UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) or (g) of
The Securities Exchange Act of 1934
IVES HEALTH COMPANY, INC.
(Name of small business issuer in its charter)
Oklahoma 73-1430235
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
817 North J.M. Davis Blvd.
Claremore, OK 74017
(Address, including zip code, of registrant's executive office)
(918)283-1226
(Registrant's telephone number, including area code)
(918)283-1232
(Registrant's facsimile number, including area code)
Securities to be registered pursuant to section 12(b) of the Act: None
Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, $0.001
(Title of Class)
Information Required in Registration Statement
Certain Forward-Looking Information
Certain statements included in this report which are not historical facts
are forward looking statements, including the information provided with respect
to future business opportunities, expected financing sources and related
matters. These forward looking statements are based on current expectations,
estimates, assumptions and beliefs of management, and words such as "expects,"
"anticipates," "intends," "believes," "estimates," and similar expressions are
intended to identify such forward looking statements. Since this information is
based on current expectations that involve risks and uncertainties, actual
results could differ materially from those expressed in the forward-looking
statements.
<PAGE>
PART I
Item 1. Description of Business
(a) Business Development
1. Form and Year of Organization
Ives Health Company, Inc. (A Development Stage Company) ( the "Registrant",
"Company", "IHC" or "New Ives" ) was formed pursuant to an agreement between
Maxxon, Inc. and M. Keith Ives, entered into and made effective December 31,
1997 (see Exhibit I - Agreement Between M. Keith Ives and Maxxon, Inc.) Ives
Health Company, Inc., (a wholly owned subsidiary of Maxxon, Inc.) and Maxxon,
Inc. agreed to separate. The separation was accomplished by a non-pro rata
split-off of non-monetary assets, and the issuance of 7,000,000 shares of New
Ives common stock to M. Keith Ives, and 1,700,000 shares of New Ives common
stock to Maxxon, Inc. New Ives began operations January 1, 1998 and was
incorporated in Oklahoma on February 12, 1998. The split-off was valued and
recorded at the fair market value of the Maxxon stock in accordance with Issue
96-4 of the Emerging Issues Task Force.
2. Bankruptcy or Receivership
Ives has never been in bankruptcy or receivership.
3. Mergers, Reclassifications and purchases of Assets
Prior to August of 1997, Ives Health Company, Inc., was a privately held
company incorporated in the state of Oklahoma in 1993 and was engaged in the
business of selling and distributing homeopathic supplements, weight loss
products, vitamins, and other alternative medicines to the public through retail
grocery stores and other distribution outlets. In August, 1997, the shareholders
of Ives exchanged all of their issued and outstanding shares for Maxxon shares
in a tax free share exchange. As a result, Ives Health Company became a wholly
owned subsidiary of Maxxon. Mr. Keith Ives became a shareholder of Maxxon and
remained President and a director of Ives Health Company. Mr. Ives had never
been the holder of more than 5% of the issues and outstanding stock of Maxxon.
Mr. Ives also became a director of Maxxon. Note: Maxxon, Inc. is a development
stage company in the process of developing a safety syringe. Its stock has been
traded on the OTC Bulletin Board under the symbol, "MXON".
After a short period of time, it became apparent to both Maxxon and Ives
management that the business of Maxxon and Ives apparently did not fit together
as originally believed, that Maxxon was not able to obtain financing for the
Ives operations as expected, and that the management style of Maxxon was
incompatible with the management style of Mr. Ives. The parties determined to
separate. At that time, Ives Health Company, Inc., a wholly owned subsidiary of
Maxxon Inc., changed it's name to SEVI Health Company a wholly owned subsidiary
of Maxxon Inc., in order to free up the name of Ives Health Company, Inc. The
separation agreement shown in Exhibit I shows that a new corporation named Newco
would be formed. The name Newco was never used as a name for New Ives because
permission was granted by the Secretary of State of Oklahoma to use the old name
Ives Health Company. The new Ives Health Company was again incorporated as of
February 12, 1998. Mr. Ives became the principal stockholder of that new
company. Substantially all of the assets of the old Ives Health Company which
later became a wholly owned subsidiary of Maxxon, Inc., which later became SEVI
Health Company, Inc., a wholly owned subsidiary of Maxxon, Inc., were
transferred into New Ives the registrant. The assets included inventory,
equipment, contract rights, intellectual property rights, and product
specifications. The new Ives Health Company, Inc. commenced a Regulation D, Rule
504 offering in which additional capital was raised.
(b) Business of Issuer
1. Principal Products and Services of Ives and Their Markets
The Company is engaged in developing and marketing innovative, safe, high
quality natural medicines and nutritional supplements, which are guaranteed for
potency and purity, including homeopathic medicines, weight loss formulas,
natural remedies, and nutritional supplements. Ives Health Company presently
offers 27 different products as follows: Aches and Pains, Acne, Allergy,
Antacid, Arthritis, Cough & Sore Throat, Energy, Headache, and Sinus are all
homeopathic medicines that provide temporary symptomatic treatment for relief of
aches and pains, acne, allergies, upset stomach, pain in joints, cough and sore
throat, fatigue, head pain due to stress, and runny nose and sinus congestion.
Each of the homeopathic medicines comes in tablet form with 30 tablets in a
bottle and sells for $5.98 per bottle. Step 1 - Beginning Weight Loss sells for
$19.95, Step 2 - Continuing Weight Loss sells for $36.95, and Step 3 -
Maintaining Weight Loss sells for $30.95. Other products are as follows:
L-Chromatine - affects fat metabolism while aiding muscle mass gain - $9.95 for
60 tablets in a bottle, De-Tox - designed to cleanse and purify the body of
toxins - $3.65 for 9 tablets in a bottle, Flora-Plus - provides bacteria and
enzymes which improves digestion - $9.95 for 30 tablets in a bottle, Poly-Pep -
Free form amino acids which help improve nutrient absorption - $9.95 for 30
tablets in a bottle, Orangetic - A high energy performance drink containing a
specific blend of nutrients - $19.95 for 30 day supply in powder form, Arthritis
Formula - Hydrolyzed collagen peptides which feed the joints - $48.00 for a 30
day supply in powder form, Antioxidant - Helps eliminate free radicals and
peroxides in the blood - $11.95 for 60 tablets in a bottle, Cholest-Away - Helps
lower and control cholesterol and triglyceride levels - $21.30 for 60 tablets in
a bottle, Immune 2000 - Boosts immune system function while reducing secondary
infections - $19.85 for 60
<PAGE>
tablets in a bottle, Prostate Formula - enhances overall prostate health -
$39.50 for a three month supply, 270 tablets in a bottle, PMS Formula - Helps
build optimum levels of hormonal balancers; decreases cramping, nausea and
headache during menstruation - $10.95 for 15cc liquid in a bottle, Relaxagent -
relieves stress without drowsiness - $15.95 for 90 tablets in a bottle, Trace
Minerals - Achieves RDA blood levels of 77 trace minerals - $11.20 for 120
tablets in a bottle, and VEGI BEARS (original flavor and sour) - a nutritional
snack food - $5.99 for 60 bears in a box.
2. Distribution Method of Products and Services
The Company sells to wholesale pharmacy distributors, various chain
pharmacies, and independent retail pharmacies. Three of the Company's principal
distribution alliances are with Albertsons, Winn Dixie, and Dillons with over a
1000 pharmacy locations, as well as over 700 independent retail pharmacies,
distributing IHC's products in 36 states.
3. Status of Publicly Announced Products and Services
During 1999 Ives announced a new product called, Immune 2000. All rights to
this product were purchased from Dr. Robert Slayton Bedeen in July of 1999 as
part of the Quantum Resources acquisition. Immune 2000 is a product that
resulted from 10 years of research and development. It has been tested on AIDS
patients and significantly increased their immune system function while reducing
secondary infections, offering them a better quality of life.
4. Competitive business conditions, Competitive Position and Methods of
Competition
(a) WEIGHT LOSS: Ultra Slim Fast, Weight Watchers, Nutra-System, Jenny
Craig, Dexatrim, Herbal Life, and Metabolite.
(b) HOMEOPATHIC MEDICINE: Nature's Way, Naturopath Medicines, Boyron, and
Centrum are the most prevalent.
(c) NUTRITIONAL SUPPLEMENTS: Nature's Resource, Nature's Way, and Centrum
are our biggest competitors and control approximately 35% of the market.
However, most of their distribution is targeted through health food stores, i.e.
GNC, Atkins and a variety of others.
5. Sources of Raw Materials and the Names of Principal Suppliers
The principal suppliers of Ives' raw materials are: International
Formulation and Manufacturing (IFM), Vegi Snack Foods, Inc., Summa Laboratories,
Inc.; Animal Technologies, Inc. and American Labs.
6. Dependence on one of a few major customers
Ives primary distribution focus is through regional and national chain
pharmacies. We are currently distributing through Mays, Drug Warehouse, Price
Mart, Horizon, Pamida and The Medicine Shoppes (these are regional chains).
National chains currently selling our products on a regional basis are
Albertsons (2700 national locations), Dillons and Winn-Dixie (1200 plus national
locations). Wal-Mart is expected to set us up as a vendor. Walgreens, K-Mart,
and Eckerds are our next three targeted chains. Walgreens, K-Mart, and Eckerds
have expressed interest in Ives products. While there are no distributor
agreements with these companies at this time, Ives anticipates that such
agreements will be entered into with each company in the near future.
Discussions are continuing with these companies as well as Krogers, CVS,
Brookshire, Publix, and Randalls, and Ives expects to execute agreements in the
late 1st quarter or early 2nd quarter, 2000, with many of these chains.. Ives
estimates that 70% of our distribution will be through large grocery and
pharmaceutical chain stores.
Ives Health Company is dependent at this time upon product sales to 3 large
grocery and pharmaceutical chains, Albertsons, Winn Dixie and Dillons, which
have 318 stores, 707 stores and 71 stores, respectively, currently purchasing
Ives products. As the number of customers increases, the dependence of Ives upon
these chains will decrease. Ives anticipates that the growth of the acceptance
of its products will result in the addition of other large grocery and/or
pharmaceutical chains as customers.
7. Patents, trademarks, licenses, royalty agreements or labor contracts
IHC has an exclusive license agreement with Dr. Robert Slayton-Bedeen
relating to certain Technology developed by Dr. Bedeen. A Royalty agreement with
Dr. Bedeen reads as follows: a) Ten percent (10%) of the first $100,000 and five
percent (5%) on the excess over $100,000 of the adjusted sales revenue actually
received by Licensee (gross revenue received from sales of Licensed Products
less 28%) during the first five (5) years of the term of this agreement. b)
Three percent (3%) of the adjusted sales revenue during the second five years.
c) Two percent (2%) of the adjusted sales revenue during the remaining forty
(40) years. On November 30, 1998, the Company purchased for $10,000 and expensed
the cost of the royalty provision that was required under the License Agreement.
The purchase thereby eliminated any royalty payments to the previous owner of
the technology.
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The purpose of the license agreement with Dr. Bedeen was to obtain all
rights to formulations (including the rights to manufacture, distribute and
sell) that Dr. Bedeen had developed with respect to products named, Immune 2000,
T-factor and a revolutionary burn creme. This agreement has not been significant
to Ives Health Company in the past. This agreement will be a significant part of
Ives year 2000 expansion. The aforementioned products will be the primary
products sold in the new Hospital and Doctor Direct Division of Ives which is
scheduled to be created in the spring of 2000.
8. Need for Governmental Approval
None.
Ives markets our products in the wholesale distribution market for
nutritional supplements. All of our products are sold strictly over-the-counter
and are non-prescription. At the present time, Ives does not manufacture any of
our own products. Manufacturers of our products are subject to FDA compliance.
Ives only packages and distributes products manufactured in FDA approved
facilities. None of our products have ever been challenged. Ives has never had
to revise a marketing claim or withdraw a product from the market.
9. Effect of Existing or Probable Governmental Regulation
None.
10. Estimate of the amount spent on research and development
IHC's research and development department currently operates as follows:
internal tracking, quality control, test results, product development and other
important data are done internally in conjunction with an outside joint venture
with Albertsons, which is overseen by Dr. Ruth Miller. Through December 31, 1999
Ives has spent an estimate of $50,000, which includes R & D employees wages.
11. Costs and effects of environmental compliance
Ives has incurred no costs associated with environmental compliance.
12. Number of total employees and number of full time employees
The Company had 14 full-time employees at the year ended December 31, 1998
and 14 full-time employees as of December 31, 1999.
Item 2. Management's Discussion and Analysis
(a) Plan of Operations
There is no assurance that material expenses will not be incurred that
could jeopardize the stability of the Company nor that shareholders or future
shareholders will have or make available sufficient funds to cover such material
expenses. However, it is the belief of the Company, that the following summary
of the Company should occur.
The overall goal of the management team is to develop IHC into a major
player in the arena of natural health products. Objectives leading to that goal
include being a structured and professional organization of integrity, thus
maintaining strong relationships with suppliers and customers. Marketing goals
include having products in 15,000 pharmacies in the U.S. by the year 2001. Of
these 15,000 pharmacies, 30% are independent pharmacies and 70% are regional and
national chains, i.e. Albertsons, Winn-Dixie, Wal-Mart, Walgreens, K-Mart,
Eckerds, etc.
As of January 31, 2000, Ives products are sold in 146 independent
pharmacies and 1096 chain pharmacies (318 Albertsons, 707 Winn Dixies, and 71
Dillons) for a total of 1242 pharmacy locations that carry our products. There
are 2400 additional Albertsons stores that Ives has the opportunity to sell
products to. It is Ives plan to sell products nationwide by selling to as many
chain pharmacies as possible by the end of the year 2000. Most stores that carry
Ives products vend our entire product line. Ives has no exclusive arrangements
for the wholesale distribution of our products.
