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U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-SB
AMENDMENT NO. 5
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER
SECTION 12(b) OR (g)OF THE SECURITIES EXCHANGE ACT OF 1934
THEHEALTHCHANNEL.COM, INC.
(Name of Small Business Issuer in its charter)
Delaware 33-0728140
- ---------------------------------- -----------------------------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
3101 W. Coast Hwy., Suite 175
Newport Beach, California 92663
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 949-476-3602
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class
is to be registered
None N/A
- ---------------------------------- -----------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
Item 1. Description of Business
Business Development
Innovative Tracking Solutions Corporation, also known as InTracks Corporation
("IVTX" or "the Predecessor Company") was incorporated under the laws of the
state of Delaware on
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September 4, 1996. IVTX was formed to develop, manufacture, and market a
broad range of simple and creative products to solve typical problems
associated with the fast-paced nature of modern individuals and businesses.
IVTX's initial operations included the further development and manufacture of
the Smart Kitchen(tm) patented food storage tracking system invented by IVTX'
founders and licensed exclusively to IVTX. Based on the then current
financial condition of IVTX and the cost to launch this product into the
consumer marketplace, management of IVTX decided to postpone the launch in
favor of the development and launch of an additional product, the Private
Practice(tm) Vibration Reminder Disk, which management of IVTX felt held
greater market potential and lower manufacturing and marketing costs. IVTX
secured exclusive marketing rights to the product and launched it into test
markets in November 1997.
IVTX' initial launch of its first version of Private Practice into test
markets in November 1997 was through a short-form infomercial to the consumer
market. This small media test did not generate sufficient results to warrant
a full scale rollout of the product to the consumer market. Therefore, IVTX
continued development of the healthcare versions of the Private Practice(tm)
product and introduced its first healthcare version in June, 1998 at an
industry trade show and officially launched the product in November, 1998 at
one of the largest healthcare device trade shows in the country (MedTrade).
In March 1998, a market maker filed a 15c2-11 statement with the
National Association of Securities Dealers, Inc. ("NASD") and IVTX's stock
was cleared to trade on the Over-the-Counter Bulletin Board (Symbol: IVTX) on
April 21, 1998.
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In early 1999, IVTX management determined that the "public" status of IVTX
was detrimental to IVTX' operations due to the time and expense burdens of
being a public company. IVTX management then decided to take the operations
of IVTX "private" by transferring all IVTX assets and liabilities to a newly
formed private company and selling the public shell to a suitable company,
preferably in the healthcare industry.
On April 16, 1999, IVTX transferred all of its assets and liabilities
based on majority stockholder approval to a newly formed private company.
In June 1999, IVTX was introduced to thehealthchannel.com, a consumer-based
health supersite (http://www.thehealthchannel.com). On July 28, 1999, IVTX,
pursuant to its bylaws and general Delaware corporate law, acquired certain
assets of Biologix International, Ltd., consisting primarily of
thehealthchannel.com website and related technology in exchange for the
controlling interests of IVTX. Restricted common shares, representing the
majority controlling interests held by the directors of IVTX were
transferred.
In connection with this change of control, IVTX' name was changed to
thehealthchannel.com, Inc. on July 28, 1999. The Acquisition closed on July
28, 1999 (the "Acquisition").
Business of the Issuer
General
With headquarters at 3101 West Coast Highway, Suite 175, Newport Beach,
California, thehealthchannel.com is a comprehensive health information
Internet portal that offers a one-step access point for consumers and
professionals who want to explore a broad array of health topics. The portal
currently indexes more than 2.8 million other Internet health and
health-related sites, has direct links with more than 2,800 online
health-care information service centers, provides detailed coverage of some
700 medical conditions, and is nearly 1 million web pages in size. Consumers
may access a global library of health-care information while searching for
products and services. The site offers a complete Internet portal for
state-of-the-art continuing medical education for professionals. It is also
linked to more than 3 million URLs through various other strategic alliances,
such as Infoseek
Products
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Thehealthchannel.com
Thehealthchannel.com provides health-related content and programming for the
world wide web targeted at consumer access vis-a-vis the Internet, web-TV
and/or other means of network access. Web site: www.thehealthchannel.com.
The content for the Company's website comes from three primary sources:
1: HTML links. Programmed medical content links from the Infoseek search
engine (ultraseek). thehealthchannel.com has currently has over 2,800 links.
2: Strategic Alliances and Business Relationships. These come in many
different forms. For example, medical education, alternative medicine,
pharmacy, library, journals. The Company has will have business relationships
with many companies that provide information and e-commerce to create content
of the Company's site.
3: Original content: The Company has a diverse, experienced board of
directors (see "Management") and advisors who provide original content for
the Company's site in their areas of expertise.
The Company's revenue model comes with six variants of revenue sources:
1: Advertising Revenue Model. Banner and "time-out" advertising.
2: Retail Sales Model. Companies will sell their products and services
on their site with referrals from the Company and the Company will receive
commissions.
3: Portal/Information Center. Companies pay to have products and
services listed in thehealthchannel.com broadband portal.
4: Subscription model. The Company could charge users to access
information certain portions of the Company's website.
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5. Affiliate/Affinity model. The Company's web site would offer goods
and services from companies that it has a direct relationship with so that
the Company may share in the revenues.
6. Auction model. thehealthchannel.com would offer the forum for
companies to "auction" their goods or services.
Distribution Methods
thehealthchannel.com, Inc. (the "Company") distributes its web site
content via the Internet.
Status of Publicly Announced New Product or Service
On December 1, 1999, the Company unveiled an updated version of its
web site hosted by DVCi Technologies.
Sources and Availability of Materials and Production
Not Applicable.
Principal suppliers and vendors
The Company's web site is maintained and hosted by DVCi Technologies.
Additionally, the Company contracts as needed with variety of third-party
content providers.
Competition
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The online commerce industry, particularly on the Internet, is new, rapidly
evolving and intensely competitive, which the Company expects to intensify
tin the future. Barriers to entry are minimal, allowing current and new
competitors to launch new Web sites at a relatively low cost. The company
currently or potentially competes with other companies which have health care
websites. These competitors include InteliHealth, OnHealth, Web MD, Koop.com,
and YourHealth.com.
The Company believes that the principal competitive factors in its market are
brand name recognition, wide selection, personalized service, ease of use,
24-hour accessibility, customer service, convenience, reliability, quality of
search engine tools, and quality of editorial and other site content. Many of
the Company's current and potential competitors have longer operating
histories, larger customer bases, greater brand name recognition and
significantly greater financial, marketing and other resources than the
Company. In addition, other websites may be acquired by, receive investments
from or enter into other commercial relationships with larger,
well-established and well-financed companies as use of the Internet and other
online services increases. Certain of the Company's competitors may be able
to devote greater resources to marketing and promotional campaigns, and
devote substantially more resources to Web site and systems development than
the Company. Increased competition may result in reduced operating margins,
loss of market share and a diminished franchise value. There can be no
assurance that the Company will be able to compete successfully against
current and future competitors, and competitive pressures faced by the
Company may have a material adverse effect on the Company's business,
prospects, financial condition and results of operations. Further as a
strategic response to changes in the competitive environment, the Company
may, from time to time, make certain service or marketing decisions or
acquisitions that could have a material adverse effect on its business,
prospects, financial condition and results of operations. New technologies
and the expansion of existing technologies may increase the competitive
pressures on the Company. In addition, companies that control access to
transactions through network access or Web browsers could promote the
Company's competitors or charge the Company a substantial fee for inclusion.
The Market and Competitive Business Conditions
The Internet
IDC estimates that the number of users accessing the Web will grow from 28
million in 1996 to 175 million in 2001 and that the amount of commerce conducted
over the Web will increase from approximately $2.6 billion in 1996 to $220
billion in 2001. Growth in Internet usage has been fueled by a number of
factors, including the large and growing base of personal computers installed in
the workplace and home, advances in the performance and speed of personal
computers and modems, improvements in network infrastructure, easier and cheaper
access to the Internet and increased awareness of the Internet among consumer
and trade customers.
The emergence of the Internet as a significant communications medium is
driving the development and adoption of Web content and commerce applications
that offer both convenience and value to consumers, as well as unique
marketing opportunities and reduced operating costs to business. A growing
number of consumer and trade customers have begun to conduct business on the
Internet including paying bills, booking airline tickets, trading securities
and purchasing consumer goods (e.g., personal computers, consumer
electronics, compact disks, books, groceries and vehicles). Moreover, online
transactions
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can be faster, less expensive and more convenient than transactions conducted
through a human intermediary.
Telemedicine
Due to the convergence of advanced image transmission and computer technology,
price declines in hardware, and providers' quests to improve both the quality
and access of care and their competitive position in urban and rural markets,
the interest in telemedicine is now at an all-time high. Its use as a tool for
clinical consultation, linking the various elements of an integrated network,
including homes and long-term care facilities is expanding rapidly. However,
many unresolved issues remain, such as liability, reimbursement and other
economic factors, clinical expectations, ease of use and licensing of technology
and expertise, among others.
Although now a rapidly emerging and burgeoning industry, telemedicine has
existed in this country for almost 40 years. The first known project involved
the transmission of neurological records across the campus of the University of
Nebraska in 1959. Five years later, the university established a link with a
state mental hospital 112 miles away. Since that time, many state and federal
agencies as well as private insurers, managed care organizations (MCO's),
software companies, and medical device manufacturers have created their own
telemedicine initiatives. Although the total amount of money spent on
telemedicine research and development is unknown, a recent report by the U.S.
General Accounting Office places telemedicine investments by nine federal
departments and independent agencies at $646 Million for fiscal years 1994-96.
Based on the Company's experience, internet companies compete by providing
quality content and creating a body of users through advertising and
word-of-mouth. The Company believes that it will succeed by providing quality
content and by advertising its web site on third-party web sites and in more
traditional media.
Competition
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The Company faces well-financed competition from other companies competing in
the health sector on the Internet, such as Healtheon, WebMD, and DrKoop.
Recently, Healtheon and WebMD announced that they were merging. There is no
guarantee that the Company will be able to compete against these companies or
any other companies that might enter the Internet health sector.
Intellectual Property.
The Company currently has an application pending with the United States
Patent and Trademark Office ("PTO") for registration of the name
"thehealthchannel.com" as a trademark. The Company has also registered the
website domain name of www.thehealthchannel.com.
The Company does not rely on proprietary technology in providing its healthcare
information over the Internet. While the Company uses technology which has been
customized for its own purposes, the Company has deliberately avoided becoming
overly dependent on any one technology. By avoiding reliance on any one
technology, the Company will be able to take advantage of technological advances
to provide improved accessibility to its content.
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The Company has no collective labor agreements.
Needed Governmental Approvals
The Company is not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, and laws or regulations directly applicable to access to online
commerce. However, due to the
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increasing popularity and use of the Internet and other online services, it
is possible that a number of laws and regulations may be adopted with respect
to the Internet or other online services covering issues such as user
privacy, pricing, content, copyrights, distribution and characteristics and
quality of products and services. The adoption of any additional laws or
regulations may decrease the growth of the Internet or other online services,
which could, in turn, decrease the demand for the Company's products and
services and increase the Company's cost of doing business, or otherwise have
a material adverse effect on the company's business, prospects, financial
condition and results of operations.
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Moreover, the applicability to the Internet and other online services of
existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes, libel and personal privacy is uncertain and
may take years to resolve. Any such new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to the Company's business, or the application of existing
laws and regulations to the Internet and other online services could have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations.
Permits or licenses may be required from federal, state or local government
authorities to operate on the Internet. No assurances can be made that such
permits or licenses will be obtainable. The Company may be required to comply
with future national and/or international legislation and statutes regarding
conducting commerce on the Internet in all or specific countries throughout the
world.
Employees
As of the date hereof, the Company employed two full-time employees. The Company
hires independent contractors on an "as needed" basis only. The Company has no
collective bargaining agreements with its employees. The Company believes that
its employee relationships are satisfactory. Long term, the Company will attempt
to hire additional employees as needed based on its growth rate.
Item 2. Management's Discussion and Analysis or Plan of Operations
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The discussion and financial statements contained herein for the fiscal years
ended December 31, 1996, 1997, and 1998, consist solely of the financial results
of IVTX, the predecessor company. Following the year-end financial statements of
IVTX, are the most recent financial statements of the Company, consisting solely
of thehealthchannel.com, Inc. assets and liabilities, for the three months ended
September 30, 1999 and for the period from May 1, 1999 (inception) to September
30, 1999. The following discussion regarding the financial statements of the
Company should be read in conjunction with the financial statements of the
Company included herewith.
Overview
The Company is engaged in the business of providing healthcare information over
the Internet.
Results of Operations
The following table sets forth, for the years indicated, selected financial
information for the Company:
<TABLE>
<CAPTION>
Period from
Inception Period from
Year Ended (September 6, Three Months May 1, 1999
December 31 1996) to Ended (Inception)
------------------------- December 31, September 30 to September 30,
1998 1997 1996 1999 1999
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<S> <C> <C> <C> <C> <C>
Total revenue $ 11,938 $ -0- $ -0- $ -0- $ -0-
Cost of revenue $ (6,371) $ -0- $ -0- $ -0- $ -0-
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Gross profit $ 5,567 $ -0- $ -0- $ -0- $ -0-
General, administrative,
and selling expenses $ 596,616 $ 170,030 $ 9,261 $ 680,684 $ 684,469
Loss from operations $(591,049) $ (170,030) $ (9,261) $ (680,684) $ (684,469)
Interest Income $ 1,183 $ 12 $ -0- $ 291 $ 291
Interest expense $ (4,848) $ (250) $ -0- $ -0- $ -0-
Total other expense $ (3,665) $ (238) $ -0- $ -0- $ -0-
Loss before taxes $(594,715) $ (170,268) $ (9,261) $ (680,393) $ (684,178)
Taxes on income $ -0- $ -0- $ -0- $ -0- $ -0-
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Net income (loss) $(594,714) $ (170,268) $ (9,261) $ (680,393) $ (684,178)
</TABLE>
Fiscal Year Ended December 31, 1997 as Compared to Period from Inception
(September 6, 1996) through December 31, 1996
Revenues. The Company generated no revenues in either 1997 or 1996. All of 1997
and the last three months of 1996 were spent performing research and development
of the Company's proposed product lines.
General, administrative, and selling expenses. The Company had $170,030 in
expenses in 1997 compared to $9,261 in initial start-up expenses in 1996. The
expenses incurred in 1997 were primarily research and development expenses.
Loss from operations. The loss from operations was $170,030 in 1997 compared to
$9,261 in 1996. The loss from operations for both periods consist of the
general, selling, and administrative expenses of the Company as the Company
generated no revenues during these periods.
Loss before taxes. The Company had a loss of $170,268 in 1997 as compared to a
loss of $9,261 in 1996.
Net loss. The Company was not required to pay income taxes in 1997 or 1996 and,
therefore, the net loss fiscal year ended December 31, 1997 was $170,268 and the
net loss for the period from inception (September 6, 1996) through December 31,
1996 was $9,261.
Fiscal Year Ended December 31, 1998 as Compared to Fiscal Year Ended December
31, 1997
Revenues. The Company generated $11,938 in 1998 from the sale of its products
compared to no revenues in 1997.
General, administrative, and selling expenses. The Company incurred $596,616 in
general, administrative, and selling expenses for the year ended 1998 as
compared to $170,030 in expenses incurred in 1997. This is due to the ramping up
of the Company's product line and increased marketing expenses following the
completion of the research and development of the Company's products.
Loss from operations. The Company incurred a loss from its operations in 1998 of
$591,049 as compared to a loss of $170,030 in 1997. The Company expended
significant sums in product development and marketing in 1998, while making only
$11,938 in sales, therefore resulting in this loss.
Loss before taxes. The Company had a loss of $594,714 in 1998 as compared to a
loss of $170,268 in 1997 due to the increased development and marketing expenses
of the Company in 1998.
Net loss. The Company was not required to pay income taxes in 1998 or 1997 and,
therefore, the net loss for the fiscal year ended December 31, 1998 was $594,714
and the net loss for the fiscal year ended December 31, 1997 was $170,268.
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Three Months Ended September 30, 1999.
Revenue
The Company is a development stage company and had no revenues for the
three months ended September 30, 1999
Selling, general and administrative expenses
The Company incurred costs of approximately $405,000 for the three
months ended September 30, 1999 for launching its advertising campaign in
support of its health-care web site. In addition, it expended approximately
$160,000 in connection with the development of the web site.
Loss from operations
The Company incurred a loss from operations of $680,684 for the three
months ended September 30, 1999.
Other income
The Company earned $291 in interest income for the three months ended
September 30, 1999.
Net loss
The Company had a net loss of $680,393 or $(0.01) per share.
Liquidity and Capital Resources
Since its inception, the Company has primarily funded its capital requirements
through private equity infusions. The Company is currently conducting a private
offering to accredited investors only of units, each unit consisting of one
share of the Company's Common Stock and one Warrant exercisable for a term of
two years (the "Units"). The Company originally priced this offering at $0.75
per Unit with a $0.75 exercise price on the Warrants. However, the price of the
Company's publicly traded stock dropped precipitously since the beginning of
this private offering and the Company is now offering the Units at $0.45 with a
$0.45 exercise price on the Warrants. The Company will raise of a maximum of
$5,000,000 under this private offering. This private offering is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act")
pursuant to Section 4(2) of the Act.
At September 30, 1999, the Company had outstanding current liabilities of
$660,063 consisting of accounts payable $83,081, accrued marketing $414,482,
accrued professional fees $114,500, and accrued officers salaries $48,000. All
officers of the Company have agreed to defer their compensation until such time
as the Company has the financial ability to pay compensation. The Company
anticipates satisfying its current liabilities in the ordinary course of
business from revenues and accounts receivable.
Over the next 12 months, the Company plans to upgrade its management information
system, telecommunications system and office equipment to accommodate
anticipated growth plans. However, the Company will not perform any upgrades
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until its management believes it has sufficient revenues to accommodate such
upgrades.
The Company does not believe that inflation has had a significant impact on its
operations since inception of the Company.
Year 2000 Compliance
The Company has performed an audit of all its computer hardware, internal
accounting and software applications and found all to be Year 2000 compliant or
capable. As of this date, the Company has been given assurances from its banking
institution, transfer agent, and all third party suppliers and contractors used
for manufacturing and production of the Company's products and services that
they are Year 2000 compliant.
Forward Looking Statements
This registration statement contains forward-looking statements. The company's
expectation of results and other forward-looking statements contained in this
registration statement, involve a number of risks and uncertainties. Among the
factors that could cause actual results to differ materially from those expected
are the following: business conditions and general economic conditions;
competitive factors, such as pricing and marketing efforts, timing of product
introductions; and the pace and success of product research and development.
These and other factors may cause expectations to differ.
Item 3. Description of Property
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The main administrative offices of the Company are located at 31-1 West Coast
Highway, Suite 175, Newport Beach, California 92663, consisting of 1,850 square
feet, with a monthly lease payment of $3,000, pursuant to an oral agreement.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the date of this Prospectus by:
(i) each stockholder known by the Company to be the beneficial owner of more
than five percent of the outstanding Common Stock, (ii) each director of the
Company and (iii) all directors and officers as a group.
<TABLE>
<CAPTION>
Shares of Percent of
Name and Address Common Stock(1) Class(2)
<S> <C> <C>
Donald A. Shea(2) 415,500 *
Thomas F. Lonergan(2) 2,586,009 3.4%
Balazs Imre Bodai, M.S., M.D.(2) 1,335,000 1.8%
Jeffrey H. Berg, MBA, Ph.D.(2) 443,400 *
Joseph Song, M.D.(2) 2,533,625 3.4%
All Officers and Directors
as a Group (5 persons) 7,313,534 9.8%
Dianna Cleveland 4,141,000 5.5%
23232 Peralta Drive, Suite 209
Laguna Hills, CA 92653
</TABLE>
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* Less than one percent
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities. Shares of Common Stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for purposes
of computing the percentage of the person holding such options or warrants, but
are not deemed outstanding for purposes of computing the percentage of any other
person.
(2) c/o Company's address: 3101 West Coast Highway, Suite 175, Newport
Beach, California 92663.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The
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directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Office
---- --- ------
<S> <C> <C>
Donald A. Shea 64 Chief Executive Officer, President and
Chairman of the Board of Directors
Thomas F. Lonergan 47 Chief Operating Officer, Vice President,
Secretary, Chief Financial Officer, and
Director
Balazs Imre Bodai, M.S., M.D. 45 Director
Jeffrey H. Berg, MBA, Ph.D. 59 Director
Joseph Song, M.D., F.A.C.C. 40 Director
</TABLE>
DONALD J. SHEA, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN. From 1995
through 1997, Mr. Shea was Marketing Consultant to Marketing Insights, Inc., a
new product development Company in Princeton, New Jersey. Prior to that he was
President of Avonwood Capital Corporation, Philadelphia, Pennsylvania, a Venture
Capital/Management Consulting firm; and President of Brilliant Enterprises,
Inc., Philadelphia, Pennsylvania, a dental products manufacturer. Mr. Shea was
also the former President and CEO of Clairol, Inc., a Division of Bristol-Myers
Squibb, former Vice-President of Bristol-Myers Squibb. Mr. Shea brings over 35
years of consumer products marketing and general management experience to the
Company.
THOMAS F. LONERGAN, MA, CHIEF OPERATING OFFICER, VICE PRESIDENT, SECRETARY,
CHIEF FINANCIAL OFFICER, AND DIRECTOR. Mr. Lonergan was the co-founder and Vice
Chairman The IQ NOW Corporation, a deliverer of healthcare information on the
Internet from 1992 through 1999. Previously, he was a Regional Director of
Cardiology for Tenet Medical Group, former Director of Clinical Services at
Downey Community Hospital, and has been a hospital administrator for 20 years.
He was responsible for $70 million budget and manages over 200 employees. For 11
years he has been an instructor and director of medical technology at Coast
College. Mr. Lonergan is co-founder of the American College of Cardiovascular
Administrators. He has an Associate of Arts (Pre-Medicine) from Cerritos Junior
College (1971), a Bachelor of Science (Pre-Medicine) from the University of
<PAGE>
California, Irvine (1973), and an Executive Masters Degree of Business
Administration from Pepperdine University (1990).
BALAZS IMRE BODAI, M.D., DIRECTOR. From 1985 and continuing through the present,
Dr. Bodai is the Chief of Surgery at Kaiser Permanente Medical Center,
Sacramento, California. He is also President of B and B Medical Research
Technology, Inc., Sacramento, California; an Associate Clinical Professor of
Surgery at the University of California at Davis; a Consultant to COAT, Johnson
& Johnson, Newark, New Jersey; and a Senior Consultant to Sontek Medical, Inc.,
Higham, Massachusetts. "Ernie" holds a Bachelor of Science and Master of Science
Degrees from the School of Medicine at the University of California at Los
Angeles, and a Doctor of Medicine Degree from the University of California at
Davis. He is author and co-author of over 120 scientific and clinical
publications in various of the leading medical journals, author of a surgery
text book, and is well-recognized within the field of emergency and critical
care medicine.
