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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
STOCKUP.COM, INC.
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(Name of Small Business Issuer in its charter)
Nevada 88-0417949
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(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
333 N. Rancho, Suite 900, Las Vegas, NV 89106
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(Address of principal executive offices) (Zip Code)
(702) 648-6400
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
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Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of Class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. BUSINESS DEVELOPMENT
1. FORM AND YEAR OF ORGANIZATION
Courtleigh Capital, Inc., a Kansas corporation was first incorporated
under the laws of the state of Colorado as ANCR, Inc. on July 30, 1985. On July
23, 1987, ANCR, Inc. changed its name to CEA Lab, Inc. and on October 16, 1995
reincorporated in the State of Kansas as CEA Lab, Inc. On September 12, 1997, it
amended its articles to change its name to Courtleigh Capital, Inc. Courtleigh
Capital, Inc. commenced trading during December, 1998 under the symbol CTLH on
the Over the Counter/BulletinBoard. On February 2, 1999, Courtleigh Capital,
Inc. changed its name to StockUp.com, Inc. StockUp.com, Inc. a Kansas
corporation, formerly Courtleigh Capital, Inc. was reincorporated in the state
of Nevada utilizing the name StockUp.com, Inc. (the term the "Company" shall
refer to the surviving Nevada corporation). The Company changed its trading
symbol to SKUP effective as of February 22, 1999.
2. ANY BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING.
Not Applicable.
3. ANY MATERIAL RECLASSIFICATION, MERGER, CONSOLIDATION, OR
PURCHASE OR SALE OF A SIGNIFICANT AMOUNT OF ASSETS NOT IN THE ORDINARY COURSE OF
BUSINESS.
On February 22, 1999 certain computer hardware and office furniture
assets, valued at $368,178 were acquired by the Company in exchange for 4.5
million shares of the Company. StockUp.com, Inc. a Kansas corporation was
reincorporated in the state of Nevada, by merging StockUp.com, Inc., a Nevada
corporation with StockUp.com, Inc., a Kansas corporation. StockUp-Nevada is the
surviving entity.
B. BUSINESS OF ISSUER.
The Company develops proprietary second-generation Internet
technology-TM- based upon the Microsoft Internet platform. The Company owns and
is developing a system of fully integratable modular software products which are
intended to aggressively increase and retain Internet traffic. Although the
Company's software is adaptable to many different vertical applications on the
Internet, the Company has selected the financial information and services
industry to provide an initial showcase for its proprietary technology. The
Company's web site is currently under construction at HTTP://WWW.STOCKUP.COM.
The Company believes that its software products provide a fully customizable,
interactive, dynamic Internet experience, relative to the increasingly prevalent
static portal models installed throughout the world wide web. The Company is a
Microsoft Certified Solutions Provider and its team of in excess of twenty
programmers and animators, has based its proprietary technologies upon
Microsoft's Internet platform.
1. PRINCIPAL PRODUCTS AND SERVICES AND THEIR MARKET.
A. THE MARKET
The rapid growth of the Internet and the World Wide Web is changing the
way companies do business. Web sites are providing a new medium for working and
interacting with customers, suppliers and business partners, while corporate
intranets promise to transform the way companies gather and distribute
information internally.
The Internet is not another newspaper generating advertising revenue or
a television show to be observed passively. Yet many Internet companies employ
technology that achieves nothing more than that traditionally achieved by
newspapers . The Company believes that its integrated software products, when
fully deployed, will for the first time take full advantage of the "computing
power" giving rise to the Internet. Unlike newspapers and magazines, the
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Company's technologies will allow end-users to fully customize what they want to
see and how they want to see it. Further, unlike television, end-users will
interact with the Company's technology, thereby providing extremely valuable
data regarding the end users product and service preferences. While the Company
has selected the financial services sector as its initial technology showcase,
its technology has been intentionally developed to be deployable among a number
of vertical applications. These applications may involve sites proprietary to
the Company or they may involve other Internet companies which license all or a
part of the Company's technology.
According to Morgan Stanley Dean Witter the strongest Internet business
opportunities for electronic commerce reside in the financial services sector.
Demographic information identifies Internet users who are consumers of financial
information, as having the highest level of disposable income in addition to
filling one of the largest market niches on the Internet. The Company's software
products provide a fully customizable, interactive, dynamic Internet experience,
relative to the increasingly prevalent static portal models installed throughout
the world wide web. The Company is a Microsoft Certified Solutions Provider and
its team of over twenty programmers and animators have based the Company's
proprietary technologies upon Microsoft's Internet platform.
B. PRINCIPAL PRODUCTS AND SERVICES
The Company's business focuses upon two areas, its system and
technology and its current financial services business application. The Company'
s systems and technology utilize proprietary software capable of servicing in
excess of one million users per day. The six major components of the Company's
system and technology are: (1) the desktop portal, (2) the digital nervous
system, (3) on-line analytical processing, (4) English query language, (5)
interactive agents, and (6) the computer hardware network (all collectively
referred to as the "Systems and Technology"). Each of the software components of
the technology is completely modular and may be licensed separately or with one
or more other components of the Company's software products.
(I) SYSTEMS AND TECHNOLOGY PRODUCTS AND SERVICES
THE DESKTOP PORTAL
The Company has developed a desktop portal deployed in May, 1999
evidenced by a Window's icon that maintains a constant connection with the
Internet; it is comprised of a "streaming" series of news/advertisement items,
with e-commerce buttons linked to various industry specific sites. The portal is
the product of second-generation Internet technology-TM- and is more
customizable and interactive than anything currently available on the Internet.
This private desktop portal is fully deployable from the user's desktop, capable
of receiving data from virtually any third party news feed, proprietary content
developed by StockUp or any advertiser. The end-user then customizes these
various data feeds to when and how the end-user wishes to view the data. This
portal grants access to major Internet search engines, provides full audio and
video streaming capability and has multiple e-mail source monitoring capability.
The Company has initially incorporated this technology into its QuoteStream-TM-
product, which was introduced in May, 1999 and may be downloaded at
WWW.QUOTESTREAM.COM.
The Company has designed the desktop portal to retain aggregate user
data for marketing purposes and the Company believes that this data will promote
partnerships and co-branding alliances between the portal and other sites
viewing the portal as a strategic source of retaining existing customers and
obtaining new subscribers. This data is secured upon the portal being downloaded
and then is constantly updated to the end user or subscriber of QuoteStream-TM-.
The device or portal acts as a gateway and link to all sources of information
the user is interested in obtaining (both current and updating) from the
information sources.
THE DIGITAL NERVOUS SYSTEM
The Company is developing a proprietary "middleware" which monitors the
items customized on the desktop portal. All of the information potentially
available for those items is then electronically stored in this middleware and
is then readily accessible by the end-user when and if needed. The Company has
labeled this customized middleware as "The Digital Nervous System".
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The primary advantage of this system is its increased speed in
delivering data according to the customized specifications of the end user. For
example, assume that a QuoteStream-TM- end-user has selected five stocks to
include in his/her QuoteStream-TM-, including a large computer manufacturing
company. Current financial information sites provide the requested data, which
is typically price and volume for the trading day. If additional information is
required (for example price history, charting, etc.), this information is
relatively slow in being displayed because the request for this additional
information has "triggered" an additional data search. StockUp stores all data
regarding the hardware manufacturer in its digital nervous system (middleware)
and when additional information is requested, it is provided virtually instantly
because no additional search is needed. This increased speed becomes critical in
displaying the high technology applications developed by StockUp, including
three-dimensional charting capabilities. In summary, the digital nervous system
acts like an electronic brain. As an individual's usage of the middleware
increases, the more familiar the brain becomes with the user's requests
providing the data results faster with each experience.
ONLINE ANALYTICAL PROCESSING (OLAP)
Online Analytical Processing ("OLAP") is an analytical tool that allows
the user to track multidimensional data (for example five stocks, over five
different variables) in an easy natural way. Through its current use of OLAP
technology, the Company empowers users to perform spreadsheet operations and
financial analysis on the web site. A library of spreadsheet templates is
available for commonly performed analysis. The user will also be able to
construct his/her own spreadsheets for a more customized approach. Utilizing
OLAP applications will deliver fast analysis of shared multidimensional
information. OLAP is the technology that drives the stock screening feature and
organizes data so that StockUp.com-TM- interactive charting software can plot
any set of data available at the site in an entirely customizable format, at a
very high speed. The Company believes that this degree of depth and flexibility
is currently unavailable at other sites. With OLAP, users can see as little or
as much information as they desire.
ENGLISH QUERY
Through the application of the Company's innovative second-generation
Internet technology-TM- called English Query, users are able to make both text
and verbal requests for data using a natural English query such as "Show stocks
that have Market Capitalization in excess of $20 billion and have declared a
dividend within the past twenty-four hours." The Company believes that this
feature is not available on the Internet to the degree of functionality that
StockUp offers. English Query permits users to bypass drop down menus and scroll
bars, contributes to the overall interactivity of the site, and makes specific
data more accessible.
INTERACTIVE AGENTS
The Company has expanded upon the Microsoft platform in developing
customized interactive agents which not only play a roll in both providing a
help feature for end-users navigating an Internet site, but also provide a
dynamic alternative to static banner advertisements currently employed
throughout the Internet. These interactive agents will be deployed simultaneous
with the deployment of the StockUp website in August-September, 1999.
These agents take the form of animated characters (currently to be
deployed as a Bull and Bear on the StockUp web site) which "walk and talk" an
end user through the various features of a particular Internet site. These
agents deliver a new level of vibrancy and user-friendliness relative to the
traditional text based help features usually incorporated into web sites,
thereby improving the retention of subscribers. Further, the interactive agents
have the limited ability of identifying when a user is experiencing problems and
then appear to assist the user to a solution.
The Company also plans to use these interactive agents to replace the
static banner advertisements currently used by Internet companies. The Company
is currently developing technology, to be deployed in October/November 1999,
which will replace traditional banners with interactive three-dimensional
advertising agents. The interface comprising the agent will be customizable
according to the end-users preferences and each agent will monitor the end users
activities on the Internet, thereby focusing the agents "advertising pitch" to
the end users historical patterns. Licensees of the agents may select from a
number of "interface" characters depending upon the customer base to be
solicited.
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The Company has developed seven animated agent characters that may be
licensed in a number of applications. Further, the Company intends to continue
to develop up to an additional 10-20 such characters. While the
character/animation comprising the user interface is unique to each application,
the underlying software is readily adaptable to virtually any Internet industry
application.
THE NETWORK
StockUp's network is a state of the art system that is scalable,
secure, and fast. The focus of the Company's network is to provide up to the
minute technology, security and speed.
The Company believes that its network is the most scalable network
available. Existing technologies have been optimized for high speed performance
and work load balancing preventing potential data bottlenecks within the server
and all networking components. The Company is directly connected to the Internet
through Sprint's Asynchronous Transfer Mode (ATM) backbone, and separately at a
Sprint DS3 connection at a different point of presence (POP). StockUp has signed
an agreement with Sprint for 90Mbps per second of burstable bandwidth from the
Sprint backbone. This is the equivalent of two T-3 connections or 56 T1 lines.
Each T3 line is delivered from a separate source providing redundancy in the
event one source fails. This technology can handle a greater volume of data as
the business grows, is impervious to electromagnetic interference, is resistant
to eaves dropping, can travel long distances before the signal has to be
regenerated and retransmitted and supports LED and laser transmissions thereby
enabling the signal to travel at the speed of light.
The Company has an array of high capacity Intel Pentium based systems
that are expandable to accommodate the business needs of the company. StockUp
runs on an NT based software platform and utilizes SQL servers. These servers
are configured with RAID 5 technology. RAID 5 copies all parts of all data
across five drives. If one drive goes down, the remaining four drives can still
access information from the fifth drive. Collectively, all Dell servers provide
the Company with 600 GB of storage capacity, enabling the Company to house large
volumes of day-to-day data and archive data for quick retrieval. Server load
balancing is handled in a back end Internet Work Packet Exchange (IPX) sub-net.
StockUp employs a load balance utility that evenly distributes http responses
across to incoming http requests. Because the Company has direct access to the
Internet, it serves as its own Internet Service Provider ("ISP"). As such, the
Company must allocate a server toward handling domain name service ("DNS")
requests and, in order to handle the projected heavy traffic, the Company has
allocated two servers as DNS servers.
The Company employs the Microsoft Proxy Server as its firewall. A
firewall determines what types of traffic the Company will accept and which
traffic will be rejected. StockUp is designed to run 24 hours a day. Each server
and network device has redundancy built into the devices themselves. StockUp has
three state of the art DLT taped backups. In the event of power fluctuations the
Company has 12 American Power Conversion Uninterrupted Power Sources that will
protect all mission critical equipment from surges, spikes, black outs and brown
outs. In the event of a blackout all servers would institute normal automatic
shut down procedures before the power fails. Finally, the Company employs
dedicated isolated circuits on every server. This substantially reduces the
chance that a singe point of failure will impact the entire network.
(II) FINANCIAL INFORMATION SYSTEM
As discussed above, the Company has developed a series of modular
software products, which may be licensed separately or on a fully integrated
basis. During calendar year 1999 the Company is deploying a fully integrated
system containing all of these products in the financial information and
services area. The Company's products are designed to increase subscriber base
on web sites, build proprietary content, and offer turn key second-generation
Internet technology-TM- solutions to other Internet companies. These products
offer users a highly customized Internet experience and are designed to
substantially increase and retain traffic on web sites that employ them. The
application of this technology will initially focus upon three products:
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QUOTESTREAM-TM-.
QuoteStream-TM- is the engine that will increase and retain traffic and
subscribers for the StockUp.com-TM- website and any other website developed by
the Company. QuoteStream-TM- is a desktop news and stock ticker that maintains a
persistent connection to the Internet. It may be downloaded at
WWW.QUOTESTREAM.COM. The QuoteStream-TM- application offers the user a broad
range of customization features including: business, finance, sports,
entertainment, and local news, as well as any other general information it
obtains from its strategic partners and alliances; instant messaging; automatic
e-mail notification from multiple sources; streaming audio and video; access to
the Internet through multiple search engines; and use of the most sophisticated
financial glossary on the Internet, to be utilized in the financial information
industry which is available free of charge at WWW.QUOTESTREAM.COM. The primary
purpose of the desktop portal (as demonstrated by QuoteStream-TM-) is to
increase, direct and retain Internet traffic in a strategic fashion dictated by
the business plan of the portal's "owner".
The power of QuoteStream-TM- lies in its ability to increase and retain
traffic on host web sites. The stock quotes and articles displayed on
QuoteStream-TM-'s tickers are linked to the QuoteStream-TM- site that provided
the article or information in the data feed. When a user double clicks on an
article or stock quote, a browser is opened displaying the desired item (which
is located on the QuoteStream-TM- web site). When the user reads the article or
conducts research on a given stock they do so from the host web site, thereby
generating traffic on that site (i.e. the StockUp.com-TM- web site or whichever
partner web site that is supplying the news or stock information to
QuoteStream-TM-). The e-mail notification system operates similarly in that the
free e-mail distributor's web site is displayed when the user opts to check
e-mail via the e-mail notification system.
The StockUp.com-TM- website is the host site for all research on stock
quotes, glossary terms, or streaming audio and video, the StockUp.com-TM- web
site will experience substantial levels of traffic, limited only by the number
of its affiliate partners that are distributing QuoteStream-TM-. Users that
select local news stories or magazine articles will be transported to the web
site of the appropriate media partner, generating traffic for the partner. The
Company is nearing completion of the StockUp.com-TM- website and anticipates
that the website will go "online" by the end of August, 1999.
STOCKUP.COM-TM- WEB SITE AND STRATEGIC AFFILIATED WEB SITES.
The StockUp.com-TM- web site will be the flagship of StockUp.com-TM-
and the showcase for some of its second-generation Internet technologies. The
power of StockUp.com-TM- lies in its ability to deliver raw data in a highly
customizable format to as large and target an audience as possible. The Company
acquires its raw data from virtually all leading industry sources including S&P
Comstock; Market Guide; Comtex; Reuters; and others. The Company's proprietary
second-generation Internet technology-TM- allows subscribers to customize more
than 300 data elements into a highly interactive financial monitoring and
research tool that employs proprietary interactive agents to assist users with
the application of the many research tools and features of the web site.
StockUp.com-TM- web site has an existing non-paid subscriber base of more than
300,000 members who have previously demonstrated an interest in accessing
financial information over the Internet.
The StockUp.com-TM- web site will provide the user with the following
customizable and interactive features:
INTERACTIVE AGENTS. An animated talking bear and bull that are linked
to the help menu and can walk the user through any aspect of the site in as much
detail as needed. These agents are the proprietary technology of StockUp.com-TM-
and are available for licensing to other companies. In summary, while
StockUp.com-TM- has focused upon the bull/bear interactive agents as the "user
interface" for its financial web site, the technology underlying the
animation/software comprising the interactive agents has applications in many
different industries.
INTERACTIVE CHARTING. A second-generation interactive charting
application that incorporates a greater degree of customization than is
currently available on the Internet. The interactive charting component allows
users to chart 50 separate data elements on four levels of charting and offers
zoom in capability on each level, as well as three dimensional charting features
allowing more in-depth analysis.
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CUSTOMIZABLE STOCK PORTFOLIO. The Customizable Stock Portfolio allows
the user to build a customized stock portfolio and manipulate and analyze
combinations of over 300 data elements. This will be the most interactive
customizable portfolio available and offer more features than any personal stock
portfolio currently on the Internet.
STOCK SELECTOR. Allows the user to build customized stock screening
criteria from over 100 data elements and to make comparisons to its
corresponding industry, economic sector, and the S&P 500. Additionally users can
select stock criteria in a natural language format. In summary, the selector
allows the user to build a profile meeting any criteria composed of one or all
of 100 financial data elements.
EDUCATIONAL ARCHIVES. A reference section of finance and business
related articles compiled over three years and being continuously expanded by
the Company's 15 staff writers.
STOCKUP.COM-TM- FINANCIAL GLOSSARY. The most sophisticated financial
glossary on the Internet with over 6,000 definitions of finance related terms
including expanded references to each term linked to articles in the educational
archives.
The Company is rapidly developing partnerships and alliances through
its debut product QuoteStream-TM-. StockUp.com-TM- believes that the
implementation of its second-generation Internet technology-TM- products as
demonstrated on QuoteStream-TM- and its showcase web site will build affiliate
partnerships and subscriber base. These partnerships and subscribers will
provide the necessary components required by the market to value
StockUp.com-TM-, because the alliances and partnerships add subscriber base and
proprietary content to its ongoing technology development.
INTERACTIVE ADVERTISING AGENTS
The Company's Interactive Advertising Agents are scheduled to be
released in October/November, 1999. As mentioned above, static banner
advertisements have increasingly become the focus of many Internet companies
claimed revenue models. The Company's technology will replace traditional
banners with interactive three-dimensional advertising agents. The interface
comprising the agent will be customizable according to the end-users preferences
and each agent will monitor the end users activities on the Internet, thereby
focusing the agents "advertising pitch" to the end users historical patterns.
Licensees of the agents may select from a number of "interface" characters
depending upon the customer base to be solicited.
2. DISTRIBUTION
As discussed above, the Company's financial information services are
distributed via the Internet.
The Company's products will be distributed through strategic alliances
with media and Internet related companies. Establishing a broad base of
affiliate relationships will build proprietary content for QuoteStream-TM- which
in turn will create an extensive network of channels which will link to the
StockUp.com-TM- website or other websites developed by the Company.
StockUp.com-TM- will target the following types of companies to form
partnerships and distribute its products:
1. No charge direct distribution services (such as free software
and e-mail websites)
2. Local newspapers (conventional and online)
3. Magazines (conventional and online)
4. Online brokerage firms
5. Radio and television stations (conventional and online)
6. Technology companies (conventional and online)
7. E-commerce websites
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StockUp.com-TM- has formed alliances with many direct distribution
services. Collectively, these alliance companies have a viewership of in excess
of 100 million page views per month.
3. STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE.
QuoteStream-TM- is currently available and can be downloaded
AT WWW.QUOTESTREAM.COM. The beta version of the StockUp.com-TM- web site is
scheduled to be launched in late August, 1999, and the interactive advertising
agents are scheduled to be available in October/November, 1999. Upon the
successful launching of each of these products, the underlying technology will
be available for licensing to third parties.
4. COMPETITION
The Company is a technology developer that has elected to initially
showcase its proprietary second-generation Internet applications on the
StockUp.com-TM- website and QuoteStream-TM-, its desktop portal. The Company's
major competitors are in the areas of Internet portals and news related
websites. These include:
- software development companies;
- publishers and distributors of traditional media, including
print, radio, and television, such as The Wall Street Journal,
Fortune, Bloomberg Business Radio, and CNBC;
- providers of terminal-based financial news and data, such as
Bloomberg Business News, Reuters News Service, Dow Jones
Markets, and Bridge News Service;
- web "portal" companies, such as Yahoo! and America Online; and
The Company believes that the principal competitive factors in its
market are brand name recognition, wide selection, personalized service, ease of
use, 24-hour accessibility, customer service, convenience, reliability, quality
of search engine tools, and quality of editorial and other site content. Many of
the Company's current and potential competitors have longer operating histories,
larger customer bases, greater brand name recognition and significantly greater
financial, marketing and other resources than the Company. In addition, other
websites may be acquired by, receive investments from or enter into other
commercial relationships with larger, well-established and well-financed
companies as use of the Internet and other online services increases. Certain of
the Company's competitors may be able to devote greater resources to marketing
and promotional campaigns, and devote substantially more resources to Web site
and systems development than the Company. Increased competition may result in
reduced operating margins, loss of market share and a diminished franchise
value. There can be no assurance that the Company will be able to compete
successfully against current and future competitors, and competitive pressures
faced by the Company may have a material adverse effect on the Company's
business, prospects, financial condition and results of operations. Further as a
strategic response to changes in the competitive environment, the Company may,
from time to time, make certain service or marketing decisions or acquisitions
that could have a material adverse effect on its business, prospects, financial
condition and results of operations. New technologies and the expansion of
existing technologies may increase the competitive pressures on the Company. In
addition, companies that control access to transactions through network access
or Web browsers could promote the Company's competitors or charge the Company a
substantial fee for inclusion.
5. THE SOURCES AND AVAILABILITY OF RAW MATERIALS.
The Company is not dependent on any raw materials. All software which
comprises a material component of its technology is developed at the Company's
headquarters. All other software which might be of potential use constitutes
readily available programs distributed at a number of locations.
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6. DEPENDENCE ON A SINGLE OR FEW CUSTOMERS.
The Company currently does not have any customers. It has developed
multiple strategic alliances with newspapers located throughout the United
States to provide proprietary content to its website. The Company does not
anticipate that it will be dependent on a single or small group of customers.
7. THE IMPORTANCE OF PATENTS, TRADEMARKS, LICENSES, FRANCHISES
AND CONCESSIONS HELD.
To protect its rights to its intellectual property, the Company relies
on a combination of trademark and copyright law, patent, trade secret
protection, confidentiality agreements, and other contractual arrangements with
its employees, affiliates, clients, strategic partners, and others. The
protective steps it has taken may be inadequate to deter misappropriation of the
Company's proprietary information. The Company may be unable to detect the
unauthorized use of, or take appropriate steps to enforce its intellectual
property rights. StockUp.com-TM- has registered certain of its trademarks in the
United States and has pending U.S. applications for other trademarks and
patents. Effective trademark, copyright, patent, and trade secret protection may
not be available in every country in which it offers or intends to offer its
services. In addition, although StockUp.com-TM- believes that its proprietary
rights do not infringe on the intellectual property rights of others, other
parties may assert infringement claims against the Company or claims that it has
violated a patent or infringed a copyright, trademark, or other proprietary
right belonging to them. These claims, even if not meritorious, could result in
the expenditure of significant financial and managerial resources on its part,
which could materially adversely affect the Company's business, results of
operations, and financial condition. The Company incorporates certain licensed
third-party technology in some of its services. In these license agreements, the
licensors have generally agreed to defend, indemnify, and hold the Company
harmless with respect to any claim by a third party that the licensed software
infringes any patent or other proprietary right. The Company cannot assure that
these provisions will be adequate to protect from infringement claims. The loss
or inability to obtain or maintain any of these technology licenses could result
in delays in introduction of new services.
8. GOVERNMENT APPROVAL.
No government approval is required for any of the Company's current
products or services.
9. EFFECT OF ANY EXISTING OR PROPOSED GOVERNMENT REGULATIONS.
Other than normal government regulations that any business encounters,
the Company's business is not effected by any government regulations.
10. RESEARCH AND DEVELOPMENT COSTS.
Since the Company began operations in February 1999 it has spent in
excess of $1.5 million on the research and development of its proprietary
technology. The revenues the Company achieves will be primarily from strategic
alliances and subscriber fees. Revenues generated, while paying directly for
research and technology costs accrued to date, will fund the operations of the
Company, which includes funding on-going technological development.
11. COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS AND
REGULATIONS.
The Company is not involved in a business which involves the use of
materials in a manufacturing stage where such materials are likely to result in
the violation of any existing environmental rules and/or regulations. Further,
the Company does not own any real property which would lead to liability as a
land owner. Therefore, the Company does not anticipate that there will be any
costs associated with the compliance of environmental laws and regulations.
12. EMPLOYEES.
As of the date hereof, the Company employs approximately 100 full-time
employees and 15 part-time employees. The Company hires independent contractors
on an "as needed" basis only. The Company has no collective
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bargaining agreements with its employees. The Company believes that its employee
relationships are satisfactory. In the long term, the Company will attempt to
hire additional employees as needed based on its growth rate.
13. YEAR 2000.
The Company has begun to address possible remedial efforts in
connection with computer software that could be affected by the Year 2000
("Y2K") problem. The Y2K problem is the result of computer programs being
written using two digits rather than four to define the applicable year. Any
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a major system
failure or miscalculations.
The Y2K problem can affect any modern technology used by a business in
the course of its day. Any machine that uses embedded computer technology is
susceptible to this problem, including for example, telephone systems, postage
meters and scales, and of course, computers. The impact on a company is
determined to a large extent by the company's dependence on these technologies
to perform their day to day operations.
Internally, the Company has begun reviewing all such equipment and has
determined that many of its systems are Y2K compliant. The Company anticipates
that all system and software will be fully reviewed and brought into compliance
by November 1999. If certain systems are not brought up to Y2K compliance by the
end of November 1999, then the non-compliant technology will be disabled so as
not to have an impact on the systems that are compliant. Any such events would
not have a serious impact on the Company's day to day operations, nor would any
valuable information be lost. The Company backs up all computer systems daily to
protect against data loss.
The costs of bringing the Company's technology up to Y2K compliance is
expected to be less than $5,000. This is because the majority of the "patches"
or programs designed to make software Y2K compliant can be obtained over the
Internet from manufacturers for little or no cost and the Company does not
expect to rely heavily on outside consultants to upgrade its systems as most of
the work can be performed in-house.
Externally the Year 2000 problem may impact other entities with which
we transact business, and the Company cannot predict the effect of the Year 2000
problem on such entities on us. With regard to those companies that the Company
does business with on a daily basis, the Company cannot guarantee that they will
be vigilant about their Y2K plan of action.
In the event that the Company does experience Y2K problems, it could
result in a suspension of the Company's revenues. A suspension of revenues could
result in material losses from operations and a reduction of the Company's
working capital. Management is unable at this time to quantify the impact that
the Y2K problem could have on the Company's results of operations and financial
condition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
These financial projections contain figures relating to plans,
expectations, future results, performance, events or other matters that are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended. When used in the Plan of Operations, words such as
"estimate", "project", "intend", "expect", "anticipate" and similar expressions
are intended to identify forward-looking statements. Such forward looking
statements involve numerous risks and uncertainties, pertaining to technology,
development of the Company's products, and markets for such products, timing and
level of customer orders, competitive products and pricing, changes in economic
conditions and markets for the Company's products and other risks and
uncertainties. Actual results, performance and events are likely to differ and
may differ materially and adversely. Investors are cautioned not to place undue
reliance on these forward-looking statements which speak only as to the date of
the Plan of Operations. The Company undertakes no obligation to release or
deliver to investors revisions to these forward-looking statements to reflect
events or circumstances after the date of the Plan of Operations, the occurrence
of unanticipated events or other matters.
9
<PAGE>
A. PLAN OF OPERATIONS
The Company began operations in February 1999 for the purpose of
developing proprietary Internet software and related technologies to be deployed
by both the Company, as well as third-party Internet companies. The Company has
a limited operating history on which to evaluate its prospects. The risks,
expense, and difficulties encountered by startup companies must be considered
when evaluating the Company's prospects. The Company's plan of operations for
the next twelve months is to further develop its products while seeking
strategic alliances with media and Internet related companies in order to
demonstrate its technology to companies and consumers. The Company believes that
its existing funds in combination with funds raised in private offerings and the
revenues generated by its operations will be sufficient to fund its operations
for the next twelve months. However, there is no guarantee that the Company will
be able to raise sufficient capital. Additionally, the Company's estimates of
the costs to develop its products and to seek strategic alliances might be low.
The operating expenses of the Company cannot be predicted with certainty. They
will depend on several factors, including the amount of marketing expenses, the
acceptance of the Company's services in the market, and competition for such
services. Management may be able to control the timing of development expenses
in part by speeding up or slowing down marketing, development and distribution
activities.
The Company is currently is in the process of introducing its products
to the market. QuoteStream-TM- was introduced in May, 1999 and currently has in
excess of 50,000 subscribers, the beta version of the StockUp.com-TM-web site is
scheduled to be available in late August, 1999 and the Company anticipates that
the Interactive advertising agents will be available in October/November, 1999.
While the Company believes that it will comply with this schedule, there is no
assurance that it will comply with this schedule. If the Company is unsuccessful
in raising additional capital, the probability of it complying with this
schedule will be adversely effected. The Company does not anticipate a purchase
or sale of a plant or significant equipment and does not anticipate any
significant changes in the number of employees.
The Company's projected plan of operations for the calendar years 2000
and 2001 consist of the following key figures:
<TABLE>
<CAPTION>
Year 2000 Year 2001
<S> <C> <C>
- Aggregate Revenues $6,478493 $30,853,472
- Marketing Expenses (5,044,964) ( 6,798,115)
- Research and Development (5,074,630) ( 7,213,429)
- General and Administrative (3,102,780) ( 3,449,577)
Net Income (Loss) Before Taxes $(6,743,991) 13,392,351
</TABLE>
There is no assurance that the Company's actual operations will reflect
the above projections. Market conditions, competition, the ability to raise
capital and all other risks associated with the operation of a business could
adversely impact upon the Company achieving the above projections. This section
contains forward-looking statements that involve risks and uncertainties, such
as statements of the Company's plans, objectives, expectations and intentions.
The cautionary statements made in this document should be read as being
applicable to all related forward-looking statements wherever they appear in
this document.
10
<PAGE>
B. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of StockUp's
financial condition and results of operations. Detailed information is contained
in the financial statements included with this document. This section contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this document should be read as being applicable
to all related forward-looking statements wherever they appear in this document.
The following table sets forth, for the period indicated, selected financial
information for the Company:
STOCKUP.COM, INC.
SELECTED FINANCIAL DATA SCHEDULE
FROM INCEPTION TO APRIL 30, 1999
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Period from
February 2, 1999
(inception) to
April 30, 1999
<S> <C>
Selling, general and administrative expenses $ 1,881,458
Loss from operations (1,881,456)
Other income (expense)
Investment income 1,363
Forgiveness of debt 81,822
Financing expense (1,557,335)
TOTAL OTHER INCOME (EXPENSE) (1,474,150)
- ------------------------------------------------------------------------------------
Net Loss $(3,355,608)
------------
------------
Basic Loss per share $ (.54)
------------
------------
Diluted loss per share $ (.54)
------------
------------
Weighted average shares outstanding 6,220,395
------------
------------
</TABLE>
BALANCE SHEET
<TABLE>
<CAPTION>
Period from
February 2, 1999
(inception) to
April 30, 1999
<S> <C>
Assets
Current Assets $ 583,692
Notes receivable-employee 11,800
Subscriptions receivable 1,800,000
Prepaid services 1,156,253
PREPAID EXPENSES 36,540
--------------------------------------------------------------------------
Total Current Assets $3,588,285
Furniture and equipment, net 438,988
OTHER ASSETS 51,509
--------------------------------------------------------------------------
Total Assets $4,078,782
------------
------------
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Liabilities and Stockholder's Equity
Current Liabilities $ 172,860
Accounts payable and accrued expenses
--------------------------------------------------------------------------
Total current liabilities $ 172,860
Stockholder's equity
Common stock, $0.001 par value
50,000,000 shares authorized
6,324,52 shares issued and outstanding 6,325
Additional paid-in capital 7,255,205
Deficit accumulated during the development stage (3,355,608)
--------------------------------------------------------------------------
Total stockholder's equity $3,905,922
Total Liabilities and Stockholders' equity $4,078,782
------------
------------
</TABLE>
The Company is a development stage company and did not generate any
operating revenues from its inception on February 2, 1999 to April 30, 1999. The
Company is currently focusing its efforts on developing quality products and
establishing a large consumer base for these products. While there is no
assurance, the Company anticipates that by developing quality products and
establishing a consumer base, it will be in a position to receive revenues in
the future. The Company's predecessor, Courtleigh Capital, had no operations
accordingly there is no meaningful comparative data available for the year
ending April 1998.
From its inception to date, the Company has incurred costs associated
with the development and launch of its products, probable markets and business.
The Company has established relationships with information providers which
increase the quality and marketability of the Company's products. While there is
no assurance, management believes that the Company's products will commence
generating revenues during fourth quarter of 1999.
The Company financed its expenditures primarily through the sale of its
common stock. Since inception through August 1, 1999, the company issued
6,094,512 shares of common stock. It raised $2.9 million pursuant to certain
commitments it received in February, 1999 in exchange for the following: (i)
1,266,666 shares; and (ii) 300,000 warrants exercisable at $5.00 per share.
666,666 of these shares were issued as free-trading shares under Rule 504 of
Regulation D of the Act. 600,000 of these shares are currently restricted and
subject to a demand registration right as of January 1, 2000. The 600,000 shares
and the shares underlying the 300,000 warrants are subject to reasonable
underwriter trading restrictions in the event of a public offering. The
investors in the February, 1999 transaction are also entitled to anti-dilution
rights in the event the Company issues stock at less than $5.00 per share.
From inception through April 30, 1999 the Company's selling, general,
and administrative expenses were $1,881,458. In addition the Company incurred
financing expenses of $1,557,335. These expenses are partially offset by income
from investments in the amount of $1,363 and debt forgiveness in the amount of
$81,822, resulting in a net loss of $3,355,608.
As of April 30, 1999, the Company had current assets of $3,588,285 and
$490,497 in furniture, equipment and other assets, resulting in total assets of
$4,078,782. The Company's current liabilities were $172,860.
ITEM 3. DESCRIPTION OF PROPERTY
The main administrative offices of the Company are located at 333 N.
Rancho Drive, Suite 600, Las Vegas, Nevada 89106. The Company leases
approximately 14,100 square feet at this location, with an aggregate rental
payment of $22,646 per month. The Company's leases expire for 13,000 square feet
and 1100 square feet on March 31, 2003 and July 31, 2000 respectively. The lease
payments are scheduled to increase by approximately $400 on March 31st of each
year of the lease term.
12
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of July 14, 1999 by (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock, (ii) each director of the Company,
(iii) each executive officer of the Company, and (iv) all directors and
executive officers as a group. Unless otherwise indicated, the address for each
stockholder is 333 N. Rancho Drive, Suite 600, Las Vegas, NV 89106.
<TABLE>
<CAPTION>
PERCENTAGE
NAME NUMBER OF SHARES (1) BENEFICIALLY OWNED
- ---- -------------------- ------------------
<S> <C> <C>
Michael Calderone(2)(3) 3,950,300 62%
Kerry Nicponski(2) 35,000 0.55%
Leo Verheul(2) 0 0%
Steven Liebowitz(2) 0 0%
All officers and directors 3,985,300 62.63%
as a group (4 persons)
</TABLE>
- -----------------
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. Beneficial
ownership is determined in accordance with the rules of the Securities
and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to
options or warrants currently exercisable, or exercisable within 60
days, are deemed outstanding for purposes of computing the percentage
of the person holding such options or warrants, but are not deemed
outstanding for purposes of computing the percentage of any other
person.
(2) c/o Company's address: 333 N. Rancho Drive, Suite 600, Las Vegas, NV
89106.
(3) Includes 10,000 shares held in his name as guardian for his son, Gage
Calderone.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE OFFICE
-----------------------------------------------------------------------------------
<S> <C> <C>
Michael Calderone 39 Chief Executive Officer, Chairman of the Board
Kerry Nicponski 38 Chief Operating Officer, Director
Leo Verheul 54 Chief Information Officer, Director
Steven Liebowitz 34 Executive Vice President, Site Director, Director
</TABLE>
MR. MICHAEL CALDERONE - PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE
BOARD, has 17 years prior business experience. During that time he has
successfully managed two companies, Express Tel 900, which was a long distance
service for 800 and 900 lines and Access Media Network, a direct response
advertising agency. From 1995 to 1999, Mr. Calderone was the President of
Marketing Direct Concepts, Inc., a financial public relations firm. Mr.
Calderone has also consulted for several multi-million dollar ventures. Prior to
forming Marketing Direct Concepts, Mr. Calderone trained race horses.
13
<PAGE>
KERRY NICPONSKI - CHIEF OPERATING OFFICER AND DIRECTOR. Mr. Nicponski brings a
wealth of experience to StockUp.com-TM-, having previously served as an
independent contractor for a number of Southern Nevada corporations. During
1997-1998, Mr. Nicponski managed software development and MS SQL databases while
giving technical support to a telemarketing operation for a 500-member sales
team at NOS Communications. He also rewrote Visual Basic and Access programs
used daily to automate account information updates for Household Credit
Services. Mr. Nicponski also designed a SQL data warehouse that he integrated
with web applications for the credit company. Also during that time, Mr.
Nicponski served as Project Manager for Casino Management Systems at
International Thunderbird Gaming, programmed the dispatch system for a 100-filed
technician operation at United Coin Machine Company, and held the position of
Project Manager of Report Development for Fairbanks Capital Corporation. From
1994 to 1997, Mr. Nicponski worked for Gaming Systems International. He received
his BS in Business Administration/Computer Science at Southern Utah University.
Among his many other accomplishments, Mr.
Nicponski is a Captain in the United States Army Reserve.
MR. LEO VERHEUL - CHIEF INFORMATION OFFICER AND DIRECTOR, brings a wealth of
experience to his position as Chief Information Officer for the Company
Appointed in March 1997 by Governor Pete Wilson to the position of Chief
Information Officer and Deputy Director of the Information Systems Division of
the State of California, Department of Motor Vehicles, Mr. Verheul oversaw a
department with 450 employees, and a budget of more than $72 million. From May
1995 to March 1997 , he was CIO of Kaiser B. Hill, LLC, one of the largest
engineering, construction and consulting services companies in the United
States, located in Denver, Colorado and assumed the leadership role of all
statewide IT functions. As Director of Information Services at Porsche Cars
North America, from 1985 to 1990 , Mr. Verheul was responsible for the overall
management of all corporate IT systems as well as the U.S. Porsche dealer
network systems. Within two years, he replaced an outsourced telecommunications
function with an in-house developed system, which turned the MIS organization
from a cost center into a profit center. Porsche Computer Services sales grew to
$2 million during his tenure. Mr. Verheul attended the California State
University at Hayward and graduated with a BS in Business
Administration/Management Systems.
