EXHIBIT 4.5
COMMON STOCK PURCHASE AGREEMENT
BETWEEN
ALTERNATE ACHIEVEMENTS, INC.
(THE COMPANY)
AND
THOMSON KERNAGHAN & CO. LIMITED, AS AGENT
(THE PURCHASER)
DATED AS OF FEBRUARY 24, 2000
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is
made and entered into as of February 24, 2000 (the "Effective Date"), between
Alternate Achievements, Inc. (the "Company"), a Florida corporation, and Thomson
Kernaghan & Co. Limited, as Agent (the "Purchaser").
Background
The Company has authorized the issuance, sale, and delivery of
350,000 shares (the "Shares") of the Company's Common Stock, par value $0.0001
("Common Stock") at a price per Share of $1.00, in currency of the United States
of America, for a total purchase price of $350,000. The Purchaser wishes to
purchase the Shares upon the terms and conditions stated in this Agreement. The
Purchaser is purchasing the Shares in reliance upon the exemption from the
registration requirements of Section 5 of the U.S. Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon the safe harbor afforded by
Rule 903 promulgated by the U.S. Securities and Exchange Commission (the "SEC").
In connection with the issuance and sale of the Shares to the
Purchaser, the Company has authorized the issuance and delivery of (i) a warrant
in the form of Exhibit C attached to this Agreement (the "Purchaser's Warrant")
to the Purchaser to purchase 225,000 shares of Common Stock at $0.01 per share,
and (ii) a warrant in the form of Exhibit D attached to this Agreement (the
"Agent's Warrant") to Thomson Kernaghan & Co. Limited, to purchase 75,000 shares
of Common Stock at $0.01 per share.
Agreement
For and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser hereby agree as follows:
Section 1. Common Stock.
Section 1.1. Issuance and Sale of Common Stock and Warrants
The Company agrees (i) to issue and sell the Shares to the
Purchaser and the Purchaser agrees to purchase the Shares from the Company, at
the Closing, for the Purchase Price of US$350,000; (ii) to issue and deliver the
Purchaser's Warrant to the Purchaser, and (iii) to issue and deliver the Agent's
Warrant to the Agent.
Section 1.2. Closing.
The closing of the purchase and sale of the Shares (the
"Closing") shall take place at the offices of Thomson Kernaghan & Co. Limited,
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, at 3:00 p.m.,
Toronto time, on Thursday, February 24, 2000 (the "Closing Date"), or on such
other date or such other time or place as the parties may agree.
Section 1.3 Deliveries at Closing
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At the Closing the Company shall deliver to Purchaser:
(a) this Agreement, executed by the Company;
(b) a certificate for the Shares, registered in the
Purchaser's name, free and clear of any claims, and containing a legend
complying with the requirements of SEC Rule 903(b)(3)(iii)(B)(3);
(c) the Purchaser's Warrant;
(c) the Registration Rights Agreement (defined in
Section 4.9 below), executed by the Company, in substantially the form of
Exhibit B hereto;
(d) the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
legal counsel to the Company, in substantially the form of Exhibit A hereto; and
At the Closing, the Company shall also deliver the Agent's
Warrant to the Agent.
Section 2. Purchaser's Representations and Warranties
The Purchaser represents and warrants with respect to only
itself that:
Section 2.1. Investment Purpose
The Purchaser is acquiring the Shares, for the account for of
certain "accredited investors under Ontario law who are not "U.S. person" as
defined by SEC Rule 902(k), and who are acquiring the Shares investment and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof, in the United States, on to or for the account of a U.S.
person; provided however, that by making the representations herein, the
Purchaser does not agree to hold any Shares for any minimum or other specific
term. The Purchaser acknowledges that the Shares may not be resold in the United
States, or to or for the account of a U.S. person as defined by SEC Rule 902(k),
except pursuant to an effective registration statement under the Securities Act
or after the expiration of the one-year distribution compliance period provided
in SEC Rule 903(b)(3)(iii)(A).
Section 2.2. Accredited Purchaser Status
The Purchaser is an "accredited investor" as that term is
defined in Rule 501(a)(3) of Regulation D of the SEC.
Section 2.3. Reliance on Regulation S Exemption
The Purchaser understands that the Shares are being offered
and sold to it in reliance on the exemption from the registration requirements
of Section 5 of the Securities Act for offshore transactions as defined in SEC
Rule 902(h), and that the Company is relying in part upon the truth and accuracy
of, and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments, and understandings of the Purchaser set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire such Shares. With respect to that
exemption, the Purchaser further represents and warrants to the Company that:
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(a) The Purchaser is not a U.S. Person as defined in SEC
Rule 902(k).
(b) The offer to sell the Shares to the Purchaser was not
made in the United States, and was made in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
(c) The Purchaser's buy order for the Shares was made
outside the United States, and was made in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
(d) The Purchaser has complied with all of the conditions
required of it by SEC Rule 903(b)(3).
Section 2.4. Information
The Purchaser and its advisors, if any, have been furnished
with all materials relating to the proposed business, financial condition, and
operations of the Company and materials relating to the offer and sale of the
Shares, which have been requested by the Purchaser. The Purchaser and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by the Purchaser or its advisors, if any, or its representatives shall
modify, amend, or affect the Purchaser's right to rely on the Company's
representations and warranties contained in Section 3 below. The Purchaser
understands that its investment in the Shares involves a high degree of risk.
The Purchaser has sought such accounting, legal, and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Shares.
Section 2.5. No Governmental Review
The Purchaser understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Shares, or the fairness or
suitability of the investment in the Shares, nor have such authorities passed
upon or endorsed the merits of the offering of the Shares.
Section 2.6. Authorization Enforcement
This Agreement has been duly and validly authorized, executed,
and delivered on behalf of the Purchaser and is a valid and binding agreement of
the Purchaser enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
Section 2.7. Organization
The Purchaser is a limited partnership organized under the
laws of Bermuda.
Section 2.8. No Scheme to Evade Registration.
Purchaser represents and warrants to the Company that the
acquisition of the Shares is not a transaction (or any element of a series of
transactions) that is part of a plan or scheme by the Purchaser to evade the
registration provisions of the Securities Act.
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Section 3. Representations And Warranties Of The Company
The Company represents and warrants to the Purchaser that:
Section 3.1. Organization and Qualification
The Company is a corporation duly organized, validly existing,
and in good standing under the laws of Florida, and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
The Company is not qualified as a foreign corporation to do business in any
other jurisdiction. The Company has no subsidiaries.
Section 3.2. Authorization, Enforcement, Compliance with
Other Instruments.
(a) The Company has the requisite corporate power and
authority to enter into and perform this Agreement and to issue the Shares;
(b) the execution and delivery of this Agreement by the
Company, and the consummation by it of the transactions contemplated hereby,
including without limitation the issuance of the Shares, have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders;
(c) this Agreement has been duly executed and delivered by the
Company and the persons signing on behalf of the Company have full power and
authority to do so; and
(d) this Agreement constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
Section 3.3. Capitalization
Immediately prior to Closing, the authorized capital stock of
the Company consisted of 50,000,000 shares of Common Stock, of which 4,000,000
shares are issued and outstanding. No shares of the Company's capital stock are
subject to preemptive rights or any other similar rights.
Section 3.4. Issuance of Shares
The Shares are duly authorized and, upon issuance in
accordance with the terms hereof, shall be validly issued, fully paid, and
nonassessable, are free from all taxes, liens, and charges with respect to the
issue thereof and are entitled to the rights and preferences set forth in the
Shares. The Shares are "restricted securities" as defined by SEC rules, and may
be transferred, assigned or resold by the Purchaser only in accordance with the
Securities Act and the SEC rules promulgated thereunder.
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Section 3.5. No Conflicts
The execution, delivery, and performance of this Agreement and
the Acquisition Agreement by the Company, and the consummation by the Company of
the transactions contemplated hereby and thereby, will not (a) result in a
violation of the Certificate of Incorporation, any Certificate of Designation
applicable to any Preferred Stock of the Company, or the Bylaws of the Company
or (b) conflict with, constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration, or cancellation of, any
agreement, indenture, or instrument to which the Company is a party, or result
in a violation of any law, rule, regulation, order, judgment, or decree
(including federal and state securities laws and regulations) applicable to the
Company or by which any property or asset of the Company is bound or affected.
