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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of the Securities Exchange Act of 1934
Go Call, Inc.
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(Name of Small Business Issuer in its charter)
Delaware 65-0794980
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Plaza 138, Unit 5, Route 138, KM 30, Kahnawake, Quebec, Canada, J0L1B0
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(Address of principal executive offices) (Zip Code)
450-691-3051
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(Issuer's telephone number, including area code)
with copies to:
Matthias & Berg LLP
Jeffrey P. Berg, Esq.
1990 South Bundy Drive, Suite 790
Los Angeles, California 90025
(310) 820-0083
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to be registered
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None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.001 par value per share
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(Title of class)
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AVAILABLE INFORMATION
Upon this Registration Statement becoming effective, the Company will
become subject to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and in accordance therewith will file
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its New York Regional Office, Room 1300, 7 World
Trade Center, New York, New York 10048; and at its Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material may also be obtained from the
Public Reference Section of the Commission at prescribed rates. In addition,
such materials may be accessed electronically at the Commission's site on the
World Wide Web, located at http:/www.sec.gov.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other reports as the Company
deems appropriate or as may be required by law.
THIS REGISTRATION STATEMENT ON FORM 10-SB (THE "REGISTRATION
STATEMENT") MAY BE DEEMED TO CONTAIN FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS IN THIS REGISTRATION STATEMENT OR HEREAFTER INCLUDED IN OTHER
PUBLICLY AVAILABLE DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION"), REPORTS TO THE COMPANY'S STOCKHOLDERS AND OTHER PUBLICLY
AVAILABLE STATEMENTS ISSUED OR RELEASED BY THE COMPANY INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE THE COMPANY'S ACTUAL
RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE
FUTURE RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS EXPRESSED
OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FUTURE RESULTS ARE BASED
UPON MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT CONDITIONS AND THE MOST
RECENT RESULTS OF OPERATIONS. THESE RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE
RISKS SET FORTH HEREIN, EACH OF WHICH COULD ADVERSELY AFFECT THE COMPANY'S
BUSINESS AND THE ACCURACY OF THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Go Call, Inc., a Delaware corporation (the "Company"), together with
its wholly-owned subsidiaries, Go Cash, Inc., a Turks and Caicos corporation,
and Go Call Canada, Inc., an Ontario (Canada) corporation (collectively, the
"Company") is principally a provider of services to businesses engaged in
electronic commerce on the Internet ("E-commerce"). Such services include
research and development of E-commerce technology, management, marketing and
long-range planning.
HISTORY OF THE COMPANY
The Company was incorporated on March 1, 1994 as Omni Advantage, Inc.,
a Louisiana corporation. On February 12, 1998, the Company formed a Delaware
subsidiary, Go Call, Inc. ("Go Call"), and merged into such subsidiary on
February 17, 1998. Go Phone Inc., an Ontario (Canada) corporation ("Go Phone"),
was formed on August 10, 1995 and engaged in telecommunications business,
including sale of long distance time, sale of prepaid telephone cards and
operation of an Internet service provider for the Ontario market. Effective
February 24, 1998, the Company effected a merger with Go Phone in which the
shareholders of Go Phone received 5,906,175 shares of Go Call, which represented
approximately seventy-two percent (72%) of the Company's issued and outstanding
shares of Common Stock.
Pursuant to a Stock Acquisition Agreement dated as of March 11, 1999,
the Company acquired approximately 92% of the issued and outstanding common
stock of Country Star Restaurants ("Country Star"), a Delaware corporation, from
the three principal shareholders of Country Star in exchange for 4,552,751
shares of the Company's Common Stock, which represented twenty-three percent
(23%) of all of the Company's issued and outstanding Common Stock. The Company
announced its intention to the remaining shareholders of Country Star to merge
Country Star into the Company in exchange for shares of the Company's Common
Stock. After assuming control of Country Star's operations, the Company advanced
approximately $250,000 to Country Star in exchange for a promissory note secured
by all of Country Star's assets. Management of the Company subsequently
determined that the Company had not received complete disclosure of Country
Star's operations and, pursuant to a repurchase agreement dated as of August 5,
1999, redeemed the 4,552,751 shares of its Common Stock for a cash payment of
$728,440. As of August 19, 1999, Country Star and the Company agreed to
terminate plans to merge the two companies. The Company has announced its
intention to dispose of its interest in Country Star as and when a suitable
buyer becomes available. No assurance can be given that the Company will be able
to able to sell its interest in Country Star on terms acceptable to the Company,
or at all.
BUSINESS OF THE COMPANY
BUSINESS PLAN
Beginning in February, 1998, the principal business of the Company was
the marketing of telecommunications services, a business which had been carried
out by Go Phone. During the remainder of 1998, management of the Company
explored a number of new business possibilities pursuant to its goal of
exploiting its technological and marketing experience to expand into a variety
of E-commerce businesses. Thus, while the Company intends to draw on its skills
to provide services to a number of different companies engaged in E-commerce,
there is no specifically targeted industry or business segment for such
potential customers and co-venturers. The Company recognizes that to carry out
its goal it will be necessary to enter into a number of E-commerce ventures long
before they are proven to be successful and , therefore, that an essential
element of its business plan involves entering into of a number of new
businesses and, inevitably, the shelving of those which did not meet the
Company's expectations. In addition, because of the need to act quickly, the
Company will require a significant amount of outside financing to carry out its
business plan. Only a small number of the E-commerce ventures entered into by
the Company have shown enough revenue or promises of revenue for the Company to
continue developing them. See "Description of Business - Competition."
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As of the date of this Registration Statement, the Company's businesses
are: (i) Providing services to GoCasino.com and ImperialDragon.com, two Internet
gaming businesses; (ii) Marketing personal pagers which, in addition to the
usual services, carry paid advertisements, including information on odds for
sports books; (iii) Go Indexus, a sophisticated, constantly updated E-commerce
"yellow pages;" (iv) GoBannerAd.com, which provides services to prepare and
market Internet "banner" advertisements; and (v) Go Internet Kiosks, which are
stand-alone, Internet-connected computers available to the public for a fee and
which are intended to be located, among other locations, in convenience stores.
Up to the date of this Registration Statement, of the above businesses, the
gaming businesses provide almost all of the Company's revenue; the technology
for Go.Indexus is still in the development stage; and the Company has placed the
Internet Kiosks and the Banner.Ad businesses on hold pending entering into
arrangements with joint venture partners to share the development and marketing
responsibilities. The Company estimates that the Go.Indexus technology may
require financing of approximately $2,000,000 and six months of development time
to bring the technology to the point where it can be commercially marketable, of
which no assurance can be given. No assurance can be given that any of the
businesses other than that providing services to gaming companies will generate
revenue to the Company.
