ONHEALTH NETWORK CO
POS462B, 1999-11-19
PREPACKAGED SOFTWARE
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<PAGE>

As filed with the Securities and Exchange Commission on November 19, 1999
                                                      Registration No. 333-81321


                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                AMENDMENT NO. 3
                       (POST EFFECTIVE AMENDMENT NO. 1)
                                      TO
                                   FORM S-3
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933


                            ONHEALTH NETWORK COMPANY
             (Exact name of registrant as specified in its charter)


Washington                             7372                      41-1686038
(State of incorporation     Primary Standard Industrial      (I.R.S. Employer
or organization)            Code Number                     Identification No.)


                          808 Howell Street, Suite 400
                           Seattle, Washington 98101
                                 (206) 583-0100
  (Address, including zip code, and telephone number, including area code, of
                    registrant's principal executive office)


                               ROBERT N. GOODMAN
                            Chief Executive Officer
                          808 Howell Street, Suite 400
                           Seattle, Washington 98101
                                 (206) 583-0100
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                        Copies of all communications to:

                                 GARY J. KOCHER
                           Preston Gates & Ellis LLP
                          701 Fifth Avenue Suite 5000
                         Seattle, Washington 98104-7078
                                 (206) 623-7580



  Approximate date of commencement of proposed sale to the public: From time to
time after the registration statement is declared effective.

  If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[_]

  If any of the Securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[X]

  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[_]

  If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]

  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[_]


<PAGE>

     The sole purpose of this Amendment No. 3 (Post Effective Amendment No. 1)
to Form S-3 Registration Statement is to file Exhibit No. 1.2 as an Exhibit to
the Registration Statement.

                                       3
<PAGE>

                                  SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Seattle, State of Washington, on the 19th day of
November, 1999.

                                     Onhealth Network Company

                                             /s/   Robert N. Goodman
                                             -----------------------------------
                                      By:
                                                   Robert N. Goodman
                                          President and Chief Executive Officer

  Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement on Form S-3 has been signed by the following
persons in the capacities indicated on November 19, 1999.

<TABLE>
<CAPTION>
           Signature                                      Title
           ---------                                      -----
<S>                              <C>

/s/   Robert N. Goodman          President, Chief Executive Officer, Director (Principal
Robert N. Goodman                Executive Officer)

/s/   Ronald M. Stevens          Chief Financial Officer (Principal Financial and
Ronald M. Stevens                Accounting Officer)

*                                Chairman of the Board of Directors
- - -----------------------------
Michael A. Brochu

*                                Director
- - -----------------------------
Ann Kirschner

*                                Director
- - -----------------------------
Ram Shriram

*                                Director
- - -----------------------------
Rick Thompson
</TABLE>

- - ----------------
* Pursuant to power of Attorney dated June 21, 1999

               /s/   Robert N. Goodman
               ---------------------------------
                     Attorney-in-Fact

                                       4
<PAGE>

Item 16.  Exhibits and Financial Statement Schedules.


Exhibit                       Description
- - -------       -------------------------------------------------
  No.
  ---

  1.1         Underwriting Agreement*
  1.2         Subscription Agreement
  3.2         Bylaws of the Company***
  5           Opinion of Preston Gates & Ellis LLP regarding legality*
  23.1        Consent of Ernst & Young LLP, Independent Auditors *
  23.2        Consent of Preston Gates & Ellis LLP (contained in Exhibit 5) *
  24          Power of Attorney*

_______________________
  *  Previously filed
 **  Incorporated by reference to the Form S-3 of the Registrant filed June
     20, 1999 (333-81321)
***  Incorporated by reference to the Form S-3 of the Registrant filed
     December 31, 1998 (333-69989).

                                       5

<PAGE>

Exhibit 1.2



                            SUBSCRIPTION AGREEMENT

          THIS SUBSCRIPTION AGREEMENT, dated as of November 16, 1999 (this
"Agreement"), by and between OnHealth Network Company, a Washington corporation
(the "Company"), with headquarters located at 808 Howell Street, Suite 400,
Seattle, Washington 98101, and the purchaser set forth on the Signature Page to
this Agreement (the "Buyer").

