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As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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Ucellit.com Inc.
(Exact name of small business issuer in its charter)
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Washington 5499 91-2022701
(State or other jurisdiction of (primary standard (I.R.S. Employer
incorporation or organization) industrial code) Identification Number)
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1177 West Hastings, Suite 2110
Vancouver, British Columbia V6E 2K3, CANADA
(604) 687-2199
(Address and telephone number of principal executive offices)
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Agent for Service: With a Copy to:
Michael Kirsh, President James L. Vandeberg
Ucellit.com Inc. Ogden Murphy Wallace, PLLC
1177 West Hastings, Suite 2110 1601 Fifth Avenue, Suite 2100
Vancouver, British Columbia V6E 2K3, CANADA Seattle, Washington 98101
(604) 687-2199 (206) 447-7000
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered registered per unit offering price fee
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Class A Common Stock............ 500,000 $.01 $5,000.00 $1.32
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Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 (Section
230.457 of this chapter) relied upon, if the basis of the calculation is not
otherwise evident from the information presented in the table. If the filing
fee is calculated pursuant to Rule 457(o) under the Securities Act, only the
title of the class of securities to be registered, the proposed maximum
aggregate offering price for that class of securities and the amount of
registration fee needed to appear in the Calculation of Registration Fee
table. Any difference between the dollar amount of securities registered for
such offerings and the dollar amount of securities sold may be carried forward
on a future registration statement pursuant to Rule 429 under the Securities
Act.
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The registration hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. THE +
+INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT +
+SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--[enter date, 2000]
PROSPECTUS
, 2000
Ucellit.com Inc.
1177 West Hastings, Suite 2110
Vancouver, British Columbia V6E 2K3, CANADA
(604) 687-2199
500,000 Shares of Common Stock
to be sold by Ucellit.com Inc.
This is the initial public offering of common stock of Ucellit.com Inc., and
no public market currently exists for shares of Ucellit.com's common stock. The
price for the stock will be fixed. Ucellit.com has no revenues to date and
there may not be a market for the products it plans to sell.
This is not an underwritten offering, and Ucellit.com's stock is not listed
on any national securities exchange or the NASDAQ Stock Market. Ucellit.com
intends to apply to have its shares traded on the OTC bulletin board under the
symbol:
"UCEL"
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE .
-----------
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
You should rely only on the information contained in this document.
Ucellit.com has not authorized anyone to provide you with information that is
different. This document may only be used where it is legal to sell these
securities. The information in this document may only be accurate on the date
of this document.
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TABLE OF CONTENTS
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PART I--PROSPECTUS
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PROSPECTUS SUMMARY........................................................ 1
RISK FACTORS.............................................................. 2
Ucellit.com is in Its Earliest Stages of Development and May Never
Become Profitable...................................................... 2
Conflicts of Interest May Arise Between Companies Owned By the Sole
Shareholder............................................................ 2
Ucellit.com May Lose Its Vitamineralherb License if Vitamineralherb.com
Defaults Under Its Agreement with Its Supplier......................... 2
Dependence on Use of the Internet for Commerce.......................... 3
Dependence on the Internet and Computer Technology...................... 3
Dependence on Telecommunications Carrier and Other Suppliers............ 3
Government Regulation of the Internet Could Adversely Affect
Ucellit.com's Profitability............................................ 4
Government Regulation of Products Could Adversely Affect Viability of
Dietary Supplements.................................................... 4
Heavy Dependence on One Individual Who Will Not Devote His Full Time and
Attention to Ucellit.com's Affairs Could Result in Delays or Business
Failure................................................................ 5
Heavy Dependence on One Individual Who Has No Experience in the Retail
Vitamin Line of Business............................................... 5
Product Liability....................................................... 5
Effect of Unfavorable Publicity......................................... 6
Ability to Manage Growth................................................ 6
Absence of Conclusive Clinical Studies.................................. 6
Competition............................................................. 6
No Assurance of Future Industry Growth.................................. 6
Potential Business Combinations Dilute Stockholder Value................ 7
Potential Business Combinations Could Be Difficult to Integrate and
Disrupt Business....................................................... 7
Ucellit.com May Enter in to New Line of Business Which Investors Could
Not Evaluate........................................................... 7
Ucellit.com Has No Operating History and Financial Results Are
Uncertain.............................................................. 7
Ucellit.com May Need Additional Financing Which May Not Be Available or
Which May Dilute the Ownership Interests of Investors.................. 8
Ucellit.com's Common Stock Has No Prior Market, and Prices May Decline
After the Offering..................................................... 8
Investors May Face Significant Restrictions on the Resale of Ucellit.com
Stock Due to State Blue Sky Laws....................................... 8
Investors May Face Significant Restrictions on the Resale Of Ucellit.com
Stock Due to Federal Penny Stock Regulations........................... 9
USE OF PROCEEDS........................................................... 10
DETERMINATION OF OFFERING PRICE........................................... 10
DILUTION..................................................................
SELLING SECURITY HOLDERS.................................................. 10
PLAN OF DISTRIBUTION...................................................... 10
LEGAL PROCEEDINGS......................................................... 10
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.............. 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............ 11
DESCRIPTION OF SECURITIES................................................. 11
INTEREST OF NAMED EXPERTS AND COUNSEL..................................... 12
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES.............................................................. 12
DESCRIPTION OF BUSINESS................................................... 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION................. 19
DESCRIPTION OF PROPERTY................................................... 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................ 20
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................. 21
EXECUTIVE COMPENSATION................................................... 21
FINANCIAL STATEMENTS..................................................... F-1
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.............................................................. F-7
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS................................ II-1
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.............................. II-1
RECENT SALES OF UNREGISTERED SECURITIES.................................. II-1
EXHIBITS................................................................. II-2
UNDERTAKINGS............................................................. II-2
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PART I--PROSPECTUS
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and the Financial Statements and
notes thereto appearing elsewhere in this Prospectus.
Ucellit.com
Ucellit.com Inc. is a corporation formed under the laws of the State of
Washington, whose principal executive offices are located in Vancouver, British
Columbia, Canada.
The primary objective of the business is designed to market high-quality,
low-cost vitamins, minerals, nutritional supplements, and other health and
fitness products to medical professionals, alternative health professionals,
martial arts studios and instructors, sports and fitness trainers, other health
and fitness professionals, school and other fund raising programs and other
similar types of customers via the Internet for sale to their clients.
In a License Agreement with Vitamineralherb.com, filed herewith as Exhibit
10.1, Ucellit.com acquired the exclusive right to distribute
Vitamineralherb.com products to health and fitness professionals for sale to
their customers in Ontario via the Internet. Ucellit.com's goal in becoming a
Vitamineralherb.com licensee is to eliminate the need to develop products,
store inventory, build and maintain a web-site, establish banking liaisons, and
develop a fulfillment system, thereby enabling Ucellit.com to focus strictly on
marketing and sales. All sales are conducted over the Internet through
Vitamineralherb.com's website. Health and fitness professionals may order a
variety of products, and may have the products custom-labeled. Products are
shipped directly to the client. Ucellit.com and Vitamineralherb.com share the
profit on product sales.
Background on the Manufacturer and Distributor
On June 9, 1999, Vitamineralherb.com entered into a manufacturing agreement
with International Formulation and Manufacturing Inc., a nutraceuticals
manufacturing firm, located in San Diego, California, USA. International
Formulation and Manufacturing Inc. is a contract manufacturer of vitamin,
mineral, nutritional supplement, and alternative health products for various
marketing organizations. In addition to a line of standard products,
International Formulation and Manufacturing Inc. is able to manufacture custom
blended products for customers, and to supply privately labeled products for
Ucellit.com's customers at a minimal added cost.
Market Opportunity
The vitamins, supplements and minerals market is projected to grow as the
"baby boomer" population becomes increasingly concerned with aging and disease,
preventative health care and natural products. According to Jupiter
Communications, online sales of such products are expected to be US $434
million in the year 2003, up from $1 million in 1998. For additional
information, see "Business--Industry Background."
Name, Address, and Telephone Number of Registrant
Ucellit.com Inc.
1177 West Hastings, Suite 2110
Vancouver, British Columbia V6E 2K3, CANADA
(604) 687-2199
(604) 687-8360
The Offering
Ucellit.com is offering up to 500,000 shares of its common stock at $.01 per
share. Ucellit.com is simultaneously applying to the OTC Bulletin Board along
with filing with the SEC.
1
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RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing the common stock of
Ucellit.com. Investing in Ucellit.com's common stock involves a high degree of
risk. Any of the following risks could adversely affect Ucellit.com's
business, financial condition and results of operations and could result in a
complete loss of your investment.
You Should Not Rely on Forward-Looking Statements Because They Are Inherently
Uncertain
You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions to identify these
forward-looking statements. Prospective investors should not place undue
reliance on forward-looking statements, which apply only as of the date of
this prospectus. Ucellit.com's actual results could differ materially from
those anticipated in these forward-looking statements for many reasons,
including the risks faced by Ucellit.com described in "Risk Factors" and
elsewhere in this prospectus.
Risks Related to Ucellit.com's Business
Ucellit.com's success is dependent on a number of factors that should be
considered by prospective investors. Ucellit.com has only recently acquired
its principal asset. It is a new company and has no history of earnings or
profit and there is no assurance that it will operate profitably in the
future. As such, there is no assurance that Ucellit.com will provide a return
on investment in the future.
Ucellit.com is in Its Earliest Stages of Development and May Never Become
Profitable
Ucellit.com is in the extreme early stages of development and could fail
before implementing its business plan. It must be regarded as a "start up"
venture that will incur net losses for the foreseeable future. Ucellit.com has
no operating history or revenues from operations, and it faces unforeseen
costs, expenses, problems and difficulties that could easily prevent it from
ever becoming profitable. Ucellit.com's success is dependent on a number of
factors that should be considered by prospective investors. Ucellit.com has
only recently acquired its principal asset. It is a relatively young company
and has no history of earnings or profit and there is no assurance that it
will operate profitably in the future. As such, there is no assurance that
Ucellit.com will provide a return on investment in the future.
Conflicts of Interest May Arise Between Companies Owned By the Sole
Shareholder
Michael Kirsh, the sole shareholder, officer and director of Ucellit.com, is
also the sole shareholder, officer and director of BentleyCapitalCorp.com, a
company with a Vitamineralherb.com license for the territory of British
Columbia, Canada. The license for British Columbia territory may prove more
lucrative than Ucellit.com's Ontario territory, and it is possible that Mr.
Kirsh could devote more time and resources to the company that is more likely
to succeed.
Ucellit.com May Lose Its Vitamineralherb License if Vitamineralherb.com
Defaults Under Its Agreement with Its Supplier
Vitamineralherb.com granted the distribution license to Ucellit.com based on
Vitamineralherb.com's Manufacturing Agreement with International Formulation
and Manufacturing Inc. If Vitamineralherb.com defaults under its agreement
with International Formulation and Manufacturing Inc., it could lose access to
its manufacturing source, and the rights Vitamineralherb.com has granted
Ucellit.com would become meaningless. Similarly, any dispute between
International Formulation and Manufacturing Inc. and Vitamineralherb.com (or
their successors) could impair Ucellit.com's ability to fully exploit its
license rights. Any termination or impairment of Ucellit.com's license rights
due to circumstances under the control of International Formulation and
Manufacturing Inc., Vitamineralherb.com or others with an interest in the
products could prevent Ucellit.com from implementing its business plan,
thereby limiting its profitability and decreasing the value of its stock.
2
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Dependence on Use of the Internet for Commerce
If use of the Internet and growth of the market for online vitamins,
supplements, minerals and other similar products do not continue, Ucellit.com
may not achieve the critical mass of customers necessary for sustaining
revenues and achieving profitable operations. Ucellit.com's future revenues
and profits, if any, substantially depend upon the widespread acceptance and
use of the Internet as an effective medium of business by target consumers.
Rapid growth in the use of and interest in the Internet has occurred only
recently. As a result, acceptance and use may not continue to develop at
historical rates, and a sufficiently broad base of consumers may not use the
Internet and other online services as a medium of commerce. Further, the
online market for such products is in its infancy, and is significantly less
developed than the online market for books, auctions, music, software and
numerous other consumer products. Even if use of the Internet and electronic
commerce continues to increase, the rate of growth, if any, of the online
vitamins, supplements, minerals and other similar products market could be
significantly less than the online market for other products. Ucellit.com's
rate of revenue growth and prospects for profitability could therefore be
significantly less than that of other online merchants.
Dependence on the Internet and Computer Technology
The market for Internet access is characterized by rapidly changing
technology, evolving industry standards, changes in users' needs and frequent
new service introductions. Ucellit.com's future success will depend, in part,
on Vitamineralherb.com's use of leading technologies to provide seamless
access to and services through its Website. There can be no assurance that
Vitamineralherb.com will be successful in using new technologies effectively,
developing new services or enhancing existing services on a timely basis.
Ucellit.com's success also depends on continued use and expansion of the
Internet. The Internet infrastructure may not be able to support the demands
placed on it by continued growth. The growth in volume of Internet traffic may
create instabilities in its structure such as shortages in Internet addresses
and overworked search engines. Such instabilities may have an adverse affect
on Ucellit.com's operations and business if they are not addressed. The
Internet could also lose its viability due to delays in the development or
adoption of new standards and protocols to handle increased levels of Internet
activity, security, reliability, cost, ease of use, accessibility, and quality
of service. Vitamineralherb.com's network infrastructure may be vulnerable to
computer viruses, hacking or similar disruptive problems caused by users,
other connected Internet sites, the interconnecting networks and the various
telephone networks. Computer viruses or problems caused by third parties could
lead to interruptions, delays or cessation in service to Ucellit.com.
The Internet may not be accepted as a viable long-term commercial
marketplace for a number of reasons, including potentially inadequate
development of the necessary network infrastructure or delayed development of
enabling technologies and performance improvements. Ucellit.com's success will
depend, in large part, upon third parties maintaining the Internet
infrastructure to provide a reliable network backbone with the speed, data
capacity, security and hardware necessary for reliable Internet access and
services.
Dependence on Telecommunications Carriers and Other Suppliers
Ucellit.com will rely on Vitamineralherb.com's providers such as the local
telephone companies and other companies to provide data-communications via
local telecommunications lines and leased long-distance lines. The means of
ordering and paying for products may be disrupted or eliminated if
Vitamineralherb.com experiences disruptions or capacity constraints in its
telecommunications services. There may be no means of replacing these services
on a timely basis or at all.
In addition, the inability or unwillingness of any third-party to provide
point of presence access to Ucellit.com or its inability to secure alternative
point of presence arrangements could significantly limit its ability to
service its existing customers and could limit its ability to expand to new
markets, which could, in turn, have a material adverse effect on its business,
financial condition and results of operations.
3
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Government Regulation of the Internet Could Adversely Affect Ucellit.com's
Profitability
Existing or future legislation could limit growth in use of the Internet,
which would curtail Ucellit.com's revenue growth. Statutes and regulations
directly applicable to Internet communications, commerce and advertising are
becoming more prevalent. The law remains largely unsettled, however, even in
areas where there has been legislative action. It may take years to determine
whether and how existing laws governing intellectual property, privacy, libel
and taxation apply to the Internet, electronic commerce and online
advertising. In addition, the growth and development of electronic commerce
may prompt calls for more stringent consumer protection laws, in the United
States, Canada and abroad. It is possible that Canadian, U.S., or other local
or foreign jurisdictions may seek to impose sales tax collection obligations
on Ucellit.com. If one or more states or any foreign country successfully
asserts that Ucellit.com should collect sales or other taxes on the sale of
its products, it could also prevent Ucellit.com's business from growing or
expose it to unanticipated liabilities.
Any new regulation or taxation of Internet commerce could damage
Ucellit.com's business, affect the profitability and perhaps the viability of
its business plan, and cause the price of its common stock to decline. Such
regulation or taxation could prove to be burdensome, and impose significant
additional costs on Ucellit.com's business or subject it to additional
liabilities. As Internet commerce continues to evolve, increasing regulation
by federal, state, or foreign agencies becomes more likely. Such regulation is
likely in the areas of user privacy, pricing, content, and quality of products
and services. Taxation of Internet use, or other charges imposed by government
agencies or by private organizations for accessing the Internet, may also be
imposed. Laws and regulations applying to the solicitation, collection, or
processing of personal or consumer information could limit Ucellit.com's
activities. In addition, any regulation imposing fees for Internet use could
result in a decline in the use of the Internet and the viability of Internet
commerce, which could have a material adverse effect on Ucellit.com's
business, results of operations, and financial condition.
Government Regulation of Products Could Adversely Affect Viability of Dietary
Supplements
In Canada, extensive federal government regulations may restrict the way
Ucellit.com sells its products, resulting in restrictions on the products and
content Ucellit.com offers its customers and significant additional expenses.
The manufacture, packaging, labeling, advertising, promotion, distribution and
sale of Ucellit.com's products are subject to regulation by numerous Canadian
governmental agencies, the most active of which is Health Canada, which
regulates Ucellit.com's products under the Food and Drugs Act and associated
regulations.
Canadian laws, regulations and enforcement policies governing Ucellit.com's
dietary supplement products are relatively new and still evolving and
Ucellit.com cannot predict what enforcement positions Health Canada or
Industry Canada may take with respect to Ucellit.com's selling methods. Health
Canada has established a new Office of National Health Products (ONHP) which
will evaluate health products for assurance of safety while enhancing consumer
access and choice to a full range of natural health products. ONHP will be a
new regulatory authority reporting to the Assistant Deputy Minister, Health
Protections Branch. Until the new regulatory framework has been established
under the ONHP, natural health products will continue to be regulated either
as foods or drugs.
U.S. federal, state and local government regulations may also restrict
Ucellit.com's products. The manufacture, packaging, labeling, advertising,
promotion, distribution and sale of Ucellit.com's products are subject to
regulation by numerous governmental agencies, the most active of which is the
U.S. Food and Drug Administration, which regulates Ucellit.com's products
under the Federal Food, Drug and Cosmetic Act and regulations promulgated
thereunder. Ucellit.com's products are also subject to regulation by, among
other regulatory entities, the Consumer Product Safety Commission, the U.S.
Department of Agriculture, and the Environmental Protection Agency.
Advertising and other forms of promotion and methods of marketing of
Ucellit.com's products are subject to regulation by the U.S. Federal Trade
Commission, which regulates these activities under the Federal Trade
Commission Act. The manufacture, labeling and advertising of Ucellit.com's
products are also regulated by various state and local agencies as well as
those of each foreign country to which it distributes its products.
4
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Ucellit.com cannot be certain that its attempts, or those of its suppliers,
to comply with laws and regulations in this area are or will be deemed
sufficient by the appropriate regulatory agencies. Enforcement actions by any
of these regulatory agencies can result in civil and criminal penalties, an
injunction to stop or modify certain selling methods, seizure of Ucellit.com's
products, adverse publicity or voluntary recalls and labeling changes. If any
governmental agency were to undertake an enforcement action against
Ucellit.com, it could cause an immediate decrease in its revenues, cause it to
incur significant additional expenses and result in a decrease in its stock
price. Ucellit.com's efforts to comply with existing laws and regulations may
be costly, may force it to change its selling strategy and may not be
successful. Ucellit.com cannot promise that it will be able to comply with any
existing or future laws, regulations, interpretations or applications without
incurring significant costs or adjusting its business model. A more detailed
discussion of the government regulations affecting Ucellit.com's business is
included in this prospectus under the heading "Business--Regulatory
Environment."
Heavy Dependence on One Individual Who Will Not Devote His Full Time and
Attention to Ucellit.com's Affairs Could Result in Delays or Business Failure
Mr. Kirsh is serving as Ucellit.com's sole officer and director. Loss of Mr.
Kirsh's services may hamper Ucellit.com's ability to implement its business
plan, and could cause its stock to be worthless. Ucellit.com will be heavily
dependent upon Mr. Kirsh's entrepreneurial skills and experience to implement
its business plan and may, from time to time, find that his inability to
devote full time and attention to its affairs will result in delay(s) in
progress towards the implementation of its business plan or in a failure to
implement its business plan. Moreover, Ucellit.com does not have an employment
agreement with Mr. Kirsh and as a result, there is no assurance that he will
continue to manage its affairs in the future. Nor has Ucellit.com obtained a
key man life insurance policy on Mr. Kirsh. Ucellit.com could lose the
services of Mr. Kirsh, or Mr. Kirsh could decide to join a competitor or
otherwise compete directly or indirectly with Ucellit.com, which would have a
significant adverse effect on its business and could cause the price of its
stock to be worthless. The services of Mr. Kirsh would be difficult to
replace. Because investors will not necessarily be able to evaluate the merits
of Ucellit.com's business decisions, they should carefully and critically
assess Mr. Kirsh's background. See "Directors and Executive Officers".
Heavy Dependence on One Individual Who Has No Experience in the Retail
Vitamin Line of Business
Mr. Kirsh has no experience in marketing and retail sale of vitamins and
other nutritional supplements, or the sale of products over the Internet. Mr.