MR. STEVEN LIEBOWITZ - EXECUTIVE VICE PRESIDENT, SITE DIRECTOR AND DIRECTOR, is
lead manager of the Company's financial research and education web site,
www.stockup.com. Mr. Liebowitz brings to StockUp 15 years of management,
business, finance, and technologies experience with some of the country's top
corporations such as Salomon Brothers and Bear Stearns. An expert at providing
technical solutions for large corporations, Mr. Liebowitz served as Director of
Development for Zainet Software, L.P from July 1998 to January 1999. As Director
of Development, Mr. Liebowitz led the development of applications for trading
and risk management of power, energy, and foreign exchange products. That group
of products was fully integrated with a series of customized applications
requested by traders and other users of the system. Mr. Liebowitz designed and
implemented these major initiatives as well as established quality assurance
procedures during a period of sustained company growth. During the last two
years of his nine-year tenure with Salomon Brothers, from 1989 to May 1998, Mr.
Liebowitz managed every aspect of the global foreign exchange business as Vice
President, Global Business Unit Manager. Previously as Vice President, FX
Technology for Salomon Brothers he designed and implemented front and back
office distribution systems, replacing costly IBM mainframe and other
centralized legacy systems, resulting in an annual savings of approximately $15
million per year. Mr. Liebowitz studied applications programming from NYU.
ITEM 6. EXECUTIVE COMPENSATION.
The Company began operations in February 1999. Accordingly, no salary
or other benefits were awarded to any executive officers or directors prior to
that date. All information provided below is for the current fiscal year.
14
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
-------------------
Name and Principal Other Restricted All other
Position annual Stock Options LTIP Compen-
Year Salary Bonus Compen- Awards SARs Payouts sation
sation
- ------------------------ ------- ---------- ----------- ------------ ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael Calderone, 1999 $ 225,000 N/A N/A N/A 600,000(1) N/A N/A
Chief Executive
Officer, President
Kerry Nicponski, 1999 $ 65,000 N/A N/A N/A 70,000(2) N/A N/A
Chief Operating
Officer, Director of
Programming and
Software
Development
Leo Verheul, 1999 $ 60,000 N/A N/A N/A 25,000(3) N/A N/A
Chief Information
Officer
Steven Liebowitz, 1999 $ 70,000 N/A N/A N/A 85,000(4) N/A N/A
Executive Vice
President
- ------------------------ ------- ---------- ----------- ------------ ------------- ------------- ----------- ------------
</TABLE>
(1) These options were granted to Mr. Calderone on April 9, 1999. They
entitle Mr. Calderone to acquire 600,000 shares of common stock of the
Company at $8.50 per share and are exercisable on April 2, 2000 and
expire April 2, 2002. The options vest at a rate of 1/15th of the total
options per month.
(2) These options were granted to Mr. Nicponski on April 9, 1999. They
entitle Mr. Nicponski to acquire 70,000 shares of common stock of the
Company at $8.50 per share and are exercisable on April 2, 2000 and
expire April 2, 2002. The options vest at a rate of 1/15th of the total
options per month commencing on Mr. Nicponski's employment commencement
date.
(3) These options were granted to Leo Verheul on April 9, 1999. They
entitle Mr. Verheul to acquire 25,000 shares of common stock of the
Company at $8.50 per share and are exercisable on April 2, 2000 and
expire April 2, 2002. The options vest at a rate of 1/15th of the total
options per month commencing on Mr. Verheul's employment commencement
date.
(4) These options were granted to Mr. Liebowitz on April 9, 1999. They
entitle Mr. Liebowitz to acquire 85,000 shares of common stock of the
Company at $8.50 per share and are exercisable on April 2, 2000 and
expire April 2, 2002. The options vest at a rate of 1/15th of the total
options per month commencing on Mr. Liebowitz's employment commencement
date.
As the Company did not commence operations until February, 1999, the
Company did not grant any stock options in the last fiscal year.
15
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company approved the issuance of options to purchase common stock
of the Company to certain of its employees commencing on April 9, 1999. These
options took two forms: a Series A option and a Series B option.
A total of 78,000 Series A options were granted. The Series A options
grant their holders the right to purchase common stock of the Company at $8.50
per share. Each Series A option is exercisable on the later to occur of the two
following conditions: (i) the option holder has been employed full-time by the
Company for six months or (ii) April 2, 2000. The options vest over a 15 month
period of time, typically commencing upon the employee's employment commencement
date. The option terminates two years after it first becomes exercisable.
However, if the option holder is terminated for violating the Company's Employee
Manual, the option holder loses all rights in all vested and non-vested options.
If the option holder's employment with the Company is terminated for any other
reason, the holder retains all vested options but all non-vested options
immediately terminate. In addition, the non-vested options automatically
terminate if there is a change in control of the company. The options are not
assignable.
A total of 1,118,500 Series B options were granted. The Series B
options are substantially similar to the Series A options with the following
differences: (i) in the event there is a change in control of the Company all
options immediately vest; (ii) the option holder agrees not to work for any
company developing second-generation Internet technology-TM- for six months
following any termination of employment with the Company; and (iii) Michael
Calderone's options are assignable for the express purpose of attracting key
management personnel to work for the Company.
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES.
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of Common Stock, with a par value of $.001 per share, of which
6,363,179 shares are currently outstanding.
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of common stock
have no cumulative voting rights. Accordingly, the holders of in excess of 50%
of the aggregate number of shares of Common Stock outstanding will be able to
elect all of the directors of the Company and to approve or disapprove any other
matter submitted to a vote of all shareholders.
Holders of shares of common stock are entitled to share ratably in
dividends, if any, as may be declared, from time to time, by the Board of
Directors in its discretion, from funds legally available therefor. The Company
does not currently anticipate paying any dividends on its Common Stock. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
shares of common stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities. Holders of common stock have no preemptive
rights to purchase the Company's common stock. There are no conversion rights or
redemption or sinking fund provisions with respect to the common stock. All of
the outstanding shares of common stock are fully paid and non-assessable.
Shares of Common Stock are registered at the transfer agent and are
transferable at such office by the registered holder (or duly authorized
attorney) upon surrender of the Common Stock certificate, properly endorsed. No
transfer shall be registered unless the Company is satisfied that such transfer
will not result in a violation of any applicable federal or state securities
laws. The Company's transfer agent is Securities Transfer Corporation, whose
address is 16910 Dallas Parkway, Suite 100, Dallas, TX 75248.
16
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS' COMMON
EQUITY AND OTHER STOCKHOLDERS MATTERS
A. MARKET INFORMATION
The Company's common stock traded in the over-the-counter bulletin
board market from December 15, 1999 through trading symbol 22, 1999 under the
symbol CTLH. On February 2, 1999 the Company changed its name to StockUp.com-TM-
and on February 22, 1999 commenced trading under the symbol SKUP.
The following table sets forth the high and low bid prices for the
Company's common stock since its inception. The prices below also reflect
inter-dealer quotations, without retail mark-up, mark-down or commissions and
may not represent actual transactions:
<TABLE>
<CAPTION>
Low High
Quarter ended Bid Bid
---------------------------------------------
<S> <C> <C>
12/31/98 3 3
3/31/99 10 10
6/30/99 13.5 16
</TABLE>
On February 22, 1999, there was a 1:13 reverse stock split. As of
August 2, 1999 the bid price of the Company's common shares was $18.9375 per
share.
B. HOLDERS
As of July 14, 1999, there were approximately 256 holders of Company
Common Stock, as reported by the Company's transfer agent.
C. DIVIDENDS
The Company has not paid any dividends on its Common Stock. The Company
currently intends to retain any earnings for use in its business, and therefore
does not anticipate paying cash dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings or claims.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Effective December 31, 1998 the Company issued 4,500,000 shares of
common stock to Marketing Direct Concepts, Inc., a Nevada corporation in
exchange for certain assets of Marketing Direct Concepts. The Company relied on
an exemption available under Section 3(a)(11) of the Act. Marketing Direct
Concepts was a sophisticated investor which acquired information about the
Company in its due diligence investigation in connection with the sale of
assets.
Since inception through August 1, 1999, the company issued 6,094,512
shares of common stock. It raised $2.9 million pursuant to certain commitments
it received in February, 1999 in exchange for the following: (i) 1,266,666
17
<PAGE>
shares; and (ii) 300,000 warrants exercisable at $5.00 per share. 666,666 of
these shares were issued as free-trading shares under Rule 504 of Regulation D
of the Act. 600,000 of these shares are currently restricted and subject to a
demand registration right as of January 1, 2000. The 600,000 shares and the
shares underlying the 300,000 warrants are subject to reasonable trading
restrictions in the event the Company files a registration statement . The
investors in the February, 1999 transaction are also entitled to anti-dilution
rights in the event the Company issues stock at less than $5.00 per share.
As of June 21, 1999 the Company is offering up to 1,000,000 shares of
its Common Stock at $12.00 per share to accredited investors and up to 35
non-accredited investors in reliance upon the Section 4(2) exemption The minimum
amount of the offering is $600,000 or 50,000 shares. The funds of this offering
are held in escrow pending the acquisition of the minimum offering or August 15,
1999, subject to extension by the Company, whereafter if the minimum offering
has been achieved, the funds will be released to the Company. The Company is
obligated to register the shares issued in its June 21, 1999 offering in any
subsequent registration statement filed with the Securities and Exchange
Commission, subject to an underwriter's trading lock-up which shall not exceed
180 days. Should the minimum offering not be achieved by August 15, 1999, and
should the minimum offering date not be extended, the funds will be returned to
the investors.
ITEM 12. INDEMNIFICATIONS OF DIRECTORS AND OFFICERS.
The Nevada Revised Statutes and the Company's Articles of Incorporation
and Bylaws authorize indemnification of a director, officer, employee or agent
of the Company against expenses incurred by him or her in connection with any
action, suit, or proceeding to which such person is named a party by reason of
having acted or served in such capacity, except for liabilities arising from
such person's own misconduct or negligence in performance of duty. In addition,
even a director, officer, employee or agent of the Company who was found liable
for misconduct or negligence in the performance of duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
PART F/S
FINANCIAL STATEMENTS
The following financial statements are included herein:
Audited Financial Statements from inception through April 30, 1999.
18
<PAGE>
PART III
ITEM 1 AND
ITEM 2. INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Document Description
<S> <C>
2.1 Plan and Agreement of Merger
3.1 Articles of Incorporation, dated February 18, 1999
3.2 Bylaws, dated March 1, 1999
4.1 Specimen of Common Stock Certificate
4.2 Form of Series A Option Agreement and Certificate
4.3 Form of Series B Option Agreement and Certificate
4.4 Form of Vesting Agreement
10.1 Lease, dated February 5, 1999
10.2 Sublease, dated May 15, 1999
10.3 Agreement with Travis Morgan Securities, Inc.
10.4 Asset Purchase Agreement
10.5 Employment Memorandum for Michael Calderone
</TABLE>
19
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
STOCKUP.COM, INC.
By: Michael Calderone
----------------------------------
Michael Calderone
Its: President
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Michael Calderone President August 9, 1999
- --------------------------
Michael Calderone
/s/ Kerry Nicponski Chief Operating Officer, Director August 9, 1999
- --------------------------
Kerry Nicponski
/s/ Leo Verheul Chief Information Officer, Director August 9, 1999
- --------------------------
Leo Verheul
/s/ Steven Liebowitz Executive Vice President, August 9, 1999
- -------------------------- Site Director, Director
Steven Liebowitz
</TABLE>
20
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-8
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
StockUp.com, Inc.
We have audited the accompanying balance sheet of StockUp.com, Inc. (a
development stage company) as of April 30, 1999, and the related statements of
operations, stockholders' equity and cash flows for the period from February 3,
1999 (inception) to April 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 StockUp.com, Inc. as of
April 30, 1999, and the results of its operations and its cash flows for the
period from February 3, 1999 (inception) to April 30, 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 incurred a net loss of $3,355,608 during the
period from February 3, 1999 (inception) to April 30, 1999, and it had negative
cash flows from operations of $496,986. These factors, among others, as
discussed in Note 2 to the financial statements, raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to 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.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
June 4, 1999
F-2
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
APRIL 30, 1999
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 583,692
Notes receivable - employee 11,800
Subscriptions receivable 1,800,000
Prepaid services 1,156,253
Prepaid expenses 36,540
-----------
Total current assets 3,588,285
FURNITURE AND EQUIPMENT, net 438,988
OTHER ASSETS 51,509
-----------
TOTAL ASSETS $ 4,078,782
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 172,860
-----------
Total current liabilities 172,860
-----------
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value
50,000,000 shares authorized
6,324,512 shares issued and outstanding 6,325
Additional paid-in capital 7,255,205
Deficit accumulated during the development stage (3,355,608)
-----------
Total stockholders' equity 3,905,922
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,078,782
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 3, 1999 (INCEPTION) TO APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES $ 1,881,458
-------------
LOSS FROM OPERATIONS (1,881,458)
-------------
OTHER INCOME (EXPENSE)
Investment income 1,363
Forgiveness of debt 81,822
Financing expense (1,557,335)
-------------
Total other income (expense) (1,474,150)
-------------
NET LOSS (3,355,608)
-------------
-------------
BASIC LOSS PER SHARE (0.54)
-------------
-------------
DILUTED LOSS PER SHARE $ (0.54)
-------------
-------------
WEIGHTED-AVERAGE SHARES OUTSTANDING 6,220,395
-------------
-------------
</TABLE>
F-4
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM FEBRUARY 3, 1999 (INCEPTION) TO APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
--------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 3,
1999 (INCEPTION) -- $ -- $ -- $ -- $ --
INITIAL CAPITALIZATION 232,846 233 (233)
SHARES ISSUED IN
MERGER 4,500,000 4,500 363,678 368,178
ISSUANCE OF COMMON
STOCK IN PRIVATE
PLACEMENT 1,266,666 1,267 3,198,733 3,200,000
OFFERING COSTS (300,000) (300,000)
ISSUANCE OF COMMON
STOCK FOR LEGAL
SERVICES 250,000 250 2,031,001 2,031,251
ISSUANCE OF BELOW-
MARKET
stock options 864,335 864,335
warrants 693,000 693,000
ISSUANCE OF BELOW-
MARKET STOCK OPTIONS
TO EMPLOYEES 312,766 312,766
ISSUANCE OF COMMON
STOCK FOR CASH 75,000 75 91,925 92,000
NET LOSS (3,355,608) (3,355,608)
----------- ----------- ----------- ----------- -----------
BALANCE, APRIL 30, 1999 6,324,512 $ 6,325 $7,255,205 $(3,355,608) $ 3,905,922
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying Notes are an integral part of these financial statements.
F-5
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 3, 1999 (INCEPTION) TO APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(3,355,608)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 40,512
Common stock issued for services 2,031,251
Financing expense recognized for issuing below-market warrants 693,000
Financing expense recognized for issuing below-market stock
options 864,335
Compensation expense recognized for issuing below-market
stock options 312,766
(Increase) decrease in
Notes receivable - employee (11,800)
Prepaid expenses (36,540)
Prepaid services (1,156,253)
Other assets (51,509)
Increase in
Accounts payable and accrued expenses 172,860
-----------
Net cash used in operating activities (496,986)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment (111,322)
-----------
Net cash used in investing activities (111,322)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 92,000
Proceeds from private placement of common stock 1,214,000
Offering costs (114,000)
-----------
Net cash provided by financing activities 1,192,000
-----------
Net increase in cash and cash equivalents 583,692
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR -
-----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 583,692
-----------
-----------
</TABLE>
SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION
During the period from February 3, 1999 (inception) to April 30, 1999, the
Company paid no income taxes or interest.
The accompanying Notes are an integral part of these financial statements.
F-6
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD FROM FEBRUARY 3, 1999 (INCEPTION) TO APRIL 30, 1999
- --------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the period from February 3, 1999 (inception) to April 30, 1999, the
Company acquired furniture and equipment valued at $368,178 in exchange for
4,500,000 shares of the Company's common stock. The equipment is recorded as
furniture and equipment on the accompanying balance sheet.
The Company issued 1,266,666 shares of common stock in a private placement for a
total consideration of $2,900,000, net of offering costs. $1,100,000 was
collected prior to April 30, 1999, leaving a subscription receivable of
$1,800,000, which was collected subsequent to April 30, 1999.
The accompanying Notes are an integral part of these financial statements.
F-7
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF BUSINESS
StockUp.com, Inc. (the "Company") was incorporated in Nevada on
February 18, 1999 and is developing second-generation Internet
technology(TM) products that will be licensed to other websites and
distributed to end users. The Company's products offer the end user
increased levels of customization and interactivity. Websites deploying
the technology will benefit from increased traffic, enhanced user
retention, and the ability to build targeted aggregate marketing
profiles of users.
Courtleigh Capital, Inc. ("Courtleigh"), a Kansas corporation and a
publicly traded corporation, was first incorporated under the name
ANCR, Inc. on July 30, 1985 under the laws of the State of Colorado.
ANCR, Inc. became an inactive shell corporation, and on July 23, 1997
changed its name to CEA Lab, Inc. Furthermore, on October 16, 1995, CEA
Lab, Inc. reincorporated in the State of Kansas and subsequently
changed its name to Courtleigh Capital, Inc. In February 1999,
Courtleigh subsequently changed its name to StockUp.com, Inc. and
reincorporated in the State of Nevada.
On December 30, 1998, Marketing Direct Concepts, Inc. ("MDC"), a Nevada
corporation, entered into an Asset Purchase and Escrow Agreement,
whereby it sold assets and liabilities, valued at $368,178, to the
Company in exchange for 4,500,000 shares of Courtleigh's common stock.
Courtleigh had minimal assets and liabilities at the date of the
acquisition and did not have operations prior to the acquisition.
Therefore, no pro forma information is presented.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. However, during the
period from February 3, 1999 (inception) to April 30, 1999, the Company
incurred a net loss of $3,355,608, and it has negative cash flows from
operations of $496,986. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
F-8
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION (Continued)
Recovery of the Company's assets is dependent upon future events, the
outcome of which is indeterminable. Successful completion of the
Company's development program and its transition to the attainment of
profitable operations is dependent upon the Company achieving a level
of sales adequate to support the Company's cost structure. In addition,
realization of a major portion of the assets in the accompanying
balance sheet is dependent upon the Company's ability to meet its
financing requirements and the success of its plans to sell products.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts
and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
In addition to the capital raised as of April 30, 1999 through private
equity offerings, the Company is currently negotiating with certain
investors about raising additional capital through private placement
offerings. Unless the Company raises additional funds, either by debt
or equity issuances, management believes that its current cash on hand
will be insufficient to cover its working capital needs until the
Company's sales volume reaches a sufficient level to cover operating
expenses.
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 disclosures of contingent assets and liabilities at the
date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, the Company considers
all highly-liquid investments purchased with original maturities of
three months or less to be cash equivalents.
DEVELOPMENT STAGE ENTERPRISE
The Company is a development stage company as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7, "Accounting and
Reporting by Development Stage Enterprises." The Company is devoting
substantially all of its present efforts to establish a new business,
and its planned principal operations have not yet commenced. All losses
accumulated since inception have been considered as part of the
Company's development stage activities.
F-9
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING
The Company expenses advertising costs as incurred. Advertising costs
for the period from February 3, 1999 (inception) to April 30, 1999 were
$60,029.
FURNITURE AND EQUIPMENT
Furniture and equipment are recorded at cost. Depreciation and
amortization are provided using the straight-line method over estimated
useful lives as follows:
Furniture and equipment 7 years
Computer hardware and software 3 years
Leasehold Improvements 10 months (lease term)
Maintenance and minor replacements are charged to expense as incurred.
Leasehold improvements are amortized over the lease period or the
useful life of the asset, whichever is shorter.
INCOME TAXES
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in
the financial statements or tax returns. Under this method, deferred
income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax
laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized. The provision for income taxes
represents the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
NET LOSS PER SHARE
For the period from February 3, 1999 (inception) to April 30, 1999, the
Company adopted SFAS No. 128, "Earnings per Share." Basic loss per
share is computed by dividing loss available to common stockholders by
the weighted-average number of common shares outstanding. Diluted loss
per share is computed similar to basic loss per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive. For
the period from February 3, 1999 (inception) to April 30, 1999, the
Company incurred a net loss; therefore, basic and diluted loss per
share are the same.
F-10
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK SPLIT
On February 22, 1999, the Company effected a one-for-13 reverse stock
split of its common stock. All share and per share data have been
retroactively restated to reflect this stock split.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of the
Company's financial instruments, including cash and cash equivalents,
notes receivable - employee, and accounts payable and accrued expenses,
the carrying amounts approximate fair value due to their short
maturities.
CONCENTRATIONS OF CREDIT RISK
The financial instrument which potentially subjects the Company to
concentrations of credit risk is cash. The Company places its cash with
high quality financial institutions, and at times it may exceed the
Federal Deposit Insurance Corporation $100,000 insurance limit. As of
April 30, 1999, uninsured portions held at the financial institutions
aggregated to $650,446.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 132, "Employers' Disclosures about Pensions and Other
Post-Retirement Benefits." The Company does not expect adoption of SFAS
No. 132 to have a material impact, if any, on its financial position or
results of operations.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," is effective for financial statements with fiscal years
beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. The Company does not expect adoption of SFAS No. 133 to
have a material effect, if any, on its financial position or results of
operations.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking Enterprise," is effective for financial statements with the
first fiscal quarter beginning after December 15, 1998. The Company
does not expect adoption of SFAS No. 134 to have a material effect, if
any, on its financial position or results of operations.
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections," is effective for financial statements with fiscal years
beginning February 1999. This statement is not applicable to the
Company.
F-11
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPREHENSIVE INCOME
For the period from February 3, 1999 (inception) to April 30, 1999, the
Company adopted SFAS No. 130, "Reporting Comprehensive Income." This
statement establishes standards for reporting comprehensive income and
its components in a financial statement. Comprehensive income as
defined includes all changes in equity (net assets) during a period
from non-owner sources. Examples of items to be included in
comprehensive income, which are excluded from net income, include
foreign currency translation adjustments and unrealized gains and
losses on available-for-sale securities. Comprehensive income is not
presented in the Company's financials statements since the Company did
not have any of the items of comprehensive income in the period
presented.
NOTE 3 - FURNITURE AND EQUIPMENT
Furniture and equipment at April 30, 1999 consisted of the following:
<TABLE>
<S> <C>
Furniture and equipment $ 86,227
Computer hardware and software 371,765
Leasehold improvements 21,508
--------
479,500
Less accumulated depreciation and amortization 40,512
--------
TOTAL $438,988
--------
--------
</TABLE>
Depreciation and amortization expense for the period from February 3,
1999 (inception) to April 30, 1999 was $40,512.
NOTE 4 - COMMITMENTS
LEASES
The Company leases certain facilities for its corporate and operations
offices under long-term, non-cancelable operating lease agreements that
expire through March 31, 2003.
F-12
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 4 - COMMITMENTS (CONTINUED)
LEASES (Continued)
Future minimum aggregate lease payments under non-cancelable operating
leases with initial terms of one year or more at April 30, 1999 were as
follows:
YEARS ENDING
APRIL 30,
2000 $ 223,000
2001 170,000
2002 170,000
2003 160,000
----------------
TOTAL $ 723,000
----------------
----------------
Rent expense for the period from February 3, 1999 (inception) to
April 30, 1999 was $32,206.
EMPLOYMENT AGREEMENT
During the period from February 3, 1999 (inception) to April 30, 1999,
the Company entered into a new employment agreement with a key officer
of the Company. This officer will receive an annual salary of $225,000,
a monthly personal allowance of $3,000, and all automobile expenses
paid.
NOTE 5 - STOCKHOLDERS' EQUITY
COMMON STOCK
In December 1998, the Company entered into an agreement with MDC to
purchase certain assets in exchange for 4,500,000 shares of common
stock.
In February 1999, the Company entered into an agreement to issue an
aggregate of 250,000 shares of common stock for legal services rendered
or to be rendered. The shares were to be issued according to three
stages of completion. In connection with the issuance of the common
stock, the Company recorded $874,998 of legal expenses and $1,156,253
as a prepaid asset in the accompanying balance sheet.
F-13
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 5 - STOCKHOLDERS' EQUITY (CONTINUED)
PRIVATE PLACEMENT
In February 1999, the Company entered into a subscription agreement to
offer up to $900,000 worth of shares of common stock for 666,666 shares
and $2,300,000 worth of units to accredited investors. Each unit was
comprised of one share of the Company's common stock (or 600,000
shares) and 0.5 warrant at an exercise price of $5.00 per share. The
warrants are deemed granted below market value, for which an expense of
$693,000 has been recorded. The warrants may be exercised, commencing
upon the date the Company closes a public offering of its stock
pursuant to a Registration Statement registering the shares underlying
the warrants and terminating 30 days thereafter. The warrant holders
have the right to demand registration of the shares if such shares have
not been registered by January 1, 2000. In addition, the warrants are
callable at the option of the Company on and after the date that (i)
the shares underlying the warrants are registered and (ii) the
Company's common stock is traded on any exchange, at a Market Price, as
defined below, equal to or exceeding $20 per share for 10 consecutive
trading days. The Market Price shall be the closing bid price of the
common stock.
A total offering of $2,900,000, net of offering costs, was completed,
of which $1,100,000, net of offering costs, was collected prior to
April 30, 1999, leaving a subscription receivable of $1,800,000, which
was collected subsequent to April 30, 1999.
Stock options were granted in connection with the private placement,
granting an aggregate of 145,418 shares at exercise prices of $50,000
and $75,000. The options were granted below market, for which an
expense of $864,335 has been recorded.
STOCK OPTION PLAN
The Company's Board of Directors adopted the Option Agreement and
Certificate (the "Agreement") in order to issue options to purchase
common stock of the Company to certain employees, commencing on April
9, 1999. These options took two forms: a Series A option and a Series B
option.
F-14
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 5 - STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLAN (Continued)
The Series A options grant their holders the right to purchase common
stock of the Company at $8.50 per share. Each Series A option is
exercisable on the latter of the following: (i) the option holder has
been employed full-time by the Company for six months or (ii) April 2,
2000. Once the option is exercisable, one-fifteenth of the shares
granted by the option become exercisable each month. The option
terminates two years after it first becomes exercisable or within three
years from the date of issuance. However, if the option holder is
terminated for violating the Company's employee manual, the option
holder loses all rights in all vested and non-vested options. If the
option holder's employment with the Company is terminated for any other
reason, the holder retains all vested options, but all non-vested
options immediately terminate. In addition, the non-vested options
automatically terminate if there is a change in control of the Company.
In addition, the options are not assignable.
The Series B options are substantially similar to the Series A options
with the following differences: (i) the option holder does not lose all
rights in vested and non-vested options if his or her employment is
terminated for violating the Company's employee manual; (ii) the option
holder agrees not to work for any company developing Internet
technology for six months following any termination of employment with
the Company; and (iii) the key officer's options are assignable for the
express purpose of attracting key management personnel to work for the
Company.
Per SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company should incur additional compensation cost for the excess of the
fair value of the modified options issued over the value of the
original options at the date of the exchange. The Company thus added
that incremental amount to the remaining unrecognized compensation cost
for the original options at the April 30, 1999 pro forma disclosure and
recognized the total amount over the remaining years of the remaining
life of the options. The remaining expected life of the options is 2.92
years at April 30, 1999.
F-15
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 5 - STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLAN (Continued)
The Company has adopted only the disclosure provisions of SFAS No. 123.
It applies Accounting Principles Bulletin ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations
in accounting for its plans and does not recognize compensation expense
for its stock-based compensation plans other than for restricted stock
and options/warrants issued to outside third parties. If the Company
had elected to recognize compensation expense based upon the fair value
at the grant date for awards under its plan consistent with the
methodology prescribed by SFAS No. 123, the Company's net loss and loss
per share would be reduced to the pro forma amounts indicated below for
the period from February 3, 1999 (inception) to April 30, 1999:
<TABLE>
<S> <C>
Net loss
As reported $ (3,355,608)
Pro forma $ (6,790,693)
Basic loss per common share
As reported $ (0.54)
Pro forma $ (1.09)
</TABLE>
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense
related to grants made before 1995. The fair value of these options was
estimated at the date of grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions for the period
from February 3, 1999 (inception) to April 30, 1999: dividend yield of
0%; expected volatility of 100%; risk-free interest rate of 5.2%; and
expected life of three years. The weighted-average fair value of
options granted during the period from February 3, 1999 (inception) to
April 30, 1999 for which the exercise price was less than the Market
Price at the grant date was $5.87.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion,
the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
F-16
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 5 - STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLAN (Continued)
The following summarizes the stock option transactions under the stock
option plan:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
STOCK OPTIONS EXERCISE
OUTSTANDING PRICE
------------- ----------
<S> <C> <C>
Balance, February 3, 1999 (inception) - $ -
Granted 1,178,000 $ 8.50
-----------
OUTSTANDING, APRIL 30, 1999 1,178,000 $ 8.50
-----------
-----------
EXERCISABLE, APRIL 30, 1999 - $ -
-----------
-----------
</TABLE>
The weighted-average remaining contractual life of the options
outstanding is 2.92 years at April 30, 1999.
During the period from February 3, 1999 (inception) to April 30, 1999,
the Company issued 1,178,000 stock options to employees when the
exercise price was less than the fair value of the Company's stock at
the date of the grant. The Company incurred compensation expense of
$589,000, of which $312,766 is recorded as of April 30, 1999, and the
remainder will be expensed according to the vesting period of the
options.
NOTE 6 - INCOME TAXES
As of April 30, 1999, the Company had approximately $3,355,608 in net
operating loss carryforwards that may be offset against future taxable
income. No provision for income taxes for the period from February 3,
1999 (inception) to April 30, 1999 has been made, except for minimum
state taxes, since the Company incurred a loss during the period. The
deferred income tax benefit of the loss carryforward is the only
significant deferred income tax asset or liability of the Company. It
has been offset by a valuation allowance of the same amount since
management does not believe the recoverability of this deferred tax
asset is more likely than not. Accordingly, no deferred income tax
benefit has been recognized in these financial statements.
NOTE 7 - YEAR 2000 ISSUE
The Company has conducted a comprehensive review of its computer
systems to identify the systems that could be affected by the Year 2000
Issue.
F-17
<PAGE>
STOCKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
NOTE 7 - YEAR 2000 ISSUE (CONTINUED)
The Issue is whether computer systems will properly recognize
date-sensitive information when the year changes to 2000. Systems that
do not properly recognize such information could generate erroneous
data or cause a system to fail. The Company is dependent on computer
processing in the conduct of its business activities.
Based on the comprehensive review of the computer systems, management
has determined that the Company's computer systems will not be
materially affected and does not believe the cost of implementation
will be material to the Company's financial position and results of
operations.
Externally, the Year 2000 Issue may impact other entities with which
the Company transacts business. The Company cannot predict the effect
of the Year 2000 Issue on such entities, nor their effect on the
Company. With regard to those companies that the Company does business
with on a daily basis, the Company cannot guarantee that they will be
vigilant about their Year 2000 Issue plan of action.
In the event that the Company does experience Year 2000 Issue problems,
it could result in a suspension of the Company's revenues. A suspension
of revenues could result in material losses from operations and a
reduction of the Company's working capital. Management is unable at
this time to quantify the impact that the Year 2000 Issue could have on
the Company's results of operations and financial condition.
F-18
<PAGE>
EXHIBIT 2.1
ARTICLES AND PLAN OF MERGER
<PAGE>
ARTICLES AND PLAN OF MERGER
This Plan of Merger is made as of February 25, 1999, between
StockUp.com, Inc., formally Courtleigh Capital, Inc., a Kansas corporation, 304
Courtleigh Street, Wichita, Kansas 67218 (the "Disappearing Corporation") and
StockUp.com, Inc., a Nevada corporation, 333 North Rancho Drive, Suite 900, Las
Vegas, Nevada 89106 (the "Surviving Corporation"). (The corporations together
are sometimes referred to below as the "Constituent Corporations.")
The Constituent Corporations agree as follows:
1. SURVIVING CORPORATION is duly organized, existing and in good
standing under the laws of the State of Nevada. It has 50,000,000 shares of
authorized capital stock at a par value of $.001, 6,351,179 shares are issued
and outstanding. The undersigned certifies that he is the President and
Secretary of Surviving Corporation.
2. DISAPPEARING CORPORATION is duly organized, existing and in good
standing under the laws of the State of Kansas. The authorized capitalization of
the Disappearing entity consists of 300,000,000 Common shares, no par value.
5,727,000 shares of common stock are issued and outstanding. The undersigned
certifies that he is the President and Secretary of the Disappearing
Corporation.
3. THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE CONSTITUENT
CORPORATIONS deem it in the best interests of the corporations and their
shareholders that Disappearing Corporation be merged with Surviving Corporation
in accordance with Kansas Revised Statutes Section 17-6702 and Nevada Revised
Statutes Section 92A.200. The Boards hereby adopt on behalf of their
corporations the plan of reorganization set forth in this Plan of Merger. The
majority Shareholders of both disappearing and surviving corporations approve
this merger.
4. MERGER: Disappearing Corporation shall be merged with Surviving
Corporation, which shall survive the merger. Disappearing Corporation's separate
existence shall cease on the effective date of the merger. Without any other
transfer or documentation, on the effective date of the merger, Successor
Corporation shall (i) succeed to all of Disappearing Corporation's rights and
property; and (ii) be subject to all Disappearing Corporation's liabilities and
obligations. All merger documents shall be kept at the Surviving Corporation's
headquarters and copies of same will be available to any shareholder of the
Constituent Corporation.
Notwithstanding the above, after the effective date the Surviving
Corporation's proper officers and directors may perform any acts necessary or
desirable to vest or confirm Surviving Corporation's possession of and title to
any property or rights of Disappearing Corporation; or otherwise carry out this
Agreement's purposes. This includes execution and delivery of deeds, assurances,
assignments or other instruments.
5. CONVERSION OF SHARES: By virtue of the merger and without any action
by any shareholder, upon the effective date the Surviving Corporation shall
effect a forward split of its issued and outstanding common stock, whereby one
(1) share of common stock shall be exchanged for every one (1) common share then
issued and outstanding, in order to establish the number of common shares of the
Surviving Corporation issued and outstanding at 230,000, 200,000 of which are
free trading.
Any Disappearing Corporation shareholder entitled to .50 or more of a
share of Surviving Corporation's parent stock shall receive the next higher
number of whole shares; and any such shareholder entitled to less than .50 of a
share of Surviving Corporation's parent stock shall receive the next lower
number of shares.
The shares of Surviving Corporation outstanding immediately prior to
the merger shall not be changed by reason of the merger.
6. STOCK CERTIFICATES: On or after the effective date, all of the
Disappearing Corporation's outstanding stock certificates shall be deemed to
represent ownership of Surviving Corporation's parent's shares, into which
Disappearing Corporation's shares have been converted (as provided above). The
holders of such certificates must
1
<PAGE>
surrender them to the Surviving Corporation in whatever manner it may legally
require. On receipt thereof, Surviving Corporation's parent shall issue and
exchange certificates for shares of its common stock representing the number of
shares to which the holder is entitled as provided above.
Pending the surrender and exchange of certificates, the registered
owner on Disappearing Corporation's books of any outstanding stock certificate
shall be entitled to exercise all voting and other rights with respect to the
shares of Surviving Corporation's parent represented by the certificates, as
provided above.
7. CHANGE IN ARTICLES OF INCORPORATION AND BYLAWS: Surviving
Corporation's Articles of Incorporation as amended and in effect on the
effective date shall continue to be its Articles of Incorporation without
changes as a result of the merger.
Surviving Corporation's Bylaws, as amended and in effect on the
effective date shall continue to be its Bylaws without change as a result of the
merger.
8. OFFICERS AND DIRECTORS: Surviving Corporation's directors shall,
upon the effective date of the merger, be Steve Liebowitz, Kerry Nicponski, Leo
Verheul and Michael D. Calderone, and the Surviving Corporation's officers shall
be Michael D. Calderone, President, Chief Financial Officer, and Secretary;
Kerry Nicponski, Chief Operating Officer; Leo Verheul, Chief Information Officer
and Steve Liebowitz, Executive Vice President. The above officers and directors
shall have, for the full unexpired terms of their respective offices, or until
their successors have been duly elected or appointed and qualified.
9. EFFECTIVE DATE. Provided this Agreement is not abandoned, the
effective date of merger shall be at the close of business on the date when the
Articles of Merger are filed with the Kansas Secretary of State in accordance
with Kansas Revised Statutes Section 17-6702 and the Nevada Secretary of State
in accordance with Nevada Revised Statutes Section 92A.200.
10. ABANDONMENT OF MERGER: Any time prior to the effective date, this
merger may be abandoned without further obligation or liability by action of the
board of directors of either of the Constituent Corporations, notwithstanding
approval by the merger by their shareholders.
11. COUNTERPARTS: This Plan of Merger may be executed in any number of
counterparts, each of which shall constitute an original instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their respective duly authorized officers, as of the date first written above.
StockUp.com, Inc., formally Courtleigh
Capital, Inc., a Kansas corporation,
as Disappearing Corporation
By /s/ Michael A. Calderone
---------------------------------
Michael A. Calderone
Its: President and Secretary
StockUp.com, Inc., a Nevada
corporation, as Surviving Corporation
By: /s/ Michael A. Calderone
---------------------------------
Michael A. Calderone
Its: President and Secretary
2
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
DATED FEBRUARY 18, 1999
<PAGE>
ARTICLES OF INCORPORATION
OF
STOCKUP.COM CORPORATION
FIRST. The name of this corporation is STOCKUP.COM CORPORATION.
SECOND. Its resident agent and registered office in the State of Nevada
are as follows: 333 N. Rancho, Suite 900, Las Vegas, Nevada, 89106.
THIRD. The total number of shares which the corporation is authorized
to issue is Fifty Million (50,000,000) shares of common stock with a par value
of $.001 per share.
FOURTH. The governing body of this corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the bylaws of the corporation.
The names and addresses of the first board of directors, which shall
consist of one director, is as follows:
Michael Calderone
333 N. Rancho, Suite 900
Las Vegas, Nevada 89106
FIFTH. The name and address of the incorporator signing the Articles of
Incorporation are as follows:
Michael Calderone
333 N. Rancho, Suite 900
Las Vegas, Nevada 89106
SIXTH. At all elections of directors of the corporation, each holder of
stock possessing voting power is entitled to as many votes as equal the number
of shares multiplied by the number of directors to be elected, and he may cast
all of his votes for a single director or may distribute them among the number
to be voted for or any two or more of them, as he may see fit.
SEVENTH. No director or officer of the corporation shall be personally
liable to the corporation 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 or officer; provided, however, that the foregoing provision shall
not eliminate or limit the liability of a director or officer (i) for acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law, or (ii) the payment of dividends in violation of Section 78.300 of the
Nevada Revised Statues. Any repeal or modification of this Article by the
stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director or
officer of the corporation for acts or omissions prior to such repeal or
modification.
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 Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set my hand this 1st day of February, 1999.
/s/ Michael Calderone
-------------------------------------
Michael Calderone, Incorporator
<PAGE>
STATE OF NEVADA )
) SS.
COUNTY OF CLARK )
On this 2nd day of February, 1999, before me, the undersigned Notary
Public, personally appeared Michael Calderone, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within Instrument and acknowledged to me that he executed the
same in her authorized capacity, and that by her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal. /s/ Jennifer Watts
-----------------------------
Notary Public
Notary Seal
<PAGE>
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
The undersigned, Michael Calderone, hereby accepts the appointment as
Resident Agent of the above named corporation.
