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As Filed with Securities and Exchange Commission on January 28, 2000
Registration No. 333-92331
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2/A
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BIOLYNX.COM, INC.
(Exact name of the registrant as specified in its charter)
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Texas 0073 74-2916627
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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5617 Grissom Road
San Antonio, Texas 78238
(210) 256-8300
(Address, including zip code and telephone number,
including area code, of the registrant's principal
executive offices)
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John D. Walker II With a copy to:
Chairman of the Board Norman T. Reynolds, Esq.
5617 Grissom Road Jackson Walker L.L.P.
San Antonio, Texas 78238 1100 Louisiana Street, Suite 4200
(210) 256-8300 Houston, Texas 77002
(Name, address, including zip code, and telephone number, (713) 752-4512
including area code, of agent for service for the registrant)
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after this registration statement has been declared
effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount To Offering Price Aggregate Registration
Securities To Be Registered Be Registered Per Share (1) Offering Price Fee (2)
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Common Stock to be Newly Issued..... 1,000,000 $4.00 $4,000,000 $1,056.00
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) The registration fee has already been paid.
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The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date 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 this registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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BIOLYNX.COM, INC.
Cross-Reference Sheet
Showing Location in the Prospectus of
Information Required by Items of Form SB-2
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Form SB-2 Item Number and Caption Location in Prospectus
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1. Front of Registration Statement and
Outside Front Cover of Prospectus............... Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus............................. Inside Front Cover Page; Outside Back Cover Page
3. Summary Information and Risk Factors............. Prospectus Summary; Risk Factors; Business
4. Use of Proceeds.................................. Use of Proceeds
5. Determination of Offering Price.................. Outside Front Cover Page
6. Dilution......................................... Dilution
7. Selling Security Holders......................... *
8. Plan of Distribution............................. Plan of Distribution
9. Legal Proceedings................................ Business - Litigation
10. Directors, Executive Officers, Promoters
and Control Persons............................. Business; Management - Executive Officers and
Directors
11. Security Ownership of Certain Beneficial
Owners and Management........................... Principal Stockholders
12. Description of Securities........................ Description of Securities
13. Interest of Named Experts and Counsel............ *
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.. Description of Securities - Certain Provisions of the
Articles of Incorporation and Bylaws
15. Organization Within Last Five Years.............. Business
16. Description of Business.......................... Business
17. Management's Discussion and Analysis
or Plan of Operation............................ Management's Discussion and Analysis of Financial
Condition and Results of Operations
18. Description of Property.......................... Business - Patents and Intellectual Property, - Facilities
19. Certain Relationships and Related Transactions... Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters............................. Price Range of Common Stock and Dividend Policy;
Description of Securities
21. Executive Compensation........................... Management - Executive Compensation
22. Financial Statements............................. Financial Statements
23. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.......... *
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(*) None or Not Applicable
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SUBJECT TO COMPLETION, DATED JANUARY 28, 2000
Prospectus
February , 2000
[LOGO OF BIOLYNX.COM, INC. APPEARS HERE]
1,000,000 Shares of Common Stock
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This is our initial public offering of common stock. The initial public
offering price will be $4.00 per share. We have applied to list our common stock
on the American Stock Exchange under the symbol "___." No public market
currently exists for the shares of our common stock.
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Offering Fees and Proceeds to
Price Expenses BioLynx.Com
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Per share............................. $4.00 $0.66 $3.34 (1)
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Total minimum offering................ $2,000,000 $400,000 $1,600,000
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Total maximum offering................ $4,000,000 $660,000 $3,340,000
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(1) If all 1,000,000 shares are sold.
The shares will be sold on a "best efforts" basis through Aurora
Financial Services, L.L.C. and Travis Morgan Securities, Inc. who will be paid a
commission on the shares sold by them. Until we have accepted subscriptions for
at least 500,000 shares, all cash payments for the shares will be subject to an
escrow agreement and held in an escrow account at Sterling Bank in Houston,
Texas. After we have accepted subscriptions for 500,000 shares, all cash
payments for the shares will no longer be subject to the escrow agreement, and
will be immediately available for use by BioLynx.Com. This offering will
terminate, if not sooner terminated, on August , 2000.
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This investment involves risks. See "Risk Factors" beginning on page 7
of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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AURORA FINANCIAL SERVICES, L.L.C.
TRAVIS MORGAN SECURITIES, INC.
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BioLynx.Com offers a
time, attendance and
data integration
solution based on the
biometric technology of
hand geometry.
The BioLynx.Com Solution
By placing the user's hand on a platen, in less than one second, the reader used
in the BioLynx.com Time and Attendance System measures over 90 three-dimensional
attributes--including the shape of the hand, the length and width of the
fingers, and the shape of the knuckles--to verify the person's identity. As no
two hands feature the exact same characteristics, the BioLynx.Com Time and
Attendance System is designed to reduce fraud and provide data collection and
integration as well as payroll accuracy by:
. Eliminating the possibility of "buddy punching."
. Eliminating the time and expense of administering and replacing
badges and timecards, plus the cost of these items.
. Stopping losses due to payroll fraud.
. Precise payroll, time, and attendance data.
. Eliminating manual data entry errors.
. Streamlining time recording, attendance, labor tracking functions.
. Providing an audit trail of personal activity for physical access
control.
Time and Cost-saving Features of the BioLynx.Com Solution Include:
. The ability to add or review employee punches over the Internet.
. The entry of vacation hours and department transfers.
. Programming time restrictions to eliminate unscheduled overtime.
. Providing centralized computer data storage with optional
networking.
. Securing against Instructions by unauthorized person.
. The generation of time and attendance reports for management review
and evaluation on a daily or weekly basis which can be received via
the Web, e-mail or fax.
Accessing Data
BioLynx.Com provides multiple options for retrieving data including pre-set
e-mail and on-demand Web access. We can configure our system to update daily or
even during shift changes or break times which ensures that a client will have
access to the most up-to-date employee data. We can even configure our system to
integrate with a client's accounting program to automate its payroll data entry.
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TABLE OF CONTENTS
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Page
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Prospectus Summary..................................................... 4
Risk Factors........................................................... 7
Terms of the Offering.................................................. 8
Plan of Distribution................................................... 8
Use of Proceeds........................................................ 9
Price Range of Common Stock and Dividend Policy........................ 10
Capitalization......................................................... 10
Dilution............................................................... 11
Unaudited Pro Forma Condensed Combined Financial Data.................. 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 18
Business............................................................... 19
Management............................................................. 26
Certain Transactions................................................... 29
Principal Stockholders................................................. 31
Description of Securities.............................................. 32
Shares Eligible for Future Sale........................................ 38
Legal Matters.......................................................... 39
Experts................................................................ 39
Where You Can Find More Information.................................... 39
Index to Financial Information......................................... 40
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PROSPECTUS SUMMARY
Unless the context otherwise suggests, "we," "our," "us," and similar
terms, as well as references to "BioLynx.Com," all refer to BioLynx.Com, Inc.
BioLynx.Com
BioLynx.Com, Inc. is a biometric technology applications business that
designs and markets time and attendance services, utilizing our own copyrighted
software. We also engage in the employee leasing business. We were incorporated
in the State of Texas on April 29, 1999.
Our software and hardware systems use biometrics, a technology that
electronically measures, records, and compares unique personal characteristics
for identification, which is expected to bring payroll accuracy to time and
attendance systems. Although the technology is relatively new to the time and
attendance industry, we feel our use of biometrics will eliminate many data
entry errors inherent in a manual time system. Additionally, our use of 3-D hand
geometry, which we consider to be the most accurate of all the biometric
identification techniques, is expected to eliminate the possibility of an
employee clocking in for another employee, because the employee has to be
present in order to punch in for work. We anticipate that high accuracy from the
use of 3-D hand geometry should ensure user satisfaction because of its very low
level of false rejects.
The primary market for our time and attendance system is the employee
leasing industry. We plan to provide to our clients all of the information
needed to generate their payrolls using 3-D hand geometry. Subscribers to our
service are expected to realize substantial savings through increased workplace
accountability and reduced administrative costs associated with generating their
payrolls. Our software is adaptable to any current existing payroll technology
so that our clients do not have to change their existing payroll software.
As of December 31, 1999, we have been engaged in the employee leasing
business. An employee lessor contractually assumes the role of employer for its
employer client and begins managing the human resource function for the client's
employees, including providing medical insurance, workers compensation
insurance, and training.
Corporate Information
BioLynx.Com's Internet's address is www.biolynx.com. Information
contained in BioLynx.Com's Internet site does not constitute part of this
prospectus. Our address is 5617 Grissom Road, San Antonio, Texas 78238,
telephone number (210) 256-8300, fax number (210) 682-2137, and e-mail
[email protected].
4
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The Offering
The following information regarding shares of our common stock
outstanding is as of January 18, 2000. It excludes:
. 250,000 shares of common stock reserved for issuance under our 1999
Stock Incentive Compensation Plan;
. 7,500 shares of common stock which may be issued upon the exercise
of an outstanding warrant; and
. shares of common stock which might be received upon the conversion
of any currently outstanding shares of our preferred stock.
Although we hope to sell all 1,000,000 of the shares of common stock
being offered, we may only sell the minimum of 500,000 shares. Therefore, the
following information assumes that only 500,000 shares will be sold:
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Common stock offered by BioLynx.Com............................ 500,000 shares.
Common stock to be outstanding after this offering,
if only 500,000 shares are sold.............................. 5,787,213 shares; includes 5,262,213 shares
currently outstanding and 25,000 shares to be
issued to Aurora Financial Services, L.L.C.,
in consideration of services rendered in this
offering.
Use of proceeds, if only 500,000 shares are sold............... . $260,000 for payment of commissions
relating to this offering.
. $140,000 for payment of other offering
costs.
. $230,000 for payment of general and
administrative expenses.
. $388,000 for payment of expenses related to research and
development of additional and improved hardware and
software systems.
. $607,000 for the purchase and installation
of hand readers.
. $175,000 for payment of sales and
marketing expenses.
. $200,000 for general working capital.
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Summary Unaudited Pro Forma Condensed Combined Financial Information
This summary unaudited pro forma financial information shows financial
results as if BioLynx.Com, Inc., BioLynx Outsource Services, Inc., and the
employee leasing division of Alamo Commercial Group, Inc. had been combined for
the periods shown. Pro forma combined figures are simply an arithmetical
combination of the three separate historical financial results, with certain
adjustments. Under accounting rules, we acquired BioLynx Outsource Services,
Inc., which included the employee leasing division of Alamo Commercial Group,
Inc. This acquisition will create goodwill in the pro forma combined financial
results. The amount of goodwill will be based on the difference between the fair
value of our preferred stock and the fair value of BioLynx Outsource Services,
Inc.'s identifiable net assets. You should not assume that the companies would
have achieved the depicted results if they actually had been combined at the
dates and the periods shown or that they will achieve these results in the
future. This summary unaudited pro forma combined financial information should
be read along with the unaudited pro forma combined financial statements
included elsewhere in this prospectus.
The pro forma as adjusted balance sheet data reflect:
. the additional sale between October 1, 1999 and November 24, 1999 of
319,500 shares of our common stock in a private placement at $2.00
per share before considering offering costs;
. the awarding between October 1, 1999 and November 24, 1999 of
340,000 shares of our common stock to consultants, advisers, selling
agents, and a board member, and the corresponding charge to expense
of $680,000, to reflect a value of $2.00 per share of common stock;
. the conversion of our outstanding convertible subordinated debenture
on January 18, 2000 into 335,613 shares of common stock; and
. the sale of 500,000 shares of our common stock in this offering at
an assumed net offering price of $3.20 per share, after deducting
the estimated selling expenses and commissions, and the application
of the net proceeds from the sale of the shares.
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Inception Nine Months
Through Ended
December 31, 1998 September 30, 1999
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Pro Forma Statement of Operations Data (Unaudited):
Total services revenues..................................... $ 7,189,852 $ 14,033,459
Total cost of operations.................................... $ 6,382,670 $ 12,591,231
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Gross profit................................................ $ 807,182 $ 1,442,228
Loss from operations........................................ $ (280,410) $ (491,537)
Net loss.................................................... $ (280,410) $ (531,904)
Basic and diluted net loss per share........................ $ (0.12) $ (0.17)
Weighted average common shares outstanding.................. 2,249,000 3,081,580
September 30, 1999 As Adjusted
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Pro Forma Balance Sheet Data (Unaudited):
Cash and cash equivalents................................... $ 91,198 $ 2,330,198
Working capital (deficit)................................... $ (111,225) $ 2,127,775
Total assets................................................ $ 5,357,639 $ 7,596,639
Convertible subordinated debenture.......................... $ 1,107,523 $ ------
Stockholders' equity (deficit).............................. $ 3,921,629 $ 7,268,152
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RISK FACTORS
Before you invest in our common stock, you should be aware of various
risks, including those described below. You should carefully consider these risk
factors, together with all other information included in this prospectus, before
you decide whether to purchase shares of our common stock.
Proceeds immediately available after we have accepted subscriptions for
500,000 shares
After we have accepted subscriptions for 500,000 shares, the proceeds
to be received by us from the sale of additional shares will be immediately
available for use by us, without the requirement of any escrow. There is no
assurance that we will be able to sell all 1,000,000 of the shares offered. As a
result, those investors who purchase shares early in the offering period will be
more at risk than those investors who purchase shares later in the offering
period, since the later investors will have more information about the success
of our sales efforts.
Our success depends on our ability to retain John D. Walker II and other key
personnel
Our success is substantially dependent upon the retention of our senior
management team, particularly John D. Walker II, our founder and chairman. If
any member of our senior management team becomes unable or unwilling to
participate in the business and operations of BioLynx.Com, our future business
and operations could be materially and adversely affected.
We may not successfully manage additional growth
Our recent growth has placed significant demands on management as well
as on our administrative, operational and financial resources. To manage any
additional growth, we must:
. Expand our sales, marketing and client support organizations.
. Invest in the development of enhancements to existing products and
new products that meet changing client needs.
. Further develop our technical expertise so that we can influence and
respond to emerging industry standards.
. Improve our operational processes and management controls.
Our inability to sustain or manage any additional growth could have a
material adverse effect on our business, operating results, and financial
condition.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "will," "expect," "anticipate," "believe,"
"estimate," and "continue," or similar words. You should read statements that
contain these words carefully because they discuss our future expectations,
contain projections of our future results of operations or of our financial
condition or state other "forward-looking" information. We believe that it is
important to communicate our future expectations to our investors. However,
there may be events in the future that we are not able to accurately predict or
control. These forward-looking statements are made as of the date of this
prospectus, and we assume no obligation to update them or the reasons why actual
results may differ.
The factors listed above in the section captioned "Risk Factors," as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in the "Risk Factors" and elsewhere in this prospectus could
have a material adverse effect on our business, operating results and financial
condition.
7
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TERMS OF THE OFFERING
The offering of the shares of the common stock will begin on the
effective date of this prospectus and will terminate, if not sooner terminated,
at 5:00 p.m., San Antonio, Texas time, on August , 2000. Until we have received
and accepted subscriptions for at least 500,000 of the shares totaling
$2,000,000, the "initial closing date," all proceeds received from the sale of
shares will be deposited into an interest bearing escrow account at Sterling
Bank in Houston, Texas, the "escrow agent," and will not be commingled with the
funds of BioLynx.Com or any other entity. On the initial closing date, we will
receive all funds held in escrow contributed by the investors, less the fees and
commissions of this offering. Following the initial closing date, and until
August , 2000, the remaining shares will be offered and sold on the same terms
as contained in this prospectus, other than the requirement for an escrow as
discussed below.
At any time before or after the initial closing date and before the
maximum number of shares have been sold, BioLynx.Com may terminate this offering
if:
. it determines, in its sole discretion, to terminate this offering;
. specified actions, usually associated with extremely adverse
economic and market conditions, have been taken by the principal
national securities exchanges or by governmental authorities; or
. other events have occurred or are pending or threatened which, in
our judgment, materially impair the investment quality of the
shares.
After the initial closing date, upon the sale of any of the shares, no
part of the subscription proceeds will be subject to the escrow agreement
executed between us and Sterling Bank, but will be immediately available for use
by BioLynx.Com. If the required minimum amount of the subscriptions is not
received by 5:00 p.m., San Antonio, Texas time, on August , 2000, by the next
business day, all subscriptions will be returned by the escrow agent to the
investors with interest and without any deduction.
Subscriptions may be rejected in whole or in part by BioLynx.Com for
any reason and need not be accepted in the order received. All subscriptions are
subject to prior sale. Fully paid subscriptions for shares of the common stock
shall be irrevocable by the investors during the offering period.
PLAN OF DISTRIBUTION
Subscriptions for the shares offered in this prospectus will be
solicited on a "best efforts" basis by Aurora Financial Services, L.L.C. and
Travis Morgan Securities, Inc. There is no firm commitment on the part of Aurora
or Travis Morgan, and they are under no obligation to take down or pay for any
of the shares.
As compensation for its services for the sale of the shares offered in
this prospectus, Aurora will receive from BioLynx.Com:
. a commission equal to 10 percent of the cash proceeds of this
offering generated by Aurora;
. an amount equal to three percent of the cash proceeds of the
offering as a non-refundable and non-accountable investment banking
fee; and
. 25,000 shares of BioLynx.Com's common stock.
Previously, Aurora acted as the selling agent for our shares of common
stock sold by means of a private placement which was closed on November 24,
1999, after 586,600 shares of our common stock were sold for $1,173,200. In
consideration of its services, Aurora received 20,000 shares of our common
stock, and we agreed to pay Aurora a sales commission in the amount of eight
percent of the cash proceeds of the private placement.
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In addition to its compensation rights relating to this offering,
Aurora will have a right of first refusal to place subsequent rounds of
financing for BioLynx.Com.
As compensation for its services for the sale of the shares offered in
this prospectus, Travis Morgan will receive from BioLynx.Com a commission equal
to 10 percent of the cash proceeds of this offering generated by Travis Morgan.
Previously, Travis Morgan acted as the selling agent for our shares of
common stock in the private placement discussed above. Travis Morgan received
$10,400 and a warrant exercisable for 7,500 shares of our common stock for its
services to us. See "Capital Stock - Warrant."
Aurora and Travis Morgan will be deemed "underwriters" as that term is
defined in the Securities Act of 1933, the "Securities Act," and any commissions
payable to them may be deemed underwriting compensation. BioLynx.Com has agreed
to indemnify Aurora and Travis Morgan against some civil liabilities, including
liabilities arising under the Securities Act.
USE OF PROCEEDS
Assuming an initial public offering price of $4.00 per share, we will
receive approximately $3,340,000 in net proceeds if we sell 1,000,000 shares of
the common stock; approximately $2,470,000 in net proceeds if we sell 750,000
shares; or approximately $1,740,000 in net proceeds if we sell only 500,000
shares.
Net proceeds reflect the payment of sales commissions of $520,000,
$390,000, and $260,000 in relation to the sale of 1,000,000, 750,000 and 500,000
shares, respectively. Additionally, the calculations of net proceeds reflect the
payment of the following fixed expenses related to this offering:
. $60,000 in legal expenses;
. $23,000 in accounting expenses;
. $25,000 in printing expenses; and
. $32,000 in other fees and expenses.
The anticipated uses of net proceeds are shown in the following table.
Until they are needed, BioLynx.Com intends to invest the net proceeds of this
offering in short-term, interest-bearing, investment-grade securities.
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If 1,000,000 If 750,000 If 500,000
Use of Proceeds Shares are Sold Shares are Sold Shares are Sold
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General and administration....................... $ 352,000 $303,000 $230,000
Research and development......................... 388,000 388,000 388,000
Purchase and installation of hand readers........ 1,890,000 1,215,000 607,000
Sales and marketing.............................. 450,000 314,000 175,000
Working capital.................................. 260,000 250,000 200,000
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Total................................... $3,340,000 $2,470,000 $1,600,000
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The total amount of sales commissions listed above does not include
25,000 shares of the common stock to be issued to Aurora Financial Services,
L.L.C.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
As of the date of this prospectus, our common stock is quoted on the
American Stock Exchange under the symbol "_____." Before the effective date of
this prospectus, there has been no public market for our shares.
As of January 18, 2000, there were 5,262,213 shares of our common stock
issued and outstanding held of record and beneficially owned by approximately 72
persons on that date. The 25,000 shares of our common stock to be issued to
Aurora Financial Services, L.L.C. in connection with this offering are not
included within the total of our outstanding shares.
BioLynx.Com has not paid or declared any dividends on the common stock,
nor do we anticipate paying any cash dividends or other distributions on the
common stock in the foreseeable future. Any future dividends will be declared at
the discretion of our board of directors and will depend, among other things, on
our earnings, if any, our financial requirements for future operations and
growth, and other facts as we may then deem appropriate.
CAPITALIZATION
The following table describes BioLynx.Com's total capitalization at
September 30, 1999:
. On an actual basis.
. On a pro forma basis to reflect the conversion of our outstanding
convertible subordinated debenture into 335,613 shares of common
stock on January 18, 2000.
. On a pro-forma basis to reflect the additional sale between October
1, 1999 and November 24, 1999 of 319,350 shares of the common stock
of BioLynx.Com in a private placement at $2.00 per share before
considering offering costs, and the awarding between October 1, 1999
and November 24, 1999 of 340,000 shares of the common stock of
BioLynx.Com to consultants, advisers, selling agents, and a board
member, and the corresponding charge to expense of $680,000, all of
the awarded shares being valued at $2.00 per share.
. On a pro forma basis to reflect the acquisition on December 31, 1999
by BioLynx Outsource Services, Inc. of all leased employees and all
customer contracts of the employee leasing division of Alamo
Commercial Group, Inc., and the acquisition on December 31, 1999 by
BioLynx.Com, Inc. of all the
10
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outstanding stock of BioLynx Outsource Services, Inc. in exchange
for the issuance of 5,051,882 shares of our preferred stock.
. On a pro forma as adjusted basis to reflect the sale of 500,000
shares of our common stock in this offering at an assumed initial
public offering price of $4.00 per share and the application of the
estimated net proceeds in the manner described in "Use of Proceeds."
. On a pro forma as adjusted basis to reflect the issuance of 25,000
shares of our common stock to Aurora Financial Services, L.L.C., in
consideration for its services as a selling agent in connection with
this prospectus.
You should read the following information in conjunction with our
financial statements and the accompanying notes beginning on page F-1 of this
prospectus. The following information regarding shares outstanding is as of
January 18, 2000. It excludes 250,000 shares of common stock reserved for
issuance under our 1999 Stock Incentive Compensation Plan. It also excludes any
shares of our common stock which may be issued to Travis Morgan Securities,
Inc., if it elects to convert our warrant covering 7,500 shares.
Lastly, the following information excludes any shares of our common
stock which might be issued upon the conversion of the shares of preferred stock
issued to United Capital Investment Group, Inc. and Alamo Commercial Group, Inc.
as payment for the purchase of BioLynx Outsource Services, Inc. by BioLynx.Com.
and the purchase of the leased employees and the contracts of Alamo Commercial
Group, Inc. by BioLynx Outsource Services, Inc., both of which closed on
December 31, 1999.
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Pro Forma
Actual Pro Forma As Adjusted
------------ ------------ -----------
<S> <C> <C> <C>
Convertible subordinated debenture........................... $ 1,107,523 $ - - $ - -
Stockholders' equity (deficit):
Preferred stock, $1.00 par value, 20,000,000
shares authorized, 0 shares issued and
outstanding, actual, 5,051,882 shares issued and
outstanding, pro forma and as adjusted................... ---- 5,051,882 5,051,882
Common stock, $0.001 par value, 50,000,000 shares
authorized, 4,267,250 shares issued and outstanding,
actual; 5,262,213 shares issued and outstanding, pro
forma; 5,787,213 shares issued and outstanding, as
adjusted................................................. 4,267 5,262 5,787
Paid-in-capital.............................................. 1,098,393 3,444,733 5,144,208
Retained earnings (deficit).................................. (2,232,913) (2,912,913) (3,012,913)
----------- ----------- -----------
Total stockholders' equity (deficit)......................... (1,130,253) 5,588,964 7,188,964
----------- ---------- -----------
Total capitalization......................................... $ (22,730) $5,588,964 $ 7,188,964
=========== ========== ===========
</TABLE>
DILUTION
After the sale of 500,000 shares of the common stock offered, the
minimum amount which must be raised by this offering, the shareholders of
BioLynx.Com on January 18, 2000 will own approximately 91 percent of the issued
and outstanding shares of the common stock, and the investors as a result of
this offering will own approximately 91 percent of the issued and outstanding
shares of the common stock. All calculations of stock ownership described in
this section assume that 25,000 shares of the common stock will be issued to
Aurora Financial Services, L.L.C., in consideration for its services as a
selling agent in this offering. However, the
11
<PAGE>
calculations do not provide for the exercise of our warrant covering 7,500
shares of common stock in favor of Travis Morgan Securities, Inc., or the
issuance or conversion of shares of our issued and outstanding preferred stock.
The actual net tangible book value of BioLynx.Com as of September 30,
1999 was ($1,130,253), or ($0.26) per share of the common stock. The unaudited
net tangible book value of BioLynx.Com on a pro forma basis as of September 30,
1999 was $537,082, or $0.10 per share of the common stock, after giving effect
to:
. the adjustments to reflect the additional sale between October 1,
1999 and November 24, 1999 of 319,350 shares of the common stock of
BioLynx.Com in a private placement at $2.00 per share before
considering offering costs;
. the awarding between October 1, 1999 and November 24, 1999 of
340,000 shares of the common stock of BioLynx.Com to consultants,
advisers, selling agents, and a board member, and the corresponding
charge to expense of $680,000, to reflect a value of $2.00 per
share; and
. the conversion of our convertible subordinated debenture into
335,613 shares of common stock on January 18, 2000;
Also, on a pro forma basis as of September 30, 1999, after giving
effect to the sale by BioLynx.Com of 500,000 of the shares offered by means of
this prospectus, and the receipt of the net proceeds from the sale, and the
issuance of 25,000 shares of the common stock to Aurora Financial Services,
L.L.C., in consideration for its services as a selling agent in this offering,
the pro forma net tangible book value would have been $2,277,082, or $0.39 per
share of the common stock.
This represents an immediate increase in the pro forma net tangible
book value of $0.29 per share to our current shareholders immediately before
this offering, and an immediate dilution of $3.61 per share of the common stock
to the new investors. Dilution is determined by subtracting pro forma net
tangible book value after this offering from the offering price. The following
table illustrates this per share dilution.
<TABLE>
<S> <C> <C>
Offering Price to New Investors............................ $4.00
Net Tangible Book Value before the Offering.............. $ 0.10
Increase Per Share Attributable to Sale of the Shares.... 0.29
------
Pro Forma Net Tangible Book Value after the Offering....... 0.39
-----
Dilution of Net Tangible Book Value to New Investors....... $3.61
=====
</TABLE>
Additionally, if we issue more shares of common stock in the future,
including the exercise of our warrant in favor of Travis Morgan Securities,
Inc., shares issued under our 1999 Stock Incentive Compensation Plan, or the
conversion of our issued and outstanding preferred stock into common stock, you
may experience further dilution.
The following table summarizes the total consideration paid, and the
average price per share paid to BioLynx.Com for shares held by our current
shareholders and by investors purchasing shares in this offering on a pro forma
basis as of September 30, 1999, and after:
. the sale of 586,600 shares of our common stock in a private
placement which closed on November 24, 1999;
. the awarding in 1999 of a total of 665,000 shares of our common
stock to key employees, consultants, advisers and a board
member;
12
<PAGE>
. the conversion of our outstanding convertible subordinated debenture
for 335,613 shares of common stock on January 18, 2000;
. the sale of 500,000 of the shares offered in this prospectus; and
. the issuance of the common stock to Aurora Financial Services,
L.L.C. for its services as a selling agent in this offering.
<TABLE>
<CAPTION>
Number of
Shares Percent Total Percent of Total
Purchased of Total Consideration Consideration Effective Price
or Owned Shares Paid Paid Per Share
---------- -------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Current shareholders 5,262,213 91.00 $2,282,149 53.00 $0.43
New investors 500,000 09.00 2,000,000 47.00 $4.00
Aurora 25,000 00.00 00.00 $0.00
--------- ------ ---------- ------ -----
Total 5,787,213 100.00 $4,282,149 100.00
========= ====== ========== ======
</TABLE>
The above calculations do not provide for the exercise of our warrant
covering 7,500 shares of our common stock in favor of Travis Morgan Securities,
Inc., or the issuance or conversion of shares of our issued and outstanding
preferred stock into shares of our common stock. The current shareholders of
BioLynx.Com will receive no additional shares of the common stock as a result of
this offering, unless the shares are purchased on the same terms as presented in
this prospectus.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined balance sheet as
of September 30, 1999 gives effect to the acquisitions of BioLynx Outsource
Services and the employee leasing division of Alamo Commercial Group as if they
occurred on that date.
The following unaudited pro forma condensed combined statements of
operations for the nine months ended September 30, 1999 and for the period from
inception through December 31, 1998, give effect to the following transactions
as if they occurred on January 1, 1998:
. the December 31, 1999 acquisition by BioLynx Outsource Services of
all leased employees together with all contracts to furnish services
and leasing of the employee leasing division of Alamo Commercial
Group; and
. the December 31, 1999 acquisition by BioLynx.Com of all the
outstanding stock of BioLynx Outsource Services.
The unaudited pro forma condensed combined financial statements have
been derived from and should be read in connection with the audited historical
financial statements of BioLynx.Com and BioLynx Outsource Services, and the
audited historical pro forma statement of income of the employee leasing
division of Alamo Commercial Group for the period from inception through
December 31, 1998 and for the nine months ended September 30, 1999 included in
this prospectus.
The pro forma adjustments and the resulting unaudited pro forma
condensed combined financial statements were prepared based on available
information and certain assumptions and estimates described in the notes to the
unaudited pro forma condensed combined financial statements. A final
determination of required purchase accounting adjustments, including the
allocation of the purchase price to the assets acquired and liabilities assumed,
has not been made, and the allocation reflected in the unaudited pro forma
condensed combined financial statements
13
<PAGE>
should be considered preliminary. However, in the opinion of our management, the
final allocation will not have a material impact on the unaudited condensed
combined pro forma financial statements.
The unaudited pro forma condensed combined financial statements do not
purport to represent what our financial positions or results of operations would
have been had the acquisitions occurred on the date indicated or to project our
financial position or results of operations for any future period. Furthermore,
the unaudited pro forma condensed combined financial statements do not reflect
changes which may occur as the result of activities after the acquisitions
closed.
INTENTIONALLY LEFT BLANK
14
<PAGE>
BIOLYNX.COM, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
EMPLOYEE
LEASING
DIVISION OF
BIOLYNX ALAMO PRO
OUTSOURCE COMMERCIAL FORMA
SERVICES GROUP BIOLYNX.COM COMBINED ADJUSTMENTS COMBINED
--------- ---------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents................ $ 12,736 $ - $ 78,462 $ 91,198 $ 91,198
Trade accounts receivable................ 28,832 0 10,410 39,242 39,242
Stock subscriptions receivable........... 0 0 3,839 3,839 3,839
Notes receivable from affiliates......... 59,145 0 0 59,145 59,145
Interest receivable...................... 415 0 0 415 415
Component parts inventory................ 0 0 19,393 19,393 19,393
Prepaid expenses......................... 0 0 4,000 4,000 4,000
-------- ------ ----------- ----------- ---------- -----------
Total current assets.............. 101,128 0 116,104 217,232 217,232
Property and equipment, net....................... 0 0 79,237 79,237 79,237
Deferred offering costs, net...................... 0 0 27,792 27,792 27,792
Intangible assets................................. 0 0 0 0 A 5,030,394 5,030,394
Other assets...................................... 0 0 2,984 2,984 2,984
-------- ------ ----------- ----------- ---------- -----------
Total assets...................... $101,128 $ - $ 226,117 $ 327,245 $5,030,394 $ 5,357,639
======== ====== =========== =========== ========== ===========
Current liabilities:.............................. $ 61,632 $ - $ 75,196 $ 136,828 $ 136,828
Accounts payable and accrued
liabilities.............................
Amounts payable to affiliate of
majority stockholder.................... 14,392 0 173,651 188,043 188,043
Accrued federal income taxes payable..... 3,636 0 0 3,616 3,616
-------- ------ ----------- ----------- ---------- -----------
Total current liabilities......... 79,640 0 248,847 328,487 0 328,487
Convertible subordinated debenture................ 0 0 1,107,523 1,107,523 1,107,523
Stockholders' equity:
Preferred stock.......................... 0 0 0 0 A $5,051,882 5,051,882
Common stock............................. 1 0 4,267 4,268 A $ (1) 4,267
Paid in capital.......................... 999 0 1,098,393 1,099,392 A $ (999) 1,098,393
Retained earnings (deficit).............. 20,488 (2,232,913) (2,212,425) A $ (20,488) (2,232,913)
-------- ------ ----------- ----------- ---------- -----------
Total stockholders' equity
(deficit)........................ 21,488 0 (1,130,253) (1,108,765) 5,030,394 3,921,629
-------- ------ ----------- ----------- ---------- -----------
Total liabilities and stockholders'
equity (deficit)................. $101,128 $ - $ 226,117 $ 327,245 $5,030,394 $ 5,357,639
======== ====== =========== =========== ========== ===========
</TABLE>
15
<PAGE>
BIOLYNX.COM, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
EMPLOYEE
LEASING
DIVISION OF
BIOLYNX ALAMO
OUTSOURCE COMMERCIAL PRO FORMA
SERVICES GROUP COMBINED BIOLYNX .COM COMBINED ADJUSTMENT COMBINED
--------- ------------ ----------- ------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Employee leasing and
other revenues........... $ - $7,189,852 $7,189,852 $ - $7,189,852 $ $7,189,852
Work-site wages, taxes and
insurance................ - 6,382,670 6,382,670 0 6,382,670 6,382,670
------- ---------- ---------- --------- ---------- ----------
Gross profit...... 0 807,182 807,182 0 807,182 807,182
Total operating expenses... 0 287,594 287,594 799,998 1,087,592 1,087,592
------- ---------- ---------- --------- ---------- ----------
Income from
operations...... 0 519,588 519,588 (799,998) (280,410) (280,410)
Interest income (expense).. 0 0 0 0 0 0
------- ---------- ---------- --------- ---------- ----------
Income before
taxes........... 0 519,588 519,588 (799,998) (280,410) (280,410)
Provision for federal
income taxes............. 0 176,660 176,660 0 176,660 B (176,660) 0
------- ---------- ---------- --------- ---------- --------- ----------
Net Income
(loss).......... $ - $ 342,928 $ 342,928 $(799,998) $ (457,070) $(176,660) $ (280,410)
======= ========== ========== ========= ========== ========= ==========
Basic and Diluted Net
(Loss) per Share......... N/A N/A N/A (0.36) N/A N/A (0.12)
Weighted Average common
shares outstanding....... N/A N/A N/A 2,249,000 N/A N/A 2,249,000
</TABLE>
16
<PAGE>
BIOLYNX.COM, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
EMPLOYEE
LEASING
DIVISION OF
BIOLYNX ALAMO
OUTSOURCE COMMERCIAL PRO FORMA
SERVICES GROUP COMBINED BIOLYNX .COM COMBINED ADJUSTMENT COMBINED
--------- ------------ ----------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Employee leasing and
other revenues........... $2,082,211 $11,940,838 $14,023,049 $ 10,410 $14,033,459 $ $14,033,459
Work-site wages, taxes and
insurance................ 2,003,685 10,587,546 12,591,231 0 12,591,231 12,591,231
---------- ---------- ----------- ------------ ----------- -----------
Gross profit...... 78,526 1,353,292 1,431,818 10,410 1,442,228 1,442,228
Total operating expenses... 54,837 477,634 532,471 1,401,294 1,933,765 1,933,765
---------- ---------- ----------- ------------ ----------- -----------
Income from
operations...... 23,689 875,658 899,347 (1,390,884) (491,537) (491,537)
Interest income (expense).. 415 0 415 (40,782) (40,367) (40,367)
---------- ---------- ----------- ------------ ----------- -----------
Income before
taxes........... 24,104 875,658 899,762 (1,431,666) (531,904) (531,904)
Provision for federal
income taxes............. 3,616 297,724 301,340 0 301,340 B (301,340) 0
---------- ---------- ----------- ------------ ----------- ========= -----------
Net Income
(loss).......... $ 20,488 $ 577,934 $ 598,422 $ (1,431,666) $ (833,244) $(301,340) $ (531,904)
========== ========== =========== ============ =========== ========= ===========
Basic and Diluted Net
(Loss) per Share......... $ 20.49 N/A N/A (.046) N/A N/A (0.17)
Weighted Average common
shares outstanding....... 1,000 N/A N/A 3,081,580 N/A N/A 3,081,580
</TABLE>
17
<PAGE>
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements as of
September 30, 1999
Note A is to record the acquisition of BioLynx Outsource Services, Inc.
and the leased employees and all leasing contracts of the employee leasing
division of Alamo Commercial Group, Inc., based on the issuance of 5,051,882
shares of preferred stock at $1.00 par value. The preferred stock issued is
convertible at any time at the option of the holder into 1,530,873 shares of
common stock, based on a conversion value of $3.30 for each share of common
stock.