The Company is not in violation of any term of, or in default under, its
Certificate of Incorporation or Bylaws, or any material contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree, or order or any
statute, rule, or regulation applicable to the Company. The business of the
Company is not being conducted and shall not be conducted in violation of any
law, ordinance, or regulation of any governmental entity. Except as specifically
contemplated by this Agreement, the Acquisition Agreement and as required under
the Securities Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization, or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver, and perform any of its obligations under or contemplated by
this Agreement and the Acquisition Agreement in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings, and registrations
which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the date hereof. The Company is unaware
of any facts or circumstances which might give rise to any of the foregoing.
Section 3.6. Financial Statements
The Company's unaudited balance sheet at November 30, 1999 and
the audited balance sheet at September 30, 1999, and the related statements of
profit and loss for the periods then ended, were prepared in accordance with
generally accepted accounting principles, are true, correct and complete in all
material respects, and fairly present the Company's financial position at that
date and the results of its operations for the period then ended. The Company
has not engaged in any transaction, maintained any bank account, or used any of
the funds of the Company that are not reflected in the normally maintained books
and records of the Company. No other information provided by or on behalf of the
Company to the Purchaser which is not included in the Financial Statements,
including, without limitation, information referred to in Section 2.4 of this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made, not misleading.
Section 3.7. Absence of Certain Changes
Since November 30, 1999, the date of the Company's opening
balance sheet, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations, or prospects of the Company. The Company has not taken
any steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
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Section 3.8. Absence of Litigation
There is no action, suit, proceeding, inquiry, or
investigation before or by any court, public board, government agency,
self-regulatory organization, or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or the Common Stock, in
which an unfavorable decision, ruling or finding would (a) have a material
adverse effect on the transactions contemplated hereby, (b) adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under this Agreement, or any of the other documents
contemplated herein, or (c) have a material adverse effect on the business,
operations, properties, financial condition, or results of operation of the
Company.
Section 3.9. Purchase of Shares
The Company acknowledges and agrees that the Purchaser is
acting solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement or the Acquisition Agreement, or the transactions contemplated herein
or therein. The Company further represents to the Purchaser that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
Section 3.10. No Undisclosed Events, Liabilities, Developments
or Circumstances
No event, liability, development, or circumstance has occurred
or exists, or is contemplated to occur, with respect to the Company or its
businesses, properties, prospects, operations, or financial condition, which
could be material but which has not been publicly announced or disclosed in
writing to the Purchaser.
Section 3.11. No General Solicitation
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Shares.
Section 3.12. No Integrated Offering
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the Shares under the Securities
Act or cause this offering of the Shares to be integrated with prior offerings
by the Company for purposes of the Securities Act or any applicable stockholder
approval provisions.
Section 3.13. Internal Accounting Controls
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (a) transactions are executed in
accordance with management's general or specific authorizations, (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (c) access to assets is permitted only in
accordance with management's general
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or specific authorization, and (d) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
Section 3.14. No Materially Adverse Contracts, Etc.
The Company is not subject to any charter, corporate, or other
legal restriction, or any judgment, decree, order, rule, or regulation which in
the judgment of the Company's officers has, or is expected in the future to
have, a material adverse effect on the business, properties, operations,
financial condition, results of operations, or prospects of the Company. The
Company is not a party to any contract or agreement which in the judgment of the
Company's officers has, or is expected to have, a material adverse effect on the
business, properties, operations, financial condition, results of operations, or
prospects of the Company.
Section 3.15. Tax Status
The Company has made or filed all federal and state income and
all other tax returns, reports, and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes), and has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports, and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports,
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
Section 3.16. Certain Transactions
Except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from third parties, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers,
and directors), including any contract, agreement, or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director, or such employee or, to the knowledge of the Company, any
corporation, partnership, trust, or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee, or partner.
Section 3.17. Fees and Rights of First Refusal
The Company is not obligated to offer the securities offered
hereunder on a right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents, or other third parties. The Company is not
obligated to pay any commission or fee in connection with the issuance and sale
of the Shares for which the Purchaser is or may become liable.
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Section 3.18. Regulation S Exemption
The Company understands that the Purchaser is purchasing the
Shares in reliance on the exemption from the registration requirements of
Section 5 of the Securities Act for offshore transactions as defined in SEC Rule
902(h), and that the Purchaser is relying in part upon the truth and accuracy
of, and the Company's compliance with, the representations, warranties,
agreements, acknowledgments, and understandings of the Company set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Company to issue and sell the Shares to the Purchaser without having
complied with those registration requirements. With respect to that exemption,
the Company further represents and warrants to the Purchaser that:
(a) The Company has not offered any of the Shares to a U.S.
Person (as defined in SEC Rule 902(k)) or to a person in the United States.
(b) The offer and sale of the Shares to the Purchaser is being
made in an offshore transaction as defined in SEC Rule 902(h).
(c) The Company has not engaged in any directed selling
efforts, as defined in SEC Rule 902(c), with respect to the Shares.
(d) The Company has complied with all of the conditions
required of it under SEC Regulation S.
Section 4. Covenants
Section 4.1. Best Efforts
Each party shall use its best efforts timely to satisfy each
of the conditions to be satisfied by it as provided in Sections 5 and 6 of this
Agreement.
Section 4.2. Compliance with Regulation S
Each party shall comply with all of the terms of SEC Rule
903(b)(3) required of it with respect to the Shares.
Section 4.3. Use of Proceeds
The Company will use the proceeds from the sale of the Shares
for general working capital purposes.
Section 4.4 Listings
The Company shall secure and maintain the listing of its
Common Stock (including the Shares), on the OTC Bulletin Board as soon as is
practicable, and upon the NASDAQ Small Cap Market as soon thereafter as it is
eligible therefor. The Company shall promptly provide to the Purchaser copies of
any notices it receives regarding the eligibility of the Common Stock for
trading in the over-the-counter market.
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Section 4.5. Expenses
The Company shall pay the Purchaser's expenses, including
reasonable attorney's fees, incurred in connection with this Agreement.
Section 4.6. Corporate Existence
So long as the Purchaser is the holder of 1% or more of the
outstanding Common Stock, the Company shall not directly or indirectly
consummate any merger, reorganization, restructuring, consolidation, sale of all
or substantially all of the Company's assets, or any similar transaction or
related transactions (each such transaction, a "Sale of the Company") except if
the surviving or successor entity in such transaction is a publicly traded
corporation whose Common Stock is listed for trading on the New York Stock
Exchange, Inc., the American Stock Exchange, or the NASDAQ National Market.
Section 4.7. Transactions With Affiliates
So long as the Purchaser is the holder of 1% or more of the
outstanding Common Stock, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify, or supplement, or permit any
subsidiary to enter into, amend, modify, or supplement any agreement,
transaction, commitment, or arrangement with any of its or any subsidiary's
officers, directors, persons who were officers or directors at any time during
the previous two years, stockholders who beneficially own 5% or more of any
class of the Company's capital stock, or affiliates, or with any individual
related by blood, marriage, or adoption to any such individual or with any
entity in which any such entity or individual owns a 5% or more beneficial
interest (each, a "Related Party"), except for (i) transactions contemplated by
the Acquisition Agreement, (ii) customary employment arrangements and benefit
programs on reasonable terms, (iii) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than terms which
would have been obtainable from a person other than such Related Party, (vi) any
agreement, transaction, commitment, or arrangement which is approved by a
majority of the disinterested directors of the Company, for purposes hereof, any
director who is also an officer of the Company or any subsidiary of the Company
shall not be disinterested director with respect to any such agreement,
transaction, commitment, or arrangement. "Affiliate" for purposes hereof means,
with respect to any person or entity, another person or entity that, directly or
indirectly, (1) has a 5% or more equity interest in that person or entity, (2)
has 5% or more common ownership with that person or entity, (3) controls that
person or entity, or (4) share common control with that person or entity.
"Control" or "controls" for purposes hereof means that a person or entity has
the power, direct or indirect, to conduct or govern the policies of another
person or entity.
Section 4.8. Registration Rights
As soon as is practicable after the date of this Agreement,
the Company shall file a registration statement (the "Registration Statement")
with the SEC to register the resale of the Shares, and the issuance and resale
of the Common Stock underlying the Purchaser's Warrant and the Agent's Warrant
and shall use its best efforts to cause the Registration Statement to become
effective, all as provided in the Registration Rights Agreement (the
"Registration Rights Agreement") attached as Exhibit B to this Agreement.
