Document:

Exhibit 4.3

 

SHARE EXCHANGE AGREEMENT

 

THIS SHARE EXCHANGE AGREEMENT (this “Agreement”)
is made as of August 25, 2004 by and among CASCADE SLED DOG ADVENTURES, INC., a
Nevada corporation (the “Company”), Sunset Brands, Inc., a Nevada
corporation (“Sunset”), and certain holders of the Company’s Common
Stock, $.001 par value (“Common Stock”) identified on Exhibit 1
attached hereto (each a “Holder” and collectively, the “Holders”).

 

A.            WHEREAS,
the Company has 5,045,658 shares of issued and outstanding Common Stock.

 

B.            WHEREAS,
the Holders have acquired and are the record and beneficial owners of the
number of shares of Common Stock specified in Exhibit 1 attached hereto. 

 

C.            WHEREAS,
the Company and Sunset have entered into an Agreement and Plan of Merger, dated
on or about August 25, 2004 (the “Merger Agreement”) pursuant to which
Sunset will merge with a wholly-owned subsidiary of the Company and the
stockholders of Sunset will become stockholders of the Company (the “Merger”).

 

D.            WHEREAS,
pursuant to the terms of a Confidential Term Sheet, dated on or about August 6,
2004 (together with any supplements or amendments thereto, including the
supplement dated on or about August 23, 2004, the “Term Sheet”), Sunset
is offering up to $6,300,000 in Units (the “Units”), each Unit having a
purchase price of $900 and consisting of 1,000 shares of Series A Redeemable
Convertible Preferred Stock and warrants to purchase an aggregate of 1,000
shares of Common Stock, $0.0001 par value, of Sunset at the following exercise prices:
(i) 500 shares at an exercise price of $1.08 per share, (ii) 250 shares at an
exercise price of $1.20 per share, and (iii) 250 shares at an exercise price of
$1.32 per share (subject to adjustment in certain circumstances);

 

E.             WHEREAS,
as a condition to the closing of the Merger (the “Closing”) and the
other transactions contemplated by the Merger Agreement, Sunset and the Company
have required that 2,218,560 issued and outstanding shares of Common Stock be
cancelled and exchanged for warrants (the “Warrants”) to purchase an
aggregate of 1,000,000 shares of Common Stock at an initial exercise price of
$1.08 per share, in substantially the same form attached hereto as Exhibit A,

 

F.             WHEREAS,
simultaneous with the Closing, the Holders wish to exchange the number of
shares of Common Stock specified after their respective names in Exhibit 1 to this Agreement for the
number Warrants specified after their respective names in Exhibit 1, all in accordance with the
terms of this Agreement.  

 

NOW, THEREFORE,
in consideration of the premises and of the covenants and agreements
hereinafter set forth and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereby covenant
and agree as follows:

 

1.                                       Agreement
to Convert Common Stock.  

 

1.1           Cancellation and Exchange of
Common Stock.  

 

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(a)           Cancellation
and Exchange.  Each of the Holders
hereby agrees that simultaneously with the Closing, the number of shares of
Common Stock held by such Holder and set forth after such Holder’s name on Exhibit
1 attached hereto (along with any right to declared but unpaid dividends,
preferences or distributions (collectively, the “Tendered Shares”) shall be
automatically cancelled and exchanged for the right to receive Warrants to
purchase the number of shares of Common Stock specified after such Holder’s
name in Exhibit 1 attached hereto (collectively, the “Conversion Securities”).

 

(b)           Irrevocable
Election.  Holder agrees that the
decision to convert the Tendered Shares pursuant to this Agreement is
irrevocable and is contingent solely upon Closing of the Merger.  Each Holder agrees that, without the prior
written consent of the Company and Sunset, following the date of this Agreement
until the earlier of (i) Closing of the Merger or (ii) termination of the
Merger Agreement in accordance with its terms for reasons other than a breach
by the Company, such Holder shall not (A) elect to convert the Tendered Shares
into any other security of the Company other than pursuant to this Agreement,
or (B) directly or indirectly sell, assign, hypothecate or otherwise transfer
or purport to transfer all or any portion of the Tendered Shares (or securities
issuable upon conversion thereof). 
Effectiveness of any sale, assignment or transfer of any Tendered Shares
that is approved in writing by the Company and Sunset shall be contingent upon
the new Holder agreeing in writing to be bound by the terms of this Agreement.

 

(c)           Cancellation
of Tendered Shares.  Each Holder
agrees that, as of the Closing, (i) the Tendered Shares shall be deemed
cancelled, and (ii) the Holder shall have no rights with respect to the
Tendered Shares other than to surrender the original stock certificate(s) representing
such Tendered Shares (the “Certificate(s)”) for conversion and to
receive the number of Warrants specified after such Holder’s name in Exhibit 1 in exchange therefor.  Prior to the Closing, Holder shall deliver
the Certificate(s) to the Company (or its designee) duly endorsed for transfer
to the Company.  Promptly following the
Closing, the Company shall deliver or cause its transfer agent to deliver to
each Holder, the number of Warrants specified after such Holder’s name in Exhibit 1; provided, however, that to
the extent that any Holder does not deliver the Certificate(s) prior to
Closing, upon surrender of the duly endorsed original Certificate(s) to the
Company (or its designee), the Holder shall be entitled to receive (and the
Company shall promptly issue or cause to be issued) in exchange therefor the
number of Warrants specified after such Holder’s name in Exhibit 1.

 

(d)           Lost
Certificates.  In the event that any
Certificate(s) has been lost or destroyed, the Holder of the Tendered Shares
represented by such Certificate(s), as a condition to receipt of any Conversion
Securities in exchange therefore, execute and deliver to the Company an
indemnity agreement, in such customary form as is reasonably acceptable to the
Company and Sunset, indemnifying the Company for any loss or damages resulting
from or arising out of the loss of such Certificate(s).

 

1.2           Piggy-Back Registration Rights.  Holder shall have the following registration
rights with respect to (i) all shares of Common Stock owned by such Holder
immediately following the Closing, and (ii) the shares of Common Stock
underlying the Conversion Securities acquired pursuant to the terms of this
Agreement:

 

(a)           Registration.  In the event that the Company files a
registration statement with the Securities and Exchange Commission (“Commission”)
at any time following the Closing, the Company will give written notice to
Holder of such filing at least thirty (30) days prior to the effective date of
such registration statement.  Upon the
written request of the Holder that is received by the Company at least ten (10)
business days prior to effectiveness of such registration statement, the

 

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Company will cause (i) all shares of Common Stock owned by such Holder
immediately following the Closing and (ii) all shares of Common Stock issued or
issuable upon conversion or exercise of such Holder’s Conversion Securities
(collectively, the “Shares”) to be included in the registration
statement, to the extent necessary to legally permit the resale or other
disposition of Shares by the Holder. 
Nothing herein shall require the Company to file any registration
statement and the Company may withdraw such registration statement at any
time.  In addition, nothing herein shall
entitle Holder to participate in any registration if such Holder’s
participation is prohibited under applicable law (including Commission rules
and regulations).

