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Exhibit 10.5  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS AGREEMENT is made effective as of the 5th day of December, 2002 (the "Commencement Date"), between ETS Payphones, Inc., a Georgia
corporation (the "Company"), and Michael H. McClellan (the "Executive"). 

INTRODUCTION 

        The
Company and the Executive desire to enter into an employment agreement embodying the terms and conditions of Executive's employment. 

        NOW,
THEREFORE, the parties agree as follows: 

1.     Definitions  

        (a)   "Affiliate" means any person, firm, corporation, partnership, association or entity that, directly or indirectly or
through one or more intermediaries, controls, is controlled by or is under common control with the Company. 

        (b)   "Applicable Period" means the period of the Executive's employment hereunder and for one (1) year after
termination of his employment with the Company. 

        (c)   "Area" means the United States of America. 

        (d)   "Business of the Company" means the business of the management and operation of payphones, as such business existed on
the date of Executive's termination of employment. 

        (e)   "Cause" means any of the following events which is reasonably determined by the Board of Directors of the Company to have
occurred: (i) willful and continued failure (other than such failure resulting from his incapacity during physical or mental illness) by the Executive to substantially perform his duties with
the Company or an Affiliate; (ii) conduct by the Executive that amounts to willful misconduct or gross negligence which causes material harm to the Company; (iii) any act by the
Executive of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company or an Affiliate; (iv) conviction of the Executive for a felony or any other crime involving
moral turpitude; or (v) illegal drug use by the Executive. 

        (f)    Change in Control. For purposes of this Agreement, a Change in Control of the Company shall have occurred if (i) any
"Person" (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") as modified and used in Sections 13(d) and 14(d) of the Exchange Act) other than
(1) the Company or any of its subsidiaries, (2) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (3) an
underwriter temporarily holding securities pursuant to an offering of such securities, or (4) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of the Company's common stock), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 10% of the combined voting power of the Company's then outstanding voting securities; 

        (g)   "Company Information" means Confidential Information and Trade Secrets. 

        (h)   "Competing Business" means any person, firm, corporation, joint venture or other business entity which is engaged in the
Business of the Company (or any aspect thereof) within the Area. 

        (i)    "Confidential Information" means data and information relating to the Business of the Company (which does not rise to the
status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through its relationship to the Company and which has value to
the Company and is not generally known to its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed 

 

to
the public by the Company (except where such public disclosure has been made by the Executive without authorization) or that has been independently developed and disclosed by others, or that
otherwise enters the public domain through lawful means. The provisions in this Agreement restricting the use of Confidential Information shall survive for a period of one (1) year following
termination of this Agreement. 

        (j)    "Disability" means a physical or mental condition which prevents Executive from performing the regular duties of his
employment for any period in excess of the period of short-term disability or salary continuation under the Company's short-term disability plan or policy, or if none, a
continuous period of three months or an aggregate of three months in any twelve month period. 

        (k)   "Good Reason" means the occurrence of any of the following events which is not corrected by the Company within thirty
(30) days after the Executive's written notice to the Company of the same: (i) the nature of Executive's duties or the scope of his responsibilities are materially modified without the
Executive's written consent; (ii) the Executive is required to report to a different position without the Executive's written consent; (iii) before the ninth (9th) monthly anniversary of
the Commencement Date, the Company changes the location of the Executive's place of employment to more than fifty (50) miles from its present location without the Executive's consent; or
(iv) a material breach of the Agreement by the Company. 

Additionally,
for purposes of Section 4(c), if Executive terminates his employment within 30 days of a Change in Control, it shall be considered a termination for Good Reason. 

        (l)    "Invention" means any discovery, whether or not patentable, including, but not limited to, any useful process, method,
formula, technique, machine, manufacture, composition of matter, algorithm or computer program, as well as improvements thereto, which is new or which Executive has a reasonable basis to believe may
be new. The definition of "Invention" under this Agreement is not limited to the definition of that term under the United States patent laws. 

