U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 33-68570
eConnect
(Exact name of registrant as specified in its charter)
Nevada 43-1239043
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
2500 Via Cabrillo Marina, Suite 112, San Pedro, California 90731
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (310) 514-9482
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value; Class A Warrants
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [ ].
The Registrant had revenues of $40,000 for the fiscal year ended
on December 31, 1999. The aggregate market value of the voting
stock held by non-affiliates of the Registrant as of May 1, 2000:
Common Stock, par value $0.001 per share -- $114,423,601. As of
May 1, 2000, the Registrant had 162,394,801 shares of common
stock issued and outstanding.
TABLE OF CONTENTS
PART I PAGE
ITEM 1. BUSINESS 3
ITEM 2. PROPERTIES 15
ITEM 3. LEGAL PROCEEDINGS 15
ITEM 4. SUBMISSION TO MATTERS TO VOTE OF SECURITY HOLDERS 18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 19
ITEM 6. PLAN OF OPERATION 22
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 28
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 28
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 28
ITEM 10. EXECUTIVE COMPENSATION 30
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 30
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 31
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES,
AND REPORTS ON FORM 8-K 34
SIGNATURES 36
PART I.
ITEM 1. BUSINESS.
(a) Business Development
The Registrant was originally organized under the laws of
the State of Missouri on September 1, 1981, as HANDY-TOP, INC.
On April 20, 1983, the Articles of Incorporation were amended to
change the name of the corporation to HTI Corporation. On May
28, 1993, the Articles of Incorporation were amended to change
the name of the corporation to Leggoons, Inc. and increase the
number of authorized shares of common stock from 40,000 to
10,000,000 and decrease the par value of the common stock from
$1.00 per share to $0.01 per share. Also on May 28, 1993,
Leggoons, Inc., declared a 14-for-1 stock split.
Leggoons, Inc., was engaged in the design, manufacture and
distribution of apparel and related accessories which are sold to
specialty and department stores nationwide under the brands
Leggoons, CPO by Leggoons, John Lennon Artwork Apparel, and
Snooggel. On January 19, 1996, Leggoons, Inc. adopted a formal
plan to discontinue the designing, selling, manufacturing and
distribution of its apparel products. As part of such plan,
Leggoons, Inc., discontinued production on April 30, 1996, and
intended to either sell or liquidate the operations within twelve
months of that date.
On June 12, 1996, Leggoons, Inc., transferred all of its assets
and liabilities to a third party assignee, under an "Assignment
for the Benefit of Creditors" (the "Assignment"). An Assignment
is a business liquidation device available as an alternative to
bankruptcy. The third party assignee, a Nebraska corporation,
also named Leggoons, Inc. (the "Assignee"), was required to
properly, timely, and orderly dispose of all remaining assets for
the benefit of creditors. Leggoons, Inc. continued to maintain
its status as a shell corporation.
On February 18, 1997, Leggoons, Inc. entered into an
Agreement to License Assets from Home Point of Sales, Inc.(now
know as Electronic Transactions & Technology - "ET&T")) for the
purpose of licensing certain technology for the development of
Personal Encrypted Remote Financial Electronic Card Transactions
("PERFECT"). ET&T is a privately held corporation 70% owned by
Thomas S. Hughes, President of the Registrant. This technology
is designed to enable consumers to instantly pay bills or impulse
purchase from home with real time cash transactions.
Mr. Hughes, Chairman of ET&T, became Chairman and President
of Leggoons, Inc. on March 1, 1997. At that time, the name was
changed to Betting, Inc.
On April 28, 1997, the Registrant entered into a Host
Processing Agreement with ET&T for the purpose of having ET&T act
as the bank host processing for all Betting, Inc.'s future
transactions that are sent by terminals that read credit cards or
ATM cards. On March 27, 1998, the Registrant entered into a
License Agreement with ET&T for the purpose of licensing
additional technology for processing electronic banking
transactions. The technology licensed under this agreement
supplements the technology licensed under the Agreement dated
February 18, 1997.
On May 17, 1999, an Agreement and Plan of Merger between
Betting, Inc., a Missouri corporation, into Betting, Inc., a
Nevada corporation ("Registrant") was executed by an authorized
signatory of each company (see Exhibit 2 to this Form 10-KSB).
On May 21, 1999, the merger of the two companies was approved by
a majority of the shareholders. Effective on June 1, 1999,
Articles of Merger were filed with the Nevada Secretary of State,
which formally resulted in the redomicile of the Registrant from
the State of Missouri to the State of Nevada. This also resulted
in the change of the fiscal year end from August 31 to December
31. On June 4, 1999, a Certificate of Amendment to Articles of
Incorporation was filed with the Nevada Secretary of State
changing the name of the Registrant to "eConnect" and increasing
the number of authorized common shares to 100,000,000 (see
Exhibit 3.2 to this Form 10-KSB). On August 23, 1999, a
Certificate of Amendment to Articles of Incorporation was filed
with the Nevada Secretary of State increasing the number of
authorized common shares to 200,000,000 (see Exhibit 3.3 to this
Form 10-KSB).
(b) Business of the Registrant.
(1) Transaction Division.
The business of the Registrant is to drive (process) PERFECT
global transactions with specific emphasis on ATM card with PIN
instant cash transactions. There are two aspects to the industry
of self serviced home or mobile swiped ATM card with PIN entry or
credit card transactions which the Registrant has named PERFECT
(personal encrypted remote financial electronic card
transactions).
The first aspect is the development of the "Bank Eyes Only"
transactions system whereby a consumer can use a remote terminal
from a home environment or mobile environment to read a credit
card or ATM card with PIN or a smart card which is then sent to a
host processor for card authorization. "Bank Eyes Only"
transactions refers to a direct Internet connection between the
consumer's terminal and the Registrant's bank card authorization
system. The web merchant does not store nor has ready access to
the consumer's card data. These "Bank Eyes Only" terminals are
remote from the merchant (protecting the consumer's data) and are
wireless or landline or computer enabled. This should result in
greater consumer confidence in performing such financial
transactions.
This system will also enable the consumer or business person to
effect instant cash payments to the recipient. A transaction
using the terminal device with an ATM card with PIN is considered
a cash payment. Internet "Bank Eyes Only" ATM card with PIN
payments could substantially affect global commerce, completely
changing the way people around the world do business.
The second aspect of a PERFECT transaction is the usage of the
Registrant's proprietary hardware placed in public locations for
self serviced bill payments by ATM card with PIN entry.
Today, bankcard authorized transactions, that are terminal
driven, are initiated by consumers, "face to face" with
merchants. The Registrant's "Bank Eyes Only" transaction enables
the consumer to perform the transaction safely from a remote
location. These PERFECT transactions are originated by the
consumer. The transaction is encrypted before being sent. The
merchant does not originate the transaction by swiping the bank
card; the consumer swipes the bank card with no merchant present.
The consumer is "remote" from the merchant.
Applications of the PERFECT industry focus specific attention of
the usage of ATM card with PIN entry to effect "just in time"
bill, tax, mortgage, or premium payments from home, to "reserve
your seat"T for entertainment purposes.
The Registrant acknowledges that a proprietary hardware device is
necessary to conduct its fee per transaction business. However,
the revenue will derive not from the hardware but from the
transaction fees. The Registrant's goal is to develop network
global host processing centers. These centers will drive and be
compatible with all types of hardware made by many different
competitors.
The Registrant has spent over $2,000,000 in cash and stock during
the last two fiscal years developing the system for the
implementation of the PERFECT industry in general and for the
specific application of Internet "Bank Eyes Only" transactions in
particular.
The Registrant has contracted exclusive licenses for global usage
of Patent No. 5,336,870, issued August 8, 1994, Patent No.
5,754,655, issued May 19, 1998, and Patent No. 5,809,143, issued
September 15, 1998 (see Exhibit 99.1 to this Form 10-KSB). These
three Patents broadly cover the implementation of what the
Registrant is now calling "Bank Eyes Only" transactions.
Patent No. 5,336,870 has developed into the EzyDepot unit, which
is now being upgraded to a wireless unit for use by households in
the U.S. pay home services such as for plumbers and carpet
cleaners. Using the ExyDepot unit, consumers may pay for
household services from home with an ATM card rather than with a
check. The Registrant will generate revenues from fees paid by
the home service merchant to receive real cash in real time, and
the Registrant will also generate revenue from the sales of the
EzyDepot.
Patent No. 5,809,143 has developed into what the Registrant is
calling the eCashPad, and the specific focus is for Internet
"Bank Eyes Only" usage. This device connects directly to a
personal computer and runs on the Windows operating system. The
Registrant expects that the eCashPad should be commercially
available in June for use by consumers.
Patent No. 5,754,655 covers is in the process of development as a
hand held wireless voice capable phone and terminal for sale and
distribution into the PERFECT industry, with specific focus for
"Bank Eyes Only" Internet ATM card with PIN entry transactions.
This product is called the ePocketPay and is in the development
stage.
The present "Bank Eyes Only" system consists of the proprietary
Registrant eCashPad, the proprietary Registrant EzyDepot, the
Registrant/RGTecq Linux Transaction Server, and the Registrant
host systems which will drive these transactions. In other words,
simple servers at the host center will "drive" the incoming
eCashPad or EzyDepot transactions into the bank system for
authorization. For example, the Linux transaction server will
receive the incoming eCashPad transaction and then send the
transaction on to the Registrant host system for card
authorization. At no time is any bankcard data stored with the
Internet merchant, and this simple action effects a highly secure
consumer Internet transaction. The Linux server operates on
proprietary software developed by the Registrant.
National Data Funding Corporation will be providing the
Registrant with operations support for the Registrant' host
systems under an agreement with the Registrant in April 2000.
The eCashPad has been developed by Asia Pacific Micro, Inc, under
a manufacturing agreement entered into in January 2000.
Production of the eCashPad has commenced in Asia and is
commercially targeted for distribution in June 2000. This unit
attaches to the consumer's computer keyboard and enables the
consumer to affect Internet "Bank Eyes Only" transactions, from
the consumer's home or office. The Registrant will receive a fee
from the merchant per transaction. The Registrant is currently
establishing distribution agreements for the eCashPad.
The eCashPad will also be distributed with private labels.
Companies participating in the private label eCashPads will enjoy
the benefit of receiving a portion of the Registrant's
transaction fee for transactions made to them in addition to
those made to other merchants. For example, an insurance company
using the eCashPad will generate cash payments by ATM card with
PIN entry for its premium payments. In addition, it can generate
additional revenues from the same eCashPad as it is used to pay a
phone bill, to make a charitable donation, to purchase a product,
or to pay a tax bill. The Registrant will receive a projected
fee of $1.00 per transaction.
The ePocketPay is targeted for a third quarter prototype which
will effect hand held wireless "Bank Eyes Only" transactions plus
act as a wireless voice phone.
The first country outside of the United States that the
Registrant is presently developing a host system is the
Dominican Republic, the second is Ireland, followed by Hong Kong
and then Australia. The Registrant has recently formed eConnect
Dominican Republic, S.A. to develop its gaming and other
operations in the Dominican Republic. The Registrant has chosen
these countries since they have a strong usage of ATM card with
PIN entry.
Within the countries of Hong Kong, Ireland, Australia, and the
Dominican Republic, the Registrant recognizes that the eCashPad
within those countries will naturally evolve into ATM card with
PIN cash games, and the Registrant intends the present holdings
of Top Sports and 777WINS to be combined into an eGaming company
which will feature the "International", which will be the
equivalent of a same day instant cash game between the countries
of Australia, Hong Kong, Ireland and the Dominican Republic
whereby the eCashPad is used with ATM card and PIN entry and
processed by the Registrant's host systems.
The specific goal of the Registrant is to establish global "Bank
Eyes Only" ATM card with PIN entry by the usage of the eCashPad
which will be targeted for substantial free distribution within
the United States and in Hong Kong, Ireland, the Dominican
Republic and Australia in the second and third quarters of 2000.
The long term strategic goal of Registrant is to position its
global host systems to offer "Bank Eyes Only" processing services
for both competitors' terminal solutions and for the Registrant's
terminal solutions. This places the Registrant in the position
of being a HUB for its own transactions and competitor's
transactions. There will also be a particular emphasis on
Internet cash payments between countries by the usage of eCashPad
or ePocketPay type of devices and ATM card with PIN entry. This
enables the Registrant to handle Business to Business
transactions and Country to Country transactions.
Revenue generation from "Bank Eyes Only" transactions is expected
to begin in the second quarter of 2000 when the eCashPad is
freely distributed by the Registrant and is also aggressively
deployed by the industries of telecommunications, insurance,
collection, network marketing, charity and utilities.
Within the United States market, the Registrant is closely
working with NDFC to secure the go ahead for regional ATM card
networks for an eCashPad ATM card with PIN entry "Bank Eyes Only"
internet payment.
The Registrant's host service in the United States is provided by
eFunds, a wholly owned subsidiary of Deluxe Data under an
agreement between eFunds and the Registrant entered into in
February 2000. The Registrant is currently using the eFunds
CONNEX software to provide the Registrant Host support system
outside of the United States.
The Registrant is confident that the ATM card network will
accept "Bank Eyes Only" transactions. A targeted pilot program
is scheduled to begin in the third quarter. Since this is a new
endeavor, the Registrant cannot guarantee that such United States
"Bank Eyes Only" with ATM card and PIN entry transactions will
actualize. The usage of ATM card with PIN entry "Bank Eyes Only"
transactions is directly dependent on the acceptance by bank
networks such as STAR or MAC.
The Registrant expects the industry of "Bank Eyes Only" Internet
transactions to develop substantially by the fourth quarter and
anticipates numerous "Bank Eyes Only" product devices to be
introduced by various companies. It is the intention of the
Registrant to provide support services for such hardware devices
and to gain a service fee from the processing of "Bank Eyes Only"
transactions. The Registrant encourages the introduction of
different types of "Bank Eyes Only" devices.
The Registrant anticipates a strong effort by competitors to
seize the "Bank Eyes Only" space on an Internet merchant site
and the Registrant recognizes that there are a finite number of
top 100 web merchants per category.
In summary, the Registrant intends to build host systems in such
countries as the Dominican Republic, Hong Kong, Australia and
Ireland, plus numerous other countries, whereby the Registrant's
host system is driving many different types of hardware devices
as developed by many companies to meet the demand of the PERFECT
industry. The Registrant will generate a fee per transaction
from the driving of each hardware device which is sending in
PERFECT ATM card and PIN entry, credit card and smart card
payments.
(2) Gaming Division.
As of December 31, 1999, the Registrant held a 50% interest in
Top Sports S.A., a series of 12 walk in Dominican Republic
Sportsbooks. The Registrant's interest in gaming two fold: (1)
the generation of revenues; (2) the establishment of a base for
the usage of "bank eyes only" eCashPads for global ATM card with
PIN entry gaming.
It is anticipated that 777WINS.com, as explained in more detail
below, will generate revenue in 2000. Under the strict control
of the Dominican Republic subsidiary, United States originated
gaming transaction will not be accepted.
The government of the Dominican Republic has granted the
Registrant the specific Licenses required to own and manage full
service walk in sports gaming public locations and to offer
Internet gaming with the 777WINS.com service.
3. General.
Registrant presently has 12 full time employees and contracts
with multiple independent contractors. To meet the Registrant's
service launch requirements, it expects to hire additional
financial, technical, administrative and sales staff.
In addition to the Patents set forth above, the Registrant
currently has 8 filed applications for trademarks.
(c) Acquisitions of the Registrant.
(1) Rogel Technologies.
According to an agreement dated May 6, 1999, the Registrant
acquired all of the assets of Rogel Technologies, a sole
proprietorship ("RT") (see Exhibit 10.7 to the Form 10-KSB).
These assets consisted of the following: (a) proposed RT's Secure
Email service; (b) Perfect Merchant Response Software (MRS); (c)
RT's Global Market Place Mall (GMM) (the GMM includes these
products: GMM Classified Adds, GMM Web hosting services, eTrusts,
eHomebuy, eDine, eTheater, Portable Website Software, PCA
Compression Software, and Virtual Card Game Software); and (d)
the consulting services of Rogel Patawaran for the purpose of
creating and writing new software products for the Registrant.
The Registrant agreed to make the following payments under this
agreement: (a) 2,750,000 free trading shares; (b) 2,500,000
restricted shares of common stock; (c) options to purchase
500,000 shares of common stock at an exercise price of $0.50 per
share, which options expire on June 30, 2000; (d) options to
purchase 500,000 shares of common stock at an exercise price of
$1.00, which options expire on June 30, 2001; (e) options to
purchase 250,000 shares of common stock at an exercise price
$2.00 per share, which options expire on June 30, 2002 ; (f)
$200,000 per year management fee payable from the gross revenues
of RT; and (g) 12.5% of the remaining net profits of RT as an
administration fee. A total of 2,500,000 restricted shares of
common stock and 2,500,000 free trading shares of common stock
have been issued date under this agreement (no options as set
forth in the agreement have been issued to date).
Under an agreement dated October 23, 1999, the Registrant agreed
to pay Rogel Technologies an additional $168,000 for services
related to MRS software and the SafeTPay system server, and to
provide additional consulting services for an hourly fee (see
Exhibit 10.14 to the Form 10-KSB). Under an agreement dated
November 23, 1999, the parties agreed that in consideration of
said sum the MRS and SafeTPay software will remain under the
ownership and full control of Rogel Technologies; however, the
Registrant would have the right to utilize this software and
provide instruction in its use (see Exhibit 10.16 to this Form
10-KSB).
Based on the main focus of this agreement being the consulting
services of Mr. Patawaran in research and development activities
of the Registrant, the shares issued under this agreement are
being accounted for as research and development costs in the
financial statements of the Registrant. The Registrant has not
as yet made any determination regarding further development of
the other items set forth in the agreement.
(2) eBet.com, Inc.
According to an agreement dated August 12, 1999, the Registrant
intended to acquire all of the stock of eBet.com, Inc., a Nevada
corporation ("eBet") (see Exhibit 10.8 to this Form 10-KSB); one
of the assets of eBet is the eSportsbet.com website). The assets
of the company consisted of certain technology in connection with
on-line wagering. As part of this transaction, the Registrant
also agreed to assume all of the liabilities of eBet. This
compensation specified for this acquisition was as follows: (a)
400,000 free trading shares, and 1,000,000 restricted shares,
paid to the shareholders of eBet; and (b) 1,200,000 free trading
shares paid to the principal of this firm (Edward James Wexler).
In addition, the Registrant agreed to pay a total of $225,000 to
satisfy the creditors of eBet and for other development costs in
connection with the acquisition. However, this agreement was
never consummated, and the eSportsbet.com website therefore
stayed under the ownership of eBet.com, Inc.
(3) Isla Escondida, S.A.
La Empresa Ranco Plasticos Limitada, a Costa Rica corporation
("Holder"), was the owner of record of 58.33% of the issued and
outstanding stock of Isla Escondida, S.A., a Costa Rica
Corporation ("IE") ("Stock"). Pursuant to an agreement between
Holder, Jamie Ligator and Michael Lanes, one-half (1/2) of the
Stock was actually being held in the name of Holder for the
benefit of Lanes and the other one-half (1/2) of the Stock was
actually being held in the name of Holder for the benefit of
Ligator. Effective on August 31, 1999, the Registrant purchased
the Stock under a Stock Exchange Agreement (see Exhibit 10.10 to
this Form 10-KSB).
Under this agreement the Registrant paid the following amounts
for the Stock: 7,000,000 shares of free trading common stock of
the Registrant, to be deposited into an escrow account. These
share were all released by December 31, 1999 under the provisions
of an accompanying escrow agreement. Subsequent to this
agreement, the Registrant acquired, for 5,000,000 free trading
shares, the remaining 41.67% of the stock of IE directly from the
shareholders of that company in a stock swap (an additional
5,200,000 restricted shares of common stock previously issued in
connection with this transaction, which were registered in a Form
SB-2 of the Registrant filed on September 3, 1999, still need to
be cancelled by the Registrant). In addition to the above
amounts paid, the Registrant paid an additional 1,510,000 shares
of free trading common stock in connection with closing this
transaction.
This asset has generated no revenues for the Registrant
since its acquisition. Due to various problems with the 777WINS
operation in Costa Rica, this website was closed shortly after
the acquisition by the Registrant and no revenues or profits were
realized from this operation. As a result, this entire
investment was written down to $250,000 in the fourth quarter of
fiscal 1999. As set forth in section (5) below, the Registrant
now owns only a 50% interest in 777WINS.com in connection with
the agreement with Top Sports, S.A.
(4) TheArtAuction.com
Effective on September 9, 1999, the Registrant acquired the
website known as "theArtAuction.com" from PowerClick, Inc., a
Nevada corporation, through an Agreement and Plan of Acquisition
Agreement (see Exhibit 10.11 to this Form 10-KSB for the
agreement which reflected the actual acquisition, which is
different from the one attached to a Form 8-K filed on November
16, 1999). Under this agreement, Registrant paid the following:
(a) 1,000,000 shares of free trading common stock of the
Registrant; and (b) 1,000,000 shares of restricted common stock
of the Registrant. In addition, the Registrant paid an
additional 165,000 shares of restricted common stock in
connection with closing this transaction.
Although this website did briefly generate revenues in September
1999 totaling approximately $40,000, the website was closed down
in November 1999 for reconstruction and has not as yet reopened.
Registrant has been upgrading theArtAuction.com into artaste.com,
which is scheduled for a second quarter 2000 opening.
5. Top Sports S.A.
By a Contract of Partnership dated November 20, 1999, the
Registrant acquired a 50% interest in Top Sports S.A., a
Dominican Republic corporation (see Exhibit 10.17 to the Form 10-
KSB). The Registrant has also entered into a Business
Cooperation Agreement with Top Sports S.A., dated December 9,
1999, to carryfroward the terms of the partnership between the
two companies under local law (see Exhibit 10.21 to this Form 10-
KSB). Top Sports operates various sports book betting
establishments in the Dominican Republic, where casino and
related types of gaming are legal. Under these agreements, the
Registrant shall be the beneficiary of 50% of all the assets,
benefits and gains, an shall share in 50% all the liabilities,
losses or obligations that Top Sports, S.A. can hold, to be
titled or to be forced as much in the Dominican territory as
outside Dominican territory. As part of these agreements, the
Registrant agreed to give-up a 50% interest in its website
777WINS.com.
Under these agreements, the Registrant paid the following
amounts for this acquisition: (a) U.S. $35,000.00; and (b)
1,000,000 of restricted common stock of the Registrant. The
Registrant also agreed to pay options to purchase 2,000,000
shares of common stock of the Registrant, during the 12 months
following the execution hereof for the fixed price of U.S. $0.30
per share; these options have not yet been issued.
Under these agreements, it is the intention of the parties that
not only will sportsbook betting be expanded in the Dominican
Republic, but that only wagering will be facilitated through the
777WINS.com website. To this end, all of the equipment and other
assets of 777WINS.com have been moved from Costa Rica to the
Dominican Republic in January 2000.
In addition, in January 2000 the Registrant formed eConnect
Dominican Republic S.A. for the purpose of serving internet
gaming companies. The intent is to have this firm process cash
pay per play transactions through use of the eCashPad.
In order to help fund the operation of Top Sports, S.A., this
firm and the Registrant entered into an agreement dated December
16, 1999, whereby the Registrant is to provide that firm with
100,000 free trading shares of the Registrant per month beginning
January 2000 and ending December 2000 (see Exhibit 10.24 to this
Form 10-KSB). Top Sports will sell such shares in the
marketplace and will use the resulting revenues to fund the
continued expansion plans of Top Sports SA, specifically the
acquisition of 20 targeted Dominican Republic Sports Books.
(d) Other Agreements.
(1) First Entertainment Holding Corp.
On April 29, 1999, the Registrant entered into a Joint Venture
Agreement with First Entertainment Holding Corp. for the purpose
of using the allowing customers to use their ATM cards to make
purchases from a number of websites owned by that firm at
www.firstentertainment.com (see Exhibit 10.6 to this Form 10-
KSB). These companies intend to move forward with this project
once the eCashPad is available for distribution. Each company
will share equally in the profits and losses from this joint
venture.
(2) Cash2Trade.
In September 1999, the Registrant entered into an oral joint
venture agreement with Robert Bragg and Michael Rice to develop
an online investement trading website. The Registrant issued a
total of 1,650,000 shares of free trading common stock in this
transaction. As of December 31, 1999, the Registrant's
management evaluated the value of this investment and
substantially all of the $325,000 investment was written off as a
loss on investment since it has no future benefit.
International Investor Relations Group.
The Registrant entered into a Consulting Agreement with
International Investor Relations Group, Inc. ("IRG"), dated
September 24, 1999 (see Exhibit 10.12 to this Form 10-KSB).
Under the terms of this agreement, this firm provided certain
services for the Registrant, as follows: (a) 10 road shows; (b) 1
Media Placement in Stock/Card deck reaching 250,000 + investors;
(c) 2 News releases, includes broadcast fax to all interested
parties; (d) one research report 6-8 page full color; and (e) a
broker card - 2 sided, full color.
Under this agreement, the Registrant paid the following amounts
for the services of IRG: (a) $85.000.00; (b) 167,000 free trading
shares based on a .21 cent per share price; and (c) 300,000
purchase warrants, as follows: 100,000 $0.50 cents per share,
100,000 at $0.75 cents per share, and 100,000 at $1.00 per share.
These have a 2-year expiration date from the original date of
signing the agreement.
(4) Kanakaris Communications.
On October 21, 1999, the Registrant entered into an
agreement with Kanakaris Communications for the purpose of
developing Internet Cash Programming ("ICP"), a service to be
offered by Kanakaris and the Registrant which will enable the
consumer to purchase internet video streaming programming by
Same-as-Cash (ATM card and PIN), or by Enhanced Credit Card (the
payment by credit card that is read by the ePIN or like devices)
(see Exhibit 10.13 to this Form 10-KSB). Under this agreement,
Kanakaris Communications will provide the delivery to the
internet consumer of video streaming programming from either
Kanakaris Communications own inventory base or shall act as a
distributor of video streaming programming from other
entertainment providers.
Under the terms of this agreement, ICP will be established
as a separate Nevada corporation and will authorize 1,000,000
shares of stock; Kanakaris Communications will receive 400,000
shares of stock and eConnect shall receive 400,000 shares of
stock, and 200,000 shares of stock shall remain in the ICP
treasury. Kanakaris Communications will retain the managing
control of ICP and shall appoint officers to manage ICP. All
profits of ICP shall be equally split between eConnect and
Kanakaris Communications.
The Registrant will receive exclusive global rights to drive
or process all originating ICP transactions whether transacted by
an ePIN or by a competitive hardware devices that are effecting
either a Same-as-Cash or Enhanced Credit Card programming
purchase. In addition, the Registrant will charge ICP a flat fee
per ICP processed transaction. Further development of this
project is awaiting the delivery of the eCashPad, as previously
discussed.
The Registrant paid a total of 3,000,000 shares of free
trading common stock for the research and development to be done
under this agreement. However, unbeknownst to the Registrant
these shares were paid out directly to a nominee of Richard
Epstein, United Capital Management.
(5) SafeTPay.com.
On November 5, 1999, the Registrant entered into a Capital
Contribution Agreement with SafeTPay.com, a Nevada corporation
(see Exhibit 10.15 to this Form 10-KSB). Under the terms of this
agreement, the Registrant agreed to creation and management of a
business unit focused on the processing of secure internet
transactions.
Under this agreement, the Registrant agreed to contribute
the following assets to this newly formed company:
(a) Software. All ownership and rights to the software that
have been developed by Rogel Technologies ("RT") per
specifications provided by SafeTPay ("System"). SafeTPay is to
have access to this software as needed for the operation of its
business.
(b) Computer Hardware. The server which has been procured by RT
for use as the SafeTPay internet server, and installed in St.
Petersburg, Florida.
(c) Miscellaneous Physical Assets. Three laptop personal
computers, 7 sample PIN pads, and miscellaneous office supplies
that have been purchased for and/or are being used by the
SafeTPay business unit.
(d) Trademarks, Trade-names, Copyrights. Ownership of any and
all marks, registrations, and goodwill that eConnect may own,
regarding "SafeTpay", "Same-As-Cash", "ePIN" and "ePAD". As a
condition for this transferal, Harry Hargens is to contribute and
unconditionally transfer to SafeTPay any and all trademarks and
domain names held in his name.
(e) Web Address. Ownership of any web addresses reserved for
any of the above names or marks.
Under the agreement, the parties were to receive stock in
SafeTPay.com as follows:
(a) Common Stock: SafeTPay will initially authorize 20 million
shares of common stock. In return for the capital contributions
listed above, the Registrant is to receive 2,300,000 shares of
restricted common stock of SafeTPay. The principals of SafeTPay
(Harry Hargens, Gerard Gay, Robert Hodgson, and Dale Reistad) are
to each receive 150,000 shares of restricted common stock of
SafeTPay.
(b) Options.
(1) The Registrant is to, upon execution of the agreement,
receive options to purchase 5,000,000 shares of SafeTPay common
stock, at an exercise price of one dollar ($1.00) per share. Any
unexercised options shall expire 3 years after execution of this
Agreement.
(2) The principals of SafeTPay are to each receive options to
purchase 500,000 shares of SafeTPay common stock, at an exercise
price of $1.00 per share. Any unexercised options shall expire 3
years after execution of this Agreement.
(3) For a period of 24 months following execution of this
Agreement, any additional options given to officers or
shareholders of either SafeTPay or eConnect shall be issued at
the same exercise price at those set forth in subparagraph (a)
above.
(c) Additional common stock in return for capitalization:
eConnect hereby commits to invest in SafeTPay $500,000 over the
period of one year from the date of this Agreement, in four (4)
equal quarterly installments, with $20,000 of the first
installment due not later than November 15, 1999, $42,500 due not
later than December 15, 1999, and the remainder of the first
installment due not later than January 15, 2000; subsequent
installments shall be due not later than the following dates:
April 15, 2000, July 15, 2000, and October 15, 2000.
Although to the knowledge of the Registrant no litigation
has been threatened with regard to this agreement with
SafeTPay.com, the principals of SafeTPay now claim that the
Registrant is now in breach of contract since it did not pay
certain sums for the capital contribution, as stated above, and
has not fulfilled certain obligations under the agreement. The
Registrant has contributed a total of $62,500 to SafeTPay.com.
The Registrant does not intend to contribute any further cash,
or other assets as set forth above, until other claims of the
principals of SafeTpay.com can be resolved.
In connection with this agreement, the Registrant entered
into a separate consulting agreement with Michael Leste and
Michael Kofoed for their services in connection with this
agreement (see Exhibits 10.22 and 10.23, respectively, to the
Form 10-KSB). Under the terms of these agreements, these
individuals are to receive certain options and restricted shares
of SafeTPay.com; these have not been paid due to the status of
this agreement.
(6) eMarkit (eConnect2Trade.com).
(a) August 16, 1999 Agreement.
On August 16, 1999, the Registrant entered into a consulting
agreement with eMarkit Incorporated, a Nevada corporation,
whereby this company would provide certain consulting services
for the Registrant in connection with introductions to the
brokerage industry (see Exhibit 10.9 to this Form 10-KSB). Such
introductions would be for the purpose of developing the "Bank
Eyes Only" system for use in the financial services industry.
Under the terms of this agreement, the Registrant agreed to
pay 1,000,000 free-trading shares of Registrant's common stock
deemed fully earned upon execution hereof for eMarkit's initial
setup activities which are necessary for Contractee to provide
the services herein. In addition, the Registrant agreed to pay
1,000,000 warrants exercisable at $1.00 per share, which expire
on December 31, 2000. However, this consulting agreement never
went forward and the compensation was not paid.
(b) December 29, 1999 Agreement.
On December 29, 1999, the Registrant entered into an agreement
with eMarkit for the purpose of a joint venture, whereby the
Registrant agrees to purchase on a "stock for stock" basis, 50%
of a corporation to be formed by eMarkit, that name being
eConnect2Trade.com, Incorporated ("ET") (see Exhibit 10.25 to
this Form 10-KSB). The business of ET is to be the marketing and
sales of the Registrant's "same-as-cash" transactions to the
securities industry via any medium, but initially via the
internet using an ATM pin pad. The long term goal of ET will be,
for a fee, to act as a financial interface between securities
broker/dealers and their clients who are transacting currencies
via transactions using bank host processing centers that are
authorizing such transactions.
Upon signing of this agreement of the Registrant agreed to issue
1,000,000 "free-trading" shares of the Registrant's stock to
eMarkit and 2,000,000 warrants to eMarkit to purchase 2,000,000
"free-trading" shares of eConnect stock at an exercise price of
$1.00 per share. The expiration date of the warrants is to be
December 31, 2000. The Registrant is to deliver the stock and
warrants as follows: 300,000 shares and 300,000 warrants no
later than January 20, 2000. The next issuance of 200,000 shares
and 200,000 warrants will be delivered when Beta testing begins
and 500,000 shares and 500,000 warrants will be delivered when
Beta testing is complete but no later than March 20, 2000.
Subsequent to December 31, 1999, a total of 300,000 free trading
shares were issued to Robert Bragg, the principal of eMarkit; the
Registrant has not as yet been issued any shares in
eConnect2Trade.com but the parties intend to proceed with this
transaction.
Although a recent agreement of eConnect2Trade.com with
Empire Financial Holding Co., a broker/dealer, did not proceed,
it is the intention of the Registrant to seek other contacts
within the brokerage industry.
ITEM 2. DESCRIPTION OF PROPERTY.
At its executive offices in San Pedro, California, which the
Registrant leases, it owns approximately $18,000 of miscellaneous
office furniture and equipment, including computers. In the
Dominican Republic, the Registrant owns approximately $250,000 of
computer equipment and associated equipment for use in gaming
operations; this equipment has recently been transferred from the
former operations of 777WINS in Costa Rica to the Dominican
Republic.
ITEM 3. LEGAL PROCEEDINGS.
Other than as stated below, the Registrant is not a party to any
material pending legal proceedings and, to the best of its
knowledge, no such action by or against the Registrant has been
threatened:
(a) Securities and Exchange Commission Action (March 12, 1999).
On March 12, 1999, the Securities and Exchange Commission
("SEC") filed a complaint alleging the Company had failed to make
available to the investing public current and accurate
information about its financial condition and results of
operations through the filing of periodic reports as required by
the Securities Exchange Act of 1934 (specifically, the Form 10-
KSB for the 1997 and 1998 fiscal years, the Form 10QSB for each
of the first three quarters of fiscal 1998, and the corresponding
Notifications of Late Filings (Form 12b-25)). The SEC sought in
this action to compel the Company to file delinquent reports and
enjoin the Company from further violations of the reporting
requirements. The Company consented to the entry of a final
judgment granting the relief sought by the SEC.
Although this action has been concluded, since the permanent
injunction was entered the Company has been late with the
following reports: (a) Form 10QSB for the quarter ended February
28, 1999 (due by April 29, 1999 because of the filing of a Form
12b-25) - filed with the SEC on May 28, 1999; (b) Form 10QSB for
the quarter ended June 30, 1999 (due by August 14, 1999) - filed
with the SEC on August 23, 1999 (due to an error in the CIK code
for the Company entered on the EDGAR electronic filing system);
(c) a Form 10-QSB for the transition period ended December 31,
1998 (due by July 5, 1999) - filed with the SEC on September 3,
1999; (d) Form 8-K to reflect a certain acquisition by the
Company (due by May 21, 1999) - filed with the SEC on November
15, 1999; (e) Form 8-K to reflect two acquisitions by the Company
(due by September 15, 1999) - filed with the SEC on November 16,
1999; and (f) Form 10-KSB for the period ended on December 31,
1999.
(b) Securities and Exchange Commission Action (March 23, 2000).
In a complaint filed on March 23, 2000 (Securities and Exchange
Commission v. eConnect and Thomas S. Hughes, Civil Action No. CV
00 02959 AHM (C.D. Cal.)), the SEC alleged that since February
28, 2000, the Registrant issued false and misleading press
releases claiming: (1) the Registrant and its joint venture
partner had a unique licensing arrangement with PalmPilot; and
(2) a subsidiary of the Registrant had a strategic alliance with
a brokerage firm concerning a system that would permit cash
transactions over the Internet. The complaint further alleges
that the press releases, which were disseminated through a wire
service as well as by postings on internet bulletin boards,
caused a dramatic rise in the price of the Registrant's stock
from $1.39 on February 28 to a high of $21.88 on March 9, 2000,
on heavy trading volume. The SEC suspended trading in the
Registrant's common stock on the Over the Counter Bulletin Board
on March 13 for a period of 10 trading days(trading resumed on the
National Quotation Bureau's Pink Sheets on March 27, 2000). The
complaint alleges that despite the trading suspension and the SEC's
related investigation, the Registrant and Mr. Hughes continued to issue
false and misleading statements concerning the Registrant's
business opportunities. In addition to the interim relief
granted, the Commission seeks a final judgment against the
Registrant and Mr. Hughes enjoining them from future violations
of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
(the anti-fraud provisions of that act) and assessing civil
penalties against them.
On March 24, 2000, a temporary restraining order was issued in
the above-entitled action prohibiting the Registrant and Mr.
Hughes, from committing violations of the antifraud provisions of
the federal securities laws. The Registrant and Mr. Hughes
consented to the temporary restraining order.
On April 6, 2000, without admitting or denying the allegations
contained in said complaint, the Registrant and Mr. Hughes
entered into a settlement by consent that has resulted in the
entry of permanent injunctive relief. The settlement agreement
with the SEC was accepted and a judgment of permanent injunction
was entered by the Court on April 7, 2000. The judgment that the
Registrant and Mr. Hughes consented to prohibits the Registrant
and Mr. Hughes from taking any action or making any statement, or
failing to make any statement that would violate Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The court has yet to determine whether disgorgement, civil
penalties or other relief should be assessed against the
Registrant or Mr. Hughes.
(c) Shareholder Class Action Lawsuits.
Barbara Einhorn, et al. v. eConnect, Thomas S. Hughes, Jack M.
Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case
No. 00-02674 MMM (JWJx);
Joel Eckstein, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack
M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case
No. 00-02700 DDP (CWx);
Felicia Bernstein, et al. v. eConnect, Inc., et al., Case No. 00-
02703 FMC (BQRx);
Robert Colangelo, et al. v. eConnect, Inc., et al., Case No. 00-
02743 SVW (SHx);
Irving Baron, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack
M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case
No. 00-02757 WJR (CTx);
James J. Warstler, et al. v. eConnect, Inc. , Thomas S. Hughes,
Jack M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis,
Case No. 00-02758 R (SHx);
Yakov Prager, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack
M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case
No. 00-02759 GHK (RCx);
Gil Weisblum, et al. v. eConnect and Thomas S. Hughes, Case No.
00-02770 MRP (CTx);
Kenneth Mazda, et al. v. eConnect, et al., Case No. 00-02776 LGB
(Mcx);
Domenico Pirraglia, et al. v. eConnect, et al., Case No. 00-02875
SVW (CWx);
Israel C. Hershkop and Shlomo Hershkop, et al. v. eConnect and
Thomas S. Hughes, Case No. 00-03095 MRP (RNRx);
Judith Bacun, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack
M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case
No. 00-03161 FMC (JWJx);
Howard Fine, et al. v. eConnect, Inc. and Thomas Hughes, Case No.
00-03290 SVW (BQRx);
Arthur Smith, et al. v. eConnect, Thomas Hughes, Case No. 00-
03301 DT (Mcx);
Thomas Reimer, et al. v. eConnect, Thomas Hughes, Case No. 00-
03405 JSL;
Morris Tepper, et al. v. eConnect and Thomas S. Hughes, Case No.
00-03444 WJR (CTx);
Vin Bury, et al. v. eConnect, Thomas Hughes, Case No. 00-03446
ABC;
Frances Villari, et al. v. eConnect, Thomas Hughes, Case No. 00-
03447 LGB (SHx);
Benjamin Ringel, et al. v. eConnect, Inc. , Thomas S. Hughes,
Jack M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis,
Case No. 00-03591 RSWL (RNBx);
Anthony Massaro, et al. v. eConnect, Inc., Thomas S. Hughes, Jack
M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case
No. 00-03671 DDP (MANx);
Ardelle Gardner, et al. v. eConnect, Inc., Thomas S. Hughes, Jack
M. Hall, Dianne Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case
No. 00-03897 MMM (RZx);
The foregoing twenty-one actions were filed on various dates
between March 14, 2000 and April 12, 2000, inclusive, and are all
pending in the United States District Court for the Central
District of California. These actions are brought by various
putative classes of the purchasers of the Registrant's common
stock. The putative classes alleged, none of which have been
certified, range from no earlier than November 18, 1999 through
March 13, 2000. Plaintiffs in the various actions assert that
the Registrant and Thomas S. Hughes, as well as (in certain of
the actions) Jack M. Hall, Diane Hewitt, Anthony L. Hall, and
Kevin J. Lewis, have violated Section 10(b) of the Exchange Act
(false or misleading statements and omissions which deceived
stock purchasers) and also Section 20(a) of the Exchange Act
(liability as a "controlling person" with respect to a primary
violation of securities laws). The principal allegations concern
various alleged material misrepresentations and omissions which
supposedly made the Registrant's public statements on and after
November 18, 1999 (and/or on and after November 23, 1999) false
and misleading, thereby artificially inflating the market in and
for the Company's common stock. The answers or other responses
of the defendants to the various initial complaints are not yet
due. The Registrant cannot as yet express any opinion as to the
probable outcome of these litigation matters. The Registrant
intends to defend these litigation matters vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable
PART II.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Information.
