UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------
FORM 8-K
-------------------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 19, 2002 0-26411
Date of Report Commission File
(Date of earliest event reported) Number
BOROUGH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-2175529
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1504 R. Street, N.W.
Washington, D.C. 20009
(Address of Principal Executive Offices) (Zip Code)
(202) 387-5400
(Registrant's telephone number, including area code)
_____________________________________________________________
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 19, 2002, Borough Corporation (the "Company" entered into a
memorandum of understanding with IMPACT Diagnostics Inc., a Utah
corporation ("IMPACT") whereby we advised IMPACT's President that
the that the Company would like to acquire not less than 80% of
IMPACT's outstanding capital shares from IMPACT shareholders.
The consideration to be paid to the IMPACT shareholders is expected
to be shares of Company common stock, based on an exchange rate of 6.7778
shares of IMPACT common stock for each share of Company common stock.
Impact's existing shareholders assuming 100% were acquired would receive
approximately 8.25 million shares of company common stock subject to certain
lock-up provisions and that number of shares, combined with the conversion of
notes, will result in approximately 67% (12.261 million shares) of the then
outstanding common stock to be held by IMPACT shareholders, subject to certain
three-year lock-up provisions.
As a condition to closing, among other things, IMPACT must obtain audited
financial statements for its previous three years of operations and obtain
an opinion of counsel that all of IMPACT's intellectual property is protected,
is not subject to any third party rights, and all rights to the intellectual
property have been assigned, as applicable, to IMPACT.
ITEM 5. OTHER EVENTS.
Description of IMPACT's Business.
Generally.
IMPACT Diagnostics is developing a test to detect specific antibodies against
oncogenic HPVs, which are those human papilloma viruses that induce or cause
cancers that make their appearance when a cancer-causing event has occurred.
This proprietary analysis is based on detecting antibodies against
oncoproteins, which are those proteins coded by those HPV genes responsible
for the uncontrolled growth typifying cancers, made available for a human
immune response, or antibody production, when normal cells are transformed
into neoplastic or cancerous ones. IMPACT's goal is to provide an inexpensive
and highly sensitive alternative to the PAP test, the method most often used
for cervical cancer screening. However, IMPACT cannot assure anyone that its
claims as to its proprietary test can be validated. Immunotests for
antibodies highly associated with cancer have previously entailed problems
like high background (the antigen used to detect the cancer-associated
antibodies also react with other irrelevant antibodies).
FDA-related clinical trials of IMPACT's tests are currently underway. The
outcome of these trials will help determine whether IMPACT's proprietary
analysis are accurate and cost effective.
Background
Cervical cancer is second only to breast cancer as the most frequent female
malignancy and cause of death worldwide. There are approximately 500,000 new
cases of invasive cervical cancer each year, and 300,000 deaths. Almost 80%
of new cases occur among women in developing countries, with 80-85% of them
appearing at late, incurable stages -- making incidence equivalent to
mortality. This disease is due to infections by certain human papillomaviruses
(HPVs), as are many head and neck cancers as well as penile, urethral, anal
and possibly some bladder cancers. Another consequence is laryngeal
papillomatosis in babies born to HPV-infected women, a pathology that kills
25,000 children per year. Such dire consequences of unmonitored HPV
infections are a priority issue of major medical entities with worldwide
perspective like the World Health Organization, the Program for Applied
Technology in Health and the Johns Hopkins Program for International Education
in Reproductive Health (JHPIEGO).
Current Methods of Diagnosing Cancer
Reduced mortalities from cervical cancer are mostly due to procedures for
detecting precancerous and early invasive conditions, but those currently used
are hindered by lacking sensitivity, high cost and the need for considerable
technical expertise and specialized facilities. The overwhelmingly prevalent
procedure has been the PAP smear, which is a microscopic search for abnormal
cells indicative of the disease. Its use is predicated on highly trained
clinicians and special laboratory equipment. Furthermore, PAP smears have
proven unreliable, with a cancer detection rate at 60-70% of those actually
afflicted. Among gynecological health practitioners, it is well-known that
false negatives for PAP smears vary between 15 and 55% with invasive cervical
cancers, and up to 80% for preinvasive conditions.
