As filed with the Securities and Exchange Commission on January 14, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Nugget Exploration, Inc.
(Name of small business issuer in our charter)
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Nevada 7370 83-0250943
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(State of jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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2051 Springdale Road
Cherry Hill, New Jersey 08003
(800) 204-1902
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Dr. Leonard Vernon, President
2051 Springdale Road
Cherry Hill, New Jersey 08003
(800) 204-1902
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices and name,
address and telephone number of agent for service)
Copies of Communications to:
Kevin S. Woltjen, P.C.
900 Jackson Street, Suite 600
Dallas, Texas 75202
Telephone: 214-712-5673
Facsimile: 214-712-5674
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [_]
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<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of each class of securities Amount of Proposed Amount of
to be registered securities to be maximum registration
registered aggregate fee
offering price
- -------------------------------------------- ----------------------- ------------------------- ----------------------
<S> <C> <C> <C>
Common Stock, par value 1,514,500 (1) $4.00 (2) $1,600
$0.01, per share
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(1) All of the shares of common stock being registered hereby are being offered
by selling stockholders who acquired such shares in private transactions. No
other shares of the registrant's common stock are being registered in this
offering.
(2) Estimated pursuant to Rule 457(c) under the Securities Act of 1933 solely
for purposes of computing the amount of the registration fee. The fee for the
common stock was based on the average of the bid and ask price of the common
stock reported on the Over-the-Counter (OTC) Bulletin Board on January 7, 2000.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant will file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SUBJECT TO COMPLETION DATED JANUARY 13, 2000
Prospectus
1,514,500 SHARES
NUGGET EXPLORATION, INC.
COMMON STOCK
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities
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and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
The selling stockholders are offering to sell 1,514,500 shares of common stock.
We will not receive any proceeds from the offering of common stock. Because
989,500 shares offered hereby are issuable upon exercise of our options and
warrants, we will receive approximately $1,387,000 if all of the warrants and
options are exercised. These proceeds will be used for our general corporate
purposes.
Our common stock is traded and quoted on the Over-the-Counter (OTC) Bulletin
Board under the symbol "NUGT." On January 7, 2000, the last reported bid price
of our common stock was $4.00 and the last reported ask price of our common
stock was $5.00.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The securities offered in this prospectus involve a high degree of risk. You
should carefully consider the factors described under the heading "Risk Factors"
beginning on page 6.
The date of this prospectus is January 13, 2000.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................5
RISK FACTORS...................................................................6
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ............................19
USE OF PROCEEDS...............................................................20
MARKET PRICE FOR OUR COMMON STOCK.............................................20
DIVIDENDS.....................................................................21
BUSINESS......................................................................22
MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION.................26
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.....................................................35
PROPERTY......................................................................36
MANAGEMENT....................................................................36
EXECUTIVE COMPENSATION........................................................37
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................38
PRINCIPAL STOCKHOLDERS........................................................39
SELLING STOCKHOLDERS..........................................................40
PLAN OF DISTRIBUTION..........................................................43
DESCRIPTION OF SECURITIES.....................................................44
FINANCIAL STATEMENTS..........................................................46
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PROSPECTUS SUMMARY
This summary contains basic information about us and the offering. Because it is
a summary, it does not contain all the information that you should consider
before investing. You should read the entire prospectus carefully, including the
risk factors beginning on page 6 and our financial statements and the notes to
those statements appearing elsewhere in this prospectus and the information
under "Selected Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Except as otherwise required by
the context, references in this prospectus to "we," "our" and "us" refer to
Nugget Exploration, Inc. and our wholly owned subsidiary, GoHealth.MD, Inc., and
not to the selling stockholders. Our operations are conducted through our wholly
owned subsidiary, GoHealth.MD, Inc.
ABOUT OUR COMPANY
We operate an Internet informational site, located at www.Healthmall.com.,
relating to health and medicine, and we also sell Internet domain names with a
".MD" extension, at our site www.GoHealth.MD.
By developing Healthmall.com into a leading Internet resource dedicated to the
use of herbs and vitamins as well as information for alternative health care
providers, such as chiropractors and naturopathic physicians, we believe we will
be able to generate substantial advertising revenues. We have entered into, and
intend to continue to enter into new distribution and business relationships
with entities that have significant reach on the Internet and are in similar
fields, such as pharmacy chains, Internet access providers and portals, as well
as other traditional media to build the Healthmall.com brand and drive traffic
to the site.
We also sell and host .MD domain names directly from our Internet website,
located at www.GoHealth.MD. We sell such names through an agreement we have with
Domain Name Trust, located in Florida, which has an exclusive contract with the
country of Moldova, which was assigned a monopoly over the ".MD" top-level
domain extension. We believe that .MD is a new type of website address which is
a natural and intuitive address for physicians and those whose personal or
corporate initials involve the letters M and D, those residing in the state of
Maryland, and those whose title (i.e., managing director) involves the letters M
and D.
Our executive offices are located at 2051 Springdale Road, Cherry Hill, New
Jersey 08003, and our telephone number is 800-204-1902.
SUMMARY FINANCIAL DATA
This summary financial data for the fiscal years ended May 31, 1999 and 1998 is
derived solely from our audited financial statements as we existed prior to the
merger with GoHealth. The pro forma consolidated financial data as of September
30, 1999, presents the pro forma position of the merged entities as if the
merger had occurred on that date along with the assumptions included within the
pro forma financial statements included elsewhere. The pro forma consolidated
operating data assumes the merger occurred at the beginning of the period
presented. GoHealth commenced operations on February 23, 1999 and its operations
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include theperiod ending September 30, 1999. The pro forma consolidated
operating data include our operations for the three months ended August 31,
1999. You should read the following summary financial data in conjunction with
the financial statements and notes to those statements.
Nugget Nugget Consolidated
Year ended Year ended Pro Forma
5-31-99 5-31-98 9-30-99
Statement of Operations Data
Revenues $ 0 $ 0 $ 948
Expenses $ 250,304 $ 78,254 $ 99,288
Net Profit (Loss) $ 1,722,606 $ (78,254) $ 1,004,970
Balance Sheet Data
Cash & Cash Equivalents $ 6,180 $ 7,010 $ 1,699,669
Total Assets $ 6,180 $ 118,512 $ 1,763,249
Total Liabilities $ 36,547 $ 2,072,585 $ 141,030
Shareholders Equity $ (30,367) $(1,954,073) $ 1,622,219
RISK FACTORS
An investment in our common stock is highly speculative and involves a high
degree of risk. Therefore, you should carefully consider all of the risk factors
discussed below, as well as the other information contained in this document.
You should not invest in our common stock unless you can afford to lose your
entire investment and you are not dependent on the funds you are investing.
Risks Related to Our Business
Our Limited Operating History Makes an Evaluation of Our Business Difficult.
All of our operations are conducted by our wholly owned subsidiary, GoHealth.MD,
Inc. GoHealth was incorporated in February 1999 and began providing Internet
related services in October 1999. Our limited operating history makes an
evaluation of our business and prospects very difficult. Companies in an early
stage of development frequently encounter enhanced risks and unexpected expenses
and difficulties. These risks, expenses and difficulties apply particularly to
us because our market, Internet-related services, is new and rapidly evolving.
Uncertainties regarding the Internet, such as taxation, technical limitations
and competition, increase these risks as well. Our long-term success will depend
on our ability to achieve satisfactory results for our clients and to form
long-term relationships with core clients. We have not been in operation long
enough to judge whether our clients will perceive our work as being beneficial
to their businesses or to form any long-term business relationships. Also,
because of our limited operating history, our business reputation is based on a
limited number of client engagements. All of our clients have only limited
experience with the Internet-related services we provide. Accordingly, we cannot
assure you that the limited number of Internet-related operations we have
implemented will be successful in the long term.
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Our Method of Becoming a Public Company May Result in Operating Difficulties.
We were originally incorporated in Nevada on July 24, 1980 under the name of
Western Exploration and Mining Company to engage in the business of locating,
acquiring, testing, exploring and mining precious metals including gold, silver,
uranium and other mineral properties. On February 5, 1981, we changed our name
to Nugget Exploration, Inc.
All mining related operations ceased in April 1994. Since that time, we have
attempted to effect a merger or acquisition. On November 10, 1999, we acquired
GoHealth.MD, Inc., a Delaware corporation, through a wholly owned subsidiary,
Nugget Holding Company, a Delaware corporation. Pursuant to the Merger
Agreement, we issued 3,102,000 shares of our common stock to the shareholders of
GoHealth in consideration for all of GoHealth's issued and outstanding equity,
which constituted 3,102,000 outstanding shares of common stock.
The Merger Agreement provided that we assume GoHealth's rights and obligations
under all of GoHealth's outstanding stock options and warrants. In the event all
of the GoHealth options and warrants are exercised, we will issue an additional
567,000 shares, which will result in total issuances of a total of 3,669,000
shares of common stock to GoHealth stockholders. If all GoHealth options and
warrants are exercised, the GoHealth stockholders will have received 76.5% of
the total number of shares of common stock outstanding.
We Have a History of Losses and If We Do Not Achieve Profitability We May Not Be
Able to Continue Our Business.
As a development stage company, we have not realized a profit for any fiscal
period, nor achieved profitability and expect to continue to incur operating
losses for the foreseeable future. This lack of profitability results in our
inability to assure that we will achieve profitability in the future or if
profitability is achieved, that it can be sustained at a level sufficient to
enable us to continue our operations and expansion.
We Are Highly Dependent on Our Executive Officers and Several Technical
Employees, the Loss of Any of Whom Could Have an Adverse Impact on Our Future
Operations.
We believe that due to the rapid pace of innovation within our industry, factors
such as the technological and creative skills of our personnel are more
important in establishing and maintaining a leadership position within the
industry than legal protections of our technology. We are dependent on our
ability to recruit, retain and motivate high quality personnel. However,
competition for such personnel is intense and the inability to attract and
retain additional qualified employees or the loss of current key employees could
materially adversely affect our business, operating results and financial
condition.
We are largely dependent upon the personal efforts of Dr. Leonard F. Vernon,
Kevin O'Donnell, William Hanna and Steven Goldberg for the successful
implementation of our business plan and the excellence of our planned commercial
operations. The loss of any one of these persons could ave a material adverse
effect upon our business and prospects. We do not presently have key- man life
insurance upon the life of any of our officers, directors or key personnel.
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Some of Our Stockholders Own a Significant Amount of Our Common Stock.
As of January 12, 2000, Leonard Vernon, William Hanna and Kevin O'Donnell in
aggregate beneficially own approximately 72.5% of our common stock. As a result,
these stockholders are able to exercise significant influence, and in most cases
control, over most matters requiring approval by our stockholders, including the
election of directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying, deterring or
preventing a change in control that may otherwise be beneficial to you.
Our Business Model Is Unproven, Subject to Special Liability Risks and No Brand
Name Recognition.
Our business model assumes that consumers will be attracted to and use
healthcare information and related content available on our Internet-based
consumer healthcare network which will, in turn, provide us with the opportunity
to sell advertising designed to reach those consumers.
We plan to develop relationships with retailers, manufacturers and other
providers to offer healthcare products and services through direct links from
our website. Such a strategy involves numerous risks and uncertainties.
Consumers may sue us if any of the products or services which we may sell on or
through our website are defective, fail to perform properly or injure the user,
even if such goods and services are provided by unrelated third parties.
We may also have liability for information we provide on our website or which is
accessed from our website. Because users of the website access health content
and services relating to a condition they may have and may distribute our
content to others, third parties may sue us for defamation, negligence,
copyright or trademark infringement, personal injury or other matters. We could
also become liable if confidential information is disclosed inappropriately.
These types of claims have been brought, sometimes successfully, against on-line
entities in the past. Others could also sue us for the content and services that
are accessible from our website through links to other websites or through
content and materials that may be posted by users in our chat rooms or bulletin
boards. Some of our agreements, including those with content providers, provide
us with indemnification against such liabilities. However, even if available,
such indemnification may be in adequate and we do not have insurance for these
types of claims. Further, our business is based on establishing the
Healthmall.com network as a trustworthy and dependable provider of healthcare
information and services. Allegations of impropriety, even if unfounded, could
therefore have a material adverse effect on our reputation and business.
We May Not Be Able to Adequately Protect Our Proprietary Rights.
We have applied for federal registration of the mark "GoHealth.MD" as well as
other service and trademarks. A potentially conflicting pending application has
been made with the US Department of Commerce's Patent and Trademark Office. If
we lose our right to use this mark, we could be forced to change our corporate
name and adopt a new domain name. These changes could confuse current and
potential customers and adversely impact our business. We also rely on a variety
of technologies that are licensed from third parties, including our database and
Internet server software, which are used in the Healthmall.com website to
perform key functions. These third-party licenses may not be available to us on
commercially reasonable terms in the future.
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We are relying upon a combination of copyright, trademark and trade secret laws,
nondisclosure and other contractual provisions to protect our proprietary
rights. Notwithstanding these safeguards, it may be possible for competitors to
imitate our products and services or to develop independently non-infringing
competing products and services. Litigation, which could result in substantial
cost to and diversion of our efforts, may be necessary (i) to enforce any
trademarks, or copyrights, (ii) to protect trade secrets or know-how we own or
to defend ourselves against claimed infringement of the rights of others, or
(iii) to determine the scope and validity of the proprietary rights of others.
Adverse determinations in litigation could subject us to significant liabilities
to third parties, could require that we seek licenses from third parties and
could prevent us from manufacturing, selling or using our products, any of which
could have a material adverse effect on our business, financial condition and
results of operations. We are not currently a party to any litigation.
We Have Limited Sales, Marketing and Management Experience.
Although our management has experience in marketing other products, they have
had only limited marketing experience with Internet products and services. Our
management has some background in the computer business and believes that they
have an adequate management team for existing business with an ability to add
additional support services as business requires. However, management has
relatively little experience with regard to the Internet.
We Do Not Have a Contract with Our Internet Technical Service Provider.
We offer webpage development and hosting on our own server. Such websites are
basically templated websites designed by World Wide Web Communications of Cherry
Hill, New Jersey. In addition, we sell other customized websites, which are also
prepared by World Wide Web Communications. We have not secured a contract with
World Wide Web Communications and although believe we possess a stable
relationship with them, we cannot guarantee that World Wide Web Communications
will continue to provide these services to us for any time in the future.
We Do Not Have a Contract with the Provider of Certain Information to our
Website, Healthmall.com.
Among the information included on our Internet site, Healthmall.com, is herb and
prescription drug interactions. This information is supplied on the site through
a licensing contract with Facts and Comparisons Corporation, with whom we have
not finalized a contract, although they have received $5,000 from us. Although
we believe we will secure a contract with them shortly, we cannot guarantee that
Facts and Comparisons will continue to provide this information.
Our Contract with Domain Name Trust Could Be Canceled.
Our contract with Domain Name Trust can be terminated at any time without cause.
Should Domain Name Trust choose to cancel our existing agreement, should
Domain Name Trust lose its agreement with Moldova, or should Domain Name Trust
be sold to an entity not wishing to continue the contract with us, we could be
materially adversely affected. S
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We May Not Be Able to Enforce Our Rights under the Moldova Law.
Our agreement with Domain Name Trust to market and register .MD domain names is
premised upon a contract that Domain Name Trust has entered into with Moldova
("Moldova Contract"). Domain Name Trust has assured us that attorneys in the
Republic of Moldova have confirmed that the Moldova Contract is valid and
enforceable pursuant to Moldovan law. We have not received, nor sought, an
opinion of counsel to that effect and there can be no assurance that the Moldova
Contract is valid or enforceable under either Moldovan law or U.S. law.
Furthermore, there can be no assurance that the Moldova Contract will be found
enforceable by a court of competent jurisdiction or that we would have an
adequate remedy at law if Moldova breaches its contract with Domain Name Trust.
Moreover, there is no guarantee that the Republic of Moldova or the Internet
Corporation for the Assigned Names and Numbers ("ICANN") will continue to
recognize the validity of the Moldova Contract. We would be materially adversely
affected (i) if the Moldova Contract was found unenforceable, (ii) if after a
favorable judgment on a breach action no adequate remedy at law existed to
recover from Moldova, or (iii) if the Republic of Moldova or ICANN refused to
accept or enforce the Moldova Contract's validity or refused to honor the
Moldova Contract. The Republic of Moldova is currently governed by a
parliamentary democracy. However, should a change in governmental structure
occur, the Moldovan government may seek to challenge Domain Name Trust's rights
under their contract with Moldova. Alternatively, if a government sufficiently
hostile to the United States were to gain power, the United States Department of
State may forbid all forms of transactions with the Republic of Moldova. Any of
these events may have a material adverse effect on our business, financial
condition and results of operations.
Our Capital Requirements May Require Additional Financing Which May Not Be
Available.
We estimate that we have sufficient cash resources to fund operations through
December 2000. If our cash resources prove to be insufficient at that time we
may be required to seek additional debt or equity financing to fund the costs of
continuing operations until we achieve positive cash flow. We have no current
commitments or arrangements for additional financing and there can be no
assurance that any additional debt or equity financing will be available to us
on acceptable terms, or at all.
Your Ownership Interest, Voting Power and the Market Price of Our Common Stock
May Decrease Because We Have Issued, and May Continue to Issue, a Substantial
Number of Securities Convertible or Exercisable into Our Common Stock.
We have issued common stock, options and warrants to purchase our common stock,
and in the future we may issue additional shares of common stock, options,
warrants, preferred stock or other securities exercisable for or convertible
into our common stock. A substantial number of shares of common stock may become
available for resale in the near future under Rule 144 under the Securities Act
of 1933. The availability of Rule 144 to the holders of restricted securities
would be conditioned on, among other factors, the availability of our certain
public information. Of the shares of common stock outstanding as of the date of
this prospectus, approximately 3.1 million are "restricted securities" as that
term is defined in Rule 144 and may, under certain circumstances, be sold
without registration pursuant to Rule 144. In particular, some shares of our
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common stock issued or issuable upon the exercise of warrants and options will
be registered under this document and, will be freely saleable by the selling
stockholders. Presuming the exercise of all such options and warrants, such
shares would represent 24% of our common stock. Sales of these shares or the
market's perception that these sales could occur may cause the market price of
our common stock to fall and may make it more difficult for us to (i) use equity
securities as consideration for future acquisitions or (ii) sell equity
securities in the future at a time and price that we deem appropriate.
If we develop cash flow problems, we may seek to raise capital. If additional
funds are raised through the issuance of equity or convertible debt securities,
the percentage ownership of our stockholders will be reduced, and these
newly-issued securities may have rights, preferences or privileges senior to
those of existing stockholders, including those acquiring shares in this
offering. If adequate funds are not available or are not available on acceptable
terms, our ability to fund our operations, take advantage of unanticipated
opportunities, develop or enhance website's editorial content, features or
services, or otherwise respond to competitive pressures would be significantly
limited.
Our Articles of Incorporation authorize the issuance of up to 25 million
undesignated shares with such rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, under the Articles of
Incorporation the Board of Directors may, without shareholder approval, issue
capital stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
our common stock. In addition, the issuance of such capital stock may have the
effect of rendering more difficult or discouraging an acquisition of us or
changes in control of our management. Although we do not currently intend to
issue any undesignated shares, there can be no assurance that we will not do so
in the future. See "Description of Securities."
We Have Not Declared and Do Not Intend to Declare Dividends.
Any investor who purchases our common stock should not anticipate receiving any
dividends on their common stock at any time in the foreseeable future. Payment
of dividends is within the absolute discretion of our board of directors and
there can be no assurances that cash dividends will ever be paid on the common
stock or that their value will ever increase. We have not paid dividends nor, by
reason of our contemplated financial requirements, do not anticipate paying any
dividends upon our common stock in the future.
We Are Competing in the Internet Industry with a Number of Other Companies,
Including Larger, Well Known Entities Who Possess Greater Financial Resources.
We compete directly for users, advertisers, e-commerce merchants, syndication
partners and other affiliates with numerous Internet and non-Internet
businesses, including:
o Health-related on-line services or websites targeted at consumers, such
as accesshealth.com, ahn.com, betterhealth.com, drweil.com,
healthcentral.com, healthgate.com, intelihealth.com, mayohealth.org;
mediconsult.com, onhealth.com, thriveonline.com and webmd.com;
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o On-line and Internet portal companies, such as America Online, Inc.;
drkoop, Inc., Microsoft Network; Yahoo! Inc.; Excite, Inc.; Lycos
Corporation and Infoseek Corporation;
o Electronic merchants and conventional retailers that provide healthcare
goods and services competitive to those available from links on our
website;
o Hospitals, HMOs, managed care organizations, insurance companies and
other healthcare providers and payors which offer healthcare
information through the Internet; and
o Other consumer affinity groups, such as the American Association of
Retired Persons, SeniorNet and ThirdAge Media, Inc. which offer
healthcare-related content to specific demographic groups.
Many of these actual and potential competitors are likely to enjoy substantial
competitive advantages compared to us, including:
o the ability to offer a wider array of on-line products and services;
o larger production and technical staffs;
o greater name recognition and larger marketing budgets and resources;
o larger customer and user bases; and
o substantially greater financial, technical and other resources.
Increased competition could result in significant price competition, which in
turn could result in significant reductions in the average selling price of
products and services offered on the site. There is no assurance that we will be
able to offset the effects of any such price reductions through an increase in
the number of our customers, higher revenue from enhanced services, cost
reductions or otherwise. Increased competition or price reductions, could
adversely affect our operating results. There is no assurance that we will have
the financial resources, technical expertise, marketing and support capabilities
to continue to compete successfully.
Rapid Technological Change in Our Industry Could Outdate Our Products and
Services.
The market for our products is characterized by rapidly changing technology and
continuing development of customer requirements. The future success of our
business will depend in large part upon our ability to develop and market our
products at an acceptable cost, develop and market products which meet changing
customer needs, and successfully anticipate or respond to technological changes
in customer requirements on a cost-effective and timely basis. There can be no
assurance that our product development efforts will be successful or that the
emergence of new technologies, industry standards or customer requirements will
not render our technology or products obsolete or uncompetitive. In addition, to
the extent that we determine that new technologies or equipment are required to
remain competitive, the acquisition and implementation of such technologies and
equipment are likely to require significant capital investment. There can be no
assurance that sufficient capital will be available in the future. Operating
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results can also be significantly adversely affected by the development and
introduction of new products or by the establishment of better financed
competition.
Dependence on Third Party Transactions and Relationships.
In order to expand our network, we have entered into a strategic partnership,
and will attempt to enter into similar relationships which may involve the
payment of significant funds for prominent or exclusive carriage of our
healthcare information and services. Such transactions are premised on the
assumption that the traffic obtained from these arrangements will permit us to
earn revenues in excess of the payments made to partners. This assumption is not
yet proven, and if we are unsuccessful in generating sufficient resources to
offset these expenditures, we will likely be unable to operate our business.
We depend, and will continue to depend, on a number of third-party relationships
to increase traffic on Healthmall.com and thereby generate advertising and other
revenues. Outside parties on which we depend include unrelated website operators
that provide links to Healthmall.com, providers of healthcare content and the
on-line property representation company which provides us with advertising sales
services. Many of the arrangements with third-party Internet sites and other
third-party service providers are not exclusive and are short-term or may be
terminated at the convenience of either party. We cannot provide assurances that
the third parties regard these relationships as important to their own
respective businesses and operations. They may reassess their commitment to us
at any time in the future and may develop their own competitive services or
products.
We intend to produce only a portion of the healthcare content that will be found
on the Healthmall.com network. We will rely on third-party organizations that
have the appropriate expertise, technical capability, name recognition,
reputation for integrity, and willingness to syndicate product content for
branding and distribution by others. As health-related content grows on the
Internet, we believe that there will be increasing competition for the best
product suppliers, which may result in a competitor acquiring a key supplier on
an exclusive basis, or in significantly higher content prices. Such an outcome
could make the Healthmall.com network less attractive or useful for an end user
which could reduce our advertising and e-commerce revenues.
We cannot provide assurances that we will be able to maintain relationships with
third parties that supply us with content, software or related products or
services that are crucial to our success, or that such content, software,
products or services will be able to sustain any third-party claims or rights
against their use. Also, we cannot assure that the content, software, products
or services of those companies that provide access or links to our website will
achieve market acceptance or commercial success. Accordingly, we cannot assure
that our existing relationships will result in sustained business partnerships,
successful product or service offerings or the generation of significant
revenues.
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Investors in Our Common Stock Will Realize an Immediate and Substantial Dilution
Compared to Net Tangible Book Value per Share.
Investors who purchase shares of our common stock will experience significant
dilution of investment as compared to pro forma net tangible book value per
share. The last reported bid price for shares of our common stock on January 7,
2000 was $4.00. As of September 30, 1999, our pro forma net tangible book value
was $1,556,264, or $0.32 per share of common stock. Therefore, investors of the
common stock will experience an immediate dilution as the price they will pay
for the common stock will exceed the net tangible book value for the common
stock.
One of Our Control Person Was Previously Subject to Disciplinary Action in the
Medical Industry.
Dr. Vernon has a previous disciplinary action by the New Jersey State Board of
Medical Examiners in which he was given an 18-month suspension of his license,
30 days of which were to be active with a monetary penalty of $3000. Dr. Vernon
failed to perform the required community service and pay the fine and the
suspension was imposed for a full 18 months. This disciplinary action was taken
after the determination that Dr. Vernon's application to the Educational
Commission of Foreign Medical Graduates was misleading. Dr. Vernon currently
possesses an unrestricted license to practice chiropractic in the State of New
Jersey and there is no pending disciplinary action against him in any of the
states in which he is licensed.
We Make No Assurances of Our Generation of Future Revenues.
Revenues for the foreseeable future will remain dependent on user traffic
levels, advertising and Internet-related activity on Healthmall.com and the
level of affiliate subscriptions. Such future revenues are difficult to
forecast. In addition, we plan to increase our sales and marketing operations,
expand and develop content and upgrade and enhance our technology and
infrastructure development in order to support our growth. Many of the expenses
associated with these activities, for example, personnel costs and technology
and infrastructure costs, are relatively fixed in the short-term. We may be
unable to adjust spending quickly enough to offset any unexpected revenue
shortfall, in which case our results of operations would suffer.
Lack of Market Research.
We have not undertaken formal market studies with respect to the market
potential for a product such as those we plan to offer and currently offer, and
none are planned. Therefore, there can be no assurance that our planned business
operations will achieve market acceptance, or sufficient market acceptance to
make our operations commercially viable. Our failure to achieve market
acceptance (or sufficient market acceptance to make our operations profitable),
would have a material adverse effect upon our business and financial condition
and could result in our failure to achieve, or sustain, viable commercial
operations of any kind in the future. In such event, it is likely that investors
herein would lose their entire investment.
General Liability Exposure.
We do not carry a general liability insurance policy. the owner of the office
facilities we currently occupy maintains premise liability insurance.
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Casualty Loss Exposure.
We do not possess any property casualty insurance policy for our leased office
facility.
Penny Stock Reform Act: Possible Inability to Sell in The Secondary Market.
In October 1990, Congress enacted the "Penny Stock Reform Act of 1990" (the "90
Act") to counter fraudulent practices common in penny stock transactions. Rule
3a51-1 of the Securities Exchange Act of 1934 defines a "penny stock" as an
equity security that is not, among other things: (a) a reported security (i.e.,
listed on certain national securities exchanges); (b) a security registered or
approved for registration and traded on a national securities exchange that
meets certain guidelines, where the trade is effected through the facilities of
that national exchange; (c) a security listed on the NASDAQ National Market
System; (d) a security of an issuer that meets certain minimum certified
financial requirements ("net tangible assets" in excess of $2,000,000 (if the
issuer has been continuously operating for more than three years) or $5,000,000
(if the issuer has been continuously operating for less than three years), or
"average revenue" of at least $6,000,000 for the last three years); or (e) a
security with a price of at least $5.00 per share for the transaction in
question or that has a bid quotation (as defined in the Rule) of at least $5.00
per share. Under Rule 3a51-1, our common stock falls within the definition of a
"penny stock."
Pursuant to the 90 Act, brokers and/or dealers, prior to effecting a transaction
in a penny stock, are required to provide investors with written disclosure
documents containing information concerning various aspects of the market for
penny stocks as well as specific information about the penny stock and the
transaction involving the purchase and sale of that stock (e.g., price quotes
and broker/dealer and associated person compensation). Subsequent to the
transaction, the broker is required to deliver monthly or quarterly statements
containing specific information about the penny stock. Because our common stock
has been trading around the $5.00 penny stock threshold, the above discussed
added disclosure requirements will most likely negatively affect the ability of
purchasers herein to sell our common stock in the secondary market, if any.
Our business may face additional risks and uncertainties not presently known to
it which could cause our business to suffer.
Risks Related to Our Industry
Consumers and the Healthcare Industry must Accept the Internet as a Source of
Healthcare Content and Services for Our Business Model to Be Successful.
To be successful, we must attract to our network a significant number of
consumers as well as other participants in the healthcare industry. To date,
consumers have generally looked to healthcare professionals as their principal
source for health and wellness information. Our business model assumes that
consumers will use healthcare information available on our network, that
consumers will access important healthcare needs through electronic commerce
using our website, and that local healthcare organizations will affiliate with
us. This business model is not yet proven, and if we are unable to successfully
implement our business model, our business will be materially adversely
affected.
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Our Success Depends on Increased Adoption of the Internet as a Means for
Commerce.
Our future success depends heavily on the acceptance and use of the Internet as
a means for commerce. The widespread acceptance and adoption of the Internet for
conducting business are likely only in the event that the Internet provides
businesses with greater efficiencies and other advantages. If commerce on the
Internet does not continue to grow, or grows more slowly than expected, our
growth would decline and our business would be seriously harmed. Consumers and
businesses may reject the Internet as a viable commercial medium for a number of
reasons, including:
o Potentially inadequate network infrastructure;
o Delays in the development of Internet enabling technologies and
performance improvements;
o Delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity;
o Delays in the development of security and authentication technology
necessary to effect secure transmission of confidential information;
o Changes in, or insufficient availability of, telecommunication
services to support the Internet; and
o Failure of companies to meet their customers' expectation in delivering
goods and services over the Internet.
General Risks of Internet Business.
We have formulated our Internet business plans and strategies based on the
rapidly increasing size of the Internet markets, our anticipated participation
in those markets, and the estimated sales cycle, price and acceptance of our
products and services. Although these assumptions are based on the best
estimates of management, there can be no assurance that these assumptions will
prove to be correct. Any future success that we might enjoy will depend upon
many factors including some beyond our control or that we cannot predict at this
time.
We must continue to expand and adapt our network infrastructure to accommodate
additional users, increase transaction volumes and changing consumer and
customer requirements. We may not be able to accurately project the rate or
timing of increases, if any, in the use of our website or to expand and upgrade
our systems and infrastructure to accommodate such increases. Our systems may
not accommodate increased use while maintaining acceptable overall performance.
Service lapses could cause our website users to instead use the on-line services
of our competitors.
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Additionally, Internet capacity constraints may impair the ability of consumers
to access our website, which could hinder our ability to generate advertising
revenue.
Internet Competition.
The market for Internet products and services is highly competitive and we
expect that this competition will intensify in the future. Our current and
prospective competitors include many companies that have substantially greater
financial, technical, marketing and other resources. Increased competition could
result in price reductions and increased spending on marketing and product
development. Any of these events could have a materially adverse effect on our
financial condition and operating results. Many nationally known companies and
regional and local companies across the country are involved in Internet
applications, including the development and support of healthcare websites, and
the number of competitors is growing. Competition for business in the healthcare
industry is strong and increasing rapidly.
The Market May Not Accept the .MD Domain Name.
The extent and rate of market acceptance and penetration of the .MD domain name
are functions of many variables including, but not limited to:
o Perception of the need to differentiate with a .MD address;
o Price;
o Web-hosting reliability; and
o Marketing and sales efforts.
Our ability to generate revenue from .MD domains will depend to a substantial
degree upon market acceptance of, and our ability to successfully market and
support, the .MD name registrations. The market is currently accustomed to the
use of the .com, .net, .edu and .org top level domain ("TLD's"). There can be no
assurance that we will be able to convert .com, .net, .edu or .org users to .MD
or be able to achieve or maintain market acceptance of .MD for new users.
Similar risks may confront other products and services provided by us. The
failure to achieve significant market acceptance would have a material adverse
effect on our business, financial condition and results of operations.
Increasing Government Regulation Could Affect Our Business.
We are subject not only to regulations applicable to businesses generally, but
also laws and regulations directly applicable to electronic commerce. Although
there are currently few such laws and regulations, state, federal and foreign
governments may each adopt a number of these laws and regulations. Any such
legislation or regulation could dampen the growth of the Internet and decrease
its acceptance as a communications and commercial medium. If such a decline
occurs, companies may decide in the future not to use our products and services.
This decrease in the demand for our products and services would seriously harm
our business and operating results.
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Any new laws and regulations may govern or restrict the following issues:
o User privacy;
o The pricing and taxation of goods and services offered over the Internet;
o The content of websites;
o Consumer protection; and
o The characteristics and quality of products and services offered over the
Internet.
For example, the Telecommunications Act of 1986 prohibits the transmission of
certain types of information and content over the Internet. The scope of this
Act's prohibition is currently unsettled. In addition, although courts recently
held substantial portions of the Communications Decency Act, federal or state
governments may enact, and courts may uphold, similar legislation in the future.
Future legislation could expose companies involved in Internet commerce to
liability.
Since we operate a healthcare network over the Internet, our business is also
subject to government regulation specifically relating to medical devices, the
practice of medicine and pharmacology, healthcare regulation, insurance and
other matters unique to the healthcare area.
Laws and regulations have been or may be adopted with respect to the provision
of healthcare- related products and services on-line, covering areas such as:
o The regulation of medical devices;
o The practice of medicine and pharmacology and the sale of controlled
products such as pharmaceuticals on-line;
o The regulation of government and third-party cost reimbursement; and
o The regulation of insurance sales.
Reliance on Internet Servers.
We rely on the Internet and, accordingly, depend upon the continuous, reliable
and secure operation of Internet servers and related hardware and software.
Recently, several large Internet commerce companies suffered highly publicized
system failures which resulted in adverse reactions to their stock prices,
significant negative publicity and, in certain instances, litigation. We have
also suffered service outages from time to time, although to date none of these
interruptions has materially adversely affected our business operations or
financial condition. To the extent that our service is interrupted, our users
will be inconvenienced, our commercial customers will suffer from a loss in
advertising or transaction delivery and our reputation may be diminished. Some
of these outcomes could directly result in a reduction in our stock price,
significant negative publicity and litigation. Our computer and communications
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hardware are protected through physical and software safeguards. However, they
are still vulnerable to fire, storm, flood, power loss, telecommunications
failures, physical or software break-ins and similar events. We do not have full
redundancy for all of our computer and telecommunications facilities and do not
maintain a backup data facility. We do not have any type of business
interruption insurance to protect us in the event of a catastrophe. We also
depend upon third parties to provide potential users with web browsers and
Internet and on-line services necessary for access to our website. In the past,
our users have occasionally experienced difficulties with Internet and other
on-line services due to system failures, including failures unrelated to our
systems. Any sustained disruption in Internet access provided by third parties
could adversely impact our business.
In addition to the risks specifically identified in this Risk Factors section or
elsewhere in this prospectus, we may face additional risks and uncertainties not
presently known to us or that we currently deem immaterial which may ultimately
impair our business, results of operations and financial condition.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of the risks we face described
above and elsewhere in this prospectus. We undertake no obligation after the
date of this prospectus to update publicly any forward- looking statements for
any reason, even if new information becomes available or other events occur in
the future.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary," "Risk Factors," "Management's
Discussion and Analysis and Results of Operations," "Business" and elsewhere in
this prospectus constitute forward-looking statements. These statements involve
known and unknown risks, uncertainties and other factors that may cause our or
our industry's actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include those listed under "Risk Factors" and elsewhere
in this prospectus.
This prospectus contains forward-looking statements. These statements relate to
future events or to our future financial performance. In some cases, you can
indentify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of such terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, you should
specifically consider various factors, including the risks outlined under "Risk
Factors." These factors may cause our actual results to differ materially from
any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform such statements to actual results.
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USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling stockholder's of
the common stock offered by this prospectus. The shares of common stock will be
sold from time to time by the selling stockholders at prevailing market prices.
We will receive approximately $1,414,500 if all of the warrants and options for
underlying shares of common stock being registered are exercised. We expect to
use these proceeds, if any, for general corporate purposes.
MARKET PRICE FOR OUR COMMON STOCK
Our common stock is currently traded through the NASD Over-the-Counter ("OTC")
Bulletin Board under the symbol NUGT. Limited trading has occurred over the past
several years.
In October 1998, our common stock experienced a 1-for-310 reverse stock split
and all fractional shares were rounded up. Immediately after the reverse split,
we had approximately 97,117 total shares of issued and outstanding. Simultaneous
with this reverse stock split the number of shares of common stock authorized
for issuance was reduced 1-for-10, from 50,000,000 to 5,000,000.
At our 1999 annual meeting, held on August 16, 1999, our Board of Directors and
the holders of a majority of the outstanding common stock increased the number
of authorized shares of our common stock to 25,000,000 from 5,000,000.
The following table set forth below lists the range of high and low bids of our
common stock for each fiscal quarter for the last two fiscal years. The prices
in the table reflect inter-dealer prices, without retail markup, markdown or
commission and may not represent actual transactions.
The amounts, and all other shares and price information contained in this
document have been adjusted to reflect the stock splits.
Fiscal Year Ended May 31, 1998 High Low
First Quarter $0.02 $0.005
Second Quarter $0.02 $0.005
Third Quarter $0.02 $0.001
Fourth Quarter $0.02 $0.005
Fiscal Year Ended May 31, 1999
First Quarter $0.02 $0.001
Second Quarter $6.00 $0.062
Third Quarter $7.00 $0.062
Fourth Quarter $5.062 $0.062
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Fiscal Year Ended May 31, 2000
First Quarter $4.125 $1.375
Second Quarter $5.25 $2.00
Third Quarter (*) $5.812 $4.00
* This is only a partial fiscal quarter as the third quarter of 2000 began on
December 1, 1999 and ends on February 29, 2000. The prices listed in this
quarter are therefore high and low bids between December 1, 1999 through January
7, 2000.
As of January 11, 2000, we had approximately 4,224,604 shares of our common
stock outstanding held by approximately 622 holders of record.
DIVIDENDS
We have never paid a cash dividend on our common stock. It is our present policy
to retain earnings, if any, to finance the development and growth of our
business. Accordingly, we do not anticipate declaring any cash dividends in the
foreseeable future.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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BUSINESS
History
We were originally incorporated in Nevada on July 24, 1980 under the name of
Western Exploration and Mining Company to engage in the business of locating,
acquiring, testing, exploring and mining precious metals including gold, silver,
uranium and other mineral properties. On February 5, 1981, we changed our name
to Nugget Exploration, Inc.
All mining related operations ceased in April 1994. Since that time, we sought
to effect a merger or acquisition. On November 10, 1999, we acquired
GoHealth.MD, Inc., a Delaware corporation, when it merged with our wholly owned
subsidiary, Nugget Holding Company, a Delaware corporation. Pursuant to the
Merger Agreement, we issued 3,102,000 shares of our common stock to the
shareholders of GoHealth in consideration for all of GoHealth's issued and
outstanding equity, which constituted 3,102,000 outstanding shares of common
stock.
The Merger Agreement provided that we assume GoHealth's rights and obligations
under all of GoHealth's outstanding stock options and warrants. In the event all
of the GoHealth options and warrants are exercised, we will issue an additional
567,000 shares, which would result in our issuance of a total of 3,669,000
shares of common stock to GoHealth stockholders. If all GoHealth options and
warrants are exercised, the GoHealth stockholders will have received 76.5% of
the total number of shares of common stock outstanding.
When GoHealth obtained the consent of its shareholders to enter into the Merger,
it also obtained consent to change our name to GoHealth.MD, Inc. Because this
name change was effected by written consent without a meeting, we are going to
be providing to all of our shareholders information regarding this consent prior
to the expected effectiveness of the name change. We expect the name change to
be effective on January 23, 2000.
Our fiscal year has historically closed on May 31 of each year. However, this
fiscal year end does not coincide with GoHealth's more traditional fiscal year
end of December 31. To simplify our affairs, especially the generation of
consolidated financial statements, our board of directors has approved a change
in our fiscal year from May 31 to December 31. This change will result in our
filing of an annual report for the year ending December 31, 1999, including
audited financial statements as of such date.
The Internet related operations of GoHealth now comprise virtually all of our
activities. These activities are conducted in two arenas. We operate an
informational Internet site, Healthmall.com, and sell Internet domain names with
the ".MD" extension.
Healthmall.com
Our informational Internet site, located at www.Healthmall.com, is devoted to
providing information related to the use of herbs and vitamins and to serving as
an information source for alternative health care providers such as
chiropractors and naturopathic physicians. The site therefore serves as an
information portal for alternative health care and is very heavily content
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based. Among the vast quantities of information that can be garnered on the site
is herb and prescription drug interactions. This information is supplied on the
site through a licensing contract with Facts and Comparisons Corporation, one of
the leading sources of information for pharmacists in the United States.
The site includes a continuously updated news wire feed related to health care
from PR Newswire, a searchable database through the National Library of Medicine
for published peer review of medical journal articles known as "Medline search,"
and information on almost 200 herbs, including their pharmacology, toxicology,
and their clinical indications.
Healthmall.com also features one of the largest databases in the United States
of health food stores. This searchable database contains more than 5000 health
food stores in the United States and includes their name, address, and phone
number. The database is constantly being updated and expanded.
Databases of alternative health care providers, such as licensed chiropractors,
massage therapists and naturopathic physicians are also contained on the site.
The site contains a database of more than 3,000 chiropractors in the United
States. It is our goal to establish an online presence for the chiropractor by
developing a website as well as an e-mail account. This will initially be done
free-of-charge for the first six months. At the end of six months, the
chiropractor will have the option of staying online for an annual fee of $150 or
terminate the service. In the event these options prove of interest to
chiropractors, we plan to utilize similar options for other health care
practitioners.
The site also offers the following options and services:
SYMPTOMS AND REMEDIES: An extensive database of symptoms, diseases, and
medical conditions that offers viewers the opportunity to read short
descriptions of symptoms, diseases, or conditions, as well as view
associated herbal remedies and/or prescription medications commonly
used to treat conditions.
SHOPPING: A health food/health product "mall" with specialized stores,
shops, and services. The shopping section offers each store a home
page, unlimited product categories, unlimited product descriptions
and/or photos, as well as a secure e-commerce connection to complete
ordering transactions.
HEALTH CHAT: A chat room in which people can ask questions or chat
about health- related topics, concerns, and information. We also offer
chat sessions with experts in various fields who offer advice and
lectures, and interact with the Internet community in scheduled
question and answer sessions.
We are currently gathering data on the purchasing habits of consumers regarding
their vitamin and nutritional supplement purchases. We hope to use this
information in the future as an information source to develop an e-commerce
relationship with vitamin manufacturers and retailers.
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Healthmall.com is targeted to well-educated, technology adept women aged 25-54
who are proactive in seeking information to maintain their health and well-being
and reactive in addressing health and medical issues. Healthmall.com's target
market is thus predominantly female, as we believe they are the key healthcare
decision-makers within the household. According to International Data
Corporation, women are expected to represent approximately 51% of on-line users
in 1999, up from 46% in 1998. Healthmall.com believes that women represent an
attractive demographic group for advertisers since they have disproportionate
control over consumer spending in the United States. Industry experts estimate
that women make 75% of the household's healthcare decisions, control 66% of the
health dollars and spend 80% of a household's discretionary income.
.MD Domain Names
We sell and host .MD domain names directly from our Internet website, located at
www.GoHealth.MD. Anyone can access this site and acquire an available domain
name with the .MD extension. We have a strategic partnership with a Florida
company, Domain Name Trust ("DNT"), which has a licensing agreement with the
country of Moldova, a small Eastern European country which was assigned a
monopoly over the ".MD" top-level domain extension by the Internet Assigned
Numbers Authority ("IANA"), a United States government agency, in conjunction
with the United Nations' International Organization for Standardization.
A domain name is the equivalent of an address on Internet. Therefore, every site
on the Internet has a domain name identifying it. There are two types of
top-level domains, generic and country code. Generic domains were created for
use by the Internet public, while country code domains were created to be used
by each individual country as they deemed necessary.
In the Domain Name System ("DNS") naming of computers, a hierarchy of names
exists beginning with "top-level domain names" ("TLDs"). There are generic TLDs
(EDU, COM, NET, ORG, GOV, MIL, and INT), and the two letter country codes
("ccTLDs"). Under each TLD, a hierarchy of names may be created by extending
from the initial domain name. Generally, the structure under the generic TLDs is
very flat where organizations are registered directly under the TLD, and then
may determine what, if any further structure to employ.
We are highlighting the unlimited marketing potential of TLDs because medical
professionals commonly associate in large groups. A virtually unlimited number
of specialists in any given specialty will have the ability to use the .MD
domain name of their particular choice. An example of this would be a
chiropractor with the last name of Smith utilizing a domain such as
Backdoc.MD/Smith.
In addition to selling the .MD domain names outright to others, we own more than
40 domain names that end in the .MD extension. Examples of some of these names
include www.Ask.MD, www.Call911.MD, www.nutrition.MD, www.Family.MD. We believe
that these specific domain names may be particularly useful in the establishment
of additional websites. We believe the .MD extension is and will continue to be
a highly desired domain extension in the medical and health communities, and is
more appealing than comparable extensions of ".COM", ".NET", ".ORG".
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Domain Name Trust has been licensed to sell .MD domain extension registrations
by Moldova in the United States, Europe, Canada, and other English speaking
countries. In 1992, IANA appointed an individual employed by the Moldovan
government to be the Administrative Contact and Registrar of the .MD domain. In
May 1998, Domain Name Trust entered into an agreement with Moldova for the right
to market and register on behalf of the Republic of Moldova Internet domain
names with a .MD extension. The general rights and responsibilities of Domain
Name Trust under the terms of the Moldova Contract are as follows:
Domain Name Trust has the exclusive license to market and register on
behalf of the Republic of Moldova domain names under the .MD top level
domain in English speaking countries and certain non-English speaking
countries.
Domain Name Trust employs a technical administrator who oversees and
is solely responsible for the administration of all .MD domain names
sold in countries in which Domain Name Trust possesses marketing
rights. The technical administrator is also responsible for
maintaining and operating the primary domain name server system for
such names.
In return for the rights, Domain Name Trust pays the Republic of Moldova an
initial license fee and a fee for each name registered and for renewals. The
term of the agreement is twenty-five years, consisting of an initial term with
subsequent renewal periods to allow for minor contract modifications only. The
Moldova Contract provides that it is governed by the laws of the State of
Florida and the United States.
After entering into the Moldova Contract, both Moldova and Domain Name Trust
informed IANA of the change of Technical Administrator. IANA has confirmed this
change and routinely assigns to Domain Name Trust batches of numbers (or IP
addresses) which are then licensed by Domain Name Trust to registrants. At the
request of Domain Name Trust, attorneys in the Republic of Moldova recently
reviewed the Moldova Contract and have advised Domain Name Trust that the
Moldova Contract is valid and enforceable under Moldovan law.
We retained the services of MCOM Management Corp. ("MCOM") on November 16, 1999.
MCOM conducts marketing research in the Internet health industry and confers
with our management daily regarding our operations and the implementation of our
business plan. MCOM is also expected to provide investment relations for us by
interacting with brokerage firms and investment and acquisition candidates for
us.
Office Facilities
Our offices are located at 2051 Springdale Road, Cherry Hill, New Jersey, which
also houses the offices of Able Imaging, Inc., a wholly owned entity of William
D. Hanna, one of our directors. We do not pay rent to Mr. Hanna for such
facilities.
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MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION
Capturing a large physician network (medical doctors, chiropractors, dentists,
podiatrists, osteopaths) to view online advertising in exchange for the
establishment of websites and hosting services is one of our primary goals. We
intend to entice physicians to utilize our Internet website design services with
one of our Internet .MD domain extensions. We also intend to have advertisers,
such as pharmaceutical companies, underwrite physicians' cost of a .MD domain
and website in exchange for their viewing and involvement with Healthmall.com.
We believe the potential to have a few thousand of the hundreds of thousands of
physicians in the United States viewing our website also establishes a
significant potential for advertising revenue from entities which desire to sell
their products or services to such physicians. In our opinion, the medical
industry underutilizes advertising on the Internet. We intend to secure such
advertising through our marketing efforts.