 

(b)           Underwritten
Offering.  If the registration is for
a public offering involving an underwriting, Company will so advise Holder as a
part of its written notice.  In such
event, the right of Holder to registration pursuant to this Section 1.2 is
conditioned upon Holder’s participation in the underwriting and the inclusion
of Holder’s Shares in the underwriting to the extent provided herein.  Holder will enter into (together with Company
and the other shareholders distributing their securities through the
underwriting) an underwriting agreement with the underwriter or underwriters
selected by Company for the underwriting provided that the underwriting
agreement is in customary form and is reasonably acceptable to Holders of a
majority of all Shares issued or issuable upon conversion of Conversion
Securities.

 

(c)           Cut
Back at Request of Underwriter. 
Notwithstanding any other provision of this Section, if the managing
underwriter of an underwritten distribution advises Company and Holder in
writing that in its good faith judgment the number of Shares and the other
securities requested to be registered exceeds the number of Shares and other
securities which can be sold in the offering, then (i) the number of Shares so
requested to be included in the offering will be reduced to that number of
Shares which in the good faith judgment of the managing underwriter can be sold
in the offering, and (ii) the reduced number of Shares will be allocated among
all Holders electing to have their Shares registered with such allocation being
made on a pro rata basis based on the relative percentage of Shares requested
to be registered by all Holders.  All
Shares and other securities which are excluded from the underwriting by reason
of the underwriter’s marketing limitation and all other Shares not originally
requested to be so included will not be included in the registration and will
be withheld from the market by Holder for a period, not to exceed 180 days,
which the managing underwriter reasonably determines is necessary to effect the
underwritten public offering.

 

(d)           Registration
Procedures.  In connection with the
registration of Shares, Company, at its expense, will:

 

(i)            In
accordance with the Securities Act and all applicable rules and regulations,
prepare and file with the Commission a registration statement on Form S-1, S-2,
S-3, SB-2, or S-4 (or any successor form which is intended to replace, or to
apply to similar transactions as, such forms) or such other form as the Company
may reasonably determine, with respect to the Shares;

 

(ii)           If
the offering is to be underwritten in whole or in part, enter into a customary
written underwriting agreement in form and substance reasonably satisfactory to
the managing underwriter of the public offering;

 

(iii)          Furnish
to Holder such number of copies of the registration statement and each
amendment and supplement thereto, preliminary prospectus, final prospectus and
such other documents as the underwriters and Holder may reasonably request in
order to facilitate the public offering of the securities registered;

 

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(iv)          Notify
Holder of the filing of, such amendments or supplements to the registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to the securities is
required to be delivered under the Securities Act, any event has occurred as
the result of which the prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading;

 

(v)           In
case Holder or any underwriter for Holder is required to deliver a prospectus
at a time when the prospectus then in circulation is not in compliance with the
Securities Act or the rules and regulations of the Commission, prepare upon
request such amendments or supplements to such registration statement and such
prospectus as may be necessary in order for the prospectus to comply with the
requirements of the Securities Act and such rules and regulations; and

 

(vi)          Advise
Holder, after it receives notice or obtains knowledge thereof, of the issuance
of any stop order by the Commission suspending the effectiveness of the
registration statement or the initiation or threatening of any proceeding for
that purpose and promptly use its commercially reasonable efforts to prevent
the issuance of any stop order or to obtain its withdrawal if a stop order
should be issued.

 

(e)           Expenses.

 

(i)            With
respect to each inclusion of Shares in a registration statement pursuant to
this Agreement, Company will bear all fees, costs and expenses of and
incidental to the registration and the public offering in connection therewith;
provided, however, that Holder will bear its pro rata share of any underwriting
discounts and/or commissions.

 

(ii)           The
fees, costs and expenses of registration to be borne as provided in this
Section, include, without limitation, all registration, filing and NASD fees,
exchange fees (if any), printing expenses, fees and disbursements of accountants
and counsel for Company (but excluding any fees or disbursements of counsel for
Holder), fees and disbursements of counsel for the underwriter or underwriters
of such securities (if Company and/or selling security shareholders are
otherwise required to bear such fees and disbursements).

 

(f)            Indemnification.

 

(i)            Company
will indemnify and hold harmless pursuant to the provisions of this Agreement,
Holder and each of Holder’s officers, directors, partners, legal counsel and
accountants, and each person who controls Holder within the meaning of the
Securities Act and any underwriter (as defined in the Securities Act) for
Holder, and any person who controls such underwriter within the meaning of the
Securities Act, from and against, and to reimburse Holder, its officers,
directors, partners, legal counsel, accountants and controlling persons and
each underwriter and controlling person of such underwriter with respect to,
any and all claims, actions (actual or threatened), demands, losses, damages,
liabilities, costs and expenses to which Holder, its officers, directors,
partners, legal counsel, accountants or controlling persons or any such
underwriter or controlling person of such underwriter may become subject under
the Securities Act or otherwise, insofar as such claims, actions, demands,
losses, damages, .liabilities, costs or expenses arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in light of
the circumstances in which they were made;

 

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provided, however, that Company will not be liable in any such case to
the extent that any claim, action, demand, loss, damage, liability, cost or
expense is caused by an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with written information
furnished by Holder, such underwriter or such controlling person specifically
for use in the preparation thereof.

 

(ii)           Holder
will indemnify and hold harmless Company, its officers, directors, legal
counsel and accountants, any underwriter and each person who controls Company
or any underwriter within the meaning of the Securities Act, from and against,
and agrees to reimburse Company, its officers, directors, legal counsel,
accountants and controlling persons, any underwriter with respect to, any and
all claims, actions, demands, losses, damages, .liabilities, cots or expenses
to which Company, its officers, directors, legal counsel, accountants, such
controlling persons, or any underwriter may become subject under the Securities
Act or otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue statement
of any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto or are caused by the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case, to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
conformity with written information furnished by Holder specifically for use in
the preparation thereof.  Notwithstanding
the foregoing, Holder will not be obligated hereunder to pay more than the
net-proceeds realized by it upon its sale of Shares included in such
registration statement.

 

(g)           Restrictions.  Shares will only be treated as eligible for
registration under this Section 1.2 if and so long as they (i) have not been
sold to or through a broker or dealer or underwriter in a public distribution
or a public securities transaction, or (ii) have not been sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect to such Shares are removed upon the
consummation of such sale.  In addition,
any right to have Shares registered and any obligation of the Company to effect
or maintain such registration shall terminate at such time as the Shares may be
sold in reliance on Rule 144 of the Securities Act.

 

(h)           Information.  Holder will furnish Company with such
information with respect to Holder and the Shares as Company may from time to
time reasonably request in writing and as may be required by law or by the
Commission.  In the event Holder fails or
refuses to provide such requested information in a timely manner, the Company
shall have the right to exclude such Holder’s Shares from the registration
statement.