This acquisition will be accounted for as a purchase, based on the
seller's minority ownership position in BioLynx.Com, Inc. at the date of
acquisition.
<TABLE>
<S> <C>
Purchase price $5,051,882
Less adjusted historical equity (21,488)
----------
Goodwill $5,030,394
==========
</TABLE>
Note B is to reverse the provision for federal income taxes on income
of BioLynx Outsource Services, Inc. and to reverse the pro forma provision for
federal income taxes on income from the employee leasing division of Alamo
Commercial Group, Inc. due to offsetting losses incurred during the period by
BioLynx.Com, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Plan of Operation
BioLynx.Com, Inc. is a newly organized company, having been
incorporated on April 29, 1999 by John D. Walker II. However, we are an
outgrowth and continuation of an employee leasing business of Mr. Walker, which
he had owned for over nine years when he sold the client base in July 1997. In
1998, Mr. Walker founded Alamo Commercial Group, Inc. to provide employee
leasing on a smaller scale than he previously furnished. In December 1998, Mr.
Walker founded BioLynx, Inc. to furnish employee leasing and biometric
technology with respect to time and attendance of employees. BioLynx, Inc.
developed our business plan, and lined up the key people who were thought to be
instrumental in the projected business of our company. On May 12, 1999, BioLynx,
Inc. and BioLynx.Com, Inc. merged, with BioLynx.Com, Inc. being the surviving
corporation.
Research and Development Plans for 2000 and Beyond. Our plans include
the following for 2000 and beyond:
. Improve the functions and features of our time and attendance system
to include more payroll features, such as adding time and annotating
the time for holidays, vacation, sick leave, etc.
. Add job-costing features to reflect a specific job or department so
a client can see not only the time and attendance data but job-
costing as well.
. Work to include more export functions, via a "drop down menu," which
will enable a client to export the time and attendance data, in the
specific order required by the client's system, directly to its
payroll.
. Add more functions and features to our Web site to give our clients
the ability to order products or services using the Internet.
. Utilize our on-staff programmers to alter our programming code or
database to address unique client requirements for programming or
reporting
18
<PAGE>
Liquidity and Capital Resources
On November 24, 1999, we completed a private placement of 586,600
shares of our common stock, raising $1,173,200 in the process. This offering
seeks to raise up to an additional $4,000,000 by the further sale of our common
stock.
As discussed in this prospectus, the proceeds of both the private
placement and this offering will be used to add systems, physical space and
other resources as necessary to deliver our services and continue to develop the
capabilities of the BioLynx.Com time and attendance system. Funds will also be
used to further develop the corporate infrastructure, capitalize equipment for
rapid growth, and add management from within the employee leasing industry.
Other goals are expansion of the development and support teams,
retirement of debt, fund new product development, further the network
infrastructure expansion, including a second internal system for full
redundancy, and finance an intensive marketing program.
The funds raised to date, as well as the minimum amount of funds to be
raised by this offering, are expected to take care of our financial needs for
the next six months. Thereafter, we will rely on cash flow from operations to
satisfy our cash requirements. At this time, we do not anticipate raising any
more cash within the next 12 months. Likewise, over the next 12 months, we do
not expect any significant change in the number of our employees.
BUSINESS
General
BioLynx.Com, Inc. is a biometric technology applications business that
designs and markets time and attendance services, utilizing our own copyrighted
software. We also provide employee leasing. We were incorporated on April 29,
1999 in the State of Texas. In May 1999, we merged with BioLynx, Inc., a Texas
corporation, with BioLynx.Com, Inc. being the surviving corporation. As a result
of the merger, we succeeded to all the rights and properties and became subject
to all the debts and liabilities of BioLynx, Inc. At the time of the merger,
BioLynx, Inc. had engaged in no business, but had put into motion the basics of
our business plan.
Our primary market is the employee leasing industry, which, according
to the National Association of Professional Employer Organizations, employs
approximately two to three million people. John D. Walker II has over 10 years
experience in the employee leasing business, and provides significant insight as
to how we run our business. We plan to provide our clients all of the
information needed to generate payroll using 3-D hand geometry. Subscribers to
our service are expected to realize substantial savings through increased
workplace accountability and reduced administrative costs associated with
generating payrolls. In our opinion, the use of approximately one biometric hand
reader for every 62 workers will avoid long lines at "punch in" locations. We
feel that our software, which the management of BioLynx.Com designed over a two-
year period, is adaptable to any current existing payroll technology so that our
clients do not have to change their existing payroll software. Since October
1998, we estimate that we have spent approximately $2 million in developing our
time and attendance system.
A reasonable degree of socializing at work is acceptable, and being
late once in a while is understandable. However, deliberate and continual time
theft, where an employee claims to be at work, but is not, may pose a serious
threat to companies at every level of business. For instance, according to a
1983 study by Robert Half International, Inc., the average office worker was
estimated to be stealing four hours and 21 minutes of time each week, versus
three hours and 30 minutes per week for manufacturing workers. At an average
wage of $8.21 per hour, Half arrived at an average weekly time-theft cost of
$34-$64 per worker. When measured against an average check of $328.40 per
week, this amounts to a minimum loss of approximately 10 percent.
In our view, over the last 20 years, Americans have lead the resurgence
in worker productivity, which has probably been the driving force behind the
prosperity that has occurred in the industrialized world. We feel increased
productivity has allowed increased real wages and near full employment, without
causing the onset of inflation. The computer, software, and the Internet are all
making their contributions, but workers are increasingly unable to harness all
the tools with which they are provided. From where is the next simple gain in
productivity to
19
<PAGE>
come? More technology? Yes, but more importantly, how about a simple solution
that will help every worker provide more value regardless of his level of
training and computer skill?
BioLynx.Com feels that it has a simple solution. Our proprietary
software, when linked with a biometric hand reader, provides a control feature
for business, which reasonably ensures that a business will pay an hourly paid
employee only for the hours he is actually on the job. This increases worker
productivity in a remarkably simple way. The copyrighted BioLynx software is
mated to a hand reader in order to ensure the accuracy of how many hours were
worked by any given employee. That same employee is afforded reasonable
certainty that he will not be the subject of human error which predominates in
businesses where time cards are hand written, and worse, calculated with a 10-
key calculator.
The employee leasing business is extremely capital intensive, requires
knowledge skill sets in many industries, and often yields only one to three
percent net profit after taxes. As a result, management of employee leasing
businesses have continuously sought ways to improve employee efficiency, safety,
and productivity. The requirement of operating in an industry with thin margins
has been the impetus behind numerous attempts to improve net profits. The
BioLynx.Com time and attendance system has been developed as an answer to this
quest.
Biometrics
Biometrics is a technology that electronically measures, records, and
compares unique personal characteristics for identification. While the
technology is common in security and access control applications, it is new to
the time and attendance industry. There are two major categories of biometric
devices, behavioral and physiological.
Behavioral devices rely on learned traits that are unique to
individuals. Perhaps the most common example of a unique trait is a person's
signature. Society routinely uses this trait to verify the identity of an
individual, as with the signature on a check. Another behavioral technology is
voice recognition, which records and compares vocal frequency and patterns.
Physiological biometric identification measures a distinct unique
characteristic of a person such as the size and shape of his hand, fingerprint
details, blood vessel patterns on the retina, and unique features of the iris. A
biometric device provides true identification of a person by comparing his
physical characteristics to a known pattern recorded during the enrollment
process. Carried identification, like a badge, personal identification number,
or password cannot truly identify an individual. A person can transfer any of
these to another person.
The primary benefit of using biometrics in a time and attendance system
is payroll accuracy. An accurate payroll requires accurate data entry. Tainted
data entered into a time and attendance system results in inaccurate paychecks.
A computerized time and attendance system eliminates many inaccuracies inherent
in a manual time keeping system. Badges and data terminals collect employee
punches electronically. This minimizes many data entry errors. Yet, if one
person can use another person's badge to punch in for him, inaccuracies in
payroll will persist. A biometric device eliminates that possibility, because
the employee has to be there. "Buddy punching" is a common abuse of time keeping
systems. We feel that with biometrics, "buddy punching" will be eliminated.
3-D Hand Geometry
There are a number of biometric identification readers on the market.
However, in our opinion, 3-D hand geometry is the most accurate of all the
biometric techniques. High accuracy is expected to enhance user satisfaction
because of low level of false rejects. Based on a report issued by Sandia
National Laboratories in 1991 under a contract to an agency of the United States
Government, we believe:
. 3-D hand geometry has, by a wide margin, the highest level of user
acceptance of all of the biometric techniques.
. 3-D hand geometry has the lowest level of user concerns of all
biometric techniques, since it is regarded as the least intrusive of
all biometric devices.
. 3-D hand geometry is the most cost effective of all biometric
techniques.
20
<PAGE>
According to our own experience, 3-D hand geometry is the easiest
biometric technology to integrate into payroll systems.
Hand Readers
We purchase all of the hand readers used in our 3-D hand geometry time
and attendance systems from Recognition Systems, Inc. located in Campbell,
California. Under the terms of our agreement with Recognition Systems:
. we agree to purchase a minimum of 250 hand readers during the
agreement's initial 12 month term;
. we agree to create and maintain software which will allow
Recognition System's hand readers to be a data collection device
for end user applications;
. Recognition Systems agrees, in exchange for our utilization of its
hand readers, to recommend BioLynx.Com as a source of time and
attendance software solutions;
. Recognition Systems agrees to indemnify BioLynx.Com against any
claim relating to actual or alleged infringement of any patent,
copyright, trademark or trade secret against BioLynx.Com by virtue
of our use of Recognition System's products;
. the agreement's initial 12 month term may be extended by mutual
agreement; and
. the agreement may be terminated by either party upon 120 day's
prior written notice.
Recognition Systems, Inc. is the sole manufacturer of the hand reader
we use. In the event that we cannot obtain hand readers from Recognition
Systems, Inc., we would utilize a different form of biometric reader. The other
forms of biometric readers are manufactured by several vendors, and employ
finger, retina, or voice recognition, instead of 3-D hand geometry. We do not
anticipate any significant problems in applying a different form of biometric
reader to our time and attendance system.
Employee Leasing
In the late 1980's, the employee leasing industry was introduced to
many states, including Texas. The goal of an employee leasing company is to
provide an integrated, cost effective approach to the management and
administration of human resources and employer risk for its clients. The
employee leasing company contractually assumes the role of employer from its
employer clients and begins managing the human resource function for the
employees.
Generally, small to mid size companies receive the most benefit from
the use of an employee leasing company, because those companies often lack the
infrastructure to deal with the various levels of state and federal employee
regulations and insurance and workers compensation claims processing. In fact,
the most important factor contributing to the successful introduction of
employee leasing was the ability to provide workers compensation insurance
coverage to client companies at a rate below what they could purchase on their
own. Leasing entities bought at lower rates strictly because they were buying
for many companies, not just one.
After the Texas Legislature passed a law requiring leasing companies to
be licensed, insurance companies began to actively solicit leasing companies for
workers compensation and other insurance requirements. Competition among these
carriers created more competitive pricing and the industry grew.
21
<PAGE>
As the leasing industry developed, it was apparent to us that keeping
workers compensation insurance rates low depended on the ability of the leasing
company to keep claims low. To enhance our ability to successfully manage claims
or perhaps prevent them, we would need to create an awareness of the need for
safety and a safe working environment. We have hired three individuals, trained
and educated in all aspects of safety from construction site safety to office
staff ergonomics. These individuals are now certified safety engineers. One has
just been elected president of the American Society of Safety Engineers.
Having control of client companies' workers compensation insurance is
also a valuable tool in the elimination of collection problems. At the beginning
of our relationship, a client company is made aware that failure to pay an
invoice in a timely manner will result in cancellation of coverage. This tool is
expected to keep account write-offs at very low levels. In the past, Mr. Walker,
through his previous employee leasing business, has been successful in keeping
his client companies and many thousands of employees in safe working
environments while controlling insurance costs. Recognizing the need for safety
programs and implementing these programs has set us a step above other leasing
companies. To our knowledge, we are the only leasing company with accredited
safety engineers on staff.
Current and Potential Business
We have not received any material complaints from our clients about our
time and attendance systems operating in the field. To this point, our staff has
had the responsibility of marketing our services. Currently, we are attempting
to develop dealer partner programs and build strategic alliances with national
companies who have mature distribution channels that will compliment our target
market. We are also focusing on employers who have a large number of employees,
where accurate time and attendance records are sorely needed, and where labor is
a large component of cost. For example, we recently signed a marketing
representative agreement with SOS Staffing Services, Inc., a Salt Lake City,
Utah staffing and information technology consultant firm. SOS operates through a
network of approximately 150 offices located throughout the United States. The
material terms of our agreement with SOS include:
. Except for the State of Texas, SOS will be the sole staffing
industry firm authorized to distribute our products and services.
. SOS will use its best efforts to obtain service agreements for the
installation of 100 hand readers within a reasonable time.
. SOS will be responsible for billing and collecting service fees for
each unit.
. For its efforts, SOS will, upon written notice of a designated
customer, have the exclusive right to sell the products and services
to the customer for a period of 90 days from the date of
notification.
. In order to support SOS, we will provide marketing materials,
coordinate installations, provide customer support and undertake
additional research and development to upgrade our products and
services as necessary.
Additionally, we are currently negotiating contracts with a vendor to
an employee leasing business. Although negotiations with the vendor may not
result in a contract, we anticipate that this vendor could generate substantial
sales to other leasing companies, and prospects for acquisitions in the leasing
business.
We anticipate revenues from the following sources:
. Service agreements with clients who wish to utilize our biometric
time and attendance systems without leasing employees. Currently,
clients pay a service charge for use of our time and attendance
systems equal to approximately $5.00 per employee per week.
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. Employee leasing. We intend to use a portion of the proceeds
from this offering as working capital to facilitate the growth
of BioLynx Outsource Services.
. New adaptations for our biometric technology.
During the next year, we plan to continue to improve our service bureau
software which will enhance our clients' ability to retrieve additional
information from the hand reader used in our 3-D hand geometry and to report
this information via the current BioLynx.Com Internet Web site such as job-
costing tips, etc. In addition, we will provide many current general ledger
functions on the Internet to include pay rates, deductions, garnishments, etc.
This will all be used to feed existing payroll/general ledger applications.
Patents and Intellectual Property
Patents. On November 18, 1999, BioLynx.Com filed a Provisional Patent
Application with the United States Patent and Trademark Office under application
Serial No. 60/166,241. It is valid for one year. Generally, the proprietary
technology consists of a method and apparatus for providing inexpensive
integration of remote biometric identification verification/two-way
communication units with automated centralized remote management of multiple
clients having multiple locations. The invention integrates biometrically
verified information from multiple locations, produces exception reports,
facilitates automated or discretionary decisions based on the information
obtained, and communicates and effects the decisions, all in real or delayed
time.
For example, without the client company having to purchase any hardware
or employ any computer personnel, the invention permits the identity of a tardy
employee of a client to be biometrically verified upon his seeking entry to a
company facility, his history of tardinesses; based upon the answers received,
use the information to effect his termination, lock him out of all company
locations, calculates his payoff salary and deductions, integrate the same into
job cost reports, and dispatch another qualified employee to the subject
location.
The application is pending. We may additionally file patent
applications in appropriate other countries based upon the priority date of the
pending United States application. A patent application does not in and of
itself grant exclusive rights. A patent application must be reviewed by the
Patent Office of each relevant country prior to issuing as a patent and granting
exclusive rights.
In order to claim priority, a utility patent application must be filed
within the year. Currently, we expect to file a utility patent application by
March 1, 2000. In order for a patent to issue, the United States Patent and
Trademark Office must examine the application and determine that its claims meet
the criteria for patentability.
This technology was transferred to BioLynx.Com by written assignment
from the inventor Andrew Fitch-Wallish, one of our officers and a director, on
or about October 20, 1999. No royalties or payments remain due.
Trademarks. BioLynx.Com filed with the United States Patent and
Trademark Office application Serial No. 75/666,219 for a United States Trademark
registration for the term "BIOLYNX" on March 15, 1999. The application is
pending. The application itself does not in and of itself grant exclusive
rights. A trademark application must be reviewed by the Trademark Office prior
to issuing as a federal trademark registration. Additionally, we have common law
trademark rights in our "BIOLYNX" word mark and design marks.
Copyrights. BioLynx.Com has unregistered copyright rights in its
software, user manuals, and advertising materials. We are in the process of
obtaining copyright registrations upon our software. Our BioLynx.Com software,
which runs our time and attendance business, is copyrighted.
Rapid Technological Change Could Render Our Products Obsolete
Our markets are characterized by rapid technological changes, frequent
new product introductions and enhancements, uncertain product life cycles,
changes in client requirements, and evolving industry standards. The
introduction of new products embodying new technologies and the emergence of new
industry standards could render our existing products obsolete. Our future
success will depend upon our ability to continue to develop and introduce a
variety of new products and product enhancements to address the increasingly
sophisticated needs of
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<PAGE>
our clients. We may experience delays in releasing new products and product
enhancements in the future. Material delays in introducing new products or
product enhancements may cause clients to forego purchases of our products and
purchase those of our competitors.
Our Products May Contain Undetected Software Errors
Our software products are complex and may contain undetected errors. We
have previously discovered and corrected software errors in some of the products
that we have developed. Despite testing, we cannot be sure that errors will not
be found in current versions, new versions or enhancements of our products after
commencement of commercial shipments. These undetected errors could result in
adverse publicity, loss of revenues, delay in market acceptance or claims
against us by clients, all of which could seriously damage our business,
operating results, and financial condition.
Adequacy of Working Capital
While we, through this offering, will raise what we feel is sufficient
working capital for the foreseeable future, the resulting working capital to be
available to us could be insufficient to enable us to continue to develop our
strategies for the marketplace.
We May Be Unable to Enforce or Defend Our Ownership and Use of Proprietary
Technology
Our success depends to a significant degree upon our proprietary
technology. Companies in the software industry have experienced substantial
litigation regarding intellectual property. We rely on a combination of
trademark, trade secret and copyright law, and contractual restrictions and
passwords to protect our proprietary technology. However, these measures provide
only limited protection, and we may not be able to detect unauthorized use or
take appropriate steps to enforce our intellectual property rights, particularly
in foreign countries where the laws may not protect our proprietary rights as
fully as in the United States. Any litigation to enforce our intellectual
property rights would be expensive and time consuming, would divert management
resources, and may not be adequate to protect our business.
We could be subject to claims that we have infringed the intellectual
property rights of others. In addition, we may be required to indemnify our
distribution partners and end-users for similar claims made against them. Any
claims against us could require us to spend significant time and money in
litigation, pay damages, develop new intellectual property or acquire licenses
to intellectual properties that are the subject of the infringement claims.
These licenses, if required, may not be available on acceptable terms. As a
result, intellectual property claims against us could have a material adverse
effect on our business, operating results, and financial condition.
We May Become Subject to Product Liability Claims
Because our products provide critical database access, integration, and
management functions, we may receive significant liability claims if our clients
believe that our products have failed to perform their intended functions. Our
agreements with clients typically contain provisions intended to limit our
exposure to liability claims. These contract provisions may not preclude all
potential claims. Liability claims could require us to spend significant time
and money in litigation or to pay significant damages. As a result, any claims,
whether or not successful, could have a material adverse effect on our
reputation and business, operating results and financial condition.
Our Financial Results May Be Affected by Factors Outside of Our Control
Our future operating results may vary significantly from quarter to
quarter due to a variety of factors, many of which are outside our control. Our
expense levels are based primarily on our estimates of future revenues and are
largely fixed. We may be unable to adjust spending rapidly enough to compensate
for any unexpected revenues shortfall. Accordingly, any significant shortfall in
revenues in relation to our planned expenditures would materially adversely
affect our business, operating results, and financial condition.
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<PAGE>
Due to those factors, we cannot predict with certainty our quarterly
revenues and operating results. Further, we believe that period-to-period
comparisons of our operating results are not necessarily a meaningful indication
of future performance. It is likely that in one or more future quarters our
results may fall below the expectations of securities analysts and investors. If
this occurs, the trading price of our common stock would likely decline.
Competition
BioLynx.Com competes in markets that are intensely competitive and
characterized by rapidly changing technology and evolving standards. Our
competitors are diverse and offer a variety of solutions directed at various
segments of the employee leasing markets, as well as those entities interested
in our time and attendance systems. BioLynx.Com has experienced, and expects to
continue to experience, increased competition from current and potential
competitors, many of whom have greater name recognition, a larger client base
and significantly greater financial, technical, marketing, and other resources
than BioLynx.Com.
BioLynx.Com faces competition from:
. Other business applications vendors who may internally develop, or
attain through acquisitions and partnerships, a similar software
solution provided by BioLynx.Com.
. Internal development efforts by corporate information technology
departments.
. New entrants to the payroll services market, especially those
utilizing biometrics.
. New entrants in the employee leasing business.
Some of our major competitors include ADP, Kronos, Robert Half
International, Inc., Administaff, Inc., and Staff Leasing, Inc. All of these
companies are engaged in either the employee leasing business, use biometric
ingress and egress equipment, or time and attendance linked software. However,
none of these companies provide time and attendance as a service without tying
it to their payroll or leasing activities, or without a large capital outlay for
the purchase of equipment.
For example, the core business and main profit center for many of our
competitors is the processing of payroll, the printing of checks, and or the
leasing of employees. Therefore, those companies usually only pursue the
business of collecting time record via "punch" data as an added value, and cost,
to their main services. Although we also provide the same main services as
several of our competitors, we also offer the collection of time records as an
individual service. This option allows our clients who process their own payroll
and hire their own employees to outsource the collection of time records.
Additionally, we alleviate the capital outlay required by several of
our competitors. Although we do charge a service charge for the utilization of
our time and attendance system, our clients are provided the equipment necessary
to use our service free of charge during the length of their contract. In
addition to installing the biometric devices and the necessary networking
equipment free of charge, we will also provide reasonable maintenance of the
system and train the client's employees in the use of the equipment and software
without the additional fees charged by several of our competitors.
Our competitors may be able to respond more quickly to new or emerging
technologies and changes in client requirements or devote greater resources to
the development, promotion and sale of their products than we can. Increased
competition could result in price reductions, fewer client orders, reduced gross
margins, longer sales cycles and loss of market share, any of which would
materially and adversely affect our business, operating results, and financial
condition.
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Employees
Currently, we have nine employees, including two in sales, four in
research and development, two in finance and administration, and one in client
services. As we grow, we will need to attract additional qualified employees.
Although we have experienced no work stoppages and believe our relationships
with our employees are good, we could be unsuccessful in attracting and
retaining the persons needed. None of our employees are represented by a labor
union.
Facilities
We lease from John D. Walker II approximately 2,650 square feet of
office space in San Antonio, Texas for an annual rental of approximately
$36,000. The lease expires in November 2001. We believe that our facilities are
adequate for our current operations.
Litigation
We are not engaged in any litigation, and we are unaware of any claims
or complaints that could result in future litigation. We will seek to minimize
disputes with our clients but recognize the inevitability of legal action in
today's business environment as an unfortunate price of conducting business.
MANAGEMENT
Executive Officers and Directors
The following table sets forth information concerning the directors and
executive officers of BioLynx.Com as of January 18, 2000:
<TABLE>
<CAPTION>
Name Age Position Director Since
---- --- -------- --------------
<S> <C> <C> <C>
John D. Walker II 55 Chairman of the Board 1999
Reagan E. Hicks 26 President, Chief Executive Officer, 2000
and Director
Patrick E. Tolle 46 Vice President, Chief Operating Officer, 1999
Secretary, Treasurer, and Director
Andrew Fitch-Wallish 28 Vice President and Director 1999
Barbara A. Bean 52 Chief Financial Officer 1999
Louis A. Ross, Ph.D. 63 Director 1999
Wren Alexander 44 Director 1999
</TABLE>
Officers are elected annually by the directors. There are no family
relationships among the directors and officers of BioLynx.Com. See "Description
of Securities - Additional Corporate Governance and Takeover Related Matters"
for the manner of election and term of office of our directors.
We may employ additional management personnel as our board deems
necessary. BioLynx.Com has not identified or reached an agreement or
understanding with any other individuals to serve in management positions, but
does not anticipate any problem in employing qualified staff.
A description of the business experience during the past several years
for each of the directors and executive officers of BioLynx.Com is set forth
below.
John D. Walker II has over 10 years experience in employee leasing.
From 1989 until 1997, he owned and operated Regional Management, Inc., a Texas
employee leasing company. Under Mr. Walker's direction, Regional
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Management grew from an entry level company in the relatively new industry of
employee leasing into a successful company with annual revenues in excess of
$100 million. In July 1997, he sold Regional Management to Advanced Management
Services, Inc. In 1998, he reentered the employee leasing industry by founding
Alamo Commercial Group, Inc. By controlling growth and focusing on lower risk
clients, he developed Alamo Commercial into a successful employee leasing
business with annual revenues in excess of $30 million.
Reagan E. Hicks has over six years experience in starting, managing,
and growing businesses. His area of expertise is in the technology and service
sectors. Prior to joining BioLynx.Com, he was employed with ATX Technologies, a
Texas based corporation, since 1994. During his tenure with ATX Technologies,
Mr. Hicks was extensively involved in day to day operations and in developing
new and innovative sales and distribution channels. In addition to being a co-
founder of ATX Technologies, he held positions including national sales manager
and director of competitive research. Most recently, as director of wireless
business development, Mr. Hicks was responsible for developing strategic
business relationships with various location enabled handset manufacturers and
handset assist network location hardware manufacturers. Mr. Hicks attended San
Antonio College prior to joining ATX Technologies.
Patrick E. Tolle has over 20 years experience in information systems.
This experience includes expertise in various fields, including research and
development and systems engineering. From 1995 until 1998, before joining
BioLynx.Com, he was a manager of information systems with Alcoa Fujikura, Ltd.
in San Antonio, Texas. During his four years with Alcoa, he managed over 50
employees and was responsible for LAN/WAN design implementation and support.
Prior to Alcoa, he was employed with IBM for over 15 years. At IBM, he served as
an operations manager, managing technical personnel, project management and
consulting. Mr. Tolle has also completed various technical and marketing classes
offered by IBM.
Andrew Fitch-Wallish has worked for eight years in the field of
software development. During this time, he has built enterprise class client
server and Internet systems utilizing a variety of technologies including hand
held computers, infrared communication, n-tier architecture, distributed
architecture, virtual reality and Java. Most recently, he worked as an
independent contractor creating websites and developing a litigation management
system for a large group of bankruptcy attorneys. From 1991 through 1998, he
worked as an internet/intranet coordinator for Kinetic Concepts, Inc., a medical
manufacturing company. His experience in that position included developing and
maintaining a company intranet, developing browser based applications, and
coordinating the Kinetic Concepts' web development. In 1991, Mr. Fitch-Wallish
earned a Bachelors Degree in Computer Science from Carroll College. He has been
published in WebReview magazine, and speaks 20 programming languages. He chairs
the San Antonio, Texas chapter of the International Webmasters Association.
Barbara A. Bean currently serves as Chief Financial Officer of
BioLynx.Com as well as United Capital Investment Group, Inc., an affiliate of
John D. Walker II. From 1995 through August 1999, she was the Business Manager
of H. J. Group/Bufete Independent Joint Venture. During that time, she managed
the accounting department and was involved in major business and public
relations decisions. Additionally, she was involved in writing and reviewing
technical contracts. From May 1985 to May 1997, she was the president of the
Board of Trustees of the East Central Independent School District, where she was
responsible for the management of the school system's $45,000,000 budget. Ms.
Bean holds a Bachelor of Business Administration from the University of Texas at
San Antonio.
Louis A. Ross, Ph.D., has broad management and corporate development
experience in the petrochemical and thermoplastics industries derived from 30
years of increasingly responsible positions in technical, development,
commercial and operating functions. He is skilled in business unit management,
strategic planning budgeting and project management. Dr. Ross received a
Bachelor of Science degree from Loyola University, Chicago in 1957. He received
his Ph.D. in inorganic chemistry in 1962 from Indiana University and studied at
Harvard University Graduate School of Business in 1975 in its program for
Management Development.
Wren Alexander has spent his entire business career in the commercial
banking and mortgage businesses. Since 1990, he has been president of Alpha
Mortgage, Inc. in San Antonio, Texas. Prior to working for Alpha Mortgage, Mr.
Alexander was a real estate loan officer for American Savings. During his 20
years of banking experience, Mr. Alexander has also worked as a commercial loan
officer and as a branch manager for several banks in the San Antonio, Texas
area. Mr. Alexander received a Bachelor of Business Administration in Finance
degree
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from the University of Texas at Austin in 1977. In addition, he also attended
the Texas Tech University School of Banking Advanced Program in 1979.
We have two other significant employees, Charles E. Pircher, Director
of Strategic Planning, and Margaret A. Rice, Director of Training. Mr. Pircher
has over 20 years experience in sales and management, including insurance sales
and district management with Massachusetts Mutual Life Insurance Company, where
he was a consistent multi-million dollar producer. Ms. Rice joined us in
September 1999 as our corporate trainer. She has extensive experience in various
hardware and software applications. Ms. Rice has owned her own software training
and consulting firm, and was a contractor to a major San Antonio, Texas software
training provider.
Committees of the Board of Directors
The board of directors has created a compensation committee and an
audit committee. The compensation committee makes recommendations to the board
of directors concerning salaries and compensation for BioLynx.Com's officers and
employees and administers our 1999 Stock Incentive Compensation Plan. The
members of the compensation committee are Messrs. Walker, Ross and Alexander.
Mr. Alexander is the chairman of the compensation committee. The audit committee
makes recommendations to the board of directors regarding the selection of
independent auditors, reviews the results and scope of audits and other
accounting related services, and reviews and evaluates BioLynx.Com's internal
control functions. The members of the audit committee are Messrs. Ross and
Alexander. Dr. Ross is the chairman of the audit committee.
Executive Compensation
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------------- ------------------------------
Securities
Underlying
Name and Principal Fiscal All Other Options and
Position Year Salary Bonus Compensation Warrants
-------- ------ ------ ----- ------------ --------
<S> <C> <C> <C> <C> <C>
John D. Walker II, Chairman 1999 $208,000 -0- -0- -0-
Reagan E. Hicks, President 1999 $ -0- -0- -0- -0-
and Chief Executive Officer
Patrick E. Tolle, Vice 1999 $ 98,600 -0- -0- -0-
President, Chief Operating
Officer, Secretary and
Treasurer
Andrew Fitch-Wallish, Vice 1999 $ 85,276 -0- -0- -0-
President
</TABLE>
In 1999, $68,000 of John D. Walker II's salary was paid by an
affiliated company owned by Mr. Walker, with $140,000 being paid by BioLynx.Com.
Mr. Hicks replaced Mr. Walker as our president and chief executive officer on
January 15, 2000 at an annual salary of $145,600. In addition, Mr. Hicks was
granted an option covering 100,000 shares of our common stock. See "- Stock
Options" below.
Employment Contracts
BioLynx.Com has entered into employment contracts with all of our
officers and other key personnel. Currently, BioLynx.Com has employment
agreements with the following individuals: John D. Walker II, Reagan E. Hicks,
Patrick E. Tolle, Andrew Fitch-Wallish, Charles E. Pircher, Gregory W.
Schlather, Larry Roy, Barbara A. Bean, and Margaret A. Rice. Each employment
agreement provides that:
. The employee shall be paid a monetary compensation in return for the
employee's faithful performance.
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<PAGE>
. All proprietary items and inventions developed by the employee, or
in conjunction with other employees, shall belong to BioLynx.Com.
. The employee shall not, for a period of two years following the
termination of the employee's employment with BioLynx.Com, engage in
the business of developing, publishing, or marketing of products in
direct competition with BioLynx.Com anywhere within BioLynx.Com's
trade territory.
. A confidentiality agreement prohibiting the disclosure to any third
party of any confidential information received from BioLynx.Com.
Although each employment contract contains a non-compete clause, a
state court could determine that the provision is against public policy and
refuse to enforce the clause, either partially or entirely.
Director Compensation
We do not currently compensate our directors for their services as
directors, although we may consider doing so in the future.
Stock Options
BioLynx.Com anticipates reserving warrants or options for future
issuance to our senior management, employees, and consultants as incentive
compensation for services to be rendered in connection with their efforts on our
behalf. In that regard, our board of directors and shareholders have adopted our
1999 Stock Incentive Compensation Plan. We have reserved 250,000 shares of the
common stock for issuance under the plan. Of the reserved shares, our board of
directors recently granted an option for 100,000 shares of our stock to Reagan
E. Hicks. Under the terms of Mr. Hick's option, his interest in the shares
covered by the option will vest at a rate of 25 percent for each year of
employment he completes with us. Once vested, he may exercise the option, in
whole or in part and purchase shares of our common stock, at an exercise price
of $4.00 per share. Mr. Hick's option agreement will expire on December 31,
2005. The remaining options under our plan will be issued on a case-by-case
basis. We reserve the right to issue the options from time to time, in amounts,
as we may, in our sole discretion, deem advisable.
The exercise price for shares purchased under an option shall be as
determined by the plan administrator, but shall not be less than 100 percent of
the fair market value of the common stock on the grant date. The term of each
option shall be as established by the plan administrator or, if not so
established, shall be 10 years from the grant date. The plan administrator shall
establish and set forth in each instrument that evidences an option the time at
which or the installments in which the option shall vest and become exercisable,
which provisions may be waived or modified by the plan administrator at any
time. If not so established in the instrument evidencing the option, the option
will vest and become exercisable over a schedule of four years, which may be
waived or modified by the plan administrator at any time. The exercise price for
shares purchased under an option shall be paid in full to BioLynx.Com by
delivery of consideration equal to the product of the option exercise price and
the number of shares purchased.
CERTAIN TRANSACTIONS
Merger of BioLynx, Inc. and BioLynx.Com, Inc. On May 12, 1999, BioLynx,
Inc., a Texas corporation, under Section 368(a)(1)(A) of the Internal Revenue
Code of 1986, merged with and into BioLynx.Com, Inc. The surviving corporation
was BioLynx.Com, Inc. John D. Walker II was the sole shareholder of BioLynx,
Inc. Mr. Walker received 10 shares of our common stock for every share of the
common stock in BioLynx, Inc. held by him. At the time of the merger, Mr. Walker
was the only officer of BioLynx, Inc. The directors of BioLynx, Inc. were John
D. Walker II, Patrick E. Tolle, and Andrew Fitch-Wallish, three of our current
directors. As a result of the merger, the separate existence of BioLynx, Inc.
ceased and BioLynx.Com, Inc. succeeded, without other transfer, to all the
rights and properties of BioLynx, Inc., and became subject to all the debts and
liabilities of BioLynx, Inc. in the same manner as if BioLynx.Com, Inc. had
itself incurred them. All rights of creditors and all liens upon the property of
each constituent corporation was preserved unimpaired, limited in lien to the
property affected by the liens immediately prior to the merger. Mr. Walker is
the promoter of BioLynx, Inc., and Messrs. Walker, Tolle, and
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<PAGE>
Fitch-Wallish are the promoters of BioLynx.Com, Inc. In addition, Martex Trading
Co., Inc., R. F. Bearden, Inc., Texas Commercial Resources, Inc., and
Jazbermaine are promoters of BioLynx.Com. At the time of our organization,
Martex, Bearden, Texas Commercial, and Jazbermaine each purchased shares of our
common stock at the par value of $0.001 per share. Martex purchased 400,000
shares for $400, Bearden and Texas Commercial each purchased 37,500 shares for
$37.50, and Jazbermaine purchased 200,000 shares for $200. The sole shareholder
of Martex is Unicorp, Inc., a Nevada corporation quoted on the OTC Bulletin
Board.
