U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ALTERNET SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Nevada 98-0206627
(State of Incorporation) (I.R.S. Employer ID No.)
Suite 610 - 815 West Hastings Street,
Vancouver, British Columbia V6C 2B4
(Address of principal executive offices)
STOCK RETAINER PLAN FOR EMPLOYEES
DIRECTORS AND CONSULTANTS
(Full title of the Plan)
Resident Agents of Nevada
(Name and address of agent for service)
711 S. Carson Street, Suite 4
Carson City, Nevada 89701
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of each Amount to be Proposed Maximum Proposed Maximum Fee
Class of Registered Offering price aggregate offering
Securities price
Common Stock 5,000,000 $0.30 $1,500,000 $121.50
(1) The Offering Price is used solely for the purposes of estimating the
registration fee pursuant to Rule 457(h) and Rule 457(c) promulgated pursuant to
the Securities Act of 1933 and is the average of the bid and asked price of the
Company's common stock as of April 22, 2003. The actual Offering Price per Share
is established pursuant to the Retainer Stock Plan for Employees, Directors and
Consultants, set forth in Exhibit 99.1 to this Form S-8 and in management and
consulting agreements executed in accordance with the Stock Plan.
PART I. INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Item 1: Plan Information
The Retainer Stock Plan for Employees, Directors and Consultants (the "Plan")
allows the grant of up to 5,000,000 shares of Common Stock to qualifying persons
at the discretion of the Registrant's Board of Directors, either directly
through the Plan or under management and consulting agreements allotting Plan
shares.
The Plan allows for grants over a five year period commencing on March 1, 2003
and terminating on February 29, 2008.
The Plan allows the Registrant to compensate qualifying persons with equity
compensation in addition to or in lieu of cash compensation. The offering
price of shares of common stock to each qualifying person will be determined
by negotiation with the Registrant with the approval of the Board of Directors.
Shares of common stock are to be issued from the Registrant's treasury in
consideration of services rendered and not for cash payment.
Eligibility for the Plan will be limited to persons who are employees or
directors of the Registrant or its subsidiary, AI Systems Group, Inc. and to
consultants performing work on a contractual basis for the Registrant or its
subsidiary, AI Systems Group, Inc. The persons eligible under the Plan need
not be natural persons but may be corporate persons providing services to the
Registrant.
The Registrant anticipates that shares of common stock issued under the Plan
will be, in all cases, issued as part of management agreement, consulting or
employment contracts.
Where a qualifying person under the Plan receives shares of common stock under
the Plan and that qualifying person is an affiliate or control person of the
Registrant, the qualifying person may be subject to resale or volume sales
restrictions. In particular, if a control person or director or senior officer
of the Registrant acquires shares of common stock under the Plan, they may be
subject to the US Securities and Exchange Commission's "swing profit rules"
applying to sales of securities within six months of their acquisition.
The Plan does not permit assignment of rights to receive shares of common stock.
The Plan permits qualifying persons to register their shares of common stock
only under their own names.
Qualifying persons are advised to seek their own tax advice with respect to the
acquisition of shares of common stock under the terms of the Plan. However, as
a general statement, issuance of shares of common stock to these qualifying
persons will constitute income to those persons under the tax laws of the United
States and Canada.
Item 2: Registrant Information and Employee Plan Annual Information
All qualifying persons are referred by the Registrant to the Registrant's
current annual report filed on Form 10KSB on March 14, 2003 and are further
advised to review the Registrant's filings on the SEC's EDGAR filing system.
It is anticipated that all qualifying persons granted stock under the Plan will
be in a unique position to assess the advisability of purchasing securities of
the Registrant due to their positions of employment or executive positions with
the Registrant.
All qualifying persons will be provided with an annual update as to the status
of the Plan, the number of shares of common stock issued under it and other
information.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3:
Alternet Systems, Inc. hereby incorporates by reference the contents of
its latest annual report on Form 10KSB, filed pursuant to Section 13(a) of
the Exchange Act, and any subsequent reports filed pursuant to Section 13(a)
or 15(d) of the Exchange Act.
