FEC LETTERHEAD
April 1, 1998
Moorgate Management Inc. (in formation)
C/O ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Black
10th Floor - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇:
---------
Dear ▇▇. ▇▇▇▇▇▇▇:
RE: CONSULTING AGREEMENT WITH FEC
---------------------------------
Pursuant to our various meetings and discussions pertaining to the engagement of
your services, this letter serves to confirm and acknowledge the arrangements
reached between Moorgate Management, Inc. (in formation) and FEC.
1. Moorgate will provide ongoing consulting services to FEC on all matters
relating to management, operation and corporate secretarial services. In
addition, ▇▇▇▇▇▇▇▇ will assist in compilation of material for the drafting
and preparation of a corporate business plan and the 10SB filing with the
SEC to enable FEC to become a reporting issuer.
2. Moorgate shall be paid an annual consulting fee of US $125,000 payable
monthly. In addition to the consulting fee, FEC will also be responsible for
any and all reasonable disbursements and out of pocket expenses incurred by
Moorgate in the course of it providing the necessary services.
3. Since FEC is presently in a "start-up" mode, and is not adequately funded, we
have agreed that the consulting fee due to Moorgate may, with mutual prior
agreement, be accrued from time to time. Should any of the consulting fee be
accrued, either Moorgate or ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have the right to apply any
or all of the accrued consulting fees, together with any outstanding
disbursements toward exercise of any options that may be set by FEC either in
the name of Moorgate or ▇▇▇▇▇ ▇▇▇▇▇▇▇.
4. The commencement date of your services shall be April 1, 1998 and be
automatically renewed on each anniversary for one year, unless otherwise
notified in writing.
5. Upon entering into this agreement, Moorgate shall be issued a signing bonus
of 200,000 common shares of FEC subject to rules and regulations of SEC.
FEC LETTERHEAD
6. As a further inducement, Moorgate shall be issued 400,000 warrants entitling
the holder to purchase one common share of FEC for each warrant so issued at
a purchase price of US $ 0.35. The warrants shall have a term of five (5)
years commencing April 1, 1998 and expiring March 31, 2003. The Share
Purchase Warrant Certificate shall be in the form attached hereto as Schedule
"I".
7. Moorgate shall be solely responsible for all of its own corporate expenses,
including but not limited to office rent, assistant or substitute and
supplies that are used directly in the employee's work, etc.
Both parties hereby confirm and acknowledge that Moorgate Management Inc. is in
the process of being formed and is not currently in existence; except that the
name has been reserved. In the event Moorgate Management Inc. is not
incorporated, for whatever reason, this agreement shall deem to be in the name
of ▇▇▇▇▇ ▇▇▇▇▇▇▇, with ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ having full rights to assign this
agreement to a management company of his choice.
Please review the foregoing and if the same accurately reflects our
understanding, please be so good as to sign in the appropriate space below,
confirming the above arrangement.
Kindly execute both copies of this letter agreement, retain the original for
your files and return the enclosed copy to the writer's attention.
Yours truly,
FORTUNE ENTERTAINMENT CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Office & Director
We, the undersigned, hereby acknowledge and confirm the above arrangement for
consulting services for FEC.
MOORGATE MANAGEMENT INC.
April 01 / 1998 /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Date ▇▇▇▇▇ ▇▇▇▇▇▇▇
(President)
April 01 / 1998 /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------- ----------------------------------------
Date ▇▇▇▇▇ ▇▇▇▇▇▇▇
Encl.
SCHEDULE "I"
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SHARE PURCHASE WARRANT CERTIFICATE
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WARRANT TO PURCHASE 400,000 COMMON SHARES
OF
FORTUNE ENTERTAINMENT CORPORATION
(Incorporated under the laws of the State of Delaware, U.S.A.)
SHARE PURCHASE WARRANT
(the "Warrant")
THIS SHARE PURCHASE WARRANT CERTIFICATE AND ANY SECURITIES ISSUED PURSUANT TO
THE TERMS HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"). THE CORPORATION HOWEVER, HEREBY COVENANTS AND
UNDERTAKES TO EXERCISE ITS BEST EFFORT TO HAVE THE WARRANTS REGISTERED IN AN
APPROPRIATE FORM SO THAT THE SHARES CAN BE ISSUED WITHOUT ANY TRADING
RESTRICTONS.