The Company's products can generally be grouped into five categories:
Homeopathic medicines (pure medicines), Weight Management, Natural Remedies,
Nutritional food supplements, and Health and Beauty Aids. IHC will continue to
implement the same positive marketing strategy that brought the Company to this
point. It will sell the bulk of its product through wholesale distributors and
play off the success of its current wholesalers and generate business with new
wholesalers. Also IHC will continue to seek regional and national chain
pharmacies. Other strategies include attending more pharmacy trade shows,
getting endorsements from strategic pharmacy, physician, and health insurance
providers (by conducting our innovative validation testing), hiring more direct
sales representatives, and increasing regional advertising while expanding to a
national advertising campaign. Our greatest need is advertising dollars in order
to create more consumer awareness and demand (mass over time).
<PAGE>
The Company's powders, capsules, tablets and liquids in bulk are produced
by International Formulation & Manufacturing, Inc. of San Diego, California,
Summa RX Laboratories, Inc. in Mineral Wells, Texas, Animal Technologies, Inc.
in Tyler, Texas, and American Labs, Inc. of Omaha, Nebraska. All of the
preceding companies are FDA registered drug companies. All final packaging, i.e.
(shrink-wrapping, UPC coding, expiration dating, and quality control, etc.) is
performed by IHC in Claremore, Oklahoma. Future products will be handled on the
same basis. The long-term goal of IHC is to manufacture products from start to
finish.
The Company's primary distribution focus is through regional and national
chain pharmacies. We are currently distributing through Mays, Drug Warehouse,
Price Mart, Horizon, Pamida and The Medicine Shoppes (these are regional
chains). National chains currently selling our products on a regional basis are
Albertsons (2700 national locations) and Winn-Dixie (1200 national locations).
Wal-Mart , Walgreens, K-Mart, and Eckerds are our next targeted chains. IHC has
established a strong alliance with wholesale distributors who sell to
independent pharmacies and continued growth with these distributors is another
reason for IHC achieving nationwide distribution. IHC's most noted strengths
with their wholesalers are product quality, a strong in-store marketing package,
high profit margins for both the wholesaler and the retail pharmacy, product and
alternative medicine education and validation testing.
Management of Ives believes that Ives is a leader in the industry in
promotional incentives and profit margins for its products. In the July 1999
issue of Pharmacy Today Magazine it was stated that the average margins on
over-the-counter pharmaceutical products is 23% and the average margins on
prescription drugs is 7-11% with a total average margin for pharmaceuticals of
17%. Ives Health Company products boast an average margin of 38% which is far
above our competitors. The average incentive by other pharmaceutical companies
to wholesalers and brokers is 3%. Ives give a 5-8% commission to wholesalers and
brokers.
(b) Results of Operations
Revenues were $469,567 for the year ended December 31, 1999 compared to
$394,854 for the year ended December 31, 1998. This represents a 19% increase in
revenue from 1998 to 1999. Cost of sales were $330,526 for the year ended
December 31, 1999 compared to $192,039 for the year ended December 31, 1998.
Selling expenses were $196,830 for the year ended December 31, 1999 compared to
$329,149 for the year ended December 31, 1998. General & Administrative expenses
were $532,563 for the year ended December 31, 1999 compared to $323,693 for the
year ended December 31, 1998. This change represents an increase of $208,870 or
65% over 1998 general and administrative expenses. This General & Administrative
expense increase was primarily due to increases in consulting expenses, legal
and accounting expenses, research and development expenses, fringe benefits to
employees and office clerical salaries. The company posted a net loss of
$(590,242) for the year ended December 31, 1999, compared to a net loss of
$(502,746) for the year ended December 31, 1998. A total deficit of $(1,092,988)
accumulated during the 1998-1999 development stage of the company.
(i) Cash Requirements
Management believes that to achieve its objectives , the Company should
seek additional funding of $750,000, whether it be through long-term debt or
additional sales of stock or both. The funds will be used for company expansion,
which will include the following: increasing inventory, significantly increasing
advertising expenses, creating a multi-level marketing division where private
label products will be sold to consumers directly over the internet, creating a
hospital and doctor direct division where the products purchased from Dr. Bedeen
and Quantum Resources will be sold directly to hospitals and doctors offices,
creating an international sales division where products will be sold abroad and
retirement of existing debt. Management also believes that the 4th quarter 1999
refocus on large chain pharmacy sales should significantly increase sales of the
company which combined with the above company expansion will result in projected
gross sales of $2 million for the year 2000 with positive net earnings.
Due to the refocus on large chain pharmacy sales in the 4th quarter of
1999, company financial conditions had significantly improved by December 31,
1999. As of January 31, 2000, Ives Health Company was posting positive
operational cash flow. Ives is presently providing working capital from the sale
of inventory; however, is seeking to borrow additional working capital which
will be used to implement the aforementioned company expansion.
As of January 31, 2000, Ives Health Company is servicing $21,191.99 in
monthly short-term and long-term debt payments and is meeting this debt service
out of operational cash flow.
(ii) Product Development and Research Plan for the Next Twelve Months
IHC's research and development department currently operates as follows:
internal tracking, quality control, test results, product development and other
important data are done internally in conjunction with an outside joint venture
with Albertsons, which is overseen by Dr. Ruth Miller. Management plans to
continue the validation testing for current products and all new products
introduced.
During the last half of 1999, Ives Health Company entered into a validation
testing agreement with Albertsons where 400 participants were enrolled for
validation testing in Oklahoma Albertsons pharmacies. The reason for this
program was to substantiate the efficacy of our products. Each participant was
given a 30 day supply of a specific product. A series of tests were performed
under a doctor's supervision on each participant as part of the validation
testing. The testing was completed on November 15, 1999. From these tests it was
determined that Ives products have an overall effectiveness of 83%. This
information is being used in Ives new
<PAGE>
Preventive Health Discount Plan where Ives, pharmacy chains and insurance
companies enter into agreements that provide wellness to participants. The Ives
Preventive Health Plan will be of significant benefit to insurance companies
(decreased claims and increased profits), consumers (decreased drug expense,
better health and lower insurance premiums), companies ( better employee health,
less absenteeism, increased employee performance and lower insurance premiums),
the participating pharmacy chains (increased traffic, increased sales and
increased profits), and will significantly boost the sales of Ives products. The
validation testing program has validated the product claims of Ives and will be
very important in the expansion of Ives products, its markets, and the
acceptance of its products by the ultimate consumer.
(iii) Expected Purchase or Sale of Plant and Significant Equipment
None.
(iv) Expected Significant changes in number of employees.
Ives intends to hire two to three additional sales representatives to
service our customers in the field.
Item 3. Description of Property
(a) Location and Description of Property
The Company owns land and building at 817 North J.M. Davis Blvd.,
Claremore, OK 74017, and all furniture, fixtures, and equipment. The land and
building has a mortgage against it, held by Seven Brothers LLC. The balance due
at December 31, 1998 was $164,574. The balance due on the building mortgage as
of December 31, 1999, was $154,305. The Company purchased the land (.565 acres)
and building (13,180 sq. ft. ) in July, 1998 for $270,000, the cost of
remodeling was $99,747. The appraised value after remodeling was $462,000. The
Company carries adequate insurance coverage on all property and equipment. The
Ives building at 817 North J.M. Davis Blvd. in Claremore, OK, is used mostly for
packaging, storage and shipping of Ives products and a lesser part of the
building houses the corporate offices of the company. The equipment located in
the building is limited to computers, a labeling machine, two packaging machines
and a forklift.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Beneficial Owners of More than Five Percent
The following shareholders own of record more than 5% and/or includes
security ownership of management personnel of the 9,577,650 shares issued and
outstanding as of December 31, 1998 and as of December 31, 1999 of 12,846,946:
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Owner Amount and Nature
Of Beneficial Owner % of Class
- -----------------------------------------------------------------------------------------------------
As of December 31,
1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common M. Keith Ives, Officer/Director 8,439,260 65.7%
22972 Woodridge Dr., Claremore, OK 74017
- -----------------------------------------------------------------------------------------------------
Common Maxxon, Inc., Beneficial Owner 1,700,000 13.2%
8908 S. Yale Ave, Ste 409, Tulsa, OK 74137
- -----------------------------------------------------------------------------------------------------
Common Bill Elliott, Beneficial Owner 150,187 1.2%
Route 1, Box 156, Tahlequah, OK 7446
- -----------------------------------------------------------------------------------------------------
Common Pat Storms, Beneficial Owner 349,975 2.7%
15849 Sheffield Rd., Siloam Springs, AR 72761
- -----------------------------------------------------------------------------------------------------
Common JoEtta Hughes, Officer/Director 549,984 4.3%
Claremore, OK 74017
- -----------------------------------------------------------------------------------------------------
Common Perry Ives, Officer/Director 329,800 2.6%
316-A S. Choctaw, Claremore, OK 74017
- -----------------------------------------------------------------------------------------------------
Common Tony Fauver/Director 80,000 0.6%
Claremore, OK 74017
- -----------------------------------------------------------------------------------------------------
Common Jim Jones, Director 2,000 N/A
6937 E 97th St. South, Tulsa, OK 74133
- -----------------------------------------------------------------------------------------------------
Common All Officers and Directors as a group (4 persons) 9,401,044 73.2%
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Note: Maxxon is a company with over 12,000,000 shares of common stock
issued and outstanding at December 31, 1999. Ives does not know who the
principal shareholders are. Mr. Gifford Mabee is the President, but Ives does
not know who other officers are. Maxxon filed a form 10-SB on December 22, 1999.
Information regarding Maxxon can be found from that filing.
(b) Security Ownership of Management
These numbers are included in the table 4(a) shown above.
(c) Changes in Control
None.
Item 5. Directors, Executive Officers, Promoters and Control Persons
(a) Identify directors and executive officers.
(1) - (4) Names, ages, positions, offices, business experience.
A) M. Keith Ives, age 42, is President, of Ives Health Company. Mr. Ives,
upon graduating from college, went to work for McKesson Drug Co. as a territory
sales manager where he gained expertise in sales, pharmacology, marketing,
business management, and business consulting. After seven years with McKesson
Drug Co. Mr. Ives decided to start his own pharmaceutical company for two
primary reasons ( to specialize in natural preventive health products and to
find products which would help improve the quality of life for his wife who had
contracted Multiple Sclerosis). To accomplish this goal, he bought an insurance
agency to gain experience in personnel management, sales management, and
knowledge about the insurance industry and their role on the pharmaceutical
industry. Simultaneously, he became a distributor for a direct marketing company
to gain the knowledge necessary in applying direct marketing to his future
pharmaceutical business. Mr. Ives then started a pharmaceutical company and has
been the driving force to realizing his goals. Mr. Ives' perseverance has led
this company to its present position and with proper funding, IHC will become a
leader in the growing preventive health care industry.
RESPONSIBILITIES - Mr. Ives oversees the day to day operations, coordinates
closely with Fred Oberloh, National Sales Manager, on company promotions and
sales, makes direct sales calls, conducts ride-alongs with wholesale/broker
representatives to secure new business, attends local, regional and national
trade shows, promotes the company's growth and vision to the pharmaceutical
industry, via alternative medicine seminars both live & televised, and conducts
the business of securing funds for IHC's growth. Mr. Ives has been recognized by
his employers, peers, and his customers for his outstanding achievements in
sales, service, consulting and management. These achievements include: #1 in
annual multi-million dollar sales volume seven of ten years before starting IHC,
Mr. Ives and the sales people he managed were always in the top 5% of sales
producers for their respective companies.
B) Michael Harrison, age 45, was hired as CEO of Ives Health Company on
December 27, 1999. Mr. Harrison managed the largest oil operation in the state
of Kansas from 1987-1991. Applied operation management skills which resulted in
net earnings increased from 14 million dollars in 1987 to 31 million dollars in
1991. Successfully performed duties a financial consultant for the corporate
financial planning and analysis department of OXY USA from 1991-1993.
Co-instructor of an in-house business decision making school. Evaluated 106 oil
companies for possible acquisition during 1992. Managed divestment of $5 million
of company properties at auction during 1992. Acquired the world renown
Hasty-Bake Barbecue Grill Company in 1993. Successfully marketed and operated
company resulting in doubling of sales and significant increase in earnings.
Developed marketing strategy and revitalized dealer network. Reestablished and
redesigned many old products. Sold majority interest in company to minority
partner in 1996. Divestiture resulted in a profit of five times the original
cash investment in the company. Acquired 100% of RPC Company an industrial
powder coating operation in 1996. Secured bank and SBA financing for acquisition
and subsequent expansion involving buyout of competition. Tripled revenues and
earnings of company in three years. Increased net value of company ten times the
original investment by November 1999.
RESPONSIBILITIES - Mr. Harrison is responsible for the daily operations and
administration of the company. He is the company's primary deal maker with
respect to future acquisitions and financing. Mr. Harrison is also responsible
for all future performance predictions of the company as well as a liaison with
the SEC on corporate filing matters. Mr. Harrison works very closely with Mr.
Keith Ives in the planning and future direction of the company and with respect
to targeted sales efforts. Mr. Harrison has been instrumental in attaining
continuing education (CE) certification status for Ives Health Company with
local and national pharmacy boards. By utilizing CE certification, Ives Health
Company can better inform pharmacists about the generalities of Ives products
and at the same time award the pharmacists with local or national continuing
education credits.
C) JoEtta Hughes, age 43, is CFO of Ives Health Company. Ms. Hughes has
comprehensive experience in accounting, the pharmaceutical industry, warehouse
and personnel management and has worked for McKesson Drug Co. and a division of
Cooper and Lybrand accounting firm. She graduated valedictorian from Bryan
Institute in computer programming and accounting. She is currently Vice
President of the local chapter of Business and Professional Woman's Federation
as well as state Membership Chair. She sits on the advisory boards for Rogers
University and OSU.