Item 4:
The class of securities to be offered is registered under Section 12 of the
Exchange Act.
Item 5: Interests of named Experts and Counsel
No named expert or counsel was hired on a contingent basis, will receive a
direct or indirect interest in the small business issuer, or was a promoter,
underwriter, voting trustee, director, officer, or employee of the Company.
As of March 1, 2003, Christopher D. Farber owns 118,500 common shares of the
Company and also represents the Company as its inside corporate counsel. CD
Farber Law Corporation, of which he is the sole shareholder, officer and
director, has entered into an agreement dated March 1, 2003 with the Registrant
whereby the law corporation receives a total of 3,000 shares of common stock per
month in exchange for providing legal services to the Registrant.
Item 6: Indemnification of Directors and Officers
The Articles and Bylaws of the Company do not provide for
indemnification of the directors and officers of the Company for acts
taken in their capacity as directors or officers.
The Articles and Bylaws of the Company do not prohibit arrangement by
the Company of indemnification insurance or an agreement by the
Company to indemnify directors and officers against loss or damage
from such acts.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to any future amendments
to the Company's Articles or Bylaws, the Company has been advised that
in the opinion of the US Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforcable.
Item 7: Registration from Registration Claimed
Not applicable.
ITEM 8. EXHIBITS
5.1* Opinion of Law Office of CD Farber Law Corporation as to the
legality of the Company's Common Stock being registered.
23.1* Consent of Labonte & Company, Chartered Accountants
23.2* Consent of Law Office of CD Farber Law Corporation (contained in
Exhibit 5.1)
99.1* Alternet Systems, Inc. Retainer Stock Plan for Employees, Directors
and Consultants dated March 1, 2003.
* Filed herewith
Item 9: Undertakings
In accordance with Rule 415 and Item 512 of Regulation S-K, the
undersigned company hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
Notwithstanding the forgoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation From the low or high end of the estimated
maximum offering range may be reflected in the form of
prospects filed with the U.S. Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions,
or otherwise, the small business issuer has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling
person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the small business issuer will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Vancouver, Province of British Columbia, on
April 23, 2003.
ALTERNET SYSTEMS, INC.
By: /S/ Griffin Jones By: /S/ Michael Dearden
Date: April 23, 2003 Date: April 23, 2003
-------------------------- ------------------------
Griffin Jones, Michael Dearden,
Director, Secretary, Director, President
Treasurer
By: /S/ Patrick Fitzsimmons By: /S/ Karim Lakhani
Date: April 23, 2003 Date: April 23, 2003
-------------------------- ------------------------
Patrick Fitzsimmons, Karim Lakhani,
Director, Vice President Director
By: /S/ Greg Protti By: /S/ Brandon Douglas
Date: April 23, 2003 Date: April 23, 2003
-------------------------- ------------------------
Greg Protti, Brandon Douglas,
Director, Vice President Director
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
ALTERNET SYSTEMS, INC.
By: /S/ Griffin Jones By: /S/ Michael Dearden
Date: April 23, 2003 Date: April 23, 2003
-------------------------- ------------------------
Griffin Jones, Michael Dearden,
Director, Secretary, Director, President
Treasurer
By: /S/ Patrick Fitzsimmons By: /S/ Karim Lakhani
Date: April 23, 2003 Date: April 23, 2003
-------------------------- ------------------------
Patrick Fitzsimmons, Karim Lakhani,
Director, Vice President Director
By: /S/ Greg Protti By: /S/ Brandon Douglas
Date: April 23, 2003 Date: April 23, 2003
-------------------------- ------------------------
Greg Protti, Brandon Douglas,
Director, Vice President Director
Exhibit 5.1 and 23.2
CD FARBER LAW CORPORATION,
A British Columbia Law Corporation
Suite 2602 - 1111 Beach Ave
Vancouver, British Columbia
V6E 1T9
Tel: (604) 608-4226
Fax: (604) 608-4223
April 23, 2003
Gentlemen:
In connection with the Registration Statement on Form S-8, being filed by
Alternet Systems, Inc. (the "Company") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
registration of 5,000,000 shares of the Company's Common Stock offered
under the Company's Stock Plan for Employees, Directors and Consultants
(the "Plan"), we are of the opinion that:
1. The Company is a validly organized and existing corporation under
the laws of the State of Nevada;
2. All necessary corporate action required to be taken at this time has
been duly taken to authorize the establishment of the Plan and the
issuance of 5,000,000 shares of the Company's Common Stock under the
Plan; and
3. The shares of the Company's Common Stock, when issued in accordance
with the Plan, will be legally issued, fully paid and non-assessable
shares of the Common Stock of the Company.
