FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMERICAN ALLIANCE CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
NEVADA 98-0170247
- - ------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 Wertheim Court, Suite 311, Richmond Hill, Ontario L4B 3H7
- - ---------------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (905) 709-8240
--------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to
be registered
100,000,000 Shares of Common Stock None
5,000,000 Shares of Preferred Stock None
Securities to be registered pursuant to Section 12(g) of the Act:
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
COVER PAGE 1
TABLE OF CONTENTS 2
PART I 3
DESCRIPTION OF BUSINESS 3
DESCRIPTION OF PROPERTY 13
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 14
REMUNERATION OF DIRECTORS AND OFFICERS 16
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURITYHOLDERS 16
INTEREST OF MANAGEMENT AND OTHERS IN
CERTAIN TRANSACTIONS 17
SECURITIES BEING OFFERED 17
PART II 18
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS 18
LEGAL PROCEEDINGS 19
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 19
RECENT SALES OF UNREGISTERED SECURITIES 19
INDEMNIFICATION OF DIRECTORS AND OFFICERS 20
PART F/S 20
FINANCIAL STATEMENTS 20
PART III 20
INDEX TO EXHIBITS 20
SIGNATURES 21
</TABLE>
<PAGE>
PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative 2.
ITEM 6. DESCRIPTION OF BUSINESS
- - ------- -----------------------
American Alliance Corporation (The Company) is a developmental stage
company. The Company was incorporated under the laws of the State of Utah, on
July 14, 1983 under the name of Far West Gold, Inc., with an authorized capital
of 50,000,000 shares of common stock with a par value of $.001 per share.
On July 14, 1983, the Company, in connection with a Rule 504,
Regulation D offering issued 5,141,000 shares of common stock for cash at $.003
per share or $15,000. During October 1984, the Company issued 13,009,000 shares
of common stock at $.01 per share or $130,090, less expenses of the offering of
$27,547, for net proceeds of $102,543. The Company was not operational for the
years 1990 to 1995 and received no revenues during this time. For the year ended
December 31, 1995, the Company issued 20,000,000 shares of common stock at $.001
per share to satisfy current liabilities in the amount of $20,000.
On April 15, 1996, the Company effected a reverse split of 500:1, with
par value remaining at $.001. On April 16, 1996, the Company issued 4,000,000
shares of common stock at $.0005 per share for services or $2000 to Mr. Harmel
S. Rayat, a director of the Company. On May 9, 1996, in connection with a Rule
504, Regulation D offering, the Company issued 4,000,000 shares of common stock
at $0.05 per share for cash in the amount of $200,000. On May 9, 1996, the
stockholders authorized a name change to Far West Resources, Inc. and authorized
an increase in the number of shares that Company has authority to issue to
105,000,000, of which 100,000,000 shares shall be at $.001 par value common
stock, and 5,000,000 shares shall be $.10 par value preferred stock.
On June 30, 1997, the stockholders authorized a name change to American
Alliance Corporation, authorized a change in the state of registration from Utah
to Nevada, authorized an increase in common share par value from $.001 to
$.00001 and preferred share par value from $.10 to $.0001, and authorized to
adopt the 1997 Stock Option Plan and reserve 1,250,000 shares for issuance
thereunder. On June 30, 1997, in connection with a Rule 504, Regulation D
offering, the Company issued 2,000,000 shares of common stock for cash of
$45,000 and $255,000 for services at $0.15 per share or a total of $300,000. On
September 22, 1997, the Company merged the Utah Corporation, Far West Resources,
Inc., into American Alliance Corporation, a Nevada Corporation, with the Nevada
Corporation being the surviving corporation. On October 14, 1997, the Company
issued 1,000,000 shares of common stock in a Rule 504, Regulation D offering
memorandum at $.50 per share or $500,000. On December 9, 1997, the Company
issued 450,000 shares of common stock in a Rule 505, Regulation D offering
memorandum at $2.00 per share or $900,000, along with 450,000 share purchase
warrants to purchase common shares at $2.00 per share until December 9, 2001.
On January 9, 1998, the Company organized American Alliance, Inc., its
wholly owned subsidiary, under the laws of the State of Nevada with an
authorized capital of 1000 common shares, with a par value of $.001, and with
one share issued to American Alliance Corporation. On June 22, 1998, the
stockholders authorized to adopt the 1998 Stock Option Plan and reserve
1,750,000 shares for issuance thereunder. On July 27, 1998, the Company
appointed Mr. Britt Weaver as President and Chief Executive Officer, replacing
Mr. Harmel S. Rayat who remains the Company's Chairman. Mr. Weaver also replaced
Mr. Kundan S. Rayat as a Director, who retired from the Board. On September 15,
1998, the Company paid $29,000 for 100% of the shares of Rowland Carmichael &
Associates, Inc., an Arizona based broker dealer, for the development of an
online brokerage service. Subsequent to the acquisition of Rowland Carmichael,
the Company decided not to enter into the business of Internet brokerage
services. On December 1, 1998, Mr. Kesar S. Dhaliwal joined the Board of
Directors as President and Chief Executive Office in the place of Mr. Britt
Weaver.
<PAGE>
In January, 1999, the Company entered into the field of targeted
Internet streaming with the launch of its portal, www.eviewonline.com. The
Company's objective is to make available aggregated audio and video content on a
worldwide basis, with particular emphasis on entertainment, news, sports,
fashion and business. In April, 1999, the Company acquired the domain name
www.whatsonline.com and merged the contents of eviewonline.com into
whatsonline.com. A trademark application has been filed for whatsonline with the
United States Patent and Trademark Office.
On May 4, 1999, the Board of Directors held a meeting at which it was
resolved to commence a forward split of the Company's common stock on a
two-to-one basis. This split will become effective on or about May 14, 1999. On
May 5, 1999, the Directors elected to change the Company's name to
"WhatsOnline.Com, Inc." This name change will also take place on or about May
14, 1999.
The Company is a development stage company, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting substantially all of
its present efforts in securing and establishing its business, and although its
planned operations have commenced there have been no significant revenues
derived therefrom. Using media streaming technologies and infrastructures
already developed by companies such as Microsoft, Real Networks, InterVu and
others, the Company plans initially to market and brand itself as a media
streaming portal and an online listing guide to online users seeking an enriched
multimedia audio/video web experience. By focusing on sales and marketing, and
either outsourcing or co-branding most technology and capital intensive aspects,
the Company's objective is to place emphasis on generating revenues from
advertising, sponsorships, pay per view broadcasts of business events such as
shareholder meetings and new product launches, fees from streamed content, and
e-commerce.
With the availability of broadband Internet access accelerating, along
with the proliferation of software enabling multimedia viewing of online
content, more and more online users will come to expect a TV like web
experience, which in turn can be used to draw more traffic. To date, only a
small percentage of mostly large corporations have streamed their products or
services over the Internet. While a significant marketplace is available for the
Company's services, the Company believes that there will be significant
competition from numerous parties, both in the near and long term. Competition
exists from such companies as Broadcast.com, InterVu, Payperview.com, and
others. The Company intends to compete by aggressively branding itself as a
premier streaming portal, with wide ranging and international content, focus on
sales and marketing of its services, and enter markets where the Company can
leverage off its first mover advantage.
While competition is expected to intensify in the future, the high
growth of the Internet itself is expected to expand the size of the marketplace
in order to allow for many competitors. The Computer Industry Almanac reported
that there were more than 147 million world-wide users of the Internet at the
end of 1998, compared to just 61 million at the end of 1996, with approximately
50% of the total being in the US. With the number of Internet users around the
world constantly growing, the Computer Industry Almanac projects that worldwide
users will reach 320 million by the end of year 2000, and surpass 720 million by
in 2005.
Fuelling greater interest in the Internet is the continued improvement
and development of software, hardware and technological infrastructure that has
allowed the Internet to develop from a medium that delivered slow downloading
web pages with marginal graphics and text only content to one that now delivers
near broadcast quality audio and video content, both live and archived. In fact,
the Internet has dramatically shifted traditional radio and TV habits. In the
second half of 1998, 13 percent of Americans listened to the radio over the
Internet, compared to just 6 percent of the US population that had tuned in
online in July 1998. Technological improvements have actually resulted in less
TV viewing time in households with Internet access according to a recent report
by the Yankee Group, entitled "TVs, PCs and Beyond: Convergence or Confusion".
The Yankee Group study found that households with PCs and Internet access were
more likely
<PAGE>
to be Cable and DBS subscribers, with the extra time taken up by the Internet
affecting broadcasters, who typically rely on advertising as opposed
subscription fees for revenue.
ITEM 7. DESCRIPTION OF PROPERTY
- - ------- -----------------------
The Company maintains its head office at 15 Wertheim Court, Suite 311,
Richmond Hill, Ontario, L4B 3H7. These premises are 2180 sq. ft. and are leased
for C$3203.79 per month. The Company's lease expires on February 2, 2001,
however, the Company has an option to renew for another five year term.
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
- - ------- -------------------------------------------------------
The following information sets forth the names of the officers and
directors of the Company, their present positions with the Company and
biographical information.
HARMEL S. RAYAT (Age 37) Chairman, Director. Mr. Rayat has been in the venture
capital industry since 1981 and since January 1993 has been the president of
Hartford Capital Corporation, a company which specializes in providing early
stage funding and investment banking services to emerging growth corporations.
From January 1989 through December 1992 Mr. Rayat was the President and CEO of
K.S. Rayat & Company, an investment banking and venture capital company, where
he was responsible for research, due diligence and investment strategy in early
stage, start-up venture capital investments. Mr. Rayat has been a director and
President of the Company since March 1996.
KESAR S. DHALIWAL (Age 37) President and Chief Executive Officer, Director. Mr.
Dhaliwal has international business management experience in North America, Asia
and Europe. Between 1993 and just prior to joining American Alliance Corporation
in December 1998, Mr. Dhaliwal lead two technology companies which developed and
marketed real time Internet based information technology platforms to financial
services institutions. From 1986 through 1993, Mr. Dhaliwal was the Chief
Strategic Officer and Investment Officer for a large multi-national Singapore
based conglomerate. His duties included expanding the company's diverse
operations into shipping, construction, hospitality and entertainment. From 1984
through 1986, Mr. Dhaliwal was president of an international hospitality
company, where he developed and executed the company's expansion strategy from
North America to Europe and Asia.
JASBINDER CHOHAN. (Age 36) Secretary /Treasurer, Director. Ms. Chohan has
extensive sales, marketing and accounting experience with established, as well
as start up corporations. Since January 1995, Ms. Chohan has been an account
manager at an international packaging company. Between March 1991 and January
1995, Ms. Chohan handled all aspects of general accounting, administration, and
employee relations at an growing advertising concern and for a holding company
involved in recycling.
GURSH S. KUNDAN. (Age 32) Vice President, Business Development. Mr. Kundan has
held senior positions with several financial service and technology
organizations. From 1996 to 1998, Mr. Kundan was a senior vice president of a
start up technology company where he was responsible for developing the
technology for, and managing a service bureau operation which administered nine
billion dollars of financial service assets for several financial planning
firms. During his tenure, he also developed and implemented the firm's business
plan and marketing strategy which lead to an increase in revenue. Between 1991
and 1996, Mr. Kundan worked for several financial institutions developing
strategic initiatives to increase market share and profitability through
marketing programs and process improvement projects. From 1989 to 1991, Mr.
Kundan worked for a large information systems company and was responsible for
several initiatives, including development of distribution channels, product
marketing strategies and marketing research studies. Mr. Kundan holds a Bachelor
of Business Administration Degree from Simon Fraser University, with a focus on
marketing strategy, management
<PAGE>
information systems and operations.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS
- - ------- --------------------------------------
The following table sets forth certain information as to the Company's
five highest paid executive officers and directors for the fiscal year ended
December 31, 1997 and for the fiscal year which will end on December 31, 1998.
No other compensation was paid or will be paid to any such officers other than
the cash compensation set forth below.
<TABLE>
Summary Compensation Table
<CAPTION>
Name and principal position Year Salary
<S> <C> <C>
Harmel S. Rayat, Chairman, Director 1997 $0.00
1998 $0.00
Britt Weaver, former President & CEO, Director 1997 $0.00
1998 $64,167
Kesar S. Dhaliwal, joined as President & CEO, Director on December 1/98 1997 $0.00
1998 $0.00
Jasbinder Chohan, Secretary & Treasurer, Director 1997 $0.00
1998 $0.00
</TABLE>
In fiscal 1997, the aggregate amount of compensation paid to all
executive officers and directors as a group for services in all capacities was
nil. In fiscal 1998, the aggregate amount of compensation paid to all executive
officers and directors as a group for services in all capacities was
approximately $64,167.
ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
- - -------- ------------------------------------------------------------
The following table sets forth, as of April 19, 1997, the beneficial
ownership of the Company's Common Stock by each person known by the Company to
beneficially own more than 5% of the Company's Common Stock outstanding as of
such date and by the officers and directors of the Company as a group. Except as
otherwise indicated, all shares are owned directly.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and address of Amount and Nature Percent
Title of Class Of beneficial owner of beneficial ownership of class
- - -------------- ------------------- ----------------------- --------
<S> <C> <C> <C>
Common Harmel S. Rayat 4,000,000 34.7%
216 - 1628 West 1st Ave
Vancouver, B.C., V6J 1G1
Common Kesar S. Dhaliwal 1,200,000 10.4%
15 Wertheim Court, Suite311
Richmond Hill, Ontario L4B 3H7
Common Jasbinder Chohan 30,000 0.3%
216-1628 West 1st Avenue
Vancouver, B.C. V6J 1G1
Common Officers and Directors 5,230,000 45.4%
As A Group (3 persons)
</TABLE>
<PAGE>
ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
- - -------- ---------------------------------------------------------
From time to time, the Company has provided Internet related services
at fair market value for MedCare Technologies Inc., a company listed on the
NASDAQ Small Cap. Mr. Harmel S. Rayat, a Director and Chairman of the Company,
is also a Director and Chairman of MedCare Technologies.
ITEM 12. SECURITIES BEING OFFERED
- - -------- ------------------------
Common Stock
- - ------------
The Company has 100,000,000 common shares authorized with $0.00001 par
value. Holders of the Common Stock are entitled to one vote for each share held
by them of record on the books of the Company in all matters to be voted on by
the stockholders. Holders of Common Stock are entitled to receive such dividends
as may be declared from time to time by the Board of Directors out of funds
legally available, and in the event of liquidation, dissolution or winding up of
the Company, to share ratably in all assets remaining after payment of
liabilities. Declaration of dividends on Common Stock is subject to the
discretion of the Board of Directors and will depend upon a number of factors,
including the future earnings, capital requirements and financial condition of
the Company. The Company has not declared dividends on its Common Stock in the
past and the management currently anticipates that retained earnings, if any, in
the future will be applied to the expansion and development of the Company
rather than the payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and
are not subject to further calls or assessments by the Company. There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock currently outstanding is, and the Common Stock offered by the Company
hereby will, when issued, be validly issued, fully paid and nonassessable.
Preferred Stock
- - ---------------
The Company has 5,000,000 preferred shares at $0.0001 par value
authorized, none issued at this time. The Board of Directors may issue the
preferred shares from time to time in one or more series, each series to have
voting rights, preferences in dividends and in liquidation and such other
rights, preferences and conditions as the Board of Directors may designate by an
amendment to the Company's Articles of Incorporation by action duly adopted
without shareholder action and shareholder action shall not be required thereof.
Stock Options
- - -------------
The Company has 1,250,000 shares reserved under its 1997 Stock Option
Plan for issuance at $1.00 per share until November 5th, 2007. The optionees and
numbers of shares optioned are as follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Ranjit Bhogal* 400,000
Terry Johnston** 300,000
Bhupinder Mann*** 300,000
Herdev S. Rayat 110,000
Jasvir S. Rayat 110,000
Jasbinder Chohan 30,000
</TABLE>
* As at April 19, 1999, 30,000 options have been exercised. ** As at April 19,
1999, 5,000 options have been exercised. *** As at April 19, 1999, 5,000 options
have been exercised.
The Company has 1,750,000 shares reserved under its 1998 Stock Option
Plan. As at April 15, 1999, 1,250,000 shares out of the 1,750,000 shares had
been issued at $2.00 per share until November 5th, 2007. The optionees and
numbers of shares optioned are as follows:
<TABLE>
<CAPTION>
<S> <C>
Kesar S. Dhaliwal* 1,200,000
</TABLE>
* 1,000,000 options vest in 5 equal installments each December 1st, beginning
1999. The balance of 200,000 options vest once the Company attains $5,000,000 in
annual sales.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
- - ------- --------------------------------------------------------
EQUITY AND OTHER STOCKHOLDER MATTERS
- - ------------------------------------
The shares of the Company's stock are traded on the OTC Bulletin Board
under the symbol AMRE and the following have been the High and Low prices for
the times indicated:
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
January - March 1999 $10.25 $ 3.75
October - December 1998 $ 6.50 $ 4.88
July - September 1998 $ 6.75 $ 1.75
April - June 1998 $ 5.63 $ 2.13
January - March 1998 $ 3.25 $ 2.38
October - December 1997 $ 2.38 $ 0.56
July - September 1997 $ 0.50 $ 0.50
April - June 1997 $ 0.38 $ 0.19
January - March 1997 $ 1.00 $ 0.63
</TABLE>
There are 450,000 share purchase warrants exercisable at $2.00 per
share until December 9th, 2001. Other than stock options currently outstanding,
there are no other convertible securities.
As of April 19, 1999 there were 309 registered shareholders of the
Company. There are no dividend restrictions on the Company. Market makers who
have posted bids or offers during the period April 1996
<PAGE>
to April 1999 are as follows: William V. Frankel & Co. Incorporated, Hill
Thompson Magid & Co Inc., Knight Securities, Inc., Paragon Capital Corporation
and Sharpe Capital, Inc.
ITEM 2. LEGAL PROCEEDINGS
- - ------- -----------------
There are no legal proceedings pending or threatened against the
Corporation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- - ------- ---------------------------------------------
Far West Resources, Inc. changed its accountants from Hansen, Burnett &
Maxwell to Clancy & Company, PLLC on May 9, 1996. There were no and are no
disagreements with Hansen, Burnett & Maxwell.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- - ------- ---------------------------------------
On July 14, 1983, the Company, in connection with a 504 D offering issued
5,141,000 shares of common stock for cash at $.003 per share or $15,000. During
October 1984, the Company issued 13,009,000 shares of common stock at $.01 per
share or $130,090, less expenses of the offering of $27,547, for a net cash of
$102,543. For the year ended December 31, 1995, the Company issued 20,000,000
shares of common stock at $.001 per share to satisfy current liabilities in the
amount of $20,000.
On April 15, 1996, the Company effected a reverse split of 500:1, with
par value remaining at $.001. On April 16, 1996, the Company issued 4,000,000
shares of common stock at $.0005 per share for services or $2000 to Mr. Harmel
S. Rayat, a director of the Company. On May 9, 1996, in connection with a 504 D
offering, the Company issued 4,000,000 shares of common stock at $0.05 per share
for cash in the amount of $200,000.
On June 30, 1997, in connection with a 504 D offering, the Company
issued 2,000,000 shares of common stock for cash of $45,000 and $255,000 for
services at $0.15 per share or a total of $300,000. On October 14, 1997, the
Company issued 1,000,000 shares of common stock in a 504 D offering memorandum
at $.50 per share or $500,000. On December 9, 1997, the Company issued 450,000
shares of common stock in a 505 D offering memorandum at $2.00 per share or
$900,000, along with 450,000 share purchase warrants to purchase common shares
at $2.00 per share until December 9, 2001.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- - ------- -----------------------------------------
The officers and directors of the Company are indemnified as provided
under the Nevada Revised Statutes and pursuant to the Bylaws of the Company.
This indemnification, as described in Article VII, Section 1 of the Bylaws,
includes "current and future legislation or judicial or administrative decision
against all fines, liabilities, costs and expenses, including attorneys' fees."
<PAGE>
PART F/S
FINANCIAL STATEMENTS
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheet at December 31, 1998 and 1997 . . . . . . . . . . 2
Consolidated Statement of Operations For the Years Ended
December 31, 1998 and 1997, and From Inception (July 14, 1983)
To December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Stockholders' Equity From Inception
(July 14, 1983) To December 31, 1998 . . . . . . . . . . . . . . . . . 4-6
Consolidated Statement of Cash Flows For the Years Ended
December 31, 1998 and 1997, and From Inception (July 14, 1983)
To December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . 9-14
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
American Alliance Corporation
Richmond Hill, Ontario, Canada
We have audited the consolidated balance sheet of American Alliance Corporation
(A Development Stage Company), (the Company), and subsidiaries as of December
31, 1998 and 1997, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years then ended and for the period
from Inception (July 14, 1983) to December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the financial statements provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American Alliance
Corporation as of December 31, 1998 and 1997, and the consolidated results of
their operations and their consolidated cash flows for the years then ended, in
conformity with generally accepted accounting principles.
As discussed in Note 1, the Company has been in the development stage since its
inception on July 14, 1983, and although planned principal operations have
commenced, there have been no significant revenues derived therefrom.
Clancy and Co., P.L.L.C.
Phoenix, Arizona 85016
April 15, 1999
-1-
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998 AND 1997
<TABLE>
ASSETS
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 1,225,276 $ 1,447,925
Property and Equipment, Net (Note 3) 7,937 0
Other Assets
Goodwill, net of amortization of $956 13,382 0
Organization Costs 649 0
--- -
Total Other Assets 14,031 0
------ -
Total Assets $ 1,247,244 $ 1,447,925
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ 17,814 $ 0
Stockholders' Equity
Preferred Stock: Authorized $0.0001 Par Value, 5,000,000
Shares; Issued and Outstanding, NONE 0 0
Common Stock: Authorized $0.00001 Par Value, 100,000,000
Shares; Issued and Outstanding, 11,526,202 115 115
Additional Paid In Capital 2,043,892 2,043,892
Loss Accumulated During the Development Stage (814,577) (596,082)
--------- ---------
Total Stockholders' Equity 1,229,430 1,447,925
--------- ---------
Total Liabilities and Stockholders' Equity $ 1,247,244 $ 1,447,925
============ ============
</TABLE>
-1-
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
From Inception
Year Ended Year Ended (July 14, 1983)
December 31, December 31, to December 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Revenues $ 66,426 $ 0 $ 66,426
Operating Expenses
General and Administrative 355,978 263,268 963,687
------- ------- -------
Operating Loss (289,552) (263,268) (897,261)
Other Income
Interest Income 71,057 7,481 82,684
------ ----- ------
Net Loss Available to Common Stockholders $ (218,495) $ (255,787) $ (814,577)
============ =========== ============
Loss Per Weighted Average Share of
Common Stock $ (0.02) $ (0.03) $ (0.07)
============ =========== ============
Weighted Average Number of Common
Shares Outstanding 11,526,202 9,530,568 11,526,202
========== ========= ==========
</TABLE>
-3-
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Loss
Accumulated
Additional During the
Preferred Stock Common Stock Paid In Development
Shares Amount Shares Amount Capital Stage Total
------ ------ ------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Common Stock Issued For Cash at
$0.003 Per Share, August 26, 1983 0 $ 0 5,141,000 $ 5,141 $ 9,859 $ 0 $ 15,000
Net Loss From Inception (July 14, 1983)
Through December 31, 1983 (2,888) (2,888)
--------- ------ ---------- ---------- ------------ ------- -------
Balance, December 31, 1983 0 0 5,141,000 5,141 9,859 (2,888) 12,112
Common Stock Issued - Public Offering at
$0.01 Per Share, October 1984 13,009,000 13,009 117,081 130,090
Cost of Offering (27,547) (27,547)
Net Loss, Year Ended December 31, 1984 (15,327) (15,327)
--------- ----- ----------- ---------- ------------ -------- --------
Balance, December 31, 1984 0 0 18,150,000 18,150 99,393 (18,215) 99,328
Capital Contribution, 1990 4,364 4,364
Net Loss, Year Ended December 31, 1985
Through 1990 (103,692) (103,692)
--------- ----- ----------- ---------- ------------ -------- --------
Balance, December 31, 1990 0 0 18,150,000 18,150 103,757 (121,907) 0
Capital Contribution, 1991 100 100
Net Loss, Year Ended December 31, 1991 (100) (100)
--------- ----- ----------- ---------- ------------ -------- --------
Balance, December 31, 1991 0 0 18,150,000 18,150 103,857 (122,007) 0
Net Loss, Year Ended December 31, 1992 (141) (141)
--------- ----- ----------- ---------- ------------ -------- --------
Balance, December 31, 1992 0 0 18,150,000 18,150 103,857 (122,148) (141)
</TABLE>
-4-
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Loss
Accumulated
Additional During the
Preferred Stock Common Stock Paid In Development
Shares Amount Shares Amount Capital Stage Total
------ ------ ------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Loss, Year Ended December 31, 1993 (204) (204)
-------- ------ ---------- --------- ------------ ------------- ----------
Balance, December 31, 1993 0 0 18,150,000 18,150 103,857 (122,352) (345)
Net Loss, Year Ended December 31, 1994 (100) (100)
-------- ------ ---------- --------- ------------ ------------- ----------
Balance, December 31, 1994 0 0 18,150,000 18,150 103,857 (122,452) (445)
Common Stock Issued To Satisfy Current
Liabilities at $0.001 Per Share,
December 31, 1995 20,000,000 20,000 20,000
Net Loss, Year Ended December 31, 1995 (22,215) (22,215)
-------- ------ ---------- --------- ------------ ------------- ----------
Balance, December 31, 1995 0 0 38,150,000 38,150 103,857 (144,667) (2,660)
500:1 Reverse Stock Split, April 15, 1996 (38,073,798) (38,074) 38,074 0
Common Stock Issued In Exchange For
Services at $0.005 Per Share, April
16,1996 4,000,000 4,000 (2,000) 2,000
Common Stock Issued For Cash at $0.05
Per Share, May 9, 1996 4,000,000 4,000 196,000 200,000
Net Loss, Year Ended December 31, 1996 (195,628) (195,628)
-------- ------ ----------- ----------- ----------- ------------ ----------
Balance, December 31, 1996 0 0 8,076,202 8,076 335,931 (340,295) 3,712
Common Stock Issued For Cash and
Services at $0.15 Per Share, June 30,
1997 2,000,000 2,000 298,000 300,000
</TABLE>
-5-
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Loss
Accumulated
Additional During the
Preferred Stock Common Stock Paid In Development
Shares Amount Shares Amount Capital Stage Total
------ ------ ------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Adjustment For Change in Par Value From
$0.001 to $0.00001 (9,975) 9,975 0
Common Stock Issued For Cash at $0.50
Per Share, October 24, 1997 1,000,000 10 499,990 500,000
Common Stock Issued For Cash at $0.20
Per Share, December 19, 1997
450,000 4 899,996 900,000
Net Loss, Year Ended December 31, 1997 (255,787) (255,787)
-------- ------ ----------- ----------- ----------- ------------ ----------
Balance, December 31, 1997 0 0 11,526,202 115 2,043,892 (596,082) 1,447,925
Net Loss, Year Ended December 31, 1998 (218,495) (218,495)
-------- ------ ----------- ----------- ----------- ------------ ----------
Balance, December 31, 1998 0 $ 0 11,526,202 $ 115 $ 2,043,892 $ (814,577) $1,229,430
= === ========== ========== ============ ============ ==========
</TABLE>
-6-
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
From
Inception
(July 4
Year Ended Year Ended 1983) to
December 31, December 31, December 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss $ (218,495) $ (255,787) $ (814,577)
Adjustments to Reconcile Net Loss to Net Cash
Used In Operating Activities
Investment in Subsidiary 11,274 0 11,274
Depreciation and Amortization 2,940 0 2,940
Common Stock Issued for Services 0 255,000 257,000
Common Stock Issued to Satisfy Current
Liabilities 0 0 20,000
Changes in Assets and Liabilities
(Increase) Decrease in Organization Costs (649) 0 (649)
Increase (Decrease) in Accrued Liabilities 17,814 0 17,814
--------- ------- --------
Total Adjustments 31,379 255,000 308,379
--------- ------- --------
Net Cash Used In Operating Activities (187,116) (787) (506,198)
Cash Flows From Investing Activities
Purchase of Property and Equipment (9,921) 0 (9,921)
Investment, Net of Cash Acquired 3,388 0 3,388
Investment, Cash Paid For Acquisition (29,000) 0 (29,000)
------- - -------
Net Cash Flows Used In Investing Activities (35,533) 0 (35,533)
Cash Flows From Financing Activities
Proceeds From the Issuance of Common Stock 0 1,445,000 1,790,090
Cost of Public Offering 0 0 (27,547)
Capital Contributions 0 0 4,464
- - -----
Net Cash Provided By Financing Activities 0 1,445,000 1,767,007
- --------- ---------
Increase (Decrease) in Cash and Cash Equivalents (222,649) 1,444,213 1,225,276
</TABLE>
-7-
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
From
Inception
(July 4
Year Ended Year Ended 1983) to
December 31, December 31, December 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cash and Cash Equivalents, Beginning of Year 1,447,925 3,712 0
--------- ----- -
Cash and Cash Equivalents, End of Year $ 1,225,276 $ 1,447,925 $ 1,225,276
=========== =========== ===========
Supplemental Disclosure of Cash Flow Information:
- - -------------------------------------------------
Cash paid for:
Interest $ 0 $ 0 $ 0
=========== =========== ===========
Income taxes $ 0 $ 0 $ 0
=========== =========== ===========
Noncash Investing and Financing Activities:
Issuance of Common Stock for Services $ 0 $ 255,000 $ 257,000
=========== =========== ===========
Common Stock Issued to Satisfy Current $ 0 $ 0 $ 20,000
=========== =========== ===========
Liabilities
Acquisition of 100% of Subsidiary in Exchange For Cash
Details of Acquisition:
Fair Value of Assets $ 15,688
Liabilities 1,026
-----
Book Value of Company 14,662
Cash Paid For Acquisition 29,000
------
Goodwill Acquired 14,338
Less Cash Acquired (3,388)
Total Acquisition, Net of Cash Received $ 11,274 $ 0 $ 0
=========== =========== ===========
</TABLE>
-8-
The accompanying notes are an integral part of these financial statements.
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION
- - ---------------------
American Alliance Corporation (The Company) was incorporated under the
laws of the State of Utah, on July 14, 1983 under the name Far West
Gold, Inc., with an authorized capital of 50,000,000 shares of common
stock with a par value of one mil ($.001) per share. The Company
changed its name to Far West Resources, Inc. on May 14, 1996. On
September 22, 1997, the Company changed its name and state of
incorporation from Far West Resources, Inc., a Utah Corporation, to
American Alliance Corporation, a Nevada Corporation, with the Nevada
Corporation being the surviving corporation.
On July 14, 1983, the Company, in connection with a 504D offering,
issued 5,141,000 shares of common stock for cash at $.003 per share,
or $15,000.
During October, 1984, the Company issued 13,009,000 shares of common
stock at $.01 per share or $130,090, less expenses of the offering of
$27,547, for net cash of $102,543.
For the year ended December 31, 1990, the Company received a capital
contribution of $4,364 to pay expenses of the Company.
For the year ended December 31, 1991, the Company received a capital
contribution of $100 to pay expenses of the Company.
For the year ended December 31, 1995, the Company issued 20,000,000
shares of common stock at $0.001 per share to satisfy current
liabilities in the amount of $20,000.
On April 15, 1996, the Board of Directors authorized a reverse split
of 500:1, that was approved by the stockholders on May 9, 1996.
On April 16, 1996, the Company issued 4,000,000 shares of common stock
at $0.0005 per share for services, or $2,000.
On May 9, 1996, the Company issued 4,000,000 shares of common stock at
$0.05 per share for cash in the amount of $200,000.
On May 9, 1996, the stockholders authorized an increase in the number
of shares that the Company has authority to issue to 105,000,000, of
which 100,000,000 shares shall be $.001 par value Common Stock and
5,000,000 shares shall be $.10 par value Preferred Stock.
On June 30, 1997, the Company issued 2,000,000 shares of common stock
for cash of $45,000 and $255,000 for services at $0.15 per share, or
$300,000.
-9-
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION (CONTINUED
- - --------------------------------
On September 22, 1997, the Company changed its name and state of
incorporation from Far West Resources, Inc., a Utah Corporation, to
American Alliance Corporation, a Nevada Corporation, with the Nevada
Corporation being the surviving corporation, and authorized a decrease
in the par value of capital stock. Preferred stock par value was
adjusted from $.001 to $.0001 and common stock par value was adjusted
from $.10 to $.00001.
On October 24, 1997, the Company issued 1,000,000 shares of common
stock in a 504 D offering memorandum at $0.50 per share, or $500,000.
On December 19, 1997, the Company issued 450,000 shares of common
stock in a 504 D offering memorandum at $2.00 per share, or $900,000.
On January 9, 1998, the Company organized American Alliance, Inc., its
wholly owned subsidiary, under the laws of the State of Nevada with an
authorized capital of 1,000.
On September 15, 1998, the Company's acquired 100% of the outstanding
common stock of Rowland, Carmichael and Associates, Inc. for $29,000.
The book value of the assets acquired was $14,662 less cash acquired
of $3,388, for a net acquisition of $11,274. Excess of market value
over book value of assets acquired is $14,338.
The Company is a development stage company, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting
substantially all of its present efforts in securing and establishing
a new business, and although its planned principal operations have
commenced there have been no significant revenues derived therefrom.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
- - ----------------------------------------
A. Cash and Cash Equivalents
----------------------------
The Company considers all highly liquid debt instruments with a
maturity of three months or less to be cash and cash equivalents.
B. Basis of Financial Statement Presentation
--------------------------------------------
The Company's financial statements are prepared using the accrual
method of accounting.
C. Concentration of Credit Risk
-------------------------------
The Company maintains U.S. dollar cash balances in Canadian banks that
are not insured.
-10-
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- - ----------------------------------------------------
D. Principles of Consolidation
------------------------------
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, American Alliance, Inc. and
Rowland, Carmichael, & Associates, Inc. All material intercompany
transactions have been eliminated in consolidation.
E. Property and Equipment
-------------------------
Property and Equipment are recorded at cost, less accumulated
depreciation. Depreciation is computed using the straight line method
over the estimated useful life of the assets, which is five years.
Repairs and maintenance are charged to operations as incurred.
F. Goodwill
-----------
Goodwill represents the excess of the cost of subsidiary acquired over
the fair value of their net assets at dates of acquisition and is
being amortized on the straight-line method over 15 years.
Amortization expense charged to operations for 1998 was $956.
G. Revenue Recognition
----------------------
Revenues are recognized at time of performance of services.
H. Earnings or Loss Per Share
-----------------------------
Basic earnings or loss per share has been computed based on the
weighted average number of common shares outstanding and common share
equivalents at the date of the financial statements. All earnings or
loss per share amounts in the financial statements are basic earnings
or loss per share, as defined by Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share." Diluted earnings or
loss per share does not differ materially from basic earnings or loss
per share for all periods presented. The number of shares used in
computing earnings or loss per share at December 31, 1998 and 1997 was
11,526,202 and 9,530,368, respectively.
I. Income Taxes
---------------
The Company accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes,' by which deferred tax liabilities
and assets are determined based on the difference between the
financial statement and tax bases of
-11-
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- - ----------------------------------------------------
I. Income Taxes
---------------
assets and liabilities, using enacted tax rates in effect for the year
in which the differences are expected to reverse. See Note 4.
J. Use of Estimates
-------------------
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenues and expenses. Actual
results could vary from the estimates that were assumed in preparing
the financial statements.
K. Business Segment Information
-------------------------------
The Company implemented SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," on January 1, 1998. The
Company operates in one industry. The Company is an aggregator and
presentation portal for targeted Internet streaming media content. The
Company offers a large, comprehensive selection of Internet
programming, including sports, news, business and finance, health and
medicine, technology politics, and religion. Among other content, the
Company will broadcast live pay-per-view seminars and entertainment,
trade shows, conferences, and training events on worldwide basis.
There were no material amounts of sales or transfers among geographic
areas or major customers within the United States.
L. Pending Accounting Pronouncements
------------------------------------
It is anticipated that current pending accounting pronouncements will
not have an adverse impact on the financial statements of the Company.
NOTE 3 - PROPERTY AND EQUIPMENT
- - -------------------------------
Property and equipment consists of computer equipment at December 31,
1998. Depreciation expense charged to operations during 1998 was
$1,984.
NOTE 4 - INCOME TAXES
- - ---------------------
There is no current or deferred tax expense for the years ended
December 31, 1998 and 1997, due to the Company's loss position. The
benefits of timing differences have not been previously recorded.
-12-
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 4 - INCOME TAXES (CONTINUED)
- - ---------------------------------
The deferred tax consequences of temporary differences in reporting
items for financial statement and income tax purposes are recognized,
as appropriate. Realization of the future tax benefits related to the
deferred tax assets is dependent on many factors, including the
Company's ability to generate taxable income within the net operating
loss carryforward period. Management has considered these factors in
reaching its conclusion as to the valuation allowance for financial
reporting purposes. The income tax effect of temporary differences
comprising the deferred tax assets and deferred tax liabilities is a
result of the following:
<TABLE>
<CAPTION>
Deferred Taxes 1998 1997
-------------- ---- ----
<S> <C> <C>
NOL Carryforwards $ 355,102 $ 208,629
Valuation Allowance (355,102) (208,629)
-------- --------
Net Deferred Tax Assets $ 0 $ 0
</TABLE>
A reconciliation between the statutory federal income tax rate and the
effective rate of income tax expense for each of the years during the
period ended December 31 follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Statutory Federal Income Tax Rate (35.0%) (35.0%)
Increase in Valuation Allowance 35.0% 35.0%
---- ----
Effective Income Tax Rate 0.0% 0.0%
=== ===
</TABLE>
The Company has available net operating loss carryforwards of $814,577
and $596,082 at December 31, 1998 and 1997, for tax purposes to offset
future taxable income. The net operating loss carryforwards expire
principally beginning in the year 2013.
NOTE 6 - STOCK OPTIONS
- - ----------------------
The Company has two stock option plans that provide for the granting
of stock options to officers and key employees. The objectives of
these plans include attracting and retaining the best personnel,
providing for additional performance incentives, and promoting the
success of the Company by providing employees the opportunity to
acquire common stock. Options outstanding under the Company's two
stock option plans have been granted at prices which are either equal
to or above the market value of the stock on the date of grant and
expire at various dates after the grant date.
-13-
<PAGE>
AMERICAN ALLIANCE CORPORATION
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 6 - STOCK OPTIONS (CONTINUED)
- - ----------------------------------
The status of the Company's stock option plans is summarized below as
of December 31:
<TABLE>
<CAPTION>
Number of Option
Shares Price
------ -----
<S> <C> <C>
Outstanding at December 31, 1996 0 $ .00
- ---------
Options Outstanding at December 31, 1997 0 .00
Granted Under the 1997 Stock Option Plan 1,250,000 1.00
Granted Under the 1998 Stock Option Plan 1,200,000 2.00
--------- ----
Options Outstanding at December 31, 1998 2,450,000 1.00-2.00
========= ==== ====
</TABLE>
The Company accounts for stock-based compensation using the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," under which no
compensation cost for stock options is recognized for stock options
awards granted at or above fair market value. Had compensation expense
for the Company's stock-based compensation plans been determined under
SFAS No. 123, based on the fair market value at the grant dates, the
Company's pro forma net loss and pro forma net loss per share would
have been reflected as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net Loss
As reported $ (218,495) $ (255,787)
Pro forma $(1,508,532) $ (919,101)
Net Loss Per Share
As reported $ (0.02) $ (0.03)
Pro forma $ (0.13) $ (0.10)
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumption used for those options granted in 1998 and
1997, respectively, dividend yield of 0% and 0%, expected volatility
of 76% and 173%, risk-free interest rates of 5% and 5%, and expected
lives of 10 years and 10 years.
NOTE 6 - SUBSEQUENT EVENTS
--------------------------
On March 8, 1999, the Company's subsidiary, American Alliance, Inc.,
entered into an agreement to assign interest in the domain name of
"WhatsOnLine.com" for a consideration of $50,000. All rights, title
and interest in, and to, the domain name convey to the buyer
effectively immediately upon completion of all documents and
notifications required to transfer domain name to buyer.
-14-
<PAGE>
PART III
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Exhibit 2
2a Merger of American Alliance Utah into American Alliance Nevada E-1
2b Stock Purchase Agreement with Rowland Carmichael E-
Exhibit 3
3a Articles of Incorporation and Amendments E-
3b Bylaws E-
Exhibit 10
10a Domain Name Acquisition Agreement
10b Escrow Agreement regarding Domain Name
Exhibit 23 Consent of Independent Auditor
Exhibit 27 Financial Data Schedule
Exhibit 99
99a Minutes regarding organization and stock issuance
99b Minutes regarding offering and loans
99c Minutes regarding stock to repay debt
99d Minutes regarding 500:1 reverse split
99e Minutes regarding acquisition and share issuance
99f Minutes approving 504 offering
99g Shareholders' minutes regarding Preferred Stock
99h Minutes approving 504 offering
99i Minutes regarding disposition of interest
99j Shareholdres' minutes regarding share increase and options
99k Minutes regarding 504 offering
99l Minutes regarding 1997 option plan
99m Minutes regarding 505 offering
99n Minutes regarding annual meeting
99o Minutes regarding 2:1 forward split
99p Minutes regarding name change
99q 1997 Stock Option Plan
99r 1998 Stock Option Plan
99s 504 offering dated April 23, 1996
99t 504 offering dated June 30, 1997
99u 504 offering dated October 1, 1997
99v 505 offering dated December 1, 1997
99w Trademark Application for Domain Name
</TABLE>
<PAGE>
SIGNATURES
The issuer has duly caused this offering statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Vancouver,
Province of British Columbia, Canada, on May 11, 1999.
AMERICAN ALLIANCE CORPORATION
By /s/ Harmel S. Rayat
-----------------------
Harmel S. Rayat, Director, Chairman
This offering statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Harmel S. Rayat May 11, 1999
- - ------------------------------------------- ------------------------
Harmel S. Rayat, Director Date
/s/ Kesar S. Dhaliwal May 11, 1999
- - ------------------------------------------- ------------------------
Kesar S. Dhaliwal, Director Date
/s/ Jasbinder Chohan May 11, 1999
- - ------------------------------------------- ------------------------
Jasbinder Chohan, Director Date
<PAGE>
FAR WEST RESOURCES, INC.
CONSENT OF DIRECTORS
Board Resolutions for Migratory Merger to Nevada
Pursuant to the Utah Revised Business Corporation Act, all the
directors of Far West Resources, Inc. ("FWR"), a Utah corporation (the
"Corporation") the undersigned directors of the Corporation, comprising all the
directors of the Corporation consent to the following resolutions:
RESOLVED, that it is in the best interests of the Corporation and its
shareholders to effect a tax-free reorganization under Section 368(a) (1)(F) of
the Internal Revenue Code to change the state of incorporation of the
Corporation from Utah to Nevada by means of a merger on a tax-free basis;
RESOLVED FURTHER, that the Agreement and Plan of Merger ("Merger
Agreement") between the Corporation and American Alliance Corporation, a Utah
corporation, a copy of which has been provided to each director, and all actions
required thereby are hereby approved subject to receipt of shareholder approval
of the plan of merger; however, the officers of the Corporation are authorized
to make such nonsubstantive changes and amendments to said agreement as they
deem necessary or advisable with the advice of counsel;
RESOLVED FURTHER, that all agreements governing or applying to the
Corporation's capital shares shall continue to apply to shares received in the
merger reorganization;
RESOLVED FURTHER, that the officers of the Corporation are hereby
authorized and directed to take all actions, including the filing, execution,
and delivery of any and all articles, documents, certificates or instruments,
amendments to articles, documents, certificates or instruments, and to do or
cause to be done any and all acts which may be deemed necessary or desirable to
effect the foregoing resolutions and transactions.
BOARD OF DIRECTORS:
/s/ Harmel S. Rayat
- - ------------------------------------------
Harmel S. Rayat
/s/ Jasbinder Chohan
- - ------------------------------------------
Jasbinder Chohan
/s/ Kundan S. Rayat
- - ------------------------------------------
Kundan S. Rayat
<PAGE>
ACTION BY WRITTEN CONSENT OF
THE DIRECTORS OF
AMERICAN ALLIANCE CORPORATION
A Nevada corporation
In accordance with Chapter 78 of the Nevada Revised Statutes, the
undersigned, constituting all the directors of American Alliance Corporation, a
Nevada corporation (the "Corporation"), no shares having yet been issued or paid
for in the Corporation, hereby unanimously adopt the following resolutions:
RESOLVED, that the Bylaws in the form attached are hereby adopted as
the Bylaws of the Corporation. That these Bylaws are those used by Far West
Resources, Inc., a Utah Corporation.
RESOLVED, that the fiscal year of the Corporation shall be December 31.
RESOLVED, that the following listed persons are elected to the
respective offices of the Corporation shown opposite their names below,
effective immediately, to serve at the pleasure of the Board or until their
respective successors are duly elected and qualified:
Harmel S. Rayat President, Chairman of the Board
Jasbinder Chohan Secretary, Director
Kundan S. Rayat Treasurer, Director
RESOLVED, that the President and Secretary of the Corporation are
authorized to open such bank accounts (including certificates or other time
deposit accounts) as they deem to be in the Corporation's best interests and the
Secretary is authorized to certify as to the passage of all Board resolutions
required to open such accounts.
RESOLVED, that it is in the best interests of the Corporation to effect
a reorganization under Section 368(a)(1)(F) of the Internal Revenue Code to
change the state of incorporation of Far West Resources, Inc., a Utah
corporation, from Utah to Nevada by means of a merger into the Corporation on a
tax-free basis;
RESOLVED FURTHER, that the Agreement and Plan of Merger between the
Corporation and Far West Resources, Inc., a Utah corporation, a copy of which is
attached hereto, and all actions required thereby are hereby approved, provided
that the officers of the Corporation are authorized to make such nonsubstantive
changes and amendments to said agreement as they deem necessary or advisable
with the advice of counsel;
RESOLVED FURTHER, that all agreements governing or applying to the Utah
corporation's capital shares shall continue to apply to shares of this
Corporation issued in exchange therefor in the merger;
RESOLVED FURTHER, that the Corporation hereby takes all steps necessary
or appropriate to assuming the liabilities and obtaining the assets and benefits
of the Utah corporation;
<PAGE>
RESOLVED FURTHER, that the Corporation should qualify to do business in
the State of Utah and, if necessary and appropriate, in other states, and the
officers are hereby authorized and directed to take all actions and execute all
documents and instruments they deem appropriate to obtain such qualifications to
do business;
RESOLVED that the officers of the Corporation are hereby authorized and
directed to take all actions, including the filing, execution, and delivery of
any and all applications, articles, documents, certificates or instruments,
amendments to applications, articles, documents, certificates or instruments and
to do or cause to be done any and all acts which may be deemed necessary or
desirable to effect the foregoing resolutions and transactions.
BOARD OF DIRECTORS:
/s/ Harmel S. Rayat
- - ------------------------------------------
Harmel S. Rayat
/s/ Jasbinder Chohan
- - ------------------------------------------
Jasbinder Chohan
/s/ Kundan S. Rayat
- - ------------------------------------------
Kundan S. Rayat
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER made as of the 18th day of September, 1997
by and between Far West Resources, Inc., a Utah corporation (hereinafter
referred to as "Old Company" or as a "Constituent Corporation") ("FWR"), and
American Alliance Corporation, a Nevada corporation (hereinafter referred to as
"New Company" or as a "Constituent Corporation") ("AAC").
WHEREAS, Old Company has determined that it is in the best interest of
Old Company to change the state of its incorporation from the State of Utah to
the State of Nevada; and
WHEREAS, Old Company has caused New Company to be formed and desires to
merge with and into New Company for the purpose of accomplishing such change,
and New Company desires to merge with Old Company pursuant to Nevada Revised
Statutes ss.92a, no shares having been issued by New Company (the "Merger"),
upon the terms, and subject to the conditions, set forth in this Agreement and
Plan of Merger (hereinafter called the "Agreement") in accordance with the laws
of the State of Nevada and the State of Utah; and
WHEREAS, the authorized capital stock of Old Company consists of one
hundred million (100,000,000) shares of common stock, par value $0.001
(hereinafter called the "Old Company Common Stock") and five million (5,000,000)
shares of preferred stock, par value $0.10 (hereinafter called the "Old Company
Preferred Stock"), of which ten million seventy-six thousand two hundred two
(10,076,202) shares of Old Company Common Stock and no (0) shares of Old Company
Preferred Stock are issued and outstanding (as may hereafter be adjusted for any
change in the number of shares of Old Company Common Stock or Old Company
Preferred Stock); and
WHEREAS, the authorized capital stock of New Company consists of one
hundred million (100,000,000) shares of common stock, $0.00001 par value
(hereinafter called the "New Company Common Stock"), of which no (0) shares are
issued and outstanding; and
WHEREAS, the Boards of Directors of Old Company and New Company by
resolutions duly adopted have approved the terms of this Agreement and Plan of
the Merger and have directed the submission of this Agreement to the
stockholders of Old Company for approval;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, and provisions herein contained, the parties hereto agree
as follows:
1
<PAGE>
ARTICLE I
THE MERGER
1.1 At the Effective Time as defined in Section 4.1 hereof, Old Company
shall be merged with and into New Company which shall be the surviving
corporation and New Company at such time shall merge Old Company with and into
New Company. The corporate existence of New Company with all its purposes,
powers, and objects shall continue unaffected and unimpaired by the Merger and
New Company as it shall be constituted after the Effective Time is herein called
the "Surviving Corporation." The Surviving Corporation shall, from and after the
Effective Time, possess all of the rights, privileges, powers, and franchises of
a public, as well as a private, nature and be subject to and liable for all the
restrictions, disabilities, debts, liabilities, obligations, penalties and
duties of each of the Constituent Corporations and all of the rights,
privileges, powers, and franchises of each of the Constituent Corporations in
all property, real, personal, or mixed, and all debts due either of the
Constituent Corporations on whatever account, including stock subscriptions and
other things in action and all or every other interest of or belonging to either
of the Constituent Corporations shall be vested in the Surviving Corporation
without further act or deed; and the title to any real estate, whether vested by
deed or otherwise in either of the Constituent Corporations, shall not revert or
be in any way impaired by reason of the Merger, and no liability or obligation
due or to become due at the Effective Time or any claim or demand for any cause
then existing or action or proceeding pending by or against either of the
Constituent Corporations or any shareholder, officer or director thereof shall
be released or impaired by the Merger; and all rights of creditors and liens
upon property, of either of the Constituent Corporations, shall be preserved
unimpaired, all in accordance with, and with the effect stated in Section 92a of
the Nevada Revised Statutes, as amended. The separate existence and corporate
organization of Old Company shall cease upon the Effective Time and thereupon
Old Company and New Company shall be a single corporation, New Company.
1.2 If at any time after the Effective Time the Surviving Corporation
shall consider or be advised that any further assignment, assurances in law, or
any other things are necessary or desirable to vest, perfect, or confirm of
record or otherwise in the Surviving Corporation, the title to any property or
right of Old Company acquired or to be acquired by reason of or as a result of
the Merger, Old Company and its proper officers and directors will, upon notice,
execute and deliver such proper deeds, assignments, and assurances reasonably
requested by the Surviving Corporation and do all things necessary or advisable
to vest, perfect, or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the intent and purposes of this Agreement
and the proper officers and directors of the Surviving Corporation are fully
authorized in the name of Old Company or otherwise to take any and all such
action.
2
<PAGE>
ARTICLE II
ARTICLES OF INCORPORATION; BYLAWS; BOARD OF
DIRECTORS; OFFICERS
2.1 The Articles of Incorporation of New Company as in effect at the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until the same shall be amended as provided by law.
2.2 The Bylaws of New Company as in effect at the Effective Time shall
be the Bylaws of the Surviving Corporation until the same shall thereafter be
altered, amended, or repealed in accordance with law, the Articles of
Incorporation of the Surviving Corporation, or said Bylaws.
2.3 From and after the Effective Time the officers and directors of Old
Company immediately prior to the Effective Time shall serve in their respective
capacities as the officers and directors of the Surviving Corporation, each to
serve until his respective successor shall have been duly elected and qualified.
2.4 The laws which are to govern the Surviving Corporation are the laws
of the State of Nevada.
ARTICLE III
CONVERSION OF SHARES
3.1 At the Effective Time each one (1) share of Old Company Common
Stock issued and outstanding immediately prior to the Effective Time then held
by each Old Company shareholder of record shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one (1)
share of New Company Common Stock.
3.2 All agreements of any kind governing the Old Company Common Stock
are adopted by New Company at the Effective Time and shall apply to and burden
and benefit the New Company Common Stock.
3.3 Within a reasonable time after the Effective Time, each holder of
Old Company Common Stock prior to the Merger shall surrender to the Surviving
Corporation each certificate (the "Certificates") representing such Old
Company Common Stock prior to the Merger and shall receive in exchange therefor
a certificate or certificates representing the shares of stock of the Surviving
Corporation into which such Old Company Common Stock shall have been converted.
Except as otherwise provided by law, at and after the Effective Time, each
holder of a Certificate shall cease to have any rights as a shareholder of Old
Company, except for the right to surrender such Certificate in exchange for
shares of stock of the Surviving Corporation as provided herein.