 

2.             Representations
and Warranties of Holder. 
Holder hereby represents, warrants and agrees with the Company and
Sunset that:

 

2.1           Authorization; Outstanding Common
Stock.  Holder
has full power and authority to enter into the Agreement.  The Agreement, when executed and delivered by
Holder, will constitute a valid and legally binding obligation of Holder,
enforceable in accordance with its terms.  Holder is the only person with a direct or
indirect interest in the Tendered Shares being converted into Conversion
Securities under this Agreement.  Neither
the Tendered Shares nor any interest therein has been sold, assigned,
transferred or hypothecated by Holder and Holder has not entered into any
agreement or arrangement to sell, assign, transfer or hypothecate all or any
portion of the Tendered Shares.  The
Tendered Shares are owned, beneficially and of record, by Holder free and clear
of any claims, liens or encumbrances. 
The information contained in Exhibit
1, attached hereto, regarding Holder, his or its

 

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address and share ownership is complete and accurate and the Company
and Sunset may rely on such information in issuing the Conversion Securities.

 

2.2           Accredited
Investor.  Holder
is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities
Act”).  Holder is experienced in
evaluating and investing in securities of companies in a similar stage of
development and is able to fend for himself or itself and can bear the economic
risk of an investment in the Conversion Securities and underlying Shares.  

 

2.3           Disclosure
of Information and Risks.  Holder has a preexisting
relationship with, and has extensive knowledge of, the Company.  Holder has had an opportunity to ask
questions and receive answers from the Company and Sunset with respect to the
Merger and related transactions, including (without limitation) the Company’s
proposed acquisition of Low Carb Creations, Inc. (“LCC”) following the
closing of the Merger (the “LCC Acquisition”).  Holder has had an opportunity to review any
requested documentation regarding the terms of the Merger, the LCC Acquisition
and related transactions, as well as the business, properties, prospects and financial
condition of the Company.  Holder acknowledges and agrees that Holder
has previously received a copy of the Term Sheet, and is aware that an
investment in the Conversion Securities as a result of the exchange of Common
Stock contemplated hereby involves significant risks including those described
in this Agreement and in the Term Sheet under “Risk Factors.”  Among other things, Holder acknowledges and
agrees that there can be no assurance that the LCC Acquisition will be
completed in a timely manner or, if completed, the Company will be able to
successfully operate LCC or execute its business plan.  Holder has been advised to consult, and has
had an opportunity to consult, with Holder’s own counsel and/or tax or other
advisors regarding the transaction contemplated by this Agreement.  

 

2.4           Specific Risk Awareness.  Holder
confirms that Holder understands and has fully considered the risks of the
exchange of Tendered Shares contemplated by this Agreement and the resulting
investment in the Conversion Securities and underlying Shares.  By agreeing to exchange the Tendered Shares
for the Conversion Securities, Holder acknowledges and agrees that if Holder
elects to exercise convert all or any portion of the Conversion Securities into
Shares, Holder will hold only a small percentage of the total issued and
outstanding shares of Common Stock of the Company following completion of the
Merger and, as a result, will be bound by decisions made by holders of a
majority of such outstanding shares.  In
addition, Holder acknowledges, confirms, and agrees that (a) an investment in
Conversion Securities (and underlying Shares) is suitable only for an investor
who is able to bear the economic consequences of losing his or its entire
investment, (b) investment in the Conversion Securities is highly speculative
and involves a high degree of risk of loss by Holder of his or its investment,
(c) Holder is able to bear the economic risk of this investment, and (d) Holder
may be required to hold the Conversion Securities and/or underlying Shares for
an indefinite period of time.  

 

2.5           Purchase Entirely for Own Account.  This
Agreement is made with Holder in reliance upon Holder’s representation to the
Company and Sunset, which by Holder’s execution of this Agreement Holder hereby
confirms, that the Conversion Securities (and underlying shares of Common
Stock) to be acquired by Holder will be acquired for investment for Holder’s
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof (other than sales in accordance with
applicable state and federal securities laws). 
By executing this Agreement, Holder further represents that Holder does
not presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to any of the Conversion Securities (or underlying shares
of Common Stock) and Holder has

 

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not been formed for the specific purpose of acquiring
the Conversion Securities or underlying shares of Common Stock.

 

2.6           No
Public Market.  Holder understands that there
can be no assurance that a liquid public market for the Warrants or the Common
Stock underlying the Warrants will ever exist.

 

2.7           Restricted Securities.  Holder
understands that the Warrants and the Common Stock issuable upon exercise of
the Warrants) have not been, and will not be, registered under the Securities
Act by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of Holder’s representations as expressed
herein.  Holder understands that the Warrants and the Common Stock underlying the
Warrants will be “restricted securities” under applicable U.S. federal and
state securities laws and regulations, and that pursuant to these laws, Holder
must hold the Warrants and Common Stock underlying the Warrants indefinitely
unless they are registered with the Commission and qualified by state
authorities or an exemption from such registration and qualification
requirements is available.  Holder
acknowledges that the Company has no obligation to register or qualify the
Conversion Securities or underlying shares of Common Stock for resale other
than in accordance with the terms of this Agreement.  Holder further acknowledges that if an
exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Warrants and shares of Common Stock
underlying the Warrants, and requirements relating to the Company which are
outside of Holder’s control and which the Company is under no obligation, and
may not be able, to satisfy.

 

2.8           Legends.   It is understood and agreed that the Warrants
and the shares of Common Stock underlying the Warrants, and any securities
issued in respect thereof or exchange therefor, may bear a legend substantially
the same as the following legend as well as any legend required by the Blue Sky
laws of any state of the United States to the extent such laws are applicable
to the Shares represented by the certificate so legended:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT AND LAWS.”

 

3.             Release
of Claims.  Each Holder hereby
waives, releases and discharges the Company, Sunset and its successors,
representatives, subsidiaries, assigns, agents, officers, directors, and
employees, and each of them (herein collectively the “Releasees”), of
and from any and all claims, debts, liabilities, demands, obligations, costs,
expenses, actions and causes of action, of every nature, character and description,
known or unknown, relating to the offer, sale or issuance of the Tendered
Shares or any other obligations or securities of the Company (collectively, “Released
Claims”), which Holder now owns or holds, or has at any time heretofore
owned or held, in any way relating to any prior agreements, arrangements or
understandings between Holder and any Releasee, except for any claims arising
under the terms of this Agreement, the Merger Agreement, or Holder’s rights as
a holder of the Tendered Shares.  Holder agrees
that to forever refrain and forbear from commencing, instituting or prosecuting
any lawsuit, action or other proceeding against any Releasees based on, arising
out of, or in connection with any Released Claim.

 

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Each Holder hereby waives and relinquishes all rights
and benefits afforded by Section 1542 of the Civil Code of the State of
California with respect to the Released Claims. 
Holder understands that the facts in respect of which the release made
in this Agreement are given may hereafter turn out to be other than or
different from the facts in that connection now known or believed by Holder to
be true, and Holder hereby accepts and assumes the risk of the facts turning
out to be different and agrees that this release shall be and remain in all
respects effective and not subject to termination or rescission by virtue of
any such difference in facts.

