Document/Exhibit Description Pages Size
1: POS AM Post-Effective Amendment 94± 461K
2: EX-10.47 Letter of Intent With Respect to Proposed Purchase 7± 29K
of Shares of National Data Funding
Corporation.
3: EX-10.48 Shares Sale Contract 3± 13K
4: EX-10.49 Amended Agreement With Top Sports, Dated June 20, 2± 11K
2000
5: EX-13.1 Form 10-Qsb Filed on May 30, 2000 172± 731K
6: EX-13.2 Form 10-Ksb Filed on May 9, 2000 181± 766K
7: EX-23 Consent of Independent Certified Public 1 5K
Accountants
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 2000
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, $0.01 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 .
As of As of May 1, 2000, the Registrant had 162,394,801
shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X .
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 3
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 1999 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 1999 5
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. PLAN OF OPERATION 11
PART II
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14
ITEM 5. OTHER INFORMATION 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURE 14
PART I.
ITEM 1. FINANCIAL STATEMENTS.
eCONNECT
CONSOLIDATED BALANCE SHEET (Unaudited)
ASSETS
Current assets March 31, 2000
Cash $ 1,247,262
Due from related party 200,000
Total current assets 1,447,262
Fixed assets, net 135,506
Other assets
Investments, net 2,445,046
Goodwill, net 187,614
Other intangibles, net 680,520
Other assets 11,012
3,324,192
Total assets 4,906,960
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 664,504
Accrued liabilities 57,795
Due to related party 607,221
Due to affiliate 1,725,000
Total current liabilities 3,054,520
Total liabilities 3,054,520
Stockholders' equity
Common stock; $.001 par value; 200,000,000
shares authorized, 154,870,876 shares
issued and outstanding 154,871
Additional paid-in capital 55,521,296
Due from related party - secured by
Company's common stock (4,093,529)
Accumulated deficit (49,730,198)
Total stockholders' equity 1,852,440
Total liabilities and stockholders' equity 4,906,960
See Accompanying Notes to Financial Statement
eCONNECT
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended March 31
2000 1999
Revenue - -
Operating expenses
Consulting 9,868,917 -
Public relations 5,232,780 -
Research and development 1,910,310 -
General and administrative 1,951,826 175,730
Total operating expenses 18,963,833 175,730
Net loss from operations (18,963,833) (175,730)
Other income (expense)
Interest income 87,350 -
Equity losses of investees (280,366) -
Total other income (expense) (193,016) -
Net loss before provision for
income taxes (19,156,849) (175,730)
Provision for income taxes - -
Net loss (19,156,849) (175,730)
Basic and diluted loss per
common share (0.14) (0.01)
Basic and diluted weighted
average common shares
outstanding 136,090,236 14,316,067
See Accompanying Notes to Financial Statements
eCONNECT
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended March 31
2000 1999
Cash flows from operating
activities:
Net loss (19,156,849)
(175,730)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and amortization 223,183 -
Common shares issued for
services 15,627,561 -
Equity losses of investees 280,366 -
Changes in operating assets and
liabilities:
Decrease in stock subscription
receivable 220,176 -
Decrease in due from related
party 50,000 -
Increase in due from related party -
secured by Company's common stock (1,112,647) -
Increase in other assets (11,012) -
Increase (decrease) in accounts
payable 139,234
(12,522)
Increase (decrease) in accrued
liabilities (32,885) 36,000
Decrease in due to related party (5,789) -
Decrease in stockholder loan
payable (350,000) -
Net cash used by operating
activities (4,128,662)
(152,252)
Cash flows from investing
activities:
Purchase of fixed assets (138,144) -
Payments for investments (706,200) -
Net cash used by investing
activities (844,344) -
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt - 16,600
Proceeds from issuance of
common stock 6,094,096 149,300
Net cash provided by financing
activities 6,094,096 165,900
Net increase in cash 1,121,090 13,648
Cash, beginning of period 126,172 8,862
Cash, end of period 1,247,262 22,510
Schedule of non-cash investing and
financing activities:
Remaining consideration of the
acquisition of Powerclick, Inc.
recorded as due to affiliate 1,725,000 -
eCONNECT
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
For the three months ended March
31
2000 1999
2,000,000 common shares issued
related to the acquisition of
Powerclick, Inc. 325,000 -
666,667 common shares issued for
accounts payable 550,000 -
6,000,000 common shares issued for
officer bonus payable 4,800,000 -
203,865 common shares issued for
stock subscription payable 81,546 -
See Accompanying Notes to Financial Statements
eCONNECT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared in accordance with U.S. Securities and Exchange
Commission requirements for interim financial statements.
Therefore, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. The financial statements
should be read in conjunction with the Form 10-KSB for the year
ended December 31, 1999 of eConnect ("the Company").
The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected
for the full year. In the opinion of management, the information
contained herein reflects all adjustments necessary to make the
results of operations for the interim periods a fair statement of
such operation. All such adjustments are of a normal recurring
nature.
During the first quarter of 2000, the Company's investees
(PowerClick and Top Sports S.A.) were operational, while the
"Bank Eyes Only" Internet products were in the development stage.
As described below under the caption "Business Combinations and
Investments," the investees' earnings or losses are recorded on
the equity method of accounting.
2. ACQUISITION
Powerclick, Inc. - In February 2000, the Company acquired 50% of
the outstanding capital stock of Powerclick, Inc. ("the
Investee") in consideration of $1,200,000 and 8,000,000 shares of
the Company's common stock ("the Acquisition"). As of March 31,
2000 the Company has made payments totaling $450,000 and issued
2,000,000 shares of the Company's common stock related to the
Acquisition. The remaining unpaid balance of $750,000 and
unissued common stock totaling 6,000,000 shares are recorded as
"Due to affiliate" totaling $1,725,000 at March 31, 2000. The
Company has accounted for its ownership interest in the Investee
under the equity-method as the Company has the ability to
exercise significant influence, but not control, and has an
ownership interest of the investee's voting stock between 20% and
50%. As of March 31, 2000, the investment in the Investee
exceeded the Company's share of the underlying net assets by
approximately $2,424,190. 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
three months ended March 31, 2000, amortization expense related
to this investment approximated $120,000.
Business Combinations and Investments - This 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 net 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 based on
its ownership interest are included in the consolidated
statements of operations. The investee's earnings or losses are
the net result of total revenues less total expenses. 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 statements 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.
3. RELATED PARTY TRANSACTIONS
Due from related party - As of March 31, 2000, the Company loaned
$200,000 to a director of the Company. The balance is non-
interest bearing and is due on demand. The Company received a
$100,000 repayment of this amount in April 2000.
Due from related party - secured by Company's common stock - As
of March 31, 2000, the Company made loans totaling $4,093,529
(including accrued interest receivable of $231,821) 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.
4. GOING CONCERN
The Company incurred a net loss of approximately $19,000,000 for
the three months ended March 31, 2000. The Company's current
liabilities exceed its current assets by approximately $1,600,000
as of March 31, 2000. These factors create substantial doubt
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.
ITEM 2. 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"T Internet aspect of the
PERFECT transaction (see Exhibit 99.3 for a summary of the
trademark filed on March 15, 2000).
"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 on January 21, 2000
(see Exhibit 10.29 to this Form 10-QSB). Production of the
eCashPad has commenced in Asia and is commercially targeted for
distribution in June 2000.
(2) The Registrant has entered into two agreements with eFunds
Corporation, a subsidiary of Deluxe Data, dated February 3, 2000
and February 4, 2000 to provide the Dominican Republic and
Ireland host systems for "Bank Eyes Only" transactions (see
Exhibits 10.34 and 10.36, respectively, to this Form 10-QSB).
This means that eFunds will help process the transaction after it
leaves the Registrant's server.
(3) Under the agreements 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 in March 2000.
(5) The Registrant has entered into a letter of intent with Real
Solutions, Ltd. on March 9, 2000 to provide the IBM hardware
support in connection with the eFunds agreements (see Exhibit
10.40 to this Form 10-QSB). On April 13, 2000, the Registrant
entered into a formal Master Services Agreement with Real
Solutions, Ltd. in connection with this matter.
(6) On February 9, 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 (see Exhibit 10.37 to
this Form 10-QSB). 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) On December 29, 1999, the Registrant entered into an
agreement for establishing eConnect2Trade.com, Incorporated
("ET") (see Exhibit 10.25 to this Form 10-QSB). 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.
Although a recent Letter of Intent between ET and 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 (see Exhibit 10.28 to this Form 10-QSB).
(10) On March 10, 2000, the Registrant entered into a Joint
Venture Agreement for the creation of a software/hardware
solution that will facilitate a secure transaction interface and
communications between handheld computing devices and secure
transaction servers (see Exhibit 10.39 to this Form 10-QSB). The
net result to be to provide same as cash transactions over
virtual private networks. The combined hardware
/software/service is to be known as "PocketPay" an existing
trademark of eConnect.
(11) 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.
(12) 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.
(13) 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.
(14) 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.
(15) 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. In this regard, the Registrant
entered into a Joint Venture Agreement, dated March 27, 2000,
with Raymond and Li-Wang Kessler for the purpose of delivering a
delegation from the Peoples Republic of China to a meeting in the
United States with the Registrant to discuss launching the
Registrant's services in China (subsequent meetings with China
Delegation contact(s) and their associates will explore forging
business relationships in Singapore, Hong Kong, Macao and other
countries) (see Exhibit 10.44 to this Form 10-QSB).
(16) 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. 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-QSB).
However, there is no guarantee that this funding source will
continue to be available in the future.
The current funds available to the Company, and any revenue
generated by operations, 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."
PART II.
ITEM 1. 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; (f) Form 10-KSB for the period ended on December 31, 1999
(due by April 14, 2000) - filed with the SEC on May 9, 2000; and
(g) Form 10-QSB for the quarter ended March 31, 2000 (due by May
22, 2000).
(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.
(d) Employment Agreement - President/Chief Operating Officer.
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 (see Exhibit 10.42 to
this Form 10-QSB). 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.
(e) Employment Agreement - Outside Counsel.
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 (see Exhibit 10-43 to this
Form 10-QSB). 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 $700,000 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 600,000 common shares and 600,000 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.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) Sales of Unregistered Securities.
The Registrant made the following sales of unregistered
securities during the three month period ended on March 31, 2000:
(1) Between February 2, 2000 and February 29, 2000, the
Registrant sold a total of 3,069,011 shares of common stock to 79
individuals at a price of $0.40 per share, for an aggregate
consideration of $1,227,604.
(2) During the period of January 1, 2000 through March 6, 2000,
the Registrant sold a total of 9,320,167 shares of common stock
to 17 individuals and firms in exchange for consulting and other
services performed for the Registrant (including 6,000,000 shares
issued to Ryan Kavanaugh in connection with the Consulting
Agreement with the Registrant (see Exhibit 10.41 to this Form 10-
QSB).
No commissions or fees were paid in connection with these sales.
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.
(b) Use of Proceeds.
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 (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, and an additional 14,490,746
shares for the quarter ended on March 31, 2000 (for a total of
38,701,563 shares sold in this offering). Out of the total
offering, the Registrant issued 9,088,442 shares out of those
registered from the Common Stock Purchase Agreement for a total
consideration of $933,000 through December 31, 1999, and an
additional 2,877,084 shares for the quarter ended March 31, 2000
for a total consideration of $2,871,000. In addition, the
Registrant issued 4,988,730 shares upon the exercise of warrants,
for a total consideration of $1,995,492. The expenses involved
with this offering to March 31, 2000 were approximately $370,640
(which includes an 8% commission of payable on the sales made
under the Common Stock Purchase Agreement). The net cash
proceeds from this offering (gross proceeds of $5,799,492 less
offering expenses) of $5,428,852 were used for working capital
for the Registrant. This offering has not as yet terminated.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
(a) Promissory Note and Security Agreement.
The Registrant, and Electronic Transactions & Technologies (a
privately held corporation majorty owned by Thomas Hughes,
President of the Registrant) and Mr. Hughes entered into a
Promissory Note, dated December 1, 1999 (see Exhibit 10.19 to
this Form 10-QSB), to reflect the principal sum of approximately
$2,900,000 owed by ET&T and Mr. Hughes to the Registrant for
various sums paid by the Registrant to ET&T. During the first
quarter of 2000, the Registrant advanced approximately $1,000,000
to ET&T. This additional amount, along with the existing amount
owed, are set forth in an Amended and Restated Promissory Note
(see Exhibit 10.45 to this Form 10-QSB) and are secured by the
9,400,000 shares of the Registrant owned by Mr. Hughes and ET&T
as reflected in an accompanying Amended and Restated Security
Agreement (see Exhibit 10.46 to this Form 10-QSB).
(b) eSportsbet.com.
Under an Agreement dated January 7, 2000, the Registrant
acquired the eSportsbet.com website from PowerClick, Inc. (the
owner of that website on that date) (see Exhibit 10.27 to this
Form 10-QSB). In return, the Registrant agreed to be responsible
to any liabilities that may have been incurred by PowerClick
during its ownership and control of eSportsbet.com. The
Registrant intends to use this website in its eGaming operations
in the Dominican Republic.
(c) Beneficial Ownership of Shares.
With regard to the beneficial ownership of shares of the
Registrant's common stock as of May 1, 2000, management has
reexamined the control that Thomas Hughes exercises over ET&T and
the 5,400,000 shares owned by that firm. Based on this review,
the Registrant has determined that the shares owned by ET&T
should be attributed to the beneficial ownership of Mr. Hughes:
Resulting in a total beneficial ownership of Mr. Hughes of
5,550,000 (3.42% of the total issued and outstanding as of that
date of 162,394,801 and bringing the total of the directors and
executive officers of 15,240,000 (9.33% of the total).
(d) License Agreement of February 18, 1997.
On February 18, 1997, the Registrant entered into an Agreement to
License Assets from Home Point of Sales, Inc.("HPOS") (now know
as "ET&T) (see Exhibit 10.1 to this Form 10-QSB). 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 the Registrant are issued to the public or any
employees, ET&T's ownership interest in the Registrant shall be
and remain no less than 60% and that ownership interest of the
ten current shareholder of the Registrant (James Clinton) shall,
at that time, be no less than 10%. ET&T has never sought to
enforce this provision in this license agreement. On February
2, 2000, the Registrant issued a total of 1,638,789 shares to
James Clinton or his nominees based on the stated reason that
compliance with said 10% provision in such license agreement was
required (this is in addition to the 1,850,000 shares so issued
in 1999). 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 Nevada Revised
Statutes 78.211.
ITEM 6. EXHBITS AND REPORTS ON FORM 8-K.
(a) Reports on Form 8-K. Reports on Form 8-K were filed during
the first quarter of the fiscal year covered by this Form 10-QSB,
as follows:
(1) Form 8-K filed on January 18, 2000 reflecting the settlement of
litigation between the Registrant and CALP II, LP.
(2) Form 8-K filed on March 15, 2000 reflecting the following: (i)
the dismissal of the former certifying accountant for the
Registrant, Farber & Hass, effective March 8, 2000; and (ii) the
retention of L.L. Bradford & Company as the new certifying
accountant for the Registrant, effective March 8, 2000.
(3) Form 8-K filed on March 31, 2000 reflecting the filing of a
complaint on March 23, 2000 by the U.S. Securities and Exchange
Commission against the Registrant and Thomas Hughes, and the
issuance of a temporary restraining order against the Registrant
and Mr. Hughes.
(b) Exhibits. Exhibits included or incorporated by reference
herein: See Exhibit Index
SIGNATURE
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 25, 2000 By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
EXHIBIT INDEX
Exhibit Description
No.
2 Agreement and Plan of Merger, dated June 1, 1999
(incorporated by reference to Exhibit 2 of the Form 10-KSB filed
on May 9, 2000).
3.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registration Statemet 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).
4.25 Amended and Restated Retainer Stock Plan for Non-Employee
Directors and Consultants, dated February 1, 2000 (incorporated
by reference to Exhibit 4.1 of the Form S-8 filed on February
10,
2000).
4.26 Consulting Services Agreement between the Registrant and
Laurel-Jayne Yapel Manzanares, dated February 1, 2000
(incorporated by reference to Exhibit 4.2 of the Form S-8 filed
on February 10, 2000).
4.27 Consulting Services Agreement between the Registrant and
Marcine Aniz Uhler, dated February 1, 2000 (incorporated by
reference to Exhibit 4.3 of the Form S-8 filed on February 10,
2000).
4.28 Consulting Services Agreement between the Registrant and
William Lane, dated February 7, 2000 (incorporated by reference
to Exhibit 4.4 of the Form S-8 filed on February 10, 2000).
4.29 Consulting Services Agreement between the Registrant and
Earl Gilbrech, dated February 7, 2000 (incorporated by reference
to Exhibit 4.5 of the Form S-8 filed on February 10, 2000).
4.30 Consulting Services Agreement between the Registrant and
Dominique Einhorn, dated February 7, 2000 (incorporated by
reference to Exhibit 4.6 of the Form S-8 filed on February 10,
2000).
4.31 Consulting Services Agreement between the Registrant and
Edward James Wexler, dated February 7, 2000 (incorporated by
reference to Exhibit 4.7 of the Form S-8 filed on February 10,
2000).
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
(incorporated
by reference to Exhibit 10.5 of the Form 10-KSB filed on May 9,
2000).
10.6 Joint Venture Agreement between the Registrant and First
Entertainment Holding Corp., dated April 29, 1999 (incorporated
by reference to Exhibit 10.6 of the Form 10-KSB filed on May 9,
2000).
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 (incorporated by reference
to
Exhibit 10.9 of the Form 10-KSB filed on May 9, 2000).
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
(incorporated by reference to Exhibit 10.11 of the Form 10-KSB
filed on May 9, 2000).
10.12 Consulting Agreement between the Registrant and
International Investor Relations Group, Inc., dated September
24,
1999 (incorporated by reference to Exhibit 10.12 of the Form 10-
KSB filed on May 9, 2000).
10.13 Agreement between the Registrant and Kanakaris
Communications, dated October 21, 1999 (incorporated by
reference
to Exhibit 10.13 of the Form 10-KSB filed on May 9, 2000).
10.14 Letter of Commitment between the Registrant and Rogel
Technologies, dated October 23, 1999 (incorporated by reference
to Exhibit 10.14 of the Form 10-KSB filed on May 9, 2000).
10.15 Capital Contribution Agreement between the Registrant
and SafeTPay.com, dated November 5, 1999 (incorporated by
reference to Exhibit 10.15 of the Form 10-KSB filed on May 9,
2000).
10.16 Agreement between the Registrant and Rogel Technologies
dated November 23, 1999 (incorporated by reference
to Exhibit 10.16 of the Form 10-KSB filed on May 9, 2000).
10.17 Contract of Partnership between the Registrant and Top
Sports, S.A., dated November 20, 1999 (incorporated by reference
to Exhibit 10.17 of the Form 10-KSB filed on May 9, 2000).
10.18 Agreement between the Registrant and Alliance Equities,
dated November 29, 1999 (incorporated by reference to Exhibit
10.18 of the Form 10-KSB filed on May 9, 2000).
10.19 Secured Promissory Note issued to the Registrant by
Electronic Transactions & Technologies and Thomas S. Hughes,
dated December 1, 1999 (incorporated by reference to Exhibit
10.19 of the Form 10-KSB filed on May 9, 2000).
10.20 Security Agreement between the Registrant, Electronic
Transactions & Technologies, and Thomas S. Hughes, dated
December
1, 1999 (incorporated by reference to Exhibit 10.20 of the Form
10-KSB filed on May 9, 2000).
10.21 Business Cooperation Agreement between the Registrant
and Top Sports, S.A., dated December 9, 1999 (incorporated by
reference to Exhibit 10.21 of the Form 10-KSB filed on May 9,
2000).
10.22 Consulting Agreement between the Registrant and Michael
Leste, dated December 10, 1999 (incorporated by reference to
Exhibit 10.22 of the Form 10-KSB filed on May 9, 2000).
10.23 Consulting Agreement between the Registrant and Michael
Kofoed, dated December 10, 1999 (incorporated by reference to
Exhibit 10.23 of the Form 10-KSB filed on May 9, 2000).
10.24 Agreement between the Registrant and Top Sports S.A.,
dated December 16, 1999 (incorporated by reference to Exhibit
10.24 of the Form 10-KSB filed on May 9, 2000).
10.25 Agreement between the Registrant and eMarkit,
Incorporated, dated December 29, 1999 (incorporated by reference
to Exhibit 10.25 of the Form 10-KSB filed on May 9, 2000).
10.26 Fee Agreement between the Registrant and Red Iguana
Trading Company, Inc., dated January 2, 2000 (see below).
10.27 Assignment of eSportsbet between the Registrant and
PowerClick, Inc., dated January 7, 2000 (see below).
10.28 Letter of Intent of Negotiation and Information
Exchange between eConnect2Trade.com, Incorporated, and Empire
Financial Holdings, Incorporated, dated January 21, 2000 (see
below).
10.29 Manufacturing Agreement between the Registrant and Asia
Pacific Micro, Inc., dated January 21, 2000 (see below).
10.30 Consulting Services Agreement between the Registrant
and Boardwalk Associates, Inc., dated January 26, 2000 (see
below).
10.31 Consulting Services Agreement between the Registrant and
Coldwater Capital L.L.C., dated January 26, 2000 (see below).
10.32 Consultant Agreement between the Registrant and Harvey
M. Burstein, dated February 2, 2000 (see below).
10.33 Consultant Agreement between the Registrant and Terrie
Pham, dated February 2, 2000 (see below).
10.34 Software License, Development, and Maintenance
Agreement (Dominican Republic) between the Registrant and eFunds
Corporation, dated February 3, 2000 (see below).
10.35 Agreement between the Registrant and Burbank Coach
Works, dated February 3, 2000 (see below).
10.36 Software License, Development, and Maintenance
Agreement (Ireland) between the Registrant and eFunds
Corporation, dated February 4, 2000 (see below).
10.37 Acquisition Agreement between the Registrant and
PowerClick, Inc., dated February 9, 2000 (see below).
10.38 Loan Agreement between the Registrant and Richard
Epstein, dated February 15, 2000 (see below).
10.39 PocketPay Joint Venture Agreement between the
Registrant and Pilot Island Publishing, Inc., dated March 1,
2000
(see below).
10.40 Letter of Intent between the Registrant and Real
Solutions, Ltd., dated March 9, 2000 (see below).
10.41 Consulting Agreement between the Registrant and Ryan
Kavanaugh, dated March 10, 2000 (see below).
10.42 Amended Employment Agreement between the Registrant and
Stephen E. Pazian, dated March 21, 2000 (see below).
10.43 Amended and Restated Employment Agreement between the
Registrant and Stanley C. Morris, dated March 22, 2000 (see
below).
10.44 China-Singapore-Hong Kong-Macao Joint Venture Agreement
between the Registrant, and Raymond Kessler and Li-Wang Kessler,
dated March 27, 2000 (see below).
10.45 Amended and Restated Secured Promissory Note issued to
the Registrant by Electronic Transactions & Technologies and
Thomas S. Hughes, dated March 31, 2000 (see below).
10.46 Amended and Restated Security Agreement between the
Registrant, Electronic Transactions & Technologies, and Thomas
S.
Hughes, dated March 31, 2000 (see below).
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 of the Form 10-KSB filed on May 9, 2000).
27 Financial Data Schedule (see below).
99.1 Patents: dated August 9, 1994, May 19, 1998, and September
15, 1998 (incorporated by reference to Exhibit 99.1 of the Form
10-KSB filed on May 9, 2000).
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 (incorporated by reference to Exhibit
of the Form 10-KSB filed on May 9, 2000).
99.3 Trademark filed on March 15, 2000 (see below).
EX-10.26
FEE AGREEMENT & NON CIRCUMVENT
The undersigned Thomas S. Hughes, for and on behalf of eConnect,
Inc. and any associated/related corporations/funds/partnerships
and/or holding companies including but not limited to
client/business accounts over which he has discretionary powers,
hereinafter referred to as eConnect hereby appoints Red Iguana
Trading Company, Inc., hereinafter referred to as Red Iguana, to
procure acquisition targets which may be purchased on a cash,
equity/stock/debt or promissory note basis, eConnect will submit
to lenders and/or investors/institutions or acquisition targets,
financial data and information sufficient for the purposes of
facilitating such transactions and to attend any
meetings/conference calls necessary to the acquisition process.
Non-Circumvention:
eConnect acknowledges that Red Iguana may be introducing eConnect
to one or more of its clients, projects, financial resources or
acquisition targets (collectively, "Red Iguana Contacts") with
whom eConnect may have an interest in creating a business
relationship of some degree or nature. eConnect agrees that it
shall not conduct any business discussions with any Red Iguana
Contacts without the prior knowledge of Red Iguana. For purposes
hereof, Red Iguana shall only be deemed to have knowledge of the
discussions by eConnect with any of the Red Iguana Contacts, if
eConnect shall have disclosed the details of such discussions to
Red Iguana in writing or by having any of Red Iguana's
representatives present at any such meetings where such
introductions are made, or have been present on conference calls
between the said parties.
Confidentiality:
eConnect and each of the directors, officers, employees, agents,
advisors, affiliates and representatives of any associated
business (collectively, "Representatives), shall treat any and
all confidential information furnished to eConnect by Red Iguana
or any of Red Iguana's Representatives in the strictest
confidence. eConnect agrees that the confidential information
will be used solely for the purpose of evaluating a possible
transaction with Red Iguana's contacts. eConnect also agrees
that it will not disclose any of the Confidential Information to
any third party without the prior written consent of Red Iguana
provided, however, that any such information may be disclosed to
eConnect Representatives who need to know such information for
the purpose of evaluating the possible transaction on behalf of
Red Iguana and who agree to keep such information confidential
and to be bound by this Agreement to the same extent as if they
were parties hereto. eConnect agrees to be responsible for the
compliance by its Representatives with the terms of this
Agreement and the unauthorized use or disclosure by such
Representatives of confidential information disclosed by eConnect
or Red Iguana to such Representatives.
Notwithstanding the foregoing, access to and use of confidential
information shall be restricted to those Representatives of
eConnect with a need to use the information to perform the
services or analyses specifically requested by Red Iguana of
eConnect.
Fees:
eConnect agrees to compensate Red Iguana with a fee based on the
gross value of the transaction including but not limited to cash
price, value of stock swap, assumption of debt, promissory note
value, lines of credit, joint ventures or any combination
thereof. The fee will be agreed at 9% (nine percent) plus
accountable expenses, payable in cash and/or stock at eConnect
and Red Iguana's discretion. The time period for this Agreement
shall be for two years from the date of signing or from the date
that the transaction occurs, whichever is greater. Any such fee
shall be payable on a structured basis as per the following
schedule:
The cash fee will be payable at the earlier of:
When the Company has obtained financing that cumulatively reaches
four times the fee due on the closing of the initial acquisition
or transaction; or
On the sale of all or part of the business whether in cash or
stock, the cash element will be first used to meet the liability
due as a result of the fee deriving from the contemplated
transaction. In the event that the sale is completed for stock,
the fees due and unpaid at that point will be paid in freely
tradable stock.
It is further understood that this Agreement is irrevocable and
shall be placed in the lender's/investor's or other's escrow
account as a demand, and that any aforementioned fees shall be
paid from the cash proceeds of said escrow, subject to the above
provisions.
This Agreement shall be construed and interpreted in accordance
with the laws of the state of Florida, USA. Any controversy or
claim arising out of or relating to this contract, or the breach
thereof, shall be settled by arbitration in accordance with local
law. Any reasonable attorney's fees and costs shall be paid in
the event of a subsequent judgment against any part hereto.
FULL AUTHORITY TO EXECUTE THIS AGREEMENT ON BEHALF OF ALL PARTIES
IN INTEREST IS WARRANTED TO BE HELD BY THE UNDERSIGNED.
Dated: January 2, 2000.
Econnect Red Iguana Trading Company
By: /s/ Thomas S. Hughes By: /s/ T.A. Sandelier, III
Thomas S. Hughes, President T. A. Sandelier, III, President
EX-10.27
ASSIGNMENT OF eSPORTSBET TO eCONNECT
This Agreement states that PowerClick does hereby assign full
ownership of eSportsbet to eConnect and that eConnect agrees to
be responsible to any liabilities that may have been incurred by
PowerClick during its ownership and control of eSportsbet.
eConnect furthermore agrees that no attempt will be made by
eConnect to alter or change any prior eConnect stock and option
arrangements between eConnect and PowerClick.
Dated: January 7, 2000 eCONNECT
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
Dated: January 7, 2000 POWERCLICK
By: /s/ Dominic Einhorn
Dominic Einhorn, President
EX-10.28
LETTER OF INTENT FOR NEGOTIATION AND INFORMATION EXCHANGE
This Letter of Intent for Negotiation and Information Exchange
("Agreement") is effective as of the 21st day of January, 2000
between Empire Financial Holdings, Incorporated, a Florida
Corporation with its principal place of business/residing at 1385
West State Road 434, Longwood, Florida 32750 ("Party 1") and
eConnect2Trade.com, Incorporated, a Nevada Corporation with its
principal place of business/residing at 5737 Kanan Road, # 175,
Agoura Hills, California 91301 ("Party 2").
General
Party 1 is engaged in securities business as a "full service "
stock brokerage firm, which includes Internet securities
transactions. Party 1 is waiting for SEC approval to become a
"clearing firm house".
Party 2 is engaged in the business of sales, marketing, and
licensing of computer software products that execute cash (ATM)
and credit card transactions via the Internet and other mediums.
The parties propose entering into an agreement concerning the
Beta testing for "same as cash" ATM transactions via Internet
brokerage accounts (the "Deal").
Since November of 1999, the parties have had discussions
concerning the Deal during which they determined that further
negotiations would be appropriate. As it is expected that these
subsequent negotiations will involve frequent communications,
including the exchange of proprietary information, they agree as
follows.
Agreement
Except for Sections 2.3, 3, 4, 5, 7 and this section, all of
which are legally binding and each of which survive any cessation
of negotiations or termination of this Agreement, this Agreement
is only a statement of intent to conduct further negotiations and
does not constitute a binding Agreement in any respect. Such a
binding Agreement will arise only when all material terms have
been set forth in a definitive written agreement, or sets of
agreements, executed by both parties (the "Final Agreement").
All drafts, term sheets, memoranda, and other communications
prepared or exchanged in the course of negotiations, even if
signed by one or both Contacts (defined below), are preliminary
and have no legal effect unless subsequently incorporated into a
Final Agreement. Notwithstanding this, the parties agree to
negotiate in good faith the terms of a Final Agreement.
1. Negotiations
1.1 Designation of Negotiators. The following persons (the
"Contacts") will represent the parties in the negotiations: For
Party 1, Rob Jansen and Kevin Gagne. For Party 2, Robert Bragg.
Either party may replace their Contact(s) by giving written
notice to the other party.
2. Conduct of Negotiations
2.1 The parties desire to execute a Final Agreement by March 30, 2000
(the "Target Date"). The Contacts will in good faith talk
regularly, schedule negotiations, and coordinate all exchanges of
information, including recommendations, drafts, and proposals. A
timetable setting forth the preliminary schedule of negotiations
is attached as Exhibit A. A reasonable number of employees,
agents, and advisers may accompany the Contacts at meetings and
negotiations.
2.2 No less than one executive(s) of both parties will meet to review
the progress of the negotiations, and to identify and clarify
issues. Following each meeting, the parties will decide whether
to continue or terminate their negotiations. The meetings may be
in person or via telephone and email. These meetings shall be no
less than once per week.
The parties will negotiate with the goal of including the
following items in the Final Agreement:
1. Defining who contributes what, as well as who prepares
specifications.
2. Setting forth ownership rights of the parties in past, present
and future works.
3. The respective rights of the parties to use any developed works,
including the right to license or sublicense others and the right
to make derivative works.
4. Who pays for costs and expenses incurred.
5. Structure of transaction fees or royalties.
6. Defining obligations regarding future development, modifications
and enhancements.
7. Competitive restrictions.
2.3 No Simultaneous Negotiations. So long as the parties are
actively engaged in negotiations with each other, both agree not
to directly or indirectly enter into negotiations or arrangements
with any third parties engaged in, for Party 1: computer software
related to monetary and credit card transactions via the Internet
or any other "Network" medium; for Party 2: any brokerage firm
(B/D) engaged in Internet transactions that are the same as, or
functionally equivalent to the subject of these negotiations.
3. Costs and Expenses of Negotiation
3.1 Each party will bear its own costs and expenses.
3.2 In the event that the parties agree to select a meeting location
other than at their respective offices. The costs will be equally
shared.
4. Protection of Information
4.1 The parties agree to conspicuously mark all information exchanged
or created in the course of negotiations as "Confidential
Information." The receiving party along with its affiliates,
agents, and employees (collectively, "Recipient"), may not use
this Confidential Information for any purpose, including the
manufacture, design or sale of the Recipient's products and
services. The Recipient's use of the Confidential Information is
subject only to: (1) authorization, for a five (5) year period
commencing from the date of receipt, to refrain from revealing
any Confidential Information to third parties not engaged in
these negotiations by using the same care and discretion that the
Recipient employs to protect its own documents that it does not
want disclosed, and (2) the originating party's trademarks,
copyrights, and patent rights that it may not interfere or
otherwise use.
4.2 Any copies of the Confidential Information should be marked and
treated as such.
4.3 If a Final Agreement has not been executed, then upon termination
of this Agreement, the parties agree to return the other's
Confidential Information, including all copies.
4.4 The parties agree to use their best efforts to avoid disclosure
of the fact or object of their negotiations and to restrict all
internal communications concerning the negotiations to those
recipients to whom such information must be disclosed in order to
effectively conduct the negotiations. Except as otherwise
required by law, the parties agree not to issue any press
releases or make any public announcements regarding the
negotiations without the prior written approval of the other.
4.5 Despite any captions, headings, or restrictions regarding
proprietary matters or any nondisclosure notices or policy
statements contained in the Confidential Information, this
Section 4 constitutes the sole and exclusive agreement of the
parties concerning the Confidential Information and any
information exchanged or disclosed in connection with the
negotiations.
4.6 If the negotiations result in a Final Agreement, the Final
Agreement may contain further terms and conditions respecting
confidentiality)".
5. Limitation of Liability
Despite Section 4, neither party will make a claim against, or be
liable to, the other party or its affiliates or agents for any
damages, including, without limitation, lost profits or injury to
business reputation, resulting from the continuation or
abandonment of negotiations and the consequences of same. Neither
party will make a claim against, or be liable to, the other party
or its affiliates or agents for any special, incidental, or
consequential damages, including, without limitation, lost
profits, based on any breach, default, or negligence of such
other party, its affiliates, or agents with respect to Section
2.3 of this Agreement.
6. Term
This Letter of Intent will remain in effect until either party
gives written notice of its intention to abandon further
negotiations, or until superseded by the execution of the Final
Agreement.
7. Other
7.1 Equitable Relief. Each party acknowledges and agrees that, if
there is any breach of this Letter of Intent, including, without
limitation, unauthorized use or disclosure of Confidential
Information or other information of the other party, the non-
breaching party will suffer irreparable injury that cannot be
compensated by monetary damages and therefore will not have an
adequate remedy at law. Accordingly, if either party institutes
an action or proceeding to enforce the provisions of this Letter
of Intent, such party will be entitled to obtain such injunctive
relief, specific performance, or other equitable remedy from a
court of competent jurisdiction as may be necessary or
appropriate to prevent or curtail any such breach, threatened or
actual. These will be in addition to and without prejudice to
such other rights as such party may have in law or in equity.