BACKGROUND OF INTERNET BUSINESS
The Internet has become an important medium for communication, news,
entertainment and commerce. As a result, it is experiencing rapidly increasing
public awareness, substantial growth and acceptance on a global scale. A 1998
report issued by the United States Department of Commerce estimated that the
number of Internet users worldwide is expected to increase from approximately
100 million at year end 1997 to over 320 million by the year 2002. The same
report projects even higher growth rates for traffic and electronic commerce.
E-commerce is expected to increase from an estimated $8.6 billion in 1998 to
approximately $23.3 billion in 2001. In addition, this growth is being driven by
rapid technological advances such as the installation of more secure networks,
the introduction of better and higher performance Internet access options and
the improvement of PCs, as well as the increased penetration of PCs in both the
home and the workplace.
One of the basic growth factors of the Internet is its ability to
deliver information in ways that are not possible using traditional media
sources such as broadcast or print media. Unlike these traditional sources the
Internet is capable of combining textual, graphical, streamed audio and streamed
video formats in a dynamic, interactive and real-time environment. This has
created new programming and content delivery opportunities that are not only
capturing the interest of the general public but also shifting user preferences
away from traditional news and entertainment sources.
A second growth factor of the Internet is the fact that it is rapidly
becoming a powerful and credible new commerce channel. The Internet has already
had a significant impact on consumer and business transactions in a broad range
of industries, including financial services, particularly online securities
trading, and numerous consumer product sectors. Individuals are showing
increasingly strong preferences to consummate transactions online rather than
via traditional means such as over the phone or in person.
The Company believes that because of the Internet we will see a
profound difference in the way both businesses and individuals engage in trade,
and consumers will use various applications of E-commerce trading in their
everyday activities, from grocery shopping to stock trading, booking travel,
obtaining home loans, buying a new car, from telephone calls to interactive
videoconferencing in their own homes.
Most E-commerce businesses exploit the interactive nature and the
instantaneous communications of the Internet to bypass the relative
inefficiencies of existing marketing methods. Thus, for example, a resident of
the United Kingdom can engage in online gaming from the privacy of his home,
without the necessity of traveling to the site of a casino. At present, there
may be thousands of businesses seeking means to market their products and
services over the Internet. It is the Company's goal to identify a handful of
E-commerce businesses, either in the planning or start-up stage, which it
perceives have a reasonable chance for success and which can benefit from some
of the skills and assets which the Company has to offer.
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THE COMPANY'S SERVICE BUSINESS TO OFFSHORE GAMING BUSINESSES
The Company does not own any casinos and does not accept or place any
wagers; rather, Go Cash provides services to online casinos located and
incorporated outside the United States and owned by unrelated third parties. The
Company provides a number of services to foreign companies which own and operate
online gaming businesses. The Company services the gaming operations owned by
GoCasino.com and ImperialDragonCasino.com, including purchasing or leasing the
necessary software to manage the business. The Company's services include
ongoing marketing of the casino's business, performing calculations and
determining odds, preparing the website graphical interface with the customer,
managing secure electronic transfer of funds, storage of data on individual
players, administration of customer support service, continuous update of
website and addition of new games. The processing of the wagering transactions
for GoCasino.com and ImperialDragonCasino.com is performed outside the United
States by its subsidiary Go Cash. Certain specific services, such as processing
of credit card transactions, are outsourced to unrelated third parties.
The Company began its casino service operation in September, 1998, with
GoCasino.com, an Antigua corporation. In August, 1999, the Company began
providing services to ImperialDragonCasino.com, an Antigua corporation, which
intends to exploit markets in Asia.
During October or November, 1999, the Company intends to launch and
provide services to an unaffiliated third party sports wagering company ("Sports
Book") in which customers will be able to place bets on major sports events.
Although the Company's experience in servicing its existing casino customers
should be a significant advantage in servicing the sports book, there are
important differences. In general, casino games involve a long-term percentage
which works against the player and generates steady profits from operations for
the casino. With rare exceptions, this advantage should provide a stable and
predictable profit to the casino. In sports betting, there is a theoretical
percentage which represents the advantage a bookmaker would have if the odds
guaranteed a constant commission regardless of the outcome. Thus, a player might
wager $11 to win $10. While the profit margin may be greater in sports wagering
than in casino games, no assurance can be given that any sports book, including
one which has contracted with the Company, will generate gross profits from
operations, and, if not, the Company would receive no revenue for its services.
PAGER BUSINESS
In March, 1999, the Company entered into an agreement with PageMaster
Corporation ("PageMaster") under which PageMaster and the Company are engaging
in a mutual promotion of their respective businesses. PageMaster provides pagers
to the Company without cost as long as such pagers are marketed by the Company
to persons who sign up for at least one year's pager service. The Company will
distribute the pagers free of charge and will be entitled to run "string"
advertisements on the pagers indefinitely. Such string ads will include
information on odds on major sporting events, which are designed to stimulate
interest in wagering on the Sports Book serviced by the Company.
INDEXUS
The Company is developing software for an Internet "yellow pages" which
enables companies to provide instantly updated information on their services and
products prices to potential customers. Current search-engine based directories
are incapable of such instantaneous updating and, in the opinion of management,
are far less useful to companies and consumers alike. The Company intends to
charge participating companies a flat annual fee for listing in the searchable
directory. In addition, the Company intends to sell banner advertisements on the
search engine website. The Company estimates that the development and marketing
of Indexus will require approximately five months more work and an expenditure
of approximately $2,000,000. No assurance can be given that the development will
result in a commercially viable system or that, if it does, the Company will
receive revenue from exploitation of Indexus.
CARIBBEAN RESORT
In November 30, 1997, the Company acquired a hotel property ("Resort
Property") in the Dominican Republic for 3,360,000 shares of Common Stock of Go
Phone, which constituted approximately 18% of the issued and outstanding Common
Stock of Go Phone. In addition to deriving revenue from tourists referred by
travel agents, the Company offers one-week packages as promotions for potential
customers of the Company's other activities, principally Internet gaming.
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OTHER OPERATIONS
TELECOMMUNICATIONS
The Company continues to provide telecommunication services, as well as
Internet service to customers in the Greater Toronto areas, including sale of
long distance time. This business was formerly the principal operation of Go
Phone; management of the Company does not intend to expend money and personnel
in expansion of this business.
