July 10, 2003
DEED OF VARIATION
LORD RAZZALL and
JOHN ANTHONY MITCHELL trading as
ARGONAUT ASSOCIATES
and
BOSTON FIDELITY LIMITED
FLADGATE FIELDER
25 North Row
London W I K 6DJ
Tel: 020 7323 4747
Fax: 020 7629 4414
Ref: ELB/20500/0001
DATE: 2003
PARTIES:
(1) LORD RAZZALL and JOHN ANTHONY MITCHELL trading as ARGONAUT ASSOCIATES care
of second floor, 14-16 Regent Street, London SW1Y 4PH (Argonaut);
(2) BOSTON FIDELITY LIMITED care of Asian Management Services, 111 North Bridge
Road, 18-01 Peninsula Plaza, Singapore 179098, Singapore (Boston);
(3) TOTAL HORIZONS INC of c/8631 Terrance Drive, El Ceritto, California, CA
04530 USA (TH); and
(4) PAY2 LIMITED of c/o Exchange House, 54-58 Alhol Street, Douglas, Isle of
Man, IMI IJD United Kingdom (Pay2).
The parties to this agreement agree that the heads of agreement doted 21
February 2003 as amended by a deed of variation dated Tuesday, 29 April 2003
will be terminated and of no effect among them immediately upon the signature by
all of them of the heads of agreement set out in the schedule to this agreement.
Schedule I
AGREEMENT
PARTIES
LORD RAZZALL and JOHN ANTHONY MITCHELL
trading as ARGONAUT ASSOCIATES
BOSTON FIDELITY LIMITED
PAYGARD INC, formerly TOTAL HORIZON INC.
PAY2 LIMITED
ARGONAUT ASSOCIATES LIMITED
THIS AGREEMENT is made on 2003
BETWEEN:
LORD RAZZALL and JOHN ANTHONY MITCHELL trading as ARGONAUT ASSOCIATES C/- of 2ND
Floor, 14-16 Regent Street, London SW1Y MPH, United Kingdom ("Argonaut")
and
BOSTON FIDELITY LIMITED c/o Asian Management Services, 111 North Bridge Road,
18-01 Peninsula Plaza, Singapore 179098, Singapore ("Boston')
and
PAYGARD INC, formerly TOTAL HORIZON INC, c/o 8631 Terrance Drive, El Cerrito,
California, CA 04530, USA ("TH")
and
PAY2 LIMITED c/o Exchange House, 54-58 Athol Street, Douglas, Isle of Man, IM1
1JD, United Kingdom ("Pay2")
and
ARGONAUT ASSOCIATES LIMITED c/o Papabasiliou House, PO Box 27007, 70 John F
Kennedy Avenue, Nicosia, Cyprus CY1641 ("AAC")
RECITALS:
A. The parties wish to enter into this agreement to set out their respective
rights and obligations in relation to a transaction involving TH and the "Pay2
Card System".
B. The parties have agreed to acquire shares in TH on the terms and conditions
contained in this agreement.
C. The parties have agreed to operate the business known as "Pay2 Card System"
on the terms set out in this agreement.
THE PARTIES AGREE in consideration of the mutual promises contained in this
agreement:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this agreement:
"Business Day" means a day on which banks are open for business in the United
States of America;
"Conditions Precedent" means the conditions in clause 2. 1;
"Members" means a member of the World Games Organization;
"MSL" means Miramas Services Limited, a company incorporated in Guernsey;
"Pay2 Card System" means a digital electronic debit card provided to the
Members;
"Quotation" means the OTC dealing facility referred to in clause 2.1 (i);
"Shareholders' Agreement" means a shareholders' agreement between Argonaut and
Boston on or substantially on the terms set out in clause 6;
"Share" means a share of common stock with a par value of US $0.001 in the
capital of TH.
1.2 Interpretation
In this agreement, unless the context otherwise requires:
(a) headings and underlinings are for convenience only and do not affect
its interpretation;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender,
(d) other parts of speech and grammatical forms of a word or phrase
defined in this agreement have a corresponding meaning,
(e) a reference to any thing, including, but not limited to, any right,
includes a part of that thing;
(f) a reference to a part, clause, party, annexure, exhibit or schedule is
a reference to a part and clause of, and a party, annexure exhibit and
schedule to, this agreement and a reference to this agreement includes
any annexure, exhibit and schedule;
(g) a reference to a document includes all amendments or supplements to,
or replacements or novations of, that document;
(h) a reference to a party to a document includes that party's successors
and permitted assigns;
(i) all references to dollars are to US Dollars; and
(j) if any payment to be made pursuant to this agreement falls due on a
non-Business Day, the payment is to be made on the next Business Day.