<PAGE>
RESPONSIBILITIES - Ms. Hughes conducts all of the in-house financial business
for IHC and works closely with IHC's CPA. While her main duties are financially
related, she contributes a great deal to the day to day operations, customer
service, data entry, secretarial duties, and consulting with M. Keith Ives in
running the company. In order for IHC to be successful Mr. Ives felt he must
have Ms. Hughes on board to draw from her expertise in the pharmaceutical and
accounting fields. She has been instrumental in applying her abilities in
keeping the company functioning.
D) Perry Ives, age 35, Vice President, of Ives Health Company has 13 years
experience in employee relations and day to day operations as maintenance
supervisor for apartment management firms. He graduated high school in
Stillwater, OK and received his Associates Degree in Computerized Accounting at
Condie College in California with a 3.99 GPA. Perry is responsible for producing
our television and radio commercials, and our newspaper advertisements. He is
presently developing a CD ROM that will be used as an educational marketing
tool. Perry's diversified abilities and his knowledge of daily operations of IHC
have proven to be a valuable asset to the company.
RESPONSIBILITIES - Director of Marketing and Advertising while overseeing the
day to day operations and product production. Mr. Ives primary function is
designing and implementing in-house sales and marketing materials, creating ad
slicks, and supporting the efforts of JoEtta Hughes in accounting and computer
work. Mr. Ives has demonstrated his diversified abilities in the daily
operations of IHC and has proven to be capable of exceeding every challenge that
the company has thrown his way. He has been instrumental in performing work the
company would have had to out source, thus assisting the company's efforts to
control costs.
E) Tony Fauver, age 44, is the Director/Production & Quality Control and
has 17 years experience in warehouse management, production, and quality
control. Mr. Fauver has been employed with IHC since May of 1997. Born and
raised in Edwardsville, Illinois. Tony received his training in the United
States Army. His experience as a General Manager of a manufacturing company,
plus his experience in sales and purchasing has made him a valuable asset to
Ives Health Company, Inc. His knowledge of general management principles is
synonymous with Ives Health Company's high standards for the production of our
all natural products and weight management program.
F) Jim Jones, age 68, is currently a member of Ives Health Company's Board
of Directors. Mr. Jones was a successful insurance agent before his retirement
in 1992. Although he considers himself retired, he still acts as Ives Health
Company's independent insurance agent. Throughout his career, he has sat on the
Board of Directors for banks, insurance companies, & several corporations.
(5) Other Directorships
None.
(b) Identify Significant Employees
1) Fred Oberloh, age 40, is National Sales Manager at IHC. Mr. Oberloh has
been in the pharmaceutical industry for over 20 years as a Regional Sales
Manager with Pittman Moore Drug Company. Fred has been another welcomed addition
to our management team and started with IHC in January, 1999. His strengths are
a work ethic, which is beyond reproach and his attention to detail.
RESPONSIBILITIES - Managing local, regional and national chain accounts at both
the Corporate and Pharmacy levels. Overseeing the sales and service function for
three Sales Representatives, creating, initiating and implementing sales
promotions & bonus buys while informing IHC accounts on these promotions.
(c) Family Relationships.
M. Keith Ives, President, JoEtta Hughes, CFO and Perry Ives, Vice President
are siblings.
(d) Involvement in certain legal proceedings
NONE
<PAGE>
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE
As of Dec., 31, 1999
Executive/ Annual Stock
Position Year Salary Bonus
- --------------------------------------------------------------------------------
M. Keith Ives, 2000 $72,000.00 To be determined by
President performance of Co.
- --------------------------------------------------------------------------------
Michael Harrison, 2000 $70,000.00 To be determined by
CEO performance of Co.
- --------------------------------------------------------------------------------
JoEtta Hughes, 2000 $60,000.00 To be determined by
CFO performance of Co.
- --------------------------------------------------------------------------------
Perry Ives, 2000 $36,000.00 To be determined by
Vice President performance of Co.
- --------------------------------------------------------------------------------
Item 7. Certain Relationships and Related Transactions
(a) Describe Related Party Transactions
During 1998 M. Keith Ives and JoEtta Hughes, officers of the Company loaned
the Company funds to cover certain operating expenses. The notes accrue interest
at a rate of 10% per year and are payable on demand. During 1998 payments were
made to the officers in the amount of $81,711 to reduce the note balances. As of
December 31, 1998, there remained a balance due to JoEtta Hughes of $41,752.
During 1999 certain officers and shareholders of the company advanced $270,487
to the company to cover operating expenses. During 1999 a total of $191,101 was
paid on these notes leaving a balance of $121,137 at December 31, 1999.
Item 8. Description of Securities
The following summary of certain provisions of the Common Stock is complete
and is subject to, and qualified in its entirety by, the provisions of
applicable law and the provisions of Ives' Certificate of Incorporation, which
is included as an exhibit to this Registration Statement.
Ives is authorized to issue 50,000,000 shares of Common Stock, par value
$0.001 per share, of which 9,577,650 shares were outstanding as of December 31,
1998 and 12,846,946 shares were outstanding as of December 31, 1999.
Voting Rights. Holders of shares of Common Stock are entitled to one vote
per share on all matters submitted to a vote of the shareholders. Shares of
Common Stock do not have cumulative voting rights, which means that the holders
of a majority of the shareholder votes eligible to vote and voting for the
election of the Board of Directors can elect all members or the Board of
Directors. Holders of a majority of the issued and outstanding shares of Common
Stock may take action by written consent without a meeting.
Dividend Rights. Holders of record of shares of Common Stock are entitled
to receive dividends when and if declared by the Board of Directors. To date,
Ives has not paid cash dividends on its Common Stock. Holders of Common Stock
are entitled to receive such dividends as may be declared and paid from time to
time by the Board of Directors out of funds legally available, therefore, Ives
intends to retain any earnings for the operation and expansion of its business
and does not anticipate paying cash dividends in the foreseeable future. Any
future determination as to the payment of cash dividends will depend upon future
earnings, results of operations, capital requirements of Ives financial
condition and such other factors as the Board of Directors may consider.
Liquidation Rights. Upon any liquidation, dissolution or winding up of
Ives, holders of shares of Common Stock are entitled to receive pro rata share
of all the assets of Ives' available for distribution to shareholders after
liabilities are paid.
Preemptive Rights. Holders of Common Stock do not have any preemptive
rights to subscribe for or to purchase any stock, obligations or other
securities of Ives.
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
(a) Market information
(1) Identify the principal market or markets where common stock is traded.
Ives' common stock is traded on the NASD's Over-The-Counter Bulletin Board
and other (Pink Sheets). The trading symbol for Ives common stock is IVEH.
(i) The high and low prices for Ives' common stock during the calendar
quarters ended were:
Quarter ended High Low
June 30, 1999 $ 2.00 $ 1.20
September 30, 1999 $ 1.20 $ 1.20
December 31, 1999 $ .50 $ .03
Quotations on the OTC Bulletin Board reflect bid and ask quotations, may
reflect inter-dealer prices, without retail markup, mark-down or commission, and
may not represent actual transactions. The common stock of Ives was not traded
publicly before June 30, 1999. Ives cleared the NASD on June 30, 1999. The
opening price was $2.00/share and trading has ranged from $0.03/share to
$2.00/share.
(b) Holders
As of December 31, 1999, there were 128 holders of record of Ives' common
stock, this figure does not take into account those shareholders whose
certificates are held in the name of broker-dealers or other nominees. Ives
estimates there are approximately 25 owners who hold their shares in brokerage
accounts. These securities were sold primarily to individual investors.
(c) Dividend Policy
Ives has not declared any dividends in the past and there is no intention
to declare dividends in the future.
Item 2. Legal Proceedings
None.
Item 3. Changes in and Disagreements with Accountants
None.
Item 4. Recent Sales of Unregistered Securities
(a) Securities Sold
February 12, 1998, the Company issued 7,000,000 shares of common stock to
M. Keith Ives and 1,700,000 common shares to Maxxon, Inc. in accordance with the
separation agreement between M. Keith Ives and Maxxon, Inc. The shares were
issued in a tax free exchange under the terms of the agreement.
From April 20, 1998 through December 31, 1998 the Company sold 877,650
shares of common stock to various purchasers pursuant to Rule 504 of Regulation
D and Section 4 (2) of the Securities Act of 1933. The 552,650 shares issued
under the 504 offering to individual investors were sold at an average purchase
price of $0.72 per share. The 305,000 restricted shares issued to employees and
officers, and 20,000 restricted shares issued to Summa Laboratories for the
purchase of rights to product formulas were issued at par value at an average
price of $0.001 per share. The stock certificates for Summa Laboratories were
prepared in 1998, but the terms of the agreement were not completed until 1999
when the Summa formula investment was recorded at a fair market value of $0.80
per share.
From January 1, 1999 through December 31, 1999 the Company sold 400,736
shares of common stock to various purchasers pursuant to Rule 504 of Regulation
D and Section 4 (2) of the Securities Act of 1933. The average purchase price
was $0.72 per share which includes commissions, fees and expenses.
<PAGE>
During 1999 the Company issued 2,868,560 common shares to various
employees, officers and directors pursuant to Rule 504 of Regulation D and
Section 4 (2) of the Securities Act of 1933. These shares were issued to
employees and officers for services rendered and were issued at an average price
of $0.05 per share.
(b) Underwriters and other Purchases
There was no public offering of the shares. The shares were sold to
officers, directors and key consultants, and to purchasers in compliance with
Regulation D, Rule 504 of the Securities Exchange Act of 1933 or in compliance
with Rule 701.
(c) Consideration
The total offering price for the common stock sold for cash in 1998 & 1999
was $413,112 and $290,258, respectively. Ives paid $13,897 in commissions and
$87,222in offering costs in connection with the sale of shares of Ives' common
stock. The total offering price for the common stock exchanged for services
rendered was $151,436.
In accordance with the split-off and separation agreement with Maxxon,
Inc., the Company issued to M. Keith Ives and Maxxon, Inc. 8,700,000 shares of
Common Stock of the Company at par value.
(d) Section under which exemption from registration was claimed
The issuance of the securities described above were deemed to be exempt
from registration under the Securities Act in reliance on Section 4 (2) and SEC
Regulation D, Rule 504, among other exemptions. Each recipient of securities in
each such transaction represented his or her intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and, where applicable, appropriate legends were
affixed to the share certificates issued in such transactions. All recipients
had access to information about the Company.
Item 5. Indemnification of Directors and Officers
Ives' Certificate of Incorporation provides for indemnification to the full
extent permitted by Oklahoma law of all persons it has the power to indemnify
under Oklahoma law. In addition, Ives' Bylaws provide for indemnification to the
full extent permitted by Oklahoma law of all persons it has the power to
indemnify under Oklahoma law. Such indemnification is not deemed to be exclusive
of any other rights to which those indemnified may be entitled, under any bylaw,
agreement, vote of stockholders or otherwise. The provisions of Ives'
Certificate of Incorporation and Bylaws which provide indemnification may reduce
the likelihood of derivative litigation against Ives' directors and officers for
breach of their fiduciary duties, even though such action, if successful, might
otherwise benefit Ives and its stockholders.
In addition, Ives has entered into indemnification agreements with its
officers and directors, key consultants and others. These agreements provide
that Ives will indemnify each person for acts committed in their capacities and
for virtually all other claims for which a contractual indemnity might be
enforceable.
<PAGE>
Part F/S
INDEX TO FINANCIAL STATEMENTS AND RELATED NOTES
Independent Auditor's Report 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statements of Cash Flows 4
Statements of Shareholders' Equity 5
NOTES TO FINANCIAL STATEMENTS 6-12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of Ives Health Company, Inc.:
We have audited the balance sheet of Ives Health Company, Inc., (A Development
Stage Company), an Oklahoma Corporation, as of December 31, 1999 and 1998 and
the related statements of operation, shareholders' equity and cash flows from
January 1, 1998 (inception) to December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we 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 evaluat ing the overall financial statement presentation.
We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ives Health Company, Inc., (A
Development Stage Company), as of December 31, 1999 and 1998 and the results of
its operations and its cash flows for the years ending December 31, 1999 and
1998 and from January 1, 1998 (inception) to December 31, 1999 in conformity
with generally accepted accounting principles.
HENDERSON SUTTON & CO., P.C.
/s/ HENDERSON SUTTON & CO., P.C.