Our .MD domain extensions, in our opinion, allow for easy recognition of a
physician's website. Physicians interested in the .MD domain extensions will be
offered discount packages to encourage them to participate in Healthmall.com. We
believe the presence of physicians participating on our Healthmall.com site also
establishes a significant potential for advertising revenue from entities
desiring to sell their products or services to physicians.
Healthmall.com
By developing Healthmall.com into a leading Internet information resource for
(i) alternative health care providers such as chiropractors and naturopathic
physicians and (ii) the use and application of herbs and vitamins, we believe we
will be able to generate substantial advertising revenues. We have entered into,
and intend to continue to enter into new distribution and business relationships
with entities that have significant reach on the Internet and are in similar
fields, such as pharmacy chains, Internet access providers and portals, as well
as other traditional media to build the Healthmall.com brand and drive traffic
to our site.
We believe websites which are located at familiar domains and contain health and
medical information possess a competitive advantage as many consumers may desire
to avoid searching for unfamiliar websites. We believe our website has a
familiar, easy to remember domain. Internet-related marketing and advertising
revenues are tied directly to the amount of 'hits' a site receives, or times the
site is visited. In the event we are able to generate a greater viewing market,
we expect to generate higher advertising and marketing revenues.
We are at varying stages of establishing links with websites possessing easy to
remember domain names. Since launching the site, we have developed advertising
relationships with the following companies: Onhealth.com, Dr. Koop.com,
Pharmor.com, Natraflex, The Simple Truth.com, Vivacity.com, Nature's Source's,
Permalean, Nutriceutical Technology Corporation, Northeast Health Institute and
Nourishing Foods, Inc. Many of these advertising contracts have been generated
through our agreement with Burst! Media. Although we hope that the familiarity
of website addresses will generate user traffic alone, we are also attempting to
expand the numbers of sponsors on our various sites and improve the content of
our site.
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We will continue to seek distribution agreements with leading search engine and
portal companies, as well as with major Internet access providers. Distribution
agreements serve to build our brand and drive significant traffic to the
Healthmall.com website. By increasing our brand exposure and traffic through
distribution agreements, we hope to have Healthmall.com become the most
effective means of advertising alternative health care products on the Internet.
Some of our current distribution relationships include:
THE GOTO.COM SEARCH ENGINE. This search engine is basically an
auction-type search engine that allows individual websites to bid for
a position in the search engine. Healthmall.com has almost 300 search
terms which appear on the first page of the search engine.
THE YAHOO SEARCH ENGINE. Healthmall.com also has rankings that permit
direct traffic to our site from the YAHOO search engine.
THE ALTA VISTA SEARCH ENGINE. Healthmall.com has rankings that permit
direct traffic to our site from the ALTA VISTA search engine as well
as search engine positioning with the entity known as REAL NAMES. This
positioning allows us to purchase rights on ALTA VISTA's search engine
to various keywords that appear at the top of ALTA VISTA search
results, which we hope will enable us to achieve a higher ranking in
such search results.
We are attempting to reach independent health food stores at this time to offer
them an online presence and to increase our database of retail natural food
stores. While GNC and Great Earth possess the largest market segments, and
Mother Nature.com is an Internet-based superstore that offers nutritional
products, the remainder of the market consists of approximately 8,000 small,
independent retailers with no uniformity. There is no ongoing consolidation of
independent health food stores in the United States and they are facing
increasing competition from store chains, such as GNC and Great Earth, as well
as online chains, such as Vitamins.com and Vitaminshop.com.
If even a small portion of the approximately 8,000 small, independent health
food retailers can be combined and linked at an Internet site such as
Healthmall.com, we believe they will have the opportunity to compete with the
superstores on a national level. We are attempting to achieve this through a
free offer that allows the independent health food store to get a free website
and free online shopping cart for six months. Following the six-month trial
period, if the independent health food store wishes to remain online, there is a
cost of $20 per month. This presence would allow the independent retailer the
opportunity to advertise their business on a national level, as well as to their
existing customers and prospective customers in their own community.
We believe the synergy between our .MD websites and Healthmall.com can benefit
the natural health food industry. We will therefore attempt to have independent
natural health food stores accept a presence on Healthmall.com either at no cost
or for a nominal fee in exchange for their agreement to utilize Healthmall.com
as their Internet home page. However, we currently do not possess the ability to
monitor such retailers' viewing and thus cannot guarantee they will ever use our
site as their homepage. We are willing to provide such discounted services to
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attract advertising revenues of natural health food product wholesalers who seek
additional retail outlets for their products.
Our technical services are being provided through World Wide Web Communications
of Cherry Hill, New Jersey. All of these services will be offered to the
individual retail store for a nominal fee, estimated to be between $500 and
$1000 annually, which includes the price of developing a home page and hosting
service. We may offer webpage development and hosting free of charge to
retailers in exchange for their agreement to utilize Healthmall.com as their
Internet home page, although we cannot guarantee they will ever use our site as
their homepage. These websites will consist of various manufacturers'
advertising.
One manner by which we hope to differentiate the Healthmall.com site from other
sources of health and wellness information is by continuing to focus on
alternative medicine. While other sites only devote portions of their content to
alternative medicine, we intend to focus predominantly on the use of herbs,
vitamins, and alternative health care providers such as chiropractors and
naturopathic physicians.
To further differentiate Healthmall.com from other Internet health sites, we
allow consumers to obtain information on specific diseases or conditions and
allergy information and participate in relevant discussion groups, among other
things. Healthmall.com provides updated health- related news articles from
around the world which are received every 20 minutes via PR Newswire. This
feature always includes a cover story on the Healthmall.com home page, as well
as hundreds of additional news articles accessible from Healthmall.com's home
page.
The licensing arrangement with Facts and Comparison Corporation, referred to in
"Business" above, which allows medication information to appear directly on
Healthmall.com, identifies one of our common goals. Very few of the several
informational options found on Healthmall.com are cobranded, or require transfer
to a site removed from Healthmall.com. Therefore, with few exceptions, a visitor
to Healthmall.com remains on Healthmall.com's pages. We perceive this retained
viewing as a competitive advantage in our attempt to generate advertising
revenues.
We may acquire or make investments in complementary businesses, technologies,
services or products if appropriate opportunities arise. From time to time we
engage in discussions and negotiations with companies regarding acquiring or
investing in such companies' businesses, products, services or technologies, and
we regularly engage in such discussions and negotiations in the ordinary course
of our business. Some of those discussions also contemplate the other party
making an investment in us. There can be no assurances that we will be able to
identify future suitable acquisition or investment candidates, or if we do
identify suitable candidates, that we will be able to make such acquisitions or
investments on commercially acceptable terms or at all. If we acquire or invest
in another company, we could have difficulty in assimilating that company's
personnel, operations, technology and software. In addition, the key personnel
of the acquired company may decide not to work for us. If other types of
acquisitions are made, we could have difficulty in integrating the acquired
products, services or technologies into our operations. These difficulties could
disrupt ongoing business, distract management and employees, increase expenses
and adversely affect results of operations. Furthermore, we may incur
indebtedness or issue equity securities to pay for any future acquisitions. The
issuance of equity securities would be dilutive to our existing stockholders. As
of the date of this prospectus, there are no agreements to enter into any
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material investment or acquisition transaction. The only such investment we have
made is with Dr. James Corea, a talk show radio host in the Philadelphia area.
Pursuant to our agreement with Dr. Corea, we will manage the Internet site
www.healthyfirst.com and share any profits on the sale of products generated
from the site with Dr. Corea on an even basis.
.MD Domain Names
We currently own and operate a website for the sale of .MD domain names. We
believe that our use of the domain name .MD carries significant marketability
and that medical specialists that perform elective procedures, such as plastic
or cosmetic surgeon have been increasing their spending on advertising revenues
as evidenced by viewing the yellow page book in the United States or major
regional magazines. We also believe that .MD is a natural and intuitive address
for those whose personal or corporate initials are involve the letters M and D,
those residing in the state of Maryland, and those whose title (i.e., managing
director) involves the letters M and D.
In conjunction with our offering of .MD domain names, we offer physician
websites and the hosting of these websites on our own server which is included
in the .MD domain name purchase price. The website is basically a templated
website that has been designed by World Wide Web Communications. In addition, we
sell other customized websites, which are also prepared by World Wide Web
Communications. Hosting of websites sold in conjunction with .MD domain names
are provided by Domain Name Trust, as more fully discussed in "Business."
The limited marketing of the .MD domain names and our related Internet services
which has occurred has consisted of advertising in medical journals, direct mail
to physicians, as well as a point of presence at various medical conventions.
Marketing
We intend to distribute and advertise our products and services through a
network of sales personnel, as well as major trade shows. An example of this
includes our recent participation at the Natural Health Food Expo in October
1999 in Baltimore, Maryland, as well as the recent Florida Chiropractic
Association convention in December 1999 in Naples, Florida, where our exhibit
booth won first prize for best exhibit display. Additionally, we plan to attend
large state medical conventions that offer large physician attendance, who are
the target audience of our exhibition marketing.
We will also use mailing lists, as well as E-mail and various selective media
outlets, such as the Journal of the American Medical Association and other
largely circulated medical and specialty medical journals. We hope to eventually
expand our operations to dentistry, podiatry, and chiropractic and will place
ads in these professional journals as well.
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Sales and Support Organization
We plan to add sales support/technical support persons to the sales group by end
of March 2000. We anticipate eventually dividing the country into four regions,
each with a sales manager and a sales team of two to four members under each
sales manager. An inside sales person is also expected to be added to handle
orders from customers, as well as provide customers with literature and product
information.
Management of Growth
We expect to experience significant growth in the number of our employees, the
scope of our operating and financial systems, and the geographic scope of our
Internet operations. This growth will result in new and increased
responsibilities for both existing and new management personnel. Our success
depends largely on the ability of our managers to operate effectively, both
independently and as a group. Our ability to effectively manage any such growth
will require that we continue to implement and improve our operational,
financial and management information systems and to train, motivate and manage
our employees. This will require the addition of new management personnel and
the development of additional expertise by existing management. There can be no
assurance that our management or other resources will be sufficient to manage
any future growth in our business or that we will be able to implement in whole
or in part our expansion program, and any failure to do so could have a material
adverse effect on our operating results.
We plan an aggressive growth strategy for our clientele and products. Our growth
strategy relies on our ability to raise further capital and upon the skills of
our management. There can be no assurance that we will be successful in these
endeavors. Forces that can contribute to the lack of success in implementing
this growth strategy include, among other: (i) regulatory bodies and
governmental regulations affecting our operations, (ii) availability of funding
on a timely basis, and (iii) functionality. If our ability to expand our network
infrastructure is constrained in any way we could lose customers and suffer
damage to our operating results.
Costs and Expenses
Since we are a new business in an industry niche still in its formative stages,
we cannot accurately project or give any assurance regarding management's
ability to implement our business operations, control our development and
operating costs and expenses. Consequently, even if we are successful in
implementing our planned commercial operations (of which there can be no
assurance), if management is not able to adequately control costs and expenses,
such operations may not generate any profit or may result in operating losses.
Business Interruptions
Our operations are dependent on our ability to protect our computer equipment
against damage from fire, earthquakes, power loss, telecommunications failures
and similar events. A significant portion of our computer equipment, including
virtually all of our equipment devoted to our Internet services, is located at
our facilities in Cherry Hill, New Jersey. Any equipment damage or failure that
causes interruptions in our operations could have a materially adverse effect on
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our business. We do not have an insurance policy covering such interruptions,
although we are investigating such coverage.
Additionally, Year 2000 problems may disrupt our operations which could result
in lost revenues and increased operating costs. Because our business depends on
computer software, we have assessed the Year 2000 readiness of our systems. We
are satisfied with our state of readiness, but we cannot make any assurances
that we will avoid the Year 2000 problem. Any problems arising from Year 2000
complications could potentially result in lost revenues and increased costs.
Security Risks
Our software and equipment are vulnerable to computer viruses or similar
disruptive problems caused by our customers or other Internet users. Computer
viruses or problems caused by third parties could lead to interruptions, delays
or cessation in service to our customers. Furthermore, inappropriate use of the
Internet by third parties could also potentially jeopardize the security of
confidential information stored in the computer systems of our customers. We do
not have product liability or other insurance to protect against risks caused by
computer viruses or other misuse of software or equipment by third parties.
Although we attempt to limit our liability to customers for these types of risks
through contractual provisions, no assurances can be given that these
limitations will be enforceable or effective.
We retain confidential customer information in our database. Therefore, it is
critical that our facilities and infrastructure remain secure and are perceived
by consumers to be secure. Despite the implementation of security measures, our
infrastructure may be vulnerable to physical break- ins, computer viruses,
programming errors or similar disruptive problems. A material security breach
could damage our reputation or result in liability.
Technology And Systems
Both of our websites, www.Healthmall.com and www.GoHealth.MD, are made available
with the latest Internet hardware and software technologies. Exodus IT-class
co-location facilities provide a secure, high availability and high bandwidth
space for our servers. This includes redundant OC-3 and OC-12 backbone
connections to the Internet, uninterruptible power supplies with diesel
generator backup, all housed in a copper-lined, earthquake-proof building.
Direct connections via "T-1" and DSL lines allow the main office to connect
seamlessly and reliably to the servers and the Internet. A farm of Intergraph
IS-8000 and IS80 mission-critical servers are housed behind a redundant F5
Big/IP switcher for complete software and hardware fault tolerance and load
leveling. These servers run Microsoft Windows NT Enterprise Server with Internet
Information Server 4.0, Active Server Pages with a proprietary page caching
system and publishing tools for Web page hosting and production management. The
resulting performance in preliminary tests shows dominance over other
competitive sites. All advertisement hosting and reporting is handled through
NetGravity Ad Server, a powerful ad management and forecasting toolset.
The website's Personal Health Tracker and Search features utilize Microsoft
SiteServer tools and technologies. This provides the customized web crawling,
user profile management, nightly process runs and e-mail support that the
Personal Health Tracker requires.
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Microsoft SQL Server databases are heavily used for all content, process
management and tracking needs. Offsite backups occur regularly throughout the
day to protect against a total system failure.
We believe the site is a very stable, scalable, and high performance solution
for Healthmall.com's current and future needs.
Competition
We currently face competition in the domain name registration business from
other registries for country code TLDs and from resellers, registrars and
registries of other top-level domains, such as .com, .net and .org, including
Network Solutions, Inc. In developing and distributing future products and
services for the Internet-based services markets, we face intense competition
and expect to have multiple competitors for each of the products or services,
which we may develop, market or sell. For example, with respect to our
healthcare and medical information portal we are competing with many companies
possessing greater experience and brand recognition, including Healtheon
Companies, Inc., DrKoop, Careinsite and Webmd. Increased competition could
result in pricing pressures, reduced sales, margins, profits, and/or market
share or the failure of our products to achieve or maintain market acceptance.
Furthermore, the industry in which we compete is characterized by rapid changes
and frequent product and service introductions.
Many of our current and potential competitors have significantly greater
financial, marketing, customer support, technical and other resources than we
do. Some of our competitors and potential competitors have longer operating
histories, greater name recognition, access to larger customer bases, more
established distribution channels and substantially greater resources. As a
result, they may be able to respond more quickly to new or changing
opportunities, technologies, standards or customer requirements.
Online Competitors
There is significant interest in health-related content among online consumers.
Demographic factors and the growth of online audiences suggest that the
popularity of this content will continue to increase. Similarly, major health
advertisers are showing increased levels of interest in the Internet. Some key
operators of health-related sites on the Internet today include:
DIVISIONS OR AFFILIATES OF PRINT PUBLISHERS; including Healthy Ideas
(Rodale Press), PHYS (Conde Nast), Thrive (owned by Oxygen Media),
MediConsult, Dr. Koop and HealthScout (a service of RX Remedy, Inc., a
market research firm.);
VENTURES OF ONLINE SERVICE FIRMS; including Better Health (iVillage)
and Thrive (owned by Oxygen Media), Medscape and WebMD;
PUBLIC SECTOR AND INSTITUTIONAL SITES; including the National institute
of Health, Mayo Clinic, InteliHealth and university sites. While
these sites compete for viewer time and attention, they do not
typically compete for advertising or transactional revenues;
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PORTALS/SEARCH ENGINES; principally the proprietary health-related
content presented to subscribers to America Online, MSN.com, Yahoo!,
Excite, etc. . .; and
INTERNET SITES OTHER THAN HEALTH-RELATED SITES; including general
interest sites, such as news sites and search engines, which often host
some health-related content in the context of other editorial
materials.
Regulation
Some computer applications and software are considered medical devices and are
subject to regulation by the United States Food and Drug Administration. We do
not believe that our current applications or services will be regulated by the
FDA. We may expand our application and service offerings into areas that subject
it to FDA regulation. We have no experience in complying with FDA regulations.
The practice of medicine and pharmacology requires licensing under applicable
state law. We have endeavored to structure our website and affiliate
relationships to avoid violation of state licensing requirements, but a state
regulatory authority may at some point allege that some portion of our business
violates these statutes. Any such allegation could result in a material adverse
effect on our business. Further, any liability based on a determination that we
engaged in the practice of medicine without a license could expose us to civil
or criminal liability. We do not maintain insurance against such liabilities.
We expect to earn a service fee when users on our website purchase prescription
pharmacy products from certain of our prospective Internet partners. The fee is
not based on the value of the sales transaction but rather may be based on a fee
per visit basis, which fee remains to be negotiated with our prospective
Internet partners. Federal and state "anti-kickback" laws prohibit granting or
receiving referral fees in connection with sales of pharmacy products that are
reimbursable under federal Medicare and Medicaid programs and other
reimbursement programs. Although there is uncertainty regarding the
applicability of these regulations to our Internet revenue strategy, we believe
that the service fees received from our Internet partners are for the primary
purpose of marketing and do not constitute payments that would violate federal
or state "anti-kickback" laws. However, if our program were deemed to be
inconsistent with federal or state law, we could face criminal or civil
penalties. Further, we would be required either not to accept any transactions
which are subject to reimbursement under federal or state healthcare programs or
to restructure our compensation to comply with any applicable anti-kickback laws
or regulations. In addition, similar laws in several states apply not only to
government reimbursement but also to reimbursement by private insurers. If our
activities were deemed to violate any of these laws or regulations, it could
cause a material adverse affect on our business, results of operations and
financial condition.
Results of Operations
We have not had revenue from operations since prior to May 31, 1997. GoHealth,
the subsidiary we acquired in November 1999, generated revenue since it was
incorporated in February 1999. The following discussion is based on the
unaudited pro forma combined consolidated financial statements as of May 31,
1999 and September 30, 1999, which present our financial position as if the
Merger had occurred on such dates. The May 31, 1999 pro forma statement of
operations was prepared utilizing our May 31, 1999 audited financial statements
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and GoHealth's audited financial statements for the periods from GoHealth's
inception (February 23, 1999) through May 31, 1999. The September 30, 1999, pro
forma combined consolidated statement of operations and pro forma consolidated
balance sheet was prepared utilizing GoHealth's audited balance sheet as of
September 30, 1999 and unaudited statement of operations which reflect the four
months ended September 30, 1999, and our unaudited financial statements as of
August 31, 1999, which reflect the three months ended August 31, 1999. The pro
forma combined consolidated statement of operations, and notes accompanying it,
is attached hereto and appear elsewhere in this prospectus. Our audited
financial statements for the fiscal years ended May 31, 1999 and 1998 are also
attached hereto and appear elsewhere in this prospectus.
GoHealth generated revenue of $400 through May 31, 1999, and $948 for the four
months ended September 30, 1999. As a consolidated entity we also generated $400
in revenue through May 31, 1999 and $948 for the four months ended September 30,
1999. Such revenues were derived from advertising revenue and sales of domain
names.
General and administrative expenses for GoHealth's year ended May 31, 1999 were
$20,764, while for the four months ended September 30, 1999, such expenses were
$88,800. On a consolidated basis as of May 31, 1999, our general and
administration expenses were $271,068. Of this amount, $250,304 was attributable
to Nugget. The consolidated general and administration expenses for the four
months ended September 30, 1999 were $99,288, of which $94,000 was attributable
to GoHealth. This cost is expected to increase as a result of our attempts to
expand our operations.
GoHealth's net loss as of May 31, 1999 was $20,644. As a consolidated entity, we
had net income of $1,701,962 as of May 31, 1999, which is primarily due to a
gain from the extinguishment of debts in the amount of $1,384,411 and a $588,499
gain on sale of property. The extinguished debts consisted primarily of accrued
salary to our former president and unsecured promissory notes to two of our
former officers. These debts were settled with the proceeds from our sale of
patented lode mining claims in Atlantic City, Wyoming.
GoHealth's net loss for the four months ended September 30, 1999 was $88,482. As
a consolidated entity, we had a net loss of $1,004,970 for the four months ended
September 30, 1999. The consolidated net loss for the four months ended
September 30, 1999, was primarily attributable to a $906,000 charge we recorded
in connection with the beneficial conversion feature related to our December 22,
1999, sale of warrants to purchase 302,000 shares of our common stock at an
exercise price of $1.00 per share. The warrants were sold for $1.00 per common
stock purchase warrant and resulted in our receipt of $302,000 in proceeds.
For the four months ended September 30, 1999, GoHealth's total assets were
$203,996, while as a consolidated entity our pro forma total assets were
$1,763,249. This change in assets was due to our sales in November and December
1999 of warrants to purchase a total of 802,000 shares of our common stock.
352,000 of these shares are issuable at $1.00 per share, and the remaining
400,000 are issuable at $2.00 per share. Warrants for 50,000 of these shares
were exercised at $1.00 per share on December 13, 1999. The increase in pro
forma total assets also reflects proceeds we will receive from the exercise of
shares being offered herein.
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For the four months ended September 30, 1999, GoHealth had total liabilities of
$102,122, and as a consolidated entity our total liabilities were $141,030.
Subsequent to the December 22, 1999 pro forma financial statements presented, we
sold 77,500 warrants, which are exercisable into 77,500 shares at $1.00 per
share. We received $77,500 in proceeds for the sale of these warrants on January
10, 2000. Also on January 10, 2000, we received $75,000 as the exercise price
for warrants to purchase 75,000 shares of our common stock.
The total stockholders' equity of GoHealth for the four months ended September
30, 1999, was $101,874. On a consolidated basis, our total stockholders' equity
for the four months ended September 30, 1999 was $1,622,219. This change in
total stockholders' equity is related to the change in total assets due to the
sale of warrants and the exercise thereof.
We expect to incur additional losses in the immediate future and at least until
the first quarter of 2002. In order to significantly increase revenues, we will
be required to incur significant advertising and promotional expenses as we
continue to expand our operations and become established in our industry. We
expect the number of advertisers on Healthmall.com to increase in the calendar
year 2000 because we expect traffic to the site to increase as a result of our
marketing efforts, which we expect will provide the ability to attract new
advertisers and increase our rates for advertising. We also expect the number of
advertisers to increase because we expect to secure the viewing of additional
health professionals and health food stores who will begin paying a monthly fee
and because we expect to establish additional strategic alliances regarding our
sales of .MD domain names.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
As a result of our merger, we have retained the services of our merger partner's
independent certified public accountant, Samuel Klein & Co., as of December 1,
1999, for all of our needs. Jones, Jensen & Company, our previous accountant
("Jones, Jensen"), was dismissed by our board of directors on December 1, 1999,
in connection with the Merger of GoHealth. This dismissal was unrelated to
Jones, Jensen's competence, practices and procedures. Jones, Jensen's financial
statement reports did not contain any adverse opinion or disclaimer of opinion,
but did include a going concern paragraph.
Jones, Jensen has informed us that it will provide the SEC a letter containing
its position with the foregoing statements regarding our change in certifying
accountant.
PROPERTY
Our offices are located at 2051 Springdale Road, Cherry Hill, New Jersey. Also
present at this location are the offices of Able Imaging, Inc., a wholly owned
entity of William D. Hanna, one of our directors. We do not pay rent to Mr.
Hanna for such facilities.
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MANAGEMENT
Directors and Executive Officers
- --------------------------------------------------------------------------------
Name Age Position(s) and Office(s)
- --------------------------- --------- -----------------------------------------
Dr. Leonard F. Vernon 44 President, Treasurer and Director
- --------------------------- --------- -----------------------------------------
William D. Hanna 54 Vice President, Assistant Secretary
and Director
- --------------------------- --------- -----------------------------------------
Kevin O'Donnell 47 Secretary
- --------------------------- --------- -----------------------------------------
Dr. Leonard F. Vernon, the founder of our subsidiary, GoHealth, became our
president, treasurer and a director on November 10, 1999. Dr. Vernon has managed
and maintained a private practice of chiropractic for over 20 years. He is
licensed to practice chiropractic in New Jersey, Delaware and Pennsylvania.
William D. Hanna became one of our directors and our vice president on November
10, 1999. Mr. Hanna attended Philadelphia Community College and has extensive
experience in real estate and site development. Previous to his retirement more
than five years ago, Mr. Hanna spent 20 years in the construction industry as a
steel erector and owner of his own business. In the past five years, Mr. Hanna
has served as the chief executive officer of a durable medical equipment company
and has also been a co-owner of a provider of discounted health care services.
Kevin O'Donnell became one of our directors on November 10, 1999. Mr. O'Donnell
is a 1976 graduate of Rutgers University (B.A. Political Science). From 1978 to
1996, he was employed by Burlington Industries as an operations manager and then
as Northeast Regional Sales and Marketing Manager. From 1990 until 1998, Mr.
O'Donnell was the Director of Operations for seven outpatient diagnostic imaging
centers.
Board of Directors
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and have qualified. Officers are
appointed to serve until the meeting of the Board of Directors following the
next annual meeting of stockholders and until their successors have been elected
and have qualified.
Our current directors did not timely file required Forms 3 after their
respective appointments on November 10, 1999, until December 28, 1999. Sandra
Vernon, the wife of one of our directors and our president, Dr. Leonard Vernon,
acquired more than 10% of our common stock in the GoHealth merger and filed a
Form 3 on December 28, 1999.
Based solely upon our review of Forms 3, 4 and 5 and amendments thereto
furnished to us under Rule 16a-3(a) since May 31, 1999, we are not aware of any
other person who was a director, officer, or beneficial owner of more than ten
percent of our common stock and who failed to file reports required by Section
16(a) of the Securities Exchange Act of 1934 in a timely manner.
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EXECUTIVE COMPENSATION
The following tables set forth information with respect to the compensation
received by our executive officers and directors for the last three fiscal years
and since May 31, 1999. No compensation in excess of $100,000 was awarded to,
earned by, or paid to any executive officer or director during the years ended
May 31, 1999, 1998 or 1997, or has been since May 31, 1999.
Annual Compensation
- ----------------------------------------------------------------------------
Name and Fiscal Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- --------------------- --------- ---------- -------------- ---------------
Dr. Leonard Vernon, 1999 -0-(1) -0- -0-
President
- --------------------- --------- ---------- -------------- ---------------
Tyson Schiff, 1999 -0- $500(2) -0-
President
- --------------------- --------- ---------- -------------- ---------------
Mary C. MacGuire, 1998 -0- -0- -0-
President
- --------------------- --------- ---------- -------------- ---------------
John W. MacGuire, 1997 -0- -0- -0-
President
- --------------------- --------- ---------- -------------- ---------------
Long Term Compensation
-------------------------------------------------------
Awards Payouts
---------------------------------- ---------------------
Restricted Securities
Name and Principal Fiscal Stock Underlying LTIP All Other
Position Year Award(s) Options/SARs Payouts Compensation
($) (#) ($) ($)
- --------------------- --------- --------- ------------ ---------- -------------
Dr. Leonard Vernon, 1999 -0- -0- -0- -0-
President
- --------------------- --------- --------- ----------- ---------- ----------
Tyson Schiff, 1999 -0- -0- -0- -0-
President
- --------------------- --------- --------- ----------- ---------- ----------
Mary C. MacGuire, 1998 -0- -0- -0- -0-
President
- --------------------- --------- --------- ----------- ---------- -----------
John W. MacGuire, 1997 -0- -0- -0- -0-
President
- --------------------- --------- --------- ----------- ---------- -----------
- --------------------------
(1) Dr. Leonard Vernon has never received compensation for his services.
However, in the event our revenues exceed $1,000,000 or at the discretion of the
board of directors, Dr. Vernon will receive an annual salary of approximately
$145,000. At such level of operations, we also expect to pay $75,000 to Kevin
O'Donnell, Secretary and Director of Operations, and $30,000 to William Hanna,
Vice President and Assistant Secretary.
(2) In October 1998, Tyson Schiff received a $500 bonus for serving as our
president and director.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Leonard Vernon founded GoHealth and is one of our directors, our president
and the husband of Sandra Vernon, our largest shareholder. In 1983, Dr. Vernon
received a disciplinary action by the New Jersey State Board of Medical
Examiners in which he was given an 18-month suspension of his license, 30 days
of which were to be active with a monetary penalty of $3000. Dr. Vernon failed
to perform the required community service and pay the fine and the suspension
was imposed for a full 18 months. This disciplinary action was taken after the
determination that Dr. Vernon's application to the Educational Commission of
Foreign Medical Graduates was misleading. Dr. Vernon currently possesses an
unrestricted license to practice chiropractic in the New Jersey, Pennsylvania
and Delaware and there is no pending disciplinary action against him in any of
the states in which he is licensed.
Our offices are located at 2051 Springdale Road, Cherry Hill, New Jersey, which
also houses the offices of Able Imaging, Inc., a wholly owned entity of William
D. Hanna, one of our directors. We do not pay rent to Mr. Hanna for such
facilities.
We have obtained a total of $38,000 pursuant to three working capital loans from
William Hanna Consultants, Inc., an entity controlled by William Hanna, one of
our directors. All of these notes are unsecured, require all interest and
principal be repaid in one lump sum and bear 5% interest per annum. A $25,000
April 26, 1999 Note was due to be repaid on May 26, 1999, and was extended
indefinitely. No additional consideration was tendered for this indefinite
extension. A $10,000 Note dated March 29, 1999, matures on March 29, 2000. A
$3,000 Note dated May 2, 1999 matures on May 2, 2000. We have not made any
payments of interest or principal upon either the March 29, 1999 Note or the May
2, 1999 Note.
Ken Kurtz currently owns less than 5% of our outstanding common stock. Prior to
the GoHealth merger, however, he owned in excess of 50% of the common stock. Mr.
Kurtz received 400,000 shares pursuant to a November 30, 1998 consulting
agreement with us whereby he agreed to assist in preparing employment
agreements, contracts and other filings required by the Commission and all other
necessary state and Federal regulatory bodies, and in referring to us an
independent auditor and attorney.
On June 22, 1998, for a $15,100 investment we issued 48,709 shares of common
stock to a designee of Park Street -- First Avenue, Ltd., a limited partnership
organized under the laws of the State of Utah. Ken Kurtz, being a general
partner of First Avenue, Ltd. and the president of Park Street, indirectly
controls such shares.
According to a Financial Consulting Agreement between us and Park Street
Investments, Inc. executed on March 5, 1998, Park Street assisted with our
administration and recapitalization. Park Street also agreed to actively pursue
and negotiate a merger or business combination with a third party on our behalf.
GoHealth was introduced to us through the efforts of Kurtz and Park Street. Park
Street paid all costs associated with these responsibilities through the
GoHealth merger.
38
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning ownership of our
common stock as of December 1, 1999. The table discloses each entity known to be
the beneficial owner of more than five percent (5%) of our common stock. The
table also shows the stock holdings of our directors, as well as the shares held
by directors and executive officers as a group. The notes accompanying the
information in the table below are necessary for a complete understanding of the
figures provided.
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
- ------------------------------------- ---------------------- ------------------
MCOM Management
Corporation 875,000(1) 18.7%(2)
350 Fifth Avenue, Suite 5807
New York, NY 10118
- -------------------------------------- ---------------------- ---------------
Sandra Vernon
2051 Springdale Road 2,000,000 47.3%
Cherry Hill, NJ 08003
- -------------------------------------- ---------------------- ---------------
William D. Hanna
2051 Springdale Road 615,000(3) 14.2%(4)
Cherry Hill, NJ 08003
- -------------------------------------- ---------------------- ---------------
Dr. Leonard Vernon
2051 Springdale Road 2,000,000(5) 47.3%
Cherry Hill, NJ 08003
- -------------------------------------- ----------------------- --------------
Kevin O'Donnell
2051 Springdale Road 615,000(6) 14.2%(7)
Cherry Hill, NJ 08003
- -------------------------------------- ----------------------- --------------
Executive Officers and 3,230,000 72.5%
Directors as a Group
- -------------------------------------- ----------------------- --------------
(1) Includes 450,000 shares of our common stock which may be acquired upon
the exercise of outstanding warrants held by MCOM.
(2) Such percentage presumes the issuance of those shares of common stock
referenced in note 1 above.
(3) Includes 115,000 shares of our common stock which may be acquired upon
the exercise of outstanding stock options held by Mr. Hanna.
(4) Such percentage presumes the issuance of those shares of common stock
referenced in note 3 above.
(5) Includes 2,000,000 shares owned by Sandra Vernon, the wife of Dr.
Leonard Vernon. Dr. Vernon disclaims beneficial ownership of such shares.
(6) Includes 115,000 shares of our common stock which may be acquired upon
the exercise of outstanding stock options held by Mr. O'Donnell.
(7) Such percentage presumes the issuance of those shares of common stock
referenced in note 6 above.
39
<PAGE>
SELLING STOCKHOLDERS
The shares being offered for resale by the selling stockholders consist of (i)
shares of common stock, (ii) shares of common stock issuable upon exercise of
warrants to purchase common stock and (iii) shares of common stock issuable upon
exercise of options to purchase common stock.
The shares being offered hereby are being registered to permit public secondary
trading, and the selling stockholders may offer all or part of the shares for
resale from time to time. However, the selling stockholders are under no
obligation to sell all or any portion of such shares nor are they obligated to
sell any shares immediately under this prospectus. All information with respect
to share ownership has been furnished by the selling stockholders.
MCOM Management Corp. ("MCOM") is offering all 875,000 shares of our common
stock which it beneficially owned as of January 11, 1999. On November 16, 1999,
we entered into a Management Consulting Agreement with MCOM Management Corp.
("MCOM") whereby MCOM agreed to conduct marketing research in the Internet
health industry. MCOM also confers with our management daily regarding our
operations and implementing our business plan. MCOM is also expected to provide
investment relations for us by interacting with brokerage firms and investment
and acquisition candidates for us. We are required to compensate MCOM through
(i) $5,000 per month through October 2000, (ii) 300,000 shares of our common
stock and (iii) warrants to purchase 500,000 shares of our common stock, with
the first 100,000 shares exercisable at $1.00 per share and the remaining
400,000 shares exercisable at $2.00 per share. On December 13, 1999, MCOM
exercised warrants to purchase 50,000 shares of our common stock and tendered
$50,000 constituting the $1.00 warrant exercise price. The exercise of such
50,000 shares at $1.00 per share was conducted in lieu of MCOM's agreement to
provide us with a $100,000 bridge loan, which was to accrue interest at 10% per
annum. We are required to register the shares of our common stock beneficially
owned by MCOM as acquired in the above manner on or before January 15, 2000. In
the event we do not file a registration statement with the Securities and
Exchange Commission on or before such date, we are required to issue MCOM an
additional 100,000 shares of our common stock and warrants to purchase an
additional 100,000 shares of our common stock, all of which shares shall
additionally be registered with the Commission.
40
<PAGE>
MCOM also participated in our November 1999 private placement of warrants. MCOM
tendered $75,000 for warrants to purchase 75,000 shares of our common stock, and
on January 10, 2000, exercised such warrants by tendering $75,000 for the 75,000
shares. This purchase and exercise of warrants increased MCOM's total ownership
in us to 875,000 shares, all of which are being offered.
As of January 11, 2000, Sandra Vernon owned 2,000,000 shares of our common stock
which she received in connection with the GoHealth merger. One of our directors
and our president, Dr. Leonard Vernon is her husband. Sandra Vernon bought the
2,000,000 shares from GoHealth upon its inception for $2,000. Sandra Vernon is
offering to sell 100,000 of these shares. If she sells all such shares, she
would then beneficially own 1,900,000 shares.
The following selling stockholders beneficially own shares of our common stock
as a result of a private placement of warrants to purchase shares of our common
stock which we effected on December 22, 1999. Each of these warrants were
purchased for $1.00, and have an exercise price of $1.00 per share. None of
these entities have ever had any position, office or other material relationship
with us or GoHealth. Below are the number of shares of our common stock
beneficially owned by these selling stockholders as of January 11, 2000, and the
number of shares of common stock being offered by the selling stockholders.
Because the selling stockholders may sell all or part of their shares, no
estimates can be given as to the number of shares of common stock that will be
held by the selling stockholders upon termination of any offering made hereby.
Beneficial Ownership Securities
of Common Stock Offered
Selling Stockholder Prior to Sale Hereby
- ------------------- ------------- ------------
Martin Ciner 24,000 20,000
Michael Marks 23,000 15,000
Scott Hankinson 108,000 100,000
Marketing Management
Professionals 19,000 15,000
Joseph McGowen 19,000 15,000
Robert Lipinski 54,000 50,000
Thomas Capato 14,000 10,000
Frank Casey 23,000 15,000
Anthony Iancale 6,000 2,000
Thomas Flynn, Sr. 10,000 2,000
Thomas Flynn, III 14,000 10,000
Dawn Polizzi 9,000 5,000
Anthony Pietrafesa 15,332 10,000
Mark Keminosh 16,000 8,000
Joseph Digaetano 29,000 25,000
Alexander Zlatnik 10,500 2,500
41
<PAGE>
The remaining selling stockholders received options to purchase shares of our
common stock in connection with the GoHealth merger. They had received such
options in recognition services they had rendered to GoHealth. Such options are
exercisable at prices ranging from $0.50 to $1.50, with the exception of the
options held by Harvey Benn and Frank Gettson, which have an exercise price of
$1.00 per share, but which price is subject to a fair market value revision.
Below are the number of shares of our common stock beneficially owned by these
selling stockholders as of January 11, 2000, and the number of shares of common
stock being offered by the selling stockholders. Because the selling
stockholders may sell all or part of their shares, no estimates can be given as
to the number of shares of common stock that will be held by the selling
stockholders upon termination of any offering made hereby.
Beneficial Ownership Securities
of Common Stock Offered
Selling Stockholder Prior to Sale Hereby
- ------------------- ------------------- ----------
Millennium Consulting, Inc 30,000 30,000
Gary Crooks 5,000 5,000
John Madden 5,000 5,000
Harvey Benn 170,000 150,000
Frank Gettson 45,000 25,000
J. Eric Kishbaugh 44,000 20,000
We agreed with the selling stockholders to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a registration
statement on Form SB-2, of which this prospectus is a part, with respect to the
resale of the shares of common stock, and have agreed to prepare and file such
amendments and supplements to the registration statement as may be necessary to
keep the registration statement effective for one year following the date it is
declared effective.
PLAN OF DISTRIBUTION
The shares may be sold or distributed from time to time by the selling
stockholders or by pledgees, donees or transferees of, or successors in interest
to, the selling stockholders, directly to one or more purchasers (including
pledgees) or through brokers, dealers or underwriters who may act solely as
agents or may acquire shares as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices, which may be changed. The distribution of the shares
may be effected in one or more of the following methods:
o Ordinary brokers' transactions, which may include long or short sales;
42
<PAGE>
o Transactions involving cross or block trades or otherwise on the OTC
Bulletin Board;
o Purchases by brokers, dealers or underwriters as principals and resale
by such purchasers for their own accounts pursuant to this prospectus;
o "At the market" to or through market makers or into an existing market
for the common stock;
o In other ways not involving markets makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
o Through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise); or
o Any combination of the foregoing, or by any other legally available
means.
In addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in short sales of shares in the course of hedging
the positions they assume with the selling stockholders. The selling stockholder
may also enter into option or other transactions with broker-dealers that
require the delivery by such broker-dealer of the shares, which shares may be
resold thereafter pursuant to this prospectus.
Brokers, dealers, underwriters or agents participating in the distribution of
the shares may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders, the purchasers of shares for whom
such broker-dealers may act as agent or to whom they may sell as principal, or
both (which compensation as to a particular broker-dealer may be in excess of
customary commissions). The selling stockholders and any broker-dealers acting
in connection with the sale of the shares hereunder may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act of 1933,
and any commissions received by them and any profit realized by them on the
resale of shares as principals may be deemed underwriting compensation under the
Securities Act of 1933. Neither Nugget nor the selling stockholders can
presently estimate the amount of such compensation, nor knows of any existing
arrangements between the selling stockholders and any other stockholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the shares.
We will not receive any proceeds from the sale of the shares pursuant to this
prospectus. We have agreed to bear the expenses of the registration of the
shares, including legal and accounting fees, and such expenses are estimated to
be approximately $73,100.
We have informed the selling stockholders that certain anti-manipulative rules
contained in Regulation M under the Securities Exchange Act of 1934 may apply to
43
<PAGE>
their sales in the market and has furnished the selling stockholders with a copy
of such rules and have informed them of the need for delivery of copies of this
prospectus.
The selling stockholders may also use Rule 144 under the Securities Act of 1933
to sell the shares if they meet the criteria and conform to the requirements of
such Rule.
DESCRIPTION OF SECURITIES
The following is a summary description of our capital stock and certain
provisions of our Amended Articles of Incorporation and Bylaws, copies of which
have been incorporated by reference as exhibits to the registration statement of
which this prospectus forms a part. The following discussion is qualified in its
entirety by reference to such exhibits. We have also included a summary
description of only those options and warrants held by selling stockholders
which does not describe all our outstanding options and warrants.
Our authorized capital stock consists of 25,000,000 shares of common stock, par
value $0.01. As of January 11, 2000, we had 4,224,604 shares of common stock
issued and outstanding. We have reserved 1,321,500 shares of common stock for
issuance pursuant to outstanding options and warrants.
Common Stock
The holders of the common stock (i) have equal and ratable rights to dividends
from funds legally available therefor, when, as and if declared by our Board of
Directors; (ii) are entitled to share ratably in all of the assets available for
distribution to holders of common stock upon liquidation, dissolution or winding
up of our affairs; (iii) do not have pre-emptive, subscription or conversion
rights (there are no redemption or sinking fund provisions applicable to our
common stock), and (iv) are entitled to one non-cumulative vote per share on all
matters which shareholders may vote at all meetings of shareholders. All shares
of common stock now outstanding are fully paid for and non-assessable and all
shares which are part of this offering, when issued, will be fully paid for and
non-assessable.
Options and Warrants
Pursuant to the Merger Agreement, discussed above in "Business," we assumed the
rights and obligations under all of our merging partner's outstanding stock
options and warrants. We issued replacement options and warrants to the holders
of our merging partner's options and warrants with the same terms. All holders
of such options and warrants expressly agreed upon the exercise of such
securities to accept shares of our common stock.
As a result of the Merger, we now have outstanding options which are exercisable
into a total of 465,000 shares of our common stock at prices ranging from $0.50
44
<PAGE>
to $1.50 per share, with the exception of 175,000 options which have an exercise
price of $1.00 per share, which is subject to a fair market value revision.
Additionally, we have warrants outstanding which are exercisable into a total of
856,500 shares of our common stock at prices ranging from $1.00 to $2.50 per
share. No other voting or equity securities are authorized or issued and no
other securities convertible into voting stock are authorized or issued.
LEGAL MATTERS
The validity of the shares of common stock offered in this prospectus has been
passed upon for us by Kevin S. Woltjen, P.C., 900 Jackson Street, Suite 600,
Dallas, Texas 75202, 214-712- 5673.
EXPERTS
The financial statements of Nugget Exploration, Inc. for the fiscal years ending
May 31, 1999, and 1998 appearing in this prospectus and registration statement
have been audited by Jones, Jensen & Company, independent auditors, as set forth
in their reports thereon, appearing elsewhere herein and are included in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing. Financial statements for Nugget Exploration, Inc.
through September 30, 1999, appearing in this prospectus and registration
statement have been audited by Samuel Klein & Co., independent auditors, as set
forth in their reports thereon, appearing elsewhere herein and are included in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy any report, proxy or other
information we file with the Commission at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices. You may obtain information on the operation of the Public Reference
Room by calling the Commission at 1-800-SEC-0330. In addition, we file
electronic versions of these documents on the Commission's Electronic Data
Gathering Analysis and Retrieval, or EDGAR, system. The Commission maintains a
website at http://www.sec.gov that contains reports, proxy statements and other
information filed with the Commission.
We have filed a registration statement on Form SB-2 with the Commission to
register the shares of our common stock to be sold by the selling stockholders.
This prospectus is part of that registration statement and, as permitted by the
Commission's rules, does not contain all of the information set forth in the
registration statement. For further information with respect to us or our common
45
<PAGE>
stock, you may refer to the registration statement and to the exhibits and
schedules filed as part of the registration statement. You can review a copy of
the registration statement and its exhibits and schedules at the public
reference room maintained by the Commission, and on the Commission's website, as
described above. You should note that statements contained in this prospectus
that refer to the contents of any contract or other document are not necessarily
complete. Such statements are qualified by reference to the copy of such
contract or other document filed as an exhibit to the registration statement.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Securities
Transfer & Trust, Inc., 12039 West Alameda Parkway, Lakewood, Colorado 80228,
telephone 303-986-5400.
FINANCIAL STATEMENTS
Attached to this prospectus are our financial statements for the fiscal years
ending May 31, 1999, and May 31, 1998, as audited by Jones, Jensen & Company.
Financial statements for the operations of GoHealth through September 30, 1999,
were audited by Samuel Klein & Co. and are attached hereto. Unaudited pro forma
consolidated financial statements as of September 30, 1999, are also attached
hereto.
46
<PAGE>
CONTENTS
Independent Auditors' Report.................................................F-2
Balance Sheets...............................................................F-3
Statements of Operations.....................................................F-4
Statements of Stockholders' Equity (Deficit).................................F-5
Statements of Cash Flows.....................................................F-7
Notes to the Financial Statements............................................F-9
F-1
<PAGE>
[Letterhead of Jones, Jensen & Company]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Nugget Exploration, Inc.
(A Development Stage Company)
Casper, Wyoming
We have audited the accompanying balance sheets of Nugget Exploration, Inc. (a
development stage company) as of May 31, 1999 and 1998, and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
years ended May 31, 1999, 1998 and 1997 and from inception on July 24, 1980
through May 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 audits.
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 evaluating the overall financial statement presentation.