Recognizing PAP smear inadequacies, major American health organizations such as
the National Cancer Institute, National Institutes of Health, American Cancer
Society, American Medical Women's Association, and Cancer Research Foundation
of America, strongly advocate HPV testing to better detect disease in its
earlier stages. Cervical cancer identified at its earlier stages relegates it
to ready and inexpensive cures.
Abnormal or unusual cells in a PAP smear lead to expensive follow-up
procedures. Colposcopy, a detailed examination of the cervix under
magnification, is typically done, costing about $3.0 billion annually in
the United States. Abnormal or unusual cells but no disease are termed false
positives. Each year, about 1.8 million colposcopies reveal no cancer,
underscoring this inaccuracy in PAP smears. If colposcopies were done only
on patients with abnormal PAP smears along with an HPV test confirming the
likelihood of disease, thousands of procedures could be avoided and hundreds
of millions of dollars saved.
Other Methods of Detection include the Digene HPV DNA Hybrid Capture Assay.
This is the HPV test in commercial use is the Digene HPV DNA Hybrid Capture
Assay, a $100-150 procedure. Approved by the US Food and Drug Administration
(FDA), it is now offered in clinical settings. While the Digene test detects
HPV and is significantly more accurate than is a PAP smear, it requires a
larger sample than does the IMPACT test, sophisticated laboratory equipment
and highly trained technicians. Initial clinical trials of the IMPACT test
indicate sensitivity equal to or better than that for the Digene test.
IMPACT's Proprietary Cancer Test
IMPACT has developed a sensitive, straightforward and low-cost test for
detecting cancer-causing HPVs and associated disease. Through a proprietary
protein-based technology (patent pending), the unique test by IMPACT
Diagnostics confirms HPV infection in a fashion that also identifies cervical
and other HPV-related cancers or the likelihood of their presence. The
ultimate IMPACT test resembles a pregnancy test strip, in the sense that it
consists of a small paper-like membrane on which a colored line occurs when
disease is present. Unique and highly desirable attributes are its inexpensive
nature and that no special laboratory facilities or highly trained clinicians
are required for use with immediate test results. A drop of blood or other
body fluids, like mucous and possibly urine, yield rapid visualization of HPV
infection and consequent disease. This technology is dramatically superior
to extant tests because of its sensitivity and rapidity in consort with
uncomplicated and economical use. Too few cells or improperly harvested ones
are partly why PAP smears fail. Such circumstances are highly improbable with
the IMPACT test, since it uses so little material to get legitimate results.
Clinical Verification of the IMPACT Test
After initial studies in Salt Lake City, IMPACT Diagnostics progressed to a
formal relationship with the University of California at Los Angeles (UCLA)
and its Charles R. Drew University of Medicine and Science. This entails an
Institutional Review Board approved, clinical trial, for scrutiny by the US
Food and Drug Administration (FDA), at the Martin Luther King, Jr., Medical
Center in Los Angeles, California. The trial is uniquely comprehensive, with
comparisons of the IMPACT test, PCR DNA verification and PAP smears against
the "gold standard" of microscopic examination of biopsied tissues. Martin
Luther King Hospital is very important to IMPACT Diagnostics because it serves
a large "high risk" population -- in which the frequency of abnormal PAP smear
findings is 18%, compared against 3-4% at most hospitals. Another trial of
180 women is about to get underway at the University of Southern California,
and a study comprised of more than 200 women is in progress in Salt Lake City,
Utah, under the aegis of Intermountain Healthcare institutional review board
approval.
IMPACT studies in China
By frequency and numbers, cancer-causing HPV infections and cervical cancer
incidence for China are among the worst worldwide, and their pervasive nature
presents IMPACT Diagnostics with a great opportunity. Indeed, there are
248,000,000 to 414,000,000 women at ages for which HPV-based cervical cancer
testing would be of benefit. The China Academy of Medical Sciences considers
cervical cancer detection and early treatment urgent health priorities, and
government entities are very eager to acquire newer, cost-effective means of
surveillance. For China, PAP smear cytology is available mostly in larger
urban settings, yet most of the population is rural and distant from diagnostic
centers. PAP smears costs are also prohibitive in lieu of the many millions
of women who need testing.
IMPACT Diagnostics has completed a comprehensive, initial study of women in
Guangxi Province, China, previously diagnosed with high-grade cervical lesions
and cancer. This region experiences the greatest incidence of cervical cancer
in China. Data (PAP smears, biopsied tissues and other analyses) from previous
studies on cervical cancer there by the Karolinska Institute, Sweden, were made
available for correlation.