- ----------------------------------
Certified Public Accountants
Tulsa, Oklahoma
March 15, 2000
<PAGE>
IVES HEALTH COMPANY, INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
------------ ------------
Current Assets
<S> <C> <C>
Cash $ 3,165 $ 24,787
Accounts Receivable 78,704 8,853
Less Allowance For Doubtful Accounts (10,000) --
Inventories 153,970 156,819
Prepaid expenses 110,952 --
Loans to officers 5,000 --
------------ ------------
Total Current Assets 341,791 190,459
------------ ------------
Property and Equipment
Property, Plant & Equipment 491,180 445,586
Less Accumulated Depreciation 62,097 21,136
------------ ------------
Net Property and Equipment 429,083 424,450
------------ ------------
Other Assets
Goodwill-net 284,700 306,600
Deposits 600 900
Marketing design program-net 13,849 31,778
Investments 39,825 34,055
------------ ------------
Total Other Assets 338,974 373,333
------------ ------------
TOTAL ASSETS $ 1,109,848 $ 988,242
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 252,847 $ 179,940
Payroll & sales taxes payable 22,924 11,092
Accrued Expenses 11,283 22,998
Note payable to officer 121,137 41,752
Current Portion of Long Term Debt 151,434 272,219
------------ ------------
Current Liabilities 559,625 528,000
------------ ------------
Long-Term Liabilities
Notes Payable 681,758 556,904
Less current portion long-term debt (151,434) 272,219
------------ ------------
Total Long-term Liabilities 530,324 284,685
------------ ------------
Total Liabilities 1,089,949 812,685
------------ ------------
Shareholders' Equity
Common Stock (Par $.001) 12,847 9,578
12,846,946 and 9,577,650 outstanding at
December 31, 1999 and 1998 respectively
Additional Paid in Capital 1,100,040 668,725
Retained earnings (1,092,988) (502,746)
------------ ------------
Total Shareholder's Equity 19,899 175,556
------------ ------------
TOTAL LIABILITIES & SHAREHOLDER'S EQUITY $ 1,109,848 $ 988,242
------------ ------------
</TABLE>
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
IVES HEALTH COMPANY, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
JANUARY 1, 1998
(INCEPTION) TO
REVENUES DECEMBER 31, 1999 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Sales $ 864,421 $ 469,567 $ 394,854
Cost of Sales 522,565 330,526 192,039
----------- ----------- -----------
Gross Profit 341,856 139,041 202,815
----------- ----------- -----------
OPERATING EXPENSES
Selling Expenses 525,979 196,830 329,149
General & Administrative Expenses 856,256 532,563 323,693
Depreciation & Amortization 105,222 77,694 27,528
Interest & Factoring Expense 97,387 72,196 25,191
----------- ----------- -----------
Total Operating Expenses 1,584,844 879,283 705,561
----------- ----------- -----------
NET OPERATING LOSS (1,242,988) (740,242) (502,746)
Gain On Contract Default 150,000 150,000 --
Income Tax Expense -- -- --
----------- ----------- -----------
NET LOSS $(1,092,988) $ (590,242) $ (502,746)
----------- ----------- -----------
Weighted Average Shares Outstanding 10,146,618 9,034,076
----------- -----------
Net Loss Per Share $ (.058) $ (.056)
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
Cash Flows From Operating Activities
<S> <C> <C>
Net loss from operations $ (590,242) $ (502,746)
Depreciation 40,961 9,568
Amortization 36,641 26,189
Stock Issued for services 151,436 --
(Increase) decrease in accounts receivable (59,851) 51,702
(Increase) decrease in inventories 2,848 (86,295)
(Increase) decrease in prepaid expenses (110,951) 27,806
Increase (decrease) in accounts payable 72,908 108,045
Increase (decrease) in accrued payroll taxes 11,832 7,612
Increase (decrease) in accrued expenses (11,716) 12,382
Liabilities assumed from old Ives -- (8,614)
Net Cash Provided (Used) by Operating Activities (456,134) (354,351)
---------- ----------
Cash Flows From Investing Activities
Loans to Officers (5,000) --
Property Plant and Equipment (45,594) (424,892)
Deposits 300 3,380
Investments 13,418 (35,975)
Other Assets -- (34,055)
Equity acquired from old Ives -- (17,976)
Net Cash Provided (Used) by Investing Activities (36,876) (509,518)
---------- ----------
Cash Flows From Financing Activities
Notes payable to Officers 4,385 20,772
Long term debt 199,854 502,219
Sale of Common Stock for Cash, net of offering cost 267,387 358,417
Net Cash Provided (Used) by Financing Activities 471,387 881,408
---------- ----------
NET INCREASE (DECREASE) IN CASH (21,623) 17,539
CASH AT BEGINNING OF YEAR 24,787 7,249
CASH AT END OF YEAR $ 3,165 $ 24,787
Non-cash financing & investing activities:
Stock issued for investments $ 16,000 $ --
Goodwill -- 328,500
Stock issued for services 151,436 --
Stock issued for product formulas 16,000 --
---------- ----------
$ 183,436 $ 328,500
========== ==========
</TABLE>
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
Ives Health Company, Inc.
(A Development Stage Company)
Statements of Changes in Shareholders' Equity
For the Years Ended
December 31, 1999 and 1998
<TABLE>
<CAPTION>
DEFICIT
PRICE COMMON STOCK DURING THE
PER ------------------------ PAID-IN DEVELOPMENT
SHARE SHARES AMOUNT CAPITAL STAGE
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1998 $ -- -- $ -- $ -- $ --
Shares Issued in Conjunction With .001 8,700,000 8,700 6,000 --
The Maxxon/Ives Split-Off Transaction
To Record Goodwill 328,500 --
Shares Issued Under 504 Offering .72 552,650 553 398,662 --
Shares Issued to Employees & Officers .001 305,000 305 (305) --
Shares Issued for Summa License .001 20,000 20 (20) --
Less Offering Cost (64,112) --
Net Loss For the Year (502,746)
-------------------------------------------------------------------
BALANCE DECEMBER 31, 1998 9,577,650 9,578 668,725 (502,746)
-------------------------------------------------------------------
Shares Issued to Employees & Officers .05 2,868,560 2,858 148,578 --
for Services
Shares Issued Under 504 Offering .72 400,736 411 289,847
Shares Issued for Summa License .80 16,000
Less Offering Cost (23,110)
Net Loss For The Year (590,242)
-------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 12,846,946 $ 12,847 $1,100,040 $(1,092,988)
-------------------------------------------------------------------
</TABLE>
(The Accompanying notes are an integral part of these Financial Statements)
<PAGE>
Ives Health Company, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999 and 1998
NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Ives Health Company, Inc.
(the "Company") is presented to assist in understanding the Company's financial
Statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the presentation of the financial
statements.
ORGANIZATION
Ives Health Company, Inc. ("IVES" or the "Company") was formed pursuant to an
agreement between Maxxon, Inc. and M. Keith Ives, entered into and made
effective December 31, 1997. IVES, (a wholly owned subsidiary of Maxxon, Inc.)
and Maxxon, Inc. agreed to separate. The separation was accomplished by, a
non-pro-rata split-off of non-monetary assets in accordance with Issue 96-4 of
the Emerging Issues Task Force, a recapitalization and the issuance of 7,000,000
shares of new Ives common stock to M. Keith Ives, and 1,700,000 shares of new
Ives common shares to Maxxon, Inc. The new IVES began operations January 1, 1998
and was incorporated in Oklahoma on February 12, 1998.
Ives Health Company, Inc. (A Development Stage Company) is engaged in developing
and marketing innovative, safe, high quality natural non-prescription medicines
and nutritional supplements. IVES products, which are guaranteed for potency and
purity, include natural medicines, herbal formulas, vitamins, minerals and
homeopathic medicines. The Company wholesales the products to pharmacies.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid assets with maturities of three months
or less to be cash equivalents.
INVENTORY
Inventory consists primarily of bulk product that will be packaged into
capsules, bottled, and packaged for distribution to customers. Inventory is
stated at the lower of cost or market value using the first-in, first-out
method. Obsolete products are written off in the year they are determined to be
obsolete.
FISCAL YEAR END
The Company's fiscal year ends on December 31.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. All material property and equipment
additions are capitalized and depreciated on a straight-line basis over the
estimated useful life of the asset.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and 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.
<PAGE>
INCOME TAXES
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires the measurement
of deferred tax assets for deductible temporary differences and operating loss
carry-forwards, and of deferred tax liabilities for taxable temporary
differences. Measurement of current and deferred tax liabilities and assets is
based on provisions of enacted tax law. The effects of future changes in tax
laws or rates are not included in the measurement. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable for the period and the
change during the period in deferred tax assets and liabilities.
EARNINGS PER SHARE
Earnings (Loss) per Share
- -------------------------
The Company computes net income per share in accordance with SFAS No. 128,
"Earnings per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under
provision of SFAS No. 128 and SAB 98 basic net income (loss) per share is
calculated by dividing net income (loss) available to common stockholders for
the period by the weighted average shares of common stock of the Company
outstanding during the period. Diluted net income per share is computed by
dividing the net income for the period by the weighted average number of common
and common equivalent shares outstanding during the period. The calculation of
fully diluted income (loss) per share of common stock assumes the dilutive
effect of stock options outstanding.
Segment Information
- -------------------
Effective January 1, 1998, the Company adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The
Company identifies its operating segments based on business activities,
management responsibility and geographical location. During the years ended
December 31, 1999 and 1998, the Company operated in the single business segment
engaged in developing and marketing selected healthcare products.
New Accounting Standards
- ------------------------
The Company adopted SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information"
during 1998. The Company had no comprehensive income items during 1999 and 1998.
Therefore, net loss equals comprehensive income. The Company operates in only
one business segment. The company adopted SFAS No. 133, "Accounting for
Derivative Investments and Hedging Activities" during 1999. As of December 31,
1999, the Company did not engage in hedging activities or other transactions
involving derivatives.
REVENUE RECOGNITION
Revenue is recognized monthly based upon the terms of the sale. The Company
issues credit to customers on a discount basis of 2% if paid within ten days of
the invoice or the full balance due within thirty days of the invoice.
Management uses the allowance method of recognizing bad debts. A provision for
doubtful accounts was not required at December 31, 1999 and 1998 of $10,000 and
$0, respectively.
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of the major classes of property and equipment:
ESTIMATED
USEFUL LIFE 1999 1998
----------- ----- ----
Building 30 years $249,347 $249,347
Building Improvements 30 years 100,400 100,400
Land -- 20,000 20,000
Equipment 5-7 years 68,387 65,171
Furniture 5-7 years 11,075 10,668
Master Dies 5 years 4,355 --
Vehicles 3 years 37,616 --
-------------------------------------
491,180 445,586
Accumulated Depreciation 62,097 21,136
-------- --------
Property and equipment (net) $429,083 $424,450
-------- --------
<PAGE>
NOTE 3 - OTHER ASSETS
GOODWILL
- --------
Effective December 31, 1997 M. Keith Ives exchanged 275,360 shares of Maxxon
Inc. common shares valued at $1.01 per share (using the average of the last five
trading days in 1997) for 7,000,000 common shares of the Company's stock. Maxxon
retained 1,700,000 shares of the newly formed Ives Health Company, Inc. After
the issuance of the 8,700,000 common shares, M. Keith Ives owned 80.5% of the
outstanding shares and Maxxon owned 19.5% of the outstanding shares. The
exchange was accounted for as a purchase using the fair market value of the
Maxxon common stock as consideration for 80.5% of the newly formed company. The
transaction was a non-pro-rata split-off of certain non-monetary assets, whereby
Maxxon exchanged assets for a non-controlling interest in a new entity. The
transaction was recorded in accordance with the Emerging Issues Task Force
Issues # 96-4 and #89-7. Goodwill in the amount of $328,500 was recorded with a
resulting credit to Paid-in Capital. The Goodwill is being amortized over its
estimated useful life of fifteen years.
INVESTMENT IN LICENSING AND OPTION TO PURCHASE AGREEMENTS
- ---------------------------------------------------------
On August 24, 1998, the Company entered into a License Agreement to the rights
to certain technology known as (1) the T-Factor Immune System Optimizer and (2)
The Burn Treatment Therapy. The rights to the technology were acquired for
future development of the technology for the consumer market. The rights to the
license, which included a royalty provision to the seller and extends through
August 24, 2049, were acquired for approximately $25,000. The cost related to
the license and rights were capitalized and is being amortized over five years.
On July 30, 1999, the company purchased for $10,000 and expensed the cost of the
royalty provision that was required under the License Agreement. The purchase
thereby eliminated any royalty payments to the previous owner of the technology.
In January 1998, Ives Health Company paid $10,000 for the option to purchase
VEGI-Snack Foods, Inc., where Ives had the exclusive right to sell VEGI BEARS
and related products and retained the right to purchase VEGI-Snack Foods, Inc.
until the end of 1999. The option to purchase VEGI-Snack Foods expired at the
end of 1999 and the $10,000 investment made to secure this purchase option was
written off during 1999..
Investments 1999 1998
- -----------
Veggie Snack Foods $ -- $ 10,000
Quantum License 34,602 24,602
Summa Formulas 16,000 --
---------------------------
Total Investments $ 50,602 $ 34,602
Accumulated Amortization (10,777) (547)
---------------------------
$ 39,825 $ 34,055
Marketing Design Program
- ------------------------
During 1998, the Company incurred $35,975 in costs related to the development of
a marketing design program. During 1999 the program was curtailed and the cost
and related accounts payable were reduced by $13,418. The remaining costs are
expected to benefit the Company over the five-year amortization period.
1999 1998
Marketing design $ 22,557 $ 35,975
Accumulated amortization (8,708) (4,197)
--------------------------
Net capitalized $ 13,849 $ 31,788
<PAGE>
NOTE 4 - NOTES PAYABLE-OFFICERS
During 1998 M. Keith Ives and JoEtta Hughes, officers of the Company loaned the
Company funds to cover operating expenses. The notes accrue interest at a Rate
of 10% per year and are payable on demand. During 1998 payments were made to the
officer in the amount of $81,711 to reduce the note balances. As of December 31,
1998, there remained a balance due JoEtta Hughes of $41,752. During 1999 certain
officers & shareholders of the company advanced $270,487 to the company to cover
certain operating expenses. During the year at total of $191,101 was paid on
these notes leaving a balance due of $121,137 at December 31, 1999.