Kirsh is not a doctor, nutritionist, or health professional by trade. As a
result, Ucellit.com will likely need to rely on others who understand the sale
and marketing of nutritional supplements. Because of lack of experience in
this line of business, Ucellit.com may overestimate the marketability of the
Vitamineralherb.com products and may underestimate the costs and difficulties
associated with selling and distributing of the products. Any such
unanticipated costs or difficulties could prevent Ucellit.com from
implementing its business plan, thereby limiting its profitability and
decreasing the value of its stock.
Product Liability
Ucellit.com, like other retailers, distributors and manufacturers of dietary
supplements designed for human consumption, faces an inherent risk of exposure
to product liability claims in the event that the use of its products results
in injury. Ucellit.com may be subjected to various product liability claims,
including, among others, that its products include inadequate instructions for
use or inadequate warnings concerning possible side effects and interactions
with other substances. Ucellit.com relies on third party manufacturers for its
products. Ucellit.com has no product liability insurance coverage. Although
Vitamineralherb.com warrants the products and provides indemnification to
Ucellit.com for losses, claims, and expenses arising from a breach of the
product warranties, any such indemnification is limited by its terms and, as a
practical matter, is limited to the creditworthiness of the indemnifying
party. In the event that Ucellit.com does not have adequate indemnification,
product liabilities relating to its products could have a material adverse
effect on its business, financial condition and results of operations.
5
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Effect of Unfavorable Publicity
Ucellit.com believes the dietary supplement market is affected by national
media attention regarding the consumption of dietary supplements. Future
scientific research or publicity may not be favorable to the dietary
supplement industry or to any particular product, and may not be consistent
with earlier favorable research or publicity. Because of Ucellit.com's
dependence on consumers' perceptions, adverse publicity associated with
illness or other adverse effects resulting from the consumption of its
products or any similar products distributed by other companies and future
reports of research that are perceived as less favorable or that question
earlier research could have a material adverse effect on Ucellit.com's
business, financial condition and results of operations. Ucellit.com is highly
dependent upon consumers' perceptions of the safety and quality of its
products as well as dietary supplements distributed by other companies. Thus,
the mere publication of reports asserting that such products may be harmful or
questioning their efficacy could have a material adverse effect on
Ucellit.com's business, financial condition and results of operations,
regardless of whether such reports are scientifically supported or whether the
claimed harmful effects would be present at the dosages recommended for such
products.
Ability to Manage Growth
Ucellit.com's ability to manage growth depends in part upon its ability to
develop and expand operating, management, information and financial systems,
and production capacity, which may significantly increase its future operating
expenses. No assurance can be given that Ucellit.com's business will grow in
the future or that it will be able to effectively manage such growth.
Ucellit.com's inability to manage its growth successfully could have a
material adverse effect on its business, financial condition and results of
operations.
Absence of Conclusive Clinical Studies
Although many of the ingredients in Ucellit.com's products are vitamins,
minerals, herbs and other substances for which there is a long history of
human consumption, some of its products contain ingredients for which no such
history exists. In addition, although Ucellit.com believes all of its products
are safe when taken as directed on the product labeling, there is little long-
term experience with human consumption of certain of these product ingredients
in concentrated form. Accordingly, there can be no assurance that
Ucellit.com's products, even when used as directed, will have the effects
intended or will not have harmful side effects. Any such unintended effects
may result in adverse publicity or product liability claims which could have a
material adverse effect on Ucellit.com's business, financial condition and
results of operations.
Competition
The electronic commerce industry is new, rapidly evolving and intensely
competitive, and Ucellit.com expects competition to intensify in the future.
If it fails to attract and retain a large customer base and its competitors
establish a market position more prominent than Ucellit.com's, it could
experience declines in its revenue and a loss of market share. Barriers to
entry are minimal and current and new competitors can launch sites at a
relatively low cost. In addition, the vitamins, supplements, minerals and
alternative health products market is very competitive and highly fragmented,
with no clear dominant leader and increasing public and commercial attention.
Ucellit.com competes with a variety of other companies, including traditional
vitamins, supplements, minerals and alternative health product retailers, the
online retail initiatives of several such traditional retailers and other
Vitamineralherb.com licensees. A more detailed discussion regarding the
competition Ucellit.com faces is included in this prospectus under the heading
"Business--Competition."
No Assurance of Future Industry Growth
There can be no assurance that the market is as large as reported in market
data referred to in this prospectus or that such projected growth will occur
or continue. Market data and projections such as those presented in this
prospectus are inherently uncertain, subject to change and often dated. In
addition, the underlying market
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conditions are subject to change based on economic conditions, consumer
preferences and other factors that are beyond Ucellit.com's control. An
adverse change in size or growth rate of the market for dietary supplements is
likely to have a material adverse effect on Ucellit.com's business, financial
condition and results of operations.
Potential Business Combinations Dilute Stockholder Value
Because Ucellit.com may not be successful in developing a viable market for
the Vitamineralherb.com products, its management will spend a significant
portion of the time it devotes to evaluating other business opportunities that
may be available to Ucellit.com. In the event of a business combination, the
ownership interests of holders of existing shares of Ucellit.com's stock will
be diluted. Due to its limited financial resources, the only way Ucellit.com
will be able to diversify its activities, should its business plan prove to be
impractical, would be to enter into a business combination.
Any asset acquisition or business combination would likely include the
issuance of a significant amount of Ucellit.com's common stock, which would
dilute the ownership interest of holders of existing shares, and may result in
a majority of the voting power being transferred to new investors. Depending
on the nature of the transaction, Ucellit.com's stockholders may not have an
opportunity to vote on whether to approve it. For example, Ucellit.com's board
of directors may decide to issue a significant amount of stock to effect a
share exchange with another company. Such a transaction does not require
shareholder approval, but Ucellit.com's officers and directors must exercise
their powers in good faith and with a view to the interests of the
corporation.
Potential Business Combinations Could Be Difficult to Integrate and Disrupt
Business
Any acquisition of or business combination with another company could
disrupt Ucellit.com's ongoing business, distract management and employees and
increase its expenses. If Ucellit.com acquires a company, it could face
difficulties in assimilating that company's personnel and operations. In
addition, the key personnel of the acquired company may decide not to work for
Ucellit.com. Acquisitions also involve the need for integration into existing
administration, services, marketing, and support efforts. Any amortization of
goodwill or other assets, or other charges resulting from the costs of these
acquisitions, could limit Ucellit.com's profitability and decrease the value
of its stock. In addition, Ucellit.com's liquidity and capital resources may
be diminished prior to or as a result of consummation of a business
combination and its capital may be further depleted by the operating losses
(if any) of the business entity which Ucellit.com may eventually acquire.
Ucellit.com May Enter in to New Line of Business Which Investors Could Not
Evaluate
In the event of a business combination, acquisition, or change in
shareholder control, Ucellit.com may enter in to a new line of business which
an investor did not anticipate and in which that investor may not want to
participate. Ucellit.com may make investments in or acquire complementary
products, technologies and businesses, or businesses completely unrelated to
its current business plan. Similarly, an asset acquisition or business
combination would likely include the issuance of a significant amount of
Ucellit.com's common stock, which may result in a majority of the voting power
being transferred to new investors. New investors may replace Ucellit.com's
management. New management may decide not to continue to implement
Ucellit.com's current business plan, and may decide to enter into a business
completely unrelated to the current business plan which an investor did not
anticipate and in which that investor may not want to participate. In such
case, an investor could lose its entire investment on a business decision it
did not get to evaluate at the time of investing in Ucellit.com.
Financial Risks
Ucellit.com Has No Operating History and Financial Results Are Uncertain
Ucellit.com is a young company with no history of earnings or profit and
there is no assurance that it will operate profitably in the future.
Ucellit.com faces all the risks of a new business. As a result of
Ucellit.com's
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limited operating history, it is difficult to accurately forecast its
potential revenue, and there is no meaningful historical financial data upon
which to base planned operating expenses. Its revenue and income potential is
unproven and its business model is still emerging. As such, there is no
assurance that Ucellit.com will provide a return on investment in the future.
An investor in Ucellit.com's common stock must consider the challenges, risks
and uncertainties frequently encountered by early-stage companies using new
and unproven business models in new and rapidly evolving markets. These
challenges include our ability to:
. execute on Ucellit.com's business model;
. create brand recognition;
. manage growth in Ucellit.com's operations;
. create a customer base cost-effectively;
. retain customers;
. access additional capital when required;
. attract and retain key personnel.
Ucellit.com cannot be certain that its business model will be successful or
that it will successfully address these and other challenges, risks and
uncertainties. Consumers of vitamins, supplements, minerals and other similar
products may not purchase products from our site, which would reduce our
revenues and prevent us from becoming profitable.
Ucellit.com May Need Additional Financing Which May Not Be Available, or
Which May Dilute the Ownership Interests of Investors
Ucellit.com's ultimate success will depend on its ability to raise
additional capital. No commitments to provide additional funds have been made
by management or other shareholders. Ucellit.com has not investigated the
availability, source or terms that might govern the acquisition of additional
financing. When additional capital is needed, there is no assurance that funds
will be available from any source or, if available, that they can be obtained
on terms acceptable to Ucellit.com. If not available, Ucellit.com's operations
would be severely limited, and it would be unable to implement its business
plan.
Risks Related to the Securities Market
Ucellit.com's Common Stock Has No Prior Market, and Prices May Decline After
the Offering
There is no public market for Ucellit.com's common stock and no assurance
can be given that a market will develop or that any shareholder will be able
to liquidate its investment without considerable delay, if at all. The trading
market price of Ucellit.com's common stock may decline below the offering
price. If a market should develop, the price may be highly volatile. In
addition, an active public market for Ucellit.com's common stock may not
develop or be sustained. Factors such as those discussed in this "Risk
Factors" section may have a significant impact on the market price of
Ucellit.com's securities. Owing to the low price of the securities, many
brokerage firms may not be willing to effect transactions in the securities.
Even if a purchaser finds a broker willing to effect a transaction in
Ucellit.com's common stock, the combination of brokerage commissions, state
transfer taxes, if any, and other selling costs may exceed the selling price.
Further, many lending institutions will not permit the use of such securities
as collateral for loans. Thus, a purchaser may be unable to sell or otherwise
realize the value invested in Ucellit.com stock.
Investors May Face Significant Restrictions on the Resale of Ucellit.com
Stock Due to State Blue Sky Laws
Because Ucellit.com's securities have not been registered for resale under
the blue sky laws of any state, the holders of such shares and those persons
desiring to purchase them in any trading market that may develop in the future
should be aware that there may be significant state blue sky law restrictions
on the ability of
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investors to sell and on purchasers to buy Ucellit.com's securities. Each
state has its own securities laws, often called "blue sky laws", which limit
sales of stock to a state's residents unless the stock is registered in that
state or qualifies for an exemption from registration, and govern the
reporting requirements for broker-dealers and stock brokers doing business
directly or indirectly in the state. Before a security is sold in a state,
there must be a registration in place to cover the transaction, and the broker
must be registered in that state, or otherwise be exempt from registration.
Ucellit.com does not know whether its stock will be registered under the laws
of any states. A determination regarding registration will be made by the
broker-dealers, if any, who agree to serve as the market-makers for
Ucellit.com's stock.
Accordingly, investors should consider the secondary market for
Ucellit.com's securities to be a limited one. Investors may be unable to
resell their stock, or may be unable to resell it without the significant
expense of state registration or qualification.
Investors May Face Significant Restrictions on the Resale of Ucellit.com
Stock Due to Federal Penny Stock Regulations
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-
2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act
of 1934, as amended. Because Ucellit.com's securities may constitute "penny
stock" within the meaning of the rules, the rules would apply to Ucellit.com
and its securities. The rules may further affect the ability of owners of
Ucellit.com's shares to sell their securities in any market that may develop
for them. There may be a limited market for penny stocks, due to the
regulatory burdens on broker-dealers. The market among dealers may not be
active. Investors in penny stock often are unable to sell stock back to the
dealer that sold them the stock. The mark ups or commissions charged by the
broker-dealers may be greater than any profit a seller may make. Because of
large dealer spreads, investors may be unable to sell the stock immediately
back to the dealer at the same price the dealer sold the stock to the
investor. In some cases, the stock may fall quickly in value. Investors may be
unable to reap any profit from any sale of the stock, if they can sell it at
all.
Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include:
. control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer;
. manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases;
. "boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
. excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
. the wholesale dumping of the same securities by promoters and broker-
dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor
losses.
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USE OF PROCEEDS
The net proceeds to Ucellit.com from the sale of the 500,000 shares of
common stock offered by Ucellit.com hereby at an assumed initial public
offering price of $.01 per share are estimated to be $5,000. Ucellit.com
expects to use the net proceeds for organizational purposes, to conduct a
search for employees, and to determine the feasibility of selling
Vitamineralherb.com products to specific markets.
Ucellit.com continually evaluates other business opportunities that may be
available to it, whether in the form of assets acquisitions or business
combinations. Ucellit.com may use a portion of the proceeds for these
purposes. Ucellit.com is not currently a party to any contracts, letters of
intent, commitments or agreements and is not currently engaged in active
negotiations with respect to any acquisitions.
Ucellit.com has not yet determined the amount of net proceeds to be used
specifically for any of the foregoing purposes. Accordingly, Ucellit.com's
management will have significant flexibility in applying the net proceeds of
the offering.
DETERMINATION OF OFFERING PRICE
Ucellit.com arbitrarily determined the price of the Units in this Offering.
The offering price is not an indication of and is not based upon the actual
value of Ucellit.com. It bears no relationship to the book value, assets or
earnings of Ucellit.com or any other recognized criteria of value. The
offering price should not be regarded as an indicator of the future market
price of the securities.
SELLING SECURITY HOLDERS
There are no selling security holders.
PLAN OF DISTRIBUTION
Ucellit.com will sell a maximum of 500,000 shares of its common stock to the
public on a "best efforts" basis. There can be no assurance that any of these
shares will be sold. The gross proceeds to Ucellit.com will be $5,000 if all
the shares offered are sold. No commissions or other fees will be paid,
directly or indirectly, by Ucellit.com, or any of its principals, to any
person or firm in connection with solicitation of sales of the shares. No
public market currently exists for shares of Ucellit.com's common stock.
Ucellit.com intends to apply to have its shares traded on the OTC bulletin
board under the symbol "UCEL".
LEGAL PROCEEDINGS
Ucellit.com is not a party to any pending legal proceeding or litigation and
none of its property is the subject of a pending legal proceeding. Further,
the officer and director knows of no legal proceedings against Ucellit.com or
its property contemplated by any governmental authority.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age and position of each director
and executive officer of Ucellit.com:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael Kirsh................ 46 President, Secretary, Treasurer, Director
</TABLE>
In March, 2000, Mr. Kirsh was elected as the sole officer and director of
Ucellit.com by the current shareholders, of whom he is majority stockholder.
He will serve until the first annual meeting of Ucellit.com's
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shareholders and his successors are elected and qualified. Thereafter,
directors will be elected for one-year terms at the annual shareholders'
meeting. Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement.
During the past five years, Mr. Kirsh has worked with a group of independent
investors that acquires private companies and conducts reverse takeovers. In a
reverse takeover, the shareholders of an acquired company generally end up
owning all or most of the resulting combined company. Before forming his
investment group, Mr. Kirsh had invested in both real estate and the stock
market. From approximately 1986 to 1992 Mr. Kirsh developed two dental
practices in Vancouver, British Columbia, Canada, which he sold in 1992 before
forming his investment group.
Mr. Kirsh is the sole shareholder, officer, and director of
BentleyCapitalCorp.com Inc., a company with a Vitamineralherb.com license for
the territory of British Columbia, Canada. BentleyCapitalCorp also plans to
register its securities pursuant to a Form SB-2 registration statement. Mr.
Kirsh is also the sole shareholder, officer and director of Gentry Resources,
Inc., and Growtex Inc., both of which filed with the Securities and Exchange
Commission on March 10, 2000, Forms 10-SB pursuant to the Securities Exchange
Act of 1934.
Mr. Kirsh is also a director of Mezuma Mining, which is traded on the
Alberta Stock Exchange. Mezuma Mining has currently raised approximately
$250,000.00 Canadian and is looking for a company to acquire.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2000, Ucellit.com's
outstanding common stock owned of record or beneficially by each Executive
Officer and Director and by each person who owned of record, or was known by
Ucellit.com to own beneficially, more than 5% of its common stock, and the
shareholdings of all Executive Officers and Directors as a group. Each person
has sole voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
Percentage
of
Shares Shares
Name Owned Owned
---- --------- ----------
<S> <C> <C>
Michael Kirsh, President, Secretary, Treasurer, and 1,500,000 100%
Director...........................................
5076 Angus Drive
Vancouver, BC Canada V6M 3M5
All executive officers & directors as a group (1
individual)........................................ 1,500,000 100%
</TABLE>
DESCRIPTION OF SECURITIES
The following description of Ucellit.com's capital stock is a summary of the
material terms of its capital stock. This summary is subject to and qualified
in its entirety by Ucellit.com's articles of incorporation and bylaws, which
are included as exhibits to the registration statement of which this
prospectus forms a part, and by the applicable provisions of Washington law.
The authorized capital stock of Ucellit.com consists of 120,000,000 shares:
100,000,000 shares of Common Stock having a par value of $0.0001 per share and
20,000,000 shares of Preferred Stock having a par value of $0.0001 per share.
The articles of incorporation do not permit cumulative voting for the election
of directors, and shareholders do not have any preemptive rights to purchase
shares in any future issuance of Ucellit.com's common stock.
The holders of shares of common stock of Ucellit.com do not have cumulative
voting rights in connection with the election of the Board of Directors, which
means that the holders of more than 50% of such outstanding
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shares, voting for the election of directors, can elect all of the directors
to be elected, if they so choose, and, in such event, the holders of the
remaining shares will not be able to elect any of Ucellit.com's directors.
The holders of shares of common stock are entitled to dividends, out of
funds legally available therefor, when and as declared by the Board of
Directors. The Board of Directors has never declared a dividend and does not
anticipate declaring a dividend in the future. Each outstanding share of
common stock entitles the holder thereof to one vote per share on all matters.
The holders of the shares of common stock have no preemptive or subscription
rights. In the event of liquidation, dissolution or winding up of the affairs
of Ucellit.com, holders are entitled to receive, ratably, the net assets of
Ucellit.com available to shareholders after payment of all creditors.
All of the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, and non-assessable. To the extent that
additional shares of Ucellit.com's common stock are issued, the relative
interests of existing shareholders may be diluted.
INTEREST OF NAMED EXPERTS AND COUNSEL
Neither Elliott Tulk Pryce Anderson nor Ogden Murphy Wallace, PLLC was
employed on a contingent basis in connection with the registration or offering
of Ucellit.com's common stock.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Ucellit.com's articles of incorporation, filed herewith as Exhibit 3.1,
provide that it will indemnify its officers and directors to the full extent
permitted by Washington state law. Ucellit.com's bylaws, filed herewith as
Exhibit 3.2, provide that it will indemnify and hold harmless each person who
was, is or is threatened to be made a party to or is otherwise involved in any
threatened proceedings by reason of the fact that he or she is or was a
director or officer of Ucellit.com or is or was serving at the request of
Ucellit.com as a director, officer, partner, trustee, employee, or agent of
another entity, against all losses, claims, damages, liabilities and expenses
actually and reasonably incurred or suffered in connection with such
proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Ucellit.com pursuant to the forgoing provisions or otherwise, Ucellit.com has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
DESCRIPTION OF BUSINESS
General
Ucellit.com was incorporated under the laws of the State of Washington on
March 14, 2000, and is in its early developmental and promotional stages. To
date, Ucellit.com's only activities have been organizational, directed at
acquiring its principal asset, raising its initial capital and developing its
business plan. Ucellit.com has not commenced commercial operations.
Ucellit.com has no full time employees and owns no real estate. Ucellit.com's
business plan is to determine the feasibility of selling Vitamineralherb.com
products to specific markets. Should Ucellit.com determine that the plan is
feasible, it intends to market high-quality, low-cost vitamins, minerals,
nutritional supplements, and other health and fitness products to medical
professionals, alternative health professionals, martial arts studios and
instructors, sports and fitness trainers, other health and fitness
professionals, school and other fund raising programs and other similar types
of customers via the Internet for sale to their clients.
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Acquisition of The License
On March 20, 2000, Ucellit.com's sole shareholder, Michael Kirsh, in return
for 1,500,00 shares of Ucellit.com's common stock and a promissory note for
$28,000, transferred to Ucellit.com his rights under that certain License
Agreement with Vitamineralherb.com, filed herewith as Exhibit 10.1. The
License Agreement grants an exclusive right to distribute Vitamineralherb.com
products to health and fitness professionals in Ontario via the Internet. Mr.