THIS IS TO CERTIFY THAT for value received, Moorgate Management Inc. (the
"Holder"), is entitled to purchase 400,000 fully paid and non-assessable shares
of U.S. $0.0001 par value (each a "Share") in the common stock (the "Common
Stock") of FORTUNE ENTERTAINMENT CORPORATION (the "Corporation") at any time up
to 5:00 p.m. local time in the City of Vancouver, Province of British Columbia,
on March 31, 2003 at a purchase price of U.S. $0.35 per Share.
1. The aforesaid right to purchase Shares may be exercised by the Holder at
times and from time to time within the time period required herein before set
out by (i) duly completing in the manner indicated and executing the
subscription form attached hereto, (ii) surrendering this Warrant either to
Continental Stock Transfer and Trust Company, at its principal office located
in New York, New York, U.S.A. or to the Corporate Secretary of the
Corporation, and, (iii) paying the appropriate purchase price for the Shares
subscribed for together with the requisite share transfer tax, if any, either
in cash or by certified cheque payable at par, in Vancouver, British
Columbia, to the order of the Corporation. Upon said surrender and payment,
the Corporation will issue to the Holder of the subscription form the number
of Shares subscribed for and the said ▇▇▇▇▇▇ will become a shareholder of the
Corporation in respect of the Shares as of the date of such surrender and
payment. Subject to the Terms and Conditions of this Warrant, the Corporation
will, as soon as practicable after said surrender and payment, mail to the
person or persons at the address or addresses specified in the subscription
form a certificate or certificates evidencing the Shares subscribed for. If
the Holder of this Warrant subscribes for a lesser number of Shares than the
number of Shares referred to in this Warrant, the Holder shall be entitled to
receive a further Warrant in respect of Shares not subscribed for.
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2. The Holder may, at its sole discretion, transfer or assign the Share Purchase
Warrants to another party or parties.
3. Nothing contained herein shall confer any right upon the Holder hereof or any
other person to subscribe for or purchase any Shares at any time subsequent
to 5:00 o'clock in the afternoon (Vancouver time) on March 31, 2003, and,
from and after such time, this Warrant and all rights hereunder shall be void
and of no value.
4. This warrant shall not constitute the Holder a member of the Corporation.
5. This Warrant is subject to the Terms and Conditions that are attached to this
Warrant as Schedule "A".
6. Time shall be of the essence hereof.
IN WITNESS WHEREOF, FORTUNE ENTERTAINMENT CORPORATION has caused its common seal
to be affixed and this Warrant to be signed by its authorized representative
effective on this 1st day of April, 1998.
THE CORPORATE SEAL OF )
FORTUNE ENTERTAINMENT CORPORATION )
Was affixed hereto in the presence of: )
)
)
) c/s
-------------------------------------- )
Authorized Signatory )
)
-------------------------------------- )
Authorized Signatory )
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FORM OF SUBSCRIPTION
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To: FORTUNE ENTERTAINMENT CORPORATION
And To: CONTINENTAL STOCK TRANSFER AND TRUST COMPANY OR THE CORPORATE SECRETARY
OF FORTUNE ENTERTAINMENT CORPORATION
The undersigned holder of the attached Warrant hereby subscribes for____________
Shares of Common Stock of FORTUNE ENTERTAINMENT CORPORATION (again the
"Corporation") pursuant to the attached Warrant at a purchase price of U.S.
$0.35 per Share if subscribed for on or before 5:00 p.m. (Vancouver time) on
March 31, 2003. This subscription is accompanied by a certified cheque or money
order payable to, or to the order of, the Corporation for the whole amount of
the purchase price of the said Shares, together with the amount of any issue tax
that may be imposed on issue of such Shares (or if such tax has been paid,
evidence satisfactory to the trustee of such payment).
The undersigned hereby directs that the said Shares be registered as follows:
Name in Full Address Number of Shares
------------------------ ------------------------ ------------------------
------------------------ ------------------------ ------------------------
------------------------ ------------------------ ------------------------
DATED this ____ day of __________,19__
In the presence of:
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Witness Signature of Warrant Holder
Please print your name and address in full:
Name:
----------------------------------------
Address:
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SCHEDULE "A"
TERMS AND CONDITIONS
OF
WARRANTS
These are the Terms and Conditions that are attached to the Share Purchase
Warrants issued by Fortune Entertainment Corporation.