7.2 Entire Agreement. The parties acknowledge that this Letter of
Intent expresses their entire understanding and agreement, and
that there have been no warranties, representations, covenants or
understandings made by either party to the other except such as
are expressly set forth in this section. The parties further
acknowledge that this Letter of Intent supersedes, terminates and
otherwise renders null and void any and all prior or
contemporaneous agreements or contracts, whether written or oral,
entered into between Party 1 and Party 2 with respect to the
matters expressly set forth in this Letter of Intent.
8. Fax or Email. Signatures on documents sent via fax or email,
including this "Agreement," shall be deemed an "original
signature" and is legally binding.
We have carefully reviewed this Letter of Intent and agree to and
accept its terms and conditions. We are executing this Letter of
Intent as of the day and year first written above.
PARTY 1: PARTY 2:
By: /s/ Kevin Gagne By: /s/ Robert Bragg
Kevin Gagne Robert Bragg
President/CEO President/CEO
Empire Financial Holdings, Inc. eConnect2Trade.com, Inc.
EX-10.29
MANUFACTURING AGREEMENT
This manufacturing agreement ("Manufacturing Agreement") is made
Friday, January 21, 2000 by and between Asia Pacific Micro, Inc.
("APM"), having a place of business at 2071 Mountain Blvd., Suite
C, Oakland, California, 94611 and eConnect, Inc. ("Purchaser")
having its principal place of business at 2500 Via Cabrillo
Marina, Suite 112, San Pedro, CA 90731.
1. MANUFACTURING AND SALE: APM agrees to manufacture and sell to
Purchaser and Purchaser agrees to manufacture and purchase from
APM, at the Purchase Price set forth in Appendix "A," the
products ("Equipment") described in Appendix "A" attached hereto.
APM is to have the Equipment prepared for shipment on the
Delivery Date and at the Delivery Location, using standard
packing materials. All shipping, rigging, and installation costs
shall be paid by Purchaser from the manufacturer to the consumer.
2. DESCRIPTION OF EQUIPMENT: See Appendix "A" attached hereto.
3. PURCHASE PRICE: $ US DOLLARS.
4. DELIVERY DATE: On or before 3/31/00.
5. U.S. DELIVERY LOCATION: San Bruno, CA.
6. TERMS OF PAYMENT: NET 10, FOB Origin, Non-Cancelable PO,
Partials accepted.
Failure by Purchaser to pay any monies hereunder, when due, shall
result in a late charge, payable upon demand, calculated daily at
an interest rate of 1% per month (12% PER ANNUM) or if such rate
shall exceed the maximum rate of interest allowed by law, then at
such maximum rate. Unless otherwise specified herein, the
Purchase Price shall be due and payable on delivery of the
Equipment to the Purchaser.
7. RISK OF LOSS: The risk of loss or damage to the Equipment shall
be borne by the Purchaser after the Equipment is made available
for loading and delivery at APM's loading dock.
8. DELIVERY OF EQUIPMENT: The parties intend that the Equipment
shall be delivered at the Delivery Location on or about the
Delivery Date. APM warrants that the Equipment will be available
for delivery to the Purchaser no later than the Delivery Date set
forth above. APM agrees that if it shall fail to make delivery
on or before such date, then Purchaser shall have the right,
prior to APM tendering delivery to Purchaser, to elect to
terminate this Sales Agreement whereupon the Purchaser's sole and
exclusive remedy shall be the refund of all payments, which it
has paid to APM. Such election shall be in writing and effective
five days after receipt by APM. Notwithstanding the foregoing,
if APM is not able to deliver the Equipment by the Delivery Date
for reasons beyond APM's control, APM shall have an additional
ten days from Delivery Date to deliver the Equipment prior to
Purchaser terminating this Sales Agreement pursuant to this
Section 8.
9. TITLE AND SECURITY INTEREST: APM warrants and represents that it
has good title to the aforementioned Equipment, other than
software, free and clear of all liens and encumbrances of
whatever kind and description other than the interest of APM or,
in the case of new Equipment, Vendor. Title to the Equipment,
other than software, is to remain vested in APM until the
Purchase Price is paid in full. In addition Purchaser grants to
APM a purchase money security interest in the Equipment listed
herein the amount of the Purchase Price until paid and consents
to the filing and recording of the Sales Agreement in accordance
with the laws of any applicable jurisdiction prior to payment in
full of the Purchase Price. Purchaser will execute any other
financing documents in relation to the purchase of the Equipment,
which APM may reasonably request. All software is provided to
the Purchaser pursuant to a license agreement as set out in
Section 22 below, and in no event does purchaser acquire title to
or ownership of the software.
10. DELIVERY AND INSTALLATION AND INSURANCE COSTS, TAXES: The prices
shown above are F.O.B. the manufacturer's location. Purchaser
will pay installation and insurance costs, all delivery, rigging
and drayage charges. There has been or shall be added to the
prices shown above amounts equal to any taxes, however
designated, levied or based on such prices or on this Agreement
or the Equipment. If Purchaser is purchasing for resale, a duly
executed resale certificate shall be delivered to APM prior to
shipment of the Equipment, if requested by APM.
11. INDEMNITY: Purchaser hereby agrees to defend, indemnify and save
harmless APM and its agents and servants, officers and directors
from against any and all liabilities, obligations, losses,
damages, penalties, claims, costs, expenses, including legal
expenses, of any kind whatsoever, arising from or relating to the
manufacture, order, acceptance or rejection, purchase, ownership,
delivery, lease, possession, use, importation, installation,
condition, sale, return or other disposition of the Equipment,
including, without limitation, and costs or expenses incurred by
APM in the acquisition by APM of any Equipment the cost of which
is in excess of or is included in the acquisition cost indicated
in this Sales Agreement, and the claim relating to any latent or
other defects whether or not discoverable by Lessee, any claim in
tort for strict liability and any claim for patent, trademark,
design or copyright infringement. Each party agrees to give the
other party prompt notice of any matter hereby indemnified
against. These indemnities shall become effective from the date
of delivery of the Equipment, and shall continue in full force
and effect until payment of the Purchase Price in full.
12. MANUFACTURE: Purchaser acknowledges that APM is the agent of the
manufacturer. All product will be manufactured at Purchaser's
authorization.
13. APM'S RIGHT TO TERMINATE: In the event Purchaser refuses or is
unable to accept delivery of the Equipment, or fails to pay for
the Equipment when due, then APM shall have the right (a) to
immediately terminate this Sales Agreement on written notice to
the Purchase, (b) to immediate possession of the Equipment; (c)
to re-sell or lease the Equipment; and (d) to avail itself of any
legal remedy. In addition to any other right or remedy which it
may have at law or in equity, APM shall be entitled to retain all
monies paid hereunder as liquidated damages, not as a penalty.
APM agrees to remit to Purchaser any monies collected by APM in
excess of (i) the Purchase Price referred to above, and (ii) all
costs and expenses resulting from Purchaser's default, provided
such remittance shall not exceed the amount paid by Purchaser as
liquidated damages under this paragraph 15.
14. FORCE MAJEURE: If APM is unable to deliver the Equipment due to
an act of God or other cause beyond the control of APM, APM shall
not be liable for such failure during the period and the to the
extent of the disability. If the disability prevents or
interferes with the shipment of the Equipment by the carrier
which APM would or ordinarily used, shipment shall not be made by
a more costly carrier unless Purchaser advises APM that it will
assume the additional costs.
15. ASSIGNMENT: This Sales Agreement shall be binding upon an inure
to the benefit of the parties and their respective successors and
assigns except that the Purchaser may not assign its rights or
obligations without prior written consent of APM which consent
shall not be unreasonably withheld.
16. NOTICES: Any notices from either party shall be given to the
other in writing to the address shown above, or to such other
address as may be designated in writing by such party to the
other and shall be deemed to have been received when delivered,
or two business days after deposit in the post office, postage
prepaid, whichever shall occur first.
17. APPLICABLE LAW: The laws of the United Sates of America and the
State of California shall govern this Sales Agreement. This
Sales Agreement constitutes the entire Agreement between the
Purchaser and APM with respect to the purchase and sale of the
Equipment listed above and no statement not contained in this
Agreement shall be binding upon APM as a warranty or otherwise.
The foregoing terms and conditions shall prevail notwithstanding
any variance with the terms and conditions of any order submitted
by the Purchaser in respect of the Equipment.
18. AGREEMENT BINDING: This Sales Agreement is not binding upon APM
until accepted by the signature of a corporate officer at its
head office.
19. LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES: APM SHALL
HAVE NO LIABILITY TO PURCHASER FOR ANY CLAIM, LOSS OR DAMAGE
CAUSED OR ALLEGED TO BE CAUSED DIRECTLY, INDIRECTLY, INCIDENTALLY
OR CONSEQUENTIALLY BY THE EQUIPMENT, BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR DEFECT THEREIN, BY ANY INCIDENT WHATSOEVER IN
CONNECTION THEREWITH, ARISING IN STRICT LIABILITY, NEGLIGENCE OR
OTHERWISE. EXCEPT AS CONTAINED HEREIN, APM MAKES NO EXPRESS OR
IMPLIED WARRANTIES OF ANY KIND, INCLUDING THOSE OF MERCHANT
ABILTITY, DURABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH THE RESPECT TO THE EQUIPMENT, OR PATENT, TRADEMARK, AND
COPYRIGHT INFRINGEMENT AND EXPRESSLY DISCLAIMS THE SAME. IF ANY
EQUIPMENT OR ANY PART THEREOF IS NEW EQUIPMENT, PURCHASER
ACKNOWLEDGES RECEIPT OF PRODUCT WARRANTY INFORMATION PROVIDED BY
THE MANUFACTURER. PURCHASER FURTHER ACKNOWLEDGES THAT ITS SOLE
REMEDY FOR THE BREACH OF ANY SUCH WARRANTY SHALL BE AGAINST THE
MANUFACTURER AND NOT AGAINST APM AND THAT ANY SUCH BREACH SHALL
NOT AFFECT THE OBLIGATIONS OF THE PURCHASER TO APM HEREUNDER.
ACCEPTED BY APM: ACCEPTED BY PURCHASER:
APM eCONNECT
By: /s/ Clinton Wong By: /s/ Thomas S. Hughes
Clinton Wong, President Thomas S. Hughes, President
APPENDIX "A"
All Research, Development and Design is paid for by eConnect,
Inc. A working prototype to be finalized in mid February 2000.
Procurement of the build components and production can start
immediately after final visual and written approval from
eConnect.
Qty. Mfg. Equipment/Description Unit Price Extended
5,000 China Desktop Card Reader $16 $80,000*
1 R & D Design To Be Determined/Actual
Cost
Research, Development and Design cost will be billed at actual
cost not to exceed, $5,000 USD.
Pricing is variable, plus or minus 25% depending on cost of
manufacturing. Final pricing will be determined before
manufacturing begins.
Manufacturing capacity of factory is 300,000 units per annum.
Additional factories can be contracted as needed.
SUB-TOTAL $80,000 + R&D
SHIPPING & HANDLING $ Actual
TOTAL $80,000
25% Deposit Due upon Final Approval, before production begins.
Balance Due Net 10 upon deliver in US.
EX-10.30
CONSULTING SERVICES AGREEMENT
This Consulting Agreement ("Agreement"), dated January 26, 2000,
is made by and between Boardwalk Associates, Inc., a Nevada
corporation ("Consultant"), whose address is 3402 Bimini Lane,
#3-F, Coconut Creek, Florida 33066-2049, 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 the area of
management consulting and strategic planning;
WHEREAS, Consultant desires to be engaged by Client to provide
information, evaluation and consulting services to the Client in
its area of knowledge and expertise 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; and
WHEREAS, Client desires to engage Consultant to provide
information, evaluation and consulting services to the Client in
its area of knowledge and expertise 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 management consulting and strategic
planning. Consulting services include, but are not limited to,
providing information, evaluation, and analysis with regard to
the management needs of Client and planning goals for the Client.
2. Consideration.
Client agrees to pay Consultant, as its fee and as consideration
for services provided, warrants to purchase Ten Million Five
Hundred Thousand (10,500,000) shares of free trading common stock
in Client, exercisable at $0.40 per share on or before January
31, 2005. The warrants are due and payable immediately upon the
effectiveness of the Form SB-2 Registration Statement with the
U.S. Securities and Exchange Commission and with any appropriate
states securities administrator.
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 one (1) year thereafter.
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 based on information as provided by the
parties.
(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 provisions as contained in sections 3, 5, and 6 of
this Agreement shall survive the termination of this Agreement.
(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 the date written above.
eConnect
By : /s/ Thomas S. Hughes
Thomas S. Hughes, President
Boardwalk Associates, Inc.
By: /s/ Richard Nuthmann
Richard Nuthmann, Secretary
EX-10.31
CONSULTING SERVICES AGREEMENT
This Consulting Agreement ("Agreement"), dated January 26, 2000,
is made by and between Coldwater Capital, L.L.C., a Florida
limited liability company ("Consultant"), whose address is 5309
S.W. 8th Court, Margage, Florida 33068, 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 the area of
management consulting and analysis, and general corporate
planning;
WHEREAS, Consultant desires to be engaged by Client to provide
information, evaluation and consulting services to the Client in
its area of knowledge and expertise 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; and
WHEREAS, Client desires to engage Consultant to provide
information, evaluation and consulting services to the Client in
its area of knowledge and expertise 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 management consulting and analysis, and
general corporate planning. Consulting services include, but are
not limited to, providing information, evaluation, and analysis
with regard to the management needs of Client and planning goals
for the Client.
2. Consideration.
Client agrees to pay Consultant, as its fee and as consideration
for services provided, Three Million Nine Hundred Thousand
(3,900,000) shares of free trading common stock in Client. The
warrants are due and payable immediately upon the effectiveness
of the Form SB-2 Registration Statement with the U.S. Securities
and Exchange Commission and with any appropriate states
securities administrator.
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 one (1) year thereafter.
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 based on information as provided by the
parties.
(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 provisions as contained in sections 3, 5, and 6 of
this Agreement shall survive the termination of this Agreement.
(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 the date written above.
eConnect
By : /s/ Thomas S. Hughes
Thomas S. Hughes, President
Coldwater Capital, L.L.C.
By: /s/ Marc Tow
Marc Tow, Member
EX-10.32
CONSULTANT AGREEMENT
2/2/00
This Agreement states that Harvey M. Burstein shall receive
500,000 warrants for eConnect common stock, which are exercisable
at $0.40 per share until December 31, 2000. This agreement is in
consideration of consulting work performed by Mr. Burstein in
1999.
/s/ Thomas S. Hughes /s/ Harvey M. Burstein
Thomas S. Hughes Harvey M. Burstein
Chairman & CEO, eConnect
EX-10.33
CONSULTANT AGREEMENT
2/2/00
This Agreement states that Terrie Pham shall receive 500,000
warrants for eConnect common stock, which are exercisable at
$0.40 per share until December 31, 2000. This agreement is in
consideration of consulting work performed by Mr. Pham in 1999.
/s/ Thomas S. Hughes /s/ Terrie Pham
Thomas S. Hughes Terrie Pham
Chairman & CEO, eConnect
EX-10.34
SOFTWARE LICENSE, DEVELOPMENT AND MAINTENANCE AGREEMENT
This Software License, Development and Maintenance Agreement
("Agreement") is effective as of the 3rd of February by and
between eFunds Corporation ("eFunds"), with an office at 400 West
Deluxe Parkway, Milwaukee, WI 53212, and eConnect (''Client')
with an office at 2500 Via Cabrillo Marina, Suite 112, San Pedro,
CA 90731.
In consideration of the mutual promises contained herein and
other consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, eFunds and Client agree as
follows:
Client desires to obtain certain license rights to the eFunds
Products and support services from eFunds in accordance with the
terms and conditions of this Agreement. eFunds is willing to
license to Client the eFunds Products and provide to Client the
services specified in this Agreement, in accordance with and
subject to the terms and conditions of this Agreement.
1. Definitions. In addition to other terms defined elsewhere
in this Agreement, the following terms shall have the following
meanings when used in this Agreement, unless the context clearly
requires otherwise:
A. "Client Customization" means any computer programming code
developed by Client using any Source Code provided by eFunds, and
all related Documentation, or any other Modification, and
includes, without limitation, any and all Modifications created
or developed by Client.
B. "Confidential Information" means (i) a party's proprietary or
confidential information which is designated orally or in writing
as such or that by nature of the circumstances surrounding the
disclosure ought in good faith to be treated as proprietary or
confidential, and (ii) for purposes of Client's obligations under
Section 16 of this Agreement, all eFunds Products, Client
Customizations, and Source Code, including all trade secrets
contained therein.
C. "Customized Programs" means, individually and collectively, as
the context requires, eFunds Customizations and Client
Customizations.
D. "eFunds Customization" means any computer programming code
developed by eFunds at Client's request; and all related
Documentation, including but not limited to any and all
Modifications created or developed by eFunds at Client's request.
E. "eFunds Products" means all Standard Programs, eFunds
Customizations, and related Documentation licensed to Client
hereunder.
F. "Documentation" means (a) those written manuals and other
officially published written user documentation provided to
Client by eFunds for Standard Programs and eFunds Customizations
licensed by Client, and (b) with respect to Customized Programs,
all user, reference, system, programming and coding documentation
and specifications related thereto, and all updates related to
any of the foregoing.
G. "Enhancement" means any change or addition to computer
programming code, other than Fixes and Maintenance Updates, that
adds new functions, or significantly improves operation, quality,
functional, capability, and/or performance by changes in system
design or coding.
H. "Final Requirements Definition" or "FRD" means (i) the document
to be created by eFunds pursuant to subsection 3 b) of this
Agreement which provides a detailed definition of the eFunds
Customizations to be developed for Client in order to initially
adapt or tailor the Standard Programs to Client's operating
environment, and/or (ii) any subsequent document created by
eFunds at Client's request pursuant to subsection 3 e) below
which details additional eFunds Customizations to be developed
for Client.
I. "Fix" means a correction to a eFunds Product or Client
Customization developed on an as-needed basis to address a
reproducible error, bug, or malfunction in a eFunds Product or
Client Customization. A Fix may include a temporary by-pass to
correct or lessen the impact of the effect, or a permanent change
to correct the defect.
J. "Foundation Program" means those Standard Programs specified as
such in Exhibit A to this Agreement or as to Standard Program
ordered by Client after the date of this Agreement, specified as
such by eFunds in writing or in Documentation.
K. "Initial Programs" means the Standard Programs listed in Exhibit
A as of the date of this Agreement, and/or any eFunds
Customizations developed pursuant to subsection 4 c) below, if
any.
L. "Maintenance Services" shall have the meaning ascribed thereto in
Section 8 of this Agreement.
M. "Maintenance Update" means a Fix or collection of Fixes, and may,
in eFunds' sole discretion, include minor improvements in
operational performance, quality and/or functional capability
that do not meet the definition of Enhancement.
N. "Modification" means any revision, modification, adaptation,
compilation, derivative work, enhancement, or other change made
to any Source Code or Documentation, or any other change made to
any eFunds Product or Client Customization, and specifically
includes without limitation, eFunds Customizations and Client
Customizations.
O. "Non-Foundation Program" means those Standard Programs listed in
Exhibit A or subsequently licensed by Client hereunder and which
are not specified as Foundation Programs.
P. "Preliminary Requirements Assessment" or "PRA" means: (i) the
document created by eFunds based upon information provided by
Client, which provides a high-level assessment of eFunds
Customizations requirements for the Standard Programs in order to
Initially adapt or tailor the standard Programs to Client's
operating environment, and/or (ii) any subsequent document
created by eFunds at Client's request pursuant to Section 3 e)
below for additional eFunds Customization(s) to be developed by
eFunds for Client.
Q. "Product Release" means an accumulation of Fixes and/or
Maintenance Updates.
R. "Professional Services" means any services other than Maintenance
Services that eFunds may agree to provide from time-to-time
hereunder, including but not limited to requirements reviews,
creating a PRA or FRD, project management, developing eFunds
Customizations, training, software installation, switch
preparation, and conversion services.
S. "Site" means, collectively, the permanent and temporary Client
data processing centers identified in Section 4 c) below (the
"Permanent Site" and "Temporary Site", respectively), where the
eFunds Products and any Client Customized Programs may be used
pursuant to this Agreement.
T. "Source Code" means the human-readable form of computer
programming code and any related (i) system documentation,
including all comments and procedural code such as job control
language, and (ii) libraries, screen files, data directories,
documentation and other items reasonably necessary to reconstruct
a Standard Program, eFunds Customization or Client Customization.
U. "Standard Programs" means any of the eFunds software programs
then being generally offered for license by eFunds and listed in
Exhibit A to this Agreement, and others that may be licensed
later by Client from eFunds hereunder, and all related
Enhancements, Fixes, Maintenance Updates, Product Releases,
Versions, and Documentation.
V. "Version" means (a) an accumulation of Maintenance Updates,
Product Releases, and/or Enhancements, and/or (b) any Maintenance
Update, Product Release or Enhancement, which changes a Standard
Program to a new system-operating platform.
2. Scope of Agreement. Subject to the terms and conditions of
this Agreement, and for the prices set forth in Exhibit A hereto,
eFunds agrees to provide the following products and services to
Client:
A. Standard Programs. eFunds agrees to license to Client the
Standard Programs listed on Exhibit A hereto in accordance with
the terms of Section 4 of this Agreement Standard Programs
licensed in object code-only form am so listed in Exhibit A;
B. eFunds Customizations. If requested by Client and agreed
upon in writing by eFunds, eFunds agrees to complete a Final
Requirements Definition in accordance with Section 3 b) of this
Agreement and develop eFunds Customizations in accordance
therewith;
C. Maintenance Services. eFunds agrees to provide Maintenance.
Services in accordance with Section 8 of this Agreement;
D. Professional Services. eFunds agrees to provide any
Professional Services identified in this Agreement or on Exhibit
A hereto; and
E. Additional Products and Services. Subject to subsection 19
m) below, eFunds may, in the future upon Client's request, and
upon such terms and conditions and at such prices as the parties
may agree in writing, license such additional Standard Programs,
develop such eFunds Customizations, and/or provide such
Maintenance Services and/or Professional Services as the parties
may agree upon in writing.
F. Obligations of Client. The Client undertakes to:
(i) provide to eFunds promptly any information and
cooperation which eFunds may reasonably require from time to time
to provide warranty services, Maintenance Services, and otherwise
perform its obligations under this Agreement;
(ii) prior to delivery to Client at Client's own expense,
prepare the Site and provide such environmental and operational
conditions as may be specified by eFunds; and
(iii) provide eFunds reasonable access to the Client's
premises and business records for the purpose of verifying that
Client is complying with the terms and conditions of this
Agreement.
3. Requirements Definition. If requested by Client and agreed
upon in writing by eFunds, eFunds shall create a Final
Requirements Definition for Client in accordance with the
following:
A. Preliminary Requirements Assessment. eFunds has already created
a Preliminary Requirements Assessment based upon information
obtained from Client. The PRA provides a high-level set of eFunds
Customization requirements for the Standard Programs and eFunds'
estimated cost to Client for such eFunds Customizations based
upon such Client information. The PRA, which Client represents
has been reviewed and approved by Client is attached hereto and
incorporated herein by reference as Exhibit B.
B. Final Requirements Definition. Upon execution of this Agreement,
eFunds shall immediately commence the creation of the FRD for the
fee set forth in Exhibit A. The FRD shall contain a detailed
definition of eFunds Customizations to the Standard Programs and
the actual cost to Client for such eFunds Customizations. eFunds
shall complete the FRD and present the FRD to Client within no
more than sixty (60) days of execution of this Agreement, unless
(i) Client delays the creation of the FRD, or (ii) additional
time is agreed upon by the parties pursuant to subsection 3 d)
below or otherwise. In either such event, the sixty (60) day
period shall be extended by the number of days of Client's delay
or as agreed upon by the parties. Client agrees to provide eFunds
all reasonably required assistance and to make appropriate staff
and resources available to eFunds in a timely manner and as
necessary to complete the FRD.
C. Go/No Go. In the event that the cost to Client of eFunds
Customizations as presented in the FRD, exclusive of changes
agreed upon by the parties pursuant to subsection 3 d) below or
other changes or additions requested by Client that materially
change the PRA, does not exceed the estimated cost set forth in
Exhibit B by more than twenty percent (20%), eFunds shall be
authorized to, and eFunds shall, proceed with development of the
eFunds Customizations in accordance with the FRD. In the event
that: (i) the cost to Client of eFunds Custornizations as
presented in the FRD, exclusive of changes agreed upon by the
parties pursuant to subsection 3 d) below or other changes or
additions requested by Client that materially change the PRA,
exceeds the estimated cost set forth in the PRA by more than
twenty percent (20%), and (ii) within thirty (30) days of
presentment of the FRD to Client by eFunds, either eFunds and
Client cannot work out a mutually acceptable fee for eFunds
Customizations, or in the absence of such agreement eFunds is
unwilling to absorb the difference between the eFunds
Customization fee set forth in the PRA and the FRD; then (iii)
either party may terminate this Agreement in accordance with
subsection 13 a) below.
D. Change Procedures. A change in scope of any PRA or FRD is any
alteration to the PRA or FRD that affects cost, payments, or
schedule. Any change in the scope of a PRA or a FRD shall become
effective only when a written change request is executed by
authorized representatives of both parties in accordance with
this subsection 3 d). eFunds has overall responsibility for the
change process through its required resolution. Any change
requested by either party will be evaluated, resolved and/or
negotiated with respect to cost, schedule, resource impact and/or
priorities by authorized representatives of eFunds and Client in
accordance with the following:
(i) The parties shall mutually agree upon the form of a "Change
Order Request" to be used hereunder. The change request shall be
described in the Change Order Request form by the party
originating the request The Change Order Request form will then
be submitted to eFunds' project manager for approval;
(ii) eFunds' project manager will estimate the schedule impact
and cost to perform the evaluation, document this on the Change
Order Request form, and return the form to the Client project
manager for approval. If the Client project manager authorizes
the evaluation expenditure in writing, the eFunds project manager
will assign the Change Order Request to the appropriate personnel
to perform the technical evaluation-,
(iii) Following the technical evaluation, the eFunds project
manager will determine the cost to Client of any changes or
additions to eFunds Customizations and the impact on the current
project scheduleto implement the Change Order Request document
this on the Change Order Request form, and return the form to the
Client project manager for an implementation decision, which
shall not be unreasonably withheld or delayed. Upon receipt of
the approved Change Order Request form signed by the Client
project manager, the eFunds project manager will schedule the
change for implementation. Approved Change Order Requests will be
deemed incorporated into and a part of the applicable PRA or FRD;
and
(iv) eFunds shall manage the impact Change Order Requests have on
project progress and cost, including both the impact of
performing the Change Order Request evaluation and the impact of
Change Order implementation. The eFunds project manager shall
maintain a log to keep track of all changes/issues and the
current status of each.
E. Additional Requirements. In the event that, after
completion of work in accordance with the initial FRD, Client
requests additional eFunds Customizations, eFunds shall create a
PRA and a FRD at the price to be agreed upon by the parties, and
the terms of subsection 3 c) and 3 d) above shall apply thereto.
F. FRD Price. In all cases, the price for any FRD agreed upon
by the ponies in Exhibit A or subsequent to the date hereof shall
be due and payable by Client and shall be non-refundable.
4. License. Subject to the terms and conditions of this
Agreement, eFunds grants Client a perpetual, nonexclusive,
non-transferable license to use the eFunds Products and Client
Customizations (if any) for the sole purpose of providing
electronic funds transfer and card management services for its
financial institution customers, subject to the following
limitations:
A. Scope.
(i) Each license entities Client to use one copy of the
Foundation Programs in a productive mode (and to retain one
reference copy of the Foundation Program in accordance with all
applicable provisions of this Agreement) only at the Permanent
Site identified below, and to use the Documentation provided,
solely for the purpose of providing electronic funds transfer
exclusively to its customers doing business in the Dominican
Republic. Foundation Programs copied for archival, testing,
development, temporary back-up or temporary transfer to the
Temporary Site identified below (not to exceed ninety (90) days)
shall not be considered productive use. A license for any
Non-Foundation Program(s) is concurrent with the license for the
Foundation Program at the Site. The license entitles Client to
the use of multiple copies of the Non-Foundation Program(s)
solely in association with the licensed copy of the Foundation
Program. Client may copy the Documentation. in reasonably
sufficient numbers to support its authorized use of the Standard
Programs, provided that Client reproduces any copyright or other
proprietary notice contained in the Documentation and otherwise
complies with its obligations under Section 16 of this Agreement.
(ii) For any Source Code which eFunds provides to Client, eFunds
hereby grants to Client a limited, non-exclusive and
non-transferable license for the term of this Agreement to use,
copy, execute and display such Source Code solely at the
Permanent Site and solely for the purpose of developing
Modifications to Standard Programs for Client's internal use.
(iii) Any Customized Program shall be deemed a part of the
Foundation Program or Non-Foundation Program from which it was
created or to which it relates, and Client shall have the same
license rights therein, as well as with respect to associated
Documentation, as is granted by eFunds to Client in subsection 4
a) i) above for the related Foundation or Non-Foundation Program.
B. Restrictions on Use.
(i) Client shall not use, copy, translate, print or display any
eFunds Product, Client Customization, or Source Code, in whole or
in part other than as expressly authorized in this Agreement.
(ii) Client agrees not to reverse assemble or decompile any
eFunds Product or portion thereof which eFunds does not provide
in Source Code form.
(iii) In no event shall Client, without eFunds' express prior
written consent, use any eFunds Product or any Client
Customization to provide services to customers outside the
Territory. Client acknowledges that any consent to such
additional use by eFunds will require the payment by Client of
additional license fees. In no event shall client, without
eFunds' prior written consent, use of any eFunds Product or any
Client Customization in any time sharing or service bureau
environment or for shared, regional, or national network or
interchange.
(iv) Client shall maintain appropriate and mutually agreed
processes and systems to assure that all transactions performed
by Client using or relying in any way upon any eFunds Product are
lawful; advise eFunds in writing prior to implementing any
changes to such mutually agreed processes and systems; permit
only lawful transactions to be undertaken using or relying in any
way upon any eFunds Product; and cease immediately performing any
transactions that, in the reasonable opinion of eFunds as set
forth in written notice to Client, are or may be unlawful. This
is a material term of this Agreement.
(v) Client agrees that it shall not use any eFunds Product,
permit the use of any eFunds Product, or represent to any third
party that it does, will, or intend to use any eFunds Product in
connection with any Internet gaming or gambling activities of any
kind without the express written consent of eFunds. Such consent
may be withheld by eFunds in its sole discretion. Client shall
also obtain the advance written approval of eFunds for any public
statements related to Internet gaming or gambling activities that
use, will use, or intend to use any eFunds Product. This is a
material term of this Agreement.
(vi) Any rights not expressly granted to Client in this Agreement
are reserved by eFunds.
C. Site.
Permanent Site: 2500 Via Cabrillo Marina, Suite 112, San Pedro,
CA 90731
Temporary Site: Same as Permanent
5. Term.
A. License. The license granted hereunder is perpetual upon
execution of this Agreement, subject to termination in accordance
with this Agreement.
B. Maintenance.
(i) Initial Term. With respect to Maintenance Services for
Initial Programs, this Agreement will be effective upon the date
first set forth above and will continue for sixty (60) months
following the date of Installation (the "Initial Term").
(ii) Renewal Terms. With respect to Maintenance Services for
Initial Programs, after the Initial Term, this Agreement shall be
automatically renewed for successive two (2) year periods (each,
a "Renewal Term") unless either party terminates the Agreement as
provided for in this Agreement.
(iii) Other Customized Programs. In the event that Client
requests and eFunds agrees to provide maintenance and support
services for additional eFunds Customizations and/or Client
Customizations, such maintenance and support services shall be
coterminous with this Agreement unless eFunds and Client
separately agree in writing on a different term for such
services.
6. eFunds Deliverables.
A. Installation and Testing. eFunds will install and test the
Initial Programs licensed by Client at the Permanent Site. The
installation and testing of the Initial Programs will consist of
the following operations: (i) the current version of the Initial
Programs and related files will be restored to disc from tape-
this consists of the productive code, data files, the input
specification to the operating system, utilities, a test data
base and generating installation files; (ii) this reference copy
of the Initial Programs is "frozen", that is, Modifications shall
not be made once (i) is complete; all future Product
Release/Version deliveries will be based on this reference
Initial Program copy; (iii) eFunds will modify the Initial
Programs as necessary to fit the local disc, operating system and
communications access methods environment; (iv) eFunds will bring
up the Initial Programs and will perform the, standard
installation tests; (v) in each event, the Client host will be
substituted for a simulator if Client has established the host
connection. When the tests have been successfully completed,
installation will be complete ("Installation").
B. Acceptance. After Installation, Client shall have thirty
(30) days to do whatever acceptance testing itchooses to
determine whether the Initial Program(s) function substantially
as described in theDocumentation. Failure to notify eFunds of a
problem in writing, or productive use by Client during such
thirty (30) day period, shall constitute Client acceptance of the
Initial Program(s) ("Acceptance"). In the event Client notifies
eFunds in writing during such period that the Initial Programs
are not functioning substantially as described in the
Documentation, and eFunds and Client agree within fifteen (15)
days of such notice that the Initial Programs are not functioning
substantially as described in the Documentation, then eFunds will
make such corrections as are necessary to put the Initial
Programs in operating order such that the Initial Programs will
function substantially as described in the Documentation and
Acceptance will be deemed to have occurred. In the event eFunds
and Client do not agree within forty-five (45) days of such
notice that the Initial Programs are functioning substantially as
described in the Documentation, then Client will return or
certify destruction of the Initial Programs, eFunds shall refund
all license fees paid, and this Agreement and all licenses
granted hereunder shall terminate.
C. eFunds Customizations. For any eFunds Customization
developed pursuant to subsection 3 d), eFunds and Client shall
agree, in writing, upon mutually acceptable installation and
acceptance criteria. At a minimum, the process/methodology set
forth in subsections 6 a) and 6 b) above shall be followed.
D. Documentation. eFunds will provide Client two (2) copies of
its Documentation for use with Initial Programs and other eFunds
Customizations.
7. Warranties.
A. General Warranty. eFuads warrants for a period of ninety
(90) days following Installation, that the Initial Programs and
other eFunds Customizations will perform substantially in
accordance with the specifications described in eFunds' current
Documentation, if properly used within the specified operating
environment. eFunds makes no warranty that the Initial Programs
or other eFunds Customiztions will run uninterrupted or will be
error free' During the warranty period, eFunds' sole obligation
shall be to correct any material errors or malfunctions necessary
to conform to the warranty at no additional charge to Client.
eFunds shall have no liability under this warranty unless Client
notifies eFunds in sufficient detail of any errors which Client
believes to be caused by a failure of the Initial Programs or
other eFunds Customization to function as warranted and provides
eFunds with any information which eFunds reasonably requests to
identify and correct the error. Notice shall be given by
forwarding a description of the error or malfunction to eFunds by
phone, followed by a written report. Client agrees to allow
eFunds the opportunity to make repeated efforts over a reasonable
period of time (not less than thirty (30) days) to correct any
error or malfunction.