Resident Agent
Dated: February 16, 1999 By: /s/ Michael Calderone
-------------------------
Michael Calderone
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(BEFORE ISSUANCE OF STOCK AND PAYMENT OF CAPITAL)
OF
STOCKUP.COM CORPORATION
The sole incorporator of Stockup.Com Corporation certifies:
1. The Articles of Incorporation of Stockup.Com Corporation were filed
with the Nevada Secretary of State on February 5, 1999.
2. Article 1 of Articles of Incorporation of this Corporation is
amended to read as follows:
Article 1. The name of the Corporation is:
STOCKUP.COM, INC.
3. No shares of stock of the Corporation have been issued.
/s/ Michael Calderone
- ----------------------------
Michael Calderone,
Incorporator
State of California )
) ss
County of Clark )
On February 16, 1999, personally appeared before me, a Notary Public,
personally appeared Michael Calderone, personally known to me (or proven to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that she executed the same in
her authorized capacity, and that her signature on the instrument, the person,
or the entity upon behalf of which the person acted, executed the instrument.
/s/ Jennifer Watts
------------------------------
WITNESS my hand and official seal. Signature of Notary
<PAGE>
EXHIBIT 3.2
BYLAWS
DATED MARCH 1, 1999
<PAGE>
BYLAWS
OF
STOCKUP.COM, INC.
A NEVADA CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - OFFICES...............................................................................................1
Section 1. PRINCIPAL OFFICE.......................................................................1
Section 2. OTHER OFFICES..........................................................................1
ARTICLE II - DIRECTORS-MANAGEMENT.................................................................................1
Section 1. POWERS, STANDARD OF CARE...............................................................1
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS..................................................2
Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS...............................................2
Section 4. VACANCIES..............................................................................2
Section 5. REMOVAL OF DIRECTORS...................................................................3
Section 6. PLACE OF MEETINGS......................................................................3
Section 7. ANNUAL MEETINGS........................................................................4
Section 8. OTHER REGULAR MEETINGS.................................................................4
Section 9. SPECIAL MEETINGS/NOTICES...............................................................4
Section 10. WAIVER OF NOTICE.......................................................................4
Section 11. QUORUMS................................................................................5
Section 12. ADJOURNMENT............................................................................5
Section 13. NOTICE OF ADJOURNMENT..................................................................5
Section 14. SOLE DIRECTOR PROVIDED BY ARTICLES OR BYLAWS...........................................5
Section 15. DIRECTORS ACTION BY UNANIMOUS WRITTEN CONSENT..........................................5
Section 16. COMPENSATION OF DIRECTORS..............................................................5
Section 17. COMMITTEES.............................................................................6
Section 18. MEETINGS AND ACTION OF COMMITTEES......................................................6
Section 19. ADVISORY DIRECTORS.....................................................................6
ARTICLE III - OFFICERS............................................................................................6
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 1. OFFICERS...............................................................................6
Section 2. ELECTION OF OFFICERS...................................................................6
Section 3. SUBORDINATE OFFICERS, ETC..............................................................6
Section 4. REMOVAL AND RESIGNATION OF OFFICERS....................................................7
Section 5. VACANCIES..............................................................................7
Section 6. CHAIRMAN OF THE BOARD..................................................................7
Section 7. PRESIDENT..............................................................................7
Section 8. VICE PRESIDENT.........................................................................7
Section 9. SECRETARY..............................................................................8
Section 10. TREASURER..............................................................................8
ARTICLE IV - STOCKHOLDERS' MEETINGS...............................................................................8
Section 1. PLACE OF MEETINGS......................................................................8
Section 2. ANNUAL MEETING.........................................................................9
Section 3. SPECIAL MEETINGS.......................................................................9
Section 4. NOTICE OF MEETINGS - REPORTS...........................................................9
Section 5. QUORUM................................................................................10
Section 6. ADJOURNED MEETING AND NOTICE THEREOF..................................................10
Section 7. WAIVER OR CONSENT BY ABSENT STOCKHOLDERS..............................................11
Section 9. VOTING RIGHTS; CUMULATIVE VOTING......................................................12
Section 10. PROXIES...............................................................................12
Section 11. CHAIRMAN AND SECRETARY OF MEETING.....................................................13
Section 12. INSPECTORS OF ELECTION................................................................13
ARTICLE V - CORPORATE RECORDS AND REPORTS; INSPECTION............................................................14
Section 1. RECORDS...............................................................................14
Section 2. MAINTENANCE AND INSPECTION OF SHARE REGISTER..........................................14
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 3. MAINTENANCE AND INSPECTION OF BYLAWS..................................................15
Section 4. FINANCIAL STATEMENTS..................................................................15
Section 5. ANNUAL STATEMENT OF GENERAL INFORMATION...............................................15
ARTICLE VI - GENERAL CORPORATE MATTERS..........................................................................15
Section 1. CHECKS, DRAFTS, AND EVIDENCE OF INDEBTEDNESS..........................................15
Section 2. CORPORATE CONTRACTS AND INSTRUMENTS, HOW EXECUTED.....................................15
Section 3. REPRESENTATION OF SHARES OF OTHER CORPORATION.........................................15
Section 4. CONSTRUCTION AND DEFINITIONS..........................................................16
ARTICLE VII - AMENDMENTS TO BYLAWS...............................................................................16
Section 1. AMENDMENT BY STOCKHOLDERS.............................................................16
Section 2. AMENDMENT BY DIRECTORS................................................................16
Section 3. RECORD OF AMENDMENTS..................................................................16
ARTICLE VIII - SHARES OF STOCK...................................................................................16
Section 1. CERTIFICATE OF STOCK..................................................................16
Section 2. LOST OR DESTROYED CERTIFICATES........................................................17
Section 3. TRANSFER OF SHARES....................................................................17
Section 4. RECORD DATE...........................................................................17
ARTICLE IX - DIVIDENDS...........................................................................................18
ARTICLE X - FISCAL YEAR..........................................................................................18
ARTICLE XI - CORPORATE SEAL......................................................................................18
ARTICLE XII INDEMNITY...........................................................................................18
ARTICLE XIII - MISCELLANEOUS.....................................................................................19
Section 1. STOCKHOLDERS' AGREEMENTS..............................................................19
Section 2. SUBSIDIARY CORPORATIONS...............................................................19
</TABLE>
iii
<PAGE>
BYLAWS
OF
STOCKUP.COM, INC.
A NEVADA CORPORATION
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office for the transaction
of business of the Corporation is hereby fixed and located at 333 N. Rancho
Drive Suite 600, Las Vegas, Nevada 89106. The location may be changed by
approval of a majority of the authorized Directors, and additional offices may
be established and maintained at such other place or places, either within or
outside of Nevada, as the Board of Directors may from time to time designate.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time
be established by the Board of Directors at any place or places where the
Corporation is qualified to do business.
ARTICLE II
DIRECTORS - MANAGEMENT
Section 1. POWERS, STANDARD OF CARE.
1.1 POWERS: Subject to the provisions of the Nevada Revised
Statutes (hereinafter the "Code"), and subject to any limitations in the
Articles of Incorporation of the Corporation relating to action required to be
approved by the Stockholders of record, as that term is defined in the Code, or
by the outstanding shares, as that term is defined in the Code, the business and
affairs of the Corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board of Directors. The Board of
Directors may delegate the management of the day-to-day operation of the
business of the Corporation to a management company or other persons, provided
that the business and affairs of the Corporation shall be managed, and all
corporate powers shall be exercised, under the ultimate direction of the Board.
1.2 STANDARD OF CARE; LIABILITY:
1.2.1 Each Director shall exercise such powers and
otherwise perform such duties, in good
faith, in the matters such Director believes to be in the best interests of the
Corporation, and with such care, including reasonable inquiry, using ordinary
prudence, as a person in a like position would use under similar circumstances.
1.2.2 In performing the duties of a Director, a
Director shall be entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, in which
case prepared or presented by:
1.3.1 One or more officers or employees of
the Corporation whom the Director believes to be reliable and competent in the
matters presented,
1.3.2 Counsel, independent accountants or
other persons as to which the Director believes to be within such person's
professional or expert competence, or
1.3.3 A Committee of the Board upon which
the Director does not serve, as to matters within its designated authority,
which committee the Director believes to merit confidence, so long as in any
1
<PAGE>
such case the Director acts in good faith, after reasonable inquiry when the
need therefor is indicated by the circumstances and without knowledge that would
cause such reliance to be unwarranted.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number
of Directors of the Corporation shall be not less than one (1) nor more than
five (5) until changed by a duly adopted amendment to the Articles of
Incorporation or by an amendment to this Section 2 of Article II of these Bylaws
or, without amendment of these Bylaws, the number of Directors may be fixed or
changed by resolution adopted by the vote of the majority of Directors in office
or by the vote of holders of shares representing a majority of the voting power
at any annual meeting, or any special meeting called for such purpose; but no
reduction of the number of Directors shall have the effect of removing any
Director prior to the expiration of his term.
Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS.
3.1 Directors shall be elected at each annual meeting of the
Stockholders to hold office until the next annual meeting. If any such annual
meeting of Stockholders is not held or the Directors are not elected thereat,
the Directors may be elected at any special meeting of Stockholders held for
that purpose. Each Director, including a Director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
3.2 Except as may otherwise be provided herein, or in the
Articles of Incorporation by way of cumulative voting rights, the members of the
Board of Directors of this Corporation, who need not be Stockholders, shall be
elected by a plurality of the votes cast at a meeting of Stockholders, by the
holders of shares of stock present in person or by proxy, entitled to vote in
the election.
Section 4. VACANCIES.
4.1 Vacancies on the Board of Directors may be filled by a
majority of the remaining Directors, though less than a quorum, or by a sole
remaining Director, except that a vacancy created by the removal of a Director
by the vote or written consent of the Stockholders, or by a court order, may be
filled only by the vote of a majority of the shares entitled to vote,
represented at a duly held meeting at which a quorum is present, or by the
written consent of holders of the majority of the outstanding shares entitled to
vote. Each Director so elected shall hold office until the next annual meeting
of the Stockholders and until a successor has been elected and qualified.
4.2 A vacancy or vacancies on the Board of Directors shall be
deemed to exist in the event of the death, resignation or removal of any
Director, or if the Board of Directors by resolution declares vacant the office
of a Director who has been declared of unsound mind by an order of court or
convicted of a felony.
4.3 The Stockholders may elect a Director or Directors at any
time to fill any vacancy or vacancies, but any such election by written consent
shall require the consent of a majority of the outstanding shares entitled to
vote.
4.4 Any Director may resign, effective on giving written
notice to the Chairman of the Board, the President, the Secretary, or the Board
of Directors, unless the notice specifies a later time for that resignation to
become effective. If the resignation of a Director is effective at a future
time, the Board of Directors may, prior to the effective date of a Director's
resignation, elect a successor to take office when the resignation becomes
effective.
4.5 No reduction of the authorized number of Directors shall
have the effect of removing any Director before that Director's term of office
expires.
Section 5. REMOVAL OF DIRECTORS.
5.1 The entire Board of Directors, or any individual Director,
may be removed from office as provided by Section 78.335 of the Code at any
special meeting of Stockholders called for such purpose by vote of the
2
<PAGE>
holders of two-thirds of the voting power entitling them to elect Directors in
place of those to be removed, subject to the provisions of Section 5.2.
5.2 No Director may be removed (unless the entire Board is
removed) when the votes cast against removal or not consenting in writing to
such removal would be sufficient to elect such Director if voted cumulatively at
an election at which the same total number of votes were cast (or, if such
action is taken by written consent, all shares entitled to vote, were voted) and
the entire number of Directors authorized at the time of the Directors most
recent election were then being elected; and when by the provisions of the
Articles of Incorporation the holders of the shares of any class or series
voting as a class or series are entitled to elect one or more Directors, any
Director so elected may be removed only by the applicable vote of the holders of
the shares of that class or series.
Section 6. PLACE OF MEETINGS. Regular meetings of the Board of
Directors shall be held at any place within or outside the state that has been
designated from time to time by resolution of the Board. In the absence of such
resolution, regular meetings shall be held at the principal executive office of
the Corporation. Special meetings of the Board shall be held at any place within
or outside the state that has been designated in the notice of the meeting, or,
if not stated in the notice or there is no notice, at the principal executive
office of the Corporation. Any meeting, regular or special, may be held by
conference telephone or similar communication equipment pursuant to Section
78.320 of the Code, so long as all Directors participating in such meeting can
hear one another, and all such Directors shall be deemed to have been present in
person at such meeting.
Section 7. ANNUAL MEETINGS. Immediately following each annual meeting
of Stockholders, the Board of Directors shall hold a regular meeting for the
purpose of organization, the election of officers and the transaction of other
business. Notice of this meeting shall not be required. Minutes of any meeting
of the Board, or any committee thereof, shall be maintained as required by the
Code by the Secretary or other officer designated for that purpose.
Section 8. OTHER REGULAR MEETINGS.
8.1 Other regular meetings of the Board of Directors shall be
held without call at such time as shall from time to time be fixed by the Board
of Directors. Such regular meetings may be held without notice, provided the
time and place of such meetings has been fixed by the Board of Directors, and
further provided the notice of any change in the time of such meeting shall be
given to all the Directors. Notice of a change in the determination of the time
shall be given to each Director in the same manner as notice for such special
meetings of the Board of Directors.
8.2 If said day falls upon a holiday, such meetings shall be
held on the next succeeding day thereafter.
Section 9. SPECIAL MEETINGS/NOTICES.
9.1 Special meetings of the Board of Directors for any purpose
or purposes may be called at any time by the Chairman of the Board or the
President or any Vice President or the Secretary or any two Directors.
9.2 Notice of the time and place for special meetings shall be
delivered personally or by telephone to each Director or sent by first class
mail or telegram, charges prepaid, addressed to each Director at his or her
address as it is shown in the records of the Corporation. In case such notice is
mailed, it shall be deposited in the United States mail at least four days prior
to the time of holding the meeting. In case such notice is delivered personally,
or by telephone or telegram, it shall be delivered personally or be telephone or
to the telegram company at least 48 hours prior to the time of the holding of
the meeting. Any oral notice given personally or by telephone may be
communicated to either the Director or to a person at the office of the Director
who the person giving the notice has reason to believe will promptly communicate
same to the Director. The notice need not specify the purpose of the meeting,
nor the place, if the meeting is to be held at the principal executive office of
the Corporation.
3
<PAGE>
Section 10. WAIVER OF NOTICE.
10.1 The transactions of any meeting of the Board of
Directors, however called, noticed, or wherever held, shall be as valid as
though had at a meeting duly held after the regular call and notice if a quorum
is present and if, either before or after the meeting, each of the Directors not
present signs a written waiver of notice, a consent to holding the meeting or an
approval of the minutes thereof. Waivers of notice or consent need not specify
the purposes of the meeting. All such waivers, consents and approvals shall be
filed with the corporate records or made part of the minutes of the meeting.
10.2 Notice of a meeting shall also be deemed given to any
Director who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such Director.
Section 11. QUORUMS. A majority of the authorized number of Directors
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 12 of this Article II. Every act or decision done or made by
a majority of the Directors present at a meeting duly held at which a quorum was
present shall be regarded as the act of the Board of Directors, unless a greater
number is required by law or the Articles of Incorporation. A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of Directors, if any action taken is approved by at least a
majority of the required quorum for that meeting.
Section 12. ADJOURNMENT. A majority of the Directors present, whether
or not constituting a quorum, may adjourn any meeting to another time and place.
Section 13. NOTICE OF ADJOURNMENT. Notice of the time and place of the
holding of an adjourned meeting need not be given, unless the meeting is
adjourned for more than 24 hours, in which case notice of such time and place
shall be given prior to the time of the adjourned meeting to the Directors who
were not present at the time of the adjournment.
Section 14. SOLE DIRECTOR PROVIDED BY ARTICLES OR BYLAWS. In the event
only one Director is required by the Bylaws or the Articles of Incorporation,
then any reference herein to notices, waivers, consents, meetings or other
actions by a majority or quorum of the Board of Directors shall be deemed or
referred as such notice, waiver, etc., by the sole Director, who shall have all
rights and duties and shall be entitled to exercise all of the powers and shall
assume all the responsibilities otherwise herein described, as given to the
Board of Directors.
Section 15. DIRECTORS ACTION BY UNANIMOUS WRITTEN CONSENT. Pursuant to
Section 78.315 of the Code, any action required or permitted to be taken by the
Board of Directors may be taken without a meeting and with the same force and
effect as if taken by a unanimous vote of Directors, if authorized by a writing
signed individually or collectively by all members of the Board of Directors.
Such consent shall be filed with the regular minutes of the Board of Directors.
Section 16. COMPENSATION OF DIRECTORS. Directors, and members as such,
shall not receive any stated salary for their services, but by resolution of the
Board of Directors, a fixed sum and expense of attendance, if any, may be
allowed for attendance at each regular and special meeting of the Board of
Directors; provided, however, that nothing contained herein shall be construed
to preclude any Director from serving the Corporation in any other capacity as
an officer, employee or otherwise receiving compensation for such services.
Section 17. COMMITTEES. Committees of the Board of Directors may be
appointed by resolution passed by a majority of the whole Board. Committees
shall be composed of two or more members of the Board of Directors. The Board
may designate one or more Directors as alternate members of any committee, who
may replace any absent member at any meeting of the committee. Committees shall
have such powers as those held by the Board of Directors as may be expressly
delegated to it by resolution of the Board of Directors, except those powers
expressly made non-delegable by the Code.
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Section 18. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article II, Sections 6, 8, 9, 10, 11, 12, 13 and 15, with such
changes in the context of those Sections as are necessary to substitute the
committee and its members for the Board of Directors and its members, except
that the time of the regular meetings of the committees may be determined by
resolution of the Board of Directors as well as the committee, and special
meetings of committees may also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The Board of Directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these Bylaws.
Section 19. ADVISORY DIRECTORS. The Board of Directors from time to
time may elect one or more persons to be Advisory Directors, who shall not by
such appointment be members of the Board of Directors. Advisory Directors shall
be available from time to time to perform special assignments specified by the
President, to attend meetings of the Board of Directors upon invitation and to
furnish consultation to the Board of Directors. The period during which the
title shall be held may be prescribed by the Board of Directors. If no period is
prescribed, the title shall be held at the pleasure of the Board of Directors.
ARTICLE III
OFFICERS
Section 1. OFFICERS. The principal officers of the Corporation shall be
a President, a Secretary, and a Treasurer. The Corporation may also have, at the
discretion of the Board of Directors, a Chairman of the Board, one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers,
and such other officers as may be appointed in accordance with the provisions of
Section 3 of this Article III. Any number of offices may be held by the same
person.
Section 2. ELECTION OF OFFICERS. The principal officers of the
Corporation, except such officers as may be appointed in accordance with the
provisions of Section 3 or Section 5 of this Article, shall be chosen by the
Board of Directors, and each shall serve at the pleasure of the Board of
Directors, subject to the rights, if any, of an officer under any contract of
employment.
Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may
appoint such other officers as the business of the Corporation may require, each
of whom shall hold office for such period, have such authority and perform such
duties as are provided in the Bylaws or as the Board of Directors may from time
to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS.
4.1 Subject to the rights, if any, of an officer under any
contract of employment, any officer may be removed, either with or without
cause, by a majority of the Directors at that time in office, at any regular or
special meeting of the Board of Directors, or, except in the case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
4.2 Any officer may resign at any time by giving written
notice to the Board of Directors. Any resignation shall take effect on the date
of the receipt of that notice or at any later time specified in that notice;
and, unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective. Any resignation is
without prejudice to the rights, if any, of the Corporation under any contract
to which the officer is a party.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular appointments to that office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at the meetings of the Board of
Directors and exercise and perform such other powers and duties as may,
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from time to time, be assigned by the Board of Directors or prescribed by the
Bylaws. If there is no President, the Chairman of the Board shall, in addition,
be the Chief Executive Officer of the Corporation and shall have the powers and
duties prescribed in Section 7 of this Article III.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the Board of Directors to the Chairman of the Board, if there is
such an officer, the President shall be the Chief Executive Officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
Corporation. The President shall preside at all meetings of the Stockholders
and, in the absence of the Chairman of the Board, or if there be none, at all
meetings of the Board of Directors. The President shall have the general powers
and duties of management usually vested in the office of President of a
corporation, shall be ex officio a member of all the standing committees,
including the Executive Committee, if any, and shall have such other powers and
duties as may be prescribed by the Board of Directors or the Bylaws.
Section 8. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Directors, or if not ranked, the Vice President designated by the Board
of Directors, shall perform all 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 have such other powers and perform such
other duties as from time to time may be prescribed for them, respectively, by
the Board of Directors or the Bylaws, the President, or the Chairman of the
Board.
Section 9. SECRETARY.
9.1 The Secretary shall keep, or cause to be kept, a book of
minutes of all meetings of the Board of Directors and Stockholders at the
principal office of the Corporation or such other place as the Board of
Directors may order. The minutes shall include the time and place of holding the
meeting, whether regular or special, and if a special meeting, how authorized,
the notice thereof given, and the names of those present at Directors' and
committee meetings, the number of shares present or represented at Stockholders'
meetings and the proceedings thereof.
9.2 The Secretary shall keep, or cause to be kept, at the
principal office of the Corporation or at the office of the Corporation's
transfer agent, a share register, or duplicate share register, showing the names
of the Stockholders and their addresses; the number and classes or shares held
by each; the number and date of certificates issued for the same; and the number
and date of cancellation of every certificate surrendered for cancellation.
9.3 The Secretary shall give, or cause to be given, notice of
all the meetings of the Stockholders and of the Board of Directors required by
the Bylaws or by law to be given. The Secretary shall keep the seal of the
Corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or by the Bylaws.
Section 10. TREASURER.
10.1 The Treasurer shall keep and maintain, or cause to be
kept and maintained, in accordance with generally accepted accounting
principles, adequate and correct accounts of the properties and business
transactions of the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, earnings (or surplus) and
shares issued. The books of account shall, at all reasonable times, be open to
inspection by any Director.
10.2 The Treasurer shall deposit all monies and other
valuables in the name and to the credit of the Corporation with such
depositaries as may be designated by the Board of Directors. The Treasurer shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the President and Directors, whenever they request
it, an account of all of the transactions of the Treasurer and of the financial
condition of the Corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or the Bylaws.
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Section 11. GENERAL MANAGER. Subject to the supervisory powers, if any,
as may be given by the Board of Directors to the Chairman of the Board and/or
the President, the General Manager shall, subject to the control of the Board of
Directors, have general supervision of the day-to-day operations of the Company.
ARTICLE IV
STOCKHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. Meetings of the Stockholders shall be
held at any place within or outside the state of Nevada designated by the Board
of Directors. In the absence of any such designation, Stockholders' meetings
shall be held at the principal executive office of the Corporation.
Section 2. ANNUAL MEETING.
2.1. The annual meeting of the Stockholders shall be held,
each year, as follows:
Time of Meeting: 10:00 A.M.
Date of Meeting: April 15
2.2 If this day shall be a legal holiday, then the meeting
shall be held on the next succeeding business day, at the same time. At the
annual meeting, the Stockholders shall elect a Board of Directors, consider
reports of the affairs of the Corporation and transact such other business as
may be properly brought before the meeting.
2.3 If the above date is inconvenient, the annual meeting of
Stockholders shall be held each year on a date and at a time designated by the
Board of Directors within twenty days of the above date upon proper notice to
all Stockholders.
Section 3. SPECIAL MEETINGS.
3.1 Special meetings of the Stockholders for any purpose or
purposes whatsoever, may be called at any time by the Board of Directors, the
Chairman of the Board, the President, or by one or more Stockholders holding
shares in the aggregate entitled to cast not less than 10% of the votes at any
such meeting. Except as provided in paragraph B below of this Section 3, notice
shall be given as for the annual meeting.
3.2 If a special meeting is called by any person or persons
other than the Board of Directors, the request shall be in writing, specifying
the time of such meeting and the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the Chairman of the Board, the
President, any Vice President or the Secretary of the Corporation. The officer
receiving such request shall forthwith cause notice to be given to the
Stockholders entitled to vote, in accordance with the provisions of Sections 4
and 5 of this Article, that a meeting will be held at the time requested by the
person or persons calling the meeting, not less than 35 nor more than 60 days
after the receipt of the request. If the notice is not given within 20 days
after receipt of the request, the person or persons requesting the meeting may
give the notice in the manner provided in these Bylaws or upon application to
the Superior Court. Nothing contained in this paragraph of this Section shall be
construed as limiting, fixing or affecting the time when a meeting of
Stockholders called by action of the Board of Directors may be held.
Section 4. NOTICE OF MEETINGS - REPORTS.
4.1 Notice of any Stockholders meetings, annual or special,
shall be given in writing not less than 10 days nor more than 60 days before the
date of the meeting to Stockholders entitled to vote thereat by the Secretary or
the Assistant Secretary, or if there be no such officer, or in the case of said
Secretary or Assistant Secretary's neglect or refusal, by any Director or
Stockholder.
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4.2 Such notices or any reports shall be given personally or
by mail or other means of written communication as provided in the Code and
shall be sent to the Stockholder's address appearing on the books of the
Corporation, or supplied by the Stockholder to the Corporation for the purpose
of notice, and in the absence thereof, as provided in the Code by posting notice
at a place where the principal executive office of the Corporation is located
or by publication at least once in a newspaper of general circulation in the
county in which the principal executive office is located.
4.3 Notice of any meeting of Stockholders shall specify the
place, the day and the hour of meeting, and (i) in case of a special meeting,
the general nature of the business to be transacted and that no other business
may be transacted, or (ii) in the case of an annual meeting, those matters which
the Board of Directors, at the date of mailing of notice, intends to present for
action by the Stockholders. At any meetings where Directors are elected, notice
shall include the names of the nominees, if any, intended at the date of notice
to be presented for election.
4.4 Notice shall be deemed given at the time it is delivered
personally or deposited in the mail or sent by other means of written
communication. The officer giving such notice or report shall prepare and file
in the minute book of the Corporation an affidavit or declaration thereof.
4.5 If action is proposed to be taken at any meeting for
approval of (i) contracts or transactions in which a Director has a direct or
indirect financial interest, pursuant to the Code, (ii) an amendment to the
Articles of Incorporation, pursuant to the Code, (iii) a reorganization of the
Corporation, pursuant to the Code, (iv) dissolution of the Corporation, pursuant
to the Code, or (v) a distribution to preferred Stockholders, pursuant to the
Code, the notice shall also state the general nature of such proposal.
Section 5. QUORUM.
5.1 The holders of a majority of the shares entitled to vote
at a Stockholders' meeting, present in person, or represented by proxy, shall
constitute a quorum at all meetings of the Stockholders for the transaction of
business except as otherwise provided by the Code or by these Bylaws.
5.2 The Stockholders present at a duly called or held meeting
at which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of enough Stockholders to leave less
than a quorum, if any action taken (other than adjournment) is approved by a
majority of the shares required to constitute a quorum.
Section 6. ADJOURNED MEETING AND NOTICE THEREOF.
6.1 Any Stockholders' meeting, annual or special, whether or
not a quorum is present, may be adjourned from time to time by the vote of the
majority of the shares represented at such meeting, either in person or by
proxy, but in the absence of a quorum, no other business may be transacted at
such meeting.
6.2 When any meeting of Stockholders, either annual or
special, is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at a meeting at
which the adjournment is taken, unless a new record date for the adjourned
meeting is fixed, or unless the adjournment is for more than 45 days from the
date set for the original meeting, in which case the Board of Directors shall
set a new record date. Notice of any adjourned meeting shall be given to each
Stockholder of record entitled to vote at the adjourned meeting in accordance
with the provisions of Section 4 of this Article. At any adjourned meeting, the
Corporation may transact any business which might have been transacted at the
original meeting.
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Section 7. WAIVER OR CONSENT BY ABSENT STOCKHOLDERS.
7.1 The transactions of any meeting of Stockholders, either
annual or special, however called and noticed, shall be valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each of the
Stockholders entitled to vote, not present in person or by proxy, sign a written
waiver of notice, or a consent to the holding of such meeting or an approval of
the minutes thereof.
7.2 The waiver of notice or consent need not specify either
the business to be transacted or the purpose of any regular or special meeting
of Stockholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in Section E of Section 4 of this
Article, the waiver of notice or consent shall state the general nature of such
proposal. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
7.3 Attendance of a person at a meeting shall also constitute
a waiver of notice of such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened, and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters not included
in the notice is such objection in
Section 8. OTHER ACTIONS WITHOUT A MEETING.
8.1 Unless otherwise provided in the Code, any action which
may also be taken at any annual or special meeting of the Stockholders may be
taken without a meeting and without prior notice if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
8.2 Unless the consents of all Stockholders entitled to vote
have been solicited in writing,
(i) Notice of any Stockholder approval without a meeting by
less than unanimous written consent shall be given at least ten (10) days before
the consummation of the action authorized by such approval; and
(ii) Prompt notice shall be given of the taking of any other
corporate action approved by Stockholders without a meeting by less than
unanimous written consent, to each of those Stockholders entitled to vote who
have not consented in writing.
8.3 Any Stockholder giving a written consent, or the
Stockholder's proxy holders, or a transferee of the shares or a personal
representative of the Stockholder or their respective proxy holders, may revoke
the consent by a writing received by the Secretary of the Corporation before
written consents of the number of shares required to authorize the proposed
action have been filed with the Secretary, but not do so thereafter. Such
revocation is effective upon its receipt by the Secretary.
Section 9. VOTING RIGHTS; CUMULATIVE VOTING.
9.1 Only persons in whose names shares entitled to vote stand
on the stock records of the Corporation on the day fixed by the Board of
Directors for the determination of the Stockholders of records, shall be
entitled to vote at any Stockholders' meeting.
9.2 The candidate receiving the highest number of votes up to
the number of Directors to be elected are elected.
9.3 The Board of Directors may fix a time as record date for
the determination of the Stockholders entitled to notice of and to vote at any
such meeting, or entitled to receive any such dividend or
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distribution, or any allotment, rights, or to exercise the rights in respect to
any such change, conversion, or exchange of shares. In such case, only
Stockholders of record on the date so fixed shall be entitled to notice of and
to vote at such meeting, or to receive such dividends, distributions, or
allotment of rights or to exercise such rights, as the case may be,
notwithstanding a transfer of any share on the books of the Corporation after
any record date fixed as aforesaid.
Section 10. PROXIES.
10.1 Every Stockholder entitled to vote for Directors or on
any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy validly executed by the Stockholder
and filed with the Secretary of the Corporation. A proxy may be executed by
written authorization signed, or by electronic transmission authorized, by
the Stockholder or the Stockholder's attorney-in-fact, giving the proxy
holder(s) the power to vote the Stockholder's shares. A proxy shall be deemed
signed if the Stockholder's name is placed on the proxy (whether by manual
signature, typewriting, telegraphic transmission, or otherwise) by the
Stockholder or the Stockholder's attorney-in-fact. A proxy may also be
transmitted orally by telephone if submitted with information from which it
may be determined that the proxy was authorized by the Stockholder or the
Stockholder's attorney-in-fact.
10.2 A validly executed proxy shall expire six (6) months
after the date of the proxy, unless it is coupled with an interest or unless the
Stockholder specifies in it the length of time for which it is to continue in
force, which may not exceed seven (7) years from the date of the proxy. A
validly executed proxy will also expire upon (i) revocation by the person
executing it, before the vote pursuant to that proxy, by a writing delivered to
the Corporation stating that the proxy is revoked, or by a subsequent proxy
executed by, or attendance at the meeting and voting in person by, the person
executing the proxy; or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the Corporation before the vote pursuant to
that proxy is counted.
Section 11. CHAIRMAN AND SECRETARY OF MEETING. The President, or in the
absence of the President, any Vice President, shall call the meeting of the
Stockholders to order, and shall act as Chairman of the meeting. In the absence
of the President and all the Vice Presidents, Stockholders shall appoint a
Chairman at such meeting. The Secretary of the Corporation shall act as
Secretary of all meetings of the Stockholders, but in the absence of the
Secretary at any meeting of the Stockholders, the presiding officer shall
appoint any person to act as such Secretary of the meeting.
Section 12. INSPECTORS OF ELECTION.
12.1 Before any meeting of Stockholders, the Board of
Directors may appoint any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the Chairman of the meeting may, and on the request
of any Stockholder or a Stockholder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one (1) or
three (3). If inspectors are appointed at a meeting on the request of one or
more Stockholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three (3)
inspectors are to be appointed. If any person appointed as inspector fails to
appear or fails or refuses to act, the Chairman of the meeting may, and upon the
request of any Stockholder or a Stockholder's proxy shall, appoint a person to
fill that vacancy.
12.2 The duties of these inspectors shall be as follows:
(i) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity, and effect of proxies;
(ii) Receive votes, ballots, or consents;
(iii) Hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(iv) Count and tabulate all votes or consents;
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(v) Determine the result; and
(vi) Do any other acts that may be proper to conduct the
election or vote with fairness to all Stockholders.
ARTICLE V
CORPORATE RECORDS AND REPORTS; INSPECTION
Section 1. RECORDS. The Corporation shall maintain, in accordance with
generally accepted accounting principles, adequate and correct accounts, books
and records of its business and properties. If the Corporation has fewer than
one hundred (100) Stockholders, the financial statements need not be prepared
according to generally accepted accounting principles so long as the financial
statement reasonably sets forth the assets and liabilities, income and expenses
of the Corporation, and discloses the accounting basis used. All such books,
records and accounts shall be kept at the principal executive office of the
Corporation, as fixed by the Board of Directors, from time to time, or shall be
kept at such place or such places as designated by the Board of Directors. The
minutes shall be kept in written form and the accounting books and records shall
be kept either in written form or in any other form capable of being converted
into written form. The minutes and accounting books and records shall be open to
inspection upon the written demand of any Stockholder or holder of a voting
trust certificate, at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a Stockholder or as the
holder of a voting trust certificate. The inspection may be made in person or by
an agent or attorney, and shall include the right to copy and make extracts.
These rights of inspection shall extend to the records of each subsidiary
corporation of the Corporation.
Section 2. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
2.1 The Corporation shall keep at its principal executive
office, or at the office of its transfer agent or registrar, if either be
appointed and as determined by resolution of the Board of Directors, a record of
its Stockholders, giving the names and addresses of all Stockholders and the
number and class of shares held by each Stockholder.
2.2 Any person who has been a Stockholder of record of the
Corporation for at least six (6) months immediately preceding his demand, or any
person holding at least five percent (5%) in the aggregate of the outstanding
voting shares of the Corporation may (i) inspect and copy the records of
Stockholders' names and addresses and shareholdings during usual business hours
on five days' prior written demand on the Corporation, and (ii) obtain from the
transfer agent of the Corporation, on written demand and on the tender of such
transfer agent's usual charges for such list, a list of the Stockholders' names
and addresses, who are entitled to vote for the election of Directors, and their
shareholdings, as of the most recent record date for which that list has been
compiled or as of a date specified by the Stockholder after the date of demand.
This list shall be made available to any such Stockholder by the transfer agent
on or before the later of five (5) days after the demand is received or the date
specified in the demand as the date as of which the list is to be compiled. The
record of Stockholders shall also be open to inspection on the written demand of
any Stockholder or holder of a voting trust certificate, at any time during
usual business hours, for a purpose reasonably related to the holder's interests
as a Stockholder or as the holder of a voting trust certificate. Any inspection
and copying under this Section may be made in person or by an agent or attorney
of the Stockholder or holder of a voting trust certificate making the demand.
Section 3. MAINTENANCE AND INSPECTION OF BYLAWS. The Corporation shall
keep at its principal executive office, or if not in this state, at its
principal business office in this state, the original or a copy of the Bylaws
amended to date, which shall be open to inspection by the Stockholders at all
reasonable times during office hours. If the principal executive office of the
Corporation is outside the state and the Corporation has no principal business
office in this state, the Secretary shall, upon written request of any
Stockholder, furnish to such Stockholder a copy of the Bylaws as amended to
date.
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Section 4. FINANCIAL STATEMENTS. Any person who has been a Stockholder
of record and owns not less than fifteen percent (15%) of all of the issued and
outstanding shares of stock or has been authorized in writing by the holders of
at lest fifteen percent (15%) of the issued and outstanding shares, upon at
least five (5) days' written demand, is entitled to inspect in person or by
agent or attorney, during normal business hours, the books of account and all
financial records of the Corporation, to make extracts therefrom, and to conduct
an audit of such records. Holders of voting trust certificates representing
fifteen percent (15%) of the issued and outstanding shares of the Corporation
shall be regarded as Stockholders for the purpose of this Section. All costs for
making extracts of records or conducting an audit shall be borne by the person
exercising his rights under this Section. The rights authorized herein may be
denied to any Stockholder upon his refusal to furnish the Corporation an
affidavit that such inspection, extracts or audit is not desired for any purpose
not related to his interest in the Corporation as a Stockholder.
Section 5. ANNUAL STATEMENT OF GENERAL INFORMATION. The Corporation
shall, in a timely manner, in each year, file with the Secretary of State of
Nevada, on the prescribed form, a statement in compliance with the Code.
ARTICLE VI
GENERAL CORPORATE MATTERS
Section 1. CHECKS, DRAFTS, AND EVIDENCE OF INDEBTEDNESS. All checks,
drafts or other orders for payments of money, notes or other evidences of
indebtedness, issued in the name of or payable to the Corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time to
time, shall be determined by resolution of the Board of Directors.
Section 2. CORPORATE CONTRACTS AND INSTRUMENTS, HOW EXECUTED. The Board
of Directors, except as otherwise provided in these Bylaws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances; and, unless so authorized or
ratified by the Board of Directors or within the agency power of any officer, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or to any amount.
Section 3. REPRESENTATION OF SHARES OF OTHER CORPORATION. The Chairman
of the Board, the President, or any Vice President, or any other person
authorized by resolution of the Board of Directors by any of the foregoing
designated officers, is authorized to vote on behalf of the Corporation any and
all shares of any other corporation or corporations, foreign or domestic,
standing in the name of the Corporation. The authority herein granted to said
officers to vote or represent on behalf of the corporation or corporations may
be exercised by any such officer in person or by any person authorized to do so
by proxy duly elected by said officer.
Section 4. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions of the
Nevada Revised Statutes shall govern the construction of these Bylaws. Without
limiting the generality of the foregoing, the singular number includes the
plural, the plural number includes the singular, and the term "person" includes
both a corporation and a natural person.
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. AMENDMENT BY STOCKHOLDERS. All Bylaws of the Corporation
shall be subject to alteration or repeal, and new Bylaws may be made by the
affirmative vote of Stockholders holding of record in the aggregate at least a
majority of the outstanding shares of stock entitled to vote in the election of
Directors at any annual or special meeting of Stockholders, provided that the
notice or waiver of notice of such meeting shall have summarized or set forth in
full therein, the proposed amendment.
Section 2. AMENDMENT BY DIRECTORS. The Board of Directors shall have
power to make, adopt, alter, amend and repeal, from time to time, Bylaws of the
Corporation, provided, however, that the Stockholders entitled to vote with
respect thereto as in this Article V above-provided may alter, amend or repeal
Bylaws made by the Board of
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Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of Stockholders or of the Board of Directors or to change
any provisions of the Bylaws with respect to the removal of Directors of the
filling of vacancies in the Board resulting from the removal by the
Stockholders. In any bylaw regulating an impending election of Directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of Stockholders for the election of Directors,
the Bylaws so adopted, amended or repealed, together with a concise statement of
the changes made.
Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new Bylaw is
adopted, it shall be copies in the corporate book of Bylaws with the original
Bylaws, in the appropriate place. If any Bylaw is repealed, the fact of repeal
with the date of the meeting at which the repeal was enacted or written assent
was filed shall be stated in the corporate book of Bylaws.
ARTICLE VIII
SHARES OF STOCK
Section 1. CERTIFICATE OF STOCK.
1.1 The certificates representing shares of the Corporation's
stock shall be in such form as shall be adopted by the Board of Directors, and
shall be numbered and registered in the order issued. The certificates shall
bear the following: the Corporate Seal, the holder's name, the number of shares
of stock and the signatures of: (1) the Chairman of the Board, the President or
a Vice President and (2) the Secretary, Treasurer, any Assistant Secretary or
Assistant Treasurer.
1.2 No certificate representing shares of stock shall be
issued until the full amount of consideration therefore has been paid, except as
otherwise permitted by law.
1.3 To the extent permitted by law, the Board of Directors may
authorize the issuance of certificates for fractions of a share of stock which
shall entitle the holder to exercise voting rights, receive dividends and
participate in liquidating distributions, in proportion to the fractional
holdings; or it may authorize the payment in cash of the fair value of fractions
of a share of stock as of the time when those entitled to receive such fractions
are determined; or its may authorize the issuance, subject to such conditions as
may be permitted by law, of scrip in registered or bearer form over the
signature of an officer or agent of the corporation, exchangeable as therein
provided for full shares of stock, but such scrip shall not entitle the holder
to any rights of a Stockholder, except as therein provided.
Section 2. LOST OR DESTROYED CERTIFICATES. The holder of any
certificate representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate may
be issued without requiring any such evidence or bond when, in the judgment of
the Board of Directors, it is proper to do so.
Section 3. TRANSFER OF SHARES.
3.1 Transfer of shares of stock of the Corporation shall be
made on the stock ledger of the Corporation only by the holder of record
thereof, in person or by his duly authorized attorney, upon surrender for
cancellation of the certificate or certificates representing such shares of
stock with an assignment or power of transfer endorsed thereon or delivered
therewith, duly executed, with such proof of the authenticity of the signature
and of authority to transfer and of payment of taxes as the Corporation or its
agents may require.
13
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3.2 The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the absolute owner thereof for all
purposes and , accordingly, shall not be bound to recognize any legal, equitable
or other claim to, or interest in, such share or shares of stock on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise expressly provided by law.
Section 4. RECORD DATE. In lieu of closing the stock ledger of the
Corporation, the Board of Directors may fix, in advance, a date not exceeding
sixty (60) days, nor less than ten (10) days, as the record date for the
determination of Stockholders entitled to receive notice of, or to vote at, any
meeting of Stockholders, or to consent to any proposal without a meeting, or for
the purpose of determining Stockholders entitled to receive payment of any
dividends or allotment of any rights, or for the purpose of any other action. If
no record date is fixed, the record date for the determination of Stockholders
entitled to notice of, or to vote at, a meeting of Stockholders shall be at the
close of business on the day next preceding the day on which the notice is
given, or, if no notice is given, the day preceding the day on which the meeting
is held. The record date for determining Stockholders for any other purpose
shall be at the close of business on the day on which the resolution of the
Directors relating thereto is adopted. When a determination of Stockholders of
record entitled to notice of, or to vote at, any meeting of Stockholders has
been made, as provided for herein, such determination shall apply to any
adjournment thereof, unless the Directors fix a new record date for the
adjourned meeting.
ARTICLE IX
DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of
any funds available therefor, as often, in such amount, and at such time or
times as the Board of Directors may determine.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be December 31, and may be
changed by the Board of Directors from time to time subject to applicable law.
ARTICLE XI
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the date of its incorporation, and the word
"Nevada" to indicate the Corporation was incorporated pursuant to the laws of
the State of Nevada.
ARTICLE XII
INDEMNITY
Any person made a party to any action, suit or proceeding, by reason of
the fact that he, his testator or interstate representative is or was a
Director, officer or employee of the Corporation or of any corporation in which
he served as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorneys' fees, actual
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding or in connection with any appeal therein that such officer, Director
or employee is liable for gross negligence or misconduct in the performance of
his duties.
The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which any officer or Director or employee may be entitled
apart from the provisions of this section.
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The amount of indemnity to which any officer or any Director may be
entitled shall be fixed by the Board of Directors, except that in any case in
which there is no disinterested majority of the Board available, the amount
shall be fixed by arbitration pursuant to the then existing rules of the
American Arbitration Association.
ARTICLE XIII
MISCELLANEOUS
Section 1. STOCKHOLDERS' AGREEMENTS. Notwithstanding anything contained
in this Article XI to the contrary, in the event the Corporation elects to
become a close corporation, an agreement between two or more Stockholders
thereof, if in writing and signed by the parties thereto, may provide that in
exercising any voting rights, the shares held by them shall be voted as provided
therein, and may otherwise modify the provisions contained in Article IV, herein
as to Stockholders' meetings and actions.
Section 2. SUBSIDIARY CORPORATIONS. Shares of the Corporation owned by
a subsidiary shall not be entitled to vote on any matter. For the purpose of
this Section, a subsidiary of the Corporation is defined as another corporation
of which shares thereof possessing more than 25% of the voting power are owned
directly or indirectly through one or more other corporations of which the
Corporation owns, directly or indirectly, more than 50% of the voting power.
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<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, certify that:
1. I am the duly elected and acting Secretary of STOCKUP.COM, INC., a
Nevada corporation; and
2. The foregoing Bylaws, consisting of 20 pages, are the Bylaws of this
Corporation as adopted by the Board of Directors.
IN WITNESS WHEREOF, I have subscribed my name and affixed the
seal of this Corporation on this 1st day of March, 1999.
/s/ Michael Calderone
----------------------------------
Michael Calderone, Secretary
[SEAL]
<PAGE>
EXHIBIT 4.1
SPECIMEN OF COMMON STOCK CERRTIFICATE
<PAGE>
SPECIMEN
STOCKUP.COM, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
COMMON STOCK
THIS CERTIFIES THAT _____________________________________ is the owner
of ________________________________________________ FULLY PAID AND
NON-ASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE, OF
STOCKUP.COM, INC.
(hereinafter called the "Corporation"), transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney, upon
surrender of the Certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall e held subject to all the provisions of
the Certificate of Incorporation, as amended, and the Bylaws of the Corporation,
as amended (copies of whcih are on file at the office of the Transfer Agent), to
all of which the holder of this Certificate by acceptance hereof assents. This
Certificate is not valid unless countersigned and registered by the Transfer
Agent and Registrar. Witness the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
DATE: MAY 11, 1999
Countersigned:
Securities Transfer Corporation
- -------------------------- P.O. Box 701629
President Dallas, Tx 75370
- -------------------------- By:
Secretary -----------------------------------
Transfer Agent-Authorized Signature
<PAGE>
EXHIBIT 4.2
FORM OF SERIES A OPTION AGREEMENT AND CERTIFICATE
<PAGE>
OPTION AGREEMENT
This OPTION AGREEMENT (the "Agreement") is dated as of April 1, 1999,
by and between STOCKUP.COM, INC. (the "Company"), and ____________________
("Option Holder").
WHEREAS, the Company proposes to issue to Option Holder _______ options
(the "Options"), each such Option entitling the holder thereof to purchase one
share of Common Stock, $.001 par value, of the Company (the "Shares") at an
exercise price of $10.00 per share.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. OPTION CERTIFICATES. The Option Certificates to be delivered
pursuant to this Agreement (the "Option Certificates") shall be in the form set
forth in EXHIBIT A, attached hereto and made a part hereof. The Option
Certificates shall be executed on behalf of the Company by its Chief Executive
Officer, President, or any Vice President under its corporate seal reproduced
thereon and attested by its corporate secretary or one of its assistant
secretaries. Option Certificates may be exchanged at the Optionholder's option,
when surrendered to the Company for another Option Certificate or other Option
Certificates of like tenor and representing in the aggregate a like number of
Options.
SECTION 2. RIGHT TO EXERCISE OPTIONS. Each Option may be exercised from
the date of this Agreement until 11:59 P.M. (Pacific Standard time) on the date
that is two years after the vesting date of this Option, or March 31, 2002 (the
"Expiration Date"). Each Option not exercised on or before the Expiration Date
shall expire. Subject to the provisions of this Option Agreement, including
Section 10 hereof, the holder of each Option shall have the right to purchase
from the Company, and the Company shall issue and sell to each such Option
Holder, at an initial exercise price per share of $10.00, subject to adjustment
as provided herein (the "Exercise Price"), one fully paid and nonassessable
Share upon surrender to the Company of the Option Certificate evidencing such
Option, with the form of election to purchase duly completed and signed and
evidence of payment of the Exercise Price. Payment of the Exercise Price shall
be made by wire transfer or check to the Company. A check for the option price
shall not be considered delivered until good funds are received by the Company.
Upon surrender of such Option Certificate and payment of the Exercise
Price, the Company shall cause to be issued and delivered promptly to Option
Holder a certificate for the Shares issuable upon the exercise of the Option or
Options evidenced by such Option Certificate. The Options evidenced by an Option
Certificate shall be exercisable at the election of the Option holder thereof,
either as an entirety or from time to time for less than all of the number of
Options specified in the Option Certificate.
SECTION 3. RESERVATION OF SHARES. The Company will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Shares or its authorized and issued Shares held in its
treasury for the purpose of enabling it to satisfy any obligation to issue
Shares upon exercise of Options, the full number of Shares deliverable upon the
exercise of all outstanding Options. The Company covenants that all Shares which
may be issued upon exercise of Options will be validly issued, fully paid and
nonassessable outstanding Shares of the Company.
SECTION 4. REGISTRATION UNDER THE SECURITIES ACT OF 1933. Option Holder
represents and warrants to the Company that Option Holder is acquiring the
Options for investment and with no present intention of distributing or
reselling any of the Options. The Shares and the certificate or certificates
evidencing any such Shares shall bear the following legend:
"THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES MAY NOT
1
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BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT IS AVAILABLE."
Certificates for Shares without such legend shall be issued if such shares are
sold pursuant to an effective registration statement under the Act or if the
Company has received an opinion from counsel reasonably satisfactory to counsel
for the Company, that such legend is no longer required under the Act.
Certificates for Options or Shares shall also bear such legends as may be
required from time to time by law.
SECTION 5. VESTING AND TERMINATION OF OPTION. The Options granted
hereunder shall not vest until April 1, 2000 and shall only vest if Option
Holder is employed by Company at the close of business on April 1, 2000. Should
Option Holder's employment with the Company terminate for any reason prior to
April 1, 2000 this Option immediately terminates and is without any force and
effect. This Option shall automatically terminate if, at any time from the date
of this Option until April 1, 2000, Michael Calderone owns less than fifty-one
percent (51%) of the voting stock in the Company.
SECTION 6. REGISTRATION RIGHTS.
a. PIGGYBACK REGISTRATION RIGHTS. If the Company at any time proposes
to register any of its securities under the Act, including an S-8 Registration
Statement or otherwise, it will each such time give written notice to all
holders of outstanding Shares and Options of its intention so to do. The Company
will use best efforts at the request of Option Holder to register the shares
underlying these options on a form S-8 registration statement. Upon the written
request of a holder or holders of any such Shares or Options given within 30
days after receipt of any such notice, the Company will use its best efforts to
cause all such Shares, the holders of which (or of the Options for which upon
exercise thereof the Company will issue Shares) shall have so requested
registration thereof, to be registered under the Act (with the securities which
the Company at the time propose to register), all to the extent requisite to
permit the sale or other disposition by the prospective sellers of the Shares so
registered; provided, however, that the Company may, as a condition precedent to
the effectiveness of such registration, require each prospective seller to agree
with the Company and the managing underwriter or underwriters of the offering to
be made by the Company in connection with such registration that such seller
will not sell any securities of the same class or convertible into the same
class as those registered by the Company (including any class into which the
securities registered by the Company are convertible) for such reasonable period
after such registration becomes effective (not exceeding 60 days) as shall then
be specified in writing by such underwriter or underwriters if in the opinion of
such underwriter or underwriters the Company's offering would be materially
adversely affected in the absence of such an agreement. All expenses incurred by
the Company in complying with this Section, including without limitation all
registration and filing fees, listing fees, printing expenses, fees and
disbursements of all independent accounts, or counsel for the Company and or
counsel for the sellers and the expense of any special audits incident to or
required by any such registration and the expenses of complying with the
securities or blue sky laws of any jurisdiction shall be paid by the Company.
Notwithstanding the foregoing, sellers shall pay all underwriting discounts or
commissions with respect to shares sold by the sellers.
b. INDEMNIFICATION. Each holder of any Shares or Options shall by
acceptance thereof indemnify and hold harmless the Company and its directors and
officers, and each person, if any who controls the Company, against any losses,
claims, damages or liabilities, joint or several, to which the Company or any
director or officer or any such person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in any registration statement under which Shares were registered under the Act
at the request of such holder, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such registration statement, preliminary prospectus, prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of such
holder specifically stating that it is for use therein; and will reimburse the
Company or such director, officer or
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<PAGE>
person for any legal or any other expense reasonably incurred in connection with
investigation or defending any such loss, claim, damage, liability or action.
SECTION 7. NOTICES TO COMPANY AND OPTION HOLDER. Any notice or demand
authorized by this Agreement to be given or made by any registered holder of any
Option Certificate to or on the Company shall be sufficiently give or made if
sent by registered mail, postage prepaid, addressed (until another address is
filed in writing by the Company with the holders) to the Company and the Option
Holder to the addresses indicated in the signature block of this Agreement.
SECTION 8. SUPPLEMENTS AND AMENDMENTS. The Company and Option Holder
may from time to time supplement or amend this Agreement without the approval of
any option holders (other than Option Holder) in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Option
Holder may deem necessary or desirable and which the Company and Option Holder
deem shall not adversely affect the interests of the option holders.
SECTION 9. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or Option Holder shall bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 10. GOVERNING LAW. This Agreement and each Option Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Nevada and for all proposes shall be governed by and construed in
accordance with the laws of said State.
SECTION 11. COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. The Parties
agree that facsimile signatures of this Agreement shall be deemed a valid and
binding execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date and year first above written.
STOCKUP.COM, a Nevada corporation OPTION HOLDER
By: By:
----------------------------- --------------------------------
Michael Calderone (signature)
Its: President
--------------------------------
Print Name
Address: Address:
-----------------------------
-----------------------------
3
<PAGE>
EXHIBIT A
[FORM OF OPTION CERTIFICATE]
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE FROM 12:00 P.M. PACIFIC STANDARD TIME,
ON APRIL 1, 2000 UNTIL
11:59 P.M., PACIFIC STANDARD TIME ON MARCH 31, 2002
No. ____ _________ Options
OPTION CERTIFICATE
STOCKUP.COM, INC.
This Option Certificate certifies that ________________ ("Option
Holder") is the registered holder of ________ Options (the "Options") expiring
March 31, 2002 (the "Expiration Date") to purchase shares of Common Stock (the
"Shares") of STOCKUP.COM, INC., a Nevada corporation (the "Company"). Each
Option entitles the holder to purchase from the Company before 11:59 p.m.
(Pacific Standard time) on the "Expiration Date" one fully paid and
nonassessable share of Common Stock of the Company at the initial exercise price
for each Option of $10.00 per share (the "Exercise Price"), upon surrender of
this Option Certificate and payment of the Exercise Price at an office or agency
of the Company, but only subject to the terms and conditions set forth herein
and in the Option Agreement. Payment of the Exercise Price may be permitted by
check or wire transfer. Payment shall be deemed accepted only upon the receipt
of good funds by the Company. As used herein, "Share" or "Shares" refers to the
Common Stock of the Company. In the event that upon any exercise of Options
evidenced hereby, the number of Options exercised shall be less than the total
number of Options evidence hereby, there shall be issued to the holder hereof or
his or her assignee a new Option Certificate evidencing the number of Options
not exercised. No adjustment shall be made for any cash dividends on any Shares
issuable upon exercise of this Option.
No Option may be exercised after 11:59 P.M. (Pacific Standard Time) on
the Expiration Date. All Options evidenced hereby shall thereafter be void.
The Options evidenced by this Option Certificate are part of a duly
authorized issue of Options issued pursuant to an Option Agreement, dated as of
April 1, 1999 (the "Option Agreement"), duly executed by the Company and Option
Holder which Option Agreement is hereby incorporated by reference in and made a
part of this instruments and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder of the Option Certificates of Shares).
The Company may deem and treat the person(s) registered in the
Company's register as the absolute owner(s) of this Option Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, and of any distribution to the
holder(s) hereof, and for all purposes, and the Company shall not be affected by
any notice to the contrary.
All terms used in this Option Certificate which are defined in the
Option Agreement shall have the meaning assigned to them in the Option
Agreement.
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE
1
<PAGE>
SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be duly executed under its corporate seal.
Dated: April 1, 1999 STOCKUP.COM, INC.
By:
------------------------------
Michael Calderone
ITS: President
2
<PAGE>
FORM OF
ELECTION TO PURCHASE
(To be executed upon exercise of Option)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Option Certificate, to purchase ______ Shares and
herewith authorizes payment for such Shares in the amount of $_____ all in
accordance with the terms hereof. The undersigned requests that certificates for
such Shares be registered as follows:
Name Number of Shares
---- ----------------
all of whose addresses are ____________________________________________________,
and that such certificates be delivered to Option Holder whose address is
___________________________________________________. If said number of Shares is
less than all of the Shares purchasable hereunder, the undersigned requests that
a new Option Certificate representing the remaining balance of the Shares be
registered in the name of Option Holder whose address is
________________________________ and that such Certificates be delivered to the
attention of ___________________ at the above address.
Dated: OPTION HOLDER
---------------------
By:
-----------------------------------
(signature)
-----------------------------------
(print name)
<PAGE>
OPTION CERTIFICATE
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE FROM 12:00 P.M. PACIFIC STANDARD TIME,
ON APRIL 1, 2000 UNTIL
11:59 P.M., PACIFIC STANDARD TIME ON MARCH 31, 2002
No. _____ _________ Options
OPTION CERTIFICATE
STOCKUP.COM, INC.
This Option Certificate certifies that _____________ ("Option Holder")
or registered assigns, is the registered holder of ______ Options (the
"Options") expiring March 31, 2002 (the "Expiration Date"), to purchase shares
of Common Stock (the "Shares") of STOCKUP.COM, INC., a Nevada corporation (the
"Company"). Each Option entitles the holder to purchase from the Company before
11:59 p.m. (Pacific Standard time) on the "Expiration Date" one fully paid and
nonassessable share of Common Stock of the Company at the initial exercise price
for each Option of $10.00 per share (the "Exercise Price"), upon surrender of
this Option Certificate and payment of the Exercise Price at an office or agency
of the Company, but only subject to the terms and conditions set forth herein
and in the Option Agreement. Payment of the Exercise Price may be permitted by
check or wire transfer. Payment shall be deemed accepted only upon the receipt
of good funds by the Company. As used herein, "Share" or "Shares" refers to the
Common Stock of the Company. In the event that upon any exercise of Options
evidenced hereby, the number of Options exercised shall be less than the total
number of Options evidence hereby, there shall be issued to the holder hereof or
his or her assignee a new Option Certificate evidencing the number of Options
not exercised. No adjustment shall be made for any cash dividends on any Shares
issuable upon exercise of this Option.
No Option may be exercised after 11:59 P.M. (Pacific Standard Time) on
the Expiration Date. All Options evidenced hereby shall thereafter be void.
The Options evidenced by this Option Certificate are part of a duly
authorized issue of Options issued pursuant to an Option Agreement, dated as of
April 1, 1999 (the "Option Agreement"), duly executed by the Company and Option
Holder which Option Agreement is hereby incorporated by reference in and made a
part of this instruments and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder of the Option Certificates of Shares).
The Company may deem and treat the person(s) registered in the
Company's register as the absolute owner(s) of this Option Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, and of any distribution to the
holder(s) hereof, and for all purposes, and the Company shall not be affected by
any notice to the contrary.
All terms used in this Option Certificate which are defined in the
Option Agreement shall have the meaning assigned to them in the Option
Agreement.
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE
SOLD OR
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<PAGE>
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be duly executed under its corporate seal.
Dated: April 1, 1999 STOCKUP.COM, INC.
By:
-----------------------------
Michael Calderone
ITS: President
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<PAGE>
ELECTION TO PURCHASE
(To be executed upon exercise of Option)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Option Certificate, to purchase ______ Shares and
herewith authorizes payment for such Shares in the amount of $_____ all in
accordance with the terms hereof. The undersigned requests that certificates for
such Shares be registered as follows:
Name Number of Shares
---- ----------------
all of whose addresses are ____________________________________________________,
and that such certificates be delivered to Option Holder whose address is
______________________________________________________ . If said number of
Shares is less than all of the Shares purchasable hereunder, the undersigned
requests that a new Option Certificate representing the remaining balance of the
Shares be registered in the name of Option Holder whose address is
_______________________________________________ and that such Certificates be
delivered to the attention of ___________________ at the above address.
Dated: OPTION HOLDER
--------------------
By:
--------------------------------
(signature)
--------------------------------
(print name)
<PAGE>
EXHIBIT 4.3
FORM OF SERIES B OPTION AGREEMENT AND CERTIFICATE
<PAGE>
OPTION AGREEMENT
This OPTION AGREEMENT (the "Agreement") is dated as of April 1, 1999,
by and between STOCKUP.COM, INC. (the "Company"), and ____________________
("Option Holder").
WHEREAS, the Company proposes to issue to Option Holder _______ options
(the "Options"), each such Option entitling the holder thereof to purchase one
share of Common Stock, $.001 par value, of the Company (the "Shares") at an
exercise price of $10.00 per share.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. OPTION CERTIFICATES. The Option Certificates to be delivered
pursuant to this Agreement (the "Option Certificates") shall be in the form set
forth in EXHIBIT A, attached hereto and made a part hereof. The Option
Certificates shall be executed on behalf of the Company by its Chief Executive
Officer, President, or any Vice President under its corporate seal reproduced
thereon and attested by its corporate secretary or one of its assistant
secretaries. Option Certificates may be exchanged at the Optionholder's option,
when surrendered to the Company for another Option Certificate or other Option
Certificates of like tenor and representing in the aggregate a like number of
Options.
SECTION 2. RIGHT TO EXERCISE OPTIONS. Each Option may be exercised from
the date of this Agreement until 11:59 P.M. (Pacific Standard time) on the date
that is two years after the vesting date of this Option, or March 31, 2002 (the
"Expiration Date"). Each Option not exercised on or before the Expiration Date
shall expire. Subject to the provisions of this Option Agreement, including
Section 10 hereof, the holder of each Option shall have the right to purchase
from the Company, and the Company shall issue and sell to each such Option
Holder, at an initial exercise price per share of $10.00, subject to adjustment
as provided herein (the "Exercise Price"), one fully paid and nonassessable
Share upon surrender to the Company of the Option Certificate evidencing such
Option, with the form of election to purchase duly completed and signed and
evidence of payment of the Exercise Price. Payment of the Exercise Price shall
be made by wire transfer or check to the Company. A check for the option price
shall not be considered delivered until good funds are received by the Company.
Upon surrender of such Option Certificate and payment of the Exercise
Price, the Company shall cause to be issued and delivered promptly to Option
Holder a certificate for the Shares issuable upon the exercise of the Option or
Options evidenced by such Option Certificate. The Options evidenced by an Option
Certificate shall be exercisable at the election of the Option holder thereof,
either as an entirety or from time to time for less than all of the number of
Options specified in the Option Certificate.
SECTION 3. RESERVATION OF SHARES. The Company will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Shares or its authorized and issued Shares held in its
treasury for the purpose of enabling it to satisfy any obligation to issue
Shares upon exercise of Options, the full number of Shares deliverable upon the
exercise of all outstanding Options. The Company covenants that all Shares which
may be issued upon exercise of Options will be validly issued, fully paid and
nonassessable outstanding Shares of the Company.
SECTION 4. REGISTRATION UNDER THE SECURITIES ACT OF 1933. Option Holder
represents and warrants to the Company that Option Holder is acquiring the
Options for investment and with no present intention of distributing or
reselling any of the Options. The Shares and the certificate or certificates
evidencing any such Shares shall bear the following legend:
"THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THE SHARES MAY NOT
1
<PAGE>
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE."
Certificates for Shares without such legend shall be issued if such shares are
sold pursuant to an effective registration statement under the Act or if the
Company has received an opinion from counsel reasonably satisfactory to counsel
for the Company, that such legend is no longer required under the Act.
Certificates for Options or Shares shall also bear such legends as may be
required from time to time by law.
SECTION 5. VESTING AND ASSIGNMENT OF OPTION. The Options granted
hereunder shall be fully earned as of April 1, 2000. If a change in control of
the Company should occur prior to the vesting date of April 1, 2000, the Option
shall be immediately deemed exercised in full. A change in control is defined as
any transaction which results in Michael Calderone holding less than fifty-one
percent (51%) of the voting stock of the Company. The percentage for purposes of
determining control is calculted prior to the exercise of this Option. This
Option is freely assignable by Option Holder at any time prior to its
expiration.
SECTION 6. REGISTRATION RIGHTS.
a. PIGGYBACK REGISTRATION RIGHTS. If the Company at any time proposes
to register any of its securities under the Act, including an S-8 Registration
Statement or otherwise, it will each such time give written notice to all
holders of outstanding Shares and Options of its intention so to do. The Company
will use best efforts at the request of Option Holder to register the shares
underlying these options on a form S-8 registration statement. Upon the written
request of a holder or holders of any such Shares or Options given within 30
days after receipt of any such notice, the Company will use its best efforts to
cause all such Shares, the holders of which (or of the Options for which upon
exercise thereof the Company will issue Shares) shall have so requested
registration thereof, to be registered under the Act (with the securities which
the Company at the time propose to register), all to the extent requisite to
permit the sale or other disposition by the prospective sellers of the Shares so
registered; provided, however, that the Company may, as a condition precedent to
the effectiveness of such registration, require each prospective seller to agree
with the Company and the managing underwriter or underwriters of the offering to
be made by the Company in connection with such registration that such seller
will not sell any securities of the same class or convertible into the same
class as those registered by the Company (including any class into which the
securities registered by the Company are convertible) for such reasonable period
after such registration becomes effective (not exceeding 60 days) as shall then
be specified in writing by such underwriter or underwriters if in the opinion of
such underwriter or underwriters the Company's offering would be materially
adversely affected in the absence of such an agreement. All expenses incurred by
the Company in complying with this Section, including without limitation all
registration and filing fees, listing fees, printing expenses, fees and
disbursements of all independent accounts, or counsel for the Company and or
counsel for the sellers and the expense of any special audits incident to or
required by any such registration and the expenses of complying with the
securities or blue sky laws of any jurisdiction shall be paid by the Company.
Notwithstanding the foregoing, sellers shall pay all underwriting discounts or
commissions with respect to shares sold by the sellers.
b. INDEMNIFICATION. Each holder of any Shares or Options shall by
acceptance thereof indemnify and hold harmless the Company and its directors and
officers, and each person, if any who controls the Company, against any losses,
claims, damages or liabilities, joint or several, to which the Company or any
director or officer or any such person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in any registration statement under which Shares were registered under the Act
at the request of such holder, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such registration statement, preliminary prospectus, prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of such
holder specifically stating that it is for use therein; and will reimburse the
Company or such director, officer or
2
<PAGE>
person for any legal or any other expense reasonably incurred in connection with
investigation or defending any such loss, claim, damage, liability or action.
SECTION 7. NOTICES TO COMPANY AND OPTION HOLDER. Any notice or demand
authorized by this Agreement to be given or made by any registered holder of any
Option Certificate to or on the Company shall be sufficiently give or made if
sent by registered mail, postage prepaid, addressed (until another address is
filed in writing by the Company with the holders) to the Company and the Option
Holder to the addresses indicated in the signature block of this Agreement.
SECTION 8. SUPPLEMENTS AND AMENDMENTS. The Company and Option Holder
may from time to time supplement or amend this Agreement without the approval of
any option holders (other than Option Holder) in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Option
Holder may deem necessary or desirable and which the Company and Option Holder
deem shall not adversely affect the interests of the option holders.
SECTION 9. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or Option Holder shall bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 10. GOVERNING LAW. This Agreement and each Option Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Nevada and for all proposes shall be governed by and construed in
accordance with the laws of said State.
SECTION 11. COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. The Parties
agree that facsimile signatures of this Agreement shall be deemed a valid and
binding execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date and year first above written.
STOCKUP.COM, a Nevada corporation OPTION HOLDER
By: By:
-------------------------- --------------------------------
Michael Calderone (signature)
Its: President
--------------------------------
Print Name
Address: Address:
----------------------------
----------------------------
3
<PAGE>
EXHIBIT A
[FORM OF OPTION CERTIFICATE]
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE FROM 12:00 P.M. PACIFIC STANDARD TIME,
ON APRIL 1, 2000 UNTIL
11:59 P.M., PACIFIC STANDARD TIME ON MARCH 31, 2002
No. ____ _________ Options
OPTION CERTIFICATE
STOCKUP.COM, INC.
This Option Certificate certifies that ________________ ("Option
Holder") is the registered holder of ________ Options (the "Options") expiring
March 31, 2002 (the "Expiration Date") to purchase shares of Common Stock (the
"Shares") of STOCKUP.COM, INC., a Nevada corporation (the "Company"). Each
Option entitles the holder to purchase from the Company before 11:59 p.m.
(Pacific Standard time) on the "Expiration Date" one fully paid and
nonassessable share of Common Stock of the Company at the initial exercise price
for each Option of $10.00 per share (the "Exercise Price"), upon surrender of
this Option Certificate and payment of the Exercise Price at an office or agency
of the Company, but only subject to the terms and conditions set forth herein
and in the Option Agreement. Payment of the Exercise Price may be permitted by
check or wire transfer. Payment shall be deemed accepted only upon the receipt
of good funds by the Company. As used herein, "Share" or "Shares" refers to the
Common Stock of the Company. In the event that upon any exercise of Options
evidenced hereby, the number of Options exercised shall be less than the total
number of Options evidence hereby, there shall be issued to the holder hereof or
his or her assignee a new Option Certificate evidencing the number of Options
not exercised. No adjustment shall be made for any cash dividends on any Shares
issuable upon exercise of this Option.
No Option may be exercised after 11:59 P.M. (Pacific Standard Time) on
the Expiration Date. All Options evidenced hereby shall thereafter be void.
The Options evidenced by this Option Certificate are part of a duly
authorized issue of Options issued pursuant to an Option Agreement, dated as of
April 1, 1999 (the "Option Agreement"), duly executed by the Company and Option
Holder which Option Agreement is hereby incorporated by reference in and made a
part of this instruments and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder of the Option Certificates of Shares).
The Company may deem and treat the person(s) registered in the
Company's register as the absolute owner(s) of this Option Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, and of any distribution to the
holder(s) hereof, and for all purposes, and the Company shall not be affected by
any notice to the contrary.
All terms used in this Option Certificate which are defined in the
Option Agreement shall have the meaning assigned to them in the Option
Agreement.
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE
1
<PAGE>
SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be duly executed under its corporate seal.
Dated: April 1, 1999 STOCKUP.COM, INC.
By:
----------------------------
Michael Calderone
ITS: President
2
<PAGE>
FORM OF
ELECTION TO PURCHASE
(To be executed upon exercise of Option)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Option Certificate, to purchase ______ Shares and
herewith authorizes payment for such Shares in the amount of $_____ all in
accordance with the terms hereof. The undersigned requests that certificates for
such Shares be registered as follows:
Name Number of Shares
---- ----------------
all of whose addresses are ____________________________________________________,
and that such certificates be delivered to Option Holder whose address is
___________________________________________________. If said number of Shares is
less than all of the Shares purchasable hereunder, the undersigned requests that
a new Option Certificate representing the remaining balance of the Shares be
registered in the name of Option Holder whose address is
________________________________ and that such Certificates be delivered to the
attention of ___________________ at the above address.
Dated: OPTION HOLDER
---------------------
By:
------------------------------------
(signature)
------------------------------------
(print name)
<PAGE>
OPTION CERTIFICATE
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE FROM 12:00 P.M. PACIFIC STANDARD TIME,
ON APRIL 1, 2000 UNTIL
11:59 P.M., PACIFIC STANDARD TIME ON MARCH 31, 2002
No. _____ _________ Options
OPTION CERTIFICATE
STOCKUP.COM, INC.
This Option Certificate certifies that _____________ ("Option Holder")
or registered assigns, is the registered holder of ______ Options (the
"Options") expiring March 31, 2002 (the "Expiration Date"), to purchase shares
of Common Stock (the "Shares") of STOCKUP.COM, INC., a Nevada corporation (the
"Company"). Each Option entitles the holder to purchase from the Company before
11:59 p.m. (Pacific Standard time) on the "Expiration Date" one fully paid and
nonassessable share of Common Stock of the Company at the initial exercise price
for each Option of $10.00 per share (the "Exercise Price"), upon surrender of
this Option Certificate and payment of the Exercise Price at an office or agency
of the Company, but only subject to the terms and conditions set forth herein
and in the Option Agreement. Payment of the Exercise Price may be permitted by
check or wire transfer. Payment shall be deemed accepted only upon the receipt
of good funds by the Company. As used herein, "Share" or "Shares" refers to the
Common Stock of the Company. In the event that upon any exercise of Options
evidenced hereby, the number of Options exercised shall be less than the total
number of Options evidence hereby, there shall be issued to the holder hereof or
his or her assignee a new Option Certificate evidencing the number of Options
not exercised. No adjustment shall be made for any cash dividends on any Shares
issuable upon exercise of this Option.
No Option may be exercised after 11:59 P.M. (Pacific Standard Time) on
the Expiration Date. All Options evidenced hereby shall thereafter be void.
The Options evidenced by this Option Certificate are part of a duly
authorized issue of Options issued pursuant to an Option Agreement, dated as of
April 1, 1999 (the "Option Agreement"), duly executed by the Company and Option
Holder which Option Agreement is hereby incorporated by reference in and made a
part of this instruments and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder of the Option Certificates of Shares).
The Company may deem and treat the person(s) registered in the
Company's register as the absolute owner(s) of this Option Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, and of any distribution to the
holder(s) hereof, and for all purposes, and the Company shall not be affected by
any notice to the contrary.
All terms used in this Option Certificate which are defined in the
Option Agreement shall have the meaning assigned to them in the Option
Agreement.
THE OPTIONS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR
OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE OPTIONS, SHARES OR OTHER SECURITIES MAY NOT BE
SOLD OR
1
<PAGE>
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be duly executed under its corporate seal.
Dated: April 1, 1999 STOCKUP.COM, INC.
By:
-------------------------------
Michael Calderone
ITS: President
2
<PAGE>
ELECTION TO PURCHASE
(To be executed upon exercise of Option)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Option Certificate, to purchase ______ Shares and
herewith authorizes payment for such Shares in the amount of $_____ all in
accordance with the terms hereof. The undersigned requests that certificates for
such Shares be registered as follows:
Name Number of Shares
---- ----------------
all of whose addresses are ____________________________________________________,
and that such certificates be delivered to Option Holder whose address is
______________________________________________________. If said number of Shares
is less than all of the Shares purchasable hereunder, the undersigned requests
that a new Option Certificate representing the remaining balance of the Shares
be registered in the name of Option Holder whose address is
_______________________________________________ and that such Certificates be
delivered to the attention of ___________________ at the above address.
Dated: OPTION HOLDER
--------------------
By:
---------------------------------
(signature)
---------------------------------
(print name)
<PAGE>
EXHIBIT 4.4
FORM OF VESTING AGREEMENT
<PAGE>
VESTING AGREEMENT NUMBER:_________
VESTING AGREEMENT
This Agreement is made effective as of the Issuance Date set
forth in Exhibit A (the "Issuance Date") by and between Marketing Direct
Concepts, Inc., a Nevada corporation (the "Company"), Stockup.Com, Inc.
("Stockup") and the Employee who has executed this Agreement in Exhibit A hereto
(the "Employee") .
1. GRANT OF STOCK. Subject to the terms and conditions of this
Agreement, the Company agrees to transfer to Employee as of the Issuance Date
the number of shares of common stock of Stockup set forth in Exhibit A hereto
(the "Stockup Shares"), in exchange for the number of shares owned by the
Employee in the Company set forth in Exhibit A (the "MDC Shares"). It being
understood that in the event the Employee does not own shares of the Company as
of the Issuance Date, then the transfer of Shares to the Employee may generate
certain adverse tax effects
2. VESTING SCHEDULE. The Stockup Shares shall vest over a six (6) month
period commencing upon the Commencement Date (set forth in Exhibit A hereto) in
accordance with the following schedule:
a. 10% of the Shares at the end of the first thirty (30)
days following the Commencement Date.
b. 10% of the Shares at the end of the first sixty (60)
days following the Commencement Date.
c. 10% of the Shares at the end of the first ninety (90)
days following the Commencement Date.
d. 10% of the Shares at the end of the first one hundred
twenty (120) days following the Commencement Date.
e. 10% of the Shares at the end of the first one hundred
fifty (150) days following the Commencement Date.
f. the remaining 50% at the end of the first one hundred
eighty (180) days following the Commencement Date.
All non-vested Shares shall automatically vest, at any time after the
Commencement Date, in the event there is a Change in Control of the Company (as
hereinafter defined). "Change in Control" shall be the acquisition by a single
third party of at least 50.1% of the issued and outstanding shares of the common
stock of the Company or securities convertible or exercisable into such amount
which provide the acquiror with at least 50.1% of the voting control of the
Company. The Employee shall not have the right to trade, encumber or otherwise
transfer the Shares during the twelve month period of time following the
completion of the Vesting Schedule, without the express written consent of the
Company. In the event the Employee's employment with the Company is terminated
by reason of a violation of the Company's Employee Manual in effect at the time
of the termination ("Manual Violation"), then the Shares transferred under this
Vesting Agreement shall be canceled and the Employee shall forfeit all right,
title and interest in those Shares. In the event the Employee's employment with
the Company is voluntarily or involuntarily terminated hereunder for any reason
other than a Manual Violation, then the Employee shall be entitled to retain all
vested Shares, but all non-vested Shares granted to such Employee shall be
canceled and returned to the treasury of Stockup.
3. DELIVERY OF STOCK. Upon execution of this Agreement, Stockup shall
issue a certificate representing the Stockup Shares to Employee. The certificate
shall bear a restrictive legend as follows:
THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF A VESTING AGREEMENT. THIS VESTING AGREEMENT PROHIBITS THE
TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE DURING THE 12
MONTH PERIOD OF TIME FOLLOWING THE COMPLETION OF THE VESTING SCHEDULE
TO PURSUANT TO WHICH THESE
1
<PAGE>
SHARES WERE ISSUED. IN ORDER TO TRANSFER SUCH SHARES, THE HOLDER OF
THIS CERTIFICATE MUST OBTAIN AN OPINION OF LEGAL COUNSEL TO STOCKUP
THAT THE SHARES ARE TRANSFERABLE UNDER THE TERMS OF THE VESTING
AGREEMENT.
Unless and until the Shares transferred under this Vesting Agreement
are lawfully sold by the Employee in an open market transaction, the Employee
hereby grants Michael Calderone, an irrevocable proxy, coupled with an interest
to vote all such Shares, within the complete discretion of Michael Calderone.
