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
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ 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 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
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. ▇▇▇▇▇ ▇▇▇▇▇▇:
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 ▇▇▇▇ ▇▇▇▇:
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 ▇▇▇▇ ▇▇▇▇▇▇▇▇:
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 ▇▇▇▇▇▇▇ in the
denomination of 1,000,000 shares and ▇▇▇▇▇▇ in the denomination
of 2,000,000 shares. The aforementioned shares were previously
purchased by ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ 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: ▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to PCLICK:
Powerclick, Inc.
Facsimile No.:
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Exhibit "A"
Share Issuance
The ECNC Shares shall be issued and delivered in such names and
denominations as follows:
1. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,980,000
2. ▇▇▇▇▇ ▇▇▇▇ 280,000
3. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 540,000
4. E. ▇▇▇▇▇ ▇▇▇▇▇▇ 560,000
5. Quantum, Inc. 1,120,000
6. ▇▇▇▇▇▇▇ D'Fellipo 180,000
7. ▇▇▇▇▇▇▇ ▇▇▇▇▇ 120,000
8. Tab ▇▇▇▇▇▇▇▇▇ 80,000
9. ▇▇▇▇▇ ▇▇▇▇▇▇ 80,000
10. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 60,000