Article V - CapEx IPO Underwriting Policies
Article V - CapEx IPO Underwriting Policies
Section 1: Preamble and Introduction
A) Fundamentally, the purpose of this stock market simulation game is to provide opportunity for companies to raise capital to grow their business. This is accomplished by selling a true “virtual” ownership interest in the company to investors. Such ownership interest is tabulated by the issuance of stock certificates (shares) to the investor. Each share represents a fractional ownership interest in the company, with all shares collectively representing 100% of the company's ownership, its assets and other entitlements.
B) Upon such sale of stock, the officers and executives of the selling company obligate themselves with a fiduciary responsibility to the shareholders. Such obligation is inseverable - the rights of shareholders are equal to officers rights on a share for share basis. The shareholders are equity owners of the underlying company and are thus entitled to participate in many corporate governance decisions and ANY distribution of company profits on a pro rata, per-share basis.
C) Historically, the role of a stock exchange has been to simply provide an efficient clearinghouse for the transactional transfer of the ownership interest in companies as represented by the issued Stock Certificates (Shares). For a fee, an Exchange collects and distributes the shares and serves in trust as an intermediary in the transfer of value between parties. The clearinghouse/Exchange affords buyers and sellers the ability to quickly and easily transfer ownership interests in the underlying company.
D) In the Real World, such transactions are regulated by a variety of governmental agencies that establish policy and administer rules of conduct for all participants within the market. There are also other governmental agencies that monitor and enforce such policies and rules as a matter of law. To date, within the sometimes peculiar virtual world economy of Second Life(R) no such regulatory agencies have emerged to independently adjudicate disputes among market participants. The SL Stock Exchanges, individual Investors and participating companies have been left to their own resources in that regard, often with abysmal results and ultimately satisfying the needs of none of its participants.
E) The operators of Capital Exchange as embodied at http://www.slcapex.com endeavor to provide a Stock Market simulation game that equally values the needs of the individual investor and the entrepreneurial desires of companies that market or trade stock on our Exchange. As a self-regulated Exchange, we seek to find an equitable balance between the competing interests of the counter-parties without asserting undue influence on the overall market. At best, this is a delicate dance - the principals of CapEx collectively own a large percentage of the authorized and issued shares of the various companies that trade here, and also often hold positions of significant influence as Board Members and Directors of several companies that trade here.
F) We encourage articulate debate and discourse where practical. Our Policy revisions are usually a direct result of such discourse, however, investors and officers alike must remain mindful that we, as a body, generally lack the authority and regulatory framework to resolve many conflicts. All participants here are cautioned therefore to self-monitor and mitigate their own risks as we are unlikely to be able to help you recover $Lindens in the event of a catastrophic company failure, underwriting deficiency, fraud, or changes in Second Life(R) policies as implemented, administered and supported by Linden Research, Inc.
Section 2: Operating Context
Capital Exchange (CapEx: CAPX) is a fictional stock market simulation game for educational and entertainment purposes owned and operated by Skip Oceanlane. As an entity, CapEx operates within the Second Life® environment owned and operated by Linden Research, Inc., and beyond its boundaries via our website at (http://www.SLCapEx.com).
The Second Life® environment includes a "Currency" called "$Lindens". As specified in the Linden Lab TERMS OF SERVICE, Section 1.4 ( http://secondlife.com/corporate/tos.php ), the $Linden "currency" is a limited license right available for purchase or free distribution at Linden Lab's discretion, and is not redeemable for monetary value from Linden Lab. Similarly, CapEx offers no capability for conversion of ($Lindens) to legal-tender currencies including $US Dollars. Linden Lab does offer an Exchange, called LindeX(tm), for the trading of $Lindens. Please refer to the Linden Lab TERMS OF SERVICE, Section 1.5 for information regarding LindeX(tm) transactions. SLCapEx.com is NOT affiliated with Linden Research, Inc.
CapEx as designed and offered is a SERIOUS SIMULATION. The participants here PLAY FOR KEEPS. Their time commitment and $Linden-based holdings represent a considerable investment in SL and our community. As such, the IPO UNDERWRITING and CONTINUED LISTING POLICIES described herein will be ENFORCED VIGOROUSLY by CapEx Management.