On March 13, 2000, the SEC ordered a 10 trading day suspension in
the trading of the Registrant's common stock on the Over the
Counter Bulletin Board ("OTCBB"). This trading suspension was taken in
connection with an investigation of the Registrant by the SEC.
The Company's common stock resumed trading on March 27, 2000; however,
from that date to the present, the Company's common stock has been
trading on the National Quotation Bureau's Pink Sheets (symbol ECNC)
since the Company's common stock was delisted on that date from the
OTCBB OTCBB due to the trading suspension. Subsequent to the filing of the
Form 10-KSB with the SEC, the Company intends to file a 15c2-11 through a
market maker in order to apply for relisting on the OTCBB.
The range of closing prices shown below is as reported by these
markets. The quotations shown reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended December 31, 2000
High Low
Quarter Ended March 31, 2000 * 16.50 0.49
* The common stock did not trade from March 13, 2000 through
March 24, 2000 due to the trading suspension ordered by the
Securities and Exchange Commission
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended December 31, 1999
High Low
Quarter Ended December 31, 1999 0.40 0.06
Quarter Ended September 30, 1999 0.41 0.15
Quarter Ended June 30, 1999 0.83 0.38
Quarter Ended March 31, 1999 0.81 0.37
Per Share Common Stock Bid Prices
For the Transition Period Ended December 31, 1998 **
High Low
Four Months Ended December 31, 1998 0.69 0.05
** Due to a change in the fiscal year of the Registrant from
August 31 to December 31
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1998
High Low
Quarter Ended August 31, 1998 0.16 0.09
Quarter Ended May 31, 1998 0.14 0.03
Quarter Ended February 28, 1998 0.08 0.00
Quarter Ended November 30, 1997 0.10 0.03
(b) Holders of Common Equity.
As of March 31, 2000, the Registrant had approximately 567
shareholders of record of the Registrant's common stock.
(c) Dividends.
The Registrant has not declared or paid a cash dividend to
stockholders since it was originally organized on September 1,
1981. The Registrant did pay a 5% stock dividend on September
20, 1999 to shareholders of record as of close of business on
September 14, 1999. The Board of Directors presently intends to
retain any earnings to finance Registrant operations and does not
expect to authorize cash dividends in the foreseeable future.
Any payment of cash dividends in the future will depend upon the
Registrant's earnings, capital requirements and other factors.
(d) Sales of Unregistered Securities.
The Registrant made the following sales of unregistered
securities during the three year period prior to December 31,
1999:
(1) During the period of September 28, 1998 through July 16,
1999, the Registrant sold a total of 1,058,622 shares of common
stock to 76 individuals, at an average price of $0.40 per share.
In conjunction with some of these sales, the Registrant give to
these individuals for no additional charge warrants to purchase
common stock of the Registrant at $0.40 per share.
(2) During the period of April 7, 1999 through November 24,
1999, the Registrant sold a total of 4,484,500 shares of common
stock to 14 individuals and firms in exchange for consulting and
other services to the Registrant.
(3) In addition to the above sales, the Registrant issued
restricted shares in the following amounts in connection with the
following acquisitions: (a) 2,500,000 shares in connection with
the Letter of Intent between the Reistrant and Rogel
Technologies; (b) 5,200,000 shares in connection with the
acquisition of Isla Escondida, S.A. (owner of the 777WINS.com
website) (these shares were later registered under a Form SB-2
registration statement); (c) 1,165,000 shares in connection with
the acquisition of the TheArtauction.com website from PowerClick;
and (d) 1,000,000 shares in connection with the acquisition of a
50% interest in TopSports, S.A.
(4) The sale of restricted shares to Alpha Venture Capital, Inc.
through a Common Stock Purchase Agreement between the Registrant
and this firm Alpha Venture Capital, Inc., dated September 28,
1999 (see Exhibit 4.22 to this Form 10-KSB). Under the terms of
this agreement, Alpha Venutre Capital, Inc. is permitted, upon
notice by the Registrant, to purchase up to 20,000,000 shares of
restricted common stock of the Registrant (held in an escrow
account) based on 80% of the lowest market price on the 5
business days immediately following such notice (these shares
were registered under a Form SB-2 registration statement pursuant
to a Registration Rights Agreement; see Exhibit 4.23 to this Form
10-KSB). In addition, Alpha Venture Capital, Inc. is also
entitled to receive warrants to purchase up to 1,000,000 shares
of common stock (exercisable at a price equal to 80% of the
closing bid price of the common stock on the effective date of
the Purchase Agreement from said date until a date which is five
years thereafter) and up to 500,000 shares of common stock in
connection with drawdowns under the Purchase Agreement
(exercisable at the closing bid price on the date of each draw
from the effective date of the Purchase Agreement until a date
which is five years thereafter) (these warrants were registered
under said Form SB-2; see Exhibit 4.24 to this Form 10-KSB).
No commissions or fees were paid in connection with these sales,
except for a commission of 8% of the amount of each draw under
the Common Stock Purchase Agreement payable to Alpha Venture
Capital, Inc. All of the above sales were undertaken pursuant to
a claim of exemption from registration under the Securities Act
of 1933 as provided in Rule 506 under Regulation D.
(e) Use of Proceeds.
The Registrant filed a Form SB-2 with the SEC on June 1, 1999.
This offering was used exclusively for consulting and other
services provided to the Registrant and for settling litigation
involving a debenture and certain warrants between the Registrant
and CALP II, LP (see Exhibit 4.20 to this Form 10-KSB), as
reported in a Form 8-K filed with the SEC on January 18, 2000.
Therefore, no cash proceeds were raised from this offering.
On August 20, 1999, the Registrant filed a Form SB-2 with
the SEC under Rule 415 (self offering) to register an aggregate
amount of 61,000,000 shares of common stock (aggregate offering
price of $11,590,000 under Rule 457(c)). This offering was used
primarily for consulting services and acquisitions by the
Registrant, and commenced on the effective date of this
registration statement (September 7, 1999). However, 20,000,000
shares of common stock under this offering were used for the
registration of shares sold under a Common Stock Purchase
Agreement (as discussed above) (through a post-effective
amendment to this Form SB-2 filed and effective on September 29,
1999 - File No. 333-79739). The total amount of shares sold
under this offering through December 31, 1999 is 24,210,817; out
of this total, the Registrant issued 9,088,442 shares out of
those registered from the Common Stock Purchase Agreement for a
total consideration of $933,000. The expenses involved with this
offering to December 31, 1999 were approximately $50,000; the net
cash proceeds from this offering ($883,000) were used for working
capital for the Registrant. This offering has not as yet
terminated.
(f) Announced Stock Buy Back Program.
In December 1999 the Registrant announced that from mid
October 1999 up until December 29, 1999 it had bought back a
total of 2,560,752 shares of its common stock on the Over the
Counter Bulletin Board for the purpose off reducing the public
float of its stock. On November 29, 1999, the Registrant entered
into an agreement with Alliance Equities pursuant to which
Alliance Equities was to advance funds of up to $1,000,000 to the
Registrant to facilitate the buy-back program and to otherwise
assist the Registrant in this program (see Exhibit 10.18 to this
Form 10-KSB).
What occurred with respect to this program is as follows:
(a) Alliance Equities advanced the sum of $250,000 to the
Registrant under said agreement; (b) the Registrant in turn
loaned the sum of $250,000 to Thomas Hughes, President of the
Registrant, who in turn opened a brokerage account in his name
with this sum; (c) Mr. Hughes subsequently purchased $250,000
worth of the Registrant's common stock on the Bulletin Board; (d)
Mr. Hughes sold the stock purchased directly to Alliance Equities
for $250,000 in order to repay the advance (Mr. Hughes in turn
repaid the loan from the Registrant with the $250,000 sale of the
stock). Alliance Equities was paid a stock bonus for this
advance under the terms of said agreement.
ITEM 6. PLAN OF OPERATION.
(a) Twelve Month Plan of Operation.
In the year 2000, the Registrant will focus its attention on the
marketing and development of the PERFECT industry (Personal
Encrypted Remote Financial Electronic Card Transactions), with
specific focus on the "Bank Eyes Only" Internet aspect of the
PERFECT transaction.
"Bank Eyes Only" refers to a direct Internet connection between
the consumer's terminal and the Registrants bank card
authorization system by which the consumer will order an item
from an Internet merchant, but the credit card data or ATM data
will go directly to the Registrant's server and then to the bank,
bypassing the merchant. Thus, this service will enable customers
to pay for Internet purchases, bill payments and other types of
transactions from home by physically swiping either credit cards
or ATM cards with PIN entry. These "Bank Eyes Only,"
transactions can be processed over the Internet without the
cardholder account information being stored at the merchant's web
site, nor does the merchant have ready access to the consumer's
bank card information.
The Registrant believes that "Bank Eyes Only" transaction
processing system will effectively address Internet consumers'
concerns regarding personal and financial information security.
The Registrant will receive a projected flat fee of $1.00 for
each "Bank Eyes Only" transaction which will be paid by the
merchant, not the consumer.
The Registrant has begun initial sign ups of web Merchants for
this service and based on responses, will now expend substantial
dollars for an aggressive May sign up campaign to begin
simultaneously on several fronts. To launch the service of
Internet "Bank Eyes Only" transactions, the Registrant has
implemented the following initiatives:
(1) The development of the eCashPad by Asia Pacific Micro, Inc,
under a manufacturing agreement entered into in January 2000.
Production of the eCashPad has commenced in Asia and is
commercially targeted for distribution in June 2000.
(2) The Registrant has entered into an agreement with eFunds, a
subsidiary of Deluxe Data, in January 2000 to provide the United
States host system for "Bank Eyes Only" transactions. This means
that eFunds will help process the transaction after it leaves the
Registrant's server.
(3) Under the agreement with eFunds, the Registrant also
obtained a license of the eFunds CONNEX host system software for
usage in countries other than the United States. The CONNEX
system provides the Registrant with a proven host software system
which will effect "Bank Eyes Only" transactions as originated by
eCashPads.
(4) The purchase of an IBM Multiprise 2000 as a platform for the
CONNEX host system software.
(5) The Registrant has entered into a letter of intent with Real
Solutions in March 2000 to provide the IBM hardware support in
connection with the eFunds agreement.
(6) In February 2000, the Registrant consummated an acquisition
agreement with PowerClick, Inc., a Nevada corporation, whereby
the Registrant acquired 50% of the outstanding capital stock of
this company. PowerClick, Inc. owns and operates a website that
provides a wide range of products and services to the public, and
is intended to be used as a vehicle to promote the use of the
"Bank Eyes Only" system.
(7) The Registrant has entered into an agreement with National
Data Funding Corporation ("NDFC") in April 2000 to provide
eCashPad distribution, encryption, and maintenance. The
eCashpad is a device which will attach to a personal computer to
enable a credit card or ATM transaction via Internet. NDFC will
also provide full merchant processing for all credit and debit
cards in support of the United States eFunds host.
(8) Completion of testing of the eCashPads, the consumer "Bank
Eyes Only" device. eCashPads will be in a pilot program through
the second quarter of 2000 with a national roll out anticipated
for the third quarter of 2000.
(9) Development of "bankeyesonly.com" web sites in the United
States, Dominican Republic, Ireland, Australia and Hong Kong.
These web sites will be used to register web merchants within the
above listed countries to be able to receive a "Bank Eyes Only"
transaction by an eCashPad. A consumer will be able to go the
Registrant's website and with the use of his/her eCashPad will be
able to safely order merchandise on line.
(10) Aggressive recruiting of web merchants to the Registrant
"Bank Eyes Only" network. Registration of "Bank Eyes Only" web
merchants will be pursued by a team specialists to be hired who
understand their specific industry such as phone or cable or
collections and who will fully develop the pertinent "Bank Eyes
Only" applications for that industry and who will develop
strategic alliances within their specific industry. In addition,
the Registrant has structured a networking approach for mass
market consumer participation in finding "Bank Eyes Only"
merchants along with sales teams to sign on local web merchants.
(11) Using a revenue sharing plan from the flat fee, the
Registrant will incentivize private labels of eCashPads with
expected advertising and marketing of these private label
eCashPads by the web merchants to their consumer base. For
example, a merchant might distribute eCashPads with its logo to
its own consumers.
(12) Establishment of strategic alliances with a substantial
partner in each country. The partner will then proceed to
develop the business of "Bank Eyes Only" transactions by usage of
the simple and proprietary eCashPad which has been developed by
the Registrant.
(13) The activation of the Dominican Republic host system, and
host systems in Ireland, Hong Kong Host, and Australia as full
service centers which will provide not only "Bank Eyes Only"
Internet transactions by the usage of eCashPads but also full
service aspects of processing merchant retail terminal
transactions and ATM cash machines. Terminals could be placed in
strategic market areas of each country such as check cashing
centers or even grocery stores.
(14) Establishment of the "International," which will be a four
country real time "Bank Eyes Only" with ATM card and PIN entry
game between the countries of the Dominican Republic, Ireland,
Australia, and Hong Kong, whereby consumers within those
countries will be able to use the eCashPad to effect same day
gaming with ATM card and PIN entry.
The Registrant intends to spin off eGaming and its PowerClick
subsidiary as separate publicly traded companies.
(b) Risk Factors in Connection with Plan of Operation.
An investment in the Registrant is subject to a number of
risks. Among these risks are the following:
(1) eCashPad Production. The agreement under which the eCashPad
is being manufactured for the Registrant only calls for an
initial production run of 5,000 units, at a total cost of
$80,000. The Registrant must conclude an agreement for a
substantial additional manufacturing run in order for the plan of
business as set forth above to succeed. There is no guarantee
that the Registrant will be able to conclude such an agreement.
This agreement offers the Registrant substantial savings by
contracting with an Asian country for manufacturing. Currently,
the manufacturer is stable but there is no guarantee that the
manufacturer may not be impacted by future changes in government
policies. The Registrant is presently seeking additional
suppliers.
(2) Approval of Regional ATM Networks. Within the United States
market, the Registrant is closely working with NDFC to secure the
go ahead for regional ATM card networks for an eCashPad ATM card
with PIN entry "Bank Eyes Only" Internet payment. Such network
currently permit the usage of credit cards on their systems.
Thus, a substantial part of the Registrant's strategy is based on
ATM card with PIN entry Internet payments, and the Registrant may
not receive bank approvals from the regional ATM card networks in
the United States for such transactions. In such case, this
payment system could not be used in the United States, which
could substantially affect the prospects of the Company in this
country. Even though this type of payment system has already
been approved in the Dominican Republic and Ireland, and may be
approved elsewhere outside the United States, the Company would
expect that a substantial portion of its projected revenues would
come form United States based transactions.
(3) Influence of Other External Factors. The Internet industry,
and Internet gaming in particular, is a speculative venture
necessarily involving some substantial risk. There is no
certainty that the expenditures to be made by the Company will
result in commercially profitable business. The marketability of
the Registrant's services will be affected by numerous factors
beyond the control of the Company. These factors include market
fluctuations and the general state of the economy (including the
rate of inflation and local economic conditions) which can affect
peoples' discretionary spending. Factors which leave less money
in the hands of potential clients of the Company will likely have
an adverse effect on the Company. The exact effect of these
factors cannot be accurately predicted, but the combination of
these factors may result in the Company not receiving an adequate
return on invested capital.
(4) Regulatory Factors. Existing and possible future consumer
legislation, regulations and actions could cause additional
expense, capital expenditures, restrictions and delays in the
activities undertaken in connection with the business, the extent
of which cannot be predicted. For example, the U.S. Senate has
considered a proposed bill introduced by U.S. Senator John Kyl
that would ban Internet gaming in the United States. The passage
of such a bill may adversely affect the operation of the Company,
depending on the form of legislation. Even though all gaming
operations of the Company are off-shore and such transactions are
not accepted from the United States, the effect of such
legislation may influence the business.
(5) Competition. The Registrant anticipates substantial
competition in the development of the PERFECT industry and the
"Bank Eyes Only" internet application in particular. The
Registrant believes that the marketplace is large enough to
absorb many competitor companies who may focus on ancillary
aspects of the PERFECT industry such as the development of
hardware or of merchant sign ups, rather than on the core
business of the Registrant which is the processing of
transactions. Many competitors in this industry, and in internet
gaming will have greater experience, resources, and managerial
capabilities than the Company, may be in a better position than
the Company to obtain access to attractive clientele. Such
competition could have a material adverse effect on the Company's
profitability.
(6) Reliance on Management. The Company's success is
dependent upon the hiring of key administrative personnel. None
of the officers or directors, or any of the other key personnel,
has any employment or non-competition agreement with the Company.
Therefore, there can be no assurance that these personnel will
remain employed by the Company. Should any of these individuals
cease to be affiliated with the Company for any reason before
qualified replacements could be found, there could be material
adverse effects on the Company's business and prospects. In
addition, management has no experience in managing companies in
the same business as the Company.
All decisions with respect to the management of the Company
will be made exclusively by the officers and directors of the
Company. Investors will only have rights associated with
minority ownership interest rights to make decisions that affect
the Company. The success of the Company, to a large extent, will
depend on the quality of the directors and officers of the
Company. Accordingly, no person should invest in the Shares
unless he or she is willing to entrust all aspects of the
management of the Company to the officers and directors.
(7) Conflicts of Interest. The officers and directors have
other interests to which they devote time, either individually or
through partnerships and corporations in which they have an
interest, hold an office, or serve on boards of directors, as set
forth elsewhere in this Form 10-KSB. Each will continue to
devote such time to the business of the Company, notwithstanding
other obligations, that may reduce the time they can devote to
the business of the Company. As a result, certain conflicts of
interest may exist between the Company and its officers and/or
directors, which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of
corporate opportunities, which cannot be resolved through arm's
length negotiations. All of the potential conflicts of interest
will be resolved only through exercise by the directors of such
judgment as is consistent with their fiduciary duties to the
Company. It is the intention of management, so as to minimize
any potential conflicts of interest, to present first to the
Board of Directors of the Company, any proposed investments for
its evaluation.
(8) Additional Financing Will Be Required. The Registrant will
be required to raise significant capital to fund its Plan of
Operation; this is estimated to be $3,000,000 over the next 12
months. Currently, the Registrant is meeting its funding
requirements through financing provided by the Alpha Venture
Capital, Inc. through a Common Stock Purchase Agreement between
the Registrant and this firm Alpha Venture Capital, Inc., dated
September 28, 1999 (see Exhibit 4.22 to this Form 10-KSB, and the
discussion under Market For Common Equity And Related Stockholder
Matters). However, there is no guarantee that this funding
source will be available in the future.
The current funds available to the Company, and the revenue
generated by Top Sports and PowerClick, will not be adequate for
it to be competitive in the areas in which it intends to operate,
and may not be adequate for the Registrant to survive.
Therefore, the Company will need to raise additional funds in
order to fully implement its business plan. The Company's
continued operations therefore will depend upon its ability to
raise additional funds through bank borrowings, equity or debt
financing. There is no assurance that the Company will be able
to obtain additional funding when needed, or that such funding,
if available, can be obtained on terms acceptable to the Company.
If the Company cannot obtain needed funds, it may be forced to
curtail or cease its activities. If additional shares were
issued to obtain financing, current shareholders may suffer a
dilution on their percentage of stock ownership in the Company.
(9) Uncertainty Due to Year 2000 Issue. The Year 2000
issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in
errors when information using the year 2000 date is processed.
In addition, similar problems may arise in some systems, which
use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 issue may be experienced
after January 1, 2000, and if not addressed, the impact on
operations and financial reporting may range from minor errors to
significant system failure which could affect the Registrant's
ability to conduct normal business operations. This creates
potential risk for all companies, even if their own computer
systems are Year 2000 compliant. It is not possible to be
certain that all aspects of the Year 2000 issue affecting the
Registrant, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
The Registrant currently believes that its systems are Year 2000
compliant in all material respects. Although management is not
aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the Registrant
may experience serious unanticipated negative consequences (such
as significant downtime for one or more of its suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of customers may be affected by Year 2000
issues. The Registrant does not currently have any information
about the Year 2000 status of its potential material suppliers.
The Registrant's Year 2000 plans are based on management's best
estimates.
(c) Forward Looking Statements.
The foregoing Plan of Operation contains "forward looking
statements" within the meaning of Rule 175 under the Securities
Act of 1933, as amended, and Rule 3b-6 under the Securities Act
of 1934, as amended, including statements regarding, among other
items, the Registrant's business strategies, continued growth in
the Registrant's markets, projections, and anticipated trends in
the Registrant's business and the industry in which it operates.
The words "believe," "expect," "anticipate," "intends,"
"forecast," "project," and similar expressions identify forward-
looking statements. These forward-looking statements are based
largely on the Registrant's expectations and are subject to a
number of risks and uncertainties, certain of which are beyond
the Registrant's control. The Registrant cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in
the market price of ingredients used in the Registrant's products
and the level of expenses incurred in the Registrant's
operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained
herein will in fact transpire or prove to be accurate. The
Registrant disclaims any intent or obligation to update "forward
looking statements."
ITEM 7. FINANCIAL STATEMENTS.
Financial statements as of and for the four month period
ended on December 31, 1998, and the twelve month period ended
December 31, 1999, are presented in a separate section of this
report following Part IV.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable
PART III.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS AND COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.
(a) Directors and Executive Officers.
The names, ages, and respective positions of the directors and
executive officers of the Registrant are set forth below. The
Directors named below will serve until the next annual meeting
of the Registrant's stockholders or until their successors are
duly elected and have qualified. Directors are elected for a
one-year term at the annual stockholders' meeting. Officers
will hold their positions at the will of the board of directors,
absent any employment agreement, of which none currently exist
or are contemplated. There are no arrangements,
agreements or understandings between non-management
shareholders and management under which non-management
shareholders may directly or indirectly participate in or
influence the management of the Registrant's affairs. There are
legal proceedings involving the officers and directors of the
Registrant (please see Item 3. Legal Proceedings for a
description of these proceedings).
Thomas S. Hughes, Chief Executive Officer/Director.
Mr. Hughes, Age 52, has been President and a Director of the
Registrant since March 1997. From 1993 to the present, he has
also served as the President of Electronic Transactions &
Technologies, a privately held Nevada corporation which developed
terminals for wireless home and internet applications.
Jack M. Hall, Secretary/Director.
Mr. Hall, age 72, is currently President of Hall
Developments, a real estate development company he founded in
1991, which employs a staff of 10 people. Mr. Hall spends
approximately 20 hours per week searching out strategic alliances
for the Registrant. Mr. Hall joined the Registrant as Secretary
and a Director in March 1997.
Diane Hewitt, Treasurer/Director.
Ms. Hewitt, age 51, has been an interior designer since
1991. Currently she owns and manages her own firm, D. Diane
Hewitt Designs. This firm's expertise is churches and employs a
staff of five people. Ms. Hewitt currently devotes approximately
25 hours per week in working with the Registrant's image
development and consulting with the Registrant's advertising
firm. Ms. Hewitt joined the Registrant as Treasurer and a
Director in March 1997.
(b) Key Employee.
Anthony J. Bayne, Senior Vice President of Operations.
Mr. Bayne, age 33, received his Bachelor of Science degree
in 1992 from Simon Greenleaf University, and his J.D. degree from
the same school in 1994. In 1998, he was awarded an LL.M. degree
in taxation from Washington School of Law. Mr. Bayner is
licensed as an attorney in the State of California. From January
1995 to February 2000, Mr. Bayne served as a deputy public
defender in the Los Angeles County Public Defender's Office. In
this position, he represented defendants in all stages of
criminal proceedings though trial, directed investigations,
appointed experts, and planned case strategy. For the period of
February 2000 to April 2000, Mr. Bayne was in private practice
Rancho Palo Verdes, California. He joined the Registrant in his
current position on April 27, 2000.
(c) Compliance with Section 16(a) of the Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires
executive officers and directors, and persons who beneficially
own more than 10% of any class of the Registrant's equity
securities to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission
("SEC"). Executive officers, directors and beneficial owners of
more than 10% of any class of the Registrant's equity securities
are required by SEC regulations to furnish the Registrant with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to
the Registrant during or with respect to fiscal 1999, and certain
written representations from executive officers and directors,
the Registrant is aware that Mr. Hughes and Ms. Hall failed to
report certain stock issuances to them between September 1999 and
March 2000. A Form 4 for each of these issuances is now in the
process of being prepared for filing. The Registrant is unaware
of any other filings that have not been timely made.
ITEM 10. EXECUTIVE COMPENSATION.
Summary Compensation Table
Annual compensation Long-term
compensation
Awards Payouts
Other Securi All
Annual ties other
Name and compen Restrict under compen
Principal Year Salary Bonus sation stock lying LTIP sation
Position award options payouts
SARs
($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Thomas S. 1999 79,215 0 0 0 0 0 0
Hughes, 1998 0 0 0 0 0 0 0
Chief 1997 0 0 0 750,000 0 0 0
Executive
Off.
0
Jack M. Hall 1999 21,000 0 0 0 0 0 0
Secretary 1998 0 0 0 0 0 0 0
1997 0 0 0 0 0 0 0
Diane
Hewitt 1999 79,075 0 0 46,875 0 0 0
Treasurer 1998 0 0 0 0 0 0 0
1997 0 0 0 0 0 0 0
Employment Contract.
As of December 31, 1999, the Registrant had not entered into
any employment agreement with any officer and/or director of the
Registrant.
Other Compensation.
(a) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
Registrant in the event of retirement at normal retirement date
as there was no existing plan as of December 31, 1999 provided
for or contributed to by the Registrant.
(b) No remuneration is proposed to be paid in the future
directly or indirectly by the Registrant to any officer or
director since there was no existing plan as of December 31, 1999
which provides for such payment, including a stock option plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information regarding the
beneficial ownership of shares of the Registrant's common stock
as of May 1, 2000 (162,394,801 issued and outstanding) by (i) all
stockholders known to the Registrant to be beneficial owners of
more than 5% of the outstanding common stock; and (ii) all
directors, executive officers, and key employees of the
Registrant, individually and as a group:
Title of Name and Address of Amount of Percent
Class Beneficial Owner Beneficial of
Ownership(1) class
Common Hughes Net Income 8,533,500(2) 5.25%
Stock Charitable Remainder Unitrust
c/o Anthony J. Bayne, Esq.
2500 Via Cabrillo Marina
Suite 300
San Pedro, CA 90731
Common Diane Hewitt 1,157,500 0.71%
Stock 2500 Via Cabrillo Marina
Suite 112
San Pedro, CA 90731
Common Thomas S. Hughes 150,000 0.09%
Stock 2500 Via Cabrillo Marina
Suite 112
San Pedro, CA 90731
Common Jack M. Hall 0 0.00%
Stock 2500 Via Cabrillo Marina
Suite 112
San Pedro, CA 90731
Common Anthony J. Bayne, Esq. 10,000 0.006%
Stock 2500 Via Cabrillo Marina
Suite 300
San Pedro, CA 90731
Common Shares of all directors, 9,840,000 5.95%
Stock executive officers, and key
employees as a group
(4 persons)
(1) Except as noted in footnote 2 below, each person has sole
voting power and sole dispositive power as to all of the shares
shown as beneficially owned by them
(2) The trustor of this trust is Thomas S. Hughes. Thomas S.
Hughes is the trustee of the trust; Lawrence B. Donoghue, Esq. is
the special trustee, and as such has the voting power and power
over the disposition of the Registrant's shares under this trust.
In addition, Mr. Hughes is the lifetime net income beneficiary of
this trust, and the remainder beneficiary is Philosopher Kings
and Queens, a California nonprofit public benefit corporation
(according to information provided by Mr. Hughes). According to
information provided by Mr. Hughes, this trust is irrevocable.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the past two fiscal years, certain transactions which
occurred between the Registrant and its officers and directors
are set forth below. With respect to each such transaction, the
Registrant believes that the terms of each transaction were
approximately as favorable to the Registrant as could have been
obtained from an unrelated third party:
(a) On February 18, 1997, Leggoons, Inc. entered into an
Agreement to License Assets from Home Point of Sales,
Inc.("HPOS") (now know as Electronic Transactions & Technology -
"ET&T") (see Exhibit 10.1 to this Form 10-KSB). ET&T is a
privately held corporation 70% owned by Mr. Hughes, President of
the Registrant, which is focused on the emergence of the Personal
Encrypted Remote Financial Electronic Card Transactions industry
(although this agreement was entered into prior to Mr. Hughes
becoming affiliated with the Registrant, it is included here
since certain of the conditions under that agreement have not
been completely fulfilled, as discussed below). This technology
will provide consumers with the option to instantly pay bills or
impulse purchase from home with real time cash transactions with
the usage of simple equipment such as the eCashPad.
The assets included under this agreement are the following: (a)
The name "Betting, Inc.", as trademarked by HPOS; (b) The
Wagering Gate (receive incoming data transfer commands from the
Host Center and other competitive Host Centers who have received
ATM and SMART card wagering payment from off site home or office
locations and then who command the Wagering GATE to alert the
recipient gaming companies that they have been paid and to
respond back with an acknowledgement of such payment; and, the
general promotion and education of home ATM and SMART card
wagering over the Internet through the HPOS Secure Computer
Keyboard or over the telephone through the HPOS stand alone
Infinity unit); (c) the specific application of Wagering with an
ATM card or SMART card with the Secure Computer Keyboard (any
other uses of the Secure Computer Keyboard, such as Bill Pay or
Impulse Purchase that are not Wagering transactions, are not
included); (d) the HPOS developed Merchant Response Software for
the specific application only of transacting Off Site ATM and
Smart card Wagering through the Wagering Gate; and (e) HPOS'
interest in the use of and revenue from the HPOS Personal
Encrypted Remote Financial Electronic Card transaction relating
to the Wagering Business in all HPOS partner countries.
Under terms of this licensing agreement, the Registrant is to
issue 2,900,000 shares of restricted common stock to HPOS as the
total consideration in exchange for licensing home ATM card and
SMART card wagering technology developed by HPOS. Of this
amount, 2,755,000 shares were placed in escrow subject to
cancellation on February 10, 1998, in the event the bid price of
the common stock of the Registrant is not at least $3.00 per
share for any twenty consecutive day period as reported on the
NASD's Electronic Bulletin Board or NASDAQ's Small Cap Market
from the date of the agreement through February 10, 1998 (see
Exhibit 10.2 to this Form 10-KSB).
As of the date of this Form 10-KSB, the terms of the Licensing
Agreement have not been met by the Registrant. However, the
Registrant has entered into amendment(s) of the original
agreement that provide for an extension of the cancellation
deadline from February 10, 1998, to September 1, 2001, subject to
certain conditions specified in the agreement. All conditions
set forth in the original agreement need to be met on or before
September 1, 2001.
The License Agreement also provides that in the event that the
bid price for the common stock of the Registrant is more than
$3.00 per share for any twenty consecutive day period, then HPOS
shall have the option to purchase up to 13,822,000 additional
shares of the Registrant common stock at an exercise price of
$.30 per share. To date, the conditions of this provision have
not been met.
Under the terms of this license agreement, it was the
intention of the parties hereto that if and when any additional
shares of the common stock of Leggoons (now the Registrant) are
issued to the public or any employees, HPOS' (now ET&T's)
ownership interest in the Registrant shall be and remain no less
than 60% and that ownership interest of the current shareholders
of Leggoons (James Clinton) shall, at that time, be no less than
10%. ET&T has never sought to enforce this provision in this
license agreement. Between June 9, 1999 and November 24, 1999,
the Registrant has issued a total of 1,850,000 shares to James
Clinton or his nominees based on the stated reason that
compliance with said 10% provision in such license agreement was
required. Shares issued under said provision of this license
agreement were not issued for consideration and therefore may not
have been properly issued in compliance with Missouri Revised
Statutes 351.160 (which governed the Registrant prior to its
redomicile to the State of Nevada on June 1, 1999) and Nevada
Revised Statutes 78.211.
(b) On April 28, 1997, the Registrant entered into a Host
Processing Agreement with ET&T for the purpose of having ET&T act
as the bank host processing for all Registrant transactions that
are sent by terminals that read credit cards or ATM cards (see
Exhibit 10.3 to this Form 10-KSB). ET&T is to charge the
Registrant a fee of $0.25 per transaction or 2.5% of the wager
being sent by the Registrant to gaming operators. These
transactions are to originate from globally placed Registrant
equipment and/or Registrant licensed operators.
(c) On March 27, 1998, the Registrant entered into a License
Agreement with ET&T for the purpose of licensing additional
technology for processing electronic banking transactions (see
Exhibit 10.4 to this Form 10-KSB). This agreement states that
ET&T licenses the following ET&T products to the Registrant for
the exclusive global usage of wagering by PERFECT originated ATM
cards, credit cards, and smart cards:
The PayMaster, defined as a stand alone terminal that attaches to
phone lines and which calls the ET&T host processing center with
bank data.
The SLICK, defined as a stand alone keyboard terminal that
attaches to phone lines and call the ET&T host processing center
with bank data that has bypassed the Internet.
The PocketPay, defined as a pocket sized terminal and telephone
that sends bank data by wireless transmission to the ET&T host
processing center.
The TV Pin Pad Remote, defined as a set top box and TV remote
that sends bank data by landline dial up transmission to the ET&T
host processing center.
Each ET&T product is exclusively licensed to the Registrant on a
global basis for the application of PERFECT wagering at a
licensing fee of $2,000,000 each. The duration of the exclusive
license is 20 years. The licensing fee is to be paid by the
Registrant at the rate of $30,000 per month; however, under the
terms of this License Agreement, this fee is not due and payable
until the technology for a particular product covered by the
license has been perfected and is ready for public use. As of
the date of this Form 10-KSB, only the PayMaster has been
perfected. This liability was satisfied in full in June 1999
through the issuance of common stock (as reflected in the Form
10-QSB for the quarter ended June 30, 1999). None of the other
products covered by the License Agreement had been perfected,
and, therefore, no licensing fee is required to be paid at this
time (when this does occur, a statement to that effect will be
placed in a future report filed by the Registrant).
(d) The Registrant and ET&T and Mr. Hughes entered into a
Promissory Note, dated December 1, 1999 (see Exhibit 10.19 to
this Form 10-KSB), to reflect the principal sum of $2,836,411
owed by the latter two to the Registrant for various sums paid by
the Registrant to ET&T, as follows: (a) the sum resulting from
the credit to Mr. Hughes and ET&T of the license fee owed by the
Registrant to ET&T, as set forth above, and the charge to ET&T of
5,400,000 shares issued to that firm in 1999 and the charge to
Mr. Hughes of 4,000,000 shares issued to him in 1999; and (b) the
oral assumption by the Registrant of payment of a promissory note
in favor of Unipay, Inc. whereby ET&T promised to pay the
principal sum of $690,000 with interest thereon at 8.5% accruing
from April 26, 1999, the date of this note (see Exhibit 10.5 to
this Form 10-KSB) (through December 31, 1999, the Registrant had
paid a total of $93,800 towards this note). The amount set forth
in the Promissory Note is secured by the 9,400,000 shares of the
Registrant owned by Mr. Hughes and ET&T as reflected in an
accompanying Security Agreement (see Exhibit 10.20 to this Form
10-KSB).
PART IV.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) Index to Financial Statements and Schedules Page
Report of Independent Accountants 37
Consolidated Balance Sheet
as of December 31, 1999 38
Consolidated Statements of Operations for the year
ended December 31, 1999, the transition period ended
December 31, 1998, and the year ended August 31, 1998 39
Consolidated Statement of Shareholders' Deficit
for the year ended December 31, 1999, the
transition period ended December 31, 1998,
and the year ended August 31, 1998 40
Consolidated Statements of Cash Flows for the year
ended December 31, 1999, the transition period ended
December 31, 1998, and the year ended August 31, 1998 42
Notes to Consolidated Financial Statements 44
(b) Reports on Form 8-K. The following reports on Form 8-K were
filed during the last quarter of the fiscal year covered by this
report, as follows:
(1) A Form 8-K was filed on November 16, 1999 which reflected
the following:
The Registrant acquired a significant amount of assets, other
than in the ordinary course of business, as follows:
Purchase of all the issued and outstanding stock of Isla
Escondida, S.A., a Costa Rica Corporation. This acquisition made
in connection with the transfer of ownership of the 777WINS.com
gaming website to the Registrant (see discussion under Business
of the Registrant for a more complete description of this
transaction).
Effective on September 7, 1999, the Registrant acquired the
website known as "theArtAuction.com" from PowerClick, a Nevada
corporation, through an Acquisition Agreement (see discussion
under Business of the Registrant for a more complete description
of this transaction).
(2) A Form 8-K was filed on November 15, 1999 which reflected
the following:
The Registrant has acquired a significant amount of assets, other
than in the ordinary course of business, as follows:
Effective on May 6, 1999, the Registrant acquired all of the
assets of Rogel Technologies (see discussion under Business of
the Registrant for a more complete description of this
transaction).
(3) A Form 8-K/A was filed on November 15, 1999 which reflected
the following:
The Registrant has acquired a significant amount of assets, other
than in the ordinary course of business, as follows:
Effective on August 12, 1999, the Registrant acquired all of the
stock and other assets of eBet.com, Inc., a Nevada corporation
(see discussion under Business of the Registrant for a more
complete description of this proposed transaction).
Effective on August 10, 1999, the telephone number of the
Registrant was changed to: (310) 514-9482.
(c) Exhibits Included or Incorporated by Reference Herein. See
Exhibit Index.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
eConnect
Dated: May 5, 2000 By: /s/ Thomas S, Hughes
Thomas S. Hughes, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated:
Signature Title Date
/s/ Thomas S. Hughes President/Chief Executive Officer/ May 5, 2000
Thomas S. Hughes Officer
/s/ Jack M. Hall Secretary/Director May 5, 2000
Jack M. Hall
/s/ Diane Hewitt Treasurer (Principal Financial and May 5, 2000
Diane Hewitt Accounting Officer)/Director
L.L. Bradford & Company, LLC
Certified Public Accountants & Consultants
2901 El Camino Avenue, Suite 105
Las Vegas, Nevada 89102
(702) 735-5030 facsimile (702) 735-4854
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
eConnect
San Pedro, California
We have audited the accompanying consolidated balance sheet of
eConnect as of December 31, 1999, and the related statements of
operations, stockholders' deficit, and cash flows for the year
ended December 31, 1999 and for the transition period ended
December 31, 1998. These consolidated financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audit. The consolidated
financial statements of eConnect for the year ended August 31,
1998, were audited by another auditor whose report dated April 7,
1999, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the December 31, 1999 and December 31, 1998
consolidated financial statements referred to above present
fairly, in all material respects, the financial position of
eConnect as of December 31, 1999, and the results of its
operations and its cash flows for the year and transition period
then ended in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 11 to the consolidated financial
statements, the Company has suffered losses from operations,
current liabilities exceed current assets and has a net
stockholders' deficiency, all of which raise substantial doubt
about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 11.
The consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
/s/ L.L. Bradford & Company, LLC
L.L. Bradford & Company, LLC
March 24, 2000
(except for Note 12, as to
which the date is April 17, 2000)
Las Vegas, Nevada
eCONNECT
CONSOLIDATED BALANCE SHEET
December 31, 1999
ASSETS
Current assets
Cash $ 126,172
Stock subscriptions receivable 220,176
Due from related party 250,000
Total current assets 596,348
Other assets
Investments, net 93,883
Goodwill, net 208,333
Other intangibles, net 755,675
1,057,891
Total assets $1,654,239
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Officer bonus payable $4,800,000
Accounts payable 1,075,270
Accrued liabilities 90,680
Due to related party 613,010
Stockholder loan payable 350,000
Total current liabilities 6,928,960
Total liabilities 6,928,960
Commitments and contingencies -
Stockholders' deficit
Common stock; $.001 par value;
200,000,000 shares authorized, 110,601,173 shares
issued and outstanding 110,601
Additional paid-in capital 28,087,363
Due from related party - secured by Company's common
stock (2,980,882)
Stock subscription payable 81,546
Accumulated deficit (30,573,349)
Total stockholders' deficit (5,274,721)
Total liabilities and stockholders' deficit 1,654,239
See Accompanying Notes to Financial Statement
eCONNECT
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Transition Year
Ended Period Ended Ended
December 31 December 31 August 31
1999 1998 1998
Revenue $ 40,000 $ - $ -
Operating expenses
Consulting 7,664,088 768,050 122,020
Officers compensation 5,026,165 - -
Research and development 3,490,411 - -
General and administrative 2,886,080 8,088 74,948
Total operating expenses 19,066,744 776,138 196,968
Net loss from operations (19,026,744) (776,138) (196,968)
Other income (expense)
Interest income 144,471 - -
Loss on investments (4,391,120) - -
Total other income (expense) (4,246,649) - -
Net loss before provision
for income taxes (23,273,393) (776,138) (196,968)
Provision for income taxes - - -
Net loss (23,273,393) (776,138) (196,968)
Basic and diluted loss per
common share (0.63) (0.05) (0.02)
Basic and diluted weighted
average common shares
outstanding 36,868,312 14,346,554 10,994,465
See Accompanying Notes to Financial Statement
eCONNECT
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
Due
From
Common Related
Stock Party Total
Number Add'l Secured Stock Accumu Stockholder
Of Paid in by Subscrip lated Defict
Shares Amount Capital Companys tion Deficit
Stock Payable
Balance
September
1 1997 7,843,234 7,843 4,926,124 - - (5,270,634) (336,667)
Common shares
issued for
services 5,341,000 5,341 147,819 - - - 153,160
Common shares
issued for
payment on
due to related
party 750,000 750 34,385 - - - 35,135
Common shares
issued for
payment on
accounts
payable 350,000 350 20,650 - - - 21,000
Net loss - - - - - (196,968)(196,968)
Balance
August
31, 1998 14,284,234 14,284 5,128,978 - - (5,467,602)(324,340)
Common shares
issued for
services 161,000 161 7,889 - - - 8,050
Common shares
issued for
cash 30,000 30 11,970 - - - 12,000
Net loss - - - - - (776,138) (776,138)
Balance
December
31, 1998 14,475,234 14,475 5,148,837 - - (6,243,740)(1,080,428)
Stockholder
Loan 9,400,000 9,400 2,827,011 (2,980,882) - - (144,471)
Stock
Subscription
Payable - - - - 81,546 - 81,546
Common
shares
issued for
services 37,299,736 37,300 10,205,932 - - - 10,243,232
Common
shares
issued for
interest 3,410,613 3,411 640,349 - - - 643,760
Common
shares
issued for
stock
subscription
receivable 716,966 717 219,459 - - - 220,176
Common
shares
issued for
principal
payments
on long
term debt 1,589,387 1,589 298,411 - - - 300,000
Common
shares
issued for
cash 16,428,136 16,428 2,804,209 - - - 2,820,637
Common
shares
issued for
acquisi
tion
of Isla
Escondida
S.A. 18,710,000 18,710 3,533,091 - - - 3,551,801
Common
shares
issued for
acquisi
tion
www.theArt
Auction.
Com 2,165,000 2,165 961,804 - - - 963,969
Common
shares
issued for
joint
venture 1,650,000 1,650 323,700 - - - 325,350
Common
shares
issued
for
acquisi
tion
of Top
Sports,
S.A. 1,000,000 1,000 72,100 - - - 73,100
Common
shares
issued for
stock
dividend 3,756,101 3,756 1,052,460 - - (1,056,216) -
Net loss - - - - - (23,273,393) (23,273,393)
Balance
December
31, 1999
110,601,173 110,601 28,087,363 (2,980,882) 81,546 (30,573,349) (5,274,721)
See Accompanying Notes to Financial Statement
eCONNECT
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Transition Year
Ended Period Ended
Ended
December December August 31
1999 1998 1998
Cash flows from operating
activities:
Net loss (23,273,393) (776,138) (196,968)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization 207,019 - -
Common shares issued for
interest expense 643,760 - -
Common shares issued for
Services 10,243,232 8,050 153,160
Loss on investments 4,391,120 - -
Changes in operating assets
and liabilities:
Increase in due from related
Party (250,000) - -
Increase in due from related
party - secured by Company's
common stock (757,481) - -
Increase in officer bonus
Payable 4,800,000 - -
Increase (decrease) in
accounts payable (62,251) 759,750 21,793
Increase in accrued
Liabilities 45,111 24,169 3,001
Increase in due to related
Party 613,010 - -
Increase (decrease) in
stockholder loan payable 350,000 (18,969) 18,969
Net cash used by
operating activities (3,049,873) (3,138) (45)
Cash flows from investing
activities:
Payments for investment (35,000) - -
Net cash used by
investing activities (35,000) - -
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt 500,000 - -
Principal payments on long-
term debt (200,000) - -
Proceeds from issuance of
common stock 2,820,637 12,000 -
Proceeds from issuance of
stock subscription payable 81,546 - -
Net cash provided by
financing activities 3,202,183 12,000 -
Net increase (decrease) in cash 117,310 8,862 (45)
Cash, beginning of period 8,862 - 45
Cash, end of period 126,172 8,862 -
Schedule of non-cash investing
and financing activities:
18,710,000 common shares
issued for the acquisition of
Isla Escondida, S.A. 3,551,801 - -
2,165,000 common shares
issued for the acquisition
of www.theArtAuction.com 963,969 - -
1,650,000 common shares
issued for joint venture 325,350 - -
1,000,000 common shares
issued for the acquisition
of a 50% interest in Top
Sports, S.A. 73,100 - -
9,400,000 common shares
issued in exchange for
due from related party -
secured by Company's
common stock 2,836,411 - -
716,966 common shares issued
in exchange for stock
subscription receivable 220,176 - -
3,756,101 common shares
issued for a 5% stock
dividend 1,056,216 - -
1,589,397 common shares
issued for principal
payments on long-term debt 300,000 - -
Acquisition of investment in
exchange for due from related
party - secured by Company's
common stock 706,810 - -
5,341,000 common shares
issued for payment on
due to related party - - 35,135
350,000 common shares issued
for payment on
accounts payable - - 21,000
See Accompanying Notes to Financial Statement
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
POLICIES
Description of business - eConnect (the "Company") currently has
two divisions. The first division is primarily comprised of on-
line gaming. Presently, the on-line gaming division has not
commenced operations but plans to do so in the near future
through an off-shore company. The second division is comprised
of technology developments for ATM cards with PIN access or smart
card payments (same-as-cash payments whereby the merchant can
reverse the transaction) using the Personal Encrypted Remote
Financial Electronic Card Transactions ("PERFECT").
History - eConnect (formerly Betting, Inc.) was originally
incorporated in the State of Missouri on September 1, 1981 under
the name of Handy-Top, Inc. The Company underwent several name
changes until May 1993, when it changed its name to Leggoons,
Inc. As Leggoons, Inc., the Company was engaged in the design,
manufacturing and distribution of apparel and related
accessories. In June 1996, Leggoons, Inc. transferred all of its
assets to a third party assignee under an " Assignment for the
Benefit of Creditors" ("Assignment"). An Assignment is a
business liquidation device available as an alternate to
bankruptcy. As such, Leggoons, Inc. continued as a shell
corporation with no business operations.
In February 1997, the Company entered into an agreement to
license assets from Electronic Transaction Technology ("ET&T"),
formerly known as Home Point of Sales, Inc., for the purpose of
licensing certain technology for the development of PERFECT.
ET&T is a privately held corporation with a majority interest
owned by Thomas S. Hughes, President of the Company. This
technology developed by ET&T would provide consumers with the
option to instantly pay bills or make purchases from home with
real-time cash transactions. In March 1997, Thomas S. Hughes,
Chairman of ET&T, was elected the Chairman and President of the
Company and concurrently changed the Company's name to Betting,
Inc.
In May 1999, an Agreement and Plan of Merger was consummated
between the Company and Betting, Inc., a non-operating privately
held Nevada corporation ("Betting-Nevada"), whereby no shares
were issued between companies. Effective in June 1999, the
Articles of Merger were filed with the Nevada Secretary of State,
which formally resulted in the re-domicile of the Company from
the State of Missouri to the State of Nevada. Under generally
accepted accounting principles, the merger with Betting-Nevada is
considered to be a reorganization in substance, rather than a
business combination since Betting-Nevada had no assets,
liabilities or operations, and the Company has since re-domiciled
in the State of Nevada through Betting-Nevada. Accordingly, the
accounting for the merger has been recorded at historical cost in
a manner similar to a pooling of interests ("as-if pooling of
interest accounting"), and no goodwill was recorded.
In June 1999, a Certificate of Amendment to the Articles of
Incorporation changed the name of the Company to eConnect and
increased the number of authorized common shares to 100,000,000.
On August 23, 1999, a Certificate of Amendment to the Articles of
Incorporation was filed with the Nevada Secretary of State
further increasing the number of authorized common shares to
200,000,000.
Business combination and investments - The business combination
has been accounted for under the purchase method of accounting,
therefore the Company includes the results of operations of the
acquired business from the date of acquisition. Net assets of
the company acquired are recorded at fair value as of the date of
acquisition. The excess of the acquired business' purchase price
over the fair value of its tangible and identifiable intangible
assets is then included in goodwill in the accompanying
consolidated balance sheet.
Investments in affiliated entities in which the Company has the
ability to exercise significant influence, but not control, and
generally is an ownership interest of the investee's voting stock
between 20% and 50%, are accounted for under the equity method of
accounting. Accordingly, under the equity method of accounting,
the Company's share of the investee's earnings or losses are
included in the consolidated statements of operations. The
Company records its investments accounted for under the equity-
method as "Investments" on the consolidated balance sheet and its
share of the investee's earnings or losses in "Equity earnings or
losses of investees" on the consolidated statement of operations.
The portion of the Company's investment in an investee that
exceeds its claim of the net assets of the investee, if any, is
treated as goodwill and amortized over a period of three years.
Principles of consolidation - The consolidated financial
statements include the accounts of the Company and its
subsidiary. All significant intercompany balances and
transactions have been eliminated.
Definition of fiscal year - In June 1999, the Company changed its
fiscal year-end from August 31 to December 31. Accordingly, the
Company reported a transition period, which began September 1,
1998 and ended on December 31, 1998 (referred to herein as the
"transition period").
Reclassification - Certain prior year balances have been
reclassified to conform to the current year presentation.
Use of estimates - The preparation of consolidated financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
Goodwill and intangible assets - Goodwill represents the excess
of an acquired business' purchase price over the fair value of
its assets, which is recorded for business acquisitions accounted
for under the purchase method. Goodwill is presented net of
related accumulated amortization and is being amortized over the
estimated useful life.
The Company periodically evaluates whether events and
circumstances have occurred that may warrant revision of the
estimated useful life of goodwill and intangible assets or
whether the remaining balance of goodwill and intangible assets
should be evaluated for possible impairment. The Company uses an
estimate of the related undiscounted cash flows over the
remaining life of the goodwill and intangible assets in measuring
their recoverability.
Fair value of financial instruments - The carrying amounts for
the Company's cash, stock subscriptions receivable, due to/from
related party, officer bonus payable, accounts payable, accrued
liabilities, stockholder loan payable and stock subscription
payable approximate fair value due to the short-term maturity of
these instruments.
Earnings (loss) per share - Basic earnings (loss) per share
excludes any dilutive effects of options, warrants and
convertible securities. Basic earnings (loss) per share is
computed using the weighted-average number of outstanding common
shares during the applicable period. Diluted earnings per share
is computed using the weighted average number of common and
common stock equivalent shares outstanding during the period.
Common stock equivalent shares are excluded from the computation
if their effect is antidilutive.
Income taxes - The Company accounts for its income taxes in
accordance with Statement of Financial Accounting Standards No.
109, which requires recognition of deferred tax assets and
liabilities for future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
date.
As of December 31, 1999, the Company has available net operating
loss carryovers of approximately $30 million that will expire in
various periods through 2019. Such losses may not be fully
deductible due to the significant amounts of non-cash service
costs and the change in ownership rules under Section 382 of the
Internal Revenue Code. The Company has established a valuation
allowance for the full tax benefit of the operating loss
carryovers due to the uncertainty regarding realization.
Comprehensive income (loss) - The Company has no components of
other comprehensive income. Accordingly, net loss equals
comprehensive loss for all periods.
Advertising costs - The Company recognizes advertising expenses
in accordance with Statement of Position 93-7 "Reporting on
Advertising Costs." Accordingly, the Company expenses the costs
of producing advertisements at the time production occurs, and
expenses the costs of communicating advertisements in the period
in which the advertising space or airtime is used. Internet
advertising expenses are recognized based on the terms of the
individual agreements, generally over the greater of the number
of impressions delivered over the total number of contracted
impressions, or a straight-line basis over the term of the
contract. Advertising costs of approximately $50,000 were
incurred for the year ended December 31, 1999. No advertising
costs were incurred for the transition period ended December 31,
1998 or the year ended August 31, 1998.
Research and development costs - Research and development costs
are charged to expense when incurred. Costs incurred to
internally develop software, including costs incurred during all
phases of development, are charged to expense as incurred.
Stock-based compensation - The Company accounts for stock-based
employee compensation arrangements in accordance with provisions
of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of Statements of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, compensation expense is based
on the difference, if any, on the date of the grant, between the
fair value of the Company's stock and the exercise price. The
Company accounts for stock issued to non-employees in accordance
with the provisions of SFAS No. 123 and the Emerging Issues Task
Force ("EITF") Issue No. 96-18.
New accounting pronouncements - In November 1999, the EITF
commenced discussions on EITF No. 99-17, "Accounting for
Advertising Barter Transactions." The EITF provides guidance on
the recognition of Internet barter advertising revenues and
expenses under various circumstances. The EITF reached a
conclusion that revenues and expenses from advertising barter
transactions should be recognized at the fair value of the
advertising surrendered or received only when an entity has a
historical practice of receiving or paying cash for similar
advertising transactions. The Company does not expect that the
adoption of EITF No. 99-17 will have a material impact on its
consolidated financial statements.
2. BUSINESS COMBINATION
The Company initiated an acquisition of Isla Escondida, S.A.
during 1999. This acquisition was recorded using the purchase
method of accounting under APB No. 16. The results of operations
for the acquired company have been included in the financial
results of the Company from the date of such transaction forward.
In accordance with APB No. 16, all identifiable assets were
assigned a portion of the cost of the acquired company (purchase
price) on the basis of their respective fair values. Intangible
assets were identified and valued by considering the Company's
intended use of the acquired assets and analysis of data
concerning products, technologies, markets, historical
performance, and underlying assumptions of future performance.
The economic environment in which the Company and the acquired
company operate were also considered in the valuation analysis.
In August 1999, the Company completed its acquisition of Isla
Escondida, S.A. (hereafter "777WINS"), a Costa Rica Corporation
with the ability to provide on-line gaming through its website
portal www.777WINS.com. In connection with the acquisition, the
Company issued 18,710,000 shares of the Company's common stock.
Substantially all of the purchase price, approximately
$3,552,000, was allocated to goodwill. Goodwill is being
amortized on a straight-line basis over the estimated useful life
of three years. As of December 31, 1999, the Company evaluated
the balance and useful life of goodwill related to 777WINS and
determined that approximately $3,302,000 had no future benefit
and, accordingly, recorded a loss on investment for the same
amount. For the year ended December 31, 1999, amortization
expense related to this investment approximated $42,000.
3. INVESTMENTS
In December 1999, the Company acquired 50% of the outstanding
capital stock of Top Sports, S.A. ("the Investee") in exchange
for $35,000 and 1,000,000 shares of the Company's common stock.
The Company has accounted for its 50% ownership interest in the
Investee under the equity-method. As of December 31, 1999, the
investment in the Investee exceeded the Company's share of the
underlying net assets by approximately $85,300. The excess of
the underlying net assets in the Investee is being amortized on a
straight-line basis over the estimated useful life of three
years. For the year ended December 31, 1999, amortization
expense related to this investment approximated $14,000.
In September 1999, the Company entered into a joint venture with
certain parties to develop an on-line investment trading website.
In connection with the joint venture, the Company issued
1,650,000 shares of the Company's common stock. As of December
31, 1999, the Company's management has evaluated and determined
that this investment has no future value and was written off as a
loss on investment for approximately $325,000.
4. STOCK SUBSCRIPTION RECEIVABLE
The Company entered into a Regulation D Common Stock Private
Equity Line Subscription Agreement ("Subscription Agreement").
The Subscription Agreement entitles the Company to draw funds up
to $5,000,000 through the issuance of the Company's common stock
for an amount equal to 80% of the market value at the time of
each draw, which is subject to certain terms and conditions. The
Company is assessed a placement fee, as provided within the
Subscription Agreement, for funds drawn, which is equal to 8% of
each draw. As of December 31, 1999, the Company has drawn
$933,000 of the available $5,000,000. The related placement fee
totaling $74,640 has been recorded as additional paid-in capital
since this fee relates to the issuance of the Company's common
stock. In conjunction with this Subscription Agreement, the
Company issued an additional 716,966 shares of the Company's
common stock as of December 31, 1999. However, the funds related
to this additional issuance of the Company's common stock
totaling $220,176 was not fully received by the Company until
February 2000. Accordingly, the Company has recorded a stock
subscription receivable totaling $220,176 as of December 31,
1999.
5. OTHER INTANGIBLES
In February 1997, the Company entered into an agreement for the
exclusive 20-year license of certain assets of ET&T. In
satisfaction of the agreement terms, the Company reduced the
balance due from related party - secured by the Company's common
stock by approximately $707,000 based upon the fair value of this
license. The Company has estimated the fair value based upon the
amount of research and development costs incurred by ET&T. As
such, the Company has recorded such costs related to this
agreement as other intangibles. This other intangible is being
amortized on a straight-line basis over three years based upon
management's estimated useful life of such asset. Amortization
expense for the year ended December 31, 1999, approximated $118,000.
In September 1999, the Company acquired www.theArtAuction.com
from PowerClick, Inc., a domain name and website portal, to
provide on-line art auctions. In connection with the
acquisition, the Company issued 2,165,000 shares of the Company's
common stock to PowerClick, Inc. Substantially all of the
purchase price, approximately $964,000, was allocated to other
intangibles. This other intangible is being amortized on a
straight-line basis over an estimated useful life of three years.
As of December 31, 1999, the Company's management has evaluated
and determined that approximately $764,000 of this investment has
no future benefit, accordingly, the Company recorded a loss on
investment for the same amount. Amortization expense for the
year ended December 31, 1999, approximated $33,000.
6. OFFICER BONUS PAYABLE
As of December 31, 1999, the Company declared a bonus to the
Chief Executive Officer of the Company valued at $4,800,000,
which is based upon 6,000,000 shares of the Company's common
stock issued in January 2000.
7. STOCKHOLDERS' DEFICIT
Stock dividend - On September 20, 1999, the Company issued a 5%
stock dividend totaling 3,756,101 shares of the Company's common
stock to stockholders of record on September 14, 1999.
Stock option activity - The following table summarizes the
Company's stock option activity:
Number Weighted
Of Average
Shares Exercise
Price
Balance, September 1, 1998 - -
Options granted and assumed - -
Options canceled - -
Options exercised - -
Balance, December 31, 1998 - -
Options granted and assumed 15,770,000 0.40
Options canceled - -
Options exercised - -
Balance, December 31, 1999 15,770,000 0.40
The following table summarizes information about options
outstanding and exercisable at December 31, 1999:
Shares Underlying
Shares Underlying Options Outstanding Options Exercisable
Weighted
Shares Average Shares
Underlying Remaining Weighted Underlying Weighted
Range of Options Contractual Average Options Average
Exercise Outstanding Life Exercise Exercisable Exercise
Prices Price Price\
$0.20 -$1.00 15,770,000 1.0 years $ 0.40 15,770,000 $ 0.40
Pro forma disclosure - SFAS No. 123 requires companies that
follow APB No. 25 to provide a pro forma disclosure of the impact
of applying the fair value method of SFAS No. 123. Accordingly,
had compensation cost been recognized based on the fair value at
the date of grant for options granted in 1999, the pro forma
amounts of the Company's net loss and net loss per share for the
year ended December 31, 1999 would have been as follows:
December 31,1999
Net loss - as reported $(23,273,393)
Net loss - pro forma $(24,198,493)
Basic and diluted loss per share - as reported $ (0.63)
Basic and diluted loss per share - pro forma $ (0.66)
The fair value for each option granted was estimated at the date
of grant using the Black-Scholes option pricing model, assuming
no expected dividends and the following weighted average
assumptions:
December 31,1999
Average risk-free interest rates 6.50%
Average expected life (in years 1
Volatility 80%
The weighted average fair value of options granted with exercise
prices at the current fair value of the underlying stock during
1999 was $877,600. During 1999, some options were granted with
exercise prices that were below the current fair value of the
underlying stock. The weighted average fair value of options
granted with exercise prices below the current fair value of the
underlying stock during 1999 was $47,500. Compensation expense
that is recognized in providing pro forma disclosures might not
be representative of the effects on pro forma earnings for future
years because SFAS No. 123 does not apply to stock option grants
made prior to 1995.
8. RELATED PARTY TRANSACTIONS
Due from related party - As of December 31, 1999, the Company
loaned $250,000 to an officer and stockholder of the Company.
The balance is non-interest bearing and is due on demand. The
Company received repayment of this amount in January 2000.
Due to related party - During 1999, the Company assumed a note
payable from ET&T with an outstanding balance at December 31,
1999 of $613,010 in exchange for the due from related party -
secured by the Company's common stock in the same amount. The
balance is non-interest bearing and is due on demand.
Stockholder loan payable - As of December 31, 1999, a stockholder
made loans to the Company of $350,000. This outstanding balance
is comprised of $250,000, which is non-interest bearing and due
on demand; and $100,000, which bears a simple interest rate of
15% and is due on demand.
Due from related party - secured by Company's common stock - As
of December 31, 1999, the Company made loans of $2,980,882
(including accrued interest receivable of $144,471) to ET&T and
Thomas Hughes (an officer and director of the Company). The
balance is secured by approximately 9,400,000 shares of the
Company's common stock, which is owned by ET&T and Thomas Hughes,
bearing an interest rate of 10% and is due on demand.
9. COMMITMENTS AND CONTINGENCIES
Legal proceedings - From March 14, 2000 through the date of this
report, multiple legal proceedings were filed asserting the
Company and Thomas S. Hughes (an officer and director of the
Company), as well as the directors of the Company (in certain
actions), have violated Section 10(b) of the Exchange Act (false
or misleading statements and omissions which deceived stock
purchasers) and also Section 20(a) of the Exchange Act (liability
as a "controlling person" with respect to a primary violation of
securities laws). The principal allegations concern various
material misrepresentations and omissions which allegedly made
the Company's public statements, on and after November 18, 1999,
false and misleading; and artificially inflated the market for
the Company's common stock. The answers or other responses of
defendants to the initial complaints are not yet due; therefore,
management is unable to express an opinion as to the probable
outcome of these litigation matters. The Company intends to
defend itself in these litigation matters vigorously.
On March 23, 2000, the Securities and Exchange Commission ("SEC")
filed a complaint alleging the Company and Thomas S. Hughes had
violated Section 10(b) and Rule 10b-5 of the Securities Exchange
Act of 1934 (the anti-fraud provisions of that act). The
Complaint also seeks civil penalties against the Company and
Thomas S. Hughes and any additional relief within the
jurisdiction of the Court. The SEC has alleged that the Company
and Thomas S. Hughes disseminated certain press releases that
contained material misstatements. On April 6, 2000, the Company
consented to the entry of a Permanent Injunction. The court has
yet to determine whether disgorgement, civil penalties or other
relief should be assessed against the Company.
While the results of these matters cannot be predicted with
certainty, the Company's management believes that losses, if any,
resulting from the ultimate resolution of these matters will not
have a material adverse effect on the Company's consolidated
results of operations, cash flows or financial position.
However, unfavorable resolution could affect the consolidated
results of operations or cash flows for the years in which they
are resolved.
10. OTHER MATTER
On March 12, 1999, the Securities and Exchange Commission ("SEC")
filed a complaint alleging the Company had failed to make
available to the investing public current and accurate
information about its financial condition and results of
operations through the filing of periodic reports with the SEC as
required by the Securities Exchange Act of 1934. The SEC sought
to compel the Company to file the delinquent periodic reports and
enjoin the Company from further violations of the Exchange Act of
1934. The Company consented to the entry of a Final Judgment
granting the relief sought by the SEC.
11. GOING CONCERN
The Company incurred a net loss of approximately $23,000,000 for
the year ended December 31, 1999. The Company's liabilities
exceed its assets by approximately $5,300,000, and current
liabilities exceed its current assets by approximately $6,300,000
as of December 31, 1999. These factors create an uncertainty
about the Company's ability to continue as a going concern. The
Company's management has developed a plan to complete the
development of technology products to generate future revenues
and elect new directors to the board. The Company will also seek
additional sources of capital through the issuance of debt equity
financing, but there can be no assurance that the Company will be
successful in accomplishing its objectives.
The ability of the Company to continue as a going concern is
dependent on additional sources of capital and the success of the
Company's plan. The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern.
12. SUBSEQUENT EVENTS
During January 2000 through the date of this report, the Company
advanced approximately $966,000 to ET&T. These amounts advanced
have been secured by ET&T and Thomas Hughes' (an officer and
director of the Company) common stock in the Company (see Note
8), which bear an interest rate of 10% and is due on demand.
On February 9, 2000, the Company consummated an acquisition
agreement with PowerClick, Inc. whereby the Company acquired 50%
of the outstanding capital stock of PowerClick, Inc. in
consideration of $1,500,000 and 6,000,000 shares of the Company's
common stock, options to purchase 2,000,000 shares of the
Company's common stock with a price of $0.40 per share, and an
option to purchase an additional 4,000,000 shares of the
Company's common stock with a price of $0.40 per share
exercisable no sooner than April 1, 2000, but no later than April
30, 2000. This acquisition has been accounted for under the
equity method of accounting.
On March 13, 2000, the SEC suspended trading of the Company's
common stock from the Over the Counter Bulletin Board ("OTCBB") in
connection with an investigation of the Company.
The Company's common stock resumed trading on March 27, 2000;
however, from that date to the date of this report, the Company's
common stock has been trading on the National Quotation Bureau's
Pink Sheets since the Company's Company's common stock was delisted
On that date from the OTCBB due to the trading suspension. Subequent
to the filing of the Form 10-KSB with the SEC, the Company intends to
file a 15c2-11 through a market maker in order to apply for relisting
on the OTCBB.
On March 13, 2000, the Company advanced approximately $200,000 to
a director of the Company. The balance is non-interest bearing
and is due on demand.
On March 22, 2000, the Company consummated an amended and
restated employment agreement with an individual and his firm to
act as outside counsel for the Company. On April 14, 2000, the
Company terminated this individual and his firm as outside
counsel. Based upon the amended and restated employment
agreement, the remaining compensation for the term of this
agreement will be due immediately upon the termination of this
individual and his firm as outside counsel if terminated for
reasons other than good cause. In addition, any common stock and
stock warrants granted through the term of this agreement will be
considered due in the event of termination for reasons other than
good cause. Accordingly, the termination of this individual and
his firm, for reasons other than good cause, may potentially
expose the Company to incur a liability of approximately $600,000
for the remaining portion of unpaid compensation for the first,
second and third years of this agreement. Furthermore, the
termination may have accelerated the vesting of the granted
common stock and stock warrants consisting of 400,000 common
shares and 400,000 warrants exercisable at $1.00 per share. The
Company's management believes that the termination of this
individual and his firm was in good cause and intends to defend
itself in this matter vigorously.
On March 21, 2000, the Company consummated an amended employment
agreement with an individual for the position of President and
Chief Operating Officer for the Company. On April 17, 2000, the
Company terminated this individual as President and Chief
Operating Officer of the Company. Based upon the amended
employment agreement, the remaining salary for the term of this
agreement, will be due within 30 days upon the termination of
this individual if terminated for reasons other than good cause.
In addition, through the date of termination, all of the granted
stock options and warrants will vest and be exercisable for their
entire term. Accordingly, the termination of this individual,
for reasons other than good cause, may potentially expose the
Company to incur a liability of approximately $1,260,000 for the
remaining portion of unpaid salary for the first, second, third,
and fourth years of this agreement. Furthermore, the termination
may have accelerated the vesting of the granted stock options and
warrants consisting of 1,000,000 warrants exercisable at $1.00
per share, 6,000,000 stock options exercisable at $0.40 per
share, and 1,500,000 stock options exercisable at the lowest
average daily trading price of the Company's common stock within
the first 90 days of the executive's employment. The Company's
management believes that the termination of this individual was
in good cause and intends to defend itself in this matter
vigorously.
EXHIBIT INDEX
Exhibit Description
No
2 Agreement and Plan of Merger, dated June 1, 1999 (see below).
3.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registration Statement on Form
SB-2/A filed on July 22, 1999).
3.2 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.2 of the Registration
Statement on Form SB-2/A filed on July 22, 1999).
3.3 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.3 of the Registration
Statement on Form SB-2/A filed on September 3, 1999).
3.4 Bylaws of the Registrant (incorporated by reference to
Exhibit 3.3 of the Registration Statement on Form SB-2/A filed on
July 22, 1999).
4.1 Class A Warrant Agreement (incorporated by reference to
Exhibit 4.2 of Leggoons, Inc. Registration Statement on Form S-1
filed on October 28, 1993).
4.2 Retainer Stock Plan for Non-Employee Directors and
Consultants, dated April 26, 1999 (incorporated by reference to
Exhibit 4.1 of the Form S-8 filed on May 14, 1999).
4.3 Consulting and Service Agreement between the Registrant and
James Wexler, dated May 20, 1998 (incorporated by reference to
Exhibit 4.2 of the Form S-8 filed on May 14, 1999).
4.4 Consulting Agreement between the Registrant and Rogel
Patawaran, dated March 18, 1998 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on May 14, 1999).
4.5 Consulting Agreement between the Registrant and David Ninci,
dated February 22, 1999 (incorporated by reference to Exhibit 4.4
of the Form S-8 filed on May 14, 1999).
4.6 Consulting Agreement between the Registrant and Harry
Hargens, dated January 17, 1999 (incorporated by reference to
Exhibit 4.5 of the Form S-8 filed on May 14, 1999).
4.7 Consulting Agreement between the Registrant and Charlene
Charles, dated March 10, 1999 (incorporated by reference to
Exhibit 4.6 of the Form S-8 filed on May 14, 1999).
4.8 Internet Consulting Services Agreement between the
Registrant and Steve Goodman, dated May 3, 1999 (incorporated by
reference to Exhibit 4.2 of the Form S-8 filed on July 2, 1999).
4.9 Consulting Agreement between the Registrant and Rogel
Patawaran, dated June 8, 1999 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on July 2, 1999).
4.10 Consulting and Service Agreement between the Registrant and
Edward Wexler, dated May 20, 1999 (incorporated by reference to
Exhibit 4.4 of the Form S-8 filed on July 2, 1999).
4.11 Consultant Agreement between the Registrant and Richard
Epstein, dated June 3, 1999 (incorporated by reference to Exhibit
4.5 of the Form S-8 filed on July 2, 1999).
4.12 Consultant Agreement between the Registrant and Ezzat
Jallad, dated March 10, 1999 (incorporated by reference to
Exhibit 4.6 of the Form S-8 filed on July 2, 1999).
4.13 Consultant Agreement between the Registrant and Shar
Offenberg, dated June 20, 1998 (incorporated by reference to
Exhibit 4.7 of the Form S-8 filed on July 2, 1999).
4.14 Consultant Agreement between the Registrant and Richard
Parnes, dated May 10, 1999 (incorporated by reference to Exhibit
4.8 of the Form S-8 filed on July 2, 1999).
4.15 Consulting Contract between the Registrant and Robert Bragg,
dated August 19, 1999 (incorporated by reference to Exhibit 4.2
of the Form S-8 filed on August 31, 1999).
4.16 Consultant Agreement between the Registrant and Dominique
Einhorn, dated August 9, 1999 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on August 31, 1999).
4.17 Consultant Agreement between the Registrant and Richard
Epstein, dated August 16, 1999 (incorporated by reference to
Exhibit 4.4 of the Form S-8 filed on August 31, 1999).
4.18 Consultant Agreement between the Registrant and Jane Hauser,
dated August 16, 1999 (incorporated by reference to Exhibit 4.5
of the Form S-8 filed on August 31, 1999).
4.19 Form of Debenture issued by the Registrant to CALP II, LP,
dated June 9, 1999 (incorporated by reference to Exhibit 4.3 of
the Registration Statement on Form SB-2/A filed on July 22,
1999).
4.20 Registration Rights Agreement between the Registrant and
CALP II, LP, dated June 9, 1999 (incorporated by reference to
Exhibit 4.2 of the Registration Statement on Form SB-2/A filed on
July 22, 1999).
4.21 Form of Warrant issued by the Registrant to CALP II, LP,
dated June 9, 1999 (incorporated by reference to Exhibit 4.4 of
the Registration Statement on Form SB-2/A filed on July 22,
1999).
4.22 Common Stock Purchase Agreement between the Registrant and
Alpha Venture Capital, Inc., dated September 28, 1999
(incorporated by reference to Exhibit 4.2 of the Registration
Statement on Form SB-2 POS filed on September 29, 1999).
4.23 Registration Rights Agreement between the Registrant and
Alpha Venture Capital, Inc., dated September 28, 1999
(incorporated by reference to Exhibit 4.3 of the Registration
Statement on Form SB-2 POS filed on September 29, 1999).
4.24 Warrant issued by the Registrant to Alpha Venture Capital,
Inc., dated September 28, 1999 (incorporated by reference to
Exhibit 4.4 of the Registration Statement on Form SB-2 POS filed
on September 29, 1999).
10.1 Agreement to License Assets between the Registrant and Home
Point of Sales, Inc., dated February 18, 1997 (incorporated by
reference to Exhibit 10.16 to the Form 8-K filed on February 25,
1997).
10.2 Escrow Agreement between the Registrant, Home Point of
Sales, Inc, and First National Bank of Omaha, dated February 18,
1997 (incorporated by reference to Exhibit 10.17 to the Form 8-K
filed on February 25, 1997).
10.3 Host Processing Agreement between the Registrant and
Electronic Transactions & Technologies, dated April 28, 1997
(incorporated by reference to Exhibit 10.3 of the Form 10-KSB/A
for the fiscal year ended on August 31, 1998).
10.4 Licensing Agreement between the Registrant and Electronic
Transactions & Technologies, dated March 27, 1998 (incorporated
by reference to Exhibit 10.4 of the Form 10-KSB/A for the fiscal
year ended on August 31, 1998).
10.5 Promissory Note between Electronic Transactions &
Technologies and Unipay, Inc., dated April 26, 1999 (see below).
10.6 Joint Venture Agreement between the Registrant and First
Entertainment Holding Corp., dated April 29, 1999 (see below).
10.7 Letter of Commitment between the Registrant and Rogel
Technologies, dated May 6, 1999 (incorporated by reference to
Exhibit 2 to the Form 8-K filed on November 15, 1999).
10.8 Acquisition Agreement between the Registrant and eBet.com,
Inc., dated August 12, 1999 (incorporated by reference to Exhibit
2 to the Form 8-K/A filed on November 15, 1999).
10.9 Consulting Agreement between the Registrant and eMarkit,
Incorporated, dated August 16, 1999 (see below).
10.10 Stock Exchange Agreement between the Registrant, La
Empresa Ranco Plasticos Limitada, Michael Lanes, and Jamie
Ligator, dated August 31, 1999 (incorporated by reference to
Exhibit 2.1 to the Form 8-K filed on November 16, 1999).
10.11 Agreement and Plan of Acquisition between the
Registrant and PowerClick, Inc., dated September 9, 1999 (see
below).
10.12 Consulting Agreement between the Registrant and
International Investor Relations Group, Inc., dated September 24,
1999 (see below).
10.13 Agreement between the Registrant and Kanakaris
Communications, dated October 21, 1999 (see below).
10.14 Letter of Commitment between the Registrant and Rogel
Technologies, dated October 23, 1999 (see below).
10.15 Capital Contribution Agreement between the Registrant
and SafeTPay.com, dated November 5, 1999 (see below).
10.16 Agreement between the Registrant and Rogel
Technologies, dated November 23, 1999 (see below).
10.17 Contract of Partnership between the Registrant and Top
Sports, S.A., dated November 20, 1999 (see below).
10.18 Agreement between the Registrant and Alliance Equities,
dated November 29, 1999 (see below).
10.19 Secured Promissory Note issued to the Registrant by
Electronic Transactions & Technologies and Thomas S. Hughes,
dated December 1, 1999 (see below).
10.20 Security Agreement between the Registrant, Electronic
Transactions & Technologies, and Thomas S. Hughes, dated December
1, 1999 (see below).
10.21 Business Cooperation Agreement between the Registrant
and Top Sports, S.A., dated December 9, 1999 (see below).
10.22 Consulting Agreement between the Registrant and Michael
Leste, dated December 10, 1999 (see below).
10.23 Consulting Agreement between the Registrant and Michael
Kofoed, dated December 10, 1999 (see below).
10.24 Agreement between the Registrant and Top Sports S.A.,
dated December 16, 1999.
10.25 Agreement between the Registrant and eMarkit,
Incorporated, dated December 29, 1999 (see below).
21 Subsidiaries of the Registrant (see below).
27 Financial Data Schedule (see below).
99.1 Patents: dated August 9, 1994, May 19, 1998, and September
15, 1998 (see below).
99.2 Trademarks: filed March 31, 1997, February 16, 1999, May 6,
1999, May 24, 1999, June 3, 1999, June 4, 1999, August 12, 1999,
and September 28, 1999 (see below).
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BETTING, INC. (NEVADA)
AND
BETTING, INC. (MISSOURI)
This Agreement and Plan of Merger ("Agreement") between
Betting, Inc. ("Betting Nevada" or "Surviving Corporation") and
Betting, Inc. ("Betting Missouri"), the two corporations acting
by their respective boards of directors and sometimes
collectively referred to as the "Constituent Corporations," is
entered into this 17th day of May, 1999 in Rancho Palos Verdes,
California, and will have an effective date, if approved as set
forth in Article I, Section 1 hereafter, of June 1, 1999
("Effective Date").
WHEREAS, Betting Nevada is a corporation organized and existing
under the laws of the State of Nevada, having been incorporated
on March 8, 1999, with its principal business office to be
located at 31310 Eaglehaven Center, Suite 10, Rancho Palos
Verdes, California 90275;
WHEREAS, the authorized capital stock of Betting Nevada is
Twenty-Five Million (25,000,000) shares of common stock, par
value of One Tenth of One Cent ($0.001) per share, none of which
have been issued;
WHEREAS, Nevada Revised Statutes 92A.190 confers upon Betting
Nevada the power to merge with a foreign corporation, and Nevada
Revised Statutes 92A.250 confers upon Betting Nevada the right to
issue its own shares in exchange for shares of any corporation to
be merged into Betting Nevada;
WHEREAS, Betting Missouri is a corporation organized and existing
under the laws of the State of Missouri, having been originally
incorporated on September 1, 1981 as HANDY-TOP, INC (on April 20,
1983, the Articles of Incorporation were amended to change the
name of the corporation to HTI Corporation; on May 28, 1993, the
Articles of Incorporation were amended to change the name of the
corporation to Leggoons, Inc.; on March 1, 1997, the Articles of
Incorporation were amended to change the name to Betting, Inc.);
WHEREAS, the authorized capital stock of Betting Missouri
consists of Ten Million (10,000,000) shares of common stock, par
value of One Cent ($0.01) per share, of which Fourteen Million
Five Hundred Thousand (14,500,000) shares are presently issued
and outstanding, and Five Million (5,000,000) shares of preferred
stock, par value of One Cent ($0.01), of which no shares are
issued and outstanding. Section 351.458.1 of the Missouri
Revised Statutes provides that a foreign corporation and a
domestic corporation may be merged and the foreign corporation
can be the surviving entity.
WHEREAS, the respective boards of directors of Betting Nevada and
Betting Missouri deem it desirable and in the best interests of
the corporations and their stockholders that the corporations
enter into this Agreement and merge pursuant to the terms and
conditions contained herein and for the sole purpose of
redomiciling the corporation into the State of Nevada; and
WHEREAS, in order to consummate this merger and in consideration
of the mutual benefits to be derived and the mutual agreements
contained herein, Betting Nevada and Betting Missouri approve and
adopt this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual
agreements, provisions and covenants herein contained, it is
agreed by and between the parties that, in accordance with the
provisions of the laws of the State of Nevada, Betting Nevada and
Betting Missouri and shall be, and they are, as of the merger
date (as defined in Article I, Section 2 hereafter) merged into a
single surviving corporation, which shall be and is Betting
Nevada, one of the Constituent Corporations, which shall continue
its corporate existence and remain a Nevada corporation governed
by the laws of that state, all on the terms and conditions set
forth as follows:
ARTICLE I
MERGER
1. Shareholder Approval.
Within thirty (30) days from the date of this Agreement, or
such longer period as the parties hereto shall agree upon in
writing, this Agreement shall be submitted for approval and
adoption, pursuant to and in accordance with the applicable
provisions of the laws of the State of Nevada and the State of
Missouri, to the holders of common stock of Betting Nevada and to
the holders of common shares of Betting Missouri at duly held
shareholders' meetings or by unanimous written consent. This
Agreement shall be approved and adopted upon receiving the
affirmative vote of the holders of a majority of the common stock
of Betting Nevada outstanding on the record date established for
determining the holders of Betting Nevada common stock entitled
to vote at such Betting Nevada shareholders' meeting, and the
affirmative vote of a majority of the common shares of Betting
Missouri outstanding on the record date established for
determining the holders of common shares entitled to vote at such
Betting Missouri shareholders' meeting. If this Agreement shall
be so approved and adopted, Betting Nevada and Betting Missouri
shall immediately proceed to effectuate the merger of Betting
Missouri into Betting Nevada. If this Agreement shall not be so
approved and adopted, it shall, without any further action by the
parties, other than certification to the other Constituent
Corporation of the results of the vote by the Secretary or Clerk,
as the case may be, of the Constituent Corporation the
shareholders of which shall not have approved or adopted this
Plan, be cancelled without liability from either party to the
other.