3
<PAGE>
ARTICLE IV
PROCEDURE TO EFFECT MERGER
4.1 The term "Effective Time" as used herein shall mean the time on the
day on which this Agreement shall become effective in accordance with the laws
of the State of Nevada. Each of the Constituent Corporations hereby agrees to do
promptly all of such acts, and to take promptly all such measures as may be
appropriate to enable it to perform as early as practicable the covenants and
agreements herein provided to be performed by it.
4.2 This Agreement may be terminated by the mutual consent of the
Boards of Directors of the Constituent Corporations whether before or after
approval of this Agreement by the stockholders of Old Company.
4.3 A copy of this Agreement or Articles of Merger with respect thereto
shall be filed in the office of the Secretary of State of the State of Nevada
and in the office of the Secretary of State of the State of Utah. Duplicate
copies of this Agreement, certified by the appropriate authorities, if necessary
or desirable, shall be filed or recorded in such other offices or places as
shall be required by the laws of the State of Nevada and the State of Utah.
ARTICLE V
MISCELLANEOUS
5.1 This Agreement may be executed in several counterparts each of
which shall be deemed an original but all of which counterparts collectively
shall constitute one instrument representing the agreement between the parties
hereto.
5.2 Except as otherwise provided in this Agreement, nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the Constituent Corporations or
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
5.3 This Agreement and legal relations between the parties hereto shall
be governed by and construed in accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, each of the Constituent Corporations has caused
this Agreement and Plan of Merger to be signed in its corporate name by its duly
authorized officers all as of the date first above written.
American Alliance Corporation
a Nevada corporation
Suite 216 -- 1628 West Street Avenue
Vancouver, British Columbia V6J 1G1 Canada
4
<PAGE>
By: /s/ Harmel S. Rayat
-----------------------
President
ATTEST:
/s/ Jasbinder Chohan
- - -------------------------------------
Secretary
Far West Resources, Inc.
a Utah corporation
Suite 216 -- 1628 West Street Avenue
Vancouver, British Columbia V6J 1G1 Canada
By: /s/ Harmel S. Rayat
-----------------------
President
ATTEST:
/s/ Jasbinder Chohan
- - ---------------------------------------
Secretary
I, Jasbinder Chohan, Secretary of American Alliance Corporation, a
Nevada corporation organized and existing under the laws of the State of Nevada,
hereby certify, as such secretary, that the Agreement and Plan of Merger to
which this certificate is attached, after having first being duly signed on
behalf of the said corporation and having been signed on behalf of Far West
Resources, Inc., a corporation of the State of Utah, was duly adopted pursuant
to Section 92a of the Nevada Revised Statutes, without any vote of the
stockholders of the surviving corporation; and that no shares of the corporation
were issued prior to the adoption by the Board of Directors of the surviving
corporation of the resolution approving the Agreement and Plan of Merger, and
that Section 92a of the Nevada Revised Statutes, is applicable; and that the
Agreement and Plan of Merger was adopted by action of the Board of Directors of
said American Alliance Corporation, a Nevada corporation, and is the duly
adopted agreement and act of the said corporation.
WITNESS my hand on this 18th day of September, 1997.
/s/ Jasbinder Chohan
------------------------------------
Secretary
5
<PAGE>
ARTICLES OF MERGER
OF
FAR WEST RESOURCES, INC.,
a Utah corporation,
INTO
AMERICAN ALLIANCE CORPORATION
a Nevada corporation,
Pursuant to the Utah Revised Business Corporation Act ss.16-10a-1105
and Nevada Revised Statutes ss.92a, the undersigned corporations, by and through
the undersigned officers, hereby set forth the following Articles of Merger:
1. Plan of Merger. The Plan of Merger is set forth on Exhibit A attached
hereto and is incorporated herein by this reference. American Alliance
Corporation, a Nevada corporation, is the Surviving Corporation.
2. Outstanding Shares. The number of shares outstanding for each
corporation named in the plan of merger was as follows:
Far West Resources, Inc.
a Utah corporation 10,076,202 Common
0 Preferred
American Alliance Corporation,
a Nevada corporation 0
3. Approvals. All issued and outstanding shares of Far West Resources,
Inc., a Utah corporation, and of American Alliance Corporation, a Nevada
corporation, were voted in favor of the plan of merger.
4. Agreements. The Surviving Corporation hereby agrees that:
(a) it may be served with process in the State of Utah in any
proceeding for the enforcement of any obligation of the disappearing
corporation and in any proceeding for the enforcement of the rights of a
dissenting shareholder of such disappearing corporation against the
Surviving Corporation;
(b) the Utah Secretary of State may accept service in any such
proceeding on behalf of the Surviving Corporation, or service may be had
on this Corporation's agent as appointed in its application for
authority to do business in the state of Utah; and
1
<PAGE>
(c) it will pay to any dissenting shareholder of the
disappearing corporation the amount, if any, to which such dissenting
shareholder may be entitled under the provisions of ss. 16-10a-1302,
16-10a-1303 et seq. of the Utah Revised Business Corporation Act, as
amended, and of Nevada Revised Statutes ss.92a.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the 18th day of September, 1997.
Far West Resources, Inc.,
a Utah corporation
By: /s/ Harmel S. Rayat
-----------------------
President
By: /s/ Jasbinder Chohan
------------------------
Secretary
American Alliance Corporation
a Nevada corporation
By: /s/ Harmel S. Rayat
-----------------------
President
By: /s/ Jasbinder Chohan
------------------------
Secretary
STATE/PROVINCE OF BRITISH COLUMBIA )
)ss.
County of ______________ )
On this, the 18th day of September, 1997, before me, the under signed
Notary Public, personally appeared Harmel S. Rayat and Jasbinder Chohon, the
President and Secretary of Far West Resources, Inc., a Utah corporation, and
acknowledged to me that they, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by themselves as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/
-------------------------------------
Notary Public
2
<PAGE>
My Commission Expires:
12/31/97
- - ---------------------
STATE/PROVINCE OF _____________ )
)ss.
County of ______________ )
On this, the 18th day of September, 1997, before me, the under signed
Notary Public, personally appeared Harmel S. Rayat and Jasbinder Chohon, the
President and Secretary of American Alliance Corporation, a Nevada corporation,
and acknowledged to me that they, being authorized to do so, executed the
foregoing instrument for the purposes therein contained by signing the name of
the corporation by themselves as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/
-------------------------------------
Notary Public
My Commission Expires:
12/31/97
- - ---------------------
3
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT, made on the date last below indicated, by and between David L.
Carmichael ("Carmichael") and Timothy L. Rowland ("Rowland"), hereinafter
sometimes referred to as the "Sellers" and American Alliance Corporation, a
Nevada corporation, hereinafter sometimes referred to as the "Buyers."
RECITALS
WHEREAS, Carmichael is the owner of 500 common shares of Rowland,
Carmichael & Associates, Inc. ("RCN"), an Arizona corporation; and
WHEREAS, Rowland is the owner of 500 common shares of RCA; and
WHEREAS, Carmichael and Rowland desire to sell to Buyer and Buyer has
agreed to purchase their shares of RCA (the "Shares"), subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration and in consideration of
the mutual covenants set forth herein, the parties agree as follows:
ARTICLE I
SALE OF SHARES BY SELLERS
1.1 On the closing date the Seller will convey and transfer the stock to
Broker/Dealer Market, Inc. Escrow Account.
1.1.1 Carmichael will transfer to Buyer his 500 shares of RCA which shares
represent an amount of stock equal to 50% of the total outstanding stock
of RCA.
1.1.2 Rowland will transfer to Buyer his 500 shares of RCA which shares
represent an amount of stock equal to 50% of the total outstanding stock
of RCA.
<PAGE>
1.2 Not included in the sale:
1.2.1 All of RCA's cash and cash equivalents;
1.2.2 RCA's bank accounts and deposits;
1.2.3 RCA's portfolio of securities, if any;
1.2.4 The deposits with the clearing broker, if any;
1.2.5 Commissions receivable; and
1.2.6 Any tangible assets of RCA on the closing date.
The withdrawal of these assets shall take place simultaneously with
the Buyer's infusion of requisite regulatory "net capital" as shall be
appropriate.
ARTICLE II
PURCHASE PRICE
3.1 The Purchase Price is Twenty-nine Thousand Dollars ($29,000) which sum
of Ten Thousand Dollars ($ 10,000) has been deposited with Broker/Dealer
Market, Inc. Escrow Account as a good faith deposit. The balance of the
Purchase Price is Nineteen Thousand Dollars ($19,000) in the form of a
Cashier's Check or Bank to Bank transfer shall bedue and payable to
Broker/Dealer Market, Inc. Escrow Account before the closing date.
ARTICLE III
CLOSING DATE
3.1 The Closing Date shall occur on or before September 8, 1998 at
Broker/Dealer Market, Inc., Escrow Agent, 117 Lakeside Drive, Oldsmar,
Florida 34677. The closing shall be accomplished by mail.
3.2 On the day before the 'Closing Date, the balance of the Purchase Price
will be paid to Broker/Dealer Market, Inc. Escrow Account by Cashier's
Check or Bank to Bank transfer. The Seller shall convey the stock of the
RCA to Broker/Dealer Market, Inc. Escrow Account prior to the closing
date. The stock and the net
2
<PAGE>
purchase price will be sent Federal Express to the respective parties on
the closing date.
ARTICLE IV
BUYER'S OBLIGATION
4.1 On Closing Date, Buyer will immediately prepare and file an amended Form
B/D with the Securities Exchange Commission (SEC), National Association
of Securities ("NASD") and the State, indicating the change in ownership
of RCA and listing the new officers and directors; including
specifically appropriate disclosure of the resignation of the present
licensed persons from association with RCA. Buyer shall deliver copies
of forms as filed to the Sellers concurrently with their filing with
NASD.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1 Seller represents and warrants to Buyer the following on the date
hereof, which representation shall continue to be true on the closing
date:
5.1.1 RCA is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arizona, has all
requisite corporate power and authority to own and operate its
properties and to carry on business as now being conducted or as
conducted in the past and is qualified to do business and is in
good standing as a foreign corporation in each state or other
jurisdiction in which the nature of its properties, assets or
business requires such qualifications and in which the failure
to so qualify could have a material adverse effect on its
business.
5.1.2 On the closing date, RCA will have absolutely no debts or
liabilities of any nature or kind, and the stock will be
conveyed, on the closing date, free of any claim, debt or
obligation whatsoever. This representation shall survive the
closing.
5.1.3 RCA is duly licensed as a broker/dealer with:
5.1.3.1 the Securities and Exchange Commission;
5.1.3.2 the National Association of Securities Dealers;
3
<PAGE>
5.1.3.3 the states of Arizona, California, Indiana, New Mexico,
Nevada, Ohio, Oregon and Virginia; and
5.1.3.4 Securities Industry Protection Corporation.
RCA has all permits, licenses and authorizations
required by any government authority or agency for the
conduct of its current business. RCA is registered and
in good standing with the Securities and Exchange
Commission ("SEC") as a broker-dealer pursuant to the
Securities Exchange Act of 1934 (the "1934 Act") and
each jurisdiction which requires such registration or
qualification in connection with its business and is a
member in good standing of the National Association of
Securities Dealers ("NASD"), the Securities Industry
Protection Corporation ("SIPC"), and is currently fully
registered to conduct business in eight (8) states, and
has fully complied, to the best of Sellers' knowledge,
with such regulatory bodies and any other industry,
governmental or trade organization required by law for
the conduct of its present business.
5.1.4 RCA on the closing date will be operating in full compliance
with laws and the rules and regulations of the regulatory
agencies having jurisdiction.
5.1.5 Shortly after the closing date, Seller will turn over to Buyer
copies of all of the Company's books, records, and documents in
such form and detail as may be required or suggested by any of
the regulatory agencies of licensed broker/dealers.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES BY BUYER
6.1 Buyer represents and warrants to Seller the following on the date
hereof, which representation shall continue to be true on the closing
date.
6.1.1 Buyer hereby acknowledges that the transfer of the stock by the
Sellers to Buyer shall not convey to Buyer any interest in or
right to the trailing commissions, deposits and commissions
receivable. Buyer agrees to immediately, upon receipt of any
monies representing the assets, to deliver to Sellers all monies
or proceeds received by Buyer from such assets.
4
<PAGE>
6.1.2 The transfers, assignments and deliveries by Sellers to Buyer
contemplated hereby will not violate any applicpble law, nor
will they violate the provisions of or constitute a default
under:
6.1.2.1 Buyer's articles of incorporation, by-laws or other
corporate documents;
6.1.2.2 any judgment, order, decree, injunction, regulation or
ruling of any court or governmental authority t o which
Buyer or its shareholders are subject; or
6.1.2.3 any contract, agreement or instrument to which Buyer is
a party or by which it is bound.
6.1.3 No authorizations, consent or other approval of any third party
which has not been obtained in writing and delivered to Sellers
prior to or at the Close of Escrow is or will be necessary to be
obtained by Buyer for the valid execution, delivery or
performance by Buyer of the terms of this Agreement.
6.1.4 Buyer has been afforded the full right and opportunity to
inspect all corporate records, files and documents of RCA and
investigate all permits and licenses and records to Buyer's
satisfaction.
6.1.5 No representation or warranty made by Buyer herein contains any
untrue statement of a material fact or omits to state a material
fact necessary to make any statement of fact contained herein
not misleading. No statement contained in any certificate,
schedule or other instrument furnished or to be furnished by
Buyer to Seller pursuant hereto or in connection with the
transaction contemplated hereby contains any untrue statement of
a material fact, or omits to state a material fact necessary to
make such statement not misleading or necessary to provide
Sellers with proper information as to Buyer and its affairs.
6.1.6 The representations and warranties made by Buyer shall survive
the Close of Escrow and the delivery of the stocks.
6.1.7 Buyer will change the name of the firm prior to conducting any
securities business. No securities business will be conducted
under the name of Rowland Carmichael & Associates, Inc. after
the closing date.
<PAGE>
ARTICLE VII
INDEMNIFICATION
7.1 The Seller shall indemnify and hold harmless the Buyer with respect to
all matters, which pursuant to the express terms of this Agreement
above shall survive the Closing. This indemnlification shall include
any claim, debt, or liability whatsoever, asserted against the stock
which arose prior to the Closing, and shall include the Buyer's costs
and fees of an attorney mutually agreed upon by Buyer and Seller.
7.2 The Buyer shall indemnify and hold harmless the Seller with respect to
all claims, losses, actions, and/or expenses arising by reason of the
Buyer's operations of RCA and/or the Buyer's misrepresentation and/or
breach of the terms of this Agreement, and shall include the Sellers'
costs and attorney's fees in defending any such claim.
ARTICLE VIII
NOTICES
8.1 This Agreement shall be enforced and interpreted in accordance with the
terms of the State of Arizona law and in the courts of the State of
Arizona, which shall have sole jurisdiction thereover. Personal
service, in any.proceeding, shall be made and accepted in the manner
for giving of notice as below stated.
8.2 Any notice, tender, delivery, or other communication pursuant to this
Agreement shall be in writing and shall be deemed to be properly given
if delivered, mailed, sent overnight delivery service or sent by wire
or other telegraphic or facsimile transmission in the manner provided
in this section to the following persons:
To Buyer: Harmel S. Rayat
American Alliance Corporation
6201 Fairview Road, Suite 200
Charlotte, NC 28210
6
<PAGE>
Copy to: Gary Blume, Esquire
11801 N. Tatum Blvd., Suite 108
Phoenix, AZ 85028-1612
Phone: (602) 494-7976
Facsimile: (602) 494-7313
To Sellers: David L. Carmichael
2809 E. Camelback Road, Suite 300
Phoenix, AZ 85016
Phone: (602) 955-1540
Facsimile: (602) 955-3088
Timothy L. Rowland
2809 E. Camelback Road, Suite 300
Phoenix, AZ 85016
Phone: (602) 955-1540
Facsimile: (602) 955-3088
Copy to: Hal W. Mack, P.C.
616 E. Southern Avenue, #103
Mesa, AZ 85204
Phone: (602) 610-1171
Facsimile: (602) 461-9808
8.3 Either party may change that party's address for these purposes by
giving written notice of the change to the other party in the manner
provided in this section. If sent by mail, any notice, delivery, or
other communication shall be effective or deemed to have been given two
(2) business days after it has been deposited in the United States
Mail, duly registered or certified, with postage prepaid, and addressed
as set forth above or one (1) business day after deposit before the
daily deadline time with a reputable overnight courier or service. If
sent by wire or other form of telegraphic communication, including
facsimile transmission, or if delivered by courier or personal service,
any notice, delivery, or other communication shall be effective or
deemed to have been given upon receipt, provided a hard copy of such
transmission shall be thereafter delivered by certified mail, hand
delivery or overnight delivery service.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement as
of the date last written below.
SELLERS:
ROWLAND, CARMICHAEL & ASSOCIATES, INC.
/s/ David L. Carmichael, President 8/3/98
- - ---------------------------------- ------
David L. Carmichael, President Date
/s/ Timothy L. Rowland 8/3/98
- - ---------------------------- ------
Timothy L. Rowland, Chairman Date
BUYER:
AMERICAN ALLIANCE CORPORATION
/s/ Harmel S. Rayat 8/7/98
- - ------------------------------ ------
By: Harmel S. Rayat, Chairman Date
Agreed and Accepted as of this ___ day of _________________, 1998.
BROKER/DEALER MARKET, INC.
/s/ John McGrath 8/12/98
- - --------------------------------- -------
By: John McGrath, Escrow Officer Date
8
ARTICLES OF INCORPORATION
of
FAR WEST GOLD, INC.
We, the undersigned natural persons, bona fide residents of Utah, over
the age of twenty-one years, associated to establish a corporation for the
business purposes hereinafter stated, do hereby act as incorporators of a
corporation pursuant to the Utah Business Corporation Act, and we do adopt and
declare the following as Articles of Incorporation for the same:
ARTICLE I
The name of the corporation is: FAR WEST GOLD, INC.
ARTICLE II
The initial registered agent and the registered office are:
Registered Agent: Arthur Blake Thomas
Registered Office: 10 Exchange Place, Room 304
Salt Lake City, Utah 84111
ARTICLE III
The duration of this corporation is perpetual.
ARTICLE IV
The powers of this corporation shall be those enumerated, granted and
specified in the Utah Business Corporation Act, or implied therefrom; and any
and all powers necessary or convenient to effect any or all of the purposes for
which the corporation is organized.
ARTICLE V
The purposes for which this corporation is organized are:
Section 1. To generally engage in hard-rock mining,
Page one of Seven Pages
<PAGE>
uranium, coal and/or the oil and gas business for a profit; to engage in,
conduct ventures in, perform contracts andhave dealings in all kinds of mineral
operations, exploration, geologic and engineering activities, drilling,
recovery, refining and marketing; and to have dealings in ot her various
interests, investments, rights and royalties related to mining and minerals.
Section 2. To acquire and deal in inventions, appliances, products and
ideas. To develop, lease, option, franchise, assemble, manufacture and market.
To conduct joint operations, ventures and partnerships.
Section 3. To buy, sell, hold and deal in non-mineral real property,
particularly undeveloped acreage, and to improve and develop the same.
Section 4. To engage in any and all other lawful business endeavor.
ARTICLE VI
The aggregate number of shares which this corporation shall have the
authority to issue shall be fifty million shares, with a par value of one mill
per share; total capital value equating to $50,000.00.
ARTICLE VII
There shall be but one class of stock, namely common stock. Each share
shall be entitled to one vote in shareholder meetings and cumulative voting is
denied. All shares shall be non-assessable with equal rights and privileges.
Shareholder pre-emptive rights are not accorded shareholders.
ARTICLE VIII
The Board of Directors shall consist of no less than one nor more than
five. The initial Board shall be three Directors, as follows:
Page Two of Seven Pages
<PAGE>
Arthur Blake Thomas 1108 East 2700 South, #B-14
Salt Lake City, Utah 84106
Rudolph M. Miller 1982 Roberta Street
Salt Lake City, Utah 84115
Clinton D. Shurtleff 2590 Elizabeth Street, #2
Salt Lake City, Utah 84106
ARTICLE IX
This corporation shall not commence business until consideration of at
least One Thousand Dollars ($1,000.00) has been paid in to the corporation for
the issuance of shares. However, this requirement shall not preclude
transactions or the, incurring of indebtedness which is incidental to its
organization or to the obtaining of subscriptions to or payment for its shares
by the founding group or individuals.
ARTICLE XI
The following provisions shall govern shareholder meetings:
Section 1. An annual meeting of the shareholders shall be held at time
and place within or without the State of Utah, and in further manner as may be
provided in bylaws or other action of the Board of Directors. Failure to hold an
annual meeting shall not work a forfeiture or dissolution of the corporation.
Section 2. Thirty percent (30%) of the shares of common stock entitled
to vote shall be necessary to constitute a quorum of shareholders. Affirmative
vote of the majority of shares represented shall be the act of the shareholders,
at any annual or special meeting -- unless a greater approval is recr.tirad by
law concerning a specific subject matter or proposition.
Section 3. Special meetings of the shareholders may be called by the
Board, the Chairman of the Board, the President, or the holders of not less than
ten percent (10%) of the shares outstanding.
Page Three of Seven Pages
<PAGE>
ARTICLE XII
Other provisions regulating the internal affairs of this corporation
are:
Section 1. Board of Directors. The business and affairs of the
corporation shall be managed by its board of directors. A director need not be a
shareholder. Directors' terms shall continue until proper stockholder meeting is
called.and successors are elected and quality. A majority of the Board is
necessary to constitute a quorum. Board meetings may be held within or without
the state. Unless otherwise later required by bylaws, neither the purpose nor
the business to be transacted at any regular or special Board meeting, need be
specified in the notice of meeting or waiver thereunto appertaining.
Section 2. Officers. Corporate officers shall include a president, a
vice-president, a secretary and a treasurer. The positions of president and
treasurer may, by the Directors, be at any time combined in one person. officers
shall be elected by the Board in meeting immediately following annual
shareholder meeting, for each year-to-year period (unless replaced or removed by
the Board, with officer tenure being at the ultimate discretion of the Board).
Duties of the officers are those usually and normally incumbent upon holders of
office of that title, subject to specific direction of the Board of Directors
and as provided in bylaws. The president shall be the principal executive
officer to put into effect the decisions of the Board of Directors, and he shall
supervise and control the business and affairs of the corporation subject to the
Board decisions, and shall preside at meetings of the shareholders and
directors. The vice-president shall perform the duties of the president when the
president is absent or unable to act. The secretary shall keep minutes of
meetings and have general charge of the stock records of the. corporation
Section 3. Fiscal Year. Until changed by the Board of Directors, the
fiscal period shall end each year on the
Page Four of Seven Pages
<PAGE>
anniversary date (month and year) of incorporation in Utah.
Section 4. Bylaws. The affairs of this corporation shall be governed
by these articles until bylaws are adopted and thereafter shall be governed by
these articles and the bylaws. The Board shall have the power to adopt bylaws
and to amend same at any regular or special board meeting.
Section 5. The Board of Directors may authorize any officer or agent
to enter into any contract or to execute any instrument for the corporation.
Such authority may be general or be confined to specific instances.
Section 6. Action Without Meeting. Any action required or permitted to
be taken by the Board of Directors or the shareholders at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all directors or shareholders, as the case may be.
Section 7. Waiver of Notice. Whenever any notice is required to be
given to any shareholder or director of the corporation under provisions of
these Articles, bylaws or the Utah Business Corporation Act, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE XIII
No contract or other transaction between this corporation and any
other corporation or entity shall be affected or invalidated solely by the fact
that any director or officer of this corporation is interested in, or is a
director or officer of such other corporation or entity -- provided that the
extent of the interest and connection of such director or officer shall have
been fully or satisfactorily disclosed to this corporation Board of Directors,
and no Board member disapproves of such contract or transaction under the
circumstances.disclosed.
Page Five of Seven Pages
<PAGE>
IN WITNESS WHEREOF, we, the undersigned, being all of the
incorporators of FAR WEST GOLD, INC., hereby certify that the facts hereinabove
stated are truly set forth and constitute our desire, and we do now accordingly
hereunto set our hands to same on this 13th day of July, 1983, at Salt Lake
City, Utah.
/s/ Arthur Blake Thomas
-----------------------
Arthur Blake Thomas Residing at:
1180 East 2700 South, #B-14
Salt Lake City, Utah 84106
/s/ Rudolph M. Miller
---------------------
Rudolph M Miller Residing at:
1982 Roberta Street
Salt Lake City, Utah 84115
/s/ Clinton D. Shurtleff
------------------------
Clinton D. Shurtleff Residing at:
2590 Elizabeth Street
Salt Lake City, Utah 84106
STATE OF UTAH )
)ss.
County of Salt Lake )
BE IT KNOWN AND REMEMBERED, that personally appeared before me, Ralph J.
Hofen, a Notary Public in and for said County and State afiresaid, ARTHUR BLAKE
THOMAS, RUDOLPH M. MILLER and CLINTON D. SHURTLEFF, personally known to me to be
the same and being the incorporators and all of same who signed the foregoing
Articles of Incorporation; and I having made known to them and each of them the
contents of said Articles, they did under oath severally acknowledge their
signatures as their free act and deed and that the facts are truly set forth
therein.
Page Six of Seven Pages
<PAGE>
Given under my hand and seal of office this 13th day of July, 1983, at
Salt Lake City, Utah.
/s/ Ralph J. Hofen
------------------
(S E A L) Notary Public
Residing at: Salt Lake City, Utah
My Commission Expires:
Page Seven of Seven Pages
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
FAR WEST GOLD, INC.
Far West Gold, Inc., a corporation organized and existing under and by virtue of
the General Corporation and Business Laws of the State of Utah (hereinafter
"Corporation" ).
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation
resolutions were duly adopted setting forth two proposed amendments of the
Certificate of Incorporation of Corporation, declaring said amendments to be
advisable and calling a meeting of the stockholders of Corporation for
consideration thereof The resolution setting forth the proposed amendment is as
follows:
RESOLVED: that the Certificate of Incorporation be amended by changing
Article I thereof so that, as amended, said Article shall be and
read as follows:
"The name of the corporation is Far West Resources, Inc." And be it,
FURTHER RESOLVED: that the Cerificate of Incorporation be amended by
changing Article VI thereof so that, as amended, said Article shall read as
follows:
"The aggregate number of shares which this corporation shall have authority
to issue is 105,000,000 shares, of which 100,000,000 shares shall be $.001
par value Common Stock and 5,000, 000 shares shall be $. 10 par value
Preferred Stock. The Common Stock shall have voting rights of one vote per
share. The Board of Directors may issue the Preferred Stock from time to
time in one or more series, each series to have such voting rights,
preference in dividends and in liquidation and such other rights,
preferences and conditions as the Board of Directors may designate by an
amendment to these Articles of Incorporation by action duly adopted without
shareholder action and shareholder action shall not be required therefor.
Fully-paid stock of this Corporation shall not be liable to any further
call or assessment."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a meeting of the stockholders of said corporation was duly called and
held, on May 9th, 1996, upon n ' otice in accordance with Section 16-10a-705 of
the General Corporation and Business Laws of the State of Utah at which meeting
4,040,320 out of 4,076,300 said shares voting in favor of the amendment
constitute a majority of the outstanding shares were voted in favor of the
amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 16-10a-1003 of the General Corporation and Business Laws
of the State of Utah.
FOURTH: That the capital of said corporation shall not be reduced or by
reason of said amendment.
IN WITNESS WHEREOF, said Board of Directors has caused this
certificate to be signed by Jasbinder Chohan, its Secretary, this 9th day of
May, 1996.
Far West Gold, Inc.
/s/ Jasbinder Cholan
- - --------------------
Jasbinder Chohan, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
AMERICAN ALLIANCE CORP.
-----------------------
Name of Corporation
We the undersigned, PRESIDENT and BRIAN R. FONS, ASSISTANT SECRETARY of AMERICAN
ALLIANCE CORP.
do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on JUNE 27, 1997, adopted a resolution to amend the original articles as
follows:
Article 1 is hereby amended to read as follows:
---
NAME OF CORPORATION:
American Alliance Corporation
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is: that the said change(s) and
amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ Harmel S. Rayat
---------------------------
President or Vice President
/s/ Kundan S. Rayat
--------------------------------
Secretary or Assistant Secretary
Province of British Columbia )
)ss.
Country of Canada )
On June 27, 1997, personally appeared before me, a Notary Public,
_____________, who acknowledged that they executed the above instrument.
/s/
-------------------
[SEAL] Signature of Notary
<PAGE>
Articles of Incorporation
(PURSUANT TO NRS 78)
STATE OF NEVADA
[SEAL]
STATE OF NEVADA
Secretary of State
1. NAME OF CORPORATION: American Alliance Corp.
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada
where process may be served)
Name of Resident Agent: National Registered Agents, Inc. of NV
--------------------------------------
Street Address: 400 West King Street, Carson City 89703
-----------------------------------------
Street No. Street Name City Zip
Mailing Address (if different):
3. SHARES: (number of shares the corporation is authorized to issue)
Number of shares with par value: 100,000,000 Parvalue: $.00001
----------- -------
Number of shares without par value:
4. GOVERNING BOARD: shall be styled as (check one): x Directors Trustees
-- ---
The FIRST BOARD OF DIRECTORS shall consist of 3 members and the names and
addresses are as follows: ---
Harmel S. Rayat 1400-400 Burrard Street, Vancouver, B.C. V6C 3G2
- - --------------- -------------------------------------------------
Name Address City/State/Zip
Kundan S. Rayat 1400-400 Burrard Street, Vancouver, B.C. V6C 3G2
- - --------------- -------------------------------------------------
Name Address City/State/Zip
Jasbinder Chohan 1400-400 Burrard Street, Vancouver, B.C. V6C 3G2
- - --------------- -------------------------------------------------
Name Address City/State/Zip
5. PURPOSE (optional-see reverse side): The purpose of the corporation shall be:
- - --------------------------------------------------------------------------------
6. NRS 78-037: States that the articles of incorporation may also contain a
provision eliminating or limiting the personal liability of a director or
officer of the corporation of its stockholders for damages for breath of
fiduciary duty as a director or officer except acts or omissions which
include misconduct or fraud. Do you want this provision to be part of your
articles? Please check one of the following: YES X NO
---
7. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information noted on
separate pages. But, if any of the additional information is contradictory
to this form it cannot bo filed and will be returned to you for correction.
Number of pages attached: 1.
---
8. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (signature must be authorized)
Brian R. Fons Subscribed and sworn to before me this 9th day of
- - ------------- June, 1997
Name (print) /s/ Luis A. Uriarte
-------------------
Notary Public
401 Ocean Drive #312 (Door Code 125) Miami Beach FL 33139-6629
- - --------------------------------------------------------------
Address City/State/Zip
/s/ Brian R. Fons
- - -----------------
Signature
9. CERTIRCATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
I, National Registered Agents, Inc. of NV hereby accept appointment as Resident
Agent for the above named corporation.
/s/ 6/9/97
- - --------------------------- ------
Signature of Resident Agent Date
<PAGE>
Articles of Incorporation
(PURSUANT TO NRS 79)
STATE OF NEVADA
[SEAL]
STATE OF NEVADA
Secretary of State
Attachment #1
3. SHARES: Continued
The Corporation shall bave the authority to issue 5,000,000 shares of preferred
stock, par value $.0001 per sbare, which may be divided into series and with the
preferences, limitations and relative rights determined by the Board of
Directors.
<PAGE>
American Alliance, Inc.
Formed in Nevada
Federal Employer Identification Number (Tax ID):
98--0180534
Corporate Creations
(305) 672-0686
<PAGE>
Articles of Incorporation.
(PURSUANT TO NRS 78)
STATE OF NEVADA
1. NAME OF CORPORATION: American Alliance, Inc.
2. RESIDENT AGENT: (designated resident agent and STREET ADDRESS in Nevada where
process may be served)
Name of Resident Agent: National Registered Agents, Inc. of Nevada
Street Address: 400 West King Street Carson City NV 89703
Mailing Address (if different):______________________________________________
3. AUTHORIZED SHARES: (number of shares the corporation is authorized to issue)
Number of shares with par value: 1,000 Par Value: $-001
-------- --------
Number of. shares without par-value:
-------------
4. GOVERNING BOARD: shall be styled as (check one): X Directors' Trustees
-------- --------
The FIRST BOARD OF DIRECTORS shall consist of two members and the names and
addresse are as follows:
Harmol S.Royat 214-1628 W. 1st Ave Vancouver Canada BC V6J 1G1
- - -------------- -----------------------------------------------
David A.Gamche 214-1628 W. 1st Ave Vancouver Canada BC V6J 1G1
- - -------------- -----------------------------------------------
5. PURPOSE: The purpose of the corporation is to conduct or promote any lawful
business or purposes.
6. NRS 78.037: States that the articles of incorporation may also contain a
provision eliminating or limiting the personal liability of a director or
officer of the corporation or its stockholders for damages for breach of
fiduciary duty as a director or officer except acts or omissions which include
misconduct or fraud. Do you want this provision to be part of your articies?
Please check one of the following YES NO
7. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate, under NRS 78. You may attach additional information noted on
separate pages. But, if any of the additional information is contradictory to
this form it cannot be filed and will be returned to you for correction.
NUMBER OF PAGES ATTACHED
8. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles:
Corporate Creations International Inc.
- - -------------------------------------
941 Fourth Street #200 Miami Beach Fl 33139
- - ------------------------------------- -----
/s/ Greg K. Kuroda
- - ------------------
9. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
National registered agents, Inc. of Nevada hereby accepts appointment as
- - -----------------------------------------------
Resident Agent for the above named corporation.
/s/ Date: 1-8-98
- - ------------------ ----- ------
NATIONAL REGISTERED AGENTS, INC. OF NEVADA
<PAGE>
SECRETARY OF STATE
CORPORATE CHARTER
1, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that AMERICAN ALLIANCE, INC. did on January 9, 1998 file i'n this
office the original Articles of Incorporation; that said Articles are now on
file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal
of State, at my office, in Carson City, Nevada, on January 9, 1998.
/S/ Dean Heller
Secretary of State
By
Certification Clerk
<PAGE>
Bylaws
of
American Alliance Corp.
ARTICLE I. DIRECTORS
--------------------
Section 1. Function. All corporate powers shall be exercised by or under the
- - ---------------------
authority of the Board of Directors. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. Directors must
be natural persons who are at least 18 years of age but need not be shareholders
of the Corporation. Residents of any state may be directors.
Section 2. Compensation. The shareholders shall have authority to fix the
- - --------------------------
compensation of directors. Unless specifically authorized by a resolution of the
shareholders, the directors shall serve in such capacity without compensation.
Section 3. Presumption of Assent. A director who is present at a meeting of the
- - ----------
Board of Directors or a committee of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless he objects at the beginning of the meeting (or promptly upon
arriving) to the holding of the meeting or transacting the specified business at
the meeting, or if the director votes against the action taken or abstains from
voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have at least the minimum number of
- - -----------------
directors required by 1aw. The number of directors may be
increased or decreased from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders, the
- - ------------------------------
shareholders shall elect directors to hold office until the next annual meeting
or until their earlier resignation, removal from office or death. Directors
shall be elected by a plurality of the votes cast by the shares entitled to vote
in the election at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors, including
- - --------------------
a vacancy created by an increase in the number of directors, may be filled by
the shareholders or by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders. If there are no remaining directors, the vacancy
shall be filled by the shareholders.
Section 7. Removal of Directors. At a meeting of shareholders, any director or
- - -------------------------------
the entire Board of Directors may be removed, with or without cause, provided
the notice of the meeting states that one of the purposes of the meeting is the
removal of the director. A director may be removed only if the number of votes
cast to remove him exceeds the number of votes case against removal.
Section 8. Quorum and Voting. A majority of the number of directors fixed by
- - -----------------------------
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by resolution
- - -----------------------------------------
adopted by a majority of the full Board of Directors, may designate from among
its members one or more committees of each of which must have at least two
members. Each committee shall have the authority set forth in the resolution
designating the committee.
Section 10. Place of Meeting. Regular and special meetings of the Board of
- - ------------------------------
Directors shall be held at the principal place of business of the Corporation or
at another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section 11. Time, Notice and Call of Meetings. Regular meetings of the Board of
- - ---------------------------------------------
Directors shall be held without notice at the time and on the date designated by
resolution of the Board of Directors. Written notice of the time, date and place
of special meetings of the Board of Directors shall be given to each director by
mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened, unless a
director objects to the transaction of the business (promptly upon arrival at
the meeting) because the meeting is not lawfully called or convened. Neither the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors must be specified in the notice of waiver of the meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of an adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors. Meetings of the Board of Directors may be called by the President or
the Chairman of the Board of Directors. Members of the Board of Directors and
any committee of the Board may participate in a meeting by telephone conference
or similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation by these means constitutes
presence in person at a meeting.
Section 12. Action By Written Consent. Any action required or permitted to be
- - --------------------------------------
taken at a meeting of directors may be taken without a meeting if a consent in
writing setting forth the action to be taken and signed by all of the directors
is filed in the minutes of the proceedings of the Board. The action taken shall
be deemed effective when the last director signs the consent, unless the consent
specifies otherwise.
<PAGE>
ARTICLE II. MEETINGS OF SHAREHOLDERS
------------------------------------
Section 1. Annual Meeting. The annual meeting of the shareholders of the
- - ---------------------------
corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be held
- - --------------------------
when directed by the President or when requested in writing by shareholders
holding at least 10% of the Corporation's stock having the right and entitled to
vote at such meeting. A meeting requested by shareholders shall be called by the
President for a date not less than 10 nor more than 60 days after the request is
made. Only business within the purposes described in the meeting notice may be
conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the principal
- - ----------------
place of business of the Corporation or at such other place as is designated by
the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders shall be
- - -----------------
mailed to each shareholder having the right and entitled to vote at the meeting
at the address as it appears on the records of the Corporation. The meeting
notice shall be mailed not less than 10 nor more than 60 days before the date
set for the meeting. The record date for determining shareholders entitled to
vote at the meeting will be the close of business on the day before the notice
is sent. The notice shall state the time and place the meeting is to be held. A
notice of a special meeting shall also state the purposes of the meeting. A
notice of meeting shall be sufficient for that meeting and any adjournment of
it. If a shareholder transfers any shares after the notice is sent, it shall not
be necessary to notify the transferee. All shareholders may waive notice of a
meeting at any time.
Section 5. Shareholder Quorum. A majority of the shares entitled to vote,
- - --------------------------------
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative vote of a
- - -----------------------------
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Each outstanding share
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. An alphabetical list of all shareholders who are entitled to
notice of a shareholders' meeting along with their addresses and the number of
shares held by each shall be produced at a shareholders, meeting upon the
request of any shareholder.
Section 7. Proxies. A shareholder entitled to vote at any meeting of
- - --------------------
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the Corporation's
officer or agent authorized to tabulate votes. No proxy shall be valid more than
11 months after the date of its execution unless a longer term is expressly
stated in the proxy.
Section 8. Validation. If shareholders who hold a majority of the voting stock
- - ---------------------- entitled to vote at a meeting are present at the meeting,
and sign a written consent to the meeting on the record, the acts of the meeting
shall be valid, even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the
- - --------------------------------------------------------
shareholders may be taken without a meeting if written consents, setting forth
the action taken, are signed by at least a majority of shares entitled to vote
and are delivered to the officer or agent of the Corporation having custody of
the Corporation's records within 60 days after the date that the earliest
written consent was delivered. Within 10 days after obtaining an authorization
of an action by written consent, notice shall be given to those shareholders who
have not consented in writing or who are not entitled to vote on the action. The
notice shall fairly summarize the material features of the authorized action. If
the action creates dissenters, rights, the notice shall contain a clear
statement of the right of dissenting shareholders to be paid the fair value of
their shares upon compliance with and as provided for by the state law governing
corporations.
ARTICLE III. OFFICERS
---------------------
Section 1. Officers; Election; Resignation; Vacancies. The Corporation shall
- - --------------------------------------------------------
have the officers and assistant officers that the Board of Directors appoint
from time to time. Except as otherwise provided in an employment agreement which
the Corporation has with an officer, each officer shall serve until a successor
is chosen by the directors at a regular or special meeting of the directors or
until removed. Officers and agents shall be chosen, serve for the terms, and
have the duties determined by the directors. A person may hold two or more
offices.
Any officer may resign at any time upon written notice to the Corporation. The
resignation shall be effective upon receipt, unless the notice specifies a later
date. If the resignation is effective at a later date and the Corporation
accepts the future effective date, the Board of Directors may fill the pending
vacancy before the effective date provided the successor officer does not take
office until the future effective date. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 2. Powers and Duties of Officers. The officers of the Corporation shall
- - ----------------------------------------
have such powers and duties in the management of the Corporation as may be
prescribed by the Board of Directors and, to the extent not so provided, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a committee
- - -------------------------------
elected or appointed by the Board of Directors may be removed by the Board with
or without cause whenever in its judgment the best interests of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an
of f icer, agent or member of a committee shall not of itself create contract
rights. Any officer, if appointed by another officer, may be removed by that
officer.
Section 4. Salaries. The Board of Directors may cause the Corporation to enter
- - -------------------
into employment agreements with any officer of the Corporation. Unless provided
for in an employment agreement between the Corporation and an officer, all
officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with financial
- - -------------------------
institutions as determined by the Board of Directors.
ARTICLE IV. DISTRIBUTIONS
-------------------------
The Board of Directors may, from time to time, declare distributions to
its shareholders in cash, property, or its own shares, unless the distribution
would cause (i) the Corporation to be unable to pay its debts as they become due
in the usual course of business, or (ii) the Corporation's assets to be less
than its liabilities plus the amount necessary, if the Corporation were
dissolved at the time of the distribution, to satisfy the preferential rights of
shareholders whose rights are superior to those receiving the distribution. The
shareholders and the Corporation may enter into an agreement requiring the
distribution of corporate profits, subject to the provisions of law.
ARTICLE IV. DISTRIBUTIONS
-------------------------
Section 1. Corporate Records. The corporation shall maintain its records in
- - ------------------------------
written form or in another form capable of conversion into written form within a
reasonable time. The Corporation shall keep as permanent records minutes of all
meetings of its shareholders and Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting, and a record
of all actions taken by a committee of the Board of Directors on behalf of the
Corporation. The Corporation shall maintain accurate accounting records and a
record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
The Corporation shall keep a copy of its articles or restated articles
of incorporation and all amendments to them currently in effect; these Bylaws or
restated Bylaws and all amendments currently in effect; resolutions adopted by
the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of all shareholders'
meetings and records of all actions taken by shareholders without a meeting for
the past three years; written communications to all shareholders generally or
all shareholders of a class of series within the past three years, including the
financial statements furnished for the last three years; a list of names and
business street addresses of its current directors and officers; and its most
recent annual report delivered to the Department of State.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to inspect
- - ------------------------------------------
and copy, during regular business hours at a reasonable location specified by
the Corporation, any books and records of the Corporation. The shareholder must
give the Corporation written notice of this demand at least five business days
before the date on which he wishes to inspect and copy the record(s). The demand
must be made in good faith and for a proper purpose. The shareholder must
describe with reasonable particularity the purpose and the records he desires to
inspect, and the records must be directly connected with this purpose. This
Section does not affect the right of a shareholder to inspect and copy the
shareholders I list described in this Article if the shareholder is in
litigation with the
<PAGE>
Corporation. In such a case, the shareholder shall have the same rights as any
other litigant to compel the production of corporate records for examination.
The Corporation may deny any demand for inspection if the demand was
made for an improper purpose, or if the demanding shareholder has within the two
years preceding his demand, sold or offered for sale any list of shareholders of
the Corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of this
Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by resolution
- - ------------------------------------------------
of the shareholders within 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders with annual financial statements
which may be consolidated or combined statements of the Corporation and one or
more of its subsidiaries, as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flows for that year. If financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the President or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The Corporation
shall mail the annual financial statements to each shareholder within 120 days
after the close of each fiscal year or within such additional time thereafter as
is reasonably necessary to enable the Corporation to prepare its financial
statements. Thereafter, on written request from a shareholder who was not mailed
the statements, the Corporation shall mail him the latest annual financial
statements.
Section 4. Other Reports to Shareholders. If the Corporation indemnifies or
- - -----------------------------------------
advances expenses to any director, officer, employee or agent otherwise than by
court order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or prior to the meeting if the
indemnification or advance occurs after the giving of the notice but prior to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation or threatened litigation.
If the Corporation issues or authorizes the issuance of shares for
promises to render services in the future, the Corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders, meeting.
ARTICLE VI. STOCK CERTIFICATES
------------------------------
Section 1. Issuance. The Board of Directors may authorize the issuance of some
- - --------------------
or all of the shares of any or all of its classes or series without
certificates. Each certificate issued shall be signed by the President and the
Secretary (or the Treasurer). The rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.
Section 2. Registered Shareholders. No certificate shall be issued for any share
- - ----------------------------------
until the share is fully paid. The Corporation shall be entitled to treat the
holder of record of shares as the holder in fact and, except as otherwise
provided by law, shall not be bound to recognize any equitable or other claim to
or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be transferred on
- - -----------------------------
its books only after the surrender to the Corporation of the share certificates
duly endorsed by the holder of record or attorney- in- fact. If the surrendered
certificates are canceled, new certificates shall be issued to the person
entitled to them, and the transaction recorded on the books of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. If a shareholder claims to
- - --------------------------------------------------
have lost or destroyed a certificate of shares issued by the Corporation, a new
certificate shall be issued upon the delivery to the Corporation of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity as the Board reasonably requires.
ARTICLE VII. INDEMNIFICATION
----------------------------
Section 1. Right to Indemnification. The Corporation hereby indemnifies each
- - ------------------------------------
person (including the heirs, executors, administrators, or estate of such
person) who is or was a director or officer of the Corporation to the fullest
extent permitted or authorized by current or future legislation or judicial or
administrative decision against all fines, liabilities, costs and expenses,
including attorneys' fees, arising out of his or her status as a director,
officer, agent, employee or representative. The foregoing right of
indemnification shall not be exclusive of other rights to which those seeking an
indemnification may be entitled. The Corporation may maintain insurance, at its
expense, to protect itself and all officers and directors against fines,
liabilities, costs and expenses, whether or not the Corporation would have the
legal power to indemnify them directly against such liability.
Section 2. Advances. Costs, charges and expenses (including attorneys, fees)
- - -------------------
incurred by a person referred to in Section 1 of this Article in defending a
civil or criminal proceeding shall be paid by the Corporation in advance of the
final disposition thereof upon receipt of an undertaking to repay all amounts
advanced if it is ultimately determined that the person is not entitled to be
indemnified by the Corporation as authorized by this Article, and upon
satisfaction of other conditions required by current or future legislation.
Section 3. Savings Clause. If this Article or any portion of it is invalidated
- - -------------------------- on any ground by a court of competent jurisdiction,
the Corporation nevertheless indemnifies each person described in Section 1 of
this Article to the fullest extent permitted by all portions of this Article
that have not been invalidated and to the fullest extent permitted by law.
ARTICLE VIII. AMENDMENT
-----------------------
These Bylaws may be altered, amended or repealed, and new Bylaws adopted, by a
majority vote of the directors or by a vote of the shareholders holding a
majority of the shares.
I certify that these are the Bylaws adopted by the Board of Directors
of the Corporation.
/s/ Kundan Rayat
----------------
Secretary
Date: June 11, 1997
<PAGE>
BYLAWS
OF
FAR WEST GOLD, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Article I. Office 1
Article II. Shareholders' Meeting
Section 2.1 Annual Meetings 1
Section 2.2 Special Meetings 2
Section 2.3 Notice of Shareholders' Meeting 2
Section 2.4 Waiver of Notice 2
Section 2.5 Place of Meeting 2
Section 2.6 Closing of Transfer Books or Filing Record Date 3
Section 2.7 Quorum of Shareholders 4
Section 2.8 Voting Lists 4
Section 2.9 Voting 4
Section 2.10 Proxies 5
Section 2.11 Informal Action by Shareholders 5
Article III. Board of Directors
Section 3.1 General Powers 5
Section 3.2 Number, Tenure and Qualifications 5
Section 3.3 Election of Board of Directors 5
Section 3.4 Regular Meetings 5
Section 3.5 Special Meetings 6
Section 3.6 Waiver of Notice 6
Section 3.7 Quorum 6
Section 3.8 Manner of Acting 6
Section 3.9 Powers of Directors 7
Section 3.10 Vacancies 7
Section 3.11 Removals 8
Section 3.12 Resignations 8
Section 3.13 Compensation 8
Section 3.15 Emergency Power 9
Section 3.16 Chairman 9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Article IV. Officers
Section 4.1 Number 9
Section 4.2 Election and Term of Office 9
Section 4.3 Resignations 10
Section 4.4 Removal
Section 4.5 Vacancies 10
Section 4.6 President 10
Section 4.7 Vice President 11
Section 4.8 Secretary 11
Section 4.9 Treasurer 11
Section 4.10 General Manager 12
Section 4.11 Other Officers 13
Section 4.12 Salaries 13
Section 4.13 Surety Bonds 13
Article V. Committees
Section 5.1 Executive Committee 13
Section 5.2 Other Committees 14
Article VI. Contracts, Loans, Deposits and Checks
Section 6.1 Contracts 14
Section 6.2 Loans 14
Section 6.3 Deposits 14
Section 6.4 Checks and Drafts 14
Section 6.5 Bonds and Debentures 15
Article VII. Capital Stock
Section 7.1 Certificate of Share 15
Section 7.2 Transfer of Shares 16
Section 7.3 Transfer Agent and Registrar 16
Section 7.4 Lost or Destroyed Certificates 16
Section 7.5 Consideration for Shares 17
Section 7.6 Registered Shareholders 17
Article VIII. Indemnification
Section 8.1 Indemnif ication 17
Section 8.2 Other Indemnification 18
Section 8.3 Insurance 18
Section 8.4 Settlement by Corporation 19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Article IX Amendments 19
Article X Fiscal Year 19
Article XI Dividends 19
Article XII Corporate Seal 20
</TABLE>
<PAGE>
BYLAWS
OF
FAR WEST GOLD, INC.
ARTICLE I
Section 1.1 Office. The principal office of the Corporation in the State of Utah
shall be located at #10 Exchange Place, Suite 304, Salt Lake City, Utah 84111.
The Corporation may maintain such other offices, within or without the State of
Utah, as the Board of Directors may from time to time designate. The location of
the principal office may be changed by the Board of Directors.
ARTICLE II
SHAREHOLDERS' MEETING
Section 2.1 Annual Meetings. The annual meeting of the shareholders of
the Corporation shall be held at such place within or without the State of Utah
as shall be set forth in compliance with these Bylaws. The meeting shall be held
on the 2nd Friday of the month of May of each year beginning with the year 1984
at 10:00 a.m. If such day is a legal holiday, the meeting shall be on the next
business day. This meeting shall be for the election of directors and for the
transaction of such other business as may properly come before it.
In the event that such annual meeting is omitted by oversight or
otherwise on the date herein provided for, the directors shall cause a meeting
in lieu thereof to be held as soon thereafter as conveniently may be, and any
business transacted or elections held at such meeting shall be as valid as if
transacted or held at the annual meeting. If the election of directors shall not
be held on the date designated herein for any annual meeting of shareholders, or
at any adjournment thereof, the Board of Directors shall cause the election to
be held at a special meeting of shareholders as soon thereafter as may
conveniently be called. Such subsequent meetings shall be called in the same
manner as is provided for the annual meeting of shareholders.
Section 2.2 Special Meetings, Special meetings of shareholders,
other than those regulated by statute, may be called at any time by the
President, or by a majority of the directors, and must be called by the
President upon written request of the holders of not less than 10% of the issued
and outstanding shares entitled to vote at such special meeting.
Section 2.3 Notice of Shareholders' Meetings. The President, Vice
President or Secretary shall give written notice stating the place, day and hour
of the meeting, and in the case of a special meeting the purpose or purposes for
which the meeting is called, which shall be delivered not less than ten nor more
than fifty days before the day of the meeting, either personally or by mail to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the books of the
Corporation, with postage thereon prepaid.
Any meeting of which all shareholders shall at any time waive or
have waived notice in writing shall be a legal meeting for the transaction of
business notwithstanding that notice has not been given as hereinbefore
provided.
Section 2.4 Waiver of Notice. Whenever any notice whatever is required to
be given by these Bylaws, or the Articles of Incorporation, or by any of the
Corporation Laws of the State of
<PAGE>
Utah, a shareholder may waive the notice of meeting by attendance, either in
person or by proxy, at the meeting, or by so stating in writing, either before
or after such meeting. Attendance at a meeting for the express purpose of
objecting that the meeting was not lawfully called or convened shall not,
however, constitute a waiver of notice.
Section 2.5 Place of Meeting. The Board of Directors may designate
any place, either within or without the State of Utah, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the registered office of the Corporation.