Collectively, these and other Policy Documents as published and ammended from time-to-time shall constitute our RULES and REGULATIONS and TOGETHER IN WHOLE OR IN PART shall be used as the primary and authoritative resource for administrative decisions, enforcement and dispute resolution for any issues that may arise in CapEx's daily operation.
In the absence of a definitive RULE, the decisions of CapEx Management shall prevail at its sole discretion. Your use of the software loaded at SLCapEx.com in any manner constitutes acceptance of these terms unconditionally and without reservation to any provision herein.
Section 3: General Definitions
INVESTOR -Any CapEx REGISTERED USER who "BUYS", "SELLS" or "TRADES" the "STOCKS", "SHARES", "SECURITIES", "CERTIFICATES", "$LINDENS" or any other "UNIT OF MEASURE" offered in whole or part via the SLCapEx.com website.
MEMBER COMPANY - Any "ENTITY" or "ORGANIZATION" (fictitious or otherwise) that "OFFERS FOR SALE, TRANSFER OR TRADE" ANY "OWNERSHIP INTEREST or INVESTMENT" in any manner (whole or fractional) via the SLCapEx.com website.
PUBLIC COMPANY - Any "ENTITY" or "ORGANIZATION" (fictional or otherwise) whose "FRACTIONAL OWNERSHIP INTERESTS" (ie; STOCK or SHARES) are "OFFERED FOR SALE, TRANSFER OR TRADE" in whole or part via the SLCapEx.com website.
AFFILIATE - Any "ENTITY" or "ORGANIZATION" (fictional or otherwise) that offers "SERVICES" (regardless of compensation) as an "AGENT", "BROKER", "MARKET-MAKER", etc. IN COOPERATION and WITH PERMISSION of CapEx.
IPO CANDIDATE - Any "ENTITY" or "ORGANIZATION" (fictional or otherwise) that "SUBMITS AN APPLICATION for an INITIAL PUBLIC OFFERING" (ie; OFFERS ANY PORTION OF THEIR ENTITY FOR SALE TO INVESTORS) via the SLCapEx.com website.
OFFICER or EXECUTIVE - Any Person (REAL or AVATAR) having fiduciary or administrative responsibility regardless of title (CHAIRMAN, CEO, etc.) of any entity as conferred by a "CHARTER", "PROSPECTUS", "VOTE" or any other method.
SHAREHOLDER - Any Person (REAL or AVATAR) having a RIGHTFUL CLAIM to any FRACTIONAL OWNERSHIP INTEREST in a PUBLIC COMPANY as evidenced by any RIGHTFUL CLAIM or possession of "STOCKS", "SHARES", etc. representative thereof.
STOCK EXCHANGE - As used herein, all of the software that "RECORDS", "TABULATES" and otherwise facilitates "INTERMEDIATION and TRANSFER" of any "UNIT OF MEASURE" between transactional counter-parties via the SLCapEx.com website.
CURRENCY - As used herein, exclusively the "$LINDEN" (or simply $L), a limited-license right "UNIT OF MEASURE" offered by Linden Research, Inc. The $Linden is the SOLITARY "CURRENCY" supported by CapEx at this time.
Section 4: General Rules
A) CapEx is a SERIOUS SIMULATION. The participants here PLAY FOR KEEPS and their time and $Linden-based holdings represent a considerable investment in our community. Persons who take on the RESPONSIBILITY of operating a PUBLIC COMPANY are OBLIGATED to perform their DUTIES as OFFICERS and/or EXECUTIVES and additionally have a FIDUCIARY OBLIGATION to PROTECT the OWNERSHIP INTERESTS of the company's SHAREHOLDERS. Such OBLIGATIONs are NOT SEVERABLE.
B) Public Company Shareholders are indeed OWNERS of the company and are ENTITLED to certain RIGHTS (INCLUDING sharing in ANY PROFIT DISTRIBUTION, having an EQUAL VOICE in the GOVERNANCE of the Company INCLUDING Election of OFFICERS and ANY DECISION that may MATERIALLY effect the company's BUSINESS STRATEGY, CAPITALIZATION PLAN or any other significant event that may impact the ongoing viability, sustainability or survivability of the entity. Such RIGHTS may NOT be SEVERED by OFFICERS or EXECUTIVES without DUE PROCESS in the event of a legal dispute, or for ANY OTHER REASON without FAIR and EQUITABLE COMPENSATION to the SHAREHOLDER(s) as DETERMINED by a MAJORITY VOTE of Shareholders.