2. CONDITIONS PRECEDENT
2.1 This agreement and the obligations of the parties pursuant to it are
conditional upon the following:
(a) Boston being satisfied in its absolute discretion with the results of
its due diligence on TH, including its assets, liabilities, capital
structure and shareholders;
(b) Boston being satisfied in its absolute discretion with the rights,
title and interest of Pay2 in all intellectual property and know-how
in the Pay2 Card System;
(c) the issue by TH of 28,185,000 Shares credited as fully paid to AAC in
consideration for AAC arranging for TH to acquire an exclusive 10 year
global license from Pay2 in the form to be agreed (Pay2 License);
(d) the transfer to Boston by AAC of 4,185,000 Shares in repayment of a
promissory note from AAC to Boston for sum totalling US $1,000,000
tent by Boston to AAC;
(e) TH entering into an agreement with AAC for the repayment of a loan of
US $1,000,000 from AAC to TH evidenced by a promissory note;
(f) TH changing its name to "Paygard Inc";
(g) TH completing all relevant statutory, legal, and accounting
obligations and obtaining all necessary approvals to enable it to have
its shares dealt in on the Over the Counter Billboard in the United
States of America and paying all fees associated with the Quotation;
(h) TH obtaining all shareholder, SEC, and any other regulatory approvals
required under the laws of the United States of America to any and all
of the transactions contemplated in this agreement;
(i) the execution of the Shareholders' Agreement and such other agreements
required to give effect to the transactions contemplated in this
agreement;
(j) TH being satisfied with its due diligence investigations in respect of
Boston.
2.2 In the event that the Conditions Precedent are not satisfied by 30
September 2003, Boston and Argonaut may elect by notice in writing to
terminate this agreement whereupon the parties will be released from all
further obligations under it.
3. BOSTON RIGHTS AND OBLIGATIONS
3.1 After satisfaction of the Conditions Precedent, Boston will subscribe in
cash for Shares payment for which will be made in installments as follows
(a) 3,420,000 far $750,000, representing a premium of $0.218 per Share
payable on completion;
(b) 2,916,471 for US $1,000,000 representing a premium of US $0.342 per
Share payable one calendar month from completion;
(c) 2,916,471 for US $1,000,000 representing a premium of US $0.342 per
Share payable two calendar months from completion;
(d) 2,916,471 for US $1,000,000 representing a premium of US $0.342 per
Share payable three calendar months from completion; and
(e) 3,645,588 for US $1,250,000 representing a premium of US $0.,342 per
Share payable four calendar months from completion.
The Shares will be issued on completion of the Shareholders Agreement to Boston
nil paid and held in trust until the corresponding installment of consideration
set out above has, been paid in cleared funds for the account of the Company.
3.2 Boston will grant to TH a 20 year exclusive license to use the names of
1,000,000 Members for the purpose only of marketing the Pay2 Card System
to them (Boston License Agreement).
3.3 Boston agrees to introduce the Pay2 Card System to up to 1,000,000
Members and, with the consent of accepting Members, will arrange for
those Members to be signed up as Pay2 Card System card members by TH.
3.4 TH will pay the following sums to Boston as and when a Member is signed up
as a Pay2 Card System member by TH:
(a) for each Member up to 150,000 Members, $5;
(b) for each Member from 150,001 to 1,000,000, $5; and
(c) for each Member over 1,000,000, $ 50 cents.
3.5 The records of the Members who am the subject of the Boston License
Agreement will be maintained in the Pay2 database in the Isle of Man or anywhere
else from time to time and those records will at all times remain exclusively
the property of TH until the termination or expiry of that license agreement.
3.6 Boston, Pay2, and TH agree that the names of the Members introduced by
Boston or World Games Inc to TH will at all times remain the property of the
owner. TH and Pay2 agree not to use those names in any form whatsoever other
than pursuant to the Boston License Agreement.
