U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-SB
AMENDMENT NO. 4
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER
SECTION 12(b) OR (g)OF THE SECURITIES EXCHANGE ACT OF 1934
INNOVATIVE TRACKING SOLUTIONS CORPORATION
(Name of Small Business Issuer in its charter)
Delaware 33-0728140
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
23232 Peralta Drive, Suite 115
Laguna Hills, California 92653-1438
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 949-454-1278
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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
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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
("the Company") was incorporated under the laws of the state of Delaware on
September 4, 1996. Its principal and executive offices are located at 23232
Peralta Drive, Suite 115, Laguna Hills, California 92653-1438, telephone
(949) 454-1278. The Company is in the business of developing, manufacturing
and marketing a broad range of simple and creative products that solve typical
problems associated with the fast-paced nature of modern individuals and
businesses. The Company chooses to launch products that are expected to
generate continual profits for years to come based on the products having a
"niche" in the market and, in most cases, having "proprietary" or "exclusive"
market rights. The Company holds the exclusive rights to several patents as
well as additional pending patents for products which have broad ranges of
applications from consumer to healthcare devices. The Company launched its
first product into small test markets in November of 1997.
The Company's initial operations included the further development and
manufacture of the Smart Kitchen(tm) patented food storage tracking system
invented by the Company founders and licensed exclusively to the Company.
Based on the then current financial condition of the Company and the cost
to launch this product into the consumer marketplace, the Company decided
to postpone the launch in favor of the development and launch of an
additional product, the Private Practice(tm) Vibration Reminder Disk, which
the Company felt held greater market potential and lower manufacturing and
marketing costs. The Company secured exclusive marketing rights to the
product and launched it into test markets in November of 1997.
The Company Research & Development Division's continuing goal is to develop
proprietary product concepts within its healthcare and consumer divisions and
strategically market these products both domestically and internationally.
The Company believes that by diversifying its holdings into multiple product
lines and applications, it will reduce the risk that can be associated with
one-product companies and increase its profit potential. The Company also
seeks to acquire exclusive marketing rights to products developed outside the
Company.
The Company is still in the development stage of many of its products and
therefore has generated minimal revenues to date. The Company's initial
launch of its first version of Private Practice into test markets in November
of 1997 was through a short-form infomercial to the consumer market. This
small media test did not generate sufficient results to warrant and full scale
rollout of the product to the consumer market. Therefore, the company
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 NASD and the
company's stock was cleared to trade on the NASDAQ OTC Bulletin Board
(Symbol: IVTX) on April 21, 1998. The OTC Bulletin Board is maintained by the
National Association of Securities Dealers (NASD).
Business of the Issuer
General
The Company develops, manufacturers and markets unique and proprietary
products that have broad applications in several markets. The Company has
three main divisions: Healthcare Products, Consumer Products, and Research &
Development (New Products). The Company's first product in the Healthcare
division was launched into test markets in November of 1997 and into the
healthcare industry in June of 1998. Within its Consumer Product division, the
Company intends to launch its first product in 1999. Within its Research &
Development division, the Company intends to begin the development of
additional proprietary product concepts and also evaluate additional product
concepts developed outside the Company.
Products
The Private Practice(tm) Vibration Reminder Disk
The first product launched within the Company's Healthcare division is the
patented Private Practice(tm) Vibration Reminder Disk System. The product has
countless applications in the healthcare field in prompting patients to
perform their prescribed therapies which usually consist of rehabilitation
exercises or taking medications. The product also has applications in
"ergonomics" in helping to prevent "Repetitive Motion Injury" by prompting
workers to take several 30-second "Microbreaks" throughout the day to perform
specific conditioning exercises. It also has applications in consumer fitness
and health by prompting mini sessions of isometric exercises frequently
throughout the day along with an eating pace mode that helps to slow one's
eating speed.
The Company holds the exclusive rights to an existing patent on the Private
Practice(tm) product (patent expires August 24, 2007) with exclusive rights
to an additional patent approved on April 28, 1998 by the United States Patent
and Trademark Office (patent will expire on August 8, 2017) and exclusive
rights to a third patent currently pending on the product and to any and all
extensions or improvements on the product that become patented. The Company
also holds exclusive rights to the use of the name, Private Practice(tm) and
the name Pouch-Patch(r) (registration filed and is currently pending for
Private Practice(tm) and registration issued for Pouch-Patch(r) on 12/8/98).
Trademark registrations remain in force for ten years from their date of issue
or expiration, and may be renewed for periods of ten years from the expiring
period unless previously cancelled or surrendered. (See Exhibit 10.3 for
details of Licensing Agreement.)
Worn on the body, the Private Practice(tm) Vibration Reminder Disk
automatically, consistently and silently vibrates at specific intervals
throughout the day to remind the wearer to stop and perform a specific task
from taking medications to performing rehabilitation exercises frequently
throughout the day at home, work or wherever they may be. With patient
compliance to treatment plans being one of the biggest problems facing the
healthcare professional today, there is a tremendous need for practical and
affordable solutions to improving patient outcomes. The Company's low-cost
vibration disk that can be worn conveniently anywhere on the body provides a
"private" and "physical" reminder that can be more effective than the few
audible or visual reminders currently available for use.
The Private Practice(tm) Vibration Reminder Disk was designed to be easy to
use and has a simple one-button operation. It is small (approx. 1 3/4 in
diameter) and thin (3/4 inch thick) and can be worn practically anywhere on
the body undetectable in several ways: inside a specially designed skin Pouch-
Patch(tm), clipped under the clothing, simply placed in a pocket or worn on the
wrist with the specially designed wrist strap (all included with the product).
It also has a "postpone feature" which acts like a "snooze button" on an alarm
clock for those times when the patient may not be near their medication when
the vibration reminder occurs.
The product is proprietary and unique and currently has over 50 applications
or uses in the healthcare field from prompting Kegel therapy exercises
throughout the day to help reduce incontinence problems to prompting bedridden
or wheelchair-mobile patients to reposition and "unweight" frequently to help
prevent pressure ulcers (sores). Since launching the Private Practice(tm)
Vibration Reminder Disk into the healthcare industry, the Company has developed
seven versions of the product to address the specific reminder interval needs
of several health problems; (1) Physical Therapy/General Rehab Version, (2)
Medications Reminder Version, (3)Pressure Ulcer Prevention Version
(4)Casting/Bracing/Immobilization Version, (5) Kegel Therapy/Incontinence
Version (6) Ergonomic/Injury Prevention Version and (7) Fitness Version.
Each version comes pre-set with five relative and specific reminder intervals
and vibration sequences and includes specific information and recommendations
relative to the needs of the particular application.
The Company extends the product into several healthcare settings through
specific protocols developed by industry experts hired by the Company. These
well-known experts in the fields of incontinence, wound care (pressure ulcer
prevention) and work injury prevention are currently developing specific
protocols for the vibration disk for these health issues. The protocols
include patient educational brochures and videos along with specific guidelines
for the healthcare staff in implementing the Private Practice(tm) system.
Patient non-compliance to therapy or treatment regimens can result in health
complications and/or the need for extended treatments. According to national
studies, non-compliance to medications costs the U.S. population over $100
billion per year and results in as many as 125,000 deaths. The Company's goal
is improve patient compliance and consequently patient outcomes with the
Private Practice(tm) Vibration Reminder Disk. The Company is offering a
simple and low-cost solution that has a multitude of applications for a
magnitude of healthcare problems.
With the recent "cut-backs" in Medicare and the Prospective Payment System,
"patient outcomes" and "preventative healthcare" are among the most significant
issues for third party payors (insurance companies). A new Medicare prospective
payment system, created by the Balanced Budget Act of 1997, will have a
profound effect upon the nation's healthcare institutions. Health care
institutions and providers are assuming more financial risk for appropriate
product utilization, patient compliance and outcomes management. The low cost
Private Practice Vibration Reminder Disk is designed to follow patients from
the hospital setting, to the skilled nursing facility setting, or on to the
home care setting, stepping down the cost of care while maintaining patient
compliance to prescribed treatments. Improved patient outcomes in lower cost
health care settings is what healthcare payors are demanding.
There are over 7,000 hospitals, 15,000 skilled nursing facilities and 15,000
home health agencies in the United States facing reimbursement cut-backs.
Furthermore, there are over 15,000 Home Medical Equipment (HME) dealers
throughout the United States searching for retail business to augment their
dependence on Medicare and MediCaid billing. The Healthcare Product division
of the Company is determined to capture a large share of this market, by
providing a low cost solution for healthcare delivery. Based on successful case
studies already submitted to the Company from clinicians using the Private
Practice(tm) Vibration Reminder Disk with their patients, the Company feels
their low-cost and easy-to-use Private Practice(tm) Vibration Reminder Disk
will have substantial impact in the healthcare industry in improving patient
outcomes and assisting preventive healthcare.
The Company's focus is on high-application markets such as physical therapy
and rehabilitation, incontinence treatments, pharmacy services, AIDS treatment
centers, diabetes centers, respiratory therapy departments, wound care
prevention, for every healthcare setting; and wherever a patient or caregiver
needs a reminder to take or provide a medication or to perform a therapy.
The Company has identified insurance reimbursement for the Private
Practice(tm) Vibration Reminder Disk through certain existing Medicare and CPT
(Current Procedure Technology) codes. The Company has received recent
notification from a practitioner who prescribed the product for a patient that
it was successfully approved for reimbursement by the patient's insurance
carrier. Reimbursement from a patient's insurance company to the doctor,
therapist or to the patient is approved on a case by case basis and dependent
upon several factors. Reimbursement using these codes can sometimes take a
longer time for completion and can be disapproved in some patient cases. The
ideal reimbursement situation is for the product to have it's own Medicare
(HCPCS) code. The Company is working to establish the product's own code which
would allow its cost to be reimbursed more often and more quickly. If
successful in acquiring this code, the proliferation of this product could be
enhanced in this industry. The product can be assigned its own code by virtue
of it being billed often and frequently by the medical practitioners under the
existing codes. The Company continues to provide information to clinicians
regarding possible reimbursement and encourages them to bill the product as
often as possible. The product can also be assigned it's own code through the
submission of clinical trials and substantiation through regional DMERCS
offices. The Company has already completed the design of a study protocol
for the casting/bracing/immobilization application of the product and is
currently submitting the study to select hospitals for approval. Once the
clinical trial is completed, and if the trial is successful in providing
substantiation that the product is effective in use, the Company will submit
this information to regional DMERC offices to attempt receiving a single code
for the product.
The Company has also identified opportunities for clinicians to enhance their
practice with the use of the Private Practice(tm) Vibration Reminder Disk
when the product is reimbursed by insurance or sold to the patient. The
additional time the clinician spends training the patient with the product (or
diagnosing the need for the product) is billable under the adjunct therapy
treatment (CPT) codes. This additional reimbursement generates new revenue as
a result of prescribing the product. If the product is not reimbursed by
medical insurance, it remains affordable for the patient or the professional
providing the care. The suggested retail price of the Private Practice(tm)
Vibration Reminder Disk at the home health dealer is $29.95 with a clinician or
professional price of $24.95. The product is made of high quality materials
and to be extremely reliable having an expected battery life of approximately
one year. The Company is currently working on a lower-cost and more temporary
or disposable version of the device that would be more feasible for the
pharmaceutical manufacturer to include free with each and every prescription
The device would serve to increase compliance to a patient's medication
schedule, therefore benefiting the patient's health and outcome.
According to medical studies that measure compliance to prescription
medications, approximately only 33% of patients take their medications
properly and timely. Even patients facing serious health problems such as
heart problems or cancer have difficulty complying with the prescription
regimen with only 22% and 27% respectively complying to their medications
schedule. For pharmaceutical manufacturers, missed doses result in delayed
refills of the prescribed medication and consequently lost revenue amounting
to billions of dollars. Therefore, improved compliance would result in more
on-time refills and consequently increased revenue for pharmaceutical
manufacturers.
The Private Practice(tm) Vibration Reminder Disk also has applications in
"injury prevention" and "ergonomics" in helping to prevent "Repetitive Motion
Injury" and other potential injuries in the work environment. According to
industry sources, Repetitive Motion Injury (RMI) cases have increased 13-fold
in the past decade and now account for nearly $20 billion in workers'
compensation costs annually and an estimated $100 billion in lost
productivity and turnover. The average treatment and disability costs for one
injured worker are approximately $45,000.3 Pending regulations from OSHA
(Occupational Health and Safety Administration) and state legislature will mean
more businesses, even small ones, will have to take steps to evaluate work
sites, provide training and "control exposures" believed to cause RMI. The
Company has recently begun marketing an "ergonomic" version of the disk that
silently prompts workers to take several 30-second "Microbreaks" throughout the
day to perform specific conditioning exercises with respect to proper body
mechanics, or to perform safety checks. These exercises help reduce risks to
repetitive motion injury and help to energize the body, relieve stress, and
increase productivity.
The Private Practice(tm) Vibration Reminder Disk also has applications in
consumer health and fitness and is used as a prompt to perform mini sessions
of isometric exercise throughout the day or to promote one's health by being
prompted to drink water consistently, among other applications.
Sources and Availability of Materials and Production
The components for two of the Company's products are purchased from various
third party vendors. The major components of these products include printed
circuit boards, injection molded housings, liquid crystal displays, micro-
motors as well as other minor electronic components. The Printed circuit
boards, housings and all electronic components are sent to job shop assembly
firms that provide wave soldering, hand soldering and final product assembly.
Physical, electronic and initial quality inspection is performed at the
assembly shop prior to final inspection by the Company.
The company is not dependent upon any of theses vendors for any source
materials as the printed circuit boards as well as the other electronic
components are readily available from other sources.
Names of principal suppliers and vendors
Component/Service Suppliers
Plastic Housing Slaney McConnell Company,
Plastotech, Bopla Industries
Electronic Components Bell Industries, ITT Switch, Sony, Rancho
Electronics, Aegis Electronic Group,
Microchip, Digikey
Printed Circuit Boards Printed Circuit Master, Circuit Technology
Motors Copal Electronics, TMI/Source Engineering
Assembly Semi-Kinetics, Circuit Technology
Liquid Crystal Displays Tricom International
Key pads Membrane Switch & Panel
Competition
With respect to vibration "reminder" devices in general, the Company is aware
of only one other device on the market that is somewhat similar to the
Private Practice(tm) Vibration Reminder Disk. It is called the Motivator(tm)
and it is worn on the belt similar to a pager. It does not come pre-programmed
with pre-set intervals for a specific purpose or task and cannot be worn
anywhere on the body. It retails for approximately $90 making it much more
expensive than the Private Practice(tm) Vibration Reminder Disk.
With respect to compliance to medication schedules, there are currently other
types of reminder aids available; most are audible. Most of these devices
are ineffective, complicated or expensive. Many are in the form of pill cases
that have to be set to specific times and that beep when it is time to take a
medication. Although these are fairly inexpensive, there are several
disadvantages to these types of devices that make them ineffective in
improving compliance. First, if the patient is not within "ear shot" of the
beeping case, the reminder is lost. Furthermore, most people are bombarded
with audible and visual stimuli all day long and as a result, tend to not
notice the beeping type reminder, tune it out or simply ignore it, usually
unintentionally. lastly, the devices can tend to be too complicated for the
elderly patient to set. There are also watches that beep or vibrate that
can be used to provide a reminder. However, most cannot be set for specific
and separate intervals within a given day (other than once per hour) and
usually have to be set again every day. They too, can be quite complicated
for an elderly patient to operate. There are also paging services that will
page a patient several times throughout the day to let them know it is time to
take a medication. Not only does the patient have to purchase and wear a
bulky pager, but they also have to pay for the ongoing paging service. The
Private Practice(tm) Vibration Reminder Disk is simple, affordable and can be
worn undetectable anywhere on the body. It provides a "private" and "physical"
reminder to help assure that patients remember to take their medications on
time.
With respect to "ergonomics" or "injury prevention", the Company is aware of
only one other type of reminder system for prompting exercises at the
workstation; software programs. There are several software programs designed
to "pop up" on the screen at predetermined times to prompt the worker to stop
and exercise. However, these programs have inherent problems that make them
less practical for businesses; many programs that lock up the keyboard
interrupt the work flow and frustrate the worker and many programs will
"freeze up" other computers attached to a network and cause other network
problems. Furthermore, these programs provide only a visual or audible
reminder
that can be easily "tuned-out" by the worker.
Marketing
The Company is currently marketing the Private Practice(tm) Vibration
Reminder Disk through industry trade magazines, conventions and trade shows and
through its recently formed independent manufacturer's representative network.
The Company has contracted exclusive territories in the U.S. to certain
experienced members of the Health Industry Representative Association for sale
of the product to clinicians and home health dealers across the country. These
representatives provide an existing infrastructure which allows the product
to gain immediate and broad exposure. The Company has also achieved
distribution through several national medical and healthcare specialty catalogs
with the product being featured in fourth quarter, 1998 issues. As the Company
expands it distribution network, it is also currently considering requests for
exclusive distribution in Japan and Taiwan from certain well-known
international distributors as well as private labeling of the product with
certain national healthcare product manufacturers in the U.S.
The Company is currently marketing the ergonomic application of the product
to key ergonomic consultants, distributors, independent sales reps and
potential strategic alliance firms to more quickly tap the market for the
product by using the existing marketing infrastructures in the ergonomic
industry. The Company is also investigating and pursuing the potential of
insurance companies offering discounted workers' compensation insurance rates
to companies that have instituted the Private Practice(tm) 30-second
Microbreak( in the workplace (similar to how consumers receive a discount
on their homeowner's insurance if they have a fire extinguisher in their
home). The potential of the product in preventing RMI could mean that
insurance companies could benefit from a reduced number of actual injury
claims relative to RMI. If such a discount were offered, the proliferation
of this product could be enhanced in this market.
The Smart Kitchen(tm) Food Tracking System.
The Company's Consumer Product division intends to launch the Company's
second innovative new product called the Smart Kitchen(tm) Food Tracking System
in 1999. Smart Kitchen(tm) is a patented electronic food inventory and timing
device that attaches magnetically to the front of a consumer's refrigerator
and helps them keep track of their leftover and perishable foods. The device
contains a databank of the most commonly stored food items stored in the
kitchen along with their estimated storage lifetimes. The consumer simply
enters the names of their perishable and leftover food items as they store
them and the device provides a warning before each food item can potentially
spoil. This product was originally named the Leftover Lifeguard(r), but was
changed, based on focus-group research and the expansion of the device to track
perishables stored in the freezer and pantry, to the Smart Kitchen(tm) Food
Tracking System. The product will retail for approximately $50.
The Company holds the exclusive rights to three patents on the Smart Kitchen
product with exclusive rights to any and all extensions or improvements on
the product that become patented. The three patents expire on July 28, 2013,
May 5, 2014 and January 26, 2016. The Company also holds exclusive rights to
use the names Leftover Lifeguard(r) (registered on 1/16/96) and Smart
Kitchen(tm), Pocket Kitchen(tm) and Sharp Kitchen(tm) (registrations pending).
Trademark registrations remain in force for ten years from their date of issue
or expiration, and may be renewed for periods of ten years from the expiring
period unless previously cancelled or surrendered. (See Exhibit 10.5 for
details of Licensing Agreement.)
The USDA announced on July 1, 1997 that Americans waste over 96 billion
pounds of edible food per year and that the vast majority of the waste came
from consumers who threw away uneaten produce, forgot foods in the back of
their refrigerators or discarded foods possibly too soon because they had
trouble interpreting package-dating information. According to research from
the University of Arizona, the average American wastes approximately 15% of
the food they buy, throwing away enough leftovers and perishables every year to
feed all of Canada. This figure translates to approximately $750 per year
for the average household being wasted on forgotten and spoiled food. A 1987
study by the University of Oregon, which examined the reasons that households
discard food, suggests that consumer education may play an important role in
reducing consumer food loss. The Smart Kitchen( automatically helps to educate
consumers by the nature of its functions. It helps consumers organize their
kitchen, saves them time and money, helps them determine food safety, warns
them before food might spoil and helps them build their weekly shopping list,
too.