B. Warranty Against Infringement. eFunds will hold harmless
and, at its own expense, defend any action brought against Client
based an a claim that a eFunds Product provided hereunder
infringes a United States copyright or United States patent,
provided that Client notifies eFunds promptly in writing of the
claim and eFunds is provided an opportunity to fully defend the
claim and/or agrees to any settlement of such claim. Should the
eFunds Products become, or in eFunds' opinion be likely to become
the subject of a claim of infringement of a copyright, patent, or
other United States proprietary right, eFunds may procure for
Client the right to continue using the eFunds Products as
contemplated by this Agreement or replace or modify them to make
them non-infringing, at no additional charge to Client. In the
event neither of the above is economically practical, Client may
receive a refund of a portion of the license fee paid, based upon
a five yew straight line depreciation from the date of
Installation. The above obligations as to infringement apply to
eFunds Customizations only if eFunds had actual knowledge of a
potential third party claim and failed to advise Client promptly
of such knowledge. eFunds shall have no obligation under this
provision for any claim based upon (i) the operation, combination
or use of eFunds Products with equipment, data or programs not
furnished by eFunds if such infringement could have been avoided
by the operation, combination or use of other equipment, data or
programs, (ii) any information or specifications supplied or
required by Client; (iii) Client Customization or Client's use of
any Source Code, or (iv) any Modification by any third party. The
foregoing states the entire liability of eFunds with respect to
infringement of any copyrights or patents or other proprietary
right by the eFunds Products or any part thereof.
C. Disclaimer Of Warranties. CLIENT ACKNOWLEDGES THAT IT HAS
INDEPENDENTLY EVALUATED THE INITIAL PROGRAMS AND OTHER EFUNDS
CUSTOMIZATIONS AND APPLICATION THEREOF TO ITS NEEDS, AND THAT,
EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THERE ARE NO WARRANTIES,
EXPRESS, IMPLIED, OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOP, A
PARTICULAR PURPOSE, NON-INFRINGEMENT, FROM A COURSE OF DEALING OR
USAGE OF TRADE, OR ARISING OTHERWISE BY LAW. CLIENT FURTHER
ACKNOWLEDGES AND AGREES MT SOURCE CODE IS PROVIDED BY EFUNDS "AS
IS" AND THAT EFUNDS MAKES NO WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, FROM A COURSE
OF DEALING OR USAGE OF TRADE, NON-INFRINGEMENT, OR OTHERWISE
ARISING BY LAW, WITH RESPECT TO SOURCE CODE, CLIENT
CUSTOMIZATIONS, OR CLIENT'S USE OF ANY OF THE FOREGOING, EFUNDS
ASSUMES NO RESPONSBILITY AND CLIENT EXPRESSLY ASSUMES ALL RISKS
IN ANY WAY RELATED THERETO. EFUNDS MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO THE PERFORMANCE OF ANY CLIENT CUSTOMIZATION OR
THAT ANY CLIENT CUSTOMIZATION WILL FUNCTION WITH EXISTING OR
FUTURE VERSIONS OR RELEASES OF ANY STANDARD PROGRAM AND CLIENT
ASSUMES ALL RESPONSIBILITY THEREFOR AND RISK THEREOF.
8. Maintenance. Subject to the provisions of this Section
8 and the timely and full payment of applicable fees, eFunds will
provide the maintenance and support services detailed in this
Section 8 ("Maintenance Services") for one productive copy of all
Initial Program(s) and those Customized Programs subsequently
agreed to by Client and eFunds for maintenance- Maintenance
Services shall be provided only to the Permanent Site.
A. Maintenance of Initial Programs. Subject to the timely and
full payment of the fees required hereunder and the conditions of
this Agreement, during the term of this Agreement, eFunds will
maintain the Initial Programs in accordance with the General
Warranty set forth in subsection 7 a) above, and as set forth in
this subsection 8 a), provided that Client is using Standard
Programs that are current to within one Product Release or
Version.
(i) Documentation. eFunds will supply applicable Documentation
as released by eFunds.
(ii) Fixes. eFunds will supply Client with all Fixes for defects
reported by Client or where the Fix will lessen or correct a
serious defect. Fixes which are applicable to any Client are
accumulated and provided with the next Maintenance Update.
(iii) Maintenance Updates. eFunds will offer Client all
Maintenance Updates. The availability of Maintenance Updates is
announced periodically in eFunds technical bulletins, Maintenance
Updates are sent upon request at no additional charge to Client
(iv) Product Releases. eFunds will offer Client all Product
Releases. General availability of Product Releases and the
descriptions of new features and functions are announced
periodically, with an estimated availability announced
approximately three (3) months in advance. Product Releases
include development of a plan to migrate eFunds Products under
maintenance, coordination of plan activities, and testing prior
to delivery. Product Releases are sent upon request after general
availability and will be provided at no additional charge to
Client.
(v) Versions. eFunds will offer Client all Versions. Versions
may, in eFunds sole discretion, require payment of an additional
license fee.
(vi) If, as the result of Client making any changes to the Source
Code of the eFunds Product(s), any new Release or Version of the
eFunds Products that eFunds supplies to Client am not compatible
with the operational version of the eFunds Products so modified,
eFunds shall have no obligation to provide support or any
Maintenance Service to Client in respect of the new Release or
Version.
B. Maintenance Delivery. All Fixes, Maintenance Updates,
Product Releases, and Versions provided hereunder shall be
delivered on magnetic tape by mail. Client may request additional
levels of delivery, including express mail delivery, delivery
through computer by computer access, or on-line terminal entry,
at eFunds' then current charges for such services.
C. Client Support. eFunds will provide a Client support center
during normal business hours (CST) to provide routine technical
support for eFunds Products under maintenance and a 24-hour,
7-day "hot line" to support significant problems wising outside
of normal business hours. Client agrees that when Client notifies
eFunds of an error or malfunction and eFunds determines that the
problem is due to other than eFunds' failure to maintain the
eFunds Products as required hereunder, any time expended by
eFunds to fix the problem shall be at eFunds' then current time
and materials rate.
(i) Account Managers. Each party shall assign an account
manager to act as a single point of contact to the other party
for all aspects of Maintenance Services. The respective account
manager's duties will include:
(a) acting as primary interface with the other party;
(b) managing service levels;
(c) monitoring Client's level of satisfaction with eFunds'
services and continuously evaluating potential improvements of
service quality; and
(d) coordinating the required modifications and associated
approvals to any changes in this Agreement to which the parties
may agree
(ii) Telephone Support Service. Telephone support service
includes Client having direct telephone access to the eFunds
software support center- The telephone number for such service is
1-900-356-6448 or 414-341-5595, or as advised in writing from
time-to-time by eFunds.
(iii) Problem Resolution. Problems shall be dealt with in
accordance with the level of severitv determined by eFunds, as
further defined in Exhibit B attached hereto and incorporated
herein by reference.
D. Installation. Unless otherwise agreed in writing by the
parties, Client will be responsible for the installation of all
Fixes, Maintenance Updates, Versions, and Product Releases.
Client acknowledges that its failure to instill such items may
eventually make the Initial Programs unusable or nonconforming to
their specifications and Client assumes all risks of such use.
eFunds may provide installation services at Client's request, at
eFunds' then-current time and materials rates.
E. Maintenance of Other Customized Programs.
(i) if Client elects to have eFunds maintain eFunds
Customizations, eFunds will maintain eFunds Customizations so
that they operate in substantial conformity with the
Documentation, provided that Client has installed Standard
Programs that are current to within one Product Release or
Version. eFunds will supply Client with all Fixes as
expeditiously as is reasonably possible. in the event that Client
declines maintenance for eFunds Customizations, Client may
maintain such eFunds Customizations itself, however, Client
acknowledges that eFunds shall have no responsibility therefor
and Client assumes all risks of any consequence of eFunds not
providing maintenance for such eFunds Customizations.
(ii) With respect to Client Customizations, eFunds may, but shall
have no obligation to, provide Maintenance Services therefor. For
any Client Customization, Client and eFunds must separately agree
in writing as to any maintenance that eFunds will provide with
respect thereto, including aIl terms and conditions thereof and
the annual maintenance fee to be paid by Client for such
services. A condition precedent to any obligation of eFunds to
provide maintenance for Client Customizations shall, be that
Client is using Standard Programs that art current to within one
Product Release or Version.
(iii) Migration of any Customized Program from Product
Release to Product Release or to a new Version will be done at
eFunds' current time and material rates.
(iv) eFunds shall not be required to provide maintenance to
anything other than a Standard Program or Initial Program. If
someone other than eFunds makes any Modification to a Standard
Program or Initial Program without the express written
authorization of eFunds, eFunds will continue to supply
Maintenance Services to the unmodified portion of the Standard
Programs or Initial Programs. Modification by anyone other than
eFunds and release of eFunds' obligations for maintenance shall
not relieve Client from its obligations to pay fees hereunder. At
eFunds' option and at Client's request, eFunds may provide
maintenance for such unauthorized changes at eFunds' then current
time and materials rates or as otherwise agreed upon.
F. Client Responsibilities. Failure by Client to install
Standard Programs that are current to within one Product Release
or Version shall relieve eFunds of its obligation to provide
Maintenance Services hereunder, but shall not relieve Client of
its obligations to pay full Maintenance Services fees hereunder.
G. Exclusions. Notwithstanding any other provision of this
Agreement, eFunds' obligation to provide maintenance and support
services under this Agreement does not cover maintenance
services, repair or replacement caused by (i) failure to provide
a suitable environment prescribed by eFunds; (ii) neglect,
accident disaster (including water, wind and lightening),
transportation or vandalism not attributable to eFunds; (iii)
alterations, applications, additions or Modifications to or for
the eFunds Products or Client Customizations which are not
provided or approved in writing by eFunds; (iv) host computers,
networks, telephone switches and other applications, attachments,
machines, software or accessories, and modification or additions
thereto, not provided by eFunds; (v) failure to use and operate
the eFunds Products in accordance with the Documentation
delivered to Client; (vi) requests for remedial maintenance from
any party other than Client-, or (vii) maintenance or repair not
performed by eFunds.
9. Proprietary Rights. All eFunds Products, Client
Customizations, Source Code, and any Modifications to any of the
foregoing, and all proprietary and intellectual property rights,
title and interest in and to all such eFunds Products, Client
Customizations Source Code and Modifications, is and shall be the
sole and exclusive property of eFunds. Client agrees that it
shall make no use whatsoever of any eFunds Product, Client
Customization, Source Code or Modification except as expressly
authorized in this Agreement.
A. If Client creates or develops any Modification, it shall be
considered a work made for hire by Client for eFunds and Cheat
hereby assigns, and upon creation of any Modification
automatically assigns, to eFunds, its successors and assigns,
ownership of all copyrights, patents, and other intellectual
property rights in and to each and every Modification, whether or
not any such Modification, by operation of law, may be considered
work made for hire by Client for eFunds. All Modifications
created by Client shall be considered Client Customizations for
all purposes of the Agreement. Cheat represents and warrants that
Client shall obtain from any individual making Modifications an
agreement sufficient for Client to comply with the terms and
conditions of Section 16 of this Agreement, and to obtain such
rights as am necessary to vest in eFunds the rights and ownership
in the Modifications as provided in this provision.
B. Client shall (i) mark any Modification with such copyright
or other proprietary notices as directed by eFunds, and (ii)
provide to eFunds such assistance as is reasonably necessary to
perfect or protect proprietary and intellectual property rights
to the Modifications.
C. Upon request of eFunds, but no less frequently than
semi-annually (whether or not requested by eFunds), Cheat shall
provide to eFunds at no cost to eFunds and at such location and
on media designated by eFunds all Source Code for any
Modifications made or created by or for Client. This provision
and the delivery by Client to eFunds hereunder does not change or
after eFunds' obligations with respect to Client Customizations
under this Agreement.
10. Cooperation. During the term of this Agreement, Client
shall assign at least one qualified staff member to work with
eFunds and shall make available additional appropriate personnel
as eFunds may reasonably request to answer questions and provide
information concerning Client's facility, operations and
requirements related to the installation, testing and maintenance
of eFunds Products and Client Customizations. Client shall have
the Site ready for installation, and allow eFunds appropriate
physical access to the computer systems and such data bases as
will be in communication with die eFunds Products and Client
Customizations.
11. Destruction of eFunds Property upon Termination.
Within thirty (30) days of termination of any license granted
hereunder or of this Agreement, Client will either certify to
eFunds in writing as to the destruction of the eFunds Products,
Client Customizations, eFunds' Confidential Information, and
Source Code, including all copies thereof or will return to
eFunds the eFunds Products, Client Customizations, eFunds'
Confidential Information, and Source Code, and all copies
thereof.
12. Compliance with Federal, State and Local Law. Except as set
forth in the Documentation, Client assumes all responsibility for
the eFunds Products provided hereunder, and Client
Customizations, being capable of allowing the Client to comply
with federal, state and local laws and regulations.
13. Termination of Agreement. This Agreement may be terminated
by Client or by eFunds only as set forth in this Section
A. Failure to Agree on eFunds Customizations Costs for
Initial Programs. In the event that (i) the cost to Client of
eFunds Customizations as presented in the FRD created by eFunds
pursuant to subsection 3 b) above, exclusive.of changes agreed
upon by the parties pursuant to subsection 3 d) above or other
changes or additions requested by Client that materially change
the PRA, exceeds the estimated cost set forth in Exhibit B by
more than twenty percent (20%), and (ii) either eFunds and Client
cannot work out a mutually acceptable fee for such eFunds
Customizations, or in the absence of such agreement eFunds is
unwilling to absorb the difference between the eFunds
Customization fee set forth in the PRA and the FRD, then either
party may terminate this Agreement upon ten (10) days written
notice to the other party.
B. Non-Acceptance of Initial Programs. In the event that
the Initial Programs are not accepted by Client pursuant to
subsection 6 b) of this Agreement, either party may terminate
this Agreement upon ten (10) days written notice to the other
party.
C. End of Term. With respect to Maintenance Services,
this Agreement may be terminated by either party by giving no
less than one hundred eighty (180) days prior written notice of
termination effective at the end of the Initial Term or any
Renewal Tem.\
D. Default. Either party may terminate this Agreement in its
entirety, including any and all licenses granted hereunder,
effective thirty (30) days after written notice is given upon the
occurrence of a material default by the other party, provided
that such default is not cured within thirty (30) days after
receipt of such notice of such default; except that with respect
to the default of the Client under section 4(b)(iv) or 4(b)(v) of
this Agreement, termination shall be effective ten (10) days
after written notice is given upon the occurrence of a material
default of section 4(b)(iv) or 4(b)(v), provided that such
default is not cured within ten (10) days after receipt of such
notice of default; and provided further that, with respect to the
default of the Client under section 4(b)(iv) or 4(b)(v) of this
Agreement termination may occur upon a second default immediately
upon the receipt of the second notice, without any additional
opportunity to cure.
E. Other Conditions. A party may terminate this Agreement in
its entirety, including any and all licenses granted hereunder,
immediately upon written notice in the event the other party:
(i) has failed to establish reasonable procedures for
protecting the other party's Confidential Information or has
intentionally disclosed the other party's Confidential Information,
without permission;
(ii) makes a general assignment for the benefit of
creditors;
(iii) applies for the appointment of a trustee, liquidator or
receiver for its business or property, or one is assigned
involuntarily;
(iv) is subject to a proceeding for bankruptcy,
receivership, insolvency, dissolution or liquidation; or
(v) is adjudicated insolvent or bankrupt
14. Client's Remedies. eFunds and Client acknowledge that
circumstances could arise entitling Client to damages or
rescission arising from performance by eFunds of its obligations
hereunder or a failure by eFunds to perform its obligations and
have agreed in all such circumstances that Client's remedies and
eFunds' liabilities will be limited to those set forth in this
Agreement. Fox- material breach or default of this Agreement,
eFunds' sole obligation shall be to remedy the breach, IN ANY
ACTION BY CLIENT AGAINST EFUNDS ARISING FROM THE PERFORMANCE, OR
FAILURE OF PERFORMANCE OF EFUNDS' OBLIGATIONS UNDER - THIS
AGREEMENT, DAMAGES SHALL BE LIMITED SOLELY TO DIRECT MONEY
DAMAGES ACTUALLY INCURRED BY CLIENT AND DIRECTLY ATTRlBUTABLE TO
EFUNDS' PERFORMANCE OR FAILURE TO PERFORM, REGARDLESS OF THE FORM
OF ACTION AND WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR
OTHERWISE; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SUCH DAMAGES
OR ANY RIGHT OF RECOVERY BY CLIENT EXCEED THE TOTAL MAINTENANCE
FEES PAID BY CLIENT TO EFUNDS UNDER THIS AGREEMENT FOR THE THREE
(3) MONTHS IMMEDIATELY PRECEDING THE DATE ON WHICH CLIENT'S CLAIM
AROSE. IN NO EVENT SHALL EFUNDS BE RES13ONSIBLE OR LIABLE FOR ANY
LOSS OF PROFITS, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR INDIRECT
DAMAGES OF ANY KIND OR NATURE. Client agrees that eFunds shall
have no duty of indemnity or contribution for a third party claim
arising from the use of the Products or eFunds' performance or
non-performance of any Processing Services hereunder.
Client acknowledges and agrees that the damage and liability
limitations set forth in this Section 14 are reasonable in light
of all present and reasonably foreseeable events and the possible
amount of actual damages to Client. The limitations set forth in
this Section 14 shall not apply to personal injury or tangible
property damage to the extent caused by the gross negligence or
willful misconduct of eFunds, or to eFunds' obligations under
Section 7(b) of this Agreement. The limitations set forth in this
Section 14 will survive termination of this Agreement
notwithstanding Customer election to rescind or otherwise be
discharged from this Agreement.
15. Client's Liability For Third Party Claims. Client agrees to
defend, indemnify and hold eFunds harmless from and against any
claim by a third party for any loss, cost damages, or expenses
(including reasonable attorneys' fees), including but not limited
to lost profits, direct incidental, consequential, special,
indirect or punitive damages arising out of or relating to Client
use of the eFunds Products, Client Customizations, or Source
Code. provided eFunds promptly notifies Client of any such claims
of which eFunds is aware and Client is provided an opportunity to
fully participate in the defense or settlement of any such
claims. Such indemnification by Client shall not apply to
personal injury or property damage to the extent caused by the
gross negligence of eFunds, or to eFunds' obligations with
respect to its warranty against infringement. EFunds may require
Client to provide reasonable and adequate security with respect
to any claim or potential third party claim arising out of or
related to in tiny way any unlawful or allegedly unlawful
transactions undertaken using or relying in any way upon any
eFunds Product .
16. Confidentiality Obligations. Each party agrees that (a)
during the course of its performance of this Agreement it may
learn or be exposed to certain of the other party's Confidential
Information; (b) the Confidential Information of the other shall
remain the property of the other, and that such Confidential
Information is made available on a limited use basis solely in
connection with this Agreement; (c) it will advise its employees
and independent contractors to whom the information is disclosed
of their obligations under this Agreement; (d) it will not sell,
disclose or otherwise make available any such Confidential
Information, in whole or in part, to any third party other than
its independent contractors under appropriate written
confidentiality agreements without the prior written consent of
the other party, or use Confidential Information for any purpose
other than as expressly authorized by this Agreement; and (e) it
will utilize the same degree of care it utilizes for its own
Confidential Information, but in no case less than a reasonable
degree of care, to prevent disclosure of such Confidential
Information to any unauthorized person or entity. Upon
termination of this Agreement all copies of Confidential
Information shall be returned. The restrictions under this
Section shall not apply to information which: (i) is or becomes
publicly known through no wrongful act of the party receiving the
Confidential Information; or (ii) becomes known to a party
without confidential or proprietary restriction from a source
other than the disclosing party-, or (iii) a party can show by
written records was in its possession prior to disclosure by the
other party; or (iv) was independently developed by it without
use of or reference to the Confidential Information of the other
party. In the event a party is legally compelled to disclose
Confidential Information of the other party, it will be entitled
to do so provided it gives the other party prompt notice and
assists the other party, at the other party's expense, in
obtaining a protective order.
17. Escrow. In the event eFunds does not provide Source
Code to Client for any Standard Program or eFunds Customization,
upon Client's request and at Client's expense, eFunds will
deposit with a third party software escrow agent in the United
States such Source Code and related materials sufficient to
enable a reasonably skilled programmer or analyst to maintain and
enhance the Program(s) licensed hereunder ("Escrow Deposit"). The
Escrow Deposit will be made available to Client in accordance
with the terms and conditions of a mutually agreed upon escrow
agreement in the event eFunds or a suitable third party (i) no
longer makes available maintenance support for the Escrow Deposit
and the Escrow Deposit is within one Product Release or Version
of eFunds' currently licensed Standard Program; (ii) has become
insolvent or bankrupt or (iii) fails to remedy a material breach
of its obligations as set forth in this Agreement after proper
notice and reasonable opportunity to cure (no less than thirty
(30) days).
18. Year 2000 Compliance Statement. eFunds will ensure that
eFunds Products are Century Compliant for the year 2000. "Century
Compliant" means that the eFunds Products shall be capable of
accounting for all calculations using a century/date sensitive
algorithm for the 201 and 2 1 st century in performing the
functions described in eFunds' current Documentation, if properly
used within the specified operating environment. The eFunds
Products will recognize the rollover to year 2000 and the fact
that the year 2000 is a leap year. eFunds' sole obligation under
Us provision shall be to correct any material errors or
malfunctions necessary to make the eFunds Products Century
Compliant, at no additional charge to Client. eFunds shall not be
required to render Century Compliant any Client unique software,
custom code, or other product that eFunds has identified as being
non-standard. eFunds shall not be required to provide Century
Compliant support to any customer which is not current in all
payments overall to eFunds. Client is responsible for notifying
its vendors and having its vendors' code modified to eFunds'
format. eFunds shall not be required to provide Century Compliant
modifications for (a) software for which Client rightfully has
source code and which is not under maintenance with eFunds; or
(b) software owned by Client or licensed by Client from a third
party. EFunds shall not be liable for any Century Compliant
failure if such failure was caused by Client or third party
hardware, software, or interfaces to the processing software.
This statement is a reflection of eFunds' intention to provide a
cost free customer service to customers under specified terms and
conditions. This statement is not a representation or warranty by
eFunds with respect to any eFunds Products or other software.
19. General Provisions.
A. Notices. All notices provided for by this Agreement shall
be in writing and shall be by registered or certified mail,
addressed to the President at the address set forth in this
Agreement or in accordance with the last written instructions
received from such party concerning the Person and address for
such notices, and shall be effective upon receipt,
B. Assignment. Neither party shall have the right to assign
this Agreement without the prior written consent of the other,
which consent shall not be unreasonably withheld, except that
eFunds may assign this Agreement to Deluxe Corporation, any of
Deluxe Corporation's majority owned or controlled subsidiaries,
or a successor in interest to eFunds, provided that eFunds gives
Customer written notice of such assignment. The covenants and
conditions contained in this Agreement shall apply to and bind
the successors and permitted assigns of the ponies hereto.
C. Severability. If any provision of the Agreement shall be
held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remainder of this Agreement
shall not in any way be affected.
D. Further Assurances. Each party shall upon request provide
such further assurances and undertake such further acts or things
as may be reasonably necessary or appropriate to effectuate the
terms of this Agreement.
E. Force Majeure. Neither party shall be considered in default
in performance of its obligations should their execution be
delayed by any act or cause which is beyond the reasonable
control and without the fault or negligence of the party claiming
the delay. Notwithstanding the foregoing, if Client is prohibited
from making any payments hereunder by any authority having
jurisdiction, eFunds may terminate this Agreement in its entirety
immediately.
F. Waiver. The failure of either parry to enforce at anytime
any provision of this Agreement or to exercise any right herein
provided, shall not in any way be construed to be a waiver of
such provision or right, and shall not in anyway affect the
validity of this Agreement or any part hereof, or limit, prevent
or impair the right of either party to subsequently enforce any
provision or exercise any right hereunder.
G. Survival. Expiration or termination of this Agreement by
either party shall not relieve either party from any obligation
accrued through the date of termination. In addition, the terms
and conditions set forth in this Agreement which by their nature
and sense continue beyond termination of this Agreement including
by way of illustration only and not limitation, Sections 1, 4, 7,
9, 11, 14, 15, 16, and 18 of this Agreement, shall survive any
termination or expiration of this Agreement.
H. Status. Neither party shall be deemed the agent, partner,
or co-venturer of the other by reason of this Agreement or
Client's use of the eFunds Products, Client Customizations, or
Source Code.
I. Governing Law. This Agreement shall be governed by the Jaws
of the State of Wisconsin, without regard to conflicts of law
provisions.
J. Export Restriction. Regardless of any disclosure made by
Client to eFunds of an ultimate destination of any eFunds
Products, Client Customization or Source Code, Client will not
export and/or re-export, either directly or indirectly, any
eFunds Product, Client Customization, Source Code or any other
technology obtained from eFunds without first obtaining, at the
Client's expense, an export/re-export license from the United
States government, as required. In no event shall Client export
or re-export any of the foregoing to any country, individual,
end-user at end-use prohibited under U.S. Department of Commerce
or U.S. Department of Treasury Regulations. Client expressly
acknowledges and agrees that eFunds' obligations under this
Agreement are dependent and contingent upon eFunds' ability to
obtain any required U.S. export or re-export license or other
authorization.
K. Taxes. Any taxes based upon this Agreement or the services
or products provided, except upon income of eFunds, shall be paid
by Client eFunds shall be entitled to receive 100% of payments
due to it hereunder. In the event any taxing authority withholds
or intercepts any amount due to eFunds; hereunder, Client shall
pay to eFunds on demand the Ml amount of such withholding or
intercepted payment.
L. Construction. Unless explicitly stated otherwise, for any
event which calls for either party to exercise its judgment, give
its consent or perform an obligation, a standard of
reasonableness shall apply. This Agreement shall not be
construed more favorably toward either party regardless of which
party is more responsible for drafting it.
M. Changes. Any modifications or additions to this Agreement,
the eFunds Products, or services requested by Client and agreed
to by eFunds: will be documented in writing signed by both
parties and will be governed by this Agreement unless otherwise
specifically agreed.
N. Payments. Client shall pay eFunds such amounts as are
specified in Exhibit A, as well as such amounts as are
subsequently agreed upon by the parties. Unless specified
otherwise, 4 amounts are due when the service has been completed
or eFunds Product provided. Annual fees will be invoiced and paid
in advance. Amounts outstanding after the due date are subject to
an interest charge to date of payment of the lesser of 18% per
annum or the highest legally allowable rate. eFunds may adjust
its fees annually, effective January 1, upon at least sixty (60)
days written notice; provided no such increase, except with
respect to rates for professional services, shall exceed 10%.
O. Dispute Resolution. The parties shall agree upon a
reasonable dispute resolution process and will endeavor in good
faith to resolve any dispute or controversy arising under this
Agreement in a mutually acceptable manner. Any dispute or matter
arising out of or connected with this Agreement that cannot be
resolved by such process way be referred to Arbitration in
Milwaukee, Wisconsin by either party under the rules and
regulations of the American Arbitration Association ("AAA")
applicable to computer and technology disputes before a single
arbitrator. The said arbitrator shall be appointed by agreement
between the parties or, in default of such agreement, by the AAA,
and the arbitrator's final ruling shall be enforceable in any
court having jurisdiction. Notwithstanding the foregoing, in no
event shall any dispute as to ownership or infringement of
Confidential Information or intellectual property rights-be
subject to this provision.
P. Non-Hire Covenant. Each party covenants with the other that
it shall not hire or solicit, for itself or any other person or
entity, directly or indirectly, any person who was employed or
engaged as a consultant of the other within two (2) years of the
date such person terminates his/her employment or consultant
status with the other patty.
Q. Inspection; Audit. Client shall maintain such books and
records as are necessary to demonstrate Client's compliance with
its obligations under this Agreement and to verify that Client
has paid eFunds all license, maintenance and other service fees
in accordance with this Agreement. eFunds or eFunds' auditors
shall, upon reasonable notice have the right to inspect and audit
those books, records, systems and operations of Client as
necessary for eFunds to ascertain the correctness of fees due and
paid/payable to eFunds hereunder, and for eFunds to ascertain
compliance by Client with its obligations under this Agreement.
If any audit reveals underpayment by Client, Client shall
immediately rectify same, subject to subsection 18 n) above. If
any underpayment is five percent (5%) or greater of amounts due,
Client shall bear eFunds' expenses associated with such audit.
R. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof and supersedes all existing agreements and all
other communications, written or oral. This Agreement way not be
released, discharged or modified in any manner except in writing
signed by both parties. No purchase order or other form of the
Client will modify, supersede, add to or in any way vary the
terms of this Agreement. Any acknowledgment by an employee of
eFunds of such a Client form shall be solely for informational
purposes.
ECONNECT EFUNDS CORPORATION
By: /s/ Thomas S. Hughes By: /s/ John M. Pendergast
Name: Thomas S. Hughes Name: John M. Pendergast
(Please print or type) (Please print or type)
Title: Chairman & CEO Title: Chief Financial Officer
EXHIBIT A
I. STANDARD PROGRAM LICENSE FEES
CONNEX STANDARD PRODUCTS LICENSE FEES
Foundation $200,000
TCP/IP HCH 20,000
VTAM HCH 10,000
Deluxe 8583 ISO PI 50,000
System Health Monitor 50,000
Connex Notification System 50,000
CrossCheck 45,000
FTI 15,000
Settle Daily Prep 25,000
Settle Daily Report 25,000
Fee Billing 20,000
Binload 15,000
Authorization Services N/C
License Fee $525,000
SOURCE CODE WILL NOT BE PROVIDED FOR THE FOLLOWING
CXBOMD FOUNDATION MODULES:
CXBPMD01, CXBPMD02, CXDPMD03,
CXBPMD04, CXBPMD05, CXBPMD06,
CXBPMD07, CXBPMD08, CXBPMD09,
CXBPMD10, CXBPMD13
II. Professional Services Package $150,840
Professional Services Included in this Agreement
As defined in the PRA dated January 19, 2000
Final Requirements Definition (FRD)
Non refundable fee $75,420
Development of eFunds Customization(s) per FRD
III. Payment Schedule
A. License Fee $105,000
(20% of List price due upon signing Agreement)
Paid at Signing of Letter of Intent and Nonrefundable
Total Present Value of License Fee $525,813
Balance of License fee invoiced in 36 monthly installments of
$14,600 with the first installment to be due and payable upon
execution of Agreement.
Third Party Royalty Fee Monthly Transaction Volume* Fee**
1- 1,000,000 $0.0100
1- 2,000,000 $0.0090
1- 5,000,000 $0.0085
1- 10,000,000 $0.0075
1- 20,000,000 $0.0065
1- 40,000,000 $0.0055
1- 60,000,000 $0.0045
1- 80,000,000 $0.0035
* Drop Through Pricing
** Royalty fees billed monthly in arrears and due net
net thirty (30) days of invoice.
B. Professional Services
50% or $75,420 due upon execution of Agreement. $150,840
balance of $75,420 shall be invoiced in arrears as work is completed
Quotes are subject to change upon completion of Functional
Requirement Definition (FRD).
Quotes based on the PRA dated January 19, 2000 is guaranteed
within twenty percent (20%) assuming the same scope of the final
quote at the completion of the FRD.
In the event quote exceeds twenty percent (20%) ($30,168 US
Dollars) both parties shall have the option to:
Accept the new price
Negotiate a mutually acceptable new price
Terminate the Agreement
IV. Annual Maintenance Fees
Maintenance shall be invoiced and paid annually in the amount of
$89,250
V. MAINTENANCE FEES
Annual maintenance fees for the Standard Programs/modules listed
above shall be 17% of the eFunds Standard Program license fee
(before any applicable discount is applied), invoiced and payable
monthly along with payment for license fees based on monthly
transactions- For any eFunds Customization maintained by eFunds
for Client; the annual maintenance fee for eFunds Customization(s)
shall be 20% of The custornization fees charged by eFunds to Client,
invoiced and payable monthly along with payment for license fees
based on monthly transactions. Maintenance services and associated
annual fees for any Client Customization must be separately agreed
upon in
writing by eFunds and Client
VI. ADDITIONAL PROFESSIONAL SERVICES/MATERIALS:
Professional Services, including but not limited to Requirements
Review, Project Management Customization, Installation, Switch
Preparation and Conversion:
Hourly rates:
Testing Analyst $160.00
Analyst $170.00
Consultant $195.00
Senior Consultant $225.00
Principal Consultant QUOTE
Terms:
At eFunds offices, hours billed will be only those actual hours
logged to a Client specific task. At Client designated
facilities, hours billed will be the actual hours logged at the
Client designated facilities, plus travel time with a minimum of
four (4) hours per day. Fees are payable 50% of estimated cost on
order, balance an shipment of code or completion of services.
Materials
All materials are charged at cost, payable when invoiced,
Materials include but are not limited to: travel, lodging, meals,
and shipping. eFunds Products are shipped FOB eFunds, Glendale,
Wisconsin.
EXHIBIT B
ISSUE RESOLUTION SEVERITY GUIDELINES
An incident is assessed a severity level of one (high) to five
(low) depending on the impact it has on Client's business.
Magnitude, frequency, and type of incident are considered in
assigning a severity level. The eFunds' Software Support Center
analyst may feel the incident should have either a higher or
lower severity. It is important that Client and the analyst
mutually agree on the assigned severity so the appropriate
resources can be allocated to investigate and resolve the
incident. However, the final decision on the incident's severity
level is made by eFunds.
In general terms the severity levels art defined as follows:
Severity Level I means that a major system segment is
out-of-service, an essential system function has been lost, the
system is experiencing major operational difficulties, or the
financial (or transaction servicing) integrity of the system is
being seriously compromised. When a Severity Level I incident is
reported, eFunds and Client agree to provide immediate and
continuous attention (meaning 24 X 7 work by both parties) to the
incident until it is resolved or the severity level can be
lowered.
Severity Level 2 means that the system has suffered some
significant (but not essential) functional loss, the system is
experiencing significant operational difficulties, or the system
is experiencing occasional financial (or transaction servicing)
integrity problems. When a Severity Level 2 incident is reported,
eFunds agrees to start work on the incident within one (1)
business day of notification of the incident and complete the
work, or lower the severity level of the incident within seven
(7) business days.
Severity Level 3 means that the system is performing normally,
but a functional or operational problem that requires correction
is being experienced. When a Severity Level 3 incident is
reported, eFunds agrees to start work on the incident within
seven (7) business days of notification of the incident and
complete the work, or lower the severity level of the incident
within thirty (30) business days.
Severity Level 4 means that the system is performing normally,
but a functional or operational irritant or inconvenience is
being experience& When a Severity Level 4 incident is reported,
eFunds agrees to start work on the incident within twenty-one (2
1) days of notification of the incident and complete the work, or
lower the severity level of the incident within ninety (90)
business days.
Severity Level 5 means that the system is performing normally,
but either a cosmetic irritant or inconvenience is being
experienced, or a point of information is to be made. When a
Severity Level 5 incident is reported, eFunds agrees to start
work an the incident within ninety (90) days of notification of
the incident and complete the work within one hundred and eighty
(ISO) days.
EX-10.35
AGREEMENT
2/3/00
This Agreement states that eConnect has agreed to issue 100,000
SB2 shares of free trading stock to Burbank Coach Works as
payment for the co-branding of the eConnect logo at the 24 hours
HSR series at the February 4th and February 5th Daytona
International Raceway.
The eConnect name shall be displayed on the front end and on the
sides of a Porsche 935 and shall also be displayed on the
tractor-trailer. Photos of the event shall be provided to
eConnect.
/s/ Thomas S. Hughes /s/ Ray Torres
Thomas S. Hughes Ray Torres
Chairman & CEO, eConnect President, Burbank Coach Works
EX-10.36
SOFTWARE LICENSE, DEVELOPMENT AND MAINTENANCE AGREEMENT
This Software License, Development and Maintenance Agreement
("Agreement") is effective as of the 4th of February by and
between eFunds Corporation ("eFunds"), with an office at 400 West
Deluxe Parkway, Milwaukee, WI 53212, and eConnect (''Client')
with an office at 2500 Via Cabrillo Marina, Suite 112, San Pedro,
CA 90731.