 

Section 1542 of the Civil Code of the State of
California reads as follows:

 

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.” 

 

4.             Indemnification
of Company and Sunset Each Holder agrees to indemnify and hold harmless the
Company, Sunset and each of their respective officers, directors, agents,
attorneys, accountants and affiliates from and against all damages, losses,
costs and expenses (including reasonable attorneys’ fees) that they may incur
by reason of the failure of Holder to fulfill any of the terms or conditions of
this Agreement, or by reason of any breach of the representations and
warranties made by Holder herein or in any other document provided by Holder to
the Company or Sunset in connection with the transactions contemplated hereby.
Holder understands and agrees that, in addition to any other remedies available
to the Company under this Agreement, the Merger Agreement, or under applicable
law, in the event of any breach of Holder’s representations or warranties
contained in Section 2.1, the Company may (or may cause its transfer agent to)
issue stop transfer instructions with respect to any of the Conversion
Securities.

 

5.             Nontransferability
of Agreement.  This Agreement is not
transferable or assignable by a Holder without the written consent of the
Company and Sunset.

 

6.             Holders’
Joint and Several Liability.  If more
than one person is executing this Agreement as a Holder, the obligations of
each shall be joint and several and the representations and warranties
contained in this Agreement shall be deemed to be made by, and be binding upon,
each of those persons and his or her heirs, executors, administrators,
successors and assigns.

 

7.             Successors and Assigns.  The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any of the Tendered Shares or Conversion Securities).  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.

 

8.             Governing
Law; Arbitration.  This Agreement
shall be construed in accordance with and governed in all respects by the laws
of the State of California.  Holder
agrees that any dispute, controversy or claim arising out of, relating to, or
in connection with, this Agreement or the agreements or transactions
contemplated hereby shall be finally settled by arbitration conducted in
accordance with the provisions of this Section 8.  The arbitration shall be conducted and the
arbitrator chosen in accordance with the rules of the American Arbitration
Association (the “AAA”) in effect at the time of the arbitration, except as
they may be modified herein or by mutual agreement of the Company, Sunset (to
the extent Sunset is a party to such claim) and Holder.  The seat of the arbitration shall be in Los
Angeles, California.  Each of the
Company, Sunset and Holder hereby irrevocably submits to the jurisdiction of
the

 

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arbitrator in Los Angeles, California and waives any defense in an
arbitration based upon any claim that such party is not subject personally to
the jurisdiction of such arbitrator, that such arbitration is brought in an
inconvenient forum or that such venue is improper.  The arbitral award shall be in writing and
shall be final and binding on each of the Company, Sunset and Holder.  The award may include an award of costs,
including reasonable attorneys’ fees and disbursements.  Judgment upon the award may be entered by any
court having jurisdiction thereof or having jurisdiction over the parties or
their assets.  Holder
acknowledges and agrees that by agreeing to the provisions of this Section 8
Holder is waiving any right that Holder may have to a jury trial with respect
to the resolution of any dispute under this Agreement.

 

9.             Amendments;
Counterparts.  This Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same
instrument.  This Agreement may only be
amended by written agreement of Holder, the Company and Sunset.  Upon execution by the Company and Sunset,
this Agreement shall be binding upon each Holder who executes a copy of this
Agreement regardless of whether any other Holders agree to execute a
counterpart of this Agreement or be bound by its terms.

 

10.           Entire
Agreement; No Reliance on Other Information.  This Agreement, and the documents referred to
herein or contemplated hereby constitute the entire agreement between the parties
hereto pertaining to the subject matter hereof, and any and all other written
or oral agreements relating to the subject matter hereof existing between the
parties hereto are expressly canceled. 
Holder acknowledges and agrees that, other than as specifically
contained or referenced in or specifically contemplated by this Agreement,
Holder has not relied on and no party has provided any information (whether
written or oral) to, or made any representation, warranty or promise relating
to, the Tendered Shares, Conversion Securities or underlying Shares, the
Merger, the LCC Merger, or Holder’s decision to enter into this Agreement.  

 

11.           Notice
Regarding Record Ownership. All record Holders of the Common Stock being
converted and exchanged hereby should sign this Agreement in the same name as
title to such Common Stock is held. 
Conversion Securities will be issued in the name of the record holder of
the Common Stock as maintained by the Company. 
In the event that the Conversion Securities are to be issued to a
different person or entity, a special request must be made in writing to the
Company and Sunset and the Company and Sunset consent to the transfer of rights
to receive the Conversion Securities.

 

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IN WITNESS WHEREOF, the undersigned have signed this
Agreement as of the date set forth above.

 

	
   

  	
  “Company”

  
	
   

  	
   

  
	
   

  	
  CASCADE SLED DOG ADVENTURES, INC., a

  Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Rowland W. Day II, President

  
	
   

  	
   

  
	
   

  	
  “Sunset”

  
	
   

  	
   

  
	
   

  	
  SUNSET BRANDS, INC., a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
    Todd Sanders, President and CEO

  

 

	
  “Holders”

  	
   

  
	
   

  	
   

  
	
  ACUARIUS ASSOCIATES CORP.

  	
  ARDEE TRADING CORP.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  
	
   

  	
   

  
	
  CARLTON EQUITIES SA

  	
  GRANADA ENTERPRISES

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  
	
   

  	
   

  
	
  MIRAFLORES CORP

  	
  RED SPRINGS TRADING CORP.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  
	
   

  	
   

  
	
  VALENTIA PROPERTIES INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  

 

10

 

EXHIBIT
1

 

List
of Holders, Tendered Shares and Conversion Securities

 

	
  Name

  	
   

  	
  Number of Shares of

  Common Stock Owned

  	
   

  	
  Number of

  Tendered Shares

  	
   

  	
  Warrants to

  be Issued

  	
   

  
	
  Initials

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Acuarius
  Associates Corp.

  	
   

  	
  575,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ardee Trading
  Corp.

  	
   

  	
  700,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Carlton Equities
  SA

  	
   

  	
  650,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Granada
  Enterprises

  	
   

  	
  700,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Miraflores Corp.

  	
   

  	
  300,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Red Springs
  Trading Corp.

  	
   

  	
  300,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Valentia
  Properties Inc.

  	
   

  	
  575,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dennis Madsen

  	
   

  	
  200,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals:

  	
   

  	
  4,000,000

  	
   

  	
  2,218,560

  	
   

  	
  1,000,000

  	
   

  

 

11Exhibit
4.4

 

THIS WARRANT AND THE
SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.  SUCH WARRANTS
AND SHARES MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

WARRANT

 

TO
PURCHASE SHARES OF COMMON STOCK OF
CASCADE SLED DOG ADVENTURES, INC.