The Company has completed all research and development and in-home usage
testing of the product. The Company has also developed an accompanying
handbook that teaches the consumer many important facts and offers helpful
hints relative to food storage and safety. The Company retained a leading
expert in food storage to author the handbook. The Company has built 500
units using an existing off-the-shelf plastic housing for the product's initial
launch. The Company intends to mold a new housing for the product for
subsequent inventory and sale.
Marketing
General Electric is currently reviewing the Smart Kitchen(tm) product with
interest in licensing the exclusive rights to the patents licensed to the
Company on the product. These patents also protect the right to incorporate
the utility of the Smart Kitchen(tm) device as a built-in feature to a
refrigerator. If a licensing arrangement is secured, all marketing and
possibly manufacturing as well, will be handled by General Electric and the
Company will receive a royalty on sales. If a licensing arrangement is not
achieved, the Company intends to market the Smart Kitchen(tm) through the
existing infrastructure of in-home sales provided by appliance service
technicians and then through the retail market.
Competition
The Company is unaware of any other product on the market that automatically
tracks food storage and lifetimes for multiple items stored in the kitchen.
Nite Note(r)
The Company's Consumer Product division has recently begun distributing a
product called Nite Note(r) manufactured by Nite Note of Irvine, California
on a non-exclusive basis. Nite Note(r) is a silent easy way to note night-time
thoughts. The hand-held memo pad conveniently holds a pen and a writing pad.
Nite Note(r) features the pressurized Fisher Space(r) pen used by U.S.
astronauts because it writes at any angle, even upside-down. Nite Note(r)
"lights up" when the pen is removed and "lights off" when the pen is
replaced. The Company has distributed the product through QVC home shopping
channel and is marketing it to other potential retailers.
Employees
As of the date of this registration statement, the Company employs 3 people
on a full-time basis and retains the services of as many as 10 industry
professionals or experts on an Independent Contractor basis.
Item 2. Management's Discussion and Analysis or Plan of Operations
Plan of Operations
The Company is engaged in the business of product development, manufacturing,
marketing and sale of new innovative products in both the consumer product
and healthcare industries.
The Company has financed its activities to date through the sale of its
securities. See Item 10 - "Recent Sales of Unregistered Securities."
The Company's plan of operations over the next 12 months includes the full
scale industry roll-out of the physical therapy version of the Private
Practice(tm) product and 3 comprehensive product programs; Pressure Ulcer
Prevention, Incontinence and Ergonomics/Injury Prevention to the healthcare
provider industry. The Company intends to offer private label marketing or
co-distribution opportunities to the pharmaceutical industry for the medication
version of the Private Practice(tm) product in order to avoid the high cost
of marketing directly to consumers for this version.
The company will continue to secure services from healthcare industry experts
to gain additional product and program development through payment of the
company's common stock as it has in the past. Offering equity to these
individuals helps to foster better performance and quality of work along
helping to create additional avenues for creating exposure for the products
within the expert's industry and peer group. The Company will also continue
to market the product through its network of independent manufacturer's
representatives and other joint distribution opportunities with existing
healthcare product manufacturers in order to reduce its costs for sales and
marketing personnel. The Company will need to increase its internal staff for
day to day operations and management by four to six people.
In order to improve the longevity of the Private Practice(tm) disk and to
help secure greater sales of the ergonomic version from large entities such as
corporations or state governments, the Company will need to secure the
production a new mold for the vibration reminder disk housing that
incorporates a battery compartment. Although the current device has an
estimated battery life of one year and a low enough initial cost to the end-
user to warrant throwing it away after the battery has been exhausted, an
entity purchasing a large volume of these disks for their employees will in
many cases prefer a changeable battery compartment to avoid the cost of
purchasing disks every year. The cost for this mold is estimated to be
$30,000. The company does not anticipate any additional capital commitments
over the next 12 months.
Year 2000 Compliance
With respect to Year 2000 compliance, the Company manufactures two products
that contain microprocessors. The source code for the microprocessors has
been written so that it is not dependent on dates but instead functions on a
24-hour internal timing routine. To this extent, all products currently being
manufactured by the Company are Year 2000 compliant.
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
The Company's executive offices are located in Laguna Hills, California, and
consist of approximately 1,700 square feet which the Company rents on a month
to month basis for monthly rent of $1,904.
The Company holds the exclusive rights to several patents and trademarks on
the products its developing. The Company's licensor holds U.S. Utility Patent
No.s 5,335,509; 5,487,276 5,711,160; on Smart Kitchen(tm), formerly known as
the Leftover Lifeguard(r). Smart Kitchen(tm) is pending a U.S. registered
trademark, Serial No.75291283, and the Leftover Lifeguard(r) is a U.S.
registered trademark, Reg. No. 1,947,954. The Company holds the exclusive
manufacturing and marketing rights to an Assignment of U.S. Utility Patent
No. 4,801,921 and to pending application No. 08/907,440 and co-pending
application No. 08/907,440 for the Private Practice(tm) Vibration Reminder
Disk,
which is pending U.S. trademark registration, Serial No. 75247416. The Company
also holds the exclusive rights to any and all improvements and extensions of
these products and their patents. See Exhibits 10.3 to 10.6, Licensing
Agreements, Schedule A & B: Patents and Trademarks, for further information.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock as of the end of fiscal year, 1998 by
(i) each person who is known by the Company to be the beneficial owner of
more than five percent (5%) of the issued and outstanding shares of Common
Stock, (ii) each of the Company's directors and executive officers and
(iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Name and Address Number Percentage
- ---------------- of Shares Owned
--------- ----------
<S> <C> <C>
Dianna Cleveland (1)(3) 1,560,000 46.1%
Lee A. Namisniak (1)(4) 873,500 25.8%
Lou Weiss (1) 191,500 5.7%
Scott Postle (1) 18,000 (2)
Officers and Directors as a group 2,643,000 78.1%
</TABLE>
(1) Address is 23232 Peralta Drive, Suite 115, Laguna Hills, California,
92653.
(2) Less than 1%
(3) Does not include options granted to Dianna Cleveland to purchase 250,000
shares of stock subject to the terms of her employment agreement. See
Exhibit 10.1.)
(4) Does not include options granted to Lee A. Namisniak to purchase 200,000
shares of stock subject to the terms of his employment agreement. (See
Exhibit 10.2.)
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The Executive Officers and Directors of the Company, and their
agents, are as follows:
Name Age Position
Dianna Cleveland 39 President, Chief Executive Officer
and Director
Lee A. Namisniak 44 Executive Vice President,
Chief Financial Officer,
Chief Operating Officer and
Director
Lou Weiss 51 Director
Scott Postle 49 Vice President
Dianna Cleveland. Ms. Cleveland, founder of the Company, has
served as President, CEO and Director of the Company since its inception. She
is also the inventor or co-inventor of most all the products being marketed
or to be marketed by the Company. She is an award-winning professional and has
more than 16 years experience in the field of marketing; four years in
product development, five years with advertising agencies, and seven years in
sales. Since 1993, Ms. Cleveland has worked extensively in product development
bringing two product concepts to fruition. From 1986 through 1993, Ms.
Cleveland was a District Sales Manager for Franklin Life Insurance Company
where she was recognized as "Regional Woman of the Year" and earned several
honor club awards. From 1984 through 1986, she served as Account Executive on
the Domino's Pizza account at both their national and regional advertising
agencies, Group 243, Inc. and Davidoff & Partners. From 1982 through 1984,
she served as Senior Media Planner on the Xerox account at Needham, Harper &
Steers Advertising Agency in New York (now known as DDB Needham Worldwide). Ms.
Cleveland holds a B.S. in Business Administration with a concentration in
Marketing from Colorado State University where she graduated in 1982.
Lee A. Namisniak. Mr. Namisniak, co-founder of the Company, has
served as Chief Financial and Operating Officer and Director of the Company
since May, 1997. He is the co-inventor of several of the products being
marketed or to be marketed by the Company. He is also the spouse of Dianna
Cleveland. For the past 15 years, Mr. Namisniak has specialized in
competitive bid estimating, project management and value engineering (cost
evaluation studies) in commercial contracting for both regional and national
well-known firms. He helped to mainstream bid estimating functions for the
Denver field office of J.S. Alberici (St. Louis) and headed up the California
field office for DSP Constructors (Denver). He managed projects for additional
commercial contractors working in markets from hospital to bio-pharmaceutical
manufacturing/processing for projects up to $70 million. For the period from
November 1990 to October 1994 Mr. Namisniak served as a project estimator for
the Paramount, California based Macco Constructors (now ARB, Inc). After
leaving ARB, Inc. he served in the capacity of Senior Project Estimator for
two Southern California commercial contracting firms, Kitchell Contractors,
Inc and C. W. Driver Contractors from October 1994 to December 1995 and
December 1995 to May 1997 respectively. As a Senior Estimator Mr. Namisniak
was responsible for competitive bid teams as well as conceptual estimating
for projects from development stage through construction startup with
responsibility for proposal preparation, subcontractor coordination, value
management studies and contract preparation. He majored in Civil Engineering
with a second major in Economics at Colorado State University.
Lou Weiss. Mr. Weiss has served as a director of the
company since its inception and is a veteran and highly regarded marketing
consultant, strategist and marketing research specialist. For over 25 years,
Mr. Weiss has been instrumental in highly successful campaigns for many
Fortune 500 companies as well as an exciting array of smaller aggressive
organizations. His marketing analysis and recommendations have led to many
textbook case marketing breakthroughs, including the introduction of Apple
Computer's Macintosh, the introduction of Mitsubishi into the US market with
cars/trucks and big screen TVs, the introduction of Howard Murad's cosmetic
line, and countless other successes. In 1980, Mr. Weiss founded American
Marketing Services (AMS) which was widely regarded as the highest quality
by Satchi and Satchi in 1988, the international advertising and marketing
organization. Following the acquisition, Mr. Weiss served as Senior Vice
President and Director of Western Operations until 1990. In 1991, after a one
year "non compete" sabbatical, Mr. Weiss founded Solutions & Insights, Inc., a
strategic marketing consulting organization and still serves as its president
and sole employee today. Mr. Weiss holds a B.S. in Psychology from Brooklyn
College and completed his studies for an MBA in Marketing from Baruch College.
Scott L. Postle. Mr. Postle, joined the Company in July of
1998 as Vice President of Business Development of the Healthcare Division and
is
a 29-year veteran in the medical and healthcare industry. Having introduced
several new innovative technologies into the healthcare market, his specialty
is healthcare delivery and payment policy. Most recently, Postle established
a national distribution network of wound care suppliers representing a new
therapy system to treat patients with pressure ulcers. Annual revenues from
sales and rentals of this product are in excess of $40 million within three
years, and expected to rapidly increase under the health industry's new
prospective payment system. Prior to this, he served in various senior
management positions at several successful start-up companies including:
Director of Business Development at Lumex Medical Products (Bayshore, NY)
from 1993-1995; designed, developed and manufactured AkroTech 4000 Air Therapy
System from 1990-1996; and served on the Health Industry Manufacturers
Association (HIMA) advisory panel for healthcare delivery and payment, in
Washington D.C. from 1994-1995. From 1996-1997 Mr. Postle founded DermaNet,
Inc. in Anaheim, CA, a healthcare delivery consulting business and form 1997-
1998 worked with Gaymar Industries (Buffalo, NY) in a joint venture to
develop Infinity Air Therapy Systems. Mr. Postle holds a bachelor's degree
from
California State University at Los Angeles and several professional licenses
and certificates in healthcare.
Each director holds office until his successor is elected and qualified or
until his earlier resignation in the manner provided in the Bylaws of the
Company.
Item 6. Executive Compensation
The following table sets forth the cash and non-cash compensation paid by the
Company to its Chief Executive Officer and to all other executive officers
for services rendered during the fiscal years ended December 31, 1998, 1997 and
1996.
<TABLE>
<CAPTION>
Annual Compensation
- -------------------
Name and Position Year Salary Bonus Other Restricted
Annual Comp Stock
Awards
<S> <C> <C> <C> <C> <C>
Dianna L. Cleveland 1998 3,125 -0- -0- 260,000 shares
President/CEO 1997 -0- -0- -0- -0-
(1) (2) (5) (6) 1996 -0- -0- -0- -0-
Lee A. Namisniak 1998 2,708 -0- -0- 228,000 shares
Chief Financial/ 1997 -0- -0- -0- -0-
Operating Officer 1996 -0- -0- -0- -0-
(1)(3)(5)(6)
Lou Weiss 1998 -0- -0- -0-
Director 1997 -0- -0- -0- 71,000 shares
(4)(6) 1996 -0- -0- -0- 91,500 shares
</TABLE>
(1) Between September, 1996 and June, 1997, Dianna L. Cleveland and Lee A.
Namisniak advanced loans totaling $113,451 (Paid in Capital) to the Company's
operating budget in the form of cash and in the form of payment of Company's
expenses. From June 1997, to end of the fiscal year 1997, Ms. Cleveland and
Mr. Namisniak received reimbursements against said Paid-In-Capital in cash
or expenses totaling $52,866. From January 1998 to end of the fiscal year 1998,
Ms. Cleveland and Mr. Namisniak received additional reimbursements against said
Paid-In-Capital in cash or expenses totaling $60,585. Salaries earned in 1998
totaled $5,833. During 1998, Ms. Cleveland and Mr. Namisniak received loans
from the Company totaling $22,500 and $19,452 respectively.
(2) Ms. Cleveland holds a five-year employment agreement with the company
that expires on July 15, 2002. Ms. Cleveland began accruing a salary at the
rate of $75,000 per annum on July 15, 1997. Due to the fact that the Company
did not pay any salary to Ms. Cleveland for the first year of her contract
and subject to the terms of her employment agreement (referenced herein in
Exhibit 10.1), on July 15, 1998, Ms. Cleveland was awarded 260,000 shares of
restricted Common Stock in the Company. On July 15, 1998, one year from the
effective date of her employment agreement with the Company, Ms. Cleveland
began accruing a salary at the rate of $125,000 per annum. Pursuant to her
employment agreement with the Company, in the event of termination within five
years after a change of control, Ms. Cleveland will receive benefits that
include a lump sum payment equal to five times her annual salary and bonus,
immediate vesting of all options and restricted stock, and continuation of
other benefits for five years following termination.
(3) Mr. Namisniak holds a five-year employment agreement with the company
that expires on July 15, 2002. Mr. Namisniak began accruing a salary at the
rate of $60,000 per annum on July 15, 1997. Due to the fact that the Company
did not pay any salary to Mr. Namisniak for the first year of his contract
and subject to the terms of his employment agreement (referenced herein in
Exhibit 10.2), on July 15, 1998, Mr. Namisniak was awarded 208,000 shares of
restricted Common Stock in the Company. Also on July 15, 1998, Mr. Namisniak
was promoted to and "Executive" level and was awarded 20,000 shares of
restricted Common Stock in the Company. On July 15, 1998, one year from
the effective date of his employment agreement with the Company, Mr.
Namisniak began accruing a salary at the rate of $100,000 per annum.
See Exhibit 10.2. Pursuant to his employment agreement with the Company,
in the event of termination within five years after a change of control,
Mr. Namisniak will receive benefits that include a lump sum payment equal
to five times his annual salary and bonus, immediate vesting of all options
and restricted stock, and continuation of other benefits for five years
following termination.
(4) The Company does not pay Mr. Weiss a salary of any kind. Mr. Weiss
has acted in a consulting capacity prior to and from the inception of the
Company and has been awarded 162,500 shares of Common Stock in the Company as
compensation for consulting services.
(5) Pursuant to their employment agreements, Ms. Cleveland and Mr.
Namisniak shall be paid a cash bonus up to one hundred percent (100%) of
Executive's base salary for each calendar year from January 1, 1999 and ending
December 31, 2002, that the Company earns a Net Profit (as defined below) of
one million dollars ($1,000,000) within that respective calendar year. As used
herein, the term "Net Profit" shall mean the gross revenue generated from all
products and services sold by the Company, less all related costs and overhead,
such costs to include all costs including, but not limited to, pay-outs to
subscribers, insurance, labor (including wages and salaries of officers,
directors, Executives, independent contractors), equipment costs, technical
fees and training costs. Bonuses shall be equal to Executive's current annual
salary to the extent that it is economically feasible for the Company at the
time bonuses are earned. If not economically feasible, bonuses shall be paid
at an amount that is economically feasible for the Company.
(6) The Company has not provided any compensation to its directors for their
services as directors of the Company nor does it have any arrangement for which
compensation is to be paid to any members who sit on the Board of Directors.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees Base Price Expiration
Name Granted (#) in Fiscal Year ($/Sh) Date
<S> <C> <C> <C> <C>
Dianna Cleveland 250,000 56% $.50 July 15, 2002
President/CEO
Lee Namisniak 200,000 44% $.50 July 15, 2002
V.P./COO/CFO
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
And FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares Value at FY-End (#) at FY-End($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Dianna Cleveland -0- -0- 250,000/0 $280,000/0
President/CEO
Lee Namisniak -0- -0- 200,000/0 $224,000/0
V.P./COO/CFO
</TABLE>
Item 7. Certain Relationships and Related Transactions.
In March of 1997, Mr. Weiss purchased 25,000 shares of Common Stock of the
Company for $20,000. In October of 1997, Mr. Weiss advanced a loan of
$15,000 to the Company's operating budget for general working capital. This
advance accrued interest at the rate of eight percent (8%) per annum. On June
3, 1998, the Company repaid Mr. Weiss the $15,000 principal and Mr. Weiss
agreed to accept 4,000 shares of Common Stock of the Company in lieu of the
interest accrued.
On February 1, 1997 and on August 9, 1997, the Company entered into licensing
agreements with patent holders, Dianna Cleveland and Lee Namisniak, who are
also directors of the Company, for exclusive manufacture and marketing of the
Private Practice(tm) Vibration Reminder Disk and the Smart Kitchen products.
These licensing agreements stipulate that an 8% royalty on the dollar revenue
derived from the licensed products manufactured and sold shall be paid to the
patent holders and similarly a 1% royalty to be paid upon the same terms for
all trademarks licensed to the Company. These agreements also stipulate that
upon such time as it becomes economically feasible for the company that the
patent holders be paid a lump sum advance of future royalties in the amount
of $75,000. In August, 1998, Mr. Namisniak and Ms. Cleveland were awarded
250,000 shares each of Common Stock of the Company subject to the terms of
these exclusive product licensing agreements with the Company due to the fact
that the lump sum advance royalty had not yet been paid. Before issuance, Mr.
Namisniak assigned his 250,000 shares to Dianna Cleveland. See Exhibit 10.3
and 10.5 for details of Licensing Agreements. These stock awards, pursuant to
the stipulations of the licensing agreements that were approved by the Board
of Directors of the Company, were based on reasonable computation conservative
of what is considered a fair value for exclusive licensing arrangements. The
computations were also based on considering that the stock for the licensors is
restricted and virtually illiquid for at least two years due to the fact that
the licensors are also directors of the Company.
Each transaction in this section is on terms as fair as those obtainable from
independent third parties. The Company does not currently have any policy
towards entering into any future transactions with related parties.
Item 8. Legal Proceedings.
There are no pending legal proceedings to which the Company is a party or to
which the property interests of the Company are subject.
Item 9. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.
The Company's Common Stock has been listed on the OTC Bulletin Board under
the symbol "IVTX" since April, 1998. From inception of trading through
December 31, 1998, the high and low last sale prices were $2.25 per share and
$.875 per share, respectively. The Company considers its Common stock to be
thinly traded and that any reported bid or sale prices may not be a true
market-based valuation of the Common Stock. As of December 31, 1998, there
were 118 record holders of the Company's Common Stock. The Company has not
paid any cash dividends since its inception and does not contemplate paying
dividends in the foreseeable future. It is anticipated that earnings, if any,
will be retained for the operation of the Company's business.