                                  WITNESSETH
                                  ----------

          WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares of the Company's Common Stock par value
$.01 per share (the "Shares").

          NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

          1.   AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.

          (a) Subscription  The Buyer hereby agrees to purchase from the Company
that number of Shares set forth on the Signature Page of this Agreement.  The
purchase price per Share shall be $7.00 (the "Per Share Purchase Price").

          (b) Form of Payment.  At the Closing (as defined in Section 5) (1) the
Buyer shall pay the Company, by wire transfer of immediately available funds to
such account as specified by the Company to the Buyer that amount equal to the
number of Shares purchased by the Buyer multiplied by the Per Share Purchase
Price, and (2) Company shall agree to deliver certificates representing the
Shares within three days of the Closing.

          2.   BUYER REPRESENTATIONS, WARRANTIES, ETC.

          The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:

          (a) Subscription Agreement  The Buyer has all requisite power and
authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the other agreements executed or to be
executed by the Buyer in connection herewith and to consummate the transactions
contemplated hereby and thereby.  This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.

                                       6
<PAGE>

          3.   COMPANY REPRESENTATIONS, WARRANTIES, ETC.

          The Company represents and warrants to, and covenants and agrees with,
the Buyer that:

          (a) Organization and Authority  The Company is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to (i) own,
lease and operate its properties and to carry on its business as described in
the SEC Reports (as defined below) and as now being conducted, and (ii) to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.

          (b) Capitalization  The description of the authorized capital stock of
the Company set forth under the captions "Capitalization" and "Description of
Our Securities" in the Prospectus is accurate and complete in all material
respects.  The Company does not have outstanding any material amount of
securities (or obligations to issue any such securities) convertible into,
exchangeable for or otherwise entitling the holders thereof to acquire shares of
Common Stock, except as disclosed in the SEC Reports.  The Company has duly
reserved from its authorized and unissued shares of Common Stock the full number
of shares required for (y) all options, warrants, convertible securities and
other rights to acquire shares of Common Stock which are outstanding and (z) all
shares of Common Stock and options and other rights to acquire shares of Common
Stock which may be issued or granted under the stock option and similar plans
which have been adopted by the Company.

          (c) Authorization.  The Shares have been duly authorized.  There are
no preemptive or similar rights of any shareholder of the Company or any other
Person to acquire any of the Shares.  The Company and the Shares meet the
criteria for continued listing and trading on the Nasdaq Stock Market
("Nasdaq"); the Company has not been notified since January 1, 1999 by the
Nasdaq of any failure or potential failure to meet the criteria for continued
listing and trading on the Nasdaq and no suspension of trading in the Common
Stock is in effect.  Subject to compliance, if required, with Rule
4310(c)(25)(H) of the Nasdaq, the Company knows of no reason that the Shares
will not be eligible for listing on the Nasdaq. For purposes of this Agreement,
"Person" means an individual, partnership, corporation, limited liability
company, trust, incorporated organization, unincorporated association or joint
stock company.

          (d) Subscription Agreement.  This Agreement has been duly and validly
authorized, executed and delivered by the Company and is a valid and binding
obligation of the Company enforceable in accordance with its terms, subject as
to enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.

          (e) Non-contravention.  The execution and delivery by the Company of
this Agreement and the consummation by the Company of the issuance of the Shares
as contemplated by

                                       7
<PAGE>

this Agreement do not and will not, with or without the giving of notice or the
lapse of time, or both (i) result in any violation of any terms of the Articles
of Incorporation or by-laws of the Company, (ii) conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under, or result in the modification, amendment, termination or
cancellation of, result in the acceleration of any obligation of the Company
under, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company
pursuant to, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which the Company or any of its
respective properties or assets is bound or affected, (iii) violate or
contravene any applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any of its respective properties or assets or (iv) have any material
adverse effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company to own or lease and operate any
of their respective properties or to conduct any of their respective businesses
or the ability of the Company to make use thereof.