Kirsh acquired the license under the terms of a settlement agreement by and
between Mr. Kirsh, Growtex, Inc., a company in which he is the sole
shareholder, officer and director, and Mortenson & Associates, an affiliate of
Vitamineralherb.com. Mortenson & Associates had granted Growtex a license to
distribute and produce an oxygen enriched water product, called "Biocatalyst,"
for fish farming and aquarium uses. Mortenson & Associates acquired its right
to sublicense Biocatalyst to Growtex from NW Technologies Inc. As a result of
a legal dispute between Mortenson & Associates' principal and NW Technologies,
Mortenson & Associates was unable to fulfill its obligations to Growtex under
the license. Under the terms of the settlement agreement, Vitamineralherb.com,
an affiliate of Mortenson & Associates, granted to Kirsh the license to
distribute Vitamineralherb.com products in part for his agreement not to
pursue his individual claims against Mortenson & Associates.
The License
Ucellit.com has a three year license, filed herewith as Exhibit 10.1, to
market and sell vitamins, minerals, nutritional supplements, and other health
and fitness products to medical professionals, alternative health
professionals, martial arts studios and instructors, sports and fitness
trainers, other health and fitness professionals, school and other fund
raising programs and other similar types of customers via the Internet for
sale to their clients. The license will be automatically renewed unless
Ucellit.com or Vitamineralherb.com gives the other notice of its intent not to
renew.
As a licensee of Vitamineralherb.com, Ucellit.com eliminates the need to
develop products, store inventory, build and maintain a website, establish
banking liaisons, and develop a fulfillment system, thereby enabling
Ucellit.com to focus strictly on marketing and sales. Ucellit.com plans to
target health and fitness professionals in Ontario who wish to offer health
and fitness products to their customers.
Ucellit.com (and its customers) will have access to all products offered on
the Vitamineralherb website, as well as the ability to order custom-formulated
and custom-labeled products. Vitamineralherb.com sets the price for products
based on the manufacturer's price, plus a mark up which provides a 10%
commission to Vitamineralherb.com and a profit for Ucellit.com. Three
different labeling options are available to customers: First, products may be
ordered with the manufacturer's standard label with no customization. Second,
the fitness or health professional may customize the labels by adding its
name, address, and phone number to the standard label. In most cases, these
labels would be a standardized label with product information and a place on
the label for the wording "Distributed by." This gives these health and
fitness professionals a competitive edge. Third, labels may be completely
customized for the health or fitness professional.
When a fitness or health professional becomes a client, Ucellit.com's
salesperson will show the client how to access the Vitamineralherb website.
The client is assigned an identification number that identifies it by
territory, salesperson, and business name, address, and other pertinent
information. The health or fitness professional may then order the products it
desires directly through the Vitamineralherb.com website, paying for the
purchase with a credit card, electronic check ("e-check"), or debit card. All
products are shipped by the manufacturer directly to the professional or its
clients.
The website is maintained by Vitamineralherb.com, and each licensee pays an
annual website maintenance fee of $500. All financial transactions are handled
by Vitamineralherb.com's Internet clearing bank. The Vitamineralherb webmaster
downloads e-mail orders several times a day, checks with clearing bank for
payment and then submits the product order and electronic payment to
International Formulation and Manufacturing. Vitamineralherb.com then forwards
the money due Ucellit.com via electronic funds transfer. Vitamineralherb's
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software tracks all sales through the customer's identification number, and at
month end, e-mails to Ucellit.com and customer a detailed report including
sales commissions. Vitamineralherb has indicated that it will use e-commerce
advertising such as banner ads on major servers and websites, as well as
trying to insure that all major search engines pick Vitamineralherb.com first.
Sales originating from the website to customers located in Ontario will
automatically be assigned to Ucellit.com.
Background on the Manufacturer and Distributor
On June 9, 1999, Vitamineralherb.com entered into a manufacturing agreement
with International Formulation and Manufacturing Inc. a nutraceuticals
manufacturing firm, located in San Diego, California, USA. International
Formulation and Manufacturing is a contract manufacturer of vitamin, mineral,
nutritional supplement, and alternative health products for various marketing
organizations; International Formulation and Manufacturing does no retail
marketing. In addition to a line of standard products, International
Formulation and Manufacturing is able to manufacture custom blended products
for customers. International Formulation and Manufacturing also has the
capability to supply privately labeled products for Ucellit.com's customers at
a minimal added cost.
Industry Background
Growth of the Internet and electronic commerce. The Internet has become an
increasingly significant medium for communication, information and commerce.
According to NUA Internet Surveys, as of February 2000, there were
approximately 275.5 million Internet users worldwide. At the IDC Internet
Executive Forum held on September 28-29, 1999, IDC stated that in 1999 US $109
billion in purchases were impacted by the Internet. IDC's vice president, Sean
Kaldor, indicated that figure is expected to increase more than ten-fold over
the next five years to US $1.3 trillion in 2003, with $842 million completed
directly over the Web. Ucellit.com believes that this dramatic growth presents
significant opportunities for online retailers.
The vitamin, supplement, mineral and alternative health product market. In
recent years, a growing awareness of vitamins, herbs, and other dietary
supplements by the general public has created a whole new segment in the field
of medicine and health care products. According to Jupiter Communications,
online sales of such products are expected to be US $434 million in the year
2003, up from $1 million in 1998. Ucellit.com believes that several factors
are driving this growth, including a rapidly growing segment of the population
that is concerned with aging and disease, a growing interest in preventative
health care, favorable consumer attitudes toward alternative health products
and a favorable regulatory statute, the Dietary Supplement Health and
Education Act of 1994.
Competition
The electronic commerce industry is new, rapidly evolving and intensely
competitive, and Ucellit.com expects competition to intensify in the future.
Barriers to entry are minimal and current and new competitors can launch sites
at a relatively low cost. In addition, the vitamin, supplement, mineral and
alternative health product market is very competitive and highly fragmented,
with no clear dominant leader and increasing public and commercial attention.
Ucellit.com's competitors can be divided into several groups including:
. traditional vitamins, supplements, minerals and alternative health
products retailers;
. the online retail initiatives of several traditional vitamins,
supplements, minerals and alternative health products retailers;
. online retailers of pharmaceutical and other health-related products
that also carry vitamins, supplements, minerals and alternative health
products;
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<PAGE>
. independent online retailers specializing in vitamins, supplements,
minerals and alternative health products;
. mail-order and catalog retailers of vitamins, supplements, minerals and
alternative health products, some of which have already developed online
retail outlets; and
. direct sales organizations, retail drugstore chains, health food store
merchants, mass market retail chains and various manufacturers of
alternative health products.
Many of Ucellit.com's potential competitors have longer operating histories,
larger customer or user bases, greater brand recognition and significantly
greater financial, marketing and other resources than Ucellit.com has. In
addition, an online retailer 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 electronic services
increases. Competitors have and may continue to adopt aggressive pricing or
inventory availability policies and devote substantially more resources to
website and systems development than Ucellit.com does. Increased competition
may result in reduced operating margins and loss of market share.
Ucellit.com believes that the principal competitive factors in its market
are:
. ability to attract and retain customers;
. breadth of product selection;
. product pricing;
. ability to customize products and labeling;
. quality and responsiveness of customer service.
Ucellit.com believes that it can compete favorably on these factors. However,
Ucellit.com will have no control over how successful its competitors are in
addressing these factors. In addition, with little difficulty, Ucellit.com's
online competitors can duplicate many of the products or services offered on
the Vitamineralherb.com site.
Ucellit.com believes that traditional retailers of vitamins, supplements,
minerals and other alternative health products face several challenges in
succeeding:
. Lack of convenience and personalized service. Traditional retailers have
limited store hours and locations. Traditional retailers are also unable
to provide consumers with product advice tailored to their particular
situation..
. Limited product assortment. The capital and real estate intensive nature
of store-based retailers limit the product selection that can be
economically offered in each store location.
. Lack of Customer Loyalty. Although the larger traditional retailers
often attract customers, many of these customers are only one-time
users. People are often attractive to the name brands, but find the
products too expensive. It is understood that these are quality products
and have value, but the multilevel structure of marketing often employed
by large retailers mandate high prices.
As a result of the foregoing limitations, Ucellit.com believes there is
significant unmet demand for an alternative shopping channel that can provide
consumers of vitamins, supplements, minerals and other alternative health
products with a broad array of products and a convenient and private shopping
experience.
Ucellit.com hopes to attract and retain consumers through the following key
attributes of its business:
. Broad Expandable Product Assortment. Ucellit.com's product selection is
substantially larger than that offered by store-based retailers.
. Low Product Prices. Product prices can be kept low due to volume
purchases through Ucellit.com's affiliation with Vitamineralherb.com and
other licensees. Product prices will also be lower due to
15
<PAGE>
Ucellit.com's lack of need of inventory and warehouse space. All products
are shipped from International Formulation and Manufacturing's inventory.
. Accessibility to Customized Products. At minimal cost, health and
fitness practitioners may offer their customers customized products.
. Access to Personalized Programs. Health or fitness professional can
tailor vitamin and dietary supplement regimes to their clients.
Regulatory Environment
The manufacturing, processing, formulating, packaging, labeling and
advertising of the products Ucellit.com sells in Canada are or may be subject
to regulation by Health Canada which administers the Food and Drugs Act along
with relevant regulation thereto. Regulated products include herbal remedies,
natural health remedies, functional foods and nutraceuticals. Health Canada
regulates the formulation, manufacture, labeling and distribution of foods,
including dietary supplements, cosmetics and over-the-counter or homeopathic
drugs. Under the Food and Drugs Act, a variety of enforcement actions are
available to Health Canada against marketers of unapproved drugs or
"adulterated" or "misbranded" products. The remedies available to Health
Canada include: criminal prosecution; an injunction to stop the sale of a
company's products; seizure of products; adverse publicity; and "voluntary"
recalls and labeling changes.
The Consumer Packaging and Labeling Act, as administered by Industry Canada,
requires that certain information labeling be presented in a prescribed manner
on all foods, drugs, dietary supplements and cosmetics. A product may be
deemed an unapproved drug and "misbranded" if it bears improper claims or
improper labeling.
The manufacturing, processing, formulating, packaging, labeling and
advertising of the products Ucellit.com sells may also be subject to
regulation by one or more U.S. federal agencies, including the Food and Drug
Administration, the Federal Trade Commission, the United States Department of
Agriculture and the Environmental Protection Agency. These activities also may
be regulated by various agencies of the states, localities and foreign
countries in which consumers reside.
The Food and Drug Administration, in particular, regulates the formulation,
manufacture, labeling and distribution of foods, including dietary
supplements, cosmetics and over-the- counter or homeopathic drugs. Under the
Federal Food, Drug, and Cosmetic Act, the Food and Drug Administration may
undertake enforcement actions against companies marketing unapproved drugs, or
"adulterated" or "misbranded" products. The remedies available to the Food and
Drug Administration include: criminal prosecution; an injunction to stop the
sale of a company's products; seizure of products; adverse publicity; and
"voluntary" recalls and labeling changes.
Food and Drug Administration regulations require that certain informational
labeling be presented in a prescribed manner on all foods, drugs, dietary
supplements and cosmetics. Specifically, the Food, Drug, and Cosmetic Act
requires that food, including dietary supplements, drugs and cosmetics, not be
"misbranded." A product may be deemed an unapproved drug and "misbranded" if
it bears improper claims or improper labeling. The Food and Drug
Administration has indicated that promotional statements made about dietary
supplements on a company's website may constitute "labeling" for purposes of
compliance with the provisions of the Food, Drug, and Cosmetic Act. A
manufacturer or distributor of dietary supplements must notify the Food and
Drug Administration when it markets a product with labeling claims that the
product has an effect on the structure or function of the body. Noncompliance
with the Food, Drug, and Cosmetic Act, and recently enacted amendments to that
Act discussed below, could result in enforcement action by the Food and Drug
Administration.
The Food, Drug, and Cosmetic Act has been amended several times with respect
to dietary supplements, most recently by the Nutrition Labeling and Education
Act of 1990 and the Dietary Supplement Health and Education Act of 1994. The
Dietary Supplement Health and Education Act created a new statutory framework
16
<PAGE>
governing the definition, regulation and labeling of dietary supplements. With
respect to definition, the Dietary Supplement Health and Education Act created
a new class of dietary supplements, consisting of vitamins, minerals, herbs,
amino acids and other dietary substances for human use to supplement the diet,
as well as concentrates, metabolites, extracts or combinations of such dietary
ingredients. Generally, under the Dietary Supplement Health and Education Act,
dietary ingredients that were on the market before October 15, 1994 may be
sold without Food and Drug Administration pre-approval and without notifying
the Food and Drug Administration. In contrast, a new dietary ingredient, i.e.,
one not on the market before October 15, 1994, requires proof that it has been
used as an article of food without being chemically altered or evidence of a
history of use or other evidence of safety establishing that it is reasonably
expected to be safe. Retailers, in addition to dietary supplement
manufacturers, are responsible for ensuring that the products they market for
sale comply with these regulations. Noncompliance could result in enforcement
action by the Food and Drug Administration, an injunction prohibiting the sale
of products deemed to be noncompliant, the seizure of such products and
criminal prosecution.
The Food and Drug Administration has indicated that claims or statements
made on a company's website about dietary supplements may constitute
"labeling" and thus be subject to regulation by the Food and Drug
Administration. With respect to labeling, the Dietary Supplement Health and
Education Act amends, for dietary supplements, the Nutrition Labeling and
Education Act by providing that "statements of nutritional support," also
referred to as "structure/function claims," may be used in dietary supplement
labeling without Food and Drug Administration pre-approval, provided certain
requirements are met. These statements may describe how particular dietary
ingredients affect the structure or function of the body, or the mechanism of
action by which a dietary ingredient may affect body structure or function,
but may not state a drug claim, i.e., a claim that a dietary supplement will
diagnose, mitigate, treat, cure or prevent a disease. A company making a
"statement of nutritional support" must possess substantiating evidence for
the statement, disclose on the label that the Food and Drug Administration has
not reviewed the statement and that the product is not intended for use for a
disease and notify the Food and Drug Administration of the statement within 30
days after its initial use. It is possible that the statements presented in
connection with product descriptions on Ucellit.com's site may be determined
by the Food and Drug Administration to be drug claims rather than acceptable
statements of nutritional support. In addition, some of Ucellit.com's
suppliers may incorporate objectionable statements directly in their product
names or on their products' labels, or otherwise fail to comply with
applicable manufacturing, labeling and registration requirements for over-the-
counter or homeopathic drugs or dietary supplements. As a result,
Vitamineralherb.com may have to remove objectionable statements or products
from its site or modify these statements, or product names or labels, in order
to comply with Food and Drug Administration regulations. Such changes could
interfere with Ucellit.com's marketing of products and could cause us to incur
significant additional expenses.
In addition, the Dietary Supplement Health and Education Act allows the
dissemination of "third party literature" in connection with the sale of
dietary supplements to consumers at retail if the publication meets statutory
requirements. Under the Dietary Supplement Health and Education Act, "third
party literature" may be distributed if, among other things, it is not false
or misleading, no particular manufacturer or brand of dietary supplement is
promoted, a balanced view of available scientific information on the subject
matter is presented and there is physical separation from dietary supplements
in stores. The extent to which this provision may be used by online retailers
is not yet clear, and Ucellit.com cannot assure you that all pieces of "third
party literature" that may be disseminated in connection with the products
Ucellit.com offers for sale will be determined to be lawful by the Food and
Drug Administration. Any such failure could render the involved product an
unapproved drug or a "misbranded" product, potentially subjecting us to
enforcement action by the Food and Drug Administration, and could require the
removal of the noncompliant literature from Vitamineralherb.com's website or
the modification of Ucellit.com's selling methods, interfering with
Ucellit.com's continued marketing of that product and causing us to incur
significant additional expenses. Given the fact that the Dietary Supplement
Health and Education Act was enacted only five years ago, the Food and Drug
Administration's regulatory policy and enforcement positions on certain
aspects of the new law are still evolving. Moreover, ongoing and future
litigation between dietary supplement companies and the Food and Drug
17
<PAGE>
Administration will likely further refine the legal interpretations of the
Dietary Supplement Health and Education Act. As a result, the regulatory
status of certain types of dietary supplement products, as well as the nature
and extent of permissible claims will remain unclear for the foreseeable
future. Two areas in particular that pose potential regulatory risk are the
limits on claims implying some benefit or relationship with a disease or
related condition and the application of the physical separation requirement
for "third party literature" as applied to Internet sales.
In addition to the regulatory scheme under the Food, Drug and Cosmetic Act,
the advertising and promotion of dietary supplements, foods, over-the-counter
drugs and cosmetics is subject to scrutiny by the Federal Trade Commission.
The Federal Trade Commission Act prohibits "unfair or deceptive" advertising
or marketing practices, and the Federal Trade Commission has pursued numerous
food and dietary supplement manufacturers and retailers for deceptive
advertising or failure to substantiate promotional claims, including, in many
instances, claims made via the Internet. The Federal Trade Commission has the
power to seek administrative or judicial relief prohibiting a wide variety of
claims, to enjoin future advertising, to seek redress or restitution payments
and to seek a consent order and seek monetary penalties for the violation of a
consent order. In general, existing laws and regulations apply fully to
transactions and other activity on the Internet. The Federal Trade Commission
is in the process of reviewing its policies regarding the applicability of its
rules and its consumer protection guides to the Internet and other electronic
media. The Federal Trade Commission has already undertaken a new monitoring
and enforcement initiative, "Operation Cure-All," targeting allegedly bogus
health claims for products and treatments offered for sale on the Internet.
Many states impose their own labeling or safety requirements that differ from
or add to existing federal requirements.
Ucellit.com cannot predict the nature of any future Canadian or U.S. laws,
regulations, interpretations or applications, nor can it determine what effect
additional governmental regulations or administrative orders, when and if
promulgated, would have on its business in the future. Although the regulation
of dietary supplements is less restrictive than that of drugs and food
additives, Ucellit.com cannot assure you that the current statutory scheme and
regulations applicable to dietary supplements will remain less restrictive.
Further, Ucellit.com cannot assure you that, under existing laws and
regulations, or if more stringent statutes are enacted, regulations are
promulgated or enforcement policies are adopted, it is or will be in
compliance with these existing or new statutes, regulations or enforcement
policies without incurring material expenses or adjusting its business
strategy. Any laws, regulations, enforcement policies, interpretations or
applications applicable to Ucellit.com's business could require the
reformulation of certain products to meet new standards, the recall or
discontinuance of certain products not capable of reformulation, additional
record keeping, expanded documentation of the properties of certain products,
expanded or different labeling or scientific substantiation.
Regulation of the Internet. In general, existing laws and regulations apply
to transactions and other activity on the Internet; however, the precise
applicability of these laws and regulations to the Internet is sometimes
uncertain. The vast majority of such laws were adopted prior to the advent of
the Internet and, as a result, do not contemplate or address the unique issues
of the Internet or electronic commerce. Nevertheless, numerous federal and
state government agencies have already demonstrated significant activity in
promoting consumer protection and enforcing other regulatory and disclosure
statutes on the Internet. Additionally, due to the increasing use of the
Internet as a medium for commerce and communication, it is possible that new
laws and regulations may be enacted with respect to the Internet and
electronic commerce covering issues such as user privacy, freedom of
expression, advertising, pricing, content and quality of products and
services, taxation, intellectual property rights and information security. The
adoption of such laws or regulations and the applicability of existing laws
and regulations to the Internet may impair the growth of Internet use and
result in a decline in Ucellit.com's sales.
A number of legislative proposals have been made at the federal, state and
local level, and by foreign governments, that would impose additional taxes on
the sale of goods and services over the Internet, and certain states have
taken measures to tax Internet-related activities. Although Congress recently
placed a three-year moratorium on new state and local taxes on Internet access
or on discriminatory taxes on electronic commerce, existing state or local
laws were expressly excepted from this moratorium. Further, once this
moratorium is lifted,
18
<PAGE>
some type of federal and/or state taxes may be imposed upon Internet commerce.
Such legislation or other attempts at regulating commerce over the Internet
may substantially impair the growth of commerce on the Internet and, as a
result, adversely affect Ucellit.com's opportunity to derive financial benefit
from such activities.
Employees
Ucellit.com is a development stage company and currently has no employees.
Ucellit.com is currently managed by Michael Kirsh, its sole officer and
director. Ucellit.com looks to Mr. Kirsh for his entrepreneurial skills and
talents. For a complete discussion of Mr. Kirsh's experience, please see
"Directors and Executive Officers." Management plans to use consultants,
attorneys and accountants as necessary and does not plan to engage any full-
time employees in the near future. Ucellit.com may hire marketing employees
based on the projected size of the market and the compensation necessary to
retain qualified sales employees. A portion of any employee compensation
likely would include the right to acquire stock in Ucellit.com, which would
dilute the ownership interest of holders of existing shares of its common
stock.