The following table sets forth the range of high and low bid information for
each full quarterly period of the last fiscal year:
Period Reported Average High Bid Average Low Bid
Quarter ended June 30, 1998 2 1/2 1 1/2
Quarter ended September 30, 1998 2 1/8 1 1/8
Quarter ended December 31, 1998 2 1/8 1 1/8
Item 10. Recent Sales of Unregistered Securities.
As of December 31, 1998, there were 3,563,490 shares of Common Stock of
the Company outstanding. The Company conducted private placements 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. The Company's sales of stock were made directly with people the
Company's officers had a pre-existing relationship with or from personal
referrals. Each purchaser was provided with the Company's current 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 as of
December 31, 1998
Dollars Shares
Private transactions --------- --------
5 Accredited Investors $137,000 137,000
1 Accredited Investor Subscribed 500,000 500,000
Rule 504 Offering 257,790 233,112
Subscription Rights Reassigned -500,000 -500,000
Section 4(2) Offering comprised of 417,308 440,380
23 Accredited and 12 Sophisticated
Purchasers. -------- -------
Aggregate Private Placements 812,098 810,490
The following provides a monthly accounting and details of these transactions:
A. In September of 1996, the Company issued 800,000 shares of restricted
Common Stock to the founder of the Company and 645,500 shares of restricted
Common Stock to a co-founder of the Company. There was no underwriter involved
in this issuance. The issuance was conducted pursuant to Section 4(2) under the
1933 Act.
B. In September of 1996 through March of 1997, the Company issued 162,500
shares of restricted Common Stock to a consultant, who is also a director of
the Company, 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 of 1996, through December 1997, the Company 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 of 1997 to June of 1997, the Company 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 the Company.
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 of 1997, the Company 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 of 1997, the Company 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 of 1997, through February of 1998, the Company 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, the Company 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 the
Company. The Warrants are exercisable at $2.00 and were set to expire on July
21, 1998. The Company 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 the Company and
to people referred to the Company 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 the
Company's current offering circular.
H. In August and September of 1997, the Company 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 the Company. The contractor was a 'sophisticated' purchaser and each
consultant was an 'accredited' purchaser. All purchasers were provided with a
copy of the Company'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 of 1997, the Company 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 of 1997, prior
to the Company'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 the Company. The Company then offered
these subscription rights via a private placement, as mentioned above, pursuant
to Section 4(2) of the 1933 Act. From May of 1998 to December 31, 1998, the
Company sold 292,380 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 the Company'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 the Company and the Company also utilized referrals from individuals who
brought investors to the Company in the private placement. The Company 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 of 1997 through January of 1998, the Company issued to four
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 the Company for the total proceeds of $36.00. Each purchaser was
provided with the Company'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 of 1998, the Company 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 the Company'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 of 1998, the Company issued a total of 20,000 shares of
Common Stock to 8 consultants in consideration for services rendered on behalf
of the Company. Each consultant was a 'sophisticated' purchaser and was
provided a copy of the Company'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 of 1998, the Company issued 30,000 shares of Common Stock on a
promissory note to an individual for the purpose of selling those shares to
said individual at a price of $2.00 per share. The purchaser intends to honor
the promissory note. The purchaser was provided with a copy of the 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.
N. In May of 1998, the Company 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 the Company'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 of 1998, the Company 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 the
Company'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 of 1998, the Company 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 of 1998, the Company 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 the Company. Total proceeds of
the transaction was $10.00. The purchaser was provided with a copy of the
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 of 1998, the Company 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 the Company 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 of 1998, the Company 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 of 1998, the Company issued 10,000 shares of restricted Common
Stock to a new officer of the company in consideration for services rendered.
There was no underwriter involved in this issuance. The officer is an
accredited purchaser and had access to the Company's current offering circular.
The issuance was conducted pursuant to Section 4(2) of the 1933 Act.
U. In August of 1998, the Company issued 250,000 shares of restricted
Common Stock each to two licensors, who are also officers of the Company, 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 of 1998, the Company issued 8,000 shares of restricted Common
Stock to a new officer of the company in consideration for consulting services
rendered. There was no underwriter involved in this issuance. The officer is an
accredited purchaser and had access to the Company's current offering circular.
The issuance was conducted pursuant to Section 4(2) of the 1933 Act.
W. In October and December of 1998, the Company issued 2,000 shares of
Common Stock to an independent contractor for a total of 4,000 shares at a
purchase price of $.001 per share (par value) in consideration of services
rendered on behalf of the Company. Total proceeds of the transaction was $4.00.
The purchaser was provided with the Company'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 of 1998, the Company 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 the Company'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.
Y. In December of 1998, the Company 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 the Company'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 of 1998, the Company 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 are to be issued in 1999. The purchaser was provided with the
Company'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.
Item 11. Description of Securities.
Common Stock
The Company is authorized to issue 10,000,000 shares of Common Stock, $.001
par value, of which, as of December 31, 1998, there were 3,563,490 shares of
Common Stock of the Company outstanding held of record by 118 stockholders.
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders generally. The approval of
proposals submitted to stockholders at a meeting other than for the election of
directors requires the favorable vote of a majority of the shares voting,
except in the case of certain fundamental matters (such as certain amendments
to the Certificate of Incorporation, and certain mergers and reorganizations),
in which cases Delaware law and the Company's Bylaws require the favorable vote
of at least a majority of all outstanding shares. Stockholders are entitled to
receive such dividends as may be declared from time to time by the Board of
Directors out of funds legally available therefor, and in the event of
liquidation, dissolution or winding up of the Company to share ratably in all
assets remaining after payment of liabilities. The holders of shares of Common
Stock have no preemptive, conversion, subscription or cumulative voting rights.
Item 12. Indemnification of Directors and Officers.
Delaware Statutes
Section 145 of the Delaware General Corporation Law, as amended, provides for
the indemnification of the Company's officers, directors, employees and
agents under certain circumstances as follows:
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative(other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contender or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees)actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) and
(b) of this section. Such determination shall be made (1) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (3)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with respect
to the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan;
and references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The Court of Chancery
may summarily determine a corporation's obligation to advance expenses
(including attorneys' fees).
Certificate of Incorporation
The Company's Certificate of Incorporation provides that the directors of the
Company shall be protected from personal liability to the fullest extent
permitted by law. The Company's Bylaws also contain a provision for the
indemnification of the Company's directors (see "Indemnification of Directors
and Officers - Bylaws" in Exhibit 3.5).
Sources:
1. Compliance sources: 1. Smith, D., Compliance Packaging: A Patient
Education
Tool, American Pharmacy, Vol. NS29, No 2 February 1989 2. Medication Management
Systems, Inc. 3. Standberg, L.R., Drugs as a Reason for Nursing Home
Admissions,
American Health care Association Journal, 10,20 (1984). 4. Schering Report IX
The Forgetful Patient: The High Cost of Improper Patient Compliance. 5. Oregon
Department of Human Resources, A study of Long-Term Care in Oregon with
Emphasis
on the Elderly March 1981. 6. Smith, M., The Cost of Non-Compliance and the
Capacity of Improved Health Care Costs, N&I Pharmaceutical Council 1984. 7.
Medications and the Elderly, Ch.4, pp. 67-68, 75. 8. Drug Topics v.138
(8/2/94),
p.67. 9. Hayes, R.B.NCPIE Prescription Month, October 1989 10. U.S. Chamber of
Commerce. 11. Rosalynn Carter Institute of Georgia Southwestern College. 12.
Parade Magazine, 1/29/95. 13. Motorola, 1994. 14. Time, 4/29/96. 15. National
Public Radio, 2/1/96. 16. Cambridge Hospital and Harvard, 1994.
2. Inc. Magazine, May, 1997, "Ergonomic Regs Don't Sit Well with Small Biz".
3. "Workplace Ergonomics", Krames Communications
4. USA Today, July 1, 1997, "Food fright: 27% going to waste...Could
feed millions, USDA says." Economic Research Service, U.S. Department
of Agriculture.
5. "Rubbish" September, 1992 William Rathje and Cullen Murphy; Harper Collins,
1992.
Item 13. Financial Statements
Report of Independent Certified Public Accountant
Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholder's Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Reports on Form 8-K: Not Applicable
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
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.
Year
Furniture and equipment 7
Patents, trademarks:
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:
Years
Patents and trademarks 17 - 20
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.
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:
Year Ending
December 31 Amount
1999 $6,994
2000 3,394
$10,388
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
- -----------------------------------------------------
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.
<TABLE>
<CAPTION>
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Balance Sheet
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 -
------- ------- -------
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>
<TABLE>
<CAPTION>
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Statement of Loss and Accumulate Deficit
For the years ended December 31, 1998, 1997 and 1996
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
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
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)
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Innovative Tracking Solutions Corporation
(A Development Stage Company)
Statement of Stockholders' Equity
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)
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)
Stocks issued for cash -
From January 1, 1998
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
----------- ----------- ----------- ---------------
<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
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
See notes to Financial Statements
</TABLE>
Item 14. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosures
None
Item 15. Index to Exhibits
Exhibit No. Description
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
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
27.1 Financial Data Schedule
99.0 Office Lease
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.
INNOVATIVE TRACKING SOLUTIONS CORPORATION
/s/ DIANNA CLEVELAND
- ---------------------------------------------------------
DIANNA CLEVELAND, President and C.E.O., Director
Date: June 16, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ LEE A. NAMISNIAK
- ---------------------------------------------------------
LEE A. NAMISNIAK, Chief Financial/Operating Officer, Director
Date: June 16, 1999
/s/ LOU WEISS
- ---------------------------------------------------------
LOU WEISS, Director
Date: June 16, 1999
Exhibit 3.1
ARTICLES OF INCORPORATION
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 09/04/1996
960256545 - 2659172
CERTIFICATE OF INCORPORATION OF
Innovative Tracking Solutions Corporation
A CLOSE CORPORATION
FIRST: The name of this corporation is Innovative Tracking Solutions
Corporation
SECOND: Its registered office in the State of Delaware is to be located at
1313 N. Market St., Wilmington, DE 19801-1151, County of New Castle. The
registered agent in charge thereof is The Company Corporation, address "same as
above".
THIRD: The nature of the business and the objects and purposes proposed to be
transacted, promoted and carried on, are to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The amount of total authorized shares of stock of this corporation is
1,500 shares of NO per value.
FIFTH: The name and mailing address of the incorporation is:
Regina Cephas, 1313 N. Market St., Wilmington, DE 19801-1151
SIXTH: All of the corporation's issued stock, exclusive of treasury shares,
shall be held of record by not more than thirty (30) persons.
SEVENTH: All of the issued stock of all classes shall be subject to one or
more of the restrictions on transfer permitted by Section 202 of the General
Corporation Law.
EIGHTH: The corporation shall make no offering of any of its stock of any
class which would constitute a "public offering" within the meaning of the
United States Securities Act of 1933 as it may be amended from time to time.
NINTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporations or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this Certificate and do certify
that the facts herein are true, and I have accordingly hereunto set my hand.
DATED: SEPTEMBER 4, 1996
Exhibit 3.2
AMENDMENT TO ARTICLES OF INCORPORATION
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 05/21/1997
971166640 - 2659172
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
Innovative Tracking Solutions Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
- --FIRST: That at a meeting of the Board of Directors of Innovative Tracking
Solutions Corporation, resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and resolution setting forth the proposed
amendment is as follows:
RESOLVED: That the Certificate of Incorporation of this corporation be
amended by deleting the Heading,. Article(s) Ninth and changing Article(s)
Fourth, Seventh, and Eighth so that the document shall read as follows:
FOURTH: The amount of the total authorized capital stock of this
corporation is (ten million) 10,000,000 shares of $.001 Par Value.
SEVENTH: The Directors shall have power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of
the stockholders; and no stockholder shall have any right of inspecting any
account, or book or document of this corporation, except as conferred by the
law or the By-Laws or by resolution of the stockholders or directors, except
as otherwise required by the laws of the State of Delaware.
It is the intention that the objects, purposes and powers specified in the
Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from
the terms of any purpose and powers specified in the Third paragraph and in
each of the clauses or paragraphs of this charter shall be regarded as
independent objects, purposes and powers.
EIGHTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
- --SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statue were voted in favor of this amendment.
- --THIRD: That said amendment was fully adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
- --FOURTH: That the capital of said corporation shall not be reduced under or
by
reason of said amendment.
IN WITNESS WHEREOF, said corporation has caused its corporate seal to be
hereunto affixed and this certificate to be signed by Dianna Namisniak its
authorized officer, this 9th day of May, 1997.
S/s DIANNA NAMISNIAK
------------------------------------------
Dianna Namisniak
Authorized Officer
Exhibit 3.3
CERTIFICATE OF CORRECTION TO ARTICLES OF INCORPORATION
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 06/16/99
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF AMENDMENT
OF
INNOVATIVE TRACKING SOLUTIONS CORPORATION
----------------------------------------------------------
(Pursuant to Section 103 (f) of the General
Corporation Law of the State of Delaware
INNOVATIVE TRACKING SOLUTIONS CORPORATION, does hereby certify that the
Certificate of Amendment filed on May 21, 1997 contained an inaccurate record.
The inaccuracy of defect of said amendment is that all reference to a close
corporation should have been deleted. Article Sixth which contained specific
wording about the Corporation's issued stock being held of record by not more
than 30 persons should have also been deleted.
The Resolved paragraph and the amended Articles is corrected to read as
follows:
RESOLVED: That the Certificate of Incorporation of this corporation be
amended by deleting the Heading and Article(s) Eighth and Ninth and amending
Articles Fourth, Sixth, and Seventh so that the document shall read as follows:
FOURTH: The amount of the total authorized capital stock of this
corporation is Ten Million shares (10,000,000) with a par value of $.001.
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of
the stockholders; and no stockholder shall have any right of inspecting any
account, or book or document of this corporation, except as conferred by the
law or the By-Laws or by resolution of the stockholders or directors, except
as otherwise required by the laws of the State of Delaware.
It is the intention that the objects, purposes and powers specified in the
Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from
the terms of any purpose and powers specified in the Third paragraph and in
each of the clauses or paragraphs of this charter shall be regarded as
independent objects, purposes and powers.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
In Witness Whereof, said Certificate of Correction is being executed by
its authorized officer this sixteenth day of June, 1999.
/s/ DIANNA CLEVELAND
----------------------------
Dianna Cleveland
Authorized Officer
Exhibit 3.4
BY-LAWS
-OF-
INNOVATIVE TRACKING SOLUTIONS CORPORATION
A Close Corporation
ARTICLE I- OFFICES
The office of the Corporation shall be located in the City, County
and State designated in the Certificate of Incorporation. The
Corporation may also maintain offices at such other places within or
without the United States as the Shareholders may, from time to
time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be
held within five months after the close of the fiscal year of the
corporation, for the purpose of electing officers and transacting
such other business as may properly come before the meeting
Section 2 - Regular Meetings:
The shareholders may provide by resolution, from time to time, for
the holding of regular meetings of the shareholders and may affix
the time and place thereof.
Section 3 - Special Meetings:
Special meetings of the shareholders may be called at any time by
the President, and shall be called by the President or the Secretary
at the written request of the holders of ten percent (10%) of the
shares then outstanding and entitled to vote thereat, or as
otherwise required under the provisions of the Corporation Law.
Section 4 - Place of Meetings:
All meetings of shareholders shall be held at the principal office
of the Corporation, or at such other places within the United States
as shall be designated in the notices or waivers of notice of such
meetings.
Section 5 - Notice of Meetings:
(a) Written notice of each meeting of shareholders, whether annual
or special, stating the time when and place where it is to he held,
shall be served either personally or by mail, not less than ten or
more than fifty days before the meeting, upon each shareholder of
record entitled to vote as such meeting, and to any other
shareholder to whom the giving of notice may be required by law.
Notice of a special meeting shall also state the purpose or purposes
for which the meeting is called, and shall indicate that it is being
issued by, or at the direction of, the person or persons calling the
meeting. If, at any meeting, action is proposed to be taken that
would if taken, entitle shareholders to receive payment for their
shares pursuant to the Business Corporation Law, the notice of such
meeting shall include a statement of that purpose and to that
effect. If mailed, such notice shall be directed to each such
shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously
filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which
case, it shall be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who may
become a shareholder of record after the mailing of such notice and
prior to the meeting, or to any shareholder who attends such
meeting, in person or by proxy, or to any shareholder, who, in
person or by proxy, submits a signed waiver of notice either before
or after such meeting. Notice of any adjourned meeting of
shareholders need not be given, unless otherwise required by
statute.
Section 6 - Chairman of Meetings:
At all meetings of the Shareholders, the President, if present,
shall preside. If there shall be no President, or he shall be
absent, then a Chairman of the meeting, chosen by the shareholders,
shall preside.
Section 7 - Quorum:
(a) Except as otherwise provided herein, or by statute, or in the
Certificate of Incorporation (such Certificate and any amendments
thereof being hereinafter collectively referred to as the
"Certificate of Incorporation"), at all meetings of shareholders of
the Corporation, the presence at the commencement of such meetings
in person or by proxy of shareholders holding of record a majority
of the total number of shares of the corporation then issued and
outstanding and entitled to vote, shall be necessary and sufficient
to constitute a quorum for the transaction of any business. The
withdrawal of any shareholder after the commencement of a meeting
shall have no effect on the existence of a quorum, after a quorum
has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting
of shareholders, the shareholders, by a majority of the votes cast
by the holders of shares entitled to vote thereon, may adjourn the
meeting. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been
transacted at the meeting as originally called if a quorum had been
present.
Section 8 - Voting:
(a) Except as otherwise provided herein or by statute, or by the
Certificate of Incorporation, any corporate action, to be taken by
vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled
to vote thereon.
(b) Except as otherwise provided herein or by statute or by the
certificate of Incorporation, at each meeting of shareholders, each
holder of record of stock of the corporation entitled to vote
thereat, shall be entitled to one vote for each share of stock
registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or
dissent without a meeting, may do so by proxy; provided, however,
that the instrument authorizing such proxy to act shall have been
executed in writing by the shareholder himself, or by his attorney-
in-fact thereunto duly authorized in writing. No proxy shall be
valid after the expiration of eleven months from the date of its
execution, unless the persons executing it shall have specified
therein the length of time it is to continue in force. Such
instrument shall be exhibited to the secretary at the meeting and
shall be filed with the records of the corporation.
(d) Any resolution in writing, signed by all of the shareholders
entitled to vote thereon, shall be and constitute action by such
shareholders to the effect therein expressed, with the same force and
effect as if the same had been duly passed by unanimous vote at a
duly called meeting of shareholders and such resolution so signed
shall be inserted in the Minute Book of the corporation under its
proper date.
Section 9 - Duties and Powers:
The Shareholders shall be responsible for the control and management
of the affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation.
Section 10 - Contracts:
(a) No contract or other transaction between this Corporation and any
other corporation shall be impaired, affected or invalidated, nor
shall any shareholder be liable in any way by reason of the fact that
such shareholder of this Corporation is interested in, or is a
shareholder, director or officer of such other corporation, provided
that such facts are disclosed or made known to the remaining
shareholders.
(b) Any shareholder, personally and individually, may be a party to
or may be interested in any contract or transaction of the
corporation, and no shareholder shall be liable in any way by reason
of such interest, provided that the fact of such interest be
disclosed or made known to the other shareholders, and provided that
the shareholders shall authorize, approve or ratify such contract or
transaction by a majority vote not counting the shares of any such
shareholder, notwithstanding the presence of any such shareholder at
the meeting at which such action is taken. The shares of such
shareholder or shareholders may be counted in determining the
presence of a quorum at such meeting. This Section shall not be
construed to impair or invalidate or in any way affect any contract
or other transaction which would otherwise be valid under the law
(common, statutory, or otherwise) applicable thereto.