Acquisition of BioLynx Outsource Services, Inc. On December 31, 1999,
BioLynx.Com purchased from United Capital Investment Group, Inc., an affiliate
of John D. Walker II, all of the common stock of BioLynx Outsource Services,
Inc. owned by United Capital. BioLynx Outsource Services is an employee leasing
firm which is 100 percent owned by United Capital. In exchange for the BioLynx
Outsource Services stock, BioLynx.Com delivered to United Capital 1,446,347
shares of our convertible preferred stock with a liquidation privilege equal to
its face amount, and bearing an eight percent non-cumulative dividend. The
preferred stock will, at the holder's option, be convertible into BioLynx.Com's
common stock at the rate of the liquidation privilege, together with any
declared but unpaid dividends, divided by $3.30 per share of common stock. As a
result of the acquisition, BioLynx Outsource Services is a wholly-owned
subsidiary of BioLynx.Com. Mr. Walker and his affiliated company, United Capital
Investment Group, Inc., are the promoters of BioLynx Outsource Services,
Inc.
Our primary reasons for the acquisition of BioLynx Outsource Services
were:
. Revenue and Profit Generation. BioLynx Outsource Services is
expected to generate substantial revenue and net profits through its
employee leasing business which will be reflected in our
consolidated income statement.
. BioLynx Outsource Services is a natural fit for the marketing of our
services.
. Cross selling of our respective services.
. BioLynx Outsource Services has over 350 current or former client
companies.
The determination of the final consideration to be paid to United
Capital by BioLynx.Com for the purchase of the common stock of BioLynx Outsource
Services, Inc. was not a result of arms' length bargaining. Due to Mr. Walker's
interests in both United Capital and BioLynx.Com, there was a possibility of
inherent conflicts of interest in the transaction. Therefore, we arrived at our
determination of the consideration to be paid to United Capital using a
valuation equation utilized in comparable transactions in the employee leasing
industry. Initially, we determined the average weekly gross profits of BioLynx
Outsource Services over a four week period. Then, we multiplied that figure by
78 in order to arrive at the final purchase price, which is equal to the number
of shares of our preferred stock issued to United Capital.
Acquisition of Employee/Customer Base of Alamo Commercial Group, Inc.
On December 31, 1999, BioLynx Outsource Services, Inc. purchased from Alamo
Commercial Group, Inc., wholly-owned by John D. Walker II, all of its leased
employees, together with all contracts to furnish services and leasing. In
exchange for the leased employees and the contracts of Alamo Commercial,
BioLynx.Com delivered to Alamo Commercial 3,605,535 shares of our convertible
preferred stock with a liquidation privilege equal to its face amount, and
bearing an eight percent non-cumulative dividend. The preferred stock will be
convertible, at Alamo Commercial's option, into common stock of BioLynx.Com at
the rate of liquidation privilege, with any declared but unpaid dividends,
divided by $3.30 per share of common stock. The primary reason for this
acquisition was to give us a ready-made client base for our employee leasing
business.
Due to the potential conflict of interest resulting from Mr. Walker's
interest in both Alamo Commercial and BioLynx.Com, we arrived at the purchase
price for Alamo Commercial's leased employees and contracts in the same manner
as we determined the purchase price for the common stock of BioLynx Outsource
Services, Inc. Mr. Walker is the promoter of Alamo Commercial Group, Inc.
Conversion of Preferred Stock. If any of the issued shares of
convertible preferred stock discussed above were converted into shares of our
common stock, the effective dollar cost per share of the converted common
stock
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would be $3.30. This results in an effective cost of $0.70 per share less than
the public offering price. However, the effective cost per share of the common
stock is only $0.04 less than the net proceeds to be received by us for shares
of common stock sold to the public in this offering.
PRINCIPAL STOCKHOLDERS
The following table presents information regarding the beneficial
ownership of all shares of the common stock at January 18, 2000 by:
. each person who owns beneficially more than five percent of the
outstanding shares of the common stock;
. each director of BioLynx.Com;
. each named executive officer; and
. all directors and officers as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-----------------------------
Name of Beneficial Owner Number Percent
------------------------ --------- -------
<S> <C> <C>
John D. Walker II................................................ 3,753,986 55.26
Reagan E. Hicks.................................................. 50,000 0.74
Patrick E. Tolle................................................. 450,000 6.62
Andrew Fitch-Wallish ............................................ 300,000 4.42
Louis A. Ross, Ph.D.............................................. 10,000 0.15
Wren Alexander................................................... 100,000 1.47
All directors and officers
as a group (six persons)....................................... 4,663,986 68.66
Martex Trading Co., Inc.......................................... 400,000 5.89
</TABLE>
Unless otherwise indicated, each person named in the table above has
the sole voting and investment power with respect to his shares of the common
stock beneficially owned. The business address of each individual is the same as
the address of BioLynx.Com's principal executive offices, except for Martex
Trading Co., Inc., whose address is 1800 Bering Drive, Suite 400, Houston, Texas
77057.
Some of the shares shown as being owned by Mr. Walker are actually
owned by United Capital Investment Group, Inc., a company wholly-owned by Mr.
Walker, which owns 1,650,000 shares, and several members of Mr. Walker's family
which own, in the aggregate, 237,500 shares. Additionally, 1,530,873 of the
shares included as being owned by Mr. Walker actually represent the shares of
our common stock that could be received by United Capital and Alamo Commercial
Group upon the conversion, at any time, of the outstanding shares of our
preferred stock issued to them in our recent acquisitions.
Registration Rights Agreements
On May 7, 1999, BioLynx.Com executed a registration rights agreement
with each of R. F. Bearden Associates, Inc., Texas Commercial Resources, Inc.,
and Jazbermaine. In addition, the shares of our common stock issued to John D.
Walker II as a result of his election to convert our convertible subordinated
debenture are governed by a registration rights agreement executed on April 16,
1999. Likewise, on April 16, 1999, BioLynx.Com and Aurora Financial Services,
L.L.C. executed a registration rights agreement covering the 20,000 shares of
the common stock that Aurora received in connection with a private placement of
our common stock. Finally, on November 19, 1999, BioLynx.Com executed a
registration rights agreement with Sabinal Trust. Each agreement provides the
following:
. The right to "piggyback" on a firm commitment underwritten offering
with respect to our common stock.
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. If the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the
managing underwriter may limit some or all of the shares that may be
included in the registration.
. BioLynx.Com agrees to use its best lawful efforts to make and keep
public information available, as those terms are understood and
defined in Rule 144 of the Securities Act at all times during which
BioLynx.Com is subject to the reporting requirements of the
Securities Exchange Act of 1934, the "Exchange Act," and file with
the SEC in a timely manner all reports and other documents required
of BioLynx.Com under the Securities Act and the Exchange Act.
. All expenses, except for any underwriting and selling discounts and
commissions and legal fees for the shareholder's attorneys, will be
paid by BioLynx.Com.
. Each party agrees to indemnity and hold harmless the other against
any and all claims, demands, losses, costs, expenses, obligations,
liabilities, joint or several, damages, recoveries and deficiencies,
including interest, penalties and attorneys' fees, to which a party
may become subject under the Securities Act as a result of any
untrue statement or alleged untrue statement of any material fact.
DESCRIPTION OF SECURITIES
The following is a summary of the material provisions of BioLynx.Com's
articles of incorporation, the "articles," and bylaws, the "bylaws," as they are
currently in effect, but may not contain all of the information that is
important to you. The rights described below are subject to any rights that may
be granted to any holder of preferred shares.
Capital Stock
The authorized capital stock of BioLynx.Com consists of 50,000,000
shares of common stock, par value $0.001 per share, and 20,000,000 shares of
preferred stock, par value $1.00 per share. As of January 18, 2000, there were
5,262,213 shares of the common stock issued and outstanding, while 5,051,882
shares of the preferred stock were issued or outstanding. In addition,
BioLynx.Com has reserved an adequate number of shares of our common stock in
anticipation of issuance of shares under the various agreements discussed in
this prospectus.
The following description of specific matters relating to the common
stock and the preferred stock is a summary and is qualified in its entirety by
the provisions of our articles and bylaws.
Common Stock. The holders of the common stock are entitled to one vote
per share on all matters submitted to a vote of our shareholders. The holders of
the common stock have the sole right to vote, except as otherwise provided by
law or by our articles, including provisions governing any shares of the
preferred stock. In addition, our shareholders are entitled to receive ratably,
dividends, if any, as may be declared from time to time by our board of
directors out of legally available funds, subject to the payment of preferential
dividends with respect to any shares of the preferred stock that from time to
time may be outstanding. In the event of the dissolution, liquidation or winding
up of BioLynx.Com, the holders of the common stock are entitled to share ratably
in all assets remaining after payment of all liabilities of BioLynx.Com and
subject to the prior distribution rights of the holders of any shares of the
preferred stock that may be outstanding at that time.
The holders of the common stock do not have cumulative voting rights or
preemptive rights to acquire or subscribe for additional, unissued or treasury
shares in accordance with the laws of the State of Texas. Accordingly, the
holders of more than 50 percent of the issued and outstanding shares of the
common stock voting for the election of directors can elect all of the directors
if they choose to do so, and in that event, the holders of the remaining shares
of the common stock voting for the election of the directors will be unable to
elect any person or persons to the board of directors. All outstanding shares of
the common stock are fully paid and nonassessable.
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The laws of the State of Texas provide that the affirmative vote of
two-thirds (2/3) of the holders of the outstanding shares of the common stock is
required to authorize any amendment to our articles, any merger or consolidation
of BioLynx.Com with any corporation, or any liquidation or disposition of any
substantial assets of BioLynx.Com.
A Public Market for Our Common Stock May Be Uncertain. Prior to this
offering, there has been no public market for our common stock. The initial
public offering price of $4.00 per share for our common stock was arbitrarily
determined by BioLynx.Com, and you may be unable to resell your shares at or
above that initial offering price. Although the offering price is based on what
we regard the shares to be worth, the offering price should not be considered an
indication of the actual value of the securities. After this offering, the
market price of our common stock may be subject to significant fluctuations in
response to numerous factors, including:
. Variations in our annual or quarterly financial results or those of
our competitors.
. Changes by financial research analysts in their estimates of our
earnings or our failure to meet the estimates.
. Conditions in the economy in general or in the software and other
technology industries.
. Announcements of key developments by competitors.
. Loss of key personnel.
. Unfavorable publicity affecting our industry or us.
. Adverse legal events affecting us.
. Sales of BioLynx.Com common stock by existing shareholders.
From time to time, the stock market experiences significant price and
volume fluctuations, which may affect the market price of our common stock for
reasons unrelated to our performance. Recently, volatility has particularly
impacted the stock prices of publicly traded technology companies. In the past,
securities class action litigation has been instigated against companies
following periods of volatility in the market price of the companies'
securities. If similar litigation were instituted against us, it could result in
substantial costs and a diversion of our management's attention and resources,
which could have an adverse effect on our business.
We have applied to list the common stock on the American Stock
Exchange. The AMEX listing does not, however, guarantee that a trading market
will develop, or, if a market does develop, the depth of the trading market for
the common stock.
Existing Shareholders May Sell Their Common Stock. If any of our
holders of common or preferred stock, options, or warrants sell substantial
amounts of our common stock in the public market following this offering, the
market price of our common stock could fall. A substantial number of sales, or
the perception that sales might occur, also might make it more difficult for us
to sell equity or equity related securities in the future at a time and price
that we deem appropriate. See "Certain Transactions" and "Principal
Stockholders."
Preferred Stock. The board of directors is authorized, without action
by the holders of the common stock, to provide for the issuance of the preferred
stock in one or more series, to establish the number of shares to be included in
each series and to fix the designations, powers, preferences and rights of the
shares of each series and the qualifications, limitations, or restrictions of
each series. This includes, among other things, voting rights, conversion
privileges, dividend rates, redemption rights, sinking fund provisions and
liquidation rights which shall be superior to the common stock. The issuance of
one or more series of the preferred stock could adversely affect the voting
power of the holders of the common stock and could have the effect of
discouraging or making more difficult any attempt by a person or group to attain
control of BioLynx.Com. The holders of the preferred stock do
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not have cumulative voting rights or preemptive rights to acquire or subscribe
for additional, unissued or treasury shares.
Currently, our board of directors has issued one series of preferred
stock, which consists of 5,051,882 shares. The relative rights and preferences
of the preferred sock is as follows:
. The holders of outstanding shares of the preferred stock shall be
entitled to receive, out of our legally available assets, cash
dividends equal to eight percent of the stated value of the
preferred stock, payable quarterly on the last day of March, June,
September and December of each year. All dividends payable on the
preferred stock shall be non-cumulative.
. The preferred stock shall not have redemption rights.
. Upon the dissolution, liquidation or winding up of BioLynx.Com,
whether voluntary or involuntary, the holders of the shares of
outstanding preferred stock will be entitled to receive, out of our
assets, $1.00 per share before any payment or distribution shall be
made on our common stock or any other class of our capital stock
ranking junior to the preferred stock.
. After the payment to the holders of shares of the preferred stock of
the full preferential amounts for shares of the preferred stock, the
holders of the preferred stock shall have no right or claim to any
of our remaining assets.
. In the event our assets available for distribution to the holders of
the preferred stock upon dissolution, liquidation or winding up of
BioLynx.Com are insufficient to pay in full all amounts to which the
holders of the preferred stock are entitled, no distribution shall
be made on account of any shares of a class or series of our capital
stock ranking on a parity with the shares of the preferred stock, if
any, upon a dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the
shares of the preferred stock, ratably, in proportion to the full
distributive amounts for which holders of all parity shares are
respectively entitled upon a dissolution, liquidation or winding up.
. At the option of the holders of the preferred stock, shares of the
preferred stock shall be convertible into shares of our common stock
at the rate of $1.00 per share, together with any declared but
unpaid dividends, divided by $3.30 per share of common stock.
. The holders of shares of the preferred stock do not have any
preemptive or preferential rights to purchase or subscribe to any
shares of any class of our capital stock.
. The holders of shares of the preferred stock have no voting rights
except as provided by law.
Warrant
On October 6, 1999, we issued to Travis Morgan Securities, Inc. our
warrant for the purchase of 50,000 shares of our common stock at a purchase
price of $1.00 per share. The warrant was issued in connection with our private
placement of our shares which closed on November 24, 1999. The warrant was
designed to compensate Travis Morgan for its services in the private placement
of our shares. The warrant expired on November 5, 1999 without being exercised,
and consequently, no shares were issued. On December 1, 1999, we issued to
Travis Morgan our warrant for the purchase of 7,500 shares of our common stock
at a purchase price of $1.00 per share,
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<PAGE>
which expires on March 31, 2000. The warrant was designed to compensate Travis
Morgan Securities, Inc. for its additional services in the private placement of
our shares, which closed on November 24, 1999.
Certain Provision of the Articles of Incorporation and Bylaws
General. A number of provisions of our articles and bylaws concern
matters of corporate governance and the rights of shareholders. Some of these
provisions, as well as the ability of our board of directors to issue shares of
the preferred stock and to set the voting rights, preferences and other terms of
the preferred stock, may be deemed to have an anti-takeover effect and may
discourage takeover attempts not first approved by the board of directors. Those
provisions may also discourage takeover attempts which some shareholders may
deem to be in their best interests. To the extent takeover attempts are
discouraged, temporary fluctuations in the market price of the common stock,
which may result from actual or rumored takeover attempts, may be
inhibited.
Other provisions of our articles and bylaws, together with the ability
of the board of directors to issue preferred stock without further shareholder
action, also could delay or frustrate the removal of incumbent directors or the
assumption of control by the shareholders, even if the removal or assumption
would be beneficial to the shareholders of BioLynx.Com. These provisions also
could discourage or make more difficult a merger, tender offer or proxy contest,
even if they could be favorable to the interests of the shareholders, and could
potentially depress the market price of the common stock. The board of directors
believes that these provisions are appropriate to protect the interests of
BioLynx.Com and all of its shareholders.
Meetings of Shareholders. The articles provide that a special meeting
of the shareholders may be called only by:
. the president;
. the holders of at least 10 percent of all of the shares entitled to
vote at the proposed special meeting; or
. the board of directors under a resolution adopted by a majority of
the then authorized number of directors of BioLynx.Com.
Special shareholder meetings may not be called by any other person or
persons or in any other manner. Our bylaws provide that only those matters set
forth in the notice of the special meeting may be considered or acted upon at
the special meeting. Our articles do not permit actions to be taken by written
consent, unless approved by the board of directors.
The first annual meeting of our shareholders will be held in 2000, on a
date and at a place and time designated by the board.
Indemnification and Limitation of Liability. Our articles provide that
any person who at any time shall serve or shall have served, as a director,
officer, employee, or agent of BioLynx.Com, or of any other enterprise at the
request of BioLynx.Com, and the heirs, executors, and administrators of the
person, shall be indemnified by us against all costs reasonably incurred in
connection with the defense of any claim, action, suit, or proceeding, whether
civil, criminal, administrative, or other, in which he may be involved by virtue
of that person being or having been a director, officer, employee, or agent,
provided, however, that the indemnity shall not be operative with respect
to:
. Any matter as to which the person shall have been finally adjudged
in the action, suit, or proceeding to be liable for negligence or
misconduct in the performance of his duties as a director, officer,
employee, or agent; or
. Any matter settled or compromised, unless in the opinion of
independent counsel selected by or in a manner determined by the
board of directors, there is not reasonable ground for the person
being adjudged liable for negligence or
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<PAGE>
misconduct in the performance of his duties as a director, officer,
employee, or agent; or
. Any amount paid or payable to BioLynx.Com or another
enterprise.
Costs and expenses which may be covered by the indemnity include, but
are not limited to, counsel fees, amounts or judgments paid, and amounts paid in
settlement. This indemnification shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any bylaw, agreement,
vote of shareholders, or otherwise. By its terms, and in accordance with
applicable state law, however, this provision does not eliminate or limit the
liability of a director of BioLynx.Com for any breach of duty based upon an act
or omission:
. involving appropriation in violation of duty of any business
opportunity of BioLynx.Com;
. involving acts or omissions that are not in good faith or which
involve intentional misconduct or a knowing violation of the law; or
. involving unlawful distributions or transactions from which the
director derived an improper personal benefit.
Our bylaws contain similar indemnification and limitation of liability
provisions. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, or persons controlling
BioLynx.Com under the indemnification provisions, or otherwise, BioLynx.Com is
aware that, in the opinion of the SEC, the indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
Amendment of Bylaws. The articles provide that the bylaws may be
amended either:
. by the board of directors by the affirmative vote of at least a
majority of the then authorized number of directors; or
. by the shareholders by the affirmative vote of the holders of at
least two-thirds (2/3) of the combined voting power of the then
outstanding voting shares of the capital stock of BioLynx.Com,
voting together as a single class.
Certain Effects of Authorized but Unissued Stock
Until the issuance of all of the shares of the common stock offered,
and covered by our 1999 Stock Incentive Compensation Plan, our authorized but
unissued capital stock will consist of approximately 44,737,787 shares of the
common stock and 14,948,118 shares of the preferred stock. One of the effects of
the authorized but unissued capital stock may be to enable our board to render
more difficult or to discourage an attempt to obtain control of BioLynx.Com by
means of a tender offer, proxy contest or otherwise, and thereby to protect the
continuity of BioLynx.Com's management. If, in the due exercise of its fiduciary
obligations, for example, the board were to determine that a takeover proposal
was not in BioLynx.Com's best interests, shares of our capital stock could be
issued by the board without shareholder approval in one or more private or
public offerings or other transactions.
The effect of issuing more shares might prevent or render more
difficult or costly the completion of the proposed takeover transaction by
diluting the voting or other rights of the proposed acquirer or insurgent
shareholder or shareholder group, by creating a substantial voting block of
institutional or other investors that might undertake to support the position of
the incumbent board, by effecting an acquisition that might complicate or
preclude the takeover, or otherwise. In this regard, our articles grant the
board broad power to establish the rights and preferences of the authorized, but
unissued preferred stock, one or more series of which would be issued entitling
holders to vote separately as a class on any proposed merger or consolidation,
to convert preferred stock into a larger number of shares of the common stock or
other securities, to demand redemption at a specified price under prescribed
circumstances related to a change in control, or to exercise other rights
designed to impede a takeover.
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The issuance of shares of the preferred stock at the board's authority
described above could decrease the amount of earnings and assets available for
distribution to holders of the common stock, and adversely affect the rights and
powers, including voting rights, of the holders and may have the effect of
delaying, deferring or preventing a change in control of BioLynx.Com. The board
of directors does not currently intend to seek shareholder approval prior to any
issuance of authorized, but unissued stock, unless otherwise required by
law.
Additional Corporate Governance and Takeover Related Matters
Board of Directors. The business and affairs of BioLynx.Com are managed
under the direction of our board, which consists of six members. The number of
directors that shall constitute the whole board shall be fixed by, and may be
increased or decreased from time to time by, the affirmative vote of a majority
of the members at any time constituting the board.
Newly created directorships resulting from any increase in the number
of directors and any vacancies on the board resulting from death, resignation,
disqualification, removal or other cause shall be filled 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. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until the director's successor shall have been elected and
qualified or until his earlier death, resignation or removal. No decrease in the
number of directors constituting the board of directors shall shorten the term
of any incumbent director. The board may not have fewer than one member.
Our board of directors is divided into three classes, Class A, Class B
and Class C. The classes are as nearly equal in number of directors as possible.
Each director shall serve for a term expiring at the third annual meeting
following the annual meeting at which the director was elected; provided,
however, that the directors first elected to Class A shall serve for an initial
term expiring at the annual meeting following the end of our 1999 fiscal year,
the directors first elected to Class B shall serve for an initial term expiring
at the second annual meeting next following the end of our 1999 fiscal year, and
the directors first elected to Class C shall serve for an initial term expiring
at the third annual meeting next following the end of our 1999 fiscal year. The
persons named as directors in this prospectus are all Class C directors.
Moreover, directors who are elected at an annual meeting of
shareholders, and directors elected in the interim to fill vacancies and newly
created directorships, shall hold office for the term for which elected and
until their successors are elected and qualified or until their earlier death,
resignation or removal. Whenever the holders of any class or classes of stock or
any series shall be entitled to elect one or more directors under any resolution
or resolutions of the board of directors designating a series of the preferred
stock, vacancies and newly created directorships of a class or classes or series
may be filled by a majority of the directors elected by a class or classes or
series then in office, by a sole remaining director so elected or by the
unanimous written consent or the affirmative vote of a majority of the
outstanding shares of the class or classes or series entitled to elect the
director or directors.
Any director may be removed from office only by the affirmative vote of
the holders of two-thirds (2/3) or more of the combined voting power of the then
outstanding shares of capital stock of BioLynx.Com entitled to vote at a meeting
of shareholders called for that purpose, voting together as a single class.
Nominations of persons for election to the board of directors may be
made at a meeting of the shareholders at which directors are to be elected:
. by or at the direction of the board of directors; or
. by any shareholder of BioLynx.Com who is a shareholder of record at
the time of the giving of notice, who shall be entitled to vote at
the meeting in the election of directors and who complies with the
requirements of the bylaws.
Nominations, other than those made by or at the direction of the board
of directors, shall be preceded by timely advance notice in writing to our
corporate secretary. To be timely, a shareholder's notice shall be delivered to,
or mailed and received at, the principal executive offices of BioLynx.Com:
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. with respect to an election to be held at the annual meeting of the
shareholders of BioLynx.Com, not later than the close of business on
the 90th day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that with respect to the annual
meeting of shareholders to be held in 2000 or in the event that the
date of the annual meeting is more than 30 days before or more than
60 days after the anniversary date, notice by the shareholder to be
timely must be so delivered not later than the close of business on
the later of the 90th day prior to the annual meeting or the 10th
day following the day on which public announcement of the date of
the meeting is first made by BioLynx.Com; and
. with respect to an election to be held at a special meeting of
shareholders of BioLynx.Com for the election of directors not later
than the close of business on the 10th day following the day on
which notice of the date of the special meeting was mailed to
shareholders of BioLynx.Com as provided in the bylaws or public
disclosure of the date of the special meeting was made, whichever
first occurs.
The presiding officer of the meeting of shareholders shall determine
whether the requirements of the bylaws have been met with respect to any
nomination or intended nomination. If the presiding officer determines that any
nomination was not made in accordance with the requirements of the bylaws, he
shall so declare at the meeting and the defective nomination shall be
disregarded. A shareholder is also required to comply with all applicable
requirements of the Exchange Act and the rules and regulations of the Exchange
Act with respect to the matters set forth in the bylaws regarding nominations of
persons as directors.
Anti-Takeover Effects. All of the provisions discussed in this section
might make it more difficult for someone to obtain control of us unless the
transaction is approved by our board. Some of these provisions could also make
it more difficult for a third party to replace our management or board without
the approval of our board of directors.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock will be American
Stock Transfer & Trust Company, Stock Transfer Department, 40 Wall Street, 46th
Floor, New York, New York 10005, telephone (212) 936-5100.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. Upon completion of this offering, there will be an aggregate of 5,787,213
shares of BioLynx.Com's common stock outstanding, assuming:
. the issuance of 500,000 shares of our common stock in this offering;
. the issuance of 25,000 shares of our common stock to Aurora
Financial Services, L.L.C. in consideration of its services in
connection with this offering;
. no conversion of the preferred stock issued to United Capital
Investment Group, Inc. and Alamo Commercial Group, Inc.;
. no exercise of the warrant in favor of Travis Morgan Securities,
Inc. covering 7,500 shares of our common stock.
Of the 5,787,213 shares, all of the 500,000 shares sold in this
offering will be freely transferable without restriction or limitation under the
Securities Act, unless purchased by "affiliates" of BioLynx.Com, as defined
under the Securities Act. The remaining 5,287,213 shares are "restricted shares"
within the meaning of Rule 144 under the Securities Act, and are subject to
restrictions under the Securities Act.
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In general, under Rule 144, as currently in effect, a person, or
persons whose shares are required to be aggregated, who has beneficially owned,
for at least one year, shares of common stock that have not been registered
under the Securities Act or that were acquired from an "affiliate" of
BioLynx.Com is entitled to sell within any three-month period the number of
shares of common stock that does not exceed the greater of:
. one percent of the number of then outstanding shares; or
. the average weekly reported trading volume during the four calendar
weeks preceding the sale.
Sales under Rule 144 are also subject to notice and manner of sale
requirements and to the availability of current public information about
BioLynx.Com and must be made in unsolicited brokers' transactions or to a market
maker. A person who is not an "affiliate" of BioLynx.Com under the Securities
Act during the three months preceding a sale and who has beneficially owned the
shares for at least two years is entitled to sell the shares under Rule 144
without regard to the volume, notice, information and manner of sale provisions
of the rule. Affiliates of BioLynx.Com must comply with the restrictions and
requirements of Rule 144 when transferring restricted shares even after the two
year holding period has expired and must comply with the restrictions and
requirements of Rule 144 other than the one-year holding period in order to sell
unrestricted shares. Rule 144 does not require the same person to have held the
securities for the applicable period.
Any employee, officer or director of, or consultant to BioLynx.Com who
purchased or was awarded shares or options to purchase shares under a written
compensatory plan or contract is entitled to rely on the resale provisions of
Rule 701 under the Securities Act, which permits affiliates and non-affiliates
to sell the shares without having to comply with the holding period restrictions
of Rule 144, in each case commencing 90 days after the date of this prospectus.
In addition, non-affiliates may sell shares without complying with the public
information, volume and notice provisions of Rule 144.
LEGAL MATTERS
Certain legal matters relating to the issuance of the shares of the
common stock will be passed upon for us by Jackson Walker L.L.P., Houston,
Texas.
EXPERTS
The financial statements and schedules for the periods from inception
through December 31, 1998 and the nine months ended September 30, 1999 included
in this prospectus and in the registration statement have been audited by John
M. James, independent certified public accountant, to the extent and for the
periods set forth in his report appearing elsewhere in this prospectus and in
the registration statement, and are included in reliance upon the report given
upon the authority of said firm as an expert in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
BioLynx.Com has not been previously subject to the reporting
requirements of the Exchange Act, although it will become subject to the
reporting requirements of the Exchange Act following the registration of the
securities described in this prospectus. In accordance with the Exchange Act, we
will file reports, proxy statement, and other information with the SEC. In
addition, we intend to furnish our shareholders with annual reports containing
audited financial statements and interim reports as we deem appropriate. No
person is authorized by BioLynx.Com to give any information or to make any
representations other than those contained in this prospectus, and, if given or
made, you should not rely upon that information.
We have filed with the SEC a registration statement under the
Securities Act on Form SB-2 to register the shares of BioLynx.Com's common stock
to be sold under this prospectus. As allowed by SEC rules, this prospectus does
not contain all the information contained in the registration statement or in
the exhibits to the registration statement. For further information you may read
and copy documents at the principal office of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC at 7 World Trade
Center, Suite 1300, New York, New York 10048, and at Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois
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60661. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC charges a fee for copies. Copies of this
material should also be available through the Internet by using the Quick Forms
Lookup at the SEC EDGAR Archive, the address of which is http://www.sec.gov.
INDEX TO FINANCIAL INFORMATION
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<S> <C>
BioLynx.Com, Inc
Report of Independent Certified Public Accountant...........................................................F-1
Audited Financial Statements:
Balance Sheets.........................................................................................F-2
Statements of Operations...............................................................................F-3
Statement of Changes in Stockholders' Equity (Deficit).................................................F-4
Statements of Cash Flows...............................................................................F-5
Notes to the Financial Statements......................................................................F-6
BioLynx Outsource Services, Inc.
Report of Independent Certified Public Accountant..........................................................F-10
Audited Financial Statements:
Balance Sheet.........................................................................................F-11
Statement of Income...................................................................................F-12
Statement of Changes in Stockholders' Equity..........................................................F-13
Statement of Cash Flows...............................................................................F-14
Notes to the Financial Statements.....................................................................F-15
Employee Leasing Division of Alamo Commercial Group, Inc.
Report of Independent Certified Public Accountant..........................................................F-18
Audited Financial Statements:
Pro Forma Statements of Income........................................................................F-19
Notes to the Pro Forma Statements of Income...........................................................F-20
</TABLE>
40
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
of BioLynx.Com, Inc.
I have audited the accompanying balance sheets of BioLynx.Com, Inc. (a
development stage corporation) at December 31, 1998 and September 30, 1999, and
the related statements of operations, changes in stockholders' equity (deficit),
and cash flows for the period from inception through December 31, 1998, the nine
months ended September 30, 1999, and the period from Inception through September
30, 1999. These financial statements are the responsibility of BioLynx.Com's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted the audits in accordance with generally accepted accounting
standards. Those standards require that I plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of BioLynx.Com, Inc. at
December 31, 1998 and September 30, 1999, and the results of its operations and
its cash flows for the period from its inception through December 31, 1998, the
nine month period ended September 30, 1999, and the period from Inception
through September 30, 1999, in conformity with generally accepted accounting
principles.
/s/ John M. James
JOHN M. JAMES
Houston, Texas
November 19, 1999,
except for footnote 11,
for which the date is
January 18, 2000
F-1
<PAGE>
BIOLYNX.COM, INC.
(a development stage corporation)
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents.......................................... $ -- $ 78,462
Trade accounts receivable.......................................... -- 10,410
Stock subscriptions receivable..................................... -- 3,839
Component parts inventory.......................................... -- 19,393
Prepaid expenses................................................... -- 4,000
------------- ----------------
Total Current Assets..................................... -- 116,104
Property and equipment, net ( Note 3)...................................... 22,354 79,237
Deferred offering costs, net............................................... -- 27,792
Other assets (Deposit)..................................................... -- 2,984
------------- ----------------
Total Assets............................................. $ 22,354 $ 226,117
============= ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued liabilities........................... $ -- $ 75,196
Amounts payable to affiliate of majority stockholder............... -- 173,651
------------- ----------------
Total Current Liabilities................................. -- 248,847
Convertible subordinated debenture (Note 4)................................ 821,352 1,107,523
Commitments and contingencies (Note 8)..................................... -- --
Stockholders' Equity (Deficit):.......................................
Preferred stock, $1.00 par value, 20,000,000 shares
authorized, 0 shares issued and outstanding...................... -- --
Common stock, $0.001 par value, 50,000,000 shares
authorized, 2,249,000 and 4,267,250 shares issued
and outstanding, respectively.................................... 2,249 4,267
Paid-in-capital.................................................... -- 1,098,393
Retained earnings (deficit)........................................ (801,247) (2,232,913)
------------- ----------------
Total Stockholders' Equity (Deficit)...................... (798,998) (1,130,253)
------------- ----------------
Total Liabilities and Stockholders' Equity (Deficit)...... $ 22,354 $ 226,117
============= ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
BIOLYNX.COM, INC.
(a development stage corporation)
Statements of Operations
<TABLE>
<CAPTION>
Inception Nine Months Inception
Through Ended Through
Dec. 31, 1998 Sept. 30, 1999 Sept. 30, 1999
----------------- ---------------- -----------------
<S> <C> <C> <C>
Revenues:
Services revenues.................................. $ -- $ 10,410 $ 10,410
----------------- ---------------- -----------------
Costs and expenses:
Cost of operations................................. -- -- --
Research and development (Note 5).................. 403,042 982,371 1,385,413
Selling, general and administrative (Note 5)....... 395,569 396,233 791,802
Depreciation and amortization...................... 1,387 22,690 24,077
Total costs and expenses..................... 799,998 1,401,294 2,201,292
Operating income (loss).................................... (799,998) (1,390,884) (2,190,882)
----------------- ---------------- -----------------
Other income (expense):
Interest expense................................... -- (40,782) (40,782)
Other ............................................. -- -- --
Net Income (Loss)............................ $ (799,998) $ (1,431,666) $ (2,231,664)
Basic and Diluted Net (Loss) Per Share..................... $ (0.36) $ (0.46) $ (0.74)
Weighted average common shares outstanding................. 2,249,000 3,081,580 2,999,146
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
BIOLYNX.COM, INC.
(a development stage corporation)
Statement of Changes in Stockholders' Equity (deficit)
<TABLE>
<CAPTION>
Retained
Common Paid-In- Earnings
Stock Capital (Deficit)
----- ------- ---------
<S> <C> <C> <C>
Issuance of 224,900 shares of no-par value $ 2,249 $ -- $ (1,249)
common stock issued to founder for services
rendered on date of incorporation of BioLynx,
Inc. (predecessor company), valued at $1,000, which
were later exchanged for 2,249,000 shares of
BioLynx.Com, Inc. $0.001 par value common stock on
the merger date of May 7, 1999, (merger accounted for
as a reorganization)...............................
Net income (loss) for the period................... -- -- (799,998)
--------------- --------------- -------------
Balance at December 31, 1998....................... 2,249 -- (801,247)
Issuance of 1,426,000 shares of common stock
on May 7, 1999 (the date of incorporation),
shares sold for par value of $0.001 per share...... 1,426 -- --
Issuance of 267,100 shares of common stock from
June 11, 1999 through September 30, 1999 in a
private placement offering, shares sold at $2.00
per share, net of offering costs of $85,215........ 267 448,718 --
Issuance of 325,000 shares of common stock from
July 1, 1999 to September 14, 1999 to
employees/consultants for services rendered,
shares valued at $2.00 par share................... 325 649,675 --
Net income (loss) for the period................... -- -- (1,431,666)
--------------- --------------- -------------
Balance at September 30, 1999..................... $ 4,267 $ 1,098,393 $ (2,232,913)
=============== =============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
BIOLYNX.COM, INC.
(a development stage corporation)
Statements of Cash Flows
<TABLE>
<CAPTION>
Inception Nine Months Inception
Through Ended Through
Dec. 31, 1998 Sept. 30, 1999 Sept. 30, 1999
----------------- ---------------- -----------------
<S> <C> <C> <C>
Operating activities:
Net income (Loss).............................................. $ (799,998) $ (1,431,666) $ (2,231,664)
Adjustment to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 1,387 22,690 24,077
Recognition of compensation for stock awards........... -- 650,000 650,000
Increase in accounts receivable, net................... -- (10,410) (10,410)
Increase in component parts inventory.................. -- (19,393) (19,393)
Increase in prepaid expenses........................... -- (4,000) (4,000)
Increase in accounts payable & accrued liabilities..... -- 75,196 75,196
Increase in amounts payable to affiliates.............. -- 173,651 173,651
Net cash paid by stockholder for the Company........... 798,611 -- 798,611
-------------- -------------- --------------
Net cash (used in) operating activities.......... -- (543,932) (543,932)
-------------- -------------- --------------
Investing activities:
Capital expenditures................................... (23,741) (79,573) (103,314)
Other assets (deposit)................................. -- (2,984) (2,984)
Net cash paid by stockholder for the Company........... 23,741 -- 23,741
-------------- -------------- --------------
Net cash used in investing activities............ -- (82,557) (82,557)
-------------- -------------- --------------
Financing activities:
Proceeds from advances from stockholder (later
converted to subordinated debentures).................. 821,352 286,171 1,107,523
Stockholder contributions.............................. 1,000 535,926 536,926
Increase in stock subscriptions receivable............. -- (3,839) (3,839)
Private placement offering costs incurred -- (113,307) (113,307)
Net non-cash benefit received by stockholder for
payments made on behalf of the Company................. (822,352) -- (822,352)
-------------- -------------- --------------
Net cash provided by financing activities........ -- 704,951 704,951
-------------- -------------- --------------
Net increase in cash and cash equivalents...................... -- 78,462 78,462
Cash and cash equivalents at the beginning of the period -- -- --
-------------- -------------- --------------
Cash and cash equivalents at the end of the period..... $ -- $ 78,462 $ 78,462
============== ============== ==============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest............... $ -- $ -- $ --
============== ============== ==============
Cash paid during the period for income taxes........... $ -- $ -- $ --
============== ============== ==============
Supplemental schedule of non-cash investing and financing
information:
Issuance of common stock for services rendered......... $ 1,000 $ 650,000 $ 651,000
============== ============== ==============
Issuance of amounts payable to stockholder for
expenditures paid outside the Company................ $ 821,352 $ -- $ 821,352
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
BIOLYNX.COM, INC.