In consideration of the mutual promises contained herein and
other consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, eFunds and Client agree as
follows:
Client desires to obtain certain license rights to the eFunds
Products and support services from eFunds in accordance with the
terms and conditions of this Agreement. eFunds is willing to
license to Client the eFunds Products and provide to Client the
services specified in this Agreement, in accordance with and
subject to the terms and conditions of this Agreement.
1. Definitions. In addition to other terms defined elsewhere
in this Agreement, the following terms shall have the following
meanings when used in this Agreement, unless the context clearly
requires otherwise:
A. "Client Customization" means any computer programming code
developed by Client using any Source Code provided by eFunds, and
all related Documentation, or any other Modification, and
includes, without limitation, any and all Modifications created
or developed by Client.
B. "Confidential Information" means (i) a party's proprietary
or confidential information which is designated orally or in
writing as such or that by nature of the circumstances
surrounding the disclosure ought in good faith to be treated as
proprietary or confidential, and (ii) for purposes of Client's
obligations under Section 16 of this Agreement, all eFunds
Products, Client Customizations, and Source Code, including all
trade secrets contained therein.
C. "Customized Programs" means, individually and collectively,
as the context requires, eFunds Customizations and Client
Customizations.
D. "eFunds Customization" means any computer programming code
developed by eFunds at Client's request; and all related
Documentation, including but not limited to any and all
Modifications created or developed by eFunds at Client's request.
E. "eFunds Products" means all Standard Programs, eFunds
Customizations, and related Documentation licensed to Client
hereunder.
F. "Documentation" means (a) those written manuals and other
officially published written user documentation provided to
Client by eFunds for Standard Programs and eFunds Customizations
licensed by Client, and (b) with respect to Customized Programs,
all user, reference, system, programming and coding documentation
and specifications related thereto, and all updates related to
any of the foregoing.
G. "Enhancement" means any change or addition to computer
programming code, other than Fixes and Maintenance Updates, that
adds new functions, or significantly improves operation, quality,
functional, capability, and/or performance by changes in system
design or coding.
H. "Final Requirements Definition" or "FRD" means (i) the
document to be created by eFunds pursuant to subsection 3 b) of
this Agreement which provides a detailed definition of the eFunds
Customizations to be developed for Client in order to initially
adapt or tailor the Standard Programs to Client's operating
environment, and/or (ii) any subsequent document created by
eFunds at Client's request pursuant to subsection 3 e) below
which details additional eFunds Customizations to be developed
for Client.
I. "Fix" means a correction to a eFunds Product or Client
Customization developed on an as-needed basis to address a
reproducible error, bug, or malfunction in a eFunds Product or
Client Customization. A Fix may include a temporary by-pass to
correct or lessen the impact of the effect, or a permanent change
to correct the defect.
J. "Foundation Program" means those Standard Programs specified
as such in Exhibit A to this Agreement or as to Standard Program
ordered by Client after the date of this Agreement, specified as
such by eFunds in writing or in Documentation.
K. "Initial Programs" means the Standard Programs listed in
Exhibit A as of the date of this Agreement, and/or any eFunds
Customizations developed pursuant to subsection 4 c) below, if
any.
L. "Maintenance Services" shall have the meaning ascribed
thereto in Section 8 of this Agreement.
M. "Maintenance Update" means a Fix or collection of Fixes, and
may, in eFunds' sole discretion, include minor improvements in
operational performance, quality and/or functional capability
that do not meet the definition of Enhancement.
N. "Modification" means any revision, modification, adaptation,
compilation, derivative work, enhancement, or other change made
to any Source Code or Documentation, or any other change made to
any eFunds Product or Client Customization, and specifically
includes without limitation, eFunds Customizations and Client
Customizations.
O. "Non-Foundation Program" means those Standard Programs
listed in Exhibit A or subsequently licensed by Client hereunder
and which are not specified as Foundation Programs.
P. "Preliminary Requirements Assessment" or "PRA" means: (i)
the document created by eFunds based upon information provided by
Client, which provides a high-level assessment of eFunds
Customizations requirements for the Standard Programs in order to
Initially adapt or tailor the standard Programs to Client's
operating environment, and/or (ii) any subsequent document
created by eFunds at Client's request pursuant to Section 3 e)
below for additional eFunds Customization(s) to be developed by
eFunds for Client.
Q. "Product Release" means an accumulation of Fixes and/or
Maintenance Updates.
R. "Professional Services" means any services other than
Maintenance Services that eFunds may agree to provide from
time-to-time hereunder, including but not limited to requirements
reviews, creating a PRA or FRD, project management, developing
eFunds Customizations, training, software installation, switch
preparation, and conversion services.
S. "Site" means, collectively, the permanent and temporary
Client data processing centers identified in Section 4 c) below
(the "Permanent Site" and "Temporary Site", respectively), where
the eFunds Products and any Client Customized Programs may be
used pursuant to this Agreement.
T. "Source Code" means the human-readable form of computer
programming code and any related (i) system documentation,
including all comments and procedural code such as job control
language, and (ii) libraries, screen files, data directories,
documentation and other items reasonably necessary to reconstruct
a Standard Program, eFunds Customization or Client Customization.
U. "Standard Programs" means any of the eFunds software
programs then being generally offered for license by eFunds and
listed in Exhibit A to this Agreement, and others that may be
licensed later by Client from eFunds hereunder, and all related
Enhancements, Fixes, Maintenance Updates, Product Releases,
Versions, and Documentation.
V. "Version" means (a) an accumulation of Maintenance Updates,
Product Releases, and/or Enhancements, and/or (b) any Maintenance
Update, Product Release or Enhancement, which changes a Standard
Program to a new system-operating platform.
2. Scope of Agreement. Subject to the terms and conditions of
this Agreement, and for the prices set forth in Exhibit A hereto,
eFunds agrees to provide the following products and services to
Client:
A. Standard Programs. eFunds agrees to license to Client the
Standard Programs listed on Exhibit A hereto in accordance with
the terms of Section 4 of this Agreement Standard Programs
licensed in object code-only form am so listed in Exhibit A;
B. eFunds Customizations. If requested by Client and agreed
upon in writing by eFunds, eFunds agrees to complete a Final
Requirements Definition in accordance with Section 3 b) of this
Agreement and develop eFunds Customizations in accordance
therewith;
C. Maintenance Services. eFunds agrees to provide Maintenance.
Services in accordance with Section 8 of this Agreement;
D. Professional Services. eFunds agrees to provide any
Professional Services identified in this Agreement or on Exhibit
A hereto; and
E. Additional Products and Services. Subject to subsection 19
m) below, eFunds may, in the future upon Client's request, and
upon such terms and conditions and at such prices as the parties
may agree in writing, license such additional Standard Programs,
develop such eFunds Customizations, and/or provide such
Maintenance Services and/or Professional Services as the parties
may agree upon in writing.
F. Obligations of Client. The Client undertakes to:
(i) provide to eFunds promptly any information and
cooperation which eFunds may reasonably require from time to time
to provide warranty services, Maintenance Services, and otherwise
perform its obligations under this Agreement;
(ii) prior to delivery to Client at Client's own expense,
prepare the Site and provide such environmental and operational
conditions as may be specified by eFunds; and
(iii) provide eFunds reasonable access to the Client's
premises and business records for the purpose of verifying that
Client is complying with the terms and conditions of this
Agreement.
3. Requirements Definition. If requested by Client and agreed
upon in writing by eFunds, eFunds shall create a Final
Requirements Definition for Client in accordance with the
following:
E. Preliminary Requirements Assessment. eFunds has already created
a Preliminary Requirements Assessment based upon information
obtained from Client. The PRA provides a high-level set of eFunds
Customization requirements for the Standard Programs and eFunds'
estimated cost to Client for such eFunds Customizations based
upon such Client information. The PRA, which Client represents
has been reviewed and approved by Client is attached hereto and
incorporated herein by reference as Exhibit B.
F. Final Requirements Definition. Upon execution of this Agreement,
eFunds shall immediately commence the creation of the FRD for the
fee set forth in Exhibit A. The FRD shall contain a detailed
definition of eFunds Customizations to the Standard Programs and
the actual cost to Client for such eFunds Customizations. eFunds
shall complete the FRD and present the FRD to Client within no
more than sixty (60) days of execution of this Agreement, unless
(i) Client delays the creation of the FRD, or (ii) additional
time is agreed upon by the parties pursuant to subsection 3 d)
below or otherwise. In either such event, the sixty (60) day
period shall be extended by the number of days of Client's delay
or as agreed upon by the parties. Client agrees to provide eFunds
all reasonably required assistance and to make appropriate staff
and resources available to eFunds in a timely manner and as
necessary to complete the FRD.
G. Go/No Go. In the event that the cost to Client of eFunds
Customizations as presented in the FRD, exclusive of changes
agreed upon by the parties pursuant to subsection 3 d) below or
other changes or additions requested by Client that materially
change the PRA, does not exceed the estimated cost set forth in
Exhibit B by more than twenty percent (20%), eFunds shall be
authorized to, and eFunds shall, proceed with development of the
eFunds Customizations in accordance with the FRD. In the event
that: (i) the cost to Client of eFunds Custornizations as
presented in the FRD, exclusive of changes agreed upon by the
parties pursuant to subsection 3 d) below or other changes or
additions requested by Client that materially change the PRA,
exceeds the estimated cost set forth in the PRA by more than
twenty percent (20%), and (ii) within thirty (30) days of
presentment of the FRD to Client by eFunds, either eFunds and
Client cannot work out a mutually acceptable fee for eFunds
Customizations, or in the absence of such agreement eFunds is
unwilling to absorb the difference between the eFunds
Customization fee set forth in the PRA and the FRD; then (iii)
either party may terminate this Agreement in accordance with
subsection 13 a) below.
H. Change Procedures. A change in scope of any PRA or FRD is any
alteration to the PRA or FRD that affects cost, payments, or
schedule. Any change in the scope of a PRA or a FRD shall become
effective only when a written change request is executed by
authorized representatives of both parties in accordance with
this subsection 3 d). eFunds has overall responsibility for the
change process through its required resolution. Any change
requested by either party will be evaluated, resolved and/or
negotiated with respect to cost, schedule, resource impact and/or
priorities by authorized representatives of eFunds and Client in
accordance with the following:
(i) The parties shall mutually agree upon the form of a "Change
Order Request" to be used hereunder. The change request shall be
described in the Change Order Request form by the party
originating the request The Change Order Request form will then
be submitted to eFunds' project manager for approval;
(ii) eFunds' project manager will estimate the schedule impact
and cost to perform the evaluation, document this on the Change
Order Request form, and return the form to the Client project
manager for approval. If the Client project manager authorizes
the evaluation expenditure in writing, the eFunds project manager
will assign the Change Order Request to the appropriate personnel
to perform the technical evaluation-,
(iii) Following the technical evaluation, the eFunds project
manager will determine the cost to Client of any changes or
additions to eFunds Customizations and the impact on the current
project scheduleto implement the Change Order Request document
this on the Change Order Request form, and return the form to the
Client project manager for an implementation decision, which
shall not be unreasonably withheld or delayed. Upon receipt of
the approved Change Order Request form signed by the Client
project manager, the eFunds project manager will schedule the
change for implementation. Approved Change Order Requests will be
deemed incorporated into and a part of the applicable PRA or FRD;
and
(iv) eFunds shall manage the impact Change Order Requests have on
project progress and cost, including both the impact of
performing the Change Order Request evaluation and the impact of
Change Order implementation. The eFunds project manager shall
maintain a log to keep track of all changes/issues and the
current status of each.
E. Additional Requirements. In the event that, after
completion of work in accordance with the initial FRD, Client
requests additional eFunds Customizations, eFunds shall create a
PRA and a FRD at the price to be agreed upon by the parties, and
the terms of subsection 3 c) and 3 d) above shall apply thereto.
F. FRD Price. In all cases, the price for any FRD agreed upon
by the ponies in Exhibit A or subsequent to the date hereof shall
be due and payable by Client and shall be non-refundable.
4. License. Subject to the terms and conditions of this
Agreement, eFunds grants Client a perpetual, nonexclusive,
non-transferable license to use the eFunds Products and Client
Customizations (if any) for the sole purpose of providing
electronic funds transfer and card management services for its
financial institution customers, subject to the following
limitations:
D. Scope.
(i) Each license entities Client to use one copy of the
Foundation Programs in a productive mode (and to retain one
reference copy of the Foundation Program in accordance with all
applicable provisions of this Agreement) only at the Permanent
Site identified below, and to use the Documentation provided,
solely for the purpose of providing electronic funds transfer
exclusively to its customers doing business in the Dominican
Republic. Foundation Programs copied for archival, testing,
development, temporary back-up or temporary transfer to the
Temporary Site identified below (not to exceed ninety (90) days)
shall not be considered productive use. A license for any
Non-Foundation Program(s) is concurrent with the license for the
Foundation Program at the Site. The license entitles Client to
the use of multiple copies of the Non-Foundation Program(s)
solely in association with the licensed copy of the Foundation
Program. Client may copy the Documentation. in reasonably
sufficient numbers to support its authorized use of the Standard
Programs, provided that Client reproduces any copyright or other
proprietary notice contained in the Documentation and otherwise
complies with its obligations under Section 16 of this Agreement.
(ii) For any Source Code which eFunds provides to Client, eFunds
hereby grants to Client a limited, non-exclusive and
non-transferable license for the term of this Agreement to use,
copy, execute and display such Source Code solely at the
Permanent Site and solely for the purpose of developing
Modifications to Standard Programs for Client's internal use.
(iii) Any Customized Program shall be deemed a part of the
Foundation Program or Non-Foundation Program from which it was
created or to which it relates, and Client shall have the same
license rights therein, as well as with respect to associated
Documentation, as is granted by eFunds to Client in subsection 4
a) i) above for the related Foundation or Non-Foundation Program.
E. Restrictions on Use.
(i) Client shall not use, copy, translate, print or display any
eFunds Product, Client Customization, or Source Code, in whole or
in part other than as expressly authorized in this Agreement.
(ii) Client agrees not to reverse assemble or decompile any
eFunds Product or portion thereof which eFunds does not provide
in Source Code form.
(iii) In no event shall Client, without eFunds' express prior
written consent, use any eFunds Product or any Client
Customization to provide services to customers outside the
Territory. Client acknowledges that any consent to such
additional use by eFunds will require the payment by Client of
additional license fees. In no event shall client, without
eFunds' prior written consent, use of any eFunds Product or any
Client Customization in any time sharing or service bureau
environment or for shared, regional, or national network or
interchange.
(iv) Client shall maintain appropriate and mutually agreed
processes and systems to assure that all transactions performed
by Client using or relying in any way upon any eFunds Product are
lawful; advise eFunds in writing prior to implementing any
changes to such mutually agreed processes and systems; permit
only lawful transactions to be undertaken using or relying in any
way upon any eFunds Product; and cease immediately performing any
transactions that, in the reasonable opinion of eFunds as set
forth in written notice to Client, are or may be unlawful. This
is a material term of this Agreement.
(v) Client agrees that it shall not use any eFunds Product,
permit the use of any eFunds Product, or represent to any third
party that it does, will, or intend to use any eFunds Product in
connection with any Internet gaming or gambling activities of any
kind without the express written consent of eFunds. Such consent
may be withheld by eFunds in its sole discretion. Client shall
also obtain the advance written approval of eFunds for any public
statements related to Internet gaming or gambling activities that
use, will use, or intend to use any eFunds Product. This is a
material term of this Agreement.
(vi) Any rights not expressly granted to Client in this Agreement
are reserved by eFunds.
F. Site.
Permanent Site: 2500 Via Cabrillo Marina, Suite 112, San Pedro,
CA 90731
Temporary Site: Same as Permanent
5. Term.
A. License. The license granted hereunder is perpetual upon
execution of this Agreement, subject to termination in accordance
with this Agreement.
B. Maintenance.
(i) Initial Term. With respect to Maintenance Services for
Initial Programs, this Agreement will be effective upon the date
first set forth above and will continue for sixty (60) months
following the date of Installation (the "Initial Term").
(ii) Renewal Terms. With respect to Maintenance Services for
Initial Programs, after the Initial Term, this Agreement shall be
automatically renewed for successive two (2) year periods (each,
a "Renewal Term") unless either party terminates the Agreement as
provided for in this Agreement.
(iii) Other Customized Programs. In the event that Client
requests and eFunds agrees to provide maintenance and support
services for additional eFunds Customizations and/or Client
Customizations, such maintenance and support services shall be
coterminous with this Agreement unless eFunds and Client
separately agree in writing on a different term for such
services.
6. eFunds Deliverables.
A. Installation and Testing. eFunds will install and test the
Initial Programs licensed by Client at the Permanent Site. The
installation and testing of the Initial Programs will consist of
the following operations: (i) the current version of the Initial
Programs and related files will be restored to disc from tape-
this consists of the productive code, data files, the input
specification to the operating system, utilities, a test data
base and generating installation files; (ii) this reference copy
of the Initial Programs is "frozen", that is, Modifications shall
not be made once (i) is complete; all future Product
Release/Version deliveries will be based on this reference
Initial Program copy; (iii) eFunds will modify the Initial
Programs as necessary to fit the local disc, operating system and
communications access methods environment; (iv) eFunds will bring
up the Initial Programs and will perform the, standard
installation tests; (v) in each event, the Client host will be
substituted for a simulator if Client has established the host
connection. When the tests have been successfully completed,
installation will be complete ("Installation").
B. Acceptance. After Installation, Client shall have thirty
(30) days to do whatever acceptance testing itchooses to
determine whether the Initial Program(s) function substantially
as described in theDocumentation. Failure to notify eFunds of a
problem in writing, or productive use by Client during such
thirty (30) day period, shall constitute Client acceptance of the
Initial Program(s) ("Acceptance"). In the event Client notifies
eFunds in writing during such period that the Initial Programs
are not functioning substantially as described in the
Documentation, and eFunds and Client agree within fifteen (15)
days of such notice that the Initial Programs are not functioning
substantially as described in the Documentation, then eFunds will
make such corrections as are necessary to put the Initial
Programs in operating order such that the Initial Programs will
function substantially as described in the Documentation and
Acceptance will be deemed to have occurred. In the event eFunds
and Client do not agree within forty-five (45) days of such
notice that the Initial Programs are functioning substantially as
described in the Documentation, then Client will return or
certify destruction of the Initial Programs, eFunds shall refund
all license fees paid, and this Agreement and all licenses
granted hereunder shall terminate.
C. eFunds Customizations. For any eFunds Customization
developed pursuant to subsection 3 d), eFunds and Client shall
agree, in writing, upon mutually acceptable installation and
acceptance criteria. At a minimum, the process/methodology set
forth in subsections 6 a) and 6 b) above shall be followed.
D. Documentation. eFunds will provide Client two (2) copies of
its Documentation for use with Initial Programs and other eFunds
Customizations.
7. Warranties.
A. General Warranty. eFuads warrants for a period of ninety
(90) days following Installation, that the Initial Programs and
other eFunds Customizations will perform substantially in
accordance with the specifications described in eFunds' current
Documentation, if properly used within the specified operating
environment. eFunds makes no warranty that the Initial Programs
or other eFunds Customiztions will run uninterrupted or will be
error free' During the warranty period, eFunds' sole obligation
shall be to correct any material errors or malfunctions necessary
to conform to the warranty at no additional charge to Client.
eFunds shall have no liability under this warranty unless Client
notifies eFunds in sufficient detail of any errors which Client
believes to be caused by a failure of the Initial Programs or
other eFunds Customization to function as warranted and provides
eFunds with any information which eFunds reasonably requests to
identify and correct the error. Notice shall be given by
forwarding a description of the error or malfunction to eFunds by
phone, followed by a written report. Client agrees to allow
eFunds the opportunity to make repeated efforts over a reasonable
period of time (not less than thirty (30) days) to correct any
error or malfunction.
B. Warranty Against Infringement. eFunds will hold harmless
and, at its own expense, defend any action brought against Client
based an a claim that a eFunds Product provided hereunder
infringes a United States copyright or United States patent,
provided that Client notifies eFunds promptly in writing of the
claim and eFunds is provided an opportunity to fully defend the
claim and/or agrees to any settlement of such claim. Should the
eFunds Products become, or in eFunds' opinion be likely to become
the subject of a claim of infringement of a copyright, patent, or
other United States proprietary right, eFunds may procure for
Client the right to continue using the eFunds Products as
contemplated by this Agreement or replace or modify them to make
them non-infringing, at no additional charge to Client. In the
event neither of the above is economically practical, Client may
receive a refund of a portion of the license fee paid, based upon
a five yew straight line depreciation from the date of
Installation. The above obligations as to infringement apply to
eFunds Customizations only if eFunds had actual knowledge of a
potential third party claim and failed to advise Client promptly
of such knowledge. eFunds shall have no obligation under this
provision for any claim based upon (i) the operation, combination
or use of eFunds Products with equipment, data or programs not
furnished by eFunds if such infringement could have been avoided
by the operation, combination or use of other equipment, data or
programs, (ii) any information or specifications supplied or
required by Client; (iii) Client Customization or Client's use of
any Source Code, or (iv) any Modification by any third party. The
foregoing states the entire liability of eFunds with respect to
infringement of any copyrights or patents or other proprietary
right by the eFunds Products or any part thereof.
C. Disclaimer Of Warranties. CLIENT ACKNOWLEDGES THAT IT HAS
INDEPENDENTLY EVALUATED THE INITIAL PROGRAMS AND OTHER EFUNDS
CUSTOMIZATIONS AND APPLICATION THEREOF TO ITS NEEDS, AND THAT,
EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THERE ARE NO WARRANTIES,
EXPRESS, IMPLIED, OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOP, A
PARTICULAR PURPOSE, NON-INFRINGEMENT, FROM A COURSE OF DEALING OR
USAGE OF TRADE, OR ARISING OTHERWISE BY LAW. CLIENT FURTHER
ACKNOWLEDGES AND AGREES MT SOURCE CODE IS PROVIDED BY EFUNDS "AS
IS" AND THAT EFUNDS MAKES NO WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, FROM A COURSE
OF DEALING OR USAGE OF TRADE, NON-INFRINGEMENT, OR OTHERWISE
ARISING BY LAW, WITH RESPECT TO SOURCE CODE, CLIENT
CUSTOMIZATIONS, OR CLIENT'S USE OF ANY OF THE FOREGOING, EFUNDS
ASSUMES NO RESPONSBILITY AND CLIENT EXPRESSLY ASSUMES ALL RISKS
IN ANY WAY RELATED THERETO. EFUNDS MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO THE PERFORMANCE OF ANY CLIENT CUSTOMIZATION OR
THAT ANY CLIENT CUSTOMIZATION WILL FUNCTION WITH EXISTING OR
FUTURE VERSIONS OR RELEASES OF ANY STANDARD PROGRAM AND CLIENT
ASSUMES ALL RESPONSIBILITY THEREFOR AND RISK THEREOF.
8. Maintenance. Subject to the provisions of this Section
8 and the timely and full payment of applicable fees, eFunds will
provide the maintenance and support services detailed in this
Section 8 ("Maintenance Services") for one productive copy of all
Initial Program(s) and those Customized Programs subsequently
agreed to by Client and eFunds for maintenance- Maintenance
Services shall be provided only to the Permanent Site.
A. Maintenance of Initial Programs. Subject to the timely and
full payment of the fees required hereunder and the conditions of
this Agreement, during the term of this Agreement, eFunds will
maintain the Initial Programs in accordance with the General
Warranty set forth in subsection 7 a) above, and as set forth in
this subsection 8 a), provided that Client is using Standard
Programs that are current to within one Product Release or
Version.
(i) Documentation. eFunds will supply applicable Documentation
as released by eFunds.
(ii) Fixes. eFunds will supply Client with all Fixes for defects
reported by Client or where the Fix will lessen or correct a
serious defect. Fixes which are applicable to any Client are
accumulated and provided with the next Maintenance Update.
(iii) Maintenance Updates. eFunds will offer Client all
Maintenance Updates. The availability of Maintenance Updates is
announced periodically in eFunds technical bulletins, Maintenance
Updates are sent upon request at no additional charge to Client
(iv) Product Releases. eFunds will offer Client all Product
Releases. General availability of Product Releases and the
descriptions of new features and functions are announced
periodically, with an estimated availability announced
approximately three (3) months in advance. Product Releases
include development of a plan to migrate eFunds Products under
maintenance, coordination of plan activities, and testing prior
to delivery. Product Releases are sent upon request after general
availability and will be provided at no additional charge to
Client.
(v) Versions. eFunds will offer Client all Versions. Versions
may, in eFunds sole discretion, require payment of an additional
license fee.
(vi) If, as the result of Client making any changes to the Source
Code of the eFunds Product(s), any new Release or Version of the
eFunds Products that eFunds supplies to Client am not compatible
with the operational version of the eFunds Products so modified,
eFunds shall have no obligation to provide support or any
Maintenance Service to Client in respect of the new Release or
Version.
B. Maintenance Delivery. All Fixes, Maintenance Updates,
Product Releases, and Versions provided hereunder shall be
delivered on magnetic tape by mail. Client may request additional
levels of delivery, including express mail delivery, delivery
through computer by computer access, or on-line terminal entry,
at eFunds' then current charges for such services.
C. Client Support. eFunds will provide a Client support center
during normal business hours (CST) to provide routine technical
support for eFunds Products under maintenance and a 24-hour,
7-day "hot line" to support significant problems wising outside
of normal business hours. Client agrees that when Client notifies
eFunds of an error or malfunction and eFunds determines that the
problem is due to other than eFunds' failure to maintain the
eFunds Products as required hereunder, any time expended by
eFunds to fix the problem shall be at eFunds' then current time
and materials rate.
(i) Account Managers. Each party shall assign an account
manager to act as a single point of contact to the other party
for all aspects of Maintenance Services. The respective account
manager's
duties will include:
(a) acting as primary interface with the other party;
(b) managing service levels;
(c) monitoring Client's level of satisfaction with eFunds'
services and continuously evaluating potential improvements of
service quality; and
(d) coordinating the required modifications and associated
approvals to any changes in this Agreement to which the parties
may agree
(ii) Telephone Support Service. Telephone support service
includes Client having direct telephone access to the eFunds
software support center- The telephone number for such service is
1-900-356-6448 or 414-341-5595, or as advised in writing from
time-to-time by eFunds.
(iii) Problem Resolution. Problems shall be dealt with in
accordance with the level of severitv determined by eFunds, as
further defined in Exhibit B attached hereto and incorporated
herein by reference.
D. Installation. Unless otherwise agreed in writing by the
parties, Client will be responsible for the installation of all
Fixes, Maintenance Updates, Versions, and Product Releases.
Client acknowledges that its failure to instill such items may
eventually make the Initial Programs unusable or nonconforming to
their specifications and Client assumes all risks of such use.
eFunds may provide installation services at Client's request, at
eFunds' then-current time and materials rates.
E. Maintenance of Other Customized Programs.
(i) if Client elects to have eFunds maintain eFunds
Customizations, eFunds will maintain eFunds Customizations so
that they operate in substantial conformity with the
Documentation, provided that Client has installed Standard
Programs that are current to within one Product Release or
Version. eFunds will supply Client with all Fixes as
expeditiously as is reasonably possible. in the event that Client
declines maintenance for eFunds Customizations, Client may
maintain such eFunds Customizations itself, however, Client
acknowledges that eFunds shall have no responsibility therefor
and Client assumes all risks of any consequence of eFunds not
providing maintenance for such eFunds Customizations.
(ii) With respect to Client Customizations, eFunds may, but shall
have no obligation to, provide Maintenance Services therefor. For
any Client Customization, Client and eFunds must separately agree
in writing as to any maintenance that eFunds will provide with
respect thereto, including aIl terms and conditions thereof and
the annual maintenance fee to be paid by Client for such
services. A condition precedent to any obligation of eFunds to
provide maintenance for Client Customizations shall, be that
Client is using Standard Programs that art current to within one
Product Release or Version.
(iii) Migration of any Customized Program from Product
Release to Product Release or to a new Version will be done at
eFunds' current time and material rates.
(iv) eFunds shall not be required to provide maintenance to
anything other than a Standard Program or Initial Program. If
someone other than eFunds makes any Modification to a Standard
Program or Initial Program without the express written
authorization of eFunds, eFunds will continue to supply
Maintenance Services to the unmodified portion of the Standard
Programs or Initial Programs. Modification by anyone other than
eFunds and release of eFunds' obligations for maintenance shall
not relieve Client from its obligations to pay fees hereunder. At
eFunds' option and at Client's request, eFunds may provide
maintenance for such unauthorized changes at eFunds' then current
time and materials rates or as otherwise agreed upon.
F. Client Responsibilities. Failure by Client to install
Standard Programs that are current to within one Product Release
or Version shall relieve eFunds of its obligation to provide
Maintenance Services hereunder, but shall not relieve Client of
its obligations to pay full Maintenance Services fees hereunder.
G. Exclusions. Notwithstanding any other provision of this
Agreement, eFunds' obligation to provide maintenance and support
services under this Agreement does not cover maintenance
services, repair or replacement caused by (i) failure to provide
a suitable environment prescribed by eFunds; (ii) neglect,
accident disaster (including water, wind and lightening),
transportation or vandalism not attributable to eFunds; (iii)
alterations, applications, additions or Modifications to or for
the eFunds Products or Client Customizations which are not
provided or approved in writing by eFunds; (iv) host computers,
networks, telephone switches and other applications, attachments,
machines, software or accessories, and modification or additions
thereto, not provided by eFunds; (v) failure to use and operate
the eFunds Products in accordance with the Documentation
delivered to Client; (vi) requests for remedial maintenance from
any party other than Client-, or (vii) maintenance or repair not
performed by eFunds.
9. Proprietary Rights. All eFunds Products, Client
Customizations, Source Code, and any Modifications to any of the
foregoing, and all proprietary and intellectual property rights,
title and interest in and to all such eFunds Products, Client
Customizations Source Code and Modifications, is and shall be the
sole and exclusive property of eFunds. Client agrees that it
shall make no use whatsoever of any eFunds Product, Client
Customization, Source Code or Modification except as expressly
authorized in this Agreement.
A. If Client creates or develops any Modification, it shall be
considered a work made for hire by Client for eFunds and Cheat
hereby assigns, and upon creation of any Modification
automatically assigns, to eFunds, its successors and assigns,
ownership of all copyrights, patents, and other intellectual
property rights in and to each and every Modification, whether or
not any such Modification, by operation of law, may be considered
work made for hire by Client for eFunds. All Modifications
created by Client shall be considered Client Customizations for
all purposes of the Agreement. Cheat represents and warrants that
Client shall obtain from any individual making Modifications an
agreement sufficient for Client to comply with the terms and
conditions of Section 16 of this Agreement, and to obtain such
rights as am necessary to vest in eFunds the rights and ownership
in the Modifications as provided in this provision.
B. Client shall (i) mark any Modification with such copyright
or other proprietary notices as directed by eFunds, and (ii)
provide to eFunds such assistance as is reasonably necessary to
perfect or protect proprietary and intellectual property rights
to the Modifications.
C. Upon request of eFunds, but no less frequently than
semi-annually (whether or not requested by eFunds), Cheat shall
provide to eFunds at no cost to eFunds and at such location and
on media designated by eFunds all Source Code for any
Modifications made or created by or for Client. This provision
and the delivery by Client to eFunds hereunder does not change or
after eFunds' obligations with respect to Client Customizations
under this Agreement.
10. Cooperation. During the term of this Agreement, Client
shall assign at least one qualified staff member to work with
eFunds and shall make available additional appropriate personnel
as eFunds may reasonably request to answer questions and provide
information concerning Client's facility, operations and
requirements related to the installation, testing and maintenance
of eFunds Products and Client Customizations. Client shall have
the Site ready for installation, and allow eFunds appropriate
physical access to the computer systems and such data bases as
will be in communication with die eFunds Products and Client
Customizations.
11. Destruction of eFunds Property upon Termination.
Within thirty (30) days of termination of any license granted
hereunder or of this Agreement, Client will either certify to
eFunds in writing as to the destruction of the eFunds Products,
Client Customizations, eFunds' Confidential Information, and
Source Code, including all copies thereof or will return to
eFunds the eFunds Products, Client Customizations, eFunds'
Confidential Information, and Source Code, and all copies
thereof.
12. Compliance with Federal, State and Local Law. Except as set
forth in the Documentation, Client assumes all responsibility for
the eFunds Products provided hereunder, and Client
Customizations, being capable of allowing the Client to comply
with federal, state and local laws and regulations.
13. Termination of Agreement. This Agreement may be terminated
by Client or by eFunds only as set forth in this Section
A. Failure to Agree on eFunds Customizations Costs for
Initial Programs. In the event that (i) the cost to Client of
eFunds Customizations as presented in the FRD created by eFunds
pursuant to subsection 3 b) above, exclusive.of changes agreed
upon by the parties pursuant to subsection 3 d) above or other
changes or additions requested by Client that materially change
the PRA, exceeds the estimated cost set forth in Exhibit B by
more than twenty percent (20%), and (ii) either eFunds and Client
cannot work out a mutually acceptable fee for such eFunds
Customizations, or in the absence of such agreement eFunds is
unwilling to absorb the difference between the eFunds
Customization fee set forth in the PRA and the FRD, then either
party may terminate this Agreement upon ten (10) days written
notice to the other party.
B. Non-Acceptance of Initial Programs. In the event that
the Initial Programs are not accepted by Client pursuant to
subsection 6 b) of this Agreement, either party may terminate
this Agreement upon ten (10) days written notice to the other
party.
C. End of Term. With respect to Maintenance Services,
this Agreement may be terminated by either party by giving no
less than one hundred eighty (180) days prior written notice of
termination effective at the end of the Initial Term or any
Renewal Tem.\
D. Default. Either party may terminate this Agreement in its
entirety, including any and all licenses granted hereunder,
effective thirty (30) days after written notice is given upon the
occurrence of a material default by the other party, provided
that such default is not cured within thirty (30) days after
receipt of such notice of such default; except that with respect
to the default of the Client under section 4(b)(iv) or 4(b)(v) of
this Agreement, termination shall be effective ten (10) days
after written notice is given upon the occurrence of a material
default of section 4(b)(iv) or 4(b)(v), provided that such
default is not cured within ten (10) days after receipt of such
notice of default; and provided further that, with respect to the
default of the Client under section 4(b)(iv) or 4(b)(v) of this
Agreement termination may occur upon a second default immediately
upon the receipt of the second notice, without any additional
opportunity to cure.
E. Other Conditions. A party may terminate this Agreement in
its entirety, including any and all licenses granted hereunder,
immediately upon written notice in the event the other party:
(i) has failed to establish reasonable procedures for
protecting the other party's Confidential Information or has
intentionally
disclosed the other party's Confidential Information, without
permission;
(ii) makes a general assignment for the benefit of creditors;
(iii) applies for the appointment of a trustee, liquidator or
receiver for its business or property, or one is assigned
involuntarily;
(iv) is subject to a proceeding for bankruptcy,
receivership, insolvency, dissolution or liquidation; or
(v) is adjudicated insolvent or bankrupt
14. Client's Remedies. eFunds and Client acknowledge that
circumstances could arise entitling Client to damages or
rescission arising from performance by eFunds of its obligations
hereunder or a failure by eFunds to perform its obligations and
have agreed in all such circumstances that Client's remedies and
eFunds' liabilities will be limited to those set forth in this
Agreement. Fox- material breach or default of this Agreement,
eFunds' sole obligation shall be to remedy the breach, IN ANY
ACTION BY CLIENT AGAINST EFUNDS ARISING FROM THE PERFORMANCE, OR
FAILURE OF PERFORMANCE OF EFUNDS' OBLIGATIONS UNDER - THIS
AGREEMENT, DAMAGES SHALL BE LIMITED SOLELY TO DIRECT MONEY
DAMAGES ACTUALLY INCURRED BY CLIENT AND DIRECTLY ATTRlBUTABLE TO
EFUNDS' PERFORMANCE OR FAILURE TO PERFORM, REGARDLESS OF THE FORM
OF ACTION AND WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR
OTHERWISE; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SUCH DAMAGES
OR ANY RIGHT OF RECOVERY BY CLIENT EXCEED THE TOTAL MAINTENANCE
FEES PAID BY CLIENT TO EFUNDS UNDER THIS AGREEMENT FOR THE THREE
(3) MONTHS IMMEDIATELY PRECEDING THE DATE ON WHICH CLIENT'S CLAIM
AROSE. IN NO EVENT SHALL EFUNDS BE RES13ONSIBLE OR LIABLE FOR ANY
LOSS OF PROFITS, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR INDIRECT
DAMAGES OF ANY KIND OR NATURE. Client agrees that eFunds shall
have no duty of indemnity or contribution for a third party claim
arising from the use of the Products or eFunds' performance or
non-performance of any Processing Services hereunder.