JEFFREY H. BERG, PH.D., DIRECTOR. Dr. Berg holds an MBA and Ph.D. in Chemistry
from New York University. From September 1995 through the present, he is a
senior research analyst for M.H. Meyerson & Co., Inc. From 1991 through the
present, he is the President of Health Care Insights. Mr. Berg was Chicago
Corporation's senior medical advisor from 1991 to 1992. Mr. Berg was security
analyst for William K. Woodruff & Co. from 1990 to 1991 and Vice-President of
Research for J.C. Bradford & Co. from 1987 to 1990. From 1981 to 1987 he was
Vice-President of the Health Care Division of PA Consulting Services, Inc. of
London, England, specializing in international technology and new product
surveillance, venture capital investment, acquisition studies, and
state-of-the-art for diverse areas of health care. During the 1970s, Mr. Berg
developed products and conducted research for General Foods, the Patient Care
Division of Johnson & Johnson Products, Inc., the Consumer Products Division of
Ortho Pharmaceutical Corporation; and staffed and supervised scientists and
engineers at the R&D laboratories for development of varied medical and health
care products within the Johnson & Johnson family of companies. Dr. Berg holds
several patents in the area of biosensor and disposable electrode technology. He
has published a number of articles on topics such as biosensors, cancer therapy,
biopharmaceuticals, drug infusion devices and industrial biotechnology. Dr. Berg
serves as a liaison with the investment banking and scientific communities.
JOSEPH SONG, M.D., F.A.C.C., DIRECTOR. From 1994 through the present, Dr. Song
has his own practice in Interventional Cardiology. From 1991 through 1994, he
was an Interventional Cardiologist with Internal Medicine Specialists Medical
Group, Inc. He is a Lecturer and Moderator at Downey Foundation Hospitals. Dr.
Song is Clinical Assistant Professor of Medicine/Cardiology at the College of
Osteopathic Medicine of the Pacific in California and a member of the Teaching
Staff of the Family Practice Internship/Residency Program at Rio Hondo/Downey
Community Hospital, California. He is certified by the American Board of
Internal Medicine and the American Board of Cardiovascular Dieases. Dr. Song
received an A.B. in Physics from Washington University in St. Louis Missouri in
1982 and his M.D. from University of Missouri-Columbia School of Medicine in
1986. the of the Case of the Week Presentation at the Downey Foundation Hospital
and of the T
Item 6. Executive Compensation
The following
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shows the annual amounts which the Company anticipates paying each
executive officer for the fiscal year ending December 31, 1999. The officers
joined the Company on July 28, 1999. The following officers of the Company
received the following
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annual cash salaries and other compensation:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Principal Position Year Annual Salary (1) (2) (3)
- --------------------------- ---- -------------------------
<S> <C> <C>
Donald A. Shea, Chief Executive Officer 1999 $144,000
Thomas F. Lonergan, Chief Operating 1999 $144,000
Officer, Vice President, Chief
Financial Officer
<PAGE>
All Officers as a Group (2 persons) 1999 $288,000
</TABLE>
(1) No officers received or will receive any bonus or other annual compensation
other than salaries during fiscal 1999. The Company does not provide any
personal benefits to offices of the Company, such as the cost of automobiles,
life insurance, and supplemental medical insurance. Management believes that the
value of non-cash benefits and compensation distributed to executive officers of
the Company individually or as a group during fiscal year 1999 will not exceed
the lesser of $50,000 or ten percent of such officers' individual cash
compensation or, with respect to the group, $50,000 times the number of person
sin the group or ten percent of the group's aggregate cash compensation.
(2) No officers received or will receive any long term incentive plan (LTIP)
payouts or other payouts during fiscal 1999.
(3) No officers received or will receive any awards, including stock awards or
securities underlying options, during fiscal 1999.
Item 7. Certain Relationships and Related Transactions.
<PAGE>
The Company has an employment agreement with Thomas F. Lonergan, its Vice
President, Chief Operations Officer, Secretary, and Chief Financial Officer,
dated September 1, 1999. This agreement has a term of three years and provides
for salary of $144,000 per year, four weeks of vacation per year, and
eligibility to participation in all Company benefit programs. There is no
severance provision.
The Company has an employment agreement with Thomas F. Lonergan, its Vice
President, Chief Operations Officer, Secretary, and Chief Financial Officer,
dated September 1, 1999. This agreement has a term of three years and provides
for salary of $144,000 per year, four weeks of vacation per year, and
eligibility to participation in all Company benefit programs. There is no
severance provision.
Item 8. Description of Securities.
The authorized capital stock of the Company currently consists of 110,000,000
shares of Common Stock, no par value. The Company has no shares of Preferred
Stock.
<PAGE>
The Company's Transfer Agent is Continental Stock Transfer & Trust Company, 2
Broadway, 19th Floor, New York, New York 10004.
The following summary of certain terms of the Common Stock does not purport to
be complete and is subject to, and qualified in its entirety by, the provisions
of the Company's Articles of Incorporation and Bylaws.
Common Stock
As of the date of this report, there are 75,000,000 shares of Common Stock
outstanding.
Holders of Common Stock are each entitled to cast one vote for each share held
of record on all matters presented to shareholders. Cumulative voting is not
allowed; hence, the holders of a majority of the outstanding Common Stock can
elect all directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor and,
in the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. The Board of Directors is not
obligated to declare a dividend and it is not anticipated that dividends will be
paid until the Company is profitable.
Holders of Common Stock do not have preemptive rights to subscribe to additional
shares if issued by the Company. There are no conversion, redemption, sinking
fund or similar provisions regarding the Common Stock. All of the outstanding
shares of Common Stock are fully paid and non-assessable and all of the shares
of Common Stock offered hereby will be, upon issuance, fully paid and
non-assessable.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
A. Market Information
The Company's Common Stock has been quoted on the over-the-counter bulletin
board system ("OTC Bulletin Board") since April 1998, formerly under the symbol
IVTX, and since it's name change, under the symbol THCL.
The following table sets forth the high ask and low bid prices for the Company's
common stock as reported on the OTC Bulletin Board.
The prices below also reflect inter-dealer quotations, without retail mark-up,
mark-down or commissions and may not represent actual transactions:
<TABLE>
<CAPTION>
Period Reported High Ask Low Bid
--------------- -------- -------
<S> <C> <C>
Quarter ended June 30, 1998 2 1/2 1 7/64
Quarter ended September 30, 1998 2 7/64 0 7/8
Quarter ended December 31, 1998 1 3/4 0 9/16
Quarter ended March 31, 1999 3.00 0 9/16
Quarter ended June 30, 1999 3 1/4 0 1/2
Quarter ended September 30, 1999 4 5/8 0 5/16
</TABLE>
<PAGE>
As of December 1, 1999, the closing bid price of our Common Stock was $0.515625
(33/64) per share.
Management is not aware of any firms that currently make a market for the
Company's securities on the OTC Bulletin Board.
B. Holders
As of December 2, 1999 there were approximately 618 holders of Company Common
Stock, as reported by the our transfer agent.
C. Dividends
The Company has not paid any dividends on its Common Stock. The Company intends
to retain any earnings for use in its business, and therefore does not
anticipate paying cash dividends in the foreseeable future.
Item 2 Legal Proceedings.
To the knowledge of management, there is no material litigation pending or
threatened against the Company.
Item 3. Changes in and Disagreements with Accountants.
Not Applicable.
Item 4 Recent Sales of Unregistered Securities.
IVTX conducted various private placements detailed below pursuant to Regulation
D, Rule 504, propounded by the U.S. Securities and Exchange Commission, and
Section 4(2) of the 1933 Act.
None of the transactions involved general solicitation or general
advertising. IVTX' sales of stock were made directly with people whom IVTX'
officers had a pre-existing relationship with or from personal referrals. Each
purchaser was provided with an offering circular. Proceeds from the sale of the
shares were applied towards the continuing development and marketing of its
products and working capital.
The following provides a numerical summary of the offerings conducted by IVTX:
<TABLE>
<CAPTION>
Dollars Shares
--------- --------
<S> <C> <C>
Private transactions
5 Accredited Investors $137,000 137,000
1 Accredited Investor Subscribed 500,000 500,000
Rule 504 Offering 340,092 402,677
Subscription Rights Reassigned -500,000 -500,000
Section 4(2) Offering comprised of 417,308 645,566
29 Accredited and 30 Sophisticated
Purchasers.
-------- -------
Aggregate Private Placements $894,400 1,185,243
</TABLE>
<PAGE>
Shares held by public
The following provides a monthly accounting and details of these transactions:
A. In September 1996, IVTX issued 800,000 shares of restricted Common Stock
to a founder of IVTX and 645,500 shares of restricted Common Stock to a
co-founder of IVTX. There was no underwriter involved in this issuance. The
issuance was conducted pursuant to Section 4(2) under the 1933 Act.
B. In September 1996 through March 1997, IVTX issued 162,500 shares of
restricted Common Stock to a consultant, who was also a director of IVTX, in
consideration of consulting services rendered. There was no underwriter involved
in the issuances. The issuances were conducted pursuant to Section 4(2) of the
1933 Act.
C. In September 1996, through December 1997, IVTX conducted a private
placement of 137,000 shares of restricted Common Stock to five accredited
investors at a price of $1.00 per share, for the gross proceeds of $137,000.
There was no underwriter involved in this issuance. The issuance was conducted
pursuant to Section 4(2) of the 1933 Act.
D. From February 1997 to June 1997, IVTX issued a total of 19,000 shares of
restricted Common Stock to two independent electronic design contractors in
consideration for services rendered on behalf of IVTX. Each of the contractors
were accredited purchasers. There was no underwriter involved in this issuance.
The issuance was conducted pursuant to Section 4(2) of the 1933 Act.
E. In March 1997, IVTX issued 25,000 shares of restricted Common Stock to a
director, at a price of $0.80 per share for cash proceeds of $20,000. There was
no underwriter involved in this issuance. The issuance was conducted pursuant to
Section 4(2) under the 1933 Act.
F. In June 1997, IVTX issued 25,000 shares of restricted Common Stock to its
corporate securities counsel in consideration of legal services rendered. The
purchaser was 'sophisticated' and provided with a copy of the Company's current
private placement memorandum prior to the transaction. There was no underwriter
involved in this issuance. The issuance was conducted pursuant to Section 4(2)
under the 1933 Act.
G. During July 1997, through February 1998, IVTX conducted a private
placement of Common Stock pursuant to Regulation D, Rule 504 offering 125,000
units of Common Stock at $2.00 per unit, for total offering proceeds of
$250,000. Each unit offered consisted of one (1) share of Common Stock ($.001
par value) and three (3) Stock Purchase Warrants. Upon the future exercise of
all warrants, total proceeds of the offering would total $1,000,000. In the
private placement, IVTX sold 93,612 units of Common Stock in consideration of
cash proceeds of $161,113 net of $24,713 of offering costs. Each Unit consists
of one (1) share of Common Stock ($.001 par value) and three (3) Stock Purchase
Warrants, except for California residents who receive per unit one (1) share of
Common Stock and one (1) purchase warrant. Each Warrant entitles the holder
thereof to purchase one (1) share of Common Stock of IVTX. The Warrants are
exercisable at $2.00 and were set to
<PAGE>
expire on July 21, 1998. IVTX extended the Warrants to expire on December 31,
1998. There was no underwriter involved in these transactions. The issuances
were conducted pursuant to Regulation D, Rule 504, propounded by the U.S.
Securities and Exchange Commission. Each purchaser was provided with the
Company's current offering circular. None of the transactions involved
general solicitation or general advertising. In the private placement, the
Company sold shares to investors who had a pre-existing relationship with
officers of IVTX and to people referred to IVTX and issued a total of 6,000
shares of restricted Common Stock as finder's fees to two `sophisticated'
purchasers pursuant to Section 4(2) of the 1933 Act. Each purchaser was
provided with IVTX's current offering circular.
H. In August and September 1997, IVTX issued 1,000 shares of Common Stock to
an independent contractor and 15,000 shares of restricted Common Stock to two
consultants in consideration of services rendered on behalf of IVTX. The
contractor was a 'sophisticated' purchaser and each consultant was an
'accredited' purchaser. All purchasers were provided with a copy of IVTX's
current offering circular prior to the transaction. There was no underwriter
involved in the issuances. The issuances were conducted pursuant to Section
4(2)of the 1933 Act.
I. In December 1997, IVTX commenced an offering of 500,000 of Common Stock at
$1.00 per share pursuant to Section 4(2) of the 1933 Act. The shares being
offered where in the form of reassigned subscription rights that were previously
subscribed to by an accredited investor in May 1997, prior to IVTX's Regulation
D, Rule 504 offering. The pending sale of the 500,000 shares and the potential
dilution was fully disclosed in the Company's later Regulation D, Rule 504
offering circular. However, the sale of the securities never consummated.
Therefore, on December 3, 1997, the subscriber assigned his subscription rights
back to IVTX. IVTX then offered these subscription rights via a private
placement, as mentioned above, pursuant to Section 4(2) of the 1933 Act. From
May 1998 to December 31, 1998, IVTX sold 292,366 of these shares to 22
accredited investors and 12 sophisticated investors in consideration of cash
proceeds totaling $227,916 net of $41,392 of offering costs. Each purchaser was
provided with IVTX's Current offering circular. There was no underwriter
involved in the issuances. The issuances were conducted pursuant to Section 4(2)
of the 1933 Act. None of the transactions involved general solicitation or
general advertising. The shares were sold to investors who had a pre-existing
relationship with officers of IVTX and IVTX also utilized referrals from
individuals who brought investors to IVTX in the private placement. IVTX issued
a total of 8,000 shares of restricted Common Stock as finder's fees to two
individuals. Both individuals were accredited investors and the finder's fee
shares were issued pursuant to Section 4(2) of the 1933 Act.
J. In December 1997 through January 1998, IVTX issued to five independent
contractors, a total of 9,000 shares of Common Stock at a purchase price of
$.001 per share (par value) in consideration of services rendered on behalf of
IVTX for the total proceeds of $36.00. Each
<PAGE>
purchaser was provided with IVTX's current offering circular. There was no
underwriter involved in the issuances. The issuances were conducted pursuant
to Regulation D, Rule 504, propounded by the U.S. Securities and Exchange
Commission.
K. In January 1998, IVTX issued to one 'accredited' and three 'sophisticated'
purchasers, a total of 9,000 shares of restricted Common Stock in consideration
of support services rendered. Each purchaser was provided a copy of IVTX's
current offering circular prior to the transaction. There was no underwriter
involved in the issuances. The issuances were conducted pursuant to Section 4(2)
of the 1933 Act.
L. In January 1998, IVTX issued a total of 20,000 shares of Common Stock to 8
consultants in consideration for services rendered on behalf of IVTX. Each
consultant was a 'sophisticated' purchaser and was provided a copy of IVTX's
current offering circular prior to the transaction. There was no underwriter
involved in this issuance. The issuance was conducted pursuant to Section 4(2)
of the 1933 Act.
M. In April 1998, IVTX issued 30,000 shares of Common Stock on a promissory
note to one investor. The purchaser was provided with a copy of IVTX's current
offering circular prior to the transaction. There was no underwriter involved in
this issuance. The promissory note was honored in April 1999 and accepted by
IVTX for the total proceeds of $15,000. The issuance was conducted pursuant to
Regulation D, Rule 504, propounded by the U.S. Securities and Exchange
Commission.
N. In May 1998, IVTX issued a total of 500 Units of Common Stock to two
existing shareholders at a price of $2.00 per unit including 3 stock purchase
warrants with an exercise price of $2.00. Total proceeds from the transactions
were $1,000. Each purchaser was provided with IVTX's current offering circular.
There was no underwriter involved in this issuance. The issuance was conducted
pursuant to Regulation D, Rule 504, propounded by the U.S. Securities and
Exchange Commission.
O. In May 1998, IVTX issued 1,000 shares of restricted Common Stock to an
independent contractor in consideration of services rendered. The contractor was
a 'sophisticated' purchaser and was provided with a copy of IVTX's current
offering circular prior to the transaction. There was no underwriter involved in
the issuances. The issuances were conducted pursuant to Section 4(2) of the 1933
Act.
P. In June 1998, IVTX issued 4,000 shares of restricted Common Stock to a
director in consideration for interest payment on indebtedness. There was no
underwriter involved in this issuance. The issuances were conducted pursuant to
Section 4(2) of the 1933 Act.
Q. In June 1998, IVTX issued a total of 10,000 shares of Common Stock to a
consultant at a price of $.001 per share (par value) in consideration for
services rendered on behalf of IVTX. Total proceeds of the transaction was
$10.00. The purchaser was provided with a copy of the
<PAGE>
Company's current offering circular prior to the transaction. There was no
underwriter involved in this issuance. The issuance was conducted pursuant to
Regulation D, Rule 504, propounded by the U.S. Securities and Exchange
Commission.
R. In July 1998, IVTX granted to two founding officers, subject to the terms
of their employment agreements, options to purchase 250,000 and 200,000 shares
respectively of Common Stock in IVTX at an exercise price of $.50 per share. The
options expire on December 31, 2002. There was no underwriter involved in the
issuances. The issuances were conducted pursuant to Section 4(2) of the 1933
Act.
S. In August 1998, IVTX issued to two of its officers an aggregate of 468,000
shares of restricted Common Stock subject to the terms of their Employment
Agreements referenced herein in Exhibit 10.1 and 10.2 and 20,000 shares of
restricted Common Stock to one of the directors as a promotion bonus. There was
no underwriter involved in the issuances. The issuances were conducted pursuant
to Section 4(2) of the 1933 Act.
T. In August 1998, IVTX issued 10,000 shares of restricted Common Stock to a
new officer of IVTX in consideration for services rendered. There was no
underwriter involved in this issuance. The officer is an accredited purchaser
and had access to IVTX's current offering circular. The issuance was conducted
pursuant to Section 4(2) of the 1933 Act.
U. In August 1998, IVTX issued 250,000 shares of restricted Common Stock each
to two licensors, who are also officers of IVTX, in partial fulfillment of the
terms of their Licensing Agreements referenced herein in Exhibit 10.3 and 10.5.
Before issuance, one officer, as licensor, assigned the total of all 250,000
shares to the other licensor. There was no underwriter involved in the
issuances. The issuances were conducted pursuant to Section 4(2) of the 1933
Act.
V. In October 1998, IVTX issued 8,000 shares of restricted Common Stock to a
new officer of IVTX in consideration for consulting services rendered. There was
no underwriter involved in this issuance. The officer is an accredited purchaser
and had access to IVTX's current offering circular. The issuance was conducted
pursuant to Section 4(2) of the 1933 Act.
W. In October and December 1998, IVTX issued a total of 4,000 shares of
Common Stock to an independent contractor at a purchase price of $.001 per share
(par value) in consideration of services rendered on behalf of IVTX. Total
proceeds of the transaction was $4.00. The purchaser was provided with IVTX's
current offering circular. There was no underwriter involved in the issuances.
The issuances were conducted pursuant to Regulation D, Rule 504, propounded by
the U.S. Securities and Exchange Commission.
X. In November and December 1998, IVTX issued a total of 86,000 shares of
Common Stock to three accredited investors. Total proceeds from the transactions
were $70,914. Each purchaser was provided with IVTX's current offering circular.
There was no underwriter involved in this issuance. The issuance was conducted
pursuant to Regulation D, Rule 504,
<PAGE>
propounded by the U.S. Securities and Exchange Commission.
Y. In December 1998, IVTX issued 6,000 shares of restricted Common Stock to
two independent contractors and one employee in consideration of services
rendered. The contractors and the employee were 'sophisticated' purchasers and
were provided with a copy of IVTX's current offering circular prior to the
transaction. There was no underwriter involved in the issuances. The issuances
were conducted pursuant to Section 4(2) of the 1933 Act.
Z. In December 1998, IVTX received a total of $148,000 from one accredited
purchaser for the issuance of 148,000 shares of restricted Common Stock, of
which 148,000 shares were pending issue at the close of the fiscal year and were
to be issued in 1999. The shares were issued in March 1999. The purchaser was
provided with IVTX's current offering circular. There was no underwriter
involved in this issuance. The issuances were conducted pursuant to Section
4(2)of the 1933 Act.
AA. In February, 1999, IVTX issued a total of 105,000 shares of Common Stock
to three independent contractors at a purchase price of $.001 per share (par
value) in consideration of engineering or production services on behalf of IVTX.
The purchase price of the transaction was recorded at $105.00. Each purchaser
was provided with IVTX's current offering circular. There was no underwriter
involved in the issuances. The issuances were conducted pursuant to Regulation
D, Rule 504, propounded by the U.S.
Securities and Exchange Commission.
AB. In February, 1999, IVTX sold a total of 64,565 shares of Common Stock to
six investors in consideration of cash proceeds totaling $67,198. Each purchaser
was provided with IVTX's current offering circular. There was no underwriter
involved in this issuance. The issuance was conducted pursuant to Regulation D,
Rule 504, propounded by the U.S.
Securities and Exchange Commission.
AC. In February of 1999, IVTX issued 9,000 shares of restricted Common Stock
to a new officer of IVTX in consideration for services rendered. There was no
underwriter involved in this issuance. The officer is an accredited purchaser
and had access to IVTX's current offering circular. The issuance was conducted
pursuant to Section 4(2) of the 1933 Act.
AD. In February and March 1999, IVTX issued 32,200 shares of restricted
Common Stock to three independent contractors in consideration for clinical
consulting and product development services. The contractors were
'sophisticated' purchasers and were provided with a copy of IVTX's current
offering circular prior to the transaction. There was no underwriter involved in
the issuances. The issuances were conducted pursuant to Section 4(2) of the 1933
Act.
AE. In March 1999, IVTX issued 11,000 shares of restricted Common Stock to two
independent contractors in consideration for professional consulting services.
The contractors were 'sophisticated' purchasers and were provided with a copy of
IVTX's current offering circular prior to the transaction. There was no
underwriter involved in the issuances. The issuances were conducted pursuant to
Section 4(2) of the 1933 Act.
<PAGE>
On September 24, 1999, the Company commenced a private placement of up
to 6,666,667 units, each unit consisting of one share of the Company's Common
Stock (the "Share") and one Warrant exercisable at $0.75 for a term of two years
from the date of issuance (the "Warrants") to accredited investors only (the
"Private Placement"). The Private Placement was exempt from the registration
provisions of the Act by virtue of Section 4(2) of the Act, as transactions by
an issuer not involving any public offering. The securities issued pursuant to
the Private Placement were restricted securities as defined in Rule 144. The
Private Placement is continuing and, to date, has generated gross proceeds of
approximately $160,940.
Item 5 Indemnification of Directors and Officers.