Notes To The Financial Statements
1. ORGANIZATION
BioLynx.Com, Inc., "BioLynx.Com," is a Texas corporation incorporated
on April 29, 1999 for the purpose of merging with BioLynx, Inc., the
"predecessor company,"and carrying on and expanding their business operations.
BioLynx, Inc. was a Texas corporation incorporated on December 2, 1998 to offer
biometric payroll services to employers. BioLynx.Com's principal business
activity is the installation of a biometric device (which logs employees in and
out for the employer) and applicable software which records, summarizes, and
inputs payroll time information into the employer's payroll system.
The merger of BioLynx.Com, Inc. and BioLynx, Inc. occurred on May 7,
1999, and was accounted for as a reorganization, due to the common ownership of
the two companies. Under this accounting treatment for the merger, the assets
and liabilities of BioLynx, Inc. were transferred to BioLynx.Com, Inc. and
accounted for at historical cost in a manner similar to that in pooling-of-
interests accounting.
BioLynx.Com is currently a development stage enterprise. Development of
the predecessor company's products began in the first quarter of 1996, and
continued until and after the predecessor company's incorporation in December
1998. Costs of approximately $750,000 incurred prior to the date of
incorporation were included in the predecessor company's financial statements,
primarily recorded as development costs. From inception through March 31, 1999,
all expenditures related to the predecessor company, including payroll related
expenses, were funded and paid directly by its shareholder (and affiliates of
the shareholder). The predecessor company did not itself open a bank account
until April 21, 1999. The amount of the funds advanced by BioLynx.Com's
shareholder has been recorded to reflect the liabilities to the shareholder for
the advances. Management has stated that additional advances from shareholders
subsequent to September 30, 1999 will also be recorded in this fashion. (See
Note 4).
At December 31, 1998, September 30, 1999 and as of the date of the
audit report, BioLynx.Com is entirely dependent on continued funding by the
shareholders. Substantial resources will be required in the future to complete
development efforts, acquire other companies and customer bases (see Note 11),
design and implement marketing and sales efforts, purchase equipment, fund
installations at customer locations, and set up administrative departments. At
September 30, 1999, management was in the process of selling shares of common
stock of BioLynx.Com under a private placement memorandum. The private placement
offering was completed on November 24, 1999, with a total of 586,600 shares sold
at $2.00 per share (including 319,350 shares sold after September 30, 1999.
Significant sales are expected to begin in the first quarter of 2000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment. Property and equipment is recorded at cost and
is depreciated using the straight-line method over their useful lives as
follows:
Computer hardware and other electronic equipment......... 3 years
Purchased software....................................... 3 years
Expenditures for maintenance, repairs and minor replacements are
charged to operations when incurred. Expenditures for major replacements and
betterments are capitalized to the property and equipment account and
depreciated over the remaining life of the asset. The cost and accumulated
depreciation of property and equipment retired or sold is removed at the time of
disposition, and the resulting gain or loss is reflected in operations.
Income Taxes. BioLynx.Com has adopted the method of accounting for
income taxes promulgated by Statement of Financial Accounting Standards No. 109.
F-6
<PAGE>
BIOLYNX.COM, INC.
Notes To The Financial Statements
Advertising Costs. The cost of advertising is expensed as incurred.
BioLynx.Com did not incur advertising expenses during the period ended December
31, 1998. BioLynx.Com incurred $24,998 of advertising expense during the nine
month period ended September 30, 1999.
Use of Estimates in Financial Statement Preparation. 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 disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Concentration of Credit Risk. BioLynx.Com maintains cash deposits in a
single financial institution. During the periods ended December 31, 1998 and
September 30, 1999, there were no occasions when the $100,000 FDIC account
insurance limit was exceeded.
Cash and Cash Equivalents. Cash and highly liquid investments with
maturities of three months or less when purchased are included in cash and cash
equivalents in these financial statements. The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its fair value.
Fair Value of Financial Instruments. The carrying amounts of
BioLynx.Com's financial instruments, which include accounts receivable, accounts
payable and convertible subordinated debentures, approximate their fair values
at December 31, 1998 and at September 30, 1999.
3. PROPERTY AND EQUIPMENT
The components of property and equipment at December 31, 1998 and at September
30, 1999 are as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
---- ----
<S> <C> <C>
Computer equipment....................... $ 2,446 $ 67,625
Other equipment.......................... 21,295 21,295
Purchased software....................... -- 14,394
------------------ -----------
Total cost............................... 23,741 103,314
Less accumulated depreciation .......... (1,387) (24,077)
------------------ -----------
Net property and equipment............... $ 22,354 $ 79,237
================== ===========
</TABLE>
4. SUBORDINATED CONVERTIBLE DEBENTURE
Amounts payable to the shareholder outstanding at December 31, 1998 and
September 30, 1999 amounted to $821,352 and $1,107,523, respectively. On April
16, 1999, the balance of the amounts payable to the shareholder account was
converted to a subordinated convertible debenture of BioLynx.Com. This
debenture, which is unsecured, bears interest at 8%, and the principal along
with all accrued interest is due on April 16, 2002. The holder of the debenture
has the right, but not the obligation, to convert the debenture into one share
of common stock for every $3.30 of debenture held. Interest accrued on this
debenture during the nine month period ended September 30, 1999 amounted to
$40,782.
F-7
<PAGE>
BIOLYNX.COM, INC.
Notes To The Financial Statements
5. RELATED PARTY TRANSACTIONS
At December 31, 1998 and at June 30, 1999, BioLynx.Com leased its
employees from an employee leasing company owned by one of BioLynx.Com's
shareholders under an informal arrangement under which BioLynx.Com is billed 12%
over the gross wages of each employee. The 12% mark-up covers the employer
payroll taxes, employee benefit costs, and workers compensation costs, as well
as profit margin to the leasing company.
At December 31, 1998 and at September 30, 1999, BioLynx.Com subleased
office space from a company owned by one of BioLynx.Com's shareholders at a cost
of $3,000 per month, beginning in November 1998. See Footnote 7 for further
details.
At December 31, 1998 and at September 30, 1999, BioLynx.Com shared its
executive staff with an affiliated company. As a consequence, one-half of the
total payroll costs of BioLynx.Com's two executives were charged to BioLynx.Com
by the affiliate.
6. RECOGNITION OF COMPENSATION FOR STOCK AWARDS
In July and also in September 1999, BioLynx.Com awarded a combined
total of 325,000 shares of common stock to consultants as compensation for their
services. A total of $680,000 has been charged to development expense to account
for these issued shares (at $2.00 per share).
In November 1999, BioLynx.Com awarded an additional 340,000 shares of
common stock to consultants as compensation for their services. In November
1999, a total of $530,000 will be charged to administrative expense to account
for these issued shares (at $2.00 per share).
7. RISKS AND UNCERTAINTIES
The "Year 2000" problem refers to the inability of computer programs to
correctly interpret the century from a date in which the year is represented by
only two digits. A computer system that is not Year 2000 compliant, "Y2K
compliant," would not be able to correctly process certain data, or in extreme
situations, could disable an entire system.
Since inception, BioLynx.Com has purchased various types of computer
hardware and software to meet its operational needs. BioLynx.Com has stated it
has undertaken a feasibility study in 1999 to identify any changes necessary in
its computer systems to assure they will be Y2K compliant. During the remainder
of 1999, BioLynx.Com has stated that its outside consultants will upgrade, to
the extent necessary, any of the software and hardware systems necessary to
assure their Y2K compliance.
8. COMMITMENTS AND CONTINGENCIES
Employment Agreements. Effective March 12, 1999, BioLynx.Com entered
into employment contracts with eight employees. The agreements also contain
provisions that the employees will not compete with BioLynx.Com in specific
geographic territories for a period of two years beyond the terms of the
employment contracts.
Consulting Agreements. In April 1999, BioLynx.Com entered into a
consulting agreement with one organization and financial advisory agreements
with two Texas corporations. These agreements included a provision for an
aggregate of 275,000 shares of the restricted common stock of BioLynx.Com to be
sold to these three organizations at the par value of the stock. These shares
were sold in May 1999.
Lease Agreement. Effective November 9, 1998, BioLynx.Com entered into a
lease for approximately 2,650 square feet of office space with a related party
for $3,000 per month. The term of the lease is 36 months.
F-8
<PAGE>
BIOLYNX.COM, INC.
Notes To The Financial Statements
Lease expense for the periods ended December 31, 1998 and September 30, 1999
were $6,000 and $27,000, respectively.
9. STOCK OPTION PLAN
At its organizational meeting on May 7, 1999, BioLynx.Com set up the
1999 stock incentive compensation plan. Under the provisions of the Plan, the
maximum number of shares of common stock which shall be available for issuance
under the Plan shall not exceed in the aggregate the greater of 250,000 shares
of the common stock or 15% of the issued shares of common stock as of the first
day of the preceding calendar quarter. There have been no grants of stock
options as of September 30, 1999.
10. NEW ACCOUNTING STANDARD
In June, 1997, the Financial Accounting standards Board issued
Statement of Financial Accounting Standards Number 130, Reporting Comprehensive
Income ("SFAS No. 130"). SFAS No. 130 established standards for reporting and
presentation of comprehensive income and its components. Comprehensive income is
defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources and
includes all changes in equity during a period, except those resulting from
investments by owners and distributions to owners. SFAS No. 130 was adopted by
BioLynx.Com at its inception. Initial adoption of this standard had no impact on
BioLynx.Com's financial statements.
11. SUBSEQUENT EVENTS
On December 31, 1999, BioLynx.Com acquired BioLynx Outsource Services,
Inc., "Outsource," from an affiliate of BioLynx.Com's majority shareholder.
Outsource is a professional employer organization which offers small and midsize
companies such services as payroll and benefits administration, health and
workers compensation insurance programs, personnel records management, and
employee recruiting. The purchase price was based on a multiple of the average
gross profit earned by BioLynx.Com during the four weeks prior to closing of
this transaction, and amounted to $1,446,347, paid in convertible preferred
stock of BioLynx.Com bearing an 8% non-cumulative annual dividend. The preferred
stock is, at the option of the shareholder, convertible into common stock at
face value plus unpaid dividends at the rate of $3.30 per share of common stock.
In addition, Outsource on December 31, 1999 acquired all of the leased
employee contracts of Alamo Commercial Group, Inc. , "Alamo," another affiliate
of BioLynx.Com's majority shareholder. Alamo had a professional employer
organization division which offers small and midsize companies such services as
payroll and benefits administration, health and workers compensation insurance
programs, personnel records management, and employee recruiting. The purchase
price was based on a multiple of the average gross profit earned by BioLynx.Com
during the four weeks prior to closing of this transaction, and amounted to
$3,605,535 paid in convertible preferred stock of BioLynx.Com bearing an 8% non-
cumulative annual dividend. The preferred stock is, at the option of the
shareholder, convertible into common stock at face value plus unpaid dividends
at the rate of $3.30 per share of common share.
On January 18, 2000, the holder of the Company's subordinated
convertible debenture exercised the option to convert the debenture into 335,613
shares of the company's common stock.
F-9
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
of BioLynx Outsource Services, Inc.
I have audited the accompanying balance sheet of BioLynx Outsource Services,
Inc. at September 30, 1999, and the related statements of income, changes in
stockholder's equity, and cash flow for the period from inception (May 25, 1999)
through September 30, 1999. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted the audit in accordance with generally accepted accounting
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of BioLynx Outsource Services, Inc. at
September 30, 1999, and the results of its operations and its cash flows for the
period from its inception (May 25, 1999) through September 30, 1999, in
conformity with generally accepted accounting principles.
/s/ JOHN M. JAMES
---------------------
JOHN M. JAMES
Houston, Texas
January 11, 2000
F-10
<PAGE>
BIOLYNX OUTSOURCE SERVICES, INC.
Balance Sheet
September 30, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 12,736
Trade accounts receivable 28,832
Notes receivable from affiliate, short-term, bearing
interest at 8% per annum 23,145
Notes receivable from affiliate, short-term, non-interest bearing 36,000
Interest receivable 415
Prepaid expenses --
------------
Total current assets 101,128
Property and equipment, net --
------------
Total assets $ 101,128
============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $ --
Accrued liabilities--payroll taxes and other payroll items due 61,632
Accrued management fees due to affiliate 14,392
Accrued federal income taxes payable 3,616
------------
Total current liabilities 79,640
Commitments and contingencies (Note 7) --
Stockholder's Equity:
Preferred stock, $1 par value, 3,000,000 shares
authorized, 0 shares issued and outstanding --
Common stock, $0.001 par value, 20,000,000 shares
authorized, 1,000 shares issued and outstanding 1
Paid-in-capital 999
Retained earnings 20,488
------------
Total stockholders' equity 21,488
------------
Total liabilities and stockholders' equity $ 101,128
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
BIOLYNX OUTSOURCE SERVICES, INC.
Statement of Income
Period From
Inception (May 25, 1999) To September 30, 1999
Revenues:
Employee leasing revenues $ 2,082,211
Direct costs:
Salaries and wages of work-site employees 1,809,080
Payroll taxes 194,605
------------
Total direct costs 2,003,685
------------
Gross profit 78,526
Operating expenses:
Management fees due to affiliate 40,988
Consulting fees 7,000
Other 6,849
------------
Total operating expenses 54,837
------------
Income from operations 23,689
Other income (expense):
Interest income 415
Other --
------------
Income before taxes 24,104
Provision for federal income taxes (15% rate) 3,616
------------
Net Income $ 20,488
============
Basic and Diluted Net Income Per Share $ 20.49
============
Weighted average common shares outstanding 1,000
============
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
BIOLYNX OUTSOURCE SERVICES, INC.
Statement of Changes in Stockholders' Equity
Period From
Inception (May 25, 1999) To September 30, 1999
<TABLE>
<CAPTION>
Common Paid-In- Retained
Stock Capital Earnings
<S> <C> <C> <C>
Common stock (1,000 shares) issued at
inception for services valued at $1,000 on
May 25, 1999 $ 1 $ 999 $ --
Net income for the period -- -- 20,488
----------------- -------------- --------------
Balance at September 30, 1999 $ 1 $ 999 $ 20,488
================= ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
BIOLYNX OUTSOURCE SERVICES, INC.
Statement of Cash Flows
Period From
Inception (May 25, 1999) To September 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Operating activities:
Net income $ 20,488
Adjustment to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization --
Consulting fees expense paid with common stock 1,000
Increase in accounts receivable, net (28,832)
Increase in interest receivable (415)
Increase in accounts payable & accrued liabilities 61,632
Increase in management fees due to affiliate 14,392
Increase in accrued federal income taxes payable 3,616
-------------
Net cash provided by operating activities 71,881
-------------
Investing activities:
Capital expenditures --
Loan to affiliate (59,145)
-------------
Net cash used in investing activities (59,145)
-------------
Financing activities:
Sale of stock for cash --
Borrowings under note payable arrangements --
-------------
Net cash provided by financing activities --
-------------
Net increase in cash and cash equivalents 12,736
Cash & cash equivalents at the beginning of the period --
-------------
Cash & cash equivalents at the end of the period $ 12,736
=============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ --
Cash paid during the period for income taxes $ --
=============
Supplemental schedule of non-cash investing and financing information:
Issuance of common stock for services rendered $ 1,000
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
BIOLYNX OUTSOURCE SERVICES, INC.
Notes To The Financial Statements
September 30, 1999
1. ORGANIZATION
BioLynx Outsource Services, Inc. BioLynx Outsource Services is a Texas
corporation incorporated on May 25, 1999 to offer payroll services to employers.
The Company is a professional employer organization which offers small and
midsize companies such services as payroll and benefits administration, health
and workers compensation insurance programs, personnel records management, and
employee recruiting.
To accelerate the growth of the Company, management entered into a
management services contract with an affiliate of the Company's stockholder
whereby the affiliate will provide all sales, management, insurance, and
administrative services to the Company on a month--to--month basis for a fee
equal to 4% of the gross revenues of the Company for the 3 months ended July 31,
1999, and for a fee equal to 2% of the gross payroll of the Company for the two
months ended September 30, 1999. For the period from inception through September
30, 1999, this management fee amounted to $40,988. This fee includes all costs
associated with insurance coverage for all employees.
The Company has only been in business for a little over four months. To
date, the Company has not been required to borrow money to fund operations. It
is expected that future cash flow will require either borrowings from a bank or
an affiliate, or funds from the sale of common or preferred stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes. The Company has adopted the method of accounting for
income taxes promulgated by Statement of Financial Accounting Standards # 109.
Advertising Costs. The cost of advertising is expensed as incurred.
BioLynx Outsource Services did not incur advertising expenses during the period
ended September 30, 1999.
Use of Estimates in Financial Statement Preparation. 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 disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
F-15
<PAGE>
BIOLYNX OUTSOURCE SERVICES, INC.
Notes To The Financial Statements
September 30, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk. The Company will maintain cash deposits
in a single financial institution. During the period ended September 30, 1999,
there were no occasions when the $100,000 FDIC account insurance limit was
exceeded.
Cash and Cash Equivalents. Cash and highly liquid investments with
maturities of three months or less when purchased are included in cash and cash
equivalents in these financial statements. The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its fair value.
Fair Value of Financial Instruments. The carrying amounts of the
Company's financial instruments, which include accounts receivable, accounts
payable and accrued liabilities, approximate their fair values at September 30,
1999.
3. RELATED PARTY TRANSACTIONS
During the period from inception through September 30, 1999, the
Company operated under a management services contract with an affiliate, and did
not have any employees nor physical office facilities under lease.
4. NEW ACCOUNTING STANDARD
In June, 1997, the Financial Accounting standards Board issued
Statement of Financial Accounting Standards Number 130, "Reporting Comprehensive
Income ("SFAS # 130"). SFAS # 130 established standards for reporting and
presentation of comprehensive income and its components. Comprehensive income is
defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources and
includes all changes in equity during a period, except those resulting from
investments by owners and distributions to owners. SFAS # 130 was adopted by the
Company at its inception. Initial adoption of this standard had no impact on the
Company's financial statements.
F-16
<PAGE>
BIOLYNX OUTSOURCE SERVICES, INC.
Notes To The Financial Statements
September 30, 1999
5. SUBSEQUENT EVENTS
Asset Purchase Agreement. On December 31, 1999, the Company acquired
all of the leased employees and the employee leasing customer contracts of the
Employee Leasing Division of Alamo Commercial Group, Inc., a company entirely
owned by the Company's sole shareholder.
The Employee Leasing Division of Alamo Commercial Group, Inc. (a Texas
corporation) has offered employee leasing services to its clients in central and
south Texas since May 2, 1998.
Pursuant to the terms of the agreement, the purchase price was
$3,605,535, payable by means of convertible preferred stock of the Company, with
a liquidation privilege equal to its face amount, issued in $100,000 increments,
bearing an eight percent non-cumulative dividend. The preferred stock will, at
the holder's option, be convertible into the Company's new parent--BioLynx.Com's
common stock at the rate of the liquidation privilege, together with any
declared but unpaid dividends, divided by $3.30 per share of common stock.
Stock Sales Agreement. Also on December 31, 1999, the Company's
shareholder sold 100% of the Company's stock to BioLynx.Com, Inc., a company
partially-owned by an affiliate of the Company's sole shareholder.
BioLynx.Com, Inc. is a Texas corporation which offers biometric payroll
services to employers. The Company's principal business activity is the
installation of a biometric device (which logs employees in and out for the
employer) and applicable software which records, summarizes, and inputs payroll
time information into the employer's payroll system.
Pursuant to the terms of the agreement, the purchase price was
$1,446,348, payable by means of convertible preferred stock with a liquidation
privilege equal to its face amount, issued in $100,000 increments, bearing an
eight percent non-cumulative dividend. The preferred stock will, at the holder's
option, be convertible into BioLynx.Com's common stock at the rate of the
liquidation privilege, together with any declared but unpaid dividends, divided
by $3.30 per share of common stock.
F-17
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Stockholders
of Alamo Commercial Group, Inc.
I have audited the accompanying pro forma statements of income of the Employee
Leasing Division of Alamo Commercial Group, Inc. for the period from inception
(May 2, 1998) through December 31, 1998 and for the nine months ended September
30, 1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted the audit in accordance with generally accepted accounting
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the pro forma income statements referred to above present fairly,
in all material respects, the results of its operations for the period from
inception (May 2, 1998) through December 31, 1998 and for the nine months ended
September 30, 1999, in conformity with generally accepted accounting principles.
/s/ JOHN M. JAMES
---------------------
JOHN M. JAMES
January 11, 2000
F-18
<PAGE>
EMPLOYEE LEASING DIVISION OF
ALAMO COMMERCIAL GROUP, INC.
Pro-Forma Statements of Income
Periods From
Inception (May 2, 1998) To December 31, 1998
and
Nine Months Ended September 30,1999
<TABLE>
<CAPTION>
Nine
Inception Months
Through Ended
December 31, 1998 September 30, 1999
----------------- ------------------
<S> <C> <C>
Revenues:
Employee leasing revenues $ 7,189,852 $ 11,940,838
Direct costs:
Work-site wages, taxes and insurance 6,382,670 10,587,546
----------------- ----------------
Gross profit 807,182 1,353,292
Operating expenses:
Management fees due to affiliate 287,594 477,634
----------------- ----------------
Pro-forma income before taxes 519,588 875,658
Pro-forma provision for federal
income taxes (statutory 34% rate) 176,660 297,724
----------------- ----------------
Pro-forma Net Income $ 342,928 $ 577,934
================= ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
EMPLOYEE LEASING DIVISION OF
ALAMO COMMERCIAL GROUP, INC.
Notes To The Pro-Forma Statements of Income
Periods From
Inception (May 2, 1998) To December 31, 1998
and
Nine Months Ended September 30, 1999
1. ORGANIZATION
Alamo Commercial Group, Inc. (the Company) is a Texas corporation
incorporated on May 28, 1997 to offer several planned business activities of its
owner. The Company opened its employee leasing division (the Division) in May
1998, and began offering small and midsize companies such services as payroll
and benefits administration, health and workers compensation insurance programs,
personnel records management, and employee recruiting.
To accelerate the growth of the Division, management of the Division
entered into a management services contract with the Company whereby the Company
will provide all sales, management, insurance, and administrative services to
the Division on a month--to--month basis for a fee equal to 4% of the gross
revenues of the Company. This management fee amounted to $287,594 for the period
from inception through December 31, 1998, and amounted to $477,634 for the nine-
month period ended September 30, 1999. This fee includes all costs associated
with insurance coverage for all employees.
2. BASIS OF PRESENTATION
These pro forma statements of income are being presented to reflect the
historical sales, direct costs, and gross profit realized from the Employee
Leasing Division of the Company from inception of its operations. The Company
also conducts various other business activities, including significant personal
transactions of its sole shareholder. Consequently, additional financial
information pertaining to the Company's other operations are not relevant, nor
meaningful, to the historical information of the Division.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes. The Company has adopted the method of accounting for
income taxes promulgated by Statement of Financial Accounting Standards # 109.
For purposes of reflecting a pro forma provision for federal income
taxes, the attached pro forma statements of income reflect a tax provision at
the statutory federal income tax rate of 34% for each period presented.
F-20
<PAGE>
EMPLOYEE LEASING DIVISION OF
ALAMO COMMERCIAL GROUP, INC.
Notes To The Pro-Forma Statements of Income
Periods From
Inception (May 2, 1998) To December 31, 1998
and
Nine Months Ended September 30, 1999
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates in Financial Statement Preparation. 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 disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
4. RELATED PARTY TRANSACTIONS
During the period from inception through September 30, 1999, the
Division operated under a management services contract with an affiliate, and
did not have any employees nor physical office facilities under lease.
5. SUBSEQUENT EVENT
On December 31, 1999, the Company sold all of the leased employees and
the employee leasing customer contracts of the Employee Leasing Division to
BioLynx Outsource Services, Inc., a company entirely owned by the Company's sole
shareholder.
BioLynx Outsource Services, Inc. (a Texas corporation) has offered
employee leasing services to its clients in central and south Texas since its
inception in May 25, 1999.
Pursuant to the terms of the agreement, the purchase price was
$3,605,535, payable by means of convertible preferred stock of the buyer with a
liquidation privilege equal to its face amount, issued in $100,000 increments,
bearing an eight percent non-cumulative dividend. The preferred stock will, at
the holder's option, be convertible into the Company's new parent--BioLynx.Com's
common stock at the rate of the liquidation privilege, together with any
declared but unpaid dividends, divided by $3.30 per share of common stock.
F-21
<PAGE>
,2000
[LOGO OF BIOLYNX.COM, INC. APPEARS HERE]
1,000,000 SHARES OF COMMON STOCK
--------------
PROSPECTUS
--------------
AURORA FINANCIAL SERVICES, L.L.C.
TRAVIS MORGAN SECURITIES, INC.
We have not authorized any dealer, sales person or other person to give
you written information other than this prospectus or to make representations as
to matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained in this prospectus or the affairs of
BioLynx.Com, Inc. have not changed since the date of this prospectus.
Until __________, 2000 (25 days after the date of this prospectus), all
broker-dealers that effect transactions in these shares of common stock, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as an underwriter and with respect to their unsold allotments or
subscriptions.
<PAGE>
PART II
Information Not Required in Prospectus
Item 24. Indemnification of directors and officers
BioLynx.Com's articles provide that any person who at any time shall
serve or shall have served, as a director, officer, employee, or agent of
BioLynx.Com, or of any other enterprise at the request of BioLynx.Com, and the
heirs, executors, and administrators of the person, shall be indemnified by
BioLynx.Com against all costs and expenses (including but not limited to counsel
fees, amounts or judgments paid, and amounts paid in settlement) reasonably
incurred in connection with the defense of any claim, action, suit, or
proceeding, whether civil, criminal, administrative, or other, in which he may
be involved by virtue of the person being or having been a director, officer,
employee, or agent, provided, however, that the indemnity shall not be operative
with respect to:
. any matter as to which the person shall have been finally
adjudged in an action, suit, or proceeding to be liable for
negligence or misconduct in the performance of his duties as a
director, officer, employee, or agent;
. any matter settled or compromised, unless in the opinion of
independent counsel selected by or in a manner determined by
the board of directors, there is not reasonable ground for the
person being adjudged liable for negligence or misconduct in
the performance of his duties as a director, officer,
employee, or agent; or
. any amount paid or payable to BioLynx.Com or another
enterprise.
This indemnification shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under any Bylaw, agreement, vote of
shareholders, or otherwise. By its terms, and in accordance with applicable
state law, however, this provision does not eliminate or limit the liability of
a director of BioLynx.Com for any breach of duty based upon an act or omission:
. involving appropriation in violation of duty of any business
opportunity of BioLynx.Com;
. involving acts or omissions that are not in good faith or
which involve intentional misconduct or a knowing violation of
the law; or
. involving unlawful distributions or transactions from which
the director derived an improper personal benefit.
The bylaws contain similar indemnification and limitation of liability
provisions. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, or persons controlling
BioLynx.Com under the indemnification provisions, or otherwise, BioLynx.Com is
aware that, in the opinion of the SEC, the indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
II-1
<PAGE>
Item 25. Other expenses of issuance and distribution
The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the securities being registered. The
expenses shall be paid by the registrant. No expenses will be paid by the
security holders.
SEC Registration Fee............................ $1,112
Printing and Engraving Expenses................. 25,000
Selling Commissions............................. 520,000
Legal Fees and Expenses......................... 60,000
Accounting Fees and Expenses.................... 23,000
Blue Sky Fees and Expenses...................... 15,845
Transfer Agent Fees............................. 3,500
Miscellaneous................................... 11,543
Total......................................... $660,000
The total amount of sales commissions listed above does not include 25,000
shares of the common stock to be issued to Aurora Financial Services, L.L.C.
II-2
<PAGE>
Item 26. Recent sales of unregistered securities
Set forth below is information regarding securities that BioLynx.Com
has sold in the past three years to directors ("D"), officers ("O"), employees
("E"), consultants ("C"), institutional investors ("I"), affiliates ("A"), and
non-affiliates ("N").
On May 7, 1999, in connection with the organization of BioLynx.Com,
Inc. and the merger with BioLynx, Inc., BioLynx.Com issued an aggregate of
3,000,000 shares of the common stock to Patrick E. Tolle (D, O), Andrew Fitch-
Wallish (D, O), and John D. Walker II (D, O). Messrs. Tolle and Fitch-Wallish
paid to the company, in the aggregate, $750 in cash for their shares. Mr. Walker
paid $1.00, in cash to BioLynx.Com, plus services previously rendered to
BioLynx, Inc. in the amount of $1,000 for his shares. At the same time, an
aggregate of 675,000 shares of BioLynx.Com common stock (for a total
consideration of $675 paid in cash) were issued to Martex Trading Co., Inc.
(I), R. F. Bearden, Inc. (C), Texas Commercial Resources, Inc. (C), and
Jazbermaine (C).
Beginning on May 12, 1999 and ending on November 24, 1999, BioLynx.Com
conducted a private placement in conformity with Rule 506 of Regulation D
promulgated under the Securities Act. In the private placement, BioLynx.Com sold
586,600 shares of the common stock, including 525,250 shares to 39 Accredited
Investors and 61,350 shares to 19 Non-Accredited Investors. The purchase price
for each share was $2.00, and the total amount raised by BioLynx.Com as a result
of the private placement was $1,173,200. The shares were offered for sale by
Aurora Financial Services, L.L.C., a registered broker-dealer, and its
affiliated broker-dealers, as selling agents. In consideration of its services,
Aurora received 20,000 shares of our common stock, and we agreed to pay Aurora a
sales commission in the amount of eight percent of the cash proceeds of the
private placement.
In addition, since May 12, 1999 and through November 19, 1999,
BioLynx.Com issued 665,000 shares of the common stock to eight shareholders, for
services rendered to BioLynx.Com having a value of $1,180,000, in the aggregate,
as follows:
. 10,000 shares issued to Louis A. Ross, Ph.D., in exchange for
his agreement to serve as a director of BioLynx.Com.
. 20,000 shares issued to Aurora Financial Services, L.L.C. in
connection with its services relating to the above described
private placement.
. 200,000 shares issued to Sabinal Trust in exchange for
financial advisory services rendered to BioLynx.Com. Sabinal
holds no licenses and was not engaged in the sale of any
securities, but only provided information on the proper
structure of BioLynx.Com and the various aspects of this
offering.
. 85,000 shares issued to Pete Johnson in exchange for
financial advisory services rendered to BioLynx.Com. Mr.
Johnson holds no licenses and was not engaged in the sale of
any securities, but only provided information on the proper
structure of BioLynx.Com and the various aspects of this
offering.
. 15,000 shares issued to Johnson Capital Consultants, Inc. in
exchange for financial advisory services rendered to
BioLynx.Com. Johnson Capital holds no licenses and was not
engaged in the sale of any securities, but only provided
information on the proper structure of BioLynx.Com and the
various aspects of this offering.
. 10,000 shares issued to J. A. Stanley III, in exchange for
his agreement to serve as an officer of BioLynx.Com. The
arrangement with Mr. Stanley did not work out.
. 25,000 shares issued to Gregory W. Schlather for services
rendered in the development of our proprietary software.
. 300,000 shares Larry Roy for services rendered in the
development of our proprietary software.
II-3
<PAGE>
On October 6, 1999, we issued to Travis Morgan Securities, Inc. our
warrant for the purchase of 50,000 shares of our common stock at a purchase
price of $1.00 per share. The warrant was issued in connection with our private
placement of our shares which closed on November 24, 1999. The warrant was
designed to compensate Travis Morgan Securities, Inc. for its services in the
private placement of our shares. The warrant expired on November 5, 1999 without
being exercised., and consequently, no shares were issued. On December 1, 1999,
we issued to Travis Morgan Securities, Inc. our warrant for the purchase of
7,500 shares of our common stock at a purchase price of $1.00 per share, which
expires on March 31, 2000. The warrant was designed to compensate Travis Morgan
Securities, Inc. for its additional services in the private placement of our
shares, which closed on November 24, 1999.
Unless otherwise indicated above, the issuance of securities were
exempt from registration under Section 4(2) of the Securities Act as
transactions by an issuer not involving any public offering. In each instance,
the purchaser had a pre-existing relationship with BioLynx.Com, the offers and
sales were made without public solicitation, the certificates bear restrictive
legends, and appropriate stop-transfer orders have been given to the transfer
agent. No underwriter was involved in the transactions and no commissions were
paid.
II-4
<PAGE>
Item 27. Exhibits
The following exhibits are filed as part of this registration
statement:
<TABLE>
<CAPTION>
Exhibit No. Identification of Exhibit
----------- -------------------------
<S> <C>
1.1** Agreement between Aurora Financial Services, L.L.C. and BioLynx.Com, Inc.
dated October 15, 1999.
1.2* Amended Agreement between Aurora Financial Services, L.L.C. and
BioLynx.Com, Inc. dated October 15, 1999
1.3* Agreement between Travis Morgan Securities, Inc. and BioLynx.Com, Inc.
dated January 26, 2000
2.1** Agreement and Plan of Merger between BioLynx, Inc. and BioLynx.Com,
Inc. dated May 7, 1999.
2.2** Articles of Merger between BioLynx, Inc. and BioLynx.Com, Inc. filed May
12, 1999.
3.1** Articles of Incorporation of BioLynx, Inc. filed December 2, 1998.
3.2** Articles of Incorporation of BioLynx.Com, Inc. filed April 29, 1999.
3.3** Amendment to Articles of Incorporation of BioLynx.Com, Inc. filed
October 7, 1999.
3.4** Bylaws.
4** See Exhibits 3.1, 3.2, 3.3, and 3.4.
4.1* Common Stock Certificate - Sample.
4.2* Preferred Stock Certificate - Sample.
5** Opinion Regarding Legality.
10.1** Employment Contract dated March 15, 1999 between BioLynx, Inc. and John D.
Walker II.
10.2** Employment Contract dated March 12, 1999 between BioLynx, Inc. and Patrick
E. Tolle.
10.3** Employment Contract dated March 12, 1999 between BioLynx, Inc. and Andrew
Fitch-Wallish.
10.4** Employment Contract dated March 12, 1999 between BioLynx, Inc. and Charles
E. Pircher.
10.5** Employment Contract dated March 12, 1999 between BioLynx, Inc. and Gregory
W. Schlather.
10.6** Employment Contract dated March 12, 1999 between BioLynx, Inc. and Larry
Roy.
10.7** Confidentiality Agreement dated November 1, 1999 between BioLynx.Com, Inc.
and Barbara A. Bean.
10.8** Employment Contract dated November 1, 1999 between BioLynx.Com, Inc. and
Barbara A. Bean.
10.9** Employment Contract dated November 11, 1999 between BioLynx.Com, Inc. and
Margaret A. Rice.
10.10** Confidentiality Agreement dated November 11, 1999 between BioLynx.Com,
Inc. and Margaret A. Rice.
10.11** BioLynx.Com, Inc. 1999 Stock Incentive Compensation Plan dated May 7, 1999.
10.12** Letter Agreement dated March 31, 1999 between Aurora Financial Services,
L.L.C. and BioLynx, Inc. with respect to a private placement of 500,000
shares of common stock.
10.13** Registration Rights Agreement between BioLynx, Inc. and Aurora Financial
Services, L.L.C. dated April 16, 1999.
10.14** Convertible Subordinated Debenture dated April 16, 1999 in the amount of
$1,107,523, in favor of John D. Walker II.