Section 2.6 Closing of Transfer Books or Fixing Record Date. For the
purpose of determining shareholders entitled to notice or to vote at any meeting
of shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any ot her proper purpose, the Board of Directors of the Corporation may provide
that the stock transfer books shall be closed for a period not to exceed in any
case 50 days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least 10 days immediately
preceding the date determined to be the date of record. In lieu of closing the
stock transfer books, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any case to
be not more than 50 days and in case of a meeting of shareholders not less than
10 days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice or to vote at a meeting of shareholders or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be deemed the date
of record for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
Section 2.7 Quorum of Shareholders. Except as herein provided and
as otherwise provided by law, at any meetng of shareholders a majority in
interest of all the Type A shares issued and outstanding represented by
shareholders of record in person or by proxy shall constitute a quorum, but a
less interest may adjourn any meeting and the meeting may be held as adjourned
without further notice; provided, however, that directors shall not be elected
at the meeting so adjourned. When a quorum is present at any meeting, a majority
in interest of the shares represented thereat shall decide any question brought
before such meeting, unless the question is one upon which the express provision
of law or of the Articles of Incorporation or of these Bylaws a larger or
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 2.8 Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make a complete list of
the shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list shall be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any shareholder, for
any purpose germane to the meeting, during the whole time of the meeting. The
original stock transfer books shall be primafacie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
<PAGE>
Section 2.9 Voting. A holder of an outstanding share entitled to
vote at a meeting may vote at each meeting in person or by proxy. Except as may
otherwise be provided in the Articles of Incorporation, every shareholder shall
be entitled to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the Articles of Incorporation otherwise
provided, all corporate action shall be determined by a majority of the votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
Section 2.10 Proxies. At all meetings of shareholders, a shareholder
may vote in person or by proxy executed in writing by the shareholderr or by his
duly authorized attorney in fact. Such proxy shall be filed with the secretary
of the Corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy.
Section 2.11 Informal Action by Shareholders. Any action required to
be taken at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders may be taken without a meeting if a consent in
writing setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers. The business and affairs of the
Corporation shall be managed by its Board of Directors. The Board of Directors
may adopt such rules and regulations for the conduct of their meetings and the
management of the Corporation as they deem proper.
Section 3.2 Number, Tenure and Qualifications. The number of
directors for the Board of Directors of the Corporation shall be not less than
three nor more than ten. Each director shall hold office until the next annual
meeting of shareholders and until his successor shall have been elected and
qualified. Directors need not be residents of the State of Utah or shareholders
of the Corporation.
Section 3.3 Election of Board of Directors. The Board of Directors
shall be chosen by ballot at the annual meeting of shareholders or at any
meeting held in place thereof as provided by law.
Section 3.4 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than by this Bylaw, immediately
following and at the same place as the annual meeting of the shareholders. The
Board of Directors may provide by resolution the time and place for the holding
of additional regular meetings without other notice than this resolution.
Section 3.5 Special Meetings. Special meetings of the Board of
Directors may be called by order of the Chairman of the Board, the President or
by one-third of the directors. The Secretary shall give notice of the time,
place and purpose or purposes of each special meeting by mailing the same at
least two days before the meeting or by telephoning or telegraphing the same at
least one day before the meeting to each director.
Section 3.6 Waiver of Notice. Whenever any notice whatever is
required to be given by these Bylaws, or the Articles of Incorporation of the
Corporation, or by any of the Corporation Laws of the State of Utah, a director
may waive the notice of meeting by attendance in person at the meeting, or by so
stating in writing, either before or after such meeting. Attendance at a meeting
for the express purpose of objecting that the meeting was not lawfully called or
convened shall not, however, constitute a waiver of notice.
Section 3.7 Quorum. A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business, but less than a
quorum may adjourn any meeting from time
<PAGE>
to time until a quorum shall be present, whereupon the meeting may be held, as
adjourned, without further notice. At any meeting at which every director shall
be present, even though without any notice, any business may be transacted.
Section 3.8 Manner of Acting. At all meetings of the Board of
Directors, each director shall have one vote. The act of a majority present at a
meeting shall be the act of the Board of Directors, provided a quorum is
present. Any action required to be taken or which may be taken at a meeting of
the directors may be taken without a meeting if a consent in writing setting
forth the action so taken shall be signed by all the directors. The directors
may conduct a meeting by means of a conference telephone or any similar
communication equipment by which all persons participating in the meeting can
hear each other.
Section 3.9 Powers of Directors. The Board of Directors shall have
the responsibility for the entire management of the businesss of the
Corporation. In the management and control of the property, business and affairs
of the Corporation the Board of Directors is hereby vested with all of the
powers possessed by the Corporation itself so far as this delegation of
authority is not inconsistent with the laws of the State of Utah and with the
Articles of Incorporation or with these Bylaws. The Board of Directors shall
have the power to determine what constitutes net earnings, profits and surplus,
respectively, and what amounts shall be reserved for working capital and for any
other purpose and what amounts shall be declared as dividends, and such
determination by the Board of Directors shall be final and conclusive.
Section 3.10 Vacancies. A vacancy in the Board of Directors shall be
deemed to exist in case of death, resignation or removal of any director, or if
the authorized number of directors be increased, or if the shareholders fail at
any meeting of shareholders at which any director is to be elected, to elect the
full authorized number to be elected at that meeting.
Any vacancy occuring in the Boardof Directors may be filled by an
affirmative vote of the majority of the remaining directors though less than a
quorum of the Board of Directors, unless otherwise provided by law or the
Articles of Incorporation. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office. Any directorship to be
filled by reason of an increase in the number of directors shall be filled by
election at the annual meeting or at a special meeting of shareholders called
for that purpose.
Section 3.11 Removals. Directors may be removed at any time, at a
meeting called expressly for that purpose by a vote of the shareholders holding
a majority of the shares issued and outstanding and entitled to vote. Such
vacancy shall be filled by the directors then in office, though less than a
quorum, to hold office until the next annual meeting or until his successor is
duly elected and qualified, except that any directorship to be filled by reason
of removal by the shareholders may be filled by election, by the shareholders,
at the meeting at which the director is removed. No reduction of the authorized
number of directors shall have the effect of removing any director prior to the
expiration of his term of office.
Section 3.12 Resignations. A director may resign at any time by
delivering written notification thereof to the President or Secretary of the
Corporation. Such resignation shall become effective upon its acceptance by the
Board of Directors; provided, however, that if the Board of Directors has not
acted thereon within ten days from the date of its delivery, the resignation
shall upon the tenth day be deemed accepted.
Section 3.13 Presumption of Assent. A director of the Corporation
who is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the meeting
<PAGE>
or unless he shall file his written dissent to such action with the person
acting as the Secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
Section 3.14 Compensation. By resolution of the Board of Directors,
the directors shall be paid their expenses, if any, of attendance at each
meeting of the Board of Directors, and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.15 Emergency Power. When, due to a national disaster or
death, a majority of the directors are incapacitated or otherwise unable to
attend the meetings and function as directors, the remaining members of the
Board of Directors shall 'have all the powers necessary to function as a
complete Board and, for the purpose of doing business and filling vacancies,
shall constitute a quorum until such time as all directors can attend or
vacancies can be filled pursuant to these Bylaws.
Section 3.16 Chairman. The Board of Directors may elect from its own
number a Chairman of the Board, who shall preside at all meetings of the Board
of Directors, and shall perform such other duties as may be prescribed from time
to time by the Board of Directors.
ARTICLE IV
OFFICERS
Section 4.1 Number. The officers of the Corporation shall be a
President, one or more Vice Presidents, a Secretary and a Treasurer, each of
whom shall be elected by a majority of the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. In its discretion, the Board of Directors
may leave unfilled for any such period as it may determine any office except
those of President and Secretary. Any two or more offices may be held by the
same person, except the offices of President and Secretary. Officers may or may
not be directors or shareholders of the Corporation.
Section 4.2 Election and Term of Office. The officers of the
Corporation are to be elected by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of the shareholders. If
the election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as convenient. Each officer shall hold office until
his successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 4.3 Resignation. Any officer may resign at any time by
delivering a written resignation either to the President or to the Secretary.
Unless otherwise specified therein, such resignation shall take effect upon
delivery.
Section 4.4 Removal. Any officer or agent may be removed by the
Board of Directors whenever in its judgment the best interests of the
Corporation will be served thereby but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Any such removal shall require a majority vote of the Board of Directors,
exclusive of the officer in question if he is also a director.
Section 4.5 Vacancies. A vacancy in any office because of death,
resignation, removal,
<PAGE>
disqualification or otherwise, or if a new office shall be created, may be
filled by the Board of Directors for the unexpired portion of the term.
Section 4.6 President. The President shall be the chief executive and
administrative officer of the Corporation. He shall preside at all meetings of
the shareholders and, in the absence of the Chairman of the Board, at meetings
of the Board of Directors. He shall exercise such duties as customarily pertain
to the office of President and shall have general and active supervision over
the property, business and affairs of the Corporation and over its several
officers. He may appoint officers, agents or employees other than those
appointed by the Board of Directors. He may sign, execute and deliver in the
name of the Corporation, powers of attorney, certificates of stock, contracts,
bonds, deeds, mortgages and other obligations and shall perform such other
duties as may be prescribed from time to time by the Board of Directors or by
the Bylaws.
Section 4.7 Vice President. The Vice President shall have such
powers and perform such duties as may be assigned to him by the Board of
Directors or the President. In the absence or disability of the President, the
Vice President designated by the board or the President shall perform the duties
and exercise the powers of the President. In the event there is more than one
Vice President and the Board of Directors has not designated which Vice
President is to act as President, then the Vice President who was elected first
shall act as President. A Vice President may sign and execute contracts and
other obligations pertaining to the regular course of his duties.
Section 4.8 Secretary. The Secretary shall keep the minutes of all
meetings of the shareholders and of the Board of Directors and to the extent
ordered by the Board of Directors or the President, the minutes of meetings of
all committees. He shall cause notice to be given of the meetings of
shareholders, of the Board of Directors and of any committee appointed by the
board. He shall have custody of the corporate seal and general charge of the
records, documents and papers of the Corporation not pertaining to the
performance of the duties vested in other officers, which shall at all
reasonable times be open to the examination of any director. He may sign or
execute contracts with the President or Vice President thereunto authorized in
the name of the Corporation and affix the seal of the Corporation thereto. He
shall perform such other duties as may be prescribed from time to time by the
Board of Directors or by the Bylaws. He shall be sworn to the faithful discharge
of his duties. Assistant Secretaries shall assist the Secretary and shall keep
and record such minutes of meetings as shall be directed by the Board of
Directors.
Section 4.9 Treasurer. The Treasurer shall have general custody of
the collection and disbursement of funds of the Corporation for collection
checks, notes, and other obligations, and shall deposit the same to the credit
of the Corporation in such bank or banks or depositories as the Board of
Directors may designate. He may sign, with the President, or such other persons
as may be designated for the purpose by the Board of Directors, all bills of
exchange or promisssory notes of the Corporation. He shall enter or cause to be
entered regularly in the books of the Corporation full and accurate accounts of
all monies received and paid by him on account of the Corporation; shall at all
reasonable times exhibit his books and accounts to any director of the
Corporation upon application at the office of the Corporation during business
hours; and, whenever required by the Board of Directors or the President, shall
render a statement of his accounts. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the Bylaws.
Section 4.10 General Manager. The Board of Directors may employ and
appoint a General Manager who may, or may not, be one of the officers or
directors of the Corporation. If employed by the Board of Directors he shall be
the chief operating officer of the Corporation and, subject to the directions of
the Board of Directors, shall have general charge of the business operations of
the
<PAGE>
Corporation and general supervision over its employees and agents. He shall have
the exclusive management of the business of the Corporation and of all of its
dealings, but at all times subject to the control of the Board of Directors.
Subject to the approval of the Board of Directors or the executive committee, he
shall employ all employees of the Corporation, or delegate such employment to
subordinate officers, or such division officers, or such division chiefs, and
shall have authority to discharge any person so employed. He shall make a
quarterly report to the President and directors, or more often if required to do
so, setting forth the result of the operations under his charge, together with
suggestions looking to the improvement and betterment of the condition of the
Corporation, and to perform such other duties as the Board of Directors shall
require.
Section 4.11 Other Officers. Other officers shall perform such
duties and have such powers as may be assigned to them by the Board of
Directors.
Section 4.12 Salaries. The salaries or other compensation of the
officers of the Corporation shall be fixed from time to time by the Board of
Directors except that the Board of Directors may delegate to any person or group
of persons the power to fix the salaries or other compensation of any
subordinate officers or agents. No officer shall be prevented from receiving any
such salary or compensation by reason of the fact that he is also a director of
the Corporation.
Section 4.13 Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the Corporation shall execute to the
Corporation a bond in such sums and with sureties as the Board of Directors may
direct, conditioned upon the faithful performance of his duties to the
Corporation, including responsibility for negligence and for the accounting for
all property, monies or securities of the Corporation which may come into his
hands.
ARTICLE V
COMMITTEES
Section 5.1 Executive Committee. The Board of Directors may appoint from
among its members an Executive Committee of not less than two nor more than
seven members, one of whom shall be the President, and shall designate one or
more of its members as alternates to serve as a member or members of the
Executive Committee in the absence of a regular member or members. The Board of
Directors reserves to itself alone the power to declare dividends, issue stock,
recommend to shareholders any action requiring their approval, change the
membership of any committee at any time, fill vacancies therein, and discharge
any committee either with or without cause at any time. Subject to the foregoing
limitations, the Executive Committee shall possess and exercise all other powers
of the Board of Directors during the intervals between meetings.
Section 5.2 Other Committees. The Board of Directors may also
appoint from among its own members such other committees as the Board may
determine, which shall in each case consist of not less than two directors, and
which shall have such powers and duties as shall from time to time be prescribed
by the Board. The President shall be a member ex officio of each committee
appointed by the Board of Directors. A majority of the members of any committee
may fix its rules of procedure.
ARTICLE VI
CONTRACTS, LOANS, DEPOSITS AND CHECKS
Section 6.1 Contracts. The Board of Directors may authorize any officer or
officers, agent or
<PAGE>
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Corporation, and such authority may be general or
confined to specific instances.
Section 6.2 Loans. No loan or advances shall be contracted on behalf
of the Corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
Corporation shall be mortgaged, pledged, hypothecated or transferred as security
for the payment of any loan, advance, indebtedness or liability of the
corporation unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
Section 6.3 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select, or as may be selected by any officer or agent authorized to do so by
the Board of Directors.
Section 6.4 Checks and Drafts. All notes, drafts, acceptances,
checks, endorsements and evidences of indebtedness of the Corporation shall be
signed by such officer or officers or such agent or agents of the Corporation
and in such manner as the Board of Directors from time to time may determine.
Endorsements for deposit to the credit of the Corporation in any of its duly
authorized depositories shall be made in such a manner as the Board of Directors
from time to time may determine.
Section 6.5 Bonds and Debentures. Every bond or debenture issued by the
Corporation shall be evidenced by appropriate instrument which shall be signed
by the President or a Vice President and by the Treasurer or by the Secretary,
and sealed with the seal of the Corporation. The seal may be facsimile, engraved
or printed. Where such bond or debenture is authenticated with the manual
signature of an authorized officer of the Corporation or other trustee
designated by the indenture of trust or other agreement which security is
issued, the signature of any of the Corporation's officers named thereon may be
facsimile. In case any officer who signed, or whose facsimile signature has been
used on any such bond or debenture, shall cease to be an officer of the
Corporation for any reason before the same has been delivered by the
Corporation, such bond or debenture may nevertheless be adopted by the
Corporation and issued and delivered as though the person who signed it or whose
facsimile signature has been used thereon had not ceased to be such officer.
ARTICLE VII
CAPITAL STOCK
Section 7.1 Certificate of Share. The shares of the Corporation shall
be represented by certificates prepared by the Board of Directors and signed by
the President or the Vice President, and by the Secretary, or an Assistant
Secretary, and sealed with the seal of the Corporation or a facsimile.
The signatures of such officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation itself or one of its employees. All certificates for
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
<PAGE>
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
Section 7.2 Transfer of Shares. Transfer of shares of the
Corporation shall be made only on the stock transfer books of the Corporation by
the holder of record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
Section 7.3 Transfer Agent and Registrar. The Board of Directors
shall. have power to appoint one or more transfer agents and registrars for the
transfer and registration of certificates of stock of any class, and may require
that stock certificates shall be countersigned and registered by one or more of
such transfer agents and registrars.
Section 7.4 Lost or Destroyed Certificates. The Corporation may
issue a new certificate to replace any certificate theretofore issued by it
alleged to have been lost or destroyed. The Board of Directors may require the
owner of such a certificate or his legal representatives to give the Corporation
a bond in such sum and with such sureties as the Board of Directors may direct
to indemnify the Corporation and its transfer agents and registrars, if any,
against claims that may be made on account of the issuance of such new
certificates. A new certificate may be issued without requiring any bond.
Section 7.5 Consideration for Shares. The capital stock of the
Corporation shall be issued for such consideration, but not less than the par
value thereof, as shall be fixed from time to time by the Board of Directors. In
the absence of fraud, the determination of the Board of Directors as to the
value of any property or services received in full or partial payment of shares
shall be conclusive.
Section 7.6 Registered Shareholders. The Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder thereof in fact, and shall not be bound to recognize any equitable or
other claim to or on behalf of the Corporation, any and all of the rights and
powers incident to the ownership of such stock at any such meeting, and shall
have power and authority to execute and deliver proxies and consents on behalf
of the Corporation in connection with the exercise by the Corporation of the
rights and powers incident to the ownership of such stock. The Board of
Directors, from time to time may confer like powers upon any other person or
persons.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification. No officer or director shall be personally
liable for any obligations arising out of any acts or conduct of said officer or
director performed for or on behalf of the Corporation. The Corporation shall
and does hereby indemnify and hold harmless each person and his heirs and
administrators who shall serve at any time hereafter as a director or officer of
the Corporation from and against any and all claims, judgments and liabilities
to which such persons shall become subject by reason of any action alleged to
have been heretofore or hereafter taken or omitted to have been taken by him as
such director or officer, and shall reimburse each such person for all legal and
other expenses reasonably incurred by him in connection with any such claim or
liability, including power to defend such person from all suits as provided for
under the provisions of the Utah Corporation Laws; provided, however that no
such person shall be indemnified against,
<PAGE>
or be reimbursed for, any expense incurred in connection with any claim or
liability arising out of his own negligence or willful misconduct. The rights
accruing to any person under the foregoing provisions of this section shall not
exclude any other right to which he may lawfuly be entitled, nor shall anything
herein contained restrict the right of the Corporation to indemnify or reimburse
such person in any proper case, even though not specifically herein provided
for. The Corporation, its directors, officers, employees and agents shall be
fully protected in taking any action or making any payment or in refusing so to
do in reliance upon the advice of counsel.
Section 8.2 Other Indemnification. The indemnification herein
provided shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8.3 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer or employee
of the Corporation, or is or was serving at the request of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against liability under the provisions of this Article 8 or the laws of the
State of Utah.
Section 8.4 Settlement by Corporation. The right of any person to be
indemnified shall be subject always to the right of the Corporation by its Board
of Directors, in lieu of such indemnity, to settle any such claim, action, suit
or proceeding at the expense of the Corporation by the payment of the amount of
such settlement and the costs and expenses incurred in connection therewith.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended, repealed, or added to by the
affirmative vote of the holders of a majority of the shares entitled to vote in
the election of any director at an annual meeting or at a special meeting called
for that purpose, provided that a written notice shall have been sent to each
shareholder of record entitled to vote at such meetings at least ten days before
the date of such annual or special meetings, which notice shall state the
alterations, amendments, additions, or changes which are proposed to be made in
such Bylaws. Only such changes shall be made as have been specified in the
notice. The Bylaws may also be altered, amended, repealed, or new Bylaws adopted
by a majority of the entire Board of Directors at any regular or special
meeting. Any Bylaws adopted by the Board may be altered, amended, or repealed by
a majority of the shareholders entitled to vote.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.
<PAGE>
ARTICLE XI
DIVIDENDS
The Board of Directors may at any regular or special meeting, as they deem
advisable, declare dividends payable out of the unreserved and unrestricted
earned surplus of the Corporation except the directors may declare dividends in
accordance with the laws of the State of Utah.
ARTICLE XII
CORPORATE SEAL
The seal of the Corporation shall be in the form of a circle and shall
bear the name of the Corporation and the year of incorporation.
Adopted by resolution of the Board of Directors the ,_____day
of__________19__.
-------------------------------
Secretary
<PAGE>
ARTICLES OF INCORPORATION
of
FAR WEST GOLD, INC.
We, the undersigned natural persons, bona fide residents of Utah, over
the age of twenty-one years, associated to establish a corporation for the
business purposes hereinafter stated, do hereby act as incorporators of a
corporation pursuant to the Utah Business Corporation Act, and we do adopt and
declare the following as Articles of Incorporation for the same:
ARTICLE I
The name of the corporation is: FAR WEST GOLD, INC.
ARTICLE II
The initial registered agent and the registered office I are:
Registered Agent: Arthur Blake Thomas
Registered office: 10 Exchange Place, Room 304
Salt Lake City, Utah 84111
ARTICLE III The duration of this corporation
is perpetual.
ARTICLE IV
The powers of this corporation shall be those enumerated, granted and
specified in the Utah Business Corporation Act, or implied therefrom; and any
and all powers necessary or convenient to effect any or all of the purposes for
which the corporation is organized.
ARTICLE V
The purposes for which this corporation is organized are:
Section 1. To generally engage in hard-rock mining, uranium, coal
and/or the oil and gas business for a profit; to engage in, conduct ventures in,
perform contracts and have dealings in all kinds of mineral operations,
exploration, geologic and engineering activities, drilling, recovery, refining
and marketing; and to have dealings in other various interests, investments,
rights and royalties related to mining and minerals.
Section 2. To acquire and deal in inventions, appli- ances, products and
ideas. To develop,
<PAGE>
lease, option, franchise, assemble, manufacture and market. To conduct joint
operations, ventures
and partnerships.
Section 3. To buy, sell, hold and deal in non-mineral real property,
particularly undeveloped acreage, and to improve and develop the same.
Section 4. To engage in any and all other lawful business endeavor.
ARTICLE VI
The aggregate number of shares which this corporation shall have the
authority to issue shall be fifty million shares, with a par value of one mill
per share; total capital value equating to $50,000.00.
ARTICLE VII
There shall be but one class of stock, namely common stock. Each share
shall be entitled to one vote in share- holder meetings and cumulative voting is
denied. All shares shall be non-assessable with equal rights and privileges.
Shareholder pre-emptive rights are not accorded shareholders.
ARTICLE VIII
The Board of Directors shall consist of no less than one nor more than
five. The initial Board shall be three Directors, as follows:
Arthur Blake Thomas 1108 East 2700 South, #B-14
Salt Lake City, Utah 84106
Rudolph M. Miller 1982 Roberta Street
Salt Lake City, Utah 84115
Clinton D. Shurtleff 2590 Elizabeth Street, #2
Salt Lake City, Utah 34106
ARTICLE IX
This corporation shall not commence business until consideration of at
least One Thousand Dollars ($1t000.00) has been paid in to the corporation for
the issuance of shares. How- ever, this requirement shall not preclude
transactions or the incurring of indebtedness which is incidental to its
organization or to the obtaining of subscriptions to or payment for its shares
by the founding group or individuals.
ARTICLE XI
The following provisions shall govern shareholder meetings:
<PAGE>
Section 1. An annual meeting of the shareholders shall be held at time
and place within or without the State of Utah, and in further manner as may be
provided in bylaws or other action of the Board of Directors. Failure to hold an
annual meeting shall not work a forfeiture or dissolution of the corporation.
Section 2. Thirty percent (30%) of the shares of common stock entitled
to vote shall be necessary to constitute a quorum of shareholders. Affirmative
vote of the majority of shares represented shall be the act of the shareholders,
at any annual or special meeting -- unless a greater approval is required by law
concerning a specific subject matter or proposition.
Section 3. Special meetings of the shareholders may be called by the
Board, the Chairman of the Board, the President, or the holders of not less than
ten percent (10%) of the shares outstanding.
ARTICLE XII
Other provisions regulating the internal affairs of this corporation
are:
Section 1. Board of Directors. The business and affairs of the
corporation shall be managed by its board of directors. A director need not be a
shareholder. Directors' terms shall continue until proper stockholder meeting is
called and successors are elected and quality. A majority of the Board is
necessary to constitute a quorum. Board meetings may be held within or without
the state. Unless otherwise later required by bylaws, neither the purpose nor
the business to be trans- acted at any regular or special Board meeting, need be
specified in the notice of meeting or waiver thereunto appertaining.
Section 2. Officers. Corporate officers shall include a pres ident,
a vice-president, a secretary and a treasurer. The positions of president and
treasurer may, by the Directors, be at any time combined in one person. officers
shall be elected by the Board in meeting immediately following annual
shareholder meeting, for each year-to-year period (unless re- placed or removed
by the Board, with officer tenure being at the ultimate discretion of the
Board). Duties of the officers are those usually and normally incumbent upon
holders of office of that title, subject to specific direction of the Board of
Directors and as provided in bylaws. The president shall be the principal
executive officer to put into effect the decisions of the Board of Directors,
and he shall supervise and control the business and affairs of the corporation
subject to the Board decisions, and shall preside at meetings of the
shareholders and directors. The vice-president shall perform the duties of the
president when the president is absent or unable to act. The secretary shall
keep minutes of meetings and have general charge of the stock records of the
corporation
Section 3. Fiscal Year. Until changed by the Board of Directors, the fiscal
period shall end each year on the anniversary date (month and year) of
incorporation in Utah. Section 4. Bylaws. The affairs of this corporation shall
be governed by these articles until bylaws are adopted and thereafter shall be
governed by these articles and the bylaws. The Board shall have the power to
adopt bylaws and to amend same at any regular or special board meeting. Section
5. The Board of Directors may authorize any officer or agent to enter into any
contract or to execute any instrument for the corporation. Such authority may be
general or be confined to specific instances. Section 6. Action Without Meeting.
Any action required or permitted to be taken by the
<PAGE>
Board of Directors or the shareholders at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all directors or shareholders, as the case may be.
Section 7. Waiver of Notice. Whenever any notice is required to be
given to any shareholder or director of the corporation under provisions of
these Articles, bylaws or the Utah Business Corporation Act, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE XIII
No contract or other transaction between this corporation and any other
corporation or entity shall be affected or invalidated solely by the fact that
any director or officer of this corporation is interested in, or is a director
or officer of such other corporation or entity -- provided that the extent of
the interest and connection of such director or officer shall have been fully or
satisfactorily disclosed to this corporation Board of Directors, and no Board
member dis- approves of such contract or transaction under the circumstances
disclosed.
IN WITNESS WHEREOF, we, the undersigned, being all of the incorporators
of FAR WEST GOLD, INC., hereby certify that the facts hereinabove stated are
truly set forth and constitute our desire, and we do now accordingly hereunto
set our hands to same on this 13th day of July, 1983, at Salt Lake City, Utah.
-----------------------------
Arthur Blake Thomas
Residing at: 1180 East 2700 South, #B-14
Salt Lake City, Utah 84106
----------------------
Rudolph M Miller
Residing at: 1982 Roberta Street
Salt Lake City, Utah 84115
----------------------
Clinton D. Shurtleff
Residing at: 2590 Elizabeth Street
Salt Lake City, Utah 84106
STATE OF UTAH ) ss.
<PAGE>
County of Salt Lake )
BE IT KNOWN AND REMEMBERED, that personally appeared before
me,__________________, a Notary Public in and for said County and State
afiresaid, ARTHUR BLAKE THOMAS, RUDOLPH M. MILLER and CLINTON D. SHURTLEFF,
personally known to me to be the same and being the incorporators and all of
same who signed the foregoing Articles of Incorporation; and I having made known
to them and each of them the contents of said Articles, they did under oath
severally acknowledge their signatures as their free act and deed and that the
facts are truly set forth therein.
Given under my hand and seal of office this 13th day of July, 1983, at
Salt Lake City, Utah.
------------------------
Notary Public
My Commission Expires: Residing at :
- - -------------------
<PAGE>
4S- CC
AGREEMENT TO ASSIGN INTEREST IN DOMAIN NAME
This Agreement to Assign Interest in Domain Name (the "Agreement") is
entered into as of March 8, 1999, by and between American Alliance, Inc., a
Nevada corporation, ("Buyer") and I Soft Corporation, an Oregon corporation
("Seller"), with reference to the following facts:
RECITALS
A. Seller owns all right, title and interest in and to the domain name
WhatsOnLine.com (the "Domain Name") and has agreed to transfer and assign such
interest in the Domain Name to Buyer.
B. Buyer has agreed to purchase all of Seller's right, title and
interest in and to the Domain Name.
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Transfer of Interest in Domain Name. Seller hereby transfers to
------------------------------------
Buyer all of its right, title and interest in and to the Domain Name
including, without limitation, all of its intellectual property
rights, including, without limitation, all tradename, trademark,
copyright and other intellectual property rights.
2. Representations and Warranties of Seller. Seller owns the Domain
-------------------------------------------
Name free and clear of any liens, claims and encumbrances and hereby
transfers the Domain Name to Buyer free and clear of any liens,
claims and encumbrances.
3. Consideration. As consideration for the transfer of the Domain Name,
-------------
Buyer shall pay to Seller the sum of US$50,000.
3.1 Upon acceptance of this Agreement, Buyer shall deposit US$50,000,
either by wire transfer or certified check, into the Trust Account
of Gary R. Blume, PC (Gary R. Blume, Esquire, 11801 N. Tatum Blvd.,
Suite 108, Phoenix, AZ, 85028-1612.
Telephone: 602-494-7976, Telefax: 602-494-7313).
3.2 Upon deposit of funds, Buyer undertakes to immediately complete all
documents and notifications with Network Solutions, Inc., or any
other required company or organization to transfer Domain Name to
Buyer, and Seller undertakes to accept receipt of such transfer
documents and notifications from Network Solutions, Inc., or any
other organization, to transfer Domain Name to Buyer.
3.3 Within twenty-four (24) hours of receiving written notice of
transfer of Domain Name to Buyer, which shall not be later than the
close of business April 15, 1999, both the Buyer and Seller hereby
agree that Gary Blume PC is to wire transfer $50,000, less 50% of
Gary Blume's cost for being escrow agent, which is not to exceed
$300.00, to Sellers bank, listed below:
Routing# 1211-35045,
TriCounties Bank,
Chico, California,
acct# : 230-262091.
Name of acct: 1 Soft Corp
3.4 If the Domain Name is not transferred to Buyer for any reason
whatsoever by the close of business April 15, 1999, Buyer and
Seller agree that Buyer's $50,000 shall be immediately returned to
Buyer, less 50% of Gary Blume's cost for being escrow agent, which
is not to exceed $300.00. At its sole discretion, Buyer retains the
option to extend the April 15, 1999 transfer date deadline.
3.5 In the event the funds are returned and the InterNIC transfer of
the Domain Name cannot be cancelled, the Buyer will immediately
transfer the name back to the Seller at no cost to the Seller.
4. No Assumption of Liabilities and Indemnification. Buyer shall not
------------------------------------------------
assume any liabilities with respect to the Domain or any other
liabilities of Seller.
4.1 The Seller shall indemnify and hold harmless the Buyer with respect
to all matters, which pursuant to the express terms of this
Agreement shall survive closing. This indemnification ' shall
include any claim, debt, or liability whatsoever, asserted against
the Domain Name which arose prior to this Agreement, and shall
include Buyer's costs and fees of an attorney.
5. Miscellaneous Provisions.
------------------------
5.1 Seller's Undertakings. Seller hereby agrees to take whatever
additional action and execute whatever additional documents
Buyer may in its judgement deem necessary or advisable in order to
carry out or effect the provisions of this Agreement, including
the completion and submission of the Registrant Name Change
Agreement with Network Solutions Inc. Seller also agrees to
correct in a timely fashion any errors in the InterNIC Transfer
Agreement to complete the transfer of the Domain Name.
5.2 Agreement Is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject
matter hereof.
5.3 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Oregon, as such laws are
applied to contracts entered into and performed in such State.
5.4 Dispute Resolution. All parties to this Agreement agree to attempt to
resolve any dispute, controversy or claim arising out of or relating
to this Agreement by mediation. The contents of all discussions of
such mediation shall be privileged, confidential and inadmissible in
any later proceeding unless such information was obtained independent
of the mediation. If mediation fails to resolve such dispute, any
controversy or dispute arising relating to this Agreement or the
breach, tennination, enforcement, interpretation or validity of any
provision hereof, shall be settled by binding arbitration in Eugene,
Oregon. Either party to this Agreement can initiate arbitration
pursuant to this Agreement by serving notice on the other party of an
intent to arbitrate. The notice shall specify with particularity the
claims or issues that are to be arbitrated. Within ten (10) days of
receipt of the notice, the parties shall obtain a list of at least
five(5)available arbitrators from the local office of Judicial Dispute
Resolution, LLC ("JDR") and select a mutually acceptable arbitrator.
If the parties are unable to agree on an arbitrator within ten (10)
days, either party may petition the Presiding Judge of the Superior
Court for Lane County to select a single arbitrator from the JDR list.
The parties shall have the discovery rights available under Oregon's
Civil Rules, subject to the limitation that each side shall be limited
to no more than twenty five (25) interrogatories and five(5)
depositions unless, upon a showing of good cause, the party can
convince the arbitrator that more interrogatories or depositions
should be permitted. All discovery must be concluded within sixty (60)
days of the selection of an arbitrator. The arbitration hearing must
be concluded within thirty (30) days of the close of discovery and it
will be conducted in accordance with Oregon Rules of Evidence. The
arbitrator's final decision shall be rendered within ten(10)days of
the final hearing day. Judgment upon the arbitrator's final award may
be entered in any court having jurisdiction thereof each party shall
bear in equal shares the arbitrator's fees and costs. The prevailing
party in the arbitration shall be awarded its reasonable attorneys'
fees and all costs, other than the arbitrator's fees and costs. For
the purposes of determining who is the prevailing party, each party
shall submit to the other a single written offer of settlement
ten(10)days prior to the start of the arbitration hearing and the
party whose offer most closely approximates the arbitrator's award
shall be deemed the prevailing party for the purpose of awarding
attorneys' fees. Any disputes about attorneys' fees shall be decided
by the arbitrator.
5.5 Counterparts, This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which
together shall constitute one an the same instrument.
5.6 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, Buyer and Seller
and their respective successors and assigns.
IN WITNESS WHEREOF, the Parties have executed this agreement on the day
and year first indicated above.
AMERICAN ALLIANCE, INC.
311 - 15 Wertheim Court
Richmond Hill, Ontario
telephone 905-709-8240
facsimile 905-709-8192
By: /s/ Harmel S. Rayat
-----------------------
Harmel S. Rayat, Director
1SOFT CORPORATION
56759 North Bank Rd.
Blue River, OR 97413
telephone 541-822-6000
facsimile 541-822-3300
By: /s/ Greg Thorne
--------------------
Greg Thorne, President
<PAGE>
ESCROW AGREEMENT
This Escrow Agreement, ("Agreement"), dated as of among American
Alliance, Inc., a Nevada corporation with corporate offices located at 311-15
Wertheim Court, Richmond Hill, Ontario, Canada ("CompanyA"); 1Soft Corporation,
an Oregon corporation with corporate offices located at 56759 North Bank Road,
Blue River, Oregon, 97413, ("CompanyB"); and Blume Law Firm, P.C., whose address
is 11801 North Tatum Boulevard, Suite 108, Phoenix, Arizona 85028-1612 (the
"Agent").
I. Escrow
S. 1.01 Appointment and Acknowledgment of Escrow Agent
Company A and Company B hereby appoint the Agent, and the Agent hereby
agrees to serve, as Escrow Agent pursuant to the terms of this Agreement. The
Agent acknowledges receipt of $50,000, which has been wired into the Agent's
Attorney Trust Account. This shall hereafter be referred to as the "Escrowed
Property."
S. 1.02 Operation of Escrow
The parties hereto agree that the escrow created by this Agreement (the
"Escrow") shall operate as follows:
(a) Within twenty-four (24) hours of receiving written notice of
transfer of the Domain Name "WhatsOnLine.com" (the "Domain
Name") to CompanyA, which shall not be later than the close of
business April 15, 1999, Agent shall transfer the Escrowed
Property, less fifty percent (50%) of Agent's escrow fee not
to exceed $300.00, to CompanyB's bank as listed below:
Routing #1211-35045
TriCounties Bank
Chico, California
Acct.# 230-262091
AccountName: 1Soft Corp.
(b) If Domain Name has not been transferred to CompanyA by close
of business April 15, 1999 and the Agent has not received
written notice of the extension of the deadline, the Escrowed
Property, less fifty percent (50%) of Agent's escrow fee not
to exceed $300.00, shall be immediately returned to CompanyA.
S. 1.03 Further Provisions Relating to the Escrow
(a) Distribution by the Agent in accordance with the terms of this
Agreement shall operate to divest all right, title, interest, claim, and demand,
either at law or in equity, of any party to this Agreement (other than the
distributee) in and to the Escrowed Property distributed and shall be a
perpetual bar both at law and in equity with respect to such distributed
Escrowed Property against the parties to this Agreement and against any person
claiming or attempting to claim such distributed escrowed property from,
through, or under such party.
(b) Company A (as to half)and Company B (as to half)agree to reimburse
the Agent for the Agent's reasonable fees and other expenses (including legal
fees and expenses) incurred by the Agent in connection with its duties
hereunder.
(c) CompanyA and CompanyB jointly and severally, agree to indemnify and
hold harmless the Agent against and in respect of any and all claims, suits,
actions, proceedings (formal or informal), investigations, judgments,
deficiencies, damages, settlements, liabilities, and legal and other expenses
(including counsel fees and expenses of attorneys chosen by the Agent) as and
when incurred and whether or not involving a third party arising out of or based
upon any act, omission, alleged act, or alleged omission by the Agent or any
other cause, in any case in connection with the acceptance of, or the
performance or nonperformance by the Agent of, any of the Agent's duties under
this Agreement, except as a result of the Agent's bad faith or gross negligence.
The Agent shall be fully protected by acting in reliance upon any notice,
advice, direction, other document, or signature believed by the Agent to be
genuine, by assuming that any person purporting to give the Agent any notice,
advice, direction, or other document in accordance with the provisions hereof,
in connection with this Agreement, or in connection with the Agent's duties
under this Agreement, has been duly authorized so to do, or by acting or failing
to act in good faith on the advice of any counsel retained by the Agent (which
may be Blume Law Firm, P.C.). CompanyB acknowledges that Blume Law Firm, P.C.
acts as counsel to CompanyA and may continue to serve in that capacity, and
neither anything contained herein, the execution or delivery hereof by the
Agent, nor the performance by the Agent of its duties hereunder shall in any way
affect or require termination of such relationship with A. The Agent shall not
be liable for any mistake of fact or of law or any error of judgment, or for any
act or any omission, except as a result of the Agent's bad faith or gross
negligence.
(d) The Agent makes no representation as to the validity, value,
genuineness, or the collectibility of any security or other document or
instrument held by or delivered to the Agent.
(e) The Agent shall have no duties or responsibilities except those
expressly set forth herein. The parties hereto agree that the Agent will not be
called upon to construe any contract or instrument. The Agent shall not be bound
by any notice of a claim, or demand with respect thereto, or any waiver,
modification, amendment, termination, cancellation, or revision of this
Agreement, unless in writing and signed by the other parties hereto and received
by the Agent, and, if the Agent's duties as Escrow Agent hereunder are affected,
unless the Agent shall have given its prior written consent thereto. The Agent
shall not be bound by any assignment by CompanyA or by CompanyB of its rights
hereunder unless the Agent shall have received written notice thereof from the
assignor. The Agent is authorized to comply with and obey laws, rules,
regulations, orders, judgments, and decrees of any governmental authority,
court, or other tribunal. If the Agent complies with any such law, rule,
regulation, order, judgment, or decree, the Agent shall not be liable to any of
the parties hereto or to any other person even if such law, rule, order,
regulation, judgment, or decree is subsequently reversed, modified, annulled,
set aside, vacated, found to have been entered without jurisdiction, or found to
be in violation of or beyond the scope of a constitution or a law.
(f) If the Agent shall be uncertain as to the Agent's duties or rights
hereunder, shall receive any notice, advice, direction, or other document from
any other party with respect to the Escrowed Property which, in the Agent's
opinion, is in conflict with any of the provisions of this Agreement, or should
be advised that a dispute has arisen with respect to the payment, ownership, or
right of possession of the Escrowed Property or any part thereof (or as to the
delivery, nondelivery, or content of any notice, advice, direction, or other
document), the Agent shall be entitled, without liability to anyone, to refrain
from taking any action other than to use the Agent's reasonable efforts to keep
safely the Escrowed Property until the Agent shall be directed otherwise in
writing by both other parties hereto or by an order, decree, or judgment of a
court of competent jurisdiction which has been finally affirmed on appeal or
which by lapse of time or otherwise is no longer subject to appeal (a "Final
Judgment"), but the Agent shall be under no duty to institute or to defend any
proceeding, although the Agent may, in the Agent's discretion and at the expense
of CompanyA and CompanyB as provided in Section 1.03(c), institute or defend
such proceedings.
(g) The Agent may at any time give written notice of the Agent's
resignation (the "Notice") to the other parties hereto. Upon receipt of written
notice of the Agent's resignation, CompanyA and CompanyB promptly shall appoint
another successor escrow agent. If no successor escrow agent has been appointed
and has accepted the Escrowed Property within five days after the Notice is
sent, all responsibilities of the Agent hereunder shall, nevertheless, cease.
The Agent's sole responsibility thereafter shall be to use the Agent's
reasonable efforts to keep safely the Escrowed Property and to deliver the
Escrowed Property as may be directed in writing by both of the other parties
hereto or by a Final Judgment. In addition, the Agent may, but is not obligated
to, petition any court of competent jurisdiction for the appointment of a
successor escrow agent. Such court may thereupon appoint a successor escrow
agent after the Agent deposits the Escrowed Property into court and after such
notice, if any, to the other parties hereto as the court may deem proper and
prescribe. Except as provided in this Section 1.03(g), this Agreement shall not
otherwise be assignable by the Agent without the prior written consent of the
other parties hereto.
(h) CompanyA and CompanyB authorize the Agent, if the Agent is
threatened with litigation or is sued, to interplead all interested parties in
any court of competent jurisdiction and to deposit the Escrowed Property with
the clerk of that court.
(i) The Agent's responsibilities and liabilities hereunder, except as a
result of the Agent's own bad faith or gross negligence, will terminate upon the
delivery by the Agent of all the Escrowed Property under any provision of this
Agreement.
II. MISCELLANEOUS
S. 2.01 Further Action
At any time and from time to time, CompanyA and CompanyB each agrees,
at its expense, to take such actions and to execute and deliver such documents
as may be reasonably necessary to effectuate the purposes of this Agreement.
S. 2.02 Survival
Subject to Section 1.03(i), the covenants, agreements, representations,
and warranties contained in or made pursuant to this Agreement shall survive the
delivery by the Agent of the Escrowed Property, irrespective of any
investigation made by or on behalf of any party.
S. 2.03 Modification
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements among
them concerning such subject matter, and (subject to Section 1.03(e)) may be
modified only by a written instrument duly executed by each party.
S. 2.04 Notices
Any notice, advice, direction, or other document or communication
required or permitted to be given hereunder shall be in writing and shall be
mailed by certified mail, return receipt requested [(or by the most nearly
comparable method if mailed from or to a location outside of the United
States)], or by Federal Express, Express Mail, or similar overnight delivery or
courier service or delivered (in person or by telecopy or similar
telecommunications equipment) against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement
(or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 2.04) with a copy to each of the
other parties hereto. Any notice given to a corporate party shall be addressed
to the attention of the Corporate Secretary. Any notice, advice, direction, or
other document or communication given by certified mail (or such comparable
method) shall be deemed given at the time of certification thereof (or
comparable act), except for a notice changing a party's address which shall be
deemed given at the time of receipt thereof. Any notice given by other means
permitted by this Section 2.04 shall be deemed given at the time of receipt
thereof.
S. 2.05 Waiver
Any waiver by any party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of that
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing.
S. 2.06 Binding Effect
Subject to Section 1.03(g), the provisions of this Agreement shall be
binding upon and inure to the benefit of CompanyA and CompanyB and their
respective assigns, heirs, and personal representatives, and shall be binding
upon and inure to the benefit of the Agent and the Agent's successors and
assigns.
S. 2.07 No Third Party Beneficiaries
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 2.06).
S. 2.08 Jurisdiction
The parties hereby irrevocably consent to the jurisdiction of the
courts of the State of Arizona and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Agreement, any document or instrument delivered pursuant to, in connection with,
or simultaneously with this Agreement, a breach of this Agreement or of any such
document or instrument, or the Escrowed Property.
S. 2.09 Separability
This entire Agreement shall be void if any provision of this Agreement
other than the second and third sentence s of Section 2.11 is invalid, illegal,
unenforceable, or inapplicable to any person or circumstance to which it is
intended to be applicable, except that the provisions of Section 1.03 shall
survive.
S. 2.10 Headings
The headings in this Agreement are solely for convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
S. 2.11 Counterparts; Governing Law
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. It shall be governed by and construed in accordance
with the laws of the State of Arizona, without giving effect to conflict of
laws. Any action, suit, or proceeding arising out of, based on, or in connection
with this Agreement, any document or instrument delivered pursuant to, in
connection with, or simultaneously with this Agreement, any breach of this
Agreement or any such document or instrument, or any transaction contemplated
hereby or thereby may be brought only in the United States District Court for
the District of Phoenix and each party covenants and agrees not to assert, by
way of motion, as a defense, or otherwise, in any such action, suit, or
proceeding, any claim that such party is not subject personally to the
jurisdiction of such court, that such party's property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
AMERICAN ALLIANCE, INC.
- - -------------------------------------
Name: _______________________
Its: __________________________
1SOFT CORP.
- - -------------------------------------
Name: _______________________
Its: __________________________
BLUME LAW FIRM, P.C.
- - -------------------------------------
Gary R. Blume, Attorney at Law, Agent
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
May 11, 1999
As independent auditors, we hereby consent to the incorporation by
reference in this Form 10SB Statement of our report, relating to the
consolidated financial statements and financial statement schedules of
American Alliance Corporation for the years ended December 31, 1997 and 1998,
included on Form 10SB for the years ended December 31, 1997 and 1998.
/s/ Clancy and Co.
------------------
CLANCY AND CO., P.L.L.C.
Certified Public Accountants
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 1,225,276 1,447,925
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,225,276 1,447,925
<PP&E> 7,937 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 1,247,244 1,447,925
<CURRENT-LIABILITIES> 17,814 0
<BONDS> 0 0
0 0
0 0
<COMMON> 115 115
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,247,244 1,447,925
<SALES> 66,426 0
<TOTAL-REVENUES> 66,426 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 355,978 263,268
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 71,057 7,481
<INCOME-PRETAX> (289,552) (263,268)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (218,495) (255,787)
<EPS-PRIMARY> (0.02) (0.03)
<EPS-DILUTED> (0.02) (0.03)
</TABLE>
FAR WEST GOLD, INC.
#10 Exchange Place, Room 304
Salt Lake City, Utah 84111
MINUTES
ORGANIZATIONAL MEETING AND AUTHORIZATION FOR PUBLIC STOCK OFFERING
August 26, 1983
The undersigned founders, incorporators and directors of Far West Gold,
Inc. met this date pursuant to unanimous agreement and consent, and with proper
notice of meeting acknowledged, to organize the corporation in conformity with
pre-incorporation understanding. Mr. Arthur Blake Thomas presented Articles of
Incorporation filed with the Utah Secretary of State date stamped as received
July 13, 1983, and opened the meeting as Temporary Chairman asking Rudolph M.
Miller to act as Secretary. Each director as named in the Articles expressed
acceptance of the position, agreeing to lawfully and properly act in such
capacity during his tenure, with his signature hereto attesting to same. Each
director agreed to give affidavit for the corporate files and purposes as to his
history background and any data relating to criminal or securities law
violations having any materiality. Each director stated he was under no charge,
injunction, or investigation as to securities laws and had never been convicted
of a felony.
Chairman Thomas opened the meeting to nomination and election of corporate
officers, nominating himself as President and Treasurer; Clinton D. Schurtleff,
Vice President; and Rudolph M. Miller as Secretary. No other nominations were
made and said slate received unanimous vote. Each accepted office and duties
thereof. Mr. Thomas was unanimously chosen as regular Chairman of the Board of
Directors without dissent. Pursuant to pre-incorporation intent, Arthur Blake
Thomas reaffirmed his subscription to original investment stock as stated below,
offering payment therefor. The respective subscription and payment was accepted
as follows:
Arthur Blake Thomas 2,800,000 sh. @ $0.002631 $7,500.00
Alma Sachs 1,425,000 sh. @ $0.002631 $3,750.00
J.L. Sachs 1,425,000 sh. @ $0.002631 $3,750.00
The President and Treasurer were authorized and instructed to deposit said
$15,000 in corporate account with First Security Bank of Utah, 405 South Main,
Salt Lake City, Utah 84111, with any withdrawals valid under signature of the
President-Treasurer (Arthur Blake Thomas), and was further instructed to enter
said stockholdings upon the books of the corporation and further to select in
his judgment appropriate stock certificates and cause' the proper execution of
same for each stockholder. The undersigned (Mr. Thomas) acknowledged he will pay
for his stock the amount of $0.002631 per share and will deposit his check for
$7,500.00 an dthe check of J.L. Sachs for $3,750.00 in the above designated
bank.
The President and Secretary were unanimously instructed to purchase
necessary seal, minute books and stock records and minor supplies, and to enter
these minutes, Certificate of Incorporation, articles, etc. in the official
records. The Treasurer shall give receipts for appropriate monies to the
purchaser and maintain records thereof. The Company's register and transfer
agent shall be the American Registrar & Transfer Co., $10 Exchange Place, Salt
Lake City, Utah 84111.
In line with pre-incorporation understanding, it was further
<PAGE>
RESOLVED: That Arthur Blake Thomas, President, be and is hereby authorized
and directed to have prepared and to file the necessary application documents,
exhibits, prospectuses and offering circulars with the Utah Securities
Commission, at the earliest possible date, in order to secure registration of
15,000,000 shares of the common stock of Far West Gold, Inc. to be offered to
bona fide residents of the State of Utah only at a public offering price of
$0.001 per share. Directors agree to sign any necessary and standard documents,
and do herewith accept the Terms and Conditions of Registration as outlined by
form document of the Securities Commission. President and Secretary are
authorized to sign any other necessary and standard application forms without
additional Board authorization. The President shall proceed with counsel and
necessary assistance in working out, at his discretion, details and content of
offering circular and other matters relating to registration and public
offering.
Further, RESOLVED: That Attorney Ronald L. Poulton, #9 Exchange Place, Salt
Lake City, Utah be employed and retained by the President to assist with an
prepare registration application and exhibits, represent the company before the
Securities Commission, and to render legal opinion as required as to the
validity of proposed stock issue when registered, etc. The President is
authorized to sign for the Company, attorney/client retainer agreement at a fee
considered by him as reasonable.
Further, RESOLVED: That a Certified Public Accountant be retained by the
Company to prepar necessary financial statements as part of registration
application, and to be printed in Offering Circular. The President may negotiate
a total reasonable fee for his services and should proceed immediately. Consent
to use of his Statements shall be obtained.
Further, RESOLVED: That Jeffrey L. Sachs of 264 South 9800 East, Salt Lake
City, Utah 80470 be and is appointed Sales Agent for any issue registered and
approved and subject to all terms and conditions therein contained. It is
understood that he is properly registered except specific card and license may
be required for this particular issue and company. No special bond shall be
required. Sales agent shall sign Fund Escrow Agreements along with any
depository bank and the Company, relating to his handling and turnover of funds.
He shall pay his own normal day-to-day expenses in effecting contracts and
sales.
Further, RESOLVED: That the principal office of the Company shall be #10
Exchange Place, Room 304, Salt Lake City, Utah 84111.
Directors and officers agree to supply all necessary data, documents, and
financial statement, etc. to Attorney Poulton for preparation of registration --
working with President Thomas who shall officially be listed as Correspondent in
said registration.
It is understood company operations, which were discussed and may be
varied, will not be assured or definitely ascertained until registration is
approved and minimum sales of stock is effected. The officers are instructed, as
near as possible, to hold other offering costs, besides sales commission, to
$4,500.00, and believe the minimum objectives of the Company can be pursued with
a bank fund escrow being cleared to the company of a total of $50,000.00. During
the escrow period of initial sales funds, no salaries or other remuneration
shall be paid to officers. Total salaries that may be paid later, must in no
case exceed 10% of the offering for the first year. It is understood that the
company presently owns no properties, leases or options.
BOARD OF DIRECTORS
/s/ Arthur Blake Thomas
-----------------------
Arthur Blake Thomas
/s/ Rudolph M. Miller
---------------------
ATTEST: Rudolph M. Miller
/s/ Rudolph M. Miller /s/ Clinton D. Shurtleff
- - --------------------- ------------------------
Secretary - FAR WEST GOLD, INC. Clinton D. Shurtleff
<PAGE>
Joint Board of Directors Meeting
Far West Gold, Inc.
Golden Age Minerals, Inc.
At 10 Exchange Place, Room 304
Salt Lake City, Utah 84111
December 31, 1983
Joint Board meeting with all directors and officers of each corporation
present. Meeting presided over by Arthur Blake Thomas, President and Director of
each corporation. Others in attendance were Director and Secretary, Rudolph
Miller, and Clinton Shurtleff, Director and Vice President, holding these said
positions in both corporations.
Mr. Thomas called attention to the fact that the Far West Gold, Inc., as of
October 21, 1983, issued an effective prospectus and commenced with the sale of
15,000,000 shares of its corporate stock at 1 cent per share. He stated that
there was apparently a demand for the securities and it appeared that the issue
could probably be sold over a time period. President Thomas called attention to
the fact that the books of the Company, as of December 31, 1983, showed Far West
Gold, Inc. loans to Golden Age Minerals, Inc. totaling $10,500. He stated that
such matters were first cleared informally with the company directors pending
the calling of a directors meeting at the end of periodic accounting periods.