C) SHAREHOLDERS as OWNERS of a public company are OBLIGATED to act IN GOOD FAITH with regard to the company and its operation, including GUARDING TRADE SECRETS, MARKETING STRATEGIES, BUSINESS OPPORTUNITIES, or ANY OTHER UNANNOUNCED (Non-Public) INFORMATION that may be divulged through private conversations with company Officers, Executives, Board Members, employees, consultants or any other party to such CONFIDENTIAL INFORMATION. Such OBLIGATION can ONLY BE DISCHARGED by DISPOSESSION of the SHARE OWNERSHIP INTEREST (either by death, surrender, sale, trade or any other transfer of the underlying shares to another party).
D) The SLCapex.com website operates as a non-fiduciary clearinghouse providing transactional intermediation between private parties that trade "SHARES" and "$Lindens". The Terms "PROFIT" and "EARNINGS" as used within the context of the SLCapEx.com website and any other claim of monetary value therein relates solely and specifically to the valuation of $Lindens as defined by Linden Lab. Regardless, in some jurisdictions such transactions or trades may be subject to taxation as REGULAR or INVESTMENT INCOME. ANY consequence including taxation or Income reporting requirements for such transactions are the sole responsibility of the counter parties and NOT CapEx. Please consult with your own Accountant or Tax Advisor should you have any questions regarding this Rule.
Section 5: IPO Underwriting Policies
Thank you for considering listing your company on the SLCapEx.com website. Our Underwriting Policies and Guidelines for submitting an IPO APPLICATION are defined below. Before Submitting an application as an IPO CANDIDATE please thoroughly familiarize yourself with our IPO UNDERWRITING POLICIES. This policy describes our minimum underwriting requirements, our IPO process, review criteria, and a general timeline for our evaluation of your submittal.
IPO Applicants should fully understand our "CONTINUED LISTING REQUIREMENTS" which outline the OBLIGATIONS and FIDUCIARY RESPONSIBILITIES you would have to SHAREHOLDERS should you successfully complete an IPO and commence trading as a PUBLIC COMPANY.
PLEASE CONSIDER THESE OBLIGATIONS CAREFULLY BEFORE SUBMITTING AN APPLICATION.
The TIME required to be successful here OFTEN exceeds 10-15 hours OR MORE per week!
Your RESPONSIBILITIES and OBLIGATIONS to CapEx are also described herein, including our COMPLIANCE and ENFORCEMENT POLICIES, FEES and FINES YOU and/or your COMPANY could be subject to should you violate our RULES.
SLCapEx.com ONLY accepts and considers IPO APPLICATIONS for entities that...
operate either EXCLUSIVELY WITHIN the Second Life(R) Environment, or entities that operate OUTSIDE of SL EXCLUSIVELY IN SUPPORT OF the Second Life(R) Environment and community. At CapEx's sole discretion, this may INCLUDE SL COMMERCE WEBSITES and/or ONLINE BLOGS or PERIODICALS or other PUBLICATIONS whose editorial content predominately supports the SL community.
As a general Guideline, we tend to disqualify or reject most START-UP companies that have no operating history or existing revenue base. These types of SL businesses have historically experienced extremely high failure rates as Public Companies. However, IF your business concept is of exceptional merit and includes well-defined objectives and reasonably achievable financial goals, CapEx may be able to help you secure private venture funding to launch your company.
SLCapEx.com DOES NOT ACCEPT OR CONSIDER IPO APPLICATIONS that...
endeavor to pursue entrepreneurial opportunites unrelated to Second Life(R) or that attempt to leverage any RW commodity or Financial Instrument for capital gain or Financial Advantage on behalf of the Capital Exchange User Community. CapEx will DISQUALIFY and REJECT "out-of-hand" without reservation any IPO Application that purports to offer any opportunity for RW monetary gain.
IF your company is currently listed on another SL Stock Exchange...
and you are contemplating MOVING and RELISTING your COMPANY at SLCapEx.com, PLEASE, contact Skip Oceanlane either IN-WORLD or via: (firstname.lastname@example.org) PRIOR TO ANNOUNCING OR DISCLOSING YOUR INTENT. Our Underwriting policies DIFFER SUBSTANTIALLY from other Exchanges and we generally move rather pragmatically as a result. We welcome opportunities to discuss the merits of your company and ours, and the potential benefits and risks inherent in contemplating such a move, and will assure complete *CONFIDENTIALITY and NON-DISCLOSURE* with respect to such dialogue.