We believe that our audits provide 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 Nugget Exploration, Inc. (a
development stage company) as of May 31, 1999 and 1998, and the results of its
operations and its cash flows for the years ended May 31, 1999, 1998 and 1997
and from inception on July 24, 1980 through May 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's recurring losses from operations and working
capital deficit raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are also described in Note
2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
July 21, 1999
The accompanying notes are an integral part of these
financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
MAY 31,
1999 1998
---- ----
CURRENT ASSETS
<S> <C> <C>
Cash $ 6,180 $ 7,010
----------------- -------------------
Total Current Assets 6,180 7,010
----------------- -------------------
OTHER ASSETS
Patented lode mining claims held for sale (Note 4) - 111,502
----------------- -------------------
Total other assets - 111,502
----------------- -------------------
TOTAL ASSETS $ 6,180 $ 118,512
================= ===================
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 20,465 $ 147,553
Accrued payroll - related party (Note 5) - 651,389
Notes payable - related parties (Note 3) - 624,642
Accrued interest - related parties (Note 3) - 591,652
Notes payable (Note 6) 7,380 29,714
Accrued interest (Note 6) 8,702 27,635
----------------- -------------------
TOTAL CURRENT LIABILITIES 36,547 2,072,585
----------------- -------------------
TOTAL LIABILITIES 36,547 2,072,585
----------------- -------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 50,000,000 shares authorized
of $0.01 par value; 697,117 and 48,407
shares issued and outstanding, respectively 6,971 484
Additional paid-in capital 3,536,930 3,342,317
Deficit accumulated during the development stage (3,574,268) (5,296,874)
----------------- -------------------
Total Stockholders' Equity (Deficit) (30,367) (1,954,073)
----------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 6,180 $ 118,512
================= ===================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Statements of Operations
From
Inception on
July 24,
For the Years Ended 1980 Through
May 31, May 31,
1999 1998 1997 1999
---------------- ------------------ ----------------- -------------------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
---------------- ------------------ ----------------- -------------------
EXPENSES 250,304 78,524 78,967 5,547,178
---------------- ------------------ ----------------- -------------------
NET LOSS FROM OPERATIONS (250,304) (78,524) (78,967) (5,547,178)
---------------- ------------------ ----------------- -------------------
OTHER INCOME
Gain on sale of asset (Note 4) 588,499 - - 588,499
---------------- ------------------ ----------------- -------------------
Total Other Income 588,499 - - 588,499
---------------- ------------------ ----------------- -------------------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 338,195 (78,524) (78,967) (4,958,679)
---------------- ------------------ ----------------- -------------------
EXTRAORDINARY ITEM (Note 7)
Gain on extinguishment of debt 1,384,411 - - 1,384,411
---------------- ------------------ ----------------- -------------------
Total Extraordinary Item 1,384,411 - - 1,384,411
---------------- ------------------ ----------------- -------------------
NET INCOME (LOSS) $ 1,722,606 $ (78,524) $ (78,967) $ (3,574,268)
================ ================== ================= ===================
BASIC INCOME (LOSS) PER
SHARE OF COMMON STOCK
Before extraordinary items $ 0.85 $ (1.62) $ (1.63)
Extraordinary items 3.50 - -
---------------- ------------------ -----------------
Basic Income (Loss) Per
Share of Common Stock $ 4.35 $ (1.62) $ (1.63)
================ ================== =================
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 396,162 48,407 48,407
================ ================== =================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
At inception on July 24, 1980 - $- $- $ -
Common stock issued for property
at approximately $19.62 per share 10,452 104 204,940 -
Common stock issued for cash
at approximately $30.33 per share 2,374 24 71,976 -
Common stock issued for cash
at approximately $77.50 per share 9,677 97 749,903 -
Stock offering costs - - (18,854) -
Common stock issued for cash
at approximately $77.52 per share 258 3 19,997 -
Common stock issued for cash
at approximately $96.68 per share 16,129 161 2,499,839 -
Stock offering costs - - (482,517) -
Stock issued for property
at approximately $96.68 per share 2,581 26 249,502 -
Warrant issued for cash - - 100 -
Common stock issued for cash
and services at approximately
$43.41 per share 645 6 27,994 -
Common stock issued for services
at approximately$3.10 per share 323 3 997 -
Common stock issued for debt
at approximately $3.10 per share 5,968 60 18,440 -
Net loss for the period from
inception on July 24, 1980 to
May 31, 1995 - - - (5,103,532)
------------------ ----------- ------------- -------------------
Balance, May 31, 1995 48,407 484 3,342,317 (5,103,532)
Net loss for the year ended
MAY 31, 1996 - - - (35,851)
------------------ ----------- ------------- -------------------
Balance, May 31, 1996 48,407 $ 484 $ 3,342,317 $(5,139,383)
------------------ ----------- ------------- --------------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
------ ------ ------- -----
<S> <C> <C> <C> <C>
Balance, May 31, 1996 48,407 $ 484 $ 3,342,317 $ (5,139,383)
Net loss for the year ended
May 31, 1997 - - - (78,967)
-------------- --------------- ----------------- --------------------
Balance, May 31, 1997 48,407 484 3,342,317 (5,218,350)
Net loss for the year ended
May 31, 1998 - - - (78,524)
-------------- --------------- ----------------- --------------------
Balance, May 31, 1998 48,407 484 3,342,317 (5,296,874)
Common stock issued for cash
$0.31 per share 48,710 487 14,613 -
Common stock issued for services
at $0.31 per share 600,000 6,000 180,000 -
Net income for the year ended
May 31, 1999 - - - 1,722,606
-------------- --------------- ----------------- --------------------
Balance, May 31, 1999 697,117 $ 6,971 $ $ 3,536,930 $ (3,574,268)
============== =============== ================= ====================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
July 24,
For the Years Ended 1980 Through
May 31, May 31,
1999 1998 1997 1999
-------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) $ 1,722,606 $ (78,524) $ (78,967) $ (3,574,268)
Adjustments to reconcile net loss to
changes in operating assets and
liabilities:
Stock issued for services, property and
debt 186,000 - - 550,571
Gain on sale of asset (588,499) - - (588,499)
Gain on extinguishment of debt (1,384,411) - - (1,384,411)
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses 664 74,709 73,907 1,271,340
Increase (decrease) in accounts payable (90,611) 10,803 4,932 56,942
------------- ------------ ------------- --------------
Net Cash Provided (Used) by
Operating Activities (154,251) 6,988 (128) (3,668,325)
------------- ------------ ------------- --------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Investment in property - - - (111,502)
Cash received on sale of property 700,000 - - 700,000
------------ ------------ ------------- --------------
Net Cash Provided by
Investing ActivitieS 700,000 - - 588,498
------------ ------------ ------------- --------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Sale of common stock for cash - net of
stock offering costs 15,100 - - 2,993,330
Cash payments of notes payable - related (561,679) - - (561,679)
Proceeds from notes payable - - - 654,356
------------ ------------ ------------- --------------
Net Cash Provided (Used) by
Financing Activities (546,579) - - 3,086,007
------------ ------------ ------------- --------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (830) 6,988 (128) 6,180
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 7,010 22 150 -
------------ ------------ ------------- --------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 6,180 $ 7,010 $ 22 $ 6,180
============ ============ ============== ==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
From
Inception on
July 24,
For the Years Ended 1980 Through
May 31, May 31,
1999 1998 1997 1999
-------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
SUPPLEMENTAL CASH FLOW
INFORMATION
CASH PAID FOR:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services rendered $ 186,000 $ - $ - $ 200,000
Common stock issued for debt relief $ - $ - $ - $ 18,500
Common stock issued for property $ - $ - $ - $ 249,528
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-8
<PAGE>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
May 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND HISTORY
Nugget Exploration, Inc. (the Company) was incorporated under the
laws of Nevada on July 24, 1980 for the purpose of exploring for
and developing uranium, gold and other mineral properties. The
Company has had limited operations to date and its activities have
consisted primarily of raising equity capital and the acquisition
and exploration of mineral properties; accordingly, the Company is
considered to be a development stage enterprise as defined in SFAS
7. Current operations are being funded by borrowings from the
Company's officers.
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a May 31 calendar
year end.
b. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments
with maturities of three months or less at the time of
acquisition.
c. Basic Loss Per Share
The computations of basic loss per share of common stock are based
on the weighted average number of shares outstanding during the
period of the financial statements.
d. Provision for Taxes
At May 31, 1999, the Company had net operating loss carryforwards
of approximately $3,500,000 that may be offset against future
taxable income through 2014. No tax benefit has been reported in
the financial statements, because the Company believes there is a
50% or greater chance the carryforwards will expire unused.
Accordingly, the potential tax benefits of the loss carryforwards
are offset by a valuation allowance of the same amounts.
e. 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 disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F-9
<PAGE>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
May 31, 1999 and 1998
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company
does not have significant cash or other material assets, nor does
it have an established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. It
is the intent of the Company to seek a merger with an existing,
operating company. Until that time, shareholders of the Company
have committed to meeting its minimal operating needs.
NOTE 3 - NOTES PAYABLE - RELATED PARTIES
<TABLE>
<CAPTION>
Notes payable - related parties at May 31, 1999 and 1998 consisted
of the following:
1999 1998
----------------- -----------------
<S> <C> <C>
Note payable to officers of the Company,
interest at 12% per annum, due on demand,
unsecured. $ - $ 155,203
Notes payable to an officer of the Company,
interest at 11% to 12.75%, due on demand,
unsecured. - 434,073
Note payable to a related party bearing interest
at 2% over prime, due on demand, unsecured. - 34,166
Note payable to a related party bearing interest
at 2% over prime, due on demand, unsecured. - 1,200
-------- --------------
Totals - 624,642
ACCRUED INTEREST - 591,652
--------------- ---------------
TOTAL AMOUNTS DUE $ - $ 1,216,294
=============== ===============
</TABLE>
Since inception of the Company, the President and Treasurer of the
Company had advanced money to the Company without collateral and
paid certain expenses on behalf of the Company, which totaled
$624,642 at May 31, 1998. During the year ended May 31, 1999, the
Company settled the amount in full, including accrued interest
thereon.
F-10
<PAGE>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
May 31, 1999 and 1998
NOTE 4 - PATENTED LODE MINING CLAIMS SALE
The Company acquired patented lode mining claims in Atlantic City,
Wyoming for the purpose of mining gold. During the year ended May
31, 1999, the mining claims were sold at a gain of $588,499.
NOTE 5 - ACCRUED PAYROLL - RELATED PARTY
The Company had accrued salary to the Company's former President.
At May 31, 1999 and 1998, the amounts due were $-0- and $651,389,
respectively.
NOTE 6 - NOTES PAYABLE
Notes payable at May 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Note payable to an individual, interest at 9%
per annum, due on demand, unsecured. $ 2,290 $2,290
Note payable to an individual, interest at 9%
per annum, due on demand, unsecured. 5,090 5,090
Notes payable to a company, interest at 10.5% -
12.75%, due on demand, unsecured. - 22,334
------------- -----------------
Totals 7,380 29,714
Accrued interest 8,702 27,635
------------- -----------------
Total Amounts Due $ 16,082 $ 57,349
============= =================
</TABLE>
F-11
<PAGE>
NUGGET EXPLORATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
May 31, 1999 and 1998
NOTE 7 - EXTRAORDINARY ITEM
During the year ended May 31, 1999, the Company recognized a gain
from extinguishment of debt in the amount of $1,384,411. FASB
Statement No. 4 requires that gains and losses from extinguishment
of debt be reported as extraordinary items. Due to the Company's
net operating loss carryforwards, tax effects are not considered
in the calculation. The gain on extinguishment of debt was
calculated as follows:
<TABLE>
<CAPTION>
Balance, Gain on Debt Balance,
May 31, Cash Extinguish- May 31,
1998 Payments ments Additions 1999
------------- ------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Accounts payable $ 147,553 $ (92,342) $ (36,476) $ 1,730 $ 20,465
Accrued payroll -
related party 651,389 - (651,389) - -
Notes payable -
related parties 624,642 (561,679) (62,963) - -
Accrued interest -
related parties 591,652 - (591,652) - -
Notes payable 29,714 - (22,334) - 7,380
ACCRUED INTEREST 27,635 - (19,597) 664 8,702
------------- ------------- ------------- ---------- -------------
TOTAL $ 2,072,585 $ (654,021) $ (1,384,411) $ 2,394 $ 36,547
============= ============= ============= ========== =============
</TABLE>
F-12
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
F-13
<PAGE>
[Letterhead of Samuel Klein and Company]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
GOHEALTH.MD, Inc.
(A Development Stage Company)
Cherry Hill, New Jersey 08003
We have audited the accompanying balance sheet of GOHEALTH.MD, Inc. (A
Development Stage Company) as of September 30, 1999 and the related statements
of operations, stockholders= equity and cash flows for the period from inception
(February 23, 1999) to September 30, 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GOHEALTH.MD, Inc. (A
Development Stage Company) as of September 30, 1999 and the results of its
operations and its cash flows for the initial period then ended in conformity
with generally accepted accounting principles.
/S/
SAMUEL KLEIN AND COMPANY
Newark, New Jersey
December 27, 1999
F-14
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
Current Assets:
Cash $109,016
Accounts receivable 48
Stock subscription receivable 1,400
Domain names - available for sale 27,577
----------
138,041
Other Assets:
Website costs 65,955
$203,996
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 37,806
Accrued expenses 4,694
Notes payable 38,000
Due to officer 21,622
----------
Total Liabilities 102,122
Stockholders' Equity:
Common stock ($.001 par value, 10,000,000 shares
authorized, 3,080,000 shares issued and outstanding) 3,080
Additional paid-in capital 207,920
Deficit accumulated during the development stage (109,126)
----------
Total Stockholders' Equity 101,874
$203,996
===========
- --------------------
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 23, 1999)
TO SEPTEMBER 30, 1999
Sales:
Advertising revenue $ 48
Domain name sales 1,300
Cost of Sales (910)
Gross Profit 438
Other Expenses:
General and administrative expenses 82,532
Marketing and licensing fees 26,338
Interest expensE 694
--------------
109,564
--------------
Net Loss $(109,126)
==============
- --------------------
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (FEBRUARY 23, 1999)
TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
$.001 Par Value Additional During the Total
Number Paid-In Development Stockholders'
of Shares Amount Capital Stage Equity
--------- --------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
At Inception on February 23, 1999 $ $ $ $ $
Issuance of Common Stock
at $.001 per share 3,000,000 3,000 - - 3,000
Issuance of Shares and Warrants
in Private Placement 76,000 76 197,524 - 197,600
Issuance of Shares and
Warrants for Services 4,000 4 10,396 - 10,400
Net Loss for the Period from
Inception February 23, 1999 to
September 30, 1999 (109,126) (109,126)
------------- ------------ ------------ ------------ -------------
$ 3,080,000 $ 3,080 $ 207,920 $ (109,126) $ 101,874
============= ============ ============ ============ ============
</TABLE>
- --------------------
The accompanying notes are an integral part of these financial statements.
F-17
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 23, 1999)
TO SEPTEMBER 30, 1999
Cash Flows from Operating Activities:
Net loss $(109,126)
Adjustment to reconcile net loss to net cash
used in operating activities:
Increase in accounts receivable (48)
Increase in stock subscription receivable (1,400)
Increase in Domain names - available for sale (27,577)
Increase in accounts payable 37,806
Increase in accrued expenses 4,694
-----------
Net cash used in operating activities (95,651)
----------
Cash Flows from Investing Activities:
Purchase of Website (55,555)
Net cash used in investing activities (55,555)
Cash Flows from Financing Activities:
Proceeds from sale of common stock and stock warrants 200,600
Proceeds of notes payable 38,000
Proceeds from officers loans 21,622
-----------
Net cash provided by investing activities 260,222
-----------
Net Increase in Cash 109,016
Cash - Inception (February 23, 1999) $ -
-
-----------
Cash - End of Period (September 30, 1999) $109,016
===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -
Taxes $ -
===========
Supplemental Disclosure of Noncash Investing
and Financing Activities:
Issuance of common stock and warrants for
Website purchase $ 10,400
===========
- --------------------
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
GOHEALTH.MD, Inc. (the ACompany@), a development stage company, was incorporated
under the laws of the State of Delaware on February 23, 1999. GOHEALTH.MD, Inc.
will be engaged in providing through the Internet an advertising network and
Internet presence for independently-owned health food stores, health care
providers and others.
BASIS OF ACCOUNTING
The financial statements of the Company have been prepared on the accrual basis
of accounting.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less to be cash equivalents.
USE OF MANAGEMENT'S 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 disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
DOMAIN NAMES - AVAILABLE FOR SALE
Domain name - available for sale consists of specific domain names purchased and
are valued at the purchase price. When a domain name is sold, the purchase price
for that specific name is removed at cost.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company adopted Statement of Financial Accounting Standards No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS 121 requires that if facts and circumstances
indicate that the cost of fixed assets or othe assets may be impaired, an
evaluation of recoverability would be performed by comparing the estimated
future undiscounted pre-tax cash flows associated with the asset to the asset's
carrying value to determine if a write-down to market value or discounted
pre-tax cash flow value would be required.
ADVERTISING AND PROMOTIONAL COSTS
Advertising expenditures of the Company's programs and services are expensed in
the period the advertising costs are incurred. Advertising and promotional costs
for the period from inception (February 23, 1999) to September 30, 1999 were
$24,478.
F-19
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards No. 130, (SFAS
130) AReporting Comprehensive Income@. This statement establishes rules for the
reporting of comprehensive income and its components which require that certain
items such as foreign currency translation adjustments, unrealized gains and
losses on certain investments in debt and equity securities, minimum pension
liability adjustments and unearned compensation expense related to stock
issuances to employees be presented as separate components of stockholders=
equity. The adoption of SFAS 130 had no impact on total stockholders= equity for
the period presented in these financial statements.
START-UP ACTIVITIES
The American Institute of Certified Public Accountants recently issued Statement
of Position ("SOP") 98-5, "Reporting the Costs of Start-Up Activities." SOP 98-5
requires start-up costs, as defined, to be expensed as incurred and is effective
for financial statements for fiscal years after December 15, 1998. The Company
currently expenses all start-up costs as incurred and the application of SOP
98-5 will have no material impact on the Company's financial statements.
STOCK-BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion No. 25,
(APB 25) "Accounting for Stock Issued to Employees" in accounting for its
employee stock option plans. Under APB 25, when the exercise price of the
Company's employee stock options equals or is above the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
In accounting for options granted to persons other than employees, the
provisions of Financial Accounting Standards Board Statement No. 123, (FASB 123)
"Accounting for Stock Based Compensation" are applied. In accordance with FASB
123 the fair value of these options are to be estimated at the grant date using
the Black- Scholes option pricing model.
INCOME TAXES
The Company follows Statement of Financial Accounting Standards No. 109, (SFAS
109) "Accounting for Income Taxes". SFAS 109 requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax bases of
assets and liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to be
realized.
F-20
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
2. PLAN OF OPERATIONS
GOHEALTH.MD, Inc. is a development stage company and will be engaged in
providing through the Internet an advertising network and Internet presence for
independently owned health food stores, health care providers and others through
an additional website owned by the Company, HEALTHMALL.COM.
GOHEALTH.MD, Inc. has marketing rights to more than 40 domain names (such as:
HERB.MD, NUTRITION.MD, ARTHRITIS.MD, VITAMIN.MD, FAMILY.MD, and SPORTS.MD) in
the TLD (top level domain) .MD. A Florida company, Domain Name Trust, acquired
the .MD protocol from Moldova, a small European country formerly part of the
Soviet Union. Domain Name Trust has been licensed to sell registrations by
Moldova in Europe, Canada and other English speaking countries. The country of
Moldova benefits economically from this arrangement, receiving $35 for each name
sold.
The Company believes that .MD is the first of a new generation of website
addresses and it is a natural and intuitive address that makes sense for
physicians and those in the broad medical community, as well as those whose
personal initials, corporate initials, state of residence (i.e. Maryland), or
title (i.e. Managing Director) are the letters .MD.
.MD is a top level domain (TLD), comparable in purpose to the top level domain
.COM, .NET, or .ORG. The Company believes that in the future a top level domain
name will no longer be as primitive as the first TLDs. Secondly, the names still
available within these domains are finite. Once a name is registered, it is not
available to anyone else. Eventually, all of the domains may be taken. .MD was
first made available in 1998.
The Company believes it has several advantages over other companies that may be
offering a similar product. The Company expects to develop a significant revenue
stream over the next three years through the development and marketing of its
Internet domain names. The availability of capturing a large physician network
(medical doctors, chiropractors, dentists, podiatrists, osteopaths) to view
online advertising in exchange for the establishment of websites and hosting
services is one of the Company's primary goals. The availability of having tens
of thousands of physicians guaranteed viewing the websites establishes the
significant potential for advertising revenue. The Company also believes that
the same potential exists for the natural health food products market. It is
believed that individual health food stores could be provided with a webpage
either free of charge or for a nominal fee with free hosting and website design
in exchange for guaranteed viewing of certain web pages on a monthly basis. In
exchange, the Company could receive advertising revenue for the guaranteed
visits to that particular site.
The Company also owns the domains ACCIDENT.MD, ASK.MD and CALL911.MD and
believes that management will be able to obtain the necessary funding to
commence its planned principal operations during the year 2000.
F-21
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
2. PLAN OF OPERATIONS (Continued)
The Company is only recently organized and does not have any material assets and
has no previous commercial operations, and therefore, there is no history of
earnings or operations upon which to judge its future success. To date, the
Company has been engaged in the development of its business plan and the
preparation and offering of a Private Placement Memorandum. The Company
currently has not conducted any significant business nor has the Company signed
any definitive agreements with any health food stores, health care providers, or
others. Because of its lack of prior operations, assets and industry position,
the Company must be considered a development stage enterprise. Consequently,
there can be no assurance that viable commercial operations can be achieved or
sustained by the Company even if it is successful in raising all of the capital
it requires. As a development stage enterprise, the Company is subject to all of
the risks inherent in the establishment of a new business, including the absence
of a significant operating history, lack of market recognition and limited
banking and financial relationships. There can be no assurance that the
Company's proposed operations will attract a sufficient customer base to
establish viable commercial operations or that it will generate sufficient cash
flow to fund the future operations of the Company. The Company's growth strategy
is largely dependent on the marketing of its home pages through various
marketing media, including but not limited to the Internet.
The market for the Company's products will be characterized by rapidly changing
technology and continuing development of customer requirements. The future
success of the Company's business will depend in large part upon its ability to
develop and market its products at an acceptable cost, develop and market
products which meet changing customer needs, and successfully anticipate or
respond to technological changes in customer requirements on a cost-effective
and timely basis. There can be no assurance that the Company's product
development efforts will be successful or that the emergence of new
technologies, industry standards or customer requirements will not render the
Company's technology or products obsolete or noncompetitive. In addition, to the
extent that the Company determines that new technologies or equipment are
required to remain competitive, the acquisition and implementation of such
technologies and equipment are likely to require significant capital investments
by the Company. There can be no assurance that sufficient capital will be
available in the future. Operating results can also be significantly adversely
affected by the development and introduction of new products or by the
establishment of better financed competition.
The Company intends to comply fully with industry rules and regulations. These
regulations vary dramatically, from region to region. The Company can make no
assurances that it will be able to meet or comply with all the regulatory
standards affecting Internet service in every jurisdiction in the world.
Furthermore, management cannot predict what changes may occur in such
regulations in the future or give any assurances as to the Company's ability to
continue its planned operations in light of any such presently unknown changes
in regulations applicable to the Company. The Company may be faced with the need
to incur substantial legal and professional expenses in an effort to meet the
requirements of changing regulatory requirements.
The Company plans an aggressive growth strategy for its clientele and products.
There can be no assurance that the Company will be successful in these
endeavors. Forces that can contribute to the lack of success in implementing
this growth strategy include, among others: (i) regulatory bodies and
governmental regulations affecting the Company and its operations, (ii)
availability of funding on a timely basis and (iii) functionality. The Company's
growth strategy relies on its ability to raise further capital and upon the
skills of its management.
F-22
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
3. NOTES PAYABLE
The following is a summary of the Company's notes payable at September 30, 1999:
Payable to William Hanna on demand, with interest accrued
at 5% per annum, unsecured $25,000
Payable to William Hanna Consultants on March 29, 2000,
with interest accrued at 5% per annum, unsecured 10,000
Payable to William Hanna Consultants on May 2, 2000, with
interest accrued at 5% per annum, unsecured 3,000
---------
$38,000
=========
4. DUE TO OFFICER
As of September 30, 1999 the Company is indebted to its officer in the amount of
$21,622. This is a noninterest bearing loan payable on demand.
5. PROVISION FOR INCOME TAXES
For the period of inception (February 23, 1999) to September 30, 1999 the
Company had a loss of $109,126. No tax expense or benefit has been reported in
the financial statements due to the uncertainty of future operations.
6. COMMON STOCK
The authorized capital stock of the Company consists of 10,000,000 shares of
Common Stock, par value $.001 per share.
The Company issued 3,000,000 shares of Common Stock to the incorporators of the
Company for $3,000.
The Company has offered a total of 500 Units at a price of $5,200 per Unit,
which were offered on a Abest efforts, all or none@ basis with respect to the
first 20 shares of the Company's Common Stock and a detachable warrant entitling
the holder to purchase 2,000 shares of Common Stock. The Company is conducting
the Offering in such a manner that the Shares will be sold only to certain
Accredited Investors as such term is defined in Rule 501 of Regulation D under
the Act, and to not more than 35 other nonaccredited investors, and who satisfy
any additional requirements of their state of residency. The pricing and the
terms of the securities have been arbitrarily determined by the Company and bear
no relationship to the Company's assets, book value or results of operations or
any other generally accepted criteria of value. The Units are being offered and
sold exclusively through the Company by its Officers, as well as the selected
dealers, if any, and their officers, directors and employees may purchase the
Units on the same terms and conditions as other investors.
F-23
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
6. COMMON STOCK (Continued)
The minimum subscription price to investors is for $10,400 for 2 units. The
Company may, in its sole discretion, accept subscription offers for lesser
amounts if deemed to be in the Company's best interest and insofar as permitted
by law.
Each Unit Warrant entitles the registered holder thereof to purchase up to 2,000
shares of Common Stock at a price of $2.50 per share (subject to adjustment as
described herein) at any time prior to the earlier of (i) May 31, 2003 or (ii)
the date that the respective Unit Warrant is redeemed. If the Company is able to
complete an initial public offering (AIPO@) of the Common Stock, then beginning
12 months after the IPO, the Unit Warrants will be subject to redemption by the
Company at $0.10 per share of the Common Stock that remains, subject each Unit
Warrant on thirty (30) days prior written notice if the average closing sales
price of the Common Stock over any 10 consecutive trading days equals or exceeds
150% of the IPO price per share of Common Stock.
As of September 30, 1999 and in connection with the private placement, the
Company issued 76,000 shares of its Common Stock and 76,000 detachable Warrants
and received proceeds of $197,600.
Also, as of September 30, 1999, the Company issued 4,000 Shares and 4,000
Warrants in connection with a website purchase and valued these services at
$10,400.
Subsequent to September 30, 1999 and in connection with the private placement,
the Company issued additional 22,000 Common Stock shares and 22,000 Warrants and
received proceeds of $52,000 and consulting services valued at $5,200.
7. COMMITMENTS AND CONTINGENCIES
EMPLOYEE STOCK OPTIONS
The Company has reserved a total of 500,000 shares of its Common Stock for
grants of incentive stock options to employees. A total of 230,000 options with
an exercise price of $.50 per share with terms expiring seven (7) years from the
respective dates of the grant have been granted to two employees as of September
30, 1999.
All future grants will have an exercise price above $1.50 per share.
OTHER STOCK OPTIONS
On May 6, 1999 the Company granted 30,000 options to a consulting firm at an
exercise price of $.50 per share. These options will have no expiration date and
contain two piggyback registration rights.
On May 26, 1999 the Company granted 10,000 options to investment banking
consultants at exercise prices of $.50 per share for 5,000 options and $1.00 for
5,000 options. These options contain piggyback registration rights.
On August 27, 1999 the Company granted 20,000 options to a professional
consultant. The options, which include piggyback registration rights, are
exercisable 10,000 at an exercise price of $1.00 and 10,000 at an exercise price
of $1.50.
F-24
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
7. COMMITMENTS AND CONTINGENCIES (Continued)
OTHER STOCK OPTIONS (Continued)
In August 1999 the Company granted to two consultants nonqualified stock options
for the right to purchase 175,000 shares of the Company's Common Stock. The
options have an exercise price of $1.00 and expire on August 27, 2006 and
piggyback registrations rights.
The fair value of the other stock options were estimated according to FASB 123
at the grant dates using the Black Scholes option pricing model and were
determined to be immaterial.
GOVERNMENT REGULATION
The Company is subject to local state and federal laws of the jurisdiction that
it operates in. The Company also believes that it will be subject to all
jurisdictions of its participants and clients.
LITIGATION
The Company is not a party to any litigation, nor to the knowledge of
management, is any viable litigation currently threatened against the Company or
any of its officers or directors in their capacity as such.
EMPLOYMENT AGREEMENTS
The current officers and directors of the Company have entered into agreements
with the Company that state that they will forego salaries until the Company's
revenues exceed $1,000,000 or at the discretion of the Board of Directors.
YEAR 2000 ISSUES
The year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
2000 dates is processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 Issue may be experienced before, on, or after January
1, 2000, and, if not addressed, the impact on operations and financial reporting
may range from minor errors to significant systems failures which could affect
an entity's ability to conduct normal business operations. It is not possible
that all aspects of the Year 2000 Issue affecting the Company, including those
related to the efforts of customers or third parties, will be fully resolved.
The Company has verified that its significant service providers are currently
Year 2000 compliant
8. MERGER AGREEMENT
On September 30, 1999 the Company entered into a Stock Exchange Agreement and
Plan of Merger with Nugget Exploration, Inc. (ANugget@), a publicly held Nevada
corporation without current operations and seeking a merger with a corporate
entity with planned operations. The agreement provides that at the closing date
each issued and outstanding common shares of the Company shall be converted into
and exchanged for one fully paid and nonassessable Nugget share.
F-25
<PAGE>
GOHEALTH.MD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
8. MERGER AGREEMENT (Continued)
In addition, the agreement provided that Nugget would assume all of the
Company's rights and obligations under all outstanding stock options and
warrants. Upon the closing of the transaction, which was subject to a number of
conditions, including shareholder approvals and regulatory requirements, the
stockholders of The Company will own approximately 81% of Nugget and therefore
have control.
On November 10, 1999 the merger became effective and the stockholders of The
Company were issued 3,102,000 shares of Nugget common stock, par value $.01,
which resulted in 3,799,117 shares of Nugget common stock outstanding after the
merger.
The transaction is expected to be accounted for as a purchase, however, since
the stockholders of The Company will own approximately 81% of Nugget outstanding
shares and therefore have control, the Company will be deemed to be the acquirer
and surviving entity.
9. SUBSEQUENT EVENTS
On November 16, 1999 the Company entered into a Management Consulting Agreement
(AAgreement@) for management consulting, strategic planning and marketing and
advisor services. The Agreement requires the Company to compensate the
management consulting company $5,000 per month through October 2000, issue to
the consultant 300,000 shares of its common stock and requires the Company to
issue warrants to the consultant to purchase 500,000 shares of the Company's
common stock at exercise prices of $1.00 for the first 100,000 and $2.00 per
share for the next 400,000.
In connection with this transaction, the Company will record an expense of
$1,050,000 for the 300,000 shares grant and $850,000 for the intrinsic value of
the warrants to purchase 500,000 shares of the Company's common stock.
On December 13, 1999 50,000 of the $1.00 warrants were exercised.
On December 22, 1999 the Company issued, in connection with a private placement
offering, warrants to purchase 302,000 shares of its common stock at an exercise
price of $1.00 per share till December 31, 2002. The warrants were sold for
$1.00 per common stock purchase warrants and resulted in the Company receiving
proceeds of $302,000. The market price of the Company's common stock at December
22, 1999 was $5.00 and created a beneficial conversion feature to the warrant
holders. The Company intends to record $906,000 as a charge in computing net
income or loss on common stock.
F-26
<PAGE>
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial data for GoHealth.MD,
Inc. ("GoHealth") is based on the historical financial statements of GoHealth
and Nugget Exploration, Inc. (collectively with its subsidiaries referred to
herein as "Nugget") which appear elsewhere in this Registration Statement and
has been prepared on a pro forma basis to give effect to the merger under the
purchase method of accounting, as if the transaction had occurred at January 1,
1998 for each operating period presented. The unaudited pro forma information
was prepared based upon certain assumptions described below and may not be
indicative of results that actually would have occurred had the merger occurred
at the beginning of the last full fiscal year presented or of results which may
occur in the future. The unaudited pro forma consolidated financial data and
accompanying notes should be read in conjunction with the annual and interim
financial statements and notes thereto of Nugget and GoHealth appearing
elsewhere herein and incorporated by reference into this Registration Statement.
The unaudited pro forma consolidated balance sheet as of September 30, 1999
presents the financial position of Nugget as if the merger had occurred on that
date and was prepared utilizing the audited GoHealth balance sheet as of
September 30, 1999 and the unaudited Nugget balance sheet as of August 31, 1999.
The unaudited pro forma consolidated statement of operations presented, assumes
the merger occurred at the beginning of the periods presented. It should not be
assumed that Nugget and GoHealth would have achieved the unaudited pro forma
consolidated results if they had actually been combined during the periods
shown.
The merger is expected to be accounted for as a purchase. The stockholders of
GoHealth will receive one share of common stock of Nugget for each share of
GoHealth common stock held, resulting in the current stockholders of GoHealth
owning approximately 81% of Nugget common stock.
The unaudited pro forma consolidated results are based on estimates and
assumptions, which are preliminary and have been made solely for the purposes of
developing such pro forma information. The unaudited pro forma consolidated
results are not necessarily an indication of the results that would have been
achieved had such transactions been consummated as of the dates indicated or
that may be achieved in the future.
The unaudited pro forma combined results should be read in conjunction with the
historical consolidated financial statements and notes thereto set forth herein,
and other financial information pertaining to GoHealth and Nugget including
Management's Discussion and Analysis of Financial Condition and Results of
Operations of GoHealth, Management's Discussion and Analysis of Financial
Condition and Results of Operations of Nugget and Risk Factors".
F-27
<PAGE>
GOHEALTH.MD, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL DATA
SEPTEMBER 30, 1999
On November 10, 1999 GoHealth.MD, Inc. (AGoHealth@) and Nugget Exploration, Inc.
(collectively with it's subsidiaries herein referred to as ANugget@ completed
their planned Stock Exchange Agreement and Plan of Merger. Under the terms of
the Agreement, GoHealth will become a wholly owned subsidiary of Nugget and a
wholly owned subsidiary of GoHealth will merge with and into Nugget. Following
the merger, GoHealth will be a wholly owned subsidiary of Nugget. The
stockholders of GoHealth will receive one share of common stock of Nugget for
each share of GoHealth common stock held, resulting in the current stockholders
of GoHealth owning approximately 81% of Nugget common stock.
The merger is expected to be accounted for as a purchase. However, since the
stockholders of GoHealth will own approximately 81% of Nugget outstanding
shares, and therefore have control, they will be deemed to be the acquirer and
no step up in basis will be reflected and no goodwill will be recorded by the
company.
PRO FORMA ADJUSTMENTS
1) To record private placement offering proceeds of GoHealth.MD, Inc.
subsequent to September 30, 1999 and the issuance of 20,000 shares of
common stock, 20,000 warrants to purchase common stock and the receipt
of corresponding cash proceeds totaling $52,000.
2) To record the receipt of stock subscriptions receivable subsequent to
September 30, 1999.
3) To record the issuance of 2,000 shares of common stock and 2,000
warrants to purchase common stock subsequent to September 30, 1999
to a consultant for services valued at $5,200.
4) On November 16, 1999 the Company entered into a Management Consulting
Agreement for management consulting, strategic planning and marketing
and advisor services. The Agreement requires the Company to compensate
the management consulting company $5,000 per month through October 2000
issue to the consultant 300,000 shares of its common stock and requires
the Company to issue warrants to purchase 500,000 shares of the
Company's common stock at exercise prices of $1.00 for the first
100,000 and $2.00 per share for the next 400,000. In connection with
this transaction, the Company will record an expense of $1,050,000 for
the 300,000 shares granted and $850,000 for the intrinsic value of the
warrants to purchase 500,000 shares of the Company's common stock
5) On December 22, 1999 the Company issued, in connection with a private
placement offering, warrants to purchase 302,000 shares of its common
stock at an exercise price of $1.00 per share until December 31, 2002.
The warrants were sold for $1.00 per common stock purchase warrants
and resulted in the Company receiving proceeds of $302,000. The
market price of the Company's common stock at December 22, 1999
was $5.00 and created a beneficial conversion feature to the warrant
holders.
6) In connection with the transaction described in Note 5, the Compan
will record $906,000 as a charge in computing net income or loss on
common stock.
7) To record issuance of 3,102,000 shares of common stock of Nugget to the
stockholders of GoHealth and the elimination of Nugget's accumulated
deficit as a result of the merger.
F-28
<PAGE>
<TABLE>
<CAPTION>
GOHEALTH.MD, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
Nugget
GoHealth Exploration
.MD, , Inc.
August 31,
Inc. 1999 Pro Forma
Sept. 30, Adjustment Pro Forma
1999 (Unaudited) s Results
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 109,016 $ 3,253 $ 1,400(2) $ 1,669,669
52,000(1)
900,000(4)
604,000(5)
Accounts receivable 48 48
Stock subscription receivable 1,400 (1,400)(2) 0
Domain names available for 0
sale 27,577 27,577
=========== =========== ================ ============
Total Current Assets 138,041 3,253 1,556,000 1,697,294
Other Assets - Website Costs 65,955 65,955
=========== =========== =============== ============
$ 203,996 $ 3,253 $ 1,556,000 1,763,249
=========== =========== =============== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Notes payable $ 38,000 $ 7,380 $ $ 45,380
Accounts payable 42,500 22,622 65,122
Accrued interest 8,906 8,906
Due to officers 21,622 21,622
=========== =========== =============== ============
Total Current Liabilities 102,122 38,908 141,030
=========== =========== =============== ============
Commitments and Contingencies 0 0 0 0
Stockholders' Equity:
Common stock 3,080 6,971 20(1) 49,001
2(3)
3,000(4)
5,000(4)
3,020(5)
27,908(7)
Additional paid-in-capital 207,920 3,536,930 51,980(1) 4,493,544
5,198(3)
1,047,000(4)
1,745,000(4)
600,980(5)
906,000(6)
(3,607,464)(7)
Unamortized Consulting Expense (1,050,000)(4) (1,900,000)
(850,000)(4)
Retained deficit (5,200)(3)
(906,000)(6)
(109,126) (3,579,556) 3,579,556(7) (1,020,326)
============= =========== ================ ============
101,874 1,556,000 1,622,219
Total Stockholders' Equity (35,655)
=========== =========== ================ ============
0
203,99 1,556,00 1,763,24
$ 6 $ 3,253 $ 0 $ 9
=========== ============= ================ ============
</TABLE>
- --------------------
See notes to Pro Forma Consolidated
Financial Data.
F-29
<PAGE>
<TABLE>
<CAPTION>
GOHEALTH.MD, INC.
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Year Ended For the Three Months Ended August 31, 1999 (Nugget)
May 31, 1999 For the Four Months Ended September 30, 1999 (GoHealth)
========================================================================================================
Nugget Nugget
GoHealth.MD, Exploration, Pro Forma GoHealth.MD, Exploration, Pro Forma Pro Forma
Inc. Inc. Results Inc. Inc. Adjustments Results
----------- ----------- -------------- ----------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Ad revenue $ $ $ $ 48 $ $ $ 48
Domain name sales 400 400 900 900
Cost of sales (280) (280) (630) (630)
----------- ---------- ----------- ----------- ---------- ----------- ------------
Gross Profit (Loss) 120 120 318 318
----------- ---------- ----------- ----------- ---------- ----------- ------------
Costs and Expenses:
General and administrative
expenses 20,764 250,304 271,068 88,800 5,288 5,200(3) 99,288
----------- ----------- ----------- ----------- ---------- ----------- ------------
Loss from Operations (20,644) (250,304) (270,948) (88,482) (5,288) (5,200) (98,970)
Other Income:
Gain on sale of asset 588,499 588,499
=========== ============ ============ =========== =========== =========== ===========
Net Income (Loss) before
Extraordinary Item (20,644) 338,195 317,551 (88,482) (5,288) (5,200) (98,970)
Gain on Extinguishment
of Debt 1,384,411 1,384,411
Beneficial Conversion Feature
Series A Warrants/Dividends (906,000)(6) (906,000)
----------- ----------- ----------- ----------- ---------- ----------- -----------
Net Income (Loss) on
Common Stock $ (20,644) $ 1,722,606 $ 1,701,962 $ (88,482) $ (5,288) $ (911,200) $ (1,004,970)
=========== ============ ============ =========== =========== =========== ===========
Net Income (Loss) per Share:
Basic $ (0.03) $ (0.01) (0.21)
=========== =========== ===========
Diluted $ (0.03) $ (0.01) $ (0.21)
=========== =========== ===========
Basic common shares
outstanding 3,080,000 697,117 4,901,117
Diluted common shares
outstanding 3,080,000 697,117 4,901,117
</TABLE>
- --------------------
See notes to Pro Forma
Consolidated Financial Data.
F-30
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation provide that we shall, to the fullest extent
permitted by the laws of the State of Nevada, as the same may be amended and
supplemented, indemnify our officers and directors under said laws, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement,
vote of security holders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to benefit of the heirs,
executors, and administrators of such a person. We have the power to purchase
and maintain officers' and directors' liability insurance in order to insure
against the liabilities for which such officers and directors are indemnified.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and control persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the United States Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or control person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or control person, we will, unless in the opinion of counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act of 1933, as amended,
and we will be governed by the final adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses of this offering, all of
which we will pay:
SEC Registration Fee.............................................$1,600
Blue Sky Fees and Expenses....................................... 7,000
Accounting Fees and Expenses.................................... 15,000
Legal Fees and Expenses..........................................40,000
Printing and Engraving Expenses...................................2,500
Transfer Agent and Registrar Fees and Expenses....................1,000
Miscellaneous.....................................................5,000
Total.................................................$73,000
47
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
All securities we sold during the last three years without registration under
the Securities Act of 1933, as amended (the "Act"), were to accredited investors
pursuant to Rule 506 under the Act. No underwriting discounts or commissions
were paid in connection with any of these securities.
On June 22, 1998, for $15,100, we issued 48,709 shares of common stock to a
designee of Ken W. Kurtz. Ken W. Kurtz is an accredited investor.
MCOM Management Corp. ("MCOM") has received 350,000 shares of our common stock
pursuant to a November 16, 1999, Management Consulting Agreement. MCOM agreed to
render management consulting, strategic planning and marketing and advisory
services in exchange for (i) $5,000 per month through October 2000, (ii) 300,000
shares of our common stock and (iii) warrants to purchase 500,000 shares of our
common stock at exercise prices of $1.00 for the first 100,000 shares and $2.00
per share for the next 400,000 shares. On December 13, 1999, MCOM exercised
warrants to purchase 50,000 shares of our common stock and tendered $50,000
constituting the $1.00 warrant exercise price. The exercise of such 50,000
shares at $1.00 per share was conducted in lieu of MCOM's agreement to provide
us with a $100,000 bridge loan, which was to accrue interest at 10% per annum.
MCOM is an accredited investor. We have accounted for this transaction by
recording an expense of $1,050,000 for the grant of 300,000 shares and $850,000
for the intrinsic value of the warrants to purchase 500,000 shares of our common
stock.
MCOM also acquired 75,000 shares of our common stock in conjunction with its
purchase of warrants to purchase 75,000 shares in our private placement of
warrants described in the following paragraph. They are the only warrant holder
to have exercised the warrants.
Through November 12, 1999-January 11, 2000, we conducted a private placement of
warrants to purchase shares of our common stock to the following stockholders.
Each of these warrants were purchased for $1.00, have an exercise price of $1.00
per share and expire on December 31, 2002.
Stockholder Shares Issuable Upon Exercise of Warrants
- ----------- -----------------------------------------
Martin Ciner 20,000
Michael Marks 15,000
Scott Hankinson 100,000
Marketing Management Professionals 15,000
Joseph McGowen 15,000
Robert Lipinski 50,000
Thomas Capato 10,000
48
<PAGE>
Frank Casey 15,000
Anthony Iancale 2,000
Thomas Flynn, Sr. 2,000
Thomas Flynn, III 10,000
Dawn Polizzi 5,000
Anthony Pietrafesa 10,000
Mark Keminosh 8,000
Joseph DiGaetano 25,000
Alexander Zlatnik, M.D. 2,500
We issued options to purchase shares of our common stock in connection with the
GoHealth merger to the following stockholders. They received such options
between May 1999 and August 1999 in recognition of services they had rendered to
GoHealth. We granted options to purchase the following shares to Gettson and
Benn, both of whom are medical professionals, for their assistance in designing
and formatting our website to attract other medical professionals. Kishbaugh is
an attorney who accepted the options in lieu of payment for the legal services
he rendered in connection with our contract with Dr. James Corea, related to the
website www.healthyfirst.com. Millennium, Madden & Crooks received the options
in consideration for their services regarding the structuring of terms of our
private placements. The president of Millennium is the wife of Gary Crooks.
These options are exercisable at prices ranging from $0.50 to $1.50, with the
exception of the options held by Harvey Benn and Frank Gettson, which have an
exercise price of $1.00 per share, but which price is subject to a fair market
value revision. The options held by Millennium, Crooks, and Madden expire in May
2006, while Kishbaugh's options expire in June 2006, and Benn and Gettson's
options expire in July 2009. The options to purchase shares of our common stock
contained the same terms as the option holders received from GoHealth.
Stockholder Shares Issuable Upon Exercise of Options
- ----------- ----------------------------------------
Millennium Consulting, Inc 30,000
Gary Crooks 5,000
John Madden 5,000
Harvey Benn 150,000
Frank Gettson 25,000
J. Eric Kishbaugh 20,000
We issued to the following persons unregistered shares of our common stock in
connection with the GoHealth Merger. All of these entities initially received
shares of GoHealth's common stock. These shareholders were the founders of
GoHealth and received the following 3,000,000 shares at GoHealth's par value,
$0.001 per share, or $3,000.
49
<PAGE>
Sandra Vernon 2,000,000
William Hanna 500,000
Kevin O'Donnell 500,000
On February 23, 1999, GoHealth granted two of its executive officers, Kevin
O'Donnell and William Hanna, incentive stock options to each purchase 115,000
shares of its common stock with an exercise price of $0.50 per share. These
options expire on February 23, 2006. Pursuant to the Merger, we assumed the
rights and obligations of GoHealth regarding all of its option agreements.
Therefore, we constructively issued replacement options to O'Donnell and Hanna.
The remainder of securities we issued without registration under the Act within
the past three years were also pursuant to the GoHealth Merger. These
stockholders received the same amount of shares of our common stock and warrants
to purchase shares of our common stock as they had received shares of GoHealth's
common stock and warrants to purchase GoHealth's common stock pursuant to a
private placement conducted between February 1999 and November 1999. Pursuant to
this private placement, GoHealth offered units at a price of $5,200 per unit,
with each unit entitling an investor to 2000 shares of GoHealth's common stock
and a warrant entitling the holder to purchase 2,000 shares of Common Stock at
$2.50 per share (subject to adjustment), at any time prior to September 30,
2003. We issued to each such stockholder a warrant to purchase shares of common
stock on the same terms as were received from GoHealth. A total of 51 units, or
102,000 shares of GoHealth's common stock and 102,000 warrants to purchase
shares of GoHealth's common stock, were issued in this private placement, with
GoHealth receiving (i) proceeds of $249,600 for 96,000 shares and warrants, (ii)
Internet website assets valued at $10,400 for 4,000 shares and warrants (2,000
shares and warrants were issued to Moiz Balkhi and 2,000 shares and warrants
were issued to Market Management Professionals, Inc. in separate transactions
for separate assets), (iii) consulting services rendered by William Bromley, a
doctor of chiropractic, in connection with his assistance in the design and
format of our website, valued at $5,200 for 2,000 shares and warrants.
Shareholder Number of Shares and Warrants
- ----------- -----------------------------
Robert Deacon, Sr. 2,667
Robert Deacon, Jr. 2,667
Frank Casey 4,000
Albert DiPasquale, M.D. 2,000
Thomas Flynn, III, Esq. 4,000
Scott Hankinson, M.D. 4,000
Marc Kahn, M.D. 4,000
Michael Marks, Esq. 4,000
Joseph McGowan, Jr., Esq. 2,000
Mullica Hill-Family Practice 4,000
Anthony Pietrafesa 2,666
Moiz Balkhi 2,000
Market Management Professionals, Inc. 2,000
50
<PAGE>
Alexander Zlatnik, MD 4,000
J. Erik Kishbaugh, Esq. 12,000
Martin Ciner 2,000
Harvey Benn, D.O. 10,000
Frank J. Gettson, D.C. 10,000
Market Management Professionals, Inc. 2,000
Robert Lipinski 2,000
Thomas Capato 2,000
Joseph DiGaetano 2,000
Mark Keminosh, D.C. 4,000
William Bromley, D.C. 2,000
Anthony Iancale 2,000
Dawn Polizzi 4,000
Thomas Flynn, M.D. 4,000
ITEM 27. EXHIBITS
Number Description
2.1* Stock Exchange Agreement and Plan of Merger dated September 30, 1999, by
and between Nugget Exploration, Inc., Nugget Holding Company and
GoHealth.MD, Inc.
3.1* Articles of Incorporation of Nugget Exploration, Inc.
3.2* By-Laws of Nugget Exploration, Inc.
3.3* Articles of Incorporation of GoHealth.MD, Inc.
3.4* By-Laws of GoHealth.MD, Inc.
4.1* Management Consulting Agreement dated November 1999, by and between Nugget
Exploration, Inc. and MCOM Management Corp.
4.2* Stock Option Agreement dated August 27, 1999, by and between GoHealth.MD,
Inc. and Harvey Benn
4.3* Stock Option Agreement dated August 27, 1999, by and between GoHealth.MD,
Inc. and Frank Gettson.
4.4* Stock Option Agreement dated May 7, 1999, by and between GoHealth.MD, Inc.
and Millennium Consulting, Inc.