Thomas further mentioned that at the effective date of the Far West
Prospectus, October 21, 1983, the purposes for Company activity included the
search for and the acquisition of mineral property and subsequent development
thereof. He stated that time had been consumed on a search for Far West Gold,
Inc. property with negative results and speculative hazards seemed high. Thomas
stated that he had discussed this matter with Directors, outside engineers,
geologists, brokers and mine operators. People from whom opinions were requested
were asked to read a mining report by Geologist W. B. Winter. General opinion
was to the effect of why search for added property while a situation of merit
was held by a companion concern? Golden Age Minerals, Inc. needing support to
maintain its valuable leasehold possession at Willow Creek, Nevada. The copy of
the winter report attached hereto indicates the presence of 400,000 yards of
gold bearing placer gravel with a gross value of $20 per yard or $8,000,000,
contained where
<PAGE>
JOINT BOARD OF DIRECTORS MEETING
December 31, 1983
work has been performed, with much larger areas still open for investi gation.
Such situations are called "open ended" and total value might exceed the worth
of exposed ground by large margins. Thomas called attention to page 7 paragraph
17 of the Far West Prospectus and asked consideration thereof by Directors prior
to voting on the following reso ltuion, stating that in his own opinion conflict
of interest could not be involved between companies where best business judgment
indicated equal value as probable to both entities plus the solution of mutual
problems.
BE IT RESOLVED: That the Far West Gold, Inc. is authorized by these presents to
loan funds to Golden Age Minerals for the purpose of expenditure upon its
Pershing County mining lease known as the Willow Creek Placer in such manner as
considered judicious by both Far West Gold, Inc. and Golden Age Minerals, Inc.,
copy of said lease is attached hereto. Any loans made and accepted as hereby
authorized are to be returned to Far West Gold through payment of one-half of
the gross revenue received by Golden Age Minerals, Inc. from its sale of mineral
products from its project, Willow Creek. It is the intent that payment as above
set forth continue beyond any liquidation period and continue in pertetuity.
Upon being sent to a vote, all Directors voted in the affirmative.
President Thomas stated that a sum of money estimated in several or more
hundred thousand dollars had been expended by Golden Age and Far West in
relation to "Willow Creek." On the credit side, a minimum 400,000 yards of $20
per yard of gold value ($8,000,000) is indicated
<PAGE>
JOINT BOARD OF DIRECTORS MEETING
December 31, 1983
as present for exploitation, an added expenditure is needed to guarantee early
production and is currently being solicited from well-established mining
concerns who currently exhibit great interest.
GOLDEN AGE MINERALS, INC. FAR WEST GOLD, INC.
/s/ Arthur Blake Thomas /s/ Arthur Blake Thomas
- - ----------------------- -----------------------
/s/ Clinton Shurtleff /s/ Clinton Shurtleff
- - --------------------- ---------------------
/s Rudolph M. Miller /s/ Rudolph M. Miller
- - -------------------- ---------------------
<PAGE>
ACTION BY BOARD OF FAR WEST GOLD, INC.
WITHOUT A MEETING
The following are resolutions duly adopted by the Board of Directors of Far
West Gold, Inc. (the "Corporation"), a Utah corporation, pursuant to Utah
Revised Business Corporation Act which allows the adoption of resolutions by the
unanimous consent of directors without a meeting.
The following resolutions are adopted effective this 29th day of August,
1995.
Whereas, Ronald L. Poulton, has represented the Corporation in numerous
transactions, tax matters and business and has been paid no compensation for any
of the above services during the past several years, be it,
RESOLVED, the Corporation shall issue 20,000,000 shares of Far West Gold,
Inc. to Ronald L. Poulton, which stock shall be issued to him fully paid and
non-assessable in consideration for his release of the Corporation from all
liability to him in connection with the above mentioned services.
RESOLVED FURTHER, that Matthew D. Taylor, Secretary of the Corporation,
instruct the transfer agent for the Corporation to issue the certificate for
shares as set forth above.
Adopted effective this 29th day of August, 1995.
/s/ Rudolph M. Miller
---------------------
Rudolph M. Miller, Director
/s/ Clinton Shurtleff
---------------------
Clinton Shurtleff, Director
/s/ Matthew D. Taylor
---------------------
Matthew D. Taylor, Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
FAR WEST GOLD, INC.
A meeting of the Board of Directors of Far West Gold, Inc. was held on the 15th
day of April, 1996 at 10:00 a.m. at the offices located at 400 Burrard Street,
Suite 1400, Vancouver, B.C. V6C-3G2.
There were present and participating at the meeting, either in person or
telephonically, Mr. Harmel S. Rayat, Mr. Kundan S. Rayat and Ms. Jasbinder
Chohan being all of the Directors of the Company. Harmel S. Rayat, the
President, chaired the meeting. Jasbinder Chohan, the Secretary, read the
minutes of the last regular meeting and they were approved.
The first item of discussion brought before the Board of Directors was a
discussion concerning a reverse split of the company's common stock by a ratio
of one (1) new share for every five hundred (500) old shares with the par value
to remain at $.001. The reverse split is to take effect on this 15th day of
April, 1996. After motion duly made, seconded and unanimously carried with all
in favor; it was,
Resolved, that the Company reverse split its common stock by a ratio of
one (1) new share for five hundred (500 old shares with the par value remaining
$.001.
Further Resolved, that the effective date of the reverse split to be
April 15, 1996.
The second item to be discussed was concerning the possibility of acquiring
exploration and development stage resource properties in North America and
abroad. After a thorough discussion it was agreed to put the vote on hold until
the next Board of Directors meeting which was scheduled to be on Tuesday, April
16th, 1996.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat /s/ Kundan S. Rayat
- - ------------------- -------------------
Mr. Harmel S. Rayat, President, Director Mr. Kundan S. Rayat, Director
/s/ Jasbinder Chohan
- - --------------------
Ms. Jasbinder Chohan, Secretary, Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
FAR WEST GOLD, INC.
A meeting of the Board of Directors of Far West Gold, Inc. was held on the 16th
day of April, 1996 at 10:00 a.m. at the offices located at Suite 1400, 400
Burrard Street, Vancouver, B.C., V6C 3G2.
There were present and participating at the meeting, either in person or
telephonically, Mr. Harmel S. Rayat, Mr. Kundan S. Rayat and Ms. jasbinder
Chohan, being all of the Directors of the Company. Mr. Harmel S. Rayat, the
President, chaired the meeting and Ms. Chohan, the Secretary, read the minutes
of the last regular meeting and they were approved.
The first item of discussion brought before the board was a discussion
concerning the acquisition of The Tom Property Mining Claims in the Kamloops
Mining Division of British Columbia, Canada. After a long and thorough
discussion, it was agreed that the Company acquire the claims and issue
4,000,000 of its unissued common shares of stock in exchange for services
rendered in the negotiation and subsequent acquisition of these claims. Upon
motion duly made, seconded and unanimously carried with all in favor, it was;
Resolved, that the Company the Company acquire The Tom Property Mining
Claims and issue 4,000,000 of its unissued common shares of stock in exchange
for services rendered in the negotiation and subsequent acquisition of these
claims.
Further Resolved, that the 4,000,000 shares be issued in the name of Mr.
Harmel S. Rayat.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat /s/ Kundan S. Rayat
- - ------------------- -------------------
Mr. Harmel S. Rayat, President, Director Mr. Kundan S. Rayat, Director
/s/ Jasbinder Chohan
- - --------------------
Ms. Jasbinder Chohan, Secretary/Treasurer, Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
FAR WEST GOLD, INC.
A meeting of the Board of Directors of Far West Gold, Inc. was held on the
23rd day of April, 1996 at 10:00 A.M. at the offices of the Company located at
400 Burrard Street, 14th Floor, Vancouver, B.C. V6C-3G2.
There were present and participating at the meeting Harmel Rayat, Kundan S.
Rayat both being directors of the Company. Ms. Jasbinder Chohan was present
telephonically as Secretary at the request of the Directors. Harmel Rayat acted
as Chairman. The minutes of the last meeting were read and approved.
The first item of business brought before the Board was concerning the
necessity to raise additional capital for acquiring exploration and development
stage resource properties in North America and abroad. Upon motion duly made,
seconded and unanimously carried, it was;
Resolved, The Company execute a 504 Registration authorizing 4,000,000
shares at $0.05 per share.
The second item of business brought before the Board was a discussion
concerning the necessity of retaining legal S.E.C. counsel for the Company. It
was suggested and agreed that Gary Blume be retained as the Companys S.E.C.
counsel. Upon motion duly made, seconded, and unanimously carried, it was:
Resolved, that Gary R. Blume, is appointed as Company's SEC Counsel.
The third item of business brought before the Board was a discussion that
the Company is in need of an independent CPA. After a thorough discussion it was
agreed that William Clancy CPA be appointed as the Company's independent public
accountant. Upon motion duly made, seconded and unanimously carried, it was:
Resolved, that William Clancy, CPA, is appointed Company's Independent
Public Account.
The fourth item of business to be discussed was in regards to change to
change the Company's transfer agent from American Registrar and Transfer Co.
located in Salt Lake City, Utah to Holladay Stock Transfer Company located in
Phoenix , AZ. After further discussions it was agreed to appoint Holladay Stock
Transfer Company as the Company's transfer agent. Upon motion duly made,
seconded and unanimously carried, it was;
Resolved, that the Company change its transfer agent from American
Registrar and Transfer Co. to Holladay Stock Transfer.
The last item of business discussed was concerning the date for a special
shareholders meeting with the following agenda; election of Harmel Rayat, Kundan
S. Rayat and Ms Jasbinder
<PAGE>
Chohan as directors, approval of the Company's name to be changed to Far West
Resources,Inc. Amend the Articles of Inc. to reflect the name change, authorize
5,000,000 preferred shares, amend the Articles of Inc. to reflect the increasing
of the authorized to create the preferred shares, authorize to create the
preferred shares, authorize a stock option plan, ratify all past actions by the
directors and any other business that may come before the meeting. It was also
agreed that the meeting should take place on the May 9th, 1996 at 400 Burrard
Street, Suite 1400, Vancouver, B.C. V6C-3G2. at 2:00 P.M. Upon motion duly made,
seconded and unanimously carried, it was:
Resolved, a special shareholders meeting be set for May 9th,1996 at 2:00
P.M. at 400 Burrard Street, Suite 1400, Vancouver, B.C. V6C-3G2.
Further Resolved, the following items are to be on the agenda for
shareholders approval:
a. Election of the following directors: Harmel Rayat, Kundan S.Rayat, Ms
Jasbinder Chohan.
b. Approve the Company's name to be changed to Far West Resources, Inc.
c. Amend Article I of the Articles of Incorporation to reflect the name
change to Far West Resources, Inc.
d. Authorize 5,000,000 preferred shares.
e. Amend Article 4 of the Articles of Incorporation to be amended to
increase the authorized create a class of preferred shares.
f. Authorize stock option plan.
g. Ratify all actions by the directors.
h. Ratify the appointment of Gary R.Blume as S.E.C. counsel for the
Company.
i Ratify the appointment of William Clancy, CPA as the Company's
independent public accountant.
j. Any other business that may come before the meeting.
There being no further business, and upon motion duly made and seconded the
meeting was adjourned.
/s/ Jasbinder Chohan
- - --------------------
Jasbinder Chohan, Secretary
<PAGE>
MINUTES OF ACTION BY THE
SHAREHOLDERS OF
FAR WEST GOLD, INC.
AT A SPECIAL SHAREHOLDERS MEETING
(May 9th, 1996)
WHEREAS, the By-Laws of the Corporation provide that a Special Meeting of
the shareholders may be called at any time by the Board of Directors or by the
President, and shall be called by the President or the Secretary at the written
request of the holders of (10%) of the shares then outstanding and entitled to
vote thereat, or as otherwise required under the provisions of the Business
Corporation Act.
WHEREAS, there were represented by proxy or in person 4,040,320 shares of
the Corporation which constituted a quorum, there being currently 4,076,300
shares issued and outstanding, and;
WHEREAS, being all the Directors of the Corporation, desire that the Board
of Directors shall take the action expressed in the Resolution hereinafter set
forth;
NOW THEREFORE, we the undersigned, do hereby declare that the action
expressed in the following Resolutions shall be and are hereby taken by majority
vote of the shareholders of the Corporation as of the date hereof:
RESOLVED, that the following individuals be and hereby are appointed to the
Board of Directors of this Corporation, to serve in their respective capacities
until the next Annual General Meeting of shareholders: Harmel S. Rayat,
Jasbinder Chohan and Kundan S. Rayat.
FURTHER RESOLVED, that Harmel S. Rayat be President and Jasbinder Chohan be
Secretary.
RESOLVED, that the Corporation change its name from Far West Gold, Inc. to
Far West Resources, Inc. and to amend Article 1 of the Articles of Incorporation
to read: "The name of the corporation is Far West Resources, Inc."
RESOLVED, to increase the number of shares of the Company is authorized to
issue and to include a class of Preferred shares. and to amend Article 6 of the
Articles of Incorporation to read as follows:
"The aggregate number of shares which this corporation shall have authority
to issue is 105,000,000 shares, of which 100,000,000 shares shall be $0.001
par value Common Stock and 5,000,000 shares shall be $.10 par value
Preferred Stock. The Common Stock shall have voting rights of one vote per
share. The Board of Directors may issue the Preferred Stock from time to
time in one or more series, each series to have such voting rights,
preference in dividends and *in liquidation and such other rights,
preferences and conditions as the Board of Directors may designate by an
amendment to these Articles of Incorporation by action duly adopted without
shareholder action and shareholder action
<PAGE>
shall not be required therefor. Fully-paid stock of this Corporation shall
not be liable to any further call or assessment."
RESOLVED, that the Directors are authorized to establish a Stock Option
Plan.
RESOLVED, ratify the appointment of William Clancy, CPA as the Company's
independent auditor.
RESOLVED, ratify the appointment of Gary Blume as the Company's SEC counsel
RESOLVED, that all past actions taken by the Board of Directors of this
Company be ratified.
We, Harmel S. Rayat and Jasbinder Chohan, do hereby certify that we are
respectively the duly elected President and the duly elected and qualified
Secretary and keeper of the records of Far West Resources, Inc., a corporation
presently organized and existing under the laws of the State of Utah, and that
the above is a true and correct copy of resolutions duly adopted at a special
meeting of Shareholders thereof, convened and held in accordance with law and
By-laws of said Corporation on the 9th day of May, 1996 and that such
resolutions are now in full force and effect.
/s/ Harmel S. Rayat /s/ Jasbinder Chohan
- - ------------------- --------------------
Mr. Harmel S. Rayat, President Ms. Jasbinder Chohan, Secretary
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
FAR WEST RESOURCES, INC.
A meeting of the Board of Directors of Far West Resources, Inc. was held on the
30th day of May, 1997 at 10:30 a.m. at the offices located at Suite 1400, 400
Burrard Street, Vancouver, B.C., V6C 3G2.
There were present and participating at the meeting, either in person or
telephonically, Mr. Harmel S. Rayat, Mr. Kundan S. Rayat and Ms. Jasbinder
Chohan, being all of the Directors of the Company. Mr. Harmel S. Rayat, the
President, chaired the meeting and Ms. Chohan, the Secretary, read the minutes
of the last regular meeting and they were approved.
The first item of discussion brought before the board was a discussion
concerning the necessity of raising additional capital in order to fund the
Company's future endeavors and for potential acquisitions. After a thorough
discussion it was agreed that a 504 Registration be executed authorizing
2,000,000 shares at $0.15 per share. Upon motion duly made, seconded and
unanimously carried with all in favor, it was;
Resolved, that the Company execute a 504 Registration be executed
authorizing 2,000,000 shares at $0.15 per share.
Further Resolved, that the Company issue 500,000 each in the names of
Greystone Management Ltd., Matrix Capital Corp., Shetland Holdings Corp. and
Blackrock Capital Corp.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat /s/ Kundan S. Rayat
- - ------------------- -------------------
Mr. Harmel S. Rayat, President, Director Mr. Kundan S. Rayat,Director
/s/ Jasbinder Chohan
- - --------------------
Ms. Jasbinder Chohan, Secretary/Treasurer, Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
FAR WEST RESOURCES, INC.
A meeting of the Board of Directors of Far West Resources, Inc. was held on the
3rd day of June, 1997 at 10:30 a.m. at the offices located at Suite 1400, 400
Burrard Street, Vancouver, B.C., V6C 3G2.
There were present and participating at the meeting, either in person or
telephonically, Mr. Harmel S. Rayat, Mr. Kundan S. Rayat and Ms. Jasbinder
Chohan, being all of the Directors of the Company. Mr. Harmel S. Rayat, the
President, chaired the meeting and Ms. Chohan, the Secretary, read the minutes
of the last regular meeting and they were approved.
The first item of discussion brought before the board was a discussion
concerning the disposition of all resource based assets, and instead to
concentrate on other non-resource business endeavors and potential acquisitions.
Upon motion duly made, seconded and unanimously carried with all in favor, it
was;
Resolved, that the Company dispose of all resource based assets and
concentrate on other non-resource business endeavors and potential acquisitions.
Further Resolved, that the Company dispose of its interest and tide to The
Tom Mining Claims.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Mr. Harmel S. Rayat /s/ Kundan S. Rayat
- - ----------------------- -------------------
Mr. Harmel S. Rayat, President, Director Mr. Kundan S. Rayat, Director
/s/ Jasbinder Chohan
- - --------------------
Ms. Jasbinder Chohan, Secretary/Treasurer, Director
<PAGE>
MINUTES OF ACTION BY THE
SHAREHOLDERS OF
FAR WEST RESOURCES, INC.
AT AN ANNUAL GENERAL SHAREHOLDERS MEETING
(June 30, 1997)
WHEREAS, the By-Laws of the Corporation provide that an Annual General
Meeting of the shareholders be held each year when they shall elect a Board of
Directors and transact such other business as may be properly brought before the
meeting.
WHEREAS, there were represented by proxy or in person 5,100,000 shares of
the Corporation which constituted a quorum, there currently being 8,076,202
shares issued and outstanding, and;
WHEREAS, being all the Directors of the Corporation, desire that the Board
of Directors shall take the action expressed in the Resolution hereinafter set
forth;
NOW THEREFORE, we the undersigned, do hereby declare that the action
expressed in the following Resolutions shall be and are hereby taken by majority
vote of the shareholders of the Corporation as of the date hereof:
RESOLVED, that the following individuals be and hereby are appointed to the
Board of Directors of this Corporation, to serve in their respective capacities
until the next Annual General Meeting of shareholders: Harmel S. Rayat,
Jasbinder Chohan and Kundan S. Rayat.
FURTHER RESOLVED, that Harmel S. Rayat be President and Jasbinder Chohan be
Secretary.
RESOLVED, that Clancy and Co., PLLC be appointed as the Company's
independent auditors for the fiscal year ending December 31, 1997.
RESOLVED, that the state of registration of the Corporation be changed from
Utah to Nevada and to amend the Company's Articles of Incorporation to reflect
such a change.
RESOLVED, to approve the Corporation's name change to American Alliance
Corp. or American Alliance Corporation and to amend the Company's Articles of
Incorporation to reflect such a change.
RESOLVED, to increase common share par value from $0.001 to $0.00001 and
preferred share par value from $0.10 to $.0001.
RESOLVED, that the Directors establish a new 1997 Stock Option Plan.
FURTHER RESOLVED, that the Directors are authorized to adopt the 1997 Stock
Option Plan and reserve 1,250,000 shares of Common Stock for issuance
thereunder.
<PAGE>
RESOLVED, that all past actions taken by the Board of Directors of this
Company be ratified.
We, Harmel S. Rayat and Jasbinder Chohan, do hereby certify that we are
respectively the duly elected President and the duly elected and qualified
Secretary and keeper of the records of Far West Resources, Inc., a corporation
presently organized and existing under the laws of the State of Utah, and that
the above is a true and correct copy of resolutions duly adopted at an Annual
General Meeting of Shareholders thereof, convened and held in accordance with
law and By-laws of said Corporation on the 30th day of June, 1997 and that such
resolutions are now in full force and effect.
/s/ Harmel S. Rayat /s/ Jasbinder Chohan
- - ------------------- --------------------
Mr. Harmel S. Rayat, President Ms. Jasbinder Chohan, Secretary
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
AMERICAN ALLIANCE CORPORATION
A meeting of the Board of Directors of American Alliance Corporation was held on
the 14th day of October, 1997 at 2:30 p.m. at the offices located at Suite 216,
1628 West 1st Avenue, Vancouver, B.C., V6J lGl.
There were present and participating at the meeting, either in person or
telephonically, Mr. Harmel S. Rayat, Mr. Kundan S. Rayat and Ms. Jasbinder
Chohan, being all of the Directors of the Company. Mr. Harmel S. Rayat, the
President, chaired the meeting and Ms. Chohan, the Secretary, read the minutes
of the last regular meeting and they were approved.
The first item of discussion brought before the board was a discussion
concerning the necessity of raising additional capital in order to fund the
Company's future endeavors and for potential acquisitions. After a thorough
discussion it was agreed that a 504 Registration be executed authorizing
1,000,000 shares at $.50 per share. Upon motion duly made, seconded and
unanimously carried with all in favor, it was;
Resolved, that the Company execute a 504 Registration be executed
authorizing 1,000,000 shares at $0.50 per share.
Further Resolved, that the Company issue 400,000 shares in the name of
Shetland Holdings Corp. and 600,000 shares in the name of Matrix Capital Corp.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat /s/ Kundan S. Rayat
- - ------------------- -------------------
Mr. Harmel S. Rayat, President, Director Mr. Kundan S. Rayat, Director
/s/ Jasbinder Chohan
- - --- ----------------
Ms. Jasbinder Chohan, Secretary/Treasurer, Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
AMERICAN ALLIANCE CORPORATION
A meeting of the Board of Directors of American Alliance Corporation was
held on the 5th day of November, 1997, at 9:30 a.m. local time, at the offices
located at Suite 216, 1628 West 1st Avenue, Vancouver, B.C., V6J 1G1.
Present and participating at the meeting, either in person or
telephonically and constituting a quorum, were Mr. Harmel S. Rayat, Mr. Kundan
S. Rayat, and Ms. Jasbinder Chohan, being all of the Directors of the Company.
Mr. Harmel S. Rayat, the President, chaired the meeting. The minutes of the last
regular meeting were read and they were approved.
The first item brought before the Board of Directors was regarding entering
into stock option agreements with certain directors, officers, and employees for
1,250,000 common shares reserved for issuance under the Company's 1997 Stock
Option Plan, which was approved by Shareholders at an Annual General Meeting of
Shareholders held on June 30th, 1997. Upon motion duly made, seconded and
unanimously carried with all in favor, it was;
Resolved, that the Company establish 1,050,000 stock options at a price of
$1.00 until November 5th, 2004, and 200,000 stock options at a price of $3.00
until November 5th, 2004.
Further Resolved, that 300,000 stock options be established in the name of
Ranjit Bhogal, 300,000 stock options be established in the name of Terry
Johnston, 300,000 stock options be established in the name of Bhupinder Mann,
65,000 stock options be established in the name of Herdev S. Rayat, 65,000 stock
options be established in the name of Herdev S. Rayat, 20,000 stock options be
established in the name of Jasbinder Chohan, and 200,000 stock options be
established in the name of Harmel S. Rayat, which are exercisable at $3.00, and
vest in 5 equal installments each November 5th, beginning in 1998.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat /s/ Kundan S. Rayat
- - ------------------- -------------------
Mr. Harmel S. Rayat, President, Director Mr. Kundan Rayat, Director
/s/ Jasbinder Chohan
- - --------------------
Ms. Jasbinder Chohan, Secretary, Treasurer & Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
AMERICAN ALLIANCE CORPORATION
A meeting of the Board of Directors of American Alliance Corporation was held on
the 9th day of December, 1997 at 10:30 a.m. at the offices located at Suite 216,
1628 West 11, Avenue, Vancouver, B.C., V6J 1G1.
There were present and participating at the meeting, either in person or
telephonically, Mr. Harmel S. Rayat, Mr. Kundan S. Rayat and Ms. Jasbinder
Chohan, being all of the Directors of the Company. Mr. Harmel S. Rayat, the
President, chaired the meeting and Ms. Chohan, the Secretary, read the minutes
of the last regular meeting and they were approved.
The first item of discussion brought before the board was a discussion
concerning the necessity of raising additional capital in order to fund the
Company's future endeavors and for potential acquisitions. After a thorough
discussion it was agreed that a 505 Registration be executed authorizing 450,000
shares at $2.00 per share for $900,000, and grant 450,000 share purchase
warrants exercisable at $2.00 until December 9th, 2001. Upon motion duly made,
seconded and unanimously carried with all in favor, it was;
Resolved, that the Company execute a 505 Registration be executed
authorizing 450,000 shares at $2.00 per share for $900,000, and grant 450,000
share purchase warrants exercisable at $2.00 until December 9, 2001.
Further Resolved, that the Company issue 450,000 shares and 450,000 share
purchase warrants in the name of Kirkland Capital SA.
There being no further business in and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat /s/ Mr. Kundan S. Rayat
- - ------------------- -----------------------
Mr. Harmel S. Rayat, President, Director Mr.Kundan S. Rayat, Director
/s/ Jasbinder Chohan
- - --------------------
Ms. Jasbinder Chohan, Secretary, Treasurer, Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
AMERICAN ALLIANCE CORPORATION
A meeting of the Board of Directors of American Alliance Corporation was
held on the 24th day of April, 1998, at 10:00 a.m. local time, at the offices
located at Suite 216, 1628 West 1st Avenue, Vancouver, B.C., V6J 1G1.
Present and participating at the meeting, either in person or
telephonically and constituting a quorum, were Mr. Harmel S. Rayat, Mr. Kundan
S. Rayat, and Ms. Jasbinder Chohan, being all of the Directors of the Company.
Mr. Harmel S. Rayat, the President, chaired the meeting. The minutes of the last
regular meeting were read and they were approved.
The first item of discussion brought before the Board of Directors was a
discussion regarding the Company's 1998 Annual General Meeting with the
following agenda: election of Mr. Harmel S. Rayat, Mr. Kundan S. Rayat and Ms.
Jasbinder Chohan as Directors, authorize the Company's 1998 Stock Option Plan
and reserve 1,750,000 common shares for issuance thereunder, ratify the
appointment of Clancy and Co., PLLC as the Company's independent auditor and
transact any other business that may come before the meeting. It was agreed to
fix the close of business on May 15th, 1998 as the record date for the
determination of shareholders entitled to an annual meeting notice and to vote
at the meeting or any adjournment thereof, and that the meeting should take
place on June 22nd, 1998 at the Company's office in Vancouver, located at Suite
216, 1628 West 1st Avenue, Vancouver, B.C., V6J 1G1, at 10:00 a.m. local time.
Upon motion duly made, seconded and unanimously carried with all in favor, it
was:
RESOLVED, that the 1998 Annual General Meeting be set for June 22nd, 1998
at Suite 216, 1628 West 1st Avenue, Vancouver, B.C., V6J 1G1, at 10:00 a.m.
local time, and that the close of business on May 15th, 1998 be the record date
for the determination of shareholders entitled to an annual meeting notice and
to vote at the meeting or any adjournment thereof.
FURTHER RESOLVED, that the following items are to be on the agenda for the
1998 Annual General Meeting:
a. Election of Mr. Harmel S. Rayat, Mr. Kundan S. Rayat, and Ms.
Jasbinder Chohan as Directors.
b. Authorize the Company's 1998 Stock Option Plan and reserve 1,750,000
common shares for issuance thereunder.
c. Ratify the appointment of Clancy and Co., PLLC as the Company's
independent auditor.
d. To transact any other business that may come before the meeting.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat /s/ Kundan S. Rayat
- - ------------------- -------------------
Mr. Harmel S. Rayat, President, Director Mr. Kundan Rayat, Director
/s/ Jasbinder Chohan
- - --------------------
Ms. Jasbinder Chohan, Secretary, Treasurer & Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
AMERICAN ALLIANCE CORPORATION
A meeting of the Board of Directors of American Alliance Corporation was
held on the 4th day of May, 1999, at 9:00 a.m. local time, at the offices
located at 1628 West 1st Avenue, Suite 216, Vancouver, B.C. V6J 1G1.
Present and participating at the meeting, either in person or
telephonically and constituting a quorum, were Mr. Harmel S. Rayat, Mr. Kesar S.
Dhaliwal, and Ms. Jasbinder Chohan, being all of the Directors of the Company.
Mr. Harmel S. Rayat, the Chairman, chaired the meeting, and Ms. Chohan, the
secretary, read the minutes of the last regular meeting and they were approved.
The first item of discussion brought before the Board of Directors was a
discussion regarding enhancing the trading volumes of the Company's common
shares. The second item of discussion was to become a reporting issuer in order
to improve the availability of financial reports to shareholders. After a
thorough discussion, it was agreed that the Company execute a two for one
forward split and file a Form 10-SB with the SEC. Upon motion duly made,
seconded and unanimously carried with all in favor, it was:
RESOLVED, that the Company forward split its common shares two for one,
with the par value remaining the same, and that the Company file a Form 10-SB
with the SEC.
FURTHER RESOLVED, that the effective date for the two for one forward split
be fore shareholders of record on the close of business May 14, 1999.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat
- - -------------------
Mr. Harmel S. Rayat, President, Director
<PAGE>
MINUTES OF DIRECTORS MEETING
OF
AMERICAN ALLIANCE CORPORATION
A meeting of the Board of Directors of American Alliance Corporation was
held on the 5th day of May, 1999, at 10:00 a.m. local time, at the offices
located at Suite 216, 1628 West 1st Avenue, Vancouver, B.C., V6J 1G1.
Present and participating at the meeting, either in person or
telephonically and constituting a quorum, were Mr. Harmel S. Rayat, Mr. Kesar S.
Dhaliwal, and Ms. Jasbinder Chohan, being all of the Directors of the Company.
Mr. Harmel S. Rayat, the Chairman, chaired the meeting, and Ms. Chohan, the
secretary, read the minutes of the last regular meeting and they were approved.
The first item of discussion brought before the Board of Directors was a
discussion regarding obtaining a new CUSIP number for the Company's Common Stock
in anticipation for a name change to "WhatsOnline.Com, Inc." on May 14, 1999.
After a thorough discussion, it was agred that the Company obtain a new CUSIP as
soon as possible. Upon motion duly made, seconded and unanimously carried with
all in favor, it was:
RESOLVED, that the Company obtain a new CUSIP number for its Common Shares
as soon as possible.
There being no further business and upon motion duly made and seconded, the
meeting was adjourned.
/s/ Harmel S. Rayat
- - -------------------
Mr. Harmel S. Rayat, President, Director
<PAGE>
1997 INCENTIVE STOCK OPTION PLAN AND 1997
NONSTATUTORY STOCK OPTION PLAN
1. Names and Purposes of the Plans. This Plan document is intended to
implement and govern two separate Stock Option Plans of American Alliance
Corporation, a Nevada corporation (the "Company"): the 1997 Incentive Stock
Option Plan ("Plan A") and the 1997 Nonstatutory Stock Option Plan ("Plan B")
(collectively the "Plans"). Plan A provides for the granting of options that are
intended to qualify as incentive stock options ("Incentive Stock Options")
within the meaning of Section 422(b) of the Internal Revenue Code, as amended.
Plan B provides for the granting of options that are not intended to so qualify.
Unless specified otherwise, all the provisions of this Plan document relate
equally to both Plan A and Plan B, which Plans are condensed into one Plan
document solely for purposes of administrative convenience and are not intended
to constitute tandem plans. The purposes of the Plans are (a) to attract and
retain the best available people for positions of substantial responsibility,
and (b) to provide additional incentive to the Employees of the Company (and its
future parents and subsidiaries, if any) and to promote the success of the
Company's business.
2. Definitions. For purposes of the Plans, the following terms will have the
respective meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company;
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended;
(c) "Common Stock" shall mean the Class A common stock of the Company;
(d) "Company" shall mean American Alliance Corporation, a Nevada
corporation;
(e) "Committee" shall mean the committee appointed by the Board in
accordance with Paragraph 3(a) of this Plan document, if one is appointed;
(f) "Employee" shall mean any person, including an officer or director,
who is an employee (within the meaning of Section 422 of the Code) of the
Company, any parent, any subsidiary or any successors to any of the foregoing;
(g) "Incentive Option" shall mean an incentive stock option as defined
in Section 422(b) of the Code;
(h) "Non-Statutory Option" shall mean an option which does not qualify
as an Incentive Option;
(i) "Option" shall mean a stock option granted pursuant to the Plan,
whether an Incentive Option or a Non-Statutory Option;
(j) "Option Agreement" shall mean an agreement substantially in the
form attached hereto as Exhibit A or the form attached hereto as Exhibit B, or
such other form or forms as the Board (subject to the terms and conditions of
the Plans) may from time to time approve, evidencing an Option;
(k) "Option Grant Date" shall mean the date on which an Option is
granted by the Board;
(1) "Optioned Stock" shall mean the Common Stock subject to an Option
granted pursuant to a Plan;
(m) "Optionee" shall mean an Employee or other Eligible Person who
receives an Option;
(n) "Outstanding Incentive Option" shall mean any Incentive Stock
Option which has not yet been exercised in full or has not yet expired by lapse
of time;
(o) "Parent" shall mean a "parent corporation" as defined in Section
424(e) of the Code;
(p) "Plan A" shall mean the 1997 Incentive Stock Option Plan;
(q) "Plan B" shall mean the 1997 Non-Statutory Stock Option Plan;
<PAGE>
(r) "Predecessor Corporation" shall mean a corporation which is a party
to a transaction described in Code Section 424(a) (or which would be so
described if a substitution or assumption under such section had been effected)
with the Company, a Parent, a Subsidiary or a predecessor corporation of any
such corporations.
(s)"Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 13 of this Plan document;
(t) "Stock Purchase Agreement" shall mean an agreement substantially in
the form attached hereto as Exhibit D or such other form or forms as the Board
(subject to the terms and conditions of this Plan) may from time to time
approve, which is to be executed as a condition of purchasing Optioned Stock
upon exercise of an Option as provided in a Plan; and,
(u) "Subsidiary" shall mean a subsidiary corporation as defined in
Section 424(f) of the Code.
3. Administration of Plan.
(a) Procedure. The Plans shall be administered by the Board.
The Board may appoint a Committee consisting of not less than two (2)
members of the Board to administer one or both of the Plans on behalf of the
Board, subject to such terms and conditions as the Board may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board. From time to time, the Board may increase the size of the Committee and
appoint additional members thereof, remove members of the Committee, and
thereafter, directly administer the Plans. Any references herein to the Board
shall refer to the Committee, if one is appointed, to the extent of the
Committee's authority.
(b) Limitations on Members of Board. Members of the Board who are either
eligible for options or have been granted Options may vote on any matters
affecting the administration of the Plans or the grant of any Options pursuant
to the Plans; except that no such member shall act in connection with an Option
to himself or herself, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board during which action is taken
with respect to Options of such member.
(c) Powers of the Board. Subject to the provisions of the Plan the Board
shall have the authority, in its discretion, to make all determinations
necessary or advisable for the administration of the Plans, including without
limitation:
(i) to determine, upon review of relevant information, the then
fair market value per share of the Common Stock;
(ii) to determine the exercise price of the Options to be
granted, subject to the provisions of Paragraph 8 of this Plan document;
(iii)to determine the Employees to whom, and the time or times
at which, Options shall be granted, and the number of shares of Optioned
Stock to be represented by each Option;
(iv) to determine whether Options granted hereunder shall be
granted under Plan A as Incentive Options or Plan B as Non-statutory
Options;
(v) to prescribe, amend and rescind rules and regulations
relating to the Plans;
(vi) to determine the terms and provisions of each Option
granted under the Plans (which need not be identical) and to modify or
amend each Option (with or without consent of the Optionee, if
necessary);
(vii) to accelerate the exercise date of any Option;
(viii) to construe and interpret the Plans, the Option
Agreements, Stock Purchase Agreements and any other agreements provided
for hereunder; and
(ix) to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option previously
granted by the Board or to take such other actions as may be necessary
or advisable with respect to the Company's rights pursuant to the
Option, Stock Purchase Agreement or other agreement approved hereunder.
<PAGE>
(d) Effect of the Board's or Committee's Decision. All decisions,
determinations and interpretations of the Board or the Committee shall be final
and binding on all Optionees and any other proper holders of any Options granted
under the Plan.
4. Stock Subject to the Plan. Subject to the provisions of Section 13 of this
Plan document, the maximum aggregate number of shares which may be optioned
under these Plans is 1,250,000 shares of authorized Common Stock. This
constitutes an absolute cumulative limitation on the total number of shares that
may be optioned under Plan A and Plan B and, therefore, at any particular date
the maximum aggregate number of shares which may be optioned under Plan A is
equal to 1,250,000 minus the number of shares previously optioned under Plan A
and Plan B; and the maximum aggregate number of shares which may be optioned
under Plan B is equal to 1,250,000 minus the number of shares which have been
previously optioned under Plan A or Plan B. All shares to be optioned under
either Plan A or Plan B may be either authorized but unissued shares or shares
held in the treasury. Shares of Common Stock that (a) are repurchased by the
Company after issuance hereunder pursuant to the exercise of an Option or (b)
are not purchased by the Optionee prior to the expiration of the applicable
Option Period (as described hereinbelow) shall again become available to be
covered by Options to be issued hereunder and shall not, as of the effective
date of such repurchase or expiration, be counted as having been previously
optioned for purposes of the above-described maximum number of shares which may
be optioned hereunder.
5. Eligibility. Options under Plan A may be granted to any Employee who is
designated by the Board in its discretion. NonEmployees, including directors of
the Company or any Parent or Subsidiary, who are not regular employees of the
Company, are not eligible to receive Options under Plan A. Options under Plan B
may be granted to any Employee, any Non-Employee director of Company or any
Parent or Subsidiary, and any consultant or independent contractors who provide
valuable services to the Company (or its Parent or Subsidiary), all as
designated by the Board in its discretion. An Optionee who has been granted an
Option may, if otherwise eligible, be granted an additional Option or Options.
Options may be granted to one or more persons without being granted to other
eligible persons, as the Board may deem fit.
6. Term of the Plan. Plan A shall become effective immediately upon the earlier
to occur of its adoption by the Board or its approval by vote of a majority of
the outstanding shares of the Company entitled to vote on the adoption of such
Plan. Plan B shall become effective immediately upon its adoption by the Board.
Each Plan shall continue in effect until December 31, 2007 unless sooner
terminated under Sections 15 or 18 of this Plan document. No Option may be
granted under a Plan after its expiration.
7. Option Period. Each Option granted pursuant to either Plan shall be evidenced
by an Option Agreement. Each Option shall expire and all rights thereunder shall
end at the expiration of such period (which shall in no event be more than ten
(10) years) after the Option Grant Date as shall be fixed by the Board, subject
in all cases to earlier expiration as provided in Section 11 of this Plan
document. Notwithstanding the foregoing, the term of each Incentive Option
granted to an Employee who, at the time the Incentive Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary (determined
as required by the Code as applied to Incentive Options) shall not be more than
five (5) years from the Option Grant Date.
8. Option Price and Consideration.
(a) Price. The per share Option price for the Shares to be issued
pursuant to an Option granted under either Plan shall be such price as is
determined by the Board in its sole discretion. Notwithstanding the foregoing,
with respect to Incentive Options granted under Plan A: (i) such price shall in
no event be less than one hundred percent (100%) of the fair market value per
Share of the Company's Common Stock on the Option Grant Date, as determined by
the Board; and (ii) in the case of an Incentive Option granted to an Employee
who, at the time the Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent, Subsidiary or Predecessor Corporation (determined as
required by the Code as applied to Incentive Options), the per share Option
price shall be at least one hundred ten percent (110%) of the fair market value
as of the Option Grant Date, as determined by the Board. The fair market value
shall be determined by the Board in its sole discretion, exercised in good
faith; provided, however, that where there is a public market for the Common
Stock, the fair market value per share shall be the mean of the reported bid and
asked price for the Common Stock on the date of the grant, or, in the event the
Common Stock is listed on a stock exchange, the fair market value per share
shall be the closing price on the exchange as of the date of grant of the
Option.
<PAGE>
(b) Form of Consideration. The form of consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Board and may consist of cash, promissory notes, or
the surrender of shares of Common Stock having a fair market value on the date
of surrender equal to the purchase price of the Shares as to which said Option
shall be exercised, a combination thereof, or such other consideration and
method of payment for the issuance of Shares as is permitted under applicable
law.
(c) Promissory Notes. If the consideration for the exercise of an Option
is a promissory note, such note shall be a full recourse promissory note
executed by the Optionee. If the option is an Incentive Option under Plan A,
such note shall bear interest at a per annum rate which is not less than the
greater of (i) the applicable "test rate" described in Treasury Regs. Section
1.4831(d) in effect on the date of exercise or (ii) a fair market interest rate,
as determined by the Board in its good faith discretion. If a promissory note is
given as consideration, the Company may retain the Shares purchased upon
exercise of the Option in escrow as security for payment of the promissory note.
(d) Surrendered Common Stock. If the consideration for the exercise of
an Option is the surrender of previously acquired and owned shares of common
stock of the Company, the Optionee will be required to make representations and
warranties satisfactory to the Company regarding the Optionee's title to the
shares used to effect the purchase, including without limitation,
representations and warranties that the Optionee has good and marketable title
to such shares free and clear of any and all liens, encumbrances, charges,
equities, claims, security interests, options or restrictions and has full power
to deliver such shares without obtaining the consent or approval of any person
or governmental authority other than those which have already given consent or
approval in a form satisfactory to the Company. The value of the shares used to
effect the purchase shall be the fair market value of those shares as determined
by the Board in its sole discretion, exercised in good faith.
9. Limit on Value of Optioned Stock Issued Under Plan A. The aggregate fair
market value (determined as of the Option Grant Date of each Option) of the
Shares with respect to which Incentive Options are exercisable for the first
time by the Optionee during any calendar year under Plan A and all other
incentive stock option plans of the Company, any Parent or Subsidiary, or any
Predecessor Corporation of any such corporation shall not exceed One Hundred
Thousand Dollars ($100,000.00), as determined pursuant to Section 422(d) of the
Code.
10. Exercise of Option.
(a) General Terms. Any Option granted hereunder shall be exercisable at
such times and under such conditions as may be determined by the Board which
conditions may include performance criteria with respect to the Company and/or
the Optionee or provisions for vesting over a period of time conditioned upon
continued employment and shall include the contemporaneous execution of a Stock
Purchase Agreement in a form approved by the Board and as shall be permissible
under the terms of the Plan. In all events, in order to exercise an Option
hereunder the Optionee shall execute a Stock Purchase Agreement in a form
approved by the Board and shall deliver the required (or permitted) exercise
consideration to the Company. As a condition to the exercise of an Option, the
Board may require the Optionee pursuant to the Option Agreement to agree to
restrictions on the sale or other transfer of ownership of the Common Stock
acquired by an Optionee or to sell such Shares to the Company upon termination
of employment.
(b) Partial Exercise. An Option may be exercised in accordance with the
provisions of either Plan as to all or any portion of the Shares then
exercisable under an Option, from time to time during the term of the Option. An
Option may not be exercised for a fraction of a Share.
(c) Time of Exercise. An Option shall be deemed to be exercised when the
Company has received at its principal business office: (i) written notice of
such exercise in accordance with the terms of the Option Agreement and given by
the person entitled to exercise the Option; (ii) full payment for the Shares
with respect to which the Option is exercised; (iii) the executed Stock Purchase
Agreement if required; and (iv) any other representations or agreements required
by the terms of this Plan or the Option Agreement. Full payment may consist of
such consideration as is authorized by the Board as provided hereunder.
(d) No Rights as Shareholder Until Exercise. Until this Option is
properly exercised hereunder and the Company receives full payment for the
Shares with respect to which the Option is exercised, no right to receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Option is properly exercised and
payment in full is received, except as provided in Section 13 of this Plan
document.
<PAGE>
(e) Issuance of Share Certificates. As soon as practicable after any
proper exercise of an Option in accordance with the provisions of this Plan
document and payment in full for the exercised Shares, the Company shall,
without transfer or issue tax to the Optionee, deliver to the Optionee at the
principal business office of the Company, or such other place as shall be
mutually acceptable, a certificate or certificates representing the Shares of
Common Stock as to which the Option has been exercised. The time of issuance and
delivery of the certificates) representing the Shares of Common Stock may be
postponed by the Company for such period as may be required for it, with
reasonable diligence, to comply with any applicable listing requirements of any
national or regional securities exchange and any law or regulation applicable to
the issuance and delivery of such Shares.
(f) Reduction of Shares Upon Exercise. Exercise of an Option in any
manner shall result in a decrease in the number of Shares which thereafter may
be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.
11. Termination of Employment.
(a) General. If an Optionee ceases to be an Employee for any reason
then, except as provided in Paragraph 11(a) or 11(b) hereof, any Option of the
Optionee, whether vested or non-vested, and if issued under Plan A or Plan B,
shall terminate as of the date of termination of employment.
(b)Death or Disability. If Optionee dies or becomes disabled (within the
meaning of Code Section 422 and the rules and regulations thereunder) then,
within the earlier of thirty (30) days (or such other period of time not
exceeding six (6) months as set forth in the Option Agreement) following the
date of such death or disability and the time the Option expires by its terms,
the Optionee or such person or persons to whm the Optionee's rights under the
Option shall pass by the Optionee's will or by the laws of descent and
distribution, may exercise the Option to the extent it was vested and
exercisable on the date of death or disability.
12. Non-transferability of Options. The Options and any rights and privileges
granted under any Option Agreement are not transferable by the Optionee, either
voluntarily or by operation of law, otherwise than by will and the laws of
descent and distribution and shall be exercisable during Optionee's lifetime
only by Optionee.
13. Adjustments Upon Changes in Capitalization.
(a) Reorganizations, Recapitalization, Etc. If the outstanding shares of
Common Stock of the Company are increased, decreased, changed into or exchanged
for a different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, stock dividend (but only on
Common Stock), stock split, reverse stock split or other similar transaction,
or, if any other increase or decrease occurs in the number of Shares of Common
Stock of the Company without the receipt of consideration by the Company, then
an appropriate and proportional adjustment shall be made in (i) the number and
kind of shares of stock covered by each outstanding Option, (ii) the number and
kind of shares of stock which have been authorized for issuance under the Plan
but as to which no Options have yet been granted (or which have been returned to
the Plan upon cancellation of an Option), and (iii) the exercise price per share
of stock covered by each such outstanding Option. The granting of stock options
or bonuses to Employees of the Company and the conversion of any convertible
securities of the Company shall not be deemed to have been "effected without the
receipt of consideration." Notwithstanding the foregoing, no adjustment need be
made under this paragraph if, upon the advice of counsel, the Board determines
that such adjustment may result in federal taxable income to the holders of
Options or Common Stock or other classes of the Company's securities.
(b) Dissolution, Liquidation, Etc. Upon the dissolution or liquidation
of the Company, or upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation, or upon a sale (or exchange through merger) of
substantially all the property or more than fifty percent (50%) of the then
outstanding stock of the Company to another corporation, the Plan shall
terminate, and any Option theretofore granted hereunder shall terminate.
Notwithstanding the foregoing, the Board may provide in writing in connection
with, or in contemplation of, such transaction for any, all or none of the
following alternatives (separately or in combination): (i) for all or a portion
of the Options theretofore granted to become immediately exercisable; (ii) for
the assumption by the successor corporation of the Options theretofore granted
or the substitution by such corporation for such Options of new options covering
the stock of the successor corporation, or a Parent or Subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; or (iii)
for the continuance of the Plan by such successor corporation in which event the
Plan and the Options theretofore granted shall continue in the manner and under
the terms so provided.
<PAGE>
(c) No Fractional Shares. No fractional shares of the Common Stock shall
be issuable on account of any action under this Paragraph 13, and the aggregate
number of shares into which Shares then covered by an Option, when changed as
the result of such action, shall be reduced to the largest number of whole
Shares resulting from such action. Notwithstanding the foregoing, the Board, in
its sole discretion, may determine to issue scrip certificates, in respect to
any fractional shares, which scrip certificates, in such event, shall be in a
form and have such terms and conditions as the Board in its discretion shall
prescribe.
(d) Binding Effect of Board Determinations. All adjustments under this
Paragraph 13 shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive.
(e) No Other Adjustments. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares of Common Stock
subject to the Plan or any Options.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time and from time
to time suspend or terminate either Plan. The Board may also amend or revise
either Plan from time to time in such respects as the Board may deem advisable,
except that, without approval of the holders of the majority of the outstanding
shares of the Company's Common Stock, no such revision or amendment shall amend
Plan A or Plan B so as to:
(i) Increase the number of Shares subject to Plan A or Plan B
other than in connection with an adjustment under Section 13 of this
Plan document;
(ii) Permit the granting of Incentive Options to anyone other
than as provided in Paragraph 5;
(iii) Remove the administration of Plan A or Plan B from the
Board;
(iv) Extend the term of Plan A or Plan B beyond that provided in
Paragraph 6 hereof;
(v) Extend the term of any Incentive Option beyond the maximum
term set forth in Paragraph 7;
(vi) Permit the granting of Incentive Options which would not
qualify as Incentive Stock Options; or
(vii) Decrease the per share option price required with respect
to Incentive Options under Paragraph 8(a) hereof.
(b) Effect of Termination. Except as otherwise provided in Section 13,
without the written consent of the Optionee, any such termination of the Plan
shall not affect Options already granted and such Options shall remain in full
force and effect as if the Plan had not been terminated.
15. Conditions Upon Issuance of Shares. Options granted under either Plan are
conditioned upon the Company obtaining any required permit, or exemption from
the qualification or registration provisions of any applicable state securities
law and other appropriate governmental agencies, authorizing the Company to
issue such Options and Optioned Stock upon terms and conditions acceptable to
the Company. Shares shall not be issued with respect to an Option granted under
either Plan unless the exercise of such Option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As a condition to the
exercise of an Option, the Board may require the person exercising such Option
to execute an agreement approved by the Board, and may require the person
exercising such Option to make any representation and warranty to the Company as
may, in the judgment of counsel to the Company, be required under applicable
laws or regulations.
16. Reservation of Shares. During the term of the Plans, the Company will at all
times reserve and keep available the number of Shares as shall be sufficient to
satisfy the requirements of the Plans. During the term of the Plans, the Company
will use its best efforts to seek to obtain from appropriate regulatory agencies
any requisite authorization in order to issue and sell such number of Shares of
its Common Stock as shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain from any such regulatory agency the
requisite authorization(s) deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any Shares hereunder, or the inability of the
Company to confirm to its satisfaction that any issuance and sale of any Shares
hereunder will meet applicable legal requirements, shall relieve the Company of
any liability in respect to the non-issuance or sale of such Shares as to which
such requisite authority shall not have been obtained.
<PAGE>
17. Taxes, Fees, Expenses and Withholding of Taxes.
(a) Issue and Transfer Taxes. The Company shall pay all original issue
and transfer taxes (but not income taxes, if any) with respect to the grant of
Options and the issue and transfer of Shares pursuant to the exercise of such
Options, and all other fees and expenses necessarily incurred by the Company in
connection therewith, and will use its best efforts to comply with all laws and
regulations which, in the opinion of counsel for the Company, shall be
applicable thereto.
(b) Withholding. The grant of Options hereunder and the issuance of
Shares of Common Stock pursuant to the exercise of such Options are conditioned
upon the Company's reservation of the right to withhold, in accordance with any
applicable law, from any compensation payable to the Optionee any taxes required
to be withheld by federal, state or local law as a result of the grant or
exercise of such Option or the sale of the Shares issued upon exercise of the
Option.
18. Shareholder Approval of Plan A and Plan B. Continuance of Plan A and Plan B
and the effectiveness of any Option granted under such Plan shall be subject to
approval by the holders of the outstanding voting stock of the Company in
accordance with applicable law within twelve (12) months before or after the
date Plan A and Plan B is adopted by the Board. Any Options granted under Plan A
and Plan B prior to obtaining such shareholder approval shall be granted upon
the conditions that the Options so granted: (i) shall not be exercisable prior
to such approval and (ii) shall become null and void ab initio if such
shareholder approval is not obtained.
19. Liability of Company. The Company, its Parent or any Subsidiary which is in
existence or hereafter comes into existence, will not be liable to an Optionee
granted an Incentive Option or other person if it is determined for any reason
by the Internal Revenue Service or any court having jurisdiction that any
Incentive Options granted hereunder are not Incentive Stock Options.
20. Notices. Any notice to be given to the Company pursuant to the provisions of
the Plans shall be addressed to the Company in care of its Secretary at its
principal office, and any notice to be given to an Optionee shall be delivered
personally or addressed to such Optionee at the address given beneath such
Optionee's signature on such Optionee's Stock Option Agreement, or at such other
address as such Employee (or any transferee) upon the transfer of the Optioned
Stock may hereafter designate in writing to the Company. Any such notice shall
be deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, registered or certified, and deposited, postage and
registry or certification fee prepaid, in a post office or branch post office
regularly maintained by the United States Postal Service. It shall be the
obligation of each Optionee and each transferee holding Shares purchased upon
exercise of an Option to provide the Secretary of the Company, by letter mailed
as provided hereinabove, with written notice of such person's direct mailing
address.