2. Filings After Shareholder Approval.
Under Section 351.458.1(2) of the Missouri Revised Statutes,
Betting Missouri will cease to exist and Betting Nevada will
possesses all the powers and property formerly possessed by
Betting Missouri upon approval of this Agreement by its
shareholders, and the filing with the Missouri Secretary of State
the following: (a) An agreement that Betting Missouri will
promptly pay to the dissenting shareholders of Betting, Inc. the
amount, if any, to which they shall be entitled under provisions
of the Missouri Revised Statutes with respect to the rights of
dissenting shareholders; and (b) an agreement that Betting, Inc.
may be served with process in Missouri, and an irrevocable
appointment of the Missouri Secretary of State as its agent to
accept service of process, in any proceeding based upon any cause
of action against Betting, Inc. arising in Missouri prior to the
issuance of the Certificate of Merger by the Missouri Secretary
of State, and in any proceeding for the enforcement of the rights
of a dissenting shareholder of Betting, Inc. against the
Surviving Corporation. Under Section 351.458.4, the effective
date of the merger is the date on which the merger becomes
effective in the State of Nevada.
As soon as practicable after the approval of the merger by the
shareholders of Betting Nevada has been obtained and all other
conditions to the obligations of the parties to this agreement to
the effect the merger shall have been satisfied or waived,
Betting Nevada shall file with the Nevada Secretary of State a
duly executed Articles of Merger, as required by Nevada Revised
Statutes 92A.200, and take such other and future actions as may
be required by Nevada law to make the merger effective. The
merger of Betting Missouri into Betting Nevada shall become
effective upon the filing of the Articles of Merger with the
Nevada Secretary of State ("Merger Date").
3. Effect of Merger.
Betting Nevada shall succeed to, without other transfer, and
shall possess and enjoy all rights, privileges, powers and
franchises as well of a public as of a private nature, and be
subject to all restrictions, disabilities and duties of each of
two Constituent Corporations, and all and singular, the rights,
privileges, powers and franchises of each of corporations, and
all property, real, personal and mixed, and all debts to either
of Constituent Corporations on whatever account, as well for
stock subscriptions as all other things in action or belonging to
each of the corporations shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be as
effectually property of the Surviving Corporation as they were of
Constituent Corporations, provided, that all rights of creditors
and all liens on any property of each of Constituent Corporations
shall be preserved unimpaired, limited to property affected by
the liens at time of merger, and all debts, liabilities and
duties of Constituent Corporations shall attach to the Surviving
Corporation, and may be enforced against it to the same extent as
if debts, liabilities and duties had been incurred or contracted
by it. If at any time the Surviving Corporation shall deem or be
advised that any further assignments or assurances in law or
things are necessary or desirable to vest, or to perfect or
confirm, of record or otherwise, in the Surviving Corporation the
title to any property acquired or to be acquired by reason of or
as a result of merger provided for by this agreement, proper
officers and directors of each of Constituent Corporations shall
execute and deliver all proper deeds, assignments and assurances
in law and do all things necessary or proper to vest, perfect or
confirm title to property in the Surviving Corporation and
otherwise to carry out the purpose of this Agreement.
ARTICLE II
NAME AND CONTINUED CORPORATE EXISTENCE
OF SURVIVING CORPORATION
The corporate name of Betting Nevada, the Constituent Corporation
whose corporate existence is to survive this merger and continue
thereafter as the Surviving Corporation, and its identity,
existence, purposes, powers, objects, franchises, rights and
immunities shall continue unaffected and unimpaired by the
merger, and the corporate identity, existence, purposes, powers,
objects, franchises, rights and immunities of Betting Missouri
shall be wholly merged into Betting Nevada. Accordingly, on the
Merger Date the separate existence of Betting Missouri, except
insofar as continued by statute, shall cease.
ARTICLE III
GOVERNING LAW
CERTIFICATE OF INCORPORATION
As stated, the laws of State of Nevada shall govern the Surviving
Corporation. From and after the Merger Date, the certificate of
incorporation of Betting Nevada attached as Appendix A (which
Appendix A represents the certificate of incorporation of Betting
Nevada filed in the office of the Secretary of State of the State
of Nevada on March 8, 1999) shall be and become the certificate
of incorporation of the Surviving Corporation. In addition to
the powers conferred upon it by law, the Surviving Corporation
shall have the powers set forth in Appendix A and be governed by
those provisions. From and after the Merger Date, and until
further amended as provided by law, Appendix A may be certified,
separate and apart from this agreement, as the certificate of
incorporation of the Surviving Corporation.
ARTICLE IV
BYLAWS OF SURVIVING CORPORATION
From and after the Merger Date the present bylaws of Betting
Nevada shall be and become the bylaws of the Surviving
Corporation until they shall be altered, amended or repealed, or
until new bylaws shall be adopted, in accordance with the
provisions of law, the bylaws and the certificate of
incorporation of the Surviving Corporation.
ARTICLE V
DIRECTORS AND OFFICERS
1. Directors.
The number of directors of the Surviving Corporation, who
shall hold office until their successors have been duly elected
and shall have qualified, or as otherwise provided in the
certificate of incorporation of Betting Nevada or its bylaws,
shall be three (3) until changed by action of the Board of
Directors of the Surviving Corporation pursuant to its bylaws;
and the respective names of the first directors of the Surviving
Corporation are as follows:
Thomas S. Hughes
Jack M. Hall
Diane Hewitt
If, on or after the Merger Date, a vacancy shall for any reason
exist in the Board of Directors of the Surviving Corporation, or
in any of the offices, the vacancy shall be filled in the manner
provided in the certificate of incorporation of Betting Nevada or
in its bylaws.
2. Annual Meeting.
The first annual meeting of the shareholders of the Surviving
Corporation after the Merger Date shall be the annual meeting
provided by the bylaws of Betting Nevada for the year 2000.
3. Officers.
The first officers of the Surviving Corporation, who shall
hold office until their successors have been elected or appointed
and shall have qualified, or as otherwise provided in its bylaws,
are as follows:
Thomas S. Hughes, President
Jack M. Hall, Secretary
Diane Hewitt, Treasurer
ARTICLE VI
CAPITAL STOCK OF SURVIVING CORPORATION
The capitalization of the Surviving Corporation upon the Merger
Date shall be as set forth in the certificate of incorporation of
Betting Nevada.
ARTICLE VII
CONVERSION OF SHARES ON MERGER
Each of the shares of common stock, par value of One Cent ($0.01)
per share, of Betting Missouri outstanding on the Merger Date
("Betting Missouri Stock"), and all rights shall upon the Merger
Date be converted into one share of common stock, par value One
Tenth of One Cent ($0.001) per share of Betting Nevada ("Betting
Nevada Stock"). At any time and from time to time after the
Merger Date, each holder of an outstanding certificate or
certificates representing shares of Betting Missouri Stock shall
be entitled, upon the surrender of the certificate or
certificates at the office of an transfer agent of Betting Nevada
to be designated by the Board of Directors of Betting Nevada to
receive in exchange a certificate or certificates representing
the number of shares of Betting Nevada Stock into which the
shares of Betting Missouri Stock represented by the certificate
or certificates surrendered shall have been converted. No
dividend shall be paid by Betting Nevada to the holders of
outstanding certificates expressed to represent shares of Betting
Missouri Stock, but, upon surrender and exchange as provided,
there shall be paid to the record holder of the certificate or
certificates for Betting Nevada Stock issued in exchange therefor
an amount with respect to each such share of Betting Nevada Stock
equal to all dividends which shall have been paid or become
payable to holders of record of Betting Nevada Stock between the
Merger Date and the date of exchange.
ARTICLE VIII
ASSETS AND LIABILITIES
On the Merger Date, all property, real, personal and mixed, and
all debts due to either of the Constituent Corporations on
whatever account, as well for stock subscriptions as all other
choses in action, and all and every other interest of or
belonging to either of Constituent Corporations shall be taken by
and deemed to be transferred to and vested in the Surviving
Corporation without further act or deed; and all property and
every other interest shall be as effectually the property of the
Surviving Corporation as it was of the respective Constituent
Corporations, and the title to any real estate or any interest,
whether vested by deed or otherwise, in either of the Constituent
Corporations shall not revert or be in any way impaired by reason
of the merger; provided, however, that all rights of creditors
and all liens upon the property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts,
liabilities, obligations and duties of the respective Constituent
Corporations shall attach to the Surviving Corporation, and may
be enforced against it to the same extent as if the debts,
liabilities, obligations and duties had been incurred or
contracted by it. Any action or proceeding pending by or against
either of the Constituent Corporations may be prosecuted to
judgment as if the merger had not taken place, or the Surviving
Corporation may be submitted in place of either of the
Constituent Corporations. The parties respectively agree that
from time to time, when requested by the Surviving Corporation or
by its successors or assigns, they will execute and deliver or
cause to be executed and delivered all deeds and instruments, and
will take or cause to be taken all further or other action, as
the Surviving Corporation may deem necessary or desirable in
order to vest in and confirm to the Surviving Corporation or its
successors or assigns title to and possession of all the property
and rights and otherwise carry out the intent and purposes of
this Agreement.
ARTICLE IX
CONDUCT OF BUSINESS BY CONSTITUENT CORPORATIONS
Prior to the Merger Date Betting Missouri shall conduct its
business in its usual and ordinary manner, and shall not enter
into any transaction other than in the usual and ordinary course
of such business except as provided. Without limiting the
generality of the above, Betting Missouri shall not, except as
otherwise consented to in writing by Betting Nevada or as
otherwise provided in this agreement:
1. Issue or sell any shares of its capital stock in addition to
those outstanding on this date, except shares issued pursuant to
rights or options outstanding at that date;
2. Issue rights to subscribe to or options to purchase any
shares of its stock in addition to those outstanding on this
date;
3. Amend its certificate of incorporation or its bylaws;
4. Issue or contract to issue funded debt;
5. Declare or pay any dividend or make any other distribution
upon or with respect to its capital stock.
6. Repurchase any of its outstanding stock or by any other means
transfer any of its funds to its shareholders either selectively
or rateably, in return for value or otherwise, except as salary
or other compensation in the ordinary or normal course of
business;
7. Undertake or incur any obligations or liabilities except
current obligations or liabilities in the ordinary course of
business and except for liabilities for fees and expenses in
connection with the negotiation and consummation of the merger in
amounts to be determined after the Merger Date;
8. Mortgage, pledge, subject to lien or otherwise encumber any
realty or any tangible or intangible personal property;
9. Sell, assign or otherwise transfer any tangible assets of
whatever kind, or cancel any claims, except in the ordinary
course of business;
10. Sell, assign, or otherwise transfer any trademark, trade
name, patent or other intangible asset;
11. Default in performance of any material provision of any
material contract or other obligation;
12. Waive any right of any substantial value; or
13. Purchase or otherwise acquire any equity or debt security of
another corporation except to realize on an otherwise worthless
debt.
ARTICLE X
WARRANTIES OF THE CONSTITUENT CORPORATIONS
1. Representations and Warranties of Betting Missouri.
Betting Missouri covenants, represents and warrants to
Betting Nevada that:
a. It is on the date of this Agreement, and will be on the
Merger Date, (a) a corporation duly organized and existing and in
good standing under the laws of the jurisdiction of the State of
Missouri, (b) duly authorized under its articles, and under
applicable laws, to engage in the business carried on by it, and
(c) it is fully qualified to do business in the State of
Missouri;
b. All federal, state and local tax returns required to be filed
by it on or before the Merger Date will have been filed, and all
taxes shown to be required to be paid on or before the Merger
Date will have been paid;
c. It will use its best efforts to collect the accounts
receivable owned by it on or prior to the Merger Date and will
follow its past practices in connection with the extension of any
credit prior to the Merger Date;
d. All fixed assets owned by it and employed in its business are
of the type, kind and condition appropriate for its business and
will be operated in the ordinary course of business until the
Merger Date;
e. All leases now held by it are now and will be on the Merger
Date in good standing and not voidable or void by reason of any
default whatsoever;
f. During the period between January 1, 1999, and the date of
this Agreement, except as disclosed in writing to Betting Nevada,
it has not taken any action, or suffered any conditions to exist,
to any material or substantial extent in the aggregate, which it
has agreed in Article IX or this Article X of this Agreement not
to take or to permit to exist during the period between the date
of this agreement and the Merger Date;
g. It has not been represented by any broker in connection with
the transaction contemplated, except as it has advised Betting
Nevada in writing; and
h. Its Board of Directors has, subject to the authorization and
approval of its stockholders, authorized and approved the
execution and delivery of this Agreement, and the performance of
the transactions contemplated by this Agreement.
i. Betting Missouri, in addition to other action which is has
covenanted, represented, and warranted to Betting Nevada that it
shall take, shall also:
(1) Use its best efforts to preserve its business organization
intact, to keep available to Betting Nevada the present officers
and employees of Betting Missouri, and to preserve for Betting
Nevada the relationships of Betting Missouri with suppliers and
customers and others having business relations with Betting
Missouri; and
(2) Not increase the compensation, wages, or other benefits
payable to its officers or employees, other than increases which
Betting Nevada has approved in writing.
2. Representations and Warranties of Betting Nevada.
Betting Nevada covenants, represents and warrants to Betting
Missouri that:
a. Betting Nevada is a corporation duly organized and
existing and in good standing under the laws of the State of
Nevada and has the corporate power to own its properties and to
carry on its business as now being conducted; and
b. Its Board of Directors has, subject to the authorization and
approval of its stockholders, authorized and approved the
execution and delivery of this Agreement, and the performance of
the transactions contemplated by this Agreement.
ARTICLE XI
CONSUMMATION OF MERGER
If the merger contemplated is completed, all expenses incurred in
consummating the plan of merger shall, except as otherwise agreed
in writing between the Constituent Corporations, be borne by
Betting Nevada. If the merger is not completed, each of the
Constituent Corporations shall be liable for, and shall pay, the
expenses incurred by it.
Notwithstanding shareholder authorization and at any time prior
to the filing, the filing and recording of this agreement may be
deferred from time to time by mutual consent of the respective
boards of directors of each of the Constituent Corporations, and,
to the extent provided in (a), (b), (c) and (d) below, the merger
may be abandoned:
1. By the mutual consent of the respective Boards of Directors
of each of the Constituent Corporations;
2. At the election of the Board of Directors of Betting Nevada,
if (a) demands by shareholders for appraisal of their shares of
Betting Missouri Stock have been received from the holders of
twenty-five percent (25%) or more of the outstanding shares, or
(b) in the judgment of the Board any judgment is rendered
relating to any legal proceeding not commenced and the existence
of the judgment will or may materially affect the rights of
either Constituent Corporation to sell, convey, transfer or
assign any of its assets or materially interfere with the
operation of its business, renders the merger impracticable,
undesirable or not in the best interests of its shareholders;
3. By the Board of Directors of Betting Nevada if there shall
not have been submitted to Betting Nevada the opinion of counsel
for Betting Missouri, in form and substance satisfactory to
Betting Nevada, to the effect that (1) Betting Missouri is a
validly organized and duly existing corporation, (2) this
Agreement has been duly authorized by, and is binding upon,
Betting Missouri in accordance with its terms, and (3) all the
properties, estate, rights, privileges, powers and franchises of
Betting Missouri and all debts due to Betting Missouri shall be
transferred to and vested in Betting Nevada, as the Surviving
Corporation, without further act or deed, subject only to any
legal requirements for recording or filing any instruments of
conveyance, assignment or transfer, the giving of notice of any
such conveyance, assignment or transfer, consents of third
parties and governmental authorities to assignment of any
contract or lease, and other specified exceptions acceptable to
Betting Nevada;
4. At the election of the Board of Directors of Betting Missouri
if there shall not have been submitted to Betting Missouri the
opinion of counsel for Betting Nevada, in form and substance
satisfactory to Betting Missouri, to the effect that (1) Betting
Nevada is a validly organized and duly existing corporation, (2)
this Agreement has been duly authorized by, and is binding upon,
Betting Nevada in accordance with its terms, (3) when Articles of
Merger shall have been filed as provided in this Agreement, the
merger will become effective and all liabilities and obligations
of Betting Missouri will become the liabilities and obligations
of Betting Nevada, as the surviving corporation, fully and
without any further action by either Constituent Corporation, (4)
the Betting Missouri Stock will be converted into Betting Nevada
Stock, (5) the Betting Nevada Stock into which the Betting
Missouri Stock will be converted as provided herein will be
legally and validly authorized, exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as
amended, ("Act'), provided by Section 3(a)(10) thereof, exempt
from the registration requirements of Nevada Revised Statutes
90.460, as amended, provided by Nevada Revised Statutes
90.530(11), and may be issued without a restrictive legend
pursuant to Rule 145(a)(2) under the Act if the shares of Betting
Missouri are otherwise unrestricted, and (6) when issued will be
validly issued, fully paid and nonassessable stock of the
surviving corporation;
5. At the election of the Board of Directors of either
Constituent Corporation if:
a. The warranties and representations of the other
Constituent Corporation contained in this Agreement shall not be
substantially accurate in all material respects on and as of the
date of election; or the covenants contained of the other
Constituent Corporation shall not have been performed or
satisfied in all material respects;
b. This agreement shall not have been approved by the requisite
votes of shareholders of the Constituent Corporations on or
before June 1, 1999;
c. Prior to the merger (1) there shall have been filed in any
court or agency having jurisdiction a complaint or other
proceeding seeking to restrain or enjoin the merger contemplated
hereby, or (2) there shall have been presented to Betting
Missouri or Betting Nevada or any director or officer of either
of them any process, demand or request which, in the opinion of
counsel for either Constituent Corporation, offers reasonable
ground to believe that a complaint or bill in equity may be
forthcoming which, if successful, would restrain, enjoin or
dissolve the merger, and if, in either case, such Board of
Directors determines that abandonment and cancellation of this
Agreement is advisable in the best interests of the Constituent
Corporations, their shareholders, employees and customers;
d. If the Merger Date shall not have occurred by June 1, 1999,
then, at the option of the Board of Directors of ABC it may be
deferred to a date on or after August 1, 1999. If the Merger
Date shall not have occurred by September 1, 1999, then, at the
option of the Board of Directors of either Constituent
Corporation the merger may be abandoned. In the event of the
abandonment of the merger pursuant to the foregoing provisions,
this Agreement shall become void and have no effect, without any
liability on the part of either of the Constituent Corporations
or its shareholders or directors or officers in respect of this
merger except the obligation of each Constituent Corporation to
pay its own expenses as provided in this Article XI.
ARTICLE XII
RESIDENT AGENT
The respective names of the county and the city within the county
in which the principal office of the surviving corporation is to
be located in the State of Nevada, the street and number of this
office, the name of the registered agent will, as of the Merger
Date, be as set forth in Article Second of the Articles of
Incorporation of the Surviving Corporation.
ARTICLE XIII
RIGHT TO AMEND ARTICLES OF INCORPORATION
The Surviving Corporation reserves the right to amend, alter,
change or repeal its Articles of Incorporation in the manner now
or later prescribed by statute or otherwise authorized by law;
and all rights and powers conferred in the certificate of
incorporation on shareholders, directors or officers of Betting
Nevada, or any other person, are subject to this reserved power.
ARTICLE XIV
MISCELLANEOUS
1. Access to Books and Records.
To enable Betting Nevada to coordinate the activities of Betting
Missouri into those of Betting Nevada on and after the Merger
Date, Betting Missouri shall, before the Merger Date, afford to
the officers and authorized representatives of Betting Nevada
free and full access to the plants, properties, books and records
of Betting Missouri, and the officers of Betting Missouri will
furnish Betting Nevada with financial and operating data and
other information as to the business and properties of Betting
Missouri as Betting Nevada shall from time to time reasonably
request. Betting Nevada shall, before the Merger Date, afford to
the officers and authorized representatives of Betting Missouri
such access, and Betting Nevada's officers will furnish such data
and information to Betting Missouri, as may be reasonably
required by Betting Missouri for the preparation of its proxy
statement in connection with the meeting of shareholders to be
called pursuant to section 1 of Article I of this Agreement.
Betting Nevada and Betting Missouri agree that, unless and until
the merger contemplated by this Agreement has been consummated,
Betting Nevada and Betting Missouri and their officers and
representatives will hold in strict confidence all data and
information obtained from one another as long as it is not in the
public domain, and if the merger provided for is not consummated
as contemplated, Betting Nevada and Betting Missouri will each
return to the other party all data as the other party may
reasonably request.
2. Rights Cumulative; Waivers.
The rights of each of the parties under this Agreement are
cumulative. The rights of each of the parties hereunder shall
not be capable of being waived or varied other than by an express
waiver or variation in writing. Any failure to exercise or any
delay in exercising any of such rights shall not operate as a
waiver or variation of that or any other such right. Any
defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such
right. No act or course of conduct or negotiation on the part of
any party shall in any way preclude such party from exercising
any such right or constitute a suspension or any variation of any
such right.
3. Benefit; Successors Bound.
This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators,
representatives, successors, and permitted assigns.
4. Entire Agreement.
This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof. There are no
promises, agreements, conditions, undertakings, understandings,
warranties, covenants or representations, oral or written,
express or implied, between them with respect to this Agreement
or the matters described in this Agreement, except as set forth
in this Agreement. Any such negotiations, promises, or
understandings shall not be used to interpret or constitute this
Agreement.
5. Assignment.
Neither this Agreement nor any other benefit to accrue hereunder
shall be assigned or transferred by either party, either in whole
or in part, without the written consent of the other party, and
any purported assignment in violation hereof shall be void.
6. Amendment.
This Agreement may be amended only by an instrument in writing
executed by all the parties hereto.
7. Severability.
Each part of this Agreement is intended to be severable. In the
event that any provision of this Agreement is found by any court
or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the
extent necessary to render it enforceable and as so severed or
modified, this Agreement shall continue in full force and effect.
8. Section Headings.
The Section headings in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. Construction.
Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall
be deemed to include each of the singular, and pronouns of one or
no gender shall be deemed to include the equivalent pronoun of
the other or no gender.
10. Further Assurances.
In addition to the instruments and documents to be made, executed
and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed
and delivered, to the requesting party such other instruments and
to take such other actions as the requesting party may reasonably
require to carry out the terms of this Agreement and the
transactions contemplated hereby.
11. Notices.
Any notice which is required or desired under this Agreement
shall be given in writing and may be sent by personal delivery or
by mail (either a. United States mail, postage prepaid, or b.
Federal Express or similar generally recognized overnight
carrier), addressed as follows (subject to the right to designate
a different address by notice similarly given):
To Betting Nevada:
Shawn F. Hackman, Esq.
Shawn F. Hackman, P.C.
3360 West Sahara Avenue, Suite 200
Las Vegas, Nevada 89102
To Betting Missouri:
Thomas S. Hughes, President
Betting, Inc.
31310 Eaglehaven Center, Suite 10
Rancho Palos Verdes, California 90275
12. Governing Law.
This Agreement shall be construed and enforced under, in
accordance with, and governed by, the laws of the State of
Nevada.
13. Consents.
The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent
and authority to execute and deliver this Agreement on behalf of
such party.
14. Termination of Agreement.
This Agreement shall terminate on the Effective Date unless
all actions required under this Agreement have not been fully
performed.
15. Survival of Provisions.
The representations and warranties contained in Article X of this
agreement and any liability of one Constituent Corporation to the
other for any default under the provisions of Articles IX or X of
this agreement, shall expire with, and be terminated and
extinguished by, the merger under this agreement on the Merger
Date.
16. Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed and delivered as of the date first above written.
BETTING NEVADA:
By: /s/ Thomas S. Hughes
Thomas S, Hughes, President
BETTING MISSOURI:
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
PROMISSORY NOTE
$690,000 April 26, 1999
Marietta, Georgia
FOR VALUE RECEIVED, the undersigned ELECTRONIC TRANSACTIONS AND
TECHNOLOGIES, INC., a Nevada corporation ("Maker"), promises to
pay to the order of UNIPAY, INC., a North Carolina Corporation
(together with any subsequent holder hereof, "Holder"), at 3773
Northwest 126th Avenue, Building 1, Coral Springs, Florida 33065,
or such other place as Holder may from time to time designate in
writing, the principal sum of Six Hundred Ninety Thousand Dollars
($690,000), together with interest thereon at a fixed rate per
annum of Eight and One Half Percent (8.5%) (the "Interest Rate")
computed on the basis of a 360-day year for the actual number of
days elapsed (including the first day but excluding the last
day). This Promissory Note shall be referred to herein as this
"Note."
Interest shall be computed on a daily basis by applying the
Interest Rate effective on that day as a daily rate to the
outstanding principal balance as of that day. The outstanding
principal balance under this Note as of any day shall be the
outstanding principal balance as of the beginning of such day
(exclusive of interest) less any payments of principal credited
to Maker's account on that day.
Principal only payments shall be due and payable hereunder in the
amounts and on the dates set forth in points (i) through (viii)
below:
(i) the sum of Twenty-Five Thousand Dollars ($25,000) due and payable
on May 4, 1999;
(ii) the sum of Twenty-Five Thousand Dollars ($25,000) due and payable
on June 15, 1999;
(iii) the sum of Thirty Thousand Dollars ($30,000) due and payable on
July 6, 1999;
(iv) the sum of Ten Thousand Dollars ($10,000) due and payable on July
27, 1999;
(v) the sum of Five Thousand Dollars Per Month ($5,000/month), due
and payable on the fifteenth (15th) day of each month, commencing
August 15, 1999 and continuing to and including July 15, 2000;
(vi) the sum of Seven Thousand Dollars Per Month ($7,000/month), due
and payable on the fifteenth (15th) day of each month, commencing
August 15, 2000, and continuing to and including July 15, 2001;
(vii) the sum of Eight Thousand Dollars Per Month ($8,000/month), due
and payable on the fifteenth (15th) day of each month, commencing
August 15, 2001 and continuing to and including July 15, 2002;
and
(viii) the sum of Ten Thousand Dollars Per Month ($10,000/month), due
and payable on the fifteenth (15th) day of each month, commencing
August 15, 2002 and continuing to and including July 15, 2003.
On August 15, 2003, or such earlier date as payment of the
indebtedness evidenced hereby shall be due, whether by mandatory
prepayment, acceleration or otherwise (the "Maturity Date"), the
sum of Two Hundred Forty Thousand Dollars ($240,000), plus all
other amounts representing the entire outstanding principal
balance of this Note, together with accrued interest and all
other sums then outstanding under this Note, shall be due and
payable.
In the event any required payment on this Note is not received by
Holder on the date that said payment is due, Maker shall pay
Holder, in addition to the amount of the required payment, a late
charge equal to four percent (4%) of the payment not so received,
the parties agreeing that said charge for the late payment and
shall not be deemed a penalty. Notwithstanding the foregoing,
neither the assessment nor the collection of any late fee shall
waive, excuse, or cure Maker's failure to remit any amount owned
hereunder on its due date, and such failure shall nevertheless
constitute an "Even of Default" hereunder.
This Note may be prepaid in whole or in part without premium or
penalty. Each prepayment other than full payment shall be in the
minimum amount of Ten Thousand Dollars ($10,000).
Each payment under this Note received by Holder prior to 2:00
p.m. (Eastern Standard Time) on any business day shall be
credited as of that day. Any payment received by Holder at or
after 2:00 p.m. (Eastern Standard Time) on any business day, or
at any time on a non-business day, shall be deemed received as of
the next business day. Business days are days other than
Saturdays, Sundays and legal holidays.
All payments shall be made in lawful money of the United States
of America and shall be applied first to fees and costs,
including collection costs, if any, next to interest, and then to
principal.
Notwithstanding any other provision of this Note or of any
document, instrument or agreement securing or executed in
connection with this Note, the total liability for payments of
interest and payments in the nature of interest, including all
charges, fees, exactions or other sums that may at any time be
deemed to be interest ("Interest") shall not exceed the highest
rate of interest allowed by applicable law. In the event the
obligation to pay interest hereunder or under any such other
document, instrument or agreement shall, for any period or for
any reason whatsoever, result in an effective rate of interest
which exceeds the limit imposed by applicable law, such excess,
upon receipt thereof by Holder, shall be applied, without further
agreement or notice, first to the reduction of the outstanding
principal balance of this Note with the excess, if any being then
repaid to Maker. Holder agrees to accept such sums as a penalty-
free prepayment of principal, unless Holder at any time elects,
by notice in writing, to waive, reduce or limit the collection of
any sums in excess of those lawfully collectable as interest
rather than accept those sums as a prepayment of principal. The
parties hereto acknowledge that Maker does not intend or expect
to pay, nor does Holder intend or expect to charge or collect any
Interest under this Note greater than the highest nonusurious
rate of interest that may be charged under applicable law.
Maker, together with all endorsers, guarantors, sureties and
other parties liable for the payment of any sum or sums due or to
become due under the terms of this Note, jointly and severally
agree to pay all costs of collection of this Note, including
reasonable attorney's fees, paralegal's fees and other legal
costs (including court costs) incurred in connection with
consultation, arbitration, and litigation (including trial,
appellate, administrative and bankruptcy proceedings) regardless
of whether or not suit is brought, and all other costs and
expenses incurred by Holder in exercising its rights and remedies
hereunder or under any document, instrument or agreement securing
this Note. Such costs of collection shall bear interest at the
lower of : (i) a per annum rate of eighteen percent (18%), or
(ii) the highest rate permitted under applicable law (such lower
rate of (i) or (ii) being referred to herein as the "Default
Rate").
This Note is given pursuant to the Stock Purchase Agreement dated
April 12, 1999 between Maker, Holder, Shop While You Wait, Inc.
("SWYW"), a North Carolina corporation, Thomas S. Hughes
("Hughes"), and Harry Hargens, an adult individual currently
residing in Hampton, Georgia (the "Stock Purchase Agreement").
All capitalized terms not defined in this Note shall have the
meanings ascribed thereto in the Stock Purchase Agreement.
This Note is secured by a Security Agreement of even date
herewith (the "Security Agreement") between Holder and SWYW, the
Continuing Guaranty of even date hereof of Hughes and SWYW and by
other related security instruments.
The obligation of Maker to make payment hereunder are absolute
and unconditional and shall not be subject to diminution or delay
by set off, counterclaim, abatement or otherwise.
As used in this Note, the term "Obligations" shall mean,
collectively, all payment and performance duties, liabilities,
obligations, representations, warranties, covenants, and
indebtedness of Maker, SWYW, or Hughes to Holder, whether direct
or indirect, absolute or contingent, due or to become due,
monetary or non-monetary, secured or unsecured, liquidated or
non-liquidated, now existing or hereafter arising, however
acquired, and whether on open account, evidenced by an
instrument, arising out of contract (including under any
Transaction Document or any "Miscellaneous Services Agreement"
(as such term is defined in the Software License and Support
Agreement of even date herewith between Holder and SWYW (the
"Software License and Support Agreement")), tort, the
Transactions, or otherwise. As used in this Note, the term
"Obligor" shall mean each of Maker, SWYW, Hughes, and any other
party primarily, secondarily or contingently liable on any of the
Obligations.
Each of the following shall constitute an "Even of Default"
hereunder:
(i) if any payment under this Note is not paid when due, or Maker
fails to perform any other Obligation hereunder when due, it
being agreed that time is of the essence with respect to all such
payments and other Obligations hereunder;
(ii) any other failure by any Obligor (including Maker) to pay or
perform any Obligation not described in point (i) above,
including any failure by SWYW to pay or perform when due any
Obligation under the Software License and Support Agreement or
any Miscellaneous Services Agreement;
(iii) any warranty or representation made by any Obligor (including
Maker) to Holder (including in any Transaction Document) proves
to be or becomes false or materially misleading either as of the
time made or thereafter;
(iv) any Obligor makes an assignment for the benefit of creditors,
files a petition in bankruptcy, petitions or applies to any
tribunal for the appointment of a custodian, receiver or trustee
for such Obligor or a substantial part of any of such Obligor's
assets, or commences any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect, or any such petition or application is filed
against any Obligor, or any such proceeding is commenced against
any Obligor; or
(v) any Obligor admits in writing its inability, or is generally
unable, to pay its debts as they become due, or any Obligor, by
any act or omission, indicates its consent to, approval of or
acquiescence in any petition, application, proceeding or order
for relief or the appointment of a custodian, receiver or trustee
for such Obligor or any substantial part of any such Obligor's
properties, or suffers any such custodianship, receivership or
trusteeship.
Upon the occurrence of any Event of Default, the entire
outstanding principal balance of this Note, together with all
accrued and unpaid interest, and all other amounts owed
hereunder, shall, at the option of Holder and without notice (any
notice of such Event of Default being hereby waived by Maker),
become immediately due and payable and may be collected
forthwith, and Holder may exercise any and all rights and
remedies provided herein or any other Transaction Document, or at
law, or in equity. After the Maturity Date or the occurrence of
an Event of Default, the outstanding principal balance of this
Note and, to the extent permitted by applicable law, accrued and
unpaid interest, shall bear interest at the Default Rate.
Maker, endorsers, guarantors, sureties and all other parties
liable for the payment of any sum or sums due or to become due
under the terms of this Note waive all applicable exemption
rights and also waive valuation and appraisement, demand,
presentment, protest and demand, and notice of protest, demand
and dishonor, and nonpayment of this Note, and agree that Holder
shall have the right, without notice, to deal in any way at any
time with any party hereto, or to grant any extension or
extensions of time for payment of any of said indebted ness or
any other indulgences or forbearance whatsoever, or may release,
exchange or substitute any of the security for this Note or may
release Maker or any endorsers, guarantors or sureties of this
Note, in each case, without in any way affecting the liability of
any other party liable for the payment of this Note.
No delay or omission on the part of Holder in exercising its
rights under this Note, or delay or omission on the part of
Holder in exercising its rights hereunder or under any
instrument, document or agreement securing or executed in
connection with this Note, or course of conduct relating thereto,
shall operate as a waiver of such rights or any other right of
Holder, nor shall any waiver by Holder of any such right or
rights on any one occasion be deemed a bar to, or waiver of, the
same right or rights on any future occasion. Acceptance by
Holder of any payment after its due date shall not be deemed a
waiver of the right to require prompt payment when due of all
other sums, and acceptance of any payment after Holder has
declared the indebtedness evidenced by this Note due and payable
shall not cure any Event of Default or operate as a waiver of any
right of Holder.
Time is of the essence with respect to each and every Obligation
under this Note.
Any notice to Maker or Holder provided for in this Note shall be
given in accordance with the notice provisions of the Stock
Purchase Agreement.
This Note shall be governed by and construed in accordance with
the laws of the State of Florida, without regard to its conflict
of laws principles.
As used in this Note, (i) the words "include, includes,
including" and all variations of thereof shall mean including,
but not limited to, (ii) the word "or" shall include the meaning
and/or, and (iii) the words "herein, hereon, hereof, hereto,
hereby, and hereunder" and similar terms shall refer to this
Note.
This Note may not be changed or waived orally, but only by
an agreement in writing and signed by the party against whom
enforcement of any change or waiver is sought. This Note shall
be binding upon Maker and any endorsers, guarantors, sureties and
other parties liable for this Note and their respective personal
representatives, heirs, devisees, successors and assigns, and
shall inure to the benefit of Holder and its personal
representatives, heirs, devisees, successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this note as of
the day and year first above written.
Electronic Transactions
And Technologies, Inc.,
A Nevada Corporation
By: __________________________
/s/Thomas S. Hughes
Title: Chairman & CEO
JOINT VENTURE AGREEMENT
This Joint Venture ("Agreement") dated as of April 29, 1999 by
and between First Entertainment Holding Corp. (FTET) and
Electronic Transactions and Technologies/eConnect ("BETT"). FTET
and BETT are sometimes collectively referred to herein as the
"Venturers".
WHEREAS, the Venturers desire to develop, produce, finance and
exploit an e-commerce cash transfer technology and any and all
other allied and ancillary rights relating thereto; and
WHEREAS, the Venturers desire to join together to produce and
exploit the technology and to operate as a joint venture for such
purpose;
NOW, THEREFORE, in consideration for the mutual covenants and
agreements contained herein, the Venturers agree as follows:
1. FORMATION. The Venturers do hereby constitute themselves a
joint venture for the purpose and upon the terms, covenants and
conditions hereinafter set forth. The name of the venture shall
be IntranGate.com ("IGC"), and all business done by it shall be
under said name. The principal place of business of the venture
shall be at the offices of FTET in Colorado, and BETT in Los
Angeles, CA. The sole purpose of the Venture shall be to
develop, produce and arrange for financing, exploitation and
introduction into e-commerce and all rights therein and derived
therefrom and to do all other business necessary and relating
thereto.
2. CONTRIBUTION OF FTET. FTET shall contribute to the Venture:
a. FTET will furnish the non-exclusive services of its
associates to render services as, when and where reasonably
required in connection with the Venture, as well as facilitate
the development through its strategic partners in bringing this
technology to the market.
b. A best efforts financing commitment for up to 50% of the
Project the terms of which commitment shall be subject to the
mutual approval of the parties.
3. CONTRIBUTION OF BETT. BETT shall contribute to the Venture:
a. All of BETT's right, title and interest in and to the
technology to include, but not limited to:
1. A PERFECT (Personal Encrypted Remote Financial Electronic
Card Transactions)
2. PocketPay (Wireless Terminal Voice Phone)
3. SLICK (Secure Line Computer Keyboard)
4. TVPinpad (Remote Addressable DBS)
b. The non-exclusive services of BETT employees,
c. A best efforts financing commitment for up to 50% of the
Project the terms of which commitment shall be subject to the
mutual approval of the parties.
4. FTET shall be granted a non-exclusive license to use the ET&T
technology for e-commerce for sites that FTET owns or operates
and BETT shall waive all fees related to that license.
5. BUSINESS DECISIONS. All joint venture and business decisions
relating to the development and production of the joint venture
(including, without limitation, relating to any third party
financing agreement, compensation for individual services
rendered by Venture employees in connection with the Venture,
shall be subject to the mutual approval of the Venturers. FTET
designates A.B. Goldberg as its executive with respect to such
business approvals. In the even the Venturers shall fail to
reach agreement as to any material decision affecting the joint
venture within five (5) business days of either party's demand
therefore, the Venturers shall immediately submit the matter to
arbitration before a neutral arbitrator to be selected by the
Venturers' respective counsel, the costs for which shall be borne
equally by the Venturers.
6. OWNERSHIP. The technology, as well as all ancillary and
subsidiary rights therein including, without limitation,
merchandising, publications, licensing, copyrights and patents
shall all be owned by the Venture, and copyrights and patents
shall be registered in the name of IGC and assigned to the
Venture.
7. NET PROFITS AND NET LOSSES. The Venturers shall be mutually
responsible for all expenses directly related to the operation of
the Venture. BETT shall be responsible for its development costs
to date and FTET for fund raising costs directly related to
securing the funding. Both of these costs shall be accounted for
and included in distribution of revenues below. Thereafter, the
profits, losses, if any, and loss financing shall likewise be
shared equally by FTET and BETT. The net profits and net losses
of the Venture, if any, shall be determined by accountants
employed by the Venture in accordance with generally accepted
accounting principles, and such determination shall be binding
upon the Venturers. Fifty percent (50%) of the net profits and
fifty percent (50%) of the net losses of the Venture shall be
allocated to FTET, and fifty percent (50%) of the net profits and
fifty percent (50%) of the net losses shall be allocated to BETT.
8. DISTRIBUTION OF REVENUES. All revenues and compensation
payable to the Venture and/or either of the Venturers in
connection with the Venture shall be deemed revenue to the
Venture and shall be allocated and disbursed in the following
manner in order of priority:
a. To pay any costs of the Venture
b. The remaining revenue shall be allocated and paid to each
Venturer in accordance with the profit sharing ratio set forth in
Paragraph 6 above.
The Venture shall maintain at its principal office accurate
books of account of all transactions pertaining to the Venture,
and each Venturer shall have the right, during reasonable
business hours, to examine and audit such books of account, or to
cause the same to be examined and audited, at its sole cost and
expense.
9. WARRANTIES AND REPRESENTATIONS. Each of the Venturers
hereby represents, warrants and agrees that it has the right to
enter into this Agreement and that it is not subject to any
obligation or disability which will, or might, prevent it from or
interfere with its fully keeping and performing all of the
covenants and conditions to be kept and performed by it hereunder
and that it has not made, and will not make, any grant or
assignment which will, or might, conflict with or impair the
complete enjoyment of the rights and privileges granted to the
Venture hereunder. Each of the Venturers agrees to indemnify the
other Venturer and to hold the other Venturer harmless from and
against any and all claims, actions, causes of action,
liabilities, damages, judgments, decrees, losses, costs and
expenses, including reasonable attorneys' fees, arising out of
any breach of any representations, warranties or agreements made
by it hereunder.