ARTICLE ONE - INTERPRETATION
Section 1.01 - Definitions
In these Terms and Conditions, unless there is something in the subject matter
or context inconsistent:
a) "Corporation" means Fortune Entertainment Corporation until a successor
corporation or its successor is present in Article 6;
b) "Corporations Auditors" means an independent firm of accountants duly
appointed as auditors of the Corporation;
c) "Director" means a director of the Corporation for the time being, and
reference, without more, to action by the directors of the Corporation as a
board, or whenever duly empowered, action by an executive committee of the
board;
d) "herein", "hereby" and similar expressions refer to these Terms and
Conditions as the same may be amended or modified from time to time; and
the expressions "Article" or "Section" followed by a number refer to the
specified Article or Section of these Terms and Conditions;
e) "Issuance Date" means that date on which the Corporation issued the attached
Warrants;
f) "person" means an individual, corporation, partnership, trustee or any
unincorporated organization, and any words importing persons have a similar
meaning;
g) "shares" means the U.S. $0.0001 par value common shares in the capital of
the Corporation as constituted at the Issuance Date and any shares resulting
from any subdivision or consolidation of the shares;
h) "Transfer Agent" means Continental Stock Transfer and Trust Company, of #▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇.▇., ▇▇▇▇▇;
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i) "Warrants" means the Warrants of the Corporation issued and presently
authorized, as set out in Section 2.01 and for the time being outstanding,
and any other warrants made subject to these Terms and Conditions;
j) "Warrant Holders" or "Holders" means the bearers of the Warrants for the
time being; and
k) words importing the singular number include the plural and vice-versa, and
words importing the masculine gender include the feminine and neuter
genders.
Section 1.02 - Interpretation Not Affected By Headings
The division of these Terms and Conditions into Articles and Sections and the
insertion of headings are for convenience of reference only and will not affect
their construction of interpretation.
Section 1.03 - Applicable Law
The Warrants will be construed in accordance with the laws of British Columbia
and will be treated in all respects as British Columbia contracts.
ARTICLE TWO - ISSUE OF WARRANTS
Section 2.01 - Issue of Warrants
Warrants entitling the Holders thereof to purchase an aggregate of 400,000
shares and hereby authorized to be issued by the Corporation where one Warrant
is required to purchase one share of the Corporation.
Section 2.02 - Additional Warrants
Nothing contained herein shall preclude the Corporation from time to time to
make further equity or debt offerings and sell additional shares, warrants or
grant options or similar rights to purchase shares of its capital stock.
Section 2.03 - Issue In Substitution For Lost Warrants
(a) Subject to Section 2.03(b), if a Warrant is mutilated, lost, destroyed or
stolen, the Corporation shall issue and deliver a new Warrant of like, date
and tenor as the one mutilated, lost, destroyed or stolen, in exchange for,
and in place of, and upon cancellation of such mutilated Warrant, or in lieu
of, and in substitution for such lost, destroyed or stolen Warrant. The
substituted Warrant will be entitled to the benefit of these Terms and
Conditions and rank equally in accordance with its terms with all other
Warrants issued, or to be issued, by the Corporation.
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(b) The applicant for the issue of a new Warrant will bear the cost of its issue
and in case of loss, destruction or theft, furnish to the Corporation such
evidence of ownership and of loss, destruction or theft of the Warrant so
lost, destroyed or stolen, as will be satisfactory to the Corporation in its
discretion, and such applicant may also be required to furnish indemnity in
an amount and form satisfactory to the Corporation, in its discretion, and
will pay the reasonable charges of the Corporation.
Section 2.04 - Warrant Holder Not a Shareholder
The holding of a Warrant will not constitute the Holder a member of the
Corporation, nor entitle him to any right or interest except as expressly
provided in the Warrant and herein.
ARTICLE THREE - OWNERSHIP AND TRANSFER
Section 3.01 - Exchange of Warrants
(a) Warrants in any authorized denomination may, upon compliance with the
reasonable requirements of the Corporation, be exchanged for Warrants in any
other authorized denomination, of the same class and date of expiry,
entitling the Holder to purchase any equal aggregate number of shares at the
same subscription price and on the same terms as the Warrants so exchanged.
