As filed with the Securities and Exchange Commission on December 18, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
BALANCED LIVING, INC.
(Exact name of registrant as specified in its charter)
Colorado 8299 87-0575577
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
organization)
6375 South Highland Drive, Suite D
Salt Lake City, Utah 84121
(801) 424-1624
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JEANNENE BARHAM
President and Chief Financial Officer
Balanced Living, Inc.
6375 South Highland Drive, Suite D
Salt Lake City, Utah 84121
(801) 424-1624
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
A. ROBERT THORUP, ESQ.
RAY, QUINNEY & NEBEKER
79 South Main Street
Salt Lake City, Utah 84111
(801) 323-3359
(fax) (801) 532-7543
Approximate date of commencement of proposed sale of the securities to
the Public: As soon as practicable after the Effective Time of this
Registration Statement.
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CALCULATION OF REGISTRATION FEE
Title of each Amount to Proposed Proposed Amount of
class of to be Maximum offering Maximum aggregate registration
securities to registered price per share offering price fee
be registered
Common Stock 250,000 $2.00 $500,000 $147.50
($0.001 par shares
value)
Class A 250,000 $3.00 $750,000 $221.25
Warrants and warrants
underlying and under-
Common Stock lying shares
Class B 250,000 $5.00 $1,250,000 $368.75
Warrants and warrants
underlying and under-
Common Stock lying shares
Class C 250,000 $10.00 $2,500,000 $652.50
Warrants and warrants
underlying and under-
Common Stock lying shares
TOTAL $1,390.00
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its Effective Time until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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P R O S P E C T U S
250,000 Units
Each Unit Consists of One Share of Common Stock, And One Each of
Class A Warrants, Class B Warrants and Class C Warrants
BALANCED LIVING, INC.
A Colorado Corporation
THIS OFFERING INVOLVES A SIGNIFICANT DEGREE OF RISK.
INVESTORS NEED TO READ THE SECTION CALL "RISK OF THIS
INVESTMENT" FOUND AT PAGE 3 OF THIS PROSPECTUS
- Balanced Living, Inc. is a new Colorado
corporation engaged in the personal
development business, and offers seminars,
books and related personal development
products to its clients. All of its current
activities are conducted in its wholly owned
subsidiary, The Balanced Woman, Inc.
- The Units consist of one (1) share of
Balanced Living Common Stock, one (1) Class A
Warrant, one (1) Class B Warrant, and one (1)
Class C Warrant.
- The Company wants to raise $500,000 from this
Offering.
- An Investor's purchase of Units must not
exceed 10% of that Investor's net worth.
- Class A Warrants allow the purchase of one (1) share of Common Stock
for $3.00. Class B Warrants allow the same one (1) share purchase,
but at $5.00 per common share. Class C Warrants allow the purchase
of one (1) share of Balanced Living Common Stock for $10.00.
- All of the Warrants are valid until December 31, 2003, when they
will expire.
- There is no public market for Balanced Living Common Stock.
- If a public trading market develops for Balanced Living Common
Stock, and if twenty (20) consecutive days of trading takes place in
that public market, then Balanced Living may call all of the then
outstanding Warrants at $0.01 paid in cash.
- The officers of Balanced Living will offer the Units and will not be
specially compensated for their selling efforts. They will claim an
exemption from registration as broker dealers or registered
representatives. The Company may decide that it needs the help of a
registered broker dealer in selling the Units. If a registered
broker dealer is used, the Company will pay a maximum commission of
10%, and this amount, up to a maximum of $50,000, is included in the
Company's estimate of offering expenses used in its Use of Proceeds
calculation. (See "USE OF PROCEEDS" at page 8.)
- There is no minimum offering. The Company will accept and spend
any Investor money submitted for an accepted purchase of Units.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, OR ANY STATE SECURITIES AGENCY, NOR HAS ANY
FEDERAL OR STATE REGULATORY AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is December , 1998
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PROSPECTUS SUMMARY
THIS IS A BRIEF SUMMARY OF THE INFORMATION IN THIS PROSPECTUS. WE
ENCOURAGE YOU TO READ THE ENTIRE PROSPECTUS BEFORE YOU DECIDE
WHETHER AND HOW MUCH TO INVEST IN THE UNITS.
The Company
Balanced Living, Inc. ("the Company") is a newly formed
Colorado corporation with no operating history and under the
management of persons with limited experience in starting and
successfully developing a new company. The business of the Company
initially will be conducted through its wholly-owned subsidiary, The
Balanced Woman, Inc., ("Balanced Woman") also a relatively new
Colorado corporation.
Balanced Woman was organized by women for the benefit of women ,
and to function as part of the personal growth/life management
industry. It offers seminars, personal growth experiences and
products that assist women in living more balanced and purposeful
lives. The Company believes that Balanced Woman will be a
successful enterprise because of (1) the life-changing principles
taught in Balanced Woman seminars and reinforced through Balanced
Woman products and services; (2) the valuable and diverse background
and experiences of the management team; and, (3) the believed
favorable timing of Balanced Woman's entry into the personal
growth/life management market.
Balanced Woman is committed to fulfilling this mission statement:
"Balanced Woman offers a journey of self-discovery through
powerful principles, supportive networks of women, and life-enriching
programs and products."
Financial History and Current Position
The Company was formed on July 1, 1998 and acquired Balanced
Woman on July 14, 1998. Balanced Woman was formed on January 26,
1998.
Balanced Woman's first seminar was given in Salt Lake City,
Utah in February 1998, with several seminars following in that area.
A seminar was given in Newport Beach, California in June 1998, and
other seminars in Southern California are planned.
Balanced Woman earned revenues of $6,467 (through July 31,
1998) and experienced a net loss of ($137,438) as of July 31, 1998.
Management believes that it can increase revenues substantially as
new seminar locations are employed, as the reputation of Balanced
Woman seminars grows, and as follow on products and services to the
seminars are developed and offered. See "Management Discussion &
Analysis of Financial Condition and Results of Operations" and
"Business of the Company".
Business Plan
Seminars: Currently Balanced Woman is offering its seminars
with Rose Blackham, one of the founders of Balanced Woman and of the
Company, facilitating Growth in revenues from Balanced Woman
Seminars is expected to come from employing multiple facilitators in
multiple locations. December 1, 1998 is management's target date
for completion of the development of the Balanced Woman Training
Academy, a "train-the-trainer" program designed to train, develop
and certify high-quality, effective and inspiring facilitators for
the Balanced Woman Seminars. Management has targeted March 1, 1999
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for at least 3 trainers to have completed the Balanced Woman
certification process and to be ready to teach Balanced Woman -
Seminar One.
Products: Fifteen Balanced Woman products are now being
designed and in various stages of production, of which six are
completed and currently being offered for sale at seminars and
through other marketing methods. Management has targeted Fall 1999
to have completed and published The Balanced Woman, a book that will
compliment Balanced Woman Seminars as well as provide independent
revenue opportunity. By this same date, management intends to
complete the production of all of the initial 15 SKUs in its product
line.
Circles of Women: One of the keys to maximizing ongoing
revenues from Balanced Woman Seminars is Balanced Woman "Circles of
Women" program, providing on-going mentoring, encouragement, and
support to women who wish to continue a program of life change as
started at a seminar. By January 1, 1999, management intends to
launch the first "Circle of Women" in the Salt Lake City market, and
intends to have created the materials and systems necessary to
support Circles of Women in several new market areas, including
Southern California to follow up on the introduction there of
Balanced Woman Seminars presented in June 1998. See "Management
Discussion & Analysis of Financial Condition and Results of
Operations" and "Business of the Company".
Use of Estimated Net Proceeds
The Company estimates that it will have available from this
Offering after expenses if total Offering is sold. Any funds raised
through this Offering will be used to implement the seminars and
products described above. In this connection, the proceeds will pay
costs of third party contractors and providers, as well as salaries
and expenses of the management team during the start-up period. See
"Use of Proceeds"
Becoming a Shareholder
You will be asked to complete and sign a Subscription Agreement
and to submit that with your investment money. If your investment
is not more than ten percent of your net worth you will be accepted
as a Shareholder. When your subscription has been accepted, you
will receive a signed copy of your Subscription Agreement and an
acknowledgment letter along with your share certificates.
RISK FACTORS
AN INVESTMENT IN THE UNITS INVOLVES A HIGH DEGREE OF RISK AND SHOULD
ONLY BE MADE BY PERSONS WHO CAN AFFORD TO LOSE UP TO THEIR ENTIRE
INVESTMENT. BEFORE PURCHASING UNITS, YOU SHOULD CONSIDER CAREFULLY THE
FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER INFORMATION IN THIS
PROSPECTUS.
Risks Inherent in the Company
Limited Operating History. The Company was formed in July
1998, and is in the development stages of its business plan. It has
no significant assets, has just begun business operations, and
considers 1998 and early 1999 to be a period of research and
development. There is no assurance that upon completion of this
Offering the Company will be able to continue successfully
implementing its business plan or that it will ever operate
profitably.
Limited Capital/Need for Additional Capital. With the
exception of approximately $300,000 borrowed from the founders and a
few private investors, the Company has no significant assets or
operating capital. It is totally dependent upon receipt of the
proceeds of this Offering to provide the working capital necessary
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to continue the development of its business. Even so, upon
successful completion of the Offering, the working capital available
to the Company will be limited. The Company has no commitments for
additional cash funding beyond the proceeds expected to be received
from this Offering. In the event that the proceeds from this
Offering are not sufficient to move the Company to internal funding
and profitability, the Company may need to seek additional financing
from commercial lenders or other sources, including additional sales
of equity, for which it presently has no commitments or
arrangements.
No Dividends. The Company does not currently intend to pay
cash dividends on its Common Stock and does not anticipate paying
such dividends at any time in the foreseeable future. At present,
the Company will follow a policy of retaining all of its earnings,
if any, to finance development and expansion of its business.
Limited Management. The Company will be substantially
dependent upon its current management team, only 2 of which are
employees. (See "Management"). Other key personnel are functioning
as independent contractors and are involved with other businesses.
The Company also relies heavily on the training, teaching methods,
and curriculum of Rose Blackham. Currently, Ms. Blackham is the
sole facilitator of the Company's seminars. The stability of the
Company would be significantly compromised if Ms. Blackham were
unable or unwilling to perform these responsibilities. The Company
is training additional facilitators to support its needs and
objectives, and it plans to have three additional certified trainers
by March, 1999. This will allow the Company to increase the number
of seminars and diversify its training personnel. The loss of the
services of any of the current management team members could have a
materially adverse impact upon the Company. The Company does not
carry key person life insurance with respect to any employee and has
no employment agreements.
Conflicts of Interest/Non-Arms-Length Transactions. Many of
the services and goods acquired by the Company have been and will
likely come from sources connected in some way with members of the
Company's management team. Some members of the management team have
other interests which could give rise to conflicts with respect to
the amount of time devoted to the Company. There is no assurance
such conflicts of time and interests will be resolved favorably to
the Company.
Possible Payment of Finder's Fees to Management or Affiliates.
Management does not currently intend to pay any finders fees from
the revenues or other funds of the Company. In the event that a
person or entity assists the Company in connection with the
introduction to a prospective business product opportunity which is
ultimately consummated, such person or entity may be entitled to
receive, upon Board of Directors approval, a finder's fee through
the issuance of securities in consideration for such introduction.
Such person, who may be an affiliate of the Company, may be required
to be registered as, among other things, an agent or broker/dealer
under the laws of certain jurisdictions. The Company is not
presently obligated to pay any finder's fees. The executive
officers, directors or affiliates of the Company may be entitled to
receive a finder's fee in the event they originate a prospective
business product or opportunity.
Possible Need for Additional Financing and Risk of
Unavailability of such Financing. The Company has earned only
limited revenues to date and is entirely dependent upon the proceeds
of this Offering to continue operations relating to its prospective
business. Although the Company believes that the proceeds of this
Offering will be sufficient to implement its business plan, the
Company cannot ascertain with any degree of certainty the future
capital requirements for the full development and production of its
seminars, products and inventory. In the event that the net
proceeds of this Offering prove to be insufficient to allow the
Company to pursue its business plan, the Company currently has no
plans or arrangements with respect to additional financing which may
be required to continue the operations of the Company. There can be
no assurance that additional financing will be available to the
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Company on acceptable terms, if at all. The unavailability of
additional financing when needed would have a material adverse
effect on the continued development or growth of the Company's
business.
There are currently no limitations on the Company's ability to
borrow funds to implement its business plan. The amount and nature
of any borrowings by the Company will depend on numerous
considerations, including the Company's capital requirements, the
Company's perceived ability to meet debt service on such borrowings
and the prevailing conditions in the financial markets, as well as
general economic conditions. There can be no assurance that debt
financing, if required or otherwise sought, would be available on
terms deemed to be commercially acceptable and in the best interests
of the Company. It is presently not contemplated that any of the
Company's executive officers or directors or their respective
affiliates will be providing any loans to the Company over and above
what they have already loaned to the Company. The inability of the
Company to borrow funds for an additional infusion of capital into
the business may have material adverse effects on the Company's
financial condition and future prospects. To the extent that debt
financing ultimately proves to be available, any borrowings may
subject the Company to various risks traditionally associated with
incurring indebtedness, including the risks of interest rate
fluctuations and insufficiency of cash flow to pay principal and
interest.
Year 2000 Risks. The Company faces risks from the Year 2000
computer problem in three areas: its own computer systems, its
appliances and equipment with embedded chips, and the possibly
noncompliant systems of its third party vendors and service
providers. While the Company believes that its own computerized
information processing systems are "Y2K" compliant with four digit
dating and recognizing 2000 as a leap year, it is still in the early
stages of assessing its non-computer equipment for noncompliant
embedded chips. The Company is also in the very earliest stages of
assessing and communicating with its key vendors and service
providers to determine their Y2K compliance. In a worst case
scenario, the Company may not be able to present its seminars
because of disruptions in transportation systems, building
locations, or utility services. In the event of significant economic
turmoil from Y2K occurrences, the demand for the Company's seminars
and products may be significantly reduced. Suppliers of its private
label products may not be able to ship sufficient quantities to meet
the Company's needs. The Company's own offices may be closed by
equipment or utility failures or possible civil unrest.
Risks related to the Nature of the Proposed Business
Uncertain Market Acceptance. The Company's proposed business
plan is based upon a six-month beta test of Balanced Woman Seminars
and related products and services to limited markets, and is based
upon assumed needs and concerns of women who are interested in
personal growth. There are no assurances of general market
acceptance of the Company's products and services. The Company's
business will be subject to all the risks associated with the
packaging and introduction of new seminars and product lines for
sale into the competitive personal growth seminar market. Other
than limited pilot testing, the Company has undertaken no
independent market studies to determine the acceptance of its
proposed products and services.
Competition. The Company presents unique programs, principles
and products that specialize in particular areas of women's
interests. Due to the unique nature of these products and services,
it is difficult to succinctly identify a specific industry and
clearly define market competitors. To date, the Company has
undertaken no in-depth, independent studies determining market
competition, although it appears as though the competition is
limited. There are, however, many companies that target women in
various forms. These range from multiple online internet
organizations structuring women talk groups to seminar companies
covering women's issues.
The Company's seminar program is currently the primary platform
that leads to many higher-margined products, programs, and services.
Consequently, the Company will be substantially dependent in its
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developmental stage for success in the highly competitive seminar
training industry. A high percentage of developmental seminar
companies fail for multiple reasons, including low margins, high
marketing costs, poor client retention, and competition.
Intellectual Property Risks. The Company relies primarily on
copyright laws and employee and third party nondisclosure agreements
to protect its intellectual property, but the Company has not yet
registered copyrights in any of its materials. The Company could be
damaged significantly by unauthorized copying of its products and
services. Although the Company is not aware that any of its
products and services are materially infringing the rights of
others, it is possible they are. If so, the Company could have to
modify its products and services, at substantial possible cost. The
Company might be subject to lawsuits if it is alleged that it is
infringing on the property rights of others.
No Present Acquisition or Merger Transaction Contemplated.
None of the Company's officers, directors, promoters, their
affiliates or associates have had any preliminary contact or
discussions with and there are no present plans, proposals,
arrangements for mergers, acquisitions or similar transactions
involving the Company.
General Economic Situation. The Company provides products and
services that are not essential to the support of life. In the
event of significant economic downturns in the United States or the
World caused by any or all of a number of potential causes, the
demand for the Company's seminars and products may be significantly
reduced.
Risks Related to the Offering
Best Efforts Offering/No Firm Commitment. The Company is
offering the Units on a "best efforts basis" with no underwriter
assistance or firm commitment from any investor or dealer. No
assurance can be given that any or all of the Units will be sold.
Benefits to Present Shareholders; Continued Control. The
600,000 presently outstanding shares of the Company's Common Stock
(not including any shares underlying stock options or warrants) were
purchased by the founders of the Company for a total aggregate
consideration of $3,000. Immediately after completion of this
Offering, assuming the full $500,000 is sold, the current
shareholders will own 71% of the then outstanding Common Stock, for
which they will have paid an average $0.005 per share; and Investors
in this Offering will own the other 29% , for which they will have
paid $2.00 per share (without regard to the warrants included in the
Units). Thus, Investors in this offering will contribute to capital
of the Company a disproportionately greater percentage than the
current shareholders. Moreover, the current shareholders will
continue to control the Company through their majority common share
voting ability. See "Dilution".
Broad Discretion to Use Offering Proceeds. Management will
have wide discretion as to the allocation, priority and timing of
the allocation and spending of funds raised from this Offering. The
uses of the proceeds of the Offering may vary significantly from
those outlined in this Prospectus depending on numerous factors,
including the success that the Company has testing and marketing its
products. Investors purchasing the Units will be entrusting their
funds to the Company's management, upon whose judgement the
Investors must depend. (See "Use of Proceeds" and "Management")
Arbitrary Determination of Offering Price . The public
offering price of the Units offered hereby was arbitrarily
determined by the Company without the advice of an underwriter. The
price bears no relationship to the Company's assets, book value, net
worth or other recognized criterion of value. In no event should
the public offering price be regarded as an indicator of any future
market price of the Units.
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There May Not Be A Public Trading Market. Prior to this
Offering, there was no public market for the Company's Common Stock,
and the offering price for the Units was determined arbitrarily by
the Board of Directors. See "Plan of Distribution - Determination
of Offering Price."
The Company does not currently meet the numerical requirements
(such as income, stockholders' equity and number of public shares
outstanding) to have its shares listed on a United States stock
exchange or quoted on the NASDAQ over-the-counter market. As soon
as it meets those requirements, the Company intends to apply for a
trading listing such that its Common Stock can be followed on public
information services over the Internet or in the financial trade
publications. Until any listing, the Company has not yet decided
whether to utilize the provisions of Rule 15c2-11 under the
Securities Exchange Act to enable limited public trading in its
Common Stock. It is unlikely that sufficient shares will be
outstanding in the foreseeable future to support a public market in
the Company's Common Stock. The price of the Units, after the
completion of this Offering, can vary due to general economic
conditions and forecasts, the Company's general business condition,
the release of the Company's financial reports and sales of shares
which were outstanding prior to this offering. See "Units Eligible
For Future Resale."
State Blue Sky Registration; Restricted Resales of the
Securities. The Company has not made application to register the
Securities in any states except California, Colorado, New York and
Utah. The Company will seek to obtain an exemption from
registration to offer the Units in various state jurisdictions and
may also make additional application to register the Units in some
states. Purchasers of Units in this offering must be residents of
such jurisdictions which either provide an applicable exemption or
in which the Units are registered. In order to prevent resale
transactions in violations of states' securities laws, public
stockholders may only engage in resale transactions in the Units in
such jurisdictions in which an applicable exemption is available or
a blue sky application has been filed and accepted. As a matter of
notice to the holders thereof, the common Stock and Warrant
certificates will contain information with respect to resale of the
securities. Further, the Company will advise its market makers, if
any, of such restriction on resale.
Such restriction on resales may limit the ability of investors
to resell the Units purchased in this Offering.
Several additional states may permit secondary market sales of
the Units (i) once or after certain financial and other information
with respect to the company is published in a recognized securities
manual such as Standard & Poor's Corporation Records (ii) after a
certain period has elapsed from the date hereof; or (iii) pursuant
to exemptions applicable to certain investors."
Some Units Owned By Earlier Investors Could Be Sold After The
Offering, Affecting The Resale Price. The owners of 600,000 shares
of the Company's Common Stock will be able to sell 100,000 of these
shares any time after July 1, 1999; and 500,000 shares at any time
after July 14, 1999, assuming a public market exists at such times.
Whenever any shares of the Company's Common Stock are sold, it could
cause the share price to go down and might keep it from rising. See
"Units Eligible for Future Resale."
There is No Escrow or Impoundment of Investor Funds. All
Investor subscription funds received will be credited to the cash
accounts of the Company. See "Plan of Distribution."
Statutory And Charter Limitations Could Deter An Acquisition Of
The Company. The laws under which the Company is chartered deny
voting rights to persons trying to acquire control, subject to
approval by the other shareholders. The Company's articles of
incorporation and bylaws also contain provisions which allow
shareholders to increase the quorum or voting requirement for
shareholders. These provisions would make it relatively difficult
to authorize a merger or other business combination, to change the
board of directors or to amend charter provisions. This could deter
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an acquisition of the Company that might otherwise be of benefit to
shareholders who are not part of management. See "Description of
Common Stock."
The "Penny Stock" Rules Could Make Selling Units More
Difficult. The Company's common stock might be defined as a "penny
stock" pursuant to Rule 3a51-1 under the Securities and Exchange of
Act if the shares were to be traded at a price less than $5.00 per
share, if the Company had not yet met certain financial size and
volume levels, and if the shares were not registered on a national
securities exchange or quoted on the NASDAQ system. A "penny stock"
is subject to Rules 15g-1 through 15g-10 of the Securities and
Exchange Commission. Those rules require securities broker-dealers,
before effecting transactions in any "penny stock," to (1) deliver
to the customer, and obtain a written receipt for a disclosure
document set forth in Rule 15g-10. (Rule 15g-2); to disclose certain
price information about the stock (Rule 15g-3); to disclose the
amount of compensation received by the broker-dealer (Rule 15g-4) or
any "associated person" of the broker-dealer (Rule 15g-5); and to
send monthly statements to customers with market and price
information about the "penny stock." (Rule 15g-6) The Company's
common stock could also become subject to Rule 15g-9, which requires
the broker-dealer, in some circumstances, to approve the "penny
stock" purchasers account under certain standards and deliver
written statements to the customer with information specified in the
rules. (Rule 15g-9) These additional broker-dealers from effecting
transactions and limit the ability of purchasers in this offering to
sell their shares into any secondary market for the Company's Common
Stock.
Two Major Shareowners Will Control The Company. Jeannene
Barham and Rose Blackham now own, in the aggregate, 100% of the
outstanding common stock of the Company, and will own, in the
aggregate, 71% of the total outstanding shares even if this Offering
as fully described. With such percentages of ownership, Ms. Barham
and Ms. Blackham could cause the election of all of the Board of
Directors, prevent approval of an acquisition of the Company or
otherwise exercise control of the Company.
Officers' And Directors' Liabilities Are Limited. The
Company's articles of incorporation provide that the Company will
indemnify any officer, director or former officer or director, to
the full extent permitted by law. This could include
indemnification for liabilities under securities laws enacted for
shareowner protection, although, in the opinion of the federal
Securities and Exchange Commission, that indemnification is against
public policy.
Effect of Purchases of Units By Officers, Directors and
Affiliates. Officers and Directors of the Company may purchase
Units sold in this Offering under the same terms and conditions as
the public investors. Such purchases, if made, will be in
compliance with rule 10b-6 and be for investment purposes only and
not for redistribution (i.e., no present intention to distribute or
resell the securities). To the extent of any such purchases for
investment purposes only, a portion of the Units from this Offering
will not enter the "public float." (The public float is the amount
of free-trading securities which are immediately resalable in the
trading market.) Such reduction means that there are less
securities for the public investors to purchase and resell and may
cause a lack of liquidity in any trading of the Company's shares.
Also, such a reduction in the public float may make possible the
commitment of public investors in the absence of public demand for
the offering.
No Commitment to Purchase Units. No commitment presently
exists by anyone to purchase any of the Units offered.
Consequently, no assurance can be given that any Units will be sold.
Although no commitment has been made, officers and directors may
purchase in the Offering.
Officers or Directors May Purchase Up To 20% of the Units in
this Offering. The Company may make sales of Units to officers and
Directors of the Company and that such persons may purchase up to
50,000 of the Units offered hereby, although they have made no
commitment to do so. Such purchases shall be made for investment
purposes only and in a manner consistent with a public offering of
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the Company's Units. Such purchases will increase the percentage of
securities being held by the officers and Directors.
USE OF PROCEEDS
The uses of the proceeds available to the Company from the sale
of the Units in this Offering are estimated below, assuming that all
of the Units are sold. There is no assurance that all of the Units
will be sold. The Company expects to use the net proceeds over the
coming 12-month period for general corporate purposes, primarily as
outlined below.
Offering Expenses $82,077
Marketing and
advertising 43,300
Inventory 91,427
R&D 9,650
Working Capital 273,546
TOTAL $500,000
Estimated offering expenses include legal counsel fees and
costs, accounting fees and costs, printing costs, mailing and travel
expenses, and related costs. This amount also includes a reserve
for possible commissions payable to registered broker dealers who
may be asked to assist in the offer and sale of the Units. A
maximum of $50,000 is reserved for this purpose and management
believes that no broker dealer assistance likely will be required.
Working Capital is the amount of the Company's current assets,
such as cash, receivables and inventory, in excess of its current
liabilities, such as accounts payable. As proceeds are received,
and not used for marketing and advertising , they would be added to
cash bank balances, increasing working capital. Working capital may
be used to pay salaries and expenses of employees, including
management personnel. Working capital also may be used, in
Management's discretion, to make loans (other than to officers and
other affiliates); no restrictions exist other than as set forth
above, as to whom loans may be made. Further, no criteria have as
yet been established for determining whether or not to make loans,
whether any such loans will be secured or limitations as to amount.
The Company has not and does not presently intend to impose any
limits or other restrictions on the amount or circumstances under
which any of such transactions may occur except, that none of the
Company's officers, directors or their affiliates shall receive any
personal financial gain from the proceeds of this Offering except
for reimbursement for out-of-pocket offering expenses. No assurance
can be given that any of such potential conflicts of interest will
be resolved in favor of the Company or will otherwise not cause the
Company to lose potential opportunities.
None of the proceeds raised hereby will be used to make any
loans to the Company's promoters, management or their affiliates or
associates of any of the Company's shareholders. Further, the
Company may not borrow funds and use the proceeds therefrom to make
payments to the Company's promoters, management or their affiliates
or associates.
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Dilution.
The following table shows, on a pro forma basis as of September
30, 1998, the difference between existing shareholders (not
including existing options to buy shares) and new Investors
purchasing Units in this Offering (without respect to the Warrants).
SHARES TOTAL AVERAGE PRICE
PURCHASED CONSIDERATION PER SHARE
NUMBER PERCENT AMOUNT PERCENT
Existing
Shareowners 600,000(1) 71% $3,000 0.6% $0.005
New Investors 250,000(2) 29% $500,000 99.4% $2.000
Total 100.0% $503,000 100.0%
_________________
(1) Does not include options or warrants now outstanding.
(2) Does not include the Class A, Class B or Class C Warrants included
in the Units.
On July 31, 1998, the Company had a net book value of
($128,938), or ($0.22) per share (based on 600,000 shares
outstanding). The net tangible book value per share is equal to
the Company's total tangible assets, less its total liabilities and
divided by its total number of shares of common stock outstanding.
After giving effect to the sale of the Units at the public offering
price of $2.00 per Unit, and the application of the estimated net
offering proceeds, the pro forma net tangible book value of the
Company, as of July 31, 1998, would have been $292,862, or $0.34
per share, respectively. This represents an immediate increase in
net tangible book value of $0.56 per share to existing shareowners,
and an immediate dilution of $1.66 per share to new Investors
purchasing shares in this Offering. The following table
illustrates the per share dilution in net tangible book value per
share to new Investors:
Public offering price per Unit $2.00
Pro forma net tangible book value ($0.22)
per share as of July 31, 1998
Increase per share attributed to $0.56
investors in this Offering
Pro forma net tangible book value $0.34
per share as of July 31, 1998,
after this Offering
Net tangible book value dilution $1.66
per share to new investors
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results
The Company is a new enterprise and a development stage
company. Its revenues to date have been marginal, and there is no
prior year or quarter period to effectively compare operating
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results. As of November 30, 1998, the Company was operating at a loss.
The Company anticipates becoming profitable in 1999, although there can be
no assurance of this result.
Business Plan Progress
The information in this prospectus other than historical
information is "forward looking information" presenting management's
beliefs and estimates about the future. These beliefs, plans and
estimates are subject to significant risks. (See "Risk Factors".
Above)
The Company has reviewed many studies showing that women are
placing a high value on meaningful, life enhancing products that
focus on (1) relationships and networking, (2) relevant factual
information, (3) time efficiency management, (4) reputation and
support, (5) brand loyalty, and (6) the opinion of others. It is
estimated through looking at these studies that in 1997 women
spent $80.3 billion on these self-improvement products and
services. These expenditures included self-help books, personal
services, journals, and other related personal growth products.
Evidence in the market place and the popular news media
indicate that this trend is continuing and expanding. The
Company is positioned to benefit from this growing trend and its
business plan is in consonance with this expanding market need.
The experience during 1998, the Company's first developmental
year, has proven that there is market appeal for The Balanced
Woman seminars and products and that word-of-mouth advertising
(relationship marketing) will be a strong influencing factor in
the Company's growth and market penetration.
The Company, is positioned to offer a series of three seminars,
and multiple products and other services to re-enforce and support
seminar participants. During its first year of development, the
Company has designed and produced seminar curriculum and participant
materials, and has launched seminars in Salt Lake City and Newport
Beach. Fifteen seminars have been taught, averaging thirty women
per seminar. The Company currently has six customized Balanced
Woman products, including a short "affirmation book" called A
Balanced Woman Knows, The Balanced Woman Collection CD, the Picture
This Packet, Balanced Woman bookmarks, "Jewel Cards", and Balanced
Woman T-Shirts. The Company is also selling self-care products,
which are purchased at wholesale and sold at 100% mark-up. Products
sales at seminars are steadily increasing, ranging at $3.70 per
person in the first seminars to a current level of over $10.25 per
person, compared with the Company's own $7.50 per person target for
the first year.
The Company's plan of operation for 1999 includes expanding the
number of seminar cities by adding Denver, Seattle, San Diego, and
San Francisco. The Company aims to increase the number of
participants to an average of forty in each seminar. A target
average of five seminars will be presented each month for a target
total of sixty seminars to be taught in 1999. The Company's average
participant fee income is planned to increase from $ 100 (due to
introductory specials) to an average seminar fee of $200.
To achieve these projections, the Company will add three
independent contractors to facilitate seminars who will be paid a
teaching fee for each seminar taught. Each trainer will complete an
extensive train-the-trainer program by March 1, 1999, and will be
prepared to facilitate seminars for the remainder of 1999. Gross
seminar income is planned to average $8,000 per seminar, bringing in
approximately $40,000 per month, beginning in the second quarter of
1999. Our year-end projections for 1999 are to complete the
presentation of sixty (60) seminars, bringing in an approximate
total seminar revenue of $480,000. Projected product sales revenue
of $183,000 will be in addition to the projected $480,000 in seminar
revenues, bringing total Company projected 1999 revenues to
$663,000.
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The Company projects direct seminar expenses to average $2,700
per seminar, for a total average of $13,500 in such projected
expenses each month. The overall Company projected expense budget
for 1999 is $472,800. This results in a projected profit of
$190,200. (This budget includes salaries for four full time and two
part-time employees.)
Eight new products will be added to the Company's product line
in 1999: These products will include a new full-size hard cover
book called The Balanced Woman, The Balanced Woman Journal, The
Dumping Book, Meditation CD, Balanced Woman Seminar cassette series,
Sara Coloring Book, and a "What" Box. The Company will also be
purchasing an "inner-child" CD at wholesale and selling it at retail
at the seminars. The Company will maintain an average of 50% mark-
up on all products it distributes at its seminars.
A tentative agreement has been made with AMS Publishing and
Distribution Co., of San Diego to publish and distribute, both
nationally and internationally, The Balanced Woman Book by Fall
1999. The Company will be hold license to this book and receive
a royalty for each copy sold. Contract negotiations are
currently underway with AMS and therefore, projected revenues
from these royalties have not been included in this plan as they
are yet to be determined.
Adverse conditions that could negatively effect the
Company's growth would be an inability to recruit, hire, and
retain skilled seminar facilitators, or a copyright infringement
of the Company's unique curriculum materials and products and
resulting litigation. To combat these potentially harmful
conditions, the Company has secured the assistance of an
intellectual rights attorney and is taking every measure possible
to protect and copyright all materials. Because skilled trainers
will be key to the Company's growth, time and attention is being
placed into recruitment efforts. There is already an adequate
pool of candidates from which to select.
Liquidity and Capital Resources
The Company requires the investor capital to continue the
development of its business plan. While it has been able to borrow
needed operating capital from its founders to date, these sources
have indicated an unwillingness to continue to advance funds to the
Company. The Company will depend on the funds to be raised in this
Offering to stay in business and to implement its business plan. If
there is insufficient capital raised in this Offering, the Company
will be left to attempt to raise investor capital through other
offerings or placements at different prices or configurations. The
Company has limited cash funds and may not be able to retain the
needed professional assistance if another offering were necessary
because this Offering failed.
Year 2000 Issues
The Company has not completed its assessment of its own
information processing computer systems and is not aware if such
systems are Y2K compliant at this time, although management believes
the newness of the current computer system should result in tested
compliance when tests are made.
The Company has not completed its assessment of embedded non-IT
computer systems used in its business. However the Company does not
regard any such system as material to its business.
The Company has not yet performed an assessment of its material
goods or services suppliers to determine their Y2K compliance. The
Company expects to begin this assessment in the first quarter of
1999. There is no assurance that the Company will be able to
complete its assessment of third party risks before the end of 1999.
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The Company is unaware of the potential cost, if any, to
remediate Y2K problems in the Company's own IT systems or its
embedded systems. So far the Company has spent nothing on Y2K
remediation.
The Company believes that it is most reasonably likely that its
own computers will perform according to expectations on and after
January 1, 2000. However the Company is dependent on suppliers of
airplane travel, electric power, office products, private label
products, natural gas and financial services. Given its failure to
date to obtain a reliable assessment of the Y2K compliance of its
key goods and services vendors and suppliers, the Company must
assume that these vendors and suppliers will have disruptions in
their deliveries to the Company. The Company's business would
likely suffer a material adverse result on and after January 1, 2000
from Y2K related effects. In the worst case, the Company would fail
and its outstanding securities would become worthless.
The Company has not developed any contingency plans in the
event that its own IT computer equipment fails or in the event that
material suppliers of goods or services fail or have significant
disruptions in deliveries to the Company.
INFORMATION ABOUT THE COMPANY
Overview
The Company produces and presents values-oriented seminars and
products aimed at helping women achieve balance in their lives, and
thereby to find joy and fulfillment. The Company operates through
its wholly-owned subsidiary, Balanced Woman. Balanced Woman earns
revenues and profits from its seminars, products and service
offerings.
The Company has become subject to the informational filing
requirements of the Securities Exchange Act of 1934, as amended
("Exchange Act"). Upon completion of this offering, the Company to
file all required annual and quarterly reports.
The Company intends to furnish its shareowners with annual
reports containing financial statements audited by an independent
public accounting firm after the end of its fiscal year on December
31.
History and Development of the Company
The Company was incorporated in Colorado, on July 1, 1998. The
Company's corporate offices are located at 6375 South Highland
Drive, Suite D, Salt Lake City, Utah 84121. The Company's other
addresses are Voice: (801) 424-1624; and Facsimile: (801) 424-
1626.
The Company was formed to be a holding company and financing
vehicle for Balanced Woman, and perhaps other companies or projects.
On July 14, 1998, the Company acquired all of the outstanding shares
of common stock of Balanced Woman in exchange for shares of the
common stock of the Company in a tax free exchange with the
shareholders of Balanced Woman shown on Balanced Woman's records at
that date. Currently the Company has no other business plan than to
function as the holding company and financial support for Balanced
Woman.
The business concept for Balanced Woman was conceived in 1997
when several of the founders of the Company attended a seminar
presented by Rose Blackham in Orange County, California. Ms.
Blackham had previously taught this program in California and
Colorado for several years. After experiencing the positive
response of the thirty participants at the Orange County seminar,
Ms. Blackham and the other attending founders of the Company
conceived the concept of a seminar company to teach the principles
of how to live a balanced life to women, similar in concept,
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although different in curriculum, to many existing seminar/training
companies, such as Franklin-Covey, Inc., Anthony Robbins, Inc.,
Career Track, and Nightingale Conant.
Balanced Woman was formed as a Colorado corporation in January
1998 as a company owned, managed and developed by women to provide
services and products that would support and assist women in living
a more balanced life. Seed capital was provided by the nine
founders of the Company, and the first pilot seminar was organized
and presented by Balanced Woman in February 1998 in Salt Lake City,
Utah.
In June 1998, Balanced Woman presented its first seminar
outside of the Salt Lake City market by organizing a seminar in
Newport Beach, California. Balanced Woman perceived positive
response from the Newport Beach seminar, and management felt that
its business concept was showing market acceptance.
Balanced Woman is now actively engaged in program refinement
and product development. Balanced Woman is currently testing six
products in the marketplace. During the remainder of 1998,
Balanced Woman plans to continue to test seminar prototypes,
varying the seminar hours, venues, and pricing structures. The
curricula, pricing and marketing systems will be fine-tuned as research
continues.
The Company's Business Model
Balanced Woman teaches a curriculum and offers products and
services that are based on Balanced Woman's Seven Principles of
Balance: The Sacred, Self-Care, Relationships, Play, Home/Career,
Financial Serenity, and Personal Vision.
The product and service line includes seminars, membership-
based Circles of Women, and "Balanced Woman" Products. Balanced
Woman also publishes a bi-monthly newsletter which can be purchased
through an annual subscription or as part of the Circles of Women
membership package.
What follows is a brief description of Balanced Woman's primary
service and product offerings:
Seminars. Balanced Woman currently offers a series of three
seminars based on the seven Balanced Woman principles. Seminar I is
a one-day interactive program; Seminar II and III are both two and
one-half day programs which teach the participants more in depth how
to implement the principles into their daily lives. The Balanced
Family, Balanced Relationships, and The Balanced Man, as well as,
other related seminars, will be developed and presented as an
extension of The Balanced Woman curriculum within one to three
years.
Wholesale/Retail Products. Balanced Woman has created six
unique and innovative products that invite women to actively share and
live Balanced Woman principles. Each product has a meaningful
purpose and has been created to support women in living the Seven
Balanced Woman principles.
Circles of Women. The Circles of Women membership has been
established to provide a supportive and nurturing setting in which
eight to twelve women come together monthly to be encouraged and
supported in living Balanced Woman Principles and to be motivated to
express their personal vision.
Business Plan
By the end of January 1999, Balanced Woman plans to have
successfully launched two of the Balanced Woman seminar series, and
to be selling a full-range of Balanced Woman products, not only to
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seminar participants, but also eventually to catalog customers and
at wholesale for purchase in select retail outlets and boutiques.
Market. The primary market for Balanced Woman's services and
products includes women in all demographic strata. The women's
personal growth/life management market has increased dramatically in
the last 10 years. Industry sources estimate that in 1997 $80.3
billion was spent by women for self-improvement-related products and
services. Among other things, these expenditures have included
self-help books, journals, seminars and related personal growth
products. The test seminars that Balanced Woman has already
presented in Salt Lake City and in Orange County, as well as the
history of successful seminars presented independently by Ms.
Blackham all show market appeal for Balanced Woman's concepts and
products, and an opportunity to capture part of this $80 billion
market.
Balanced Woman. is positioned to meet and fill the needs of
this growing market segment with a fully-integrated line of women's
personal development and life management products and services.
Marketing Plan. Balanced Woman's marketing strategy has been
designed with a multi-pronged and non-traditional approach. For
example, through relationship marketing, Balanced Woman has achieved a
high percentage of seminar sales through referrals. This strategy
economizes sales and marketing expenditures and creates a new twist on
traditional word-of-mouth advertising,
Mass and vertical marketing promotions are made more effective
because of cross marketing relationships Balanced Woman is forming
alliances with chambers of commerce, women's associations, key business
affiliations, and independent sales associates.
Advertising and Publicity. Balanced Woman recognizes that a key
to its success is becoming a widely known name. To accomplish this
goal, Balanced Woman is designing its product offerings and
advertising brochures with common themes, logos and styles. These
products and services will be marketed at and also sold separately
from Balanced Woman's seminars, thus taking advantage of book stores
and gift shop advertising opportunities.
Seminar Related Balanced Woman has joined and/or will
join the Chamber of Commerce in each of our business markets.
In Salt Lake City the Company is negotiating with the Chamber's
Director of the Women's Forum, taking an active role and sub-
chairing this committee. This will increase our visibility and
exposure within the business community and leverage our
business potential across the state. Balanced Woman is also
actively participating in local Women's Business Associations
and business networks, i.e., Utah's Women's Association, Utah
Women's Sales Association, and Business Network International.
Balanced Woman has begun networking with several potential
seminar sponsoring organizations, and anticipates having a
large number of local and national sponsoring companies with
special women interests, who will financially sponsor and
endorse our seminars, conferences and events.
The Company has also obtained a contract with the Director of
Women's programs of WINET, a division of the Federal Small
Business Association for the following services:
- Training access to their women's network
- Participation in their national conference of approximately
1000 members
- Participation in the Women's Connection.com, a women-to
women internet site
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Product Related. Management of Balanced Woman has met
with and are negotiating with the Advantage Publishers Group
in San Diego, Ca., discussing and planning the development and
publication of Balanced Woman's first book, The Balanced
Woman.
Several consultants and contract development firms have
been contacted to negotiate the arrangements for the design,
development, and production of Balanced Woman's products
scheduled within the first phase product line. Management is
also working with a women's datebook planner company to begin
plans for production of Balanced Woman's customized datebook
planner schedule for the second line of products.
Several individuals with experience in retailing women's
apparel and self-care products have contacted the Company and
are interested in contracting for the "private labeling" of
products for the Company.
Customer Base. Balanced Woman's current customer base is made
up of a broad segment of the women's market. Products and services
are designed to appeal equally to women from a wide range of
lifestyles. Seminar evaluations consistently receive positive
responses from a wide variety of market segments, income levels,
educational and professional backgrounds. As its customer-base
grows, Balanced Woman will collect, compile, and analyze customer
characteristics, enabling them to create a very detailed and
specific customer profile for each of the service and product lines
we produce and offer.