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Section 4.9. Limitation on Future Issuance of Shares of the
Company's Stock
The Company shall refrain from issuing from the date of this
Agreement forward, and so long as the Purchaser holds any equity or debt
position in the Company, from issuing shares of its capital stock regardless of
class or series, without the express written consent of the Purchaser, which
consent shall not be unreasonably withheld.
Section 5. Conditions To The Company's Obligation To Sell
The obligation of the Company hereunder to issue and sell the
Shares to The Purchaser at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
(a) The Purchaser shall have executed this Agreement and
delivered the same to the Company.
(b) The Purchaser shall have delivered the Purchase Price for
the Shares to the Company.
(c) The representations and warranties of the Purchaser shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time, and the Purchaser shall have
performed, satisfied, and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied,
or complied with by the Purchaser at or prior to the Closing Date.
Section 6. Conditions To The Purchaser's Obligation To Purchase
The obligation of The Purchaser hereunder to purchase the
Shares at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Purchaser's sole benefit and may be waived by the Purchaser at any time
in its sole discretion:
(a) The Company shall have executed this Agreement.
(b) The Company shall have executed the Registration Rights
Agreement.
(c) The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied, and complied in all material respects with the covenants,
agreements, and conditions required by this Agreement to be performed,
satisfied, or complied with by the Company at or prior to the Closing Date.
(d) The Purchaser shall have received the opinion of the
Company's counsel dated as of the Closing Date, in form, scope, and substance
reasonably satisfactory to the Purchaser and in substantially the form of
Exhibit A attached hereto.
(e) The Company shall have acquired one hundred percent (100%)
of the issued and outstanding capital stock of Power Photo Kiosks, Inc., a
Canadian corporation ("PPK"), such that PPK shall be a wholly-owned subsidiary
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of the Company (the "Acquisition") prior to closing and all documents in
connection with the Acquisition shall be satisfactory to the Purchaser, in its
sole discretion.
Section 7. Indemnification
In consideration of the Purchaser's execution and delivery of
this Agreement and acquiring the Shares hereunder and in addition to all of the
Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify, and hold harmless the Purchaser, and all of its officers,
directors, employees, and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities, and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement of the
Acquisition Agreement, or any other certificate, instrument, or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement, or
obligation of the Company contained in this Agreement, or (c) any cause of
action, suit, or claim brought or made against such Indemnitee and arising out
of or resulting from the execution, delivery, performance, or enforcement of
this Agreement, or any other instrument, document, or agreement executed
pursuant hereto by any of the Indemnities, any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Shares, or the status of the Purchaser or holder of the Shares,
as a stockholder in the Company. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
Section 8. General Provisions
Section 8.1. Governing Law
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Florida; provided, however, (i) that if
any provision of this Agreement is unenforceable under the laws of the State of
Florida, but is enforceable under the laws of the Province of Ontario, Canada,
then such provision shall be governed by and interpreted in accordance with the
laws of the Province of Ontario; and (ii) that the exemption from the
registration requirements of the Securities Act for the sale shall be governed
by SEC Rule 903. The parties agree that the courts of the Province of Ontario,
Canada, shall have exclusive jurisdiction and venue for the adjudication of any
civil action between them arising out of relating to this Agreement, and hereby
irrevocably consent to such jurisdiction and venue.
Section 8.2. Counterparts
This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.
12
Section 8.3. Headings
The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
Section 8.4. Severability
If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
Section 8.5. Entire Agreement, Amendments
This Agreement supersedes all other prior oral or written
agreements between the Purchaser, the Company, their affiliates and persons
acting on their behalf with respect to the issuance and sale of the Shares, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Purchaser makes any representation, warranty, covenant, or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.
Section 8.6. Notices
Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (a) upon receipt, when
delivered personally, (b) upon receipt, when sent by facsimile, provided a copy
is mailed by U.S. certified mail, return receipt requested, (c) three (3) days
after being sent by certified mail, return receipt requested, or (d) one (1) day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
if to the Company:
Alternate Achievements, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, President & CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13
if to the Purchaser:
Thomson Kernaghan & Co. Limited
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Mintmire & Associates
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall provide five (5) day's prior written notice to the other party
of any change in address or facsimile number.
Section 8.7. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and assigns. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchaser. The Purchaser may assign its rights
hereunder without the consent of the Company, provided however, that any such
assignment shall not release the Purchaser from its obligations hereunder unless
such obligations are assumed by such assignee and the Company has consented to
such assignment and assumption.
Section 8.8. No Third Party Beneficiaries
This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other person.
Section 8.9. Survival
Unless this Agreement is terminated under Section 8.12, the
representations and warranties of the Company and the Purchaser contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4 and 5,
and the indemnification provisions set forth in Section 7, shall survive the
Closing. The Purchaser shall be responsible only for its own representations,
warranties, agreements, and covenants hereunder.
Section 8.10. Publicity
The Company and the Purchaser shall have the right to approve,
before issuance, any press releases or any other public statements with respect
to the transactions contemplated hereby; provided however, that the Company
shall be entitled, without the prior approval of the Purchaser, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although the Purchaser shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
14
Section 8.11. Further Assurances
Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments, and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
Section 8.12. Termination
In the event that the Closing shall not have occurred with
respect to the Purchaser on or before five (5) business days from the date
hereof due to the Company's or Purchaser's failure to satisfy the conditions set
forth in Sections 5 and 6 above (and the non-breaching party's failure to waive
such unsatisfied condition(s)), the non-breaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided however, that if this Agreement is terminated pursuant to this Section
8.12, the Company shall remain obligated to reimburse the Purchaser for the
expenses described in Section 4.6 above.
Section 8.13. No Strict Construction
The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
Section 8.14. Currency
All dollar amounts expressed in this Agreement are currency of
the United States of America.
Section 8.15. Agent's Fee
On the Closing Date, the Company shall pay the Agent a fee of
$35,000, and hereby authorizes the Agent to withhold that
amount, together with the fees and expenses of its legal
counsel from the Purchase Price.
IN WITNESS WHEREOF, the Company and the Purchaser have caused
this Common Stock Purchase Agreement to be duly executed as of the date first
written above.
ALTERNATE ACHIEVEMENTS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President & CEO
THOMSON KERNAGHAN & CO. LIMITED, AS
AGENT
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Title
-----------------------------------
15
February 24, 2000
Thomson Kernaghan & Co. Limited, as Agent
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Re: Alternate Achievements, Inc.
Ladies and Gentlemen:
We have acted as special counsel to yourselves, Thomson Kernaghan & Co.,
Ltd. ("TK") in connection with:
o the issuance and sale by Alternate Achievements, Inc., a Florida
corporation (the "Company) of 350,000 shares (the "Shares") of the
Company's Common Stock, par value $0.0001 per share (the "Common
Stock"), to you pursuant to the terms of a Purchase Agreement,
dated as of February 24, 2000 (the "Common Stock Purchase
Agreement"), between the Company and you;
o the issuance by the Company to you, upon the terms and subject to
the conditions of the Purchase Agreement, of a Warrant to purchase
250,000 shares of the Common Stock (the "Purchaser's Warrant");
and
o the issuance by the Company to TK, upon the terms and subject to
the conditions of the Purchase Agreement, of a Warrant to purchase
75,000 shares of the Company's Common Stock (the "Agent's
Warrant").
In addition, to induce you to execute and deliver the Purchase Agreement, the
Company has agreed to provide certain registration rights pursuant to the terms
of that certain Registration Rights Agreement, dated as of February 24, 2000
(the "Registration Rights Agreement"), between the Company, and you.
This opinion is furnished pursuant to Section 1.3(d) of the Purchase
Agreement. Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed to such terms in the Purchase Agreement.
In rendering this opinion, we have examined such documents and records
as we have deemed appropriate, including the following:
16
(1) Copies of the Certificate of Incorporation of the Company as
certified by their state of incorporation as of a recent date.
(2) Copies of the Bylaws.
(3) A signed copy of the Purchase Agreement.
(4) Specimen copy of the certificate evidencing the Shares.
(5) A signed copy of the Purchaser's Warrant.
(6) A signed copy of the Agent's Warrant.
(7) A signed copy of the Registration Rights Agreement.
In addition, we have examined originals or copies (certified and
otherwise identified to our satisfaction) of such other documents, instruments
and certificates and have made such investigations of such matters of law and
fact as we have considered necessary or appropriate for the purpose of this
opinion.