<PAGE>
The Company is required by its Bylaws and Certificate of Incorporation to
indemnify, to the fullest extent permitted by law, each person that the Company
is permitted to indemnify. The Company's Charter requires it to indemnify such
parties to the fullest extent permitted by Sections 102(b)(7) and 145 of the
Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law permits the Company to
indemnify its directors, officers, employees, or agents against expenses,
including attorneys fees, judgments, fines and amounts paid in settlements
actually and reasonably incurred in relation to any action, suit, or proceeding
brought by third parties because they are or were directors, officers,
employees, or agents of the corporation. In order to be eligible for such
indemnification, however, the directors, officers, employees, or agents of the
Company must have acted in good faith and in a manner they reasonably believed
to be in, or not opposed to, the best interests of the Company. In addition,
with respect to any criminal action or proceeding, the officer, director,
employee, or agent must have had no reason to believe that the conduct in
question was unlawful.
In derivative actions, the Company may only indemnify its officers, directors,
employees, and agents against expenses actually and reasonably incurred in
connection with the defense or settlement of a suit, and only if they acted in
good faith and in a manner they reasonably believed to be in, or not opposed to,
the best interests of the corporation. Indemnification is not permitted in the
event that the director, officer, employee, or agent is actually adjudged liable
to the Corporation unless, and only to the extent that, the court in which the
action was brought so determines.
The Company's Certificate of Incorporation permits the Company to indemnify its
directors except in the event of: (1) a breach of the duty of loyalty to the
Company or its stockholders; (2) an act or omission that involves intentional
misconduct or a knowing violation of the law and an act or omission not in good
faith; (3) liability arising under Section 174 of the Delaware General
Corporation Law, relating to unlawful stock purchases, redemptions, or payment
of dividends; or (4) a transaction in which the potential indemnity received an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers, or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable
PART F/S
The following financial statements are included herein:
Balance Sheet of IVTX as of December 31, 1998, December 31, 1997, and December
31, 1996 (audited)
Statement of Loss and Accumulated Deficit of IVTX for the years ended December
31, 1998, 1997 and 1996 (audited)
<PAGE>
Statement of Stockholders' Equity of IVTX (audited)
Statements of Cash Flows of IVTX for the period September 6, 1996 (inception) to
December 31, 1998 (audited)
Balance Sheet of the Company as of September 30, 1999 and June 30, 1999
(unaudited)
Statements of Operations of the Company for the three months ended September 30,
1999 and for the period from May 1, 1999 (inception) to September 30, 1999
(unaudited)
Statements of Cash Flows of the Company for the three months ended September 30,
1999 and for the period from May 1, 1999 (inception) to September 30, 1999
(unaudited)
INNOVATIVE TRACKING SOLUTIONS CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
REPORT OF INDEPENDENT AUDITOR
To the Shareholders and Board of Directors
Innovative Tracking Solutions Corporation
I have audited the accompanying balance sheets of Innovative Tracking
Solutions Corporation (A Development Stage Company) as of December 31, 1998,
1997 and 1996, and the related statements of operations, stockholders' equity,
and cash flows for periods then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audits.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a
reasonable basis for my opinion.
The accompanying financial statements have been prepared assuming the
Company will continues as going concern. As discussed in Note H, the Company
has an accumulated deficit at December 31, 1998. These factors raise
substantial doubt about the Company's ability to continue as going concern.
Management's plan in regard to these matters is also discussed in Note H. The
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Innovative
Tracking Solutions Corporation (A Development Stage Company) at December 31,
1998, 1997
<PAGE>
and 1996, and the results of operations and cash flows for the years then
ended, in conformity with generally accepted accounting principles.
Roger G. Castro
Oxnard, California
April 1, 1999
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Consolidated Notes to Financial Statements
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------------------
This summary of significant accounting policies of Innovative Tracking
Solutions Corporation (a development stage company) is presented to assist in
understanding the Company's financial statements. The financial statements
and notes are representations of the Company's management who is responsible
for their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently applied
in the preparation of the financial statements.
Business Activity:
Innovative Tracking Solutions Corporation (a development stage company) was
incorporated in Delaware on September 4, 1996. The Company is licensed to
manufacture and market patented products. The Company has devoted
substantially all of its efforts in establishing its business and has not
generated significant revenues.
Accounts receivable:
Although the Company employs the full accrual method of accounting, there
were no receivables at the end of the year .
Inventory:
Inventories are stated at cost. Cost is determined by specific identification
of each unit.
Furniture & Equipment:
Furniture and equipment are stated at cost. Depreciation is computed using
the straight-line method for both financial statement purposes and income tax
purposes.
<TABLE>
<CAPTION>
Year
<S> <C>
Furniture and equipment 7
</TABLE>
Patents, trademarks:
<PAGE>
Patents and trademarks are carried at costs and only include current costs
subsequent to licensing agreements. Amortization of patents and trademarks are
provided using the straight-line method for financial reporting purposes at
rates based on the remaining legal lives:
<TABLE>
<CAPTION>
Years
<S> <C>
Patents and trademarks 17 - 20
</TABLE>
Revenue & Expense Recognition:
Revenue is recognized when the earning process is complete. Expenses are
recognized as incurred.
Primary Net Income Per Common Share:
Primary net income per share is based on the average number of shares of common
stock outstanding during the year.
NOTE B - RELATED PARTY TRANSACTIONS
- -----------------------------------------------------
Loan receivable is cash advances made to the Company by certain officers and
stockholders of the Company.
Note payable to officer and principal stockholder in the amount of $15,000 is
payable in full plus interest at the rate of 8% per annum on October 15,
1998. Interest expense related to this note was $350 for 1998 and $250 for
1997. The Company issued 4,000 shares of restricted common stock to the
officer in lieu of cash in satisfaction of the accrued interest on the loan.
The amounts related to this transaction are reflected on the income statement
as an interest expense recorded at a value of $.90 per share representing a
discount from the $1.00 offering price of the Company's then current private
placement offering. The discount for these restricted securities was based on
the restrictive nature of the stock being held by the affiliate who is also a
Director of the Company. The values recorded represented 6 months of interest
accrued during the later of 1998 and the beginning of 1999.
Licensing Agreements: The Company issued 500,000 shares of restricted common
stock in satisfaction of licensing agreement contracts to licensors who are
also officers and shareholders of the Company. The amounts related to these
transactions are reflected on the income statement as an expense and were
valued at $.90 per share representing a discount from the $1.00 offering
price of the Company's then current private placement offering. The discount
for these restricted securities was based on the restrictive nature of the
stock being held by the affiliates who are also founders of the Company.
The Company issued 488,000 shares of restricted common stock to officers of
the Company pursuant to the terms of their employment agreements. The amounts
related to these transactions are reflected on the income statement as an
expense and were valued at $.90 per share representing a discount from the
$1.00 offering price of the Company's then current private placement
offering. The discount for these restricted securities was based on the
restrictive nature of the stock being held by the affiliates who are also
founders of the Company.
<PAGE>
NOTE C - INCOME TAXES
- -----------------------------------------------------
As of December 31, 1998, the Company had available for federal income tax
purposes a net operating loss carry forward of approximately $1,747,384, which
expired in various years through 2013.
NOTE D - LEASING ARRANGEMENTS
- -----------------------------------------------------
The Company conducts its operations from facility that is leased under a
two-year noncancelable operating lease expiring in April 1999. In addition, the
Company is leasing office equipment under a three year lease expiring in
November 2000.
The following is a schedule of future minimum rental payments under the above
operating leases as of December 31, 1998:
<TABLE>
<CAPTION>
Year Ending
December 31 Amount
<S> <C>
1999 $6,994
2000 3,394
$10,388
</TABLE>
Rental expense amounted to $15,861 in 1997 and $21,456 in 1998.
NOTE E - OFFERING EXPENSES
- -----------------------------------------------------
Costs are directly attributable to offering of securities and costs of the
offering are charged to expense as incurred.
NOTE F -NONCASH CONSIDERATION
- -----------------------------------------------------
The Company issued stock for consulting, engineering, design and professional
services to non-affiliates of the Company. The amounts related to these
transactions are reflected on the income statement as expenses and were
valued at a fair value of $.25 per share for stocks issued for services in
1996 and early 1997, prior to any private securities offerings made by the
Company. Stocks issued for services later in 1997 and in 1998, during or
after the Company began its private placement, were valued at $2.00 per share
for any Rule 504 issuances and $1.00 per share for any Section 4 (2)
restricted issuances which is consistent with the Company's then current
offering price for those securities.
NOTE G - PAID IN CAPITAL ADJUSTMENTS
- -----------------------------------------------------
Certain shareholders, who are also officers of the Company, elected to draw
funds against the original basis of their stocks.
NOTE H - GOING CONCERN
- -----------------------------------------------------
<PAGE>
The Company has no current operations with which to create sufficient
operating capital. The Company seeks to raise operating capital to develop
and market the technology it has acquired. As of December 31, 1998, the
deficit accumulated during the development stage amounts to $1,747,384.
NOTE I - CONTINGENCIES
- -----------------------------------------------------
The Company and certain related parties who are also officers and
shareholders of the Company entered in to an employment contract agreement
wherein the Company will pay them certain amounts of compensation as funds
are readily available. The total amounts due are $147,917 for 1998, and
$61,875 for 1997.
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
As of December 31, 1997 and 1996 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
ASSETS
Current Assets
Cash in Banks $ 22,551 $ 42,191 $ (1,268)
Accounts Receivable 3,336 - -
Loan receivable - officers 41,952 - -
Inventory 76,982 76,199 47,110
Prepaid Expenses 2,475 1,525 -
------- ------- -------
Total Current Assets 147,296 119,915 45,842
Fixed Assets:
Furniture & Equipment 38,512 9,408 2,866
Less: Accumulate Depreciation (4,769) (1,346) (136)
------- ------- -------
Total Fixed Assets 33,743 8,062 2,730
Other Assets:
Patents, trademarks and rights 28,786 10,931 -
Less accumulated amortization (1,215) (104) -
------- ------- -------
Total Other Assets 27,571 10,827 -
------- ------- -------
TOTAL ASSETS $ 208,610 138,804 48,572
Liabilities & Stockholders' Equity
Current Liabilities:
Accounts payable $ 19,450 7,340 4,922
Accrued expenses 7,294 - -
Note payable - 15,000 -
------- ------- -------
<PAGE>
Total Current Liabilities 26,744 22,340 4,922
Contingencies - NOTE J
Stockholders' Equity:
Common stocks , $.001 par value
Authorized shares - 10,000,000
Issued and outstanding shares:
3,563,490 shares, 1,852,580
shares, and 1,537,000 shares,
respectively 3,533 1,853 1,537
Common Stock Subscribed 30 -
Paid in capital 1,985,687 389,394 123,785
Subscriptions receivable (60,000) - -
Deficit accumulated during the
development stage (1,747,384) (274,783) (81,672)
------- ------- -------
Total Stockholders' Equity 181,866 116,464 43,650
--------- -------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 208,610 $ 138,804 $ 48,572
See Notes to Consolidated Financial Statements
</TABLE>
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Statement of Loss and Accumulate Deficit
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Cumulative
During
Development December 31, December 31 December 31
Stage 1998 1997 1996
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sales $ 11,938 $ 11,938 $ - $ -
Cost of Goods Sold (6,371) (6,371) - -
---------- ------- ------- -------
Gross Profit 5,567 5,567 - -
Operating Expenses:
Advertising & marketing 118,191 82,432 34,713 1,046
<PAGE>
Amortization 1,215 1,111 104 -
Auto Expense 6,042 5,394 648 -
Bank Charges 3,968 2,873 722 373
Contributions 410 60 319 31
Depreciation 4,769 3,423 1,210 136
Education 5,115 4,026 393 696
Entertainment 3,563 3,209 331 23
Insurance 19,233 13,871 5,362 -
Inventory Write-offs 40,214 40,214 - -
Legal and Professional 59,475 57,906 1,238 331
Misc. Expenses 22,891 6,794 13,639 580
Offering Expenses 80,105 54,806 25,299 -
Office Expense 31,094 20,774 8,714 1,606
Outside Service 133,676 96,980 26,321 10,375
Payroll Expense 29,334 29,334 - -
Postage and Copies 7,880 5,166 2,277 437
Promotions-product samples expense 6,450 6,450 - -
Rent 37,317 21,456 15,861 -
Repairs 1,938 1,599 264 75
Research and Development 158,436 57,415 38,969 62,052
Shipping 18,525 14,848 3,509 168
Stock Awards 889,200 889,200 - -
Taxes and Licenses 9,105 8,489 438 178
Trade Shows & conventions 20,168 19,134 565 469
Travel 7,546 7,546 - -
Utilities and Telephone 34,189 21,119 9,974 3,096
-------- --------- --------- ---------
Total Operating Expenses $ 1,748,171 $ 1,475,629 $ 190,870 $ 81,672
<PAGE>
Net loss from operation $(1,742,604) $(1,470,062) $(190,870) $ (81,672)
Other Income (Expenses)
Interest income 1,195 1,183 12 -
Interest expense (5,975) (3,722) (2,253) -
-------- ------- -------- -------
Total Other Income (Expenses) (4,780) (2,539) (2,241) -
-------- ------- -------- -------
Net loss $(1,747,384) (1,472,601) (193,111) (81,672)
Earnings(loss) per share $(0.41) $(0.10) $(0.05)
</TABLE>
See Notes to Financial Statements
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Number Common Common Additional Subscrip- During the
of Shares Stock at Stock Paid-in- tions Development
Outstanding Par Value Subscribed Capital Receivable Stage Total
----------- ---------- ---------- -------- --------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
September 6, 1996 (inception)
Net loss - September 6, 1996
through December 31, 1996 - - $(81,672) $(81,672)
<PAGE>
Stocks issued for cash - from
September 6, 1996 (inception)
to December 31, 1996
Restricted shares 1,495,500 $1,496 $113,451 114,947
Stocks issued for past, present,
and future services - from
September 6, 1996 to
December 31, 1996 - 41,500 41 10,334 10,375
--------- -------- -------- -------- -------- -------- --------
Balance at
December 31, 1996 1,537,000 1,537 123,785 (81,672) 43,650
Net loss - January 1, 1997
Through December 31, 1997 - (193,111) (193,111)
Stocks issued for cash -
from January 1, 1997 to
December 31, 1997 240,080 240 294,548 294,788
Paid in capital adjustments (52,866) (52,866)
(NOTE G)
Stocks issued for past, present,
and future services - from
January 1, 1997 to
December 31, 1997 - (NOTE F) 71,000 71 17,679 17,750
Stocks issued for payments
in lieu of cash - (NOTE F)
January 1, 1997 to
December 31, 1997 2,000 2 3,998 4,000
Interest expense (NOTE B) 2,500 3 2,250 2,253
--------- -------- --------- -------- -------- -------- --------
Balance at December 31, 1997 1,852,580 $1,853 - 389,394 - (274,783) 116,464
Net Loss for 1998 (1,472,601) (1,472,601)
</TABLE>
Stocks issued for cash -
From January 1, 1998
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
to December 31, 1998 542,410 542 516,718 517,260
Paid in capital adjustments (40,796) (40,796)
(NOTE G)
Stocks issued for services in lieu
of cash - January 1, 1998 to
December 31, 1998 (NOTE F) 149,000 149 169,851 170,000
Restricted Stocks issued in lieu of
Cash as per contract agreements -
from January 1, 1998 to
December 31, 1998
Licensing Agreements
(NOTE B) 500,000 500 450,000 450,500
Employment Agreements
(NOTE B) 488,000 488 439,200 439,688
Interest expense (NOTE B) 1,500 1 1,350 1,351
Common stock subscription 30,000 30 59,970 (60,000) -
--------- ------- ----- -------- -------- -------- --------
Balance at December 31, 1998 3,563,490 $ 3,533 30 $ 1,985,687 $(60,000) $(1,747,384) $181,866
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Statements of Cash Flows
For the period September 6, 1996 (inception) to December 31, 1998
Cumulative September 6,
During 1996 (inception)
Development December 31, December 31 to December 31
Stage 1998 1997 1996
----------- ----------- ----------- ---------------
<PAGE>
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(1,747,384) $(1,472,601) $ (193,111) $ (81,672)
Adjustments to reconcile Net Loss
to net cash provided by operating
activities:
Depreciation & amortization 5,984 4,534 1,314 136
Services paid by stocks 1,095,917 1,061,539 24,003 10,375
Increase in accounts receivable (3,336) (3,336) - -
Increase in loans receivable - officers (41,952) (41,952) - -
Increase in inventory (76,982) (783) (29,089) (47,110)
Increase in prepaid expenses (2,475) (950) (1,525) -
Increase (decrease) in accounts payable 19,450 12,110 (2,418) 4,922
Increase (decrease) in accrued expenses 7,294 7,294 - -
--------- -------- ------- ---------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES $(743,484) $(434,145) $ (195,990) $ (113,349)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (38,512) (29,104) (6,542) (2,866)
Acquisition of other assets (28,786) (17,855) (10,931) -
--------- -------- ------- ---------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES $ (67,298) $ (46,959) $ (17,473) $ (2,866)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable - (15,000) 15,000 -
Proceeds from issuance of common stock 926,995 517,260 294,788 114,947
Reduction in paid in capital (93,662) (40,796) (52,866) -
--------- -------- -------- -------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES 833,333 461,464 256,922 114,947
<PAGE>
INCREASE (DECREASE) IN CASH 22,551 (19,640) 43,459 (1,268)
BEGINNING CASH - 42,191 (1,268) -
--------- ------- -------
ENDING CASH $ 22,551 $ 22,551 $ 42,191 $ (1,268)
Schedule of noncash transactions
Issuance of stock in exchange for
Services $1,095,917 $1,061,539 24,003 $ 10,375
Stock Subscription receivable 78,700 60,000 18,700 -
--------- --------- ------- --------
$1,174,617 $1,121,539 $ 42,703 $ 10,375
</TABLE>
See notes to Financial Statements
THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
A. FOR THE THREE MONTHS ENDED
B. SEPTEMBER 30, 1999 AND
C. FOR THE PERIOD FROM MAY 1, 1999 (INCEPTION)
D. TO SEPTEMBER 30, 1999
<PAGE>
THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
June 30, 1999 and September 30, 1999 (unaudited)
Page
FINANCIAL STATEMENTS
Balance Sheets 1
Statements of Operations 2
Statements of Cash Flows 3 - 4
Notes to Financial Statements 5 - 8
THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 1999 and September 30, 1999 (unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
(unaudited)
<S> <C> <C>
Current assets
Cash $ 131,059 $ -
Prepaid expenses 8,000 -
Total current assets 139,059 -
Furniture and equipment, net 562,285 581,674
Total assets $ 701,344 $ 581,674
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 83,081 $ -
Accrued marketing 414,482 -
Accrued professional fees 114,500 -
Accrued salaries 48,000 -
Total current liabilities 660,063 -
Stockholders' equity
<PAGE>
Common stock, $0.001 par value
110,000,000 shares authorized
107,049,558 (unaudited) and
106,819,558 shares issued and
outstanding 107,050 106,820
Paid-in capital 618,409 478,639
Deficit accumulated during the
development stage (684,178) (3,785)
Total stockholders' equity 41,281 581,674
Total liabilities and
stockholders' equity $ 701,344 $ 581,674
</TABLE>
THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1999 (unaudited) and For the Period
From May 1, 1999 (Inception) to September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
For the
Period from
For the May 1,
Three Months 1999
Ended (Inception) to
September 30, September 30,
1999 1999
<S> <C> <C>
Revenue $ - $ -
Cost of goods sold - -
Gross profit - -
Selling, general, and administrative expenses 680,684 684,469
Loss from operations (680,684) (684,469)
Other income (expense)
Interest income 291 291
Net loss $ (680,393) $ (684,178)
Basic loss per share $ (0.01) $ (0.01)
1. Weighted-average shares outstanding 106,839,812 106,831,817
</TABLE>
THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 1999 (unaudited) and For the Period
From May 1, 1999 (Inception) to September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
For the
Period from
<PAGE>
For the May 1,
Three Months 1999
Ended (Inception) to
September 30, September 30,
1999 1999
<S> <C> <C>
Cash flows from operating activities
Net loss $ (680,393) $ (684,178)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities
Depreciation 19,389 19,389
Decrease in
Accounts receivable - 3,336
Loans receivable - officers - 41,952
Inventories - 76,982
Prepaid expenses (8,000) (5,525)
Decrease in
Accounts payable 83,081 52,295
Accrued expenses - (7,294)
Accrued marketing 414,482 414,482
Accrued professional fees 114,500 114,500
Accrued salaries 48,000 48,000
Net cash provided by (used in)
operating activities (8,941) 73,939
Cash flows from investing activities
Acquisitions of furniture and equipment - 33,743
Other assets - 27,571
Net cash provided by investing
activities - 61,314
Cash flows from financing activities
Paid in capital - (1,985,687)
Subscription receivable - 60,000
Proceeds from sale of common stock 140,000 473,540
Deficit accumulated during the development
stage - 1,425,402
Net cash provided by (used in)
financing activities 140,000 (26,745)
</TABLE>
THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (Continued)
For the Three Months Ended September 30, 1999 (unaudited) and For the Period
From May 1, 1999 (Inception) to September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
For the
Period from
For the May 1,
Three Months 1999
Ended (Inception) to
<PAGE>
September 30, September 30,
1999 1999
<S> <C> <C>
Net increase in cash $ 131,059 $ 108,508
Cash, beginning of period - 22,551
Cash, end of period $ 131,059 $ 131,059
</TABLE>
NOTE 1 - BUSINESS ACTIVITY
thehealthchannel.com, Inc., formerly known as Innovative Tracking
Solutions Corporation, (the "Company") was incorporated in Delaware. It operates
a consumer-based health supersite (http://www.thehealthchannel.com).
NOTE 2 - SIGNIFICANT TRANSACTIONS
On April 16, 1999, the Company transferred all of its assets and
liabilities based on majority stockholder approval to a newly formed private
company. The Company's plan of operations following the transfer of assets and
liabilities was to seek and complete a merger or acquisition transaction with a
small- or medium-sized enterprise which desired to become or remain a public
corporation.
On July 28, 1999, the Company completed the following:
1. found an appropriate acquisition candidate and, pursuant to its bylaws and
general Delaware corporate law, the Company acquired assets from Biologix
International, Ltd., consisting primarily of the thehealthchannel.com website
and related technology in exchange for the 1,185,243 shares of the Company's
common stock held by the public. The value of the 885,868 free trading shares
issued by the Company is based on the Company's closing stock price of $0.531 on
the date of the acquisition, July 28, 1999, and the value of the 299,375
restricted shares issued is based on a discount of 30% from the Company's
closing stock price on the date of the acquisition.
2. increased the number of authorized shares of common stock to 110,000,000.
3. implemented a forward stock split of 28.22-to-1 of all outstanding shares of
the Company's common stock outstanding as of July 29, 1999.
In connection with this change of control, the Company's name was changed to
thehealthchannel.com, Inc. on July 28, 1999. The acquisition closed on July 28,
1999.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles for interim financial
<PAGE>
information and with the instructions to Form 10-QSB and Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all normal, recurring adjustments considered
necessary for a fair presentation have been included. The financial statements
should be read in conjunction with the audited financial statements included in
the Company's Amended Current Report on Form 8-K/A for the period from May 1,
1999 (inception) to June 30, 1999. The results of operations for the three
months ended September 30, 1999 are not necessarily indicative of the results
that may be expected for the year ended June 30, 2000.