        (m)  "Subject Invention" means any Invention which is conceived by or first practiced by Executive, whether alone or in a
joint effort with others, during Executive's employment by the Company, whether prior to or following execution of this Agreement, which (i) may be reasonably expected to be used in a product
of the Company or a product similar to a Company product; (ii) results from work that Executive has been assigned as part of Executive's duties as an employee of the Company; (iii) is in
an area of technology which is the same as or substantially related to the areas of technology with which Executive is involved in the performance of Executive's duties as an employee of the Company;
or (iv) is useful, or which Executive reasonably expects may be useful, in any manufacturing or product design process of the Company. 

        (n)   "Trade Secrets" means information including, but not limited to, technical or nontechnical data, formulas, patterns,
compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which
(i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. 

        (o)   "Work" means a copyrightable work of authorship, including without limitation, any technical descriptions for products,
user's guides, illustrations, advertising materials, computer programs (including the contents of read only memories) and any contribution to such materials. 

2.     Terms and Conditions of Employment.  

        (a)   Employment. The Company hereby employs the Executive as its Executive Vice President and Chief Financial Officer and the
Executive accepts employment with the Company subject to the terms 

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and
conditions hereof. The Executive shall have such authority and responsibilities and perform such duties as shall be assigned to the Executive from time to time by the Chief Executive Officer and
Board of Directors of the Company. 

        (b)   Exclusivity. Throughout the Executive's employment hereunder, the Executive shall devote substantially all the
Executive's time, energy and skill during regular business hours to the performance of the duties of the Executive's employment (vacations and reasonable absences due to illness excepted), shall
faithfully and industriously perform such duties, and shall diligently follow and implement all management policies and decisions of the Company. 

3.     Compensation.  

        (a)   Base Salary. In consideration for the Executive's services hereunder, the Company shall pay to the Executive an initial
annual base salary in the amount of $165,000 Executive's annual base salary shall be reviewed at least annually by the Company, and the Company may increase the Executive's annual base salary in its
discretion. The Company shall pay annual base salary in accordance with the normal payroll payment practices of the Company and subject to such deductions and withholdings as law or policies of the
Company, from time to time in effect, require. 

        (b)   Annual Bonus. In addition to the annual base salary payable under Section 3(a) hereof, the Executive shall be
entitled to an annual bonus for each fiscal year of the Company beginning on or after January 1, 2003 in an amount determined by the Chief Executive Officer of the Company. 

        (c)   Benefits. In addition to the annual base salary, bonus, and other benefits payable to the Executive hereunder, the
Executive shall be entitled to such benefits as currently exist for executives of the Company. 

        (d)   Expenses. The Executive shall be entitled to be reimbursed in accordance with the policies of the Company, as adopted and
amended from time to time, for reasonable and necessary expenses incurred by the Executive in connection with the performance of the Executive's duties of employment hereunder; provided, however, the
Executive shall, as a condition of such reimbursement, submit verification of the nature and amount of such expenses in accordance with the reimbursement policies from time to time adopted by the
Company. 

4.     Term, Termination and Termination Payments.  

        (a)   Term. The term of this Agreement (the "Term") shall commence as of the Commencement Date of this Agreement and shall end
on the fourth anniversary of the Commencement Date; provided, however, that the Term may be renewed if the Executive and Company agree. 

        (b)   Termination. This Agreement and the Executive's employment by the Company hereunder may only be terminated (i) by
mutual agreement of the Executive and the Company; (ii) by the Executive upon not less than one month's prior notice to the Company; (iii) by the Company without Cause; (iv) by
the Company for Cause; or (v) upon expiration of the Term. This Agreement shall also terminate immediately upon the death or the Disability of the Executive. Notice of termination by either the
Company or the Executive shall be given in writing and shall specify the basis for termination and the effective date of termination. 

        (c)   Effect of Termination. Upon termination of this Agreement and the Executive's employment hereunder, the Company shall
have no further obligation to the Executive or the Executive's estate with respect to this Agreement, except for payment of salary and bonus amounts, if any, accrued pursuant to Section 3(a) or
3(b) hereof and unpaid at the date of termination; provided, however, that if the Company terminates the Executive's employment without Cause during the Term or if the Executive terminates his
employment for Good Reason during the Term, the Company shall pay the Executive a lump sum equal to one (1) times his annual base salary, based on the Executive's base 

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salary
as of the date of termination and shall continue medical insurance for the Executive and his dependents on the same terms as exist on the date of termination for a period of one
(1) year. After that one year period, Executive shall be entitled to elect eighteen months of continuation coverage under COBRA. Nothing contained herein shall limit or impinge any other rights
or remedies of the Company or the Executive under any other agreement or plan to which the Executive is a party or of which the Executive is a beneficiary. 