 

	
   

  	
  Dated as
  of                          ,
  2004

  

 

HOLDER:

 

NUMBER OF SHARES:

 

THIS CERTIFIES THAT, for good and valuable consideration, the above
referenced holder (“Holder”), or its registered assigns, is entitled to
subscribe for and purchase from CASCADE SLED DOG ADVENTURES, INC., a Nevada
corporation (the “Company”), at any time commencing on the date of this
Warrant (the “Warrant”) and ending at the close of business five (5)
years from the date of issuance, the number of fully paid and nonassessable
shares of the Common Stock of the Company set forth above at an exercise price
of One Dollar and Eight Cents ($1.08) per share (the “Warrant Exercise Price”),
subject to the adjustment provisions of Sections 5, 6 and 11 of this Warrant.

 

This Warrant is issued pursuant to the terms of that certain Share
Exchange Agreement (the “Exchange Agreement”) by and among the Company,
Sunset Brands, Inc., a Nevada corporation (“Sunset”), and Holder and
certain other holders of Company Common Stock pursuant to which such holders
have agreed to exchange an aggregate of 2,218,560 shares of Common Stock,
$0.001 par value, of the Company (“Common Stock”) for warrants to
purchase an aggregate of 1,000,000 shares of Common Stock, which Warrants are
in the same form as this Warrant.  The
shares of Common Stock which may be acquired upon exercise of this Warrant are
referred to herein as the “Warrant Shares.” As used herein, the term “Holder”
includes any party who acquires all or a part of this Warrant as a permitted
transferee of Holder.

 

This Warrant is subject to the following provisions, terms and
conditions:

 

1.                                       Exercise;
Transferability; Vesting.

 

(a)                                  The
rights represented by this Warrant may be exercised by the Holder hereof, in
whole or in part (but not as to any fractional shares of Common Stock), by
written notice of exercise (in the form attached hereto) delivered to the
Company at the principal office of the Company at any time after the original
issue date of this Warrant and prior to the expiration of this Warrant and
accompanied or preceded by the surrender of this Warrant along with payment of
the Warrant Exercise Price for such shares (i) in cash, by check or by wire
transfer of federal funds, (ii) only to the extent permitted by the Company, in
its sole and absolute discretion, on a cashless basis in exchange for other

 

 

securities of the Company, or (iii) by a combination of the methods
specified in clauses (a) and (b). 
Notwithstanding the foregoing, the Company, in its sole discretion, may
extend and maintain, or arrange for the extension and maintenance of, credit to
the Holder to finance payment of the purchase price on such terms as may be
approved by the Board of Directors of the Company in accordance with applicable
law.

 

(b)                                 This
Warrant may not be sold, transferred, assigned, hypothecated or divided except
as provided in Section 9 hereof.

 

2.                                       Exchange and
Replacement.  Subject to
Sections 1 and 9 hereof, this Warrant is exchangeable upon the surrender hereof
by the Holder to the Company at its office for new Warrants of like tenor and
date representing in the aggregate the right to purchase the number of Warrant
Shares purchasable hereunder, each of such new Warrants to represent the right
to purchase such number of Warrant Shares (not to exceed the aggregate total
number purchasable hereunder) as shall be designated by the Holder at the time
of such surrender. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will make and deliver a new Warrant of like
tenor, in lieu of this Warrant; provided, however, that if Holder shall be such
Holder, an agreement of indemnity by such Holder in customary form shall be
sufficient for all purposes of this Section 2. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The Company shall pay all expenses, taxes (other
than stock transfer taxes), and other charges payable in connection with the
preparation, execution, and delivery of Warrants pursuant to this Section 2.

 

3.                                       Issuance of
the Warrant Shares.

 

(a)                                  The
Company agrees that the Warrant Shares shall be and will be deemed to be issued
to the Holder as of the close of business on the date on which this Warrant
shall have been surrendered and the payment made for such Warrant Shares as
provided herein. Subject to the provisions of the next section, certificates
for the Warrant Shares so purchased shall be delivered to the Holder within a
reasonable time after the rights represented by this Warrant shall have been so
exercised, and, unless this Warrant has expired, a new Warrant representing the
right to purchase the number of Warrant Shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be delivered to the
Holder within such time.

 

(b)                                 Notwithstanding
the foregoing, however, the Company shall not be required to deliver any
certificate for Warrant Shares upon exercise of this Warrant except in
accordance with exemptions from the applicable securities registration requirements
or registrations under applicable securities laws. Nothing herein, however,
shall obligate the Company to effect registrations under federal or state
securities laws. If registrations are not in effect and if exemptions are not
available when the Holder seeks to exercise the Warrant, the Warrant exercise
period will be extended, if need be, to prevent the Warrant from expiring,
until such time as either registrations become effective or exemptions are
available, and the Warrant shall then remain exercisable for a period of at
least 90 calendar days from the date the Company delivers to the Holder written
notice of the availability of any registrations or exemptions. The Holder
agrees to execute such documents and make such representations, warranties and
agreements as maybe required solely to comply with the exemptions relied upon
by the Company, or any registrations made, for the issuance of the Warrant
Shares.

 

2

 

4.                                       Covenants of
the Company.  The Company
covenants and agrees that all Warrant Shares will, upon issuance, be duly
authorized and issued, fully paid, nonassessable, and free from all taxes,
liens, and charges with respect to the issue thereof. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved for the purpose of issue or transfer upon exercise of the purchase
rights evidenced by this Warrant a sufficient number of shares of Common Stock
to provide for the exercise of the rights represented by this Warrant.

 

5.                                       Restrictions on Issuance and Transfer of Shares.  Shares of Common Stock acquired
pursuant to the exercise of this Warrant which are not registered under the
Securities Act of 1933, as amended (the “Act”), shall be subject to
restrictions on transfer and as required by applicable state and/or federal
securities laws.  Any unregistered
shares acquired by exercise of this Warrant shall bear a legend referring to
the restrictions and limitations of this Section.  The Company may impose stop transfer instructions to implement
such restrictions and limitations.

 

6.                                       Anti-dilution
Adjustments.  The number of
Warrant Shares purchasable upon the exercise of this Warrant and the Warrant
Exercise Price shall be subject to adjustment as follows:

 

(a)                                  In case the Company
shall (i) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock or other securities, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its
outstanding Common Stock into a smaller number of shares or (iv) issue, by
reclassification of its Common Stock, shares of its capital stock or other
securities of the Company (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
corporation), the number of Warrant Shares purchasable upon exercise of this
Warrant immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of Warrant Shares, shares of its
capital stock and other securities of the Company which such holder would have
owned or would have been entitled to receive immediately after the happening of
any of the events described above, had the Warrant been exercised immediately
prior to the happening of such event or any record date with respect
thereto.  Any adjustment made pursuant
to this subsection 6(a) shall become effective immediately after the effective
date of such event.