Available Information and Reports to Securities Holders
Ucellit.com has filed with the Securities and Exchange Commission a
registration statement on Form SB-2 with respect to the common stock offered
by this prospectus. This prospectus, which constitutes a part of the
registration statement, does not contain all of the information set forth in
the registration statement or the exhibits and schedules which are part of the
registration statement. For further information with respect to Ucellit.com
and its common stock, see the registration statement and the exhibits and
schedules thereto. Any document Ucellit.com files may be read and copied at
the Commission's Public Reference Room located at 450 Fifth Street N.W.,
Washington D.C. 20549, and the public reference rooms in New York, New York,
and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Ucellit.com's filings
with the Commission are also available to the public from the Commission's
website at http://www.sec.gov.
Upon completion of this offering, Ucellit.com will become subject to the
information and periodic reporting requirements of the Securities Exchange Act
and, accordingly, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the
Commission's public reference rooms, and the website of the Commission
referred to above.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of Ucellit.com's financial condition
and results of operations should be read in conjunction with the Financial
Statements and accompanying notes and the other financial information
appearing elsewhere in this Prospectus.
This prospectus contains forward-looking statements, the accuracy of which
involve risks and uncertainties. Words such as "anticipates," "believes,"
"plans," "expects," "future," "intends" and similar expressions are used to
identify forward-looking statements. This prospectus also contains forward-
looking statements attributed to certain third parties relating to their
estimates regarding the potential markets for Vitamineralherb products.
Prospective investors should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Ucellit.com's
actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by
Ucellit.com described in "Risk Factors" and elsewhere in this prospectus. The
following discussion and analysis should be read in conjunction with
Ucellit.com's Financial Statements and Notes thereto and other financial
information included elsewhere in this prospectus.
19
<PAGE>
Results of Operations
During the period from March 14, 2000 through March 31, 2000, Ucellit.com
has engaged in no significant operations other than organizational activities,
acquisition of the rights to market Vitamineralherb and preparation for
registration of its securities under the Securities Act of 1933, as amended.
No revenues were received by Ucellit.com during this period.
For the current fiscal year, Ucellit.com anticipates incurring a loss as a
result of organizational expenses, expenses associated with registration under
the Securities Act of 1933, and expenses associated with setting up a company
structure to begin implementing its business plan. Ucellit.com anticipates
that until these procedures are completed, it will not generate revenues, and
may continue to operate at a loss thereafter, depending upon the performance
of the business.
Ucellit.com's business plan is to determine the feasibility of marketing the
Vitamineralherb products in various markets, and, if the products prove to be
in demand, begin marketing and selling Vitamineralherb products.
Liquidity and Capital Resources
Ucellit.com remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
shareholders' equity. Consequently, Ucellit.com's balance sheet as of March
31, 2000, reflects total assets of $35,000, in the form of a license and
capitalized organizational costs. Organizational expenses of $3,000 were paid
for by the sole shareholder and expensed to operations.
Ucellit.com expects to carry out its plan of business as discussed above.
Ucellit.com has no immediate expenses, other than the $3,000 of organizational
expenses incurred and paid by the sole shareholder on behalf of the company
and $3,000 of additional expenses to be incurred. Mr. Kirsh will serve in his
capacity as sole officer and director of Ucellit.com without compensation
until a market is developed for the Vitamineralherb products.
In addition, Ucellit.com may engage in a combination with another business.
Ucellit.com cannot predict the extent to which its liquidity and capital
resources will be diminished prior to the consummation of a business
combination or whether its capital will be further depleted by the operating
losses (if any) of the business entity with which Ucellit.com may eventually
combine. Ucellit.com has engaged in discussions concerning potential business
combinations, but has not entered into any agreement for such a combination.
Ucellit.com will need additional capital to carry out its business plan or
to engage in a business combination. No commitments to provide additional
funds have been made by management or other shareholders. Accordingly, there
can be no assurance that any additional funds will be available on terms
acceptable to Ucellit.com or at all. Ucellit.com has no commitments for
capital expenditures.
DESCRIPTION OF PROPERTY
Ucellit.com currently maintains limited office space, occupied by Michael
Kirsh, for which it pays no rent. Its address is 1177 West Hastings, Suite
2110, Vancouver, British Columbia V6E 2K3, Canada and its phone number is
(604) 687-2199. Ucellit.com does not believe that it will need to obtain
additional office space at any time in the foreseeable future until its
business plan is more fully implemented.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a director of
Ucellit.com, and no owner of five percent or more of Ucellit.com's outstanding
shares or any member of their immediate family has entered into or proposed
any transaction in which the amount involved exceeds $60,000.
20
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No established public trading market exists for Ucellit.com's securities.
Ucellit.com has no common equity subject to outstanding purchase options or
warrants. Ucellit.com has no securities convertible into its common equity.
There is no common equity that could be sold pursuant to Rule 144 under the
Securities Act or that Ucellit.com has agreed to register under the Securities
Act for sale by shareholders. Except for this offering, there is no common
equity that is being, or has been publicly proposed to be, publicly offered by
Ucellit.com.
As of March 31, 2000, there were 1,500,000 shares of common stock
outstanding, held by 1 shareholder of record. Upon effectiveness of the
registration statement that includes this prospectus, all of Ucellit.com's
outstanding shares will be eligible for sale.
To date Ucellit.com has not paid any dividends on its common stock and does
not expect to declare or pay any dividends on its common stock in the
foreseeable future. Payment of any dividends will depend upon Ucellit.com's
future earnings, if any, its financial condition, and other factors as deemed
relevant by the Board of Directors.
EXECUTIVE COMPENSATION
No officer or director has received any remuneration from Ucellit.com.
Although there is no current plan in existence, it is possible that
Ucellit.com will adopt a plan to pay or accrue compensation to its officers
and directors for services related to the implementation of Ucellit.com's
business plan. Ucellit.com has no stock option, retirement, incentive, defined
benefit, actuarial, pension or profit-sharing programs for the benefit of
directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future. Ucellit.com has
no employment contract or compensatory plan or arrangement with any executive
officer of Ucellit.com. The director currently does not receive any cash
compensation from Ucellit.com for his service as a member of the board of
directors. There is no compensation committee, and no compensation policies
have been adopted. See "Certain Relationships and Related Transactions."
21
<PAGE>
UCELLIT.COM INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Index
-----
<S> <C>
Report of Independent Auditors............................................ F-1
Balance Sheet............................................................. F-2
Statement of Operations................................................... F-3
Statement of Cash Flows................................................... F-4
Statement of Stockholders' Equity......................................... F-5
Notes to the Financial Statements......................................... F-6
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
Ucellit.com Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Ucellit.com Inc. (A
Development Stage Company) as of March 31, 2000 and the related statements of
operations, stockholders' equity and cash flows for the period from March 14,
2000 (Date of Inception) to March 31, 2000. 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 U.S. 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 aforementioned financial statements present fairly, in
all material respects, the financial position of Ucellit.com Inc. (A
Development Stage Company), as of March 31, 2000, and the results of its
operations and its cash flows for the period from March 14, 2000 (Date of
Inception) to March 31, 2000, in conformity with U.S. generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated any revenues or conducted
any operations since inception. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also discussed in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Elliott Tulk Pryce Anderson
CHARTERED ACCOUNTANTS
Vancouver, Canada
March 31, 2000
F-1
<PAGE>
UCELLIT.COM INC.
(A Development Stage Company)
BALANCE SHEET
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
March 31,
2000
---------
ASSETS
------
<S> <C>
License (Notes 3 and 4).......................................... $35,000
=======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C>
Current Liabilities
Note payable (Note 4).......................................... $28,000
-------
Stockholders' Equity
Common Stock, 100,000,000 common shares authorized with a par
value of $.0001; 20,000,000 preferred shares with a par value
of $.0001; 1,500,000 common shares issued and outstanding..... 150
Additional Paid in Capital..................................... 14,850
Preferred Stock, 20,000,000 preferred shares authorized with a
par value of $.0001; none issued.............................. --
Deficit Accumulated During the Development Stage............... (8,000)
-------
7,000
-------
$35,000
=======
Contingent Liability (Note 1)
Commitment (Note 3)
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-2
<PAGE>
UCELLIT.COM INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
From March 14, 2000
(Date of Inception)
to March 31, 2000
-------------------
<S> <C>
Revenue................................................ $ --
-------
Expenses
Legal................................................ 8,000
-------
Net Loss............................................... $(8,000)
=======
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-3
<PAGE>
UCELLIT.COM INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
From March 14, 2000
(Date of Inception)
to March 31, 2000
-------------------
<S> <C>
Cash Flows to Operating Activities......................... $ --
Net loss................................................. (8,000)
Non-cash item............................................
Note payable............................................. 8,000
-------
Net Cash Used by Operating Activities...................... --
-------
Change in cash............................................. --
Cash--beginning of period.................................. --
-------
Cash--end of period........................................ --
=======
Non-Cash Financing Activities
A total of 1,500,000 shares were issued to a director at
a fair market value of
$0.01 per share for the acquisition of a License (Notes
3 and 5)................................................ 15,000
A note payable was issued to a director for the
acquisition of a License
(Notes 3 and 5)......................................... 20,000
-------
$35,000
=======
Supplemental Disclosures
Interest paid............................................ --
Income tax paid.......................................... --
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-4
<PAGE>
UCELLIT.COM INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
From March 14, 2000 (Date of Inception) to March 31, 2000
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
---------------- Paid-in Development
Shares Amount Capital Total Stage
--------- ------ ---------- ------- -----------
<S> <C> <C> <C> <C> <C>
Balance--March 14, 2000
(Date of Inception)....... -- $ -- $ -- $ -- $ --
Stock issued for a
license at a fair market
value of $0.01 share.... 1,500,000 150 14,850 15,000 --
Net loss for the period.. -- -- -- -- (8,000)
--------- ----- ------- ------- -------
Balance--March 31, 2000.... 1,500,000 $ 150 $14,850 $15,000 $(8,000)
========= ===== ======= ======= =======
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-5
<PAGE>
UCELLIT.COM INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(expressed in U.S. dollars)
1. DEVELOPMENT STAGE COMPANY
Ucellit.com Inc. herein (the "Company") was incorporated in the State of
Washington, U.S.A. on March 14, 2000. The Company acquired a license to market
and distribute vitamins, minerals, nutritional supplements, and other health
and fitness products in which the grantor of the license offers these products
for sale from various suppliers on their Web Site.
The Company is in the development stage.
In a development stage company, management devotes most of its activities in
developing a market for its products. Planned principal activities have not
yet begun. The ability of the Company to emerge from the development stage
with respect to any planned principal business activity is dependent upon its
successful efforts to raise additional equity financing and/or attain
profitable operations. There is no guarantee that the Company will be able to
raise any equity financing or sell any of its products at a profit. There is
substantial doubt regarding the Company's ability to continue as a going
concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Year end
The Company's fiscal year end is December 31.
(b) License
The cost to acquire a license is capitalized as incurred. These costs
will be amortized on a straight-line basis over the next twelve months,
commencing April 1, 2000.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the periods. Actual results could differ from those estimates.
3. LICENSE
The Company's only asset is a license to market vitamins, minerals,
nutritional supplements and other health and fitness products through the
Grantor's Web Site. The Company desires to market these products to medical
practitioners, alternative health professionals, martial arts studios and
instructors, sports and fitness trainers, other health and fitness
practitioners, school and other fund raising programs and other similar types
of customers in the Province of Ontario, Canada. The license was acquired on
March 20, 2000 for a term of three years. The Company must pay an annual fee
of $500 for maintenance of the Grantor's Web Site commencing on the
anniversary date. The Grantor of the license retains 50% of the profits.
The Company paid total consideration of $35,000 for the license being
1,500,000 common shares and a note payable of $20,000.
F-6
<PAGE>
UCELLIT.COM INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(expressed in U.S. dollars)
4. NOTE PAYABLE
The note payable is unsecured, non-interest bearing and has no specific
terms of repayment.
5. RELATED PARTY TRANSACTION
The License referred to in Note 3 was assigned to the Company by the sole
director and President of the Company for consideration of 1,500,000 shares
having a fair market value of $15,000 and a note payable of $20,000.
The Grantor of the License is not related to the Company.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
F-7
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Ucellit.com's Articles of Incorporation provide that it must indemnify its
directors and officers to the fullest extent permitted under Washington law
against all liabilities incurred by reason of the fact that the person is or
was a director or officer of Ucellit.com or a fiduciary of an employee benefit
plan, or is or was serving at the request of Ucellit.com as a director or
officer, or fiduciary of an employee benefit plan, of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.
The effect of these provisions is potentially to indemnify Ucellit.com's
directors and officers from all costs and expenses of liability incurred by
them in connection with any action, suit or proceeding in which they are
involved by reason of their affiliation with Ucellit.com. Pursuant to
Washington law, a corporation may indemnify a director, provided that such
indemnity shall not apply on account of: (a) acts or omissions of the director
finally adjudged to be intentional misconduct or a knowing violation of law;
(b) unlawful distributions; or (c) any transaction with respect to which it
was finally adjudged that such director personally received a benefit in
money, property, or services to which the director was not legally entitled.
The bylaws of Ucellit.com, filed as Exhibit 3.2, provide that it will
indemnify its officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings against them on
account of their being or having been directors or officers of Ucellit.com,
absent a finding of negligence or misconduct in office. Ucellit.com's Bylaws
also permit it to maintain insurance on behalf of its officers, directors,
employees and agents against any liability asserted against and incurred by
that person whether or not Ucellit.com has the power to indemnify such person
against liability for any of those acts.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The securities are being registered for the account of selling shareholders,
and all of the following expenses will be borne by such shareholders. The
amounts set forth are estimates except for the SEC registration fee:
<TABLE>
<CAPTION>
Amount to
be Paid
---------
<S> <C>
SEC registration fee........................................... $ 35
Printing and engraving expenses................................ --
Attorneys' fees and expenses................................... 8,000
Accountants' fees and expenses................................. 1,500
Transfer agent's and registrar's fees and expenses............. 500
Miscellaneous.................................................. 965
-------
Total.......................................................... $11,000
=======
</TABLE>
The Registrant will bear all expenses shown above.
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of
Ucellit.com's securities without registration since its formation. No such
sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
On March 20, 2000, Ucellit.com issued 1,500,000 shares of common stock to
Michael Kirsh in compensation, along with a promissory note for $28,000, for
the license of Vitamineralherb.com rights. The issuance of the shares was
exempt from registration under Rule 506 of Regulation D, and sections 3(b) and
4(2)
II-1
<PAGE>
of the Securities Act of 1933, as amended, due to Mr. Kirsh's status as the
founder and initial management of Ucellit.com, and his status as an accredited
investor, and the limited number of investors (one).
EXHIBITS
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
4.2 Stock Subscription Agreement
5.1 Opinion re: legality
10.1 License Agreement
10.2 Assignment of License Agreement
10.3 Promissory Note
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1 Financial Data Schedule
</TABLE>
UNDERTAKINGS
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities
offered, and the Offering of the securities of the securities at that time
to be the initial bona fide Offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the Offering.
(4) Provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(5) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this registration statement as
of the time the Commission declared it effective.
(6) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of the securities at that time as the initial
bona fide Offering of those securities.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Vancouver, British Columbia, Canada,
on March 31, 2000.
UCELLIT.COM INC.
/s/ Michael Kirsh
By: _________________________________
Michael Kirsh
President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael Kirsh President, Secretary, March 31, 2000
______________________________________ Treasurer, and Director
Michael Kirsh
</TABLE>
II-4
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION OF
UCELLIT.COM INC.
The undersigned, for the purpose of forming a corporation under the
Washington Business Corporation Act, hereby adopts the following Articles of
Incorporation.
ARTICLE I
The name of the corporation is "Ucellit.com Inc.".
ARTICLE II
2.1. Authorized Capital
The total number of shares that this corporation is authorized to issue is
120,000,000, consisting of 100,000,000 shares of Common Stock having a par value
of $0.0001 per share and 20,000,000 shares of Preferred Stock having a par value
of $0.0001 per share. The Common Stock is subject to the rights and preferences
of the Preferred Stock as set forth below.
2.2. Issuance of Preferred Stock by Class and in Series
The Preferred Stock may be issued from time to time in one or more classes
and one or more series within such classes in any manner permitted by law and
the provisions of these Articles of Incorporation, as determined from time to
time by the Board of Directors and stated in the resolution or resolutions
providing for its issuance, prior to the issuance of any shares. The Board of
Directors shall have the authority to fix and determine and to amend the
designation, preferences, limitations and relative rights of the shares
(including, without limitation, such matters as dividends, redemption,
liquidation, conversion and voting) of any class or series that is wholly
unissued or to be established. Unless otherwise specifically provided in the
resolution establishing any class or series, the Board of Directors shall
further have the authority, after the issuance of
1
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
shares of a class or series whose number it has designated, to amend the
resolution establishing such class or series to decrease the number of shares of
that class or series, but not below the number of shares of such class or series
then outstanding.
ARTICLE III
The purpose of this corporation is to engage in any business, trade or
activity that may lawfully be conducted by a corporation organized under the
Washington Business Corporation Act and to engage in any and all such activities
as are incidental or conducive to the attainment of the foregoing purpose or
purposes.
ARTICLE IV
No preemptive rights shall exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.
ARTICLE V
The right to cumulate votes in the election of Directors shall not exist
with respect to shares of stock of this corporation.
ARTICLE VI
6.1. Number of Directors
The Board of Directors shall be composed of not less than one nor more than
six Directors. Except with respect to the initial Director, the specific number
of Directors shall be set by resolution of the Board of Directors or, if the
Directors in office constitute fewer than a quorum of the Board of Directors, by
the affirmative vote of a majority of all the Directors in office. The number
of Directors of this corporation may be increased or decreased from time to time
in the
2
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
manner provided herein, but no decrease in the number of Directors shall have
the effect of shortening the term of any incumbent Director.
6.2. Classification of Directors
The Directors shall be divided into three classes, with each class to be as
nearly equal in number as possible, as specified by resolution of the Board of
Directors or, if the Directors in office constitute fewer than a quorum of the
Board of Directors, by the affirmative vote of a majority of all the Directors
in office. The term of office of Directors of the first class shall expire at
the first annual meeting of shareholders after their election. The term of
office of Directors of the second class shall expire at the second annual
meeting after their election. The term of office of Directors of the third
class shall expire at the third annual meeting after their election. At each
annual meeting after such classification, a number of Directors equal to the
number of the class whose term expires at the time of such meeting shall be
elected to hold office until the third succeeding annual meeting. Absent his or
her death, resignation or removal, a Director shall continue to serve despite
the expiration of the Director's term until his or her successor shall have been
elected and qualified or until there is a decrease in the number of Directors.
6.3. Removal of Directors
The shareholders may remove one or more Directors with or without cause,
but only at a special meeting called for the purpose of removing the Director or
Directors, and the meeting notice must state that the purpose, or one of the
purposes, of the meeting is removal of the Director or Directors.
3
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
6.4. Vacancies on Board of Directors
If a vacancy occurs on the Board of Directors, including a vacancy
resulting from an increase in the number of Directors, the Board of Directors
may fill the vacancy, or, if the Directors in office constitute fewer than a
quorum of the Board of Directors, they may fill the vacancy by the affirmative
vote of a majority of all the Directors in office. The shareholders may fill a
vacancy only if there are no Directors in office.
6.5. Initial Board of Directors
The initial Board of Directors shall consist of one Director, who shall be
in the first class of Directors, and the name and address of the person who
shall serve as such Director until the first annual meeting of shareholders or
until his successor is elected and qualified is:
Michael Kirsh Suite 2110
1177 West Hastings
Vancouver, B.C.
CANADA V6E 2K3
ARTICLE VII
This corporation reserves the right to amend or repeal any of the
provisions contained in these Articles of Incorporation in any manner now or
hereafter permitted by the Washington Business Corporation Act, and the rights
of the shareholders of this corporation are granted subject to this reservation.
ARTICLE VIII
The Board of Directors shall have the power to adopt, amend or repeal the
Bylaws of this corporation, subject to the power of the shareholders to amend or
repeal such Bylaws. The
4
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
shareholders shall also have the power to amend or repeal the Bylaws of this
corporation and to adopt new Bylaws.
ARTICLE IX
9.1. Shareholder Actions
Any action required or permitted to be taken at a shareholders meeting may
be taken without a meeting or a vote if either:
(a) the action is taken by written consent of all shareholders entitled
to vote on the action; or
(b) so long as this corporation is not a public company, the action is
taken by written consent of shareholders holding of record, or otherwise
entitled to vote, in the aggregate 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 on the action were present and voted.
To the extent that the Washington Business Corporation Act requires prior
notice of any such action to be given to nonconsenting or nonvoting
shareholders, such notice shall be made prior to the date on which the action
becomes effective, as required by the Washington Business Corporation Act. The
form of the notice shall be sufficient to apprise the nonconsenting or nonvoting
shareholder of the nature of the action to be effected, in a manner approved by
the Directors of this corporation or by the committee or officers to whom the
Board of Directors has delegated that responsibility.
5
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
9.2. Number of Votes Necessary to Approve Actions
Whenever the Washington Business Corporation Act permits a corporation's
articles of incorporation to specify that a lesser number of shares than would
otherwise be required shall suffice to approve an action by shareholders, these
Articles of Incorporation hereby specify that the number of shares required to
approve such an action shall be such lesser number.