Current Products & Services. Balanced Woman is positioned to
offer a three-part seminar series based on seven specific
principles; proprietary products that will support and reinforce
Balanced Woman principles; and Circle of Women memberships, designed
to bring women together monthly in small groups in a safe and
nurturing environment, to share, support, and connect. Product
offerings include books, tapes, and self-care products, games,
jewelry and apparel. A common theme of the products is to encourage
women to take a journey of self-discovery and to live lives of
balance, purpose, and fulfillment. For instance, the Balanced Woman
Collection, a CD of the music played throughout the first seminar,
is designed to open a women's heart and to take her back to the
powerful principles taught for living a balanced life. Also, full-
sized hardcover "The Balanced Woman" book will be published and
distributed on a national basis by Fall 1999.
Seminars: Currently Balanced Woman is offering its seminars
through the facilitation of Rose Blackham, a founder of Balanced
Woman. Growth in revenues from Balanced Woman Seminars will come
from multiple facilitators in multiple locations. December 1, 1998
is management's target date for completion of the development of
Balanced Woman Training Academy, a "train-the-trainer" program
designed to train, develop and certify high-quality, effective and
inspiring trainers to facilitate each of the seminars in Balanced
Woman Series. Management also has targeted March 1, 1999 as the
date by which at least 3 trainers will have completed Balanced
Woman's certification process and will be ready to teach Balanced
Woman - Seminar One.
Products: Fifteen Balanced Woman products are now being
designed and in various stages of completion and production, of
which six are currently being offered for sale at seminars and
through other marketing methods. Management has targeted April 1,
1999 to have completed and published The Balanced Woman, a book that
will compliment Balanced Woman seminars as well as provide
independent revenue opportunity. By this same date, management
intends to complete and produce all of the initial 15 items/SKUs in
its product line. In addition to the customized products developed
and produced by The Balanced Woman, products will also be purchased
from other sources and sold with the private Balanced Woman label
through various distribution channels, including retail outlets, web
sites, catalogues, etc.
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Circles of Women: One of the keys to maximizing ongoing
revenues from Balanced Woman Seminars is Balanced Woman "Circles of
Women" program, providing on-going mentoring and support to women
who wish to continue a program of life change as started at a
seminar. By January 1, 1999, management intends to have launched
the first Balanced Woman "Circle of Women" in the Salt Lake City
market, and intends to have created the materials and systems
necessary to support Circles of Women in several new market areas,
including Southern California to follow up on the introduction there
of Balanced Woman Seminars in June 1998.
Competition
The financial and personal development information industry,
while large, is highly fragmented into many niches with some
competitors being successful in only certain niches, and with no
company having acquired dominance in the industry.
Many competitors have products and services that are marketed
as being similar, but the Company believes that its customers can
quickly distinguish the difference between its products and services
and those of competitors. The Company believes that its strong
testimonial base of satisfied customers is a growing competitive
advantage.
The Company competes primarily with a large number of
privately-and publicly owned, educational and publishing companies
providing personal and financial development information through a
variety of media. Some competitors have greater financial,
marketing, distribution, technical and other resources than the
Company. Some examples of competitors in this general personal
development market are Anthony Robbins & Associates, Nightingale-
Conant Corporation, Franklin-Covey, Inc., American Marketing
Systems, Inc., David G. Phillips Publishing Company, Inc., Agora,
Inc., Ted Nicholas & Associates, Inc., Whitney Leadership Group and
The Hume Group, Inc.
Operations
Accounting, purchasing, inventory control, scheduling, order
processing, warehousing and shipping activities for the Company are
still under design and development, and exist in only the most
rudimentary levels. The Company expects that production and major
vendor initial shipments will be performed by independent contractors
working for the Company. The Company will maintain an order flow
computer record-keeping system to monitor customer fulfillment and
cross selling. This computer system will handle order entry, order
processing, picking, billing, accounts receivable, accounts payable,
general ledger, inventory control, catalog management and analysis
and mailing list management. Subject to credit terms and product
availability, orders will typically be shipped to customers within a
short time of receiving an order. Third party contractors will print
and assemble the Company's audio and video tapes, manuals,
transcripts, newsletters, software, inserts and the boxes in which
the products are shipped. The Company intends to develop multiple
sources for all components of its products.
Legal Proceedings
As of the date of this Prospectus, there is no pending
litigation involving the Company.
Government Regulation
The Company's business is subject to regulation under the
federal Telemarketing and Consumer Fraud and Abuse Prevention Act
and state laws applicable to consumer protection and telemarketing
activities. See "Risk Factors." Management believes that it is in
substantial compliance with all of the foregoing federal and state
laws and the regulations promulgated thereunder. Any claim that the
Company is not in compliance could result in judgments or consent
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agreements that required the Company to modify its marketing
program. In the worst cases, enforcement of fraud laws can result
in forcing a business to close and to subject the business and its
management and employees to be subject to criminal prosecution and
civil damage actions.
Employees
As of July 31, 1998, the Company had two full-time employees
and no part-time employees. The Company also uses three independent
contractors. Employees are not represented by a labor union and are
not subject to any collective bargaining arrangement. The Company
has never experienced a work stoppage and we believe that it has
good relations with its employees and contractors.
Properties
The Company rents the space in which its headquarters is
located at 6375 South Highland Drive, Suite D, Salt Lake City, Utah
84121. This space contains two offices and a reception area, and
comprises approximately 600 square feet. It is occupied entirely by
the Company and Balanced Woman. This space is under lease by the
Company for a ten (10) month period at $600 per month. Management
believes that this space will provide adequate office space to meet
the Company's needs for the foreseeable future. The independent
contractors used by the Company, as well as many of its officers,
maintain filings about and for the Company, perform business
activities for the Company, at their personal residences or places
of business.
MANAGEMENT OF THE COMPANY
The following persons are the current executive officers and
directors of the Company:
NAME AGE POSITION
Jeannene N. Barham 61 President, Secretary/Treasurer and
sole Director of the Company and of
Balanced Woman
Directors of the Company are elected by the shareholders
annually, or as needed by the Board of Directors to fill vacancies.
Jeannene N. Barham is a founder of the Company and of Balanced
Woman, and has held her current position since the inception of the
Company and of Balanced Woman. During the last five years, Ms.
Barham has been affiliated with The Focus Foundation, a non-profit
entity organized to help at-risk children. Between 1979 and 1990
she was Vice President of Marketing and Operations at The Charles
Hobbs Corp.(time management seminars and products). She is active
in community affairs, and currently serves as National President of
the Lambda Delta Sigma sorority. Ms. Barham is the sister of Rose
Blackham
Other Key Personnel and Independent Contractors:
Rose N. Blackham is a founder of the Company and of Balanced
Woman, and has held her current position since the inception of the
Company and of Balanced Woman. During the last five years, Ms.
Blackham has conducted management training and personal growth
seminars as an independent contractor and consultant. She has been
involved in the management training and personal development
industry for over twenty (20) years. Ms. Blackham is the originator
of Balanced Woman concept and is currently the sole presenter and
facilitator for Balanced Woman's seminars. Balanced Woman regards
Ms. Blackham as a visionary leader and presenter, and she was one of
the founders of Balanced Woman, although she has chosen to hold no
formal title or employment with Balanced Woman or the Company at
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this time. The loss of Ms. Blackham's counsel and services would
have a material adverse impact on the Company. Ms. Blackham is the
sister of Jeannene Barham.
Lisa Hawthorne is a founder of the Company and of Balanced
Woman and she assists with program and product development. During
the past five years she was employed full time by Franklin/Covey,
Inc., first as International Operations Manager, and later as
Director of Management and Employee Training and Development.
Teri Sundh is a founder of the Company and of Balanced Woman,
and has assisted with developing the sales and marketing strategy
for the Company and Balanced Woman as an independent contractor.
During the last five years, Ms. Sundh has worked as Vice President
of Public Seminars for Franklin/Covey, Inc. and as a consultant for
NitchCraft and other seminar training companies. Ms. Sundh
continues to do consulting work for various training companies.
Executive Compensation
Neither the Company nor Balanced Woman has been in existence
for a full year, and neither has not paid compensation to anyone for
such a period. The following table sets forth the aggregate
compensation paid to the Chief Executive Officer of the Company, and
to any other executive officer paid $100,000 or more during the
entire period of Balanced Woman's existence to the date of this
Prospectus.
(a) (b) (c) (d)
NAME AND YEAR SALARY BONUS
PRINCIPAL POSITION ($) ($)
Jeannene N. Barham, Since inception to 20,000.00 0
President and Chief July 31, 1998
Executive Officer
Explanation of Columns:
(c) SALARY: Total base salary earned during applicable period.
(d) BONUS: Annual incentive award paid for results achieved during
applicable period. Any amounts deferred at the election of the
executive are included in the reported amounts.
Employment Agreements
No officer or employee of the Company has an employment
agreement with the Company at this time. If the Company's business
plan proves initially successful, management intends to recommend to
the Board of Directors that the President and all key employees be
covered by employment agreements and non-compete provisions..
Long Term Incentive Plan.
In January 1998, the Board of Directors of the Company adopted
and the present stockholders approved, a 1998 Stock Option
Plan,("1998 Plan"). The 1998 Plan authorizes the granting of awards
of up to 1,000,000 shares of Common Stock to the Company's key
employees, officers, directors, consultants, advisors and sales
representatives. Awards consist of stock options (both non-qualified
options and options intended to qualify as "Incentive" stock options
under Section 422 of the Internal Revenue Code of 1986, as amended),
18
<PAGE>
restricted stock awards, deferred stock awards, stock appreciation
rights and other stock-based awards, as described in the 1998 Plan.
The 1998 Plan is administered by the Board of Directors which
determines the persons to whom awards will be granted, the number of
awards to be granted and the specific terms of each grant, including
the vesting thereof, subject to the provisions of the 1998 Plan. In
connection with qualified stock options, the exercise price of each
option may not be less than 100% of the fair market value of the
Common Stock on the date of grant (or 110% of the fair market value
in the case of a grantee holding more than 10% of the outstanding
stock of the Company). The aggregate fair market value of shares for
which qualified stock options are exercisable for the first time by
such employee during any calendar year may not exceed $100,000. Non-
qualified stock options granted under the 1998 Plan may be granted
at a price determined by the Board of Directors, not to be less than
the fair market value of the Common Stock on the date of grant.
The 1998 Plan also contains certain change in control
provisions which could cause options and other awards to become
immediately exercisable and restrictions and deferral limitations
applicable to other awards to lapse in the event any "person," as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, including a "group" as defined in Section
13(d), but excluding certain stockholders of the Company, became the
beneficial owners of more than 25% of the Company's outstanding
shares of Common Stock.
Options and Restricted Stock Grants.
The Founders of the Company purchased stock options from the
Company for $500 for each 50,000 share stock option. Pursuant to
such options each Founder has been granted an option (the "Option")
to purchase up to an aggregate of 50,000 shares of Common Stock at
an exercise price of $1.00 per share. The Option has a duration of
five years from date of vesting Each Option provides for the
vesting of 10,000 shares each year for the first five years. Shares
subject to options are subject to adjustments in the event of the
Company's declaration of stock dividends, stock splits,
reclassification and the occurrence of other similar events. The
Company has reserved 500,000 shares of Common Stock for issuance of
the Options and the Board of Directors will administer the Options.
At July 31, 1998, 450,000 Options were issued and 50,000 more were
issued November 4, 1998.
No shares of Common Stock have been granted to any employee or
contractor to date. The Company has agreed to compensate Rose
Blackham for her services to the Company in shares of restricted
Common Stock in amounts to be negotiated with the Board of
Directors. Shares of restricted stock are restricted in that they
are subject to the resale restrictions of Rule 144 of the Securities
and Exchange Commission and possible vesting requirements imposed by
the Company.
Director Compensation
The Company has no arrangements pursuant to which directors
have been compensated to date. No such director compensation has
been paid:
The Company has no plans to pay directors' compensation.
PRINCIPAL SHAREHOLDERS
The following table shows certain information known to the
Company regarding the beneficial ownership of the Company's common
stock as of September 30, 1998, and as adjusted to reflect the
shares being sold through this Offering, for (i) each shareholder
known by the Company to own beneficially 5% or more of the
19
<PAGE>
outstanding shares of its common stock; (ii) each director; and
(iii) all directors and executive officers as a group. The Company
believes that these beneficial owners, based on information they
have furnished, have sole investment and voting power with respect
to their shares, subject to community property laws where
applicable.
Name Class of Before the After the
Security Offering(1) Offering(2)
(Percent of class) (Percent of class)
Jeannene Barham Common Stock 300,000 (50%) 300,000 (35.5%)
Rose Blackham Common Stock 300,000 (50%) 300,000 (35.5%)
All directors Common Stock 300,000 (50%) 300,000 (35.5%)
and executive
officers as a
group (1 person)
________________________
(1) Includes any shares that any person or group has the right to acquire
anytime before November 30, 1998, pursuant to options or other rights.
(2) Assumes all 250,000 shares from the Offering were sold and outstanding
at July 31, 1998.
CERTAIN TRANSACTIONS
There have been no material transactions between the Company
and any affiliated person. All transactions between the Company or
Balanced Woman and their officers, directors, and principal
shareowners and their affiliates will be approved by a majority of
the disinterested Directors of the Company, who do not have an
interest in the transaction and who had access, at the Company's
expense, to the Company's or independent legal counsel, and will be
on terms no less favorable to the Company than could be obtained
from unrelated third parties.
DESCRIPTION OF THE SECURITIES OF THE COMPANY
The Units
The Units are specially created for the purposes of this
Offering. Each Unit consists of one (1) share of Common Stock, and
one each of the Class A, Class B and Class C Warrants, described
below.
Preferred Stock
The Company has 10,000,000 shares of preferred stock
authorized, of which none are currently issued and outstanding. The
board of directors is permitted to issue preferred stock in series
with differing preferences and rights.
Common Stock
The authorized capital stock of the Company consists of
50,000,000 shares of common stock, $0.001 par value (the "Common
Stock"), of which 600,000 shares were issued and outstanding on July
31, 1998. There were 2 holders of the Common Stock as of July 31,
1998.
Holders of the Common Stock are entitled to one vote per share
on all matters submitted to a vote of shareholders of the Company
and may not cumulate votes for the election of directors. Holders
of the Common Stock have the right to receive dividends when, as,
and if declared by the Board of Directors from funds legally
available therefor. Upon liquidation of the Company, holders of the
distribution to shareholders after payment of all obligations of the
Company. Common Stock are entitled to share pro rata in any assets
available for Holders of Common Stock have no preemptive rights and
20
<PAGE>
have no rights to convert their Common Stock into any other
securities. All shares of Common Stock have equal rights and
preferences. All shares of Common Stock now outstanding are fully
paid for and non-assessable.
The Company has never paid a cash dividend on the Common Stock.
The Company currently intends to retain all earnings, if any, to
increase the capital of the Company to effect planned expansion
activities and to pay dividends only when it is prudent to do so and
the Company's performance justifies such action. Holders of Common
Stock are entitled to receive dividends out of funds legally
available therefor when, as and if declared by the Company's Board
of Directors.
Description of the Warrants
The Company has issued three classes of common stock purchase
warrants for inclusion in the Units offered in this Offering. Class
A Redeemable Warrants allow the purchase of one (1) share of Common
Stock for $3.00. Class B Redeemable Warrants allow the same one (1)
share purchase, but at $5.00 per common share. Class C Redeemable
Warrants allow the purchase of one (1) share of Balanced Living
Common Stock for $10.00. (When referred to together, "the
Warrants".) All of the Warrants are valid until December 31, 2003,
when they will expire.
All of the Warrants provide that the Company is not obligated
to deliver shares of Common Stock pursuant to the exercise of a
Warrant unless a registration statement under the Securities Act of
1933, as amended, with respect to the Common Stock underlying that
Warrant is effective at the Securities and Exchange Commission. The
Company has filed a registration statement in connection with this
Offering, and will use its best efforts to keep that registration
statement, or a replacement registration statement, current and
effective as long as the Warrants are outstanding and exercisable.
There are costs associated with keeping such a registration
statement effective and current. There can be no assurance that the
Company will be able at all times to maintain an effective
registration statement covering the Warrants.
The Company believes that the Warrants are qualified in those
states where the Units themselves have been qualified by
registration or exemption from registration. The attempted exercise
of a Warrant in a state where such exercise would be unlawful will
not be honored.
The number of shares of Common Stock that may be acquired
through exercise of the Warrants (now one (1) share per Warrant)
will be adjusted for all then outstanding and unexercised Warrants
to give effect to any recapitalization, stock dividend or stock
split taking place at the Company with the respect to the
outstanding Common Stock. Such adjustments will be made by the
Company as appropriate and notice of such adjustments will be mailed
to all record holders of the Warrants then outstanding.
The Warrants may be redeemed by the Company, in all or only in
part, at a redemption price of $0.01 per Warrant at any time after
one (1) year from the issue date of the Warrant if the public market
price for the Company's Common Stock (if there is any such market)
equals or exceeds the exercise price for the particular Warrant.
Notice of any such redemption will be given at least 30 days before
the date fixed for redemption. Any Warrant selected for redemption
that is still outstanding and unexercised on and after the date
fixed for redemption will cease to have the rights of a Warrant and
will become only a right to receive the $.01 per Warrant redemption
price.
Warrants are freely transferable, subject to requirements of
applicable securities laws. The Company has entered into a Warrant
Agreement with its transfer agent, Interwest Transfer of Salt Lake
City, Utah, to supervise the transfer and exercise of the Warrants.
The form of this Warrant Agreement was filed as an exhibit to the
registration statement of which this Prospectus is a part.
21
<PAGE>
Limitations On Officers And Directors Liability And Indemnification
The Company's articles of incorporation provide that the
Company will indemnify any officer, director or former officer or
director, to the full extent permitted by law. This could include
indemnification for liabilities under securities laws enacted for
shareowner protection. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
Transfer Agent And Registrar
The Transfer Agent and Registrar for the Common Stock will be
Interwest Transfer Company, Inc., 1981 E. 4800 South, Suite 100,
Salt Lake City, Utah 84117 (801) 272-9294.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, assuming the sale of all
250,000 Units being offered, the Company will have outstanding
850,000 shares of Common Stock, not including the 665,000 shares now
covered by warrants and options, or the assumed total of 750,000
shares covered by the Class A, Class B and Class C warrants included
in the Units. Of the outstanding shares, the shares of Common Stock
sold in this Offering will be freely tradable without restriction or
further registration under the Securities Act, except for any shares
purchased by an "affiliate" of the Company, which will be subject to
the resale limitations of Rule 144 adopted under the Securities Act.
All of the 600,000 shares held by existing shareholders are
"restricted" securities within the meaning of Rule 144. Such shares
will become salable by complying with Rule 144 on various dates
after July 1, 1999. No shares are subject to any "lock-up"
agreement or similar arrangement.
In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned
shares for at least one year, including "affiliates" as that term is
defined under the Securities Act, is entitled to sell, within any
three-month period, a number of shares that does not exceed the
greater of (i) one percent (1%) of the then outstanding shares of
the Common Stock or (ii) the average weekly trading volume in the
Common Stock during the four calendar weeks immediately preceding
the date on which the notice of sale is filed with the Commission.
Sales under Rule 144 are subject to certain requirements relating to
manner of sale, notice and availability of certain current public
information about the Company. A person (or persons whose shares
are aggregated) who is not deemed to have been an "affiliate" of the
Company at any time during the 90 days immediately preceding the
sale and who has beneficially owned shares for at least three years
is entitled to sell such shares under Rule 144(k) without regard to
these limitations.
The Company's common stock is not listed or quoted on any
organized exchange or other trading market, nor has the Company
applied for a formal listing or quotation. The Company does not
currently meet the numerical requirements to have its shares listed
on a United States stock exchange or quoted on the NASDAQ over-the-
counter market. A trading market may not develop or be sustained.
The post-offering fair value of the Company's common stock, whether
or not any secondary trading market develops, is variable and may be
impacted by the business and financial condition of the Company, as
well as factors beyond the Company's control. Sales of substantial
amounts of shares in any public market could cause lower market
prices and even make it difficult for the Company to raise capital
through a future offering of its equity securities.
22
<PAGE>
PLAN OF DISTRIBUTION
No Broker-Dealer or Selling Agent Now Planned
The Company is offering 250,000 Units of the Company's
securities through its officers and directors on a "best-efforts"
basis. Each Unit consists of one (1) share of $.001 par value
Common Stock and one (1) Class A Common Stock Purchase Warrant, one
(1) Class B Common Stock Purchase Warrant and one (1) Class C Common
Stock Purchase Warrant, at a total purchase price of $2.00 per Unit.
The Offering is planned to be managed by the Company without any
under writer, and without any underwriting discounts or sales
commissions. The Units will be offered and sold primarily by the
Company's president and sole director Jeannene Barham, who will
receive no sales commissions or other compensation, except for
reimbursement of expenses actually incurred on behalf of the Company
for such activities. In connection with her efforts, she will rely
on the "safe harbor" provisions of Rule 3a4-1 of the Securities and
Exchange Act of 1934 (the "1934 Act"). Generally speaking, Rule
3a4-1 provides an exemption from the broker/dealer registration
requirements of the 1934 Act for associated persons of an issuer.
There is no minimum offering, therefore all subscriptions will be
paid directly to the Company upon receipt. No one, including the
Company, has made any commitment to purchase any or all of the
Units. Rather, Ms. Barham will use her best efforts to find
purchasers for the Units. The Company cannot state how many Units
will be sold, or the number of Units, if any, that will be sold
through the efforts of broker-dealers.
The Company anticipates making sale of the Units to persons
whom it believes may be interested or who have contacted the Company
with interest in purchasing the securities. The Company may sell
Units to such persons if they reside in a state in which the Units
legally may be sold and in which the Company is permitted to sell
the Units. The Company is not obligated to sell Units to any such
persons.
Investors should be aware that while this Offering is being
conducted through its officer and director, Jeannene Barham, that
the Company retains the right to utilize the services of
broker/dealers ("Participating Broker/Dealers") who are members of
the National Association of Securities Dealers, Inc. ("NASD"). The
Company reserves the right to pay commissions in connection with
sales effectuated through Participating Broker/Dealers in an amount
not to exceed 10% of the sales price for sale effectuated by them.
Prior to the involvement of any Participating Broker/Dealer in the
Offering, the Company must obtain a no objection position from the
NASD regarding any contemplated compensation and arrangements. In
view of the Commission's Division of Corporation Finance any
Participating Broker/Dealer that sells securities in this Offering
will be deemed an underwriter as defined in Section 2(11) of the
Securities Act of 1933, as amended. Further, the Company will amend
the Prospectus and the registration statement of which it is a part
to by post-effective amendment to identify a selected Participating
Broker/Dealer at such time as such Participating Broker/Dealer sells
5% or more of the Offering hereby.
No Minimum Offering Amount
The Company has established no minimum offering amount and no
escrow of Investor money pending a certain minimum number of shares
being sold. Each subscription for shares in this Offering that is
accepted by the Company will be credited immediately to the cash
accounts of the Company and such Investor funds may be spent by the
Company without any waiting period or other contingency.
Determination Of Offering Price
Prior to this Offering there has been no market for the common
stock of the Company, and the Company has had essentially no
business operations to date. The public offering price has been
determined arbitrarily by the Company's Board of Directors.
23
<PAGE>
The Company reserves the right to reject any subscription in
full or in part and to terminate the offering at any time.
Officers, directors present shareholders of the Company and persons
associated with them may be sold some of the Units. However,
officers, directors and their affiliates shall not be permitted to
purchase more than 20% of the Units sold hereunder and such
purchases will be held for investment and not for resale. In
addition, no proceeds from this offering will be used to finance any
such purchases.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, THAT INFORMATION
AND REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY
THE COMPANY. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES IT OFFERS TO ANY
PERSON IN ANY JURISDICTION IN WHICH THAT OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF ANY DATE LATER
THAN THE DATE OF THIS PROSPECTUS.
THE UNITS HAVE NOT BEEN REGISTERED IN ANY STATE EXCEPT CALIFORNIA,
COLORADO, NEW YORK AND UTAH, AND MAY ONLY BE OFFERED OR TRADED IN SUCH
OTHER STATES PURSUANT TO AN EXEMPTION FROM REGISTRATION.
PURCHASERS OF UNITS EITHER IN THIS OFFERING OR IN ANY SUBSEQUENT
TRADING MARKET WHICH MAY DEVELOP MUST BE RESIDENTS OF STATES IN WHICH
THE SECURITIES ARE REGISTERED OR EXEMPT FROM REGISTRATION. FOR THE
OFFERING HEREUNDER, THE COMPANY INTENDS TO RELY ON, BUT HAS NOT YET
OBTAINED, EXEMPTIONS FROM REGISTRATION IN THE STATES OF ARIZONA,
IDAHO, PENNSYLVANIA, NEVADA, AND NEW JERSEY. SOME OF THE EXEMPTIONS
ARE SELF-EXECUTING, THAT IS TO SAY THAT THERE ARE NO NOTICE OR FILING
REQUIREMENTS, AND COMPLIANCE WITH THE CONDITIONS OF THE EXEMPTION
RENDER THE EXEMPTION APPLICABLE. THE COMPANY WILL AMEND THIS
PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL STATES, IF ANY, IN
WHICH THE COMPANY'S SECURITIES WILL HAVE BEEN REGISTERED OR AN
EXEMPTION IS AVAILABLE. See "RISK FACTORS - State Blue Sky
Registration; Restricted Resales of the Securities."
EXPERTS
The Consolidated balance sheets of Balanced Living, Inc. as of
July 31, 1998 and the related statements of operations,
stockholders' deficit and cash flows for the period ended July 31,
1998, included in this Prospectus, have been included herein in
reliance on the report of Pritchett, Siler & Hardy, P.C. independent
certified public accountants, given on the authority of that firm as
experts in accounting and auditing.
LEGAL MATTERS
Ray Quinney & Nebeker PC has passed on certain legal matters
for Balanced Woman and for the Company in connection with this
Offering. No attorney at Ray Quinney & Nebeker is related by blood
or otherwise to any affiliate of the Company or of Balanced Woman,
nor does any attorney at Ray Quinney & Nebeker beneficially own any
of the securities of the Company or of Balanced Woman.
WHERE CAN YOU FIND ADDITIONAL INFORMATION
A Registration Statement on Form SB-2, including amendments
thereto, relating to the shares offered hereby has been filed with
the Securities and Exchange Commission. This Prospectus does not
contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each
instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.
For further information with respect to the Company and the shares
offered hereby, reference is made to such Registration Statement,
exhibits and schedules. A copy of the Registration Statement may be
inspected by anyone without charge at the Commission's principal
office located at 450 Fifth Street, N.W., Washington, D.C. 20549,
the Northeast Regional Office located at 7 World Trade Center, 13th
Floor, New York, New York, 10048, and the Midwest Regional Office
located at Northwest Atrium Center, 500 The Companyst Madison
Street, Chicago, Illinois 60661-2511 and copies of all or any part
thereof may be obtained from the Public Reference Branch of the
Commission upon the payment of certain fees prescribed by the
Commission. The Commission also maintains a site on the World Wide
The Company at http://www.sec.gov that contains information
regarding registrants that file electronically with the Commission.
24
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
UNAUDITED CONSOLIDATED BALANCE SHEET
ASSETS
November 30,
1998
_____________
CURRENT ASSETS:
Cash in bank $ 7,614
Inventory 18,049
Prepaid assets 600
___________
Total Current Assets 26,263
EQUIPMENT, net 3,318
___________
$ 29,581
___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ -
Accounts payable - related party 471
Notes payable - related party 255,000
Accrued liabilities 7,240
___________
Total Current Liabilities 262,711
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
10,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized,
600,000 shares issued and outstanding 600
Paid in capital 7,400
Deficit accumulated during the
development stage (241,130)
___________
Total Stockholders' Equity (Deficit) (233,130)
___________
$ 29,581
___________
F-1
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Period From Inception
from August 1, on January 26,
1998 Through 1998 Through
November 30, 1998 November 30, 1998
_____________ _____________
REVENUE $ 9,147 $ 15,614
COST OF SALES 6,364 20,129
_____________ _____________
GROSS PROFIT (LOSS) 2,783 (4,515)
_____________ _____________
EXPENSES:
General and administrative 98,970 224,313
_____________ _____________
OPERATING LOSS (96,187) (228,828)
OTHER INCOME (EXPENSE):
Interest income 18 18
Interest expense (7,523) (12,320)
_____________ _____________
LOSS BEFORE INCOME TAXES (103,692) (241,130)
CURRENT TAX EXPENSE - -
DEFERRED TAX EXPENSE - -
_____________ _____________
NET LOSS $ (103,692) $ (241,130)
_____________ _____________
LOSS PER COMMON SHARE:
Basic earnings per share $ (.17) $ (.72)
_____________ _____________
Weighted average shares
outstanding 600,000 337,201
_____________ _____________
F-2
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FROM INCEPTION ON JANUARY 26, 1998
THROUGH NOVEMBER 30, 1998
Deficit
Accumulated
Common Stock During the
___________________ Paid in Development
Shares Amount Capital Stage
________ _________ _________ _________
BALANCE, January 26, 1998 - $ - $ - $ -
Issuance of 100,000 shares
common stock for cash,
February 10, 1998 at
$.01 per share 100,000 100 900 -
Effect of reorganization
of the Company through
the issuance of 500,000
shares of common stock
to acquire "The Balanced
Woman, Inc." pursuant
to agreement and plan
reorganization on
July 14, 1998 500,000 500 1,500 -
Consideration received for
the grant of 450,000
non-qualified stock
options, at $.01 per
underlying share of stock - - 4,500 -
Net loss for the period
ended July 31, 1998 - - - (137,438)
_________ _________ _________ _________
BALANCE, July 31, 1998 600,000 600 6,900 (137,438)
Consideration received
for the grant of 50,000
non-qualified stock
options, at $.01 per
underlying share of
stock - - 500 -
Net loss for the period
ended November 30, 1998 - - - (103,692)
_________ _________ _________ _________
BALANCE, November 30, 1998 600,000 $ 600 $ 7,400 $(241,130)
_________ _________ _________ _________
F-3
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period From Inception
from August 1, on January 26,
1998 Through 1998 Through
November 30, 1998 November 30, 1998
_______________ _______________
Cash Flows Used by Operating Activities:
Net loss $ (103,692) $ (241,130)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation 177 318
Changes in assets and liabilities:
Decrease in shareholder advance
receivable 1,000 -
Increase in inventory (3,278) (18,049)
Increase in prepaid assets - (600)
Decrease in accounts payable (6,242) -
Increase in accounts payable -
related party - 471
Increase in accrued liabilities 4,276 7,240
_______________ _______________
Net Cash Used by Operating
Activities (107,759) (251,750)
_______________ _______________
Cash Flows Used by Investing Activities:
Equipment purchases (563) (3,636)
_______________ _______________
Net Cash Used by Investing
Activities (563) (3,636)
_______________ _______________
Cash Flows Provided by Financing Activities:
Proceeds from options granted 500 5,000
Proceeds from common stock issuance - 3,000
Proceeds from notes payable issuance 95,000 255,000
_______________ _______________
Net Cash Provided by Financing
Activities 95,500 263,000
_______________ _______________
Net Increase (Decrease) in Cash (12,822) 7,614
Cash at Beginning of Period 20,436 -
_______________ _______________
Cash at End of Period $ 7,614 $ 7,614
_______________ _______________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ 6,625 $ 8,458
Income taxes $ - $ -
Supplemental schedule of Noncash Investing and Financing Activities:
For the period ended November 30, 1998:
The Company entered into a reorganization with The Balanced
Woman, Inc. wherein the shareholders of The Balanced Woman
retained 500,000 shares of stock in the Company.
F-4
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1998
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
BALANCED LIVING, INC.
[A Development Stage Company]
F-5
<PAGE>
CONTENTS
PAGE
- Independent Auditors' Report 1
- Consolidated Balance Sheet, July 31, 1998 2
- Consolidated Statement of Operations, from
inception on January 26, 1998 through
July 31, 1998 3
- Consolidated Statement of Stockholders'
Deficit, from inception on January 26, 1998
through July 31, 1998 4
- Consolidated Statement of Cash Flows, from
inception on January 26, 1998 through
July 31, 1998 5
- Notes to Consolidated Financial Statements 6 - 12
F-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
BALANCED LIVING, INC.
Sandy, Utah
We have audited the accompanying consolidated balance sheet of
Balanced Living, Inc. and The Balanced Woman, Inc., its only
subsidiary [a development stage company] at July 31, 1998, and
the related consolidated statements of operations, stockholders'
deficit and cash flows from inception on January 26, 1998 through
July 31, 1998. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we 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. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements audited by
us present fairly, in all material respects, the consolidated
financial position of Balanced Living, Inc. and Subsidiary as of
July 31, 1998, and the consolidated results of their operations
and their cash flows for the period from inception through July
31, 1998, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 13 to the financial statements, the Company was only
recently formed and has not yet established profitable
operations, has incurred losses through July 31, 1998 amounting
to $137,438, has current liabilities in excess of current assets
and has a stockholders deficit. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regards to these matters are also described
in Note 13. The financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
August 7, 1998
F-7
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONSOLIDATED BALANCE SHEET
ASSETS
July 31,
1998
_____________
CURRENT ASSETS:
Cash in bank $ 20,436
Shareholder advance receivable 1,000
Inventory 14,771
Prepaid assets 600
___________
Total Current Assets 36,807
EQUIPMENT, net 2,932
___________
$ 39,739
___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 6,242
Accounts payable - related party 471
Notes payable - related party 160,000
Accrued liabilities 2,964
___________
Total Current Liabilities 169,677
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
10,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized,
600,000 shares issued and outstanding 600
Paid in capital 6,900
Deficit accumulated during the
development stage (137,438)
___________
Total Stockholders' Equity (Deficit) (129,938)
___________
$ 39,739
___________
The accompanying notes are an integral part of these financial
statements.
F-8
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONSOLIDATED STATEMENT OF OPERATIONS
From Inception
on January 26,
1998 Through
July 31, 1998
_______________
REVENUE $ 6,467
COST OF SALES 13,765
_____________
GROSS PROFIT (LOSS) (7,298)
_____________
EXPENSES:
General and administrative 125,343
_____________
OPERATING LOSS (132,641)
OTHER INCOME (EXPENSE):
Interest expense (4,797)
_____________
LOSS BEFORE INCOME TAXES (137,438)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
_____________
NET LOSS $ (137,438)
_____________
LOSS PER COMMON SHARE:
Basic earnings per share $ (.92)
_____________
Diluted earnings per share $ (.92)
_____________
The accompanying notes are an integral part of these financial
statements.
F-9
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FROM THE DATE OF INCEPTION ON JANUARY 26, 1998
THROUGH JULY 31, 1998
[RESTATED]
Deficit
Accumulated
Common Stock During the
______________________ Paid in Development
Shares Amount Capital Stage
______________________________________________
BALANCE, January 26, 1998 - $ - $ - $ -
Issuance of 100,000 shares
common stock for cash,
February 10, 1998 at
$.01 per share 100,000 100 900 -
Effect of reorganization of
the Company through the
issuance of 500,000 shares
of common stock to acquire
"The Balanced Woman, Inc."
pursuant to agreement and
plan reorganization on
July 14, 1998 500,000 500 1,500 -
Consideration received for
the grant of 450,000 non-
qualified stock options,
at $.01 per underlying
share of stock - - 4,500 -
Net loss for the period
ended July 31, 1998 - - - (137,438)
______________________________________________
BALANCE, July 31, 1998 600,000 $ 600 $ 6,900 $ (137,438)
______________________________________________
The accompanying notes are an integral part of these financial
statements.
F-10
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONSOLIDATED STATEMENT OF CASH FLOWS
From Inception
on January 26
1998 Through
July 31, 1998
__________________
Cash Flows Used by Operating Activities:
Net loss $ (137,438)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation 141
Changes in assets and liabilities:
Increase in shareholder advance receivable (1,000)
Increase in inventory (14,771)
Increase in prepaid assets (600)
Increase in accounts payable 6,242
Increase in accounts payable - related party 471
Increase in accrued liabilities 2,964
________________
Net Cash Used by Operating Activities (143,991)
________________
Cash Flows Used by Investing Activities:
Equipment purchases (3,073)
________________
Net Cash Used by Investing Activities (3,073)
________________
Cash Flows Provided by Financing Activities:
Proceeds from options granted 4,500
Proceeds from common stock issuance 3,000
Proceeds from notes payable issuance 160,000
________________
Net Cash Provided by Financing Activities 167,500
________________
Net Increase in Cash 20,436
Cash at Beginning of Period -
________________
Cash at End of Period $ 20,436
________________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ 1,833
Income taxes $ -
Supplemental schedule of Noncash Investing and Financing
Activities:
For the period ended July 31, 1998:
The Company entered into a reorganization with The Balanced
Woman, Inc. wherein the shareholders of The Balanced Woman
retained 500,000 shares of stock in the Company.
The accompanying notes are an integral part of these financial
statements.
F-11
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Balanced Woman, Inc. ("Subsidiary") was
organized under the laws of the State of Colorado on January 26,
1998. During July, 1998 the Company was reorganized through a
stock for stock exchange with Balanced Living, Inc. ("Parent")
[See Note 2]. Balanced Living, Inc. a Colorado corporation, was
organized on July 1, 1998. The Company has not raised
significant revenue from planned principal operations and is
considered a development stage company as defined in SFAS No. 7.
The Company is engaged in the business of holding motivational
seminars, and selling books and other motivational products. The
Company has, at the present time, not paid any dividends and any
dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary, The
Balanced Woman, Inc. All significant intercompany transactions
have been eliminated in consolidation.
Inventories - Inventories are stated at the lower of cost or
market. Cost is determined by the first-in, first-out method.
Equipment - Equipment is carried at cost and is depreciated over
the estimated useful life of the equipment using the straight
line method.
Revenue Recognition - The company's revenue comes from holding
motivational seminars and selling motivational products (books,
cards, CD's, etc.). Revenue is recognized when the services are
rendered or the product is delivered.
Loss Per Share - The computation of loss per share is based on
the weighted average number of shares outstanding during the
period presented in accordance with FASB 128 "Earnings Per
Share".
Statement of Cash Flows - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from
those estimated.
Fair Value of Financial Instruments - Management estimates that
the carrying value of financial instruments on the consolidated
financial statements approximates their fair values.
Restatement - The financial statements have been restated to
reflect the reorganization of the Company pursuant to a stock for
stock exchange [See Note 2]. All references to common stock and
the numbers of shares issued and outstanding have been restated
to reflect the shares of common stock issued in the
reorganization.
F-12
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - BUSINESS REORGANIZATION
On July 14, 1998 the Company entered into an Agreement and Plan
of Reorganization wherein Parent acquired all the issued and
outstanding shares of common stock of Subsidiary in a stock for
stock exchange. Parent issued 500,000 shares of common stock in
the exchange. Parent and Subsidiary had similar ownership at the
time of reorganization and were considered to be entities under
common control. Accordingly, the reorganization has been
recorded in a manner similar to a pooling of interests.
NOTE 3 - INVENTORIES
Inventories consisted of finished goods in the amount of $14,771
at July 31, 1998.
NOTE 4 - EQUIPMENT
Equipment consists of the following:
Estimated
Useful Lives July 31,
in Years 1998
___________ __________
Office equipment 5 - 7 $ 3,073
__________
3,073
Accumulated depreciation (141)
__________
$ 2,932
__________
Depreciation expense for the period ended July 31, 1998 was $141.
NOTE 5 - NOTES PAYABLE
During March, 1998, the Company issued subordinated demand notes
payable to various officers, shareholders, and consultants in the
amount of $160,000. The notes bear interest at a rate of 10% per
annum with quarterly interest payments, the notes are due on
March 1, 1999. Note-holders can demand payment of the unpaid
principal plus accrued interest in order to purchase other equity
opportunities in the Company of equal value at any time prior to
the maturity date. As of July 31, 1998, interest payments have
been made in the amount of $1,833. The notes are subordinated by
80,000 warrants to purchase one share of the Company's stock at
$1 per share [See Note 6].
Subsequent to July, 1998, the Company raised an additional
$65,000 through issuing additional subordinated demand notes
payable, $25,000 of which came from a private investor. Warrants
for 32,500 shares of common stock were included in the
transaction.
F-13
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - CAPITAL STOCK
Common Stock - In connection with its acquisition of Subsidiary
on July 14, 1998, the Company issued 500,000 shares of its
previously authorized, but unissued common stock [See Note 2].
The Subsidiary had previously been funded with $2,000.
During January, 1998, the Company issued 100,000 shares of common
stock in connection with the organization of the Company at $.01
per share. Total proceeds amounted to $1,000.
Stock Warrants - During March, 1998, Subsidiary issued 80,000
common stock warrants to various officers, directors and
consultants in conjunction with the issuance of subordinated
notes payable [See Note 5]. Due to the reorganization of the
company [See note 2], the warrants of Subsidiary were cancelled,
and re-issued under the same terms by Parent during July, 1998.
Each warrant grants the holder the right to purchase one share of
the Company's common stock at a price of $1 per share. The
warrants may be exercised at any time prior to March 1, 2003. An
additional 32,500 warrants were issued subsequent to July, 1998.
Stock Option Plan - During January, 1998 the Company implemented
its 1998 stock option plan. The plan provides for 1,000,000
shares of common stock to be reserved for issuance to officers,
directors, employees and consultants as employment incentives.
As of July 31, 1998, no options have been issued under the plan.
Options granted vest over a five year period and are exercisable
at $1 per share. As of July 31, 1998 no options had vested.
Non-Qualified Stock Options - As of July 31, 1998, the Company
has issued a total of 450,000 options outside of the 1998 stock
option plan to various officers, directors and consultants of the
Company. These options are exercisable at $1 per share, and vest
over a five-year period, based upon certain conditions specified
in the option agreement. The options expire five years from the
date of vesting. As of July 31, 1998, no options had vested. An
additional 50,000 non-qualified options were issued subsequent to
July 31, 1998.
A summary of the status of the options granted under the
Company's stock option plans and other agreements at July 31,
1998 and changes during the period then ended is presented in the
table below:
1998
____________________________
Weighted Average
Shares Exercise Price
__________________________
Outstanding at
beginning of period - $ -
Granted 450,000 1.00
Exercised - -
Forfeited - -
Canceled - -
__________________________
Outstanding at
end of Period 450,000 $ 1.00
__________________________
Exercisable at
end of period - $ 1.00
__________________________
Weighted average
fair value of
options granted 450,000 $ -
__________________________
F-14
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - CAPITAL STOCK [Continued]
The fair value of each option granted is estimated on the date
granted using the Black-Scholes option pricing model with the
following weighted-average assumptions used for grants during
the period ended July 31, 1998: risk-free interest rate of
4.879%, expected dividend yield of 0%, expected life of 5
years, and expected volatility of 0%.