10. ASSIGNABILITY. Neither of the Venturers shall have the
right or power to sell, dispose of, assign, pledge, mortgage,
hypothecate or otherwise encumber (collectively, "Assignment")
its interest in the Venture without the prior written approval of
the other Venturer, and any Assignment or purported Assignment
shall not be effective or binding upon the Venture or the other
Venturer, except that each Venturer shall have the right to
assign its share of the revenues derived by the Venture without
such approval.
11. OUTSIDE ACTIVITIES. During and after the term of the
Venture, each of the Venturers shall be free to render services
in connection with any and all of its regular business
activities, hereto, it being understood that all so-called
"business opportunities", "corporate opportunities", "joint
venture opportunities" or other fiduciary opportunities are
hereby waived.
12. FUTHER DOCUMENTS. Each of the Venturers agrees to
execute, acknowledge and deliver any and all further documents
which may be required to carry into effect this Agreement and its
respective obligations hereunder, all of which further documents
shall be in accordance with and consistent with the terms of this
Agreement.
13. DISSOLUTION. The Venture shall be dissolved only upon
the occurrence of any of the following:
a. The mutual agreement of the Venturers;
b. The occurrence of any event which makes it unlawful for
the Venture business to be carried on or for the Venturers to
carry on the Venture;
c. The bankruptcy of either Venturer;
d. At the election of either Venturer, upon the occurrence
of a material breach by the other Venturer of this Agreement, who
has been served notice of the breach and has failed to cure same
within thirty days after notice;
e. Any other cause of dissolution provided for in the
Colorado or California Uniform Partnership Act; the Venturer may
not be dissolved for a period of five (5) years after the date
hereof by the will of either Venturer acing unilaterally without
the consent of the other Venturer; or
f. Upon dissolution of the Venture, the Venture assets,
after payment of creditors' claims, shall be distributed in
accordance with the applicable provisions of the Colorado or
California Uniform Partnership Act then in force.
14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado
applicable to agreements entered into and wholly performed
therein. Any other controversy or claim arising out of or
relating to this Agreement or the validity, construction or
performance of this Agreement, or the breach thereof, shall be
resolved by arbitration in accordance with the rules and
procedures of the American Arbitration Association situated in
Denver, Colorado, as said rules may be amended. Such rules and
procedures are deemed incorporated herein and made a part of this
Agreement by this reference. The parties agree that they will
abide by and perform any award (including, without limitation, as
the costs thereof) rendered in any such arbitration and that nay
court having jurisdiction may issue a judgment based upon such
award.
15. NOTICES. All notices, statements or other documents
which either Venturer shall desire to give to the other hereunder
shall be in writing. The addresses of the Venturers shall, until
further notice be:
FTET: First Entertainment Holding Corp.
7887 E. Bellview, Suite 1100
Englewood, CO 80111
Attn: Mr. A. B. Goldberg
Telephone: (303) 228-1650
FAX: (303) 228-2281
With a copy to: Jeff Esses
Palmer, Guest and Esses
1999 Broadway
Denver, CO 80202
Telephone: (303) 292-2992
BETT:
With a copy to: Thomas S. Hughes
31310 Eaglehaven Circle
Rancho Palos Verdes, CA 90275
16. BANK ACCOUNT. The Venture shall maintain bank
account(s) at a bank to be mutually approved by the Venturers,
into which all funds contributed to or received by the Venture,
shall be deposited. All withdrawals from such account(s) shall
require the joint signatures of a representative of each
Venturer, or a written authorization of same.
17. ENTIRE AGREEMENT. This Agreement contains the full and
complete understanding between the Venturers with reference to
the within subject matter, supersedes all prior agreements and
understandings, whether written or oral, pertaining thereto, and
cannot be modified except by a written instrument signed by both
of the Venturers. Each of the Venturers acknowledges that in
entering this Agreement it is not relying upon any representation
or promise made by the other or its agents or representative not
expressly contained in this Agreement has been.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
First Entertainment Holding Corp.
By: /s/ A.B. Goldberg
A.B. Godlberg, President
Electronic Transactions &
Technologies/eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes, Chairman & CEO
CONSULTING AGREEMENT
Agreement made as of August 16, 1999 by and between eConnect
Incorporated, a Nevada corporation, 2500 Via Cabrillo Marina,
Suite 112, San Pedro, CA 90731 ("Contractor") and eMarkit,
Incorporated, a Nevada corporation, 6339 E. Greenway Road, Suite
102-215, Scottsdale, AZ 85254 ("Contractee").
WITNESSETH
Whereas, Contractor requires expertise in the area of public
corporate consulting to support its business and growth; and
Whereas, Contractee has substantial contacts among the members of
the investment community and desires to act as a consultant to
provide financial and consulting services.
Now, therefore, in consideration of the premises and the mutual
promises and covenants contained herein and subject specifically
thereby, the parties agree as follows:
(1) Certain Definitions. When used in this Agreement, the following
terms shall have the meanings set forth below:
1.1 Affiliate - any person or entities controlled by a party.
1.2 Contractor - the Contractor who uses the services of Contractee.
1.3 Contractor Clients - the Contractor's clients who use the
services of Contractee through the Contractor.
1.4 Contact Person - the person who shall be primarily responsible
for carrying out the duties of the parties hereunder. Contractor
and Contractee shall each appoint a Contact Person to be
responsible for their respective duties. In the even that one
party gives notice to the other party in writing that in their
reasonable opinion, the other party's Contact Person is not able
to fulfill their duties and responsibilities hereunder, both
parties shall mutually agree upon a replacement Contact Person
within ten (10) days of said notice.
1.5 Extraordinary Expenses - expenses that are beyond those expenses
that are usual, regular, or customary in the conduct of the in-
house activities in fulfillment of the scope of the Agreement.
1.6 Equity - cash, securities or liquid assets, specifically
excluding real property.
1.7 Payment or Payable of Kind - distribution of the proceeds of a
transaction in the same type and form was given as valuable
consideration for the transaction.
(2) Contact Persons. The Contact Person for Contractor is Thomas
Hughes. The Contact Person for Contractee is Frank Mecoli.
(3) Services To Be Rendered By Contractee. Services to be rendered
by Contractee are as follows:
3.1 Stock Performance. The parties agree that performance of
Contractee shall not be based on the price of the stock and not
to affect the price of the stock. Contractor understands that
Contractee has no control with regard to the price of these
securities.
3.2 Advice and Counsel. Contractee will provide advice and
counsel regarding Contractor's strategic business and financial
plans, strategy and negotiations with potential lenders/investor,
merger/acquisition candidates, joint ventures, corporate partners
and others involving financial and financially related
transactions.
3.3 Introduction to the Securities Brokerage Community.
Contractee has a close association with broker/dealers and
investment professionals across the country and will enable
contact between Contractor and/or Contractor Clients to
facilitate business transactions among them. Contractee shall
use their contacts in the brokerage community to assist
Contractor in establishing relationships with securities dealers
and to provide the most recent corporate information to
interested securities dealers on a regular and continuous basis.
Contractee understands that this is in keeping with Contractor's
business objective to establish a nationwide network of
securities dealers who have an interest in Contractor and/or
Contractor Clients.
3.4 Market Making Intelligence. Contractee knows market-makers
and has access through its network and Contractee will monitor
and react to sensitive market information on a timely basis and
provide advice, counsel and proprietary intelligence (including
but not limited to information on price and volume) to Contractor
in a timely fashion with respect to securities in which
contractor has an interest. Contractor understands that this
information is available from other sources but acknowledges that
Contractee can provide it in a more timely fashion and with
substantial value-added interpretation of such information. The
foregoing notwithstanding, no information will be provided to
Contractor with respect to the activities of any other Contractee
customer's accounts without such customer's prior consent.
3.5 Contractor and/or Contract Client Transaction Due Diligence.
Contractee will undertake due diligence on all proposed financial
transactions affecting the Contractor, including investigation
and advice on the financial, valuation and stock price
implications thereof.
3.6 Additional Duties. Contractor and Contractee shall mutually
agree upon any additional duties, which Contractee may provide
for compensation paid or payable by Contractor under this
Agreement. Such additional agreement(s) may, although there is
no requirement to do so, be attached hereto and made a part
hereof as Exhibits beginning with Exhibit "A".
3.7 Best Efforts. Contractee shall devote such time and best
efforts as may be reasonably necessary to perform its services.
Contractee is not responsible for the performance of any
services, which may be rendered hereunder without Contractor
providing the necessary information prior thereto. Contractee
cannot guarantee results on behalf of Contractor but shall pursue
all avenues available through its network of financial contacts.
At such time as an interest is expressed in Contractor's needs,
Contractee shall notify Contractor and advise it as to the source
of such interest and any terms and conditions of such interest.
The acceptance and consummation of any transaction is subject to
acceptance of the terms and conditions by Contractor. It is
understood that a portion of the compensation to be paid
hereunder is being paid by Contactor to have Contractee remain
available to assist it with transactions on an as-needed basis.
4) Compensation to Contractee
4.1 Initial Fee. Contractor does agree to pay Contractee an initial
fee of One Million (1,000,000) "free-trading" shares of eConnect
stock deemed fully earned upon execution hereof for Contractee's
initial setup activities which are necessary for Contractee to
provide the services herein. Immediately upon signature of this
Agreement by Contractor and Contractee, One Million (1,000,000)
"free-trading" shares shall be deposited in Contractee's account
of choice. Contractor and Contractee agree that these 1,000,000
shares shall be sold without any restrictions in order to provide
Contractee with the necessary capital to initiate its program on
behalf of Contractor. In addition, 1,000,000 warrants
exercisable at $1.00 per share, which expire on December 31,
2000, shall be issued to Contractee immediately upon signature of
this Agreement by Contractor and Contractee. The 1,000,000
warrants shall be sent directly to eMarkit, Incorporated at 6339
E. Greenway Road, Suite 102-215, Scottsdale, AZ 85254. This fee
shall be considered in arrears if not received by the tenth
(10th) business day following execution of this Agreement.
4.2 Additional Fees. Contractor and Contractee shall mutually agree
upon any additional fees, which Contractor may pay in the future
for services rendered by Contractee under this Agreement. Such
additional agreement(s) may, although there is no requirement to
do so, be attached hereto and made apart hereof as Exhibits
beginning with Exhibit "A".
4.3 Extraordinary Expenses. Extraordinary expenses of Contractee
shall be submitted to Contractor for approval prior to
expenditure and shall be paid by Contractor within ten (10)
business days of receipt of Contractee's request for payment.
4.4 Finder Fees.
4.4.1 In the event Contractee introduces Contractor or a Contractor
affiliate to any third party funding source(s), underwriter(s),
or merger partner(s) which arrive at a mutual funding,
underwriting or merger agreement, Contractor hereby agrees to pay
Contractee an advisory fee of five percent (5%) of the gross
proceeds derived from such funding, payable upon the consummation
of such funding of underwriting, even though the term of this
Agreement may have expired.
4.4.2 Contractor hereby directs and authorizes funding source(s) or
underwriter(s), or merger partner(s) which arrive at a mutual
funding, underwriting or merger agreement, Contractor hereby
agrees to pay Contractee an advisory fee of five percent (5%) of
the gross proceeds derived from such funding, payable upon the
consummation of such funding of underwriting, even though the
term of this Agreement may have expired.
4.4.3 Contractee may, at is sole option, elect to receive all or a
portion of said advisory fee as payment in kind, i.e., pro-rata
in the same form and type of securities, equity, or financing
instruments issued to the funding source or underwriter by
Contractor. In the even the exercise of this option results in
additional expense over and above the expenses of the funding
and/or underwriting then the additional expenses shall be borne
by Contractor. In addition, the exercise of this option by
Contractee shall not impede or otherwise have a negative effect
on the funding or underwriting.
4.5 Interest of Funds Due. Contractor shall pay interest on all
payments in arrears due Contractee at the rate of ten percent
(10%) per annum.
5) Indemnification. Each party shall hold the other party
harmless from and against, and shall indemnify the other party
for, any liability, loss and costs, and expenses or damages
however caused by reason of any injury (whether to body,
property, personal or business character, or reputation)
sustained by any person or to any person or property by reason of
any act of neglect, default or omission of it or any of its
agents, employees, or other representatives arising out of or in
relation to this Agreement. Nothing herein is intended to nor
shall it relieve either party from liability for its own act,
omission or negligence. All remedies provided by law or in
equity shall be cumulative and not in the alternative.
6) Contractor Representations. Contractor hereby represents,
covenants and warrants to Contractee as follows:
6.1 Authorization. Contractor and its signatories herein have
full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby.
6.2 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate any provision of the charter or by-laws of
Contractor or violate, or be in conflict with, or constitute a
default under, any agreement or commitment to which Contractor is
a party, or violate any statute or law or any judgment, decree,
order, regulation or rule of any court or government authority.
6.3 Agreement in Full Force and Effect. All contracts,
agreements, plans, leases, policies and licenses referenced
herein to which Contractor is a party are valid and in full force
and effect.
6.4 Litigation. Except as set forth below, there is no action,
suit, inquiry, proceeding or investigation by or before any court
of governmental or other regulatory or administrative agency or
commission pending or to the best knowledge of Contractor
threatened against or involving Contractor, or which questions or
challenges the validity of this Agreement and its subject matter;
and Contractor does not know or have any reason to know if any
valid basis for any such action, proceeding or investigation
exists.
6.5 Consents. No consent of any person, other than the
signatories hereto, is necessary to the consummation of the
transactions contemplated hereby including, without limitation,
consents from parties to loans, contracts, leases or other
agreements and consents from government agencies, whether
federal, state or local.
6.6 Contractee's Reliance. Contractee has and will rely upon
the documents, instruments and written information furnished to
Contractee by the Contractor's officers or designated employees
and:
6.6.1 Contractor Material. All representations and
statements provided about Contractor are true, complete and
accurate. Contractor agrees to indemnify, hold harmless, and
defend Contractee, its officers, directors, agents, consultants
and employees at Contractor's expense for any proceeding or suit
which may arise out of any inaccuracy or incompleteness of any
such material or written information supplied to Contractee; and
6.6.2 Contractor Client and Other Material. All
representations and statements provided, other than about
Contractor, are to the best of its knowledge true, complete and
accurate.
6.7 Services Not Expressed or Implied.
6.7.1 Contractee is not a registered Broker/Dealer and will
not and cannot directly solicit the buying or selling of
Contractor securities. Contractee has not agreed with
Contractor, in this agreement or any other agreement, verbal or
written, to be a market maker in any specific securities in which
Contractor or Contractor Client has an interest; and
6.7.2 Any payments made herein to Contractee are not, and
shall not be construed as, compensation to the Contractee for the
purposes of making a market, to cover Contractee's out-of-pocket
expenses for making a market, or for the submission by Contractee
of an application to make a market in any securities; and
6.7.3 No payments made herein to Contractee are for the
purposes of affecting the price of any security or influencing
any market-making functions, including but not limited to,
bid/ask quotations, initiation and termination of quotations,
retail securities activities, or for the submission of any
application to make a market.
7) Confidentiality. Contractee and Contractor each agree to provide
reasonable security measures to keep information confidential
whose release may be detrimental to the business. Contractee and
Contractor shall each require their employees, agents,
affiliates, subcontractors, other licenses, and other who will
properly have access to the information through Contractee and
Contractor respectively, to first enter into appropriate non-
disclosure agreements requiring the confidentiality contemplated
by this Agreement in perpetuity.
8) Miscellaneous Provisions.
8.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written
agreement of Contractee and Contractor or by their duly
authorized respective officers.
8.2 Waiver of Compliance. Any failure of Contractee on the one
hand, or Contractor on the other, to comply with any obligation,
agreement or condition herein may be expressly waived in writing,
but such waiver of failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
8.3 Expenses: Transfer Taxes, etc. Whether or not the
transaction contemplated by this Agreement shall be consummated,
Contractor agrees that all fees and expenses incurred by
Contractee in connection with this Agreement shall be borne by
Contractor and Contractor agrees that all fees and expenses
incurred by Contractor in connection with this Agreement shall be
borne by Contractor, including, without limitation as to
Contractee or Contractor, all fees of counsel and accountants.
8.4 Other Business Opportunities. Except as expressly provided
in this Agreement, each party hereto shall have the right
independently to engage in and receive full benefits from
business activities.
8.5 Compliance with Regulatory Agencies. Each party represents
to the other party that all actions, direct or indirect, taken by
it and its respective agents, employees and affiliates in
connection with this Agreement and any financing or underwriting
hereunder shall conform to all applicable Federal and State
securities laws.
8.6 Notices. Any notices to be given hereunder by an party to
the other may be effected by personal delivery in writing or by
mail, registered or certified, postage prepaid with return
receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph
of this Agreement, but any party may change their address by
written notice in accordance with this subsection. Notices
delivered personally shall be deemed communicated as of actual
receipt; mailed notices shall be deemed communicated as of three
(3) days after mailing.
8.7 Assignment. This Agreement and all of the provision hereof
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by Contractor without the
prior written consent of Contractee, except by operation of law.
8.8 Delegation. Neither party shall delegate the performance of
its duties under this Agreement without prior written consent of
the other party.
8.9 Publicity. Neither Contractee nor Contractor shall make or
issue, or cause to be made or issued, any announcement or written
statement concerning this Agreement or the transactions
contemplated hereby for dissemination to the general public
without the prior consent of the other party. This provision
shall not apply, however, to any announcement or written
statement required to be made by law or the regulations of any
Federal or State governmental agency, except that the party
required to make such announcement shall, whenever practicable,
consult with the other party concerning the timing and consent of
such announcement before such announcement is made.
8.10 Governing Law. This Agreement and the legal relations among
the parties hereto shall be governed and construed in accordance
with the laws of the State of Nevada, without regard to its
conflict of law doctrine. Contractor and Contractee agree that
if action is instituted to enforce or interpret any provision of
this Agreement then jurisdiction and venue shall be Clark County,
Nevada.
8.11 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but of which together shall constitute one and the same
instrument.
8.12 Headings. The headings of the Sections of this Agreement
are inserted for convenience only and shall not constitute a part
hereto or affect in any way the meaning or interpretation of this
Agreement.
8.13 Entire Agreement. This Agreement, including any Exhibits
hereto, and any other documents and certificates delivered
pursuant to the terms hereof, set forth the entire Agreement and
understanding of the parties hereto in respect to the subject
matter contained herein, and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
8.14 Third Parties. Except as specifically set forth or
referenced to herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any
person or corporation other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason
of this Agreement.
8.15 Attorney's Fees and Costs. If any action is necessary to
enforce and collect upon the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees
and costs, in addition to any other relief to which that party
may be entitled. This provision shall be construed as applicable
to the entire Agreement.
8.16 Survivability. If any part of this Agreement is found, or
deemed by a court of competent jurisdiction, to be invalid or
unenforceable, that part shall be severable from the remainder of
this Agreement.
8.17 Further Assurance. Each of the parties agrees that it shall
from time to time take such actions and execute such additional
instruments as may be reasonably necessary or convenient to
implement and carry out the intent and purpose of this Agreement.
8.18 Right to Data After Termination. After termination of this
Agreement each party shall be entitled to copies of all
information acquired hereunder as of the date of termination and
not previously furnished to it.
8.19 Relationships of the Parties. Nothing contained in this
Agreement shall be deemed to constitute either party the partner
of the other, nor except as otherwise herein expressly provided,
to constitute either party the agent or legal representative of
the other, nor to create any fiduciary relationship between them.
It is not the intention of the parties to create, nor shall this
Agreement be construed to create, any commercial nor other
partnership. Neither party shall have any authority to act for
or to assume any obligation or responsibility on behalf of the
other party except as otherwise expressly provided herein. The
rights, duties, obligations and liabilities of the parties shall
be severable and not joint or collective. Each party hereto
shall be responsible only for its obligations as herein set out
and shall be liable only for its share of the costs and expenses
as provided herein. Each party shall indemnify, defend and hold
harmless the other party, its directors, officers and employees,
from and against any and all losses, claims, damages and
liabilities arising out of any act or any assumption of liability
by the indemnifying party, or any of its directors, officers or
employees, done or undertaken, or apparently done or undertaken,
on behalf of the other party, except pursuant to the authority
expressly granted herein or otherwise agreed in writing between
the parties. Each party shall be responsible for the acts of its
agents, consultants and affiliates.
9) Terms of Agreement and Termination. This Agreement shall be
effective upon execution, and shall continue for one (1) year
unless terminated sooner, by either party, upon giving to the
other party thirty (30) days written notice, after which time
this Agreement is terminated. Contractee shall be entitled to
any fees stipulated in Exhibit "A", finder's fees for funding or
underwriting commitments entered onto within one (1) year after
the termination of this Agreement if said fees for services,
funding or underwriting was the result of Contractee's efforts
prior to the termination of this Agreement.
10) Arbitration. Contractor agrees that all controversies which may
arise between Contractor and Contractee concerning any
transaction, the construction, performance, or breach of this or
any other agreement between Contractor and Contractee, whether
entered into prior, on or subsequent to the date hereof,
including any controversy based on an expressed or implied right
of action under any state securities laws, shall be determined by
arbitration. Contractor understands that:
10.1 Arbitration is Final. Arbitration is final and binding on the
parties.
10.2 Waiver of Right. The parties waive their right to seek remedies
in court, including the right to a jury trial.
10.3 Pre-Arbitration. Pre-arbitration discovery is generally more
limited than and different from court proceedings.
10.4 Arbitrators' Award. The arbitrators' award is not required to
include factual findings or legal reasoning and any party's right
to appeal or seek modification of rulings by the arbitrators is
strictly limited.
10.5 Panel of Arbitrators. The panel of arbitrators will typically
include a minority of arbitrators who were or are affiliated with
the securities industry.
Any arbitration under this Agreement shall be in compliance with
the Federal Arbitration Act. Contractor may elect whether
arbitration shall be provided by the National Association of
Securities Dealers, Inc. or any facility provided by an exchange
or market if applicable. If Contractor fails t make such
election, by certified mail to Contractee at their address of
record, before the expiration of five (5) days after receipt of a
written request from Contractee with regard to such election,
then Contractee shall make such election.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above
written.
eConnect
/s/ Thomas S. Hughes
Thomas S. Hughes
eMarkit, Incorporated
/s/ Robert Bragg
Robert Bragg, President
EXHIBIT "A"
DATE:
TO:
FOR SERVICES RENDERED PURSUANT TO SECTION NO. 3 OF THE CONSULTING
AGREEMENT $00 AND/OR 1,000,000 "FREE-TRADING" SHARES OF ECONNECT
STOCK AND 1,000,000 WARRANTS EXERCISABLE AT $1.00 PER SHARE WHICH
EXPIRE ON DECEMBER 31, 2000.
Insert name of institution here
DTC Instructions:
Non-customer House Account No. ___________, Account No. ________
Trading Account No. ______________
Client Account No. ( ) _ _ _ / _ _ _ / _ _ _
Clearing No.
DTC No.
Insert name and address of institution here
Attention:
Telephone
(FAX)
WIRE INSTRUCTIONS:
Insert bank wire instructions here.
AGREEMENT AND PLAN OF ACQUSITION
This Agreement made as of the ninth day of September, 1999, by
and among eConnect, a Nevada corporation ("eConnect") and
PowerClick, Inc., a Nevada corporation (the "Company"):
WHEREAS, the Board of Directors of eConnect have determined
that it is in the best interest of its shareholders to approve
the business combination transaction provided for herein whereby
theArtAuction (www.theArtAuction.com) will be acquired by
eConnect.
NOW, THEREFORE, in consideration of the agreements
hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
PURCHASE PRICE
1.2 Purchase Price. Upon the sale, transfer and delivery to
eConnect by the Company and its shareholders of theArtAuction
(www.theArtAuction.com) and in an aggregate of 2,000,000 shares of
eConnect common stock.
The Company certificates evidencing an aggregate of 2,000,000
shares of eConnect common stock are paid as follows:
1,000,000 shares of registered free trading common stock.
1,000,000 shares of one year - restricted common stock
The eConnect shares issued to the Company in accordance with the
terms hereof shall be deemed to have been fully paid and non-
assessable and issued as applicable, in full satisfaction of all
rights pertaining to such shares of theArtAuction (www.theArtAuction.com).
ARTICLE II
BREACH
2.2.1 No Breach. Neither the execution and delivery of this
Agreement nor compliance by the Company with any of the
provisions hereof, nor the consummation of the transactions
contemplated hereby, will:
(a) violate or conflict with any provision of the Certificate
of Incorporation or By-laws of the Company:
(b) violate or, alone with the passage of time, result in the
material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a default
under, the terms of any agreement or other document or
undertaking, oral or written to which the Company is a party or
which any of them or any of their respective properties or
assets may be bound (except for such violations, conflicts,
breaches or defaults as to which require waivers or consents by
other parties have been or will, prior to the Closing, be
obtained);
(c) result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of any such agreement or
instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, the Company, or upon its respective
properties or assets; or
(e) violate any law or regulation of any jurisdiction relating to
the Company, its securities, assets or properties.
ARTICLE III
REPRESENTATION AND WARRANTIES OF ECONNECT
eConnect makes the following representations and warranties
to the Company, each of which shall be deemed material (and the
Company, in executing, delivering and consummating the
Agreement, has relied and will rely upon the correctness and
completeness of each of such representations and warranties):
3.1 Valid Corporate Existence; Qualification. eConnect is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. eConnect has
the corporate power to carry on its business as now conducted
and to own its assets. The copies of the Certificates of
Incorporation (as certified by the Secretary of the State of
Nevada) and By-Laws (as certified by the secretary of eConnect,)
are true and complete copies of those documents as now effect.
The minute books of eConnect contain accurate records of all
meetings of its Board of Directors, and stockholders since its
incorporation, and accurately reflect all transactions referred
to therein.
3.2 Corporate Authority: Binding Nature of Agreement: etc.
eConnect has the corporate power to enter into this Agreement
and to carry out its obligation hereunder. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by
the Board of Directors of eConnect prior to the closing. This
Agreement constitutes the valid and binding obligations of each
of eConnect and is enforceable on accordance with its terms.
3.3 Untrue or Omitted Facts. To the knowledge of eConnect,
after reasonable inquiry, no representation, warranty or
statement by eConnect in the Agreement contains any untrue
statement of a material fact or omits or will omit to state a
fact necessary in order to make such representation, warranties
or statements not materially misleading. Without limitation of
the foregoing, there is no fact known to eConnect after
reasonable inquiry, that has had, or which may be reasonably
expected to have, a materially adverse effect on eConnect or any
of its assets, properties, operations or businesses and that has
not been disclosed in writing to the Company.
ARTICLE IV
COMPANY INFORMATION
Since the Company must at all times rely upon the accuracy and
completeness of information supplied to it by eConnect's
officers, directors, agents, and employees, eConnect agrees to
indemnify, hold harmless, and defend the Company at eConnect's
expense, in any proceeding or suit which may arise out of and/or
due to any inaccuracy or incompleteness of material information
supplied by eConnect to the Company.
ARTICLE V
ASSIGNMENT
This Agreement is intended to be binding upon and shall insure
to the benefit of the parties, their successors, and assigns.
ARTICLE VI
ARBITRATION/JURISDICTION OF COURT
Any controversy or claim arising out of, or relating to, this
Agreement or any breach thereof shall be submitted for
arbitration before the American Arbitration Association ("AAA"),
California, under the Commercial Arbitration Rules of the AAA.
Judgment upon any such award rendered thereby may be entered in
any court having jurisdiction thereof, and no jurisdiction shall
exist in any other International or Domestic court, tribunal,
forum or agency, except to confirm any award made as a judgment.
ARTICLE VII- MISCELLANEOUS
This Agreement constitutes as the entire Agreement between
eConnect and the Company relating to provided services outlined
herein for the compensation provided herein. It supercedes all
prior or contemporaneous communications, representations or
agreements, whether oral or written, with respect to the subject
matter hereof and has been induced by no representations,
statements or agreements other than those expressed herein. No
agreements hereinafter made between the parties shall be binding
on either party unless reduced to writing and signed by an
authorized of the party bound hereby.
ARTICLE IX
EXECUTION
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by their duly authorized officers.
eConnect
By: /s/ Thomas S. Hughes
Thomas S, Hughes, President
PowerClick, Inc.
By: /s/ Dominique Einhorn
Dominique Einhorn, President
CONSULTING AGREEMENT
THIS AGREEMENT made this 24th day of September 1999, by and between:
INTERNATIONAL INVESTOR RELATIONS GROUP, INC.
162 Riverbend Dr., # F
Altamonte Springs, FL 32714
Tel: (407) 865-9433
Fax: (407) 699-8851
a Florida Corporation (hereinafter referred to as "IIRG") and
e-CONNECT
2500 Via Cabrillo Marina, Suite 112
San Pedro, CA 90731
www.e-connect.com
Tel: (877) 399-7467
Fax: (310) 514-9442
a Nevada corporation (hereinafter referred to as the "COMPANY").
Collectively, IIRG and the COMPANY will hereinafter be referred
to as "the parties".
WITNESSETH
WHEREAS, IIRG is an investor relations, direct marketing,
publishing, public relations and advertising firm with expertise
in the dissemination of information about publicly traded
companies; and is in the business of providing investor relations
services, publishing, advertising services, fulfillment services,
marketing of business formats and opportunities and other related
programs, services and products; and
WHEREAS, COMPANY is publicly held with its common stock trading
on one or more stock exchanges and/or over-the-counter; and
WHEREAS, COMPANY desires to publicize itself with the intention
of making its name and business better known to its shareholders,
investors and brokerage houses; and
WHEREAS, IIRG is willing to accept COMPANY as a client.
WHEREAS, COMPANY requires investor relations services and desires
to employ and/or retain IIRG to provide such services as an
independent contractor, and IIRG is agreeable to such a
relationship and/or arrangement, and the parties desire a written
document formalizing and defining their relationship and
evidencing the terms of this Agreement;
THEREFORE, in consideration of the mutual covenants contained
herein, it is agreed as follows:
DEFINITIONS AND INTERPRETATIONS
1. Captions and Section Numbers
The headings and section references in this Agreement are for
convenience of reference only and do not form a part of this
Agreement and are not intended to interpret, define or limit the
scope, extent or intent of this Agreement or any provisions
thereof.
2. Extended Meanings
The words "hereof", "herein", "hereunder" and similar expressions
used in any clause, paragraph or section of this Agreement will
relate to the whole of this Consulting Agreement and not to that
clause, paragraph or section only, unless otherwise expressly
provided.
3. Number and Gender
In this Agreement, words importing the masculine gender include
the feminine or neuter gender and words in the singular include
the plural, and vice versa.
4. Section References and Schedules
Any reference to a particular "article", "section", "paragraph"
or other subdivision of this Agreement and any reference to a
schedule, exhibit or addendum by name, number and/or letter will
mean the appropriate schedule, exhibit or addendum attached to
this Agreement and by such reference is incorporated into and
made part of this Agreement.
AGREEMENT
5. Appointment
COMPANY hereby appoints and engages IIRG as its investor
relation's counsel and hereby retains and employs IIRG upon the
terms and conditions of this Agreement. IIRG accepts such
appointment and agrees to perform the services upon the terms and
conditions of said Agreement.
6. Engagement
COMPANY engages IIRG to publicize the COMPANY to brokers,
prospective investors and shareholders and as further described
below and subject to the further provisions of the Agreement.
IIRG hereby accepts said engagement by COMPANY as a client, and
agrees to publicize COMPANY as further described below and
subject to the further provisions of the Agreement.
7. Authority and Description of Services
During the term of the Agreement, IIRG shall furnish various
professional services and advice as specifically requested by the
COMPANY. Said professional services and advice shall relate to
those services, items and/or subjects described in Addendum "A",
which is attached hereto and made a part hereof by this
reference, and/or as follows:
A. IRRG shall act, generally, as corporate investor relations
counsel, essentially acting (I) as liaison between COMPANY and
its shareholders; (2) as advisor to COMPANY with respect to
existing and potential market makers, broker-dealers,
underwriters, and investors as well as being the liaison between
COMPANY and such persons; and (3) as advisor to COMPANY with
respect to communications and information, including but not
necessarily limited to preparation of a one page magazine
advertorial, writing of a corporate profile, preparation of a
research report, planning, developing, designing, organizing,
writing and distributing such communications and information,
bookings and organizing road shows.
B. IIRG shall assist in establishing, and advise COMPANY with
respect to interviews of COMPANY officers by the financial media;
interviews of COMPANY officers by analysts, market makers,
broker-dealers, and other members of the financial community.
C. IIRG shall seek to make COMPANY , its management, its
products, and its financial situation and prospects known to the
financial media, financial publications, broker-dealers, mutual
funds, institutional investors, market makers, analysts,
investment advisors, and other members of the financial community
as well as the public generally.
D. IIRG, in providing the foregoing services, shall be
responsible for all costs of providing the services, including
but not limited to out-of-pocket expenses for postage, delivery
service (e.g., Federal Express, United Parcel Service, DHL
Worldwide Service), telephone charges, compensation to third
party vendors, copywriters, staff writers, art and graphic
personnel, subcontractors, printing, etc.
E. IIRG's compensation under this Agreement shall be deemed to
include the above-mentioned costs and expenses, unless otherwise
expressly provided herein.
8. Marketing Program
Including but not necessarily limited to the following components:
A. IIRG reviews and analyzes all aspects of COMPANY'S goals and
makes recommendations on feasibility and achievement of desired
goals.
B. IIRG provides through their network, firms and brokers
interested in participating and schedules and conducts the
necessary due diligence and obtains the required approvals
necessary for those firms to participate. IIRG interviews and
makes determinations on any firms or brokers referred by COMPANY
with regard to their participation.
C. IIRG shall be available to COMPANY to field calls from firms
and brokers inquiring about COMPANY.
9. Terms of Agreement
This Agreement shall become effective upon execution hereof and
shall continue thereafter up to and including March 23, 2000, or
in the case of specific services until such time as such matters
are finalized to the satisfaction of both COMPANY and IIRG . It
is expressly acknowledged and agreed by and between the parties
hereto that IIRG shall not be obligated to provide any services
and/or perform any work related to the Agreement until such time
as any agreed and/or specified retainer (deposit, initial fee,
down-payment) in US funds, and/or other specified and/or agreed
valuable consideration, has been received by IIRG.
10. Where Services Shall be Performed
IIRG services shall be performed at the main office location, or
at other such designated location(s) as IIRG and COMPANY agree
are the most advantageous for the work to be performed.
11. Limitations on Services
The parties hereto recognize that certain responsibilities and
obligations are imposed by Federal and State Securities Laws and
by the applicable rules and regulations of stock exchanges, the
National Association of Securities Dealers, in-house "due
diligence" or "compliance" departments of brokerage houses, etc.
IIRG agrees as follows:
A. IIRG shall NOT release any financial or other information or
data about COMPANY without the consent and approval of the
COMPANY.
B. IIRG shall NOT conduct any meetings with financial analysts
without informing COMPANY in advance of any proposed meeting, the
format or agenda of such meeting and COMPANY may elect to have a
representative of COMPANY attend such meeting.
C. IIRG shall NOT release any information or data about the
COMPANY to any selected or limited person(s), entity, or group
IIRG is aware that such information or data has not been
generally released or promulgated.
After notice by COMPANY of filing for a proposed public offering
of securities of COMPANY, and during any period of restriction on
publicity, IIRG shall not engage in any public relations efforts
not in the normal course without approval of counsel for COMPANY
and of counsel for the underwriter(s), if any.
12. Duties of Company
A. COMPANY shall supply IIRG, on a regular and timely basis with
all approved data and information about COMPANY, its management,
its products and its operations and COMPANY shall be responsible
for advising IIRG of any facts which would affect the accuracy of
any prior data and information previously supplied to IIRG so
that IIRG may take corrective action.
B. COMPANY shall promptly supply IIRG with full and complete
copies of all filings with all Federal and State securities
agencies; with full and complete copies of all shareholder
reports and communications whether or not prepared with the
assistance of IIRG; with all data and information supplied to any
analyst, broker-dealer, market maker, or other member of the
financial community; and with all product/services brochures,
sales materials, etc. COMPANY shall supply IIRG, within 15 days
of execution of this Agreement, with a list of all stockbrokers
and market makers active in the stock of COMPANY, and a complete
list of all shareholders on computer disk in a universal format.
C. IIRG reports are not intended to be used in the offering of
securities. Accordingly, clients must agree to each of the
points listed below and to indemnify IIRG for any breach of these
representations and covenants.
(i) COMPANY will immediately notify IIRG if it intends to make
any private or public offering of securities, including S-8 or
Regulation S.
Initial _______________
(ii) COMPANY will immediately notify IIRG in advance of any
insider selling of clients stock.
Initial _______________
(iii) COMPANY will not use IIRG reports in connection with any
offering of securities without the prior written consent of IIRG.
Initial _______________
D. In that IIRG relies on information provided by COMPANY for a
substantial part of its preparations and reports, COMPANY must
represent that said information is neither false nor misleading,
and agrees to hold harmless and indemnify IIRG for any breach of
these representations and covenants; and COMPANY agrees to hold
harmless and indemnify IIRG for any claims relating to the
purchase and/or sale of COMPANY securities occurring out of, or
in connection with, IIRG's relationship with COMPANY, unless such
claim arises out of or is a result of any wrongful or negligent
act or omission of IIRG or its agents, including, without
limitation, reasonable attorney's fees and other costs.
E. In that IIRG shareholders, officers, employees, and/or
members of their families may hold a position in and engage in
transactions with respect to COMPANY securities, and in light of
the fact that IIRG imposes restrictions on such transactions to
guard against trading on the basis of material nonpublic
information COMPANY shall contemporaneously notify IIRG if any
information or data being supplied to IIRG has been generally
released or promulgated.
13. Representation and Indemnification
A. COMPANY shall be deemed to make a continuing representation
of the accuracy of any and all material facts, materials,
information, and data which it supplies to IIRG and the COMPANY
acknowledges its awareness that IIRG will rely on such continuing
representation in disseminating such information and otherwise
performing its investor relations functions.
B. IIRG, in the absence of notice in writing from COMPANY, will
rely on the continuing accuracy of materials, information,
and data supplied by COMPANY.
C. COMPANY hereby agrees to hold harmless and indemnify IIRG
against any claims, demands, suits, loss, damages, etc., arising
out of IIRG's reliance upon the continuing accuracy of such
facts, materials, information and data, unless IIRG has been
negligent in performing its duties and obligations hereunder.
D. IIRG shall issue, as required upon written approval of
COMPANY, corrective, amendatory, supplemental, or explanatory
press releases, shareholder communications and reports, or data
supplied to analysts, broker-dealers, market makers, or other
members of the financial community.
E. COMPANY shall cooperate fully and timely with IIRG to enable
IIRG to perform its duties and obligations under this Agreement.
F. The execution and performance of this Agreement by COMPANY
has been duly authorized by the Board of Directors of COMPANY in
accordance with applicable law, and to the extent required by the
requisite number of shareholders of COMPANY.
G. The performance by COMPANY of this Agreement will not violate
any applicable court decree or order, law or regulation, nor will
it violate any provision of the organizational documents and/or
bylaws of COMPANY or any contractual obligation by which COMPANY
may be bound.
H. COMPANY shall promptly deliver to IIRG a complete due
diligence package to include latest Form 10-QSB, last 6 months of
press releases and all other relevant materials, including but
not limited to corporate reports, brochures, etc.
I. COMPANY shall promptly deliver to IIRG a list of names and
addresses of all shareholders of COMPANY, which it is aware. This
list shall be upgraded at IIRG's request.
J. COMPANY shall promptly deliver to IIRG a list of brokers and
market makers of COMPANY'S securities, which have been following
COMPANY.
15. Billing and Payment
Monthly fees or payments shall be due and payable without
billing. Billing and payments for special services shall be as
agreed on a case-by-case basis. COMPANY acknowledges and agrees
that deposits, initial payments, down payments, partial payments,
payments for special services, monthly fees or monthly payments
shall be by wire transfer to IIRG's bank account upon execution
of any agreement or agreements, or upon payment due date in the
case of monthly fees or monthly payments, or in the case of
special services within five (5) days of invoice for work
scheduled to be performed, unless expressly provided otherwise in
writing, and that if such funds are not received by IIRG by said
date COMPANY shall pay to IIRG an additional operations charge
equal to 1% for each day said funds are not received.
16. IIRG as an Independent Contractor
IIRG shall provide said services as an independent contractor,
and not as an employee of COMPANY or of any company affiliated
with COMPANY. IIRG has no authority to bind COMPANY or any
affiliate of COMPANY to any legal action, contract, agreement, or
purchase, and said action can not be construed to be made in good
faith or with the acceptance of COMPANY; thereby becoming the
sole responsibility of IIRG. IIRG is not entitled to any medical
coverage, life insurance, savings plans, health insurance, or any
and all other benefits afforded COMANY employees. IIRG shall be
solely responsible for any Federal, State or Local taxes, and
should CO:MP ANY for any reason be required to pay taxes at a
later date, IIRG shall ensure such payment is made by IIRG, and
not by COMPANY. IIRG shall be responsible for all workers
compensation payments and herein holds COMPANY harmless for any
and all such payments and responsibilities related hereto.