Results from the Guangxi Province study show the IMPACT test with a sensitivity
and specificity much better than PAP smear cytology and as good or better than
the Digene test for detecting cervical disease. These results comprise part of
a database for expedited approval by the China government of the IMPACT test,
and an even more extensive clinical study is about to start at the China Cancer
Institute in Beijing. Agreement for this study was finalized in early June
2002.
PATH
IMPACT Diagnostics has begun an association with the Program for Appropriate
Technology in Health (PATH), and is scheduled to begin scrutiny of archived
samples from an already published, major research work on cervical cancer for
further assessment of the IMPACT test. Studies in Mexico and Peru may also
follow. PATH was established to identify, develop and apply appropriate and
innovative solutions to public health problems worldwide, especially as these
pertain to women. Very influential regarding health policy around the world
and the promotion of cost-effective health products, PATH is also the
coordinating agency for the Alliance for Cervical Cancer. Funding for PATH
has been provided by the Gates Foundation.
The clinical research done by IMPACT Diagnostics occurs at an entity certified
under the Clinical Laboratory Improvement Amendments (CLIA). By functioning
under CLIA standards, IMPACT Diagnostics is able to ensure the accuracy,
reliability and timeliness of its data, thus facilitating their acceptance.
FDA Approval
IMPACT is conducting studies under FDA scrutiny via the IDE, investigational
device exemption, granted when clinicals are conducted at institutions with IRB
(Institutional Review Board) Approvals. The results of these studies will be
the basis for the FDA application either through a PMA ( PreMarket Approval),
or a 510K Application. Preliminary talks with the FDA yield promise of an
expedited review, as the need for the test is extreme and it is a noninvasive
diagnostic.
Product Development
IMPACT Diagnostics has completed preliminary development of both an Enzyme
Linked Immunoassay (ELISA) for use in laboratory settings and a prototype
test strip. The proprietary peptides and the test strip itself are being
manufactured in outside facilities, both Good Manufacturing Practices (GMP)
certified. Manufacturing capability to satisfy demand is readily available.
Further clinical data will be used to enhance the readability of the test
and to establish cutoff values and validate sensitivity. Product costs can
be reduced to below $2.00 with minimum volumes.
IMPACT is also developing another detection tool, which is the polymerase
chain reaction (PCR) is a DNA-based diagnostic procedure for rapidly and
accurately identifying, differentiating and quantifying virus-caused disease.
It is being used to independently confirm the presence of HPV DNA in clinical
trials of the IMPACT test. For this, IMPACT Diagnostics has developed and
validated a proprietary PCR method that permits for the first time a
collective, sensitive and rapid look at the cancer-causing forms of the virus
only. Previous HPV PCR methods have been either too general, encompassing
both cancer-causing and non-cancerous HPVs, or specific for only a particular
HPV, with cancers caused by a several strains. Both circumstances have made
HPV PCR analyses expensive and cumbersome. The IMPACT PCR method is
significant for more than just research purposes. It makes for an immediate
assay similar to the Digene one, but faster, lesser expensive and more
sensitive. In that sense, the IMPACT PCR method supercedes the Digene HPV
DNA Hybrid Capture Assay, making it a commercial product of high demand.
Market Information
The demand for cervical cancer testing, let alone other sorts of HPV-related
cancer testing, is enormous. Albeit an unreliable test, around 55,000,000 Pap
tests are done each year in the United States and Canada, with an equivalent
number processed elsewhere. About $5,000,000,000 are spent worldwide on routine
PAP smears each year, with $2,000,000,000 in the United States alone.
That the societal and economic consequences of HPV-caused disease are
disastrous is emphasized by the $100,000,000 spent annually on its research in
the United States alone.
Worldwide market implications are enormous. Over 2,500,000,000 women
worldwide need HPV testing. As the incidence of cervical cancer grows at
500,000 per year and mortality is over 300,000 deaths per year. In
semi-developed countries, with improving medical systems, the cost of care
is staggering.
IMPACT's Management
Michael L. Ahlin, BSME, MBA. Mr. Ahlin has served as the Company's Chairman
of the Board and as President since July 1998. Mr. Ahlin has 30 years of
experience in start up companies and the administration of small companies.