21. No Enlargement of Employee Rights. This Plan is purely voluntary on the part
of the Company, and the continuance of the Plan shall not be deemed to
constitute a contract between the Company and any Employee, or to be
consideration for or a condition of the employment of any Employee. Nothing
contained in this Plan shall be deemed to give any Employee the right to be
retained in the employ of the Company, its Parent, Subsidiary or a successor
corporation, or to interfere with the right of the Company or any such
corporations to discharge or retire any Employee thereof at any time. No
Employee shall have any right to or interest in Options authorized hereunder
prior to the grant of such Option to such employee, and upon such grant he or
she shall have only such rights and interests as are expressly provided herein,
subject, however, to all applicable provisions of the Company's Certificate of
Incorporation, as the same may be amended from time to time.
22. Legends on Certificates.
(a) Federal Law. Unless an appropriate registration statement is filed
pursuant to the Federal Securities Act of 1933, as amended, with respect to the
Options and Shares issuable under the Plans, each certificate representing such
Options and Shares shall be endorsed on its face with a legend substantially as
follows:
<PAGE>
"THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(b) State Legend. If required by applicable state authorities each
certificate representing the Options and Shares issuable under the Plans shall
be endorsed on its face with any legends required by such authorization.
(c) Additional Legends. Each certificate representing the Options and
Shares issuable under the Plans shall also contain legends as are set forth in
any Stock Purchase Agreement or other agreement the execution of which is a
condition to the exercise of an Option under this Plan. In addition, each Option
Agreement shall be endorsed with a legend substantially as follows:
"THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAYBE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY, TO BE ENTERED INTO BETWEEN THE HOLDER OF THIS OPTION AND THE
COMPANY AS A CONDITION TO EXERCISE OF THIS OPTION."
23. Availability of Plan. A copy of the Plans shall be delivered to the
Secretary of the Company and shall be shown by him to any eligible person making
reasonable inquiry concerning it.
24. Invalid Provisions. In the event that any provision of the Plans is found to
be invalid or otherwise unenforceable under any applicable law, such invalidity
or unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
25. Applicable Law. These Plans shall be governed and construed in accordance
with the laws of the State of Nevada applicable to contracts executed, and to be
fully performed, in Nevada.
IN WITNESS WHEREOF, pursuant to the due authorization and adoption of
these Plans by the Board on _________, 199__, the Company has caused these Plans
to be duly executed by its duly authorized officers, effective as of __________,
199__.
American Alliance Corporation
a Nevada corporation
By: _________________________
Title: ___________
<PAGE>
EXHIBIT "A"
PLAN A
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NO SALE, TRANSFER OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, TO BE ENTERED INTO
BETWEEN OPTIONEE AND THE COMPANY AS A CONDITION TO EXERCISE OF THIS OPTION.
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made as of the ___ day of _______, 199__, by and between
American Alliance Corporation a Nevada corporation (hereinafter called
"Company") and ____________ (hereinafter called "Optionee").
RECITALS
A. The Board of Directors of the Company has adopted the Company's 1997
Incentive Stock Option Plan (the "Plan") for the purpose of attracting and
retaining the services of selected key employees (including officers and
employee directors), who contribute to the financial success of the Company or
its parent or subsidiary corporations.
B. Optionee is a key member of the Company or its parent or subsidiary
corporations, and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Company's grant of a
stock option to the Optionee.
C. The granted option is intended to be an incentive stock option
("Incentive Option") within the meaning of Section 422 of the Internal Revenue
Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set
forth in this Agreement, there is hereby granted to Optionee, as of the date of
this Agreement (the "Grant Date"), a stock option to purchase up to __________
shares of the Company's Common Stock (the "Optioned Shares") from time to time
during the option term at the option price of $_____ per share.
2. Plan. The options granted hereunder are in all instances subject to
the terms and conditions of the Plan. In the event of any conflict between this
Agreement and the Plan, the provisions of the Plan shall control. Optionee
acknowledges receipt of a copy of the Plan and hereby accepts this option
subject to all of the terms and conditions of the Plan. Optionee agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.
3. Option Term. This option shall have a maximum term of ___ (__) years
measured from the Grant Date and shall accordingly expire at the close of
business on ______, _____ (the "Expiration Date"), unless sooner terminated in
accordance with Paragraph 7, 9(a) or 20.
4. Option Nontransferable; Exception. This option shall be neither
transferable nor assignable by Optionee, either voluntarily or involuntarily,
other than by will or by the laws of descent and distribution and may be
exercised, during Optionee's lifetime, only by Optionee.
5. Condition Precedent to Exercise. This option may not be exercised in
whole or in part at any time prior to the time the Company has satisfied the
following condition precedent: ______________. In the event the foregoing
condition precedent has not been satisfied prior to the Expiration Date or prior
to this option's earlier termination in accordance with Paragraph 7, 9(a) or 20,
then this option shall terminate and cease to be outstanding.
6. Dates of Exercise. This option may not be exercised in whole or in
part at any time prior to the time it is approved by the Company's shareholders
in accordance with Paragraph 20. Provided such shareholder approval is obtained
and the condition precedent to exercise set forth in Paragraph 5 has been
satisfied, this option shall become exercisable for 100% of the Optioned Shares
one (1) year from the Grant Date, provided that in no event may options for more
than One Hundred Thousand Dollars ($100,000) of Optioned Shares, calculated at
the exercise price, become exercisable for the first time in any calendar year.
Once exercisable, options shall remain so exercisable until the expiration or
sooner termination of the option term under Paragraph 7 or Paragraph 9(a) of
this Agreement. In no event, however, shall this option be exercisable for any
fractional shares.
7. Accelerated Termination of Option Term. The option term specified in
Paragraph 3 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
<PAGE>
(i) Except as otherwise provided in subparagraphs (ii) and (iii) below,
should Optionee cease to be an Employee of the Company for any reason at any
time during the option term, any option of the Optionee, whether vested or
non-vested, and if issued under Plan A, shall terminate as of the date of
termination of employment.
(ii) Should Optionee die while this option is outstanding, then the
executors or administrators of Optionee's estate or Optionee's heirs or
legatees (as the case may be) shall have the right to exercise this option
for the number of shares (if any) for which the option is exercisable on the
date of the optionee's death. Such right shall lapse and this option shall
cease to be exercisable upon the earlier of (i) six (6) months from the date
of the optionee's death or (ii) the Expiration Date.
(iii) Should Optionee become permanently disabled and cease by reason
thereof to be an Employee of the Company at any time during the option term,
then Optionee shall have a period of six (6) months (commencing with the
date of such cessation of Employee status) during which to exercise this
option; provided, however, that in no event shall this option be exercisable
at any time after the Expiration Date. Optionee shall be deemed to be
permanently disabled if Optionee is, by reason of any medically determinable
physical or mental impairment expected to result in death or to be of
continuous duration of not less than twelve (12) months, unable to perform
his/her usual duties for the Company or its Parent or Subsidiary
corporations. Upon the expiration of the limited period of exercisability or
(if earlier) upon the Expiration Date, this option shall terminate and cease
to be outstanding.
(iv) For purposes of this Paragraph 7 and for all other purposes under
this Agreement, Optionee shall be deemed to be an Employee of the Company
and to continue in the Company's employ for so long as Optionee remains an
Employee of the Company or one or more of its parent or subsidiary
corporations as such terms are defined in the Plan.
8. Adjustment in Option Shares
.
(a) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of
shares, or other change affecting the outstanding Common Stock as a class
without receipt of consideration (as set forth in the Plan), then
appropriate adjustments will be made to (i) the total number of Optioned
Shares subject to this option and (h) the option price payable per share in
order to reflect such change and thereby preclude a dilution or enlargement
of benefits hereunder.
(b) If the Company is the surviving entity in any merger or other
business combination, then this option, if outstanding under the Plan
immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number and class of
securities to which Optionee immediately prior to such merger of other
business combination would have been entitled to receive in the consummation
of such merger or other business combination.
9. Special Termination of Option.
(a) In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) any other corporate reorganization or business
combination in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred, or exchanged through merger,
to different holders in a single transaction or a series of related
transactions;
then this option shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable, unless it is expressly assumed by the
successor corporation or parent thereof. The Company shall provide Optionee with
at least thirty (30) days prior written notice of the specified date for the
Corporate Transaction. The Company can give no assurance that the options shall
be assumed by the successor corporation or its parent company and it may occur
that some options outstanding under the Plan will be assumed while these options
are terminated.
(b) In the event of a Corporate Transaction, the Company may, at its
option, accelerate the vesting schedule contained in Section 6 hereof, but shall
have no obligation to do so. The Company shall have the right to accelerate
other options outstanding under the Plan or any other plan, even if it does not
accelerate the options of Optionee hereunder.
<PAGE>
(c) This Agreement shall not in any way affect the right of the Company
to make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of
its business or assets.
10. Privilege of Stock Ownership. The holder of this option shall not have
any of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option and paid the option price in
accordance with this Agreement.
11. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part of
the Optioned Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must take
the following actions:
(i) Execute and deliver to the Secretary of the Company a
stock purchase agreement in substantially the form of Exhibit D to this
Agreement (the "Purchase Agreement");
(ii) Pay the aggregate option price for the purchased shares
in cash, unless another form of consideration is permitted as described
in Exhibit C, if any, attached hereto or by the Board at the time of
exercise.
(b) This option shall be deemed to have been exercised with respect to the
number of Optioned Shares specified in the Purchase Agreement at such time as
the executed Purchase Agreement for such shares shall have been delivered to the
Company and all other conditions of this Section have been fulfilled. Payment of
the option price shall immediately become due and shall accompany the Purchase
Agreement. As soon thereafter as practical, the Company shall mail or deliver to
Optionee or to the other person or persons exercising this option a certificate
or certificates representing the shares so purchased and paid for.
12. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and Optionee with
all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee shall execute
and deliver to the Company such representations in writing as may be requested
by the Company in order for it to comply with the applicable requirements of
federal and state securities laws.
13. Successors and Assigns. Except to the extent otherwise provided in Paragraph
4 or 9(a), the provisions of this Agreement shall insure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
14. Liability of Company.
(a) If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this option shall be
void with respect to such excess shares unless shareholder approval of an
amendment sufficiently increasing the number of shares of Common Stock
issuable under the Plan is obtained in accordance with the provisions of
Section 18 of the Plan.
(b) The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option without the
imposition of requirements unacceptable to the Company in its reasonable
discretion shall relieve the Company of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall
not have been obtained. The Company, however, shall use its best efforts
to obtain all such approvals.
<PAGE>
(c) Neither the Company nor any Parent, Subsidiary or successor
corporation will have any liability to Optionee or any other person if it
is determined for any reason that any options granted hereunder are not
Incentive Stock Options.
15. No Employment Contract. Except to the extent the terms of any written
employment contract between the Company and Optionee may expressly provide
otherwise, the Company (or any parent or subsidiary corporation of the Company
employing Optionee) shall be under no obligation to continue the employment of
Optionee for any period of specific duration and may terminate Optionee's status
as an Employee at any time, with or without cause.
16. Notices. Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Company in
care of its Secretary at its corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on this Agreement. All notices
shall be deemed to have been given or delivered upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.
17. Loans or Guarantees. The Company may, in its absolute discretion and without
any obligation to do so, assist Optionee in the exercise of this option by (i)
authorizing the extension of a loan to Optionee from the Company, (ii)
permitting Optionee to pay the option price for the purchased Common Stock in
installments over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan, installment
method of payment or guarantee (including the interest rate, the Collateral
requirements and terms of repayment) shall be established by the Company in its
sole discretion.
18. Construction. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the Plan. All decisions of the Company with respect to any question or issue
arising under the Plan or this Agreement shall be conclusive and binding on all
persons having an interest in this option.
19. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Nevada.
20. Shareholder Approval. The grant of this option is subject to approval of the
Plan by the Company's shareholders within twelve (12) months after the adoption
of the Plan by the Board of Directors, and this option may not be exercised in
whole or in part until such shareholder approval is obtained. In the event that
such shareholder approval is not obtained, then this option shall thereupon
terminate and Optionee shall have no further rights to acquire any Optioned
Shares hereunder.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, all as of the day and year indicated
above.
American Alliance Corporation
a Nevada corporation
-----------------------------------
By: __________________
Title: ________________
- - ------------------------------------
Optionee
Address:
<PAGE>
EXHIBIT "B"
PLAN A
Other Forms of Acceptable Consideration
[If no forms are listed hereon, cash shall be the only
acceptable form of consideration for the exercise of the
options.]
-----------------
<PAGE>
EXHIBIT "C"
PLAN B
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NO SALE, TRANSFER OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION TATEMENT RELATING
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, TO BE ENTERED INTO
BETWEEN OPTIONEE AND THE COMPANY AS A CONDITION TO EXERCISE OF THIS OPTION.
NON-STATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the ____ day of ______, 199__, by and between
American Alliance Corporation, a Nevada corporation (hereinafter called
"Company"), and _______________ (hereinafter called "Optionee").
RECITALS
A. The Board of Directors of the Company has adopted the Company's 1997
Non-Statutory Stock Option Plan (the "Plan") for the purpose of attracting and
retaining the services of selected key employees (including officers and
employee directors) and others (collectively, "Eligible Persons"), who
contribute to the financial success of the Company or its parent or subsidiary
corporations.
B. Optionee is an Eligible Person and this Agreement is executed pursuant
to, and is intended to carry out the purposes of, the Plan in connection with
the Company's grant of a stock option to Optionee.
<PAGE>
C. The granted option is not intended to be an incentive stock option
("Incentive Option") within the meaning of Section 422 of the Internal Revenue
Code, but is rather a non-statutory option.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set forth in
this Agreement, there is hereby granted to Optionee, as of the date of this
Agreement (the "Grant Date"), a stock option to purchase up to
_________ shares of the Company's Common Stock (the "Optioned
Shares") from time to time during the option term at the option price of $____
per share.
2. Plan. The options granted hereunder are in all instances subject to the terms
and conditions of the Plan. In the event of any conflict between this Agreement
and the Plan, the provisions of the Plan shall control. Optionee acknowledges
receipt of a copy of the Plan and hereby accepts this option subject to all of
the terms and conditions of the Plan. Optionee agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan.
3. Option Term. This option shall have a maximum term of years measured from the
Grant Date and shall accordingly expire at the close of business on _____ ____ ,
199__ (the "Expiration Date"), unless sooner terminated in accordance with
Paragraph 6 or 8(a).
4. Option Nontransferable; Exception. This option shall be neither transferable
nor assignable by Optionee, either voluntarily or involuntarily, other than by
will or by the laws of descent and distribution and may be exercised, during
Optionee's lifetime, only by Optionee.
5. Dates of Exercise. This option shall be exercisable as follows: _________.
Once exercisable, options shall remain so exercisable until the expiration or
sooner termination of the option term under Paragraph 6 or Paragraph 8(a) of
this Agreement. In no event, however, shall this option be exercisable for any
fractional shares.
6. Accelerated Termination of Option Term. The option term specified in
Paragraph 3 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) (i) Except as otherwise provided in subparagraphs (ii) and (iii)
below, should Optionee cease to be an Employee of the Company for any reason at
any time during the option term, any option of the Optionee, whether vested or
non-vested, and if issued under Plan B, shall terminate as of the date of
termination of employment.
(ii) Should Optionee die while this option is outstanding, then the
executors or administrators of Optionee's estate or Optionee's heirs or legatees
(as the case may be) shall have the right to exercise this option for the number
of shares (if any) for which the option is exercisable on the date of the
optionee's death. Such right shall lapse and this option shall cease to be
exercisable upon the earlier of (i) six (6) months from the date of the
optionee's death or (ii) the Expiration Date.
(iii) Should Optionee become permanently disabled and cease by reason
thereof to be an Employee of the Company at any time during the option term,
then Optionee shall have a period of six (6) months (commencing with the date of
such cessation of Employee status) during which to exercise this option;
provided, however, that in no event shall this option be exercisable at any time
after the Expiration Date. Optionee shall be deemed to be permanently disabled
if Optionee is, by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of not
less than twelve (12) months, unable to perform his/her usual duties for the
Company or its Parent or Subsidiary corporations. Upon the expiration of the
limited period of exercisability or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(iv) For purposes of this Paragraph 6 and for all other purposes under
this Agreement, if Optionee is an Employee, Optionee shall be deemed to be an
Employee of the Company and to continue in the Company's employ for so long as
Optionee remains an Employee of the Company or one or more of its parent or
subsidiary corporations as such terms are defined in the Plan. For purposes of
this Paragraph 6 and for all other purposes under this Agreement, if Optionee is
not an Employee, but is eligible because Optionee is a director, consultant or
contractor of Company or a parent or subsidiary corporation, Optionee shall be
deemed to be an Eligible Person for so long as Optionee remains a director,
consultant or contractor of the Company or one or more of its parent or
subsidiary corporations as such terms are defined in the Plan.
<PAGE>
7. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares, or
other change affecting the outstanding Common Stock as a class without receipt
of consideration (as set forth in the Plan), then appropriate adjustments will
be made to (i) the total number of Optioned Shares subject to this option and
(ii) the option price payable per share in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger or other
business combination, then this option, if outstanding under the Plan
immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number and class of
securities to which Optionee immediately prior to such merger or other business
combination would have been entitled to receive in the consummation of such
merger or other business combination.
8. Special Termination of Option.
(a) In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation;
(ii)the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) any other corporate reorganization or business combination
in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred, or exchanged through merger, to different holders
in a single transaction or a series of related transactions;
then this option shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable, unless it is expressly assumed by the
successor corporation or parent thereof. The Company shall provide Optionee with
at least thirty (30) days prior written notice of the specified date for the
Corporate Transaction. The Company can give no assurance that the options shall
be assumed by the successor corporation or its parent company and it may occur
that some options outstanding under the Plan will be assumed while these options
are terminated.
(b) In the event of a Corporate Transaction, the Company may, at its
option, accelerate the vesting schedule contained in Section 5 hereof, but shall
have no obligation to do so. The Company shall have the right to accelerate
other options outstanding under the Plan or any other plan, even if it does not
accelerate the options of Optionee hereunder.
(c) This Agreement shall not in any way affect the right of the Company
to make changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
9. Privilege of Stock Ownership. The holder of this option shall not have any of
the rights of a shareholder with respect to the Optioned Shares until such
individual shall have exercised the option and paid the option price in
accordance with this Agreement.
10. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part of
the Optioned Shares for which this option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Execute and deliver to the Secretary of the Company a stock
purchase agreement in substantially the form of Exhibit "E" to this
Agreement (the "Stock Purchase Agreement");
(ii) Pay the aggregate option price for the purchased shares in
cash, unless another form of consideration is permitted as described in
Exhibit D, if any, attached hereto or by the Board at the time of
exercise.
<PAGE>
(b) This option shall be deemed to have been exercised with respect to
the number of Optioned Shares specified in the Purchase Agreement at such time
as the executed Purchase Agreement for such shares shall have been delivered to
the Company and all other conditions of this Section have been fulfilled.
Payment of the option price shall immediately become due and shall accompany the
Purchase Agreement. As soon thereafter as practical, the Company shall mail or
deliver to Optionee or to the other person or persons exercising this option a
certificate or certificates representing the shares so purchased and paid for.
11. Compliance With Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and Optionee with
all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
12. Successors and Assigns. Except to the extent otherwise provided in Paragraph
4 or 8(a), the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
13. Liability of Company.
(a) If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section 18 of the Plan.
(b) The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option without the
imposition of requirements unacceptable to the Company in its reasonable
discretion shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
14. No Employment Contract. Except to the extent the terms of any written
employment contract between the Company and Optionee may expressly provide
otherwise, the Company (or any parent or subsidiary corporation of the Company
employing Optionee) shall be under no obligation to continue the employment of
Optionee for any period of specific duration and may terminate Optionee's status
as an Employee at any time, with or without cause.
15. Notices. Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Company in
care of its Secretary at its corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on this Agreement. All notices
shall be deemed to have been given or delivered upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.
16. Withholding. Optionee acknowledges that, upon any exercise of this option,
the Company shall have the right to require Optionee topay to the Company an
amount equal to the amount the Company is required to withhold as a result of
such exercise for federal and state income tax purposes.
17. Loans or Guarantees. The Company may, in its absolute discretion and without
any obligation to do so, assist Optionee in the exercise of this option by (i)
authorizing the extension of a loan to Optionee from the Company, (ii)
permitting Optionee to pay the option price for the purchased Common Stock in
installments over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan, installment
method of payment or guarantee (including the interest rate, the Collateral
requirements and terms of repayment) shall be established by the Company in its
sole discretion.
18. Construction. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the express terms and provisions of the Plan. All decisions of the Company with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
<PAGE>
19. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Nevada.
20. REPURCHASE R1GHTS. OPTIONEE HEREBY AGREES THAT ALL OPTIONED SHARES ACQUIRED
UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE
COMPANY AND ITS ASSIGNS TO REPURCHASE SUCH SHARES IN ACCORDANCE WITH THE TERMS
AND CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT,
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, all as of the day and year indicated
above.
American Alliance Corporation
a Nevada corporation
By: ____________________________
Title:
- - ---------------------------
OPTIONEE:
------------------
Address:
------------------
- - ---------------------------
<PAGE>
EXHIBIT "D"
PLAN B
Other Forms of Acceptable Consideration
[If no forms are listed hereon, cash shall be the only acceptable form of
consideration for the exercise of the options.]
<PAGE>
EXHIBIT "E"
STOCK PURCHASE AGREEMENT
This Agreement is made as of this ____ day of ______, 199__, by and among
American Alliance Corporation, a Nevada corporation ("Corporation"), and
________, the holder of a stock option under the Corporation's 1997 Stock Option
Plan ("Optionee").
1. EXERCISE OF OPTION
1.1 Exercise. Optionee hereby purchases shares of Class A Common Stock
of the Corporation ("Purchased Shares") pursuant to that certain option
("Option") granted Optionee on April 24th, 199__, under the Corporation's 1997
Stock Option Plan ("Plan") to purchase up to ______ shares of the Corporation's
Common Stock at an option price of $___ per share ("Option Price").
1.2 Payment. Concurrently with the delivery of this Agreement to the
Secretary of the Corporation, Optionee shall pay the Option Price for the
Purchased Shares in accordance with the provisions of the agreement between the
Corporation and Optionee evidencing the Option ("Option Agreement") and shall
deliver whatever additional documents may be required by the Option Agreement as
a condition for exercise.
2. INVESTMENT REPRESENTATIONS
2.1 Investment Intent. Optionee hereby warrants and represents that
Optionee is acquiring the Purchased Shares for Optionee's own account and not
with a view to their resale or distribution and that Optionee is prepared to
hold the Purchased Shares for an indefinite period and has no present intention
to sell, distribute or grant any participating interests in the Purchase Shares.
Optionee hereby acknowledges the fact that the Purchased Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
that the Corporation is issuing the Purchased Shares to Optionee in reliance on
the representations made by Optionee herein.
2.2 Restricted Securities. Optionee hereby confirms that Optionee has
been informed that the Purchased Shares may not be resold or transferred unless
the Purchased Shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly, Optionee
hereby acknowledges that Optionee is prepared to hold the Purchased Shares for
an indefinite period and that Optionee is aware that Rule 144 of the Securities
and Exchange Commission issued under the 1933 Act is not presently available to
exempt the sale of the Purchased Shares from the registration requirements of
the 1933 Act. Should Rule 144 subsequently become available, Optionee is aware
that any sale of the Purchased Shares effected pursuant to the Rule may,
depending upon the status of Optionee as an affiliate" or "non-affiliate" under
the Rule, be made only in limited amounts in accordance with the provisions of
the Rule, and that in no event may any Purchased Shares be sold pursuant to the
Rule until Optionee has held the Purchased Shares for the requisite holding
period following payment in cash of the Option Price for the Purchased Shares.
2.3 Optionee Knowledge. Optionee represents and warrants that he or she
has a preexisting business or personal relationship with the officers and
directors of the Corporation, that he or she is aware of the business affairs
and financial condition of the Corporation and that he or she has such knowledge
and experience in business and financial matters with respect to companies in
business similar to the Corporation to enable him or her to evaluate the risks
of the prospective investment and to make an informed investment decision with
respect thereto. Optionee further represents and warrants that the Corporation
has made available to Optionee the opportunity to ask questions and receive
answers from the Corporation concerning the terms and conditions of the issuance
of the Purchased Shares and that he or she could be reasonably assumed to have
the capacity to protect his or her own interests in connection with such
investment.
<PAGE>
2.4 Speculative Investment. Optionee represents and warrants that he or
she realizes that his or her purchase of the Purchased Shares will be a
speculative investment and that he or she is able, without impairing his or her
financial condition, to hold the Purchased Shares for an indefinite period of
time and to suffer a complete loss of his or her investment. Optionee represents
and warrants that he or she is aware and fully understands the implications of
the restrictions upon transfer imposed by the Plan and therefore on the
Purchased Shares.
2.5 Restrictive Legends. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED PURSUANT TO
THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, ASSIGNED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREUNDER OR AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.
3. MISCELLANEOUS PROVISIONS
3.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
3.2 Agreement Is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the express terms and provisions of the
Plan.
3.3 Governing Law. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
3.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
3.5 Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Corporation and its successors and
assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transfer by operation of law, whether or not
any such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms and conditions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
American Alliance Corporation
a Nevada corporation
----------------------------------
By:
Title:
- - ------------------------------------
Optionee
Address:
<PAGE>
1998 INCENTIVE STOCK OPTION PLAN AND 1998
NONSTATUTORY STOCK OPTION PLAN
1. Names and Purposes of the Plans. This Plan document is intended to
implement and govern two separate Stock Option Plans of American Alliance
Corporation, a Nevada corporation (the "Company"): the 1998 Incentive Stock
Option Plan ("Plan A") and the 1998 Nonstatutory Stock Option Plan ("Plan B")
(collectively the "Plans"). Plan A provides for the granting of options that are
intended to qualify as incentive stock options ("Incentive Stock Options")
within the meaning of Section 422(b) of the Internal Revenue Code, as amended.
Plan B provides for the granting of options that are not intended to so qualify.
Unless specified otherwise, all the provisions of this Plan document relate
equally to both Plan A and Plan B, which Plans are condensed into one Plan
document solely for purposes of administrative convenience and are not intended
to constitute tandem plans. The purposes of the Plans are (a) to attract and
retain the best available people for positions of substantial responsibility,
and (b) to provide additional incentive to the Employees of the Company (and its
future parents and subsidiaries, if any) and to promote the success of the
Company's business.
2. Definitions. For purposes of the Plans, the following terms will have
the respective meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company;
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended;
(c) "Common Stock" shall mean the Class A common stock of the Company;
(d) "Company" shall mean American Alliance Corporation, a Nevada
corporation;
(e) "Committee" shall mean the committee appointed by the Board in
accordance with Paragraph 3(a) of this Plan document, if one is appointed;
(f) "Employee" shall mean any person, including an officer or director,
who is an employee (within the meaning of Section 422 of the Code) of the
Company, any parent, any subsidiary or any successors to any of the foregoing;
(g) "Incentive Option" shall mean an incentive stock option as defined
in Section 422(b) of the Code;
(h) "Non-Statutory Option" shall mean an option which does not qualify
as an Incentive Option;
(i) "Option" shall mean a stock option granted pursuant to the Plan,
whether an Incentive Option or a Non-Statutory Option;
(j) "Option Agreement" shall mean an agreement substantially in the form
attached hereto as Exhibit A or the form attached hereto as Exhibit B, or such
other form or forms as the Board (subject to the terms and conditions of the
Plans) may from time to time approve, evidencing an Option;
(k) "Option Grant Date" shall mean the date on which an Option is
granted by the Board;
(1) "Optioned Stock" shall mean the Common Stock subject to an Option
granted pursuant to a Plan;
(m) "Optionee" shall mean an Employee or other Eligible Person who
receives an Option;
(n) "Outstanding Incentive Option" shall mean any Incentive Stock Option
which has not yet been exercised in full or has not yet expired by lapse of
time;
(o) "Parent" shall mean a "parent corporation" as defined in Section
424(e) of the Code;
(p) "Plan A" shall mean the 1998 Incentive Stock Option Plan;
(q) "Plan B" shall mean the 1998 Non-Statutory Stock Option Plan;
<PAGE>
(r) "Predecessor Corporation" shall mean a corporation which is a party
to a transaction described in Code Section 424(a) (or which would be so
described if a substitution or assumption under such section had been effected)
with the Company, a Parent, a Subsidiary or a predecessor corporation of any
such corporations.
(s)"Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 13 of this Plan document;
(t) "Stock Purchase Agreement" shall mean an agreement substantially in
the form attached hereto as Exhibit D or such other form or forms as the Board
(subject to the terms and conditions of this Plan) may from time to time
approve, which is to be executed as a condition of purchasing Optioned Stock
upon exercise of an Option as provided in a Plan; and,
(u) "Subsidiary" shall mean a subsidiary corporation as defined in
Section 424(f) of the Code.
3. Administration of Plan.
(a) Procedure. The Plans shall be administered by the Board.
The Board may appoint a Committee consisting of not less than two (2)
members of the Board to administer one or both of the Plans on behalf of the
Board, subject to such terms and conditions as the Board may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board. From time to time, the Board may increase the size of the Committee and
appoint additional members thereof, remove members of the Committee, and
thereafter, directly administer the Plans. Any references herein to the Board
shall refer to the Committee, if one is appointed, to the extent of the
Committee's authority.
(b) Limitations on Members of Board. Members of the Board who are either
eligible for options or have been granted Options may vote on any matters
affecting the administration of the Plans or the grant of any Options pursuant
to the Plans; except that no such member shall act in connection with an Option
to himself or herself, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board during which action is taken
with respect to Options of such member.
(c) Powers of the Board. Subject to the provisions of the Plan the Board
shall have the authority, in its discretion, to make all determinations
necessary or advisable for the administration of the Plans, including without
limitation:
(i) to determine, upon review of relevant information, the then
fair market value per share of the Common Stock;
(ii) to determine the exercise price of the Options to be
granted, subject to the provisions of Paragraph 8 of this Plan document;
(iii)to determine the Employees to whom, and the time or times
at which, Options shall be granted, and the number of shares of Optioned
Stock to be represented by each Option;
(iv) to determine whether Options granted hereunder shall be
granted under Plan A as Incentive Options or Plan B as Non-statutory
Options;
(v) to prescribe, amend and rescind rules and regulations
relating to the Plans;
(vi) to determine the terms and provisions of each Option
granted under the Plans (which need not be identical) and to modify or
amend each Option (with or without consent of the Optionee, if
necessary);
(vii) to accelerate the exercise date of any Option;
(viii) to construe and interpret the Plans, the Option
Agreements, Stock Purchase Agreements and any other agreements provided
for hereunder; and
(ix) to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option previously
granted by the Board or to take such other actions as may be necessary
or advisable with respect to the Company's rights pursuant to the
Option, Stock Purchase Agreement or other agreement approved hereunder.
<PAGE>
(d) Effect of the Board's or Committee's Decision. All decisions,
determinations and interpretations of the Board or the Committee shall be final
and binding on all Optionees and any other proper holders of any Options granted
under the Plan.
4. Stock Subject to the Plan. Subject to the provisions of Section 13 of this
Plan document, the maximum aggregate number of shares which may be optioned
under these Plans is 1,750,000 shares of authorized Common Stock. This
constitutes an absolute cumulative limitation on the total number of shares that
may be optioned under Plan A and Plan B and, therefore, at any particular date
the maximum aggregate number of shares which may be optioned under Plan A is
equal to 1,750,000 minus the number of shares previously optioned under Plan A
and Plan B; and the maximum aggregate number of shares which may be optioned
under Plan B is equal to 1,750,000 minus the number of shares which have been
previously optioned under Plan A or Plan B. All shares to be optioned under
either Plan A or Plan B may be either authorized but unissued shares or shares
held in the treasury. Shares of Common Stock that (a) are repurchased by the
Company after issuance hereunder pursuant to the exercise of an Option or (b)
are not purchased by the Optionee prior to the expiration of the applicable
Option Period (as described hereinbelow) shall again become available to be
covered by Options to be issued hereunder and shall not, as of the effective
date of such repurchase or expiration, be counted as having been previously
optioned for purposes of the above-described maximum number of shares which may
be optioned hereunder.
5. Eligibility. Options under Plan A may be granted to any Employee who is
designated by the Board in its discretion. NonEmployees, including directors of
the Company or any Parent or Subsidiary, who are not regular employees of the
Company, are not eligible to receive Options under Plan A. Options under Plan B
may be granted to any Employee, any Non-Employee director of Company or any
Parent or Subsidiary, and any consultant or independent contractors who provide
valuable services to the Company (or its Parent or Subsidiary), all as
designated by the Board in its discretion. An Optionee who has been granted an
Option may, if otherwise eligible, be granted an additional Option or Options.
Options may be granted to one or more persons without being granted to other
eligible persons, as the Board may deem fit.
6. Term of the Plan. Plan A shall become effective immediately upon the earlier
to occur of its adoption by the Board or its approval by vote of a majority of
the outstanding shares of the Company entitled to vote on the adoption of such
Plan. Plan B shall become effective immediately upon its adoption by the Board.
Each Plan shall continue in effect until December 31, 2008 unless sooner
terminated under Sections 15 or 18 of this Plan document. No Option may be
granted under a Plan after its expiration.
7. Option Period. Each Option granted pursuant to either Plan shall be evidenced
by an Option Agreement. Each Option shall expire and all rights thereunder shall
end at the expiration of such period (which shall in no event be more than ten
(10) years) after the Option Grant Date as shall be fixed by the Board, subject
in all cases to earlier expiration as provided in Section 11 of this Plan
document. Notwithstanding the foregoing, the term of each Incentive Option
granted to an Employee who, at the time the Incentive Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary (determined
as required by the Code as applied to Incentive Options) shall not be more than
five (5) years from the Option Grant Date.
8. Option Price and Consideration.
(a) Price. The per share Option price for the Shares to be issued
pursuant to an Option granted under either Plan shall be such price as is
determined by the Board in its sole discretion. Notwithstanding the foregoing,
with respect to Incentive Options granted under Plan A: (i) such price shall in
no event be less than one hundred percent (100%) of the fair market value per
Share of the Company's Common Stock on the Option Grant Date, as determined by
the Board; and (ii) in the case of an Incentive Option granted to an Employee
who, at the time the Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent, Subsidiary or Predecessor Corporation (determined as
required by the Code as applied to Incentive Options), the per share Option
price shall be at least one hundred ten percent (110%) of the fair market value
as of the Option Grant Date, as determined by the Board. The fair market value
shall be determined by the Board in its sole discretion, exercised in good
faith; provided, however, that where there is a public market for the Common
Stock, the fair market value per share shall be the mean of the reported bid and
asked price for the Common Stock on the date of the grant, or, in the event the
Common Stock is listed on a stock exchange, the fair market value per share
shall be the closing price on the exchange as of the date of grant of the
Option.
<PAGE>
(b) Form of Consideration. The form of consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Board and may consist of cash, promissory notes, or
the surrender of shares of Common Stock having a fair market value on the date
of surrender equal to the purchase price of the Shares as to which said Option
shall be exercised, a combination thereof, or such other consideration and
method of payment for the issuance of Shares as is permitted under applicable
law.
(c) Promissory Notes. If the consideration for the exercise of an Option
is a promissory note, such note shall be a full recourse promissory note
executed by the Optionee. If the option is an Incentive Option under Plan A,
such note shall bear interest at a per annum rate which is not less than the
greater of (i) the applicable "test rate" described in Treasury Regs. Section
1.4831(d) in effect on the date of exercise or (ii) a fair market interest rate,
as determined by the Board in its good faith discretion. If a promissory note is
given as consideration, the Company may retain the Shares purchased upon
exercise of the Option in escrow as security for payment of the promissory note.
(d) Surrendered Common Stock. If the consideration for the exercise of
an Option is the surrender of previously acquired and owned shares of common
stock of the Company, the Optionee will be required to make representations and
warranties satisfactory to the Company regarding the Optionee's title to the
shares used to effect the purchase, including without limitation,
representations and warranties that the Optionee has good and marketable title
to such shares free and clear of any and all liens, encumbrances, charges,
equities, claims, security interests, options or restrictions and has full power
to deliver such shares without obtaining the consent or approval of any person
or governmental authority other than those which have already given consent or
approval in a form satisfactory to the Company. The value of the shares used to
effect the purchase shall be the fair market value of those shares as determined
by the Board in its sole discretion, exercised in good faith.
9. Limit on Value of Optioned Stock Issued Under Plan A. The aggregate fair
market value (determined as of the Option Grant Date of each Option) of the
Shares with respect to which Incentive Options are exercisable for the first
time by the Optionee during any calendar year under Plan A and all other
incentive stock option plans of the Company, any Parent or Subsidiary, or any
Predecessor Corporation of any such corporation shall not exceed One Hundred
Thousand Dollars ($100,000.00), as determined pursuant to Section 422(d) of the
Code.
10. Exercise of Option.
(a) General Terms. Any Option granted hereunder shall be exercisable at
such times and under such conditions as may be determined by the Board which
conditions may include performance criteria with respect to the Company and/or
the Optionee or provisions for vesting over a period of time conditioned upon
continued employment and shall include the contemporaneous execution of a Stock
Purchase Agreement in a form approved by the Board and as shall be permissible
under the terms of the Plan. In all events, in order to exercise an Option
hereunder the Optionee shall execute a Stock Purchase Agreement in a form
approved by the Board and shall deliver the required (or permitted) exercise
consideration to the Company. As a condition to the exercise of an Option, the
Board may require the Optionee pursuant to the Option Agreement to agree to
restrictions on the sale or other transfer of ownership of the Common Stock
acquired by an Optionee or to sell such Shares to the Company upon termination
of employment.
(b) Partial Exercise. An Option may be exercised in accordance with the
provisions of either Plan as to all or any portion of the Shares then
exercisable under an Option, from time to time during the term of the Option. An
Option may not be exercised for a fraction of a Share.
(c) Time of Exercise. An Option shall be deemed to be exercised when the
Company has received at its principal business office: (i) written notice of
such exercise in accordance with the terms of the Option Agreement and given by
the person entitled to exercise the Option; (ii) full payment for the Shares
with respect to which the Option is exercised; (iii) the executed Stock Purchase
Agreement if required; and (iv) any other representations or agreements required
by the terms of this Plan or the Option Agreement. Full payment may consist of
such consideration as is authorized by the Board as provided hereunder.
(d) No Rights as Shareholder Until Exercise. Until this Option is
properly exercised hereunder and the Company receives full payment for the
Shares with respect to which the Option is exercised, no right to receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Option is properly exercised and
payment in full is received, except as provided in Section 13 of this Plan
document.
<PAGE>
(e) Issuance of Share Certificates. As soon as practicable after any
proper exercise of an Option in accordance with the provisions of this Plan
document and payment in full for the exercised Shares, the Company shall,
without transfer or issue tax to the Optionee, deliver to the Optionee at the
principal business office of the Company, or such other place as shall be
mutually acceptable, a certificate or certificates representing the Shares of
Common Stock as to which the Option has been exercised. The time of issuance and
delivery of the certificates) representing the Shares of Common Stock may be
postponed by the Company for such period as may be required for it, with
reasonable diligence, to comply with any applicable listing requirements of any
national or regional securities exchange and any law or regulation applicable to
the issuance and delivery of such Shares.
(f) Reduction of Shares Upon Exercise. Exercise of an Option in any
manner shall result in a decrease in the number of Shares which thereafter may
be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.
11. Termination of Employment.
(a) General. If an Optionee ceases to be an Employee for any reason
then, except as provided in Paragraph 11(a) or 11(b) hereof, any Option of the
Optionee, whether vested or non-vested, and if issued under Plan A or Plan B,
shall terminate as of the date of termination of employment.
(b)Death or Disability. If Optionee dies or becomes disabled (within the
meaning of Code Section 422 and the rules and regulations thereunder) then,
within the earlier of thirty (30) days (or such other period of time not
exceeding six (6) months as set forth in the Option Agreement) following the
date of such death or disability and the time the Option expires by its terms,
the Optionee or such person or persons to whm the Optionee's rights under the
Option shall pass by the Optionee's will or by the laws of descent and
distribution, may exercise the Option to the extent it was vested and
exercisable on the date of death or disability.
12. Non-transferability of Options. The Options and any rights and privileges
granted under any Option Agreement are not transferable by the Optionee, either
voluntarily or by operation of law, otherwise than by will and the laws of
descent and distribution and shall be exercisable during Optionee's lifetime
only by Optionee.
13. Adjustments Upon Changes in Capitalization.
(a) Reorganizations, Recapitalization, Etc. If the outstanding shares of
Common Stock of the Company are increased, decreased, changed into or exchanged
for a different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, stock dividend (but only on
Common Stock), stock split, reverse stock split or other similar transaction,
or, if any other increase or decrease occurs in the number of Shares of Common
Stock of the Company without the receipt of consideration by the Company, then
an appropriate and proportional adjustment shall be made in (i) the number and
kind of shares of stock covered by each outstanding Option, (ii) the number and
kind of shares of stock which have been authorized for issuance under the Plan
but as to which no Options have yet been granted (or which have been returned to
the Plan upon cancellation of an Option), and (iii) the exercise price per share
of stock covered by each such outstanding Option. The granting of stock options
or bonuses to Employees of the Company and the conversion of any convertible
securities of the Company shall not be deemed to have been "effected without the
receipt of consideration." Notwithstanding the foregoing, no adjustment need be
made under this paragraph if, upon the advice of counsel, the Board determines
that such adjustment may result in federal taxable income to the holders of
Options or Common Stock or other classes of the Company's securities.
(b) Dissolution, Liquidation, Etc. Upon the dissolution or liquidation
of the Company, or upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation, or upon a sale (or exchange through merger) of
substantially all the property or more than fifty percent (50%) of the then
outstanding stock of the Company to another corporation, the Plan shall
terminate, and any Option theretofore granted hereunder shall terminate.
Notwithstanding the foregoing, the Board may provide in writing in connection
with, or in contemplation of, such transaction for any, all or none of the
following alternatives (separately or in combination): (i) for all or a portion
of the Options theretofore granted to become immediately exercisable; (ii) for
the assumption by the successor corporation of the Options theretofore granted
or the substitution by such corporation for such Options of new options covering
the stock of the successor corporation, or a Parent or Subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; or (iii)
for the continuance of the Plan by such successor corporation in which event the
Plan and the Options theretofore granted shall continue in the manner and under
the terms so provided.
<PAGE>
(c) No Fractional Shares. No fractional shares of the Common Stock shall
be issuable on account of any action under this Paragraph 13, and the aggregate
number of shares into which Shares then covered by an Option, when changed as
the result of such action, shall be reduced to the largest number of whole
Shares resulting from such action. Notwithstanding the foregoing, the Board, in
its sole discretion, may determine to issue scrip certificates, in respect to
any fractional shares, which scrip certificates, in such event, shall be in a
form and have such terms and conditions as the Board in its discretion shall
prescribe.
(d) Binding Effect of Board Determinations. All adjustments under this
Paragraph 13 shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive.
(e) No Other Adjustments. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares of Common Stock
subject to the Plan or any Options.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time and from time
to time suspend or terminate either Plan. The Board may also amend or revise
either Plan from time to time in such respects as the Board may deem advisable,
except that, without approval of the holders of the majority of the outstanding
shares of the Company's Common Stock, no such revision or amendment shall amend
Plan A or Plan B so as to:
(i) Increase the number of Shares subject to Plan A or Plan B
other than in connection with an adjustment under Section 13 of this
Plan document;
(ii) Permit the granting of Incentive Options to anyone other
than as provided in Paragraph 5;
(iii) Remove the administration of Plan A or Plan B from the
Board;
(iv) Extend the term of Plan A or Plan B beyond that provided in
Paragraph 6 hereof;
(v) Extend the term of any Incentive Option beyond the maximum
term set forth in Paragraph 7;
(vi) Permit the granting of Incentive Options which would not
qualify as Incentive Stock Options; or (vii) Decrease the per share
option price required with respect to Incentive Options under Paragraph
8(a) hereof.
(b) Effect of Termination. Except as otherwise provided in Section 13,
without the written consent of the Optionee, any such termination of the Plan
shall not affect Options already granted and such Options shall remain in full
force and effect as if the Plan had not been terminated.
15. Conditions Upon Issuance of Shares. Options granted under either Plan are
conditioned upon the Company obtaining any required permit, or exemption from
the qualification or registration provisions of any applicable state securities
law and other appropriate governmental agencies, authorizing the Company to
issue such Options and Optioned Stock upon terms and conditions acceptable to
the Company. Shares shall not be issued with respect to an Option granted under
either Plan unless the exercise of such Option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As a condition to the
exercise of an Option, the Board may require the person exercising such Option
to execute an agreement approved by the Board, and may require the person
exercising such Option to make any representation and warranty to the Company as
may, in the judgment of counsel to the Company, be required under applicable
laws or regulations.
16. Reservation of Shares. During the term of the Plans, the Company will at all
times reserve and keep available the number of Shares as shall be sufficient to
satisfy the requirements of the Plans. During the term of the Plans, the Company
will use its best efforts to seek to obtain from appropriate regulatory agencies
any requisite authorization in order to issue and sell such number of Shares of
its Common Stock as shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain from any such regulatory agency the
requisite authorization(s) deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any Shares hereunder, or the inability of the
Company to confirm to its satisfaction that any issuance and sale of any Shares
hereunder will meet applicable legal requirements, shall relieve the Company of
any liability in respect to the non-issuance or sale of such Shares as to which
such requisite authority shall not have been obtained.
<PAGE>
17. Taxes, Fees, Expenses and Withholding of Taxes.
(a) Issue and Transfer Taxes. The Company shall pay all original issue
and transfer taxes (but not income taxes, if any) with respect to the grant of
Options and the issue and transfer of Shares pursuant to the exercise of such
Options, and all other fees and expenses necessarily incurred by the Company in
connection therewith, and will use its best efforts to comply with all laws and
regulations which, in the opinion of counsel for the Company, shall be
applicable thereto.
(b) Withholding. The grant of Options hereunder and the issuance of
Shares of Common Stock pursuant to the exercise of such Options are conditioned
upon the Company's reservation of the right to withhold, in accordance with any
applicable law, from any compensation payable to the Optionee any taxes required
to be withheld by federal, state or local law as a result of the grant or
exercise of such Option or the sale of the Shares issued upon exercise of the
Option.
18. Shareholder Approval of Plan A and Plan B. Continuance of Plan A and Plan B
and the effectiveness of any Option granted under such Plan shall be subject to
approval by the holders of the outstanding voting stock of the Company in
accordance with applicable law within twelve (12) months before or after the
date Plan A and Plan B is adopted by the Board. Any Options granted under Plan A
and Plan B prior to obtaining such shareholder approval shall be granted upon
the conditions that the Options so granted: (i) shall not be exercisable prior
to such approval and (ii) shall become null and void ab initio if such
shareholder approval is not obtained.
19. Liability of Company. The Company, its Parent or any Subsidiary which is in
existence or hereafter comes into existence, will not be liable to an Optionee
granted an Incentive Option or other person if it is determined for any reason
by the Internal Revenue Service or any court having jurisdiction that any
Incentive Options granted hereunder are not Incentive Stock Options.
20. Notices. Any notice to be given to the Company pursuant to the provisions of
the Plans shall be addressed to the Company in care of its Secretary at its
principal office, and any notice to be given to an Optionee shall be delivered
personally or addressed to such Optionee at the address given beneath such
Optionee's signature on such Optionee's Stock Option Agreement, or at such other
address as such Employee (or any transferee) upon the transfer of the Optioned
Stock may hereafter designate in writing to the Company. Any such notice shall
be deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, registered or certified, and deposited, postage and
registry or certification fee prepaid, in a post office or branch post office
regularly maintained by the United States Postal Service. It shall be the
obligation of each Optionee and each transferee holding Shares purchased upon
exercise of an Option to provide the Secretary of the Company, by letter mailed
as provided hereinabove, with written notice of such person's direct mailing
address.
21. No Enlargement of Employee Rights. This Plan is purely voluntary on the part
of the Company, and the continuance of the Plan shall not be deemed to
constitute a contract between the Company and any Employee, or to be
consideration for or a condition of the employment of any Employee. Nothing
contained in this Plan shall be deemed to give any Employee the right to be
retained in the employ of the Company, its Parent, Subsidiary or a successor
corporation, or to interfere with the right of the Company or any such
corporations to discharge or retire any Employee thereof at any time. No
Employee shall have any right to or interest in Options authorized hereunder
prior to the grant of such Option to such employee, and upon such grant he or
she shall have only such rights and interests as are expressly provided herein,
subject, however, to all applicable provisions of the Company's Certificate of
Incorporation, as the same may be amended from time to time.
22. Legends on Certificates.
(a) Federal Law. Unless an appropriate registration statement is filed
pursuant to the Federal Securities Act of 1933, as amended, with respect to the
Options and Shares issuable under the Plans, each certificate representing such
Options and Shares shall be endorsed on its face with a legend substantially as
follows:
<PAGE>
"THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF
THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(b) State Legend. If required by applicable state authorities each
certificate representing the Options and Shares issuable under the Plans shall
be endorsed on its face with any legends required by such authorization.
(c) Additional Legends. Each certificate representing the Options and
Shares issuable under the Plans shall also contain legends as are set forth in
any Stock Purchase Agreement or other agreement the execution of which is a
condition to the exercise of an Option under this Plan. In addition, each Option
Agreement shall be endorsed with a legend substantially as follows:
"THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAYBE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY, TO BE ENTERED INTO BETWEEN THE HOLDER OF THIS OPTION AND THE
COMPANY AS A CONDITION TO EXERCISE OF THIS OPTION."
23. Availability of Plan. A copy of the Plans shall be delivered to the
Secretary of the Company and shall be shown by him to any eligible person making
reasonable inquiry concerning it.
24. Invalid Provisions. In the event that any provision of the Plans is found to
be invalid or otherwise unenforceable under any applicable law, such invalidity
or unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
25. Applicable Law. These Plans shall be governed and construed in accordance
with the laws of the State of Nevada applicable to contracts executed, and to be
fully performed, in Nevada.
IN WITNESS WHEREOF, pursuant to the due authorization and adoption of
these Plans by the Board on , 199__, the Company has caused these Plans to be
duly executed by its duly authorized officers, effective as of , 199__.
American Alliance Corporation
a Nevada corporation
By:
-------------------------
Title:
----------------------
<PAGE>
EXHIBIT "A"
PLAN A
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NO SALE, TRANSFER OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, TO BE ENTERED INTO
BETWEEN OPTIONEE AND THE COMPANY AS A CONDITION TO EXERCISE OF THIS OPTION.
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made as of the ___ day of _______, 1998, by and between
American Alliance Corporation a Nevada corporation (hereinafter called
"Company") and ____________ (hereinafter called "Optionee").
RECITALS
A. The Board of Directors of the Company has adopted the Company's 1998
Incentive Stock Option Plan (the "Plan") for the purpose of attracting and
retaining the services of selected key employees (including officers and
employee directors), who contribute to the financial success of the Company or
its parent or subsidiary corporations.
B. Optionee is a key member of the Company or its parent or subsidiary
corporations, and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Company's grant of a
stock option to the Optionee.
C. The granted option is intended to be an incentive stock option
("Incentive Option") within the meaning of Section 422 of the Internal Revenue
Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set
forth in this Agreement, there is hereby granted to Optionee, as of the date of
this Agreement (the "Grant Date"), a stock option to purchase up to __________
shares of the Company's Common Stock (the "Optioned Shares") from time to time
during the option term at the option price of $_____ per share.
2. Plan. The options granted hereunder are in all instances subject to
the terms and conditions of the Plan. In the event of any conflict between this
Agreement and the Plan, the provisions of the Plan shall control. Optionee
acknowledges receipt of a copy of the Plan and hereby accepts this option
subject to all of the terms and conditions of the Plan. Optionee agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.
3. Option Term. This option shall have a maximum term of ___ (__) years
measured from the Grant Date and shall accordingly expire at the close of
business on ______, _____ (the "Expiration Date"), unless sooner terminated in
accordance with Paragraph 7, 9(a) or 20.
4. Option Nontransferable; Exception. This option shall be neither
transferable nor assignable by Optionee, either voluntarily or involuntarily,
other than by will or by the laws of descent and distribution and may be
exercised, during Optionee's lifetime, only by Optionee.
5. Condition Precedent to Exercise. This option may not be exercised in
whole or in part at any time prior to the time the Company has satisfied the
following condition precedent: ______________. In the event the foregoing
condition precedent has not been satisfied prior to the Expiration Date or prior
to this option's earlier termination in accordance with Paragraph 7, 9(a) or 20,
then this option shall terminate and cease to be outstanding.
6. Dates of Exercise. This option may not be exercised in whole or in
part at any time prior to the time it is approved by the Company's shareholders
in accordance with Paragraph 20. Provided such shareholder approval is obtained
and the condition precedent to exercise set forth in Paragraph 5 has been
satisfied, this option shall become exercisable for 100% of the Optioned Shares
one (1) year from the Grant Date, provided that in no event may options for more
than One Hundred Thousand Dollars ($100,000) of Optioned Shares, calculated at
the exercise price, become exercisable for the first time in any calendar year.
Once exercisable, options shall remain so exercisable until the expiration or
sooner termination of the option term under Paragraph 7 or Paragraph 9(a) of
this Agreement. In no event, however, shall this option be exercisable for any
fractional shares.