<TABLE>
<CAPTION>
NOTE 5 - NOTES PAYABLE 1999 1998
<S> <C> <C>
NationsBank, N.A
Note dated June 17, 1998 bearing interest @ 9%, due $ 39,613 $ 48,660
in sixty monthly installments of $1,097, principle and
interest through June 2, 2003. Note is secured by
inventory and equipment, a security agreement with
William D. Elliott, a shareholder and by a personal
guarantee of M. Keith Ives, an officer and major
shareholder of the Company. Certain personal assets of
Mr. Ives also collateralize the note
Seven Brothers, LLC
Interest @ 8.5%, due in one hundred twenty monthly $ 154,305 $ 165,840
installments of $1,888, principle and interest, through
August 1, 2008. Note is secured by land and building
Interest @ 45% calculated according to the actuarial -- $ 30,000
Method, principle and interest due December 20, 1998
Dr. Bedeen - Balance due on technology purchase -- $ 9,600
Paid during 1999
State Bank & Trust, N.A
Interest @ Wall Street Prime plus 1.5%, currently -- $ 102,804
9.25%, due January 25, 1999
Paid with financing from Armstrong Bank. This note
was secured by personal stock and an annuity
owned by M. Keith Ives. Mr. Ives also personally
Guaranteed the note
State Bank & Trust, N.A
Interest @ Wall Street Prime plus 1.5%, currently -- $ 20,000
9.25%, payable monthly with principle due January
25, 1999. The note was retired with proceeds from
the Armstrong Bank financing. Mr. Ives personally
guaranteed this note
Local America Bank
Interest @ 9.99%, in monthly installments of -- $ 20,000
approximately $1,200 monthly through June 15, 2000,
personally guaranteed by M. Keith Ives and secured
by personal automobiles. Paid during 1999
<PAGE>
NOTE 5 - NOTES PAYABLE (CONTINUED) 1999 1998
Dr. Craft Loan Agreement
Dr. Craft advanced Ives $160,000 under an agreement -- $ 160,000
to provide additional funding. Dr. Craft defaulted on
agreement and under terms of agreement $160,000 was
retained by Ives and booked as gain on contract default
Armstrong Bank
Interest @ 9.30%. Originated July 9, 1999 $ 121,382 --
Personally guaranteed by Dr. Bill Elliot (shareholder)
and M. Keith Ives
Armstrong Bank
Interest @ 8.75%. Originated July 9, 1999 $ 273,849 --
Personally guaranteed by Dr. Bill Elliot (shareholder)
and M. Keith Ives
Armstrong Bank
Interest @ 9.50 %. Originated June 18, 1999 $ 42,379 --
Personally guaranteed by Dr. Bill Elliot (shareholder)
and M. Keith Ives
State Bank
Interest @ 10.12%. Originated September 24, 1999 $ 19,755 --
Personally guaranteed by M. Keith Ives
Ford Motor Credit
Interest @ 8.90%. Originated August 3, 1999. Loans $ 30,476 --
to purchase three automobiles. Secured
by three 1998 Ford Taurus automobiles. Monthly
payment equals $1075
TOTAL NOTES PAYABLE $ 681,759 $ 556,904
---------- ----------
Less current maturities: $ 151,434 $ 272,219
---------- ----------
Long-term Debt $ 530,325 $ 284,685
========== ==========
</TABLE>
Maturities of long-term debt is as follows for the next five years:
2000 $ 151,434
2001 116,760
2002 122,215
2003 107,204
2004 105,682
Thereafter 78,464
----------
Total $ 681,759
----------
<PAGE>
NOTE 6 - INCOME TAXES
The Company has incurred net operating losses since inception and has a loss
carry-forward of approximately $1,093,000 at December 31, 1999, expiring in
years beginning 2014. Deferred tax assets have not been recorded for future
reduction in income taxes that may result from the net operating loss
carry-forward.
The deferred tax assets and liabilities are as follows at December 31,1999 :
1999 1998
Net operating loss carry-forward $ 1,092,988 $ 502,746
Depreciation 16,480 8,252
---------
Total 1,076,508 510,998
Less valuation allowance (1,076,508) (510,998)
----------- ---------
Net Deferred Tax Liability $ 0 $ 0
----------- ---------
Deferred taxes reflect a combined federal and state tax rate of approximately
40%. For financial reporting purposes, a valuation allowance equal to the
deferred tax asset has been established in accordance with the provisions of
FASB Statement No. 109, "Accounting for Income Taxes". The Company will
continually review the adequacy of the valuation allowance and will recognize
these benefits only as assessment indicates that it is more likely than not that
the benefits will be realized.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is defendant in lawsuits arising from normal business activities.
Management has reviewed pending litigation with legal counsel and believes that
the action is without merit or that the ultimate liability, if any, resulting
from it will not have a material adverse affect on the Company's earnings, cash
flows or financial position.
NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN-CAPITAL
On February 12, 1998, the Company issued 7,000,000 shares of common stock to M.
Keith Ives and 1,700,000 common shares to Maxxon, Inc., in accordance with the
separation agreement between M. Keith Ives and Maxxon, Inc.. The shares were
issued in a tax free exchange under the terms of the agreement.
From April 20, 1998 through December 31, 1998 the Company sold 877,650 shares of
common stock to various purchasers pursuant to Rule 504 of Regulation D and
Section 4 (2) of the Securities Act of 1933. The 552,650 shares issued under the
504 offering to individual investors were sold at an average purchase price of
$0.72 per share. The 305,000 restricted shares issued to employees and officers,
and 20,000 restricted shares issued to Summa Laboratories for the purchase of
rights to product formulas were issued at par value at an average price of
$0.001 per share. The stock certificates for Summa Laboratories were prepared in
1998, but the terms of the agreement were not completed until 1999 when the
Summa formula investment was recorded at a fair market value of $0.80 per share.
From January 1, 1999 through December 31, 1999 the Company sold 400,736 shares
of common stock to various purchasers pursuant to Rule 504 of Regulation D and
Section 4 (2) of the Securities Act of 1933. The average purchase price was
$0.72 per share which includes commissions, fees and expenses.
During 1999 the Company issued 2,868,560 to various employees, officers and
directors pursuant to Rule 504 of Regulation D and Section 4 (2) of the
Securities Act of 1933. These shares were issued to employees, officers and
directors for services rendered and were issued at an average price of $0.05 per
share.
<PAGE>
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1998, officers loaned the Company $91,044 to
cover certain operating expenses. During 1998, the Company repaid a total of
$81,711. The remaining note payable-officer balance of $41,752 accrues interest
at a rate of 10% per year. During 1999 certain officers & shareholders of the
company advanced $270,487 to the company to cover certain operating expenses.
During the year a total of $191,101 was paid on these notes leaving a balance
due of $121,137 at December 31, 1999.
NOTE 10 - EARNING PER SHARE
The following table reconciles the number of common shares outstanding as shown
on the Balance Sheet with the weighted average common shares outstanding as
shown on the Statement of Operations for the year ended December 31, 1999 and
1998.
1999 1998
---- ----
Common shares outstanding 12,846,946 9,577,650
Effect of using weighted average common
And Common equivalent shares outstanding 2,700,328 543,574
---------- ---------
Weighted average common shares outstanding 10,146,618 9,034,076
---------- ---------
PART III
Item 1. Index to Exhibits
Exhibit I - AGREEMENT BETWEEN KEITH IVES AND MAXXON, INC.
---------------------------------------------
(See attached)
Exhibit II - STATE OF OKLAHOMA CERTIFICATE OF INC. AND BY-LAWS
-------------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this Registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
IVES HEALTH COMPANY, INC.
Date: /s/ Michael Harrison
---------------------------
By: Michael Harrison,
Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Michael Harrison and/or M. Keith
Ives, his true and lawful attorneys-in-fact and agents, to sign any or all
amendments to this Report on Form 10-SB, and to file the same with all exhibits
thereto and other and documents in connection therewith, with the Securities and
Exchange Commission, granting unto the attorney-in-fact agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
or she might or could do in person hereby ratifying and confirming that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Exchange Act of 1934, this Report on
Form 10-KSB has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
- --------------------------------------------------------------------------------
/s/ M. KEITH IVES President and Director March 15, 2000
- ------------------------
M. Keith Ives
s/ MICHAEL HARRISON CEO and Director March 15, 2000
- ------------------------
Michael Harrison
/s/ PERRY IVES Vice-President and Director March 15, 2000
- ------------------------
Perry Ives
/s/ JOETTA HUGHES Secretary, Treasurer and Director March 15, 2000
- ------------------------
JoEtta Hughes
/s/ JIM JONES Director March 15, 2000
- ------------------------
Jim Jones
EXHIBIT I
AGREEMENT BETWEEN M. KEITH IVES AND MAXXON, INC.
------------------------------------------------
This Agreement ("Agreement") is entered into and effective this 31st day of
December 1997 by and among M. Keith Ives("Keith Ives"), Ives Health Company,
Inc. ("Ives"), Gifford Mabie ("Mabie"), and Maxxon, Inc. ("Maxxon").
Whereas, Ives and Maxxon completed a share exchange in August, 1997
pursuant to which Ives became a wholly owned subsidiary of Maxxon; and
Whereas, the parties have concluded that it is in their mutual best
interests and the interests of their shareholders to enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt adequacy
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. FORMATION OF NEWCO. Upon execution of this Agreement, Maxxon will
organize a new corporation ("Newco") under Oklahoma law with an authorized
capitalization of 50,000,000 shares of common stock, par value $.001 per share,
whose name shall be Ives Health Company, Inc.. Keith Ives shall designate the
directors and officers of Newco. Maxxon will change the name of its current
subsidiary and make the name "Ives Health Company, Inc." available to this new
corporation.
2. RESIGNATION OF KEITH IVES. Upon execution of this Agreement, Keith Ives
agrees to resign as a director, officer, employee, agent, and representative of
Maxxon in every other capacity and as a director, officer, employee, agent and
representative of The Health Club, Inc. and in every other capacity of The
Health Club, Inc.
3. INITIAL BUSINESS PLAN FOR NEWCO.
(a) The parties agree to issue at par 7,000,000 shares of common stock to
Keith Ives. The parties agree to issue, in a stock for stock tax free
reorganization, 1,700,000 shares of Common Stock of Newco in exchange for all
the issued and outstanding shares of Ives. Simultaneously, and as consideration
for the above stock exchange, Keith Ives agrees to surrender to Maxxon 275,360
shares of Maxxon Common Stock owned by him, so that thereafter he shall
personally own of record 80,000 shares of Maxxon Common Stock.
(b) The parties agree that Newco will immediately commence to conduct a
private offering under SEC Regulation D, Rule 504 to sell up to 1,000,000 shares
of Newco for $1.00 per share for up to $1,000,000 less costs and expenses
thereof ("Offering"). Newco shall bear all the costs and expenses in connection
with the Offering, including all printing, copying, mailing, shipping, filing
fees, and federal and state compliance expenses, and related brokerage and
finder's fees, expenses and commissions.
(c) In connection with the Offering, Maxxon agrees to introduce to Newco at
least 5 persons who might agree to assist Newco in the conduct of the Offering
for a fee upon terms and conditions which shall be agreed to by Keith Ives.
(d) Maxxon agrees to assist Newco in drafting a private offering
memorandum, including projections generated from information supplied by Newco,
for use by Newco in the conduct of the Offering and supplying Ives/Newco a
copied disk of the Offering. All the information in the private placement
memorandum shall be provided by Newco and Keith Ives. The parties agree that
Maxxon is rendering its services to Newco in connection with the Offering
memorandum solely as an accommodation to Newco and as an independent contractor
for no fee whatsoever. It is expressly agreed that the content of the private
placement memorandum is solely the product of Newco, for which Newco is solely
responsible; and Maxxon shall have no responsibility or liability in connection
with the Offering for any reason whatsoever, including assisting Newco in
preparing disclosure documents. The failure to disclose any facts and the
omission of disclosures from the private placement memorandum is a matter within
the sole discretion of Newco and Keith Ives and is not the determination of or
within the power or discretion of Maxxon in any respect.
(e) Newco and its officers, directors, agents, employees and
representatives shall be solely responsible for the compliance with federal and
state securities laws in connection with the Offering, including the filing of
notice of Form D and all applicable state law requirements in connection
therewith. Maxxon will assist and consult with this and all applicable
compliance and filings.
(f) The parties agree that neither Maxxon nor any of its directors,
officers, employees, agents, or representatives shall have any responsibility or
liability for any matter relating to the Offering; and Newco agrees to indemnify
and hold them harmless therefrom.
<PAGE>
(g) As soon as reasonably appropriate and after substantial completion of
the Offering, Maxxon agrees to assist Newco in the preparation of a filing with
the SEC under Section 15c211 of the Securities Exchange Act of 1934; provided
all information contained therein shall be supplied by Newco; and further
provided, neither Maxxon nor any of its directors, officers, employees, agents
or representatives shall have any responsibility or liability for the content
thereof in connection therewith.
(h) Mabie agrees to consult with Newco and Keith Ives for up to 25 hours
after the execution of this Agreement; provided the times at which such
consulting services shall be rendered shall be at mutually agreed times and
further provided Mabie shall have no liability with respect to any advice given
or information provided during such consulting services.
4. OPTION TO UNWIND MAXXON'S ACQUISITION OF THE HEALTH CLUB, INC. Maxxon
hereby grants Keith Ives the right for two years from the date of execution of
this Agreement to unwind Maxxon's acquisition of The Health Club, Inc. by paying
Maxxon the $10,000 paid to Keith Ives and by returning to Maxxon the 35,000
shares of Maxxon Common Stock issued to Keith Ives in connection with Maxxon's
acquisition thereof.
5. DISTRIBUTION AGREEMENT. Maxxon agrees to propose, execute, deliver and
enter into a distribution agreement with Newco granting Newco a non-exclusive
right to sell the Maxxon Safety Syringe(TM) for a period of five years after the
date hereof containing standard wholesale prices and upon terms no less
favorable to Newco than to any other distributor purchasing the same volumes,
upon the same terms and subject to other applicable requirements. Newco shall be
granted the ability to verify the terms and/or contracts of other distributors.
6. PAYMENT OF OUTSTANDING INVOICE. Maxxon agrees to pay the outstanding
invoices, invoiced to Ives from Frederick K. Slicker and Cross & Robinson, CPA
to Ives before this agreement can be finalized.
(a) All information, documents, etc.. in the possession of Cross &
Robinson, CPA, that was removed from Ives CPA, E. Carolyn Tolmans' office must
be returned to Ives before this agreement can be finalized.