He has also served as the Chairman of the Board of another biotechnology
company, Seroctin Research & Technology since 1999 and a major partner in
two land development projects in Utah.
Mark J. Rosenfeld, PhD. Dr. Rosenfeld has served as the Vice President and
Secretary of Impact since July 1998 and also serves as the Chairman of the
Scientific Advisory Board of Impact Diagnostics; Dr. Rosenfeld began his work
on viral oncology as a Research Fellow at the University of Utah. He has
studied mammalian virus oncogenes, chiefly their interactions with cellular
control proteins and immunological methods for looking at these interactions.
He has been most recently working on cervical cancer in consort with the Cancer
Institute, China Academy of Sciences, and is a Visiting Scientist at Beijing
University and Professor at the Guanxi Province Medical School.
Yao Xiong Hu, M.D. Dr. Hu has served as the Vice President and Science
Director of Impact since July 1998. Dr. Hu has long centered his work about
the DNA genetics and immunology of HPV and cervical cancer. He emigrated from
China to the United States 10 years ago, and has recently been pursuing studies
in molecular genetics at Stanford University. Under the auspices of the World
Health Organization (WHO), he established the Central Control Center for
Sexually Transmitted Diseases in Guangzhou, and became its Director. Notably,
Dr. Yao did DNA analyses to define the incidence of cancer-causing HPVs in
southern China, for which he was honored by WHO, the Guangzhou Municipal
Government, the Guangdong Province Medical and Health Administration and the
Guangzhou Foundation for the Advancement of Science and Technology. Dr. Hu
is the originator of the IMPACT Diagnostics test concept. Now with Stanford
University, Dr. Hu had been Chief of Obstetrics and Gynecology at the
Guangzhou Hospital for Women in China. Dr. Hu has also worked on cancer-
causing viruses at the Department of Pathology and the Huntsman Cancer
Institute, University of Utah School of Medicine.
IMPACT's Advisory Board.
IMPACT Diagnostics is fortunate to have secured the service of prominent
medical scientists on its Scientific Advisory Board (SAB). The SAB designs,
oversees and evaluates the medical and scientific activities of IMPACT
Diagnostics. The SAB represents diverse expertise ranging from molecular
genetics and immunology to clinical diagnostics, disease epidemiology and
laboratory quality control.
Paul D. Blumenthal, MD, MPH -- Dr. Blumenthal is Associate Professor of
Obstetrics-Gynecology at the Johns Hopkins University Medical School;
Director of Contraceptive Research and Programs at the Johns Hopkins Bayview
Medical Center; Medical Adviser to Planned Parenthood; Medical Director of
the Cervical Cancer Prevention Project at JHPIEGO (Johns Hopkins Program for
Training In Reproductive Health); and consultant to several international
programs on cervical cancer administered by JHPIEGO, International Projects
Assistance Services, and Family Health International in Africa, the former
Soviet Union, and Southeast Asia.
David R. Bolick, MD, FCAP, MIAC -- Medical Director of Reference Pathology
Services (RPS), Dr. Bolick is well known for his work on HPV testing in
clinical settings. He designed and implemented the independent study to assess
the effectiveness, safety and cost effectiveness of the Digene HPV Hybrid
Capture II assay as an indicator for colposcopy in patients with mild Pap
abnormalities. Under his direction, RPS was among the first laboratories in
the world to do HPV testing from ThinPrep vials.
L. Roy Eversole, DDS, MSD, MA - A Professor at the University of Pacific School
of Dentistry and Director of the Pacific Oral & Maxillofacial Pathology
Laboratory, Dr. Eversole is a recognized pioneer regarding the association
between HPV and oral cancers, and is the author of several scientific papers
on this subject. He is the originator, Scientific Coordinator and Consulting
Pathologist for an independent clinical trial on the IMPACT Diagnostics test
and HPV-associated oral cancers at the Division of Head and Neck Surgery,
Department of Surgery, University of California at Los Angeles.
Yao Xiong Hu, MD - See Management.
Mark J. Rosenfeld, PhD - See Management.
Anthony R. Torres, MD -- A Professor at Utah State University, Dr. Torres is
a globally recognized protein biochemist, immunologist and cell growth
specialist. Formerly on the Yale University School of Medicine faculty,
Dr. Torres actively champions the rapid implementation of new technology
into applied venues, and sits on university committees for that purpose.