Client acknowledges and agrees that the damage and liability
limitations set forth in this Section 14 are reasonable in light
of all present and reasonably foreseeable events and the possible
amount of actual damages to Client. The limitations set forth in
this Section 14 shall not apply to personal injury or tangible
property damage to the extent caused by the gross negligence or
willful misconduct of eFunds, or to eFunds' obligations under
Section 7(b) of this Agreement. The limitations set forth in this
Section 14 will survive termination of this Agreement
notwithstanding Customer election to rescind or otherwise be
discharged from this Agreement.
15. Client's Liability For Third Party Claims. Client agrees to
defend, indemnify and hold eFunds harmless from and against any
claim by a third party for any loss, cost damages, or expenses
(including reasonable attorneys' fees), including but not limited
to lost profits, direct incidental, consequential, special,
indirect or punitive damages arising out of or relating to Client
use of the eFunds Products, Client Customizations, or Source
Code. provided eFunds promptly notifies Client of any such claims
of which eFunds is aware and Client is provided an opportunity to
fully participate in the defense or settlement of any such
claims. Such indemnification by Client shall not apply to
personal injury or property damage to the extent caused by the
gross negligence of eFunds, or to eFunds' obligations with
respect to its warranty against infringement. EFunds may require
Client to provide reasonable and adequate security with respect
to any claim or potential third party claim arising out of or
related to in tiny way any unlawful or allegedly unlawful
transactions undertaken using or relying in any way upon any
eFunds Product .
16. Confidentiality Obligations. Each party agrees that (a)
during the course of its performance of this Agreement it may
learn or be exposed to certain of the other party's Confidential
Information; (b) the Confidential Information of the other shall
remain the property of the other, and that such Confidential
Information is made available on a limited use basis solely in
connection with this Agreement; (c) it will advise its employees
and independent contractors to whom the information is disclosed
of their obligations under this Agreement; (d) it will not sell,
disclose or otherwise make available any such Confidential
Information, in whole or in part, to any third party other than
its independent contractors under appropriate written
confidentiality agreements without the prior written consent of
the other party, or use Confidential Information for any purpose
other than as expressly authorized by this Agreement; and (e) it
will utilize the same degree of care it utilizes for its own
Confidential Information, but in no case less than a reasonable
degree of care, to prevent disclosure of such Confidential
Information to any unauthorized person or entity. Upon
termination of this Agreement all copies of Confidential
Information shall be returned. The restrictions under this
Section shall not apply to information which: (i) is or becomes
publicly known through no wrongful act of the party receiving the
Confidential Information; or (ii) becomes known to a party
without confidential or proprietary restriction from a source
other than the disclosing party-, or (iii) a party can show by
written records was in its possession prior to disclosure by the
other party; or (iv) was independently developed by it without
use of or reference to the Confidential Information of the other
party. In the event a party is legally compelled to disclose
Confidential Information of the other party, it will be entitled
to do so provided it gives the other party prompt notice and
assists the other party, at the other party's expense, in
obtaining a protective order.
17. Escrow. In the event eFunds does not provide Source
Code to Client for any Standard Program or eFunds Customization,
upon Client's request and at Client's expense, eFunds will
deposit with a third party software escrow agent in the United
States such Source Code and related materials sufficient to
enable a reasonably skilled programmer or analyst to maintain and
enhance the Program(s) licensed hereunder ("Escrow Deposit"). The
Escrow Deposit will be made available to Client in accordance
with the terms and conditions of a mutually agreed upon escrow
agreement in the event eFunds or a suitable third party (i) no
longer makes available maintenance support for the Escrow Deposit
and the Escrow Deposit is within one Product Release or Version
of eFunds' currently licensed Standard Program; (ii) has become
insolvent or bankrupt or (iii) fails to remedy a material breach
of its obligations as set forth in this Agreement after proper
notice and reasonable opportunity to cure (no less than thirty
(30) days).
18. Year 2000 Compliance Statement. eFunds will ensure that
eFunds Products are Century Compliant for the year 2000. "Century
Compliant" means that the eFunds Products shall be capable of
accounting for all calculations using a century/date sensitive
algorithm for the 201 and 2 1 st century in performing the
functions described in eFunds' current Documentation, if properly
used within the specified operating environment. The eFunds
Products will recognize the rollover to year 2000 and the fact
that the year 2000 is a leap year. eFunds' sole obligation under
Us provision shall be to correct any material errors or
malfunctions necessary to make the eFunds Products Century
Compliant, at no additional charge to Client. eFunds shall not be
required to render Century Compliant any Client unique software,
custom code, or other product that eFunds has identified as being
non-standard. eFunds shall not be required to provide Century
Compliant support to any customer which is not current in all
payments overall to eFunds. Client is responsible for notifying
its vendors and having its vendors' code modified to eFunds'
format. eFunds shall not be required to provide Century Compliant
modifications for (a) software for which Client rightfully has
source code and which is not under maintenance with eFunds; or
(b) software owned by Client or licensed by Client from a third
party. EFunds shall not be liable for any Century Compliant
failure if such failure was caused by Client or third party
hardware, software, or interfaces to the processing software.
This statement is a reflection of eFunds' intention to provide a
cost free customer service to customers under specified terms and
conditions. This statement is not a representation or warranty by
eFunds with respect to any eFunds Products or other software.
19. General Provisions.
A. Notices. All notices provided for by this Agreement shall
be in writing and shall be by registered or certified mail,
addressed to the President at the address set forth in this
Agreement or in accordance with the last written instructions
received from such party concerning the Person and address for
such notices, and shall be effective upon receipt,
B. Assignment. Neither party shall have the right to assign
this Agreement without the prior written consent of the other,
which consent shall not be unreasonably withheld, except that
eFunds may assign this Agreement to Deluxe Corporation, any of
Deluxe Corporation's majority owned or controlled subsidiaries,
or a successor in interest to eFunds, provided that eFunds gives
Customer written notice of such assignment. The covenants and
conditions contained in this Agreement shall apply to and bind
the successors and permitted assigns of the ponies hereto.
C. Severability. If any provision of the Agreement shall be
held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remainder of this Agreement
shall not in any way be affected.
D. Further Assurances. Each party shall upon request provide
such further assurances and undertake such further acts or things
as may be reasonably necessary or appropriate to effectuate the
terms of this Agreement.
E. Force Majeure. Neither party shall be considered in default
in performance of its obligations should their execution be
delayed by any act or cause which is beyond the reasonable
control and without the fault or negligence of the party claiming
the delay. Notwithstanding the foregoing, if Client is prohibited
from making any payments hereunder by any authority having
jurisdiction, eFunds may terminate this Agreement in its entirety
immediately.
F. Waiver. The failure of either parry to enforce at anytime
any provision of this Agreement or to exercise any right herein
provided, shall not in any way be construed to be a waiver of
such provision or right, and shall not in anyway affect the
validity of this Agreement or any part hereof, or limit, prevent
or impair the right of either party to subsequently enforce any
provision or exercise any right hereunder.
G. Survival. Expiration or termination of this Agreement by
either party shall not relieve either party from any obligation
accrued through the date of termination. In addition, the terms
and conditions set forth in this Agreement which by their nature
and sense continue beyond termination of this Agreement including
by way of illustration only and not limitation, Sections 1, 4, 7,
9, 11, 14, 15, 16, and 18 of this Agreement, shall survive any
termination or expiration of this Agreement.
H. Status. Neither party shall be deemed the agent, partner,
or co-venturer of the other by reason of this Agreement or
Client's use of the eFunds Products, Client Customizations, or
Source Code.
I. Governing Law. This Agreement shall be governed by the Jaws
of the State of Wisconsin, without regard to conflicts of law
provisions.
J. Export Restriction. Regardless of any disclosure made by
Client to eFunds of an ultimate destination of any eFunds
Products, Client Customization or Source Code, Client will not
export and/or re-export, either directly or indirectly, any
eFunds Product, Client Customization, Source Code or any other
technology obtained from eFunds without first obtaining, at the
Client's expense, an export/re-export license from the United
States government, as required. In no event shall Client export
or re-export any of the foregoing to any country, individual,
end-user at end-use prohibited under U.S. Department of Commerce
or U.S. Department of Treasury Regulations. Client expressly
acknowledges and agrees that eFunds' obligations under this
Agreement are dependent and contingent upon eFunds' ability to
obtain any required U.S. export or re-export license or other
authorization.
K. Taxes. Any taxes based upon this Agreement or the services
or products provided, except upon income of eFunds, shall be paid
by Client eFunds shall be entitled to receive 100% of payments
due to it hereunder. In the event any taxing authority withholds
or intercepts any amount due to eFunds; hereunder, Client shall
pay to eFunds on demand the Ml amount of such withholding or
intercepted payment.
L. Construction. Unless explicitly stated otherwise, for any
event which calls for either party to exercise its judgment, give
its consent or perform an obligation, a standard of
reasonableness shall apply. This Agreement shall not be
construed more favorably toward either party regardless of which
party is more responsible for drafting it.
M. Changes. Any modifications or additions to this Agreement,
the eFunds Products, or services requested by Client and agreed
to by eFunds: will be documented in writing signed by both
parties and will be governed by this Agreement unless otherwise
specifically agreed.
N. Payments. Client shall pay eFunds such amounts as are
specified in Exhibit A, as well as such amounts as are
subsequently agreed upon by the parties. Unless specified
otherwise, 4 amounts are due when the service has been completed
or eFunds Product provided. Annual fees will be invoiced and paid
in advance. Amounts outstanding after the due date are subject to
an interest charge to date of payment of the lesser of 18% per
annum or the highest legally allowable rate. eFunds may adjust
its fees annually, effective January 1, upon at least sixty (60)
days written notice; provided no such increase, except with
respect to rates for professional services, shall exceed 10%.
O. Dispute Resolution. The parties shall agree upon a
reasonable dispute resolution process and will endeavor in good
faith to resolve any dispute or controversy arising under this
Agreement in a mutually acceptable manner. Any dispute or matter
arising out of or connected with this Agreement that cannot be
resolved by such process way be referred to Arbitration in
Milwaukee, Wisconsin by either party under the rules and
regulations of the American Arbitration Association ("AAA")
applicable to computer and technology disputes before a single
arbitrator. The said arbitrator shall be appointed by agreement
between the parties or, in default of such agreement, by the AAA,
and the arbitrator's final ruling shall be enforceable in any
court having jurisdiction. Notwithstanding the foregoing, in no
event shall any dispute as to ownership or infringement of
Confidential Information or intellectual property rights-be
subject to this provision.
P. Non-Hire Covenant. Each party covenants with the other that
it shall not hire or solicit, for itself or any other person or
entity, directly or indirectly, any person who was employed or
engaged as a consultant of the other within two (2) years of the
date such person terminates his/her employment or consultant
status with the other patty.
Q. Inspection; Audit. Client shall maintain such books and
records as are necessary to demonstrate Client's compliance with
its obligations under this Agreement and to verify that Client
has paid eFunds all license, maintenance and other service fees
in accordance with this Agreement. eFunds or eFunds' auditors
shall, upon reasonable notice have the right to inspect and audit
those books, records, systems and operations of Client as
necessary for eFunds to ascertain the correctness of fees due and
paid/payable to eFunds hereunder, and for eFunds to ascertain
compliance by Client with its obligations under this Agreement.
If any audit reveals underpayment by Client, Client shall
immediately rectify same, subject to subsection 18 n) above. If
any underpayment is five percent (5%) or greater of amounts due,
Client shall bear eFunds' expenses associated with such audit.
R. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof and supersedes all existing agreements and all
other communications, written or oral. This Agreement way not be
released, discharged or modified in any manner except in writing
signed by both parties. No purchase order or other form of the
Client will modify, supersede, add to or in any way vary the
terms of this Agreement. Any acknowledgment by an employee of
eFunds of such a Client form shall be solely for informational
purposes.
ECONNECT EFUNDS CORPORATION
By: /s/ Thomas S. Hughes By: /s/ John M. Pendergast
Name: Thomas S. Hughes Name: John M. Pendergast
(Please print or type) (Please print or type)
Title: Chairman & CEO Title: Chief Financial Officer
EXHIBIT A
I. STANDARD PROGRAM LICENSE FEES
CONNEX STANDARD PRODUCTS LICENSE FEES
Foundation $200,000
TCP/IP HCH 20,000
VTAM HCH 10,000
Deluxe 8583 ISO PI 50,000
System Health Monitor 50,000
Connex Notification System 50,000
CrossCheck 45,000
FTI 15,000
Settle Daily Prep 25,000
Settle Daily Report 25,000
Fee Billing 20,000
Binload 15,000
Authorization Services N/C
Racal Hardware Security 25,000
License Fee $550,000
SOURCE CODE WILL NOT BE PROVIDED FOR THE FOLLOWING
CXBOMD FOUNDATION MODULES:
CXBPMD01, CXBPMD02, CXDPMD03,
CXBPMD04, CXBPMD05, CXBPMD06,
CXBPMD07, CXBPMD08, CXBPMD09,
CXBPMD10, CXBPMD13
II. Professional Services Package $150,840
Professional Services Included in this Agreement
As defined in the PRA dated February 3, 2000
Final Requirements Definition (FRD)
Non refundable fee $75,420
Development of eFunds Customization(s) per FRD
III. Payment Schedule
A.License Fee $130,000
Due upon signing Agreement, non refundable
Total Present Value of License Fee $525,813
Balance of License fee invoiced in 36 monthly installments of
$14,600 with the first installment to be due and payable upon
execution of Agreement.
Third Party Royalty Fee Monthly Transaction Volume* Fee**
1- 1,000,000
$0.0100
1- 2,000,000
$0.0090
1- 5,000,000
$0.0085
1- 10,000,000
$0.0075
1- 20,000,000
$0.0065
1- 40,000,000
$0.0055
1- 60,000,000
$0.0045
1- 80,000,000
$0.0035
* Drop Through Pricing
** Royalty fees billed monthly in arrears and due net
net thirty (30) days of invoice.
B. Professional Services
50% or $75,420 due upon execution of Agreement. $150,840
balance of $75,420 shall be invoiced in arrears as work is completed
Quotes are subject to change upon completion of Functional
Requirement Definition (FRD).
Quotes based on the PRA dated February 3, 2000 is guaranteed
within twenty percent (20%) assuming the same scope of the final
quote at the completion of the FRD.
In the event quote exceeds twenty percent (20%) ($30,168 US
Dollars) both parties shall have the option to:
Accept the new price
Negotiate a mutually acceptable new price
Terminate the Agreement
IV. Annual Maintenance Fees
Maintenance shall be invoiced and paid annually in the amount of
$93,500
V. MAINTENANCE FEES
Annual maintenance fees for the Standard Programs/modules listed
above shall be 17% of the eFunds Standard Program license fee
(before any applicable discount is applied), invoiced and payable
monthly along with payment for license fees based on monthly
transactions- For any eFunds Customization maintained by eFunds
for Client; the annual maintenance fee for eFunds
Customization(s) shall be 20% of The custornization fees charged
by eFunds to Client, invoiced and payable monthly along with
payment for license fees based on monthly transactions.
Maintenance services and associated annual fees for any Client
Customization must be separately agreed upon in writing by eFunds
and Client
VI. ADDITIONAL PROFESSIONAL SERVICES/MATERIALS:
Professional Services, including but not limited to Requirements
Review, Project Management Customization, Installation, Switch
Preparation and Conversion
Hourly rates:
Testing Analyst $160.00
Analyst $170.00
Consultant $195.00
Senior Consultant $225.00
Principal Consultant QUOTE
Terms:
At eFunds offices, hours billed will be only those actual hours
logged to a Client specific task. At Client designated
facilities, hours billed will be the actual hours logged at the
Client designated facilities, plus travel time with a minimum of
four (4) hours per day. Fees are payable 50% of estimated cost on
order, balance an shipment of code or completion of services.
Materials
All materials are charged at cost, payable when invoiced,
Materials include but are not limited to: travel, lodging, meals,
and shipping. eFunds Products are shipped FOB eFunds, Glendale,
Wisconsin.
EXHIBIT B
ISSUE RESOLUTION SEVERITY GUIDELINES
An incident is assessed a severity level of one (high) to five
(low) depending on the impact it has on Client's business.
Magnitude, frequency, and type of incident are considered in
assigning a severity level. The eFunds' Software Support Center
analyst may feel the incident should have either a higher or
lower severity. It is important that Client and the analyst
mutually agree on the assigned severity so the appropriate
resources can be allocated to investigate and resolve the
incident. However, the final decision on the incident's severity
level is made by eFunds.
In general terms the severity levels art defined as follows:
Severity Level I means that a major system segment is
out-of-service, an essential system function has been lost, the
system is experiencing major operational difficulties, or the
financial (or transaction servicing) integrity of the system is
being seriously compromised. When a Severity Level I incident is
reported, eFunds and Client agree to provide immediate and
continuous attention (meaning 24 X 7 work by both parties) to the
incident until it is resolved or the severity level can be
lowered.
Severity Level 2 means that the system has suffered some
significant (but not essential) functional loss, the system is
experiencing significant operational difficulties, or the system
is experiencing occasional financial (or transaction servicing)
integrity problems. When a Severity Level 2 incident is reported,
eFunds agrees to start work on the incident within one (1)
business day of notification of the incident and complete the
work, or lower the severity level of the incident within seven
(7) business days.
Severity Level 3 means that the system is performing normally,
but a functional or operational problem that requires correction
is being experienced. When a Severity Level 3 incident is
reported, eFunds agrees to start work on the incident within
seven (7) business days of notification of the incident and
complete the work, or lower the severity level of the incident
within thirty (30) business days.
Severity Level 4 means that the system is performing normally,
but a functional or operational irritant or inconvenience is
being experience& When a Severity Level 4 incident is reported,
eFunds agrees to start work on the incident within twenty-one (2
1) days of notification of the incident and complete the work, or
lower the severity level of the incident within ninety (90)
business days.
Severity Level 5 means that the system is performing normally,
but either a cosmetic irritant or inconvenience is being
experienced, or a point of information is to be made. When a
Severity Level 5 incident is reported, eFunds agrees to start
work an the incident within ninety (90) days of notification of
the incident and complete the work within one hundred and eighty
(ISO) days.
EX-10.37
ACQUISITION AGREEMENT
Agreement dated as of February 9, 2000, between eCONNECT, Inc., a
Nevada corporation ("ECNC"), and PowerClick, Inc., a Nevada
corporation ("PCLICK").
The parties agree as follows:
1. The Acquisition
1.1 Tender and Exchange. Subject to the terms and conditions of
this Agreement. At the Closing to be held as provided in Section
2, ECNC shall tender the ECNC Shares (defined below) to PCLICK,
and PCLICK shall receive the ECNC Shares from ECNC, free and
clear of all encumbrances other than restrictions imposed by
Federal and State securities laws.
1.2 Transaction. ECNC will issue 6, 000,000 restricted shares
of its common stock (the "ECNC Shares") for 3,000,000 shares of
capital stock of PCLICK (the "PCLICK Shares"). The ECNC Shares
shall be issued and delivered as set forth in Exhibit "A" hereto.
1.3 Cash Consideration. (See Section 5.21)
1.4 Options. (See Section 5.22)
2. The Closing.
2.1 Place and Time. The closing of the instant transaction (the
"Closing") shall take place at the Offices of ECNC located at
2500 Via Cabrillo Marina, San Pedro, CA no later than the close
of business (Pacific Daylight Time) on February 9, 2000, or at
such other place, date and time as the parties may agree in
writing.
2.2 Deliveries by PCLICK. At the Closing, PCLICK shall deliver
the following to ECNC:
(a) Certificate representing the PCLICK Shares, and deliver to
ECNC at the Closing, a certificate representing the PCLICK Shares
registered in the name of ECNC (without any legend or other
reference to any Encumbrance) other than those required by
federal and or state securities law.
(b) The documents contemplated by Section 3.
(c) All other documents, instruments and writings required by
this Agreement to be delivered by PCLICK AT THE closing and any
other documents or records relating to PCLICK's business
reasonably requested by ECNC in correction with this Agreement.
2.3 Deliveries by ECNC. At the Closing, ECNC shall deliver the
following to PCLICK.
(a) The ECNC Shares as contemplated by Section 1.
(b) The Cash Consideration as contemplated by Section 1.
(c) The Options as contemplated by Section 1 and Section 5.
(d) The documents as contemplated by Section 4.
(e) All other documents, instruments and writings required by
this Agreement to be delivered by ECNC at the Closing.
3. Conditions to ECNC's Obligations.
The obligations of ECNC to effect the Closing shall be subject to
the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by ECNC.
3.1 No Injunction. There shall not be in effect any injunction,
order or decree of a court of competent jurisdiction that
prevents the consummation of the transactions contemplated by
this Agreement, that prohibits ECNC's acquisition of the PCLICK
Shares or the ECNC Shares or that will require any divestiture as
a result of ECNC's acquisition of the PCLICK Shares or that will
require all or any part of the business of ECNC to be held
separate and no litigation or proceedings seeking the issuance of
such an injunction, order or decree or seeking to impose
substantial penalties on ECNC or PCLICK if this Agreement is
consummated shall be pending.
3.2 Representations, Warranties and Agreements. The
representations and warranties of PCLICK set forth in this
Agreement shall be true and complete in all material respects as
of the Closing Date as though made at such time, (b) PCLICK shall
have performed, and complied in all material respects with the
agreements contained in this Agreement required to be performed
and complied with by it at or prior to the Closing and (c) ECNC
shall have received a certificate to that effect signed by an
authorized representative of PCLICK.
3.3 Regulatory Approvals. All licenses, authorizations,
consents, orders and regulatory approvals of Governmental Bodies
necessary for the consummation of ECNC's acquisition of the
PCLICK Shares shall have been obtained and shall be in full force
and effect.
4. Conditions to PCLICK's Obligations.
The obligations of PCLICK to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by PCLICK:
4.1 No Injunction. There shall not be in effect any injunction,
order or decree of a court of competent jurisdiction that
prevents the consummation of the transactions contemplated by
this Agreement, that prohibits ECNC's acquisition of the PCLICK
Shares or PCLICK's receipt of the ECNC Shares or that will
require any divestiture as a result of ECNC's acquisition of the
Shares or PCLICK's acquisition of the ECNC Shares or that will
require all or any part of the business of ECNC or PCLICK to be
held separate and no litigation or proceedings seeking the
issuance of such an injunction, order or decree or seeking to
impose substantial penalties on ECNC or PCLICK if this Agreement
is consummated shall be pending.
4.2 Representations, Warranties and Agreements. The
representations and warranties of ECNC set forth in this
Agreement shall be true and complete in all material respects as
of the Closing Date as though made at such time, (b) ECNC shall
have performed and complied in all material respects with the
agreements contained in the Agreement required to be performed
and complied with by it at or prior to the Closing and (c) PCLICK
shall have received a certificate to that effect signed by an
authorized representative of ECNC.
4.3 Legal Opinion. PCLICK shall have received an opinion from
appropriate counsel to ECNC date the Closing Date, to the effect
that ECNC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada and has
the requisite power and authority to own, lease and operate its
properties and corporate power to carry on its business as now
being conducted; all of the outstanding share of ECNC are duly
and validly issued, fully paid and non-assessable and the
issuance of such shares has complied with the applicable Federal
and State securities laws and the regulations promulgated
thereunder; ECNC is duly qualified and in good standing as a
domestic corporation and is authorized to do business in all
states or other jurisdictions in which such qualification or
authorization is necessary and there has not been any claim by
any other state of jurisdiction to the effect that ECNC is
required to qualify or otherwise be authorized to do business as
a foreign corporation therein; all persons who have executed or
will execute this Agreement on behalf of ECNC or its Shareholders
have been duly authorized to do so; to the best knowledge of such
counsel there is no action, suit or proceeding and no
investigation by any governmental agency pending or threatened
against ECNC or the assets or business of ECNC that could have a
materially adverse effect on the financial condition of ECNC or
PCLICK.
4.4 Regulatory Approvals. All licenses, authorizations,
consents, orders and regulatory approvals of Governmental Bodies
necessary for the consummation of ECNC's acquisition of the
PCLICK Shares and PCLICK's acquisition of the ECNC Shares shall
have been obtained and shall be in full force and effect.
5. Representations and Warranties of PCLICK.
PCLICK represents and warrants to ECNC that, to the knowledge of
PCLICK (which limitation shall not apply to Section 5.3), and
except as set forth in the PCLICK Disclosure Letter:
5.1 Organization of PCLICK; Authorization. PCLICK is a
corporation duly organized, validly existing and in good standing
under the laws of Nevada with full corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary
corporate action of PCLICK and this Agreement constitutes a valid
and binding obligation of PCLICK; enforceable against it in
accordance with its terms.
5.2 Capitalization. The authorized capital stock of PCLICK
consists of 25,000,000 shares of common stock, .001 par value,
and no shares of preferred stock. As of the date hereof
3,000,000 of such common shares of PCLICK were issued and
outstanding. No shares have been registered under state or
federal securities laws. As of the Closing Date, all of the
issued and outstanding shares of common stock of PCLICK are
validly issued, fully paid and non-assessable. Prior to closing
PCLICK shall cause to be issued to ECNC a share certificate in
the amount of 3,000,000 shares of PCLICK common stock. To bring
the total issued and outstanding shares of PCLICK to 6,000,000.
5.3 No Conflict as to PCLICK. Neither the execution and
delivery of this Agreement nor the consummation of the sale of
the PCLICK Shares to ECNC will (a) violate any provision of the
certificate of incorporation or by-laws of PCLICK or (b) violate,
be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under any agreement to which PCLICK is a party or (c) violate
any statute or law or any judgment, decree, order, regulation or
rule of any court or other Governmental Body applicable to
PCLICK.
5.4 Ownership of PCLICK Shares. The delivery of certificates to
ECNC provided in Section 2.2. and the delivery of certificates to
PCLICK as provided in Section 2.3 will result in ECNC's immediate
acquisition of record and beneficial ownership of 3,000,000
PCLICK Shares, free and clear of all Encumbrances subject to
applicable State and Federal securities laws. There are no
outstanding options, rights, conversion rights, agreements or
commitments of any kind relating to the issuance, sale or
transfer of any Equity Securities or other securities of PCLICK.
5.5 No Conflict as to PCLICK and Subsidiaries. Neither the
execution and delivery of this Agreement nor the consummation of
the acquisition of the PCLICK Shares to ECNC will (a) violate any
provision of the certificate of incorporation or by-laws (or
other governing instrument) of PCLICK or any of its Subsidiaries
or (b) violate, or be in conflict with, or constitute a default
(or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or excuse performance by
any Person of its obligations under, or cause the acceleration of
the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any Encumbrance upon any property
or assets of PCLICK or any of its Subsidiaries under, any
material agreement or commitment to which PCLICK or any of its
Subsidiaries is a party or by which any of their respective
property or assets is bound, or to which any of the property or
assets of PCLICK or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order,
regulation or rule of any court or other Governmental Body
applicable to PCLICK or any of its Subsidiaries except, in the
case of violations, conflicts, defaults, terminations,
accelerations or Encumbrances described in clause (b) of this
Section 5.5, for such matters which are not likely to have a
material adverse effect on the business or financial condition of
PCLICK and its Subsidiaries, taken as a whole.
5.6 Consent and Approvals of Governmental Authorities. Except
with respect to applicable State and Federal securities laws, no
consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Body is required to be made
or obtained by PCLICK or ECNC or any of its subsidiaries in
connection with the execution, delivery and performance of this
Agreement by PCLICK or the consummation of the acquisition of the
PCLICK Shares to ECNC.
5.7 Other Consents. No consent of any Person is required to be
obtained by PCLICK or ECNC prior to the execution, delivery and
performance of this Agreement or the consummation of the
acquisition of the PCLICK Shares to ECNC, including, but not
limited to, consents from parties to leases or other agreements
or commitments, except for any consent which the failure to
obtain would not be likely to have a material adverse effect on
the business and financial condition of PCLICK or ECNC.
5.8 Financial Statements. PCLICK has delivered t ECNC
consolidated balance sheets of PCLICK and its Subsidiaries as at
September 30, 1999, and statements of income and changes in
financial position for the period then ended. Such PCLICK
financial Statements and notes fairly present the consolidated
financial condition and results of operations of PCLICK and its
subsidiaries as at the respective dates thereof and for the
periods therein.
5.9 Title to Properties. Either PCLICK or one of its
Subsidiaries owns all the material properties and assets that
they purport to own (real, personal and mixed, tangible and
intangible), including, without limitation, all the material
properties and assets reflected in the PCLICK financial
Statements (except for property sold since the date of the PCLICK
Financial Statements in the ordinary course of business or leased
under capitalized leases.), and all the material properties and
assets purchased or otherwise acquired by PCLICK or any of its
Subsidiaries since the date of the PCLICK Financial Statements.
All properties and assets reflected in the PCLICK Financial
Statements are free and clear of all material Encumbrances and
are not, in the case of real property, subject to any material
rights of way, building use restrictions, exceptions, variances,
reservations or limitations of any nature whatsoever except, with
respect to all such properties and assets, (a) mortgages or
security interests shown on the PCLICK Financial statements as
securing specified liabilities or obligations, with respect to
which no default (or event which, with notice or lapse of time or
both, would constitute a default) exists, and al of which are
listed in the PCLICK Disclosure Letter, (b) mortgages or security
interests incurred in connection with the purchase of property or
assets after the date of the PCLICK Financial Statements (such
mortgages and security interests being limited t the property or
assets so acquired), with respect to which no default (or event
which, with notice or lapse of time or both, would constitute a
default) exists, (c) as to real property, (i) imperfections of
title, if any, none of which materially detracts from the value
or impairs the use of the property subject thereto, or impairs
the operations of PCLICK or any of its Subsidiaries and (ii)
zoning laws that do not impair the present or anticipated use of
the property subject thereto, and (d) liens for current taxes not
yet due. The properties and assets of PCLICK AND ITS
subsidiaries include all rights, properties and other assets
necessary to permit PCLICK and its Subsidiaries to conduct
PCLICK's business in all material respects in the same manner as
it is conducted on the date of this Agreement.
5.10 Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other personal
property owned or leased by PCLICK or its Subsidiaries are, in
all respects material to the business or financial condition of
PCLICK and its Subsidiaries, taken as a whole, in good operating
condition and repair (ordinary wear and tear excepted) and are
adequate in all such respects for the purposes for which they are
being used. PCLICK has not received notification that it or any
of its Subsidiaries is in violation of any applicable building,
zoning, anti-pollution, health, safety or other law, ordinance or
regulation in respect of its buildings, plants or structures or
their operations, which violation is likely to have a material
adverse effect on the business or financial condition of PCLICK
and its Subsidiaries, taken as a whole or which would require a
payment by PCLICK or ECNC or any of their subsidiaries in excess
of $2,000 in the aggregate, and which has not been cured.
5.11 No condemnation or Expropriation. Neither the whole nor any
portion of the property or leaseholds owned or held by PCLICK or
any of its subsidiaries is subject to any governmental decree or
order to be sold or is being condemned, expropriated or otherwise
taken by any Governmental Body or other Person with r without
payment of compensation therefore, which action is likely to have
a material adverse effect on the business or financial condition
of ECNC and its Subsidiaries, taken as a whole.
5.12 Litigation There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending
or threatened in writing against or involving PCLICK or any of
its Subsidiaries which is likely to have a material adverse
effect on the business or financial condition of PCLICK, ECNC and
any of their Subsidiaries, taken as whole, or which would require
a payment by PCLICK or its subsidiaries in excess of $2,000 in
the aggregate or which questions or challenges the validity of
this Agreement. Neither PCLICK nor any of its Subsidiaries is
subject to any judgment, order or decree that is likely to have a
material adverse effect on the business or financial condition of
PCLICK, ECNC or any of their Subsidiaries, taken as a whole, or
which would require a payment by PCLICK or its subsidiaries in
excess of $2,000 in the aggregate.
5.13 Absence of Certain Changes. Except as set forth in Section
5.13 of the PCLICK Disclosure Letter, since the date of the
PCLICK Financial Statements, neither PCLICK nor any of its
Subsidiaries has:
(a) suffered the damage or destruction of any of its properties
or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of
PCLICK and its Subsidiaries, taken as a whole, or made any
disposition of any of its material properties or assets other
than in the ordinary course of business;
(b) made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
(c) issued or sold any equity Securities or other securities,
acquired, directly or indirectly, by redemption or otherwise, any
such Equity Securities, reclassified, split-up or otherwise
changed any such Equity Security, or granted or entered into any
options, warrants, calls or commitments of any kind with respect
thereto;
(d) organized any new Subsidiary or acquired any Equity
Securities of any Person, or any equity or ownership interest in
any business;
(e) borrowed any funds or incurred, or assumed or become subject
to, whether directly or by way of guarantee or otherwise, any
obligation or liability with respect to any such indebtedness for
borrowed money;
(f) paid, discharged or satisfied any material claim, liability
or obligation (absolute, accrued, contingent or otherwise), other
than in the ordinary course of business;
(g) prepaid any material obligation having a maturity of more
than 90 days from the date such obligation was issued or
incurred;
(h) canceled any material debts or waived any material claims or
rights, except in the ordinary course of business;
(i) disposed of or permitted to lapse any rights to the use of
any material patent or registered trademark or copyright or other
intellectual property owned or used by it;
(j) granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any
employee benefit plan);
(k) purchased or entered into any contract or commitment to
purchase any material quantity of raw materials or supplies, or
sold or entered into any contract or commitment to sell any
material quantity of property or assets, except (i) normal
contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary
course of business, (ii) normal contracts or commitments for the
sale of, and normal sales of, inventory in the ordinary course of
business, and (iii) other contracts, commitments, purchases or
sales in the ordinary course of business;
(l) made any capital expenditures or additions to property,
plant or equipment or acquired any other property or assets
(other than raw materials and supplies) at a cost in excess of
$25,000 in the aggregate;
(m) written off or been required to write off any notes or
accounts receivable in an aggregate amount in excess of $2,000;
(n) written down or been required to write down any inventory in
an aggregate amount in excess of $2,000;
(o) entered into any collective bargaining or union contract or
agreement; or
(p) other than the ordinary course of business, incurred any
liability required by generally accepted accounting principles to
be reflected on a balance sheet and material to the business or
financial condition of PCLICK and its subsidiaries taken as a
whole.
5.14 No Material Adverse Change. Since the date of PCLICK
Financial Statements, there has not been any material adverse
change in the business or financial condition of PCLICK.