7. Accelerated Termination of Option Term. The option term specified in
Paragraph 3 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
<PAGE>
(i) Except as otherwise provided in subparagraphs (ii) and (iii)
below, should Optionee cease to be an Employee of the Company for any
reason at any time during the option term, any option of the Optionee,
whether vested or non-vested, and if issued under Plan A, shall
terminate as of the date of termination of employment.
(ii) Should Optionee die while this option is outstanding, then
the executors or administrators of Optionee's estate or Optionee's heirs
or legatees (as the case may be) shall have the right to exercise this
option for the number of shares (if any) for which the option is
exercisable on the date of the optionee's death. Such right shall lapse
and this option shall cease to be exercisable upon the earlier of (i)
six (6) months from the date of the optionee's death or (ii) the
Expiration Date.
(iii) Should Optionee become permanently disabled and cease by
reason thereof to be an Employee of the Company at any time during the
option term, then Optionee shall have a period of six (6) months
(commencing with the date of such cessation of Employee status) during
which to exercise this option; provided, however, that in no event shall
this option be exercisable at any time after the Expiration Date.
Optionee shall be deemed to be permanently disabled if Optionee is, by
reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of not less
than twelve (12) months, unable to perform his/her usual duties for the
Company or its Parent or Subsidiary corporations. Upon the expiration of
the limited period of exercisability or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding.
(iv) For purposes of this Paragraph 7 and for all other purposes
under this Agreement, Optionee shall be deemed to be an Employee of the
Company and to continue in the Company's employ for so long as Optionee
remains an Employee of the Company or one or more of its parent or
subsidiary corporations as such terms are defined in the Plan.
8. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares, or
other change affecting the outstanding Common Stock as a class without receipt
of consideration (as set forth in the Plan), then appropriate adjustments will
be made to (i) the total number of Optioned Shares subject to this option and
(h) the option price payable per share in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger or other
business combination, then this option, if outstanding under the Plan
immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number and class of
securities to which Optionee immediately prior to such merger of other business
combination would have been entitled to receive in the consummation of such
merger or other business combination.
9. Special Termination of Option.
(a) In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) any other corporate reorganization or business combination
in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred, or exchanged through merger, to different holders
in a single transaction or a series of related transactions;
then this option shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable, unless it is expressly assumed by the
successor corporation or parent thereof. The Company shall provide Optionee with
at least thirty (30) days prior written notice of the specified date for the
Corporate Transaction. The Company can give no assurance that the options shall
be assumed by the successor corporation or its parent company and it may occur
that some options outstanding under the Plan will be assumed while these options
are terminated.
(b) In the event of a Corporate Transaction, the Company may, at its
option, accelerate the vesting schedule contained in Section 6 hereof, but shall
have no obligation to do so. The Company shall have the right to accelerate
other options outstanding under the Plan or any other plan, even if it does not
accelerate the options of Optionee hereunder.
<PAGE>
(c) This Agreement shall not in any way affect the right of the Company
to make changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
10. Privilege of Stock Ownership. The holder of this option shall not have
any of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option and paid the option price in
accordance with this Agreement.
11. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part of
the Optioned Shares for which this option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Execute and deliver to the Secretary of the Company a stock
purchase agreement in substantially the form of Exhibit D to this
Agreement (the "Purchase Agreement");
(ii) Pay the aggregate option price for the purchased shares in
cash, unless another form of consideration is permitted as described in
Exhibit C, if any, attached hereto or by the Board at the time of
exercise.
(b) This option shall be deemed to have been exercised with respect to
the number of Optioned Shares specified in the Purchase Agreement at such time
as the executed Purchase Agreement for such shares shall have been delivered to
the Company and all other conditions of this Section have been fulfilled.
Payment of the option price shall immediately become due and shall accompany the
Purchase Agreement. As soon thereafter as practical, the Company shall mail or
deliver to Optionee or to the other person or persons exercising this option a
certificate or certificates representing the shares so purchased and paid for.
12. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and Optionee with
all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
13. Successors and Assigns. Except to the extent otherwise provided in Paragraph
4 or 9(a), the provisions of this Agreement shall insure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
14. Liability of Company.
(a) If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section 18 of the Plan.
(b) The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option without the
imposition of requirements unacceptable to the Company in its reasonable
discretion shall relieve the Company of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Company, however, shall use its best efforts to obtain
all such approvals.
<PAGE>
(c) Neither the Company nor any Parent, Subsidiary or successor
corporation will have any liability to Optionee or any other person if it is
determined for any reason that any options granted hereunder are not Incentive
Stock Options.
15. No Employment Contract. Except to the extent the terms of any written
employment contract between the Company and Optionee may expressly provide
otherwise, the Company (or any parent or subsidiary corporation of the Company
employing Optionee) shall be under no obligation to continue the employment of
Optionee for any period of specific duration and may terminate Optionee's status
as an Employee at any time, with or without cause.
16. Notices. Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Company in
care of its Secretary at its corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on this Agreement. All notices
shall be deemed to have been given or delivered upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.
17. Loans or Guarantees. The Company may, in its absolute discretion and without
any obligation to do so, assist Optionee in the exercise of this option by (i)
authorizing the extension of a loan to Optionee from the Company, (ii)
permitting Optionee to pay the option price for the purchased Common Stock in
installments over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan, installment
method of payment or guarantee (including the interest rate, the Collateral
requirements and terms of repayment) shall be established by the Company in its
sole discretion.
18. Construction. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the Plan. All decisions of the Company with respect to any question or issue
arising under the Plan or this Agreement shall be conclusive and binding on all
persons having an interest in this option.
19. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Nevada.
20. Shareholder Approval. The grant of this option is subject to approval of the
Plan by the Company's shareholders within twelve (12) months after the adoption
of the Plan by the Board of Directors, and this option may not be exercised in
whole or in part until such shareholder approval is obtained. In the event that
such shareholder approval is not obtained, then this option shall thereupon
terminate and Optionee shall have no further rights to acquire any Optioned
Shares hereunder.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, all as of the day and year indicated
above.
American Alliance Corporation
a Nevada corporation
---------------------------
By:
-----------------------
Title:
---------------------
- - ------------------------------------
Optionee
Address:
<PAGE>
EXHIBIT "B"
PLAN A
Other Forms of Acceptable Consideration
[If no forms are listed hereon, cash shall be the only
acceptable form of consideration for the exercise of the
options.]
-----------------
<PAGE>
EXHIBIT "C"
PLAN B
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NO SALE, TRANSFER OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION TATEMENT RELATING
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, TO BE ENTERED INTO
BETWEEN OPTIONEE AND THE COMPANY AS A CONDITION TO EXERCISE OF THIS OPTION.
NON-STATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the ____ day of ______, 199__, by and between
American Alliance Corporation, a Nevada corporation (hereinafter called
"Company"), and _______________ (hereinafter called "Optionee").
RECITALS
A. The Board of Directors of the Company has adopted the Company's 1998
Non-Statutory Stock Option Plan (the "Plan") for the purpose of attracting and
retaining the services of selected key employees (including officers and
employee directors) and others (collectively, "Eligible Persons"), who
contribute to the financial success of the Company or its parent or subsidiary
corporations.
B. Optionee is an Eligible Person and this Agreement is executed pursuant
to, and is intended to carry out the purposes of, the Plan in connection with
the Company's grant of a stock option to Optionee.
<PAGE>
C. The granted option is not intended to be an incentive stock option
("Incentive Option") within the meaning of Section 422 of the Internal Revenue
Code, but is rather a non-statutory option.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set forth in
this Agreement, there is hereby granted to Optionee, as of the date of this
Agreement (the "Grant Date"), a stock option to purchase up to _________ shares
of the Company's Common Stock (the "Optioned Shares") from time to time during
the option term at the option price of $____ per share.
2. Plan. The options granted hereunder are in all instances subject to the terms
and conditions of the Plan. In the event of any conflict between this Agreement
and the Plan, the provisions of the Plan shall control. Optionee acknowledges
receipt of a copy of the Plan and hereby accepts this option subject to all of
the terms and conditions of the Plan. Optionee agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan.
3. Option Term. This option shall have a maximum term of years measured from the
Grant Date and shall accordingly expire at the close of business on _____ ____ ,
199__ (the "Expiration Date"), unless sooner terminated in accordance with
Paragraph 6 or 8(a).
4. Option Nontransferable; Exception. This option shall be neither transferable
nor assignable by Optionee, either voluntarily or involuntarily, other than by
will or by the laws of descent and distribution and may be exercised, during
Optionee's lifetime, only by Optionee.
5. Dates of Exercise. This option shall be exercisable as follows: _________.
Once exercisable, options shall remain so exercisable until the expiration or
sooner termination of the option term under Paragraph 6 or Paragraph 8(a) of
this Agreement. In no event, however, shall this option be exercisable for any
fractional shares.
6. Accelerated Termination of Option Term. The option term specified in
Paragraph 3 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) (i) Except as otherwise provided in subparagraphs (ii) and (iii)
below, should Optionee cease to be an Employee of the Company for any reason at
any time during the option term, any option of the Optionee, whether vested or
non-vested, and if issued under Plan B, shall terminate as of the date of
termination of employment.
(ii) Should Optionee die while this option is outstanding, then the
executors or administrators of Optionee's estate or Optionee's heirs or legatees
(as the case may be) shall have the right to exercise this option for the number
of shares (if any) for which the option is exercisable on the date of the
optionee's death. Such right shall lapse and this option shall cease to be
exercisable upon the earlier of (i) six (6) months from the date of the
optionee's death or (ii) the Expiration Date.
(iii) Should Optionee become permanently disabled and cease by reason
thereof to be an Employee of the Company at any time during the option term,
then Optionee shall have a period of six (6) months (commencing with the date of
such cessation of Employee status) during which to exercise this option;
provided, however, that in no event shall this option be exercisable at any time
after the Expiration Date. Optionee shall be deemed to be permanently disabled
if Optionee is, by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of not
less than twelve (12) months, unable to perform his/her usual duties for the
Company or its Parent or Subsidiary corporations. Upon the expiration of the
limited period of exercisability or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(iv) For purposes of this Paragraph 6 and for all other purposes under
this Agreement, if Optionee is an Employee, Optionee shall be deemed to be an
Employee of the Company and to continue in the Company's employ for so long as
Optionee remains an Employee of the Company or one or more of its parent or
subsidiary corporations as such terms are defined in the Plan. For purposes of
this Paragraph 6 and for all other purposes under this Agreement, if Optionee is
not an Employee, but is eligible because Optionee is a director, consultant or
contractor of Company or a parent or subsidiary corporation, Optionee shall be
deemed to be an Eligible Person for so long as Optionee remains a director,
consultant or contractor of the Company or one or more of its parent or
subsidiary corporations as such terms are defined in the Plan.
<PAGE>
7. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares, or
other change affecting the outstanding Common Stock as a class without receipt
of consideration (as set forth in the Plan), then appropriate adjustments will
be made to (i) the total number of Optioned Shares subject to this option and
(ii) the option price payable per share in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger or other
business combination, then this option, if outstanding under the Plan
immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number and class of
securities to which Optionee immediately prior to such merger or other business
combination would have been entitled to receive in the consummation of such
merger or other business combination.
8. Special Termination of Option.
(a) In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation;
(ii)the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) any other corporate reorganization or business combination
in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred, or exchanged through merger, to different holders
in a single transaction or a series of related transactions;
then this option shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable, unless it is expressly assumed by the
successor corporation or parent thereof. The Company shall provide Optionee with
at least thirty (30) days prior written notice of the specified date for the
Corporate Transaction. The Company can give no assurance that the options shall
be assumed by the successor corporation or its parent company and it may occur
that some options outstanding under the Plan will be assumed while these options
are terminated.
(b) In the event of a Corporate Transaction, the Company may, at its
option, accelerate the vesting schedule contained in Section 5 hereof, but shall
have no obligation to do so. The Company shall have the right to accelerate
other options outstanding under the Plan or any other plan, even if it does not
accelerate the options of Optionee hereunder.
(c) This Agreement shall not in any way affect the right of the Company
to make changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
9. Privilege of Stock Ownership. The holder of this option shall not have any of
the rights of a shareholder with respect to the Optioned Shares until such
individual shall have exercised the option and paid the option price in
accordance with this Agreement.
10. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part of
the Optioned Shares for which this option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Execute and deliver to the Secretary of the Company a stock
purchase agreement in substantially the form of Exhibit "E" to this
Agreement (the "Stock Purchase Agreement");
(ii) Pay the aggregate option price for the purchased shares in
cash, unless another form of consideration is permitted as described in
Exhibit D, if any, attached hereto or by the Board at the time of
exercise.
<PAGE>
(b) This option shall be deemed to have been exercised with respect to
the number of Optioned Shares specified in the Purchase Agreement at such time
as the executed Purchase Agreement for such shares shall have been delivered to
the Company and all other conditions of this Section have been fulfilled.
Payment of the option price shall immediately become due and shall accompany the
Purchase Agreement. As soon thereafter as practical, the Company shall mail or
deliver to Optionee or to the other person or persons exercising this option a
certificate or certificates representing the shares so purchased and paid for.
11. Compliance With Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned Shares upon
such exercise shall be subject to compliance by the Company and Optionee with
all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
12. Successors and Assigns. Except to the extent otherwise provided in Paragraph
4 or 8(a), the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of Optionee and the successors and assigns of the Company.
13. Liability of Company.
(a) If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section 18 of the Plan.
(b) The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option without the
imposition of requirements unacceptable to the Company in its reasonable
discretion shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
14. No Employment Contract. Except to the extent the terms of any written
employment contract between the Company and Optionee may expressly provide
otherwise, the Company (or any parent or subsidiary corporation of the Company
employing Optionee) shall be under no obligation to continue the employment of
Optionee for any period of specific duration and may terminate Optionee's status
as an Employee at any time, with or without cause.
15. Notices. Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Company in
care of its Secretary at its corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on this Agreement. All notices
shall be deemed to have been given or delivered upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.
16. Withholding. Optionee acknowledges that, upon any exercise of this option,
the Company shall have the right to require Optionee topay to the Company an
amount equal to the amount the Company is required to withhold as a result of
such exercise for federal and state income tax purposes.
17. Loans or Guarantees. The Company may, in its absolute discretion and without
any obligation to do so, assist Optionee in the exercise of this option by (i)
authorizing the extension of a loan to Optionee from the Company, (ii)
permitting Optionee to pay the option price for the purchased Common Stock in
installments over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan, installment
method of payment or guarantee (including the interest rate, the Collateral
requirements and terms of repayment) shall be established by the Company in its
sole discretion.
18. Construction. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the express terms and provisions of the Plan. All decisions of the Company with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
<PAGE>
19. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Nevada.
20. REPURCHASE R1GHTS. OPTIONEE HEREBY AGREES THAT ALL OPTIONED SHARES ACQUIRED
UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE
COMPANY AND ITS ASSIGNS TO REPURCHASE SUCH SHARES IN ACCORDANCE WITH THE TERMS
AND CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT,
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, all as of the day and year indicated
above.
American Alliance Corporation
a Nevada corporation
By:
--------------------------
Title:
------------------------
OPTIONEE:
---------------------------
Address:
---------------------------
<PAGE>
EXHIBIT "D"
PLAN B
Other Forms of Acceptable Consideration
[If no forms are listed hereon, cash shall be the only acceptable form of
consideration for the exercise of the options.]
<PAGE>
EXHIBIT "E"
STOCK PURCHASE AGREEMENT
This Agreement is made as of this ____ day of ______, 199__, by and among
American Alliance Corporation, a Nevada corporation ("Corporation"), and
________, the holder of a stock option under the Corporation's 1998 Stock Option
Plan ("Optionee").
1. EXERCISE OF OPTION
1.1 Exercise. Optionee hereby purchases shares of Class A Common Stock
of the Corporation ("Purchased Shares") pursuant to that certain option
("Option") granted Optionee on ______, 199__, under the Corporation's 1998 Stock
Option Plan ("Plan") to purchase up to ________ shares of the Corporation's
Common Stock at an option price of $_____ per share ("Option Price").
1.2 Payment. Concurrently with the delivery of this Agreement to the
Secretary of the Corporation, Optionee shall pay the Option Price for the
Purchased Shares in accordance with the provisions of the agreement between the
Corporation and Optionee evidencing the Option ("Option Agreement") and shall
deliver whatever additional documents may be required by the Option Agreement as
a condition for exercise.
2. INVESTMENT REPRESENTATIONS
2.1 Investment Intent. Optionee hereby warrants and represents that
Optionee is acquiring the Purchased Shares for Optionee's own account and not
with a view to their resale or distribution and that Optionee is prepared to
hold the Purchased Shares for an indefinite period and has no present intention
to sell, distribute or grant any participating interests in the Purchase Shares.
Optionee hereby acknowledges the fact that the Purchased Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
that the Corporation is issuing the Purchased Shares to Optionee in reliance on
the representations made by Optionee herein.
2.2 Restricted Securities. Optionee hereby confirms that Optionee has
been informed that the Purchased Shares may not be resold or transferred unless
the Purchased Shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly, Optionee
hereby acknowledges that Optionee is prepared to hold the Purchased Shares for
an indefinite period and that Optionee is aware that Rule 144 of the Securities
and Exchange Commission issued under the 1933 Act is not presently available to
exempt the sale of the Purchased Shares from the registration requirements of
the 1933 Act. Should Rule 144 subsequently become available, Optionee is aware
that any sale of the Purchased Shares effected pursuant to the Rule may,
depending upon the status of Optionee as an affiliate" or "non-affiliate" under
the Rule, be made only in limited amounts in accordance with the provisions of
the Rule, and that in no event may any Purchased Shares be sold pursuant to the
Rule until Optionee has held the Purchased Shares for the requisite holding
period following payment in cash of the Option Price for the Purchased Shares.
2.3 Optionee Knowledge. Optionee represents and warrants that he or she
has a preexisting business or personal relationship with the officers and
directors of the Corporation, that he or she is aware of the business affairs
and financial condition of the Corporation and that he or she has such knowledge
and experience in business and financial matters with respect to companies in
business similar to the Corporation to enable him or her to evaluate the risks
of the prospective investment and to make an informed investment decision with
respect thereto. Optionee further represents and warrants that the Corporation
has made available to Optionee the opportunity to ask questions and receive
answers from the Corporation concerning the terms and conditions of the issuance
of the Purchased Shares and that he or she could be reasonably assumed to have
the capacity to protect his or her own interests in connection with such
investment.
2.4 Speculative Investment. Optionee represents and warrants that he or
she realizes that his or her purchase of the Purchased Shares will be a
speculative investment and that he or she is able, without impairing his or her
financial condition, to hold the Purchased Shares for an indefinite period of
time and to suffer a complete loss of his or her investment. Optionee represents
and warrants that he or she is aware and fully understands the implications of
the restrictions upon transfer imposed by the Plan and therefore on the
Purchased Shares.
2.5 Restrictive Legends. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED PURSUANT TO
THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, ASSIGNED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREUNDER OR AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.
3. MISCELLANEOUS PROVISIONS
3.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
3.2 Agreement Is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the express terms and provisions of the
Plan.
3.3 Governing Law. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
3.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
3.5 Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Corporation and its successors and
assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transfer by operation of law, whether or not
any such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms and conditions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
American Alliance Corporation
a Nevada corporation
-----------------------------
By:
Title:
- - ------------------------------------
Optionee
Address:
<PAGE>
CONFIDENTIAL
NOT TO BE REPRODUCED OR DISTRIBUTED
Memorandum No._______
Name of Offeree : ___________________________
PRIVATE PLACEMENT MEMORANDUM
Far West Resources, Inc.
(a Utah Corporation) (" Company ")
4,000,000 Shares of Common Stock
$0.05 Per Share
Prinicipal Executive Offices
400 Burrard Street, Suite 1400
Vancouver, B.C. V6C-3G2
(604) 643-1777
The date of this Memorandum is April 23, 1996
<PAGE>
FAR WEST RESOURCES, INC.
Type of securities offered : Shares of the Company's common stock,
$0.001 par value
Number of Securities offered : 4,000,000 shares
Price per security : $0.05 per share
Total proceeds : If all shares sold : $200,000.00
Is a commissioned selling agent selling the securities in this offering ?
[ ] Yes [ X ] No
If yes , what percent is commission of price to public ?
Is there other compensation to selling agent(s) ?
[ ] Yes [ X ] No
Is there a finder's fee or similar payment to any person ?
[ ] Yes [ X ] No
Is there an escrow of proceeds until minimum is obtained ?
[ ] Yes [ X ] No
Is this offering limited to members of a special group, such as employees of the
Company or individuals ?
[ ] Yes [ X ] No
Is transfer of the securities restricted ?
[ ] Yes [ X ] No
THIS OFFERING OF SECURITIES HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR
HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE. THE OFFERING WILL
TERMINATE UPON THE EARLIER OF ALL OF THE SHARES OR JUNE 30th, 1996. THE COMPANY
IS NOT REQUIRED TO SELL ANY MINIMUM NUMBER OF SHARES IN ORDER TO SELL SHARES IN
THE OFFERING. THE COMPANY MAY, IN ITS DISCRETION, CONDUCT MULTIPLE CLOSINGS. (
SEE " DESCRIPTION OF THE OFFERING." )
<PAGE>
THIS MEMORANDOM HAS BEEN PREPARED SOLELY FOR USE IN CONNECTION WITH THE PRIVATE
PLCEMENT OF THE SHARES OFFERED HEREBY AND MAY NOT BE REPRODUCED OR USED FOR ANY
OTHER PURPOSE . THE OFFEREE AGREES TO RETURN TO THE COMPANY THIS MEMORANDUM AND
ALL ATTACHMENTS AND RELATED DOCUMENTATION IF THE OFFEREE DOES NOT SUBSCRIBE TO
PURCHASE SHARES IN THE OFFERING.
THESE SECURITIES ARE BEING OFFERED ONLY TO INVESTORS WHO THE OFFEROR BELIEVES
HAVE THE QUALIFICATIONS NECESSARY TO PERMIT THE SECURITIES TO BE OFFERED AND
SOLD UNDER APPLICABLE EXEMPTIONS FROM REGISTRATION UNDER THE ACT AND
QUALIFICATION UNDER APPLICABLE STATE STATUTES. THE OFFEROR WILL BE THE SOLE
JUGDE OF WHETHER AN INVESTOR POSSESSES SUCH QUALIFICATIONS. NOTWITHSTANDING
DELIVERY OF THIS MEMORANDUM AND ASSOCIATED DOCUMENTATION , THE OFFEROR DOES NOT
INTEND TO EXTEND AN OFFER TO SELL OR TO SOLICIT AN OFFER TO BUY THESE SECURITIES
UNTIL THE OFFEROR DETERMINES THAT THE OFFEREE IS QUALIFIED AND COMMUNICATES SUCH
DETERMINATION TO INVESTORS IN WRITING. THE SHARES ARE BEING OFFERED IN A PRIVATE
PLACEMENT TO A LIMITED NUMBER OF INVESTORS.THIS MEMORANDUM DOES NOT CONSTITUTE
AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT PERMITTED UNDER APPLICABLE LAW OR ANY FIRM OR INDIVIDUAL WHO DOES NOT
POSSESS THE QUALIFICATIONS DESCRIBED IN THIS MEMORANDUM.
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURTIES ACT OF
1933 ( THE "ACT" ), OR THE SECURITIES LAWS OF UTAH OR OTHER STATES, AND ARE
BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH LAWS. THERE IS NO PUBLIC MARKET FOR SECURITIES
OF THE COMPANY . EVEN IF SUCH MARKET EXISTED, PURCHASERS OF SHARES WILL BE
REQUIRED TO REPRESENT THAT THE SHARES ARE BEING ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO SALE OR DISTRIBUTION, AND PURCHASERS WILL NOT BE ABLE TO
RESELL THE SHARES UNLESS THE SHARES ARE REGISTERED UNDER THE ACT AND QUALIFIED
UNDER THE APPLICABLE STATE STATUTES ( UNLESS AN EXEMPTION FROM SUCH REGISTRATION
AND QUALIFICATION IS AVAILABLE ). PURCHASERS OF THE SHARES SHOULD BE PREPARED TO
BEAR THE ECONOMIC RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE PURCHASE OF THESE SECURITIES WILL ENTAIL A HIGH DEGREE OF RISK. THESE
SECURITIES ARE SUITABLE ONLY FOR PERSONS WHO HAVE SUBSTANTIAL FINANCIAL
RESOURCES AND HAVE NO LIQUIDITY IN THIS INVESTMENT. NO ONE SHOULD INVEST IN THE
SHARES WHO IS NOT PREPARED TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE
INVESTORS SHOULD CONSIDER CAREFULLY THE RISK FACTORS INDICATED UNDER " RISK
FACTORS."
<PAGE>
INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THIS MEMORANDUM OR ANY
COMMUNICATION, WHETHER WRITTEN OR ORAL, FROM THE COMPANY, ITS FOUNDERS,
MANAGEMENT, EMPLOYEES OR AGENTS, AS LEGAL, TAX, ACCOUNTING OR OTHER EXPERT
ADVICE. EACH INVESTOR SHOULD CONSULT THEIR OWN COUNSEL, ACCOUNTANT AND OTHER
PROFESSIONAL ADVISORS AS TO LEGAL,TAX, ACCOUNTING, AND RELATED MATTERS
CONCERNING HIS INVESTMENT AND ITS SUITABILITY FOR THEM.
NO PERSON (OTHER THAN OFFICERS OF THE COMPANY TO WHOM REQUESTS ARE DIRECTED FOR
ADDITIONAL INFORMATION CONCERNING THIS OFFERING) IS AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS (WHETHER ORAL OR WRITTEN) IN CONNECTION
WITH THIS OFFERING EXCEPT SUCH INFORMATION AS IS CONTAINED IN THIS PRIVATE
PLACEMENT MEMORANDUM AND THE ATTACHMENTS THERETO AND DOCUMENTS REFERRED TO
HEREIN . ONLY INFORMATION OR REPRESENTATIONS CONTAINED HEREIN AND THEREIN MAY BE
RELIED UPON AS HAVING BEEN AUTHORIZED.
THE SECURITIES OFFERED HEREBY WILL BE SOLD TO SUBJECT TO THE STOCK SUBSCRIPTION
AGREEMENT ATTACHED AS ATTACHMENT A OF THIS MEMORANDUM, WHICH CONTAINS CERTAIN
REPRESENTATIONS, WARRANTIES, TERMS AND CONDITIONS. EACH INVESTOR SHOULD
CAREFULLY REVIEW THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT BEFORE INVESTING.
This Company :
[ ] Has never conducted operations.
[X ] Is in the development stage.
[ ] Is currently conducting operations.
[ ] Has shown a profit in the last fiscal year.
[ ] Other ( Specify ) ______________________
( Check at one , as appropriate )
This offering has been registered for offer and sale in the following states :
State State File No Effective Date
No registration has been filed.
This Offering Circular, together with Financial Statements and other
Attachments, consists of a total of 19 pages (not including cover page).
<PAGE>
TABLE OF CONTENTS
Disclosure Statements 2
Table of Contents 4
Summary of the Offering 5
The Company 6
Risk Factors 6
Use of Proceeds 8
Description of Securities 9
Terms of the Offering 9
Directors, Officers and key Personnel of the Company 10
Remuneration of Directors and Officers 10
Reports 11
Legal Matters 11
Litigation 11
Additional Information 11
State Restrictions 12
EXHIBITS
Exhibit A Subscription Agreement
This is an original unpublished work protected under copyright laws of the
United States and other countries. All Rights Reserved. Should publication
occur, then the following notice shall apply: Copyright 1996 Far West Resources,
Inc., All Rights Reserved. No part of this document may be reproduced, stored in
a retrieval system or transmitted, in any form or any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Far West Resources, Inc.
<PAGE>
SUMMARY OF THE OFFERING
The following material is intended to summarize information contained elsewhere
in this Memorandom. This summary is qualified in its entirety by express
reference to the Memorandom and the exhibits referred to therein. Each
prospective investor is urged to read this Memorandom in its entirety.
Issuer: Far West Resources, Inc., a Utah corporation (the "Company"), is the
issuer of the Shares. The address of the Company is 1400 - 400 Burrard Street,
Vancouver, B.C. V6C-3G2.
Terms of the Offering: The Company is offering up to 4,000,000 of its common
stock, par value $.001 per share ( the " Shares " ). The Company, in its sole
discretion, may accept subscriptions for up to an aggregate of 4,000,000 or
$200,000.00 until June 30, 1996, or until such earlier date as the Company
determines that this Offering shall be terminated. In its sole discretion, the
Company may elect to terminate this Offering even if subscriptions for Shares
have been received and accepted by the Company. See " Terms of the Offering" and
"Subscription for Shares ".
Company's Business: The Company is engaged the development of natural resource
properties.
Risk Factors: The offering involves speculative investment with substantial
risks, including those associated with an unproven startup venture, and risks
associated with the development of natural resource properties in remote
locations. Although the Company will use its best efforts to protect the
investments of the Investors, there is no assurance that the Company's efforts
will be successful. Accordingly, a prospective Investor should not view the
Company or its officers, directors, employees or agents as guarantors of the
financial success of an investment in the Shares. See "Risk Factors".
Limited Transferability of the Shares: The Shares have not been registered under
the 1933 Act or the securities laws of any state. The Shares of common stock
purchased pursuant to this Offering will not be "restricted" shares because the
shares are offered under Rule 504 and this offering is excluded from the
provisions of Regulation D pertaining to retricted shares. This does not mean,
however, that a public market exists for the Shares. A limited public market
exists now, but may not exist in the future. See "Risk Factors", "Terms of the
Offering".
Limitation of Liability: Except for the amounts paid by Investors for their
purchase of any Shares, and as required by Utah State law, no investor will be
liable for any debts of the Company or be obligated to contribute any additional
capital or funds to the Company. See "Risk Factors".
<PAGE>
Suitability Standards: Each Investor must meet certain eligibility standards
established by the Company for the purchase of the Shares. See "Terms of the
Offering" and "Subscription for Shares".
Use of Proceeds: The Company plans to use the money received from this offering
for the due diligence and exploration of resource properties and for working
capital. The funds will not be deposited in an escrow account and will be
available to the Company immediately. No minimum amount of Shares is required to
be sold.
THE COMPANY
Exact corporate name: Far West Resources, Inc.
State and date of incorporation: Utah State
July 14th, 1983
Street address of principal office: 400 Burrard Street, Suite 1400
Vancouver, B.C. V6C-3G2
(604) 643-1777
Fiscal Year: December 31.
Person(s) to contact with respect to
offering: Mr Harmel S. Rayat
MATERIAL CONTRACTS
The Company has no contracts at the present time.
<PAGE>
RISK FACTORS
An investment in the Shares involves a high degree of risk. No prospective
Investor should acquire the Shares unless he can afford a complete loss of his
investment. The risks described below are those which the Company deems most
significant as of the date hereof. Other factors which may have a material
impact on the operations of the Company may not be forseen. In addition to the
other factors set forth elsewhere in this Memorandum, prospective Investors
should carefully consider the following specific risk factors:
A. OPERATING RISKS
General. The economic success of an investment in the Shares depends,
to a large degree, upon many factors over which the Company has no control.
These factors include general economic, industrial and international conditions;
inflation or deflation; fluctuation in interest rates; the availability of, and
fluctuations in the money supply. The extent, type and sophistication of the
Company's competition; and government regulations.
Lack of Operations. The Company engages in limited business operations
at the present time. However, upon completion of the Offering, the Company plans
to use the proceeds to conduct due diligence on exploration stage natural
resource properties.
Development Stage Company. The Company is a development stage company as
defined by Statement of Financial Accounting Standards No.7.
Dependence on Key Personnel. The Company's success will depend, in
large part, upon the talents and skills of key management personnel. To the
extent that any of its management personnel is unable or refuses to continue
association with the Company, a suitable replacement would have to be found.
There is no assurance that the Company would be able to find suitable
replacements for such personnel, or that suitable personn.
Inherent Business Risks. The business that the Company plans to engage
in involves substantial and inherent risks associated with a development company
with limited financial resources.
B. INVESTMENT RISKS
Speculative Investment. The Shares are a very speculative investment.
There can be no assurance that the Company will attain its objective and it is
very likely that the Company will not be able to advance any business activities
and Investors could lose their entire investments.
Arbitrary Purchase Price. The purchase price for the Shares has been
arbitrarily determined by the Company, and is not necessarily indicative of
their value. No assurance is or can be given that the Shares, although
transferable, could be sold for the purchase price, or for any amount. There
currently exists a limited market for resale of the Shares.
Restriction of Transferability. While the Company believes that no
restriction exists for the transfer of the Shares being offered by the Company,
an investment in the Shares may be a long term investment. Investors who do not
wish or who are not financially able to hold the Shares for a substantial period
of time are advised against purchasing Shares. The Shares are not registered
under the 1933 Act or under the securities laws of any state, but are being
offered by the Company under the exemption from registration provided by Rule
504 under Regulation D and related state and foreign exceptions.
<PAGE>
Immediate Dilution for Investors. An investor in this offering will
experience an immediate and substantial dilution.
"Best Efforts" Offering. The Shares are being offered on a "best
efforts" basis by the Company. No person or entity is committed to purchase or
take down any of the Shares offered pursuant to this Offering. No escrow account
is maintained and no minimum amount is required to be sold. Funds will be
available to the Company upon receipt.
Management and Operation Experience. The Company's officers, directors
and other personnel have engaged in a variety of businesses and have been
involved in business financing, operations and marketing, but their experience
in these fields is limited.
There is no assurance that such experience will result in the success of the
Company.
Other Risks. No assurance can be given that the Company will be
successful in achieving its stated objectives, that the Company's business is
undertaken by the Company, will generate cash sufficient to operate the business
of the Company or that other parties entering into agreements relating to the
Company's business will meet their respective obligations.
Dividends. The Company's Board of Directors presently intends to cause
the Company to follow a policy of retaining earnings, if any, for the purpose of
increasing the net worth and reserves of the Company. Therefore, there can be no
assurance that any holder of Common Stock will receive any cash, stock or other
dividends on his shares of Common Stock. Future dividends on Common Stock, if
any, will depend on the future earnings, financing requirements and other
factors.
USE OF PROCEEDS
The Company will incur expenses in connection with the Offering in an amount
anticipated not to exceed $5,000.00 for legal fees, accounting fees, filing
fees, printing costs and other expenses. If the maximum number of Shares are
sold, the Company anticipates that the net proceeds to it from the Offering will
be as follows:
Maximum
Item Shares Sold
Gross Proceeds of Offering $200,000.00
Offering Expenses
Costs of Offering 5,000.00
TOTAL PROCEEDS TO BE RECEIVED: $195,000.00
<PAGE>
The Company estimates that the costs of the Offering will be as follows: (i)
legal fees of approximately $750.00, (ii) accounting fees of approximately
$2500.00 and (iii) printing and other miscellaneous costs of approxmately
$1750.00.
The net proceeds of this offering, assuming all the Shares are sold, will be
sufficient to sustain the planned development and exploration activities of the
Company for a period of approximately 9 months, depending upon the number of
Shares sold in the offering and other factors. Even if all the Shares offered
hereunder are sold, the Company will require additional capital in order to fund
continued development activities and capital expenditures that must be made. The
Company's business plan is based on the premise that additional funding will be
obtained through funds generated from operations, the exercising of the options
by shareholders, additional offerings of its securities, or other arrangements.
There can be no assurance that any securities offerings will take place in the
future, or that funds sufficient to meet any of the foregoing needs or plans
will be raised from operations or any other source.
DESCRIPTION OF SECURITIES
The following discussion describes the stock and other securities of the
Company.
General. The Company currently has 100,000,000 authorized common
shares, par value $.001 per share, of which 4,076,300 common shares were issued
and outstanding as of the date of this Placement. All of the outstanding common
shares of the Company are fully paid for and nonassessable.
Voting Rights. Each share of the 4,076,300 shares of the Company's common
stock held by its current shareholders is entitled to one vote at shareholders
meetings.
Dividends. The Company has never paid a dividend and does not anticipate
doing so in the never future.
Options. The Company currently has no options outstanding in relation to
its common stock.
Miscellaneous Rights and Provisions. Shares of the Company's common
stock have no pre-emptive rights. The Shares do not have any conversion rights,
no redemption or sinking fund provisions, and are not liable to further call or
assessment. The Shares, when paid for by Investors, will be fully paid and
nonassessable. Each share of the Company's common shares is entitled to a pro
rata share in any asset available for distribution to holders of equity
securities upon the liquidation of the Company.
<PAGE>
TERMS OF THE OFFERING
The Company is offering to qualified investors a maximum of 4,000,000 Shares at
a purchase price of $0.05 per share of the Company's common stock. The Company
may, in its sole discretion, terminate the offering at any time. The Offering
will close on the earliest of June 30, 1996 or the election of the Company when
all of the Shares are sold, in no event later than June 30, 1996.
The Shares are being offered and sold by the Company under the exemption from
registration contained in Rule 504 under Regulation D and related exemptions
from state registration requirements. Rule 504 permits the Company to offer and
sell its stock in an amount not exceeding $1,000,000 to an unlimited number of
persons. Until 1992, Rule 504(b)(2)(ii) imposed a limited disclosure obligation
of all issuers such as the Company which was intended to ensure that investors
in a Rule 504 transaction were clearly advised of the retricted character of the
securities being offered for sale. This requirement was eliminated in July, 1992
at which time the Securities and Exchange Commission adopted an amendment to
Rule 504 that eliminated all limitations on the manner of offering of stock
under that rule and/or the resale of stock purchased in reliance on that rule.
Therefore, following adoption of the 1992 amendment, the securities being
offered and sold by the Company pursuant to the present Offering are available
for immediate resale by nonaffiliates of the issuer.
The Shares are being offered on a "best efforts" basis by the Company and
certain expenses of the Offering will be paid from the proceeds of the Offering.
The Company anticipates that such expenses will not exceed $5,000 as detailed in
the Use of Proceeds.
DIRECTORS, OFFICERS AND KEY PERSONNEL OF THE COMPANY
Officers and Directors. The following information sets forth the names
of the officers and directors of the Company and their present position with the
Company.
NAME POSITION HELD SINCE
Harmel S. Rayat* President March 1996
Kundan S. Rayat Director March 1996
Jasbinder Chohan Secretary/Treasurer
Director March 1996
* Beneficial owner of 4,000,000 common shares.
<PAGE>
REMUNERATION OF DIRECTORS AND OFFICERS
Directors of the Company who are also employees of the Company receive no
additional compensation for their services as Directors. The Company intends, in
the future, to pay Directors who are not employees of the Company, compensation
of $500 per Director's Meeting, as well as reimbursements of any out of pocket
expenses incurred in the Company's behalf.
REPORTS
The books and records of the Company will be maintained by the Company. The
books of account and records shall be kept at the principal place of business of
Far West Resources, Inc. and each shareholder, or his duly authorized
representatives, shall have upon giving ten (10) days prior notice, access
during reasonable business hours to such books and records, and the right to
inspect and copy them. Within 120 days after the close of each fiscal year,
reports will be distributed to the shareholders which will include financial
statements (including a balance sheet and statements of income, shareholder's
equity, and cash flows) prepared in accordance with generally accepted
accounting principals, with a reconciliation to the tax information
supplementary supplied, accompanied by a copy of the accountant's report.
LEGAL MATTERS
Gary R. Blume, Esquire, 11801 North Tatum Boulevard, Suite 108, Phoenix, Arizona
85028-1611 will pass upon certain matters for the Company.
LITIGATION
The Company is not presently involved in any material litigation or other legal
proceedings.
<PAGE>
ADDITIONAL INFORMATION
In the opinion of the Board of Directors of the Company, this memorandum
contains a fair presentation of the subjects discussed herein and does not
contain a misstatement of material fact or fail to state a material fact
necessary to make any statements made herein not misleading. Persons to whom
offers are made will be furnished with such additional information concerning
the Company and other matters discussed herein as they, or their purchaser
representative or other advisors, may reasonably request. The Company shall, to
the extent such information is available or can be acquired without unreasonable
effort or expense, endeavor to provide the information to such persons. All
offerees are urged to make such personal investigations, inspections or
inquiries as they deem appropriate.
Questions or requests for additional information may be directed to Harmel S.
Rayat at (604) 643-1777. Requests for additional copies of this Memorandum or
assistance in executing subscription documents may be directed to the Company.
STATE RESTRICTIONS AND DISCLOSURES
FOR UNREGISTERED SECURITIES OFFERINGS
NOTICE TO ARIZONA RESIDENTS:
These securities are being sold in reliance upon Arizona's Limited
Offering exemption from registration pursuant to A.R.S. 44-1844.
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE ARIZONA
SECURITIES ACT, AS AMENDED, AND THEREFORE, CANNOT BE TRANSFERRED OR RESOLD
UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR AN EXEMPTION THEREFROM IS
AVAILABLE.
As a purchaser of such securities hereby represent that I understand
these securities cannot be resold without registration under the Arizona
Securities Act or an exemption therefrom. I am not an underwriter within the
meaning of A.R.S 44-1801(17), and I am acquiring these securities for myself,
not for other persons. If qualifying as a non-accredited investor, I further
represent that this investment does not exceed 20% of my net worth (excluding
principal residence, furnishings therein and personal automobiles).
NOTICE TO CALIFORNIA RESIDENTS:
These securities are being sold in reliance upon California's Limited
Offering Exemption. 25102(f) of the California Code, as amended.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS MEMORANDUM HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFROM PRIOR TO SUCH QUALIFICATIONS IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATIONS BY SECTION
25100, 25102 OR 26105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL
PARTIES ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS
THE SALE IS SO EXEMPT.
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA DOES NOT
RECOMMEND OR ENDORSE THE PURCHASE OF THESE SECURITIES.
<PAGE>
NOTICE TO COLORADO RESIDENTS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE COLORADO SECURTIES ACT OF 1981 BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON
OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE COLORADO SECURITIES ACT OF 1981, IF SUCH REGISTRATION IS
REQUIRED.
NOTICE TO NEW YORK RESIDENTS:
THIS PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED
BY THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF
THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION OF THE CONTRARY IS UNLAWFUL.
THIS PRIVATE PLACEMENT MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT
OF MATERIAL FACT AND DOES NOT OMIT ANY MATERIAL FACT NECESSARY TO MAKE THE
STATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS
PURPOSED TO BE SUMMARIZED HEREIN.
Purchaser Statement:
I understand that this Offering of Shares has not been reviewed by the
Attorney General of the State of New York because of the Offeror's
representations that this intended to be a non-public Offering pursuant to the
Regulation D Rule 505 or 506, and that if all of the conditions and limitations
of Regulation D are not complied with, the Offering will be resubmitted to the
Attorney General for amended exemption. I understand that any literature used in
connection with this Offering has not been previously filed with the Attorney
General and has not been reviewed by the Attorney General. This Investment Unit
is being purchased for my own account for investment, and not for distribution
or resale to others. I agree that I will not sell or otherwise transfer these
securities unless they are registered under the Federal Securities Act of 1933
or unless an exemption from such registration is available. I represent that I
have adequate means of providing for my current needs and possible personal
contingencies of financial problems, and that I have no need for liquidity of
this investment.
<PAGE>
It is understood that alldocuments, records and books pertaining to
this investment have been made available to my attorney, my accountant, or my
offeree representative and myself, and that, upon reasonable notice, the books
and records of the issuer will be available for inspection by investors, at
reasonable hours at the principal place of business.
<PAGE>
EXHIBITS
<PAGE>
Far West Resources, Inc.
SUBSCRIPTION DOCUMENT
1. The undersigned hereby subscribes for ____________ shares of common stock
(hereinafter "Shares"), as described in the Private Offering Memorandum dated
April 26, 1996 ("Memorandum"), of Far West Resources, Inc., a Utah corporation
(the "Company"), being offered by the Company for a purchase price of $0.05 per
share and tenders herewith the sum of $__________ in payment therefor, together
with tender of this Subcription Document.
2. The undersigned represents and warrants that he is a bona fide resident of
the State of ___________________ .
3. The undersigned acknowledges:
a. Receipt of a copy of the Private Offering Memorandum;
b. That this subscription, if accepted by the Company, is legally binding
and irrevocable;
c. That the Company has a very limited financial and operating history;
d. That the Shares have not been registered under the Securities Act of
1933, as amended, in reliance upon exemptions contained in that Act,
and that the Shares have not been registered under the securities acts
of any state in reliance upon exemptions contained in certain state's
securities laws; and
e. That the representations and warranties provided in this Subscription
Document are being relied upon by the Company as the basis for the
exemption from the registration requirements of the Securities Act of
1933 and of the applicable state's securities laws.
4. The undersigned represents and warrants as follows:
<PAGE>
a. That the undersigned subscriber is purchasing said Shares as an
investment and said Shares are purchased soley for the undersigned's
own account.
b. That the undersigned subscriber has sufficient knowledge and
experience in financial and business matters to evaluate the merits
and risks of an investment in the Shares;
c. That the undersigned subscriber is able to bear the economic risk of
an investment in the Shares;
d. That the undersigned subscriber has read and is thoroughly familiar
with the Private Offering Memorandum and represents and warrants that
he is aware of the high degree of risk involved in making investment
in the Shares;
e. That the undersigned subscriber's decision to purchase the Shares is
based solely on the information contained in the Private Offering
Memorandum and on written answers to such questions as he has raised
concerning the transaction;
f. That the undersigned subscriber is purchasing the Shares directly from
the Company and understands that neither the Company nor the Offering
is associated with; endorsed by nor related in any way with any
investment company, national or local brokerage firm or broker dealer.
The undersigned subscriber's decision to purchase the Shares is not
based in whole or in part on any assumption or understanding that an
investment company, national or local brokerage firm or other broker
dealer is involved in any way in this Offering or has endorsed or
otherwise recommended an investment in these Shares.
g. That the undersigned subscriber has an investment portfolio of
sufficient value that he could suitably absorb a high risk illiquid
addition such as an investment in the Shares.
h. The undersigned further represents that (INITIAL APPROPRIATE
CATEGORY):
[ ] I am a natural person whose individual net worth, or joint
worth with my spouse at the time of purchase, exceeds $200,000;
[ ] I am a natural person who had an individual income inexcess of
$50,000 or joint income with my supose in excess of $50,000 in
each of the two most recent years and who reasonably expects an
income in excess of those amounts in the current year;
<PAGE>
i. That Regulation D requires the Company to conclude that each investor
has sufficient knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the shares, or to verify that the investor has retained
the services of one or more purchaser representatives for the purpose
of evaluating the risks of investment in the shares, and hereby
represents and warrants that he has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of an investment in the shares and of making an
informed investment decision and will not require a purchaser
representative.
5. The undersigned understands and agrees that this subscription is made subject
to each of the following terms and conditions:
a. The Company shall have the right to accept or reject this
subscription, in whole or part, for any reason. Upon receipt of each
Subscription Document, the Company shall have until June 30th, 1996 in
which to accept or reject it. If no action is taken by the Company
within said period, the subscription shall be deemed to have been
accepted. In each case where the subscription is rejected, the Company
shall return the entire amount tendered by the subscriber, without
interest;
b. That the undersigned subscriber will, from time to time, execute and
deliver such documents or other instruments as may be requested by the
Company in order to aid the Company in the consummation of the
transactions contemplated by the Memorandum.
6. The undersigned hereby constitutes and appoints the Company, with full power
of substitution, as attorney-in-fact for the purpose of executing and
delivering, swearing to and filing, any documents or instruments related to or
required to make any necessary clarifying or conforming changes in the
Subscription Document so that such document is correct in all respects.
7. As used herein, the singular shall include the plural and the masculine shall
include the feminine where necessary to clarify the meaning of this Subscription
Document. All terms not defined herein shall have the same meanings as in the
Memorandum.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Documentthis _____ day of ___________, 1996.
Number of Shares ___________________
Total amount tendered $__________________
<PAGE>
INDIVIDUAL OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
JOINT OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
OTHER OWNERSHIP __________________________________________
Name ( Please Type or Print )
By:_______________________________________
( Signature )
__________________________________________
Title
__________________________________________
Employer Indentification Number
ADDRESS:____________________________________________________________________
Street City State Zip
Phone ( Residence )_____________________ ; Phone ( Business ) _________________
<PAGE>
I,________________________________, do hereby certify that the
representations made herein concerning my financial status are true, and that
all other statements contained herein are true, accurate and complete to the
best of my knowledge.
Date: ___________________ , 1996. __________________________________________
Signature
CERTIFICATE OF DELIVERY
I hereby acknowledg that I delivered the foregoing Subscription
Document to _________ _________________ on the _______ day of __________________
, 1996.
__________________________________________
Signature
ACCEPTANCE
This Subscription is accepted by Far West Resources, Inc., as of the
______ day of _____________ , 1996.
Far West Resources, Inc.
By :______________________________________
Harmel Rayat, President
<PAGE>
PRIVATE PLACEMENT MEMORANDUM
Far West Resources, Inc.
2,000,000 Shares
Offering Price - $0.15 per Shares
Minimum Investment: 6,666 Shares ($1,000)
Far West Resources, Inc. (the "Company") is offering 2,000,000 Shares (the
"Shares") at a price of $0.15 per Share, with a minimum purchase of 6,666 Shares
($1,000). The Shares are offered for sale directly by the Company, subject to
the terms and conditions set forth herein.
THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS
The securities offered by this Memorandum have not been registered under the
Securities Act of 1993, as amended (the "Securities Act"), and are offered for
sale in reliance upon the exemption provided by, or pursuant to regulations
promulgated under, Section 4(2), Regulation D, Rule 504 of such Act relating to
transactions not involving a public offering. Because the securities are not
registered under the Securities Act or the securities laws of any state, the
investor must hold them indefinitely unless (I) they are registered under the
Securities Act and any applicable state securities laws, (ii) the investor
obtains an opinion of counsel satisfactory to the Company to the effect that
registration is not required under the Securities Act and applicable state laws
or (iii) the Company permits the sale, transfer, or other disposition of the
securities by the investor as provided herein. No public market exists for any
of the securities offered hereby and such a market for resale of these
securities may never develop.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THESE
AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This offering will be withdrawn on August 31, 1997, unless the offering is
extended one or more times by the Company without notice to subscribers to a
date not later than September 30, 1997 (the "Termination Date") as provided
herein.
The date of this Memorandum is June 30, 1997
<PAGE>
This Memorandum does not constitute an offer to sell or a solicitation of an
offer to purchase the Shares in any state or to any person to whom it is
unlawful to make such offer or solicitation and does not constitute an offer to
sell or solicitation to any member of the general public. This Memorandum has
been prepared solely for the benefit of investors interested in purchasing the
Shares offered hereby. Any distribution of this Memorandum to any person other
than the recipient (or to those individuals whom he may retain to advise him
with respect thereto) is unauthorized, and any reproduction of this Memorandum
in whole or in part, or the divulgence of any of its contents without the prior
written consent of the Company, is unauthorized and prohibited.
The recipient, by accepting delivery of this Memorandum, agrees to return this
Memorandum and all documents furnished herewith to the Company or its
representatives if the recipient does not purchase any of the Shares offered
hereby or if the offering is withdrawn or terminated.
The delivery of this Memorandum at any time subsequent to the date hereof does
not imply that the information contained herein is correct as of any time
subsequent to the date of this Memorandum.
No dealer or salesperson has been authorized to give any information or make any
representations or warranties, either express or implied, other than those that
may be contained in this Memorandum or other documents included herein or in
written supplements to this Memorandum and, if given or made, such information,
representations and warranties must not be relied upon by any potential
investor.
During the course of the offering and prior to sale, each prospective investor
and his purchaser representative(s), if any, are invited to ask questions of and
obtain additional information from the Company and its directors concerning the
terms and conditions of the offering, the Company and its officers and directors
and any other relevant matters, including, but not limited to, additional
information to verify the accuracy of the information set forth in the
Memorandum. The Company will provide such information to the extent it is
available or can be acquired without unreasonable effort or expense. Answers to
questions and additional information may be given only by the Company and its
duly authorized representatives. Information, representations or warranties
received from any other person or in any other manner must not be relied upon as
having been authorized by the Company.
This Memorandum contains statements, believed to be accurate, based on certain
documents, but reference is hereby made to the actual documents for complete
information relating thereto. Copies of such documents are attached as exhibits
to this Memorandum or are on file at the Company. All such statements are
qualified in their entirety by this reference. All documents relating to this
investment will be made available to any prospective subscriber and his
purchaser representative(s) upon request.
The Shares are offered by the Company subject to receipt and acceptance of
subscriptions, the right to reject any subscription in whole or in part,
withdrawal, cancellation or modification of the offer without notice to
investors and certain other conditions.
<PAGE>
NOTICES TO ALL INVESTORS:
1. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
2. EXCEPT AS SET FORTH HEREIN, NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR
IMPLIED, OTHER THAN THOSE WHICH , MAY BE CONTAINED HEREIN. IF MADE, SUCH
INFORMATION MUST NOT BE RELIED UPON. NO STATEMENT CONTAINED HEREIN SHALL BE
DEEMED TO MODIFY, SUPPLEMENT OR CONSTRUE IN ANY WAY THE PROVISIONS OF ANY
DOCUMENTS ATTACHED HERETO AS EXHIBITS OR ANY OF THE LANGUAGE CONTAINED THEREIN,
AND ANY STATEMENT MADE HEREIN WITH RESPECT TO ANY SUCH DOCUMENT IS QUALIFIED BY
REFERENCE THERETO.