4.5* Stock Option Agreement dated May 26, 1999, by and between GoHealth.MD, Inc.
and Gary Crooks
4.6* Stock Option Agreement dated May 26, 1999, by and between GoHealth.MD, Inc.
and John Madden
51
<PAGE>
4.7* Stock Option Agreement dated June 12, 1999, by and between GoHealth.MD,
Inc. and J. Eric Kishbaugh
4.8* Master Series A Warrant dated October 1, 1999, by and between Nugget
Exploration, Inc. and various entities as described in recent sales of
unregistered securities.
4.9* Master Unit Warrant dated November 12, 1999, by and between GoHealth.MD,
Inc. and various entities as described in recent sales of unregistered
securities.
4.10 Stock Option Agreement dated February 23, 1999, by and between GoHealth.MD,
Inc., and Kevin O'Donnell
4.11 Stock Option Agreement dated February 23, 1999, by and between GoHealth.MD,
Inc., and William Hanna
5.1* Opinion of Kevin S. Woltjen, P.C.
10.1* $10,000 Note dated March 29, 1999, by and between GoHealth.MD, Inc. and
William Hanna Consultants, Inc.
10.2* $25,000 Note dated April 26, 1999, by and between GoHealth.MD, Inc. and
William Hanna.
10.3* $3,000 Note dated May 2,1999, by and between GoHealth.MD, Inc. and William
Hanna Consultants, Inc.
10.4*Contract of Sale dated April 26, 1999, and between GoHealth.MD, Inc. and
Robert H. Savar.
10.5*Contract of Sale dated April 26, 1999, by and between GoHealth.MD, Inc.
and Computerized Professional Enrichment Services Contract of Sale.
10.6*Independent Reseller Agreement dated March 22, 1999, by and between
GoHealth.MD, Inc. and Domain Name Trust, Inc.
10.7*Agreement dated November 16, 1999, by and between GoHealth.MD, Inc. and
Domain Name Trust, Inc.
10.8*Agreement dated May 5, 1999, by and between GoHealth.MD, Inc. and PR
Newswire.
10.9*Agreement dated December 13, 1999, by and between GoHealth.MD, Inc. and
Company X t/a James Corea's Vita-Labs.
10.10* Consulting Agreement dated August 23, 1999, by and between GoHealth.MD,
Inc. and Frank Gettson.
10.11* Consulting Agreement dated August 23, 1999, by and between GoHealth.MD,
Inc. and Harvey Benn.
10.12* Consulting Agreement dated November 30, 1998 by and between Nugget
Exploration, Inc. and Ken W. Kurtz, incorporated herein by reference from
the Company's previous filings.
10.13* Financial Consulting Agreement dated March 5, 1998, by and between Nugget
Exploration, Inc. and Park Street Investments, Inc.
21.1* List of subsidiaries
23.1* Consent of Jones, Jensen & Co.
23.2* Consent of Samuel Klein & Co.
23.3* Consent of Kevin S. Woltjen, P.C.
* All exhibits referenced are included herewith.
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ITEM 28. UNDERTAKINGS
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and
(iii) Include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering therein, and
the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(B) Undertaking Required by Regulation S-B, Item 512(e):
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
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question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(C) Undertaking Required by Regulation S-B, Item 512(f):
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cherry Hill, State of New
Jersey, on this______ day of January 2000.
Nugget Exploration, Inc.
By: _/s/_________________
Dr. Leonard Vernon
Title: President
POWER OF ATTORNEY
The undersigned directors and officers of Nugget Exploration, Inc. hereby
constitute and appoint Dr. Leonard Vernon, with full power to act without the
other and with full power of substitution and resubstitution, our true and
lawful attorneys-in-fact with full power to execute in our name and behalf in
the capacities indicated below any and all amendments (including post-effective
amendments and amendments thereto) to this registration statement under the
Securities Act of 1933 and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
and hereby ratify and confirm each and every act and thing that such
attorney-in-fact, or his substitute, shall lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
___/s/_Leonard Vernon_____ President, Director January 13, 2000
Dr. Leonard Vernon
___/s/_William Hanna______ Vice President, Assistant January 13, 2000
William Hanna Secretary & Director
55
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INDEX TO EXHIBITS
EXHIBIT
NO. PAGE DESCRIPTION
2.1* 58 Stock Exchange Agreement and Plan of Merger dated September 30,
1999, by and between Nugget Exploration, Inc., Nugget Holding
Company and GoHealth.MD, Inc.
3.1* 78 Articles of Incorporation of Nugget Exploration, Inc.
3.2* 86 By-Laws of Nugget Exploration, Inc.
3.3* 96 Articles of Incorporation of GoHealth.MD, Inc.
3.4* 97 By-Laws of GoHealth.MD, Inc.
4.1* 107 Management Consulting Agreement dated November 1999, by and
between Nugget Exploration, Inc. and MCOM Management Corp.
4.2* 111 Stock Option Agreement dated August 27, 1999, by and between
GoHealth.MD, Inc. and Harvey Benn
4.3* 121 Stock Option Agreement dated August 27, 1999, by and between
GoHealth.MD, Inc. and Frank Gettson.
4.4* 131 Stock Option Agreement dated May 7, 1999, by and between
GoHealth.MD, Inc. and Millennium Consulting, Inc.
4.5* 140 Stock Option Agreement dated May 26, 1999, by and between
GoHealth.MD, Inc. and Gary Crooks
4.6* 149 Stock Option Agreement dated May 26, 1999, by and between
GoHealth.MD, Inc. and John Madden
4.7* 158 Stock Option Agreement dated June 12, 1999, by and between
GoHealth.MD, Inc. and J. Eric Kishbaugh
4.8* 167 Master Series A Warrant dated November, 1999, by and between
Nugget Exploration, Inc. and various entities as described in
recent sales of unregistered securities.
4.9* 175 Master Unit Warrant dated November, 1999, by and between
GoHealth.MD, Inc. and various entities as described in recent
sales of unregistered securities.
4.10 181 Stock Option Agreement dated February 23, 1999, by and between
GoHealth.MD, Inc., and Kevin O'Donnell
4.11 187 Stock Option Agreement dated February 23, 1999, by and between
GoHealth.MD, Inc., and William Hanna
5.1* 193 Opinion of Kevin S. Woltjen, P.C.
10.1* 194 $10,000 Note dated March 29, 1999, by and between GoHealth.MD,
Inc. and William Hanna Consultants, Inc.
10.2* 197 $25,000 Note dated April 26, 1999, by and between GoHealth.MD,
Inc. and William Hanna.
10.3* 200 $3,000 Note dated May 2, 1999, by and between GoHealth.MD, Inc.
and William Hanna Consultants, Inc.
10.4* 203 Contract of Sale dated April 26, 1999, and between GoHealth.MD,
Inc. and Robert H. Savar.
10.5* 210 Contract of Sale dated April 26, 1999, by and between
GoHealth.MD, Inc. and Computerized Professional Enrichment
Services Contract of Sale.
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10.6* 216 Independent Reseller Agreement dated March 22, 1999, by and
between GoHealth.MD, Inc. and Domain Name Trust, Inc.
10.7* 218 Agreement dated November 16, 1999, by and between GoHealth.MD,
Inc. and Domain Name Trust, Inc.
10.8* 219 Agreement dated May 5, 1999, by and between GoHealth.MD, Inc.
and PR Newswire.
10.9* 220 Agreement dated December 13, 1999, by and between GoHealth.MD
Inc. and Company X t/a James Corea's Vita-Labs.
10.10* 224 Consulting Agreemen dated August 23, 1999, by and between
GoHealth.MD, Inc. and Frank Gettson.
10.11* 226 Consulting Agreement dated August 23, 1999, by and between
GoHealth.MD, Inc. and Harvey Benn.
10.12* 228 Consulting Agreement dated November 30, 1998 by and between
Nugget Exploration, Inc. and Ken W. Kurtz.
10.13* 231 Financial Consulting Agreement dated March 5, 1998, by and
between Nugget Exploration, Inc. and Park Street Investments,
Inc.
21.1* 236 List of subsidiaries
23.1* 237 Consent of Jones, Jensen & Co.
23.2* 238 Consent of Samuel Klein & Co.
23.3* 239 Consent of Kevin S. Woltjen, P.C.
All exhibits referenced are included herewith.
57
EXHIBIT 2.1
STOCK EXCHANGE AGREEMENT
AND
PLAN OF MERGER
THIS STOCK EXCHANGE AGREEMENT AND PLAN OF MERGER ("Agreement") is entered
into this 30th day of September 1999 by and among Nugget Exploration, Inc., a
Nevada corporation ("Nugget"), Nugget Holding Company, a Delaware corporation
("Newco"), and GoHealth.md Inc., a Delaware corporation ("GoHealth.md") (Nugget,
Newco and GoHealth.md may be collectively referred to as the "Constituent
Parties").
Recitals
A. Nugget, Newco and GoHealth.md desire to effect the merger of GoHealth.md
with and into Newco, pursuant to the terms of this Agreement, so that
GoHealth.md will be a wholly owned subsidiary of Nugget.
B. The Boards of Directors of Nugget, Newco and GoHealth.md, deeming it
advisable and in their respective best interests, have approved the merger of
GoHealth.md with and into Newco, upon and subject to the terms, conditions and
provisions set forth in this Agreement.
C. For corporate law purposes, the transaction contemplated by this
Agreement constitutes a merger in accordance with the Delaware General
Corporation Law and Nevada Revised Statutes.
D. For federal income tax purposes, Nugget, Newco, GoHealth.md, and
GoHealth.md Stockholders intend that the transaction contemplated by this
Agreement shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
Agreement
NOW, THEREFORE, based on the foregoing premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements contained herein, and in reliance on the representations and
warranties set forth in this Agreement, the benefits to be derived herein and
for other valuable consideration, the sufficiency of which is hereby expressly
acknowledged, the Constituent Parties agree as follows:
1.1 Merger. At the Effective Time (as defined in Section 1.3 hereof),
Newco shall be merged with and into GoHealth.md (the "Merger")
pursuant to the General Corporation Law of the State of Delaware and
the Nevada Revised Statutes, (collectively, the "Corporation Law") in
accordance with this Agreement and the Merger Documents defined in
Section 1.2 hereof. Thereupon, the corporate identity and existence of
GoHealth.md, with all its rights, privileges, immunities, powers and
purposes, shall continue unaffected and unimpaired by the Merger, and
the corporate identity and existence, with all the rights, privileges,
immunities, powers and purposes, of Newco shall be merged into
GoHealth.md as the corporation surviving the Merger, and GoHealth.md
shall be fully vested therewith. The separate identity, existence and
corporate organization of GoHealth.md shall continue after the Merger
becomes effective, and thereupon GoHealth.md shall continue as the
surviving corporation (herein sometimes called the "Surviving
Corporation").
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1.2 Filing of Merger Documents. At or before the Closing (as defined in
Section 1.3 hereof), GoHealth.md and Newco shall cause articles of
merger and such other documents as are necessary under the Corporation
Law (the "Merger Documents"), to be executed to effectuate the merger
under applicable state laws. The Constituent Parties shall file the
Merger Documents with respective Secretary of State of Delaware as
provided in the Corporation Law upon the Closing.
1.3 Closing and Effective Time of the Merger. The Merger shall be
effective as provided in the Merger Documents and upon the filing
thereof with the respective Secretary of State of Delaware, which time
may herein be referred to as the "Effective Time." The Closing of the
transactions contemplated by this Agreement ("Closing") shall take
place simultaneous with the Effective Time, hence the filing of the
Merger Documents shall occur only upon the presentation of all
required schedules and documents, after the conclusion of all required
due diligence, and upon satisfaction of the conditions precedent to
Closing, as described in Section 13.1 herein. Closing shall take place
at such place as the Constituent Parties hereto shall agree upon or by
facsimile transmission and overnight delivery service.
1.4 Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances in law or that any other things are
necessary, desirable or proper to complete the merger in accordance
with the terms of this agreement or to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, the title to any
property or rights of Newco acquired or to be acquired by GoHealth.md
by reason of, or as a result of the Merger, the Constituent Parties
agree that Nugget, GoHealth.md, and their proper officers and
directors shall execute and deliver all such proper deeds, assignments
and assurances in law and do all things necessary, desirable or proper
to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose of this
Agreement, and that the proper officers and directors of GoHealth.md,
Newco and Nugget are fully authorized in the name and on behalf of
GoHealth.md, Nugget and Newco, respectively, to take any and all such
action.
1.5 Conversion. At the Effective Time, all of the issued and outstanding
shares of capital stock of GoHealth.md shall, by virtue of the Merger
and without any action on the part of any shareholder of GoHealth.md,
become or be converted or canceled as follows:
a. Each issued common share, $0.001 par value, of GoHealth.md as of
the Closing (the "GoHealth.md Stock") shall be converted into and
exchanged for one share of fully paid and non-assessable Nugget
Common Stock, $0.01 par value ("Nugget Stock").
b. No fractional shares of Nugget Stock shall be issued in the
Merger. In lieu of the issuance or recognition of fractional
Nugget Stock, cash equal to the value of such fractional share on
the Closing Date shall be paid to each holder of GoHealth.md
Stock converting a fractional share as provided in this Section
1.5.
c. Each share of Newco Stock issued and outstanding immediately
prior to the Effective Time of the Merger shall by virtue of the
Merger, and without any action on the part of the holder thereof,
automatically become one fully paid and nonassessable share of
stock of GoHealth.md.
d. Any securities held in GoHealth.md's treasury shall be cancelled
and retired.
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e. Upon completion of the conversion and cancellation described in
this Section 1.5, Nugget will own all of the issued and
outstanding capital stock of the Surviving Corporation, and which
stock shall have been duly authorized and validly issued, and be
fully paid and nonassessable, with no pre- emptive or other
rights in the Surviving Corporation held by any person or entity.
1.6. Exchange of Certificates. At or after the Effective Time each of
GoHealth.md Stockholders shall, upon surrender of certificates
representing such GoHealth.md Stock, receive the number of Nugget
Stock determined as set forth in Section 1.5. At the Closing,
GoHealth.md shall deliver to Nugget and Newco a list of the
GoHealth.md shareholders, by name,address, tax identification number
and number of shares of GoHealth.md stock they own at the closing.
Schedule 1.6 attached hereto and incorporated herein sets forth a list
of all GoHealth.md Stockholders and the number of shares of
GoHealth.mdstock owned as of the date of this agreement.
a. Until the certificates representing GoHealth.md Stock have been
surrendered by GoHealth.md Stockholders and replaced by shares of
Nugget Stock in accordance with this Agreement, the certificates
for GoHealth.md Stock shall, for all corporate purposes, be
deemed to be evidence of the right to receive the Nugget Stock as
set forth in this Agreement. Whether or not a certificate is
surrendered, from and after the Effective Time, such certificates
shall under no circumstances evidence, represent or otherwise
constitute any stock or other interest whatsoever in Newco, the
Surviving Corporation or any other person, firm or corporation
other than Nugget or its successors. By virtue of the Merger and
without any action of GoHealth.md Stockholders, GoHealth.md Stock
shall otherwise be deemed canceled as of the Effective Time.
1.7 Deliveries. GoHealth.md Stockholders shall deliver at Closing the
certificates representing GoHealth.md Stock, together with any
necessary endorsements and with all necessary transfer tax and other
revenue stamps, acquired at the expense of GoHealth.md Stockholders,
affixed and canceled. GoHealth.md Stockholders agree to cure any
deficiencies with respect to the endorsement of the certificates or
other documents of conveyance with respect to such GoHealth.md Stock
or with respect to the stock powers accompanying any GoHealth.md
Stock. Subject to Nugget's prior receipt of the certificates
representing GoHealth.md Stock in accordance with this Section, Nugget
shall deliver at the Closing certificates representing the Nugget
Stock in exchange for the GoHealth.md stock. In the event any
certificate representing GoHealth.md stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by a
GoHealth.md Stockholder claiming such certificate to be lost, stolen
or destroyed and subject to such other conditions as the Board of
Directors of Nugget may impose, Nugget shall issue in exchange for
such lost, stolen or destroyed certificate the Nugget Stock
certificate otherwise due such GoHealth.md Stockholder under this
Agreement. When authorizing the issuance of a certificate of the
Nugget Stock in exchange therefor, the Board of Directors of Nugget
may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
certificate to provide Nugget and its transfer agent a bond or other
surety in such sum as Nugget may reasonably direct as indemnity
against any claim that may be made with respect to the certificate
alleged to have been lost, stolen or destroyed.
1.8 Tax-Free Reorganization. It is the intention of the Constituent
Parties hereto that the Merger constitute a "reorganization" within
the meaning of Section 368(a)(1)(A) of the Code, by reason of the
application of Section 368(a)(2)(E) of the Code, and that this
Agreement and exhibits and Schedules hereto constitute a plan of
reorganization. All Constituent Parties shall cooperate with one
another after the closing in order to achieve a tax free
reorganization.
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1.9 Tax Status. GoHealth.md, GoHealth.md Stockholders, and Nugget intend
the Merger to constitute a plan of reorganization pursuant to Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended,
provided, however, that notwithstanding this statement of intent and
the similar statement in the Recital D of this Agreement,at the
effective date GoHealth.md and GoHealth.md stockholders shall have
deemed to have concluded that the Merger, and the transactions
contemplated hereby, as currently structured and under existing tax
law, will provide the tax treatment to GoHealth.md and GoHealth.md
Stockholders desired by them, and that regardless of the actual tax
outcome of the transactions, no Constituent Party shall raise such tax
treatment as an impediment to the Merger.
1.10 Exercise of Options and Warrants Relating to GoHealth.md Stock. Prior
to the Closing, the holders of options or warrants granted by
GoHealth.md shall not exercise any such securities or acquire any
underlying securities of GoHealth.md.
1.11 GoHealth.md Options and Warrants. At the Effective Time, Nugget shall
assume GoHealth.md's rights and obligations under each of the
outstanding options and warrants previously granted by GoHealth.md, a
complete list (including grantee names, vesting schedule, number of
shares, and grant date) of which appears on the attached Schedule 1.11
(each such option and warrant existing immediately prior to the
Effective Time being called an "Existing Option", and each such option
and warrant so assumed by Nugget being called an "Assumed Option"), by
which assumption the optionee shall have the right to purchase that
number of shares of Nugget Stock (rounded down to the nearest whole)
into which the number of shares of GoHealth.md Stock the optionee was
entitled to purchase under the Existing Option would have been
converted pursuant to the terms of the Merger as described in Section
1.5 hereof. Each Assumed Option shall constitute a continuation of the
Existing Option, with the same rights, terms, and obligations as the
Existing Option substituting Nugget for the Surviving Company as
issuer. The aggregate price for the total number of shares of Nugget
Stock at which the Assumed Option may be exercised shall be the
aggregate price at which the Existing Option was exercisable for the
total number of shares of GoHealth.md Stock, reduced (as necessary for
purposes of rounding down) to the price that will buy the number of
whole shares for which the Assumed Option will be exercisable in
accordance with this Section 1.11, and the purchase price per share of
Nugget Stock thereunder shall be such aggregate price divided by the
total number of whole shares of Nugget Stock covered thereby. The
assumption of the Assumed Options by Nugget as provided in this
Section 1.11 shall not, except as provided herein, provide the holders
thereof additional benefits which they did not have immediately prior
to the Effective Time or relieve the holders thereof of any
obligations or restrictions applicable to the Assumed Options or the
shares of Nugget Stock obtainable upon exercise of the Assumed
Options. Except as set forth in the option or warrant agreement, there
shall be no acceleration of the vesting schedule for any Existing
Option as a result of the consummation of the Merger. From and after
the date of this Agreement, no additional options or warrants shall be
granted by GoHealth.md. However, options and warrants of Nugget may be
granted or issued after Closing.
1.12 Restricted Stock. GoHealth.md and GoHealth.md Stockholders acknowledge
and agree that all Nugget Stock issued to GoHealth.md Stockholders
hereunder shall bear a prominent legend restricting the sale or other
transfer thereof unless such shares are registered with the Securities
and Exchange Commission under the Securities Act of 1933, and with any
applicable state in compliance with the securities laws of such state
(collectively, "Securities Laws") or unless GoHealth.md Stockholder
delivers a legal opinion acceptable to Nugget's General Counsel that
such sale or other transfer is exempt from registration in compliance
with Securities Laws.
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2.1 Post-Merger Affairs.
a. The current officers and directors of GoHealth.md shall remain
the officers and directors of GoHealth.md after the Merger. At
the Closing, GoHealth.md shall inform the directors of Nugget in
writing of their designees and Nugget and its directors shall
take all coporate action needed to appoint such designess as
directors of Nugget and the then existing Nugget directors
(except such existing directors that are designees) shall resign
as directors of Nugget.
b. The Articles of Incorporation and Bylaws of Nugget in effect
immediately prior to the Merger will remain as such after the
Merger, without any modification or amendment as a result of the
Merger.
3.1 Warranties and Representations of GoHealth.md In order to induce
Nugget to enter into this Agreement and to complete the transaction
contemplated hereby, GoHealth.md warrants and represents to Nugget
that:
a. Organization and Standing. GoHealth.md is a corporation duly
organized, validly existing and in good standing under the laws
of the state of Delaware. It is also qualified to do business and
in good standing in every other state or jurisdiction in which it
operates, except where the failure to be so duly qualified or
licensed and in good standing would not individually or in the
aggregate have a material adverse effect on GoHealth.md, and has
all requisite corporate power and authority to own, operate and
lease its assets, properties and business in such states or
jurisdictions. Copies of the articles of incorporation and Bylaws
of GoHealth.md hereto delivered to Nugget and Newco are accurate
and complete as of the date hereof and shall be complete and
accurate as of the Closing.
b. Capitalization. As of Closing, 10,000,000 shares of GoHealth.md
Stock, par value $0.001, are authorized for issuance by
GoHealth.md, of which 3,102,000 shares of Common Stock are issued
and outstanding. Additionally, GoHealth.md has outstanding
options which are exercisable into a total of 465,000 shares of
its GoHealth.md Stock at prices ranging from $0.50 to $1.50 per
share. GoHealth.md also has 102,000 warrants outstanding, each of
which is convertible into one (1) share of GoHealth.md Stock at
$2.50 per share. No other voting or equity securities are
authorized or issued and no other securities convertible into
voting stock are authorized or issued. GoHealth.md does not have
any outstanding subscriptions, warrants, calls, options, rights,
commitments or agreements by which GoHealth.md is bound, calling
for the issuance of any additional shares of Common Stock or any
other voting or equity security which conversion, exercisable or
derivative rights are not transferable into a parent
corporation's securities. The GoHealth.md Stock constitutes 100%
of the outstanding equity capital of GoHealth.md and such stock
constitutes 100% of GoHealth.md's voting power, representing the
exclusive right to receive dividends, when, and if, declared and
paid, and the exclusive right to receive the proceeds of
liquidation attributable to GoHealth.md Stock, if any. From the
date hereof, and until the Closing Date, no dividends or
distributions of capital, surplus, or profits shall be paid or
declared by GoHealth.md in redemption of their outstanding shares
or otherwise. Except as expressly described herein, no additional
shares shall be issued in connection with this Merger by
GoHealth.md.
c. Authority, No Conflict. This Agreement constitutes the legal,
valid, and binding obligation of GoHealth.md, enforceable against
GoHealth.md in accordance with its terms. GoHealth.md has the
absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and to perform its
obligations under this Agreement. Neither the execution nor
delivery
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of this Agreement nor the consummation or performance of the
Merger will contravene, conflict with, constitute default or
result in a violation of (i) any provisions of the articles of
incorporation or Bylaws of GoHealth.md, or (ii) any external
restraint, ruling, agreement, law, judgment, contract, agreement,
plan or order relating to GoHealth.md, which contravention,
conflict, violation or default would result in a material adverse
effect on GoHealth.md's business. The execution and delivery of
this Agreement and the consummation of the transactions on the
part of GoHealth.md contemplated hereunder have been duly and
validly authorized by the board of directors of GoHealth.md and
at or prior to the Closing shall have obtained shareholder
approval for the Merger, or shall have provided the other
Constituent Parties such assurances, including opinions of
counsel, that the other Constituent Parties reasonably require
that no such shareholder approval is required.
d. Taxes. Within the times and in the manner prescribed by law,
GoHealth.md and its subsidiaries have filed all federal, state
and local income or other tax returns and reports required to be
filed with all governmental agencies and have paid or accrued for
payment all taxes as shown on such returns, such that a failure
to file, pay or accrue will not have a material adverse effect on
GoHealth.md or its subsidiaries.
e. No Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial,
pending against GoHealth.md or to the best of GoHealth.md's
knowledge, after diligent inquiry, threatened against or
affecting GoHealth.md or its subsidiaries, or against any of the
officers or directors therewith that arise out of their operation
of GoHealth.md and its subsidiaries, nor, to the best of
GoHealth.md's knowledge, is GoHealth.md or its subsidiaries in
material violation of any federal or state law, ordinance or
regulation of any kind whatever, including, but not limited to
laws, rules and regulations governing the sale of its products,
services or securities. GoHealth.md is not an investment company
as defined in or otherwise subject to regulation under, the
Investment Company Act of 1940.
f. Assets & Liabilities. GoHealth.md represents that neither it nor
its subsidiaries own or have rights or obligations to any assets
and liabilities not disclosed and accounted for in its audited
financial statements, which shall have been provided to Nugget
and Newco prior to Closing.
g. No Interest in Suppliers, Customers, Landlords or Competitors. To
the best of GoHealth.md's knowledge after due inquiry, except as
set forth in its audited financial statements or in this
Agreement none of the following persons possess an ownership
interest of any nature whatsoever in any supplier, customer,
landlord or competitor of GoHealth.md or its subsidiaries:
GoHealth.md Shareholder, family member of any GoHealth.md
Shareholder; or employee of GoHealth.md or its subsidiaries.
h. Insider Debt. Except as specifically set forth herein or in its
audited financial statements, neither GoHealth.md nor its
subsidiaries owe any money, securities, or property to any of the
following persons: GoHealth.md Shareholders, family members of
GoHealth.md Shareholders, or employees of GoHealth.md or its
subsidiaries either directly or indirectly. GoHealth.md and its
subsidiaries do not have any material debt, liability or
obligation of any nature, whether accrued, absolute, contingent
or otherwise, and whether due or to become due, that is not
reflected in its audited financial statements. GoHealth.md and
its subsidiaries do not currently have, nor will they have on
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the Closing Date any pension plan, profit-sharing plan, or stock
purchase plan for any of its employees or certain options to
proposed executive officers.
i. Conduct of Business. GoHealth.md represents that it shall not
materially change the normal course of its business operations
prior to Closing. GoHealth.md shall not amend its Articles of
Incorporation or Bylaws (except as may be described in this
Agreement), declare dividends, redeem securities, incur
additional or newly-funded liabilities outside the ordinary
course of business, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract,
guarantee obligations of any third party, settle or discharge any
balance sheet receivable for less than its stated amount, pay
more on any liability than its stated amount, or enter into any
other transaction without the prior approval of Nugget, not to be
unreasonably withheld.
j. Filings with the Securities and Exchange Commission ("SEC").
GoHealth.md represents that it is aware that Nugget is subject to
SEC reporting requirements.
k. Effect of Merger Transactions. On the Effective Date, as
described herein:
i. Nugget will own all of the issued and outstanding capital
stock of GoHealth.md; and
ii. No other person or entity will have any pre-emptive or other
rights to acquire any of the capital stock of GoHealth.md.
l. Lack of Subsidiaries. GoHealth.md has no subsidiaries.
m. Absence of Certain Changes. Except as otherwise set forth in this
Agreement, there have not been since the date of the latest
audited balance sheet delivered by GoHealth.md any changes of the
following nature:
i. Business, properties, and financial condition. Any
significant labor disputes or any material adverse change in
GoHealth.md's properties, business supply of raw materials,
or markets for its products, including, but not limited to,
damage or destruction of property by fire or other casual,
whether or not covered by insurance, or any material adverse
change in the financial condition or results of operations
of GoHealth.md taken as a whole.
ii. Capital stock; options, dividends, and so forth. Any change
in the authorized, issued, or outstanding capital stock of
GoHealth.md; any granting of any stock option or right to
purchase shares of capitalstock or any issuance of any
security convertible into shares of capital stock of
GoHealth.md; any purchase, redemption, retirement, or other
acquisition of any shares of capital stock by GoHealth.md;
or any agreement to do any of the foregoing; or any
declaration, setting aside; or payment of any dividend or
other distribution in respect of the capital stock of
GoHealth.md.
iii. Sales, leases, borrowings, and so forth. Any sale of lease
of GoHealth.md's property or assets, other than inventory
sold in the ordinary course of busienss, any mortgage or
pledge of any properties or assets of GoHealth.md, any
borrowing incurred, assumed or guaranteed by GoHealth.md
other than in the ordinary course of business.
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iv. Employee benefit plans and certain salaries. Any employment
contract, bonus, stock option, profit-sharing, pension,
retirement, incentive or similar arrangement or plan
instituted, agreed to, or amended.
n. No Violation. GoHealth.md has received no notice of violation of
any applicable zoning regulation, ordinance, or other law, order,
regulation, or requirement relating to its operations, business,
or its properties and, so far as is known to GoHealth.md, (i)
thereis no such violation of a material nature and (ii) all
buildings and structures used by GoHealth.md substantially
conform with all applicable ordinances, codes and regulations.
4.1 Warranties and Representations of Nugget. In order to induce
GoHealth.md to enter into this Agreement and to complete the
transaction contemplated herein, Nugget warrants and represents to
GoHealth.md that:
a. Organization and Standing. Nugget is a corporation duly
organized, validly existing and in good standing under the laws
of Nevada. It is also qualified to do business and in good
standing in every other state or jurisdiction in which it
operates, except where the failure to be so duly qualified or
licensed and in good standing would not individually or in the
aggregate have a material adverse effect on Nugget, and has all
requisite corporate power and authority to own, operate and lease
its assets, properties and business in such states or
jurisdictions. Copies of the articles of incorporation and Bylaws
of Nugget hereto delivered to GoHealth.md are accurate and
complete as of the date hereof and shall be complete and accurate
as of the Closing.
b. Capitalization. As of Closing, Nugget shall have authorized for
issuance 25,000,000 shares of voting Common Stock, $0.01 par
value, of which a total of 697,117 shares will be issued and
outstanding, which shares are validly issued, fully paid and
non-assessable. To the best of Nugget's knowledge, all such
issued and outstanding shares were issued pursuant to a valid
registration statement under the Act or pursuant to valid
exemptions therefrom. No other voting or equity securities are
authorized or issued and no other securities convertible into
voting or equity stock are authorized or issued. Nugget does not
have any outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which Nugget is bound,
calling for the issuance of any additional shares of Common Stock
or any other voting or equity security which conversion,
exercisable or derivative rights are transferable into its or
another entities' securities. Nugget has no outstanding debt
securities except as set forth in its audited financial
statements.
c. Authority, No Conflict. This Agreement constitutes the legal,
valid, and binding obligation of Nugget, enforceable against
Nugget in accordance with its terms. Nugget has the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and to perform its obligations under this
Agreement. Neither the execution nor delivery of this Agreement
nor the consummation or performance of the Merger will
contravene, conflict with, constitute default or result in a
violation of (i) any provisions of the articles of incorporation
or Bylaws of Nugget, or (ii) any external restraint, ruling,
agreement, law, judgment, contract, agreement, plan or order
relating to Nugget, which contravention, conflict, violation or
default would result in a material adverse effect on Nugget's
business. The execution and delivery of this Agreement and the
consummation of the transactions on the part of Nugget
contemplated hereunder have been duly and validly authorized by
the board of directors of Nugget and at or prior to the Closing
shall have obtained shareholder approval for the Merger, or shall
have provided the other Constituent Parties
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such assurances, including opinions of counsel, that the other
Constituent Parties reasonably require that no such shareholder
approval is required.
d. Taxes. Within the times and in the manner prescribed by law,
Nugget and its subsidiaries have filed all federal, state and
local income or other tax returns and reports required to be
filed with all governmental agencies and have paid or accrued for
payment all taxes as shown on such returns, such that a failure
to file, pay or accrue will not have a material adverse effect on
Nugget or its subsidiaries. Nugget has not been advised, nor is
it aware, that any taxing authorityis auditing or is considering
an audit of its operations or tax returns.
e. No Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial,
pending against Nugget or to the best of Nugget's knowledge,
after diligent inquiry, threatened against or affecting Nugget or
its subsidiaries, or against any of the officers or directors
therewith that arise out of their operation of Nugget and its
subsidiaries, nor, to the best of Nugget's knowledge, is Nugget
or its subsidiaries in material violation of any federal or state
law, ordinance or regulation of any kind whatever, including, but
not limited to laws, rules and regulations governing the sale of
its products, services or securities. Nugget is not an investment
company as defined in or otherwise subject to regulation under,
the Investment Company Act of 1940.
f. Assets & Liabilities. Nugget represents that it owns no assets
and has incurred no liabilities except as disclosed in its
audited financial statements and in this Agreement.
g. Filings with the Securities and Exchange Commission ("SEC"). To
the best of Nugget's knowledge, it has complied with all
reporting requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and that all such filings do not contain and
have not contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, false or misleading. Additionally, to the
best of Nugget's knowledge, it has never been subject to any SEC
administrative proceedings, enforcement actions or sanctions and
there is not such proceeding or enforcement investigation pending
or threatened.
h. Insider Debt. Except as specifically set forth in its audited
financial statements, Nugget does not owe any money, securities,
or property to any of the following persons: Nugget Shareholders,
family members of Nugget Shareholders, or employees of Nugget
either directly or indirectly. Nugget does not have any material
debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become
due, that is not reflected in its audited financial statements.
Nugget does not currently have, nor will it have on the Closing
Date any pension plan, profit-sharing plan, or stock purchase
plan for any of its employees or certain options to proposed
executive officers.
i. Ownership of Shares. Upon the transfer of the Nugget Common Stock
to the GoHealth.md Shareholders pursuant to this Agreement, the
GoHealth.md Shareholders will thereby acquire fully paid and
nonassessable shares of Nugget Stock with good and absolute
marketable title thereto. Such securities shall be subject to
restrictions imposed by the Act, and applicable state Blue Sky
laws due to lack of registration with any federal or state
securities commissions or authorities. Nugget shall be
responsible for obtaining any and all exemptions from
registration under Federal
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or applicable state securities laws in connection with the
issuance of Nugget Stock to the GoHealth.md shareholders under
the terms of this Agreement and pursuant to the Merger.
j. Effect of Merger Transactions. On the Effective Date, as
described herein:
i. Nugget will own all of the issued and outstanding capital
stock of GoHealth.md; and
ii. No other person or entity will have any pre-emptive or other
rights to acquire any of the capital stock of GoHealth.md.
k. Lack of Subsidiaries. As of Closing, Nugget shall have only one
subsidiary, Newco.
l. Absence of Certain Changes. Except as otherwise set forth in this
Agreement, there have not been since the date of the latest
audited balance sheet delivered by Nugget any changes of the
following nature:
i. Business, properties, and financial condition. Any
significant labor disputes or any material adverse change in
Nugget's properties, business supply of raw materials, or
markets for its products, including, but not limited to,
damage or destruction of property by fire or other casual,
whether or not covered by insurance, or any material adverse
change in the financial condition or results of operations
of Nugget taken as a whole.
ii. Capital stock; options, dividends, and so forth. Any change
in the authorized, issued, or outstanding capital stock of
Nugget; any granting of any stock option or right to
purchase shares of capital stock or any issuance of any
security convertible into shares of capital stock of Nugget;
any purchase, redemption, retirement, or other acquisition
of any shares of capital stock by Nugget; or any agreement
to do any of the foregoing; or any declaration, setting
aside; or payment of any dividend or other distribution in
respect of the capital stock of Nugget.
iii. Sales, leases, borrowings, and so forth. Any sale of lease
of Nugget's property or assets, other than inventory sold in
the ordinary course of busienss, any mortgage or pledge of
any properties or assets of Nugget, any borrowing incurred,
assumed or guaranteed by Nugget other than in the ordinary
course of business.
iv. Employee benefit plans and certain salaries. Any employment
contract, bonus, stock option, profit-sharing, pension,
retirement, incentive or similar arrangement or plan
instituted, agreed to, or amended.
m. No Violation. Nugget has received no notice of violation of any
applicable zoning regulation, ordinance, or other law, order,
regulation, or requirement relating to its operations, business,
or its properties and, so far as is known to Nugget, (i) thereis
no such violation of a material nature and (ii) all buildings and
structures used by Nugget substantially conform with all
applicable ordinances, codes and regulations.
5.1 Warranties and Representations of Newco. In order to induce
GoHealth.md to enter into this Agreement and to complete the
transaction contemplated herein, Newco warrants and represents to
GoHealth.md that:
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a. Organization and Standing. Newco is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
It is also qualified to do business and in good standing in every
other state or jurisdiction in which it operates, except where
the failure to be so duly qualified or licensed and in good
standing would not individually or in the aggregate have a
material adverse effect on Newco, and has all requisite corporate
power and authority to own, operate and lease its assets,
properties and business in such states or jurisdictions. Copies
of the articles of incorporation and Bylaws of Newco hereto
delivered to GoHealth.md are accurate and complete as of the date
hereof and shall be complete and accurate as of the Closing.
b. Capitalization. As of Closing, Newco shall have authorized for
issuance 25,000,000 shares of voting Common Stock, $0.001 par
value, of which 1,000 shares will be issued and outstanding and
validly issued, fully paid and non-assessable, all of which are
owned by Nugget. To the best of Newco's knowledge, all such
issued and outstanding shares were issued pursuant to a valid
registration statement under the Act or pursuant to valid
exemptions therefrom. No other voting or equity securities are
authorized or issued and no other securities convertible into
voting stock are authorized or issued. Newco does not have any
outstanding subscriptions, warrants, calls, options, rights,
commitments or agreements by which Newco is bound, calling for
the issuance of any additional shares of Common Stock or any
other voting or equity security which conversion, exercisable or
derivative rights are not transferable into a parent
corporation's securities. Newco has no outstanding debt
securities except as set forth in its audited financial
statements.
c. Authority, No Conflict. This Agreement constitutes the legal,
valid, and binding obligation of Newco, enforceable against Newco
in accordance with its terms. Newco has the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and to perform its obligations under this
Agreement. Neither the execution nor delivery of this Agreement
nor the consummation or performance of the Merger will
contravene, conflict with, constitute default or result in a
violation of (i) any provisions of the articles of incorporation
or Bylaws of Newco, or (ii) any external restraint, ruling,
agreement, law, judgment, contract, agreement, plan or order
relating to Newco, which contravention, conflict, violation or
default would result in a material adverse effect on Newco's
business. The execution and delivery of this Agreement and the
consummation of the transactions on the part of Newco
contemplated hereunder have been duly and validly authorized by
the board of directors of Newco and at or prior to the Closing
shall have obtained shareholder approval for the Merger, or shall
have provided the other Constituent Parties such assurances,
including opinions of counsel, that the other Constituent Parties
reasonably require that no such shareholder approval is required.
d. Taxes. Within the times and in the manner prescribed by law,
Newco and its subsidiaries have filed all federal, state and
local income or other tax returns and reports required to be
filed with all governmental agencies and have paid or accrued for
payment all taxes as shown on such returns, such that a failure
to file, pay or accrue will not have a material adverse effect on
Newco or its subsidiaries.
e. No Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial,
pending against Newco or to the best of Newco's knowledge, after
diligent inquiry, threatened against or affecting Newco or its
subsidiaries, or against any of the officers or directors
therewith that arise out of their operation of Newco and its
subsidiaries, nor is Newco or its subsidiaries in material
violation of any federal or state law, ordinance or regulation
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w. of any kind whatever, including, but not limited to laws, rules
and regulations governing the sale of its products, services or
securities. Newco is not an investment company as defined in or
otherwise subject to regulation under, the Investment Company Act
of 1940.
f. Assets & Liabilities. Newco represents that it owns no assets and
that it has not incurred any liabilities since inception except
as disclosed to GoHealth.md.
g. Insider Debt. Except as specifically set forth in its audited
financial statements, Newco does not owe any money, securities,
or property to any of the following persons: Newco Shareholders,
family members of Newco Shareholders, or employees of Newco
either directly or indirectly. Newco does not have any material
debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become
due, that is not reflected in its audited financial statements.
Newco does not currently have, nor will it have on the Closing
Date any pension plan, profit-sharing plan, or stock purchase
plan for any of its employees or certain options to proposed
executive officers.
h. Effect of Merger Transactions. On the Effective Date, as
described herein:
i. Nugget will own all of the issued and outstanding capital
stock of GoHealth.md; and
ii. No other person or entity will have any pre-emptive or other
rights to acquire any of the capital stock of GoHealth.md.
i. Lack of Subsidiaries. Newco has no subsidiaries.
j. Absence of Certain Changes. Except as otherwise set forth in this
Agreement, there have not been since the date of the latest
audited balance sheet delivered by Newco any changes of the
following nature:
i. Business, properties, and financial condition. Any
significant labor disputes or any material adverse change in
Newco's properties, business supply of raw materials, or
markets for its products, including, but not limited to,
damage or destruction of property by fire or other casual,
whether or not covered by insurance, or any material adverse
change in the financial condition or results of operations
of Newco taken as a whole.
ii. Capital stock; options, dividends, and so forth. Any change
in the authorized, issued, or outstanding capital stock of
Newco; any granting of any stock option or right to purchase
shares of capitalstock or any issuance of any security
convertible into shares of capital stock of Newco; any
purchase, redemption, retirement, or other acquisition of
any shares of capital stock by Newco; or any agreement to do
any of the foregoing; or any declaration, setting aside; or
payment of any dividend or other distribution in respect of
the capital stock of Newco.
iii. Sales, leases, borrowings, and so forth. Any sale of lease
of Newco's property or assets, other than inventory sold in
the ordinary course of busienss, any mortgage or pledge of
any properties or assets of Newco, any borrowing incurred,
assumed or guaranteed by Newco other than in the ordinary
course of business.
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iv. Employee benefit plans and certain salaries. Any employment
contract, bonus, stock option, profit-sharing, pension,
retirement, incentive or similar arrangement or plan
instituted, agreed to, or amended.
k. No Violation. Newco has received no notice of violation of any
applicable zoning regulation, ordinance, or other law, order,
regulation, or requirement relating to its operations, business,
or its properties and, so far as is known to Newco, (i) thereis
no such violation of a material nature and (ii) all buildings and
structures used by Newco substantially conform with all
applicable ordinances, codes and regulations.
6.1 No Misleading Statements or Omissions. Neither this Agreement nor any
schedule or document attached hereto or presented to Nugget or Newco
by GoHealth.md or to GoHealth.md by Nugget or Newco in connection with
this Agreement or the Merger, contain or contained any materially
misleading statement, or omits any material fact of statement
necessary to make the other statements or facts therein set forth not
materially misleading.
7.1 Validity of this Agreement. By Closing, all corporate and other
proceedings required to be taken by Nugget, Newco and GoHealth.md in
order to enter into and to carry out this Agreement shall have been
duly and properly taken. Upon execution, this Agreement shall
constitute the valid, binding and enforceable obligations of the
Constituent Parties and shall inure to the benefit of the heirs,
executors, administrators, successors and assigns of the GoHealth.md
Shareholders and upon the successors and assigns of Nugget, except to
the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors rights. The execution and
delivery of this Agreement and these stated terms shall not result in
the breach of any of the terms or conditions of, or constitute a
default under or violate the Constituent Parties' Articles of
Incorporation and Bylaws thereto or any similar document of
undertaking, oral or written, to which the Constituent Parties are a
party to or is bound or may be affected by, nor will such execution,
delivery and carrying out violate any order, writ, injunction, decree,
law, rule or regulation of any court, regulatory agency or other
governmental body; and the business now conducted by the Constituent
Parties can continue to be so conducted after completion of the
transaction contemplated hereby, with GoHealth.md as a wholly-owned
subsidiary of Nugget.
8.1 Access to Books and Records. During the course of the Merger through
Closing, Nugget, Newco and GoHealth.md agree to make available for
inspection all corporate books, records and assets, and otherwise
afford to each other and their respective representatives, reasonable
access to all documentation and other information concerning the
business, financial and legal conditions of each other for the purpose
of conducting a due diligence investigation thereof. Such due
diligence investigation shall be for the purpose of satisfying each
party as to the business, financial and legal condition of each other
for the purpose of determining the desirability of consummating the
proposed Merger. The Constituent Parties further agree to keep
confidential and not use for their own benefit, except in accordance
with this Agreement and the Merger, any information or documentation
obtained in connection with any such investigation.
9.1 Restricted Shares; Legend. All shares of Nugget Common Stock to be
issued to the GoHealth.md Shareholders will be issued pursuant to
exemptions from registration and therefore shall be "restricted
securities" as defined in the Act; and each stock certificate issued
to such recipients hereunder will bear a restrictive legend
substantially as follows:
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The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under the
securities laws of any state and may not be sold or otherwise
transferred unless in compliance with the registration provisions of
such Act and state laws or unless availability of an exemption from
such registration provisions has been established.
Appropriate stop transfer instructions regarding such shares shall be
given to Nugget's stock transfer agent, American Securities Transfer.
10.1 Expenses. Each of the Constituent Parties shall bear and pay the costs
and expenses they have allocated prior to the execution of the
Agreement and that they shall bear and pay the costs incurred by them
or on their behalf in connection with the consummation of this
Agreement, including, without limiting the generality of the
foregoing, fees and expenses of financial consultants, accountants and
counsel and the cost of any documentary stamps, sales and excise taxes
which may be imposed upon or be payable in respect to the transaction.
11.1 Deliveries. At or after Closing, each GoHealth.md Shareholder may
deliver or surrender a certificate or certificates representing all of
such shareholder's GoHealth.md Stock. Upon delivery of such shares,
Nugget will deliver or irrevocably instruct its transfer agent to
deliver the number of shares of Nugget Stock equal to the number of
GoHealth.md shares so surrendered in the certificate format specified
by each GoHealth.md Shareholder.
12.1 No Reverse Split. A material term hereto and a condition to Nugget
entering into this Agreement is that GoHealth.md agree that for a
period of twelve (12) months from the date of Closing, no
recapitalization or reverse stock splits will be effected without the
prior written consent of all of the directors of Nugget as of the date
immediately prior to Closing of this Agreement, which consent shall
not be unreasonably withheld.
13.1 Conditions Precedent to Closing. The obligations of the Constituent
Parties under this Agreement shall be and are subject to fulfillment,
prior to or at the Closing, of each of the following conditions:
a. That each of the representations and warranties of the
Constituent Parties contained herein shall be true and correct at
the time of the Closing date as if such representations and
warranties were made at such time;
b. That the Constituent Parties shall have performed or complied
with all agreements, terms and conditions required by this
Agreement to be performed or complied with by them prior to or at
the time of the Closing;
c. GoHealth.md shall provide Nugget with complete audited financial
statements for the period ending May 31, 1999, on or before the
Closing Date.
d. That the Constituent Parties shall be satisfied with the results
of their due diligence and review of the other Constituent
Parties' books and records as set forth in Section 8.1 herein.
e. GoHealth.md shall provide Nugget with the express consent, in a
format satisfactory to Nugget, of all holders of GoHealth.md's
convertible securities, as described in Section 3.1(b), to
convert such GoHealth.md securities into shares of Nugget's
common stock.
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14.1 Termination. This Agreement may be terminated at any time before or, at
Closing, by:
a. The mutual agreement of the Constituent Parties;
b. Any party if:
i. Any provision of this Agreement applicable to a party shall
be materially untrue or fail to be accomplished;
ii. Any legal proceeding shall have been instituted or shall be
imminently threatening to delay, restrain or prevent the
consummation of this Agreement; or
iii. The conditions precedent to Closing are not satisfied.
c. Upon termination of this Agreement for any reason, in accordance
with the terms and conditions set forth in this paragraph, each
said party shall bear all costs and expenses as each party has
incurred and no party shall be liable to the other.
15.1 Miscellaneous Provisions. This Agreement is the entire agreement
between the Constituent Parties in respect of the subject matter
hereof, and no other agreements exist, written or oral, nor may this
Agreement be modified except in writing and executed by all of the
Constituent Parties hereto. The failure to insist upon strict
compliance with any of the terms, covenants or conditions of this
Agreement shall not be deemed a waiver or relinquishment of such right
or power at any other time or times.
18.1 Controlling Law. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the state of Delaware,
without regard to its law on the conflict of laws. Any dispute arising
out of this Agreement shall be brought in a court of competent
jurisdiction in Delaware. The Constituent Parties exclude any and all
statutes, laws and treaties which would allow or require any dispute
to be decided in another forum or by other rules of decision than
provided in this Agreement.