Section 11 - Committees:
The shareholders may, from time to time, designate from among its
members an executive committee and such other committees, and
alternate members thereof, as they deem desirable, each consisting of
three or more members, with such powers and authority (to the extent
permitted by law) as may be provided in such resolution. Each such
committee shall serve at the pleasure of the shareholders. At all
meetings of a committee, the presence of all members at the committee
shall be necessary to constitute a quorum for the transaction of
business, except as otherwise provided for by the shareholders.
Participation of any one or more members of the committee by means of
a conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at the
same time, shall constitute presence in person at any such meeting.
Any action authorized in writing by all of the members of a committee
entitled to vote thereon and filed with the minutes of the Committee
shall be the act of the committee with the same force and effect as
if the same had been passed by unanimous vote at a duly called
meeting of the committee.
ARTICLE III - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a president, a
Secretary, a Treasurer, and such other officers, as the shareholders
may from time-to-time deem advisable. Any two or more offices may be
held by the same person.
(b) The officers of the Corporation shall be elected by the
shareholders at the regular annual meeting of the shareholders.
(c) Each officer shall hold office until the annual meeting of the
shareholders next succeeding his election, and until his successor
shall have been elected and qualified, or until his death,
resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the President or the Secretary of the Corporation,
unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by such officer, and the
acceptance of such resignation shall not be necessary to make it
effective.
Section 3 - Removal:
Any officer may be removed, either with or without cause, and a
successor elected by the shareholders at any time.
Section 4 - Vacancies:
A vacancy in any office by reason of death, resignation, inability to
act, disqualification, or any other cause, may at any time be filled
for the unexpired portion of the term by the shareholders.
Section 5 - Duties of Officers:
Officers of the corporation shall, unless otherwise provided by the
shareholders, each have such powers and duties as generally pertain
to their respective offices as well as such powers and duties as may
be set forth in these by-laws or may from time to time be
specifically conferred or imposed by the shareholders. The President
shall be the chief executive officer of the corporation.
Section 6 - Sureties and Bonds:
In case the shareholders shall so require, any officer, employee or
agent of the Corporation shall execute to the Corporation a bond in
such sum, and with such surety or sureties as the shareholders may
direct, conditioned upon the faithful performance of his duties to
the Corporation, including responsibility for negligence and for the
accounting for all property, funds or securities of the Corporation
which may come into his hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other
Corporation, any right or power of the Corporation as such
shareholder (including the attendance, acting and voting at
shareholders' meetings and execution of waivers, consents, proxies
or other instruments) may be exercised on behalf of the Corporation
by the President, any Vice President or such other person as the
shareholder may authorize.
ARTICLE IV SHARES OF STOCK
Section 1 - Certificate of Stock:
(a) The certificates representing shares of the Corporation shall
be in such form as shall be adopted by the shareholders, and shall
be numbered and registered in the order issued. They shall bear
the holder's name and the number of shares, and shall be signed by
(i) the president or Vice President, and (ii) the Secretary or
Treasurer, or any Assistant Secretary or Assistant Treasurer, and
may bear the corporate seal.
(b) No certificate representing shares shall be issued until the
full amount of consideration therefor has been paid, except as
otherwise permitted by law.
(c) The shareholders may authorize the issuance of certificates for
fractions of a share which shall entitle the holder to exercise
voting rights, receive dividends and participate in liquidating
distributions, in proportion to the fractional holdings; or it may
authorize the payment in cash of the fair value of fractions of a
share as of the time when those entitled to receive such fractions
are determined; or it may authorize the issuance, subject to such
conditions as may be permitted by law, of script in registered or
bearer form over the signatures of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but
such script shall not entitle the holder to any rights of a
shareholder, except as therein provided for full shares.
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation
shall immediately notify the Corporation of any loss or destruction
of the certificate representing the same. The Corporation may issue
a new certificate in the place of any certificate theretofore issued
by it, alleged to have been lost or destroyed. On production of
such evidence of loss or destruction as the shareholders in their
discretion, may require, the shareholders may, in their discretion,
require the owner of the lost or destroyed certificate or his legal
representatives, to give the Corporation a bond in such sum as they
may direct, and with such surety or sureties as may be satisfactory
to them, to indemnify the Corporation against any claims, loss,
liability or damage it may suffer on account of the issuance of the
new certificate. A new certificate may be issued without requiring
any such evidence or bond when, in the judgment of the shareholders,
it is proper to do so.
Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the
share records of the Corporation only by the holder of record
thereof, in person or by his duly authorized attorney, upon
surrender for cancellation of the certificate or certificates
representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such
proof of the authenticity of the signature and of authority to
transfer and of payment of transfer taxes as the Corporation or
agents may require.
(b) The Corporation shall be entitled to treat the holder of record
of any share or shares as the absolute owner thereof for all
purposes and, accordingly, shall not be bound to recognize any
legal, equitable or other claim to, or interest in, such share or
shares on the part of any other person; whether or not it shall have
express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date:
In lieu of closing the share records of the corporation, the
shareholders may fix, in advance, a date not exceeding fifty days,
nor less than ten days, as the record date for the determination of
shareholder entitled to receive notice of, or to vote at, any
meeting of shareholders, or to consent to any proposal without a
meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends or allotment of any rights, or for
the purpose of any other action. If no record date is fixed, the
record date for the determination of shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day on which notice is given,
or, if no notice is given, the day on which the meeting is held; the
record date for determining shareholders for any other purpose shall
be the close of business on the day on which the resolution of the
directors relating thereto is adopted. When a determination of
shareholders of record entitled to notice of or to vote at any
meeting of shareholders has been made as provided for herein, such
determination shall apply to any adjournment thereof, unless the
directors fix a new record date for the adjourned meeting
ARTICLE V - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of
any funds available therefor, as often, in such amounts, and at such
time or times as the shareholders may determine.
ARTTCLE VI - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the shareholders
from time to time, subject to applicable law.
ARTICLE VII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be
approved from time to time by the shareholders.
ARTICLE VIII - AMENDMENTS
Except as otherwise provided by statute or by the Certificate of
Incorporation, all by-laws of the Corporation shall be subject to
alteration or repeal, and new by-laws may be made by a majority
vote of the shareholders.
RESOLUTIONS ADOPTED BY INCORPORATOR
OF
INNOVATIVE TRACKING SOLUTIONS CORPORATION
The undersigned, being the sole Incorporator of the corporation,
hereby adopts the following resolutions:
RESOLVED, that a copy of the Certificate of Incorporation of the
Corporation, together with the original receipt showing payment
of the statutory organization tax and filing fee, be inserted in
the Minute Book of the Corporation.
RESOLVED, that the form of First By-Laws submitted to the
meeting be, and the same hereby are, adopted as and for the By-
Laws of the Corporation, and that a copy thereof be placed in the
Minute Book of the Corporation, directly following the
Certificate of Incorporation.
(3) RESOLVED, that the election is hereby made to have a Board of
Directors.
Dated: September 4, 1996
/s/ Regina Cephas
-------------------------------
Incorporator
Exhibit 3.5
AMENDED BY-LAWS
-OF-
INNOVATIVE TRACKING SOLUTIONS CORPORATION
An Open Corporation
ARTICLE I- OFFICES
The office of the Corporation shall be located in the City, County and State
designated in the Certificate of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as
the Shareholders may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the corporation, for the
purpose of electing officers and transacting such other business as may
properly
come before the meeting.
Section 2 - Regular Meetings
The shareholders may provide by resolution, from time to time, for the holding
of regular meetings of the shareholders and may affix the time and place
thereof.
Section 3 - Special Meetings:
Special meetings of the shareholders may be called at any time by the
President,
and shall be called by the President or the Secretary at the written request of
the holders of ten percent (10%) of the shares then outstanding and entitled to
vote thereat, or as otherwise required under the provisions of the Corporation
Law.
Section 4 - Place of Meetings
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places within the United States as shall be
designated in the notices or waivers of notice of such meetings.
Section 5 - Notice of Meetings
(a) Written notice of each meeting of shareholders, whether annual or special,
stating the time when and place where it is to he held, shall be served either
personally or by mail, not less than ten or more than fifty days before the
meeting, upon each shareholder of record entitled to vote as such meeting, and
to any other shareholder to whom the giving of notice may be required by law.
Notice of a special meeting shall also state the purpose or purposes for which
the meeting is called, and shall indicate that it is being issued by, or at the
direction of, the person or persons calling the meeting. If, at any meeting,
action is proposed to be taken that would if taken, entitle shareholders to
receive payment for their shares pursuant to the Business Corporation Law, the
notice of such meeting shall include a statement of that purpose and to that
effect. If mailed, such notice shall be directed to each such shareholder at
his address, as it appears on the records of the shareholders of the
Corporation, unless he shall have previously filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address, in which case, it shall be mailed to the address designated in
such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the
meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to
any shareholder, who, in person or by proxy, submits a signed waiver of notice
either before or after such meeting. Notice of any adjourned meeting of
shareholders need not be given, unless otherwise required by statute.
Section 6. Adjourned Meeting And Notice Thereof.
Any shareholders meeting, whether or not a quorum is present, may be adjourned
from time to time. In the absence of a quorum (except as provided in Section 5
of this Article), no other business may be transacted at such meeting.
It shall not be necessary to give any notice of the time and place of the
adjourned meeting or of the business to be transacted thereat, other than by
announcement at the meeting at which such adjournment is taken; provided,
however when a shareholders meeting is adjourned for more than forty-five (45)
days or, if after adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given as in the case of an
original meeting.
Section 7 - Quorum:
(a) Except as otherwise provided herein, or by statute, or in the Certificate
of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all
meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the corporation then issued and outstanding
and entitled to vote, shall be necessary and sufficient to constitute a quorum
for the transaction of any business. The withdrawal of any shareholder after
the commencement of a meeting shall have no effect on the existence of a
quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called if a
quorum
had been present.
Section 8 - Voting:
(a) Except as otherwise provided herein or by statute, or by the Certificate of
Incorporation, any corporate action, to be taken by vote of the shareholders,
shall be authorized by a majority of votes cast at a meeting of shareholders by
the holders of shares entitled to vote thereon.
(b) Except as otherwise provided herein or by statute or by the certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without
a
meeting, may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the persons executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited
to
the secretary at the meeting and shall be filed with the records of the
corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same force and effect as if the same had been duly
passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the corporation
under its proper date.
Section 9. Consent of Absentees.
The transactions of any meeting of shareholders, however called and noticed,
and
wherever held, are as valid as though had at a meeting duly held after regular
call and notice, if a quorum is present either in person or by proxy, and if,
either before or after the meeting, each of the persons entitled to vote not
present in person or by proxy, signs a written waiver of notice, or a consent
to
the holding of the meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made
a part of the minutes of the meeting.
Section 10. Action Without Meeting.
Any action which, under any provision of law, may be taken at any annual or
special meeting of shareholders, may be taken without a meeting and without
prior notice if a consent in writing, setting forth the actions to be taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such
action
at a meeting at which all shares entitled to vote thereon were present and
voted. Unless a record date for voting purposes be fixed as provided in Section
8 of this Article, the record date for determining shareholders entitled to
give
consent pursuant to this Section 10, when no prior action by the Board has been
taken, shall be the day on which the first written consent is given.
Section 11. Proxies.
Every person entitled to vote shares has the right to do so either in person or
by one or more persons authorized by a written proxy executed by such
shareholder and filed with the Secretary not less than five (5) days prior to
the meeting.
Section 12. Conduct Of Meeting.
The President shall preside as Chairman at all meetings of the shareholders,
unless another Chairman is selected. The Chairman shall conduct each such
meeting in a businesslike and fair manner, but shall not be obligated to follow
any technical, formal or parliamentary rules or principles of procedure. The
Chairman's ruling on procedural matters shall be conclusive and binding on all
shareholders, unless at the time of ruling a request for a vote is made by the
shareholders entitled to vote and represented in person or by proxy at the
meeting, in which case the decision of a majority of such shares shall be
conclusive and binding on all shareholders without limiting the generality of
the foregoing, the Chairman shall have all the powers usually vested in the
chairman of a meeting of shareholders.
Section 13 - Committees:
The shareholders may, from time to time, designate from among its members an
executive committee and such other committees, and alternate members thereof,
as
they deem desirable, each consisting of three or more members, with
such powers and authority (to the extent permitted by law) as may be provided
in
such resolution. Each such committee shall serve at the pleasure of the
shareholders. At all meetings of a committee, the presence of all members
at the committee shall be necessary to constitute a quorum for the transaction
of business, except as otherwise provided for by the shareholders.
Participation of any one or more members of the committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time, shall
constitute presence in person at any such meeting. Any action authorized in
writing by all of the members of a committee entitled to vote thereon and filed
with the minutes of the Committee shall be the act of the committee with the
same force and effect as if the same had been passed by unanimous vote at a
duly
called meeting of the committee.
ARTICLE III
DIRECTORS
Section 1. Powers.
Subject to limitation of the Articles of Incorporation, of these bylaws, and of
actions required to be approved by the shareholders, the business and affairs
of
the corporation shall be managed and all corporate powers shall be exercised
by or under the direction of the Board. The Board may, as permitted by law,
delegate the management of the day-to-day operation of the business of the
corporation to a management company or other persons or officers of the
corporation provided that the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised under the ultimate
direction
of the Board. Without prejudice to such general powers, it is hereby expressly
declared that the Board shall have the following powers:
(a) To select and remove all of the officers, agents and employees of the
corporation, prescribe the powers and duties for them as may not be
inconsistent
with law, or with the Articles of Incorporation or by these bylaws, fix their
compensation, and require from them, if necessary, security for faithful
service.
(b) To conduct, manage, and control the affairs and business of the corporation
and to make such rule and regulations therefore not inconsistent with law, with
the Articles of Incorporation or these bylaws, as they may deem best.
(c) To adopt, make and use a corporate seal, and to prescribe the forms of
certificates of stock and to alter the form of such seal and such of
certificates from time to time in their judgment they deem best.
(d) To authorize the issuance of shares of stock of the corporation from time
to
time, upon such terms and for such consideration as may be lawful.
(e) To borrow money and incur indebtedness for the purposes of the corporation,
and to cause to be executed and delivered therefor, in the corporate name,
promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecation or other evidence of debt and securities therefor.
Section 2. Number And Qualification Of Directors.
The authorized number of directors shall be no fewer than one (1) and no more
than twelve (12) until changed by amendment of the Articles or by a bylaw duly
adopted by approval of the outstanding shares amending this Section 2.
Section 3. Election And Term Of Office.
The directors shall be elected at each annual meeting of shareholders but if
any
such annual meeting is not held or the directors are not elected thereat, the
directors may be elected at any special meeting of shareholders held for that
purpose. Each director shall hold office until the next annual meeting and
until
a successor has been elected and qualified.
Section 4. Chairman Of The Board.
At the regular meeting of the Board, the first order of business will be to
select, from its members, a Chairman of the Board whose duties will be to
preside over all board meetings until the next annual meeting and until a
successor has been chosen.
Section 5. Vacancies.
Any director may resign effective upon giving written notice to the Chairman of
the Board, the President, Secretary, or the Board, unless the notice specified
a
later time for the effectiveness of such resignation. If the resignation is
effective at a future time, a successor may be elected to take office when the
resignation becomes effective.
Vacancies in the Board including those existing as a result of a removal of a
director, shall be filled by the shareholders at a special meeting, and each
director so elected shall hold office until the next annual meeting and until
such director's successor has been elected and qualified.
A vacancy or vacancies in the Board shall be deemed to exist in case of the
death, resignation or removal of any director or if the authorized number of
directors be increased, or if the shareholders fail, at any annual or special
meeting of shareholders at which any directors are elected, to elect the full
authorized number of directors to be voted for the meeting.
The Board may declare vacant the office of a director who has been declared of
unsound mind or convicted of a felony by an order of court.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies. Any such election by written consent requires the consent
of a majority of the outstanding shares entitled to vote. If the Board accepts
the resignation of a director tendered to take effect at a future time, the
shareholder shall have power to elect a successor to take office when the
resignation is to become effective. No reduction of the authorized number of
directors shall have the effect of removing any director prior to the
expiration
of the director's term of office.
Section 6. Place Of Meeting.
Any meeting of the Board shall be held at any place which has been designated
from time to time by the Board. In the absence of such designation meetings
shall be held at the principal executive office of the corporation.
Section 7. Regular Meetings.
Immediately following each annual meeting of shareholders the Board shall hold
a
regular meeting for the purpose of organization, selection of a Chairman of the
Board, election of officers, and the transaction of other business. Call and
notice of such regular meeting is hereby dispensed with.
Section 8. Special Meetings.
Special meetings of the Board for any purposes may be called at any time by the
Chairman of the Board, the President or the Secretary or by any two directors.
Special meetings of the Board shall be held upon at least four (4) days written
notice or forty-eight (48) hours notice given personally or by telephone,
telegraph, telex or other similar means of communication. Any such notice shall
be addressed or delivered to each director at such director's address as it is
shown upon the records of the Corporation or as may have been given to the
Corporation by the director for the purposes of notice.
Section 9. Quorum.
A majority of the authorized number of directors constitutes a quorum of the
Board for the transaction of business, except to adjourn as hereinafter
provided. Every act or decision done or made by a majority of the directors
present at a meeting duly held at which a quorum is present shall be regarded
as
the act of the Board, unless a greater number be required by law or by the
Articles of Incorporation. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the number of directors
required as noted above to constitute a quorum for such meeting.
Section 10. Participation In Meetings By Conference Telephone.
Members of the Board may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all members
participate in such meeting can hear one another.
Section 11. Waiver Of Notice.
The transactions of any meeting of the Board, however called and noticed or
wherever held, are as valid as though had at a meeting duly held after regular
call and notice if a quorum be present and if, either before or after the
meeting, each of the directors not present signs a written waiver of notice, a
consent to holding such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made
part of the minutes of the meeting.
Section 12. Adjournment.
A majority of the directors present, whether or not a quorum is present, may
adjourn any directors' meeting to another time and place. Notice of the time
and
place of holding an adjourned meeting need not be given to absent directors if
the time and place be fixed at the meeting adjourned. If the meeting is
adjourned for more than forty-eight (48) hours, notice of any adjournment to
another time or place shall be given prior to the time of the adjourned meeting
to the directors who were not present at the time of adjournment.
Section 13. Fees And Compensation.
Directors and members of committees may receive such compensation, if any, for
their services, and such reimbursement for expenses, as may be fixed or
determined by the Board.
Section 14. Action Without Meeting.
Any action required or permitted to be taken by the Board may be taken without
a
meeting if all members of the Board shall individually or collectively consent
in writing to such action. Such consent or consents shall have the same effect
as a unanimous vote of the Board and shall be filed with the minutes of the
proceedings of the Board.
Section 15. Committees.
The board may appoint one or more committees, each consisting of two or more
directors, and delegate to such committees any of the authority of the Board
except with respect to:
(a) The approval of any action which requires shareholders' approval or
approval
of the outstanding shares;
(b) The filling of vacancies on the Board or on any committees;
(c) The fixing of compensation of the directors for serving on the Board or on
any committee;
(d) The amendment or repeal of bylaws or the adoption of new bylaws;
(e) The amendment or repeal of any resolution of the Board which by its express
terms is not so amendable or repealable by a committee of the board;
(f) A distribution to the shareholders of the corporation;
(g) The appointment of other committees of the Board or the members thereof.
(h) Any such committee must be appointed by resolution adopted by a majority of
the authorized number of directors and may be designated an Executive Committee
or by such other name as the Board shall specify. The Board shall have the
power
to prescribe the manner in which proceedings of any such committee shall be
conducted. Unless the Board or such committee shall otherwise provide, the
regular or special meetings and other actions of any such committee shall be
governed by the provisions of this Article applicable to meetings and actions
of
the Board. Minutes shall be kept of each meeting of each committee.
ARTICLE IV
OFFICERS
Section 1. Officers.