He has developed patented procedures for purifying proteins and for reducing
the attack on cells by the immune system. Dr. Torres is also associated with
the National Institutes of Health, where he researches disease immunology.
Duane Townsend, MD, FACOG -- Until recently Director of Gynecologic Oncology
and Gynecologic Endoscopy at LDS Hospital, Salt Lake City, and Clinical
Professor at the University of Utah School of Medicine, Dr. Townsend is now
a Gynecologic Oncologist with a private practice. An active researcher, he
has authored over 90 papers in peer reviewed journals and 15 chapters in books,
over half of which deal with pre-invasive diseases of the cervix, vulva and
vagina. He was senior author of the first paper to show the worth of
colposcopy, directed cervical biopsies and endocervical curettage for women
with abnormal cytology -- now the universal procedure for verifying cervical
cancer.
Ronald L. Weiss, MD, MBA -- A Vice President of Associated Regional University
Pathologists, Dr. Weiss is also its Director of Laboratories. His considerable
research and clinical accomplishments includes several works on viral
infections and cancer. Dr. Weiss is a recognized authority on clinical
laboratory management, and the author of multiple papers on this topic.
A member of the Clinical Faculty at the University of Utah School of Medicine,
he sits on the Laboratory Quality and Utilization Improvement Committee.
You-Hui Zhang, MD - Dr. Zhang is Director of the Cancer Institute, Chinese
Academy of Medical Sciences; Chief Editor of the Chinese Journal of Cancer;
and Chief Advisor on Cancer Policy to the China government (CPC) Central
Committee. He is a Board Member of the International Union Against Cancer,
and was organizer of the 2001 International Oncology Conference. Dr. Zhang
is also Principal Investigator for research by IMPACT Diagnostics in China.
ITEM 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
3.1 Certificate of Incorporation(1)
3.2 Bylaws(2)
3.3 Specimen stock certificate(1)
10.1 Agreement with TPG Capital Corporation(1)
10.2 Lock Up Agreement(1)
10.3 Employment Agreement between Borough Corporation and Henry Jr.
Boucher, Jr. dated as of May 16, 2002.(3)
10.4 Stock Purchase Agreement between Borough Corporation and BWY Holdings
LLC dated as of May 31, 2002.(3)
10.4.1 Warrant Agreement between Borough Corporation and BWY Holdings, LLC
dated as of May 31, 2002.(3)
10.4.2 Registration Rights Agreement between Borough Corporation and BWY
Holdings, LLC dated as of May 31, 2002(3)
10.5 Line of Credit Loan and Security Agreement between Borough Corporation
and BWY Holdings, LLC dated as of June 3, 2002 in the principal
amount of $400,000.(3)
10.6 Private Equity Line Of Credit Agreement between Borough Corporation
and BWY Holdings, LLC dated as of June 3, 2002 in the principal
amount of up to $30.0 million.(3)
10.6.1 Registration Rights Agreement between Borough Corporation and BWY
Holdings, LLC dated as of June 3, 2002.(3)
10.6.2 Warrant Agreement between Borough Corporation and BWY Holdings, LLC
dated as of June 3, 2002.(3)
10.7 2002 Borough Corporation Stock Incentive Plan.(3)
10.8 Memorandum of Understanding with IMPACT Diagnostics, Inc. dated
June 19, 2002*
10.8.1 IMPACT Diagnostics, Inc. Shareholder Exchange Certification dated
June 19,2002*
10.8.2 IMPACT Diagnostics, Inc. Certified Shareholder List dated
June 19, 2002*
*Filed with this Form 8-K.
(1) Included as an exhibit to Form 10-SB, filed with the Securities and
Exchange Commission on June 27, 1999.
(2) Included as an exhibit to Form 10-SB/A, filed with the Securities and
Exchange Commission on November 18, 1999.
(3) Included as an exhibit to Form 8-K, filed with the Securities and Exchange
Commission on June 14, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 19, 2002 BOROUGH CORPORATION.
By: /s/ Henry J. Boucher, Jr.
President
Exhibit 10.8
Borough Corporation
1504 R Street NW
Washington, DC 20009
(202) 387-5400
June 19, 2002
Mr. Michael Ahlin
President
Impact Diagnostics Inc.