A summary of the status of the options outstanding under the
Company's stock option plans and other agreements at July 31,
1998 is presented below:
Options Outstanding Options Exercisable
________________________________ ____________________
Weighted Weighted Weighted
Range of Average Average Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Price Exercisable Price
Life
_______ ___________ __________ ________ __________ ________
$1.00 450,000 5 years $1.00 0 $1.00
The Company accounts for its option plans and other option
agreements under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related
interpretations. Accordingly, since all options granted were
granted with exercise prices at market value or above, no
compensation cost has been recognized in the accompanying
financial statements. Had compensation cost for these options
been determined based on the fair value at the grant dates for
awards under these plans and other option agreements
consistent with the method prescribed by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation", the Company's net income and earnings per
common share would have been the proforma amounts as indicated
below:
Period Ended
July 31,
1998
____________
Net Loss As reported $ (137,438)
Proforma $ (137,438)
Loss per share As reported $ (.92)
Proforma $ (.92)
NOTE 7 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or
tax credit carryforwards. At July 31, 1998 the Company has
available unused operating loss carryforwards of approximately
$137,000, which may be applied against future taxable income and
which expire in 2013.
F-15
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES [Continued]
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company, and other future events, the effects of
which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset has
been recognized for the loss carryforwards. The net deferred tax
assets are approximately $47,000 as of July 31, 1998 with an
offsetting valuation allowance of the same amount resulting in a
change in the valuation allowance of approximately $47,000 during
1998.
NOTE 8 - LOSS PER SHARE
The following data shows the amounts used in computing loss per
share for the period ended July 31, 1998.
Weighted-Average
Loss Shares Per-Share
(Numerator) (Denominator) Amount
___________ _______________ _________
Basic loss per share
Net loss $ (137,438) 149,708 $ (.92)
_________
Effect of dilutive
securities
Warrants - -
Options - -
___________ _______________
Diluted loss per share
Net loss + assumed
conversions $ (137,438) 149,708 $ (.92)
___________ _______________ _________
The Company had at July 31, 1998, options and warrants to
purchase 450,000 and 80,000 shares of common stock ,
respectively, at prices of $1.00 per share, that were not
included in the computation of diluted loss per share because
their effect was anti-dilutive (the exercise price of the
options and warrants was greater than the average market price
of the common shares).
NOTE 9 - COMMITMENTS
The Company has agreed to compensate a majority shareholder of,
and independent contractor to, the Company for her services to
the Company in shares of the Company's restricted common stock.
The exact number of shares has yet to be negotiated with the
board of directors of the Company, and may be subject to vesting
rights imposed by the Company. No amounts have been accrued in
the accompanying financial statements for this agreement to issue
stock.
F-16
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - SUB-LEASE AGREEMENT
During July, 1998, the Company entered into an agreement to
sub-lease office space. The term of the lease is 10.5 months,
with no option to renew. The agreement terminates on June 1,
1999. Total base rent amounts to $6,300 and is due in monthly
installments of $600. As of July 31, 1998 the Company had
paid its first month's rent of $600 plus a security deposit of
$600.
NOTE 11 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company paid $20,000 in salary to
the Company's President/Secretary-Treasurer during the period
ended July 31, 1998.
Shareholder Advance - During the period ended July 31, 1998, the
Company made advances to the President/Secretary-Treasurer of the
Company totaling $1,000. The advances are non-interest bearing
and were subsequently repaid in full.
Accounts Payable - As of July 31, 1998 the Company owed $471 to
an option/warrant holder and consultant to the Company for
amounts paid on behalf of the Company for operating expenses and
inventory.
Notes Payable - As of July 31, 1998 the Company had outstanding
subordinated demand notes payable to various officers, directors,
shareholders and consultants totaling $160,000 [See Note 5]. Of
the notes, $10,000 were issued to the Company's
President/Secretary-Treasurer, and $50,000 were issued to a
majority shareholder.
Stock Warrants - During the period ended July 31, 1998, the
Company issued 80,000 common stock warrants to various officers,
directors and consultants [See Note 6]. Of the 80,000 warrants,
5,000 were issued to the Company's President/Secretary-Treasurer,
and 25,000 were issued to a majority shareholder.
Stock Options - During the period ended July 31, 1998, The
Company issued 450,000 stock options to various officers,
directors and consultants [See Note 6]. Of the 450,000 options,
50,000 were issued to the Company's President/Secretary-
Treasurer, and 50,000 were issued to a majority shareholder.
NOTE 12 - DEVELOPMENT STAGE COMPANY
The Company was formed with a very specific business plan.
However, the possibility exists that the Company could expend
virtually all of its working capital in a relatively short time
period and may not be successful in establishing on-going
profitable operations.
F-17
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
contemplate continuation of the Company as a going concern.
However, the Company was only recently formed, has not yet
established profitable operations, has incurred significant
losses since inception, and has a stockholder's deficit. The
Company also has current liabilities in excess of current assets
(a working capital deficiency). These factors raise substantial
doubt about the ability of the Company to continue as a going
concern. In this regard, management is proposing to raise
additional funds through loans and/or through additional sales of
its common stock which funds will be used to assist in
establishing on-going operations. There is no assurance that the
Company will be successful in raising this additional capital or
achieving profitable operations. The financial statements do not
include any adjustments that might result from the outcome of
these uncertainties.
NOTE 14 - SUBSEQUENT EVENTS
Proposed Public Offering of Common Stock - The Company plans to
file a registration statement with the United States Securities
and Exchange Commission on Form SB-2 under the Securities Act of
1933. The Company proposes to sell 250,000 "Units" at a price of
$2 per Unit, which price has been arbitrarily determined by the
Company. Each Unit consists of one share of the Company's $.001
par value common stock sold at $2 per share, one "Class A
Warrant" to purchase one share of common stock at $3 per share,
one "Class B Warrant" to purchase one share of common stock at $5
per share, and one "Class C Warrant" to purchase one share of
common stock at $10 per share. All warrants issued under the
offering will expire on December 31, 2003. The warrants are
callable if, after one year from the issuance date, public
trading develops and trading occurs for at least 20 consecutive
days. The warrants are callable at $.01 per warrant upon 30 days
notice by the Company to warrant holders. The Units will be
offered and sold by officers of the Company, who will receive no
sales commissions or other compensation in connection with the
offering, except for reimbursement of expenses actually incurred
on behalf of the Company in connection with the offering. If a
registered broker dealer is used in selling any of the units, a
10% sales commission will be paid to those broker dealers who
assist in selling the units. The Company has not incurred any
stock offering costs as of July 31, 1998, but any such costs will
be netted against the proceeds of the proposed public offering.
Subordinated Demand Notes-Payable - Subsequent to July, 1998 the
Company issued additional subordinated demand notes payable for
proceeds totaling $95,000. Warrants for 47,500 shares of common
stock were also issued in the transaction.
Stock Options - Subsequent to July, 1998 the Company issued
additional non-qualified stock options for the purchase of 50,000
shares of common stock. The options will vest over a five year
period and are exercisable at $1 per share.
F-18
<PAGE>
No dealer, salesman or other person is authorized to give any
information or to make any representations other than those
contained in this Prospectus in connection with the offer made
hereby. If given or made, such information or representations
must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities
covered hereby in any jurisdiction or to any person to whom it
is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any
sale made hereunder shall, in any circumstances, create any
implication that there has been no change in the affairs of
the Company since the date hereof.
TABLE OF CONTENTS
Item Page
Prospectus Summary 1
Risk Factors 2
Use of Proceeds 8
Dilution 9
Management's Discussion & Analysis
of Financial Condition and Results of Operations 9
Business of the Company 12
Management of the Company 17
Principal Shareholders 19
Certain Transactions 20
Description of Common Stock 20
Shares Eligible for Future Sale 22
Plan of Distribution 23
Experts 24
Additional Information 24
Financial Statements 24
Notes to Financial Statements F-1
Balanced Living, Inc.
250,000 Common Stock Units
PROSPECTUS
December , 1998
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or
other arrangements under which controlling persons, directors
or officers of the registrant are insured or indemnified in
any manner against any liability which they may incur in such
capacity are as follows:
Section 7-109-102 of the Colorado Code grants authority to a
Colorado corporation to indemnify officers and directors as
follows:
(1) Except as provided in subsection (4), below, a corporation may
indemnify a person made a party to a proceeding because the person is or
was a director against liability incurred in the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonably believed:
(I) In the case of conduct in an official capacity
with the corporation, that his or her conduct was in the
corporation's best interests; and
(II) In all other cases, that his or her conduct
was at least not opposed to the corporation's best
interests; and
(c) In the case of any criminal proceeding, the person
had no reasonable cause to believe his or her conduct was
unlawful.
(2) Indemnification is appropriate as to a director's
conduct with respect to an employee benefit plan for a purpose
the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that
satisfies the requirement of subparagraph (II) of paragraph
(b) of (1), above. A director's conduct with respect to an
employee benefit plan for a purpose that the director did not
reasonably believe to be in the interests of the participants
in or beneficiaries of the plan shall be deemed not to satisfy
the requirements of paragraph (a) of (1), above.
(3) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
its equivalent is not, of itself, determinative that the
director did not meet the statutory standard of conduct.
(4) A corporation may not indemnify a director:
(a) In connection with a proceeding by or in the right
of the corporation in which the director was adjudged liable
to the corporation; or
(b) In connection with any other proceeding charging
that the director derived an improper personal benefit,
whether or not involving action in an official capacity, in
which proceeding the director was adjudged liable on the basis
that he or she derived an improper personal benefit.
26
<PAGE>
(5) Indemnification must be limited to reasonable expenses
incurred in connection with the proceeding.
(6) The articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the
expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by
the corporation as they are incurred and in advance of the
final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by
a court of competent jurisdiction that he is not entitled to
be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses
to which corporate personnel other than directors or officers
may be entitled under any contract or otherwise by law.
The registrant's Articles of Incorporation limit
liability of its Officers and Directors to the full extent
permitted by the Colorado Business Corporation Act.
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated costs and
expenses to be paid by the Company in connection with the
Offering described in the Registration Statement.
Amount
SEC registration fee $ 1,327
Blue sky fees and expenses $ 5,000
Printing and shipping expenses $ 500
Contingent Broker Commissions $ 50,000
Legal fees and expenses $ 20,000
Accounting fees and expenses $ 4,000
Transfer, Escrow and Miscellaneous expenses $ 1,250
Total $ 82,077
* All expenses except SEC registration fee are estimated.
ITEM 26. Recent Sales of Unregistered Securities
On July 14, 1998, the Company agreed to issue 250,000
shares of unregistered Common Stock to each of Ms. Barham and
Ms. Blackham in exchange for their shares of equal number in
The Balanced Woman, Inc. This offering was conducted in
reliance on Section 4(2) of the Securities Act and state
corollary exemptions.
On July 15, 1998, the Company issued a total of 80,000
warrants to purchase a total of 80,000 shares of the Company's
Common Stock, at $1.00 per share, to 7 persons who were
involved in the formation of The Balanced Woman, Inc. and who
were instrumental in the organization of the Company. The
total subscription amount was $160,000, which was loaned to
the Company. The Company believes that these warrants were
issued under the exemption of Section 4(2) of the Securities
Act, and corollary state exemptions.
27
<PAGE>
On July 1, 1998, 100,000 shares of unregistered Company
Common Stock were issued to Ms. Barham and Ms. Blackham
(50,000 each) in return for $500.00 each. These shares were
issued in reliance on the exemption found in Section 4(2) of
the Securities Act and corollary state exemptions.
On August 12, 1998, the Company issued a total of 12,500
warrants to purchase a total of 12,500 shares of the Company's
Common Stock, at $1.00 per share, to Jolley Family Trust, a
private investor. The total subscription amount was $25,000,
which was loaned to the Company. The Company believes that
these warrants were issued under the exemption of Section 4(2)
of the Securities Act, and corollary state exemptions.
On August 24, 1998, the Company issued a total of 20,000
warrants to purchase a total of 20,000 shares of the Company's
Common Stock, at $1.00 per share, to Carol Jensen, who was
involved in the formation of The Balanced Woman, Inc. and who
was instrumental in the organization of the Company and had
previously been issued warrants. The total subscription
amount was $40,000, which was loaned to the Company. The
Company believes that these warrants were issued under the
exemption of Section 4(2) of the Securities Act, and corollary
state exemptions.
On October 30, 1998, the Company issued 12,500 warrants
to purchase a total of 12,500 shares of the Company's Common
Stock, at $1.00 per share, to Rose Blackham. The total
subscription amount was $25,000, which was loaned to the
Company. The Company believes that these warrants were issued
under the exemption of Section 4(2) of the Securities Act, and
corollary state exemptions.
On November 4, 1998, the Company issued a total of 2,500
warrants to purchase a total of 2,500 shares of the Company's
Common Stock, at $1.00 per share, to Linda Ford. The total
subscription amount was $5,000, which was loaned to the
Company. The Company believes that these warrants were issued
under the exemption of Section 4(2) of the Securities Act, and
corollary state exemptions.
On December 4, 1998, the Company issued a total of 20,000
warrants to purchase a total of 20,000 shares of the Company's
Common Stock, at $1.00 per share, to Kim and Shannan Lundgren, a
private investor. The total subscription amount was $40,000,
which was loaned to the Company. The Company believes that
these warrants were issued under the exemption of Section 4(2)
of the Securities Act, and corollary state exemptions.
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On December 4, 1998, the Company issued a total of 12,500
warrants to purchase a total of 12,500 shares of the Company's
Common Stock, at $1.00 per share, to Kent G. and Marianne C.
Stephens, a private investor. The total subscription amount was
$25,000, which was loaned to the Company. The Company believes
that these warrants were issued under the exemption of Section 4(2)
of the Securities Act, and corollary state exemptions.
On December 9, 1998, the Company issued a total of 5,000
warrants to purchase a total of 5,000 shares of the Company's
Common Stock, at $1.00 per share, to Neidda Shehady, a
private investor. The total subscription amount was $10,000,
which was loaned to the Company. The Company believes that
these warrants were issued under the exemption of Section 4(2)
of the Securities Act, and corollary state exemptions.
ITEM 27. Exhibits
Index SEC Reference
Exhibit No. Document
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Agreement & Plan of Reorganization with The
Balanced Woman, Inc.
4.2 Stock Option Agreement with Jeannene Barham
4.3 Stock Option Agreement with Rose Blackham
4.4 Stock Option Agreement with Terri Sundh
4.5 Stock Option Agreement with Lisa Hawthorne
4.6 Stock Option Agreement with Linda Ford
4.7 Stock Option Agreement with Carole F. Madsen
4.8 Stock Option Agreement with Gail Showalter
Soderling
4.9 Stock Option Agreement with Carol N. Jensen
4.10 Stock Option Agreement with Carole F. Madsen
4.11 Stock Option Agreement with 1st Zamora Corp.
4.12 Form of Promissory Note used with private investors
4.13 Form of Securities Purchase Agreement used
with private investors
4.14 Form of $1.00 per share Warrants used with
private investors
5. Opinion on Legality
10 Stock Option Plan
21 Subsidiaries of the small business issuer
24.1 Consent of Pritchett, Siler & Hardy P.C.
24.2 Consent of Counsel to Issuer (included in Exhibit 5)
27 Financial Data Schedule
99.1 Form of Subscription Agreement
99.2 Form of Class A Warrant
99.3 Form of Class B Warrant
99.4 Form of Class C Warrant
99.5 Form of Warrant Agreement with Trust Agreement
99.6 Lease Agreement
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ITEM 28. Undertakings
Subject to the terms and conditions of Section 15(d) of
the Securities Exchange Act of 1934, the undersigned
Registrant hereby undertakes to file with the Securities and
Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by
any rule or regulation of the Commission heretofore or
hereafter duly adopted pursuant to authority conferred to that
section.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
its Articles of Incorporation or provisions of the Nevada
Revised Statutes, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of counsel the matter
has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question, whether or not such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes to:
(1) File, during any period in which it offers or
sells securities, a post-effective amendment to this
registration statement to: (i) Include any prospectus
required by section 10(a)(3) of the Securities Act; (ii)
Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and (iii)
Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities
Act treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the
end of the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that
it has met all of the requirements of filing on Form SB-2 and has
authorized this Registration Statement to be signed on its behalf by
the undersigned, in Salt Lake City, Utah, on December 18, 1998.
Balanced Living, Inc.
By: /s/ Jeannene Barham
Jeannene Barham, Chief Executive Officer,
Director and President
Pursuant to the requirements of the Securities Act of
1933, this amendment to Registration Statement has been signed
by the following persons in the capacities and on the date
indicated.
Signatures Title Date
/s/ Jeannene Barham Chief Executive Officer December 18, 1998
Jeannene Barham President, Chief Financial
Officer and Director
31
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Articles Of Incorporation
Of
BALANCED LIVING, INC.
WE, THE UNDERSIGNED natural persons of the age of eighteen
(18) years or more, acting as incorporators of a corporation
under the Colorado Business Corporation Act, adopt the following
Articles of Incorporation.
Article I
NAME
The Name of the corporation is Balanced Living, Inc.
Article II
PRINCIPAL BUSINESS ADDRESS
The principal business address is 10920 South 1700 East, Sandy,
Utah 84092.
Article III
DURATION
The duration of the corporation is perpetual.
Article IV
PURPOSES
The purpose or purposes for which this corporation is engaged
are:
(a) To acquire, develop, explore, and otherwise deal in and
with all kinds of consulting business opportunities and the
development and production self-improvement seminars. Also, to
acquire, develop, explore, and otherwise deal in and with all
kinds of real and personal property and all related activities,
and for any and all other lawful purposes.
(b) To acquire by purchase, exchange, gift, bequest,
subscription, or otherwise; and to hold, own, mortgage, pledge,
hypothecate, sell, assign, transfer, exchange, or otherwise
dispose of or deal in or with its own corporate securities or
stock or other securities including, without limitations, any
shares of stock, bonds, debentures, notes mortgages, or other
obligations, and any certificates, receipts or other instruments
representing rights or interests therein on any property or
assets created or issued by any person, firm, associate, or
corporation, or instrumentalities thereof; to make payment
therefor in any lawful manner or to issue in exchange therefor in
any lawful manner or to issue in exchange therefor its unreserved
earned surplus for the purchase of its own shares, and to
exercise as owner or holder of any securities, any and all
rights, powers, and privileges in respect thereof.
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(c) To do each and everything necessary, suitable, or
proper for the accomplishment of any of the purposes or the
attainment of any one or more of the subjects herein enumerated,
or which may, at any time, appear conducive to or expedient for
the protection or benefit of this corporation, and to do said
acts as fully and to the same extent as natural persons might, or
could do in any part of the world as principals, agents,
partners, trustees, or otherwise, either alone or in conjunction
with any other person, association, or corporation.
(d) The foregoing clauses shall be construed both as
purposes and powers and shall not be held to limit or restrict in
any manner the general powers of the corporation, and the
enjoyment and exercise thereof, as conferred by the laws of the
State of Colorado; and it is the intention that the purposes and
powers specified in each of the paragraphs of this Article III
shall be regarded as independent purposes and powers.
Articles V
STOCK
(a) Common Stock. The aggregate number of shares of Common
Stock which the Corporation shall have authority to issue is
50,000,000 shares at a par value of $.001 per share. All stock
when issued shall be fully paid and non-assessable, shall be of
the same class and have the same rights and preferences.
No holder of shares of Common Stock of the Corporation shall
be entitled, as such, to any pre-emptive or preferential rights
to subscribe to any unissued stock or any other securities which
the Corporation may now or thereafter be authorized to issue.
Each share of Common Stock shall be entitled to one vote at
a stockholder's meeting, either in person or by proxy.
Cumulative voting in elections of Directors and all other matters
brought before stockholders meeting, whether they be annual or
special, shall not be permitted.
(b) Preferred Stock. The aggregate number of shares of
Preferred Stock which the Corporation shall have authority to
issue is 10,000,000 shares, par value $.001, which may be issued
in series, with such designations, preferences, stated values,
rights, qualifications or limitations as determined solely by the
Board of Directors of the Corporation.
(1) Dividends. Dividends in cash, property or shares
shall be paid upon the Preferred Stock for any year on a
cumulative or noncumulative basis as determined by a resolution
of the board of directors prior to the issuance of such Preferred
Stock, to the extent earned surplus for each such year is
available, in an amount as determined by a resolution of the
board of directors. Such Preferred Stock dividends shall be paid
pro rata to holders of Preferred Stock as determined by a
resolution of the board of directors prior to the issuance of
such Preferred Stock. No other dividend shall be paid on the
Preferred Stock.
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Dividends in cash, property or shares of the
corporation may be paid upon the Common Stock, as and when
declared by the board of directors, out of funds of the
corporation to the extent and in the manner permitted by law,
except that no Common Stock dividend shall be paid for any year
unless the holders of Preferred Stock, if any, shall receive the
maximum allowable Preferred Stock dividend for such year.
(2) Distribution in Liquidation. Upon any liquidation,
dissolution or winding up of the corporation, and after paying or
adequately providing for the payment of all its obligations, the
remainder of the assets of the corporation shall be distributed,
either in cash or in kind, first pro rata to the holders of the
Preferred Stock until an amount to be determined by a resolution
of the board of directors prior to issuance of such Preferred
Stock has been distributed per share, and, then, the remainder
pro rata to the holders of the Common Stock.
(3) Redemption. The Preferred Stock may be redeemed
in whole or in part as determined by a resolution of the board of
directors prior to the issuance of such Preferred Stock upon
prior notice of the holders of record of the Preferred Stock,
published, mailed and given in such manner and form and on such
other terms and conditions as may be prescribed by the Bylaws or
by resolution of the board of directors, by payment in cash or
Common Stock f or each share of the Preferred Stock to be
redeemed, as determined by a resolution of the board of directors
prior to the issuance of such Preferred Stock. Common Stock used
to redeem Preferred Stock shall be valued as determined by a
resolution of the board of directors prior to the issuance of
such Preferred Stock. Any rights to or arising from fractional
shares shall be treated as rights to or arising form one share.
No such purchase or retirement shall be made if the capital of
the corporation would be impaired thereby.
Article VI
AMENDMENT
These Articles of Incorporation may be amended by the
affirmative Vote of "a majority" of the shares entitled to vote
on each such amendment.
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Article VII
SHAREHOLDERS RIGHTS
The authorized and treasury stock of this corporation may be
issued at such time, upon such terms and conditions and for such
consideration as the Board of Directors shall determine.
Shareholders shall not have pre-emptive rights to acquire
unissued shares of the stock of this corporation.
Article VIII
INITIAL OFFICE AND AGENT
The registered office of the Corporation in the State of
Colorado is 225 Monroe Street, Denver, CO 80206. The registered
agent in charge thereof at such address is Rose Blackham.
Article IX
DIRECTORS
The directors are hereby given the authority to do any act
on behalf of the corporation by law and in each instance where
the Business corporation act provides that the directors may act
in certain instances where the Articles of Incorporation
authorize such action by the directors, the directors are hereby
given authority to act in such instances without specifically
numerating such potential action or instance herein.
The directors are specifically given the authority to
mortgage or pledge any or all assets of the business with
stockholders' approval.
The number of directors constituting the initial Board of
Directors of this corporation is one (1). The names and addresses
of persons who are to serve as Directors until the first annual
meeting of stockholders or until their successors are elected and
qualify are:
NAME ADDRESS
Jeannene Barham 10920 South 1700 East
Sandy, Utah 84092
Article X
INCORPORATORS
The name and address of each incorporator is:
NAME ADDRESS
Jeannene Barham 10920 South 1700 East
Sandy, Utah 84092
Article XI
COMMON DIRECTORS - TRANSACTIONS BETWEEN CORPORATIONS
No contract or other transaction between this corporation
and any on or more of its directors or any other corporation,
firm, association, or entity in which one or more of its
directors or officers are financially interested, shall be either
void or voidable because of such relationship or interest, or
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because such director or directors are present at the meeting of
the Board of Directors, or a committee thereof, which authorizes,
approves, or ratifies such contract or transaction, or because
his or their votes are counted for such purpose if: (a) the fact
of such relationship or interest is disclosed or known to the
Board of Directors or committee which authorizes, approves, or
ratifies the contract or transaction by vote or consent
sufficient for the purpose without counting the votes or consents
of such interested director; or (b) the fact of such relationship
or interest is disclosed or known to the stockholders entitled to
vote and they authorize, approve, or ratify such contract or
transaction by vote or written consent, or the contract or
transaction is fair and reasonable to the corporation.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors
or committee there of which authorizes, approves or ratifies such
contract or transaction.
Article XII
LIABILITY OF DIRECTORS AND OFFICERS
No director or officer shall be personally liable to the
Corporation or its stockholders for monetary damages for any
breach of fiduciary duty by such person as a director or officer.
Notwithstanding the foregoing sentence, a director or officer
shall be liable to the extent provided by applicable law, (i) for
acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) for the payment of dividends
in violation of.
The provisions hereof shall not apply to or have any effect
on the liability or alleged liability of any officer or director
of the Corporation for or with respect to any acts or omissions
of such person occurring prior to such amendment.
Under penalties of perjury, I declare that these Articles of
Incorporation have been examined by me and are, to the best of my
knowledge and belief, true, correct and complete.
Dated this 23rd day of June 1998.
/s/ Jeannene Barham
The Corporation Company hereby consents to the appointment
as the initial registered agent for the Corporation.
/s/ Rose Blackham, Initial Registered Agent
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BY-LAWS
OF
BALANCED LIVING, INC.
A COLORADO CORPORATION
ARTICLE I
OFFICES
Section I. The principal office of the Corporation shall be
at 10920 South 1700 East, Sandy, Utah 84092. The Corporation may
have such other offices, either within or without the State of
Colorado as the Board of Directors may designate or as the
business of the Corporation may require from time to time.
The registered office of the Corporation required by the
Colorado Business Corporation Act to be maintained in the State
of Colorado may be, but need not be, identical with the principal
offices in the State of Colorado, and the address of the
registered office may be changed, from time to time, by the Board
of Directors.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders
shall be held at the principal office of the Corporation, at
10920 South 1700 East, Sandy, Utah 84092, or at such other places
on the third Wednesday of January or at such other times as the
Board of Directors may, from time to time, determine. If the day
so designated falls upon a legal holiday then the meeting shall
be held upon the first business day thereafter. The Secretary
shall serve personally or by mail a written notice thereof, not
less than ten (10) nor more than fifty (50) days previous to such
meeting, addressed to each stockholder at his address as it
appears on the stock book; but at any meeting at which all
stockholders shall be present, or of which all stockholders not
present have waived notice in writing, the giving of notice as
above required may be dispensed with.
Section 2. Special Meetings. Special meetings of stockholders
other than those regulated by statute, may be called at any time
by a majority of the Directors. Notice of such meeting stating
the place, day and hour and the purpose for which it is called
shall be served personally or by mail, not less than ten (10)
days before the date set for such meeting. If mailed, it shall
be directed to a stockholder at his address as it appears on the
stock book; but at any meeting at which all stockholders shall be
present, or of which stockholders not present have waived notice
in writing, the giving of notice as above described may be
dispensed with. The Board of Directors shall also, in like
manner, call a special meeting of stockholders whenever so
requested in writing by stockholders representing not less than
ten percent (10%) of the capital stock of the Corporation
entitled to vote at the meeting. The President may in his
discretion call a special meeting of stockholders upon ten (10)
days notice. No business other than that specified in the call
for the meeting shall be transacted at any special meeting of the
stockholders, except upon the unanimous consent of all the
stockholders entitled to notice thereof.
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Section 3. Closing of Transfer Books or fixing of Record Date.
For the purpose of determining stockholders entitled to receive
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive payment
of any dividend; or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors
of the Corporation may provide that the stock transfer books
shall be closed for a stated period not to exceed, in any case,
fifty (50) days. If the stock transfer books shall be closed for
the purpose of determining stockholders entitled to notice of or
to vote at a meeting of stockholders, such books shall be closed
for a least ten (10) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not
more than fifty (50) days, and in case of a meeting of
stockholders, not less than ten (10) days prior to the date on
which the particular action, requiring such determination of
stockholders, is to be taken. If the stock transfer books are
not closed, and no record date is fixed for the determination of
stockholders entitled to receive notice of or to vote at a
meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination as to
stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment
thereof.
Section 4. Voting. At all meetings of the stockholders of
record having the right to vote, subject to the provisions of
Section 3, each stockholder of the Corporation is entitled to one
(1) vote for each share of stock having voting power standing in
the name of such stockholder on the books of the Corporation.
Votes may be cast in person or by written authorized proxy.
Section 5. Proxy. Each proxy must be executed in writing by
the stockholder of the Corporation or his duly authorized
attorney. No proxy shall be valid after the expiration of eleven
(11) months from the date of its execution unless it shall have
specified therein its duration.
Every proxy shall be revocable at the discretion of the person
executing it or of his personal representatives or assigns.
Section 6. Voting of Shares by certain Holders. Shares
standing in the name of another corporation may be voted by such
officer, agent or proxy as the by-laws of such corporation may
prescribe, or, in the absence of such provision, as the Board of
Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or
conservator may be noted by him either in person or by proxy
without a transfer of such shares into his name. Shares standing
in the name of a trustee may be voted by him either in person or
by proxy, but no trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into
his name if authority so to do be contained in an appropriate
Order of the Court by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledge, and thereafter the pledgee shall be entitled
to vote the shares so transferred.
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Shares of its own stock belonging to the Corporation or held
by it in a fiduciary capacity shall not be voted, directly or
indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares at any given
time.
Section 7. Election of Directors. At each election for
Directors every stockholder entitled to vote at such election
shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are Directors
to be elected and for whose election he has a right to vote.
There shall be no cumulative voting.
Section 8. Quorum. A majority of the outstanding shares of
the Corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of the
stockholders.
If a quorum shall not be present or represented, the
stockholders entitled to vote thereat, present in person or by
proxy, shall have the power to adjourn the meeting, from time to
time, until a quorum shall be present or represented. At such
rescheduled meeting at which a quorum shall be present or
represented any business or any specified item of business may be
transacted which might have been transacted at the meeting as
originally notified.
The number of votes or consents of the holders of stock having
voting power which shall be necessary for the transaction of any
business or any specified item of business at any meeting of
stockholders, or the giving of any consent, shall be a majority
of the outstanding shares of the Corporation entitled to vote.
Section 9. Informal Action by Stockholders. Any action
required or permitted to be taken by the stockholders of the
Corporation may be effected by any consent in writing by such
holders, signed by holders of not less than that number of shares
of Common Stock required to approve such action.
ARTICLE III
DIRECTORS
Section 1. Number. The affairs and business of this
Corporation shall be managed by a Board of Directors. The
present Board of Directors shall consist of one (1) member.
Thereafter the number of Directors may be increased to not more
than nine (9) by resolution of the Board of Directors. Directors
need not be residents of the State of Colorado and need not be
stockholders of the Corporation.
Section 2. Election. The Directors shall be elected at each
annual meeting of the stockholders, 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 the
stockholders held for that purpose.
Section 3. Term of Office. The term of office of each of the
Directors shall be one (1) year, which shall continue until his
successor has been elected and qualified.
Section 4. Duties. The Board of Directors shall have the
control and general management of the affairs and business of the
Corporation. Such Directors shall in all cases act
as a Board, regularly convened, and may adopt such rules and
regulations for the conduct of meetings and the management of the
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Corporation, as may be deemed proper, so long as it is not
inconsistent with these By-Laws and the laws of the State of
Colorado.
Section 5. Directors' Meetings. Regular meetings of the Board
of Directors shall be held immediately following the annual
meeting of the stockholders, and at such other time and places as
the Board of Directors may determine. Special meetings of the
Board of Directors may be called by the President or the
Secretary upon the written request of one (1) Director.
Section 6. Notice of Meetings. Notice of meetings other than
the regular annual meeting shall be given by service upon each
Director in person, or by mailing to him at his last known
address, at least three (3) days before the date therein
designated for such meeting, of a written notice thereof
specifying the time and place of such meeting, and the business
to be brought before the meeting, and no business other than that
specified in such notice shall be transacted at any special
meeting. At any Directors' meeting at which a quorum of the
Board of Directors shall be present (although held without
notice), any and all business may be transacted which might have
been transacted if the meeting had been duly called if a quorum
of the Directors waive or are willing to waive the notice
requirements of such meeting.
Any Directors may waive notice of any meeting under the
provisions of Article XII. The attendance of a Director at a
meeting shall constitute a waiver of notice of such meeting
except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the
meeting is not lawfully convened or called.
Section 7. Voting. At all meetings of the Board of Directors,
each Director is to have one (1) vote. The act of a majority of
the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 8. Newly Created Directorships and Vacancies. Newly
created directorships resulting from any increase in the number
of Directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or
other cause shall be filled only by the affirmative vote of a
majority of the remaining Directors then in office, even though
less than a quorum of the Board of Directors. No decrease in the
number of Directors constituting the Board of Directors shall
shorten the term of any incumbent Director.
Section 9. Removal of Directors. Any Director may be removed
from office, with or without cause, only by the affirmative vote
of the holders of 51% of the voting power of all shares of the
Corporation entitled to vote generally in the election of
Directors, voting together as a single class.
Section 10. Quorum. The number of Directors who shall be
present at any meeting of the Board of Directors in order to
constitute a quorum for the transaction of any business or any
specified item of business shall be a majority.
The number of votes of Directors that shall be necessary for
the transaction of any business of any specified item of business
at any meeting of the Board of Directors shall be a majority.
If a quorum shall not be present at any meeting of the Board
of Directors, those present may adjourn the meeting, from time to
time, until a quorum shall be present.
Section 11. Compensation. By resolution of the Board of
Directors, the Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors or each may
be paid a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefore.
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Section 12. Presumption of Assent. A Director of the
Corporation who is present at a meeting of the Board of Directors
at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent
is entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as the
Secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered or certified mail to the
Secretary of the Corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be:
President, Vice-President, Secretary, and Treasurer, and such
assistant Secretaries as the President shall determine.
Any officer may hold more than one (1) office.
Section 2. Election. All officers of the Corporation shall
be elected annually by the Board of Directors at its meeting held
immediately following the meeting of stockholders, and shall hold
office for the term of one (1) year or until their successors are
duly elected. Officers need not be members of the Board of
Directors.
The Board may appoint such other officers, agents and employees
as it shall deem necessary who shall have such authority and
shall perform such duties as, from time to time, shall be
prescribed by the Board.
Section 3. Duties of Officers. The duties and powers of the
officers of the Corporation shall be as follows:
PRESIDENT
The President shall preside at all meetings of the
stockholders. He shall present at each annual meeting of the
stockholders and Directors a report of the condition of the
business of the Corporation. He shall cause to be called regular
and special meetings of these stockholders and Directors in
accordance with these By-Laws. He shall appoint and remove,
employ and discharge, and fix the compensation of all agents,
employees, and clerks of the Corporation other than the duly
appointed officers, subject to the approval of the Board of
Directors. He shall sign and make all contracts and agreements
in the name of the Corporation, subject to the approval of the
Board of Directors. He shall see that the books, reports,
statements and certificates required by the statutes are properly
kept, made and filed according to law. He shall sign all
certificates of stock, notes, drafts, or bills of exchange,
warrants or other orders for the payment of money duly drawn by
the Treasurer; and he shall enforce these By-Laws and perform all
the duties incident to the position and office, and which are
required by law.
VICE-PRESIDENT
During the absence or inability of the President to render and
perform his duties or exercise his powers, as set forth in these
By-Laws or in the statutes under which the Corporation is
organized, the same shall be performed and exercised by the Vice-
President; and when so acting, he shall have all the powers and
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be subject to all the responsibilities hereby given to or imposed
upon such President.
SECRETARY
The Secretary shall keep the minutes of the meetings of the
Board of Directors and of the stockholders in appropriate books.
He shall give and serve all notices of the Corporation. He shall
be custodian of the records and of the corporate seal and affix
the latter when required. He shall keep the stock and transfer
books in the manner prescribed by law, so as to show at all times
the amount of capital stock issued and outstanding; the manner
and the time compensation for the same was paid; the names of the
owners thereof, alphabetically arranged; the number of shares
owned by each; the time at which each person became such owner;
and the amount paid thereon; and keep such stock and transfer
books open daily during the business hours of the office of the
Corporation, subject to the inspection of any stockholder of the
Corporation, and permit such stockholder to make extracts from
said books to the extent prescribed by law. He shall sign all
certificates of stock. He shall present to the Board of
Directors at their meetings all communications addressed to him
officially by the President or any officer or stockholder of the
Corporation; and he shall attend to all correspondence and
perform all the duties incident to the office of Secretary.
TREASURER
The Treasurer shall have the care and custody of and be
responsible for all the funds and securities of the Corporation,
and deposit all such funds in the name of the Corporation in such
bank or banks, trust company or trust companies or safe deposit
vaults as the Board of Directors may designate. He shall exhibit
at all reasonable times his books and accounts to any Director or
stockholder of the Corporation upon application at the office of
the Corporation during business hours. He shall render a
statement of the conditions of the finances of the Corporation at
each regular meeting of the Board of Directors, and at such other
times as shall be required of him, and a full financial report at
the annual meeting of the stockholders. He shall keep, at the
office of the Corporation, correct books of account of all its
business and transactions and such other books of account as the
Board of Directors may require. He shall do and perform all
duties appertaining to the office of Treasurer. The Treasurer
shall, if required by the Board of Directors, give to the
Corporation such security for the faithful discharge of his
duties as the Board may direct.
Section 4. Bond. The Treasurer shall, if required by the
Board of Directors, give to the Corporation such security for the
faithful discharge of his duties as the Board may direct.
Section 5. Vacancies, How Filled. All vacancies in any office
shall be filled by the Board of Directors without undue delay,
either at its regular meeting or at a meeting specifically called
for that purpose. In the case of the absence of any officer of
the Corporation or for any reason that the Board of Directors may
deem sufficient, the Board may, except as specifically otherwise
provided in these By-Laws, delegate the power or duties of such
officers to any other officer or Director for the time being;
provided, a majority of the entire Board concur therein.
Section 6. Compensation of Officers. The officers shall
receive such salary or compensation as may be determined by the
Board of Directors.
Section 7. Removal of Officers. The Board of Directors may
remove any officer, by a majority vote, at any time with or
without cause.
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ARTICLE V
CERTIFICATES OF STOCK
Section 1. Description of Stock Certificates. The
certificates of stock shall be numbered and registered in the
order in which they are issued. They shall be bound in a book
and shall be issued in consecutive order therefrom, and in the
margin thereof shall be entered the name of the person owning the
shares therein represented, with the number of shares and the
date thereof. Such certificates shall exhibit the holder's name
and number of shares. They shall be signed by the President or
Vice President, and countersigned by the Secretary or Treasurer
and sealed with the Seal of the Corporation.
Section 2. Transfer of Stock. The stock of the Corporation
shall be assignable and transferable on the books of the
Corporation only by the person in whose name it appears on said
books, his legal representatives or by his duly authorized agent.
In case of transfer by attorney, the power of attorney, duly
executed and acknowledged, shall be deposited with the Secretary.
In all cases of transfer the former certificate must be
surrendered up and canceled before a new certificate may be
issued. No transfer shall be made upon the books of the
Corporation within ten (10) days next preceding the annual
meeting of the stockholders.
Section 3. Lost Certificates. If a stockholder shall claim
to have lost or destroyed a certificate or certificates of stock
issued by the Corporation, the Board of Directors may, at its
discretion, direct a new certificate or certificates to be
issued, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed,
and upon the deposit of a bond or other indemnity in such form
and with such sureties if any that the Board may require.
ARTICLE VI
SEAL
Section 1. Seal. The seal of the Corporation shall be as
follows:
NO SEAL IN USE AT THIS TIME
ARTICLE VII
DIVIDENDS
Section 1. When Declared. The Board of Directors shall by
vote declare dividends from the surplus profits of the
Corporation whenever, in their opinion, the condition of the
Corporation's affairs will render it expedient for such dividends
to be declared.
Section 2. Reserve. The Board of Directors may set aside, out
of the net profits of the Corporation available for dividends,
such sum or sums (before payment of any dividends) as the Board,
in their absolute discretion, think proper as a reserve fund, to
meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of
the Corporation, and they may abolish or modify any such reserve
in the manner in which it was created.
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ARTICLE VIII
INDEMNIFICATION
Section 1. Any person made a party to or involved in any
civil, criminal or administrative action, suit or proceeding by
reason of the fact that he or his testator or intestate is or was
a Director, officer, or employee of the Corporation, or of any
corporation which he, the testator, or intestate served as such
at the request of the Corporation, shall be indemnified by the
Corporation against expenses reasonably incurred by him or
imposed on him in connection with or resulting from the defense
of such action, suit, or proceeding and in connection with or
resulting from any appeal thereon, except with respect to matters
as to which it is adjudged in such action, suit or proceeding
that such officer, Director, or employee was liable to the
Corporation, or to such other corporation, for negligence or
misconduct in the performance of his duty. As used herein the
term "expense" shall include all obligations incurred by such
person for the payment of money, including without limitation
attorney's fees, judgments, awards, fines, penalties, and amounts
paid in satisfaction of judgment or in settlement of any such
action, suit, or proceedings, except amounts paid to the
Corporation or such other corporation by him.
A judgment of conviction whether based on plea of guilty or
nolo contendere or its equivalent, or after trial, shall not of
itself be deemed an adjudication that such Director, officer or
employee is liable to the Corporation, or such other corporation,
for negligence or misconduct in the performance of his duties.
Determination of the rights of such indemnification and the
amount thereof may be made at the option of the person to be
indemnified pursuant to procedure set forth, from time to time,
in the By-Laws, or by any of the following procedures: (a) order
of the Court or administrative body or agency having jurisdiction
of the action, suit, or proceeding; (b) resolution adopted by a
majority of the quorum of the Board of Directors of the
Corporation without counting in such majority any Directors who
have incurred expenses in connection with such action, suit or
proceeding; (c) if there is no quorum of Directors who have not
incurred expense in connection with such action, suit, or
proceeding, then by resolution adopted by a majority of the
committee of stockholders and Directors who have not incurred
such expenses appointed by the Board of Directors; (d) resolution
adopted by a majority of the quorum of the Directors entitled to
vote at any meeting; or (e) Order of any Court having
jurisdiction over the Corporation. Any such determination that
a payment by way of indemnity should be made will be binding upon
the Corporation. Such right of indemnification shall not be
exclusive of any other right which such Directors, officers, and
employees of the Corporation and the other persons above
mentioned may have or hereafter acquire, and without limiting the
generality of such statement, they shall be entitled to their
respective rights of indemnification under any By-Law, Agreement,
vote of stockholders, provision of law, or otherwise in addition
to their rights under this Article. The provision of this
Article shall apply to any member of any committee appointed by
the Board of Directors as fully as though each person and been a
Director, officer or employee of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. How Amended. These By-Laws may be altered,
amended, repealed or added to by the vote of the Board of
Directors of the Corporation at any regular meeting of said
Board, or at a special meeting of Directors called for that
purpose provided a quorum of the Directors as provided by law and
by the Articles of Incorporation, are present at such regular
meeting or special meeting. These By-Laws and any amendments
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thereto and new By-Laws added by the Directors may be amended,
altered or replaced by the stockholders at any annual or special
meeting of the stockholders.
ARTICLE X
FISCAL YEAR
Section 1. Fiscal Year. The fiscal year shall end on the 31st
day of DECEMBER.
ARTICLE XI
WAIVER OF NOTICE
Section 1. Whenever any notice is required to be given to any
shareholders or directors of the Corporation under the provisions
of these By-Laws, under the Articles of Incorporation or under
the provisions of the Colorado Business Corporation Act, a waiver
thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
ADOPTED this 6th day of July,1998.