        (d)   Survival. The covenants of the Executive in Sections 5, 6, 7, and 8 hereof shall survive the termination of this
Agreement and the Executive's employment hereunder and shall not be extinguished thereby. 

5.     Agreement Not to Solicit Customers.  

        The Executive agrees that commencing on the Commencement Date and continuing through the Applicable Period, he will not, either directly or indirectly, on the
Executive's own behalf or in the service of or on behalf of others, solicit or divert, or attempt to solicit or divert, to a Competing Business, any individual or entity which was an actual or
actively sought prospective client, customer of the Company, or distributor of the Company's products or services and with whom the Executive had material contact during the Executive's last
2 year(s) of employment with the Company. 

6.     Agreement Not to Solicit Employees.  

        The Executive agrees that commencing on the Commencement Date and continuing through the Applicable Period, he will not, either directly or indirectly, on the
Executive's own behalf or in the service of or on behalf of others, solicit, divert, or attempt to solicit, divert, to any Competing Business in the Area any person employed by the Company or an
Affiliate, whether or not such employee is a full-time employee or a temporary employee of the Company or an Affiliate and whether or not such employment is pursuant to written agreement
and whether or not such employment is for a determined period or is at will. 

7.     Ownership and Protection of Proprietary Information.  

        (a)   Confidentiality. All Confidential Information and Trade Secrets and all physical embodiments thereof received or
developed by the Executive while employed by the Company are confidential to and are and will remain the sole and exclusive property of the Company. Except to the extent necessary to perform the
duties assigned to him by the Company, the Executive will hold such Confidential Information and Trade Secrets in trust and strictest confidence, and will not use, reproduce, distribute, disclose or
otherwise disseminate the Confidential Information and Trade Secrets or any physical embodiments thereof and may in no event take any action causing or fail to take the action necessary in order to
prevent, any Confidential Information and Trade Secrets disclosed to or developed by the Executive to lose its character or cease to qualify as Confidential Information or Trade Secrets. 

        (b)   Return of Company Property. Upon request by the Company, and in any event upon termination of the employment of the
Executive with the Company for any reason, the Executive will promptly deliver to the Company all property belonging to the Company, including, without limitation, all Confidential Information and
Trade Secrets (and all embodiments thereof) then in the Executive's custody, control or possession. 

        (c)   Survival. The covenants of confidentiality set forth herein will apply on and after the date hereof to any Confidential
Information and Trade Secrets disclosed by the Company or developed by the Executive prior to or after the date hereof. The covenants restricting the use of Confidential Information will continue and
be maintained by the Executive for a period of one (1) year following the termination of this Agreement. The covenants restricting the use of Trade Secrets will continue and 

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be
maintained by the Executive following termination of this Agreement for so long as permitted by the Georgia Trade Secrets Act of 1990, O.C.G.A. § 10-1-760, et
seq. 

8.     Inventions.  

        (a)   Executive
agrees that all Subject Inventions and all patent and other intellectual property and trade secret rights in and to Subject Inventions will become the property
of the Company, and Executive hereby irrevocably assigns to the Company all of Executive's rights to all Subject Inventions. 

        (b)   Executive
agrees that if Executive has conceived or reduced to practice or if Executive conceives or reduces to practice an Invention during the term of Executive's
employment with the Company, Executive will promptly provide a written description of the Invention and all other requested information to the Company adequate to allow evaluation for a determination
as to whether the Invention is a Subject Invention. 