9.3. Special Meetings of Shareholders
So long as this corporation is a public company, special meetings of the
shareholders of the corporation for any purpose may be called at any time by the
Board of Directors or, if the Directors in office constitute fewer than a quorum
of the Board of Directors, by the affirmative vote of a majority of all the
Directors in office, but such special meetings may not be called by any other
person or persons.
9.4. Quorum for Meetings of Shareholders.
Except with respect to any greater requirement contained in these Articles
of Incorporation or the Washington Business Corporation Act, one-third of the
votes entitled to be cast on a matter by the holders of shares that, pursuant to
the Articles of Incorporation or the Washington Business Corporation Act, are
entitled to vote and be counted collectively upon such matter, represented in
person or by proxy, shall constitute a quorum of such shares at a meeting of
shareholders.
ARTICLE X
To the full extent that the Washington Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of
6
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
Directors, a Director of this corporation shall not be liable to this
corporation or its shareholders for monetary damages for conduct as a Director.
Any amendments to or repeal of this Article X shall not adversely affect any
right or protection of a Director of this corporation for or with respect to any
acts or omissions of such Director occurring prior to such amendment or repeal.
ARTICLE XI
11.1. Indemnification.
The corporation shall indemnify its directors to the full extent permitted
by the Washington Business Corporation Act now or hereafter in force. However,
such indemnity shall not apply on account of: (a) acts or omissions of the
director finally adjudged to be intentional misconduct or a knowing violation of
law; (b) conduct of the director finally adjudged to be in violation of RCW
23B.08.310; or (c) any transaction with respect to which it was finally adjudged
that such director personally received a benefit in money, property, or services
to which the director was not legally entitled. The corporation shall advance
expenses for such persons pursuant to the terms set forth in the Bylaws, or in a
separate Board resolution or contract.
11.2. Authorization.
The Board of Directors may take such action as is necessary to carry out
these indemnification and expense advancement provisions. It is expressly
empowered to adopt, approve, and amend from time to time such Bylaws,
resolutions, contracts, or further indemnification and expense advancement
arrangements as may be permitted by law, implementing these provisions. Such
Bylaws, resolutions, contracts or further arrangements
7
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
shall include but not be limited to implementing the manner in which
determinations as to any indemnity or advancement of expenses shall be made.
11.3. Effect of Amendment.
No amendment or repeal of this Article shall apply to or have any effect on
any right to indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
ARTICLE XII
The name and address of the incorporator is:
Vicki E. Orrico Ogden Murphy Wallace, P.L.L.C.
1601 Fifth Ave., Suite 2100
Seattle, WA 98101-1686
The incorporator's authority on behalf of this corporation is limited to forming
it by the filing of these Articles of Incorporation, and the incorporator has no
further power or authority on behalf of the corporation, express or implied, by
virtue of being the incorporator.
ARTICLE XIII
The street address of the initial registered office of the corporation is
Ogden Murphy Wallace, P.L.L.C., 1601 Fifth Ave., Suite 2100, Seattle, Washington
98101-1686. The name of its initial registered agent at that address is Vicki
E. Orrico.
ARTICLE XIV
These Articles of Incorporation shall become effectiveupon filing.
8
<PAGE>
Articles of Incorporation
Ucellit.com Inc.
IN WITNESS WHEREOF, the incorporator has signed these Articles of
Incorporation this _____ day of _____________, 2000.
/s/
-----------------------------
Vicki E. Orrico
Incorporator
9
<PAGE>
Exhibit 3.2
BYLAWS
of
UCELLIT.COM, INC.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
SECTION 1 - OFFICES.............................................................................................. 1
SECTION 2 - SHAREHOLDERS 1
2.1 Annual Meeting................................................................................ 1
2.2 Special Meetings.............................................................................. 1
2.3 Meetings by Communications Equipment.......................................................... 2
2.4 Date, Time and Place of Meetings.............................................................. 2
2.5 Notice of Meeting............................................................................. 2
2.6 Waiver of Notice.............................................................................. 2
2.7 Fixing of Record Date for Determining Shareholders............................................ 3
2.8 Voting Record................................................................................. 3
2.9 Quorum........................................................................................ 3
2.10 Manner of Acting.............................................................................. 4
2.11 Proxies....................................................................................... 4
2.12 Voting Shares................................................................................. 4
2.13 Voting for Directors.......................................................................... 4
2.14 Action by Shareholders Without a Meeting...................................................... 4
SECTION 3 - BOARD OF DIRECTORS................................................................................... 5
3.1 General Powers................................................................................ 5
3.2 Number, Classification and Tenure............................................................. 5
3.3 Annual and Regular Meetings................................................................... 6
3.4 Special Meetings.............................................................................. 6
3.5 Meetings by Communications Equipment.......................................................... 6
3.6 Notice of Special Meetings.................................................................... 6
3.6.1 Personal Delivery.............................................................. 6
3.6.2 Delivery by Mail............................................................... 6
3.6.3 Delivery by Private Carrier.................................................... 7
3.6.4 Facsimile Notice............................................................... 7
3.6.5 Delivery by Telegraph.......................................................... 7
3.6.6 Oral Notice.................................................................... 7
3.7 Waiver of Notice.............................................................................. 7
3.7.1 In Writing..................................................................... 7
3.7.2 By Attendance.................................................................. 7
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
3.8 Quorum........................................................................................ 7
3.9 Manner of Acting.............................................................................. 8
3.10 Presumption of Assent......................................................................... 8
3.11 Action by Board or Committees Without a Meeting............................................... 8
3.12 Resignation................................................................................... 8
3.13 Removal....................................................................................... 9
3.14 Vacancies..................................................................................... 9
3.15 Executive and Other Committees................................................................ 9
3.15.1 Creation of Committees......................................................... 9
3.15.2 Authority of Committees........................................................ 9
3.15.3 Minutes of Meetings............................................................10
3.15.4 Removal........................................................................10
3.16 Compensation..................................................................................10
SECTION 4 - OFFICERS.............................................................................................10
4.1 Appointment and Term..........................................................................10
4.2 Resignation...................................................................................10
4.3 Removal.......................................................................................11
4.4 Contract Rights of Officers...................................................................11
4.5 Chairman of the Board.........................................................................11
4.6 President.....................................................................................11
4.7 Vice President................................................................................11
4.8 Secretary.....................................................................................11
4.9 Treasurer.....................................................................................12
4.10 Salaries......................................................................................12
SECTION 5 - CONTRACTS, LOANS, CHECKS AND DEPOSITS................................................................12
5.1 Contracts.....................................................................................12
5.2 Loans to the Corporation......................................................................12
5.3 Checks, Drafts, Etc...........................................................................12
5.4 Deposits......................................................................................13
SECTION 6 - CERTIFICATES FOR SHARES AND THEIR TRANSFER...........................................................13
6.1 Issuance of Shares............................................................................13
6.2 Certificates for Shares.......................................................................13
6.3 Stock Records.................................................................................13
6.4 Restriction on Transfer.......................................................................13
6.5 Transfer of Shares............................................................................14
6.6 Lost or Destroyed Certificates................................................................14
SECTION 7 - BOOKS AND RECORDS............................................................................. 14
SECTION 8 - ACCOUNTING YEAR............................................................................... 15
SECTION 9 - SEAL.......................................................................................... 15
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 10 - INDEMNIFICATION 15
10.1 Right to Indemnification............................................................................. 15
10.2 Restrictions on Indemnification...................................................................... 16
10.3 Advancement of Expenses.............................................................................. 16
10.4 Right of Indemnitee to Bring Suit.................................................................... 16
10.5 Procedures Exclusive................................................................................. 17
10.6 Nonexclusivity of Rights............................................................................. 17
10.7 Insurance, Contracts and Funding..................................................................... 17
10.8 Identification of Employees and Agents of the Corporation............................................ 17
10.9 Persons Serving Other Entities....................................................................... 17
SECTION 11 - LIMITATION OF LIABILITY............................................................................. 18
SECTION 12 - AMENDMENTS.......................................................................................... 18
</TABLE>
iii
<PAGE>
BYLAWS
of
UCELLIT.COM, INC.
SECTION 1. OFFICES
The principal office of the corporation shall be located at the principal
place of business or such other place as the Board of Directors ("Board") may
designate. The corporation may have such other offices as the Board may
designate or as the business of the corporation may require.
SECTION 2. SHAREHOLDERS
2.1 Annual Meeting
The annual meeting of the shareholders to elect Directors and transact such
other business as may properly come before the meeting shall be held on a date
not more than 180 days after the end of the corporation's fiscal year, such date
and time to be determined by the Board.
2.2 Special Meetings
(a) Subject to paragraph 2.2(b), the Chairman of the Board, the President
or the Board may call special meetings of the shareholders for any
purpose. Further, a special meeting of the shareholders shall be held
if the holders of not less than 25% of all the votes entitled to be
cast on any issue proposed to be considered at such special meeting
have dated, signed and delivered to the Secretary one or more written
demands for such meeting, describing the purpose or purposes for which
it is to be held.
(b) So long as the Corporation is a public company, special meetings of
the shareholders of the Corporation for any purpose may be called at
any time by the Board or, if the Directors in office constitute fewer
than a quorum of the Board, by the affirmative vote of a majority of
all the Directors in office, but such special meetings may not be
called by any other person or persons.
1
<PAGE>
2.3 Meetings by Communications Equipment
Shareholders may participate in any meeting of the shareholders by any
means of communication by which all persons participating in the meeting can
hear each other during the meeting. Participation by such means shall
constitute presence in person at a meeting.
2.4 Date, Time and Place of Meeting
Except as otherwise provide in these Bylaws, all meetings of shareholders,
including those held pursuant to demand by shareholders, shall be held on such
date and at such time and place designated by or at the direction of the Board.
2.5 Notice of Meeting
Written notice stating the place, day and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called shall be given by or at the direction of the Board, the Chairman of the
Board, the President or the Secretary to each shareholder entitled to notice of
or to vote at the meeting not less than 10 nor more than 60 days before the
meeting, except that notice of a meeting to act on an amendment to the Articles
of Incorporation, a plan of merger or share exchange, the sale, lease, exchange
or other disposition of all or substantially all of the corporation's assets
other than in the regular course of business or the dissolution of the
corporation shall be given not less than 20 or more than 60 days before such
meeting. If an annual or special shareholders' meeting is adjourned to a
different date, time or place, no notice of the new date, time or place is
required if they are announced at the meeting before adjournment. If a new
record date for the adjourned meeting is or must be fixed, notice of the
adjourned meeting must be given to shareholders entitled to notice of or to vote
as of the new record date.
Such notice may be transmitted by mail, private carrier, personal delivery,
telegraph, teletype or communications equipment that transmits a facsimile of
the notice. If those forms of written notice are impractical in the view of the
Board, the Chairman of the Board, the President or the Secretary, written notice
may be transmitted by an advertisement in a newspaper of general circulation in
the area of the corporation's principal office. If such notice is mailed, it
shall be deemed effective when deposited in the official government mail, first-
class postage prepaid, properly addressed to the shareholder at such
shareholder's address as it appears in the corporation's current record of
shareholders. Notice given in any other manner shall be deemed effective when
dispatched to the shareholder's address, telephone number or other number
appearing on the records of the corporation. Any notice given by publication as
herein provided shall be deemed effective five days after first publication.
2.6 Waiver of Notice
Whenever any notice is required to be given by an shareholder under the
provisions of these Bylaws, the Articles of Incorporation or the Washington
Business Corporation Act, a waiver of notice in writing, signed by the person or
persons entitled to such notice and delivered
2
<PAGE>
to the corporation, whether before or after the date and time of the meeting or
before or after the action to be taken by consent is effective, shall be deemed
equivalent to the giving of such notice. Further, notice of the time, place and
purpose of any meeting will be deemed to be waived by any shareholder by
attendance in person or by proxy, unless such shareholder at the beginning of
the meeting objects to holding the meeting or transacting business at the
meeting.
2.7 Fixing of Record Date for Determining Shareholders
For the purpose of determining shareholders entitled (a) to notice of or to
vote at any meeting of shareholders or any adjournment thereof, (b) to demand a
special meeting, or (c) to receive payment of any dividend, or in order to make
a determination of shareholders for any other purpose, the Board may fix a
future date as the record date for any such determination. Such record date
shall be not more than 70 days, and, in case of a meeting of shareholders, not
less than 10 days, prior to the date on which the particular action requiring
such determination is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote a meeting, the
record date shall be the day immediately preceding the date on which notice of
the meeting is first given to shareholders. Such a determination shall apply to
any adjournment of the meeting unless the Board fixes a new record date, which
it shall do if the meeting is adjourned to a date more than 120 days after the
date fixed for the original meeting. If no record date is set for the
determination of shareholders entitled to receive payment of any stock, dividend
or distribution (other than one involving a purchase, redemption or other
acquisition of the corporation's shares), the record date shall be the date the
Board authorizes the stock dividend or distribution.
2.8 Voting Record
At least 10 days before each meeting of shareholders, an alphabetical list
of the shareholders entitled to notice of such meeting shall be made, arranged
by voting group and by each class or series of shares, with the address of and
number of shares held by each shareholder. This record shall be kept at the
principal office of the corporation for 10 days prior to such meeting, and shall
be kept open at such meeting, for the inspection of any shareholder or any
shareholder's agent or attorney.
2.9 Quorum
Except with respect to any greater requirement contained in the Articles of
Incorporation or the Washington Business Corporation Act, one-third of the votes
entitled to be cast on a matter by the holders of shares that, pursuant to the
Articles of Incorporation or the Washington Business Corporation Act, are
entitled to vote and be counted collectively upon such matter, represented in
person or by proxy, shall constitute a quorum of such shares at a meeting of
shareholders. If less than the required number of such votes are represented at
a meeting, a majority of the votes so represented may adjourn the meeting from
time to time. Any business may be transacted at a reconvened meeting that might
have been transacted at the meeting as originally called, provided a quorum is
present or represented at such meeting. Once a share is represented for any
purpose at a meeting other than solely to object to holding the meeting or
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transacting business, it is deemed present for quorum purposes for the remainder
of the meeting and any adjournment (unless a new record date is or must be set
for the adjourned meeting), notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.10 Manner of Acting
If a quorum is present, action on a matter other than the election of
Directors shall be approved if the votes cast in favor of the action by the
shares entitled to vote and be counted collectively upon such matter exceed the
votes cast against such action by the shares entitled to vote and be counted
collectively thereon, unless the Articles of Incorporation or the Washington
Business Corporation Act requires a greater number of affirmative votes.
Whenever the Washington Business Corporation Act permits a corporation's bylaws
to specify that a lesser number of shares than would otherwise be required shall
suffice to approve an action by shareholders, these Bylaws hereby specify that
the number of shares required to approve such an action shall be such lesser
number.
2.11 Proxies
As shareholder may vote by proxy executed in writing by the shareholder or
by his or her attorney-in-fact or agent. Such proxy shall be effective when
received by the Secretary or other officer or agent authorized to tabulate
votes. A proxy shall become invalid 11 months after the date of its execution,
unless otherwise provided in the proxy. A proxy with respect to a specified
meeting shall entitle its holder to vote at any reconvened meeting following
adjournment of such meeting but shall not be valid after the final adjournment.
2.12 Voting Shares
Except as provided in the Articles of Incorporation, each outstanding
share entitled to vote with respect to a matter submitted to a meeting of
shareholders shall be entitled to one vote upon such matter.
2.13 Voting for Directors
Each shareholder entitled to vote to an election of Directors may vote, in
person or by proxy, the number of shares owned by such shareholder for as many
persons as there are Directors to be elected and for whose election such
shareholder has a right to vote. Shareholders shall not have the right to
cumulate their votes. Unless otherwise provided in the Articles of
Incorporation, the candidates elected shall be those receiving the largest
number of votes cast, up to the number of Directors to be elected.
2.14 Action by Shareholders Without a Meeting
Any action that may be or is required to be taken at a meeting of the
shareholders may be taken without a meeting by unanimous consent if one or more
written consents setting forth the action so taken shall be signed by all the
shareholders entitled to vote with respect to the matter.
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Action may also be taken by less than unanimous consent. Action by less than
unanimous consent may be taken if one or more written consents describing the
action taken shall be signed by shareholders holding the record or otherwise
entitled to vote in the aggregate 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 on the action were present and voted. If not otherwise
fixed by the Board, the record date for determining shareholders entitled to
take action without a meeting is the date the first shareholder consent is
signed. A shareholder may withdraw a consent only by delivering a written notice
of withdrawal to the corporation prior to the time that consents sufficient to
authorize taking the action have been delivered to the corporation. Every
written consent shall bear the date of signature of each shareholder who signs
the consent. A written consent is not effective to take the action referred to
in the consent unless, within 60 days of the earliest dated consent delivered to
the corporation, written consents signed by a sufficient number of shareholders
to take action are delivered to the corporation. Unless the consent specifies a
later effective date, actions taken by written consent of the shareholders are
effective when (a) consents sufficient to authorize taking the action are in
possession of the corporation and (b) the period of advance notice required by
the Articles of Incorporation to be given to any nonconsenting or nonvoting
shareholders has been satisfied. Any such consent shall be inserted in the
minute book as if it were the minutes of a meeting of the shareholders.
SECTION 3. BOARD OF DIRECTORS
3.1 General Powers
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the corporation shall be managed under the direction
of, the Board, except as may be otherwise provided in these Bylaws, the Articles
of Incorporation or the Washington Business Corporation Act.
3.2 Number, Classification and Tenure
The Board shall be composed of not less than one nor more than six
Directors, the specific number to be set by resolution of the Board or, if the
Directors in office constitute fewer than a quorum of the Board, by the
affirmative vote of a majority of all the Directors in office. The number of
Directors may be changed from time to time as provided by the Articles of
Incorporation, but no decrease in the number of Directors shall have the effect
of shortening the term of any incumbent Director. The Directors shall be
divided into three classes, with each class to be as nearly equal in number as
possible, as specified by resolution of the Board or, if the Directors in office
constitute fewer than a quorum of the Board, by the affirmative vote of a
majority of all the Directors in office. The term of office of Directors of the
first class shall expire at the first annual meeting of shareholders after their
election. The term of office of Directors of the second class shall expire at
the second annual meeting after their election. The term of office of Directors
of the third class shall expire at the third annual meeting after their
election. At each annual meeting after such classification, a number of
Directors equal to the number of the class whose term expires at the time of
such meeting shall be elected to hold office until the third succeeding annual
meeting. Absent his or her death, resignation or removal, a
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Director shall continue to serve despite the expiration of the Director's term
until his or her successor shall have been elected and qualified or until there
is a decrease in the number of Directors. Directors need not be shareholders of
the corporation or residents of the state of Washington, and need not meet any
other qualifications.
3.3 Annual and Regular Meetings
An annual Board meeting shall be held without notice immediately after and
at the same place as the annual meeting of shareholders. By resolution the
Board, or any committee designated by the Board, may specify the time and place
for holding regular meetings without notice other than such resolution.
3.4 Special Meetings
Special meetings of the Board or any committee designated by the Board may
be called by or at the request of the Chairman of the Board, the President, the
Secretary or, in the case of special Board meetings, any one-third or more of
the Directors in office and, in the case of any special meeting of any committee
designated by the Board, by its Chairman. The person or persons authorized to
call special meetings may fix any place for holding any special Board or
committee meeting called by them.
3.5 Meetings by Communications Equipment
Members of the Board or any committee designated by the Board may
participate in a meeting of such Board or committee by, or conduct the meeting
through the use of, any means of communication by which all Directors
participating in the meeting can hear each other during the meeting.
Participation by such means shall constitute presence in person at a meeting.
3.6 Notice of Special Meetings
Notice of a special Board or committee meeting stating the place, day and
hour of the meeting shall be given to a Director in writing or orally. Neither
the business to be transacted at nor the purpose of any special meeting need be
specified in the notice of such meeting.
3.6.1 Personal Delivery
If notice is given by personal delivery, the notice shall be delivered to a
Director at least two days before the meeting.
3.6.2 Delivery by Mail
If notice is delivered by mail, the notice shall be deposited in the
official government mail at least five days before the meeting, properly
addressed to a Director at his or her address shown on the records of the
corporation, with postage thereon prepaid.
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3.6.3 Delivery by Private Carrier
If notice is given by private carrier, the notice shall be dispatched to a
Director at his or her address shown on the records of the corporation at least
three days before the meeting.
3.6.4 Facsimile Notice
If a notice is delivered by wire or wireless equipment that transmits a
facsimile of the notice, the notice shall be dispatched at least two days before
the meeting to a Director at his or her telephone number or other number
appearing on the records of the corporation.
3.6.5 Delivery by Telegraph
If notice is delivered by telegraph, the notice shall be delivered to the
telegraph company for delivery to a Director at his or her address shown on the
records of the corporation at least three days before the meeting.
3.6.6 Oral Notice
If notice is delivered by orally, by telephone or in person, the notice
shall be personally given to the Director at least two days before the meeting.