BALANCED LIVING, INC.
a Colorado corporation,
Jeannene Barham, President
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary\Treasurer of
Balance Women, Inc., A Colorado Corporation: and
2. That the foregoing By-Laws, comprising eight (8) pages,
constitute the By-Laws of said Corporation as duly adopted at
a meeting of the Board of Directors thereof duly held on the
6th day of July,1998.
Jeannene Barham, Secretary/Treasurer
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AGREEMENT AND PLAN OF SHARE EXCHANGE
This Agreement and Plan of Share Exchange (the "Agreement"), dated as
of the 14th day of July, 1998, by and between Balanced Living, Inc., a
Colorado corporation ("LIVING") and The Balanced Woman, Inc., a Colorado
corporation ("WOMAN") and the shareholders of WOMAN ("Shareholders"), who
execute this Agreement and the Investment Letter as set forth in Exhibit A
of this Agreement, with reference to the following:
A. LIVING is a privately held corporation organized under the laws of
Colorado on July 1, 1998. LIVING has authorized capital stock of 60,000,000
shares, $.0001par value, 50,000,000 Common Stock and 10,000,000 Preferred
Stock. There are 100,000 common shares outstanding.
B. WOMAN is a privately held corporation organized under the laws of the
State of Colorado, on January 26, 1998. WOMAN has authorized capital stock
of 60,000,000 shares, including 50,000,000 shares of common stock, $0.001
par value and 10,000,000 shares of preferred stock. There are 500,000
common shares outstanding.
C. The respective Boards of Directors of LIVING and WOMAN have deemed it
advisable and in the best interests of LIVING and WOMAN that WOMAN be
acquired by LIVING, pursuant to the terms and conditions set forth in this
Agreement.
D. LIVING and WOMAN propose to enter into this Agreement which provides
among other things that all of the outstanding shares of WOMAN be acquired
by LIVING, in exchange for shares of LIVING and such additional items as
are more fully described in the Agreement.
E. The parties desire the transaction to qualify as a tax-free organization
under Section 368(a)(1)(B) of the internal Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.1 At the Closing, a total of 500,000 common shares, which represents all
of the outstanding shares of WOMAN, shall be acquired by LIVING in exchange
for 500,000 shares of LIVING common stock which shall be issued to the
WOMAN shareholders as set forth on the signature page of this Agreement.
1.2 At the Closing, the WOMAN shareholder will deliver certificates for the
outstanding shares of WOMAN, duly endorsed so as to make LIVING the sole
holder thereof, free and clear of all claims and encumbrances and LIVING
shall deliver a transmittal letter directed to the transfer agent of LIVING
directing the issuance of shares to the shareholder of WOMAN set forth on
the signature page of this Agreement.
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1.3 Following the Share Exchange, there will be a total of 600,000 shares of
common stock, $.001 par value issued and outstanding in LIVING.
1.4 In connection with the share exchange contemplated by this Agreement,
LIVING will issue and deliver warrants and options on LIVING common stock in
exchange for any and all warrants and options on WOMAN common stock now
issued and outstanding. Such LIVING warrants and options will be identical
in terms and substance to the WOMAN warrants and options.
ARTICLE 2
THE CLOSING
2.1 The consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place in the offices of Ray, Quinney & Nebeker, 79
South Main Street, Salt Lake City, Utah 84145-0385 at 10:00 a.m., on July
14, 1998, or at such other place or date and time as may be agreed to in
writing by the parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LIVING
LIVING and its officers and directors hereby represent and warrant to
WOMAN as follows:
3.1 LIVING shall deliver to WOMAN, on or within a reasonable time after
Closing, each of the following:
(a) Financial Statements. Financial statements of LIVING, including, but
not limited to, balance sheet and income statement as of June 30, 1998.
(Schedule A)
(b) Leases and Contracts. A complete and accurate list describing all
material terms of each lease (whether of real or personal property) and each
contract, promissory note, mortgage, license, franchise, or other written
agreement to which LIVING is a party which involves or can reasonably be
expected to involve aggregate future payments or receipts by LIVING (whether
by the terms of such lease, contract, promissory note, license, franchise or
other written agreement or as a result of a guarantee of the payment of or
indemnity against the failure to pay same) of $1,000.00 or more annually
during the twelve (12) months period ended June 30, 1998, or any consecutive
12-month period thereafter, except any of said instruments which terminate
or are cancelable without penalty during such 12-month period. (Schedule B)
(c) Loan Agreements. Complete and accurate copies of all loan agreements
and other documents with respect to obligations of LIVING for the repayment
of borrowed money. (Schedule C)
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(d) Articles and Bylaws. Complete and accurate copies of the Articles of
Incorporation and Bylaws of LIVING together with all amendments thereto to
the date hereof. (Schedule D)
(e) Shareholders. A complete list of all persons or entities holding
capital stock of LIVING or any rights to subscribe for, acquire, or receive
shares of the capital stock of LIVING (whether warrants, calls, options, or
conversion rights), including copies of all stock option plans whether
qualified or nonqualified, and other similar agreements. (Schedule E)
(f) Officers and Directors. A complete and current list of all officers and
Directors of LIVING. (Schedule F)
(g) Salary Schedule. A complete and accurate list (in all material
respects) of the names and the current salary rate for each present employee
of LIVING who received $1,000.00 or more in aggregate compensation from
LIVING whether in salary, bonus or otherwise, during the last 12 months, or
who is presently scheduled to receive from LIVING salary in excess of
$1,000.00 during the year ending December 31, 1998, including in each case
the amount of compensation received or scheduled to be received, and a
schedule of the hourly rates of all other employees listed according to
departments. (Schedule G)
(h) Litigation. A complete and accurate list (in all material respects) of
all material civil, criminal administrative, arbitration or other such
proceedings or investigations (including without limitations unfair labor
practice matters, labor organization activities, environmental matters and
civil rights violations) pending or, to the knowledge of LIVING threatened,
which may materially and adversely affect LIVING. (Schedule H)
(i) Tax Returns. Accurate copies of all federal and state tax returns for
LIVING for the last fiscal year. (Schedule I)
(j) Jurisdictions Where Qualified. A list of all jurisdictions wherein
LIVING is qualified to do business and is in good standing. (Schedule J)
(k) Employee and Consultant Contracts. A complete and accurate list of all
employee and consultant contracts which LIVING may have. (Schedule K)
3.2 Organization, Standing and Power. LIVING is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Colorado with all requisite corporate power to own or lease its
properties and carry on its businesses as is now being conducted.
3.3 Qualification. LIVING is duly qualified and is licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it
conducts its business operations. Such jurisdictions, which are the only
jurisdictions in which LIVING is duly qualified and licensed as a foreign
corporation, are shown in Schedule J.
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3.4 Capitalization of LIVING. The authorized capital stock of LIVING
consists of 50,000,000 shares of Common Stock, $.001 par value, and
10,000,000 shares of Preferred Stock, $.001 par value, of which the only
shares issued and outstanding are 100,000 shares of common stock issued to
the shareholders listed on Schedule E, which shares were duly authorized,
validly issued and fully paid and nonassessable. There are no preemptive
rights with respect to the LIVING stock.
3.5 Authority. The execution delivery of this Agreement and consummation of
the transactions contemplated herein have been duly authorized by all
necessary corporate action, including but not limited to duly and validly
authorized action and approval by the Board of Directors, on the part of
LIVING. This Agreement constitutes the valid and binding obligation of
LIVING enforceable against it in accordance with its terms, subject to the
principles of equity applicable to the availability of the remedy of
specific performance. This Agreement has been duly executed by LIVING and
the execution and delivery of this Agreement and the consummation of the
tranactions contemplated by this Agreement shall not result in any breach of
any terms or provisions of LIVING Articles of Incorporation or Bylaws or of
any other agreement, court order or instrument to which LIVING is a party or
is bound.
3.6 Absence of Undisclosed Liabilities. LIVING has no material liabilities
of any nature, whether fixed, absolute, contingent or accrued, which were
not reflected on the financial statements set forth in Schedule A nor
otherwise disclosed in this Agreement or any of the Schedules or Exhibits
attached hereto.
3.7 Absence of Changes. Since June 30, 1998, there has not been any
material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings or business of LIVING, except for changes resulting
from completion of transactions described in Section 5.1.
3.8 Tax Matters. All taxes and other assessments and levies which LIVING is
required by law to withhold or to collect have been duly withheld and
collected, and have been paid over to the proper government authorities or
are held by LIVING in separate bank accounts for such payment or are
represented by depository receipts, and all such withholdings and
collections and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and employer's
share) have been paid over to the government or placed in a separate and
segregated bank account for such purpose. There are no known deficiencies
in income taxes for any periods and further, the representations and
warranties as to absence of undisclosed liabilities contained in Section 3.6
includes any and all tax liabilities of whatsoever kind or nature (including,
without limitation, all federal, state, local and foreign income, profit,
franchise, sales, use and property taxes) due or to become due, incurred in
respect of or measured by LIVING income or business prior to the Closing
Date.
3.9 Options, Warrants, Etc. There are no outstanding options, warrants,
calls, commitments or agreements of any character to which LIVING or its
shareholders are a party or by which LIVING or its shareholders are bound
calling for the issuance of shares of capital stock of LIVING or securities
representing the right to purchase or receive any such capital stock of
LIVING.
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3.10 Title to Assets. Except for liens set forth in Schedule C, LIVING is
the sole unconditional owner of, with good and marketable title to, all
assets listed in the schedules as owned by it and all other property and
assets are free and clear of any mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever.
3.11 Agreements in Force and Effect. All material contracts, agreements,
plans, promissory notes, mortgages, leases, policies, licenses, franchises
or similar instruments to which LIVING is a party are valid and in full
force and effect on the date hereof and LIVING has not breached any
material provision of, and is not in default in any material respect under
the terms of any such contract, agreement, plan, promissory note, mortgage,
lease, policy, license, franchise or similar instrument which breach or
default would have a material adverse effect upon the business, operations
or financial condition of LIVING.
3.12 Legal Proceedings, Etc. There are no civil, criminal, administrative,
arbitration or other such proceedings or investigations pending or, to the
knowledge of either LIVING or the shareholders thereof threatened, in which,
individually or in the aggregate, an adverse determination would materially
and adversely affect the assets, properties, business or income of LIVING.
LIVING has substantially complied with, and is not in default in any
material respect under, any laws, ordinances, requirements, regulations or
orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of LIVING, the company is
not in violation of or in default with respect to any applicable law or any
applicable rule, regulation, order, writ or decree of any court or any
governmental commission, board, bureau, agency or instrumentality, or
delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of LIVING.
3.14 Accuracy of Information. No representation or warranty by LIVING
contained in this Agreement and no statement contained in any certificate or
other instrument delivered or to be delivered to WOMAN pursuant hereto or in
connection with the transactions contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will contain any
untrue statement of material fact or omits or will omit to state any
material fact necessary in order to make the statement contained herein or
therein not misleading.
3.15 Subsidiaries. LIVING does not currently have any subsidiaries or own
capital stock representing ten percent (10%) or more of the issued and
outstanding stock of any other corporation.
3.16 Consents. No consent or approval of, or registration, qualification or
filing with any governmental authority or other person is required to be
obtained or accomplished by LIVING or any shareholder thereof in connection
with the consummation of the transactions contemplated hereby.
3.17 Improper Payments. Neither LIVING, nor any person acting on behalf of
LIVING has made any payment or otherwise transmitted anything of value,
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directly or indirectly, to (a) any official or any government or agency or
political subdivision thereof for the purpose of influencing any decision
affecting the business of LIVING, (b) any customer, supplier or competitor
of LIVING or employee of such customer, supplier or competitor, for the
purpose of obtaining, retailing or directing business for LIVING, or (c)
any political party or any candidate for elective political office nor has
any fund or other asset of LIVING been maintained that was not fully and
accurately recorded on the books of account of LIVING.
3.18 Copies of Documents. LIVING has made available for inspection and
copying to WOMAN and its duly authorized representatives, and will continue
to do so at all times, true and correct copies of all documents which it has
filed with any governmental agencies which are material to the terms and
conditions contained in this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF WOMAN
WOMAN and its Officers and Directors hereby represent and warrant to
LIVING as follows:
4.1 WOMAN shall deliver to LIVING, on or within a reasonable time after
Closing, each of the following:
(a) Financial Statements. Balance sheet and income statement of WOMAN as of
June 30, 1998. (Schedule AA)
(b) Leases and Contracts. A complete and accurate list describing all
material terms of material leases (whether of real or personal property) and
each contract, promissory note, mortgage, license, franchise, or other
written agreement to which WOMAN is a party which involves or can reasonably
be expected to involve aggregate future payments or receipts by WOMAN
(whether by the terms of such lease, contract, promissory note, license,
franchise or other written agreement or as a result of a guarantee of the
payment of or indemnity against the failure to pay same) of $1,000.00 or
more annually during the twelve (12) months period ended June 30, 1998, or
any consecutive 12-month period thereafter, except any of said instruments
which terminate or are cancelable without penalty during such 12-month
period. (Schedule BB)
(c) Loan Agreements. Complete and accurate copies of all loan agreements
and other documents with respect to obligations of WOMAN for the repayment
of borrowed money. (Schedule CC)
(d) Articles and Bylaws. Complete and accurate copies of the Certificate
and Articles of Incorporation and Bylaws of WOMAN, together with all
amendments thereto to the date hereof. (Schedule DD)
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(e) Shareholders. A complete list of all persons or entities holding
capital stock of WOMAN or any rights to subscribe for, acquire, or receive
shares of the capital stock of WOMAN (whether warrants, calls, options, or
conversion rights), including copies of all stock option plans whether
qualified or nonqualified, and other similar agreements. (Schedule EE)
(f) Officers and Directors. A complete and current list of all officers and
Directors of WOMAN. (Schedule FF)
(g) Salary Schedule. A complete and accurate list (in all material
respects) of the names and the current salary rate for each present employee
of WOMAN who received $1,000 or more in aggregate compensation from WOMAN
whether in salary, bonus or otherwise, during the 12 months ended June 30,
1998, or who is presently scheduled to receive from WOMAN a salary in excess
of $1,000.00 during the year ending December 31, 1998, including in each case
the amount of compensation received or scheduled to be received, and a
schedule of the hourly rates of all other employee listed according to
departments. (Schedule GG)
(h) Litigation. A complete and accurate list (in all material respects) of
all material civil criminal administrative, arbitration or other such
proceedings or investigations (including without limitations unfair labor
practice matters, labor organization activities, environmental matters and
civil rights violations) pending or, to the knowledge of WOMAN threatened,
which may materially and adversely affect WOMAN. (Schedule HH)
(i) Tax Returns. Accurate copies of all Federal and State tax returns for
WOMAN, for the last fiscal year. (Schedule II)
(j) Jurisdictions Where Qualified. A list of all jurisdictions wherein
WOMAN is qualified to do business and is in good standing. (Schedule JJ)
(k) Employee and Consultant Contracts. A complete and accurate list of an
employee and consultant contracts which WOMAN may have. (Schedule KK)
4.2 Organization, Standing and Power. WOMAN is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Colorado with all requisite corporate power to own or lease its
properties and carry on its business as is now being conducted.
4.3 Qualification. WOMAN is duly qualified and licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it
conducts business operations. Such jurisdictions, which are the only
jurisdictions in which WOMAN is duly qualified and licensed as a foreign
corporation, is shown in Schedule JJ.
4.4 Capitalization of WOMAN. The authorized capital stock of WOMAN consists
of 60,000,000 shares of Capital Stock, 50,000,000 which are Common Stock,
par value $0.001 and 10,000,000 of which are preferred stock, of which the
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only shares issued and outstanding are 500,000 shares of Common Stock issued
to the shareholder listed on Schedule EE, which shares were duly authorized,
validly issued and fully paid and nonassessable. There are no preemptive
rights with respect to the WOMAN stock.
4.5 Authority. The execution delivery of this Agreement and consummation of
the transactions contemplated herein have been duly authorized by all
necessary corporate action, including but not limited to duly and validly
authorized action and approval by the Board of Directors, on the part of
WOMAN. This Agreement constitutes the valid and binding obligation of WOMAN
enforceable against it in accordance with its terms, subject to the
principles of equity applicable to the availability of the remedy of
specific performance. This Agreement has been duly executed by WOMAN and
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement shall not result in any breach
of any terms or provisions of WOMAN Certificate and Articles of Incorporation
or Bylaws or of any other agreement, court order or instrument to which WOMAN
is a party or is bound.
4.6 Absence of Undisclosed Liabilities. WOMAN has no material liabilities
of any nature, whether fixed, absolute, contingent or accrued, which were
not reflected on the financial statements set forth in Schedule AA nor
otherwise disclosed in this Agreement or any of the Schedules or Exhibits
attached hereto.
4.7 Absence of Changes. Since June 30, 1998, there has not been any
material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings or business of WOMAN, except for changes resulting
from completion of transactions described in Section 5.1.
4.8 Tax Matters. All taxes and other assessments and levies which WOMAN is
required by law to withhold or to collect have been duly withheld and
collected, and have been paid over to the proper government authorities or
are held by WOMAN in separate bank accounts for such payment or are
represented by depository receipts, and all such withholdings and
collections and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and employer's
share) have been paid over to the government or placed in a separate and
segregated bank account for such purpose. There are no known deficiencies
in income taxes for any periods and further, the representations and
warranties as to absence of undisclosed liabilities contained in Section
4.6 includes any and all tax liabilities of whatsoever kind or nature
(including, without limitation, all federal, state, local and foreign
income, profit, franchise, sales, use and property taxes) due or to become
due, incurred in respect of or measured by WOMAN income or business prior
to the Closing Date.
4.9 Options, Warrants, Etc. There are no outstanding options, warrants,
calls, commitments or agreements of any character to which WOMAN or its
shareholders are a party or by which WOMAN or its shareholders are bound, or
area party, calling for the issuance of shares of capital stock of WOMAN or
any securities representing the right to purchase or receive any such
capital stock of WOMAN.
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4.10 Title to Assets. Except for liens set forth in Schedule CC, WOMAN is
the sole unconditional owner of, with good and marketable title to, all
assets listed in the schedules as owned by them and all other property and
assets are free and clear of any mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever.
4.11 Agreements in Force and Effect. All material contracts, agreements,
plans, promissory notes, mortgages, leases, policies, licenses, franchises
or similar instruments to which WOMAN is a party are valid and in full force
and effect on the date hereof and WOMAN has not breached any material
provision of, and is not in default in any material respect under the terms
of, any such contract, agreement, plan, promissory note, mortgage, lease,
policy, license, franchise or similar instrument which breach or default
would have a material adverse effect upon the business, operations or
financial condition of WOMAN.
4.12 Legal Proceedings, Etc. There are no civil, criminal, administrative,
arbitration or other such proceedings or investigations pending or, to the
knowledge of WOMAN or the shareholders thereof threatened, in which,
individually or in the aggregate, an adverse determination would materially
and adversely affect WOMAN' properties, business or income of WOMAN. WOMAN
has substantially complied with, and is not in default in any material
respect under, any laws, ordinances, requirements, regulations or orders
applicable to its businesses.
4.13 Governmental Regulation. To the knowledge of WOMAN, the company is not
in violation of or in default with respect to any applicable law or any
applicable rule, regulation, order, writ or decree of any court or any
governmental commission, board, bureau, agency or instrumentality, or
delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of WOMAN.
4.14 Accuracy of Information. No representation or warranty by WOMAN
contained in this Agreement and no statement contained in any certificate or
other instrument delivered or to be delivered to LIVING pursuant hereto or
in connection with the transactions contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will contain any
untrue statement of material fact or omits or will omit to state any
material fact necessary in order to make the statement contained herein or
therein not misleading.
4.15 Subsidiaries. WOMAN does not have any subsidiaries or own capital
stock representing ten percent (10%) or more of the issued and outstanding
stock of any other corporation.
4.16 Consents. No consent or approval of, or registration, qualification or
filing with any governmental authority or other person is required to be
obtained or accomplished by WOMAN or any shareholder thereof in connection
with the consummation of the transactions contemplated hereby.
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4.17 Improper Payments. No person acting on behalf of WOMAN has made any
payment or otherwise transmitted anything of value, directly or indirectly,
to (a) any official or any government or agency or political subdivision
thereof for the purpose of influencing any decision affecting the business
of WOMAN, (b) any customer, supplier or competitor of WOMAN or employee of
such customer, supplier or competitor, for the purpose of obtaining,
retailing or directing business for WOMAN, or (c) any political party or
any candidate for elective political office nor has any fund or other asset
of WOMAN been maintained that was not fully and accurately recorded on the
books of account of WOMAN.
4.18 Copies of Documents. WOMAN has made available for inspection and
copying to LIVING and its duly authorized representatives, and will continue
to do so at all times, true and correct copies of all documents which it has
filed with any governmental agencies which are material to the terms and
conditions contained in this Agreement.
4.19 Investment Intent of Shareholders. Each shareholder of WOMAN
represents and warrants to LIVING that the shares of LIVING being acquired
pursuant to this Agreement are being acquired for her own account and for
investment and not with a view to the public resale or distribution of such
shares and further acknowledges that the shares being issued have not been
registered under the Securities Act and are "restricted securities" as that
term is defined in rule 144 promulgated under the Securities Act and must be
held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE EFFECTIVE TIME OF THE ACQUISITION
5.1 Conduct and Transactions of LIVING. During the period from the date
hereof to the date of Closing, LIVING shall:
(a) Conduct its operations in the ordinary course of business, including but
not limited to, paying all obligations a they mature, complying with any
applicable tax laws, filing all tax returns required to be filed and paying
all taxes due;
(b) Maintain its records and books of account in a manner that fairly and
correctly reflect its income, expenses, assets and liabilities.
5.2 LIVING shall not during such period, except in the ordinary course of
business, without the prior written consent of WOMAN:
(a) Except as otherwise contemplated or required by this Agreement, sell,
dispose of or encumber any of its properties or assets;
(b) Declare or pay any dividends on shares of its capital stock or make any
other distribution of assets to the holders thereof;
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(c) Issue, reissue or sell or issue options or rights to subscribe to, or
enter into any contract or commitment to issue, reissue or sell any shares
of its capital stock or acquire or agree to acquire any shares of its
capital stock;
(d) Except as otherwise contemplated and required by this Agreement, amend
its Articles of Incorporation or merge or consolidate with or into any other
corporation or sell all or substantially all of its assets or change in any
manner the rights of its capital stock or other securities;
(e) Except as contemplated or required by this Agreement, pay or incur any
obligation or liability, direct or contingent more than $1,000;
(f) Incur any indebtedness for borrowed money, assume, guarantee, endorse or
otherwise become responsible for obligations of any other party, or make
loans or advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect, of any of
its officers or executive employees, except in accordance with existing
employment contracts;
(i) Enter into any agreement or make any commitment to any labor union or
organization;
(j) Make any capital expenditures.
5.3 Conduct and Transactions of WOMAN. During the period from the date
hereof to the date of Closing, WOMAN shall:
(a) Obtain an investment letter from each shareholder of WOMAN in a form
substantially like that attached hereto as Exhibit A.
(b) Conduct the operations of WOMAN in the ordinary course of business.
5.4 WOMAN shall not during such period, except in the ordinary course of
business, without the prior written consent of LIVING:
(a) Except as otherwise contemplated or required by this Agreement, sell,
dispose of or encumber any of the properties or assets of WOMAN;
(b) Declare or pay any dividends on shares of its capital stock or make any
other distribution of assets to the holders thereof;
(c) Issue, reissue or sell, or issue options or rights to subscribe to, or
enter into any contract or commitment to issue, reissue or sell, any shares
of its capital stock or acquire or agree to acquire any shares of its
capital stock;
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(d) Except as otherwise contemplated and required by this Agreement, amend
its Articles of Incorporation or merge or consolidate with or into any other
corporation or sell all or substantially all of its assets or change in any
manner the rights of its capital stock or other securities;
(e) Except as otherwise contemplated and required by this Agreement, pay or
incur any obligation or liability, direct or contingent;
(f) Incur any indebtedness for borrowed money, assume, guarantee, endorse or
otherwise become responsible for obligations of any other party, or make
loans or advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect, of any of
its officers or executive employees; except in accordance with existing
employment contracts;
(i) Enter into any agreement or make any commitment to any labor union or
organization;
(j) Make any material capital expenditures;
(k) Allow any of the foregoing actions to be taken by any subsidiary of
WOMAN.
ARTICLE 6
RIGHTS OF INSPECTION
6.1 During the period from the date of this Agreement to the date of Closing
of the acquisition, LIVING and WOMAN agree to use their best efforts to give
the other party, including its representatives and agents, full access to
the premises, books and records of each of the entities, and to furnish the
other with such financial and operating data and other information including,
but not limited to, copies of all legal documents and instruments referred to
on any schedule or exhibit hereto, with respect to the business and
properties of LIVING or WOMAN, as the case may be, as the other shall from
time to time request; provided, however, if there are any such
investigations: (1) they shall be conducted in such manner s not to
unreasonably interfere with the operation of the business of the other
parties and (2) such right of inspection shall not affect in any way
whatsoever any of the representations or warranties given by the respective
parties hereunder. In the event of termination of this Agreement, LIVING
and WOMAN will each return to the other all documents, work papers and
other materials obtained from the other party in connection with the
transactions contemplated hereby, and will take such other steps necessary
to protect the confidentiality of such material.
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ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of LIVING. The obligation of LIVING to
perform this Agreement is subject to the satisfaction of the following
conditions on or within a reasonable time after Closing unless waived in
writing by WOMAN.
7.2 Representations and Warranties. There shall be no information disclosed
in the schedules delivered by LIVING which in the opinion of WOMAN would
materially adversely affect the proposed transaction and intent of the
parties as set forth in this Agreement. The representations and warranties
of LIVING set forth in Article 3 hereof shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing as
though made on and as of the Closing, except as otherwise permitted by this
Agreement.
(a) Performance of Obligations. LIVING shall have in all material respects
performed all agreements required to be performed by it under this Agreement
and shall have performed in all material respects any actions contemplated
by this Agreement prior to or on the Closing and LIVING shall have complied
in all material respects with the course of conduct required by this
Agreement.
(b) Corporate Action. Minutes, certified copies of corporate resolutions
and/or other documentary evidence satisfactory to counsel for WOMAN that
LIVING submitted this Agreement and any other documents required hereby to
such parties for approval as provided by applicable law.
(c) Consents. Execution of this Agreement by the shareholders of LIVING and
any consents necessary for or approval of any party on any Schedule
delivered by LIVING whose consent or approval is required pursuant thereto
shall have been obtained.
(d) Financial Statements. WOMAN shall have been furnished with financial
statements of LIVING including, but not limited to, balance sheets and
profit and loss statements as of June 30, 1998. Such financial statements
shall have been prepared in conformity with generally accepted accounting
principles on a basis consistent with those of prior periods and fairly
present the financial position of LIVING as of June 30, 1998.
(e) Statutory Requirements. All statutory requirements for the valid
consummation by LIVING of the transactions contemplated by this Agreement
shall have been fulfilled.
(f) Governmental Approval. All authorizations, consents, approvals, permits
and orders of all federal and state governmental agencies required to be
obtained by LIVING for consummation of the transactions contemplated by this
Agreement shall have been obtained.
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(g) Changes in financial Condition of LIVING. There shall not have occurred
any material adverse change in the financial condition or in the operations
of the business of LIVING, except expenditures in furtherance of this
Agreement.
(h) Absence of Pending Litigation. LIVING is not engaged in or threatened
with any suit, action, or legal administrative or other proceedings or
governmental investigations pertaining to this Agreement or the condition of
the transactions contemplated hereunder.
(i) Authorization for Issuance of Stock. WOMAN shall have received in form
and substance satisfactory to counsel for WOMAN a letter instructing and
authorizing the Registrar and Transfer agent for the shares of common stock
of LIVING to issue stock certificates representing ownership of LIVING
common stock to the shareholders of WOMAN in accordance with the terms of
this Agreement.
7.3 Conditions to Obligations of WOMAN. The obligation of WOMAN to perform
this Agreement is subject to the satisfaction of the following conditions on
or before the Closing unless waived in writing by LIVING
(a) Representations and Warranties. There shall be no information disclosed
in the schedules delivered by WOMAN which in the opinion of LIVING would
materially adversely affect the proposed transaction and intent of the
parties as set forth in this Agreement. The representations and warranties
of WOMAN set forth in Article 4 hereof shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing as
though made on and as of the Closing, except as otherwise permitted by this
Agreement.
(b) Performance of Obligations. WOMAN shall have in all material respects
performed all agreements required to be performed by it under this Agreement
and shall have performed in all material respects any actions contemplated
by this Agreement prior to or on the Closing and WOMAN shall have complied
in all material respects with the course of conduct required by this
Agreement.
(c) Corporate Action. Minutes, certified copies of corporate resolutions
and/or other documentary evidence satisfactory to counsel for LIVING that
WOMAN submitted this Agreement and any other documents required hereby to
such parties for approval as provided by applicable law.
(d) Consents. Any consents necessary for or approval of any party listed on
any Schedule delivered by WOMAN, whose consent or approval is required
pursuant thereto, shall be have been obtained.
(e) Financial Statements. LIVING shall have been furnished with an internal
unaudited balance sheet and income statement of WOMAN for the period ended
June 30, 1998. Such financial statements shall fairly and accurately
present the financial position of WOMAN as of June 30, 1998.
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(f) Statutory Requirements. All statutory requirements for the valid
consummation by WOMAN of the transactions contemplated by this Agreement
shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents, approvals, permits
and orders of all federal and state governmental agencies required to be
obtained by WOMAN for consummation of the transactions contemplated by this
Agreement shall have been obtained.
(h) Employment Agreements. Existing WOMAN employment agreements will have
been delivered to counsel for LIVING.
(i) Changes in Financial Condition of WOMAN. There shall not have occurred
any material adverse change in the financial condition or in the operations
of the business of WOMAN, except expenditures in furtherance of this
Agreement.
(j) Absence of Pending Litigation. WOMAN is not engaged in or threatened
with any suit, action, or legal administrative or other proceedings or
governmental investigations pertaining to this Agreement or the condition of
the transactions contemplated hereunder.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.1 Covenant of Further Assurance. The parties covenant and agree that they
shall, from time o time, execute an deliver or cause to be executed and
delivered all such further instruments of conveyance, transfer, assignments,
receipts and other instruments, and shall take or cause to be taken such
further or other actions as the other party or parties to this Agreement may
reasonably deem necessary in order to carry out the purposes and intent of
this Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.1 All statements contained in any written certificate, schedule, exhibit
or other written instrument delivered by LIVING or WOMAN pursuant hereto,
or otherwise adopted by LIVING, by its written approval or by WOMAN by its
written approval or in connection with the transactions contemplated hereby,
shall be deemed representations and warranties by LIVING or WOMAN as the
case may be. All representations, warranties and agreements made by either
party shall survive for the period of the applicable statute of limitations
and until the discovery of any claim, loss, liability or other matter based
on fraud, if longer.
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ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF SHARE EXCHANGE
10.1 Termination. Anything here into the contrary notwithstanding, this
Agreement and any agreement executed as required hereunder and the
acquisition contemplated hereby may be terminated at any time before the
closing date as follows:
(a) By mutual written consent of the Boards of Directors of LIVING and
WOMAN.
(b) By the Board of Directors of LIVING if any of the conditions set forth
in Section 7.2 shall not have been satisfied.
(c) By the board of Directors of WOMAN if any of the conditions set forth in
Section 7.1 shall not have been satisfied.
10.2 Termination of Obligations and Waiver of Conditions; Payment of
Expenses. In the event this Agreement and the Share Exchange are terminated
and abandoned pursuant to this Article 10 hereof this Agreement shall become
void and of no force and effect and there shall be no liability on the part
of any of the parties hereto, or their respective directors, officers,
shareholders or controlling persons to each other. Each party hereto will
pay all costs and expenses incident to its negotiation and preparation of
this agreement and any of the documents evidencing the transactions
contemplated hereby, including fees, expenses and disbursements of counsel.
ARTICLE 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.1 Exchange of Shares. At the Closing, LIVING shall issue a letter
to the transfer agent of LIVING with a copy of the resolution of the Board of
Directors of LIVING authorizing and directing the issuance of LIVING shares
as set forth on the signature page of this Agreement.
11.2 Restrictions on Shares Issued to WOMAN. Due to the fact that
WOMAN will receive shares of LIVING common stock in connection with the
acquisition which have not been registered under the 1933 Act by virtue of
the exemption provided in Section 4(2) of such Act, those shares of LIVING
contain the following legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares have been acquired for
investment and may not be sold or offered for sale in the absence of an
effective Registration Statement for the shares under the Securities Act of
1933 or an opinion of counsel to the Corporation that such registration is
required.
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ARTICLE 12
MISCELLANEOUS
12.1 Construction. This Agreement shall be construed and enforced in
accordance with the laws of the State of Colorado excluding the conflicts of
laws.
12.2 Notices. All notices necessary or appropriate under this Agreement
shall be effective when personally delivered or deposited in the United
States mail postage prepaid, certified or registered, return receipt
requested, and addressed to the parties' last known address which addresses
are currently as follows:
If to "LIVING" If to "WOMAN"
BALANCED LIVING, INC THE BALANCED WOMAN, INC.
10920 South 1700 East 6375 South Highland Drive, Suite D
Sandy, UTAH 84092 Salt Lake City, Utah 84121
12.3 Amendment and Waiver. The parties hereby may, by mutual agreement in
writing signed by each party, amend this Agreement in any respect. Any term
or provision of this agreement may be waived in writing at any time by the
party which is entitled to the benefits thereof such waiver right shall
include, but not be limited to, the right of either party to:
(a) Extend the time for the performance of any of the obligations of the
other;
(b) Waive any inaccuracies in representations by the other contained in this
Agreement or in any document delivered pursuant hereto;
(c) Waiver compliance by the other with any of the covenants contained in
this Agreement, and performance of any obligations by the other; and
(d) Waive the fulfillment of any condition that is precedent to the
performance by the party so waiving of any of its obligations under this
Agreement. Any writing on the part of a party relating to such amendment,
extension or waiver as provided in this Section 12.03 shall be valid if
authorized or ratified by the board of directors of such party.
12.4 Remedies Not Exclusive. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute or otherwise. The election of any one or
more remedies by LIVING or WOMAN shall not constitute a waiver of the right
to pursue other available remedies.
12.5 Counterparts. This agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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12.6 Benefit. This Agreement shall be binding upon, and inure to the
benefit of, the respective successors and assigns of LIVING and WOMAN.
12.7 Entire Agreement. This Agreement and the Schedules and Exhibits
attached hereto represent the entire agreement of the undersigned regarding
the subject matter hereof, and supersedes all prior written or oral
understandings or agreements between the parties.
12.8 Each Party to Bear Its Own Expense. LIVING and WOMAN shall each bear
their own respective expenses incurred in connection with the negotiation,
execution, closing, and performance of this Agreement, including counsel
fees and accountant fees.
12.9 Captions and Section Headings. Captions and section headings used
herein are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
BALANCED LIVING, INC.
By: __________________________
President
THE BALANCED WOMAN, INC.
By: ________________________
President
THE BALANCED WOMAN SHAREHOLDERS:
_______________________________
ROSE N. BLACKHAM
250,000 SHARES OF COMMON STOCK
_______________________________
JEANNENE N. BARHAM
250,000 SHARES OF COMMON STOCK
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This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Jeannene Barham, a founder of Optionor, (hereinafter
referred to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
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7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Jeannene Barham
10920 South 1700 East
Salt Lake City, Utah 84092
/s/Jeannene Barham
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
-4-
<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Rose Blackham, a founder of Optionor, (hereinafter
referred to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
-1-
<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Rose Blackham
225 Monroe Street
Denver, Colorado 84206
/s/Rose Blackham
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
-4-
<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Teri Sundh, a founder of Optionor, (hereinafter referred
to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
-1-
<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Teri Sundh
284 West Sterling Drive
Bountiful, Utah 84010
/s/Teri Sundh
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
-4-
<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Lisa Hawthorne, a founder of Optionor, (hereinafter
referred to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
-1-
<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Lisa Hawthorne
2169 Silver Tree Circle
Riverton, Utah 84065
/s/Lisa Hawthorne
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
-4-
<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Linda Ford, a founder of Optionor, (hereinafter referred
to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
-1-
<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Linda Ford
9071 E. Mississippi, Apt 13A
Denver, CO 80231
/s/Linda Ford
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
-4-
<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Carole F. Madsen, a founder of Optionor, (hereinafter
referred to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
-1-
<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Carole F. Madsen
2896 Old Colony Circle
Salt Lake City, Utah 84117
/s/Carole F. Madsen
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
-4-
<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Gail Showalter Soderling, a founder of Optionor,
(hereinafter referred to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
-1-
<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Gail Showalter Soderling
1221 W. Pacific Coast Highway
Newport Beach, CA 92663
/s/Gail Showalter Soderling
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
-4-
<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Carol Jensen, a founder of Optionor, (hereinafter referred
to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
-1-
<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
-2-
<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Carol Jensen
2141 Marwood Circle
Riverton, Utah 84124
/s/Carol Jensen
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
-3-
<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
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<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Barbara Ann Curl, a founder of Optionor, (hereinafter
referred to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of
option, Optionee does hereby pay the sum of $500.00 (five hundred dollars)
as payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the
attached Election to Exercise or in such other form as may be approved by
the Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with
the terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
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7. Representations and Warranties. Optionor hereby represents that
said shares will be reserved from the authorized and unissued Common Stock
of the Optionor and when exercised, Optionor hereby represents that said
stock will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In
the event that the number of outstanding shares of Common Stock of the
Optionor is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its
rights hereunder to related entities such as whollv-owned corporations.
pension and profitsharing plans. Optionee may assign no more than two
thirds of its Option under this Agreement to unrelated parties without the
consent of Optionor by providing written notice of such assignment and the
name and address of such assignee to the Option prior to the time of
exercise. Notwithstanding the foregoing, no portion of this Option may be
assigned to any person unless such person executes a written acknowledgment
of all other terms and conditions hereof. Said assignments shall only be
made to no more than an aggregate number of 10 (ten) persons, all of whom
must be sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does
not involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all
steps reasonably required to assure that the shareholders of the Optionor,
the public and the financial community is informed with regard to the
existence of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion
thereof and/or disposition of shares acquired under this Option may create
a tax liability for Optionee. Tax laws and regulations are subject to
change, therefore Optionee should consult a tax advisor before exercising
this Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder
shall be sufficient if mailed, postage prepaid, to the respective parties
at the addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted
in accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non
defaulting party shall be entitled to reimbursement of all costs including
reasonable attorneys' fees, incurred in enforcing this Agreement, whether
with or without suit.
17. Further Assurances. At any time, and from time to time, after
the execution hereof, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
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<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts,
all of which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the respective parties and their heirs, successors and
assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Barbara Ann Curl
P.O. Box 3468
Princeville, HI 96722
/s/Barbara Ann Curl
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
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<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
.
Dated:
Signed:
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<PAGE>
This Option (or shares underlying this Option) has not been registered
under the Securities Act of 1933 ("the Act"). This Option may not be sold,
assigned, or transferred in the absence of an effective registration
statement under the Act unless done pursuant to an exemption from
registration.
BALANCED LIVING, INC.
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into effective as of July 15, 1998 between
Balanced Living, Inc., a Colorado Corporation (hereinafter referred to as
"Optionor"), and Keri McGuire, a founder of Optionor, (hereinafter referred
to as "Optionee")
RECITALS:
WHEREAS, Optionor has 50,000,000 authorized shares of $.001 par value
Common Stock, and
WHEREAS, the undersigned Optionor's shares of Common Stock have little or
no market value and the Optionor being a start-up company, and
WHEREAS the Optionee is a founder of the Company and desires to obtain an
option to acquire shares of the Optionor's Common Stock from Optionor upon
the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Optionor hereby grants an option ("Option") to
Optionee to acquire 50,000 (fifty thousand) shares of the Optionor's Common
Stock (hereinafter referred to as the "Option Stock")
2. Consideration. In consideration of the foregoing grant of option,
Optionee does hereby pay the sum of $500.00 (five hundred dollars) as
payment in full for said grant of option. Optionor hereby acknowledges
receipt to said payment as of the date of execution hereof.
3. Vesting. The Optionee will vest in options for 10,000 shares of
Option Stock for every year, from the date of this Option Agreement, that
the Optionee is still actively involved in the development of the Optionor
and has meet the requirements of the Optionor's Founders Guideline
Agreement ("FGA") which is to be attached hereto. The Board of Directors
will each year review the Optionee's involvement and fulfillment of FGA
requirements before approving the Optionee's vesting in options for 10,000
shares of Option Stock.
4. Notice of Exercise. Upon written notice in the form of the attached
Election to Exercise or in such other form as may be approved by the
Company, accompanied by payment in good funds payable to Optionor, the
Option may be exercise in whole or in part and in accordance with all other
terms and conditions hereof. Upon receipt of notice of exercise and payment
of the purchase price, Optionor shall, as soon as practicable, deliver the
Option Stock, as duly purchased, to the Optionor's transfer agent for
transfer and delivery to Optionee. The Option Stock shall be accompanied
with appropriate cover letter from the Optionor to the transfer agent of
the Optionor requesting transfer of the Option Stock to the names
designated by Optionee and requesting delivery directly to the Optionee.
Payment for the cost of transfer shall be made by Optionee.
5. Exercise Price. Optionee agrees to pay a total exercise price of
$50,000.00 (Fifty Thousand dollars) upon exercise of all the Option Stock.
Upon exercise of any portion less that all of the Option Stock, Optionee
agrees to pay that percentage of the total exercise price which is equal to
the percentage which the stock being exercise is of the total amount of
Option Stock.
6. Option Period. This Option must be exercised in accordance with the
terms and conditions set forth herein within five years from the date
hereof. Otherwise, such Option shall expire without further notice unless
mutually agreed by the parties.
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<PAGE>
7. Representations and Warranties. Optionor hereby represents that said
shares will be reserved from the authorized and unissued Common Stock of
the Optionor and when exercised, Optionor hereby represents that said stock
will be validly issued, fully paid and not assessable.
8. Ownership of Rights. The Optionee shall have no rights as a
shareholder with respect to any shares covered by his option until the date
of issuance of a stock certificate to said optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided under the terms and conditions of this
Agreement.
9. Corporate Recapitalization, Stock Splits, Adjustments, etc. In the
event that the number of outstanding shares of Common Stock of the Optionor
is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure,
the number of shares subject to the terms of this Option shall be
proportionally adjusted, as shall the price for the shares.
10. Assignability. Optionee designated below may assign all of its rights
hereunder to related entities such as whollv-owned corporations. pension
and profitsharing plans. Optionee may assign no more than two thirds of its
Option under this Agreement to unrelated parties without the consent of
Optionor by providing written notice of such assignment and the name and
address of such assignee to the Option prior to the time of exercise.
Notwithstanding the foregoing, no portion of this Option may be assigned to
any person unless such person executes a written acknowledgment of all
other terms and conditions hereof. Said assignments shall only be made to
no more than an aggregate number of 10 (ten) persons, all of whom must be
sophisticated or accredited investors.