4. REPRESENTATIONS AND WARRANTIES. Employee represents to Company that:
Employee has adequate means of providing for current financial
needs and contingencies, has no need for liquidity in the Shares, and is able to
bear the economic risk of an investment in the Shares granted hereby by the
Company. Employee understands that in connection with the transfer of the
Stockup Shares Employee is not being provided with any formal disclosure
documentation. Employee has had an opportunity to ask questions of and receive
answers from Stockup concerning the terms and conditions of the grant of the
Stockup Shares and the current and proposed future operations of Stockup.
Employee will not sell or otherwise transfer the Shares unless in compliance
with the restrictive legend set forth on the Certificate evidencing the Stockup
Shares.
5. MISCELLANEOUS
a. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the
transactions contemplated hereby, and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof.
b. NOTICES. Any notice, request, instruction, or other
document required by the terms of this Agreement, or deemed by any of the
parties hereto to be desirable, to be given to any other party hereto shall be
in writing and shall be given by facsimile, personal delivery, overnight
delivery, or mailed by registered or certified mail, postage prepaid, with
return receipt requested, if to the Company:
If to the Company: Stockup.Com, Inc.
333 North Rancho Drive, Suite 900
Las Vegas, Nevada 89106
Attn: Michael Calderone
If to the Employee:
At the address set forth adjacent to his/her name set forth in Exhibit
A hereto. Three attempted but unsuccessful deliveries shall constitute notice
for purposes of this Agreement. All such notices shall be sent registered mail,
postage prepaid, addressed as set forth above (until another address is filed in
writing by either the Company or the Employee) to the Company and the Employee.
c. WAIVER AND AMENDMENT. This Agreement may only be amended
with the express written consent of each of the parties hereto. The failure or
delay of any party at any time or times to exercise its rights with respect to
any provision hereof shall in no manner operate as a waiver of or affect such
party's right at a later time to enforce the same.
d. CHOICE OF LAW. This Agreement and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of Nevada including all matters of construction, validity, performance,
and enforcement and without giving effect to the principles of conflict of laws.
The parties submit to the jurisdiction of the Courts of the State of Nevada or a
Federal Court empaneled in the State of Nevada for the resolution of all legal
disputes arising under the terms of this Agreement.
2
<PAGE>
e. TAXES. Any income taxes required to be paid in connection
with the payments due hereunder, shall be borne by the party required to make
such payment. Any withholding taxes in the nature of a tax on income shall be
deducted from payments due, and the party required to withhold such tax shall
furnish to the party receiving such payment all documentation necessary to prove
the proper amount to withhold of such taxes and to prove payment to the tax
authority of such required withholding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the date first written hereinabove.
THE COMPANY
MARKETING DIRECT CONCEPTS, INC.
BY:
-------------------------------------
Michael Calderone, President
STOCKUP.COM, INC.
BY:
-------------------------------------
Michael Calderone, President
3
<PAGE>
EXHIBIT A
Name of Employee:________________________
Signature of Employee:___________________
Issuance Date:___________________________
Commencement Date:_______________________
Number of MDC Shares:____________________
Number of Stockup Shares_________________
<PAGE>
EXHIBIT 10.1
LEASE DATED FEBRUARY 5, 1999
<PAGE>
THE ATRIUM OFFICE LEASE
THIS LEASE is made as of the 5TH day of FEBRUARY, 1999, by and between
Landlord and Tenant, upon the following terms and conditions:
SECTION 1. BASIC LEASE PROVISIONS.
These Basic Lease Provisions set forth the basic terms of this
Lease. In the event of any inconsistency between the terms set forth in these
Provisions and any other provision of this Lease, the Basic Lease Provisions
shall prevail.
1.1 TENANT:
Name and Address of Tenant: Stockup.com, Inc
333 N. Rancho Drive #810
Las Vegas, NV 89106
Telephone: 702-648-6400
1.2 LANDLORD:
Name and Address of Landlord: L.V. Atrium, Inc.
C/O Imperial Credit Commercial
Mortgage
Investment Corp.
11601 Wilshire Boulevard,
Suite 2080
Los Angeles, CA 90025
Telephone: (310) 231-1280
Facsimile: (310) 231-1281
1.3 PREMISES: Suite 650, 333 North Rancho Road, Las Vegas, NV, as shown
on EXHIBIT A.
Premises Area: 8057 sq. ft.
Building Area: 138,230 sq. ft.
Tenant's Proportionate Share: 5.83%
1.4 TERM: 4 Lease Years and 0 months
Expiration Date: March 31, 2003
Commencement Date: April 1, 1999
Options to Extend: Not applicable
1.5 BASE RENT: For the period from April 1, 1999 through and including
March 31, 2000 Base Rent shall be $13,294.05 per month;
For the period from April 1, 2000 through and including March
31, 2001, Base Rent shall be $13,696.90 per month;
For the period from April 1, 2001 through and including March
31, 2002, Base Rent shall be $14,099.75 per month;
For the period from April 1, 2002 through and including March
31, 2003, Base Rent shall be $14,502.60 per month;
Adjustments: SEE ADDENDUM
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1.6 SECURITY DEPOSIT: $23,294.05
If (a) between the date hereof and March 15, 2001 all rent and
other amounts due to Landlord pursuant to the terms of this Lease shall have
been paid on or before the due date therefor and in full, and in addition
thereto (b) on or before March 1, 2001 Tenant shall have paid to Landlord an
amount equal to the installment of base rent due and payable on March 1, 2001
reduced by the amount to be applied to that installment from the Security
Deposit pursuant to this sentence, $10,000 of the Security Deposit then held by
Landlord (or if the amount of the Security Deposit then held by Landlord and not
otherwise applied is less than $10,000, the entire unapplied amount of the
Security Deposit then held by Landlord) shall be applied toward the installment
of base rent due and payable on March 1, 2001.
1.7 BASE YEAR: 1999
1.8 PERMITTED USE: For general office use for an internet sales and
marketing company, and for no other use or purpose.
1.9 BROKER(S): First City Corporation Susan Phillip - Landlord's
Representative
1.10 GUARANTOR(S): N/A
1.11 DEFINITIONS: All capitalized terms used in this Lease shall have
the meanings specified in this SECTION 1 or in SECTION 43 or in any Addendum to
this Lease.
1.12 EXHIBITS: The following Exhibits are attached to this Lease and
incorporated herein by this reference:
EXHIBIT A - Floor Plan(s) showing the location of the Premises
EXHIBIT B - Statement of Commencement Date
EXHIBIT C - Work Letter
EXHIBIT D - Rules and Regulations for the Project
EXHIBIT E - Form of Guaranty
1.13 PARKING. Tenant shall have two reserved parking stalls in the
Parking Facilities, each of which stalls shall be in a location designated by
Landlord from time to time.
1.14 ADDENDUM ATTACHED: X Yes No
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SECTION 2. LEASE OF PREMISES.
2.1 LEASE TO TENANT. Landlord hereby leases the Premises to Tenant, and
Tenant hereby leases the Premises from Landlord, for the Term, subject to the
other provisions of this Lease. Landlord and Tenant agree on the area of the
Premises and the Project set forth in the Basic Lease Provisions, and no
remeasurement shall result in any increase or decrease in Base Rent or other
Rent; provided, however, that Landlord shall remeasure the Premises in
accordance with Building Owners and Managers Association standards or other
appropriate standards as determined by Landlord and, if such remeasurement
discloses that the actual square footage of the Premises, as so remeasured,
exceeds or is less than the square footage reflected in Section 1.3, above, by
an amount that is more than 5% of the square footage reflected in said in
Section 1.3, above, the Base Rent and other amounts payable pursuant to this
Lease shall be proportionally adjusted to reflect the actual square footage of
the Premises. If the actual square footage of the Premises, as so remeasured, is
5% or less of the square footage reflected in said Section 1.3, above, the
variance between the square footage reflected in said in Section 1.3, above and
the actual square footage of the Premises shall be deemed immaterial, and there
shall be no adjustment to the Base Rent and other amounts payable as set forth
in this Lease.
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2.2 COMMON AREAS. Tenant shall have the nonexclusive right to use the
Common Areas, subject to the Rules and Regulations. Tenant's rights are subject
to Landlord's right to make changes to the Common Areas or the use of such
Common Areas which Landlord deems reasonable, perform maintenance and repairs
and otherwise use the Common Areas as Landlord may deem appropriate in its
reasonable judgment. Landlord shall not be obligated to light the Common Areas
outside the hours specified in the Rules and Regulations.
2.3 TITLE. Tenant's leasehold estate in the Premises under this Lease
is subject to: (a) the Matters of Record; and (b) the effect of any and all Laws
applicable to the use and occupancy of the Premises.
2.4 ACCEPTANCE OF PREMISES; PROJECT. Tenant accepts the Premises, the
Common Areas and Project as satisfactorily completed and acknowledges that the
Premises and the Project are in good and satisfactory condition as of the time
when possession is taken.
2.5 DELIVERY OF POSSESSION. Landlord shall deliver to Tenant possession
of the Premises upon the Commencement Date, free and clear of all other tenants
and occupancies. Landlord shall not be liable for any delay in delivery of
possession of the Premises, but the Commencement Date and the Expiration Date
shall be extended by the same number of days of delay. Landlord makes no
representation or warranty with respect to the occupancy by any tenant or
occupant (whether a major tenant or occupant, a small shop tenant or occupant,
or the tenant or occupant of any pad or lot within the Project), the date on
which any such tenant or occupant accepted or will accept occupancy of its space
or use to which any other tenant or occupant will put its leased space.
2.6 QUIET POSSESSION. Upon paying all Rent and performing all other
required covenants and conditions, Tenant shall be entitled to quietly have,
hold, and enjoy the Premises during the Term, subject to Landlord's rights under
this Lease.
2.7 USE OF PREMISES. Tenant and Tenant's Employees shall use the
Premises solely for the uses specified in the Basic Lease Provisions and Tenant
shall, at is sole cost and expense, faithfully observe and promptly comply and
cause the Premises to comply with all Rules and Regulations, signage criteria
and any Laws or Matters of Record now in force or which may hereafter be in
force with respect to Tenant's use, occupancy and possession of the Premises.
Tenant shall at all times keep the Premises in a clean and wholesome condition,
and shall further comply with all requirements of any board of fire underwriters
or other similar body now or hereafter constituted. In no event shall Landlord
be liable to Tenant for any damage or claims suffered or incurred as a result of
the failure of Tenant, or any other Person (other than Landlord) to conform to
the foregoing.
2.8 CHANGES TO PROJECT. Landlord reserves the right, in its sole
discretion, at any time to make permanent or temporary changes or replacements
to the Project, including but not limited to the Common Areas, so long as such
change or replacement does not materially and adversely affect Tenant's use of
the Premises for the conduct of its business. Landlord's activities may require
the temporary alteration of means of ingress and egress to the Project and the
installation of scaffolding and other temporary structures while the work is in
progress. None of the same shall be considered to be a constructive eviction of
Tenant from the Premises, or give Tenant any right to rent abatement or
otherwise alter the rights or obligations (including Rent) of Tenant under this
Lease.
2.9 NAME OF PROJECT. Landlord may change the name and/or the address of
the Project at its sole discretion.
2.10 RELOCATION OF PREMISES. Landlord shall have the right at any time,
upon at least 90 days' written notice to Tenant, to relocate Tenant at
Landlord's cost to other comparable premises in the Project ("RELOCATED
PREMISES").
SECTION 3. RENT.
3.1 PAYMENT OF BASE RENT. Tenant shall pay to Landlord the Base Rent
specified in SECTION 1.5 (adjusted as provided below), in advance on or before
the first day of each calendar month during the Term without demand, deduction
or setoff.
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3.2 PAYMENT OF ADDITIONAL RENT. In addition to the Base Rent, Tenant
shall pay as Additional Rent:
3.2.1 All personal property taxes assessed against and levied
upon any Personal Property and Tenant Alterations (including a satellite dish,
if any, that may be installed on the roof of the Building by or on behalf of
Tenant, as contemplated by Section 49 of this Lease) prior to delinquency.
3.2.2 Tenant's Proportionate Share of the Excess Expense (as
hereinafter defined) incurred during the Term, payable in accordance with
SECTION 3.3.
3.2.3 All additional charges for any services, goods or
materials furnished by Landlord at Tenant's request or relating to Tenant's
specific use of the Premises.
3.2.4 All other sums payable by Tenant hereunder.
3.3 PAYMENT OF OPERATING COSTS. In addition to the Base Rent,
commencing on the first day of each calendar month during the Term, Tenant shall
pay in monthly installments an amount equal to Tenant's Proportionate Share of
the excess of Direct Expenses for such year over the Direct Expenses for the
Base Year (the "EXCESS EXPENSE") in accordance with the following provisions:
3.3.1 Following the end of each calendar year, Landlord shall
deliver to Tenant a good faith estimate of the Excess Expenses for the next
calendar year (the "EXCESS EXPENSE ESTIMATE"). The Excess Expense Estimate shall
show the amount previously paid by Tenant for Excess Expenses for the previous
calendar year. In addition to the Base Rent provided for in SECTION 3.1, above,
on the first day of each calendar month during each calendar year, Tenant shall
pay one-twelfth (1/12th) of the Excess Expense Estimate for said calendar year.
3.3.2 Landlord may periodically revise the Excess Expense
Estimate to reflect changed circumstances, and Tenant shall make subsequent
payments for Direct Expenses based upon the revised Excess Expense Estimate.
3.3.3 After each calendar year in the Term, Landlord shall
deliver to Tenant a statement of the actual Excess Expenses (the "ANNUAL
STATEMENT"). The Annual Statement shall state the amount by which Tenant has
underpaid or overpaid Tenant's Proportionate Share of the Excess Expenses.
Tenant shall pay any deficiency to Landlord within 30 days after receipt of the
Annual Statement. The amount of any overpayment shall be refunded to Tenant or
credited against Rent next coming due.
3.3.4 Tenant shall have 30 days after delivery of the Annual
Statement to object in writing to the accuracy of the statement. If Tenant does
not make its written objection within that period, the Annual Statement shall be
binding upon Tenant. Whether or not Tenant objects to the Annual Statement,
Tenant shall pay any amount required by such Statement within the 30 day period.
3.3.5 In the event Landlord elects to rehabilitate the
Project, excluding any construction of additional leasable space, the costs of
such rehabilitation shall be shared by Tenant as an Operating Cost; provided,
however, such rehabilitation costs shall be amortized over the useful life of
the rehabilitation [not to exceed fifteen (15) years] using the interest rate
actually charged by the actual rehabilitation lender as arranged by Landlord.
3.3.6 Even though the Term has expired or this Lease has been
terminated and Tenant has vacated the Premises, when the final determination is
made of Tenant's Proportionate Share of Excess Expenses pursuant to this SECTION
3.3 for the year in which the Term expires or this Lease terminates, Tenant
shall promptly pay any amount due over the estimated amount of the same
previously paid by Tenant for such year, and conversely, any overpayment made
shall be promptly refunded by Landlord to Tenant; provided however, that all or
any part of any such refund may be applied by Landlord in payment of any
delinquent or past due sums, including Base Rent or any other amounts due from
Tenant.
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3.4 ANNUAL BASE RENT ADJUSTMENT. BASE RENT SHALL BE ADJUSTED PER
SECTION 1.5 OF THE LEASE. The Base Rent for the second Lease Year, and each
Lease Year thereafter, shall be an amount equal to the Base Rent in effect for
the preceding Lease Year multiplied by a fraction, equal to the Index for the
month which is 3 months prior to the beginning of the Lease Year for which Base
Rent is being determined, divided by the Index for the same month in the
preceding year. In no event, however, shall the Base Rent for the second Lease
Year and each Lease Year thereafter be less than the Base Rent in effect
immediately prior to each such Lease Year.
3.5 SECURITY DEPOSIT. Concurrently with the execution of this Lease,
Tenant shall deposit with Landlord the Security Deposit. Landlord shall not be
required to pay interest on the Security Deposit or keep the Security Deposit
separate from its general funds. Upon any Default by Tenant, Landlord may use
the Security Deposit to the extent necessary to make good any arrears of sums
payable by Tenant under this Lease, or to compensate Landlord for any damage,
injury, expense or liability caused by Tenant's Default. If any portion of the
Security Deposit is so used or applied, Tenant shall, within five (5) days after
written demand therefor, deposit a certified or bank cashier's check with
Landlord in an amount sufficient to restore the Security Deposit to its amount
immediately preceding such use or application of funds and Tenant's failure to
do so shall be a Default under this Lease. The balance of the Security Deposit
remaining at the end of the Lease Term shall be returned after all of Tenant's
obligations have been fulfilled. If Landlord transfers its interest in the
Premises during the Lease Term, Landlord may assign the Security Deposit to the
transferee and thereafter Landlord shall have no further liability for the
return of such Security Deposit. Tenant agrees to look solely to such transferee
or assignee for the return of the Security Deposit; PROVIDED, HOWEVER, that if
such transferee or assignee is a foreclosing lender or a third party purchaser
at a judicial or non-judicial foreclosure sale (or transfer by deed in lieu
thereof), such transferee or assignee (and its successors and assigns) shall be
obligated to return the Security Deposit to Tenant if and only if it has
actually received the same from Landlord. Landlord and its successors and
assigns shall not be bound by any actual or attempted assignment or encumbrance
of the Security Deposit by Tenant; provided, however, if Tenant's interest in
this Lease has been assigned, Landord shall, provided that Landlord has been
furnished with a fully executed copy of the agreement assigning such Security
Deposit, return the Security Deposit to such assignee in accordance with the
terms and conditions hereof. If Landlord returns the Security Deposit to
Tenant's assignee as aforesaid, Landlord will have no further obligation to
Tenant or any other party with respect thereto.
3.6 LATE CHARGES. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent or other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult, if not impossible, to ascertain. Such costs include, but
are not limited to, processing and accounting charges, and late charges which
may be imposed upon Landlord by the terms of any mortgage or trust deed covering
the Premises. Accordingly, if any installment of rent or any sum due from Tenant
shall not be received by Landlord or Landlord's designee within five (5) days
after said amount is past due, then, in addition to all other remedies provided
herein, Tenant shall pay to Landlord a late charge equal to the greater of (i)
ten (10%) percent of such overdue amount (but in no event greater than the
maximum amount permitted by law), or (ii) a service charge equal to the sum of
$50.00 plus $10.00 per day for each day after the due date for which Tenant's
failure to pay continues, plus, in either event, all attorneys' fees incurred by
Landlord by reason of Tenant's failure to pay rent and/or other charges when due
hereunder. The parties hereby agree that such late charges represent a fair and
reasonable estimate of the cost that Landlord will incur by reason of the late
payment by Tenant, and that it does not constitute a forfeiture or penalty.
Acceptance of such late charges by Landlord shall in no event constitute a
waiver of Tenant's default with respect to such overdue amount, nor prevent
Landlord from exercising any of the other rights and remedies granted hereunder.
Landlord may, at its option, include all late charges accrued during any
calendar year in the estimated charges to be paid by Tenant for the ensuing
year, and may deduct all late charges from the security deposit, if any, being
maintained in accordance with SECTIONS 1.6 AND 3.5.
SECTION 4. ALTERATION AND IMPROVEMENTS.
4.1 ALTERATIONS BY TENANT. At its sole cost and expense, Tenant shall
have the right to make Tenant Alterations which have received Landlord's prior
written approval (which will not be unreasonably withheld), so long as each of
the following conditions is met:
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4.1.1 The proposed Tenant Alterations are:
(i) Are normal for general office use and will not
adversely affect the utility of the Premises for future tenants;
(ii) Will not alter the exterior appearance of the
Project;
(iii) Will not of a structural nature and will not
weaken or impair the structural strength of the Project; and
(iv) Will not adversely affect or increase demands on
any of the mechanical, electrical, sanitary, or other Systems and Equipment;
4.1.2 Landlord shall have approved complete construction
drawings and specifications for the proposed Tenant Alterations. Any change must
be approved by Landlord.
4.1.3 Landlord shall have approved of Tenant's contractor,
such approval to be granted or withheld in Landlord's absolute discretion;
4.1.4 Landlord shall have been furnished with original
certificates of insurance from a company approved by Landlord, showing Landlord
as an additional insured on public liability, automobile liability, property
damage, and worker's compensation policies, with such limits as Landlord may
reasonably require; and
4.1.5 Landlord shall have been furnished with copies of all
building and/or other applicable permits or licenses required for the
prosecution of the work.
4.2 WORK DONE BY TENANT. Any Tenant Alterations shall comply with the
following:
4.2.1 All work shall be in compliance with all Laws. Any work
not acceptable to any governmental authority or agency having jurisdiction over
such work or not reasonably satisfactory to Landlord shall be promptly corrected
by Tenant at Tenant's expense.
4.2.2 Tenant and Tenant's Employees shall not install
plumbing, mechanical, electrical wiring or fixtures, ceilings, partitions, or
other alterations which, in Landlord's judgment, may adversely affect any of the
Project systems or their performance (including, but not limited to, the
heating, ventilating and air-conditioning systems).
4.2.3 All work by Tenant and Tenant's Employees shall be
performed diligently until completed and pursuant to any scheduling requirements
imposed by Landlord.
4.3 NO LIABILITY OF LANDLORD. Landlord shall have no liability for any
faulty work or defect regardless of Landlord's approval of Tenant Alterations or
plans and specifications.
4.4 REIMBURSEMENT TO LANDLORD. Tenant shall reimburse Landlord for any
expense incurred by Landlord in approving the plans and specifications for
Tenant Alterations and in reviewing the progress of their construction, and any
expense incurred by Landlord by reason of faulty work or inadequate cleanup.
4.5 PROPERTY OF LANDLORD. All Tenant Alterations shall remain in the
Premises at the expiration or earlier termination of the Term, and shall become
the property of Landlord, without any compensation to Tenant. At Landlord's
written election, Tenant shall remove all of such items from the Premises and
Tenant shall repair any damage caused by the removal.
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4.6 NOTICE OF WORK COMMENCEMENT. Before commencing any work with
respect to the Tenant Alterations, Tenant shall notify Landlord in writing not
less than 5, nor more than 10, business days prior to the date such work
commences. Landlord shall have the right to post all appropriate notices of
non-responsibility.
4.7 MECHANICS' LIENS. Tenant shall pay for all labor and materials
supplied to the Premises for Tenant. Tenant shall not permit any mechanics' or
similar liens to be filed against the Land or the Project, or against Tenant's
leasehold interest in the Premises.
4.8 COMPLETION BOND. Landlord may require Tenant, at Tenant's sole
cost, to obtain and provide to Landlord a lien and completion bond in a form and
by a surety acceptable to Landlord, and in amount no less than 1 and 1/2 times
the estimated cost of such Tenant Alterations.
SECTION 5. REPAIR AND MAINTENANCE.
5.1 TENANT'S OBLIGATIONS. Tenant shall keep the Premises, excepting
only structural portions thereof, and all signs installed by Tenant in good
condition and repair, whether or not the need for such repairs occurs as a
result of Tenant's use, any prior use, the elements or the age of such portion
of the Premises. Without limiting the generality of the foregoing, Tenant shall
maintain at its expense any and all plumbing, HVAC, alarm, fire/life/safety and
electrical systems, fixtures and equipment located within the Premises or
serving only the Premises, in good order, condition and repair in a manner
satisfactory to Landlord in its reasonable business judgment. In addition, all
damage to the Premises or the Project caused by Tenant or Tenant's Employees, or
the failure of Tenant or Tenant's Employees to comply with this Lease and the
Rules and Regulations, shall be promptly repaired by Tenant at Tenant's expense.
Landlord may make any repairs that are not promptly made by Tenant and charge
Tenant for the cost thereof, together with interest thereon at the Default Rate.
Tenant waives all rights to make repairs to the Premises at the expense of
Landlord, or to deduct the cost thereof from Rent. Upon the expiration or
earlier termination of this Lease, Tenant shall surrender the Premises and all
alterations, additions and improvements in the same condition as when received,
ordinary wear and tear excepted.
5.2 LANDLORD'S OBLIGATIONS. Landlord shall maintain and repair the
Systems and Equipment, the Common Areas, and the structural elements of the
Project, except that Landlord shall not be responsible to repair any damage or
wear and tear which is the result of the negligence or willful misconduct of
Tenant or Tenant's Employees. In no event shall Landlord have any liability for
interruption or interference in Tenant's business, or for any other damages
(whether direct or consequential), nor shall Rent be abated, on account of
Landlord's failure to make repairs or on account of Landlord's performance of
its maintenance and repair obligations under this Section 5.2.
SECTION 6. BUILDING SERVICES.
6.1 PROVISION BY LANDLORD. Landlord shall furnish the Premises with the
following Basic Services, provided Landlord reserves the right to adopt such
reasonable non-discriminatory modifications and additions hereto as it deems
appropriate.
6.1.1 As long as Tenant is not in default under any of the
terms, covenants, conditions, provisions or agreements of the Lease, Landlord
shall, subject to limitations and provisions hereinafter set forth in this
SECTION 6.1:
(a) Provide automatic elevator facilities on Monday
through Friday from 8:00 a.m. to 6:00 p.m., excepting state and federal
holidays, and have one automatic elevator available at all other times.
(b) Provide to the Premises, during the times
specified in SECTION 6.1.1(A) hereof (and at other times for an additional
charge to be fixed from time to time by Landlord), heating, ventilation, and
air conditioning ("HVAC") as is necessary in Landlord's judgment for the
comfortable occupancy of Premises for general office purposes, subject to any
energy conservation or other regulations which may be applicable from time
to time. Landlord shall not be responsible for maintaining comfortable room
temperatures if Tenant's lighting and receptacle
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loads exceed those listed in SECTION 6.1.1(C) hereof, or if the Premises contain
other heat generating equipment in excess of those normally found in space used
for, or are used for other than, general office purposes.
(c) Furnish to the Premises, during the times
specified in SECTION 6.1.1(A) hereof, electric current for routine lighting and
the operation of general office machines such as typewriters, dictating
equipment, desk model adding machines, and the like, which use 110 volt electric
power, which lighting shall not exceed the capacity of Building standard office
lighting and receptacles. In no event shall the total electrical requirement for
the Premises exceed 3 watts per square foot of usable area, nor shall it exceed
any limits imposed by any governmental or quasi-governmental authority. Tenant
agrees, should its electrical installation or electrical consumption be in
excess of the foregoing use or extend beyond the times specified in SECTION
6.1.1(A), to reimburse Landlord for the cost of such utilities. In such event,
Landlord may install, at Tenant's expense, any necessary meters for measuring
Tenant's utility consumption.
(d) Furnish water for drinking fountains and
restrooms provided by Landlord; but if Tenant requires, uses or consumes water
for any purpose in addition to ordinary drinking and restroom purposes, Landlord
may install, at Tenant's cost, a water meter and thereby measure Tenant's water
consumption for all purposes, and Tenant shall pay for such water usage at
Landlord's standard charge for such service.
(e) Provide janitorial services to the Premises,
Monday through Friday (except Holidays), such services to be consistent with
janitorial services provided by landlords of similar office buildings in the
vicinity of the Building, provided that the Premises are used exclusively as
offices and are kept reasonably in order by Tenant. Notwithstanding the
foregoing, if the Premises are not used exclusively as offices, or if any Tenant
Alterations require janitorial services in excess or such standard janitorial
services as provided by Landlord, Tenant shall employ such persons as approved
by Landlord to perform such additional janitorial services at Tenant's expense
and to the satisfaction of Landlord. In the alternative, and at Landlord's sole
option, Landlord may provide such additional janitorial services and Tenant
shall promptly reimburse Landlord for the cost and expense of such additional
janitorial services immediately upon receipt of any invoice for such services by
Landlord. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish, to the extent that the same exceeds the refuse and rubbish
usually attendant upon the use of the Premises for general office purposes.
6.1.2 No electrical equipment, air conditioning or heating units, or
plumbing additions shall be installed, nor shall any changes to the Building's
HVAC, electrical or plumbing systems be made without prior written approval of
Landlord, which consent shall be subject to Landlord's sole and absolute
discretion. Landlord reserves the right to designate and/or approve the
contractor to be used. Any permitted installations shall be made under
Landlord's supervision, Tenant shall pay any additional cost on account of any
increased support to the floor load or additional equipment required for such
installations, and such installations shall otherwise be made in accordance with
SECTION 4 of the Lease.
6.1.3 Landlord shall not provide reception outlets or television or
radio antennas for television or radio broadcast reception, and Tenant shall not
install any such equipment without prior written approval from Landlord, which
approval may be withheld in Landlord's sole discretion.
6.1.4 Tenant will not, without prior written consent of Landlord, use
any apparatus, machine or device in the Premises, including, without limitation,
duplicating machines, computers and machines using current in excess of 110
volts, which will in any way increase the amount of electricity or water
required to be furnished or supplied for use of the Premises in excess of that
which would be required for use of the Premises as general office space as of
the date of the Lease, nor connect with electric current, except through
existing electrical outlets in the Premises, any apparatus or device for the
purpose of using electric current in excess of that now usually furnished or
supplied for use of the Premises as general office space.
6.1.5 Tenant agrees to cooperate fully at all times with Landlord, and
to abide by all regulations and requirements which Landlord may prescribe for
the proper functioning and protection of the Building's HVAC, electrical and
plumbing systems. Tenant shall comply with all Laws in connection with building
services furnished to the
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Premises, including, without limitation, any governmental rule or regulation
relating to the heating and cooling of the Building.
6.1.6 Landlord reserves the right to reduce, interrupt or cease
services of the HVAC, elevator, plumbing, and electric systems, when necessary,
by reason of accident, emergency or governmental regulations, or for repairs,
additions, alterations or improvements to the Premises or the Building until the
repairs, additions, alterations or improvements shall have been completed, and
shall further have no responsibility or liability for failure to supply elevator
facilities, plumbing, ventilating, air conditioning, or utility services, when
prevented from so doing by strike, lockout or accident, or by any cause whatever
beyond Landlord's reasonable control, or by any Laws, labor trouble or any other
cause whatsoever, or failure of gas, oil or other suitable fuel supply or
inability by exercise of reasonable diligence to obtain gas, oil or other
suitable fuel. It is expressly understood and agreed that any covenants,
conditions, provisions or agreements in the Lease, or performance of any act or
thing for the benefit of Tenant, shall not be deemed breached if Landlord is
unable to furnish or perform the same by virtue of a strike, labor dispute,
lockout, any applicable Laws, accident, breakage, or repairs, or any other cause
whatever beyond Landlord's reasonable control, or where reasonable efforts are
made to restore service, nor shall Rent be abated in any manner whatsoever by
such failure of services.
6.1.7 With respect to any meter installed as contemplated in SECTIONS
6.1.1(C) or (D) hereof, Tenant shall keep the meter and installation equipment
in good working order and repair at Tenant's own cost and expense, in default of
which Landlord may cause the meter and equipment to be replaced or repaired and
collect the cost thereof from Tenant. Tenant agrees to pay for utilities
consumed as shown by the meter, as and when billings therefor are rendered, and
in the event of Tenant's default in making such payment, Landlord may pay the
charges and collect the same from Tenant as Additional Rent.
6.2 ADDITIONAL SERVICES. Should Tenant require Additional Services,
Tenant agrees to pay on demand, as Additional Rent, the expense of all
Additional Services, and Landlord shall be entitled to impose and collect
charges for Additional Services. Landlord may cause a switch and metering system
to be installed at Tenant's expense to measure the amount of utility services
consumed. The cost of any such meters and of their installation, maintenance,
repair and replacement shall be paid by Tenant.
6.3 INTERRUPTION. No interruption or malfunction of any Basic Services
or Additional Services shall constitute an eviction or disturbance of Tenant's
use and possession of the Premises or a breach by Landlord of any of its
obligations hereunder, nor render Landlord liable for damages or entitle Tenant
to be relieved from any of its obligations under this Lease, specifically
including, but not limited to, Tenant's obligation to pay Rent. In the event of
any such interruption, however, Landlord shall use reasonable diligence to
restore such service.
SECTION 7. ASSIGNMENT AND SUBLETTING.
7.1 RESTRICTION ON ASSIGNMENT AND SUBLETTING. Tenant shall not make any
Transfer without obtaining Landlord's written approval. Tenant shall provide
Landlord with prior written notice ("TRANSFER NOTICE") of the proposed Transfer,
containing the items specified in SECTION 7.2 below. Any such attempted Transfer
without the approval of the Landlord shall be null and void and of no effect and
shall constitute an incurable Default.
7.2 DOCUMENTATION REQUIRED. The Transfer Notice shall be accompanied by
each of the following:
7.2.1 A copy of all proposed Transfer Documents.
7.2.2 A statement setting forth the name, address and
telephone number of the Transferee, and all principal owners of the Transferee.
7.2.3 Current financial information regarding the proposed
Transferee, including a statement of financial condition.
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7.2.4 For any sublease, a description of the portion of the
Premises to be sublet.
7.3 PARTNERSHIP TENANT. If Tenant is a partnership, a dissolution of
the partnership or a change in ownership of 50% or more of the voting or equity
interests in the partnership, or in any tier of the partnership (including the
admission of new partners or withdrawal of existing partners having a
controlling interest) as of the sate of this Lease, shall be deemed a Transfer,
regardless of whether the Transfer is made by one or more transactions, or
whether one or more persons hold the controlling interest prior or subsequent to
the Transfer.
7.4 MERGER. The transfer of any of Tenant's stock pursuant to merger or
consolidation shall not be deemed to be a Transfer provided that Tenant is not
released from any of its obligations under this Lease.
7.5 REASONABLE DISAPPROVAL. Landlord shall not be deemed to have
unreasonably withheld approval a Transfer if consent to such Transfer is
conditioned on any of the following grounds:
7.5.1 The business of the proposed Transferee and its use of
the Premises shall not conflict with any exclusive use granted to any other
tenant of the Project.
7.5.2 The proposed Transferee must be reputable and of good
character with a net worth sufficiently large and liquid for the proposed
Transferee to meet its obligations.
7.5.3 The subtenant or assignee must assume Tenant's
obligations (other than Base Rent) under the Lease relating to the portion of
the Premises transferred.
7.5.4 The proposed Transferee shall not be a governmental
entity or agency.
7.5.5 There does not then exist any default by Tenant under
this Lease or any non-payment or non-performance by Tenant under this Lease
which, with the passage of time and/or the giving of notice, would constitute a
Default.
7.5.6 The proposed Transferee is not a tenant in the Building
nor has it negotiated with Landlord for a lease of space within the Building for
a period of one year.
7.6 CONTINUING OBLIGATIONS.
7.6.1 Notwithstanding any Transfer, Tenant shall remain fully
liable for the performance of all obligations contained in this Lease. Any act
or omission of a Transferee that violates any Lease obligations shall be a
Default by Tenant.
7.6.2 Landlord shall have the right to approve the terms of
each Transfer authorized by Landlord.
7.7 RECAPTURE. Notwithstanding anything to the contrary contained in
this SECTION 7, Landlord may elect to terminate this Lease as to the portion of
the Premises sought to be subject to the Transfer, except that this Lease shall
terminate only for the term contemplated by the proposed Transfer if the
Transfer would be for a period ending more than one year before the end of the
Term.
7.8 TRANSFER PREMIUM. Landlord shall be entitled to receive as
Additional Rent all revenue from the Transfer in excess of the amounts payable
under this Lease for the space subject to Transfer, including any so-called key
money or personal property lease, rent or sales proceeds.
7.9 LANDLORD'S RIGHTS TO TRANSFER. Landlord shall have the right to
sell, transfer, hypothecate or assign any or all of its rights and obligations
under this Lease. Upon the transfer of all of Landlord's interest under this
Lease, all liabilities and other obligations of the Landlord arising on or after
the date of the transfer shall be the sole
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responsibility of the transferee. The transferor is hereby released from any
claim with respect thereto upon the assumption of the obligations of Landlord
hereunder by the transferee.
SECTION 8. INSURANCE/INDEMNITY.
8.1 POLICIES. All insurance required to be carried by Tenant hereunder
shall be issued by insurance companies qualified to do business in the State of
Nevada and rated A:XII or better in the most current issue of "Best's Key Rating
Guide@, and shall be in form and substance and subject to deductibles acceptable
to Landlord in all respects. Current, original certificates evidencing the
existence and amounts of such insurance shall be delivered to Landlord by Tenant
at least 30 days prior to (a) Tenant's taking occupancy of the Premises, and (b)
the expiration of any policy required hereunder. No policy shall be subject to
cancellation or modification except after not less than 30 days' written notice
to Landlord and any Lender.
8.2 EXTENDED COVERAGE. During the Term, Tenant shall procure and
maintain policies of casualty insurance at its own expense covering (a) all
Tenant Alterations, and (b) any and all Personal Property, in an amount not less
than 100% of their actual replacement cost from time to time, providing
protection against any peril included within the classification "fire and
extended coverage," together with insurance against sprinkler damage, vandalism
and malicious mischief. Such insurance shall include a code compliance
endorsement. The proceeds of such insurance shall be used for the repair or
replacement of the property insured, except that in the event of a loss
occurring after the last 6 months of the Term, the proceeds under clause (a)
above shall be paid and belong to Landlord, and the proceeds under clause (b)
above shall be paid and belong to Tenant. Each policy required under this
SECTION 8.2 shall contain a loss payable endorsement (form 438BFU or an
alternative acceptable to Landlord in its sole discretion) requiring all
proceeds to be paid to Landlord or to a Lender designated by Landlord.
8.3 COMMERCIAL GENERAL LIABILITY; OTHER INSURANCE.
8.3.1 COMMERCIAL LIABILITY INSURANCE. Tenant shall procure and
maintain during the Term, at its own expense, commercial general liability
insurance for injury to or death of any person in connection with the
construction of improvements on the Premises and with Tenant's use of the
Premises and related property. Such insurance shall have limits of not less than
$2,000,000 for injuries to persons in one accident, not less than $2,000,000 for
injury to any one person, and not less than $1,000,000 with respect to damage to
property; EXCEPT that the limits of liability shall be adjusted from time to
time during the Term to such higher limits as Landlord may reasonably require
under then current conditions. Tenant shall also carry such additional insurance
as Landlord requires from time to time.
8.3.2 OTHER INSURANCE. Tenant shall procure and maintain
during the Term, at its own expense, Workers Compensation Insurance as required
by the state in which the Premises is located and in amounts as may be required
by applicable statute, Employers Liability Coverage of One Million Dollars
($1,000,000.00) per occurrence, and coverage against such other perils, all in
such form and amounts, and with such deductibles, as Landlord from time to time
may reasonably require.
8.4 WAIVER OF SUBROGATION. So long as the same does not impair any
insurance coverage required hereunder, Tenant and Landlord each hereby waive:
(a) any rights of recovery against the other and the officers, agents, and
representatives of the other for injury or loss covered by insurance, to the
extent of the injury or loss covered thereby, and (b) on behalf of their
respective insurance companies, any right of subrogation that either may have
against the other. All policies of insurance which Tenant or Landlord obtains
pursuant to this Lease shall include a clause or endorsement denying the insurer
any right of subrogation against Landlord and/or Tenant, so long as the same can
be obtained from an insurance company meeting the standards set forth in SECTION
8.1 above.
8.5 TENANT'S FAILURE TO INSURE. If Tenant fails to maintain any
insurance required by this Lease, Tenant shall be liable for any loss or cost
resulting from that failure. Landlord may, but shall not be obligated to,
provide for such insurance at Tenant's cost. This SECTION 8.5 shall not waive
any of Landlord's other rights and remedies under this Lease. Tenant shall not
keep, use, sell or offer for sale in or upon the Premises any article which may
be prohibited by the standard form of any insurance policy required hereunder.