        (c)   If,
upon commencement of Executive's employment with the Company, Executive has previously conceived any Invention or acquired any ownership interest in any Invention,
which: (i) is Executive's property, or of which Executive is a joint owner with another person or company; (ii) is not described in any issued patent as of the commencement of
Executive's employment with the Company; and (iii) would be a Subject Invention if such Invention was made while a Company employee; then Executive must provide the Company with a written
description of the Invention on Exhibit A, in which case the written description (but no rights to the Invention) shall become the property of
the Company; or (ii) provide the Company with the license described in Section 8(d) of this Agreement. 

        (d)   If
Executive has previously conceived or acquired any ownership interest in an Invention described above in Section 8(c) and Executive elects not to disclose the
same to the Company as provided above, then Executive hereby grants to the Company a nonexclusive, paid up, royalty-free license to use and practice the Invention, including a license
under all patents to issue in any country which pertain to the Invention. 

        (e)   Executive
owns no patents, either individually or jointly with others, except those described on Exhibit A. 

9.     Patent Applications.  

        (a)   Executive
agrees that should the Company elect to file an application for patent protection, whether in the United States or in any foreign country, on a Subject
Invention of which Executive was an inventor, Executive will execute all necessary documentation relating to the patent applications, including formal assignments to the Company. 

        (b)   Executive
further agrees that Executive will cooperate with attorneys or other persons designated by the Company by explaining the nature of any Subject Invention for
which the Company elects to file an application for patent protection, reviewing applications and other papers and providing any other cooperation required for prosecution of the patent applications.
The Company will be responsible for all expenses incurred for the preparation and prosecution of all patent applications on Subject Inventions assigned to the Company. 

10.   Copyrights.  

        (a)   Executive
agrees that any Works created by Executive in the course of Executive's duties as an employee of the Company are subject to the "Work for Hire" provisions
contained in Sections 101 and 201 of the United States Copyright Law, Title 17 of the United States Code. All right, title and interest to copyrights in all Works that have been or will be prepared by
Executive within the scope of Executive's employment with the Company will be the property of the Company. Executive acknowledges and agrees that, to the extent the provisions of Title 17 of the
United States Code do not 

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vest
in the Company the copyrights to any Works, Executive hereby assigns to the Company all right, title and interest to copyrights which Executive may have in the Works. 

        (b)   Executive
must disclose to the Company all Works referred to in Section 10(a) and will execute and deliver all applications, registrations, and documents relating
to the copyrights to the Works and will provide assistance to secure the Company's title to the copyrights in the Works. The Company will be responsible for all expenses incurred in connection with
the registration of all such copyrights that it decides to register. 

        (c)   Executive
has no ownership rights in any Works except those described on Exhibit A. 

11.   Contracts or Other Agreements with Former Employer or Business.  

        The Executive hereby represents and warrants that he is not subject to any employment agreement or similar document, except as previously disclosed and delivered
to the Company, with a former employer or any business with which the Executive has been associated, which on its face prohibits the Executive
during a period of time which extends through the Commencement Date from any of the following: (i) competing with, or in any way participating in a business which competes with the Executive's
former employer or business; (ii) soliciting personnel of such former employer or business to leave such former employer's employment or to leave such business; or (iii) soliciting
customers of such former employer or business on behalf of another business. 

12.   Remedies.  

        The Executive agrees that the covenants and agreements contained in Sections 5, 6, 7 and 8 hereof are of the essence of this Agreement; that each of such
covenants is reasonable and necessary to protect and preserve the interests and properties of the Company and the Business of the Company; that the Company is engaged in and throughout the Area in the
Business of the Company; that irreparable loss and damage will be suffered by the Company should the Executive breach any of such covenants and agreements; that each of such covenants and agreements
is separate, distinct and severable not only from the other of such covenants and agreements but also from the other and remaining provisions of this Agreement; that the unenforceability of any such
covenant or agreement shall not affect the validity or enforceability of any other such covenant or agreements or any other provision or provisions of this Agreement; and that, in addition to other
remedies available to it, the Company shall be entitled to specific performance of this Agreement and to both temporary and permanent injunctions to prevent a breach or contemplated breach by the
Executive of any of such covenants or agreements. 

13.   No Set-Off.  

        The existence of any claim, demand, action or cause of action by the Executive against the Company, or any Affiliate of the Company, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any of its rights hereunder. 