19.1 Notices. All notices, requests, instructions, or other documents to be
given hereunder shall be in writing and sent by registered mail to the
Constituent Parties at the following addresses:
a. If to Nugget:
Nugget Exploration, Inc.
Attn.: Tyson Schiff, President
2133 East 9400 South, Suite 151
Sandy, UT 84093
b. If to GoHealth.md:
GoHealth.md, Inc.
Attn.: Dr. Leonard Vernon, President
2051 Springdale Road
Cherry Hill, New Jersey 08003
20.1 Finders and Brokers. The Constituent Parties agree that neither has
utilized any finder or broker in bringing the Constituent Parties
together or who were instrumental in the negotiation, execution, or
consummation of this Agreement. Further, the Constituent Parties each
agree to indemnify the other against any claim by any third person for
any commission, brokerage or finder's fee or other payment with
respect to this
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Agreement or the transaction contemplated hereby based on any alleged
agreement or understanding between such party and such third person,
whether express or implied, from the actions of such party. The
covenants set forth in this section shall survive Closing and the
consummation of the transaction herein contemplated.
21.1 Counterparts. This Agreement may be executed in duplicate facsimile
counterparts, each of which shall be deemed an original and together
shall constitute one and the same binding Agreement, with one
counterpart being delivered to each party hereto.
IN WITNESS WHEREOF, the foregoing Agreement, having been duly approved and
adopted by the Board of Directors, of the Constituent Parties, as required, in
the manner provided by the laws of the state of Nevada and state of Delaware,
the presidents of the Constituent Parties do now execute this Agreement under
the authority of the directors of each.
Nugget Exploration, Inc.
By: /s/ Tyson Schiff
-------------------------
Tyson Schiff, President
GoHealth.md, Inc.
By: /s/ Leonard Vernon
-------------------------
Dr. Leonard Vernon, President
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Schedule 1.6
HOLDERS OF COMMON STOCK IN GOHEALTH.MD, INC.
as of October 1, 1999
NAME #of Shares
Robert Deacon, Sr. 2,667
Robert Deacon, Jr. 2,667
Frank Casey 4,000
Albert DiPasquale, M.D. 2,000
Thomas Flynn, III, Esq. 4,000
Scott Hankinson, M.D. 4,000
Marc Kahn, M.D. 4,000
Michael Marks, Esq. 4,000
Joseph McGowan, Jr., Esq. 2,000
Mullica Hill-Family Practice (Dr. Newton & Dr. Jaffee) 4,000
Anthony Pietrafesa 2,666
Sandra Vernon 2,000,000
William Hanna 500,000
Kevin O'Donnell 500,000
Moiz Balkhi 2,000
Market Management Professionals, Inc. 2,000
Alexander Zlatnik, MD 4,000
J. Erik Kishbaugh, Esq. 12,000
Martin Ciner 2,000
Harvey Benn, D.O. 10,000
Frank J. Gettson, D.C. 10,000
Robert Savar 2,000
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NAME #of Shares
Robert Lipinski 2,000
Thomas Capato 2,000
Joseph DiGaetano 2,000
Mark Keminosh, D.C. 4,000
William Bromley, D.C. 2,000
Anthony Iancale 2,000
Dawn Polizzi 4,000
Thomas Flynn, M.D. 4,000
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Schedule 1.11
HOLDERS OF OPTIONS TO ACQUIRE COMMON STOCK IN
GOHEALTH.MD, INC.
as of October 1, 1999
DATE # OF SHARES EXERCISE
GRANTED NAME ISSUABLE PRICE
2/23/99 William Hanna 115,000 $.50
2/23/99 Kevin O'Donnell 115,000 $.50
5/7/99 Millennium Consulting 30,000 $.50
5/26/99 Gary Crooks 2,500 $.50
5/26/99 Gary Crooks 2,500 $1.00
5/26/99 John Madden 2,500 $.50
5/26/99 John Madden 2,500 $1.00
6/12/99 J. Eric Kishbaugh 10,000 $1.00
6/12/99 J. Eric Kishbaugh 10,000 $1.50
8/27/99 Harvey Benn, D.O. 150,000 $1.00
8/27/99 Frank J. Gettson, D.C. 25,000 $1.00
HOLDERS OF WARRANTS ISSUED BY GOHEALTH.MD, INC.
as of October 1, 1999
NAME # of Warrants
Robert Deacon, Sr. 2667
Robert Deacon, Jr. 2,667
Frank Casey 4,000
Albert DiPasquale, M.D. 2,000
Thomas Flynn, III, Esq. 4,000
Scott Hankinson, M.D. 4,000
76
<PAGE>
NAME # of Warrants
Marc Kahn, M.D. 4,000
Michael Marks, Esq. 4,000
Joseph McGowan, Jr., Esq. 2,000
Mullica Hill-Family Practice (Dr. Newton & Dr. Jaffee) 4,000
Anthony Pietrafesa 2,666
Moiz Balkhi 2,000
Market Management Professionals, Inc. 2,000
Alexander Zlatnik, MD 4,000
J. Erik Kishbaugh, Esq. 12,000
Martin Ciner 2,000
Harvey Benn, D.O. 10,000
Frank J. Gettson, D.C. 10,000
Robert Savar 2,000
Robert Lipinski 2,000
Thomas Capato 2,000
Joseph DiGaetano 2,000
Mark Keminosh, D.C. 4,000
William Bromley, D.C. 2,000
Anthony Iancale 2,000
Dawn Polizzi 4,000
Thomas Flynn, M.D. 4,000
77
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
INCLUDING CHANGE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
OF
NUGGET EXPLORATION, INC.
(a Nevada corporation)
Effective: August 16, 1999
The undersigned, being the President and Secretary of Nugget
Exploration, Inc., hereby certifies that the following was duly adopted,
authorized and approved by the Board of Directors and majority shareholders on
August 16, 1999. Nugget Exploration, Inc., a Nevada corporation (the "Company"),
hereby submits this certificate of amendment of articles of incorporation
including a change in the number of authorized shares of common stock, pursuant
to NRS Sections 78.207 and 78.209:
1. The number of authorized shares of the Company's common stock for issuance
is 5,000,000; the par value is $0.01 per share.
2. The number of authorized shares of the Company's common stock for issuance
following the increase of capital is 25,000,000; the par value will remain
as $0.01 per share.
3. The number of outstanding shares of the Company's common stock is 697,603.
4. The following Article is added to the Articles of Incorporation.
ARTICLE XII
The Corporation hereby waives and precludes the application of the
anti-takeover provisions of Nevada Revised Statutes 78.378 to 78.3793, 78.434
and 78.444.
5. The foregoing amendments have been duly authorized and approved by the
Board of Directors of the Corporation on August 16, 1999.
6. The foregoing amendments have been duly adopted and approved by the
stockholders holding no less than a majority of the Company's outstanding
common stocks on August 16, 1999.
7. The foregoing amendments shall be effective August 16, 1999.
Date: August 16, 1999
NUGGET EXPLORATION, INC.
By: /s/ Tyson Schiff
-------------------------
Tyson Schiff, President and Secretary
78
<PAGE>
Notarization of signature of the President and Secretary
State of Utah )
-----------------
)
County of Salt Lake )
-----------
On the 18th day of August, 1999 before, Tammy Gehring , a notary public,
personally appeared Tyson Schiff , the person whose name is subscribed to this
instrument and who has acknowledged that he executed the same as the President
and Director of Nugget Exploration, Inc.
S /s/ Tammy Gehring
-------------------------
E Notary Public
A
L May 12, 2003
---------------------
My Commission Expires
79
<PAGE>
CERTIFICATE OF REDUCTION IN NUMBER OF
AUTHORIZED AND OUTSTANDING SHARES OF COMMON STOCK
OF
NUGGET EXPLORATION, INC.
(a Nevada corporation)
Effective October 7, 1998
The undersigned, being the President and Secretary of Nugget
Exploration, Inc., hereby certifies the following were duly adopted, authorized
and approved by the Board of Directors and holders of a majority of the then
outstanding shares of Common Stock on October 7, 1998. Pursuant to N.R.S.
Sections 78.207 and 78.209, Nugget Exploration, Inc. (the "Company") hereby
submits this certificate of reduction to clarify a certificate of reduction
previously filed on October 15, 1998. On October 7, 1998, the Company approved a
1-for-10 reverse stock split on the Company's authorized shares of Common Stock
and a 1-for-310 reverse stock split on the Company's outstanding shares of
Common Stock, which reverse stock splits were also approved by the holders of a
majority of the then outstanding shares of Common Stock. However, when the
original certificate of reduction was filed it stated that shareholder approval
was not required. This certificate of reduction is being filed to reflect the
fact that the reverse stock splits indicated herein were approved on October 7,
1998 by the holders of a majority of the then outstanding shares of Common
Stock.
1. The number of authorized shares of the Company's Common Stock for
issuance was 50,000,000 prior to the 1-for-10 reverse stock split; the
par value was $0.01 per share.
2. The number of authorized shares of the Company's Common Stock for
issuance after the 1-for-10 reverse stock split is 4,000,000; the par
value remains as $0.01 per share.
3. The number of outstanding shares of the Company's Common Stock for
issuance was 30,106,000 prior to the 1-for-310 reverse stock split; the
par value was $0.01 per share.
4. The number of outstanding shares of the Company's Common Stock for
issuance after the 1-for-310 reverse stock split is approximately
97,117; the par value remains as $0.01 per share.
5. Fractional shares will be rounded up to the nearest whole number.
6. The reduction change in the number of authorized and outstanding shares
of the Company's Common Stock for issuance shall be effective October
7, 1998.
Nugget Exploration, Inc.
/s/ Tyson Schiff
-------------------------
Tyson Schiff, President and Secretary
STATE OF UTAH ss.
COUNTY OF SALT LAKE ss.
On this 1st day of July , 1999, before me personally appeared Tyson
Schiff, the person whose name is subscribed to this instrument and who has
acknowledged that he executed the same as the President and Secretary of Nugget
Exploration, Inc.
/s/ Tammy Gehring
---------------------
Notary Public State of Utah
My Commission Expires: 5/12/2003
----------
Tammy Gehring
-------------
(Print Notary's Name)
80
<PAGE>
CERTIFICATE OF REDUCTION OF CAPITAL
AND CHANGE IN NUMBER OF ISSUED SHARES
OF
NUGGET EXPLORATION, INC.
(a Nevada corporation)
Effective October 7, 1998
The undersigned, being the President and Secretary, respectively, of
Nugget Exploration, Inc., hereby certify the following were duly adopted,
authorized and approved by the Board of Directors on October 7, 1998. Pursuant
to N.R.S. Sections 78.207 and 78.209, Nugget Exploration, Inc. (the "Company")
hereby submits this certificate of change in the number of authorized shares:
1. The current number of authorized shares of the Company is 50,000,000; the
par value is $0.01 per share.
2. The number of shares authorized following the reduction of capital will be
5,000,000; the par value will remain as $0.01 per share.
3. The number of shares to be issued after the 1-for-310 reverse stock split
on the Company's issued and outstanding shares will be approximately 97,117
shares.
4. Fractional shares will be rounded up to the nearest whole number.
5. The reduction in authorized shares and the 1-for-310 reverse stock
split have been approved by the Board of Directors, thus shareholder
approval is not required.
6. The reduction of capital and change in number of issued shares shall be
effective October 19, 1998.
Nugget Exploration, Inc.
/s/ Mary MacGuire /s/ Tyson Schiff
- -------------------------------------------------- ----------------
Mary MacGuire, Acting President Tyson Schiff, Secretary
Notarization of the Acting President
STATE OF WYOMING ss.
COUNTY OF NATRONA ss.
On this 14 day of October before me, Denise S. Stichert , a notary
--------- ------------- ----------------------
public, personally appeared Mary MacGuire the person whose name is subscribed
--------------------
to this instrument and who has acknowledged that he/she executed the same as the
Acting President of Nugget Exploration, Inc.
/s/ Denise S. Stichert
----------------------
S Notary Public
E
A 10/04/2000
L My Commission Expires
81
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
WESTERN EXPLORATION AND MINING COMPANY, a Nevada corporation (Company),
by its President and Secretary does hereby certify:
1. The Board of Directors of the corporation at a meeting duly held by
consent on January 16, 1981 passed a resolution declaring that the following
change and amendment in the Articles of Incorporation is advisable:
That ARTICLE FIRST of the Company's Articles of Incorporation be
amended to read as follows:
"The name of the corporation is Nugget Exploration, Inc."
2 The number of shares of the Company outstanding and entitled to vote
on an amendment to the Articles of Incorporation is 3,976,000 shares of $0.01
par value common stock and the change and amendment have been consented to and
authorized by the written consent of shareholders holding 3,976,000 shares,
being all of the outstanding shares being entitled to vote thereon. The Company
has only one class of outstanding stock.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed by its President and its Secretary and its corporate seal to be affixed
hereto on January 29, 1981.
WESTERN EXPLORATION AND MINING COMPANY
a Nevada Corporation
S E A L
By /s/ John W. MacGuire
--------------------
John W. MacGuire, President
ATTEST:
/s/ Mary C. MacGuire
- ---------------------------
Mary C. MacGuire, Secretary
STATE OF WYOMING )
) ss
COUNTY OF NATRONA )
On January 29, 1981 personally appeared before me, a Notary Public,
John W. MacGuire and Mary C. MacGuire, who acknowledged that they executed the
above instrument.
My Commission Expires:
S E A L /s/ Alice D. Shaklee
--------------------
Notary Public
82
<PAGE>
ARTICLES OF INCORPORATION
OF
WESTERN EXPLORATION AND MINING COMPANY
We, the undersigned natural persons of the age of twenty- one
years or more, acting as incorporators of a corporation un- der the
General Corporation Law of Nevada, adopt the following Articles of
Incorporation for such corporation.
FIRST: The name of the corporation is Western Exploration
and Mining Company.
SECOND: The location of the principal office of this cor-
poration within the State of Nevada is One East First Street, Reno,
County of Washoe, Nevada, 89501.
THIRD: The corporation shall have unlimited power to engage in
and to do any lawful act concerning any or all lawful busi- nesses for
which corporations may be organized under the General Corporation Law
of Nevada, this statement of purpose and power being authorized
specifically in ss.78.035, Nevada Revised Statutes, 1957, as amended.
The specific purpose of this corporation with- in the scope of its
broad authority is to engage in the business of exploring for and
developing natural resources including uranium, gold, silver, petroleum
and other minerals and engaging in all transactions relating thereto.
The specific and immediate purpose is not in limitation of the general
powers and authori- ties granted under law and, specifically, the
General Corporation Law of Nevada.
FOURTH: The aggregate number of shares which the corporation
shall have authority to issue is 50,000,000 shares, each having a par
value of $0.01 per share.
FIFTH: The members of the governing board shall be styled
"directors." The number of directors constituting the initial Board of
Directors of the corporation is three. The names and addresses of the
persons who are to serve as directors until the first annual meeting of
shareholders or until their successors are elected and shall qualify
are:
Name Address
John W. MacGuire P.O. Box 2977
Casper, Wyoming 82602
James M. MacGuire 28 Green Turtle Road
Coronado Cays, San Diego, CA
Donald A. MacQueen 1756 South Chestnut
Casper, Wyoming 82601
The number of directors to be elected at each annual meeting
of shareholders or at a special meeting called for the election of
directors shall be not less than three nor more than nine, the exact
number to be fixed by the By-laws.
SIXTH: The capital stock of this corporation shall not be
subject to assessment to pay the debts of the corporation, and, in this
particular, these Articles of Incorporation shall not be subject to
amendment.
SEVENTH: The name and address of each incorporator is:
83
<PAGE>
Name Address
John W. MacGuire 815 South Durbin
Casper, Wyoming 82601
Mary C. MacGuire 815 South Durbin
Casper, Wyoming 82601
John C. MacGuire 815 South Durbin
Casper, Wyoming 82601
EIGHTH: The corporation shall have perpetual existence.
NINTH: No holder of shares of shares of stock of any class of
the corporation, whether now or hereafter authorized, shall have the
pre- emptive right to purchase, receive or subscribe for any of the
unissued stock of the corporation, or for any stock of the cor-
poration hereafter authorized to be issued, or for bonds, deben- tures,
or other securities convertible into stock of any class of the
corporation, or for stock held in the treasury of the corporation; and
all such unissued and additional shares of stock, bonds, debentures, or
other securities convertible into stock of any class of the corporation
as well as stock held in the treasury of the corporation, howsoever the
same may have been acquired, may be issued and disposed of by the Board
of Directors to such person as may be permitted by law) as the Board of
Directors in their absolute discretion may deem advisable.
TENTH: Cumulative voting in the election of directors is not
permitted.
ELEVENTH: All lawful restrictions on the sale or other dis-
position of shares may be placed on all or a portion or portions
of the certificate evidencing the corporation's shares.
TWELFTH: The officers, directors and other members of manage-
ment of this corporation shall be subject to the doctrine of cor-
porate opportunities only insofar as it applies to business oppor-
tunities in which this corporation has expressed an interest as
determined from time to time by the corporation's Board of Direc- tors
as evidenced by resolutions appearing in the corporation's Minutes.
When such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the attention
of the officers, directors and other members of management of this
corporation shall be disclosed promptly to this corporation and made
available to it. The Board of Directors may reject any business
opportunity presented to it and thereafter any officer, director or
other member of management may avail himself of such opportunity. Until
such time as this corporation, through its Board of Directors, has
designated an area of interest, the officers, directors and other
members of management of this corporation shall be free to engage in
such areas of interest on their own and this doctrine shall not limit
the rights of any officer, director or other member of management of
this corpora- tion to continue a business existing prior to the time
that such area of interest is designated by this corporation. This
provi- sion shall not be construed to release any employee of the
corpora- tion (other than an officer, director or member of management)
from any duties which he may have to the corporation.
THIRTEENTH: The directors of this corporation are authorized to adopt,
confirm, ratify, alter, amend, rescind, and repeal Bylaws or any
portion thereof from time to time.
Dated: July _16 , 1980.
----
84
<PAGE>
/s/ John W. MacGuire
------------------------------
John W. MacGuire
/s/ Mary C. MacGuire
------------------------------
Mary C. MacGuire
/s/ John C. MacGuire
------------------------------
John C. MacGuire
STATE OF WYOMING )
) ss.
COUNTY OF NATRONA )
On July 16 , 1980, personally appeared before me the
undersigned, a notary public, in and for the said county and state,
John W. MacGuire, Mary C. MacGuire and John C. MacGuire, known to me to
be the persons described in and who executed the foregoing instrument,
who acknowledged to me that they and each of them executed the same
freely and voluntarily and for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal on
July 16 , 1980. My commission expires: 5-8-81 .
S E A L /s/ Ellen M. Riggs
------------------
Notary Public
85
EXHIBIT 3.2
CONSENT TO ACTION WITHOUT A MEETING
OF THE BOARD OF DIRECTORS
OF
NUGGET EXPLORATION, INC.
The undersigned constituting all of the members of the board of
directors of Nugget Exploration, Inc., a Nevada corporation (the "Company"),
this 17th day of June 1999, hereby adopt the following resolution by written
consent effective immediately:
WHEREAS, pursuant to the power granted by the Company's Articles of
Incorporation, the board of directors desires to amend the Company's Bylaws to
provide for indemnification of the Company's directors and offices to the
fullest extent allowed by law;
RESOLVED, that the Company hereby approves and adopts, pursuant to the
authority granted to the directors in Article Thirteenth of the Articles of
Incorporation, with such changes as the appropriate officers of the Company
shall deem necessary, an amendment of the Company's Bylaws to add the following
Section 44 which shall generally indemnify the directors and officers of the
Company to the fullest extent allowed by law:
Section 44. Indemnification. No director of officer of the
Company shall be personally liable to the Company or any of its
stockholders for damages for breach of fiduciary duty as a director or
officer involving any act or omission of any such director officer
provided, however, that the foregoing provision shall not eliminate or
limit the liability of a director or officer for acts or omissions
which involve intentional misconduct, fraud or a knowing violation of
law, or the payment of dividends or other distributions in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or
modification of this Section shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director
or officer of the Company for acts or omissions prior to such repeal or
modification.
RESOLVED FURTHER, that the appropriate officers of the Company are
authorized, empowered and directed, in the name and on behalf of the Company, to
execute and deliver all such documents, schedules, instruments and certificates,
to make all such payments or perform all such acts and things, and to execute
and deliver all such other documents as may be necessary from time to time in
order to carry out the purpose and intent of amendment to the Company's Bylaws;
and that all of the acts and doings of any of such officers that are consistent
with the purpose of this amendment of the Company's Bylaws are hereby
authorized, approved, ratified and confirmed in all respects.
/s/ Tyson Schiff /s/ Brian Ortega
- ------------------------------------------------------- ----------------
Tyson Schiff, Director Brian Ortega, Director
/s/ Marianne Brady
Marianne Brady, Director
86
<PAGE>
BY-LAWS
OF
NUGGET EXPLORATION, INC.
OFFICES
Section 1. The principal office of the corporation in the State of
Nevada shall be located at Reno, Nevada. The corporation may have such other
offices, either within or without the State of Nevada, as the Board of Directors
may designate or as to the business of the corporation may require from time to
time.
SHAREHOLDERS
Section 2. Annual Meetings. The annual meeting of the shareholders
shall be held during the months of October, Novem- ber or December of each year
at such time and place as the President, Vice President or Secretary shall
designate, for the purpose of electing Directors and for the transaction of such
other business as may come before the meeting.
Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than one-tenth of all the
outstanding shares of the corporation entitled to vote at the meeting.
Section 4. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Nevada, as the place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
A waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Nevada, as the place
for the holding of such meeting. If no designation is made, or if a special
meeting be otherwise called, the place of the meeting shall be the registered
office of the corporation in the State of Nevada.
Section 5. Notice of Meeting. Written or printed notice stating the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meet- ing is called, shall be delivered not
less than ten nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the President or the Secretary,
or the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States Mail, addressed to the shareholder
at his address as it appears on the stock transfer books of the corporation,
with postage thereon prepaid.
87
<PAGE>
Section 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any ad- journment thereof, or shareholders entitled
to receive payment of any dividend or in order to make a determination of share-
holders for any other proper purpose, the Board of Directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, sixty days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Direc- tors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than sixty days, and, in case of a meeting of shareholders, not less than ten
days prior to the date on which the particu- lar action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders en-
titled to notice of or to vote at a meeting of shareholders, or on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
Section 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business un- til adjournment, notwithstanding the
withdrawal of enough share- holders to leave less than a quorum. The vote for
directors and, upon the demand of any shareholder, the vote upon any question
before the meeting, shall be by ballot.
Section 8. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the share- holder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. Voting of Shares by Certain Holders. Shares
-----------------------------------
standing in the name of another corporation may be voted by
such officer, agent or proxy as the By-laws of such corporation
may prescribe, or in the absence of such provision, as the
88
<PAGE>
Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or con- servator
may be voted by him, either in person or by proxy, with- out a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be en- titled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or in- directory, at any
meeting, and shall not be counted in determining the total number of outstanding
shares at any given time.
Section 10. Voting. There shall be no cumulative voting of shares.
Section 11. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders (other than the election of directors) may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by shareholders holding a majority of the shares
outstanding who are entitled to vote with respect to the subject matter thereof.
Further directors may be elec- ted without a meeting if a consent in writing,
setting forth the names of the directors so elected, shall be signed by all of
the shareholders entitled to vote with respect to the elec- tion of directors.
BOARD OF DIRECTORS
Section 12. General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
Section 13. Number, Tenure and Qualifications. The number of Directors
of the corporation shall be six1. Each Director shall hold office until the next
annual or special meeting of shareholders at which time a new Board of Directors
is elected and until his successor shall have been elected and qualified.
Directors need not be residents of Nevada or shareholders of the corporation.
- -------- 1 Amended November 9, 1981
89
<PAGE>
Section 14. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this By-law immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without Nevada, for the holding of additional regular meetings without other
notice than such resolution.
Section 15. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Nevada, as the place for holding any special meeting of the Board of Directors
called by them.
Section 16. Notice. Notice of any special meeting shall be given at
least two days previous thereto by written notice delivered personally or mailed
to each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States Mail so ad-
dressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting. The attendance
of a director at a meeting shall constitute a waiver of notice of such meeting,
ex- cept in cases in which a director attends a meeting for the express purposes
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the busi- ness to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 17. Quorum. A majority of the number of directors fixed by
Section 13 shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but if less than such majority is present at
a meeting, a majority of the directors present may adjourn the meeting from time
to time with- out further notice.
Section 18. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 19. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
If a director- ship is to be filled by reason of an increase in the number of
Directors, the Board of Directors may appoint two such additional
90
<PAGE>
Directors in any one fiscal year but all other directorships to be filled by
reason of an increase in the number of directorships shall be filled by election
at an annual meeting or at a special meeting of shareholders called for that
purpose.
Section 20. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 21. Presumption of Assent. A Director of the cor- poration who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the secre- tary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Direc- tor who voted in favor of such action.
Section 22. Informal Action by Directors. Any action required to be
taken at a meeting of the Directors, or any other action which may be taken at a
meeting of the Directors, may be taken without a meeting if a consent in
writing, setting forth the ac- tion so taken, shall be signed by all of the
Directors with respect to the subject matter thereof.
OFFICERS
Section 23. Number. The officers of the corporation shall be a
President, a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. One or more Vice-Presidents (the number thereof to be
determined by the Board of Directors) and such other officers and assistant
officers as may be deemed necessary may be elected or appointed by the Board of
Directors. Any two or more offices may be held by the same person, except the
offices of President and Secretary.
Section 24. Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the shareholders. If the election of officers shall not
be held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
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Section 25. Removal. Any officer or agent elected or ap- pointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the cor- poration would be served threreby, but
such removal shall be with- out prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
Section 26. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 27. Chairman of the Board of Directors. The Chairman of the
Board of Directors shall, when present, preside at all meet- ings of the
shareholders and of the Board of Directors. The Chair- man of the Board of
Directors may sign, with the Secretary, Assis- tant Secretary, or any other
proper officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts or other instruments which the Board of Directors has
authorized to be executed, except in cases in which the signing and execution
thereof shall be expressly delegated by the Board of Directors or by the By-laws
to some other officer or agent of the corporation, or shall be required by law
to be otherwise signed or executed; and in general shall perform all duties
incident to the office of Chair- man of the Board of Directors and such other
duties as may be pre- scribed by the Board of Directors from time to time.
Section 28. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all the business and affiars
of the corporation. In the absence of the Chairman of the Board of Directors or
in the event of his death, inability or refusal to act, the President shall
preside at meetings of the shareholders and of the Board of Directors. The
President may sign, with the Secretary, Assistant Secretary or any other proper
officer of the corporation thereunto authroized by the Board of Directors,
certificates for shares of the corpora- tion, any deeds, mortgages, bonds,
contracts or other instruments which the Board of Directors has authorized to be
executed, except in cases in which the signing and execution thereof shall be
ex- pressly delegated by the Board of Directors or by the By-laws to some other
officer or agent of the corporation, or shall be re- quired by law to be
otherwise signed or executed; and in general shall perform all duties incident
to the office of President, and such other duties as may be prescribed by the
Board of Direc- tors from time to time.
Section 29. The Vice-Presidents. In the absence of the President or in
the event of his death, inability or refusal to act, the Vice-President (or in
the event there be more than one Vice-President, the Vice-Presidents into the
order designated at the time of their election, or in the absence of any
designation,
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then in the order of their election), if there be a Vice-President shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any Vice-President
may sign, with the Secre- tary or an Assistant Secretary, certificates for
shares of the corporation; and shall perform such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
Section 30. The Secretary. The Secretary shall: (a) keep the minutes of
the shareholders and the Board of Directors meetings in one or more books
provided for that purpose; (b) see that all notices duly are given in accordance
with the provisions of these By-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents the execut- tion of which on
behalf of the corporation under its seal duly is authorized; (d) keep a register
of the post office address of each shareholder which shall be furnished ot the
Secretary by such shareholder; (e) sign with the President, or a Vice-President,
cer- tificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (f) have general charge
of the stock transfer books of the corpora- tion; and (g) in general perform all
duties incident to the office of the Secretary and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors.
Section 31. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful dis- charge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall: (a) have charge and custody of and be responsible for all funds and
securi- ties of the corporation; receive and give receipts for monies due and
payable to the corporation from any source whatsoever, and deposit all such
monies in the name of the corporation in such banks, trust companies, or other
depositories as shall be selected; and (b) in general peform all of the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors.
Section 32. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Direc- tors, may sign
with the President or a Vice-President certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assis- Treasurers shall respectively, if required by
the Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine. The
assistant Secretaries and Assistant Teasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the Presi- dent or the Board of Directors.
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Section 33. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no of- ficer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
corporation.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
-------------------------------------
Section 34. Contracts. The Board of Directors may autho- rize any
officer or officers, agent or agents, to enter into contracts or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 35. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instanes.
Section 36. Checks, Drafts, etc. All checks, drafts or other order for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or offerces, agent or
agents of the cor- poration and in such manner as shall from time to time be
deter- mined by resolution of the Board of Directors.
Section 37. Deposits. All funds of the corporation not otherwise
employed 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 select.
MISCELLANEOUS
Section 38. Certificates for Shares. Certificates represent- ing shares
of the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chairman of the Board of
Directors, the President or a Vice President and by the Secretary or an
Assistant Secretary. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corpora- tion for transfer shall be cancelled
and no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the corporation as the Board of Directors may
prescribe.
Section 39. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of autho-
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rity to transfer, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation, and on surrender
for cancellation of the certifi- cate for such shares. The person in whose name
shares stand on the books of the corporation shall be deemed by the corporation
to be the owner thereof for all purposes.
Section 40. Dividends. The Board of Directors may from time to time
declare, and the corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.
Section 41. Seal. The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal."
Section 42. Waiver of Notice. Whenever any notice is required to be
given to any shareholder or director of the corporation under the provisions of
these By-laws or under the provisions of the Articles of Incorporation or under
the provisions of the Nevada Business Corporation Act, a waiver thereof in
writing, signed by the person or person entitled to such notice, whether before
or after the time stated therein, shall be deemed equive- lent to the giving of
such notice.
Section 43. Amendments. These By-laws may be altered, amended or
repealed and new By-laws may be adopted by the Board of Directors at any regular
or special meeting of the Board of Directors.
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EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
GOHEALTH.MD INC.
FIRST: The name of this corporation is: GOHEALTH.MD INC.
SECOND: The address of its registered office in the State of Delaware and
the name of its registered agent is Agents and Corporations, Inc., Suite 600,
One Commerce Center, Twelfth and Orange Streets, Wilmington, New Castle County,
Delaware 19899-0511.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares which the corporation is authorized to
issue is 10,000,000 shares of common voting stock, each share to have a par
value of $.001 per share.
FIFTH: The name and mailing address of the incorporator is: Patricia A.
Howe, Suite 600, One Commerce Center, Twelfth and Orange Streets, Wilmington,
Delaware 19899-0511.
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The directors shall have concurrent power with the stockholders to
make, alter, amend, change, add to or repeal the By-Laws of the corporation.
EIGHTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Notwithstanding the foregoing sentence, a director shall be liable to the extent
provided by applicable law, (i) for breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of Delaware; or (iv) for
any transaction from which the director derived an improper personal benefit.
This Article Eighth shall not eliminate or limit the liability of a director for
any act or omission occurring prior to the date when this Article Eighth became
effective.
I, the undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed, and the facts therein stated are true and,
accordingly, I have hereunto set my hand and seal this 23rd day of February,
1999.
/s/ Patricia A. Howe (SEAL)
---------------------------------
Patricia A. Howe,
Incorporator
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EXHIBIT 3.4
BY-LAWS
OF
GOHEALTH.MD INC.
ARTICLE I - OFFICES
Section 1. The registered office shall be in the City of Wilmington,
New Castle County, Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine, or the business of the corporation may require.
ARTICLE II - MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for election of directors
shall be held in Wilmington, Delaware, at such place as may be fixed from time
to time by the Board of Directors, or at such other place, either within or
without Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without
Delaware, as shall be stated in the notice of meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of the stockholders commencing with the year
1999 shall be held on the thirty-first of December in each year.
If the designated day is a legal holiday, then the annual meeting shall
be held on the next secular day following or at such other date and time as
shall be designated from time to time by the Board of Directors and stated in
the notice of meeting, at which they shall elect by a plurality vote by written
ballot a Board of Directors, and transact other business as may properly be
brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting, shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than fifty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be
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called by the president or secretary at the request in writing of a majority of
the Board of Directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than fifty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, 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 such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder on record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be voted
on after three years from its date unless the proxy provides for a longer
period.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action, by any provision of the statutes, the meeting and vote of stockholders
may be dispensed with if all of the stockholders who would have been entitled to
vote upon the action if such meeting were held shall consent in writing to such
corporate action being taken; or if the certificate of incorporation authorized
the action to be taken with the written consent of the holders of less than all
the stock who would have been entitled to vote upon the action if a meeting were
held, then on the written consent of the stockholders having not less than such
percentage of the number of votes as may be authorized in the certificate of
incorporation; provided that in no case shall the written consent be by the
holders of stock having less than the minimum percentage of the vote required by
statute for the proposed corporate action; and provide that prompt notice must
be given to all stockholders of the taking of corporate action without a meeting
and by less than unanimous written consent.
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ARTICLE III - DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be three. A director shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and any director
elected shall hold office until his successor is elected and qualified. A
director need not be a stockholder.
Section 2. 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 the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. 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), the Court of Chancery of the State of
Delaware may, upon application of any stockholder or stockholders holding at
least ten percent of the total number of 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. The business of the corporation shall be managed by its
Board of Directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. A director of the corporation may resign at any time by
giving notice to the Board, the president or secretary of the corporation. Such
resignation shall take effect on the date of receipt 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.
Section 5. A director or directors may be removed with or without cause
by the affirmative vote of the holders of a majority of all the shares of stock
outstanding entitled to vote, at a special meeting of the stockholders called
for such purposes.
Meetings of the Board of Directors
Section 6. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 7. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum is present. In the event of the failure of
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
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Section 8. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 9. Special meetings of the Board of Directors may be called by
the president on three days' notice to each director, either personally or by
mail or by telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 10. At all meetings of the Board, three 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
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, 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.
Section 11. Unless otherwise restricted by the certificate of
incorporation or these by-laws, 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, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
Committees of Directors
Section 12. The Board of Directors may, upon resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of two or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any
such committee, to the extent provided in the resolution, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may required it; provided, however, that, in the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors.
Section 13. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
Compensation of Directors
Section 14. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV - NOTICES
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Section 1. Whenever, under the provisions of the statutes or the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his 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 directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V - OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board
of Directors and shall consist of a president, a secretary and a treasurer. The
Board of Directors may also choose one or more vice presidents, assistant
secretaries and assistant treasurers. Any number of offices may be half by the
same person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose, a president, a secretary and a
treasurer.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
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Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
The President
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the Board of
Directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
Section 7. The president shall execute bonds, mortgages, and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed, and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
The Vice Presidents
Section 8. In the absence of the president, or in the event of his
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the president, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the president. The vice presidents
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
The Secretary and Assistant Secretary
Section 9. The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose, and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation, and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretary in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary, and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
The Treasurer and Assistant Treasurers
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Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to 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.
Section 12. The treasurer shall disburse the funds of the corporation
as may be ordered by the Board of Directors taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the Board of Directors, the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books. papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
ARTICLE VI - CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by or in the name of the corporation by the
chairman, or vice chairman of the Board of Directors, or the president or a vice
president and the treasurer or an assistant treasurer or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
Section 2. Where a certificate is countersigned (a) by a transfer agent
other than the corporation or its employee; or (b) by a registrar other than the
corporation or its employee, any other signature on the certificates may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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Lost Certificates
Section 3. 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 or
destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or 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 or destroyed.
Transfer of Stock
Section 4. Upon surrender to the corporation or transfer agent of the
corporation or a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
Transfer Agent and Registrar
Section 5. The corporation may, if and whenever the Board of Directors
shall so determine, maintain one or more transfer offices or agencies within or
without the State of Delaware, each in charge of a transfer agent or agents
designed by the Board of Directors, where the shares of the corporation shall be
directly transferable, and also one or more registry offices, each in charge of
a registrar or registrars designated by the Board of Directors, where such
shares shall be so registered, and no certificate for shares of the corporation
in respect of which a transfer agent or registrar shall have been designated
shall be valid unless countersigned by such transfer agent and registered by
such registrar. The Board of Directors may also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of share certificates of the corporation.
Fixing Record Date
Section 6. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders 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.
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Registered Stockholders
Section 7. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or in interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII - GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 2. 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 form time to time, in their discretion, think 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
directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Annual Statement
Section 3. The Board of Directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
Checks
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Fiscal Year
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
Seal
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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ARTICLE VIII - AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the Certificate of
Incorporation at any regular meeting of the stockholders or of the Board of
Directors, or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting.
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EXHIBIT 4.1
MCOM Management Corp.
Investment Banking
November 16, 1999
BY DHL COURIER
Nugget Exploration, Inc.
2051 Springdale Rd.
Cherry Hill, NJ 08003
Attn: Dr. Leonard Vernon
Management Consulting Agreement
Our File: 2532-V
Dear Sirs:
Formalizing our earlier discussions, this is to acknowledge and confirm the
terms of our Management Consulting Agreement ("Agreement") as follows:
1. Nugget Exploration, Inc. (the "Company") hereby engages
MCOM Management Corp.
("MCOM") and MCOM hereby agrees to render services to the Company as a
management consultant, strategic planner and advisor and as further
described herein.
2. Duties. During the term of this Agreement, MCOM shall
provide advice and consult with the
Company concerning management, marketing, strategic planning, corporate
organization and structure, expansion of services, and shall review and
advise the Company regarding its overall progress, needs and condition.
MCOM agrees to provide on a timely basis the following enumerated
services plus additional services contemplated thereby:
a. Assist the Company in the implementation of short range and long term
strategic planning to fully develop and enhance the Company's
operations, resources, products and services;
b. Assist the Company in the implementation of a marketing program with a
view toward broadening the markets for its products and services;
c. Assist the Company in the monitoring of service provided by the other
professionals employed or retained by the Company;
d. Advise the Company relative to the recruitment and employment of key
executives consistent with the expansion of operations of the Company;
e. Advise and recommend to the Company additional services relating to
the present business and services provided by the Company as well as
new products and services that may be provided by the Company.
The Empire State Building 550 Fifth Ave., Suite 5807 New York, NY 10118
Tel: 212.629.4911 Fax: 212.629.4917
_____________________________________________________________________
email: [email protected] .629.4917
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f. Assist the Company in development of third part marketing
partnerships, sale of services and negotiation of exclusive
advertising rights with prospective ISP's.
g. Assist the Company in developing a strategic or marketing "significant
event" which will increase visibility of the Company and materially
effect the Company.
h. Coordinate both U.S. and international road shows.
3. Term. The term of this Agreement shall be for a one yea period commencing
upon the date hereof.
4. Compensation. As compensation for its services hereunder, the Company shall
issue to MCOM:
a. $5,000 per month with the first payment of $5,000 to be made within
seven (7) days of the date of this agreement and thereafter payments
of $5,000 per month to continue thirty days hence on a monthly basis
with the final payment to be due and payable during October, 2000.
b. 300,000 shares of common stock of the Company (the "Common Stock") on
or before November 30, 1999. The company shall file a registration
statement with respect to these shares on or before January 15, 2000.
If the Company does not file the registration statement with the SEC
on or before January 15, 2000, MCOM shall receive an additional
100,000 shares on or before February 15, 2000, and a registration
statement for such additional shares of the Common Stock shall be
filed with the SEC on or before April 30, 2000.
c. Within fifteen (15) days of the issuance of the 300,000 shares
mentioned in paragraph 4.b. above, MCOM shall provide the Company with
a bridge loan in the amount of $100,000, with interest to accrue from
the date the Company receives the funds at the rate of ten percent
(10%) per annum on the unpaid balance until paid or until default,
both principal and interest payable in cash or kind. The principal and
interest shall be due and payable on or before November 30, 2000.
d. The Company shall issue on or before November 30, 1999, a warrant to
purchase 500,000 shares of the Common Stock, with the registration
statement with respect to such shares of the Common Stock to be filed
with the SEC on or before January 15, 2000. The exercise price of the
warrant shall be $1.00 per share for the first 100,000 shares of the
Common Stock and $2.00 per share for the next 400,000 shares of the
Common Stock.
In the event the registration statement is not filed with the SEC on
or before January 15, 2000, MCOM or its designees shall receive an
additional warrant to purchase 100,000 shares of the Common Stock at
an exercise price of $2.00 per share. A registration statement with
respect to these additional 100,000 shares shall be filed with the SEC
on or before March 31, 2000. All expenses, including attorneys and
accountants fees associated with such registration statement shall be
for the Company's account.
e. Upon exercise of all of the warrants set forth in paragraph 4.d.
above, on or before April 1, 2000, the Company shall issue to MCOM an
additional 200,000 shares of the
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Common Stock. MCOM shall have demand registration rights with respect
to such shares, and should MCOM exercise the demand registration
rights, MCOM shall be responsible for all registration fees, expenses,
including attorneys' fee. These shares shall also have "piggyback"
registration rights. The Company shall retain the right to withhold
the issuance of the shares issued pursuant to this clause upon thirty
(30) days written notice to MCOM.
5. Expenses. The Company shall be responsible for all reasonable expenses MCOM
may incur in performing services under this Agreement. However, all
expenses over $500 in any month must be pre-approved by the Company.
6. Confidentiality. MCOM will not disclose to any other person, firm,
corporation, nor use for its own benefit during or after the term of this
Agreement, any trade secrets or other information designated as
confidential by the Company which is acquired by MCOM in the course of its
performing services hereunder. (A trade secret is information not generally
known to the trade, which gives the Company an advantage over its
competitors. Trade secrets can include, by way of example, products or
services under development, production methods and processes, sources of
supply, customer lists, marketing plans and information concerning the
filing or pendency of patent applications.) Any financial advice rendered
by MCOM pursuant to this Consulting Agreement may not be disclosed publicly
in any manner without the prior written approval of MCOM.
7. Indemnification. The Company agrees to indemnify and hold MCOM harmless
from and against all claims, damages, liabilities, costs or expenses,
including reasonable attorney fees (collectively the "Liabilities") joint
and several, arising out of the performance of this Consulting Agreement,
whether or not MCOM is a party to such dispute. This indemnity shall not
apply however, and MCOM shall indemnify and hold the Company, its
affiliates, control persons, officers, employees and agents harmless from
and against all Liabilities, where under arbitration a final determination
that MCOM engaged in gross recklessness and willful misconduct in the
performance of its services hereunder which gave rise to the losses, claim,
damage, liability cost expense sought to be recovered hereunder (but
pending any such final determination, the indemnification and reimbursement
provision of this Consulting Agreement shall apply and the Company shall
perform its obligations hereunder to reimburse MCOM for its expenses.) The
provisions of this paragraph shall survive the termination and expiration
of this Agreement.
8. Dilution. Regarding the aforementioned issuance of shares of common stock
and warrants, if at any time the Company shall (i) declare a dividend or
make a distribution on the Common Stock payable in shares of its capital
stock (whether shares of Common Stock or of capital stock of any other
class); (ii) subdivide, reclassify or recapitalize its outstanding Common
Stock into a greater number of shares; (iii) combine, reclassify or
recapitalize its outstanding Common Stock into a smaller number of shares,
or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing
corporation), the amount of Common Stock issued to MCOM or its designees at
the time of the record date of such dividend, distribution, subdivision,
combination, reclassification or recapitalization shall be adjusted so that
MCOM or its designees shall be entitled to receive the aggregate number and
kind of shares which it would have owned and been entitled to receive by
virtue of such dividend, distribution, subdivision,
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required by this paragraph shall be made immediately after the record date,
in the case of a dividend or distribution, or the effective date, in the
case of a subdivision, combination, reclassification or recapitalization.
We enclose two (2) original Agreements. If this Agreement is in accordance with
your understanding, please confirm by signing and returning to MCOM Management
Corp. one (1) original, retaining the other for your files.
AGREED TO BY MCOM MANAGEMENT CORP.:
/s/ Mr. Michael C.O. Morfit
Mr. Michael C.O. Morfit
President
AGREED TO BY NUGGET EXPLORATION, INC.:
/s/ Dr. Leonard Vernon
Dr. Leonard Vernon
President
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EXHIBIT 4.2
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of this 27th day of August, 1999, by and between GOHEALTH.MD, INC., a
Delaware corporation (the "Company"), and Harvey Benn ("Optionee").
Background
The Company desires to grant Optionee an option to purchase shares of
common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, including the
consideration set forth in the Consulting Agreement, the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, it is agreed as
follows:
1. Non-Qualified Stock Options to Purchase Shares.
----------------------------------------------
(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 150,000 shares of common stock, with an exercise
price of $1.00 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on August 27, 2009 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
---------------------------------------
(a) The Options may be exercised in whole or in part, subject
to the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid, in the Optionee's discretion, (i) by delivering a
certified check or wire transfer of immediately available funds to the order of
the Company for the entire exercise price, or (ii) in accordance with provisions
of subparagraph 2(b), hereof, or (iii) by any combination thereof determined by
the Optionee. The person entitled to the shares so purchased shall be treated
for all purposes as the holder of such shares as of the close of business on the
date of exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has expired, a new
Option of like tenor and for
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such number of shares as the holder of this Option shall direct, representing in
the aggregate the right to purchase a number of shares with respect to which
this Option shall not have been exercised, shall also be issued to the holder of
this Option within such time.
(b) In addition to and without limiting the right of the
Optionee under any other terms set forth herein, the Optionee shall have, upon
written request by the Optionee delivered or transmitted to the Company together
with this Option, the right (the "Conversion Right") to require the Company to
convert this Option into shares of Common Stock as follows: upon exercise of the
Conversion Right, the Company shall deliver to the Optionee (without payment by
the Optionee of any Exercise Price) that number of shares of Common Stock that
is equal to the quotient obtained by dividing (x) the value of the Option at the
time the Conversion Right is exercised (determined by subtracting the aggregate
Exercise Price in effect immediately prior to the exercise of the Conversion
Right from the aggregate Fair Market Value of the shares of Common Stock
issuable upon exercise of the Option immediately prior to the exercise of the
Conversion Right) by (y) the current Fair Market Value of one share of Common
Stock (determined as provided in paragraph 11(c) below) immediately prior to the
exercise of the Conversion Right. The Conversion Right may be exercised by the
Optionee by surrender of this Option at the principal office of the Company,
together with a written statement specifying that the Optionee thereby intends
to exercise the Conversion Right. Certificates for shares of common Stock
issuable upon exercise of the Conversion Right shall be delivered to the
Optionee promptly following the Company's receipt of this Option together with
the aforesaid written statement.
3. Rights as Stockholder. Optionee or a permitted transferee of the
Options shall have no rights as a stockholder of the Company with respect to any
shares of common stock subject to such Options prior to his exercise of the
Options.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
-------------------------
(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
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6. Exercisability. The Options shall be exercisable only by Optionee
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws. The Options granted hereunder and the registration rights may
be assigned together only, but may not be separately assigned.
7. Piggyback Registrations.
-----------------------
(a) Right to Piggyback. At any time after the first to occur
of the date (i) a registration statement covering the Initial Public Offering of
the Company's securities shall become effective or (ii) upon the Company
becoming a reporting company under Section 12 of the Securities Act of 1934, as
amended whenever the Company proposes to register any of its securities under
the 1933 Act (other than a registration on Form S-4 or S-8 or such replacement
form), and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to the Optionee and will include in such Piggyback
Registration, subject to the allocation provisions below, all Registrable
Securities of Optionee with respect to which the Company has received written
requests for inclusion within fifteen (15) days after the Company's mailing of
such notice.
(b) Piggyback Expenses. In all Piggyback Registrations, the
Company will pay all of the Registration Expenses.
(c) Priority on Registrations. If a Piggyback Registration is
initiated as an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their reasonable opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company may limit the number of Registrable Securities included in such
registration.
(d) Selection of Underwriters. If any Piggyback Registration
is underwritten, the selection of investment banker(s) and manager(s) and the
other decisions regarding the underwriting arrangements for the offering will be
made by the Company.
(e) Continuing Obligations. The Company's agreements with
respect to the registration of the Option Shares in this Section 8 shall
continue in effect regardless of the exercise and surrender of the Option.