17. IIRG Not to Engage in Conflicting Activities
During the term of this Agreement, IIRG shall not engage in any
activities that directly conflict with the interests of COMPANY.
COMPANY hereby acknowledges notification by IIRG and understands
that IIRG does, and shall, represent and service other multiple
clients in the same manner as it does COMPANY, and that COMANY is
not an exclusive client of IIRG.
18. Trade Secrets and Inventions
IIRG shall treat as proprietary any and all information belonging
to COMPANY, its affiliates, or any third parties, disclosed to
IIRG in the course of the performance of IIRG services. IIRG
assigns and agrees to assign to COMPANY or its nominee all rights
in invention and other proprietary information conceived by IIRG
during the term of this Agreement with respect to any work
performed under said Agreement.
19. Inside Information -Securities Violations
In the course of the performance of this Agreement it is expected
that specific sensitive information concerning the operations of
COMPANY'S business, and/or affiliate companies shall come to the
attention and knowledge of IIRG. In such an event, IIRG will not
divulge, discuss or otherwise reveal such information to any
third parties.
20. Disclosure
IIRG is required to immediately disclose to COMPANY any outside
activities or interests, including ownership or participation in
the development of prior contractual relations, that conflicts or
may conflict with the best interests of COMPANY. It is mutually
understood that prompt disclosure is required under this
paragraph if the activity or interest is related, directly or
indirectly, to any activity that IIRG may be involved with on
behalf of COMPANY.
21. Warranty Against Contemplation of Agreement Related Corrupt
Practices
IIRG represents and warrants that all payments and other valuable
considerations paid or to be paid under this Agreement
constitutes compensation for services rendered; that this
Agreement and all payments and other valuable considerations and
the use of those payments and valuable considerations are non-political
in nature; and that said payments and valuable considerations do not
influence, sway or bribe any government or municipal party, either
domestic or foreign, in any way.
22. Amendments
This Agreement may be modified or amended, provided such
modifications or amendments are mutually agreed upon by and
between the parties hereto and that said modifications or
amendments are made in writing and signed by both parties.
23. Severability
If any provision of this Agreement shall be held to be contrary
to law, invalid or unenforceable for any reason, the remaining
provisions shall continue to be valid and enforceable. If a court
finds that any provision of this Agreement is contrary to law,
invalid or unenforceable, and that by limiting such provision it
would become valid and enforceable, then such provision shall be
deemed to be written, construed, and enforced as so limited.
24. Termination of Agreement
Either party prior to the expiration of the term provided in
Paragraph 9 above except as follows might not terminate this
Agreement:
a. Upon the bankruptcy or liquidation of the other party; whether
voluntary or involuntary;
b. Upon the other party taking the benefit of any insolvency law;
and/or
c. Upon the other party having or applying for a receiver appointed
for either party;
d. Sixty (60) day written notice by either party.
25. Attorney Fees
In the event that either party is in default of the terms or
conditions of this Agreement and legal action is initiated or
suit be entered as a result of such default, the prevailing party
shall be entitled to recover all costs incurred as a result of
such default including all costs, reasonable attorney fees,
expenses and court cost through trial, appeal and to final
disposition.
26. Return of Records
Upon termination of this Agreement, IIRG shall immediately
deliver to COMPANY all records, notes, data, memorandum, models
and equipment of any nature that are in the control of IIRG that
are the property of or relate to the business of COMPANY.
27. Waiver of Breach
Waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as
a waiver of any subsequent breach by the other party.
28. Disclaimer by IIRG
IIRG shall be the preparer of certain promotional materials, and
IIRG makes no representation to COMPANY or others that (i) its
efforts or services will result in any enhancement to COMPANY
(ii) the price of COMPANY'S publicly traded securities will
increase (iii) any person will purchase COMPANY'S securities, or
(iv) any investor will lend money to and/or invest in or with
COMPANY.
29. Early Termination
In the event COMPANY fails or refuses to cooperate with IIRG, or
fails or refuses to make timely payment of the compensation set
forth above and/or in Addendum "A", IIRG shall have the right to
terminate any further performance under this Agreement. In such
event, and upon notification thereof, compensation, pursuant to
Paragraph 24(D) above, shall become immediately due and payable
and/or deliverable, and IIRG shall be entitled to receive and
retain the same as liquidated damages and not as a penalty, in
lieu of all other remedies the parties hereby acknowledge and
agree that it would be too difficult currently to determine the
exact extent of IIRG's damages, but that the receipt and
retention of such compensation is a reasonable present estimate
of such damage.
30. Limitation of IIRG Liability
In the event IIRG fails to perform its work or services hereunder
its entire liability to COMPANY shall not exceed the greater of
(i) the amount of cash compensation IIRG has received from
COMPANY under Paragraph 14 above (ii) the amount of cash
compensation IIRG has received from COMPANY under Addendum "A";
or (iii) the actual damage to COMPANY as a result of such non-
performance. In no event shall IIRG be liable to COMPANY for any
indirect, special or consequential damages, or for any claim
against COMPANY by any person or entity arising from or in any
way related to this Agreement.
31. Agreement Not to Hire
COMPANY understands and appreciates that IIRG invested a
tremendous amount of time, energy and expertise in the training
of its employees and education of its subcontractors to be able
to provide the very services COMPANY desires. COMPANY further
understands that in the event an employee of IIRG be enticed to
leave, then IIRG shall be damaged in an amount the parties are
incapable to calculating at the present time. Therefore, COMPANY
agrees not to offer employment to any employee or subcontractor
of IIRG, nor to allow any employee, officer or director of
COMPANY to offer such employment with COMPANY or any other
company, concern, venture or entity with whom officers and
directors of COMPANY are employed, associated or hold a financial
stake in for a period of three (3) years from the date of
expiration or termination hereof.
32. Miscellaneous
a. Effective date of representations shall be no later than the date
IIRG is prepared to distribute magazines and/or brochures
pursuant to this Agreement.
b. Currency: In all instances, references to dollars shall be deemed
to be United States currency.
c. Stock: In all instances, references to stock shall be deemed to
be unrestricted and free trading or registered warrants or
piggyback registered rights.
33. Notices
All notices hereunder shall be in writing and addressed to the
party at the address herein set forth, or at such other address
which notice pursuant to this section may be given, and shall be
given by either personal delivery, certified mail, express mail
or other national overnight courier services. Notices shall be
deemed given upon the earlier of actual receipt or three (3)
business days after being mailed or delivered to such courier
service. Any notices to be given hereunder shall be effective if
executed by and sent by the attorneys for the parties giving such
notice, and in connection therewith the parties and their
respective counsel agree that in giving such notice such counsel
may communicate directly in writing with such parties to the
extent necessary to give such notice. Any notice required or
permitted by this Agreement to be given shall be given to the
respective parties at the addresses listed on Page 1 of this
Agreement.
34. Time is of the Essence
The parties of their respective obligations hereby expressly make
time of the essence of this Agreement with respect to the
performance, hereunder.
35. Inurnment
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors, assigns and
any addenda's attached hereto.
36. Entire Agreement
This Agreement contains the entire agreement of the parties and
may be modified or amended only by agreement in writing, signed
by the party against whom enforcement of any waiver, change,
amendment, modification, extension or discharge is sought. Both
parties declare that there are no oral or other agreements or
understandings between them affecting this Agreement, or relating
to the business of IIRG. This Agreement supersedes all previous
agreements between IIRG and the COMPANY.
37. Applicable Law
This Agreement is not valid or binding upon IIRG unless and until
executed by its President or other duly authorized executive
officer of IIRG at its home office in Altamonte Springs, Florida.
38. Non-Waiver
The failure of either party, at any time, to require any such
performance by any other party shall not be construed as a waiver
of such right to require such performance and shall in no way
affect such party's right to require such performance and shall
in no way affect such party's right subsequently to require full
performance hereunder.
39. Execution in Counterpart
This Agreement may be executed in counterpart, not withstanding
the date or dates upon which this Agreement is executed and
delivered by any of the parties, and shall be deemed to be an
original and all of which will constitute one and the same
agreement, effective as of the reference date first written
above.
IN WITNESS WHEREOF, the parties hereto have set their hands in
execution of this Agreement.
ECONNECT
By: /s/ Thomas S. Hughes
Thomas S. Hughes
Chairman and Chief Executive Officer
INTERNTIONAL INVESTOR RELATIONS GROUP, INC.
By: /s/ Thomas A. Sandelier, III
Thomas A. Sandelier, III
Addendum A
Services that will be performed:
10 road shows
Sample of cities will include New York, Chicago, Boston, Detroit,
Los Angeles, San Diego, and San Francisco. We will reach
approximately 450 to 600 brokers, fund managers and financial
advisors.
1 Media Placement in Stock/Card deck reaching 250,000 + investors
These are standard stockdeck/broker deck mailers directly mailed
to the Readers of Money World, Bull & Bear, Louis Rukerser, W/S,
Insider's Guide, Growth Stock Report and Investor's Business Daily.
2 News releases, includes broadcast fax to all interested parties
News releases are released by Business Newswire and are picked up
by Bloomberg, Dow Jones News service, Rueters, etc.
Research report 6-8 page full color
This is a full color glossy research report describing in detail
the particulars of the company (5000 printed)
Broker card - 2 sided, full color
This is a concise but brief information piece primarily used by
brokers to explain and sell their clients. (5000 printed)
Addendum B
All Monies payable hereunder shall be in U.S. funds and drawn on
U.S. banks. The parties acknowledge that in negotiating this fee
they recognize that the services will probably not be performed
in equal monthly segments, but may be substantial during the
earlier portion of the term and less thereafter as relationships
and communication lines are established. Thus, part of the
compensation for earlier services will be deferred and therefore
any lessening of services shall not constitute a breach or
termination hereof and the level fee shall continue.
$85.000.00 - Payment schedule as follows:
Fifty thousand Dollars - US cy ($50,000) payable no later than
(September 3O, 1999).
International Investor Relations Group, Inc.
Washington Mutual
Stockton California
Account # 831 394 1911
AB Routing # 321180748
Branch # 1681
167,000 free trading shares based on a .21 cent per share price
payable no later than October 14, 1999. If the COMPANY cannot
deliver the 167,000 free trading stocks by October 14, 1999 then
the balance $35,000 will be paid in cash by October 14, 1999.
PURCHASE WARRANTS
300,000 PURHASE WARRENTS TO BE EXECUTED AS FOLLOWS:
100,000 WARRANTS at .50 cents per share
100,000 WARRANTS at. 75 cents per share
100,000 WARRANTS at 1.00 per share
These WARRANTS will have first position on current or future
registration by the COMPANY with a 2-year expiration date from
the original date of signing the aforementioned CONTRACT.
For all special services, not within the scope of the agreement,
COMPANY shall pay to IIRG such fee(s) as, and when, the parties
shall determine in advance of performance of said special
services, provided COMPANY has agreed to said special services in
advance.
AGREEMENT
This agreement states that eConnect and Kanakaris Communications
do hereby enter into a joint venture and strategic alliance to be
ceded Internet Cash Programming and the following terms and
conditions shall apply:
Definitions:
Internet Cash Programming: A Service offered by Kanakaris
Communications and eConnect which shall enable the consumer with
the ability to purchase programming by Same-as-Cash, or by
Enhanced Credit Card.
Same-as-Cash: The payment of programming by ATM card and PIN and
effected by the ePIN or like devices.
Enhanced Credit Card: The payment of programming by; credit card
that is read by the ePIN or like devices and is therefore
considered as a safer transaction for the consumer and results in
a lower bank fee for the recipient merchant.
ePIN: The present hardware device that will be distributed into
homes and will effect either a Same-as-Cash or Enhanced Credit
Card transaction.
SafeTpay: The name of the web site button that the consumer
clicks in order to begin either a Same-as-Cash or Enhanced Credit
Card Transaction.
Internet Cash Programming: The name of the service offered to the
Entertainment Industry that will enable them to receive either a Same-as-Cash
or Enhanced Credit Card payment for their programming.
Recitals:
1.0: eConnect and Kanakaris Communications shall enter into a
strategic alliance to form the Internet Service that shall be
named Internet Cash Programming.
2.0: That eConnect shall provide the SafeTpay support service for
Internet Cash Pay Per Play.
3.0: That Kanakaris Communications shall provide the delivery to
the internet consumer of video streaming programming from either
Kanakaris Communications own inventory base or shall act as a
distributor of video streaming programming from other
entertainment providers.
4.0: That ICP shall be jointly owned by eConnect and Kanakaris
Communications.
4.1: That ICP shall be a Nevada corporation and shall authorize
1,000,000 shares of stock and that Kanakaris Communications shall
receive 400,000 shares of stock and eConnect shall receive
400,000 shares of stock and that 200,000 shares of stock shall
remain in the ICP Treasury.
4.2: That Kanakaris Communications shall retain the managing
control of ICP and shall appoint officers to manage ICP.
4.3: That all profits of ICP shall be equally split between
eConnect and Kanakaris Communications.
5.0: That eConnect shall enjoy exclusive global rights to drive
or process all originating ICP transactions whether transacted by
an ePIN or by a competitive hardware devices that are effecting
either a Same-as-Cash or Enhanced Credit Card programming
purchase.
5.1: That eConnect shall charge ICP a flat fee per ICP processed
transaction.
5.2: That eConnect shall purchase this exclusive global ICP
processing with a payment of 3,000,000 shares of free trading
stock to Kanakaris Communications.
6.0: That it is the stated purpose of eConnect and Kanakaris
Communications to bring ICP public by September 2000.
By: /s/ Thomas S. Hughes By: /s/ Alex Kanakaris
Thomas S. Hughes, Alex Kanakaris
Chairman and CEO Chairman and CEO
EConnect Kanakaris Communications
Dated: 10/9/99 Dated: 10/21/99
ADDENDUM:
eConnect will bear the responsibility for payments of any finders
fee or brokerage commission if any.
LETTER OF COMMITMENT
This letter made as of the 23rd of October, 1999, ("The Effective
Date") by and between Rogel Patawaran, individually and
collectively known as, Rogel Technologies with address at 1861 S.
Bundy, Dr., Los Angeles, CA 90025 ("Hereinafter referred to as
`RT'"), and Mr. Tom Hughes, individually and collectively known
as eConnect and or safeTpay with address at 2500 Via Cabrillo,
San Pedro, CA ("Hereinafter referred to as "EC")
1. EC agrees that it presently owes RT the sum of One Hundred Sixty
Eight Thousand Dollars ($168,000.00) for services rendered and
completed for MRS software and safeTpay system server as of the
date of this contract.
2. EC agrees that RT has, to the date of this contract, fulfilled
its contract obligation to EC, completed the MRS software and
safeTpay system server and is ready to ship.
3. EC also agrees that any additional technical support regarding
the MRS software or safeTpay server will be an additional cost to
EC.
4. In the event that EC or any of its affiliates request any of RT's
staff to travel for the purpose of technical support or advice
for the Integration of the safeTpay server, EC will pay for all
airfare, hotel and perdium (at a rate of $100.00 per day) for
each person.
5. In addition, in the even EC requests RT Technical support to
travel for the Integration of the safeTpay server to the Host, EC
shall pay each programmer the rate of $1,500.00 per day for a
maximum of three (3) days in advance (before they leave) for
services rendered.
6. EC agrees to pay RT the sum mentioned in Paragraph 1 as follows:
a. The sum of Forty Thousand Dollars ($40,000.00) by Monday,
November 1st, 1999;
b. The sum of Sixty Four Thousand Dollars ($64,000.00) by Friday,
November, 19th, 1999;
c. The sum of Sixty Four Thousand Dollars ($64,000.00) by Tuesday,
November 30th, 1999.
7. In the event that EC fails to meet the above payment schedule
(mentioned in Paragraph 6 - a, b, c, EC shall pay, in addition to
the fees mentioned in Paragraph 6 - a, b, c, to RT as follows:
a. For Monday, November 1st, 1999, a late charge of 60,000 free
trading shares of ECNC;
b. For Friday, November 19th, 1999, a late Charge of 100,000 free
trading shares of ECNC;
c. For Tuesday, November 30th, 1999, a late Charge of 500,000 free
trading shares of ECNC.
Agreed and Accepted:
By: /s/ Rogel Patawaran By: /s/ Tom Hughes
Rogel Patawaran, President Tom Hughes, CEO
Rogel Technologies eConnect
Date: October 23, 1999 Date: October 23, 1999
CAPITAL CONTRIBUTION AGREEMENT
This Capital Contribution Agreement ("Agreement") between
eConnect, a Nevada corporation ("eConnect"), and SafeTPay.com, a
Nevada corporation ("SafeTPay"), is entered into this 5th day of
November, 1999.
Recitals
WHEREAS, eConnect is a corporation organized and existing under
the laws of the State of Nevada, having been originally
incorporated under the laws of the State of Missouri on September
1, 1981, as HANDY-TOP, INC., on April 20, 1983, the name was
changed to HTI Corporation, on May 28, 1993, the name was changed
Leggoons, Inc., on March 1, 1997 the name was changed to Betting,
Inc., on June 1, 1999 Articles of Merger were filed with the
Nevada Secretary of State, which formally resulted in the
redomicile to the State of Nevada. On June 2, 1999, the name was
changed to "eConnect", with its principal business office located
at 2500 Via Cabrillo Marina, Suite 112, San Pedro, California
90731;
WHEREAS, the authorized capital stock of eConnect consists of Two
Hundred Million (200,000,000) shares of common stock, par value
of One Cent ($0.001) per share, of which Eight-Three Million One
Hundred Ninety-Eight Thousand Five Hundred One (83,198,501)
shares are issued and outstanding as of October 12, 1999;
WHEREAS, SafeTPay is a corporation organized and existing under
the laws of the State of Nevada, having been incorporated on
August 11, 1999, with its principal business office located at 98
Shoreline Way, Hampton, Georgia 30228;
WHEREAS, the authorized capital stock of SafeTPay consists of
Twenty Million (20,000,000) shares of common stock, par value of
$0.001 per share, and no preferred stock.;
WHEREAS, the principal of SafeTPay, Harry Hargens, has been
working for eConnect as a consultant regarding the creation and
management of a business unit focused on the processing of secure
Internet transactions;
WHEREAS, the respective boards of directors of eConnect and
SafeTPay deem it desirable and in the best interests of the
corporations and their stockholders that the corporations enter
into this Agreement to restructure this business unit as a
separate corporation so as to enable the business to be most
effective in focusing on it's specific mission, and in soliciting
marketing assistance and other important partnerships and
investments from certain key companies in it's industry, all
pursuant to the terms and conditions contained herein; and
WHEREAS, in order to consummate this contribution to the capital
of SafeTPay and in consideration of the mutual benefits to be
derived and the mutual agreements contained herein, eConnect and
SafeTPay approve and adopt this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual
agreements, provisions and covenants herein contained, the
parties hereto agree as follows:
ARTICLE I
CAPITAL CONTRIBUTIONS
AND RELATED MATTERS
The process of structuring SafeTPay will be accomplished by
having eConnect contribute certain assets to SafeTPay, in return
for certain shares of common stock in eConnect, as follows:
1. Assets to be contributed to SafeTPay.
eConnect hereby contributes and unconditionally transfers to
SafeTPay the following assets and properties, in return for
certain common stock in SafeTPay (as set forth in section 2
below):
(a) Software. All ownership and rights to the software that has
been developed by Rogel Technologies ("RT"), a subsidiary of
eConnect, per specifications provided by SafeTPay ("System").
This shall include the work already done prior to the date of the
Agreement, and any minor work required to debug or correct the
System as delivered last week, including but not limited to the
implementation of an 0400 reversal message for credit & debit
transactions. The cost for developing any subsequent
enhancements shall be negotiated directly between SafeTPay and
RT. A copy of the source code shall be maintained at Fort Knox
Escrow service, or such other escrow service as the parties shall
mutually agree to from time to time. SafeTPay shall have access
to this software as needed for the operation of their business.
(b) Computer Hardware. The server which has been procured by RT
for use as the SafeTPay internet server, and installed in St.
Petersburg, Florida.
(c) Miscellaneous Physical Assets. Three laptop personal
computers, 7 sample PIN pads, and miscellaneous office supplies
that have been purchased for and/or are being used by the
SafeTPay business unit.
(d) Trademarks, Trade-names, Copyrights. Ownership of any and
all marks, registrations, and goodwill that eConnect may own,
regarding "SafeTpay", "Same-As-Cash", "ePIN" and "ePAD". As a
condition for this transferal, Mr. Hargens shall contribute and
unconditionally transfer to SafeTPay any and all trademarks and
domain names held in his name.
(e) Web Address. Ownership of any web addresses reserved for
any of the above names or marks.
(g) Consulting Agreements. eConnect currently holds consulting
agreements with Harry Hargens, Robert Hodgson, Gerard Gay, and
Dale Reistad. Those agreements are hereby unconditionally
assigned to SafeTPay.
2. Equity to be received by the Parties and Others.
(a) Common Stock: SafeTPay shall initially authorize 20 Million
shares of stock. In return for the capital contributions listed
above, eConnect shall receive Two Million Three Hundred Thousand
(2,300,000) shares of restricted common stock of SafeTPay. The
principals of SafeTPay (Harry Hargens, Gerard Gay, Robert
Hodgson, and Dale Reistad) shall each receive One Hundred Fifty
Thousand (150,000) shares of restricted common stock of SafeTPay.
(d) Options.
(1) eConnect shall, upon execution of this Agreement, receive
options to purchase five million (5,000,000) shares of SafeTPay
common stock, at an exercise price of one dollar ($1.00) per
share. Any unexercised options shall expire 3 years after
execution of this Agreement.
(2) The principals of SafeTPay (Harry Hargens, Gerard Gay, Robert
Hodgson, and Dale Reistad) shall each receive options to purchase
five hundred thousand (500,000) shares of SafeTPay common stock,
at an exercise price of one dollar ($1.00) per share. Any
unexercised options shall expire 3 years after execution of this
Agreement.
(3) For a period of twenty-four (24) months following execution
of this Agreement, any additional options given to officers or
shareholders of either SafeTPay or eConnect shall be issued at
the same exercise price at those set forth in subparagraph (a)
above.
(c) Additional common stock in return for capitalization:
eConnect hereby commits to invest in SafeTPay Five Hundred
Thousand Dollars ($500,000) over the period of one (1) year from
the date of this Agreement, in four (4) equal quarterly
installments, with Twenty Thousand Dollars ($20,000) of the
first installment due not later than November 15, 1999, Forty-Two
Thousand Five Hundred Dollars ($42,500) due not later than
December 15, 1999, and the remainder of the first installment due
not later than January 15, 2000; subsequent installments shall be
due not later than the following dates: April 15, 2000, July 15,
2000, and October 15, 2000. Provided, however, that eConnect may
choose to pre-pay any portion or all of the amounts due in 2000,
by marketable securities delivered no later than January 1, 2000;
with the number of shares equal to the amount due (based on the
closing bid price on the delivery date), assuming that the common
stock of eConnect is trading on the day that the installment is
to be paid. If the first two (2) payments set forth above
(November and December 1999) are not made within five calendar
days after the due date, then eConnect shall pay to SafeTPay a
late fee of seven and one-half percent (7.5%) of the amount due.
If the last four (4) payments (January, April, July, and October
2000) are not made within fifteen (15) days of the due date, then
eConnect shall pay to SafeTPay a late fee of seven and one-half
percent (7.5%) of the amount due.
If the total investment set forth above (plus penalties, if any)
is not fully paid by December 31, 2000, then eConnect shall have
its ownership of the Two Million Three Hundred Thousand
(2,300,000) shares, as set forth above, reduced by a prorated
amount based on the amount actually invested (with the maximum
reduction being five hundred thousand (500,000) shares).
(d) Right to match other investments: The board of SafeTPay
shall be free to manage the sale of SafeTPay common stock to
investors, provided, however, that eConnect shall have the right
to match any funding from other investors, within ninety (90)
days of such funding, at the same price per common share.
3. Consulting and/or Employment Agreements.
SafeTPay shall take responsibility for renegotiating consulting
or employment agreements with the parties named in Section 1(g)
above. The parties acknowledge that significant amounts of
SafeTPay common stock, or common stock options, may be granted to
these parties by the audit and compensation committee of
SafeTPay, to secure their written acceptance of this
restructuring, and their continued enthusiastic contributions to
developing SafeTPay.
4. Ongoing Relationship between SafeTPay and eConnect; Board of
Directors.
(a) Board of Directors. eConnect and SafeTPay hereby
acknowledge and accept the following: (1) The initial board shall
consist of three (3) members appointed by Mr. Hargens, two (2)
members appointed by Thomas S. Hughes, President of eConnect, and
two (2) independent director positions to be filled by the then
existing board members when and as the board see fits. The
independent board members shall be sole members of the audit and
compensation committees; (2) the activities and actions normally
conducted by controlling shareholders shall be designated to the
board members for action; (3) all board members shall sign
confidentiality and non-disclosure agreements; (4) this initial
board as described in (1) above shall serve for three (3) years,
or until the first public offering of common stock of SafeTPay,
whichever occurs first; at which time normal elections for board
members shall commence; and (5) other than as set forth in this
paragraph, eConnect shall have no special rights or authority to
limit SafeTPay's actions, and SafeTPay shall otherwise be free
to manage its own affairs.
(b) Ownership Rights. SafeTPay hereby acknowledges and accepts
that this agreement does not grant it any ownership in, or
license or right to use, the patents held by eConnect for the
devices known as the "SLICK", the "Paymaster", the "PocketPay",
or the "TV PIN pad remote". eConnect hereby acknowledges that it
will support the principals of SafeTPay in the defense of their
patent, so as to prevent competitors from infringing on that
patent.
(c) Marketing Rights: SafeTPay hereby grants marketing
rights to eConnect as follows;
(1) SafeTPay shall grant eConnect the right to market an
exclusive private label Internet payment System, which SafeTPay
shall operate, support, and maintain.
(2) SafeTPay shall provide said marketing rights for a fee of
ten cents ($0.10) per transaction, or 10% of the fee charged by
eConnect to its clients, whichever is greater.
(3) eConnect and its subsidiaries shall have the exclusive right
to sub-license its private label product to its clients. It
shall not have the right to make agreements on SafeTPay's behalf,
and eConnect's right shall not infringe on or limit SafeTPay's
right to sign clients or license SafeTPay's System to others.
(4) eConnect shall honor all terms and conditions imposed by
banking agreements, master service agreements or any other
agreements that SafeTPay must enter into to provide the System.
(5) eConnect shall present its product with the joint service
mark "Processed by SafeTPay".
(6) The button that appears on merchant screens to facilitate
the transaction shall always read "SafeTPay".
(7) Every press release that eConnect releases with their
private label System, shall include a standard paragraph provided
by SafeTPay. No other mention or description of SafeTPay may
occur in an eConnect press release without written approval from
SafeTPay.
(8) Every press release issued by SafeTPay for the next 24
months shall include, in the safe harbor paragraph, a mention of
eConnect as a shareholder.
ARTICLE II
WARRANTIES OF THE CONSTITUENT CORPORATIONS
1. Representations and Warranties of eConnect.
eConnect covenants, represents and warrants to SafeTPay that:
(a) It is on the date of this Agreement, and will be on the
Effective Date, (a) a corporation duly organized and existing and
in good standing under the laws of the jurisdiction of the State
of Nevada, and (b) duly authorized under its articles, and under
applicable laws, to engage in the business carried on by it.
(b) Its Board of Directors has authorized and approved the
execution and delivery of this Agreement, and the performance of
the transactions contemplated by this Agreement.
(c) It has complied with, and is not in violation of any
applicable Federal, State, or local statutes, laws, and
regulations affecting its properties or the operation of its
business.
(d) It is not involved as a defendant or plaintiff in any suit,
action, arbitration, or legal, administrative or other
proceeding, which to its best knowledge, would affect the company
or its business, assets, or financial condition in a negative
manner; or, governmental investigation which is pending; to the
best of its knowledge, threatened against or affecting the
company or its business assets or financial condition; and is not
in default with respect to any order, writ, injunction or decree
of any Federal, State, local/foreign court, department, agency,
or instrumentality applicable to it.
(e) The execution and delivery of this Agreement and its
performance in the time and manner contemplated will not cause,
constitute, or conflict with, or result in any of the following:
(1) a breach or violation of any provisions of or constitute a
default under any license, indenture, mortgage instrument,
article of incorporation, bylaw, other agreement or instrument to
which the company is a party, or by which it may be bound, nor
will any consents or authorizations of any party other than those
required, (2) any event that would permit any party to any
agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of the company,
or, (3) an event that would result in the creation or imposition
of any lien, charge, encumbrance on the assets of eConnect.
(f) All fixed assets owned by it and employed in its business
are of the type, kind and condition appropriate for its business
and will be operated in the ordinary course of business.
(g) The transaction processing System being developed by
SafeTPay does not infringe on any patents owned or controlled by
eConnect or any other person or entity (both those patents named
above, and any others which may be unknown to SafeTPay); and
therefore SAFETPAY does not require any license from any of them,
and will not owe any license fees to any of them.
(h) All of the shares to be issued under Article I will be
properly authorized, validly issued, and nonassessable, and have
the status as indicated above (either restricted or free
trading).
2. Representations and Warranties of SafeTPay.
SafeTPay covenants, represents and warrants to eConnect that:
(a) It is on the date of this Agreement, and will be on the
Effective Date, (1) a corporation duly organized and existing and
in good standing under the laws of the jurisdiction of the State
of Nevada, and (2) duly authorized under its articles, and under
applicable laws, to engage in the business carried on by it.
(b) Its Board of Directors has authorized and approved the
execution and delivery of this Agreement, and the performance of
the transactions contemplated by this Agreement, and is a legal,
valid, and binding obligation of the company, and is enforceable
in accordance with its terms and conditions.
(c) It has complied with, and is not in violation of any
applicable Federal, State, or local statutes, laws, and
regulations affecting its properties or the operation of its
business.
(d) It is not involved as a defendant or plaintiff in any suit,
action, arbitration, or legal, administrative or other
proceeding, which to its best knowledge, would affect the company
or its business, assets, or financial condition in a negative
manner; or, governmental investigation which is pending; to the
best of its knowledge, threatened against or affecting the
company or its business assets or financial condition; and is not
in default with respect to any order, writ, injunction or decree
of any Federal, State, local/foreign court, department, agency,
or instrumentality applicable to it.
(e) The execution and delivery of this Agreement and its
performance in the time and manner contemplated will not cause,
constitute, or conflict with, or result in any of the following:
(1) a breach or violation of any provisions of or constitute a
default under any license, indenture, mortgage instrument,
article of incorporation, bylaw, other agreement or instrument to
which the company is a party, or by which it may be bound, nor
will any consents or authorizations of any party other than those
required, (2) any event that would permit any party to any
agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of the company,
or, (3) an event that would result in the creation or imposition
of any lien, charge, encumbrance on the assets of Internet.
ARTICLE III
CONSUMMATION OF CONTRIBUTION
If the capital contribution contemplated is completed, all
expenses incurred in consummating this agreement, except as
otherwise agreed in writing between the parties, shall be equally
borne by each of the parties. This transaction may be deferred
from time to time by mutual consent of the respective boards of
directors of each of the parties hereto, and, to the extent
provided in (1), (2), (3) and (4) below, this transaction merger
may be abandoned:
1. By the mutual consent of the respective Boards of Directors
of each of the parties hereto;
2. At the election of either of the Boards of Directors, if in
the discretion of the Board any judgment is rendered relating to
any legal proceeding not commenced and the existence of the
judgment will or may materially affect the rights of either party
to sell, convey, transfer or assign any of its assets or
materially interfere with the operation of its business, renders
the merger impracticable, undesirable or not in the best
interests of its shareholders;
3. At the election of the Board of Directors of either party if:
(a) The warranties and representations of the other party
contained in this Agreement shall not be substantially accurate
in all material respects on and as of the date of election; or
the covenants contained of the other Constituent Corporation
shall not have been performed or satisfied in all material
respects;
(b) Prior to completion of this transaction: (1) there
shall have been filed in any court or agency having jurisdiction
a complaint or other proceeding seeking to restrain or enjoin the
transaction contemplated hereby; or (2) there shall have been
presented to eConnect or SafeTPay, or any director or officer of
either of them, any process, demand or request which, in the
opinion of counsel for either party, offers reasonable grounds to
believe that a complaint or bill in equity may be forthcoming
which, if successful, would restrain, enjoin or dissolve the
transaction, and if, in either case, such Board of Directors
determines that abandonment and cancellation of this Agreement is
advisable in the best interests of the parties, their
shareholders, employees and customers;
ARTICLE IV
SPECIFIC PERFORMANCE
The assets being contributed, and especially the software still
being developed by RT, are unique and if eConnect fails in the
delivery of these assets (especially in the timely delivery of
properly-operating software) that such failure will cause
irreparable harm to SafeTPay, and thereby to SafeTPay's other
investors, for which there will be no adequate remedy under law.
SafeTPay shall be entitled, in addition to all other remedies at
law or under equity, to specific performance should eConnect fail
to deliver any asset.
ARTICLE V
INDEMNIFICATION
(a) To the extent permitted by law, eConnect shall indemnify and
hold harmless SafeTPay, and its directors and officers (each, an
"Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject
as the result of any conflict created by, or as a result of the
imposition of any lien, charge, or encumbrance created by, this
agreement & transaction, or from any action that may be brought
against SafeTPay regarding the patents referred to above,
including, but not limited to, any actions that may be brought by
Jed Dowlen, Gus Molina, or Jim Torres, or otherwise, insofar as
such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon
the foregoing. eConnect shall reimburse an Indemnified Person
promptly as such expenses are incurred, and are due and payable,
for any reasonable legal fees or other reasonable expenses
incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Article shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written
consent of eConnect, which consent shall not be unreasonably
withheld.
(b) Promptly after receipt by an Indemnified Person or
under this Section of notice of the commencement of any action
(including any governmental action), such Indemnified Person
shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Article, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory
to the indemnifying party and the Indemnified Person; provided,
however, that an Indemnified Person shall have the right to
retain its own counsel with the reasonable fees and expenses to
be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation
by such counsel of the Indemnified Person would be inappropriate
due to actual or potential differing interests between such
Indemnified Person and any other party represented by such
counsel in such proceeding. In such event, eConnect shall pay
for only one separate legal counsel for such Indemnified Person.
The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action
shall not relieve such indemnifying party of any liability to the
Indemnified Person under this Article, except to the extent that
the indemnifying party is prejudiced in its ability to defend
such action. The indemnification required by this Article shall
be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss,
damage or liability is incurred and is due and payable.
(c) To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to
make the maximum contribution with respect to any amounts for
which it would otherwise be liable under this Article to the
fullest extent permitted by law; provided, however, that no
contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault
standards set forth in this Article.
ARTICLE VI
YEAR 2000 ISSUE
Each of the parties hereto acknowledge and recognize the following:
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced before, on, or after January 1, 2000, and if
not addressed, the impact on operations and financial reporting
may range from minor errors to significant system failure which
could affect the parties' ability to conduct normal business
operations. This creates potential risk for all companies, even
if their own computer systems are Year 2000 compliant. It is not
possible to be certain that all aspects of the Year 2000 issue
affecting the parties, including those related to the efforts of
customers, suppliers, or other third parties, will be fully
resolved. It is also not possible to predict the affect that
such issue will have on the operation of the Over the Counter
Bulletin Board, upon which the common stock of eConnect is traded
(trading on such market could be disrupted for periods of time).
Each of the parties hereto represents and warrants as follows:
The parties currently believe that their systems are Year
2000 compliant in all material respects. Although the parties
are not aware of any material operational issues or costs
associated with preparing its internal systems for the Year 2000,
the parties may experience serious unanticipated negative
consequences (such as significant downtime for one or more of its
web site properties) or material costs caused by undetected
errors or defects in the technology used in their internal
systems. Furthermore, the purchasing patterns of customers may
be affected by Year 2000 issues as companies expend significant
resources to correct their current systems for Year 2000
compliance. The parties do not currently have any information
about the Year 2000 status of their existing or potential
customers. The parties' Year 2000 plans are based on their best
estimates.
ARTICLE VII
MISCELLANEOUS
1. Rights Cumulative; Waivers.
The rights of each of the parties under this Agreement are
cumulative. The rights of each of the parties hereunder shall
not be capable of being waived or varied other than by an express
waiver or variation in writing. Any failure to exercise or any
delay in exercising any of such rights shall not operate as a
waiver or variation of that or any other such right. Any
defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such
right. No act or course of conduct or negotiation on the part of
any party shall in any way preclude such party from exercising
any such right or constitute a suspension or any variation of any
such right.
2. Benefit; Successors Bound.
This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators,
representatives, successors, and permitted assigns.
3. Entire Agreement.
This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof, and supercedes any
prior agreement and/or understandings between the parties. There
are no promises, agreements, conditions, undertakings,
understandings, warranties, covenants or representations, oral or
written, express or implied, between them with respect to this
Agreement or the matters described in this Agreement, except as
set forth in this Agreement. Any such negotiations, promises, or
understandings shall not be used to interpret or constitute this
Agreement.
4. Assignment.
Neither this Agreement nor any other benefit to accrue hereunder
shall be assigned or transferred by either party, either in whole
or in part, without the written consent of the other party, and
any purported assignment in violation hereof shall be void.
5. Amendment.
This Agreement may be amended only by an instrument in writing
executed by all the parties hereto.
6. Severability.
Each part of this Agreement is intended to be severable. In the
event that any provision of this Agreement is found by any court
or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the
extent necessary to render it enforceable and as so severed or
modified, this Agreement shall continue in full force and effect.
7. Section Headings.
The Section headings in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
8. Construction.
Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall
be deemed to include each of the singular, and pronouns of one or
no gender shall be deemed to include the equivalent pronoun of
the other or no gender.
9. Further Assurances.
In addition to the instruments and documents to be made, executed
and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed
and delivered, to the requesting party such other instruments and
to take such other actions as the requesting party may reasonably
require to carry out the terms of this Agreement and the
transactions contemplated hereby.
10. Notices.
Any notice which is required or desired under this Agreement
shall be given in writing and may be sent by personal delivery or
by mail (either (a) United States mail, postage prepaid, or (b)
Federal Express or similar generally recognized overnight
carrier), addressed as follows (subject to the right to designate
a different address by notice similarly given):
To eConnect:
Thomas S. Hughes
eConnect
2500 Via Cabrillo Marina, Suite 112
San Pedro, California 90731
To SafeTPay:
Harry Hargens
SafeTPay.com
98 Shoreline Way
Hampton, Georgia 30228
11. Governing Law.
This Agreement shall be governed by the interpreted in accordance
with the laws of the State of Nevada without reference to its
conflicts of laws rules or principles. Each of the parties
consents to the exclusive jurisdiction of the federal courts of
the State of Nevada in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non
coveniens, to the bringing of any such proceeding in such
jurisdictions.
12. Consents.
The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent
and authority to execute and deliver this Agreement on behalf of
such party.
13. Termination of Agreement.
This Agreement shall terminate on the Effective Date unless all
actions required under this Agreement have not been fully
performed.
14. Survival of Provisions.
The representations and warranties contained in Article II of
this Agreement and any liability of one party to the other for
any default under the provisions of Articles II of this
Agreement, shall survive the completion of the transaction under
this Agreement.
15. Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
16. Potential Conflict of Interest.
Each of the parties hereto agree and acknowledge that Brian F.
Faulkner, Esq. and Marc R. Tow, Esq. were involved in the
negotiations for the conclusion of this Agreement between the
parties. Mr. Faulkner has represented both the parties on other
matters in the past, and will continue to do so in the future.
In addition, Mr. Tow has represented eConnect in the past and
will continue to do so in the future. Mr. Faulkner and Mr. Tow
know of no actual conflict of interest between eConnect and
SafeTPay that would disqualify then from continuing the
representation as set forth above. If Mr. Faulkner or Mr. Tow
learn of facts that establish such a conflict, or if they are
convinced that such a conflict is imminent, they will advise the
parties hereto immediately and suggest each retain separate
counsel. Neither Mr. Faulkner nor Mr. Tow think it likely,
based on what they know now, that such a conflict will develop.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
SafeTPay.com
By: /s/ Harry Hargens
Harry Hargens, President
AGREEMENT
This Agreement is made as of the 23rd of November, 1999, ("The
Effective Date") by Rogel Patawaran, individually and
collectively known as, Rogel Technologies with address at 1861 S.
Bundy Dr., Los Angeles, CA 90025 ("Hereinafter referred to as
`RT'") and Mr. Tom Hughes, individually and collectively known
as, eConnect and or SafeTpay with address as 2500 Via Cabrillo
("Hereinafter referred to as `ECNC'").
The parties hereby represent and warrant that the individuals
executing this Agreement on their behalf are authorized to do so
and will bind the parties to the terms and conditions of this
Agreement.
