-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hv5HV6oAam2JepO8c9GofNHbmJGqxj66x8T5cmGROzFdG57nTaoyIlrDdT3UvK9q dX6ige5wkmV4IWEPXtQIuA== 0000910195-99-000581.txt : 19991102 0000910195-99-000581.hdr.sgml : 19991102 ACCESSION NUMBER: 0000910195-99-000581 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCESS POWER INC CENTRAL INDEX KEY: 0001041588 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 333-65069 FILM NUMBER: 99738681 BUSINESS ADDRESS: STREET 1: 10033 SAWGRASS DR W STREET 2: STE 100 CITY: PONTE VEDRA BEACH STATE: FL ZIP: 32082 BUSINESS PHONE: 9042732980 MAIL ADDRESS: STREET 1: 10033 SAWGRASS DR W CITY: PONTE VEDRA BEACH STATE: FL ZIP: 32082 10QSB 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB /x/ Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 1999 / / Transition Report Under Section 13 or 15(d) of The Exchange Act For the Transition Period from ____________ to ____________ Commission File Number 000-____________ ACCESS POWER, INC. (Exact Name of Small Business Issuer as Specified in its Charter) FLORIDA 59-3420985 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10033 SAWGRASS DR., W, PONTE VEDRA BEACH, FL 32082 (Address of principal executive office) (Zip Code) Issuer's telephone number, including area code: (904) 273-2980 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes / X / No / / At October 20, 1999, there were issued and outstanding 28,741,358 shares of Common Stock. Transitional Small Business Disclosure Format (check one): Yes / / No / X / PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS A. BASIS OF PRESENTATION --------------------- Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed and omitted pursuant to such rules and regulations, although management believes the disclosures are adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the Company's annual report and most recent financial statements included in its report on Form 10-KSB for the year ended December 31, 1998 filed with the Securities and Exchange Commission. The interim financial information included herein is unaudited; however, such information reflects all the adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results of operations and cash flows for the interim periods. The results of operations for the nine months ended September 30, 1999 are not necessarily indicative of the results to be expected for the full year. 2 ACCESS POWER, INC. (A Development Stage Company) Balance Sheets As of September 30, 1999 and December 31, 1998
Assets 30-Sep December 31, ------ 1999 1998 ---- ---- (unaudited) Current assets: Cash $ 885,191 $ 33,156 Accounts receivable 97,022 29,145 Notes receivable 458,200 30,791 Prepaid expenses 151,138 -- Inventory 18,815 21,770 ----------- ----------- Total current assets 1,610,366 114,862 ----------- ----------- Property and equipment, net 922,174 1,131,471 Other assets 13,000 16,000 ----------- ----------- Total assets $ 2,545,540 $ 1,262,333 =========== =========== Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Accounts payable and accrued expenses $ 1,760,364 $ 1,373,978 Unearned revenue 21,490 -- Notes payable 62,500 120,136 ----------- ----------- Total current liabilities 1,844,354 1,494,114 ----------- ----------- 6% Convertible Debenture 1,000,000 -- ----------- ----------- Stockholders' equity: Common stock, $.001 par value, authorized 40,000,000 shares, issued and outstanding 27,451,358 and 12,325,788 shares in 1999 and 1998 27,452 12,326 Preferred stock, $.001 par value, authorized 10,000,000 shares, issued and outstanding 3,952 and 1,050 shares in 1999 and 1998 4 1 Additional paid in capital 3,898,025 2,252,971 Deficit accumulated during the development stage (4,224,295) (2,497,079) ----------- ----------- Total stockholders' equity (298,814) (231,781) ----------- ----------- =========== =========== Total liabilities and stockholders' equity $ 2,545,540 $ 1,262,333 =========== ===========
3 ACCESS POWER, INC. (A Development Stage Company) Statements of Cash Flows
For the nine months ended September 30, 1999 and 1998 and the cumulative period from October 10, 1996 (date of inception) through September 30, 1999 For the period October 10, 1996 1999 1998 through (unaudited) September 30, 1999 ----------- --------------- ------------------ Cash flows from operating activities: Net loss $(1,727,216) $(1,594,748) $(4,224,295) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 244,229 210,287 593,048 Loss on disposal of property and equipment 6,880 33,341 Stock issued for services 234,983 50,625 317,049 Stock issued for interest 14,000 114,375 128,375 Change in operating assets and liabilities: Accounts receivable (67,877) (20,147) (97,022) Accounts payable and accrued expenses 386,386 1,224,316 1,760,364 Deferred Revenue 21,490 -- 21,490 Other assets (151,138) -- (174,304) Inventory 2,955 (30,000) (18,815) ----------- ----------- ----------- Net cash used in operating activities (1,035,308) (45,292) (1,660,769) ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sale of property and equipment 10,050 -- 50,320 Purchase of property and equipment (48,862) (1,103,891) (1,588,717) Note receivable (427,409) (999) (458,200) ----------- ----------- ----------- Net cash used in investing activities (466,221) (1,104,890) (1,996,597) ----------- ----------- ----------- Cash flows from financing activities: Proceeds from issuance of stock 1,411,200 1,025,000 3,480,057 Proceeds from issuance of notes payable 1,072,804 300,000 1,202,829 Principal payments on notes payable (130,440) (200,000) (140,329) ----------- ----------- ----------- Net cash provided by financing activities 2,353,564 1,125,000 4,542,557 ----------- ----------- ----------- Net change in cash 852,035 (25,182) 885,191 Cash, at beginning of period 33,156 54,086 -- ----------- ----------- ----------- Cash at end of period $ 885,191 $ 28,904 $ 885,191 =========== =========== ===========
4
ACCESS POWER, INC. (A Development Stage Company) Statements of Operations For the three months and six months ended September 30, 1999 and 1998 and the cumulative period from October 10, 1996 (date of inception) through September 30, 1999 (unaudited) For the period October 10, 1996 Three months ended September 3, Nine months ended September 30, through 1999 1998 1999 1998 September 30, 1999 ------------------------------- ------------------------------- ------------------ Revenue: Software/hardware sales $ 1,050 $ - $ 9,450 $ 212,092 $ 223,881 Telcommunication services 50,599 29,305 69,999 42,089 123,518 ------------ ------------ ------------ ------------ ------------ Total revenue 51,649 29,305 79,449 254,181 347,399 ------------ ------------ ------------ ------------ ------------ Costs and expenses: Cost of sales 315 -- 2,955 152,920 164,605 Product development and marketing 205,444 338,659 851,037 710,533 1,620,193 General and administrative 391,859 350,665 938,142 868,174 2,648,115 ------------ ------------ ------------ ------------ ------------ Total costs and expenses 597,618 689,324 1,792,134 1,731,627 4,432,913 ------------ ------------ ------------ ------------ ------------ Other income (expense): Other income (expense) (318) (0) (7,198) 407 1,977 Interest expense (2,833) (3,333) (7,333) (117,708) (140,758) ------------ ------------ ------------ ------------ ------------ Total other income (expense) (3,151) (3,334) (14,531) (117,302) (138,781) ------------ ------------ ------------ ------------ ------------ Net loss $ (549,120) $ (663,353) $ (1,727,216) $ (1,594,748) $ (4,224,295) ============ ============ ============ ============ ============ Net loss per share $ (0.02) $ (0.06) $ (0.07) $ (0.14) $ (0.28) ============ ============ ============ ============ ============ Weighted average number of shares 31,386,691 11,759,000 24,126,030 11,619,463 15,137,504 ============ ============ ============ ============ ============
5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS REPORT. PLAN OF OPERATION Overview - -------- Access Power, Inc. was formed in 1996 to offer Internet-based communications products and services in the U.S. and international markets. The Company has created a network of Internet telephony gateway servers and IP and PSTN (Public Switched Telephone Network) circuits to provide voice and multimedia communications services, more commonly referred to as Internet Protocol telephony or IP telephony. From its inception the Company has devoted most of its efforts to technical analysis, development, procurement, implementation and testing, and the establishment of the corporate and technical policies and procedures necessary to support its business requirements. The Company is a development stage operation. Access Power's IP telephony gateway network allows the Company to offer competitive call rates while providing premium communications features. Access Power products and services are based on Personal Computer ("PC")-to-PC, PC-to-Phone, and Phone-to-Phone communications. Customers anywhere in the world can use their PC and software from the Company to place unlimited calls to telephones anywhere in the United States, Canada and Puerto Rico for $10 per month. In addition, customers in the United States can make unlimited calls with their telephone to another telephone anywhere in the continental United States for $49 per month and call anywhere in Alaska, Hawaii, Canada, and the United Kingdom for 7 cents per minute. Calls to over fifty other countries are 29 cents per minute. 6 The Company is a reseller of third party PC telephone software called Internet Phone, and it is having a software product called "e-button" developed for marketing to companies with Web sites. The e-button is an icon residing on a Web site that connects a consumer browsing a Web page to a company's call center. This technology allows corporate customers to voice-activate their Web site, connecting consumers directly with sales departments, customer service or technical support. While in its start-up and current development stages the Company tested and preliminarily introduced certain products and services new to both the Company and the communications industry. To date, the Company has not realized revenues from sales of any products or services in amounts necessary to support all of its cash operating needs. Expansion Plans - --------------- The Company believes it must expand its gateway network capacity and its customer base to achieve profitability. The Company intends to expand its network and customer base internationally through affiliates and other business relationships, such as the relationship defined by the Lycos-Bertelsmann agreement. Such expansion will increase the Company's revenues without causing the Company to incur significant capital expenditures. Software Sales - -------------- To date, the Company has realized only small revenues from the resale of software to its customers, and it does not expect such sales to become a significant source of profit in the future. During the next year, however, the Company does intend to begin marketing the e-button software, and it expects to realize a fair amount of revenues from those sales. Marketing - --------- The Company has recently begun its effort to market its products and services. The Company has implemented a public relations and marketing campaign along with establishing arrangements with web-based communications portals. Public relations and certain marketing is expected to cost $50,000 and stock with a market value of approximately $600,000. Raising Capital - --------------- The Company has recently sold 6% convertible debentures in the face amount of $1,000,000. In addition, the investor purchased a warrant to purchase an additional $1,000,000 of debentures on the same terms. The Company is of the opinion that if the warrant is exercised then the aggregate proceeds would be sufficient to fund the Company for the next twelve months while it deploys its domestic and international networks. 7 PERIOD ENDED SEPTEMBER 30, 1999 COMPARED TO PERIOD ENDED SEPTEMBER 30, 1998 REVENUES AND COSTS OF REVENUES. The Company realized no revenue from the sale of hardware and software in the three months ended September 30, 1998 compared to software sales of $1,050 in the three months ended September 30, 1999 and $9,450 during the nine months ended September 30, 1999 compared to $212,092 during the previous year. The revenue generated from sale of services increased $21,294 from $29,305 during the three months ended September 30, 1998 to $50,599 during the three months ended September 30, 1999. The revenue generated from sale of services increased $ 27,910 from $42,089 during the nine months ended September 30, 1998 to $69,999 during the nine months ended September 30, 1999. EXPENSES. Product development and marketing expenses were $205,444 for the three months ended September 30, 1999; a decrease of $133,215, or over 39% of such expenses, from the three months ended September 30, 1998. Depreciation and amortization expense decreased $39,100, professional fees decreased $30,000, travel decreased $8,245 and advertising decreased $7,671. For the nine months ended September 30, 1999 product development and marketing expenses increased $141,504 or almost 20%. Professional fees for public relations accounted for $155,000 of this increase. General and administrative expenses increased $41,194, or 12%, from $350,665 for the three months ended September 30, 1998. Legal and professional fees increased $20,000. Finder's fees increased $100,000. Payroll expense decreased $86,082. During the nine months ended September 30, 1999 general and administrative expenses increased $68,968 or 8% to $938,142 of which finder's fees increased $81,444. LIQUIDITY AND CAPITAL RESOURCES Since its inception, the Company has financed its operations through the proceeds from the issuance of equity securities and loans from stockholders and others. To date, the Company has raised approximately $2,782,700 from the sale of common stock and preferred stock, and it has borrowed approximately $1,400,000 from investors and stockholders. Funds from these sources have been used as working capital to fund the build-out of the Company's network and for internal operations, including the purchases of capital equipment. The Company generated negative cash flow from operating activities for the period from inception (October 10, 1996) through September 30, 1999. The Company realized negative cash from operating activities for the nine months ended September 30, 1999 of ($1,035,308) compared to negative cash from operating activities of ($45,292) primarily due to faster payment being required by vendors than previously. Investing activities for the period from inception through September 30, 1999 consisted primarily of equipment purchases to build out the initial network. Investing activities in the nine months ended September 30, 1999 were $466,221 compared to $1,104,890 during the nine months ended September 30, 1998. The timing and amount of the Company's capital requirements will depend on a number of factors, including demand for the Company's products and services and the availability of opportunities for international expansion through affiliations and other business relationships. 8 The Company expects to invest approximately $1,000,000 over the next twelve months in capital equipment and software for network expansion. The Company is performing ongoing cost benefit analysis to ensure that any existing under utilized equipment is made available for redeployment to prolong the necessity to acquire new equipment. The Company raised $75,000 in January 1999 from the sale of 75 shares of Series A Preferred Stock for $1,000 per share. The Company received $150,000 and issued 1,500,000 shares of common stock to an investor in March 1999. The Company issued 512,000 shares of common stock in exchange for a debt repayment and the interest due thereon in April 1999. The Company issued 1,295,000 shares of common stock upon the exercise of employee stock options for $632,700. The Company issued $1,000,000 of 6% convertible debentures in September 1999. The Company has taken steps to reduce the monthly negative cash flow ("burn rate") and lessen the impact of the negative working capital position. The main step has been the reduction of payroll expenditures, by executives agreeing to defer pay until further financing is received. The Company's relations with its current vendors are positive and include a strong credit history resulting in suppliers and vendors assisting the Company in reducing short term costs and extending payments. Burn rate reduction is also being achieved with the suspension of certain general activities and expenses including but not limited to travel, training and public relations. While the Company believes that its cash used in operating activities will increase over the next year, near term cash flow reductions are being considered particularly in the main expense items of salaries and network management. The Company's financing activities for the nine months ended September 30, 1999 provided a net total of $2,353,564. Cash at the end of that period was $885,191. As of October 25, 1999, the Company had cash of $395,000 and working capital of ($423,800). The Company is currently expending approximately $125,000 per month, which amount includes monthly co-location costs or network infrastructure, systems maintenance and development, payments for equipment and general and administrative costs. The timing and amount of the Company's capital requirements will depend on a number of factors, including demand for the Company's products and services and the availability of opportunities for international expansion through business relationships. 9 YEAR 2000 Since its inception and as a development stage company the Company has implemented solutions to the year 2000 problem as it has built its systems solutions and developed its policies and procedures for both technical and administrative purposes. The Company believes it is in a high state of readiness regarding year 2000 and is at minimal risk. Costs associated with year 2000 solutions are incorporated in all the Company's computer administrative information systems and technical development. As standard operating procedure the Company inquires as to the readiness of any customers and suppliers in handling potential year 2000 problems. The Company does not foresee substantial direct or indirect costs associated with its implementation or any affiliates implementation of year 2000 solutions. There are no assurances that the Company and all of its key suppliers, customers or third parties upon which it relies will completely address and solve the potential problem and by not doing so could result in an adverse material effect on the company, its financial condition or results on operations. CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The statements contained in the section captioned Management's Discussion and Analysis of Financial Condition and Results of Operations which are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent the Company's present expectations or beliefs concerning future events. The Company cautions that such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the uncertainty as to the Company's ability to obtain financing on acceptable terms to finance the Company's operations and growth strategy, acceptance of the Company's technology and services in the market place, telecommunications industry trends towards solutions not addressed by the Company's business, increasing competition in the information technology services market, the ability to hire, train and retain sufficient qualified personnel, and the ability to develop and implement operational and financial systems to manage the Company's growth. 10 PART II OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS In September 1999 the Company issued $1,000,000 of 6% convertible debentures to Bamboo Investors, LLC, an investment fund managed by WEC Asset Management, LLC, as well as a warrant to purchase 200,000 shares of common stock and a special warrant to purchase an additional $1,000,000 of 6% convertible debentures coupled with a warrant to purchase 200,000 shares of common stock. The Company claims an exemption from registration under Section 4(2) of the Act for this offer and sale. The securities were offered and sold to one investor who the Company believed was an accredited investor. The investor agreed to acquire the securities for investment and not with a view to their distribution. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits Filed With This Report (a) 3.1 Amended Articles of Incorporation of Access Power, Inc. 4.1 6% Convertible Debenture due September 30, 2001 4.2 Warrant to purchase common stock, par value $.001 per share, of Access Power, Inc. 10.1 Retainer Agreement dated September 23, 1999, among Access Power, Inc., Tatum CFO Partners, LLP and Howard Kaskel 10.2 Securities Purchase Agreement dated as of September 30, 1999, among Access Power, Inc., certain stockholders of Access Power, Inc. named therein and Bamboo Investors, LLC 10.3 Warrant to purchase 6% Convertible Debentures and common stock warrants of Access Power, Inc. 10.4 Registration Rights Agreement, dated as of September 30, 1999, by and among Access Power, Inc. and Bamboo Investors LLC 10.5 Share Exchange Agreement dated as of September 30, 1999 between Access Power, Inc. and each of Glenn Smith, and schedule of additional agreements 10.6 Web services agreement as of August 6, 1999 between Access Power, Inc. and Lycos-Bertelsmann GmbH* 10.7 Consulting Agreement dated as of October 4, 1999 between Access Power, Inc. and Northstar Advertising, Inc. 27 Financial Data Schedule. ------------------ *Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment. (b) No Reports on Form 8-K were filed during this period. SIGNATURES In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACCESS POWER, INC. By: /S/ GLENN A. SMITH Date: October 29, 1999 ---------------------------------------- Glenn A. Smith President /S/ HOWARD L. KASKEL Date: October 29, 1999 - ------------------------------------ Howard L. Kaskel Chief Financial Officer (principal financial and accounting officer) EXHIBIT INDEX ------------- Exhibit No. Description ----------- ----------- 3.1 Amended Articles of Incorporation of Access Power, Inc. 4.1 6% Convertible Debenture due September 30, 2001 4.2 Warrant to purchase common stock, par value $.001 per share, of Access Power, Inc. 10.1 Retainer Agreement dated September 23, 1999, among Access Power, Inc., Tatum CFO Partners, LLP and Howard Kaskel 10.2 Securities Purchase Agreement dated as of September 30, 1999, among Access Power, Inc., certain stockholders of Access Power, Inc. named therein and Bamboo Investors, LLC 10.3 Warrant to purchase 6% Convertible Debentures and common stock warrants of Access Power, Inc. 10.4 Registration Rights Agreement, dated as of September 30, 1999, by and among Access Power, Inc. and Bamboo Investors LLC 10.5 Share Exchange Agreement dated as of September 30, 1999 between Access Power, Inc. and each of Glenn Smith, and schedule of additional agreements 10.6 Web services agreement as of August 6, 1999 between Access Power, Inc. and Lycos-Bertelsmann GmbH* 10.7 Consulting Agreement dated as of October 4, 1999 between Access Power, Inc. and Northstar Advertising, Inc. 27 Financial Data Schedule. EX-3.1 2 AMENDED ARTICLES OF INCORPORATION ARTICLES OF INCORPORATION OF ACCESS POWER, INC. The undersigned incorporator hereby forms a corporation under Chapter 607 of the laws of the State of Florida. ARTICLE I. NAME ---------------- The name of the corporation shall be: ACCESS POWER, INC. The address of the principal office of this corporation shall be 61 South Roscoe Road, Ponte Vedra Beach, Florida 32082, and the mailing address of the corporation shall be the same. ARTICLE II. NATURE OF BUSINESS ------------------------------- This corporation may engage or transact in any or all lawful activities or business permitted under the laws of the United States, the State of Florida or any other state, country, territory or nation. ARTICLE III. CAPITAL STOCK --------------------------- The maximum number of shares of stock that this corporation is authorized to have outstanding at any one time is 10,000,000 shares of common stock having no par value per share. ARTICLE IV. REGISTERED AGENT ----------------------------- The street address of the initial registered office of the corporation shall be 1201 Hays Street, Tallahassee, Florida 32301, and the name of the initial registered agent of the corporation at that address is Corporation Service Company. ARTICLE V. TERM OF EXISTING ---------------------------- This corporation is to exist perpetually. 2 ARTICLE VI. DIRECTORS --------------------- All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of its Board of Directors, subject to any limitation set forth in these Articles of Incorporation. This corporation shall have two Directors, initially. The names and addresses of the initial members of the Board of Directors are: Glenn A. Smith 61 South Roscoe Road Ponte Vedra Beach, Florida 32082 Michael L. Pitts 108 Nautilus Lane Ponte Vedra Beach, Florida 32082 ARTICLE VII. INCORPORATOR -------------------------- The name and street address of the incorporator to these Articles of Incorporation: Corporate Agents, Inc. 1201 Hays Street Tallahassee, Florida 32301 The undersigned incorporator has executed these Articles of Incorporation on October 10, 1996. _______________________________ Incorporator It's Agent, Deborah D. Skipper 3 ACCEPTANCE OF REGISTERED AGENT DESIGNATED ----------------------------------------- IN ARTICLES OF INCORPORATION ---------------------------- Corporation Service Company, a Delaware corporation authorized to transact business in this State, having a business office identical with the registered office of the corporation named above, and having been designated as the Registered Agent in the above and foregoing Articles, is familiar with and accepts the obligations of the position on Registered Agent under Section 607.0505, Florida Statutes. By: __________________________________ It's Agent, Deborah D. Skipper Authorized Service Representative Corporation Service Company 4 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF ACCESS POWER, INC. Article III of the articles of incorporation of ACCESS POWER, INC. was amended by the corporation's board of directors on May 23, 1997. The corporation is filing these articles of amendment to articles of incorporation pursuant to F.S. 607.06J2. 1. The name of the corporation is ACCESS POWER, INC. 2. Article III of the articles of incorporation of ACCESS POWER, INC. was amended as follows: ARTICLE III. CAPITALIZATION ----------------------------- The total number of shares of capital stock which the Corporation has the authority to issue is fifty million (50,0000,000). The total number of shares of common stock which the Corporation is authorized to issue is forty million (40,000,000) and the par value of each share of such common stock is one-tenth of one cent ($.001) for an aggregate par value of forty thousand ($40,000). The total number of shares of preferred stock which the Corporation is authorized to issue is ten million (10,000,000) and the par value of each share of such preferred stock is one-tenth of one cent ($.001) for an aggregate par value of ten thousand dollars ($10,000). The voting powers, designations, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions, if any, of the preferred stock, in ore or more series, shall be fixed by one or more resolutions providing for the issuance of such stock adopted by the Corporations' board of directors (the "Board of Directors"), in accordance with the provisions of the General Corporation Law of the State of Florida and the Board of Directors is expressly vested with authority to adopt one or more such resolutions. 3. The foregoing amendment in articles of incorporation was duly adopted by the board of directors on May 23, 1997. In witness whereof, the undersigned Director of this corporation has executed these articles of amendment on May 23, 1997. _______________________________________ Glenn A. Smith, Chairman 5 ARTICLES OF AMENDMENT OF ACCESS POWER, INC. DESIGNATING SERIES A PREFERRED STOCK Glenn Smith, certifies that he is the President and a Director ACCESS POWER, INC., a Florida corporation (hereinafter referred to as the "Corporation" or the "Company"); that the Board of Directors of the Corporation adopted the following amendments to the Articles of Incorporation: FIRST: That at a meeting of the Board of Directors of ACCESS POWER, INC., on May 7th, 1998 a resolution was duly adopted by the Board of Directors, without shareholder approval, as provided for in Article III of the Articles of Amendment to the Articles of Incorporation of Access Power, Inc. adopted May 23, 1997, setting forth a proposed amendment to the Articles of Incorporation and declaring said amendment to be advisable. The resolution setting forth the proposed amendment is as follows: The following is hereby appended to the end of Article III of the Articles of Incorporation. 1. CREATION OF SERIES A CONVERTIBLE PREFERRED STOCK. There is hereby created a series of preferred stock consisting of 1,000 shares and designated as the Series A Convertible Preferred Stock, having the voting powers, preferences, relative, participating, optional and other special rights and the qualifications, limitations and restrictions thereof that are set forth below. 2. DIVIDEND PROVISIONS. The holders of shares of Series A Convertible Preferred Stocks shall be entitled to receive, when and as declared by the Board of Directors out of any funds at the time legally available therefor dividends at a par with the holders of Common Stock as if the Series A Convertible Preferred Stock had been converted into Common Stock on the record date for the payment of the dividend. Dividends shall be waived with respect to any series of Series A convertible Preferred Stock shall rank on a parity with each other share of Series A Convertible Preferred Stock with respect to dividends. 3. REDEMPTION PROVISIONS. Each share of the Series A convertible Preferred Stock is redeemable, at the option of the Company, upon the terms and conditions set froth herein, prior to the day the registration statement to be filed by the Company becomes effective. On the day the registration becomes effective, all rights of the Company to a redemption of said shares shall be waived, as of 5 P.M. on the previous day, and any notice of redemption after said time shall be null and void. If notice of redemption is received prior to the time which said right expires, said shares shall be redeemable in the following manner at a price of One Thousand Five Hundred ($1,500.00) Dollars per share (the "Redemption Price"). The Corporation shall have the right to redeem each Share within twenty- four (24) hours after the Notice of Conversion (as defined in Section 5(a)) is given by a Holder with respect to such Shares. The Corporation shall effect such redemption by payment to the Holder by wire transfer or certified check payable to Holder on or before the Redemption Date, which shall be the later of (i) the fifth (5th) calendar day after Notice of Conversion or (ii) the date on which the Holder had delivered the certificates representing the Preferred Shares proposed to be converted pursuant to Section 5(a)(1). In the event the Corporation shall not make such payment it shall be deemed to have waived its right to redemption as to those Shares. The 6 Corporation shall have the right to redeem less than all of the Shares which are subject to the Notice of Conversion. 4. LIQUIDATION PROVISIONS. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Series A Convertible Preferred Stock shall be entitled to receive an amount equal to One Thousand Five Hundred ($1,500.00) Dollars per share. After the full preferential liquidation amount has been paid to, or determined and set apart for, all other series of Preferred Stock hereafter authorized and issued, if any, the remaining assets of the Corporation available for distribution to shareholders shall be distributed ratably to the holders of the common stock. In the event the assets of the Corporation available for distribution to its shareholders are insufficient to pay the full preferential liquidation amount per share required to be paid the Corporation's Series A Convertible Preferred Stock, the entire amount of assets of the Corporation available for distribution to shareholders shall be paid up to their respective full liquidation amounts first to the Series A Convertible Preferred Stock, then to any other series of Preferred Stock hereafter authorized and issued, all of which amounts shall be distributed ratably among holders of each such series of Preferred Stock, and the common stock shall receive nothing. A reorganization or any other consolidation or merger of the Corporation with or into any other corporation, or any other sale of all substantially all of the assets of the Corporation, shall not be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 4, and the Series A Convertible Preferred Stock shall be entitled only to (i) the right provided in any agreement or plan governing the reorganization or other consolidation, merger or sale of assets transaction, (ii) the rights contained in the Florida Corporation Law and (iii) the rights contained in other Sections hereof. 5. CONVERSION PROVISIONS. The holders of shares of Series A Convertible Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): (a) RIGHT TO CONVERT. (1) Each share of Series A Convertible Preferred Stock (the "Preferred Shares") shall be convertible, at the option of its holder pursuant to the terms set forth herein, into a number of shares of common stock of the Company at the initial conversion rate (the "Conversion Rate") defined below. The initial Conversion Rate, subject to the adjustments described below, shall be a number of shares of common stock (rounded to the nearest whole number equal to $1,000 divided by the lower of(i) Sixty-five (65%) of the average Market Price of the common stock for the five trading days immediately prior to the Conversion Date (defined below) or (ii) 75% of closing bid price on the day of first disbursement from escrow, increased proportionately for any reverse stock split and decreased proportionately for any forward stock split or stock dividend. For purposes of this Section 5(a)(1), Market Price shall be the closing bid price of the common stock on the Conversion Date, as reported by the National Association of Securities Dealers Automated Quotation System (NASDAQ) or the closing bid price on the over the counter market if other than NASDAQ, averaged over the five trading days prior to the date of conversion. 7 The Holder shall notify the Corporation, by facsimile notice to the Corporation at (904) 273-6309, copy by overnight courier to Access Power, Inc., 10033 Sawgrass Drive West, Suite 100, Ponte Verda, Florida 32004 of the Holder's intent to convert (the "Notice of Conversion") in the form set forth in Section 5(a)(3) hereof, executed by the holder of the Preferred Share(s) or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Such conversion shall be effectuated by surrendering the Preferred Shares to be converted (with a copy, by facsimile or courier, to the Company) to the Company's registrar and transfer agent, Atlas Stock Transfer Company, 5899 S. State Street, Salt Lake City, Utah 84107 ("Transfer Agent"). The date on which notice of conversion (the "Conversion Date" is given shall be the date on which the holder has delivered to the Company, by facsimile or hand delivery, of the Notice of Conversion duly executed to the Company. The Company shall cause the Transfer Agent to complete the issuance and delivery of Common Shares within five (5) calendar days of receipt of such conversion form, provided that the Company or its agent has received the Series A Convertible Preferred Stock certificates which are the subject of the conversion on or prior to such fifth calendar day. (2) No less than 25 (or multiple thereof) shares of Series A Convertible Preferred Stock may be converted at any one time. No fractional shares of common stock shall be issued upon conversion of the Series A Convertible Preferred Stock, in lieu of fractional shares, the number of shares issuable will be rounded to the nearest whole share. (3) Upon receipt of a Notice of Conversion, the Corporation shall absolutely and unconditionally be obligated to cause a certificate or certificates representing the number of shares of Common Stock to which the converting holder or Preferred Shares shall be entitled as provided herein, which shares shall constitute fully paid and nonassessable shares of Common Stock to be issued to, delivered by overnight courier to, and received by such holder by the fifth (5th) calendar day following the Conversion Date, unless the company has duly redeemed the Preferred Shares which are the subject of the Notice of Conversion in accordance with Section 3 hereof. Such delivery shall be made at such address as a holder may designate thereof in its Notice of Conversion or in its written instructions submitted together therewith. In the event the Company fails to deliver the shares of Common Stock in accordance with the terms and conditions set forth herein, the Company shall be liable for the payment of a penalty and shall be unconditionally obligated to pay the Converting Shareholder(s) an additional monetary penalty of 8 $200.00 per $10,000 converted per day after five (5) days should the converted shares not be delivered to the Converting Shareholder(s) as provided for in Section ________. (4) The form of conversion Certificate shall read substantially as follows: The undersigned holder (the "Holder") is surrendering to Access Power, Inc., a Florida corporation (the "Company"), one or more certificates representing shares of Series A Convertible Preferred Stock of the Company (the "Preferred Stock") in connection with the conversion of all or a portion of the Preferred Stock into shares of Common Stock, $.001 par value per share, of the Company (the "Common Stock") as set forth below. 