14.   Notice.  

        All notices, requests, demands and other communications required hereunder shall be in writing and shall be deemed to have been duly given if delivered or if
mailed, by United States certified or 

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registered
mail, prepaid to the party to which the same is directed at the following addresses (or at such other addresses as shall be given in writing by the parties to one another): 

	If to the Company:	 	ETS Payphones, Inc.

Suite G

1490 Westfork Drive

Lithia Springs, Georgia 30122

Attn: Chief Executive Officer
	

With a copy to:	
 	

Shannon Lowry Nagle, Esq.

Powell, Goldstein, Frazer & Murphy LLP

191 Peachtree Street, N.E.

Sixteenth Floor

Atlanta, Georgia 30303-1740
	

If to the Executive:	
 	

Michael H. McClellan

Notices
delivered in person shall be effective on the date of delivery. Notices delivered by mail as aforesaid shall be effective upon the third calendar day subsequent to the postmark date thereof. 

15.   Miscellaneous.  

        (a)   Assignment. This Agreement will be binding on the assignees of the Company and may be assigned by the Company to any
Affiliate, legal successor to the Company or an Affiliate, or to an entity which purchases all or substantially all of the assets of the Company or an Affiliate. Otherwise, neither this Agreement nor
any right of the parties hereunder may be assigned or delegated by any party hereto without the prior written consent of the other party. In the event the Company assigns this Agreement as permitted
by this Agreement, the "Company" as defined herein will refer to the assignee and the Executive will not be deemed to have terminated employment hereunder until the Executive terminates employment
from the assignee. 

        (b)   Waiver. The waiver by the Company of any breach of this Agreement by the Executive shall not be effective unless in
writing, and no such waiver shall constitute the waiver of the same or another breach on a subsequent occasion. 

        (c)   Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of
Georgia. The parties agree that any appropriate state or federal court located in Fulton County, Georgia shall have jurisdiction of any case or controversy arising under or in connection with this
Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. 

        (d)   Entire Agreement. This Agreement embodies the entire agreement of the parties hereto relating to the subject matter
hereof and supersedes all oral agreements, and to the extent inconsistent with the terms hereof, all other written agreements. 

        (e)   Amendment. This Agreement may not be modified, amended, supplemented or terminated except by a written instrument
executed by the parties hereto. 

        (f)    Severability. Each of the covenants and agreements hereinabove contained shall be deemed separate, severable and
independent covenants, and in the event that any covenant shall be declared invalid by any court of competent jurisdiction, such invalidity shall not in any manner affect or impair the validity or
enforceability of any other part or provision of such covenant or of any other covenant contained herein. 

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        (g)   Captions and Section Headings. Except as set forth in Section 1 hereof, captions and section headings used herein
are for convenience only and are not a part of this Agreement and shall not be used in construing it. 

[Remainder
of Page Intentionally Left Blank] 

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        IN
WITNESS WHEREOF, the Company and the Executive have each executed and delivered this Agreement as of the date first shown above. 

	 	 	COMPANY:
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	

Title:	
 	

 
	 	 	 	 	
 [CORPORATE SEAL]
	

 	
 	

EMPLOYEE:
	

 	
 	

 Michael H. McClellan

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EMPLOYMENT AGREEMENTSECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

Date of Report: April 6, 2004

                                  PAYGARD, INC.
                        --------------------------------
              (Exact name of registrant as specified in its charter)

 NEVADA                     0-29685                 95-4783100
- ----------------           -------------            ------------
(State or other               (Commission              (IRS Employer
jurisdiction of               File Number)             Identification No.
incorporation)                                          pre-merger)

              350 South Center Street, Suite 500, Reno, NV 89501
           ----------------------------------------------------------
               (Address of principal executive offices)(Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (775) 284-3700

<PAGE>

ITEM 1.    CHANGES IN CONTROL OF REGISTRANT

               None.

ITEM 2.    ACQUISITION OR DISPOSITION OF ASSETS

               None.

ITEM 3.    BANKRUPTCY OR RECEIVERSHIP

               None.

ITEM 4.    CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT

               None.