(b) Regarding this transaction, Ives is responsible for payment to Russell
Barber, Attorney at Law and Maxxon is responsible for payment to Frederick K.
Slicker, Attorney at Law and/or any other counsel.
7. NO RESTRICTIONS UPON IVES, NEWCO OR KEITH IVES. The parties agree that
upon execution and delivery of this Agreement there shall be imposed by Maxxon
no restrictions of any kind upon Ives, Keith Ives, or Newco.
8. TRANSFER RESTRICTIONS OF MAXXON SHARES. This Agreement shall have no
adverse effect upon any applicable transfer restrictions under SEC Rule 144 or
otherwise to the extent such provisions are available.
9. RELEASE. The parties agree that the execution and delivery of this
Agreement constitute a full and complete general release, settlement, discharge,
accord and satisfaction by Newco, Keith Ives, Ives, on the one hand, and by
Mabie and Maxxon, on the other hand, and their respective directors, officers,
employees, agents, partners, representatives, successors, and assigns, from and
against any and all claims, actions, causes of action, rights, obligations,
debts, duties, demands, damages or liabilities of every kind, character and
description, whatsoever, whether known or unknown, actual or contingent, from
the beginning of time through the date hereof, except as Keith Ives/Ives may
bring action against Maxxon/Mabie in the event Keith Ives/Newco are sued by
third parties which have as its basis any allegations attributable to or
resulting from the actions of Maxxon/Mabie.
10. FULL SETTLEMENT. Each party hereto represents and acknowledges to the
other that it has read and understands the terms, conditions and legal effect of
this Agreement; that it has been represented by counsel of its own choosing in
connection herewith; that its counsel is competent and has explained the meaning
and legal effect of the terms of this Agreement to its satisfaction; that this
Agreement is made voluntarily without any promise, inducement, threat, coercion
or intimidation of any kind, character and description from anyone; and that the
execution and delivery of this Agreement constitutes a full and final general
release, accord, satisfaction, acquittal, compromise, adjustment, adjudication,
reimbursement, restitution, discharge and settlement of all claims by Keith Ives
and Ives, on the one hand, and Mabie and Maxxon, on the other hand, and vice
versa, which either has or may have against the other. This Agreement does not
constitute an admission of wrongdoing or of liability for any reason whatsoever.
The Agreement may not be used for any purpose whatsoever except to reflect the
settlement of the parties as set forth herein.
11. COVENANT NOT TO DISPARAGE. Keith Ives, Newco and Ives, on the one hand,
and Mabie and Maxxon, on the other hand, agree not to make untrue or disparaging
statements with respect to each other.
12. CONFIDENTIALITY WITH RESPECT TO THIS AGREEMENT. The parties agree to
keep confidential the terms of the Agreement to the extent permitted by law and
not to disclose the terms hereof to any person without the written consent of
the other parties except as required by law. In the event any lawful process,
action, subpoena or other process is commenced against any party hereto which
<PAGE>
seeks in whole or in part the disclosure of all or any portion of the terms and
conditions of this Agreement, the party against whom such disclosure agrees to:
(1) promptly and before any such disclosure is made notify the other parties to
this Agreement of the nature and of such request; (2) seek by all appropriate
means a protective or other order preventing such disclosure; (3) cooperate
fully with the other parties in seeking a protective order preventing such
disclosure; (4) respond by stating that the information is covered by a
confidentiality agreement which cannot be disclosed without an order from a
court or competent jurisdiction requiring such disclosure; and (5) decline to
make any such disclosure unless and until ordered to do so by a court of
competent jurisdiction.
13. BINDING EFFECT. This Agreement shall be binding upon, shall inure to
the benefit of, and shall be enforceable by and against, all the parties and
their respective heirs, legal representatives, successors and assigns.
14. MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original and all of which shall
constitute one agreement. The parties agree that faxed signed copies of this
Agreement shall have the same force an effect as originals.
15. REPRESENTATIONS. Each individual executing this Agreement on behalf of
a corporation or other entity represents and warrants that he has express
authority to bind, enter and deliver this Agreement on behalf of that entity
which he represents and that this Agreement is valid, binding and enforceable in
accordance with its terms.
16. NON COMPETE CLAUSE. Maxxon/Mabie or its successors may not enter into
any negotiations or attempt to buy products or the actual operations of Cap Tabs
NFM, Inc. 5660 Eastgate Drive, San Diego, CA 92121 and /or Summa Rx
Laboratories, Inc., 15840 FM Rd. #3028, Mineral Wells, TX 76067. Additionally,
Maxxon/Mabie or it successors may not use any information attained from Keith
Ives/Ives to start, fund or induce start up of any competitive business, for a
period of five (5) years in any areas where Ives conducts its business,
including but not limited to the United States of America.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their authorized representatives effective the 31st day of December
1997.
MAXXON, INC. IVES HEALTH COMPANY, INC.
By:_________________________________ By:__________________________________
Gifford Mabie, President M. Keith Ives, President
____________________________________ _____________________________________
Gifford Mabie, individually M. Keith Ives, individually
(Please note this is a word-processed copy of the executed agreement; therefore,
signatures will not appear on this document.)
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[State Seal of Oklahoma]
CERTIFICATE OF INCORPORATION
WHEREAS, the Certificate of Incorporation of
IVES HEALTH COMPANY, INC.
has been filed in the office of Secretary of State as provided by the laws of
the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of Oklahoma,
by virtue of the powers vested in me by law, do hereby issue this certificate
evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hank and cause to be affixed the Great
Seal of the State of Oklahoma.
Filed in the City of Oklahoma City
this 12th day of FEBRUARY, 1998.
[State Seal
Of
Oklahoma] /s/
-----------------------------------
SECRETARY OF STATE
BY: /s/
-----------------------------------
<PAGE>
BYLAWS
OF
IVES HEALTH COMPANY, INC.
ADOPTED EFFECTIVE
FEBRUARY 11, 1998
<PAGE>
TABLE OF CONTENTS
TO
BYLAWS
OF
IVES HEALTH COMPANY, INC.
ARTICLE I - OFFICES............................................................1
SECTION 1.01. Registered Office and Registered Agent.....................1
--------------------------------------
SECTION 1.02. Other Offices..............................................1
-------------
ARTICLE II - SHAREHOLDERS......................................................1
SECTION 2.01. Place of Meeting...........................................1
----------------
SECTION 2.02. Annual Meeting.............................................1
--------------
SECTION 2.03. Special Meetings...........................................1
----------------
SECTION 2.04. Notice of Meetings.........................................2
------------------
SECTION 2.05. Quorum and Adjourned Meetings..............................2
-----------------------------
SECTION 2.06. Conduct of Meetings........................................3
-------------------
SECTION 2.07. Voting ....................................................3
------
SECTION 2.08. Consent of Shareholders in Lieu of a Meeting...............3
--------------------------------------------
SECTION 2.09. Voting Lists...............................................3
------------
ARTICLE III - BOARD OF DIRECTORS...............................................4
SECTION 3.01. Powers ....................................................4
------
SECTION 3.02. Number, Qualifications and Term of Office..................4
-----------------------------------------
SECTION 3.03. Vacancies..................................................4
---------
SECTION 3.04. Resignations...............................................4
------------
SECTION 3.05. Organization...............................................5
------------
SECTION 3.06. Place of Meetings..........................................5
-----------------
SECTION 3.07. Organizational Meeting.....................................5
----------------------
SECTION 3.08. Regular Meetings...........................................5
----------------
SECTION 3.09. Special Meetings...........................................5
----------------
SECTION 3.10 Quorum and Adjourned Meetings..............................5
-----------------------------
SECTION 3.11. Unanimous Consent of Directors in Lieu of Meeting..........5
-------------------------------------------------
SECTION 3.12. Executive and Other Committees.............................6
------------------------------
SECTION 3.13. Compensation of Directors..................................6
-------------------------
ARTICLE IV - NOTICE OF MEETINGS................................................6
SECTION 4.01. Notice ....................................................6
------
SECTION 4.02. Waiver of Notice...........................................7
----------------
SECTION 4.03. Teleconference Meetings....................................7
-----------------------
ARTICLE V - OFFICERS...........................................................7
SECTION 5.01 Number, Qualifications and Designation.....................7
--------------------------------------
SECTION 5.02 Election, Term of Office and Resignation...................7
----------------------------------------
SECTION 5.03 Removal of Officers........................................7
-------------------
SECTION 5.04 Chairman of the Board......................................8
---------------------
SECTION 5.05 President..................................................8
---------
SECTION 5.06 Vice Presidents............................................8
---------------
SECTION 5.07 Secretary..................................................8
---------
SECTION 5.08 Treasurer..................................................9
---------
SECTION 5.09 Controller.................................................9
----------
SECTION 5.10 Assistant Officers.........................................9
------------------
SECTION 5.11 Bonds .....................................................9
-----
SECTION 5.12 Compensation of Officers...................................9
------------------------
ARTICLE VI - CERTIFICATES OF STOCK............................................10
SECTION 6.01 Issuance .................................................10
--------
SECTION 6.02 Transfer .................................................10
--------
SECTION 6.03 Stock Certificates........................................10
------------------
SECTION 6.04 Lost, Stolen, Destroyed or Mutilated Certificates.........10
-------------------------------------------------
SECTION 6.05. Record Holder of Shares...................................10
-----------------------
SECTION 6.06. Determination of Record Date..............................11
----------------------------
ARTICLE VII - INDEMNIFICATION OF DIRECTORS, OFFICERS ANDOTHER
AUTHORIZED REPRESENTATIVES......................................11
SECTION 7.01. Indemnification of Authorized Representatives in
------------------------------------------------
Third Party Proceedings...................................11
-----------------------
SECTION 7.02. Indemnification of Authorized Representatives in
------------------------------------------------
Corporate Proceedings.....................................12
---------------------
SECTION 7.03. Mandatory Indemnification of Authorized Representatives...12
-------------------------------------------------------
SECTION 7.04. Determination of Entitlement to Indemnification...........12
-----------------------------------------------
SECTION 7.05. Advancing Expenses........................................13
------------------
SECTION 7.06. Employee Benefit Plans....................................13
----------------------
SECTION 7.07. Scope ....................................................13
-----
SECTION 7.08. Reliance .................................................13
--------
SECTION 7.09. Insurance.................................................14
---------
ARTICLE VIII - GENERAL PROVISIONS.............................................14
SECTION 8.01. Dividends.................................................14
---------
SECTION 8.02. Annual Statements.........................................14
-----------------
SECTION 8.03. Contracts.................................................14
---------
SECTION 8.04. Checks ...................................................14
------
SECTION 8.05. Corporate Seal............................................14
--------------
SECTION 8.06. Deposits .................................................15
--------
SECTION 8.07. Amendment of Bylaws.......................................15
-------------------
SECTION 8.08. Fiscal Year...............................................15
-----------
SECTION 8.09. Interested Directors......................................15
--------------------
SECTION 8.10. Form of Records...........................................15
---------------
<PAGE>
B Y L A W S
OF
IVES HEALTH COMPANY, INC.
ARTICLE I
OFFICES
SECTION 1.01. REGISTERED OFFICE AND REGISTERED AGENT. The registered office
and registered agent shall be designated in duly adopted actions of the Board of
Directors. Each registered office and registered agent may be changed from time
to time by a duly adopted action of the Board of Directors, and the Corporation
shall file an appropriate statement of change of registered office or registered
agent promptly after the taking of such action in accordance with applicable
law.
SECTION 1.02. OTHER OFFICES. The Corporation may also have offices at such
other places within or without the state of incorporation of the Corporation as
the Board of Directors may from time to time determine or the business of the
Corporation requires.
ARTICLE II
SHAREHOLDERS
SECTION 2.01. PLACE OF MEETING. All meetings of the shareholders of the
Corporation shall be held at the principal executive office of the Corporation
unless otherwise determined by the Board of Directors and specified in the
notice of meeting, in which event the meeting shall be held at the place within
or without the state of incorporation as shall be designated in the notice of
such meeting.
SECTION 2.02. ANNUAL MEETING. The Board of Directors may fix the date and
time of the annual meeting of the shareholders, but if no such date and time is
fixed by the Board, the annual meeting shall be held on a third Tuesday in May,
if not a legal holiday, and if a legal holiday, then on the next succeeding
business day, at 10:00 a.m. local time. Failure to hold an annual meeting shall
not invalidate, alter or otherwise affect the validity of subsequent actions. At
the annual meeting, the shareholders then entitled to vote shall elect Directors
and shall transact such other business as may properly be brought before the
meeting.
<PAGE>
SECTION 2.03. SPECIAL MEETINGS. Special meetings of the shareholders of the
Corporation as a whole, and meetings of a particular class or series of
shareholders of the Corporation may be called for any purpose or purposes for
which meetings may lawfully be called at any time by the Chief Executive Officer
of the Corporation or by a majority of the Board of Directors, and shall be
called after the Corporation's receipt of the request in writing from
shareholders owning of record one-fourth of the amount of each class or series
of stock of the Corporation issued and outstanding and entitled to vote. Every
request for a special meeting shall state the specific purposes of the meeting.
The date of the meeting shall be held at such date and time as the Chief
Executive Officer of the Corporation shall fix, not less than 10 days nor more
than 60 days after the receipt of the request, and the Secretary shall give due
notice thereof. If the Chief Executive Officer of the Corporation shall neglect
or refuse to fix the time and date of such meeting or shall fail to cause the
Secretary to give notice thereof, the person or persons calling the meeting may
do so.
SECTION 2.04. NOTICE OF MEETINGS. Written notice of the place, date and
hour of every meeting of the shareholders, whether annual or special, shall be
given to each shareholder of record entitled to vote at the meeting not less
than 10 nor more than 60 days before the date of the meeting. Every notice of a
special meeting shall state the purposes thereof.