INTERNET CAFE
The Company also operates an "Internet Cafe" in Kitchener, Ontario,
where customers can eat, drink and rent time at computer stations to surf the
Internet and check e-mail. The Company does not plan to build more such cafes
and uses the existing cafe as a testing ground for products and services offered
by the Company in connection with its other operations.
INTERNET KIOSKS
Internet Kiosks are stand-alone computer stations, much like public
telephones, where a consumer can log on to the Internet and send and receive
e-mail. These are intended to be placed in high traffic areas, such as
convenience stores and airports. The Company is beta testing these kiosks and is
considering different methods of marketing them.
INTERNET BANNER SWAP ADVERTISEMENTS
The Company engages in swap advertising on the Internet, wherein the
Company provides free banner advertising on the websites operated by the Company
in exchange for free banner ads on websites operated by third parties. To date,
the Company has not received any revenue from this activity but will receive
free banner ads indefinitely on all pagers sold.
YEAR 2000
The Year 2000 ("Y2K") risk is the result of computer programs being
written using two digits rather than four digits to define the applicable year.
Computer programs that have sensitive software may recognize a date using "00"
as the year 1900 rather than the Y2K. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with Y2K requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
Based on an internal assessment, the Company believes that its software
programs, either leased or purchased from outside vendors, are Y2K compliant or
will be by December 31, 1999. The Company began assessing its state of Y2K
readiness during late 1998. This included reviewing the Y2K compliance of
third-party software vendors and of those companies which perform critical
services for the Company, including credit card processing of wagering
transactions. The Company will continue to require its service providers and
vendors of software to provide assurances of their Y2K compliance.
As of the date of this Registration Statement, the Company has incurred
minimal costs in identifying and evaluating Y2K compliance issues. Most of the
Company's expenses have related to, and are expected to continue to relate to,
the operating costs associated with time spent by employees in the evaluation
Y2K compliance matters. At this time, the Company does not possess the
information necessary to estimate the potential costs of future revisions to its
software packages should revisions be required or the replacement of third-party
software, if any, that are determined to not be Y2K compliant. Although the
Company believes that its software programs, leased or purchased from outside
vendors are either already Y2K compliant or will be by December 31, 1999,
failure to identify non Y2K compliant software could have a material and adverse
effect on the Company's business, results of operations and financial condition.
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INTELLECTUAL PROPERTY
In developing credit card transaction logistics for GoCasino.com and
ImperialDragonCasino.com, both Antigua corporations, Go Cash purchased or leased
publicly available software technologies from unrelated third parties and then
combined such software into systems of its own design. Management of the Company
believes that its application of such software provides the Company with a
competitive advantage over other companies in the same business. For example,
winners of wagers on GoCasino.com and ImperialDragonCasino.com receive credits
to their account automatically and instantaneously for their winnings. Many
other casino systems require some human intervention before such winnings are
credited. Although the Company has no proprietary interest in the component
elements of the Company's technology, the method of combining such software does
constitute a valuable trade secret which could take time for a competitor to
replicate. If a well-financed competitor were able to reproduce the Company
software application system, it could have an adverse effect on the Company's
competitive position in the short run.
COMPETITION
The E-commerce industry in which the Company's business operates is
highly competitive. A great many companies are actively exploiting the perceived
opportunities in Internet-based businesses, including the businesses in which
the company is engaged. Some of the companies with which the Company competes
are substantially larger, have more substantial histories, backgrounds,
experience and records of successful operations, greater financial, technical,
marketing and other resources, more employees and more extensive facilities than
the Company has or will have in the foreseeable future. The Company's ability to
compete effectively may also depend on the availability of capital. Many of the
Company's competitors have access to significantly greater capital and
management resources then does the Company.
The Company believes that the key to establishing and maintaining a
competitive position in the E-commerce business will be the ability to identify
new E-commerce businesses which have a good chance of success, to apply the
Company's skills in software applications for managing and servicing such
businesses and in marketing such businesses and to do all of this before other
companies perceive the same business opportunity. Thus, the key to the company's
competitive position may be its ability to act quickly. This, in turn, will
require capital resources to enable the Company to seize opportunities before
its competitors. The Company will have to obtain outside financing for such
resources, for which no assurance can be given. See "Business - Capital
Requirements."
EMPLOYEES
As of September 25, 1999, the Company had 16 full-time and part-time
employees, consisting of 1 management person and 15 staff persons The staff
persons work principally at the Company's Internet Cafe. Except for the chief
executive officer, the Company relies on outside consultants to perform all the
administrative and management functions of the Company; at present the Company
has 7 outside consultants for these purposes. The Company considers its employee
relationships to be satisfactory. None of the Company's employees is a member of
any labor union and the Company has never experienced any business interruption
as a result of any labor disputes.
REGULATION OF INTERNET WAGERING
Although the Company provides services to GoCasino.com and
ImperialDragonCasino.com, it does not own any gaming establishments. The
headquarters and service operations of Go Cash are all located and carried out
outside the United States. Gaming activities carried out by other companies
which either are or are perceived to be located in the United States are subject
to extensive statutory and regulatory control by both state and federal
authorities, and are likely to be significantly affected by any changes in the
political climate and economic and regulatory policies. Such changes may have a
material adverse impact on the business of the casinos with which the Company
does business and, therefore, with the business of the Company itself.
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Management of the Company that the Company's activities conform to
those gaming laws and regulations as currently applied, although no assurance
can be given to that effect, especially since there is very little clear
statutory and case law authority. Like other companies involved with gaming
business, the Company may face the risk of either civil or criminal proceedings
brought by governmental or private litigants who disagree with the Company's
interpretation of the applicable laws. Because there is little guiding
authority, there is a risk that the Company could lose such lawsuits or actions
and be subject to significant damages or civil or criminal penalties.
The Company intends to comply with all applicable laws and regulations,
including the proposed Kyl bill, if enacted, and will monitor proposed
regulations and legislation that would affect its business.
International expansion of the Go Cash's business, including in
particular the Asian market serviced by ImperialDragonCasino.com may be subject
to regulation in those countries in which it is made available. The Company
believes that the casinos set up and serviced by the Company can operate, or
license technology, in numerous jurisdictions that allow telephone and account
wagering, such as Canada, Mexico, the United Kingdom, Australia, and Hong Kong.
However, the Company may not be able to obtain the approvals necessary to market
its services in such jurisdictions.