As a self-regulating entity, CapEx vigorously monitors and enforces its policies. We do this NOT so much as a punitive action against our member-companies but rather as part of a good-faith effort on behalf of Investors who've often had litte voice in the SL Finance Community and on occassion an even still smaller voice in the governance of the companies who trade within the SL Finance Community.
The depth and breadth of CapEx policies have been specifically ammended effective February 01, 2009 as part of a broad attempt to fundamentally change the status quo within our at-large community. Our forward success will be determined largely by the willingness and ability of our MEMBER-COMPANIES and our INVESTORS to ABIDE BY THESE POLICIES.
A) IPO CANDIDATE OFFICER REQUIREMENTS
CapEx IPO CANDIDATE COMPANIES must organize and elect a BOARD OF DIRECTORS (BOD) consisting of at minimum three persons and constituting IN ANY CONFIGURATION the following roles;
* a CHAIRMAN of the BOARD (COB),
* a CHIEF EXECUTIVE OFFICER (CEO),
* a CHIEF FINANCIAL OFFICER (CFO), and
* AT LEAST ONE INDEPENDENT OUTSIDE DIRECTOR / BOARDMEMBER - (defined as a person having no direct operational responsibility for the day-to-day activities of the company).
The (BOD) may appoint additional OFFICERS (CCO, CIO, CMO, COO, CTO, etc.) where appropriate.
By Definition, the COB is responsible FOR/TO the SHAREHOLDERS above ALL else. Typically the COB is also responsible for articulating the strategic Business Plan, and for oversight of all other Company Officers.
The CEO is responsible for the company's operational performance and tactical execution of the Business Plan.
The CFO is responsible for the Financial performance of the company, and particularly for producing and distributing an accurate INCOME STATEMENT and BALANCE SHEET each month.
The OUTSIDE DIRECTOR/BOARDMEMBER(s) is/are responsible for monitoring the character and integrity of the BOD independently, and shall report any irregularities he/she may discover to the SHAREHOLDERS and CapEx promptly.
The (BOD) shall serve AT THE DISCRETION OF THE SHAREHOLDERS as determined by a COMMON MAJORITY SHAREHOLDER VOTE for a TERM LIMIT as DEFINED in a Corporate Charter, Business Plan, Articles of Incorporation, Prospectus, Published Shareholder Meeting Minutes or other documents that adequately describes the roles and responsibilities, and SERVICE TERM of EACH OFFICER.
Such document shall additionally define the NOMINATION and ELECTION PROCESS for the replacement of Board Members should an Officer resign or otherwise fail to complete their term (ie; Special Election).
At company formation, the (BOD) MUST DEFINE a BUSINESS SUCCESSION PLAN that clearly and definatively articulates a strategy for either the CONTINUATION OF THE BUSINESS AS AN ONGOING CONCERN or LIQUIDATION OF ITS ASSETS IN A MANNER PREFERENTIAL TO NON-OFFICER SHAREHOLDERS in the event that an OFFICER OR FOUNDER exits the business unexpectedly.
Such plan must be PUBLISHED on CapEx AND DISTRIBUTED to SHAREHOLDERS as a BINDING COVENANT and ADMINISTERED in good faith as countersigned by each member of the (BOD).
ALL OFFICERS shall meet the following minimum requirements;
(i) - Must be a "Resident" of Second Life(R) in good standing for a minimum of 90 days prior to commencing an IPO as evidenced by the "BORN:" date displayed in your SL Avatar Profile,
(ii) - Must have "Payment Information" on file with Linden Lab as evidenced by the information contained in the "ACCOUNT:" field of your SL Avatar Profile,
(iii) - Must be articulate and fluent in the English Language.
ALL of the foregoing IPO CANDIDATE OFFICER REQUIREMENTS must be on-file and complete to the sole satisfaction of CapEx PRIOR TO THE COMMENCEMENT and SALE OF INITIAL PUBLIC OFFERING SHARES TO THE PUBLIC. In the event that a (BOD) is NEWLY NOMINATED as part of the IPO, such nominations shall be RATIFIED BY SHAREHOLDERS WITHIN 30 DAYS of THE COMMENCEMENT OF TRADING FOLLOWING THE SUCESSFUL COMPLETION OF AN IPO.