Revenue and Expense Recognition
Revenue is recognized when the earning process is complete. Expenses are
recognized as incurred.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
highly-liquid investments purchased with original maturities of three months or
less to be cash equivalents.
Furniture and Equipment
Furniture and equipment are stated at cost. The Company provides for
depreciation using the straight-line method over an estimated useful life of
five years. Expenditures for maintenance and repairs are charged to operations
as incurred while renewals and betterments are capitalized. Gains or losses on
the sale of furniture and equipment are reflected in the statements of
operations.
Basic Net Loss per Share
Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares outstanding.
Diluted loss per share is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive. Because the Company has
incurred a net loss, basic and diluted loss per share are the same.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to future net cash flows
expected to be generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount exceeds the fair value of the assets. To date, no impairment has
occurred.
Development Stage Enterprise
The Company is a development stage company as defined in Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises." The Company is devoting substantially all of its present efforts
to establish a new business, and its planned principal operations have not yet
commenced. All losses accumulated since inception have been considered as part
of the Company's development stage activities.
<PAGE>
NOTE 4 - FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
(unaudited)
<S> <C> <C>
Purchased technology $ 581,674 $ 581,674
Less accumulated depreciation 19,389 -
Total $ 562,285 $ 581,674
</TABLE>
NOTE 5 - STOCKHOLDERS' EQUITY (UNAUDITED)
During the three months ended September 30, 1999, the Company issued 180,000
restricted shares of the Company's common stock and 180,000 warrants to purchase
restricted shares of the Company's common stock with an exercise price of $0.75
for proceeds of $135,000. The shares issued and the shares issuable upon
exercise of the warrants have piggyback registration rights in the event the
Company files a Registration Statement with the Securities and Exchange
Commission. The warrants vest immediately and expire two years from the date of
issuance.
NOTE 5 - STOCKHOLDERS' EQUITY (UNAUDITED) (Continued)
During the three months ended September 30, 1999, the Company issued 50,000
restricted shares of the Company's common stock for proceeds of $5,000. The
shares issued have piggyback registration rights in the event the Company files
a Registration Statement with the Securities and Exchange Commission.
PART III
Item 1. Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
<C> <S>
3.1 Articles of Incorporation*
3.2 Amendment to Articles of Incorporation*
3.3 Certificate of Correction to Articles of Incorporation*
3.4 By-laws*
3.5 Amended By-laws*
4.1 Specimen Certificate of Common Stock*
4.2 Specimen Warrant Certificate of Common Stock*
<PAGE>
<C> <S>
10.1 Employment Agreement dated, July 15, 1997
between the Company and President/CEO, Dianna Cleveland*
10.2 Employment Agreement dated, July 15, 1997 between
the Company and Vice President/CFO/COO, Lee A. Namisniak*
10.3 Exclusive Product Licensing Agreement for the
Private Practice(tm) Vibration Reminder Disk*
10.4 Addendum to Licensing Agreement - Schedule A & B*
10.5 Licensing Agreement for the
Smart Kitchen(tm) Food Tracking System*
10.6 Addendum to Licensing Agreement - Schedule A & B*
10.7 Acquisition, Stock Purchase, and Exchange Agreement, dated July
28, 1999
10.8 Stock Purchase Agreement and Warrant Agreement (form) for pending
private placement
10.9 24/7 Media Inc. Network Affiliation Agreement, dated September 9,
1999
10.10 Employment Agreement with Thomas F. Lonergan, dated September 1,
1999
10.11 Employment Agreement with Donald A. Shea, dated September 1, 1999
27.1 Financial Data Schedule
99.0 Office Lease*
- ---------------------------
*Previously filed.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
THE HEALTHCHANNEL.COM, INC.
<PAGE>
/s/ Donald A. Shea
By: Donald A. Shea
Its: President, Chief Executive
Officer, Director
POWER OF ATTORNEY
Each person whose signature appears appoints Donald A. Shea, and in his absence,
Thomas F. Lonergan, as his agent and attorney-in-fact, with full power of
substitution to execute for him and in his name, in any and all capacities, all
amendments (including post-effective amendments) to this Registration Statement
to which this power of attorney is attached. In accordance with the requirements
of the Securities Act of 1933, this Registration Statement was signed by the
following persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Donald A. Shea
Donald A. Shea Chief Executive Officer, Director December 2, 1999
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Thomas F. Lonergan
Thomas F. Lonergan Chief Financial Officer, Director,
Chief Operating Officer, Executive
Vice President, Secretary December 2, 1999
/s/Balazs Imre Bodai
Balazs Imre Bodai Director December 2, 1999
/s/ Joseph K. Song
Joseph K. Song Director December 2, 1999
/s/ Jeffrey Berg
Jeffrey Berg Director December 2, 1999
</TABLE>
<PAGE>
Exhibit 10.7
Acquisition, Stock Purchase, and Exchange Agreement,
dated July 28, 1999
ACQUISITION, STOCK PURCHASE AND EXCHANGE AGREEMENT
THIS AGREEMENT, made as of the 28th day of July, 1999, is by and between
BioLogix International, Ltd., a Delaware corporation (the "PURCHASER") and
Innovative Tracking Solutions, Corporation, a Delaware corporation (the
"COMPANY"), and Dianna Cleveland, an individual, Lee Namisniak, an individual,
and Lou Weiss, an individual (collectively referred to as the "SHAREHOLDERS").
WITNESSETH
WHEREAS, the COMPANY is a publicly held Delaware corporation, traded on
the Over-the-Counter Bulletin Board under the symbol "IVTX", with a total of
10,000,000 shares of common stock authorized and 3,785,243 shares issued and
outstanding of which 1,185,243 shares are held by the public and 2,600,000
restricted shares are held by management. Of the shares held by the public,
there are approximately 410,677 Regulation D, Rule 504 free trading shares,
475,191 restricted shares that have been held more than one year and are
currently tradable under Rule 144, and 299,375 restricted shares under Rule 144
that have been held less than one year.
WHEREAS, SHAREHOLDERS are the owners of 2,600,000 shares (the "Shares") of
the Common Stock of Innovative Tracking Solutions Corporation ("COMPANY"); and
WHEREAS, PURCHASER is a publicly held Delaware corporation, traded on the Over-
the-Counter Bulletin Board under the symbol "BGIX" and is in the business of
internet healthcare information services with a total of approximately
20,000,000 freely tradable and 50,000,000 restricted shares of stock issued and
outstanding; and
WHEREAS, SHAREHOLDERS desire to sell 2,550,000 Shares to the PURCHASER on
the terms and conditions set forth in this Acquisition, Stock Purchase and
Exchange Agreement (hereinafter called "Agreement"); and WHEREAS, the COMPANY
desires to acquire the majority of assets of PURCHASER,
<PAGE>
specifically, 100% of the proprietary website, "thehealthchannel.com" and
related technology (the "WEBSITE"), in exchange for the majority of
outstanding common stock of COMPANY; and
WHEREAS, the PURCHASER desires the COMPANY to conduct a forward split of
its current outstanding stock in order to facilitate a 1 to 1 exchange of
outstanding shares of PURCHASER for shares of COMPANY and to facilitate a 2 to 1
forward exchange of outstanding shares of COMPANY to COMPANY's shareholders
(hereinafter referred to as the "SHARE EXCHANGE PLAN"); and
WHEREAS, it is the intention of the parties that the transactions completed
hereby shall to the extent possible, be structured as a tax deferred exchange
and reorganization, as defined in the Internal Revenue Code of 1986, resulting
in no adverse tax liability to the SHAREHOLDERS, the COMPANY, the PURCHASER and
that all the terms of the Agreement shall be interpreted, construed and enforced
to effectuate this intent.
NOW THEREFORE, in consideration of the promises and respective mutual
agreements herein contained, it is agreed by and between the parties hereto as
follows:
AGREEMENT
1) Sale of the Shares. Upon the execution of this Agreement as provided in
Section 2 hereto (the "Closing"), subject to the terms and conditions herein set
forth, and on the basis of the representations, warranties and agreements herein
contained, SHAREHOLDERS shall sell to PURCHASER, and PURCHASER shall purchase
from SHAREHOLDERS, the Shares.
a) Instruments of Conveyance and Transfer. Within fifteen (15) days of the
Closing, SHAREHOLDERS shall deliver certificates representing the Shares to the
Custodian, Horwitz & Beam, for further delivery to the PURCHASER, in form and
substance satisfactory to PURCHASER, as shall be effective to vest in PURCHASER
all right, title and interest in and to all of the Shares, as set forth in
Section 3 herein.
b) Consideration and Payment for the Shares. In consideration for the Shares
PURCHASER shall pay the purchase price equal to $250,000 ("Purchase Price"),
receipt of which is acknowledged.
2) Closing. The Closing shall be deemed to have occurred upon the date of
signing of this Agreement. Following the closing, subsequent actions by the
parties as provided in Section 3 hereto shall occur in a timely manner.
3) Subsequent Actions of SHAREHOLDERS
a) SHAREHOLDERS shall deliver to the Custodian for further delivery to the
PURCHASER stock certificates and any and all other instruments of conveyance and
transfer required by Section 1 hereto.
b) SHAREHOLDERS shall deliver, or cause to be delivered, to the Custodian for
further delivery to the PURCHASER such instruments, documents and certificates
as are required to be delivered by SHAREHOLDERS or its representatives pursuant
to the provisions of this Agreement.
<PAGE>
4) Subsequent Actions of CUSTODIAN
a) Upon the delivery of the Shares by SHAREHOLDERS to the CUSTODIAN, the
CUSTODIAN shall hold, administer and distribute the Shares to PURCHASER pursuant
to the terms of this Agreement upon the closing of this Agreement or another
mutually agreeable date.
5) Subsequent Actions of COMPANY
a) The COMPANY shall cancel all issued securities options convertible into IVTX
shares as requested by PURCHASER.
b) The COMPANY shall change its name to "thehealthchannel.com, Inc." and
increase its authorized capital stock to one hundred ten million (110,000,000)
shares of common stock.
c) The COMPANY shall implement a forward stock split of 28.22 to 1 of all
outstanding IVTX shares of record as of July 29, 1999 resulting in a total of
approximately 106,819,558 shares outstanding consisting of 24,999,195 tradable
shares and 81,820,362 restricted shares in order to bring its current
outstanding shares to a level that will facilitate an exchange of shares with
the total outstanding shares of PURCHASER. The split shall not be intended to
effect the current trading price of IVTX on the record date. The post-split
shares are hereinafter referred to as the "THCL" shares.
<TABLE>
<CAPTION>
The post-split shares are intended to be allocated as follows:
<S> <C> <C>
1. 20,000,000 Tradable shares for PURCHASER's public float (1:1
exchange); and
2. 81,221,614 Restricted shares for PURCHASER's restricted shareholders,
treasury and contingencies; and
3. 3,127,458 Tradable shares for PURCHASER's treasury for
contingencies; and
4. 1,771,736 Tradable shares for COMPANY's public tradable float (2:1
exchange);
5. 598,750 Restricted shares for COMPANY's restricted public
shareholders, excluding management (2:1 exchange); and
6. 100,000 Shares to IVTX management (2:1 exchange).
106,819,558 Total Outstanding Shares
</TABLE>
The extra restricted stock not used will be cancelled by PURCHASER and/or
utilized in a private placement, at the discretion of PURCHASER.
d) The COMPANY shall authorize its transfer agent to forward and release
<PAGE>
all shareholder lists and relevant records to the PURCHASER's transfer agent
following the forward split.
e) The COMPANY shall assist PURCHASER in responding to any comments received
relative to the COMPANY'S Form 10-SB disclosure document filed with the
Securities and Exchange Commission ("SEC") on December 14, 1998 (the "Form
10-SB), including any amendments thereto.
f) Upon the final completion of the Acquisition and Share Exchange Plan, the
COMPANY's Board of Directors and Officers will resign said directorships and
offices and, by a duly authorized resolution prior to their resignation,
shall appoint Don Shea as President and Director, and Thomas F. Lonergan as
Secretary, Treasurer and Director of the COMPANY.
g) The COMPANY shall deliver, or cause to be delivered, to the Custodian for
further delivery to the PURCHASER such instruments, documents and
certificates as are required to be delivered by COMPANY or its
representatives pursuant to the provisions of this Agreement and copies of
all corporate records and securities filings in the COMPANY's possession.
h) The COMPANY shall notify its shareholders as to the details of this
Agreement and require its shareholders to make their final elections for
options previously given to its shareholders to exchange their IVTX shares
into private shares of Innovative Tracking Solutions Corporation, a private
Nevada Corporation, (hereinafter referred to as "ITSC PRIVATE SHARES"), and
to finalize all exchanges and transfers in a timely manner. The parties to
this Agreement understand that prior to the signing of this Agreement, the
COMPANY estimated that all but 325,000 IVTX shares held by COMPANY's public
shareholders would be submitted for exchange into ITSC PRIVATE SHARES. The
parties further understand that this estimate was based on the elections for
exchange previously submitted by the COMPANY's shareholders based on the
COMPANY'S intention to merge with Desert Sun Investments, Ltd. and prior to
the notification to COMPANY's shareholders of the proposed acquisition of
"thehealthchannel.com" and the terms of this Agreement. The parties to this
Agreement understand that after notification to the COMPANY's shareholders by
COMPANY of the terms of this Agreement, that the COMPANY is obligated to
allow its shareholders to change their elections for exchange of IVTX shares
into ITSC PRIVATE SHARES, and that said elections will undoubtedly change.
The parties understand that said changes in elections could result in as much
as 100% of IVTX shares held by the COMPANY'S public shareholders remaining
un- exchanged for ITSC PRIVATE SHARES and that all un- exchanged IVTX shares
that remain to be held by the COMPANY'S shareholders, including 50,000 shares
retained by COMPANY's current management, shall be split, and upon surrender,
shall be exchangeable into THCL shares on a basis of two shares of THCL for
each IVTX post-split share held.
i) The COMPANY shall use its best efforts to secure from each IVTX
shareholder of record as of July 29, 1999 a signed affidavit that releases
all claim and title to 26.22 post-split shares pursuant to the SHARE EXCHANGE
PLAN thereby allowing said post-split shares to be exchanged on a 1 to 1
basis with BGIX shareholders while resulting in a 2 to 1 forward exchange for
COMPANY's shareholders.
j) The COMPANY shall use its best efforts to coordinate the sale of all
shares held in THCL by the COMPANY's existing shareholders, including shares
retained by COMPANY's management, in a manner that minimizes the number of
shares being sold in the market to approximately 10% per month of the total
<PAGE>
shares held by COMPANY's public shareholders over a period of ten (10)
consecutive months following the date of this Agreement. The parties
understand that any shares held by COMPANY's existing management or
affiliated parties shall not be tradable for a minimum of ninety (90) days
following the execution of this Agreement but that the monthly limitation
shall still expire ten (10) months from the date of this Agreement. The
parties to this Agreement understand that no assurance can be given that the
monthly limitation will be achieved, and if not achieved, shall not
constitute a breach of this Agreement.
6) Subsequent Actions of PURCHASER.
a) The PURCHASER shall deliver the Purchase Price as required in Section 1(b)
of this Agreement.
b) The PURCHASER shall deliver, or cause to be delivered, to SHAREHOLDERS and
COMPANY such instruments, documents and certificates as are required to be
delivered by the PURCHASER or its representatives pursuant to the provisions
of this Agreement.
c) The PURCHASER shall transfer its WEBSITE to the COMPANY.
d) The PURCHASER shall handle the redistribution of all THCL shares as
follows: each free-trading BGIX share submitted for exchange by a BGIX
shareholder shall be exchanged for one TRADABLE THCL SHARE and each
restricted BGIX share submitted for exchange by a BGIX shareholder shall be
exchanged for one restricted THCL share. Each free trading IVTX share, held
as of record date of July 29, 1999, submitted for exchange by an IVTX
shareholder shall be exchanged for two TRADABLE THCL SHARES and each IVTX
restricted share, held as of record date of July 29, 1999, submitted for
exchange by an IVTX shareholder shall be exchanged for two restricted THCL
shares. All IVTX shares that bear a restricted legend that are submitted for
exchange into THCL shares shall be exchanged for certificates of THCL that
are time-stamped with the original issue date of the IVTX shares, thereby not
commencing a new holding period. However, it is understood that the foregoing
exchange of restricted BGIX shares into THCL restricted shares may recommence
the holding period for said shares.
e) The PURCHASER shall bear the sole responsibility of conducting all
transactions for exchange by way of a proper registration or appropriate
exemption.
f) The PURCHASER agrees that all transfer agent costs incurred for both the
PURCHASER'S and the COMPANY's transfer agents relative to this Agreement,
IVTX, BGIX and THCL, shall be the sole responsibility of the PURCHASER.
g) The PURCHASER shall cancel all extra THCL shares at a future date that is
mutually agreeable to all the parties of this Agreement.
h) The PURCHASER shall include feature product coverage of the Private
Practice" Vibration Reminder Disk product line and programs on the
"thehealthchannel.com" website each month for at least six months with banner
ads at least five days per month. The PURCHASER also agrees to include video
streaming of the feature segment of the Private Practice" Vibration Reminder
Disk which will air on an upcoming edition of American Medical Review (AMR)
on National Public Television upon the approval of AMR.
<PAGE>
7) Representations and Warranties of SHAREHOLDERS
a) Validity of SHAREHOLDERS' Shares. The Shares to be delivered to PURCHASER
hereunder from the SHAREHOLDERS have been duly authorized by the appropriate
corporate action of COMPANY.
b) Clean Title of the Shares. The SHAREHOLDERS shall transfer title, in and
to the Shares to PURCHASER free and clear of all liens, security interests,
pledges, encumbrances, charges, restrictions, demands and claims, of any kind
and nature whatsoever, whether direct or indirect or contingent.
c) Delivery of the Shares. SHAREHOLDERS shall deposit with the Custodian,
certificates in fully transferable form with Medallion Signature Guaranteed
signatures representing the Shares subject to no liens, security interests,
pledges, encumbrances, charges, restrictions, demands or claims in any other
party whatsoever, except as set forth in the legend on the certificate, which
legend shall provide as follows:
THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION
OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
d) Restricted Shares. PURCHASER acknowledges that the Shares are "restricted
securities" (as such term is defined in Rule 144 ("Rule 144") promulgated
under the Securities Act of 1933, as amended (the "Act"), that the Shares may
include the foregoing restrictive legend, and, except as otherwise set forth
in this Agreement, that the Shares cannot be sold except in accordance with
Rule 144 promulgated by the Securities and Exchange Commission, or unless
registered with the SEC and qualified by appropriate state securities
regulators, or unless PURCHASER otherwise complies with an exemption from
such registration and qualification (including, without limitation,
compliance with Rule 144).
8) Representations and Warranties of the COMPANY.
a) Organization. COMPANY is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware, has all necessary corporate
powers to own properties and to carry on its business as now owned and
operated by it, is duly qualified to do business and is in good standing in
each of the jurisdictions where its business requires qualification. COMPANY
is currently in good standing with its Transfer Agent, Atlas Stock Transfer.
b) Authority. The Board of Directors of COMPANY have authorized the execution
of this Agreement and the transactions contemplated herein and has full power
and authority to execute, deliver, and perform this Agreement based on a
unanimous vote of shareholders obtained at a meeting duly convened on April
12, 1999.
c) Capital. The authorized capital stock of COMPANY consists of 10,000,000
shares of $.001 par value common stock of which 3,785,243 shares are
currently issued and outstanding. All of the issued and outstanding shares
are validly issued, fully paid, and non-assessable. All currently
<PAGE>
outstanding shares of COMPANY'S common stock have been issued in compliance
with applicable federal and state securities laws.
d) Subsidiaries. COMPANY has no subsidiaries and does not own any interest in
any other enterprise, whether or not enterprise is a corporation.
e) Directors and Officers. The COMPANY's Form 10-SB, as filed with the SEC on
December 14, 1998, including all amendments thereto, contains the names and
titles of all officers and directors of COMPANY as of the date of this
Agreement.
f) Financial Statements. The COMPANY's Form 10-SBA filed with the SEC on
April 5, 1999 includes the COMPANY's audited financial statements as of
December 31, 1998. The financial statements have been prepared in accordance
with generally accepted accounting principles and practices consistently
followed throughout the period indicated and fairly present the financial
position of COMPANY as of the dates of the balance sheets included in the
financial statements and the results of operations for the periods indicated.
g) Absence of Changes. Since the date of COMPANY's most recent financial
statements, the COMPANY's assets and liabilities have been transferred to
another entity. All such assets formerly owned by the COMPANY are hereby
excluded from this transaction.
h) Absence of Undisclosed Liabilities. As of the date of COMPANY's most
recent balance sheet, included in the Form 10-SB, it did not have any
material debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that is
not reflected in such balance sheet.
i) Tax Returns. With the times and in the manner prescribed by law, COMPANY
has filed all federal, state or local tax returns required by law, has paid
all taxes, assessments and penalties due and payable and has made adequate
provisions on its most recent balance sheet for any unpaid taxes. There are
no present disputes as to taxes of any nature payable by COMPANY.
j) Investigation of Financial Condition. Without in any manner reducing or
otherwise mitigating the representations contained herein, representatives of
PURCHASER shall have the opportunity to meet with COMPANY's accountants and
attorneys to discuss the financial condition of COMPANY. COMPANY shall make
available to representatives of PURCHASER all books and records of COMPANY.
k) Compliance with Laws. COMPANY has complied with, and is not in violation
of, applicable federal, state or local statutes, laws and regulations
affecting its properties, securities or the operation of its business.
l) Litigation. COMPANY is not a party to, nor to the best of its knowledge is
there pending or threatened, any suit, action, arbitration or legal,
administrative or other proceedings, or governmental investigation concerning
its business, assets or financial condition.
m) Ability to Carry Out Obligations. The execution and delivery of this
Agreement by COMPANY and the performance of its obligations hereunder will
not cause, constitute, conflict with or result in (i) any breach of the
<PAGE>
provisions of any license, indenture, mortgage, charter, instrument,
certificate of incorporation, bylaw or other agreement or instrument to which
it is a party or by which it may be bound, nor will any consents or
authorizations of any party other than those hereto be required, (ii) an
event that would permit any party to any agreement or instrument to terminate
it or to accelerate the maturity of any indebtedness or other obligation, or
(iii) an event that would result in a creation or imposition of any lien,
charge, or encumbrance on any asset.
n) Full Disclosure. None of the representations and warrantees made by
COMPANY herein, or in any exhibit, certificate, or memorandum furnished or to
be furnished by it or on its behalf, contains or will contain any untrue
statement of a material fact, or omits any material fact, the omission of
which would be misleading.
o) Assets. COMPANY has had good and marketable title to all of its property
free and clear of any and all liens, claims and encumbrances.
p) Indemnification. COMPANY agrees to indemnify, defend and hold harmless
PURCHASER against and in respect to any and all claims, demands, losses,
costs, expenses, obligations, liabilities or damages, including interest,
penalties, and reasonable attorneys fees, incurred or suffered, which arise
out of, result from or relate to any breach of, or failure by COMPANY to
perform any of its representations, warranties, or covenants in this
Agreement or in any exhibit or other instrument furnished, or to be
furnished, under this Agreement and from any and all claims, demands, losses,
costs, expenses, obligations, liabilities, or damages which arise form
activities prior to the date of the transfer of assets from PURCHASER to
COMPANY as set forth in Section 6(c).
q) Validity of COMPANY Shares. The Shares of COMPANY $.001 par value common
stock to be issued pursuant to this Agreement will be duly authorized,
validly issued, fully paid and nonassessable under Delaware law.