1.01 It is agreed that an "outstanding balance" in the amount of One
Hundred and Sixty Eight Thousand dollars (USD$168,000.00) exists
payable to RT for which ECNC is responsible to pay under the
terms of the previously signed Payment Schedule dated October 23,
1999.
2.01 In consideration of the item mentioned herein in Paragraph 1.01,
ECNC agrees that the MRS and or SafeTpay software, which was
designed and created by RT, remain under the owndership and full
control of RT. However, RT agrees to allow ECNC to utilize its
software, and provide instruction to SafeTpay for the Merchant
Plug-in integration so that SafeTpay may sign on new Merchants
(for the purpose of moving monies across the Internet for a
transaction fee).
3.01 For the service provided to ECNC and SafeTpay by RT, ECNC agrees
to pay fees to RT as follows:
a. A non-refundable fee of Five Thousand Dollars ($5,000.00) upon the
signing of this Agreement.
b. The hourly rate of Four Hundred Fifty dollars ($450.00)
per hour, per Programmer for any additional work, instruction or advice.
4.01 ECNC agrees that the payments mentioned in Paragraph 3.01 above,
Does Not satisfy the "outstanding balance" mentioned in Paragraph
1.01 and said Payment Schedule dated October 23rd, 1999 will
still remain effect until completely and fully satisfied.
IN THE WITNESS WHEREOF, Both Parties have executed this Agreement
on the date first written above.
Agreed and Accepted:
By: /s/ Rogel Patawaran By: /s/ Tom Hughes
Rogel Patawaran, President Tom Hughes, CEO
Rogel Technologies eConnect
Date: November 23, 1999 Date: November 23, 1999
CONTRACT OF PARTNERSHIP
BETWEEN
TOP SPORTS, U.S.A., commercial society, constituted and regulated
by the Laws of the Dominican Republic, with its social address
located in the suite No. 106 of the commercial Center "Jardin Des
Artes", Jardines del Embajador, situated at Avenida Sarasota No.
65, of the neighborhood of Bella Vista, in the city of Santo
Domingo, National District, Dominican Republic, duly represented
by its President Mr. Paul F. Egan, Irish, of legal age,
unmarried, businessman, bearer of Irish passport No. M371523,
domiciled and resident in the city of Santo Domingo, National
District, and that hereinafter this Contract shall be denominated
as Top Sports, S.A., and;
ECONNECT, INC., commercial society, constituted and regulated by
the Laws of The United States of America, with its social address
at the 2500 Villa Cabrillo Marina in the Suite No. 112, at San
Pedro, California, The United States of America, duly represented
by its President, Mr. Thomas Hughes, North America, of legal age,
married, businessman, bearer of North American passport No.
______________, domiciled and resident in the city of San Pedro,
California, and that hereinafter this Contract shall be
denominated as eConnect, Inc.;
INASMUCH AS: The commercial society Top Sports, S.A. and
eConnect, Inc. have elements, assets and future projections in
similar fields, where the experience, technology, personnel and
infrastructure of both can be combined in an effective and
beneficial way, for the development and evolution of both
companies in the gaming industry of games and chance, as much in
the electronic commerce on-line;
INASMUCH AS: The commercial society eConnect, Inc wishes to
diversify its rank of operations and to integrate the solutions
of electronic commerce and interactivity in the environment of
the Internet and electronics, to businesses and projects of high
cash flow and volume of data transmission, like that found in the
gaming industry of games of chance, a great growth sector as much
in the Dominican Republic as in other countries where these
activities are allowed and governed by the Law;
INASMUCH AS: The commercial society eConnect, Inc. possesses
the correct mixture of technological knowledge and experience in
its applications to integrate these knowledge and experiences in
the sector of the gaming industry of games of chance, specially
in its electronic approach through Internet and of telephony on-
line;
INASMUCH AS: The commercial society Top Sports, S.A. wishes to
integrate and to cooperate with an institution that can,
simultaneously, to provide managerial and technical experience,
aimed at projecting and obtaining the objectives of consolidation
and growth that the shareholders of this society always have
wished;
INASMUCH AS: The commercial society Top Sports, S.A., as far as
their shareholders and executives, counts on a great experience
and ample connections and relationships in the gaming industry of
games of chance, as much in the Dominican Republic as in the
Republic of Ireland, a nation that is among the territories to
develop by this society;
INASMUCH AS: Both societies recognize the economical,
synergistical and evolutionary advantages of a narrow and near
collaboration;
THEREFORE:
THE PARTIES AGREED AND CONCURRED ON THE FOLLOWING:
ARTICLE I. The commercial society eConnect, Inc. acquires the
sum of 4,997 shares of the Subscribed and Paid-in Capital of Top
Sports, S.A. by the following amount and conditions A) Thirty-
Five Thousand (US$35,000.00) North American Dollars; B) One
Million (1,000,000) of Restricted Shares Class No. 144 of the
commercial society eConnect, Inc.; and C) Two Purchase Options
(Warrants) of shares of the commercial society eConnect, Inc. at
the fixed price of Thirty Cents of North American Dollars
(US$0.30) to be exerted in a proportion 1:2 within the term of 12
months as from the date of the company signature of this
Contract, at the fixed price of Thirty Cents of North American
Dollar (US$0.30).
ARTICLE II: As from the date of subscription of this Contract
eConnect, Inc. shall be proprietor and shall be beneficiary of
the fifty percent (50%) of all the assets, benefits and gains, an
shall share in common jeopardy by the fifty percent (50%) all the
liabilities, losses or obligations that Top Sports, S.A. can
hold, to be titled or to be forced as much in the Dominican
territory as outside Dominican territory. Mentioned assets
consist of all Sportsbooks of which Top Sports, S.A. is
proprietor, operates in renting to another modality or operation,
such as in all possible projects that involve the installation,
development, operation and evolution of Sportsbooks, operations
of electronic games of chance on-line, electronic Sportsbooks on-
line or any derivation that can arise in the future. The PARTIES
shall decide the most convenient way to communicate. The
Certified Financial Statements attributable to the exercise and
the operations of the society, aimed at fulfilling their
obligations and at perceiving the benefits attributable to these
operations.
PARAGRAPH 1: The PARTIES shall decide that as of the date of
subscription of this Contract, any possible project that
surrounds the installation, acquisition, renting, administration,
development and evolution of the Sportsbooks, operations of
electronic games of chance, electronic Sportsbooks on-line or any
derivation of which can arise in the future, shall count on the
previous, unanimous and written will of the PARTIES that
subscribe.
ARTICLE III: As from the date of subscription of this Contract,
eConnect, Inc. shall be proprietor of the fifty percent (50)%) of
all the assets, benefits or gains and shall share in common
jeopardy by the fifty percent (50%) of all the liabilities,
losses or obligations that the electronic virtual casino on-line
property of eConnect, Inc., located in the electronic direction
www.777win.com can hold, to be titled or forced, as much in North
American territory as outside North American territory. The
PARTIES shall decide the most convenient way to communicate the
Certified Financial statements attributable to this electronic
virtual casino online, aimed at fulfilling the obligations and
perceiving the benefits derived from its operation. Final
management decisions on www.777win.com shall be shared between
Top Sports, S.A. staff and eConnect, Inc. staff;
PARAGRAPH I: The PARTIES decide that Top Sports, S.A. and
eConnect, Inc., by virtue of this same Contract, and in a non-
greater term of six (6) months as of the date of subscription of
this Contract, shall constitute, develop and operate the
electronic Sportsbooks on-line, that shall be located, whenever
is possible, in the World Wide Web in the following electronic
direction: www.topsportssa.com, where all type of sport events
bets shall be accepted. The infrastructure, physical and
logistical base for electronic Sportsbooks on-line shall be
located in Top Sports, S.A. Dominican installations. Final
decisions on www.topsportssa.com shall be shared between
eConnect, Inc. staff and Top Sports, S.A. staff;
PARAGRAPH II: The PARTIES decide that the creation and operation
of electronic Sportsbooks on-line shall be ruled by the
stipulations contained in this Contract, it is to say, that both
PARTIES shall be proprietary and shall assume each one the fifty
percent (50%) of the costs and expenses of installation,
operation, development and payment of bets, as well as be titled
each one of the PARTIES, of the fifty percent (50%) of the gains
and benefits that it can yield in the course of the operations;
ARTICLE IV: The PARTIES decide that all logistical and technical
aspects that surround the physical necessities required for the
operations of the electronic virtual casino on-line, located in
the electronic direction www.777wins.com, shall be, as from the
moment of the subscription of this Contract, transferred to the
facilities and infrastructure available for such an aim and set
up especially for Top Sports, S.A.;
ARTICLE V: Top Sports, S.A. decides to acquire and to use the
available technology owned or represented by eConnect, Inc., in
all the aspects of the operations of Top Sports, S.A., as long as
it is technical and economically feasible to use this
technologies in the field, goal of the operations for Top Sports,
S.A.;
ARTICLE VI: The PARTIES decide that, as from the subscription of
this Contract, all communication of financial nature shall be for
Inter-Parties use or for public information use, that can arise
during the course of this Contract, upon requirement of the
Government authority, state, municipal, banking or stock
marketing. At the aim of or in fulfillment of, the
interpretation of the totality or part of this Contract shall be
made by way of financial statements properly certified by an
Authorized Public Accountant of Dominican or North American
nationality;
ARTICLE VII: The PARTIES decide that at least one (1)
representative, properly appointed by eConnect, Inc., shall be a
member of the Board of Administration or an executive of Top
Sports, S.A. without this number or position being limited in
number or position to be occupied;
ARTICLE VIII: ECONNECT, INC. recognizes that outside of the
specifically stipulated in this Contract, Top Sports, S.A. does
not maintain any relation of dependency, subordination or
subsidiarity with it and, therefore, cannot be responsible for,
receiver or be titled of obligations, liabilities, litigations,
actions, be these: judicial or extra judicial, as much in the
Dominican territory as in North American territory. By committed
actions or omissions, assumed or contracted debts, assumed or
contracted obligations on and during the exercise of its
activities, in any period of time previous to the date of
subscription of this Contract;
PARAGRAPH I: ECONNECT, INC. formally resigns to any pretension
or claim related to benefits, gains, commissions, dividends,
valuables, movable and immovable properties that have been
realized, generated, gained or acquired by Top Sports, S.A.,
previous to the date of subscription of this Contract;
ARTICLE IX: TOP SPORTS, S.A. recognizes that outside of the
specifically stipulated in this Contract, eConnect, Inc. does not
maintain any relation of dependency, subordination or
subsidiarity within and, therefore, cannot be responsible for,
receiver or be titled of obligations, liabilities, litigations,
actions, be these: judicial or extra judicial, as much in the
Dominican territory as in North American territory. By committed
actions or omissions, assumed or contracted debts, assumed of
contracted obligations on and during the exercise of its
activities, in any period of time previous to the date of
subscription of this Contract;
PARAGRAPH I: TOP SPORTS, S.A. formally resigns to any
pretension or claim related to benefits, gains, commissions,
dividends, valuables, movable and immovable properties that have
been realized, generated, gained or acquired by Top Sports, S.A.
previous to the date of subscription of this Contract;
ARTICLE X: This Contract is agreed to per indefinite time and
shall solely be terminated by mutual consent of the PARTIES, or
in case of breach of some or the totality of the clauses that
form it;
ARTICLE XI: The PARTIES decide that neither part nor the
totality of the obligations stipulated by them shall be yielded
or transferred to third persons, either physical or moral,
without previous written warning and the mutual consent of the
PARTIES subscribing this Contract;
ARTICLE XII: The PARTIES stipulate in an express way, that in
case of violation by anyone of the PARTIES, of anyone of the
obligations stipulated in this Contract, the same shall be
terminated in full right, and that PARTY shall be responsible in
front of the other of the damages and prejudices that this breach
causes;
ARTICLE XIII: The PARTIES decide that the only Laws applicable
to any differendum that shall arise on the occasion of the
execution of the present contract, shall be those of the
Dominican Republic;
ARTICLE XIV:
1. In case that any dispute related to the interpretation shall
arise from this agreement, concerning the rights or obligations
based or related to this agreement, such dispute shall be
deferred and shall be concluded by arbitration.
2. If the PARTIES decide the allocation of a single one arbitrator
the arbitration court shall constitute a single one designated
arbitrator.
3. If the PARTIES do not agree with a single one designation each
PARTY shall designate and the designated arbitrators shall
designate an additional arbitrator in order to stipulate an odd
number.
4. When an arbitration court consists of more than one arbitrator
the judgment shall be given by a majority of votes.
5. The court of arbitration shall establish its own procedure. Its
decision must include instructions on the distribution of costs
and expenses related to the process of the arbitration, including
the honoraries of the arbitrators. The judgment shall final and
conclusive for both PARTIES.
6. The arbitration shall be made in the city of Santo Domingo,
National District, Dominican Republic and each participant agrees
to be put under the arbitration according to the procedures
established by the Law concerning cases of arbitration of the
Dominican Republic, accepting the established Law and its
modifications.
ARTICLE XV: For the aims and consequences of the present Contract
the PARTIES make selection of domiciles in the following way:
eConnect in 2500 VILLA CABRILLA MARINA, SUITE NO. 112, SAN PEDRO,
CALIFORNIA, UNITED STATES OF AMERICA.
Top Sports, S.A., in SUITE NO. 106, PLAZA DES ARTS, JARDINES DEL
EMBAJADOR, AVENIDA SARASOTA NO. 65, SECTOR BELLA VISTA, SANTO
DOMINGO, DISTRITO NACIONAL.
Made and signed in good faith in the city of Santo Domingo,
National District, Dominican Republic, on the twentieth (20th)
day of the month of November of year one thousand, nine hundred
and ninety-nine (1999) in three originals of the same tenor and
effect: one for each on the contracting PARTIES, and other for
legal aims that are proceedings.
eCONNECT
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
TOP SPORTS, S.A.
By: /s/ Paul Egan
Paul Egan, President
AGREEMENT
This agreement states that Alliance Equities is advancing
eConnect the sum of $250.000 weekly for the next four weeks with
the purpose being to buyback $1,000,000 worth of eConnect
stock.
The stock shall be held in certificate form with the goal being
to reduce the overall float of eConnect stock.
eConnect agrees that Alliance Equities shall receive 25% bonus of
the stock that is purchased by eConnect per $250,000 traunce.
Example: $250.000 is used to purcchase 1,667.000 shares.
eConnect will pay a bonus of 416,666 shares to Alliance
Equities.
Alliance Equities reserves the right to sell a portion of this
free trading stock to recover the investment of each traunce of
$250,000, but agrees to not sell more than 25% of the stock bonus
per 30 days and will sell in such a manner to not adversely
effected: the share price of the eConnect stock.
eConnect agrees that Richard Epstein shall be paid a Finders Fee
of 10% of all monies advanced to buyback eConnect stock and that
this finders fee shall be paid in free trading stock based at the
average five day trading average per $250.000 traunce.
Example: First traunce: $250,000 with average fIVe day trading
value at 18 cents. 10% of $250,000 = $25,000/.18 = 1,388,888
shares to Richard Epstein.
/s/ Thomas S. Hughes /s/ Richard Epstein
Chairman and CEO Richard Epstein, President
Dated: November 29, 1999 Dated: November 29, 1999
SECURED PROMISSORY NOTE
Secured by Security Agreement
$2,836,411 December 1, 1999
For value received, the undersigned, Electronic Transactions &
Technologies, a Nevada corporation, and Thomas S. Hughes
(collectively, "Obligor"), hereby promise to pay to eConnect, a
Nevada corporation ("Obligee"), as such place or to such other
party or parties or order as Obligee may from time to time
designate, the principal sum of Two Million Eight Hundred Thirty-
Six Thousand Four Hundred Eleven Dollars ($2,836,411) with
interest at the legal rate of ten percent (10%) annually
beginning July 1, 1999. This promissory note ("Note"), including
principal and interest, shall be paid in full upon demand. All
payments hereunder shall be made in cash or cash equivalent funds
immediately available and acceptable to Obligee, made payable to
eConnect, 2500 Via Cabrillo Marina, Suite 112, San Pedro,
California 90731, delivered personally or in the United States
mail by certified or registered letter.
Obligor acknowledge that any default in the making or performing
of any of the payments, agreements or conditions of this Note, or
any other agreement or instrument now or hereinafter entered into
among Obligor and Obligee hereunder, will result in loss and
additional expenses to Obligee in servicing the indebtedness
evidenced hereby, handling such delinquent payments and meeting
their other financial obligations.
In the event of the failure to make full payment when due under
the terms of this Note, the Obligee may declare the entire
principal balance and accrued interest due and payable
immediately. As an alternative, Obligor shall return to Obligee
restricted stock certificates totaling 9,400,000 shares of common
stock of Obligee in the event of such failure. Obligor hereby
waive to the fullest extent allowable, any and all defenses,
offsets or counterclaims with regard to any action by Obligee for
reinforcement of this Note, including the defense of expiration
of the statute of limitations. The only issue in any such action
shall be that of payment or nonpayment hereunder and any such
action shall be so limited. No portion of this Note, or payment
hereunder, shall be subject to offset or refund by reason of any
claims of Obligor.
This Note is made in conjunction with that certain security
agreement by and between Obligor and Obligee ("Security
Agreement") and reference to the Security Agreement herein is
made for informational purposes only and in accordance with the
provisions of Section 3105(1)(c) and 3105(1)(e) of the California
Commercial Code ("Code"). Any default under the Security
Agreement or any other agreement now existing or hereinafter
entered into by and between Obligor and Obligee shall be a breach
hereunder and constitute a default allowing Obligee to accelerate
this Note. The above acceleration provision is made in
accordance with Section 3109(1)(c) of the Code. Notwithstanding
the foregoing, Obligor's promise to pay hereunder is an
unconditional promise to pay to Obligee a sum certain in money on
demand or at a definite time which does not include any other
demand or at a definite time which does not include any other
promise, obligation or power given by Obligor (except as
otherwise authorized by Division 3 of the Code) all in accordance
with the provisions of Section 3104 of the Code. This Note is
intended to constitute a negotiable instrument as defined in the
Code.
If this Note, or any payment or charge hereunder, is not paid
when due, whether at maturity or by acceleration or otherwise, or
should any controversy arise hereunder necessitating legal,
equitable or administrative action, Obligor promises to pay all
costs of collection in such action, including, but not limited
to, attorneys' fees and costs.
Obligor expressly waives presentment, protest and demand, notice
of protest, demand and dishonor and nonpayment of this Note and
all other notices of any kind, and expressly agree that this
Note, or any payment thereunder, may be extended from time to
time without affecting the liability of Obligor. No single or
partial exercise of any power hereunder, if any, shall preclude
any other or further exercise thereof or the exercise of any
other power. The release of any party liable under this Note
shall not operate to release any other party liable thereon.
Obligee expressly declares that Obligee may rely upon the
ostensible authority of the persons signing this Note to be
binding upon Obligor in all respects.
All agreements between Obligor and Obligee are expressly limited
so that in no contingency or event whatsoever, whether by
acceleration of maturity of the unpaid principal balance hereof
or otherwise, shall the amount, if any, paid or agreed to be paid
to Obligee or the use, forbearance or detention of the money to
be advanced hereunder, exceed the highest lawful rate permissible
under applicable usury laws. If, for any circumstances
whatsoever, fulfillment of any provision hereof at the time
performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law which a
court of competent jurisdiction may deem applicable thereto, the
ipso facto, obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any circumstances, Obligee
shall ever receive an amount which would be excessive interest,
the same shall be applied to the reduction of the unpaid
principal balance due hereunder and not to the payment of
interest. This provision shall control every other provision of
all agreements between the undersigned and Obligee.
This Note has been executed and delivered in the State of
California and is to be governed by and construed according to
the laws thereof. Venue in any action arising shall lie in the
County of Los Angeles, California.
Obligor:
Electronic Transactions & Technologies
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
/s/ Thomas S. Hughes
Thomas S. Hughes, an individual
Obligee:
eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
SECURITY AGREEMENT
BY AND BETWEEN
ELECTRONIC TRANSACTIONS & TECHNOLOGIES
AND THOMAS S. HUGHES,
AND
ECONNECT
eConnect, a Nevada corporation ("Secured Party"), and Electronic
Transactions & Technologies, a Nevada corporation and Thomas S.
Hughes (collectively, "Debtor") agree as follows:
1. GRANT OF SECURITY INTEREST.
1.1 The Debtor, jointly and severally, hereby grant to the
Secured Party a security interest in shares of common stock in
Secured Party owned by Debtor in the amount of 9,400,000 as
collateral security for:
1.1.1 The satisfaction and the prompt and full performance of
all of Debtor's obligations under that certain Promissory Note of
even date herewith in the principal amount of Two Million Eight
Hundred Thirty-Six Thousand Four Hundred Eleven ($2,636,411) plus
interest at the rate of ten percent (10%) per annum beginning
July 1, 1999 ("Note"), as the Note may be amended, modified, or
extended from time to time (including, without limitation, the
obligation to make payments of principal and interest thereon);
and
1.1.2 The full, faithful, true and exact performance and
observance of all of the obligations, covenants and duties of
Debtor under this Security Agreement, as the same may be amended,
modified, or extended from time to time.
2. DEFAULT. Any of the following events shall constitute an
event of default hereunder:
2.1 The failure by Debtor to make full and timely payment when
due of any sum as required to be paid to Secured Party under the
Note after any applicable notice of non-payment provided for in
the Note has been given, and any period within which to cure the
non-payment has elapsed, if applicable. A true and correct copy
of the Note is attached hereto as Exhibit C and incorporated
herein by this reference.
2.2 The failure by Debtor to fully and timely perform any
covenant, agreement, obligation or duty imposed on Debtor by this
Security Agreement or any other agreement by and between Debtor
and Secured Party now existing or hereinafter made.
2.3 The filing by Debtor of any petition, or commencement by
Debtor of any proceeding, under the Bankruptcy Act or any state
insolvency law.
2.4 The making by Debtor of any general assignment for the
benefit of creditors.
2.5 The filing of any petition, or commencement of any
proceeding, under the Bankruptcy Act or any state insolvency law,
against Debtor, or the appointment of any receiver or trustee,
which petition, proceeding or appointment is not fully and
completely discharged, dismissed or vacated within sixty (60)
days.
2.6 Any warranties made by Debtor are untrue in any material
respect, or any schedule, statement, report, notice, or writing
furnished by Debtor to the Secured Party are untrue in any
material respect on the date as of which the facts set forth are
stated or certified.
3. INSPECTION OF RECORDS. Secured Party shall have the right
without notice to inspect all financial books, records and
reports of Debtor at Debtor's premises or wherever the same may
be maintained during normal business hours.
4. REMEDIES UPON DEFAULT.
4.1 Upon the occurrence of an event of default, in addition to
any and all other remedies at law or in equity available to
Secured Party, Debtors hereby authorize and empower Secured
Party, at Secured Party's option and without notice to Debtor,
except as specifically provided herein (and, to the extent
necessary, hereby irrevocably appoint Secured Party as Debtor's
attorney-in-fact for such purposes):
4.1.1 To require Debtor to assemble any and all of the
Collateral and make the same available to Secured Party at the
premises wherein the same is located, or any other place
designated by Secured Party; Secured Party may enter upon any
premises where any of the Collateral is located and may take
possession of the same without judicial process and without the
need to post any bond or security as an incident thereto; and
4.1.2 To sell, assign, transfer and deliver the whole or any
part of the Collateral on any securities market on which the
Collateral is trading, at such prices and upon such terms as are
commercially reasonable, given the nature of the Collateral and
the market therefor, with or without warranties, demand for
performance, protest, notice of protest, or notice of dishonor
except as set forth herein, any other such advertisement,
presentment, demand or notice being expressly waived by Debtors
to the extent permitted by law. At any public sale or sales of
the Collateral, Secured Party or Secured Party's assigns may bid
for and purchase all or any party of the Collateral offered for
sale and upon compliance with the terms of such sale, may hold,
exploit and dispose of such Collateral discharged from all claims
of Debtor, except to the extent that Debtor have rights in the
proceeds of such sale or sales, and free from any right or
redemption, all of which are hereby expressly waived and
released, and may in paying the purchase price thereof, in lieu
of cash assignment at the face amount thereof, together with any
interest accrued thereon, all or any part of unpaid principal or
interest or both, payable under the Note.
4.2 In the event of any such sale by Secured Party of all or any
of said Collateral on credit, or for future delivery, such
property so sold may be retained by Secured Party until the
selling price is paid by the purchaser. Secured Party shall
incur no liability in case of the failure of the purchaser to
take up and pay for the property so sold. In case of any such
failure, said Collateral may be again, and from time to time,
sold.
4.3 In the event of any such sale or disposition, the proceeds
thereof shall be applied first to the payment of the expenses of
the sale, commissions, actual attorneys' fees, and all other
charges paid or incurred by Secured Party in taking, holding,
selling , advertising, or otherwise preparing such Collateral for
sale or otherwise in connection with maintaining the security of
such Collateral, including any taxes or other charges imposed by
law upon the Collateral and/or the ownership, holding or transfer
thereof; secondly, to pay, satisfy and discharge all indebtedness
of Debtor to Secured Party secured hereby then due and payable
pursuant to the Note; thirdly, to the extent that Debtor may
still have monetary obligations to Secured Party not yet due and
payable, Secured Party may retain any surplus as collateral for
the payment of such sums when due; and fourthly, if all of the
secured obligations are then discharged and satisfied, to pay the
surplus, if any, to Debtor. Secured Party shall look only to the
assets of the business then operated and/or owned by Debtor to
satisfy any and all claims, defaults or breaches regarding the
Note and shall not in any event, look to any other assets of
Debtor to satisfy same.
4.4 Secured Party shall not be liable or responsible for
safeguarding the Collateral, or any portion thereof, or
maintaining the condition thereof, or for any loss or damage
thereto and diminution in value of the Collateral either through
loss or non-collection. Secured Party shall not be liable or
responsible for any act or default of any carrier or warehouseman
or of any other person, other than that occasioned by the gross
negligence and willful misconduct of Secured Party.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants that this Security Agreement has been duly and validly
authorized, executed and delivered by Debtor and constitutes a
valid and binding agreement, enforceable in accordance with its
terms, and the execution and delivery of this Security Agreement
do not violate, or constitute a default (with or without the
giving of notice, the passage of time, or both) under any order,
judgment, agreement, contract, or instrument to which Debtor are
a party or by which Debtor are affected or may be bound. Debtor
represents that Debtor will at all times maintain the Collateral
in good state of repair and condition consistent with good
business practice, will pay any and all taxes thereon or
applicable thereto prior to delinquency.
6. INDEMNITY. In the case of any adverse claim with respect to
the Collateral or any portion thereof arising out of any act done, or
permitted or acquiesced in by Debtor, Debtor indemnifies and agrees to
hold Secured Party harmless from and against any and all claims,
losses, liabilities, damages, expenses, costs and actual
attorneys' fees incurred by Secured Party in or by virtue of
exercising any right, power or remedy of Secured Party hereunder
or defending, protecting, enforcing or prosecuting the security
interest hereby created. Any such loss, cost, liability, damage
or expense so incurred shall be repaid upon demand by Secured
Party and until so paid shall be deemed a secured obligation hereunder.
7. NO WAIVER BY SECURED PARTY. Any forbearance, failure, or
delay by Secured Party in exercising any right, power or remedy hereunder
shall not be deemed to be a waiver of such right, power, or
remedy, and any single or partial exercise of any right, power,
or remedy of Secured party shall not preclude the later exercise
of any other right, power, or remedy, each of which shall
continue in full force and effect until such right, power, or
remedy is specifically waived by an instrument in writing,
executed by Secured Party.
8. EFFECTIVENESS OF AGREEMENT. This Security Agreement and Debtors'
duties and obligations and Secured Party's powers to dispose of
the Collateral, and all other rights, powers and remedies granted
to Secured Party hereunder shall remain in full force and effect
until Debtor has satisfied and discharged all of Debtor's
obligations to Secured Party secured thereby.
9. WAIVER BY DEBTOR. All provisions of law, in equity and by
statute providing for providing for, relating to, or pertaining
to pledges or security interests and the sale of pledged property
or property in which a security interest is granted, or which
prescribe, prohibit, limit or restrict the right to, or
conditions, notice or manner of sale, together with all
limitations of law, in equity, or by statute, on the right of
attachment in the case of secured obligations, are hereby
expressly waived by Debtor to the fullest extent Debtor may
lawfully waive same.
10. RELEASE OF COLLATERAL. Upon payment in full by Debtor, in
lawful money of the United States of America, to Secured Party at
the address set forth in the Note of all amounts secured hereby,
and performance of all other obligations of Debtor under this
Security Agreement, together with any interest thereon and any
costs and expenses incurred by Secured Party in the enforcement
of this Security Agreement or of any of Secured Party?s rights
hereunder, or in the enforcement of any other agreements (whether
heretofore or hereafter entered into) between Debtor and Secured
Party, or any of the rights of Secured Party thereunder, and upon
the request of Debtor therefor, Secured Party will deliver to
Debtor, at Debtor's sole cost and expense, such termination
statements and such other documents of release, reconveyance and
reassignments as shall be sufficient to discharge Debtor of the
liabilities secured hereby and to terminate and release the
security interest in the Collateral created hereby.
11. MISCELLANEOUS.
11.1 This Security Agreement and all of the rights and duties in
connection herewith shall be governed by and construed in
accordance with the laws of the State of California.
11.2 This Security Agreement and all of its terms and provisions
shall be binding upon the heirs, successors, transferees and
assigns of each of the parties hereto.
11.3 In the event any portion of this Security Agreement is held
invalid, the remaining portions shall remain in full force and
effect as if that invalid portion had never been a part hereof.
11.4 In the event litigation is commenced to enforce or
interpret this Security Agreement, or any provision hereof, the
prevailing party shall be entitled to recover its actual costs
and attorneys' fees.
11.5 This Security Agreement may be amended only by written
consent of each of the parties hereto.
11.6 Any and all notices, demands, requests, or other
communications required or permitted by this Security Agreement
or by law to be served on, given to, or delivered to any party
hereto by any other party to this Security Agreement shall be in
writing and shall be deemed duly served, given, or delivered when
personally delivered to the party, or in lieu of such personal
delivery, when deposited in the United States mail, first-class
postage prepaid addressed to the party at the address herein
appearing.
11.7 This Security Agreement constitutes the entire security
agreement between the parties pertaining to the subject matter
contained herein and supercedes all prior and contemporaneous
agreements, representations and understandings of the parties.
No waiver of any of the provisions of this Security Agreement
shall be deemed, or shall constitute a waiver of any other
provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
11.8 This Security Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument. The exhibits attached hereto are made a part
hereof and incorporated herein.
11.9 Nothing in this Security Agreement, whether express or
implied, is intended to confer any rights or remedies under or by
reason of this Security Agreement on any persons other than the
parties to it and their respective successors and assigns, nor is
anything in this Security Agreement intended to relieve or
discharge the obligations or liability of any third persons to
any party to this Security Agreement, nor shall any provision
give any third person any right of subrogation or action against
any party to this Security Agreement.
11.10 Each party's obligations under this Security
Agreement is unique. If any party should default in its
obligations under this Security Agreement, the parties each
acknowledge that it would be extremely impracticable to measure
the resulting damages; accordingly, the nondefaulting party, in
addition any other available rights or remedies, may sue in
equity for specific performance without the necessity of posting
a bond or other security, and the parties each expressly waive
the defense that a remedy in damages will be adequate.
11.11 All representations, warranties and agreements of the
parties contained in this Security Agreement, or in any
instrument, certificate, opinion or other writing provided for in
it, shall survive the completion of all acts contemplated herein.
11.12 Whenever the context of this Security Agreement requires,
the masculine gender includes the feminine or neuter gender, and
the singular number includes the plural.
11.13 As used herein, the wordd "days" shall refer to calendar
day, including holidays, weekends, non-business days, etc.
11.14 The captions contained herein do not constitute part of
this Security Agreement and are used solely for convenience and
shall in no way be used to construe, modify, limit otherwise
affect this Security Agreement.
IN WITNESS WHEREOF, this Security Agreement is executed on
December 1, 1999 at San Pedro, California.
Debtor:
Electronic Transactions & Technologies
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
/s/ Thomas S. Hughes
Thomas S. Hughes, an individual
Secured Party:
eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
BUSINESS COOPERATION AGREEMENT
BETWEEN:
TOP SPORTS, S.A., a business company organized and ruled under
the laws of the Dominican Republic, with corporate offices at
Jardin des Arts Shopping Center, Suite 106, Jardines del
Embajador, 65 Sarasota Avenue, Bella Vista, in the city of Santo
Domingo, National District, Dominican Republic, duly represented
herein by its President, Mr. Paul F. Egan, an Irish subject, of
legal age, marital status single, a businessman, bearer of Irish
Passport No. ________ domiciled and residing in this city of
Santo Domingo, National District, to be referred to hereinafter
as Top Sports; and
eConnect, a business company organized and ruled under the laws
of the United States of America, with corporate offices at 2500
Villa Cabrillo Marina, Suite 112, San Pedro, California, United
States of America, duly represented by its President, Mr. Thomas
Hughes, a U.S. citizen, of legal age, marital status married, a
businessman, bearer of United States Passport No. ________,
domiciled and residing in San Pedro, California, United States of
America, to be referred to hereinafter as eConnect.
WHEREAS: Top Sports, S.A. and eConnect, Inc., both have
elements, assets and future projections in similar fields,
wherein their know-how, technology, personnel and infrastructure
may be efficiently and beneficially combined in the development
and advancement of both companies both in the area of physical
and on-line electronic gambling;
WHEREAS: eConnect, Inc., desires to diversify its range of
operations so as to include such business and electronic
interactivity solutions as are applied in the area of internet
and electronics to high cash flow and volume data transmission
businesses and projects such as are found in the gambling
business, an area which is growing significantly in the Dominican
Republic as well as In other countries where such operations are
permitted and regulated by the laws;
WHEREAS: eConnect, Inc., possesses the right combination of
know-how and expertise to apply said know-how and expertise
through the internet and on-line telephony particularly in their
electronic approach to the gambling business;
WHEREAS: Top Sports, S.A. desires to join in and cooperate with
an organization that will in turn provide managerial and
technical experience in order to project and attain such
consolidation and growth aims as have always been desired by the
shareholders of said company;
WHEREAS: Top Sports, S.A. has an installed infrastructure
consisting in several Sport Betting Banks, an area which is
developing and growing favorably in the Dominican Republic under
the laws in force;
WHEREAS: Top Sports, S.A. has through its shareholders and
officers considerable expertise and a large number of contacts
and relations in the gambling business both in the Dominican
Republic and in Ireland, a country which is among such
territories as are desired to be developed by the company.
WHEREAS: The financial, synergistical and developmental
advantages of a close cooperation are acknowledged by both
companies:
THEREFORE
THE PARTIES HAVE AGREED AND COVENANTED THE FOLLOWING:
ARTICLE I: A total of (4,997) shares in the subscribed and paid
up capital of Top Sports, S.A. are hereby purchased by eConnect,
Inc., for the following consideration and under the following
conditions: A) Thirty Thousand U.S. Dollars (US$35,000.00; B) One
Million (1,000,000) Class No.144 restricted shares in the
eConnect business company which may be purchased at the rate of
one hundred thousand (100,000) shares per month up to the total
amount of all such shares during a term of one (1) year as of the
execution hereof; and C) Two options to purchase (warrants)
shares in eConnect for the fixed price of Thirty Cents of a U.S.
Dollar (US$0.30) to be exercised in a 1:2 proportion during a
term of 12 months as of the date of sale. That is to say, the
ability or preferential option to purchase Two Million
(2,000,000) shares of stock in eConnect, Inc., during the 12
months following the execution hereof for the fixed price of
Thirty Cents of a U.S. Dollar (US$0.30). Said options to
purchase (warrants) to be finally purchased by TOP SPORTS may be
exercised and executed when eConnect shares shall reach or exceed
the above Thirty Cents of a U .S: Dollar (US$0.30) offering price
in the public stock exchange market of the United States of
America, no reduction in such a price to imply however any
restriction to the sale of the above mentioned shares.
ARTICLE II: As of the date hereof eConnect shall be the owner
and beneficiary of fifty percent (50%) of all assets, profits and
earnings and shall be in solido liable for fifty percent (50%) of
all liabilities, debts and obligations as Top Sports may have or
be liable for both in Dominican territory and elsewhere; said
assets shall include all Sports Betting Banks which are owned and
operated by Top Sports whether under lease or any other manner of
operation, as well as any future projects involving the
installation, development, operation and advancement of Sports
Betting Banks, on-line electronic games, on-line electronic
bookings or any future derivations therefrom. The parties herein
shall agree on the most convenient form for the communication of
any financial statements on these operations, so as to comply
with their obligations and receive any profits as resulted
therefrom.
PARAGRAPH I: The Parties herein agree that as of the date
hereof, any future projects involving the installation, purchase,
lease, management, development, operation and advancement of
Sports Betting Banks, on-line electronic gambling operations, on-
line electronic sports bookings or any future derivations
therefrom shall require the prior, unanimous and written
authorization of the parties hereto.
ARTICLE III. As of the date of execution hereof, Top Sports
shall be the owner and beneficiary of fifty percent (50%) of all
assets, profits or earnings and shall be in solido liable for
fifty percent (50%) of all liabilities, losses or obligations as
may be had both in the U.S. territory and elsewhere by the on-
line electronic virtual casino owned by eConnect located at the
www.777wins.com electronic address; the Parties herein shall
agree on the most convenient manner of communication of all
financial statements regarding said on-line electronic virtual
casino for the purposes of complying with their obligations and
receiving any profits deriving therefrom.
PARAGRAPH I: The parties herein agree hereby that Top Sports and
eConnect shall within a term not to exceed six (6) months as of
the date hereof, organize, develop and operate an on-line
electronic sportsbook to be sited if possible in the world wide
web under the www.topsportssaa.com electronic address, where bets
for all types of sporting events shall be accepted; the
infrastructure, physical base and logistics of such on-line
electronic sports bookings shall be located at Top Sports
premises in the Dominican Republic.
PARAGRAPH II: The parties herein agree that the development and
operation of the above on-line electronic sportsbook shall be
ruled by the provisions herein, that is to say, that both parties
hereto shall own and shall each one assume fifty percent (50%) of
all costs, installation, operation, development and payment
expenditures, while each one shall own fifty percent (50%) of all
profits and earnings as may derive therefrom.
ARTICLE IV: The parties herein agree that all logistical and
technical aspects involved in the physical requirements of the
operation of the online electronic virtual casino at the
www.777wins.com electronic address shall as of the time of
execution hereof be transferred to the installations and
infrastructure specially designated and made available by Top
Sports therefor;
ARTICLE V: Top Sports agrees to secure and employ such technology
as is owned, made available or represented by eConnect in all
operational aspects of Top Sports, provided however, it were
technically and financially feasible to employ said technologies
in the area of operations of Top Sports;
ARTICLE VI: THE PARTIES herein agree that as of the execution
hereof any communications of a financial nature, whether for use
by the parties or for public information as may be given during
the term hereof at the request of any governmental, state,
municipal, bank or exchange authorities for the purposes of or in
compliance with or in the construction of the whole or a part
hereof shall be provided through financial statements duly
certified by a U.S. or Dominican Certified Public Accountant
(C.P.A.).
ARTICLE VII: The PARTIES herein agree that the Board of Directors
shall include, but shall not be limited to at least one (1)
representative appointed by eConnect and one Top Sports officer.
ARTICLE VIII: eConnect acknowledges hereby that apart from the
specific provisions herein, Top Sports shall have no relation as
dependent, subordinate or affiliate of eConnect, and
consequently, shall not be liable for any obligations,
liabilities, in or out of court lawsuits, civil actions whether
in Dominican or U.S. territory resulting from any actions or
omissions, or obligations assumed or undertaken in and during the
exercise of its business operations during any period of time
prior to or preceding the date of execution hereof;
PARAGRAPH I: eConnect formally waivers hereby any pretension or
claim as to any profits, earnings, commissions, dividends,
values, real or movable assets made, resulted, earned or acquired
by Top Sports before the date of execution hereof.
ARTICLE IX: Top Sports acknowledges hereby that apart from the
specific provisions herein, eConnect has to relationship as
dependent, subordinate or affiliate with it, and consequently,
shall not be liable for any obligations, liabilities, court or
extra court lawsuits or civil actions whether in Dominican or
U.S. territory resulting from any actions or omissions or
obligations assumed or undertaken in and during the exercise of
its business operations during any period of time prior to or
preceding the date of execution hereof.
PARAGRAPH I. Top Sports formally waivers hereby any pretension
or claim related to any profits, earnings, commissions,
dividends, values, real or movable assets made, resulting, earned
or acquired by eConnect before the date of execution hereof.
ARTICLE X: The agreement herein is entered into for an
indefinite term of time and may be terminated by mutual, prior
and written consent of the parties.
ARTICLE XI: The PARTIES herein agree hereby that their
obligations hereunder shall not be assigned in whole or in part
to any third party, whether individual or corporation except with
the prior, written and mutual Consent of the parties.
ARTICLE XII: The PARTIES herein expressly provide that in the
event of breach of any of their obligations hereunder by anyone
of the parties, the agreement herein shall be automatically
terminated and the guilty party shall be liable for any damages
resulting for the party, which were not in fault.