10.15** Consulting Agreement dated May 7, 1999 between BioLynx.Com, Inc. and
Jazbermaine.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Identification of Exhibit
----------- -------------------------
<S> <C>
10.16** Financial Advisory Agreement dated May 7, 1999 between BioLynx.Com, Inc.
and R. F. Bearden Associates, Inc.
10.17** Financial Advisory Agreement dated May 7, 1999 between BioLynx.Com, Inc.
and Texas Commercial Resources, Inc.
10.18** Letter Agreement between BioLynx.Com, Inc. and Recognition Systems, Inc.
dated November 18, 1999 with respect to the sale of biometric hand readers.
Option to Purchase Stock Agreement dated October 1, 1999 between
10.19** BioLynx.Com, Inc., BioLynx Outsource Services, Inc., and United Capital
Investment Group, Inc.
10.20** Option to Purchase Employee/Customer Base dated October 1, 1999 between
BioLynx Outsource Services, Inc. and Alamo Commercial Group, Inc.
10.21** Amended Option to Purchase Stock Agreement dated December 1, 1999 between
BioLynx.Com, Inc., BioLynx Outsource Services, Inc., and United Capital
Investment Group, Inc.
10.22** Amended Option to Purchase Employee/Customer Base dated December 1, 1999
between BioLynx Outsource Services, Inc. and Alamo Commercial Group, Inc.
10.23** Stock Purchase Warrant dated October 6, 1999 between BioLynx.Com, Inc. and
Travis Morgan Securities, Inc.
10.24** Stock Purchase Warrant dated December 1, 1999 between BioLynx.Com, Inc.
and Travis Morgan Securities, Inc.
10.25** Acknowledgment of Debt dated December 1, 1999 between BioLynx.Com, Inc.,
John D. Walker, II, United Capital Investment Group, Inc., and Alamo
Commercial Group, Inc.
10.26** Escrow Agreement dated December 1, 1999 between BioLynx.Com, Inc. and
Sterling Bank.
10.27* Marketing Representative Agreement dated January 5, 2000 between
BioLynx.Com, Inc. and SOS Staffing Services, Inc.
10.28* Amended Stock Purchase Warrant dated January 1, 2000 between BioLynx.Com,
Inc. and Travis Morgan Securities, Inc.
10.29* Letter from John D. Walker II dated January 3, 2000 regarding conversion
of subordinated debenture.
10.30* Office Lease dated August 14, 1998 between John D. Walker II and BioLynx.
10.31* Employment Agreement dated January 25, 2000 between BioLynx.Com, Inc. and
Reagan E. Hicks.
10.32* Confidentiality Agreement dated January 25, 2000 between BioLynx.Com, Inc.
and Reagan E. Hicks.
10.33* Escrow Agreement dated January 18, 2000 between BioLynx.Com, Inc. and
Sterling Bank.
10.34* Stock Option Agreement dated January 15, 2000 between Reagan E. Hicks and
BioLynx.Com, Inc.
10.35* Registration Rights Agreement between Sabinal Trust and BioLynx.Com, Inc.
dated November 19, 1999.
10.36* Second Amended Option to Purchase Stock Agreement dated December 31, 1999
between BioLynx.Com, Inc., BioLynx Outsource Services, Inc., and United
Capital Investment Group, Inc.
10.37* Second Amended Option to Purchase Employee/Customer Base dated December
31, 1999 between BioLynx Outsource Services, Inc. and Alamo Commercial
Group, Inc.
10.38* Statement of Resolutions Establishing a Series of Shares delivered to the
Secretary of State of the State of Texas by BioLynx.Com, Inc.
11** Computation of Per Share Earnings.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Identification of Exhibit
----------- -------------------------
<S> <C>
15** See Exhibit 23.2.
21* Subsidiaries of BioLynx.Com, Inc.
23.1** Consent of Counsel (included in Exhibit 5).
23.2* Consent of John M. James, CPA.
27** Financial Data Schedule.
</TABLE>
- ------------------
* Filed herewith.
** Previously filed.
II-7
<PAGE>
Item 28. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required in
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to the
information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered, and the offering of
the securities at that time shall be deemed to be the initial bona fide
offering;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of this offering.
(4) That for purposes of determining any liability under the
Securities Act, (i) the information omitted from the prospectus filed as part of
this registration statement, as permitted by Rule 430A of the Securities Act and
to be contained in the form of prospectus to be filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act, shall be deemed to
be incorporated by reference into this registration statement at the time it is
declared effective, and (ii) each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered and the offering of the securities at that time shall be
deemed to be the initial bona fide offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant under the indemnification provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
the indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against those liabilities, other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding, is asserted by a
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether the indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of the issue.
II-8
<PAGE>
SIGNATURES
As required under the Securities Act of 1933, the registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on the registration statement on Form SB-2 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of San Antonio, State
of Texas, on the 28th day of January, 2000.
BIOLYNX.COM, INC.
By /s/ John D. Walker II
------------------------------------
John D. Walker II, Chairman of the Board
As required under the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John D. Walker II Chairman of the Board January 28, 2000
- -------------------------------------
JOHN D. WALKER II
/s/ Reagan E. Hicks President and Director January 28, 2000
- -------------------------------------
REAGAN E. HICKS
/s/ Patrick E. Tolle Vice President, Chief Operating January 28, 2000
- ------------------------------------- Officer, Secretary,
PATRICK E. TOLLE Treasurer, and Director
/s/ Andrew Fitch-Wallish Vice President and Director January 28, 2000
- -------------------------------------
ANDREW FITCH-WALLISH
/s/ Barbara A. Bean Chief Financial Officer January 28, 2000
- -------------------------------------
BARBARA A. BEAN
/s/ Louis A. Ross, Ph.D. Director January 28, 2000
- -------------------------------------
LOUIS A. ROSS, Ph.D.
/s/ Wren Alexander Director January 28, 2000
- -------------------------------------
WREN ALEXANDER
</TABLE>
II-9
<PAGE>
Exhibit 1.2
AURORA FINANCIAL SERVICES, L.L.C.
INVESTMENT SECURITIES
1800 Bering, Suite 400
Houston, TX 77057
October 15, 1999
BioLynx.Com, Inc.
5617 Grissom Road
San Antonio, Texas 78238
Re: Equity Placement by Aurora Financial Services, L.L.C. for BioLynx.com,
Inc.
Gentlemen:
Aurora Financial Services, L.L.C., (hereinafter referred to as "Aurora ")
hereby agrees to attempt to raise certain amounts (hereinafter referred to as
"the Required Capital") for BioLynx.com, Inc. (herein referred to as "BioLynx"
and as the "Issuer"). BioLynx hereby agrees to be bound by this agreement. The
required capital to be raised is as follows:
Aurora agrees to attempt to raise a minimum of $2,000,000 up to a maximum
of $4,000,000 for the Issuer which will pertain to providing biometric
automation for the control of employees time and attendance for employers.
The efforts of Aurora to raise the required capital are based upon the
following terms and conditions.
1. Engagement. For a period of 180 days from the effective date of the
Registration Statement under the Securities Act of 1933 (hereinafter referred to
as the ("Prospectus"), related to sale of equity securities of the Issuer,
BioLynx shall grant to Aurora the exclusive right to raise the Required Capital
in the manner to be described in the Prospectus. Provided, however,
notwithstanding anything herein obtained to the contrary, Aurora shall be
entitled to employ other broker-dealers selected by it to sell all or any
portion of the Required Capital. In that regard, Aurora shall be entitled to
reallow a portion of its commission to such participating broker-dealers
resulting from any of the Required Capital raised by them. Aurora may terminate
the Offering to be described in the Prospectus in the event that, among other
things, (a) certain specified actions, usually associated with extremely adverse
economic and market conditions, have been taken by the principal national
securities exchanges or by governmental authorities, or (b) other events have
occurred or are pending or threatened which, in the judgement of Aurora,
materially impair the investment quality of an investment in the Issuer.
2. Termination. If the Offering fails to have an Initial Closing resulting
in the raising of the minimum of the Required Capital to be described in the
Prospectus within 180 days following the effective date of the Prospectus, this
Agreement shall terminate with respect to the provisions which relate to the
failure to have such Initial Closing. Likewise, if the said offering shall fail
to close by the "Extended Subscription Period" (and/or terms of similar import)
as described in the Prospectus, this agreement shall terminate with respect to
the provisions which relate to the Issuer. As used herein, the terms "Initial
Closing", "Subsequent Closings" and "Extended Subscription Period" shall have
the meanings fairly ascribed to them in the Prospectus. Notwithstanding anything
herein contained to the contrary, in the event that either party hereto violates
the terms of this Agreement or the securities laws of the United States any
state wherein interests in the Issuer are to be offered for sale, or if either
party shall furnish to the other party hereunder information which is untrue or
misleading or fails to state the facts which make any such information so
supplied misleading, then the other party may terminate this Agreement without
any further liability hereunder.
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3. The Offering. The Required Capital shall be raised by Aurora pursuant to
an offering involving the public sale of securities (hereinafter referred to as
the "Offering"). The Offering shall be conducted in conformity with the
securities Act of 1933, as amended (herein referred to as the "1933 Act"). The
Offering documents shall be prepared at the direction of BioLynx by parties
selected by and who are acceptable to Aurora. The work on the Prospectus with
respect to the Offering shall begin upon the effective date of this Agreement.
4. Best Efforts. The Offering will be on a "best effort" only basis, with
no guarantees by Aurora that any or all of the Required Capital shall be raised.
5. Compensation. As its compensation in connection with the raising of the
Required Capital, Aurora shall be entitled to receive the following:
(a) A sales commission equal to 10% of the Required Capital raised by
Aurora or any broker-dealer selected by Aurora and acting pursuant to the
terms of this Agreement for the Issuer. Any sales commissions shall be paid
upon any Initial, Subsequent or Final Closing of the Offering.
(b) Aurora will receive a 3% non refundable and non accountable
investment banking fee.
(c) In addition, Aurora will receive 25,000 shares of common stock in
BioLynx.Com, Inc.
(d) The agreement of BioLynx evidenced by its execution hereof that
should BioLynx or any of its affiliates undertake within the first 60 month
period following the date hereof, an offering or offerings of securities
for the purpose of raising capital from third party investors, then Aurora
(or any successor to Aurora) will be tendered a right of first refusal to
act as selling agent or dealer manager, as then appropriate, in respect to
any such offering or offerings.
(e) In the event BioLynx (or any successor or successors or subsidiary
of BioLynx) shall determine within the first 60 month period following the
date hereof to undertake a program or plan to issue common stock or other
form of equity security whether or not in furtherance of a contemplated
public offering, then BioLynx agrees to tender to Aurora (i) a right of
first refusal in general accord with Subparagraph (c) of this Paragraph 5,
and (ii) the right to purchase for a nominal consideration a generous
number, giving effect to the then existing circumstances, of rights or
warrants to acquire at a favorable exercise price a recognizable percentage
of equity in the entity resulting from any such offering, reorganization or
recapitalization.
6. Indemnification. Each of the parties hereto shall indemnify and hold the
other harmless against any losses, claims, damages or liability, joint or
several, to which the indemnified party may become subject under the 1933 Act or
otherwise, by the other party by reason of any representation, warranty or
covenant contained in this Agreement or resulting from any untrue statements of
a material fact or omission thereof with respect to the information concerning
the parties to be contained in any Prospectus relating to the Offering made in
reliance upon and in conformity with the information furnished to the
indemnified party. Insofar as this indemnity agreement relates to any untrue
statement or omission made in any such Prospectus, this indemnity agreement
shall not inure to the benefit of the indemnified party if (i) the other party
shall have furnished to the indemnified party an amendment or supplement to the
Prospectus which corrected such untrue statement or omission which is the basis
for the loss, liability, claim, damage or expense for which indemnification is
sought and (ii) the indemnified party failed to send or give a copy of such
corrective amendment or supplement to the person asserting any such loss,
liability, claim, damage or expense at such time as the Prospectus as so amended
or supplemented, is required under the 1933 Act to be delivered by the
indemnified party to such person.
(a) BioLynx agrees to indemnify and hold harmless Aurora and each person,
if any, who controls Aurora within the meaning of the 1933 Act, from and against
any and all losses, claims, damages or liabilities, joint or several (including,
without limitation, any and all expenses whatsoever reasonably
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<PAGE>
incurred in investigating, preparing, or defending against the same), which
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or any amendment or
supplement thereto, or any application or other document filed in any state or
jurisdiction in order to qualify the Offering under the Blue Sky or securities
laws thereof ("Blue Sky Application"), if necessary, or to secure an exemption
therefrom, or which arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made not misleading and (ii) any actions, direct or indirect, in
connection with the offering and sale of the securities by BioLynx or any of
their respective agents or employee (other than by Aurora its employees or
affiliates), employees or affiliates in violation of the 1933 Act, or any other
applicable federal or state securities laws or regulations.
BioLynx agrees to promptly notify Aurora of the commencement of any
litigation or proceedings against BioLynx or any of their respective officers,
directors, employees, agents or affiliates in connection with the Offering.
(b) Aurora agrees to indemnify BioLynx and their respective affiliates, and
hold each of them harmless against any losses, claims, damages or liabilities to
which they or either of them may become subject, under the 1933 Act or the
Securities Exchange Act of 1934, as amended, or otherwise, insofar as such
losses, claims damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact made by Aurora or arising out of any violation or alleged
violation by Aurora or any of Aurora's representations, warranties, covenants or
agreements contained in this Agreement, (ii) any misuse or unauthorized use in
any jurisdiction of any supplemental sales literature (whether designed solely
for broker-dealer use or otherwise) by Aurora or (iii) any delivery,
distribution or furnishing by Aurora, either orally or in writing, of
information not contained in or materially inconsistent with, the Prospectus or
supplemental sales literature (as they, respectively, may be amended or
supplemented).
(c) Promptly after receipt by an indemnified party under subparagraph (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subparagraph, notify the indemnifying party in writing of the
commencement thereof; but the omission to so notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subparagraph. In case any such action shall be brought
against any indemnified party, and it shall notify the indemnifying party, of
the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, to jointly participate
with any other indemnifying party, similarly notified, in the defense thereof
with the indemnified party. The indemnifying party shall pay all legal fees and
expenses of the indemnified party in the defense of such claims and actions,
provided, however, that the indemnifying party shall not be obliged to pay legal
expenses and fees to more than one law firm in connection with the defense of
similar claims arising out of the same alleged acts or omissions giving rise to
such claims, notwithstanding that such actions or claims are alleged or brought
by one or more parties against more than one indemnified party. In case such
claims or actions are alleged or brought against more than one indemnified
party, then the indemnifying party shall only be obliged to reimburse the
expenses and fees of the one law firm which has been selected by a majority of
the indemnified parties against which such action as finally brought and, in the
event a majority of such indemnified parties are unable to agree on which law
firm or which expenses or fees will be reimbursed by the indemnifying party. The
payments shall be made to the first law firm of record representing an
indemnified party against the action or claim. Such law firm shall be paid only
to the extent of services performed by such law firm and no reimbursement shall
be payable to law firm on account of legal services performed by another law
firm. Notwithstanding anything contained herein to the contrary, an indemnified
party may, without the prior consent of the indemnifying party, settle or
compromise any action brought against such indemnified party.
3
<PAGE>
(d) The provisions of this Paragraph 6 shall remain in full force and
effect after the termination of this Agreement.
7. Effective Date. The effective date of this Agreement is the last date
that a party hereto executes same.
8. Further Acts. Each party hereto recognizes that this Agreement is not
complete in every detail with respect to the Offering, and that it may be
necessary to amend this Agreement from time to time in order to carry out the
intent hereof. However, each party will proceed in good faith to arrive at
whatever necessary adjustments are needed in order to carry out the terms of
this Agreement. Further, each party agrees to provide in a timely and complete
manner all information needed to complete the preparation of the Offering
documents and to supplement any such information as needed during the course of
the Offering or thereafter. In this connection, the Issuer undertakes and agrees
to provide Aurora with all such information and data as it may reasonably
require to comply with its statutory and regulatory obligations in connection
with the Offering, the application of proceeds, the operations of the Issuer and
the like.
9. Attorney's fees. In the event that it should become necessary for any
party entitled hereunder to bring suit against any other party to this Agreement
for enforcement of the covenants herein contained, the parties hereby covenant
and agree that the party who is found to be in violation of said covenants shall
also be liable for all reasonable attorney's fees and costs of court incurred by
the other parties hereto.
10. Benefit. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, if
to Aurora addressed to Mr. David Hayden at 1800 Bering, Suite 400, Houston, TX
77057, and if to BioLynx, addressed to John D Walker II President and CEO 5617
Grissom Road, San Antonio, Texas 78238. Any party hereto may change its address
upon 10 days written notice to any other party hereto.
12. Construction. Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
13. Waiver. No course of dealing on the part of any party hereto or its
agents, or any failure or delay by any such party with respect to exercising any
right, power or privilege of such party under this Agreement or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
14. Cumulative Rights. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
15. Invalidity. In the event any one or more of the provisions contained in
this Agreement or in any instrument referred to herein or executed in connection
herewith shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement or any such other instrument.
4
<PAGE>
16. Headings. The headings used in this Agreement are for convenience and
reference only and in no way define, limit, amplify or describe the scope or
intent of this Agreement, and in no way effect or constitute a part of this
Agreement.
17. Excusable Delay. None of the parties shall be obligated to perform and
none shall be deemed to be in default hereunder, if the performance of a non-
monetary obligation is prevented by the occurrence of any of the following,
other than as the result of the financial inability of the party obligated to
perform: acts of God, strikes, lock-outs, other industrial disturbances, acts of
a public enemy, war or war-like action (whether actual, impending or expected
and whether de jure or de facto), arrest or other restraint of governmental
(civil or military) blockades, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, hurricanes, storms, floods, washouts, sink holes,
civil disturbances, explosions, breakage or accident to equipment or machinery,
confiscation or seizure by any government of public authority, nuclear reaction
or radiation, radioactive contamination or other causes, whether of the kind
herein enumerated or otherwise, that are not reasonably within the control of
the party claiming the right to delay performance on account of such occurrence.
18. Multiple 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.
19. Law Governing. This Agreement shall be construed and governed by the
laws of the State of Texas, and all obligations hereunder shall be deemed
performable in Harris County, Texas.
20. Further Acts. The parties hereto shall do all other acts and things
that may be reasonably necessary or proper, full or more fully, to evidence,
complete or perfect this Agreement, and to carry out the intent of this
Agreement.
21. Entire Agreement. This instrument contains the entire Agreement of the
parties and may not be changed orally, but only by instrument in writing signed
by the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
If the foregoing meets your approval, please sign and date the enclosed
copies of this letter in the space provided below, and return same to us as soon
as possible.
Very truly yours,
AURORA FINANCIAL SERVICES, L.L.C.
By: /s/ David Hayden
----------------------------
David Hayden, President
Date Executed: October 15, 1999
This Letter Agreement is accepted and
agreed to this 20th day of October, 1999
BioLynx.Com, Inc.
By: /s/ John D. Walker II
-----------------------------
John D Walker II
5
<PAGE>
Exhibit 1.3
BioLynx.Com, Inc.
5617 Grissom Road
San Antonio, Texas 78238
Re: Equity Placement by Travis Morgan Securities, Inc. for BioLynx.Com, Inc.
Gentlemen:
Travis Morgan Securities, Inc., (hereinafter referred to as "Travis") hereby
agrees to attempt to raise certain amounts (hereinafter referred to as "the
Required Capital") for BioLynx.Com, Inc. (herein referred to as "BioLynx" and as
the "Issuer"). The required capital to be raised is as follows:
Travis agrees to attempt to raise a minimum of $200,000 up to a maximum of
$4,000,000 for the Issuer which will pertain to providing biometric automation
for the control of employees time and attendance for employers.
The efforts of Travis to raise the required capital are based upon the
following terms and conditions.
1. Engagement. For a period of 180 days from the effective date of the
Registration Statement under the Securities Act of 1933 (hereinafter referred to
as the "Prospectus"), related to sale of equity securities of the Issuer,
BioLynx shall grant to Travis, subject to the rights to raise the Required
Capital previously granted to Aurora Financial Services, L.L.C., which Travis
hereby acknowledges, the right to raise the Required Capital in the manner to be
described in the Prospectus. Provided, however, notwithstanding anything herein
contained to the contrary, Travis shall be entitled to employ other broker-
dealers selected by it to sell all or any portion of the Required Capital. In
that regard, Travis shall be entitled to reallow a portion of its commission to
such participating broker-dealers resulting from any of the Required Capital
raised by them.
2. Termination. If the Offering fails to have an Initial Closing resulting
in the raising of the minimum of the Required Capital to be described in the
Prospectus within 180 days following the effective date of the Prospectus, this
Agreement shall terminate with respect to the provisions which relate to the
failure to have such Initial Closing. As used herein, the term "Initial Closing"
shall have the meaning fairly ascribed to it in the Prospectus. Notwithstanding
anything herein contained to the contrary, in the event that either party hereto
violates the terms of this Agreement or the securities laws of the United States
any state wherein interests in the Issuer are to be offered for sale, or if
either party shall furnish to the other party hereunder information which is
untrue or misleading or fails to state the facts which make any such information
so supplied misleading, then the other party may terminate this Agreement
without any further liability hereunder.
3. The Offering. The Required Capital shall be raised by Travis pursuant
to an offering involving the public sale of securities (hereinafter referred to
as the "Offering"). The Offering shall be conducted in conformity with the
securities Act of 1933, as amended (herein referred to as the "1933 Act"). The
Offering documents shall be prepared at the direction of BioLynx.
4. Best Efforts. The Offering will be on a "best effort" only basis, with
no guarantees by Travis that any or all of the Required Capital shall be raised.
5. Compensation. As its compensation in connection with the raising of the
Required Capital, Travis shall be entitled to receive the following:
(a) A sales commission equal to 10% of the Required Capital raised by
Travis or any broker-dealer selected by Travis and acting pursuant to the
terms of this Agreement for the Issuer. Any sales
1
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commissions shall be paid upon at the time of the Initial Closing, and
thereafter, upon any sales generated by Travis in connection with the
Offering.
6. Indemnification. Each of the parties hereto shall indemnify and hold the
other harmless against any losses, claims, damages or liability, joint or
several, to which the indemnified party may become subject under the 1933 Act or
otherwise, by the other party by reason of any representation, warranty or
covenant contained in this Agreement or resulting from any untrue statements of
a material fact or omission thereof with respect to the information concerning
the parties to be contained in any Prospectus relating to the Offering made in
reliance upon and in conformity with the information furnished to the
indemnified party. Insofar as this indemnity agreement relates to any untrue
statement or omission made in any such Prospectus, this indemnity agreement
shall not inure to the benefit of the indemnified party if (i) the other party
shall have furnished to the indemnified party an amendment or supplement to the
Prospectus which corrected such untrue statement or omission which is the basis
for the loss, liability, claim, damage or expense for which indemnification is
sought and (ii) the indemnified party failed to send or give a copy of such
corrective amendment or supplement to the person asserting any such loss,
liability, claim, damage or expense at such time as the Prospectus as so amended
or supplemented, is required under the 1933 Act to be delivered by the
indemnified party to such person.
(a) BioLynx agrees to indemnify and hold harmless Travis and each
person, if any, who controls Travis within the meaning of the 1933 Act,
from and against any and all losses, claims, damages or liabilities, joint
or several (including, without limitation, any and all expenses whatsoever
reasonably incurred in investigating, preparing, or defending against the
same), which arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus, or
any amendment or supplement thereto, or any application or other document
filed in any state or jurisdiction in order to qualify the Offering under
the Blue Sky or securities laws thereof ("Blue Sky Application"), if
necessary, or to secure an exemption therefrom, or which arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made not
misleading and (ii) any actions, direct or indirect, in connection with the
offering and sale of the securities by BioLynx or any of their respective
agents or employee (other than by Travis its employees or affiliates),
employees or affiliates in violation of the 1933 Act, or any other
applicable federal or state securities laws or regulations.
BioLynx agrees to promptly notify Travis of the commencement of any
litigation or proceedings against BioLynx or any of their respective
officers, directors, employees, agents or affiliates in connection with the
Offering.
(b) Travis agrees to indemnify BioLynx and their respective
affiliates, and hold each of them harmless against any losses, claims,
damages or liabilities to which they or either of them may become subject,
under the 1933 Act or the Securities Exchange Act of 1934, as amended, or
otherwise, insofar as such losses, claims damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact made by Travis
or arising out of any violation or alleged violation by Travis or any of
Travis 's representations, warranties, covenants or agreements contained in
this Agreement, (ii) any misuse or unauthorized use in any jurisdiction of
any supplemental sales literature (whether designed solely for broker-
dealer use or otherwise) by Travis or (iii) any delivery, distribution or
furnishing by Travis , either orally or in writing, of information not
contained in or materially inconsistent with, the Prospectus or
supplemental sales literature (as they, respectively, may be amended or
supplemented).
(c) Promptly after receipt by an indemnified party under subparagraph
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subparagraph, notify the
indemnifying party in writing of the commencement thereof; but the omission
to so notify the indemnifying party shall not relieve it
2
<PAGE>
from any liability which it may have to any indemnified party otherwise
than under such subparagraph. In case any such action shall be brought
against any indemnified party, and it shall notify the indemnifying party,
of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, to jointly
participate with any other indemnifying party, similarly notified, in the
defense thereof with the indemnified party. The indemnifying party shall
pay all legal fees and expenses of the indemnified party in the defense of
such claims and actions, provided, however, that the indemnifying party
shall not be obliged to pay legal expenses and fees to more than one law
firm in connection with the defense of similar claims arising out of the
same alleged acts or omissions giving rise to such claims, notwithstanding
that such actions or claims are alleged or brought by one or more parties
against more than one indemnified party. In case such claims or actions are
alleged or brought against more than one indemnified party, then the
indemnifying party shall only be obliged to reimburse the expenses and fees
of the one law firm which has been selected by a majority of the
indemnified parties against which such action as finally brought and, in
the event a majority of such indemnified parties are unable to agree on
which law firm or which expenses or fees will be reimbursed by the
indemnifying party. The payments shall be made to the first law firm of
record representing an indemnified party against the action or claim. Such
law firm shall be paid only to the extent of services performed by such law
firm and no reimbursement shall be payable to law firm on account of legal
services performed by another law firm. Notwithstanding anything contained
herein to the contrary, an indemnified party may, without the prior consent
of the indemnifying party, settle or compromise any action brought against
such indemnified party.
(d) The provisions of this Paragraph 6 shall remain in full force and
effect after the termination of this Agreement.
7. Effective Date. The effective date of this Agreement is the last date
that a party hereto executes same.
8. Further Acts. Each party hereto recognizes that this Agreement is not
complete in every detail with respect to the Offering, and that it may be
necessary to amend this Agreement from time to time in order to carry out the
intent hereof. However, each party will proceed in good faith to arrive at
whatever necessary adjustments are needed in order to carry out the terms of
this Agreement. In this connection, the Issuer undertakes and agrees to provide
Travis with all such information and data as it may reasonably require to comply
with its statutory and regulatory obligations in connection with the Offering,
the application of proceeds, the operations of the Issuer and the like.
9. Attorney's fees. In the event that it should become necessary for any
party entitled hereunder to bring suit against any other party to this Agreement
for enforcement of the covenants herein contained, the parties hereby covenant
and agree that the party who is found to be in violation of said covenants shall
also be liable for all reasonable attorney's fees and costs of court incurred by
the other parties hereto.
10. Benefit. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, if
to Travis, addressed to Mr. Joseph A. Cerbone, Travis Morgan Securities, Inc.
18952 MacArthur Blvd., Suite 315, Irvine, CA 92612 and if to BioLynx, addressed
to John D. Walker II President and CEO 5617 Grissom Road, San Antonio, Texas
78238. Any party hereto may change its address upon 10 days written notice to
any other party hereto.
12. Construction. Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context
3
<PAGE>
requires otherwise. In addition, the pronouns used in this Agreement shall be
understood and construed to apply whether the party referred to is an
individual, partnership, joint venture, corporation or an individual or
individuals doing business under a firm or trade name, and the masculine,
feminine and neuter pronouns shall each include the other and may be used
interchangeably with the same meaning.
13. Waiver. No course of dealing on the part of any party hereto or its
agents, or any failure or delay by any such party with respect to exercising any
right, power or privilege of such party under this Agreement or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
14. Cumulative Rights. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
15. Invalidity. In the event any one or more of the provisions contained in
this Agreement or in any instrument referred to herein or executed in connection
herewith shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement or any such other instrument.
16. Headings. The headings used in this Agreement are for convenience and
reference only and in no way define, limit, amplify or describe the scope or
intent of this Agreement, and in no way effect or constitute a part of this
Agreement.
17. Excusable Delay. None of the parties shall be obligated to perform and
none shall be deemed to be in default hereunder, if the performance of a non-
monetary obligation is prevented by the occurrence of any of the following,
other than as the result of the financial inability of the party obligated to
perform: acts of God, strikes, lock-outs, other industrial disturbances, acts of
a public enemy, war or war-like action (whether actual, impending or expected
and whether de jure or de facto), arrest or other restraint of governmental
(civil or military) blockades, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, hurricanes, storms, floods, washouts, sink holes,
civil disturbances, explosions, breakage or accident to equipment or machinery,
confiscation or seizure by any government of public authority, nuclear reaction
or radiation, radioactive contamination or other causes, whether of the kind
herein enumerated or otherwise, that are not reasonably within the control of
the party claiming the right to delay performance on account of such occurrence.
18. Multiple 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.
19. Law Governing. This Agreement shall be construed and governed by the
laws of the State of California, and all obligations hereunder shall be deemed
performable in Orange County, California.
20. Further Acts. The parties hereto shall do all other acts and things
that may be reasonably necessary or proper, full or more fully, to evidence,
complete or perfect this Agreement, and to carry out the intent of this
Agreement.
21. Entire Agreement. This instrument contains the entire Agreement of the
parties and may not be changed orally, but only by instrument in writing signed
by the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
4
<PAGE>
If the foregoing meets your approval, please sign and date the enclosed copies
of this letter in the space provided below, and return same to us as soon as
possible.
Very truly yours,
TRAVIS MORGAN SECURITIES, INC.
By /s/ Joseph A. Cerbone
----------------------------
JOSEPH A. CERBONE, Chairman
Date Executed: January 26, 2000
----------------------
This Letter Agreement is accepted and
agreed to this 26th day of January, 2000
BIOLYNX.COM, INC.
By /s/ John D. Walker II
--------------------------------
JOHN D WALKER II, Chairman
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<PAGE>
Exhibit 4.1
Certificate Shares
Number SEE REVERSE FOR CERTAIN RESTRICTIONS
---
BIOLYNX.COM, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
COMMON STOCK
The Corporation is authorized to issue 50,000,000 shares
of Common Stock, $0.001 par value per share and
20,000,000 shares of Preferred Stock, $1.00 par value
per share.
This Certifies that _______________________________________ is the owner of
_______ fully paid and non-assessable shares of Common Stock, par value $0.001
per share, of BioLynx.Com, Inc. (the "Corporation").
This Certificate is transferable only on the books of the Corporation by
the holder hereof in person, or by duly authorized attorney, upon surrender of
this Certificate properly endorsed.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officers this ______ day of _______________, 1999.
SAMPLE SAMPLE
- ------------------------------- ------------------------------
PRESIDENT SECRETARY
<PAGE>
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -___Custodian___
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act___
in common (State)
Additional abbreviations may also be used
though not in the above list.
For Value Received, ___________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------- shares
of Common Stock represented by the within certificate, and do hereby irrevocably
constitute and appoint ___________________________________ attorney to transfer
the said shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated
---------------------
____________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit 4.2
Certificate Shares
Number SEE REVERSE FOR CERTAIN RESTRICTIONS
---
BIOLYNX.COM, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
PREFERRED STOCK
The Corporation is authorized to issue 50,000,000 shares of Common Stock, $0.001
par value per share and 20,000,000 shares of Preferred Stock, $1.00 par value
per share.
This Certifies that _______________________________________ is the owner of
_______ fully paid and non-assessable shares of Preferred Stock, par value $1.00
per share, of BioLynx.Com, Inc. (the "Corporation").
This Certificate is transferable only on the books of the Corporation by
the holder hereof in person, or by duly authorized attorney, upon surrender of
this Certificate properly endorsed.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officers this ______ day of _______________, 1999.
SAMPLE SAMPLE
- --------------------------------- ---------------------------------
PRESIDENT SECRETARY
<PAGE>
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -___Custodian___
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act___
in common (State)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell, assign and transfer unto
-----------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ----------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- ------------------------------------------------------------------------- shares
of Preferred Stock represented by the within certificate, and do hereby
irrevocably constitute and appoint ___________________________________ attorney
to transfer the said shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated
-----------------------
_________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit 10.27
MARKETING REPRESENTATIVE AGREEMENT
This Agreement, entered into on the date designated below, is between
BioLynx.Com, Inc. (hereinafter referred to as BioLynx), a Texas corporation,
with its principal place of business located at 5617 Grissom Road, San Antonio,
Texas 78228 and SOS Staffing Services, Inc. (hereinafter referred to as
Representative), a Utah corporation, with its principal place of business
located at 1415 South Main Street, Salt Lake City, Utah 84115. BioLynx and
Representative are collectively referred to as "Parties".
WHEREAS, BioLynx is the owner of and has the right to distribute certain
"hardware"; has proprietary rights to certain "software"; and agrees to supply
the "services" necessary to provide a time, attendance and data integrated
payroll system. The "hardware" and "software" are collectively referred to as
"products"; and,
WHEREAS, Representative desires to market the products and services of
BioLynx under the terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained the parties agree as follows:
1. Appointment - BioLynx hereby appoints Representative as an authorized
distributor of its products and services. The Representative may solicit Service
Agreements anywhere within the United States, but without any exclusive right in
any territory; provided that BioLynx agrees that, except in the state of Texas,
no staffing industry firm other than Representative shall be engaged as an
authorized distributor of its products and services during the term of this
Agreement or any extension thereof. Representative may, with the consent of
BioLynx, which consent shall not be unreasonably withheld, subcontract to other
staffing industry firms the distribution of BioLynx's products and services.
2. Designated Customers - In consideration of Representative efforts to
market BioLynx's products and services, BioLynx agrees that, upon written
notice, the Representative will have the exclusive right to sell the products
and services to a designated customer for a period of ninety (90) days from the
date of notification.
3. Term of Appointment - This appointment shall commence on the date of
this agreement and remain in full force and effect for a period of three (3)
years from date hereof, but is subject to the following:
a. This appointment shall automatically renew at the expiration of the
original term unless earlier terminated.
b. If either party shall cease to function as a going concern, or a
receiver is appointed or applied for, or a petition under the federal
bankruptcy code is filed by or against it, or it makes an assignment for
the benefit of creditors, the non-defaulting party may upon two days
written notice terminate this agreement, but such termination shall be
without prejudice to the rights of the parties with respect to products
already sold and delivered.
c. In the event of the termination of this agreement, BioLynx agrees
that the fees payable to Representative shall continue for a period of one
(1) year from the date of termination.
4. Duties of Representative - Upon acceptance of this appointment,
Representative agrees as follows:
a. To use its best efforts to obtain Service Agreements for the
installation of 100 units within a reasonable time from the date hereof.
The inventory of products is to be maintained at the principal place of
business of BioLynx and all installations and services shall be performed
by BioLynx personnel.
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b. To attend an orientation and training seminar at BioLynx's home
office in San Antonio, Texas. All expenses of attending the seminar will be
the responsibility of the Representative.
c. To be responsible for billing and collecting the Service Fee from
its customers. The minimum Service Fee for each unit shall be the greater
of $125.00 per week or $5.00 per employee utilizing the unit per week (the
"Minimum Service Fee").
d. To promptly pay BioLynx its invoice for services. Until such time
that the Representative has obtained service contracts for the placement of
100 units, Representative will be billed an amount equal to seventy percent
(70%) of the Minimum Service Fee for the units actually placed based on the
terms of the Service Agreements for the units. Thereafter, if
Representative has obtained service contracts for the placement of 100
units, Representative will be billed an amount equal to sixty percent (60%)
of the Minimum Service Fee for the units placed based on the terms of the
Service Agreements for the units. If Representative places units at a price
above the Minimum Service Fee, Representative shall be entitled to the
entire amount of such excess.
5. Duties of BioLynx - In consideration of Representative's undertakings,
BioLynx agrees as follows:
a. To coordinate completion of all installations.
b. To provide marketing materials (limited to 20 brochures per unit,
with additional materials available on an "at cost" basis).
c. To employ, at its sole cost and expense, qualified personnel to
provide the required services and products under the Service Agreement.
d. To provide customer support services at the levels specified in the
Service Agreement, the form of which is attached hereto as Exhibit "A" and
incorporated herein by this reference.
e. To undertake research and development and upgrade products as may
become necessary.
f. To provide Representative with five (5) "demo" units. Additional
"demo" units may be obtained at a cost of $1,000.00 per unit.