9. Representations of Warranties of PURCHASER
a) Organization. PURCHASER is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware, has all necessary corporate
powers to own properties and to carry on its business as now owned and
operated by it, is duly qualified to do business, and is in good standing in
each of the jurisdictions where its business requires qualification.
b) Capital. The authorized capital stock of PURCHASER consists of one hundred
million (100,000,000) shares of common stock of which approximately
20,000,000 free trading shares and 50,000,000 restricted shares are currently
issued and outstanding. All of the issued and outstanding shares are validly
issued, fully paid and nonassessable.
c) Subsidiaries. PURCHASER has no subsidiaries.
d) Directors and Officers. Don Shea, President and Thomas F. Lonergan, Vice
President, C.O.O., Secretary, and Treasurer are the officers of the Company.
e) Investigation of Financial Condition. Without in any manner reducing or
otherwise mitigating the representations contained herein, COMPANY and/or
<PAGE>
its attorneys shall have the opportunity to meet with accountants and
attorneys to discuss the financial condition of PURCHASER. PURCHASER shall
make available to COMPANY and/or its attorneys all books and records of
PURCHASER. Further, PURCHASER shall provide a copy of its most recent
financial statements to COMPANY and SHAREHOLDERS prior to the Closing. If the
transaction contemplated hereby is not completed, all documents received by
COMPANY and/or its attorneys shall be returned to PURCHASER and all
information so received shall be treated as confidential.
f) Compliance with Laws. PURCHASER has complied with, and is not in violation
of, applicable federal, state or local statutes, laws and regulations
affecting its properties, securities or the operation of its business.
g) Litigation. PURCHASER is not a party to, nor to the best of its knowledge,
is there pending or threatened, any suit, action, arbitration or legal,
administrative or other proceedings, or governmental investigation concerning
its business, assets or financial condition. PURCHASER is not in default with
respect to any order, writ, injunction or decree of any federal, state,
local, or foreign court or agency, nor is it engaged in, nor does it
anticipate it will be necessary to engage in, any lawsuits to recover money
or real or personal property.
h) Authority. The SHAREHOLDERS and Board of Directors of PURCHASER have
authorized the execution of this Agreement and the transactions contemplated
herein and it has full power and authority to execute, deliver, and perform
this Agreement.
i) Ability to Carry Out Obligations. The execution and delivery of this
Agreement by PURCHASER and the performance of its obligations hereunder will
not cause, constitute, conflict with or result in (i) any breach of the
provisions of any license, indenture, mortgage, charter, instrument,
certificate of incorporation, bylaw or other agreement or instrument to which
it is a party or by which it may be bound, nor will any consents or
authorizations of any party other than those hereto be required, (ii) an
event that would permit any party to any agreement or instrument to terminate
it or to accelerate the maturity of any indebtedness or other obligation, or
(iii) an event that would result in a creation or imposition of any lien,
charge, or encumbrance on any asset.
j) Full Disclosure. None of the representations and warranties made by
PURCHASER herein, or in any exhibit, certificate, or memorandum furnished or
to be furnished by it or on its behalf, contains or will contain any untrue
statement of a material fact, or omits any material fact, the omission of
which would be misleading.
k) Assets. PURCHASER has good and marketable title to all of its property
free and clear of any and all liens, claims and encumbrances.
l) Indemnification. PURCHASER agrees to defend and hold SHAREHOLDERS and
COMPANY and its officers and directors harmless against and in respect to any
and all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties, and reasonable attorneys fees, that
it shall incur or suffer, which arise out of, result from or relate to any
breach of, or failure by PURCHASER to perform any of its representations,
warranties, or covenants in this Agreement or in any exhibit or other
instrument furnished, or to be furnished, under this
<PAGE>
Agreement and from any and all claims, demands, losses, costs, expenses,
obligations, liabilities, or damages which arise form activities subsequent
to the date of the transfer of assets from PURCHASER to COMPANY as set forth
in Section 6(c).
m) Investment Intent. PURCHASER understands and acknowledges that the Shares
offered for sale from the SHAREHOLDERS pursuant to this Agreement are being
offered in reliance upon an exemption from registration requirements of the
Act, pursuant to the exemption commonly known as the Section 4 1 1/2
exemption and makes the following representations, agreements and warranties
with the intent that the same may be relied upon in determining the
suitability of PURCHASER as a buyer of the Shares from the SHAREHOLDERS. The
shares to be exchanged upon the Closing are offered pursuant to Section 4(2)
of the Act. Further:
i. The Shares are being acquired solely for the account of PURCHASER, for
investment purposes only, and not with a view to resale or redistribution in
violation of applicable state and federal securities laws and with no present
intention of distributing or reselling any part of COMPANY's common stock
acquired; and that any subsequent sale of the shares shall be in compliance
with the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
ii. PURCHASER agrees not to dispose of COMPANY's common stock or any portion
thereof unless and until counsel for COMPANY shall have determined that the
intended disposition is permissible and does not violate the Act or any
applicable Federal or state securities laws, or the rules and regulations
thereunder;
iii. PURCHASER agrees that the certificates evidencing the Shares acquired
pursuant to this Agreement may have a legend placed thereon stating that they
have not been registered under the Act or any state securities laws and
setting forth or referring to the restrictions on transferability and sale of
COMPANY's common stock.
iv. PURCHASER acknowledges that COMPANY has made all records and
documentation pertaining to COMPANY's common stock available to them and to
their qualified representatives, if any, and has offered such person or
persons an opportunity to ask questions and further discuss the proposed
acquisition of COMPANY' s common stock, and any available information
pertaining thereto, with the officers and directors of COMPANY, and that all
such questions and information requested have been answered by COMPANY and
its officers and directors to PURCHASER's satisfaction;
v. PURCHASER has carefully evaluated their financial resources and investment
position and the risks associated with this transaction and are able to bear
the economic risks of this transaction; and they have substantial knowledge
and experience in financial, business, and investment matters and are
qualified as sophisticated investors, and are capable of evaluating the
merits and risks of this transaction; and they desire to acquire COMPANY's
common stock on the terms and conditions set forth;
vi. PURCHASER is able to bear the economic risk of an investment in the
Shares; and
<PAGE>
vii. PURCHASER understand that an investment in the Shares is not liquid and
PURCHASER has no need for liquidity in this investment.
n) Receipt of Relevant Information. PURCHASER has received from COMPANY all
financial and other information concerning COMPANY and its officers and
directors, including, but not limited to, the Form 10- SB, and all other
documents and information they have requested.
o) Public "Shell" Corporation. PURCHASER is aware that COMPANY has public
shareholders and is a "shell" corporation without significant assets or
liabilities, and further that public companies are subject to extensive and
complex state, federal, and other regulations. Among other requirements,
PURCHASER is aware that a Form 8-K must be filed with the SEC within fifteen
days after the Closing which filing requires that audited financial statements
be filed within sixty days after the filing of the Form 8-K, and they agree that
such responsibility shall not be the responsibility of COMPANY, its officers,
directors, or employees nor the SHAREHOLDERS, but the sole responsibility of the
new officers and directors of COMPANY. PURCHASER is aware of the legal
requirements and obligations of public companies, understands that regulatory
efforts regarding public shell transactions similar to the transaction
contemplated herein has been and is currently being exerted by some state
agencies, the SEC, and the National Association of Securities Dealer, Inc.
(NASD), and are fully aware of their responsibilities, following the Closing, to
fully comply with all securities laws and regulations, and hereby agrees to do
so.
p) No Assurances of Warranties. PURCHASER acknowledges that there can be no
assurance regarding the tax consequences of this transaction, nor can there be
any assurance that the Internal Revenue Code or the regulations promulgated
thereunder will not be amended in such manner as to deprive them of any tax
benefit that might otherwise be received. PURCHASER is relying upon the advice
of their own tax advisors with respect to the tax aspects of this transaction.
No representations or warranties have been made by COMPANY, its officers,
directors, affiliates or agents, or by the SHAREHOLDERS as to the benefits to be
derived by PURCHASER in completing this transaction, nor have any of them made
any warranty or agreement, expressed or implied, as to the tax or securities
consequences of the transactions contemplated by this Agreement or the tax or
securities consequences of any action pursuant to or growing out of this
Agreement.
q) State Fees. PURCHASER acknowledges that PURCHASER shall be fully responsible
for all fees and charges incurred by the State of Delaware relative to the
outstanding capital stock of THCL.
10) Legal Opinion. COMPANY, upon the Closing, will furnish PURCHASER an opinion
of its counsel to the affect that:
a) COMPANY is duly organized, valid and existing in good standing under the laws
of the State of Delaware, and has authority to conduct its business, to enter
into this Agreement, and in connection therewith has performed all acts required
pursuant to the laws of Delaware in effecting this Agreement.
b) COMPANY has the authority, pursuant to the corporate laws of the State of
Delaware, to issue or exchange its shares of common stock.
c) That such counsel has examined the representations and warranties of
<PAGE>
COMPANY hereunder and to counsel's best knowledge, the representations and
warranties of COMPANY are true in connection therewith, and that counsel may
rely upon certificates of officers and directors of COMPANY.
d) That COMPANY is current in its reporting requirements with the SEC.
e) That there is no pending or threatened litigation or contingent liabilities
against COMPANY.
f) Such other opinions as counsel may be requested to issue and can issue based
upon counsel's review of any documents or instruments in connection therewith
and associated only with the terms and transactions contemplated by this
Agreement.
11) Investment Banking Fees. The Parties agree that Travis Morgan Securities,
Inc. (the "Investment Banker") has acted as the investment banker for both
parties in the consummation of this purchase and sale in connection with this
Agreement. The Parties also agree that the Investment Banker shall be paid a fee
of 50,000 shares of restricted common stock of THCL to be issued to the
investment Banker as soon as practicable after the Closing.
12) Contingencies. Purchaser understands that the COMPANY may not be able to
obtain a surrender of certain pre-split shares of COMPANY totaling approximately
25,000 relative to the COMPANY'S previous reverse-merger agreement with Desert
Sun Investments and that if said surrender and affidavit for the release of any
and all claims to the 26.22 post-split shares is not received, it shall
constitute a breach of this Agreement.
13) Termination. Notwithstanding anything to the contrary contained in this
Agreement, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to delivery of the Purchase Price
solely by the mutual consent of all of the parties. In the event the transfer of
PURCHASER's WEBSITE into the COMPANY does not occur by September 1, 1999 thereby
commencing the exchange and distribution of BGIX shares into THCL shares, this
Agreement shall be terminated, all transfer of shares by SHAREHOLDERS shall be
rescinded and all monies paid hereunder by PURCHASER shall be non-refundable.
14) Waiver and Amendment. Any term, provision, covenant, representation,
warranty or condition of this Agreement may be waived, but only by a written
instrument signed by all the parties of this Agreement. The failure or delay of
any party at any time to require performance of any provision hereof or to
exercise its rights with respect to any provision hereof shall in no manner
operate as a waiver of, or affect such party's right at a later time to enforce
the same. No waiver by any party of any condition, or of the breach of any term,
provision, covenant, representation or warranty contained in this Agreement, in
any one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such condition or breach or waiver of any other
condition, or of the breach of any other term, provision, covenant,
representation or warranty. No modification or amendment of this Agreement shall
be valid and binding unless it be in writing and signed by all the parties
hereto.
15) Rights and Responsibilities of the Custodian The following provisions shall
apply to the appointed Custodian, Horwitz & Beam, in the course of performing
hereunder:
<PAGE>
a. Status of Custodian. The Parties acknowledge and agree that, in acting
hereunder, the Custodian has not and is not acting as counsel to COMPANY or
SHAREHOLDERS, in regard to whom the Custodian is acting solely as Custodian
hereunder.
b. Discretion of the Custodian. In acting pursuant to this Agreement, the
Custodian shall be fully protected in every reasonable exercise of Custodian's
discretion and shall have no obligation hereunder to any other party except as
expressly set forth herein.
c. Fees and Expenses of the Custodian. The Custodian may charge a reasonable fee
for custodial services, which will cover all normal and reasonable expenses of
holding the shares. Such fees and expenses shall be paid by PURCHASER.
d. Liability of the Custodian. In performing any of Custodian's duties
hereunder, the Custodian shall not incur any liability to anyone for any
damages, losses, or expenses, except for willful default or negligence and
shall, accordingly, not incur any such liability with respect to any action
taken or omitted in good faith or taken or omitted in reliance upon an
instrument, including written advices provided for herein, not only as to its
due execution and the validity and effectiveness of its provisions, but also as
to the truth and accuracy of any information contained herein, which the
Custodian shall in good faith believe to be genuine, to have been signed or
presented by a proper person or persons, and to conform with the provisions of
this Agreement.
e. Information and Indemnity. The Parties agree to provide to the Custodian all
information necessary to facilitate the administration of this Agreement, and
the Custodian may rely upon any representation so made. The Parties hereby agree
jointly and severally, to indemnity and hold harmless the Custodian against any
and all claims, losses, damages, liabilities, costs and expenses, including
reasonable costs of investigation aid counsel fees and disbursements, which may
be imposed upon the Custodian or incurred by the Custodian in connection with
acceptance of appointment of Custodian hereunder or the performance of
Custodian's duties hereunder, including any litigation arising from this
Agreement or involving the subject matter hereof. However, such indemnity shall
not include acts or omissions to act of the Custodian which involve gross
negligence or willful misconduct.
f. Interpleader. If at any time, a dispute arises as to the duties of the
Custodian or the terms hereof, the Custodian may deposit the Shares with the
Clerk of the District Court of Orange County, California, and may interplead the
other parties hereto. Upon so depositing the Shares and filing its complaint in
interpleader, the Custodian shall be completely discharged and released from all
further liability or responsibility hereunder. The parties hereto, for
themselves, their heirs, successors, assigns and legal representatives, do
hereby submit themselves to the jurisdiction of said Court and do hereby appoint
the Clerk of the said Court as their agent for services of all process in
connection with any such proceedings.
g. Notices: Orders of Court, Etc. The Custodian hereby is expressly authorized
and directed to disregard any and all notices or warnings not specifically
called for in or permitted by this Agreement, or by any other
<PAGE>
person or entity not party to this Agreement, excepting only orders or
process of Court, and is hereby expressly authorized to comply with and obey
any and all orders, judgments, or decrees of any Court, and in case the
Custodian obeys or complies with any such order, judgment, or decree of any
Court, shall not be liable to any of the parties hereto or to any other
person, firm, or corporation by reason of such compliance, notwithstanding
that any such order, judgment, or decree may be subsequently reversed,
modified, annulled, set aside or vacated, or found to have been entered
without jurisdiction.
16) Notices. Any notice, request, instruction, or other document required by the
terms of this Agreement, or deemed by any of the Parties hereto to be desirable,
to be given to any other Party hereto shall be in writing and shall be given by
facsimile, personal delivery, overnight delivery, or mailed by registered or
certified mail, postage prepaid, with return receipt requested, to the following
addresses:
TO PURCHASER:
BioLogix International, Ltd.
Don Shea, President
7 Benjamin Place
Locust Valley, NY 11560
Phone: 516-759-6010
Fax: 516-759-6010
BioLogix International, Ltd.
Thomas F. Lonergan, Director
9581 Cape Split Circle
Huntington Beach, CA 92646
Phone:714-962-0259
Fax: 714-593-3009
WITH A COPY TO:
Horwitz & Beam
Two Venture Plaza, Suite 350
Irvine, CA 92618
Attn: Lynne Bolduc, Esq.
Fax: 949/453-9416
TO CUSTODIAN:
Horwitz & Beam
Two Venture Plaza, Suite 350
Irvine, CA 92618
Attn: Larry Horwitz
Fax: 949/453-9416
TO COMPANY:
Innovative Tracking Solutions Corporation
<PAGE>
23232 Peralta Drive, Suite 115
Laguna Hills, CA 92653
Attn: Dianna Cleveland, President
Fax: 949/595-4741
WITH A COPY TO:
Ken Eade 143 South. B Street
Oxnard, CA 93030
Fax: 805-483-7634
TO SHAREHOLDERS:
Dianna Cleveland
<PAGE>
23232 Peralta Drive, Suite 115
Laguna Hills, CA 92653
Fax: 949/595-4741
Lee Namisniak
23232 Peralta Drive, Suite 115
Laguna Hills, CA 92653
Fax: 949/595-4741
Lou Weiss
23232 Peralta Drive, Suite 115
Laguna Hills, CA 92653
Fax: 949/595-4741
The persons and addresses set forth above may be changed from time to time
by a notice sent as aforesaid. If notice is given by facsimile, personal
delivery, or overnight delivery in accordance with the provisions to this
Section, said notice shall be conclusively deemed given at the time of such
delivery. If notice is given by mail in accordance with the provisions of this
Section, such notice shall be conclusively deemed given seven business days
after deposit thereof in the United States mail.
17) Counterparts: Facsimile Signatures. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The Parties agree that facsimile signatures of this Agreement shall
be deemed a valid and binding execution of this Agreement.
18) Jurisdiction. Any dispute, claim, or other legal proceedings in relation to
this Agreement shall be held in the County of Orange, State of California.
19) Governing Law. This Agreement shall be deemed to be a contract made under
the laws of the State of California and for all purposes shall be governed by
and construed in accordance with the laws of said State.
20) Professional Fees. In the event either party hereto shall commence
<PAGE>
legal proceedings against the other to enforce the terms hereof, or to
declare rights hereunder, as the result of a breach of any Covenant or
condition of this Agreement, the prevailing party in any such proceeding
shall be entitled to recover from the losing party its costs of suit,
including reasonable attorneys' fees, accountants' fees, and experts' fees.
21) Miscellaneous Provisions.
a) This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, their beneficiaries, heirs, representatives, assigns, and all
other successors in interest.
b) Each of the parties shall execute any and all documents required to be
executed and perform all acts required to be performed in order to effectuate
the terms of this Agreement.
c) This Agreement contains all of the agreements and understandings of the
parties hereto with respect to the matters referred to herein, and no prior
agreement or understanding pertaining to any such matters be effective for any
purpose.
d) Each of the parties hereto has agreed to the use of the particular language
of the provisions of this Agreement, and any question of doubtful interpretation
shall not be resolved by any rule of interpretation against the party who causes
the uncertainty to exist or against the draftsman.
e) This Agreement may not be superseded, amended or added to except by an
agreement in writing, signed by the parties hereto, or their respective
successors-in-interest.
f) Any waiver of any provision of this Agreement shall not be deemed a waiver of
such provision as to any prior or subsequent breach of the same provision or any
other breach of any other provision of this Agreement.
g) If any provision of this Agreement is held, by a court of competent
jurisdiction, to be invalid, or enforceable, said provisions shall be deemed
deleted, and neither such provision, its severance or deletion shall affect the
validity of the remaining provisions of this Agreement, which shall,
nevertheless, continue in full force and effect.
h) The parties shall use their reasonable best efforts to obtain the consent of
all necessary persons and agencies to the transfer of shares provided for in
this Agreement.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement effective as
of the date first above written.
COMPANY PURCHASER
INNOVATIVE TRACKING SOLUTIONS CORP. BIOLOGIX INTERNATIONAL, LTD.
S/s Dianna Cleveland S/s Don Shea
- ----------------------- ---------------------
By: Dianna Cleveland By: Don Shea
Its: President Its: President
<PAGE>
SHAREHOLDERS S/s Thomas F. Lonergan
---------------------
S/s Dianna Cleveland By: Thomas F. Lonergan
- ------------------------ Its: Vice President,
Dianna Cleveland C.O.O., Secretary
S/s Lee Namisniak CUSTODIAN
- ----------------------
Lee Namisniak HORWITZ & BEAM
S/s Lou Weiss S/s Larry Horwitz
- ---------------------- ------------------------
Lou Weiss Larry Horwitz
<PAGE>
Exhibit 10.8
Stock Purchase Agreement and Warrant Agreement (form)
for pending private placement
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated as of ________________,
1999, is by and between _____________________, an individual ("PURCHASER"),
and THEHEALTHCHANNEL.COM, INC., a Delaware corporation ("SELLER")
(collectively, the "PARTIES").
W I T N E S S E T H
WHEREAS, SELLER is offering for sale a maximum of 5,000,000 units (the
"Units"), each unit consisting of one share of SELLER'S common stock (the
"Shares") and one warrant, exercisable at $0.75 and expiring two years after
the date of issuance (the "Warrants"), at $0.75 per Unit, minimum investment
$25,000 (33,333 Units).
WHEREAS, SELLER desires to sell to PURCHASER and PURCHASER desires to
purchase from SELLER, __________ Units of SELLER (the "Units") upon the terms
and conditions set forth herein.
NOW THEREFORE, in consideration of the promises and respective mutual
agreements herein contained, it is agreed by and between the PARTIES hereto
as follows:
ARTICLE 1
SALE AND PURCHASE OF THE UNITS
1.1 Sale of the Units. Upon execution of this Agreement (the "Closing"),
subject to the terms and conditions herein set forth, and on the basis of the
representations, warranties and agreements herein contained, SELLER shall
sell to PURCHASER, and PURCHASER shall purchase from SELLER, the Units.
1.2 Instruments of Conveyance and Transfer. As soon as practicable after the
Closing, SELLER shall deliver a certificate or certificates representing the
Units of SELLER to PURCHASER sufficient to transfer all right, title and
interest in the Units to PURCHASER.
<PAGE>
1.3 Consideration and Payment for the Units. In consideration for the
Units, PURCHASER shall pay a purchase price of a total of
________________________________dollars ($_______) ($0.75 per Unit)
("Purchase Price").
ARTICLE 2
REPRESENTATIONS AND COVENANTS OF SELLER AND PURCHASER
2.1 SELLER hereby represents and warrants that:
(a) The Units issued hereunder (the "Units") have been duly authorized by the
appropriate corporate action of SELLER.
(b) SELLER shall transfer title, in and to the Units to PURCHASER free and
clear of all liens, security interests, pledges, encumbrances, charges,
restrictions, demands and claims, of any kind and nature whatsoever, whether
direct or indirect or contingent.