RISK FACTORS
THE SECURITIES ISSUED BY THE COMPANY ARE HIGHLY SPECULATIVE AND INVOLVE
A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION. AN INVESTMENT IN THESE
SECURITIES SHOULD BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. IN ADDITION TO THE FACTORS SET FORTH ELSEWHERE IN THIS
REGISTRATION STATEMENT, PROSPECTIVE INVESTORS SHOULD GIVE CAREFUL CONSIDERATION
TO THE FOLLOWING RISK FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
PURCHASING ANY SUCH SECURITIES.
THIS REGISTRATION STATEMENT MAY BE DEEMED TO CONTAIN FORWARD-LOOKING
STATEMENTS. FORWARD-LOOKING STATEMENTS IN THIS REGISTRATION STATEMENT OR
HEREAFTER INCLUDED IN OTHER PUBLICLY AVAILABLE DOCUMENTS FILED WITH THE
COMMISSION, REPORTS TO THE COMPANY'S STOCKHOLDERS AND OTHER PUBLICLY AVAILABLE
STATEMENTS ISSUED OR RELEASED BY THE COMPANY INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE THE COMPANY'S ACTUAL RESULTS,
PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE FUTURE
RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FUTURE RESULTS ARE BASED UPON
MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT CONDITIONS AND THE MOST RECENT
RESULTS OF OPERATIONS. THESE RISKS INCLUDE, BUT ARE NOT LIMITED TO, RISKS SET
FORTH HEREIN, EACH OF WHICH COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS AND
THE ACCURACY OF THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.
HIGH-RISK BUSINESS. The Company's business involves identifying and
exploiting E-commerce business opportunities in a manner that is more efficient
and more timely than its competitors. Thus, the success of the Company depends
in significant part on the ability of its management to make critical judgments
as to which potential E-commerce businesses have the potential to be successful
and present an opportunity for the Company to employ its skills and assets to
participate therein. Such judgments are difficult and involve taking significant
risks. Even where an E-commerce business proves initially to be successful, the
Company must make additional critical judgments to maintain market position in
an extremely competitive environment. Since February, 1998, the Company has
engaged in a number of different potential businesses, only one of which has
generated significant revenue to the Company and most of which are dormant.
Although the revenue generated from Go Cash's credit card logistics service
business has increased revenue since September, 1998, management has had to make
constant changes and new capital investments to maintain that growth. As of the
date of this Registration Statement, management intends to expand its credit
card logistics service business to other businesses, including bingo and
wagering on sports events. No assurance can be given that the Company's
decisions will prove correct often enough to maintain and build its E-commerce
business. See "Description of Business - Business of the Company - Business
Plan."
LACK OF PROFITABILITY AND HISTORY OF LOSSES. The Company incurred
losses of $393,967, $796,137 and $100,460 for the periods from July 1, 1997
through February 28, 1998, from March 1, 1998 through December 31, 1998, and
from January 1, 1999 through June 30, 1999, respectively. The Company expects to
continue to incur operating losses over at least the next twelve months as it
continues to devote significant financial resources to development activities
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and as the Company expands its operations generally. In order to achieve
profitability, the Company will have to identify and exploit E-commerce ventures
which are accepted on a commercial basis, and no assurance can be given that the
Company will be able to accomplish this goal or, even if it does, that the
Company will operate profitably in the future. See " "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Description of
Business" and "Financial Statements."
NEED TO ENGAGE IN A NUMBER OF VENTURES. The Company's business assets
consist of its technological and marketing skills as applied to E-commerce
operations. In order to exploit these assets pursuant to the Company's business
plan, the Company will have to enter into a number of different E-commerce
ventures long before such ventures are proven to be successful. Inevitably, a
number of such ventures will not be successful and will have to be shelved by
the Company. No assurance can be given that the Company will be able to enter
into enough successful ventures to offset the losses on the unsuccessful
ventures. See "Description of Business - Business Plan."
NEED FOR ADDITIONAL FINANCING. The Company's business plan requires it
to expand its business operations continuously to exploit new E-commerce
opportunities before competitors can do so, which will require significant
financing. To carry out the Company's business plan, it will require
approximately $5,000,000, including $2,000,000 for the Indexus project alone,
over the next twelve months, which will have to come from outside sources. There
can be no assurance that the Company will be able to obtain such outside
financing on terms acceptable to the Company, or at all. Failure to obtain such
financing could have a material adverse effect on the Company's operations. See
"Description of Business - Capital Requirements" and "Management's Discussion
and Analysis or Plan of Operation."
COMPETITION. The Company faces competition from a wide variety of
businesses engaged in E-commerce ventures. Some of the companies with which the
Company competes are substantially larger, have more substantial histories,
backgrounds, experience and records of successful operations, greater financial,
technical, marketing and other resources, more employees and more extensive
facilities than the Company has or will have in the foreseeable future. Many of
the Company's competitors have access to significantly greater capital and
management resources then does the Company. In addition, the advantages of
E-commerce, from the Company's point of view, also present serious competitive
challenges. Competitors can arise in any part of the world and may be able to
take advantage of lower costs and fees to operate their businesses. There can be
no assurance that the Company will be competitive with larger or more efficient
E-commerce service companies in the future. See "Description of
Business--Competition."
DIFFICULTY OF MAINTAINING TECHNOLOGICAL POSITION The Company's
performance depends on its ability to develop, license or acquire new
technologies to enhance its existing services in a time effective manner. The
Company may not be able to maintain its competitive technological position
against current and potential competitors, especially those with greater
financial resources. The Company relies on its application of software
technology to give it a competitive advantage. Such software is not currently
protected by patents or copyrights. The Company's main technological advantage
over potential competitors is its software lead-time in the market and the
Company's experience in operating a wagering business. Therefore, if competitors
introduce new products and services which are based on the Company's application
of software, the Company may have little recourse and its business could be
adversely affected. See "Description of Business - Intellectual Property" and
"Description of Business -Competition."
RISKS OF CASINO GAMING - GOVERNMENT REGULATION. Even though Go Cash's
service business does not operate in the United States, various federal and
state statutes and regulations could have a direct and material adverse effect
on the Company's business and indirectly could have a material adverse effect on
the public's demand for the Company's services. Gaming activities are subject to
extensive statutory and regulatory regulation by both state and federal
authorities, and are likely to be significantly affected by any changes in the
political climate and changes in economic and regulatory policies. Such effects
could be materially adverse to the Company. See "Description of Business -
Regulation of Internet Wagering."