The officers of the corporation shall be a president, a secretary and a
treasurer. The corporation may also have, at the discretion of the Board, one
or
more vice-presidents, one or more assistant vice presidents, one or more
assistant secretaries, one or more assistant treasurers and such other officers
as may be elected or appointed in accordance with the provisions of Section 3
of
this Article.
Section 2. Election.
The officers of the corporation, except such officers as may be elected or
appointed in accordance with the provisions of Section 3 or Section 5 of this
Article, shall be chosen annually by, and shall serve at the pleasure of, the
Board, and shall hold their respective offices until their resignation, removal
or other disqualification from service, or until their respective successors
shall be elected.
Section 3. Subordinate Officers.
The Board may elect, and may empower the President to appoint, such other
officers as the business of the corporation may require, each of whom shall
hold
office for such period, have such authority, and perform such duties as are
provided in these bylaws or as the Board, or the President may from time to
time
direct.
Section 4. Removal And Resignation.
Any officer may be removed, either with or without cause, by the Board of
Directors at any time, or, except in the case of an officer chosen by the
Board,
by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the corporation.
Any such resignation shall take effect at the date of the receipt of such
notice
or at any later time specified therein. The acceptance of such resignation
shall
be necessary to make it effective.
Section 5. Vacancies.
A vacancy of any office because of death, resignation, removal,
disqualification, or any other cause shall be filled in the manner prescribed
by
these bylaws for the regular election or appointment to such office.
Section 6. President.
The President shall be the chief executive officer and general manager of the
corporation. The President shall preside at all meetings of the shareholders
and, in the absence of the Chairman of the Board at all meetings of the Board.
The president has the general powers and duties of management usually vested in
the chief executive officer and the general manager of a corporation and such
other powers and duties as may be prescribed by the Board.
Section 7. Vice Presidents.
In the absence or disability of the President, the Vice Presidents in order of
their rank as fixed by the Board or, if not ranked, the Vice President
designated by the Board, shall perform all the duties of the President, and
when
so acting shall have all the powers of and be subject to all the restrictions
upon the President. The Vice Presidents shall have such other powers and
perform
such other duties as from time to time may be prescribed for them respectively
by the President or the Board.
Section 8. Secretary.
The Secretary shall keep or cause to be kept, at the principal executive
offices
and such other place as the Board may order, a book of minutes of all meetings
of shareholders, the Board, and its committees, with the time and place of
holding, whether regular or special, and, if special, how authorized, the
notice
thereof given, the names of those present at Board and committee meetings, the
number of shares present or represented at shareholders' meetings, and
proceedings thereof. The Secretary shall keep, or cause to be kept a copy of
the bylaws of the corporation at the principal executive office of the
corporation.
The Secretary shall keep, or cause to be kept, at the principal executive
office, a share register, or a duplicate share register showing the names of
the
shareholders and their addresses, the number and classes of shares held by
each,
the number and date of certificates issued for the same, and the number and
date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings of
the shareholders and of the Board and any committees thereof required by these
bylaws or by law to be given, shall keep the seal of the corporation in safe
custody, and shall have such other powers and perform such other duties as may
be prescribed by the Board.
Section 9. Treasurer.
The Treasurer is the chief financial officer of the corporation and shall keep
and maintain, or cause to be kept and maintained, adequate and correct accounts
of the properties and financial transactions of the corporation, and shall send
or cause to be sent to the shareholders of the corporation such financial
statements and reports as are by law or these bylaws required to be sent to
them. The Treasurer shall deposit all monies and other valuables in the name
and
to the credit of the corporation with such depositories as may be designated by
the Board. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board, shall render to the President and directors, whenever
they
request it, an account of all transactions as Treasurer and of the financial
conditions of the corporation, and shall have such other powers and perform
such
other duties as may be prescribed by the Board.
Section 10. Agents.
The President, any Vice-President, the Secretary or Treasurer may appoint
agents
with power and authority, as defined or limited in their appointment, for and
on
behalf of the corporation to execute and deliver, and affix the seal of the
corporation thereto, to bonds, undertakings, recognizance, consents of surety
or
other written obligations in the nature thereof and any said officers may
remove
any such agent and revoke the power and authority given to him.
ARTICLE V SHARES OF STOCK
Section 1 - Certificate of Stock
(a) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the shareholders, and shall be numbered and
registered in the order issued. They shall bear the holder's name and the
number of shares, and shall be signed by (i) the president or Vice President,
and (ii) the Secretary or Treasurer, or any Assistant Secretary or Assistant
Treasurer, and may bear the corporate seal.
(b) The shareholders may authorize the issuance of certificates for fractions
of a share which shall entitle the holder to exercise voting rights, receive
dividends and participate in liquidating distributions, in proportion to the
fractional holdings; or it may authorize the payment in cash of the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined; or it may authorize the issuance, subject to such
conditions as may be permitted by law, of script in registered or bearer form
over the signatures of an officer or agent of the Corporation, exchangeable as
therein provided for full shares, but such script shall not entitle the holder
to any rights of a shareholder, except as therein provided for full shares.
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the
certificate
representing the same. The Corporation may issue a new certificate in the
place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the
shareholders in their discretion, may require, the shareholders may, in their
discretion, require the owner of the lost or destroyed certificate or his legal
representatives, to give the Corporation a bond in such sum as they
may direct, and with such surety or sureties as may be satisfactory to them, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate
may
be issued without requiring any such evidence or bond when, in the judgment of
the shareholders, it is proper to do so.
Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share records
of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share
or shares as the absolute owner thereof for all purposes and, accordingly,
shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person; whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date
In lieu of closing the share records of the corporation, the shareholders may
fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the
record date for the determination of shareholder entitled to receive notice of,
or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the
day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be the close of business on the day on which the resolution of
the
directors relating thereto is adopted. When a determination of shareholders of
record entitled to notice of or to vote at any meeting of shareholders has been
made as provided for herein, such determination shall apply to any adjournment
thereof, unless the directors fix a new record date for the adjourned meeting
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
shareholders may determine.
ARTTCLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the shareholders from time
to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time
to time by the shareholders.
ATICLE IX - AMENDMENTS
These bylaws may be altered, amended or repealed either by approval of a
majority of the outstanding shares entitled to vote or by the approval of the
Board; provided however that after the issuance of shares, a bylaw specifying
or
changing a fixed number of directors or the maximum or minimum number or
changing from a fixed to a flexible Board or vice versa may only be adopted by
the approval by an affirmative vote of not less than two-thirds of the
corporation's issued and outstanding shares entitled to vote.
ARTICLE X
INDEMNIFICATION
Section 1. Indemnification In Actions By Third Parties.
Subject to the limitations of law, if any, the corporation shall have the power
to indemnify any director, officer, employee and agent of the corporation who
was or is a party or is threatened to be made a party to any proceeding (other
than an action by or in the right of to procure a judgement in its favor)
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding, provided that the Board
shall find that the director, officer, employee or agent acted in good faith
and
in a manner which such person reasonably believed in the best interests of the
corporation and, in the case of criminal proceedings, had no reasonable cause
to
believe the conduct was unlawful. The termination of any proceeding by
judgment,
order, settlement, conviction or upon a plea of nolo contendere shall not, of
itself create a presumption that such person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of the
corporation or that such person had reasonable cause to believe such person's
conduct was unlawful.
Section 2. Indemnification In Actions By Or On Behalf Of The Corporation.
Subject to the limitations of law, if any, the Corporation shall have the power
to indemnify any director, officer, employee and agent of the corporation who
was or is threatened to be made a party to any threatened, pending or completed
legal action by or in the right of the Corporation to procure a judgement in
its
favor, against expenses actually and reasonable incurred by such person in
connection with the defense or settlement, if the Board of Directors determine
that such person acted in good faith, in a manner such person believed to be in
the best interests of the Corporation and with such care, including reasonable
inquiry, as an ordinarily prudent person would use under similar circumstances.
Section 3 Advance Of Expenses.
Expenses incurred in defending any proceeding may be advanced by the
Corporation
prior to the final disposition of such proceeding upon receipt of an
undertaking
by or on behalf of the officer, director, employee or agent to repay such
amount
unless it shall be determined ultimately that the officer or director is
entitled to be indemnified as authorized by this Article.
Section 4. Insurance.
The corporation shall have power to purchase and maintain insurance on behalf
of
any officer, director, employee or agent of the Corporation against any
liability asserted against or incurred by the officer, director, employee or
agent in such capacity or arising out of such person's status as such whether
or
not the corporation would have the power to indemnify the officer, or director,
employee or agent against such liability under the provisions of this Article.
ATICLE XI - OTHER PROVISIONS
Section 1 - Sureties and Bonds:
In case the shareholders shall so require, any officer, employee or agent of
the
Corporation shall execute to the Corporation a bond in such sum, and with such
surety or sureties as the shareholders may direct, conditioned upon the
faithful
performance of his duties to the Corporation, including responsibility for
negligence and for the accounting for all property, funds or securities of the
Corporation which may come into his hands.
Section 2 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other Corporation, any
right or power of the Corporation as such shareholder (including the
attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of the Corporation by
the President or any other officer authorized by the Board or the President.
RESOLUTIONS ADOPTED BY SHAREHOLDERS OF
OF
INNOVATIVE TRACKING SOLUTIONS CORPORATION
The undersigned, representing a majority vote of the shareholders of the
corporation, hereby adopts the following resolutions:
RESOLVED, that a copy of the Amendment of the Certificate of Incorporation of
the Corporation, together with the original receipt showing payment of the
statutory organization tax and filing fee, be inserted in the Minute Book of
the
Corporation.
RESOLVED, that the form of Amended By-Laws submitted to the meeting be, and the
same hereby are, adopted as and for the By-Laws of the Corporation, and that a
copy thereof be placed in the Minute Book of the Corporation, directly
following
the Certificate of Incorporation and the Amendment to the Certificate of
Incorporation.
Dated: May 22, 1997
/s/ DIANNA CLEVELAND
- -----------------------------------------
Dianna Cleveland, Shareholder
/s/ LEE NAMISNIAK
- -----------------------------------------
Lee Namisniak, Shareholder
/s/ LOU WEISS
- -----------------------------------------
Lou Weiss, Shareholder
Exhibit 4.1
<SEQUENCE>4
[DESCRIPTION]SPECIMEN OF COMMON STOCK CERTIFICATE
EXHIBIT
INNOVATIVE TRACKING SOLUTIONS CORPORATION
[________]NUMBER SHARES[________]
AUTHORIZED COMMON STOCK; 10,000,000 SHARES
PAR VALUE $.001
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK CUSIP 45765S 10 8
THIS CERTIFIES THAT ________________________________________________
Is the RECORD HOLDER OF ______________ SHARES OF INNOVATIVE TRACKING SOLUTIONS
CORPORATION COMMON STOCK TRANSFERABLE ON THE BOOKS OF THE CORPORATION IN PERSON
OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY
ENDORSED.
THIS CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT AND
REGISTERED BY THE REGISTRAR.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
[SEAL OF INNOVATIVE TRACKING SOLUTIONS CORPORATION]
/s / LEE A. NAMISNIAK /s/ DIANNA CLEVELAND
- - ----------------------- ---------------------
Secretary President
By: PAM GRAY
---------------------------------
Atlas Stock Transfer Corporation
5899 south State Street
Salt Lake City, UT 84107
This Certificate is not valid unless countersigned by the Transfer Agent.
NOTICE: Signature must be guaranteed by a firm which is a member of a
registered national stock exchange, or by a bank (other than a savings bank),
or a trust company.
The following abbreviation, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____Custodian____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act ________________________
tenants in common (State)
Additional abbreviation may also be used though not in above list.
FOR VALUE RECEIVED, _________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- - --------------------------------------
- - --------------------------------------
__________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Shares of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
__________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated, ---------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
Exhibit 4.2
SPECIMEN FORM OF WARRANT CERTIFICATE
Warrant Number Number of Warrants
COMMON STOCK PURCHASE WARRANT
Innovative Tracking Solutions
(A Delaware Company)
Cusip No. 457655 11 6
This certifies that FOR VALUE RECEIVED, ______________________________________
Or registered assigns (the "Holder") is the owner of _________________________
Common Stock Purchase Warrants. Each entitles the Holder to purchase at any
time between July 21, 1997, and July 21, 1998, subject to the terms and
conditions set forth in this certificate and the Warrant Agreement (as
hereinafter defined), for an exercise price of $2.00, one fully paid and
nonassessable share of common stock, $0.001 par value, of Innovative Tracking
Solutions Corporation, a Delaware corporation (the "Company"). After July 21,
1998, each Warrant that has not been exercised will expire. Shares of common
stock are issuable on the presentation and surrender of this Warrant
Certificate with the subscription form on the reverse side hereof duly executed
at the principal office of the Company or its duly appointed agent, Atlas Stock
Transfer Corporation, or its successor (the "Warrant Agent") accompanied by
payment in lawful money of the United States of America in cash of by official
bank or certified check payable to the Company.
The Warrant Certificate and each Warrant represented hereby are issued under
and are subject in all respects to the terms and conditions set forth in the
Warrant Agreement (the "Warrant Agreement") dated as of April 30, 1997, between
the Company and the Warrant Agent. A copy of the Warrant Agreement is on file
at the principal office of the Warrant Agent, and a copy will be provided by
the Company to each Holder on request at no charge.
The term "Expiration Date" shall mean 11:59 p.m. (Pacific Standard Time) July
21, 1998. If such date shall in the state of California be a holiday or a day
on which banks are authorized to close, then the Expiration Date shall mean
11:59 p.m. (Pacific Standard Time) the next following date which in the state
of California is not a holiday or a day on which banks are authorized to close.
The company has the right to call in each Warrant represented hereby upon 15
days notice to the Holder, if not exercised by the Holder prior to the
expiration of the 15 day period, should the Company's Common Stock trade at or
above a $2.50 reported closing bid or trade price for at least 10 consecutive
trading days.
This Warrant shall not be exercisable and the Company shall not be obligated to
deliver any securities pursuant to this Warrant unless a registration statement
under the Securities Act of 1933, as amended and under applicable state
securities laws with respect to such securities is effective or there is an
available exemption from such federal and state registration requirements.
This Warrant shall not be exercisable by a Holder in any state where such
exercise would be unlawful.
This warrant shall not be valid unless countersigned by the Warrant Agent.
Date:
Secretary ____________________________
President _____________________________
Corporate Seal
FORM OF EXERCISE
(Form of exercise to be executed by the Holder at the time of exercise)
TO ATLAS STOCK TRANSFER CORPORATION, THE WARRANT AGENT:
The undersigned, the Holder of the within Warrant, hereby (1) exercise his
right to purchase shares of Common Stock, par value $0.001 per share, of
Innovative Tracking Solutions Corporation, at any time between July 21, 1997,
and July 21, 1998, which the undersigned is entitled to purchase under the
terms of the within Warrant; and (2) makes payment in full for the number of
shares of Common Stock so purchased by payment of dollars ($).
Please issue the certificate for shares of Common Stock in the name of, and pay
any cash for any fractional shares to:
Print Type Name
Social Security Number or Other Identifying Number
Street Address
City
State
Zip Code
and, if said number of shares purchasable hereunder, please issue a new Warrant
for the unexercised portion of the within Warrant to:
Print Type Name
Social Security Number or Other Identifying Number
Street Address
City
State
Zip Code
Date:
(Signature Must Conform in all Respects to Name of Holder as Specified on the
Face of the Warrant)
ASSIGNMENT
(Form of Assignment to be Executed if Holder Desires to Transfer Certificate)
FOR VALUE RECEIVED, hereby sells, assigns, and transfers unto the right
represented by the within Warrant to purchase shares of Common Stock, par
value $0.001 per share, of Innovative Tracking Solutions Corporation, to which
the within Warrant relates and appoints attorney to transfer such right on
the books of the Warrant Agent with full power of substitution in the premises.
Dated:
(Signature Guaranteed)
Signature
(Signature Must Conform in All Respects to Name of Holder as Specified on the
Face of the Warrant.)
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into on July 15, 1997,
between INNOVATIVE TRACKING SOLUTIONS CORPORATION, INC., a Delaware corporation
("Company"), and DIANNA L. CLEVELAND ("Executive").
R E C I T A L
Company wishes to employ Executive, and Executive agrees to serve, as President
and Chief Executive Officer of Company, subject to the terms and conditions set
forth below.
AGREEMENT
It is agreed as follows:
1. TERM OF EMPLOYMENT. Company hereby employs Executive, and Executive hereby
accepts employment with Company, for a period of five (5) years terminating
July 15, 2002 ("Employment Period"); provided that this Agreement shall be
automatically renewed for successive five (5) year terms unless either party
elects not to renew this Agreement by delivering written notice of its election
to the other party no later than one hundred twenty (120) days prior to the end
of the current term. Notwithstanding anything in this Paragraph 1 to the
contrary, this Agreement may be terminated at any time in accordance with
Paragraph 7.
2. DUTIES OF EXECUTIVE. Executive shall serve in the capacity as President and
Chief Executive Officer of Company at Company's office in Laguna Hills,
California, or at such other place as Company may direct provided that Company
shall not direct or cause Executive to perform her services from an office
outside of Orange County, California. Executive's principal duties and
responsibilities shall consist of primary responsibility for all (i) sales and
marketing and activities; (ii) administrative matters; and (iii) Executive
management and supervision. Executive shall perform such other services and
duties as may from time to time be assigned to Executive by Company's board of
directors provided that such other services and duties are not inconsistent
with any other term of this Agreement. Except during vacation periods or in
accordance with Company's personnel policies covering executive leaves and
reasonable periods of illness or other incapacitation, Executive shall devote
her services to Company's business and interests in a manner consistent with
Executive's title and office and Company's needs for her services. Executive
shall perform the duties of Executive's office and those assigned to Executive
by the Company's board of directors with fidelity, to the best of Executive's
ability, and in the best interest of Company.
3. COMPENSATION OF EXECUTIVE.
a) Base Compensation. At such time that it becomes economically feasible for
the Company with due regard to the financial conditions and prospects of the
business, the Company will pay Executive for services hereunder an annual base
salary of Seventy Five Thousand Dollars ($75,000). If after one year from the
date of this Agreement, the Company has not been able to begin and maintain
said Base Salary, the Company hereby agrees to award to Executive, Five
Thousand (5,000) shares of restricted common stock in the Company for each week
earned during the first year of this Agreement. Any stock awarded shall not be
construed as payment in lieu of Executive's Base Salary.
b) Increases To Base Compensation: Effective one year from the date of this
Agreement. Executive shall receive an increase in annual base salary to One
Hundred Twenty Five Thousand Dollars ($125,000) for the remaining term of this
Agreement. For all subsequent years, Executive shall be entitled to receive an
annual increase in base salary equal to the cost of living adjustment to base
salary based on the percentage of the federal annual increase of the cost of
living which, in addition to any merit increases awarded in the sole discretion
of the Company, create an annual base salary rate. Said annual increase in
base salary shall at no time for the term of this Agreement be less than ten
percent (10%) of Executive's previous year's base salary.
c) Bonus Compensation. As additional compensation for Executive's services
hereunder, Executive shall be paid a cash bonus up to one hundred percent
(100%) of Executive's base salary for each calendar year from January 1, 1999
and ending December 31, 2002, if the Company earns a Net Profit (as defined
below) of one million dollars ($1,000,000) within that respective calendar
year. As used herein, the term "Net Profit" shall mean the gross revenue
generated from all products and services sold by the Company, less all related
costs and overhead, such costs to include all costs including, but not limited
to, pay-outs to subscribers, insurance, labor (including wages and salaries of
officers, directors, Executives, independent contractors), equipment costs,
technical fees and training costs. Executive may elect to receive said bonus
in common stock based on a valuation of one-half 1/2 of the then current fair
market value for the stock or to receive bonus in any combination of cash and
stock.
d) Stock Options. As additional compensation for Executive's services
hereunder, Executive shall be granted stock options each year to purchase Two
Hundred Fifty Thousand (250,000) shares of Common Stock in the Company at $.50
per share. Options granted each year shall hold a five year expiration.