3.7 Waiver of Notice
3.7.1 In Writing
Whenever any notice is required to be given to any Director under the
provisions of these Bylaws, the Articles of Incorporation or the Washington
Business Corporation Act, a waiver thereof in writing, signed by the person or
persons entitled to such notice and delivered to the corporation, whether before
or after the date and time of the meeting, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the purpose
of any regular or special meeting of the Board or any committee designated by
the Board need be specified in the waiver of notice of such meeting.
3.7.2 By Attendance
A Director's attendance at or participation in a Board or committee meeting
shall constitute a waiver of notice of such meeting, unless the Director at the
beginning of the meeting, or promptly upon his or her arrival, objects to
holding the meeting or transacting business at such meeting and does not
thereafter vote for or assent to action taken at the meeting.
3.8 Quorum
A majority of the number of Directors fixed by or in the manner provided in
these Bylaws shall constitute a quorum for the transaction of business at any
Board meeting but, if less than a
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majority are present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice. A majority of the
number of Directors composing any committee of the Board, as established and
fixed by resolution of the Board, shall constitute a quorum for the transaction
of business at any meeting of such committee but, if less than a majority are
present at a meeting, a majority of such Directors present may adjourn the
committee meeting from time to time without further notice.
3.9 Manner of Acting
If a quorum is present when the vote is taken, the act of the majority of
the Directors present at a Board or committee meeting shall be the act of the
Board or such committee, unless the vote of a greater number is required by
these Bylaws, the Articles of Incorporation or the Washington Business
Corporation Act.
3.10 Presumption of Assent
A Director of the corporation who is present at a Board or committee
meeting at which any action is taken shall be deemed to have assented to the
action taken unless (a) the Director objects at the beginning of the meeting, or
promptly upon the Director's arrival, to holding the meeting or transacting any
business at such meeting, (b) the Director's dissent or abstention from the
action taken is entered in the minutes of the meeting, or (c) the Director
delivers written notice of the Director's dissent or abstention to the presiding
officer of the meeting before its adjournment or to the corporation within a
reasonable time after adjournment of the meeting. The right of dissent or
abstention is not available to a Director who votes in favor of the action
taken.
3.11 Action by Board or Committees Without a Meeting
Any action that could be taken at a meeting of the Board or of any
committee created by the Board may be taken without a meeting if one or more
written consents setting forth the action so taken are signed by each of the
Directors or by each committee member either before or after the action is taken
and delivered to the corporation. Action taken by written consent of Directors
without a meeting is effective when the last Director signs the consent, unless
the consent specifies a later effective date. Any such written consent shall be
inserted in the minute book as if it were the minutes of a Board or a committee
meeting.
3.12 Resignation
Any Director may resign from the Board or any committee of the Board at
any time by delivering either oral tender of resignation at any meeting of the
Board or any committee, or written notice to the Chairman of the Board, the
President, the Secretary or the Board. Any such resignation is effective upon
delivery thereof unless the notice of resignation specifies a later effective
date and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
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3.13 Removal
At a meeting of shareholders called expressly for that purpose, one or
more members of the Board, including the entire Board, may be removed with or
without cause (unless the Articles of Incorporation permit removal for cause
only) by the holders of the shares entitled to elect the Director or Directors
whose removal is sought if the number of votes cast to remove the Director
exceeds the number of votes cast not to remove the Director.
3.14 Vacancies
If a vacancy occurs on the Board, including a vacancy resulting from an
increase in the number of Directors, the Board may fill the vacancy, or, if the
Directors in office constitute fewer than a quorum of the Board, they may fill
the vacancy by the affirmative vote of a majority of all the Directors in
office. The shareholders may fill a vacancy only if there are no Directors in
office. A Director elected to fill a vacancy shall serve only until the next
election of Directors by the shareholders.
3.15 Executive and Other Committees
3.15.1 Creation of Committees
The Board, by resolution adopted by the greater of a majority of the
Directors then in office and the number of Directors required to take action in
accordance with these Bylaws, may create standing or temporary committees,
including an Executive Committee, and appoint members from its own number and
invest such committees with such powers as it may see fit, subject to such
conditions as may be prescribed by the Board, the Articles of Incorporation,
these Bylaws and applicable law. Each committee must have two or more members,
who shall serve at the pleasure of the Board.
3.15.2 Authority of Committees
Each Committee shall have and may exercise all the authority of the Board
to the extent provided in the resolution of the Board creating the committee and
any subsequent resolutions adopted in like manner, except that no such committee
shall have the authority to: (1) authorize or approve a distribution except
according to a general formula or method prescribed by the Board, (2) approve or
propose to shareholders actions or proposals required by the Washington Business
Corporation Act to be approved by shareholders, (3) fill vacancies on the Board
or any committee thereof, (4) amend the Articles of Incorporation pursuant to
RCW 23B.10.020, (5) adopt, amend or repeal Bylaws, (6) approve a plan of merger
not requiring shareholder approval, or (7) authorize or approve the issuance or
sale of contract for sale of shares, or determine the designation and relative
rights, preferences and limitations of a class or series of shares except that
the Board may authorize a committee or a senior executive officer of the
corporation to do so within limits specifically prescribed by the Board.
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3.15.3 Minutes of Meetings
All committees shall keep regular minutes of their meetings and shall cause
them to be recorded n books kept for that purpose.
3.15.4 Removal
The Board may remove any member of any committee elected or appointed by it
but only by the affirmative vote of the greater of a majority of Directors then
in office and the number of Directors required to take action in accordance with
these Bylaws.
3.16 Compensation
By Board resolution, Directors and committee members may be paid either
expenses, if any, of attendance at each Board or committee meeting, or a fixed
sum for attendance at each Board or committee meeting, or a stated salary as
Director or a committee member, or a combination of the foregoing. No such
payment shall preclude any Director or committee member from serving the
corporation in any other capacity and receiving compensation therefore.
SECTION 4. OFFICERS
4.1 Appointment and Term
The officers of the corporation shall be those officers appointed from time
to time by the Board or by any other officer empowered to do so. The Board shall
have sole power and authority to appoint executive officers. As used herein,
the term "executive officer" shall mean the President, the chief financial
officer and any other officer designated by the Board as an executive officer.
The Board or the President may appoint such other officers to hold office for
such period, have such authority and perform such duties as may be prescribed.
The Board may delegate to any other officer the power to appoint any subordinate
officers and to prescribe their respective terms of office, authority and
duties. Any two or more offices may be held by the same person. Unless an
officer dies, resigns or is removed from office, he or she shall hold office
until his or her successor is appointed.
4.2 Resignation
Any officer may resign at any time by delivering written notice to the
corporation. Any such resignation is effective upon delivery, unless the notice
of resignation specifies a later effective date, and, unless otherwise
specified, the acceptance of such resignation shall not be necessary to make it
effective.
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4.3 Removal
Any officer may be removed by the Board at any time, with or without cause.
An officer or assistant officer, if appointed by another officer, may be removed
at any time, with or without cause, by any officer authorized to appoint such
officer or assistant officer.
4.4 Contract Rights of Officers
The appointment of an officer does not itself create contract rights.
4.5 Chairman of the Board
If appointed, the Chairman of the Board shall perform such duties as shall
be assigned to him or her by the Board from time to time, and shall preside over
meetings of the Board and shareholders unless another officer is appointed or
designated by the Board of Chairman of such meetings.
4.6 President
If appointed, the President shall be the chief executive officer of the
corporation unless some other offices is to designated by the Board, shall
preside over meetings of the Board and shareholders in the absence of a Chairman
of the Board, and, subject to the Board's control, shall supervise and control
all the assets, business and affairs of the corporation. In general, the
President shall perform all duties incident to the office of President and such
other duties as are prescribed by the Board from time to time. If no Secretary
has been appointed, the President shall have responsibility for the preparation
of minutes of meetings of the Board and shareholders and for authentication of
the records of the corporation.
4.7 Vice President
In the event of the death of the President or his or her inability to act,
the Vice President (or if there is more than one Vice President, the Vice
President who was designated by the Board as the successor to the President, or
if no Vice President is so designated, the Vice President first elected to such
office) shall perform the duties of the President, except as may be limited by
resolution of the Board, with all the powers of and subject to all the
restrictions upon the President. Vice Presidents shall perform such other
duties as from time to time may be assigned to them by the President or by or at
the direction of the Board.
4.8 Secretary
If appointed, the Secretary shall be responsible for preparation of minutes
of the meetings of the Board and shareholders, maintenance of the corporation
records and stock registers, and authentication of the corporation's records,
and shall in general perform all duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him or her by
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the President or by or at the direction of the Board. In the absence of the
Secretary, an Assistant Secretary may perform the duties of the Secretary.
4.9 Treasurer
If appointed, the Treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation, receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in banks,
trust companies or other depositories selected in accordance with the provisions
of these Bylaws, and in general perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him or
her by the President or by or at the direction of the Board. In the absence of
the Treasurer, an Assistant Treasurer may perform the duties of the Treasurer.
4.10 Salaries
The salaries of the officers shall be fixed from time to time by the Board
or by any person or persons to whom the Board has delegated such authority. No
officer shall be prevented from receiving such salary by reason of the fact that
he or she is also a Director of the corporation.
SECTION 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 Contracts
The Board may authorize any officer or officers, or agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation. Such authority may be general or confined to
specific instances.
5.2 Loans to the Corporation
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the Board. Such authority may be general or confined to specific instances.
5.3 Checks, Drafts, Etc.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, or agent or agents, of the corporation and in such
manner as is from time to time determined by resolution of the Board.
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5.4 Deposits
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the Board may authorize.
SECTION 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Issuance of Shares
No shares of the corporation shall be issued unless authorized by the
Board, or by a committee designated by the Board to the extent such committee is
empowered to do so.
6.2 Certificates for Shares
Certificates representing shares of the corporation shall be signed, either
manually or in facsimile, by the President or any Vice President and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
and shall include on their face written notice of any restrictions that may be
imposed on the transferability of such shares. All certificates shall be
consecutively numbered or otherwise identified.
6.3 Stock Records
The stock transfer books shall be kept at the principal office at the
corporation or at the office of the corporation's transfer agent or registrar.
The name and address of each person to whom certificates for shares are issued,
together with the class and number of shares represented by each such
certificate and the date of issue thereof, shall be entered on the stock
transfer books of the corporation. The person in whose name shares stand on the
books of the corporation shall be deemed by the corporation to be the owner
thereof for all purposes.
6.4 Restriction on Transfer
Except to the extent that the corporation has obtained an opinion of
counsel acceptable to the corporation that transfer restrictions are not
required under applicable securities laws, or has otherwise satisfied itself
that such transfer restrictions are not required, all certificates representing
shares of the corporation shall bear a legend on the face of the certificate, or
on the reverse of the certificate if a reference to the legend is contained on
the face, which reads substantially as follows:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE
STATE SECURITIES LAWS, AND NO INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UDNER THE
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ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
INVOLVING SAID SECURITIES, (B) THIS CORPORAZTION RECEIVES AN OPINION OF
LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THIS
CORPORATION STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR
(C) THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION.
6.5 Transfer of Shares
The transfer of shares of the corporation shall be made only on the stock
transfer books of the corporation pursuant to authorization or document of
transfer made by the holder of record thereof or by his or her legal
representative, who shall furnish proper evidence of authority to transfer, or
by his or her attorney-in-fact authorized by power of attorney duly executed and
filed with the Secretary of the corporation. All certificates surrendered to
the corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificates for a like number of shares shall have been
surrendered and canceled.
6.6 Lost or Destroyed Certificates
In the case of a lost, destroyed or damaged certificate, a new certificate
may be issued in its place upon such terms and indemnity to the corporation as
the Board may prescribe.
SECTION 7. BOOKS AND RECORDS
The corporation shall:
(a) Keep as permanent records minutes of all meetings of its shareholders
and the Board, a record of all actions taken by the shareholders or the Board
without a meeting, and a record of all actions taken by a committee of the Board
exercising the authority of the Board on behalf of the corporation.
(b) Maintain appropriate accounting records.
(c) Maintain a record of its shareholders, in a form that permits
preparation of a list of the names and addresses of all shareholders, in
alphabetical order by class of shares showing the number and class of
shares held by each; provided, however, such record may be maintained by an
agent of the corporation.
(d) Maintain its records in written form or in another form capable of
conversion into written form within a reasonable time.
(e) Keep a copy of the following records at its principal office:
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1. the Articles of Incorporation and all amendments thereto as
currently in effect;
2. these Bylaws and all amendments thereto as currently in effect;
3. the minutes of all meetings of shareholders and records of all
action taken by shareholders without a meeting, for the past three
years;
4. the financial statements described in Section 23B.16.200(1) of the
Washington Business Corporation Act, for the past three years;
5. all written communications to shareholders generally within the
past three years;
6. a list of the names and business addresses of the current
Directors and officers; and
7. the most recent annual report delivered to the Washington
Secretary of State.
SECTION 8. ACCOUNTING YEAR
The accounting year of the corporation shall be the calendar year, provided
that if a different accounting year is at any time selected by the Board for
purposes of federal income taxes, or any other purpose, the accounting year
shall be the year so selected.
SECTION 9. SEAL
The Board may provide for a corporate seal that shall consist of the name
of the corporation, the state of its incorporation, and the year of its
incorporation.
SECTION 10. INDEMNIFICATION
10.1 Right to Indemnification
Each person who was, is or is threatened to be made a party to or is
otherwise involved (including, without limitation, as a witness) in any
threatened, pending or completed action, suit, claim or proceeding, whether
civil, criminal, administrative or investigative and whether formal or informal
(hereinafter a "proceedings"), by reason of the fact that he or she is or was a
Director or officer of the corporation or, that being or having been such a
Director or officer of the corporation, he or she is or was serving at the
request of the corporation as a Director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise (hereafter an "indemnitee"), whether the basis
of a proceeding is alleged action in an official capacity or in any other
capacity while serving as such a Director, officer, partner, trustee, employee
or agent, shall be indemnified and held harmless by the corporation against all
losses, claims, damages (compensatory, exemplary, punitive or otherwise),
liabilities and expenses (including attorneys' fees, costs, judgments, fines,
ERISA excise taxes or penalties, amounts to be paid in settlement and any other
expenses) actually and reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an indemnitee
who has ceased to be a Director or officer of the Corporation or a Director,
officer, partner, trustee, employee or agent of another corporation,
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partnership, joint venture, trust, employee benefit plan or other enterprise and
shall insure to the benefit of the indemnitee's heirs, executors and
administrators. Except as provided in subsection 10.4 of this Section with
respect to proceedings seeking to enforce rights to indemnification, the
corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if a proceeding (or part
thereof) was authorized or ratified by the Board. The right to indemnification
conferred in this Section shall be a contract right.
10.2 Restrictions on Indemnification
No indemnification shall be provided to any such indemnitee for acts or
omissions of the indemnitee finally adjudged to be intentional misconduct or a
knowing violation of law, for conduct of the indemnitee finally adjudged to be
in violation of Section 23B.08.310 of the Washington Business Corporation Act,
for any transaction with respect to which it was finally adjudged that such
indemnitee personally received a benefit in money, property or services to which
the indemnitee was not legally entitled or if the corporation is otherwise
prohibited by applicable law from paying such indemnification. Notwithstanding
the foregoing, if Section 23B.08.560 or any successor provision of the
Washington Business Corporation Act is hereafter amended, the restrictions on
indemnification set forth in this subsection 10.2 shall be as set forth in such
amended statutory provision.
10.3 Advancement of Expenses
The right to indemnification conferred in this Section shall include the
right to be paid by the corporation the expenses reasonably incurred in
defending any proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"). As advancement of expenses shall be made upon
delivery to the corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such indemnitee is not entitled to be indemnified.
10.4 Right of Indemnitee to Bring Suit
If a claim under subsection 10.1 or 10.3 of this Section is not paid in
full by the corporation within 60 days after a written claim has been received
by the corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be 20 days, the indemnitee
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim. If successful in whole or in part, in any such suit
or in a suit brought by the corporation to recover an advancement of expenses
pursuant to the terms of the undertaking, the indemnitee shall be entitled to be
paid also the expense of litigating such suit. The indemnitee shall be presumed
to be entitled to indemnification under this Section upon submission of a
written claim (and, in an action brought to enforce a claim for an advancement
of expenses, when the required undertaking has been tendered to the corporation)
and thereafter the corporation shall have the burden of proof to overcome the
presumption that the indemnitee is so entitled.
16
<PAGE>
10.5 Procedures Exclusive
Pursuant to Section 23B.08.560(2) or any successor provision of the
Washington Business Corporation Act, the procedures for indemnification and the
advancement of expenses set forth in this Section are in lieu of the procedures
required by Section 23B.08.550 or any successor provision of the Washington
Business Corporation Act.
10.6 Nonexclusivity of Rights
Except as set forth in subsection 10.5, the right to indemnification and
the advancement of expenses conferred in this Section shall not be exclusive of
any other right that any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation or Bylaws of the corporation, general
or specific action of the Board or shareholders, contract or otherwise.
10.7 Insurance, Contracts and Funding
The corporation may maintain insurance, at its expense, to protect itself
and any Director, officer, partner, trustee, employee or agent of the
corporation or another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any expense, liability or loss, whether
or not the corporation would have the authority or right to indemnify such
person against such expense, liability or loss under the Washington Business
Corporation Act or other law. The corporation may enter into contracts with any
Director, officer, partner, trustee, employee or agent of the corporation in
furtherance of the provisions of this section and may create a trust fund, grant
a security interest, or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Section.
10.8 Identification of Employees and Agents of the Corporation
In addition to the rights of indemnification set forth in subsection 10.1,
the corporation may, by action of the Board, grant rights to indemnification and
advancement of expenses to employees and agents or any class or group of
employees and agents of the corporation (a) with the same scope and effect as
the provisions of this Section with respect to indemnification and the
advancement of expenses of Directors and officers of the corporation; (b)
pursuant to rights granted or provided by the Washington Business Corporation
Act; or (c) as are otherwise consistent with law.
10.9 Persons Serving Other Entities
Any person who, while a Director or officer of the corporation, is or was
serving (a) as a Director, officer, employee or agent of another corporation of
which a majority of the shares entitled to vote in the election of its directors
is held by the corporation or (b) as a partner, trustee or otherwise in an
executive or management capacity in a partnership, joint venture, trust,
17
<PAGE>
employee benefit plan or other enterprise of which the corporation or a majority
owned subsidiary of the corporation is a general partner or has a majority
ownership shall conclusively be deemed to be so serving at the request of the
corporation and entitled to indemnification and the advancement of expenses
under subsections 10.1 and 10.3 of this Section.
SECTION 11. LIMITATION OF LIABILITY
To the full extent that the Washington Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of any person who would be considered an indemnitee
under subsection 10.1 of Section 10, an indemnitee of the Corporation shall not
be liable to the Corporation or its shareholders for monetary damages for
conduct in the capacity based upon which such person is considered an
indemnitee. Any amendments to or repeal of this Section 11 shall not adversely
affect any right or protection of any indemnitee of the Corporation for or with
respect to any acts or omissions of such indemnitee occurring prior to such
amendment or repeal.
SECTION 12. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board, except that the Board may not repeal or amend any Bylaw
that the shareholders have expressly provided, in amending or repealing such
Bylaw, may not be amended or repealed by the Board. The shareholders may also
alter, amend and repeal these Bylaws or adopt new Bylaws. All Bylaws made by
the Board may be amended, repealed, altered or modified by the shareholders.
The foregoing Bylaws were adopted by the Board on March 30, 2000.
------------------------
/s/ Michael Kush
___________________________
Secretary
18
<PAGE>
EXHIBIT 4.1
------------------------------
INCORPORATED UNDER THE LAWS OF
------------------------------
- ----- --------------
No. Shares
- ----- --------------
The State of Washington
[LOGO] Ucellit.com Inc.
Two Million Five Hundred Thousand Shares Authorized, $0.001 Par Value
This Certifies That SPECIMAN is the owner of _______________________ Shares of
--------
$0.001 each of the Capital Stock of
Ucellit.com Inc.
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers, and to be sealed with the Seal of the
Corporation this ____, day of _____ At
[SEAL]
___________________ ___________________
President Secretary
------ ----
SHARES $0.001 EACH
------ ----
<PAGE>
CERTIFICATE
FOR
SHARES
[SEAL APPEARS HERE]
OF THE
CAPITAL STOCK
UCELLIT.COM INC.
ISSUED TO
_____________________
DATED
_____________________
For Value Received ___ hereby sell, assign and transfer unto _______
_________________________________________________________________________
___________________________________________________________________ Shares
of the Capital Stock represented by the written Certificate and do hereby
irrevocably constitute and appoint ______________________________________
to transfer the said Stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated ________________________
In presence of
__________________________
________________________
NOTICE. THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN ON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR WITHOUT ALTERATION
AND ENLARGEMENTS OR ANY CHANGE WHATEVER
PLEASE NOTE THAT ALL CERTIFICATES MUST BE LEGENDED AS FOLLOWS:
The shares to be acquired upon exercise of these warrants have not
been registered under the Securities Act of 1933, as amended, (the
"Act") and may not be sold, transferred or otherwise disposed of by
the holder, unless registered under the act or unless, in the opinion
of counsel satisfactory to the issuer, the transfer qualifies for an
exemption from or exemption to the registration provisions thereof.