11. Nonpublic Nature of Transaction. The grant of this Option does not
involve any public solicitation or advertisement and was privately
negotiated on an arms length basis. The Optionee is a sophisticated
investor and experienced in purchase of securities. The Option is acquired
for investment purposes for Optionee's own account and not for public
distribution. The Option will not be assigned or distributed except by
registration under The Act or an exemption therefrom. The Optionee
acknowledges that the grant of Option has not been registered under The Act
and the Option is a "restricted security" within the meaning of The Act.
12. Disclosure Obligations. Optionee and Optionor must take all steps
reasonably required to assure that the shareholders of the Optionor, the
public and the financial community is informed with regard to the existence
of the Option and the relevant terms hereof.
13. Tax Consequences. Exercise of this Option or any portion thereof
and/or disposition of shares acquired under this Option may create a tax
liability for Optionee. Tax laws and regulations are subject to change,
therefore Optionee should consult a tax advisor before exercising this
Option or disposing of the shares.
14. Notices. Any notice required or permitted to be given hereunder shall
be sufficient if mailed, postage prepaid, to the respective parties at the
addresses set forth herein.
15. Construction. This Agreement shall be construed and interpreted in
accordance with the State of Colorado.
16. Default. In the event of any default hereunder, the non defaulting
party shall be entitled to reimbursement of all costs including reasonable
attorneys' fees, incurred in enforcing this Agreement, whether with or
without suit.
17. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
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<PAGE>
18. Counterparts. This Agreement may be executed in Counterparts, all of
which shall constitute on and the same agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
OPTIONEE:
Keri McGuire
9085 E. Mississippi, #M-206
Denver, CO 80231
/s/Keri McGuire
Date: July 15, 1998
OPTIONOR:
Balanced Living, Inc.
6375 So. Highland Drive
Salt Lake City, Utah 84121
/s/ Jeannene Barham
Jeannene Barham, President
Date: July 15, 1998
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<PAGE>
ELECTION TO EXERCISE
Balanced Living, Inc.
(To be delivered when exercising vested option stock)
The undersigned, being the Registered Holder of the attached
Stock Option Agreement in shares of option stock of Balanced
Living, Inc. (the "Company"), hereby irrevocably elects to exercise such
option stock with respect to shares of the Common Stock of the
Company and herewith tenders payment for such shares in cash or by certified
or official bank check payable to the order of the Company or has made a
wire transfer to the Company of good funds in the amount of
and in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of
whose addressis at and that such
certificate be delivered to whose address is
at .
If said number of shares is less than all of the shares
purchasable hereunder, the undersigned requests that the Company endorse
on the Option Agreement the number of shares for which it remains
exercisable and return it to whose address is
at .
Dated:
Signed:
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<PAGE>
EXHIBIT A
NOTE # $XX,XXX.xx
XXXXXXX XX, 1998
THE BALANCED WOMAN, INC.
10% DEMAND SUBORDINATED NOTE
PRINCIPAL DUE: March 1, 1999
QUARTERLY PRINCIPAL PAYMENTS DUE THROUGH: March 1, 1999
THE BALANCED WOMAN, INC., a Colorado corporation (the "Company"), for
value received, promises to pay to the registered holder whose name appears
below (the "Holder"), or the registered assigns thereof:
(1) the Principal Amount on or before March 1, 1999; and
(2) interest at the Interest Rate on the Principal Amount from the date
of this Note, quarterly on June 1, September 1, December 1, and
March 1 of each year, beginning on June 1, 1998, until the Unpaid
Principal Amount is paid in full.
Registered Holder:
Original Principal Amount: $XX,XXX.xx
First Interest Payment Date: June 1, 1998
Interest Rate: 10% per annum based on a year of 365 days.
Payments shall be in coin or currency of the United States of America
which at the time of payment is legal tender for the payment of public and
private debts, except as provided in Section 2.1. Payments shall be made by
check mailed to the address of the registered Holder in accordance with
Sections 9 and 11, except where presentment is required hereby
(see Section 2).
THIS DEBENTURE WAS ISSUED PURSUANT TO, AND IS SUBJECT TO, THAT CERTAIN
DEMAND NOTE/COMMON STOCK WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND
THE HOLDER ("THE AGREEMENT").
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<PAGE>
Month, day, 1998
THE BALANCED WOMAN, INC.
10% DEMAND SUBORDINATED NOTE
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby accepted and acknowledged, the parties reduce
to writing and ratify the following agreement.
1. The Notes. This Note is one of a series of Notes (the "Notes") issued
or to be issued by the Company, having an aggregate original principal
amount of up to $200,000, and is to be identical with the other Notes
in all material respects except the original principal amount of this
Note (the "Original Principal Amount") and the date, which are set
forth on the first page of this Note, and the initial Interest Payment
Date.
2. Payment and Prepayment (Redemption). The principal of this Note shall
be paid, and may be prepaid or redeemed as follows.
2.1 Principal; Unpaid Principal Amount; Interest. The Unpaid
Principal Amount shall be due and payable on or before March 1,
1999; provided, however, that in the event of demand for repayment
in part of the Note, the amount of each of the remaining payments
shall be adjusted pro rata. "Unpaid Principal Amount," as used
herein, shall mean the Original Principal Amount minus any
principal amount repaid. Interest shall be payable at the
Interest Rate on the Unpaid Principal Amount from the date of this
Note quarterly on June 1, September 1, December 1, and March 1 of
each year (an "Interest Payment Date"), beginning on June 1, 1998,
until the Unpaid Principal Amount is paid in full.
2.2 Demand Payment. The holder of this Note shall have the first
right, at such holder's option to demand re-payment of all
principal and interest due under this Note, whether upon maturity
or otherwise, to make a purchase of equal value in any equity
financing opportunities offered by the Company.
1. Procedure. For Demand Payment, the Holder must present this
Note at the office or agency of the Company designated for
payments along with: (1) the Demand for Payment form (attached
hereto as Exhibit A-1) properly executed; and a properly
executed assignment form (attached hereto as Exhibit A-2) if
any of the payments are to be issued in a name other than a
registered Holder's. On the demand date or as promptly
thereafter as practicable, the Company shall deliver to the
Holder, or as otherwise directed by such Holder in writing, all
principal and interest due and payable on such date.
2.3 Usury Savings Clause. This Note and all agreements between Company
and Holder, present or future, written or oral, are limited so
that, whether by reason of demand or acceleration of the maturity
hereof or otherwise, interest contracted for, charged, received,
paid or agreed to be paid to any Holder, may never exceed interest
computed at the highest lawful contract rate of interest. If
interest would otherwise be payable to any Holder hereof in excess
of interest computed at the highest lawful contract rate of
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<PAGE>
interest, the interest payable to Holder must be reduced to
interest computed at the highest lawful contract rate of
interest; and if any Holder ever receives anything of value deemed
interest by applicable law in excess of interest computed at the
highest lawful contract rate of interest, all excess interest must
be applied to the reduction of the principal hereof and not to the
payment of interest, or if such excess interest exceeds the unpaid
balance of principal hereof, such excess must be refunded to the
Company. All interest paid or agreed to be paid to Holder must, to
the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full period this Note is
outstanding until payment in full of the principal (including the
period of any renewal or extension hereof) so that the interest
for such full period does not exceed interest computed at the
highest lawful contract rate of interest. This paragraph controls
all agreements between Company and Holder.
3. Covenants. So long as any Note is outstanding the following
provisions shall be applicable.
3.1 Payment. The Company shall pay the principal and interest on
this Note according to its terms, computing interest for any
period of less than three months on the basis of actual days
elapsed over a 365-day year.
3.2 Corporate Existence. The Company shall do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and statutory)
and franchises. However, the Company need not preserve a right
or franchise if the Board determines that its preservation is
no longer desirable in the conduct of the Company's business,
and that its loss is not disadvantageous in a material respect
to the Note Holders.
4. Amendments.
4.1 By 66% Consent. With the written consent of Holders of 66
2/3% or more of the unpaid principal amount of the Notes at
the time outstanding, the Company may add, delete or change
provisions of the Notes (and the corresponding rights of
Holders) except as specified in Section 4.2.
4.2 By 100% Consent. The written consent of Holders of 100% of
the unpaid principal amount of the Notes shall be necessary
to: (i) change the first payment date; (ii) reduce the
principal amount; (iii) reduce the interest rate; (iv) extend
the time for payment of interest; (v) change the method or
medium of payment of principal or interest; (vi) change this
Section 4.2.
4.3 Effect of Amendment. An amendment under Section 4.1 or 4.2
shall apply equally to all Holders of the Notes then
outstanding. It shall be binding upon them, upon future
Holders of the Notes, and upon the Company, whether or not a
Note is marked to indicate the amendment. A Note issued
thereafter shall bear a notation of the amendment.
4.4 Notice of Amendment. The Company shall give the Note Holders
immediate written notice of an amendment. The notice shall
include a copy of the amendment and a copy of the consent.
5. Default.
5.1 Event of Default Defined. Each of the following is an event
of default.
1. Principal. The Company does not pay the principal of any
of the Notes when the same becomes due.
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<PAGE>
2. Interest. The Company does not pay the interest or premium
on any Note for more than 30 days after the same becomes
due.
3. Misrepresentations. A material representation or warranty
made by the Company herein or in a writing furnished in
connection with the purchase of this Note is false in a
material respect on the date as of which made.
4. Other Covenants. The Company does not perform or observe
any other agreement, covenant, term or condition hereof
and the nonperformance or nonobservance is not remedied
within thirty days after written notice specifying the
nonperformance or nonobservance is received by the Company
from one or more of the Note Holders.
5. Assignment for Creditors. The Company or a subsidiary
makes an assignment for the benefit of creditors.
6. Voluntary Receivership, etc. The Company: i) petitions
or applies to a tribunal for the appointment of a trustee
or receiver of the Company, or of any substantial part of
the assets thereof; or (ii) commences a proceeding
relating to the Company under a bankruptcy,
reorganization, arrangement, insolvency, debt
readjustment, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect.
7. Involuntary Receivership, etc. An involuntary
receivership application is filed, or such a proceeding
is commenced, against the Company, and: (i) the Company
by any act indicates its approval, consent, or
acquiescence; or (ii) an order is entered appointing the
trustee or receiver, or adjudicating the Company bankrupt
or insolvent, or approving the petition in the
proceeding, and the order remains in effect for more than
sixty days.
8. Involuntary Dissolution, etc. In order is entered in a
proceeding against the Company decreeing the dissolution,
winding up, liquidation, or split-up of the Company, and
the order remains in effect for more than sixty days.
5.2 Remedy; Acceleration. If an event of default occurs and
continues, then the Holder or Holders of at least a majority
of the unpaid principal amount of the Notes outstanding may,
by notice in writing to the Company declare all of the unpaid
principal of the Notes to be due, and all of the unpaid
principal of the Notes shall then be, forthwith due and
payable together with interest accrued thereon.
5.3 Waiver. The Holders of a majority in unpaid principal amount
of the Notes may, on behalf of all Holders of outstanding
Notes and by written consent, waive any past default and its
consequences except a default under Section 5.1(1) or (2) or
a default in respect of a covenant or provision which under
Section 4.2 can be changed only with the consent of all
Holders of outstanding Notes. On waiver, the underlying event
(s) of default shall be deemed cured for all purposes of the
Note. No waiver shall extend to a later or other default, or
impair any right consequent thereto.
5.4 Rescission of Acceleration. The Holders of a majority in
unpaid principal amount of the Notes may, on behalf of all
Note Holders and by written consent, rescind and annul a
declaration of acceleration under Section 5.2 if the Company
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<PAGE>
pays all accrued interest on the Notes then outstanding and
the unpaid principal and redemption premium (if any) on the
Notes then outstanding which have become due otherwise than
by the declaration. No rescission-annulment shall extend to
a later or other default, orimpair any right consequent
thereto.
6. Subordination.
6.1 In General. The Notes (including this Note) are subordinated
to and for the benefit of Senior Debt as provided in this
Section 6.
6.2 Senior Debt Defined. "Senior Debt" means the principal of and
interest and premium (if any) on debt of the Company
outstanding from time to time for money borrowed and
financing leases from banks, insurance companies, other
financial institutions regularly engaged in the business of
lending and from equipment suppliers. Senior Debt does not
include the Notes.
6.3 Operative Events. Subordination shall operate in any payment
or distribution of Company assets on dissolution, winding up,
liquidation or reorganization of the Company (whether in
receivership, bankruptcy, insolvency, assignment for benefit
of creditors or other marshaling of assets and liabilities
for the Company).
6.4 Hold-back for Senior Debt. If an operative event (Section
6.3) occurs, all Senior Debt shall be paid in full before any
Note Holder shall receive any payment or distribution on
account of the principal of or interest or redemption premium
(if any) on the Notes.
6.5 Pay-over to Senior Debt. If an operative event (Section 6.3)
occurs, any payment or distribution to which the Note Holders
would be entitled but for the hold-back of Section 6.4 shall
be paid to the holders of the Senior Debt, in proportion to
the unpaid amounts thereof, to the extent necessary to pay
them in full (after giving effect to any concurrent payment).
Payments or distributions so made shall among the Company,
its creditors (other than the Senior Debt holders) and the
Note Holders, not be deemed a payment or distribution to or
on account of the Senior Debt. This Section 6.5 is intended
solely to define the relative rights of the Senior Debt
holders and the Note Holders.
6.6 Reorganization Exception. Nothing in Section 6 prevents the
payment or distribution to the Note Holders of securities of
the Company (or any other corporation) as reorganized or
readjusted if: (1) the securities are subordinated at least
to the extent of this Section 6; (2) the Senior Debt is
assumed by the new corporation, if any; and (3) the rights of
the Senior Debt holders are not altered without their
consent.
6.7 Subrogation to Senior Debt. If the Senior Debt is paid in
full, the Note Holders shall be subrogated to the rights of
the Senior Debt holders so that any payment or distribution
to which the Senior Debt holders would be entitled but for
the fact that they have been paid in full through the pay
-over of Section 6.5, shall be paid to the Holders of the
Notes, in proportion to the unpaid amounts thereof, to the
extent necessary to pay them in full (after giving effect to
any concurrent payment). Payments or distributions so made
shall among the Company, its creditors (other than Senior
Debt holders) and the Note Holders, not be deemed a payment,
or distributions to, or on account of the Notes. This
Section 6.7 is intended solely to define the relative rights
of the Senior Debt holders and the Note Holders.
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6.8 Non-impairment of Notes. Nothing in Section 6 impairs among
the Company, its creditors (other than the Senior Debt
holders) and the Note Holders, the absolute and unconditional
obligation to pay the principal of and the interest and
redemption premium (if any) on the Notes when due and
payable. Subject to Section 6, that obligation ranks equally
with all other general obligations of the Company. Nothing in
Section 6 affects the relative rights of the Note Holders and
other creditors of the Company (other than the Senior Debt
holders). Nothing in Section 6 prevents the Note Holders from
exercising remedies otherwise permitted by law on the
occurrence of an event of default (Section 5.1), subject to
the rights (if any) of the Senior Debt holders to receive, in
accordance with Section 6, payments or distributions
otherwise receivable by the Note Holders on the exercise of
their remedies. On occurrence of an event of default, Note
Holders may file claims or proofs of claim but they must
include a specific reference to their subordination pursuant
to Section 6.
6.9 No Waiver. No present or future holder of Senior Debt shall
in any way be prejudiced or its rights to enforce
subordination impaired: (1) by an act or failure to act by
the Company; or (2) by non compliance by the Company with the
terms of the Notes; and in either case regardless of any
knowledge such holder may have or be charged with.
7. Payments Without Presentment. The Company shall pay interest on,
redemption premium (if any) on, and principal (except a payment
of all the unpaid principal amount of this Note pursuant to
Section 2) without presentment of the Note and without notation
of payment being made on the Note. Payment shall be made by check
mailed to the registered Holder in accordance with Section 11.
8. Transfer. This Note is transferable only on the books of the
Company (at its office or agency maintained in Salt Lake City,
Utah) by the registered Holder in person or by attorney on
surrender of this Note properly endorsed.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE APPLICABLE ACTS OR UNTIL THE CORPORATION HAS
RECEIVED ADVICE OF ITS COUNSEL THAT THE SECURITIES MAY BE
TRANSFERRED WITHOUT SUCH REGISTRATION.
9. Registered Owner. Prior to the presentment for registration of
transfer of this Note the Company and any agent of the Company
may treat the registered Holder as the absolute owner of this
Note for all purposes, whether or not the Note is overdue.
Neither the Company nor the agent shall be affected by any notice
to the contrary (including any notation of ownership or other
writing on the Note made by anyone other than the Company).
10. No Recourse. No recourse shall be had for the payment of the
principal, interest, or redemption premium (if any) on this Note,
or for any claim based hereon against an incorporator,
stockholder, officer or director as such (whether past, present
or future) of the Company or any successor corporation, either
directly through the Company or successor corporation, whether by
virtue of a constitution, statute or rule of law or by the
enforcement of an assessment or penalty or otherwise. All such
liability is released and waived by the acceptance of this Note
and as part of the consideration for its issuance.
11. Notices; Addresses. All notices to the Holder or to the Company
shall be given in writing by first class registered or certified
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United States mail, postage prepaid, addressed: (1) if to the
Holder, at his address most recently furnished by him to the
Company for that purpose; or (2) if to the Company, at 6375 South
Highland Drive, Suite D, Salt Lake City, Utah 84121, Attention:
President), or at such other address as the Company may specify
by notice to the Holder. Notice shall be deemed given at the
time so mailed. A notice by the Company of change of address of
its office or agency for any payment on this Note shall be given
at least ten business days before the date the change is to
become effective, and shall specify such date. Checks may be
sent to the Holder by ordinary mail, to the address indicated in
clause (1).
12. Table of Contents; Headings. The table of contents and headings
are for organization, convenience and clarity. In interpreting
this Note, they shall be subordinated in importance to the other
written material.
Witness the signature of an authorized officer of the Company.
THE BALANCED WOMAN, INC.
By:
Jeannene Barham, President
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EXHIBIT A-1
DEMAND FOR PAYMENT
The undersigned Holder in accordance to Section 2.2 hereby irrevocably:
(1) requests payment of $ principal amount of this
Note which is outstanding together with interest owed thereon in
accordance with the terms of this Note;
(2) requests issuance and delivery of payment in the name of the Holder
at the address shown below;
(3) acknowledges that the Holder received or had made available to the
Holder all financial or other information which the Holder
considers necessary to an informed judgment as to the investment
merits of this demand payment.
Date
(Please sign exactly as name appears on Note)
In the presence of:
DELIVER TO:
Name
Address
City, State Zip
Taxpayer ID No.
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EXHIBIT A-2
ASSIGNMENT FORM
For value received, hereby sell, assign, and transfer
to , all right, title and interest in and to
this Note in the principal amount of , and
irrevocably appoint , attorney (with full power
of substitution) to transfer the Note on the books of the Company.
Date
(Please sign exactly as name appears on Note)
Taxpayer ID No.
In the presence of:
Signature guaranteed by:
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<PAGE>
DEMAND NOTE/COMMON STOCK WARRANT
PURCHASE AGREEMENT
THE BALANCED WOMAN, INC.
Month day, 1998
The Balanced Woman, Inc.
6375 South Highland Drive, Suite D
Salt Lake City, Utah 84121
Dear Sirs:
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby accepted and
acknowledged, the parties reduce to writing and ratify the
following agreement.
The undersigned investor ("Investor") hereby agrees to
purchase from The Balanced Woman, Inc. (the "Issuer"), and the
Issuer hereby agrees to sell to the Investor, that number of
Units (as that term is defined below) inscribed by the name of
the Investor, below, at a purchase price equal to $1000.00 per
Unit (the "Purchase Price"), upon the terms and conditions and
in reliance on the representations and warranties hereinafter
set forth. The undersigned is aware that the offer of Units
is governed by a minimum investment of $5000.00.
Section 1. DEFINITIONS. Terms defined in this Section shall
have the respective meanings hereinafter specified.
"Agreement" means this Purchase Agreement between the
Issuer and the undersigned Investor.
"Board" means the Board of Directors of the Issuer.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commission" means the United States Securities and
Exchange Commission or any similar or corresponding
governmental commission, department or agency substituted
therefor.
"Common Stock" means the authorized shares of Common
Stock of the Issuer.
"Conversion Shares" means any shares of Common Stock into
which the Warrant may be exercised.
"GAAP" means generally accepted accounting principles for
financial reporting in the U.S.
"Issuer" has the meaning specified in the first paragraph
hereof.
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<PAGE>
"1933 Act" means the Securities Act of 1933, as amended.
"Note" means one of the Issuer's 10% Demand Subordinated
Notes, due September 1, 1998, which the Investor is purchasing
as part of a Unit pursuant to this Agreement. The form of
Note is attached hereto as Exhibit A. The total principal
amount of the Investor's Note is the Purchase Price.
"Person" shall mean any individual, partnership, joint
venture, corporation, trust, judicial body, unincorporated
organization, or governmental authority, or any department,
agency, or political subdivision thereof.
"Securities Laws" means the 1933 Act and any other
applicable state securities or blue sky laws.
"Unit" means one (1)Note and one (1)Warrant certificate
representing one(1) Warrant for every $2.00 of the Investor's
Purchase Price, which shall be acquired hereunder as a tandem
unit in return for the Purchase Price. (Example: with the
purchase of a $20,000 Unit, the Investor will receive a Note
for $20,000 and a Warrant certificate to purchase 10,000
shares of Common Stock at any time up to March 1, 2003 for
$1.00). Notes may not be acquired separately from an equal
amount of Warrants.
"U.S." means the United States of America.
"Warrant" means one or more of the Balanced Living, Inc.
March 1, 2003 Common Stock Purchase Warrants, which the
Investor is purchasing pursuant to this Agreement, in the form
attached hereto as Exhibit B. Each Warrant entitles the
holder to acquire that number of shares of Common Stock at an
exercise price of $1.00 per share as will total the Purchase
Price divided by two (2). (Example: with the purchase of a
$20,000 Unit, the Investor will receive a Note for $20,000 and
a Warrant certificate to purchase 10,000 shares of Common
Stock at any time up to March 1, 2003 for $1.00).
Section 2. THE PURCHASE. Upon execution hereof, the Investor
agrees to deliver funds to you in the full amount of the
Purchase Price for the number of Units inscribed opposite
Investor's name at the end of this Agreement, against delivery
by the Issuer to the Investor of the Debenture. Funds may be
delivered to the Issuer in the form of (i) a "same day funds"
check or (ii) an electronic funds transfer.
Section 3. REPRESENTATIONS AND WARRANTIES OF INVESTOR. The
Investor hereby represents and warrants to the Issuer that:
Section 3.1. Suitability. The Investor is (a) a founder,
one of the 10 founders who originally agreed to provide
initial capitalization to the Issuer; or (b) an "accredited
investor," as such term is defined in Rule 501(a) under the
1933 Act; or (c) an experienced and sophisticated investor
with the economic ability to lose the entire Purchase Price
without negatively impacting Investor's ability to provide for
personal needs and the needs of family members, if any.
Section 3.2. Independent Investigation. The Investor,
together with representatives or alone, as chosen by the
Investor, has conducted an independent investigation and has
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relied on such independent investigation in making a decision
to purchase the Unit(s), and has a full understanding and
appreciation of the risks associated with the purchase of
Units. In connection with such investigation, the Investor
and Investor's agents, if any, (a) have been given an
opportunity to ask and, to the extent the Investor considered
necessary, have asked questions of, and have received answers
from, officers of the Issuer concerning the Units and the
Issuer; and (b) have been given or afforded access to all
documents, records, books and additional information which the
Investor has requested regarding such matters.
Section 3.3.Unregistered Securities. The Investor
recognizes that the Units, the Note(s) the Warrant(s), and the
Conversion Shares underlying the Warrant(s) have not been
registered under the 1933 Act in reliance upon the private
offering exemption provided by Section 4(2) thereof, and
Regulation D promulgated thereunder, and have not been
registered under any other Securities Laws in reliance upon
exemptions from the registration requirements thereof; and the
Investor is acquiring Units solely for the Investor's account
for investment and not with a view to, or for offer or resale
in connection with, a distribution thereof in violation of any
Securities Laws. The Investor understands that the effect of
such representation and warranty is that the Units, Note(s),
Warrant(s) and Conversion Shares must be held indefinitely
unless subsequently registered under the Securities Laws or an
exemption from such registration is available at the time for
any proposed sale or other transfer thereof. The Investor
also understands that the Issuer is under no obligation either
to file a registration statement under the 1933 Act covering
the Conversion Shares or to file a Notification under
Regulation A under the 1933 Act with respect thereto. The
Investor is familiar with, or has been advised by the
Investor's counsel regarding, (i) the applicable limitations
upon the resale of the Unit(s), Note(s), Warrant(s) and
Conversion Shares, (ii) the circumstances under which the
Investor is required to hold the Unit(s), Note(s), Warrant(s)
and any Conversion Shares, and (iii) the limitations upon the
transfer or other disposition thereof. The Investor
acknowledges that the Issuer is relying upon the truth and
accuracy of the foregoing representations and warranties in
transferring the Units to the Investor without first
registering the Units and the underlying securities under the
1933 Act, and in any subsequent transfer to the Investor of
Conversion Shares pursuant to the conversion of the Warrant(s)
or any portion thereof.
Section 3.4.Restrictive Legend and Stop Order. The Investor
agrees that a restrictive legend substantially as follows may
be placed on the certificates representing the Notes(s), the
Warrant(s) and any Conversion Shares, to wit:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE APPLICABLE
ACTS OR UNTIL THE CORPORATION HAS RECEIVED ADVICE
OF ITS COUNSEL THAT THE SECURITIES MAY BE
TRANSFERRED WITHOUT SUCH REGISTRATION."
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<PAGE>
The Investor understands and agrees that the Issuer may
instruct any transfer agent to place a stop transfer notation
in the stock transfer records in respect of the certificates
representing the Note(s), the Warrant(s) and Conversion Shares
in the event that the Investor attempts to transfer the same,
or any part thereof, without complying with Section 3.5
hereof.
Section 3.5. Transfer Restrictions. Prior to any sale,
transfer or other disposition of any of the Note(s), the
Warrant(s), the Unit(s) or the Conversion Shares other than
pursuant to an effective registration statement under the 1933
Act, the Investor agrees to give written notice to the Issuer
of the Investor's intention to effect such transfer and to
comply in all other respects with this Section 3.5. Each such
notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail to enable counsel to
render the opinions required herein, and shall be accompanied
by an opinion of counsel satisfactory to the Issuer, addressed
to the Issuer and satisfactory in form and substance to the
Issuer, stating that, in the opinion of such counsel, such
transfer will be a transaction exempt from registration under
the 1933 Act and that any consents, approvals or
authorizations of any governmental authority or securities
exchange as may be required prior to such proposed transfer
have been obtained. If in the opinion of such counsel such
transfer may be effected without registration under the 1933
Act and if all necessary consents, approvals, or
authorizations have been obtained, the Investor shall
thereupon be entitled to transfer such shares in accordance
with the terms of the notice delivered by the Investor to the
Issuer. Each certificate issued in connection with such
transfer shall bear an appropriate restrictive legend unless,
in the opinion of the respective counsel for the Investor and
the Issuer, such legend is not required in order to aid in
assuring compliance with the 1933 Act. The Investor agrees
that the Investor will not sell, transfer or otherwise dispose
of any of the Debenture or any Conversion Shares except upon
compliance with this Section 3.5.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The
Issuer represents and warrants to the Investor that:
Section 4.1. Corporate Organization and Authority. The
Issuer (a) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado,
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to
carry on its business as now conducted and as presently
proposed to be conducted, and (c) has duly qualified, is
authorized to do business and is in good standing as a foreign
corporation in each jurisdiction where the character of its
properties or the nature of its activities makes such
qualification necessary and the failure to so qualify would
have a material adverse effect on the Issuer.
Section 4.2. Sale is Legal and Authorized. The issue and
sale of the Unit(s) and compliance by the Issuer with all of
the provisions of this Agreement (i) are within the corporate
powers of the Issuer, (ii) have been duly authorized by all
necessary corporate action on the part of the Issuer, and
(iii) are legal and will not conflict with, result in any
breach in any of the provisions of, constitute a default
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<PAGE>
under, or result in the creation of any lien or encumbrance
upon any property of the Issuer under the provisions of the
Articles of Incorporation or Bylaws of the Issuer or, to the
best of the Issuer's knowledge, any law, ordinance,
governmental rule, regulation or order, agreement or other
instrument to which the Issuer is a party or by which the
properties of the Issuer may be bound.
Section 4.3. Authorization, Reservation and Issuance of
Shares. The Warrant Shares have been duly authorized and
reserved for issuance upon the exercise of the Warrant(s); and
such Common Stock, when issued in accordance with the terms of
the Issuer's Articles of Incorporation and the resolutions of
the Board, will be validly issued, fully paid, non-assessable
and free of preemptive rights.
Section 4.4. Capitalization. The authorized capital stock
of the Issuer consists of 50,000,000 shares of Common Stock,
of which 500,000 shares are issued and outstanding as of the
date hereof, and 10,000,000 shares of Preferred Stock, of
which none is outstanding. The outstanding Common Stock is
held by a limited number of shareholders and there is no
trading market for the Issuer's Common Stock. There are no
other outstanding options, warrants, rights or other
agreements of any kind for the purchase or other acquisition
from the Issuer of any of its securities or providing rights
of first refusal with respect to sales or transfers of the
Issuer's securities, except as being offered in the form of
the Units. All of the Issuer's outstanding securities have
been validly issued, and are fully paid, nonassessable and
free of preemptive rights.
Section 4.5. Liabilities. The Issuer has no material
liabilities.
Section 4.6. Financial Statements. Upon completion, the
Issuer shall deliver to each Purchaser the Issuer's
consolidated audited balance sheet as of July 31, 1998, and
audited statements of income and cash flow (the "Interim
Financial Statements"). The Financial Statements are complete
and correct in all material respects and have been prepared in
accordance with GAAP, except as disclosed therein.
Section 4.7. Agreements.
a) There are no other agreements, understandings or
proposed transactions between the Issuer and any of its
officers, directors, affiliates or any affiliate
thereof, and there are no obligations of the Issuer to
officers, directors, shareholders, or employees of the
Issuer other than (a) for payment of salary for
services rendered, (c) reimbursement for reasonable
expenses incurred on behalf of the Issuer and (d) for
other standard employee benefits made generally
available to all employees (including stock option
agreements outstanding under any stock option plan
approved by the Board of Directors of the Issuer).
b) There are no agreements, understandings,
instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Issuer
is a party or to its knowledge by which it is bound
which may involve (i) obligations (contingent or
otherwise) of, or payments to, the Issuer in excess of
$25,000 (other than obligations of, or payments to, the
Issuer arising from purchase or sale agreements entered
into in the ordinary course of business), or (ii) the
license of any patent, copyright, trade secret or other
proprietary right to or from the Issuer (other than
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licenses arising from the purchase of "off the shelf"
or other standard products), or (iii) provisions
restricting or affecting the development, manufacture
or distribution of the Issuer's products or services,
or (iv) indemnification by the Issuer with respect to
infringements of proprietary rights (other than
indemnification obligations arising from purchase or
sale agreements entered into in the ordinary course of
business).
c) For the purposes of subsection (b) above, all
indebtedness, liabilities, agreements, understandings,
instruments, contracts and proposed transactions
involving the same person or entity (including persons
or entities the Issuer has reason to believe are
affiliated therewith) shall be aggregated for the
purpose of meeting the individual minimum dollar
amounts of such subsections.
Section 4.8. Changes. Since the date of the most recent
Financial Statement, there has not been to the Issuer's knowledge:
a) Any change in the assets, liabilities, financial
condition or operations of the Issuer from that
reflected in the Financial Statements, other than
changes in the ordinary course of business, none of
which individually or in the aggregate has had or is
expected to have a material adverse effect on such
assets, liabilities, financial condition or operations
of the Issuer;
b) Any resignation or termination of any key officers
of the Issuer; and the Issuer, to the best of its
knowledge, does not know of the impending resignation
or termination of employment of any such officer;
c) Any material change, except in the ordinary course
of business, in the contingent obligations of the
Issuer by way of guaranty, endorsement, indemnity,
warranty or otherwise;
d) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely
affecting the properties, business or prospects or
financial condition of the Issuer;
e) Any waiver by the Issuer of a valuable right or of a
material debt owed to it;
f) Any direct or indirect loans made by the Issuer to
any shareholder, employee, officer or director of the
Issuer, other than advances made in the ordinary course
of business;
g) Any material change in any compensation arrangement
or agreement with any employee, officer, director or
stockholder;
h) Any declaration or payment of any dividend or other
distribution of the assets of the Issuer;
i) Any debt, obligation or liability incurred, assumed
or guaranteed by the Issuer, except those for
immaterial amounts and for current liabilities incurred
in the ordinary course of business;
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<PAGE>
j) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other
intangible assets;
k) Any change in any material agreement to which the
Issuer is a party or by which it is bound which
materially and adversely affects the business, assets,
liabilities, financial condition, operations or
prospects of the Issuer, including compensation
agreements with the Issuer's employees; or
l) Any other event or condition of any character that,
either individually or cumulatively, has materially and
adversely affected the business, assets, liabilities,
financial condition, operations or prospects of the
Issuer.
Section 4.9. Title to Properties and Assets; Liens, etc.
The Issuer has good and marketable title to its properties and
assets, including the properties and assets reflected in the
Financial Statements, and good title to its leasehold estates,
in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (i) those resulting from
taxes which have not yet become delinquent, (ii) minor liens
and encumbrances which do not materially detract from the
value of the property subject thereto or materially impair the
operations of the Issuer, and (iii) those that have otherwise
arisen in the ordinary course of business.
Section 4.10. Patents and Trademarks. Except as otherwise
disclosed to Purchaser:
a) the Issuer owns or possesses sufficient legal rights
to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information and other
proprietary rights and processes necessary for its
business as now conducted and as proposed to be
conducted, without any known infringement of the rights
of others;
b) there are no outstanding options, licenses or
agreements of any kind relating to the foregoing, nor
is the Issuer bound by or a party to any options,
licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and
proprietary rights and processes of any other person or
entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard
products;
c) the Issuer has not received any communications
alleging that the Issuer has violated or, by conducting
its business as proposed, would violate any of the
patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights
of any other person or entity;
d) the Issuer is not aware that any of its employees is
obligated under contract (including licenses, covenants
or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court
or administrative agency, that would interfere with
their duties to the Issuer or that would conflict with
the Issuer's business as proposed to be conducted;
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<PAGE>
e) neither the execution nor delivery of this
Agreement, nor the carrying on of the Issuer's business
by the employees of the Issuer, nor the conduct of the
Issuer's business as proposed, will, to the Issuer's
knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument
under which the Issuer or any employee is now
obligated; and
f) the Issuer does not believe it is or will be
necessary to utilize any inventions, trade secrets or
proprietary information of any of its employees made
prior to their employment by the Issuer, except for
inventions, trade secrets or proprietary information
that have been assigned to the Issuer.
Section 4.11. Litigation. There is no action, suit,
proceeding or investigation pending or to the Issuer's
knowledge currently threatened against the Issuer that
questions the validity of this Agreement or the right of the
Issuer to consummate the transactions contemplated hereby or
thereby, or which might result, either individually or in the
aggregate, in any material adverse change in the assets,
condition, affairs or prospects of the Issuer, financially or
otherwise, or any change in the current equity ownership of
the Issuer, nor is the Issuer aware that there is any basis
for the foregoing, except in each case as otherwise disclosed
to Purchaser in writing. The foregoing includes, without
limitation, actions pending or threatened (or any basis
therefor known to the Issuer) involving (i) the prior
employment of any of the Issuer's employees, their use in
connection with the Issuer's business of any information or
techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with
prior employers and (ii) any prior or current security holders
of the Issuer. The Issuer is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. Except
as disclosed to the Purchaser in writing, there is no action,
suit, proceeding or investigation by the Issuer currently
pending or which the Issuer intends to initiate.
Section 4.12. Registration Rights. The Issuer is presently
not under any obligation, and has not granted any rights, to
register any of the Issuer's presently outstanding securities
or any of its securities that may hereafter be issued
Section 4.13.Compliance with Laws; Permits. To its
knowledge, the Issuer is not in violation of any applicable
statute, rule, regulation, order or restriction of any
domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or
the ownership of its properties which violation would
materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of
the Issuer. The Issuer has all franchises, permits, licenses
and any similar authority necessary for the conduct of its
business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties,
prospects or financial condition of the Issuer and believes it
can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be
conducted.
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Section 4.14. Section 1202 of the Code.
a) The Company is a "C" corporation for federal income
tax purposes.
b) The Company is an "eligible corporation" as defined
in Section 1202(e)(4) of the Code.
c) During the one-year period beginning on the date one
year before the date hereof, the Company has not made
one or more purchases of its capital stock.
d) At all times during the period that begins on
August 10, 1993, and ends on the Closing Date, the
aggregate gross assets of the Company did not exceed
$50,000,000. For purposes of this representation
(i) the amount received by the Company from the sale of
its securities contemplated in Section 2 of this
Agreement shall be taken into account and
(ii) "aggregate gross assets" shall mean the amount of
(1) cash, (2) the aggregate fair market value of all
property contributed to the Company (or other property
with a basis determined in whole or in part for federal
income tax purposes by reference to the adjusted basis
of property so contributed) as of the date of such
contribution, and (3) the aggregate adjusted basis for
federal income tax purposes of other property held by
the Company, and (iii) the Company shall be deemed to
own its ratable share of the assets of its
subsidiaries, if any.
e) The representations and warranties set forth in this
Section 4.15, as well as those representations and
warranties set forth in Section 4.15, are made only as
of the date hereof and, such representations and
warranties notwithstanding, the Company does not
represent nor warrant that the benefits of Section 1202
of the Code shall be available to Purchaser.
Section 4.15. Cooperation and Repurchases With Respect to
Section 1202. The Company shall furnish to each Purchaser
such information, and shall make such filings with the
Internal Revenue Service as shall be required pursuant to
Section 1202(d)(1)(C) of the Code to enable such Purchaser to
obtain the benefits provided by Section 1202 of the Code in
connection with any sales of any Shares, so long as (i) the
Company's Board of Directors determines that it is in the best
interests of and not unduly burdensome to the Company to
furnish such information and make such filings and (ii) there
is a reasonable basis to believe that such shares could
qualify for such benefits. In addition, with a view to making
such benefits available to the Purchasers, the Company agrees
that it will not make any purchases of its stock within the
meaning of Section 1202(c)(3)(B) of the Code until the
expiration of one year after the Closing Date, or unless such
purchases have been consented to by a majority in interest of
the Purchasers. Any information provided to Purchasers under
this Section 4.16 shall not be disclosed by any Purchaser to
any other party except as required and solely in order for
such Purchaser to claim any benefits under Section 1202 of the
Code.
Section 4.16. Corporate Approvals. All material corporate
actions taken by the Issuer (including without limitation, the
issuance or granting of stock, debentures, options, warrants,
rights and other securities and the amending or cancellation
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of any such securities or any plans or agreements relating
thereto) have been approved by all necessary shareholder and
board of directors action required by law or the Issuer's
governing documents to authorize the same.
Section 4.17. Series of Notes. The Note(s) issued to
Investor pursuant to this Agreement will be treated as being
in the same series as, and will be entitled to substantially
the same rights and benefits as are provided to the holders of
all Notes issued by the Issuer.
Section 5. ISSUER COVENANTS: FINANCIAL STATEMENTS.
The Issuer shall deliver to the Investor so long as the
Investor holds any Notes, Annual Audited Financial Statements.
As soon as available, and in any event within 120 days after
the end of each fiscal year of the Issuer, the Issuer shall
deliver to the Investor balance sheets, income statements,
statements of shareholders' equity and statements of cash
flows of Issuer for such fiscal year showing on a consolidated
basis the financial position, results of operations and cash
flows as of the end of such fiscal year and for the 12-month
period then ended, in each case setting forth the comparable
information for the preceding fiscal year, all in reasonable
detail and accompanied by the report of an independent
certified public accountant of recognized standing chosen by
the Issuer, based on an audit using generally accepted
auditing standards, that the financial statements present
fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of the Issuer
for the respective periods in conformity with GAAP.
Section 6 MISCELLANEOUS.
Section 6.1 Notices. All requests, notices and other
communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid:
a) if to the Investor, at the Investor's address shown
at the end of this Agreement, marked for attention as there
indicated, or at such other address as the Investor may have
furnished the Issuer in writing;
b) if to the Issuer, at 6375 South Highland Drive,
Suite D, Salt Lake City, Utah 84121, marked for the
attention of its President, or at such other address
as it may have furnished in writing to the Investor;
or
c) if to any other person who is the registered holder of any
Shares, to the address for such purpose of such holder as it
appears in the Stock ledger of the issuer.
Any notice so addressed and mailed by registered or certified
mail shall be deemed to be given when so mailed.
Section 6.2 Survival. All representations, warranties and
covenants made herein or in any certificate or other
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instrument delivered under this Agreement shall be considered
to have been relied upon by the party to whom it was delivered
and shall survive the Note(s) and/or the exercise of the
Warrant(s) into Conversion Shares.
Section 6.3 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of each of the parties.
Section 6.4 Law Governing. This Agreement shall be
construed in accordance with and governed by the laws of the
State of Utah.
Very truly yours,
NUMBER OF UNITS INVESTOR:
SUBSCRIBED FOR [print name]
ADDRESS:
SIGNATURE:
INVESTOR TAX ID NUMBER:
ACCEPTED:
THE BALANCED WOMAN, INC.
Jeannene Barham, President
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<PAGE>
EXHIBIT
THE WARRANTS EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES
ISSUABLE UPON EXERCISE THEREOF (THE WARRANTS AND SUCH
SECURITIES, COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NONE OF THE SECURITIES
NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION
AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS. THE
HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER ANY SECURITY, UNLESS PREVIOUSLY
REGISTERED UNDER THE SECURITIES ACT, ONLY: (A) TO THE COMPANY;
OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE).
THIS WARRANT IS SUBJECT TO THAT CERTAIN DEMAND NOTE/COMMON
STOCK WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER ("THE AGREEMENT")
No. XX Certificate for ***xxx,xxx*** warrants
5 YEAR WARRANTS TO PURCHASE COMMON STOCK OF
BALANCED LIVING, INC.
Expiring March 1, 2003
BALANCED LIVING, INC., a Colorado corporation (the
"Company") for value received, hereby certifies that the
Holder whose name is inscribed below (the "Holder"), at its
option and subject to the provisions contained on the reverse
hereof, is entitled to purchase from the Company that number
of shares of the Common Stock of the Company ("Common Stock")
this derived from the following equation:
THE PURCHASE PRICE, AS DEFINED IN THE PURCHASE AGREEEMENT
DEVIDED BY
2
(Example: with the Purchase Price of a $20,000 Unit, the Investor will
receive a Warrant certificate to purchase 10,000 shares of Common Stock)
, at any time prior to the Expiration Time (as defined on the
reverse hereof) one share of Common Stock, par value of $0.001
per share, of the Company at the per share exercise price of
$1.00 (the "Exercise Price"), or by Cashless Exercise referred
to below. The securities, number of shares purchasable upon
exercise of the Warrants and the Exercise Price per share
shall be subject to adjustment from time to time as set forth
on the reverse hereof.