6. Pricing of Services - In marketing the products and services,
Representative agrees that the minimum fees charged for the products and
services must be approved by BioLynx, in writing, prior to the execution of a
Service Agreement with any customers. BioLynx agrees that the Service Agreements
obtained by Representative may provide, at Representative's discretion, that the
Service Fees may be tied to the customer's use of Representative's staffing
services and could increase if the customer ceased the use of Representative's
staffing services.
7. Representations and Warranties - BioLynx represents and warrants to
Representative that all software used in or in connection with the products and
services which are the subject of this Agreement shall be an original work of
authorship of BioLynx, or shall be fully available for use in such software by
BioLynx through appropriate license or purchase of rights.
BioLynx represents and warrants to Representative that no technology use in or
in connection with the services or products will violate any copyright, trade
secret, trade dress, trademark or patent of any third party.
8. Indemnification - BioLynx shall indemnify and hold Representative
harmless from and against all costs, expenses, including reasonable attorney's
fees, claims, proceedings, causes of action, damages, and liabilities arising
from or related to any breach of the representations and warranties made by
BioLynx in paragraph 7 of this Agreement.
2
<PAGE>
9. Confidentiality - Contemporaneously with the execution of this
Agreement, the parties have executed a Confidentiality Agreement that is
attached hereto and incorporated herein for all purposes.
10. Waiver - the failure of either party to enforce at any time any of the
provisions hereof shall not be construed to be a waiver of such provisions or of
the right of such party thereafter to enforce any such provisions.
11. Assignment - This appointment is personal, and the rights hereunder are
not assignable or the obligations imposed delegable without the prior written
consent of BioLynx, which shall not be unreasonably withheld.
12. Modification - No renewal or termination of this agreement, or
modification or waiver of any of the provisions herein contained, or any future
representations, promises, or condition in connection with the subject matter
hereof shall be binding unless made in writing. A mere acknowledgment or
acceptance of any order inconsistent with the terms of this agreement, or the
making of deliveries pursuant thereto, shall not be deemed an acceptance or
approval of the inconsistent provisions.
13. Construction - This instrument contains the entire agreement between
the parties. All prior and collateral representations, promises and conditions
are expressly merged herein. Any representations, promises or conditions not
incorporated herein shall not be binding upon either party.
14. Mandatory Arbitration - The parties agree that any dispute or claim
concerning this agreement will be settled by arbitration. The arbitration
proceedings shall be conducted under the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time a demand for arbitration
under the rules is made. The decision of the arbitrators, including
determination of amount of damages suffered shall be exclusive, final and
binding on both parties, their heirs, successors, administrators and assigns.
15. Governing Law - This Agreement shall be governed by the laws of the
State of Texas and both parties agree that exclusive venue shall be in Bexar
County, Texas.
IN WITNESS WHEREOF, the parties have executed this agreement on the 5th day
of January, 2000.
BIOLYNX.COM, INC. SOS STAFFING SERVICES, INC.
By: /s/ John D. Walker II By: /s/ Joann W. Wagner
---------------------------- -----------------------------
Name: John D. Walker II Name: Joann W. Wagner
-------------------------- ---------------------------
Title: President Title: Chief Executive Officer
------------------------- --------------------------
3
<PAGE>
Exhibit 10.28
BIOLYNX.COM, INC.
AMENDED STOCK PURCHASE WARRANT
Expiring March 31, 2000
7,500 Shares San Antonio, Texas
THIS IS TO CERTIFY that, for value received, TRAVIS MORGAN SECURITIES, INC.
(the "Holder") is entitled at any time from the date hereof, but prior to 2:00
p.m., San Antonio, Texas time on March 31, 2000, subject to and upon the terms
and conditions contained herein, to purchase up to 7,500 fully paid and non-
assessable shares of the common stock, par value $0.001 per share (the "Shares")
of BIOLYNX.COM, INC., a Texas corporation (the "Company"), at a purchase price
of $1.00 per Share (such number of the Shares and the purchase price being
subject to adjustment as provided herein). This Warrant shall be void and of no
effect and all rights hereunder shall cease at 2:00 p.m., San Antonio, Texas
time on March 31, 2000, except to the extent theretofore exercised; provided
that in the case of the earlier dissolution of the Company, this Warrant shall
become void on the date fixed for such dissolution.
1. Warrant. This Warrant has been issued by the Company to the Holder in
connection with the offering of the Shares of the Company.
2. Covenants of the Company. The Company covenants that, while this Warrant
is exercisable (a) it will reserve from its authorized and unissued Shares a
sufficient number of Shares to provide for the delivery of the Shares pursuant
to the exercise of this Warrant, and (b) that all Shares which may be issued
upon the exercise of this Warrant will upon issue be fully paid and non-
assessable.
3. Protection Against Dilution, Etc. In any of the following events,
occurring after the date of the issuance of this Warrant, appropriate adjustment
shall be made in the number of Shares to be deliverable upon the exercise of
this Warrant and the purchase price per share to be paid, so as to maintain the
proportionate interest of the Holder as of the date hereof: (a) recapitalization
of the Company through a split-up or reverse split of the outstanding Shares
into a greater or lesser number, as the case may be, or (b) declaration of a
dividend on the Shares, payable in Shares or other securities of the Company
convertible into Shares, or (c) any of the events described in Paragraph 4
hereof.
4. Merger, Etc. In case the Company, or any successor, shall be
consolidated or merged with another company, or substantially all of its assets
shall be sold to another company in exchange for stock, cash or other property
with the view to distributing such stock, cash or other property to its
shareholders, each of the Shares purchasable by this Warrant shall be replaced
for the purposes hereof by the securities of the Company or cash or property
issuable or distributable in respect of one Share of the Company, or its
successors, upon such consolidation, merger, or sale, and adequate provision to
that effect shall be made at the time thereof. Provided, however,
notwithstanding anything herein contained to the contrary, in the event that the
terms of any such consolidation, merger or sale call for the distribution of any
cash or property to the shareholders of the Company, no such cash or property
shall be distributable to the Holder in connection with any unexercised portion
of this Warrant, unless the Holder shall have exercised this Warrant pursuant to
the terms of Paragraph 7 hereof and all other terms of this Warrant.
5. Notice of Certain Events. Upon the happening of any event requiring an
adjustment of the Warrant purchase price hereunder, the Company shall forthwith
give written notice thereof to the Holder stating the adjusted Warrant purchase
price and the adjusted number of Shares purchasable upon the exercise hereof
resulting from such event and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The Board of
Directors of the Company shall determine the computation made hereunder. In the
case of (a) any consolidation, merger, or sale affecting the Company and calling
for the payment of cash or the delivery of property to shareholders of the
Company, or (b) any voluntary or involuntary dissolution, liquidation, or
winding up of the Company shall at any time be proposed, the Company
1
<PAGE>
shall give at least 20 days' prior written notice thereof to the Holder stating
the date on which such event is to take place and the date (which shall be at
least 20 days after the giving of such notice) as of which the holders of record
of Shares shall be entitled to participate in any such event. If the Holder does
not elect to exercise any part of this Warrant as a result of any such notice,
the Holder shall have no right with respect to any portion of this Warrant which
shall remain unexercised to participate in (i) any such cash or other property
resulting from any such consolidation, merger or sale, or (ii) any voluntary or
involuntary dissolution, liquidation, or winding up of the Company.
6. Shareholders' Rights. Until the valid exercise of this Warrant, the
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares covered by this Warrant; but immediately upon the exercise of this
Warrant and upon payment as provided herein, the Holder shall be deemed a record
holder of the Shares.
7. Manner of Exercise. In order to exercise this Warrant, the Holder shall
surrender this Warrant, duly endorsed or assigned to the Company or, in blank,
at the office of the Company, accompanied by (a) written notice to the Company
that the Holder elects to exercise this Warrant or, if less than the entire
amount thereof is to be exercised, the portion thereof to be exercised, and (b)
payment of the purchase price of the Shares to be purchased on such exercise, in
cash or by cashier's or certified check.
This Warrant shall be deemed to have been exercised immediately prior to
the close of business on the day of surrender of this Warrant for exercise in
accordance with the foregoing provisions, and at such time the person or persons
entitled to receive the Shares issuable upon exercise shall be treated for all
purposes as the record holder or holders of the Shares at such time. As promptly
as practicable on or after the exercise date, the Company shall issue and shall
deliver to the Holder a certificate or certificates for the number of full
Shares issuable upon exercise.
In case this Warrant is exercised in part only, upon such exercise the
Company shall execute and deliver to the Holder thereof, at the expense of the
Company, a new Warrant to purchase, in the aggregate, in the number of Shares
covered by the unexercised portion of this Warrant.
8. Covenants of the Holder. The Holder covenants that this Warrant has not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or any other applicable securities law. This Warrant has been purchased
for investment only and not with a view to distribution or resale, and may not
be sold, pledged, hypothecated or otherwise transferred unless this Warrant or
the Shares represented hereby are registered under the Securities Act, and any
other applicable securities law, or the Company has received an opinion of
counsel satisfactory to it that registration is not required. A legend in
substantially the following form will be placed on any certificates or other
documents evidencing the Shares to be issued upon any exercise of this Warrant:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE OR FOREIGN JURISDICTION.
WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE COMPANY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY
BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAW OF
ANY STATE OR FOREIGN JURISDICTION, OR ANY RULE OR REGULATION PROMULGATED
THEREUNDER.
Further, stop transfer instructions to the transfer agent of the Shares
have been or will be placed with respect to the Shares so as to restrict the
resale, pledge, hypothecation or other transfer thereof, subject to the further
items hereof, including the provisions of the legend set forth in this
paragraph.
2
<PAGE>
9. Fractional Warrants. Upon the exercise of this Warrant, no fractions of
Shares shall be issued; but fractional Warrants shall be delivered, entitling
the Holder, upon surrender with other fractional Warrants aggregating one or
more full Shares, to purchase such full Shares.
10. Registration Obligation. The Company has not agreed to file and the
Company does not anticipate the filing of a registration statement under the
Securities Act to allow a public resale of this Warrant or any Shares issued
upon the exercise of this Warrant.
11. Loss, Theft, Destruction of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
receipt of indemnity reasonably satisfactory to the Company, or, in the case of
any such mutilation, upon surrender and cancellation of this Warrant, the
Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor.
12. Arbitration. All disputes arising or related to this Agreement must
exclusively be resolved by binding arbitration under the Commercial Arbitration
Rules of the American Arbitration Association in effect at the time the
arbitration proceeding commences; except that (a) Texas law and the Federal
Arbitration Act must govern construction and effect, (b) the locale of any
arbitration must be in San Antonio, Texas, and (c) the arbitrator must with the
award provide written findings of fact and conclusions of law. Any party may
seek from a court of competent jurisdiction any provisional remedy that may be
necessary to protect its rights or assets pending the selection of the
arbitrator or the arbitrator's determination of the merits of the controversy.
The exercise of such arbitration rights by any party will not preclude the
exercise of any self-help remedies (including without limitation, setoff rights)
or the exercise of any non-judicial foreclosure rights. An arbitration award may
be entered in any court having jurisdiction.
13. Benefit. All the terms and provisions of this Warrant shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto, and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns.
14. Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, if
to the Company, addressed to the Company at 5617 Grissom Road, San Antonio,
Texas 78238; and if to the Holder, addressed to Travis Morgan Securities, Inc.,
18952 MacArthur Boulevard, Suite 360, Irvine, California 92612. Any party hereto
may change its address upon 10 days' written notice to any other party hereto.
15. Construction. Words of any gender used in this Warrant shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Warrant shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
16. Headings. The headings used in this Warrant are for convenience and
reference only and in no way define, limit, simplify or describe the scope or
intent of this Warrant, and in no way effect or constitute a part of this
Warrant.
17. Law Governing. This Warrant shall be construed and governed by the laws
of the State of Texas, and all obligations hereunder shall be deemed performable
in Bexar County, Texas.
3
<PAGE>
IN WITNESS WHEREOF, this Warrant has been issued on January 1, 2000.
BIOLYNX.COM, INC.
By /s/ John D. Walker II
---------------------------------
John D. Walker II, President
4
<PAGE>
EXERCISE FORM
(To be Executed If The Owner Desires to Exercise the Warrant)
To: BioLynx.Com, Inc.
5617 Grissom Road
San Antonio, Texas 78238
The undersigned hereby exercises, according to the terms and conditions
thereof ______ (number of Shares to be purchased) of the Warrant evidenced
hereby, and herewith makes payment of the purchase price at a price of $1.00 per
share in full in the amount of $_________________. Kindly issue all Shares to
the undersigned and deliver them to the undersigned at the address stated below.
If such number of shares shall not be all of the shares purchasable by this
Warrant, please issue a new Warrant of like tenor for the balance of the
remaining Shares purchasable hereunder to be delivered to the undersigned at the
address stated below.
________________________________________
(Printed Name)
_______________________________________
Address
_______________________________________
City State Zip Code
_______________________________________
Signature
Dated:____________________
5
<PAGE>
Exhibit 10.29
January 3, 2000
BioLynx.Com, Inc. Via Certified Mail, Return Receipt Requested
5617 Grissom Road
San Antonio, Texas 78238
Attn: Mr. Charles Pircher
Re: Exercise of Conversion Rights on Subordinated Debenture
Dear Sirs:
At this time, I wish to inform you of my decision to convert the entire
remaining principal balance of the subordinated debenture into shares of the
Company's common stock pursuant to paragraph 3.1. Enclosed, please find the
originally executed copy of the debenture. At your earliest convenience, please
issue stock certificates in my name for, by my calculation, 335,613 shares of
common stock. Please call me to discuss the number of stock certificates to be
issued. If you agree with my calculation of the number of shares to be issued,
please execute this document and return a copy to me by facsimile.
If you should have any questions, please do not hesitate to call.
Sincerely,
/s/ John D. Walker II
John D. Walker II
Enclosure
cc: Mr. Patrick E. Tolle Via Regular Mail
BioLynx.Com, Inc.
/s/ Charles Pircher
______________________________________
Charles Pircher
<PAGE>
Exhibit 10.30
OFFICE LEASE
This Lease is entered into between John D. Walker, II ("Landlord"), and
Biolynx ("Tenant").
In consideration of the mutual covenants and agreements of this lease, and
other good and valuable consideration, Landlord demises and leases to Tenant,
and Tenant leases from Landlord, suite number 110, comprising approximately 2650
square feet of space, located on the first floor of the Building A, 5617 Grissom
Road, San Antonio, Bexar County, Texas, legally described on Exhibit A attached
to this lease, and made a part of this lease for all purposes. The premises are
referred to in this lease as "the premises" or "the leased premises."
ARTICLE 1. TERM
Term of Lease
1.01. The term of this lease is 36 (thirty-six), months beginning on
November 9, 1998, and ending on November 9, 2001, unless terminated sooner or
extended as provided in this lease.
Option to Extend Term
1.02. Tenant may extend the term of this lease beyond the expiration date
provided in (S) 1.01 on the following conditions:
a. Tenant may, if it is not in default either on the date required for the
notice or on the date such extension commences, extend the lease term for
additional periods of n/a months each. The extended term will begin on the day
following the expiration date of the lease term specified in (S) 1.01, and for
n/a additional periods of the same length, each to begin on the day following
the expiration date of the immediately preceding extended term. But if, on the
date the original term or any extended term expires, Tenant is in default beyond
any grace period provided in this lease in performing any of the terms of this
lease, the remaining option or options are void. All the terms and covenants of
the original lease term apply to all extended lease terms; provided, however,
that in no event shall this lease be in force and effect after n/a, unless
pursuant to holdover under (S) 1.03.
b. Tenant may exercise each option to extend this lease by giving Landlord
notice of its intention to do so not later than sixty (60) days before the then
current lease term expires, in the case of the initial option to extend, or
before the extended lease term expires, in the case of successive options to
extend. Notice of an intention to exercise an option under this lease must, to
be effective, be sent by mail or fax to Landlord as provided in (S) 15.02 no
later than the latest date provided in this section for Tenant's exercising the
option.
Holdover
1.03. If Tenant holds over and continues in possession of the premises
after the lease term (or any extension of it) expires, other than as provided in
(S) 1.02, Tenant will be considered to be occupying the premises on a month-to-
month tenancy, subject to all of the terms of this lease.
ARTICLE 2. RENT
Basic Rent
2.01. Tenant will pay Landlord $3,000.00 per month, from the beginning of
the lease term and throughout the original lease term, in advance on the 9th
(ninth) day of each month without deduction or setoff. This amount is the "basic
rent." Rent for any fractional month at the beginning or end of the lease term
will be prorated on a per-day basis. This basic rent will increase by n/a
percent for each extended lease term, so that the basic rent during the first
extended term will be $ n/a; the basic rent during second extended term will be
$ n/a; and so forth.
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Security Deposit
2.02. a. Tenant has deposited with Landlord the additional sum, equal to
one month's rent, of ________________ and 00/100 Dollars ($__________) which
Landlord acknowledges receiving, as security for Tenant fully and faithfully
performing the terms and covenants of this lease to be performed and kept on
Tenant's part. This deposit does not constitute advance payment of the final
rental payment due under this lease.
b. Landlord will hold the deposit for Tenant, and it is understood
that Tenant's claim to the deposit is prior that of any creditor of Landlord's,
excluding a trustee in bankruptcy.
c. Excluding the final rental payment to be made under this lease,
if, at any time during the lease term, Tenant defaults in paying rent or any
portion of rent reserved in this lease, or any other sums expressly constituting
rent, other than advance rental payments, Landlord may appropriate and apply any
portion of the security deposit as may be necessary to pay the overdue rent or
other sums expressly constituting rent under this lease.
d. If, at any time during this lease term, Tenant fails to repair any
damage to the premises that Tenant must repair under this lease for a period
greater than ten (10) days after Landlord serves on Tenant written demand to
make the repair, the Landlord may appropriate and apply any portion of the
security deposit as may be reasonably necessary to make the repairs.
e. If, on termination of this tenancy for any reason, Tenant does not
leave the premises in reasonably clean condition and in good repair, excluding
normal wear and tear, then Landlord may appropriate and apply any portion of the
security deposit as may be reasonably necessary to put the premises in clean
condition and good repair. As used in this lease, "normal wear and tear" means
deterioration that results from the intended use of the Property, and does not
include deterioration that results from negligence, carelessness, accident, or
abuse of the premises by Tenant, Tenant's employee, or Tenant's guest.
f. If there is actual cause for retaining all or any portion of the
security deposit, Landlord will return to Tenant the balance, if any, together
with a written description and itemized list of all deductions. Such deductions
will be limited to damages and charges for which Tenant are legally liable under
this agreement or as a result of breaching it. Landlord is not required to
furnish a description and itemized list of deductions if any rentals are due and
unpaid when Tenant surrenders possession of the premises and there is no
controversy over the amount of rentals due and unpaid.
g. Within thirty (30) days Tenant surrenders the premises, any
remaining portion of the security deposit, after any lawful deductions as above,
will be returned to Tenant at the address left by Tenant specifically for that
purpose. BUT TENANT IS NOT ENTITLED TO ANY PORTION OF THE SECURITY DEPOSIT AS A
REFUND UNLESS TENANT GIVE LANDLORD SIXTY (60) DAYS NOTICE OF SURRENDERING THE
PREMISES.
h. If Landlord transfers Landlord's interest under this lease in any
manner, Landlord or his agent must do one of the following, either of which will
relieve Landlord or his agent of further liability with respect to the deposit:
(1) Transfer the portion of the deposit remaining after any lawful
deductions, as above, to the successor in interest, and then notify Tenant
by registered mail of the transfer and of the transferee's name and
address. On receiving the remaining deposit, Landlord's successor in
interest will have all of Landlord's rights with respect to the deposit. On
Tenant's receiving a statement signed by the successor in interest
acknowledging receipt of and responsibility for the security deposit,
Landlord's successor in interest will have all of Landlord's obligations
with respect to the deposit.
(2) Return to Tenant the portion of the deposit remaining after any
lawful deductions have been made.
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Exhibit 10.31
EMPLOYMENT CONTRACT
This agreement is between BioLynx, Inc. ("Company") of San Antonio, Texas,
and Reagan E. Hicks ("Employee") of San Antonio, Texas.
In consideration of Employee's employment with or continued employment with
the Company, the Company and Employee agree as follows:
I. SERVICES AND COMPENSATION
The Company hereby employs, engages, and hires Employee, and Employee
hereby accepts and agrees to such employment, subject to the general supervision
and pursuant to the orders, advice, and direction of the Company.
The Employee agrees that he or she will at all times faithfully and to the
best of his or her ability, experience, and talents perform all of the duties
that may be required of or from him or her to the reasonable satisfaction of the
Company. The duties shall be rendered at all place or places as the Company
shall in good faith require.
The Company shall pay Employee a monetary compensation, and Employee shall
accept such compensation from the Company for Employee's services.
II. CONFIDENTIALITY AND NON-DISCLOSURE
During and after his or her employment with the Company, Employee agrees
that, except as directed by the Company, he or she will not use or disclose
Confidential Information to any person or organization or permit any person to
examine or copy Confidential Materials. Upon termination of employment with the
Company, Employee will deliver to the Company all confidential Materials in his
or her possession or control. At all times during and after employment with the
Company, Employee will take reasonable precautions to prevent unintentional
disclosures of Confidential Information.
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"Confidential Information" means information: (1) disclosed to or known by
Employee as a consequence of his or her employment with the Company; (2) not
generally known outside the Company; and (3) which relates to the Company's
business. "Confidential Information" is intended to include trade secrets as
defined in the Restatement of Torts. Specifically, without limitation,
"Confidential Information" includes information relating to products developed
for or used by the Company.
"Confidential Materials" are tangible materials containing Confidential
Information, including, without limitation, software, letters, books, records,
notes, memoranda, research materials, artwork, and drawings.
III. PROPRIETARY RIGHTS
All rights to Proprietary Items and Inventions, existing and to be
developed under the terms of this agreement, whether by Employee alone or in
cooperation with others, shall belong to the Company. Employee agrees that all
copyrightable material shall be a work for hire as defined by the United States
copyright laws, to be developed as part of a collective work.
Employee agrees to assign, without further compensation, his or her
interest, if any, in any Proprietary Item or Invention to the Company. Employee
further agrees to (1) disclose promptly to the Company in confidence and in
writing all Proprietary Items or Inventions conceived or made during the term of
employment, and (2) comply with the Company's reasonable instructions and
execute any documents necessary for vesting, registering or recording the
Company's interests in Proprietary Items or Inventions.
"Invention" means any new or useful art, discovery, contribution, finding,
or improvement whether or not patentable, and all related know-how.
"Proprietary Items" are ideas and information and their expressions
(whether copyrightable or not copyrightable), and inventions, including
development of existing Confidential Information or Materials, conceived or made
by Employee alone or with others during his or her employment at the Company.
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IV. NON-COMPETITION
The Employee recognizes and agrees that he or she has received or will
receive special training, knowledge, and access to confidential information and
trade secrets through his or her employment with the Company.
The Employee further recognizes and agrees that this industry in which the
Company is engaged is extremely competitive and the Company would suffer
irreparable harm if the Employee were to engage in activities directly in
competition with the Company.
In consideration of the valuable training, knowledge, and access to
confidential information and trade secrets provided to the Employee by the
Company, the Employee agrees that for a reasonable period, deemed by the parties
to be two years, after the termination of the Employee's employment for any
reason, the Employee will not engage in the business of developing, publishing,
or marketing of products in direct competition with the Company anywhere within
the Company's trade territory, the extent of the trade territory being
determined as of the time the Employee ends his or her employment with the
Company.
It is further understood that the geographic restrictions above are
reasonable and necessary to protect the business and interests of the Company.
V. ENFORCEMENT AND GENERAL CONDITIONS
It is agreed that all damages shall be an inadequate remedy for breach or
threatened breach by Employee of any of his or her covenants herein and that any
such breach by Employee will cause the Company irreparable damage. Accordingly,
Employee agrees that the Company shall be entitled, without waiving any
additional remedies otherwise available to it, to injunctive and other equitable
relief in the event of a breach or threatened breach. The validity and
interpretation of this agreement and legal relations of the parties shall be
governed by the laws of the State of Texas.
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The parties have signed this agreement the 25th day of January, 2000, to be
effective as of the day of first employment of Employee with Company.
EMPLOYEE: COMPANY: BioLynx, Inc.
REAGAN E. HICKS By: JOHN D. WALKER
Its: Chairman of the Board
-----------------------
/s/ Reagan E. Hicks /s/ John D. Walker
- ------------------------------ -----------------------------
January 25, 2000 January 25, 2000
- ------------------------------- -----------------------------
Date Date
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Exhibit 10.32
CONFIDENTIALITY AGREEMENT
PARTIES
This Confidentiality Agreement, is between BioLynx, Inc., a business
located at 5617 Grissom Road, San Antonio, Texas 78238 (and hereinafter
"BioLynx") and Reagan Hicks (hereinafter "Receiving Party").
RECITALS
Whereas, in connection with certain proposed business transactions
("Projects") products or information in the nature of product designs,
illustrations, prototypes and software may be provided by BioLynx to Receiving
Party and certain of Receiving Party's affiliates for the purposes of
manufacturing, tooling, mold designing, advertising, marketing and other means
in furtherance of or including, but not limited to, product sales, production,
licensing or other rights thereto;
Whereas preliminary to a Project, or during the course of a Project certain
proprietary works may be produced or disclosed;
Whereas, all proprietary works produced by Receiving Party at the direction
of BioLynx are conveyed to BioLynx and are not made available to third parties,
or used for personal gain by Receiving Party regardless of whether such works
were produced or disclosed to Receiving Party, or any other party, before or
after the date hereof; and
Whereas, it is agreed that Receiving Party is willing to covenant not to
make available any works disclosed by BioLynx or produced for BioLynx at the
direction of BioLynx.
NOW, THEREFORE, BioLynx and Receiving Party hereby agree as follows:
I. OWNERSHIP OF DISCLOSED PROPRIETARY ITEMS
By disclosing information (including, but not limited to, product designs,
illustrations, prototypes and software), BioLynx does not grant any express or
implied license or other rights to or under patents, copyrights, trademarks,
service marks or trade secret information of BioLynx.
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II. CONFIDENTIAL INFORMATION
Receiving Party shall not divulge or communicate to any person (other than
those whose province it is to know the same or with proper authority) any of the
trade secrets or other confidential information of BioLynx, BioLynx's
subsidiaries and/or affiliated persons or entities which may have been received
or obtained during the course of this Agreement. This restriction shall continue
to apply after the termination of this Agreement without limit in point of time
but shall cease to apply to information or knowledge which may come into the
public domain.
For purposes of this Agreement, the term "Confidential Information" shall
include, without limitation, information (including product designs,
illustrations, prototypes, and software), records, know-how, technology,
business plans, policies, strategies and/or practices, trade secrets, written
documentation, electronic files, computer programs, illustrations, edited works,
and financial and/or operating data relating to BioLynx or BioLynx's existing or
potential Business policies or practices.
III. FAILURE OF TRANSACTION
All information and all copies of information (including all product
designs, illustrations, prototypes and software) will either be destroyed or
returned to BioLynx upon request, in the event negotiations for Project are
terminated. Receiving Party agrees not to retain any copy, summary or extract of
Information provided to it by BioLynx. Upon request of BioLynx, Receiving Party
shall provide a certification from an appropriate officer that the requirements
of this paragraph have been satisfied in full.
IV. MANDATORY DISCLOSURE
In the event that Receiving Party or anyone to whom Receiving Party
transmits Information pursuant to this Agreement becomes compelled by law or by
any court or governmental agency to disclose any of the Information, Receiving
Party will provide BioLynx with prompt notice prior to the disclosure so that
BioLynx may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. In the event that such
protective order or other remedy is not obtained, or that BioLynx waives
compliance with the provisions of this Agreement, Receiving Party will furnish
only that portion of the Information which is believed to be legally required
and will exercise its best efforts to obtain assurance that confidential
treatment will be accorded the Information.
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V. ADDITIONAL NONDISCLOSURE
Receiving Party agrees that, without the prior written consent of BioLynx,
it will not disclose to any other person or entity the fact that Information has
been made available by BioLynx, that discussion or negotiations are taking place
concerning a possible transaction involving either BioLynx or Receiving Party,
or any of the terms, conditions or other facts with respect to such possible
transaction.
VI. CHOICE OF LAW
The laws of the State of Texas govern any interpretation of the provisions
of this Agreement without regard to Conflict of Law principles.
VII. INJUNCTIVE RELIEF
Receiving Party acknowledges that in the event of any breach of this
Agreement by Receiving Party, Receiving Party affiliates, agents representatives
or employees, BioLynx shall be irreparably harmed, and remedies at law may be
inadequate to protect against breach of this Agreement, and Receiving Party
hereby agrees in advance to the granting of injunctive relief in favor of
BioLynx without proof of actual damages, in addition to any right at law to
damages (including reasonable attorneys' fees and costs) arising out of or
resulting from such breach.
IN WITNESS WHEREOF, the parties hereto confirm, Accept and Agree to the
foregoing Agreement by executing herein below.
BioLynx, Inc.: RECEIVING PARTY:
- ------------- ---------------
/s/ John D. Walker II /s/ Reagan E. Hicks
- --------------------------- --------------------
By: JOHN D. WALKER By: REAGAN E. HICKS
------------------------ -------------------
Title: Chairman of the Board Title: President
------------------------------ --------------------
Date: January 25, 2000 Date: January 25, 2000
------------------------------- ---------------------
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Exhibit 10.33
ESCROW AGREEMENT
Account Name: BioLynx.Com, Inc. Escrow Account
Account Number:
Tax Identification No: 74-2916627
Date Opened:
THIS ESCROW AGREEMENT made and entered into as of the 18th day of January,
2000, by and between BioLynx.Com, Inc. doing business as BioLynx a Texas
corporation ("Client"), and Sterling Bank, a Texas state banking association
("Escrow Agent").
WITNESSETH:
WHEREAS, Client pursuant to a Registration Statement having an Effective Date as
therein provided (the "Registration Statement" or "Prospectus") is making an
offering of a minimum of $2,000,000 and a maximum of $4,000,000 from the sale to
investors (the "Subscribers") of shares of the common stock of the Company, par
value of $0.001 per share (the "Common Stock") at a price of $4.00 per share,
pursuant to the Securities Act of 1933, as amended, and
WHEREAS, Client wishes to retain the services of the Escrow Agent to escrow the
funds, and the Escrow Agent is willing to act as an escrowee, in accordance with
and subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
herein set forth, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged and confessed, the parties agree as
follows:
1. Appointment of Escrow Agent. Client hereby appoints Sterling Bank as Escrow
Agent for the purposes set forth herein and Sterling Bank accepts such
appointment upon the terms and provisions set forth in the Escrow
Agreement.
2. Deposits of Escrow Funds. Until the date the Company has accepted
subscriptions for at least 500,000 shares as hereinafter defined, all
collected funds of the Subscribers received by the Company shall be
deposited directly into the Escrow Account. The Company shall advise the
Escrow Agent in writing at the time of each deposit into the Escrow Account
of the name and address of each Subscriber along with the number of Shares
of the Common Stock subscribed for by each Subscriber, and the cash amount
tendered by each Subscriber.
3. Duties and Responsibilities of Escrow Agent. The duties and
responsibilities of the Escrow Agent shall be limited to the following:
(a) At the expiration of five days after the sale of 500,000 shares of
Common Stock totaling $2,000,000 by the Company and the deposit of the
proceeds from the sale thereof in the Escrow Account, together with
information as to the names and addresses of the Subscribers and the amount
subscribed for by each such Subscriber by 5:00 p.m., Houston, Texas time,
180 days from the effective date of the Prospectus (herein referred to as
the "date the Company has accepted subscriptions for at least 500,000
shares"), the Company, in writing, shall direct the Escrow Agent to pay all
fees and commissions then due in connection with the offering as specified
in the Prospectus, and disburse the remainder of such proceeds of such
sales to the Company.
(b) In the event that the proceeds representing the sale of 500,000 shares
of Common Stock shall not have been deposited by the Company into the
Escrow Account by 5:00 p.m., Houston, Texas time, 180 days from the
effective date of the Prospectus or the Company terminates the Offering
before such date, then in such
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event, the Escrow Agent shall send by the end of the next business day to
the Subscribers, by checks, the cash theretofore contributed by them to the
Company and deposited in the Escrow Account, with interest.
(c) Upon the happening of (i) the complete disbursement from the Escrow
Account by the Escrow Agent to the Company of the proceeds from the
Offering in accordance with the distribution terms hereinabove set forth,
or (ii) the repayment to the Subscribers of their subscriptions in the
event the Offering does not close as provided in the Prospectus, or (iii)
the Offering is terminated before the date the Company has accepted
subscriptions for at least 500,000 shares, and the repayment to the
Subscribers of their subscriptions, the Escrow Agent shall be relieved of
all liabilities in connection with the Escrow Account and this Agreement
shall terminate.
4. Investment of Escrow Funds. Escrow Agent shall invest and reinvest the
Escrow Funds only in such account or investments as the Company may specify
by written notice. The Company may only specify investments in (i) bank
accounts, (ii) bank money-market accounts, (iii) short-term certificates of
deposit issued by a bank, (iv) short-term securities issued or guaranteed
by the U.S. Government, or (v) money market mutual funds which hold United
States Treasury obligations and/or repurchase agreements covering United
States Treasury obligations. Escrow Agent shall not be liable or
responsible for any loss resulting from any investment of the Escrow Funds
in accordance with the terms of this Agreement. Client hereby agrees to
indemnify Escrow Agent from any losses incurred in making any of the
foregoing investments or following the investment instructions of Client.
The Escrow Agent shall not under any circumstances be required to advance
its own funds.
5. Liability of Escrow Agent. The duties of the Escrow Agent hereunder will be
limited to observance of the express provisions of the Escrow Agreement.
Furthermore, the Escrow Agent is not expected or required to be familiar
with the provisions of any other writing, understanding or agreement, and
shall not be charged with any responsibility or liability in connection
with the observance or non-observance of the provisions of such other
writing, understanding or agreement, and no implied covenant of any type
whatsoever shall be read into the Escrow Agreement. The Escrow Agent may
rely and act upon any instrument received by it pursuant to this Escrow
Agreement which it reasonably believes to be in conformity with the
requirements of the Escrow Agreement and Escrow Agent shall not be
responsible for determining the genuineness, authenticity of authority from
any such instrument or the person signing same. Escrow Agent will not be
liable for any action taken or not taken by it under the terms of the
Escrow Agreement in the absence of fraud or gross negligence on its part.
In receiving the Escrow Funds, Escrow Agent acts only as a depository and
assumes no responsibility except pursuant to the terms of this Escrow
Agreement.
Escrow Agent may act or refrain from acting in respect of any matter
covered by this Escrow Agreement in full reliance upon and with the advice
of counsel which may be selected by it, and shall be fully protected in so
acting or in refraining from acting upon the advice of such counsel.
Furthermore, Escrow Agent may rely and shall be protected in acting upon
any writing that may be submitted to it in connection with its duties
hereunder without determining the genuineness, authenticity or due
authority from any such writing or the person signing same and shall have
no liability or responsibility with respect to the form, content or
validity thereof.
Escrow Agent shall have no responsibility or liability for any act or
omission on its part, notwithstanding any demand or notice to the contrary
by Client or any other person or entity, all subject to the sole limitation
that Escrow Agent exercises its best judgment. Except as herein expressly
provided, none of the provisions of the Escrow Agreement shall require
Escrow Agent to expend or risk its own funds or otherwise incur financial
liability or expense in the performance of any of its duties hereunder.
Escrow Agent is hereby authorized to comply with and obey all orders,
judgments, decrees or writs entered or issued by any court, and in the
event Escrow Agent obeys or complies with any such order, judgment, decree
or writ, in whole or in part, it shall not be liable to Client or any other
parties to this Escrow Agreement, or to any other person or entity, by
reason or such compliance, notwithstanding that it shall be determined that
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any such order, judgment, decree or writ be entered without jurisdiction or
be invalid for any reason or be subsequently reversed, modified, annulled,
satisfied or vacated.
Escrow Agent shall not be required to institute or defend any action or
legal process involving any matter referred to herein which in any manner
affects his or its duties or liabilities hereunder to take any other action
with reference to the Escrow Funds not specifically agreed to herein, and
Escrow Agent shall not be responsible for any act or failure to act on its
part except in the case of its own fraud or gross negligence.