4. EXPENSE REIMBURSEMENTS. Executive shall be reimbursed for reasonable and
actual out-of-pocket expenses incurred by Executive in performance of
Executive's duties and responsibilities hereunder in accordance with Company's
established personnel policy covering executive officer expense reimbursements,
as such policy may be amended, revised or otherwise changed from time to time.
Executive shall furnish proper vouchers and expense reports and shall be
reimbursed only for those expenses which shall be reimbursable. The Company
shall reimburse Executive for all reasonable and necessary relocation expenses
in the event the Company chooses to relocate the business outside of Orange
County, California.
5. STOCK INCENTIVES. The Company intends to adopt a "performance-based
compensation" plan, the Compensation Incentive Plan (CIP), that is tax
deductible by the Company without limitation under Section 162(m) of the Code.
The Company Board of Directors believes that attracting and retaining key
employees of high quality is essential to the Company's growth and success. In
addition, the Company Board believes that the long term success of the Company
is enhanced by a competitive and comprehensive compensation program which may
include tailored types of incentives designed to motivate executives and reward
key employees for outstanding service, including awards that link compensation
to applicable measures of the Company's performance and the creation of
stockholder value. In this regard, stock options and other stock-related awards
will be an important element of compensation for key employees. Such awards
will enable the Company to attract and retain executives and key employees and
enable such persons to acquire a proprietary interest in the Company and
thereby align their interests with the interests of the Company's stockholders.
In addition, the Company Board has concluded that the Company Board (the
"Compensation Committee") should be given as much flexibility as possible to
provide for annual and long-term incentive awards contingent on performance.
Executive shall be included in all programs of this type adopted by Company.
6. VACATION, SICK LEAVE AND OTHER FRINGE BENEFITS.
a) Executive shall be entitled to a four (4) weeks paid vacation per every
twelve (12) month period of employment hereunder. Executive must use a minimum
of two (2) weeks vacation per every twelve (12) month period. Executive may
choose carryover a maximum of two (2) weeks vacation per every twelve (12)
month period.
b) Executive shall also be entitled to leaves for illness or other
incapacitation as is consistent with Executive's title and the Company's needs
for Executive's services, except as otherwise provided for disability in
Paragraph 6.2.
c) Executive shall be entitled during Executive's employment hereunder to share
or participate in such medical insurance programs or other "fringe" benefit
plans or programs as shall be made available to executive officers employed by
Company generally, in accordance with Company's established personnel policies,
if any, or as established, amended, revised or otherwise changed from time to
time, covering executive officer Executive benefits.
7. TERMINATION.
a) Termination by Company for Cause. Company may terminate this Agreement and
Executive's employment hereunder for Cause (as defined herein) any time
effective upon 15 days written notice to Executive. As used herein, the term
"Cause" shall mean:
i) Habitual neglect in the performance of Executive's material duties as
set
forth in Paragraph 2 which continues uncorrected for a period of thirty (30)
days after written notice thereof by Company to Executive; or
ii) Gross negligence involving misfeasance or nonfeasance by Executive in
the performance of Executive's material duties as set forth in Paragraph 2
which continues uncorrected for a period of thirty (30) days after written
notice thereof by Company to Executive.
b) Termination Upon Death or Disability. This Agreement and Executive's
employment hereunder shall terminate upon Executive's death or Disability (as
defined herein). For this purpose, "Disability" means incapacity, whether by
reason of physical or mental illness or disability, which prevents Executive
from substantially performing Executive's material duties as set forth in
Section 2 for six (6) months, or for shorter periods aggregating six (6) months
in any twelve (12) successive calendar months. Upon termination for death, and
unless Company shall have in force a disability insurance policy providing for
benefits in an amount at least equal thereto, upon termination for Disability,
Company shall continue to pay the base compensation payments pursuant to
Paragraph 3.1 to the surviving spouse of Executive (or if there is none to
Executive's estate) in the case of death and to Executive or Executive's court
appointed conservator in the case of Disability until the date three (3) months
thereafter. Termination for death shall become effective upon the occurrence of
such event and termination for Disability shall become effective upon written
notice by Company to Executive.
c) Other Termination. In the event the Company terminates Executive's
employment without Cause, or Executive terminates Executive's employment for
Good Reason (as such terms are defined below), Executive will receive severance
benefits. If termination is prior to a change in control of the Company (as
defined below), the benefits will include continuation of salary, bonus and
other benefits, and continued vesting of options and restricted stock, for five
(5) years following termination. If termination is within five years after a
change in control, the benefits will include a lump sum payment equal to five
times Executive annual salary and bonus, immediate vesting of all options and
restricted stock, and continuation of other benefits for five years following
termination. Additionally, if any payment or distribution to Executive would be
subject to any "golden parachute payment" excise tax or similar tax, then
Executive will be entitled to receive gross-up payments in an amount such that,
after payment of such excise tax or similar tax, and all taxes attributable to
such gross-up payments, Executive retains an amount equal to the amount he
would have retained if such excise tax or similar tax had not applied.
i) A "change in control" will be defined as the acquisition of 30% or more
of the Company's Common Stock or voting securities by a person or group
(subject to specified exceptions), certain changes in the majority of the
Company's Board of Directors, certain mergers involving the Company, or the
liquidation, dissolution or sale of all or substantially all of the assets of
the Company.
ii) "Good reason" is defined generally as demotion, reduction in
compensation, unapproved relocation or a material breach of the Employment
Agreement by the Company.
8. EVENTS UPON TERMINATION. The termination of this Agreement pursuant to
Section 6 shall also result in the termination of all rights and benefits of
Executive under this Agreement except for any rights to compensation accrued
under Paragraph 3 prior to the date of termination or rights to expense
reimbursement under Paragraph 4.
9. EXECUTIVE'S REPRESENTATIONS. Executive represents and warrants that
Executive is free to enter into this Agreement and to perform each of the
provisions contained herein. Executive represents and warrants that Executive
is not restricted or prohibited, contractually or otherwise, from entering into
and performing this Agreement, and that Executive's execution and performance
of this Agreement is not a violation or breach of any agreement between
Executive and any other person or entity.
10. GENERAL PROVISIONS.
a) Severable Provisions. The provisions of this Agreement are severable, and if
any one or more provisions may be determined to be judicially unenforceable, in
whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.
b) Assignment. Neither this Agreement nor any of the rights or obligations of
Executive or the Company hereunder shall be assignable.
c) Attorneys' Fees. If any legal action arises under this Agreement or by
reason of any asserted breach of it, the prevailing party shall be entitled to
recover all costs and expenses, including reasonable attorneys' fees, incurred
in enforcing or attempting to enforce any of the terms, covenants or
conditions, including costs incurred prior to commencement of legal action, and
all costs and expenses, including reasonable attorneys' fees, incurred in any
appeal from an action brought to enforce any of the terms, covenants or
conditions.
d) Notices. Any notice to be given to Company under the terms of this
Agreement shall be addressed to Company at the address of Company's principal
place of business, and any notice to be given to Executive shall be addressed
to Executive at her home address last shown on the records of Company, or at
such other address as either party may hereafter designate in writing to the
other. Any notice required or permitted under this Agreement shall be in
writing and shall be deemed effective: (i) upon receipt in the event of
delivery by hand, including delivery made by private delivery or overnight mail
service where either the recipient or delivery agent executes a written receipt
or confirmation of delivery; or (ii) 48 hours after deposited in the United
States mail, registered or certified mail, return receipt requested, postage
prepaid.
e) Waiver. Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, or prevent that party thereafter from enforcing each
and every other provision of this Agreement.
f) Entire Agreement; Amendments. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Executive by Company and contains all of the covenants and
Agreements between the parties with respect to the employment of Executive by
Company. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement or promise not contained in this
Agreement will be effective only if it is in writing signed by the party to be
charged.
g) Titles and Headings. Titles and headings to sections of this Agreement are
for the purpose of reference only and shall in no way limit, define or
otherwise affect the interpretation or construction of such provisions.
h) Construction And Performance . This Agreement shall not be construed against
the party preparing it, but shall be construed as if both parties prepared this
Agreement. As used herein the singular and plural number, the masculine,
feminine and neutral genders include on another.
i) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard for
conflicts of laws statutes. Any suit or action brought to resolve a dispute
arising from the terms of this Agreement shall be brought in a court of
competent jurisdiction in the County of Orange, State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
"COMPANY"
INNOVATIVE TRACKING SOLUTIONS CORPORATION, INC.,
a Delaware corporation
By:
/s/ LEE A. NAMISNIAK
- ------------------------------- DATE: July 15, 1997
Lee A. Namisniak, Chief Financial Officer/Vice President
/s/ LOU WEISS
- ------------------------------- DATE: July 15, 1997
Lou Weiss, Director
"EXECUTIVE"
/s/ DIANNA L. CLEVELAND
- ------------------------------- DATE: July 15, 1997
Dianna L. Cleveland
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into on July 15, 1997,
between INNOVATIVE TRACKING SOLUTIONS CORPORATION, INC., a Delaware corporation
("Company"), and LEE A. NAMISNIAK ("Employee").
R E C I T A L
Company wishes to employ Employee, and Employee agrees to serve, as Vice
President and Chief Financial and Operating Officer of Company, subject to the
terms and conditions set forth below.
AGREEMENT
It is agreed as follows:
1. TERM OF EMPLOYMENT. Company hereby employs Employee, and Employee hereby
accepts employment with Company, for a period of five (5) years terminating
July 15, 2002 ("Employment Period"); provided that this Agreement shall be
automatically renewed for successive five (5) year terms unless either party
elects not to renew this Agreement by delivering written notice of its election
to the other party no later than one hundred twenty (120) days prior to the end
of the current term. Notwithstanding anything in this Paragraph 1 to the
contrary, this Agreement may be terminated at any time in accordance with
Paragraph 7.
2. DUTIES OF EMPLOYEE. Employee shall serve in the capacity as Vice President
and Chief Financial and Operating Officer of Company at Company's office in
Laguna Hills, California, or at such other place as Company may direct provided
that Company shall not direct or cause Employee to perform his services from an
office outside of Orange County, California. Employee's principal duties and
responsibilities shall consist of primary responsibility for all (i) financial
and operations activities; (ii) administrative matters; and (iii) Employee
management and supervision. Employee shall perform such other services and
duties as may from time to time be assigned to Employee by Company's board of
directors provided that such other services and duties are not inconsistent
with any other term of this Agreement. Except during vacation periods or in
accordance with Company's personnel policies covering Employee leaves and
reasonable periods of illness or other incapacitation, Employee shall devote
his services to Company's business and interests in a manner consistent with
Employee's title and office and Company's needs for his services. Employee
shall perform the duties of Employee's office and those assigned to Employee by
the Company's board of directors with fidelity, to the best of Employee's
ability, and in the best interest of Company.
3. COMPENSATION OF EMPLOYEE
a) Base Compensation. At such time that it becomes economically feasible for
the Company with due regard to the financial conditions and prospects of the
business, the Company will pay Employee for services hereunder an annual base
salary of Sixty Thousand Dollars ($60,000). If after one year from the date of
this Agreement, the Company has not been able to begin and maintain said Base
Salary, the Company hereby agrees to award to Employee, Four Thousand (4,000)
shares of restricted common stock in the Company for each week earned during
the first year of this Agreement. Any stock awards shall not be construed as
payment in lieu of Employee's Base Salary.
b) Increases To Base Compensation: Effective one year from the date of this
Agreement. Employee shall receive an increase in annual base salary to One
Hundred Thousand Dollars ($100,000) for the remaining term of this Agreement.
For all subsequent years, Employee shall be entitled to receive an annual
increase in base salary equal to the cost of living adjustment to base salary
based on the percentage of the federal annual increase of the cost of living
which, in addition to any merit increases awarded in the sole discretion of the
Company, create an annual base salary rate. Said annual increase in base
salary shall at no time for the term of this Agreement be less than ten percent
(10%) of Employee's previous year's base salary.
c) Bonus Compensation. As additional compensation for Employee's services
hereunder, Employee shall be paid a cash bonus up to one hundred percent (100%)
of Employee's base salary for each calendar year from January 1, 1999 and
ending December 31, 2002, if the Company earns a Net Profit (as defined below)
of one million dollars ($1,000,000) within that respective calendar year. As
used herein, the term "Net Profit" shall mean the gross revenue generated from
all products and services sold by the Company, less all related costs and
overhead, such costs to include all costs including, but not limited to, pay-
outs to subscribers, insurance, labor (including wages and salaries of
officers, directors, Employees, independent contractors), equipment costs,
technical fees and training costs. Employee may elect to receive said bonus in
common stock based on a valuation of one-half 1/2 of the then current fair
market value for the stock or to receive bonus in any combination of cash and
stock.
d) Stock Options. As additional compensation for Employee's services
hereunder, Employee shall be granted stock options each year to purchase Two
Hundred Thousand (200,000) shares of Common Stock in the Company at $.50 per
share. Options granted each year shall hold a five year expiration.
4. EXPENSE REIMBURSEMENTS. Employee shall be reimbursed for reasonable and
actual out-of-pocket expenses incurred by Employee in performance of Employee's
duties and responsibilities hereunder in accordance with Company's established
personnel policy covering Employee officer expense reimbursements, as such
policy may be amended, revised or otherwise changed from time to time.
Employee shall furnish proper vouchers and expense reports and shall be
reimbursed only for those expenses which shall be reimbursable. The Company
shall reimburse Employee for all reasonable and necessary relocation expenses
in the event the Company chooses to relocate the business outside of Orange
County, California.
5. STOCK INCENTIVES. The Company intends to adopt a "performance-based
compensation" plan, the Compensation Incentive Plan (CIP), that is tax
deductible by the Company without limitation under Section 162(m) of the Code.
The Company Board of Directors believes that attracting and retaining key
employees of high quality is essential to the Company's growth and success. In
addition, the Company Board believes that the long term success of the Company
is enhanced by a competitive and comprehensive compensation program which may
include tailored types of incentives designed to motivate Employees and reward
key employees for outstanding service, including awards that link compensation
to applicable measures of the Company's performance and the creation of
stockholder value. In this regard, stock options and other stock-related awards
will be an important element of compensation for key employees. Such awards
will enable the Company to attract and retain Employees and key employees and
enable such persons to acquire a proprietary interest in the Company and
thereby align their interests with the interests of the Company's stockholders.
In addition, the Company Board has concluded that the Company Board (the
"Compensation Committee") should be given as much flexibility as possible to
provide for annual and long-term incentive awards contingent on performance.
Employee shall be included in all programs of this type adopted by Company.
6. VACATION, SICK LEAVE AND OTHER FRINGE BENEFITS.
a) Employee shall be entitled to a four (4) weeks paid vacation per every
twelve (12) month period of employment hereunder. Employee must use a minimum
of two (2) weeks vacation per every twelve (12) month period. Employee may
choose carryover a maximum of two (2) weeks vacation per every twelve (12)
month period.
b) Employee shall also be entitled to leaves for illness or other
incapacitation as is consistent with Employee's title and the Company's needs
for Employee's services, except as otherwise provided for disability in
Paragraph 6.2.
c) Employee shall be entitled during Employee's employment hereunder to share
or participate in such medical insurance programs or other "fringe" benefit
plans or programs as shall be made available to Employee officers employed by
Company generally, in accordance with Company's established personnel policies,
if any, or as established, amended, revised or otherwise changed from time to
time, covering Employee officer Employee benefits.
7. TERMINATION.
a) Termination by Company for Cause. Company may terminate this Agreement and
Employee's employment hereunder for Cause (as defined herein) any time
effective upon 15 days written notice to Employee. As used herein, the term
"Cause" shall mean:
I. Habitual neglect in the performance of Employee's material duties as set
forth in Paragraph 2 which continues uncorrected for a period of thirty (30)
days after written notice thereof by Company to Employee; or
II. Gross negligence involving misfeasance or nonfeasance by Employee in
the
performance of Employee's material duties as set forth in Paragraph 2 which
continues uncorrected for a period of thirty (30) days after written notice
thereof by Company to Employee.
b) Termination Upon Death or Disability. This Agreement and Employee's
employment hereunder shall terminate upon Employee's death or Disability (as
defined herein). For this purpose, "Disability" means incapacity, whether by
reason of physical or mental illness or disability, which prevents Employee
from substantially performing Employee's material duties as set forth in
Section 2 for six (6) months, or for shorter periods aggregating six (6) months
in any twelve (12) successive calendar months. Upon termination for death, and
unless Company shall have in force a disability insurance policy providing for
benefits in an amount at least equal thereto, upon termination for Disability,
Company shall continue to pay the base compensation payments pursuant to
Paragraph 3.1 to the surviving spouse of Employee (or if there is none to
Employee's estate) in the case of death and to Employee or Employee's court
appointed conservator in the case of Disability until the date three (3) months
thereafter. Termination for death shall become effective upon the occurrence of
such event and termination for Disability shall become effective upon written
notice by Company to Employee.
c) Other Termination. In the event the Company terminates Employee's
employment without Cause, or Employee terminates Employee's employment for Good
Reason (as such terms are defined below), Employee will receive severance
benefits. If termination is prior to a change in control of the Company (as
defined below), the benefits will include continuation of salary, bonus and
other benefits, and continued vesting of options and restricted stock, for five
(5) years following termination. If termination is within five years after a
change in control, the benefits will include a lump sum payment equal to five
times Employee annual salary and bonus, immediate vesting of all options and
restricted stock, and continuation of other benefits for five years following
termination. Additionally, if any payment or distribution to Employee would be
subject to any "golden parachute payment" excise tax or similar tax, then
Employee will be entitled to receive gross-up payments in an amount such that,
after payment of such excise tax or similar tax, and all taxes attributable to
such gross-up payments, Employee retains an amount equal to the amount he would
have retained if such excise tax or similar tax had not applied.
I. A "change in control" will be defined as the acquisition of 30% or more
of the Company's Common Stock or voting securities by a person or group
(subject to specified exceptions), certain changes in the majority of the
Company's Board of Directors, certain mergers involving the Company, or the
liquidation, dissolution or sale of all or substantially all of the assets of
the Company.
II. "Good reason" is defined generally as demotion, reduction in
compensation, unapproved relocation or a material breach of the Employment
Agreement by the Company.
8. EVENTS UPON TERMINATION. The termination of this Agreement pursuant to
Section 6 shall also result in the termination of all rights and benefits of
Employee under this Agreement except for any rights to compensation accrued
under Paragraph 3 prior to the date of termination or rights to expense
reimbursement under Paragraph 4.
9. EMPLOYEE'S REPRESENTATIONS. Employee represents and warrants that Employee
is free to enter into this Agreement and to perform each of the provisions
contained herein. Employee represents and warrants that Employee is not
restricted or prohibited, contractually or otherwise, from entering into and
performing this Agreement, and that Employee's execution and performance of
this Agreement is not a violation or breach of any agreement between Employee
and any other person or entity.
10. GENERAL PROVISIONS.
a) Severable Provisions. The provisions of this Agreement are severable, and if
any one or more provisions may be determined to be judicially unenforceable, in
whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.
b) Assignment. Neither this Agreement nor any of the rights or obligations of
Employee or the Company hereunder shall be assignable.
c) Attorneys' Fees. If any legal action arises under this Agreement or by
reason of any asserted breach of it, the prevailing party shall be entitled to
recover all costs and expenses, including reasonable attorneys' fees, incurred
in enforcing or attempting to enforce any of the terms, covenants or
conditions, including costs incurred prior to commencement of legal action, and
all costs and expenses, including reasonable attorneys' fees, incurred in any
appeal from an action brought to enforce any of the terms, covenants or
conditions.
d) Notices. Any notice to be given to Company under the terms of this
Agreement shall be addressed to Company at the address of Company's principal
place of business, and any notice to be given to Employee shall be addressed to
Employee at his home address last shown on the records of Company, or at such
other address as either party may hereafter designate in writing to the other.