In rendering our opinion, we have examined copies of the following documents:
1. A copy of the Registration Statement;
2. A copy of the Plan, as reviewed and completed by the Company and approved
by its Board of Directors effective March 1, 2003;
3. The Certificate of Incorporation and other corporate records documents
contained in the Company's minute books; and
4. The By-Laws, as amended of the Company as certified by the Secretary of
the Company.
We have assumed the genuineness of all signatures, the legal capacity of all
natural persons, the accuracy and completeness of all documents submitted to us
and the conformity to authentic original docuements of all documents submitted
to us as copies. This opinion letter is given, and all statements herein are
made, in the context of the foregoing.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement referred to above. In
giving this consent, we do not thereby admit that we are an "expert" within the
meaning of the Securities Act of 1933, as amended.
Very truly yours,
/S/ Christopher D. Farber
CD FARBER LAW CORPORATION
EXHIBIT 23.1
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the incorporation by reference of our report dated February 28,
2002, in the Registration Statement (Form S-8) pertaining to the Retainer Stock
Plan for Employees, Directors and Consultants of Alternet Systems, Inc. with
respect to the consolidated financial statements of Alternet Systems, Inc.
included in its Annual Report (Form 10-KSB) for the year ended December 31,
2002, filed with the Securities and Exchange Commission on March 28, 2003.
/S/ Labonte & Company
-------------------------
Vancouver, Canada Labonte & Company
April 23, 2003 Chartered Accountants
EXHIBIT 99.1
ALTERNET SYSTEMS, INC.
RETAINER STOCK PLAN FOR EMPLOYEES,
DIRECTORS AND CONSULTANTS
1. INTRODUCTION.
This plan shall be known as the "Alternet Systems, Inc. Retainer Stock Plan for
Employees, Directors and Consultants" and is hereinafter referred to as the
"Plan". The purpose of the Plan is to enable Alternet Systems, Inc., a Nevada
corporation (the "Company"), to promote the interests of the Company and its
shareholders by (a) attracting and retaining employees capable of furthering the
future success of the Company, providing incentives for outstanding performance
and rewards for such performance; and (b) attracting and retaining Directors and
Consultants capable of furthering the future success of the Company, and
aligning their economic interests more closely with those of the Company's
shareholders, by paying their retainer fees in the form of shares of the
Company's common stock (the "Common Stock") on the terms and conditions to be
agreed between the Company and these persons.
2. DEFINITIONS
The following terms shall have the meanings set forth below:
"BOARD" means the Board of Directors of the Company.
"CHANGE OF CONTROL" has the meaning set forth in Section 12(d).
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder. References to any provision of the Code or rule
or regulation thereunder shall be deemed to include any amended or successor
provision, rule or regulation.
"COMMITTEE" means the committee that administers the Plan, as more fully defined
in Section 13.
"COMMON STOCK" has the meaning set forth in Section 1.
"COMPANY" has the meaning set forth in Section 1.
"CONSULTANT" means a person who is contractually obligated as an independent
contractor to provide services to the Company.
"DEFERRAL ELECTION" has the meaning set forth in Section 6.
"DEFERRED STOCK ACCOUNT" means a bookkeeping account maintained by the Company
for a Participant representing the Participant's interest in the shares credited
to such Deferred Stock Account pursuant to Section 7.