2.2 As soon as practicable after the Closing Date, SELLER shall deliver to
PURCHASER a certificate or certificates representing the Units subject to no
liens, security interests, pledges, encumbrances, charges, restrictions,
demands or claims in any other party whatsoever, except as set forth in the
legend on the certificate, which legend shall provide as follows:
THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
2.3. PURCHASER acknowledges that the Units will initially be "restricted
securities" (as such term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended ("Rule 144"), that the Units will include
the foregoing restrictive legend, and, except as otherwise set forth in this
Agreement, that the Units cannot be sold for a period of at least one year
from the date of issuance unless registered with the United States Securities
and Exchange Commission ("SEC") and qualified by appropriate state securities
regulators, or unless PURCHASER obtains written consent from SELLER and
otherwise complies with an exemption from such registration and qualification
(including, without limitation, compliance with Rule 144).
2.4 SELLER certifies that attached hereto as Exhibit A is the Warrant
Agreement and form of Warrant Certificate setting forth the terms of the
Warrants. Exhibit A is incorporated herein by reference as though fully set
forth herein.
2.5 PURCHASER acknowledges and agrees that SELLER makes no other
representations or warranties with respect to the Units or the SELLER.
2.6 PURCHASER represents and warrants to SELLER as follows:
(a) PURCHASER has adequate means of providing for current needs and
contingencies, has no need for liquidity in the investment, and is able to
bear the economic risk of an investment in the Units offered by SELLER of the
size contemplated. PURCHASER represents that PURCHASER is able to bear the
economic risk of the investment and at the present time could afford a
complete loss of
<PAGE>
such investment. PURCHASER has had a full opportunity to inspect the books
and records of the SELLER and to make any and all inquiries of SELLER
officers and directors regarding the SELLER and its business as PURCHASER has
deemed appropriate.
(b) PURCHASER is an "Accredited Investor" as defined in Regulation D of the
Securities Act of 1933 (the "Act") and PURCHASER, either alone or with
PURCHASER's professional advisers who are unaffiliated with, have no equity
interest in and are not compensated by SELLER or any affiliate or selling
agent of SELLER, directly or indirectly, has sufficient knowledge and
experience in financial and business matters that PURCHASER is capable of
evaluating the merits and risks of an investment in the Units offered by
SELLER and of making an informed investment decision with respect thereto and
has the capacity to protect PURCHASER's own interests in connection with
PURCHASER's proposed investment in the Units.
(c) PURCHASER is acquiring the Units solely for PURCHASER'S own account as
principal, for investment purposes only and not with a view to the resale or
distribution thereof, in whole or in part, and no other person or entity has
a direct or indirect beneficial interest in such Units.
(d) PURCHASER will not sell or otherwise transfer the Units without
registration under the Act or an exemption therefrom and fully understands
and agrees that PURCHASER must bear the economic risk of PURCHASER'S purchase
for an indefinite period of time because, among other reasons, the Units have
not been registered under the Act or under the securities laws of any state
and, therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Act and under the
applicable securities laws of such states or unless an exemption from such
registration is available.
ARTICLE 3
REGISTRATION RIGHTS
3.1 Piggyback Registration Rights. If the COMPANY at any time proposes to
register any of its securities under the Act, including under an SB-2
Registration Statement or otherwise, the COMPANY will use its best efforts to
cause all of the Shares and all of the shares of common stock underlying the
Warrants owned by PURCHASER to be registered under the Act (with the
securities which the COMPANY at the time propose to register), all to the
extent requisite to permit the sale or other disposition by the PURCHASER;
provided, however, that the COMPANY may, as a condition precedent to its
effecting such registration, require the PURCHASER to agree with the COMPANY
and the managing underwriter or underwriters of the offering to be made by
the COMPANY in connection with such registration that the PURCHASER will not
sell any securities of the same class or convertible into the same class as
those registered by the COMPANY (including any class into which the
securities registered by the COMPANY are convertible) for such reasonable
period after such registration becomes effective as shall then be specified
in writing by such underwriter or underwriters if in the opinion of such
underwriter or underwriters the COMPANY's offering would be materially
adversely affected in the absence of such an agreement. All expenses incurred
by the COMPANY in complying with this Section, including without limitation
all registration and filing fees, listing fees, printing expenses, fees and
disbursements of all independent accounts, or counsel for the COMPANY and or
counsel for the PURCHASER and the expense of any special audits incident to
or required by any
<PAGE>
such registration and the expenses of complying with the securities or blue
sky laws of any jurisdiction shall be paid by the COMPANY. Notwithstanding
the foregoing, PURCHASER shall pay all underwriting discounts or commissions
with respect to any securities sold by the PURCHASER.
3.2 Indemnification.
(a) In the event of any registration of any of its securities under the Act
pursuant to this Section, the COMPANY hereby indemnifies and holds harmless
the PURCHASER (which phrase shall include any underwriters of such
securities), their respective directors and officers, and each other person
who participates, in the offering of such securities and each other person,
if any, who controls the PURCHASER, or such participating persons within the
meaning of the Act, against any losses, claims, damages or liabilities, joint
or several, to which each the PURCHASER or any such director or officer or
participating person or controlling person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under which such
securities were registered under the Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
arise out of or are based upon any omission or alleged omission to state
therein an material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each the PURCHASER
and each director, officer or participating or controlling person for any
legal or any other expenses reasonably incurred by the PURCHASER or such
director, officer or participating or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the COMPANY shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus
or prospectus or amendment or supplement in reliance upon and in conformity
with written information furnished to the COMPANY through an instrument duly
executed by the PURCHASER specifically stating that it is for use therein.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the PURCHASER or such directors,
officer or participating or controlling person, and shall survive the
transfer of such securities by the PURCHASER.
(b) The PURCHASER shall by acceptance thereof, indemnify and hold harmless
the COMPANY and its directors and officers, and each person, if any who
controls the COMPANY, against any losses, claims, damages or liabilities,
joint or several, to which the COMPANY or any director or officer or any such
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which securities were registered under the Act at the request
of such holder, any preliminary prospectus or final 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 each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in such registration statement, preliminary prospectus, prospectus,
amendment or supplement in reliance upon and in
<PAGE>
conformity with written information furnished to the COMPANY through an
instrument duly executed by or on behalf of such holder specifically stating
that it is for use therein; and will reimburse the COMPANY or such director,
officer or person for any legal or any other expense reasonably incurred in
connection with investigation or defending any such loss, claim, damage,
liability or action.
3.3 Rule 144. If the COMPANY shall be subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
COMPANY will use its best efforts timely to file all reports required to be
filed from time to time with the SEC (including but not limited to the
reports under Section 13 and 15(d) of the 1934 Act referred to in
subparagraph (c)(1) of Rule 144 adopted by the SEC under the Act). If there
is a public market for any securities of the COMPANY at any time that the
COMPANY is not subject to the reporting requirements of either of said
Section 13 or 15(d), the COMPANY will, upon the request of PURCHASER, use its
best efforts to make publicly available the information concerning the
COMPANY referred to in subparagraph (c)(2) of said Rule 144. The COMPANY will
furnish to PURCHASER, promptly upon request, (i) a written statement of the
COMPANY's compliance with the requirements of subparagraphs (c)(1) or (c)(2),
as the case may be, of said Rule 144, and (ii) written information concerning
the COMPANY sufficient to enable PURCHASER to complete any Form 144 required
to be filed with the SEC pursuant to said Rule 144.
ARTICLE 4
MISCELLANEOUS
4.1 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings related to the subject matter hereof. No understanding,
promise, inducement, statement of intention, representation, warranty,
covenant or condition, written or oral, express or implied, whether by
statute or otherwise, has been made by any party hereto which is not embodied
in this Agreement or the written statements, certificates, or other documents
delivered pursuant hereto or in connection with the transactions contemplated
hereby, and no party hereto shall be bound by or liable for any alleged
understanding, promise, inducement, statement, representation, warranty,
covenant or condition not so set forth.
4.2 Notices. Any notice, request, instruction, or other document required by
the terms of this Agreement, or deemed by any of the parties hereto to be
desirable, to be given to any other party hereto shall be in writing and
shall be given by facsimile, personal delivery, overnight delivery, or mailed
by registered or certified mail, postage prepaid, with return receipt
requested, to the following addresses:
TO SELLER: thehealthchannel.com, Inc.
5000 Birch Street, Suite 4000
Newport Beach, California 92660
Fax: (949) 260-2099
Attn: Mr. Thomas F. Lonergan, Secretary/Treasurer
TO PURCHASER: ___________________________
_____________________________
_____________________________
Fax: (___) __________________
<PAGE>
Attn:__________________________
WITH COPY TO: HORWITZ & BEAM
Two Venture Plaza, Suite 350
Irvine, CA 92618
Fax: (949) 453-9416
Attn: Lynne Bolduc, Esq.
The persons and addresses set forth above may be changed from time to time by
a notice sent as aforesaid. If notice is given by facsimile, personal
delivery, or overnight delivery in accordance with the provisions of this
Section, said notice shall be conclusively deemed given at the time of such
delivery. If notice is given by mail in accordance with the provisions of
this Section, such notice shall be conclusively deemed given seven days after
deposit thereof in the United States mail.
4.3 Waiver and Amendment. Any term, provision, covenant, representation,
warranty or condition of this Agreement may be waived, but only by a written
instrument signed by the party entitled to the benefits thereof. The failure
or delay of any party at any time or times to require performance of any
provision hereof or to exercise its rights with respect to any provision
hereof shall in no manner operate as a waiver of or affect such party's right
at a later time to enforce the same. No waiver by any party of any condition,
or of the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall be deemed to
be or construed as a further or continuing waiver of any such condition or
breach or waiver of any other condition or of the breach of any other term,
provision, covenant, representation or warranty. No modification or amendment
of this Agreement shall be valid and binding unless it be in writing and
signed by all parties hereto.
4.4 Choice of Law. This Agreement and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws of
the State of California including all matters of construction, validity,
performance, and enforcement and without giving effect to the principles of
conflict of laws.
4.5 Jurisdiction. The parties submit to the jurisdiction of the Courts of the
County of Orange, State of California or a Federal Court empaneled in the
State of California for the resolution of all legal disputes arising under
the terms of this Agreement, including, but not limited to, enforcement of
any arbitration award.
4.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument.
4.7 Attorneys' Fees. Except as otherwise provided herein, if a dispute should
arise between the parties including, but not limited to arbitration, the
prevailing party shall be reimbursed by the non-prevailing party for all
reasonable expenses incurred in resolving such dispute, including reasonable
attorneys' fees exclusive of such amount of attorneys' fees as shall be a
premium for result or for risk of loss under a contingency fee arrangement.
4.8 Taxes. Any income taxes required to be paid in connection with the
payments due hereunder, shall be borne by the party required to make such
<PAGE>
payment. Any withholding taxes in the nature of a tax on income shall be
deducted from payments due, and the party required to withhold such tax shall
furnish to the party receiving such payment all documentation necessary to
prove the proper amount to withhold of such taxes and to prove payment to the
tax authority of such required withholding.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of
the date first written hereinabove.
PURCHASER
- -----------------------------------
By: _________________________________
Its:__________________________________
SELLER
THEHEALTHCHANNEL, INC.
a Delaware corporation
By: Thomas F. Lonergan
Its: Secretary and Treasurer
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") is made and entered into as of
_______________, 1999, between THEHEALTHCHANNEL.COM, INC., a Delaware
corporation (the "Company") and ____________________
______________________________ ("Holder").
R E C I T A L S
WHEREAS, the Company proposes to issue to Holder ______ warrants (the
"Warrants"), each such Warrant entitling the holder thereof to purchase one
share of Common Stock of the Company (the "Exercise Shares," "Shares," or the
"Common Stock"); and
WHEREAS, the Warrants which are the subject of this Agreement will be issued
by the Company to Holder as part of consideration payable to Holder in
connection with an investment by the Holder pursuant to the concurrent
private offering of the Company (the "Offering").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
A G R E E M E N T
<PAGE>
1. Warrant Certificates. The warrant certificates to be delivered pursuant to
this Agreement (the "Warrant Certificates") shall be in the form set forth in
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Warrant Agreement.
2. Right to Exercise Warrants. Each Warrant may be exercised from the date of
this Agreement until 11:59 P.M. (Pacific time) on the date that is two years
after the date of this Agreement (the "Expiration Date"). Each Warrant not
exercised on or before the Expiration Date shall expire.
Each Warrant shall entitle its holder to purchase from the Company one share
of Common Stock at an exercise price of $0.75 per share, subject to
adjustment as set forth below ("Exercise Price").
The Company shall not be required to issue fractional shares of capital stock
upon the exercise of this Warrant or to deliver Warrant Certificates which
evidence fractional shares of capital stock. In the event that a fraction of
an Exercise Share would, except for the provisions of this paragraph 2, be
issuable upon the exercise of this Warrant, the Company shall pay to the
Holder exercising the Warrant an amount in cash equal to such fraction
multiplied by the current market value of the Exercise Share. For purposes of
this Agreement, the current market value shall be determined as follows:
(a) if the Exercise Shares are traded in the over-the-counter market and not
on any national securities exchange and not in the NASDAQ Reporting System,
the average of the mean between the last bid and asked prices per share, as
reported by the National Quotation Bureau, Inc., or an equivalent generally
accepted reporting service, for the last business day prior to the date on
which this Warrant is exercised, or, if not so reported, the average of the
closing bid and asked prices for an Exercise Share as furnished to the
Company by any member of the National Association of Securities Dealers,
Inc., selected by the Company for that purpose.
(b) if the Exercise Shares are listed or traded on a national securities
exchange or in the NASDAQ Reporting System, the closing price on the
principal national securities exchange on which they are so listed or traded
or in the NASDAQ Reporting System, as the case may be, on the last business
day prior to the date of the exercise of this Warrant. The closing price
referred to in this Clause (b) shall be the last reported sales price or, in
case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices, in either case on the national
securities exchange on which the Exercise Shares are then listed or in the
NASDAQ Reporting System; or
(c) if no such closing price or closing bid and asked prices are available,
as determined in any reasonable manner as may be prescribed by the Board of
Directors of the Company.
3. Mutilated or Missing Warrant Certificates. In case any of the Warrant
Certificates shall be mutilated, lost, stolen or destroyed prior to its
expiration date, the Company shall issue and deliver, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and in substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest.
<PAGE>
4. Reservation of Shares. The Company will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its
authorized but unissued Shares or its authorized and issued Shares held in
its treasury for the purpose of enabling it to satisfy its obligation to
issue Shares upon exercise of Warrants, the full number of Shares deliverable
upon the exercise of all outstanding Warrants.
The Company covenants that all Shares which may be issued upon exercise of
Warrants will be validly issued, fully paid and nonassessable outstanding
Shares of the Company.
5. Rights of Holder. The Holder shall not, by virtue of anything contained in
this Warrant Agreement or otherwise, prior to exercise of this Warrant, be
entitled to any right whatsoever, either in law or equity, of a stockholder
of the Company, including without limitation, the right to receive dividends
or to vote or to consent or to receive notice as a shareholder in respect of
the meetings of shareholders or the election of directors of the Company of
any other matter.
6. Investment Intent. Holder represents and warrants to the Company that
Holder is acquiring the Warrants for investment and with no present intention
of distributing or reselling any of the Warrants.
7. Certificates to Bear Language. The Warrants and the certificate or
certificates therefor shall bear the following legend by which each holder
shall be bound:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
(OR OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE."
The Shares and the certificate or certificates evidencing any such Shares
shall bear the following legend:
"THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE."
Certificates for Warrants without such legend shall be issued if such
warrants or shares are sold pursuant to an effective registration statement
under the Securities Act of 1933 (the "Act") or if the Company has received
an opinion from counsel reasonably satisfactory to counsel for the Company,
that such legend is no longer required under the Act.
8. Piggyback Registration Rights. If the Company at any time proposes to
register any of its securities under the Act, including under an SB-2
Registration Statement or otherwise, the Company will use its best efforts to
cause all of the shares of common stock underlying the Warrants owned by
Holder to be registered under the Act (with the securities which the Company
at the time propose to register), all to the extent requisite to permit the
sale or other disposition by the Holder; provided, however, that the Company
may, as a condition precedent to its effecting such registration, require the
Holder to
<PAGE>
agree with the Company and the managing underwriter or underwriters of the
offering to be made by the Company in connection with such registration that
the Holder will not sell any securities of the same class or convertible into
the same class as those registered by the Company (including any class into
which the securities registered by the Company are convertible) for such
reasonable period after such registration becomes effective as shall then be
specified in writing by such underwriter or underwriters if in the opinion of
such underwriter or underwriters the Company's offering would be materially
adversely affected in the absence of such an agreement. All expenses incurred
by the Company in complying with this Section, including without limitation
all registration and filing fees, listing fees, printing expenses, fees and
disbursements of all independent accounts, or counsel for the Company and or
counsel for the Holder and the expense of any special audits incident to or
required by any such registration and the expenses of complying with the
securities or blue sky laws of any jurisdiction shall be paid by the Company.
Notwithstanding the foregoing, Holder shall pay all underwriting discounts or
commissions with respect to any securities sold by the Holder.
(a) Indemnification.
(i) In the event of any registration of any of its securities under the Act
pursuant to this Section, the Company hereby indemnifies and holds harmless
the Holder (which phrase shall include any underwriters of such securities),
their respective directors and officers, and each other person who
participates, in the offering of such securities and each other person, if
any, who controls the Holder, or such participating persons within the
meaning of the Act, against any losses, claims, damages or liabilities, joint
or several, to which each the Holder or any such director or officer or
participating person or controlling person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under which such
securities were registered under the Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
arise out of or are based upon any omission or alleged omission to state
therein an material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each the Holder and
each director, officer or participating or controlling person for any legal
or any other expenses reasonably incurred by the Holder or such director,
officer or participating or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus
or prospectus or amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by the Holder specifically stating that it is for use therein. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holder or such directors, officer
or participating or controlling person, and shall survive the transfer of
such securities by the Holder.
(ii) The Holder shall by acceptance thereof, indemnify and hold harmless the
Company and its directors and officers, and each person, if any who controls
the Company, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any director or officer or any such person
may become
<PAGE>
subject under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which securities were registered under the Act at the request of such holder,
any preliminary prospectus or final 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
each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary prospectus, prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf
of such holder specifically stating that it is for use therein; and will
reimburse the Company or such director, officer or person for any legal or
any other expense reasonably incurred in connection with investigation or
defending any such loss, claim, damage, liability or action.
(b) Rule 144. If the Company shall be subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
Company will use its best efforts timely to file all reports required to be
filed from time to time with the SEC (including but not limited to the
reports under Section 13 and 15(d) of the 1934 Act referred to in
subparagraph (c)(1) of Rule 144 adopted by the SEC under the Act). If there
is a public market for any securities of the Company at any time that the
Company is not subject to the reporting requirements of either of said
Section 13 or 15(d), the Company will, upon the request of Holder, use its
best efforts to make publicly available the information concerning the
Company referred to in subparagraph (c)(2) of said Rule 144. The Company will
furnish to Holder, promptly upon request, (i) a written statement of the
Company's compliance with the requirements of subparagraphs (c)(1) or (c)(2),
as the case may be, of said Rule 144, and (ii) written information concerning
the Company sufficient to enable Holder to complete any Form 144 required to
be filed with the SEC pursuant to said Rule 144.
9. Adjustment of Number of Shares and Class of Capital Stock Purchasable. The
Number of Shares and Class of Capital Stock purchasable under this Warrant
Agreement are subject to adjustment from time to time as set forth in this
Section.
(a) Adjustment for Change in Capital Stock. If the Company:
(i) pays a dividend or makes a distribution on its Common Stock, in each
case, in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(iii) combines its outstanding shares of Common Stock into a smaller
number of shares;
(iv) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
<PAGE>
(v) issues by reclassification of its shares of Common Stock any shares of
its capital stock;
then the number and classes of shares purchasable upon exercise of each
Warrant in effect immediately prior to such action shall be adjusted so that
the holder of any Warrant thereafter exercised may receive the number and
classes of shares of capital stock of the Company which such holder would
have owned immediately following such action if such holder had exercised the
Warrant immediately prior to such action.
For a dividend or distribution the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision,
combination or reclassification.
If after an adjustment the holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Board of Directors of the Company shall in good faith determine the
allocation of the adjusted Exercise Price between or among the classes of
capital stock. After such allocation, that portion of the Exercise Price
applicable to each share of each such class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common
Stock in this Agreement. Notwithstanding the allocation of the Exercise Price
between or among shares of capital stock as provided by this Section 9(a), a
Warrant may only be exercised in full by payment of the entire Exercise Price
currently in effect.
(b) Consolidation, Merger or Sale of the Company. If the Company is a party
to a consolidation, merger or transfer of assets which reclassifies or
changes its outstanding Common Stock, the successor corporation (or
corporation controlling the successor corporation or the Company, as the case
may be) shall by operation of law assume the Company's obligations under this
Warrant Agreement. Upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities, cash
or other assets which the holder of a Warrant would have owned immediately
after the consolidation, merger or transfer if the holder had exercised the
Warrant immediately before the effective date of such transaction. As a
condition to the consummation of such transaction, the Company shall arrange
for the person or entity obligated to issue securities or deliver cash or
other assets upon exercise of the Warrant to, concurrently with the
consummation of such transaction, assume the Company's obligations hereunder
by executing an instrument so providing and further providing for adjustments
which shall be as nearly equivalent as may be practical to the adjustments
provided for in this Section 9.
10. Successors. All the covenants and provisions of this Agreement by or for
the benefit of the Company or Holder shall bind and inure to the benefit of
their respective successor and assigns hereunder.
11. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all proposes be deemed
to be an original, and such counterparts shall together constitute by one and
the same instrument.
12. Notices. Any notice, request, instruction, or other document required by
the terms of this Agreement, or deemed by any of the parties hereto to be
<PAGE>
desirable, to be given to any other party hereto shall be in writing and
shall be given by facsimile, personal delivery, overnight delivery, or mailed
by registered or certified mail, postage prepaid, with return receipt
requested, to the following addresses:
TO SELLER: thehealthchannel.com, Inc.
5000 Birch Street, Suite 4000
Newport Beach, California 92660
Fax: (949) 260-2099
Attn: Mr. Thomas F. Lonergan, Secretary/Treasurer
TO HOLDER: ___________________________
- ---------------------------
- ---------------------------
Fax: (___) __________________
Attn:_______________________
WITH COPY TO: HORWITZ & BEAM
Two Venture Plaza, Suite 350
Irvine, CA 92715
Fax: (949) 453-9416
Attn: Lynne Bolduc, Esq.
The persons and addresses set forth above may be changed from time to time by
a notice sent as aforesaid. If notice is given by facsimile, personal
delivery, or overnight delivery in accordance with the provisions of this
Section, said notice shall be conclusively deemed given at the time of such
delivery. If notice is given by mail in accordance with the provisions of
this Section, such notice shall be conclusively deemed given seven days after
deposit thereof in the United States mail.
13. Supplements and Amendments. The Company may from time to time supplement
or amend this Warrant Agreement without the approval of any Holders of
Warrants in order to cure any ambiguity or to be correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provision, or to make any other provisions in regard to matters or
questions herein arising hereunder which the Company may deem necessary or
desirable and which shall not materially adversely affect the interest of the
Holder.