1. The Holder understands that the Preferred Stock was issued by the Company pursuant to the exemption from registration under the United States Securities Act of 1933, as amended (the "Securities Act"), provided by Regulation D promulgated thereunder. 2. The Holder represents and warrants that all offers and sales of the Common Stock issued to the Holder upon such conversion of the Preferred Stock shall be made (a) pursuant to an effective registration statement under the Securities Act, (b) in compliance with Rule 144, or (c) pursuant to some other exemption from registration. Number of Shares of Preferred Stock being converted: ______________________________________ Applicable Conversion Price:___________________________ Number of Shares of Common Stock Issuable:_____________ Date of conversion:____________________________________ Delivery Instructions for certificates of Common Stock and for new certificates representing any remaining shares of Preferred Stock; _______________________________________________________ _______________________________________________________ _______________________________________________________ _______________________________________________________ NAME OF HOLDER: _________________________ _________________________ (Signature of Holder) 9 (b) Adjustments to Conversion Rate ------------------------------ (1) RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. if the common stick issuable on conversion of the Series A Convertible Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, reverse stock split or forward stock split or stock dividend or otherwise (other than a subdivision or combination of shares provided for above), the holders of the Series A Convertible Preferred Stock shall, upon its conversion, be entitled to receive, in lieu of the common stock which the holders would have become entitled to received but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the holders if they had exercised their rights of conversion of the Series A Convertible Preferred Stock immediately before that change. (2) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALE OF ASSETS. If at any time there shall be a capital reorganization of the Corporation's common stock (other than a subdivision, combination , reclassification or exchange of shares provided for elsewhere in this Section (b) or merger of the Corporation into another corporation, or the sale of the Corporation's properties and assets as, an entirety to any other person), then, as a part of such reorganization, merger or sale, lawful provision shall be made so that the holders of the Series A Convertible Preferred Stock shall thereafter be entitled to receive upon conversion of the Series A Convertible Preferred Stock shall thereafter be entitled to receive upon conversion of the Series A Convertible Preferred Stock, the number of shares of stock or other securities or property of the Corporation, or of the successor corporation resulting from such merger, to which holders of the common stock deliverable upon conversion of the Series A Convertible Preferred Stock would have been entitled on such capital reorganization, merger or sale if the Series A Convertible Preferred Stock had been converted immediately before that capital reorganization, merger or sale to the end that the provisions of this paragraph (b)(3) (including adjustment of the Conversion Rate then in effect and number of shares purchasable upon conversion of the Series A Convertible Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (3) In the event (a) the Company does not file a registration statement under the Securities Act of 1933 covering the Common Stock issuable upon conversion of the Series A Convertible Preferred Stock within 30 days of the closing (the "Closing Date"), (b) the registration statement is not declared effective within 120 days of the Closing Date or (c) the Company does not issue the Common Shares within the time limits set forth in the penultimate sentence of Section 5(a)(1), Conversion Rate shall be adjusted to increase the number of shares of common stock assessable by 5%. The foregoing adjustments are cumulative and not exclusive. 10 (c) NO IMPAIRMENT. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, merger, dissolution, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provision of this Section 5 and in the taking of all such actions as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series A Convertible Preferred Stock against impairment. (d) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment of the Conversion Rate for any shares of Series A Convertible Preferred Stock, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series A Convertible Preferred Stock effected thereby a certificate setting forth such adjustment or readjustment and showing in detail the facts upon the written request at any time of any holder of Series A Convertible Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Rate at the time in effect, and (iii) the number of common stock and the amount, if any, of other property which at the time would be received upon the conversion of such holder's shares of Series A Convertible Preferred Stock. (e) NOTICES OF RECORD DATE. In the vent of the establishment by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, the Corporation shall mail to each holder of Series A Preferred Stock at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution and the amount and character of such dividend or distribution. (f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of common stock solely for the purpose of effecting the conversion of the shares of the Series A Convertible Preferred Stock such number of its shares of common stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, and if at any time the number of authorized but unissued shares of common stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of common stock to such number of shares as shall be sufficient for such purpose. 11 (g) NOTICES. Any notices required by the provisions of this Paragraph (e) to be given to the holders of shares of Series A Convertible Preferred Stock shall be deemed given if deposited in the United Sate mail, postage prepaid, and addressed to each holder of record at its address appearing on the books of the Corporation. In witness whereof, the undersigned President and Director of this corporation has executed these articles of amendment on May 21, 1998. ________________________________ Glenn Smith, Chairman 12 EXHIBIT I CERTIFICATE OF CONVERSION The undersigned holder (the "Holder") is surrendering to Access Power, Inc., a Florida corporation (the "Company"), one or more certificates representing shares of Series A Convertible Preferred Stock of the Company (the "Preferred Stock") in connection with the conversion of all or a portion of the Preferred Stock into shares of Common Stock, $.001 par value per share, of the Company (the "Common Stock") as set forth below. 1. The Holder understands that the Preferred Stock was issued by the Company pursuant to the exemption from registration under the United States Securities Act of 1933, as amended (the "Securities Act"), provided by Regulation D promulgated thereunder. 2. The Holder represents and warrants that all offers and sales of the Common Stock issued to the Holder upon such conversion of the Preferred Stock shall be made (a) pursuant to an effective registration statement under the Securities Act, (b) in compliance with Rule 144, or (c) pursuant to some other exemption from registration. Number of Shares of Preferred Stock being converted: ________ Applicable Conversion Price: ________________________________ Number of Shares of Common Stock Issuable:___________________ Date of conversion: _________________________________________ Delivery Instructions for certificates of Common Stock and for new certificates representing any remaining shares of Preferred Stock; _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ NAME OF HOLDER: _______________________________ _______________________________ (Signature of Holder) 13 ARTICLES OF AMENDMENT OF ACCESS POWER, INC. Glenn Smith, certifies that he is the President and a Director ACCESS POWER, INC., a Florida corporation (hereinafter referred to as the "Corporation"); that the Board of Directors of the Corporation adopted the following amendments to the Articles of Incorporation on November 19, 1998 without the need for the approval of stockholders: The name of the corporation is ACCESS POWER, INC. Article III of the Articles of Incorporation of the Corporation, as previously amended, is further amended by changing paragraph 1 of the designation of the Corporation's Series A Convertible Preferred Stock to provide that the number of shares of authorized Preferred Stock designated as Series A Convertible Preferred Stock shall be increased from 1000 to 1,200 shares. In witness whereof, the undersigned President and Director of the Corporation has executed these articles of amendment on November 19, 1998. /s/ Glenn Smith Glenn Smith, Chairman ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF ACCESS POWER, INC. Pursuant to the provisions of section 607.1006, Florida Statutes, this Florida profit corporation adopts the following articles of amendment to its articles of incorporation: I. The name of the corporation is Access Power, Inc. (hereinafter referred to as the "Corporation"). II. The Corporation's Articles of Incorporation are amended by adding at the end of Article III the following: "SERIES B CONVERTIBLE PREFERRED STOCK ------------------------------------- SERIES B CONVERTIBLE PREFERRED STOCK. There is established within the Corporation's authorized Preferred Stock a series to be designated "Series B Convertible Preferred Stock" consisting of four thousand (4,000) shares (the "Series B Preferred Stock") and having the powers, preferences and other rights and the qualifications, limitations and restrictions set forth herein. The following is a statement of the powers, designations, preferences, privileges, rights, qualifications, limitations and restrictions of the Series B Preferred Stock: 1. DIVIDENDS; OTHER DISTRIBUTIONS. The holders of the Series B Preferred Stock shall receive no preference with respect to dividends or other distributions (other than any distribution described in Section 2 of this Article III) that shall be declared or paid on any of the Corporation's common stock, par value $0.001 (the "Common Stock"), provided, however, any dividend (including any share dividend) or other distribution on the Common Stock as declared by the board of directors, if any, shall be made to the holders of Common Stock and Series B Preferred Stock, pro rata, determined as of the record date as a fraction of such dividend or distribution, the numerator of which is the sum of the number of shares of Common Stock then held by each holder thereof plus the number of shares of Common Stock which they then have the right to acquire upon conversion of the shares of Series B Preferred Stock then held by them ("Conversion Shares") and the denominator of which is the sum of the aggregate number of shares then outstanding of (i) Common Stock, plus (ii) Conversion Shares, plus (iii) all other Common Stock equivalents resulting from any other series or class of Preferred Stock having rights to share in dividends and distributions of the Company PARI PASSU with the Common Stock. 1 2. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, distributions to the shareholders of the Corporation shall be made in the following manner: (a) Except as may be limited by (b) below, the holders of the Series B Preferred Stock shall be entitled to receive, prior to and in preference to any distribution of any of the assets or surplus funds of the Corporation available for distribution to its shareholders (the "Available Funds"), whether from capital, surplus, earnings, or otherwise to the holders of the Common Stock or any other equity security of the Corporation, by reason of their ownership of such stock or equity security, the amount of $0.001 per share (the "Series B Preference Amount"). If the amount of the Available Funds is insufficient to permit the payment to all holders of the Series B Preferred Stock of their full Series B Preference Amount, then all of the Available Funds shall be distributed among the holders of the then outstanding Series B Preferred Stock pro rata, determined by multiplying the amount of the Available Funds by a fraction, the numerator of which is the number of shares of Series B Preferred Stock then held by each holder thereof and the denominator of which is the sum of the aggregate number of shares then outstanding of (i) Series B Preferred Stock plus (ii) all other series or classes of Preferred Stock having liquidation rights PARI PASSU with the Series B Preferred Stock. (b) If, upon the completion of the distributions contemplated by Section 2(a) of this Article III, Available Funds remain available for distribution by the Corporation, such remaining Available Funds, if any, shall be distributed among the holders of Common Stock and Series B Preferred Stock, pro rata, determined by multiplying the amount of the remaining Available Funds by a fraction, the numerator of which is the sum of the number of shares of Common Stock then held by each holder thereof plus the number of Conversion Shares which they then have the right to acquire and the denominator of which is the sum of the aggregate number of shares then outstanding of (i) Common Stock, plus (ii) Conversion Shares, plus (iii) all other Common Stock equivalents resulting from any other series or class of Preferred Stock having rights to share in the proceeds of a liquidation of the Company PARI PASSU with the Common Stock, provided, however, that in no case may the holders of Series B Preferred Stock receive more than the greater of the Series B Preference Amount and the amount that would have been distributable to them as holders of Common Stock if all shares of Series B Preferred Stock had been converted and the Series B Preference Amount was not payable. (c) Written notice of liquidation stating a payment date and the aggregate amount of the Series B Preference Amount due shall be provided by mail, postage prepaid, or by facsimile, not less than 20 days prior to the payment date stated therein, to the record holders of the Series B Preferred Stock, such notice to be addressed to each such holder at its address as shown in the records of the Corporation. 3. VOTING RIGHTS. The holders of the Series B Preferred Stock shall be entitled to vote the number of votes as is equal to the number of shares of Common Stock into which such holder's shares of Series B Preferred Stock could be converted at the record date for determination of the shareholders entitled 2 to vote on any matters, or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited, and shall have voting rights and powers equal to the voting rights and powers of the Common Stock (except as otherwise expressly provided herein or required by law) such votes to be counted together with all other shares of stock of the Corporation having general voting power and not separately as a class. 4. CONVERSION. The holders of the Series B Preferred Stock shall have conversion rights as follows (the "Series B Conversion Rights"): (a) RIGHT TO CONVERT. Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for the Series B Preferred Stock, into one thousand (1000) fully paid and nonassessable shares of Common Stock (the "Conversion Rate"). No amount shall be payable by a shareholder in respect of the conversion of any share of Series B Preferred Stock. (b) MECHANICS OF CONVERSION. No fractional shares of Common Stock shall be issued upon conversion of Series B Preferred Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series B Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu of issuing any fractional shares to which the holder would be otherwise entitled, pay cash equal to the fair market value of such fractional share on the date of conversion, which fair market value shall be determined in good faith by the Board of Directors. Before any holder of Series B Preferred Stock shall be entitled to convert the same into full shares of Common Stock and to receive certificates therefor, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Series B Preferred Stock or the Common Stock, and shall give written notice to the Corporation at such office that such holder elects to convert the same. The Corporation shall, as soon as practicable thereafter, issue and deliver at the office of the Corporation or at such transfer agent's office to such holder of Series B Preferred Stock, (i) a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid, and (ii) cash or a check payable to the holder of such Series B Preferred Stock in the amount of any cash amounts payable in lieu of the conversion into fractional shares of Common Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the Series B Preferred Stock to be converted or delivery of the written conversion notice, whichever is later, and the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock on the date of such conversion. (c) ADJUSTMENT TO SERIES B CONVERSION RATE. The Conversion Rate from time to time in effect shall be subject to adjustment from time to time (i) in case the Corporation shall at any time subdivide the outstanding shares of Common Stock, the Conversion Rate in effect 3 immediately prior to such subdivision shall be proportionately increased, and (ii) in case the Corporation shall at any time combine the outstanding shares of Common Stock, the Conversion Rate in effect immediately prior to such combination shall be proportionately decreased, effective at the close of business on the date of such subdivision or combination, as the case may be. 5. GENERAL PROVISIONS. (a) ISSUE TAXES. The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of Series B Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion or income tax of the holder of the Series B Preferred Stock. (b) NO RE-ISSUANCE OF SERIES B PREFERRED STOCK. No shares of Series B Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and any such shares shall be canceled, retired, and eliminated from the shares which the Corporation shall be authorized to issue; PROVIDED, HOWEVER, that any such redeemed or purchased shares of Series B Preferred Stock shall be eliminated from the shares which the Corporation shall be authorized to issue only upon the filing with the Secretary of State of the State of Florida a certificate of amendment of these Articles of Incorporation in compliance with the General Corporation Law of the State of Florida." III. These Articles of Amendment to the Articles of Incorporation were adopted by the Board of Directors without the need for approval of common shareholders, pursuant to the authority granted to the Board of Directors by Section 607, Florida Statutes, and the Corporation's Articles of Incorporation, all as of the 29th day of September, 1999. IN WITNESS WHEREOF, these Articles of Amendment to the Articles of Incorporation have been signed on behalf of the Corporation as of the 29th day of September, 1999. ACCESS POWER, INC. By: /s/ Glenn Smith Name: Glenn Smith Title: CEO, President, Chairman 4 EX-4.1 3 FORM OF 6% CONVERTIBLE DEBENTURE THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION SHALL NO LONGER BE REQUIRED. FORM OF 6% CONVERTIBLE DEBENTURE DUE SEPTEMBER 30, 2001 $1,000,000 September 30, 1999 New York, New York 1. CONSIDERATION. FOR VALUE RECEIVED, ACCESS POWER, INC., a Florida corporation (the "undersigned" or the "Company"), hereby promises to pay to the order of BAMBOO INVESTORS LLC, , at its offices located at One World Trade Center, Suite 4563, New York, New York 10048 or at such other place as the holder hereof (the "holder" or the "Registered Holder") shall designate to the undersigned in writing, in lawful money of the United States of America or in New York Clearing House Funds, the principal amount of one million ($1,000,000) Dollars , and to pay interest (computed on the basis of a 360-day year and the actual number of days elapsed) on the unpaid principal amount hereof at the rate of six (6%) percent per annum, compounded quarterly, on the first day of each January, April, July and October of each year, for the period from September 30, 1999 until the Maturity Date. The undersigned promises to pay the said principal sum and interest in accordance with the terms of this Debenture. 2. PAYMENT. On September 30, 2001 (the "Maturity Date") the undersigned shall pay the holder all accrued and unpaid principal and interest on this Debenture. At the Company's option, any interest payment required to be paid on this Debenture may be made in the form of the issuance to the holder of the Company's common stock, par value $.001 per share (the "Common Stock"), with the number of shares of such Common Stock to be payable in lieu of such interest payments to be determined in accordance with the provisions of Section 6, as if such interest payment were a portion of the principal amount of the Debenture to be converted into Common Stock. Principal and interest shall be payable at the most recent address as the Registered Holder shall have designated to the Company in writing. No payment of the principal of this Debenture may be made prior to the Maturity Date by the Company without the consent of the Registered Holder, except as otherwise provided herein. 1 3. OVERDUE INTEREST PAYMENTS. Interest on the indebtedness evidenced by this Debenture after default or maturity accelerated or otherwise shall be due and payable at the rate of ten (10%) percent per annum, subject to the limitations of applicable law. 4. HOLIDAYS. If this Debenture or any installment hereof becomes due and payable on a Saturday, Sunday or public holiday under the laws of the State of New York, the due date hereof shall be extended to the next succeeding business day and interest shall be payable at the rate of six (6%) percent per annum during such extension. All payments received by the holder shall be applied first to the payment of all accrued interest payable hereunder. 5. ISSUANCE OF DEBENTURES. This Debenture has been issued by the Company pursuant to the authorization of the Board of Directors of the Company (the "Board") and issued pursuant to a Securities Purchase Agreement, dated as of September 30, 1999, by and between the Company and the Purchaser and other parties identified therein (the "Securities Purchase Agreement"). Pursuant to the Securities Purchase Agreement, the Company issued $1,000,000 principal amount of the Debentures, warrants to purchase (the "Common Stock Warrants") 200,000 shares of the Company's Common Stock and warrants to purchase (the "Special Warrants") $1,000,000 principal amount of the Company's 6% Convertible Debentures due 2001 (the "Warrant Debentures") and warrants (the "Special Common Stock Warrants") to purchase 200,000 shares of the Company's Common Stock. The Securities Purchase Agreement contains certain additional terms that are binding upon the Company and each Registered Holder of the Debentures. A copy of the Securities Purchase Agreement may be obtained by any registered holder of the Debentures from the Company upon written request. Capitalized terms used but not defined herein shall have the meanings set forth in the Securities Purchase Agreement, including the Exhibits thereto. This Debenture and the other 6% Convertible Debentures due 2001 issued by the Company pursuant to the terms of the Securities Purchase Agreement, together with any debentures from time to time issued in replacement thereof, whether pursuant to transfer and assignment, partial conversion thereof or otherwise, are collectively referred to herein as the "Debentures." 6. CONVERSION. (a) Subject to and in compliance with the provisions hereof, the holder shall have the right to convert all or a portion of the outstanding principal amount of this Debenture, and all accrued and unpaid interest thereon, into such number of shares of Common Stock (the shares of Common Stock issuable upon conversion of, and issuable in lieu of interest payments on, this Debenture are hereinafter referred to as the "Conversion Shares") as shall equal the quotient obtained by dividing (x) the principal amount of this Debenture to be converted by (y) the Applicable Conversion Price (as hereinafter defined) and by surrender of this Debenture, such surrender to be made in the manner provided herein. (b) For purposes hereof the term "Applicable Conversion Price" shall mean the lesser of (i) $0.45 (the "Fixed Price") and (ii) the product obtained by multiplying (x) the Average Closing Price (as hereinafter defined) by (y) .75. For purposes hereof the "Average Closing Price" with 2 respect to any conversion elected to be made by the holder shall be the average of the three lowest daily closing bid prices (each such price is referred to individually as a "Floating Reference Price" and, collectively, as the "Floating Reference Prices") during the twenty two (22) trading days immediately preceding the date on which the holder gives the Company a written notice of the holder's election to convert outstanding principal of, and accrued interest on, this Debenture or the Company gives them notice of intent to convert the interest due under Section 2 of this Debenture. The closing bid price on any trading day shall be (a) if the Common Stock is then listed or quoted on either the OTC:BB, the NASDAQ SmallCap Market or the NASDAQ National Market, the reported closing bid price for the Common Stock as reported by Bloomberg, L.P. ("Bloomberg") or The Wall Street Journal (the "Journal") on such day (or, if not so reported, as otherwise reported by The NASDAQ Small Cap Market, NASDAQ National Market or the OTC:BB, as the case may be), (b) if the Common Stock is listed on either the American Stock Exchange or New York Stock Exchange, the closing bid price for the Common Stock on such exchange on such day as reported by Bloomberg or the Journal or (c) if neither (a) nor (b) apply but the Common Stock is quoted in the over-the-counter market, another recognized exchange, or on the pink sheets, the last reported bid price thereof on such date. If the prices of the Common Stock cannot be calculated on such date on any of the foregoing bases, such prices on such date shall be the fair market value as mutually determined by the Company and the Registered Holder for which the calculation is required in order to determine the Applicable Conversion Price; PROVIDED, HOWEVER, that if the Company and the Registered Holder are unable to mutually determine the fair market value, such fair market value shall be determined by a nationally recognized investment banking firm or firm of independent chartered accountants of recognized standing (which firm may be the firm that regularly examines the financial statements of the Company) (an "Appraiser") selected in good faith by the Board and holders of a majority in interest of the Debentures with respect to which a conversion Notice has been given. "Trading day" shall mean any day on which the Company's Common Stock is traded for any period on the principal securities exchange or other securities market on which the Common Stock is then being traded. (c) If, during any period following September 30, 1999 (the "Original Issue Date"), as a result of the occurrence of any of the events set forth in Section 3(f) or 3(g) of the Registration Rights Agreement, dated as of September 30, 1999, by and between the Company and the Purchaser set forth therein (the "Registration Rights Agreement"), the Purchaser is not able to sell shares of Common Stock issuable upon conversion of, or in lieu of interest payments on, this Debenture pursuant to a registration statement filed pursuant to such agreement, the Registered Holder shall have the right, for any purpose under this Debenture during such period and thereafter, to designate as the Applicable Conversion Price any Conversion Price that would have been applicable during such period had the Registered Holder delivered a Notice of Conversion with respect to any portion of this Debenture. (d) The Registere Holder shall convert this Debenture in accordance with Section 6(b) of the Securities Purchase Agreement. If the Company fails to deliver to the holder a ertificate or certificates for shares of Common Stock in the period set forth in the Securities Purchase Agreement, the Company shall make certain payments to the holder in accordance with Section 6(d) of the Securities Purchase Agreement. 3 (e) If the entire outstanding principal amount of this Debenture is not converted, the Company shall also issue and deliver to such holder a new Debenture of like tenor in the principal amount equal to the principal which was not converted and dated the Original Issue Date. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which a Notice of Conversion shall have been delivered as aforesaid, and the person or persons in whose name or names any certificate of certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date. (f) All shares of Common Stock delivered upon conversion of, or in lieu of interest payments on, this Debenture will, upon delivery, be duly authorized, validly issued and fully paid and nonassessable. (g) No fractional shares of Common Stock shall be issued upon conversion of, or in lieu of interest payments on, this Debenture. Instead of any fractional share of Common Stock which would otherwise be deliverable upon the conversion of, or in lieu of interest payments on, the principal of this Debenture, the Company shall pay to the holder an amount in cash (computed to the nearest cent) equal to the Average Closing Price multiplied by the fraction of a share of Common Stock represented by such fractional interest. (h) The issuance of certificates for shares of Common Stock upon any conversion of, or in lieu of interest payments on, this Debenture shall be made without charge to the payee hereof for any tax or other expense in respect to the issuance of such certificates, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued only in the name of the registered holder of this Debenture. 7. REDEMPTION BY COMPANY. (a) If, after the Original Issue Date, there shall occur a Change in Control of the Company (as defined below), then, at the option of the Registered Holder, the Company shall, on the effective date of and subject to the consummation of such Change in Control, redeem this Debenture for cash from the Registered Holder at a redemption price equal to 125% of the aggregate principal and accrued interest outstanding under this Debenture. Nothing in this subsection shall limit the Registered Holder's right to convert this Debenture on or prior to such Change in Control. For purposes hereof, a "Change in Control" shall be deemed to have occurred if (A) any person or group (as defined for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than a person who is, (x) an officer of the Company on the Original Issue Date, (y) beneficial owner on the Original Issue Date of at least five percent (5%) of the outstanding Common Stock on such date or (z) a member of the Board of Directors of the Company on the Original Issue Date, shall have become the beneficial owner or 4 owners of more than 50% of the outstanding voting stock of the Company; (B) there shall have occurred a merger or consolidation in which the Company or an affiliate of the Company is not the survivor or in which holders of the Common Stock of the Company shall have become entitled to receive cash, securities of the Company other than voting common stock or securities of any other person; (C) at any time persons constituting the Existing Board of Directors cease for any reason whatsoever to constitute at least a majority of the members of the Board of Directors of the Company; or (D) there shall have occurred a sale of all or substantially all the assets of the Company. For purposes hereof, the term "Existing Board of Directors" shall mean the persons constituting the Board of Directors of the Company on the date hereof, together with (i) each new director appointed by a vote of the majority of the members of the Existing Board of Directors who are in office immediately prior to such appointment and (ii) each new director whose election, or nomination for election by the Company's stockholders is approved by a vote of the majority of the members of the Existing Board of Directors who are in office immediately prior to the election or nomination of such director. (b) If the Company shall be required to redeem the Debentures pursuant to any of the terms or conditions set forth in this Section 7, the Company shall remit the redemption price to the Registered Holder thereof immediately upon such redemption. 8. COVENANTS. (a) The Company will pay all taxes, assessments and governmental charges lawfully levied or assessed upon it, its property and any part thereof, and upon its income for profits, and any part thereof, before the same shall become delinquent; and will duly observe, and conform to, all lawful requirements of any governmental authority relative to any of its property, and all covenants, terms and conditions upon or under which any of its property is held; provided that nothing in this Section shall require the Company to observe or conform to any requirement of governmental authority so long as the validity thereof shall be contested in good faith by appropriate proceedings or to pay any such tax, assessment or governmental charges so long as the validity thereof shall be contested in good faith by appropriate proceedings and adequate reserves with respect thereto shall have been set aside on the books of the Company. (b) Subject to the other provisions of this Debenture, the Company at all times will maintain its corporate existence and right to carry on its business and will duly procure all necessary renewals and extensions thereof and use its best efforts to maintain, preserve and renew all of its rights, powers, privileges and franchises; PROVIDED, HOWEVER, that nothing herein contained shall be construed to prevent the Company from ceasing or omitting to exercise any rights, powers, privileges or franchises which, in the judgment of the Board, can no longer be profitably exercised, nor to prevent the consolidation, merger or liquidation of any subsidiary or subsidiaries of the Company with or into the Company. (c) The Company will at no time close its stock transfer books against the transfer of any shares of Common Stock issued or issuable upon the conversion of, or in lieu of interest payments on, the Debentures, in any manner which interferes with the timely conversion of such Debentures. (d) As used in this Debenture, the term "Common Stock" shall mean the Company's authorized common stock, par value $0.001 and all stock of any class or classes (however designated) of the Company, 5 authorized on or after the date hereof, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and the holders of which shall ordinarily be entitled to vote for the election of the directors of the Company. The Company shall not, without the prior written consent of the Registered Holder of this Debenture, issue any shares of its capital stock, other than: (i) as permitted by Section 5 of the Securities Purchase Agreement, (ii) in exchange for Debentures as provided hereunder, (iii) upon exercise of the Common Stock Warrants and Special Common Stock Warrants in accordance with the terms thereof or (iv) upon conversion of the Warrant Debentures in accordance with the terms thereof. (e) The Company will not, by amendment of its Articles of Incorporation or By-laws or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder or pursuant to the Securities Purchase Agreement by the Company, and will at all times assist in good faith in the carrying out of all the provisions of this Debenture and the Securities Purchase Agreement and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Registered Holders of the Debentures against impairment. 