For purposes of such examination, we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals and the conformity with the original
documents of all documents submitted to us as forms or copies. We have assumed,
except as to the Company, that all parties to any agreement had the corporate
power and authority to enter into such agreement and perform all obligations
thereunder and, as to such parties, we have also assumed the due authorization
by all requisite corporate action, the due execution and delivery and the
validity and binding effect and enforceability thereof.
Based upon the foregoing, and in reliance thereon, and subject to the
limitations hereinafter set forth, we are of the opinion that:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of its state of
incorporation, with all requisite corporate power and
authority to own, lease, license and use its properties and
assets and to conduct its business.
(ii) The Company is not qualified to do business in any
jurisdiction other than Florida, and, is not required to
qualify to do business in any other jurisdiction.
(iii) Each of the Purchase Agreement, the Purchaser's Warrant, the
Agent's Warrant and the Registration Rights Agreement is a
legal, valid and binding obligation of the Company, and is
enforceable against the Company, in accordance with its terms
except (i) as enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, liquidation,
receivership, moratorium or other similar laws relating to or
affecting creditors' rights generally or (b) general
principles of equity or public
17
policy, regardless of whether such enforceability is
considered in a proceeding in equity or at law and (ii) as the
rights to indemnification or contribution thereunder may be
limited by federal or state securities laws.
(iv) The authorized and outstanding capital stock of the Company is
as set forth in Section 3.3 of the Purchase Agreement.
(v) The Shares have been duly and validly authorized and will be
validly issued, fully paid and nonassessable upon receipt by
the Company from the Purchaser of the Purchase Price for the
Shares.
(vi) Assuming the accuracy of your representations and warranties
under the Purchase Agreement, the Company's issuance and sale
of the Shares to you as provided in the Purchase Agreement are
exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Act"), and from the registration
or qualification requirements of the securities or blue sky
laws of any U.S. state. The Company's issuance and sale of the
Shares to you complies with the provisions of Rule 903 under
the Act.
(vii) No authorization, approval or consent of, or filing with, any
court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market, or the stockholders
of the Company, or, to our knowledge, any third party is
required to be obtained by the Company to enter into and
perform its obligations under the Purchase Agreement, the
Purchaser's Warrant, the Agent's Warrant or the Registration
Rights Agreement.
(viii) The Company's execution, delivery and performance of each of
the Purchase Agreement, the Purchaser's Warrant and the
Agent's Warrant, and the Registration Rights Agreement have
been duly authorized by all necessary corporate action, and do
not violate, conflict with or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under the Company's Certificate of Incorporation,
Bylaws or, to our knowledge, any material agreement to which
the Company is a party or by which any of its property or
assets are bound.
(ix) To our knowledge, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board
or body, or any governmental agency or self-regulatory
organization pending or threatened against or affecting the
Company.
This opinion is limited to the corporate laws of Florida and the
federal securities laws of Florida. We express no opinion as to the laws of any
other jurisdiction, including the laws of the Province of Ontario, Canada. This
opinion is for your use only and may not be relied upon by you in any other
context, or published or communicated to any third party for any purpose
whatsoever. This opinion is delivered as of the date hereof and we assume no
obligation to update this opinion at any time after the date hereof.
Sincerely,
Mintmire & Associates
18
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into
as of February 24, 2000, by and between Alternate Achievements, Inc., a Florida
corporation (the "Company"), and Thomson Kernaghan & Co. Limited (the
"Purchaser").
Preliminary Statements
In connection with the consummation of the transactions contemplated by
that certain Common Stock Purchase Agreement (the "Purchase Agreement") of even
date herewith by and between the Company and the Purchaser, the Company has
agreed, upon the terms and subject to the conditions of the Common Stock
Purchase Agreement, to issue and sell to the Purchaser 350,000 shares ( the
"Shares") of the Company's Common Stock (the "Common Stock").
The Company has also agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue to the Purchaser a Warrant to
purchase 225,000 shares of Common Stock (the "Purchaser's Warrant") and to issue
to the Agent a Warrant to purchase 75,000 shares of the Common Stock (the
"Agent's Warrant").
The Shares, the Purchaser's Warrant and the Agent's Warrant are
collectively referred to as the "Securities." The Common Stock issuable upon
exercise of the Purchaser's Warrant is called the "Purchaser's Warrant Shares"
and the Common Stock issuable upon exercise of the Agent's Warrant is called the
"Agent's Warrant Shares" (the Purchaser's Warrant Shares and the Agent's Warrant
Shares are sometimes collectively referred to as the "Warrant Shares").
To induce the Purchaser to execute and deliver the Purchase Agreement,
the Company has agreed, pursuant to the terms and conditions of this Agreement,
to provide certain registration rights with respect to the Common Shares, and
the Warrant Shares.
Agreement
In consideration of the foregoing, the mutual covenants and conditions
set forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to become legally bound, hereby agree as follows:
19
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"Agent" shall mean Thomson Kernaghan & Co. Limited.
"Agent's Warrant" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Agent's Warrant Shares" shall have the meaning ascribed to such term
in the Preliminary Statements to this Agreement.
"Agreement" shall mean this Registration Rights Agreement, made and
entered into as of January 12, 2000, by and between the Company and the
Purchaser.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Purchase Agreement" shall have the meaning ascribed to such term in
the Preliminary Statements to this Agreement.
"Company" shall mean Alternate Achievements, Inc., a Florida corporation
of which Power Photo Kiosks, Inc., a Canadian corporation is a wholly owned
subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as in effect from time to time.
"Filing Deadline" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Holder" or "Holders" shall mean (a) the Purchaser, to the extent that
the Purchaser holds Registrable Securities, and (b) any Person holding
Registrable Securities as a transferee of the Purchaser (directly or indirectly,
including subsequent transfers).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint- stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Purchase Agreement" shall mean, that certain Common Stock Purchase
Agreement, dated as of February 24, 2000, by and between the Company and the
Purchaser.
"Purchaser" shall mean Thomson Kernaghan & Co. Limited, as Agent.
20
"Purchaser's Warrant" shall have the meaning ascribed to such term in
the Preliminary Statements to this Agreement.
"Purchaser's Warrant Shares" shall have the meaning ascribed to such
term in the Preliminary Statements to this Agreement.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing with the Commission one or more
registration statements covering Registrable Securities in compliance with the
Securities Act that is declared or ordered effective by the Commission.
"Registrable Securities" shall mean the Common Shares, the Converted
Common Shares, the Purchaser's Warrant Shares and the Agent's Warrant Shares,
and any shares of capital stock issued or issuable with respect to the
Securities, the Purchaser's Warrant Shares or the Agent's Warrant Shares as a
result of any stock split, stock dividend, recapitalization, exchange or similar
event; provided, however, that such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to such securities
shall have been declared effective under the Securities Act and such securities
shall have been disposed of pursuant to the registration statement, (b) such
securities are distributed to the public pursuant to Rule 144(k) (or any
successor provisions) promulgated under the Securities Act or (c) such
securities shall have ceased to be outstanding.
"Registration Deadline" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Registration Expenses" shall mean all expenses incurred in order to
comply with Article II hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of one (1) counsel for the Holders,
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, but excluding the compensation of regular
employees of the Company (which shall be paid in any event by the Company) and
excluding Selling Expenses.
"Restricted Securities" shall mean Registrable Securities that are
"restricted securities" as defined in Rule 144 under the Securities Act.
"Securities" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions incurred in connection with the sale of securities pursuant to a
registration effected hereunder.
"Warrant Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
21
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Purchase
Agreements.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Mandatory Registration.
(a) The Company shall prepare and file with the Commission
within ninety (90) days from the date of this Agreement (the "Filing
Deadline") a registration statement or registration statements (as is
necessary) on Form SB-2 or Form S-1 covering (i) the issuance of the
Warrant Shares, and (ii) the resale of all of the Registrable
Securities. Such registration statement shall initially register for
resale at least 100% of the Common Shares, and the Warrant Shares. The
Company shall use its best efforts to have the registration statement
declared effective by the Commission within one hundred and twenty
(120) days after the Filing Deadline (the "Registration Deadline"). The
Company shall permit the registration statement to become effective
within five (5) business days after receipt of a "no review" notice
from the Commission. Such registration statement shall be kept current
and effective for the greater of (i) a period of at least twelve (12)
months from the Closing Date and (ii) a period of at least ninety (90)
days after the Purchaser's Warrant and the Agent's Warrant shall have
been fully exercised or expired. If a registration statement with
respect to the Registrable Securities is not effective on the
Registration Deadline date, the Company agrees to and shall pay a cash
penalty equal to two percent (2%) per month of the aggregate purchase
price of the Registrable Securities, payable monthly and pro-rated for
partial months until the registration statement is effective.