14. Severability. If for any reason any provision, paragraph or term of this
Warrant Agreement is held to be invalid or unenforceable, all other valid
provisions herein shall remain in full force and effect and all terms,
provisions and paragraphs of this Warrant shall be deemed to be severable.
15. Governing Law and Venue. This Warrant shall be deemed to be a contract
made under the laws of the State of California and for all purposes shall be
governed and construed in accordance with the laws of said State. Any
proceeding arising under this Warrant Agreement shall be instituted in the
County of Orange, State of California.
16. Headings. Paragraphs and subparagraph headings, used herein are included
herein for convenience of reference only and shall not affect the
construction of this Warrant Agreement nor constitute a part of this Warrant
Agreement for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the date and year first above written.
<PAGE>
"COMPANY"
THEHEALTHCHANNEL.COM, INC.
- -----------------------------
- -----------------------------
BY: Thomas F. Lonergan
ITS: Secretary/Treasurer
"HOLDER"
_____________________________
<PAGE>
_____________________________
By:__________________________
Its:_______________________________
EXHIBIT A
NUMBER __ WARRANT
Warrant to Purchase
Shares
THEHEALTHCHANNEL.COM, INC. see reverse for
COMMON STOCK PURCHASE WARRANT certain
definitions
will be void if not exercised prior to 11:59 P.M. Pacific Time on
__________, ____
This Certifies that for value received,
the registered holder or assigns ("Holder"),
is entitled to purchase from thehealthchannel.com, Inc., a Delaware
corporation (the "Company") at any time after 9:00 A.M. Pacific Time on
__________, ____ at the purchase price per share of $0.75 (the "Warrant
Price"), the number of shares of Common Stock of the Company set forth above
(the "Shares"). The number of shares purchasable upon exercise of each
warrant evidenced hereby and the Warrant Price per Share shall be subject to
adjustment from time to time as set forth in the Warrant Agreement referred
to below. The Warrants expire on __________, ____. Holders will not have any
rights or privileges of shareholders of the Company prior to exercise of the
Warrants. Holders of the Warrants evidenced hereby and the shares of Common
Stock issuable upon exercise hereof have certain rights with respect to
registration with the Securities and Exchange Commission of the Warrants and
Common Stock issuable upon exercise hereof. These registration rights are set
forth in that certain Warrant Agreement of even date herewith pursuant to
which this Warrant Certificate has been issued. The Warrant evidenced hereby
may be exercised in whole or in part by presentation of this Warrant
certificate with the Purchase Form on the reverse side hereof fully executed
(with a signature guarantee as provided on the reverse side hereof) and
simultaneous payment of the Warrant Price (subject to adjustment) at the
principal office of the Company. Payment of such price shall be made at the
option of the Holder in cash or by certified check or bank draft. The
Warrants evidenced hereby are part of a duly authorized issue of Common Stock
Purchase Warrants with rights to purchase an aggregate of up to 5,000,000
shares of Common Stock of the Company. Upon any partial exercise of the
Warrant evidenced hereby, there shall be countersigned and issued to the
Holder a new Warrant Certificate in respect of the Shares as to which the
Warrants evidenced hereby shall not have been exercised. This Warrant
<PAGE>
Certificate may be exchanged at the office of the Company by surrender of
this Warrant Certificate properly endorsed with a signature guarantee either
separately or in combination with one or more other Warrants for one or more
new Warrants to purchase the same aggregate number of Shares as evidenced by
the Warrant or Warrants exchanged. No fractional Shares will be issued upon
the exercise of rights to purchase hereunder, but the Company shall pay the
cash value of any fraction upon the exercise of one or more Warrants. The
Holder hereof may be treated by the Company and all other persons dealing
with this Warrant Certificate as the absolute owner hereof for all purposes
and as the person entitled to exercise the rights represented hereby, any
notice to the contrary notwithstanding, and until such transfer is on such
books, the Company may treat the Holder as the owner for all purposes.
Dated: __________, ____
THEHEALTHCHANNEL.COM, INC.
Secretary Chief Executive
Officer
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
ELECTION TO PURCHASE
The undersigned hereby elects irrevocably to exercise the within Warrant and to
purchase _______________________ shares of Common Stock of thehealthchannel.com,
Inc. and hereby makes payment of $_________ (at the rate of $________ per share)
in payment of the Exercise Price pursuant hereto. Please issue the shares as to
which this Warrant is exercised in accordance with the instructions given below.
The undersigned represents and warrants that the exercise of the within Warrant
was solicited by the member firm of the National Association of Securities
<PAGE>
Dealers, Inc. ("NASD") listed below. If not solicited by an NASD member,
please write "unsolicited" in the space below.
- ------------------------------------------------------
(Insert Name of NASD Member or "Unsolicited")
Dated: ________________________ Signature: ________________________________
INSTRUCTIONS FOR REGISTRATION OF SHARES
Name (print) __________________________________________________________________
Address (print) _______________________________________________________________
ASSIGNMENT
FOR VALUE RECEIVED, ________________________________________________________
does hereby sell, assign and transfer unto
___________________________________________________, the right to purchase
________________shares of Common Stock of thehealthchannel.com, Inc. ,
evidenced by the within Warrant, and does hereby irrevocably constitute and
appoint __________________________________________ attorney to transfer such
right on the books of thehealthchannel.com, Inc., with full power of
substitution on the premises.
Dated: ________________, 19______
Signature: _____________________________________________
Notice: The signature of Election to Purchase or Assignment must correspond
with the name as written upon the face of the within Warrant in every
particular without alteration or enlargement or any change whatsoever. The
signature(s) must by guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions with membership
in an approved signature guarantee Medallion Program), pursuant to S.E.C.
Rule 17Ad-15.
- -----------------------------------------
Signature Guarantee
<PAGE>
Exhibit 10.9
24/7 Media Inc. Network Affiliation Agreement,
dated September 9, 1999
24/7 MEDIA INC.
NETWORK AFFILIATION
AGREEMENT
WHEREAS, the undersigned (hereinafter the "Network Affiliate") is
the operator and owner of the Internet Web site(s) (the "Web Site") specified
on the signature pages hereto;
WHEREAS, 24/7 Media, Inc. ("24/7"), a Delaware corporation with an
address at 1250 Broadway, 27th floor, New York, NY 10001, operates a network
of
<PAGE>
Internet Web sites (the "24/7 Network") for which it solicits advertisers,
advertising agencies, buying services or others ("Advertisers") regarding the
placement of advertising banners and similar devices and sponsorships
("Advertising") for display on pages, screens, and other segments or spaces
on Web site reasonably suitable for the display of advertising and to which
the Tags (as defined in Section 2(A) below) can be affixed as provided herein
(the "Pages");
WHEREAS, Network Affiliate and 24/7 wish to include the Web Site in
the 24/7 Network;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
it is agreed as follows:
<PAGE>
1. Affiliation.
The Network Affiliate hereby grants to 24/7 the worldwide exclusive
right to sell all Advertising on the Web Site.
<PAGE>
2. Obligations of 24/7.
In furtherance of the foregoing, 24/7 covenants and agrees:
A. to provide the Network Affiliate, during the term of this Agreement
(the "Term") and only for use in the performance of this Agreement, with unique
tags in HTML/Java or other appropriate languages (the "Tags") which shall be
affixed appropriately by Network Affiliate to the Web Site's Pages to enable
24/7 to serve Advertising to those Pages;
B. to utilize its best efforts to sell to Advertisers Advertising on
the Web Site's Pages, (including sales of the Web Site as a single site, through
multi-site packages and through the 24/7 Network package, at such prices as 24/7
shall deem appropriate);
C. to serve Advertising to the Web Site's Pages;
D. to provide the Network Affiliate with notice, via on-line posting,
of new Advertising that has been solicited by 24/7 to be displayed on the Web
Site's Pages, and to use its best efforts to honor any decision by Network
Affiliate to decline any Advertising, in accordance with the provisions in 3(D)
below;
E. to provide the Network Affiliate with real-time access to records
that will allow it to monitor the volume of paid Advertising delivered to the
Web Site's Pages and the revenue produced (subject to billing corrections and
adjustments) thereby; all such records, including data, statistical information
or other traffic analysis, produced or provided by 24/7 shall be the joint
property of 24/7 and Network Affiliate;
F. to deliver to the Network Affiliate a monthly statement showing
revenues earned by Network Affiliate during the calendar month and any sum(s)
due the Network Affiliate on account thereof pursuant to Section 4 hereof; and
G. to maintain suitable and qualified personnel in administrative,
sales and technical positions necessary for 24/7 to perform effectively the
terms of this Agreement.
3. Obligations of Network Affiliate.
The Network Affiliate covenants and agrees:
A. to use its best efforts to continue and maintain the Web Site and
the Web Site's Pages in a manner consistent with the intent and purpose of the
Web Site;
B. to insert the Tags on each of the Web Site's Pages and only on such
Pages in such a manner as to assure that the Advertising to be affixed to said
Tag is fully and clearly visible on the first Web Site Page viewed when that
Page is viewed at a 640 x 480 pixel resolution;
C. to insert a button with the 24/7 logo on the Web Site's Home Page
directing potential advertisers to the 24/7 web site.
D. to notify 24/7 within one business day from the time of notice of
any new Advertising is given of the Network Affiliate's rejection of any new
Advertising. Failure to provide timely notice of rejection of the new
<PAGE>
Advertising shall be deemed acceptance thereof, until such time as Network
Affiliate notifies 24/7 of Network Affiliate's rejection thereof at which time
24/7 will use its best efforts to remove the Advertising;
E. to furnish 24/7 with all subscribership, viewership, inventory, and
usage reports, reviews and audience studies, deliveries, census requirements,
and any other information regarding the Web Site and the Web Site's Pages as is
reasonably available to the Network Affiliate and appropriate for use by 24/7
for the sale of Advertising; and
F. not to engage, contract with, license or permit any person, firm or
entity (including the Network Affiliate and its employees) other than 24/7 and
its employees to sell, or represent the Network Affiliate for the sale of,
Advertising on the Web Site and to refer all advertising inquiries to 24/7.
4. Payments.
A. Advertisers shall be directed to pay all cash and other
consideration generated from the sale of Advertising by 24/7 during the term of
this Agreement and for a period of six months following the termination of this
Agreement (except for sponsorships, with respect to which payments shall be made
to 24/7 and a percentage shall be retained by 24/7 for the duration of the
sponsorship regardless of the date of termination of this Agreement). 24/7 shall
retain a percentage of such Payment (reduced by those advertising agency
commissions actually retained by agencies or paid by 24/7 to agencies) with
respect to the sale of Advertising on the Web Site in accordance with the
following chart, and shall pay to the Network Affiliate the remainder of the
Payment received by 24/7 for the sale of Advertising on the Web:
Number of Impressions
Delivered in Preceding Month
Percentage Retained by 24/7
for Current Month
999,999 to 2,000,000
50%
2,000,000 to 2,999,999
45%
3,000,000 to 4,999,999
40%
5,000,000 to 14,999,999
35%
15,000,000+
30%
Network Affiliate represents and warrants that the number of impressions served
in the month preceding the Effective Date was _____________, and thus, subject
to verification of monthly ad impressions, the initial percentage to be retained
by 24/7 is _____%. The percentage retained by 24/7 shall be lowered effective
upon Network Affiliate's notifying 24/7 that the number of impressions delivered
in the preceding month requires the percentage retain to be adjusted.
B. The Network Affiliate may elect to have 24/7 serve promotional or
barter advertisements not sold by 24/7, for which Network Affiliate will pay
24/7 a serving fee of $2.50 cost per thousand ("CPM"); such promotional and
barter advertisements shall not exceed thirty percent (30%) of the Pages.
<PAGE>
C. In the event any Advertiser remits any payment for Advertising sold
by 24/7 directly to the Network Affiliate rather than to 24/7, the Network
Affiliate agrees to make prompt payment to 24/7 of any and all such payments.
D. Network Affiliate will be obligated to compensate 24/7 on any
business contracted by 24/7 Media prior to termination date.
E. Network Affiliate acknowledges that 24/7 has an ownership interest
in the "clicktobuy.com" e-commerce service (the "Service") and that the Service
includes the placement of banners on the 24/7 Network, generally on a "cost per
transaction" basis and on terms no more favorable to clicktobuy.com than would
be made available to a party not affiliated with 24/7.
F. Network Affiliate also acknowledges that 24/7 owns and operates the
Profilz database of demographic profiles (the "Database "). Network Affiliates
understands and agrees that the Payment in respect of Advertising sold that
employs the Database shall be calculated by subtracting from gross revenue a fee
for use of the Database, which fee shall be disclosed to Network Affiliate prior
to implementation and shall reasonably reflect 24/7's cost of developing and
operating the Database. Network Affiliate shall have the option not to accept
Advertising that employs the Database.
5. Intellectual Property. All hardware, software, programs, codes,
trade names, technology, intellectual property, licenses, patents,
trademarks, copyrights, trade secrets, know-how, and processes (collectively,
the "24/7 Technology") used by 24/7 under this Agreement shall remain the
sole property of 24/7. Network Affiliate shall have no rights, title or
interest in the 24/7 Technology. All hardware, software, programs, codes,
trade names, technology, intellectual property, licenses, patents,
trademarks, copyrights, trade secrets, know-how, and processes (collectively,
the "Network Affiliate Technology") used by Network Affiliate under this
Agreement shall remain the sole property of Network Affiliate. 24/7 shall
have no rights, title or interest in the Network Affiliate Technology. Upon
the expiration or termination of this Agreement, each party shall promptly
return all information, documents, manuals and other materials belonging to
the other party except as otherwise provided in this Agreement.
6. Confidentiality. 24/7 and Network Affiliate covenant to each other that
neither party shall disclose to any third party (other than its employees and
directors, in their capacity as such, and the employees and directors of any
affiliate on a need to know basis so long as they are bound by the terms of this
Agreement) any information regarding the terms and provisions of this Agreement
or any non-public confidential information which has been identified as such by
the other Party hereto except (i) to the extent necessary to comply with any law
or valid order of a court of competent jurisdiction (or any regulatory or
administrative tribunal), in which event the party so complying shall so notify
the others as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information, if
available; (ii) as part of its normal reporting or review procedure to its
auditors or its attorneys, as the case may be, so long as they are notified of
the provisions of this Agreement; (iii) in order to enforce its rights pursuant
to this Agreement; (iv) in connection with any filing with any governmental body
or as otherwise required by law, including the federal securities laws and any
applicable rules and regulations of any stock exchange or quotation system; and
(v) in a confidential disclosure made in connection with a contemplated
financing, merger, consolidation or sale of capital stock of 24/7 or the Network
<PAGE>
Affiliate. Information which is or should be reasonably understood to be
confidential or proprietary includes, but is not limited to, information about
the 24/7 Network, sales, cost and other unpublished financial information,
product and business plans, projections, marketing data, and sponsors but shall
not include information (a) already lawfully known to or independently developed
by a party, (b) disclosed in published materials, (c) generally known to the
public, (d) lawfully obtained from any third party or (e) required to be
disclosed by law.
7. Term.
A. The term of this Agreement (the "Term") shall commence on the
Effective Date and shall continue for at least one year from the Effective Date.
Either party may terminate the Agreement by giving notice no earlier than eight
months after the Effective Date. Termination will be effective four (4) months
after the date on which written notice is given, as determined under the
provisions of Section 13 below, to the other party.
B. Notwithstanding Section A. above, this Agreement may be terminated
by either party on 60 days' prior written notice to the other party upon the
occurrence of a material breach by the other party of any covenant, duty or
undertaking herein, which material breach continues without cure for a period of
30 days after written notice of such breach from the non-breaching party to the
breaching party.
C. Notwithstanding Section A. or B. above, this Agreement may be
terminated by 24/7 on written notice to the Network Affiliate upon the
occurrence of a material breach by Network Affiliate of its covenants under
Section 8 of this Agreement, which material breach continues without cure for a
period of more than 48 hours after written notice of such breach from 24/7 to
Network Affiliate of such breach, or which material breach occurs on more than
two occasions.
D. Notwithstanding Section A. or B. above, this Agreement may be
terminated by 24/7 on 30 days' prior written notice to the Network Affiliate if
the number of Pages in any three consecutive months is less than one million or
if the average click through rate for any three-month period is less than 0.25%.
8. Content of Web Site. Network Affiliate covenants and agrees not to
include or provide via the Web Site or the Web Site's Pages any material that
is or may be considered: (i) libelous, pornographic, obscene, or defamatory
under any federal or state law; (ii) an infringement of any third party's
intellectual property rights (including copyright, patent, trademark, trade
secret or other proprietary rights); or (iii) an infringement on any third
party's rights of publicity or privacy. Network Affiliate further covenants
and agrees, with respect to the operation of its Web Site and its Pages, to
comply with all laws, statutes, ordinances, and regulations.
9. Indemnification. Network Affiliate shall indemnify and hold harmless
24/7, its advertisers and other suppliers and any related third parties,
against and in respect of any and all third party claims, suits, actions,
proceedings (formal and informal), investigations, judgments, deficiencies,
damages, settlements, liabilities, and legal and other expenses (including
reasonable legal fees and expenses of attorneys chosen by 24/7) as and when
incurred, arising out of or based upon any act or omission or alleged act or
alleged omission by Network Affiliate in connection with the acceptance of,
or the
<PAGE>
performance or non-performance by Network Affiliate of, any of its duties under
this Agreement or arising from the breach by Network Affiliate of its
warranties, representations or covenants contained in this Agreement. 24/7 shall
indemnify and hold harmless the Network Affiliate, against and in respect of any
and all third party claims, suits, actions, proceedings (formal and informal),
investigations, judgments, deficiencies, damages, settlements, liabilities, and
legal and other expenses (including reasonable legal fees and expenses of
attorneys chosen by Network Affiliate) as and when incurred, arising out of or
based upon any act or omission or alleged act or alleged omission by 24/7 in
connection with the acceptance of, or the performance or non-performance by 24/7
of, any of its duties under this Agreement or arising from the breach by 24/7 of
its warranties, representations or covenants contained in this Agreement.
10. No Poaching. Network Affiliate agrees that, during the Term and for
a period of one year from the end of the Term, neither it nor its affiliates
will solicit or recruit the services of any 24/7 employees, or hire any such
employees.
11. No Waiver. This Agreement shall not be waived, modified, assigned or
transferred except by a written consent to that effect signed by Network
Affiliate and 24/7. Network Affiliate agrees that if it assigns or transfers
this Agreement, it shall cause such successor, assignee, or transferee to assume
all of the Network Affiliate's obligations hereunder. Any assignment, transfer,
or assumption shall not relieve the Network Affiliate of liability hereunder.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed therein, without regard to principles of conflicts of laws.
13. Notices. All notices required or permitted to be given hereunder
shall be in writing and either hand-delivered, telecopied, mailed by
certified first class mail, postage prepaid, or sent via electronic mail to
the other party or parties hereto at the address(es) set forth below. A
notice shall be deemed given when delivered personally, when the telecopied
notice is transmitted by the sender, three business days after mailing by
certified first class mail, or on the delivery date if delivered by
electronic mail.
14. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements of the Parties with respect to the transactions
set forth herein and, except as otherwise expressly provided herein, is not
intended to confer upon any other person any rights or remedies hereunder.
15. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall
constitute one and the same document.
16. Force Majeure. Neither party shall be held liable or responsible to the
other party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected party, including but not limited to fire, floods,
failure of communications systems or networks, embargoes, war, acts of war
(whether war is declared or not), insurrections, riots, civil commotion,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other party; provided,
however, that the party so affected shall use reasonable commercial efforts to
<PAGE>
avoid or remove such causes of nonperformance, and shall continue performance
hereunder with reasonable dispatch whenever such causes are removed. Either
party shall provide the other party with prompt written notice of any delay or
failure to perform that occurs by reason of force majeure. The parties shall
mutually seek a resolution of the delay or the failure to perform as noted
above.
17. Severability. Should one or more provisions of this Agreement be or
become invalid, the parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their
economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement
shall not affect the validity of this Agreement as a whole, unless the
invalid provisions are of such essential importance to this Agreement that it
is to be reasonably assumed that the parties would not have entered into this
Agreement without the invalid provisions.
18. Dispute Resolution. Any controversy or claim arising out of or
relating to the Agreement, or the breach thereof, shall be settled
exclusively by arbitration. Such arbitration shall be conducted before a
single arbitrator in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. If arbitration is commenced
by 24/7, it shall take place in the city in the continental United States in
which the principal U.S.A. corporate offices of Network Affiliate are
located. If Network Affiliate has no corporate offices in the U.S.A. or if
arbitration is commenced by Network Affiliate, then arbitration shall take
place in New York, New York. Judgment may be entered on the arbitrator's
award in any court having jurisdiction, and the parties irrevocably consent
to the jurisdiction of such courts for that purpose. The parties waive
personal service in connection with any such arbitration; any process or
other papers under this provision may be served outside the home state of
Network Affiliate or New York by registered mail, return receipt requested,
or by personal service, provided a reasonable time for appearance or response
is allowed. All decisions of the arbitrator shall be final and binding on the
parties. The parties shall equally divide all costs of the American
Arbitration Association and the arbitrator. Each party shall bear its own
legal fees in any dispute. The arbitrator may grant injunctive or other
relief.
19. Independent Contractors. 24/7 Media and Network Affiliate shall each
act as independent contractors. Neither party shall exercise control over the
activities and operations of the other party. 24/7 Media and Network
Affiliate shall each conduct all of its business in its own name and as it
deems fit, provided it is not in derogation of the other's interests. Neither
party shall engage in any conduct inconsistent with its status as an
independent contractor, have authority to bind the other with respect to any
agreement or other commitment with any third party, nor enter into any
commitment on behalf of the other, except as expressly provided for by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement this
9th day of September, 1999 (the "Effective Date").
24/7 MEDIA, INC.
<PAGE>
By: /s/ Bruce L. MacDonald
Name: Bruce L. McDonald
Title: Director, Business Development
E-mail address: [email protected]
NETWORK AFFILIATE:
Name of Web Site: thehealthchannel.com
Web Site URL: www.thehealthchannel.com
Corporate Name of Web Site owner: thehealthchannel.com, Inc.
Address: 5000 Birch Street, Suite 4000, Newport Beach, CA 92660
Address: 7 Benjamin Place, Locust Valley, NY 11560
By: /s/ Donald J. Shea
Name: Donald J. Shea
Title: President
II. E-mail address: [email protected]
<PAGE>
Exhibit 10.10
Employment Agreement with Thomas F. Lonergan,
dated September 1, 1999
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made, entered into, and effective as
of September 1, 1999 (the "Effective Date"), by and between
Thehealthchannel.com, Inc., a California corporation ("Company"), and Thomas F.
Lonergan, an individual ("Employee").
RECITALS
A. Company is engaged in the business of providing internet healthcare
information and services, and maintains an office in the State of California.