ARTICLE XIII. The PARTIES herein agree that the only laws that
shall apply in the event of any differences resulting herefrom
shall be the laws of the Dominican Republic.
ARTICLE XIV.
1. In the event of any differences in the construction hereof, or
respecting the rights or obligations arising herefrom, any such
difference shall be referred to and decided by arbitration.
2. If the parties herein agreed on the appointment of one single
arbiter, the arbitration tribunal shall be made up by that one
single arbiter.
3. If the parties did not agree on the appointment of one single
arbiter, each one of them shall appoint one arbiter, and these
two arbiters shall then designate a third arbiter so as to have
an odd number of arbiters.
4. Whenever any such arbitration tribunal included more than one
member, any decision rendered shall be by majority vote.
5. The arbitration tribunal shall establish its own procedure. Any
decision rendered shall include instructions on the division of
costs and expenditures related to the arbitration procedure,
including arbiters' fees. Any award rendered shall be final for
both parties.
6. For all purposes and consequences hereof, the parties choose
domicile as follows:
eConnect - at 2500 Villa Cabrillo Marina, Suite 112, San Pedro,
California, United States of America.
TOP SPORTS at Plaza des Arts, Suite 106, Jardines de El
Embajador, Avenida Sarasota No. 65, Bella Vista, Santo Domingo,
National District.
eCONNECT
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
TOP SPORTS, S.A.
By: /s/ Paul Egan
Paul Egan, President
CONSULTING SERVICES AGREEMENT
This Consulting Agreement ("Agreement") is made by and between
Michael S. Leste, an individual ("Consultant"), whose address is
850 Gray Court, Thousand Oaks, California 91362, and eConnect, a
Nevada corporation ("Client"), having its principal place of business
at 2500 Via Cabrillo Marina, Suite 112, San Pedro, California 90731.
WHEREAS, Consultant has knowledge and expertise in many
areas including identifying, investigating, analyzing, and
evaluating businesses from the standpoint of assessing their
worth for investment by the Client, their worth as an operating
entity, as well as the value which may be imputed to them by the
investing public, and assisting in whatsoever negotiations may be
necessary to achieve business transactions with those entities;
WHEREAS, Consultant desires to be engaged by Client to
provide information, identification, investigation, evaluation
and negotiation services to the Client on the terms and subject
to the conditions set forth herein;
WHEREAS, Client is a publicly held corporation with its common
stock shares trading on the Over the Counter Bulletin Board under
the ticker symbol "ECNC," and desires to further develop its
business and increase it's common stock share's value by
combining its business through acquisition of, or arranging some
other business transaction with, another publicly or privately
held company;
WHEREAS, Client desires to engage Consultant to provide
information, identification, investigation, evaluation and
negotiation services on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration for those services Consultant
provides to Client, the parties agree as follows:
1. Services of Consultant.
Consultant agrees to perform for the Client all services and
consulting related to analyzing, negotiating and advising Client
on with regard to the Capital Contribution Agreement by and
between Client and SafeTPay.com, and its implementation.
2. Consideration.
Client agrees to pay Consultant, as his fee and as consideration
for services provided, options to purchase Two Hundred Fifty
Thousand (250,000) shares of restricted common stock of
SafeTPay.com. These shares and options are due and payable
immediately upon the execution of said Capital Contribution
Agreement.
3. Confidentiality.
Each party agrees that during the course of this Agreement,
information that is confidential or of a proprietary nature may
be disclosed to the other party, including, but not limited to,
product and business plans, software, technical processes and
formulas, source codes, product designs, sales, costs and other
unpublished financial information, advertising revenues, usage
rates, advertising relationships, projections, and marketing data
("Confidential Information"). Confidential Information shall not
include information that the receiving party can demonstrate (a)
is, as of the time of its disclosure, or thereafter becomes part
of the public domain through a source other than the receiving
party, (b) was known to the receiving party as of the time of its
disclosure, (c) is independently developed by the receiving party
or (d) is subsequently learned from a third party not under a
confidentiality obligation to the providing party.
4. Late Payment.
Client shall pay to Consultant all fees within fifteen (15) days
of the due date. Failure of Client to finally pay any fees within
fifteen (15) days after the applicable due date shall be deemed a
material breach of this Agreement, justifying suspension of the
performance of the "Services" provided by Consultant, will be
sufficient cause for immediate termination of this Agreement by
Consultant. Any such suspension will in no way relieve Client
from payment of fees, and, in the event of collection
enforcement, Client shall be liable for any costs associated with
such collection, including, but not limited to, legal costs,
attorneys' fees, courts costs, and collection agency fees.
5. Indemnification.
(a) Client.
Client agrees to indemnify, defend, and shall hold harmless
Consultant and /or his agents, and to defend any action brought
against said parties with respect to any claim, demand, cause of
action, debt or liability, including reasonable attorneys' fees
to the extent that such action is based upon a claim that: (i) is
true, (ii) would constitute a breach of any of Client's
representations, warranties, or agreements hereunder, or (iii)
arises out of the negligence or willful misconduct of Client, or
any Client Content to be provided by Client and does not violate
any rights of third parties, including, without limitation,
rights of publicity, privacy, patents, copyrights, trademarks,
trade secrets, and/or licenses.
(b) Consultant.
Consultant agrees to indemnify, defend, and shall hold harmless
Client, its directors, employees and agents, and defend any
action brought against same with respect to any claim, demand,
cause of action, debt or liability, including reasonable
attorneys' fees, to the extent that such an action arises out of
the gross negligence or willful misconduct of Consultant.
(c) Notice.
In claiming any indemnification hereunder, the indemnified party
shall promptly provide the indemnifying party with written notice
of any claim, which the indemnified party believes falls within
the scope of the foregoing paragraphs. The indemnified party may,
at its expense, assist in the defense if it so chooses, provided
that the indemnifying party shall control such defense, and all
negotiations relative to the settlement of any such claim. Any
settlement intended to bind the indemnified party shall not be
final without the indemnified party's written consent, which
shall not be unreasonably withheld.
6. Limitation of Liability.
Consultant shall have no liability with respect to Consultant's
obligations under this Agreement or otherwise for consequential,
exemplary, special, incidental, or punitive damages even if
Consultant has been advised of the possibility of such damages.
In any event, the liability of Consultant to Client for any
reason and upon any cause of action, regardless of the form in
which the legal or equitable action may be brought, including,
without limitation, any action in tort or contract, shall not
exceed ten percent (10%) of the fee paid by Client to Consultant
for the specific service provided that is in question.
7. Termination and Renewal.
(a) Term.
This Agreement shall become effective on the date appearing next
to the signatures below and terminate on December 31, 2000.
Unless otherwise agreed upon in writing by Consultant and Client,
this Agreement shall not automatically be renewed beyond its
Term.
(b) Termination.
Either party may terminate this Agreement on thirty (30) calendar
days written notice, or if prior to such action, the other party
materially breaches any of its representations, warranties or
obligations under this Agreement. Except as may be otherwise
provided in this Agreement, such breach by either party will
result in the other party being responsible to reimburse the non-
defaulting party for all costs incurred directly as a result of
the breach of this Agreement, and shall be subject to such
damages as may be allowed by law including all attorneys' fees
and costs of enforcing this Agreement.
(c) Termination and Payment.
Upon any termination or expiration of this Agreement, Client
shall pay all unpaid and outstanding fees through the effective
date of termination or expiration of this Agreement. And upon
such termination, Consultant shall provide and deliver to Client
any and all outstanding services due through the effective date
of this Agreement.
8. Miscellaneous.
(a) Independent Contractor.
This Agreement establishes an "independent contractor" relationship
between Consultant and Client.
(b). Rights Cumulative; Waivers.
The rights of each of the parties under this Agreement are
cumulative. The rights of each of the parties hereunder shall
not be capable of being waived or varied other than by an express
waiver or variation in writing. Any failure to exercise or any
delay in exercising any of such rights shall not operate as a
waiver or variation of that or any other such right. Any
defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such
right. No act or course of conduct or negotiation on the part of
any party shall in any way preclude such party from exercising
any such right or constitute a suspension or any variation of any
such right.
(c) Benefit; Successors Bound.
This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators,
representatives, successors, and permitted assigns.
(d) Entire Agreement.
This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof. There are no
promises, agreements, conditions, undertakings, understandings,
warranties, covenants or representations, oral or written,
express or implied, between them with respect to this Agreement
or the matters described in this Agreement, except as set forth
in this Agreement. Any such negotiations, promises, or
understandings shall not be used to interpret or constitute this
Agreement.
(e) Assignment.
Neither this Agreement nor any other benefit to accrue hereunder
shall be assigned or transferred by either party, either in whole
or in part, without the written consent of the other party, and
any purported assignment in violation hereof shall be void.
(f) Amendment.
This Agreement may be amended only by an instrument in writing
executed by all the parties hereto.
(g) Severability.
Each part of this Agreement is intended to be severable. In the
event that any provision of this Agreement is found by any court
or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the
extent necessary to render it enforceable and as so severed or
modified, this Agreement shall continue in full force and effect.
(h) Section Headings.
The Section headings in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Construction.
Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall
be deemed to include each of the singular, and pronouns of one or
no gender shall be deemed to include the equivalent pronoun of
the other or no gender.
(j) Further Assurances.
In addition to the instruments and documents to be made,
executed and delivered pursuant to this Agreement, the parties
hereto agree to make, execute and deliver or cause to be made,
executed and delivered, to the requesting party such other
instruments and to take such other actions as the requesting
party may reasonably require to carry out the terms of this
Agreement and the transactions contemplated hereby.
(k) Notices.
Any notice which is required or desired under this Agreement
shall be given in writing and may be sent by personal delivery or
by mail (either a. United States mail, postage prepaid, or b.
Federal Express or similar generally recognized overnight
carrier), addressed as follows (subject to the right to designate
a different address by notice similarly given):
To Client:
Thomas S. Hughes
eConnect
2500 Via Cabrillo Marina, Suite 112
San Pedro, California 90731
To Consultant:
Michael A. Kofoed
848 5th Street, Unit 10
Santa Monica, California 90403
(l) Governing Law.
This Agreement shall be governed by the interpreted in accordance
with the laws of the State of California without reference to its
conflicts of laws rules or principles. Each of the parties
consents to the exclusive jurisdiction of the federal courts of
the State of California in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on
forum non coveniens, to the bringing of any such proceeding in
such jurisdictions.
(m) Consents.
The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent
and authority to execute and deliver this Agreement on behalf of
such party.
(n) Survival of Provisions.
The representations and warranties contained in Article VIII of
this Agreement and any liability of one Constituent Corporation
to the other for any default under the provisions of Articles VII
or VIII of this Agreement, shall expire with, and be terminated
and extinguished by, the merger under this Agreement on the
Effective Date.
(o) Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and have agreed to and accepted the terms herein on this
date, appearing next to their signatures.
eConnect
Date: December 10, 1999 By : /s/ Thomas S. Hughes
Thomas S. Hughes, President
Date: December 10, 1999 Michael S. Leste
/s/ Michael S. Leste
Michael S. Leste
CONSULTING SERVICES AGREEMENT
This Consulting Agreement ("Agreement") is made by and between
Michael A. Kofoed, an individual ("Consultant"), whose address is
848 5th Street, Unit 10, Santa Monica, California 90403, and
eConnect, a Nevada corporation ("Client"), having its principal
place of business at 2500 Via Cabrillo Marina, Suite 112, San
Pedro, California 90731.
WHEREAS, Consultant has knowledge and expertise in many
areas including identifying, investigating, analyzing, and
evaluating businesses from the standpoint of assessing their
worth for investment by the Client, their worth as an operating
entity, as well as the value which may be imputed to them by the
investing public, and assisting in whatsoever negotiations may be
necessary to achieve business transactions with those entities;
WHEREAS, Consultant desires to be engaged by Client to
provide information, identification, investigation, evaluation
and negotiation services to the Client on the terms and subject
to the conditions set forth herein;
WHEREAS, Client is a publicly held corporation with its common
stock shares trading on the Over the Counter Bulletin Board under
the ticker symbol "ECNC," and desires to further develop its
business and increase it's common stock share's value by
combining its business through acquisition of, or arranging some
other business transaction with, another publicly or privately
held company;
WHEREAS, Client desires to engage Consultant to provide
information, identification, investigation, evaluation and
negotiation services on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration for those services Consultant
provides to Client, the parties agree as follows:
1. Services of Consultant.
Consultant agrees to perform for the Client all services and
consulting related to analyzing, negotiating and advising Client
on with regard to the Capital Contribution Agreement by and
between Client and SafeTPay.com, and its implementation.
2. Consideration.
Client agrees to pay Consultant, as his fee and as consideration
for services provided, as follows: (a) Thirty Thousand (30,000)
shares of restricted common stock of SafeTPay.com; and (b)
options to purchase Six Hundred Thousand (600,000) shares of
restricted common stock of SafeTPay.com, exercisable at one
dollar ($1.00) per share; these options expire three years after
the date of this Agreement. These shares and options are due and
payable immediately upon the execution of said Capital
Contribution Agreement.
3. Confidentiality.
Each party agrees that information that is confidential or of a
proprietary nature may be disclosed to the other party,
including, but not limited to, product and business plans,
software, technical processes and formulas, source codes, product
designs, sales, costs and other unpublished financial
information, advertising revenues, usage rates, advertising
relationships, projections, and marketing data ("Confidential
Information"). Confidential Information shall not include
information that the receiving party can demonstrate (a) is, as
of the time of its disclosure, or thereafter becomes part of the
public domain through a source other than the receiving party,
(b) was known to the receiving party as of the time of its
disclosure, (c) is independently developed by the receiving party
or (d) is subsequently learned from a third party not under a
confidentiality obligation to the providing party.
5. Indemnification.
(a) Client.
Client agrees to indemnify, defend, and shall hold harmless
Consultant and /or his agents, and to defend any action brought
against said parties with respect to any claim, demand, cause of
action, debt or liability, including reasonable attorneys' fees
to the extent that such action is based upon a claim that: (i) is
true, (ii) would constitute a breach of any of Client's
representations, warranties, or agreements hereunder, or (iii)
arises out of the negligence or willful misconduct of Client, or
any Client Content to be provided by Client and does not violate
any rights of third parties, including, without limitation,
rights of publicity, privacy, patents, copyrights, trademarks,
trade secrets, and/or licenses.
(b) Consultant.
Consultant agrees to indemnify, defend, and shall hold harmless
Client, its directors, employees and agents, and defend any
action brought against same with respect to any claim, demand,
cause of action, debt or liability, including reasonable
attorneys' fees, to the extent that such an action arises out of
the gross negligence or willful misconduct of Consultant.
(c) Notice.
In claiming any indemnification hereunder, the indemnified party
shall promptly provide the indemnifying party with written notice
of any claim, which the indemnified party believes falls within
the scope of the foregoing paragraphs. The indemnified party may,
at its expense, assist in the defense if it so chooses, provided
that the indemnifying party shall control such defense, and all
negotiations relative to the settlement of any such claim. Any
settlement intended to bind the indemnified party shall not be
final without the indemnified party's written consent, which
shall not be unreasonably withheld.
6. Limitation of Liability.
Consultant shall have no liability with respect to Consultant's
obligations under this Agreement or otherwise for consequential,
exemplary, special, incidental, or punitive damages even if
Consultant has been advised of the possibility of such damages.
In any event, the liability of Consultant to Client for any
reason and upon any cause of action, regardless of the form in
which the legal or equitable action may be brought, including,
without limitation, any action in tort or contract, shall not
exceed ten percent (10%) of the fee paid by Client to Consultant
for the specific service provided that is in question.
7. Miscellaneous.
(a) Independent Contractor.
This Agreement establishes an "independent contractor"
relationship between Consultant and Client.
(b) Rights Cumulative; Waivers.
The rights of each of the parties under this Agreement are
cumulative. The rights of each of the parties hereunder shall
not be capable of being waived or varied other than by an express
waiver or variation in writing. Any failure to exercise or any
delay in exercising any of such rights shall not operate as a
waiver or variation of that or any other such right. Any
defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such
right. No act or course of conduct or negotiation on the part of
any party shall in any way preclude such party from exercising
any such right or constitute a suspension or any variation of any
such right.
(c) Benefit; Successors Bound.
This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators,
representatives, successors, and permitted assigns.
(d) Entire Agreement.
This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof. There are no
promises, agreements, conditions, undertakings, understandings,
warranties, covenants or representations, oral or written,
express or implied, between them with respect to this Agreement
or the matters described in this Agreement, except as set forth
in this Agreement. Any such negotiations, promises, or
understandings shall not be used to interpret or constitute this
Agreement.
(e) Assignment.
Neither this Agreement nor any other benefit to accrue hereunder
shall be assigned or transferred by either party, either in whole
or in part, without the written consent of the other party, and
any purported assignment in violation hereof shall be void.
(f) Amendment.
This Agreement may be amended only by an instrument in writing
executed by all the parties hereto.
(g) Severability.
Each part of this Agreement is intended to be severable. In the
event that any provision of this Agreement is found by any court
or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the
extent necessary to render it enforceable and as so severed or
modified, this Agreement shall continue in full force and effect.
(h) Section Headings.
The Section headings in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Construction.
Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall
be deemed to include each of the singular, and pronouns of one or
no gender shall be deemed to include the equivalent pronoun of
the other or no gender.
(j) Further Assurances.
In addition to the instruments and documents to be made, executed
and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed
and delivered, to the requesting party such other instruments and
to take such other actions as the requesting party may reasonably
require to carry out the terms of this Agreement and the
transactions contemplated hereby.
(k) Notices.
Any notice which is required or desired under this Agreement
shall be given in writing and may be sent by personal delivery or
by mail (either a. United States mail, postage prepaid, or b.
Federal Express or similar generally recognized overnight
carrier), addressed as follows (subject to the right to designate
a different address by notice similarly given):
To Client:
Thomas S. Hughes
eConnect
2500 Via Cabrillo Marina, Suite 112
San Pedro, California 90731
To Consultant:
Michael A. Kofoed
848 5th Street, Unit 10
Santa Monica, California 90403
(l) Governing Law.
This Agreement shall be governed by the interpreted in accordance
with the laws of the State of California without reference to its
conflicts of laws rules or principles. Each of the parties
consents to the exclusive jurisdiction of the federal courts of
the State of California in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on
forum non coveniens, to the bringing of any such proceeding in
such jurisdictions.
(m) Consents.
The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent
and authority to execute and deliver this Agreement on behalf of
such party.
(n) Survival of Provisions.
The representations and warranties contained in Article VIII of
this Agreement and any liability of one Constituent Corporation
to the other for any default under the provisions of Articles VII
or VIII of this Agreement, shall expire with, and be terminated
and extinguished by, the merger under this Agreement on the
Effective Date.
(o) Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and haveagreed to and accepted the terms herein on this
date, appearing next to their signatures.
eConnect
Date: December 10, 1999 By : /s/ Thomas S. Hughes
Thomas S. Hughes, President
Michael A. Kofoed
Date: December 10, 1999 /s/ Michael A. Kofoed
Michael A. Kofoed
AGREEMENT
This agreement between Top Sports SA and eConnect hereby states
that eConnect shall provide Top Sports with 100,000 free trading
ECNC shares per month beginning January 2000 and ending December
2000.
That Top Sports will sell such shares in the marketplace and will
use the resulting revenues to fund the continued expansion plans
of Top Sports SA, specifically the acquisition of 20 targeted
Dominican Repubic Sports Books.
Top Sports shall provide a complete monthly accounting of the
sale of the ECNC stock and the usage of the resulting funds.
Dated: December 16, 1999. eCONNECT
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
TOP SPORTS, S.A.
By: /s/ Paul Egan
Paul Egan, President
AGREEMENT
This "Agreement" replaces the "Agreement" between eConnect
Incorporated and Warp Drive Incorporated dated December 20, 1999,
which was duly signed by all parties on December 22, 1999
This Agreement is made as of the 29th of December, 1999, ("The
Effective Date") by eMarkit Incorporated, (a Nevada Corporation)
with resident address at 1905 S. Eastern Avenue, Las Vegas,
Nevada 89104, maintaining its mailing address at 6339 E. Greenway
Road, # 102-215 hereinafter known as eMarkit and Mr. Tom Hughes,
individually, collectively known and on behalf of, eConnect,
Incorporated with address at 2500 Via Cabrillo, San Pedro, CA,
hereinafter known as eConnect.
1. That eConnect, and eMarkit, Incorporated do hereby agree to a
joint venture, whereby eConnect agrees to purchase on a "stock
for stock" basis, 50% of a corporation to be formed by eMarkit,
that name being; eConnect2Trade.com, Incorporated, herein known
as ET. EConnect acknowledges that eMarkit is in the process of
incorporating ET, currently owns 100% of ET and is in the process
of reserving the Internet "domain name" of econnect2trade.com.
Upon signing of this agreement of eConnect agrees to issue one
million (1,000,000) "free-trading" shares of eConnect stock to
eMarkit and 2,000,000 warrants to eMarkit to purchase 2,000,000
"free-trading" shares of eConnect stock at an exercise price of
$1.00 per share. The expiration date of the warrants shall be
December 31, 2000. eConnect shall deliver the stock and warrants
as follows: 300,000 shares and 300,000 warrants no later than
January 20th, 2000. Upon signing this agreement, eConnect shall
send proof of documentation that the transfer agent has received
instructions to issue the stock to eMarkit. This documentation
shall be sent via fax to eMarkit no later than the following
business day. EMarkit's fax number is, (480) 368-8708 and/or
(818) 991-9905 (California branch office). The next issuance of
200,000 shares and 200,000 warrants will be delivered when Beta
testing begins and 500,000 shares and 500,000 warrants will be
delivered when Beta testing is complete but no later than March
20,0000.
1.1 That the business of ET shall be the marketing and sales of
eConnect "same-as-cash" transactions to the securities industry
via any medium, but initially via the internet using an ATM pin
pad.
1.2 eConnect shall pay all expenses, provide all funding, software
and hardware to implement the ET Beta testing and finalize the
operational system.
1.3 The long term goal of ET shall be to, for a fee, act as a
financial interface between securities broker/dealers and their
clients who are transacting currencies via PERFECT transactions
using bank host processing centers that are authorizing such
transactions.
1.4 Examples of ET services are establishing the eConnect2Trade
button on Internet sites of securities firms; routing commerce
PERFECT orders to either Internet or non-Internet securities
firms and their clients, whereby such transactions are
originating from land based terminals such as ePin, eConnect
EzyDepot, or wireless terminal such as the eConnect "PocketPay".
1.5 eMarkit's consideration and duties will be as follows:
A. Provide the financial contacts and resources to implement the
business of ET as outlined in this agreement.
B. eMarkit shall operate, maintain and provide the personnel for the
corporate offices of ET.
C. EMarkit will provide a clearinghouse or houses and or a brokerage
firm or brokerage firms for the beta testing of the "same as
cash" transactions as outlined in this agreement.
D. EMarkit will contract to develop the ET web site.
E. EMarkit will market, advertise, sell and or license eConnect's
"same as cash" technology to the financial industry on a best
efforts basis.
F. EMarkit, via ET, shall be the primary conduit between the
financial community and eConnect.
G. EMarkit is relying on eConnect's issuance of eConnect stock to ET
to implement all of the above.
H. In essence, eConnect is providing the financial resources and
technology for eMarkit to market, advertise, administrate,
operate, sell and/or license eConnect's technology to the
financial community via eMarkit's corporation and web site, known
as, eConnect2Trade.com, Incorporated and www.econnect2trade.com,
by which eMarkit will issue 50% of ET to eConnect for this joint
venture as outlined in this agreement.
2. The PERFECT orders to financial firms shall be processed via
eConnect's bank host. eConnect will not charge a fee to ET to
process the transactions, ET will pay the bank the host bank
charges.
2.1 The settlement bank shall deduct the ET fee at the moment of the
transaction. The fee shall then be placed in the ET bank
account. The amount remaining after the bank host processing
costs have been deducted/paid is to be known as "Net Transaction
Receipts".
2.2 From these Net Transaction Receipts, eConnect shall receive 25%
of these "Receipts" as repayment of the capital funding to
implement the ET system. Once the initial capital funding to
implement the system is satisfied, eConnect shall no longer
receive 25% of the Net Transaction Receipts. The capital funding
does not include the fair market value of the eConnect stock to
purchase 50% of ET.
3. eConnect, and eMarkit shall equally share in the net profits
generated from ET. These profits shall be determined after sales
costs, marketing costs, administrative costs, general office
costs, overhead costs, consulting fees, legal fees, and
applicable taxes that will be deducted from the Net Transaction
Receipts.
4. ET agrees that all transactions shall be processed by eConnect
via eConnect's bank host. In turn eConnect shall grant exclusive
International rights to ET to market and sell eConnect's system
to the securities industry.
5. 10,000,000 shares of stock will be authorized by ET. Initial
issuance of stock shall be: 1,000,000 shares to eConnect and
1,000,000 shares to eMarkit. EConnect shall retain a Board seat.
EMarkit shall appoint Officers and Directors. Management control
shall remain with eMarkit.
6. This agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but of
which together shall constitute one and the same instrument. A
faxed signature shall be acceptable as an original legal
signature.
7. This Agreement shall be binding and replaces the agreement signed
on December 16, 1999 and December 22, 1999.
8. The laws of the State of Nevada shall govern this agreement.
9. Indemnification. Each party shall hold the other party harmless
from and against, and shall indemnify the other party for, any
liability, loss and costs, and expenses or damages however caused
by reason of any injury (whether to body, property, personal or
business character, or reputation) sustained by any person or to
any person or property by reason of any act of neglect, default
or omission of it or any of its agents, employees, or other
representatives arising out of or in relation to this Agreement.
Nothing herein is intended to nor shall it relieve either party
from liability for its own act, omission or negligence. All
remedies provided by law or in equity shall be cumulative and not
in the alternative.
10. Authorization. Contractor and its signatories herein have full
power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
11. No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate any provision of the charter or by-laws of
eConnect and eMarkit or violate, or be in conflict with or
constitute a default under, any agreement or commitment to which
eConnect or eMarkit is a party, or violate any statute or law or
any judgment, decree, order, regulation or rule of any court of
government authority.
12. Litigation. Except as set forth below, there is no action, suit,
inquiry, proceeding or investigation by or before any court of
governmental or other regulatory or administrative agency or
commission pending or to the best knowledge of eConnect
threatened against or involving eConnect, or which questions or
challenges the validity of this Agreement and its subject matter;
and eConnect does not know or have any reason to know if any
valid basis for any such actions, proceeding or investigation
exists.
13. Consents. No consent of any person, other than the signatories
hereto, is necessary to the consummation of the transactions
contemplated hereby including, without limitation, consents from
parties to loans, contracts, leases or other agreements and
consents from government agencies, whether federal, state or
local.
14. eMarkit's reliance. eMarkit has and will rely upon the
documents, instruments and written information furnished to
eMarkit by the eConnect's officers or designated employees and:
15. eConnect Material. All representations and statements provided
about eConnect are true, complete and accurate. EConnect agrees
to indemnify, hold harmless, defend eMarkit and ET, its officers,
directors, agents, consultants and employees at eConnect's
expense for any proceeding or suit which may arise out of any
inaccuracy or incompleteness of any such material written
information supplied to eMarkit and ET; and
16. eConnect Client and Other Material. All representations and
statements provided, other than about eConnect, are to the best
of its knowledge true, complete and accurate.
17. Confidentiality. eMarkit, ET and eConnect each agree to provide
reasonable security measures to keep information confidential
whose release may be detrimental to the business. EMarkit, ET
and eConnect shall each require their employees, agents,
affiliates, subcontractors, other licenses, and other who will
properly have access to the information through eMarkit, ET and
eConnect respectively, to first enter into appropriate non-
disclosure agreements requiring the confidentiality contemplated
by this Agreement in perpetuity.
18. Waiver of Compliance. Any failure of eMarkit on the one hand, or
eConnect on the other, to comply with any obligation, agreement
or condition herein may be expressly waived in writing, but such
waiver of failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other
failure.
19. Other Business Opportunities. Except as expressly provided in
this Agreement, eConnect and eMarkit shall have the right to
independently engage in and receive full benefits from other
business activities.
20. Compliance with Regulatory Agencies. Each party represents to
the other party that all actions, direct or indirect, taken by it
and its respective agents, employees and affiliates in connection
with this Agreement and any financing or underwriting hereunder
shall confirm to all applicable Federal and State securities
laws.
21. Notices. Any notices to be given hereunder by any party to the
other may be effected by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at
the addresses appearing in the introductory paragraph of this
Agreement, but any party may change their address by written
notice in accordance with this subsection. Notices delivered
personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of three (3) days
after mailing.
22. Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by eConnect without the
prior written consent of eMarkit and ET, except by operation of
law.
23. Publicity. Neither eConnect nor eMarkit nor ET shall make or
issue, or cause to be made or issued, any announcement or written
statement concerning this Agreement or the transactions
contemplated hereby for dissemination to the general public
without the prior consent of the other party. This provision
shall not apply, however, to any announcement or written
statement required to be made by law or the regulations of any
Federal or State governmental agency, except that the party
required to make such announcement shall, whenever practicable,
consult with the other party concerning the timing and consent of
such announcement before such announcement is made.
24. Entire Agreement. This Agreement, including any Exhibits hereto,
and any other documents and certificates delivered pursuant to
the terms hereof, set forth the entire agreement and
understanding of the parties hereto in respect to the subject
matter contained herein, and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
25. Relationships of the Parties. Nothing contained in this
Agreement shall be deemed to constitute either party the partner
of the other, nor except as otherwise herein expressly provided,
to constitute either party the agent or legal representative of
the other, or to create any fiduciary relationship between them.
It is not the intention of the parties to create, nor shall this
Agreement be construed to create, any commercial nor other
partnership. Neither party shall have any authority to act for
or to assume any obligation or responsibility on behalf of the
other party, except as otherwise expressly provided herein. The
rights, duties, obligations and liabilities of the parties shall
be severable and not joint or collective. Each party hereto
shall be responsible only for its obligations as herein set out
and shall be liable only for its share of the costs and expenses
as provided herein. Each party shall indemnify, defend and hold
harmless the other party, its directors, officers, and employees,
from and against any and all losses, claims, damages and
liabilities arising out of any act or any assumption of liability
by the indemnifying party, or any of its directors, officers or
employees, done or undertaken, or apparently done or undertaken,
on behalf of the other party, except pursuant to the authority
expressly granted herein or otherwise agreed in writing between
the parties. Each party shall be responsible for the acts of its
agents, consultants and affiliates.
IN WITNESS WEHREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above written.
By: /s/ Robert Bragg By: /s/ Thomas S. Hughes
Robert Bragg, President Thomas S. Hughes, Chairman and CEO
eMarkit, Incorporated eConnect
Date: December 22, 1999 Date: December 22, 1999
SUBSIDIARIES OF THE REGISTRANT
Isla Escondida, S.A., a Costa Rica corporation
Top Sports, S.A., a Dominican Republic corporation (50% owned)
eConnect Dominican Republic, S.A.
PowerClick, Inc., a Nevada corporation (50% owned)
<TABLE> <S> <C>
<S> <C>
<PAGE>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE AUDITED FINANCIAL STATEMENTS IN THIS FORM 10-KSB, THE
UNAUDITED FINANCIAL STATEMENTS CONTAINED IN A TRANSITION REPORT
ON FORM 10-QSB FOR THE PERIOD ENDED DECEMBER 31, 1998, AND THE
AUDITED FINANCIAL STATEMENT CONTAINED IN THE FORM 10-KSB FOR THE
PERIOD ENDED AUGUST 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1
<S> <C>
<PERIOD-TYPE> YEAR 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1999 SEP-01-1998 SEP-01-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1998
<CASH> 126,172 4,512 0
<SECURITIES> 0 0 0
<RECEIVABLES> 470,176 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 596,348 4,512 0
<PP&E> 0 0 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 1,654,239 4,512 0
<CURRENT-LIABILITIES> 6,928,960 327,385 283,971
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 110,601 144,752 142,842
<OTHER-SE> (5,274,721) (322,873) (324,340)
<TOTAL-LIABILITY-AND-EQUITY> 1,654,239 4,512 0
<SALES> 0 0 0
<TOTAL-REVENUES> 40,000 0 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 19,066,744 776,138 196,968
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> (144,471) 0 0
<INCOME-PRETAX> (23,273,393)(776,138) (196,968)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (23,273,393)(776,138) (196,968)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (23,273,393)(776,138) (196,968)
<EPS-BASIC> (.63) (.05) (.02)
<EPS-DILUTED> (.63) (.05) (.02)
</TABLE>
(a) United States Patent No. 5,336,870
Thomas S. Hughes, et al., August 9, 1994
System for remote purchase payment transactions and remote bill
payments
Abstract
It is the object of this invention to provide a terminal and
system to allow debit and credit card holders the ability to
conveniently perform various transactions from their home or
office. The terminal is a single device, which has an alphabetic
QWERTY keyboard, a numeric touch tone type keypad, miscellaneous
other keys, a magnetic card reader, a display, a printer, a
modem, and a serial port. The terminal firmware supports various
financial transactions including: purchase payment, bill payment,
and settlement review. The terminal supports initialization,
encryption, transaction generation, transaction transmission and
data reception from a host system and receipt printing. A local
data base including a transaction log and a profile list are
maintained in the terminal memory . The transaction log stores
purchase payment information and is stored as a stack and the
profile list has entries for each specific bill pay account.
(b) United States Patent No. 5,809,143
Thomas S. Hughes, September 15, 1998
Secure keyboard
Abstract
Apparatus and methods are provided for transacting secure
purchase and bill payment transactions. A method for transacting
a secure purchase via an internet using a system including a
computer, a first communication device coupled to the computer
and to the internet, and a secure keyboard, the secure keyboard
including a controller, an interface between the controller and
the computer, a removable media interface, an alphanumeric
keypad, an encryption device, and a second communication device
coupled to a secure host, includes the steps of browsing the
internet via the first communication device, retrieving item data
for a purchase from the internet via the first communication
device, accessing information from removable media using the
removable media interface, the information including a user
identifier and an issuer identifier, entering a personal
identifier number (PIN) on the alphanumeric keypad, encrypting
the PIN using the encryption device, sending to the secure host
via the second communication device, the information, the item
data, and the encrypted PIN , the secure host blocking the
information and the PIN from the internet, the secure host
requesting authorization from a bank system for making the
purchase using the information and PIN , proceeding with the
purchase if the secure host receives from the bank system a bank
authorization for the purchase, otherwise canceling the purchase,
the secure host sending purchase transaction data to the secure
keyboard via the second communication device, and the secure
keyboard printing a purchase transaction receipt.
(c) United States Patent No. 5,754,655
Thomas S. Hughes et al., May 19,1998
System for remote purchase payment and remote bill payment
transactions
Abstract
A terminal is provided for allowing a user to conduct remote
purchase payment and remote bill payment transactions with a
remote host computer. In one embodiment, the terminal includes a
QWERTY alphabetic keyboard (14), a numeric keypad (16), a
magnetic card reader (54), a display (12), a printer (52), a
modem (338), an earphone 402, a microphone 404, and a cellular
phone 408 all integral to the terminal. A controller is included
for operating the terminal and communicating with the remote host
computer system via the modem, the controller coupled to the
QWERTY alphabetic keyboard (14), the numeric keyboard (16), the
magnetic card reader (54), the display (12), the printer (52),
and the modem (338). A memory (332) is coupled to the controller
for storing a transaction log of purchase payment transactions,
each purchase payment transaction in the transaction log
comprising a date and a time of purchase payment transaction, an
amount of the purchase payment transaction, information
identifying a merchant, information identifying an item or
service purchased, and data for identifying the transaction.
Word Mark BETTING INC.
Owner Name (REGISTRANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record LEE W TOWER
Serial Number 75-267095
Registration Number 2239503
Filing Date 03/31/1997
Registration Date 04/13/1999
Section 1(B) indicator SECTION 1 (B)
Mark Drawing Code (1) TYPED DRAWING
Disclaimer NO CLIAM IS MADE TO THE EXCLUSIVE RIGHT TO
USE "INC." APART FROM THE MARK AS SHOWN
Register PRINCIPAL
Published for
Opposition 11/04/1997
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely, electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1997.02.01; DATE OF FIRST USE IN
COMMERCE: 1997.02.01
Word Mark POCKETPAY
Pseudo Mark POCKET PAY
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-641147
Filing Date 02/16/1999
Section 1(B) indicator SECTION 1 (B)
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark TRADEMARK
International Class 009
Goods and Services Computer terminals for use in processing
financial transactions, namely, purchase and bill payment
transactions.
Word Mark SLICK
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-641148
Filing Date 02/16/1999
Section 1(B) indicator SECTION 1 (B)
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark TRADEMARK
International Class 009
Goods and Services ELECTRONIC TERMINALS FOR USE IN PROCESSING
FINANCIAL TRANSACTIONS, NAMELY, PURCHASE AND BILL PAYMENT
TRANSACTIONS
Word Mark ECONNECT
Pseudo Mark E CONNECT
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-699966
Filing Date 05/06/1999
Section 1(B) indicator SECTION 1 (B)
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.02.23; DATE
Word Mark MRS
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-712400
Filing Date 05/24/1999
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.05.10; DATE OF FIRST USE IN
COMMERCE: 1999.05.10
Word Mark TV PIN PAD REMOTE
Owner Name (APPLICANT) Thomas S. Hughes
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-712410
Filing Date 05/24/1999
Section 1(B) indicator SECTION 1 (B)
Mark Drawing Code (1) TYPED DRAWING
Register SUPPLEMENTAL
Type of Mark TRADEMARK
Amended Supplemental
Registration 11/06/1999
International Class 009
Goods and Services electronic terminal for use in processing
financial transactions, namely credit, debit, and smart card
transactions
Word Mark SAME-AS-CASH
Owner Name (APPLICANT) Thomas S. Hughes
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-712416
Filing Date 05/24/1999
Mark Drawing Code (1) TYPED DRAWING
Register SUPPLEMENTAL
Type of Mark SERVICE MARK
Amended Supplemental
Registration 10/21/1999
International Class 036
Goods and Services electronic payment, namely, electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.05.19; DATE OF FIRST USE IN
COMMERCE: 1999.05.19
Word Mark MERCHANT RESPONSE SOFTWARE
Owner Name (APPLICANT) Thomas S. Hughes
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-712420
Filing Date 05/24/1999
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely, electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.05.10; DATE OF FIRST USE IN
COMMERCE: 1999.05.10
Word Mark P.E.R.F.E.C.T.
Owner Name (APPLICANT) Thomas S. Hughes
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 INDIVIDUAL UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-712424
Filing Date 05/24/1999
Section 1(B) indicator SECTION 1 (B)
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely, electronic
processing and transmission of bill payment and purchase payment
data
Word Mark EZ CARD
Pseudo Mark EASY CARD
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 UNKNOWN
Attorney of Record Lee W. Tower
Serial Number 75-719861
Filing Date 06/03/1999
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 042
Goods and Services electronic payment, namely electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.05.25; DATE OF FIRST USE IN
COMMERCE: 1999.05.25
Word Mark EZYSHOP
Pseudo Mark EASY SHOP
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 UNKNOWN
Attorney of Record Lee W. Tower
Serial Number 75-719767
Filing Date 06/04/1999
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.05.25; DATE OF FIRST USE IN
COMMERCE: 1999.05.25
Word Mark EZBET
Pseudo Mark EASY BET
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 UNKNOWN UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-721691
Filing Date 06/04/1999
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.05.25; DATE OF FIRST USE IN
COMMERCE: 1999.05.25
Word Mark EZYPAY
Pseudo Mark EASY PAY
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 UNKNOWN UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-721690
Filing Date 06/04/1999
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services electronic payment, namely electronic
processing and transmission of bill payment and purchase payment
data; DATE OF FIRST USE: 1999.05.25; DATE OF FIRST USE IN
COMMERCE: 1999.05.25
Word Mark ETHEATRE
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 UNKNOWN
Attorney of Record Lee W Tower
Serial Number 75-773706
Filing Date 08/12/1999
Mark Drawing Code (5) WORDS, LETTERS AND/OR NUMBERS IN STYLIZED FORM
Register PRINCIPAL
Type of Mark SERVICE MARK
International Class 036
Goods and Services Internet multimedia; DATE OF FIRST USE:
1999.06.15; DATE OF FIRST USE IN COMMERCE: 1999.06.15
Word Mark SAFETYPAY
Pseudo Mark SAFETY PAY
Owner Name (APPLICANT) Hughes, Thomas S.
Owner Address 31310 Eagle Haven Cir. Ste. 100 Rancho Palos Verdes
CALIFORNIA 90275 UNKNOWN UNITED STATES
Attorney of Record Lee W. Tower
Serial Number 75-808414
Filing Date 09/28/1999
Section 1(B) indicator SECTION 1 (B)
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark TRADEMARK
International Class 009
Goods and Services electronic payment, namely electronic
processing and transmission of bill payment and purchase payment
data