3. THESE SECURITIES ARE OFFERED SOLELY BY THIS CONFIDENTIAL PRIVATE PLACEMENT
MEMORANDUM AND ARE SUBJECT TO PRIOR SALE. THE COMPANY RESERVES THE RIGHT, IN ITS
SOLE DISCRETION, TO WITHDRAW OR MODIFY THIS OFFER WITHOUT PRIOR NOTICE OR TO
REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART OR TO ALLOT TO ANY PROSPECTIVE
INVESTOR FEWER THAN THE INTERESTS APPLIED FOR BY SUCH INVESTOR.
4. AN INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. (SEE "RISK
FACTORS") THESE RISK FACTORS INCLUDE, AMONG OTHER RISKS, THE FOLLOWING:
A. THERE IS LIMITED MARKET FOR RESALE OF THE STOCK; HOWEVER, THERE ARE
NO ASSURANCES THAT THIS MARKET WILL EXIST WHEN THE INVESTOR DESIRES TO
LIQUIDATE. IN ADDITION, TRANSFERABILITY OF THE STOCK IS RESTRICTED AND
INVESTORS MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE THEIR
INVESTMENT AT A TIME WHEN THEY MAY DESIRE TO DO SO. INVESTORS MAY,
THEREFORE, BE REQUIRED TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME. ANY SALE OR TRANSFER OF THE STOCK OR
NOTES MAY ALSO RESULT IN ADVERSE TAX CONSEQUENCES.
B. THIS OFFERING INVOLVES SUBSTANTIAL RISKS INHERENT IN ANY BUSINESS
WHICH IS A START-UP AND, IN PARTICULAR, A BUSINESS WHICH IS DEPENDENT
UPON THE COMMERCIAL SUCCESS OF UNTESTED PRODUCTS.
5. NO OFFERING LITERATURE OR ADVERTISING IN WHATEVER FORM IS AUTHORIZED FOR USE
IN CONNECTION WITH THIS OFFERING EXCEPT THIS CONFIDENTIAL PRIVATE PLACEMENT
MEMORANDUM AND THE DOCUMENTS LISTED HEREIN. NO PERSON OR SALESMAN HAS BEEN
AUTHORIZED TO MAKE ANY REPRESENTATION OR GIVE ANY INFORMATION WITH RESPECT TO
THESE INVESTMENT SHARES, EXCEPT THE INFORMATION CONTAINED IN SUCH DOCUMENTS.
ONLY THOSE REPRESENTATIONS EXPRESSLY SET FORTH IN SUCH DOCUMENTS MAY BE RELIED
UPON IN CONNECTION WITH THE OFFERING OF THESE INVESTMENT SHARES.
<PAGE>
WHO MAY INVEST
The Shares are being offered through this Memorandum without registration under
the Securities Act pursuant to the exemption from the registration requirements
of such Act provided by Section 4(2) thereof and Rule 504 of Regulation D
promulgated thereunder.
General Suitability Standards
- - -----------------------------
The Shares will be sold only to a person:
(I) who makes a minimum purchase of 20,000 Shares for $10,000,
unless the Company, in its sole discretion, permits the
purchase of fewer Shares;
(ii) who complies with the terms of the Subscription Agreement;
(iii) who represents that they have been furnished and have
carefully read and relied solely on the information contained
in this Memorandum, including all exhibits, amendments and
supplements hereto;
(iv) who either:
(a) represents in writing that they qualify as an Accredited
Investor or
(b) if they are a Non-Accredited Investor, demonstrates in the
Subscription Agreement that they, either alone or with their
Purchaser Representative(s), has such knowledge and
experience in financial and business matters that they are
capable of evaluating the merits and risks of an investment
in the Shares (investors will also be required to provide
the Company with any additional information or documentation
that may be required to verify such qualifications);
(v) whose overall commitment to investments which are not readily
marketable is not disproportionate to their net worth, and
whose acquisition of the Shares will not cause such overall
commitment to become excessive; and
(vi) who has no need for liquidity with respect to their investment
in the Shares and is capable of suffering the loss of their
entire investment in any Shares purchased.
Accredited Investors
- - --------------------
Accredited Investor is defined in the Securities Act of 1933, Rule
501(a) and shall mean any person who comes within any of the following
categories, or who the issuer reasonable believes comes within any of the
following categories, at the time of the sale of the securities to that person:
<PAGE>
1. Bank, Broker, Insurance Company, Investment Company, Small Business
Investment Company, State Plan, or Employee Benefit Plan. Any bank as
defined in section 3(a)(2) of the Act, or any savings and loan
association or other institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; any
broker or dealer registered pursuant to section 15 of the Securities
Exchange Act of 1934; any insurance company as defined in section
2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in section 2(a)(48) of that Act; any small business investment
company licensed by the US Small Business Administration under section
301(c) or (d) of the Small Business Investment Act of 1958; and plan
established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in section
3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or
if the employee benefit plan has total assets in excess of $5,000,000
or, if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;
2. Private Business Development Company. Any private business development
company as defined in section 202(a)(22) of the Investment Advisers
Act of 1940;
3. Organization, Partnership, Corporate or Other Entity Investor. Any
organization described in section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
4. Officer of Issuer. Any director, executive officer, or general partner
of the issuer of the securities being offered or sold, or any
director, executive officer, or general partner of a general partner
of that issuer;
5. $1,000,000 Net Worth. Any natural person whose individual net worth,
or joint net worth with that person's spouse, at the time of this
purchase exceeds $1,000,000;
6. $200,000 Income. Any natural person who had individual income in
excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same
level of income in the current year;
7. Trust. Any trust, with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii); and
8. Entity. Any entity in which all of the equity owners are accredited
investors.
<PAGE>
General Requirements
- - --------------------
A breach of an investor of any of its representations made to the
Company in the Subscription Agreement which results in a loss by the Company of
its registration exemption provided by Regulation D will cause such investor to
be liable to the Company for all damages and losses proximately caused thereby.
The bases for establishing the foregoing standards include the relative
lack of liquidity of the Shares and the risks inherent in an investment in the
Company. The foregoing standards represent minimum requirements for a
prospective purchaser and the Company reserves the right to reject any
subscription notwithstanding compliance with these standards. Shares may also be
sold to corporations, partnerships, trusts and other entities meeting the
foregoing requirements.
Certain states in which the Company may qualify its Shares for sale may
establish suitability standards and minimum purchase requirements more
restrictive than those set by the Company. Those requirements, if any, will be
set forth in a supplement to this Memorandum.
<PAGE>
SUMMARY OF THE OFFERING
The following material is intended to summarize information contained
elsewhere in this Memorandum. This summary is qualified in its entirety by
express reference to the Memorandum and the exhibits referred to therein. Each
prospective investor is urged to read this Memorandum in its entirety, as well
as various filings submitted to the SEC and other regulatory bodies.
The Company
- - -----------
The Company was incorporated under the laws of the State of Utah, on
July 14, 1983 under the name of Far West Gold, Inc., with an authorized capital
of 50,000,000 shares of common stock with a par value of $.001 per share.
On July 14, 1983, the Company, in connection with a 504 D offering
issued 5,141,000 shares of common stock for cash at $.003 per share or $15,000.
During October 1984, the Company issued 13,009,000 shares of common stock at
$.01 per share or $130,090, less offering expenses of the offering of $27,547,
for a net cash of $102,543. For the year ending December 31, 1990, the Company
received a capital contribution of $4,364 to pay expenses of the Company. For
the year ending December 31, 1991, the Company received a capital contribution
of $100 to pay expenses of the Company. For the year ending December 31, 1995,
the Company issued 20,000,000 shares of common stock at $.001 per share to
satisfy current liabilities in the amount of $20,000.
On April 15, 1996, the Company effected a reverse split of 500:1, with
the par value remaining at $.001. On April 16, 1996, the Company issued
4,000,000 shares of common stock at $.0005 or $2000 for services to Mr. Harmel
Rayat, a director of the Company. On May 9, 1996, in connection with a 504 D
offering, the Company issued 4,000,000 shares of common stock at $.05 per share
for cash in the amount of $200,000. On May 9, 1996, shareholders of the Company
approved a name change to Far West Resources, Inc and approved an increase in
the number of shares that the Company has authority to issue to 105,000,000, of
which 100,000,000 shares shall be at $.001 par value common stock, and
5,000,000shares shall be $.10 par valued preferred stock.
The Company is engaged in the development of natural resource and real
estate properties.
The Offering
- - ------------
Shares Offered 2,000,000
Offering Price $0.15 Per Share
<PAGE>
Use of Proceeds
- - ---------------
The Company plans to use the proceeds from this Offering for working
capital, public relations and management consulting purposes.
Need for Additional Capital and Capital Formation Plan
- - ------------------------------------------------------
Even if all or substantially all of the Shares offered hereunder are
sold, the Company may be dependent upon, among other things, the receipt of
additional capital. The Company plans to seek the additional financing it will
require through the sale of additional debt or equity securities, through
venture capital or through strategic partnerships. There is no assurance that
such additional financing will be available when required in order to proceed
with the business plan and complete preparations to continue operations.
RISK FACTORS
Investment in the Company involves a number of risks. In addition to
the risks and investment considerations discussed elsewhere in the Memorandum,
the following factors should be considered prior to purchasing the Shares
offered through this Memorandum.
SUMMARY OF RISKS
General
- - -------
The economic success of an investment in the Shares depends, to a large
degree, upon many factors over which the Company has not control. These factors
include general economic, industrial and international conditions; inflation or
deflation; fluctuation in interest rates; the Company's competition; and
governmental regulations.
Speculative Investment
- - ----------------------
The Shares are a very speculative investment. Although the Company is
confident it will succeed in its endeavours, Investors could lose their entire
investment.
Management and Operation Experience
- - -----------------------------------
The Company's officers, directors and other personnel have engaged in a
variety of businesses and have been involved in business financing, operations
and marketing, but their experience in these fields is limited. There is no
assurance that such experience will result in the success for the Company.
Other Risks
- - -----------
No assurance can be given that the Company will be successful in
achieving its stated objectives, that the Company's business, once business is
undertaken by the Company, will generate
<PAGE>
cash sufficient to operate the business of the Company or that other parties
entering into agreements relating to the Company's business will meet their
respective obligations.
Paid in Capital Has Funded Operations
- - -------------------------------------
Much of the operating capital of the Company over the past several
years has come from cash provided by private fundings. The Company has not been
profitable in the past nor has it generated sufficient capital to cover the
on-going operating and expansion expenses.
Dependence Upon Offering Proceeds and Need for Additional Capital
- - -----------------------------------------------------------------
There is no assurance that such additional financing will be available
when required in order to proceed with the business plan or that the Company's
ability to respond to competition or changes in the market place. If the Company
is unsuccessful in securing the additional capital needed to continue operations
within the time required, the Company will not be in a position to continue
operations and the purchasers of Shares in this offering may lose their entire
investment.
Immediate and Substantial Dilution
- - ----------------------------------
The purchasers of the Shares being offered hereby will furnish a
substantial portion of the Company's initial capital. Therefore the capital
invested by the purchasers of the Shares will be at risk immediately in the
business of the Company. Even if all Shares offered hereunder are sold, the
investors in the Shares should assume that the shares of Common Stock will have
only a minimal book value.
Limited Transferability and Liquidity
- - -------------------------------------
In order to satisfy the requirements of the exemptions from
registration under the Securities Act and the various applicable state
securities laws, each subscriber must acquire his Common Stock for investment
purposes only and not with a view to distribution or resale. Consequently,
certain conditions of such federal and state securities laws must be satisfied
prior to any disposition of the securities. Some of these conditions may include
a minimum holding period, availability of certain reports, including financial
statements, from the Company, limitation on the percentage of the securities
sold and the manner in which the securities are sold. The Company can prohibit
any sale, transfer or other disposition unless it receives an opinion of counsel
provided at the Shareholder's expense, in a form satisfactory to the Company,
stating that the proposed sale, transfer or other disposition will not result in
a violation of the applicable federal and state securities laws and regulations
or other applicable federal and state laws and regulations. It is likely that
Rule 144, which permits sales of unregistered securities under certain
conditions, will be available to the shareholders of the Company. No public
market exists for the Common Stock, and no assurances can be given that such a
market for the resale of such securities will develop. Consequently, owners of
the securities may have to hold them indefinitely and may not be able to
liquidate their investment in the Company or pledge such securities as
collateral for a loan in the event of an emergency.
<PAGE>
Dividends
- - ---------
The Company's Board of Directors presently intends to cause the Company
to follow a policy of retaining earnings, if any, for the purpose of increasing
the net worth and reserves of the Company. Therefore, there can be no assurance
that any holder of Common Stock will receive any cash, stock or other dividends
on his shares of Common Stock. Future dividends on Common Stock, if any, will
depend on future earnings, financing requirements and other factors.
Arbitrary Determination of Offering Price
- - -----------------------------------------
The offering price of the Common Stock was arbitrarily set by the
Company. No independent investment banking firm was retained to assist in
determining the offering price. The offering price of the Common Stock may not
bear any relation to the actual value of the Common Stock. Among the factors
considered in determining the price were estimates of the prospects of the
Company, the background and capital contributions of Management and current
conditions in the securities markets and the Company's industry. There is,
however, no relationship between the offering price of the Common Stock and the
Company's assets, earnings, book value or any other objective criteria of value.
Additional Securities Available for Issuance
- - --------------------------------------------
The Company's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock, and 5,000,000 shares of Preferred Stock. At
this time, 8,076,202 shares of Common Stock have been issued. Accordingly,
shareholders, including those purchasing the shares offered with the sale of
these Shares, will be dependent upon the judgment of management in connection
with the future issuance and sale of shares of the Company's capital stock, in
the event purchasers can be found for such securities.
MANAGEMENT
Directors and Executive Officers
- - --------------------------------
<TABLE>
<CAPTION>
Name Position Director
Since
<S> <C> <C>
Harmel S. Rayat President and CEO 3/96
Jasbinder Chohan Director, Secretary/Treasurer 3/96
Kundan S. Rayat Director 3/96
</TABLE>
<PAGE>
Executive Compensation
- - ----------------------
At the present time no Officer or Director receives any compensation
for their services.
Employment and Consulting Agreements
- - ------------------------------------
Although the Company is not party to any Employment or Consulting
Agreements currently, it is anticipated that all future employees will enter
into standard confidentiality and non-compete agreements prior to employment.
Stock Options
- - -------------
The Company currently has a policy of awarding stock options to certain
directors and employees and views the issuance of stock options necessary in
order to attract and maintain the services of individuals essential to the
Company's long term success.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of the date of this Memorandum the
amount of the Company's Common Stock beneficially owned by each officer and
director of the Company and by each person owning more than five percent of any
class of the Company's voting securities. As of the date of the Memorandum,
there are no other equity securities of the Company outstanding, other than the
Common Stock.
<TABLE>
<CAPTION>
Before Offering After Offering
Number of Percent of Number of Percent of
Name Shares Class Shares Class
<S> <C> <C> <C> <C>
Harmel S. Rayat 4,000,000 49.5% 4,000,000 39.6%
</TABLE>
DESCRIPTION OF COMMON STOCK
Common Stock
- - ------------
Holders of the Common Stock are entitled to one vote for each share
held by them of record on the books of the Company in all matters to be voted on
by the stockholders. Holders of Common Stock are entitled to receive such
dividends as may be declared from time to time by the Board of Directors out of
funds legally available, and in the event of liquidation, dissolution or winding
up of the Company, to share ratably in all assets remaining after payment of
liabilities. Declaration of dividends on Common Stock is subject to the
discretion of the Board of Directors and will depend upon a number of factors,
including the future earnings, capital requirements and financial condition of
the Company. The Company has not declared dividends on its Common Stock in the
past and the
<PAGE>
management currently anticipates that retained earnings, if any, in the future
will be applied to the expansion and development of the Company rather than the
payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and
are not subject to further calls or assessments by the Company. There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock currently outstanding is, and the Common Stock offered by the Company
hereby will, when issued, be validly issued, fully paid and nonassessable.
Warrants
- - --------
There are no warrants outstanding.
Securities Restrictions
- - -----------------------
Purchasers of the Shares of Common Stock offered hereby must be aware
of the long-term nature of their investment and be able to bear the economic
risk of their investment for an indefinite period of time. There is no public
trading market for the shares of Common Stock and there can be no assurance that
any such market will develop in the foreseeable future. The Shares of Common
Stock have not been registered under the Securities Act or the securities laws
of any state. The right of any purchaser to sell, transfer, pledge or otherwise
dispose of such securities is limited by the Securities Act and state securities
laws and the regulations promulgated thereunder. The Company's stock transfer
records will reflect "stop transfer" restrictions with respect to its Common
Stock and the certificates representing such securities will bear the following
legend:
These securities have not been registered under the Securities Act of 1933 or
any applicable state securities laws, and they may not be offered for sale,
sold, transferred, pledged or hypothecated without an effective registration
statement under the Securities Act and under any applicable state securities
laws, or an opinion of counsel, satisfactory to the company, that an exemption
from such registration is available.
Antidilution Provision
- - ----------------------
The conversion price from time to time in effect shall be subject to
adjustment from time to time as follows:
1. In case the corporation shall at any time subdivide the outstanding
shares of common stock, or shall issue a stock dividend on its
outstanding common stock, the conversion price in effect immediately
prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in case the corporation shall at any
time combine the outstanding shares of common stock, the conversion
price in effect immediately prior to such combination shall be
proportionately increased, effective at the close of business on the
date of such subdivision, dividend or combination, as the case may be.
<PAGE>
2. The conversion price will be adjusted for dividends or distributions
on common stock payable in company stock; subdivisions, combinations
or certain reclassifications of common stock; distributions to all
holders of common stock of certain rights to purchase common stock at
less than current market price at the time; distributions to such
holders of assets or debt securities of the Company or certain rights
to purchase securities of the Company (excluding cash dividends or
distributions from current or retained earnings). However, no
adjustment need be made if security holders may participate in the
transaction or in certain other cases.
DIVIDEND POLICY
The Company's Board of Directors presently intends to cause the Company
to follow a policy of retaining earnings, if any, for the purpose of increasing
the net worth and reserves of the Company. Therefore, there can be no assurance
that any holder of Common Stock will receive any cash, stock or other dividends
on his shares of Common Stock. To date, the Company has neither declared nor
paid any dividends on its Common Stock nor does the Company anticipate that
dividends will be paid in the foreseeable future. Rather, the Company intends to
apply earnings to the expansion and development of its business.
LITIGATION
There are no pending legal proceedings to which the Company is a party.
ADDITIONAL INFORMATION
In the opinion of the Board of Directors of the Company, this
Memorandum contains a fair presentation of the subjects discussed herein and
does not contain a misstatement of a material fact or fail to state a material
fact necessary to make any statements made herein not misleading. Persons to
whom offers are made will be furnished with such additional information
concerning the Company and other matters discussed herein as they, or their
purchaser representative or other advisors, may reasonably request. The Company
shall, to the extent such information is available or can be acquired without
unreasonable effort or expense, endeavour to provide the information to such
persons. All offerees are urged to make such personal investigations,
inspections or inquiries as they deem appropriate.
<PAGE>
SUBSCRIPTION DOCUMENT
1. The undersigned hereby subscribes for Shares of common stock (hereinafter
"Shares"), as described in the Private Offering Memorandum dated June 30,
1997 ("Memorandum"), of Far West Resources, Inc., a Utah corporation (the
"Company"), being offered by the Company for a purchase price of $0.15 per
share and tenders herewith the sum of $ In payment therefore, together with
tender of this Subscription Document.
2. The undersigned represents and warrants that he is a bona fide resident of
the State of .
3. The undersigned acknowledges:
a. Receipt of a copy of the Private Offering Memorandum;
b. That this subscription, if accepted by the Company, is legally binding
and irrevocable;
c. That the Company has a very limited financial and operating history;
d. That the Shares have not been registered under the Securities Act of
1933, as amended, in reliance upon exemptions contained in that Act,
and that the Shares have not been registered under the securities acts
of any state in reliance upon exemptions contained in certain state's
securities laws; and
e. That the representations and warranties provided in this Subscription
Document are being relied upon by the Company as the basis for the
exemption from the registration requirements of the Securities Act
1933 and of the applicable state's securities laws.
FOR NEW YORK RESIDENTS ONLY: THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS
NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
4. The undersigned represents and warrants as follows:
a. That the undersigned subscriber is purchasing said Shares as an
investment and said Shares are purchased solely for the undersigned's
own account;
<PAGE>
b. That the undersigned subscriber has sufficient knowledge and
experience in financial and business matters to evaluate the merits
and risks of an investment in the Shares;
c. That the undersigned subscriber is able to bear the economic risk of
an investment in the Shares;
d. That the undersigned subscriber has read and is thoroughly familiar
with the Private Offering Memorandum and represents and warrants that
he is aware of the high degree of risk involved in making an
investment in the Shares;
e. That the undersigned subscriber's decision to purchase the Shares is
based solely on the information contained in the Private Offering
Memorandum and on written answers to such questions as he has raised
concerning the transaction;
f. That the undersigned subscriber is purchasing the Shares directly from
the Company and understands that neither the Company nor the Offering
is associated with, endorsed by nor related in any way with any
investment company, national or local brokerage firm or other broker
dealer. The undersigned subscriber's decision to purchase the Shares
is not based in whole or in part on any assumption or understanding
that an investment company, national or local brokerage firm or other
broker dealer is involved in any way in this Offering or has endorsed
or otherwise recommended an investment in these Shares.
g. That the undersigned subscriber has an investment portfolio of
sufficient value that he could suitably absorb a high risk illiquid
addition such as an investment in the Shares.
h. The undersigned further represents that (INITIAL APPROPRIATE
CATEGORY):
[ ] I am a natural person whose individual net worth, or joint
worth with my spouse at the time of purchase, exceeds $200,000;
[ ] I am a natural person who had an individual income in excess of
$50,000 or joint income with my spouse in excess of $50,000 in
each of the two most recent years and who reasonably expects an
income in excess of those amounts in the current year.
i. That Regulation D requires the Company to conclude that each investor
has sufficient knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the shares, or to verify that the investor has retained
the services of one or more purchaser representatives for the purpose
of evaluating the risks of investment in the shares, and hereby
represents and warrants that he has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of an investment in the shares and
<PAGE>
of making an informed investment decision and will not require a
purchaser representative.
5. The undersigned understands and agrees that this subscription is made
subject to each of the following terms and conditions:
a. The Company shall have the right to accept or reject this
subscription, in whole or part, for any reason. Upon receipt of each
Subscription Document, the Company shall have until August 31, 1997 in
which to accept or reject it. If no action is taken by the Company
within said period, the subscription shall be deemed to have been
accepted. In each case where the subscription is rejected, the Company
shall return the entire amount tendered by the subscriber, without
interest;
b. That the undersigned subscriber will, from time to time, execute and
deliver such documents or other instruments as may be requested by the
Company in order to aid the Company in the consummation of the
transactions contemplated by the Memorandum.
6. The undersigned hereby constitutes and appoints the Company, with full
power of substitution, as attorney-in-fact for the purpose of executing and
delivering, swearing to and filing, any documents or instruments related to
or required to make any necessary clarifying or conforming changes in the
Subscription Document so that such document is correct in all respects.
7. As used herein, the singular shall include the plural and the masculine
shall include the feminine where necessary to clarify the meaning of this
Subscription Document. All terms not defined herein shall have the same
meanings as in the Memorandum.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Document
this __ day of __________, 1997.
Number of Shares ___________________
Total amount tendered $__________________
<PAGE>
INDIVIDUAL OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
JOINT OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
OTHER OWNERSHIP __________________________________________
Name ( Please Type or Print )
By:_______________________________________
( Signature )
__________________________________________
Title
__________________________________________
Employer Indentification Number
ADDRESS:____________________________________________________________________
Street City State Zip
Phone ( Residence )_____________________ ; Phone ( Business ) _________________
<PAGE>
I,________________________________, do hereby certify that the
representations made herein concerning my financial status are true, and that
all other statements contained herein are true, accurate and complete to the
best of my knowledge.
Date: ___________________ , 1996. __________________________________________
Signature
CERTIFICATE OF DELIVERY
I hereby acknowledg that I delivered the foregoing Subscription
Document to _________ _________________ on the _______ day of __________________
, 1996.
__________________________________________
Signature
ACCEPTANCE
This Subscription is accepted by Far West Resources, Inc., as of the
______ day of _____________ , 1997.
Far West Resources, Inc.
By :______________________________________
Harmel Rayat, President
<PAGE>
PRIVATE PLACEMENT MEMORANDUM
American Alliance Corporation
1,000,000 Shares
Offering Price - $0.50 per Shares
Minimum Investment: 20,000 Shares ($10,000)
American Alliance Corporation (the "Company") is offering 1,000,000 Shares (the
"Shares") at a price of $0.50 per Share, with a minimum purchase of 20,000
Shares ($10,000). The Shares are offered for sale directly by the Company,
subject to the terms and conditions set forth herein. See "TERMS OF THE
OFFERING" and "PLAN OF PLACEMENT".
THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS
The securities offered by this Memorandum have not been registered under the
Securities Act of 1993, as amended (the "Securities Act"), and are offered for
sale in reliance upon the exemption provided by, or pursuant to regulations
promulgated under, Section 4(2), Regulation D, Rule 504 of such Act relating to
transactions not involving a public offering. Because the securities are not
registered under the Securities Act or the securities laws of any state, the
investor must hold them indefinitely unless (I) they are registered under the
Securities Act and any applicable state securities laws, (ii) the investor
obtains an opinion of counsel satisfactory to the Company to the effect that
registration is not required under the Securities Act and applicable state laws
or (iii) the Company permits the sale, transfer, or other disposition of the
securities by the investor as provided herein. No public market exists for any
of the securities offered hereby and such a market for resale of these
securities may never develop.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THESE
AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Selling Proceeds to
Investors Commissions (1) the Company
<S> <C> <C> <C>
Per Share $0.50 $0.03 $0.47
Total Minimum Offering (100,000 Shares) $50,000.00 $3,000.00 $47,000.00
Total Maximum Offering (1,000,000 Shares) $500,000.00 $30,000.00 $470,000.00
</TABLE>
(1) The Company is offering the Shares directly and no person is obligated
to purchase any Shares. The Company may, in its discretion, accept
subscriptions for Shares received through broker-dealers that are
members of the National Association of Securities Dealers, Inc.
("NASD") and will, in connection with such sales, pay a commission of
6% of the price of each Shares sold, provided not fewer than 100,000
Shares (the "Minimum Offering") are sold in the offering. See "PLAN OF
PLACEMENT." The offering is made on a "best efforts, all-or-none" basis
with respect to the Minimum Offering and on a "best efforts" basis with
respect to the remaining Shares offered. See "TERMS OF THE OFFERING."
The date of this Memorandum is October 1, 1997
<PAGE>
This offering will be withdrawn on October 31, 1997, unless the offering is
extended one or more times by the Company without notice to subscribers to a
date not later than November 30, 1997 (the "Termination Date") as provided
herein. See "TERMS OF THE OFFERING."
This Memorandum does not constitute an offer to sell or a solicitation of an
offer to purchase the Shares in any state or to any person to whom it is
unlawful to make such offer or solicitation and does not constitute an offer to
sell or solicitation to any member of the general public. This Memorandum has
been prepared solely for the benefit of investors interested in purchasing the
Shares offered hereby. Any distribution of this Memorandum to any person other
than the recipient (or to those individuals whom he may retain to advise him
with respect thereto) is unauthorized, and any reproduction of this Memorandum
in whole or in part, or the divulgence of any of its contents without the prior
written consent of the Company, is unauthorized and prohibited.
The recipient, by accepting delivery of this Memorandum, agrees to return this
Memorandum and all documents furnished herewith to the Company or its
representatives if the recipient does not purchase any of the Shares offered
hereby or if the offering is withdrawn or terminated.
The delivery of this Memorandum at any time subsequent to the date hereof does
not imply that the information contained herein is correct as of any time
subsequent to the date of this Memorandum.
No dealer or salesperson has been authorized to give any information or make any
representations or warranties, either express or implied, other than those that
may be contained in this Memorandum or other documents included herein or in
written supplements to this Memorandum and, if given or made, such information,
representations and warranties must not be relied upon by any potential
investor.
During the course of the offering and prior to sale, each prospective investor
and his purchaser representative(s), if any, are invited to ask questions of and
obtain additional information from the Company and its directors concerning the
terms and conditions of the offering, the Company and its officers and directors
and any other relevant matters, including, but not limited to, additional
information to verify the accuracy of the information set forth in the
Memorandum. The Company will provide such information to the extent it is
available or can be acquired without unreasonable effort or expense. Answers to
questions and additional information may be given only by the Company and its
duly authorized representatives. Information, representations or warranties
received from any other person or in any other manner must not be relied upon as
having been authorized by the Company.
This Memorandum contains statements, believed to be accurate, based on certain
documents, but reference is hereby made to the actual documents for complete
information relating thereto. Copies of such documents are attached as exhibits
to this Memorandum or are on file at the Company. All such statements are
qualified in their entirety by this reference. All documents relating to this
investment will be made available to any prospective subscriber and his
purchaser representative(s) upon request.
The Shares are offered by the Company subject to receipt and acceptance of
subscriptions, the right to reject any subscription in whole or in part,
withdrawal, cancellation or modification of the offer without notice to
investors and certain other conditions.
<PAGE>
NOTICES TO ALL INVESTORS:
1. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
2. EXCEPT AS SET FORTH HEREIN, NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR
IMPLIED, OTHER THAN THOSE WHICH , MAY BE CONTAINED HEREIN. IF MADE, SUCH
INFORMATION MUST NOT BE RELIED UPON. NO STATEMENT CONTAINED HEREIN SHALL BE
DEEMED TO MODIFY, SUPPLEMENT OR CONSTRUE IN ANY WAY THE PROVISIONS OF ANY
DOCUMENTS ATTACHED HERETO AS EXHIBITS OR ANY OF THE LANGUAGE CONTAINED THEREIN,
AND ANY STATEMENT MADE HEREIN WITH RESPECT TO ANY SUCH DOCUMENT IS QUALIFIED BY
REFERENCE THERETO.
3. THESE SECURITIES ARE OFFERED SOLELY BY THIS CONFIDENTIAL PRIVATE PLACEMENT
MEMORANDUM AND ARE SUBJECT TO PRIOR SALE. THE COMPANY RESERVES THE RIGHT, IN ITS
SOLE DISCRETION, TO WITHDRAW OR MODIFY THIS OFFER WITHOUT PRIOR NOTICE OR TO
REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART OR TO ALLOT TO ANY PROSPECTIVE
INVESTOR FEWER THAN THE INTERESTS APPLIED FOR BY SUCH INVESTOR.
4. AN INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. (SEE "RISK
FACTORS") THESE RISK FACTORS INCLUDE, AMONG OTHER RISKS, THE FOLLOWING:
A. THERE IS LIMITED MARKET FOR RESALE OF THE STOCK; HOWEVER, THERE ARE
NO ASSURANCES THAT THIS MARKET WILL EXIST WHEN THE INVESTOR DESIRES TO
LIQUIDATE. IN ADDITION, TRANSFERABILITY OF THE STOCK IS RESTRICTED AND
INVESTORS MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE THEIR
INVESTMENT AT A TIME WHEN THEY MAY DESIRE TO DO SO. INVESTORS MAY,
THEREFORE, BE REQUIRED TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME. ANY SALE OR TRANSFER OF THE STOCK OR
NOTES MAY ALSO RESULT IN ADVERSE TAX CONSEQUENCES.
B. THIS OFFERING INVOLVES SUBSTANTIAL RISKS INHERENT IN ANY BUSINESS
WHICH IS A START-UP AND, IN PARTICULAR, A BUSINESS WHICH IS DEPENDENT
UPON THE COMMERCIAL SUCCESS OF UNTESTED PRODUCTS.
5. NO OFFERING LITERATURE OR ADVERTISING IN WHATEVER FORM IS AUTHORIZED FOR USE
IN CONNECTION WITH THIS OFFERING EXCEPT THIS CONFIDENTIAL PRIVATE PLACEMENT
MEMORANDUM AND THE DOCUMENTS LISTED HEREIN. NO PERSON OR SALESMAN HAS BEEN
AUTHORIZED TO MAKE ANY REPRESENTATION OR GIVE ANY INFORMATION WITH RESPECT TO
THESE INVESTMENT SHARES, EXCEPT THE INFORMATION CONTAINED IN SUCH DOCUMENTS.
ONLY THOSE REPRESENTATIONS EXPRESSLY SET FORTH IN SUCH DOCUMENTS MAY BE RELIED
UPON IN CONNECTION WITH THE OFFERING OF THESE INVESTMENT SHARES.
<PAGE>
WHO MAY INVEST
The Shares are being offered through this Memorandum without registration under
the Securities Act pursuant to the exemption from the registration requirements
of such Act provided by Section 4(2) thereof and Rule 504 of Regulation D
promulgated thereunder.
General Suitability Standards
The Shares will be sold only to a person:
(I) who makes a minimum purchase of 20,000 Shares for $10,000,
unless the Company, in its sole discretion, permits the
purchase of fewer Shares;
(ii) who complies with the terms of the Subscription Agreement;
(iii) who represents that they have been furnished and have
carefully read and relied solely on the information contained
in this Memorandum, including all exhibits, amendments and
supplements hereto;
(iv) who either:
(a) represents in writing that they qualify as an Accredited
Investor or
(b) if they are a Non-Accredited Investor, demonstrates in the
Subscription Agreement that they, either alone or with their
Purchaser Representative(s), has such knowledge and
experience in financial and business matters that they are
capable of evaluating the merits and risks of an investment
in the Shares (investors will also be required to provide
the Company with any additional information or documentation
that may be required to verify such qualifications);
(v) whose overall commitment to investments which are not readily
marketable is not disproportionate to their net worth, and
whose acquisition of the Shares will not cause such overall
commitment to become excessive; and
(vi) who has no need for liquidity with respect to their investment
in the Shares and is capable of suffering the loss of their
entire investment in any Shares purchased.
Accredited Investors
- - --------------------
Accredited Investor is defined in the Securities Act of 1933, Rule
501(a) and shall mean any person who comes within any of the following
categories, or who the issuer reasonable believes comes within any of the
following categories, at the time of the sale of the securities to that person:
<PAGE>
1. Bank, Broker, Insurance Company, Investment Company, Small Business
Investment Company, State Plan, or Employee Benefit Plan. Any bank as defined in
section 3(a)(2) of the Act, or any savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; any insurance company as
defined in section 2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that Act; any small business investment company licensed by
the US Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; and plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
2. Private Business Development Company. Any private business development
company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
3. Organization, Partnership, Corporate or Other Entity Investor. Any
organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
4. Officer of Issuer. Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer;
5. $1,000,000 Net Worth. Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of this purchase exceeds
$1,000,000;
6. $200,000 Income. Any natural person who had individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same level of income in the current year;
7. Trust. Any trust, with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii); and
8. Entity. Any entity in which all of the equity owners are accredited
investors.
<PAGE>
General Requirements
- - --------------------
A breach of an investor of any of its representations made to the
Company in the Subscription Agreement which results in a loss by the Company of
its registration exemption provided by Regulation D will cause such investor to
be liable to the Company for all damages and losses proximately caused thereby.
The bases for establishing the foregoing standards include the relative
lack of liquidity of the Shares and the risks inherent in an investment in the
Company. The foregoing standards represent minimum requirements for a
prospective purchaser and the Company reserves the right to reject any
subscription notwithstanding compliance with these standards. Shares may also be
sold to corporations, partnerships, trusts and other entities meeting the
foregoing requirements.
Certain states in which the Company may qualify its Shares for sale may
establish suitability standards and minimum purchase requirements more
restrictive than those set by the Company. Those requirements, if any, will be
set forth in a supplement to this Memorandum.
<PAGE>
SUMMARY OF THE OFFERING
The following material is intended to summarize information contained
elsewhere in this Memorandum. This summary is qualified in its entirety by
express reference to the Memorandum and the exhibits referred to therein. Each
prospective investor is urged to read this Memorandum in its entirety, as well
as various filings submitted to the SEC and other regulatory bodies.
The Company
- - -----------
The Company was incorporated under the laws of the State of Utah, on
July 14, 1983 under the name of Far West Gold, Inc., with an authorized capital
of 50,000,000 shares of common stock with a par value of $.001 per share.
On July 14, 1983, the Company, in connection with a 504 D offering
issued 5,141,000 shares of common stock for cash at $.003 per share or $15,000.
During October 1984, the Company issued 13,009,000 shares of common stock at
$.01 per share or $130,090, less offering expenses of the offering of $27,547,
for a net cash of $102,543. For the year ending December 31, 1990, the Company
received a capital contribution of $4,364 to pay expenses of the Company. For
the year ending December 31, 1991, the Company received a capital contribution
of $100 to pay expenses of the Company. For the year ending December 31, 1995,
the Company issued 20,000,000 shares of common stock at $.001 per share to
satisfy current liabilities in the amount of $20,000.
On April 15, 1996, the Company effected a reverse split of 500:1, with
the par value remaining at $.001. On April 16, 1996, the Company issued
4,000,000 shares of common stock at $.0005 or $2000 for services to Mr. Harmel
Rayat, a director of the Company. On May 9, 1996, in connection with a 504 D
offering, the Company issued 4,000,000 shares of common stock at $.05 per share
for cash in the amount of $200,000. On May 9, 1996, shareholders of the Company
approved a name change to Far West Resources, Inc and approved an increase in
the number of shares that the Company has authority to issue to 105,000,000, of
which 100,000,000 shares shall be at $.001 par value common stock, and
5,000,000shares shall be $.10 par valued preferred stock.
On June 30, 1997, the shareholders of the Company approved a name
change to American Alliance Corporation, approved a change in state registration
from Utah to Nevada, approved an increase in common share par value from $.001
to $.00001 and preferred par value from $.10 to $.0001, and approved the 1997
Employee and Director Stock Option Plan for 1,250,000 shares. On June 30, 1997,
the Company issued 2,000,000 common shares at $.15 per share in connection with
a 504 D offering.
The Company is a developmental stage company that currently actively
seeking to acquire or enter into a technology based business endeavor.
<PAGE>
The Offering
- - ------------
Shares Offered 1,000,000
Offering Price $0.50 Per Share
Common Stock Outstanding (Oct 1/97) 10,076,202
Common Stock to be Outstanding After the Offering
MINIMUM OFFERING: 10,176,202
MAXIMUM OFFERING: 11,076,202
Estimated Proceeds of the Offering
MINIMUM OFFERING: $50,000
MAXIMUM OFFERING: $500,000
Use of Proceeds
- - ---------------
The Company plans to use the proceeds from this Offering for working
capital purposes while the Company seeks potential technology related
acquisitions or business opportunities. See -- "ESTIMATED USE OF PROCEEDS."
Need for Additional Capital and Capital Formation Plan
- - ------------------------------------------------------
Even if all or substantially all of the Shares offered hereunder are
sold, the Company may be dependent upon, among other things, the receipt of
additional capital. The Company plans to seek the additional financing it will
require through the sale of additional debt or equity securities, through
venture capital or through strategic partnerships. There is no assurance that
such additional financing will be available when required in order to proceed
with the business plan and complete preparations to continue operations. See
"RISK FACTORS - Dependence Upon Offering Proceeds and Need for Additional
Capital."
Risk Factors
- - ------------
Investment in the Common Stock involves a high degree of risk.
Potential investors should carefully consider the information under the caption,
"RISK FACTORS."
<PAGE>
RISK FACTORS
Investment in the Company involves a number of risks. In addition to
the risks and investment considerations discussed elsewhere in the Memorandum,
the following factors should be considered prior to purchasing the Shares
offered through this Memorandum.
SUMMARY OF RISKS
General
- - -------
The economic success of an investment in the Shares depends, to a large
degree, upon many factors over which the Company has not control. These factors
include general economic, industrial and international conditions; inflation or
deflation; fluctuation in interest rates; the Company's competition; and
governmental regulations.
Speculative Investment
- - ----------------------
The Shares are a very speculative investment. Although the Company is
confident it will succeed in its endeavours, Investors could lose their entire
investment.
Management and Operation Experience
- - -----------------------------------
The Company's officers, directors and other personnel have engaged in a
variety of businesses and have been involved in business financing, operations
and marketing, but their experience in these fields is limited. There is no
assurance that such experience will result in the success for the Company.
Other Risks
- - -----------
No assurance can be given that the Company will be successful in
achieving its stated objectives, that the Company's business, once business is
undertaken by the Company, will generate cash sufficient to operate the business
of the Company or that other parties entering into agreements relating to the
Company's business will meet their respective obligations.
Paid in Capital Has Funded Operations
- - -------------------------------------
Much of the operating capital of the Company over the past several
years has come from cash provided by private fundings. The Company has not been
profitable in the past nor has it generated sufficient capital to cover the
on-going operating and expansion expenses.
Dependence Upon Offering Proceeds and Need for Additional Capital
- - -----------------------------------------------------------------
There is no assurance that such additional financing will be available
when required in order to proceed with the business plan or that the Company's
ability to respond to competition or changes in the market place. If the Company
is unsuccessful in securing the additional capital needed to
<PAGE>
continue operations within the time required, the Company will not be in a
position to continue operations and the purchasers of Shares in this offering
may lose their entire investment.
Immediate and Substantial Dilution
- - ----------------------------------
The purchasers of the Shares being offered hereby will furnish a
substantial portion of the Company's initial capital. Therefore the capital
invested by the purchasers of the Shares will be at risk immediately in the
business of the Company. Even if all Shares offered hereunder are sold, the
investors in the Shares should assume that the shares of Common Stock will have
only a minimal book value.
Limited Transferability and Liquidity
- - -------------------------------------
In order to satisfy the requirements of the exemptions from
registration under the Securities Act and the various applicable state
securities laws, each subscriber must acquire his Common Stock for investment
purposes only and not with a view to distribution or resale. Consequently,
certain conditions of such federal and state securities laws must be satisfied
prior to any disposition of the securities. Some of these conditions may include
a minimum holding period, availability of certain reports, including financial
statements, from the Company, limitation on the percentage of the securities
sold and the manner in which the securities are sold. The Company can prohibit
any sale, transfer or other disposition unless it receives an opinion of counsel
provided at the Shareholder's expense, in a form satisfactory to the Company,
stating that the proposed sale, transfer or other disposition will not result in
a violation of the applicable federal and state securities laws and regulations
or other applicable federal and state laws and regulations. It is likely that
Rule 144, which permits sales of unregistered securities under certain
conditions, will be available to the shareholders of the Company. No public
market exists for the Common Stock, and no assurances can be given that such a
market for the resale of such securities will develop. Consequently, owners of
the securities may have to hold them indefinitely and may not be able to
liquidate their investment in the Company or pledge such securities as
collateral for a loan in the event of an emergency.
Dividends
- - ---------
The Company's Board of Directors presently intends to cause the Company
to follow a policy of retaining earnings, if any, for the purpose of increasing
the net worth and reserves of the Company. Therefore, there can be no assurance
that any holder of Common Stock will receive any cash, stock or other dividends
on his shares of Common Stock. Future dividends on Common Stock, if any, will
depend on future earnings, financing requirements and other factors.
Arbitrary Determination of Offering Price
- - -----------------------------------------
The offering price of the Common Stock was arbitrarily set by the
Company. No independent investment banking firm was retained to assist in
determining the offering price. The offering price of the Common Stock may not
bear any relation to the actual value of the Common Stock. Among the factors
considered in determining the price were estimates of the prospects of the
Company, the background and capital contributions of Management and current
conditions in the
<PAGE>
securities markets and the Company's industry. There is, however, no
relationship between the offering price of the Common Stock and the Company's
assets, earnings, book value or any other objective criteria of value. See "PLAN
OF PLACEMENT."
Additional Securities Available for Issuance
- - --------------------------------------------
The Company's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock, and 5,000,000 shares of Preferred Stock. At
this time, 10,076,202 shares of Common Stock have been issued. Accordingly,
shareholders, including those purchasing the shares offered with the sale of
these Shares, will be dependent upon the judgment of management in connection
with the future issuance and sale of shares of the Company's capital stock, in
the event purchasers can be found for such securities.
ESTIMATED USE OF PROCEEDS
The Company plans to use the proceeds from this Offering primarily for
funding technology based acquisitions or business opportunities and for working
capital.
<TABLE>
<CAPTION>
Item Maximum Shares
Sold
<S> <C>
Working Capital $500,000.00
Legal, Accounting & Transfer Agent $30,000.00
TOTAL $470,000.00
</TABLE>
NET FUNDS AVAILABLE TO COMPANY
The net proceeds of the sale if all of the Shares offered are
sold will be $470,000. The Company will incur expenses in connection with the
offering in an amount anticipated not to exceed $35,000 for commissions, legal
fees, accounting fees, filing fees, printing costs and other expenses. If the
maximum number of Shares are sold, the Company anticipates that the net proceeds
to it from the Offering will be as follows:
<TABLE>
<CAPTION>
Item Maximum Shares
Sold
<S> <C>
Gross Proceeds of Offering $500,000.00
LESS: Commissions $30,000.00
Costs of Offering* $5,000.00
TOTAL PROCEEDS RECEIVED $465,000.00
</TABLE>
<PAGE>
* The Company estimates that the costs of the Offering will be as follows: (I)
legal fees of approximately $1000, (ii) accounting fees of approximately $1000,
(iii) travel expenses of approximately $3000, and (iv) printing and other
miscellaneous costs of approximately $1000.
Even if all the Shares offered hereunder are sold, the Company may
require additional capital in order to fund continued development activities and
capital expenditures that must be made. The Company's business plan is based on
the premise that additional funding will be obtained through funds generated
from operations, the exercising of the warrants by shareholders, additional
offerings of its securities, or other arrangements. There can be no assurances
that any securities offerings will take place in the future, or that funds
sufficient to meet any of the foregoing needs or plans will be raised from
operations or any other source.
MANAGEMENT
Directors and Executive Officers
- - --------------------------------
<TABLE>
<CAPTION>
Name Position Director
Since
<S> <C> <C>
Harmel S. Rayat President and CEO 3/96
Jasbinder Chohan Director, Secretary/Treasurer 3/96
Kundan S. Rayat Director 3/96
</TABLE>
Executive Compensation
- - ----------------------
At the present time no Officer or Director receives any compensation
for their services.
Employment and Consulting Agreements
- - ------------------------------------
Although the Company is not party to any Employment or Consulting
Agreements currently, it is anticipated that all future employees will enter
into standard confidentiality and non-compete agreements prior to employment.
Stock Options
- - -------------
The Company currently has a policy of awarding stock options to certain
directors and employees and views the issuance of stock options necessary in
order to attract and maintain the services of individuals essential to the
Company's long term success.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth as of the date of this Memorandum the
amount of the Company's Common Stock beneficially owned by each officer and
director of the Company and by each person owning more than five percent of any
class of the Company's voting securities. As of the date of the Memorandum,
there are no other equity securities of the Company outstanding, other than the
Common Stock.
<TABLE>
<CAPTION>
Before Offering After Offering
Number of Percent of Number of Percent of
Name Shares Class Shares Class
<S> <C> <C> <C> <C>
Harmel S. Rayat 4,000,000 39.7% 4,000,000 36.1%
</TABLE>
DESCRIPTION OF COMMON STOCK
Common Stock
- - ------------
Holders of the Common Stock are entitled to one vote for each share
held by them of record on the books of the Company in all matters to be voted on
by the stockholders. Holders of Common Stock are entitled to receive such
dividends as may be declared from time to time by the Board of Directors out of
funds legally available, and in the event of liquidation, dissolution or winding
up of the Company, to share ratably in all assets remaining after payment of
liabilities. Declaration of dividends on Common Stock is subject to the
discretion of the Board of Directors and will depend upon a number of factors,
including the future earnings, capital requirements and financial condition of
the Company. The Company has not declared dividends on its Common Stock in the
past and the management currently anticipates that retained earnings, if any, in
the future will be applied to the expansion and development of the Company
rather than the payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and
are not subject to further calls or assessments by the Company. There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock currently outstanding is, and the Common Stock offered by the Company
hereby will, when issued, be validly issued, fully paid and nonassessable.
Warrants
- - --------
There are no warrants outstanding.
Securities Restrictions
- - -----------------------
Purchasers of the Shares of Common Stock offered hereby must be aware
of the long-term nature of their investment and be able to bear the economic
risk of their investment for an indefinite period of time. There is no public
trading market for the shares of Common Stock and there can be
<PAGE>
no assurance that any such market will develop in the foreseeable future. The
Shares of Common Stock have not been registered under the Securities Act or the
securities laws of any state. The right of any purchaser to sell, transfer,
pledge or otherwise dispose of such securities is limited by the Securities Act
and state securities laws and the regulations promulgated thereunder. The
Company's stock transfer records will reflect "stop transfer" restrictions with
respect to its Common Stock and the certificates representing such securities
will bear the following legend:
These securities have not been registered under the Securities Act of 1933 or
any applicable state securities laws, and they may not be offered for sale,
sold, transferred, pledged or hypothecated without an effective registration
statement under the Securities Act and under any applicable state securities
laws, or an opinion of counsel, satisfactory to the company, that an exemption
from such registration is available.
Antidilution Provision
- - ----------------------
The conversion price from time to time in effect shall be subject to
adjustment from time to time as follows:
1. In case the corporation shall at any time subdivide the outstanding
shares of common stock, or shall issue a stock dividend on its
outstanding common stock, the conversion price in effect immediately
prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in case the corporation shall at any
time combine the outstanding shares of common stock, the conversion
price in effect immediately prior to such combination shall be
proportionately increased, effective at the close of business on the
date of such subdivision, dividend or combination, as the case may be.
2. The conversion price will be adjusted for dividends or distributions
on common stock payable in company stock; subdivisions, combinations
or certain reclassifications of common stock; distributions to all
holders of common stock of certain rights to purchase common stock at
less than current market price at the time; distributions to such
holders of assets or debt securities of the Company or certain rights
to purchase securities of the Company (excluding cash dividends or
distributions from current or retained earnings). However, no
adjustment need be made if security holders may participate in the
transaction or in certain other cases.
DIVIDEND POLICY
The Company's Board of Directors presently intends to cause the Company
to follow a policy of retaining earnings, if any, for the purpose of increasing
the net worth and reserves of the Company. Therefore, there can be no assurance
that any holder of Common Stock will receive any cash, stock or other dividends
on his shares of Common Stock. To date, the Company has neither declared nor
paid any dividends on its Common Stock nor does the Company anticipate that
dividends will be paid in the foreseeable future. Rather, the Company intends to
apply earnings to the expansion and development of its business.
<PAGE>
TERMS OF THE OFFERING
PLAN OF PLACEMENT
The Shares are offered directly by the Company in accordance with the
terms and conditions set forth in this Memorandum. The Company offers the Shares
on a "best efforts, all-or-none" basis with respect to the Minimum Offering and
on a "best efforts" basis with respect to the remaining Shares offered, which
means that no person or participating dealer is obligated to purchase any
Shares. The Company will use its best efforts to sell the Shares to investors.
There can be no assurance that all or any of the Shares offered hereunder will
be sold.
The Company may, in its discretion, accept subscriptions for Shares
received through broker-dealers that are members of the National Association of
Securities Dealers, Inc. ("NASD") and will, in connection with such sales, pay a
commission of 6% of the price of each Share sold, provided not less than the
Minimum Offering is sold in the offering.
LITIGATION
There are no pending legal proceedings to which the Company is a party.
LEGAL MATTERS
Gary R. Blume, Esquire, 11801 North Tatum Boulevard, Suite 108,
Phoenix, Arizona 85028, will pass upon certain matters for the Company.
ADDITIONAL INFORMATION
In the opinion of the Board of Directors of the Company, this
Memorandum contains a fair presentation of the subjects discussed herein and
does not contain a misstatement of a material fact or fail to state a material
fact necessary to make any statements made herein not misleading. Persons to
whom offers are made will be furnished with such additional information
concerning the Company and other matters discussed herein as they, or their
purchaser representative or other advisors, may reasonably request. The Company
shall, to the extent such information is available or can be acquired without
unreasonable effort or expense, endeavour to provide the information to such
persons. All offerees are urged to make such personal investigations,
inspections or inquiries as they deem appropriate.
<PAGE>
SUBSCRIPTION DOCUMENT
1. The undersigned hereby subscribes for Shares of common stock
(hereinafter "Shares"), as described in the Private Offering Memorandum
dated October 1, 1997 ("Memorandum"), of American Alliance Corporation,
a Nevada corporation (the "Company"), being offered by the Company for
a purchase price of $0.50 per share and tenders herewith the sum of $
In payment therefore, together with tender of this Subscription
Document.
2. The undersigned represents and warrants that he is a bona fide
resident of the State of ________________.
3. The undersigned acknowledges:
a. Receipt of a copy of the Private Offering Memorandum;
b. That this subscription, if accepted by the Company, is legally
binding and irrevocable;
c. That the Company has a very limited financial and operating
history;
d. That the Shares have not been registered under the Securities
Act of 1933, as amended, in reliance upon exemptions contained
in that Act, and that the Shares have not been registered
under the securities acts of any state in reliance upon
exemptions contained in certain state's securities laws; and
e. That the representations and warranties provided in this
Subscription Document are being relied upon by the Company as
the basis for the exemption from the registration requirements
of the Securities Act 1933 and of the applicable state's
securities laws.