3785 South 700 East, Ste. 203
Salt Lake City, Utah 84106
Dear Mr. Ahlin:
Our company, Borough Corporation, a Delaware corporation ("Borough"),
which is a reporting entity to the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended, wishes to advise you that
it is desirous of acquiring (the "Acquisition") not less than 80% and up to
100% (on a fully diluted basis) of the currently outstanding capital stock
("Stock") of Impact Diagnostics Corporation, a Utah corporation ("Impact")
from Impact's shareholders, on and subject to the terms and conditions below
set forth.
On the date herein, Borough has authorized capital stock of 100,000,000 shares
of common stock, $.0001 par value per share, of which 5,000,000 shares are
issued and outstanding and authorized 20,000,000 shares of preferred stock,
par value $.0001, with zero preferred shares issued and outstanding. All the
outstanding shares have been duly and validly issued, are fully paid and
non-assessable. On June 14, 2002, Borough filed a Form 8K pursuant to
section 13 or 15 (D) of the Securities Exchange Act of 1934 disclosing an
exchange in control, beneficial ownership, management, certain financing
agreements and a stock incentive plan ("June 14, 2002 8K Filing")
Borough has signed a $2,600,000 acquisition funding commitment from BWY
Holdings LLC, pursuant to the terms described in the June 14, 2002 8K Filing.
In this agreement, Borough will issue an additional 1,039,000 capital shares
of Borough and warrants to purchase an additional 2,300,000 capital shares
of Borough at a price of $1.09 per share.
Borough has also secured a private equity facility in the amount of $30
million from Prima Capital Growth Fund LLC ("Prima"), pursuant to the terms
described in the June 14, 2002 8k Filing. The net proceeds of the private
equity facility would be available principally to promote the business
requirements of the Impact subsidiary of Borough and that of its affiliates.
Prima will be paid a 1% funding fee and be issued warrants to purchase
1,098,000 shares of Borough capital stock at $.55 per share.
Borough would acquire at least 80% of the Stock directly from the
shareholders of Impact and the balance not exchanged by the shareholders,
at the election of Borough, pursuant to a merger of Impact with Borough in
exchange for the common stock of Borough. Based upon the authorized capital
stock of Impact, consisting of 10,000,000 shares of common stock, $.001 par
value per share, of which 1,215,000 shares are issued and 594,000 reserved
for automatic conversion through convertible notes for a total of 1,809,000
shares issued and outstanding and no shares of preferred stock being issued
and outstanding, the exchange rate would be 6.77778 shares of Borough for
each share of Impact. All of the Stock must be validly issued, fully paid
and non-assessable and shall be free of any lien, encumbrances or options.
In addition, this offer is being made on the basis that there are no
outstanding options, warrants or instruments convertible into Stock
and that the only equity of Impact is represented by common stock, except
as specifically provided by the Impact Convertible Loan Agreement.
If Borough acquires all of the currently outstanding Stock, under the
exchange provisions the Impact shareholders would:
A. Own 67% of Borough's capital stock and
(i) would receive 8,235,000 shares of newly issued Borough capital stock of
Borough, and the Impact principals, consisting of Michael Ahlin, Mark
Rosenfeld, Yao Xiong Hu, and Mitchell T. Godfrey, would be subject to a
"lock up" on the shares held by them for a period of three (3) years.
(ii) would receive 4,026,000 shares of newly issued capital stock to meet
Impact's obligations with respect to their convertible note obligations.
B. Have the right to nominate and/or appoint five of the eight members of the
Board of Directors of Borough until July 31, 2003 (it is the desire of Borough
that the current Impact Board members become Borough Board members), subject
to applicable State and Federal laws.
C. The total capital stock issued and outstanding of Borough would be
approximately 18,300,000 shares and warrants to purchase an additional
3,398,000 capital shares, which could provide an approximately additional
$3,103,900 of paid-in capital.
As a condition to the exchange of the Stock for Borough shares, Impact
undertakes, at its cost and expense:
(A) To obtain audited financials from an accredited SEC CPA firm for Impact's
three previous years of operation; and reviewed interim financials, if
applicable, for any stub period.
(B) To bring Impact's patent copyright and trademark filings current with all
State and Federal agencies, including without limitation, the United States
Patent and Trademark Offices for all intellectual property ("IP") and obtaining
a representation letter from Mallinckrodt & Mallinckrodt that (i) all Impact's
IP is protected, (ii) is not subject to rights of any other party or entity,
and, (iii) any inventor, creator or author of any of the IP has assigned the
same to Impact.