8. Registration Procedures.
-----------------------
Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best reasonable efforts to cause such registration statement to
become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 90 days;
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(c) furnish to each Selling Holder such reasonable number of
copies of such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary prospectus and any term sheet associated therewith), and such other
documents as such Optionee may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by each seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
states as the managing underwriter(s) may reasonably request, or if the offering
is not underwritten in New York, New Jersey and Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within the
period that the Company is required to keep the registration statement effective
of the happening of any event as a result of which the prospectus included in
such registration statement, together with any associated term sheet, contains
an untrue statement of a material fact or omits and fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statement therein not misleading;
(f) cause all such Registrable Securities to be listed or
included on each national securities exchange, if any, or on the NASDAQ Stock
Market, on which the other outstanding shares of Common Stock of the Company are
then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other customary actions
as may be reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company from
its independent public accountants in customary form and covering such matters
of the type customarily covered by "comfort" letters; and
(j) make available for inspection by the Optionee, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller, or any underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller or any such underwriter, attorney, accountant or agent in connection
with such registration statement.
9. Indemnification.
---------------
(a) The Company hereby indemnifies, to the extent permitted by
law, each Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of the 1933
Act (each, an "indemnified Party") against all losses, claims, damages,
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liabilities and expenses arising out of or resulting from any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or associated term sheet or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which made except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such
Indemnified Party expressly for use therein or by any Indemnified Party's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Indemnified Party with a sufficient number of copies of the same. In connection
with an underwritten offering, the Company will indemnify the underwriters,
their officers and directors, and each person who controls such underwriters
(within the meaning of the 1933 Act) to the same extent as provided above with
respect to the indemnification of any Indemnified Party.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Holder will furnish to the Company in
a timely manner in writing such information as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who controls the Company (within the meaning of the
1933 Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact or any
omission or alleged omission of a material fact required to be stated in the
registration statement or prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or omission is contained in information so
furnished in writing by such Holder specifically for use in preparing the
registration statement. Notwithstanding the foregoing, the liability of a
Selling Holder under this Section 9(b) shall be limited to an amount equal to
the net proceeds actually received by the Selling Holder from the sale of
Registrable Securities covered by the registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnifying party's counsel
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled, or
elects not, to assume the defense of a claim will not be obligated to pay the
fees and expenses or more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgement of any indemnified party's counsel a conflict of interest exists
between such indemnified party and any other of such indemnifying parties with
respect to such claim.
10. Participation in Underwritten Registrations.
-------------------------------------------
The Optionee may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements under Section 7(e), and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
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11. Definitions.
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(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
(c) The term "Fair Market Value" per share of Common Stock as
to any date shall mean the average of the daily closing prices (as such term is
hereinafter defined) immediately prior to such date; provided, however, that in
the event the Fair Market Value of the Common Stock is determined during a
period following the announcement by the Company of (i) a dividend or
distribution on the Common stock payable in shares of Common Stock or securities
convertible into Common Stock, or (ii) any subdivision, combination or
reclassification of Common Stock and prior to the expiration of 30 consecutive
Trading days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then and
in each such case, the Fair Market Value shall be appropriately adjusted to
reflect the Fair Market Value equivalent of the Common Stock. The "closing
price" for each day shall be the last quoted price, or if not so reported by the
National Association of Securities Dealers, Inc. Automated Quotations System or
such other system then in use, or, if on any such date the security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the security
selected by the Board of Directors of the Company. If the Common Stock in not
publicly held or so listed and traded, "Fair market Value" shall mean the fair
value of the Common Stock as determined in good faith by the Board of Directors
of the Company whose determination shall be conclusive and shall be described in
a statement filed with the Optionee. The term "Trading Day" shall mean a day on
which the securities exchange or automated quotation system on which the Common
Stock is listed or admitted to listing is open for the transaction of business
or, if the Common Stock is not listed or admitted to trading on any securities
exchange or automated quotations system, a business day.
(d) The term "Initial Public Offering" means the first public
offering under the 1933 Act of any of the Company's equity securities.
(e) The term "Registrable Securities" means (i) the Common
Stock issuable upon the exercise of the Options and (ii) any securities issued
or to be issued with respect to the securities referred to above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when they have been effectively registered under the 1933 Act and
disposed of in accordance with the registration statement covering them.
(f) The term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states reasonably
determined by the Company), printing expenses, messenger and delivery expenses,
expenses and fees for listing the securities to be registered on exchanges or
electronic quotation systems on which similar
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securities issued by the Company are then listed, and fees and disbursements of
counsel for the Company (but not Optionee's counsel) and of all independent
certified public accountants, underwriters (other than Underwriting Commissions)
and other persons retained by the Company.
(g) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company.
12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") which may permit the sale of the Options or the
shares underlying the Options to the public without registration, at any time
after the first to occur of the date (i) a registration statement under the
Securities Act covering the Initial Public Offering of the Company's securities
shall become effective, or (ii) upon the Company becoming a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended, the Company
agrees to: (a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act; (b) file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1993 Act and the Securities Exchange Act of 1934, as amended; and (c)
furnish to Optionee upon its written request a written statement by the Company
as to its compliance with the public information requirements of Rule 144 and a
copy of the most recent annual or quarterly report of the Company.
13. Miscellaneous.
-------------
(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
If to the Optionee: Harvey Benn
1014 Broadway
Camden, NJ 08103
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
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(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of the Agreement or the
interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
By: /s/ Leonard F. Vernon /s/ Harvey Benn
----------------------------- ---------------
Leonard F. Vernon Harvey Benn
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable upon the exercise
of this Option and the Exercise Price shall be subject to adjustment from
time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any time while this
Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon
exercise of this Option (other than a change in par value, or from par
value to no par value per share, or from no par value per share to par
value or as a result of a subdivision or combination of outstanding
securities issuable upon the exercise of this Option), (ii) any
consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from
par value to no par value per share, or from no par value per share to
par value, or as a result of a subdivision or combination of
outstanding securities issuable upon the exercise of this Option), or
(iii) any sale or transfer to another corporation of the property of
the Company as an entirety or substantially as an entirety, the
Company, or such successor or purchasing corporation, as the case may
be, shall without payment of any additional consideration therefor,
execute a new Option providing that the holder of this Option shall
have the right to exercise such new Option (upon terms not less
favorable to the holder than those then applicable to this Option) and
to receive upon such exercise, in lieu of each share of Common Stock
theretofore issuable upon exercise of this Option, the kind and amount
of shares of stock, other securities, money or property receivable
upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided
for in this Section 1 of Schedule A. The provisions of this subsection
1(a) shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time while
this Option remains outstanding and unexpired, shall subdivide or
combine its Capital Stock, the Exercise Price shall be proportionately
reduced, in case of subdivision of such shares, as of the effective
date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of
such record date, whichever is earlier, or shall be proportionately
increased, in the case of combination of such shares, as of the
effective date of such combination, or, if the Company shall take a
record of holders of its Capital Stock for the purpose of so
combining, as of such record date, whichever is earlier.
(c) Stock Dividends. If the Company at any time while this Option is
outstanding and unexpired shall pay a dividend in shares of, or make
other distribution of shares of, its Capital Stock, then the Exercise
Price shall be adjusted, as of the date the Company shall take a
record of the holders of its Capital Stock for the purpose of
receiving such dividend or other distribution (or if no such record is
taken, as at the date of such payment or other distribution), to that
price determined by multiplying the exercise price in effect
immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of
Capital Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total
number of shares of Capital Stock outstanding immediately after such
dividend or distribution. The provisions of this
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subsection 1(c) shall not apply under any of the circumstances for
which an adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any time while this
Option is outstanding and unexpired makes a distribution of its assets
to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of
earnings or surplus legally available for dividends under applicable
law or any distribution to such holders made in respect of the sale of
all or substantially all of the Company's assets (other than under the
circumstances provided for in the foregoing subsections (a) through
(c)), the holder of this Option shall be entitled to receive upon the
exercise hereof, in addition to the shares of Common Stock receivable
upon such exercise, and without payment of any consideration other
than the exercise price, an amount in cash equal to the value of such
distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such
distribution, are issuable upon exercise of this Option (with no
further adjustment being made following any event which causes a
subsequent adjustment in the number of shares of Common Stock issuable
upon the exercise hereof), and an appropriate provision therefor
should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in
good faith by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price or the number of
shares of Common Stock purchasable under the terms of this Option at that
exercise price shall be adjusted pursuant to Section 1 hereof, the Company
shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which
the Company's Board of Directors made any determination hereunder), and the
exercise price and number of shares of Common Stock purchasable at that
exercise price after giving effect to such adjustment, and shall promptly
cause copies of such certificate to be mailed (by first class and postage
prepaid ) to the registered holder of this Option.
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EXHIBIT 4.3
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of this 27th day of August, 1999, by and between GOHEALTH.MD, INC., a Delaware
corporation (the "Company"), and Frank J. Gettson ("Optionee").
Background
The Company desires to grant Optionee an option to purchase
shares of common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, and intending to be
legally bound, it is agreed as follows:
2. Non-Qualified Stock Options to Purchase Shares.
(a) Number of Option Shares and Exercise Price. The Company hereby grants
to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock,
par value $0.001 per share (the "Option Shares"):
(i) 25,000 shares of common stock with an exercise price of $1.00 per
share.
(b) Exercise Period. The Options shall be exercisable, in whole or in
part, at any time and from time to time during the period
commencing on the date hereof, and ending on August 27, 2006 (the
"Exercise Period").
2. Manner of Exercise and Terms of Payment.
(a) The Options may be exercised in whole or in part, subject to the
limitations set forth in this Agreement, upon delivery to the Company
of timely written notice of exercise, accompanied by full payment of
the Option Price for the Option Shares with respect to which the
Options are exercised. The exercise price may be paid, in the
Optionee's discretion, (i) by delivering a certified check or wire
transfer of immediately available funds to the order of the Company
for the entire exercise price, or (ii) in accordance with provisions
of subparagraph 2(b), hereof, or (iii) by any combination thereof
determined by the Optionee. The person entitled to the shares so
purchased shall be treated for all purposes as the holder of such
shares as of the close of business on the date of exercise and
certificates for the shares of stock so purchased shall be delivered
to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has expired,
a new Option of like tenor and for such number of shares as the holder
of this Option shall direct, representing in the aggregate the right
to
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purchase a number of shares with respect to which this Option shall
not have been exercised, shall also be issued to the holder of this
Option within such time.
(b) In addition to and without limiting the right of the Optionee under
any other terms set forth herein, the Optionee shall have, upon
written request by the Optionee delivered or transmitted to the
Company together with this Option, the right (the "Conversion Right")
to require the Company to convert this Option into shares of Common
Stock as follows: upon exercise of the Conversion Right, the Company
shall deliver to the Optionee (without payment by the Optionee of any
Exercise Price) that number of shares of Common Stock that is equal to
the quotient obtained by dividing (x) the value of the Option at the
time the Conversion Right is exercised (determined by subtracting the
aggregate Exercise Price in effect immediately prior to the exercise
of the Conversion Right from the aggregate Fair Market Value of the
shares of Common Stock issuable upon exercise of the Option
immediately prior to the exercise of the Conversion Right) by (y) the
current Fair Market Value of one share of Common Stock (determined as
provided in paragraph 11(c) below) immediately prior to the exercise
of the Conversion Right. The Conversion Right may be exercised by the
Optionee by surrender of this Option at the principal office of the
Company, together with a written statement specifying that the
Optionee thereby intends to exercise the Conversion Right.
Certificates for shares of common Stock issuable upon exercise of the
Conversion Right shall be delivered to the Optionee promptly following
the Company's receipt of this Option together with the aforesaid
written statement.
3. Rights as Stockholder. Optionee or a permitted transferee of the Options
shall have no rights as a stockholder of the Company with respect to any
shares of common stock subject to such Options prior to his exercise of the
Options.
4. Adjustment of Purchase Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in
Schedule A attached hereto.
5. Investment Representation.
(a) Optionee represents and warrants to the Company that Optionee is
acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward
resale or other distribution thereof in violation of the 1933 Act.
Optionee acknowledges that the effect of the representations and
warranties is that the economic risk of the investment in the Options
and Option Shares must be borne by the Optionee for an indefinite
period of time. This representation and warranty shall be deemed to be
a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been registered under the
1933 Act, the Company shall place a legend on each certificate for the
Option Shares issued pursuant hereto, or any certificate issued in
exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or
referring to the restriction on transferability and sale thereof
imposed by the 1933 Act or any applicable state securities law, and
that the holder thereof agrees to be bound by such restrictive legend.
6. Exercisability. The Options shall be exercisable only by Optionee during
his lifetime or by his assigns, heirs, executors or administrators, as the
case may be. Any assignment hereof shall be in
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compliance with applicable securities laws. The Options granted hereunder
and the registration rights may be assigned together only, but may not be
separately assigned.
7. Piggyback Registrations.
(a) Right to Piggyback. At any time after the first to occur of the date
(i) a registration statement covering the Initial Public Offering of
the Company's securities shall become effective or (ii) upon the
Company becoming a reporting company under Section 12 of the
Securities Act of 1934, as amended whenever the Company proposes to
register any of its securities under the 1933 Act (other than a
registration on Form S-4 or S-8 or such replacement form), and the
registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will
give prompt written notice to the Optionee and will include in such
Piggyback Registration, subject to the allocation provisions below,
all Registrable Securities of Optionee with respect to which the
Company has received written requests for inclusion within fifteen
(15) days after the Company's mailing of such notice.
(b) Piggyback Expenses. In all Piggyback Registrations, the Company will
pay all of the Registration Expenses.
(c) Priority on Registrations. If a Piggyback Registration is initiated as
an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing
underwriters advise the Company in writing that in their reasonable
opinion the number of securities requested to be included in such
registration exceeds the number that can be sold in such offering, at
a price reasonably related to fair value, the Company may limit the
number of Registrable Securities included in such registration.
(d) Selection of Underwriters. If any Piggyback Registration is
underwritten, the selection of investment banker(s) and manager(s) and
the other decisions regarding the underwriting arrangements for the
offering will be made by the Company.
(e) Continuing Obligations. The Company's agreements with respect to the
registration of the Option Shares in this Section 8 shall continue in
effect regardless of the exercise and surrender of the Option.
8. Registration Procedures.
Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and
use its best reasonable efforts to cause such registration statement
to become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period of not less than 90
days;
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(c) furnish to each Selling Holder such reasonable number of copies of
such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary prospectus and any term sheet associated therewith), and
such other documents as such Optionee may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
each seller;
(d) use its best reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such states as the managing underwriter(s) may reasonably request, or
if the offering is not underwritten in New York, New Jersey and
Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act within the
period that the Company is required to keep the registration statement
effective of the happening of any event as a result of which the
prospectus included in such registration statement, together with any
associated term sheet, contains an untrue statement of a material fact
or omits and fact necessary to make the statement therein not
misleading, and, at the request of any such seller, the Company will
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statement therein
not misleading;
(f) cause all such Registrable Securities to be listed or included on each
national securities exchange, if any, or on the NASDAQ Stock Market,
on which the other outstanding shares of Common Stock of the Company
are then listed;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other customary actions as
may be reasonably necessary to expedite or facilitate the disposition
of such Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company from its
independent public accountants in customary form and covering such
matters of the type customarily covered by "comfort" letters; and
(j) make available for inspection by the Optionee, any underwriter
participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any
such seller, or any underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such seller or any such
underwriter, attorney, accountant or agent in connection with such
registration statement.
9. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by law, each
Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of
the 1933 Act (each, an "indemnified Party") against all losses,
claims, damages,
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(d) liabilities and expenses arising out of or resulting from any untrue
or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or
associated term sheet or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which made except insofar as the same are caused by
or contained in any information furnished in writing to the Company by
such Indemnified Party expressly for use therein or by any Indemnified
Party's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company
has furnished such Indemnified Party with a sufficient number of
copies of the same. In connection with an underwritten offering, the
Company will indemnify the underwriters, their officers and directors,
and each person who controls such underwriters (within the meaning of
the 1933 Act) to the same extent as provided above with respect to the
indemnification of any Indemnified Party.
(b) In connection with any registration statement in which a Selling
Holder is participating, each such Holder will furnish to the Company
in a timely manner in writing such information as is reasonably
requested by the Company for use in any such registration statement or
prospectus and will indemnify, to the extent permitted by law, the
Company, its directors and officers and each person who controls the
Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact or any omission or alleged
omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto
or necessary to make the statements therein not misleading, but only
to the extent that such untrue statement or omission is contained in
information so furnished in writing by such Holder specifically for
use in preparing the registration statement. Notwithstanding the
foregoing, the liability of a Selling Holder under this Section 9(b)
shall be limited to an amount equal to the net proceeds actually
received by the Selling Holder from the sale of Registrable Securities
covered by the registration statement.
(c) Any person entitled to indemnification hereunder will (i) give prompt
notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnifying party's
counsel reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party.
Any failure to give prompt notice shall deprive a party of its right
to indemnification hereunder only to the extent that such failure
shall have adversely affected the indemnifying party. If the defense
of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who
is not entitled, or elects not, to assume the defense of a claim will
not be obligated to pay the fees and expenses or more than one counsel
for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgement of any indemnified
party's counsel a conflict of interest exists between such indemnified
party and any other of such indemnifying parties with respect to such
claim.
10. Participation in Underwritten Registrations.
The Optionee may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements under Section 7(e), and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
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11. Definitions.
(a) The term "Additional Shares of Capital Stock" shall mean all shares of
Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any
other shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common stock, and
any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and
assets of the Company without limit as to amount or percentage.
(c) The term "Fair Market Value" per share of Common Stock as to any date
shall mean the average of the daily closing prices (as such term is
hereinafter defined) immediately prior to such date; provided,
however, that in the event the Fair Market Value of the Common Stock
is determined during a period following the announcement by the
Company of (i) a dividend or distribution on the Common stock payable
in shares of Common Stock or securities convertible into Common Stock,
or (ii) any subdivision, combination or reclassification of Common
Stock and prior to the expiration of 30 consecutive Trading days after
the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then and
in each such case, the Fair Market Value shall be appropriately
adjusted to reflect the Fair Market Value equivalent of the Common
Stock. The "closing price" for each day shall be the last quoted
price, or if not so reported by the National Association of Securities
Dealers, Inc. Automated Quotations System or such other system then in
use, or, if on any such date the security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
security selected by the Board of Directors of the Company. If the
Common Stock in not publicly held or so listed and traded, "Fair
market Value" shall mean the fair value of the Common Stock as
determined in good faith by the Board of Directors of the Company
whose determination shall be conclusive and shall be described in a
statement filed with the Optionee. The term "Trading Day" shall mean a
day on which the securities exchange or automated quotation system on
which the Common Stock is listed or admitted to listing is open for
the transaction of business or, if the Common Stock is not listed or
admitted to trading on any securities exchange or automated quotations
system, a business day.
(d) The term "Initial Public Offering" means the first public offering
under the 1933 Act of any of the Company's equity securities.
(e) The term "Registrable Securities" means (i) the Common Stock issuable
upon the exercise of the Options and (ii) any securities issued or to
be issued with respect to the securities referred to above by way of a
stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have been
effectively registered under the 1933 Act and disposed of in
accordance with the registration statement covering them.
(f) The term "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including
without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states
reasonably determined by the Company), printing expenses, messenger
and delivery expenses, expenses and fees for listing the securities to
be registered on exchanges or electronic quotation systems on which
similar
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securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company (but not Optionee's counsel)
and of all independent certified public accountants, underwriters
(other than Underwriting Commissions) and other persons retained by
the Company.
(g) The term "Underwriting Commissions" means all underwriting discounts
or commissions relating to the sale of securities of the Company.
12. Rule 144 Reporting. With a view to making available to the Holders the
benefits of certain rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") which may permit the sale of the Options or
the shares underlying the Options to the public without registration, at
any time after the first to occur of the date (i) a registration statement
under the Securities Act covering the Initial Public Offering of the
Company's securities shall become effective, or (ii) upon the Company
becoming a reporting company under Section 12 of the Securities Exchange
Act of 1934, as amended, the Company agrees to: (a) make and keep public
information available, as those terms are understood and defined in Rule
144 under the 1933 Act; (b) file with the SEC in a timely manner all
reports and other documents required of the Company under the 1993 Act and
the Securities Exchange Act of 1934, as amended; and (c) furnish to
Optionee upon its written request a written statement by the Company as to
its compliance with the public information requirements of Rule 144 and a
copy of the most recent annual or quarterly report of the Company.
13. Miscellaneous.
(a) Termination of Other Agreements. This Agreement sets forth the entire
understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such
matters.
(b) Notices. Any notices required hereunder shall be deemed to be given
upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail,
(ii) the next business day after the date sent by guaranteed overnight
courier, or (iii) the date sent by telecopier or delivered by hand, in
each case, to the addresses set forth below:
If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
If to the Optionee: Frank J. Gettson
1014 Broadway
Camden, NJ 08103
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement may be
amended or terminated unless in a writing signed by the Optionee and
the Company.
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(d) Binding Effect. This Agreement will bind and inure to the benefit of
the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal
representatives of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and construed and
enforced ------------- in accordance with the laws of the State of New
Jersey.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original
instrument and to be effective as of the date first written above.
Each such copy shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement clearly requires
otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently
identified with the phrase "and/or" and (d) "including" has the
inclusive meaning frequently identified with the phrase "but not
limited to." The section and other headings contained in this
Agreement are for reference purposes only and shall not control or
affect the construction of the Agreement or the interpretation thereof
in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
By: /s/ Leonard F. Vernon /s/ Frank J. Gettson
----------------------------- --------------------
Leonard F. Vernon Frank J. Gettson
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable upon the exercise
of this Option and the Exercise Price shall be subject to adjustment from
time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any time while this
Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable
upon exercise of this Option (other than a change in par value,
or from par value to no par value per share, or from no par value
per share to par value or as a result of a subdivision or
combination of outstanding securities issuable upon the exercise
of this Option), (ii) any consolidation or merger of the Company
with or into another corporation (other than a merger with
another corporation in which the Company is a continuing
corporation and which does not result in any reclassification or
change, other than a change in par value, or from par value to no
par value per share, or from no par value per share to par value,
or as a result of a subdivision or combination of outstanding
securities issuable upon the exercise of this Option), or (iii)
any sale or transfer to another corporation of the property of
the Company as an entirety or substantially as an entirety, the
Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration
therefor, execute a new Option providing that the holder of this
Option shall have the right to exercise such new Option (upon
terms not less favorable to the holder than those then applicable
to this Option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of
this Option, the kind and amount of shares of stock, other
securities, money or property receivable upon such
reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 1 of Schedule A. The
provisions of this subsection 1(a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers,
sales and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
while this Option remains outstanding and unexpired, shall
subdivide or combine its Capital Stock, the Exercise Price shall
be proportionately reduced, in case of subdivision of such
shares, as of the effective date of such subdivision, or, if the
Company shall take a record of holders of its Capital Stock for
the purpose of so subdividing, as of such record date, whichever
is earlier, or shall be proportionately increased, in the case of
combination of such shares, as of the effective date of such
combination, or, if the Company shall take a record of holders of
its Capital Stock for the purpose of so combining, as of such
record date, whichever is earlier.
(c) Stock Dividends. If the Company at any time while this Option is
outstanding and unexpired shall pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the
Exercise Price shall be adjusted, as of the date the Company
shall take a record of the holders of its Capital Stock for the
purpose of receiving such dividend or other distribution (or if
no such record is taken, as at the date of such payment or other
distribution), to that price determined by multiplying the
exercise price in effect immediately prior to such payment or
other distribution by a fraction (a) the numerator of which shall
be the total number of shares of Capital Stock outstanding
immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of
Capital Stock outstanding immediately after such dividend or
distribution. The provisions of this
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subsection 1(c) shall not apply under any of the circumstances
for which an adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any time while this
Option is outstanding and unexpired makes a distribution of its
assets to the holders of its Capital Stock as a dividend in
liquidation or by way of return of capital or other than as a
dividend payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to such
holders made in respect of the sale of all or substantially all
of the Company's assets (other than under the circumstances
provided for in the foregoing subsections (a) through (c)), the
holder of this Option shall be entitled to receive upon the
exercise hereof, in addition to the shares of Common Stock
receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash
equal to the value of such distribution per share of Common Stock
multiplied by the number of shares of Common Stock which, on the
record date for such distribution, are issuable upon exercise of
this Option (with no further adjustment being made following any
event which causes a subsequent adjustment in the number of
shares of Common Stock issuable upon the exercise hereof), and an
appropriate provision therefor should be made a part of any such
distribution. The value of a distribution which is paid in other
than cash shall be determined in good faith by the Board of
Directors.
2. Notice of Adjustments. Whenever any of the exercise price or the number of
shares of Common Stock purchasable under the terms of this Option at that
exercise price shall be adjusted pursuant to Section 1 hereof, the Company
shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which
the Company's Board of Directors made any determination hereunder), and the
exercise price and number of shares of Common Stock purchasable at that
exercise price after giving effect to such adjustment, and shall promptly
cause copies of such certificate to be mailed (by first class and postage
prepaid ) to the registered holder of this Option.
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EXHIBIT 4.4
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of this 7th day of May, 1999, by and between GOHEALTH.MD, INC., a Delaware
corporation (the "Company"), and Millennium Consulting, Inc. ("Optionee").
Background
The Company desires to grant Optionee an option to purchase shares of
common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, including the
consideration set forth in the Consulting Agreement, the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, it is agreed as
follows:
3. Non-Qualified Stock Options to Purchase Shares.
(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 30,000 shares of common stock with an exercise price
of $.50 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on May 7, 2006 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
The Options may be exercised in whole or in part, subject to
the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid by delivering a certified check or wire transfer of
immediately available funds to the order of the Company for the entire exercise
price. The person entitled to the shares so purchased shall be treated for all
purposes as the holder of such shares as of the close of business on the date of
exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has expired, a new
Option of like tenor and for such number of shares as the holder of this Option
shall direct,
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representing in the aggregate the right to purchase a number of shares with
respect to which this Option shall not have been exercised, shall also be issued
to the holder of this Option within such time.
3. Rights as Stockholder. Optionee or a permitted transferee of the Options
shall have no rights as a stockholder of the Company with respect to any shares
of common stock subject to such Options prior to his exercise of the Options.
4. Adjustment of Purchase Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
6. Exercisability. The Options shall be exercisable only by Optionee during
his lifetime or by his assigns, heirs, executors or administrators, as the case
may be. Any assignment hereof shall be in compliance with applicable securities
laws. The Options granted hereunder and the registration rights may be assigned
together only, but may not be separately assigned.
7. Piggyback Registrations.
(a) Right to Piggyback. At any time after the first to occur
of the date (i) a registration statement covering the Initial Public Offering of
the Company's securities shall become effective or (ii) upon the Company
becoming a reporting company under Section 12 of the Securities Act of 1934, as
amended whenever the Company proposes to register any of its securities under
the 1933 Act (other than a registration on Form S-4 or S-8 or such replacement
form), and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to the Optionee and will include in such Piggyback
Registration, subject to the allocation provisions below, all Registrable
Securities of Optionee with respect to which the Company has received written
requests for inclusion within fifteen (15) days after the Company's mailing of
such notice.
(b) Piggyback Expenses. In all Piggyback Registrations, the
Company will pay all of the Registration Expenses.
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(c) Priority on Registrations. If a Piggyback Registration is
initiated as an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their reasonable opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company may limit the number of Registrable Securities included in such
registration.
(d) Selection of Underwriters. If any Piggyback Registration
is underwritten, the selection of investment banker(s) and manager(s) and the
other decisions regarding the underwriting arrangements for the offering will be
made by the Company.
(e) Continuing Obligations. The Company's agreements with
respect to the registration of the Option Shares in this Section 8 shall
continue in effect regardless of the exercise and surrender of the Option.
8. Registration Procedures.
Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best reasonable efforts to cause such registration statement to
become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 90 days;
(c) furnish to each Selling Holder such reasonable number of
copies of such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary prospectus and any term sheet associated therewith), and such other
documents as such Optionee may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by each seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
states as the managing underwriter(s) may reasonably request, or if the offering
is not underwritten in New York, New Jersey and Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within the
period that the Company is required to keep the registration statement effective
of the happening of any event as a result of which the prospectus included in
such registration statement, together with any associated term sheet, contains
an untrue statement of a material fact or omits and fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statement therein not misleading;
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(f) cause all such Registrable Securities to be listed or
included on each national securities exchange, if any, or on the NASDAQ Stock
Market, on which the other outstanding shares of Common Stock of the Company are
then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other customary actions
as may be reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company from
its independent public accountants in customary form and covering such matters
of the type customarily covered by "comfort" letters; and
(j) make available for inspection by the Optionee, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller, or any underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller or any such underwriter, attorney, accountant or agent in connection
with such registration statement.
9. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by
law, each Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of the 1933
Act (each, an "indemnified Party") against all losses, claims, damages,
liabilities and expenses arising out of or resulting from any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or associated term sheet or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which made except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such
Indemnified Party expressly for use therein or by any Indemnified Party's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Indemnified Party with a sufficient number of copies of the same. In connection
with an underwritten offering, the Company will indemnify the underwriters,
their officers and directors, and each person who controls such underwriters
(within the meaning of the 1933 Act) to the same extent as provided above with
respect to the indemnification of any Indemnified Party.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Holder will furnish to the Company in
a timely manner in writing such information as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who controls the Company (within the meaning of the
1933 Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact or any
omission or alleged omission of a material fact required to be stated in the
registration statement or prospectus or any
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amendment thereof or supplement thereto or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in information so furnished in writing by such Holder
specifically for use in preparing the registration statement. Notwithstanding
the foregoing, the liability of a Selling Holder under this Section 9(b) shall
be limited to an amount equal to the net proceeds actually received by the
Selling Holder from the sale of Registrable Securities covered by the
registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnifying party's counsel
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled, or
elects not, to assume the defense of a claim will not be obligated to pay the
fees and expenses or more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgement of any indemnified party's counsel a conflict of interest exists
between such indemnified party and any other of such indemnifying parties with
respect to such claim.
10. Participation in Underwritten Registrations.
The Optionee may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements under Section 7(e), and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
11. Definitions.
(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
(c) The term "Initial Public Offering" means the first public
offering under the 1933 Act of any of the Company's equity securities.
(d) The term "Registrable Securities" means (i) the Common
Stock issuable upon the exercise of the Options and (ii) any securities issued
or to be issued with respect to the securities referred to above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities,
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such securities will cease to be Registrable Securities when they have been
effectively registered under the 1933 Act and disposed of in accordance with the
registration statement covering them.
(e) The term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states reasonably
determined by the Company), printing expenses, messenger and delivery expenses,
expenses and fees for listing the securities to be registered on exchanges or
electronic quotation systems on which similar securities issued by the Company
are then listed, and fees and disbursements of counsel for the Company (but not
Optionee's counsel) and of all independent certified public accountants,
underwriters (other than Underwriting Commissions) and other persons retained by
the Company.
(f) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company.
12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") which may permit the sale of the Options or the
shares underlying the Options to the public without registration, at any time
after the first to occur of the date (i) a registration statement under the
Securities Act covering the Initial Public Offering of the Company's securities
shall become effective, or (ii) upon the Company becoming a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended, the Company
agrees to: (a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act; (b) file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1993 Act and the Securities Exchange Act of 1934, as amended; and (c)
furnish to Optionee upon its written request a written statement by the Company
as to its compliance with the public information requirements of Rule 144 and a
copy of the most recent annual or quarterly report of the Company.
13. Miscellaneous.
(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
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If to the Optionee: Millennium Consulting, Inc.
P.O. Box 970633
Boca Raton, FL 33497-0633
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of the Agreement or the
interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
MILLENNIUM CONSULTING, INC.
By: /s/ Leonard F. Vernon /s/ Millennium Consulting, Inc.
----------------------------- -------------------------------
Leonard F. Vernon
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable
upon the exercise of this Option and the Exercise Price shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any
time while this Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Option (other than a change in par value, or from par value to no par value
per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Option providing that the holder of this Option shall have the right to
exercise such new Option (upon terms not less favorable to the holder than those
then applicable to this Option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of this Option,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
1 of Schedule A. The provisions of this subsection 1(a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the
Company at any time while this Option remains outstanding and unexpired, shall
subdivide or combine its Capital Stock, the Exercise Price shall be
proportionately reduced, in case of subdivision of such shares, as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of such
record date, whichever is earlier, or shall be proportionately increased, in the
case of combination of such shares, as of the effective date of such
combination, or, if the Company shall take a record of holders of its Capital
Stock for the purpose of so combining, as of such record date, whichever is
earlier.
(c) Stock Dividends. If the Company at any time while
this Option is outstanding and unexpired shall pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the Exercise Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Capital Stock
outstanding immediately after such dividend or distribution. The provisions of
this
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subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any
time while this Option is outstanding and unexpired makes a distribution of its
assets to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Option (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in good faith
by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price
or the number of shares of Common Stock purchasable under the terms of this
Option at that exercise price shall be adjusted pursuant to Section 1 hereof,
the Company shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Option.
139
EXHIBIT 4.5
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of this 26th day of May, 1999, by and between GOHEALTH.MD, INC.,
a Delaware corporation (the "Company"), and Gary Crooks ("Optionee").
Background
The Company desires to grant Optionee an option to purchase
shares of common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, and intending to be
legally bound, it is agreed as follows:
4. Non-Qualified Stock Options to Purchase Shares.
(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 2,500 shares of common stock,with an exercise price of
$.50 per share.
(ii) 2,500 shares of common stock, with an exercise price
of $1.00 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on May 26, 2006 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
The Options may be exercised in whole or in part, subject to
the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid by delivering a certified check or wire transfer of
immediately available funds to the order of the Company for the entire exercise
price. The person entitled to the shares so purchased shall be treated for all
purposes as the holder of such shares as of the close of business on the date of
exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has
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expired, a new Option of like tenor and for such number of shares as the holder
of this Option shall direct, representing in the aggregate the right to purchase
a number of shares with respect to which this Option shall not have been
exercised, shall also be issued to the holder of this Option within such time.
3. Rights as Stockholder. Optionee or a permitted transferee of the Options
shall have no rights as a stockholder of the Company with respect to any shares
of common stock subject to such Options prior to his exercise of the Options.
4. Adjustment of Purchase Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
6. Exercisability. The Options shall be exercisable only by Optionee during
his lifetime or by his assigns, heirs, executors or administrators, as the case
may be. Any assignment hereof shall be in compliance with applicable securities
laws. The Options granted hereunder and the registration rights may be assigned
together only, but may not be separately assigned.
7. Piggyback Registrations.
(a) Right to Piggyback. At any time after the first to occur
of the date (i) a registration statement covering the Initial Public Offering of
the Company's securities shall become effective or (ii) upon the Company
becoming a reporting company under Section 12 of the Securities Act of 1934, as
amended whenever the Company proposes to register any of its securities under
the 1933 Act (other than a registration on Form S-4 or S-8 or such replacement
form), and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to the Optionee and will include in such Piggyback
Registration, subject to the allocation provisions below, all Registrable
Securities of Optionee with respect to which the Company has received written
requests for inclusion within fifteen (15) days after the Company's mailing of
such notice.
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(b) Piggyback Expenses. In all Piggyback Registrations, the
Company will pay all of the Registration Expenses.
(c) Priority on Registrations. If a Piggyback Registration is
initiated as an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their reasonable opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company may limit the number of Registrable Securities included in such
registration.
(d) Selection of Underwriters. If any Piggyback Registration
is underwritten, the selection of investment banker(s) and manager(s) and the
other decisions regarding the underwriting arrangements for the offering will be
made by the Company.
(e) Continuing Obligations. The Company's agreements with
respect to the registration of the Option Shares in this Section 8 shall
continue in effect regardless of the exercise and surrender of the Option.
8. Registration Procedures.
Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best reasonable efforts to cause such registration statement to
become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 90 days;
(c) furnish to each Selling Holder such reasonable number of
copies of such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary prospectus and any term sheet associated therewith), and such other
documents as such Optionee may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by each seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
states as the managing underwriter(s) may reasonably request, or if the offering
is not underwritten in New York, New Jersey and Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within the
period that the Company is required to keep the registration statement effective
of the happening of any event as a result of which the prospectus included in
such registration statement, together with any associated term sheet, contains
an untrue statement of a material fact or omits and fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter
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delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statement therein not misleading;
(f) cause all such Registrable Securities to be listed or
included on each national securities exchange, if any, or on the NASDAQ Stock
Market, on which the other outstanding shares of Common Stock of the Company are
then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other customary actions
as may be reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company from
its independent public accountants in customary form and covering such matters
of the type customarily covered by "comfort" letters; and
(j) make available for inspection by the Optionee, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller, or any underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller or any such underwriter, attorney, accountant or agent in connection
with such registration statement.
9. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by
law, each Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of the 1933
Act (each, an "indemnified Party") against all losses, claims, damages,
liabilities and expenses arising out of or resulting from any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or associated term sheet or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which made except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such
Indemnified Party expressly for use therein or by any Indemnified Party's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Indemnified Party with a sufficient number of copies of the same. In connection
with an underwritten offering, the Company will indemnify the underwriters,
their officers and directors, and each person who controls such underwriters
(within the meaning of the 1933 Act) to the same extent as provided above with
respect to the indemnification of any Indemnified Party.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Holder will furnish to the Company in
a timely manner in writing such information as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who
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controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished in writing by
such Holder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of a Selling Holder under this
Section 9(b) shall be limited to an amount equal to the net proceeds actually
received by the Selling Holder from the sale of Registrable Securities covered
by the registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnifying party's counsel
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled, or
elects not, to assume the defense of a claim will not be obligated to pay the
fees and expenses or more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgement of any indemnified party's counsel a conflict of interest exists
between such indemnified party and any other of such indemnifying parties with
respect to such claim.
10. Participation in Underwritten Registrations.
The Optionee may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements under Section 7(e), and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
11. Definitions.
(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
(c) The term "Initial Public Offering" means the first public
offering under the 1933 Act of any of the Company's equity securities.
(d) The term "Registrable Securities" means (i) the Common
Stock issuable upon the exercise of the Options and (ii) any securities issued
or to be issued with respect to the securities referred
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to above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, such securities
will cease to be Registrable Securities when they have been effectively
registered under the 1933 Act and disposed of in accordance with the
registration statement covering them.
(e) The term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states reasonably
determined by the Company), printing expenses, messenger and delivery expenses,
expenses and fees for listing the securities to be registered on exchanges or
electronic quotation systems on which similar securities issued by the Company
are then listed, and fees and disbursements of counsel for the Company (but not
Optionee's counsel) and of all independent certified public accountants,
underwriters (other than Underwriting Commissions) and other persons retained by
the Company.
(f) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company.
12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") which may permit the sale of the Options or the
shares underlying the Options to the public without registration, at any time
after the first to occur of the date (i) a registration statement under the
Securities Act covering the Initial Public Offering of the Company's securities
shall become effective, or (ii) upon the Company becoming a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended, the Company
agrees to: (a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act; (b) file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1993 Act and the Securities Exchange Act of 1934, as amended; and (c)
furnish to Optionee upon its written request a written statement by the Company
as to its compliance with the public information requirements of Rule 144 and a
copy of the most recent annual or quarterly report of the Company.
13. Miscellaneous.
(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
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If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
If to the Optionee: Gary Crooks
7100 West Camino
Boca Raton, FL 33433
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of the Agreement or the
interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
By: /s/ Leonard F. Vernon /s/ Gary Crooks
----------------------------- ---------------
Leonard F. Vernon Gary Crooks
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable
upon the exercise of this Option and the Exercise Price shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any
time while this Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Option (other than a change in par value, or from par value to no par value
per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Option providing that the holder of this Option shall have the right to
exercise such new Option (upon terms not less favorable to the holder than those
then applicable to this Option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of this Option,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
1 of Schedule A. The provisions of this subsection 1(a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the
Company at any time while this Option remains outstanding and unexpired, shall
subdivide or combine its Capital Stock, the Exercise Price shall be
proportionately reduced, in case of subdivision of such shares, as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of such
record date, whichever is earlier, or shall be proportionately increased, in the
case of combination of such shares, as of the effective date of such
combination, or, if the Company shall take a record of holders of its Capital
Stock for the purpose of so combining, as of such record date, whichever is
earlier.
(c) Stock Dividends. If the Company at any time while
this Option is outstanding and unexpired shall pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the Exercise Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Capital Stock
outstanding immediately after such dividend or distribution. The provisions of
this
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subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any
time while this Option is outstanding and unexpired makes a distribution of its
assets to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Option (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in good faith
by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price
or the number of shares of Common Stock purchasable under the terms of this
Option at that exercise price shall be adjusted pursuant to Section 1 hereof,
the Company shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Option.
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EXHIBIT 4.6
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of this 26th day of May, 1999, by and between GOHEALTH.MD, INC., a Delaware
corporation (the "Company"), and John Madden ("Optionee").
Background
The Company desires to grant Optionee an option to purchase shares of
common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and intending to be legally bound, it
is agreed as follows:
5. Non-Qualified Stock Options to Purchase Shares.
(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 2,500 shares of common stock, with an exercise price
of $.50 per share.
(ii) 2,500 shares of common stock, with an exercise price
of $1.00 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on May 26, 2006 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
The Options may be exercised in whole or in part, subject to
the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid by delivering a certified check or wire transfer of
immediately available funds to the order of the Company for the entire exercise
price. The person entitled to the shares so purchased shall be treated for all
purposes as the holder of such shares as of the close of business on the date of
exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has
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expired, a new Option of like tenor and for such number of shares as the holder
of this Option shall direct, representing in the aggregate the right to purchase
a number of shares with respect to which this Option shall not have been
exercised, shall also be issued to the holder of this Option within such time.
3. Rights as Stockholder. Optionee or a permitted transferee of the
Options shall have no rights as a stockholder of the Company with respect to any
shares of common stock subject to such Options prior to his exercise of the
Options.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
6. Exercisability. The Options shall be exercisable only by Optionee
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws. The Options granted hereunder and the registration rights may
be assigned together only, but may not be separately assigned.
7. Piggyback Registrations.
(a) Right to Piggyback. At any time after the first to occur
of the date (i) a registration statement covering the Initial Public Offering of
the Company's securities shall become effective or (ii) upon the Company
becoming a reporting company under Section 12 of the Securities Act of 1934, as
amended whenever the Company proposes to register any of its securities under
the 1933 Act (other than a registration on Form S-4 or S-8 or such replacement
form), and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to the Optionee and will include in such Piggyback
Registration, subject to the allocation provisions below, all Registrable
Securities of Optionee with respect to which the Company has received written
requests for inclusion within fifteen (15) days after the Company's mailing of
such notice.
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(b) Piggyback Expenses. In all Piggyback Registrations, the
Company will pay all of the Registration Expenses.
(c) Priority on Registrations. If a Piggyback Registration is
initiated as an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their reasonable opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company may limit the number of Registrable Securities included in such
registration.
(d) Selection of Underwriters. If any Piggyback Registration
is underwritten, the selection of investment banker(s) and manager(s) and the
other decisions regarding the underwriting arrangements for the offering will be
made by the Company.
(e) Continuing Obligations. The Company's agreements with
respect to the registration of the Option Shares in this Section 8 shall
continue in effect regardless of the exercise and surrender of the Option.
8. Registration Procedures.
Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best reasonable efforts to cause such registration statement to
become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 90 days;
(c) furnish to each Selling Holder such reasonable number of
copies of such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary prospectus and any term sheet associated therewith), and such other
documents as such Optionee may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by each seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
states as the managing underwriter(s) may reasonably request, or if the offering
is not underwritten in New York, New Jersey and Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within the
period that the Company is required to keep the registration statement effective
of the happening of any event as a result of which the prospectus included in
such registration statement, together with any associated term sheet, contains
an untrue statement of a material fact or omits and fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter
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delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statement therein not misleading;
(f) cause all such Registrable Securities to be listed or
included on each national securities exchange, if any, or on the NASDAQ Stock
Market, on which the other outstanding shares of Common Stock of the Company are
then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other customary actions
as may be reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company from
its independent public accountants in customary form and covering such matters
of the type customarily covered by "comfort" letters; and
(j) make available for inspection by the Optionee, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller, or any underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller or any such underwriter, attorney, accountant or agent in connection
with such registration statement.
9. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by
law, each Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of the 1933
Act (each, an "indemnified Party") against all losses, claims, damages,
liabilities and expenses arising out of or resulting from any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or associated term sheet or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which made except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such
Indemnified Party expressly for use therein or by any Indemnified Party's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Indemnified Party with a sufficient number of copies of the same. In connection
with an underwritten offering, the Company will indemnify the underwriters,
their officers and directors, and each person who controls such underwriters
(within the meaning of the 1933 Act) to the same extent as provided above with
respect to the indemnification of any Indemnified Party.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Holder will furnish to the Company in
a timely manner in writing such information as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who
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controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished in writing by
such Holder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of a Selling Holder under this
Section 9(b) shall be limited to an amount equal to the net proceeds actually
received by the Selling Holder from the sale of Registrable Securities covered
by the registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnifying party's counsel
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled, or
elects not, to assume the defense of a claim will not be obligated to pay the
fees and expenses or more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgement of any indemnified party's counsel a conflict of interest exists
between such indemnified party and any other of such indemnifying parties with
respect to such claim.
10. Participation in Underwritten Registrations.
The Optionee may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements under Section 7(e), and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
11. Definitions.
(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
(c) The term "Initial Public Offering" means the first public
offering under the 1933 Act of any of the Company's equity securities.
(d) The term "Registrable Securities" means (i) the Common
Stock issuable upon the exercise of the Options and (ii) any securities issued
or to be issued with respect to the securities referred
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to above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, such securities
will cease to be Registrable Securities when they have been effectively
registered under the 1933 Act and disposed of in accordance with the
registration statement covering them.
(e) The term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states reasonably
determined by the Company), printing expenses, messenger and delivery expenses,
expenses and fees for listing the securities to be registered on exchanges or
electronic quotation systems on which similar securities issued by the Company
are then listed, and fees and disbursements of counsel for the Company (but not
Optionee's counsel) and of all independent certified public accountants,
underwriters (other than Underwriting Commissions) and other persons retained by
the Company.
(f) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company.
12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") which may permit the sale of the Options or the
shares underlying the Options to the public without registration, at any time
after the first to occur of the date (i) a registration statement under the
Securities Act covering the Initial Public Offering of the Company's securities
shall become effective, or (ii) upon the Company becoming a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended, the Company
agrees to: (a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act; (b) file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1993 Act and the Securities Exchange Act of 1934, as amended; and (c)
furnish to Optionee upon its written request a written statement by the Company
as to its compliance with the public information requirements of Rule 144 and a
copy of the most recent annual or quarterly report of the Company.
13. Miscellaneous.
(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
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If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
If to the Optionee: John Madden
7100 West Camino
Boca Raton, FL 33433
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of the Agreement or the
interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
By: /s/ Leonard F. Vernon /s/ John Madden
----------------------------- ---------------
Leonard F. Vernon John Madden
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable
upon the exercise of this Option and the Exercise Price shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any
time while this Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Option (other than a change in par value, or from par value to no par value
per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Option providing that the holder of this Option shall have the right to
exercise such new Option (upon terms not less favorable to the holder than those
then applicable to this Option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of this Option,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
1 of Schedule A. The provisions of this subsection 1(a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the
Company at any time while this Option remains outstanding and unexpired, shall
subdivide or combine its Capital Stock, the Exercise Price shall be
proportionately reduced, in case of subdivision of such shares, as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of such
record date, whichever is earlier, or shall be proportionately increased, in the
case of combination of such shares, as of the effective date of such
combination, or, if the Company shall take a record of holders of its Capital
Stock for the purpose of so combining, as of such record date, whichever is
earlier.
(c) Stock Dividends. If the Company at any time while
this Option is outstanding and unexpired shall pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the Exercise Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Capital Stock
outstanding immediately after such dividend or distribution. The provisions of
this
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subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any
time while this Option is outstanding and unexpired makes a distribution of its
assets to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Option (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in good faith
by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price
or the number of shares of Common Stock purchasable under the terms of this
Option at that exercise price shall be adjusted pursuant to Section 1 hereof,
the Company shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Option.
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EXHIBIT 4.7
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of this 12th day of June, 1999, by and between GOHEALTH.MD, INC., a Delaware
corporation (the "Company"), and J. Eric Kishbaugh ("Optionee").
Background
The Company desires to grant Optionee an option to purchase shares of
common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and intending to be legally bound, it
is agreed as follows:
6. Non-Qualified Stock Options to Purchase Shares.
(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 10,000 shares of common stock with an exercise price
of $1.00 per share.