          (f) Approvals.  The Shares are duly and validly registered with the
SEC pursuant to the Registration Statement.  The Registration Statement has been
declared effective by the SEC and the Company has no knowledge of any stop order
or other action by the SEC to suspend or terminate the effectiveness thereof.
No authorization, approval or consent of, or filing with, any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the shareholders of the Company is required to be obtained
or made by the Company for (1) the execution, delivery and performance by the
Company of this Agreement, and (2) the issuance and sale of the Shares as
contemplated by this Agreement.

          (g) Information Provided.  The information provided by or on behalf of
the Company to the Buyer in connection with the transactions contemplated by
this Agreement does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading, it
being understood that, for purposes of this Section 3(g), any statement
contained in such information shall be deemed to be modified or superseded for
purposes of this Section 3(g) to the extent that a statement in any document
included in such information which was prepared or filed with the SEC on a later
date modifies or replaces such statement, whether or not such later prepared or
filed statement so states.

          (h) Absence of Certain Changes.  Except as disclosed or incorporated
by reference in the Company's Registration Statement on Form S-3 filed with the
Securities and Exchange Commission (the "SEC") on June 22, 1999 as amended from
time to time (SEC 1933 Act Number 333-81321, the "Registration Statement") and
the Prospectus dated August 31, 1999 and the supplements thereto forming a part
of such Registration Statement (collectively, the "Prospectus"), in each case as
filed with the SEC (the "SEC Reports"), since September 30, 1998, there has been
no material adverse change and no material adverse development in the business,
properties, operations, condition (financial or other), results of operations or
prospects of the

                                       8
<PAGE>

Company. Except as and to the extent disclosed, reflected or reserved against in
the financial statements of the Company and the notes thereto included in the
SEC Reports and except as disclosed in the Prospectus, the Company has no
material (individually or in the aggregate) liabilities, debts or obligations
whether accrued, absolute, contingent or otherwise, and whether due or to become
due. Since June 30, 1998, the Company has not incurred any liabilities, debts or
obligations of any nature whatsoever which are individually or in the aggregate
material to the Company, other than those incurred in the ordinary course of
their respective businesses or disclosed in the SEC Reports.

          (i) Absence of Certain Proceedings.  Except as described in the SEC
Reports, there is no action pending or, to the knowledge of the Company,
threatened against the Company, in any such case likely to have a material
adverse effect on the business, properties, condition (financial or other),
results of operations or prospects of the Company or the transactions
contemplated by this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, this Agreement;
neither the Company nor any director or officer thereof is or has been the
subject of any action involving (i) a claim of violation of or liability under
federal or state securities laws or (ii) a claim of breach of fiduciary duty.
The Company does not have pending before the SEC any request for confidential
treatment of information.

          (j) SEC Filings.  The Company has timely filed all required forms,
reports and other documents required to be filed with the SEC under the
Securities Exchange Act of 19334, as amended (the "1934 Act").  All of such
forms, reports and other documents complied, when filed, in all material
respects, with all applicable requirements of the Securities Act of 1933, as
amended (the "1933 Act") and the 1934 Act.

          4.   Certain Covenants and acknowledgements.

          (a) Reporting Status. So long as the Buyer beneficially owns any of
the Shares, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act and the Company shall not
voluntarily terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
permit such termination.

          (b) Blue Sky Laws.  The Company shall take such action as and to the
extent it shall be necessary or required to qualify, or to obtain an exemption
for, the Shares pursuant to this Agreement under such of the securities or "blue
sky" laws of jurisdictions as shall be applicable to the sale of the Shares
pursuant to this Agreement.  The Company shall furnish copies of all filings,
applications, orders and grants or confirmations of exemptions relating to such
securities or "blue sky" laws.

          (c) Best Efforts.  Each of the parties shall use its commercially
reasonably best efforts timely to satisfy each of the conditions to the other
party's obligations to sell and purchase

                                       9
<PAGE>

the Shares set forth in Section 6 or 7, as the case may be, of this Agreement on
or before the Closing Date.

          5.   CLOSING.

          Subject to the satisfaction or waiver of the conditions set forth in
Sections 6 and 7, the Closing shall take place shall be 12:00 noon, Seattle,
Washington time (the "Closing"), on the date of this Agreement, or such other
mutually agreed to time.  The closing of such sale of the Shares shall occur on
the Closing Date at the offices of Preston Gates & Ellis LLP, 701 Fifth Avenue,
Suite 5000, Seattle, Washington 98104.