Section 2.2 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 2.1 shall be borne by the Company; and all Selling Expenses
in connection with such registration, qualification or compliance shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of shares so registered.
Section 2.3 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Article II,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense, the Company will:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement;
(b) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirement of the Securities Act, and such other documents as they may
reasonably request (including a conformed copy of the registration
statement filed with the Commission and any amendments thereto and an
22
original executed underwriting agreement entered into in connection
with such registration) in order to facilitate the disposition of
Registrable Securities owned by them;
(c) use reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of one (1) jurisdiction (in addition to
those jurisdictions in which the Company has otherwise agreed to so
register and qualify such securities) as shall be reasonably requested
by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions;
(d) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement with
the managing underwriter(s) of such offering; each Holder participating
in such underwriting shall also enter into and perform its obligations
under such underwriting agreement;
(e) notify each Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and
(f) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Article II, on
the date that such Registrable Securities are delivered to the
underwriters for sale in connection with registration pursuant to this
Article II, if such securities are being sold through underwriters, or
on the date that the registration statement with respect to such
securities becomes effective, if such securities are not being sold
through underwriters, (i) a copy of any opinion, dated such date, of
the counsel representing the Company for the purposes of such
registration, addressed to the underwriters of the Company, and (ii) a
copy of any letter, dated such date, from the independent accountants
of the Company, addressed to the underwriters of the Company.
Each Holder of Registrable Securities agrees that upon receipt
of any notice from the Company of the happening of any event of the
kind described in clause (f) of this Section 2.3, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until
such Holder's receipt of the copies of a supplemented or amended
prospectus and, if so directed by the Company, such Holder will deliver
to the Company (at the Company's expense), all copies, other than
permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities that was in effect
prior to such amendment or supplement. In the event the Company shall
give any such notice, the period set forth in clause (a) of this
Section 2.3 shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to
clause (e) of this Section 2.3 to and including the date when each
seller of Registrable Securities covered by such registration statement
shall have received the copies of a supplemented or amended prospectus.
23
Section 2.4 Indemnification.
(a) The Company will indemnify each Holder, each Holder's
officers, directors and partners, and each Person controlling such
Holder (collectively, "Holder's Parties"), participating in any
registration, qualification, or compliance effected pursuant to this
Article II with respect to Registrable Securities held by such Holder
and each underwriter, if any, and each Person who controls any
underwriter, against all claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, to which they
may become subject under the Securities Act, the Exchange Act or other
federal or state law, arising out of or based on (i) any untrue
statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other similar document (including
any related registration statement, notification or the like) incident
to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any violation by the Company of any
federal, state or common law rule or regulation applicable to the
Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder's Parties each such
underwriter, and each Person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, as incurred, provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement
or omission, made in reliance on and in conformity with written
information furnished to the Company by such Holder's Parties or
underwriter or Person controlling such underwriter specifically for use
in the preparation thereof.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, severally and not
jointly, indemnify the Company, each of its directors and officers,
each underwriter, if any, of the Company securities covered by such a
registration statement, and each Person who controls the Company or
such underwriter within the meaning of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other similar document, or
any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such directors,
officers, Persons, underwriters or control Persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, as
incurred, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with the
written information furnished to the Company by such Holder
specifically for use in the preparation thereof, or (ii) any violation
by any such Holder of any federal, state or common law rule or
regulation applicable to such Holder in connection with the
distribution of securities pursuant to a registration statement, and
will reimburse the Company, such
24
Holders, such directors, officers, Persons, underwriters or control
Persons for any legal any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, liability, or action, as incurred; provided, however, that the
obligations of each such Holder hereunder shall be limited to an amount
equal to the aggregate proceeds received by such Holder in such
offering.
(c) Each party entitled to indemnification under this Section
2.4 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has received written notice of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be
withheld). The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of one counsel representing the
Indemnified Party if representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of
interest. The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2.4, except to the extent such failure
to give notice shall materially and adversely prejudice the
Indemnifying Party in the defense of any such claim or any such
litigation. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
(d) (i) If the indemnification provided for in this Section
2.4 is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to herein, then
the Indemnifying Party hereunder shall contribute to the
amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense, in such
proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and the Indemnified
Party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties' relevant intent, knowledge, access to information and
opportunities to correct or prevent such statement or
omission.
(ii) The parties agree that it would not be just and
equitable if contribution pursuant to this Section 2.4 were
determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to above. The amount paid or payable
by an Indemnified Party as a result
25
of the claims, losses, damages and liabilities referred to
above shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with
investigating or defending any such action or claim.
(iii) No Holder that is a seller of Registrable Stock
covered by such registration statement or Person controlling
such seller other than the Company shall be obligated to make
contribution hereunder that in the aggregate exceeds the total
public offering price of the Registrable Stock sold by such
Holder, less the aggregate amount of any damages that such
Holder and its controlling Persons have otherwise been
required to pay pursuant to this Section 2.4. The obligations
of such Holders to contribute are several in proportion to
their respective ownership of the securities covered by such
registration statement and not joint.
(iv) The indemnity and contribution provided herein
shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
Section 2.5 Information by Holder. Each Holder of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Article
II.
Section 2.6 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission that may at any time
permit the sale of the Restricted Securities to the public without registration,
the Company agrees to:
(a) use its best efforts to facilitate the sale of the
Restricted Securities to the public without registration under the
Securities Act, pursuant to Rule 144 under the Securities Act;
(b) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general
public;
(c) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such
reporting requirements); and
(d) so long as a Holder owns any Restricted Securities to
furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the public information requirements
of said Rule 144, and the reporting requirements of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by
the Company as a Holder may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Holder to sell any
such securities without registration.
26
Section 2.7 Transfer of Registration Rights. The rights granted under
this Article II may be assigned or otherwise conveyed by any Holder of
Registrable Securities to any transferee, subject to compliance with all
applicable securities laws and regulations.
Section 2.8 Certain Limitations in Connection with Future Grants of
Registration Rights.
From and after the date of this Agreement, without the prior written
consent of the Holders of a majority of the Registrable Securities, the Company
shall not enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the granting to such holder of
registration rights that would be superior to those granted to Holders pursuant
to Section 2.1.
Section 2.9 Restrictions on Market Manipulation. In the event any
shares of Common Stock are offered or sold by any Holder in a registration, each
such Holder will:
(a) advise the Company in writing of any offer, sale or other
disposition by it of any Common Stock in any manner other than as set
forth in the registration statement or any prospectus included therein
on or for the 30-day period prior to the filing of such registration
statement until the distribution under the registration statement has
been completed;
(b) not effect any stabilization activity in connection with
the Company's Common Stock;
(c) not bid or purchase, for any account in which it has a
beneficial interest, any Common Stock except as may be permitted
pursuant to Rule 10b-6 under the Exchange Act (if applicable);
(d) not until it has sold all of such shares of Common Stock,
attempt to induce any Person to purchase any Common Stock except as may
be permitted pursuant to Rule 10b-6; and
(e) not until it has sold all such shares of Common Stock, pay
any compensation for soliciting another to purchase any securities of
the Company, except as may be permitted pursuant to Rule 10b-6.
27
ARTICLE III
MISCELLANEOUS
Section 3.1 Governing Law; Jurisdiction and Venue. This Agreement shall
be governed by and interpreted in accordance with the laws of the State of
Florida; provided, however, that if any provision of this Agreement is
unenforceable under the laws of the State of Florida, but is enforceable under
the laws of the Province of Ontario, Canada, then such provision shall be
governed by and interpreted in accordance with the laws of the Province of
Ontario. The parties agree that the courts of the Province of Ontario, Canada,
shall have exclusive jurisdiction and venue for the adjudication of any civil
action between them arising out of relating to this Agreement, and hereby
irrevocably consent to such jurisdiction and venue.
Section 3.2 Successors and Assignees. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assignees, heirs, executors and administrators (as the
case may be) of the parties hereto.