3.7 Boston will have the right to acquire the issued share capital of Pay2 in
each case at the price proposed by an independent valuer in the Isle of Man as
follows:
(a) in the event that Lord Razzall, John Mitchell or Graham Newall elect
to sell all or part of their shareholdings in Pay2 and they do not
wish to acquire all or pan of each others, shareholding offered for
sale, all or part of the shareholding offered for sale;
(b) in the event that Pay2 becomes insolvent the entire issued share
capital of Pay2.
4. MSL RIGHTS AND OBLIGATIONS
4.1 TH will issue 5,700,000 Shares to MSL in satisfaction of the fee owed to MSL
for corporate finance services.
4.2 TH will enter into a consultancy agreement with MSL for a term of 3 years
commencing on I October 2003 pursuant to which MSL will be paid an annual fee of
$150,000. MSL will provide general business and consultancy services.
5. TH RIGHTS AND OBLIGATIONS
5.1 TH undertakes to Boston not to issue any further shares or other securities
without the prior written approval of Boston.
5.2 TH undertakes to Boston to provide it, and its advisers, with access to its
books and records for the purpose of enabling Boston to exercise its rights
pursuant to this agreement and Argonaut agrees to use its best endeavors to
cause TH to provide Boston with such access to the books and records of TH.
6. SHAREHOLDERS' AGREEMENT
6.1 Argonaut and Boston agree to enter into the Shareholders' Agreement
regulating their rights and obligations with respect to their shareholdings in
TH, such agreement to:
(a) provide that Argonaut and Boston will have equal voting rights and
control in TH, notwithstanding that Argonaut will hold more Shares
than Boston;
(b) include, without limitation, the terms of dilution and management and
rights of refusal in respect of each other's shares in TH and such
other terms ordinarily found in shareholders' agreements in common use
in the United States of America;
(c) provide for equal representation on the board of TH, which will not
exceed four directors but not fewer than two directors each for
Argonaut and Boston;
(d) provide that the nominated board representatives will in the case of
Argonaut, be John Mitchell and Lord Razzall and as an alternate for
either or both of them Graham Newall and in the case of Boston, Greg
Kennedy and Lindsay Sanford, who may appoint an alternate for either
or both of them.
7. SERVICE CONTRACTS
7.1 Both TH and Pay 2 will enter into a contract for services with Apollo
Consulting Limited, London for services on a cost plus 10% basis in the form
attached as appendix 2;
7.2 TH will enter into a contract for services with Interpaytech Limited,
Nicosia, Cyprus for marketing services for $900,000 per annum in the form
attached as appendix 3, with the intention that Interpaytech Limited enter into
contractual arrangements with such nominees of Boston and under which $450,000
of the funds to be paid to Interpaytech Limited are disbursed in full to such
nominees in equal shares and with such nominees of Argonaut as may be advised by
Argonaut and under which $450,000 of the funds am disbursed in full to such
nominees in equal shares.
8. GENERAL
8.1 Each party must pay its own costs and expenses in respect of the
negotiation, preparation, execution, delivery and registration of this
agreement.
8.2
(a) This agreement is governed by the laws of England.
(b) Each party irrevocably submits to the non-exclusive jurisdiction of
the courts of London, England.
(c) Each party irrevocably waives any objection to the venue of any legal
process on the basis that the process has been brought in an
inconvenient forum.
(d) Each party irrevocably waives any immunity in respect of its
obligations under this agreement that it may acquire from the
jurisdiction of any court or any legal process for any reason
including, but not limited to, the service of notice, attachment prior
to judgment, attachment in aid of execution or execution.
8.3 The terms of this agreement are confidential to each party and the
employees, legal advisers, auditors and other consultants to the parties, and
may not be disclosed by either party to other persons except:
(a) with the written consent of the other parties, which consent is not to
be unreasonably withheld-, or
(b) if required by law or by a stock exchange; or
(c) in connection with legal proceedings; or
(d) if the information is available generally and publicly.
8.4 Further assurances
Each party must do all things necessary to give full effect to this agreement
and the transactions contemplated by this agreement.
8.5 Variation
An amendment or variation to this agreement is not effective unless it is in
writing and signed by the parties.
8.6 Waiver
A party's failure or delay to exercise a power or right does not operate as a
waiver of that power or right.