          6.   CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.

          The Buyer understands that the Company's obligation to sell the Shares
to the Buyer pursuant to this Agreement at the Closing is conditioned upon the
satisfaction of the following conditions precedent on or before the Closing (any
or all of which may be waived by the Company in its sole discretion):

          (a) Delivery by the Buyer to the Company of good funds as payment in
full of an amount equal to the Per Share Purchase Price for each of the Shares;

          (b) The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement as if made on the Closing
Date and the performance by the Buyer on or before the Closing Date of all
covenants and agreements of the Buyer required to be performed on or before the
Closing Date; and

          (c) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.

          7.   CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

          The Company understands that the Buyer's obligation to purchase the
Shares from the Company pursuant to this Agreement at the Closing is conditioned
upon the satisfaction of the following conditions precedent on or before the
Closing (any or all of which may be waived by the Buyer in its sole discretion):

          (a) Delivery by the Company of the certificates for the Shares for the
account of the Buyer in accordance with this Agreement (such delivery, the
parties agree, may be up to three days after the Closing);

          (b) The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date and the performance by the

                                      10
<PAGE>

Company on or before the Closing Date of all covenants and agreements of the
Company required to be performed on or before the Closing Date and receipt by
the Buyer of a certificate, dated the Closing Date, of the Chief Executive
Officer or the Chief Financial Officer of the Company confirming such matters
and such other matters as the Buyer may reasonably request;

          (c) The receipt by the Buyer of a certificate, dated the Closing Date,
of the Secretary of the Company certifying (1) the Articles of Incorporation and
By-Laws of the Company as in effect on the Closing Date, (2) all resolutions of
the Board of Directors (and committees thereof) of the Company relating to this
Agreement and the transactions contemplated hereby and (3) such other matters as
reasonably requested by the Buyer;

          (d)  The Company and the Company's transfer agent shall have executed
an Order to Issue and Register substantially in the form attached hereto as
Annex II.

          (e) Receipt by the Buyer on the Closing Date of an opinion of Preston
Gates & Ellis LLP, counsel for the Company, dated the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer;

          (f) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.

          8.   MISCELLANEOUS.

          (a) Governing Law.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Washington.

          (b) Counterparts.  This Agreement may be executed in counterparts and
by the parties hereto on separate counterparts, all of which together shall
constitute one and the same instrument.  A facsimile transmission of this
Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party.  Although this Agreement is dated as of the date first
set forth above, the actual date of execution and delivery of this Agreement by
each party is the date set forth below such party's signature on the signature
page hereof.  Any reference in this Agreement or in any of the documents
executed and delivered by the parties hereto in connection herewith to (1) the
date of execution and delivery of this Agreement by the Buyer shall be deemed a
reference to the date set forth below the Buyer's signature on the signature
page hereof, (2) the date of execution and delivery of this Agreement by the
Company shall be deemed a reference to the date set forth below the Company's
signature on the signature page hereof and (3) the date of execution and
delivery of this Agreement or the date of execution and delivery of this
Agreement by the Buyer and the Company shall be deemed a reference to the later
of the dates set forth below the signatures of the parties on the signature page
hereof.

          (c) Headings, etc.  The headings, captions and footers of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.

                                      11
<PAGE>

          (d) Severability.  If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

          (e) Amendments.  No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Buyer or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given.  No course of dealing between the parties hereto shall operate
as an amendment of this Agreement.

          (f) Waivers.  Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, or any course of dealings between the parties, shall not operate as a
waiver thereof or an amendment hereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.

          (g) Notices.  Any notices required or permitted to be given under the
terms of this Agreement shall be delivered personally (which shall include
telephone line facsimile transmission with answer back confirmation) or by
courier and shall be effective upon receipt, if delivered personally or by
courier, in the case of the Company addressed to the Company at its address
shown in the introductory paragraph of this Agreement, Attention:  Chief
Financial Officer (telephone line facsimile transmission number (206) 652-9075),
or, in the case of the Buyer, at its address or telephone line facsimile
transmission number shown on the signature page of this Agreement or such other
address or telephone line facsimile transmission number as a party shall have
provided by notice to the other party in accordance with this provision.