 

(b)                                 In case the Company
shall issue rights, options, warrants or convertible securities to holders of
its Common Stock, without any charge to such holders, containing the right to
subscribe for or purchase Common Stock, the number of Warrant Shares thereafter
purchasable upon the exercise of this Warrant shall be determined by
multiplying the number of Warrant shares theretofore purchasable upon exercise
of this Warrant by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or convertible securities plus the number of
additional shares of Common Stock offered for subscription or purchase, and of
which the denominator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
convertible securities.  Such adjustment
shall be made whenever such rights, options, warrants or convertible securities
are issued, and shall become effective immediately upon issuance of such
rights, options, warrants or convertible securities.  In the event of such adjustment, corresponding adjustments shall
be made to the Warrant Exercise Price.

 

3

 

(c)                                  In case the Company
shall distribute to holders of its Common Stock evidences of its indebtedness
or assets (excluding cash dividends or distributions out of current earnings
made in the ordinary course of business consistent with past practices), then
in each case the number of Warrant shares thereafter purchasable upon the
exercise of this Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon exercise of this Warrant by a
fraction, of which the numerator shall be the then Market Price (as defined
below) on the date of such distribution, and of which the denominator shall be
such Market Price on such date minus the then fair value (determined as
provided in subsection 6(e) below) of the portion of the assets or
evidences of indebtedness so distributed applicable to one share of Common
Stock.  Such adjustment shall be made
whenever any such distribution is made and shall become effective on the date
of distribution.  In the event of any
such adjustment, the number of shares of Common Stock subject to the Warrant
shall also be adjusted and shall be that number determined by multiplying the
number of shares of Common Stock issuable upon exercise before the adjustment
by a fraction, the numerator of which shall be the Warrant Exercise Price in
effect immediately before the adjustment and the denominator of which shall be
the Warrant Exercise Price as so adjusted.

 

(d)                                 Whenever the number of
Warrant Shares purchasable upon the exercise of this Warrant is adjusted as
provided in this Section 6, the Warrant Exercise Price payable upon
exercise of the Warrant shall be adjusted by multiplying such Warrant Exercise
Price immediately prior to such adjustment by a fraction, the numerator of
which shall be the number of Warrant Shares purchasable upon the exercise of
this Warrant immediately prior to such adjustment, and the denominator of which
shall be the number of Warrant Shares purchasable immediately thereafter.

 

(e)                                  To
the extent not covered by subsections 6(b) or (c) hereof:

 

in case the Company shall sell or issue Common Stock or rights,
options, warrants or convertible securities containing the right to subscribe
for, purchase or exchange into shares of Common Stock at a price per share
(determined, in the case of such rights, options, warrants or convertible
securities, by dividing (i) the total amount received or receivable by the
Company in consideration of the sale or issuance of such rights, options,
warrants or convertible securities, plus the total consideration payable to the
Company upon exercise, conversion or exchange thereof, by (ii) the total number
of shares covered by such rights, options, warrants or convertible securities)
lower than the then the then current Market Price and lower than the Warrant
Exercise Price in effect immediately prior to such sale or issuance, then the
Warrant Exercise Price shall be reduced to a price (calculated to the nearest
cent) determined by dividing (I) an amount equal to the sum of (A) the number
of shares of Common Stock outstanding immediately prior to such sale or
issuance multiplied by the then existing Warrant Exercise Price, plus (B) the
consideration received or receivable by the Company upon such sale or issuance,
by (II) the total number of shares of Common Stock outstanding immediately
after such sale or issuance.  The number
of Warrant Shares purchasable upon the exercise of a Warrant shall thereafter
be that number determined by multiplying the number of Warrant Shares
purchasable upon exercise immediately prior to such adjustment by a fraction,
of which the numerator shall be the Warrant Exercise Price in effect
immediately prior to such adjustment and the denominator shall be the Warrant
Exercise Price as so adjusted; and

 

4

 

in case the Company shall sell or issue Common Stock or rights,
options, warrants or convertible securities containing the right to subscribe
for, purchase or exchange into shares of Common Stock at a price per share
(determined, in the case of such rights, options, warrants or convertible
securities, by dividing (i) the total amount received or receivable by the
Company in consideration of the sale or issuance of such rights, options,
warrants or convertible securities, plus the total consideration payable to the
Company upon exercise, conversion or exchange thereof, by (ii) the total number
of shares covered by such rights, options, warrants or convertible securities)
higher than the Warrant Exercise Price then in effect but lower than the then
current Market Price in effect immediately prior to the earlier of the date of
such sale or issuance or the first public announcement of such sale or
issuance, then the Warrant Exercise Price shall be reduced to a price
(calculated to the nearest cent) determined by multiplying the Warrant Exercise
Price then in effect by a fraction, the numerator of which equals (I) the sum
of (A) the number of shares of Common Stock outstanding immediately prior to
such sale or issuance multiplied by the then current Market Price, plus (B) the
consideration received or receivable by the Company upon such sale or issuance,
divided by (II) the total number of shares of Common Stock outstanding
immediately after such sale or issuance, and the denominator of which equals
the current Market Price in effect immediately prior to the earlier of such
sale or issuance or the first public announcement of such sale or
issuance.  The number of Warramt Shares
purchasable upon the exercise of a Warrant shall thereafter be that number
determined by multiplying the number of Warrant Shares purchasable upon
exercise immediately prior to such adjustment by a fraction, of which the
numerator shall be the Warrant Exercise Price in effect immediately prior to
such adjustment and the denominator shall be the Warrant Exercise Price as so
adjusted.

 

For the purposes of such adjustments, the Common Stock which the
holders of any such rights, options, warrants or convertible securities shall
be entitled to subscribe for, purchase or exchange into shall be deemed issued
and outstanding as of the date of such sale or issuance and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants or convertible
securities, plus the consideration or premiums stated in such rights, options,
warrants or convertible securities to be payable for the Common Stock covered
thereby.  In case the Company shall sell
or issue Common Stock or rights, options, warrants or convertible securities
containing the right to subscribe for, purchase or exchange into Common Stock
for a consideration consisting, in whole or in part, of property other than
cash or its equivalent, then, in determining the “price per share” of Common
Stock and the “consideration received by the Company” for purposes of the first
sentence of this subsection 6.1(e), the Board of Directors shall determine
the fair value of said property, and such determination, if based upon the
Board of Directors, good faith business judgment, shall be binding upon the
Warrantholders.  In determining the
“price per share” of Common Stock, any underwriting discounts or commissions
paid to brokers, dealers or other selling agents shall not be deducted from the
price received by the Company for sales of securities registered under the Act
or issued in a private placement.

 

(f)                                    For
the purpose of this Section 6, the term “Common Stock” shall mean (i) the
class of stock designated as the Common Stock of the Company at the date of
this Agreement or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value.  In the event that at any time,
as a result of an adjustment made pursuant to this Section 6, a
Warrantholder shall become entitled to purchase any securities of the Company
other than Common Stock, (i) if the Warrantholder’s right to purchase is
on any other basis than that available to all holders of

 

5

 

the Company’s Common Stock, the Company shall obtain an opinion of a
reputable investment banking firm valuing such other securities and
(ii) thereafter the number of such other securities so purchasable upon
exercise of a Warrant and the Warrant Exercise Price of such securities shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in this Section6.