NO INDEPENDENT DIRECTORS. The Board of Directors consists of two
directors, neither of whom is independent. Although all directors are required
to act in the best interests of the Company and its stockholders, directors not
employed by the Company may be able to more independently assess certain key
areas, such as compensation of management as it relates to operations and
progress of the Company, and reviewing accounting issues, including the scope
and adequacy of internal control procedures, and recommending independent
auditors to serve the Company. The Company has no compensation committee.
Independent directors also aid in avoiding conflicts of interest that exist by
9
<PAGE>
virtue of affiliation with the Company. Management has undertaken to appoint
independent directors to the Board at such time as qualified candidates are
available. There can be no assurance that such candidates will be available. See
"Directors, Executive Officers, Promoters and Control Persons."
LIMITED PUBLIC MARKET FOR COMMON STOCK. There is currently a limited
public market for the Common Stock. Holders of the Company's Common Stock may,
therefore, have difficulty selling their Common Stock, should they decide to do
so. In addition, there can be no assurances that such markets will continue or
that any shares of Common Stock which may be purchased may be sold without
incurring a loss. Any such market price of the Common Stock may not necessarily
bear any relationship to the Company's book value, assets, past operating
results, financial condition or any other established criteria of value, and may
not be indicative of the market price for the Common Stock in the future.
Further, the market price for the Common Stock may be volatile depending on a
number of factors, including business performance, industry dynamics, news
announcements or changes in general economic conditions. See "Market for Common
Equity and Related Shareholder Matters."
DISCLOSURE RELATING TO LOW-PRICED STOCKS. The Company's Common Stock is
currently listed for trading in the over-the-counter market on the NASD
Electronic Bulletin Board, which is generally considered to be less efficient
than markets such as NASDAQ or other national exchanges, and which may cause
difficulty in conducting trades and difficulty in obtaining future financing.
Further, the Company's securities are subject to the "penny stock rules" adopted
pursuant to Section 15 (g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The penny stock rules apply to non-NASDAQ companies whose
common stock trades at less than $5.00 per share or which have tangible net
worth of less than $5,000,000 ($2,000,000 if the company has been operating for
three or more years). Such rules require, among other things, that brokers who
trade "penny stock" to persons other than "established customers" complete
certain documentation, make suitability inquiries of investors and provide
investors with certain information concerning trading in the security, including
a risk disclosure document and quote information under certain circumstances.
Many brokers have decided not to trade "penny stock" because of the requirements
of the penny stock rules and, as a result, the number of broker-dealers willing
to act as market makers in such securities is limited. In the event that the
Company remains subject to the "penny stock rules" for any significant period,
there may develop an adverse impact on the market, if any, for the Company's
securities. See "Market for Common Equity and Related Shareholder Matters."
POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS. The
Company's Certificate of Incorporation includes certain provisions which are
intended to protect the Company's stockholders by rendering it more difficult
for a person or persons to obtain control of the Company without cooperation of
the Company's management. These provisions include certain super-majority
requirements for the amendment of the Company's Certificate of Incorporation and
Bylaws. Such provisions are often referred to as "anti-takeover" provisions. The
inclusion of such "anti-takeover" provisions in the Certificate of Incorporation
may delay, deter or prevent a takeover of the Company which the stockholders may
consider to be in their best interests, thereby possibly depriving holders of
the Company's securities of certain opportunities to sell or otherwise dispose
of their securities at above-market prices, or limit the ability of stockholders
to remove incumbent directors as readily as the stockholders may consider to be
in their best interests. See "Market for Common Equity and Related Shareholder
Matters."
FUTURE ISSUANCES OF PREFERRED STOCK. The Company's Certificate of
Incorporation, as amended, authorizes the issuance of preferred stock with such
designation, rights and preferences as may be determined from time to time by
the Board of Directors, without stockholder approval. In the event of the
issuance of additional series of preferred stock, the preferred stock could be
utilized, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company. See "Market for Common Equity and
Related Shareholder Matters."
LACK OF DIVIDENDS ON COMMON STOCK. As of the date of this Registration
Statement, the Company has paid no dividends on its Common Stock to date and
there are no plans for paying dividends on the Common Stock in the foreseeable
future. The Company intends to retain earnings, if any, to provide funds for the
expansion of the Company's business. See "Market for Common Equity and Related
Shareholder Matters."
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
[TO BE PROVIDED BY AMENDMENT]
ITEM 3. DESCRIPTION OF PROPERTY
The Company is in the process of moving its principal administrative,
data and marketing facilities to offices in the greater Montreal, Quebec area,
in a space totaling approximately 950 square feet., for which the Company is
paying rent of total approximately US$900 on a month-to-month basis. The
Company's lease in Cambridge has been assumed by a new tenant which is an
unrelated third party, which assumption has been consented to by the landlord.
The Company has been released by the landlord from any further obligations under
such lease. The Company also maintains property in Kitchener, Ontario for the
Internet cafe of approximately 2,000 square feet, for which the Company pays a
monthly rental of US$1,500 on a lease which will expire in September, 2001. The
Company owns and operates a resort hotel in the Dominican Republic which is
debt-free.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of August 31, 1999, the Company had issued and outstanding _ shares
of Common Stock. The following table reflects, as of August 31, 1999, the
beneficial Common Stock ownership of: (a) each director of the Company, (b) each
executive officer named in the Summary Compensation Table, (c) person known by
the Company to be a beneficial owner of five percent (5%) or more of its Common
Stock and (d) all executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Name and Address of Number
Beneficial Owner of Shares Percent
- ---------------- --------- -------
<S> <C> <C>
Michael Ruge, CEO and Director (1) (2) 3,567,916 20
Irving Insik Moon, Director (2) 100,000 1
All Directors and Officers as a Group 3,567,916 21
(2 persons)
</TABLE>
- ---------------
# Pursuant to the rules of the Commission, shares of Common Stock which an
individual or group has a right to acquire within 60 days pursuant to the
exercise of options or warrants are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table.
1. Includes 460,000 shares owned directly, 207,916 shares owned by his
wife Elspeth Ruge, and 2,900,000 shares owned by the Ruge Family Trust.
2. The address for Messrs Ruge and Moon is Plaza 138, Unit 5, Route
138, KM 30, Kahnawake, Quebec
11
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors of the Company currently have terms which will end at the
next annual meeting of the stockholders of the Company or until their successors
are elected and qualify, subject to their prior death, resignation or removal.
Officers serve at the discretion of the Board of Directors. There are no family
relationships among any of the Company's directors and executive officers.