(ii) 10,000 shares of common stock with an exercise price
of $1.50 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on June 12, 2006 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
The Options may be exercised in whole or in part, subject to
the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid by delivering a certified check or wire transfer of
immediately available funds to the order of the Company for the entire exercise
price. The person entitled to the shares so purchased shall be treated for all
purposes as the holder of such shares as of the close of business on the date of
exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has
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expired, a new Option of like tenor and for such number of shares as the holder
of this Option shall direct, representing in the aggregate the right to purchase
a number of shares with respect to which this Option shall not have been
exercised, shall also be issued to the holder of this Option within such time.
3. Rights as Stockholder. Optionee or a permitted transferee of the
Options shall have no rights as a stockholder of the Company with respect to any
shares of common stock subject to such Options prior to his exercise of the
Options.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
6. Exercisability. The Options shall be exercisable only by Optionee
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws. The Options granted hereunder and the registration rights may
be assigned together only, but may not be separately assigned.
7. Piggyback Registrations.
(a) Right to Piggyback. At any time after the first to occur
of the date (i) a registration statement covering the Initial Public Offering of
the Company's securities shall become effective or (ii) upon the Company
becoming a reporting company under Section 12 of the Securities Act of 1934, as
amended whenever the Company proposes to register any of its securities under
the 1933 Act (other than a registration on Form S-4 or S-8 or such replacement
form), and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to the Optionee and will include in such Piggyback
Registration, subject to the allocation provisions below, all Registrable
Securities of Optionee with respect to which the Company has received written
requests for inclusion within fifteen (15) days after the Company's mailing of
such notice.
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(b) Piggyback Expenses. In all Piggyback Registrations, the
Company will pay all of the Registration Expenses.
(c) Priority on Registrations. If a Piggyback Registration is
initiated as an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their reasonable opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company may limit the number of Registrable Securities included in such
registration.
(d) Selection of Underwriters. If any Piggyback Registration
is underwritten, the selection of investment banker(s) and manager(s) and the
other decisions regarding the underwriting arrangements for the offering will be
made by the Company.
(e) Continuing Obligations. The Company's agreements with
respect to the registration of the Option Shares in this Section 8 shall
continue in effect regardless of the exercise and surrender of the Option.
8. Registration Procedures.
Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best reasonable efforts to cause such registration statement to
become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 90 days;
(c) furnish to each Selling Holder such reasonable number of
copies of such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary prospectus and any term sheet associated therewith), and such other
documents as such Optionee may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by each seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
states as the managing underwriter(s) may reasonably request, or if the offering
is not underwritten in New York, New Jersey and Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within the
period that the Company is required to keep the registration statement effective
of the happening of any event as a result of which the prospectus included in
such registration statement, together with any associated term sheet, contains
an untrue statement of a material fact or omits and fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter
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delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statement therein not misleading;
(f) cause all such Registrable Securities to be listed or
included on each national securities exchange, if any, or on the NASDAQ Stock
Market, on which the other outstanding shares of Common Stock of the Company are
then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other customary actions
as may be reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company from
its independent public accountants in customary form and covering such matters
of the type customarily covered by "comfort" letters; and
(j) make available for inspection by the Optionee, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller, or any underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller or any such underwriter, attorney, accountant or agent in connection
with such registration statement.
9. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by
law, each Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of the 1933
Act (each, an "indemnified Party") against all losses, claims, damages,
liabilities and expenses arising out of or resulting from any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or associated term sheet or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which made except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such
Indemnified Party expressly for use therein or by any Indemnified Party's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Indemnified Party with a sufficient number of copies of the same. In connection
with an underwritten offering, the Company will indemnify the underwriters,
their officers and directors, and each person who controls such underwriters
(within the meaning of the 1933 Act) to the same extent as provided above with
respect to the indemnification of any Indemnified Party.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Holder will furnish to the Company in
a timely manner in writing such information as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who
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controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished in writing by
such Holder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of a Selling Holder under this
Section 9(b) shall be limited to an amount equal to the net proceeds actually
received by the Selling Holder from the sale of Registrable Securities covered
by the registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnifying party's counsel
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled, or
elects not, to assume the defense of a claim will not be obligated to pay the
fees and expenses or more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgement of any indemnified party's counsel a conflict of interest exists
between such indemnified party and any other of such indemnifying parties with
respect to such claim.
10. Participation in Underwritten Registrations.
The Optionee may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements under Section 7(e), and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
11. Definitions.
(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
(c) The term "Initial Public Offering" means the first public
offering under the 1933 Act of any of the Company's equity securities.
(d) The term "Registrable Securities" means (i) the Common
Stock issuable upon the exercise of the Options and (ii) any securities issued
or to be issued with respect to the securities referred
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to above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, such securities
will cease to be Registrable Securities when they have been effectively
registered under the 1933 Act and disposed of in accordance with the
registration statement covering them.
(e) The term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states reasonably
determined by the Company), printing expenses, messenger and delivery expenses,
expenses and fees for listing the securities to be registered on exchanges or
electronic quotation systems on which similar securities issued by the Company
are then listed, and fees and disbursements of counsel for the Company (but not
Optionee's counsel) and of all independent certified public accountants,
underwriters (other than Underwriting Commissions) and other persons retained by
the Company.
(f) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company.
12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") which may permit the sale of the Options or the
shares underlying the Options to the public without registration, at any time
after the first to occur of the date (i) a registration statement under the
Securities Act covering the Initial Public Offering of the Company's securities
shall become effective, or (ii) upon the Company becoming a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended, the Company
agrees to: (a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act; (b) file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1993 Act and the Securities Exchange Act of 1934, as amended; and (c)
furnish to Optionee upon its written request a written statement by the Company
as to its compliance with the public information requirements of Rule 144 and a
copy of the most recent annual or quarterly report of the Company.
13. Miscellaneous.
(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
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If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
If to the Optionee: J. Eric Kishbaugh
10 Foster Avenue, Suite D3
Gibbsboro, NJ 08026
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of the Agreement or the
interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
By: /s/ Leonard F. Vernon /s/ J. Eric Krishbaugh
----------------------------- ----------------------
Leonard F. Vernon J. Eric Kishbaugh
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable
upon the exercise of this Option and the Exercise Price shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any
time while this Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Option (other than a change in par value, or from par value to no par value
per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Option providing that the holder of this Option shall have the right to
exercise such new Option (upon terms not less favorable to the holder than those
then applicable to this Option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of this Option,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
1 of Schedule A. The provisions of this subsection 1(a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the
Company at any time while this Option remains outstanding and unexpired, shall
subdivide or combine its Capital Stock, the Exercise Price shall be
proportionately reduced, in case of subdivision of such shares, as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of such
record date, whichever is earlier, or shall be proportionately increased, in the
case of combination of such shares, as of the effective date of such
combination, or, if the Company shall take a record of holders of its Capital
Stock for the purpose of so combining, as of such record date, whichever is
earlier.
(c) Stock Dividends. If the Company at any time while
this Option is outstanding and unexpired shall pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the Exercise Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Capital Stock
outstanding immediately after such dividend or distribution. The provisions of
this
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subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any
time while this Option is outstanding and unexpired makes a distribution of its
assets to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Option (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in good faith
by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price
or the number of shares of Common Stock purchasable under the terms of this
Option at that exercise price shall be adjusted pursuant to Section 1 hereof,
the Company shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Option.
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EXHIBIT 4.8
SERIES A
WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT) OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNTIL THE
COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED.
Nugget Exploration, Inc., a Nevada corporation, (the "Company") hereby
grants to ____________________ (the "Holder") the right, privilege and option to
purchase ____ shares of its common stock, $0.01 par value, ("Common Stock") at
the purchase price of $1.00 per share (the "Exercise Price"), in the manner and
subject to the conditions hereinafter provided (the "Warrant").
1. Time of Exercise of Warrant. This Warrant may be exercised during
the period commencing on the date this Warrant is issued and ending on December
31, 2002.
2. Method of Exercise. The Warrant shall be exercised in whole at any
time or in part from time to time, by delivery of the Subscription Form attached
hereto duly executed along with this Warrant directed to the Company at its
principal place of business accompanied by a check payable to the Company in
payment of the Exercise Price rounded to the nearest $.01, for the number of
whole shares specified, together with appropriate endorsements or transfer
documents and a check for payment of any transfer or similar tax, if required.
Upon clearance of the checks, the Company shall make prompt delivery of a
certificate evidencing the number of whole shares to which the Holder may be
entitled, and pay to the Holder cash in an amount equal to the fair value
(determined in such reasonable manner as the Board of Directors of the Company
shall determine) of any fractional share; provided that if any law or regulation
requires the Company to take any action with respect to the shares specified in
such notice before the issuance thereof, then the date of delivery of such
shares shall be extended for the period necessary to take such action. In case
of the purchase of less than all the shares purchasable under this Warrant, the
Company shall cancel this Warrant upon surrender hereof and shall execute and
deliver a new Warrant of like tenor and date for the balance of the shares
purchasable hereunder. The Company agrees at all times to reserve or hold
available a sufficient number of shares of Common Stock to cover the number of
shares issuable upon the exercise of this and all other Warrants of like tenor
then outstanding.
3. Rights as Stockholder. The Holder shall have no rights as a
stockholder of the Company with respect to any shares of Common Stock subject to
this Warrant prior to his exercise of the Warrant.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Warrant and the
exercise price shall be subject to adjustment from time to time, as provided in
Schedule A attached hereto.
5. Investment Representation.
(a) Holder represents and warrants to the Company that Holder
is acquiring this Warrant and the shares issuable upon exercise of the Warrant
("Warrant Shares") for Holder's own account for the purpose of investment and
not with a view toward resale or other distribution thereof in violation of the
Securities Act of 1933. Holder acknowledges that the effect of the
representations and warranties is that the economic risk of the investment in
the Warrant and Warrant Shares must be borne by the Holder for an indefinite
period of time. This representation and warranty shall be deemed to be a
continuing representation and warranty and shall be in full force and effect
upon such exercise of the Warrant granted hereby.
(b) In order to enable the Company to comply with the
Securities Act of 1933 (the "Securities Act") and relevant state law, the
Company may require the Holder as a condition of the exercising of the Warrant
granted hereunder, to give written assurance satisfactory to the Company that
the shares subject to the Warrant are being acquired for its own account, for
investment only, with no view to the distribution of same, and that any
subsequent resale of any such shares either shall be made pursuant to a
registration statement under the Securities Act which shall become effective and
be current with regard to the shares being sold, or shall be pursuant to an
exemption from registration under the Securities Act. If the shares
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of Common Stock purchased pursuant to the exercise of this Warrant are not
subject to an effective registration statement under the Securities Act, the
certificate(s) evidencing shares of Common stock purchased upon exercise of this
Warrant shall bear the following restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAW
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW, OR UNTIL THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
6. Exercisability. The Warrant shall be exercisable only by Holder
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws.
7. Piggyback Registration Rights.
-----------------------------
(a) Right to Piggyback. At any time, whenever the Company
proposes to register any of its securities under the 1933 Act (other than a
registration on Form S-4 or S-8 or such replacement form), and the registration
form to be used may be used for the registration of Registrable Securities (a
"Piggyback Registration"), the Company will give prompt written notice to the
Holder and will include in such Piggyback Registration, subject to the
allocation provisions below, all Registrable Securities of Holder with respect
to which the Company has received written requests for inclusion within fifteen
(15) days after the Company's mailing of such notice.
(b) Piggyback Expenses. In all Piggyback Registrations, the
Company will pay all of the Registration Expenses.
(c) Priority on Registrations. If a Piggyback Registration is
initiated as an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their reasonable opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company may limit the number of Registrable Securities included in such
registration.
(d) Selection of Underwriters. If any Piggyback Registration
is underwritten, the selection of investment banker(s) and manager(s) and the
other decisions regarding the underwriting arrangements for the offering will be
made by the Company.
(e) Continuing Obligations. The Company's agreements with
respect to the registration of the Warrant Shares in this Section 7 shall
continue in effect regardless of the exercise and surrender of the Warrant.
8. Registration Procedures.
-----------------------
Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best reasonable efforts to cause such registration statement to
become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 90 days;
(c) furnish to each Selling Holder such reasonable number of
copies of such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary
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prospectus and any term sheet associated therewith), and such other documents as
such Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by each seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
states as the managing underwriter(s) may reasonably request, or if the offering
is not underwritten in New York, New Jersey and Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the Securities Act within the
period that the Company is required to keep the registration statement effective
of the happening of any event as a result of which the prospectus included in
such registration statement, together with any associated term sheet, contains
an untrue statement of a material fact or omits and fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statement therein not misleading;
(f) cause all such Registrable Securities to be listed or
included on each national securities exchange, if any, or on the Stock Market,
on which the other outstanding shares of Common Stock of the Company are then
listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other customary actions
as may be reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
9. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by
law, each Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of the
Securities Act (each, an "Indemnified Party") against all losses, claims,
damages, liabilities and expenses arising out of or resulting from any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or associated term sheet or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which made except insofar as the same are caused
by or contained in any information furnished in writing to the Company by such
Indemnified Party expressly for use therein or by any Indemnified Party's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Indemnified Party with a sufficient number of copies of the same.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Holder will furnish to the Company in
a timely manner in writing such information as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact or any
omission or alleged omission of a material fact required to be stated in the
registration statement or prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or omission is contained in information so
furnished in writing by such Holder specifically for use in preparing the
registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnifying party's counsel
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be
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unreasonably withheld). An indemnifying party who is not entitled, or elects
not, to assume the defense of a claim will not be obligated to pay the fees and
expenses or more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgement of any indemnified party's counsel a conflict of interest exists
between such indemnified party and any other of such indemnifying parties with
respect to such claim.
10. Participation in Underwritten Registrations.
The Holder may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the Company, and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
11. Definitions.
(a) The term "Registrable Securities" means (i) the Common
Stock issuable upon the exercise of the Warrant and (ii) any securities issued
or to be issued with respect to the securities referred to above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when they have been effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering them.
(b) The term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states reasonably
determined by the Company), printing expenses, messenger and delivery expenses,
expenses and fees for listing the securities to be registered on exchanges or
electronic quotation systems on which similar securities issued by the Company
are then listed, and fees and disbursements of counsel for the Company (but not
Optionee's counsel) and of all independent certified public accountants,
underwriters (other than Underwriting Commissions) and other persons retained by
the Company.
(c) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company.
12. Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company, of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the Company, if lost,
stolen, or destroyed, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute, and deliver to the Holder a
new Warrant of like date, tenor and denomination.
13. Governing Law. This Warrant and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided herein or performance
shall be governed or interpreted according to the laws of the State of Delaware.
14. Issuance of Shares. The Company covenants and agrees that all
shares of Common Stock which may be delivered upon the exercise of this Warrant
will, upon delivery, be duly paid and non-assessable and shall be free from all
taxes, liens and charges with respect to the purchase thereof hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed November, 1999.
Nugget Exploration, Inc.
/s/ Leonard F. Vernon
-----------------------
Leonard F. Vernon, President
(Seal)
ATTEST
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/s/ Kevin O'Donnell
------------------------
Secretary or Assistant Secretary
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable upon the
exercise of this Warrant and the exercise price shall be subject to adjustment
from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any time
while this Warrant remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant (other than a change in par value, or from par value to no par
value per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Warrant), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Warrant), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Warrant providing that the holder of this Warrant shall have the right to
exercise such new Warrant (upon terms not less favorable to the holder than
those then applicable to this Warrant) and to receive upon such exercise, in
lieu of each share of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money or
property receivable upon such reclassification, change, consolidation, merger,
sale or transfer. Such new Warrant shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 1 of Schedule A. The provisions of this subsection 1(a) shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, sales and transfers.
(b) Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired, shall subdivide
or combine its Common Stock, the Exercise Price shall be proportionately
reduced, in case of subdivision of such shares, as of the effective date of such
subdivision, or, if the Company shall take a record of holders of its Common
Stock for the purpose of so subdividing, as of such record date, whichever is
earlier, or shall be proportionately increased, in the case of combination of
such shares, as of the effective date of such combination, or, if the Company
shall take a record of holders of its Common Stock for the purpose of so
combining, as of such record date, whichever is earlier.
(c) Stock Dividends. If the Company at any time while this
Option is outstanding and unexpired shall pay a dividend in shares of, or make
other distribution of shares of, its Common Stock, then the Exercise Price shall
be adjusted, as of the date the Company shall take a record of the holders of
its Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution. The provisions of
this subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any time
while this Warrant is outstanding and unexpired makes a distribution of its
assets to the holders of its Common Stock as a dividend in liquidation or by way
of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Warrant (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an
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appropriate provision therefor should be made a part of any such distribution.
The value of a distribution which is paid in other than cash shall be determined
in good faith by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price or the
number of shares of Common Stock purchasable under the terms of this Warrant at
that exercise price shall be adjusted pursuant to Section 1 hereof, the Company
shall promptly make a certificate signed by its President or a Vice President
and by its Treasurer or Assistant Treasurer or its Secretary or Assistant
Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Warrant.
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SUBSCRIPTION
The undersigned, ______________________, pursuant to the provisions of
the foregoing Warrant, hereby agrees to subscribe for the purchase of
______________ shares of Common Stock of Nugget Exploration, Inc. covered by
said Warrant, and makes payment therefor in full at the price per share provided
by said Warrant.
Dated:_____________ Signature:_________________________
Address:__________________
-----------------
ASSIGNMENT
FOR VALUE RECEIVED ______________ hereby sells, assigns and transfers unto
____ ____________ the foregoing Warrant and all rights evidenced thereby, and
does irrevocably constitute and appoint __________________________, attorney, to
transfer said Warrant on the books of Nugget Exploration, Inc.
Dated:______________ Signature:________________________
Address:_________________
-----------------
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________ hereby assigns and transfers unto
_________________ the right to purchase _________shares of Common Stock of
Nugget Exploration, Inc. by the foregoing Warrant, and a proportionate Part of
said Warrant and the rights evidenced hereby, and does irrevocably constitute
and appoint __________________, attorney, to transfer that part of said Warrant
on the books of Nugget Exploration, Inc.
Dated:______________ Signature:________________________
Address:________________
----------------
174
EXHIBIT 4.9
UNIT WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT) OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNTIL THE
COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED.
GoHealth.MD. Inc., a Delaware corporation, (the "Company") hereby
grants to ____________________ (the "Holder") the right, privilege and option to
purchase ____ shares of its common stock, $0.001 par value, ("Common Stock") at
the purchase price of $2.50 per share (the "Exercise Price"), in the manner and
subject to the conditions hereinafter provided (the "Warrant").
1. Time of Exercise of Warrant. This Warrant may be exercised during
the period commencing on the date this Warrant is issued and ending on the
earlier of; (i) September 30, 2003, or (ii) the date Warrant is redeemed by the
Company pursuant to the terms of Paragraph 7, herein.
2. Method of Exercise. The Warrant shall be exercised in whole at any
time or in part from time to time, by delivery of the Subscription Form attached
hereto duly executed along with this Warrant directed to the Company at its
principal place of business accompanied by a check payable to the Company in
payment of the Exercise Price rounded to the nearest $.01, for the number of
whole shares specified, together with appropriate endorsements or transfer
documents and a check for payment of any transfer or similar tax, if required.
Upon clearance of the checks, the Company shall make prompt delivery of a
certificate evidencing the number of whole shares to which the Holder may be
entitled, and pay to the Holder cash in an amount equal to the fair value
(determined in such reasonable manner as the Board of Directors of the Company
shall determine) of any fractional share; provided that if any law or regulation
requires the Company to take any action with respect to the shares specified in
such notice before the issuance thereof, then the date of delivery of such
shares shall be extended for the period necessary to take such action. In case
of the purchase of less than all the shares purchasable under this Warrant, the
Company shall cancel this Warrant upon surrender hereof and shall execute and
deliver a new Warrant of like tenor and date for the balance of the shares
purchasable hereunder. The Company agrees at all times to reserve or hold
available a sufficient number of shares of Common Stock to cover the number of
shares issuable upon the exercise of this and all other Warrants of like tenor
then outstanding.
3. Rights as Stockholder. The Holder shall have no rights as a
stockholder of the Company with respect to any shares of Common Stock subject to
this Warrant prior to his exercise of the Warrant.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Warrant and the
exercise price shall be subject to adjustment from time to time, as provided in
Schedule A attached hereto.
5. Investment Representation.
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(a) Holder represents and warrants to the Company that Holder
is acquiring this Warrant and the Shares issuable upon exercise of the Warrant
("Warrant Shares") for Holder's own account for the purpose of investment and
not with a view toward resale or other distribution thereof in violation of the
Securities Act of 1933. Holder acknowledges that the effect of the
representations and warranties is that the economic risk of the investment in
the Warrant and Warrant Shares must be borne by the Holder for an indefinite
period of time. This representation and warranty shall be deemed to be a
continuing representation and warranty and shall be in full force and effect
upon such exercise of the Warrant granted hereby.
(b) In order to enable the Company to comply with the
Securities Act of 1933 (the "Securities Act") and relevant state law, the
Company may require the Holder as a condition of the exercising of the Warrant
granted hereunder, to give written assurance satisfactory to the Company that
the shares subject to the Warrant are being acquired for its own account, for
investment only, with no view to the distribution of same, and that any
subsequent resale of any such shares either shall be made pursuant to a
registration statement under the Securities Act which shall become effective and
be current with regard to the shares being sold, or shall be pursuant to an
exemption from registration under the Securities Act. If the shares of Common
Stock purchased pursuant to the exercise of this Warrant are not subject to an
effective registration statement under the Securities Act, the certificate(s)
evidencing shares of Common stock purchased upon exercise of this Warrant shall
bear the following restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAW
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW, OR UNTIL THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
6. Exercisability. The Warrant shall be exercisable only by Holder
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws.
7. Redemption of Warrant. If the Company completes an initial public
offering ("IPO") of its Common Stock, then beginning twelve (12) months after
the IPO, the Company may call the Warrant for redemption at $.01 for every share
of Common Stock purchasable upon exercise hereof at the time of such redemption;
provided, that at any time prior to expiration upon not less than thirty (30)
days prior written notice if the closing bid quotation of the Common Stock
exceeds 150% of the price per share of Common Stock as set forth in the IPO for
each of the 10 consecutive trading days during a period ending on the third day
prior to the date on which notice of redemption is given. On and after the date
of redemption the Holder shall have only the right to receive $.01 per share of
Common Stock purchasable upon exercise hereof at the time of such redemption.
8. Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company, of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the Company, if lost,
stolen, or destroyed, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute, and deliver to the Holder a
new Warrant of like date, tenor and denomination.
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9. Governing Law. This Warrant and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided herein or performance shall be
governed or interpreted according to the laws of the State of Delaware.
10. Issuance of Shares. The Company covenants and agrees that all
shares of Common Stock which may be delivered upon the exercise of this Warrant
will, upon delivery, be duly paid and non- assessable and shall be free from all
taxes, liens and charges with respect to the purchase thereof hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed on the 1st day of October, 1999.
GoHealth.MD, Inc.
/s/ Leonard F. Vernon
---------------------------
Leonard F. Vernon, President
(Seal)
ATTEST
/s/ William D. Hanna
- -------------------------------
Secretary or Assistant Secretary
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable upon the
exercise of this Warrant and the exercise price shall be subject to adjustment
from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any time
while this Warrant remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant (other than a change in par value, or from par value to no par
value per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Warrant), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Warrant), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Warrant providing that the holder of this Warrant shall have the right to
exercise such new Warrant (upon terms not less favorable to the holder than
those then applicable to this Warrant) and to receive upon such exercise, in
lieu of each share of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money or
property receivable upon such reclassification, change, consolidation, merger,
sale or transfer. Such new Warrant shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 1 of Schedule A. The provisions of this subsection 1(a) shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, sales and transfers.
(b) Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired, shall subdivide
or combine its Common Stock, the Exercise Price shall be proportionately
reduced, in case of subdivision of such shares, as of the effective date of such
subdivision, or, if the Company shall take a record of holders of its Common
Stock for the purpose of so subdividing, as of such record date, whichever is
earlier, or shall be proportionately increased, in the case of combination of
such shares, as of the effective date of such combination, or, if the Company
shall take a record of holders of its Common Stock for the purpose of so
combining, as of such record date, whichever is earlier.
(c) Stock Dividends. If the Company at any time while this
Option is outstanding and unexpired shall pay a dividend in shares of, or make
other distribution of shares of, its Common Stock, then the Exercise Price shall
be adjusted, as of the date the Company shall take a record of the holders of
its Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution. The provisions of
this
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subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any time
while this Warrant is outstanding and unexpired makes a distribution of its
assets to the holders of its Common Stock as a dividend in liquidation or by way
of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Warrant (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in good faith
by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price or the
number of shares of Common Stock purchasable under the terms of this Warrant at
that exercise price shall be adjusted pursuant to Section 1 hereof, the Company
shall promptly make a certificate signed by its President or a Vice President
and by its Treasurer or Assistant Treasurer or its Secretary or Assistant
Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Warrant.
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SUBSCRIPTION
The undersigned, ______________________, pursuant to the provisions of
the foregoing Warrant, hereby agrees to subscribe for the purchase of
______________ shares of Common Stock of GoHealth. MD, Inc. covered by said
Warrant, and makes payment therefor in full at the price per share provided by
said Warrant.
Dated:_____________ Signature:_________________
Address:__________________
----------------
ASSIGNMENT
FOR VALUE RECEIVED ______________ hereby sells, assigns and transfers
unto ____ ____________ the foregoing Warrant and all rights evidenced thereby,
and does irrevocably constitute and appoint __________________________,
attorney, to transfer said Warrant on the books of GoHealth.MD, Inc.
Dated:______________ Signature:_________________
Address:___________________
-----------------
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _____________________ hereby assigns and transfers
unto _________________ the right to purchase _________shares of Common Stock of
GoHealth.MD, Inc. by the foregoing Warrant, and a proportionate Part of said
Warrant and the rights evidenced hereby, and does irrevocably constitute and
appoint __________________, attorney, to transfer that part of said Warrant on
the books of GoHealth.MD, Inc.
Dated:______________ Signature:_________________
Address:__________________
-----------------
180
EXHIBIT 4.10
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of this 23rd day of February, 1999, by and between GOHEALTH.MD, INC., a
Delaware corporation (the "Company"), and Kevin O'Donnell ("Optionee").
Background
The Company desires to grant Optionee an option to purchase shares of
common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and intending to be legally bound, it
is agreed as follows:
1. Non-Qualified Stock Options to Purchase Shares.
(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 115,000 shares of common stock, with an exercise price
of $.50 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on February, 23, 2006 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
The Options may be exercised in whole or in part, subject to
the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid by delivering a certified check or wire transfer of
immediately available funds to the order of the Company for the entire exercise
price. The person entitled to the shares so purchased shall be treated for all
purposes as the holder of such shares as of the close of business on the date of
exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has expired, a new
Option of like tenor and for such number of shares as the holder of this Option
shall direct, representing in the aggregate the right to purchase a number of
shares with respect to which this Option shall not have been exercised, shall
also be issued to the holder of this Option within such time.
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3. Rights as Stockholder. Optionee or a permitted transferee of the
Options shall have no rights as a stockholder of the Company with respect to any
shares of common stock subject to such Options prior to his exercise of the
Options.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
6. Exercisability. The Options shall be exercisable only by Optionee
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws. The Options granted hereunder and the registration rights may
be assigned together only, but may not be separately assigned.
7. Definitions.
(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
8. Miscellaneous.
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(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
If to the Optionee: Kevin O'Donnell
19 Nottingham Road
Manalapan, NJ 07726
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for
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reference purposes only and shall not control or affect the construction of the
Agreement or the interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
/s/ Leonard Vernon /s/ Kevin O'Donnell
By: ________________________ _________________________
Leonard F. Vernon Kevin O'Donnell
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable
upon the exercise of this Option and the Exercise Price shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any
time while this Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Option (other than a change in par value, or from par value to no par value
per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Option providing that the holder of this Option shall have the right to
exercise such new Option (upon terms not less favorable to the holder than those
then applicable to this Option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of this Option,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
1 of Schedule A. The provisions of this subsection 1(a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the
Company at any time while this Option remains outstanding and unexpired, shall
subdivide or combine its Capital Stock, the Exercise Price shall be
proportionately reduced, in case of subdivision of such shares, as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of such
record date, whichever is earlier, or shall be proportionately increased, in the
case of combination of such shares, as of the effective date of such
combination, or, if the Company shall take a record of holders of its Capital
Stock for the purpose of so combining, as of such record date, whichever is
earlier.
(c) Stock Dividends. f the Company at any time while
this Option is outstanding and unexpired shall pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the Exercise Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Stock for the purpose of receiving such dividend or other
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distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Capital Stock
outstanding immediately after such dividend or distribution. The provisions of
this subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any
time while this Option is outstanding and unexpired makes a distribution of its
assets to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Option (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in good faith
by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price
or the number of shares of Common Stock purchasable under the terms of this
Option at that exercise price shall be adjusted pursuant to Section 1 hereof,
the Company shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Option.
186
EXHIBIT 4.11
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of this 23rd day of February, 1999, by and between GOHEALTH.MD, INC., a
Delaware corporation (the "Company"), and William Hanna ("Optionee").
Background
The Company desires to grant Optionee an option to purchase shares of
common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and intending to be legally bound, it
is agreed as follows:
1. Non-Qualified Stock Options to Purchase Shares.
(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 115,000 shares of common stock, with an exercise price of
$.50 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on February, 23, 2006 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
The Options may be exercised in whole or in part, subject to
the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid by delivering a certified check or wire transfer of
immediately available funds to the order of the Company for the entire exercise
price. The person entitled to the shares so purchased shall be treated for all
purposes as the holder of such shares as of the close of business on the date of
exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has expired, a new
Option of like tenor and for such number of shares as the holder of this Option
shall direct, representing in the aggregate the right to purchase a number of
shares with respect to which this Option shall not have been exercised, shall
also be issued to the holder of this Option within such time.
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3. Rights as Stockholder. Optionee or a permitted transferee of the
Options shall have no rights as a stockholder of the Company with respect
to any shares of common stock subject to such Options prior to his exercise
of the Options.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
6. Exercisability. The Options shall be exercisable only by Optionee
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws. The Options granted hereunder and the registration rights may
be assigned together only, but may not be separately assigned.
7. Definitions.
(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
8. Miscellaneous.
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(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
If to the Company: GoHealth.MD, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Attention: President
If to the Optionee: William Hanna
2051 Springdale Road
Cherry Hill, NJ 08003
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for
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reference purposes only and shall not control or affect the construction of the
Agreement or the interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
/s/ Leonard Vernon /s/ William Hanna
By: ________________________ __________________
Leonard F. Vernon William Hanna
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable
upon the exercise of this Option and the Exercise Price shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any
time while this Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Option (other than a change in par value, or from par value to no par value
per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Option providing that the holder of this Option shall have the right to
exercise such new Option (upon terms not less favorable to the holder than those
then applicable to this Option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of this Option,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
1 of Schedule A. The provisions of this subsection 1(a) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the
Company at any time while this Option remains outstanding and unexpired, shall
subdivide or combine its Capital Stock, the Exercise Price shall be
proportionately reduced, in case of subdivision of such shares, as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of such
record date, whichever is earlier, or shall be proportionately increased, in the
case of combination of such shares, as of the effective date of such
combination, or, if the Company shall take a record of holders of its Capital
Stock for the purpose of so combining, as of such record date, whichever is
earlier.
(c) Stock Dividends. If the Company at any time while
this Option is outstanding and unexpired shall pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the Exercise Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Stock for the purpose of receiving such dividend or other
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distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the exercise price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution, and (b) the
denominator of which shall be the total number of shares of Capital Stock
outstanding immediately after such dividend or distribution. The provisions of
this subsection 1(c) shall not apply under any of the circumstances for which an
adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any
time while this Option is outstanding and unexpired makes a distribution of its
assets to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (c)), the holder of this Option shall be
entitled to receive upon the exercise hereof, in addition to the shares of
Common Stock receivable upon such exercise, and without payment of any
consideration other than the exercise price, an amount in cash equal to the
value of such distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such distribution, are
issuable upon exercise of this Option (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in good faith
by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price
or the number of shares of Common Stock purchasable under the terms of this
Option at that exercise price shall be adjusted pursuant to Section 1 hereof,
the Company shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the exercise price and
number of shares of Common Stock purchasable at that exercise price after giving
effect to such adjustment, and shall promptly cause copies of such certificate
to be mailed (by first class and postage prepaid ) to the registered holder of
this Option.
192
EXHIBIT 5.1
KEVIN S. WOLTJEN, P.C.
ATTORNEYS AT LAW
900 Jackson Street, Suite 600
Dallas, Texas 75202
Telephone: 214-712-5673
Facsimile: 214-712-5674
Email: [email protected]
January 12, 2000
Nugget Exploration, Inc.
2051 Springdale Road
Cherry Hill, New Jersey 08003
Gentlemen:
We have acted as counsel to Nugget Exploration, Inc. (the "Company") in
connection with its filing of a registration statement on Form SB-2
(Registration No. 333-__________, the "Registration Statement") covering
1,514,500 shares of common stock $0.01 par value (the "Common Stock") to be sold
by selling stockholders ("Selling Stockholders").
In our capacity as counsel to the Company, we have examined the Company's
Articles of Incorporation and Bylaws, as amended to date, and the minutes and
other corporate proceedings of the Company.
With respect to factual matters, we have relied upon statements and certificates
of officers of the Company. We have also reviewed such other matters of law and
examined and relied upon such other documents, records and certificates as we
have deemed relevant hereto. In all such examinations we have assumed conformity
with the original documents of all documents submitted to us as conformed or
photostatic copies, the authenticity of all documents submitted to us as
originals and the genuineness of all signatures on all documents submitted to
us.
On the basis of the foregoing, we are of the opinion that:
The shares of Common Stock covered by this Registration Statement have
been validly authorized and will, when sold as contemplated by the
Registration Statement, be validly issued, fully paid and
non-assessable; and
The shares of Common Stock underlying options and warrants covered by
this Registration Statement, when issued in accordance with the terms
and conditions of such options and warrants, will, when sold as
contemplated by the Registration Statement, be validly issued, fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to us under the caption "Legal
Matters" in the prospectus constituting the Registration Statement.
Very truly yours,
/s/ Kevin S. Woltjen, P.C.
Kevin S. Woltjen, P.C.
193
EXHIBIT 10.1
NOTE
Cherry Hill, New Jersey
Date: March 29, 1999
For value received and intending to be legally bound GoHealth.MD, Inc.,
a Delaware Corporation, having its principal place of business address of 2051
Springdale Road, Cherry Hill, New Jersey 08003 ("Maker"), promises to pay to the
order of William Hanna Consultants, Inc. ("Payee"), P.O. Box 2660, Cherry Hill,
New Jersey 08034, or such other place as Payee may designate in writing, the
principal sum of Ten Thousand ($10,000.00) Dollars, to be paid in lawful money
of the United States of America with simple interest at Five percent (5%),
compounded annually.
The Note shall be payable as follows:
Principal and interest shall be due and paid by Maker to Payee on or
before the first anniversary of the date of this Note.
Maker shall have the privilege of prepaying the unpaid principal
balance at any time in whole or in part without penalty. All partial prepayments
shall be applied against installments of principal in the inverse order of their
maturity.
Should any default be made in the payment in any installment of
principal as aforesaid on the date on which it shall fall due, or in the
performance or observance of any of the terms, agreements or covenants contained
in this Note, then the entire unpaid balance of said principal sum with
interest, and such other sums due by maker hereunder, shall at the option of
Payee and without notice to Maker, become due and payable immediately and
payment of the same may be enforced and recovered in whole or in part at any
time by one or more of the remedies provided to Payee in this Note; and in such
case Payee may also recover all costs of suit and other expenses in connection
therewith, together with an attorneys' commission for collection equal to the
greater of Five (5%) percent of the total amount then due by Maker to Payee or
Three Thousand Dollars ($3,000.00).
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Notwithstanding anything to the contrary herein contained, it is
understood and agreed that a default in the payment or performance of the
obligations set forth in this Note shall not be deemed to have occurred unless
(i) if it consists of a failure to pay money, such money shall not have been
paid within fifteen (15) days from the date when it became due and payable or
(ii) if it consists of anything other than the failure to pay money, it shall
continue uncured for fifteen (15) days after written notice thereof from Payee
to Maker. At the conclusion of such fifteen-day period, the Guarantors shall
have thirty (30) days to cure such default.
Payee shall not by any act of omission or commission be deemed to have
waived any of its rights or remedies hereunder unless such waiver be in writing
and signed by Payee, and then only to the extent specifically set forth therein;
a waiver of one event shall not be construed as continuing or as a bar to or
waiver of such right or remedy on a subsequent event.
Maker hereby waives presentment for payment, demand, notice of
nonpayment, notice of protest and protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note except as specifically provided for herein, and agrees
that the liability of Maker shall be unconditional without regard to the
liability of any other party and shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver or modification granted or
consented to by Payee; and Maker hereby consents to any and all extensions of
time, renewals, waivers or modifications that may be granted by Payee with
respect to the payment or other provisions of this Note.
Notwithstanding anything to the contrary herein contained, the total
liability of Maker for payment of interest pursuant hereto shall not exceed the
maximum amount, if any, of any such interest permitted by applicable law to be
contracted for, charged or received.
If any provision hereof is found by a court of competent jurisdiction
to be prohibited or unenforceable, it shall be ineffective only to the extent of
such prohibition or unenforceability, and such prohibition or unenforceability
shall not invalidate the balance of such provision to the extent it is not
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prohibited or unenforceable, nor invalidate the other provisions hereof, all of
which shall be liberally construed in favor of Payee in order to effect the
provisions of the Note.
GoHealth.MD, Inc.
/s/ Leonard Vernon
By: _______________________
Leonard F. Vernon, President
STATE OF NEW JERSEY:
ss.
COUNTY OF BURLINGTON:
Leonard F. Vernon, President of Imaging Management Associates, Inc.,
subscribed, sworn to and acknowledged before me that he is the authorized
representative of Maker and having the authority to execute this instrument on
this the 31st day of March, 1999.
/s/ Denise P. Bock
---------------------------
Notary Public
My commission ends:
196
EXHIBIT 10.2
NOTE
Cherry Hill, New Jersey
Date: April 26, 1999
For value received and intending to be legally bound, GoHealth.MD,
Inc., a Delaware Corporation, having its principal place of business address of
2051 Springdale Road, Cherry Hill, New Jersey 08003 ("Maker"), promises to pay
to the order of William Hanna ("Payee"), P.O. Box 2660, Cherry Hill, New Jersey
08034, or such other place as Payee may designate in writing, the principal sum
of Twenty Five Thousand ($25,000.00) Dollars, to be paid in lawful money of the
United States of America with simple interest at Five percent (5%), compounded
annually.
The Note shall be payable as follows:
Principal and interest shall be due and paid by Maker to Payee within
thirty (30) days from the date of this Note.
Maker shall have the privilege of prepaying the unpaid principal
balance at any time in whole or in part without penalty. All partial prepayments
shall be applied against installments of principal in the inverse order of their
maturity.
Should any default be made in the payment in any installment of
principal as aforesaid on the date on which it shall fall due, or in the
performance or observance of any of the terms, agreements or covenants contained
in this Note, then the entire unpaid balance of said principal sum with
interest, and such other sums due by maker hereunder, shall at the option of
Payee and without notice to Maker, become due and payable immediately and
payment of the same may be enforced and recovered in whole or in part at any
time by one or more of the remedies provided to Payee in this Note; and in such
case Payee may also recover all costs of suit and other expenses in connection
therewith, together with an attorneys' commission for collection equal to the
greater of five (5%) percent of the total amount then due by Maker to Payee or
Three Thousand Dollars ($3,000.00).
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Notwithstanding anything to the contrary herein contained, it is
understood and agreed that a default in the payment or performance of the
obligations set forth in this Note shall not be deemed to have occurred unless
(i) if it consists of a failure to pay money, such money shall not have been
paid within fifteen (15) days from the date when it became due and payable or
(ii) if it consists of anything other than the failure to pay money, it shall
continue uncured for fifteen (15) days after written notice thereof from Payee
to Maker. At the conclusion of such fifteen-day period, the Guarantors shall
have thirty (30) days to cure such default.
Payee shall not by any act of omission or commission be deemed to have
waived any of its rights or remedies hereunder unless such waiver be in writing
and signed by Payee, and then only to the extent specifically set forth therein;
a waiver of one event shall not be construed as continuing or as a bar to or
waiver of such right or remedy on a subsequent event.
Maker hereby waives presentment for payment, demand, notice of
nonpayment, notice of protest and protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note except as specifically provided for herein, and agrees
that the liability of Maker shall be unconditional without regard to the
liability of any other party and shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver or modification granted or
consented to by Payee; and Maker hereby consents to any and all extensions of
time, renewals, waivers or modifications that may be granted by Payee with
respect to the payment or other provisions of this Note.
Notwithstanding anything to the contrary herein contained, the total
liability of Maker for payment of interest pursuant hereto shall not exceed the
maximum amount, if any, of any such interest permitted by applicable law to be
contracted for, charged or received.
If any provision hereof is found by a court of competent jurisdiction
to be prohibited or unenforceable, it shall be ineffective only to the extent of
such prohibition or unenforceability, and such prohibition or unenforceability
shall not invalidate the balance of such provision to the extent it is not
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prohibited or unenforceable, nor invalidate the other provisions hereof, all of
which shall be liberally construed in favor of Payee in order to effect the
provisions of the Note.
GoHealth.MD, Inc.
/s/ Leonard Vernon
By: _______________________
Leonard F. Vernon, President
STATE OF NEW JERSEY:
ss.
COUNTY OF BURLINGTON:
Leonard F. Vernon, President of Imaging Management Associates, Inc.,
subscribed, sworn to and acknowledged before me that he is the authorized
representative of Maker and having the authority to execute this instrument on
this the 31st day of March, 1999.
/s/ Denise P. Bock
---------------------------
Notary Public
My commission ends:
199
EXHIBIT 10.3
NOTE
Cherry Hill, New Jersey
Date: May 2, 1999
For value received and intending to be legally bound, GoHealth.MD,
Inc., a Delaware Corporation, having its principal place of business address of
2051 Springdale Road, Cherry Hill, New Jersey 08003 ("Maker"), promises to pay
to the order of William Hanna Consultants, Inc. ("Payee"), P.O. Box 2660, Cherry
Hill, New Jersey 08034, or such other place as Payee may designate in writing,
the principal sum of Three Thousand ($3,000.00) Dollars, to be paid in lawful
money of the United States of America with simple interest at Five percent (5%),
compounded annually.
The Note shall be payable as follows:
Principal and interest shall be due and paid by Maker to Payee on or
before the first anniversary of the date of this Note.
Maker shall have the privilege of prepaying the unpaid principal
balance at any time in whole or in part without penalty. All partial prepayments
shall be applied against installments of principal in the inverse order of their
maturity.
Should any default be made in the payment in any installment of
principal as aforesaid on the date on which it shall fall due, or in the
performance or observance of any of the terms, agreements or covenants contained
in this Note, then the entire unpaid balance of said principal sum with
interest, and such other sums due by maker hereunder, shall at the option of
Payee and without notice to Maker, become due and payable immediately and
payment of the same may be enforced and recovered in whole or in part at any
time by one or more of the remedies provided to Payee in this Note; and in such
case Payee may also recover all costs of suit and other expenses in connection
therewith, together with an attorneys' commission for collection equal to the
greater of Five (5%) percent of the total amount then due by Maker to Payee or
Three Thousand Dollars ($3,000.00).
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Notwithstanding anything to the contrary herein contained, it is
understood and agreed that a default in the payment or performance of the
obligations set forth in this Note shall not be deemed to have occurred unless
(i) if it consists of a failure to pay money, such money shall not have been
paid within fifteen (15) days from the date when it became due and payable or
(ii) if it consists of anything other than the failure to pay money, it shall
continue uncured for fifteen (15) days after written notice thereof from Payee
to Maker. At the conclusion of such fifteen-day period, the Guarantors shall
have thirty (30) days to cure such default.
Payee shall not by any act of omission or commission be deemed to have
waived any of its rights or remedies hereunder unless such waiver be in writing
and signed by Payee, and then only to the extent specifically set forth therein;
a waiver of one event shall not be construed as continuing or as a bar to or
waiver of such right or remedy on a subsequent event.
Maker hereby waives presentment for payment, demand, notice of
nonpayment, notice of protest and protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note except as specifically provided for herein, and agrees
that the liability of Maker shall be unconditional without regard to the
liability of any other party and shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver or modification granted or
consented to by Payee; and Maker hereby consents to any and all extensions of
time, renewals, waivers or modifications that may be granted by Payee with
respect to the payment or other provisions of this Note.
Notwithstanding anything to the contrary herein contained, the total
liability of Maker for payment of interest pursuant hereto shall not exceed the
maximum amount, if any, of any such interest permitted by applicable law to be
contracted for, charged or received.
If any provision hereof is found by a court of competent jurisdiction
to be prohibited or unenforceable, it shall be ineffective only to the extent of
such prohibition or unenforceability, and such prohibition or unenforceability
shall not invalidate the balance of such provision to the extent it is not
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prohibited or unenforceable, nor invalidate the other provisions hereof, all of
which shall be liberally construed in favor of Payee in order to effect the
provisions of the Note.
GoHealth.MD, Inc.
/s/ Leonard Vernon
By: _______________________
Leonard F. Vernon, President
STATE OF NEW JERSEY:
ss.
COUNTY OF BURLINGTON:
Leonard F. Vernon, President of Imaging Management Associates, Inc.,
subscribed, sworn to and acknowledged before me that he is the authorized
representative of Maker and having the authority to execute this instrument on
this the 2nd day of May, 1999.
/s/ Kathleen R. Aqullino
---------------------------
Notary Public
My commission ends:
202
EXHIBIT 10.4
CONTRACT OF SALE
THIS CONTRACT is made on April 26, 1999 by and between GoHealth.MD,
Inc., a Delaware Corporation (the "Purchaser") and Robert H. Savar of Cherry
Hill, NJ (the "Seller").
RECITAL
WHEREAS, the Seller has legally registered "Hlthmall.com" with Network
Solutions, Inc., the national registry for all domain names, and owns all right,
title and interest in the web site constructed by the Seller in connection with
such domain name;
WHEREAS, the Purchaser desires to purchase form the Seller, and the
Seller desires to sell to the Purchaser, the "Hlthmall.com" web site and domain
name, as well as any and all rights, title and interest associated thereto which
the Seller holds.
THEREFORE, in consideration of the mutual promises and conditions
contained in this contract, the parties agree as follows:
PURCHASE AND SALE
1. The Purchaser shall purchase from the Seller, and the Seller shall
sell to the Purchaser, any and all of the Seller's right, interest and title in
the domain name "Hlthmall.com" (the "Sale") for the purchase price of Twenty
Thousand Dollars ($20,000.00) payable at the closing of the Sale (the
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"Closing") in the form of a cashier's check, money order or wire funds. In
addition, Seller will receive 1.0 unit of GoHealth.MD pursuant to a Private
Offering Memorandum and consisting of 2,000 shares of common stock and 2,000
warrants which are exercisable at a price of $2.50 per share.
2. At the closing of the Sale, the Seller shall deliver to the
Purchaser any and all documentation in the Seller's possession reflecting the
ownership and registration of the domain name "Hlthmall.com" with Network
Solutions, Inc., as well as effectuate a domain name modification (as such term
is commonly understood) in favor of GoHealth.MD, Inc. The Seller shall
additionally deliver (or, to the extent delivery is impossible, make known) to
the Purchaser all other contracts, agreements and commitments pertaining to
Seller's ownership of said domain name "Hlthmall.com."
PURCHASER'S CONTINUING OBLIGATIONS
3. The Purchaser hereby unconditionally agrees to continue to utilize
the services of World Wide Web Communications, Inc., a New Jersey corporation
currently wholly owned by the Seller ("WWWC"), as the host of the web site
"Hlthmall.com" at WWWC's usual and customary rate for a period of three (3)
years commencing at the Closing Date.
4. The Purchaser hereby unconditionally agrees to continue to utilize
WWWC and its services for any and all changes, upgrades and maintenance of the
web site "Hlthmall.com" at WWWC's usual and customary rates for a period of
three (3) years commencing at the Closing Date.