SECTION 2.05. QUORUM AND ADJOURNED MEETINGS. The record holders in the
aggregate of a majority of stock issued and outstanding (excluding treasury
stock) and entitled to vote at a shareholders meeting and who are present in
person or represented by proxy shall constitute a quorum for the transaction of
business, except as otherwise provided by law, by the Corporation's Certificate
of Incorporation or by these Bylaws. If the matter presented for action at any
meeting of shareholders is one which requires voting by class or series of
stock, then holders of a majority of each class or series effected who are
present in person or by proxy shall constitute a quorum for such class or
series. If a quorum of one or more classes or series of stock is present, in
person or by proxy, shareholders holding that class or series of stock may act
for that class or series, even if a quorum is not present for other classes or
series. If such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat who are present in
person or represented by proxy shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting until a quorum
shall be present or represented. At any such adjourned meeting at which a quorum
shall be present in person or by proxy, any business may be transacted which
might have been transacted at the meeting as originally called. When a quorum is
present at any meeting, the vote of the record owners holding a majority of the
stock having voting power, present in person or represented by proxy, shall
decide all questions brought before such meeting, unless the question is one
upon which, by expressed provision of applicable law, the Corporation's
Certificate of Incorporation or these Bylaws, a different vote is required, in
which case such expressed provision shall govern and control the decision of
such question. The affirmative vote or consent of the holders of a majority of a
class or series of stock, voting as a class, shall constitute action by that
class or series, unless applicable law, the Corporation's Certificate of
Incorporation or these Bylaws expressly provides a different vote, in which case
such expressed provision shall control. Once a meeting is duly organized and a
quorum is present, the shareholders who are present in person or represented by
proxy may continue to conduct business until adjournment, even after withdrawal
of enough shareholders to leave less than a quorum present.
<PAGE>
SECTION 2.06. CONDUCT OF MEETINGS. All annual and special meetings of
shareholders shall be conducted in accordance with such rules and procedures as
the Board of Directors may determine, subject to the requirements of applicable
law, and as to matters not governed by such rules and procedures, the chairman
of the meeting shall determine in good faith the procedures to be followed. The
chairman of any annual or special meeting of shareholders shall be the Chief
Executive Officer of the Corporation, unless the Board of Directors or
shareholders entitled to vote thereat select a different person to be chairman
of the meeting. The Secretary or other person designated by the chairman of the
meeting, shall act as secretary of the meeting.
SECTION 2.07. VOTING. Unless the Certificate of Incorporation provides
otherwise, each shareholder of record shall be entitled to one vote in person or
by proxy for each share of stock having voting power and held of record by such
shareholder. No cumulative voting for the election of Directors shall be
permitted unless expressly permitted by the Certificate of Incorporation. No
proxy shall be voted more than three years after its date, unless the proxy
specifically provides for a longer period and the law permits.
SECTION 2.08. CONSENT OF SHAREHOLDERS IN LIEU OF A MEETING. Any action
required or permitted to be taken at a meeting of shareholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing setting forth the action so taken shall be signed
by the holders of record of stock (by class or series of stock where voting by
class or series of stock is required) having not less than the minimum number of
votes that would be necessary to authorize the taking of such action. Prompt
notice of the taking of action by the shareholders without a meeting by less
than unanimous written consent shall be given to those shareholders entitled to
vote on the action who did not consent in writing to such action.
SECTION 2.09. VOTING LISTS. At least ten (10) days before every meeting of
shareholders, the Secretary shall cause the Corporation to prepare a complete
list of the shareholders of record entitled to vote at the meeting. The list
shall be arranged in alphabetical order showing the address of each shareholder,
the number of shares registered in the name of each shareholder and the class or
series of stock held. Such list shall be open to the examination of any
shareholder of record for any lawful purpose during ordinary business hours for
a period of at least ten (10) days prior to the meeting either at the principal
executive office of the Corporation or at the place where the meeting is to be
held. The list shall also be available and open for inspection during the whole
time of the meeting and may be inspected by any shareholder of record or
authorized representative who is present.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. POWERS. The Board of Directors shall have full power to
manage the business and affairs of the Corporation. All powers of the
Corporation, except those specifically reserved to the shareholders by law, the
Certificate of Incorporation or these Bylaws, are hereby granted to and vested
in the Board of Directors.
SECTION 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The Board of
Directors shall consist of such number of directors as may be determined from
time to time by resolution of the Board of Directors. No director need be an
officer or shareholder of the Corporation, but each Director shall be a natural
person 21 years of age or older. Each Director shall serve until the next annual
meeting of the shareholders or until the Director's successor shall have been
duly elected and qualified, except in the event of the Director's death,
resignation or removal.
SECTION 3.03. VACANCIES. Except as provided by law or the Certificate of
Incorporation of the Corporation, any Director may be removed, either for or
without cause, at any meeting of shareholders by the affirmative vote of a
majority in number of shares of the shareholders present in person or by proxy
at such meeting and entitled to vote for the election of such director; provided
notice of the intention to act upon such matter shall have been given in the
notice calling such meeting and further provided, if a Director is elected by a
class or series of shareholders, the Director may not be removed without the
action of a majority of the shareholders of that class or series, except as
provided by law, except as provided by law or the Certificate of Incorporation
of the corporation. Vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, though less than a quorum, or by a sole remaining
Director, and any Director so chosen shall hold office until the next annual
election or until his successor is duly elected and qualified. If there are no
Directors in office, then an election of Directors may be held in the manner
provided by law. If, at the time of filling any vacancy or any newly created
directorship, the Directors then in office shall constitute less than a majority
of the whole Board (as constituted immediately prior to any such increase), a
court of competent jurisdiction may, upon application of shareholders holding of
record at least 10 percent of the total number of the shares at the time
outstanding having the right to vote for such Directors, summarily order an
election to be held to fill any such vacancies or newly created directorships or
to replace the Directors chosen by the Directors then in office.
SECTION 3.04. RESIGNATIONS. Any Director of the Corporation may resign at
any time by giving written notice to the Board of Directors, the Chief Executive
Officer or the Secretary of the Corporation. Such resignation shall take effect
upon receipt by the Corporation of such notice or at any later time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
<PAGE>
SECTION 3.05. ORGANIZATION. At every meeting of the Board of Directors, the
Chairman of the Board, if there be one, or, in the case of a vacancy or
incapacity in the office or absence of the Chairman of the Board, the Director
chosen by a majority of the Directors present, shall be the chairman of the
meeting and shall preside, and the person appointed by the chairman of the
meeting shall act as secretary of the meeting.
SECTION 3.06. PLACE OF MEETINGS. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or without
the state of incorporation as the Board of Directors may from time to time
select, as designated in the notice calling the meeting.
SECTION 3.07. ORGANIZATIONAL MEETING. The first meeting of each newly
elected Board of Directors shall be held without notice immediately following
the annual meeting of Common shareholders, unless the shareholders shall
determine otherwise.
SECTION 3.08. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice after the regular schedule of meetings has
been determined and approved at such time and place as shall be designated from
time to time by a duly adopted action of the Board of Directors.
SECTION 3.09. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board or by two or more of
the Directors. Notice of each special meeting shall be given to each director by
telephone, telegram, telecopy, in writing or in person at least 24 hours (in the
case of notice by telephone, in person or actual notice however received) or 48
hours (in the case of notice by telegram, or telecopy or similar wire
communication) or five (5) days (in the case of notice by mail or otherwise)
before the time at which the meeting is to be held. Each such notice shall state
the date, time and place of the meeting to be so held.
SECTION 3.10 QUORUM AND ADJOURNED MEETINGS. At all meetings of the Board, a
majority of the Directors shall constitute a quorum for the transaction of
business; and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by law or by the Certificate of
Incorporation. Proxies of Directors shall not be counted to determine a quorum
for meetings of the Board of Directors, or for any other purpose, and a Director
may not vote by proxy at a meeting of the Board of Directors. If a quorum is not
be present at any meeting of the Board of Directors, a majority of the Directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
<PAGE>
SECTION 3.11. UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF A MEETING. Unless
otherwise restricted by law, the Certificate of Incorporation or these Bylaws,
any action required or permitted to be taken at any meeting of the Board of
Directors or of any Committee thereof may be taken without a meeting, without
prior notice and without a vote if all members of the Board or such Committee,
as the case may be, consent thereto in writing either before or after the taking
of action with respect thereto. The written consent shall be filed with the
minutes of proceedings of the Board or that Committee.
SECTION 3.12. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors may,
by resolution adopted by a majority of the whole Board, designate an Executive
Committee and one or more other committees. Each Committee shall consist of one
or more Directors. Only to the extent expressly provided in the resolution
establishing any Committee and only to the extent such Committee is not
otherwise restricted or limited by applicable law or the Certificate of
Incorporation or these Bylaws, any Committee of the Board shall have and may
exercise all the power and authority of the Board of Directors in the management
of the business and affairs of the Corporation, including the power or authority
to declare a dividend, to authorize the issuance of stock, to adopt a
certificate of ownership and merger and to authorize the seal of the Corporation
to be affixed to all papers which may require it; but no such Committee shall
have the power or authority to (1) amend the Certificate of Incorporation
(except that a Committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of the stock adopted by the
Board of Directors, as permitted by applicable law, fix any of the preferences
or rights of such shares relating to voting, dividends, redemption, dissolution,
any distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation not
issued and outstanding), (2) adopt an agreement of merger or consolidation, (3)
recommend to the shareholders the sale, lease or exchange, of all or
substantially all of the Corporation's property and assets, (4) recommend to the
shareholders the dissolution of the Corporation or a revocation of a
dissolution, or (5) amend the Bylaws of the Corporation. Each Committee shall
have such name as may be determined from time to time by resolution adopted by
the Board of Directors. Each Committee shall keep regular minutes of its
meetings and file the same with the minutes of the Board of Directors.
SECTION 3.13. COMPENSATION OF DIRECTORS. Unless otherwise restricted by
law, the Certificate of Incorporation or these Bylaws, the Board of Directors
shall have the authority to fix the compensation of Directors. The Directors
shall be reimbursed their actual reasonable expenses, if any, of attendance at
any meeting of the Board of Directors and any Committee thereof and may be paid
a fixed sum for attendance at each such meeting or a fixed salary as determined
by the Board of Directors. No such payment shall preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV
NOTICE OF MEETINGS
<PAGE>
SECTION 4.01. NOTICE. Whenever notice is required to be given to any
Director or shareholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such Director or
shareholder, at the person's address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to shareholders may also be given in accordance with Section 2.04 of
Article II hereof, and notice to Directors may also be given in accordance with
Section 3.09 of Article III hereof.
SECTION 4.02. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Presence in person at any meeting of
the shareholders, the Board of Directors or any Committee of the Board shall
constitute a waiver of notice of that meeting, unless the person in attendance
expressly states at the outset of the meeting that the person's presence is for
the purpose of objecting to notice. Except in the case of a special meeting of
shareholders and as otherwise required by law, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
shareholders, Directors, or Committee of Directors need be specified in any
written waiver of notice of such meeting.
SECTION 4.03. TELECONFERENCE MEETINGS. One or more shareholders, Directors
or members of a Committee of Directors may participate in a meeting of the
shareholders, the Board, or of a Committee of the Board, by means of conference
communications or similar communications equipment; provided that all persons
participating in the meeting can hear each other and participate in discussions
thereof. Participation by conference communication equipment at a meeting shall
have the same effect as being present in person at such meeting.
ARTICLE V
OFFICERS
SECTION 5.01 NUMBER, QUALIFICATIONS AND DESIGNATION. The officers of the
Corporation shall be chosen by the Board of Directors and shall be a President,
one or more Vice Presidents, a Secretary, a Treasurer, and such other officers
as may be elected in accordance with the provisions of Section 5.02 of this
Article. Any person may hold more than one office. Officers may be, but need not
be, Directors or shareholders of the Corporation. The Board of Directors may
from time to time elect such other officers as it deems necessary or
appropriate, who shall exercise such powers and perform such duties as are
provided in these Bylaws and as the Board of Directors may from time to time
determine.
SECTION 5.02 ELECTION, TERM OF OFFICE AND RESIGNATION. The officers of the
Corporation shall be elected annually by the Board of Directors, and each such
officer shall hold office until a successor shall have been elected and
qualified, or until the officer's death, resignation, or removal. Any officer
may resign at any time upon written notice to the Corporation. Such resignation
shall take effect upon receipt by the Corporation of such notice, or such other
date as specified in such notice.
<PAGE>
SECTION 5.03 REMOVAL OF OFFICERS. Any officer or agent elected or appointed
by the Board of Directors may be removed at any time, with or without cause, by
the affirmative vote of a majority of the whole Board of Directors. If any
office becomes vacant for any reason, the vacancy may be filled by the Board of
Directors.
SECTION 5.04 CHAIRMAN OF THE BOARD. If the Board of Directors elects a
Chairman of the Board, the Chairman of the Board shall be the Chief Executive
Officer of the Corporation. The Chairman of the Board shall preside at all
meetings of the shareholders (unless the shareholders entitled to vote thereat
select a different person to so act) and the Board of Directors and shall assist
the Board of Directors in the formulation of policies to be pursued by the
executive management of the Corporation. It shall be the responsibility of the
Chairman of the Board to see that the policies established by the Board of
Directors are carried into effect. The Chairman of the Board may sign and
deliver on behalf of the Corporation any deeds, mortgages, bonds, contracts,
powers of attorney, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation; and the Chairman of
the Board shall perform all duties incident to the office of Chief Executive
Officer of the Corporation and such other duties as may be prescribed by the
Board of Directors from time to time.