5.15 Contracts and Commitments. Except as set forth in Section
5.15 of the PCLICK Disclosure Letter, neither PCLICK nor any of
its Subsidiaries is a party to any:
(a) Contract or agreement (other than purchase or sales orders
entered into in the ordinary course of business) involving any
liability on the part of PCLICK or one of its Subsidiaries of
more than $25,000 and not cancelable by PCLICK or the relevant
Subsidiary (without liability to PCLICK or such Subsidiary)
within 60 days;
(b) Except with respect to the lease on its business location,
lease of personal property involving annual rental payments in
excess of $25,000 and not cancelable by PCLICK or the relevant
Subsidiary (without liability to PCLICK or such Subsidiary)
within 90 days;
(c) Except with respect to the options referenced above,
Employee bonus, stock option or stock purchase, performance
unity, profit sharing, pension, savings, retirement, health,
deferred or incentive compensation, insurance or other material
employee benefit plan (as defined in Section 2(3) of ERISA) or
program for any of the employees, former employees or retired
employees of PCLICK or any of its Subsidiaries;
(d) Commitment, contract or agreement that is currently expected
by the management of PCLICK to result in any material loss upon
completion or performance thereof;
(e) Contract, agreement or commitment that is material to the
business of PCLICK and its Subsidiaries, taken as a whole, with
any officer, employee, agent, consultant, advisor, salesman,
sales representative, value added reseller, distributor or
dealer; or
(f) Employment agreement or other similar agreement that
contains any severance or termination pay, liabilities or
obligations.
All such contracts and agreements are in full force and effect.
Neither PCLICK nor any of its Subsidiaries is in breach of, in
violation of or in default under, any agreement, instrument,
indenture, deed of trust, commitment, contract or other
obligation of any type to which PCLICK or any of its Subsidiaries
is a party or is or may be bound that relates to the business of
PCLICK or any of its Subsidiaries or to which any of the assets
or properties of PCLICK or any of its Subsidiaries is subject,
the effect of which breach, violation or default is likely to
materially and adversely affect the business or financial
condition of PCLICK and its Subsidiaries, taken as a whole. ECNC
has not guaranteed or assumed and specifically does not guarantee
or assume any obligations of PCLICK or any of its Subsidiaries.
5.16 Labor Relations. Neither PCLICK nor any of its Subsidiaries
is a party to any collective bargaining agreement. Except for
any matter which is not likely to have a material adverse effect
on the business or financial condition of PCLICK and its
Subsidiaries, taken as a whole, (a) PCLICK and each of its
Subsidiaries is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair
labor practice, (b) there is no unfair labor practice complaint
against PCLICK or any of its Subsidiaries pending before the
national Labor Relations Board, (c) there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened
against PCLICK or any of its Subsidiaries, (d) no representation
question exists respecting the employees of PCLICK or any of its
Subsidiaries, (e) neither PCLICK nor any of its Subsidiaries has
experienced any strike, work stoppage or other labor difficulty,
and (f) no collective bargaining agreement relating to employees
of PCLICK or any of its Subsidiaries is currently being
negotiated.
5.17 Employee Benefit Plans. Section 5.16 of the PCLICK
Disclosure Letter contains a list of all material employee
pension and welfare benefit plans covering employees of PCLICK
and its Subsidiaries. No listed plan is (1) a multi-employer
plan as defined in Section 3(37) of ERISA, or (2) a defined
benefit plan as defined in Section 3(35) of ERISA, any listed
individual account pension plan is duly qualified as tax exempt
under the applicable sections of the Code, each listed benefit
plan and related funding arrangement, if any, has been maintained
in all material respects in compliance with its terms and the
provisions of ERISA and the Code, and the PCLICK Disclosure
Letter also lists all material management incentive plans and all
material employment contracts or severance arrangements
pertaining to one or more specific employees.
5.18 Compliance with Law. The operations of PCLICK and its
Subsidiaries have been conducted in accordance with all
applicable laws and regulations of all Governmental Bodies having
jurisdiction over them, except for violations thereof which are
not likely to have a material adverse effect on the business or
financial condition of PCLICK and its Subsidiaries, taken as a
whole, or which would not require a payment by PCLICK or its
Subsidiaries in excess of $2,000 in the aggregate, or which have
been cured. Neither PCLICK nor any of its Subsidiaries has
received any notification of any asserted present or past failure
by it to comply with any such applicable laws or regulations.
PCLICK and its Subsidiaries have all material licenses, permits,
orders or approvals from the Governmental Bodies required for the
conduct of their businesses, and are not in material violation of
any such licenses, permits, orders and approvals. All such
licenses, permits, orders and approvals are in full force and
effect, and no suspension or cancellation of any thereof has been
threatened.
5.19 Tax Matters.
(a) PCLICK and each of its Subsidiaries (1) (except with respect
to its 1999 tax return, as to which an extension has been or may
be appropriately filed) has filed all nonconsolidated and
noncombined Tax Returns and all consolidated or combined Tax
Returns that include only PCLICK and/or its Subsidiaries and not
Seller or its other Affiliates (for the purposes of this Section
5.18, such Tax Returns shall be considered nonconsolidated and
non combined Tax Returns) required to be filed trough the date
hereof and has paid any Tax due through the date hereof with
respect to the time periods covered by such nonconsolidated and
noncombined Tax Returns and shall timely pay any such Taxes
required to be paid by it after the date hereof with respect to
such Tax Returns and (2) shall prepare and timely file all such
nonconsolidated and noncombined Tax Returns required to be filed
after the date hereof and through the Closing Date and pay all
Taxes required to be paid by it with respect to the periods
covered by such Tax Returns; (B) all such Tax Returns filed
pursuant to clause (A) after the date hereof shall, in each case,
be prepared and filed in a manner consistent in all material-
respects (including elections and accounting methods and
conventions) with such Tax Return most recently filed in the
relevant jurisdiction prior to the date hereof, except as
otherwise required by law or regulation. Any such Tax Return
filed or required to be filed after the date hereof shall not
reflect any new elections or the adoption of any new accounting
methods or conventions or other similar items, except to the
extent such particular reflection or adoption is required to
comply with any law or regulation.
(b) All consolidated or combined Tax Returns (except those
described in subparagraph (a) above) required to be filed by any
person through the date hereof that are required or permitted to
include the income, or reflect the activities, operations and
transactions, of PCLICK or any of its Subsidiaries for any
taxable period have been timely filed, and the income,
activities, operations and transactions of PCLICK and
Subsidiaries have been properly included and reflected thereon.
PCLICK shall prepare and file, or cause to be prepared and filed,
all such consolidated or combined Tax Returns that are required
or permitted to include the income, or reflect the activities,
operations and transactions, of PCLICK or any Subsidiary, with
respect to any taxable year or the portion thereof ending on or
prior to the closing Date, including, without limitation,
PCLICK's consolidated federal income tax return for such taxable
years. PCLICK will timely file a consolidated federal income tax
return for the taxable year ended December 31, 1999 and such
return shall include and reflect the income, activities,
operations and transactions of PCLICK and Subsidiaries for the
taxable period then ended, and hereby expressly covenants and
agrees to file a consolidated federal income tax return, and to
include and reflect thereon the income, activities, operations
and transactions of PCLICK and Subsidiaries for the taxable
period through the Closing Date. All Tax Returns filed pursuant
to this subparagraph (b) after the date hereof shall, in each
case, to the extent that such Tax Returns specifically relate to
PCLICK or any of its Subsidiaries and do not generally relate to
matters affecting other members of PCLICK's consolidated group,
be prepared and filed in a manner consistent in all material
respects (including elections and accounting methods and
conventions) with the Tax Return most recently filed in the
relevant jurisdictions prior to the date hereof, except as
otherwise required by law or regulation. PCLICK has paid or will
pay all Taxes that may now or hereafter be due with respect to
the taxable periods covered by such consolidated or combined Tax
Returns.
(c) Neither PCLICK nor any of its subsidiaries has agreed, or is
required, to make any adjustment (x) under Section 481(a) of the
Code by reason, of a change in accounting method or otherwise or
(y) pursuant to any provision of the Tax Reform Act of 1986, the
Revenue Act of 1987 or the Technical and Miscellaneous Revenue
Act of 1988.
(d) Neither PCLICK nor any of its Subsidiaries or any
predecessor or Affiliate of the foregoing has, at any time, filed
a consent under Section 341 (f)(1) of the Code, or agreed under
Section 341 (f)(3) of the Code, to have the provisions of Section
341 (f) (2) of the Code apply to any sale of its stock.
(e) There is no (nor has there been any request for an)
agreement, waiver or consent providing for an extension of time
with respect to the assessment of any Taxes attributable to
PCLICK or its Subsidiaries, or their assets or operations and no
power of attorney granted by PCLICK or any of its Subsidiaries
with respect to any Tax matter is currently in force.
(f) There is no action, suit, proceeding, investigation, audit,
claim, demand, deficiency or additional assessment in PCLICK,
pending or threatened against or respect to any Tax attributable
to PCLICK, with its Subsidiaries or their assets or operations.
(g) Except as set forth in the PCLICK Disclosure Letter, all
amount required to be withheld as of the Closing Date for Taxes
or otherwise have been withheld and paid when due to the
appropriate agency or authority.
(h) No property of PCLICK is "tax-exempt use property" within
the meaning of Section 168 (h) of the Code nor property that
PCLICK and/or its Subsidiaries will be required to treat as being
owned by another person pursuant to Section 168 (f) (8) of the
Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986.
(i) There have been delivered or made available to ECNC true and
complete copies of all income Tax Returns (or with respect to
consolidated or combined returns, the portion thereof) and any
other Tax Returns requested by ECNC Aas may be relevant to
PCLICK, its Subsidiaries, or their assets or operations for any
and all periods ending after December 31, 1998, or for any Tax
years which are subject to audit or investigation by any taxing
authority or entity.
There is no contract, agreement, plan or arrangement including
but not limited to the provisions of this Agreement, covering any
employee or former employee of PCLICK or its Subsidiaries that,
individually or collectively, could give rise to the payment of
any amount that would not be ductile pursuant to Section 280G or
162 of the Code.
5.20 Environmental Matters.
(a) At all times prior to the date hereof, PCLICK and its
Subsidiaries have complied in all material respects with
applicable environmental laws, orders, regulations, rules and
ordinances relating to the Properties (as hereinafter defined),
the violation of which would have a material adverse effect on
the business or financial condition of PCLICK and its
Subsidiaries, taken as a whole, or which would require a payment
by PCLICK or its Subsidiaries in excess of $2,000 in the
aggregate, and which have been duly adopted, imposed or
promulgated by any legislative, executive, administrative or
judicial body or officer of any Governmental Body.
(b) The environmental licenses, permits and authorizations that
are material to the operations of PCLICK and its Subsidiaries,
taken as a whole, are in full force and effect.
(c) Neither PCLICK nor any of its Subsidiaries has released or
caused to be released on or about the properties currently owned
or leased by PCLICK or any of its Subsidiaries (the "Properties)
any (i) pollutants, (ii) contaminants, (iii) "Hazardous
Substances," as that term is defined in Section 101(14) of the
Comprehensive Environmental Response Act, as amended or (iv)
"Regulated Act, 42 U.S.C. Section 6901, et seq., as amended,
which would be required to be remidiated by any governmental
agency with jurisdiction over the Properties under the authority
of laws, regulations and ordinances as in effect and currently
interpreted on the date hereof, which remediation would have a
material adverse effect on the business or financial condition of
PCLICK and its Subsidiaries, taken as a whole.
5.21 Funding. The present directors of PCLICK agree to remain in
a consulting capacity to ECNC for a period of twelve (12) months
following the Closing. In consideration of this Agreement,
PCLICK shall receive the sum of One Million, Two Hundred Dollars
($1,200,000). Of this amount, One Hundred, Fifty Thousand
Dollars ($150,000) shall be released to PCLICK immediately upon
the Closing. Additional payments in the amounts of One Hundred
Fifty Thousand Dollars ($150,000) each shall be made to PCLICK on
February 17, 2000, March 15, 2000, April 15, 2000, May 15, 2000,
June 15, 2000, July 15, 2000 and August 15, 2000. All of the
aforementioned proceeds shall be used by PCLICK as and for
operations of PCLICK.
5.22 Options. ECNC shall also deposit with the Escrow Agent the
following Options, all of which shall be exercisable at a price
of $0.40 per share, and for which the holder shall receive fully
registered shares of ECNC common stock. The exercisable
denomination is subject to the bid price of ECNC not falling
below a Dollar ($1.00) for a period of Seven (7) consecutive days
during the option period. In the event that the bid price of
ECNC falls below One Dollar ($1.00) for Seven (7) consecutive
days, the option holders listed below shall be granted Twenty
percent (20%) increase in the number of options granted to each
individual. The option price shall remain $.040 per share.
5.22.1 For Dominique Einhorn:
5.22.1.1 For 500,000 shares, exercisable immediately
5.22.1.2 For 1,500,000 shares exercisable no sooner than April
1, 2000 but not later than April 30, 2000
5.22.2 For E. James Wexler:
5.22.2.1 For 500,000 shares, exercisable immediately
5.22.2.2 For 1,500,000 shares exercisable no sooner than April
1, 2000 but not later than April 30, 2000
5.22.3 For Bill Lane:
5.22.3.1 For 500,000 shares, exercisable immediately
5.22.3.2 For 500,000 shares exercisable no sooner than April 1,
2000 but not later than April 30, 2000
5.22.4 For Earl Gilbrech:
5.22.4.1 For 500,000 shares, exercisable immediately
5.22.4.2 For 500,000 shares, exercisable no sooner than April 1,
2000 but not later than April 30, 2000
5.22.5 ECNC shall also include in ECNC's next registration
statement the shares currently owned by Einhorn in the
denomination of 1,000,000 shares and Wexler in the denomination
of 2,000,000 shares. The aforementioned shares were previously
purchased by Einhorn and Wexler respectively.
5.23 Absence of Certain Commercial Practices. Neither PCLICK nor
any of its Subsidiaries has, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of
property, however characterized, to any finder, agent, government
official or other party, in the United States or any other
country, which is in any manner related to the business or
operations of PCLICK or its Subsidiaries, which PCLICK or one of
its Subsidiaries knows or has reason to believe to have been
illegal under any federal, state or local laws of the United
States or any other country having jurisdiction; and neither
PCLICK nor any of its Subsidiaries has participated directly or
indirectly, in any boycotts or other similar practices affecting
any of its actual or potential shareholders in violation of any
applicable law or regulation.
5.24 Transactions with Directors and Officers. Except as set
forth in Section 5.23 of the PCLICK Disclosure Letter, PCLICK and
its Subsidiaries do not engage in business with any Person in
which any of PCLICK's directors or officers has a material equity
interest. No director or officer of PCLICK owns any property,
asset or right, which is material to the business of PCLICK and
its Subsidiaries, taken as a whole.
5.25 Borrowing and Guarantees. Except as set forth in Section
5.24 of the PCLICK Disclosure Letter, PCLICK and its Subsidiaries
(a) do not have any indebtedness for borrowed money, (b) are not
lending or committed to lend any money (except for advances to
employees in the ordinary course of business), and (c) are not
guarantors or sureties with respect to the obligations of any
Person.
6. Representations and Warranties of ECNC
ECNC represents and warrants to PCLICK that, to the Knowledge of
ECNC (which limitation shall not apply to Section 6.3), and
except as set forth in the ECNC Disclosure Letter:
6.1 Organization of PCLICK; Authorization. ECNC is a
corporation duly organized, validly existing and in good standing
under the laws of Nevada with full corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary
corporate action of ECNC and this Agreement constitutes a valid
and binding obligation of ECNC, enforceable against it in
accordance with its terms.
6.2 Deleted.
6.3 No Conflict as to PCLICK. Neither the execution and
delivery of this Agreement nor the consummation of the sale of
the ECNC Shares to PCLICK will (a) violate any provision of the
certificate of incorporation or by-laws of ECNC, or (b) violate,
be in conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under any agreement to which ECNC is a party or (c) violate any
statute or law or any judgment, decree, order, regulation or rule
of any court or other Governmental Body applicable to ECNC.
6.4 Ownership of ECNC Shares. The delivery of certificates to
PCLICK provided in Section 2.3 will result in PCLICK's immediate
acquisition of record and beneficial ownership of the ECNC
Shares, free and clear of all Encumbrances other than as required
by Federal and State securities laws. There are no outstanding
options, rights, conversion rights, agreements or commitments of
any kind relating to the issuance, sale or transfer of any Equity
Securities or other securities of ECNC. Nothing in this
Agreement shall be deemed to be a representation or warranty as
to the tradability of any of the ECNC Shares under Federal or any
States' security laws.
6.5 No conflict as to ECNC and Subsidiaries. Neither the
execution and delivery of this Agreement nor the consummation of
the instant Agreement will (a) violate any provision of the
certificate of incorporation or by-laws (or other governing
instrument) of ECNC or any of its Subsidiaries or (b) violate, or
be in conflict with, or constitute a default (or an event, which
with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of
any of its obligations under, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the
creation or imposition of any Encumbrance upon any property or
assets of ECNC or any of its Subsidiaries under, any material
agreement or commitment to which ECNC or any of its Subsidiaries
is a party or by which any of their respective property or assets
is any statute or law or any judgment , decree, order, regulation
or rule of any court or other Governmental Body applicable to
ECNC or any of its Subsidiaries except, in the case of
violations, conflicts, defaults, termination's, accelerations or
Encumbrances described in clause (b) of this Section 6.5, for
such matters which are not likely to have a material adverse
effect on the business or financial condition of ECNC and its
Subsidiaries, taken as a whole.
6.6 Consents and Approvals of Governmental Authorities. No
consent, approval or authorization of, or declaration, filing or
registration with, any governmental Body is required to be made
or obtained by ECNC or PCLICK or any of either of their
Subsidiaries in connection with the execution, delivery and
performance of this Agreement by ECNC or the consummation of the
contemplated transaction.
6.7 Other Consents. No consent of any Person is required to be
obtained by PCLICK or ECNC to the execution, delivery and
performance of this Agreement or the consummation of the
contemplated transaction including, but not limited to, consents
from parties to leases or other agreements or commitments, except
for any consent which the failure to obtain would not be likely
to have a material adverse effect on the business and financial
condition of PCLICK or ECNC.
6.8 Deleted.
6.9 Title to Properties. Either ECNC or one of its Subsidiaries
owns all the material properties and assets that they purport to
own (real, personal and mixed, tangible and intangible),
including, without limitation, all the material properties and
assets reflected in the ECNC Financial Statements and all the
material properties and assets purchased or otherwise acquired by
ECNC or any of its Subsidiaries since the date of the ECNC
Financial Statements. All properties and assets reflected in the
ECNC Financial Statements are free and clear of all material
Encumbrances and are not, in the case of real property, subject
to any material rights of way, building use restrictions,
exceptions, variances, reservations or limitations of any nature
whatsoever except, with respect to all such properties and
assets, (a) mortgages or security interests shown on the ECNC
Financial Statements as securing specified liabilities or
obligations, with respect to which no default (or event which,
with notice or lapse of time or both, would constitute a default)
exists, and all of which are listed in the ECNC Disclosure
Letter, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date
of the ECNC Financial Statements (such mortgages and security
interests being limited to the property or assets so acquired),
with respect to which no default (or event which, with notice or
lapse of time or both, would constitute a default) exists, (c) as
to real property, (i) imperfections of title, if any, none of
which materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of ECNC
or any of its Subsidiaries and (ii) zoning laws that do not
impair the present or anticipated use of the property subject
thereto, and (d) liens for current taxes not yet due. The
properties and assets of ECNC and its Subsidiaries include all
rights, properties and other assets necessary to permit ECNC and
its Subsidiaries to conduct ECNC's business in all material
respects in the same manner as it is conducted on the date of
this Agreement.
6.10 Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other personal
property owned or leased by ECNC or its Subsidiaries are, in all
respects material to the business or financial condition of ECNC
and its Subsidiaries, taken as a whole, in good operating
condition and repair (ordinary wear and tear excepted) and are
adequate in all such respects for the purposes for which they are
being used. ECNC has not received notification that it or any of
its Subsidiaries is in violation of any applicable building,
zoning, anti-pollution, health, safety or other law, ordinance or
regulation in respect of its buildings, plants or structures or
their operations, which violation is likely to have a material
adverse effect on the business or financial condition of ECNC and
its Subsidiaries, taken as a whole or which would require a
payment by PCLICK or ECNC or any of their subsidiaries in excess
of $2,000 in the aggregate, an which has not been cured.
6.11 No Condemnation or Expropriation. Neither the whole nor any
portion of the property or leaseholds owned or held by ECNC or
any of its Subsidiaries is subject to any governmental decree or
order to be sold or is being condemned, expropriated or otherwise
taken by any Governmental Body or other Person with or without
payment of compensation therefore, which action is likely to have
a material adverse effect on the business or financial condition
of PCLICK and its Subsidiaries, taken as a whole.
6.12 Litigation. There is no action, suit, inquiry, proceeding
or investigation by or before any court or Governmental Body
pending or threatened in writing against or involving ECNC or any
of its Subsidiaries which is likely to have a material adverse
effect on the business or financial condition of PCLICK, ECNC and
any of their Subsidiaries, taken as whole, or which would require
a payment by ECNC or its subsidiaries in excess of $2,000 in the
aggregate or which questions or challenges the validity of this
Agreement. Neither ECNC nor any of its Subsidiaries is subject
to any judgment, order or decree that is likely to have a
material adverse effect on the business or financial condition of
PCLICK, ECNC or any of their Subsidiaries, taken as a whole, or
which would require a payment by ECNC or its subsidiaries in
excess of $2,000 in the aggregate.
6.13 Absence of Certain Changes. Since the date of the ECNC
Financial Statements, neither ECNC nor any of its Subsidiaries
has:
(a) suffered the damage or destruction of any of its properties
or assets (whether or not covered by insurance) which is
materially adverse to the business or financial condition of ECNC
and its Subsidiaries, taken as a whole, or made any disposition
of any of its material properties or assets other than in the
ordinary course of business;
(b) made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments;
(c) deleted.
(d) deleted
(e) borrowed any funds or incurred, or assumed or become subject
to, whether directly or by way of guarantee or otherwise, any
obligation or liability with respect to any such indebtedness for
borrowed money;
(f) paid, discharged or satisfied any material claim, liability
or obligation (absolute, accrued, contingent or otherwise), other
than in the ordinary course of business;
(g) prepaid any material obligation having a maturity of more
than 90 days from the date such obligation was issued or
incurred;
(h) canceled any material debts or waived any material claims or
rights, except in the ordinary course of business;
(i) disposed of or permitted to lapse any rights to the use of
any material patent or registered trademark or copyright or other
intellectual property owned or used by it;
(j) granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any
employee benefit plan);
(k) purchased or entered into any contract or commitment to
purchase any material quantity of raw materials or supplies, or
sold or entered into any contract or commitment to sell any
material quantity of property or assets, except (i) normal
contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary
course business, (ii) normal contracts or commitments for the
sale of, and normal sales of, inventory in the ordinary course of
business, and (iii) other contracts, commitments, purchases or
sales in the ordinary course of business;
(l) made any capital expenditures or additions to property,
plant or equipment or acquired any other property or assets
(other than raw materials and supplies) at a cost in excess of
$2,000 in the aggregate;
(m) written off or been required to write off any notes or
accounts receivable in an aggregate amount in excess of $2,000;
(n) written down or been required to write down any inventory in
an aggregate amount in excess of $2,000;
(o) entered into any collective bargaining or union contract or
agreement; or
(p) other than the ordinary course of business, incurred any
liability required by generally accepted accounting principles to
be reflected on a balance sheet and material to the business or
financial condition of ECNC and its subsidiaries taken as a
whole.
6.14 No Material Adverse Change. Since the date of the ECNC
Financial Statements, there has not been any material adverse
change in the business or financial condition of ECNC and its
Subsidiaries taken, as a whole, other than changes resulting from
economic conditions prevailing in the United States precious
coins, collectibles and metals industry.
6.15 Contracts and Commitments. Neither ECNC nor any of its
Subsidiaries is party to any:
(a) contract or agreement (other than purchase on sales orders
entered into the ordinary course of business) involving any
liability on the part of ECNC or one of its Subsidiaries of more
than $2,000 and not cancelable by ECNC or the relevant Subsidiary
(without liability to ECNC or such Subsidiary) within 60 days;
(b) lease of personal property involving annual rental payments
in excess of $2,000 and not cancelable y ECNC or the relevant
Subsidiary (without liability to ECNC or such Subsidiary) within
90 days;
(c) employee bonus, stock option or stock purchase, performance
unit, profit-sharing, pension, savings, retirement, health,
deferred or incentive compensation, insurance or other material
employee benefit plan as defined in Section 2(3) of ERISA) or
program for any of the employees, former employees or retired
employees of ECNC or any of its Subsidiaries;
(d) commitment, contract or agreement that is currently expected
by the management of ECNC to result in any material loss upon
completion or performance thereof;
(e) contract, agreement or commitment that is material to the
business of ECNC and its Subsidiaries, taken as a whole, with any
officer, employee, agent, consultant, advisor, salesman, sales
representative, value added resell, distributor or dealer; or
(f) employment agreement or other similar agreement that
contains any severance or termination, pay, liabilities or
obligations.
(g) all such contracts and agreements are in full force and
effect. Neither ECNC nor any of its Subsidiaries is in breach
of, in violation of or in default under, any agreement,
instrument, indenture, deed of trust, commitment, contract or
other obligation of any type to which ECNC or any of its
Subsidiaries is a party or is or may be bound as it relates to
the business of ECNC or any of its Subsidiaries or to which any
of the assets or properties of ECNC or any of its Subsidiaries is
subject, the effect of which breach, violation or default is
likely to materially and adversely affect the business or
financial condition of ECNC and its Subsidiaries, taken as a
whole.
6.16 Labor Relations. Neither ECNC nor any of its Subsidiaries
is a party to any collective bargaining agreement. Except for
any matter which is not likely to have a material adverse effect
on the business or financial condition of ECNC and its
Subsidiaries, taken as a whole, (a) ECNC and each of its
Subsidiaries is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair
labor practice, (b) there is no unfair labor practice complaint
against ECNC or any of its Subsidiaries pending before the
National Labor Regulations Board, (c) there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened
against ECNC or any of its Subsidiaries, (d) no representations
questions exists respecting the employees of ECNC or any of its
Subsidiaries, (e) neither ECNC nor any of its Subsidiaries has
experienced any strike, work stoppage or other labor difficulty,
and (f) no collective bargaining agreement relating to employees
of ECNC or any of its Subsidiaries is currently being negotiated.
6.17 Employee Benefit Plans. Section 6.17 of the ECNC Disclosure
Letter contains a list of all material employee pension and
welfare benefit plans covering employees of ECNC and its
Subsidiaries. No listed plan is (1) a multi-employer plan as
defined in Section 3(37) of ERISA, or (2) a defined benefit plan
as defined in Section 3(35) of ERISA, any listed individual
account pension plan is duly qualified as tax exempt under the
applicable sections of the Code, each listed benefit plan and
related funding arrangement, if any, has been maintained in all
material respects in compliance with its terms and the provisions
of ERISA and the Code, and the ECNC Disclosure Letter also lists
all material management incentive plans and all material
employment contracts or severance arrangements pertaining to one
or more specific employees.
6.18 Compliance with Law. The operations of ECNC and its
Subsidiaries have been conducted in accordance with all
applicable laws and regulations of all Governmental Bodies having
jurisdiction over them, except for violations thereof which are
not likely to have a material adverse effect on the business or
financial condition of ECNC and its Subsidiaries, taken as a
whole, or which would not require a payment by ECNC or its
Subsidiaries in excess of $2,000 in the aggregate, or which have
been cured. Neither ECNC nor any of its Subsidiaries has
received any notification of any asserted present or past failure
by it to comply with any such applicable laws or regulations.
ECNC and its Subsidiaries have all material licenses, permits,
orders or approvals from the Governmental Bodies required for the
conduct of their businesses, and are not in material violation of
any such licenses, permits, orders and approvals. All such
licenses, permits, orders and approvals are in full force and
effect, and no suspension or cancellation of any thereof has been
threatened.
6.19 Tax Matters.
(a) ECNC and ach of its Subsidiaries (1) has filed all
nonconsolidated and noncombined Tax Returns and all consolidated
or combined Tax Returns that include only ECNC and/or its
Subsidiaries and not Seller or its other Affiliates (for the
purposes of this Section 6.18, such tax returns shall be
considered nonconsolidated and noncombined Tax Returns) required
to be filed through the date hereof and has paid any Tax due
through the date hereof with respect to the time periods covered
by such nonconsolidated and noncombined Tax Returns and shall
timely pay any such Taxes required to be paid by it after the
date hereof with respect to such Tax Returns and (2) shall
prepare and timely file all such nonconsolidated and noncombined
Tax Returns required to be filed after the date hereof and
through the Closing Date and pay all Taxes required to be paid by
it with respect to the periods covered by such Tax Returns; (B)
all such Tax Returns filed pursuant to clause (A) after the date
hereof shall, in each case, be prepared and filed in a manner
consistent in all material respects (including elections and,
accounting methods and conventions) with such Tax Return most
recently filed in the relevant jurisdiction prior to the date
hereof, except as otherwise required by law or regulation. Any
such Tax Return filed or required to be filed after the date
hereof shall not reflect, any new elections or the adoption of
any new accounting methods or conventions or other similar items,
except to the extent such particular reflection or adoption is
required to comply with any law or regulation.
(b) All consolidated or combined Tax Returns (except those
described in subparagraph (a) above) required to be filed by any
person through the date hereof that are required or permitted to
include Subsidiaries for any taxable period have been timely
filed, and the income, activities, operations and transactions of
ECNC and Subsidiaries have been properly included and reflected
thereon. ECNC shall prepare and file, or cause to be prepared
and filed, all such consolidated or combined Tax Returns that are
required or permitted to include the income, or reflect the
activities, operations and transactions, of ECNC or any
Subsidiary, with respect to any taxable year or the portion
thereof ending on or prior to the Closing Date, including,
without limitation, ECNC's consolidated federal income tax return
for such taxable years. ECNC will timely file a consolidated
federal income tax return for the taxable year ended December
31,1999 and such return shall include and reflect the income,
activities, operations and transactions of ECNC and Subsidiaries
for the taxable period then ended, and hereby expressly covenants
and agrees to file a consolidated federal income tax return, and
to include and reflect thereon the income, activities, operations
and transactions of ECNC and Subsidiaries for the taxable period
through the Closing Date. All Tax Returns filed pursuant to this
subparagraph (b) after the date hereof shall, in each case, to
the extent that such Tax Returns specifically relate to ECNC or
any of its Subsidiaries and do not generally relate to matters
affecting other members of ECNC's consolidated group, be prepared
and filed in a manner consistent in all material respects
(including elections and accounting methods and conventions) with
the Tax Return most recently filed in the relevant jurisdictions
prior to the date hereof, except as otherwise required by law or
regulation. ECNC has paid or will pay all Taxes that may now or
hereafter be due with respect to the taxable periods covered by
such consolidated or combined Tax Returns.
(c) Neither ECNC nor any of its Subsidiaries has agreed, or is
required, to make any adjustment (x) under Section 481 (a) of the
Code by reason of a change in accounting method or otherwise or
(y) pursuant to any provision of the Tax Reform Act of 1986, the
Revenue Act of 1987 or the Technical and Miscellaneous Revenue
Act of 1988.
(d) Neither ECNC nor any of its Subsidiaries or any predecessor
or Affiliate of the foregoing has, at any time, filed a consent
under Section 341 (f) (1) of the Code, or agreed under Section
341 (f) (3) of the Code, to have the provisions of Section 341
(f) (2) of the Code apply to any sale of its stock.
(e) There is no (nor has there been any request for an
agreement, waiver or consent providing for an extension of time
with respect to the assessment of any Taxes attributable to ECNC
or its Subsidiaries, or their assets or operations and no power
of attorney granted by ECNC or any of its Subsidiaries with
respect to any Tax matter is currently in force.
(f) There is no action, suit, proceeding, investigation, audit,
claim, demand, deficiency or additional assessment in PCLICK,
pending or threatened against or with respect to any Tax
attributable to ECNC, its Subsidiaries or their assets or
operations.
(g) All amounts required to be withheld as of the Closing Date
for Taxes or otherwise have been withheld and paid when due to
the appropriate agency or authority.
(h) No property of ECNC is "tax-exempt use property" within the
meaning of Section 168 (b) of the Code nor property that ECNC
and/or its Subsidiaries will be required to treat as being owned
by another person pursuant to Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior
to the enactment of the Tax Reform Act of 1986.
(i) There have been delivered or made available to PCLICK true
and complete copies of all income Tax Returns (or with respect to
consolidated or combined returns, the portion thereof) and any
other Tax Returns requested by PCLICK as may be relevant to ECNC,
its Subsidiaries, or their assets or operations for any and all
periods ending after December 31, 1998, or for any Tax years
which are subject to audit or investigation by any taxing
authority or entity.
(j) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of ECNC or its
Subsidiaries that, individually or collectively, could give rise
to the payment of any amount that would not be deductible
pursuant to Section 280G or 162 of the Code.
6.20 Environmental Matters.
(a) At all times prior to the date hereof, ECNC and its
Subsidiaries have complied in all material respects with
applicable environmental laws, orders, regulations, rules and
ordinances relating to the Properties (as hereinafter defined),
the violation of which would have a material adverse effect on
the business or financial condition of ECNC and its Subsidiaries,
taken as a whole, or which would require a payment by ECNC or its
Subsidiaries in excess of $2,000 in the aggregate, and which have
been duly adopted, imposed or promulgated by any legislative,
executive, administrative or judicial body or officer of any
Governmental Body.
(b) The environmental licenses, permits or authorizations that
are material to the operations of ECNC and its Subsidiaries,
taken as a whole, are in full force and effect.
(c) Neither ECNC nor any of its subsidiaries has released or
caused to be released on or about the properties currently owned
or leased by ECNC or any of its Subsidiaries (the "Properties")
any (i) pollutants, (ii) contaminants, (iii) "Hazardous
Substances," as that term is defined in Section 101(4) of the
Comprehensive Environmental Response Act, as amended or (iv)
"Regulated Substances," as that term is defined in Section 9001
of the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901, et seq., as amended, which would be required to be
remidiated by any governmental agency with jurisdiction over the
Properties under the authority of laws, regulations and
ordinances as in effect and currently interpreted on the date
hereof, which remediation would have a material adverse effect on
the business or financial condition of ECNC and its Subsidiaries,
taken as a whole.
6.21 Intentionally Left Blank.
6.22 Absence of Certain Commercial Practices. Neither ECNC nor
any of its Subsidiaries has, directly or indirectly paid or
delivered any fee, commission or other sum of money or item of
property, however characterized, to any finder, agent, government
official or other party, in the United States or any other
country, which is in any manner related to the business or
operations of ECNC or its Subsidiaries, which ECNC or one of its
Subsidiaries knows or has reason to believe to have been illegal
under any federal, state or local laws of the United States or
any other country having jurisdiction; and neither ECNC nor any
of its Subsidiaries has participated, directly or indirectly, in
any boycotts or other similar practices affecting any of its
actual or potential shareholders in violation of any applicable
law or regulation.
6.23 Transactions with Directors and Officers. ECNC and its
subsidiaries do not engage in business with any Person in which
any of ECNC's directors or officers has a material equity
interest. No director or officer of ECNC owns any property,
asset or right, which is material to the business of ECNC and its
Subsidiaries, taken as a whole.
6.24 Borrowing and Guarantees. ECNC and its Subsidiaries (a) do
not have any indebtedness for borrowed money, (b) are not lending
or committed to lend any money (except for advances to employees
in the ordinary course of business), and (c) are not guarantors
or Sureties with respect to the obligations of any Person.