 

(g)                                 Upon
the expiration of any rights, options, warrants or conversion privileges, if
such shall not have been exercised, the number of Warrant Shares purchasable
upon exercise of a Warrant and the Warrant Exercise Price, to the extent a
Warrant has not then been exercised, shall, upon such expiration, be readjusted
and shall thereafter be such number and such price as they would have been had
they been originally adjusted (or had the original adjustment not been
required, as the case may be) on the basis of (A) the fact that the only shares
of Common Stock issued in respect of such rights, options, warrants or
conversion privileges were the shares of Common Stock, if any, actually issued
or sold upon the exercise of such rights, options, warrants or conversion
privileges, and (B) the fact that such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options, warrants or conversion
privileges whether or not exercised; provided, however, that no such
readjustment shall have the effect of decreasing the numbers of Warrant Shares purchasable
upon exercise of a Warrant or increasing the Warrant Exercise Price by an
amount in excess of the amount of the adjustment made in respect of the
issuance, sale or grant of such rights, options, warrants or conversion
privileges.

 

(h)                                 Upon
any adjustment of the Warrant Exercise Price and the number of Warrant Shares
subject to this Warrant, then and in each such case, the Company shall give
written notice thereof, by first-class mail, postage prepaid, addressed to the
Holder as shown on the books of the Company, which notice shall state the
Warrant Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares of Common Stock purchasable at such
price upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.

 

7.                                       Merger,
Reorganization or Consolidation. 
In any case in which a transaction would result in a complete
liquidation of the Company or a merger, reorganization, or consolidation of the
Company with any other unrelated corporation or other entity in which the
Company is not the surviving corporation or the Company becomes a wholly-owned
subsidiary of another unrelated corporation or other entity (all such transactions
being referred to herein as a “Reorganization”), the surviving corporation or
other entity shall be required to assume the Warrant or to issue substitute
warrants in place thereof which substitute warrants shall provide for terms at
least as favorable to the Warrantholders as contained in this Warrant and shall
provide the Warrantholder the right to acquire the kind and amount of shares
and other securities and property which the Warrantholder would have owned or
been entitled to receive had the Warrants been exercised immediately prior to
such Reorganization.

 

8.                                       No Voting
Rights.  This Warrant shall
not entitle the Holder to any voting rights or other rights as a stockholder of
the Company.

 

9.                                       Notice of
Transfer of Warrant or Resale of the Warrant Shares.

 

(a)                                  The
Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant or transferring any Warrant Shares of such
Holder’s intention to do so, describing briefly the manner of any proposed
transfer. Promptly upon receiving such written notice, the Company shall
present copies thereof to the Company’s counsel and to counsel to the original
purchaser of this Warrant. If in the opinion of each such counsel the proposed
transfer may be effected

 

6

 

without registration or qualification (under any federal or state
securities laws), the Company, as promptly as practicable, shall notify the
Holder of such opinion, whereupon the Holder shall be entitled to transfer this
Warrant or to dispose of Warrant Shares received upon the previous exercise of
this Warrant, all in accordance with the terms of the notice delivered by the
Holder to the Company; provided that an appropriate legend may be endorsed on
the Warrant or the certificates for such Warrant Shares respecting restrictions
upon transfer thereof necessary or advisable in the opinion of counsel and
satisfactory to the Company to prevent further transfers which would be in
violation of Section 5 of the Act, and applicable state securities laws;
and provided further that the prospective transferee or purchaser shall execute
such documents and make such representations, warranties, and agreements as may
be reasonably required solely to comply with the exemptions relied upon by the
Company or the Holder for the transfer or disposition of the Warrant or Warrant
Shares.

 

(b)                                 If
in the opinion of counsel referred to in this Section 9, the proposed
transfer or disposition of this Warrant or such Warrant Shares described in the
written notice given pursuant to this Section 9 may not be effected
without registration or qualification of this Warrant or such Warrant Shares,
the Company shall promptly give written notice thereof to the Holder.

 

10.                                 Fractional
Shares.  Fractional shares
shall not be issued upon the exercise of this Warrant, but in any case where
the Holder would, except for the provisions of this Section, be entitled under
the terms hereof to receive a fractional share, the Company shall, upon the
exercise of this Warrant for the largest number of whole shares then called
for, pay a sum in cash equal to the sum of (a) the excess, if any, of the
Market Price of such fractional share over the proportional part of the Warrant
Exercise Price represented by such fractional share, plus (b) the proportional
part of the Warrant Exercise Price represented by such fractional share. For
purposes of this Section, the term “Market Price” with respect to shares of
Common Stock of any class or series means the average of the last reported sale
prices or, if none, the average of the last reported closing bid and asked
prices on any national securities exchange, the Nasdaq National Market, Nasdaq
SmallCap Market, or NASD OTC Bulletin Board over the five (5) trading days
immediately preceding the determination date. 
If the Company’s Common Stock is not listed on a national securities
exchange or quoted on Nasdaq or the OTC Bulletin Board, the Market Price shall
be the average of the last reported closing bid and asked prices as reported in
the “pink sheets” or other standard compilation of quotations by market makers
in the over-the-counter market over the five consecutive trading days
immediately prior to the determination date. 
In the event that no quotations are available, the “Market Price” shall
be the fair market value of a share of Common Stock as determined in good faith
by the Board of Directors of the Company.

 

11.                                 Capitalization Adjustments.

 

(a)                                  Notwithstanding
anything to the contrary contained in this Warrant, in the event that the
Company sells shares of its Common Stock (or securities convertible into shares
of its Common Stock) at a price lower than $0.90 per share (the “Reduced
Issue Price”) at any time prior to the earlier of (i) one year following
the Closing (as such term is defined in the Exchange Agreement) or (ii) the
expiration of one hundred eighty (180) days from the effective date of the
first registration statement of the Company with respect to which Holder had
piggy-back registration rights pursuant to Section 1.2 of the Exchange
Agreement, then the Warrant Exercise Price shall automatically be reduced to
equal 120% of the Reduced Issue Price. 
Notwithstanding the foregoing, no reduction of the Warrant Exercise
Price shall occur as a result of (A) any issuance or exercise of options,
warrants or restricted shares to employees, directors, consultants or advisors
to the Company (or any subsidiary) pursuant to the terms of any compensation
plan or arrangement approved by the Board of Directors of the Company, (B)
securities issued in connection with any bona fide acquisition by the Company
(including any assumption of options or other convertible securities resulting
from any acquisition of another company by merger or exchange of securities),
(C) any issuance or exercise of securities, options or warrants issued to
suppliers,

 

7

 

distributors or retailers as compensation, payment for goods or
services or in order to induce such persons or entities to do or continue to do
business with the Company, or (D) securities issued upon the exercise or
conversion of options or warrants of the Company outstanding immediately
following completion of the Merger (as defined in the Exchange Agreement).  Any
adjustment contemplated by this Section 11 may be waived by consent of
Holders owning of majority of the aggregate outstanding Warrants issued
pursuant to the Exchange Agreements.