<PAGE>

ITEM 5.    OTHER EVENTS REGULATION FD DISCLOSURE

The Company had entered into certain  Agreements with various entities,  some
of which are related  parties,  in the prior year, which Agreements had not been
filed as Material Agreements. These Agreements are as follows:

A. On March 20,  2003,  the Company  entered  into an  Agreement  with Pay2 LTD.
whereby  Pay 2 has agreed to grant a license  to the  Company to market and sell
Pay 2 Cards. The agreement  requires marketing of 200,000 cards per month within
12 months of operational  statues of Pay 2 Cards. The Agreement provides for the
payment  of 10% of net  revenue  from  cards  plus  costs.  The  Company  issued
28,185,000  shares under the contract,  4,000,000 of which shares were issued to
Argonaut Associates.

  The term of the Agreement is initially ten years, renewable by mutual
agreement and the territory is worldwide.

B. Agreement between Lord Razzall and John Anthony Mitchell, dba Argonaut
Associates, Boston Fidelity, Pay 2 LTD and the Company on June 12, 2003 provided
for a) issuing 28,199,000 common shares of the Company to Argonaut for arranging
the exclusive ten year license, worldwide, from Pay 2 b) transfer of 4,185,000
shares from Argonaut to Boston c) The Company entering into a Promissory Note to
repay $1,200,000 in loans form Argonaut to the Company. d) Boston subscribing
for 15,815,001 common shares for $5,000,000 e) certain other Agreements include:

Boston will grant to the Company 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),

 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 the Company.

The Company will pay the following sums to Boston as and when a Member is signed
up as a Pay2 Card System member by the Company:

     (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.
<PAGE>

Boston,  Pay2, and the Company agree that -the names. of the Members  introduced
by Boston or World  Games  Inc.  to the  Company  will at all times  remain  the
property of the owner.  the Company and Pay2 agree not to use those names in any
form whatsoever other than pursuant to the Boston License Agreement.

 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:

          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 part of each others'  shareholding  offered for
          sale, all or part of the shareholding offered for sale;

The Company will issue 5,700,000  Shares to Miramas Services Ltd in satisfaction
of the fee owed to Miramas Services Ltd for corporate finance services.

The Company will enter into a consultancy  agreement  with Miramas  Services Ltd
for a term of 3 years  commencing  on October  2003  pursuant  to which  Miramas
Services Ltd will be paid an annual fee of $150,00  profit share to be agreed by
the Board,  Miramas  Services Ltd will provide general  business and consultancy
services.

The  Company  undertakes  to  Boston  not to issue any  further  shares or other
securities without the prior written approval of Boston.

The Company 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 the  agreement  and  Argonaut  agreed to use its best  endeavors to
cause the Company to provide Boston with  access to the books and records of
the Company

 Argonaut and Boston agreed to enter into the Shareholders' Agreement
regulating their rights and obligations with respect to their shareholdings in
the Company, such agreement to:

     (a)  provide that  Argonaut  and Boston will have equal  voting  rights and
          control in the Company  notwithstanding  that  Argonaut will hold more
          Shares than Boston;
<PAGE>

     (b)  include, without limitation,  the terms of dilution and management and
          rights of refusal in respect of each other's shares in the Company 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 the  Company  which
          will not exceed four  directors but no 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.

C. The Company  entered  into a Deed of Variation  July 10,  2003,  between Lord
Razzall, John Anthony Mitchell dba Argonaut Associates, Boston Fidelity, and Pay
2 LTD. whereby the prior Agreement was amended,  which provides for: a) issuance
of 28,185,000  common shares to Argonaut in consideration for the arrangement of
the Pay 2 license.  b) the  transfer of  4,185,000  shares by Argonaut to Boston
Fidelity. c) the repayment of a loan of $1,000,000 from Argonaut to the Company.
d) changing the name of the Company to Paygard,  Inc. 4) completing  the Company
regulatory  filings and obtaining an OTCBB listing.  f) Boston  reaffirming  its
subscription for the sum of $5,000,000.