The following reflects certain biographical information on the current
directors and executive officers of the Company:
NAME POSITION AGE
- ---- -------- ---
Michael Ruge Director and Chief Executive Officer 37
Irving Insik Moon Director 61
MICHAEL RUGE, Chief Executive Officer and a director of the Company,
was the President of Go Phone, Inc., a telecommunications company, from June,
1995 until its merger into the Company in February, 1998. From 1991 to May,
1994, Mr. Ruge managed the Hotel Jardin del Sol in Sosua, Dominican Republic.
Mr. Ruge founded Premium Spring Water and Juice Company, Inc. in 1987 and took
that company public in 1990.
IRVING INSIK MOON, a director of the Company, has been, since August,
1982, the General Manager of I. Moon Associates Ltd., an international business
consulting firm located in Ontario, Canada. Mr. Moon was awarded a B.A. in
mechanical engineering from Hanyang University in Seoul, Korea.
ITEM 6. EXECUTIVE COMPENSATION
No executive officer of the Company received total compensation of at
least $100,000, for the fiscal year ended December 31, 1998:
COMPENSATION OF DIRECTORS.
The Company pays no compensation to its directors for services as
directors.
DIRECTORS AND OFFICERS LIABILITY INSURANCE.
The Company does not have directors' and officers' liability insurance.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS.
The Company has no compensatory plans or an arrangements which relate
to the resignation, retirement or any other termination of an executive officer
or key employee of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
It is the practice of management that transactions between the Company
and its officers, directors, employees or stockholders or persons or entities
affiliated with officers, directors, employees or stockholders be on terms no
less favorable to the Company than it could reasonably obtain in arm's-length
transactions with independent third parties. No assurance can be given that all
such agreements will be on such terms.
12
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 100,000,000 shares of $0.001 par
value Common Stock. Subject to those preferential rights, as may be determined
by the Board of Directors of the Company in the future in connection with the
issuance of a series of Preferred Stock, holders of Common Stock are entitled to
cast one vote for each share held of record, to receive such dividends as may be
declared by the Board of Directors out of legally available funds and to share
ratably in any distribution of the Company's assets after payment of all debts
and other liabilities, upon liquidation, dissolution or winding up. Stockholders
do not have preemptive rights or other rights to subscribe for additional
shares, and the Common Stock is not subject to redemption. The outstanding
shares are validly issued, fully paid and nonassessable.
Under Delaware law, each holder of a share of Common Stock is entitled
to one vote per share for each matter submitted to the vote of the stockholders,
and cumulative voting is allowed for the election of directors, if provided for
in the Certificate of Incorporation. The Company's Certificate of Incorporation
does not provide for cumulative voting.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
up to 2,000,000 shares of $0.001 par value Preferred Stock. There are no shares
of Preferred Stock issued. The Company's Board of Directors has the power,
without further action by the holders of Common Stock, to designate the relative
rights and preferences of the preferred stock, and to issue the preferred stock
in such one or more series as designated by the Board of Directors. The
designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or other
preferences, any of which may be dilutive of the interest of the holders of the
common stock or the preferred stock of any other series. The issuance of
preferred stock may have the effect of delaying or preventing a change in
control of the Company without further shareholder action and may adversely
affect the rights and powers, including voting rights, of the holders of common
stock. In certain circumstances, the issuance of preferred stock could depress
the market price of the common stock. The Board of Directors effects a
designation of each series of preferred stock by filing with the Delaware
Secretary of State a certificate of designation defining the rights and
preferences of each such series.
WARRANTS
The Company has issued no warrants for the purchase of shares of its
Common Stock.
OPTIONS
During fiscal 1998, options to acquire 1,902,000 shares of Common Stock
were granted by the Company, including options for 800,000 shares at exercise
prices from $1.00 to $5.00 per share to consultants and suppliers of the
Company. In August, 1999, the Company issued options to acquire 10,000 shares of
Common Stock at an exercise price of $1.50 per share. As of the date of this
Registration Statement, none of these options has been exercised.
1999 STOCK OPTION PLAN. As of April 12, 1999, the Company's Board of
Directors approved a 1999 Stock Option Plan (the "Stock Option Plan"), and was
approved by the shareholders on August 31, 1999. The Company has reserved for
issuance thereunder an aggregate of 1,500,000 shares of Common Stock. The Stock
Option Plan provides for the grant to employees of the Company of incentive
stock options within the meaning of Section 422 of the Code, and for the grant
to employees and consultants of nonstatutory stock options. The description of
the 1999 Stock Option Plan is intended to be a summary of the material
provisions of the Stock Option Plan and does not purport to be complete.
GENERAL. The general purposes of the Stock Option Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to employees and consultants of
the Company and to promote the success of the Company's business. It is intended
that these purposes will be effected through the granting of stock options,
which may be either "incentive stock options" as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock
options.
The Stock Option Plan provides that options may be granted to the
employees (including officers and directors who are employees) and consultants
of the Company, or of any parent or subsidiary of the Company. Incentive stock
options may be granted only to employees. An employee or consultant who has been
granted an option may, if otherwise eligible, be granted additional options. The
Company has not granted any options to purchase shares of Common Stock under the
Stock Option Plan.
ADMINISTRATION OF AND ELIGIBILITY UNDER STOCK OPTION PLAN. The Stock
Option Plan, as adopted, provides for the issuance of options to purchase shares
of Common Stock to officers, directors, employees, independent contractors and
consultants of the Company and its subsidiaries as an incentive to remain in the
employ of or to provide services to the Company and its subsidiaries. The Stock
Option Plan authorizes the issuance of incentive stock options ("ISOs"),
non-qualified stock options ("NSOs") and stock appreciation rights ("SARs") to
be granted by a committee (the "Committee") to be established by the Board of
Directors to administer the Stock Option Plan, which will consist of at least
two (2) outside directors of the Company.
13
<PAGE>
Subject to the terms and conditions of the Stock Option Plan, the
Committee will have the sole authority to determine: (a) the persons
("optionees") to whom options to purchase shares of Common Stock and SARs will
be granted, (b) the number of options and SARs to be granted to each such
optionee, (c) the price to be paid for each share of Common Stock upon the
exercise of each option, (d) the period within which each option and SAR will be
exercised and any extensions thereof, and (e) the terms and conditions of each
such stock option agreement and SAR agreement which may be entered into between
the Company and any such optionee.
All officers, directors and employees of the Company and its
subsidiaries and certain consultants and other persons providing significant
services to the Company and its subsidiaries will be eligible to receive grants
of options and SARs under the Stock Option Plan. However, only employees of the
Company and its subsidiaries are eligible to be granted ISOs.