6.25 Purchase for Investment. ECNC is obtaining the PCLICK
Shares solely for its own account for the purpose of investment
and not with a view to, or for sale in connection with, any
distribution of any portion thereof in violation of any
applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities;
Other Covenants.
7.1 Access between the date of this Agreement and the Closing
Date. Each of PCLICK and ECNC shall (a) give t the other and its
authorized representatives reasonable access to all plants,
offices, warehouse and other facilities and properties of PCLICK
or ECNC, s the case may be, and to its books and records, (b)
permit the other to make inspections thereof, and (c) cause its
officers and its advisors to furnish the other with such
financial and operating data and other information wth respect to
the business and properties of such party and its Subsidiaries
and to discuss with such and its authorized representatives its
affairs and those of its Subsidiaries, all as the other may from
time to time reasonably request.
7.2 Exclusivity. From the date hereof until the earlier of the
Closing or the termination of this Agreement, ECNC shall not
solicit or negotiate or enter into any agreement with any other
Person with respect to or in furtherance of any proposal for a
merger or business combination involving, or acquisition of any
interest in, or (except in the ordinary course of business) sale
of assets by, ECNC, except for the exchange of the ECNC Shares
for the PCLICK Shares from PCLICK's shareholders.
7.3 Publicity. Between the date of this Agreement and the
Closing Date, ECNC and PCLICK shall discuss and coordinate with
respect to any public filing or announcement or any internal or
private announcement (including any general announcement to
employees) concerning the contemplated transaction.
7.4 Regulatory Matters. PCLICK and ECNC shall (a) file with
applicable regulatory authorities any applications and related
documents required to be filed by them in order to consummate the
contemplated transaction and (b) cooperate with each other as
they may reasonably request in connection with the foregoing.
7.5 Confidentiality. Prior to the Closing Date (or at any time
if the Closing does not occur) each of PCLICK and ECNC shall keep
confidential and not disclose to any Person (other than its
employees, attorneys, accountants and advisors) or use (except in
connection with the transactions contemplated hereby) all non-
public information obtained pursuant to Section 7.1. Following
the Closing, each of PCLICK and ECNC shall keep confidential and
not disclose to any Person (other than its employees, attorneys,
accountants and advisors) or use (except in connection with
preparing Tax Returns and conducting proceeds relating to Taxes)
any nonpublic information relating to the other. This Section
7.6 shall not be violated by disclosure pursuant to court order
or as otherwise required by law, on condition that notice of the
requirement for such disclosure is given the other party prior to
making any disclosure and the party subject to such requirement
cooperates as the other may reasonably request in resisting it.
If the Closing does not occur, each of PCLICK and ECNC shall
return to the other, or destroy, all information it shall have
received from the other in connection with this Agreement and the
transactions contemplated hereby, together with any copies or
summaries thereof or extracts therefrom. each of PCLICK and ECNC
shall use their best efforts to cause their respective
representatives, employees, attorneys, accountants and advisors
to whom information is disclosed pursuant to section 7.1 to
comply with the provisions of this section 7.5.
8. Conduct of ECNC's Business Prior to the Closing.
8.1 Operation in Ordinary Course. Between the date of this
Agreement and the Closing Date, ECNC shall cause conduct its
businesses in all material respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement
and the Closing Date, ECNC shall (a) preserve substantially
intact the business organization of ECNC; and (b) preserve in all
material respects the present business relationships and good
will of ECNC and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of this Agreement
and the Closing Date, ECNC shall not cause or permit any
amendment of its certificate of incorporation or by-laws (or
other governing instrument) and shall not:
(a) deleted;
(b) deleted;
(c) deleted;
(d) deleted;
(e) sell, lease, license or otherwise dispose of any of its
properties or assets (including, but not limited to rights with
respect to patents and registered trademarks and copyrights or
other proprietary rights), in an amount which is material to the
business or financial condition of ECNC and its Subsidiaries,
taken as a whole, except in the ordinary course of business; or
(f) Organize any new Subsidiary or acquire any Equity Securities
of any Person or any equity or ownership interest in any
business.
8.4 Other Restrictions. Between the date of this Agreement and
the Closing Date, ECNC shall not:
(a) borrow any funds or otherwise become subject to, whether
directly or by way of guarantee or otherwise, any indebtedness
for borrowed money;
(b) create any material Encumbrance on any of its material
properties or assets;
(c) except in the ordinary course of business, increase in any
manner the compensation of any director or officer or increase in
any manner the compensation of any class of employees;
(d) create or materially modify any material bonus, deferred
compensation, pension, profit sharing, retirement, insurance,
stock purchase, stock option, or other fringe benefit plan,
arrangement (any other employee benefit plan as defined in
Section 3(3) of ERISA);
(e) make any capital expenditure or acquire any property or
assets;
(f) enter into any agreement that materially restricts ECNC,
PCLICK or any of their Subsidiaries from carrying on business;
(g) pay, discharge or satisfy any material claim, liability or
obligation, absolute, accrued, contingent or otherwise, other
than the payment discharge or satisfaction, in the ordinary
course of business of liabilities or obligations reflected in the
ECNC Financial Statements or incurred in the ordinary course of
business and consistent with past practice sine the date of the
ECNC Financial Statements; or
(h) cancel any material debts or waive any material claims or
rights.
9. Definitions
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 9.
9.1 "Business Day" - Any day this is not a Saturday or Sunday or
a day on which banks located in the City of New York are
authorized or required to be closed.
9.2 "Code" - The Internal Revenue Code of 1986, as amended.
9.3 "Disclosure Letter" - A letter dated the date of this
Agreement, executed by either PCLICK and ECNC, addressed and
delivered to the other and containing information required by
this Agreement and exceptions to the representations and
warranties under this Agreement.
9.4 "Encumbrances" - any security interest, mortgage, lien,
charge, adverse claim or restriction of any kind, including, but
not limited to, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of
ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.5 "Equity Securities" See Rule 3a-11-1 under the Securities
Exchange Act of 1934.
9.6 "ERISA" - the Employee Retirement Income Security Act of
1974, as amended.
9.7 "Governmental Body" - any domestic or foreigh national,
state or municipal or other local government or multi-national
body (including, but not limited to, the European Economic
Community), an subdivision , agency, commissioner authority
thereof.
9.8 "Knowledge" - Actual knowledge, after reasonable
investigation.
9.9 "Person" - Any individual, corporation, partnership, joint
venture, trust, association, unincorporated organization, other
entity, or Governmental Body.
9.10 "Subsidiary" - With respect to any Person, any corporation
of which securities having the power to elect a majority of that
corporation's Board of Directors (other than securities having
that power only upon the happening of a contingency that has not
occurred) are held by such Person or one or more of its
Subsidiaries.
10. Termination.
10.1 Termination. This Agreement may be terminated before the
Closing occurs only as follows:
(a) By written agreement of PCLICK and ECNC at any time.
(b) By ECNC, by notice to PCLICK at any time, if one or more of
the conditions specified in Section 4 is not satisfied at the
time at which the Closing (as it may be deferred pursuant to
Section 2.1) would otherwise occur or if satisfaction of such a
condition is or becomes impossible.
(c) By PCLICK, by notice to ECNC at any time, if one or more of
the conditions specified in Section 3 is not satisfied at the
time at which the Closing (as it may be deferred pursuant to
Section 2.1), would otherwise occur of it satisfaction of such a
condition is or becomes impossible.
(d) CLICK or ECNC, by notice to the other at any time after June
30, 1999.
10.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall terminate without
any liability or further obligation of any party to another.
11. Intentionally left blank.
12. Intentionally left blank.
13. Notices. All notices, consents, assignements and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given when (a) delivered by hand, (b)
sent by eleex or facsimile (with receipt confirmed), provided
that a copy is mailed by registerd mail, return receipt
requested, or (c) received by the delivery service (receipt
requested), in each case to the appropriate addresses, telex
numbers and facsimile numbers set forth below (or to such other
addresses, telex numbers and facsimile numbers as a party may
designate as to itself by notice ot the other parties),
(a) If to ECNC:
eConnect
Facsimile No.:
Attention: Thomas Hughes
With a copy to:
Brian F. Faulkner, Esq.
3900 Birch St., Suite 113
Newport Beach, CA 92660
Facsimile No.: (949) 975-0596
(b) If to PCLICK:
Powerclick, Inc.
Facsimile No.:
Attention: Dominique Einhorn
With a copy to:
Chapman & Flanagan, Ltd.
2080 E. Flamingo Road, Suite 112
Las Vegas, NV 89119
Facsimile No.: (702) 650-5667
Attention: Daniel G. Chapman, Esq.
14. Miscellaneous.
14.1 Expenses. Each party shall bear its own expenses incident
to the preparation, negotiation, execution and delivery of this
Agreement and the performance of its obligations hereunder.
14.2 Captions. The captions in this Agreement are for
convenience of reference only and shall not be given any effect
in the interpretation of this Agreement.
14.3 No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not
be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
14.4 Exclusive Agreement; Amendment. This Agreement supersedes
all prior agreements among the parties with respect to its
subject matter with respect thereto and cannot be changed or
terminated orally.
14.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but
all of which together shall constitute the same instrument.
14.6 Governing Law. This Agreement and (unless otherwise
provided) all amendments hereof and waivers and consents
hereunder shall be governed by the internal law of the State of
Nevada, without regard to the conflicts of law principles
thereof.
14.7 Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective
successors and assigns, provided that neither party may assign
its rights hereunder without the consent of the other, provided
that, after the Closing, no consent of PCLICK shall be needed in
connection with any merger or consolidation of ECNC with or into
another entity.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto
duly authorized, and entered into as of the date first above
written.
Econnect POWERCLICK, INC.
By: /s/ Thomas S. Hughes By: /s/ Dominique Einhorn
Thomas S. Hughes, President Dominique Einhorn, President
Exhibit "A"
Share Issuance
The ECNC Shares shall be issued and delivered in such names and
denominations as follows:
1. Dominique Einhorn 2,980,000
2. Steve Gose 280,000
3. Michele F. Einhorn 540,000
4. E. James Wexler 560,000
5. Quantum, Inc. 1,120,000
6. Vincent D'Fellipo 180,000
7. Matthew Boyce 120,000
8. Tab Rosenfeld 80,000
9. Steve Kaplan 80,000
10. Bernard Einhorn 60,000
EX-10.38
LOAN AGREEMENT
This Agreement states that Richard Epstein is loaning eConnect
the sum of $100,000 on the following terms and conditions:
1. The loan will be repaid at 15% simple interest on May 15, 2000.
2. The combined principal and interest will be $115,000.
/s/ Thomas S. Hughes /s/ Richard Epstein
Thomas S. Hughes Richard Epstein
Chairman & CEO, eConnect
EX-10.39
POCKETPAY JOINT VENTURE AGREEMENT
This agreement made this 1st day of March 2000 is made by and
between Pilot Island Publishing, Inc. 123 South Woodland Street,
Winter Garden, Florida 34787, a Florida Corporation herein known
as ("PIP") which is also a subsidiary of International Digital
Holding, Inc. (OTC:IDIG) and eConnect, 2500 via Cabrillo, Suite
#112, San Pedro, California 90731, a Nevada Corporation, and its
benefactors and assigns, herein together known as ("eConnect"),
Both PIP and eConnect above together herein referred to
individually as ("party") or collectively as ("parties").
Recitals
Whereas, PIP has certain technical skills available with handheld
computer technology and personal digital assistants (PDA's).
Whereas, eConnect has a patent for handheld computing devices
that transmit debit card information.
Whereas, eConnect a s a public company, has the capital,
financial controls, development facilities to facilitate on-line
transactions.
Whereas, the parties wish to create a joint venture herein known
as the ("Project").
Whereas, the corporations related to both parties are in good
standing in their respective states and the officers signing
below have full authority to execute documents on behalf of their
respective corporation.
Agreement
The parties do hereby covenant and agree as follows:
1.0 The Project
1.01 The parties will together create a new service and product
for the Internet herein known as the Project. The Project will
be to create a "Client software/hardware solution" that will
facilitate a secure transaction interface and communications
between handheld computing devices and secure transaction
servers. The net result to be to provide same as cash
transactions over virtual private networks. The combined
hardware / software / service is to be known as "PocketPay" an
existing trademark of eConnect.
1.02 The Project will be a joint venture between the parties
above.
1.03 Ownership of intellectual property rights to the name,
brand, and trademark, the products design, patents, pattern,
copyrights, etc. related to the Project shall be shared equally.
1.04 Profits from sales will be equally distributed between both
parties. Profits are defined as 75% of Gross Profits. The
balance of 25% of Gross Profits goes into a holdback account for
the benefit of eConnect to be reimbursed startup, development and
operating costs. Gross Profits are defined as the net
transaction fee or service fee received by eConnect related to
the Project. If or when the 25% holdback account monthly amount
exceeds monthly cost of operations plus amortized startup costs,
the holdback percentage shall be adjusted downward accordingly.
Financial Math Example:
Transaction Fee $ 1.00
Gross Profit $ 1.00
25% Escrow against costs $
Profit from this sale $ 0.75
50/50 split of profits equals $ 0.375 to eConnect
$ 0.375 to PIP
2.0 PIP'S Representations
PIP represents and agrees to:
2.01 PIP will assist the development of PocketPay at the lowest
possible cost.
2.02 PIP will provide personnel and equipment for programming and
prototype development.
2.03 PIP will provide the relationship with the industry leader
with PDA's 3COM and their PALM division.
2.04 PIP will provide and oversee the distribution of the client
PQA (Palm Query Application) through industry alliances.
2.05 PIP will work with eConnect through all phases of
development.
2.06 PIP will seek to expand the Project into other form factors
and brands of computers.
3.0 eConnect's Representations:
eConnect represents and agrees to:
3.01 eConnect will provide adequate funding required for all
aspects of the Project including but not limited to providing
main host servers and other related e-commerce equipment and
personnel to maintain website, control finance, marketing, and
customer service.
3.02 eConnect will provide adequate funding required for proper
advertising and marketing of the Project.
3.03 eConnect will provide funds for startup and all direct
related costs of PIP to fulfill the Project's requirements,
payroll, personnel costs, direct equipment costs, and other such
funding as needed, subject to reasonable approval by eConnect.
3.04 eConnect will provide secure e-commerce for the Project and
maintain responsibility for all Bank related affairs, alliances,
and liabilities related to the Project. eConnect will provide a
secure management website where the parties can get reports on
sales and profits and other related statistics regarding the
Project.
3.05 eConnect will provide accurate and secure records of all
financial transactions, provide responsible management to
maintain accurate records, and be responsible for all related
management liabilities regarding; licenses, permits, income
taxes, sales taxes, and proper payments to related government
agencies, as well as maintain property or product liability
insurance if required.
3.06 eConnect will promote the Project to the best of its ability
including providing links to any website, buying banner ads,
cross promoting, magazine campaigns and promotions.
4.0 Further Agreed
4.01 No Representation
This Agreement is a joint venture for profit. This contract in
no other way joins the parties involved. eConnect and PIP are
and will continue to remain separate entities and separate
corporations and do not in any way represent each other. PIP
will not be held responsible for any of eConnect's liabilities,
likewise eConnect will not be responsible for any of PIP's
liabilities other than those related to the Project as defined in
this agreement.
4.02 Transaction Path
The Gross Sale shall be made in the name of eConnect. eConnect
or its assigns will collect and distribute all funds. The amount
collected shall be verified by eConnect's financial control.
The net amount due PIP will be paid by eConnect with a sales
report on a semi-monthly basis, on the 15th and last day of every
month.
4.03 Term
The term of this Agreement shall be for a minimum of 5 years, or
for the life of the Project, whichever is longer.
4.04 Review of Records
eConnect as a public company is already fully reporting on its
financials, nevertheless, PIP reserves the right to review and
audit the books of eConnect or its assigns which in any way
relate to the Project. This overall review is subject to a
limitation of three times per year, but shall not limit any
requests for specific documentation.
4.05 Entire Agreement
This Agreement is and represents the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes any prior or contemporaneous discussions or agreements
related thereto. This agreement may not be changed or amended
except as in writing agreed to by both parties.
4.06 Breach
This Agreement will be considered breached if any of the
covenants contained herein come into default for more than 30
days:
By eConnect if it fails to provide required funds, or maintain
accurate records;
By PIP if it fails to provide a workable solution to the Project,
subject of course to the funding provided by eConnect.
4.07 Notice
Official notice must only be given in written form via certified
US Mail to the parties at the addresses above. Change of address
must also be given by certified written notice to the other
party.
4.08 Remedy
If this Agreement becomes breached, the party giving notice of
default must provide a 30-day remedy period for the party in
default.
4.09 Indemnity
All parties agree to hold harmless each other from any litigation
or liability arising from a gross negligence on the part of the
other party. All parties remain responsible for their own debts
and operations, no other party may obligate the other under any
circumstances without direct written permission from an officer
of the company to be obligated.
4.10 Governing Law
This Agreement shall be governed by the laws of the United States
and the State of Florida without giving effect to any rules of
conflicts of law. Venue of any disputes related to this
Agreement shall be in the Middle District of Florida, Orlando
Division. If there arises any dispute between the parties, both
parties do hereby agree to first submit to non-binding
arbitration with the American Arbitration Association precedent
to any litigation.
4.11 Severability
If any provision of this Agreement is held to be unenforceable,
the remaining provisions shall be unaffected. Each provision of
this Agreement, which provides for a limitation of liability,
disclaimer or warranties, indemnification, or exclusion of
remedies is severable from and independent of any other
provision.
4.12 Assignment
This contract may only be assigned by either party with the
written approval of the other party, such approval shall not be
unreasonably withheld.
4.13 Change of Control
If there is a sale or change of control of PIP this contract will
automatically be assigned to and fulfilled by, its current parent
company, International Digital Holding, Inc.
4.14 Titles and Headers
The titles and headers used throughout this agreement are for
reference and not substance.
4.15 Counterparts
This agreement may be executed in one or more copies or
counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized representative
as of the date first written above.
For: eConnect For: Pilot Island Publishing, Inc.
By: /s/ Thomas S. Hughes By: /s/ Stephen Froelicher
Thomas S. Hughes, President Stephen Froelicher, President
EX-10.40
LETTER OF INTENT
Real Solutions will provide two individuals for the project
management, analytical business development and supervisory
support to eConnect. The following initial budget estimate sets
forth hours with summary tasks as provided below:
Name Position Task Hours
Est.
Bill Uminowicz Project Manager Design Summary Plan 8
Review Hardware Presentation 6
Discussions/
Meetings GBM, eConnect, Real, eFunds 27
Design business plan 40
For template and models 25
Set up test model outline 28
Total hours for initial
project work 134
Cost charge for Bill Uminowicz:
$325 /hour
Mike Payne Senior Business/Systems Consultant
Analyze hardware solution
Matrix 75
Report preparation ROI 38
Discussion and review
local work 45
Total hours for initial
project work 158
Cost charges for Mike Payne: $275/hour
Jim Cudworth Systems Manager Review hardware/software
presentation costs 60
Cost charges for Jim Cudworth: $150/hour
Rob Morrison Systems Analyst Test hardware software
Plan 80
Cost charges Rob Morrison $150/hour
Total estimated hours and the initial estimated cost: $108,000
DELIVERABLES
Hardware/Software Vendor Identification: Two individuals from
Real Solutions will assist eConnect with the identification and
selection of appropriate vendors that will provide the local
hardware purchase and installation. Real Solutions/eConnect will
determine the selection criteria. Real Solutions will interview
prospective vendors and review results with eConnect. Real
Solutions/eConnect will contractually agree upon chosen vendors.
Configuration Analysis/Determination: Real Solutions will
conduct an equipment analysis as it pertains to the appropriate
hardware and operating system for this project. Once completed,
Real Solutions/eConnect will review and contractually agree to
suggested configurations. Once agreed, the project manager will
determine implementation schedule and define project tasks within
phases, containing milestones and completion dates.
Test Setup of agreed to Configuration of this project is based on
the completion of the previous deliverables. This will encompass
the installation of agreed upon hardware and operating system,
testing of this system, knowledge transfer of basic operation of
this system, and an analysis of having this test module used as
the template for the installation deployment.
PLEASE NOTE: Due to the timing of the situation, Real Solutions
requires that eConnect place 75% of all estimated costs for the
above project into an escrow account immediately. Upon signing
of this letter of intent, the party's will in good faith, prepare
a Statement of Work, which encompasses the complete project
within ten days. The escrow account will be replenished on a
monthly basis. Real Solutions will provide monthly invoices and
the payment terms shall be net 15. Expenses will also include
all reasonable travel and expense costs. Initial estimate of
travel requirements is $8,250.
A completed formal Statement of Work and summarized project work
plan will be executed within ten days of the signing of this
Letter of Intent. For contractually purposes all the terms and
conditions of the Master Services Agreement shall be incorporated
herein by referenced.
COMPLETION CRITERIA
Real Solutions will have fulfilled its obligations under this
proposal and statement of work when the following occurs:
Real Solutions accomplishes the tasks, described as Real
Solutions responsibilities in the statement of work, including
the materials referenced as deliverables.
LETTER OF INTENT
Letter of Intent
The undersigned agrees to initiate this proposal for work and
fees outlined in performance of the project operation with the
eConnect and Real Solutions.
Dated: March 9, 2000
EConnect Real Solutions, Ltd.
By: /s/ Thomas S. Hughes By: /s/ Michael Payne
Thomas S. Hughes Michael Payne
EX-10.41
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into
as of March 10, 2000, between eConnect, a Nevada corporation, the
Common Stock of which is registered under Section 12(g) of the
Securities Exchange Act of 1934 and currently quoted on the
Electronic Bulletin Board operated by the National Association of
Securities Dealers, Inc. (the "Company"), and Ryan Kavanaugh, an
individual residing in the State of California ("Consultant").
WHEREAS, the Company believes that, in order to achieve the
principal business objectives (the "Business Objectives") that
have been set by its Board of Directors (the "Board"), it will
need external advice and consultative assistance in the areas of
strategic planning and business plan development and
implementation of the sort provided by business consultants and
financial advisors; and
WHEREAS, Consultant has experience in providing financial
advisory and business consulting services to companies seeking
such services; and
WHEREAS, Consultant is willing to provide to the Company
financial advisory and business consulting services on the terms
and conditions set forth in this Agreement; and
WHEREAS, the Company desires that Consultant provide to the
Company such financial advisory and business consulting services
as are reasonably requested by the Company consistently with the
terms and conditions of this Agreement.
In consideration of the mutual covenants and agreements set forth
below, the parties hereby agree as follows:
1. Term. The Company hereby retains Consultant as an
independent consultant, with the duties particularized in Section
2 hereof and subject to the other terms and conditions
particularized herein, and Consultant hereby agrees to act as
such for the Company, for a period of one (1) year commencing on
the date hereof, unless further extended by mutual agreement of
the parties hereto (the "Term").
2. Duties. During the Term, Consultant shall, on a non-
exclusive and part-time basis, in no event to exceed (without
Consultant's consent) a maximum of 10 hours per week and 40 hours
per month, render such business consulting and financial advisory
services to the Company as are requested by the Company and
reasonably related to the Company's attempt to achieve the
Business Objectives (the "Services"). The parties agree that the
Services shall expressly include (i) arranging for Peters
Entertainment, the film production company owned by Jon Peters,
to enter, on or before April 1, 2000, into a computer services
contract providing for short-term revenue to the Company in an
amount not less that $500,000, and (ii) procuring the services of
Michael Sitrick to assist the Company in its public relations
function. The Company understands and hereby expressly
acknowledges that the Services to be provided to the Company by
Consultant pursuant to the terms hereof shall be on a part-time
basis only, as the bulk of Consultant's time is and will be
devoted to other clients of Consultant, including, without
limitation, clients for whom Consultant provides financial
advisory and business consulting services similar to the
Services. The Company understands and hereby expressly
acknowledges that Consultant is not registered as a broker-dealer
with the Securities and Exchange Commission ("SEC") or any state
securities regulatory body; accordingly, notwithstanding any
other provisions of this Agreement, Consultant shall not be
required hereunder to perform any action hereunder that would
involve the raising of capital or otherwise constitute "effecting
transactions in securities" as that (or any similar) phrase is
construed by the SEC or any applicable state securities
regulatory body.
3. Consideration to Consultant. The Company hereby agrees
to issue to Consultant, and Consultant hereby agrees to accept as
payment in full for past services rendered by Consultant to the
Company and the Services to be rendered by Consultant pursuant to
the terms hereof, (i) 300,000 shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), covered by
a currently effective registration statement of the Company under
the Securities Act of 1933, as amended (the "Act"), on Form SB-2,
SEC File No. __________ (the "SB-2 Grant Shares"), (ii) an
additional 700,000 shares of the Common Stock covered by a
registration statement of the Company under the Act on Form S-8
(the "S-8 Registration Statement") to be prepared by the Company
at its expense and filed by the Company with the SEC via EDGAR
not later than 10:00 a.m. (Los Angeles time) on Tuesday, March
14, 2000 (the "S-8 Grant Shares"), and (iii) warrants (the
"Warrants") representing the right to purchase a maximum of 2.0
million shares (the "Warrant Shares") of the Common Stock at a
warrant exercise price of $1.50 per share (the "Exercise Price").
The Warrants shall be evidenced by one or more Warrant
Certificates in the form of Exhibit A attached hereto (the
"Warrant Certificates"), and contain such other terms and
conditions as are set forth in said Warrant Certificates. The
Company hereby agrees to deliver to Consultant, on or before
March 14,2000, the Warrant Certificates, registered in the name
of Consultant or its designee, and duly executed by the Company,
as well as evidence reasonably satisfactory to Consultant that
the issuance of the Warrants, as evidenced by the Warrant
Certificates, has been properly authorized by the Board. The
Company covenants (i) that all of the Warrant Shares shall be
included in the S-8 Registration Statement as filed with the SEC,
and (ii) that the S-8 Registration Statement shall be kept
effective until such time as all of the Warrant Shares have been
issued to Consultant or (if earlier) the date that the Warrants
expire in accordance with their terms. The Company hereby further
agrees to exert its best efforts to cause as expeditiously as is
practicable, but in no event by later than 10:30 a.m. (Los
Angeles time) on March 14, 2000, all of the SB-2 Grant Shares and
all of the S-8 Grant Shares to be certificated and credited by
the Depository Trust Company ("DTC") to the securities brokerage
account of Consultant specified by Consultant (the "Account") in
written instructions previously delivered by Consultant to the
Company's outside counsel (the "Company's Attorneys").
4. Expenses. The Company hereby agrees to reimburse Consultant
for any reasonable costs or expenses, including but not limited
to travel expenses, incurred by Consultant in the course of
performing Services pursuant to this Agreement or otherwise at
the direction of the Company.
5. Independent Contractor Relationship: Duty of Cooperation.
It is understood and agreed that Consultant's relationship to the
Company is that of an independent contractor and that neither
this Agreement nor the Services to be rendered hereunder shall
for any purpose whatsoever or in any way or manner create any
employer-employee or joint venture relationship. The Company
agrees to cooperate fully with Consultant in order to allow
Consultant to discharge efficiently his obligations to provide
the Services to the Company hereunder.
6. Capitalization of the Company. The Company hereby
represents and warrants to Consultant that, as of the date
hereof, the issued and outstanding securities of the Company
consist of __________shares of the Common Stock, counting for
this purpose all of the underlying shares of the Common Stock
covered by all options, warrants and other rights to purchase
such shares issued by the Company and outstanding as of the date
hereof (exclusive of the SB-2 Grant Shares, the S-8 Grant Shares
and the Warrant Shares). The Company has not issued any options,
warrants or other rights to purchase capital stock of the
Company, other than the Common Stock. As of the date hereof,
except as disclosed on Schedule I attached hereto, the Company
has no concrete or tentative plans to issue any additional shares
of capital stock during the Term, other than the SB-2 Grant
Shares, the S-8 Grant Shares, the Warrant Shares and shares
issuable upon the exercise of presently outstanding options,
warrants and other rights to purchase shares of the Common Stock,
and has no intention to issue at any time in the future shares of
the Common Stock or any of its capital stock at a price per share
less than the Exercise Price.
7. Miscellaneous.
(a) Any and all notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given
when delivered personally or forty-eight (48) hours after being
mailed, certified or registered mail, returned receipt requested,
postage pre-paid, to Consultant's or the Company's address shown
below. The Company and Consultant may change their respective
addresses for the purposes of notice at any time by the giving of
notices pursuant to this subparagraph.
Company: eConnect
2500 Via Cabrillo Marina Suite 112
San Pedro, CA 90731
Attn: Mr. Thomas Hughes
Consultant: Ryan Kavanaugh
c/o Miller & Holguin
1801 Century Park East, 7th Floor
Los Angeles, CA 90067
Attn: Brian A. Sullivan, Esq.
(b) Time is of the essence of this Agreement with respect
to each and every provision of this Agreement as to which time is
a factor.
(c) No change in, modification of, or addition, amendment
or supplement of, this Agreement shall be valid unless set forth
in writing and signed and dated by both parties subsequent to the
execution of this Agreement.
(d) The Company and Consultant, without the necessity of any
further consideration, agree to execute and deliver such other
documents and take such other actions as may be necessary or
desirable to consummate more effectively the purposes and subject
matter of this Agreement.
(e) The existence, validity , construction and operational
effect of this Agreement and the rights and obligations of the
Company and Consultant hereunder shall be determined in
accordance with the laws of the State of California; provided,
however, that any provision of this Agreement which may be
prohibited by law or otherwise held invalid shall be ineffective
only to the extent of such prohibition or invalidity and shall
not invalidate or otherwise render ineffective any or all of the
remaining provisions of this Agreement. Any litigation concerning
or to enforce the provisions of this Agreement shall be brought
at the election of the Company or Consultant in the courts of Los
Angeles, California.
(f) In the event of any controversy, claim, or dispute between
the Company and Consultant arising out of or relating to this
Agreement, the prevailing party shall be entitled to recover from
the non-prevailing party reasonable expenses, including, but not
by way of limitation, attorneys' fees and accountants' fees.
(g) The covenants, agreements, representations, warranties,
terms and conditions contained in this Agreement shall be binding
upon and inure to the benefit of the successors and assigns of
the Company and Consultant; provided, however, that Consultant
may not assign or transfer Consultant's duties to provide the
Services hereunder except upon the written consent of the Company
in its sole and absolute discretion.
(h) This Agreement constitutes the entire agreement between the
parties as to the subject matter hereof and supersedes and
terminates as of this date any prior agreements, whether written
or oral, between the parties with respect thereto. No provision
of this Agreement shall be waived except in writing signed by the
party against whom such waiver is asserted. Any such waiver shall
be limited to the particular instance, and waiver of a provision
in one instance shall not prevent a party thereafter from
enforcing each and every other provision of this Agreement.
(i) The section headings used in this Agreement are intended
solely for convenience of reference, and shall not in any way or
manner amplify, limit, or modify, or otherwise be used in the
interpretation of, any of the provisions of this Agreement, and
the masculine, feminine, or neuter gender and the singular or
plural number shall be deemed to include the others whenever the
context so indicates or requires.
(j) The Company hereby covenants to deliver to Consultant, not
later than 11:00 a.m. (Los Angeles time) on March 14, 2000, a
letter from the Company's Attorneys, addressed to Consultant,
advising that (i) the SB-2 Grant Shares have been issued to
Consultant pursuant to proper authorization by the Board under a
then effective registration statement on Form SB-2 under the Act,
(ii) the S-8 Grant Shares have been issued to Consultant pursuant
to proper authorization by the Board under a then effective
registration statement on Form S-8 under the Act, (iii) all of
the Warrant Shares are covered by the registration statement
adverted to in clause (ii), and (iv) all of the SB-2 Grant Shares
and all of the S-8 Grant Shares have been credited by DTC to the
Account.
eCONNECT
By: /s/ Thomas Hughes
Name: Thomas Hughes
Title: Chief Executive Officer
RYAN KAVANAUGH
/s/ Ryan Kavanaugh
Ryan Kavanaugh
EX-10.42
AMENDED EMPLOYMENT AGREEMENT
This Agreement is made as of this 21st day of March 2000, by and
between eConnect, a Nevada corporation (the "Company"), and
Stephen E. Pazian (the "Executive").
Recitals
The Company desires to employ Executive as President and Chief
Operating Officer under the terms and conditions set forth in
this Agreement; and
Executive is willing to accept such employment on the terms and
conditions set forth in this Agreement.
Covenants
1. Position and Term of Employment. Executive's employment
hereunder shall commence as of March 21, 2000 and shall end March
20, 2004, with two-year extensions thereafter, unless terminated
sooner or extended beyond pursuant to Section 4 of this
Agreement. During the term hereof, Executive shall be employed as
President and Chief Operating Officer of the Company and shall
devote his time, skill, attention and best efforts in carrying
out his duties and promoting the best interests of the Company.
2. Executive shall have full power of the President and Chief
Operating Officer of the Company, subject always to the
instructions and control of the Board of Directors of the
Company.
3. Executive Compensation.
3.1 Base Salary. Executive shall be paid an initial salary at
the monthly rate of$30,000 per month, payable in advance on March
21, 2000 for the first six months of this Agreement, which amount
will be earned on receipt.
3.2 Annual Bonus. Executive will be eligible for an annual cash
bonus, payable March 1st of each year, at 50% of base salary with
a 200% multiplier for achieving board of directors compensation
committee established goals.
3.3 Earned on Receipt Signing Bonus. In order to induce
Executive to accept this Agreement on an emergency basis and to
dedicate his efforts to the Company, the Company agrees to pay
Executive a signing bonus, provide warrants and stock options
which shall be earned on receipt, as follows:
3.3.1 $100,000 in cash on March 24,2000;
3.3.2 1,000,000 of the Company's warrants, exercisable at
$1.00 per share, (with a "look back" provision and downward
adjustment to the lowest average daily trading price of the
Company's common stock in the first 90 days of executive's
employment), for the maximum period permitted under the Company's
registered warrant plan, but not less than twelve months ending
March 24,2001, to be vested in full, registered, eligible for
cashless exercise and tendered to Executive. Should Executive's
employment be terminated for "good cause" under section 4 of this
Agreement on or before March 24,2001, any unexercised warrants
will expire as of the date of termination.
3.3.3 Stock Options -Executive also shall be eligible for
6,000,000 stock options vesting one quarter at the beginning of
each year of employment, exercisable on a cashless basis for a
period often years, with a strike price of$.40 for the 1,500,000
shares granted in 2000, (with a repricing provision and downward
adjustment to the lowest average daily trading price of the
Company's common stock in the first 90 days of executive's
employment), and computed thereafter as described in the current
eConnect stock plan. In addition, executive shall be eligible for
such other stock option grants as provided under the plan as well
as other upper level management compensation programs as may be
in existence at the Company at the time of his employment and
from time to time thereafter.
3.4 Severance. If terminated for reasons other than "good
cause" (as defined herein) the remainder of the salary base for
the initial term, but not less than two years, will be due within
30 days. In addition, all of Executive's then granted stock
options and warrants will vest and be exercisable for their
entire term Should there be a change of control, the job
responsibilities be diminished, the titles changed or the
executive required to move more than 50 miles from his home, then
the executive will be assumed to have been terminated without
good cause and the applicable severance payments due within 30
days.
3.5 Warrant and Stock Option Expiration. If Executive resigns
voluntarily or ceases to be employed by the Company for "good
cause" as described in Section 4. or 4.3 of this Agreement, the
unexercised warrants and stock options to be provided under
section 3.3.2 and 3.3.3 shall be null and void. All other
compensation provided in this Agreement is earned on receipt and
shall not be returned by Executive under any circumstances
contemplated by this Agreement.