 

(b)                                 The
Warrant Exercise Price has been established based on the assumptions (the “Capitalization
Assumptions”) that, immediately prior to closing of the Merger (as defined
in the Exchange Agreement) (i) the issued and outstanding Common Stock of the
Company consisted entirely of 5,045,658 shares, and (ii) there will be no
options, warrants, subscription agreements or other rights or arrangements to
acquire or issue any shares of capital stock of the Company (other than shares
of preferred stock, options, warrants and other convertible securities issued
as a result of the Merger and the acquisition of Low Carb Creations, Inc. by
the Company). Holder understands and agrees that if, subsequent to the issue
date of this Warrant, the Company reasonably determines in good faith that the
Capitalization Assumptions were not true and correct, the Warrant Exercise
Price and number of Warrant Shares issuable upon exercise of this Warrant will
be adjusted so that the total number of Warrant Shares issued to and the total
Warrant Exercise Price paid by all Holders, if all Warrants were exercised in
full, would not exceed the number of Warrant Shares or be less than the total
Warrant Exercise Price that would have been issued and payable had the
Capitalization Assumptions been true and correct.

 

12.                                 Representations
and Warranties.  The Company
represents and warrants to the Holder of this Warrant as follows:

 

(a)                                  This
Warrant has been duly authorized and executed by the Company and is a valid and
binding obligation of the Company enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and the rules of law or principles at equity governing
specific performance, injunctive relief and other equitable remedies;

 

(b)                                 The
Warrant Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable; and

 

(c)                                  The
execution and delivery of this Warrant are not, and the issuance of the Warrant
Shares upon exercise of this Warrant in accordance with the terms hereof will
not be, inconsistent with the articles of incorporation, by-laws or other
organizational documents of the Company, do not and will not contravene, in any
material respect, any governmental rule or regulation, judgment or order
applicable to the Company, and do not and will not conflict with or contravene
any provision of, or constitute a default under, any indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound or require the consent or approval of, the giving of notice to, the
registration or filing with or the taking of any action in respect of or by,
any Federal, state or local government authority or agency or other person,
except for the filing of notices pursuant to federal and state securities laws,
which filings will be effected by the time required thereby.

 

13.                                 Notices.  Notices and other communications provided
for herein shall be in writing and may be given by mail, courier, confirmed
telex or facsimile transmission and shall, unless otherwise expressly required,
be deemed given when received or when delivery thereof is refused.  In the case of Holder, such notices and
communications shall be addressed to its address as shown on the books
maintained by the Company unless Holder shall notify the Company that notices
and communications

 

8

 

should be sent to a different address (or telex or facsimile number) in
which case such notices and communications shall be sent to the address (or
telex or facsimile number) specified by Holder.

 

14.                                 Governing
Law.  This Warrant shall be
governed by and construed in accordance with the corporation law contained in
the Nevada Revised Statutes with respect to the corporate law matters that are
the subject thereof and, with respect to all other matters, application of the
laws of the State of California.

 

15.                                 General
Provisions.

 

(a)                                  This
Agreement contains the entire understanding between the parties with respect to
the subject matter hereof, and supersedes any and all prior written or oral
agreements between the parties with respect to the subject matter hereof.  There are no representations, agreements,
arrangements, or understandings, either written or oral, between or among the
parties with respect to the subject matter hereof which are not set forth in
this Agreement.

 

(b)                                 Each
party to this Agreement agrees to perform such further acts and to execute and
deliver such other and additional documents as may be reasonably necessary to carry
out the provisions of this Agreement.

 

(c)                                  If any term,
provision, covenant, or condition of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, or unenforceable for any reason,
such invalidity, illegality, or unenforceability shall not affect any of the
other terms, provisions, covenants, or conditions of this Agreement, each of
which shall be binding and enforceable.

 

(d)                                 This Agreement may not
be modified, extended, renewed or substituted without an amendment or other
agreement in writing signed by the parties to this Agreement.

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as the date first specified above.

 

	
   

  	
  CASCADE SLED DOG ADVENTURES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

9

 

CASCADE SLED DOG ADVENTURES, INC.

 

WARRANT EXERCISE NOTICE

 

(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)

 

The undersigned Holder of the foregoing Warrant hereby irrevocably
elects to exercise the right, represented by such Warrant, to
purchase             shares
of the Common Stock of CASCADE SLED DOG ADVENTURES, INC. and tenders herewith
payment in accordance with Section 1 of said Warrant as follows:

 

o                shares
for CASH:         $

 

Please deliver
the stock certificate to the address set forth below.  In addition, if the number of shares being purchased pursuant to
this exercise is less than the all of the shares purchasable under this
Warrant, please return to such address either (1) the Warrant marked to reflect
the remaining balance of shares purchasable thereunder or (2) a newly issued
Warrant in the name of the undersigned for such remaining balance of shares
purchasable thereunder.

 

Dated:

 

Name of Warrant Holder:

 

Tax Identification No.
or                                                                 Social
Security No. of Warrant
Holder:                                               

 

	
   

  	
   

  
	
  (Signature)

  

 

Title:

 

NOTE: THE ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH THE NAME OF
THE WARRANT HOLDER AS IT APPEARS ON THE FIRST PAGE OF THE WARRANT OR ON A DULY
EXECUTED WARRANT ASSIGNMENT.

 

10

 

CASCADE
SLED DOG ADVENTURES, INC.

 

WARRANT ASSIGNMENT

 

(TO BE SIGNED ONLY UPON TRANSFER OF WARRANT)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
                                                        ,
the assignee, whose address is
                                                                   ,
and whose tax identification or social security number
is                                                        ,the
right represented by the foregoing Warrant to purchase
                                  shares
of the Common Stock of CASCADE SLED DOG
ADVENTURES, INC., to which the foregoing Warrant relates and
appoints                                           attorney
to transfer said right on the books of Cascade Sled Dog Adventures, Inc., with
full power of substitution in the premises. If the number of shares assigned is
less than all of the shares purchasable under the Warrant, anew Warrant will be
issued in the name of the undersigned for the remaining balance of the shares
purchasable thereunder.

 

Dated:

 

	
  Name of Warrant Holder/Assignor:

  	
   

  	
   

  
	
   

  	
  (Please print)

  	
   

  
	
   

  
	
  (Signature)

  

Title:

 

Address of Warrant Holder/Assignor:

 

 

 

Tax Identification No. or Social Security No. of

Warrant Holder/Assignor:

NOTE: THE ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH THE NAME OF
THE WARRANT HOLDER AS IT APPEARS ON THE FIRST PAGE OF THE WARRANT OR ON A DULY
EXECUTED ASSIGNMENT FORM.

 

11

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