STOCK OPTION AGREEMENTS. All options granted under the Stock Option
Plan will be evidenced by an option agreement or SAR agreement between the
Company and the optionee receiving such option or SAR. Provisions of such
agreements entered into under the Stock Option Plan need not be identical and
may include any term or condition which is not inconsistent with the Stock
Option Plan and which the Committee deems appropriate for inclusion.
INCENTIVE STOCK OPTIONS. Except for ISOs granted to stockholders
possessing more than ten percent (10%) of the total combined voting power of all
classes of the securities of the Company or its subsidiaries to whom such
ownership is attributed on the date of grant ("Ten Percent Stockholders"), the
exercise price of each ISO must be at least one hundred percent (100%) of the
fair market value of the Company's Common Stock as determined on the date of
grant. ISOs granted to Ten Percent Stockholders must be at an exercise price of
not less than one hundred ten percent (110%) of such fair market value.
Each ISO must be exercised, if at all, within ten (10) years from the
date of grant, but, within five (5) years of the date of grant in the case of
ISO's granted to Ten Percent Stockholders. An optionee of an ISO may not
exercise an ISO granted under the Stock Option Plan so long as such person holds
a previously granted and unexercised ISO. The aggregate fair market value
(determined at time of the grant of the ISO) of the Common Stock with respect to
which the ISOs are exercisable for the first time by the optionee during any
calendar year shall not exceed $100,000.
As of the date of this Registration Statement, no ISO's have been
granted.
NON-QUALIFIED STOCK OPTIONS. The exercise price of each NSO will be
determined by the Committee on the date of grant. The Company hereby undertakes
not to grant any non-qualified stock options under the Stock Option Plan at an
exercise price less than eighty five percent (85%) of the fair market value of
the Common Stock on the date of grant of any non-qualified stock option under
the Stock Option Plan. The exercise period for each NSO will be determined by
the Committee at the time such option is granted, but in no event will such
exercise period exceed ten (10) years from the date of grant. As of the date of
this Registration Statement no NSO's have been granted.
STOCK APPRECIATION RIGHTS. Each SAR granted under the Stock Option Plan
will entitle the holder thereof, upon the exercise of the SAR, to receive from
the Company, in exchange therefor, an amount equal in value to the excess of the
fair market value of the Common Stock on the date of exercise of one share of
Common Stock over its fair market value on the date of exercise of one share of
Common Stock over its fair market value on the date of grant (or in the case of
an SAR granted in connection with an option, the excess of the fair market of
one share of Common Stock at the time of exercise over the option exercise price
per share under the option to which the SAR relates), multiplied by the number
of shares of Common Stock covered by the SAR or the option, or portion thereof,
that is surrendered.
SARs will be exercisable only at the time or times established by the
Committee. If an SAR is granted in connection with an option, the SAR will be
exercisable only to the extent and on the same conditions that the related
option could be exercised. The Committee may withdraw any SAR granted under the
Stock Option Plan at any time and may impose any conditions upon the exercise of
an SAR or adopt rules and regulations from time to time affecting the rights of
holders of SARs. As of the date of this Registration Statement, no SAR's have
been granted.
14
<PAGE>
TERMINATION OF OPTION AND TRANSFERABILITY. In general, any unexpired
options and SARs granted under the Stock Option Plan will terminate: (a) in the
event of death or disability, pursuant to the terms of the option agreement or
SAR agreement, but not less than six (6) months or more than twelve (12) months
after the applicable date of such event, (b) in the event of retirement,
pursuant to the terms of the option agreement or SAR agreement, but no less that
thirty (30) days or more than three (3) months after such retirement date, or
(c) in the event of termination of such person other than for death, disability
or retirement, until thirty (30) days after the date of such termination.
However, the Committee may in its sole discretion accelerate the exercisability
of any or all options or SARs upon termination of employment or cessation of
services. The options and SARs granted under the Stock Option Plan generally
will be non-transferable, except by will or the laws of descent and
distribution.
ADJUSTMENTS RESULTING FROM CHANGES IN CAPITALIZATION. The number of
shares of Common Stock reserved under the Stock Option Plan and the number and
price of shares of Common Stock covered by each outstanding option or SAR under
the Stock Option Plan will be proportionately adjusted by the Committee for any
increase or decrease in the number of issued and outstanding shares of Common
Stock resulting from any stock dividends, split-ups, consolidations,
recapitalizations, reorganizations or like event.
AMENDMENT OR DISCONTINUANCE OF STOCK OPTION PLAN. The Board of
Directors has the right to amend, suspend or terminate the Stock Option Plan at
any time. Unless sooner terminated by the Board of Directors, the Stock Option
Plan will terminate on the tenth anniversary date of the effectiveness of the
Stock Option Plan.
SUPERMAJORITY REQUIRED FOR AMENDMENT. In order to insure that the
substantive provisions set forth in the Certificate of Incorporation are not
circumvented by the amendment of such Certificate of Incorporation pursuant to a
vote of a majority of the voting power of the Company's outstanding shares, the
Certificate of Incorporation also provides that any amendment, change or repeal
of the provisions contained in the Certificate of Incorporation with respect to:
(i) the Company's capitalization, (ii) amendment of the Bylaws, (iii)
determination by the Board of the number of directors, (iv) filling Board
vacancies, (v) the requirement that stockholder action be taken at an annual or
special meeting, (vi) requirements with respect to appraisal rights for
stockholders, or (vii) the amendment of the provision imposing such
supermajority requirement for amendment of the Certificate of Incorporation,
shall require the affirmative vote of the holders of at least 66 2/3% of the
voting power of all outstanding shares of voting stock, including, in any
instance where the repeal or amendment is proposed by an interested stockholder
(as such term is defined in Section 203 of the Delaware General Corporation Law)
or its affiliate or associate, the affirmative vote of a majority of the voting
power of all outstanding shares of voting stock held by persons other than such
interested stockholder or its affiliates or associates. However, only the
affirmative vote of the majority of the voting power of all outstanding shares
of voting stock is required if the amendment of any of the foregoing provisions
is approved by a majority of the Continuing Directors (as such term is defined
in the Certificate of Incorporation).