Section 3.3 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
Section 3.4 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be effective four days
after mailed by first-class mail, postage prepaid, or otherwise delivered by
hand or by messenger, addressed (a) if to the Purchaser, at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman;
(b) if to any other Holder of Registrable Securities, at such address as such
Holder shall have furnished the Company in writing, or, until any such Holder so
furnishes an address to the Company, then to and at the address of the last
Holder of such Registrable Securities who has so furnished an address to the
Company; or (c) if to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇, ▇▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, President & CEO.
Section 3.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Holder of any Registrable Securities,
upon any breach or default of the Company under this Agreement, shall impair any
such right, power or remedy of such Holder nor shall it be construed to be a
waiver of any such breach or default or an acquiescence therein or of or in any
similar breach or default thereunder occurring nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any Holder shall be cumulative
and not alternative.
Section 3.6 Counterparts. This Agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts and all of which together shall constitute one
instrument.
Section 3.7 Severability. In the event any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
28
Section 3.8 Amendments. The provisions of this Agreement may be amended
at any time and from time to time, and particular provisions of this Agreement
may be waived, with and only with, an agreement or consent in writing signed by
the Company and by the Holders of a majority of the Registrable Securities
voting as a single class.
The parties have executed this Registration Rights Agreement as of the
date first written above.
ALTERNATE ACHIEVEMENTS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President & CEO
THOMSON KERNAGHAN & CO. LTD., AS AGENT
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
29
EXHIBIT C
Purchaser's Warrant
Warrant No. __
Void after 5:00 p.m. Toronto, Ontario time, on February 24, ▇▇▇▇
▇▇▇▇▇▇▇ to Purchase Shares of Common Stock
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE SELLER WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
=============================================================
WARRANT TO PURCHASE 225,000 SHARES OF COMMON STOCK
OF
ALTERNATE ACHIEVEMENTS, INC.
=============================================================
This it to certify that, FOR VALUE RECEIVED, Thomson Kernaghan & Co.
Limited, as Agent, or assigns ("Holder"), is entitled to purchase, subject to
the provisions of this Warrant, from Alternate Achievements, Inc., a Florida
corporation (the "Company"), the fully paid, validly issued and non-assessable
shares of Common Stock, $0.0001 par value, of the Company ("Common Stock") at
any time or from time to time during the period from the date hereof, through
and including February 24, 2003, but not later than 5:00 p.m. Toronto, Ontario
time, on February 24, 2003, (the "Exercise Period") at the price of US$0.01 per
share (the "Exercise Price"). The total
30
number of shares of Common Stock to be issued upon exercise of this Warrant
shall be 225,000 shares. The price to be paid for each share of Common Stock may
be adjusted from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares" and the respective
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the "Exercise Price".
This Warrant is being issued pursuant to the Common Stock Purchase Agreement,
dated as of February 24, 2000, between the Company and Thomson Kernaghan & Co.
Limited, as Agent.
A. EXERCISE OF WARRANT
This Warrant may be exercised in whole or in part at any time or from
time to time during the Exercise Period; provided, however, that (i) if the last
day of the Exercise Period is a day on which banking institutions in the City of
Toronto are authorized by law to close, then the Exercise Period shall terminate
on the next succeeding day that shall not be such a day, and during such period
the Holder shall have the right to exercise this Warrant into the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company of this Warrant
at the Company's principal office, with the Exercise Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
Warrant Shares specified in such form. As soon as practicable after each such
exercise of the Warrants, but not later than seven (7) days from the date of
such exercise, the Company shall issue and deliver to the Holder a certificate
or certificates for the designee. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of Warrant Shares purchasable thereunder. Upon receipt by
the Company of this Warrant at its principal office, or by the stock transfer
agent of the Company at its office, in proper form for exercise, the Holder
shall be deemed to be holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be physically delivered to the Holder.
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.
PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT), (ii) IF NOT
EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S. PERSON HAS ANY INTEREST
IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING SECURITIES TO BE ISSUED UPON
EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND THE WARRANT SHARES UNDERLYING
THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE UNITED STATES. IF THE ABOVE CANNOT
BE COMPLIED WITH, THEN THE WARRANT CAN BE EXERCISED ONLY IF A WRITTEN OPINION OF
COUNSEL, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE COMPANY, IS
DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF THE WARRANTS BEING EXERCISED THAT
REGISTRATION IS NOT REQUIRED, OR THE UNDERLYING SECURITIES DELIVERED UPON
EXERCISE HAVE BEEN REGISTERED UNDER THE ACT.
31
B. RESERVATION OF SHARES AND COVENANTS OF THE COMPANY
The Company shall at all times have allotted and reserved for issuance
and/or delivery upon exercise of this Warrant such number of shares of its
Common Stock as shall be required for issuance and delivery upon exercise of the
Warrant.
The Company covenants with the Holder that so long as any Warrants
remain outstanding and may be exercised:
1. it will cause the shares of Common Stock and th certificates
representing the Common Stock subscribed and paid for pursuant to
the exercise of the Warrants to be duly issued and delivered in
accordance herewith and the terms hereof;
2. all shares of Common Stock that shall be issued upon exercise
of the right to purchase provided for herein, upon payment of the
prevailing Exercise Price herein provided, shall be fully paid
and non-assessable;
3. it will use its best efforts to maintain its corporate
existence; and
4. generally, it will well and truly perform and carry out all of
the acts or things to be done by it as provided herein.
C. FRACTIONAL SHARES
No fractional shares or script representing fractional shares shall be
issued upon the exercise of this Warrant. With respect to any fraction of a
share called for upon any exercise hereof, the Company shall pay to the Holder
an amount in cash equal to such fraction multiplied by the current market value
of a share, determined as follows:
1. If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the NASDAQ system, the current
market value shall be the last reported sale price of the Common
Stock on such exchange or system on the last business day prior
to the date of exercise of this Warrant or, if no such sale is
made (or reported) on such day, the average closing bid and asked
prices for such day on such exchange or system; or
2. If the Common Stock is not so listed or admitte to unlisted
trading privileges, the current market value shall be the mean to
the last reported bid and ask prices reported by the Electronic
Bulletin Board or National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this Warrant;
or
3. If the Common Stock is not so listed or admitte to unlisted
trading privileges and bid and ask prices are not so reported,
the current market value shall be an
32
amount, not less than book value thereof as at the end of the
most recent fiscal year of the Company ending prior to the date
of the exercise of the Warrant, determined in such reasonable
manner as may be prescribed by the Board of Directors of the
Company.
D. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT
This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company for other warrants
of different denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company at its principal office, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
applicable transfer tax, the Company shall, without charge, execute and deliver
a new Warrant in the name of the assignee named in such Assignment Form and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other warrants that carry the same rights upon presentation hereof at the
principal office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged. Upon receipt of the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
This Warrant and the Common Stock issuable upon exercise of this
Warrant were issued under Regulation S under the Act and may be transferred only
in accordance therewith and as provided in the legends set forth in this
Warrant.
E. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
F. ANTI-DILUTION PROVISIONS
The respective Exercise Price in effect at any time and the number and
kind of securities purchasable upon the exercise of the Warrant shall be subject
to adjustment from time to time upon the happening of certain events are
follows:
1. In case the Company shall (i) declare a dividen or make a
distribution on its outstanding shares of Common Stock in shares
of Common Stock, (ii) subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify its outstanding shares of Common Stock into
a smaller
33
number of shares, the respective Exercise Price in effect at the
time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the
price determined by multiplying the respective Exercise Price by
a fraction, the denominator of which shall be the number of
shares of Common Stock outstanding after giving effect to such
action, and the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event
listed above shall occur.
2. Whenever the respective Exercise Price payable upon exercise
of each Warrant is adjusted pursuant to Subsection (1) above, the
number of Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the respective number
of Shares initially issuable upon exercise of this Warrant by a
fraction, the denominator of which shall be the Exercise Price
after giving effect to such action and the numerator of which
shall be the Exercise Price in effect immediately prior to such
action.
3. No adjustment in the respective Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least one cent ($0.01) in such price; provided,
however, that any adjustment that by reason of this Subsection
(3) is not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section (F) shall be made
to the nearest cent or to the nearest one-hundredth of a share,
as the case may be. Anything in this Section (F) to the contrary
notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the respective Exercise Price,
in addition to those required by this Section (F), as it shall
determine, in its sole discretion, to be advisable in order that
any dividend or distribution in shares of Common Stock, or any
subdivision, reclassification or combination of Common Stock,
hereafter made by the Company shall not result in any federal
income tax liability to the holders of Common Stock or securities
convertible into Common Stock (including the Warrants).