FOR NEW YORK RESIDENTS ONLY: THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS
NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
- - --------------------------------------------------------------------------------
4. The undersigned represents and warrants as follows:
a. That the undersigned subscriber is purchasing said Shares as an
investment and said Shares are purchased solely for the undersigned's
own account;
<PAGE>
b. That the undersigned subscriber has sufficient knowledge and
experience in financial and business matters to evaluate the merits
and risks of an investment in the Shares;
c. That the undersigned subscriber is able to bear the economic risk of
an investment in the Shares;
d. That the undersigned subscriber has read and is thoroughly familiar
with the Private Offering Memorandum and represents and warrants that
he is aware of the high degree of risk involved in making an
investment in the Shares;
e. That the undersigned subscriber's decision to purchase the Shares is
based solely on the information contained in the Private Offering
Memorandum and on written answers to such questions as he has raised
concerning the transaction;
f. That the undersigned subscriber is purchasing the Shares directly from
the Company and understands that neither the Company nor the Offering
is associated with, endorsed by nor related in any way with any
investment company, national or local brokerage firm or other broker
dealer. The undersigned subscriber's decision to purchase the Shares
is not based in whole or in part on any assumption or understanding
that an investment company, national or local brokerage firm or other
broker dealer is involved in any way in this Offering or has endorsed
or otherwise recommended an investment in these Shares.
g. That the undersigned subscriber has an investment portfolio of
sufficient value that he could suitably absorb a high risk illiquid
addition such as an investment in the Shares.
h. The undersigned further represents that (INITIAL APPROPRIATE
CATEGORY):
[ ] I am a natural person whose individual net worth, or joint worth
with my spouse at the time of purchase, exceeds $200,000;
[ ] I am a natural person who had an individual income in excess of
$50,000 or joint income with my spouse in excess of $50,000 in
each of the two most recent years and who reasonably expects an
income in excess of those amounts in the current year.
i. That Regulation D requires the Company to conclude that each investor
has sufficient knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the shares, or to verify that the investor has retained
the services of one or more purchaser representatives for the purpose
of evaluating the risks of investment in the shares, and hereby
represents and warrants that he has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of an investment in the shares and
<PAGE>
of making an informed investment decision and will not require a
purchaser representative.
5. The undersigned understands and agrees that this subscription is made
subject to each of the following terms and conditions:
a. The Company shall have the right to accept or reject this
subscription, in whole or part, for any reason. Upon receipt of each
Subscription Document, the Company shall have until October 31, 1997
in which to accept or reject it. If no action is taken by the Company
within said period, the subscription shall be deemed to have been
accepted. In each case where the subscription is rejected, the Company
shall return the entire amount tendered by the subscriber, without
interest;
b. That the undersigned subscriber will, from time to time, execute and
deliver such documents or other instruments as may be requested by the
Company in order to aid the Company in the consummation of the
transactions contemplated by the Memorandum.
6. The undersigned hereby constitutes and appoints the Company, with full
power of substitution, as attorney-in-fact for the purpose of executing
and delivering, swearing to and filing, any documents or instruments
related to or required to make any necessary clarifying or conforming
changes in the Subscription Document so that such document is correct
in all respects.
7. As used herein, the singular shall include the plural and the masculine
shall include the feminine where necessary to clarify the meaning of
this Subscription Document. All terms not defined herein shall have the
same meanings as in the Memorandum.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Document
this __ day of __________, 1997.
Number of Shares ___________________
Total amount tendered $__________________
<PAGE>
INDIVIDUAL OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
JOINT OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
OTHER OWNERSHIP __________________________________________
Name ( Please Type or Print )
By:_______________________________________
( Signature )
__________________________________________
Title
__________________________________________
Employer Indentification Number
ADDRESS:____________________________________________________________________
Street City State Zip
Phone ( Residence )_____________________ ; Phone ( Business ) _________________
<PAGE>
I,________________________________, do hereby certify that the
representations made herein concerning my financial status are true, and that
all other statements contained herein are true, accurate and complete to the
best of my knowledge.
Date: ___________________ , 1996. __________________________________________
Signature
CERTIFICATE OF DELIVERY
I hereby acknowledg that I delivered the foregoing Subscription
Document to _________ _________________ on the _______ day of __________________
, 1996.
__________________________________________
Signature
ACCEPTANCE
This Subscription is accepted by Far West Resources, Inc., as of the
______ day of _____________ , 1997.
Far West Resources, Inc.
By :______________________________________
Harmel Rayat, President
<PAGE>
PRIVATE PLACEMENT MEMORANDUM
American Alliance Corporation
$2.00 Per Share
Consisting of
450,000 Shares of Common Stock
and 450,000 Four Year Share Purchase Warrants
Minimum Investment: $10,000
<PAGE>
TABLE OF CONTENTS
COVER PAGE
NOTICES TO INVESTORS.......................................................... 5
WHO MAY INVEST................................................................ 6
SUMMARY OF THE OFFERING....................................................... 9
THE COMPANY................................................................... 9
RISK FACTORS..................................................................11
ESTIMATED USE OF PROCEEDS.....................................................13
MANAGEMENT....................................................................14
PRINCIPAL SHAREHOLDERS........................................................15
DESCRIPTION OF COMMON STOCK...................................................15
DIVIDEND POLICY...............................................................17
TERMS OF THE OFFERING.........................................................17
PLAN OF PLACEMENT.............................................................17
LITIGATION....................................................................17
.
LEGAL MATTERS.................................................................17
ADDITIONAL INFORMATION........................................................18
EXHIBITS
Exhibit A - Subscription Agreement
Exhibit B - Warrant to Purchase Common Stock
No part of this document may be reproduced, stored in a retrieval system or
transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, without the prior written permission of the Company.
<PAGE>
PRIVATE PLACEMENT MEMORANDUM
American Alliance Corporation
450,000 Shares and 450,000 Four Year Share Purchase Warrants
Offering Price - $2.00 per Shares
Minimum Investment: 5,000 Shares ($10,000)
American Alliance Corporation (the "Company") is offering 450,000 Shares (the
"Shares"), along with 450,000 4 year Share Purchase Warrants (the "Warrants").
The Shares are offered at a price of $2.00 per Share, with a minimum purchase of
5,000 Shares ($10,000), and are accompanied by Warrants to purchase an equal
amount of shares at a price of $2.00 within 4 years of closing of this offering.
The Shares are offered for sale directly by the Company, subject to the terms
and conditions set forth herein. See "TERMS OF THE OFFERING" and "PLAN OF
PLACEMENT".
THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS
The securities offered by this Memorandum have not been registered under the
Securities Act of 1993, as amended (the "Securities Act"), and are offered for
sale in reliance upon the exemption provided by, or pursuant to regulations
promulgated under, Section 4(2), Regulation D, Rule 505 of such Act relating to
transactions not involving a public offering. Because the securities are not
registered under the Securities Act or the securities laws of any state, the
investor must hold them indefinitely unless (I) they are registered under the
Securities Act and any applicable state securities laws, (ii) the investor
obtains an opinion of counsel satisfactory to the Company to the effect that
registration is not required under the Securities Act and applicable state laws
or (iii) the Company permits the sale, transfer, or other disposition of the
securities by the investor as provided herein. No public market exists for any
of the securities offered hereby and such a market for resale of these
securities may never develop.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THESE
AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Selling Proceeds to
Investors Commissions (1) the Company
<S> <C> <C> <C>
Per Share $2.00 $0.14 $1.86
Total Minimum Offering (100,000 Shares) $200,000.00 $28,000.00 $172,000.00
Total Maximum Offering (450,000 Shares) $900,000.00 $63,000.00 $837,000.00
</TABLE>
(1) The Company is offering the Shares directly and no person is obligated
to purchase any Shares. The Company may, in its discretion, accept
subscriptions for Shares received through broker-dealers that are
members of the National Association of Securities Dealers, Inc.
("NASD") and will, in connection with such sales, pay a commission of
7% of the price of each Shares sold, provided not fewer than 100,000
Shares (the "Minimum Offering") are sold in the offering. See "PLAN OF
PLACEMENT." The offering is made on a "best efforts, all-or-none" basis
with respect to the Minimum Offering and on a "best efforts" basis with
respect to the remaining Shares offered. See "TERMS OF THE OFFERING."
The date of this Memorandum is December 1, 1997
3
<PAGE>
This offering will be withdrawn on December 31, 1997, unless the offering is
extended one or more times by the Company without notice to subscribers to a
date not later than January 31, 1998 (the "Termination Date") as provided
herein. See "TERMS OF THE OFFERING."
This Memorandum does not constitute an offer to sell or a solicitation of an
offer to purchase the Shares in any state or to any person to whom it is
unlawful to make such offer or solicitation and does not constitute an offer to
sell or solicitation to any member of the general public. This Memorandum has
been prepared solely for the benefit of investors interested in purchasing the
Shares offered hereby. Any distribution of this Memorandum to any person other
than the recipient (or to those individuals whom he may retain to advise him
with respect thereto) is unauthorized, and any reproduction of this Memorandum
in whole or in part, or the divulgence of any of its contents without the prior
written consent of the Company, is unauthorized and prohibited.
The recipient, by accepting delivery of this Memorandum, agrees to return this
Memorandum and all documents furnished herewith to the Company or its
representatives if the recipient does not purchase any of the Shares offered
hereby or if the offering is withdrawn or terminated.
The delivery of this Memorandum at any time subsequent to the date hereof does
not imply that the information contained herein is correct as of any time
subsequent to the date of this Memorandum.
No dealer or salesperson has been authorized to give any information or make any
representations or warranties, either express or implied, other than those that
may be contained in this Memorandum or other documents included herein or in
written supplements to this Memorandum and, if given or made, such information,
representations and warranties must not be relied upon by any potential
investor.
During the course of the offering and prior to sale, each prospective investor
and his purchaser representative(s), if any, are invited to ask questions of and
obtain additional information from the Company and its directors concerning the
terms and conditions of the offering, the Company and its officers and directors
and any other relevant matters, including, but not limited to, additional
information to verify the accuracy of the information set forth in the
Memorandum. The Company will provide such information to the extent it is
available or can be acquired without unreasonable effort or expense. Answers to
questions and additional information may be given only by the Company and its
duly authorized representatives. Information, representations or warranties
received from any other person or in any other manner must not be relied upon as
having been authorized by the Company.
This Memorandum contains statements, believed to be accurate, based on certain
documents, but reference is hereby made to the actual documents for complete
information relating thereto. Copies of such documents are attached as exhibits
to this Memorandum or are on file at the Company. All such statements are
qualified in their entirety by this reference. All documents relating to this
investment will be made available to any prospective subscriber and his
purchaser representative(s) upon request.
The Shares are offered by the Company subject to receipt and acceptance of
subscriptions, the right to reject any subscription in whole or in part,
withdrawal, cancellation or modification of the offer without notice to
investors and certain other conditions.
4
<PAGE>
NOTICES TO ALL INVESTORS:
1. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
2. EXCEPT AS SET FORTH HEREIN, NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR
IMPLIED, OTHER THAN THOSE WHICH , MAY BE CONTAINED HEREIN. IF MADE, SUCH
INFORMATION MUST NOT BE RELIED UPON. NO STATEMENT CONTAINED HEREIN SHALL BE
DEEMED TO MODIFY, SUPPLEMENT OR CONSTRUE IN ANY WAY THE PROVISIONS OF ANY
DOCUMENTS ATTACHED HERETO AS EXHIBITS OR ANY OF THE LANGUAGE CONTAINED THEREIN,
AND ANY STATEMENT MADE HEREIN WITH RESPECT TO ANY SUCH DOCUMENT IS QUALIFIED BY
REFERENCE THERETO.
3. THESE SECURITIES ARE OFFERED SOLELY BY THIS CONFIDENTIAL PRIVATE PLACEMENT
MEMORANDUM AND ARE SUBJECT TO PRIOR SALE. THE COMPANY RESERVES THE RIGHT, IN ITS
SOLE DISCRETION, TO WITHDRAW OR MODIFY THIS OFFER WITHOUT PRIOR NOTICE OR TO
REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART OR TO ALLOT TO ANY PROSPECTIVE
INVESTOR FEWER THAN THE INTERESTS APPLIED FOR BY SUCH INVESTOR.
4. AN INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. (SEE "RISK
FACTORS") THESE RISK FACTORS INCLUDE, AMONG OTHER RISKS, THE FOLLOWING:
A. THERE IS LIMITED MARKET FOR RESALE OF THE STOCK; HOWEVER, THERE ARE
NO ASSURANCES THAT THIS MARKET WILL EXIST WHEN THE INVESTOR DESIRES TO
LIQUIDATE. IN ADDITION, TRANSFERABILITY OF THE STOCK IS RESTRICTED AND
INVESTORS MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE THEIR
INVESTMENT AT A TIME WHEN THEY MAY DESIRE TO DO SO. INVESTORS MAY,
THEREFORE, BE REQUIRED TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME. ANY SALE OR TRANSFER OF THE STOCK OR
NOTES MAY ALSO RESULT IN ADVERSE TAX CONSEQUENCES.
B. THIS OFFERING INVOLVES SUBSTANTIAL RISKS INHERENT IN ANY BUSINESS
WHICH IS A START-UP AND, IN PARTICULAR, A BUSINESS WHICH IS DEPENDENT
UPON THE COMMERCIAL SUCCESS OF UNTESTED PRODUCTS.
5. NO OFFERING LITERATURE OR ADVERTISING IN WHATEVER FORM IS AUTHORIZED FOR USE
IN CONNECTION WITH THIS OFFERING EXCEPT THIS CONFIDENTIAL PRIVATE PLACEMENT
MEMORANDUM AND THE DOCUMENTS LISTED HEREIN. NO PERSON OR SALESMAN HAS BEEN
AUTHORIZED TO MAKE ANY REPRESENTATION OR GIVE ANY INFORMATION WITH RESPECT TO
THESE INVESTMENT SHARES, EXCEPT THE INFORMATION CONTAINED IN SUCH DOCUMENTS.
ONLY THOSE REPRESENTATIONS EXPRESSLY SET FORTH IN SUCH DOCUMENTS MAY BE RELIED
UPON IN CONNECTION WITH THE OFFERING OF THESE INVESTMENT SHARES.
5
<PAGE>
WHO MAY INVEST
The Shares are being offered through this Memorandum without registration under
the Securities Act pursuant to the exemption from the registration requirements
of such Act provided by Section 4(2) thereof and Rule 505 of Regulation D
promulgated thereunder.
General Suitability Standards
The Shares will be sold only to a person:
(I) who makes a minimum purchase of 5,000 Shares for $10,000, unless
the Company, in its sole discretion, permits the purchase of
fewer Shares;
(ii) who complies with the terms of the Subscription Agreement;
(iii)who represents that they have been furnished and have carefully
read and relied solely on the information contained in this
Memorandum, including all exhibits, amendments and supplements
hereto;
(iv) who either:
(a) represents in writing that they qualify as an Accredited
Investor or
(b) if they are a Non-Accredited Investor, demonstrates in the
Subscription Agreement that they, either alone or with their
Purchaser Representative(s), has such knowledge and
experience in financial and business matters that they are
capable of evaluating the merits and risks of an investment
in the Shares (investors will also be required to provide
the Company with any additional information or documentation
that may be required to verify such qualifications);
(v) whose overall commitment to investments which are not readily
marketable is not disproportionate to their net worth, and whose
acquisition of the Shares will not cause such overall commitment
to become excessive; and
(vi) who has no need for liquidity with respect to their investment in
the Shares and is capable of suffering the loss of their entire
investment in any Shares purchased.
Accredited Investors
- - --------------------
Accredited Investor is defined in the Securities Act of 1933, Rule
501(a) and shall mean any person who comes within any of the following
categories, or who the issuer reasonable believes comes within any of the
following categories, at the time of the sale of the securities to that person:
6
<PAGE>
1. Bank, Broker, Insurance Company, Investment Company, Small
Business Investment Company, State Plan, or Employee Benefit
Plan. Any bank as defined in section 3(a)(2) of the Act, or any
savings and loan association or other institution as defined in
section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; any insurance
company as defined in section 2(13) of the Act; any investment
company registered under the Investment Company Act of 1940 or a
business development company as defined in section 2(a)(48) of
that Act; any small business investment company licensed by the
US Small Business Administration under section 301(c) or (d) of
the Small Business Investment Act of 1958; and plan established
and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has
total assets in excess of $5,000,000; any employee benefit plan
within the meaning of the Employee Retirement Income Security Act
of 1974, if the investment decision is made by a plan fiduciary,
as defined in section 3(21) of such act, which is either a bank,
savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited
investors;
2. Private Business Development Company. Any private business
development company as defined in section 202(a)(22) of the
Investment Advisers Act of 1940;
3. Organization, Partnership, Corporate or Other Entity Investor.
Any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of
$5,000,000;
4. Officer of Issuer. Any director, executive officer, or general
partner of the issuer of the securities being offered or sold, or
any director, executive officer, or general partner of a general
partner of that issuer;
5. $1,000,000 Net Worth. Any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time
of this purchase exceeds $1,000,000;
6. $200,000 Income. Any natural person who had individual income in
excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same
level of income in the current year;
7. Trust. Any trust, with total assets in excess of $5,000,000 not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as
described in Rule 506(b)(2)(ii); and
7
<PAGE>
8. Entity. Any entity in which all of the equity owners are
accredited investors.
General Requirements
- - --------------------
A breach of an investor of any of its representations made to the
Company in the Subscription Agreement which results in a loss by the Company of
its registration exemption provided by Regulation D will cause such investor to
be liable to the Company for all damages and losses proximately caused thereby.
The bases for establishing the foregoing standards include the relative
lack of liquidity of the Shares and the risks inherent in an investment in the
Company. The foregoing standards represent minimum requirements for a
prospective purchaser and the Company reserves the right to reject any
subscription notwithstanding compliance with these standards. Shares may also be
sold to corporations, partnerships, trusts and other entities meeting the
foregoing requirements.
Certain states in which the Company may qualify its Shares for sale may
establish suitability standards and minimum purchase requirements more
restrictive than those set by the Company. Those requirements, if any, will be
set forth in a supplement to this Memorandum.
8
<PAGE>
SUMMARY OF THE OFFERING
The following material is intended to summarize information contained
elsewhere in this Memorandum. This summary is qualified in its entirety by
express reference to the Memorandum and the exhibits referred to therein. Each
prospective investor is urged to read this Memorandum in its entirety, as well
as various filings submitted to the SEC and other regulatory bodies.
The Company
- - -----------
The Company was incorporated under the laws of the State of Utah, on
July 14, 1983 under the name of Far West Gold, Inc., with an authorized capital
of 50,000,000 shares of common stock with a par value of $.001 per share.
On July 14, 1983, the Company, in connection with a 504 D offering
issued 5,141,000 shares of common stock for cash at $.003 per share or $15,000.
During October 1984, the Company issued 13,009,000 shares of common stock at
$.01 per share or $130,090, less offering expenses of the offering of $27,547,
for a net cash of $102,543. For the year ending December 31, 1990, the Company
received a capital contribution of $4,364 to pay expenses of the Company. For
the year ending December 31, 1991, the Company received a capital contribution
of $100 to pay expenses of the Company. For the year ending December 31, 1995,
the Company issued 20,000,000 shares of common stock at $.001 per share to
satisfy current liabilities in the amount of $20,000.
On April 15, 1996, the Company effected a reverse split of 500:1, with
the par value remaining at $.001. On April 16, 1996, the Company issued
4,000,000 shares of common stock at $.0005 or $2000 for services to Mr. Harmel
Rayat, a director of the Company. On May 9, 1996, in connection with a 504 D
offering, the Company issued 4,000,000 shares of common stock at $.05 per share
for cash in the amount of $200,000. On May 9, 1996, shareholders of the Company
approved a name change to Far West Resources, Inc and approved an increase in
the number of shares that the Company has authority to issue to 105,000,000, of
which 100,000,000 shares shall be at $.001 par value common stock, and
5,000,000shares shall be $.10 par valued preferred stock.
On June 30, 1997, the shareholders of the Company approved a name
change to American Alliance Corporation, approved a change in state registration
from Utah to Nevada, approved an increase in common share par value from $.001
to $.00001 and preferred par value from $.10 to $.0001, and approved the 1997
Employee and Director Stock Option Plan for 1,250,000 shares. On June 30, 1997,
the Company issued 2,000,000 common shares at $.15 per share in connection with
a 504 D offering. On October 14, 1997, the Company issued 1,000,000 common
shares at $.50 per share in connection with a 504 D offering.
The Company is a developmental stage company that currently actively
seeking to acquire or enter into a technology based business endeavor.
9
<PAGE>
The Offering
- - ------------
Shares Offered 450,000
Offering Price $2.00 Per Share
Common Stock Outstanding (Dec 1/97) 11,076,202
Common Stock to be Outstanding After the Offering
MINIMUM OFFERING: 11,176,202
MAXIMUM OFFERING: 11,526,202
Estimated Proceeds of the Offering
MINIMUM OFFERING: $200,000
MAXIMUM OFFERING: $900,000
Use of Proceeds
- - ---------------
The Company plans to use the proceeds from this Offering for working
capital purposes while the Company seeks potential technology related
acquisitions or business opportunities. See -- "ESTIMATED USE OF PROCEEDS."
Need for Additional Capital and Capital Formation Plan
- - ------------------------------------------------------
Even if all or substantially all of the Shares offered hereunder are
sold, the Company may be dependent upon, among other things, the receipt of
additional capital. The Company plans to seek the additional financing it will
require through the sale of additional debt or equity securities, through
venture capital or through strategic partnerships. There is no assurance that
such additional financing will be available when required in order to proceed
with the business plan and complete preparations to continue operations. See
"RISK FACTORS - Dependence Upon Offering Proceeds and Need for Additional
Capital."
Risk Factors
- - ------------
Investment in the Common Stock involves a high degree of risk.
Potential investors should carefully consider the information under the caption,
"RISK FACTORS."
10
<PAGE>
RISK FACTORS
Investment in the Company involves a number of risks. In addition to
the risks and investment considerations discussed elsewhere in the Memorandum,
the following factors should be considered prior to purchasing the Shares
offered through this Memorandum.
SUMMARY OF RISKS
General
- - -------
The economic success of an investment in the Shares depends, to a large
degree, upon many factors over which the Company has not control. These factors
include general economic, industrial and international conditions; inflation or
deflation; fluctuation in interest rates; the Company's competition; and
governmental regulations.
Speculative Investment
- - ----------------------
The Shares are a very speculative investment. Although the Company is
confident it will succeed in its endeavours, Investors could lose their entire
investment.
Management and Operation Experience
- - -----------------------------------
The Company's officers, directors and other personnel have engaged in a
variety of businesses and have been involved in business financing, operations
and marketing, but their experience in these fields is limited. There is no
assurance that such experience will result in the success for the Company.
Other Risks
- - -----------
No assurance can be given that the Company will be successful in
achieving its stated objectives, that the Company's business, once business is
undertaken by the Company, will generate cash sufficient to operate the business
of the Company or that other parties entering into agreements relating to the
Company's business will meet their respective obligations.
Paid in Capital Has Funded Operations
- - -------------------------------------
Much of the operating capital of the Company over the past several
years has come from cash provided by private fundings. The Company has not been
profitable in the past nor has it generated sufficient capital to cover the
on-going operating and expansion expenses.
11
<PAGE>
Dependence Upon Offering Proceeds and Need for Additional Capital
- - -----------------------------------------------------------------
There is no assurance that such additional financing will be available
when required in order to proceed with the business plan or that the Company's
ability to respond to competition or changes in the market place. If the Company
is unsuccessful in securing the additional capital needed to continue operations
within the time required, the Company will not be in a position to continue
operations and the purchasers of Shares in this offering may lose their entire
investment.
Immediate and Substantial Dilution
- - ----------------------------------
The purchasers of the Shares being offered hereby will furnish a
substantial portion of the Company's initial capital. Therefore the capital
invested by the purchasers of the Shares will be at risk immediately in the
business of the Company. Even if all Shares offered hereunder are sold, the
investors in the Shares should assume that the shares of Common Stock will have
only a minimal book value.
Limited Transferability and Liquidity
- - -------------------------------------
In order to satisfy the requirements of the exemptions from
registration under the Securities Act and the various applicable state
securities laws, each subscriber must acquire his Common Stock for investment
purposes only and not with a view to distribution or resale. Consequently,
certain conditions of such federal and state securities laws must be satisfied
prior to any disposition of the securities. Some of these conditions may include
a minimum holding period, availability of certain reports, including financial
statements, from the Company, limitation on the percentage of the securities
sold and the manner in which the securities are sold. The Company can prohibit
any sale, transfer or other disposition unless it receives an opinion of counsel
provided at the Shareholder's expense, in a form satisfactory to the Company,
stating that the proposed sale, transfer or other disposition will not result in
a violation of the applicable federal and state securities laws and regulations
or other applicable federal and state laws and regulations. It is likely that
Rule 144, which permits sales of unregistered securities under certain
conditions, will be available to the shareholders of the Company. No public
market exists for the Common Stock, and no assurances can be given that such a
market for the resale of such securities will develop. Consequently, owners of
the securities may have to hold them indefinitely and may not be able to
liquidate their investment in the Company or pledge such securities as
collateral for a loan in the event of an emergency.
Dividends
- - ---------
The Company's Board of Directors presently intends to cause the Company
to follow a policy of retaining earnings, if any, for the purpose of increasing
the net worth and reserves of the Company. Therefore, there can be no assurance
that any holder of Common Stock will receive any cash, stock or other dividends
on his shares of Common Stock. Future dividends on Common Stock, if any, will
depend on future earnings, financing requirements and other factors.
12
<PAGE>
Arbitrary Determination of Offering Price
- - -----------------------------------------
The offering price of the Common Stock was arbitrarily set by the
Company. No independent investment banking firm was retained to assist in
determining the offering price. The offering price of the Common Stock may not
bear any relation to the actual value of the Common Stock. Among the factors
considered in determining the price were estimates of the prospects of the
Company, the background and capital contributions of Management and current
conditions in the securities markets and the Company's industry. There is,
however, no relationship between the offering price of the Common Stock and the
Company's assets, earnings, book value or any other objective criteria of value.
See "PLAN OF PLACEMENT."
Additional Securities Available for Issuance
- - --------------------------------------------
The Company's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock, and 5,000,000 shares of Preferred Stock. At
this time,11,076,202 shares of Common Stock have been issued. Accordingly,
shareholders, including those purchasing the shares offered with the sale of
these Shares, will be dependent upon the judgment of management in connection
with the future issuance and sale of shares of the Company's capital stock, in
the event purchasers can be found for such securities.
ESTIMATED USE OF PROCEEDS
The Company plans to use the proceeds from this Offering primarily for
funding technology based acquisitions or business opportunities and for working
capital.
<TABLE>
<CAPTION>
Item Maximum Shares
Sold
<S> <C>
Working Capital $900,000.00
Legal, Accounting & Transfer Agent $3,000.00
TOTAL $897,000.00
</TABLE>
NET FUNDS AVAILABLE TO COMPANY
The net proceeds of the sale if all of the Shares offered are
sold will be $837,000. The Company will incur expenses in connection with the
offering in an amount anticipated not to exceed $63,000 for commissions, legal
fees, accounting fees, filing fees, printing costs and other expenses. If the
maximum number of Shares are sold, the Company anticipates that the net proceeds
to it from the Offering will be as follows:
13
<PAGE>
<TABLE>
<CAPTION>
Item Maximum Shares
Sold
<S> <C>
Gross Proceeds of Offering $900,000.00
LESS: Commissions $63,000.00
Costs of Offering* $3,000.00
TOTAL PROCEEDS RECEIVED $834,000.00
</TABLE>
* The Company estimates that the costs of the Offering will be as follows: (I)
legal fees of approximately $1000, (ii) accounting fees of approximately $1000,
(iii) filing fees of approximately $0, and (iv) printing and other miscellaneous
costs of approximately $1000.
Even if all the Shares offered hereunder are sold, the Company may
require additional capital in order to fund continued development activities and
capital expenditures that must be made. The Company's business plan is based on
the premise that additional funding will be obtained through funds generated
from operations, the exercising of the warrants by shareholders, additional
offerings of its securities, or other arrangements. There can be no assurances
that any securities offerings will take place in the future, or that funds
sufficient to meet any of the foregoing needs or plans will be raised from
operations or any other source.
MANAGEMENT
Directors and Executive Officers
- - --------------------------------
<TABLE>
<CAPTION>
Name Position Director
Since
<S> <C>
Harmel S. Rayat President and CEO 3/96
Jasbinder Chohan Director, Secretary/Treasurer 3/96
Kundan S. Rayat Director 3/96
</TABLE>
Executive Compensation
- - ----------------------
At the present time no Officer or Director receives any compensation
for their services.
14
<PAGE>
Employment and Consulting Agreements
- - ------------------------------------
Although the Company is not party to any Employment or Consulting
Agreements currently, it is anticipated that all future employees will enter
into standard confidentiality and non-compete agreements prior to employment.
Stock Options
- - -------------
The Company currently has a policy of awarding stock options to certain
directors and employees and views the issuance of stock options necessary in
order to attract and maintain the services of individuals essential to the
Company's long term success.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of the date of this Memorandum the
amount of the Company's Common Stock beneficially owned by each officer and
director of the Company and by each person owning more than five percent of any
class of the Company's voting securities. As of the date of the Memorandum,
there are no other equity securities of the Company outstanding, other than the
Common Stock.
<TABLE>
<CAPTION>
Before Offering After Offering
Number of Percent of Number of Percent of
Name Shares Class Shares Class
<S> <C> <C> <C> <C>
Harmel S. Rayat 4,000,000 36.1% 4,000,000 34.7%
</TABLE>
DESCRIPTION OF COMMON STOCK
Common Stock
- - ------------
Holders of the Common Stock are entitled to one vote for each share
held by them of record on the books of the Company in all matters to be voted on
by the stockholders. Holders of Common Stock are entitled to receive such
dividends as may be declared from time to time by the Board of Directors out of
funds legally available, and in the event of liquidation, dissolution or winding
up of the Company, to share ratably in all assets remaining after payment of
liabilities. Declaration of dividends on Common Stock is subject to the
discretion of the Board of Directors and will depend upon a number of factors,
including the future earnings, capital requirements and financial condition of
the Company. The Company has not declared dividends on its Common Stock in the
past and the management currently anticipates that retained earnings, if any, in
the future will be applied to the expansion and development of the Company
rather than the payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and
are not subject to further calls or assessments by the Company. There are no
redemption or sinking fund provisions
15
<PAGE>
applicable to the Common Stock. The Common Stock currently outstanding is, and
the Common Stock offered by the Company hereby will, when issued, be validly
issued, fully paid and nonassessable.
Warrants
- - --------
Prior to this offering there were no warrants outstanding. .
Securities Restrictions
- - -----------------------
Purchasers of the Shares of Common Stock offered hereby must be aware
of the long-term nature of their investment and be able to bear the economic
risk of their investment for an indefinite period of time. There is no public
trading market for the shares of Common Stock and there can be no assurance that
any such market will develop in the foreseeable future. The Shares of Common
Stock have not been registered under the Securities Act or the securities laws
of any state. The right of any purchaser to sell, transfer, pledge or otherwise
dispose of such securities is limited by the Securities Act and state securities
laws and the regulations promulgated thereunder. The Company's stock transfer
records will reflect "stop transfer" restrictions with respect to its Common
Stock and the certificates representing such securities will bear the following
legend:
These securities have not been registered under the Securities Act of 1933 or
any applicable state securities laws, and they may not be offered for sale,
sold, transferred, pledged or hypothecated without an effective registration
statement under the Securities Act and under any applicable state securities
laws, or an opinion of counsel, satisfactory to the company, that an exemption
from such registration is available.
Antidilution Provision
- - ----------------------
The conversion price from time to time in effect shall be subject to
adjustment from time to time as follows:
1. In case the corporation shall at any time subdivide the
outstanding shares of common stock, or shall issue a stock
dividend on its outstanding common stock, the conversion price in
effect immediately prior to such subdivision or the issuance of
such dividend shall be proportionately decreased, and in case the
corporation shall at any time combine the outstanding shares of
common stock, the conversion price in effect immediately prior to
such combination shall be proportionately increased, effective at
the close of business on the date of such subdivision, dividend
or combination, as the case may be.
2. The conversion price will be adjusted for dividends or
distributions on common stock payable in company stock;
subdivisions, combinations or certain reclassifications of common
stock; distributions to all holders of common stock of certain
rights to
16
<PAGE>
purchase common stock at less than current market price at the
time; distributions to such holders of assets or debt securities
of the Company or certain rights to purchase securities of the
Company (excluding cash dividends or distributions from current
or retained earnings). However, no adjustment need be made if
security holders may participate in the transaction or in certain
other cases.
DIVIDEND POLICY
The Company's Board of Directors presently intends to cause the Company
to follow a policy of retaining earnings, if any, for the purpose of increasing
the net worth and reserves of the Company. Therefore, there can be no assurance
that any holder of Common Stock will receive any cash, stock or other dividends
on his shares of Common Stock. To date, the Company has neither declared nor
paid any dividends on its Common Stock nor does the Company anticipate that
dividends will be paid in the foreseeable future. Rather, the Company intends to
apply earnings to the expansion and development of its business.
TERMS OF THE OFFERING
PLAN OF PLACEMENT
The Shares are offered directly by the Company in accordance with the
terms and conditions set forth in this Memorandum. The Company offers the Shares
on a "best efforts, all-or-none" basis with respect to the Minimum Offering and
on a "best efforts" basis with respect to the remaining Shares offered, which
means that no person or participating dealer is obligated to purchase any
Shares. The Company will use its best efforts to sell the Shares to investors.
There can be no assurance that all or any of the Shares offered hereunder will
be sold.
The Company may, in its discretion, accept subscriptions for Shares
received through broker-dealers that are members of the National Association of
Securities Dealers, Inc. ("NASD") and will, in connection with such sales, pay a
commission of 7% of the price of each Share sold, provided not less than the
Minimum Offering is sold in the offering.
LITIGATION
There are no pending legal proceedings to which the Company is a party.
LEGAL MATTERS
Gary R. Blume, Esquire, 11801 North Tatum Boulevard, Suite 108,
Phoenix, Arizona 85028, will pass upon certain matters for the Company.
17
<PAGE>
ADDITIONAL INFORMATION
In the opinion of the Board of Directors of the Company, this
Memorandum contains a fair presentation of the subjects discussed herein and
does not contain a misstatement of a material fact or fail to state a material
fact necessary to make any statements made herein not misleading. Persons to
whom offers are made will be furnished with such additional information
concerning the Company and other matters discussed herein as they, or their
purchaser representative or other advisors, may reasonably request. The Company
shall, to the extent such information is available or can be acquired without
unreasonable effort or expense, endeavour to provide the information to such
persons. All offerees are urged to make such personal investigations,
inspections or inquiries as they deem appropriate.
18
<PAGE>
EXHIBITS
19
<PAGE>
American Alliance Corporation - Exhibit A
SUBSCRIPTION DOCUMENT
1. The undersigned hereby subscribes for Shares of common stock (hereinafter
"Shares"), as described in the Private Offering Memorandum dated December
1, 1997 ("Memorandum"), of American Alliance Corporation, a Nevada
corporation (the "Company"), being offered by the Company for a purchase
price of $2.00 per share, along with 4 year warrants to accompany an
equivalent amountg of shares at $2.00, and tenders herewith the sum of $ In
payment therefore, together with tender of this Subscription Document.
2. The undersigned represents and warrants that he is a bona fide resident of
the State of __________.
3. The undersigned acknowledges:
a. Receipt of a copy of the Private Offering Memorandum;
b. That this subscription, if accepted by the Company, is legally binding
and irrevocable;
c. That the Company has a very limited financial and operating history;
d. That the Shares have not been registered under the Securities Act of
1933, as amended, in reliance upon exemptions contained in that Act,
and that the Shares have not been registered under the securities acts
of any state in reliance upon exemptions contained in certain state's
securities laws; and
e. That the representations and warranties provided in this Subscription
Document are being relied upon by the Company as the basis for the
exemption from the registration requirements of the Securities Act
1933 and of the applicable state's securities laws.
FOR NEW YORK RESIDENTS ONLY: THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS
NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
20
<PAGE>
4. The undersigned represents and warrants as follows:
a. That the undersigned subscriber is purchasing said Shares as an
investment and said Shares are purchased solely for the undersigned's
own account;
b. That the undersigned subscriber has sufficient knowledge and
experience in financial and business matters to evaluate the merits
and risks of an investment in the Shares;
c. That the undersigned subscriber is able to bear the economic risk of
an investment in the Shares;
d. That the undersigned subscriber has read and is thoroughly familiar
with the Private Offering Memorandum and represents and warrants that
he is aware of the high degree of risk involved in making an
investment in the Shares;
e. That the undersigned subscriber's decision to purchase the Shares is
based solely on the information contained in the Private Offering
Memorandum and on written answers to such questions as he has raised
concerning the transaction;
f. That the undersigned subscriber is purchasing the Shares directly from
the Company and understands that neither the Company nor the Offering
is associated with, endorsed by nor related in any way with any
investment company, national or local brokerage firm or other broker
dealer. The undersigned subscriber's decision to purchase the Shares
is not based in whole or in part on any assumption or understanding
that an investment company, national or local brokerage firm or other
broker dealer is involved in any way in this Offering or has endorsed
or otherwise recommended an investment in these Shares.
g. That the undersigned subscriber has an investment portfolio of
sufficient value that he could suitably absorb a high risk illiquid
addition such as an investment in the Shares.
h. The undersigned further represents that (INITIAL APPROPRIATE
CATEGORY):
[ ] I am a natural person whose individual net worth, or joint
worth with my spouse at the time of purchase, exceeds $200,000;
[ ] I am a natural person who had an individual income in excess of
$50,000 or joint income with my spouse in excess of $50,000 in
each of the two most recent years and who reasonably expects an
income in excess of those amounts in the current year.
21
<PAGE>
i. That Regulation D requires the Company to conclude that each investor
has sufficient knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the shares, or to verify that the investor has retained
the services of one or more purchaser representatives for the purpose
of evaluating the risks of investment in the shares, and hereby
represents and warrants that he has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of an investment in the shares and of making an
informed investment decision and will not require a purchaser
representative.
5. The undersigned understands and agrees that this subscription is made
subject to each of the following terms and conditions:
a. The Company shall have the right to accept or reject this
subscription, in whole or part, for any reason. Upon receipt of each
Subscription Document, the Company shall have until December 31, 1997
in which to accept or reject it. If no action is taken by the Company
within said period, the subscription shall be deemed to have been
accepted. In each case where the subscription is rejected, the Company
shall return the entire amount tendered by the subscriber, without
interest;
b. That the undersigned subscriber will, from time to time, execute and
deliver such documents or other instruments as may be requested by the
Company in order to aid the Company in the consummation of the
transactions contemplated by the Memorandum.
6. The undersigned hereby constitutes and appoints the Company, with full
power of substitution, as attorney-in-fact for the purpose of executing and
delivering, swearing to and filing, any documents or instruments related to
or required to make any necessary clarifying or conforming changes in the
Subscription Document so that such document is correct in all respects.
7. As used herein, the singular shall include the plural and the masculine
shall include the feminine where necessary to clarify the meaning of this
Subscription Document. All terms not defined herein shall have the same
meanings as in the Memorandum.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Document
this __ day of __________, 1997.
Number of Shares ___________________
Total amount tendered $__________________
<PAGE>
INDIVIDUAL OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
JOINT OWNERSHIP: __________________________________________
Name ( Please Type or Print )
__________________________________________
Signature
__________________________________________
Social Security Number
OTHER OWNERSHIP __________________________________________
Name ( Please Type or Print )
By:_______________________________________
( Signature )
__________________________________________
Title
__________________________________________
Employer Indentification Number
ADDRESS:____________________________________________________________________
Street City State Zip
Phone ( Residence )_____________________ ; Phone ( Business ) _________________
<PAGE>
I,________________________________, do hereby certify that the
representations made herein concerning my financial status are true, and that
all other statements contained herein are true, accurate and complete to the
best of my knowledge.
Date: ___________________ , 1996. __________________________________________
Signature
CERTIFICATE OF DELIVERY
I hereby acknowledg that I delivered the foregoing Subscription
Document to _________ _________________ on the _______ day of __________________
, 1996.
__________________________________________
Signature
ACCEPTANCE
This Subscription is accepted by Far West Resources, Inc., as of the
______ day of _____________ , 1997.
Far West Resources, Inc.
By :______________________________________
Director
<PAGE>
Warrant to Purchase Common Stock - Exhibit B
THIS WARRANT AND THE SECURITIES PURCHASED UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (I) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase 450,000 common shares.
Warrant to Purchase Common Stock
of
AMERICAN ALLIANCE CORPORATION
THIS CERTIFIES that or any subsequent holder hereof ("Holder"), has the right to
purchase from AMERICAN ALLIANCE CORPORATION, a Nevada corporation (the
"Company"), not more than 450,000 fully paid and nonassessable shares of the
Company's common stock, $.00001 par value ("Common Stock"), at a price equal to
the Exercise Price of $2.00 per share at any time during the period beginning on
the Date of Issuance (defined below) and ending at 5:00 p.m., PST, on , 2001
(the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase Common Stock of
American Alliance Corporation (this "Warrant") is issued and all rights
hereunder shall be held subject to all of the conditions, limitations and
provisions set forth herein.
1. Date of Issuance
This Warrant shall be deemed to be issued on ___________, 1997 ("Date
of Issuance").
2. Exercise
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common
Stock covered hereby upon surrender of this Warrant, with the Exercise
Form attached hereto as Exhibit A (the "Exercise Form") duly executed,
together with the full Exercise Price (as defined below) for each
share of Common Stock as to which this Warrant is exercised, at the
office of the Company, 1628 West 1st Ave, Suite 216, Vancouber, BC,
V6J 1G1 Attention: President, or at such other office or agency as the
Company may designate
25
<PAGE>
in writing, by overnight mail, with an advance copy of the Exercise
Form sent to the Company by facsimile (such surrender and payment of
the Exercise Form sent to the Company by facsimile (such surrender and
payment of the Exercise Price hereinafter called the "Exercise of this
Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent
by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company within five (5) business
days thereafter. The original Warrant and Exercise Form must be
received within five (5) business days of the Date of Exercise, or the
exercise may, at the Company's option, be considered void.
Alternatively, the Date of Exercise shall be defined as the date the
original Exercise Form is received by the Company, if Holder has not
sent advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be cancelled upon the
Exercise of this Warrant, and, as soon as practical after the Date of
Exercise, Holder shall be entitled to receive Common Stock for the
number of shares purchased upon such Exercise of this Warrant, and if
this Warrant is not exercised in full, Holder shall be entitled to
receive a new Warrant (containing terms identical to this Warrant)
representing any unexercised portion of this Warrant in addition to
such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to be the
Holder of record of such shares on the Date of Exercise, irrespective
of the date of delivery of the Common Stock purchased upon Exercise of
this Warrant. Nothing in this Warrant shall be construed as conferring
upon Holder any rights as a stockholder of the Company.
3. Transfer and Registration
(a) Transfer Rights. Subject to the provisions of Section 7 of this
Warrant, this Warrant may be transferred on the books of the Company,
in whole or in part, in person or by attorney, upon surrender of this
Warrant properly endorsed. This Warrant shall be cancelled upon such
surrender and, as soon as practicable thereafter, the person to whom
such transfer is made shall be entitled to receive a new Warrant or
Warrants as to the portion of this Warrant transferred, and Holder
shall be entitled to receive a new Warrant as to the portion hereof
retained.
4. Anti-Dilution Adjustments
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this
Warrant after the record date for the determination of holders of
Common Stock entitled to receive such dividend, shall be entitled to
receive upon Exercise of this Warrant, in addition to the
26
<PAGE>
number of shares of Common Stock as to which this Warrant is
exercised, such additional shares of Common Stock as such Holder would
have received had this Warrant been exercised immediately prior to
such record date and the Exercise Price will be proportionately
adjusted.
(b) Recapitalization or Reclassification. If the Company shall at any time
effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be
changed into or become exchangeable for a larger or smaller number of
shares, then upon the effective date thereof, the number of shares of
Common Stock which Holder shall be entitled to purchase upon the
Exercise of this Warrant shall be increased or decreased, as the case
may be, in direct proportion to the increase or decrease in the number
of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall
be, in the case of an increase in the number of shares, proportionally
decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder the same
notice it provides to holders of Common Stock of any transaction
described in this Section 4(b).
(c) Distributions. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of
indebtedness or other securities or assets (other than cash dividends
or distributions payable out of earned surplus or net profits for the
current or preceding year) then, in any such case, Holder shall be
entitled to receive, upon Exercise of this Warrant, with respect to
each share of Common Stock issuable upon such exercise, the amount of
cash or evidences of indebtedness or other securities or assets which
Holder would have been entitled to receive with respect to each such
share of Common Stock as a result of the happening of such event had
this Warrant been exercised immediately prior to the record date or
other date fixing shareholders to be affected by such event (the
"Determination Date") or, in lieu thereof, if the Board of Directors
of the Company should so determine at the time of such distribution, a
reduced Exercise Price determined by multiplying the Exercise Price on
the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board of Directors of the Company in its discretion)
and the denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization,
or other similar event, as a result of which shares of Common Stock
shall be changed into the same or a different number of shares of the
same or another class or classes of stock or securities or other
assets of the Company or another entity or there is a sale of all or
substantially or other assets of the Company or another entity or
there is a sale of all or substantially all the Company's assets (a
"Corporate Change"), then this Warrant shall be assumed
27
<PAGE>
by the acquiring entity or any affiliate thereof and thereafter this
Warrant shall be exercisable into such class and type of securities or
other assets as Holder would have received had Holder exercised this
Warrant immediately prior to such Corporate Change; provided, however,
that Company may not affect any Corporate Change unless it first shall
have given thirty (30) business days notice to Holder hereof of any
Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3
of this Warrant until the occurrence of an event stated in subsection
(a), (b) or (c) of this Section 4 and thereafter shall mean said price
as adjusted from time to time in accordance with the provisions of
said subsection. No such adjustment under this Section 4 shall be made
unless such adjustment would change the Exercise Price at the time by
$.01 or more; provided, however, that all adjustments not so made
shall be deferred and made when the aggregate thereof would change the
Exercise Price at the time by $.01 or more. No adjustment made
pursuant to any provision of this Section 4 shall have the net effect
of increasing the total consideration payable upon Exercise of this
Warrant in respect of all the Common Stock as to which this Warrant
may be exercised. Notwithstanding anything to the contrary contained
herein, the Exercise Price shall not be reduced to an amount below the
par value of the Common Stock.
(f) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this
Section 4, Holder shall, upon Exercise of this Warrant, become
entitled to receive shares and/or other securities or assets (other
than Common Stock) then, wherever appropriate, all references herein
to shares of Common Stock shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of
such shares and/or other securities or assets shall be subject to
adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 4.
5. Fractional Interests
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common
Stock. If, on Exercise of this Warrant, Holder would be entitled to a
fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and
the number of shares of Common Stock issuable upon exercise shall be
the next higher number of shares.
28
<PAGE>
6. Reservation of Shares
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient
for the Exercise of this Warrant and payment of the Exercise Price. The
Company covenants and agrees that upon the Exercise of this Warrant,
all shares of Common Stock issuable upon such exercise shall be duly
and validly issued, fully paid, nonassessable and not subject to
preemptive rights, rights of first refusal or similar rights of any
person or entity.
7. Restrictions on Transfer
(a) Registration or Exemption Required.. This Warrant and the Common Stock
issuable on Exercise hereof have not been registered under the
Securities Act of 1933, as amended, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of in the absence of
registration or the availability of an exemption from registration
under said Act and applicable state laws. All shares of Common Stock
issued upon Exercise of this Warrant shall bear an appropriate legend
to such effect, if applicable.
(b) Assignment. If Holder can provide the Company with reasonably
satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell,
transfer, assign, pledge or otherwise dispose of this substantially in
the form of the Assignment attached hereto as Exhibit B, indicating
the person or persons to whom the Warrant shall be assigned and the
respective number of warrants to be assigned to each assignee. The
Company shall effect the assignment within ten days, and shall deliver
to the assignee(s) designated by Holder a Warrant or Warrants of like
tenor and terms for the appropriate number of shares.
(c) Investment Intent. The Warrant and Common Stock issuable upon
conversion are intended to be held for investment purposes and not
with an intent to distribution, as defined in the Act.
8. Benefit of this Warrant
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and Holder any legal or equitable right, remedy
or claim under this Warrant and this Warrant shall be for the sole and
exclusive benefit of the Company and Holder.
29
<PAGE>
9. Applicable Law
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the state of Nevada,
without giving effect to conflict of law provisions thereof.
10. Loss of Warrant
Upon receipt by the Company of evidence of the loss, theft, destruction
or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the
Company, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver a new Warrant of like
tenor and date.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the ___
day of ________, 1997.
AMERICAN ALLIANCE CORPORATION
By:__________________________
Director
30
<PAGE>
EXHIBIT A
EXERCISE FORM
TO: MEDCARE TECHNOLOGIES, INC.
The undersigned hereby irrevocably exercises the right to purchase of the shares
of common stock (the "Common Stock") of AMERICAN ALLIANCE CORPORATION., a Nevada
corporation (the "Company"), evidenced by the attached warrant (the "Warrant"),
and herewith makes payment of the exercise price with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any of the Common Stock obtained on exercise of the Warrant,
except in accordance with the provisions of Section 7(a) of the
Warrant.
2. The undersigned requests that stock certificates for such shares be
issued free of any restrictive legend, if appropriate, and a warrant
representing any unexercised portion hereof be issued, pursuant to the
Warrant in the name of the undersigned and delivered to the undersigned
at the address set forth below:
Date:
Signature
Printed Name
Address
NOTICE:
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
31
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder desiring to transfer of the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase shares of the common stock of AMERICAN ALLIANCE
CORPORATION (the "Company") evidence by the attached Warrant and does hereby
irrevocably constitute and appoint _____________________ attorney to transfer
the said Warrant on the books of the Company, with full power of substitution in
the premises.
Dated:
Signature
Fill in for new registration of Warrant:
Name
Address
Please print name and address of
assignee (including zip code number)
NOTICE:
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
32
<PAGE>
TRADEMARK APPLICATION
IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
APPLICATION FOR REGISTRATION OF A SERVICE MARK
PRINCIPAL REGISTER
Mark: WHATSONLINE
Class: International Class 42
Basis for Filing: Sect. I(b)of the Trademark Act of 1946, as
amended
To: BOX NEW APP-FEE
The Assistant Commissioner For Trademarks
2900 Crystal Drive
Arlington, VA 22202-3513
The Applicant, American Alliance, Inc., a Nevada corporation, having an
established place of business at 216-1628 West 1" Ave, Vancouver, British
Columbia, Canada V6J 101, and a mailing address of same, has a bonafide
intention to use the mark identified above and in the accompanying drawing in
Commerce on or in connection with COMPUTER SERVICES, namely, PROVIDING
COMPILATION SERVICES OF LIVE AND ON DEMAND AUDIO AND VIDEO GLOBAL COMPUTER
NETWORK STREAMING AND GLOBAL COMPUTER NETWORK PUBLISHING MEDIA CONTENT
SERVICES, and seeks registration of said mark in the United States Patent and
Trademark Office tinder Section 1(b) of the Trademark Act of 1946, as amended,
in International Class 42.
Applicant intends to use, the mark on screen and downloaded printed
copies of its global computer network offered services, as well as promotional
materials standard for the ilidustry.
The Applicant hereby appoints Kathleen T. Petrich, Registration No. 37,205,
having a mailing address of Petrich Law Firm PLLC, P.O. Box 15316, Seattle, WA
98115 USA, and physical address at 3513 NE 45th, Suite 2-West, Seattle,
Washington 98105 USA as attorney with full power of substitution andrevocation,
to prosecute this application, to make alterations and amendments therein, to
receive the registration thereof, and to transact all business in the United
States Patent and Trademark Office in connection therewith.
Further, the undersigned, Harmel S. Rayatt, being warned that willful false
statements and the like so made are punishable by fine or imprisonment, or both,
under section 1001 of Title 18 of the United States Code, and may jeopardize the
validity of the apptication or any registrationresultin2r, therefrom, declares
that: he is the president of Applicant corporation and is authorized to execute
this Declaration on behalf of said coTporation, that said corporation is
believed to be the owner of the trademark sought to be registered; that the
Applicant has a bonafide intent to use the mark in commerce on or in connection
with the goods or services specified in this application; to the best of his
knowledge and belief, no other entity has the right to use such mark in
commerce, either in identicalform or in such near resemblance thereto as to be
likely, when applied to the goods or services of such other entity, to cause
confusion, or to cause mistake, or to deceive; and that the facts set forth in
this application are true; and all statements made of his own knowledge are true
and all statements made on information and belief are believed to be true.
SIGNED AT___________(city), _________________ (Province),
_______________ (Country) this _____th day of March 1999.
American Alliance, Inc.
/s/ Harmel S. Rayat
_____________________________
Harmel S. Rayatt, President
<PAGE>
Applicant: American Alliance, Inc.
Address: 216-1628 West 1st Ave.
Vancouver, British Columbia
Canada, V6J 1G1
Date of First Use: Not Applicable, filed under
S. 1(b) of the Trademark Acot of 1946,
as amended
First Use, Interstate Not applicable, filed under
Commerce Regulatable S. 1(b) of the Trademark Act of 1946,
by Congress: as amended
Goods or Services: COMPUTER SERVICES, namely, PROVIDING
COMPILATION SERVICES OF LIVE AN ON
DEMAND AUDIO AND VIDEO GLOBAL
COMPUTER NETWORK STREAMING AND
GLOBAL COMPUTER NETWORK
PUBLISHING MEDIA CONTENT SERVICES
WHATSONLINE