The Warrants may be exercised in whole or in part (i) by
presentation of this Warrant Certificate with the Purchase
Form attached hereto duly executed and with the simultaneous
payment of the Exercise Price in cash (subject to adjustment)
to the Company for the account of the Company at the office of
the Company or (ii) by Cashless Exercise. Payment of the
Exercise Price in cash shall be made by certified or official
bank check payable to the order of the Company or by wire
transfer of funds to an account designated by the Company for
such purpose. Cashless Exercise shall be made by the surrender
of this warrant Certificate, without payment of the Exercise
Price in cash, with the Purchase Form attached hereto duly
executed, for such number of Warrant Shares (as defined on the
reverse hereof) equal to the product of (1) the number of
Warrants and (2) a fraction, the numerator of which is the
excess of the Current Market value (as defined on the reverse
hereof) on the date of exercise over the Exercise Price per
share as of the date of exercise and the denominator of which
is the Current Market Value on the date of exercise.
Upon any exercise of fewer than all the Warrants
evidenced hereby, there shall be issued to the Holder hereof a
new Warrant Certificate in respect of the balance of the
Warrants. This Warrant Certificate may be exchanged at the
office of the Company by presenting this Warrant Certificate
properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal
number of Warrants. No fractional Warrant Shares will be
issued upon the exercise of the Warrants, but the Company
shall pay an amount in cash equal to the Current Market Value
on the trading day immediately preceding the date the Warrant
is exercised, multiplied by the fraction of a Warrant Share
that would be issuable on the exercise of any Warrant.
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All Warrant Shares issuable by the Company upon the
exercise of the Warrants shall, upon such issue, be duly and
validly issued and fully paid and non-assessable. The holder
in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Company as the
absolute owner of the Warrant Certificate for all purposes
whatsoever and neither the Company nor the Company shall be
affected by notice to the contrary.
Balanced Living, INC.
By
DATED:
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[REVERSE OF WARRANT CERTIFICATE]
THE FOLLOWING TERMS AND CONDITIONS SHALL GOVERN THE WARRANTS:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
"AFFILIATE" of any Person means (i) any other Person
which, directly or indirectly, is in control of, is
controlled by or is under common control with such
Person, or (ii) any other Person who is a director or
officer (A) of such Person, (B) of any subsidiary of such
Person or (C) of any Person described in clause (i)
above. For purposes hereof, (a) "control" of a Person
means the power, direct or indirect, to direct or cause
the direction of the management and policies of such
Person whether by contract or otherwise and (b)
beneficial ownership of 5% or more of the voting common
equity (on a fully diluted basis) or warrants to purchase
such equity (whether or not currently exercisable) of a
Person shall be deemed to be in control of such Person;
and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"BOARD" means the Board of Directors of the company or
any committee thereof duly authorized to act on behalf of
such Board of Directors.
"BUSINESS DAY" means each day that is not a Saturday, a
Sunday or a day on which banking institutions are not
required to be open in the State of Utah.
"COMMON STOCK" means the Common Stock of the Company, par
value $0.001 per share, currently provided for in the
Articles of Incorporation of the Company, and any other
capital stock of the Company into which the Common Stock
may be converted or reclassified or that may be issued in
respect of, in exchange for, or in substitution of, the
Common Stock by reason of any stock split, stock
dividend, distribution, merger, consolidation or similar
event.
"COMBINATION" means an event in which the Company (i)
consolidates with, merges with or into, or sells all or
substantially all its property and assets to another
Person or (ii) distributes substantially all its assets
to its stockholders.
"CURRENT MARKET VALUE" at any date means the aggregate
fair market value of the Warrant Shares issuable upon the
exercise of one Warrant, determined by valuing each
security forming part of the Warrant Shares as follows:
(i) if such security is not registered under the Exchange
Act, (a) the value of such security, determined in good
faith by the Board and certified in a Board resolution,
based on the most recently completed arm's-length
transaction between the Company and a Person other than
an Affiliate of the Company and the closing of which
occurs on such date or shall have occurred within the
six-month period preceding such date, or (b) if no such
transaction shall have occurred on such date or within
such six-month period, the value of such security as
determined by an independent financial expert; and (ii)
if such security is registered under the Exchange Act,
the average of the daily closing bid prices for each
Business Day during the period commencing 15 Business
Days before such date and ending on the Business Day
immediately prior to such date, or if the security has
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been registered under the Exchange Act for less than 15
consecutive Business Days prior to such date, then the
average of the daily closing bid prices for all of the
Business Days before such date for which daily closing
bid prices are available. For the purposes of clause (ii)
above, the closing bid price shall be as quoted on the
primary United States securities exchange or trading
market for such security. If the closing bid price for
any security is not determinable for at least ten
Business Days in such period, such security shall be
valued as if the security were not registered under the
Exchange Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
"EXPIRATION TIME" means 5:00 p.m. Salt Lake City Time on
March 1, 2003.
"OFFICER" means the Chairman of the Board, the President,
any Vice President, the Treasurer or the Secretary of the
Company.
"PERSON" means any individual, corporation, partnership,
joint venture, limited liability company, association,
joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof
or any other entity.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"VOTING STOCK" of a corporation means all classes of
capital stock of such corporation then outstanding and
normally entitled to vote in the election of directors.
"WARRANT SHARES" means the securities issuable upon the
exercise of the Warrants.
SECTION 1.02. Rules of Construction, Unless the text
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has
the meaning assigned to it in accordance with
generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without
limitation; and
(v) words in the singular include the plural and
words in the plural include the singular.
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ARTICLE II
Transfer and Exchange
SECTION 2.01. Transfer and Exchange.
(a) Transfer and Exchange of Warrants. When Warrant
Certificates are presented to the Company with a
request to register the transfer of such Warrant
Certificates or to exchange such Warrant Certificates
for Warrant Certificates evidencing an equal number
of Warrants of other authorized denominations, the
Company shall register the transfer or make the
exchange as requested if its reasonable requirements
for such transaction are met; provided , however,
that the Warrant Certificates surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instrument of transfer in form
reasonably satisfactory to the Company, duly
executed by the Holder thereof or his attorney
duly authorized in writing; and
(ii) in the case of any transfer prior to the
second anniversary of the first issuance of
Warrant Certificates, shall be accompanied by
evidence reasonably satisfactory to the Company
as to compliance with the restrictions set
forth in the legend on the face of this Warrant
Certificate.
ARTICLE III
Exercise Terms
SECTION 3.01. Manner of Exercise. The Warrants may be
exercised in whole or in part at any time and from time to
time prior to the Expiration Time (i) by presentation of this
Warrant Certificate with the Purchase Form attached hereto as
Exhibit A-1 duly executed and with the simultaneous payment of
the Exercise Price in cash (subject to adjustment) to the
Company for the account of the Company at the office of the
Company or (ii) by Cashless Exercise. Payment of the Exercise
Price in cash shall be made by certified or official bank
check payable to the order of the Company or by wire transfer
of funds to an account designated by the Company for such
purpose, Cashless Exercise shall be made by the surrender of
this Warrant Certificate, without payment of the Exercise
Price in cash, with the Purchase Form attached hereto duly
executed, for such number of Warrant Shares equal to the
product of (1) the number of Warrants and (2) a fraction, the
numerator of which is the excess of the Current Market Value
on the date of exercise over the Exercise Price per share as
of the date of exercise and the denominator of which is the
Current Market Value on the date of exercise. For purposes of
Cashless Exercise, the term "Current Market Value" shall mean,
if the Common Stock is not registered under the Exchange Act
and no transaction has occurred as provided in clause (i)(a)
of the definition of Current Market Value, the value of the
Common Stock as determined in good faith by the Board of
Directors. All provisions hereof shall be applicable with
respect to an exercise of Warrant Certificates pursuant to a
Cashless Exercise for less than the full number of Warrants
represented thereby. The rights represented by the Warrants
shall be exercisable at the election of the Holders thereof
either in full at any time or from time to time in part and in
the event that a Warrant Certificate is surrendered for
exercise in respect of less than all the Warrant Shares
purchasable on such exercise at any time prior to the
expiration of the Exercise Period a new Warrant Certificate
exercisable for the remaining Warrant Shares will be issued.
SECTION 3.02. Issuance of Warrant Shares. Upon the
surrender of Warrant Certificates and payment of the per share
Exercise Price, as set forth in Section 3.01, the Company
shall issue and cause the Company or, if appointed, a transfer
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<PAGE>
agent for the Common Stock ("Transfer Agent") to countersign
and deliver to or upon the written order of the Holder and in
such name or names as the Holder may designate, a certificate
or certificates for the number of full Warrant Shares so
purchased upon the exercise of such Warrants or other
securities or property to which it is entitled, registered or
otherwise to the Person or Persons entitled to receive the
same, together with cash as provided in Section 3.03 in
respect of any fractional warrant Shares otherwise issuable
upon such exercise. Such certificate or certificates shall be
deemed to have been issued and any Person so designated to be
named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender
of such Warrant Certificates and payment of the per share
Exercise Price, as aforesaid; provided , however, that if, at
such date, the transfer books for the Warrant Shares shall be
closed, the certificates for the Warrant Shares in respect of
which such Warrants are then exercised shall be issuable as of
the date on which such books shall next be opened and until
such date the Company shall be under no duty to deliver any
certificates for such Warrant Shares; provided further,
however, that such transfer books, unless otherwise required
by law, shall not be closed at any one time for a period
longer than 20 calendar days.
SECTION 3.03. Fractional Warrant Shares. The Company
shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. It more than one Warrant shall be
exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon
such exercise shall be computed on the basis of the aggregate
number of Warrant Shares purchasable pursuant thereto. If any
fraction of a Warrant Share would, except for the provisions
of this Section 3.03, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay
an amount in cash equal to the Current Market Value for one
warrant Share on the trading day immediately preceding the
date the Warrant is exercised, multiplied by such fraction,
computed to the nearest whole cent.
SECTION 3.04. Compliance with Law. Notwithstanding
anything herein to the contrary, in no event shall the Holder
be entitled to exercise a Warrant unless (i) a registration
statement filed under the Securities Act in respect of the
issuance of the Warrant Shares is then effective or (ii) in
the opinion of counsel to the Company addressed to the Company
an exemption from the registration requirements is available
under the Securities Act at the time of such exercise.
SECTION 3.05. Share Legend. Each certificate for Warrant
Shares issued upon exercise of a Warrant, unless at the time
of exercise such shares are registered under the Securities
Act, shall bear a legend substantially identical to the legend
on the face of this Warrant Certificate. Any certificate
issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate
issued upon completion of a public distribution pursuant to a
registration statement under the Securities Act) shall also
bear such legend unless, in the opinion of counsel selected by
the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby need no longer
be subject to restrictions on resale under the Securities Act.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock, In the event that
at any time or from time to time the Company shall (i) pay a
dividend or make a distribution on its Common Stock in shares
of its Common Stock or other shares of capital stock, (ii)
subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) increase or decrease the number
of shares of Common Stock outstanding by reclassification of
its Common Stock, then the number of shares of Common Stock
purchasable upon exercise of each Warrant immediately after
the happening of such event shall be adjusted so that, after
giving affect to such adjustment, the holder of each Warrant
shall be entitled to receive the number of shares of Common
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Stock upon exercise that such holder would have owned or have
been entitled to receive had such warrants been exercised
immediately prior to the happening of the events described
above (or, in the case of a dividend or distribution of
capital stock, immediately prior to the record date therefor),
and the Exercise Price for each Warrant shall be adjusted in
inverse proportion. An adjustment made pursuant to this
Section 4.01 shall become effective immediately after the
effective date, retroactive to the record date therefor in the
case of a dividend or distribution in shares of capital stock,
and shall become effective immediately after the effective
date in the case of a subdivision, combination or
reclassification.
SECTION 4.02. Dividends and Other Distributions, In case
at any time or from time to time the Company shall distribute
to holders of Common Stock (I) any dividend or other
distribution of evidences of its indebtedness, shares of its
capital stock or any other noncash properties or securities or
(ii) any options, warrants or other rights to subscribe for or
purchase any of the foregoing (other than, in each case, (x)
any dividend or distribution described in Section 4.01, (y)
any rights, options, warrants or securities described in
Section 4.03 and (z) any dividend or distribution described in
Section 4.04), then the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of
shares of Common Stock purchasable upon the exercise of such
Warrant immediately prior to the record date for any such
dividend or distribution by a fraction, the numerator of which
shall be the Current Market Value per share of Common Stock on
the record date for such distribution, and the denominator of
which shall be such Current Market Value per share of Common
Stock less the fair value (as determined in good faith by the
Board, whose determination shall be evidenced by a board
resolution, a copy of which will be sent to Holders upon
request) of the portion of the distribution applicable to one
share of Common Stock consisting of evidences of indebtedness,
shares of stock, securities, other property, warrants, options
or subscription of purchase rights; and the Exercise Price
shall be adjusted to a number determined by dividing the
Exercise Price immediately prior to such record date by the
above fraction. Such adjustments shall be made whenever any
distribution is made and shall become effective as of the date
of distribution, retroactive to the record date for any such
distribution; provided , however, that the Company is not
required to make an adjustment pursuant to this Section 4.02
if at the time of such distribution the Company makes the same
distribution to Holders of Warrants as it makes to holders of
Common Stock pro rata based on the number of shares of Common
Stock for which such Warrants are exercisable. No adjustment
shall be made pursuant to this Section 4.02 which shall have
the effect of decreasing the number of shares of Common Stock
purchasable upon exercise of each Warrant or increasing the
Exercise Price.
SECTION 4.03. Rights Issue.- In the event that at any
time or from time to time the Company shall issue rights,
options or warrants for, or securities convertible or
exchangeable into, Common Stock to all holders of Common Stock
without any charge, entitling such holders to subscribe for or
purchase shares of Common Stock at a price per share that is
lower at the record date for such issuance than the then
Current Market Value per share of Common Stock, the number of
shares of Common Stock thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying
the number of shares of Common Stock theretofore purchasable
upon exercise of each Warrant by a fraction, the numerator of
which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options,
warrants or securities plus the number of additional shares of
Common Stock offered for subscription or purchase or into
which such securities are convertible or exchangeable, and the
denominator of which shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights,
options, warrants or securities plus the total number of
shares of Common Stock which the aggregate consideration
expected to be received by the Company would purchase at the
Current Market Value per share of Common Stock. In the event
of any such adjustment, the Exercise Price shall be adjusted
to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the
aforementioned fraction. Such adjustment shall be made
whenever such rights, options or warrants are issued and shall
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become effective retroactively immediately after the record
date for the determination of stockholders entitled to receive
such rights, options, warrants or securities. No adjustment
shall be made pursuant to this Section 4.03 which shall have
the effect of decreasing the number of shares of Common Stock
purchasable upon exercise of each Warrant or of increasing the
Exercise Price.
SECTION 4.04. Combination.
(a) Except as provided in Section 4.04(b), following
a Combination, the Holders shall have the right to
receive upon exercise of the Warrants such number of
shares of capital stock or other securities or
property which such Holder would have been entitled
to receive upon or as a result of such Combination
had such Warrant been exercised immediately prior to
such event. Unless Section 4.04 (b) is applicable to
a Combination, the Company shall provide that any
surviving or acquiring Person (the "Successor
Company") in such Combination will enter into an
agreement with the Company confirming the Holders,
rights pursuant to this Section 4.04(a) and
providing for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments
provided for in this Article 4. The provisions of
this Section 4.04(a) shall similarly apply to
successive Combinations involving any Successor
Company.
(b) In the event of a Combination where
consideration to the holders of Common Stock in
exchange for their shares is payable solely in cash,
then the holders of the Warrants will be entitled to
receive distributions on an equal basis with the
holders of Common Stock or other securities issuable
upon exercise of the warrants, as if the Warrants
had been exercised immediately prior to such event,
less the Exercise Price.
In case of any Combination described in this Section
4.04(b), the surviving or acquiring Person shall
deposit promptly with the Company the funds, if any,
necessary to pay to the holders of the Warrants the
amounts to which they are entitled as described
above. After such funds and the surrendered Warrant
Certificates are received, the Company shall make
payment to the Holders by delivering a check in such
amount as is appropriate to such Person or Persons
as it may be directed in writing by the holders
surrendering such Warrants.
SECTION 4.05. Other Events.- If any event occurs as to
which the foregoing provisions of this Article 4 are not
strictly applicable or, if strictly applicable, would not, in
the good faith judgment of the Board, fairly and adequately
protect the purchase rights of the Warrants in accordance with
the essential intent and principles of such provisions, then
such Board shall make such adjustments in the application of
such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good
faith opinion of such Board, to protect such purchase rights
as aforesaid, but in no event shall any such adjustment have
the effect of increasing the Exercise Price or decreasing the
number of shares of Common Stock subject to purchase upon
exercise of this Warrant.
SECTION 4.06. Superseding Adjustment, Upon the expiration
of any rights, options, warrants or conversion or exchange
privileges which resulted in the adjustments pursuant to this
Article 4, if any thereof shall not have been exercised, the
number of Warrant Shares purchasable upon the exercise of each
Warrant shall be readjusted as if (A) the only shares of
capital stock issuable upon exercise of such rights, options,
warrants, conversion or exchange privileges were the shares of
capital stock, if any, actually issued upon the exercise of
such rights, options, warrants or conversion or exchange
privileges and (B) shares of capital stock actually issued, if
any, were issuable for the consideration actually received by
the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options,
warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted
inversely; provided , however, that no such readjustment shall
(except by reason of an intervening adjustment under Section
4.01) have the effect of decreasing the number of Warrant
Shares purchasable upon the exercise of each Warrant or
increase the Exercise Price by an amount in excess of the
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amount of the adjustment initially made in respect of the
issuance, sale or grant of such rights, options, warrants or
conversion or exchange privileges.
SECTION 4.07. Minimum Adjustment, The adjustments
required by the preceding Sections of this Article 4 shall be
made whenever and as often as any specified event requiring an
adjustment shall occur, except that no adjustment of the
Exercise Price or the number of shares of Common Stock
purchasable upon exercise of Warrants that would otherwise be
required shall be made (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in
Section 4.01) unless and until such adjustment either by
itself or with other adjustments not previously made increases
or decreases by at least 1% of the Exercise Price or the
number of shares of Common Stock purchasable upon exercise of
Warrants immediately prior to the making of such adjustment.
Any adjustment representing a change of less than such minimum
amount shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this
Article 4 and not previously made, would result in a minimum
adjustment. For the purpose of any adjustment, any specified
event shall be deemed to have occurred at the close of
business on the date of its occurrence. In computing
adjustments under this Article 4, fractional interests in
Common Stock shall be taken into account to the nearest one-
hundredth of a share.
ARTICLE V
Miscellaneous
SECTION 5.01. Rights of Holders, Except as expressly set
forth in this Warrant Certificate, Holders of unexercised
warrants are not entitled (i) to receive dividends or other
distributions, (ii) to receive notice of or vote at any
meeting of the stockholders, (iii) to consent to any action of
the stockholders, (iv) to receive notice of any other
proceedings of the Company or (v) to exercise any other rights
as stockholders of the Company.
SECTION 5.02. Governing Law, The laws of the State of
Utah shall govern the Warrants.
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FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
Balanced Living, INC.
The undersigned hereby irrevocably elects to exercise [ ]
Warrants at an exercise price per Warrant (subject to adjustment) of
$1.00 to acquire an equal number of shares of Common Stock, par
value $0.001 per share, of Balanced Living, Inc. on the terms and
conditions specified in the within Warrant Certificate, surrenders
this Warrant Certificate and all right, title and interest therein
to Balanced Living, Inc. and directs that the shares of Common Stock
deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and delivered
thereto.
Exercise is made by (check one):
[ ] Tender of the Exercise Price
[ ] Cashless Exercise
DATE:
1
(Signature of Owner)
(Street Address)
(City) (ST) (zip code)
1. The signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
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OPINION OF RAY, QUINNEY & NEBEKER AS TO
THE LEGALITY OF THE SHARES BEING REGISTERED.
December 18, 1998
Balanced Living, Inc.
6375 South Highland Drive
Suite D
Salt Lake City, Utah 84121
Re: REGISTRATION AND ISSUANCE OF BALANCED LIVING INC. COMMON STOCK
TO PUBLIC INVESTORS.
Dear Ms. Barham:
This Firm has acted as counsel to Balanced Living, Inc., a Colorado
corporation ("the Company), in connection with its registration of 250,000
shares of its common stock ("the Units"), together with 250,000 Class A
Warrants, 250,000 Class B Warrants and 250,000 Class C Warrants for sale
to the public through the Company's Prospectus included within its
Registration Statement on Form SB-2 as filed with the Securities and
Exchange Commission on December 18, 1998.
In connection with this representation, we have examined the
originals, or copies identified to our satisfaction, of such minutes,
agreements, corporate records and filings and other documents necessary to
our opinion contained in this letter. The Company have also relied as to
certain matters of fact upon representations made to us by officers and
agents of the Company. Based upon and in reliance on the foregoing, it is
our opinion that:
1. the Company has been duly incorporated and is validly
existing and in good standing as a corporation under the laws
of the State of Colorado; and has full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus referred to above.
2. When issued and distributed to the purchasers thereof, the
Units will be duly and validly issued and will be fully paid
and nonassessable.
3. The shareholders of the Company have no pre-emptive rights to
acquire additional shares of the Company's Common Stock or other
securities in respect of the Units.
The Company hereby consent to the use of our name in the
Prospectus and therein being disclosed as counsel to the
Company in this matter.
Very truly yours,
RAY, QUINNEY & NEBEKER
By:/s/ A. R. Thorup
A. Robert Thorup, a Shareholder and
Director of the Firm
BALANCED LIVING, INC.
1998 STOCK OPTION PLAN
SECTION I. PURPOSE; DEFINITIONS.
1.1 Purpose. The purpose of the Balanced Living, Inc.
("Company") 1998 Stock Option Plan ("Plan") is to
enable the Company to offer to its key employees,
officers, directors, consultants, advisors and sales
representatives whose past, present and/or potential
contributions to the Company and its Subsidiaries have
been, are or will be important to the success of the
Company, an opportunity to acquire a proprietary
interest in the Company. The various types of long-term
incentive awards which may be provided under the Plan
will enable the Company to respond to changes in
compensation practices, tax laws, accounting
regulations and the size and diversity of its
businesses.
1.2 Definitions. For purposes of the Plan, the
following terms shall be defined as set forth below:
(a) "Agreement" means the agreement between the
Company and the Holder setting forth the terms
and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the
Company.
(c) " Code" means the Internal Revenue Code of
1986, as amended from time to time, and any
successor thereto and the regulations promulgated
thereunder.
(d) "Committee" means the Stock Option Committee
of the Board or any other committee of the Board,
which the Board may designate to administer the
Plan or any portion thereof. If no Committee is
so designated, then all references in this Plan
to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the
Company, par value $.001 per share.
(f) "Company" means Balanced Living, Inc., a
corporation organized under the laws of the State
of Colorado.
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(g) "Deferred Stock" means Stock to be received,
under an award made pursuant to Section 9, below,
at the end of a specified deferral period.
(h) "Disability" means disability as determined
under procedures established by the Committee for
purposes of the Plan.
(i) "Effective Date" means the date set forth in
Section 13.1, below.
(j) "Employee" means any employee, director,
general partner, trustee (where the registrant is
a business trust), officer or consultant or
advisor.
(k) "Fair Market Value", unless otherwise
required by any applicable provision of the Code
or any regulations issued thereunder, means, as
of any given date: (i) if the Common Stock is
listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq
SmallCap Market, the last sale price of the
Common Stock in the principal trading market for
the Common Stock on the last trading day
preceding the date of grant of an award
hereunder, as reported by the exchange or Nasdaq,
as the case may be; (ii) if the Common Stock is
not listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq
SmallCap Market, but is traded in the over-the-
counter market, the closing bid price for the
Common Stock on the last trading day preceding
the date of grant of an award hereunder for which
such quotations are reported by the OTC Bulletin
Board or the National Quotation Bureau,
Incorporated or similar publisher of such
quotations; and (iii) if the fair market value of
the Common Stock cannot be determined pursuant to
clause (i) or (ii) above, such price as the
Committee shall determine, in good faith.
(l) "Holder" means a person who has received an
award under the Plan
(m) "Incentive Stock Option" means any Stock
Option intended to be and designated as an
"incentive stock option" within the meaning of
Section 422 of the Code.
(n) "Nonqualified Stock Option" means any Stock
Option that is not an Incentive Stock Option.
(o) "Normal Retirement" means retirement from
active employment with the Company or any
Subsidiary on or after age 65.
(p) "Other Stock-Based Award" means an award
under Section 10, below, that is valued in whole
or in part by reference to, or is otherwise based
upon, Stock.
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(q) "Parent" means any present or future parent
corporation of the Company, as such term is
defined in Section 424(e) of the Code.
(r) "Plan" means the Balanced Living, Inc."1998"
Stock Option Plan, as hereinafter amended from
time to time.
(s) "Restricted Stock" means Stock, received
under an award made pursuant to Section 8, below,
that is subject to restrictions under said
Section 8.
(t) "SAR Value" means the excess of the Fair
Market Value (on the exercise date) of the number
of shares for which the Stock Appreciation Right
is exercised over the exercise price that the
participant would have otherwise had to pay to
exercise the related Stock Option and purchase
the relevant shares.
(u) "Stock" means the Common Stock of the
Company, par value $.001 per share.
(v) "Stock Appreciation Right" means the right
to receive from the Company, on surrender of all
or part of the related Stock Option, without a
cash payment to the Company, a number of shares
of Common Stock equal to the SAR Value divided by
the exercise price of the Stock Option.
(w) "Stock Option" or "Option" means any option
to purchase shares of Stock which is granted
pursuant to the Plan.
(x) "Stock Reload Option" means any option
granted under Section 6.3, below, as a result of
the payment of the exercise price of a Stock
Option and/or the withholding tax related thereto
in the form of Stock owned by the Holder or the
withholding of Stock by the Company.
(y) "Subsidiary" means any present or future
subsidiary corporation of the Company, as such
term is defined in Section 424(f) of the Code.
SECTION 2. ADMINISTRATION.
2.1 Committee Membership. The Plan shall be
administered by the Board or a Committee. Committee
members shall serve for such term as the Board may in
each case determine, and shall be subject to removal at
any time by the Board.
2.2 Powers of Committee. The Committee shall have full
authority, subject to Section 4, below, to award,
pursuant to the terms of the Plan: (i) Stock Options,
(ii) Stock Appreciation Rights, (iii) Restricted Stock,
(iv) Deferred Stock, (v) Stock Reload Options and/or
(vi) Other Stock-Based Awards. For purposes of
illustration and not of limitation, the Committee shall
have the authority (subject to the express provisions
of this Plan):
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(a) to select the officers, key employees,
directors, consultants, advisors and sales
representatives of the Company or any Subsidiary
to whom Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Reload Stock
Options and/or Other Stock- Based Awards may from
time to time be awarded hereunder.
(b) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any
award granted hereunder (including, but not
limited to, number of shares, share price, any
restrictions or limitations, and any vesting,
exchange, surrender, cancellation, acceleration,
termination, exercise or forfeiture provisions, as
the Committee shall determine);
(c) to determine any specified performance goals
or such other factors or criteria which need to be
attained for the vesting of an award granted
hereunder;
(d) to determine the terms and conditions under
which awards granted hereunder are to operate on
a tandem basis and/or in conjunction with or apart
from other equity awarded under this Plan and cash
awards made by the Company or any Subsidiary
outside of this Plan;
(e) to permit a Holder to elect to defer a
payment under the Plan under such rules and
procedures as the Committee may establish,
including the crediting of interest on deferred
amounts denominated in cash and of dividend
equivalents on deferred amounts denominated in
Stock;
(f) to determine the extent and circumstances
under which Stock and other amounts payable with
respect to an award hereunder shall be deferred
which may be either automatic or at the election
of the Holder; and
(g) to substitute (i) new Stock Options for
previously granted Stock Options, which previously
granted Stock Options have higher option exercise
prices and/or contain other less favorable terms,
and (ii) new awards of any other type for
previously granted awards of the same type, which
previously granted awards are upon less favorable
terms.
2.3 Powers of Committee.
(a) Committee Authority. Subject to Sections 4
and 12, below, the Committee shall have the
authority to adopt, alter and repeal such
administrative rules, guidelines and practices
governing the Plan as it shall, from time to time,
deem advisable, to interpret the terms and
provisions of the Plan and any award issued under
the Plan (and to determine the form and substance
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of all Agreements relating thereto), and to
otherwise supervise the administration of the
Plan. Subject to Section 12, below, all decisions
made by the Committee pursuant to the provisions
of the Plan shall be made in the Committee's sole
discretion and shall be final and binding upon all
persons, including the Company, its Subsidiaries
and Holders.
(b) Incentive Stock Options. Anything in the Plan
to the contrary notwithstanding, no term or
provision of the Plan relating to Incentive Stock
Options (including but limited to Stock Reload
Options or Stock Appreciation rights granted in
conjunction with an Incentive Stock Option) or any
Agreement providing for Incentive Stock Options
shall be interpreted, amended or altered, nor
shall any discretion or authority granted under
the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without
the consent of the Holder(s) affected, to
disqualify any Incentive Stock Option under such
Section 422.
SECTION 3. STOCK SUBJECT TO PLAN.
3.1 Number of Shares. The total number of shares of
Common Stock reserved and available for distribution
under the Plan shall be 1,000,000 shares. Shares of
Stock under the Plan may consist, in whole or in part,
of authorized and unissued shares or treasury shares.
If any shares of Stock that have been granted pursuant
to a Stock Option cease to be subject to a Stock
Option, or if any shares of Stock that are subject to
any Stock Appreciation Right, Restricted Stock,
Deferred Stock award, Reload Stock Option or Other
Stock-Based Award granted hereunder are forfeited or
any such award otherwise terminates without a payment
being made to the Holder in the form of Stock, such
shares shall again be available for distribution in
connection with future grants and awards under the
Plan. Only net shares issued upon a stock-for-stock
exercise (including stock used for withholding taxes)
shall be counted against the number of shares available
under the Plan.
3.2 Adjustment Upon Changes in Capitalization. Etc. In
the event of any merger, reorganization, consolidation,
recapitalization, dividend (other than a cash
dividend), stock split, reverse stock split, or other
change in corporate structure affecting the Stock, such
substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under
the Plan, in the number and exercise price of shares
subject to outstanding Options, in the number of shares
and Stock Appreciation Right price relating to Stock
Appreciation Rights, and in the number of shares
subject to, and in the related terms of, other
outstanding awards (including but not limited to awards
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of Restricted Stock, Deferred Stock, Reload Stock
Options and Other Stock-Based Awards) granted under the
Plan as may be determined to be appropriate by the
Committee in order to prevent dilution or enlargement
of rights, provided that the number of shares subject
to any award shall always be a whole number.
SECTION 4. ELIGIBILITY.
Awards may be made or granted to key employees, officers,
directors, consultants, advisors and sales representatives
who are deemed to have rendered or to be able to render
significant services to the Company or its Subsidiaries and
who are deemed to have contributed or to have the potential
to contribute to the success of the Company. No Incentive
Stock Option shall be granted to any person who is not an
employee of the Company or a Subsidiary at the time of
grant.
SECTION 5. REQUIRED SIX-MONTH HOLDING PERIOD.
Any equity security issued under this Plan must be held and
may not be sold prior to six months from the date of the
grant of the related award, without the approval of the
Company.
SECTION 6. STOCK OPTIONS.
6.1 Grant and Exercise. Stock Options granted under
the Plan may be of two types: (i) Incentive Stock
Options and (ii) Nonqualified Stock Options. Any Stock
Option granted under the Plan shall contain such terms,
not inconsistent with this Plan, or with respect to
Incentive Stock Options, not inconsistent with the
Code, as the Committee may from time to time approve.
The Committee shall have the authority to grant
Incentive Stock Options, Nonqualified Stock Options, or
both types of Stock Options and which may be granted
alone or in addition to other awards granted under the
Plan. To the extent that any Stock Option intended to
qualify as an Incentive Stock Option does not so
qualify, it shall constitute a separate Nonqualified
Stock Option. An Incentive Stock Option may be granted
only within the ten-year period commencing from the
Effective Date and may only be exercised within ten
years of the date of grant (or five years in the case
of an Incentive Stock Option granted to an optionee
("10% Stockholder") who, at the time of grant, owns
Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company.
6.2 Terms and Conditions. Stock Options granted under
the Plan shall be subject to the following terms and
conditions:
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(a) Exercise Price. The exercise price per share
of Stock purchasable under an Incentive Stock
Option shall be determined by the Committee at the
time of grant and may not be less than 100% of the
Fair Market Value of the Stock as defined above;
provided, however, that the exercise price of an
Incentive Stock Option granted to a 10%
Stockholder shall not be less than 110% of the
Fair Market Value of the Stock. The exercise price
per share of Stock purchasable under any options
granted that are not Incentive Stock Option, shall
be determined by the Committee at the time of
grants.
(b) Option Term. Subject to the limitations in
Section 6.1, above, the term of each Stock Option
shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to
such terms and conditions as shall be determined
by the Committee and as set forth in Section 11,
below. If the Committee provides, in its
discretion, that any Stock Option is exercisable
only in installments, i.e., that it vests over
time, the Committee may waive such installment
exercise provisions at any time at or after the
time of grant in whole or in part, based upon such
factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever
installment, exercise and waiting period
provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part
at any time during the term of the Option, by
giving written notice of exercise to the Company
specifying the number of shares of Stock to be
purchased. Such notice shall be accompanied by
payment in full of the purchase price, which shall
be in cash or, unless otherwise provided in the
Agreement, in shares of Stock (including
Restricted Stock and other contingent awards under
this Plan) or, partly in cash and partly in such
Stock, or such other means which the Committee
determines are consistent with the Plan's purpose
and applicable law. Cash payments shall be made by
wire transfer, certified or bank check or personal
check, in each case payable to the order of the
Company; provided, however, that the Company shall
not be required to deliver certificates for shares
of Stock with respect to which an Option is
exercised until the Company has confirmed the
receipt of good and available funds in payment of
the purchase price thereof. Payments in the form
of Stock shall be valued at the Fair Market Value
of a share of Stock on the day prior to the date
of exercise. Such payments shall be made by
delivery of stock certificates in negotiable form
which are effective to transfer good and valid
title thereto to the Company, free of any liens or
encumbrances. Subject to the terms of the
Agreement, the Committee may, in its sole
discretion, at the request of the Holder, deliver
upon the exercise of a Nonqualified Stock Option
a combination of shares of Deferred Stock and
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Common Stock; provided that, notwithstanding the
provisions of Section 9 of the Plan, such Deferred
Stock shall be fully vested and not subject to
forfeiture. A Holder shall have none of the rights
of a stockholder with respect to the shares
subject to the Option until such shares shall be
transferred to the Holder upon the exercise of the
Option.
(e) Transferability. Unless otherwise determined
by the Committee, no Stock Option shall be
transferable by the Holder other than by will or
by the laws of descent and distribution, and all
Stock Options shall be exercisable, during the
Holder's lifetime, only by the Holder.
(f) Termination by Reason of Death. If a Holder's
employment by the Company or a Subsidiary
terminates by reason of death, any Stock Option
held by such Holder, unless otherwise determined
by the Committee at the time of grant and set
forth in the Agreement, shall be fully vested and
may thereafter be exercised by the legal
representative of the estate or by the legatee of
the Holder under the will of the Holder, for a
period of one year (or such other greater or
lesser period as the Committee may specify at
grant) from the date of such death or until the
expiration of the stated term of such Stock
Option, whichever period is the shorter.
(g) Termination by Reason of Disability. If a
Holder's employment by the Company or any
Subsidiary terminates by reason of Disability, any
Stock Option held by such Holder, unless otherwise
determined by the Committee at the time of grant
and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the
Holder for a period of one year (or such other
greater or lesser period as the Committee may
specify at the time of grant) from the date of
such termination of employment or until the
expiration of the stated term of such Stock
Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions
of Section 14.3, below, and unless otherwise
determined by the Committee at the time of grant
and set forth in the Agreement, if a Holder is an
employee of the Company or a Subsidiary at the
time of grant and if such Holder's employment by
the Company or any Subsidiary terminates for any
reason other than death or Disability, the Stock
Option shall thereupon automatically terminate,
except that if the Holder's employment is
terminated by the Company or a Subsidiary without
cause or due to Normal Retirement, then the
portion of such Stock Option which has vested on
the date of termination of employment may be
exercised for the lesser of three months after
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termination of employment or the balance of such
Stock Option's term.
(i) Additional Incentive Stock Option Limitation.
In the case of an Incentive Stock Option, the
aggregate Fair Market Value of Stock (determined
at the time of grant of the Option) with respect
to which Incentive Stock Options become
exercisable by a Holder during any calendar year
(under all such plans of the Company and its
Parent and Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The
Committee may at any time, in its sole discretion,
offer to buy out a Stock Option previously
granted, based upon such terms and conditions as
the Committee shall establish and communicate to
the Holder at the time that such offer is made.
(k) Stock Option Agreement. Each grant of a Stock
Option shall be confirmed by, and shall be subject
to the terms of, the Agreement executed by the
Company and the Holder.
6.3 Stock Reload Option. The Committee may also grant
to the Holder (concurrently with the grant of an
Incentive Stock Option and at or after the time of
grant in the case of a Nonqualified Stock Option) a
Stock Reload Option up to the amount of shares of Stock
held by the Holder for at least six months and used to
pay all or part of the exercise price of an Option and,
if any, withheld by the Company as payment for
withholding taxes. Such Stock Reload Option shall have
an exercise price equal to the Fair Market Value as of
the date of the Stock Reload Option grant. Unless the
Committee determines otherwise, a Stock Reload Option
may be exercised commencing one year after it is
granted and shall expire on the date of expiration of
the Option to which the Reload Option is related.
SECTION 7. STOCK APPRECIATION RIGHTS.
7.1 Grant and Exercise. The Committee may grant Stock
Appreciation Rights to participants who have been, or
are being granted, Options under the Plan as a means of
allowing such participants to exercise their Options
without the need to pay the exercise price in cash. In
the case of a Nonqualified Stock Option, a Stock
Appreciation Right may be granted either at or after
the time of the grant of such Nonqualified Stock
Option. In the case of an Incentive Stock Option, a
Stock Appreciation Right may be granted only at the
time of the grant of such Incentive Stock Option.
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7.2 Terms and Conditions. Stock Appreciation Rights
shall be subject to the following terms and conditions:
(a) Exercisability. Stock Appreciation Rights
shall be exercisable as determined by the
Committee and set forth in the Agreement, subject
to the limitations, if any, imposed by the Code,
with respect to related Incentive Stock Options.
(b) Termination. A Stock Appreciation Right shall
terminate and shall no longer be exercisable upon
the termination or exercise of the related Stock
Option.
(c) Method of Exercise. Stock Appreciation Rights
shall be exercisable upon such terms and
conditions as shall be determined by the Committee
and set forth in the Agreement and by surrendering
the applicable portion of the related Stock
Option. Upon such exercise and surrender, the
Holder shall be entitled to receive a number of
Option Shares equal to the SAR Value divided by
the exercise price of the Option.
(d) Shares Affected Upon Plan. The granting of a
Stock Appreciation Rights shall not affect the
number of shares of Stock available under for
awards under the Plan. The number of shares
available for awards under the Plan will, however,
be reduced by the number of shares of Stock
acquirable upon exercise of the Stock Option to
which such Stock Appreciation Right relates.
SECTION 8. RESTRICTED STOCK.
8.1 Grant. Shares of Restricted Stock may be awarded
either alone or in addition to other awards granted
under the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be awarded, the
number of shares to be awarded, the price (if any) to
be paid by the Holder, the time or times within which
such awards may be subject to forfeiture (the
"Restriction Period"), the vesting schedule and rights
to acceleration thereof, and all other terms and
conditions of the awards.
8.2 Terms and Conditions. Each Restricted Stock award
shall be subject to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued,
will be represented by a stock certificate or
certificates registered in the name of the Holder
to whom such Restricted Stock shall have been
awarded. During the Restriction Period,
certificates representing the Restricted Stock and
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any securities constituting Retained Distributions
(as defined below) shall bear a legend to the
effect that ownership of the Restricted Stock (and
such Retained Distributions), and the enjoyment of
all rights appurtenant thereto, are subject to the
restrictions, terms and conditions provided in the
Plan and the Agreement. Such certificates shall be
deposited by the Holder with the Company, together
with stock powers or other instruments of
assignment, each endorsed in blank, which will
permit transfer to the Company of all or any
portion of the Restricted Stock and any securities
constituting Retained Distributions that shall be
forfeited or that shall not become vested in
accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall
constitute issued and outstanding shares of Common
Stock for all corporate purposes. The Holder will
have the right to vote such Restricted Stock, to
receive and retain all regular cash dividends and
other cash equivalent distributions as the Board
may in its sole discretion designate, pay or
distribute on such Restricted Stock and to
exercise all other rights, powers and privileges
of a holder of Common Stock with respect to such
Restricted Stock, with the exceptions that (i) the
Holder will not be entitled to delivery of the
stock certificate or certificates representing
such Restricted Stock until the Restriction Period
shall have expired and unless all other vesting
requirements with respect thereto shall have been
fulfilled; (ii) the Company will retain custody of
the stock certificate or certificates representing
the Restricted Stock during the Restriction
Period; (iii) other than regular cash dividends
and other cash equivalent distributions as the
Board may in its sole discretion designate, pay or
distribute, the Company will retain custody of all
distributions ("Retained Distributions") made or
declared with respect to the Restricted Stock (and
such Retained Distributions will be subject to the
same restrictions, terms and conditions as are
applicable to the Restricted Stock) until such
time, if ever, as the Restricted Stock with
respect to which such Retained Distributions shall
have been made, paid or declared shall have become
vested and with respect to which the Restriction
Period shall have expired; (iv) a breach of any of
the restrictions, terms or conditions contained in
this Plan or the Agreement or otherwise
established by the Committee with respect to any
Restricted Stock or Retained Distributions will
cause a forfeiture of such Restricted Stock and
any Retained Distributions with respect thereto.
(c) Vesting: Forfeiture. Upon the expiration of
the Restriction Period with respect to each award
of Restricted Stock and the satisfaction of any
other applicable restrictions, terms and
conditions (i) all or part of such Restricted
-11-
<PAGE>
Stock shall become vested in accordance with the
terms of the Agreement, subject to Section 11,
below, and (ii) any Retained Distributions with
respect to such Restricted Stock shall become
vested to the extent that the Restricted Stock
related thereto shall have become vested, subject
to Section 11, below. Any such Restricted Stock
and Retained Distributions that do not vest shall
be forfeited to the Company and the Holder shall
not thereafter have any rights with respect to
such Restricted Stock and Retained Distributions
that shall have been so forfeited.