9. LIMITATION ON CERTAIN CORPORATE ACTS. The Company hereby covenants and agrees that upon any consolidation or merger or upon the transfer of all or substantially all of the property or assets of the Company, the due and punctual payment of the principal and interest on all the Debentures according to their tenor and the due and punctual performance and observance of all the terms, covenants and conditions of the Debentures and the Securities Purchase Agreement to be kept and performed by the Company shall be expressly assumed by the corporation formed by such consolidation, or into which the Company shall have merged or by the purchaser of such property or assets; and such assumption shall be an express condition of such merger or consolidation agreement or agreement for the transfer of property or assets. 10. EVENTS OF DEFAULT. In case one or more of the following events of default shall have occurred: (a) default in the due and punctual payment of interest upon or principal of any of the Debentures as and when the same becomes due and payable either at maturity or otherwise; or (b) failure to deliver the shares of Common Stock required to be delivered upon conversion of, or in lieu of interest payments on, the Debentures in the manner and at the time required by Section 6 of the Securities Purchase Agreement; or (c) failure of the Company, at any time after the 90th day following the Closing Date, to have authorized the number of shares of Common Stock issuable upon conversion of, or in lieu of interest payments on, the Debentures and, the Warrant Debentures, or exercise of the Common Stock Warrants and the Special Common Stock Warrants; or 6 (d) failure on the part of the Company to duly observe or perform any of its other covenants or agreements contained in, or to cure any material breach in a material representation or covenant contained in, the Securities Purchase Agreement, the Debentures or the Registration Rights Agreement for a period of ten (10) business days after the date on which written notice of such failure or breach requiring the same to be remedied has been given by a Registered Holder to the Company; or (e) a decree or order by a court having jurisdiction has been entered adjudging the Company (or any Material Subsidiary (as herein after defined)) bankrupt or insolvent, or approving a petition seeking reorganization of the Company (or any Material Subsidiary) under any applicable bankruptcy law and such decree or order has continued undischarged or unstayed for a period of thirty (30) days; or a decree or order of a court having jurisdiction for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company (or any Material Subsidiary) or of all or substantially all of its property, or for the winding-up or liquidation of its affairs, has been entered, and has remained in force undischarged or unstayed for a period of thirty (30) days; or (f) the Company (or any Material Subsidiary) institutes proceedings to be adjudicated a voluntary bankrupt, or consents to the filing of a bankruptcy proceeding against it, or files a petition or answer or consent seeking reorganization under applicable law, or consents to the filing of any such petition or to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of all or substantially all of its property, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due; or if the Company (or any Material Subsidiary) shall suffer any writ of attachment or execution or any similar process to be issued or levied against it or any significant part of its property which is not released, stayed, bonded or vacated within thirty (30) days after its issue or levy; or if the Company (or any Material Subsidiary) takes corporate action in furtherance of any of the aforesaid purposes or conditions; or (g) if any default shall occur under any indenture mortgage, agreement, instrument or commitment, other than the agreement listed on Schedule 3r to the Securities Purchase Agreement, evidencing or under which there is at the time outstanding any indebtedness of the Company (or a Material Subsidiary), in excess of $50,000, or which results in such indebtedness, in an aggregate amount (with other defaulted indebtedness) in excess of $50,000 becoming due and payable prior to its due date and if such indenture or instrument so requires, the holder or holders thereof (or a trustee on their behalf) shall have declared such indebtedness due and payable; or (h) if any of the Company or its subsidiaries shall default in the observance or performance of any material term or provision of a material agreement to which it is a party or by which it is bound, and such default is not waived or cured within the applicable grace period; or 7 (i) if a final judgment which, either alone or together with other outstanding final judgments against the Company and its subsidiaries, exceeds an aggregate of $50,000 shall be rendered against the Company (or any Material Subsidiary) and such judgment shall have continued undischarged or unstayed for thirty (30) days after entry thereof; then, in each and every such case other than those specified in clauses (e) and (f) above, so long as such event of default has not been remedied and unless the principal of all the Debentures has already become due and payable, the holder of this Debenture, by notice in writing to the Company, may declare the principal of this Debenture and the interest accrued thereon, if not already due and payable, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything herein contained to the contrary notwithstanding and, upon the occurrence of the events specified in clauses (e) and (f) above, such principal and interest shall automatically become and shall be due and payable immediately without any action on the part of any holder of Debentures, anything herein contained to the contrary notwithstanding. For purposes of this Section 10, "Material Subsidiary" means any subsidiary with respect to which the Company has directly or indirectly invested, loaned, advanced or guaranteed the obligations of, an aggregate amount exceeding fifteen percent (15%) of the Company's gross assets, or the Company's proportionate share of the assets or net income of which (based on the subsidiary's most recent financial statements) exceed fifteen percent (15%) of the Company's gross assets or net income, respectively, or the gross revenues of which exceed fifteen percent (15%) of the gross revenues of the Company based upon the most recent financial statements of such subsidiary and the Company. 11. TRANSFERABILITY. This Debenture is transferable, in whole or in part, only in accordance with the terms of Section 6 of the Securities Purchase Agreement. The Registered Holder may submit a written request, in person or by his duly authorized attorney, for a transfer of this Debenture on the register of the Company maintained at its principal offices. The Company may deem and treat the person in whose name this Debenture is registered as the absolute owner hereof, for the purpose of receiving payment of the principal thereof and interest hereon, whether or not the same shall be overdue, and for all other purposes whatsoever, including but without limitation, the giving of any written notices required hereunder, and the Company shall not be affected by any notice to the contrary. 12. STOCK SPLITS; DIVIDENDS; ADJUSTMENTS; REORGANIZATIONS. (a) If the Company, at any time after the Original Issue Date, (i) shall pay a stock dividend or otherwise make a distribution or distributions on any equity securities (including investments or securities convertible into or exchangeable for such equity securities) in shares of Common 8 Stock, (ii) issue any securities payable in shares of Common Stock, (iii) subdivide the outstanding shares of Common Stock into a larger number of shares, (iv) combine outstanding shares of Common Stock into a smaller number of shares, the Fixed Price and each Floating Reference Price prior to the date of any such occurrence (collectively, the "Reference Prices") shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section 12(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of an issuance, a subdivision or a combination. (b) In the event that the Company, at any time after the Original Issue Date, issues or sells any Common Stock or securities which are convertible into or exchangeable for its Common Stock or any convertible or exchangeable securities, or any warrants or other rights to subscribe for or to purchase or any options for the purchase of its Common Stock or any such convertible or exchangeable securities (other than (i) up to 500,000 shares of Common Stock issued to employees of the Company, pursuant to benefit plans of the Company or pursuant to actions taken by the Board of Directors of the Company, (ii) shares issued upon exercise of options, warrants or rights outstanding on the date of the Securities Purchase Agreement and listed in Schedule 3b to the Securities Purchase Agreement or (iii) shares issued to consultants of the Company in lieu of cash payments for services rendered, provided that the aggregate Market Value for Shares of Common Stock (determined in each case on the date of issuance) issued to consultants shall not exceed $500,000 in any calendar year) at an effective purchase price per share which is less than the Fixed Price then in effect, then the Fixed Price in effect immediately prior to such issue or sale shall be reduced effective concurrently with such issue or sale to an amount determined by multiplying such Fixed Price then in effect by a fraction, (x) the numerator of which shall be the sum of (1) the number of shares of Common Stock outstanding immediately prior to such issue or sale, plus (2) the number of shares of Common Stock which the aggregate consideration received by the Company for such additional shares would purchase at such Fixed Price then in effect; and (y) the denominator of which shall be the number of shares of Common Stock of the Company outstanding immediately after such issue or sale. For the purposes of the foregoing adjustment, in the case of the issuance of any convertible or exchangeable securities, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of Common Stock ("Exchangeable Securities"), the maximum number of shares of Common Stock issuable upon exercise, conversion or exchange of such Exchangeable Securities shall be deemed to be outstanding, provided that no further adjustment shall be made upon the actual issuance of Common Stock upon exercise, exchange or conversion of such Exchangeable Securities. (c) If the Company, at any time after the Original Issue Date, shall distribute to all holders of Shares of Common Stock evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security (excluding those referred to in Section 12(b) above) then in each such case the Fixed Price thereafter shall be determined by multiplying the 9 Fixed Price in effect immediately prior to the record date fixed for determination of shareholders entitled to receive such distribution by a fraction of which the denominator shall be the Market Price for Shares of Common Stock (as defined below) determined as of the record date mentioned above, and of which the numerator shall be such Market Price for Shares of Common Stock on such record date less the then fair market value at such record date of the portion of such assets or evidences of indebtedness so distributed applicable to one outstanding share of Common Stock as determined by the Board in good faith; PROVIDED, however that in the event of a distribution exceeding 25% of the net assets of the Company, such fair market value shall be determined by an Appraiser selected in good faith by the Board and holders of a majority in interest of the Debentures. In either case the adjustments shall be described in a statement provided to all holders of Debentures of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one outstanding share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. "Market Price for Shares of Common Stock" shall mean the price of one share of Common Stock determined as follows: (i) If the Common Stock is then listed or quoted on either the OTC: BB, the NASDAQ SmallCap Market or the NASDAQ National Market, the reported closing price for the Common Stock as reported by Bloomberg or the Journal on such day (or, if not so reported, as otherwise reported by The NASDAQ Small Cap Market, NASDAQ National Market or the OTC:BB, as the case may be); (ii) If the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the closing price for the Common Stock on such exchange on such day as reported by Bloomberg or the Journal; (iii) If neither (i) nor (ii) apply but the Common Stock is quoted in the over-the-counter market, another recognized exchange or on the pink sheets, the last reported price thereof on such date; and (iv) If none of clauses (i), (ii) or (iii) above applies, the market value as determined by a nationally recognized investment banking firm or other nationally recognized financial advisor retained by the Company for such purpose, taking into consideration, among other factors, the earnings history, book value and prospects for the Company, and the prices at which shares of Common Stock recently have been traded. Such determination shall be conclusive and binding on all persons. (d) (1) In the event that at any time or from time to time after the Original Issue Date, the Common Stock issuable upon the conversion of, or in lieu of interest payments on, the Debentures is changed into the same or a different number of shares of any class or classes of stock, whether by merger, consolidation, recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or reorganization provided for elsewhere in this Paragraph 12), then and as a condition to each such event provision shall be made in a manner reasonably 10 acceptable to the holders of Debentures so that each holder of Debentures shall have the right thereafter to convert such Debenture into, and to receive in lieu of interest payments, the kind of stock receivable upon such recapitalization, reclassification or other change by holders of shares of Common Stock, all subject to further adjustment as provided herein. In such event, the formulae set forth herein for conversion and redemption shall be equitably adjusted to reflect such change in number of shares or, if shares of a new class of stock are issued, to reflect the market price of the class or classes of stock (applying the same factors used in determining the Fixed Price) issued in connection with the above described transaction. (2) If at any time or from time to time after the Closing Date there is a capital reorganization of the Common Stock, including by way of a sale of all or substantially all of the assets of the Company (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Paragraph 12), then, as a part of and a condition to such reorganization, provision shall be made in a manner reasonably acceptable to the holders of the Debentures so that the holders of the Debentures shall thereafter be entitled to receive upon conversion of, or in lieu of interest payments on, the Debentures the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock deliverable upon conversion, or in lieu of interest payments on, the Debentures would have been entitled on such capital reorganization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Paragraph 12 with respect to the rights of the holders of the Debentures after the reorganization to the end that the provisions of this Paragraph 12 shall be applicable after that event and be as nearly equivalent as may be practicable, including, by way of illustration and not limitation, by equitably adjusting the formulae set forth herein for conversion and redemption to reflect the market price of the securities or property (applying the same factors used in determining the Market Price for Shares of Common Stock) issued in connection with the above described transaction. (e) If at any time during the period ending twelve (12) months after the Original Issue Date, the Company sells or agrees to sell (including pursuant to a letter of intent, term sheet, or similar means) shares of Common Stock or securities or options convertible into, exercisable for, or exchangeable for, shares of Common Stock (other than (i) a sale pursuant to a bona fide registered public offering of shares of Common Stock by the Company conducted on the basis of a firm commitment underwriting raising at least $10,000,000, (ii) up to 500,000 shares of Common Stock issued to employees of the Company pursuant to benefit plans of the Company or pursuant to actions taken by the Board of Directors of the Company (iii) shares issued upon exercise of options, warrants or rights outstanding on the date of the Securities Purchase Agreement and listed in Schedule 3b to the Securities Purchase Agreement or (iv) shares issued to consultants of the Company in lieu of cash payments for services rendered, provided that the aggregate Market Value for Shares of Common Stock (determined in each case on the date of issuance) issued to consultants shall not exceed $500,000 in any calendar year) then, if the effective or maximum sales price of the shares of Common Stock with respect to such transaction (including the effective or maximum conversion exercise or exchange price) ("Other Price") is less than the Fixed Price of the Debentures 11 at such time, the Company, at the option of a holder exercised by written notice to the Company, shall adjust the Fixed Price applicable to the Debentures of such holder not yet converted in form and substance reasonably satisfactory to such holder of Debentures so that the conversion price applicable to those Debentures shall, in no event, be greater, after giving effect to all other adjustments contained therein, than the Other Price. (f) Whenever any element of the Applicable Conversion Price is adjusted pursuant to Section 12(a), (b), (c), (d) or (e), the Company shall promptly mail to each holder of the Debentures, a notice setting forth the Applicable Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. (g) In the event of any taking by the Company of a record date of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any security or right convertible or exchangeable into or entitling the holder thereof to receive additional shares of Common Stock, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Company, shall deliver to each holder of Debentures at least thirty 30 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution, security or right and the amount and character of such dividend, distribution, security or right. 13. REMEDIES CUMULATIVE. The rights, powers and remedies given to the payee under this Debenture shall be in addition to all rights, powers and remedies given to it by virtue of the Securities Purchase Agreement, any document or instrument executed in connection therewith, or any statute or rule of law. 14. NON-WAIVER. Any forbearance, failure or delay by the payee in exercising any right, power or remedy under this Debenture, the Securities Purchase Agreement, any documents or instruments executed in connection therewith or otherwise available to the payee shall not be deemed to be a waiver of such right, power or remedy, nor shall any single or partial exercise of any right, power or remedy preclude the further exercise thereof. 15. MODIFICATIONS AND WAIVERS. No modification or waiver of any provision of this Debenture, the Securities Purchase Agreement or any documents or instruments executed in connection therewith shall be effective unless it shall be in writing and signed by the payee, and any such modification or waiver shall apply only in the specific instance for which given. 16. ATTORNEY'S FEES. If this Debenture shall not be paid when due and shall be placed by the Registered Holder hereof in the hands of an attorney for collection, through legal proceedings or otherwise, or if this Debenture shall not be converted into shares of Common Stock on the Conversion Date (as defined in section 6(b) of the Securities Purchase Agreement), subject to the provisions of Section 6 hereof, and an action is brought by the Registered Holder with respect thereto, the Company shall pay reasonable attorney's fees to the Registered Holder hereof, together with reasonable costs and expenses of collection or enforcement incurred in connection with any such action. 12 17. ENFORCEMENT; SPECIFIC PERFORMANCE. (a) In case any one or more Events of Default shall occur and be continuing, a Registered Holder of a Debenture then outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law. Each holder agrees that it will give written notice to the other holders prior to instituting any such action. (b) The Company expressly agrees that each Registered Holder may not have adequate remedies at law if the Company does not perform its obligations under this Debenture. Upon a breach of the terms or covenants of this Debenture by the Company, the Registered Holder shall, each in addition to all other remedies, be entitled to obtain injunctive relief, and an order for specific performance of the Company's obligations hereunder. 18. MISCELLANEOUS. This Debenture and the rights and obligations of the parties hereto, shall be governed, construed and interpreted according to the laws of the State of New York. The Company agrees that any final judgment after exhaustion of all appeals or the expiration of time to appeal in any such action or proceeding shall be conclusive and binding, and may be enforced in any federal or state court in the United States by suit on the judgment or in any other manner provided by law. Nothing contained in this Debenture shall affect or limit the right of the Registered Holder to serve any process or notice or motion or other application in any other manner permitted by law, or limit or affect the right of the Registered Holder to bring any action or proceeding against the Company or any of its property in the courts of any other jurisdiction. The Company hereby consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Debenture, and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on FORUM NON CONVENIENS, to the bringing of any such proceeding in such jurisdictions. 19. PAYEE DEFINED. The term "payee" as used herein shall be deemed to include the payee and its successors, endorsees and assigns. 20. WAIVER OF PRESENTMENT, ETC. The undersigned hereby waives presentment, demand for payment, protest, notice of protest and notice of non-payment hereof. 21. HEADINGS. The headings contained in this Debenture are for reference purposes only and shall not affect the meaning of interpretation of this Debenture. 22. NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission) or two business days following deposit of such notice 13 with an internationally recognized courier service, with postage prepaid and addressed to the parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by five days advance written notice to each of the other parties hereto. COMPANY: ACCESS POWER, INC. 10033 Sawgrass Dr. West, Suite 100 Ponte Vedra Beach, Florida 32082 Att.: Maurice Matovich Tel.: (904) 273-2980 Fax: (904) 273-6390 With a copy to: Kilpatrick Stockton, LLP 1100 Peachtree Street Suite 2800 Atlanta, Georgia 30309 Att: Dennis J. Stockwell, Esq. Tel.: (404) 815-6500 Fax: (404) 815-6555 14 REGISTERED HOLDER: Bamboo Investments LLC c/o WEC Asset Management LLC One World Trade Center Suite 4563 New York, New York 10048 Att.: Ethan E. Benovitz Tel.: (212) 775-9299 Fax: (212) 775-9311 14 With a copy to: Kronish Lieb Weiner & Hellman LLP 1114 Avenue of the Americas New York, New York 10036 Att.: Steven Huttler, Esq. Tel.: (212) 479-6136 Fax: (212) 479-6275 [SIGNATURE PAGE FOLLOWS] 15 IN WITNESS WHEREOF, the Company has caused this Debenture to be executed as of the date first written above. ACCESS POWER, INC. By: Glenn Smith Name: Glenn Smith Title: President/CEO 16 NOTICE OF CONVERSION The conversion form appearing below should only be executed by the Registered Holder desiring to convert all or part of the principal amount of the Debenture attached hereto. CONVERSION FORM Date: ____________________________________________ TO: ACCESS POWER, INC. The undersigned hereby exercises the conversion privilege upon the terms and conditions set forth in the attached Debenture, to the extent of the maximum number of shares of Common Stock issuable pursuant to the terms of Section 6 of the Debenture, and accordingly, authorizes the Company to apply $__________ principal amount of the attached Debenture (including any accrued and unpaid interest thereon) to payment in full for such shares of Common Stock. Please register such shares and make delivery thereof as follows: Registered in the Name of (Giving First or Middle Name in Full) Name ________________________________________________________ (Please Print) Address______________________________________________________ Without waiving any rights the undersigned may have pursuant to the terms of the attached Debenture, the undersigned hereby advises the Company that it believes the number of shares of Common Stock issuable as a result of this Notice of Conversion is ________________________. 17 DELIVERY INSTRUCTIONS To be completed ONLY if Certificates are to be mailed to persons other than the Registered Holder. Name________________________________________________ (Please Print) Address_____________________________________________ Signature __________________________________________ 18 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto _______________________________________________________ the within Debenture and all rights thereunder, hereby irrevocably authorizing the Company to transfer said Debenture on the books of the Company, with full power of substitution in the premises. Dated:______________________________________________________ Signature:__________________________________________________ Print Name:_________________________________________________ 19 EX-4.2 4 WARRANT TO PURCHASE COMMON STOCK THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. WARRANT TO PURCHASE COMMON STOCK, PAR VALUE $.001 PER SHARE OF ACCESS POWER, INC. Void after September 30, 2002 Right to Purchase 200,000 shares of Common Stock (subject to adjustment) No. 1 PREAMBLE This certifies that, for value received, BAMBOO INVESTORS LLC, or registered assigns ("Warrantholder"), is entitled to purchase from ACCESS POWER, INC. (the "Company"), subject to the provisions of this Warrant, at any time and from time to time until 5:00 p.m. Eastern Standard Time on September 30, 2002, 200,000 shares of the Company's Common Stock, par value $.001 per share (the "Warrant Shares"). The purchase price payable upon the exercise of this Warrant shall be $0.45 per Warrant Share (such price, as adjusted from time to time upon the occurrence of the contingencies set forth in Section III of this Warrant, is herein after referred to as the "Warrant Price"). The Warrant Price and the number of Warrant Shares which the Warrantholder is entitled to purchase are subject to adjustment upon the occurrence of the contingencies set forth in Section III of this Warrant. This Warrant is one of the Warrants to Purchase Common Stock (the "Warrants"), evidencing the right to purchase Common Stock of the Company, issued pursuant to a Securities Purchase Agreement (the "Securities Purchase Agreement"), dated September 30, 1999, between the Company and the Purchaser and other parties identified therein. The Securities Purchase Agreement contains certain additional terms that are binding upon the Company and each Warrantholder. A copy of the Securities Purchase Agreement may be obtained by any registered Warrantholder from the Company upon written request. Capitalized terms used but not defined herein shall have the meanings set forth in the Securities Purchase Agreement, including the Exhibits thereto. This Warrant is subject to the following terms and conditions: I. EXERCISE OF WARRANT. (a) This Warrant may be exercised in whole or in part but not for a fractional share. Upon delivery of this Warrant at the offices of the Company or at such other address as the Company may designate by notice in writing to the registered holder hereof with the Subscription Form annexed hereto duly executed, accompanied by payment of the Warrant Price for the number of Warrant Shares purchased (in cash, by certified, cashier's or other check acceptable to the Company, or any combination of the foregoing), the registered holder of this Warrant shall be entitled to receive a certificate or certificates for the Warrant Shares so purchased. Such certificate or certificates shall be promptly delivered to the Warrantholder. Upon any partial exercise of this Warrant, the Company shall promptly execute and deliver a new Warrant of like tenor for the balance of the Warrant Shares purchasable hereunder. (b) The Warrant Shares deliverable hereunder shall, upon issuance, be fully paid and non-assessable and the Company agrees that at all times during the term of this Warrant it shall cause to be reserved for issuance such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant. (c) The Company will, at the time of the exercise, exchange or transfer of this Warrant, upon the request of the registered Warrantholder hereof, acknowledge in writing its continuing obligation to afford to such Warrantholder or transferee any rights (including, without limitation, any right to registration of the Company's shares of Common Stock) to which such Warrantholder or transferee shall continue to be entitled after such exercise, exchange or transfer in accordance with the provisions of this Warrant, provided that if the registered Warrantholder of this Warrant shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Warrantholder or transferee any such rights. II. TRANSFER OR ASSIGNMENT OF WARRANT. Any assignment or transfer of this Warrant shall be made by surrender of this Warrant at the offices of the Company or at such other address as the Company may designate in writing to the registered holder hereof with the Assignment Form annexed hereto duly executed and accompanied by payment of any requisite transfer taxes, and the Company shall, without charge, execute and deliver a new Warrant of like tenor in the name of the assignee for the portion so assigned in case of only a partial assignment, with a new Warrant of like tenor to the assignor for the balance of the Warrant Shares purchasable. III. ADJUSTMENT OF WARRANT PRICE AND WARRANT SHARES -- ANTI-DILUTION PROVISIONS. A. (1) Except as hereinafter provided, in case the Company shall at any time after the date hereof issue any shares of Common Stock (including shares held in the Company's treasury) without consideration, then, and thereafter successively upon 2 each issuance, the Warrant Price in effect immediately prior to each such issuance shall forthwith be reduced to a price determined by multiplying the Warrant Price in effect immediately prior to such issuance by a fraction: (a) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such issuance, and (b) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such issuance. For the purposes of any computation to be made in accordance with the provisions of this clause (1), the following provisions shall be applicable: (i) Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued and to be outstanding at the close of business on the record date fixed for the deter- mination of stock- holders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration. Shares of Common Stock issued otherwise than as a dividend or other distribution, shall be deemed to have been issued and to be outstanding at the close of business on the date of issue. (ii) The number of shares of Common Stock at any time outstanding shall not include any shares then owned or held by or for the account of the Company. (2) In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Warrant Price shall forthwith be proportionately decreased in the case of the subdivision or proportionately increased in the case of combination to the nearest one cent. Any such adjustment shall become effective at the close of business on the date that such subdivision or combination shall become effective. B. In the event of an adjustment of the Warrant Price, the number of shares of Common Stock (or reclassified stock) issuable upon exercise of this Warrant after such justment shall be equal to the number determined by dividing: 3 (1) an amount equal to the product of (i) the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment, and (ii) the Warrant Price immediately prior to such adjustment, by (2) the Warrant Price immediately after such adjustment. C. In the case of (1) any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) or (2) any consolidation of the Company with, or merger of the Company with, another corporation, or in the case of any sale, lease or conveyance of all, or substantially all, of the property, assets, business and goodwill of the Company as an entity, the holder of this Warrant shall thereafter have the right upon exercise to purchase the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, consolidation, merger or sale by a holder of the number of shares of Common Stock which the holder of this Warrant would have received had all Warrant Shares issuable upon exercise of this Warrant been issued immediately prior to such reorganization, reclassification, consolidation, merger or sale, at a price equal to the Warrant Price then in effect pertaining to this Warrant (the kind, amount and price of such stock and other securities to be subject to adjustment as herein provided). The Company shall not effect a transaction of the type described in clause (2) of this sub-paragraph (D) unless upon or prior to the consummation thereof, the Company's successor corporation, or if the Company shall be the surviving company in any such transaction but is not the issuer of the shares of stock, securities or other property to be delivered to the holders of the Company's outstanding shares of Common Stock at the effective time thereof, then such issuer, shall assume in writing the obligation hereunder to deliver to the Warrantholder of this Warrant such shares of stock, securities, cash or other property as such holder shall be entitled to purchase in accordance with the provisions hereof. D. In case the Company shall, at any time prior to the expiration of this Warrant and prior to the exercise thereof, dissolve, liquidate or wind up its affairs, the Warrantholder shall be entitled, upon the exercise thereof, to receive, in lieu of the Warrant Shares of the Company which it would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to it 4 upon such Warrant Shares of the Company, had it been the holder of record of shares of Common Stock receivable upon the exercise of this Warrant on the record date for the determination of those entitled to receive any such liquidating distribution. After any such dissolution, liquidation or winding up which shall result in any distribution in excess of the Warrant Price provided for by this Warrant, the Warrantholder may at its option exercise the same without making payment of the aggregate Warrant Price and in such case the Company shall upon the distribution to said Warrantholder consider that the aggregate Warrant Price has been paid in full to it and in making settlement to said Warrantholder, shall deduct from the amount payable to such Warrantholder an amount equal to the aggregate Warrant Price. Except as otherwise expressly provided in the prior paragraph, in the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants after the effective date of such dissolution pursuant to this sub-paragraph (E) to a bank or trust company having its principal office in New York City, as trustee for the holder or holders of the Warrants. E Except as otherwise expressly provided in this Section III, upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section III, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant. F. In case the Company shall, at any time prior to the expiration of this Warrant and prior to the exercise thereof make a distribution of assets (other than cash) or securities of the Company to its stockholders (the "Distribution") the Warrantholder shall be entitled, upon the exercise thereof, to receive, in addition to the Warrant Shares it is entitled to receive, the same kind and amount of assets or securities as would have been distributed to it in the Distribution had it been the holder of record of shares of Common Stock receivable upon exercise of this Warrant on the record date for determination of those entitled to receive the Distribution. G. Irrespective of any adjustments in the number of Warrant Shares and the Warrant Price or the number or kind of shares purchasable upon exercise of this Warrant, this Warrant may continue to express the same price and number and kind of shares as originally issued. IV. OFFICER'S CERTIFICATE. Whenever the number of Warrant Shares and the Warrant Price shall be adjusted pursuant to the provisions hereof, the Company shall forthwith file at its principal executive office an officers' certificate, signed by the Chairman of the Board, President, or one of the Vice Presidents of the Company and by its Chief Financial Officer or one of its Treasurers or Assistant Treasurers, stating the adjusted number of Warrant 5 Shares and the new Warrant Price calculated to the nearest one hundredth and setting forth in reasonable detail the method of calculation and the facts requiring such adjustment and upon which such calculation is based. Each adjustment shall remain in effect until a subsequent adjustment hereunder is required. A copy of such statement shall be mailed to the Warrantholder at its address in the records of the Company in accordance with the notice provision of the Securities Purchase Agreement. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the Warrant Price and the number and type of Shares at the time in effect and showing how it was calculated. V. CHARGES, TAXES AND EXPENSES. The issuance of certificates for Warrant Shares upon any exercise of this Warrant shall be made without charge to the Warrantholder for any tax or other expense in respect to the issuance of such certificates, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued only in the name of the Warrantholder. VI. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its Articles of Incorporation or By-laws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants, as specified herein and in the Securities Purchase Agreement, against dilution (to the extent specifically provided herein) or other impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrants above the amount payable therefor on such exercise, and (b) will not effect a subdivision or split up of shares or similar transaction with respect to any class of the Common Stock without effecting an equivalent transaction with respect to all other classes of Common Stock. VII. NOTICE OF RECORD DATE. In case (a) of any taking by the Company of a record of the holders of any class of its securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or (b) of any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or any voluntary or involuntary dissolution, liquidation or winding up of the Company; or (c) events shall have occurred resulting in the voluntary or involuntary dissolution, liquidation or winding up of the Company; then and in each such event the Company will mail or cause to be mailed to each holder of a Warrant a notice specifying (i) the date on which any record is to be taken for the purpose of any such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, 6 transfer, consolidation, merger, dissolution, liquidation or winding up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up, and (iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least thirty (30) days prior to the date specified in such notice on which any such action is to be taken. VIII. EXCHANGE OF WARRANTS. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company, at its expense, will issue and deliver to or on the order of the holder thereof a new Warrant or Warrants of like tenor, in the name of such holder or as such holder (on payment by such holder or any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. IX. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor. X. WARRANT AGENT. The Company may, by written notice to each holder of a Warrant, appoint an agent having an office in New York, New York, for the purpose of issuing shares of Common Stock on the exercise of the Warrants pursuant to Section I, exchanging Warrants pursuant to Section VIII, and replacing Warrants pursuant to Section IX, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. XI. REMEDIES. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. XII. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to all of which each Warrantholder or owner hereof by the taking hereof consents and agrees: (a) subject to the terms of Section II of this Warrant and Section 5 of the Securities Purchase Agreement, title to this Warrant may be transferred by endorsement (by the Warrantholder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; 7 (b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and (c) until this Warrant is transferred on the books of the Company, the Company may treat the register Warrantholder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. XIII. NOTICES. All notices and other communications from the Company to the registered Warrantholder of this Warrant shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error- free transmission) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed, to such address as may have been furnished to the Company in writing by such registered Warrantholder or, until any such registered Warrantholder furnishes to the Company an address, then to, and at the address of, the last registered Warrantholder of this Warrant who has so furnished an address to the Company. XIV. MISCELLANEOUS. (a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or assigns of the Company and of the holder or holders hereof and of the shares of Common Stock issued or issuable upon the exercise hereof. (b) Except as otherwise set forth herein, no holder of this Warrant, as such, shall be entitled to vote or receive dividends or be deemed to be a stockholder of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the holder of this Warrant, as such, any rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action, receive notice of meetings, receive dividends or subscription rights, or otherwise. (c) Receipt of this Warrant by the holder hereof shall constitute acceptance of an agreement to the foregoing terms and conditions. (d) The Warrant and the performance of the parties hereunder shall be construed and interpreted in accordance with the laws of the State of New York and the parties hereunder consent and agree that the State and Federal Courts which sit in the State of New York and the County of New York shall have exclusive jurisdiction with respect to all controversies and disputes arising hereunder. 8 (e) This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. [SIGNATURE PAGE FOLLOWS] 9 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer and its corporate seal to be affixed hereto. Dated: September 30, 1999 ACCESS POWER, INC. BY: /s/ Glenn Smith Name: Glenn Smith Title: President/CEO 10 SUBSCRIPTION FORM (TO BE EXECUTED BY THE REGISTERED HOLDER IF HE DESIRES TO EXERCISE THE WARRANT) TO: ACCESS POWER, INC. The undersigned hereby exercises the right to purchase _______ shares of Common Stock, par value $.001 per share, covered by the attached Warrant in accordance with the terms and conditions thereof, and herewith makes payment of the Warrant Price for such shares in full. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of ___________________________________, whose address is ______________________ ________________________, and that such Certificate be delivered to , whose address is _____________________________________________. _______________________________________ NAME (please print) ________________________________________ SIGNATURE (Signature must conform in all respects to the name of the registered Warrantholder, as specified on the face of the Warrant.) _________________________________________ SOCIAL SECURITY NUMBER (or Other Identifying Number of Holder) _________________________________________ ADDRESS DATED:__________________ ASSIGNMENT (TO BE EXECUTED BY THE REGISTERED WARRANTHOLDER IF HE DESIRES TO TRANSFER THE WARRANT) FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________ (please print name and address of transferee) the right to purchase shares of Common Stock of ACCESS POWER, INC., evidenced by the within 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. _______________________________________ NAME (please print) ________________________________________ SIGNATURE (Signature must conform in all respects to the name of the registered Warrantholder, as specified on the face of the Warrant.) _________________________________________ SOCIAL SECURITY NUMBER (or Other Identifying Number of Holder) IN THE PRESENCE OF: ___________________________________ EX-10.1 5 RETAINER AGREEMENT WITH TATUM CFO PARTNERS TATUM CFO PARTNERS, L.L.P. RETAINER AGREEMENT This Agreement is entered into on September 23, 1999 by Access Power, Inc. (the "Company"), Tatum CFO Partners, LLP ("Tatum") and Howard Kaskel ("the CFO") (collectively, the "parties"). WHEREAS, the Company wishes to engage the CFO to provide certain services and Tatum wishes that the CFO provide such services in return for certain consideration; the parties after full and careful negotiation agree as follows: I. SERVICES; FEES AND PAYMENTS A. Beginning on September 1, 1999, (the "effective date"), the CFO will perform, under the title Chief Financial Officer, CFO Services for a total monthly fee of $10,800 (the "Monthly Fee"). B. The CFO will provide CFO Services for four (4) days per week. C. The Company will pay the CFO directly according the Company's normal payroll process a portion of the Monthly Fee equal to $9,000 (the "Salary"); and will pay Tatum the remaining portion of $1,800.00 ("Retainer Fee"). D. If this Agreement commences or concludes other than at the beginning or end of a month, each portion of the Monthly Fee shall be prorated for that month. E. The Company also will pay Tatum the incentive bonus set forth in Schedule A. F. The Company will pay all amounts owed Tatum no later than the 15th day of the month for which amounts are invoiced. G. The Company will promptly reimburse the CFO for travel and out-of-pocket business expenses. H. In the case that the CFO provides CFO Services in excess of 4 days per week, the Company will pay an additional $660 daily fee (the "Additional Daily Fee"). I. The Company will pay the CFO directly according the Company's normal payroll process 83.33% of the Additional Daily Fee (the "Additional Salary"), and will pay Tatum the remaining 16.67% portion ("Additional Retainer Fee"). II. CFO SERVICES A. CFO Services is defined as those certain services as specified and directed by the Company from time to time and which the CFO is able to perform within the time allotted under this agreement. III. THE RELATIONSHIP OF THE CFO AND THE COMPANY A. The Company, Tatum and the CFO agree that the CFO will be an employee of the Company. B. As an employee of the Company, the CFO will work under the exclusive management and authority of the Company. C. Unless agreed to in writing by all parties, the CFO is not an officer, an executive officer, or a director of the Company, and the title CFO or Chief Financial Officer does not confer that status D. The CFO will be eligible for vacation and holidays consistent with the Company's policy as it applies to senior management, except that any initial delay period will not apply. E. The CFO elects not to participate in the Company's employment retirement plan or any other employee benefit plan, and waives any coverage that may otherwise exist. The Company will not include the CFO as participant in any such plan, unless required to do so by law for plan qualification. However, notwithstanding the foregoing, the CFO may participate (without company matching payments) in the Company's 401(k) plan, if such a plan is provided. The CFO waives any past or present claim it may have against the Company for any discrimination. IV. THE RELATIONSHIP OF TATUM AND THE COMPANY A. The Company, Tatum and the CFO agree that for purposes of this Agreement, Tatum's relationship with the Company is to make the CFO available to the Company to provide CFO services. However, the Company is solely responsible for its evaluation, management and use of the CFO and the CFO Services. V. THE RELATIONSHIP OF TATUM AND THE CFO A. The Company, Tatum and the CFO agree that for purposes of this Agreement, Tatum's relationship with the CFO is to make available to the CFO certain resources of Tatum. These resources are not warranted or guaranteed in any way and the Company is solely responsibility for its evaluation, management and use of these resources. VI. STANDARD DISCLAIMERS A. Neither Tatum nor the CFO will be liable for Y2K related losses, costs, damages or expenses. B. Tatum will not be liable for any non-compliance with federal, state or local laws or regulations. C. The Company agrees that reports, projections and/or forecasts can be prepared only at the Company's direction and reflect the judgment of the Company. Tatum makes no representation or warranty as to the accuracy or reliability of reports, projections and/or forecasts; and will not be held liable for any claims of reliance on such reports, projections and/or forecasts. VII. INDEMNITY; JOINT DEFENSE; LIABILITY LIMITATIONS; ARBITRATION; INSURANCE A. The Company agrees to indemnify Tatum to the full extent permitted by law for any losses, costs, damages and expenses, including attorneys' fees, as such are incurred, in connection with (1) any cause of action, suit or other proceeding arising in connection with Tatum's engagement by the Company under this Agreement, the CFO's employment with the Company or the CFO's activities while employed by the Company, and (2) any legal proceeding in which Tatum may be required or agree to participate, but in which Tatum is not a party. This indemnification does not apply to actions taken by Tatum in bad faith. B. If the Company and Tatum are defendants in any action, suit, or other proceeding, the defense of Tatum will be represented by counsel selected by Tatum. C. The Company and Tatum agree to binding arbitration under the rules of the American Arbitration Association ("AAA"), to take place in the AAA's Atlanta office, if any dispute arises between them. D. The Parties recognize and agree that any breach by Tatum of this Agreement would result in injury that would be impossible to accurately ascertain. Therefore, Tatum shall pay to the Company as liquidated damages, and not as a penalty, an amount equal to two full months of Retainer Fee. The parties agree that this amount of liquidated damages represents a reasonable approximation of the damages that would be incurred as a result of a breach by Tatum of this Agreement. E. In any event, at any time, Tatum may pay a sum equal to the total Retainer Fee paid under this Agreement for the most recent four months, which payment the Company agrees shall serve as final satisfaction and accord for any and all such liabilities of Tatum under this Agreement. F. As a precondition for recovery of any alleged liability, the Company shall give Tatum notice, in writing, the alleged basis for liability within thirty (30) days of discovering the circumstances giving rise to such alleged liability, and no legal or other action shall be taken by the Company against Tatum more than (60) days after such notice has been given or (ii) less than thirty (30) days after such notice has been given, in order that Tatum shall have the opportunity to investigate in a timely manner and, where possible, correct of rectify the alleged basis for liability. G. Tatum will not be liable in any event for incidental or consequential damages including without limitation any interruption of business or loss of business, profit, or good will. H. To the extent the Company has directors' and officers' liability insurance ("including entity coverage") and/or errors and omissions liability insurance in effect, the Company will provide such insurance coverage for the CFO. VIII. GENERAL TERMS AND CONDITIONS A. This Agreement may be canceled by either party effective on no less than 30 days' advance written notice. However, Tatum retains the right to terminate this agreement immediately if the Company has not remained current with its obligations to Tatum under this Agreement, the Company is not in compliance with any government regulatory entity, or by death or disability of the CFO. B. The provisions on the attached Schedule A are incorporated by reference as if set forth herein, and the provisions concerning the bonus in Schedule A will survive any cancellation of this Agreement. C. Neither the Company, Tatum nor the CFO shall be deemed to have waived any rights or remedies accruing under this Agreement unless such waiver is in writing and signed by the party electing to waive the right or remedy. D. This Agreement is governed by Georgia law. E. The terms of this Agreement are severable, and they may not be amended except in writing signed by the parties. This Agreement binds and benefits the successors of the parties. F. This Agreement contains the entire agreement between the parties, superseding any prior oral or written statements or agreements. G. The persons signing below are authorized to sign on behalf of each party, and their signatures are all necessary signatures. TATUM CFO PARTNERS, LLP The COMPANY The CFO /s/ Richard D. Hissam /s/ Glenn A. Smith /s/ Howard L.Kaskel Signature Signature Signature Richard D. Hissam Glenn A. Smith Howard L. Kaskel Area Partner CEO 9/23/99 9/23/99 9/23/99 - ------- ------- ------- Date Date Date SCHEDULE A TO TATUM RETAINER AGREEMENT The Company will provide to Tatum CFO, on an annual basis, during the term of this Agreement, an amount of stock options commensurate to the number of options granted to the other executive officers of the Company. Such on-going options will be issued upon the same terms and at the same time as such grant is made for said officers of the Company. Seventy-five percent of such options will be granted to the CFO and twenty-five percent of such options will be granted to Tatum CFO. EX-10.2 6 SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT, dated as of September 30, 1999, is entered into by and among ACCESS POWER, INC., a Florida corporation (the "Company") and Maurice Matovich, Glenn Smith, Tod Smith, and Howard L. Kaskel (each, individually a "Shareholder" and , collectively, the "Shareholders") and BAMBOO INVESTORS LLC, a Delaware limited partnership (the "Purchaser"). W I T N E S S E T H: WHEREAS, the Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemptions from registration provided by Regulation D ("Regulation D") promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), and/or Section 4(2) of the Securities Act. WHEREAS, the Purchaser wishes to purchase, and the Company wishes to issue, upon the terms and subject to the conditions of this Agreement, $1,000,000 principal amount of the Company's 6% Convertible Debentures due 2001 (the "Debentures"), Warrants to purchase 200,000 shares of Common Stock of the Company (the "Common Stock Warrants") and Warrants (the "Special Warrants" and, together with the Debentures and the Common Stock Warrants, the "Securities") to purchase $1,000,000 principal amount of the Company's 6% Convertible Debentures due 2001 (the "Warrant Debentures") and warrants (the "Special Common Stock Warrants") to purchase 200,000 shares of Common Stock. The Debentures and the Warrant Debentures are convertible, at the holder's option, into the Company's common stock, par value $.001 per share (the "Common Stock"), on the terms set forth therein, the Common Stock Warrants and Special Common Stock Warrants may be exercised for the purchase of Common Stock, on the terms set forth therein, and the Special Warrants may be exercised for the purchase of Warrant Debentures and Special Common Stock Warrants, on the terms set forth therein. WHEREAS, in order to induce the Purchaser to enter into the transactions contemplated hereby, the Shareholders have agreed to enter into certain other covenants set forth herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. AGREEMENT TO PURCHASE; PURCHASE PRICE CLOSING. The Purchaser hereby agrees to purchase from the Company on the Closing Date (as defined herein) the Debentures, the Common Stock Warrants and the Special Warrants for an aggregate purchase price of $1,000,100 which shall be payable in same day funds. The Debentures shall be issued in substantially the form attached hereto as Exhibit A, the Common Stock Warrants shall be issued in substantially the form attached hereto as Exhibit B and the Special Warrants shall be issued in substantially the form attached hereto as Exhibit C. 1 The Securities to be purchased by the Purchaser hereunder, in definitive form, and in such denominations and registered in such names as the Purchaser or its representative, if any, may request upon notice to the Company, shall be delivered by or on behalf of the Company for the account of the Purchaser, against payment by or on behalf of the Purchaser of the purchase price therefor by wire transfer to an account of the Company, all at the offices of Kronish Lieb Weiner & Hellman LLP, at 9:30 a.m., New York time on September 30, 1999, or at such other time and date as the Purchaser (or its representative, as the case may be) and the Company may agree upon in writing, such date being referred to herein as the "Closing Date." 2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER: ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION. The Purchaser represents and warrants to, and covenants and agrees with, the Company and the Shareholders as follows: a. The Purchaser and each of its equity owners is (i) experienced in making investments of the kind described in this Agreement and the related documents, (ii) able, by reason of the business and financial experience of its management, to protect its own interests in connection with the transactions described in this Agreement and the related documents, (iii) able to afford the entire loss of its investment in the Securities; and (iv) is an accredited investor as defined in Rule 501 of Regulation D promulgated by the commission. b. All subsequent ffers and sales of the Debentures, the Common Stock Warrants, the Special Warrants, Warrant Debentures, Special Common Stock Warrants and the Common Stock issuable upon conversion or exercise of, or in lieu of interest payments on, the Debentures, Warrant Debentures, Special Common Stock Warrants or Common Stock Warrants it shall have purchased, shall be made pursuant to an effective registration statement under the Securities Act or pursuant to an applicable exemption from such registration. c. The Purchaser understands that the Securities are being offered and sold to it in reliance upon exemptions from the registration requirements of the United States federal securities laws, and that the Company is relying upon the truth and accuracy of the Purchaser's representations and warranties, and the Purchaser's compliance with its agreements, each as set forth herein, in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities. d. The Purchaser: (A) has been provided with sufficient information with respect to the business of the Company and such documents relating to the Company as the Purchaser has requested and the Purchaser has carefully reviewed the same including, without limitation, the Company's Form 10-KSB for the fiscal year ended December 31, 1998 and Forms 10-QSB for the quarters ended March 31 and June 30, 1999 filed with the Securities and Exchange Commission (the "Commission"), (B) has been provided with such additional information with respect to the Company and its business and financial condition 2 as the Purchaser, or its agent or attorney, has requested, and (C) has had access to management of the Company and the opportunity to discuss the information provided by management of the Company, and any questions that the Purchaser had with respect thereto have been answered to the full satisfaction of the Purchaser. e. The Purchaser has the requisite corporate power and authority to enter into this Agreement, and the registration rights agreement, dated as of the date hereof, between the Company and the Purchaser (the "Registration Rights Agreement"). f. This Agreement, the Registration Rights Agreement, and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Purchaser; and such agreements, when executed and delivered by the Purchaser, the Company and the Shareholders (as applicable) will each be a valid and binding agreement of the Purchaser, enforceable in accordance with their respective terms, except to the extent that enforcement of each such agreement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. 3. REPRESENTATIONS OF THE COMPANY The Company represents and warrants to the Purchaser that: a. ORGANIZATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. The Company has no subsidiaries. The Company is duly qualified as a foreign corporation in all jurisdictions in which the failure to so qualify would have a material adverse effect on the Company. b. CAPITALIZATION. On the date hereof, the authorized capital of the Company consists of 40,000,000 shares of Common Stock, par value $.001 per share, of which 32,719,527 shares are issued and outstanding (prior to the consummation of the exchange required by Section 5(w) hereof) and 10,000,000 shares of Preferred Stock, par value $.001 per share, of which one thousand (1,000) shares have been designated as Series A Preferred Stock, none of which are outstanding, and four thousand (4,000) shares have been designated as Series B Convertible Preferred Stock, of which 3,702 shares will be issued in exchange for the cancellation of 3,702,000 shares of Common Stock immediately prior to the Closing. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable and free of preemptive rights. Schedule 3b sets forth all of the options, warrants and convertible securities of the Company, and any other rights to acquire securities of the Company (collectively, the Derivative Securities, (ii) the issue date of such Derivative Securities, (iii) the number of shares of Common Stock of the Company into which such Derivative Securities are convertible as of the date hereof, (iv) the conversion or exercise price or prices of such Derivative Securities as of the date hereof, (v) the expiration date of any conversion or exercise rights held by the owners of such Derivative Securities and (vi) any registration rights associated with such Derivative Securities. 3 c. CONCERNING THE COMMON STOCK, THE COMMON STOCK WARRANTS, THE DEBENTURES AND THE SPECIAL WARRANTS. The Common Stock issuable upon conversion of, or in lieu of interest payments on, the Debentures and the Warrant Debentures, and upon exercise of the Common Stock Warrants and the Special Common Stock Warrants, when issued, shall be duly and validly issued, fully paid and non-assessable, will not be subject to preemptive rights and will not subject the holder thereof to personal liability by reason of being such a holder. The Warrant Debentures, when issued, shall be duly and validly authorized for issuance and, when issued in accordance with the terms of the Special Warrants, will be the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. There are currently no preemptive rights of any stockholder of the Company, as such, to acquire the Securities or the Common Stock issuable to the Purchaser pursuant to the terms of the Debentures, the Warrant Debentures, the Special Common Stock Warrants and the Common Stock Warrants or the Warrant Debentures or Special Common Stock Warrants issuable to the Purchaser pursuant to the terms of the Special Warrants. d. REPORTING COMPANY STATUS. The Company is a reporting company under Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and has filed all materials and documents required to be filed with the Commission pursuant to its reporting obligations thereunder. Trading in the Common Stock currently is quoted on NASD's OTC Bulletin Board (the "OTC:BB"), and the Company is not aware of any pending or contemplated action or proceeding of any kind to suspend trading of the Common Stock. e. AUTHORIZED SHARES. Immediately after the Closing, the Company will have available 10,982,473 authorized and unissued shares of Common Stock to effect the conversion of the Debentures and the Warrant Debentures and for the exercise of the Common Stock Warrants and Special Common Stock Warrants. The Company understands and acknowledges the potentially dilutive effect to the Common Stock of the issuance of shares of Common Stock upon conversion of the Debentures and the Warrant Debentures and the exercise of the Common Stock Warrants and the Special Common Stock Warrants. The Company further acknowledges that its obligation to issue Warrant Debentures and Special Common Stock Warrants upon exercise of the Special Warrants and to issue shares of Common Stock upon conversion of the Debentures and Warrant Debentures and upon exercise of the Common Stock Warrants and Special Common Stock Warrants is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company and notwithstanding the commencement of any case under 11 U.S.C. Section 101 ET SEQ. (the "Bankruptcy Code"). In the event the Company becomes a debtor under the Bankruptcy Code, the Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. Section 362 in respect of the conversion of the Debentures and the Warrant Debentures and the exercise of the Common Stock Warrants, the Special Common Stock Warrants and the Special Warrants. The Company agrees, without cost or expense to the Purchaser, to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. Section 362. 4 f. LEGALITY. The Company has the requisite corporate power and authority to enter into this Agreement and the Registration Rights Agreement, and to issue and deliver the Debentures, the Common Stock Warrants and the Special Warrants, the Warrant Debentures and Special Common Stock Warrants issuable upon exercise of the Special Warrants, the Common Stock issuable upon conversion of, or in lieu of interest payments on, the Debentures and the Warrant Debentures (to the extent of its authorized and unissued Common Stock, including any future increase to such authorized and unissued Common Stock) and the Common Stock issuable upon the exercise of the Common Stock Warrants and Special Common Stock Warrants (to the extent of its authorized and unissued Common Stock, including any future increase to such authorized and unissued Common Stock). Each of the Shareholders has the requisite capacity to enter into this Agreement. g. TRANSACTION AGREEMENTS. This Agreement, the Registration Rights Agreement, the Debentures, the Warrant Debentures, the Special Warrants, the Common Stock Warrants and the Special Common Stock Warrants (collectively, the "Primary Documents"), and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Company; this Agreement has been duly executed and delivered by the Company and the Shareholders and this Agreement is, and the other Primary Documents, when executed and delivered by the Company will each be, a valid and binding agreement of the Company and the Shareholders, as applicable, enforceable in accordance with their respective terms, except to the extent that enforcement of each of the Primary Documents may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. h. NON-CONTRAVENTION. The execution and delivery of this Agreement and each of the other Primary Documents, and the consummation by the Company and the Shareholders of the transactions contemplated by this Agreement and each of the other Primary Documents, does not and will not conflict with or result in a breach by the Company or any Shareholder of any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company, or any material indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Shareholder is a party or by which they or any of their properties or assets are bound, or any existing applicable law, rule, or regulation or any applicable decree, judgment or order of any court or United States or foreign federal or state regulatory body, administrative agency, or any other governmental body having jurisdiction over the Company, any Shareholder or any of their properties or assets. Except as set forth on Schedule 3h, neither the filing of the registration statement required to be filed by the Company pursuant to the Registration Rights Agreement nor the offering or sale of the Securities as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied on or prior to the Closing Date, for or relating to the registration of any shares of the Common Stock. i. APPROVALS. No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, stock exchange or market or the stockholders of the Company is required to be obtained by the Company or any Shareholder for the entry into or the performance of this 5 Agreement and the other Primary Documents provided, however, the performance of this Agreement and the other Primary Documents are subject to compliance with the registration requirements of the Commission. j. SEC FILINGS. Except as set forth in Schedule 3j, none of the reports or documents filed by the Company with the Commission contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein, or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. k. STABILIZATION. Neither the Company, any Shareholder, nor any of their respective affiliates, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock. l. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company's public filings with the Commission, since December 31, 1998, there has been no material adverse change nor any material adverse development in the business, properties, operations, financial condition, prospects, outstanding securities or results of operations of the Company. m. FULL DISCLOSURE. There is no fact known to the Company (other than general economic conditions known to the public generally) that has not been disclosed in writing to the Purchaser (i) that could reasonably be expected to have a material adverse effect upon the condition (financial or otherwise) or the earnings, business affairs, properties or assets of the Company or (ii) that could reasonably be expected to materially and adversely affect the ability of the Company or any Shareholder to perform the obligations set forth in the Primary Documents. n. TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company has good and marketable title to all of its material properties and assets, both real and personal, and has good title to all its leasehold interests, in each case subject only to mortgages, pledges, liens, security interests, conditional sale agreements, encumbrances or charges created in the ordinary course of business. o. PATENTS AND OTHER PROPRIETARY RIGHTS. The Company has sufficient title and ownership of all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for the conduct of its business as now conducted and as proposed to be conducted, and such business does not and would not conflict with or constitute an infringement on the rights of others. p. PERMITS. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now conducted, the lack of which would materially and adversely affect the business or financial condition of the Company. The Company is not in default in any respect under any of such franchises, permits, licenses or similar authority. 6 q. ABSENCE OF LITIGATION. Except as disclosed in the Company's public filings with the Commission, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company threatened against or affecting the Company or any Shareholder, in which an unfavorable decision, ruling or finding would have a material adverse effect on the properties, business, condition (financial or other) or results of operations of the Company or the transactions contemplated by the Primary Documents, or which would adversely affect the validity or enforceability of, or the authority or ability of the Company or any Shareholder to perform its obligations under, the Primary Documents. r. NO DEFAULT. Except as set forth on Schedule 3r, the Company is not in default in the performance or observance of any obligation, covenant or condition contained in any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it or its property may be bound. s. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the Company's public filings with the Commission and as set forth on Schedule 3s, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors or affiliates that, had they existed on December 31, 1998, would have been required to be disclosed in the Company's Annual Report on Form 10KSB for the year ended December 31, 1998. t. EMPLOYMENT MATTERS. The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would have any liability; the Company has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. u. TAXES. All applicable tax returns required to be filed by the Company have been prepared and filed in compliance with all applicable laws, or if not yet filed, have been granted extensions of the filing dates which extensions have not expired, and all taxes, assessments, fees and other governmental charges upon the Company, or upon any of its properties, income or franchises, shown in such returns and on assessments received by the Company to be due and payable have been paid, or adequate reserves therefor have been set up if any of such taxes are being contested in good faith; or if any of such tax returns have not been filed or if any such taxes have not been paid or so reserved for, the failure to so file or to pay would not in the aggregate have a material adverse effect on the business or financial condition of the Company. v. FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any of its directors, officers or other employees has (i) used any Company funds for any unlawful contribution, endorsement, gift, entertainment or other unlawful 7 expense relating to any political activity; (ii) made any direct or indirect unlawful payment of Company funds to any foreign or domestic government official or employee; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other similar payment to any person. w. INTERNAL CONTROLS. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. x. INVESTMENT COMPANY ACT. The Company is not conducting, and will not conduct, its business in a manner which would cause it to become, an "investment company," as defined in Section 3(a) of the Investment Company Act of 1940, as amended. y. AGENT FEES. Other than a $100,000 cash payment to, and warrants to purchase 100,000 shares of Common Stock (which warrants shall be identical in all material respects to the Common Stock Warrants issued to Purchaser) to be issued to, Paul Revere Capital Corp. as placement agent, neither the Company nor any Shareholder has incurred any liability for any finder's or brokerage fees or agent's commissions in connection with the offer and sale of the Securities contemplated by this Agreement. z. PRIVATE OFFERING. Subject to the accuracy of the Purchaser's representations and warranties set forth in Section 2 hereof, (i) the offer, sale and issuance of the Securities, , (ii) the issuance of Common Stock in lieu of interest payments on the Debentures and the Warrant Debentures and (iii) the conversion and/or exercise of the Securities, the Warrant Debentures and the Special Common Stock Warrants into shares of Common Stock, Warrant Debentures or Special Common Stock Warrants, each as contemplated by this Agreement and the other Primary Documents, are exempt from the registration requirements of the Securities Act. The Company agrees that neither the Company nor anyone acting on its behalf will offer any of the Securities or any similar securities for issuance or sale, or solicit any offer to acquire any of the same from anyone in a transaction which, if consummated, would be subject to integration with the offer and sale of Securities contemplated hereunder so as to render the issuance and sale of such securities subject to the registration requirements of the Securities Act. The Company has not offered or sold the Securities by any form of general solicitation or general advertising, as such terms are used in Rule 502(c) under the Securities Act. aa. FULL DISCLOSURE. The representations and warranties of the Company and the Shareholders set forth in this Agreement (and the schedules 8 hereto) do not contain any untrue statement of a material fact or omit any material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading. 4. REPRESENTATIONS OF THE SHAREHOLDERS. The Shareholders, jointly and severally, represent and warrant to the Purchaser that: a. LEGALITY. Each of the Shareholders has the requisite capacity to enter into this Agreement. b. TRANSACTION AGREEMENTS. This Agreement has been duly executed and delivered by each of the Shareholders and is a valid and binding agreement of the Shareholders, enforceable in accordance with its terms, except to the extent that enforcement of this Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. c. NON-CONTRAVENTION. The execution and delivery of this Agreement by the Shareholders and the consummation by the Shareholders of the transactions contemplated by this Agreement does not and will not conflict with or result in a breach by any Shareholder of any material indenture, mortgage, deed of trust or other agreement or instrument to which any Shareholder is a party or by which they or any of their properties or assets are bound, or any existing applicable law, rule, or regulation or any applicable decree, judgment or order of any court or United States or foreign federal or state regulatory body, administrative agency, or any other governmental body having jurisdiction over any Shareholder or any of their properties or assets. d. OWNERSHIP OF CAPITAL STOCK. Schedule 4d sets forth all of the shares of Common Stock and Preferred Stock and all of the Derivative Securities held by the Shareholders. e. APPROVALS. No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, stock exchange or market is required to be obtained by any Shareholder for the entry into or the performance of this Agreement by the Shareholders. f. STABILIZATION. No Shareholder, nor any of their respective affiliates, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock. g. ABSENCE OF LITIGATION. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of any Shareholder, threatened against or affecting any Shareholder, in which an unfavorable decision, ruling or finding would adversely affect the validity or enforceability of, or the authority or ability of any Shareholder to perform its obligations under, this Agreement. 9 h. FULL DISCLOSURE. The representations and warranties of the Shareholders set forth in this Agreement do not contain any untrue statement of a material fact or omit any material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading. 5. CERTAIN COVENANTS AND ACKNOWLEDGMENTS. a. TRANSFER RESTRICTIONS. The Purchaser acknowledges that, except as provided in the Registration Rights Agreement, (1) neither the Common Stock issuable upon conversion of, or in lieu of interest payments on, the Debentures and Warrant Debentures or upon exercise of the Common Stock Warrants and Special Common Stock Warrants, nor the Warrant Debentures and Special Common Stock Warrants issuable upon exercise of the Special Warrants (collectively, the "Underlying Securities") nor the Securities, have been, and are not being, registered under the Securities Act, and may not be transferred unless (A) subsequently registered thereunder or (B) they are transferred pursuant to an exemption from such registration; and (2) any sale of the Securities or Underlying Securities made in reliance upon Rule 144 under the Securities Act may be made only in accordance with the terms of said Rule. The provisions of Section 5(a) and 5(b) hereof, together with the rights of the Purchaser under this Agreement and the other Primary Documents, shall be binding upon any subsequent transferee of the Securities. b. RESTRICTIVE LEGEND. The Purchaser acknowledges and agrees that, until such time as the Securities or the Underlying Securities shall have been registered under the Securities Act and offered and sold in a transaction which complies with such registration or the Purchaser demonstrates to the reasonable satisfaction of the Company and its counsel that such registration shall no longer be required, such securities may be subject to a stop-transfer order placed against the transfer of such securities, and such securities shall bear a restrictive legend in substantially the following form: THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION SHALL NO LONGER BE REQUIRED. c. FILINGS. The Company undertakes and agrees that it will make all required filings in connection with the sale of the Securities and/or Underlying Securities to the Purchaser as required by United States laws and 10 regulations, or by any domestic securities exchange or trading market, and if applicable, the filing of a notice on Form D (at such time and in such manner as required by the Rules and Regulations of the Commission), and to provide copies thereof to the Purchaser promptly after such filing or filings. d. OTC LISTING. The Company agrees and covenants that it will not seek to have trading of its Common Stock in the over-the-counter market suspended or terminated, will use its best efforts to maintain its eligibility for trading quotation on the OTC:BB (including, encouraging one or more broker-dealers to act as "market makers" in the Common Stock on the over-the-counter market and providing all information to such parties as shall be required to maintain such eligibility) and, if such trading of its Common Stock is suspended or terminated, will use its best efforts to requalify its Common Stock or otherwise cause such trading to resume. e. REPORTING STATUS. So long as the Purchaser beneficially owns any of the Securities or the Underlying Securities, the Company shall timely file all reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act and shall not terminate its status as an issuer required to file reports under the Exchange Act or cease such filings, even if the Exchange Act or the rules and regulations thereunder would permit such termination. f. STATE SECURITIES FILINGS. The Company shall from time to time promptly take such action as the Purchaser or any of its representatives, if applicable, may reasonably request to qualify the Securities and the Underlying Securities for offering and sale by the Purchaser under the securities laws (other than United States federal securities laws) of the jurisdictions in the United States as shall be so identified to the Company, and to comply with such laws so as to permit the continuance of sales therein, provided that in connection therewith, the Company shall not be required (i) to qualify as a foreign corporation or to file a general consent to the service of process in any jurisdiction or (ii) to qualify the Securities or the Underlying Securities for offering and sale by the Purchaser in more than five such jurisdictions. g. USE OF PROCEEDS. The Company will use all of the net proceeds from the issuance of the Securities for working capital. h. RESERVATION OF COMMON STOCK; INCREASE AUTHORIZED COMMON STOCK. Concurrently herewith, the Company will reserve for the purpose of issuance upon conversion of, or in lieu of interest payments on, the Debentures and the Warrant Debentures and the exercise of the Common Stock Warrants and Special Common Stock Warrants all shares of Common Stock not currently required to be reserved for other purposes. The Purchaser acknowledges that at the Closing Date the Company had at least 10,982,000 shares of authorized Common Stock available for reservation as required herewith. The Company will use its best efforts to cause its Articles of Incorporation to be amended so as to increase the number of shares of Common Stock authorized for issuance by at least 40 million and, 11 immediately after effecting such amendment, cause to be reserved for the purpose of issuance under the terms of the Securities and Underlying Securities, as applicable, a number of shares of Common Stock that is no less than the Minimum Conversion Shares (as defined in the Registration Rights Agreement) on such date. If on any ten trading days during any 20 consecutive trading day period, the number of shares reserved by the Company pursuant to this provision is less than the Minimum Conversion Shares, the Company will promptly reserve for issuance additional shares of Common Stock so that after reserving such additional shares, the number of shares so reserved is at least equal to the Minimum Conversion Shares on such date. Each Shareholder hereby agrees to vote all shares of Common Stock held by such Shareholder in favor of any resolution submitted to the shareholders of the Company for the purpose of permitting the Company to increase the number of shares of authorized and unissued Common Stock in satisfaction hereof. i. RESTRICTIONS ON CERTAIN FUTURE FINANCINGS. The provisions of this Section 5(i) shall apply at any time during the period commencing on the date hereof and ending on the later of (a) a date that is one hundred and eighty (180) days following the date of effectiveness of the registration statement covering the Common Stock, Common Stock Warrants and Special Common Stock Warrants contemplated by the Registration Rights Agreement (the "Required Registration Statement"); PROVIDED that if the Purchaser shall be unable to sell Registrable Securities (as defined in the Registration Rights Agreement) pursuant to the Required Registration Statement for any number of days after the effectiveness of the Required Registration Statement other than as a result of any action or inaction by the Purchaser, the provisions of this Section 5(i) shall apply for an additional number of days equal to the number of days during which the Purchaser is unable to sell Registrable Securities and (b) the earlier of (x) a date that is one hundred and eighty (180) days following the date the Special Warrant is exercised or (y) the expiration date of the Special Warrant. The Company agrees that if it shall reach an agreement to enter into a transaction to offer to issue or sell any equity securities (including any security convertible into, or exercisable or exchangeable into, or exercisable for, such an equity security) in a financing, the Company will promptly give to the Purchaser written notice, via facsimile, of the terms and conditions of such proposed transaction (the "ROFR Notice"), including the securities proposed to be issued or sold, the proposed consideration, the identity of the proposed offeree and the date (which may not be more than 60 days after such ROFR Notice) on which the proposed transaction is to occur (the "Proposed Sale Date") . Purchaser shall have a right of first refusal to commit to provide the funds pursuant to the terms as outlined in the ROFR Notice. Purchaser shall have ten (10) business days to reply in writing after receipt of the ROFR Notice from the Company. In the event such written reply is not received by the Company within such ten business day period, the Company shall have the right to conclude a transaction within 60 days with the investor or investors provided in the ROFR Notice. j. ADDITIONAL REGISTRATION STATEMENTS. At any time during the period commencing on the date hereof and ending on the later of (a) a date that is one hundred and eighty (180) days following the date of effectiveness of the Required Registration Statement; PROVIDED that if the Purchaser shall be unable to sell Registrable Securities (as defined in the Registration Rights Agreement) pursuant to the Required Registration Statement for any number of days after the effectiveness of the Required Registration Statement other than as a result of any action or inaction by the Purchaser, the provisions of this Section 5(j) shall apply for an additional number of days equal to the number of days during which the Purchaser is unable to sell Registrable Securities and (b) the earlier of (x) a date that is one hundred and eighty (180) days following the date the Special Warrant is exercised and (y) the expiration date of the Special Warrant, 12 the Company agrees that it will not cause any registration statement under the Securities Act (other than the Required Registration Statement and registration statements on Form S-8 covering the sale of not more than an aggregate of 500,000 shares of Common Stock to officers, directors, employees and consultants of the Company) to be declared effective by the Commission. k. AUTHORIZATIONS AND APPROVALS. The Company agrees to use its best efforts (including obtaining any required vote of its stockholders) to obtain any authorization or approval of the issuance of the Common Stock issuable upon conversion of, or in lieu of interest on, the Debentures and the Warrant Debentures and exercise of the Common Stock Warrants and Special Common Stock Warrants, if such authorization or approval is required by any applicable law, rule or regulation (including any Nasdaq rules, if such rules are applicable to the Company). l. RETURN OF DEBENTURES ON CONVERSION AND WARRANTS ON EXERCISE (i) Upon any conversion by the Purchaser of less than all of the aggregate principal amount outstanding under a Debenture or Warrant Debenture pursuant to the terms thereof, the Company shall issue and deliver to the Purchaser within two (2) business days of the later of (x) the Conversion Date for such partial conversion and (y) the date of receipt by the Company of the Debentures or Warrant Debentures so converted, a new certificate or certificates for the principal amount of such Debenture or Warrant Debenture which the Purchaser has not yet elected to convert (with the number of and denominations of such new certificate(s) designated by the Purchaser). (ii) Upon any partial exercise by the Purchaser of the Common Stock Warrants or Special Common Stock Warrants, the Company shall issue and deliver to the Purchaser within two (2) business days of the later of (x) the Conversion Date for such partial exercise or (y)the date of receipt by the Company of the Common Stock Warrants or Special Common Stock Warrants so exercised, new Common Stock Warrants or Special Common Stock Warrants representing the Common Stock Warrants or Special Common Stock Warrants which the Purchaser has not yet elected to exercised, in accordance with the terms thereof. (iii) Upon any partial exercise by the Purchaser of the Special Warrants, the Company shall issue and deliver to the Purchaser within two (2) business days of the later of (x) the Conversion Date with respect to such partial exercise or (y) the date of receipt by the Company of the Special Warrants so exercised, new Special Warrants representing the Special Warrants which the Purchaser has not yet elected to exercise, in accordance with the terms thereof. m. REPLACEMENT DEBENTURES AND WARRANTS. (i) The certificate representing the Debentures or Warrant Debentures held by the Purchaser shall be exchangeable, at the option of the Purchaser, at any time and from time to time at the office of Company, for certificates with different denominations representing an equal aggregate principal amount of Debentures or Warrant Debentures, as the case may be, as requested by the Purchaser upon surrendering the same. No service charge will be made for such registration or transfer or exchange. (ii) The Common Stock Warrants and Special Common Stock Warrants will be exchangeable, at the option of the Purchaser, at any time and from time to time at the office of the Company, for other Common Stock Warrants or Special 13 Common Stock Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable under such Common Stock Warrants or Special Common Stock Warrants. No service charge will be made for such transfer or exchange. (iii) The Special Warrants will be exchangeable, at the option of the Purchaser, at any time and from time to time at the office of the Company, for other Special Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same principal amount of Warrant Debentures and the same number of Special Common Stock Warrants as are purchasable under such Special Warrants. No service charge will be made for such transfer or exchange. n. DIVIDENDS OR DISTRIBUTIONS; PURCHASES OF EQUITY SECURITIES. So long as any Debentures, Warrant Debentures or Special Warrants remain outstanding, the Company agrees that it shall not without the written consent of the holder of a majority in principal amount of such securities (after giving effect to the exercise of the Special Warrants), (a) declare or pay any dividends or make any distributions to any holder or holders of Common Stock, or (b) purchase or otherwise acquire for value, directly or indirectly, any shares of Common Stock or equity security of the Company. o. NO SENIOR INDEBTEDNESS. Until the later of (a) the six month anniversary of the Closing Date and (b) the earlier of (x) the six month anniversary of the exercise of the Special Warrant and (y) the expiration of the Special Warrant, the Company shall not create, incur, assume, guarantee, secure or in any manner become liable in respect of any indebtedness, or permit any liens, claims or encumbrances to exist against the Company or any of its assets unless PARI PASSU or junior to the Debentures and the Warrant Debentures in all respects, except for obligations of the Company under capital leases or purchase money obligations incurred for the purpose of financing all or any part of the purchase price of property (including intellectual property, such as software), plant or equipment used in the business of the Company and except for liens securing such indebtedness (provided such liens are limited to the property subject to such capital lease or acquired with such purchase money financing) and mortgages, deeds of trust, pledges, liens, security interests or other charges or encumbrances for (i) taxes, assessments or governmental charges or levies on property, in each case, not yet due and payable, (ii) arising out of pledges or deposits under laws or regulations pertaining to workmen's compensation, unemployment insurance, old age pensions or other social security or retirement benefits or similar legislation, (iii) securing the performance of bids, tenders, service contracts, statutory obligations and surety bonds in an amount not to exceed $100,000 in the aggregate, (iv) zoning restrictions, easements and rights of restrictions of record on the use of real property, provided such restrictions do not impair the use of the real property, (v) arising by operation of law in favor of the owner or sublessor of leased premises, and (vi) arising from any litigation or proceeding which is being contested in good faith and for which adequate reserves have been set aside. p. MAINTENANCE OF CORPORATE EXISTENCE, PROPERTIES AND LEASES; TAXES. (i) The Company shall maintain in full force and effect its corporate existence, rights and franchises and all material terms of licenses and other rights to use 14 licenses, trademarks, trade names, service marks, copyrights, patents or processes owned or possessed by it and necessary to the conduct of its business. (ii) The Company shall keep each of its properties necessary to the conduct of its business in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all necessary and proper repairs, renewals, replacements, additions and improvements thereto; and the Company shall at all times comply with each material provision of all leases to which it is a party or under which it occupies property. (iii) The Company shall promptly pay and discharge, or cause to be paid and discharged when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, assets, property or business of the Company and all claims or indebtedness (including, without limitation, claims or demands of workmen, materialmen, vendors, suppliers, mechanics, carriers, warehousemen and landlords) which, if unpaid might become a lien upon the assets or property of the Company; PROVIDED, HOWEVER, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall be contested timely and in good faith by appropriate proceedings, if the Company shall have set aside on its books adequate reserves with respect thereto, and the failure to pay shall not be prejudicial in any material respect to the holders of the Securities or the Underlying Securities, and PROVIDED, FURTHER, that the Company will pay or cause to be paid any such tax, assessment, charge or levy forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefor. The Company shall pay or cause to be paid in a timely manner all other indebtedness incident to the operations of the Company. q. BASIC FINANCIAL INFORMATION. The Company shall furnish the following reports to the Purchaser (or any transferee of any Securities or Underlying Securities), so long as the Purchaser (or any such transferee) is a holder of any Securities or Underlying Securities: (i) within forty-five (45) days after the end of each of the quarterly accounting periods in each fiscal year, unaudited consolidated statements of income and retained earnings and cash flows of the Company and its subsidiaries for such quarterly period and for the period from the beginning of such fiscal year to the end of such quarterly period, setting forth in each case comparisons to corresponding periods in the preceding fiscal year, together with consolidated balance sheets of the Company and its subsidiaries as at the end of such quarterly period, which statements will be prepared in accordance with generally accepted accounting principles, consistently applied; (ii) within ninety (90) days after the end of each fiscal year, consolidated statements of income and retained earnings and cash flows of the Company and its subsidiaries for the period from the beginning of each fiscal year to the end of such fiscal year, and consolidated balance sheets as at the end of such fiscal year, setting forth in each case in comparative form corresponding figures for the preceding fiscal year, which statements will be 15 prepared in accordance with generally accepted accounting principles, consistently applied (except as approved by the accounting firm examining such statements and disclosed by the Company), and will be accompanied by a report thereon of certified public accountants. (iii) promptly as legally permitted, any additional reports or other detailed information concerning significant aspects of the operations and condition, financial or otherwise, of the Company and its subsidiaries, given to the Company by its independent accountants; (iv) within ten (10) days after transmission or receipt thereof, copies of all financial statements, proxy statements and reports which the Company sends to its stockholders or directors, and copies of all registration statements and all regular, special or periodic reports which it or any of its officers or directors (in such capacities) files with the Commission or with any securities exchange on which any of the securities of the Company are then listed or proposed to be listed, and copies of material communications sent to or received from directors or committees of the Board of Directors of the Company or any of its subsidiaries and copies of all material communications sent to and received from any lender to the Company; and (v) with reasonable promptness such other information and financial data concerning the Company as any person entitled to receive materials under this Section 5(q) may reasonably request. Notwithstanding the foregoing, so long as the Company is making publicly filed reports under the Exchange Act, the Company's obligations under Section 5(q)(i) and (ii) shall be deemed satisfied. r. NOTICE OF ADVERSE CHANGE. The Company shall promptly give notice to all holders of any Debenture, Warrant Debenture or Special Warrant (but in any event within seven (7) days) after becoming aware of the existence of any condition or event which constitutes, or the occurrence of, any of the following: (i) any Event of Default under the Debentures or Warrant Debentures; (ii) the institution of an action, suit or proceeding against the Company before any court, administrative agency or arbitrator, including, without limitation, any action of a foreign government or instrumentality, which, if adversely decided, could materially adversely affect the business, prospects, properties, financial condition or results of operations of the Company, whether or not arising in the ordinary course of business; or (iii) any information relating to the Company which could reasonably be expected to materially and adversely affect the assets, property, business or condition (financial or otherwise) of the Company or its ability to perform the terms of this Agreement. Any notice given under this Section 5(r) shall specify the nature and period of existence of the condition, event, information, development or circumstance, the anticipated effect hereof and what actions the Company has taken and/or proposes to take with respect thereto. 16 s. COMPLIANCE WITH AGREEMENTS; COMPLIANCE WITH LAWS. The Company shall comply with the material terms and conditions of all material agreements, commitments or instruments to which the Company is a party or by which it may be bound. The Company shall duly comply in all material respects with any material laws, ordinances, rules and regulations of any foreign. federal, state or local government or any agency thereof, or any writ, order or decree, and conform to all valid requirements of governmental authorities relating to the conduct of its businesses, properties or assets, including, but not limited to, the requirements of ERISA, the Environmental Protection Act, the Occupational Safety and Health Act, the Foreign Corrupt Practices Act and the rules and regulations of each of the agencies administering such acts. t. PROTECTION OF LICENSES, ETC. The Company shall maintain, defend and protect to the best of its ability licenses and sublicences (and to the extent the Company is a licensee or sublicensee under any license or sublicense, as permitted by the license or sublicense agreement), trademarks, trade names, service marks, patents and applications therefor and other proprietary information owned or used by it and shall keep duplicate copies of any licenses, trademarks, service marks or patents owned or used by it, if any, at a secure place selected by the Company. u. ACCOUNTS AND RECORDS; INSPECTIONS. (i) The Company shall keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to the business and affairs of the Company in accordance with generally accepted accounting principles applied on a consistent basis. (ii) The Company shall permit each holder of any Securities or Underlying Securities or any of such holder's officers, employees or representatives during regular business hours of the Company, upon reasonable notice and as often as such holder may reasonably request, to visit and inspect the offices and properties of the Company and (i) to make extracts or copies of the books, accounts and records of the Company, and (ii) to discuss the affairs, finances and accounts of the Company, with the Company's directors and officers, its independent pubic accountants, consultants and attorneys. (iii) Nothing contained in this Section 5(u) shall be construed to limit any rights which a holder of any Securities or Underlying Securities (a "Holder") may have with respect to the books and records of the Company, to inspect its properties or to discuss its affairs, finances and accounts. v. WAIVER BY SHAREHOLDERS; NEGATIVE PLEDGE. During the period commencing on the date hereof and terminating on the earlier to occur of (a) the date on which no Common Stock Warrants, Special Common Stock Warrants, Special Warrants, Debentures or Warrant Debentures remain outstanding and (b) the date on which the amendment to the Company's Articles of Incorporation required by Section 5(h) hereof has been declared effective provided that on such date the Company has reserved for issuance pursuant to the terms of the Securities and Underlying Securities a number of shares of Common Stock at least equal to the Minimum Conversion Amount (such period, the "Restriction Period") each Shareholder hereby agrees (i) not to exercise or convert, and hereby waives any rights it may have to exercise or convert, any outstanding Derivative Securities 17 and (ii) not to accept any grants or awards of shares of Common Stock to which such Shareholder may be entitled pursuant to the terms of any plans operated by the Company or any agreement between the Company and such Shareholder. In furtherance of the foregoing, during the Restriction Period, each Shareholder agrees not to assign, sell or otherwise transfer any Derivative Securities owned by it or any right to receive any shares of Common Stock from the Company, and any purported transfer of such Derivative Securities or such rights during the Restriction Period shall be void, and the Company shall not recognize any such transfer, unless the transferee of such Derivative Securities or such rights agrees in writing with the Company and the Purchaser to be bound by the terms hereof. Each Shareholder agrees that, and the Company hereby undertakes to ensure that, during the Restriction Period, each certificate representing Common Stock, Preferred Stock or Derivative Securities held by a Shareholder may be subject to a stop-transfer order placed against the transfer of such securities and each such certificate shall bear a restrictive legend substantially in the following form: THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND ON EXERCISE OR CONVERSION IN ACCORDANCE WITH THE TERMS OF THAT CERTAIN SECURITIES PURCHASE AGREEMENT DATED AS OF SEPTEMBER 30, 1999, A COPY OF WHICH IS AVAILABLE UPON REQUEST FROM THE COMPANY. Notwithstanding the foregoing, the terms of this covenant shall apply to Howard Kaskel only for so long as such individual is an employee or independent contractor of the Company or in any other manner, directly or indirectly, receives payment for services rendered to the Company. w. EXCHANGE OF SHARES OF COMMON STOCK FOR SHARES OF PREFERRED STOCK. On or prior to the Closing Date, each Shareholder shall exchange shares of Common Stock held by such Shareholder for shares of a series of preferred stock with such rights, preferences and designations as shall be acceptable to the Purchaser. The number of shares of Common Stock to be exchanged by each Shareholder is, and the number of shares of Preferred Stock held by each Shareholder after such exchange shall be, as set forth on Schedule 5w. x. SHORT SALES. The Purchaser agrees that it will not enter into any short sale transactions with respect to the shares of Common Stock issuable upon the conversion of the Debentures or Warrant Debentures. y. FURTHER ASSURANCES. From time to time the Company and the Shareholders shall execute and deliver to the Purchaser and the Purchaser shall execute and deliver to the Company and the Shareholders such other instruments, certificates, agreements and documents and take such other action and do all other things as may be reasonably requested by the other party in order to implement or effectuate the terms and provisions of this Agreement and any of the Securities or Underlying Securities. 