4. In the event that at any time, as a result of a adjustment
made pursuant to Subsection (1) above, the Holder of this Warrant
thereafter shall become entitled to receive any shares of the
Company, other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of this Warrant shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Subsections (1) to (3)
inclusive above.
5. Irrespective of any adjustments in the respective Exercise
Price or the related number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and kind
of shares as are stated in the similar Warrants initially
issuable pursuant to this Warrant.
34
G. OFFICER'S CERTIFICATE
Whenever the respective Exercise Price shall be adjusted as required by
the provisions of the foregoing Section (F), the Company shall forthwith file in
the custody of its Secretary or an Assistant Secretary at its principal office,
an officer's certificate showing the adjusted Exercise Price determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of related additional shares of
Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for inspection by
the holder or any holder of a Warrant executed and delivered pursuant to Section
(A) and the Company shall, forthwith after each such adjustment, mail a copy by
certified mail of such certificate to the Holder or any such holder.
H. NOTICES TO WARRANT HOLDERS
So long as this Warrant shall be outstanding, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock for subscription or purchase
by them any share of any class or any other rights, options or warrants (other
than this Warrant) or (iii) if a capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen (15) days prior
to the date specified, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which a record date
is to be determined for the purpose of such dividend, distribution or issue of
rights, options, or warrants or such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up. The failure to give such
notice shall not otherwise affect the action take by the Company.
I. RECLASSIFICATION, REORGANIZATION OR MERGER
In case of any reclassification, capital reorganization or other change
of outstanding shares Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock an other securities and property
receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of such number of shares
of
35
Common Stock that might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (I) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (F) hereof.
J. WARRANTS TO RANK PARI PASSU
All Warrants shall rank pari passu, whatever may be the actual date of
issue of the same.
K. GOVERNING LAW; JURISDICTION AND VENUE
This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Florida; provided, however, that if any provision of
this Agreement is unenforceable under the laws of the State of Florida, but is
enforceable under the laws of the Province of Ontario, Canada, then such
provision shall be governed by and interpreted in accordance with the laws of
the Province of Ontario. The parties agree that the courts of the Province of
Ontario, Canada, shall have exclusive jurisdiction and venue for the
adjudication of any civil action between them arising out of relating to this
Agreement, and hereby irrevocably consent to such jurisdiction and venue.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by the undersigned, each being duly authorized, as of the date
below.
ALTERNATE ACHIEVEMENTS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇
Its: President & CEO
DATED: February 24, 2000
ATTEST:
-----------------------
-----------------------
36
FORM OF NOTICE OF EXERCISE
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S. PERSON (AS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED), (ii) IF NOT EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S.
PERSON HAS ANY INTEREST IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING
SECURITIES TO BE ISSUED UPON EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND
THE WARRANT SHARES UNDERLYING THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE
UNITED STATES. IF THE ABOVE CANNOT BE COMPLIED WITH, THEN THE WARRANT CAN BE
EXERCISED ONLY IF A WRITTEN OPINION OF COUNSEL, THE FORM AND SUBSTANCE OF WHICH
IS ACCEPTABLE TO THE COMPANY, IS DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF
THE WARRANTS BEING EXERCISED THAT REGISTRATION IS NOT REQUIRED, OR THE
UNDERLYING SECURITIES DELIVERED UPON EXERCISE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ______________ shares of Common Stock of
ALTERNATE ACHIEVEMENTS, INC. AT $0.01 per share, for a total purchase price of
$___________.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_________________________________________
(Please typewrite or print in block letters)
Address________________________________________
Social Security or Federal I.D. Number_________________
The undersigned represents and warrants to Alternate Achievements, Inc. that the
conditions for exercise of the within Warrant set forth in the first sentence of
the first paragraph above have been fully complied with and no U.S. Person has
any interest in the Warrant or the Warrant Shares.
Signature____________________________________________________
(Sign exactly as your name appears on the first page of this Warrant)
37
ASSIGNMENT FORM
FOR VALUE RECEIVED,
---------------------------------
hereby sells, assigns and transfers unto
Name
----------------------------------------------------------
(Please typewrite or print in block letters)
Address
-----------------------------------------------------------
Social Security Federal I.D. Number
------------------------------
the right to purchase shares of Common Stock of Alternate Achievements, Inc.
represented by this Warrant as to which such right is exercisable and does
hereby irrevocably constitute and appoint __________________________ Attorney,
to transfer the same on the books of Alternate Achievements, Inc. with full
power of substitution in the premises.
Date: ______________________
Signature: ______________________
(sign exactly as your name
appears on the first page of
this Warrant)
Note: The Warrant and the Common Stock issuable upon exercise of the Warrant
were issued under Regulation S under the Securities Act of 1933, as amended, and
may be transferred only in accordance therewith and as provided in the legends
set forth in the Warrant.
38
Agent's Warrant
Warrant No. __
Void after 5:00 p.m. Toronto, Ontario time, on February 24, ▇▇▇▇
▇▇▇▇▇▇▇ to Purchase Shares of Common Stock
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE SELLER WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
-------------------------------------------------------------
WARRANT TO PURCHASE 75,000 SHARES OF COMMON STOCK
OF
ALTERNATE ACHIEVEMENTS, INC.
----------------------------------------------------------------
This it to certify that, FOR VALUE RECEIVED, Thomson Kernaghan & Co.
Ltd., as Agent, or assigns ("Holder"), is entitled to purchase, subject to the
provisions of this Warrant, from Alternate Achievements, Inc., a Florida
corporation (the "Company"), the fully paid, validly issued and non-assessable
shares of Common Stock, $0.0001 par value, of the Company ("Common Stock") at
any time or from time to time during the period from the date hereof, through
and including February 24, 2003, but not later than 5:00 p.m. Toronto, Ontario
time, on February 24, 2003, (the "Exercise Period") at the price of US$0.01 per
share (the "Exercise Price"). The total number of shares of Common Stock to be
issued upon exercise of this Warrant shall be 75,000 shares. The price to be
paid for each share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the respective exercise price of a share of Common
Stock in effect at any time and as adjusted from time to time
39
is hereinafter sometimes referred to as the "Exercise Price". This Warrant is
being issued pursuant to the Common Stock Purchase Agreement, dated as of
February 24, 2000, between the Company and Thomson Kernaghan & Co. Ltd., as
Agent.
A. EXERCISE OF WARRANT
This Warrant may be exercised in whole or in part at any time or from
time to time during the Exercise Period; provided, however, that (i) if the last
day of the Exercise Period is a day on which banking institutions in the City of
Toronto are authorized by law to close, then the Exercise Period shall terminate
on the next succeeding day that shall not be such a day, and during such period
the Holder shall have the right to exercise this Warrant into the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company of this Warrant
at the Company's principal office, with the Exercise Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
Warrant Shares specified in such form. As soon as practicable after each such
exercise of the Warrants, but not later than seven (7) days from the date of
such exercise, the Company shall issue and deliver to the Holder a certificate
or certificates for the designee. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of Warrant Shares purchasable thereunder. Upon receipt by
the Company of this Warrant at its principal office, or by the stock transfer
agent of the Company at its office, in proper form for exercise, the Holder
shall be deemed to be holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be physically delivered to the Holder.
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.
PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT), (ii) IF NOT
EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S. PERSON HAS ANY INTEREST
IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING SECURITIES TO BE ISSUED UPON
EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND THE WARRANT SHARES UNDERLYING
THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE UNITED STATES. IF THE ABOVE CANNOT
BE COMPLIED WITH, THEN THE WARRANT CAN BE EXERCISED ONLY IF A WRITTEN OPINION OF
COUNSEL, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE COMPANY, IS
DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF THE WARRANTS BEING EXERCISED THAT
REGISTRATION IS NOT REQUIRED, OR THE UNDERLYING SECURITIES DELIVERED UPON
EXERCISE HAVE BEEN REGISTERED UNDER THE ACT.
B. RESERVATION OF SHARES AND COVENANTS OF THE COMPANY
The Company shall at all times have allotted and reserved for issuance
and/or delivery upon exercise of this Warrant such number of shares of its
Common Stock as shall be required for issuance and delivery upon exercise of the
Warrant.