SECTION 5.05 PRESIDENT. The President shall be the Chief Operating Officer
of the Corporation, shall report to the Chairman of the Board, if one is
elected, and shall have general supervisory responsibility over all operations
of the Corporation, subject to the control of the Board of Directors. If a
Chairman of the Board is not elected and in the absence or incapacity of the
Chairman of the Board, the President shall perform all the duties of the
Chairman of the Board, including all duties as Chief Executive Officer of the
Corporation. The President shall execute and deliver, in the name of the
Corporation, deeds, mortgages, bonds, contracts or other instruments, authorized
by the Board of Directors, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation; and, in general,
subject to supervision by the Chairman of the Board, if one is elected, the
President shall perform all duties incident to the office of Chief Operating
Officer of the Corporation, and such other duties as from time to time may be
assigned to him by the Chairman of the Board or the Board of Directors.
SECTION 5.06 VICE PRESIDENTS. The Vice Presidents, in the order of the
designation by the Board of Directors, shall perform the duties of the President
in the President's absence or incapacity and such other duties as may from time
to time be assigned to them by the Board of Directors, the Chairman of the Board
or by the President.
<PAGE>
SECTION 5.07 SECRETARY. Unless the chairman of the meeting provides
otherwise, the Secretary shall attend all meetings of the shareholders, the
Board of Directors and Committees thereof, shall record the minutes of the
proceedings thereat and shall keep a current and complete record thereof. The
Secretary shall publish, keep and maintain records and reports of the
Corporation as required by law; shall be the custodian of the seal of the
Corporation and see that it is affixed to all documents to be executed on behalf
of the Corporation under its seal; and, in general, shall perform all duties
incident to the office of Secretary and such other duties as may from time to
time be assigned to the Secretary by the Board of Directors, the Chairman of the
Board or the President. Each Assistant Secretary shall have such powers and
perform such duties as the Board of Directors, the Chairman of the Board, or the
President may from time to time delegate to that Assistant Secretary.
SECTION 5.08 TREASURER. The Treasurer shall be the Chief Financial Officer
of the Corporation; shall have responsibility for the proper care and custody of
all corporate funds and securities; shall keep full, accurate and complete
records, receipts and disbursements of the Corporation; and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements; shall
render a report to the Board of Directors, whenever requested, of the financial
condition of the Corporation; and shall perform such other duties as the Board
of Directors may prescribe. In the absence or incapacity of a Corporate
Controller, the Treasurer shall also be responsible for the performance of all
the duties of the Controller. Each Assistant Treasurer shall have such powers
and perform such duties as the Board of Directors, the Chairman of the Board or
the President may from time to time delegate to that Assistant Treasurer.
SECTION 5.09 CONTROLLER. The Controller, if one is elected, shall be the
Chief Accounting Officer of the Corporation and shall cause to be kept full and
accurate books and accounts of all assets, liabilities and transactions of the
Corporation. The Controller shall establish and administer an adequate plan for
the control of operations, including systems and procedures required to properly
maintain internal controls on all financial transactions of the Corporation. The
Controller shall cause to be prepared statements of the financial condition of
the Corporation and proper profit and loss statements covering the operations of
the Corporation and such other and additional financial statements, if any, as
the Chairman of the Board, the President, the Treasurer or the Board of
Directors from time to time shall require. The Controller shall work under the
direct supervision of the Treasurer and also shall perform such other duties as
may be assigned to the Controller by the Board of Directors, the Chairman of the
Board or the President.
SECTION 5.10 ASSISTANT OFFICERS. The Board of Directors may appoint one or
more assistant officers. Each assistant officer shall, at the request of or in
the absence or incapacity of the officer to whom the person is an assistant,
perform the duties of such officer and shall have such other authority and
perform such other duties as the Board of Directors may prescribe.
<PAGE>
SECTION 5.11 BONDS. If required by the Board of Directors, any officer
shall give the Corporation a bond in such form, in such sum, and with such
surety or sureties as shall be satisfactory to the Board, for the faithful
performance of the duties of the officer's office and for the restoration to the
Corporation, in case of the officer's death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in their possession or under their control belonging to the
Corporation.
SECTION 5.12 COMPENSATION OF OFFICERS. The compensation of the officers of
the Corporation shall be determined from time to time by the Board of Directors.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 6.01 ISSUANCE. Each shareholder shall be entitled to a certificate
or certificates representing shares of stock of the Corporation owned of record.
The stock certificates of the Corporation shall be numbered and registered in
the stock ledger and transfer books of the Corporation as issued. Certificates
shall be signed by the Chairman, President or a Vice President and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer, and
shall bear the corporate seal. Any or all of the signatures and the corporate
seal upon such certificate may be a facsimile, engraved or printed. In case any
officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any share certificate shall have ceased to be
such officer, transfer agent or registrar, the certificate shall be valid and of
the same force and effect as if the person continued to be such officer,
transfer agent or registrar.
SECTION 6.02 TRANSFER. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, and subject to compliance with applicable law, it shall be the duty of
the Corporation to issue a new certificate of like form to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
No transfer shall be made which would be inconsistent with applicable law.
SECTION 6.03 STOCK CERTIFICATES. Stock certificates for each class and
series of stock of the Corporation shall be in such form as provided by statute
and approved by the Board of Directors. The stock transfer books for each class
and series of stock and the blank stock certificates shall be kept by the
Secretary or by any officer or agency designated by the Board of Directors for
that purpose.
<PAGE>
SECTION 6.04 LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. The Board
of Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Corporation alleged
to have been lost, stolen, destroyed or mutilated upon the receipt by the
Corporation of an affidavit of that fact by the record owner claiming the
certificate of stock to be lost, stolen, destroyed or mutilated. When
authorizing issuance of a replacement certificate, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof, require
the record owner of such lost, stolen, destroyed or mutilated certificate, or
the person's legal representative to give the Corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen,
destroyed or mutilated.
SECTION 6.05. RECORD HOLDER OF SHARES. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the record
and beneficial owner of shares to receive notices, to receive dividends, to
exercise voting rights and for all other purposes; and the Corporation shall not
be bound to recognize any equitable or other claim to or interest in such shares
on the part of any other person, even if the Corporation shall have notice
thereof.
SECTION 6.06. DETERMINATION OF RECORD DATE. In order that the Corporation
may determine the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or
other distribution or allotment of any rights, or to exercise any rights in
respect of any change, conversion or exchange of stock or for any other lawful
action or purpose, the Board of Directors may fix a record date, which shall not
be more than 60 nor less than 10 days before the date of such meeting or any
other action.
If no record date is fixed:
(1) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business
on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding
the day on which the meeting is held; and
(2) The record date for determining shareholders entitled to express
consent to actions in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed; and
(3) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
<PAGE>
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
SECTION 7.01. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN THIRD PARTY
PROCEEDINGS. To the maximum extent not prohibited by law, the Corporation shall
indemnify any person who was or is an authorized representative of the
Corporation (which shall mean for purposes of this Article a Director or officer
of the Corporation or another person serving at the request of the Corporation
as a director, officer, partner or trustee of another corporation, partnership,
joint venture, trust or other business enterprise) and who was or is a party
(which shall include for purposes of this Article the giving of testimony or
similar involvement) or is threatened to be made a party to any third party
proceeding (which shall mean for purposes of this Article, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
arbitration, administrative or investigative other than an action by or in the
right of the Corporation) by reason of the fact that such person was or is an
authorized representative of the Corporation, against expenses (which shall
include for purposes of this Article attorneys' fees and expenses), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such third party proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation and, with respect to any
criminal third party proceeding (which could or does lead to a criminal third
party proceeding) had no reasonable cause to believe such conduct was unlawful.
The termination of any third party proceeding by judgment, order, settlement,
indictment, conviction or upon a plea of nolo contendere or its equivalent shall
not of itself create a presumption that the authorized representative did not
act in good faith and in a manner which such person reasonably believed to be in
or not opposed to the best interests of the Corporation and, with respect to any
criminal third party proceeding, had reasonable cause to believe that such
conduct was unlawful.
<PAGE>
SECTION 7.02. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN CORPORATE
PROCEEDINGS. The Corporation shall indemnify any person who was or is an
authorized representative of the Corporation and who was or is a party or is
threatened to be made a party to any corporate proceeding (which shall mean for
purposes of this Article any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor or
investigative proceeding by the Corporation) by reason of the fact that such
person was or is an authorized representative of the Corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such corporate action, if such person acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation, unless and only to the extent that a
court of competent jurisdiction shall determine that, despite the adjudication
of liability but in view of all the circumstances of the case, such authorized
representative is fairly and reasonably entitled to be indemnified to the extent
such court shall order.
SECTION 7.03. MANDATORY INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES. To
the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any third party proceeding
or corporate proceeding or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses actually and reasonably
incurred by such person in connection therewith.
SECTION 7.04. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the authorized representative
is proper in the circumstances, because such person has either met the
applicable standards of conduct set forth in Section 7.01 or 7.02 or has been
successful on the merits or otherwise as set forth in Section 7.03 and that the
amount requested has been actually and reasonably incurred. Such determination
shall be made:
(1) By the Board of Directors by a majority of a quorum consisting of
Directors who were not parties to such third party or corporate
proceeding; or
(2) If such a quorum of the Board of Directors is not obtainable, or, even
if obtainable, a majority vote of such a quorum so directs, by
independent legal counsel in a written opinion; or
(3) By the shareholders voting in the aggregate and not by class or
series.
SECTION 7.05. ADVANCING EXPENSES. Expenses actually and reasonably incurred
in defending a third party or corporate proceeding shall be paid on behalf of an
authorized representative by the Corporation in advance of the final disposition
of such third party or corporate proceeding as authorized in the manner provided
in Section 7.04 of this Article upon receipt of an undertaking by or on behalf
of the authorized representative to repay such amount unless it shall ultimately
be determined that such person is entitled to be indemnified by the Corporation
as authorized in this Article. The financial ability of such authorized
representative to make such repayment shall not be a prerequisite to the making
of an advance.
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SECTION 7.06. EMPLOYEE BENEFIT PLANS. For purposes of this Article, the
Corporation shall be deemed to have requested an authorized representative to
serve an employee benefit plan where the performance by such person of duties to
the Corporation also imposes duties on, or otherwise involves services by, such
person to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an authorized representative with respect to an employee benefit
plan pursuant to applicable law shall be deemed fines; and action taken or
omitted by such person with respect to an employee benefit plan in the
performance of duties for a purpose reasonably believed to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the Corporation.
SECTION 7.07. SCOPE. The indemnification of and advancement of expenses to
authorized representatives, as authorized by this Article, shall (1) not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
shareholders or disinterested Directors or otherwise, both as to action in an
official capacity and as to action in another capacity, (2) continue as to a
person who has ceased to be an authorized representative, and (3) inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 7.08. RELIANCE. Each person who shall act as an authorized
representative of the Corporation shall be deemed to be doing so in reliance
upon rights of indemnification provided by this Article.
SECTION 7.09. INSURANCE. The Corporation may but shall not be obligated to
purchase and maintain insurance at its expense on behalf of any person who is or
was an authorized representative against any liability asserted against such
person in such capacity or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person against
such liability.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting only out of
funds or property lawfully available therefor under applicable law. Dividends
may be paid in cash, in property, or in shares of the capital stock or held by
the Corporation, subject to the provisions of the Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time, in its absolute discretion, determines to be proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Board of Directors shall determine to be in the interests of the Corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
and at the time the Board of Directors thereof so determines.
SECTION 8.02. ANNUAL STATEMENTS. The Board of Directors, through the
officers of the Corporation, shall present at each annual shareholders meeting,
and at any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
Corporation.
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SECTION 8.03. CONTRACTS. Except as otherwise provided in these Bylaws, the
Board of Directors may authorize any officer or officers or any agent or agents
to enter into any contract or to execute and deliver any instrument on behalf of
the Corporation, and such authority may be general or confined to specific
instances.
SECTION 8.04. CHECKS. All checks, notes, bills of exchange or other orders
in writing shall be signed by such person or persons as the Board of Directors
may from time to time designate.
SECTION 8.05. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal", and the state of incorporation of the Corporation. The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
SECTION 8.06. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositories as the Board of Directors may approve or
designate; and all such funds may be withdrawn only upon checks or withdrawal
requests signed by such one or more officers or employees as the Board of
Directors shall from time to time determine.
SECTION 8.07. AMENDMENT OF BYLAWS. These Bylaws may be altered, amended,
restated or repealed or new bylaws may be adopted by the shareholders or by the
Board of Directors at any regular meeting of the shareholders or of the Board of
Directors or at any special meeting of the shareholders or of the Board of
Directors if notice of such alteration, amendment, repeal, restatement or
adoption of new bylaws is contained in the notice of such special meeting.
SECTION 8.08. FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of January and end on the 31st day of December, unless
otherwise provided by resolution of the Board of Directors.
<PAGE>
SECTION 8.09. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its Directors or officers, or between the
Corporation and any other company, partnership, association or other
organization in which one or more of its Directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the Director or officer is present at or participates
in the meeting of the Board of Directors or Committee thereof which authorizes
the contract or transaction, or solely because the Director's or officer's vote
is counted for such purpose, if: (1) the material facts as to the relationship
or interest are disclosed to the Board or the Committee, and the Board or
Committee in good faith authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or (2) the material facts as to
the relationship or interest are disclosed to the shareholders or Directors
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders or Board of Directors; or (3)
the contract or transaction is determined to be fair as to the Corporation as of
the time it is authorized, approved, adopted or ratified by the Board of
Directors or a Committee thereof or by the shareholders. Interested Directors
may be counted in determining the presence of a quorum at a meeting of the Board
or of a Committee of the Board which authorizes the contract or transaction.
SECTION 8.10. FORM OF RECORDS. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of account
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs or any other information storage device,
provided that the records so kept can be converted into clearly legible form
within a reasonable time. The Corporation shall convert any records so kept upon
the request of any person entitled to inspect the same.