3.6 Expenses. During the term hereof, the Company shall pay or
reimburse Executive for a monthly auto allowance of $1,000,
payment of Executive's currently in force $2 million term life
insurance, provisioning of a DSL connection at his residence and
cellular phone expenses. Executive shall also be eligible for
reimbursement in accordance with the Company's normal practices,
including but not limited to any travel, hotel and other expenses
or disbursements reasonably incurred or paid by Executive in
connection with the services performed by Executive hereunder.
3.7 Other Benefits. During the Employment Period, the Executive
(and his eligible spouse and dependents) shall be provided paid
medical, hospitalization, dental & vision, through the
Executive's COBRA (expiring 3/01/01 - premium $657.46 per month),
until expiration of COBRA, at which such time Executive shall be
entitled to participate the Company's medical, dental, and
hospitalization plans. In addition, during the Employment Period,
the Executive shall be eligible to participate in all disability,
accidental death and dismemberment, travel accident insurance,
pension, retirement, savings and other employee benefit plans and
programs maintained from time to time by the Company for the
benefit of its senior executives. Executive shall be allowed five
(5) weeks vacation annually. Vacation not taken during the
applicable fiscal year (but not in excess of three weeks) shall
be carried over to the next following fiscal year.
3.8 Directors and Officers Insurance. The Company shall provide
Executive Directors and Officers Insurance by an insurance
company acceptable to Executive ensuring Executive against
liability up to $20 million per occurrence, effective throughout
the term of this Agreement.
3.9 Indemnification. The Company shall indemnify Executive to
the maximum extent permitted by applicable law, against all
liabilities, costs, charges and expenses (including reasonable
attorneys' fees and disbursements) incurred or sustained by it or
them in connection with any action, suit or proceeding to which
it or they may be made a party as a result of their services
hereunder on behalf of the Company pursuant to this Agreement,
provided that such liabilities, costs, charges and expenses do
not result from the willful misconduct or gross negligence of
such indemnified parties.
3.10 Fees and Expenses. The Company shall pay all legal fees and
related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result
of (a) the Executive's termination of employment (including all
such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), and (b ) the
Executive seeking to obtain or enforce any right or benefit
provided by this Agreement, including, but not limited to, any
such fees and expenses incurred in connection with any dispute
regarding the initial signing bonus compensation, whether as a
result of any applicable government proceeding, audit or
otherwise.
4. Termination.
4.1 This Agreement shall terminate upon Executive' s death.
4.2 The Company may terminate Executive's employment hereunder
upon thirty (30) days' written notice if Executive's physical or
mental disability has continued or is expected to continue for
one hundred and eighty (180) consecutive days and as a result
thereof, Executive will be unable to continue the proper
performance of his duties hereunder. Under these circumstances,
Executive will be entitled to his severance benefits including
the opportunity to vest and exercise all stock options and
warrants then granted for the remaining term of his employment
period.
4.3 The Company may terminate Executive's employment hereunder
for "good cause" (as hereinafter defined). If Executive's
employment is terminated for good cause, Executive's salary and
all other rights not then vested under this Agreement shall
terminate upon thirty (30) days written notice of termination
being given by the board of directors. As used herein, the term
"good cause" means the following:
Good Cause - The Company shall have the right to terminate the
Executive's employment for "Good Cause." For purposes of this
Agreement, the Company shall have "Good Cause" to terminate the
Executive's employment only upon the Executive's: (I) conviction
of a felony or willful gross misconduct that, in either case,
results in material and demonstrable damage to the business or
reputation of the Company; or (II) willful and continued failure
to perform his duties (other than such failure resulting from the
Executive's incapacity due to physical or mental illness) within
ten business days after the Company delivers to him a written
demand for performance that specifically identifies the actions
to be performed. For purposes of this Section, no act or failure
to act by the Executive shall be considered "willful" if such act
is done by the Executive in the good faith belief that such act
is or was to be beneficial to the Company, or such failure to act
is due to the Executive's good faith belief that such action
would be materially harmful to the Company. "Good Cause" shall
not exist unless and until the Company has delivered to the
Executive a copy of a resolution duly adopted by a majority of
the Board (excluding the Executive for purposes of determining
such majority) at a meeting of the Board called and held for such
purpose after reasonable (but in no event less than thirty days')
notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board, finding
that in the good faith opinion of the Board that "Good Cause"
exists, and specifying the particulars thereof in detail. This
Section shall not prevent the Executive from challenging in any
court of competent jurisdiction the Board's determination that
"Good Cause" exists or that the Executive has failed to cure any
act (or failure to act) that purportedly formed the basis for the
Board's determination.
5. Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive and
the Company and their respective legal representatives,
successors and assigns. Neither this Agreement nor any of the
duties or obligations hereunder shall be assignable by Executive.
6. Governing Law; Jurisdiction. This Agreement shall be
interpreted and construed in accordance with the laws of the
State of California. Each of the Company and Executive consents
to the jurisdiction of any state or federal court sitting in
California, in any action or proceeding arising out of or
relating to this Agreement.
7. Headings. The paragraph headings used in this Agreement are
for convenience of reference only and shall not constitute a part
of this Agreement for any purpose or in any way affect the
interpretation of this Agreement.
8. Severability. If any provision, paragraph or subparagraph
of this Agreement is adjudged by any court to be void or
unenforceable in whole or in part, this adjudication shall not
affect the validity of the remainder of this Agreement.
9. Complete Agreement. This document embodies the complete
agreement and understanding among the parties, written or oral,
which may have related to the subject matter hereof in any way
and shall not be amended orally, but only by the mutual agreement
of the parties hereto in writing, specifically referencing this
Agreement.
10. Counterparts. This Agreement may be executed in one or more
separate counterparts, all of which taken together shall
constitute one and the same Agreement.
eConnect
By: /s/ Thomas S. Hughes
Print: Thomas S. Hughes
Title: Chairman & CEO
Executive
By: /s/ Stephen E. Pazian
Print: Stephen E. Pazian
EX-10.43
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Agreement (this "Amended Agreement") is
made as of this 22nd day of March 2000, by and between eConnect,
a Nevada corporation (the "Company"), Stanley C. Morris (the
"Executive"), and Corrigan & Morris, the Executive's law firm.
Recitals
A. Stanley C. Morris is a partner of Corrigan & Morris, which
was retained by the Company to act as its counsel in connection
with an investigation conducted by the Securities and Exchange
Commission.
B. Effective March 21, 2000, Executive and the Company entered
into an Employment Agreement (the "original Agreement"), which
Original Agreement was approved on that day by the Company's
Board of Directors and executed by Tom Hughes, on behalf of the
Company, and Executive.
C. Upon executing the Original Agreement, Corrigan & Morris was
terminated as counsel for the Company.
D. Corrigan & Morris has informed the Company, who has had an
opportunity to consult with outside counsel, that it and Stanley
C. Morris have a direct conflict of interest with respect to this
Amended Agreement and do not represent the Company's interests in
this regard. The Company has had other counsel review and
provide it advice on this Amended Agreement and consents, after
full disclosure to enter into this Amended Agreement.
E. The Company desires to change the Executive's position in
the Company, effective immediately, from interim Chief Executive
Officer, under the terms and conditions set forth in the Original
Agreement, to outside counsel, in his capacity as a partner of
Corrigan & Morris, for the first three months of this Amended
Agreement, and then General Counsel and Executive Vice President
of the Company starting June 22, 2000, pursuant to the terms and
conditions of this Amended Agreement; and
F. Executive is willing to accept such change in his position,
provided his compensation under the Original Agreement is not
materially altered and otherwise on the terms and conditions set
forth in this Amended Agreement.
Covenants
1. Position and Term of Employment. Effective at noon Pacific
Standard Time on March 22, 2000, Executive shall resign as the
Chief Executive Officer of eConnect. Instead, commencing at the
same moment, the Company shall employ Corrigan & Morris for a
period of three months as its outside co-counsel with Morgan,
Lewis & Bockius for purposes of the ongoing investigation by the
Securities and Exchange Commission. Neither Executive nor
Corrigan & Morris shall be an officer of the Company during this
period. At the end of such three month period, starting June 22,
2000, the Company shall employ Executive individually as its
General Counsel and Executive Vice President. The term of the
Executive's employment as General Counsel and Executive Vice
President shall be three years, commencing on June 22, 2000 and
ending three years later, June 22, 2003, unless terminated sooner
pursuant to Section 3 of this Amended Agreement. During the term
hereof, Corrigan & Morris, for the first three months, and
Executive, for the remainder of the term of this Amended
Agreement, shall devote a substantial portion of Executive's
time, skill and attention and Executive's best efforts in
carrying out its or his duties and promoting the best interests
of the Company.
2. Executive Compensation.
2.1 Base Salary. The Company, Executive and Corrigan & Morris
agree that the Base Salary of $20,000 per month, which has been
paid to Executive in advance for the first six months pursuant to
the terms of the Original Agreement, shall continue to be the
Base Salary to be paid to Executive under this Amended Agreement
for the entire term of this Amended Agreement. However, for the
three-month period of this Amended Agreement during which
Corrigan & Morris shall be employed hereunder, such Base Salary
shall be earned by Corrigan & Morris instead of Executive
individually, and thereafter by Executive individually.
2.2 Earned on Receipt Signing Bonus. The Company, Executive and
Corrigan & Morris confirm and agree that the signing bonus set
forth in sections 2.2, 2.2.1, 2.2.2 and 2.2.3 of the Original
Agreement (the "Signing Bonus") was earned by Executive at the
moment of the execution of the Original Agreement; to the extent
not yet paid remains due and payable to Executive; and that
nothing herein should be construed to alter or amend Executive's
right to receive such Signing Bonus in full. To the extent any
portion of such Signing Bonus is construed by a Court of
competent jurisdiction not to have been earned on signing the
Original Agreement or otherwise prior to this Amended Agreement,
then as to such portion of the Signing Bonus, the Company and
Executive hereby agree that the Company shall pay Executive all
of such Signing Bonus and transfer all of such securities in
consideration for the compromise reflected in this Amended
Agreement.
2.2.1 In respect of section 2.2.1 of the Original Agreement,
the $100,000 paid to Executive shall be retained by Executive.
2.2.2 In respect of section 2.2.2 of the Original Agreement,
the Company immediately shall cause 400,000 shares of freely
tradable eConnect common stock to be transferred to Executive's
brokerage account, pursuant to Executive's instructions. At the
end of each of the first six months of this Amended Agreement,
the Company shall cause an additional 100,000 shares of freely
tradable eConnect common stock to be transferred to Executive's
brokerage account, pursuant to Executive's instructions.
2.2.3 In respect of section 2.2.3 of the Original Agreement,
the Company immediately shall cause 400,000 of the Company's
warrants, exercisable at $1.00 per share, to be vested in full,
registered, eligible for cashless exercise, and exercisable for a
period of twelve months ending March 21, 2001, to be transferred
to Executive's brokerage account, pursuant to Executive's
instructions. At the end of each of the first six months of this
Amended Agreement, the Company shall cause an additional 100,000
share of the Company's warrants on the same terms to be
transferred to Executive's brokerage account, pursuant to
Executive's instructions.
2.2.4 Although the Original Agreement calls for transfers of
100,000 shares and 100,000 warrants each month for the term of
that Original Agreement, the Company and Executive understand and
agree that such compensation shall be paid only for the first six
months of the term of this Amended Agreement, despite the fact
that the term of this Amended Agreement is thirty nine months,
rather than six months, as provided in the Original Agreement.
2.3 Executive also shall be eligible for such other upper level
management compensation programs as may be in existence at the
Company at the time of his employment and from time to time
thereafter and that the term of his employment for all purposes
shall be calculated as commencing March 21, 2000.
2.4 If Executive resigns voluntarily (exclusive of a voluntary
resignation under section 3.4 of this Amended Agreement), or
ceases to be employed by the Company for any reason described in
Section 3.1 or 3.3 of this Amended Agreement, Executive shall
return the pro-rata portion of his Base Salary that is unearned
as of the date of such termination. All other compensation
provided in this Amended Agreement and in the Original Agreement
shall be treated as having been earned upon the execution of the
Original Agreement or this Amended Agreement, whichever is
earliest as the case may be, and in any event shall not be
returned by Executive under any circumstances contemplated by
this Amended Agreement.
2.5 Expenses. During the term hereof, the Company shall pay or
reimburse Executive and Corrigan & Morris for a monthly auto
allowance of $1,000, payment of Executive's life insurance
premium on $2 million term life insurance, and cellular phone
expenses.. Executive shall also be eligible for reimbursement in
accordance with the Company's normal practices, including but not
limited to any travel, hotel and other expenses or disbursements
reasonably incurred or paid by Executive in connection with the
services performed by Executive hereunder.
2.6 Other Benefits. Executive shall be entitled to participate
in life, medical, dental, hospitalization, disability and life
insurance benefit plans made available by the Company to its
salaried employees and shall also be eligible to participate in
existing retirement or pension plans offered by the Company to
its salaried employees.
2.7 Directors and Officers Insurance. Prior to the commencement
of Executive's role as General Counsel and Executive Vice
President on June 22, 2000, the Company shall provide Executive
Directors and Officers Insurance by an insurance company
acceptable to Executive ensuring Executive against liability up
to $20 million per occurrence, effective throughout the term of
this Amended Agreement. If no such insurance is obtained in
advance, then in addition to is obligation to obtain such
insurance forthwith, the Company immediately and before June 22,
2000 shall pay a retainer in the amount of $250,000 to a law firm
of Executive's choice, for the sole benefit of Executive, for the
purpose of providing costs of defense, liability and/or
settlement of any action that may be brought against Executive in
connection with or arising out of the Original Agreement, this
Amended Agreement and/or his employment with the Company, and to
pay such other claims as Executive may have against the Company
under the terms of this Amended Agreement. Such retainer, once
paid, shall be refundable to the Company only upon the written
consent and approval of Executive.
2.8 Indemnification. The Company shall indemnify Executive,
Corrigan & Morris and Brian t. Corrigan, to the maximum extent
permitted by applicable law, against all liabilities, costs,
charges and expenses (including reasonable attorneys' fees and
disbursements) incurred or sustained by it or them in connection
with any action, suit or proceeding to which it, he or they may
be made a party as a result of their services hereunder or under
the Original Agreement on behalf of the Company pursuant to this
Amended Agreement or the Original Agreement, provided that such
liabilities, costs, charges and expenses do not result from the
willful misconduct or gross negligence of such indemnified
parties.
2.9 Fees and Expenses. The Company shall pay all legal fees and
related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result
of (a) the Executive's termination of employment (including all
such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), and (b) the
Executive seeking to obtain or enforce any right or benefit
provided by this Amended Agreement, including, but not limited
to, any such fees and expenses incurred in connection with any
dispute regarding the Signing Bonus, whether as a result of any
applicable government proceeding, audit or otherwise.
3. Termination.
3.1 This Amended Agreement shall terminate upon Executive's
death.
3.2 The Company may terminate Executive's and/or Corrigan &
Morris' employment hereunder upon fifteen (15) days' written
notice if in the opinion of the Board of Directors, Executive's
physical or mental disability has continued or is expected to
continue for one hundred and eighty (180) consecutive days and as
a result thereof, Executive will be unable to continue the proper
performance of his duties hereunder.
3.3 The Company may terminate Executive's employment hereunder
"for cause" (as hereinafter defined). If Executive's employment
is terminated for cause, Executive's salary and all other rights
not then vested under this Amended Agreement shall terminate upon
written notice of termination being given by Executive. As used
herein, the term "for cause" shall exclusively mean the
occurrence of any of the following:
3.3.1 Executive's disregard of a direct, material order of
the Executive Committee or the Board of Directors of the Company,
the substance of which order is (a) a proper duty of Executive
pursuant to this Amended Agreement; (b) permitted by law and (c)
otherwise permitted by this Amended Agreement, which disregard
continues after fifteen (15) days' opportunity and failure to
cure; or
3.3.2 Executive's conviction of a felony or any crime
involving moral turpitude.
3.4 Executive and Corrigan & Morris may terminate this Amended
Agreement at any time if Executive believes, in good faith, that
the Company has violated the securities law or regulations and,
after 15 days written notice of such violations, fails to take
all appropriate measures to cure such violations. In the event
the Company and Executive disagree as to what "appropriate
measures" are necessary to cure such violations, Tom Taylor of
Morgan, Lewis & Bockius, or such other lawyer assigned by that
firm in its sole and absolute discretion, shall be the sole
arbitrator of such dispute. The Company hereby waives any and
all conflicts of interest related to such decision. In addition,
Executive and Corrigan & Morris may terminate this Amended
Agreement at any time if Executive believes, in good faith, that
the Company intends to violate the securities law or regulations
by making a public disclosure containing material errors and
omissions. In the event the Company and Executive disagree as to
whether such public disclosure violates the securities law or
regulations, then Tom Taylor of Morgan, Lewis & Bockius, or such
other lawyer assigned by that firm in its sole and absolute
discretion, shall be the sole arbitrator of such dispute. The
Company hereby waives any and all conflicts of interest related
to such decision. In the event Executive or Corrigan & Morris
terminates this Amended Agreement under this provision, such
termination shall be treated as a termination by the Company
pursuant to section 3.2 above, and Executive and Corrigan &
Morris shall be entitled to all compensation provided under
section 2, section 2.1 through 2.9, inclusive, of this Amended
Agreement.
4. Successors and Assigns. This Amended Agreement is intended
to bind and inure to the benefit of and be enforceable by
Executive, Corrigan & Morris and the Company and their respective
legal representatives, successors and assigns. Neither this
Amended Agreement nor any of the duties or obligations hereunder
shall be assignable by Executive or Corrigan & Morris.
5. Governing Law; Jurisdiction. This Amended Agreement shall
be interpreted and construed in accordance with the laws of the
State of California. Each of the Company and Executive consents
to the jurisdiction of any state or federal court sitting in
California, in any action or proceeding arising out of or
relating to this Amended Agreement.
6. Headings. The paragraph headings used in this Amended
Agreement are for convenience of reference only and shall not
constitute a part of this Amended Agreement for any purpose or in
any way affect the interpretation of this Amended Agreement.
7. Severability. If any provision, paragraph or subparagraph
of this Amended Agreement is adjudged by any court to be void or
unenforceable in whole or in part, this adjudication shall not
affect the validity of the remainder of this Amended Agreement.
8. Complete Agreement. This document and the Original
Agreement embody the complete agreement and understanding among
the parties, written or oral, which may have related to the
subject matter hereof in any way and shall not be amended orally,
but only by the mutual agreement of the parties hereto in
writing, specifically referencing this Amended Agreement.
9. Survivorship. This Amended Agreement, including all
provisions in Section 2, 2.1 through 2.9, inclusive, shall
survive the termination of this Amended Agreement under Section 3
or otherwise.
10. Counterparts. This Amended Agreement may be executed in one
or more separate counterparts, all of which taken together shall
constitute one and the same Agreement. This Amended Agreement
shall be valid and enforceable once signed by a duly authorized
representative of each of the Parties, whether such signature is
transmitted by facsimile, represented by a photocopy or in
original form.
eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes
Title: Chairman & CEO
Executive
By: /s/ Stanley C. Morris
Stanley C. Morris
Title: Interim Chief Executive Officer
EX-10.44
CHINA-SINGAPORE-HONG KONG-MACAO
JOINT VENTURE AGREEMENT
AGREEMENT made and entered into this 27th day of March 2000 by
and between eConnect, and Raymond Kessler and Li-Wang Kessler
(hereinafter "Kesslers"). The parties hereto have agreed and by
these statements do hereby agree to associate themselves as Joint
Venturers on the following terms and conditions.
PURPOSE OF JOINT VENTURE
Create a joint venture between eConnect and Kesslers. Kesslers
will deliver a delegation from China to a meeting in the United
States with eConnect to discuss launching eConnect services in
China. Subsequent meetings with China Delegation contact(s) and
their associates will explore forging business relationships in
Singapore, Hong Kong, Macao and other countries.
TERMS OF AGREEMENT
1. Responsibilities: Kesslers will deliver the China
Delegation to a meeting in the United States. Kesslers (Li-Wang)
a trusted resource to the head of the China Delegation will
provide translation services (Mandarin) to the delegation and
facilitate relationship - building between the China Delegation
and eConnect to facilitate successful negotiations and execution
of agreements. Kesslers will work to enhance communication with
the China Delegation and create all necessary documents and
correspondence in English.
2. Compensation Paid by eConnect to Kesslers:
(a) 300,000 shares of free-trading eConnect stock. A flat fee in
stock for delivering the China Delegation to an eConnect meeting
hosted in the United States and not contingent upon any outcomes
of the meeting. Said compensation to be due Kesslers upon
commencement of the China Delegation meeting.
(b) 1% of daily transaction fee revenue generated from a China
portal, and 1% of daily transaction fee revenue generated from
other portals and agreements arising out of the China delegation
and their associates. Said compensation to be paid to Kesslers
every thirty (30) days.
(c) 300,000 shares of free trading eConnect stock per location
for each Proof of Concept Test generated or if the subject test
is waived then for each eConnect portal established/initiated at
each location excluding China (Proof of Concept Test is set forth
in Exhibit A - attached hereto and incorporated by reference).
3. Compensation Justification: The parties hereto recognize
China as one of the most potentially lucrative and difficult
markets to penetrate in the world. The parties further recognize
that Contacts/Personal Relationship is the only access to
presenting and sustaining business in the cultural context of
China and that influential and reliable contacts are extremely
difficult to establish. The above compensation is based on:
(a) The caliber of this China Delegation and their ability to
interact with high level decision makers in China and elsewhere,
and
(b) The long-term relationship of trust established between
Kesslers and the head of the China Delegation, which will
minimize communication, cultural, and trust impediments of doing
business with this group, and ultimately to penetrating the
markets in which they have influence.
4. Additional Compensation: In addition to the compensation as
set forth above, as additional consideration to Kesslers for
entering into this Agreement, eConnect will upon execution of
this Agreement deliver to Kesslers 35,000 shares of free-trading
eConnect stock that was owed to Kesslers by eConnect from a
previous business transaction (issuance of shares to Raymond
Kessler).
5. Taxes: Each party is only solely responsible for the
payment of their own taxes (State and Federal) that arises from
this Agreement.
6. Term of Joint Venture: The term of this Joint Venture shall
commence on execution of this Agreement and continues until the
Kesslers elect to end their active participation and only be
entitled to receive their compensation for ongoing fees and
revenues and expanded fees and revenues.
7. Capital Contribution and Losses: Kesslers will not be
required to contribute any capital to this Joint Venture
Agreement at any time. All losses will be borne only by eConnect
and not by the Kesslers and eConnect will be solely responsible
for any and all losses associated with and resulting from this
Joint Venture Agreement.
8. Indemnification: eConnect shall reimburse and indemnify and
defend and hold harmless Kesslers from any and all expense,
liabilities, attorney fees, damages, claims, lawsuits, SEC
investigations and lawsuits and any and all types of private or
governmental claims, investigations and lawsuits resulting from
or arising out of the subject joint venture or any non-joint-
venture business of eConnect (other business). EConnect further
agrees to name the Kesslers as an additional insured on all
insurance policies pertaining to eConnect concerning this Joint
Venture Agreement.
9. Notices: Any notice required by this Agreement must be in
writing and sent certified mail to the parties.
10. Accounting: Kesslers will have the right at all times to
inspect any and all accounting records maintained by eConnect
pertaining to this Joint Venture.
11. Scope of Joint Venture: This Joint Venture Agreement
between eConnect and Kesslers only pertains to this "China-
Singapore-Hong Kong Joint Venture" and does not create any type
of agency or partnership or joint venture or any other type of
business relationship (except shareholder status of Kesslers)
pertaining to/concerning eConnect's "other" operations i.e.
eConnect operations excluding China, Singapore, and Hong Kong and
Macao.
12. Definitions:
(a) China Delegation - means one or more persons. Meeting of
China Delegates means and includes audio-conferencing and any
other forms of meetings that are "not in person" meetings.
(b) Compensation - this term pertains to all agreements to
establish eConnect portal access to each location irrespective of
where the portal is geographically located (the China portal
hardware and control will likely be housed outside of China and
probably in Hong Kong). Compensation also includes all
countries, provinces, etc. that globally develop from this
Agreement and the contacts arising from this Joint Venture
Agreement and pertains to all agreements arising out of both
current and future negotiations involving the China Delegation
and or their agents and partners.
13. Severability: If any term, provision, covenant, or
condition of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the rest of
the Agreement shall remain in full force and effect and shall in
no way be affected, impaired, or invalidated. The parties may
execute this Agreement in two or more counterparts, which shall,
in the aggregate, be signed by all parties; each counter-part
shall be deemed an original instrument as against any party who
has signed it.
14. Governing Law: This Agreement is executed and intended to
be performed in the State of California, and the laws of that
state shall govern its interpretation and effect.
15. Successors: This Agreement shall be binding on and inure to
the benefit of the respective successors, assigns, and personal
representatives of the parties, except to the extent of any
contrary provision in this Agreement.
16. Sole and Only Agreement: This instrument contains the sole
and only agreement between the parties hereto relating to their
joint venture and correctly sets forth the rights, duties, and
obligations of each to the other in connection therewith as of
its date. Any prior agreements, promises, negotiations, or
representations not expressly set forth in this Agreement are of
no force or effect.
17. Amendment and Modification: This Agreement may be amended
or modified in any way by an instrument in writing signed by the
parties hereto and attached to this Agreement. Interlineation of
this Agreement is permitted if signed by each party.
EXECUTED at Los Angeles County, California on the day and year
first above written.
eConnect
By: /s/ Thomas S. Hughes
Thomas S. Hughes, President
/s/ Raymond Kessler
Raymond Kessler
/s/ Li-Wang Kessler
Li-Wang Kessler
PROOF OF CONCEPT TEST
Proof of Concept is defined as the usage of four (4) eConnect
PayMasters calling from a home, office, hotel room and public
location to our eConnect bank host processing center located in
the eConnect partners' country.
The test will be of three types:
A bill payment by ATM card with PIN or by a value added card
which represents cash and which we are calling the EzyCard. This
is known as the EzyPay service.
A self-service cash pay per play wager to the eConnect 777WINS
Internet Casino and to eConnect eSportsbet.com. The payment will
again be by ATM card with PIN or by EzyCard. This is known as
the EzyBet service.
A purchase from a catalog using a credit card or ATM card or
EzyCard. This is known as the EzyShop service.
What eConnect will do at eConnect's cost:
We will install a basic eConnect Host Processor that is linked
with the Partner's choice of banks.
We will provide the software and Paymaster equipment and will pay
for the phone links between the eConnect host processing center
and the bank, which will be authorizing the ATM card or credit
card or EzyCard.
What the eConnect Partner will do:
Establish the relationship with the bank in order to run the
Proof of Concept Test.
Establish a bill payment participant who will be paid by an
EzyPay transaction.
Establish a catalog participant who will be paid by an EzyShop
transaction.
Upon Successful Conclusion of the eConnect Proof of Concept Test:
eConnect and the China Partner will enter into a 50/50 Joint
Venture to develop the P.E.R.F.E.C.T. (Personal Encrypted Remote
Financial Electronic Card Transactions) industry in the Partner
Country.
EX-10.45
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
Secured by Security Agreement
$3,857,911 March 31, 2000
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 Three Million Eight Hundred
Fifty-Seven Thousand Nine Hundred Eleven Dollars ($3,857,911)
with interest at the legal rate of ten percent (10%) annually
beginning July 1, 1999 (March 31, 2000 for the sum of One Million
Twenty-One Thousand Five Hundred Dollars ($1,021,500)). 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
EX-10.46
AMENDED AND RESTATED
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 Three Million Eight
Hundred Fifty-Seven Thousand Nine Hundred Eleven Dollars
($3,857,911) plus interest at the legal rate of ten percent (10%)
annually beginning July 1, 1999 (March 31, 2000 for the sum of
One Million Twenty-One Thousand Five Hundred Dollars
($1,021,500)) ("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 word "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 March
31, 2000 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
EX-27
FINANCIAL DATA SCHEDULE
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[ARTICLE] 5
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-START] JAN-01-2000
[PERIOD-END] MAR-31-2000
[CASH] 44,646
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 44,646
[PP&E] 18,181
[DEPRECIATION] 0
[TOTAL-ASSETS] 6,519,100
[CURRENT-LIABILITIES] 1,062,449
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 77,852
[OTHER-SE] 4,903,651
[TOTAL-LIABILITY-AND-EQUITY] 6,519,100
[SALES] 40,000
[TOTAL-REVENUES] 40,000
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 10,183,238
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 97,500
[INCOME-PRETAX] (10,143,238)
[INCOME-TAX] 0
[INCOME-CONTINUING] (10,143,238)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (10,143,238)
[EPS-BASIC] (.31)
[EPS-DILUTED] (.31)
EX-99.3
TRADEMARK
Word Mark BANK EYES ONLY
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 76-000166
Registration Number
Filing Date 03/15/2000
Registration Date
Section 1(B) indicator Section 1(b)
Mark Drawing Code (1) Typed Drawing
Register
Published for Opposition
Type of Mark Trademark
International Class 36
Goods and Services Computer software and services for
electronic
purchases by consumers; computer software
for
electronic payment by consumers.
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘POS AM’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 1/31/05 | | 1 |
| | 3/20/04 | | 1 |
| | 6/22/03 | | 1 |
| | 3/21/01 | | 1 |
| | 12/31/00 | | 1 | | | | | 10KSB, NT 10-K |
| | 8/15/00 | | 1 | | | | | NT 10-Q |
| Filed on: | | 8/8/00 |
| | 7/15/00 | | 1 |
| | 6/22/00 | | 1 |
| | 6/15/00 | | 1 |
| | 5/25/00 | | 1 |
| | 5/22/00 | | 1 |
| | 5/15/00 | | 1 |
| | 5/9/00 | | 1 | | | | | 10KSB |
| | 5/1/00 | | 1 |
| | 4/30/00 | | 1 |
| | 4/17/00 | | 1 |
| | 4/15/00 | | 1 |
| | 4/14/00 | | 1 |
| | 4/13/00 | | 1 |
| | 4/12/00 | | 1 |
| | 4/7/00 | | 1 |
| | 4/6/00 | | 1 |
| | 4/1/00 | | 1 |
| | 3/31/00 | | 1 | | | | | 10QSB, 8-K, NT 10-K, NT 10-Q |
| | 3/30/00 | | 1 | | | | | 8-K |
| | 3/27/00 | | 1 |
| | 3/24/00 | | 1 |
| | 3/23/00 | | 1 |
| | 3/22/00 | | 1 |
| | 3/21/00 | | 1 |
| | 3/15/00 | | 1 | | | | | 8-K |
| | 3/14/00 | | 1 |
| | 3/13/00 | | 1 | | | | | 8-K |
| | 3/10/00 | | 1 |
| | 3/9/00 | | 1 | | | | | 10QSB/A |
| | 3/8/00 | | 1 | | | | | 8-K |
| | 3/6/00 | | 1 |
| | 3/1/00 | | 1 |
| | 2/29/00 | | 1 | | | | | 424A |
| | 2/28/00 | | 1 |
| | 2/17/00 | | 1 |
| | 2/15/00 | | 1 |
| | 2/10/00 | | 1 | | | | | S-8 |
| | 2/9/00 | | 1 |
| | 2/7/00 | | 1 |
| | 2/4/00 | | 1 |
| | 2/3/00 | | 1 |
| | 2/2/00 | | 1 | | | | | POS AM |
| | 2/1/00 | | 1 |
| | 1/26/00 | | 1 |
| | 1/21/00 | | 1 |
| | 1/19/00 | | 1 | | | | | POS AM |
| | 1/18/00 | | 1 | | | | | 8-K |
| | 1/7/00 | | 1 |
| | 1/2/00 | | 1 |
| | 1/1/00 | | 1 |
| | 12/31/99 | | 1 | | | | | 10KSB, NT 10-K |
| | 12/29/99 | | 1 |
| | 12/16/99 | | 1 |
| | 12/10/99 | | 1 |
| | 12/9/99 | | 1 |
| | 12/1/99 | | 1 |
| | 11/29/99 | | 1 |
| | 11/23/99 | | 1 |
| | 11/20/99 | | 1 |
| | 11/18/99 | | 1 | | | | | 10QSB |
| | 11/16/99 | | 1 | | | | | 10QSB/A, 8-K |
| | 11/15/99 | | 1 | | | | | 8-K, 8-K/A, NT 10-Q |
| | 11/5/99 | | 1 |
| | 10/23/99 | | 1 |
| | 10/21/99 | | 1 |
| | 9/30/99 | | 1 | | | | | 10QSB, 10QSB/A, NT 10-Q |
| | 9/29/99 | | 1 | | | | | POS AM |
| | 9/28/99 | | 1 |
| | 9/24/99 | | 1 |
| | 9/15/99 | | 1 |
| | 9/9/99 | | 1 |
| | 9/7/99 | | 1 |
| | 9/3/99 | | 1 | | | | | 10QSB, SB-2/A |
| | 8/31/99 | | 1 | | | | | 8-K, S-8 |
| | 8/23/99 | | 1 | | | | | 10QSB |
| | 8/20/99 | | 1 | | | | | SB-2 |
| | 8/19/99 | | 1 | | | | | 10KSB/A, 10SB12G, NT 10-Q |
| | 8/16/99 | | 1 |
| | 8/14/99 | | 1 |
| | 8/12/99 | | 1 |
| | 8/9/99 | | 1 |
| | 7/22/99 | | 1 | | | | | SB-2/A |
| | 7/5/99 | | 1 |
| | 7/2/99 | | 1 | | | | | 10QSB/A, S-8 POS, SB-2/A |
| | 7/1/99 | | 1 | | | | | 10KSB/A, 10QSB/A |
| | 6/30/99 | | 1 | | | | | 10KSB/A, 10QSB, 10QSB/A |
| | 6/9/99 | | 1 | | | | | S-8, SB-2/A |
| | 6/8/99 | | 1 |
| | 6/4/99 | | 1 |
| | 6/3/99 | | 1 |
| | 6/1/99 | | 1 | | | | | 8-K, SB-2 |
| | 5/28/99 | | 1 | | | | | 10QSB |
| | 5/24/99 | | 1 |
| | 5/21/99 | | 1 |
| | 5/20/99 | | 1 |
| | 5/14/99 | | 1 | | | | | S-8 |
| | 5/10/99 | | 1 |
| | 5/6/99 | | 1 | | | | | 8-K |
| | 5/3/99 | | 1 |
| | 4/29/99 | | 1 |
| | 4/26/99 | | 1 |
| | 3/12/99 | | 1 |
| | 3/10/99 | | 1 |
| | 2/28/99 | | 1 | | | | | 10QSB, 10QSB/A, NT 10-Q |
| | 2/22/99 | | 1 |
| | 2/16/99 | | 1 |
| | 1/17/99 | | 1 |
| | 12/31/98 | | 1 | | | | | 10KSB, 10QSB |
| | 9/15/98 | | 1 |
| | 8/31/98 | | 1 | | | | | 10KSB/A |
| | 6/20/98 | | 1 |
| | 5/20/98 | | 1 |
| | 5/19/98 | | 1 |
| | 3/27/98 | | 1 |
| | 3/18/98 | | 1 |
| | 4/28/97 | | 1 |
| | 3/31/97 | | 1 |
| | 2/25/97 | | 1 | | | | | 8-K |
| | 2/18/97 | | 1 | | | | | 8-K, 8-K/A |
| | 8/9/94 | | 1 |
| | 10/28/93 | | 1 |
| List all Filings |
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Filing Submission 0001084178-00-000261 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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