Should any controversy arise between Client and any other party to this
Escrow Agreement or between any other person or entity with respect to this
Escrow Agreement, or with respect to the ownership of or the right to
receive any sums from the Escrow Funds, Escrow Agent shall have the right
to institute a plea of interpleader in any court of competent jurisdiction
to determine the rights of the parties. Should a plea of interpleader be
instituted, or should Escrow Agent become involved in litigation in any
manner whatsoever, connected with or pertaining to this Escrow Agreement or
the Escrow Funds, Client hereby agrees to pay Escrow Agent, on demand, in
addition to any charge made hereunder for acting as escrow agent,
reasonable attorneys' fees incurred by Escrow Agent, and any other
disbursements, expenses, losses, costs, and damages in connection with or
resulting from such litigation.
6. Indemnification. Client hereby agrees to indemnify and hold Escrow Agent
harmless from and against any and all claims, loses, liabilities, costs,
damages, fees charges and expenses (including attorneys' fees) which Escrow
Agent may incur or sustain by reason of its acting as Escrow Agent under
this Agreement, unless same shall result from the fraud or gross negligence
of Escrow Agreement.
7. Compensation of Escrow Agent. Escrow Agent shall be entitled to receive
compensation for its services hereunder in accordance with its schedule of
fees published from time to time and in effect at the time such
compensation is payable hereunder. A copy of the current fee schedule is
attached hereto as Exhibit A. Escrow Agent shall also be entitled to
reimbursement for any and all costs and expenses incurred in performing its
services hereunder, including without limitation, the reasonable fees and
expenses incurred in performing its services hereunder, including without
limitation, the reasonable fees and expenses of any counsel retained by it
in accordance with the terms of this Escrow Agreement. Without relieving
Client of any obligation to pay Escrow Agent the fees and expenses payable
to it hereunder, Escrow Agent is authorized to pay and deduct its fees and
expenses from the Escrow Funds and any interest or other income earned on
the Escrow Funds.
8. Resignation. Escrow Agent may resign as escrow agent at any time by giving
Client at least ten (10) days' prior written notice of such resignation. If
on the effective date of such resignation Escrow Agent has not received
written instructions of appointment of a successor escrow agent, Escrow
Agent may thereupon deposit all Escrow Funds and documents into the
registry of a court of competent jurisdiction. The parties hereto intend
that a substitute escrow agent will be appointed to fulfill the duties of
Escrow Agent hereunder for the remaining term of the Agreement in the event
of Escrow Agent's resignation and Client will use its best efforts to
promptly appoint a substitute Escrow Agent who shall be bound by the terms
and provisions of the Escrow Agreement.
9. Termination and Amendment. The Escrow Agreement shall remain in effect
until all Escrow Funds and any escrow documents are disbursed in accordance
herewith; provided that any Escrow Agent who resigns in accordance with the
terms hereof shall no longer be bound by this Escrow Agreement but the
Agreement shall remain in effect, notwithstanding such resignation, for
purposes of determining the rights and duties of Client and any such
successor Escrow Agent. No amendment or modification to this Escrow
Agreement shall be in force or effect unless signed by the parties hereto.
10. No Trusteeship. Client agrees that Escrow Agent is acting solely as an
escrowee hereunder and not as a trustee and that Escrow Agent has no
fiduciary duties, obligations or liabilities under this Agreement.
11. Confidentiality. Except as required by applicable law, legal process or
other legal compulsion, Escrow Agent shall hold all information relating to
the transactions contemplated by this Escrow Agent in strict confidence
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and under no circumstance shall any of the terms and conditions or the
participants involved be disclosed, unless such disclosure is mandated by
applicable law.
12. Notices. All notices, requests, instructions and demands which may be given
by any party hereto to any other party shall be given to such parties in
writing and shall be delivered either in hand with acknowledgment of
receipt or by depositing same in the United States mail, certified or
registered mail, return receipt requested, addressed to the respective
parties as follows.
(A) BioLynx.Com, Inc.
5617 Grissom Road
San Antonio, Texas 78238
Attn: John D Walker II
(B) Escrow Agent: Sterling Bank
P.O. Box 40333
Houston, Texas 77240-0333
Attention:
With a copy to: Michael Roy
General Counsel
Sterling Bancshares, Inc.
P.O. Box 40333
Houston, Texas 77240-0333
Or to such other address as may from time to time be specified by the
respective parties to the other party in writing. If any notice is required
by law, ten (10) days notice shall be deemed reasonable.
13. Binding Agreement. This Agreement shall be binding up upon and enforceable
against and shall inure to the benefit of the respective successors, legal
representatives, heirs and assigns of the parties hereto.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
"Escrow Agent" "Client"
Sterling Bank BioLynx. Com, Inc.
By: /s/ Samantha Gammage By: /s/ John D. Walker II
--------------------------------- ------------------------
Name: Samantha Gammage Name: John D. Walker II
Title: AVP Title: President
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Exhibit 10.34
STOCK OPTION AGREEMENT
UNDER
THE BIOLYNX.COM, INC. 1999 STOCK INCENTIVE COMPENSATION PLAN
THIS STOCK OPTION AGREEMENT is entered into effective on the 15th day of
January 2000, by and between BIOLYNX.COM, INC., a Texas corporation (the
"Company"), and REAGAN E. HICKS, a resident of Bexar County, Texas (the
"Employee").
WHEREAS, on May 7, 1999, the Company adopted its 1999 Stock Incentive
Compensation Plan (the "Plan"); and
WHEREAS, the Plan provides for the issuance of options to purchase shares
of the common stock of the Company, par value $0.001 per share (the "Shares");
WHEREAS, the Company desires to grant to the Employee an options to
purchase 100,000 of the Shares in conformity with the Plan;
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Grant of Options. The Company hereby grants to the Employee options (the
"Options") to purchase all or any portion of 100,000 Shares at a purchase price
equal to $4.00 per Share (the "Exercise Price") in accordance with the terms of
this Agreement, and pursuant to the Plan.
2. Vesting of Options. The Employee's right to exercise the Options shall vest
at a rate of 25 percent (25,000 shares) for each year of employment the Employee
completes with the Company. For purposes of this Stock Purchase Agreement, the
Employee will be deemed to have completed a year of employment if the Employee
remains employed with the Company as of each January 15th of the years 2001,
2002, 2003 and 2004. Therefore, if the Employee remains employed with the
Company on such date, the Employee's right to exercise the Options shall be
fully vested as of January 15, 2004. In the event the Employee terminates his
employment, or the Company terminates the Employee's employment for "cause"
(defined as the Employee's negligence or failure to perform services in
accordance with reasonable industry standards) then (i) any Options that are
exercisable as of the date of such termination shall be deemed earned by the
Employee, surviving termination and exercisable on or before December 31, 2005,
and (ii) any Options that are not yet exercisable as of the date of such
termination of employment will terminate automatically without notice and be of
no further force or effect. Notwithstanding anything in this Agreement to the
contrary, the Options will terminate automatically without notice and be of no
further force or effect to the extent the Options are not yet exercised on
December 31, 2005.
3. Manner of Exercise of Options. The Options may be exercised on one or more
occasions, but can only be exercised for whole Shares. The Options shall be
exercised by the Employee by delivering to the Company (i) written notification
that any or all of the Options are exercisable, including evidence reasonably
satisfactory to the Company to that effect, (ii) the cash required to pay in
full an amount equal to the total Exercise Price for the number of Shares so
exercised. Then, the Company shall deliver to the Employee certificate(s) for
the Shares (collectively, the "Option Shares"). The Employee shall execute such
documents and instruments as requested by the Company to evidence the issuance
of the Option Shares.
4. Transferability of Options. Except as herein set forth, the Options shall
not be transferable by the Employee and shall be exercisable only by the
Employee.
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5. Requirements of Law.
(a) Compliance with Laws. The Company shall not be required to sell or
issue any Option Shares under this Agreement if the issuance of the Option
Shares will constitute a violation by the Employee or the Company of any
provisions of any law or regulation of any governmental authority or the Bylaws
of the Company. The Company shall not be obligated to take any affirmative
action other than that which is specifically set forth in this Paragraph 5 in
order to cause the exercise of the Options or the issuance of Option Shares
pursuant hereto to comply with any law or regulation of any governmental
authority.
(b) Federal and State Securities Laws. Upon exercise of the Options,
unless a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), is in effect with respect to the Option Shares covered
hereby, the Company shall not be required to issue such Option Shares unless the
Company has received evidence reasonably satisfactory to it that such issuance
is exempt from registration under the Securities Act and all applicable state
securities laws. Subject to the Registration Rights Agreement described below,
the Company may, but shall in no event be obligated to register any securities
covered hereby pursuant to the Securities Act or any applicable state securities
laws. Unless registered or exempt from restriction, the certificate(s) issued
representing the Option Shares shall bear a legend in substantially the
following form:
"The Shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or under the securities laws of any
state and may not be sold or transferred except upon such registration or
upon receipt by the Company of an opinion of counsel reasonably satisfactory
to the Company that registration is not required for such sale or transfer."
(c) Investment Intent. The Employee represents and warrants that the
Options and Option Shares are being acquired solely for the account of the
Employee for investment purposes only and not with a view to or for the resale,
distribution, subdivision, or fractionalization thereof; the Employee has no
contract, understanding, undertaking, agreement, or arrangement with any person
to sell, transfer or pledge to any person the Options or Option Shares or any
part thereof; the Employee has no present plans to enter into any such contract,
undertaking, agreement or arrangement; the Employee understands the legal
consequences of the foregoing representations and warranties to mean that the
Employee must bear the economic risk of the investment in the Option Shares for
an indefinite period of time; the Employee has such knowledge and experience in
financial and business matters that the Employee is capable of evaluating the
merits and risks of acquiring the Option Shares; and the Employee acknowledges
that the acquisition of the Option Shares involves a high degree of risk that
may result in the loss of the total amount of the Employee's investment in the
Options and Option Shares.
(d) Due Diligence. The Employee acknowledges that he has for a reasonable
amount of time had an opportunity to ask questions and receive answers
concerning the terms and conditions of the issuance of the Options and Option
Shares and the actual and proposed business and affairs of the Company, and is
satisfied with the results thereof, and been given access, if requested, to all
documents with respect to the Company or this transaction, as well as to such
other information that the Employee has requested to evaluate an investment in
the Options and Option Shares. The Employee has made his own determination of
the value of the Options and has not received or relied upon any statements,
representations, or warranties of the Company or its agents or representatives.
6. No Rights as Shareholder. The Employee shall have no rights as a shareholder
of the Company with respect to the Option Shares until the date of issuance of a
certificate for the Option Shares; no adjustment for distributions, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such certificate.
7. Changes in the Company's Structure.
(a) Changes in Structure. The existence of the Options shall not affect
in any way the right or power of the Company, directors, or its shareholders to
make or authorize any or all adjustments, recapitalization, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, or any other
security or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business or any other corporate act
or proceeding, whether of a similar character or otherwise.
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(b) Changes in Number of Shares. If, while the Options are outstanding,
the Company shall effect a subdivision or consolidation of Shares or other
capital readjustment, the payment of a Share dividend, or other increase or
reduction of the number of Shares outstanding, without receiving compensation
therefor in money, services, or property, then (i) in the event of such an
increase in the number of Shares outstanding, the number of Option Shares then
subject to the Options shall be proportionately increased, and the Exercise
Price shall be proportionately reduced and (ii) in the event of such a reduction
in the number of Shares outstanding, the number of Option Shares then subject to
the Options shall be proportionately reduced, and the Exercise Prices shall be
proportionately increased.
(c) Changes in Corporate Structure. After a merger of one or more
corporations into the Company or after a consolidation of the Company and one or
more corporations in which the Company shall be the surviving corporation, the
Employee shall, at no additional cost, be entitled upon exercise of the Options
to receive (subject to any required action by shareholders) in lieu of the
number of Option Shares as to which the Options shall then be so exercisable,
the number and class of shares or other securities to which the Employee would
have been entitled pursuant to the terms of the agreement of merger or
consolidation if, immediately prior to such merger or consolidation, the
Employee had been the holder of record of a number of Shares equal to the number
of Option Shares as to which the Options shall be so exercised. In the event the
Company agrees to be merged with or consolidated into one or more corporations
or other entities in which the Company shall not be the surviving entity then,
the Company shall, prior to such merger or consolidation, obtain the full and
unconditional agreement of such surviving entity to assume all of the
obligations of the Company under this Agreement.
(d) Issuance of Shares. Except as hereinbefore expressly provided, the
issuance by the Company of shares of any class, or securities convertible into
shares of any class, for cash or property, or for labor or services, either upon
direct sale or upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of the Shares then
subject to the Options.
8. Expenses. Each party shall pay its own expenses, including legal expenses
and attorneys' fees, which have been or may be incurred in connection with the
preparation, administration, amendment, or modification of this Agreement and
the other documents and instruments executed in connection herewith.
9. Notices. All notices, requests and other communications hereunder shall be
in writing and shall be deemed to have been duly given at the time of receipt if
delivered by hand or communicated by electronic transmission, or, if mailed,
three days after deposit in the United States mail, registered or certified,
return receipt requested, with postage prepaid and addressed to the party to
receive same, if to the Company, addressed to Mr. John D. Walker, II, at 5617
Grissom Road, San Antonio, Texas 78238, telephone (210) 256-8300, fax (210) 682-
2137, and if to Employee, addressed to Mr. Reagan E. Hicks at 5617 Grissom Road,
San Antonio, Texas 78238, telephone (210) 256-8300, fax (210) 682-2137;
provided, however, that if either party shall have designated a different
address by notice to the other given as provided above, then any subsequent
notice shall be addressed to such party at the last address so designated.
10. Conflict. Notwithstanding anything herein contained to the contrary, in
the event of any conflict between the terms of the Registration Rights Agreement
or this Agreement, the terms of the Registration Rights Agreement shall control.
11. Amendments. No amendment, modification or waiver of this Agreement or any
other agreements or documents executed pursuant hereto shall be effective unless
the same is in writing and signed by the person against whom such amendment is
sought to be enforced.
12. Attorney's Fees. In the event that it should become necessary for any
party entitled hereunder to bring suit against any other party to this Agreement
for enforcement of the covenants herein contained, the parties hereby covenant
and agree that the party who is found to be in violation of said covenants shall
also be liable for all reasonable counsel's fees and costs of court incurred by
the other parties hereto.
13. Governing law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
any conflicts of laws provisions thereof. Each party hereby irrevocably submits
to the personal jurisdiction of the United States District Court for Bexar
County, Texas, as well as of the District Courts
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of the State of Texas in Bexar County, Texas over any suit, action or proceeding
arising out of or relating to this Agreement. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such mediation, arbitration,
suit, action or proceeding brought in any such county and any claim that any
such mediation, arbitration, suit, action or proceeding brought in such county
has been brought in an inconvenient forum.
14. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach, termination, or validity thereof, shall be settled by
final and binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA Rules") in effect as of the
effective date of this Agreement. The American Arbitration Association shall be
responsible for (a) appointing a sole arbitrator, and (b) administering the case
in accordance with the AAA Rules. The situs of the arbitration shall be San
Antonio, Texas. Upon the application of either party to this Agreement, and
whether or not an arbitration proceeding has yet been initiated, all courts
having jurisdiction hereby are authorized to (x) issue and enforce in any lawful
manner, such temporary restraining orders, preliminary injunctions and other
interim measures of relief as may be necessary to prevent harm to a party's
interest or as otherwise may be appropriate pending the conclusion of
arbitration proceedings pursuant to this Agreement and (y) enter and enforce in
any lawful manner such judgments for permanent equitable relief as may be
necessary to prevent harm to a party's interest or as otherwise may be
appropriate following the issuance of arbitral awards pursuant to this
Agreement. Any order or judgment rendered by the arbitrator may be entered and
enforced by any court having competent jurisdiction.
15. Waivers. The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the party entitled to enforce such term, but such waiver shall be effective
only if in a writing signed by the party or parties against which such waiver is
to be asserted. No delay or omission on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. All remedies, either under this Agreement
or by law or otherwise afforded to any party, shall be cumulative and not
alternative.
16. Entire Agreement. This Agreement and the Registration Rights Agreement
described herein constitute the entire agreement between the parties with
respect to the matters covered hereby, and any other prior or contemporaneous
oral or written understandings or agreements with respect to the matters covered
hereby are expressly superseded by this Agreement. There are no other unwritten
or oral agreements between the parties.
17. Severability. If any provision of this Agreement, or the application of
such provision to any person or circumstance, shall be declared judicially to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement or affect the
application of such provision to other persons or circumstances, and the parties
agree that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom and the
remainder of this Agreement will have the same force and effect as if such part
or parts had never been included herein. Any such finding of invalidity or
unenforceability shall not prevent the enforcement of such provision in any
other jurisdiction to the maximum extent permitted by applicable law.
18. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BIOLYNX.COM, INC.
By /s/ John D. Walker II
-------------------------------
John D. Walker II, Chairman
/s/ Reagan E. Hicks
-------------------------------
REAGAN E. HICKS
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Exhibit 10.35
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is entered into as of November 19, 1999, by and between
BIOLYNX.COM, INC., a Texas corporation (the "Company"), and SABINAL TRUST (the
"Holder").
WHEREAS, on even date herewith the Company executed and delivered to the
Holder that certain Letter Agreement (the "Letter Agreement") whereby the
Company has agreed to issue to the Holder up to 200,000 shares of the Company's
common stock, par value $0.001 per share (the "Common Stock"), upon the
performance by the Holder as described in the Letter Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Registration Rights Available. Pursuant to the terms and conditions
contained herein, and in the Letter Agreement, the Company agrees to provide the
Holder or any permitted assignee of the Holder (collectively, the "Holder") with
the right to "piggyback" (the "Registration Rights") on a firm commitment
underwritten offering with respect to the Common Stock and any other securities
issued or issuable at any time or from time to time in respect of the Common
Stock as a result of a merger, consolidation, reorganization, stock split, stock
dividend, recapitalization or other similar event involving the Company
(collectively, the "Registrable Securities").
2. Registration Rights. With respect to the Registration Rights, the parties
agree as follows:
(a) Subject to Paragraph 2(b), the Company will (i) promptly give to the
Holder written notice of any registration relating to an Underwritten Public
Offering, and (ii) include in such registration (and related qualification under
blue sky laws or other compliance) such of the Holder's Registrable Securities
as are specified in the Holder's written request or requests, mailed in
accordance with the terms of this Agreement within 30 days after the date of
such written notice from the Company.
(b) The right of the Holder to registration pursuant to the Registration
Rights shall be conditioned upon the Holder's participation in such
underwriting, and the inclusion of the Registrable Securities in the
underwriting shall be limited to the extent provided herein. The Holder shall
(together with the Company) enter into an underwriting agreement in customary
form with the managing underwriter selected for the Underwritten Public Offering
by the Company. Notwithstanding any other provision of this Agreement, if the
managing underwriter determines that marketing factors require a limitation of
the number of the Registrable Securities to be underwritten, the managing
underwriter may limit some or all of the Registrable Securities that may be
included in the registration and the Underwritten Public Offering as follows:
the number of the Registrable Securities that may be included in the
registration and the Underwritten Public Offering by the Holder shall be
determined by multiplying the number of the shares of the Registrable Securities
of all selling shareholders of the Company which the managing underwriter is
willing to include in such registration and the Underwritten Public Offering
times a fraction, the numerator of which is the number of the Registrable
Securities requested to be included in such registration and the Underwritten
Public Offering by the Holder, and the denominator of which is the total number
of the Registrable Securities which all selling shareholders of the Company have
requested to be included in such registration and the Underwritten Public
Offering. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocable to any such
person to the nearest 100 shares. If the Holder disapproves of the terms of any
such underwriting, it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter, delivered not less than seven days before
the effective date of the Underwritten Public Offering. Any of the Registrable
Securities excluded or withdrawn from the Underwritten Public Offering shall be
withdrawn from such registration, and shall not be transferred in a public
distribution prior to 60 days after the effective date of the Registration
Statement relating thereto, or such other shorter period of time as the
underwriters may require.
3. Registration Procedure. With respect to the Registration Rights, the
following provisions shall apply:
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(c) The Holder shall be obligated to furnish to the Company and the
underwriters such information regarding the Registrable Securities and the
proposed manner of distribution of the Registrable Securities as the Company and
the underwriters may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein and shall
otherwise cooperate with the Company and the underwriters in connection with
such registration, qualification or compliance.
(d) With a view to making available the benefits of certain rules and
regulations of the Securities and Exchange Commission (the "SEC") which may at
any time permit the sale of any Restricted Securities as defined in Rule 144
("Rule 144") promulgated under the Securities Act of 1933, as amended (the
"Securities Act") to the public without registration, the Company agrees to use
its best lawful efforts to:
(i) Make and keep public information available, as those ten-ns
are understood and defined in Rule 144 at all times during which the Company is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(ii) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at all times during which the Company is subject to such reporting
requirements); and
(iii) So long as the Holder owns any Restricted Securities, to
furnish to the Holder upon request a written statement from the Company as to
its compliance with the reporting requirements of Rule 144 and with regard to
the Securities Act and the Exchange Act (at all times during which the Company
is subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as the Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing the Holder to sell any Restricted Securities
without registration.
(e) The Company agrees that it will furnish to the Holder such number of
prospectuses meeting the requirements of Section 10(a)(3) of the Securities Act,
offering circulars or other documents incident to any registration,
qualification or compliance referred to herein as provided or, if not otherwise
provided, as the Holder from time to time may reasonably request.
(f) All expenses (except for any underwriting and selling discounts and
commissions and legal fees for the Holder's attorneys) of any registrations
permitted pursuant to this Agreement and of all other offerings by the Company
(including, but not limited to, the expenses of any qualifications under the
blue sky or other state securities laws and compliance with governmental
requirements of preparing and filing any post-effective amendments required for
the lawful distribution of the Registrable Securities to the public in
connection with such registration, of supplying prospectuses, offering circulars
or other documents) will be paid by the Company.
(g) In connection with the preparation and filing of any Registration
Statement under the Securities Act pursuant to this Agreement, the Company will
give the Holder and the Holder's attorneys and accountants, the opportunity to
participate in the preparation of any Registration Statement, each prospectus
included therein or filed with the SEC, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and records and
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary to conduct a reasonable investigation within the meaning of
the Securities Act.
(h) The Company shall notify each Holder of Registrable Securities covered
by a Registration Statement, during the time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
4. Blackout Period. At any time after the effective date of the Registration
Statement, if the Company gives to the Holder a notice pursuant to Paragraph
3(f) hereof and stating that the Company requires the suspension by the
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Holder of the distribution of any of the Registrable Securities, then the Holder
shall cease distributing the Registrable Securities for such period of time (the
"Blackout Period"), not to exceed 120 days from the time notice is sent until
the Company informs the Holder that the Blackout Period has been terminated.
Upon notice by the Company to the Holder of such determination, the Holder will
(a) keep the fact of any such notice strictly confidential, (b) promptly halt
any offer, sale, trading or transfer of any of the Registrable Securities for
the duration of the Blackout Period, and (c) promptly halt any use, publication,
dissemination or distribution of each prospectus included within the
Registration Statement, and any amendment or supplement thereto by it and any of
its affiliates for the duration of the Blackout Period.
5. Lock-Up. In connection with any Underwritten Public Offering, the Holder
agrees, if requested, to execute a lock-up letter addressed to the managing
underwriter in customary form agreeing not to sell or otherwise dispose of the
Registrable Securities owned by the Holder (other than any that may be included
in the offering) for a period not exceeding 180 days.
6. Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any registration of the Registrable
Securities as the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
7. Indemnification by the Company. In the event of any registration of the
Registrable Securities of the Company under the Securities Act, pursuant to the
terms of this Agreement, the Company agrees to indemnity and hold harmless the
Holder and each other person who participates as an underwriter in the offering
or sale of the Registrable Securities against any and all claims, demands,
losses, costs, expenses, obligations, liabilities, joint or several, damages,
recoveries and deficiencies, including interest, penalties and attorneys' fees
(collectively the "Claims"), to which the Holder or any such underwriter may
become subject under the Securities Act or otherwise, insofar as the Claims or
actions or proceedings, whether commenced or threatened, in respect thereto
arise out of or are based on any untrue statement or alleged untrue statement of
any material fact contained in any Registration Statement under which the
Holder's Registrable Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse the Holder and each such underwriter for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
Claim or action or proceeding in respect thereto; provided that the Company
shall not be liable in any such case to the extent that any Claim or action or
proceeding in respect thereof or expense arises out of or is based on an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance on and in conformity
with written information furnished to the Company through an instrument duly
executed by the Holder specifically stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holder or any such
underwriter and survive the transfer of the Registrable Securities by the
Holder.
8. Indemnification by the Holder. The Company may require, as a condition to
including the Registrable Securities in any Registration Statement filed
pursuant to this Agreement, that the Company shall have received an undertaking
satisfactory to it from the Holder, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Paragraph 7 hereof) the Company,
each director and officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement or alleged statement in or omission or
alleged omission from the Registration Statement, any preliminary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance on and in
conformity with written information furnished to the Company through an
instrument duly executed by the Holder specifically stating that it is for use
in the preparation of the Registration Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Notwithstanding the
foregoing, the maximum liability hereunder which the Holder shall be required to
suffer shall be limited to the net proceeds to the Holder from the Registrable
Securities sold by the Holder in any such offering. Such indemnity shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling person and shall
survive the transfer of the Registrable Securities by the Holder.
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9. Notice of Claims. Promptly after receipt by an indemnified party of notice of
the commencement of any action or proceeding involving a Claim, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Agreement except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnifying party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of a Claim the indemnifying party shall be entitled
to participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified arty of a release from all liability
in respect of a Claim.
10. Indemnification Payments. The indemnification required by this Agreement
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
11. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Agreement may be assigned by
the Holder to a transferee or assignee of such securities who shall, upon such
transfer or assignment, be deemed a Holder under this Agreement; provided that
the Company is furnished with written notice of the name and address of such
transferee or assignee and the Registrable Securities with respect to which the
Registration Rights are being assigned; provided, further, that such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and that such transferee or assignee is either (a) a member
of the immediate family or a trust for the benefit of any Holder that is an
individual or (b) a transferee or assignee that after the transfer or assignment
holds all of the Registrable Securities.
12. Termination of this Agreement. This Agreement shall terminate with respect
to the Holder when all of the Registrable Securities have been registered as
provided herein.
13. Conflict. Notwithstanding anything herein contained to the contrary, in the
event of any conflict between the terms of the Letter Agreement or this
Agreement, the terms of this Agreement shall control.
14. Attorney's Fees. In the event that it should become necessary for any party
entitled hereunder to bring suit against any other party to this Agreement for
enforcement of the covenants herein contained, the parties hereby covenant and
agree that the party who is found to be in violation of said covenants shall
also be liable for all reasonable counsel's fees and costs of court incurred by
the other parties hereto.
15. Governing law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
any conflicts of laws provisions thereof. Each party hereby irrevocably submits
to the personal jurisdiction of the United States District Court for Bexar
County, Texas, as well as of the District Courts of the State of Texas in Bexar
County, Texas over any suit, action or proceeding arising out of or relating to
this Agreement. Each party hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such mediation, arbitration, suit, action or proceeding
brought in any such county and any claim that any such mediation, arbitration,
suit, action or proceeding brought in such county has been brought in an
inconvenient forum.
16. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach, termination, or validity thereof, shall be settled by
final and binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA Rules") in effect as of the
effective date of this Agreement. The American Arbitration Association shall be
responsible for (a) appointing a sole arbitrator, and (b) administering the case
in accordance with the AAA Rules. The situs of the arbitration shall be San
Antonio, Texas. Upon the application of
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either party to this Agreement, and whether or not an arbitration proceeding has
yet been initiated, all courts having jurisdiction hereby are authorized to: (x)
issue and enforce in any lawful manner, such temporary restraining orders,
preliminary injunctions and other interim measures of relief as may be necessary
to prevent harm to a party's interest or as otherwise may be appropriate pending
the conclusion of arbitration proceedings pursuant to this Agreement; and (y)
enter and enforce in any lawful manner such judgments for permanent equitable
relief as may be necessary to prevent harm to a party's interest or as otherwise
may be appropriate following the issuance of arbitral awards pursuant to this
Agreement. Any order or judgment rendered by the arbitrator may be entered and
enforced by any court having competent jurisdiction.
17. Benefit. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto, and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns. Notwithstanding anything herein contained to
the contrary, the Company shall have the right to assign this Agreement to any
party without the consent of the Holder.
18. Notices. All notices, requests and other communications hereunder shall be
in writing and shall be deemed to have been duly given at the time of receipt if
delivered by hand or communicated by electronic transmission, or, if mailed,
three days after deposit in the United States mail, registered or certified,
return receipt requested, with postage prepaid and addressed to the party to
receive same, if to the Company, addressed to Mr. John D. Walker II at 5617
Grissom Road, San Antonio, Texas 78238, telephone (210) 256-8300, fax (210) 256-
1992, and e-mail [email protected]; and if to the Holder, addressed to Henry A.
Schulle at 1800 Bering, Suite 400, Houston, Texas 77057, telephone (713) 334-
8224, and fax (713) 334-8232; provided, however, that if either party shall have
designated a different address by notice to the other given as provided above,
then any subsequent notice shall be addressed to such party at the last address
so designated.
19. Construction. Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall be
held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
20. General Assurances. The parties agree to execute, acknowledge, and deliver
all such further instruments, and do all such other acts, as may be necessary or
appropriate in order to carry out the intent and purposes of this Agreement.
21. Construction of Agreement. The parties hereto acknowledge and agree that
neither this Agreement nor any of the other documents executed in connection
herewith shall be construed more favorably in favor of one than the other based
upon which party drafted the same, it being acknowledged that each of the
parties hereto contributed substantially to the negotiation and preparation of
this Agreement and the documents executed in connection herewith.
22. No Third Party Beneficiaries. Except as otherwise expressly forth in this
Agreement, no person or entity not a party to this Agreement shall have rights
under this Agreement as a third party beneficiary or otherwise.
23. Incorporation by Reference. Any agreement referred to herein is hereby
incorporated into this Agreement by this reference.
24. Relationship of Parties. The Holder is providing services on an independent
contractor basis. Notwithstanding anything to the contrary herein, this
Agreement shall not in any manner be construed to create a joint venture,
partnership, agency or other similar form of relationship, and neither party
shall have the right or authority to: (a) commit the other party to any
obligation or transaction not expressly authorized by such other party, or (b)
act or purport to act as agent or representative of the other, except as
expressly authorized in writing by such other party. Further, the Holder shall
not be deemed to be an employee of the Company for any reason. The Company and
the Holder acknowledge that the Holder shall not be entitled to any insurance,
pension, profit sharing, retirement or other fringe benefits which the Company
may provide to its employees during the term of this Agreement.
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25. Waiver. No course of dealing on the part of any party hereto or its
agents, or any failure or delay by any such party with respect to exercising any
right, power or privilege of such party under this Agreement or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
26. Cumulative Rights. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
27. Invalidity. In the event any one or more of the provisions contained in
this Agreement or in any instrument referred to herein or executed in connection
herewith shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect the other provisions of this Agreement or any such other instrument.
28. Excusable Delay. None of the parties hereto shall be obligated to perform
and none shall be deemed to be in default hereunder, if the performance of a
non-monetary obligation is prevented by the occurrence of any of the following,
other than as the result of the financial inability of the party obligated to
perform: acts of God, strikes, lock-outs, other industrial disturbances, acts of
a public enemy, wars or war-like action (whether actual, impending or expected
and whether de jure or de facto), arrest or other restraint of governmental
(civil or military) blockades, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, hurricanes, storms, floods, washouts, sink holes,
civil disturbances, explosions, breakage or accident to equipment or machinery,
confiscation or seizure by any government of public authority, nuclear reaction
or radiation, radioactive contamination or other causes, whether of the kind
herein enumerated, or otherwise, that are not reasonably within the control of
the party claiming the right to delay performance on account of such occurrence.
29. Time of the Essence. Time is of the essence of this Agreement.
30. Headings. The headings used in this Agreement are for convenience and
reference only and in no way define, limit, simplify or describe the scope or
intent of this Agreement, and in no way effect or constitute a part of this
Agreement.
31. Multiple 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.
32. Entire Agreement. This instrument, together with the Letter Agreement,
contains the entire understanding of the parties and may not be changed orally,
but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
BIOLYNX, INC.
By /s/ John D. Walker II
---------------------------
John D. Walker II, President
SABINAL TRUST
By /s/ Henry A. Schulle
---------------------------
Henry A. Schulle, Trustee
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Exhibit 10.36
SECOND AMENDED OPTION TO PURCHASE STOCK AGREEMENT
This Agreement ("Agreement") is entered into this date, is by and among
BioLynx.Com, Inc., a Texas corporation and ("Purchaser"), BioLynx Outsource
Services, Inc., a Texas corporation ("Corporation"), and United Capital
Investment Group, Inc. ("Seller").
WHEREAS, the Corporation presently has outstanding a single class of common
stock ("Shares"), of which 1,000 Shares have been issued to Seller; and
WHEREAS, said Shares are the only issued and outstanding capital stock of
the Corporation; and
WHEREAS, Purchaser desires an option to purchase from Seller and Seller
desires to grant Purchaser an option to purchase all of the Shares owned by
Seller on the terms and subject to the conditions set forth herein.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Purchase of Shares.
1.1 Purchase of Shares. Subject to the terms and conditions set forth
herein, at the Closing (as defined below) Seller will sell all of the Shares
owned by Seller to Purchaser and Purchaser will purchase all of the Shares owned
by Seller from Seller, said Shares constituting one hundred percent (100%) of
all of the issued and outstanding capital stock of the Corporation as of the
Closing.
1.2 Purchase Price. As the purchase price, Purchaser will issue Seller
1,446,347.76 shares of Convertible Preferred Stock of Purchaser, with a
liquidation privilege equal to its face amount, bearing an eight percent (8%)
non-cumulative dividend (the "Preferred Stock"). The Preferred Stock will, at
the option of the holder of the stock, be convertible into Common Stock of the
Corporation at the recited amount for the liquidation privilege, together with
any declared but unpaid dividend, divided by $3.30 per share of common stock.
1.3 Closing Date. The Closing Date of this Agreement shall be December 31,
1999.
Section 2. Representations and Warranties of the Corporation and Seller. As
a material inducement to Purchaser to enter into this Agreement and purchase the
Shares, Seller and the Corporation, jointly and severally, represent and warrant
that:
2.1 Organization and Corporate Power. The Corporation is a corporation
duly incorporated and validly existing under the laws of the state of Texas and
the Corporation is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify. The
Corporation has all requisite corporate power and authority and all material
licenses, permits, and authorizations necessary to own and operate its
properties and to carry on its business as now conducted. The copies of the
Corporation's charter documents and bylaws have been furnished to Purchaser's
counsel reflect all amendments made thereto at any time prior to the date of
this Agreement and are correct and complete.
2.2 Capital Stock and Related Matters. The authorized capital stock of the
Corporation consists of 3,000,000 shares of preferred stock and 20,000,000
shares of common stock, 1,000 of which are issued and outstanding and are owned,
beneficially and of record, by Seller and no other stock of the Corporation is
issued and outstanding. The Corporation does not have outstanding and has not
agreed, orally or in writing, to issue any stock or securities convertible or
exchangeable for any shares of its stock, nor does it have outstanding nor has
it agreed, orally or in writing, to issue any options or rights to purchase or
otherwise acquire its stock. The Corporation is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its stock. The Corporation has not violated any applicable securities
laws or regulations in connection with the offer or sale of its securities other
than violations that have been, or will before the Closing have been, corrected
by post-issuance filings. All of the outstanding shares of the Corporation's
capital stock are validly issued, fully paid, and non-assessable. Seller has,
and
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upon purchase thereof pursuant to the terms of this Agreement Purchaser will
have, good and marketable title to the Shares, free and clear of all security
interests, liens, encumbrances, or other restrictions or claims, subject only to
restrictions as to marketability imposed by securities laws. Assuming that the
representations in Section 3.6 are true and correct, neither Seller nor the
Corporation has violated or will violate any applicable securities laws in
connection with the offer or sale of the Shares to Purchaser hereunder.
2.3 Subsidiaries. The Corporation does not own or hold any rights to
acquire any shares of stock or any other security or interest in any other
corporation or entity.
2.4 Conduct of Business; Liabilities. The Corporation is not in default
under, and no condition exists that with notice or lapse of time would
constitute a default of the Corporation under (i) any mortgage, loan agreement,
evidence of indebtedness, or other instrument evidencing borrowed money to which
the Corporation is a party or by which the Corporation or the properties of the
Corporation are bound or (ii) any judgment, order, or injunction of any court,
arbitrator, or governmental agency that would reasonably be expected to affect
materially and adversely the business, financial condition, or results of
operations of the Corporation taken as a whole.