Tenant agrees to pay for any increase in premiums for
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insurance referred to herein that may be charged during the Lease Term on the
amount of such insurance which may be carried by Landlord on the Premises or the
Project, resulting from any activity on or in connection with the Premises,
whether or not Landlord has consented to the same.
8.6 INDEMNITY. Tenant hereby indemnifies Landlord and Landlord's
Employees, and shall forever save and hold Landlord and Landlord's Employees
harmless, from and against all obligations, liens, claims, liabilities, costs
(including, but not limited, to all attorneys' and other professional fees and
expenses), actions and causes of action, threatened or actual, which Landlord
may suffer or incur arising out of or in connection with Tenant's and Tenant's
Employees actions and omissions relating to this Lease, including without
limitation (a) the use by Tenant and Tenant's Employees of the Premises, (b) the
conduct of Tenant's business, (c) any activity, work or things done, permitted
or suffered by Tenant in or about the Premises or the Project, (d) Tenant's or
Tenant's Employees' failure to comply with any applicable Law, or (e) any
negligence or willful misconduct of Tenant or any of Tenant's Employees. In case
of any claim, demand, action or cause of action, threatened or actual, against
Landlord, upon notice from Landlord, Tenant shall defend Landlord at Tenant's
expense by counsel reasonably satisfactory to Landlord. If Tenant does not
provide such a defense against any and all claims, demands, actions or causes of
action, threatened or actual, then Tenant shall, in addition to the above, pay
Landlord the expenses and costs incurred by Landlord in providing and preparing
such defense, and Tenant agrees to cooperate with Landlord in such defense,
including, but not limited to, the providing of affidavits and testimony upon
request of Landlord.
8.7 LANDLORD'S INSURANCE. Landlord shall insure the Project during the
Term against damage by fire, and standard extended coverage perils, and shall
carry public liability insurance and insurance against such other perils with
respect to the Premises, the Project, the Lease, the Rent and other amounts
payable thereunder, portions of any thereof or matters related thereto as
Landlord reasonably may determine to be necessary or appropriate from time to
time insuring Landlord, all in such amounts and with such deductibles as
Landlord may determine from time to time in its sole discretion. None of the
insurance carried by Landlord shall name Tenant as an insured or otherwise be
for the benefit of Tenant, as a third party beneficiary or otherwise.
8.8 TENANT'S ASSUMPTION OF RISK. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons, in, upon or about the Premises from any cause, and Tenant
hereby waives all related claims against Landlord. Such assumption and waiver
includes without limitation any damage or injury arising out of the so-called
"Year 2000" problem relating to the inability of computers and microprocessors
(including imbedded chips) to distinguish between dates before and from and
after January 1, 2000; in no event shall Tenant be entitled to any damages, rent
abatement or right to terminate this Lease for causes related to such problems.
Without implying any obligation of Landlord or Landlord's Employees to accept
any of Tenant's property for safekeeping, Landlord and Landlord's Employees
shall not be liable for any damages to property entrusted to Landlord or
Landlord's Employees, nor for loss of or damage to any property in or about the
Premises by theft or otherwise, nor for any injury or damage to persons or
property resulting from any cause whatsoever unless caused solely by the gross
negligence of Landlord or Landlord's Employees. In no event shall Landlord be
liable for loss of profits or business interruption, nor shall Landlord be
liable for consequential damages. Landlord and Landlord's Employees shall not be
liable for any latent defect in the Premises or in the Project. Tenant shall
give prompt notice to Landlord in case of fire or accidents in the Premises or
in the Project.
8.9 EXEMPTION OF LANDLORD. In the event that Landlord is prevented or
delayed from making any repairs or furnishing any services or performing any
other covenant or duty to be performed by Landlord hereunder by reason of any
Force Majeure, Landlord shall not be liable to Tenant therefor, nor shall Tenant
be entitled to any abatement of Rent, or to claim an actual or constructive,
total or partial eviction from the Premises. Tenant hereby agrees that Landlord
shall not be liable for any injury to Tenant's business or any loss of income
therefrom or for damage to the furniture, fixtures, equipment and other property
of Tenant or Tenant's Employees from any cause whatsoever. Landlord shall not be
liable for any damage, destruction or loss of property or for any injury or
death to any person arising from any act or neglect of any other tenant or other
occupant or user of the Project, or any matter beyond the reasonable control of
Landlord.
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SECTION 9. DAMAGE OR DESTRUCTION.
9.1 DAMAGE GENERALLY. If any part of the Premises or the Project is
damaged by fire or other casualty and the damage affects Tenant's use or
occupancy of the Premises, Tenant shall give prompt notice to Landlord. To the
extent that Landlord receives insurance proceeds in connection with such
casualty, Landlord shall repair such damage with reasonable diligence. If any
substantial part of the Premises is rendered untenantable by reason of damage
not caused by the negligence or willful misconduct of Tenant or any of Tenant's
Employees, for more than 30 consecutive days, then the Base Rent hereunder shall
thereafter abate in proportion to the rentable area of the Premises rendered
untenantable until the date when such part of the Premises shall have been made
tenantable, UNLESS Landlord shall make available to Tenant during the period of
such repair other space in the Project reasonably suitable for the temporary
conduct of Tenant's business. Landlord shall not be liable for any inconvenience
or annoyance to Tenant or injury to the business of Tenant resulting from such
damage or repair, construction or restoration. Tenant waives the provisions of
any Law allowing Tenant to make repairs and deduct the cost thereof from any
Rent. Except as provided herein, Landlord shall restore or repair the Premises
diligently and to their condition immediately prior to the damage. Landlord
shall not be liable for delays in repair or restoration caused by Force Majeure.
9.2 EXCEPTIONS TO OBLIGATION TO REBUILD. Despite SECTION 9.1, this
Lease may be terminated by Landlord in any of the following situations:
(a) If substantial alteration or reconstruction of the Project
shall, in the opinion of Landlord, be required as a result of damage by fire or
other casualty; or
(b) If all available insurance proceeds are less than 100% of
the cost of restoration;
(c) If the damage to the Project or Premises is caused by the
act or omission (whether or not negligent or willful) of Tenant or any of
Tenant's Employees;
(d) If existing Laws do not permit the Premises to be restored
to substantially the same condition as they were in immediately before the
destruction.
Any such election to terminate this Lease shall be exercised by notice
from Landlord to Tenant served by the later of (i) 60 days after the date of the
damage, or (ii) 30 days after the final settlement of all claims under all
applicable insurance relating to the damage. The notice shall specify the date
of termination, which shall be at least thirty (30) days after notice is given.
In the event Landlord gives such notice of termination, this Lease shall
terminate as of the date specified, and all Rent (to the extent not otherwise
abated) shall be prorated to of the later of the date of termination or Tenant's
vacation of the Premises.
9.3 EXTENT OF LANDLORD'S OBLIGATION TO REPAIR. Subject to Landlord's
right to terminate as set forth above, Landlord shall make repairs to the
structural elements and the shell of the Premises at Landlord's expense, and the
repair and restoration of Tenant Alterations and the Personal Property shall be
the sole obligation of Tenant. Tenant shall commence such repair and restoration
and the installation of its stock-in-trade, fixtures, furniture, furnishings and
equipment promptly upon delivery to it of possession of the Premises and shall
diligently prosecute any such work and installation to completion. In no event
shall Landlord have any obligation to make repairs or restoration to the extent
all insurance proceeds actually received by Landlord are insufficient to pay for
the same. However, at Landlord's option, Landlord's contractor shall perform all
reconstruction work in the Premises at Tenant's expense. In the event that
Landlord does not elect to have Landlord's contractor repair all of the damage
or destruction, Tenant shall undertake the repair and restoration of Tenant
Alterations in a diligent, first-class manner in accordance with the provisions
SECTION 4 hereof.
9.4 NEAR END OF TERM. Notwithstanding anything to the contrary
contained in this SECTION 9, Landlord shall not have any obligation of any
nature to repair, reconstruct or restore the Premises when the damage resulting
from any casualty occurs during the last 24 months of the Term, and, in such
event, Landlord shall have the right to cancel
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this Lease within 90 days after the occurrence of such damage or destruction or
to allow Tenant a pro rata abatement of all monthly charges hereunder to the
extent the Premises or any portion thereof are rendered untenantable.
SECTION 10. CONDEMNATION AND OTHER TAKINGS.
10.1 CONDEMNATION. If any part of the Project shall be taken for public
or quasi-public use by the right of eminent domain, or if the same is
transferred by agreement in connection with such public or quasi-public use or
under threat of eminent domain (collectively, a "TAKING"), Landlord shall have
the option, exercisable within 30 days after the effective date of the Taking,
to terminate this Lease as of the date possession is acquired by the condemning
authority. Tenant may terminate this Lease by reason of a Taking if, and only
if, there is a Taking of a portion of the Premises to such an extent to
substantially impair Tenant's use of the Premises. Tenant shall have no right to
terminate this Lease following any Taking except as set forth in the preceding
sentence.
10.2 PARTIAL TAKING. In the event of a Taking of a portion of the
Premises which does not result in a termination of this Lease under SECTION 10.1
above, all monthly charges shall be equitably abated, as determined by Landlord
in accordance with its normal standards and practices.
10.3 RESTORATION. In the event of a Taking of a portion of the Premises
which does not result in a termination of this Lease under SECTION 10.1 above,
Landlord shall proceed to restore the remaining portion of the Premises (other
than Tenant Alterations, or any of the Personal Property) as nearly as
practicable to its condition prior to the Taking. However, Landlord shall be
obligated to restore at its expense as provided herein only to the extent of
condemnation proceeds awarded in connection with the Taking and allocated to
restoration costs. To the extent the costs of restoration exceed the portion of
the condemnation award allocated to restoration costs, if any, the excess shall
be paid for by Tenant.
10.4 AWARD. In the event of any Taking of all or a part of the Project,
Landlord shall be entitled to receive the entire award in the condemnation
proceedings, and Tenant hereby assigns to Landlord, any and all right, title and
interest of Tenant in or to any such award, and Tenant shall be entitled to
receive no part of such award. Despite the foregoing, Tenant shall not be
precluded from claiming from the condemning authority any compensation to which
Tenant may otherwise lawfully be entitled in respect of Tenant's tangible
Personal Property, or for relocating to new space, or for the unamortized
portion of any tenant improvements installed in the Premises to the extent they
were paid for by Tenant, SO LONG AS the same does not reduce the amount of any
award payable to Landlord.
SECTION 11. DEFAULT BY TENANT.
The occurrence of any one or more of the following shall be deemed a
"DEFAULT" by Tenant and a material breach of this Lease:
11.1 ABANDONMENT. Tenant's vacation or abandonment of the Premises by
Tenant for a continuous period in excess of 5 consecutive business days or
failure to conduct the business described as the Permitted Use for a continuous
period of 30 days (except for up to 60 days of remodeling). Tenant's failure to
take possession of and occupy the Premises within 30 days following the
Commencement Date shall be deemed to be an abandonment of the Premises by Tenant
for purposes of this SECTION 11.1.
11.2 NONPAYMENT OF RENT. Tenant's failure to pay any Rent when due or
to make any other monetary payment imposed under the terms of this Lease when
due, if such failure (a) has occurred three or more times during any period of
12 consecutive months, or (b) continues for a period of 3 business days after
written notice from Landlord. It is understood and agreed that any such notice
shall be in lieu of any notice required under applicable unlawful detainer
statutes.
11.3 NONDELIVERY OF DOCUMENTS. Tenant's failure to execute and deliver
any documents required by this Lease within the time periods specified.
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11.4 OTHER OBLIGATIONS. Tenant's failure to perform any other
obligation under this Lease (including the Rules and Regulations) or under the
Parking Agreement for 10 days after written notice from Landlord; HOWEVER, if
such failure is curable but more than 10 days are reasonably required for cure,
Tenant shall not be in default hereunder if Tenant shall promptly (and in any
event within 5 days after receipt of Landlord's notice) commence to cure such
failure and diligently prosecute the same to completion, so long as cure is
completed within 30 days after receipt of Landlord's notice. Notwithstanding the
foregoing, if any such failure by Tenant creates a hazardous condition, Tenant
shall cure such failure within one business day after its receipt of Landlord's
notice, and if any failure described in this Section 11.4 HAS occurred three or
more times during any period of 12 consecutive months, any further such failure
by Tenant shall be deemed to be an incurable Default by Tenant under this Lease.
11.5 GENERAL ASSIGNMENT. A general assignment by Tenant or any
Guarantor for the benefit of creditors.
11.6 BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
Tenant or any Guarantor, or the filing of an involuntary petition by Tenant's
creditors or the creditors of any Guarantor, which involuntary petition remains
undischarged for a period of 60 days. In the event that under any Law the
trustee in bankruptcy or Tenant has the right to affirm this Lease and continue
to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in
such time period as may be permitted by the bankruptcy court having
jurisdiction, cure all Defaults of Tenant outstanding as of the date of the
affirmance of this Lease and provide to Landlord such adequate assurances as may
be necessary to ensure Landlord of the continued performance of Tenant's
obligation under this Lease.
11.7 RECEIVERSHIP. The employment of a receiver to take possession of
substantially all of the assets and business of Tenant or any Guarantor or the
Premises, if such receivership remains undissolved for a period of 30 days after
creation thereof.
11.8 ATTACHMENT. The attachment, execution or other judicial seizure of
all or substantially all of the assets of Tenant or any Guarantor or the
Premises, if such attachment or other seizure remains undismissed or
undischarged for a period of 30 days after the levy thereof.
11.9 INSOLVENCY. The admission by Tenant or any Guarantor in writing of
its inability to pay its debts as they become due, the filing by Tenant or any
Guarantor of a petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future Law providing for debtor relief, the filing by Tenant or any Guarantor of
an answer admitting or failing timely to contest a material allegation of a
petition filed against Tenant or any Guarantor in any such proceeding or, if
within 30 days after the commencement of any proceeding against Tenant or any
Guarantor seeking any reorganization, or arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future Law, such
proceeding shall not have been dismissed.
11.10 FORECLOSURE OF LEASEHOLD. The leasehold estate created under this
Lease shall be taken on execution or other process of law or equity in any
action against Tenant, or sold under a power of sale pursuant to or contained in
a leasehold Mortgage, or transferred or assigned by assignment or other
instrument in lieu thereof.
11.11 MISREPRESENTATION. Any material misrepresentation herein by
Tenant, or any material misrepresentation or omission in any financial
statements or other materials provided to Landlord by or on behalf of Tenant or
any Guarantor in connection with negotiating or entering into this Lease, or
provided by or on behalf of Tenant, or a Guarantor, or by any Transferee in
connection with any Transfer.
SECTION 12. LANDLORD'S REMEDIES UPON DEFAULT.
12.1 TERMINATION. In the event of a Default, Landlord shall have the
right to terminate this Lease. The election to terminate may be stated in any
notice served upon Tenant with respect to the Default. After the termination,
Landlord may enter the Premises and remove Tenant, any other person occupying
the same, and any or all Personal Property. Any such repossession shall be
without prejudice to any of the remedies that Landlord may have under this
Lease, or at law or in equity, by reason of the Default or the termination.
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12.2 CONTINUATION AFTER DEFAULT. In the event of the occurrence of a
Default, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession under SECTION 12.1, and Landlord may
enforce all its rights and remedies under this Lease, including (but without
limitation) the right to recover Rent as it becomes due. Acts of maintenance,
preservation or efforts to lease the Premises, or the appointment of receiver
upon application of Landlord to protect Landlord's interest under this Lease,
shall not constitute an election to terminate Tenant's right to possession in
the absence of written notice to the contrary.
12.3 DAMAGES UPON TERMINATION. Should Landlord terminate this Lease
pursuant to the provisions of SECTION 12.1, Landlord shall have all the rights
and remedies of any applicable code section. Landlord shall be entitled to
recover from Tenant: (a) the worth at the time of award of the unpaid Rent and
other amounts which had been earned at the time of termination; (b) the worth at
the time of award of the amount by which the unpaid Rent which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such Rent loss that Tenant proves could have been reasonably
avoided; (c) the worth at the time of award of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds the amount of
such Rent loss that Tenant proves could be reasonably avoided; and (d) any other
amount necessary to compensate Landlord for all the detriment proximately caused
by Tenant's failure to perform its obligations under this Lease or which, in the
ordinary course of things, would be likely to result therefrom, including,
without limitation, any costs or expenses incurred by Landlord in maintaining or
preserving the Premises after such Default, recovering possession of the
Premises, expenses of reletting the Premises to a new tenant, (including
necessary renovations, alterations and improvements to the Premises, and leasing
commissions incurred), and all attorneys' and other professional and
paraprofessional fees and other costs and expenses incurred in good faith in
connection with any of the foregoing. The "worth at the time of award" of the
amounts referred to in (a) and (b), above shall be computed with interest at the
maximum lawful rate. The "worth at the time of award" of the amount referred to
in (c), above shall be computed by reference to the formula prescribed by, and
using the lowest discount rate permitted under, any applicable Law.
12.4 REMEDIES CUMULATIVE. All rights, privileges and elections or
remedies of the parties are cumulative and, to the extent permitted by any Law
and except as otherwise provided herein, are not alternative.
SECTION 13. LANDLORD'S DEFAULT.
13.1 RIGHT TO CURE. Landlord shall not be deemed to be in default in
the performance of any obligation required of it under this Lease until it has
failed to perform such obligation within 30 days after receipt by Landlord of
written notice from Tenant to Landlord, specifying the obligation in question
and the manner in which Landlord has failed to perform the obligation. If the
nature of Landlord's obligation is such that more than 30 days are reasonably
required for its performance, Landlord shall not be in default if Landlord
commences to cure the default within the 30 day period and proceeds to
completion with reasonable promptness.
13.2 TENANT'S REMEDIES. Except as expressly set forth in, and limited
by, the terms of this Lease, Tenant hereby waives and relinquishes any and all
rights which Tenant may have to terminate this Lease or to withhold Rent for any
reason whatever, including without limitation on account of any default by
Landlord of its obligations under this Lease, and any damage to, or
condemnation, destruction or state of disrepair of, the Premises. Tenant's sole
remedy for a breach of this Lease shall be limited to an action for damages,
injunctive relief or specific performance of this Lease.
13.3 NOTICE TO LENDERS. Tenant agrees to give all Lenders, by
registered or certified mail, return receipt requested, a copy of any notice of
default served upon Landlord, PROVIDED that prior to such obligation to give
notice, Tenant has been notified, in writing (by way of Notice of Assignment of
Rents and Leases, or otherwise), of the addresses of the Lenders. Tenant further
agrees that if Landlord shall have failed to cure such default within the time
provided in this Lease, then before Tenant pursues its other remedies, all
Lenders shall have an additional 30 days (the "LENDER CURE PERIOD") within which
to cure the default on behalf of Landlord; EXCEPT that if the default cannot be
reasonably cured within the Lender Cure Period, each of the Lenders shall have
such additional time as may be reasonably necessary to complete such cure. If
the default is such that a Lender must gain possession of the Project or
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any portion of it in order to be able to effect a cure, then the commencement of
foreclosure proceedings against Landlord shall be deemed to constitute the
commencement by the Lender of the cure of the default by Landlord.
SECTION 14. SUBORDINATION AND ATTORNMENT.
14.1 SUBORDINATION. Subject to the provisions of SECTION 14.2 below,
this Lease and the rights of Tenant hereunder shall be and are hereby made
subject and subordinate at all times to any Mortgage now or hereafter existing,
and to all advances made or hereafter to be made against or to protect the
security thereof. If requested by Landlord, Tenant shall execute and deliver to
Landlord, within 10 days after written demand therefor, an agreement confirming
the subordination of this Lease to any Mortgage as may be requested by Landlord
or any Lender from time to time. Any failure or refusal of Tenant to execute
such an agreement within 10 days shall constitute a Default. However, no such
additional agreement shall be necessary to effectuate such subordination.
14.2 ATTORNMENT. Notwithstanding the provisions of SECTION 14.1, in the
event of the foreclosure of any Mortgage or cancellation or termination of any
Master Lease, Tenant, at the request of the then successor to the Landlord
following such event, shall attorn to and recognize the successor as the
Landlord under this Lease. Tenant agrees to execute and deliver at any time upon
request of any Lender or purchaser, and the successors of either, any instrument
reasonably requested to further evidence such attornment. Tenant hereby waives
its right, if any, to elect to terminate this Lease or to surrender possession
of the Premises in the event of any Mortgage termination or foreclosure. Tenant
also agrees that any Lender may, at its option, unilaterally elect to fully or
partially subordinate its Mortgage to this Lease by an instrument in form and
substance satisfactory to the Lender which Tenant shall execute within 10 days
after written request. Any failure or refusal by Tenant to execute such
instrument within the time period specified in this SECTION 14.2 (without
additional time, despite any other provision of this Lease) shall constitute a
Default hereunder, but shall not affect the validity or enforceability of the
subordination.
14.3 MORTGAGEE'S LIABILITY. Despite the provisions of SECTION 42 below,
in the event that any Lender or its respective successor in title shall succeed
to the interest of Landlord hereunder, the liability of the Lender or successor
shall exist only so long as it is the owner of the Project, the Project, or the
interest therein superior to this Lease under any Master Lease. Except for the
Base Rent paid by Tenant upon execution of this Lease, no Base Rent or any other
Rent charge shall be paid more than 30 days prior to the due date thereof, and
payments made in violation of this provision shall be a nullity as against any
Lender, EXCEPT to the extent that those payments are actually received by the
Lender.
SECTION 15. INSPECTIONS AND ACCESS.
15.1 ENTRY. Landlord and its agents or representatives may enter the
Premises at reasonable hours and with reasonable prior notice to (a) inspect the
Premises, (b) exhibit the Premises to prospective purchasers, lenders or
tenants, (c) determine whether Tenant is complying with all Tenant's obligations
hereunder, (d) supply janitorial service and any other service to be provided by
Landlord to Tenant hereunder, (e) post notices of nonresponsibility, and (f)
make repairs or do any work required of Landlord under this Lease or make
repairs or do any other work for the benefit of the Project. All such work shall
be done as expeditiously as reasonably feasible so as to cause as little
interference to Tenant as reasonably possible without requiring extraordinary
expenditure on the part of Landlord. In no event shall Tenant be entitled to any
reduction or abatement of Rent, or to make any claim for damages against
Landlord, as a result of any act of Landlord carried out pursuant to this
SECTION 15.1. Tenant hereby waives any claim for damages or claim in connection
with any injury or inconvenience to or interference with Tenant's business, any
loss of occupancy or quiet enjoyment of the Premises, or any other loss caused
by the exercise of such rights by Landlord. Landlord shall at all times have a
key to all doors providing entry to the Premises, but excluding Tenant's vaults,
safes, files, or security rooms (as to which Tenant shall provide Landlord with
prompt supervised access. Landlord shall have the right to use any and all means
that Landlord may deem proper to open any doors to or within the Premises in the
event of an emergency, without liability to Tenant except for any failure by
Landlord to exercise due care for Tenant's property under the circumstances, and
in any event with no liability to Tenant if the emergency was caused by the act
or omission of Tenant or any of Tenant's Employees.
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15.2 ACCESS. If Tenant shall not have any representative personally
present to open and permit Landlord's entry into the Premises at any time when
such an entry by Landlord is necessary or permitted hereunder, Landlord may
enter by means of a master key without liability to Tenant except for any
failure to exercise due care.
SECTION 16. SURRENDER OF PREMISES.
16.1 REMOVAL BY TENANT. At the expiration or earlier termination of
this Lease, Tenant shall surrender to Landlord the Premises and all Tenant
Alterations in good order, repair and condition, EXCEPT for ordinary wear and
tear, free of all tenancies and occupancies. Tenant shall remove all of the
Personal Property to the extent specified in SECTION 4.5 above. Tenant, at
Tenant's expense, shall perform all necessary restoration, including, without
limitation, restoration made necessary to the Premises or the Project by the
removal of the Personal Property, at or prior to the expiration or termination
of this Lease.
16.2 REMOVAL BY LANDLORD. Landlord may elect to retain or dispose of,
in any manner, any Tenant Alterations or Personal Property that Tenant does not
remove from the Premises on expiration or earlier termination of the Term. Title
to such Tenant Alterations or Personal Property Landlord elects to retain on
expiration or earlier termination of the Term shall vest in Landlord. Tenant
waives all claims against Landlord for any damage to Tenant resulting from
Landlord's retention or disposition of any such Tenant Alterations or Personal
Property. Tenant shall be liable to Landlord for Landlord's costs for storing,
removing and disposing of any Tenant Alterations or Personal Property and the
cost of any repairs to the Premises and/or the Project associated with the
removal.
16.3 HOLDING OVER. If Tenant holds over after the expiration or earlier
termination of the Term with or without the express written consent of Landlord,
such Tenancy shall be from month-to-month only, at a rental rate equal to 200%
of the Rent in effect upon the date of such expiration or termination, and
otherwise subject to the terms, covenants and conditions herein specified.
Acceptance by Landlord of Rent after such expiration or earlier termination
shall not constitute a holdover hereunder or result in a renewal. The foregoing
provisions of this SECTION 16.3 are in addition to and do not affect Landlord's
right of re-entry or any rights of Landlord hereunder or as otherwise available
to Landlord as a matter of law nor shall the foregoing be construed as consent
by Landlord to any holding over by Tenant. Landlord expressly reserves the right
to require Tenant to surrender possession of the Premises to Landlord upon the
expiration or other termination of this Lease.
SECTION 17. LANDLORD'S LIABILITY; SALE BY LANDLORD.
17.1 NO PERSONAL LIABILITY. Landlord or any successor in interest of
Landlord (whether one or more individual(s), a partnership, a joint venture, a
corporation, a trustee or other fiduciary, or the trust or other entity or
organization for which any fiduciary acts) shall have no direct or personal
liability with respect to any term or requirement of this Lease beyond
Landlord's or the successor's interest in the Project. Tenant shall look solely
to the estate of Landlord or the successor in the Project for the satisfaction
of any claim by Tenant. Under no circumstances shall any Lender, purchaser at a
foreclosure sale or grantee under a deed in lieu of foreclosure, or their
respective successors and assigns, be liable for or obligated to cure any acts,
failures to act or breaches of this Lease by any prior landlord (including
Landlord) or for events that occurred or conditions that existed prior to the
conveyance or title to such Lender, purchaser or grantee.
17.2 TENANT'S EQUITABLE REMEDY. Tenant shall not be entitled to any
damages because of Landlord's failure or refusal to consent or approve of any
matter requested by Tenant. Tenant's sole remedy shall be an action for specific
performance or injunction.
17.3 DEPOSIT. In the event the original Landlord hereunder, or any
successor in interest of Landlord, shall sell or convey its interest in the
Project, Tenant agrees to attorn to such new owner. Landlord shall transfer to
the new owner the balance of the Security Deposit, if any, and, after notice to
Tenant, Landlord shall be relieved of all future liability with respect to the
Security Deposit.
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17.4 COVENANTS. In the event of any transfer by any Landlord of its
interest, such Landlord shall be automatically relieved from all liability
accruing from and after the date of the transfer or conveyance.
SECTION 18. HAZARDOUS MATERIALS.
18.1 DEFINITIONS As used in this SECTION 18, the following words or
phrases shall have the following meanings:
(a) "AGENTS" means Tenant's partners, officers, directors,
shareholders, employees, agents, contractors, assignees, subtenants and any
other third parties entering upon the Project at the request or invitation of
Tenant.
(b) "CLAIMS" means claims, liabilities, losses, actions,
environmental suits, causes of action, legal or administrative proceedings,
damages, fines, penalties, loss of rents, liens, judgments, costs and expenses
(including, without limitation, attorneys' fees and costs of defense, and
consultants', engineers' and other professionals' fees and costs).
(c) "HAZARDOUS MATERIALS" means any: (A) Substance which is
regulated by any Hazardous Materials Law; (B) asbestos and asbestos-containing
materials; (C) urea formaldehyde; (D) radioactive substance; (E) flammable
explosives; (F) petroleum, including crude oil or any fraction thereof; (G)
polychlorinated biphenyls; and (H) "hazardous substances," "hazardous materials"
or "hazardous waste" under any Hazardous Materials Law.
(d) "HAZARDOUS MATERIALS LAWS" mean: (A) any existing or
future federal, state or local law, ordinance regulation or code which protects
health, safety or welfare, or the environment; (B) any existing or future
administrative or legal decision interpreting any such law, ordinance,
regulation or code; and (C) any common law theory which may result in Claims
against Landlord, the Premises or the Project.
(e) "PERMITS" means any permit, authorization, license or
approval required by any applicable governmental agency.
(f) "SUBSTANCE" means any substance, material, product,
chemical, waste, contaminant or pollutant.
(g) "USE" means use, generate, manufacture, produce, store,
release, discharge, and transport to or from the Project.
18.2 USE OF HAZARDOUS MATERIALS. Without limiting the generality of
this SECTION 18, and except as provided hereinbelow, Tenant covenants and agrees
that Tenant and its Agents shall not bring into, maintain upon, or Use in or
about the Project, or transport to or from the Project, any Hazardous Materials,
nor shall Tenant or its Agents release or dispose of any Hazardous Materials in,
on, under or about the Project in violation of any Hazardous Materials Law.
Notwithstanding the foregoing provisions, Tenant may Use any Substance typically
found or used in applications of the type permitted by this Lease so long as:
(A) any such Substance is typically found only in such quantity as is reasonably
necessary and customary for Tenant's Permitted Use; (B) a list of such Hazardous
Materials is provided to Landlord in writing prior to any such Use; (C) any such
Substance and all equipment necessary in connection with the Substance are Used
strictly in accordance with the manufacturers' instructions therefore; (D) no
such Substance is released or disposed of in or about the Project in violation
of any Hazardous Materials Law; (E) any such Substance and all equipment
necessary in connection with the Substance are removed from the Project and
Premises and transported for Use or disposal by Tenant in compliance with any
applicable Hazardous Materials Laws upon the expiration or earlier termination
of this Lease; and (F) Tenant and its Agents comply with all applicable
Hazardous Materials Laws. Tenant shall not use or install in or about the
Premises any asbestos or asbestos-containing materials.
18.3 DELIVERY OF NOTICES. Tenant shall furnish to Landlord copies of
all notices, claims, reports, complaints, warnings, asserted violations,
documents or other communications received or delivered by Tenant, as soon as
possible
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and in any event within five (5) days after such receipt or delivery, with
respect to any actual or alleged Use, disposal or transportation of Hazardous
Materials in or about the Premises and the Project. Whether or not Tenant
received any such notice, claim, report, complaint, warning, asserted violation,
document or other communication, Tenant shall immediately notify Landlord,
orally and in writing, if Tenant or any of its Agents knows or has reasonable
cause to believe that any Hazardous Materials, or a condition involving or
resulting from the same, is present, in Use, has been disposed of, or
transported to or from the Premises or the Project.
18.4 CLEANUP AND REMEDIATION. If Tenant or its Agents violate any
provision of this SECTION 18, then Tenant shall immediately notify Landlord in
writing and shall be obligated, at Tenant's sole cost, to abate, remediate,
clean-up and/or remove from the Project, and dispose of, all in compliance with
all applicable Hazardous Materials Laws, all Hazardous Materials Used by Tenant
or its Agents. Such work shall include, but not be limited to, all testing and
investigation required by Landlord, Landlord's Lender and/or ground Lessor, if
any, and any governmental authorities having jurisdiction, and preparation and
implementation of any remedial action plan required by any governmental
authorities having jurisdiction. Tenant's indemnification covenant set forth in
SECTION 18.6 shall extend to any enforcement or other action instituted by any
governmental authority with respect to any such alleged requirement and, Tenant
shall promptly, at Tenant's cost, comply with any requirement determined to be
applicable to Tenant. All such work shall, in each instance, be conducted (A) to
the satisfaction of the governmental authority having jurisdiction, if a
governmental authority has assumed jurisdiction of such work, (B) to Landlord's
reasonable satisfaction if a governmental authority has but declines to assume
jurisdiction of such work or (C) to Landlord's reasonable satisfaction if there
is no applicable governmental requirement with respect to such work and no
governmental authority takes jurisdiction of such work. If Tenant does not
reasonably comply with the provisions of this SECTION 18.4, then Landlord may,
without prejudicing, limiting, releasing or waiving Landlord's rights under this
SECTION 18, separately undertake such work, but only after first giving Tenant
notice of its intent to do so and the opportunity to cure such default and
Tenant shall promptly reimburse all costs incurred by Landlord.
18.5 ENTRY. Landlord shall have the right to enter and inspect the
Premises, and the right to inspect Tenant's books and records, to verify
Tenant's compliance with, or violations of, the provisions of this SECTION 18.
Furthermore, Landlord may conduct such investigations and tests as Landlord or
Landlord's Lender may require. If either (i) as a result of such inspections or
tests, Tenant is found to be in material breach of the provisions of this
SECTION 18 or (ii) as to any test or investigation requested by any governmental
authority or Landlord's Lender there is reasonable cause to believe that Tenant
is in material breach of the provisions of this SECTION 18, then, in either such
instance, Tenant, in addition to its other obligations set forth in this SECTION
18, shall promptly reimburse Landlord for all costs incurred in connection with
such test or inspection.
18.6 INDEMNITY. Tenant shall indemnify, defend and hold harmless
Landlord, its partners and its and their respective successors, assigns,
partners, directors, officers, shareholders, employees, agents, lenders, ground
lessors and attorneys, and the Project, from and against any and all Claims
incurred by such indemnified persons, or any of them, in connection with or as
the result of: (A) the presence, Use or disposal of any Hazardous Materials in
or about the Premises or Project by Tenant or its Agents; (B) any injury to or
death of persons or damage to or destruction of property resulting from the
presence, Use or disposal of any Hazardous Materials in or about the Premises or
Project by Tenant or its Agents; (C) any violation by Tenant or its Agents of
any Hazardous Materials Laws; and (D) any failure of Tenant or its Agents to
observe the provisions of this SECTION 18.6. Tenant's obligations hereunder
shall include, without limitation, and whether foreseeable or unforeseeable, all
costs of any required or necessary testing, investigation, studies, reports,
repair, clean-up, detoxification or decontamination of the Premises or Project,
and the preparation and implementation of any closure, removal, remedial action
or other required plans in connection therewith, and shall survive the
expiration or earlier termination of the Term. For purposes of this
indemnification provision, any acts or omissions of Tenant and its Agents
(regardless of whether they are negligent, intentional, willful, or unlawful)
shall be strictly attributable to Tenant. If, at any time after the initiation
of any suit, action, investigation or other proceeding which could create a
right of indemnification under this SECTION 18.6, Tenant is not complying with
the provisions of SECTION 18.4, then Landlord may, without prejudicing,
limiting, releasing or waiving the right of indemnification provided herein,
separately defend or retain separate counsel to represent and control the
defense as to Landlord's interest in such suit, action, investigation or other
proceeding. Tenant shall pay all costs of Landlord's separate defense or counsel
upon demand.
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SECTION 19. CORPORATION OR OTHER ENTITY AS TENANT. If a corporation, limited
liability company, trust, estate or other entity or association executes this
Lease as Tenant, then Tenant and the Persons executing this Lease on behalf of
Tenant hereby represent and warrant that the individuals executing this Lease on
Tenant's behalf are duly authorized to execute and deliver this Lease on behalf
of Tenant, and that this Lease is binding upon and enforceable against Tenant in
accordance with its terms.
SECTION 20. ENTIRE AGREEMENT. This Lease constitutes the entire understanding of
the parties with respect to the Premises and supersedes all prior or
contemporaneous understandings and agreements relating to the subject matter
thereof. There are no other promises, covenants, understandings, agreements,
representations, or warranties with respect to the subject matter of this Lease
except as expressly set forth herein or in any instrument executed concurrently
herewith.
SECTION 21. MODIFICATION. This Lease may not be modified, terminated or amended
except pursuant to a written instrument duly executed by all of the parties
hereto.
SECTION 22. BROKERS. Landlord and Tenant each warrant and represent to the other
that it has not employed or dealt with any real estate broker or finder in
connection with this Lease, except for the broker(s), if any, whose name(s) is
(are) set forth in the Basic Lease Provisions, and that it knows of no other
real estate broker, agent or finder who is or might be entitled to a commission
or fee in connection with this Lease. Landlord and Tenant each agree to
indemnify, defend and hold the other harmless from and against any and all
claims of any other broker or finder, used by it on account of any brokerage
commission or finder's fee in connection with this Lease.
SECTION 23. NO RECORDATION. In no event shall this Lease or any memorandum
thereof be recorded without the written consent of both Landlord and Tenant.
SECTION 24. TIME OF THE ESSENCE. Subject to the provisions of SECTION 32, time
is of the essence of this Lease and each of the provisions hereof.
SECTION 25. FINANCIAL STATEMENT. At any time during the Term, Tenant shall upon
10 days prior written notice from Landlord, provide Landlord with a current
financial statement and financial statements of the 2 fiscal years of Tenant
prior to the current financial statement year. Such statements shall be prepared
in accordance with generally accepted accounting principles.
SECTION 26. FURTHER ASSURANCES. From time to time, either party, at the request
of the other party, and without further consideration, shall execute and deliver
further instruments and take such other actions as the requesting party may
reasonably require to complete more effectively the transactions contemplated by
this Agreement.
SECTION 27. MODIFICATION FOR LENDER. If, in connection with obtaining any
financing for the Project, the prospective lender shall request reasonable
modifications to this Lease as a condition to such financing, Tenant will not
unreasonably withhold, delay or defer its consent thereto, provided that such
modifications shall not increase the obligations of Tenant hereunder or have a
materially adverse effect on the leasehold interest hereby created or Tenant's
rights hereunder.
SECTION 28. NO THIRD PARTY BENEFITS. This Lease is made and entered into for the
sole benefit and protection of the parties hereto, and the parties do not intend
to create any rights or benefits under this Lease for any person who is not a
party to this Lease, other than a Lender.
SECTION 29. NAME OF PROJECT. Tenant shall not use the name, insignia or logotype
of the Project for any purpose. Tenant shall not use any picture of the Project
in its advertising, stationery or any other manner.
SECTION 30. WAIVER. The waiver by any party of any term, covenant, agreement or
condition herein contained shall be effective only if in writing and shall not
be deemed to be a waiver of any subsequent breach of the same or any
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other term, covenant, agreement or condition herein contained, nor shall any
custom or practice which may develop between the parties in the administration
of this Lease be construed to waive or to lessen the right of any party to
insist upon the performance by the other party in strict accordance with all of
the terms, covenants, agreements and conditions of this Lease. The subsequent
acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of
any preceding breach by Tenant of any term, covenant, agreement or condition of
this Lease, other than the failure of Tenant to timely pay, the particular Rent
so accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such Rent.
SECTION 31. NO LIGHT AND AIR EASEMENT. Any diminution, restriction or shutting
off of light or air by any structure that may at any time be erected on lands
adjacent to or in the vicinity of the Project shall in no way affect this Lease,
abate any Rent or otherwise impose any cost, liability or obligation upon
Landlord.
SECTION 32. FORCE MAJEURE. Landlord shall not be chargeable with, nor be liable
or responsible to Tenant for, anything or in any amount for any failure to
perform or delay in performing caused by Force Majeure. Any such failure or
delay due to Force Majeure shall not be deemed a breach of or default in the
performance of this Lease by Landlord.