SECTION 9. DEFERRED STOCK.
9.1 Grant. Shares of Deferred Stock may be awarded
either alone or in addition to other awards granted
under the Plan. The Committee shall determine the
eligible persons to whom and the time or times at which
grants of Deferred Stock shall be awarded, the number
of shares of Deferred Stock to be awarded to any
person, the duration of the period (the "Deferral
Period") during which, and the conditions under which,
receipt of the shares will be deferred, and all the
other terms and conditions of the awards.
9.2 Terms and Conditions. Each Deferred Stock award
shall be subject to the following terms and conditions:
(a) Certificates. At the expiration of the
Deferral Period (or the Additional Deferral Period
referred to in Section 9.2 (d) below, where
applicable), share certificates shall be issued
and delivered to the Holder, or his legal
representative, representing the number equal to
the shares covered by the Deferred Stock award.
(b) Rights of Holder. A person entitled to
receive Deferred Stock shall not have any rights
of a stockholder by virtue of such award until the
expiration of the applicable Deferral Period and
the issuance and delivery of the certificates
representing such Stock. The shares of Stock
issuable upon expiration of the Deferral Period
shall not be deemed outstanding by the Company
until the expiration of such Deferral Period and
the issuance and delivery of such Stock to the
Holder.
(c) Vesting: Forfeiture. Upon the expiration of
the Deferral Period with respect to each award of
Deferred Stock and the satisfaction of any other
applicable restrictions, terms and conditions all
or part of such Deferred Stock shall become vested
in accordance with the terms of the Agreement,
subject to Section 11, below. Any such Deferred
-12-
<PAGE>
Stock that does not vest shall be forfeited to the
Company and the Holder shall not thereafter have
any rights with respect to such Deferred Stock.
(d) Additional Deferral Period. A Holder may
request to, and the Committee may at any time,
defer the receipt of an award (or an installment
of an award) for an additional specified period or
until a specified event (the "Additional Deferral
Period"). Subject to any exceptions adopted by the
Committee, such request must generally be made at
least one year prior to expiration of the Deferral
Period for such Deferred Stock award (or such
installment).
SECTION 10. OTHER STOCK-BASED AWARDS.
10.1 Grant and Exercise. Other Stock-Based Awards may
be awarded, subject to limitations under applicable
law, that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based
on, or related to, shares of Common Stock, as deemed
by the Committee to be consistent with the purposes of
the Plan, including, without limitation, purchase
rights, shares of Common Stock awarded which are not
subject to any restrictions or conditions, convertible
or exchangeable debentures, or other rights
convertible into shares of Common Stock and awards
valued by reference to the value of securities of or
the performance of specified Subsidiaries. Other
Stock-Based Awards may be awarded either alone or in
addition to or in tandem with any other awards under
this Plan or any other plan of the Company.
10.2 Eligibility for Other Stock-Based Awards. The
Committee shall determine the eligible persons to whom
and the time or times at which grants of such other
stock-based awards shall be made, the number of shares
of Common Stock to be awarded pursuant to such awards,
and all other terms and conditions of the awards.
10.3 Terms and Conditions. Each Other Stock-Based Award
shall be subject to such terms and conditions as may
be determined by the Committee and to Section 11,
below.
SECTION 11. ACCELERATED VESTING AND EXERCISABILITY.
If (i) any person or entity other than the Company and/or
any stockholders of the Company as of the Effective Date
acquire securities of the Company (in one or more
transactions) having 25% or more of the total voting power
of all the Company's securities then outstanding and (ii)
the Board of Directors of the Company does not authorize or
otherwise approve such acquisition, then, the vesting
periods of any and all Options and other awards granted and
outstanding under the Plan shall be accelerated and all such
-13-
<PAGE>
Options and awards will immediately and entirely vest, and
the respective holders thereof will have the immediate right
to purchase and/or receive any and all Stock subject to such
Options and awards on the terms set forth in this Plan and
the respective agreements respecting such Options and
awards.
SECTION 12. AMENDMENT AND TERMINATION.
Subject to Section 4 hereof, the Board may at any time, and
from time to time, amend alter, suspend or discontinue any
of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made which would
impair the rights of a Holder under any Agreement
theretofore entered into hereunder, without the Holder's
consent.
SECTION 13. TERM OF PLAN.
13.1 Effective Date. The Plan shall be effective as of
January 28, 1998. ("Effective Date").
13.2 Termination Date. Unless terminated by the Board,
this Plan shall continue to remain effective until
such time no further awards may be granted and all
awards granted under the Plan are no longer
outstanding. Notwithstanding the foregoing, grants of
Incentive Stock Options may only be made during the
ten year period following the Effective Date.
SECTION 14. GENERAL PROVISIONS.
14.1 Written Agreements. Each award granted under the
Plan shall be confirmed by, and shall be subject to
the terms of the Agreement executed by the Company and
the Holder. The Committee may terminate any award made
under the Plan if the Agreement relating thereto is
not executed and returned to the Company within 10
days after the Agreement has been delivered to the
Holder for his or her execution.
14.2 Unfunded Status of Plan. The Plan is intended to
constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments
not yet made to a Holder by the Company, nothing
contained herein shall give any such Holder any rights
that are greater than those of a general creditor of
the Company.
14.3 Employees.
(a) Engaging in Competition With the Company. In
the event a Holder's employment with the Company
or a Subsidiary is terminated for any reason
-14-
<PAGE>
whatsoever, and within one year after the date
thereof such Holder accepts employment with any
competitor of, or otherwise engages in competition
with, the Company, the Committee, in its sole
discretion, may require such Holder to return to
the Company the economic value of any award which
was realized or obtained by such Holder at any
time during the period beginning on that date
which is six months prior to the date of such
Holder's termination of employment with the
Company.
(b) Termination for Cause. The Committee may, in
the event a Holder's employment with the Company
or a Subsidiary is terminated for cause, annul any
award granted under this Plan to such employee
and, in such event, the Committee, in its sole
discretion, may require such Holder to return to
the Company the economic value of any award which
was realized or obtained by such Holder at any
time during the period beginning on that date
which is six months prior to the date of such
Holder's termination of employment with the
Company.
(c) No Right of Employment. Nothing contained in
the Plan or in any award hereunder shall be deemed
to confer upon any Holder who is an employee of
the Company or any Subsidiary any right to
continued employment with the Company or any
Subsidiary, nor shall it interfere in any way with
the right of the Company or any Subsidiary to
terminate the employment of any Holder who is an
employee at any time.
14.4 Investment Representations. The Committee may
require each person acquiring shares of Stock
pursuant to a Stock Option or other award under the
Plan to represent to and agree with the Company in
writing that the Holder is acquiring the shares for
investment without a view to distribution thereof.
14.5 Additional Incentive Arrangements. Nothing
contained in the Plan shall prevent the Board from
adopting such other or additional incentive
arrangements as it may deem desirable, including, but
not limited to, the granting of Stock Options and the
awarding of stock and cash otherwise than under the
Plan; and such arrangements may be either generally
applicable or applicable only in specific cases.
14.6 Withholding Taxes. Not later than the date as of
which an amount must first be included in the gross
income of the Holder for Federal income tax purposes
with respect to any option or other award under the
Plan, the Holder shall pay to the Company, or make
arrangements satisfactory to the Committee regarding
the payment of, any Federal, state and local taxes of
any kind required by law to be withheld or paid with
respect to such amount. If permitted by the
-15-
<PAGE>
Committee, tax withholding or payment obligations may
be settled with Common Stock, including Common Stock
that is part of the award that gives rise to the
withholding requirement. The obligations of the
Company under the Plan shall be conditioned upon such
payment or arrangements and the Company or the
Holder's employer (if not the Company) shall, to the
extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due
to the Holder from the Company or any Subsidiary.
14.7 Governing Law. The Plan and all awards made and
actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of
Colorado (without regard to choice of law
provisions).
14.8 Other Benefit Plans. Any award granted under the
Plan shall not be deemed compensation for purposes of
computing benefits under any retirement plan of the
Company or any Subsidiary and shall not affect any
benefits under any other benefit plan now or
subsequently in effect under which the availability
or amount of benefits is related to the level of
compensation (unless required by specific reference
in any such other plan to awards under this Plan).
14.9 Non-Transferability. Except as otherwise expressly
provided in the Plan, no right or benefit under the
Plan may be alienated, sold, assigned, hypothecated,
pledged, exchanged, transferred, encumbranced or
charged, and any attempt to alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or
charge the same shall be void.
14.10 Applicable Laws. The obligations of the Company
with respect to all Stock Options and awards under
the Plan shall be subject to (i) all applicable laws,
rules and regulations and such approvals by any
governmental agencies as may be required, including,
without limitation, the Securities Act of 1933, as
amended, and (ii) the rules and regulations of any
securities exchange on which the Stock may be listed.
14.11 Conflicts. If any of the terms or provisions of
the Plan or an Agreement (with respect to Incentive
Stock Options) conflict with the requirements of
Section 422 of the Code, then such terms or
provisions shall be deemed inoperative to the extent
they so conflict with the requirements of said
Section 422 of the Code. Additionally, if this Plan
or any Agreement does not contain any provision
required to be included herein under Section 422 of
the Code, such provision shall be deemed to be
-16-
<PAGE>
incorporated herein and therein with the same force
and effect as if such provision had been set out at
length herein and therein. If any of the terms or
provisions of any Agreement conflict with any terms
or provision of the Plan, then such terms or
provisions shall be deemed inoperative to the extent
they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any
provision required to be included therein under the
Plan, such provision shall be deemed to be
incorporated therein with the same force and effect
as if such provision had been set out at length
therein.
14.12 Non-Registered Stock. The shares of Stock to be
distributed under this Plan have not been, as of
the Effective Date, registered under the Securities
Act of 1933, as amended, or any applicable state or
foreign securities laws and the Company has no
obligation to any Holder to register the Stock or
to assist the Holder in obtaining an exemption from
the various registration requirements, or to list
the Stock on a national securities exchange.
-17-
<PAGE>
The Balanced Woman, Inc.
a, Nevada Corporation
6375 South Highland Drive
Salt Lake City, Utah 84121
(801) 424-1624
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting
part of this Registration Statement on Form SB-2 for Balance
Living, Inc., of our report dated August 7, 1998, relating to
the July 31, 1998 financial statements of Balanced Living,
Inc., which appears in such Prospectus. We also consent to
the reference to us under the heading "Experts".
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
December 16, 1998
OPINION OF RAY, QUINNEY & NEBEKER AS TO
THE LEGALITY OF THE SHARES BEING REGISTERED.
December 18, 1998
Balanced Living, Inc.
6375 South Highland Drive
Suite D
Salt Lake City, Utah 84121
Re: REGISTRATION AND ISSUANCE OF BALANCED LIVING INC. COMMON STOCK
TO PUBLIC INVESTORS.
Dear Ms. Barham:
This Firm has acted as counsel to Balanced Living, Inc., a Colorado
corporation ("the Company), in connection with its registration of 250,000
shares of its common stock ("the Units"), together with 250,000 Class A
Warrants, 250,000 Class B Warrants and 250,000 Class C Warrants for sale
to the public through the Company's Prospectus included within its
Registration Statement on Form SB-2 as filed with the Securities and
Exchange Commission on December 18, 1998.
In connection with this representation, we have examined the
originals, or copies identified to our satisfaction, of such minutes,
agreements, corporate records and filings and other documents necessary to
our opinion contained in this letter. The Company have also relied as to
certain matters of fact upon representations made to us by officers and
agents of the Company. Based upon and in reliance on the foregoing, it is
our opinion that:
1. the Company has been duly incorporated and is validly
existing and in good standing as a corporation under the laws
of the State of Colorado; and has full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus referred to above.
2. When issued and distributed to the purchasers thereof, the
Units will be duly and validly issued and will be fully paid
and nonassessable.
3. The shareholders of the Company have no pre-emptive rights to
acquire additional shares of the Company's Common Stock or other
securities in respect of the Units.
The Company hereby consent to the use of our name in the
Prospectus and therein being disclosed as counsel to the
Company in this matter.
Very truly yours,
RAY, QUINNEY & NEBEKER
By:/s/ A. R. Thorup
A. Robert Thorup, a Shareholder and
Director of the Firm
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 10-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-26-1998 JAN-26-1998
<PERIOD-END> NOV-30-1998 JUL-31-1998
<CASH> 7,614 20,436
<SECURITIES> 0 0
<RECEIVABLES> 0 1,000
<ALLOWANCES> 600 600
<INVENTORY> 18,049 14,771
<CURRENT-ASSETS> 26,263 36,807
<PP&E> 3,636 3,073
<DEPRECIATION> (318) (141)
<TOTAL-ASSETS> 29,581 39,739
<CURRENT-LIABILITIES> 262,711 169,677
<BONDS> 0 0
0 0
0 0
<COMMON> 600 600
<OTHER-SE> (233,730) (130,538)
<TOTAL-LIABILITY-AND-EQUITY> 29,581 39,739
<SALES> 15,614 6,467
<TOTAL-REVENUES> 15,614 6,467
<CGS> (20,129) (13,765)
<TOTAL-COSTS> (244,442) (139,108)
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (12,302) (4,797)
<INCOME-PRETAX> (241,130) (137,438)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (241,130) (137,438)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (241,130) (137,438)
<EPS-PRIMARY> (.72) (.92)
<EPS-DILUTED> (.72) (.92)
</TABLE>
EXHIBIT 99.1
FORM OF SUBSCRIPTION AGREEMENT
BALANCED LIVING, INC.
SUBSCRIPTION AGREEMENT
FOR PURCHASERS OF COMMON STOCK UNITS
. CASHIER'S CHECKS MUST BE MADE PAYABLE TO: BALANCED LIVING, INC.
. FOR IRA OR PENSION INVESTORS: INCLUDE BANK CUSTODIAL
DOCUMENTS
. CHECKS AND DOCUMENTS MUST BE DELIVERED TO: BALANCED LIVING, INC.
6375 SOUTH HIGHLAND DR.
SUITE D
SALT LAKE CITY, UT 84121
1. UNITS PURCHASED:
This subscription is for _____________ UNITS in the total purchase
amount of $ _____________, to be registered as follows:
2. FORM OF OWNERSHIP: Mark only one box:
SINGLE PERSON -- one signature required
JOINT TENANTS WITH RIGHT OF SURVIVORSHIP -- all parties must sign
HUSBAND AND WIFE, AS COMMUNITY PROPERTY -- two signatures required
TENANTS IN COMMON all parties must sign
CORPORATION
CUSTODIAN UGTM -- custodian signature required
MARRIED PERSON/SEPARATE PROPERTY -- one signature required
TRUST -- trustee signature(s) required. ALL SECTIONS MUST BE FILLED
IN Print Trustee name(s) (sign in Signature Section)
Trust Date | | | | | | | | |
Month Day Year
For the benefit of:
TENANTS BY THE ENTIRETIES -- two signatures required
-1-
<PAGE>
PARTNERSHIP
CUSTODIAN (for Taxable Person)--custodian signature required
3. INVESTOR INFORMATION: Please print name(s) in which Notes are to be
registered. All interest and principal payments and correspondence will go
to this address unless another address is listed in Section 4.
Name (1st) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name (2nd) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Address | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
City | | | | | | | | | | | | | | | | | | State | | | Zip Code | | | |
Daytime Phone Number | | | |-| | | |-| | | | |
State of Residence | | | How Long? Since | | | | |
Enter the Taxpayer identification number in the appropriate box. Note: If
the account is in more than one name, the number should be that of the first
person listed.
Social Security No. | | | |-| | |-| | | | | and/or
Taxpayer Identification No. | | |-| | | | | |
| | |-| | |-| | | $| | | | | | | | $| | | | | | | | | | |M | |F
Date of Birth Gross Income for Estimated Net Worth Sex
Past 12 Months as of This Date
If Subscription is a trust, date of trust formation | | |-| |-| | |
4. OTHER MAILING ADDRESS: If you want shareholder mailings sent to an
address other than in Section 3, please fill in below (required for IRA or
Pension accounts).
Account Number | | |-| | | | | | |
Name of Custodian | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Address | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
City | | | | | | | | | | | | | | | | | | | State | | | Zip Code | | | | |
The undersigned Investor, hereby certifies that a current copy of the
Balanced Living Inc. Prospectus dated December , 1998 has been delivered
to, and received by the Investor prior to making any investment decision,
and the Investor has had a full opportunity to ask questions of, and
receive information responsive to his questions from, Balanced Living, Inc.
prior to investing in the Units.
NOT TO BE EXECUTED UNTIL RECEIPT OF PROSPECTUS
5. SIGNATURES:
X / /
Authorized Signature of Investor Date
X / /
Signature of Joint Investor (if any) Date
-2-
<PAGE>
[Form of Face of Class A Warrant Certificate]
No. WA Certificate for ** ** warrants
CLASS A WARRANTS
VOID AFTER DECEMBER 31, 2003
STOCK PURCHASE WARRANT CERTIFICATE FOR PURCHASE OF COMMON
STOCK
BALANCED LIVING, INC.
THIS CERTIFIES THAT FOR VALUE RECEIVED or registered
assigns (the "Registered Holder") is the owner of the number
of Class A Redeemable Common Stock Purchase Warrants
("Warrants") specified above. Each Warrant initially entitles
the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant
Agreement(as hereinafter defined), one fully paid and
nonassessable share of Common Stock, $.001 par value ("Common
Stock"), of BALANCED LIVING, INC., a Colorado corporation (the
"Company"), at any time between the Initial Warrant Exercise
Date (as herein defined) and the Expiration Date (as
hereinafter defined), upon the presentation and surrender of
this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of
INTERWEST TRANSFER COMPANY, INC. as Warrant Agent, or its
successor (the "Warrant Agent"), accompanied by payment of
$3.00 (the "Purchase Price") in lawful money of the United
States of America in cash or by official bank or certified
check made payable to BALANCED LIVING, INC.
This Warrant Certificate and each Warrant represented
hereby are issued pursuant to and are subject in all respects
to the terms and conditions set forth in the Warrant Agreement
(the "Warrant Agreement") dated , 1998, by and
between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the
Warrant Agreement, the Purchase Price or the number of shares
of Common Stock subject to purchase upon the exercise of each
Warrant represented hereby are subject to modifications or
adjustment. Each Warrant represented hereby is exercisable at
the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise
of less than all the Warrants represented hereby, the Company
shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate
or Warrant Certificates of like tenor, which the Warrant Agent
shall countersign, for the balance of such Warrants.
The term "Initial Warrant Exercise Date" shall mean ,
1998.
The term "Expiration Date" shall mean 5:00 p.m. (Mountain time
on December 31, 2003, or such earlier date as the Warrants
shall be redeemed. If such date shall in the State of
Colorado be a holiday or a day on which the banks are
authorized to close, then the Expiration Date shall mean 5:00
p.m. (Mountain time) the next following day which in the State
of Colorado is not a holiday or a day on which banks are
authorized to close.
-1-
<PAGE>
The Company shall not be obligated to deliver any
securities pursuant to the exercise of this Warrant unless a
registration statement under the Securities Act of 1933, as
amended, with respect to such securities is effective. The
Company has covenanted and agreed that it will file a
registration statement and will use its best efforts to cause
the same to become effective and to keep such registration
statement current while any of the Warrants are outstanding.
This Warrant shall not be exercisable by a Registered Holder
in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate
office of the Warrant Agent, for a new Warrant Certificate or
Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant
Certificates to represent such number of Warrants as shall be
designated by such Registered Holder at the time of such
surrender. Upon due presentment with any transfer fee in
addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this
Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number
of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant
Agreement. Prior to the exercise of any Warrant represented hereby,
the Registered Holder shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right
to vote or to receive dividends or other distributions, and shall not
be entitled to receive any notice of any proceedings of the Company,
except as provided in the Warrant Agreement.
This Warrant may be redeemed at the option of the
Company, at a redemption price of $.01 per Warrant at any time
after one (1) year from the Effective Date, provided the
Market Price (as defined in the Warrant Agreement) for the
securities issuable upon exercise of such Warrant shall equal
or exceed $3.00 per share. Notice of redemption shall be
given not later than the thirtieth day before the date fixed
for redemption, all as provided in the Warrant Agreement. On
and after the date fixed for redemption, the Registered Holder
shall have no rights with respect to this Warrant except to
receive the $.01 per Warrant upon surrender of this
Certificate.
Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat
the Registered Holder as the absolute owner hereof and of each
Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the
contrary.
This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of
Colorado.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by
two of its officers there unto duly authorized.
BALANCE LIVING, INC.
By: ____________________________________________
Its: __________________________________
By: ____________________________________________
Its: __________________________________
Date: ______________________________
COUNTERSIGNED:
INTERWEST TRANSFER COMPANY, INC.
as Warrant Agent
By: ____________________________________________
Its: ______________________________
Authorized Officer
-3-
<PAGE>
[Form of Reverse of Class A Warrant Certificate]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise
Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably
elects to exercise ______________ Warrants represented by this
Warrant Certificate, and to purchase the securities issuable
upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name
of
____________________________________________
(please insert taxpayer identification or other identifying number)
and be delivered to
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Warrant
Certificate for the balance of such Warrants be registered in
the name of, and delivered to, the Registered Holder at the
address stated below:
____________________________________________
____________________________________________
____________________________________________
(Address)
_________________________________
(Taxpayer Identification Number)
(Date)
SIGNATURE GUARANTEED:
Signature ______________________________________
THE SIGNATURE TO THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
-4-
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign
Warrants
FOR VALUE RECEIVED, ______________ hereby sells, assigns,
and transfers unto
____________________________________________
(please insert taxpayer identification or other identifying number)
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
of the Warrants represented by this Warrant Certificate, and
hereby irrevocably constitutes and appoints
_________________________________ Attorney to transfer this
Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
(Date)
SIGNATURE GUARANTEED:
Signature __________________________________________
THE SIGNATURE TO THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
-5-
<PAGE>
[Form of Face of Class B Warrant Certificate]
No. WB Certificate for ** ** warrants
CLASS B WARRANTS
VOID AFTER DECEMBER 31, 2003
STOCK PURCHASE WARRANT CERTIFICATE FOR PURCHASE OF COMMON
STOCK
BALANCED LIVING, INC.
THIS CERTIFIES THAT FOR VALUE RECEIVED or registered
assigns (the "Registered Holder") is the owner of the number
of Class B Redeemable Common Stock Purchase Warrants
("Warrants") specified above. Each Warrant initially entitles
the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant
Agreement(as hereinafter defined), one fully paid and
nonassessable share of Common Stock, $.001 par value ("Common
Stock"), of BALANCED LIVING, INC., a Colorado corporation (the
"Company"), at any time between the Initial Warrant Exercise
Date (as herein defined) and the Expiration Date (as
hereinafter defined), upon the presentation and surrender of
this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of
INTERWEST TRANSFER COMPANY, INC. as Warrant Agent, or its
successor (the "Warrant Agent"), accompanied by payment of
$5.00 (the "Purchase Price") in lawful money of the United
States of America in cash or by official bank or certified
check made payable to BALANCED LIVING, INC.
This Warrant Certificate and each Warrant represented
hereby are issued pursuant to and are subject in all respects
to the terms and conditions set forth in the Warrant Agreement
(the "Warrant Agreement") dated , 1998, by and
between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the
Warrant Agreement, the Purchase Price or the number of shares
of Common Stock subject to purchase upon the exercise of each
Warrant represented hereby are subject to modifications or
adjustment. Each Warrant represented hereby is exercisable at
the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise
of less than all the Warrants represented hereby, the Company
shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate
or Warrant Certificates of like tenor, which the Warrant Agent
shall countersign, for the balance of such Warrants.
The term "Initial Warrant Exercise Date" shall mean ,
1998.
The term "Expiration Date" shall mean 5:00 p.m. (Mountain time
on December 31, 2003, or such earlier date as the Warrants
shall be redeemed. If such date shall in the State of
Colorado be a holiday or a day on which the banks are
authorized to close, then the Expiration Date shall mean 5:00
p.m. (Mountain time) the next following day which in the State
of Colorado is not a holiday or a day on which banks are
authorized to close.
-1-
<PAGE>
The Company shall not be obligated to deliver any
securities pursuant to the exercise of this Warrant unless a
registration statement under the Securities Act of 1933, as
amended, with respect to such securities is effective. The
Company has covenanted and agreed that it will file a
registration statement and will use its best efforts to cause
the same to become effective and to keep such registration
statement current while any of the Warrants are outstanding.
This Warrant shall not be exercisable by a Registered Holder
in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate
office of the Warrant Agent, for a new Warrant Certificate or
Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant
Certificates to represent such number of Warrants as shall be
designated by such Registered Holder at the time of such
surrender. Upon due presentment with any transfer fee in
addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this
Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number
of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant
Agreement. Prior to the exercise of any Warrant represented hereby,
the Registered Holder shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right
to vote or to receive dividends or other distributions, and shall not
be entitled to receive any notice of any proceedings of the Company,
except as provided in the Warrant Agreement.
This Warrant may be redeemed at the option of the
Company, at a redemption price of $.01 per Warrant at any time
after one (1) year from the Effective Date, provided the
Market Price (as defined in the Warrant Agreement) for the
securities issuable upon exercise of such Warrant shall equal
or exceed $5.00 per share. Notice of redemption shall be
given not later than the thirtieth day before the date fixed
for redemption, all as provided in the Warrant Agreement. On
and after the date fixed for redemption, the Registered Holder
shall have no rights with respect to this Warrant except to
receive the $.01 per Warrant upon surrender of this
Certificate.
Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat
the Registered Holder as the absolute owner hereof and of each
Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the
contrary.
This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of
Colorado.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by
two of its officers there unto duly authorized.
BALANCE LIVING, INC.
By: ____________________________________________
Its: __________________________________
By: ____________________________________________
Its: __________________________________
Date: ______________________________
COUNTERSIGNED:
INTERWEST TRANSFER COMPANY, INC.
as Warrant Agent
By: ____________________________________________
Its: ______________________________
Authorized Officer
-3-
<PAGE>
[Form of Reverse of Class B Warrant Certificate]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise
Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably
elects to exercise ______________ Warrants represented by this
Warrant Certificate, and to purchase the securities issuable
upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name
of
____________________________________________
(please insert taxpayer identification or other identifying number)
and be delivered to
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Warrant
Certificate for the balance of such Warrants be registered in
the name of, and delivered to, the Registered Holder at the
address stated below:
____________________________________________
____________________________________________
____________________________________________
(Address)
_________________________________
(Taxpayer Identification Number)
(Date)
SIGNATURE GUARANTEED:
Signature ______________________________________
THE SIGNATURE TO THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
-4-
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign
Warrants
FOR VALUE RECEIVED, ______________ hereby sells, assigns,
and transfers unto
____________________________________________
(please insert taxpayer identification or other identifying number)
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
of the Warrants represented by this Warrant Certificate, and
hereby irrevocably constitutes and appoints
_________________________________ Attorney to transfer this
Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
(Date)
SIGNATURE GUARANTEED:
Signature __________________________________________
THE SIGNATURE TO THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
-5-
<PAGE>
[Form of Face of Class C Warrant Certificate]
No. WC Certificate for ** ** warrants
CLASS C WARRANTS
VOID AFTER DECEMBER 31, 2003
STOCK PURCHASE WARRANT CERTIFICATE FOR PURCHASE OF COMMON
STOCK
BALANCED LIVING, INC.
THIS CERTIFIES THAT FOR VALUE RECEIVED or registered
assigns (the "Registered Holder") is the owner of the number
of Class C Redeemable Common Stock Purchase Warrants
("Warrants") specified above. Each Warrant initially entitles
the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant
Agreement(as hereinafter defined), one fully paid and
nonassessable share of Common Stock, $.001 par value ("Common
Stock"), of BALANCED LIVING, INC., a Colorado corporation (the
"Company"), at any time between the Initial Warrant Exercise
Date (as herein defined) and the Expiration Date (as
hereinafter defined), upon the presentation and surrender of
this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of
INTERWEST TRANSFER COMPANY, INC. as Warrant Agent, or its
successor (the "Warrant Agent"), accompanied by payment of
$10.00 (the "Purchase Price") in lawful money of the United
States of America in cash or by official bank or certified
check made payable to BALANCED LIVING, INC.
This Warrant Certificate and each Warrant represented
hereby are issued pursuant to and are subject in all respects
to the terms and conditions set forth in the Warrant Agreement
(the "Warrant Agreement") dated , 1998, by and
between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the
Warrant Agreement, the Purchase Price or the number of shares
of Common Stock subject to purchase upon the exercise of each
Warrant represented hereby are subject to modifications or
adjustment. Each Warrant represented hereby is exercisable at
the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise
of less than all the Warrants represented hereby, the Company
shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate
or Warrant Certificates of like tenor, which the Warrant Agent
shall countersign, for the balance of such Warrants.
The term "Initial Warrant Exercise Date" shall mean ,
1998.
The term "Expiration Date" shall mean 5:00 p.m. (Mountain time
on December 31, 2003, or such earlier date as the Warrants
shall be redeemed. If such date shall in the State of
Colorado be a holiday or a day on which the banks are
authorized to close, then the Expiration Date shall mean 5:00
p.m. (Mountain time) the next following day which in the State
of Colorado is not a holiday or a day on which banks are
authorized to close.
-1-
<PAGE>
The Company shall not be obligated to deliver any
securities pursuant to the exercise of this Warrant unless a
registration statement under the Securities Act of 1933, as
amended, with respect to such securities is effective. The
Company has covenanted and agreed that it will file a
registration statement and will use its best efforts to cause
the same to become effective and to keep such registration
statement current while any of the Warrants are outstanding.
This Warrant shall not be exercisable by a Registered Holder
in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate
office of the Warrant Agent, for a new Warrant Certificate or
Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant
Certificates to represent such number of Warrants as shall be
designated by such Registered Holder at the time of such
surrender. Upon due presentment with any transfer fee in
addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this
Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number
of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant
Agreement. Prior to the exercise of any Warrant represented hereby,
the Registered Holder shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right
to vote or to receive dividends or other distributions, and shall not
be entitled to receive any notice of any proceedings of the Company,
except as provided in the Warrant Agreement.
This Warrant may be redeemed at the option of the
Company, at a redemption price of $.01 per Warrant at any time
after one (1) year from the Effective Date, provided the
Market Price (as defined in the Warrant Agreement) for the
securities issuable upon exercise of such Warrant shall equal
or exceed $10.00 per share. Notice of redemption shall be
given not later than the thirtieth day before the date fixed
for redemption, all as provided in the Warrant Agreement. On
and after the date fixed for redemption, the Registered Holder
shall have no rights with respect to this Warrant except to
receive the $.01 per Warrant upon surrender of this
Certificate.
Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat
the Registered Holder as the absolute owner hereof and of each
Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the
contrary.
This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of
Colorado.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by
two of its officers there unto duly authorized.
BALANCE LIVING, INC.
By: ____________________________________________
Its: __________________________________
By: ____________________________________________
Its: __________________________________
Date: ______________________________
COUNTERSIGNED:
INTERWEST TRANSFER COMPANY, INC.
as Warrant Agent
By: ____________________________________________
Its: ______________________________
Authorized Officer
-3-
<PAGE>
[Form of Reverse of Class B Warrant Certificate]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise
Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably
elects to exercise ______________ Warrants represented by this
Warrant Certificate, and to purchase the securities issuable
upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name
of
____________________________________________
(please insert taxpayer identification or other identifying number)
and be delivered to
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Warrant
Certificate for the balance of such Warrants be registered in
the name of, and delivered to, the Registered Holder at the
address stated below:
____________________________________________
____________________________________________
____________________________________________
(Address)
_________________________________
(Taxpayer Identification Number)
(Date)
SIGNATURE GUARANTEED:
Signature ______________________________________
THE SIGNATURE TO THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
-4-
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign
Warrants
FOR VALUE RECEIVED, ______________ hereby sells, assigns,
and transfers unto
____________________________________________
(please insert taxpayer identification or other identifying number)
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
of the Warrants represented by this Warrant Certificate, and
hereby irrevocably constitutes and appoints
_________________________________ Attorney to transfer this
Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
(Date)
SIGNATURE GUARANTEED:
Signature __________________________________________
THE SIGNATURE TO THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
-5-
<PAGE>
WARRANT AGREEMENT
AGREEMENT, dated as of this day of
1998, by and between BALANCED LIVING, INC., a Colorado corporation
("Company"), and Interwest Transfer Company, Inc. as Warrant Agent
(the "Warrant Agent").
WITNESSETH
WHEREAS, in connection with a public offering of up to 250,000
units ("Units"), each unit consisting of one (1) share of the
Company's Common Stock, $.001 par value ("Common Stock"), one (1)
Class A Redeemable Common Stock Purchase Warrant (the "Class A
Warrants"), one (1) Class B Redeemable Common Stock Purchase Warrant
(the "Class B Warrants") and one (1) Class C Redeemable Common Stock
Purchase Warrant (the "Class C Warrants");
WHEREAS, the Company desires the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing to so act, in
connection with the issuance, registration, transfer, exchange and
redemption of the Warrants, the issuance of certificates
representing the Warrants, the exercise of the Warrants, and the
rights of the holders thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the
terms and provisions of the Warrants and the certificates
representing the Warrants and the respective rights and obligations
thereunder of the Company, the holders of certificates representing
the Warrants and the Warrant Agent, the parties hereto agree as
follows:
1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise
require:
(a) "Common Stock" shall mean the common stock of the
Company of which at the date hereof consists of 50,000,000
authorized shares, $.001 par value, and shall also include any
capital stock of any class of the Company thereafter authorized
which shall not be limited to a fixed sum or percentage in
respect to the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary
liquidation, dissolution, or winding up of the Company;
provided, however, that the shares issuable upon exercise of
the Warrants shall include (1) only shares of such class
designated in the Company's Certificate of Incorporation as
Common Stock on the date of the original issue of the Warrants
or (ii), in the case of any reclassification, change,
consolidation, merger, sale, or conveyance of the character
referred to in Section 9(c) hereof, the stock, securities, or
property provided for in such section or (iii), in the case of
any reclassification or change in the outstanding shares of
Common Stock issuable upon exercise of the Warrants as a result
of a subdivision or combination or a change in par value, or
from par value to no par value, or from no par value to par
value, such shares of Common Stock as so reclassified or
changed.
(b) "Corporate Office" shall mean the office of the
Warrant Agent (or its successor) at which at any particular
time its principal business shall be administered, which office
is located at the date hereof at 1981 East 4800 South, Suite
100, Salt Lake City, Utah 84117, (801) 272-9294
-1-
<PAGE>
(c) "Exercise Date" shall mean, as to any Warrant, the
date on which the Warrant Agent shall have received both (a)
the Warrant Certificate representing such Warrant, with the
exercise form thereon duly executed by the Registered Holder
(as defined below) thereof or his attorney duly authorized in
writing, and (b) payment in cash, or by official bank or
certified check made payable to the Company, of an amount in
lawful money of the United States of America equal to the
applicable Purchase Price (as defined below).
(d) "Initial Warrant Exercise Date" shall mean
, 1998.
(e) "Purchase Price" shall mean the purchase price per
share to be paid upon exercise of each Warrant in accordance
with the terms hereof, which price shall be $ 3.00 per share
for the Class A Warrants, $ 5.00 per share for the Class B
Warrants and $ 10.00 per share for the Class C Warrants subject
to adjustment from time to time pursuant to the provisions of
Section 9 hereof, and subject to the Company's right, in its
sole discretion, upon thirty (30) days written notice, to
reduce the Purchase Price upon notice to all warrant holders.
(f) "Redemption Price" shall mean the price at which the
Company may, at its option, redeem the Warrants, in accordance
with the terms hereof, which price shall be $0.01 per Warrant.
(g) "Registered Holder" shall mean as to any Warrant and
as of any particular date, the person in whose name the
certificate representing the Warrant shall be registered on
that date on the books maintained by the Warrant Agent pursuant
to Section 6.
(h) "Transfer Agent" shall mean Interwest Transfer
Company, Inc., as the Company's transfer agent, or its
authorized successor, as such.
(i) "Warrant Expiration Date" shall mean 5:00 P.M.
(Mountain time) on , 2003 or the Redemption
Date as defined in Section 8, whichever is earlier; provided
that if such date shall in the State of Colorado be a holiday
or a day on which banks are authorized or required to close,
then 5:00 P.M. (Mountain time) on the next following day which
in the State of Colorado is not a holiday or a day on which
banks are authorized or required to close. Upon notice to all
warrant holders, the Company shall have the right to extend the
warrant expiration date.
2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant initially shall entitle the Registered
Holder of the Warrant representing such Warrant to purchase one
share of Common Stock upon the exercise thereof, in accordance
with the terms hereof, subject to modification and adjustment
as provided in Section 9.
(b) Upon execution of this Agreement, Warrant
Certificates representing the number of Warrants sold pursuant
to the Underwriting Agreement shall be executed by the Company
and delivered to the Warrant Agent. Upon written order of the
Company signed by its President or a Vice President and by its
Secretary or an Assistant Secretary, the Warrant Certificates
shall be countersigned, issued, and delivered by the Warrant
Agent.
(c) From time to time, up to the Warrant Expiration
Date, the Transfer Agent shall countersign and deliver stock
certificates in required whole number denominations
-2-
<PAGE>
representing up to an aggregate of 750,000 shares of Common
Stock, subject to adjustment as described herein, upon the
exercise of Warrants in accordance with this Agreement.
(d) From time to time, up to the Warrant Expiration
Date, the Warrant Agent shall countersign and deliver Warrant
Certificates in required whole number denominations to the
persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those initially
issued hereunder, (ii) those issued on or after the Initial
Warrant Exercise Date, upon the exercise of fewer than all
Warrants represented by any Warrant Certificate, to evidence
any unexercised warrants held by the exercising Registered
Holder, (iii) those issued upon any transfer or exchange
pursuant to Section 6; (iv) those issued in replacement of
lost, stolen, destroyed, or mutilated Warrant Certificates
pursuant to Section 7; and (v) those issued at the option of
the Company, in such form as may be approved by the its Board
of Directors, to reflect any adjustment or change in the
Purchase Price, the number of shares of Common Stock
purchasable upon exercise of the Warrants or the Redemption
Price therefor made pursuant to Section 9 hereof.
3. Form and Execution of Warrant Certificates.
(a) The Class A Warrant Certificate, Class B Warrant
Certificate and Class C Warrant Certificate shall be
substantially in the forms annexed hereto as Exhibits A, B and
C respectfully (the provisions of which are hereby incorporated
herein) and may have such letters, numbers, or other marks of
identification or designation and such legends, summaries, or
endorsements printed, lithographed, or engraved thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform to
usage or to the requirements of Section 2(b). The Warrant
Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange, or in lieu
of mutilated, lost, stolen, or destroyed Warrant Certificates)
and issued in registered form. Class A Warrant Certificates
shall be numbered serially with the letter WA, Class B Warrant
Certificates shall be numbered serially with the letter WB and
Class C Warrant Certificates shall be numbered serially with
the letter WC.
(b) Warrant Certificates shall be executed on behalf of
the Company by its President, or any Vice President and by its
Secretary or an Assistant Secretary, by manual signatures or by
facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal. Warrant
Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be
an officer of the Company or to hold the particular office
referenced in the Warrant Certificate before the date of
issuance of the Warrant Certificates or before counter
signature by the Warrant Agent and issue and delivery thereof,
such Warrant Certificates may nevertheless be countersigned by
the Warrant Agent, issued and delivered with the same force and
effect as though the person who signed such Warrant
Certificates had not ceased to be an officer of the Company or
to hold such office. After countersignature by the Warrant
Agent, Warrant Certificates shall be delivered by the Warrant
Agent to the Registered Holder without further action by the
Company, except as otherwise provided by Section 4 hereof.
-3-
<PAGE>
4. Exercise. Each Warrant may be exercised by the Registered
Holder thereof at any time on or after the Initial Warrant Exercise
Date, but not after the Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein and in the applicable
Warrant Certificate. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the Exercise
Date and the person entitled to receive the securities deliverable
upon such exercise shall be treated for all purposes as the holder
of those securities upon the exercise of the Warrant as of the close
of business on the Exercise Date. As soon as practicable on or
after the Exercise Date, the Warrant Agent shall deposit the
proceeds received from the exercise of a Warrant shall notify the
Company in writing of the exercise of the Warrants. Promptly
following, and in any event within five (5) business days after the
date of such notice from the Warrant Agent, the Warrant Agent, on
behalf of the Company, shall cause to be issued and delivered by the
Transfer Agent, to the person or persons entitled to receive the
same, a certificate or certificates for the securities deliverable
upon such exercise (plus a certificate for any remaining unexercised
Warrants of the Registered Holder), unless prior to the date of
issuance of such certificates the Company shall instruct the Warrant
Agent to refrain from causing such issuance of certificates pending
clearance of checks received in payment of the Purchase Price
pursuant to such Warrants. Upon the exercise of any Warrant and
clearance of the funds received, the Warrant Agent shall promptly
remit the payment received for the Warrant (the"Warrant Proceeds")
to the Company or as the Company may direct in writing.
5. Reservation of Shares; Listing; Payment of Taxes, etc.
(a) The Company covenants that it will at all times
reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exercise of Warrants, such
number of shares of Common Stock as shall then be issuable upon
the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be
issuable upon exercise of the Warrants shall, at the time of
delivery, be duly and validly issued, fully paid,
nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof, (other than those which the
Company shall promptly pay or discharge) and that upon issuance
such shares shall be listed on each national securities
exchange or eligible for inclusion in each automated quotation
system, if any, on which the other shares of outstanding Common
Stock of the Company are then listed or eligible for inclusion.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder
require registration with, or approval of, any governmental
authority under any federal securities law before such
securities may be validly issued or delivered upon such
exercise, then the Company will, to the extent the Purchase
Price is less than the Market Price (as hereinafter defined),
in good faith and as expeditiously as reasonably possible,
endeavor to secure such registration or approval and will use
its reasonable efforts to obtain appropriate approvals or
registrations under state "blue sky" securities laws. With
respect to any such securities, however, Warrants may not be
exercised by, or shares of Common Stock issued to, any
Registered Holder in any state in which such exercise would be
unlawful.
(c) The Company shall pay all documentary, stamp, or
similar taxes and other governmental charges that may be
imposed with respect to the issuance of Warrants, or the
issuance, or delivery of any shares upon exercise of the
Warrants; provided, however, that if the shares of Common Stock
are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any
Warrant being exercised, then no such delivery shall be made
unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto,
if any.
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(d) The Warrant Agent is hereby irrevocably authorized
for such time as it is acting as such to requisition the
Company's Transfer Agent from time to time for certificates
representing shares of Common Stock issuable upon exercise of
the Warrants, and the Company will authorize the Transfer Agent
to comply with all such proper requisitions. The Company will
file with the Warrant Agent a statement setting forth the name
and address of the Transfer Agent of the Company for shares of
Common Stock issuable upon exercise of the Warrants.