"DELIVERY DATE" has the meaning set forth in Section 6.
"DIRECTOR" means a natural person who is a member of the Board of Directors of
the Company.
"DIVIDEND EQUIVALENT" for a given dividend or other distribution means a number
of shares of Common Stock having a Fair Market Value, as of the record date for
such dividend or distribution, equal to the amount of cash, plus the fair market
value on the date of distribution of any property, that is distributed with
respect to one share of Common Stock pursuant to such dividend or distribution;
such fair market value to be determined by the Committee in good faith.
"EFFECTIVE DATE" has the meaning set forth in Section 3.
"EMPLOYEE" means a natural person who is an employee of the Company, or its
subsidiaries.
"EXCHANGE ACT" has the meaning set forth in Section 13(b).
"FAIR MARKET VALUE" means the mean between the highest and lowest reported sales
prices of the Company's Common Stock on the last trading day prior to the date
with respect to which the Fair Market Value is to be determined or such other
value as the Company's Board of Directors may, in its sole discretion,
determine.
"PARTICIPANT" means an individual who is an Employee, Director or Consultant on
the Effective Date or who becomes an Employee, Director or Consultant thereafter
during the term of the Plan.
"PAYMENT TIME" means the time when a Granted Stock is payable to a Participant
pursuant to Section 5 (without regard to the effect of any Deferral Election).
"GRANTED STOCK" has the meaning set forth in Section 5.
"THIRD ANNIVERSARY" has the meaning set forth in Section 6.
3. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of March 1, 2003 ("Effective Date"), provided
that it is approved by the Board and the Plan shall terminate on February 29,
2008 (being a term of five years).
4. ELIGIBILITY.
Each Participant is eligible to participate in the Plan. Each credit of shares
of Common Stock pursuant to the Plan shall be evidenced by a written agreement
duly executed and delivered by or on behalf of the Company and a Participant,
if such an agreement is required by the Company to assure compliance with all
applicable laws and regulations.
5. GRANT OF SHARES.
Commencing on the Effective Date, the Committee may in its absolute discretion
grant such shares of the Common Stock pursuant to this Plan as the Committee may
in its absolute discretion deem appropriate to (a) reward and incentive
Employees; or (b) pay consideration to Directors or Consultants for their
services ("Granted Stock").
6. DEFERRAL OPTION.
From and after the Effective Date, a Participant may make an election (a
"Deferral Election") on an annual basis to defer delivery of the Granted Stock
so that it is to be delivered: (a) on the date which is three years after the
Effective Date for which it was originally payable ("Third Anniversary"), (b) on
the date upon which the Participant ceases to qualify as a Participant hereunder
for any reason ("Departure Date"), (c) in five equal annual installments
commencing on the Departure Date ("Third Anniversary" and "Departure Date" each
being referred to herein as a "Delivery Date") or in such other manner as the
Participant and the Company may agree. Such Deferral Election shall remain in
effect for each Subsequent Year unless changed, provided that, any Deferral
Election with respect to a particular Subsequent Year may not be changed less
than six (6) months prior to the beginning of such Subsequent Year and provided,
further, that no more than one Deferral Election or change thereof may be made
in any Subsequent Year.
Any Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six (6) months
prior to the beginning of the Subsequent Year in which it is to be effected;
provided that, with respect to the Subsequent Year beginning on the Effective
Date, any Deferral Election or revocation thereof must be delivered no later
than the close of business on the thirtieth (30th) day after the Effective Date.
7. DEFERRED STOCK ACCOUNTS.
The Company shall maintain a Deferred Stock Account for each Participant who
makes a Deferral Election to which shall be credited, as of the applicable
Payment Time, the number of shares of Common Stock payable pursuant to the
Granted Stock to which the Deferral Election relates. So long as any amounts
in such Deferred Stock Account have not been delivered to the Participant then
on the payment date for any dividend paid or other distribution made with
respect to the Common Stock the Deferred Stock Account shall be credited, with
a number of shares of Common Stock equal to (a) the number of shares of Common
Stock shown in such Deferred Stock Account on the record date for such dividend
or distribution multiplied by (b) the Dividend Equivalent for such dividend or
distribution.