B. Company desires to have an employment agreement with Employee as its
Vice President, Chief Operations Officer, Secretary, and Chief Financial
Officer subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto hereby agree as follows:
AGREEMENT
1. Term and Duties. Company hereby employs Employee as Vice President,
Chief Operations Officer, Secretary, and Chief Financial Officer as of the
Effective Date and Employee agrees to enter into and remain in the employ of
Company until this Agreement is terminated as provided herein below. Employee
shall faithfully and diligently perform all professional duties and acts as
Secretary
<PAGE>
and Treasurer as may be requested and required of Employee by Company or its
Directors. Employee shall devote such time and attention to the business of
Company as shall be required to perform the required services and duties.
Employee at all times during the employment term shall strictly adhere to and
obey all policies, rules and regulations established from time to time
governing the conduct of employees of Company.
2. Exclusivity, Non-Disclosure.
a. Employee agrees to perform Employee's services efficiently and to
the best of Employee's ability. Employee agrees throughout the term of this
Agreement to devote his time, energy and skill to the business of the Company
and to the promotion of the best interests of the Company.
b. Employee agrees that he shall not at any time, either during or
subsequent to his employment term, unless expressly consented to in writing
by Company, either directly or indirectly use or disclose to any person or
entity any confidential information of any kind, nature or description
concerning any matters affecting or relating to the business of Company,
including, but not limited to, information concerning the customers of
Company, Company's marketing methods, compensation paid to employees,
independent contractors or suppliers and other terms of their employment or
contractual relationships, financial and business records, know-how, or any
other information concerning the business of Company, its manner of
operations, or other data of any kind, nature or description. Employee agrees
that the above information and items are important, material and confidential
trade secrets and these affect the successful conduct of Company's business
and its goodwill.
3. Compensation.
a. Subject to the termination of this Agreement as provided herein,
Company shall compensate Employee for his services hereunder at a monthly
salary of twelve thousand dollars ($12,000) payable in accordance with the
Company's practices, less normal payroll deductions, and prorated for the
actual employment term.
b. Employee is also eligible to receive such additional compensation as
the Board of Directors of Company determines is proper in recognition of
Employee's contributions and services to Company. Such additional
compensation shall be paid to Employee on the anniversary date of this
Agreement during the Employment Term, and at such other times as may be
determined by the Board of Directors.
c. In addition to the compensation set forth above, Employee shall be
entitled to participate in or to receive benefits under all of Company's
employee benefit plans made available by Company now or in the future to
similarly situated employees, subject to the terms, conditions and overall
administration of such plans.
4. Expenses. Company shall reimburse Employee for all reasonable
business related expenses incurred by Employee in the course of his normal
duties on behalf of the Company. In compensating Employee for expenses, the
ordinary and usual business guidelines and documentation requirements shall
be adhered to by Company and Employee.
5. Vacation. Employee shall be entitled to accrue four (4) vacation
weeks with pay during each employment year, to be taken at such times as may
be
<PAGE>
convenient to Company and Employee. Any vacation time not used in any one
year may be carried forward to subsequent employment years. For purposes of
this Agreement, "employment years" shall mean the successive one (1) year
periods beginning on the Effective Date of this Agreement and on each
anniversary date of the Effective Date of this Agreement during the term of
this Agreement.
6. Inventions and Patents. All processes, inventions, patents, computer
software, copy rights, trademarks and other intangible rights (collectively
referred to as "Intellectual Property") that may be conceived or developed by
Employee during the Employment Term, either alone or with others, made or
conceived by him shall remain the sole property of Company.
7. Disability of Employee.
a. Employee shall be considered disabled if, due to illness or injury,
either physical or mental, Employee is unable to perform Employee's customary
duties as an employee of Company for more than thirty (30) days in the
aggregate out of a period of twelve (12) consecutive months. The disability
shall be determined by a certification from a physician.
b. If Employee is determined to be disabled, Company shall continue to
pay Employee's base salary for the initial ninety (90) days of "disability."
The continuation of the salary compensation after the initial ninety (90)
days shall be determined by the Board of Directors of the Company.
8. Termination By Company.
a. Unless terminated earlier as provided in this Agreement, Employee
shall be employed for a term commencing on the Effective Date and ending
three (3) years thereafter. Thereafter, the employment term shall continue on
an at will basis until terminated at the option of Company or Employee upon
thirty (30) days' prior written notice. This Agreement will terminate
immediately upon Employee's death.
b. Company may terminate this Agreement for cause at any time without
notice. For purposes of this Agreement, the term "cause" shall include, but
not be limited to, the following: a material breach of or failure to perform
any covenant or obligation in this Agreement, disloyalty, dishonesty, neglect
of duties, unprofessional conduct, acts of moral turpitude, disappearance,
felonious conduct or fraud.
c. If Company terminates this Agreement without cause, Employee shall
receive liquidated damages in accordance with Section 15 herein.
9. Termination By Employee.
a. Employee may terminate this Agreement without cause upon thirty (30)
days prior written notice to Company.
b. Employee may terminate this Agreement immediately with cause, in
which event Employee shall receive liquidated damages in accordance with
Section 15 herein. For the purposes of this Agreement, "cause" for
termination by Employee shall be a breach of any material covenant or
obligation hereunder, the voluntary or involuntary dissolution of the
Company, any merger or consolidation in which the Company is not the
surviving or resulting corporation, any transfer of all or subsequently all
of the assets of Company, transfer of a majority of
<PAGE>
shares of the Company by one or more shareholders in one or more
transactions, or the issuance of shares of Company constituting a majority of
the outstanding shares immediately following such issuance.
10. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto their respective devisees, legatees, heirs, legal
representatives, successors, and permitted assigns. The preceding sentence shall
not affect any restriction on assignment set forth elsewhere in this Agreement.
11. Effect of Combination or Dissolution. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of Company, or by any
merger or consolidation in which Company is not the surviving or resulting
corporation, or upon any transfer of all or substantially all of the
outstanding shares or assets of Company. Instead, the provisions of this
Agreement shall be binding on and inure to the benefit of Company's
creditors, the surviving business entity or the business entity to which such
shares or assets shall be transferred.
12. Assignment. Subject to all other provisions of this Agreement, any
attempt to assign or transfer this Agreement or any of the rights conferred
hereby, by judicial process or otherwise, to any person, firm, Company, or
corporation without the prior written consent of the other party, shall be
invalid, and may, at the option of such other party, result in an incurable
event of default resulting in termination of this Agreement and all rights
hereby conferred.
13. Choice of Law. This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State
of California including all matters of construction, validity, performance,
and enforcement and without giving effect to the principles of conflict of
laws.
14. Indemnification. Company shall indemnify, defend and hold Employee
harmless, to the fullest extent permitted by law, for all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney's fees
that Employee shall incur or suffer that arise from, result from or relate to
the discharge of Employee's duties under this Agreement. Company shall
maintain adequate insurance for this purpose or shall advance Employee any
expenses incurred in defending any such proceeding or claim to the maximum
extent permitted by law.
15. Liquidated Damages. In the event of any material breach of this Agreement
by Company, Employee at his sole option, may terminate this Agreement and, at
his sole option, receive as liquidated damages (the "Liquidated Damages") one
of the following:
a. The full amount of the salary and incentive compensation provided for in
Section 3 of this Agreement for the remaining term of this Agreement. The sum
payable to Employee under this Section shall be payable in monthly
installments on the first day of each month, beginning one month following
the date of termination of employment.
b. The Liquidated Damages shall not be limited or reduced by amounts that
Employment might otherwise earn or be able to earn during the period between
<PAGE>
termination of his employment under this Agreement and payment of the
Liquidated Damages. The provisions of this Section shall be in addition to
any and all rights Employee may have in equity or at law to require Company
to comply with or to prevent the breach by Company of this Agreement.
16. Jurisdiction. The parties submit to the jurisdiction of the Courts of the
County of Orange, State of California for the resolution of all legal
disputes arising under the terms of this Agreement, including, but not
limited to, enforcement of any arbitration award.
17. Entire Agreement. Except as provided herein, this Agreement, including
exhibits, contains the entire agreement of the parties, and supersedes all
existing negotiations, representations, or agreements and all other oral,
written, or other communications between them concerning the subject matter of
this Agreement. There are no representations, agreements, arrangements, or
understandings, oral or written, between and among the parties hereto relating
to the subject matter of this Agreement that are not fully expressed herein.
18. Severability. If any provision of this Agreement is unenforceable, invalid,
or violates applicable law, such provision, or unenforceable portion of such
provision, shall be deemed stricken and shall not affect the enforceability of
any other provisions of this Agreement.
19. Captions. The captions in this Agreement are inserted only as a matter of
convenience and for reference and shall not be deemed to define, limit, enlarge,
or describe the scope of this Agreement or the relationship of the parties, and
shall not affect this Agreement or the construction of any provisions herein.
20. Modification. No change, modification, addition, or amendment to this
Agreement shall be valid unless in writing and signed by all parties hereto.
21. Attorneys' Fees. Except as otherwise provided herein, if a dispute should
arise between the parties including, but not limited to arbitration, the
prevailing party shall be reimbursed by the non-prevailing party for all
reasonable expenses incurred in resolving such dispute, including reasonable
attorneys' fees exclusive of such amount of attorneys' fees as shall be a
premium for result or for risk of loss under a contingency fee arrangement.
22. Taxes. Any income taxes required to be paid in connection with the payments
due hereunder, shall be borne by the party required to make such payment. Any
withholding taxes in the nature of a tax on income shall be deducted from
payments due, and the party required to withhold such tax shall furnish to the
party receiving such payment all documentation necessary to prove the proper
amount to withhold of such taxes and to prove payment to the tax authority of
such required withholding.
23. Not for the Benefit of Creditors or Third Parties. The provisions of this
Agreement are intended only for the regulation of relations among the parties.
This Agreement is not intended for the benefit of creditors of the parties or
other third parties and no rights are granted to creditors of the parties or
other third parties under this Agreement. Under no circumstances shall any third
party, who is a minor, be deemed to have accepted, adopted, or acted in reliance
upon this Agreement.
24. Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
<PAGE>
original, but all of which together shall constitute one and the same
instrument. The Parties agree that facsimile signatures of this Agreement
shall be deemed a valid and binding execution of this Agreement.
25. Conflict Waiver. Both Employee and the Company (the "Parties") hereby agree
and acknowledge that the law firm of Horwitz and Beam ("H&B"), which represents
the Company, has drafted this Agreement. The Parties hereto further acknowledge
that they have been informed of the inherent conflict of interest associated
with the drafting of this Agreement by H&B and waive any action they may have
against H&B regarding such conflict. The Parties have been given the opportunity
to consult with counsel of their choice regarding their rights under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the Effective Date.
<TABLE>
<CAPTION>
"Company" "Employee"
<S> <C>
Thehealthchannel.com, Inc., Inc.,
a California corporation
/s/ Donald A. Shea /s/ Thomas F. Lonergan
- ----------------------- -----------------------
BY: Donald A. Shea Thomas F. Lonergan
ITS: President
Confirmed authorized by Board of Directors:
/s/ Thomas F. Lonergan
BY: Thomas F. Lonergan
ITS: Secretary
</TABLE>
<PAGE>
Exhibit 10.11
Employment Agreement with Donald A. Shea,
dated September 1, 1999
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made, entered into, and effective
as of September 1, 1999 (the "Effective Date"), by and between
Thehealthchannel.com, Inc., a California corporation ("Company"), and Donald
A. Shea, an individual ("Employee").
RECITALS
A. Company is engaged in the business of providing internet healthcare
information and services, and maintains an office in the State of California.
B. Company desires to have an employment agreement with Employee as its
President subject to the terms and conditions of this Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto hereby agree as follows:
AGREEMENT
1. Term and Duties. Company hereby employs Employee as President as of the
Effective Date and Employee agrees to enter into and remain in the employ of
Company until this Agreement is terminated as provided herein below. Employee
shall faithfully and diligently perform all professional duties and acts as
Secretary and Treasurer as may be requested and required of Employee by
Company or its Directors. Employee shall devote such time and attention to
the business of Company as shall be required to perform the required services
and duties. Employee at all times during the employment term shall strictly
adhere to and obey all policies, rules and regulations established from time
to time governing the conduct of employees of Company.
2. Exclusivity, Non-Disclosure.
a. Employee agrees to perform Employee's services efficiently and to the best of
Employee's ability. Employee agrees throughout the term of this Agreement to
devote his time, energy and skill to the business of the Company and to the
promotion of the best interests of the Company.
b. Employee agrees that he shall not at any time, either during or subsequent
to his employment term, unless expressly consented to in writing by Company,
either directly or indirectly use or disclose to any person or entity any
confidential information of any kind, nature or description concerning any
matters affecting or relating to the business of Company, including, but not
limited to, information concerning the customers of Company, Company's
marketing methods, compensation paid to employees, independent contractors or
suppliers and other terms of their employment or contractual relationships,
financial and business records, know-how, or any other information concerning
the business of Company, its manner of operations, or other data of any kind,
nature or description. Employee agrees that the above information and items
are important, material and confidential trade secrets and these affect the
successful conduct of Company's business and its goodwill.
3. Compensation.
a. Subject to the termination of this Agreement as provided herein, Company
shall compensate Employee for his services hereunder at a monthly salary of
twelve thousand dollars ($12,000) payable in accordance with the Company's
practices, less normal payroll deductions, and prorated for the actual
employment term.
b. Employee is also eligible to receive such additional compensation as the
Board of Directors of Company determines is proper in recognition of Employee's
contributions and services to Company. Such additional compensation shall be
paid to Employee on the anniversary date of this Agreement during the Employment
Term, and at such other times as may be determined by the Board of Directors.
c. In addition to the compensation set forth above, Employee shall be entitled
to participate in or to receive benefits under all of Company's employee benefit
plans made available by Company now or in the future to similarly situated
employees, subject to the terms, conditions and overall administration of such
plans.
<PAGE>
4. Expenses. Company shall reimburse Employee for all reasonable business
related expenses incurred by Employee in the course of his normal duties on
behalf of the Company. In compensating Employee for expenses, the ordinary and
usual business guidelines and documentation requirements shall be adhered to by
Company and Employee.
5. Vacation. Employee shall be entitled to accrue four (4) vacation weeks with
pay during each employment year, to be taken at such times as may be convenient
to Company and Employee. Any vacation time not used in any one year may be
carried forward to subsequent employment years. For purposes of this Agreement,
"employment years" shall mean the successive one (1) year periods beginning on
the Effective Date of this Agreement and on each anniversary date of the
Effective Date of this Agreement during the term of this Agreement.
6. Inventions and Patents. All processes, inventions, patents, computer
software, copy rights, trademarks and other intangible rights (collectively
referred to as "Intellectual Property") that may be conceived or developed by
Employee during the Employment Term, either alone or with others, made or
conceived by him shall remain the sole property of Company.
7. Disability of Employee.
a. Employee shall be considered disabled if, due to illness or injury, either
physical or mental, Employee is unable to perform Employee's customary duties as
an employee of Company for more than thirty (30) days in the aggregate out of a
period of twelve (12) consecutive months. The disability shall be determined by
a certification from a physician.
b. If Employee is determined to be disabled, Company shall continue to pay
Employee's base salary for the initial ninety (90) days of "disability." The
continuation of the salary compensation after the initial ninety (90) days shall
be determined by the Board of Directors of the Company.
8. Termination By Company.
a. Unless terminated earlier as provided in this Agreement, Employee shall be
employed for a term commencing on the Effective Date and ending three (3) years
thereafter. Thereafter, the employment term shall continue on an at will basis
until terminated at the option of Company or Employee upon thirty (30) days'
prior written notice. This Agreement will terminate immediately upon Employee's
death.
b. Company may terminate this Agreement for cause at any time without notice.
For purposes of this Agreement, the term "cause" shall include, but not be
limited to, the following: a material breach of or failure to perform any
covenant or obligation in this Agreement, disloyalty, dishonesty, neglect of
duties, unprofessional conduct, acts of moral turpitude, disappearance,
felonious conduct or fraud.
c. If Company terminates this Agreement without cause, Employee shall receive
liquidated damages in accordance with Section 15 herein.
9. Termination By Employee.
<PAGE>
a. Employee may terminate this Agreement without cause upon thirty (30) days
prior written notice to Company.
b. Employee may terminate this Agreement immediately with cause, in which event
Employee shall receive liquidated damages in accordance with Section 15 herein.
For the purposes of this Agreement, "cause" for termination by Employee shall be
a breach of any material covenant or obligation hereunder, the voluntary or
involuntary dissolution of the Company, any merger or consolidation in which the
Company is not the surviving or resulting corporation, any transfer of all or
subsequently all of the assets of Company, transfer of a majority of shares of
the Company by one or more shareholders in one or more transactions, or the
issuance of shares of Company constituting a majority of the outstanding shares
immediately following such issuance.
10. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto their respective devisees, legatees, heirs, legal
representatives, successors, and permitted assigns. The preceding sentence shall
not affect any restriction on assignment set forth elsewhere in this Agreement.
11. Effect of Combination or Dissolution. This Agreement shall not be terminated
by the voluntary or involuntary dissolution of Company, or by any merger or
consolidation in which Company is not the surviving or resulting corporation, or
upon any transfer of all or substantially all of the outstanding shares or
assets of Company. Instead, the provisions of this Agreement shall be binding on
and inure to the benefit of Company's creditors, the surviving business entity
or the business entity to which such shares or assets shall be transferred.
12. Assignment. Subject to all other provisions of this Agreement, any attempt
to assign or transfer this Agreement or any of the rights conferred hereby, by
judicial process or otherwise, to any person, firm, Company, or corporation
without the prior written consent of the other party, shall be invalid, and may,
at the option of such other party, result in an incurable event of default
resulting in termination of this Agreement and all rights hereby conferred.
13. Choice of Law. This Agreement and the rights of the parties hereunder shall
be governed by and construed in accordance with the laws of the State of
California including all matters of construction, validity, performance, and
enforcement and without giving effect to the principles of conflict of laws.
14. Indemnification. Company shall indemnify, defend and hold Employee harmless,
to the fullest extent permitted by law, for all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorney's fees that Employee shall
incur or suffer that arise from, result from or relate to the discharge of
Employee's duties under this Agreement. Company shall maintain adequate
insurance for this purpose or shall advance Employee any expenses incurred in
defending any such proceeding or claim to the maximum extent permitted by law.
15. Liquidated Damages. In the event of any material breach of this Agreement by
Company, Employee at his sole option, may terminate this Agreement and, at his
sole option, receive as liquidated damages (the "Liquidated Damages") one of the
following:
<PAGE>
a. The full amount of the salary and incentive compensation provided for in
Section 3 of this Agreement for the remaining term of this Agreement. The sum
payable to Employee under this Section shall be payable in monthly installments
on the first day of each month, beginning one month following the date of
termination of employment.
b. The Liquidated Damages shall not be limited or reduced by amounts that
Employment might otherwise earn or be able to earn during the period between
termination of his employment under this Agreement and payment of the Liquidated
Damages. The provisions of this Section shall be in addition to any and all
rights Employee may have in equity or at law to require Company to comply with
or to prevent the breach by Company of this Agreement.
16. Jurisdiction. The parties submit to the jurisdiction of the Courts of the
County of Orange, State of California for the resolution of all legal disputes
arising under the terms of this Agreement, including, but not limited to,
enforcement of any arbitration award.
17. Entire Agreement. Except as provided herein, this Agreement, including
exhibits, contains the entire agreement of the parties, and supersedes all
existing negotiations, representations, or agreements and all other oral,
written, or other communications between them concerning the subject matter of
this Agreement. There are no representations, agreements, arrangements, or
understandings, oral or written, between and among the parties hereto relating
to the subject matter of this Agreement that are not fully expressed herein.
18. Severability. If any provision of this Agreement is unenforceable, invalid,
or violates applicable law, such provision, or unenforceable portion of such
provision, shall be deemed stricken and shall not affect the enforceability of
any other provisions of this Agreement.
19. Captions. The captions in this Agreement are inserted only as a matter of
convenience and for reference and shall not be deemed to define, limit, enlarge,
or describe the scope of this Agreement or the relationship of the parties, and
shall not affect this Agreement or the construction of any provisions herein.
20. Modification. No change, modification, addition, or amendment to this
Agreement shall be valid unless in writing and signed by all parties hereto.
21. Attorneys' Fees. Except as otherwise provided herein, if a dispute should
arise between the parties including, but not limited to arbitration, the
prevailing party shall be reimbursed by the non-prevailing party for all
reasonable expenses incurred in resolving such dispute, including reasonable
attorneys' fees exclusive of such amount of attorneys' fees as shall be a
premium for result or for risk of loss under a contingency fee arrangement.
22. Taxes. Any income taxes required to be paid in connection with the payments
due hereunder, shall be borne by the party required to make such payment. Any
withholding taxes in the nature of a tax on income shall be deducted from
payments due, and the party required to withhold such tax shall furnish to the
party receiving such payment all documentation necessary to prove the proper
amount to withhold of such taxes and to prove payment to the tax authority of
such required withholding.
<PAGE>
23. Not for the Benefit of Creditors or Third Parties. The provisions of this
Agreement are intended only for the regulation of relations among the parties.
This Agreement is not intended for the benefit of creditors of the parties or
other third parties and no rights are granted to creditors of the parties or
other third parties under this Agreement. Under no circumstances shall any third
party, who is a minor, be deemed to have accepted, adopted, or acted in reliance
upon this Agreement.
24. Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The Parties agree that facsimile signatures of this Agreement shall
be deemed a valid and binding execution of this Agreement.
25. Conflict Waiver. Both Employee and the Company (the "Parties") hereby agree
and acknowledge that the law firm of Horwitz and Beam ("H&B"), which represents
the Company, has drafted this Agreement. The Parties hereto further acknowledge
that they have been informed of the inherent conflict of interest associated
with the drafting of this Agreement by H&B and waive any action they may have
against H&B regarding such conflict. The Parties have been given the opportunity
to consult with counsel of their choice regarding their rights under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the Effective Date.
<TABLE>
<CAPTION>
"Company" "Employee"
<S> <C>
Thehealthchannel.com, Inc., Inc.,
a California corporation
/s/ Donald A. Shea /s/ Donald A. Shea
BY: Donald A. Shea Donald A. Shea
ITS: President
Confirmed authorized by Board of Directors:
/s/ Thomas F. Lonergan
BY: Thomas F. Lonergan
ITS: Secretary
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FOR THE
COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 5-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1999
<PERIOD-START> MAY-01-1999 JUL-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 131,059 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 139,059 0
<PP&E> 581,674 0
<DEPRECIATION> (19,389) 0
<TOTAL-ASSETS> 701,344 0
<CURRENT-LIABILITIES> 660,063 0
<BONDS> 0 0
0 0
0 0
<COMMON> 107,050 0
<OTHER-SE> (65,769) 0
<TOTAL-LIABILITY-AND-EQUITY> 701,344 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 684,469 680,684
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (684,178) (680,393)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (684,178) (680,393)
<EPS-BASIC> (0.01) (0.01)
<EPS-DILUTED> (0.01) (0.01)
</TABLE>