Any notice required or permitted under this Agreement shall be in writing and
shall be deemed effective: (i) upon receipt in the event of delivery by hand,
including delivery made by private delivery or overnight mail service where
either the recipient or delivery agent executes a written receipt or
confirmation of delivery; or (ii) 48 hours after deposited in the United States
mail, registered or certified mail, return receipt requested, postage prepaid.
e) Waiver. Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, or prevent that party thereafter from enforcing each
and every other provision of this Agreement.
f) Entire Agreement; Amendments. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by Company and contains all of the covenants and
Agreements between the parties with respect to the employment of Employee by
Company. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement or promise not contained in this
Agreement will be effective only if it is in writing signed by the party to be
charged.
g) Titles and Headings. Titles and headings to sections of this Agreement are
for the purpose of reference only and shall in no way limit, define or
otherwise affect the interpretation or construction of such provisions.
h) Construction And Performance . This Agreement shall not be construed against
the party preparing it, but shall be construed as if both parties prepared this
Agreement. As used herein the singular and plural number, the masculine,
feminine and neutral genders include on another.
i) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard for
conflicts of laws statutes. Any suit or action brought to resolve a dispute
arising from the terms of this Agreement shall be brought in a court of
competent jurisdiction in the County of Orange, State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
"COMPANY"
INNOVATIVE TRACKING SOLUTIONS CORPORATION, INC.,
a Delaware corporation
By:
/s/ DIANNA L. CLEVELAND
- ------------------------------- DATE: July 15, 1997
Dianna L. Cleveland, President/Chief Employee Officer
/s/ LOU WEISS
- ------------------------------- DATE: July 15, 1997
Lou Weiss, Director
"EMPLOYEE"
/s/ LEE A. NAMISNIAK
- ------------------------------- DATE: July 15, 1997
Lee A. Namisniak
Exhibit 10.3
LICENSE AGREEMENT
THIS AGREEMENT, effective on August 9, 1997, is entered into by Dianna L.
Cleveland and Lee A. Namisniak, having their principal place of residence at
22592 Ledana, Mission Viejo CA, (hereinafter called "LICENSORS"), and
INNOVATIVE TRACKING SOLUTIONS CORPORATION, D.B.A., InTracks Corporation, a
Delaware corporation, having its principal place of business at 23232 Peralta
Drive, Suite 209, Laguna Hills, CA (hereinafter called LICENSEE).
1.0 Definitions
1.1 EFFECTIVE DATE shall be August 9, 1997.
1.2 LICENSED TERRITORY means:
(a) the United States of America, its territories and possessions, and
(b) International Markets
1.3 LICENSED PRODUCTS means products embodying or made in accordance with one
or more claims of the LICENSED PATENTS.
1.4 LICENSED PATENTS AND TRADEMARKS means only the patents enumerated in
Schedule A and reissues and any extensions, continuations or continuations-in-
part; any corresponding FOREIGN PATENTS thereof; and trademarks enumerated in
Schedule B (Schedules A & B are attached hereto and incorporated by reference
herein.)
1.5 FOREIGN PATENTS means patents in foreign countries within the LICENSED
TERRITORY which correspond to the LICENSED PATENTS herein.
1.6 IMPROVEMENT means any modification to a LICENSED PATENT which, if
unlicensed, would infringe one or more claims of LICENSED PATENTS AND
TRADEMARKS. IMPROVEMENT also means a further modification which would, if
unlicensed, infringe a prior hypothetically patented IMPROVEMENT.
1.7 ROYALTY PERCENTAGE means the royalty percentage as outlined in Schedule A
and Schedule B.
1.8 GRANTED RIGHTS means rights:
(a including only the right to make, design, modify, improve, use, offer
for sale, sell, and import; and excluding, because this is a personal contract,
the right to sub-license, assign, or have made by anyone other than LICENSEE
without LICENSOR'S prior written permission; and
(b) excluding any right under any other patent not explicitly enumerated
under the term LICENSED PATENTS AND TRADEMARKS. 1.9 LICENSE TERM means the
sooner of:
(a) the life of the LICENSED PATENTS, or in the case of the LICENSED
TRADEMARKS, the life of the LICENSED PRODUCTS manufactured or marketed by
LICENSEE; or the date of termination of this agreement under the provisions of
this agreement
2.0 Exclusive License Grants
2.1 LICENSORS hereby grants to the LICENSEE an exclusive license to exercise
the GRANTED RIGHTS for the LICENSED PRODUCTS to the extent of the LICENSED
TERRITORY for the LICENSE TERM.
3.0 Improvements by Licensee
3.1 LICENSEE hereby assigns to LICENSORS any further improvement to the
LICENSED PATENTS made, invented, or acquired by LICENSEE during the term of
this
Agreement. LICENSEE agrees to disclose promptly to LICENSORS any such
improvements, and to cooperate with LICENSORS in LICENSOR'S obtaining legal
patent for any such improvement which in the opinion of LICENSORS shall be
patentable. LICENSEE shall have the right to use such improvements without an
increase in ROYALTY PERCENTAGE during the term of this Agreement. In the event
of termination of this Agreement, LICENSEE'S rights in such improvement shall
terminate.
3.2 LICENSEE agrees that it will obtain from its officers, employees, agents,
contractors, dealers and representatives agreements thereby unconditionally and
perpetually assigning to LICENSORS all rights to IMPROVEMENTS to the LICENSED
PATENTS made by such persons, and agreeing to disclose such IMPROVEMENTS to
LICENSORS.
3.3 LICENSEE agrees to bear all costs including attorneys fees and filing fees
to acquire in LICENSORS' name all potential patent and trademarks rights for
the
LICENSED TERRITORY for IMPROVEMENTS derived from the LICENSED PRODUCTS,
LICENSED
PATENTS and LICENSED TRADEMARKS.
4.0 Patent Marking
4.1 LICENSEE agrees to place in a conspicuous location on each LICENSED
PRODUCT
sold by it a patent notice, as required by the applicable statutes relating to
the marking of patented articles.
5.0 LUMP SUM Advance of Future Royalty
5.1 In consideration for the rights granted by LICENSORS under this Agreement,
LICENSEE hereby agrees to pay to LICENSORS the LUMP SUM of Seventy Five
Thousand
Dollars ($75,000) in United States currency at such time that it becomes
economically feasible for LICENSEE with due regard to the financial conditions
and prospects of the business of the LICENSEE. LUMP SUM payment shall be
considered to be an advance of future royalties as outlined in section 6.0.
5.2 If LUMP SUM payment has not been paid to LICENSORS within eighteen (18)
months of the date of this Agreement, LICENSEE hereby agrees to award to
LICENSORS, Two Hundred Fifty Thousand (250,000) shares of the LICENSEE'S
restricted common stock (hereinafter referred to as Stock Royalty Payment).
Stock Royalty Payment shall not be construed as payment in lieu of LUMP SUM
currency payment. If LUMP SUM payment is not made within the time frame
specified herein and as a result LICENSEE pays Stock Royalty Payment to
LICENSOR, LICENSEE hereby agrees to still pay LUMP SUM currency payment as soon
as it becomes economically feasible for LICENSEE.
6.0 Royalty Payments
6.1 LICENSEE agrees to pay to LICENSORS by the PAYMENT DUE DATE each quarter,
royalties equaling the ROYALTY BASE multiplied by the ROYALTY PERCENTAGE.
6.2 The PAYMENT DUE DATE shall be thirty (30) days after the last day of each
quarter.
6.3 The ROYALTY BASE is the dollar revenue derived from LICENSED PRODUCTS
MANUFACTURED AND SOLD in a quarter.
6.4 LICENSED PRODUCTS shall be deemed to be MANUFACTURED AND SOLD for the
purposes of computing royalties when billed out, or when shipped, or when paid
for; whichever shall occur first.
6.5 The TOTAL ROYALTY Percentage shall equal those percentages shown in
Schedule A (or as shown in a revised schedule reached by agreement or
arbitration) for all LICENSED PATENTS and those percentages shown in Schedule B
for all LICENSED TRADEMARKS. The obligation to pay royalties shall terminate as
to each of the LICENSED PATENTS upon its expiration date and as to the end of
the LICENSED TRADEMARKS upon the cessation of the manufacture or marketing of
the LICENSED PRODUCTS AND TRADEMARKS. All sales or orders taken, achieved or
accrued prior to each respective expiration date shall still be subject to
payment under this Agreement even if the terms of Paragraph 6.4 above are not
satisfied until after a respective expiration date occurs.
6.6 All foreign taxes, assessments or other charges made in respect to this
Agreement or to royalties payable hereunder shall be borne and paid by
LICENSEE.
Royalties shall be paid to LICENSORS free and clear of all foreign taxes.
7.0 Interest Due on Overdue Payments
7.1 LICENSEE hereby agrees to pay INTEREST to LICENSORS upon royalty payments
that are OVERDUE at the PENALTY RATE, calculated from the PAYMENT DUE DATE to
the date of payment.
7.2 Royalty payment shall be deemed OVERDUE if it is not paid within 30 days
of
the PAYMENT DUE DATE.
7.3 PENALTY RATE means one and a half percent (1.5%) per month.
8.0 Books & Records
8.1 LICENSEE agrees to keep accurate and complete records and books of account
conforming to Generally Accepted Accounting Principles (GAAP), showing
sufficient information to enable the calculation of royalties.
8.2 LICENSEE agrees to maintain, at a minimum, separate Sales Accountings
showing the date, quantity of units, and description of each LICENSED PRODUCT;
(a) billed out,
(b) shipped, or
(c) paid for.
8.3 LICENSEE agrees to make quarterly audited reports available to LICENSORS
showing the calculation of royalties accrued for that quarter, and including a
summary of the quantity of LICENSED PRODUCTS manufactured and sold that
quarter.
Payment will accompany the report.
8.4 All quarterly reports shall be subject to independent verification, at the
option and expense of LICENSORS by an independent certified public accountant
selected by LICENSORS, to whom all books and records relating to LICENSED
PRODUCTS and reasonably necessary to verify said reports shall be accessible at
reasonable times and for reasonable periods to verify the reports and payments
required by this Agreement.
(a) LICENSORS agree that no more than one audit shall be made during each
calendar year.
(b) The accountant shall not disclose to LICENSORS the names of LICENSEE'S
customers.
9.0 Royalty and Audit Information to be Maintained Confidential
9.1 LICENSORS agree to hold strictly confidential the information concerning
royalty payments and reports and the information learned in the course of any
audit hereunder, except:
(a) when it is necessary for LICENSORS to reveal such information in order
to enforce its rights under this Agreement, or
(b) when required by law for tax purposes or otherwise, to reveal such
information.
10.0 Representations and Warranties, Limitations
10.1 Nothing in this agreement shall be construed as:
(a) A warranty or representation by LICENSORS as to the validity or scope
of
any LICENSED PATENT; or
(b) A warranty or representation that anything made, used, sold, or
otherwise disposed of under any license granted in this agreement is or will be
free from infringement of patents of third parties, or
(c) A requirement that LICENSORS shall file any patent application, secure
any patent, or maintain any patent in force.
11.0 Foreign Governmental Approval of Agreement
11.1 This Agreement shall not become effective in foreign countries until
LICENSEE furnishes LICENSORS with (1) written evidence that the Foreign
Government approves this Agreement and the payment of royalties in United
States
currency as provided herein, and (2) a written opinion satisfactory to
LICENSORS
from an independent attorney and counselor at law licensed to practice in the
Foreign Country to the effect that no provision of this Agreement contravenes
any law of the Foreign Country.
12.0 Non-Competition/Exclusivity
12.1 LICENSEE and LICENSORS agree that this Agreement is intended to create a
mutually exclusive relationship between the parties. Thus, LICENSEE agrees
that
it will not manufacture, market, sell or distribute products similar to those
of
LICENSOR'S or derived from LICENSEE'S exposure to the LICENSED PRODUCTS, but
not
created by LICENSORS. LICENSEE further agrees that it will not enter into any
agreement, discussions, correspondence or other communications with any other
person or entity who is attempting to compete with or circumvent the patents,
trademarks, copyrights and other intellectual property rights of LICENSORS for
the term of this Agreement. LICENSORS agree not to create, design, market,
sell, manufacture or distribute products of the type addressed under this
Agreement to any person or entity except LICENSEE for the term of this
Agreement.
13.0 Termination
13.1 This Agreement shall remain in force for the duration of the LICENSE TERM
regardless of any "change in control" of the LICENSEE'S business so long as the
LICENSEE continues to manufacture or market the LICENSED PRODUCTS.
13.2 LICENSOR hereby reserves the right to terminate this Agreement upon
ninety
(90) days notice if the ROYALTY BASE multiplied by the ROYALTY RATE for any
given calendar year, beginning in the year 2000 and continuing for the duration
of the LICENSE TERM fails to exceed one million dollars ($1,000,000), or if
LICENSEE fails to devote sufficient and reasonable efforts and resources to the
manufacture and marketing of LICENSED PRODUCTS covered by this Agreement
including, but not limited to, expending fifteen percent (15%) of gross sales
of
the LICENSED PRODUCTS for costs of sales of the LICENSED PRODUCTS in each and
every calendar year.
13.3 This Agreement shall be terminated automatically in any one or more of
the
following circumstances:
(a) in the event that LICENSEE is ordered or adjudged bankrupt or is placed
in the hands or a receiver or otherwise enters into any scheme or composition
with its creditors or makes an unauthorized assignment for the benefit of
creditors; or
(b) in the event that the assets of LICENSEE are seized or attached, in
conjunction with any action against it by any third party; or
(c) in the event that LICENSEE is dissolved, or that a sale of all or
substantially all of the assets of LICENSEE is made, or
(d) in the event that this Agreement is attempted to be assigned or
sublicensed by LICENSEE without the prior written consent of LICENSOR.
(e) in the event false or inaccurate accountings of manufacturing and sales
as required of LICENSEE under this Agreement are submitted to LICENSORS;
(f) in the event LICENSEE fails to make a required payment under this
Agreement when due;
(g) in the event either party violates the non-competition requirements of
this Agreement; or
(h) The violation of any other provision or requirement of this Agreement
that is not corrected within five (5) days after notice of the violation is
given.
13.4 In the event of termination, any rights and claims of the parties which
may
have accrued prior to termination hereof shall survive such termination.
14.0 Release
14.1 LICENSORS hereby release LICENSEE and its customers from all claims
arising out of infringement of any LICENSED PATENT by the LICENSEE'S
manufacture, use, or sale of LICENSED PRODUCTS prior to the EFFECTIVE DATE of
this agreement, such release being conditioned upon the payment of the LUMP SUM
under this Agreement.
15.0 Enforcement of Licensed Rights;
15.1 LITIGATION RIGHTS AND OBLIGATIONS: At LICENSEE'S own expense, LICENSEE
shall take all actions necessary to preserve and protect all rights conferred
on
LICENSEE under this Agreement, including exclusive use of the patents and other
intellectual property rights of LICENSORS, including instituting and
maintaining
a lawsuit against any infringer as prudent. LICENSORS agree to cooperate with
and assist LICENSEE in the prosecution of such claims. Any sums recovered in
the prosecution of such claims shall go first to reimburse LICENSEE and
LICENSORS for all direct out-of-pocket expenses of every kind and character,
including reasonable attorney's fees, expert witness fees, travel costs, court
costs and the like incurred in the prosecution of any suit and for the
reasonable loss of profit for LICENSEE and LICENSORS. If after such
reimbursement any funds shall remain from said recovery, such fund shall be
split equally.
16.0 Choice of Law and Forum
16.1 This Agreement shall be governed in all respects by the laws of the State
of California without regard to any conflicts of laws statutes and all actions
to resolve disputes arising from the terms of this Agreement whether by suit or
arbitration shall be brought in the County of Orange, State of California
unless otherwise agreed to in writing by both parties.
17.0 Arbitration
17.1 Any controversy or claim arising under this Agreement which involves a
question of infringement or any of the LICENSED PATENTS shall be settled by
arbitration in accordance with the Patent Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof.
18.0 Integration
18.1 This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter contained herein and merges all prior
discussions between them and neither party shall be bound by any definition,
condition, warranty, or representation other than as expressly stated in this
Agreement or as subsequently set forth in writing signed by the party to be
bound thereby.
19.0 Modification
19.1 This Agreement may be amended, modified, or revoked in whole or in part,
but only by a written instrument which refers to this Agreement and expressly
states that it constitutes an amendment, modification, or revocation hereof, as
the case may be, and only if such written instrument has been duly signed by a
duly authorized person of all parties.
20.0 Binding
20.1 This Agreement shall be binding upon the inure to the benefit of the
parties and their successors and assigns.
21.0 Attorneys' Fees in Event of Dispute
21.1 If any arbitration, legal action, or other proceeding is brought for the
enforcement of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs
incurred
in that action or proceeding, in addition to any other relief to which it may
be
entitled.
22.0 Construction and Performance
22.1 This Agreement shall not be construed against the party preparing it, but
shall be construed as if both parties prepared this Agreement. As used herein
the singular and plural number, the masculine, feminine and neutral genders
include on another.
23.0 Waiver
23.1 No waiver of any of the provisions of this Agreement shall be deemed, or
shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
24.0 Counterparts
24.1 This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original Agreement, and all of which shall constitute one
Agreement.
25.0 Captions
25.1 The various captions are inserted for convenience of reference only and
do
not affect the meaning or interpretation of this Agreement or any section
thereof.
26.0 Invalidity of Provisions
26.1 If any provision of this Agreement as applied to either party or to any
circumstance, shall be adjudicated by a court to be void and unenforceable, the
same shall in no way affect: any other provision in this Agreement; the
application of such provision in any other circumstance; or the validity or
enforceability of the Agreement as a whole.
LICENSOR(S)
/S/ DIANNA CLEVELAND
- --------------------------------- DATE: August 9, 1997
Dianna Cleveland
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: August 9, 1997
Lee A. Namisniak
LICENSEE
CORPORATION,
Innovative Tracking Solutions Corporation
By:
/S/ DIANNA CLEVELAND
- --------------------------------- DATE: August 9, 1997
Dianna Cleveland, President/CEO
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: August 9, 1997
Lee A. Namisniak, Vice President/CFO/COO
/S/ LOU WEISS
- --------------------------------- DATE: August 9, 1997
Lou Weiss, Director
SCHEDULE A - PATENTS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Private Practice Vibration Reminder Disk 8%
U.S. Serial No. Filing or Issue
Type of Patent or Patent No. Date of Patent
Utility Patent 08/907,440 08/08/97
"Private Alarm System
For Muscle Flexing Regimen"
Utility Patent 4,801,921 01/31/89
Assignment to LICENSOR Assignment Pending
SCHEDULE B - TRADEMARKS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Private Practice(tm) Vibration Reminder Disk 1%
U.S. Serial No. Filing or Issue
Name of Trademark or Trademark No. Date of Trademark
"Private Practice" Pending
Exhibit 10.4
Addendum to Licensing Agreement
It is hereby agreed between DIANNA L. CLEVELAND and LEE A. NAMISNIAK as
"LICENSORS" AND INNOVATIVE TRACKING SOLUTIONS CORPORATION, d.b.a., InTracks
Corporation, a Delaware corporation, as "LICENSEE" that the following patents
and trademarks shall be as of September 20, 1998 considered added and
incorporated into Schedules A & B of the Licensing Agreement executed August 9,
1997 between the parties and therefore subject to all the terms of that
Licensing Agreement.