<PAGE>
EXHIBIT 4.2
SHARE SUBSCRIPTION AGREEMENT
----------------------------
TO: Ucellit.com Inc., a Washington corporation
ADDRESS: 1177 West Hastings, Suite 2110
Vancouver, British Columbia V6E 2K3, CANADA
1. Share Subscription. The undersigned ("Subscriber") hereby agrees to
------------------
purchase One Million Five Hundred Thousand (1,500,000) shares of common stock,
par value $0.0001, of Ucellit.com Inc., a Washington corporation ("Company"), in
partial consideration for the transfer of that certain Vitamineralherb.com
license dated ___________________, 2000.
2. Issuer Representations and Warranties. Issuer hereby represents and
-------------------------------------
warrants to Subscriber as follows:
2.1 Organization, Good Standing and Qualification. The Issuer is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada.
2.2 Valid Issuance of Common Stock. The Common Stock, when issued and
------------------------------
delivered in accordance with the terms hereof for the consideration expressed
herein, will be validly issued and outstanding, fully paid and nonassessable.
2.3 Reporting Issuer. The Issuer is subject to the reporting
----------------
requirements of the Securities Exchange Act of 1934 (the "34 Act").
2.4 No Market Conditioning. The Issuer undertook no activity for the
----------------------
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the Common Stock. The Issuer
did not place any advertisements in any publication referring to the offering of
the Common Stock for sale.
3. Subscriber Representations and Warranties. Subscriber hereby represents
------------------------------------------
and warrants to Issuer as follows:
3.1 Authority of Subscriber. The Subscriber, if a corporation,
-----------------------
partnership, trust, or any other entity than a natural person, represents that
the subscription of the Common Stock referred to in this Agreement does not
contravene its charter or other organizational documents or the laws of the
country, state or province of its incorporation, formation or organization or of
any other relevant jurisdiction. The Subscriber also represents that it has the
necessary authorizations to that effect.
1
<PAGE>
3.2 Investment Experience. The Subscriber has such knowledge and
---------------------
experience in financial and business matters that it is capable of evaluating
the merits and risks of the prospective investment in the Common Stock, which
are substantial and has in fact evaluated such merits and risks in making its
investment decision to purchase the Common Stock. The Subscriber, by virtue of
its business and financial expertise, has the capacity to protect its own
interest in connection with this transaction, or has consulted with tax,
financial, legal or business advisors as to the appropriateness of an investment
in the Common Stock. The Subscriber has not been organized for the purpose of
investing in the Common Stock, although such investment is consistent with its
purposes.
3.3 Accredited Investor - The Subscriber is (check applicable box):
(a) [ ] a bank as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended (the "Act"), or a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act acting in
either an individual or fiduciary capacity.
(b) [ ] an insurance company as defined in Section 2(13) of the Act.
(c) [ ] an investment company registered under the Investment Issuer Act of
1940 or a business development company as defined in Section
2(a)(48) of that act.
(d) [ ] a Small Business Investment Issuer licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
(e) [ ] a plan established and maintained by a state, its political
subdivisions or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000.
(f) [ ] an employee benefit plan within the meaning of Title 1 of the
Employee Retirement Income Security Act of 1974, and the investment
decision is made by a plan fiduciary, as defined in Section 3(21)
of such Act, which is either a bank, savings and loan association,
insurance company or registered investment advisor, or an employee
benefit plan having total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by
persons who are Accredited Investors.
(g) [ ] a private business development company as defined in Section
202(a(22) of the investment Advisors Act of 1940.
2
<PAGE>
(h) [ ] an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, a corporation, Massachusetts or similar
business trust, or a partnership not formed for the specific
purpose of acquiring the Common Stock, with total assets in excess
of $5,000,000.
(i) [ ] any trust with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the Common Stock, whose purchase
is directed by a sophisticated person who has such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment.
(j) [ ] a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended.
(k) [ ] an individual (See Section 4.15(a) below)
(l) [ ] none of the above (See Section 4.15(b) below)
3.4(a) Individual Subscriber. If the Subscriber is an individual, then
----------------------
the Subscriber (check an applicable box):
[ ] is a director, executive officer or general partner of the issuer
of the Common Stock being offered or sold or a director, executive
officer or general partner of a general partner of that issuer.
[ ] has an individual net worth, or joint net worth with that person's
spouse, at the time of his purchase exceeding $1,000,000.
[ ] had an individual income in excess of $200,000 in each of the two
most recent years or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year.
[ ] none of the above.
_____________ (Initial)
3.4(b) If the Subscriber checked the box for "none of the above", then
the Subscriber is an entity each equity owner of which is an individual who
could check one of the first three boxes in section 3.4(a) above.
_____________ (Initial)
3
<PAGE>
3.5 No Distributor, Dealer or Underwriter. Subscriber is not a
-------------------------------------
distributor or dealer of the Common Stock. Subscriber is not taking the Common
Stock with the intent to make a distribution of the Common Stock, as such terms
are defined in the Act and the '34 Act. In any event, if Subscriber is deemed to
be the distributor of the Common Stock offered hereby, Subscriber will act in
accordance with applicable law.
3.6 Investment Intent. The Subscriber is acquiring the Common Stock
-----------------
for its own account and for investment purposes and not for sale or with a view
to distribution of all or any part of such Common Stock and has no present plans
to enter into any contract, undertaking, agreement or arrangement for such
resale or distribution.
3.7 No Immediate Need for Liquidity. The Subscriber understands that
-------------------------------
the Common Stock is a "restricted security" within the meaning of the Act, and
certificates representing the Common Stock are legended with certain
restrictions on the resale of the Common Stock and the Common Stock may not be
resold without a valid exemption from registration under the Act, or until a
registration statement is filed with respect thereto under the Act. There can be
no assurance that upon registration of the Common Stock pursuant to the Act,
that a market for the Common Stock will exist on an exchange or market or
quotation system. Accordingly, the Subscriber is aware that there are legal and
practical limits on the Subscriber's ability to sell or dispose of the Common
Stock, and, therefore that the Subscriber must bear the economic risk of the
investment for an indefinite period of time. The Subscriber has adequate means
of providing for the Subscriber's current needs and possible personal
contingencies and has need for only limited liquidity of this investment. The
Subscriber's commitment to illiquid investments is reasonable in relation to the
Subscriber's net worth. The Subscriber is capable of bearing the high degree of
economic risks and burdens of this investment, including but not limited to the
possibility of complete loss of all its investment capital and the lack of a
liquid market, such that it may not be able to liquidate readily the investment
whenever desired or at the then current asking price.
3.8 Exempt Subscription. The Subscriber understands that the Common
-------------------
Stock is being offered and sold in reliance on specific exemptions from the
registration requirements of U.S. federal and state law and that the
representations, warranties, agreements, acknowledgments and understandings set
forth herein are being relied upon by the Issuer in determining the
applicability of such exemptions and the suitability of the Subscriber to
acquire such Common Stock.
3.9 Authority of Signatory. The Subscriber has full power and
----------------------
authority to execute and deliver this Agreement and each other document included
herein as an exhibit to this Agreement for which signature is required, and the
person executing this Agreement on behalf of the subscribing individual,
partnership, trust, estate, corporation or other entity executing this Agreement
is a duly authorized signatory. If the signatory of this Agreement on behalf of
the Subscriber is not the Subscriber or an authorized officer or partner of the
Subscriber, the signatory represents and warrants to the Issuer that the
signatory is a professional fiduciary of the Subscriber, acting solely in its
capacity as holder of such account, as a fiduciary, executor or trustee.
4
<PAGE>
3.10. Private Transaction. At no time was the Subscriber presented with
-------------------
or solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.
3.11. Citizenship. The Subscriber hereby certifies that:
-----------
(a) neither it nor its beneficial owner[s], as determined pursuant
to Rule 13d-3 under the '34 Act, was a citizen of the United States at the time
it received the offer to purchase the Common Stock, or at the closing of the
purchase of the Common Stock;
(b) it was not in the United States at the time its buy order was
originated; and
(c) it did not acquire the Common Stock for the account or benefit
of any U.S. person.
3.12 Reliance on Own Advisors. The Subscriber has relied completely on
------------------------
the advice of, or has consulted with, his own personal tax, investment, legal or
other advisors and has not relied on the Issuer or any of its affiliates,
officers, directors, attorneys, accountants or any affiliates of any thereof and
each other person, if any, who controls any thereof, within the meaning of
Section 15 of the Act, except to the extent such advisors shall be deemed to be
as such.
4. Subscriber' Covenants and Acknowledgments. Subscribers makes the following
-----------------------------------------
covenants and acknowledgments
4.1 Covenants of Subscriber. Subscriber shall not make any sale,
-----------------------
transfer or other disposition of the Common Stock in violation of the Act or the
'34 Act, or any other applicable securities laws, or the rules and regulations
of the U.S. Securities and Exchange commission or of any securities authority of
any jurisdiction in which the sale, transfer or disposition of all or any
portion of the Common Stock unless and until (i) there is then in effect a
Registration Statement under the Act covering such proposed sale, transfer or
disposition and such disposition is made in accordance with such Registration
Statement; or (ii) the sale, transfer or disposition is made pursuant to a valid
exemption from the registration and prospectus delivery requirements of
applicable securities laws.
4.2 Acknowledgments of Subscriber. Subscriber acknowledges and
-----------------------------
understands as follows:
4.2.1 Risks of Investment. The Subscriber recognizes that
-------------------
investment in the Issuer involves certain risks, including the potential loss of
the Subscriber's investment herein, and the Subscriber has taken full cognizance
of and understands all of the risk factors related to the purchase of the Common
Stock.
5
<PAGE>
4.2.2 No Government Approval. No federal or state agency has
----------------------
passed upon the Common Stock or made any finding or determination as to the
fairness of this transaction.
4.2.3 Price. The Price of the Common Stock was determined by
-----
the Issuer and bears no relationship to the Issuer's assets, book value or
results of operation.
4.2.4 No Registration. The Common Stock and any component
---------------
thereof has not been registered under the Act or any securities laws of any
other jurisdiction by reason of exemptions from the registration requirements of
the Act and such laws, and may not be sold, pledged, assigned or otherwise
disposed of in the absence of an effective registration statement for the Common
Stock and any component thereof under the Act or unless an exemption from such
registration is available.
4.2.5 No Assurances of Registration. There can be no absolute
-----------------------------
assurance that any registration statement will be filed with respect to the
Common Stock or the Common Stock underlying the Common Stock, or if filed, that
such registration statement will become effective. Therefore, unless an
exemption from the registration requirements under applicable law is available,
the Subscriber may be required to bear the economic risk of the Subscriber's
investment for an indefinite period of time.
4.2.6 Legends. The certificates representing the Common Stock
-------
shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR ANY OTHER SECURITIES AUTHORITIES. IT IS
BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
REGULATIONS PROMULGATED UNDER THE ACT. IT MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR AN EXEMPTION TO THE REGISTRATION REQUIREMENTS OF THOSE
SECURITIES LAWS.
The Issuer may in its sole discretion place a "Blue Sky" legend on the
certificates in accordance with U.S. State securities laws or as required by
applicable securities laws.
5. Regulation S. Issuer and Subscriber agree that Issuer, through its
-------------
transfer agent, shall refuse to register any transfer or attempted transfer of
the Common Stock not made in accordance with the provisions of Regulation S of
the Securities Act of 1933 (the "Act"), pursuant to registration under the Act,
or pursuant to an available exemption from registration. The Subscriber agrees
to resell the Common Stock only in accordance with the provisions of Regulation
S of the Act, pursuant to registration under the Act, or pursuant to an
available
6
<PAGE>
exemption from registration; and agrees not to engage in hedging transactions
with regard to the Common Stock unless in compliance with the Act.
6. Notices. Any notice required or permitted to be given under this
-------
Subscription shall be deemed to have been given when sent by registered or
certified mail, postage prepaid, addressed to the person to receive notice at
the last address available in the records of the Company.
7. Heirs and Successors Bound. Subscriber may not cancel, terminate or
--------------------------
revoke this Subscription. Subscriber executes this Subscription on behalf of
Subscriber, Subscriber's spouse and the marital community composed of them.
This Subscription shall bind and inure to the benefit of Subscriber's heirs,
personal representatives and successors.
8. Assignments. Subscriber may not assign or delegate any right or duty
-----------
under this Subscription without the written consent of the Company.
9. Applicable Law And Jurisdiction.
--------------------------------
9.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington, without regard to conflicts of law
principles.
9.2 In the event of any dispute, controversy, claim or difference that
should arise between the parties out of or relating to or in connection with
this Agreement or the breach thereof, the parties shall endeavor to settle such
conflicts amicably among themselves. Should they fail to do so, the matter in
dispute shall be settled by arbitration pursuant to the provisions of R.C.W.
7.04. Procedurally, the arbitration will be conducted in conformity with
Washington Mandatory Arbitration Rules 5.1 - 5.4. The parties shall select a
single arbitrator within ten (10) days of the receipt of demand for arbitration.
If the parties fail to appoint an arbitrator within the ten (10) day period, any
party may make immediate application to the King County Superior Court for the
appointment of an arbitrator. The arbitration hearing shall take place in
Seattle, Washington, and shall commence within sixty (60) days of the
appointment of an arbitrator. Any party which is determined in such arbitration
to be the prevailing party shall be entitled to have its attorneys' fees and
costs paid by the non-prevailing party.
IN WITNESS WHEREOF, the undersigned Subscriber has executed this Share
Subscription Agreement this ____ day of ____________________, 2000.
SUBSCRIBER:
----------
____________________________________
____________________________________
Spouse
____________________________________
____________________________________
Address
7
<PAGE>
EXHIBIT 5.1
March 29, 2000
Ucellit.com - c/o BG Capital
1177 West Hastings
Suite 2110
Vancouver, BC V6E 2K3
CANADA
Re: Ucellit.com Inc. Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel for Ucellit.com Inc., a Washington corporation (the
"Company"), in connection with the preparation of the registration statement on
Form SB-2 (the "Registration Statement") filed with the Securities and Exchange
Commission(the "Commission") pursuant to the Securities Act of 1933, as amended
(the"Act"), relating to the public offering (the "Offering") of up to 500,000
shares (the "Shares") of the Company's common stock, $.001 par value (the
"Common Stock"). This opinion is being furnished pursuant to Item 601(b)(5) of
Regulation S-K under the Act.
In rendering the opinion set forth below, we have reviewed (a) the Registration
Statement and the exhibits thereto; (b) the Company's Articles of Incorporation;
(c) the Company's Bylaws; (d) certain records of the Company's corporate
proceedings as reflected in its minute books; and (e) such statutes, records and
other documents as we have deemed relevant. In our examination, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, and conformity with the originals of all documents submitted
to us as copies thereof. In addition, we have made such other examinations of
law and fact as we have deemed relevant in order to form a basis for the opinion
hereinafter expressed.
Based upon the foregoing, we are of the opinion that the Shares are validly
issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an Exhibit to the Registration
Statement and to all references to this Firm under the caption "Interests of
Named Experts and Counsel" in the Registration Statement.
Very truly yours,
OGDEN MURPHY WALLACE, P.L.L.C.
James L. Vandeberg
JLV/veo
<PAGE>
EXHIBIT 10.1
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made and effective as of March 20, 2000,
by and between Vitamineralherb.com Corp., a Nevada Corporation ("Grantor"), and
Michael Kirsh ("Licensee"), with reference to the following facts:
1. Grantor owns and operates an Internet marketing system for vitamins,
minerals, nutritional supplements, and other health and fitness products
(the "Products") in which Grantor offers Products for sale from various
suppliers on Grantor's Web Site.
2. Licensee desires to market the Products to medical professionals,
alternative health professionals, martial arts studios and instructors,
sports and fitness trainers, other health and fitness practitioners, school
and other fund raising programs and other similar types of customers
("Customer(s)") in the Territory, as hereinafter defined. Customers will be
able to buy the Products on a continuing basis through Grantor's Web Site.
NOW THEREFORE, in consideration of the mutual promises, warranties and covenants
herein contained, the parties hereby agree as follows:
1. Scope of Agreement. This Agreement shall govern all Products sold through
-------------------
Grantor's Web Site to Customer(s). Exhibit A contains detailed information
regarding specifications, quality control, pricing and other terms relating
to the Product(s) to be ordered through Grantor's Web Site. The parties
agree that Exhibit A will be amended to include similar information with
respect to any future orders of the same product or any future Product
ordered by Licensee or Customers. Pricing may be amended from time to time
on the Web Site, and in the event of a conflict between the pricing on the
Web Site and the pricing in Exhibit A, the price posted on the Web Site at
the time of order shall obtain. IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS OF THIS AGREEMENT AND ANY PURCHASE ORDER SUBMITTED BY CUSTOMER, THE
TERMS OF THIS AGREEMENT WILL CONTROL.
2. Grant of License; Territory. Territory shall be the state of Ontario.
----------------------------
Grantor grants to Licensee the exclusive rights to market the Products in
the Territory through the Web Site.
3. Consideration. The parties acknowledge that this License is granted in
--------------
consideration for the mutual promises, warranties and covenants contained
in that certain Settlement Agreement by and between the parties and others,
dated March 20, 2000.
4. Manufacture of Products. All Products marketed through Grantor's Web Site
------------------------
shall be manufactured, packaged, prepared, and shipped in accordance with
the specifications and requirements described on Exhibit A hereto as it may
be modified from time to time. Quality control standards relating to the
Product's weight, color, consistency, micro-biological content, labeling
and packaging are also set forth on Exhibit A. In the event that Exhibit A
is incomplete, Products shall be manufactured and shipped in accordance
with industry standards.
5. Labeling; Packaging. Products shall be labeled with Standard Labels, except
--------------------
for Private Label
Page 1 of 11
<PAGE>
Products, as described herein. Standard labels shall contain all
information necessary to conform to regulatory and industry requirements.
6. Private Label Products. Vitamins, minerals, herbs, and nutritional
-----------------------
supplement products may be available for sale with labels customized for
the Customer ("Private Label Products"). Grantor shall cause supplier to
affix to Private Label Products labels furnished by Customer which are
consistent with supplier's labeling equipment and meet all federal and/or
state labeling requirements for the Product(s) ordered. Pricing for Private
Label Products shall be as determined by supplier and posted on the Web
Site by Grantor, and the price posted on the Web Site at time of order
shall obtain.
7. Shipping. Shipping shall be by UPS ground unless Customer requests and
---------
pays for overnight shipping by UPS. Grantor will post shipping and handling
fees for overnight shipping on the Web Site. The price posted at the time
of order shall obtain. All orders from supplier's stock shall be shipped
within seventy-two (72) hours of receipt of the order. Items not in stock
(back orders) shall be shipped on a timely basis, but not later than four
to six weeks from time of order.
8. Products and Pricing. The initial pricing for the Product(s) is set forth
---------------------
on Exhibit A. The price may be amended from time to time, and such
amendments will be posted on the Web Site. The price posted at the time of
order shall obtain. Terms are payment by credit card or electronic funds
transfer at time of purchase.
9. Minimum Order Quantities for Vitamin, Mineral, and/or Nutritional
-----------------------------------------------------------------
Supplements. The minimum order quantity is 100 bottles per formulation for
-----------
standard Products. Customer Formulas, as defined herein, shall have minimum
order quantities of 5,000 units.
10. Web Site Maintenance; Fees. Grantor shall maintain Grantor's Web Site (the
---------------------------
"Web Site"). The Web Site shall post current prices for all Products.
Customers will be able to obtain unique identification codes ("Userid(s)")
and select passwords on the Web Site. Grantor shall maintain the Web Site
in a manner that ensures secure Internet financial transactions. Licensee
shall pay Grantor a maintenance fee of $500 yearly, beginning on the
anniversary date of this Agreement, for maintenance of the Web Site.
11. Orders. All Products shall be ordered through the Web Site. In
-------
jurisdictions in which sales tax would be collected on retail sales of the
Products, Licensee shall ensure that each Customer provides a sales tax ID
number for exemption from sales tax. Licensee shall assist its Customer to
register on the Web Site. Each Customer shall be issued a Userid and shall
select a password upon registration. Upon ordering, Customer must pay for
Product by credit card, debit card, or by electronic funds transfer ("e-
check") and all funds will be remitted to Grantor. Upon receipt of order,
Grantor will email the supplier to purchase the Product(s) ordered.
Supplier will drop-ship the order directly to the Customer in accordance
with Section 7, "Shipping."