8.7 Notices
A notice or other communication connected with this agreement will be taken to
have been duly and properly given if it is in writing and:
(a) sent by post, postage prepaid, to the address or last known address of
the addressee; or
(b) sent by facsimile to the facsimile number of the addressee; or
(c) otherwise delivered at the address of the addressee set out in this
agreement or subsequently notified.
For the purposes of this agreement, the initial address for service for each of
the parties is as follows:
Boston:
Address: c/o Asian Management Services,
111 North Bridge Road, 18-01 Peninsula Plaza
Singapore 179098, Singapore
Attention: Duncan Merin
Facsimile: 6563360200
Telephone: 6563360102
Argonaut:
Address: c/o 2nd Floor, 14-16 Regent Street
London SW1Y 4PH
United Kingdom
Attention: Lord Edward Timothy Razzall
Facsimile: 44 207 976 1833
Telephone: 44 207 976 1233
TH:
Address: c/o 8631 Terrance Drive, El Cerrito
California, CA 04530 USA
Attention: David Anderson
Facsimile: 44 207 976 1833
Telephone: 44 207 976 1233
Pay2:
Address: c/o Exchange House, 54-58 Athol Street
Douglas, Isle of Man IM1 I JD
United Kingdom
Attention: Graham Newall
Facsimile: 44 207 976 1933
Telephone 44 207 976 1233
8.8 This agreement may be executed in any number of counterparts, but the
counterparts together constitute the one instrument,
8.9 The parties agree that this agreement is to be legally binding on the
parties until such time as it is replaced by more formal and comprehensive
documentation.
EXECUTED AS AN AGREEMENT:
EXECUTED by LORD RAZZALL
and JOHN ANTHONY MITCHELL for and on behalf of
ARGONAUT ASSOCIATES
EXECUTED for and on behalf of
ARGONAUT ASSOCIATES LIMITED
by the authority of
the Directors
Name:
(Director)
In the presence of
Name:
Address
Occupation
EXECUTED for and on behalf of
BOSTON FIDELITY LIMITED
by the authority of the
Directors:
(one signatory)
Name (Director) in the presence of
Name: Address: Occupation:
EXECUTED for and on behalf of
TOTAL HORIZON INC
by the authority of the
Directors:
Name
(Director)
In the presence of
Name: Address: Occupation:
EXECUTED for and on behalf of
PAY2 Limited
by the authority of the Directors:
Name
(Director)
In the presence of.
Name: Address: Occupation:
EXECUTED for and on behalf of
ARGONAUT ASSOCIATES MUTED,
by the authority of the
Directors:
Name
(Director)
In the presence of
Name: Address: Occupation:
Executed by Lord Razzall and
John Anthony Mitchell
trading as Argonaut Associates
Executed a by Lord Razzall in the presence of:
Witness' signature:
Witness' name:
Address:
Occupation:
Executed by
John Anthony Mitchell
in the presence of:
Witness' signature
Witness' name:
Address:
Occupation:
Executed by
Boston Fidelity Limited
Executed by Total Horizon, Inc.
Director
Executed by Pay2 Limited
Director
Interpaytech Ltd
Nicosia, Cyprus
Airwaves Consultants Ltd Tortola British Virgin Islands
10 July 2003
Dears Sirs,
LETTER AGREEMENT
We are writing to confirm arrangements whereby we. have appointed Airwaves
Consultants Ltd to act as consultants to Interpaytech Ltd providing management
and marketing services.
By way of compensation Interpaytech will pay Airwaves Consultants Ltd an annual
fee of US $225,000 payable monthly in arrears commencing I' October 2003.
This arrangement will have a term of 3 years.
Please confirm your acceptance of these terms by signing the attached copy of
this agreement.
Yours sincerely,
J.A. Mitchell
Director
Accepted:
Airwaves Consultants Ltd
PAY2 LTD
Isle of Man
Argonaut Associates Ltd
14-16 Regent Street
London, SW I Y 4PH
10 July 2003
Dear Sirs,
We are writing to confirm your appointment as consultants to Pay 2 Ltd providing
management services.
in compensation for the provision of these services Pay2 will pay to Argonaut
Associates Ltd 54.55% of the annual royally received by Pay2 from Paygard Inc.
(formerly known as Total Horizon Inc.) in accordance with the License Agreement
dated 20 March 2003 between Pay2 and Total Horizon Inc.
Yours sincerely,
John Mitchell
Director