SECTION 33. CIVIC PROGRAMS. Tenant agrees to cooperate and use its best efforts
to participate in any traffic management, resource conservation, safety, and
other similar programs, whether voluntary or required, which may be civic or
community benefit programs generally applicable to businesses located in Las
Vegas, Nevada, or specifically applicable to the Project or the area in which
the Project is located, to, the fullest extent permitted by the requirements of
Tenant's business. Tenant shall execute and deliver promptly any documents
requested by any governmental authority in connection with the foregoing.
Neither this SECTION 33 nor any other provision in this Lease, however, is
intended to, nor shall it, create any rights or benefits in any other person,
firm, company, governmental entity or the public.
SECTION 34. ESTOPPEL CERTIFICATE. Tenant, shall at any time, and from time to
time, upon 10 business days' prior written notice from Landlord, execute,
acknowledge and deliver to Landlord an Estoppel Certificate. Any Estoppel
Certificate may be relied upon by any Lender or any prospective lender with
respect to, or any prospective purchaser of any interest in, the Project. Any
failure or refusal by Tenant to execute and return a requested Estoppel
Certificate within the time period specified in this SECTION 34 (without
additional time, despite any other provision of this Lease) shall constitute a
Default.
SECTION 35. RIGHT TO PERFORMANCE. If Tenant shall fail to perform any act on its
part to be performed hereunder, and such failure shall continue for 10 days
after written notice thereof to Tenant, provided that no notice shall be
required in cases of emergency, Landlord may, without waiving or releasing
Tenant from any obligations of Tenant perform such act. All sums so paid by
Landlord and all costs incidental thereto (including attorneys and other fees
and costs), together with interest thereon at the Interest Rate from the date of
such payment by Landlord, shall be deemed to be Rent and shall be payable to
Landlord by Tenant upon demand therefor. Any obligation of Landlord under this
Lease may be fulfilled by Landlord's Employees or by any agent or independent
contractor of Landlord.
SECTION 36. EXECUTION OF LEASE BY LANDLORD. Neither the submission of this
document to Tenant, nor examination and negotiation by Landlord or Tenant,
constitutes an offer to lease, or a reservation in favor of Tenant of, or option
to Tenant for, the Premises. This document shall become effective and binding
only upon execution and delivery hereof by Tenant and by Landlord.
SECTION 37. PROFESSIONAL FEES. If either party becomes involved in litigation or
arbitration arising out of this Lease or the performance thereof, the court in
such litigation or arbitrator in such arbitration shall, award legal expenses
(including, but not limited to attorneys and other professional and
paraprofessional fees incurred) to the prevailing party.
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SECTION 38. SURVIVAL OF INDEMNITIES. All provisions in this Lease relating to
indemnities by Tenant in favor of Landlord shall survive the expiration or
termination hereof for any reason and shall run to the benefit of the original
Landlord named herein as well as any successor in interest to it.
SECTION 39. NOTICES. All notices, requests, demands or other communications
required or desired to be given hereunder, to be legally binding, shall be in
writing and may be served personally (including service by any commercial
messenger or courier service) or by registered or certified United States mail,
return receipt requested, with all postage and fees fully prepaid, addressed to
the respective address set forth in SECTION 1 above, or to such other address as
the party to whom the notice is addressed has theretofore specified in a notice
served upon the other party in accordance with the requirements hereof.
Alternatively, notices may be served by facsimile transmission sent to the
respective facsimile transmission number specified in the applicable Base Lease
Provisions. All notices shall be effective upon actual delivery to the
addressee, as evidenced by the return receipt if service is by mail, EXCEPT in
the case of a party that has relocated and has not served upon the other party a
notice of a new address for service of notices as specified above, or in the
case if a party to whom the notice is addressed that refuses to accept delivery
of the notice, in either of which cases the notice shall be deemed effective
upon the first date of attempted delivery, as indicated by the return receipt if
the attempted service was by mail, at the last address of which the party
attempting to make the service had notice. In addition, a copy of any notice
with respect to a default of or claim against Landlord which is served upon
Landlord shall be sent concurrently to all Lenders of which Tenant has notice,
as provided in SECTION 13.3 above.
SECTION 40. GOVERNING LAW. This Lease shall be governed by and construed
pursuant to the law of the State of Nevada, without reference to conflicts of
laws rules.
SECTION 41. SEVERABILITY. In the event that any provision of this Lease shall be
adjudicated to be void, illegal, invalid, or unenforceable, the remaining terms
and provisions of this Lease shall remain in full force and effect.
SECTION 42. SUCCESSORS AND ASSIGNS. Subject to all restrictions set forth
herein, the terms, covenants, conditions and agreements herein contained shall
inure to the benefit of and bind the heirs, successors, legal representatives
and assigns of the parties hereto.
SECTION 43. DEFINITIONS.
In addition to the terms defined in SECTION 1 of the Lease, the
following terms shall have the meanings specified below when used in the Lease:
43.1. "ADDITIONAL RENT" means all of those items to be paid by Tenant
which are specified in SECTION 3.2.
43.2. "ADDITIONAL SERVICES" means all excessive or additional services
in excess of Basic Services relating to Tenant's use and occupancy of the
Premises.
43.3. "AFFILIATE" means, with respect to a Person, any other Person
controlled by or in control of such Person, or any other Person who, together
with such Person, are under the common control of a third Person.
43.4. "ANNUAL STATEMENT" shall have the meaning specified in
SECTION 3.3.4.
43.5. "BASIC SERVICES" means the utilities and services specified in
SECTION 6.1 as being provided to the Premises by Landlord, subject to the
conditions therein set forth.
43.6. "BUILDING" means the nine story office building located at 333
North Rancho Road, Las Vegas, Nevada.
43.7. "COMMON AREAS" means all areas within the exterior boundaries of
the Project now or later made available for the general use of Landlord and
other persons entitled to occupy floor area in the Project, including the common
entrances, lobbies, restrooms, elevators, stairways and accessways, loading
docks, ramps, parkways, driveways
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and roadways, loading and unloading areas, trash areas, landscaped areas in the
Project, and the common pipes, conduits, wires and appurtenant equipment serving
the Premises. Any enlargement of or addition to the Common Areas shall be
included in the definition of Common Areas.
43.8. "DEFAULT RATE" means the lesser of (a) 18% per annum, or (b) the
maximum rate per annum permitted by applicable Law.
43.9. "DIRECT EXPENSES" means the sum of Operating Costs and Taxes.
43.10. "ESTOPPEL CERTIFICATE" means a certificate to be executed by
Tenant as specified in SECTION 34 and in the form requested by Landlord.
43.11. "EXCESS EXPENSE ESTIMATE" shall have the meaning specified in
SECTION 3.3.1.
43.12. "FORCE MAJEURE" means fire, earthquake, explosion, flood,
hurricane, the elements, acts of God or the public enemy, action, restrictions,
limitations, or interference of governmental authorities or agents, war,
invasion, insurrection, rebellion, riots, strikes or lockouts, or any other
cause or occurrence, whether similar or dissimilar to the foregoing, which is
beyond the reasonable control of Landlord.
43.13. "HOLIDAYS" means all federally observed Holidays, as they may be
observed from time to time, including New Year's Day, President's Day, Memorial
Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, Christmas Day,
and, to the extent of Basic Services provided by union members engaged at the
Project, such other holidays observed by such unions.
43.14. "INDEX" means the Consumer Price Index published by the United
States Department of Labor, Bureau of Labor Statistics ("All Items" index) for
All Urban Consumers B Los Angeles, Riverside, Orange County, 1982- 84=100;
PROVIDED that, in the event the Index shall not be published or published
monthly, or shall be discontinued, the most nearly comparable index as
reasonably determined by Landlord shall be substituted therefor.
43.15. "LANDLORD'S EMPLOYEES" means Landlord's agents, contractors,
licensees, employees, directors, officers, partners, trustees and invitees.
43.16. "LAW" means any federal, state, county, municipal, or other
local governmental statute, law, ordinance, rule, regulation, code, decree, or
order, including all decisions of any court that are binding precedents in the
State of Nevada and all directions, directives, regulations or requirements of
any federal, state, county or municipal authority, whether or not having the
force of law, now in force or which may hereafter be enacted or promulgated.
43.17. "LEASE YEAR" means a period of 12 consecutive calendar months,
the first of which shall commence on the first day of the first full calendar
month during the Term, with each following Lease Year beginning on each
consecutive anniversary thereof.
43.18. "LENDER" means any holder of any Mortgage, and if the Mortgage
is a ground lease, such term shall refer to the ground lessor.
43.19. "LENDER CURE PERIOD" means the period given any Lender to cure
any default of Landlord, as provided in SECTION 13.3 of the Lease.
43.20. "MASTER LEASE" means any estate for years, whether now existing
or created in the future, and whether constituting a leasehold estate or any
tier of subleasehold estate, in the Land or in any portion of the Project which
includes the Premises, which estate for years at any time lies between the fee
estate in the Land or the Parking Facilities and the estate created under the
Lease.
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43.21. "MATTERS OF RECORD" means all easements, agreements,
rights-of-way, liens, covenants, conditions, or restrictions of any nature
affecting the Project or any part thereof and constituting a matter of public
record, any Reciprocal Easement and Operating Agreement, and any Master Lease.
43.22. "MORTGAGE" means any mortgage, deed of trust, Master Lease, or
other similar encumbrance now or hereafter placed upon the Land, the Project,
any portion thereof which includes the Premises, or against the estate for years
created by any Master Lease, and all renewals, modifications, consolidations,
replacements or extensions thereof, and all indebtedness of other monetary
obligations now or hereafter secured thereby together with all interest thereon.
43.23. "OPERATING COSTS" means all costs incurred by Landlord in
owning, maintaining, repairing, replacing, managing, and operating the Project
during or allocable to the term of the Lease, including, but not limited to, all
costs for (a) utilities, (b) supplies, (c) all insurance maintained by Landlord
(including but not limited to, public liability and property damage, earthquake,
rent continuation, and/or fire and extended coverage insurance for up to the
full replacement cost of the Project), (d) services of independent contractors,
(e) compensation (including employment taxes and fringe benefits) of all persons
who perform regular duties connected with the day-to-day management, operation,
maintenance, repair and overhaul of the Project, including, without limitation,
office personnel for the office of the Project, engineers, janitors, painters,
floor waxers, window washers, parking attendants, watchmen, and gardeners, (f)
management of the Project or any portion of it, (g) rental expenses for, or a
reasonable allowance for depreciation of, personal property used in the
management, maintenance, operation and repair of the Project, (h) performance
of, or any costs incurred in connection with, any REA and CC&R's that may now
exist or may hereafter be entered into by Landlord as permitted herein, and
allocable to the Project, (i) the cost of any capital improvements made to the
Project after the date of the Lease which improvements are either intended to
reduce other Operating Costs, or are required by any Law enacted after the date
of the Lease, in any such case such cost to be amortized over the useful life of
the improvement in question, (j) the cost of providing Basic Services, and (k)
any other costs and expenses incurred by Landlord relating to the Project or
under or relating to the Lease and not reimbursed separately by tenants of the
Project. Operating Costs for any year other than the Base Year shall not be less
than the Operating Costs for the Base Year. Operating Costs for the Base Year
shall not include any capital item amortization or nonrecurring costs and
expenses.
43.24. "PERSON" means an individual, trust, partnership, joint venture,
association, corporation, and any other legal or business entity.
43.25. "PERSONAL PROPERTY" means any trade fixtures, furnishings or
equipment, and all other personal property contained in the Premises from time
to time, including all Tenant alterations.
43.26 "PARKING FACILITIES" means the parking area included within the
Project as designated from time to time by Landlord in its sole and absolute
discretion. Landlord reserves the right to charge a fee on an hourly, daily,
monthly and/or other basis, in Landlord's sole and absolute discretion, for the
use of the Parking Facilities by tenants of and visitors to the Project.
43.27. "PROJECT" means the Building and the land thereunder and related
to the Building, and all roads, plazas, landscaped areas, Common Areas,
improvements and other facilities situated on such land.
43.28. "REA AND CC&RS" means any reciprocal easement and/or operating
agreement, and any covenants, conditions and restrictions, now existing or
hereafter entered into between the owner or ground lessee of the Land, with or
for the benefit of any other party who is the owner or ground lessee of any land
adjacent to or in the vicinity of the Land, including land separated from the
Land by a public right-of-way. Landlord shall be entitled to enter into any
REA(s) and CC&Rs at any time during the Term, and Tenant agrees that the Lease
shall be subordinate and subject to all REAs and CC&Rs now existing or so
entered into by Landlord.
43.29. "RELOCATED PREMISES" means the other premises within the Project
to which Landlord may cause Tenant to relocate as provided in SECTION 2.10.
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43.30. "RENT" means the aggregate total of all of the following: (a)
the Base Rent payable by Tenant hereunder; (b) all sums designated as
"ADDITIONAL RENT" payable by Tenant hereunder; and (c) any other sums required
to be paid by Tenant hereunder.
43.31. "RULES AND REGULATIONS" means the requirements set forth in
EXHIBIT F and such reasonable and nondiscriminatory additions, modifications and
amendments thereto as Landlord may adopt from time to time for use in the
Project.
43.32. "SYSTEMS AND EQUIPMENT" means any plant, machinery,
transformers, duct work, cable, wires, equipment, facilities, or systems
designed to supply heat, ventilation, air conditioning, humidity, or any other
services or utilities, or comprising or serving as any component or portion of
the electrical, gas, steam, plumbing, sprinkler, communications, alarm,
security, or fire/life/safety systems or equipment, or any other mechanical,
electrical, electronic, computer or other systems or equipment utilized for the
Project or any portion of it.
43.33. "TAXES" means all taxes, assessments, water and sewer charges
and other similar governmental charges levied on or attributable to the Project
or its operation, including, but not limited to, real property taxes and
assessments levied or assessed against the Project, personal property taxes or
assessments levied or assessed against the Project, and any tax measured by
gross rents received from the Project, together with any costs incurred by
Landlord (including attorneys' and other professional and paraprofessional fees
and costs incurred in good faith) in contesting any such taxes, assessments or
charges, but excluding any net income, franchise, capital stock, estate or
inheritance taxes imposed by the state or federal government or by any agency,
branch or department thereof. If at any time during the Term there shall be
levied, assessed or imposed on Landlord or the Project by any governmental
entity, any general or special, ad valorem or specific, excise, capital levy or
other tax, assessment, levy or charge directly on any Rent received under the
Lease or other leases affecting the Project, and/or any license fee, excise or
franchise tax, assessment, levy or charge measured by or based, in whole or in
part, upon any Rent, and/or any transfer, transaction, or similar tax,
assessment, levy or charge based directly or indirectly upon the execution of
the Lease or any document to which Tenant is a party creating or transferring an
interest or estate in the Premises, or the transactions represented by other
leases affecting the Project or based upon a reassessment of the Project, or any
portion thereof, or due to a change in ownership or transfer of all or part of
Landlord's interest in the Lease, the Project, or any portion thereof, and/or
occupancy, use, per capita or other tax, assessment, levy or charge based
directly or indirectly upon the use or occupancy of the Premises or the Project,
then Taxes shall include any such tax, assessment, levy or charge. If the
assessed valuation of, or the taxes, assessments and charges attributable to the
Project, shall not be based upon the Project being at least 95% occupied, then,
for purpose of calculating Tenant's Proportionate Share of Taxes hereunder, such
taxes, assessments and charges shall be adjusted to reflect the amount of such
taxes, assessments and charges that would have been payable if the Project had
been 95% occupied, with the valuation of the Project being based upon rental
income being attributed to the unoccupied portions of the Project at rates equal
to the net effective rental under the Lease. Taxes for the Base Year shall not
include special assessments or nonrecurring charges or levies; Taxes for years
other than the Base Year shall not be less than the Taxes for the Base Year.
43.34. "TENANT ALTERATIONS" means any alterations, additions, or
improvements to the interior of the Premises, including utility installations
and the improvements installed in the Premises at the outset of the Lease, and
whether paid for by Landlord, by Tenant, or otherwise.
43.35. "TENANT'S EMPLOYEES" means, collectively, all of Tenant's
agents, licensees, contractors, subcontractors, employees, directors, officers,
partners, trustees and invitees.
43.36. "TENANT'S PROPORTIONATE SHARE" means the percentage set forth in
SECTION 1.3 of the Lease, pending any change in the rentable area of the
Premises or in the rentable area of the Project.
43.37. "TRANSFER" means any transfer, sale, conveyance, assignment,
subleasing, granting of a license, encumbrance, or hypothecation by Tenant of
all or any part of its interest in the Lease or the Premises, as the case may
be.
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43.38. "TRANSFER DOCUMENTS" means any assignment or sublease or other
document pursuant to which a Transfer is, or is proposed to be, accomplished.
43.39. "TRANSFER NOTICE" shall mean the notice from Tenant to Landlord
required by the terms of SECTION 7.1 as a prerequisite to any Transfer.
43.40. "TRANSFEREE" means any Person to whom a Transfer is made or
proposed to be made.
SECTION 44. COUNTERCLAIM AND JURY TRIAL. IN THE EVENT THAT LANDLORD COMMENCES
ANY SUMMARY PROCEEDINGS OR ACTION FOR NON-PAYMENT OF RENT OR OTHER CHARGES
PROVIDED IN THIS LEASE, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY
NATURE OR DESCRIPTION IN ANY SUCH PROCEEDING OR ACTION. TENANT AND LANDLORD BOTH
WAIVE A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING IN ANY ACTION OR PROCEEDING
BETWEEN THE PARTIES HERETO OR THEIR AFFILIATES, UNDER OR CONNECTED WITH THIS
LEASE, ANY OF ITS PROVISIONS, OR ANY TRANSACTIONS OR AGREEMENTS SET FORTH HEREIN
OR CONTEMPLATED HEREBY.
SECTION 45. QUITCLAIM DEED. At the expiration or earlier termination of this
Lease, Tenant shall, upon the request of Landlord, execute, acknowledge, and
deliver to Landlord, within five (5) days after such request, any quitclaim deed
or other documents to remove the cloud of this Lease from the Premises.
IN WITNESS WHEREOF, the parties have executed this Lease on the day and
year specified above.
"TENANT":
STOCKUP.COM, INC.
By: /s/ Michael Calderone
------------------------
Michael Calderone
Its: President
By: /s/ Kerry Nicponski
------------------------
Its: COO/Chief of Operations
"LANDLORD":
L.V. ATRIUM, INC., A CALIFORNIA CORPORATION
By: /s/ Norbert Siebert
------------------------
Its: Senior VP
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EXHIBIT A
FLOOR PLAN OF PREMISES
(Map of floor plan here)
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<PAGE>
EXHIBIT B
STATEMENT OF COMMENCEMENT DATE
Date: _______ February 5, 1999
Date of Lease:____ February 5, 1999
The undersigned hereby agree that the Commencement Date and Expiration
Date of the above-referenced Lease shall be:
Commencement Date: April 1, 1999
Expiration Date: March 31, 2003
Suite 625 - March 31, 2003
Suite 810 - March 31, 2003
The Expiration Date set forth above shall not limit any options to
extend the term contained in the Lease.
"LANDLORD":
L.V. ATRIUM, INC., A CALIFORNIA CORPORATION
By: /s/ Norbert Siebert
-----------------------------
Its: Senior V.P.
"TENANT":
STOCKUP.COM, INC.
By: /s/ Michael Calderone
-----------------------------
Its: President & C.E.O.
By: /s/ Kerry Nicponski
-----------------------------
Its: Chief of Operations
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EXHIBIT C
WORK LETTER
Landlord shall provide tenant improvements to space consist of:
Install one door connecting Suite 650 to Suite 660 Provide separate
HVAC to the data processing area within the Premises Install 20
electrical outlets in the data processing area Install one door at
opening within Suite 650 Perform fire and life safety work required by
law Add Tenant's name to existing Monument Sign
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EXHIBIT D
RULES AND REGULATIONS
These Rules and Regulations are in addition to the terms,
covenants, agreements and conditions of any lease of space in the Project. In
the event these Rules and Regulations conflict with any provision of the Lease,
the Lease shall control. Landlord reserves the right to modify and make such
other and reasonable Rules and Regulations as, in its judgment, may from time to
time be needed for safety and security, for care and cleanliness of the Project
and for the preservation of good order therein. Tenant agrees to abide by all
such Rules and Regulations hereinabove stated and any additional rules and
regulations which are adopted. Tenant shall be responsible for the observance of
all the foregoing Rules and Regulations by Tenant's employees, agents, clients,
customers, invitees and guests. Landlord may waive any one or more of these
Rules and Regulations for the benefit of Tenant or any other occupant of the
Project, but no such waiver by Landlord shall be construed as a waiver of such
Rules and Regulations in favor of Tenant or any other occupant, nor prevent
Landlord from thereafter enforcing any such Rules and Regulations against any or
all of the occupants of the Project, including Tenant.
1. SIGNS/ADVERTISING. No sign, placard, picture, advertisement, name or notice
shall be installed or displayed on any part of the outside or inside of the
Project without the prior written consent of Landlord. Landlord shall have the
right to remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. Except for retail tenant, all approved
signs or lettering on doors, windows and walls shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person chosen by Landlord,
using materials of Landlord's choice and in a style and format approved in
writing by Landlord.
2. NO OBSTRUCTIONS. Tenant shall not obstruct any sidewalks, halls, exits,
entrances, elevators, stairways or other passageways of the Project. The halls,
exits, entrances, malls, elevators, stairways and other passageways are not for
the general public, and Landlord shall in all cases retain the right to control
and prevent access thereto by all persons whose presence, in the judgment of
Landlord, would be prejudicial to the safety, character, reputation or other
interests of the Project and its tenants; however, nothing herein shall be
construed to prevent access to the Premises by persons with whom Tenant normally
deals in the ordinary course of its business, unless such persons are engaged in
illegal activities. Neither Tenant nor any employee or invitee of Tenant shall
go upon the roof of the Project without Landlord's consent. Tenant shall not
have the right to maintain displays of or to sell merchandise in the Common
Areas or to use Common Areas in any manner which would interfere with the rights
of other tenants to use and access Common Areas.
3. DIRECTORY. The directory of the Project, if any, will be provided exclusively
for the display of the name and location of tenants only, and Landlord reserves
the right to exclude any other names therefrom.
4. CLEANING/JANITORIAL. Except for retail tenants, all cleaning and janitorial
services for the Project and the Premises shall be provided exclusively through
Landlord, and except with the written consent of Landlord, no person or persons
other than those approved by Landlord shall be employed by Tenant or permitted
to enter the Project for the purpose of cleaning the same. Tenant shall not
cause any unnecessary labor by carelessness or indifference to the good order
and cleanliness of the Premises. Landlord shall not in any way be responsible to
Tenant for any loss of property on the Premises, however occurring, or for any
damage to Tenant's property by the janitor or any other employee or any other
person.
5. KEYS. Landlord will furnish Tenant, free of charge, with two keys to each for
lock in the Premises. Landlord may make a reasonable charge for any additional
keys. Tenant, upon the termination of its tenancy, shall deliver to Landlord the
keys of all doors which have been furnished to Tenant, and in the event of loss
of any keys so furnished, shall pay Landlord therefor.
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6. ALARMS. If Tenant requires telephonic, burglar alarm or similar services, it
shall first obtain Landlord's approval thereof, which shall not be unreasonably
withheld by Landlord, and Tenant shall comply with all of Landlord's
instructions in their installation.
7. FREIGHT ELEVATOR. Any freight elevator shall be available for use by all
occupants of the Project, subject to such reasonable scheduling as Landlord in
its discretion shall deem appropriate. No equipment, materials, furniture,
packages, supplies, merchandise or other property will be received in the
Project or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord.
8. FLOOR LOADING. Tenant shall not place a load upon any floor of the Premises
which exceeds the load per square foot which such floor was designed to carry
and which is allowed by law. Landlord and Landlord's consultant, the cost of
which consultant shall be borne by Tenant, shall have the right to prescribe the
weight, size and position of all equipment, materials, furniture or other
property brought into the Project. Heavy objects, if such objects are considered
necessary by Tenant, shall stand on such platforms as determined by Landlord or
its consultant to be necessary to properly distribute the weight. Business
machines and mechanical equipment belonging to Tenant which cause noise or
vibration that may be transmitted to the structure of the Project or to any
space therein to such a degree as to be objectionable to Landlord or to any
other occupant of the Project, shall be placed and maintained by Tenant, at
Tenant's expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration. The persons employed to move such equipment in or
out of the Project must be approved by Landlord. Landlord will not be
responsible for loss of, or damage to, any such equipment or other property from
any cause, and all damage done to the Project by maintaining or moving such
equipment or other property shall be repaired at the expense of Tenant. If
Tenant fails to repair in an expeditious manner any and all damage caused, then
Landlord may (but shall not be obligated to) contract for the performance of the
repair work, which work shall be billed to Tenant and shall be payable by Tenant
to Landlord as Additional Rent within 10 days after Tenant's receipt of the
billing.
9. FLAMMABLE; TOXIC MATERIAL. Tenant shall not use or keep in the Premises any
kerosene, gasoline or inflammable or combustible fluid or material except in
those limited quantities necessary for the operation or maintenance of office
equipment, and then only in such a manner as to ensure the safety of the
Premises. Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or used
in a manner offensive or objectionable to Landlord or other occupant of the
Project by reason of noise, odors or vibrations, nor shall Tenant bring into or
keep in or about the Premises any birds or animals, except seeing-eye dogs when
accompanied by their masters.
10. SUPPLEMENTAL HVAC. Tenant shall not use any method of heating or air
conditioning other than that supplied or approved in writing by Landlord.
11. WASTAGE. Tenant shall not waste electricity, water, air conditioning or
other utilities or supplies furnished to the Premises, and Tenant agrees to
cooperate fully with Landlord to assure the most effective operation of the
Project's heating, air conditioning and other utility distribution systems, and
to comply with any governmental energy-saving rules, laws or regulations of
which Tenant has actual notice. Tenant shall refrain from attempting to adjust
controls other than room thermostats installed in the Premises and intended for
Tenant's use. Tenant shall keep corridor doors closed, and shall close window
coverings at the end of each business day. Heat and air conditioning shall be
provided during ordinary business hours of generally recognized business days,
but not less than the hours of 8:00 a.m. to 6:00 p.m. on Monday through Friday
and 9:00 a.m. to 1:00 p.m. on Saturday (excluding in any event Sundays and
holidays, it being understood that holidays shall mean and refer to those
holidays of which Landlord provides Tenant with reasonable prior written notice
which shall in any event include, without limitation, state and federal holidays
and those holidays on which the New York Stock Exchange is closed).
12. EXCLUSION OF PERSONS. Landlord reserves the right to exclude from the
Project (other than from retail tenants' premises which are open for business)
between the hours of 6:00 p.m. any day and 8:00 a.m. the following day, or such
other hours as may be established from time to time by Landlord, and on
Saturdays, Sundays and legal holidays, any person unless that person is known to
the person or employee in charge of the Project, or has a valid pass and is
properly identified. Tenant shall be responsible for all persons for whom it
requests passes and shall be liable to Landlord for
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<PAGE>
acts of such persons. Landlord shall not be liable for damages for any error
with regard to the admission to or exclusion from the Project of any person.
Landlord reserves the right to prevent access to the Project in case of
invasion, mob, riot, public excitement or other commotion by closing the doors
or by other appropriate action. Landlord reserves the right to exclude or expel
from the Project any person who, in Landlord's judgment, is intoxicated, or
under the influence of liquor or drugs, or who is in violation of any of the
Rules and Regulations of the Project.
13. TENANT SECURITY. Tenant shall close and lock the doors of the Premises and
entirely shut off all water faucets or other water apparatus, and, except with
regard to Tenant's computers and other equipment which require utilities on a
24-hour basis, all electricity, gas or air outlets before Tenant and its
employees leave the Premises each day. Tenant shall be responsible for any
damage or injuries sustained by other occupants of the Project or by Landlord
for noncompliance with this rule. Tenant assumes any and all responsibility for
protecting the Premises from theft, robbery and pilferage, which includes
keeping doors locked and other means of entry to the Premises closed.
14. EXTRA SERVICES. Office tenants shall not obtain for use on the Premises ice,
drinking water, food, beverage, towel or other similar services, nor accept
barbering or bootblacking services upon the Premises, except at such hours and
under such regulations as may be fixed by Landlord.
15. LAVATORIES. The toilet rooms, toilets, urinals, wash basins and other
apparatus shall not be used for any purpose other than that for which they were
constructed, and no foreign substance of any kind whatsoever shall be thrown
therein. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by Tenant if and to the extent caused by
Tenant or its employees or invitees.
16. NO SALES. Except as specifically permitted in the Basic Lease Provisions,
Tenant shall not sell, or permit the sale of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise to the general public from the
Premises. Tenant shall not make any room-to-room or public area solicitation of
business from other occupants of the Project or their employees or guests.
Tenant shall not use the Premises for any business or activity other than that
specifically provided in Tenant's Lease.
17. DAMAGE. Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork or plaster or in any way deface the Premises or any part
thereof, except to install decorative wall hangings. Landlord reserves the right
to direct electricians as to where and how telephone, telegraph,
telecommunication and computer wires are to be introduced to the Premises.
Tenant shall not cut or bore holes for wires. Tenant shall not affix any floor
covering to the floor of the Premises in any manner except as approved by
Landlord. Tenant shall repair any damage resulting from non-compliance with this
rule. If Tenant fails to repair in an expeditious manner any and all damage
caused, then Landlord may (but shall not be obligated to) contract for the
performance of the repair work, which work shall be billed to Tenant and shall
be payable by Tenant to Landlord as additional rent within 10 days after
Tenant's receipt of the billing.
18. VENDING MACHINES. Tenant shall not install, maintain or operate upon the
Premises any vending machine without the written consent of Landlord.
19. REFUSE. Tenant shall store all its trash and garbage within its Premises.
Tenant shall not place in any trash box or receptacle any material which cannot
be disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
20. STORAGE. Except as specifically permitted in the Basic Lease Provisions, the
Premises shall not be used for the storage of merchandise held for sale to the
general public, nor for lodging, nor for manufacturing of any kind, nor shall
the Premises be used for any improper, immoral or objectionable purpose. Other
than restaurants, no cooking shall be done or permitted by Tenant in the
Premises, except that use by Tenant of Underwriters' Laboratory-approved
equipment for brewing coffee, tea, hot chocolate and similar beverages shall be
permitted, and the use of a microwave oven shall be permitted, so long as such
equipment and use is in accordance with all recommendations of the manufacturer
thereof and all applicable Laws.
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21. NO BLOCKAGE. Tenant shall not use in any space or in the public halls of the
Project any mail carts or hand trucks except those equipped with rubber tires
and side guards or such other material handling equipment as Landlord may
approve.
22. SAFETY COMPLIANCE. Tenant shall comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord and any
governmental agency.
23. LANDLORD RESPONSE. The requirements of Tenant will be attended to only upon
appropriate application to the office of the Project by an authorized
individual. Employees of Landlord shall not be required to perform any work or
do anything outside of their regular duties unless under special instructions
from Landlord, and no employee of Landlord shall be required to admit any person
(Tenant or otherwise) to any office without specific instructions from Landlord.
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ADDENDUM TO THE ATRIUM OFFICE LEASE
BETWEEN L.V. ATRIUM, INC., A CALIFORNIA CORPORATION AS LANDLORD
AND
STOCKUP.COM, INC. AS TENANT
Dated: July 1, 1999
The terms of this Addendum shall supplement, amend and, to the extent
in conflict with the provisions of the Lease, supersede the above-referenced
Lease, to which this Addendum is attached.
SECTION 46 CONDITIONAL FIRST REFUSAL RIGHT. The first time on or after the date
of this Lease that the premises currently identified as Suite 600 in the
Building and/or the premises currently identified as Suite 625 in the Building
(collectively, such two Suites consist of approximately 5,090 leasable square
feet and are referred to as the "EXPANSION PREMISES") is (or are) anticipated by
Landlord to become the subject of a lease negotiation between Landlord or its
representatives and a third party prospective tenant, Landlord shall give Tenant
a written notice of that fact within a reasonable time thereafter (each such
notice is referred to herein as a "LANDLORD'S NOTICE"). Each time that Landlord
gives the Landlord's Notice to Tenant, Tenant shall have the right (that right
is referred to as the "FIRST REFUSAL RIGHT") to lease such portion of the
Expansion Premises as is specified in the Landlord's Notice, on the same terms
and conditions as those under which Tenant is in possession of the Premises
demised under this Lease and for a term of four years from the date on which
Tenant takes possession of such portion of the Expansion Premises, except that
the Base Rent per square foot for such portion of the Expansion Premises as to
which Tenant exercises the First Refusal Right shall be $1.65 per rentable
square foot during the calendar year 1999, such $1.65 per rentable square foot
increasing by five cents per rentable square foot during each calendar year
thereafter, in all cases pro-rated for partial calendar years, and with Landlord
only required to provide its standard tenant improvements in or with respect to
the Expansion Premises; provided, however, that Landlord unilaterally and in its
sole and absolute discretion may revoke the First Refusal Right at any time if
Tenant (a) has not fully and timely paid and performed each and every term,
covenant, obligation and condition of this Lease required to be performed by
Tenant from and after the date hereof through and including the date on which
Tenant would, but for this proviso, take possession of and occupy the portion of
the Expansion Premises (as that term is defined below) with respect to which the
determination as to such payment and performance is being made, or (b) fails to
give written notice to Landlord of Tenant's exercise of the First Refusal Right
within fifteen (15) days after the date on which Landlord gives Tenant the
Landlord Notice. If Landlord is obligated to return Tenant's entire security
deposit with respect to Suite 900 in the Building at the time Tenant exercises
its First Refusal Right, Landlord may elect to hold that security deposit as an
addition to the Security Deposit with respect to the Expansion Premises. If
Landlord has already returned and/or applied all or a portion of Tenant's
security deposit with respect to Suite 900 in the Building at the time Tenant
exercises its First Refusal Right, Tenant shall post an addition to the Security
Deposit with respect to the Expansion Premises, which addition to the Security
Deposit shall be proportionately equal to the security deposit previously
provided by tenant in connection with its lease of said Suite 900 in the
Building.
SECTION 47 CONDITIONAL DEFERRALS AND ABATEMENTS OF PORTIONS OF BASE RENT.
Subject to the next sentence of this Section 47, Tenant shall be entitled to a
deferral of 50% of the installments of Base Rent payable pursuant to Section 3.1
of this Lease (including Base Rent for the Expansion Premises, if applicable) on
each of January 1, 2000, January 1, 2001 and January 1, 2002, but not those
installments payable on any other date (each such deferral is referred to as a
"DEFERRAL" and collectively they are referred to as the "DEFERRALS"); provided
that Tenant has fully and timely paid and performed each and every term,
covenant, obligation and condition of this Lease required to be performed by
Tenant from and after the date hereof through and including the date on which
the payment of that installment of Base Rent is due. If at any time between the
date hereof and the date on which this Lease or the lease with respect to the
Expansion Premises, whichever ends later, ends Tenant has not fully and timely
paid and performed each and every term, covenant,
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obligation and condition of this Lease required to be performed by Tenant, all
prior Deferrals, if any, shall be and become immediately due and payable and,
notwithstanding the preceding sentence of this Section 47, there shall be no
further Deferrals under this Section 47. If at the time of the termination of
this Lease or the lease with respect to the Expansion Premises, whichever ends
later, tenant shall have fully and timely paid and performed all of the terms,
covenants, obligations and conditions of this Lease required to be performed by
Tenant, all Deferrals shall be abated and Tenant's obligations to pay the
amounts thereof to Landlord shall expire.
SECTION 48 BASE RENT ABATEMENT PROVISION. Except to the extent provided in
Section 9 of this Lease regarding damage and/or destruction and as provided in
this Section 48, Tenant shall be entitled to no abatement or offset of Base
Rent, Additional Rent, Operating Costs or other amounts that Tenant is required
to pay pursuant to this Lease.
Tenant shall be entitled to an abatement pursuant to this Section 48 of
Base Rent payable pursuant to Section 3.2.2 of the Lease if and only if (a) the
entire Premises are rendered unsuitable for the conduct of Tenant's business for
a period in excess of five (5) business days, which unsuitability is directly
and solely caused by Landlord's failure to provide electricity to the Premises
during that entire period of time in breach of Landlord's obligations under this
Lease, and (b) Tenant gives Landlord written notice of the commencement of such
unsuitability within two (2) business days after the commencement thereof, which
notice specifically references this Section 48 and specifies that (x) Landlord
is in breach of its obligations to provide electricity to the Premises, (y) the
Premises are rendered unsuitable for the conduct of Tenant's business directly
and solely as a result of that breach by Landlord, and (z) as a result of that
breach by Landlord, Tenant shall be entitled to an abatement of Base Rent
pursuant to the provisions of Section 48 of the Lease. Landlord and Tenant shall
thereafter consult in good faith to determine if there are temporary measures
which can be taken which will eliminate the need for any such abatement of Base
Rent. The provisions of this Section 48 are personal to the tenant named in
Section 1.1 of this Lease, and shall not apply to any successor or assign of
such named Tenant.
SECTION 49 INSTALLATION OF SATELLITE DISH. Tenant shall be permitted to install
one satellite dish, not exceeding 28 inches in diameter, on the roof of the
Building in a location designated by Landlord, but only if all of the
requirements and conditions set forth in this Section 49 are met. Tenant shall
give Landlord not less than 60 days' prior written notice of its intention to
install such satellite dish, which notice must contain all specifications
related to such dish and its installation, including detailed drawings related
thereto. Prior to such installation, Tenant shall have obtained all building and
other permits and licenses that are, or that the Landlord shall determined to
be, necessary or appropriate for the installation and use of such satellite
dish. Tenant shall cause such installation to be made (a) by contractors
approved by Landlord and in a manner that eliminates any possibility of a
mechanics lien being imposed on Landlord with respect to any work or materials
related to such satellite dish or the installation thereof, (b) in a manner that
has no effect on any installations of any other tenant on the roof of the
Building or any structural aspects of the Project and (c) in a manner that will
not weaken or impair the structural strength of the Project. Tenant shall cause
the installation, use and operation of such satellite dish to not adversely
affect or increase demands on any of the mechanical, electrical, sanitary, or
other Systems and Equipment. The provisions of Section 4 of this Lease shall
apply to the installation of a satellite dish by or on behalf of Tenant.
Subsequent to Tenant's installation of a satellite dish, Tenant promptly shall
obtain all permits and licenses that are, or that the Landlord shall determine
to be, necessary or appropriate for the use and operation of such satellite
dish. Upon installation of such satellite dish by or on behalf of Tenant, it
shall be deemed to be a Tenant Alteration for all purposes of this Lease. For
the period of time from and including the day on which Tenant commences the
installation of a satellite dish on the roof of the Building through the end of
the term of this Lease, the Base Rent payable under this Lease, the Base Rent
payable under this Lease shall increase by $300 per calendar month, prorated for
any partial calendar month.
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EXHIBIT 10.2
SUBLEASE DATED MAY 15, 1999
<PAGE>
SUBLEASE AGREEMENT
For consideration herein acknowledged, This Sublease Agreement (the
"Sublease") is made and entered into this 15th day of May, 1999, by and between
Bergen Brunswig Medical Group (hereinafter "Landlord"), and StockUp.Com, Inc., a
Nevada Corporation (hereinafter "Sublessee" or "Tenant"). This Sublease
Agreement is also approved and agreed to as to form and content by LV Atrium
(hereinafter "Prime Landlord").
Landlord, in consideration of the rents, covenants, agreements and
conditions contained in this agreement on the part of Sublessee to be paid,
kept, observed and performed, subleases to Tenant, and Tenant takes and
subleases from Landlord, subject to the terms and conditions of this Sublease,
the Leased Premises.