8. DELIVERY OF SHARES.
(a) The shares of Common Stock in a Participant's Deferred Stock Account
with respect to any Granted Stock for which a Deferral Election has been made
(together with dividends attributable to such shares credited to such Deferred
Stock Account) shall be delivered in accordance with this Section 8 as soon as
practicable after the applicable Delivery Date. Except with respect to a
Deferral Election pursuant to Section 6(c), or other agreement between the
parties, such shares shall be delivered at one time; provided that, if the
number of shares so delivered includes a fractional share, such number shall be
rounded to the nearest whole number of shares. If the Participant has in effect
a Deferral Election pursuant to Section 6(c), then such shares shall be
delivered in five equal annual installments (together with dividends
attributable to such shares credited to such Deferred Stock Account), with the
first such installment being delivered on the first anniversary of the Delivery
Date. References to a Participant in this Plan shall be deemed to refer to the
Participant's estate or legal guardian, where appropriate.
(b) The Company may, but shall not be required to, create a grantor trust or
utilize an existing grantor trust (in either case, "Trust") to assist it in
accumulating the shares of Common Stock needed to fulfill its obligations under
this Section 8. However, Participants shall have no beneficial or other interest
in the Trust and the assets thereof, and their rights under the Plan shall be as
general creditors of the Company, unaffected by the existence or nonexistence of
the Trust, except that deliveries of Granted Stocks to Participants from the
Trust shall, to the extent thereof, be treated as satisfying the Company's
obligations under this Section 8.
9. SHARE CERTIFICATES; VOTING AND OTHER RIGHTS.
The certificates for shares delivered to a Participant pursuant to Section 8
above shall be issued in the name of the Participant, and from and after the
date of such issuance the Participant shall be entitled to all rights of a
shareholder with respect to Common Stock for all such shares, and the
Participant shall receive all dividends and other distributions paid or
made with respect thereto.
10. GENERAL RESTRICTIONS.
(a) Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior
to fulfillment of all of the following conditions:
(i) any registration or other qualification of such shares under any state,
provincial or federal law or regulation, or the maintaining in effect of any
such registration or other qualification which the Committee shall, upon the
advice of counsel, deem necessary or advisable; and
(ii) obtaining any other consent, approval, or permit from any state,
provincial or federal governmental agency which the Committee shall, after
receiving the advice of counsel, determine to be necessary or advisable.
(b) Nothing contained in the Plan shall prevent the Company from adopting
other or additional compensation arrangements for the Participants.
11. SHARES AVAILABLE.
Subject to Section 12 below, the maximum number of shares of Common Stock which
may in the aggregate be paid as Granted Stocks pursuant to the Plan is FIVE
MILLION (5,000,000). Shares of Common Stock issuable under the Plan may be taken
from treasury shares of the Company or purchased on the open market.
The shares of common stock made available under the Plan may be granted directly
under the terms of the Plan or through management and consulting agreements
entered into by the Company with qualifying persons.
12. ADJUSTMENTS; CHANGE OF CONTROL.
(a) In the event that there is, at any time after the Board adopts the Plan,
any change in corporate capitalization, such as a stock split, combination of
shares, exchange of shares, warrants or rights of offering to purchase Common
Stock at a price below its fair market value, reclassification, or recapitaliza-
tion, or a corporate transaction, such as any merger, consolidation, separation,
including a spin-off, or other extraordinary distribution of stock or property
of the Company, any reorganization or any partial or complete liquidation of the
Company (each of the foregoing a "Transaction"), in each case other than any
such Transaction which constitutes a Change of Control (as defined below), (i)
the Deferred Stock Accounts shall be credited with the amount and kind of shares
or other property which would have been received by a holder of the number of
shares of Common Stock held in such Deferred Stock Account had such shares of
Common Stock been outstanding as of the effectiveness of any such Transaction,
(ii) the number and kind of shares or other property subject to the Plan shall
likewise be appropriately adjusted to reflect the effectiveness of any such
Transaction and (iii) the Committee shall appropriately adjust any other
relevant provisions of the Plan and any such modifications by the Committee
shall be binding and conclusive on all persons.