6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate number of
Warrants of the same class or may be transferred in whole or in
part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Corporate Office, and
upon satisfaction of the terms and provisions hereof, the
Company shall execute and the Warrant Agent shall countersign,
issue, and deliver in exchange therefor the Warrant Certificate
or Certificates which the Registered Holder making the exchange
shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in
which, subject to such reasonable regulations as it may
prescribe, it shall register Warrant Certificates and the
transfer thereof in accordance with its regular practice. Upon
due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the
Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented
for registration or transfer, or for exchange or exercise, the
subscription form on the reverse thereof shall be duly
endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory
to the Company and the Warrant Agent, duly executed by the
Registered Holder or his attorney-in-fact duly authorized in
writing.
(d) A service charge may be imposed by the Warrant Agent
for any exchange or registration of transfer of Warrant
Certificates. In addition, the Company may require payment by
such holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection
therewith.
(e) All Warrant Certificates surrendered for exercise or
for exchange in case of mutilated Warrant Certificates shall be
promptly canceled by the Warrant Agent and thereafter retained
by the Warrant Agent until termination of this Agreement or
resignation as Warrant Agent, or disposed of or destroyed, at
the direction of the Company.
(f) Prior to due presentment for registration of
transfer thereof, the Company and the Warrant Agent may deem
and treat the Registered Holder of any Warrant Certificate as
the absolute owner thereof and of each Warrant represented
thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than a duly authorized officer of
the Company or the Warrant Agent) for all purposes and shall
not be affected by any notice to the contrary. The Warrants
which are being publicly offered in Units with shares of Common
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Stock pursuant to the Underwriting Agreement will be
immediately detachable from the Common Stock and transferable
separately therefrom.
7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of
and loss, theft, destruction, or mutilation of any Warrant
Certificate and (in case of loss, theft, or destruction) of
indemnity satisfactory to them, and (in the case of mutilation) upon
surrender and cancellation thereof, the Company shall execute and
the Warrant Agent shall (in the absence of notice to the Company
and/or Warrant Agent that the Warrant Certificate has been acquired
by a bonafide purchaser) countersign and deliver to the Registered
Holder in lieu thereof a new Warrant Certificate of like tenor
representing an equal aggregate number of Warrants. Applicants for
a substitute Warrant Certificate shall comply with such other
reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
8. Redemption.
(a) Subject to the provisions of paragraph 2(e) hereof,
on not less than thirty (30) days notice given at any time
after the Initial Warrant Exercise Date, the Warrants may be
redeemed, at the option of the Company, at a redemption price
of $0.01 per Warrant, provided, in the case of the redemption
of its Class A Warrants, the Market Price of the Common Stock
receivable upon exercise of the Class A Warrant shall equal or
exceed $3.00 (the "Target Price"), in the case of the
redemption of its Class B Warrants, the Market Price of the
Common Stock receivable upon exercise of the Class B Warrant
shall equal or exceed $5.00 (the "Target Price") and in the
case of the redemption of its Class C Warrants, the Market
Price of the Common Stock receivable upon exercise of the Class
C Warrant shall equal or exceed $10.00 (the "Target Price")
subject to adjustment as set forth in Section 8(f) below.
Market Price for the purpose of this Section 8 shall mean (i)
the average closing bid price for any twenty (20) consecutive
trading days within a period of thirty (30) consecutive trading
days ending within five (5) days prior to the date of the
notice of redemption, which notice shall be mailed no later
than five (5) days there after, of the Common Stock as reported
by the National Association of Securities Dealers, Inc.
Automatic Quotation System or (ii) the last reported sale
price, for twenty (20) consecutive trading days within a period
of thirty (30)consecutive trading days ending within five (5)
days of the date of the notice of redemption, which notice
shall be mailed no later than five (5) days thereafter, on the
primary exchange on which the Common Stock is traded, if the
Common Stock is traded on a national securities exchange.
(b) If the conditions set forth in Section 8(a) are met,
and the Company desires to exercise its right to redeem the
Warrants, it shall mail a notice of redemption to each of the
Registered Holders of the Warrants to be redeemed, first class,
postage prepaid, not later than the thirtieth day before the
date fixed for redemption, at their last address as shall
appear on the records maintained pursuant to Section 6(b). Any
notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given whether or not
the Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the
redemption price,(ii) the date fixed for redemption, (iii) the
place where the Warrant Certificates shall be delivered and the
redemption price paid, and (iv) that the right to exercise the
Warrant shall terminate at 5:00 P.M. (Mountain time) on the
business day immediately preceding the date fixed for
redemption. The date fixed for the redemption of the Warrant
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shall be the Redemption Date. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect
the validity of the proceedings for such redemption except as
to a Registered Holder (a) to whom notice was not mailed or (b)
whose notice was defective and then only to the extent that the
Registered Holder is prejudiced thereby. An affidavit of the
Warrant Agent or of the Secretary or an Assistant Secretary of
the Company that notice of redemption has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts
stated therein.
(d) Any right to exercise a Warrant shall terminate at
5:00 P.M. (Mountain time) on the business day immediately
preceding the Redemption Date. On and after the Redemption
Date, Holders of the Warrants shall have no further rights
except to receive, upon surrender of the Warrant, the
Redemption Price.
(e) From and after the Redemption Date specified for,
the Company shall, at the place specified in the notice of
redemption, upon presentation and surrender to the Company by
or on behalf of the Registered Holder thereof of one or more
Warrant Certificates evidencing Warrants to be redeemed,
deliver or cause to be delivered to or upon the written order
of such Holder a sum in cash equal to the redemption price of
each such Warrant. From and after the Redemption Date and upon
the deposit or setting aside by the Company of a sum sufficient
to redeem all the Warrants called for redemption, such Warrants
shall expire and become void and all rights hereunder and under
the Warrant Certificates, except the right to receive payment
of the redemption price, shall cease.
(f) If the shares of the Company's Common Stock are
subdivided or combined into a greater or smaller number of
shares of Common Stock, the Target Price shall be
proportionally adjusted by the ratio which the total number of
shares of Common Stock outstanding immediately prior to such
event bears to the total number of shares of Common Stock to be
outstanding immediately after such event.
9. Adjustment of Exercise Price and Number of Shares of
Common Stock or Warrants.
(a) Subject to the exceptions referred to in Section
9(g) below, in the event the Company shall, at any time or from
time to time after the date hereof, sell any shares of Common
Stock for a consideration per share less than the Market Price
of the Common Stock (as defined in Section 8) on the date of
the sale or issue any shares of Common Stock as a stock
dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater
or lesser number of shares (any such sale, issuance, sub
division, or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of
Shares, the Purchase Price in effect immediately prior to such
Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the
Purchase Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number
of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares and the number of shares of
Common Stock which the aggregate consideration received
(determined as provided in subsection 9(f) below) for the
issuance of such additional shares would purchase at such
current market price per share of Common Stock, and the
denominator of which shall be the sum of the number of shares
of Common Stock outstanding immediately after the issuance of
such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
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<PAGE>
Upon each adjustment of the Purchase Price pursuant to this
Section 9, the total number of shares of Common Stock
purchasable upon the exercise of each Warrant shall (subject to
the provisions contained in Section 9(b) hereof) be such number
of shares (calculated to the nearest tenth)purchasable at the
Purchase Price in effect immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such adjustment
and the denominator of which shall be the Purchase Price in
effect immediately after such adjustment.
(b) The Company may elect, upon any adjustment of the
Purchase Price hereunder, to adjust the number of Warrants
outstanding, in lieu of the adjustment in the number of shares
of Common Stock purchasable upon the exercise of each Warrant
as herein above provided, so that each Warrant outstanding
after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to
such adjustment of the number of Warrants shall become that
number of Warrants (calculated to the nearest tenth) determined
by multiplying the number one by a fraction, the numerator of
which shall be the Purchase Price in effect immediately prior
to such adjustment and the denominator of which shall be the
Purchase Price in effect immediately after such adjustment.
Upon each adjustment of the number of Warrants pursuant to this
Section 9, the Company shall, as promptly as practicable, cause
to be distributed to each Registered Holder of Warrant
Certificates on the date of such adjustment Warrant
Certificates evidencing, subject to Section 10 hereof, the
number of additional Warrants to which such Holder shall be
entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such Holder in
substitution and replacement for the Warrant Certificates held
by him prior to the date of adjustment (and upon surrender
thereof, if required by the Company) new Warrant Certificates
evidencing the number of Warrants to which such Holder shall be
entitled after such adjustment
(c) In case of any reclassification, capital
reorganization, or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital
reorganization, or other change of outstanding shares of Common
Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as, or substantially
as, an entirety (other than a sale/leaseback, mortgage, or
other financing transaction), the Company shall cause effective
provision to be made so that each holder of a warrant then
outstanding shall have the right thereafter, by exercising such
Warrant, to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable upon
such reclassification, capital reorganization, or other change,
consolidation, merger, sale, or conveyance by a holder of the
number of shares of Common Stock that might have been purchased
upon exercise of such Warrant immediately prior to such
reclassification, capital reorganization, or other change,
consolidation, merger, sale, or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided
for in this Section 9. The Company shall not effect any such
consolidation, merger, or sale unless prior to or
simultaneously with the consummation thereof the successor (if
other than the Company) resulting from such consolidation or
merger or the corporation purchasing assets or other
appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Warrant Agent, the
obligation to deliver to the holder of each Warrant such shares
of stock, securities, or assets as, in accordance with the
foregoing provisions, such holders may be entitled to purchase
and the other obligations under this Agreement. The foregoing
provisions shall similarly apply to successive
reclassification, capital reorganizations, and other changes of
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<PAGE>
outstanding shares of Common Stock and to successive
consolidations, mergers, sales, or conveyances.
(d) Irrespective of any adjustments or changes in the
Purchase Price or the number of shares of Common Stock
purchasable upon exercise of the Warrants, the Warrant
Certificates theretofore and thereafter issued shall, unless
the Company shall exercise its option to issue new Warrant
Certificates pursuant to Section 2(d) hereof, continue to
express the Purchase Price per share, the number of shares
purchasable thereunder, and the Redemption Price therefor as
the Purchase Price per share, and the number of shares
purchasable and the Redemption Price therefore were expressed
in the Warrant Certificates when the same were originally
issued.
(e) After each adjustment of the Purchase Price pursuant
to this Section 9, the Company will promptly prepare a
certificate signed by the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant after
such adjustment, and, if the Company shall have elected to
adjust the number of Warrants, the number of Warrants to which
the registered holder of each Warrant shall then be entitled,
and the adjustment in Redemption Price resulting therefrom, and
(iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate
with the Warrant Agent and cause a brief summary thereof to be
sent by ordinary first class mail to each registered holder of
Warrants at his last address as it shall appear on the registry
books of the Warrant Agent. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the
validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose
notice was defective. The affidavit of an officer of the
Warrant Agent or the Secretary or an Assistant Secretary of the
Company that such notice has been mailed shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
(f) For purposes of Section 9(a) and 9(b) hereof, the
following provisions (i) to (vii) shall also be applicable:
(i) The number of shares of Common Stock
outstanding at any given time shall include shares of
Common Stock owned or held by or for the account of the
Company and the sale or issuance of such treasury shares
or the distribution of any such treasury shares shall not
be considered a Change of Shares for purposes of said
sections.
(ii) No adjustment of the Purchase Price shall be
made unless such adjustment would require an increase or
decrease of at least $.10 in such price; provided that
any adjustments which by reason of this subsection (ii)
are not required to be made shall be carried forward and
shall be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an
increase or decrease of at least $.10 in the Purchase
Price then in effect hereunder.
(iii) In case of (1) the sale by the Company for
cash of any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common
Stock or any securities convertible into or exchangeable
for Common Stock without the payment of any further
consideration other than cash, if any(such convertible or
exchangeable securities being herein called "Convertible
Securities"), or (2) the issuance by the Company, without
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<PAGE>
the receipt by the Company of any consideration therefor,
of any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or
Convertible Securities, in each case, if (and only if)
the consideration payable to the Company upon the
exercise of such rights, warrants, or options shall
consist of cash, whether or not such rights, warrants, or
options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable, and
the price per share for which Common Stock is issuable
upon the exercise of such rights, warrants, or options or
upon the conversion or exchange of such Convertible
Securities (determined by dividing(x) the minimum
aggregate consideration payable to the Company upon the
exercise of such rights, warrants, or options, plus the
consideration received by the Company for the issuance or
sale of such rights, warrants, or options, plus, in the
case of such Convertible Securities, the minimum
aggregate amount of additional consideration, if any,
other than such Convertible Securities, payable upon the
conversion or exchange thereof, by the total maximum
number of shares of Common Stock issuable upon the
exercise of such rights, warrants, or options or upon the
conversion or exchange of such Convertible Securities
issuable upon (y) the exercise of such rights, warrants,
or options) is less than the fair market value of the
Common Stock on the date of the issuance or sale of such
rights, warrants, or options, then the total maximum
number of shares of Common Stock issuable upon the
exercise of such rights, warrants, or options or upon the
conversion or exchange of such Convertible Securities (as
of the date of the issuance or sale of such rights,
warrants, or options) shall be deemed to be outstanding
shares of Common Stock for purposes of Sections 9(a) and
9(b) hereof and shall be deemed to have been sold for
cash in an amount equal to such price per share.
(g) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of
each Warrant will be made, however,
(i) upon the sale or exercise of the Warrants; or
(ii) upon the sale of any shares of Common Stock in
the Company's initial public offering, including, without
limitation, shares sold upon the exercise of any
over-allotment option granted to the Underwriters in
connection with such offering; or
(iii) upon the issuance or sale of Common Stock or
Convertible Securities upon the exercise of any rights or
warrants to subscribe for or purchase, or any options for
the purchase of, Common Stock or Convertible Securities,
whether or not such rights, warrants, or options were
outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold; or
(iv) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities,
whether or not any adjustment in the Purchase Price was
made or required to be made upon the issuance or sale of
such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of
the original sale of the Warrants or were thereafter
issued or sold; or
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<PAGE>
(v) upon the issuance or sale of Common Stock or
Convertible Securities in an exempt transaction unless
the issuance or sale price is less than 85% of the fair
market value of the Common Stock on the date of issuance,
in which case the adjustment shall only be for the
difference between 85% of the fair market value and the
issue or sale price;
(vi) upon the issuance or sale of Common Stock or
Convertible Securities to shareholders of any corporation
which merges and/or consolidates into or is acquired by
the Company or from which the Company acquires assets and
some or all of the consideration consists of equity
securities of the Company, in proportion to their stock
holdings of such corporation immediately prior to the
acquisition but only if no adjustment is required
pursuant to any other provision of this Section 9;
(vii) upon the issuance or exercise of options or
upon the issuance or grant of stock awards granted to the
Company's directors, employees or consultants under a
plan or plans adopted by the Company's Board of Directors
and approved by its stockholders (but only to the extent
that the aggregate number of shares excluded hereby and
issued after the date hereof shall not exceed ten percent
(10%) of the Company's Common Stock at the time of
issuance). For the purposes of determining whether the
consideration received by the Company is less than the
Market Price in connection with any issuance of stock to
the Company's directors, employees or consultants under
plans adopted by the Company's Board of Directors and
approved by its stockholders, the consideration received
shall be deemed to be the amount of compensation to the
director, employee or consultant reported by the Company
in connection with such issuance;
(viii) upon the issuance of Common Stock to the
Company's directors, employees or consultants under a
plan or plans which are qualified under the Internal
Revenue Code; or
(ix) upon the issuance of Common Stock in a bona
fide public offering pursuant to a firm commitment
underwriting.
(h) As used in this Section 9, the term "Common Stock"
shall mean and include the Company's Common Stock authorized on
the date of the original issue of the Units and shall also
include any capital stock of any class of the Company
thereafter authorized which shall not be limited to a fixed sum
or percentage in respect of the rights of the holders thereof
to participate in dividends and in the distribution of assets
upon the voluntary liquidation, dissolution, or winding up of
the Company; provided, however, that the shares issuable upon
exercise of the Warrants shall include only shares of such
class designated in the Company's Certificate of Incorporation
as Common Stock on the date of the original issue of the Units
or (i), in the case of any reclassification, change,
consolidation, merger, sale, or conveyance of the character
referred to in Section 9(c) hereof, the stock, securities, or
property provided for in such section or (ii), in the case of
any reclassification or change in the outstanding shares of
Common Stock issuable upon exercise of the Warrants as a result
of a subdivision or combination or a change in par value, or
from par value to no par value, or from no par value to par
value, such shares of Common Stock as so reclassified or
changed.
(i) Any determination as to whether an
adjustment in the Purchase Price in effect
hereunder is required pursuant to Section 9, or as
to the amount of any such adjustment, if required,
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<PAGE>
shall be binding upon the holders of the Warrants
and the Company if made in good faith by the Board
of Directors of the Company.
(ii) If and whenever the Company shall grant
to the holders of Common Stock, as such, rights or
warrants to subscribe for or to purchase, or any
options for the purchase of, Common Stock or
securities convertible into or exchangeable for or
carrying a right, warrant, or option to purchase
Common Stock, the Company shall concurrently
therewith grant to each Registered Holder as of the
record date for such transaction of the Warrants
then outstanding, the rights, warrants, or options
to which each Registered Holder would have been
entitled if, on the record date used to determine
the stockholders entitled to the rights, warrants,
or options being granted by the Company, the
Registered Holder were the holder of record of the
number of whole shares of Common Stock then
issuable upon exercise (assuming, for purposes of
this section 9(j), that exercise of warrants is
permissible during periods prior to the Initial
Warrant Exercise Date) of his Warrants. Such grant
by the Company to the holders of the Warrants shall
be in lieu of any adjustment which otherwise might
be called for pursuant to this Section 9.
10. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Common Stock purchasable
upon the exercise of each Warrant is adjusted pursuant to
Section 9 hereof, the Company nevertheless shall not be
required to issue fractions of shares, upon exercise of the
Warrants or otherwise, or to distribute certificates that
evidence fractional shares. In such event, the Company may at
its option elect to round up the number of shares to which the
Holder is entitled to the nearest whole share or to pay cash in
respect of fractional shares in accordance with the following:
With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount
in cash equal to such fraction multiplied by the current market
value of such fractional share, determined as follows:
(i) If the Common Stock is listed on a National
Securities Exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the
NASDAQ Quotation System, the current value shall be the
last reported sale price of the Common Stock on such
exchange on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on
such day, the average of the closing bid and asked prices
for such day on such exchange; or
(ii) If the Common Stock is not listed or admitted
to unlisted trading privileges, the current value shall be
the mean of the last reported bid and asked prices
reported by the National Quotation Bureau, Inc. on the
last business day prior to the date of the exercise of
this Warrant; or
(iii) If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked
prices are not so reported, the current value shall be an
amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
11. Warrant Holders Not Deemed Stockholders. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends
or be deemed the holder of Common Stock that may at any time be
issuable upon exercise of such Warrants for any purpose whatsoever,
nor shall anything contained herein be construed to confer upon the
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<PAGE>
holder of Warrants, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action (whether upon
any recapitalization, issue or reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger,
or conveyance or otherwise), or to receive notice of meetings, or to
receive dividends or subscription rights, until such Holder shall
have exercised such Warrants and been issued shares of Common Stock
in accordance with the provisions hereof.
12. Rights of Action. All rights of action with respect to
this Agreement are vested in the respective Registered Holders of
the Warrants, and any Registered Holder of a Warrant, without
consent of the Warrant Agent or of the holder of any other Warrant,
may, in his own behalf and for his own benefit, enforce against the
Company his right to exercise his Warrants for the purchase of
shares of Common Stock in the manner provided in the Warrant
Certificate and this Agreement.
13. Agreement of Warrant Holders. Every holder of a Warrant,
by his acceptance thereof, consents and agrees with the Company, the
Warrant Agent and every other holder of a warrant that:
(a) The warrants are transferable only on the registry
books of the Warrant Agent by the Registered Holder thereof in
person or by his attorney duly authorized in writing and only
if the Warrant Certificates representing such Warrants are
surrendered at the office of the Warrant Agent, duly endorsed
or accompanied by a proper instrument of transfer satisfactory
to the Warrant Agent and the Company in their mutual
discretion, together with payment of any applicable transfer
taxes; and
(b) The Company and the Warrant Agent may deem and treat
the person in whose name the Warrant Certificate is registered
as the holder and as the absolute, true, and lawful owner of
the Warrants represented thereby for all purposes, and neither
the Company nor the Warrant Agent shall be affected by any
notice or knowledge to the contrary, except as otherwise
expressly provided in Section 7 hereof.
14. Cancellation of Warrant Certificates. If the Company
shall purchase or acquire any Warrant or Warrants, the Warrant
Certificate or Warrant Certificates evidencing the same shall
thereupon be delivered to the Warrant Agent and canceled by it and
retired. The Warrant Agent shall also cancel Common Stock following
exercise of any or all of the Warrants represented thereby or
delivered to it for transfer, split up, combination, or exchange.
15. Concerning the Warrant Agent. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company,
and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not, by issuing and delivering Warrant
Certificates or by any other act hereunder be deemed to make any
representations as to the validity, value, or authorization of the
Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant
or whether any stock issued upon exercise of any Warrant is fully
paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or
cause to be made any adjustment of the Purchase Price or the
Redemption Price provided in this Agreement, or to determine whether
any fact exists which may require any such adjustments, or with
respect to the nature or extent of any such adjustment, when made,
or with respect to the method employed in making the same. It shall
not (i) be liable for any recital or statement of facts contained
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herein or for any action taken, suffered, or omitted by it in
reliance on any warrant Certificate or other document or instrument
believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties,(ii) be responsible for
any failure on the part of the Company to comply with any of its
covenants and obligations contained in this Agreement or in any
Warrant Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or
wilful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory
to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or
omitted by it in good faith in accordance with the opinion or advice
of such counsel.
Any notice, statement, instruction, request, direction, order,
or demand of the Company shall be sufficiently evidenced by an
instrument signed by the President, any Vice President, its
Secretary, or Assistant Secretary,(unless other evidence in respect
thereof is herein specifically prescribed). The Warrant Agent shall
not be liable for any action taken, suffered or omitted by it in
accordance with such notice, statement, instruction, request,
direction, order, or demand reasonably believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its
reasonable expenses hereunder; it further agrees to indemnify the
Warrant Agent and save it harmless against any and all losses,
expenses, and liabilities, including judgments, costs, and counsel
fees, for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses,
expenses, and liabilities arising as a result of the Warrant Agent's
negligence or wilful misconduct.
The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities
arising as a result of the Warrant Agent's own negligence or wilful
misconduct), after giving thirty (30) days prior written notice to
the Company. At least fifteen (15) days prior to the date such
resignation is to become effective, the Warrant Agent shall cause a
copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon
such resignation, or any inability of the Warrant Agent to act as
such hereunder, the Company shall appoint a new warrant agent in
writing. If the Company shall fail to make such appointment within
a period of fifteen (15) days after it has been notified in writing
of such resignation by the resigning Warrant Agent, then the
Registered Holder of any Warrant Certificate may apply to any court
of competent jurisdiction in the State of Colorado for the
appointment of a new warrant agent. Any new warrant agent, whether
appointed by the Company or by such a court, shall be a bank or
trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000
or a stock transfer company. After acceptance in writing of such
appointment by the new warrant agent is received by the Company,
such new warrant agent shall be vested with the same powers, rights,
duties, and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance,
conveyance, act, or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act, or deed, the same shall be done at the expense of
the Company and shall be legally and validly and delivered by the
resigning Warrant Agent. Not later than the effective date of any
such appointment the Company shall file notice thereof with the
resigning Warrant Agent and shall forthwith cause a copy of such
notice to be mailed to the Registered Holder of each Warrant
Certificate.
Any corporation into which the Warrant Agent or any new warrant
agent may be converted or merged or any corporation resulting from
any consolidation to which the Warrant Agent or any new warrant
agent shall be a party or any corporation succeeding to the trust
business of the Warrant Agent shall be a successor warrant agent
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<PAGE>
under this Agreement without any further act, provided that such
corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed to the Company and to the
Registered Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell
Warrants or other securities of the Company and otherwise deal with
the Company in the same manner and to the same extent and with like
effects as though it were not the Warrant Agent. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity
for the Company if so authorized by the Company or for any other
legal entity.
16. Modification of Agreement. The Warrant Agent and the
Company may by supplemental agreement make any changes or
corrections in this Agreement (i) that they shall deem appropriate
to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; or (ii)
that they may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not
otherwise be modified, supplemented, or altered in any respect
except with the consent in writing of the Registered Holders of
Warrant Certificates representing not less than fifty percent
(50%)of the Warrants then outstanding; and provided, further, that
no change in the number or nature of the securities purchasable upon
the exercise of any Warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without
the consent in writing of the Registered Holder of the Warrant
Certificate representing such Warrant, other than such changes as
are specifically prescribed by this Agreement as originally executed
or are made in compliance with applicable law.
17. Notices. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to
have been made when delivered or mailed first class registered or
certified mail, postage prepaid as follows: if to the Registered
Holder of a Warrant Certificate, at the address of such holder as
shown on the registry books maintained by the Warrant Agent; if to
the Company, 6375 South Highland Drive, Suite D, Salt Lake City,
Utah 84121, Attention: President, or at such other address as may
have been furnished to the Warrant Agent in writing by the Company;
and if to the Warrant Agent, at its corporate office.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado,
without reference to principles of conflict of laws.
19. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the Warrant Agent, and their
respective successors and assigns, and the holders from time to time
of Warrant Certificates. Nothing in this Agreement is intended or
shall be construed to confer upon any other person any right,
remedy, or claim, in equity or at law, or to impose upon any other
person any duty, liability, or obligation.
20. Termination. This Agreement shall terminate at the close
of business on the Warrant Expiration Date of all the Warrants or
such earlier date upon which all Warrants have been exercised,
except that the Warrant Agent shall account to the Company for cash
held by it and the provisions of Section 15 hereof shall survive
such termination.
21. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single
document.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BALANCED LIVING, INC.
By:
Its:
INTERWEST TRANSFER COMPANY, INC.
By:
Its Authorized Officer:
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<PAGE>
PLAZA 6375
SUBLEASE AGREEMENT
THIS SUBLEASE, made and entered into this 7th day of July,
1998 by and between Hamblin & Company having its principal place
of business at 6375 Highland Drive, Salt lake City, Utah 84121,
County of Salt Lake, State of Utah, herein referred to as Sub-
lessor, and Jeannene Barham, the principal place of business at
6375 S. Highland Drive, City of Salt Lake City, County of Salt
Lake, State of Utah, herein referred to as Sub-lessee.
In consideration of the mutual covenants contained herein, the
parties agree as follows:
SECTION ONE
Description of Premises
1.1 The Sub-lessor subleases to the Sub-lessee that portion
of the Plaza 6375 at 6375 S. Highland Drive, County of Salt Lake,
State of Utah, described more particularly as follows:
1.2 SUITE D, located as indicated on that particular diagram
attached hereto and made a part hereof and designated as Exhibit
"A", said Suite comprising a total of approximately 600 square
feet.
SECTION TWO
Term of Sublease
2.1 The term of this sublease is 10.5 months, beginning on
the 15th day of July, 1998, and terminating on the 1st day of
June, 1999, at 12:00 o'clock a.m.
SECTION THREE
Base Rent
3.1 The total base rent under this sublease is Six Thousand
Three Hundred (6,300.00) Dollars. Sub-lessee shall pay the Sub-
lessor that amount in equal installments of Six Hundred (600.00)
Dollars each month beginning on the 15th day of July, 1998,
succeeding payments of the same amount due and payable on the
15th day of each and every month thereafter during the term of
the sublease. If rent is not paid within five (5) days after the
date due, the Sub-lessee agrees to pay a late charge of five
percent (5%) of the amount of the rent due and late.
The Sub-lessee further agrees to pay $20.00 for each
dishonored bank check and two percent 2% per month on amounts
delinquent beyond one month.
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<PAGE>
SECTION FOUR
Use of Premises
4.1 The premises are to be used for the purpose of:
Corporate Office
Sub-lessee shall restrict its use to such purposes, and shall
not use or permit the use of the premises for any other purposes
without the written consent of the Sub-lessor, or Sub-lessor'
authorized agent.
SECTION FIVE
Restriction on Use
5.1 Sub-lessee shall not use the premises in any manner that
will increase risks covered by insurance on the premises and
result in an increase in the rate of insurance or a cancellation
of any insurance policy, even if such use may be in the
furtherance of Sub-lessee's business purpose. Sub-lessee shall
not keep, use, or sell anything prohibited by any policy of fire
insurance covering the premises and shall comply with all
requirements of the insurers applicable to the premises necessary
to keep in force the fire and liability insurance.
SECTION SIX
Waste, Nuisance, or Unlawful Activity
6.1 Sub-lessee shall not allow any waste or nuisance on the
premises, or use or allow the premises to be used for any
unlawful purposes.
SECTION SEVEN
Delay in Delivering Possession
7.1 This shall not be rendered void or voidable by
the inability of Sub-lessor to deliver possession to Sub-lessee
on the date set forth in Section Two, and Sub-lessor shall not be
liable to Sub-lessee for any loss or damage suffered by reason of
such a delay, provided, however, that Sub-lessor does deliver
possession no later than August 1, 1998. In the event of a delay
in delivering possession, the rent for the period of such delay
will be deducted from the total rent due under the sublease. No
extension of the sublease shall result from delay in delivering
possession.
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<PAGE>
SECTION EIGHT
Utilities
8.1 The Sub-lessor shall furnish electricity, gas and
water to the demised premise. The Sub-lessee agrees, however, to
avoid excessive use of the heating, air conditioning, lights and
water when the premise is not in use.
8.2 The Sub-lessor reserves the right to review any
proposals of the Sub-lessee to add equipment to the premises
which may cause or result in a larger than normal use of the
above designated utilities.
8.3 In the event such equipment is installed in the demised
premise the Sub-lessor may assess a reasonable amount to the Sub-
lessee and the Sub-lessee shall pay said amount at the same time
as he pays his monthly lease payment.
8.4 The Sub-lessee shall provide his own telephone
service.
8.5 If the Sub-lessee has manual override control of
the temperature control mechanism within the subleased premises,
the Sub-lessee and Sub-lessor agree to abide any law or
regulation of the State of Utah or the United States concerning
the temperature within the subleased premises. Sub-lessee agrees
to hold Sub-lessor harmless and free of any liability resulting
from alleged non-compliance with any such law or regulation on
account of any alleged act or failure to act where compliance was
possible for or within control of Sub-lessee given the facilities
and controls made available to Sub-lessee in the subleased
premise.
SECTION NINE
Cleaning, Caretaking and Maintenance
9.1 The Sub-lessor shall be responsible for cleaning and
caretaking of all common areas of the Plaza, including
landscaping ground maintenance, parking area and common halls and
corridors.
9.2 The Sub-lessor shall provide a common trash collection
receptacle and shall provide for the regular collection of trash
from said receptacle.
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<PAGE>
9.3 The Sub-lessee shall be responsible for the
cleaning, trash removal to the common receptacle, and general
maintenance of the interior portion of the demised premise.
9.4 The Sub-lessor will make available a janitorial service
and the Sub-lessee may employ said services at an additional cost
to be determined based on the extent and nature of the services
desired.
9.5 The Sub-lessor shall be responsible for normal repairs
to the plumbing system, unless the Sub-lessee or his employees
intentionally cause damage to said system.
9.6 The Sub-lessee shall be responsible for the
replacement of any of the following items during the term of the
sublease, e.g., carpets, draperies, wall coverings, floor tile,
light bulbs, light fixtures and related attachments, and any
other hardware items located withing the demised premise. The
Sub-lessee further agrees that any redecorating done during the
term of the Sublease shall be at the expense of the Sub-lessee.
9.7 Re-keying Locks: Locks cannot be changed by anyone
without permission of Sub-lessor. Work must be done by
authorized Sub-lessor's maintenance personnel wit the cost of re-
keying being paid by Sub-lessee.
SECTION TEN
Insurance
10.1 Sub-lessor shall provide insurance coverage on the
building and all portions thereof with the exception of contents
belonging to the Sub-lessee.
10.2 Sub-lessee agrees to provide his own insurance on the
contents of the demised premise, and will not make any claim
against the Sub-lessor for any loss of his personal property
damages or destruction due to fire or other type of loss, unless
such a loss is a result of the negligence of the Sub-lessor.
10.3 Sub-lessee shall further provide liability insurance for
losses, damages or injuries which may be incurred or sustained
within the interior portion of the demised premise.
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<PAGE>
SECTION ELEVEN
Sub-lessor's Written Approval Required for Alteration
11.1 Except as herein expressly provided, Sub-lessee
shall not make any alterations, improvements, or additions
tot he demised premise without the prior written consent of Sub-
lessor.
SECTION TWELVE
Upon Original Occupancy by Sub-lessee - -
Design, Decoration and Remodeling
12.1 Sub-lessee and Sub-lessor have discussed the condition
of the demised premises and Sub-lessee has made a thorough
inspection of them. Sub-lessee accepts the demised premises as
is.
SECTION THIRTEEN
Alterations to be Property of Sub-lessor
13.1 All alterations, replacements, changes, additions,
manager improvements, and new building service equipment that may
be made, erected, installed, or affixed on or in the demised
premise during the term of this sublease shall be, and shall be
deemed to be, part of the realty and the sole and absolute
property of Sub-lessor.
SECTION FOURTEEN
Parking
14.1 The parking lot is available to all tenants. There are
no assigned parking places.
SECTION FIFTEEN
Property Taxes
15.1 Sub-lessor shall be responsible for building and related
real property taxes.
15.2 Sub-lessee shall be responsible for any taxes assessed
against any personal property of the Sub-lessee which may be
located withing the demised premise.
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<PAGE>
SECTION SIXTEEN
Rental Adjustment for Increased in Direct
Operating Expenses (Taxes, Utilities, Etc.)
16.1 The Sub-lessee agrees to pay additional rent for
the demised premise to cover yearly increases in the direct
operating expenses, amortized tenant improvement costs, etc. for
the building complex. This yearly increase in rental rate shall
be calculated by the method discussed in the next section, 16.2.
16.2 Upon each yearly anniversary date during the life of
the sublease, the yearly rental rate shall be increased by N/A %
and the monthly rental payment shall be adjusted accordingly.
SECTION SEVENTEEN
Right of Assignment
17.1 The Sub-lessor has the right to assign this sublease
or the right to any sublease payments to any person or
corporation.
SECTION EIGHTEEN
Assignment and Sublease
18.1 Sub-lessee shall not assign any right or duties under
this sublease nor sublet the premise or any part thereof, nor
allow any other person to occupy or use the premise without prior
written consent of Sub-lessor. A consent to one assignment,
sublease or occupation or use by any other person shall not be a
consent to any subsequent assignment, sublease, or occupation or
use by another person. Any assignment or subletting without
consent shall be void. This sublease shall not be assignable, as
to the interest of Sub-lessee, by operation of law, without the
written consent of Sub-lessor. Sub-lessor shall not unreasonably
withhold consent to assignment or sublease of the demised premise
by Sub-lessee if Sub-lessee will provide evidence of the
financial responsibility of the intended assignee or sub-lessee.
18.2 The Sub-lessor shall however have the right and power,
in considering the approval or disapproval of an assignment or
sublease to give preference to another tenant who desires
changing location or expanding the size of his subleased space.
SECTION NINETEEN
Breach or Default
19.1 Sub-lessee shall have breached this sublease and shall
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<PAGE>
be considered in default hereunder if (a) Sub-lessee files a
petition in Bankruptcy or insolvency or for reorganization under
any bankruptcy act, or makes an assignment for the benefit of
creditors, (b) involuntary proceedings are instituted against
Sub-lessee under any bankruptcy act, (c) Sub-lessee fails to pay
any rent when due and does not make the delinquent payments
withing the ten (10) days after receipt of written notice thereof
from Sub-lessor, or (d) Sub-lessee fails to perform or comply
with any of the covenants or conditions of this sublease and such
failure continues for a period of thirty (30) days after receipt
of written notice thereof from Sub-lessor.
SECTION TWENTY
Effect of Breach or Default
20.1 In the event of a breach of this sublease as set
forth in Section Nineteen, the rights of Sub-lessor shall be as
follows:
(a) Sub-lessor shall have the right to cancel and
terminate this sublease, as well as all of the right, title, and
interest of Sub-lessee hereunder, by giving to Sub-lessee not
less than thirty (30) days' notice of the cancellation and
termination. On expiration of the time fixed in the notice, this
sublease and the right, title and interest of Sub-lessee shall
terminate in the same manner and with the same force and effect,
except as to Sub-lessee's liability as if the date fixed in the
notice of cancellation and termination were the end of the term
herein originally determined.
(b) Sub-lessor may elect, but shall not be obligated,
to make any payment required by Sub-lessee herein or comply with
any agreement, term, or condition required hereby to be performed
by Sub-lessee, and Sub-lessor shall have the right to enter the
demised premises for the purpose of correcting or remedying any
such default and to remain until the default has been corrected,
or remedied, but any expenditure for the correction by Sub-lessor
shall not be deemed to waive or release Sub-lessee's default or
Sub-lessor's right to take any action as may be otherwise
permissible hereunder in the case of any default.
(c) Sub-lessor may re-enter the premise immediately
and remove the property and personnel of Sub-lessee, and store
the property in a public warehouse or at a place selected by Sub-
lessor, at the expense of Sub-lessee. After re-entry, Sub-lessor
may terminate the sublease on giving fifteen (15) days' written
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<PAGE>
notice of termination to Sub-lessee. Without the notice, re-
entry will not terminate the sublease. On termination Sub-lessor
may recover from Sub-lessee all damages proximately resulting
from the breach, including the cost of recovering the premises
and the worth of the balance of this sublease over the reasonable
rental value of the premises for the remainder of the sublease
term, which such sum shall be immediately due Sub-lessor from
Sub-lessee.
After re-entry, Sub-lessor may re-let the premises or any part
thereof for any term without terminating the sublease, at the
rent and on the terms as Sub-lessor may choose. Sub-lessor may
make alterations and repairs to the premise. The duties and
liabilities of the parties if the premises are re-let as provided
herein shall be as follows:
(i) In addition to Sub-lessee's liability to Sub-
lessor for breach of the sublease, Sub-lessee shall be liable for
all expenses of the re-letting, for the alterations and repairs
made, and for the difference between the rent received by Sub-
lessor under the new sublease agreement and the rent installments
that are due for the same period under this sublease.
(ii) Sub-lessor shall have the right to apply the
rent received from re-letting the premises (A) to reduce Sub-
lessee's indebtedness to Sub-lessor under this sublease, not
including indebtedness for rent, (B) to expenses of the re-
letting and alterations and repairs made, (C) to rent due under
this sublease, or (D) to payment of future rent under this
sublease as it becomes due.
If the new Sub-lessee does not pay a rent
installment promptly to Sub-lessor, and the rent installment has
been credited in advance of payment to the indebtedness of Sub-
lessee other than rent, or if rentals from the new Sub-lessee
have been otherwise applied by Sub-lessor as provided herein, and
during any rent installment period, are less than the rent
payable for the corresponding installment period under this
sublease, Sub-lessee shall pay Sub-lessor the deficiency,
separately for each rent installment deficiency period and before
the end of that period. Sub-lessor may at any time after a re-
letting terminate the sublease for the breach on which Sub-lessor
has based the re-entry and subsequently re-let the premises.
(d) After re-entry, Sub-lessor may procure the
appointment of a receiver to take possession and collect rents
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<PAGE>
and profits of the Sub-lessee, and, if necessary to collect the
rents and profits the receiver may take possession of the
personal property used in the business of Sub-lessee, including
inventory, trade fixtures and furnishings, and use them without
compensating Sub-lessee. Proceedings for appointment of a
receiver by Sub-lessor, shall not terminate and forfeit this
sublease unless the Sub-lessor has given written notice of
termination to Sub-lessee as provided herein.
SECTION TWENTY - ONE
Option to Renew
21.1 Sub-lessee shall have the option to renew this
sublease 0 times for an identical term as provided herein for
each renewal. Written notice of intention to renew must be
furnished Sub-lessor sixty (60) days prior to expiration of the
sublease of any renewal hereunder. The rental shall be subject
to renegotiation at the time of any renewal, but all other terms
and conditions shall remain as provided herein.
SECTION TWENTY - TWO
Unlawful Detailed and Attorney's Fees
22.1 In case suit shall be brought for an unlawful detailed
of the premises, for the recovery of any rent due under the
provisions of this sublease, or for Sub-lessee's breach of any
other condition contained herein, Sub-lessee shall pay to Sub-
lessor a reasonable attorney's fee which shall be fixed by the
Court, and such attorney's fee shall be deemed to have accrued on
the commencement of the action and shall be paid on the
successful completion of this action by Sub-lessor. Sub-lessee
shall be entitled to attorney's fees in the same manner if
judgement is rendered for Sub-lessee.
SECTION TWENTY - THREE
Security Deposit
23.1 Sub-lessee shall deposit Six Hundred Dollars ($600.00)
with Sub-lessor as security for return of the premises in proper
condition at the end of the sublease term or on earlier
termination and forfeiture as provided herein. Sub-lessor may
transfer or deliver the security to any bona fide purchase of the
real property in the event the property is sold and Sub-lessor
shall be discharged from any further liability in reference to
the security on giving written notice of that transfer to Sub-
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<PAGE>
lessee. In the event the Sub-lessee returns the premises to the
Sub-lessor in substantially the same condition it was received,
subject to normal wear and tear, then said deposit shall be
returned to the Sub-lessee within thirty (30) days after the Sub-
lessee has vacated the premises.
SECTION TWENTY - FOUR
Holding Over
24.1 If Sub-lessee holds possession of the premises after
the term of this sublease, Sub-lessee shall become a tenant for
month to month on the terms herein specified, but at a monthly
rental rate equal to the monthly rental rate in effect under the
sublease for the final month of the sublease term payable monthly
in advance on the first day of each month, and Sub-lessee shall
continue to be a month-to-month tenant until the tenancy shall be
terminated by Sub-lessor upon 30 days written notice to Sub-
lessee, or until Sub-lessee has given the Sub-lessor a written
notice at least sixty (60) days prior to the date of termination
of the monthly tenancy of his intention to terminate the tenancy.
SECTION TWENTY - FIVE
Remedies of Sub-lessor Cumulative
25.1 The remedies herein given to Sub-lessor shall be
cumulative and the exercise of any one remedy by Sub-lessor shall
not be to the exclusion of any other remedy.
SECTION TWENTY - SIX
Quiet Enjoyment
26.1 Sub-lessor warrants that it is seized with good and
sufficient title to the entire premises, and further covenants
that if Sub-lessee shall discharge the obligations herein set
forth to be performed by Sub-lessee, then Sub-lessee shall have
and enjoy the quiet and undisturbed possession of the Subleased
Premises without hindrance or interference from Sub-lessor or any
other person lawfully claiming by, through, or under Sub-lessor.
SECTION TWENTY - SEVEN
Buyout Provision
27.1 None.
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IN WITNESS WHEREOF, the parties have executed this sublease at
SALT LAKE CITY, UTAH, the day and year first above written.
Sub-lessor
____________________________________
Sub-lessee
____________________________________
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