5. The Purchaser hereby unconditionally acknowledges and agrees that,
for a period of three (3) years commencing on the Closing Date, all web-hosting
fees for web sites hosted on WWWC's server, regardless of whether or not the web
sites are listed in "Hlthmall.com," will be and will continue to be the sole and
exclusive property of WWWC.
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6. All "Hlthmall.com" revenues other than those described, or
reasonably arising from or related to those described, in this "Purchaser's
Continuing Obligations" section, shall be the property of the Purchaser.
COMPLIANCE WITH LAW AND OTHER INSTRUMENTS
7. The Seller hereby represents that, to its best knowledge after
reasonable due diligence, the Seller is not in violation of any term or
provision of any charter, by-law, contract, agreement, instrument, judgment,
decree, order, statute, rule or regulation, and that the Seller's execution,
delivery and performance of this contract will not result in any violation or in
the creation of any lien, encumbrance, or charge on any of the properties or
assets of Seller.
SELLER'S TITLE
8. The Seller warrants that it has good, absolute and marketable title
to this domain name and that it has been properly registered with Network
Solutions, Inc.
9. The Seller represents that it has no knowledge of any claim against
it under or in respect of, nor any reason to believe that it is or may be
infringing on or otherwise acting adversely to the rights of any person under or
in respect of, any patent, trademark, service mark, trade name, copyright,
license, or other similar intangible property; and Seller is not aware of any
obligation or liability to make any payments by way of royalties, fees, or the
like to any owner or licensee of, or other claimant under, any intangible
property with respect to its use or in connection with the conduct of Seller's
business or otherwise (other than any fees that may be owed from time to time to
Network Solutions, Inc.).
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INDEMNIFICATION
10. The Seller shall indemnify the Purchaser, and the Purchaser shall
indemnify the Seller, on and after the Closing with respect to all claims,
actions, demands, losses, costs, expenses, liabilities (joint or several),
penalties and damages, including counsel fees incurred in investigating or
attempting to avoid or oppose the imposition of damages, resulting to the other
form (1) any inaccurate representation made by the Seller or the Purchaser, as
the case may be, in or under this contract, (2) breach of any of the warranties
or covenants made by the Seller or the Purchaser, as the case may be, in or
under this contact or (3) breach or default in the performance by the Seller or
the Purchaser, as the case may be, of any of the covenants to be performed by it
under this contract. The Seller shall indemnify the Purchaser for any debts,
liabilities, or obligations of the Seller specifically relating to
"Hlthmall.com", other than those obligations expressly or reasonably assumed by
the Purchaser pursuant to this contract, and other than those that have been
communicated to the Purchaser by the Seller on or prior to the Closing Date.
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AMENDMENT AND WAIVER
11. This contact may be amended or modified at any time and in all
respects, and any provision may be waived, by an instrument in writing executed
by both the Purchaser and the Seller, or by either of them in the case of a
waiver of a right or benefit under this contract of such waiving party.
NOTICES
12. Any notices or other communications required or permitted under
this contract shall be sufficiently given if delivered personally or sent by
registered or certified mail, postage prepaid, addressed to the Seller located
at 1133 Seagull Lane, Cherry Hill, New Jersey 08003 and to the Purchaser at
GoHealth.MD, Inc. located at 2051 Springdale Road, Cherry Hill, New Jersey 08003
or at any other address furnished in writing by one party to the other, and
shall be deemed to have been given as of the date delivered or deposited in the
United States mail, as the case may be.
CHOICE OF LAW
13. It is the intention of the parties that the laws of the State of
New Jersey shall govern the validity of this contract, the construction of its
terms, and the interpretation of the rights and duties of the parties.
ARBITRATION
14. Any dispute arising under this contract or relating to the sale and
purchase described in this contract shall be resolved under the commercial
arbitration rules of the American Arbitration
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Association.
HEADINGS
15. Headings contained in this contract are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
contract.
COUNTERPART EXECUTION
16. This contract may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same instrument.
GENDER
17. All personal pronouns used in this contract shall include the other
genders whether used in the masculine or feminine or neuter gender, and the
singular shall include the plural whenever and as often as may be appropriate.
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PARTIES IN INTEREST
18. All the terms and provisions of this contract shall be binding on
and inure to the benefit of, and be enforceable by, the Seller, the Purchaser
and their respective successors and assigns. The Purchaser hereby expressly and
unconditionally agrees that WWWC shall additionally have the right to enforce
any provision in this contract with respect to which it is a third party
beneficiary.
INTEGRATED CONTRACT
19. This contract constitutes the entire agreement between the parties,
and there are no agreements, understandings, restrictions, warranties, or
representations between the parties other than those set forth, provided for or
otherwise referenced in this contract.
ATTEST: GOHEALTH.MD. INC.
/s/ Charles R. Ropka By: /s/ Leonard F. Vernon
- ------------------------------------ ---------------------
Leonard F. Vernon, President
ATTEST:
/s/ Charles R. Ropka /s/ Robert H. Savar
- ------------------------------------ --------------------
Robert H. Savar
209
EXHIBIT 10.5
CONTRACT OF SALE
THIS CONTRACT is made on April 26, 1999 by and between GoHealth.MD,
Inc., a Delaware Corporation (the "Purchaser") and Computerized Professional
Enrichment Services (the "Seller").
RECITAL
WHEREAS, the Seller has legally registered "Healthmall.com" with
Network Solutions, Inc., the national registry for all domain names, and owns
all right, title and interest in the web site constructed by the Seller in
connection with such domain name;
WHEREAS, the Purchaser desires to purchase form the Seller, and the
Seller desires to sell to the Purchaser, the "Healthmall.com" web site and
domain name, as well as any and all rights, title and interest associated
thereto which the Seller holds;
THEREFORE, in consideration of the mutual promises and conditions
contained in this contract, the parties agree as follows:
PURCHASE AND SALE
1. The Purchaser shall purchase from the Seller, and the Seller shall
sell to the Purchaser, any and all of the Seller's right, interest and title in
the domain name "Healthmall.com" (the "Sale") for the purchase price of Five
Thousand Five Hundred Dollars ($5,500.00) payable at the closing of the Sale
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(the "Closing") in the form of a cashier's check, money order or wire funds. In
addition, Seller will receive 1.0 unit of GoHealth.MD pursuant to a Private
Offering Memorandum and consisting of 2,000 shares of common stock and 2,000
warrants which are exercisable at a price of $2.50 per share.
2. At the closing of the Sale, the Seller shall deliver to the
Purchaser any and all documentation in the Seller's possession reflecting the
ownership and registration of the domain name "Healthmall.com" with Network
Solutions, Inc., as well as effectuate a domain name modification (as such term
is commonly understood) in favor of GoHealth.MD, Inc. The Seller shall
additionally deliver (or, to the extent delivery is impossible, make known) to
the Purchaser all other contracts, agreements and commitments pertaining to
Seller's ownership of said domain name "Healthmall.com."
COMPLIANCE WITH LAW AND OTHER INSTRUMENTS
3. The Seller hereby represents that, to its best knowledge after
reasonable due diligence, the Seller is not in violation of any term or
provision of any charter, by-law, contract, agreement, instrument, judgment,
decree, order, statute, rule or regulation, and that the Seller's execution,
delivery and performance of this contract will not result in any violation or in
the creation of any lien, encumbrance, or charge on any of the properties or
assets of Seller.
SELLER'S TITLE
4. The Seller warrants that it has good, absolute and marketable title
to this domain name and that it has been properly registered with Network
Solutions, Inc.
5. The Seller represents that it has no knowledge of any claim against
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it under or in respectof, nor any reason to believe that it is or may be
infringing on or otherwise acting adversely to the rights of any person under or
in respect of, any patent, trademark, service mark, trade name, copyright,
license, or other similar intangible property; and Seller is not aware of any
obligation or liability to make any payments by way of royalties, fees, or the
like to any owner or licensee of, or other claimant under, any intangible
property with respect to its use or in connection with the conduct of Seller's
business or otherwise (other than any fees that may be owed from time to time to
Network Solutions, Inc.).
INDEMNIFICATION
6. The Seller shall indemnify the Purchaser, and the Purchaser shall
indemnify the Seller, on and after the Closing with respect to all claims,
actions, demands, losses, costs, expenses, liabilities (joint or several),
penalties and damages, including counsel fees incurred in investigating or
attempting to avoid or oppose the imposition of damages, resulting to the other
form (1) any inaccurate representation made by the Seller or the Purchaser, as
the case may be, in or under this contract, (2) breach of any of the warranties
or covenants made by the Seller or the Purchaser, as the case may be, in or
under this contact or (3) breach or default in the performance by the Seller or
the Purchaser, as the case may be, of any of the covenants to be performed by it
under this contract. The Seller shall indemnify the Purchaser for any debts,
liabilities, or obligations of the Seller specifically relating to
"Healthmall.com", other than those obligations expressly or reasonably assumed
by the Purchaser pursuant to this contract, and other than those that have been
communicated to the Purchaser by the Seller on or prior to the Closing Date.
AMENDMENT AND WAIVER
7. This contact may be amended or modified at any time and in all
respects, and any provision may be waived, by an instrument in writing
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executed by both the Purchaser and the Seller, or by either of them in the case
of a waiver of a right or benefit under this contract of such waiving party.
SHAREHOLDERS' APPROVAL
8. Seller represents that the sale and transfer of this domain name by
Seller, as provided for in this contract, have been approved by the board of
directors and by the requisite number of shareholders. As such Seller shall
provide a corporate resolution reflecting same.
NOTICES
8. Any notices or other communications required or permitted under this
contract shall be sufficiently given if delivered personally or sent by
registered or certified mail, postage prepaid, addressed to the Seller located
at 4655 West Kingswell Avenue, #203A, Los Angeles, CA 90027 and to the Purchaser
at GoHealth.MD, Inc. located at 2051 Springdale Road, Cherry Hill, New Jersey
08003 or at any other address furnished in writing by one party to the other,
and shall be deemed to have been given as of the date delivered or deposited in
the United States mail, as the case may be.
CHOICE OF LAW
9. It is the intention of the parties that the laws of the State of New
Jersey shall govern the validity of this contract, the construction of its
terms, and the interpretation of the rights and duties of the parties.
ARBITRATION
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10. Any dispute arising under this contract or relating to the sale and
purchase described in this contract shall be resolved under the commercial
arbitration rules of the American Arbitration Association.
HEADINGS
11. Headings contained in this contract are for reference purposes only
and shall not affect in any way the meaning or interpretation of this contract.
COUNTERPART EXECUTION
12. This contract may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same instrument.
GENDER
13. All personal pronouns used in this contract shall include the other
genders whether used in the masculine or feminine or neuter gender, and the
singular shall include the plural whenever and as often as may be appropriate.
PARTIES IN INTEREST
14. All the terms and provisions of this contract shall be binding on
and inure to the benefit of, and be enforceable by, the Seller, the Purchaser
and their respective successors and assigns.
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INTEGRATED CONTRACT
15. This contract constitutes the entire agreement between the parties,
and there are no agreements, understandings, restrictions, warranties, or
representations between the parties other than those set forth, provided for or
otherwise referenced in this contract.
ATTEST: GOHEALTH.MD. INC.
By: /s/ Leonard F. Vernon
- --------------------------- ---------------------
Leonard F. Vernon, President
ATTEST: COMPUTERIZED PROFESSIONAL
ENRICHMENT SERVICES
By: /s/ Moiz Balkhi 5/4/99
- --------------------------- -----------------------------------
Moiz Balkhi, President
Page 6 of
215
EXHIBIT 10.6
Domain Name Trust, Inc.
INDEPENDENT RESELLER AGREEMENT
Domain Name Trust, Inc shall;
(a) Provide the Independent Reseller with a branded registration
template at an .md site address containing the reseller's trade name
as a .md subdomain, i.e., www.register.(your name).md.
(b) Domain Name Trust, Inc. shall register the resellers nam in the
.md registry for a cost $299 which cost shall be rebated upon the
reseller registering 25 names in the .md registry. The registration
fee shall be paid by credit card within seven (7) days of the
execution of this agreement.
(c) Domain Name Trust Inc. shall pay 33% ($100.) of gross revenue
($299) received from customers registering at the reseller's branded
site, excluding registrants from the States of California and New York
which registrations shall be reimbursed at the rate of 16. % ($50) for
initial registrations ($299). All annual renewals shall be reimbursed
at the rate of 16% ($50) of gross revenue ($299), provided a link to
the branded registration page is maintained on the reseller's home
page.
(d) Domain Name Trust, Inc. shall provide the reseller with monthly
statement reflecting the sales made through the reseller's branded
registration template for the preceding month on the 28th of the
preceding month. Domain Name Trust, Inc.'s monthly report and full
payment shall be provided by the 15th of the following month. Wire
transfer at the reseller's option and cost may make payment.
(e) In the event that the reseller fails to maintain a prominently
displayed link to the branded registration page, Domain Name Trust,
Inc. shall, at its option, be relieved from any and all payment
obligations for renewal registrations as set forth in this agreement.
I, Leonard F Vernon (name) hereby agree to become an Independent Reseller for
Domain Name Trust, Inc., AS AN INDEPENDENT Reseller, I UNDERSTAND AND AGREE
THAT:
1. I shall become an Independent RESELLER upon acceptance of the application by
DOMAIN NAME TRUST, INC.
2. Domain Name Trust Inc., at it's discretion, may amend the marketing plan,
its' policies and procedures and terms of the Independent Reseller Agreement.
3. I have carefully reviewed Domain Name Trust, Inc.'s marketing materials and
policies and procedure and acknowledge that they are incorporated as part of
this Agreement in their present form and are modified from time to time Domain
Name Trust, Inc.. Domain Name Trust, Inc. pays Resellers 33% of initial
registration fees and 15% of annual renewal fees, except for registrations from
the states of California and New York, which are reimbursed at a rate of 16%.
4. Upon acceptance of this application by Domain Name Trust, Inc., I will be an
independent Reseller, responsible for my own business and not an employee of
Domain Name Trust , Inc.. I will not be treated as an employee with regard to
any state or federal laws covering employees, including but not limited to the
Federal Insurance Contributions Act, Workmen's Compensation, Income Tax
withholding at source, or any federal or state tax laws. It is my responsibility
to pay self- employment, state, and federal income taxes as required by law.
5. Either Party shall be entitled to cancel participation in the marketing
program at any time for any reason with fifteen days written notice to the other
party.
6. I will not use Domain Name Trust, Inc. trade names and /or trademarks except
in sales materials provided to me or approved by Domain Name Trust, Inc..
7. Independent Reseller acknowledges that he/she is a wholly independent
marketing representative who establishes retail customers for Domain Name Trust,
Inc. products and services as an independent contractor. This agreement is not
intended and shall not be construed to create a relationship of
employer-employee, agency, partnership, or joint venture between any Independent
Reseller and/or Domain Name Trust, Inc.. AS AN INDEPENDENT REPRESENTATIVE, the
Independent Reseller shall:
abide by any federal, state county, an local laws, rules and
regulations pertaining to this Agreement and/or the acquisition,
receipt, holding, selling, distributing, or advertising of
company products.
at the Independent Reseller's own expense, make execute or file
all such reports and obtain such licenses as are required by law
or public authority with respect to the Agreement and/or the
receipt, holding, selling, distributing, or advertising of Domain
Name Trust, Inc. products.
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be solely responsible for declaration and payment of all local,
state and federal taxes as they accrue because of Independent
Reseller's activities in connection with this Agreement.
8. This Agreement will be binding upon receipt at the company address, as set
forth below and upon acceptance thereafter by Domain Name Trust, Inc.
9. Independent Reseller understands that commissions are paid only from actual
product sales referred by Independent Resellers. No one has made any promise or
guarantee the Independent Reseller will derive any specific income or profit as
an Independent Reseller. Independent Reseller's success will depend solely upon
his/her own efforts.
10. Independent Reseller acknowledges that he/she has read, understands, and
agrees to the terms set forth in this Agreement. This Agreement is not in force
until accepted by Domain Name Trust, Inc.
11. Domain Name Trust, Inc. will provide pricing as publishe at www.register.md.
12. The construction, validity and performance of this agreement shall be
governed by construed in accordance with the laws of the State of Florida and
venue of any action arising of or related to this agreement shall be in Dade
county, Florida.
12. This Agreement constitutes the entire agreement between Independent Reseller
and Domain Name Trust, Inc. and no other additional promises of any kind shall
be valid unless in writing by Domain Name Trust, Inc..
Company Name: Leonard Vernon
Address 2051 Spring Dale
Cherry Hill, NJ 08003
Telephone 609-910-8889
Fax 609-781-8816
Email
Signature /s/ Leonard Vernon
ACCEPTED:
By: /s/ John D. Harris
-------------------
John D. Harris, President
Domain Name Trust, Inc.
26235 Hickory Blvd. PHC
Bonita Springs FL 34134
USA
1 800 757 1892
217
EXHIBIT 10.7
AGREEMENT
Domain Name Trust, Inc.
and
Go Health.Md, Inc.
It is agreed that Domain Name Trust, Inc will register 300 names in the .md
registrty during the period Jan 01,2000-Dec 31,2000 for a cost of $99 for each
name registered. All rights will accrue to these names, including web hosting.
Payment shall be made on the following terms.
$10,500 payable on Nov 16, 1999.
$64 to be paid by credit card at the time each name is registered.
Any names reserved and not registered and paid will be void after December 31,
1999.
Renewal costs of $299 will apply on the first anniversary and all anniversaries
thereafter.
November 16, 1999
/s/ John D. Harris ___________________
- ------------------------------------------
John D Harris, President Witness
Domain Name Trust, Inc.
/s/ Leonard Vernon ___________________
- ---------------------------------------
Leonard Vernon, President Witness
Go Health.MD, Inc.
218
EXHIBIT 10.8
[Letterhead of PR Newswire]
May 5, 1999
Dr. Leonard Vernon
GoHealth.MD, Inc.
2051 Springdale Avenue
Cherry Hill, NJ 08003
Dear Dr. Vernon:
I am pleased that you will be adding PR Newswire news release to the www.
hlthmall.com web site. Below are the terms of the deal we had discussed:
- - PR Newswire will provide a daily file of healthcare/pharmaceutical news
releases, via e-mail, to the Health Mall fee of charge in exchange for
exclusivity as the only corporate newswire on the www.hlthmall.com site for
a period of one year.
- - The Health Mall will not knowingly permit its users to redistribution PRN
files without the prior written approval of PR Newswire
- - No textual changes will be made by The Health Mall to PRN copy.
- - The Health Mall will identify each news release from PRN stored on its site
as having originated from PRN with an identification tag of 'PRN' or "PR
Newswire'.
- - PRN copy will be stored on the www.hlthmall.com site for no longer that a
period of 30 days.
- - PRN information may be made available to The Health Mall's users only after
a minimum of 15 minutes have elapsed since receipt of the Daily News File
from PRN.
Please return this signed letter so we can get started. Thank you in advance.
Accepted by,
/s/ Ken Dowell
- -----------------------------------------------------------------------------
Ken Dowell, VBP, Media and Content Development Date
/s/ Dr. Leonard Vernon
- ----------------------------------------------------------------------------
Dr. Leonard Vernon, GoHealth.MD, Inc. Date
219
EXHIBIT 10.9
LICENSING AGREEMENT
THIS AGREEMENT is made on December 13, 1999 by and between
GoHealth.MD, Inc., a Delaware Corporation having its principal place of business
located at 2051 Springdale Road, Cherry Hill, New Jersey 08003 (the "Buyer") and
Company X t/a James Corea's Vita-labs, having their principal place of business
located at 813 East Gate Drive, Mount Laurel, New Jersey 08054 (the "Seller").
RECITAL
WHEREAS, the Seller owns and operates a website entitled
"Healthyfirst.com";
WHEREAS, the Seller desires to sell one-half interest and Buyer desires to
buy one-half of all rights, title and interest associated to Seller's website
entitled "Healthyfirst.com."
THEREFORE, in consideration of the mutual promises and conditions contained
in this agreement, the parties agree as follows:
PURCHASE AND SALE
1. The Buyer shall buy and the Seller shall sell, any and all of Seller's
rights, title and interest associated to Seller's website entitled
"Healthyfirst.com" for the purchase price of Twenty Five Thousand Dollars
($25,000.00) payable upon the execution of this agreement by both Seller
and Buyer in the form of a company check.
2. Upon the signing of this agreement and the exchange of said funds, Seller
hereby grants Buyer the exclusive unrestricted discretion and permission
to: 1) operate, manage and to host through World Wide Web Communications,
Inc., the website "Healthyfirst.com," 2) design and/or redesign, if
necessary, the website entitled "Healthyfirst.com," 3) add additional
content, including but not limited to, medical articles of buyer's choice,
to the website, if necessary, 4) to establish hyperlinks to other internet
websites, 5) solicit and sell advertising space on the website entitled
"Healthyfirst.com" at its sole discretion, and 6) advertise and market the
website entitled "Healthyfirst.com" on major online search engines.
3. Buyer and Seller hereby unconditionally agree to utilize any and all
available advertising and marketing avenues, including but not limited to,
print, radio and direct mailings, to promote the website Healthyfirst.com.
Any and all expenses incurred therefrom will be borne by the Buyer.
4. Buyer and Seller agree to split 50/50 all gross profits after expenses,
which expenses include but are not limited to, cost of product, mailing and
postage, boxes and packaging, etc, and one employee not
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to exceed $25,000.00 without mutual consent of the parties herein. The
parties further agree that any retention of additional employees shall be
with their mutual consent. All revenues will be monitored by the Buyer in a
separate account entitled "James Corea's Vita-labs." The length of this
agreement is in perpetuity.
5. Seller and James Corea, individually, hereby agree that they will not for
the period of this agreement, which is in perpetuity, reestablish, reopen,
become engaged in or be associated with, a business of similar nature of
that which Seller is now engaged and put forth maximum efforts to endorse
and promote the website in his capacity as a radio host on WWDB or any
other radio station.
COMPLIANCE WITH LAW AND OTHER INSTRUMENTS
6. The Seller hereby represents that, to its best knowledge after reasonable
due diligence, the Seller is not in violation of any term or provision of
any charter, by-law, contract, agreement, instrument, judgment, decree,
order, statute, rule or regulation, and that the Seller's execution,
delivery and performance of this contract will not result in any violation
or in the creation of any lien, encumbrance, or charge on any of the
properties or assets of Seller.
SELLER'S TITLE
7. The Seller warrants that it has good, absolute and marketable title to this
domain name and that it has been properly registered with Network
Solutions, Inc.
8. The Seller represents that it has no knowledge of any claim against it
under or in respect of, nor any reason to believe that it is or may be
infringing on or otherwise acting adversely to the rights of any person
under or in respect of, any patent, trademark, service mark, trade name,
copyright, license, or other similar intangible property; and Seller is not
aware of any obligation or liability to make any payments by way of
royalties, fees, or the like to any owner or licensee of, or other claimant
under, any intangible property with respect to its use or in connection
with the conduct of Seller's business or otherwise (other than any fees
that may be owed from time to time to Network Solutions, Inc.).
NOTICES
9. Any notices or other communications required or permitted under this
contract shall be sufficiently given if delivered personally or sent by
registered or certified mail, postage prepaid, addressed to the Seller
located at 813 East Gate Drive, Mount Laurel, New Jersey 08054 and to the
Buyer at GoHealth.MD, Inc. located at 2051 Springdale Road, Cherry Hill,
New Jersey 08003 or at any other address furnished in writing by one party
to the other, and shall be deemed to have been given as of the date
delivered or deposited in the United States mail, as the case may be.
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CHOICE OF LAW
10. It is the intention of the parties that the laws of the State of
New Jersey shall govern the validity of this contract, the
construction of its terms, and the interpretation of the rights
and duties of the parties.
ARBITRATION
11. Any dispute arising under this contract or relating to the sale
and purchase described in this contract shall be resolved under
the commercial arbitration rules of the American Arbitration
Association.
HEADINGS
12. Headings contained in this contract are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this contract.
COUNTERPART EXECUTION
13. This contract may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
GENDER
14. All personal pronouns used in this contract shall include the
other genders whether used in the masculine or feminine or neuter
gender, and the singular shall include the plural whenever and as
often as may be appropriate.
PARTIES IN INTEREST
15. All the terms and provisions of this contract shall be binding on
and inure to the benefit of, and be enforceable by, the Seller,
the Buyer and their respective successors and assigns.
INTEGRATED CONTRACT
16. This contract constitutes the entire agreement between the
parties, and there are no agreements, understandings,
restrictions, warranties, or representations between the parties
other than those set forth, provided for or otherwise referenced
in this contract.
222
<PAGE>
ATTEST: GOHEALTH.MD, INC.
/s/ Leonard Vernon
________________________ By: ______________________________
Leonard F. Vernon, President
ATTEST: Company X t/a James Corea's Vita-labs
/s/ James Corea
________________________ By: ______________________________
James Corea, President
223
EXHIBIT 10.10
CONSULTING AGREEMENT
This Consulting Agreement ("Consulting Agreement") is entered into as
of this 23 day of August, 1999 by and between GoHealth.MD, Inc., a Delaware
corporation (the "Company"), and Frank Gettson ("Consultant").
WHEREAS, the Company desires to obtain the benefit of the Consultant's
advise and experience to the Company, under the terms of this Consulting
Agreement.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows:
1. Scope of the Consulting. During the Term (as hereinafter defined),
the Consultant shall provide such consultancy services to the Company at such
times and such places as shall be agreed from time to time between the Company
and the Consultant. Notwithstanding the foregoing or any other requirements and
duties of the Consultant hereunder, the Company agrees and acknowledges that the
Consultant is not obligated to render services at the Company's place of
business, is not obligated to render services for a fixed number of hours or
days or on project basis, is not subject to any time schedules or deadlines for
rendering services and from time to time may decline requests from the Company
for services hereunder if the Consultant deems such request to be unreasonable
burdensome or onerous. None of the foregoing shall effect, limit or mitigate the
Consultant's right to retain full compensation set forth in Paragraph 3 hereof.
In the event the Consultant is unable to perform any or all of his duties
hereunder because of death or disability, the Consultant shall not be obligated
to return any of the Compensation set forth in Paragraph 3 hereof. Nothing in
this Consulting Agreement shall be deemed to imply that the relationship between
the Company and the Consultant is that of employer and employee.
2.Term of Agreement. This Consulting Agreement shall commence on the
date hereof and shall automatically terminate on the one year anniversary hereof
(the "Term").
3. Compensation. As consideration for his services under this
Consulting Agreement, Consultant shall receive, on the date hereof,
non-qualified stock options to purchase 25,000 shares of the Company's common
stock, $0.001 par value, at an exercise price of $1.00 per share (the
"Options"). The Options shall be immediately exercisable on the date of grant,
and shall be granted pursuant to a stock option agreement in the form attached
as Exhibit A hereto.
4. Reimbursement of Expenses. The Company shall reimburse Consultant
for all reasonable expenses incurred by him in connection with the performance
of his duties under this Consulting Agreement, upon presentation of appropriate
documentation covering such expenses.
5. Early Termination. This Consulting Agreement shall terminate upon
the death of Consultant or upon the continued inability of Consultant to perform
the essential requirements of his duties and responsibilities hereunder for a
period of one hundred eighty (180) consecutive days due to illness, injury or
other physical or mental incapacity, to the extent permitted by law. Any earlier
termination hereunder shall not affect, limit or mitigate Consultant's right to
retain the full compensation set forth in Paragraph 3 hereof.
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6. Representation and Warranties. The Company represents and warrants
to Consultant that: (i) the execution, delivery and performance by the Company
of this Consulting Agreement and its obligations hereunder have been duly
authorized by all requite corporate action, and is a valid and binding
obligation of the Company, (ii) 25,000 shares of the Company's Common Stock have
been, and shall remain from and after the date hereof, duly authorized and
reserved for issuance upon exercise of the Options, and (iii) the shares
issuable upon exercise of the Options will, from and after the date hereof, not
be subject to preemptive or similar rights of any person, and when issued
against payment thereof in accordance with the terms of the Options, will be
validly issued, fully paid and non-assessable.
7. Governing Law. This Consulting Agreement shall be governed by the
laws of the State of New Jersey, without regard to conflicts of laws principles.
8. Severability. If any provision of this Consulting Agreement is held
to be invalid, illegal or unenforceable for whatever reason, that provision
shall be construed to have the broadest interpretation that would make it valid
and enforceable. Invalidity, illegality or unenforceablity of one provision
shall not effect the validity or enforceability of another provision in this
Consulting Agreement.
9. Independent Contractor. The Consultant shall conduct his business as
an independent contractor and shall pay all taxes, duties, social security
contributions and other such payments of same nature which may be found due in
respect of the Consultant's services and the payment of fees by the Company to
the Consultant thereunder.
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Consulting Agreement as of the date first above written.
GOHEALTHMD. ,INC.
By: /s/ Leonard Vernon
--------------------
Name: ____________________
Title: ______________________
CONSULTANT
/s/ Frank Gettson
------------------
Frank Gettson
225
EXHIBIT 10.11
CONSULTING AGREEMENT
This Consulting Agreement ("Consulting Agreement") is entered into as
of this 23 day of August, 1999 by and between GoHealth.MD, Inc., a Delaware
corporation (the "Company"), and Harvey S. Benn ("Consultant").
WHEREAS, the Company desires to obtain the benefit of the Consultant's
advise and experience to the Company, under the terms of this Consulting
Agreement.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows:
1. Scope of the Consulting. During the Term (as hereinafter defined),
the Consultant shall provide such consultancy services to the Company at such
times and such places as shall be agreed from time to time between the Company
and the Consultant. Notwithstanding the foregoing or any other requirements and
duties of the Consultant hereunder, the Company agrees and acknowledges that the
Consultant is not obligated to render services at the Company's place of
business, is not obligated to render services for a fixed number of hours or
days or on project basis, is not subject to any time schedules or deadlines for
rendering services and from time to time may decline requests from the Company
for services hereunder if the Consultant deems such request to be unreasonable
burdensome or onerous. None of the foregoing shall effect, limit or mitigate the
Consultant's right to retain full compensation set forth in Paragraph 3 hereof.
In the event the Consultant is unable to perform any or all of his duties
hereunder because of death or disability, the Consultant shall not be obligated
to return any of the Compensation set forth in Paragraph 3 hereof. Nothing in
this Consulting Agreement shall be deemed to imply that the relationship between
the Company and the Consultant is that of employer and employee.
2.Term of Agreement. This Consulting Agreement shall commence on the
date hereof and shall automatically terminate on the one year anniversary hereof
(the "Term").
3. Compensation. As consideration for his services under this
Consulting Agreement, Consultant shall receive, on the date hereof,
non-qualified stock options to purchase 150,000 shares of the Company's common
stock, $0.001 par value, at an exercise price of $1.00 per share (the
"Options"). The Options shall be immediately exercisable on the date of grant,
and shall be granted pursuant to a stock option agreement in the form attached
as Exhibit A hereto.
4. Reimbursement of Expenses. The Company shall reimburse Consultant
for all reasonable expenses incurred by him in connection with the performance
of his duties under this Consulting Agreement, upon presentation of appropriate
documentation covering such expenses.
5. Early Termination. This Consulting Agreement shall terminate upon
the death of Consultant or upon the continued inability of Consultant to perform
the essential requirements of his duties and responsibilities hereunder for a
period of one hundred eighty (180) consecutive days due to illness, injury or
other physical or mental incapacity, to the extent permitted by law. Any earlier
termination hereunder shall not affect, limit or mitigate Consultant's right to
retain the full compensation set forth in Paragraph 3 hereof.
226
<PAGE>
6. Representation and Warranties. The Company represents and warrants
to Consultant that: (i) the execution, delivery and performance by the Company
of this Consulting Agreement and its obligations hereunder have been duly
authorized by all requite corporate action, and is a valid and binding
obligation of the Company, (ii) 150,000 shares of the Company's Common Stock
have been, and shall remain from and after the date hereof, duly authorized and
reserved for issuance upon exercise of the Options, and (iii) the shares
issuable upon exercise of the Options will, from and after the date hereof, not
be subject to preemptive or similar rights of any person, and when issued
against payment thereof in accordance with the terms of the Options, will be
validly issued, fully paid and non-assessable.
7. Governing Law. This Consulting Agreement shall be governed by the
laws of the State of New Jersey, without regard to conflicts of laws principles.
8. Severability. If any provision of this Consulting Agreement is held
to be invalid, illegal or unenforceable for whatever reason, that provision
shall be construed to have the broadest interpretation that would make it valid
and enforceable. Invalidity, illegality or unenforceablity of one provision
shall not effect the validity or enforceability of another provision in this
Consulting Agreement.
9. Independent Contractor. The Consultant shall conduct his business as
an independent contractor and shall pay all taxes, duties, social security
contributions and other such payments of same nature which may be found due in
respect of the Consultant's services and the payment of fees by the Company to
the Consultant thereunder.
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Consulting Agreement as of the date first above written.
GOHEALTHMD. ,INC.
By: /s/ Leonard Vernon
--------------------
Name: ____________________
Title: ______________________
CONSULTANT
/s/ Harvey Benn
Harvey Benn
227
EXHIBIT 10.12
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made effective this 30th day
of November, 1998 by and between, Ken W. Kurtz ("Consultant"), an individual
residing in Utah with offices located at 2133 E 9400 S Suite 151, Sandy, Utah
84093 and Nugget Exploration, Inc. ("Client"), a Nevada Corporation with offices
located at 815 South Durbin St. Casper, Wyoming 82601 with respect to the
following:
RECITALS
WHEREAS, Consultant is in the business of providing general business
consulting services to privately held and publicly held corporations; and
WHEREAS, Client desires to retain Consultant to assist Client with such
services.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is expressly acknowledged, Client and Consultant
agree as follows:
1. Engagement of Consultant. Consultant agrees to use its best efforts to
assist Client:
a. In strategic planning, market research and in negotiating with
and hiring qualified professionals to assist the Company in
determining new markets and opportunities for the Company's
current and future products and services;
b. with various forms of document preparation including preparation
of employment agreements, contracts and securities filings such
as those needed by Client on Form 10-KSB, Form 10-QSB, and Form
8-K;
c. in preparing and filing other documents with the necessary State
and Federal regulatory
bodies as is required by law;
d. in preparing the correspondences required by the NASD, Depository
Trust Corporation ("DTC"), CUSIP Bureau, Client's Transfer Agent;
e. in identifying professionals to assist the Company in preparing
financial statements and obtaining an audit on the financial
statements in accordance with U.S. GAAP standards by an
accounting firm with SEC peer review;
f. in finding an attorney to provide any necessary legal assistance
and opinions as required or if requested;
g. in the preparation of corporate resolutions, and other
correspondences necessary to fulfill its obligations under this
Agreement, including Board and shareholder resolutions.
All of the foregoing services collectively are referred to herein as
the "Consulting Services."
228
<PAGE>
2. Compensation Client shall compensate Consultant as follows for
consulting services ("Consulting Services") to be rendered pursuant to
this Agreement which Client acknowledges consultant as having already
substantially performed:
a. Consultant shall issue to Client, four hundred thousand (400,000)
shares of Client's common stock.
b. All shares issued to Consultant pursuant to this Agreement shall
be free-trading and registered on a Form S-8 registration
statement which Client undertakes to file immediately upon
execution of this Agreement. Client further agrees to file a
post- effective amendment with a resale prospectus as is deemed
necessary by counsel.
3. Term of Agreement, Extensions and Renewals
a. This Agreement shall be in effect for a period of one year from
the date herein. This Agreement may be extended on a month to
month basis (the "Extension Period") by mutual agreement of the
parties executed in writing specifying the compensation for the
Extension Period.
b. In the event of early termination, Client shall be obligated for
any amounts due under this agreement. Such notice of either
extension or termination shall be in writing and shall be
delivered via U.S. certified mail, when applicable, effective ten
(10) days after delivery to the other.
4. Expenses. Each party shall be responsible for its own expenses for
the Consulting Services herein.
5. Due Diligence Client shall supply and deliver to Consultant all
information as may be reasonably requested by Consultant to enable
Consultant to make an investigation of the Client and its business
prospects, and they shall make available to Consultant names,
addresses, and telephone numbers as Consultant may need to verify or
substantiate any such information provided.
6. Best Efforts Basis Consultant agrees that it will at all times, to the
best of its experience, ability and talents, perform all the duties
that may be required of and from Consultant pursuant to the terms of
this Agreement. Consultant does not guarantee that its efforts will
have any impact on the Clients' business or that any subsequent
financial improvement will result from Consultants' efforts.
7. Independent Legal and Financial Advice Consultant is not a law firm;
neither is it an accounting firm. Consultant does, however, retain
professionals in those capacities to better enable Consultant to
provide consulting services. Client represent that they have not nor
will they construe any of the Consultants' representations to be
statements of law. Client has and will continue to seek the
independent advice of legal and financial counsel regarding all
material aspects of the transactions contemplated by this Agreement,
including the review of all documents provided by Consultant to Client
and all opportunities Consultant introduces to Client.
229
<PAGE>
8. Miscellaneous
a. The execution and performance of this Agreement has been duly
authorized by all requisite individual or corporate actions and
approvals and is free of conflict or violation of any other
individual or corporate actions and approvals entered into
jointly and severally by the parties hereto. This Agreement
represents the entire Agreement between the parties hereto, and
supersedes any prior agreements with regards to the subject
matter hereof. This Agreement may be executed in any number of
facsimile counterparts with the aggregate of the counterparts
together constituting one and the same instrument. This Agreement
constitutes a valid and binding obligation of the parties hereto
and their successors, heirs and assigns and may only be assigned
or amended by written consent from the other party.
b. No term of this Agreement shall be considered waived and no
breach excused by either party unless made in writing. In the
event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be constructed as if it never
contained any such invalid, illegal or unenforceable provisions.
The parties hereto shall cooperate with each other to achieve the
purpose of this Agreement. From time to time, each party will
execute additional instruments and take such action as may be
reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Agreement.
c. The validity, interpretation, and performance of this
Agreement shall be controlled by binding arbitration in the
State of Wyoming under the rules then obtaining of the
American Arbitration Association. Such arbitration ruling
shall be final and binding amongst the parties herein. If any
action is brought to enforce or interpret the provisions of
this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees, court costs, and other
costs incurred in proceeding with the action from the other
party.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date herein above written.
Nugget Exploration, Inc.
/s/ Tyson Schiff /s/ Ken W. Kurtz
- ---------------------------- -----------------------------
Tyson Schiff, President Ken W. Kurtz
230
EXHIBIT 10.13
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made effective this 5th
day of March 1998, by and between, Park Street Investments, Inc. ("Consultant"),
a Utah corporation with offices located at 2133 E 9400 S Suite 151, Sandy, Utah
84093 and Nugget Exploration, Inc. ("Client"), a Nevada Corporation with offices
located at 815 South Durbin St. Casper, Wyoming 82601 with respect to the
following:
RECITALS
WHEREAS, Consultant is in the business of providing general business
consulting services to privately held and publicly held corporations; and
WHEREAS, Client desires to retain Consultant to assist Client with a
recapitalization of its securities; and to assist Client with a reorganization
with another business entity.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants,
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which is expressly acknowledged, Client and
Consultant agree as follows:
1. Engagement of Consultant. Consultant agrees to use its best efforts
to assist Client:
a. and counsel Client relative to the steps necessary to assist
Client with a recapitalization of its securities; and to assist
Client with a reorganization with another business entity. This
includes, but is not limited to, preparing proxy material and
other correspondences to Client's shareholders and creditors
informing them of the transactions herein and requesting their
approvals and releases where applicable;
b. in preparing and filing other documents with the necessary State
and Federal regulatory bodies as is required by law;
c. in restructuring Client's capital formation through a reverse
split, re-authorization of debt and/or equity; in obtaining
shareholder votes on corporate matters; in preparing the
correspondences necessary to carry out the actions in this
paragraph including notices to the NASD, Depository Trust
Corporation ("DTC"), CUSIP Bureau, Client's Transfer Agent and
Market Makers;
d. in preparing financial statements and obtaining an audit on the
financial statements in accordance with U.S. GAAP standards by an
accounting firm with SEC peer review; in preparing and filing
other documents with the necessary regulatory bodies as is
required by law, including, but not limited to preparing and
filing forms 10K and 10Q as necessary;
231
<PAGE>
e. in finding an attorney to provide any necessary legal assistance
and opinions as required or if requested;
f. to assist Client in the preparation of corporate resolutions, and
other correspondences necessary to fulfill its obligations under
this Agreement, including Board and shareholder resolutions,
resignations and appointments.
g. in locating a reorganization candidate ("Candidate") for Client
that would provide Client's current shareholders with an equal or
better opportunity in terms of equity or stock appreciation
potential than they currently have.
h. in assisting with structuring a reorganization ("Reorganization")
transaction with a Candidate including the preparation and review
of reorganization documents
All of the foregoing services collectively are referred to herein as
the "Consulting Services."
2. Compensation Client shall compensate Consultant for consulting services
("Consulting Services") rendered pursuant to this Agreement as follows:
a. Consultant shall acquire from Client, fifteen million one hundred
thousand (15,100,000) shares of Client's restricted common stock
for $15,100 cash. Consultant shall further be appointed to the
board of directors of Client.
b. At closing time of a reorganization between Client and a
Candidate, Client shall issue to Consultant, shares of its common
stock in an amount not to exceed fifteen percent (15%) of the
total issued and outstanding shares of Client, which amount is to
be based on the total issued and outstanding shares of Client
after a Reorganization between Client and a Candidate.
c. Consultant shall also be entitled to any cash fee that it is able
to achieve from the Reorganization Candidate.
d. Notwithstanding paragraph 2(a) herein, all shares issued to
Consultant pursuant to this Agreement shall be registered under
section S-8 of the Securities and Exchange Act. If Consultant's
shares are deemed restricted under the Act, such shares shall
have "piggy back" registration rights with any registration
statement, such statement filed at such time as Client, in its
sole discretion, deems advisable.
3. Client's Obligations.
a. If necessary, Client agrees to assist Consultant in obtaining
release and indemnification letters from all of Client's
creditors and vendors releasing Client of any further obligation
to such creditors and vendors. Further, upon completion of the
asset sale and Reorganization, the current directors of Client
shall resign and provide Consultant with similar release and
indemnification letters and shall warrant that Client is free
from any liabilities or pending or threatened litigation or
environmental problems.
232
<PAGE>
b. Client will seek to sell its assets existing at the time of this
agreement and will use proceeds from any sale to pay off its
creditors.
c. Notwithstanding item (2), Client shall not issue any of its
securities to any other party during the term of this Agreement
without written consent from Consultant.
4. Limitations
a. Consultant shall have no right to any proceeds from the sale or
distribution of Client's assets existing at the time of this
agreement. Additionally, while consultant will have 51% ownership
of Client's stock pursuant to this Agreement, consultant agrees
to only votes its shares as directed by Client with regards to
any manner concerning the sale of Client's assets existing at the
time of this agreement.
5. Term of Agreement, Extensions and Renewals
a. This Agreement shall be in effect from the date first appearing
herein until a period beginning one year from the date the assets
of Client -- existing at the time of this Agreement -- are sold.
This Agreement may be extended on a month to month basis (the
"Extension Period") by mutual agreement of the parties executed
in writing specifying the compensation for the Extension Period.
In the event Client has not been Reorganized within the time
period discussed in this paragraph, Consultant shall forfeit the
compensation described in Section (2).
b. This Agreement may also be terminated when a sale of Client's
assets has been completed and Client has been Reorganized.
c. Notwithstanding 5(a) and 5(b), in the event of early termination,
Client shall be obligated for any amounts due under this
agreement. Such notice of either extension or termination shall
be in writing and shall be delivered via U.S. certified mail,
when applicable, effective ten (10) days after delivery to the
other.
6. Expenses.
---------
a. The $15,000 paid by Consultant for the restricted stock shares
pursuant to paragraph (2) herein shall be used to pay for the
costs involved in connection with the services herein. Each party
shall be responsible for any other outside legal, accounting and
any other costs incurred in connection with the transactions
contemplated herein. No party shall have any financial
responsibility to the other for failure to complete the proposed
transactions.
7. Due Diligence
a. Client shall supply and deliver to Consultant all information as
may be reasonably requested by Consultant to enable Consultant to
make an investigation of the Client and its business prospects,
and they shall make available to Consultant names, addresses, and
telephone numbers as Consultant may need to verify or
substantiate any such information provided.
233
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8. Best Efforts Basis
a. Consultant agrees that it will at all times, to the best of its
experience, ability and talents, perform all the duties that may
be required of and from Consultant pursuant to the terms of this
Agreement. Consultant does not guarantee that its efforts will
have any impact on the Clients' business or that any subsequent
financial improvement will result from Consultants' efforts.
9. Non-Circumvention.
a. Client agrees that Client will not enter into any business
combination or enter into any transaction involving a business
opportunity or asset introduced to Client by Consultant, without
compensating Consultant pursuant to this Agreement. Neither will
Client terminate this Agreement solely as a means to avoid paying
Consultant compensation earned or to be earned, or any other way
attempt to circumvent Consultant or this Consulting Agreement.
10. Independent Legal and Financial Advice
a. Consultant is not a law firm; neither is it an accounting firm.
Consultant does, however, retain professionals in those
capacities to better enable Consultant to provide consulting
services. Client represent that they have not nor will they
construe any of the Consultants' representations to be statements
of law. Client has and will continue to seek the independent
advice of legal and financial counsel regarding all material
aspects of the transactions contemplated by this Agreement,
including the review of all documents provided by Consultant to
Client and all opportunities Consultant introduces to Client.
11. Miscellaneous
a. The execution and performance of this Agreement has been duly
authorized by all requisite individual or corporate actions and
approvals and is free of conflict or violation of any other
individual or corporate actions and approvals entered into
jointly and severally by the parties hereto. This Agreement
represents the entire Agreement between the parties hereto, and
supersedes any prior agreements with regards to the subject
matter hereof. This Agreement may be executed in any number of
facsimile counterparts with the aggregate of the counterparts
together constituting one and the same instrument. This Agreement
constitutes a valid and binding obligation of the parties hereto
and their successors, heirs and assigns and may only be assigned
or amended by written consent from the other party.
b. No term of this Agreement shall be considered waived and no
breach excused by either party unless made in writing. In the
event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be constructed as if it never
contained any such invalid, illegal or unenforceable provisions.
The parties hereto shall cooperate with each other to achieve the
purpose of this Agreement. From time to time, each party will
execute additional
234
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instruments and take such action as may be reasonably requested
by the other party to confirm or perfect title to any property
transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
c. The validity, interpretation, and performance of this Agreement
shall be controlled by binding arbitration in the State of
Wyoming under the rules then obtaining of the American
Arbitration Association. Such arbitration ruling shall be final
and binding amongst the parties herein. If any action is brought
to enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable
attorneys' fees, court costs, and other costs incurred in
proceeding with the action from the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date herein above written.
Nugget Exploration, Inc.
/s/ Mary C. MacGuire
_______________________ Date: ______________________
Mary C. MacGuire, President
Park Street Investments, Inc.
/s/ Ken Kurtz
_______________________ Date: ______________________
Ken Kurtz, President
Page 10 of
235
EXHIBIT 21.1
List of Subsidiaries of Nugget Exploration, Inc.
State of Full Name of Subsidiary and
Incorporation Name Under Which Subsidiary Does Business
---------------- ----------------------------------------------------------
Delaware GoHealth.MD, Inc.
236
[Letterhead of Jones, Jensen & Company]
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS'
Board of Directors
Nugget Exploration, Inc.
Cherry Hill, New Jersey
We hereby consent to the use in this Registration Statement of Nugget
Exploration, Inc. on Form SB-2, of our report dated July 21, 1999 in the Form
SB-2 of Nugget Exploration, Inc. for the years ended May 31, 1999 and 1998,
which are part of this Registration Statement, and to all references to our firm
included in this Registration Statement.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
January 12, 2000
237
[Letterhead of Samuel Klein and Company]
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS'
We consent to the reference to our firm under the caption Experts and to the use
of our report dated December 27, 1999 on the financial statements of
GoHealth.MD, Inc., that is made a part of this Registration Statement.
/S/SAMUEL KLEIN AND COMPANY
SAMUEL KLEIN AND COMPANY
Newark, New Jersey
January 11, 2000
238
EXHIBIT 23.3
CONSENT OF KEVIN S. WOLTJEN, P.C.
---------------------------------
The undersigned, Kevin S. Woltjen, P.C. hereby consents to the use of our
name and of our opinion for Nugget Exploration, Inc. as filed with its
Registration Statement on Form SB-2, and any amendments thereto.
/s/ Kevin S. Woltjen, P.C.
------------------------------
Kevin S. Woltjen, P.C.
January 12, 2000
239