40
The Company covenants with the Holder that so long as any Warrants
remain outstanding and may be exercised:
1. it will cause the shares of Common Stock and the certificates
representing the Common Stock subscribed and paid for pursuant to the
exercise of the Warrants to be duly issued and delivered in accordance
herewith and the terms hereof;
2. all shares of Common Stock that shall be issued upon exercise of
the right to purchase provided for herein, upon payment of the
prevailing Exercise Price herein provided, shall be fully paid and
non-assessable;
3. it will use its best efforts to maintain its corporate existence;
and
4. generally, it will well and truly perform and carry out all of the
acts or things to be done by it as provided herein.
C. FRACTIONAL SHARES
No fractional shares or script representing fractional shares shall be
issued upon the exercise of this Warrant. With respect to any fraction of a
share called for upon any exercise hereof, the Company shall pay to the Holder
an amount in cash equal to such fraction multiplied by the current market value
of a share, determined as follows:
1. If the Common Stock is listed on a National Securities Exchange or
admitted to unlisted trading privileges on such exchange or listed for
trading on the NASDAQ system, the current market value shall be the
last reported sale price of the Common Stock on such exchange or
system on the last business day prior to the date of exercise of this
Warrant or, if no such sale is made (or reported) on such day, the
average closing bid and asked prices for such day on such exchange or
system; or
2. If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean to the
last reported bid and ask prices reported by the Electronic Bulletin
Board or National Quotation Bureau, Inc. on the last business day
prior to the date of the exercise of this Warrant; or
3. If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not so reported, the
current market value shall be an amount, not less than book value
thereof as at the end of the most recent fiscal year of the Company
ending prior to the date of the exercise of the Warrant, determined in
such reasonable manner as may be prescribed by the Board of Directors
of the Company.
D. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT
This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company for other warrants
41
of different denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company at its principal office, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
applicable transfer tax, the Company shall, without charge, execute and deliver
a new Warrant in the name of the assignee named in such Assignment Form and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other warrants that carry the same rights upon presentation hereof at the
principal office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged. Upon receipt of the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
This Warrant and the Common Stock issuable upon exercise of this
Warrant were issued under Regulation S under the Act and may be transferred only
in accordance therewith and as provided in the legends set forth in this
Warrant.
E. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
F. ANTI-DILUTION PROVISIONS
The respective Exercise Price in effect at any time and the number and
kind of securities purchasable upon the exercise of the Warrant shall be subject
to adjustment from time to time upon the happening of certain events are
follows:
1. In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding shares of Common Stock into a smaller
number of shares, the respective Exercise Price in effect at the time
of the record date for such dividend or distribution or of the
effective date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined by
multiplying the respective Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such action. Such adjustment shall be made
successively whenever any event listed above shall occur.
42
2. Whenever the respective Exercise Price payable upon exercise of
each Warrant is adjusted pursuant to Subsection (1) above, the number
of Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the respective number of
Shares initially issuable upon exercise of this Warrant by a fraction,
the denominator of which shall be the Exercise Price after giving
effect to such action and the numerator of which shall be the Exercise
Price in effect immediately prior to such action.
3. No adjustment in the respective Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least one cent ($0.01) in such price; provided, however, that any
adjustment that by reason of this Subsection (3) is not required to be
made shall be carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations under this
Section (F) shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. Anything in this Section
(F) to the contrary notwithstanding, the Company shall be entitled,
but shall not be required, to make such changes in the respective
Exercise Price, in addition to those required by this Section (F), as
it shall determine, in its sole discretion, to be advisable in order
that any dividend or distribution in shares of Common Stock, or any
subdivision, reclassification or combination of Common Stock,
hereafter made by the Company shall not result in any federal income
tax liability to the holders of Common Stock or securities convertible
into Common Stock (including the Warrants).
4. In the event that at any time, as a result of an adjustment made
pursuant to Subsection (1) above, the Holder of this Warrant
thereafter shall become entitled to receive any shares of the Company,
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Stock contained in Subsections (1) to (3) inclusive above.
5. Irrespective of any adjustments in the respective Exercise Price or
the related number or kind of shares purchasable upon exercise of this
Warrant, Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in
the similar Warrants initially issuable pursuant to this Warrant.
G. OFFICER'S CERTIFICATE
Whenever the respective Exercise Price shall be adjusted as required by
the provisions of the foregoing Section (F), the Company shall forthwith file in
the custody of its Secretary or an Assistant Secretary at its principal office,
an officer's certificate showing the adjusted Exercise Price determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of related additional shares of
Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for
43
inspection by the holder or any holder of a Warrant executed and delivered
pursuant to Section (A) and the Company shall, forthwith after each such
adjustment, mail a copy by certified mail of such certificate to the Holder or
any such holder.
H. NOTICES TO WARRANT HOLDERS
So long as this Warrant shall be outstanding, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock for subscription or purchase
by them any share of any class or any other rights, options or warrants (other
than this Warrant) or (iii) if a capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen (15) days prior
to the date specified, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which a record date
is to be determined for the purpose of such dividend, distribution or issue of
rights, options, or warrants or such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up. The failure to give such
notice shall not otherwise affect the action take by the Company.
I. RECLASSIFICATION, REORGANIZATION OR MERGER
In case of any reclassification, capital reorganization or other change
of outstanding shares Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock an other securities and property
receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of such number of shares
of Common Stock that might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (I) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
44
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (F) hereof.
J. WARRANTS TO RANK PARI PASSU
All Warrants shall rank pari passu, whatever may be the actual date of
issue of the same.
K. GOVERNING LAW; JURISDICTION AND VENUE
This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Florida; provided, however, that if any provision of
this Agreement is unenforceable under the laws of the State of Florida, but is
enforceable under the laws of the Province of Ontario, Canada, then such
provision shall be governed by and interpreted in accordance with the laws of
the Province of Ontario. The parties agree that the courts of the Province of
Ontario, Canada, shall have exclusive jurisdiction and venue for the
adjudication of any civil action between them arising out of relating to this
Agreement, and hereby irrevocably consent to such jurisdiction and venue.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by the undersigned, each being duly authorized, as of the date
below.
ALTERNATE ACHIEVEMENTS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇
Its: President & CEO
DATED: February 24, 2000
ATTEST:
-----------------------
-----------------------
45
FORM OF NOTICE OF EXERCISE
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S. PERSON (AS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED), (ii) IF NOT EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S.
PERSON HAS ANY INTEREST IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING
SECURITIES TO BE ISSUED UPON EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND
THE WARRANT SHARES UNDERLYING THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE
UNITED STATES. IF THE ABOVE CANNOT BE COMPLIED WITH, THEN THE WARRANT CAN BE
EXERCISED ONLY IF A WRITTEN OPINION OF COUNSEL, THE FORM AND SUBSTANCE OF WHICH
IS ACCEPTABLE TO THE COMPANY, IS DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF
THE WARRANTS BEING EXERCISED THAT REGISTRATION IS NOT REQUIRED, OR THE
UNDERLYING SECURITIES DELIVERED UPON EXERCISE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ______________ shares of Common Stock of
ALTERNATE ACHIEVEMENTS, INC. AT $0.01 per share, for a total purchase price of
$___________.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_________________________________________
(Please typewrite or print in block letters)
Address________________________________________
Social Security or Federal I.D. Number_________________
The undersigned represents and warrants to Alternate Achievements, Inc. that the
conditions for exercise of the within Warrant set forth in the first sentence of
the first paragraph above have been fully complied with and no U.S. Person has
any interest in the Warrant or the Warrant Shares.
Signature____________________________________________________
(Sign exactly as your name appears on the first page of this Warrant)
46
ASSIGNMENT FORM
FOR VALUE RECEIVED,
---------------------------------
hereby sells, assigns and transfers unto
Name
----------------------------------------------------------
(Please typewrite or print in block letters)
Address
-----------------------------------------------------------
Social Security Federal I.D. Number
------------------------------
the right to purchase shares of Common Stock of Alternate Achievements, Inc.
represented by this Warrant as to which such right is exercisable and does
hereby irrevocably constitute and appoint __________________________ Attorney,
to transfer the same on the books of Alternate Achievements, Inc. with full
power of substitution in the premises.
Date: ______________________
Signature: ______________________
(sign exactly as your name
appears on the first page of
this Warrant)
Note: The Warrant and the Common Stock issuable upon exercise of the Warrant
were issued under Regulation S under the Securities Act of 1933, as amended, and
may be transferred only in accordance therewith and as provided in the legends
set forth in the Warrant.
47