12. Sharing of Profits; Sales Reports. Licensee and Grantor shall each
----------------------------------
receive one-half of the profit on all sales made through the Web Site by
Licensee. Grantor agrees to pay supplier for the Product purchased upon
receipt of cleared funds. Grantor will retain its one-half share of the
Page 2 of 11
<PAGE>
profit and will remit the balance to Licensee by the tenth day of the month
following sales. Grantor further agrees to provide Licensee with a Monthly
Sales Report of all sales made by Licensee through the Web Site detailing
the purchases from each Customer. Grantor will e-mail the Monthly Sales
Report to Licensee by the tenth day of the month following such sales.
13. Warranties and Indemnification. Grantor warrants that all Products,
-------------------------------
including Joint Formula Products but not including Customer Formula
Products, shall be fit for the purpose for which produced and shall be in
full and complete compliance with all local, state, and federal laws
applicable thereto. Grantor warrants that all Custom Products shall be
manufactured in accordance with Customer's specifications. Grantor warrants
that all non-Private Label Products shall be correctly and accurately
described on each label affixed thereto, and that all labeling affixed
thereto shall be in full and complete compliance with all local, state, and
federal laws applicable thereto. Grantor warrants, covenants and certifies
that its supplier(s)' manufacturing facilities comply with applicable
federal, state, city, county, and municipal laws, rules, regulations,
ordinances, and codes in all material respects. Grantor hereby agrees to
indemnify, hold harmless and defend Licensee, its Customers, Buyers,
affiliates, directors, officers, agents and representatives from and
against any loss, claim, and expense (including attorneys fees and costs,
and costs of a recall of Product) incurred or suffered as a consequence of
Grantor's breach of its product warranties as set forth herein.
14. Nature of Relationship. (a) This Agreement does not constitute nor
----------------------
empower the Licensee as the agent or legal representative of Grantor for
any purpose whatsoever. Licensee is and will continue to be an independent
contractor.
(b) The arrangement created by this Agreement is not, and is not
intended to be, a franchise or business opportunity under the United
States' Federal Trade Commission Rule: Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity Ventures and
is not a franchise, business opportunity or seller assisted marketing plan
or similar arrangement under any other federal, state, local or foreign
law, rule or regulation.
(c) Licensee is not prohibited by this Agreement from pursuing other
business opportunities or other employment.
15. Rights in Formulas.
-------------------
(a) Customer Formulas. Any formula provided exclusively by Licensee's
Customer shall be owned by Customer ("Customer Formula"), provided
that such Customer Formula does not substantially duplicate an
existing Grantor formula. Grantor agrees not to sell products to other
customers using any Customer Formula during the period in which
Customer is ordering products containing the formula and for so long
as Customer continues to purchase products containing the Customer
Formula.
(c) Joint Formulas. If Grantor and Customer jointly create a formula
("Joint Formula"), such Joint Formula will be jointly owned by the
parties. Grantor agrees not to sell products to other customers using
the Joint Formula during the period in which Customer
Page 3 of 11
<PAGE>
is ordering products containing the Joint Formula from Grantor without
written permission from Customer. In the event that Customer fails to
order a specific Joint Formula Product for a period of 3 months,
Grantor shall be free to sell products containing the Joint Formula to
other customers.
16. Term of Agreement; Breach of Agreement. This Agreement shall continue for
---------------------------------------
three (3) years, and shall be automatically renewed unless one of the
parties provides ninety (90) days written notice of termination to the
other party. Licensee may terminate this Agreement for any reason at any
time upon ninety (90) days written notice to Grantor. In the event of a
material breach of this Agreement, the non-breaching party may provide
written notice of breach. Upon notice from the non-breaching party, the
breaching party shall have fourteen (14) days to cure the breach, after
which period, if not cured, the Agreement shall be automatically
terminated. In no event shall Grantor be required to accept or deliver
product under any purchase order if Grantor has not received the
outstanding balance due on any previous purchase order in a timely manner.
Failure to so perform shall not be deemed a breach of this Agreement by
Grantor.
17. Trade Secrets. Grantor and Licensee(s) are the owners of certain products,
--------------
technology, information, customer lists, services, processes, financial
information, pending or prospective transactions/proposals, operating and
marketing plans and procedures, designs, product formulas, specifications,
manufacturing methods, ideas, prototypes, software, patent, trademark and
copyright applications or registrations and other similar data relating to
each party's business which data is not publicly known and derives economic
value from not being publicly known (collectively "Trade Secrets"). Each
party agrees that it will not use or disclose to third parties any Trade
Secret it receives from the other, except as may be contemplated by this
Agreement. Each party agrees that it will take all reasonable precautions
to assure that no Trade Secret is conveyed to any officer, employee, agent,
manufacturer or other third party who does not have a need to know such
Trade Secret. The obligations created by this Section 10 shall survive the
termination of this Agreement or any business relationship between the
parties. Any Trade Secret contained in any writing will be returned to the
other party promptly upon written request, together with any reproductions
thereof.
18. Governing Law; Dispute Resolution. This Agreement shall be governed by
----------------------------------
Washington law in accordance with the Dispute Resolution Agreement attached
hereto as Exhibit B.
19. Miscellaneous Provisions. This Agreement constitutes the entire Agreement
-------------------------
between the parties and supersedes any prior or contemporaneous agreements,
oral or written. This Agreement may only be amended by a writing signed by
both parties. Any notice required or permitted to be given under this
Agreement shall be in writing and sent by telecopy, personal delivery or
certified mail, return receipt requested, as follows:
If to Vitamineralherb.Com, Inc.: Mr. J. P. Beehner
3030 FM 518 Apt 221
Pearland TX 77584-7817
If to Licensee: Cambridge Creek, Inc.
Page 4 of 11
<PAGE>
Notice shall be deemed effective upon receipt if made by confirmed
telecopy, personal delivery or 48 hours after deposit in the United States
mail with the required postage.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
MICHAEL KIRSH VITAMINERALHERB.COM CORP.
A NEVADA CORPORATION
/s/ /s/
___________________________ By: ______________________
J.P. Beehner, President
Page 5 of 11
<PAGE>
EXHIBIT A
PRODUCT SPECIFICATIONS
In the event of any inconsistency between the terms of Customer's purchase
order and this Product Specification Sheet, this Sheet and the terms of the
Manufacturing Agreement shall control.
Short Product Name: _____________________________
Exact Product Ingredients and Percentages:
Other Product Specifications:
Color: ___________ Tablet Type: ____________ Consistency:______________
Weight: _______ Bottle Size/Color:____________ Bottle Count: ___________
Cotton Insert:____ Bottle Seal:____ Shrink Wrap Neck Band:___ Silicon Pack:____
Micro-biological content: Customer to specify any requirements, if none
specified, product will be manufactured to industry standards.
Labels: Labels and/or boxes to be provided by Customer [identify any size]
_________
Labels/Boxes to be Received by [date] _____ to ensure timely delivery
Master Pack/Wrapping/Palleting Requirements (if any):_________________________
Ship to Address: _________________________________________________
Order Quantity: (minimum 5,000 BOTTLES): ________
Price: _____________ FOB IFM's facility in San Diego, CA.
Delivery Dates(s): _______________________________________
Terms of Sale: 50% with submission of purchase order; 50% due upon completion of
manufacturing, unless otherwise specified _________________________
Purchase Order Number: ________________
Date of Purchase Order: _______________
Page 6 of 11
<PAGE>
EXHIBIT B
DISPUTE RESOLUTION AGREEMENT
THIS DISPUTE RESOLUTION AGREEMENT ("Dispute Resolution Agreement") is
entered into and effective as of _________________________, 2000 by and between
Vitamineralherb.com Corp., a Nevada corporation, and Cambridge Creek, Inc., a
Washington corporation.
1. INTENT OF PARTIES. The parties desire to establish a quick, final and
------------------
binding out-of-court dispute resolution procedure to be followed in the
unlikely event any dispute arising out of or related to the Manufacturing
Agreement dated _________________, 2000 between the parties ("Agreement").
As used in this Dispute Resolution Agreement, the term "dispute" is used in
its broadest and most inclusive sense and shall include, without
limitation, any disagreement, controversy, claim, or cause of action
between the parties arising out of, related to, or involving the Agreement
or the transactions evidenced by the Agreement (collectively "Dispute").
2. NEGOTIATION. It is the intent of the parties that any Dispute be resolved
informally and promptly through good faith negotiation between the parties.
Therefore, in the event of a Dispute between the parties, the following
will apply:
A. Correspondence. Either party may initiate negotiation proceedings by
---------------
writing a certified or registered letter, return receipt requested, to
the other party referencing this Dispute Resolution Agreement, setting
forth the particulars of the Dispute, the term(s) of the Agreement
involved and a suggested resolution of the problem. The recipient of
the letter must respond within ten (10) days after its receipt of the
letter with an explanation and response to the proposed solution.
B. Meeting. If correspondence does not resolve the Dispute, then the
--------
authors of the letters or their representatives shall meet on at least
one occasion and attempt to resolve the matter. Such meeting shall
occur not later than thirty (30) days from the parties' last
correspondence. If the parties are unable to agree on the location of
such a meeting, the meeting shall be held at Grantor's corporate
offices. Should this meeting not produce a resolution of the matter,
then either party may request mandatory mediation (as provided below)
by written notice to the other party.
3. MEDIATION.
----------
A. Selection of Mediator. There shall be a single mediator. If the
----------------------
parties cannot agree upon an acceptable mediator within ten (10) days
of termination of the negotiation, each party shall select one
mediator from a list of not less than five (5) mediators provided by
the other party. These two mediators shall select a third mediator who
shall serve as the sole mediator.
B. Subject to the availability of the mediator, the mediation shall occur
not more than thirty (30) days after the request for mediation. The
mediation shall be held in Seattle, Washington. The cost of mediation
shall be borne equally by the parties. The mediation process shall
continue until the Dispute (or any part thereof) is resolved or until
such time
Page 7 of 11
<PAGE>
as the mediator makes a finding that there is no possibility of
resolution short of referring the parties to final and binding
arbitration.
4. FINAL AND BINDING ARBITRATION. Should any Dispute (or part thereof) remain
------------------------------
between the parties after completion of the negotiation and mediation process
set forth above, such Dispute shall be submitted to final and binding
arbitration in Seattle, Washington pursuant to the provision of R.C.W. 7.04.
Procedurally, the arbitration will be conducted in conformity with Washington
Mandatory Arbitration Rules 5.1 - 5.4 and the following provisions, which shall
supersede the R.C.W. in the event of any inconsistency:
A. Selection of Arbitrator(s). There shall be a single arbitrator, except
in the case where the amount in dispute exceeds $100,000, in which
case there shall be three arbitrators. If the parties cannot agree
upon acceptable arbitrator(s) within ten (10) days of the termination
of the mediation, each party shall select one arbitrator from a list
of not less than five (5) arbitrators provided by the other party.
These two arbitrators shall select a third arbitrator who shall serve
as the sole arbitrator or the third arbitrator, as the case may be.
The determination of a majority of the arbitrators or the sole
arbitrator, as the case may be, shall be conclusive upon the parties
and shall be non-appealable.
B. Discovery. No discovery shall be permitted, absent a showing of good
----------
cause. Any discovery request should be reviewed with the knowledge
that this dispute resolution process was mutually agreed upon and
bargained for by the parties with the intent to provide a cost-
effective and timely method of resolving disputes. Any discovery
granted by the arbitrator should be limited to that necessary to
protect the minimum due process rights of the parties.
C. Equitable Remedies. Any party shall have the right to seek a temporary
-------------------
restraining order, preliminary or permanent injunction or writ of
attachment, without waiving the negotiation, mediation and arbitration
provision hereof. Any other form of equitable or provisional relief
and all substantive matters relating to the Dispute shall be
determined solely by the arbitrator(s).
D. Attorney's Fees; Arbitration Costs. Each party may be represented by
-----------------------------------
an attorney or other representative selected by the party. The costs
of the arbitration shall be borne equally by the parties. Each party
shall bear its own attorneys'/representatives' fees and costs;
provided that if the arbitrator(s) find either party has acted in bad
faith, the arbitrator(s) shall have discretion to award attorneys'
fees to the other party.
E. Scope of Arbitration; Limitation on Powers of Arbitrator(s);
------------------------------------------------------------
Applicable Law. No party may raise new claims against the other party
---------------
in the arbitration not raised in the mediation. The arbitrator shall
have the power to resolve all Disputes between the parties. The
arbitrator(s) shall not have the power to award treble, punitive or
exemplary damages and the parties hereby waive their right to receive
treble, punitive or exemplary damages, to the extent permitted by law.
The arbitrator(s) shall only interpret and apply the terms and
provision of the Agreement and shall not change any such terms or
provisions or deprive either party of any right or remedy expressly or
impliedly provided for in the Agreement.
Page 8 of 11
<PAGE>
The arbitrator(s) shall apply the law of the State of Washington, or
federal law, in those instances in which federal law applies.
F. Designation of Witnesses/Exhibits; Duration of Arbitration Process;
-------------------------------------------------------------------
Written Decision. At least thirty (30) days before the arbitration is
-----------------
scheduled to commence, the parties shall exchange lists of witnesses
and copies of all exhibits intended to be used in arbitration. The
arbitration shall be completed within 90 days of the selection of the
first arbitrator. The arbitrator(s) shall render a written decision,
which contains findings of fact and conclusions of law, within 30 days
of the conclusion of the arbitration and shall specify a time within
which the award shall be performed. Judgment upon the award may be
entered in any court of competent jurisdiction.
5. MISCELLANEOUS
-------------
A. Enforcement of Negotiation/Mediation Provisions. If a party demanding
------------------------------------------------
such compliance with this Agreement obtains a court order directing
the other party to comply with this Dispute Resolution Agreement, the
party demanding compliance shall be entitled to all of its reasonable
attorneys' fees and costs in obtaining such order, regardless of which
party ultimately prevails in the matter.
B. Severability. Should any portion of this Dispute Resolution Agreement
-------------
be found to be invalid or unenforceable such portion will be severed
from this Dispute Resolution Agreement, and the remaining portions
shall continue to be enforceable unless to do so would materially
alter the effectiveness of this Dispute Resolution Agreement in
achieving the stated intent of the parties.
C. Confidentiality. The parties agree that they will not disclose to any
----------------
third party that (1) they are engaged in the dispute resolution
process described herein, (2) the fact of, nature or amount of any
compromise resulting herefrom, or (3) the fact of, nature or amount of
any arbitration award. This confidentiality obligation shall not
extend to the party's employees, spouses, accountant, bankers,
attorneys or insurers or in the event that disclosure is otherwise
required by law.
D. Time to Initiate Claims. An aggrieved party must mail and the other
------------------------
party must receive the correspondence which initiates negotiation
proceedings in connection with a Dispute as specified in Paragraph
2(A) (1) within one (1) year of the date the aggrieved party first
has, or with the exercise of reasonable diligence should have had,
knowledge of the event(s) giving rise to the Dispute (the "One Year
Statute of Limitations"). No Dispute may be raised under this Dispute
Resolution Agreement after the expiration of the One Year Statute of
Limitations.
E. Entire Agreement. These dispute resolution provisions express the
-----------------
entire agreement of the parties and there are no other agreements,
oral or written, concerning dispute resolution, except as provided
herein. Any ambiguity in the provisions hereof shall not be construed
against the drafter. This Dispute Resolution Agreement may only be
modified in a writing signed by both parties.
F. Successors. This Dispute Resolution Agreement is binding upon and
-----------
inures to the benefit
Page 9 of 11
<PAGE>
of the parties, their agents, heirs, assigns, successors-in-interest,
and any person, firm or organization acting for or through them.
G. Venue and Jurisdiction. Venue and exclusive jurisdiction for any
-----------------------
action arising out of or related to this Dispute Resolution Agreement
(including, but not limited to, equitable actions contemplated by
Section 4 (C) and actions brought to enforce or interpret this Dispute
Resolution Agreement) shall be in the state courts for the County of
King, Washington, or the federal court for the Western District of
Washington.
H. Notice. Any notice or communication required to be given hereunder
-------
shall be in writing and shall be mailed via the United States Postal
Service by Certified Mail or Registered Mail, Return Receipt
Requested, or by Federal Express or other overnight courier which can
document delivery, to the address of the party to be served as shown
below (or such other address as the party shall from time to time
notify). Such notice shall be deemed to have been served at the time
when the same is received by the party being served.
Vitamineralherb.com Corp.: J. P. Beehner, President
3030 FM 518 Apt 221
Pearland TX 77584-7817
Fax: 281-388-1047
Phone: 281-331-5580
Cambridge Creek, Inc.:
I. Acknowledgment of Legal Effect of this Dispute Resolution Agreement.
--------------------------------------------------------------------
By signing this Dispute Resolution Agreement, the parties acknowledge
that they are giving up any rights they may possess to have Disputes
litigated in a court and are hereby waiving the right to a trial by
jury. The parties further acknowledge that they are agreeing to a one
year statute of limitations regarding all Disputes and that they are
giving up their judicial rights to discovery and to appeal, unless
such rights are specifically set forth above. The parties acknowledge
that if they refuse to submit to the provisions of this Dispute
Resolution Agreement they may be compelled to do so under the
authority of the Washington
Page 10 of 11
<PAGE>
Mandatory Arbitration Rules. The parties acknowledge that they have
had the opportunity to consult counsel regarding the meaning and legal
effect of this Dispute Resolution Agreement and enter into it
knowingly and voluntarily.
IN WITNESS WHEREOF, the parties have entered into this Dispute Resolution
Agreement as of the date first above written.
MICHAEL KIRSH VITAMINERALHERB.COM CORP.
A NEVADA CORPORATION
/s/ By: /s/
- --------------------------- --------------------------
J.P. Beehner, President
Page 11 of 11
<PAGE>
EXHIBIT 10.2
ASSIGNMENT OF LICENSE AGREEMENT
FOR VALUE RECEIVED, Michael Kirsh ("Assignor"), for good and valuable
consideration, does hereby sell, assign, and transfer to Ucellit.com Inc., a
Washington corporation ("Assignee"), all of the rights, title and interest of
Assignor and delegates to Assignee all of the duties of Assignor under that
certain License Agreement dated ____________, by and between Assignor and
Vitamineralherb.com Corp., a Nevada Corporation, a true copy of which is annexed
hereto and made a part hereof.
Assignor represents that the annexed contract is a valid and binding
agreement in all respects, is assignable and the duties hereunder delegable, and
that this assignment and delegation is a valid exercise of the Assignor's
rights.
Assignee hereby assumes and agrees to perform all of Assignor's obligations
under the annexed contract. Assignee shall defend, indemnify and hold harmless
Assignor, from and against any claim, liability and expense which Assignee may
incur (including without limitation attorneys fees and litigation expenses) that
arises out of Assignee's performance of, or failure to perform, such contract.
Dated this ______ day of __________, 2000.
ASSIGNOR: ASSIGNEE:
UCELLIT.COM INC.
_____________________________ ___________________________
Michael Kirsh Michael Kirsh , President
Page 1 of 1
<PAGE>
EXHIBIT 10.3
PROMISSORY NOTE
Vancouver, British Columbia
__________________, 2000
$US28,000.00
FOR VALUE RECEIVED, the undersigned promises to pay to the order of Michael
Kirsh, the principal sum of Twenty Eight Thousand Dollars ($US28,000.00) in
legal tender. Payment shall be made upon the sale of all or substantially all
of the assets or stock, merger, or other transfer of Ucellit.com Inc.
1. Default. If any payment is not paid when due, or if Obligors breach
-------
any other agreement with the holder of this note, Obligors will be in default.
Upon default, the holder may declare the unpaid principal balance and all
accrued interest and unpaid late charges, if any, immediately due and payable,
without notice, and Obligors will then pay that amount.
The holder may employ attorneys or other agents to collect amounts due
under this note if Obligors are in default or to otherwise enforce the terms of
this note and any agreement securing this note, and Obligors agree to pay all
fees, costs and expenses incurred by the holder as a consequence of default by
Obligors. Such fees, costs and expenses include attorneys' fees whether or not
litigation is commenced and including any appeal, fees or expenses incurred in
any bankruptcy, receivership, or other insolvency proceedings, any anticipated
post-judgment collection charges, and all other costs of collection, including
court costs. The holder may delay enforcing any of its rights under this note
without forfeiting such rights.
2. Waiver. The Obligors hereby severally waive presentment, demand for
------
payment, protest, notice of nonpayment or dishonor, and any relief, waiver or
discharge arising from any extension of time for payment granted before, at or
after maturity, or for any other causes.
3. Obligors. "Obligors" as used in this note means all makers, signers
--------
and co-signers, guarantors, sureties, and endorsers.
____________________________________
Ucellit.com Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Interests Of
Named Experts And Counsel" and to the use of our reports dated March 31, 2000,
in the Registration Statement (Form SB-2 No. - ) and related Prospectus
of Ucellit.com Inc. for the registration of shares of its common stock.
/s/ Elliott Tulk Pryce Anderson
CHARTERED ACCOUNTANTS
Vancouver, Canada
March 31, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> MAR-14-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
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<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 28,000
<BONDS> 0
0
0
<COMMON> 15,000
<OTHER-SE> 8,000
<TOTAL-LIABILITY-AND-EQUITY> 35,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
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