(b) Warrants may be exchanged only at the office of the Transfer Agent or office
of the Corporate Secretary of the Corporation and any Warrants tendered for
exchange will be surrendered and cancelled.
Section 3.02 - Ownership and Transfer of Warrants
(a) The Corporation and Transfer Agent may deem and treat the registered holder
of any Warrant as absolute owner of such Warrant, for all purposes, and will
not be affected by any notice or knowledge to the contrary.
(b) The registered holder of any Warrant will be entitled to the rights
evidenced by such Warrant free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate
Holder and all persons may act accordingly, and the receipt of any such
bearer for the shares will be a good discharge to the corporation and the
Transfer Agent for the same and neither the Corporation nor the Transfer
Agent will be bound to inquire into the title of any such bearer.
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Section 3.03 - Notice to Warrant Holders
Any notice to be given to Warrant Holders will be deemed to be validly given on
the date on which it has been published if such notice is published once in the
City of Vancouver, such publication to be made in a daily newspaper in the
English language of general circulation in such city.
ARTICLE FOUR - EXERCISE OF WARRANTS
Section 4.01 - Method of Exercise Warrants
The right to purchase shares conferred by the Warrants may be exercised, before
its expiry time, by the Holder of such Warrant surrendering it, with a duly
completed and executed subscription in the form attached thereto and cash or a
certified cheque payable to or to the order of the Corporation, at par in such
city as the Corporation may reside from time to time, for the purchase price
applicable at the time of surrender in respect of the shares subscribed for in
lawful money of the United States of America, to the Transfer Agent at its
principal office in the City of New York, or to the Corporate Secretary of the
Corporation.
Section 4.02 - Effect of Exercise Warrants
As soon as practicable after surrender and payment, and subject to the Terms and
Conditions set forth herein, the Corporation will cause to be delivered to the
person or persons in whose name or names the shares subscribed for are to be
issued as specified in such subscription or mailed to him or them at his or
their respective addresses specified in such subscription, a certificate or
certificates for the appropriate number of shares not exceeding those which the
Warrant Holder is entitled to purchase pursuant to the Warrant surrendered. Upon
issuance, such person or persons shall be deemed to become the holder or holders
of record of such shares on the date of surrender and payment.
Section 4.03 - Subscription For Less than Entitlement
The Holder of any Warrant may subscribe for and purchase a number of shares less
than the number which he is entitled to purchase pursuant to the surrendered
Warrant. In the event of any purchase of a number of shares less than the number
that can be purchased pursuant to a Warrant, the Transfer Agent and/or the
Corporation will endorse the Warrant, note the number of Warrants exercised and
return the Warrant Certificate to the Holder or may issue a new Warrant in
respect of the balance of the shares which the Holder was entitled to purchase
pursuant to the surrendered Warrant and which were not then purchased.
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Section 4.04 - Warrants For Fractions of Shares
To the extend that the Holder of any Warrant is entitled to receive on the
exercise or partial exercise, a fraction of a common share, such
right may be exercised in respect of such fraction only in combination with
another Warrant or other Warrants which in the aggregate entitles the Holder to
receive a whole number of such shares.
Section 4.05 - Expiration of Warrants
After the expiration of the period within which a Warrant is exercisable, all
rights will wholly cease and terminate and such Warrant will be void and of no
effect.
Section 4.06 - Exercise Price
The price per share which must be paid to exercise a Warrant is as prescribed by
resolution of the Board of Directors of the Corporation and set forth on the
face of the Warrant Certificate.