18 6. TRANSFER AGENT INSTRUCTIONS. a. The Company warrants that no instruction, other than the instructions referred to in this Section 6 and stop transfer instructions to give effect to Sections 5(a) and 5(b) hereof prior to the registration and sale of the Securities and the Underlying Securities in the manner contemplated by the Registration Rights Agreement, will be given by the Company to the transfer agent with respect to these securities and that the Securities and the Underlying Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement, the Registration Rights Agreement and applicable law. Nothing in this Section shall affect in any way the Purchaser's obligations and agreement to comply with all applicable securities laws upon resale of the Securities or Underlying Securities. If the Purchaser provides the Company with an opinion of counsel reasonably satisfactory (as to both the identity of such counsel and the content of such opinion) to the Company and its counsel that registration of a resale by the Purchaser of any of the Securities or Underlying Securities in accordance with clause (1)(B) of Section 5(a) of this Agreement is not required under the Securities Act, the Company shall permit the transfer of the Securities or Underlying Securities and, in the case of the Common Stock, promptly instruct the Company's transfer agent to issue one or more certificates for Common Stock without legend in such names and in such denominations as specified by the Purchaser. b. (i) The Purchaser shall exercise its right to convert the Debentures or Warrant Debentures or to exercise the Common Stock Warrants, Special Common Stock Warrants or Special Warrants by faxing an executed and completed Notice of Conversion or Form of Election to Purchase, as applicable, to the Company, and delivering within two (2) business days thereafter, the original Notice of Conversion (and the related original debentures) or Form of Election to Purchase (and the related original warrants and applicable exercise price) to the Company by hand delivery or by express courier, duly endorsed. Each date on which a Notice of Conversion or Form of Election to Purchase is faxed to and received in accordance with the provisions hereof, if such date is a business day, or, if such date is not a business day, the next business day, shall be deemed a "Conversion Date." The Company will transmit the Warrant Debentures, the Special Common Stock Warrants or the certificates representing the Common Stock issuable 19 upon conversion of any Debenture or Warrant Debenture or upon exercise of any Common Stock Warrants or Special Common Stock Warrants to the Purchaser via express courier as soon as practicable, but in all events no later than three (3) business days after the Conversion Date, provided that if the Notice of Conversion or Form of Election is faxed to and received by the Company in accordance with the provisions hereof after 5:00 p.m. New York City Time on the Conversion Date, such date shall be no later than four (4) business days after the Conversion Date (each such delivery date, is referred to herein as a "Delivery Date") and, in the event of a partial exercise or conversion, shall return any Debentures, Warrant Debentures, Common Stock Warrants, Special Common Stock Warrants or Special Warrants not so exercised or converted in accordance with the provisions of Section 5(l) hereof. For purposes of this Agreement, such conversion of the Debentures or Warrant Debentures or the exercise of the Common Stock Warrants, Special Common Stock Warrants or Special Warrants shall be deemed to have been made immediately prior to the close of business on the Conversion Date. (ii) Notwithstanding anything to the contrary contained herein or in any of the other Primary Documents, in the event of a partial exercise or conversion, during the period commencing when the Purchaser delivers an original Debenture, Warrant Debenture, Common Stock Warrant, Special Common Stock Warrant or Special Warrant to the Company, (or deposits such security with an internationally recognized courier service in accordance with the notice provisions hereof) and terminating when the Purchaser receives the certificates representing the securities not so exercised or converted in accordance with the provisions of Section 5(l) hereof, the Purchaser may convert or exercise the securities required to be issued to the Purchaser in accordance with Section 5(l), notwithstanding the fact that the certificates representing such securities have not yet been issued and delivered to the Purchaser, by transmitting a Notice of Conversion and/or Election to Purchase (substantially in the form attached to the securities delivered to the Company) in accordance with Section 6(b)(i). If securities are converted or exercised in accordance with this Section 6(b)(ii), the Purchaser shall not be required to deliver to the Company the related original certificates until two (2) business days after receipt of such certificates by the Purchaser or, if such certificates have not yet been issued or dispatched for delivery to the Purchaser, such certificates shall be deemed to have been delivered by the Company to the Purchaser and subsequently delivered by the Purchaser to the Company. c. In lieu of delivering physical certificates representing the Common Stock issuable upon the conversion of, or in lieu of interest payments on, the Debentures or Warrant Debentures or the exercise of the Common Stock Warrants or Special Common Stock Warrants, provided the Company's transfer agent is participating in the Depositary Trust Company ("DTC") Fast Automated Securities Transfer program, on the written request of the Purchaser, who shall have previously instructed the Purchaser's prime broker to confirm such request to the Company's transfer agent, the Company shall cause its transfer agent to electronically transmit such Common Stock to the Purchaser by crediting the account of the Purchaser's prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system no later than the applicable Delivery Date. d. The Company understands that a delay in the issuance of Common Stock beyond the applicable Delivery Date could result in an economic loss to the Purchaser. As compensation to the Purchaser for such loss, the Company agrees to pay to the Purchaser for late issuance of Common Stock upon conversion of, or in lieu of interest payments on, the Debentures or Warrant Debentures or upon exercise of the Common Stock Warrants or Special Common Stock Warrants the sum of $5,000 per day for each $100,000 in aggregate principal amount of Debentures or Warrant Debentures that are being converted or all shares of Common Stock issuable in lieu of interest payments on the Debentures or Warrant Debentures or all shares of Common Stock issuable upon the exercise of the Common Stock Warrants or Special Common Stock Warrants (the "Delay Payment Amount") PROVIDED, 20 (A) no Delay Payment Amount shall be due with respect to any day prior to the effective date of the Required Registration Statement, (B) no Delay Payment Amount shall be due with respect to any delay in the issuance of Common Stock upon conversion of the Warrant Debentures or exercise of the Special Common Stock Warrants for any day prior to the date on which the amendment to the Company's Articles of Incorporation required to be filed pursuant to Section 5(h) hereof is effective and (C) the payment by the Company of the Delay Payment Amounts required by this Section 6(d) shall not, and the fact that Delay Payment Amounts are not due under certain circumstances shall not be construed to, relieve the Company of its obligation to deliver Common Stock pursuant to the terms of the Primary Documents. The Company shall pay any payments that are payable to the Purchaser pursuant to this Section 6 in immediately available funds upon demand. Nothing herein shall limit the Purchaser's right to pursue actual damages for failure by the Company to so issue and deliver Common Stock to the Purchaser. Furthermore, in addition to any other remedies which may be available to the Purchaser, in the event that the failure by the Company for any reason to effect delivery of such Common Stock, Special Common Stock Warrants or Warrant Debentures within five (5) business days after the relevant Delivery Date, the Purchaser will be entitled to revoke the relevant Notice of Conversion or Form of Election to Purchase by delivering a notice to such effect to the Company, whereupon the Company and the Purchaser shall each be restored to their respective positions immediately prior to delivery of such Notice of Conversion or Form of Election to Purchase. For purposes of this Section 6, "business day" shall mean any day in which the financial markets of New York are officially open for the conduct of business therein other than the Friday immediately following Thanksgiving Day. 7. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO ISSUE THE SECURITIES. Purchaser understands that the Company's obligation to issue the Securities on the Closing Date to Purchaser pursuant to this Agreement is conditioned upon: a. The accuracy on the Closing Date of the representations and warranties of Purchaser contained in this Agreement as if made on such Closing Date and the performance by Purchaser on or before such Closing Date of all covenants and agreements of Purchaser required to be performed on or before such Closing Date; b. The absence or inapplicability of any and all laws, rules or regulations prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained. 8. CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE THE SECURITIES. The Company and the Shareholders understand that Purchaser's obligation to purchase the Securities is conditioned upon: 21 a. The accuracy on the Closing Date of the representations and warranties of the Company and the Shareholders contained in this Agreement as if made on the Closing Date, and the performance by the Company and the Shareholders on or before the Closing Date of all covenants and agreements of the Company and the Shareholders required to be performed on or before the Closing Date; b. On the Closing Date, the Purchaser shall have received an opinion of counsel for the Company and the Shareholders, dated the Closing Date, in form, scope and substance reasonably satisfactory to Purchaser, to the effect set forth in E attached hereto; c. The Company shall have executed and delivered a signed counterpart to the Registration Rights Agreement, which agreement shall be substantially in the form set forth as Exhibit D attached hereto; d. The Company and the Shareholders shall have effected the exchange of the shares of Common Stock listed on Schedule 5w for an equivalent number of the shares of a series of preferred stock with rights, preferences and designations acceptable to the Purchaser. e. On the Closing Date, the Purchaser shall have received a certificate executed by (i) the President or the Chairman of the Company and (ii) the Chief Financial Officer of the Company, stating that all of the representations and warranties of the Company set forth in this Agreement are accurate as of the Closing Date and that the Company has performed all of its covenants and agreements required to be performed under this Agreement on or before the Closing Date; f. On the Closing Date, the Purchaser shall have received a certificate executed by each Shareholder, stating that all of the representations and warranties of the Shareholder set forth in this Agreement are accurate as of the Closing Date and that the Shareholder has performed all of its covenants and agreements required to be performed under this Agreement on or before the Closing Date; g. On the Closing Date, the Purchaser shall have received from the Company and the Shareholders such other certificates and documents as it or its representative, if applicable, shall reasonably request, and all proceedings taken by the Company or the Shareholders in connection with the Primary Documents as contemplated by this Agreement and the other Primary Documents and all documents and papers relating to such Primary Documents shall be satisfactory to the Purchaser; h. On or prior to the Closing Date, there shall not have occurred any of the following: (i) a suspension or material limitation in the trading of securities generally on the New York Stock Exchange or Nasdaq; (ii) a general moratorium on commercial banking activities in New York declared by the applicable banking authorities; (iii) the outbreak or escalation of hostilities involving the United States, or the declaration by the United States of a national emergency or war; or (iv) a change in international, political, financial or economic conditions, if the effect of any such event, in the 22 reasonable judgment of the Purchaser, makes it impracticable or inadvisable to proceed with the purchase of the Securities on the terms and in the manner contemplated in this Agreement and in the other Primary Documents. 9. EXPENSES. The Company covenants and agrees with the Purchaser that the Company will pay or cause to be paid the following: (a) the reasonable fees, disbursements and expenses of the Purchaser's counsel in connection with the issuance of the Securities payable on the Closing Date, (b) all expenses in connection with registration or qualification of the Securities and Underlying Securities for offering and sale under state securities laws as provided in Section 5(f) hereof, and (c) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section, including the fees and disbursements of the Company's and Shareholders' counsel, accountants and other professional advisors, if any. If the Company or any Shareholder fails to satisfy its obligations or to satisfy any condition set forth in this Agreement as a result of which the Securities are not delivered to the Purchaser on the terms and conditions set forth herein, the Company shall reimburse the Purchaser for any out-of-pocket expenses reasonably incurred in making preparations for the purchase, sale and delivery of the Securities not so delivered. 10. GOVERNING LAW; MISCELLANEOUS This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, without regard to principles of conflict of laws. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement or any of the transactions contemplated hereby, and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on FORUM NON CONVENIENS, to the bringing of any such proceeding in such jurisdictions. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of this Agreement. This Agreement and each of the Primary Documents have been entered into freely by each of the parties, following consultation with their respective counsel, and shall be interpreted fairly in accordance with its respective terms, without any construction in favor of or against either party. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or unenforceability of this Agreement in any other jurisdiction. This Agreement shall inure to the benefit of, and be binding upon the successors and assigns of each of the parties hereto, including any transferees of the Securities or the Underlying Securities and any transferees of securities held by the Shareholders subject to Section 5(v) hereof. This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. 23 11. NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed to the parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by five days advance written notice to each of the other parties hereto. COMPANY: ACCESS POWER, INC. 10033 Sawgrass Dr. West, Suite 100 Ponte Vedra Beach, Florida 32082 Att.: Maurice Matovich Tel.: (904) 273-2980 Fax: (904) 273-6390 WITH A COPY TO: Kilpatrick Stockton, LLP 1100 Peachtree Street Suite 2800 Atlanta, Georgia 30309 Att: Dennis J. Stockwell, Esq. Tel.: (404) 815-6500 Fax: (404 ) 815-6555 24 STOCKHOLDERS: c/o ACCESS POWER, INC. 10033 Sawgrass Dr. West, Suite 100 Ponte Vedra Beach, Florida 32082 Att.: Maurice Matovich Tel.: (904) 273-2980 Fax: (904) 273-6390 WITH A COPY TO: Kilpatrick Stockton, LLP 1100 Peachtree Street Suite 2800 Atlanta, Georgia 30309 Att: Dennis J. Stockwell, Esq. Tel.: (404) 815-6500 Fax: (404 ) 815-6555 PURCHASER: Bamboo Investors LLC c/o WEC Asset Management LLC One World Trade Center Suite 4563 New York, New York 10048 Att.: Ethan E. Benovitz Tel.: (212) 775-9299 Fax: (212) 775-9311 WITH A COPY TO: Kronish Lieb Weiner & Hellman LLP 1114 Avenue of the Americas New York, New York 10036 Att.: Steven Huttler, Esq. Tel.: (212) 479-6136 Fax: (212) 479-6275 25 12. SURVIVAL. The agreements, covenants representations and warranties of the Company, the Shareholders and the Purchaser shall survive the execution and delivery of this Agreement and the delivery of the Securities hereunder. [SIGNATURE PAGE FOLLOWS] 26 IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly executed by each of the undersigned. ACCESS POWER, INC. By: /s/ Glenn Smith Name: Glenn Smith Title: President/CEO /s/ Maurice Matovich MAURICE MATOVICH /s/ Glenn Smith GLENN SMITH /s/ Tod Smith TOD SMITH /s/ Howard L. Kaskel HOWARD L. KASKEL BAMBOO INVESTORS LLC By: WEC Asset Management LLC, Manager By: /s/ Ethan E. Benovitz Name: Ethan E. Benovitz Title: Managing Director 27 EXHIBIT INDEX EXHIBIT A FORM OF DEBENTURE EXHIBIT B FORM OF COMMON STOCK WARRANT EXHIBIT C FORM OF SPECIAL WARRANT EXHIBIT D FORM OF REGISTRATION RIGHTS AGREEMENT EXHIBIT E FORM OF OPINION OF COUNSEL 28 EX-10.3 7 WARRANT TO PURCHASE 6% CONVERTIBLE DEBENTURES THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. ACCESS POWER, INC. WARRANT TO PURCHASE 6% CONVERTIBLE DEBENTURES AND COMMON STOCK WARRANTS The Transferability of this Warrant is Restricted as Provided in Section 2. Void after September 30, 2001 Right to Purchase $1,000,000 Aggregate Principal Amount of 6% Convertible Debentures due 2001 and Warrants to Purchase 200,000 Shares of Common Stock (subject to adjustment) No. 1 PREAMBLE Access Power, Inc. (the "Company"), a Florida corporation, hereby certifies that, for value received, BAMBOO INVESTORS LLC, whose address is One World Trade Center, Suite 4563, New York, New York 10048, or its registered assigns (hereinafter, the "Registered Holder"), is, subject to the terms set forth herein, entitled to purchase from the Company at any time or from time to time before the expiration of this Warrant under Section 15 hereof (such time, the "Expiration Time"), up to (x) $1,000,000 aggregate principal amount of 6% Convertible Debentures due 2001 (the "Warrant Debentures") of the Company, at the purchase price of $1,000 per $1,000 of aggregate principal amount of Warrant Debentures (the "Warrant Debenture Purchase Price") and (y) Warrants (the "Special Common Stock Warrants") to purchase up to 200,000 Shares of Common Stock, at a purchase price of $1 per 2,000 shares subject to such warrants (the "Special Warrants Purchase Price"). Subject to the terms set forth herein, at the election of the Company on not less than seven (7) business days nor more than twenty (20) business days prior written notice (such notice being referred to as the "Mandatory Exercise Notice" and the closing date specified in such notice being referred to as the "Mandatory Closing Date"), the Registered Holder shall at any time or from time to time before the 180th day after the Closing Date be required to exercise this Warrant and purchase up to $1,000,000 aggregate principal amount of Warrant Debentures (minus any such Warrant Debentures previously purchased hereunder), at the Warrant Debenture Purchase Price; provided that the Registered Holder shall not be required to exercise and purchase any such Warrant Debentures if at any time from and after the delivery to the Registered Holder of the Mandatory Exercise Notice through the Mandatory Closing Date (the "Interim Period") any of the Closing Conditions (as defined below) shall not have been satisfied. This Warrant is one of the Warrants to Purchase 6% Convertible Debentures and Common Stock Warrants (the "Warrants") evidencing the right to purchase 6% Convertible Debentures due 2001 of the Company and warrants to purchase Shares of Common Stock of the Company, identical in terms (other than, with respect to the Debentures, the date on which interest will start to accrue) to the debentures and common stock warrants issued pursuant to the Securities Purchase Agreement (the "Securities Purchase Agreement"), dated September 30, 1999, between the Company and the Purchaser and other parties named therein. The Securities Purchase Agreement contains certain additional terms that are binding upon the Company and each Registered Holder of the Warrants. A copy of the Securities Purchase Agreement, including the Exhibits thereto, may be obtained by any Registered Holders of the Warrants from the Company upon written request. Capitalized terms used but not defined herein shall have the meanings set forth in the Securities Purchase Agreement, including the Exhibits thereto. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: (a) The "Closing Bid Price" on any Trading Day shall be (a) if the Common Stock is then listed or quoted on either the OTC: BB, the NASDAQ SmallCap Market or the NASDAQ National Market, the reported closing bid price for the Common Stock as reported by Bloomberg, L.P. ("Bloomberg") or The Wall Street Journal (the "Journal") on such day (or, if not so reported, as otherwise reported by the Nasdaq Small Cap Market, the NASDAQ National Market or the OTC: BB, as the case may be), (b) if the Common Stock is listed on either the American Stock Exchange or New York Stock Exchange, the closing bid price for the Common Stock on such exchange on such day as reported by Bloomberg or the Journal or (c) if neither (a) nor (b) apply but the Common Stock is quoted in the over-the- counter market, another recognized exchange or on the pink sheets, the last reported "bid" price thereof on the date of valuation. (b) The term "Company" includes any corporation which shall succeed to or assume the obligations of the Company hereunder. (c) The term "Common Stock" includes all shares of any class or classes (however designated) of the Company, authorized on or after the date hereof, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on 2 any shares entitled to preference, and the holders of which shall ordinarily be entitled to vote for the election of directors of the Company (even though the right so to vote has been suspended by the happening of a contingency). (d) The term "Major Transaction" shall be deemed to have occurred at such time as any of the following events occurs: (i) the consolidation, merger or other business combination of the Company with or into another person (other than pursuant to migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company); (ii) the sale or transfer of all or substantially all of the Company's assets; or (iii) consummation of a purchase, tender or exchange offer made to the holders of more than 30% of the outstanding shares of Common Stock. (e) The term "Material Adverse Change" means any change, event, result or happening involving, directly or indirectly, the Company or any of its subsidiaries resulting in a material adverse effect on the business, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. (f) The term "Pro Rata Share" shall mean the maximum number of shares of Common Stock subject to Special Common Stock Warrants issuable hereunder multiplied by a fraction, the numerator of which is the aggregate principal amount of Warrant Debentures designated in the Election to Purchase and the denominator of which is aggregate principal amount of Warrant Debentures issuable hereunder. (g) "Trading day" shall mean any day on which the Company's Common Stock is traded for any period on the principal securities exchange or other securities market on which the Common Stock is then being traded. (h) The term "Triggering Event" shall be deemed to have occurred at such time as any of the following events occurs: (i) the failure of the Required Registration Statement to be declared effective by the Securities and Exchange Commission on or prior to the Required Effectiveness Date; (ii) while the Required Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of the Required Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to the holder of Securities or Underlying Securities for sale of the Registrable Securities (as defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five consecutive trading days; (iii) the suspension from listing or the failure of the Common Stock to be quoted on the OTC: BB or listed on the Nasdaq SmallCap Market, the Nasdaq National Market, The New York Stock Exchange, Inc. or The American Stock Exchange, Inc. for a period of five consecutive days; (iv) the Company's notice to any holder of any convertible 3 securities of the Company, including by way of public announcement, at any time, of its intention not to comply with proper requests for conversion of such convertible securities; (v) a material breach by the Company of any representation, warranty, covenant or other term or condition of the Securities Purchase Agreement, the Registration Rights Agreement, this Warrant or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby or hereby; (vi) Glen Smith ceases to hold at least one of the offices of Chief Executive Officer or President of the Company prior to the Expiration Time for any reason other than because of (x) death or disability or (y) resignation or removal, provided that such resignation or removal is with the consent of the holders of at least two-thirds of the aggregate principal amount of Debentures and Warrant Debentures outstanding (after giving effect to the exercise in full of all the outstanding Warrants) or (vii) a Change of Control (as defined in the Warrant Debentures). 1. REGISTRATION RIGHTS. The rights of the holders of Warrants to register Special Common Stock Warrants issuable upon exercise of the Warrants (and the shares of Common Stock issuable upon conversion of, or in lieu of interest payments on, the Warrant Debentures or upon exercise of such special Common Stock Warrants) shall be as stated in the Registration Rights Agreement, which agreement is Exhibit D to the Securities Purchase Agreement. 2. RESTRICTED STOCK. If, at the time of any transfer or exchange of this Warrant, any Warrant Debentures or any Special Common Stock Warrants issuable upon exercise of this Warrant (other than a transfer or exchange not involving a change in the beneficial ownership of this Warrant or any such Warrant Debentures or such Special Common Stock Warrants), such Warrant, such Warrant Debentures or such Special Common Stock Warrants shall not be registered under the Securities Act, the Company's obligation to transfer such Warrant, such Warrant Debentures or such Special Common Stock Warrants shall be subject to the provisions of Section 6 of the Securities Purchase Agreement. 3. EXERCISE OF WARRANT. 3.1. Exercise in Full. The holder of this Warrant may, and shall on the ---------------- Mandatory Closing Date provided the Mandatory Exercise Notice is given and the Closing Conditions are satisfied, exercise this Warrant in full by surrendering this Warrant, with the form of Election to Purchase at the end hereof duly executed by such holder, to the Company in the manner set forth in Section 6 of the Securities Purchase Agreement; provided, that, in no event shall this Warrant be exercised after the Expiration Time. The surrendered Warrant shall be accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in an amount equal to the Warrant Debenture Purchase Price for the full aggregate principal amount of Warrant Debentures then purchasable hereunder plus the Special Warrants Purchase Price for the full number of Special Common Stock Warrants purchasable hereunder. 3.2. Partial Exercise. This Warrant may, and shall on the Mandatory ----------------- Closing Date provided the Mandatory Exercise Notice is given and the Closing Conditions are satisfied as required above, be exercised in part by surrender of 4 this Warrant in the manner provided in Subsection 3.1, except that the exercise price shall be equal to the Warrant Purchase Price for the aggregate principal amount of Warrant Debentures as shall be designated by the holder or the Company, as applicable, in the Election to Purchase plus the Special Warrants Purchase Price for the Pro Rata Share of Special Common Stock Warrants issuable hereunder and, provided, that, in no event shall this Warrant be exercised after the Expiration Time. On any such partial exercise, subject to the provisions of Section 2 hereof, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Registered Holder hereof a new Warrant or Warrants of like tenor, in the name of the Registered Holder hereof or as such Registered Holder may request, calling in the aggregate on the face or faces thereof for the aggregate principal amount of Warrant Debentures and the aggregate number of Special Common Stock Warrants equal to the number of such Warrant Debentures and Special Common Stock Warrants called for on the face of this Warrant minus the number of such Warrant Debentures and Special Common Stock Warrants designated by the Registered Holder or the Company, if applicable, in the applicable Election to Purchase. 3.3. Concurrent Exercise. Notwithstanding anything to the contrary -------------------- contained herein or in any of the other Primary Documents, the Registered Holder hereof may at the same time exercise this Warrant and request conversion of the Warrant Debentures issuable upon such exercise and exercise the Special Common Stock Warrants issuable upon such exercise, notwithstanding the fact that the Warrant Debentures and/or Special Common Stock Warrants have not yet been issued. Such concurrent conversion shall be effected by marking the box labeled Concurrent Exercise/Conversion Elected on the Election to Purchase and transmitting with such Election to Purchase a Notice of Conversion for the Warrant Debentures and/or an Election to Purchase for the Special Common Stock Warrants in the manner set forth in Section 6 of the Securities Purchase Agreement. If concurrent conversion is elected, the exercise of this Warrant, the conversion of the Warrant Debentures and the exercise of the Special Common Stock Warrants shall all be deemed to have been made immediately prior to the close of business on the Conversion Date applicable to the Election to Purchase for this Warrant and the Warrant Debentures and Special Common Stock Warrants issuable upon such exercise shall be deemed to have been issued by the Company and delivered to the Company by the Holder hereof. 3.4 Accelerated Expiration. At the option of the Company and ------------------------ notwithstanding the satisfaction of any Closing Conditions to a mandatory exercise hereunder, if the Company at any time after the first anniversary of the Closing Date presents to Holder a written, bona fide, irrevocable offer from a third party ("Bona Fide Offer") to purchase indebtedness of the Company (through the purchase of a convertible debenture or other evidence of indebtedness of the Company or otherwise) or purchase equity securities of the Company, in each case in an amount equal to not less than the aggregate face amount of Warrant Debentures which a Holder may purchase under this Warrant and all other Warrants outstanding at that time, and in the case of a Bona Fide Offer to purchase indebtedness of the Company, on terms no less favorable to the Company than those of the Warrant Debentures, then this Warrant shall expire at 5:00 p.m., New York City time, on the thirtieth day after the date a copy of the Bona Fide Offer was presented to Holder unless earlier exercised by the Holder. 3.5. Company Acknowledgment. The Company will, at the time of the ----------------------- exercise, exchange or transfer of this Warrant, upon the request of the Registered Holder hereof, acknowledge in writing its continuing obligation to 5 afford to such Registered Holder or transferee any rights (including, without limitation, any right to registration of the Company's shares of Common Stock) to which such Registered Holder or transferee shall continue to be entitled after such exercise, exchange or transfer in accordance with the provisions of this Warrant, provided that if the Registered Holder of this Warrant shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Registered Holder or transferee any such rights. 4. DELIVERY OF WARRANT DEBENTURE AND SPECIAL COMMON STOCK WARRANTS UPON EXERCISE. Following the exercise of this Warrant in full or in part, within the time periods and in the manner provided by Section 6(b) of the Securities Purchase Agreement, the Company, at its expense (including the payment by it of any applicable issue taxes), will cause to be issued in the name of and delivered to the Registered Holder hereof, or as such Registered Holder (upon payment by such Registered Holder of any applicable transfer taxes) may direct, a certificate or certificates for the aggregate principal amount of Warrant Debentures and the aggregate Number of Special Common Stock Warrants to which such Registered Holder shall be entitled on such exercise. The Warrant Debentures to be issued upon exercise hereof shall be substantially in the form attached hereto as Annex C and the Special Common Stock Warrants to be issued hereunder shall be substantially in the form attached hereto as Annex D. 5. CLOSING CONDITIONS. Notwithstanding anything herein to the contrary, the Company shall not be permitted to deliver a Mandatory Exercise Notice, nor shall the Registered Holder be required to exercise and purchase on a Mandatory Closing Date any Warrant Debentures and Special Common Stock Warrants, unless in either case each of the following conditions (each a "Closing Condition, and, collectively, the "Closing Conditions") is satisfied: (i) the Required Registration Statement: (a) shall have been declared effective, (b) shall have remained effective for at least 60 consecutive days after the effectiveness date, (c) shall remain effective at all times during the applicable Interim Period and (d) shall cover resales of the shares of Common Stock issuable upon conversion of the Warrant Debentures and exercise of the Special Common Stock Warrants; (ii) the Closing Bid for the Common Stock shall not be less than $0.35 per share on any Trading Day during the Interim Period; (iii) during the period beginning on the original issue date of this Warrant and ending on and including the applicable Mandatory Closing Date, there shall not have occurred (A) a public announcement of a Major Transaction which has not been abandoned or terminated on or prior to the date the Mandatory Exercise Notice is given or the Mandatory Closing Date, as the case may be, (B) a Triggering Event or (C) a Material Adverse Change; (iv) at all times during the period beginning on the original issue date of this Warrant and ending on and including the applicable Mandatory Closing Date, the Common Stock shall have been quoted on the OTC: BB and the Company shall not have been notified of any pending or threatened proceeding or other action to suspend trading of the Common Stock; (v) the Company's Articles of Incorporation shall be in full force and effect and shall not have been amended since the original issue date of this Warrant other than by any amendment whose sole effect is to increase the authorized Common Stock of the Company or to eliminate the authorized but unissued Series A Preferred Stock from the authorized capital stock of the Company; (vi) the representations and warranties of the Company in the Securities Purchase Agreement shall be true and correct as of the date when made and as of the applicable Mandatory Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and 6 complied with the covenants, agreements and conditions required by the Primary Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date (and the Registered Holder of this Warrant shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the applicable Mandatory Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such holder) and the Registered Holder shall have received all opinions and certificates required pursuant to the terms of the Primary Documents to be delivered on, and dated as of, the Closing Date, in each case delivered on and dated as of the Mandatory Closing Date; (vii) as of the applicable Mandatory Closing Date, the Company shall have available for issuance and shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion or exercise of Securities, the Warrant Debentures and the Special Common Stock Warrants, a number of shares at least equal to the Minimum Conversion Shares, and (viii) no more than 180 days shall have elapsed since the issue date of this Warrant. 6. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its Articles of Incorporation or By-laws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants, as specified herein and in the Securities Purchase Agreement, against dilution or other impairment. 7. Notice of Record Date. In case of (a) any taking by the Company of a record of the holders of any class of its securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or any voluntary or involuntary dissolution, liquidation or winding up of the Company, or (c) events shall have occurred resulting in the voluntary or involuntary dissolution, liquidation or winding up of the Company, then and in each such event the Company will mail or cause to be mailed to each holder of a Warrant a notice specifying (i) the date on which any record is to be taken for the purpose of any such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up, and (iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such 7 proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least thirty (30) days prior to the date specified in such notice on which any such action is to be taken. 8. EXCHANGE OF WARRANTS. On surrender for exchange of any Warrant, properly endorsed, to the Company, the Company, at its expense, will issue and deliver to or (subject to Section 2) on the order of the holder thereof a new Warrant or Warrants of like tenor, in the name of such holder or as such holder (on payment by such holder or any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the aggregate principal amount of Warrant Debentures and number of Special Common Stock Warrants called for on the face or faces of the Warrant or Warrants so surrendered. 9. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor. 10. WARRANT AGENT. The Company may, by written notice to each holder of a Warrant, appoint an agent having an office in New York, New York, for the purpose of issuing Warrant Debentures and Special Common Stock Warrants on the exercise of the Warrants pursuant to Section 3, exchanging Warrants pursuant to Section 8, and replacing Warrants pursuant to Section 9, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. 11. REMEDIES. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that, without prejudice to any other right or remedy to which a holder of a Warrant may be entitled, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise (without establishing the likelihood of irreparable injury or posting bond or other security), and the Company waives in any action or proceeding brought to enforce this Agreement the defense that there exists an adequate remedy at law. 12. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to all of which each Registered Holder or owner hereof by the taking hereof consents and agrees: (a) subject to the terms of Section 5 of the Securities Purchase Agreement, title to this Warrant may be transferred by endorsement (by the Registered Holder hereof executing the form of assignment at the end hereof) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery; (b) any person in possession of this Warrant properly endorsed is authorized to represent himself as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all 8 of his equities or rights in this Warrant in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and (c) until this Warrant is transferred on the books of the Company, the Company may treat the Registered Holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 13. NOTICES. All notices and other communications from the Company to the Registered Holder of this Warrant shall be given in writing and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed, to such address as may have been furnished to the Company in writing by such Registered Holder or, until any such Registered Holder furnishes to the Company an address, then to, and at the address of, the last Registered Holder of this Warrant who has so furnished an address to the Company. 14. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant is being delivered in the State of New York and, except for provisions with respect to internal corporate matters of the Company which shall be governed by the corporate laws of the State of Florida, shall be construed and enforced in accordance with and governed by the laws of the State of New York, without regard to principles of conflict of laws. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. All nouns and pronouns used herein shall be deemed to refer to the masculine, feminine or neuter, as the identity of the person or persons to whom reference is made herein may require. 15. EXPIRATION. The right to exercise this Warrant shall expire at 5:00 p.m., New York time, on September 30, 2001 or on such earlier date as provided in Section 3.4. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the undersigned have executed this Warrant as of September 30, 1999. ACCESS POWER, INC. By /s/ Glenn Smith Name: Glenn Smith Title: President/CEO Annex A FORM OF ELECTION TO PURCHASE The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant, to purchase $_____________ aggregate principal amount of Warrant Debentures and the associated Pro Rata Share of Special Common Stock Warrants and herewith tenders in payment for such securities a certified or official bank check payable in New York Clearing House Funds to the order of ACCESS POWER, INC. in the amount of $__________, all in accordance with the terms hereof. The undersigned requests that a certificate for such Warrant Debentures and Special Common Stock Warrants be registered in the name of _________________________, whose address is _________________________________ and that such Certificate be delivered to ___________________________,whose address is ______________________ Dated: Name: ______________________________________ Signature: _________________________________ (Signature must conform in all respects to the name of the Registered Holder, as specified on the face of the Warrant.) _____________________________________________ (Insert Social Security or Other Identifying Number of Holder) / / Concurrent Exercise/Conversion Elected Annex B FORM OF ASSIGNMENT (TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER DESIRES TO TRANSFER THE WARRANT.) FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers unto _____________________________________________ (Please print name and address of transferee) this Warrant, together with all right, title and interest therein, and does so hereby irrevocably constitute and appoint _____________________ Attorney, to transfer the within Warrant on the books of the within-named Company, with full power of substitution. Dated: Name: ______________________________________ Signature: _________________________________ (Signature must conform in all respects to the name of the Registered Holder, as specified on the face of the Warrant.) (Insert Social Security or Other Identifying Number of Assignee) Annex C FORM OF WARRANT DEBENTURE Annex D FORM OF SPECIAL COMMON STOCK WARRANT EX-10.4 8 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 30, 1999 (this "Agreement"), is entered into by and among ACCESS POWER, INC., a Florida corporation (the "Company") and BAMBOO INVESTORS LLC, a Delaware limited partnership (the "Purchaser"). W I T N E S S E T H: WHEREAS, pursuant to a Securities Purchase Agreement, dated as of September 30, 1999, among the Purchaser, the Company and certain other parties (the "Securities Purchase Agreement"), the Company has agreed to issue and sell to the Purchaser $1,000,000 principal amount of the Company's 6% Convertible Debentures due 2001 (the "Debentures"), Warrants to purchase 200,000 shares of Common Stock of the Company (the "Common Stock Warrants") and Warrants (the "Special Warrants" and, together with the Debentures and the Common Stock Warrants, the "Securities") to purchase $1,000,000 principal amount of the Company's 6% Convertible Debentures due 2001 (the "Warrant Debentures") and Warrants (the "Special Common Stock Warrants") to purchase 200,000 Shares of Common Stock. WHEREAS, pursuant to the terms of the Special Warrants, upon exercise of the Special Warrants, the Company will issue Warrant Debentures and Special Common Stock Warrants to the Purchaser. WHEREAS, pursuant to the terms of the Debentures, the Warrant Debentures, the Special Common Stock Warrants, and the Common Stock Warrants, (i) upon the conversion of, and in lieu of interest payments on, the Debentures and the Warrant Debentures and (ii) upon exercise of the Common Stock Warrants and Special Common Stock Warrants, the Company will issue shares of the Company's common stock, par value $.001 per share (the "Common Stock") (the shares of Common Stock issued or issuable to the Purchaser upon the conversion of, or in lieu of interest payments on, the Debentures and the Warrant Debentures or upon the exercise of the Common Stock Warrants and Special Common Stock Warrants are collectively referred to herein as the "Shares") to the Purchaser. WHEREAS, to induce the Purchaser to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchaser hereby agree as follows: 1. DEFINITIONS. (a) As used in this Agreement, the following terms shall have the following meanings: (i) "Minimum Conversion Shares" on any date means a number of shares equal to the greater of (x) 10,982,000 or (y) at least two (2) times the sum of: (a) the number of shares of Common Stock that are issuable upon conversion of the Debentures on such date, without regard to any limitation on any holder's ability to convert the Debentures, (b) the number of shares of Common Stock that would be issuable upon conversion of the Warrant Debentures on such date, without regard to whether the Special Warrants have been exercised or any limitation on any holder's ability to convert the Warrant Debentures, (c) the number of shares of Common Stock issuable in lieu of interest payments on the Debentures and the Warrant Debentures assuming that all such interest is paid in shares of Common Stock and, if the Special Warrants have not been exercised on or prior to such date, assuming that the Special Warrants were exercised and the Warrant Debentures were issued on such date and (d) the number of shares of Common Stock issuable upon exercise of the Common Stock Warrants and Special Common Stock Warrants, without regard to whether the Special Warrants have been exercised or any limitation on any holder's ability to exercise the Special Common Stock Warrants. (ii) "Register," "Registered," and "Registration" refer to a registration effected by preparing and filing one or more Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the Securities and Exchange Commission (the "Commission"). (iii) "Registrable Securities" means collectively, the Shares, the Common Stock Warrants and the Special Common Stock Warrants. (iv) "Registration Statement" means a registration statement of the Company under the Securities Act. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Securities Purchase Agreement, the Debentures, the Warrant Debentures or the Common Stock Warrants, as the case may be. 2. REGISTRTAION. (a) MANDATORY REGISTRATION. The Company shall prepare and, as soon as practicable but in no event later than thirty (30) days after the Closing Date (the "Required Filing Date"), file with the Commission a Registration Statement on Form SB-2, or an amendment to any pending Registration Statement on Form SB-2 of the Company, covering resales of (a) the Common Stock Warrants the Special Common Stock Warrants and (b) the Minimum Conversion Shares on the filing date. In the event that Form SB-2 is unavailable for such a registration, the Company shall use such 2 other form as is available for such a registration. Such Registration Statement or amended Registration Statement, as the case may be, shall state that, in accordance with Rule 416 under the Securities Act, it also covers such indeterminate number of additional Shares as may become issuable upon conversion of the Debentures or Warrant Debentures or exercise of the Common Stock Warrants or Special Common Stock Warrants (i) to prevent dilution resulting from stock splits, stock dividends or similar transactions and (ii) to the extent consistent with the interpretations of the Commission of such rule at such time, resulting from any adjustment in the applicable Conversion Price of the Debentures and Warrant Debentures or the Exercise Price of the Common Stock Warrants or Special Common Stock Warrants. If for any 10 business days during any 20 consecutive business day period the Minimum Conversion Shares exceed the total number of Shares so registered, the Company shall (i) if such Registration Statement has not been declared effective by the Commission at that time and if the Company does not reasonably believe that it will cause a delay in going effective, amend the Registration Statement filed by the Company pursuant to the preceding portions of this paragraph, to register all of such Minimum Conversion Shares, or (ii) in all other instances, file with the Commission an additional Registration Statement on SB-2 (or, in the event that Form SB-2 is unavailable for such a registration, on such other form as is available) to register all of such Minimum Conversion Shares that have not already been so registered. The Company shall use its best efforts to cause any such Registration Statement or amended Registration Statement, as the case may be, to become effective within the earliest to occur of (i) ninety (90) days following the Closing Date; (ii) if the Commission elects not to conduct a review of the Registration Statement, the date which is five business days after the date upon which either the Company or its counsel is so notified, whether orally or in writing; or (iii) if the Registration Statement is reviewed by the Commission, the date which is five business days after the date upon which the Company or its counsel is notified by the Commission, whether orally or in writing, that the Commission has no further comments with respect to the Registration Statement, or that the Registration Statement may be declared effective. The earliest of such dates is referred to herein as the "Required Effective Date." Notwithstanding the use of the terms "Required Filing Date" and "Required Effective Date" herein, the Company shall at all times use its best efforts to file each required Registration Statement or amendment to a Registration Statement as soon as possible after the Closing Date or after the date the Company becomes obligated to file such Registration Statement or amendment, as the case may be, and to cause each such Registration Statement or amendment to become effective as soon as possible thereafter. Except as set forth on Schedule 2(a), no securities of the Company other than the Registrable Securities shall be included in any such Registration Statement. The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until such date as is the earlier of (i) the date on which all of the Registrable Securities have been sold (ii) the date on which the Registrable Securities (in the opinion of counsel to the Purchaser) may be immediately sold without restriction (including without limitation as to volume by each holder thereof) without registration under the Securities Act and (iii) two years from the effective date of such Registration Statement (the "Registration Period"). 3 (b) PAYMENTS BY THE COMPANY. (i) (A) If the Registration Statement covering the Registrable Securities is not filed in proper form with the Commission on or prior to the Required Filing Date, (B) if the Registration Statement covering the Registrable Securities is not effective on or prior to the Required Effective Date, (C) if the number of Shares reserved by the Company for issuance shall be insufficient for issuance upon the conversion of the Debentures and the exercise of the Common Stock Warrants and, at any time after the 90th day following the Closing Date, the number of Shares reserved by the Company for issuance shall be insufficient for issuance upon the conversion of the Debentures and the Warrant Debentures and the exercise of the Common Stock Warrants and the Special Common Stock Warrants, or (D) upon the occurrence of a Blackout Event (as described in Section 3(f) or Section 3(g) below) (each of the events described in clauses (A) through (D) of this paragraph are referred to herein as a "Registration Default"), the Company will make payments to the Purchaser in such amounts and at such times as shall be determined pursuant to this Section 2(b). (ii) The amount (the "Periodic Amount") to be paid by the Company to the Purchaser for each thirty (30) day period, or portion thereof, during which a Registration Default shall be in effect (each such period, a "Default Period") shall be equal to two percent (2%) of the sum of (a) the principal amount of Debentures and Warrant Debentures outstanding and (b) the principal amount of Debentures and Warrant Debentures converted into shares of Common Stock (the "Purchase Price"); PROVIDED, with respect to any Default Period during which the relevant Registration Defaults shall have been cured, the Periodic Amount shall be PRO RATED for the number of days during such period during which the Registration Defaults were pending; and PROVIDED FURTHER, that the payment of such Periodic Amounts shall not relieve the Company from its continuing obligations to register the Registrable Securities pursuant to Section 2(a). (iii) Each Periodic Amount shall be payable by the Company, in cash or other immediately available funds, to the Purchaser on the last day of each month during which a Registration Default occurred or was continuing, without demand therefor by the Purchaser. If the Company shall not remit the Periodic Amounts payable to the Purchaser as set forth in paragraph (ii) above, the Company will pay the Purchaser reasonable costs of collection, including attorneys' fees, in addition to the Periodic Amounts. (iv) The parties acknowledge that the damages which may be incurred by the Purchaser if the Registration Statement is not filed by the Required Filing Date, if the Registration Statement has not been declared effective by the Required Effective Date, if an insufficient number of shares of Common Stock shall be reserved for issuance, or if the provisions of Section 3(f) or 3(g) become applicable, may be difficult to ascertain. The parties agree that the Periodic Amount represents a reasonable estimate on the part of the parties, as of the date of this Agreement, of the amount of such damages. (c) PIGGYBACK REGISTRATION. (i) If at any time or from time to time, the Company shall determine to register any of its securities, for its own account or the account of any of its 4 shareholders, other than a Registration on Form S-8 or pursuant to an acquisition transaction on Form S-4, the Company will: (A) provide the Purchaser written notice thereof as soon as practicable prior to filing the Registration Statement; and (B) include in such Registration Statement and in any underwriting involved therein, all of the Registrable Securities specified in a written request by the Purchaser made within fifteen (15) days after receipt of such written notice from the Company. (ii) If the Registration is for a registered public offering involving an underwriting, the Company shall so advise the Purchaser as a part of the written notice given pursuant to this Section. In such event, the rights of the Purchaser hereunder shall include participation in such underwriting and the inclusion of the Registrable Securities in the underwriting to the extent provided herein. To the extent that the Purchaser proposes to distribute its securities through such underwriting, the Purchaser shall (together with the Company and any other securityholders of the Company distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section, if the managing underwriter of such underwriting determines that marketing factors require a limitation of the number of shares to be offered in connection with such underwriting, the managing underwriter may limit the number of Registrable Securities to be included in the Registration and underwriting (PROVIDED, HOWEVER, that (a) the Registrable Securities shall not be excluded from such underwritten offering prior to the exclusion of any securities held by officers and directors of the Company or their affiliates, (b) the Registrable Securities shall be entitled to at least the same priority in an underwritten offering as any securities included in such offering by any of the Company's other existing securityholders, and (c) the Company shall not enter into any agreement that would provide any securityholder with priority in connection with an underwritten offering greater than the priority granted to the Purchaser hereunder). The Company shall so advise any of its other securityholders who are distributing their securities through such underwriting pursuant to their respective piggyback registration rights, and the number of shares of Registrable Securities and other securities that may be included in the registration and underwriting shall be allocated among the Purchaser and all other securityholders of the Company in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by the Purchaser and such other securityholders at the time of the filing of the registration statement. If the Purchaser disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company. Any Registrable Securities so excluded or withdrawn from such underwriting shall be withdrawn from such Registration. (d) ELIGIBILITY FOR FORM SB-2. The Company represents and warrants that it meets all of the requirements for the use of Form SB-2 for the Registration of the sale by the Purchaser and any transferee who purchases the Registrable Securities, and the Company shall file all reports 5 required to be filed by the Company with the Commission in a timely manner, and shall take such other actions as may be necessary to maintain such eligibility for the use of Form SB-2. (e) PRIORITY IN FILING. The Company covenants that beginning on the Closing Date and ending on the later of (i) a date that is one hundred and eighty (180) days after the Registration Statement filed pursuant to Section 2(a) of this Agreement becomes effective ( PROVIDED that if, after the effective date of such Registration Statement, the Purchaser shall be unable to sell Registrable Securities pursuant to such Registration Statement for any number of days for any reasons other than as a result of any action or inaction on the part of Purchaser, the provisions of this Section 2(e) shall apply for an additional number of days equal to the number of days during which the Purchaser is unable to sell Registrable Securities pursuant to such Registration Statement) and (ii) the earlier of (x) a date that is one hundred and eighty (180) days following the date the Special Warrant is exercised or (y) the expiration date of the Special Warrant, the Company will not cause any Registration Statement (other than a Registration Statement required by Section 2(a) hereof and registration statements on Form S-8 covering the sale of not more than an aggregate of 500,000 shares of Common Stock to officers, directors, employees and consultants of the Company) to be declared effective by the Commission, without the written consent of the Purchaser. 3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the Registrable Securities, the Company shall do each of the following: (a) Prepare and file with the Commission the Registration Statements required by Section 2 of this Agreement and such amendments (including post-effective amendments) and supplements to the Registration Statements and the prospectuses used in connection with such Registration Statements, each in such form as to which the Purchaser and its counsel shall not have objected, as may be necessary to keep the Registration effective at all times during the Registration Period, and, during the Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all of the Registrable Securities of the Company covered by the Registration Statements until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statements; (b) Furnish to the Purchaser, if the Registrable Securities of the Purchaser are included in the Registration Statement and the Purchaser is listed as a selling security holder in the prospectus which is part of such Registration Statement, and its legal counsel identified to the Company, promptly after the same is prepared and publicly distributed, filed with the Commission, or received by the Company, a copy of the Registration Statement, each preliminary prospectus, each final prospectus, and all amendments and supplements thereto and such other documents, as the Purchaser may reasonably request in order to facilitate the disposition of its Registrable Securities; (c) Furnish to the Purchaser and its counsel copies of any correspondence between the Company and the Commission with respect to any Registration Statement or amendment or supplement thereto filed pursuant to this Agreement; 6 (d) Use all reasonable efforts to (i) register and qualify the Registrable Securities covered by the Registration Statements under such other securities or blue sky laws of such jurisdictions as the Purchaser may reasonably request, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof at all times during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions, provided that in connection therewith, the Company shall not be required to (x) qualify as a foreign corporation or to file a general consent to the service of process in any jurisdiction or (y) qualify the resale of the Registrable Securities in more than five such jurisdictions; (e) List such securities on all national securities exchanges on which any securities of the Company are then listed, and file any filings required by such exchanges; (f) As promptly as practicable after becoming aware of such event, notify the Purchaser of the occurrence of any event, as a result of which the prospectus included in any Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and to use its best efforts to promptly prepare a supplement or amendment to such Registration Statement or other appropriate filing with the Commission to correct such untrue statement or omission, and to deliver a number of copies of such supplement or amendment to the Purchaser as the Purchaser may reasonably request; (g) As promptly as practicable after becoming aware of such event, notify the Purchaser (and, in the event of an underwritten offering, the managing underwriters) of the issuance by the Commission of any stop order or other suspension of the effectiveness of any Registration Statement at the earliest possible time, and to use its best efforts to promptly obtain the withdrawal of such stop order or other suspension of effectiveness (the occurrence of any of the events described in paragraphs (f) and (g) of this Section 3 is referred to herein as a "Blackout Event"); (h) During the period commencing upon (i) the Purchaser's receipt of a notification pursuant to Section 3(f) above or (ii) the entry of a stop order or other suspension of the effectiveness of the Registration Statement described in Section 3(g) above, and ending at such time as (x) the Company shall have completed the applicable filings (and if applicable, such filings shall have been declared effective) and shall have delivered to the Purchaser the documents required pursuant to Section 3(f) above or (y) such stop order or other suspension of the effectiveness of the Registration Statement shall have been removed, the Company shall be liable to remit the payments required to be paid to the Purchaser pursuant to Section 2(b) above; (i) Suspend the use of any prospectus used in connection with any Registration Statement only in the event, and for such period of time as, such a suspension is required by the rules and regulations of the Commission; 7 (j) Enter into such customary agreements for secondary offerings (including a customary underwriting agreement with the underwriter or underwriters, if any) and take all such other actions reasonably requested by the Purchaser in connection therewith in order to expedite or facilitate the disposition of such Registrable Securities. If an underwriting agreement is entered into and the Registrable Securities are to be sold in an underwritten offering the Company shall: (i) make such representations and warranties to the Purchaser and the underwriter or underwriters, in form, substance and scope as are customarily made by issuers to selling stockholders and underwriters in secondary offerings; (ii) cause to be delivered to the sellers of Registrable Securities and the underwriter or underwriters, opinions of independent counsel to the Company (which counsel and opinions shall be reasonably satisfactory in form, scope and substance to Purchaser and the underwriter(s), and their counsel), (A) on and dated as of the effective day of the applicable Registration Statement (and the date of delivery of any Registrable Securities sold pursuant thereto) stating that (x) such Registration Statement complies in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission thereunder, (y) to the best of such counsel's knowledge such Registration Statement does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (z) the documents incorporated by reference in the prospectus accompanying such Registration Statement, at the time they were filed with the Commission or as amended, complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations thereunder and, to the best of such counsel's knowledge when read together with the other information in such prospectus, do not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iii) cause to be delivered, immediately prior to the effectiveness of the applicable Registration Statement (and, at the time of delivery of any Registrable Securities sold pursuant thereto), a "comfort" letter from the Company's independent certified public accountants addressed to the Purchaser and each underwriter, stating that such accountants are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent certified public accountants delivered in connection with secondary offerings; (iv) enter into an underwriting agreement which shall include customary indemnification and contribution provisions to and from the underwriters and procedures for secondary underwritten offerings; (v) deliver such documents and certificates as may be reasonably requested by any purchaser of the Registrable Securities 8 being sold or the managing underwriter or underwriters, to evidence compliance with clause (i) above and with any customary conditions contained in the underwriting agreement; and (vi) deliver to the Purchaser on the effective day of the applicable Registration Statement (and on the date of delivery of any Registrable Securities sold pursuant thereto), a certificate in form and substance as shall be reasonably satisfactory to the Purchaser, executed by an executive officer of the Company and to the effect that all the representations and warranties of the Company contained in the Securities Purchase Agreement are still true and correct except as disclosed in such certificate; (k) Make available for inspection by the Purchaser, their representative(s), any underwriter participating in any disposition pursuant to a Registration Statement, and any attorney or accountant retained by the Purchaser or underwriter, all financial and other records customary for purposes of a Purchaser's and underwriters' due diligence examination of the Company and review of any Registration Statement, all filings made with the Commission subsequent to the Closing, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement, provided that such parties agree to keep such information confidential; (l) Cooperate with the Purchaser to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to any Registration Statement and to enable such certificates for the Registrable Securities to be in such denominations or amounts, as the case may be, as the Purchaser may reasonably request, and registered in such names as the Purchaser may request subject to any restrictions on transfer applicable to such Registrable Securities; and, within three (3) business days after a Registration Statement which includes Registrable Securities is ordered effective by the Commission, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Purchaser) an appropriate instruction and opinion of such counsel; and (m) Permit counsel to the Purchaser to review the Registration Statement and all amendments and supplements thereto within a reasonable period of time (but not less than 5 business days) prior to each filing, and to incorporate those changes, if provided to the Company or its counsel within such 5 business day period, reasonably suggested by such counsel. 4. OBLIGATIONS OF THE PURCHASER. In connection with the registration of the Registrable Securities, the Purchaser shall have the following obligations: (a) Furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities. The intended method or methods of disposition and/or sale (Plan of Distribution) of the Registrable Securities as 9 so provided by the Purchaser shall be included without alteration in any Registration Statement covering the Registrable Securities and shall not be changed without written consent of the Purchaser. At least five (5) business days prior to the first anticipated filing date of any Registration Statement, the Company shall notify the Purchaser of the information the Company requires from the Purchaser if the Purchaser elects to have any of its Registrable Securities included in such Registration Statement; and (b) The Purchaser agrees that, upon receipt of any notice from the Company of the happening of any Blackout Event of the kind described in Section 3(f) or 3(g) above, it will immediately discontinue disposition of its Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such copies of the supplemented or amended prospectus contemplated by Section 3(f) or 3(g) shall be furnished to the Purchaser. 5. EXPENSES OF REGISTRATION. Other than underwriting discounts and commissions, all expenses incurred in connection with registrations, filings or qualifications pursuant to this Agreement, including, without limitation, all registration, listing, and qualification fees, printing and accounting fees, and the fees and disbursements of counsel for the Company, and the reasonable fees of one counsel to the Purchaser with respect to each Registration Statement filed pursuant hereto, shall be borne by the Company. 6. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration Statement under this Agreement: (a) The Company will indemnify and hold harmless the Purchaser, each of its officers, directors and partners, and each person, if any, who controls the Purchaser within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, (ii) any untrue or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the Commission) or the omission or alleged omission to state therein any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state or foreign securities law or any rule or regulation under the Securities Act, the Exchange Act or any state or foreign securities law (the matters in foregoing clauses (i) through (iii) being, collectively, "Violations"). The Company shall, subject to the provisions of Section 6(b) below, reimburse the 10 Purchaser, promptly as such expenses are incurred and are due and payable, for any legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise, including without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which the Purchaser is a party), incurred by it in connection with the investigation or defense of any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (i) apply to any Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) with respect to any preliminary prospectus, inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the final prospectus, as then amended or supplemented, if such final prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (iii) be available to the extent that such Claim is based upon a failure of the Purchaser to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; or (iv) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Purchaser pursuant to Section 9. The Purchaser will indemnify the Company and its officers and directors against any Claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of the Purchaser, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions as are applicable to the Indemnification provided by the Company in this Section 6. (b) Promptly after receipt by an Indemnified Person under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and to the extent that the indemnifying party so desires, jointly with any other indemnifying party similarly notified, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person; PROVIDED, HOWEVER, that an Indemnified Person shall have the right to retain its own counsel with the reasonable fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding. In such event, the Company shall pay for only one legal counsel for the Purchaser, and such legal counsel shall be selected by the Purchaser. The failure to deliver written notice to an indemnifying party 11 within a reasonable time after the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person under this Section 6, except to the extent that the indemnifying party is materially prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. (c) No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Person of an unconditional and irrevocable release from all liability in respect of such claim or litigation. (d) Notwithstanding the foregoing, to the extent that any provisions relating to indemnification or contribution contained in the underwriting agreements entered into among the Company, the underwriters and the Purchaser in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in such underwriting agreements shall be controlling as to the Registrable Securities included in the public offering; PROVIDED, HOWEVER, that if, as a result of this Section 6(d), the Purchaser, its officers, directors, partners or any person controlling the Purchaser is or are held liable with respect to any Claim for which they would be entitled to indemnification hereunder but for this Section 6(d) in an amount which exceeds the aggregate proceeds received by the Purchaser from the sale of Registrable Securities included in a registration pursuant to such underwriting agreement (the "Excess Liability"), the Company shall reimburse the Purchaser for such Excess Liability. 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited under applicable law, the indemnifying party agrees to contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the Indemnified Person on the other hand in connection with the statements or omissions which resulted in such Claim, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the Indemnified Person shall be determined by reference to, among other things, whether the untrue statement of a material fact or the omission to state a material fact on which such Claim is based relates to information supplied by the indemnifying party or by the Indemnified Person, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the forgoing, (a) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation and (b) contribution by any seller of Registrable Securities shall be limited in amount to the net proceeds received by such seller from the sale of such Registrable Securities. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by PRO RATA allocation (even if the Purchaser and any other party were treated as one entity for such purpose) or by any other 12 method of allocation that does not take account of the equitable considerations referred to in this Section. 8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the Purchaser the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the Commission that may at any time permit the Purchaser to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144; (ii) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (iii) furnish to the Purchaser, so long as the Purchaser owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or periodic report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested to permit the Purchaser to sell such securities pursuant to Rule 144 without registration. 9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by the Purchaser to any transferee of all or any portion of the Securities or Shares held by the Purchaser if: (a) such transfer is permitted by the Securities Purchase Agreement and the Purchaser agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the Securities or Shares with respect to which such registration rights are being transferred or assigned; (c) at or before the time the Company receives the written notice contemplated by clause (b) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (d) the transferee of the relevant Securities or Shares complies with the restrictions on the Purchaser set forth in Section 5 of the Securities Purchase Agreement. 