The Acquisition would be subject to due diligence review by Borough of the
operations, financial condition and prospects of Impact and its subsidiaries
and affiliates of each of them. The Acquisition would also be subject to the
due diligence review by Impact of Borough and the transactions proposed by
Borough.
This letter is binding upon Borough and Impact but is subject to the execution
of mutually acceptable definitive agreements with Impact's shareholders owning
not less than 80% of Impact's outstanding capital stock for the exchange of
the Stock for Borough common shares.
In accordance with the terms of Exhibit A attached hereto, assurances are
hereby made that the majority (i.e. 80%) of shareholders of Impact shall
facilitate the terms of this agreement for purposes of the stock acquisition
by Borough.
For a period of 60 days from the date hereof, neither Impact nor its
shareholders will have any negotiation or discussion or enter in any agreements
with respect to the issuance by Impact of debt instruments of equity or the
sale of the shareholders equity in Impact, excluding the Convertible Notes.
It is understood that the terms of this letter and the ensuing discussions
between our respective representatives or the shareholders of Impact and their
representatives are confidential and will not be disclosed in any manner except
as may be required by law. The preceding paragraph and this paragraph are the
only binding obligations between us.
This letter is governed and shall be construed in accordance with the laws of
the State of Delaware, without regard to conflict of law principles.
Sincerely yours,
By: ____________________
Henry J. Boucher, Jr., President
Impact Diagnostics, Inc.
Accepted and Agreed
By: ______________________ ________
Michael Ahlin, President Date
Exhibits:
A - Certified Shareholder List and Shareholder Exchange Certification
Exhibit 10.8.1
Exhibit A
Share Exchange Certification
I, Michael Ahlin, as President of Impact Diagnostics, Inc. certify to
Borough Corporation that on and as of June 19, 2002 there are stockholders
representing at least 80% of the issued and outstanding shares of Impact
committed to exchanging their shares in Impact, pursuant to the terms of the
offer letter from Borough to Michael Ahlin dated June 19, 2002.
Each of these entities or individuals is ready and willing to execute the
share exchange documentation following its receipt and review.
I certify that, based on my knowledge and belief after diligent inquiry, the
above statements are true and correct.
Attached hereto please find referenced as Exhibit 1, a complete listing of all
Impact Shareholders. There are no warrant or options to purchase Stock except
the $200,000.00 Convertible Loan agreement included in our agreement dated
June 5, 2002.
June 19, 2002 ________________________
President
Exhibit 10.8.2
Exhibit 1
Certified Shareholder List - Impact Diagnostics, Inc.
Shareholder Cert. Number(s) # of Shares Percentage of
Total Shares
Michael Ahlin 20,37 215,000 17.70%
Princess Investments 38 50,000 4.12%
Rhio Ahlin 21 10,000 0.82%
James C. Lewis 22 50,000 4.12%
Anthony R. Torres 23 10,000 0.82%
Regula Burki 24 10,000 0.82%
Ronald L.Weiss 25 20,000 1.65%
Yao Xiong HU, M.D. 26,27 230,000 18.93%
Michael T. Godfrey 28,29 142,500 11.73%
Mark Rosenfeld, Ph.D. 29,31,33,40 242,500 19.96%
B. Max Iverson 34 5,000 0.41%
Randy Sasaki 41 5,000 0.41%
Blaine Taylor 43,44 130,000 10.70%
Sylvia Newman 45 20,000 1.65%
Six Way, Inc. 46 50,000 4.12%
Tiffani Taylor 47 5,000 0.41%
Kami Kalher 48 5,000 0.41%
Brett and Jessica Taylor 49 5,000 0.41%
Wayne and Dana Clemets 50 2,500 0.21%
Kenny and Amber Nichols 51 2,500 0.21%
Terrie McEvoy 52 5,000 0.41%
Total Issued
and Outstanding 1,215,000 100%
Reserved for Convertible Notes 594,000
---------
Fully Diluted Common Shares 1,809,000
The above represents the current issued, outstanding and reserved common
shares of Impact Diagnostics, Inc. as of June 19, 2002.
Certified by the Board of Directors of Impact Diagnostics, Inc.:
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