Section 4.07 - Adjustment of Exercise Price
The exercise price and the number of shares deliverable upon the exercise of the
Warrants will be subject to adjustment in the events and in the manner
following:
(a) in the event of any subdivision or subdivisions of the shares of the
Corporation as such shares are constituted on the Issuance Date, at any time
while the Warrants are outstanding, into a greater number of shares, the
Corporation will deliver at the time of purchase of shares, in addition to
the number of shares in respect of which the right to purchase is then being
exercised, such additional number of shares as a result from such
subdivision or subdivisions without the bearer of the Warrant making any
additional payment or giving any other consideration;
(b) in the event of any consolidation or consolidations of the shares of the
Corporation as such shares are constituted on the Issuance Date, at any time
while the Warrants are outstanding, into a lesser number of shares, the
Corporation will deliver and the bearer will accept, at the time of
purchase, in lieu of the number of shares in respect of which the right to
purchase is then being exercised, the lesser number of shares as a result
from such consolidation or consolidations;
(c) in the event of any change of the shares of the Corporation as such shares
are constituted on the Issuance Date, at any time while the Warrants are
outstanding, the Corporation will deliver at the time of purchase the number
of shares of the appropriate class resulting from such change as the bearer
would have been entitled to receive in respect of the number of
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shares so purchased, had the right to purchase been exercised before such
change;
(d) in the event of any capital reorganization, reclassification or change of
outstanding equity shares of the Corporation or in the event of any
consolidation, merger or amalgamation of the Corporation with or into any
other company, then the Holder of each Warrant then outstanding will have
the right to purchase and receive, in lieu of the shares receivable upon the
exercise of the rights represented by the Warrants, the kind and amount of
shares and other securities and property receivable upon such capital
reorganization, reclassification, change, consolidation, merger or
amalgamation which the Holder of a number of shares equal to the number of
shares receivable upon the exercise of the rights represented by the
Warrants would have received as a result of such event but the subdivision
or consolidation of shares at any time outstanding into a greater or lesser
number of shares, whether with or without par value, will not be deemed to
be a capital reorganization or a reclassification of the capital of the
Corporation for the purposes of this paragraphs (d);
(e) if the Corporation, at any time while the Warrants are outstanding, pays any
stock dividend or stock dividends upon the shares of the Corporation in
respect of which the right to purchase is then given, the Corporation will
deliver at the time of purchase of shares in addition to the number of
shares in respect of which the right of purchase is then being exercised,
the additional number of shares of the appropriate class as would have been
payable on the shares so purchased as if they had been outstanding on the
record date for the payment of such stock dividend;
(f) the adjustments provided for in this Section in the subscription rights
pursuant to any Warrants are cumulative; and,
(g) the Corporation will not be required to issue fractional shares in
satisfaction of its obligations but, if any fractional interest in a shares
would, except for the provisions of this paragraph (g), be deliverable upon
the exercise of Warrant, the Corporation will, at its option, in lieu of
delivering a fractional share, satisfy the right to receive such fractional
interest by payment to the Holder of such Warrant of an amount in cash
equal, computed in the case of a fraction of a cent to the next lower cent,
to the current market value of the right to subscribe for such fractional
interest, computed on the basis of the last sale price of shares of the
Corporation of the Nasdaq Bulletin Board preceding the day on which such
exercise takes place.
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Section 4.08 - Determination of Adjustments
If any questions arise with respect to the exercise price, such question will be
conclusively determined by the Corporation's auditors, or, if they decline to
act, any other national firm of Chartered Accountants, in Vancouver, that the
Corporation may designate and who will have access to all appropriate records,
and such determination will be binding upon the Corporation and the Holders of
the Warrants.
ARTICLE FIVE - COVENANTS BY THE COMPANY
The Corporation will reserve and there will remain unissued out of its
authorized capital a sufficient number of shares to satisfy the rights of
purchase in the Warrants should the Holders of all the Warrants, from time to
time outstanding, determine to exercise such rights in respect of all shares
which they are or may be entitled to purchase pursuant thereto.
ARTICLE SIX - MODIFICATION OF TERMS, MERGER, SUCCESSORS
Section 6.01 - Modification of Terms for Certain Purposes
From time to time the Corporation may modify these Terms and Conditions, for any
one or more, or all of the following purposes:
(a) adding to or altering these provisions in respect of the registration and
transfer of Warrants making provision for the exchange of Warrants of
different denominations; and making any modification in the form of the
Warrants which does not affect their substance;
(b) for any other purpose, including the correction of rectification of any
ambiguous, defective provisions, errors or omissions herein; or,
(c) to evidence any succession of any corporation and the assumption by any
successor of the covenants of the Corporation and in the Warrants contained
as provided in this Article.
Section 6.02 - No Extension of Expiry Date
Notwithstanding Section 6.01, no modification will be made to the Expiry Date of
Warrants without the prior consent of the Holder.
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