10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and holders of 75% of the Registrable Securities from time to time. Any 13 amendment or waiver effected in accordance with this Section 10 shall be binding upon the Purchaser and the Company. 11. MISCELLANEOUS. (a) A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of the instructions, notice or election received from the registered owner of such Registrable Securities. (b) Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed to each of the parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by five days advance written notice to each of the other parties hereto. COMPANY: ACCESS POWER, INC. 10033 Sawgrass Dr. West, Suite 100 Ponte Vedra Beach, Florida 32082 Att.: Maurice Matovich Tel.: (904) 273-2980 Fax: (904) 273-6390 WITH A COPY TO: Kilpatrick Stockton LLP 1100 Peachtree Street Suite 2800 Atlanta, Georgia 30309 Att: Dennis J. Stockwell, Esq. Tel.: (404) 815-6500 Fax: (404) 815-6555 14 PURCHASER: Bamboo Investors LLC c/o WEC Asset Management LLC One World Trade Center Suite 4563 New York, New York 10048 Att.: Ethan E. Benovitz Tel.: (212) 775-9299 Fax: (212) 775-9311 WITH A COPY TO: Kronish Lieb Weiner & Hellman LLP 1114 Avenue of the Americas New York, New York 10036 Att.: Steven Huttler, Esq. Tel.: (212) 479-6136 Fax: (212) 479-6275 (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. (d) This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, except for provisions with respect to internal corporate matters of the Company which shall be governed by the corporate laws of the State of Florida. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding in such jurisdictions. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. This Agreement has been entered into freely by each of the parties, following consultation with their respective counsel, and shall be interpreted fairly in accordance with its terms, without any construction in favor of or against either party. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such validity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. 15 (e) This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than those set forth, or referred to herein and in the other Primary Documents. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. (f) Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. (g) All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. (h) The Company acknowledges that any failure by the Company to perform its obligations under Section 2(a), or any delay in such performance could result in direct damages to the Purchaser, and the Company agrees that, in addition to any other liability the Company may have by reason of any such failure or delay, the Company shall be liable for all direct damages caused by any such failure or delay. IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed. ACCESS POWER, INC. By: /s/ Glenn Smith Name: Glenn Smith Title: President/CEO BAMBOO INVESTORS LLC By: WEC Asset Management LLC, Manager By: /s/Ethan E. Benovitz Name: Ethan E. Benovitz Title: Managing Director 16 EX-10.5 9 SHARE EXCHANGE AGREEMENT SHARE EXCHANGE AGREEMENT THIS AGREEMENT (the "AGREEMENT"), made and entered into as of September 30, 1999, by and among ACCESS POWER, INC., a Florida corporation (the "COMPANY") and Glenn Smith, a resident of Florida (the "SHAREHOLDER"), W I T N E S S E T H : WHEREAS, the Company intends to enter into a Securities Purchase Agreement, dated the date hereof with the purchaser named therein, the Shareholder and certain other shareholders of the Company (the "SECURITIES PURCHASE AGREEMENT"), providing for the issuance of the securities specified therein, including debentures ("DEBENTURES") convertible into, and warrants ("WARRANTS") exercisable for, shares of Common Stock of the Company ("COMMON SHARES"); and WHEREAS, in order to consummate the purchase of the Debentures and Warrants the purchaser thereof is requesting that the Company increase its available authorized but unissued shares of Common Stock; and WHEREAS, the Company must reacquire shares of its Common Stock to increase its authorized Common Stock within the time necessary to consummate the transactions contemplated in the Securities Purchase Agreement; and WHEREAS, Shareholder is willing to exchange Common Shares currently held by Shareholder for Series B Convertible Preferred Stock of the Company ("PREFERRED STOCK"), immediately prior to the closing of the Securities Purchase Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: 1. EXCHANGE OF SHARES. Immediately prior to the closing of the Securities Purchase Agreement: (a) Shareholder will sell, transfer, and assign to Company all of Shareholder's right, title, and interest in and to that number of Common Shares indicated next to his signature below and currently held by Shareholder (the "EXCHANGE SHARES") and shall deliver the certificate(s) representing ownership of the Exchange Shares to the Company at its principal office. (b) The Company shall issue to Shareholder that number of shares of Preferred Stock indicated next to his signature below (the "PREFERRED SHARES") in exchange for the Exchange Shares. 2. CONVERSION OF PREFERRED SHARES. (a) Shareholder shall not be entitled to convert any of the Preferred Shares into Common Shares prior to the expiration of the Restriction Period, as defined in Section 5.v of the Securities Purchase Agreement. (b) Shareholder shall immediately convert all of the Preferred Shares into Common Shares upon the expiration of the Restriction Period, or as soon thereafter as the Company has available Common Shares for issuance upon such conversion. 3. SUCCESSORS AND ASSIGNS. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the Company and Shareholder. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. ACCESS POWER, INC. By: /s/ Tod R. Smith Title: Number of Common Shares to be exchanged: SHAREHOLDER: 2,662,000 /s/ Glenn Smith Print Name: Glenn Smith Number of shares of Series B Convertible Preferred Stock to be issued in exchange: 2,662 Schedule of Agreements A Share Exchange Agreement in this form also was entered into on September 30, 1999 with the below-named officers and directors with respect to the number of shares indicated: Shares of Common Shares of Series B Convertible Name Stock Exchanged Preferred Stock Issued - ---- --------------- ---------------------- Maurice Matovich 450,000 450 Tod Smith 640,000 640 Howard Kaskel* 200,000 200 * Section 2(a) of Mr. Kaskel's agreement varies from the above form and reads as follows: "Shareholder shall not be entitled to convert any of the Preferred Shares into Common Shares until the earlier to occur of (i) the expiration of the Restriction Period, as defined in Section 5.v of the Securities Purchase Agreement, and (ii) such time as the undersigned Shareholder, Howard Kaskel, is not an employee or independent contractor of the Company or in any other manner, directly or indirectly, receives payment for services rendered to the Company." EX-10.6 10 LYCOS AGREEMENT AGREEMENT --------- This Term Sheet is by and between Lycos-Bertelsmann GmbH. a German Corporation with a principal place of business at Carl-Bertelsmann-Strasse, 161L, Postfach 310, D-33311, Gutersloh, Germany, ("Lycos"), and Access Power , Inc. a US company with a principal place of business at 10033 Sawgrass Drive West, Suite 100, Ponte Vedra Beach, FL 32082 USA ("Access Power") Recitals -------- A. Lycos-Bertelsmann is the owner or licensee of certain Pan-European Web services (collectively, the "Lycos-Bertelsmann Services", together with all localized adaptations including operated by Lycos-Bertelsmann' subsidiaries, joint ventures and licensees in Europe, the "Lycos Site"); B. Access Power, Inc. the operator of a Web site accessible through the URL WWW.ACCESSPOWER.COM, (the Access Power site) that provides on-line telecommunications products and services over the Internet Overview - -------- Lycos-Bertelsmann will place banners, promotional buttons, text links and other hyperlinks from Lycos and Tripod to the Access Power site. Terms ----- 1/ Lycos-Bertelsmann' Obligations: ------------------------------- Lycos Advertising Impressions. Lycos shall provide advertising links ----------------------------- promoting the Access Power site within the Lycos sites. Lycos shall provide these advertising impressions in accordance with Lycos' standard advertising terms and conditions. Tripod Advertising Impressions. Lycos shall provide links promoting the ------------------------------ Access Power site for members within the European Tripod Sites). Lycos shall designate Access Power as a PREMIER PARTNER. Impression Guarantees. Lycos guarantees during the term of this ---------------------- agreement it shall provide Access Power with ___________ impressions as follows: (i) __________ impressions in year ___ (as described in Section 1 above) (ii) __________ impressions in year ___ (as described in Section 1 above). Access Power shall have the right, at its own expense, to audit Lycos's books and records for the purpose of verifying impressions served. Such audits will be made not more than once per year, and not less than (10) ten days written notice, during regular business hours, by auditors reasonably acceptable to Lycos. Such audits shall not interfere with Lycos's normal business. In the event that Lycos has not delivered ___________ impressions by the end of the Term, Lycos will continue to deliver impressions until that level of impressions is received. Lycos and Access Power will work together during the term of this Agreement to determine the most effective distribution of the advertising impressions between the Lycos sites and the European Tripod Sites. 2/ Access Power, Inc.'s Obligations: --------------------------------- Integration. Access Power shall provide Lycos with any assistance ----------- requested by Lycos in establishing links between Lycos and the Access Power Site. Lycos Integration Fees. During the period beginning on the Effective ------------------------ Date, Access Power shall pay Lycos-Bertelsmann ________ payable as follows: (i) ________ within __ days of the Effective Date; (ii) four installment payments of _______ due ___________________. Lycos Transaction Fees. In addition to the integration fees outlined ------------------------ above, during the term and for two years thereafter, for a total of four years, Access Power shall owe Lycos-Bertelsmann a percentage of any sales made by users referred to the Access Power Site through the impressions outlined in Section 1. Initially, Access Power shall owe Lycos-Bertelsmann ___ of the Net Sales Revenue. Lycos' percentage of the Net Sales shall be credited dollar for dollar against the integration fee outlined above, until such time as the full amount of the integration fee has been offset. At such time, the percentage share due Lycos shall decrease to ___ of the Net Sales Revenue, and Access Power shall commence paying Lycos its share of the Net Sales Revenue within thirty (30) days of such occurrence. Access Power will promote the Net.Caller service on the Lycos sites. 3/ Term: ----- The term ("Term") of this Agreement shall commence on the Effective Date and continue for two years unless terminated earlier as provided below. The effective date will be the first day of implementation but no later than September 1st 1999. 4/ Marks: Lycos hereby grants to Access Power the non-exclusive, ----- non-transferable right to use the Lycos Marks solely for the purposes of co-branding specified in this Agreement. Access Power hereby grants Lycos the non-exclusive, non-transferable right to use the Access Power 2 Marks solely for the purposes specified in this Agreement. Except as expressly stated herein, neither party shall make any other use of the other party's marks. Upon request of either party, the other party shall provide appropriate attribution of the use of the requesting party's marks. (E.g., "Go Get It R is a registered service mark of Lycos, Inc. All Rights Reserved."). 5/ Representations and Warranties: Each party hereby represents and ------------------------------- warrants as follows: a. Corporate Power. Such party is duly organized and validly ---------------- existing under the laws of the state of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof. b. Due Authorization. Such party is duly authorized to execute ----------------- and deliver this Agreement and to perform its obligations hereunder. c. Binding Agreement. This Agreement is a legal and valid ------------------ obligation binding upon it and enforceable with its terms. The execution, delivery and performance of this Agreement by such party does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it. d. Intellectual Property Rights. Such party has the full and ----------------------------- exclusive right to grant or otherwise permit the other party to access the Access Power Site content and to use the trademarks, logos and trade names as set forth on this Agreement, and that it is aware of no claims by any third parties adverse to any of such property rights. The representations and warranties and covenants in this Section 5 are continuous in nature and shall be deemed to have been given by each party at execution of this Agreement and at each stage of performance hereunder. These representations, warranties and covenants shall survive termination or expiration of this Agreement. 6/ Limitation of Warranty. EXCEPT AS EXPRESSLY WARRANTED IN SECTION 5 ---------------------- ABOVE, EACH PARTY EXPRESSLY DISCLAIMS ANY FURTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. 7/ Indemnification. ---------------- a. Access Power Indemnity. Access Power will at all times ------------------------ indemnify and hold harmless Lycos and its officers, directors, shareholders, employees, accountants, attorneys, agents, successors and assigns from and against any and all third party claims, damages, liabilities, costs and expenses, including reasonable legal fees and expenses, arising out of or related to any breach of any warranty, representation, covenant or agreement made by Access Power in this Agreement. Lycos shall give Access Power prompt written notice of any claim, action or demand for which indemnity is claimed. Access Power shall have the right, but not the obligation, to control the defense and/or settlement of any claim in which it is named as a party. Lycos shall have the right to participate in any defense of a claim by Access Power with counsel of Lycos' choice at Lycos' own expense. The foregoing indemnity is conditioned upon: prompt written notice by Lycos to Access Power of any claim, action or demand for which indemnity is claimed; complete control of the defense and settlement thereof by Access Power; and such reasonable cooperation by Lycos in the defense as Access Power may request. b. Lycos Indemnity. Lycos will at all times defend, indemnify --------------- and hold harmless Access Power and its officers, directors, shareholders, employees, accountants, attorneys, agents, successors and assigns from and against any and all third party claims, damages, liabilities, costs and expenses, including reasonable legal fees and 3 expenses, arising out of or related to any breach of any warranty, representation, covenant or agreement made by Lycos in this Agreement. Access Power shall give Lycos prompt written notice of any claim, action or demand for which indemnity is claimed. Lycos shall have the right, but not the obligation, to control the defense and/or settlement of any claim in which it is named as a party. Access Power shall have the right to participate in any defense of a claim by Lycos with counsel defense of Access Power chosen at its own expense. The foregoing indemnity is conditioned upon; prompt written notice by Access Power to Lycos of any claim, action or demand for which indemnity is claimed; complete control of the defense and settlement thereof by Lycos; and such reasonable cooperation by Access Power in the defense of Lycos may request. 8/ Confidentiality, Press Releases. ------------------------------- a. Non-disclosure Agreement. The parties agree and -------------------------- acknowledge that, as a result of negotiating, entering into and performing this Agreement, each party has and will have access to certain of the other party's Confidential Information (as defined below). Each party also understands and agrees that misuse and/or disclosure of that information could adversely affect the other party's business. Accordingly, the parties agree that, during the Term of this Agreement and thereafter, each party shall use and reproduce the other party's Confidential Information only for purposes of this Agreement and only to the extent necessary for such purpose and shall restrict disclosure of the other party's Confidential Information to its employees, consultants or independent contractors with a need to know and shall not disclose the other party's Confidential Information to any third party without the prior written approval of the other party . Notwithstanding the foregoing, it shall not be a breach of this Agreement for either party to disclose Confidential Information of the other party if required to do so under law or in a judicial or other governmental investigation or proceeding, provided the other party has been given prior notice and the disclosing party has sought all available safeguards against widespread dissemination prior to such disclosure. b. Confidential Information Defined. As used in this ---------------------------------- Agreement, the term "Confidential Information" refers to: (i) the terms and conditions of this Agreement; (ii) each party's trade secrets, business plans, strategies, methods and/or practices; and (iii) other information relating to either party that is not generally known to the public, including information about either party's personnel, products, customers, marketing strategies, services or future business plans. Notwithstanding the foregoing, the term "Confidential Information" specifically excludes (A) information that is now in the public domain or subsequently enters the public domain by publication or otherwise through no action or fault of the other party; (B) information that is known to either party without restriction, prior to receipt from the other party under this Agreement, from its own independent sources as evidenced by such party's written records, and which was not acquired, directly or indirectly, from the other party; (C) information that either party receives from any third party reasonably known by such receiving party to have a legal right to transmit such information, and not under any obligation to keep such information confidential; and (D) information independently developed by either party's employees or agents provided that either party can show that those same employees or agents had no access to the Confidential Information received hereunder. c. Press Releases. Lycos and Access Power will jointly prepare at least one press release concerning the existence of this Agreement and the terms hereof. Otherwise, no public statements concerning the existence or terms of this Agreement shall be made or released to any medium except with the prior approval of Lycos and Access Power or as required by law, except where such information is already clearly in the public domain or the subject of existing jointly approved press releases. 4 9/ Termination. Either party may terminate this Agreement if (a) ----------- the other party files a petition for bankruptcy or is adjudicated bankrupt; (b) a petition in bankruptcy is filed against the other party and such petition is not dismissed within sixty (60) days of the filing date; (c) the other party becomes insolvent or makes an assignment for the benefit of its creditors pursuant to any bankruptcy law; (d) a receiver is appointed for the other party or its business; (e) upon the occurrence of a material breach by the other party if such breach is not cured within thirty (30) days after written notice is received by the breaching party identifying the matter constituting the material breach; (f) after 1 year either party may exercise the right to terminate the agreement under this clause, 9/(f), in which case, Lycos must give 90 days notice to Access Power and agrees to waive any further payments from Access Power. Equally, should Access Power exercise this clause, 9(f), then they shall give 90 days notice to Lycos-Bertelsmann and remain liable for any subsequent monthly guaranteed payments falling due under the terms of this agreement, as well as remain liable to Lycos-Bertelsmann ___ of the Net Sales Revenue on Sales made by the users referred to the Access Power Site through the impressions outlined in Section 1 prior to the termination of the agreement.; (g) by mutual consent of the parties 10/ Force Majeure. In the event that either party is prevented from -------------- performing, or is unable to perform, any of its obligations under this Agreement due to any cause beyond the reasonable control of the party invoking this provision, the affected party's performance shall be excused and the time for performance shall be extended for the period of delay or inability to perform due to such occurrence. 11/ Relationship of Parties. Access Power and Lycos are independent ------------------------ contractors under this Agreement, and nothing herein shall be construed to create a partnership, joint venture or agency relationship between Access Power and Lycos. Neither party has authority to enter into agreements of any kind on behalf of the other. 12/ Assignment, Binding Effect. Neither Lycos nor Access Power may ---------------------------- assign this Agreement or any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other. 13/ Choice of Law and Forum. This Agreement, its interpretation, ------------------------- performance or any breach thereof, shall be construed in accordance with, and all questions with respect thereto shall be determined by, the laws of the Commonwealth of Massachusetts applicable to contracts entered into and wholly to be performed within said state. Access Power hereby consents to the personal jurisdiction of the Commonwealth of Massachusetts, acknowledges that venue is proper in any state or Federal court in the Commonwealth of Massachusetts, agrees that any action related to this Agreement must be brought in a state or Federal court in the Commonwealth of Massachusetts, and waives any objection Access Power has or may have in the future with respect to any of the foregoing. 14/ Good Faith. The parties agree to act in good faith with respect to ---------- each provision of this Agreement and any dispute that may arise related hereto. 15/ Additional Documents/information. The parties agree to sign and/or -------------------------------- provide such additional documents and/or information as may reasonably be required to carry out the intent of this Agreement and to effectuate its purposes. 16/ Counterparts. This Agreement may be executed in multiple ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 17/ No Waiver. The waiver by either party of a breach or a default of --------- any provision of this Agreement by the other party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of either party to exercise or avail itself of any right, power or privilege that it has, or may have hereunder, operate as a waiver of any right, power or privilege by such party. 18/ Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the parties hereto and their respective heirs, successors and assigns. 5 19/ Severability. Each provision of this Agreement shall be severable ------------ from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 20/ Notices. All notice required to be given under this Agreement must ------- be given in writing and delivered either in hand, by certified mail, return receipt requested, postage pre-paid, or by Federal Express or other recognized overnight delivery service, all delivery charges pre-paid, and addressed: If to Lycos-Bertelsmann:Lycos-Bertelsmann-Bertelsmann GmbH & Co KG Carl-Bertelsmann-Strasse, 161L Postfach 315, D-33311 Gutersloh, Germany Fax No.: (+49) 5241 80 61655 Attention: Controller With a copy to: Business Development Director Lycos-Bertelsmann GmbH & Co KG 400-2 Totten Pond Road Waltham MA 02154 Fax No.: (781) 370 2600 If to Access Power, Inc.: Access Power, Inc. 10033 Sawgrass Drive West, Suite 100 Ponte Vedra Beach, FL 32082 Attention: Chief Operating Officer 22/ Entire Agreement. This Agreement contains the entire understanding ---------------- of the parties hereto with respect to the transactions and matters contemplated hereby, supersede all previous agreements between Lycos-Bertelsmann and Access Power concerning the subject matter, and cannot be amended except by writing signed by both parties. No party hereto has relied on any statement, representation or promise of any other party or with any other officer, agent, employee or attorney for the other party in executing this Agreement except as expressly stated herein. 23/ Limitations of Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY ------------------------ BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT (INCLUDING SUCH DAMAGES INCURRED BY THIRD PARTIES), SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR DAMAGES IN EXCESS OF THE AMOUNT RECEIVED BY THE OTHER PARTY UNDER THIS AGREEMENT, PROVIDED THAT THIS SECTION DOES NOT LIMIT EITHER PARTY'S LIABILITY TO THE OTHER FOR (A) WILLFUL AND MALICIOUS MISCONDUCT; (B) DIRECT DAMAGES TO REAL OR TANGIBLE PERSONAL PROPERTY; (C) BODILY INJURY OR DEATH CAUSED BY NEGLIGENCE; OR (D) INDEMNIFICATION OBLIGATIONS HEREUNDER. 6 IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the date set forth above. Access Power, Inc. Lycos Bertelsmann GmbH & CO. By: /s/ Glenn Smith By: /s/ Christoph Mohn Name: Glenn Smith Name: Christoph Mohn Title: CEO Title: CEO Date: July 27, 1999 Date: August 6th 7 EX-10.7 11 CONSULTING AGREEMENT CONSULTING AGREEMENT Agreement made this 4th day of October, 1999, between ACCESS POWER INC. (the "Corporation") and NORTHSTAR ADVERTISING, INC. (the "Consultant"). In consideration of the mutual promises contained in this Agreement, the contracting parties agree as follows: RECITALS: The Corporation desires to engage the services of the Consultant to perform consulting services for the Corporation relating to all phases of the Corporation's public relations in the areas of investor and broker/dealer relations as such may pertain to the operation of the Corporation's business (the "Services"). The Consultant desires to provide the Services to the Corporation. AGREEMENT TERM 1. The respective duties and obligations of the parties shall be for a period of twelve (12) months commencing on the date hereof. This Agreement may be terminated by either of the parties only in accordance with the terms and conditions set forth in Paragraph 7, below. SERVICES PROVIDED BY CONSULTANT 2. Consultant will provide the Services in connection with the Corporation's "public relations" dealings with NASD broker/dealers and the investing public. (At no time shall the Consultant provide services, which would require Consultant to be registered and licensed with any federal or state regulatory body or self-regulatory agency.) During the term of this Agreement, Consultant will provide those services customarily provided by a public relations firm to a Corporation, including but not necessarily limited to the following: (a) Aiding the Corporation in developing a marketing plan directed at informing the public of the business of the Corporation; (b) Providing assistance and expertise in devising an advertising campaign in conjunction with the marketing campaign set forth in (a) above; (c) Advise the Corporation and provide assistance in dealing with institutional investors as it pertains to offerings of the Corporation's securities; (d) Aid and assist the Corporation in its efforts to secure "market makers" to trade the Corporation's common stock by providing such information as may be required; (e) Aid and advise the Corporation in establishing a means of securing nationwide interest in the Corporation's securities; (f) Aid and consult with the Corporation in the preparation and dissemination of press releases and news announcements; (g) Aid and consult with the Corporation in the preparation and dissemination of all "due diligence" package requested by and furnished to NASD registered broker/dealers, and/or other institutional and/or fund managers requesting such information from the Corporation; (h) Aid and consult with the Corporation in providing the necessary due diligence materials in connection with any merger or acquisition the Corporation may contemplate and/or enter into during the term of this Agreement; and (i) Aid and consult with the Corporation with shareholder solicitations. COMPENSATION 3. In consideration for the services provided by Consultant to Corporation, the Corporation shall pay or cause to be delivered to the Consultant, on the execution of this Agreement, the following: (a) 1.3 million shares of FREE TRADING common stock, fully paid and nonassessable, of the Corporation. COMPLIANCE 4. In the event the Shares are not presently trading on any recognized market, the Shares sold to Consultant will, at that particular time, be "free trading," or, if a registration statement is contemplated, the Shares shall have "piggy back" registration rights and will, at the expense of the Corporation, be included in any such registration statement filed pursuant to the Securities Act of 1933, as amended (the "Securities Act"). For purposes of this Agreement, the OTC Bulletin Board shall be deemed to be a recognized market. REPRESENTATION OF CORPORATION 5. The Corporation, upon entering this Agreement, hereby warrants and guarantees to the Consultant that all statements, either written or oral, made by the Corporation to the Consultant are true and accurate, and contain no misstatements of a material fact. The Corporation acknowledges that the information it delivers to the Consultant will be used by the Consultant in preparing materials regarding the Corporation's business, including but not necessarily limited to, its financial condition for dissemination to the public. Therefore, in accordance with Paragraph 6, below, the Corporation shall hold harmless the Consultant from any and all errors, omissions, misstatements, negligent or intentional misrepresentations, in connection with all information furnished by Corporation to Consultant, in accordance with and pursuant to the terms and conditions of this Agreement for the purpose or purposes consistent with the services to be rendered by the Consultant in accordance with the terms of this Agreement. The Corporation further represents and warrants that as to all matters set forth within this Agreement, the Corporation has had independent legal counsel and will continue to retain independent legal counsel to advise the Corporation on all matters concerning, but not necessarily limited to, corporate law, corporate relations, investor relations, all matters concerning and in connection with the Corporation activities regarding the Securities Act, the Exchange Act, and state Blue Sky laws. LIMITED LIABILITY 6. (a) With regard to the services to be performed by the Consultant pursuant to the terms of this Agreement, the Consultant shall not be liable to the Corporation, or to anyone who may claim any right due to any relationship with the Corporation, or any acts or omissions in the performance of services on the part of the Consultant, or on the part of the agents or employees of the consultant, except when said acts or omissions of the Consultant are due to its willful misconduct or culpable negligence. The Corporation shall hold Consultant free and harmless from any obligations, costs, claims, judgments, attorney's fees, and attachments arising from or growing out of the services rendered to the Corporation pursuant to the terms of this Agreement or in any way connected with the rendering of its services, except when the same shall arise due to the willful misconduct or culpable negligence of the Consultant and the Consultant is adjudged to be guilty of willful misconduct or culpable negligence by a court of competent jurisdiction. (b) The Consultant shall use the disclaimer set forth on Exhibit B hereto in all communications related to the Corporation. TERMINATION 7. This Agreement may be terminated by the Corporation upon the giving of not less than sixty (60) days written notice to the Consultant at the address set forth in Paragraph 8, below. In the event this Agreement is terminated by the Corporation, all compensation paid by Corporation to the Consultant shall be deemed earned. Upon termination, the Corporation shall be responsible and shall pay to Consultant any and all fees and costs due and/or accrued by Consultant for and on behalf of the Corporation. NOTICES 8. Notices to be sent pursuant to the terms and conditions of this Agreement shall be sent as follows: AS TO CONSULTANT: Northstar Advertising, Inc. 4545 S. Atlantic Avenue Suite 3106 Daytona Beach, Florida 32127 AS TO CORPORATION: Access Power Suite 100 10033 Sawgrass Drive W. Ponte Vedra Beach, FL 32082 ATTORNEY'S FEES 9. In the event any litigation or controversy, including arbitration, arises out of or in connection with this Agreement between the parties hereto, the prevailing party in such litigation, arbitration or controversy, shall be entitled to recover from the other party or parties, all reasonable attorneys' fees, expenses and of litigation costs, including those associated within the appellate or post judgment collection proceedings. ARBITRATION 10. In connection with any controversy or claim arising out of or relating to this Agreement, the parties hereto agree that such controversy shall be submitted to arbitration, in conformity with the Federal Arbitration Act (Section 9 U.S. Code Section 901 ET SEQ.), and shall be conducted in accordance with the Rules of the American Arbitration Association. Any judgment rendered as a result of the arbitration of any dispute herein, shall upon being rendered by the arbitrators be submitted to a court of competent jurisdiction within the State of Florida or in any state where a party to this action maintains its principal business or is incorporated. GOVERNING LAW 11. This Agreement shall be construed under and in accordance with the laws of the State of Florida, and all obligations of the parties created under it are to be performed in Volusia County, Florida. Further, in any controversy arising out of this Agreement, the venue for said arbitration shall be in Volusia County, Florida, and all parties hereby consent to the venue as the proper jurisdiction for said proceedings provided herein. PARTIES BOUND 12. This Agreement shall be binding on and inure to the benefit of the contracting parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns when permitted by this Agreement. LEGAL CONSTRUCTION 13. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability shall not affect any other provision, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in it. PRIOR AGREEMENT SUPERSEDED 14. This Agreement constitutes the entire Agreement of the contracting parties and supersedes any prior understandings or agreements between the respective parties. This Agreement may only be modified or changed by written agreement signed by all parties hereto. MULTIPLE COPIES OR COUNTERPARTS OF AGREEMENT 15. The original and one or more copies of this Agreement may be executed by one or more of the parties hereto. In such event, all of such executed copies shall have the same force and effect as the executed original, and all of such counterparts taken together shall have the effect of a fully executed original. This Agreement may be signed by the parties and copies hereof delivered to each party by way of facsimile transmission and such facsimile copies shall be deemed original copies for all purposes if original copies of the parties' signatures are not delivered. HEADINGS 16. Headings used throughout this Agreement are for reference and convenience, and in no way define, limit or describe the scope or intent of this Agreement or effect its provisions. IN WITNESS WHEREOF, the parties have set their hands as of the date written above. NORTHSTAR ADVERTISING, INC. By: /S/ RAYLEN FARRA Raylen Farra, President/CEO ACCESS POWER, INC, By: /S/ GLENN SMITH Glenn Smith, President EX-27 12 FDS
5 0001041588 ACCESS POWER, INC. 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 885,191 0 555,222 0 18,815 1,610,366 1,489,096 566,922 2,545,540 1,844,354 0 0 4 27,452 (326,270) 2,545,540 51,649 51,649 315 597,618 0 0 2,833 549,120 0 549,120 0 0 0 549,120 (0.02) (0.02)
-----END PRIVACY-ENHANCED MESSAGE-----