1. DEFINITIONS.
As used in this Sublease, the following words and phrases shall have
the meanings indicated:
(a) Leased Premises: The leased premises is the office space leased by
Landlord from the Prime Landlord pursuant to the Prime Lease. For reference
purposes, the square footage of the leased space is approximately 1039 square
feet and the space is located at 333 N. Rancho, Ste. 645, as more expressly
described in that certain Lease executed by and between Landlord and Prime
Landlord dated June 11, 1997 (hereinafter "Prime Lease").
(b) Lease Commencement Date: For purposes of the Sublease, the Sublease
commencement date is same as the commencement date under the Prime Lease.
(c) Term: The term of this Sublease shall commence on the 15th day of
May, 1999 and shall, unless sooner terminated or renewed as provided in this
Sublease or the Prime Lease, end on the earliest of (a) the 31st day of July
2000 or (b) the termination of the Prime Lease.
(d) Prime Lease: The Prime Lease, including amendments, if any, is
attached as Exhibit "A" to this Sublease pursuant to which the Landlord leases
the Leased Premises to the Tenant or Sublessee. The Tenant acknowledges that the
Landlord is the Lessee described in the Prime Lease entered into on or about
June 11, 1997 by and between Prime Landlord and Landlord.
(e) Prime Landlord: The Landlord under the Prime Lease.
(f) Rent Commencement Date: Rent shall be due on the same date of the
month as the Prime Lease payment is due and the first occurrence of said rent
due shall be the Rent Commencement Date. Any possession by the Sublessee prior
to the first month's rental due shall be prorated and payable upon request by
the Landlord at the time of first possession.
2. TERM OF SUBLEASE.
The term of this Sublease shall commence on the 15th day of May, 1999
and shall, unless sooner terminated or renewed as provided in this Sublease or
the Prime Lease, end on the earliest of (a) the 31st day of July 2000 or (b) the
termination of the Prime Lease.
3. RENT, DEPOSIT AND OTHER CHARGES.
(a) Commencing on the rent commencement date under the Prime Lease and
continuing until the expiration or termination of this Sublease, Tenant shall
pay the sum of $1.20 per foot of the space for the remaining term of the Prime
Lease.
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(b) As a security deposit, Tenant shall pay to Landlord for Landlord's
deposit the amount of $1,246.80 which is refundable in its entirety at the
termination of this lease. The security deposit represents the square footage
rental amount of $1.20 per square foot multiplied by the number of rentable
square feet of 1,039 square feet.
(c) Tenant shall also pay to Landlord any other charges to be paid by
Landlord as tenant under the Prime Lease including, but not limited to, any
assessments, taxes, common area charges and any amount due pursuant to the Prime
Lease. Landlord shall promptly send to Tenant copies of all rent notices
received by Landlord from the Prime Landlord.
4. USE OF LEASED PREMISES.
(a) Tenant shall use and occupy the Leased Premises solely for the
purposes permitted by the Prime Lease. Tenant shall not use or permit or suffer
the use of the Leased Premises for any other purpose.
(b) Throughout the Term, Tenant covenants and agrees, at its cost and
expense, to perform, observe and comply with all of the terms, covenants and
conditions to be performed, observed or complied with by the Tenant under the
Prime Lease with respect to the use, maintenance and repair of the Leased
Premises.
(c) Tenant shall pay directly to the utility companies or governmental
units promptly as and when due all charges for electricity, gas, refuse
collection and telephone used or consumed on or in connection with the Leased
Premises, except for any such charges to be paid in whole or in part by the
Prime Landlord under the Prime Lease. It shall be a default if charges are not
paid, when due, by the Tenant. In such event, the Landlord shall have the
option, but not the obligation, to terminate this Sublease Agreement or to pay
such charges. In the event the Landlord pays the charges, such amount shall be
deemed additional rent and immediately due and payable from the Tenant to the
Landlord.
(d) Landlord represents and warrants that as of May 15, 1999, the
Premises is in the condiction and state of repair required by the Prime Lease
and free from any known liens or defects.
5. ALTERATIONS.
Tenant may not make any alterations or additions to the Leased Premises
unless Tenant complies with the terms of the Prime Lease, including, if so
required, obtaining the prior written consent of the Prime Landlord. All such
alterations and additions shall be made in accordance with the terms of the
Prime Lease.
6. INSURANCE.
(a) Tenant, at Tenant's sole cost and expense, shall obtain and
maintain in effect at all times during the Term, policies providing the
insurance coverages required to be maintained by the Tenant under the Prime
Lease and Tenant shall comply with all provisions relating to insurance
contained in the Prime Lease. Copies of all insurance policies shall be
delivered to Landlord upon request.
(b) All insurance policies required to be procured by Tenant under this
Sublease shall comply with the applicable requirements of the Prime Lease and,
in the case of public liability insurance policies, shall name the Prime
Landlord and the Landlord as an additional named insured, as their interest
shall appear.
7. DAMAGE BY FIRE OR OTHER CASUALTY.
(a) Tenant shall give prompt notice to Landlord and the Prime Landlord
in case of any fire or other damage to the Leased Premises. If the Leased
Premises are damaged by fire or other casualty to such an extent that the Prime
Landlord is entitled to, and does, terminate the Prime Lease, this Sublease
shall terminate on the same date on which the Prime Lease is terminated. If the
Leased Premises, or any portion of it, are damaged by fire or other casualty and
if, under the terms of the Prime Lease, the Tenant would have the right to
terminate the Prime Lease, then, in that event, Tenant shall also have the right
to terminate this Sublease by written notice to the Landlord.
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(b) If any damage by fire or other casualty shall render the Leased
Premises untenantable, in whole or in part, a proportionate abatement of the
Rent based upon the area rendered untenantable shall be allowed to the extent
such abatement is allowed by the Prime Lease (and the same proportionate
abatement of the Additional Rent shall be allowed) until substantial completion
of the repair or restoration work to be done by the Prime Landlord in the Leased
Premises, or, in the event the Prime Landlord elects to terminate the Prime
Lease or the Tenant elects to terminate this Sublease, until the date of
termination. If this Sublease is not terminated after damage by fire or other
casualty, the provisions of the Prime Lease shall govern the restoration and
repair of the damage, except that Tenant shall, at its cost and expense, perform
any restoration and repair to be performed by the Tenant under the Prime Lease.
8. CONDEMNATION.
(a) If all or substantially all of the Leased Premises shall be taken
in condemnation proceedings or by exercise of any right of eminent domain, or by
a private purchase in lieu of it, then this Sublease shall terminate and expire
on the date of such taking or purchase and Tenant shall, in all other respects,
keep, observe and perform all other terms, covenants and conditions of this
Sublease up to the date of such taking. The net proceeds of any award or other
compensation payable in connection with such taking or purchase shall be paid in
the manner specified in the Prime Lease. However, Tenant shall have the right to
claim, prove and receive in the condemnation proceeding such awards as may be
allowed for Tenant's separate property, such as fixtures and other equipment
installed in the Leased Premises which, under the terms of this Sublease, will
not become the property of the Landlord or the Prime Landlord upon the
termination of this Sublease.
(b) If less than all or substantially all of any of the Leased Premises
shall be taken in condemnation proceedings or by exercise of any right of
eminent domain, or by a private purchase in lieu of it, the following provisions
shall apply: (i) if the taking is of such a nature that the Prime Landlord is
entitled to, and does, terminate the Prime Lease, this Sublease shall terminate
on the same date on which the Prime Lease is terminated and subsection (a) shall
apply; (ii) if the taking is of such a nature that the Tenant under the Prime
Lease would be entitled to terminate the Prime Lease and if, within 15 days
after receiving written notice of the proposed taking, the Tenant requests
Landlord as Tenant under the Prime Lease, to terminate the Prime Lease, Landlord
will, promptly after being requested by Tenant to do so, terminate such Prime
Lease, this Sublease shall terminate and subsection (a) shall apply; and (iii)
if the taking is of such a nature that neither the Prime Landlord nor the Tenant
under the Prime Lease would be entitled to terminate the Prime Lease, or if the
taking is of such a nature that the Prime Landlord is entitled to terminate the
Prime Lease, but it does not do so, or if the taking is of such a nature that
the Tenant under the Prime Lease would be entitled to terminate the Prime Lease,
but the Tenant does not request Landlord to terminate the Prime Lease pursuant
to clause (ii) above within fifteen (15) days after receiving written notice of
the taking, then, in any such event, this Sublease shall continue with respect
to the portion of the Leased Premises not so taken, the Rent shall be adjusted
in the manner provided in the Prime Lease, the Additional Rent shall be adjusted
in the same proportions as the Rent, and the provisions of the Prime Lease shall
govern the restoration and repair of the Leased Premises, except that Tenant
shall, at its cost and expense, perform any restoration and repair to be
performed by the Tenant under the Prime Lease.
9. ASSIGNMENT AND SUBLEASE.
(a) Tenant may not, without the prior written consent of Landlord,
transfer, assign or sublease this Sublease or its rights under it. In such event
that such consent is granted, Tenant shall remain liable for the payment of all
rent required to be paid and the performance of all terms, covenants and
conditions undertaken by Tenant.
(b) Landlord shall promptly send to Tenant copies of all notices
received by Landlord from the Prime Landlord.
(c) In the event the Prime Landlord does not comply with the terms of
the Prime Lease or a request made by Tenant, Tenant shall have the right to take
such action in the name of Landlord as Tenant deems appropriate, provided that
such action shall be undertaken at no expense or cost to Landlord and Landlord
is held harmless and indemnified in connection with it.
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10. SURRENDER OF LEASED PREMISES.
(a) Tenant shall, on or before the last day of the Term, (i) peaceably
and quietly leave, surrender and yield up to the Landlord the Leased Premises,
free of subtenancies, clean and, subject to the provisions of Section 7, in good
order and condition except for reasonable wear and tear, and (ii) at its
expense, remove from the Leased Premises its sign and all moveable trade
fixtures, furniture, equipment and other personal property (all of such property
being referred to as "Tenant's Property"), provided that Tenant shall promptly
repair any damage caused by such removal. Any of Tenant's Property not so
removed may, at the Landlord's election and without limiting Landlord's right to
compel removal, be deemed abandoned and either may be retained by Landlord as
its property or be disposed of, without accountability, in such manner as
Landlord may see fit. In addition, Tenant shall have the right to remove all
leasehold improvements (if any) originally installed in the Leased Premises by
Landlord, as Tenant under the Prime Lease, to the extent Landlord would be
entitled to remove such leasehold improvements under the terms of the Prime
Lease, and shall be obligated to remove such leasehold improvements to the
extent Landlord would be obligated to remove them under the terms of the Prime
Lease.
(b) The provisions of this Section shall survive any expiration or
termination of this Sublease.
11. RENEWAL OPTIONS IN PRIME LEASE.
Landlord shall have no obligation or duty to exercise, invoke or agree
to any option set forth in the Prime Lease, including, but not limited to, any
option to extend the term of the Prime Lease.
12. COMPLIANCE WITH PRIME LEASE.
(a) In addition to the other provisions of this Sublease which impose
upon the Tenant the obligation to perform and comply with certain specified
provisions contained in the Prime Lease, throughout the Term the Tenant
covenants and agrees that it will perform, observe and comply with all of the
terms, covenants and conditions to be performed, observed or complied with by
the Tenant under the Prime Lease except for those provisions, if any, in the
Prime Lease inherently incapable of being performed by Tenant.
(b) If Tenant shall fail to pay any installments of rent promptly on
the day when the same shall become due and payable, or shall otherwise fail to
comply with the Prime Lease, and the default continues for a period of 15 days
after written notice is given by Landlord, then and in any event, and as often
as any such event shall occur, Landlord may (a) declare the term ended, and
enter into the Demised Premises, or any part of them, with process of law, and
expel Tenant or any person occupying the same in or upon the Demised Premises,
and so to repossess and enjoy the Demised Premises as in Landlord's former
estate; and/or (b) relet the Demised Premises, applying the rent from the new
tenant on this Sublease, and Tenant shall be responsible for no more than the
balance that may be due, should a balance exist.
13. TIME LIMITS
[ATTENTION: THIS PROVISION AFFECTS TIMING OF NOTICES UNDER THE PRIME LEASE]
In every instance where the Prime Lease provides for a time limit for
(a) notice to Landlord from Prime Landlord or (b) performance by Landlord, the
time limit under this Sublease for the corresponding (x) notice to Tenant from
Landlord or (y) performance by Tenant shall be 3 days less than the time limit
in the Prime Lease. In every instance where the Prime Lease provides for a time
limit for (a) notice to Prime Landlord from Landlord or (b) performance by Prime
Landlord, the time limit under this Sublease for the corresponding (x) notice to
Landlord from Tenant or (y) performance by Landlord shall be 3 days longer than
the time limit in the Prime Lease.
14. OPTION TO DIRECT PERFORMANCE TO PRIME LANDLORD.
At any time and on prior written notice to Tenant, Landlord can elect
to require Tenant to perform any or all of its obligations under this Sublease
directly to Prime Landlord, and Tenant shall do so on Landlord's election, in
which
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event Tenant immediately shall send to Landlord copies of all notices and other
communications it shall send to and receive from Prime Landlord.
15. GENERAL PROVISIONS.
(a) The covenants, conditions, agreements, terms and provisions
contained in this agreement shall be binding upon, and shall inure to the
benefit of, the parties and each of their respective successors and assigns.
(b) It is the intention of the parties that this Sublease (and its
terms and provisions) shall be construed and enforced in accordance with the
laws of the state of Nevada and the jurisdiction in which the Leased Premises
are located.
(c) No notice, request, consent, approval, waiver or other
communication which may be or is required or permitted to be given under this
Sublease shall be effective unless the same is in writing and is delivered in
person or sent by registered or certified mail, return receipt requested,
first-class postage prepaid,
(1) if to Landlord,
Larry A. Summers
Director of Real Estate
4000 Metropolitan Dr.
Orange, CA 92668
or
(2) if to Tenant,
Michael Calderone
President & CEO
333 N. Rancho Dr., Ste. 645
Las Vegas, NV 89106
or at any other address that may be given by one party to the other by notice
pursuant to this subsection. Such notices, if sent by registered or certified
mail, shall be deemed to have been given at the time of mailing.
(d) It is understood and agreed between the parties that this Sublease
contains the final and entire agreement between them, and that they shall not be
bound by any terms, statements, conditions or representations, oral or written,
express or implied, not contained in this agreement.
(e) Wherever appropriate, the singular includes the plural and the
plural includes the singular.
(f) This Sublease may be executed in several counterparts, but all
counterparts shall constitute one and the same instrument.
(g) If the Prime Landlord commences a voluntary case under the federal
bankruptcy laws, or if a decree or order for relief is entered by the court
having jurisdiction in the premises in respect to the Prime Landlord in an
involuntary case under the federal bankruptcy laws, and if such Prime Landlord
or its trustee in bankruptcy rejects the Prime Lease, Landlord, to the extent it
is lawfully entitled to do so, agrees that it will not treat the Prime Lease as
terminated by such rejection.
(h) Subject to the provisions preventing further sub-leasing of this
leasehold, this Sublease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors in interest and assigns.
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(i) The individuals executing this agreement represent by their
signatures that they have full authority from their respective entities to enter
into this agreement for their entities and have full authority to bind the
entities as set forth herein.
IN WITNESS, Landlord and Tenant have executed this Sublease by and
through their authorized agents and/or officers on the date first written above.
LANDLORD TENANT
By: /s/ Larry A. Summers By: /s/ Michael Calderone
------------------------------ --------------------------------
Larry A. Summers Michael Calderone
Director of Real Estate President and CEO
PRIME LANDLORD
By:
------------------------------
Its Agent
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<PAGE>
EXHIBIT 10.3
AGREEMENT WITH TRAVIS MORGAN SECURITIES, INC.
<PAGE>
STOCKUP.COM, INC.
333 N. RANCHO, SUITE 900
LAS VEGAS, NV 89106
(702) 648-6400; FAX (702) 638-9096
June 15, 1999
VIA FACSIMILE AND REGULAR U.S. MAIL
Mr. Marcus Hurlburt
TRAVIS MORGAN SECURITIES, INC.
18952 MacArthur Boulevard, Suite 315
Irvine, CA 92612
Fax: (949) 261-2333
RE: STOCKUP.COM
Dear Marcus:
On behalf of StockUp.com, Inc., I am providing you the following offer
to exclusively engage your firm to provide assistance in accordance with the
terms of the June 21, 1999 Private Placement Memorandum:
1. You would be paid $5,000 upon execution of this agreement. You would be
provided with a 21-day exclusive period, commencing upon the finalization of all
marketing documentation to be utilized in the private placement, including, but
not limited to the Private Placement Memorandum. We anticipate that this would
be on or about Monday, June 21, 1999. In the event you have secured $5 million
in commitments during this period, StockUp shall be obligated to provide you
with an additional 21-day exclusive period. StockUp will provide you with 40,000
restricted shares allocated on a pro-rata basis over the maximum amount of the
raise (see below).
2. The 40,000 shares shall be payable on a pro-rata basis based upon the Maximum
Amount of the offering (333.33 shares per $100,000 raised) upon your firm
securing $4 million in gross proceeds from sources for which you were the
primary procuring cause (i.e., all brokerage firms other than Cruttenden Roth,
Brighton Capital, Everen Securities, and Brookstreet Securities). You will
receive full credit for all amounts raised (other than amounts procured by
Brighton Capital) upon your reaching this $4 million minimum through sources
procured primarily by you.
3. As we discussed, the offering shall be priced at $12 per share, with a
Minimum Offering of 50,000 shares and a Maximum Offering of $1,000,000 (with an
additional 200,000). Broker-dealer compensation shall be the 10-3-10 structure
we have previously discussed (it is anticipated that the exercise price of the
warrants shall be $15 per share). StockUp anticipates that the offering will
involve 1 million restricted shares, with piggy-back registration rights,
subject to an underwriter's lock-up which shall not exceed 180 days.
4. Your firm shall receive "credit" for all commitments secured, regardless of
the source, except as otherwise set forth above, so long as the exclusive
remains in place (and for all financing sources identified during the exclusive
period).
Please contact me with any questions or comments. As you are aware,
Horwitz & Beam is advising our company regarding the terms of this letter
agreement. Horwitz & Beam has advised both of our firms that it has
<PAGE>
represented both Travis Morgan Securities (and certain principals and affiliates
of Travis Morgan) and StockUp previously. In this regard, Horwitz & Beam has a
conflict of interest in preparing this letter agreement and in providing advice
regarding the execution and performance of this letter agreement. Horwitz & Beam
has advised both Travis Morgan and StockUp to seek independent counsel.
Sincerely,
STOCKUP.COM, INC.
/s/ Michael Calderone
-----------------------
Michael Calderone
By affixing our signatures below we are agreeing to the foregoing terms:
TRAVIS MORGAN SECURITIES, INC.
By: /s/ Marcus Hurlburt
-----------------------------
Name: Marcus Hurlburt
Its: Executive Vice President
<PAGE>
EXHIBIT 10.4
ASSET PURCHASE AND ESCROW AGREEMENT
<PAGE>
ASSET PURCHASE AND ESCROW AGREEMENT
AGREEMENT made as of this 30th day of December, 1998, between MARKETING DIRECT
CONCEPTS, INC. a Nevada corporation with its principle offices located at 333 N.
Rancho, Suite 900, Las Vegas, Nevada 89016, as seller ("Seller") and COURTLEIGH
CAPITAL, INC. a Kansas corporation with its principle offices located at 400 N.
Woodlawn, Suite 18, Wichita, Kansas 67208, as purchaser ("Purchaser"), and the
LAW OFFICES OF MICHAEL G. QUINN ESQUIRE, as Escrow Agent ("Escrow Agent").
Witnesseth, that
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, certain assets of Seller's business and
assume the liabilities related to those assets, subject to the conditions
hereinafter set forth, including Escrow of common stock and cash until a closing
occurs; and
WHEREAS, the Seller, the Purchaser and the Escrow Agent desire to
provide herein for the terms of such escrow, in addition to the asset sale, and
the Escrow Agent is willing to act on the terms and subject to the conditions
herein, the parties heretofore agree that:
1. SALE AND PURCHASE OF ASSETS.
(a) On the terms and subject to the conditions of this
Agreement, Seller hereby agrees to sell to the Purchaser, and the Purchaser
hereby agrees to purchase from the Seller on the Closing Date, the assets of
Seller's business and assume the liabilities related thereto (as set forth in
Exhibit "A" hereof), valued for purpose of this transaction at the bid price of
Purchaser's shares at January 20, 1999, as quoted on the Over the
Counter-Bulletin Board for the issuance to Seller of 4,500,000 shares of the
authorized by heretofore unissued common stock, without par value, of the
Purchaser (the "CTLH") shares). The parties acknowledge that this sale of assets
expressly excludes all remaining assets of Seller including but not limited to
those listed in Exhibit "B" hereto. The Closing Date may be extended only by
agreement of both parties, communicated to the Escrow Agent.
(b) Purchaser has represented to Seller that Purchaser will
perform the following by the Closing Date, or any extension thereof, and the
Seller's condition of sale is subject thereto: (i) convene a meeting of
shareholders of Purchaser, which shall adopt by vote the following (a) a change
of name of Purchaser to STOCKUP.COM,INC.; and (reverse the outstanding common
stock of Purchaser to one (1) share for each thirteen (13) shares of common
stock of outstanding ("Reverse Stock Split"); and (c) approve this Asset
Purchase and Escrow Agreement.
(c) In the event that shareholders of Purchaser do not approve
all of the items set forth in paragraph (b) hereof, this Agreement shall be null
and void as between the parties hereto and the Escrow Agent shall return all
escrowed items to the depositor thereof. Seller shall deposit with Escrow Agent
cash in the amount of Seventy-Five Thousand and No/100 Dollars ($75,000) as its
good faith deposit to fulfill the terms applicable to Seller hereunder.
(d) The Seller acknowledges that the CTLH shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), nor under
any state securities laws, and are subject to any restrictions upon subsequent
transfer thereof under the Act and applicable state securities laws. Seller
acknowledges that ever certificate representing the CTLH shares shall bear a
legend which substantially sets forth such restrictions upon transfer.
(e) The parties agree that there is no right of registration
under the Act or any state securities laws granted hereby as it relates to the
CTLH shares to be issued hereunder.
2. RECORDS.
Upon approval of the shareholders of Purchaser, as provided in
paragraph 1(b) hereof, Purchaser's Board of Director and Officer will
resign said office and by a duly authorized resolution prior to his
resignation, appoint MICHAEL CALDERONE the President,
Secretary-Treasurer and Director of the Purchaser. Simultaneously,
Purchaser shall deliver to the Escrow Agent a copy of all Purchaser's
records in Purchaser's possession, including correspondence and all
papers relating to the business of Purchaser. Escrow Agent shall
promptly
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 1
------------ ------------ ------------
<PAGE>
deliver the Resolution and records to Seller at 333 N. Rancho, suite
900, Las Vegas, Nevada 89106, by first-class mail, postage prepaid.
3. ESCROW.
The Seller shall deposit, via wire transfer, $75,000 to the bank
account of the Escrow Agent immediately following the date of this
Agreement. The CTLH shares shall be deposited with Escrow Agent upon
the conclusion of a Special Shareholders Meeting and the approval of
the agenda as set forth in paragraph 1(b) hereof. The Escrow Agent
shall hold the $75,000 cash and the CTLH shares for safekeeping and
disposition only pursuant to the terms hereof. The Escrow Agent shall
hold Seventy-Five Thousand Dollars ($75,000.00) good faith deposit of
Seller in a special bank account designated for such purpose without
any obligation to invest the proceeds thereof.
4. DISPOSITION OF ESCROWED ITEMS.
Subject to the completion of the Agreement by the Closing Date (or any
extension thereof), the Escrow Agent shall by first-class mail postage prepaid,
promptly forward the CTLH shares to Seller, and deliver the $75,000 cash good
faith deposit to Williamson & Associates.
In the event that this Agreement is terminated, canceled, or otherwise
not performed by Seller, then absent other directions from both parties
in writing, the Escrow Agent shall return to each party their
respective deposits. In such event, Purchaser shall be entitled to keep
the Seventy-Five Thousand Dollars ($75,000) good faith deposit as
liquidated damages for Seller's failure to complete the purchase but
shall not have the remedy of specific performance or any other remedy.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants to the Seller that as a result of
this Agreement it will use its best efforts to (a) have this Agreement
duly executed and authorized by all due corporate authority and will be
binding upon Purchaser in accordance with its terms, subject however to
approval of this Agreement and the other stated obligations of
Purchaser for approval of its shareholders as stated herein; (b) at the
closing, the CTLH shares will have been duly authorized by all
requisite action of Purchaser and, when issued, will be validly issued,
fully paid, and non-assessable, and (c) after due investigation,
Purchaser is satisfied that the price to be paid for the CTLH shares is
fair and reasonable.
6. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PURCHASER.
- Purchaser is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Kansas,
and has the corporate power and authority to carry on its
business as it is now being conducted. The Articles of
Incorporation and Bylaws of Purchaser, copies of which have
been delivered to Seller, are complete and accurate, and the
minute books of Purchaser, which will be delivered to Seller,
contain a record which is complete and accurate in all
material respects, of those meetings, and those corporate
actions of the shareholders and Board of Directors of
Purchaser.
- Prior to the Closing Date, the aggregate number of shares
which Purchaser is authorized to issue is 300,000,000 shares
of common stock with no par value of which 3,025,297 shares of
such common stock are currently issued and outstanding, fully
paid and non-assessable. Purchaser has no outstanding options,
warrants, or other rights to purchase or subscribe to or
securities convertible into or exchangeable for any shares of
capital stock.
- Purchaser has delivered to Seller financial statements of
Purchaser dated
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 2
------------ ------------ ------------
<PAGE>
October 31, 1996, October 31, 1997, September 30, 1998 and will deliver
immediately upon completion, audited financial statements dated October 31,
1998. All such financial statements, herein sometimes called "Purchaser
Financial Statements," are complete and correct in all material respects and,
together with the notes of these financial statements, present fairly the
financial position and results of operations of Purchaser for the periods
indicated. All financial statements of Purchaser are prepared in accordance with
generally accepted accounting principles.
- Since the dates of the Purchaser Financial Statements, there
have not been any material adverse changes in the business or
condition, financial or otherwise of Purchaser. Purchaser does
not have any material liabilities or obligations, secured or
unsecured.
- There are no pending legal proceedings or regulatory
proceedings involving Purchaser, and there are no legal
proceedings or regulatory proceedings to the knowledge of
Purchaser, threatened against Purchaser or affecting any of
Purchaser's assets or properties. Purchaser is not in any
material breach of violation of or default under any contract
or instrument to which Purchaser is a party and no event has
occurred with the lapse of time or action by a third party
could result in a material breach or violation of or default
by Purchaser under any contract or other instrument to which
Purchaser is a party or by which Purchaser or any of its
respective properties may be bound or affected, or under its
Articles of Incorporation or Bylaws. There is no court or
regulatory order pending applicable to Purchaser.
- Purchaser shall not enter into or consummate any transactions
prior to the Closing Date and will pay no dividend or increase
the compensation of officers and will not enter into any
Agreement or transaction, except as set forth in this
Agreement.
- Purchaser is not a party to any contract performable in the
future.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Purchaser that (a) it owns of
record and beneficially the assets to be purchased as of the Closing
Date, (b) that is has the full right, power, legal capacity and
authority to enter into this Agreement and to sell and deliver the
assets to the Purchaser and that all requisite corporate action of
Seller have been complied with, (c) it is not insolvent; and (d) the
liabilities to be assumed by Buyer are the sole liabilities of Seller.
The Seller agrees that the transfer of the assets being purchased
hereunder shall be made at the closing by deeds, bills of sale,
assignments, or such other instruments of conveyance, transfer and
assignment as shall be appropriate to carry out the purpose and
intention of this Agreement and sufficient to convey, transfer and
assign to Buyer good and marketable title to all of the assets being
acquired hereunder, free and clear of all liens, claims and
encumbrances of whatsoever kind or character, except as to such liens,
if any, associated with the obligations and liabilities to be assumed
by Buyer as set forth herein, with the prior written consent or
approval by third parties or governmental authorities where required,
and in such form as may be approved by counsel for Buyer.
8. LEGAL OPINION.
Buyer, at closing, will furnish Seller an opinion of its counsel to the
effect that:
(a) Buyer is duly organized, valid and existing in a good standing
under the laws of the State of Kansas and has the authority to
conduct its business, to enter into this Agreement, and in
connection therewith has performed all acts required pursuant
to the laws of Kansas in effecting this Agreement.
(b) Buyer has the authority, pursuant to the corporate laws of the
State of Kansas, to issue from its authorized unissued shares
of Common Stock the CTLH shares.
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 3
------------ ------------ ------------
<PAGE>
(c) That such counsel has examined the representations and
warranties of Purchaser hereunder and to his best knowledge
the representations and warranties of Purchaser are true. In
connection therewith, counsel may rely upon certificates of
officers and directors of Purchaser; and
(d) Such other opinions as counsel may be requested to issue and
can issue based upon his review of any documents or
instruments in connection therewith and associated only with
the terms and transactions contemplated by this Agreement.
9. INDEMNIFICATION.
The Seller agrees to and does hereby indemnify the Buyer against and
holds the Buyer harmless from any and all such liabilities,
obligations, debts ,contracts, liens, encumbrances, or other
commitments of whatsoever kind or character, and from any and all loss,
cost or expense in connections therewith, arising directly or
indirectly therefrom (including reasonable expenses and attorney fees
in connection with investigation or defending the same) which Buyer may
suffer or incur by reason of Seller's failure to pay, discharge or
perform any of such liabilities, obligations or commitments, whether
contingent, disputed, known or unknown, and of whatever kind or
character, except as expressly assumed by Buyer as set forth herein.
Similarly, Buyer shall indemnify Seller against and hold it harmless
from any and all liability, costs or expenses (including reasonable
expenses and attorney fees in connection with investigating or
defending the same) which it may suffer or incur by reason of Buyer's
failure to pay, discharge or perform any such liabilities or
obligations of Seller which are expressly assumed by Buyer as set forth
herein. In the event of any lawsuit, proceeding, action, claim or
demand wherein the Seller shall seek indemnity from the Buyer or the
Buyer shall seek indemnity from the Seller pursuant to this paragraph,
the party to the indemnified will give the other party written notice
of the commencement of any such lawsuit, proceedings, action, claim or
demand and the indemnitor will be entitled to participate to the extent
it may wish or assume the defense of such action with counsel
satisfactory to the indemnitee.
10. INVESTMENT BANKING FEES.
The parties agree that WILLIAMSON & ASSOCIATES has acted as the
investment banker for both parties in the consummation of this purchase
and sale in connection with this Asset Purchase and Escrow Agreement.
All fees and charges made by Williamson & Associates shall be paid by
Seller at closing.
Notwithstanding the provisions of paragraph 4 hereof, if Seller secures
its obligation to Williamson & Associates with the CTLH shares, the
parties agree to authorize the Escrow Agent to hold such shares in
furtherance of the payment Agreement.
11. OTHER RIGHTS AND RESPONSIBILITIES OF THE ESCROW AGENT. The following
provisions shall apply to the Escrow Agent in the course of performing
hereunder:
(a) STATUS OF ESCROW AGENT. The seller and Purchaser acknowledge
and agree that, in acting hereunder, the Escrow Agent is
acting as attorney to the Purchaser, and has advised it in
relation to this transaction, but has not and is not acting as
counsel to Seller, in regard to whom the Escrow Agent is
acting solely as Escrow Agent hereunder.
(b) DISCRETION OF THE ESCROW AGENT. In acting pursuant to this
Agreement, the Escrow Agent shall be fully protected in every
reasonable exercise of his discretion and shall have no
obligation hereunder to any other party except as expressly
set forth herein.
(c) FEES AND EXPENSES OF THE ESCROW AGENT. The Escrow Agent shall
charge a reasonable fee for this escrow services, which will
cover all normal and reasonable expenses of the escrow. If the
sale of the CTLH shares is consummated, such fees and expenses
shall be paid by Purchaser, and delivery of the CTLH shares to
Seller shall not be held up for any failure of Purchaser to
make such payment.
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 4
------------ ------------ ------------
<PAGE>
If the sale of the CTLH shares is not consummated, however,
his fees and expenses hall be paid by Seller, in an amount not
to exceed $1,000.
(d) LIABILITY OF THE ESCROW AGENT. In performing any of this
duties hereunder, the Escrow Agent shall not incur any
liability to anyone for any damages, losses or expenses,
except for willful default or negligence and he shall,
accordingly not incur any such liability with respect to any
action taken or omitted in good faith or taken or omitted in
reliance upon any instrument, including written advices
provided for herein, not only as to its due execution and the
validity and effectiveness of its provisions, but also as to
the truth and accuracy of any information contained therein,
which the Escrow Agent shall in good faith believe to be
genuine, to have been signed or presented by a proper person
or persons, and to conform with the provisions of this
Agreement.
(e) INFORMATION AND INDEMNITY. The Purchaser and Seller agree to
provide to the Escrow Agent all information necessary to
facilitate the administration of this Agreement, and the
Escrow Agent may rely upon any representation so made. The
Purchaser and Seller hereby agree to indemnify and hold
harmless the Escrow Agent against any and all claims, losses,
damages, liabilities, costs and expenses, including reasonable
costs of investigation and counsel fees and disbursements,
which may be imposed upon the Escrow Agent or incurred by the
Escrow Agent in connection with his acceptance of appointment
of Escrow Agent hereunder or the performance of his duties
hereunder, including any litigation arising from this
Agreement or involving the subject matter hereof. However,
such indemnity shall not include acts or omissions to act of
the Escrow Agent which involve gross negligence or willful
misconduct.
(f) INTERPLEADER. If at any time a dispute arises as to the duties
of the Escrow Agent or the terms hereof, the Escrow Agent may
deposit the escrowed items with the Clerk of the District
Court of Sedgwick County, Kansas, and may interplead the other
parties hereto. Upon so depositing the escrowed items and
filing its complaint in interpleader, the Escrow Agent shall
be completely discharged and released from all further
liability or responsibility hereunder. The parties hereto, for
themselves, their heirs, successors, assigns and legal
representatives, do hereby submit themselves to the
jurisdiction of said Court and do hereby appoint the Clerk of
the said Court as their agent for services of all process in
connection with any such proceedings.
(g) NOTICES: ORDERS OF COURT, ETC. The Escrow Agent hereby is
expressly authorized and directed to disregard any and all
notices or warnings not specifically called for in or
permitted by this Agreement, or by any other person or entity
not party to this Agreement, excepting only orders or process
of Court, and is hereby expressly authorized to comply with
and obey any and all orders, judgments or decrees of any
Court, and in case the Escrow Agent obeys or complies with any
such order, judgment, or decree of any Court, he shall not be
liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance,
notwithstanding that any such order, judgment, or decree may
be subsequently reversed, modified, annulled, set aside or
vacated, or found to have been entered without jurisdiction.
12. NOTICES TO PARTIES. All notices, demands or requests required or
authorized hereunder shall (except as otherwise provided above) be
deemed given sufficiently if in writing and sent by registered mail or
certified mail, return receipt requested and postage prepaid, by
telefax transmission, telegram or cable, or by overnight air courier
service to, the parties.
13. MISCELLANEOUS. All representations and warranties made herein by the
Seller and Purchaser shall survive the consummation of this Agreement.
This Agreement shall bind the parties, their respective successors,
assign, heirs, and legal representatives. No party may assign his, her
or its rights or obligations hereunder without the prior written
consent of all other parties. This Agreement constitutes the entire
Agreement between the parties and may not be modified or canceled
except in writing signed by all parties hereto. This Agreement shall be
governed by and construed in accordance with the laws of Kansas. This
Agreement may be executed at different times and places, in
counterparts and shall be effective as of the date first above written.
Any party
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 5
------------ ------------ ------------
<PAGE>
may rely upon a copy of this Agreement received by telefax (telephone
facsimile) transmission and bearing another party's signature as having
been signed by such other party, and a copy of this Agreement received
by telefax and signed by or on behalf of a party shall have been
validly executed to the same extent as if an original copy had been
executed.
14. CLOSING DATE. The Closing of this Agreement will occur on the ___ day
of January, 1999, unless extended by the parties hereto, at 11 o'clock,
A.M., Central Standard Time at the offices of the Purchaser.
SIGNATURE PAGE
TO
ASSET PURCHASE AND ESCROW AGREEMENT
IN WITNESS WHEREOF, the Purchaser, seller and Escrow Agent have duly
executed this Agreement and initialed every preceding page hereof, effective as
of the date first above written.
PURCHASER: COURTLEIGH CAPITAL, INC.
/s/ Jeffrey N. Young
- --------------------------------------------
Jeffrey N. Young, President
SELLER: MARKETING DIRECT CONCEPTS, INC.
/s/ Michael Calderone
- --------------------------------------------
Michael Calderone, President
ESCROW AGENT: LAW OFFICES OF MICHAEL G. QUINN, ESQUIRE
/s/ Michael G. Quinn
- --------------------------------------------
Michael G. Quinn, Esquire
SELLER /S/ PURCHASER /S/ ESCROW AGENT /S/ PAGE 6
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<PAGE>
EXHIBIT "A"
ASSETS TO BE PURCHASED
<TABLE>
<S> <C>
1997 Equipment $48,807.08
1998 Equipment $179,111
1999 Equipment $254,006.75
Furniture & Fixture $75,049
1999 Office Max $898.74
- --------------- -------
$557,872.57
------------
------------
</TABLE>
<PAGE>
EXHIBIT "B"
EXCLUDED ASSETS
<TABLE>
<CAPTION>
Shares Held by Seller
<S> <C>
Innovacom, Inc. 250,000 shares
Visual Telephone of New Jersey, Inc. 250,000 shares
China Resources Development, Inc. 150,000 shares
Semiconductor Laser International, Inc. 40,000 shares
Diversifax, Inc. 150,000 warrants
SafTLock 100,000 shares
American Eco 25,000 shares
</TABLE>
<PAGE>
EXHIBIT 10.5
EMPLOYMENT MEMORANDUM
<PAGE>
I, MICHAEL CALDERONE, was hired March 3, 1999, for the position of
President and Chief Executive Officer. This position is exempt. I have accepted
this position with an annual salary of $225,000.00. All automobile expenses,
including car notes, will be paid by StockUp.com, and I will be allowed a
$3,000.00 per month personal spending limit.
I also acknowledge that upon the completion of StockUp.com becoming a
public company, I will receive 3,900,000 of company common shares under the
terms and conditions of the attached letter.
I have received a copy of the StockUp.com Personnel Policies Handbook.
I have read the handbook; I understand the Company's at-will policy; I
understand the introductory period; I understand the importance of disclosing
other positions I may currently be holding; I understand the "personal
advantage/conflict of interest & use of insider information" sections; and I
agree to follow the policies described.
If I have any questions about the policies in this handbook, I
understand I may talk to the Human Resources Representative or the President.
/s/ Michael Calderone 6/1/99
- ----------------------------------------- ---------------------------
Signature of Employee Date
/s/ Michael Calderone 6/1/99
- ----------------------------------------- ---------------------------
President Date
For your personnel records, please provide the following information:
Three personal references with telephone numbers: (list one name of who to
contract in case of emergency)
- ------------------------------------------ -------------------------------
- ------------------------------------------ -------------------------------
- ------------------------------------------ -------------------------------