The Deed of Variation provides:

Argonaut and Boston agree to enter into the Shareholders'  Agreement  regulating
their rights and obligations with respect to their shareholdings in the Company,
such agreement to:

     (a)  provide that  Argonaut  and Boston will have equal  voting  rights and
          control in the Company,  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 the Company 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 the  Company  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.
<PAGE>

Both the Company and Pay 2 will enter into a contract for  services  with Apollo
Consulting  Limited,  London for  services  on a cost plus 10% basis.

The Company agreed to will enter into a contract for services with  Interpaytech
Limited,  Nicosia, Cyprus for marketing services for $900,000 per annum 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 are disbursed in full to such nominees in equal shares.

D. The Company engaged Miramas services Ltd. under a letter  agreement  (Miramas
Agreement) concurrent with entering into the Shareholders Agreement. The Miramas
Agreement  provides  that the  Company  engages  Miramas  for  three  years  for
corporate and financial consulting services @ a fee of $150,000 per year payable
monthly in arrears.  In addition the Company agreed to pay Miramas 1.147% of the
annual net profit  generated by the Company,  which  percent shall be calculated
based upon a formula agreed to between the parties.  The profit percentage shall
continue for the life of the license agreement.

E. On July 10, 2003, the Company and Interpaytech Ltd, concurrent with the Pay 2
Agreement, entered into an Agreement whereby Interpaytech will supply services
to the Company for marketing the Pay 2 Stored Value Payment System.  The payment
schedule is based upon 35% of Net Revenue from all card transactions and sale
generated by each customer of Company procured by Interpaytech.  The term is for
three years, renewable automatically unless 30 days written notice of
termination is given.  In addition, the Company shall pay Interpaytech a
monthly fee of $75,000 per month from October 1, 2003.

F. The Company  entered into a Shareholders  Agreement  with Lord Razzall,  John
Mitchell  (Argonaut  Associates),  Boston Fidelity LTD, Paygard,  Inc. and Pay 2
Limited on July 10, 2003:
        The Agreement provided for an investment of $5,000,000 by Boston
Fidelity Ltd into Paygard for 15,815,000 shares.
     The Agreement  also provided for payment by the Company of a fee to Miramas
Services  Ltd  of  5,700,000  shares and  granted a three year  contract at
$150,000 per year for  consulting  fees to Miramas  Services  Ltd The  Agreement
further provides for:

        1) a License Agreement between Company and Boston Fidelity be executed
for use of purposing of marketing Pay 2 Card System.
        2) a Services Agreement between the Company and Graham Newall.
        3) The Company confirmed its Agreement to repay a loan of $1,200,000 to
Argonaut.
        4) The Company agreed to procure the resignation of certain existing
directors after the Company was "listed".
        5) The Company appoints John Mitchell, Lord Razzall, Greg Kennedy, and
Lindsay Sanford as Directors.
        6) The Company appoints Graham Newall as CEO.
        7) The Company will not issue further shares without the consent of
Boston Fidelity Ltd.
<PAGE>

ITEM 6.    RESIGNATION AND APPOINTMENT OF OFFICERS AND DIRECTORS

               None.

ITEM 7.    FINANCIAL STATEMENTS, PRO FORMA FINANCIALS, & EXHIBITS

               Financial Statements

               None.
<PAGE>

        Exhibits

        10.1 Pay2 LTD License Agreement March 20, 2003
        10.2 Agreement June 12, 2003
        10.3 Deed of Variation July 10, 2003
        10.4 Letter Agreement July 10, 2003
        10.5 Agreement between Total Horizon, Inc. and Interpaytech Limited July
             10, 2003
        10.6 Shareholders Agreement July 10, 2003

ITEM 8. CHANGE IN FISCAL YEAR

               None.

ITEM 9. REGULATION FD DISCLOSURE

               None.

ITEM 10. AMENDMENTS TO THE REGISTRANT'S CODE OF ETHICS, OR WAIVER OF A PROVISION
         OF THE CODE OF ETHICS.

               None.

ITEM 11. TEMPORARY SUSPENSION OF TRADING UNDER REGISTRANT'S EMPLOYEE BENEFIT
         PLANS.

               None.

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

               None.

<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

Date:  April 6, 2004                         PAYGARD, INC.

                                                  By: /s/ Gerve Brazier
                                                  ---------------------------
                                                  Gerve Brazier, President

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