(b) If the shares of Common Stock credited to the Deferred Stock Accounts are
converted pursuant to Section 12(a) into another form of property, references
in the Plan to the Common Stock shall be deemed, where appropriate, to refer to
such other form of property, with such other modifications as may be required
for the Plan to operate in accordance with its purposes. Without limiting the
generality of the foregoing, references to delivery of certificates for shares
of Common Stock shall be deemed to refer to delivery of cash and the incidents
of ownership of any other property held in the Deferred Stock Accounts.
(c) In lieu of the adjustment contemplated by Section 12(a), in the event
of a Change of Control, the following shall occur on the date of the Change
of Control: (i) the shares of Common Stock held in each Participant's Deferred
Stock Account shall be deemed to be issued and outstanding as of the Change of
Control; (ii) the Company shall forthwith deliver to each Participant who has a
Deferred Stock Account all of the shares of Common Stock or any other property
held in such Participant's Deferred Stock or any other property held in such
Participant's Deferred Stock Account; and (iii) the Plan shall be terminated.
(d) For purposes of this Plan, Change of Control shall mean any of the
following events:
(i) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (a) the then outstanding shares of common stock of the Company or (b) the
combined voting power of the then outstanding voting securities of the Company
entitled to
vote generally in the election of directors.
(ii) Individuals who, as of the date hereof, constitute the Board of the
Company cease for any reason to constitute at least a majority of the Board of
Directors of the Company.
(iii) Approval by the shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or (b) the sale or other disposition
of all or substantially all of the assets of the Company.
4
13. ADMINISTRATION; AMENDMENT AND TERMINATION
(a) The Plan shall be administered by a committee consisting of all persons
who are current directors of the Company ("Committee"), which shall have full
authority to construe and interpret the Plan, to establish, amend and rescind
rules and regulations relating to the Plan, and to take all such actions and
make all such determinations in connection with the plan as it may deem
necessary or desirable.
(b) The Board may from time to time make such amendments to the Plan,
including to preserve or come within exemption from liability under Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as it may deem proper and in the best interest of the Company provided, that,
if and to the extent required for the Plan to comply with Rule 16b-3 promulgated
under the Exchange Act, no amendment to the Plan shall be made more than once in
any six (6) month period that would change the amount, price or timing of the
grants of Common Stock hereunder other than to conform with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 174, as amended, or the regulations thereunder.
(c) The Board may terminate the Plan at any time by a vote of a majority of
the members thereof but shall terminate on September 18, 2003 at the latest and
no grants made be made pursuant to the Plan after that date. The provisions of
the Plan governing Deferred Stock Accounts shall survive the termination of the
Plan.
14. MISCELLANEOUS
(a) Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any Director for re-election by the Company's
shareholders or to limit the rights of the shareholders to remove any Director.
(b) The Company shall have the right to require, prior to the issuance or
delivery of any share of Common Stock pursuant to the Plan, that a Participant
make arrangements satisfactory to the Committee for the withholding of any taxes
required by law to be withheld with respect to the issuance or delivery of such
shares, including without limitation by the withholding of shares that would
otherwise be so issued or delivered, by withholding from any other payment due
to the Participant, or by a cash payment to the Company by the Participant.
(c) Where the terms of this Plan and any management or consulting agreement
entered into by the Company with an employee, director, officer or consultant
conflict, the terms of the management or consulting agreement shall supercede
the terms of this Plan.
15. GOVERNING LAW
The Plan and all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Nevada.
ALTERNET SYSTEMS, INC.
By: /S/ Michael Dearden
--------------------
Michael Dearden
President and Director