2.5 Financial Statements. The audited balance sheet and income statement of
the Corporation as of July 31, 1999, and the income statement for the period
ending July 31, 1999, (collectively the "July 31, 1999 Financial Statements"),
fairly presents the financial position of the Corporation as at July 31, 1999,
and has been prepared in accordance with generally accepted accounting
principles, consistently applied, and in a manner substantially consistent with
prior financial statements of the Corporation. Except as contemplated by or
permitted under this Agreement, there are no adjustments that would be required
on review of the July 31, 1999 Financial Statements that would, individually or
in the aggregate, have a material negative effect upon the Corporation's
reported financial condition.
2.6 No Undisclosed Liabilities. Except for liabilities and obligations
incurred in the ordinary course of business since July 31, 1999 ("Statement
Date"), neither the Corporation nor any of the property of the Corporation is
subject to any material liability or obligation that was required to be included
or adequately reserved against in the July 31, 1999 Financial Statements or
described in the notes thereto and was not so included, reserved against, or
described.
2.7 Absence of Certain Changes. Except as contemplated or permitted by this
Agreement, since the Statement Date there has not been:
2.7.1 Any material adverse change in the business, financial condition,
operations, or assets of the Corporation;
2.7.2 Any damage, destruction, or loss, whether covered by insurance or
not materially adversely affecting the properties or business of the
Corporation;
2.7.3 Any sale or transfer by the Corporation of any tangible or
intangible asset other than in the ordinary course of business, any
mortgage or pledge or the creation of any security interest, lien, or
encumbrance on any such asset, or any lease of property, including
equipment, other than tax liens with respect to taxes not yet due and
contract rights of customers in inventory;
2.7.4 Any declaration, setting aside, or payment of a distribution in
respect of or the redemption or other repurchase by the Corporation of any
stock of the Corporation;
2.7.5 Any material transaction not in the ordinary course of business
of the Corporation;
2.7.6 The lapse of any material trademark, assumed name, trade name,
service mark, copyright, or license or any application with respect to the
foregoing;
2.7.7 The grant of any increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension,
profit-sharing, or other plan) other than customary increases on a periodic
basis or required by agreement or understanding in the ordinary course of
business and in accordance with past practice;
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2.7.8 The discharge or satisfaction of any material lien or encumbrance
or the payment of any material liability other than current liabilities in
the ordinary course of business;
2.7.9 The making of any material loan, advance, or guaranty to or for
the benefit of any person except the creation of accounts receivable in the
ordinary course of business; or
2.7.10 An agreement to do any of the foregoing.
2.8 Title and Related Matters. The Corporation has good and marketable
title to all of its property, real and personal, and other assets included in
the July 31, 1999 Financial Statements (except properties and assets sold or
otherwise disposed of subsequent to the Statement Date in the ordinary course of
business or as contemplated in this Agreement), free and clear of all security
interests, mortgages, liens, pledges, charges, claims, or encumbrances of any
kind or character, except (i) statutory liens for property taxes not yet
delinquent or payable subsequent to the date of this Agreement and statutory or
common law liens securing the payment or performance of any obligation of the
Corporation, the payment or performance of which is not delinquent, or that is
payable without interest or penalty subsequent to the date on which this
representation is given, or the validity of which is being contested in good
faith by the Corporation; (ii) the rights of customers of the Corporation with
respect to inventory under orders or contracts entered into by the Corporation
in the ordinary course of business; (iii) claims, easements, liens, and other
encumbrances of record pursuant to filings under real property recording
statutes; and (iv) as described in the Unaudited Statements or the notes
thereto.
2.9 Litigation. There are no material actions, suits, proceedings, orders,
investigations, or claims pending or, to the best of Seller's and the
Corporation's knowledge, overtly threatened against the Corporation or any
property of either, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency, or instrumentality; the
Corporation is not subject to any arbitration proceedings under collective
bargaining agreements or otherwise or, to the best of Seller's and the
Corporation's knowledge, any governmental investigations or inquiries; and, to
the best knowledge of Seller's and the directors and responsible officers of the
Corporation, there is no basis for any of the foregoing.
2.10 Tax Matters. The Corporation has prepared in a substantially correct
manner and has filed all federal, state, local, and foreign tax returns and
reports heretofore required to be filed by them and have paid all taxes shown as
due thereon; and (ii) no taxing authority has asserted any deficiency in the
payment of any tax or informed the Corporation that it intends to assert any
such deficiency or to make any audit or other investigation of the Corporation
for the purpose of determining whether such a deficiency should be asserted
against the Corporation.
2.11 Compliance with Laws. To the best of Seller's knowledge, the
Corporation is, in the conduct of its business, in substantial compliance with
all laws, statutes, ordinances, regulations, orders, judgments, or decrees
applicable to them, the enforcement of which, if the Corporation was not in
compliance therewith, would have a materially adverse effect on the business of
the Corporation, taken as a whole. Neither the Seller nor the Corporation have
received any notice of any asserted present or past failure by the Corporation
to comply with such laws, statutes, ordinances, regulations, orders, judgments,
or decrees.
2.12 No Brokers. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with the purchase based on any
arrangement or agreement binding upon any of the parties hereto.
2.13 Insurance. The Corporation maintains insurance policies with respect
to its assets, and businesses, and each such policy is in full force and effect.
The Corporation is not in material default with respect to its obligations under
any such policy maintained by it. Neither Seller nor the Corporation have been
notified of the cancellation of any of the insurance policies or of any material
increase in the premiums to be charged for such insurance policies.
2.14 Employees and Labor Relations Matters. As provided in this Agreement:
2.14.1 Neither Seller nor the Corporation is aware that any executive
or key employee of the Corporation or any group of employees of the
Corporation has any plans to terminate employment with the Corporation;
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2.14.2 To the best of Seller's knowledge, the Corporation has
substantially complied in all material respects with all labor and
employment laws, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining, Americans With Disabilities Act,
and the payment of social security and other taxes;
2.14.3 There is no unfair labor practice charge, complaint, or other
action against the Corporation pending or, to Seller's and the
Corporation's best knowledge, threatened before the National Labor
Relations Board and the Corporation is not subject to any order to bargain
by the National Labor Relations Board;
2.14.4 No questions concerning representation have been raised or, to
Seller's and the Corporation's best knowledge, are threatened with respect
to employees of the Corporation;
2.14.5 No grievance that might have a material adverse effect on the
Corporation and no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to the best knowledge of
Seller and the directors and responsible officers of the Corporation, no
basis exists for any such grievance or arbitration proceeding; and
2.14.6 To the best knowledge of Seller and the directors and
responsible officers of the Corporation, no employee of the Corporation is
subject to any non-competition, nondisclosure, confidentiality, employment,
consulting, or similar agreements with persons other than the Corporation
relating to the present business activities of the Corporation.
2.15 Disclosure. Neither this Agreement nor any of the schedules,
attachments, written statements, documents, certificates, or other items
prepared or supplied to Purchaser by or on behalf of the Corporation or Seller
with respect to this purchase contain any untrue statement of a material fact or
omit a material fact necessary to make each statement contained herein or
therein not misleading. No Seller or any responsible officer or director has
intentionally concealed any fact known by such person to have a material adverse
effect upon the Corporation's existing or expected financial condition,
operating results, assets, customer relations, employee relations, or business
prospects taken as a whole.
2.16 Accounts Receivable. All accounts receivable of the Corporation
reflected in the July 31, 1999 Financial Statements represent bona fide sales
actually made in the ordinary course of business.
2.17 Patents, Trademarks, Trade Names, etc. To Seller's and the
Corporation's best knowledge, the Corporation has not operated and is not
operating its business in a manner that infringes the proprietary rights of any
other person in any patents, trademarks, trade names, service marks, copyrights,
or confidential information. The Corporation has not received any written notice
of any infringement or unlawful use of such property.
2.18 ERISA and Related Matters. The Corporation does not maintain any
retirement or deferred compensation plan, savings, incentive, stock option or
stock purchase plan, vacation pay, severance pay, bonus or benefit arrangement,
consultant or agent of the Corporation, whether pursuant to contract,
arrangement, custom or informal understanding, which does not constitute an
"Employee Benefit Plan" (as defined in (S) 3(3) of ERISA), for which the
Corporation may have any ongoing material liability after Closing. The
Corporation does not maintain nor has it ever contributed to any Multi employer
Plan as defined by (S) 3(37) of ERISA. The Corporation does not currently
maintain any Employee Pension Benefit Plan subject to Title IV of ERISA. There
have been no "prohibited transactions" (as described in (S) 406 of ERISA or
(S) 4975 of the Code) with respect to any Employee Pension Benefit Plan or
Employee Welfare Benefit Plan maintained by the Corporation as to which the
Corporation has been party a party. As to any employee pension benefit plan
subject to Title IV of ERISA, there have been no reportable events (as such term
is defined in (S) 4043 of ERISA).
Section 3. Representations and Warranties of Purchaser. As a material
inducement to Seller to enter into this Agreement and sell the Shares, Purchaser
hereby represents and warrants to Seller as follows:
3.1 Organization; Power. Purchaser is a corporation duly incorporated and
validly existing under the laws of the state of Texas, and has all requisite
corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
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3.2 Authorization. The execution, delivery, and performance by Purchaser of
this Agreement and all other agreements contemplated hereby to which Purchaser
is a party have been duly and validly authorized by all necessary corporate
action of Purchaser, and this Agreement and each such other agreement, when
executed and delivered by the parties thereto, will constitute the legal, valid,
and binding obligation of Purchaser enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, and similar statutes affecting creditors' rights generally and
judicial limits on equitable remedies.
3.3 No Conflict with Other Instruments or Agreements. The execution,
delivery, and performance by Purchaser of this Agreement and all other
agreements contemplated hereby to which Purchaser is a party will not result in
a breach or violation of, or constitute a default under, its Articles of
Incorporation or Bylaws or any material agreement to which Purchaser is a party
or by which Purchaser is bound.
3.4 Governmental Authorities. (i) Purchaser is not required to submit any
notice, report, or other filing with any governmental or regulatory authority in
connection with the execution and delivery by Purchaser of this Agreement and
the consummation of the purchase and (ii) no consent, approval, or authorization
of any governmental or regulatory authority is required to be obtained by
Purchaser or any affiliate in connection with Purchaser's execution, delivery,
and performance of this Agreement and the consummation of this purchase.
3.5 Litigation. There are no actions, suits, proceedings, or governmental
investigations or inquiries pending or, to the knowledge of Purchaser,
threatened against Purchaser or its properties, assets, operations, or
businesses that might delay, prevent, or hinder the consummation of this
purchase.
3.6 Investment Representations
3.6.1 Purchaser is acquiring the Shares for its own account for
purposes of investment and without expectation, desire, or need for resale
and not with the view toward distribution, resale, subdivision, or
fractionalization of the Shares.
3.6.2 During the course of the negotiation of this Agreement, Purchaser
has reviewed all information provided to it by the Corporation and has had
the opportunity to ask questions of and receive answers from
representatives of the Corporation concerning the Corporation, the
securities offered and sold hereby, and this purchase, and to obtain
certain additional information requested by Purchaser.
3.6.3 Purchaser understands that the Shares to be purchased have not
been registered under Securities Act of 1933 ("1933 Act"), or under any
state securities law.
3.6.4 Purchaser understands that the Shares cannot be resold in a
transaction to which the 1933 Act and state securities laws apply unless
(i) subsequently registered under the 1933 Act and applicable state
securities laws or (ii) exemptions from such registrations are available.
Purchaser is aware of the provisions of Rule 144 promulgated under the 1933
Act which permit limited resale of shares purchased in a private
transaction subject to the satisfaction of certain conditions.
3.6.5 Purchaser understands that no public market now exists for the
Shares and that it is uncertain that a public market will ever exist for
the Shares.
3.6.6 Purchaser understands that the certificates for the Shares will
bear the following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THE CORPORATION WILL NOT TRANSFER THIS CERTIFICATE UNLESS (i) THERE IS AN
EFFECTIVE REGISTRATION COVERING THE SHARES REPRESENTED BY THIS CERTIFICATE
UNDER THE SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS,
(ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD
OF DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE ATTORNEY THE
PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933 AND UNDER ALL
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APPLICABLE STATE SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO
RULE 144 UNDER THE SECURITIES ACT OF 1933.
3.7 Brokerage. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with this purchase based on any
arrangement or agreement entered into by Purchaser and binding upon any of the
parties hereto.
Section 4. Covenants of the Corporation and Seller. Corporation and Seller
covenant and agree with Purchaser as follows: upon the reasonable request of any
party hereto after the Closing, any other party will take all action and will
execute all documents and instruments necessary or desirable to consummate and
give effect to this purchase. These include, by way of illustration and not by
way of limitation, the following:
4.1 Various conditions relating to filing, payment, and collecting of
refunds relating to taxes;
4.2 Resignations of each of the directors of the Corporation;
4.3 Provisions relating to delivery of Corporate books and records;
4.4 Provisions relating to treatment of confidential proprietary
information obtained in the acquisition process; and if Purchaser is concerned
that Seller is not getting corporate approval in due time (or vice versa), the
following covenant may be considered.
Seller will cause a meeting of its shareholder to be called and held as
soon as practicable, will recommend approval of the transaction to its
shareholder, and will use its best efforts to obtain shareholder approval.
Section 5. Closing.
5.1 Time, Place, and Manner of Closing. Unless this Agreement has been
terminated and this purchase has been abandoned pursuant to the provisions of
Section 2 or Section 10, the closing ("Closing") will be held at such time as
the parties may agree on the Closing Date at the offices of the Corporation,
5617 Grissom Road, San Antonio, Texas 78238, or such other place as the parties
may agree. At the Closing the parties to this Agreement will exchange
certificates, Notes, Guaranties, and other instruments and documents in order to
determine whether the terms and conditions of this Agreement have been
satisfied. Upon the determination of each party that its conditions to
consummate this purchase have been satisfied or waived, Seller shall deliver to
Purchaser the certificate(s) evidencing the Shares, duly endorsed for transfer,
and Purchaser shall deliver to Seller certificate(s) evidencing the Preferred
Stock referred to in Section 1.3. After the Closing, Seller, at Purchaser's
cost, will execute, deliver, and acknowledge all such further instruments of
transfer and conveyance and will perform all such other acts as Purchaser may
reasonably request to effectively transfer the Shares.
5.2 Consummation of Closing. All acts, deliveries, and confirmations
comprising the Closing regardless of chronological sequence shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery, or confirmation of the Closing and none of such acts, deliveries, or
confirmations shall be effective unless and until the last of the same shall
have occurred. The time of the Closing has been scheduled to correspond with the
close of business at the principal office of the Corporation and, regardless of
when the last act, delivery, or confirmation of the Closing shall take place,
the transfer of the Shares shall be deemed to occur as of the close of business
at the principal office of the Corporation on the date of the Closing.
Section 6. Termination.
6.1 Termination for Cause. If, pursuant to the provisions of Section 7 or 8
of this Agreement, Seller or Purchaser is not obligated at the Closing to
consummate this Agreement, then the party who is not so obligated may terminate
this Agreement.
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6.2 Termination Without Cause. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and abandoned at any time
without further obligation or liability on the part of any party in favor of any
other by mutual consent of Purchaser and Seller.
6.3 Termination Procedure. Any party having the right to terminate this
Agreement due to a failure of a condition precedent contained in Sections 7 or 8
hereto may terminate this Agreement by delivering to the other party written
notice of termination, and thereupon, this Agreement will be terminated without
obligation or liability of any party.
Section 7. Miscellaneous Provisions.
7.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified, or supplemented only by a written agreement signed by
Purchaser and Seller.
7.2 Waiver of Compliance; Consents
7.2.1 Any failure of any party to comply with any obligation, covenant,
agreement, or condition herein may be waived by the party entitled to the
performance of such obligation, covenant, or agreement or who has the
benefit of such condition, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement, or condition will not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
7.2.2 Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent will be given in a manner
consistent with the requirements for a waiver of compliance as set forth
above.
7.3 Notices. All notices, requests, demands, and other communications
required or permitted hereunder will be in writing and will be deemed to have
been duly given when delivered by hand or two days after being mailed by
certified or registered mail, return receipt requested, with postage prepaid:
If to Purchaser, or to the Corporation
after the Closing, to:
BioLynx.Com
5617 Grissom Road
San Antonio, TX 78238
or to such other person or address as Purchaser furnishes to Seller pursuant to
the above.
If to the Corporation before the
Closing, to:
BioLynx Outsource Services, Inc.
5617 Grissom Road
San Antonio, TX 78238
If to Seller, to:
United Capital Investment Group, Inc.
5617 Grissom Road
San Antonio, TX 78238
or to such other address as Seller furnishes to Purchaser pursuant to the above.
7.4 Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
7.5 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
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7.6 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
7.7 Attorney Fees. In the event an arbitration, suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
7.8 Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall be included, unless it is a Saturday, Sunday, or a
legal holiday, in which event the period shall begin to run on the next day
which is not a Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next day thereafter which is not a Saturday,
Sunday, or legal holiday.
7.9 Pronouns and Plurals. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as the
identity of the person or persons may require.
7.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
7.11 Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
7.12 Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
7.13 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
7.14 Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
7.15 Savings Clause. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid, shall not be
affected thereby.
Dated: December 31, 1999.
PURCHASER:
BioLynx.Com,
a Texas corporation
By /s/ John D. Walker II
----------------------------------
John D. Walker II, President
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CORPORATION:
BioLynx Outsource Services, Inc.,
a Texas corporation
By /s/ John D. Walker II
----------------------------------
John D. Walker II, President
SELLER:
UNITED CAPITAL INVESTMENT GROUP, INC.
By /s/ John D. Walker II
----------------------------------
John D. Walker, II, President
9
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EXHIBIT 10.37
SECOND AMENDED OPTION TO PURCHASE EMPLOYEE/CUSTOMER BASE
This Agreement ("Agreement") is entered into this date, is by and between
BioLynx Outsource Services, Inc., a Texas corporation ("Purchaser") and Alamo
Commercial Group, Inc. ("Seller").
RECITALS:
WHEREAS, the Seller is in the business of providing business staffing to
its customers by way of leasing employees; and
WHEREAS, the Purchaser desires to acquire all of the leased employees of
the Seller, together with all contracts to furnish services and staffing for the
customers and clients of the Seller (collectively hereinafter referred to as the
"Employee/Customer Base"); and
WHEREAS, Purchaser is expected to become a wholly owned subsidiary of
BioLynx.Com, Inc. and will cause BioLynx.Com, Inc. to issue stock, as
hereinafter provided, in payment for the purchase price for the
Employee/Customer Base.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Purchase of Employee/Customer Base.
1.1 Purchase of Employee/Customer Base. Subject to the terms and conditions
set forth herein, at the Closing (as defined below) Seller will sell its
Employee/Customer Base to Purchaser and Purchaser will purchase all of its
Employee/Customer Base from Seller. This purchase and sale will be effective on
the Closing Date (as defined below).
1.2 Purchase Price. As the purchase price, Purchaser will cause
BioLynx.Com, Inc. to issue Seller 3,605,535 shares of Convertible Preferred
Stock of BioLynx.Com, Inc., with a liquidation privilege equal to its face
amount, issued in increments of $1,000.00, bearing an eight percent (8%) non-
cumulative dividend (the "Preferred Stock"). The Preferred Stock will, at the
option of the holder of the stock, be convertible into Common Stock of
BioLynx.Com, Inc. at the rate of the liquidation privilege, together with any
declared but unpaid dividend, divided by $3.30 per share of common stock.
1.3 Closing. The Closing Date of this Agreement shall be December 31, 1999.
As of the Closing Date, all employees of the Seller will become the employees of
the Purchaser and all contracts to provide staffing and services which are owned
by the Seller will be transferred to the Purchaser concurrently with such
employees. All liability related to such employees and contracts prior to the
effective date of the transfer will be retained by the Seller. All liabilities
and obligations subsequent to the date of transfer related to the leased
employees and contracts will be the liabilities and obligations of the
Purchaser.
Section 2. Representations and Warranties of the Seller. As a material
inducement to Purchaser to enter into this Agreement and purchase the
Employee/Customer Base, Seller represents and warrants that:
2.1 Organization and Corporate Power. The Seller is a corporation duly
incorporated and validly existing under the laws of the state of Texas and the
Seller is qualified to do business in every jurisdiction in which its ownership
of property or conduct of business requires it to qualify. The Seller has all
requisite corporate power and authority and all material licenses, permits, and
authorizations necessary to own and operate its properties and to carry on its
business as now conducted. The copies of the Seller's charter documents and
bylaws have been furnished to Purchaser's counsel reflect all amendments made
thereto at any time prior to the date of this Agreement and are correct and
complete.
2.2 Compliance with Laws. To the best of Seller's knowledge, the Seller is,
in the conduct of its business, in substantial compliance with all laws,
statutes, ordinances, regulations, orders, judgments, or decrees applicable to
them,
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the enforcement of which, if the Seller was not in compliance therewith, would
have a materially adverse effect on the business of the Seller, taken as a
whole. The Seller has not received any notice of any asserted present or past
failure by the Seller to comply with such laws, statutes, ordinances,
regulations, orders, judgments, or decrees.
2.3 No Brokers. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with the purchase based on any
arrangement or agreement binding upon any of the parties hereto.
2.4 Employees and Labor Relations Matters.
2.4.1 The Seller is not aware that any executive or key employee of the
Seller or any group of employees of the Seller has any plans to terminate
employment with the Seller;
2.4.2 To the best of Seller's knowledge, the Seller has substantially
complied in all material respects with all labor and employment laws,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining, Americans With Disabilities Act, and the payment of
social security and other taxes;
2.4.3 There is no unfair labor practice charge, complaint, or other
action against the Seller pending or, to Seller's best knowledge,
threatened before the National Labor Relations Board and the Seller is not
subject to any order to bargain by the National Labor Relations Board;
2.4.4 No questions concerning representation have been raised or, to
Seller's and the Seller's best knowledge, are threatened with respect to
employees of the Seller;
2.4.5 No grievance that might have a material adverse effect on the
Seller and no arbitration proceeding arising out of or under any collective
bargaining agreement is pending and, to the best knowledge of Seller and
the directors and responsible officers of the Seller, no basis exists for
any such grievance or arbitration proceeding; and
2.4.6 To the best knowledge of Seller and the directors and responsible
officers of the Seller, no employee of the Seller is subject to any non-
competition, nondisclosure, confidentiality, employment, consulting, or
similar agreements with persons other than the Seller relating to the
present business activities of the Seller.
2.5 Disclosure. Neither this Agreement nor any of the schedules,
attachments, written statements, documents, certificates, or other items
prepared or supplied to Purchaser by or on behalf of the Seller with respect to
this purchase contain any untrue statement of a material fact or omit a material
fact necessary to make each statement contained herein or therein not
misleading. No Seller or any responsible officer or director has intentionally
concealed any fact known by such person to have a material adverse effect upon
the Seller's existing or expected financial condition, operating results,
assets, customer relations, employee relations, or business prospects taken as a
whole.
2.6 Investment Representations
2.6.1 Seller is acquiring the Preferred Stock for its own account for
purposes of investment and without expectation, desire, or need for resale
and not with the view toward distribution, resale, subdivision, or
fractionalization of the Preferred Stock.
2.6.2 During the course of the negotiation of this Agreement, Seller
has reviewed all information provided to it by BioLynx.Com, Inc. and has
had the opportunity to ask questions of and receive answers from
representatives of BioLynx.Com, Inc. concerning BioLynx.Com, Inc., the
securities offered and sold hereby, and this purchase, and to obtain
certain additional information requested by Seller.
2.6.3 Seller understands that the Preferred Stock to be purchased has
not been registered under Securities Act of 1933 ("1933 Act"), or under any
state securities law.
2.6.4 Seller understands that the Preferred Stock cannot be resold in a
transaction to which the 1933 Act and state securities laws apply unless
(i) subsequently registered under the 1933 Act and applicable state
securities laws or (ii) exemptions from such registrations are available.
Seller is aware of the provisions of Rule 144 promulgated
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under the 1933 Act which permit limited resale of shares purchased in a
private transaction subject to the satisfaction of certain conditions.
2.6.5 Seller understands that no public market now exists for the
Preferred Stock and that it is uncertain that a public market will ever
exist for the Preferred Stock.
2.6.6 Seller understands that the certificates for the Preferred Stock
will bear the following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THE Seller WILL NOT TRANSFER THIS CERTIFICATE UNLESS (i) THERE IS AN
EFFECTIVE REGISTRATION COVERING THE SHARES REPRESENTED BY THIS CERTIFICATE
UNDER THE SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS,
(ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD
OF DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE ATTORNEY THE
PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933 AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR (iii) THE TRANSFER
IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OF 1933.
Section 3. Representations and Warranties of Purchaser. As a material
inducement to Seller to enter into this Agreement and sell the Preferred Stock,
Purchaser hereby represents and warrants to Seller as follows:
3.1 Organization; Power. Purchaser is duly incorporated and validly
existing under the laws of the State of Texas, and has all requisite corporate
power and authority to enter into this Agreement and perform its obligations
hereunder.
3.2 Authorization. The execution, delivery, and performance by Purchaser of
this Agreement and all other agreements contemplated hereby to which Purchaser
is a party have been duly and validly authorized by all necessary corporate
action of Purchaser, and this Agreement and each such other agreement, when
executed and delivered by the parties thereto, will constitute the legal, valid,
and binding obligation of Purchaser enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, and similar statutes affecting creditors' rights generally and
judicial limits on equitable remedies.
3.3 No Conflict with Other Instruments or Agreements. The execution,
delivery, and performance by Purchaser of this Agreement and all other
agreements contemplated hereby to which Purchaser is a party will not result in
a breach or violation of, or constitute a default under, its Articles of
Incorporation or Bylaws or any material agreement to which Purchaser is a party
or by which Purchaser is bound.
3.4 Governmental Authorities. (i) Purchaser is not required to submit any
notice, report, or other filing with any governmental or regulatory authority in
connection with the execution and delivery by Purchaser of this Agreement and
the consummation of the purchase and (ii) no consent, approval, or authorization
of any governmental or regulatory authority is required to be obtained by
Purchaser or any affiliate in connection with Purchaser's execution, delivery,
and performance of this Agreement and the consummation of this purchase.
3.5 Litigation. There are no actions, suits, proceedings, or governmental
investigations or inquiries pending or, to the knowledge of Purchaser,
threatened against Purchaser or its properties, assets, operations, or
businesses that might delay, prevent, or hinder the consummation of this
purchase.
3.6 Brokerage. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with this purchase based on any
arrangement or agreement entered into by Purchaser and binding upon any of the
parties hereto.
Section 4. Covenants of the Seller. Seller covenants and agrees with
Purchaser as follows: upon the reasonable request of any party hereto after the
Closing, any other party will take all action and will execute all documents and
instruments necessary or desirable to consummate and give effect to this
purchase. These include, by way of illustration and not by way of limitation,
the following:
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4.1 Various conditions relating to filing, payment, and collecting of
refunds relating to taxes;
4.2 Provisions relating to delivery of Corporate books and records;
4.3 Provisions relating to treatment of confidential proprietary
information obtained in the acquisition process; and if Purchaser is concerned
that Seller is not getting corporate approval in due time (or vice versa), the
following covenant may be considered.
Seller will cause a meeting of its shareholder to be called and held as
soon as practicable, will recommend approval of the transaction to its
shareholder, and will use its best efforts to obtain shareholder approval.
Section 5. Closing.
5.1 Time, Place, and Manner of Closing. Unless this Agreement has been
terminated and this purchase has been abandoned pursuant to the provisions of
Section 2 or Section 10, the closing ("Closing") will be held at such time as
the parties may agree on the Closing Date at the offices of the Corporation,
5617 Grissom Road, San Antonio, Texas 78238, or such other place as the parties
may agree. At the Closing the parties to this Agreement will exchange
certificates, other instruments and documents in order to determine whether the
terms and conditions of this Agreement have been satisfied. Upon the
determination of each party that its conditions to consummate this purchase have
been satisfied or waived, Purchaser shall deliver to Seller the certificate(s)
evidencing the Preferred Stock. After the Closing, Seller, will execute,
deliver, and acknowledge all such further instruments of transfer and conveyance
and will perform all such other acts as Purchaser may reasonably request to
effectively transfer the employees and customers to Purchaser.
5.2 Consummation of Closing. All acts, deliveries, and confirmations
comprising the Closing regardless of chronological sequence shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery, or confirmation of the Closing and none of such acts, deliveries, or
confirmations shall be effective unless and until the last of the same shall
have occurred. The time of the Closing has been scheduled to correspond with the
close of business at the principal office of the Seller and, regardless of when
the last act, delivery, or confirmation of the Closing shall take place, the
transfer of the employees shall be deemed to occur as of the close of business
at the principal office of the Seller on December 31, 1999.
Section 6. Termination.
6.1 Termination for Cause. If, pursuant to the provisions of Section 7 or 8
of this Agreement, Seller or Purchaser is not obligated at the Closing to
consummate this Agreement, then the party who is not so obligated may terminate
this Agreement.
6.2 Termination Without Cause. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and abandoned at any time
without further obligation or liability on the part of any party in favor of any
other by mutual consent of Purchaser and Seller.
6.3 Termination Procedure. Any party having the right to terminate this
Agreement due to a failure of a condition precedent contained in Sections 7 or 8
hereto may terminate this Agreement by delivering to the other party written
notice of termination, and thereupon, this Agreement will be terminated without
obligation or liability of any party.
Section 7. Miscellaneous Provisions.
7.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified, or supplemented only by a written agreement signed by
Purchaser and Seller.
7.2 Waiver of Compliance; Consents
7.2.1 Any failure of any party to comply with any obligation, covenant,
agreement, or condition herein may be waived by the party entitled to the
performance of such obligation, covenant, or agreement or who has the
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benefit of such condition, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement, or condition will not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
7.2.2 Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent will be given in a manner
consistent with the requirements for a waiver of compliance as set forth
above.
7.3 Notices. All notices, requests, demands, and other communications
required or permitted hereunder will be in writing and will be deemed to have
been duly given when delivered by hand or two days after being mailed by
certified or registered mail, return receipt requested, with postage prepaid:
If to Purchaser, or to the Seller
after the Closing, to:
BioLynx Outsource Services, Inc.
5617 Grissom Road
San Antonio, TX 78238
or to such other person or address as Purchaser furnishes to Seller pursuant to
the above.
If to the Seller, to
Alamo Commercial Group, Inc.
5617 Grissom Road
San Antonio, TX 78238
or to such other address as Seller furnishes to Purchaser pursuant to the above.
7.4 Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
7.5 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
7.6 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
7.7 Attorney Fees. In the event an arbitration, suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
7.8 Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall be included, unless it is a Saturday, Sunday, or a
legal holiday, in which event the period shall begin to run on the next day
which is not a Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next day thereafter which is not a Saturday,
Sunday, or legal holiday.
7.9 Pronouns and Plurals. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as the
identity of the person or persons may require.
7.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
7.11 Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial
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rules of the American Arbitration Association, and judgment upon the award
rendered by the arbiter may be entered in any court having jurisdiction thereof.
7.12 Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
7.13 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
7.14 Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
7.15 Savings Clause. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid, shall not be
affected thereby.
Dated: December 31, 1999.
PURCHASER:
BIOLYNX OUTSOURCE SERVICES, INC.,
a Texas corporation
By /s/ John D. Walker II
------------------------------------
John D. Walker II, President
SELLER:
ALAMO COMMERCIAL GROUP, INC.
By /s/ John D. Walker II
------------------------------------
John D. Walker II, President
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EXHIBIT 10.38
BIOLYNX.COM, INC.
STATEMENT OF RESOLUTION ESTABLISHING
A SERIES OF SHARES
To the Secretary of State of the State of Texas:
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating a series of shares and fixing and
determining the relative rights and preferences thereof:
1. The name of the corporation is BioLynx.Com, Inc. (the "Company").
2. The following resolution, establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof,
was duly adopted by the Board of Directors of the Company on December 27, 1999:
RESOLVED, that pursuant to the Articles of Incorporation of the Company
authorizing the Board of Directors to establish and designate series of the
preferred stock of the Company, par value $1.00, and to fix and determine
the relative rights and preferences of the shares of any such series, there
is hereby designated a series of the preferred stock to be called
"Preferred Stock" to consist of 5,051,882 shares and to have the following
terms:
1. Dividends. The holders of outstanding shares of the Preferred Stock
shall be entitled to receive, out of the assets of the Company legally
available therefor, cash dividends equal to eight percent (8%) of the
stated value of the Preferred Stock ($1.00), payable quarterly on the last
day of March, June, September and December of each year. All dividends
payable on the Preferred Stock shall be non-cumulative.
2. Redemption Rights. The Preferred Stock shall not have redemption
rights.
3. Liquidation Rights. Upon the dissolution, liquidation or winding up
of the Company, whether voluntary or involuntary, the holders of the shares
of Preferred Stock then outstanding shall be entitled to receive out of the
assets of the Company $1.00 per share (the "Liquidation Rate") before any
payment or distribution shall be made on the common stock of the Company,
par value $0.001 (the "Common Stock"), or any other class of capital stock
of the Company ranking junior to the Preferred Stock.
(a) The sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all
the property and assets of the Company shall be deemed a dissolution,
liquidation or winding up of the Company for purposes of this Paragraph
3, but the merger or consolidation of the Company into or with any
other corporation, or the merger or consolidation of any other
corporation into or with the Company, shall not be deemed a
dissolution, liquidation or winding up, voluntary or involuntary, for
purposes of this Paragraph 3.
(b) After the payment to the holders of shares of the
Preferred Stock of the full preferential amounts fixed by this
Paragraph 3 for shares of the Preferred Stock, the holders of the
Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Company.
(c) In the event the assets of the Company available for
distribution to the holders of the Preferred Stock upon dissolution,
liquidation or winding up of the Company shall be insufficient to pay
in full all amounts to which such holders are entitled pursuant to this
Paragraph 3, no distribution shall be made on account of any shares of
a class or series of capital stock of the Company ranking on a parity
with the shares of the Preferred Stock, if any, upon such dissolution,
liquidation or winding up unless proportionate distributive amounts
shall be paid on account of the
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shares of the Preferred Stock, ratably, in proportion to the full
distributive amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
4. Conversion. At the option of the holders of the Preferred Stock,
shares of the Preferred Stock shall be convertible into shares of the
Common Stock at the Liquidation Rate, together with any declared but unpaid
dividends, divided by $3.30 per share of Common Stock.
5. Denial of Preemptive Rights. No holder of shares of the Preferred
Stock shall by reason of his holding of such shares have any preemptive or
preferential rights to purchase or subscribe to any shares of any class of
the Company's capital stock now or hereafter to be authorized or any notes,
debentures, bonds, or other securities convertible into or carrying options
or warrants to purchase shares of any class, now or hereafter to be
authorized, whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities would adversely affect dividend or
voting rights of holders of shares of the Preferred Stock, other than such
rights, if any, as the Board of Directors in its discretion may fix; and
the Board of Directors may issue shares of any class of the Company, or any
notes, debentures, bonds, or other securities convertible into or carrying
options or warrants to purchase shares of any class, without offering any
such shares of any class, either in whole or in part, to the holders of the
Preferred Stock.
6. Voting. The holders of shares of the Preferred Stock shall have no
voting rights except as provided by law.
RESOLVED FURTHER, that the appropriate officers of the Company shall
prepare and file all necessary instruments as may be required by law to carry
out the terms of the foregoing resolution.
Dated: January 24, 2000.
BIOLYNX.COM, INC.
By /s/ John D. Walker II
------------------------------------
John D. Walker II, Chairman
2
<PAGE>
EXHIBIT 21.1
The following entities are wholly-owned subsidiaries of BioLynx.Com, Inc:
1. BioLynx. Outsource Services, Inc.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
I hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of my: (i) report dated November 19, 1999,
except for footnote 11, for which the date is January 18, 2000, relating to the
financial statements of BioLynx.Com, Inc.; (ii) report dated January 11, 2000
relating to the financial statements of BioLynx Outsource Services, Inc.; and
(iii) report dated January 11, 2000 relating to the pro-forma statements of
income of the Employee Leasing Division of Alamo Commercial Group, Inc.; which
appear in such Prospectus. I also consent to the reference to me under the
headings "Experts" in such Prospectus.
JOHN M. JAMES, C.P.A.
By /s/ John M. James
------------------------------------
John M. James
Houston, Texas
January 27, 2000