SUPPLEMENT TO SCHEDULE A - PATENTS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Private Practice Vibration Reminder Disk 8%
U.S. Serial No. Filing or Issue
Type of Patent or Patent No. Date of Patent
Utility Patent #4,801,921 1/31/89
Assignment to LICENSOR
Granted and Recorded
on Reel 8773, Frame 0149 10/30/97
Utility Patent No. 08/907,440 08/8/97
Notice of Allowance issued: 04/28/98
Utility Patent No. 09/153,984 09/16/98
SUPPLEMENT TO SCHEDULE B - TRADEMARKS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Private Practice Vibration Reminder Disk 1%
U.S. Serial No. Filing or Issue
Name of Trademark or Trademark No. Date of Trademark
"Private Practice" Serial No.75347416 08/26/97
"Pouch-Patch" Serial No 75437265. 02/19/98
LICENSOR(S)
/S/ DIANNA CLEVELAND
- --------------------------------- DATE: September 20, 1998
Dianna L. Cleveland
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: September 20, 1998
Lee A. Namisniak
LICENSEE CORPORATION,
Innovative Tracking Solutions Corporation
By:
/S/ DIANNA CLEVELAND
- --------------------------------- DATE: September 20, 1998
Dianna Cleveland, President/CEO
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: September 20, 1998
Lee A. Namisniak, Vice President/CFO/COO
Exhibit 10.5
LICENSE AGREEMENT
THIS AGREEMENT, effective on February 1, 1997, is entered into by Lee A.
Namisniak and Dianna Cleveland Namisniak, having their principal place of
residence at 22592 Ledana, Mission Viejo CA, (hereinafter called "LICENSORS"),
and INNOVATIVE TRACKING SOLUTIONS CORPORATION, D.B.A., InTracks Corporation, a
Delaware corporation, having its principal place of business at 23232 Peralta
Drive, Suite 209, Laguna Hills, CA (hereinafter called LICENSEE).
1.0 Definitions
1.1 EFFECTIVE DATE shall be February 1, 1997.
1.2 LICENSED TERRITORY means:
(a) the United States of America, its territories and possessions, and
(b) International Markets
1.3 LICENSED PRODUCTS means products embodying or made in accordance with one
or more claims of the LICENSED PATENTS.
1.4 LICENSED PATENTS AND TRADEMARKS means only the patents enumerated in
Schedule A and reissues and any extensions, continuations or continuations-in-
part; any corresponding FOREIGN PATENTS thereof; and trademarks enumerated in
Schedule B (Schedules A & B are attached hereto and incorporated by reference
herein.)
1.5 FOREIGN PATENTS means patents in foreign countries within the LICENSED
TERRITORY which correspond to the LICENSED PATENTS herein.
1.6 IMPROVEMENT means any modification to a LICENSED PATENT which, if
unlicensed, would infringe one or more claims of LICENSED PATENTS AND
TRADEMARKS. IMPROVEMENT also means a further modification which would, if
unlicensed, infringe a prior hypothetically patented IMPROVEMENT.
1.7 ROYALTY PERCENTAGE means the royalty percentage as outlined in Schedule A
and Schedule B.
1.8 GRANTED RIGHTS means rights:
(a including only the right to make, design, modify, improve, use, offer
for sale, sell, and import; and excluding, because this is a personal contract,
the right to sub-license, assign, or have made by anyone other than LICENSEE
without LICENSOR'S prior written permission; and
(b) excluding any right under any other patent not explicitly enumerated
under the term LICENSED PATENTS AND TRADEMARKS. 1.9 LICENSE TERM means the
sooner of:
(a) the life of the LICENSED PATENTS, or in the case of the LICENSED
TRADEMARKS, the life of the LICENSED PRODUCTS manufactured or marketed by
LICENSEE; or the date of termination of this agreement under the provisions of
this agreement
2.0 Exclusive License Grants
2.1 LICENSORS hereby grants to the LICENSEE an exclusive license to exercise
the GRANTED RIGHTS for the LICENSED PRODUCTS to the extent of the LICENSED
TERRITORY for the LICENSE TERM.
3.0 Improvements by Licensee
3.1 LICENSEE hereby assigns to LICENSORS any further improvement to the
LICENSED PATENTS made, invented, or acquired by LICENSEE during the term of
this Agreement. LICENSEE agrees to disclose promptly to LICENSORS any such
improvements, and to cooperate with LICENSORS in LICENSOR'S obtaining legal
patent for any such improvement which in the opinion of LICENSORS shall be
patentable. LICENSEE shall have the right to use such improvements without an
increase in ROYALTY PERCENTAGE during the term of this Agreement. In the event
of termination of this Agreement, LICENSEE'S rights in such improvement shall
terminate.
3.2 LICENSEE agrees that it will obtain from its officers, employees, agents,
contractors, dealers and representatives agreements thereby unconditionally and
perpetually assigning to LICENSORS all rights to IMPROVEMENTS to the LICENSED
PATENTS made by such persons, and agreeing to disclose such IMPROVEMENTS to
LICENSORS.
3.3 LICENSEE agrees to bear all costs including attorneys fees and filing fees
to acquire in LICENSORS' name all potential patent and trademarks rights for
the LICENSED TERRITORY for IMPROVEMENTS derived from the LICENSED PRODUCTS,
LICENSED PATENTS and LICENSED TRADEMARKS.
4.0 Patent Marking
4.1 LICENSEE agrees to place in a conspicuous location on each LICENSED
PRODUCT sold by it a patent notice, as required by the applicable statutes
relating to the marking of patented articles.
5.0 LUMP SUM Advance of Future Royalty
5.1 In consideration for the rights granted by LICENSORS under this Agreement,
LICENSEE hereby agrees to pay to LICENSORS the LUMP SUM of Seventy Five
Thousand Dollars ($75,000) in United States currency at such time that it
becomes economically feasible for LICENSEE with due regard to the financial
conditions and prospects of the business of the LICENSEE. LUMP SUM payment
shall be considered to be an advance of future royalties as outlined in section
5.2 If LUMP SUM payment has not been paid to LICENSORS within eighteen (18)
months of the date of this Agreement, LICENSEE hereby agrees to award to
LICENSORS, Two Hundred Fifty Thousand (250,000) shares of the LICENSEE'S
restricted common stock (hereinafter referred to as Stock Royalty Payment).
Stock Royalty Payment shall not be construed as payment in lieu of LUMP SUM
currency payment. If LUMP SUM payment is not made within the time frame
specified herein and as a result LICENSEE pays Stock Royalty Payment to
LICENSOR, LICENSEE hereby agrees to still pay LUMP SUM currency payment as soon
as it becomes economically feasible for LICENSEE.
6.0 Royalty Payments
6.1 LICENSEE agrees to pay to LICENSORS by the PAYMENT DUE DATE each quarter,
royalties equaling the ROYALTY BASE multiplied by the ROYALTY PERCENTAGE.
6.2 The PAYMENT DUE DATE shall be thirty (30) days after the last day of each
quarter.
6.3 The ROYALTY BASE is the dollar revenue derived from LICENSED PRODUCTS
MANUFACTURED AND SOLD in a quarter.
6.4 LICENSED PRODUCTS shall be deemed to be MANUFACTURED AND SOLD for the
purposes of computing royalties when billed out, or when shipped, or when paid
for; whichever shall occur first.
6.5 The TOTAL ROYALTY Percentage shall equal those percentages shown in
Schedule A (or as shown in a revised schedule reached by agreement or
arbitration) for all LICENSED PATENTS and those percentages shown in Schedule B
for all LICENSED TRADEMARKS. The obligation to pay royalties shall terminate as
to each of the LICENSED PATENTS upon its expiration date and as to the end of
the LICENSED TRADEMARKS upon the cessation of the manufacture or marketing of
the LICENSED PRODUCTS AND TRADEMARKS. All sales or orders taken, achieved or
accrued prior to each respective expiration date shall still be subject to
payment under this Agreement even if the terms of Paragraph 6.4 above are not
satisfied until after a respective expiration date occurs.
6.6 All foreign taxes, assessments or other charges made in respect to this
Agreement or to royalties payable hereunder shall be borne and paid by
LICENSEE. Royalties shall be paid to LICENSORS free and clear of all foreign
taxes.
7.0 Interest Due on Overdue Payments
7.1 LICENSEE hereby agrees to pay INTEREST to LICENSORS upon royalty payments
that are OVERDUE at the PENALTY RATE, calculated from the PAYMENT DUE DATE to
the date of payment.
7.2 Royalty payment shall be deemed OVERDUE if it is not paid within 30 days
of the PAYMENT DUE DATE.
7.3 PENALTY RATE means one and a half percent (1.5%) per month.
8.0 Books & Records
8.1 LICENSEE agrees to keep accurate and complete records and books of account
conforming to Generally Accepted Accounting Principles (GAAP), showing
sufficient information to enable the calculation of royalties.
8.2 LICENSEE agrees to maintain, at a minimum, separate Sales Accountings
showing the date, quantity of units, and description of each LICENSED PRODUCT;
(a) billed out,
(b) shipped, or
(c) paid for.
8.3 LICENSEE agrees to make quarterly audited reports available to LICENSORS
showing the calculation of royalties accrued for that quarter, and including a
summary of the quantity of LICENSED PRODUCTS manufactured and sold that
quarter. Payment will accompany the report.
8.4 All quarterly reports shall be subject to independent verification, at the
option and expense of LICENSORS by an independent certified public accountant
selected by LICENSORS, to whom all books and records relating to LICENSED
PRODUCTS and reasonably necessary to verify said reports shall be accessible at
reasonable times and for reasonable periods to verify the reports and payments
required by this Agreement.
(a) LICENSORS agree that no more than one audit shall be made during each
calendar year.
(b) The accountant shall not disclose to LICENSORS the names of LICENSEE'S
customers.
9.0 Royalty and Audit Information to be Maintained Confidential
9.1 LICENSORS agree to hold strictly confidential the information concerning
royalty payments and reports and the information learned in the course of any
audit hereunder, except:
(a) when it is necessary for LICENSORS to reveal such information in order
to enforce its rights under this Agreement, or
(b) when required by law for tax purposes or otherwise, to reveal such
information.
10.0 Representations and Warranties, Limitations
10.1 Nothing in this agreement shall be construed as:
(a) A warranty or representation by LICENSORS as to the validity or scope
of any LICENSED PATENT; or
(b) A warranty or representation that anything made, used, sold, or
otherwise disposed of under any license granted in this agreement is or will be
free from infringement of patents of third parties, or
(c) A requirement that LICENSORS shall file any patent application, secure
any patent, or maintain any patent in force.
11.0 Foreign Governmental Approval of Agreement
11.1 This Agreement shall not become effective in foreign countries until
LICENSEE furnishes LICENSORS with (1) written evidence that the Foreign
Government approves this Agreement and the payment of royalties in United
States currency as provided herein, and (2) a written opinion satisfactory to
LICENSORS from an independent attorney and counselor at law licensed to practice
in the Foreign Country to the effect that no provision of this Agreement
contravenes any law of the Foreign Country.
12.0 Non-Competition/Exclusivity
12.1 LICENSEE and LICENSORS agree that this Agreement is intended to create a
mutually exclusive relationship between the parties. Thus, LICENSEE agrees
that it will not manufacture, market, sell or distribute products similar to
those of LICENSOR'S or derived from LICENSEE'S exposure to the LICENSED
PRODUCTS, but not created by LICENSORS. LICENSEE further agrees that it will
not enter into any agreement, discussions, correspondence or other
communications with any other person or entity who is attempting to compete
with or circumvent the patents, trademarks, copyrights and other intellectual
property rights of LICENSORS for the term of this Agreement. LICENSORS agree
not to create, design, market, sell, manufacture or distribute products of the
type addressed under this Agreement to any person or entity except LICENSEE for
the term of this Agreement.
13.0 Termination
13.1 This Agreement shall remain in force for the duration of the LICENSE TERM
regardless of any "change in control" of the LICENSEE'S business so long as the
LICENSEE continues to manufacture or market the LICENSED PRODUCTS.
13.2 LICENSOR hereby reserves the right to terminate this Agreement upon
ninety (90) days notice if the ROYALTY BASE multiplied by the ROYALTY RATE for
any given calendar year, beginning in the year 2000 and continuing for the
duration of the LICENSE TERM fails to exceed one million dollars ($1,000,000),
or if LICENSEE fails to devote sufficient and reasonable efforts and resources
to the manufacture and marketing of LICENSED PRODUCTS covered by this Agreement
including, but not limited to, expending fifteen percent (15%) of gross sales
of the LICENSED PRODUCTS for costs of sales of the LICENSED PRODUCTS in each
and every calendar year.
13.3 This Agreement shall be terminated automatically in any one or more of
the following circumstances:
(a) in the event that LICENSEE is ordered or adjudged bankrupt or is placed
in the hands or a receiver or otherwise enters into any scheme or composition
with its creditors or makes an unauthorized assignment for the benefit of
creditors; or
(b) in the event that the assets of LICENSEE are seized or attached, in
conjunction with any action against it by any third party; or
(c) in the event that LICENSEE is dissolved, or that a sale of all or
substantially all of the assets of LICENSEE is made, or
(d) in the event that this Agreement is attempted to be assigned or
sublicensed by LICENSEE without the prior written consent of LICENSOR.
(e) in the event false or inaccurate accountings of manufacturing and sales
as required of LICENSEE under this Agreement are submitted to LICENSORS;
(f) in the event LICENSEE fails to make a required payment under this
Agreement when due;
(g) in the event either party violates the non-competition requirements of
this Agreement; or
(h) The violation of any other provision or requirement of this Agreement
that is not corrected within five (5) days after notice of the violation is
given.
13.4 In the event of termination, any rights and claims of the parties which
may have accrued prior to termination hereof shall survive such termination.
14.0 Release
14.1 LICENSORS hereby release LICENSEE and its customers from all claims
arising out of infringement of any LICENSED PATENT by the LICENSEE'S
manufacture, use, or sale of LICENSED PRODUCTS prior to the EFFECTIVE DATE of
this agreement, such release being conditioned upon the payment of the LUMP SUM
under this Agreement.
15.0 Enforcement of Licensed Rights;
15.1 LITIGATION RIGHTS AND OBLIGATIONS: At LICENSEE'S own expense, LICENSEE
shall take all actions necessary to preserve and protect all rights conferred
on LICENSEE under this Agreement, including exclusive use of the patents and
other intellectual property rights of LICENSORS, including instituting and
maintaining a lawsuit against any infringer as prudent. LICENSORS agree to
cooperate with and assist LICENSEE in the prosecution of such claims. Any sums
recovered in the prosecution of such claims shall go first to reimburse LICENSEE
and LICENSORS for all direct out-of-pocket expenses of every kind and
character, including reasonable attorney's fees, expert witness fees, travel
costs, court costs and the like incurred in the prosecution of any suit and for
the reasonable loss of profit for LICENSEE and LICENSORS. If after such
reimbursement any funds shall remain from said recovery, such fund shall be
split equally.
16.0 Choice of Law and Forum
16.1 This Agreement shall be governed in all respects by the laws of the State
of California without regard to any conflicts of laws statutes and all actions
to resolve disputes arising from the terms of this Agreement whether by suit or
arbitration shall be brought in the County of Orange, State of California
unless otherwise agreed to in writing by both parties.
17.0 Arbitration
17.1 Any controversy or claim arising under this Agreement which involves a
question of infringement or any of the LICENSED PATENTS shall be settled by
arbitration in accordance with the Patent Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof.
18.0 Integration
18.1 This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter contained herein and merges all prior
discussions between them and neither party shall be bound by any definition,
condition, warranty, or representation other than as expressly stated in this
Agreement or as subsequently set forth in writing signed by the party to be
bound thereby.
19.0 Modification
19.1 This Agreement may be amended, modified, or revoked in whole or in part,
but only by a written instrument which refers to this Agreement and expressly
states that it constitutes an amendment, modification, or revocation hereof, as
the case may be, and only if such written instrument has been duly signed by a
duly authorized person of all parties.
20.0 Binding
20.1 This Agreement shall be binding upon the inure to the benefit of the
parties and their successors and assigns.
21.0 Attorneys' Fees in Event of Dispute
21.1 If any arbitration, legal action, or other proceeding is brought for the
enforcement of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
22.0 Construction and Performance
22.1 This Agreement shall not be construed against the party preparing it, but
shall be construed as if both parties prepared this Agreement. As used herein
the singular and plural number, the masculine, feminine and neutral genders
include on another.
23.0 Waiver
23.1 No waiver of any of the provisions of this Agreement shall be deemed, or
shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
24.0 Counterparts
24.1 This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original Agreement, and all of which shall constitute one
Agreement.
25.0 Captions
25.1 The various captions are inserted for convenience of reference only and
do not affect the meaning or interpretation of this Agreement or any section
thereof.
26.0 Invalidity of Provisions
26.1 If any provision of this Agreement as applied to either party or to any
circumstance, shall be adjudicated by a court to be void and unenforceable, the
same shall in no way affect: any other provision in this Agreement; the
application of such provision in any other circumstance; or the validity or
enforceability of the Agreement as a whole.
LICENSOR(S)
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: February 1, 1997
Lee A. Namisniak
/S/ DIANNA CLEVELAND NAMISNIAK
- --------------------------------- DATE: February 1, 1997
Dianna Cleveland Namisniak
LICENSEE
CORPORATION,
Innovative Tracking Solutions Corporation
By:
/S/ DIANNA CLEVELAND
- --------------------------------- DATE: February 1, 1997
Dianna Cleveland, President/CEO
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: February 1, 1997
Lee A. Namisniak, Vice President/CFO/COO
/S/ LOU WEISS
- --------------------------------- DATE: February 1, 1997
Lou Weiss, Director
SCHEDULE A - PATENTS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Leftover Lifeguard Food Storage Tracking System 8%
U.S. Serial No. Filing or Issue
Type of Patent or Patent No. Date of Patent
Utility Patent 5,335,509 08/09/94
Utility Patent 5,487,276 01/30/96
SCHEDULE B - TRADEMARKS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Leftover Lifeguard Food Storage Tracking System 1%
U.S. Serial No. Filing or Issue
Name of Trademark or Trademark No. Date of Trademark
"Leftover Lifeguard" Reg. No.1,947,954 01/16/96
Exhibit 10.6
Addendum to Licensing Agreement
It is hereby agreed between LEE A. NAMISNIAK and DIANNA L. NAMISNIAK as
"LICENSORS" AND INNOVATIVE TRACKING SOLUTIONS CORPORATION, d.b.a., InTracks
Corporation, a Delaware corporation, as "LICENSEE" that the following patents
and trademarks shall be as of February 25, 1998 considered added and
incorporated into Schedules A & B of the Licensing Agreement executed February
1, 1997 between the parties and therefore subject to all the terms of that
Licensing Agreement.
SUPPLEMENT TO SCHEDULE A - PATENTS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Leftover Lifeguard Food Storage Tracking System 8%
U.S. Serial No. Filing or Issue
Type of Patent or Patent No. Date of Patent
Utility Patent 5,711,160 01/27/98
SUPPLEMENT TO SCHEDULE B - TRADEMARKS
LICENSED PRODUCTS ROYALTY PERCENTAGE
Leftover Lifeguard Food Storage Tracking System 1%
U.S. Serial No. Filing or Issue
Name of Trademark or Trademark No. Date of Trademark
"Smart Kitchen" Serial No.75291283 05/13/97
"Pocket Kitchen" Serial No.75294206 05/19/97
"Sharp Kitchen" Serial No.75294205 05/19/97
LICENSOR(S)
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: February 25, 1998
Lee A. Namisniak
/S/ DIANNA CLEVELAND NAMISNIAK
- --------------------------------- DATE: February 25, 1998
Dianna Cleveland Namisniak
LICENSEE
CORPORATION,
Innovative Tracking Solutions Corporation
By:
/S/ DIANNA CLEVELAND
- --------------------------------- DATE: February 25, 1998
Dianna Cleveland, President/CEO
/S/ LEE A. NAMISNIAK
- --------------------------------- DATE: February 25, 1998
Lee A. Namisniak, Vice President/CFO/COO
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Dec-31-1998
<CASH> 22,551
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<RECEIVABLES> 3,336
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<TOTAL-LIABILITY-AND-EQUITY> 208,610
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