          (h) Assignment.  No party to this Agreement may assign, by operation
of law or otherwise, all or any portion of its rights, obligations, or
liabilities under this Agreement without the prior written consent of the
Company.

          (i) Survival of Representations and Warranties.  The respective
representations, warranties, covenants and agreements of the Buyer and the
Company contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall survive the delivery of payment
for the Shares and shall remain in full force and effect regardless of any
investigation made by or on behalf of them or any Person controlling or advising
any of them.

          (j) Entire Agreement.  This Agreement sets forth the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, whether written or oral,
with respect thereto.

                                      12
<PAGE>

          (k) Termination.  The Buyer shall have the right to terminate this
Agreement by giving notice to the Company at any time at or prior to the Closing
Date if:

          (1) the Company shall have failed, refused, or been unable at or prior
     to the date of such termination of this Agreement to perform any of its
     obligations hereunder;

          (2) any other condition of the Buyer's obligations hereunder is not
     fulfilled; or

          (3) the closing of the sale of the Shares shall not have occurred on
     or before November 19, 1999, other than solely by reason of a breach of
     this Agreement by the Buyer.

Any such termination shall be effective upon the giving of notice thereof by the
Buyer.  Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.

          (l) Further Assurances.  Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.

          (m) Public Statements, Press Releases, Etc.  The Company and the Buyer
shall have the right to approve before issuance any press releases or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release).

          (n) Construction.  The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

                                      13
<PAGE>

                    SUBSCRIPTION AGREEMENT--SIGNATURE PAGE

     IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer and
the Company by their respective officers or other representatives thereunto duly
authorized on the respective dates set forth below.

                                     BUYER

                                     VAN WAGONER FUNDS


                                     By:  /s/ Garrett Van Wagoner
                                         -------------------------------
                                     Name:  Garrett Van Wagoner
                                     Title: President
                                     Number of Shares   2,100,000


                                     ONHEALTH NETWORK COMPANY


                                     By:   /s/ Ron Stevens
                                           -----------------------------
                                           Ron Stevens
                                           Chief Financial Officer

                                           Date: November 16, 1999

                                                                        ANNEX II
                           OnHealth Network Company
                         808 Howell Street, Suite 400
                              Seattle, WA  98101

                               November 16, 1999

American Stock Transfer and Trust Company

     Re:  Order to Issue and Register
          ---------------------------

Ladies and Gentlemen:

     The Board of Directors of OnHealth Network Company, a Washington
corporation (the "Company"), has authorized the issuance and sale of 2,100,000
shares of the Company's Common Stock (the "Common Stock"), pursuant to the
Subscription Agreement, dated November 16, 1999 (the "Subscription Agreement")
between the Company and Van Wagoner Funds (the "Purchaser").  The Company is
selling 2,100,000  shares of its Common Stock to the Purchaser.  You are,
therefore, hereby

                                      14
<PAGE>

authorized and requested, as Transfer Agent and Registrar of the Company's
Common Stock: (i) to issue and register for original issuance 2,100,000 shares
of the Company's Common Stock in the names and amount set forth on the attached
Exhibit A, and (ii) to cause a certificate representing such shares of Common
Stock to the Purchaser to be delivered to the Purchaser at the addresses set
forth on the attached Exhibit A

     Attached please find a copy of the opinion of Preston Gates & Ellis LLP
regarding the due authorization of the Common Stock issuable pursuant to the
Subscription Agreement.


                              Very truly yours,

                              ON HEALTH NETWORK COMPANY

                              __________________________________
                              Ron Stevens
                              Chief Financial Officer

ACCEPTED AND AGREED:

American Stock Transfer and Trust Company


By_______________________________________

  Print Name:____________________________

                                      15
<PAGE>

                                   EXHIBIT A
                                   ---------

                               List of Purchasers
                               ------------------

Name                        Van Wagoner Funds
Number of Shares            2,100,000
Address:                    c/o Van Wagoner Capital Management, Inc.
                            345 California Street
                            Suite 2450
                            San Francisco, CA 94104

                                      16


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