The Certificate of Incorporation permits the Board of Directors to
adopt, amend or repeal any or all of the Company's bylaws without stockholder
action and provide that such bylaws may also be adopted, amended or repealed by
its stockholders, but only if approved by holders of 66 2/3% or more of the
voting power of all outstanding shares of voting stock, including in any
instance in which the alteration is proposed by an interested stockholder or by
affiliates or associate of any interested stockholder, the affirmative vote of
the holders of at least a majority of voting power of all outstanding shares of
voting stock held by persons other than the interested stockholder who proposed
such action. However, the only stockholder vote required if the modification is
approved by a majority of the continuing directors is the affirmative vote of
the majority of the voting power of all outstanding shares of voting stock.
15
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS.
As of September 28, 1999, the authorized capital stock of the Company
consisted of 100,000,000 shares of common stock, par value $0.001 per share (the
"Common Stock") and 2,000,000 shares of preferred stock, par value $0.001 per
share (the "Preferred Stock"). As of September 24, 1999, there were issued and
outstanding 17,484,110 shares of Common Stock and options to purchase 1,902,000
shares of Common Stock.
The Company's Common Stock is listed for trading in the
over-the-counter market and is quoted on the NASD Bulletin Board under the
symbol "GOCA." The following table sets forth quotations for the bid and asked
prices for the Common Stock for the periods indicated below, based upon
quotations between dealers, without adjustments for stock splits, dividends,
retail mark-ups, mark-downs or commissions, and therefore, may not represent
actual transactions:
<TABLE>
<CAPTION>
CLOSING BID CLOSING ASKED
----------- -------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
1st Quarter (1) 1.125 .25 3.125 1
2nd Quarter 1.0625 .21875 2 .28125
3rd Quarter .50 .14 .5625 .23
4th Quarter .9375 .3125 1 .46875
YEAR ENDING DECEMBER 31, 1999
1st Quarter 2.375 .46 2.50 .53125
2nd Quarter 2.40625 1.4375 2.5625 1.50
- ------------------
1. From February 10, 1998 through March 31, 1998.
</TABLE>
The bid and asked sales prices of the Common Stock, as traded in the
over-the-counter market, on September 23, 1998, were approximately $0.875 and
$1.00, respectively.
No dividend has been declared or paid by the Company since inception.
The Company does not anticipate that any dividends will be declared or paid in
the future.
The transfer agent for the Company is Interwest Transfer Company, 1981
East South, #100, Salt Lake City, Utah 84117, telephone 801-272-9294.
ITEM 2. LEGAL PROCEEDINGS.
HARVEY PRODUCTIONS, INC. VS. MICHAEL RUGE AND GO CALL, INC., LOS
ANGELES COUNTY SUPERIOR COURT CASE NO. SC 054315. A Complaint was filed against
the Company and Michael Ruge, Chief Executive Officer of the Company on or about
September 23, 1998, claiming $75,000 in damages. with respect to an alleged
contract for television production services and distribution of a syndicated
television program. the Complaint alleges breach of contract, fraud and deceit,
common count, open book account and account stated. The Complaint includes a
prayer for special damages according to proof, general damages according to
proof, attorney's fees according to proof, costs of suit, punitive damages and
interest. The Complaint also alleges that the Company is the alter ego of Mr.
Ruge. The Company and Ruge have filed an Answer denying liability and raising
affirmative defenses. The Company and Mr. Ruge deny liability to Plaintiff and
contend that Plaintiff breached its obligations to the Company and failed to
deliver the program to the Company on a timely basis as agreed. The Company
contends it suffered damages as a result thereof. The Company intends to defend
this matter vigorously. Trial is currently scheduled for November 30, 1999.
Except as set forth above, the Company knows of no material legal
actions, pending or threatened, or judgment entered against the Company or any
executive officer or director of the Company, in his capacity as such.
16
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
From January 1, 1999 through August 31, 1999, the Company issued
2,593,962 shares of its Common Stock. Of this amount, 2,008,862 shares were
issued for receipt of products or services, and 585,100 were issued for cash
payments totaling $784,391.09.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and Bylaws designate the
relative duties and responsibilities of the Company's officers, establish
procedures for actions by directors and stockholders and other items. The
Company's Certificate of Incorporation and Bylaws also contain extensive
indemnification provisions which will permit the Company to indemnify its
officers and directors to the maximum extent provided by Delaware law.
A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or other
enterprise, against expenses, including amounts paid in settlement and
attorney's fees actually and reasonably incurred by him or her in connection
with the defense or settlement of the action or suit if he or she acted in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation. Indemnification may not be
made for any claim, issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of all appeals therefrom,
to be liable to the corporation or for amounts paid in settlement to the
corporation unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, or in defense of any claim, issue
or matter therein, he or she must be indemnified by the corporation against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the defense. Any indemnification under this section, unless
ordered by a court or advanced pursuant to this section, must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made: (a) by the stockholders; (b) by
the board of directors by majority vote of a quorum consisting of directors who
were not parties to the action, suit or proceeding; (c) if a majority vote of a
quorum consisting of directors who were not parties to the action, suit or
proceeding so orders, by independent legal counsel in a written opinion; or (d)
if a quorum consisting of directors who were not parties to the action, suit or
proceeding cannot be obtained, by independent legal counsel in a written
opinion.
The certificate of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the corporation. The provisions of this section do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section: (a) does not exclude any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under the certificate of incorporation or any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, for either an action in
his or her official capacity or an action in another capacity while holding his
or her office, except that indemnification, unless ordered by a court pursuant
to this section or for the advancement of any director or officer if a final
adjudication establishes that his or her acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action; and (b) continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
17
<PAGE>
On April 12 1999, the stockholders of the Company approved a form of
indemnification agreement ("Indemnification Agreement") to be entered into with
each of the Company's directors. All current officers and directors of the
Company and its subsidiaries have executed Indemnification Agreements with the
Company. These agreements include the following provisions:
First, in the event an action is instituted by the person who is
indemnified under the Indemnification Agreement ("Indemnitee") to enforce or
interpret any of the terms therein, Indemnitee shall be entitled to be paid all
costs and expenses, including reasonable attorneys' fees, incurred by the
Indemnitee with respect to such action, unless as a part or such action, a court
of competent jurisdiction determines that each of the material assertions made
by the Indemnitee were not made in good faith or were frivolous. In the event of
an action instituted by or in the name of the Company under the Indemnification
Agreement or to enforce or interpret any of the terms therein, the Indemnitee
shall be entitled to be paid all costs and expenses, including reasonable
attorneys' fees, incurred by the Indemnitee in the defense of such action,
unless as a part of such action the court determines that each of the
Indemnitee's material defenses to such action were made in bad faith or were
frivolous.
Second, the Indemnification Agreements explicitly provide for partial
indemnification of costs and expenses in the event that an Indemnitee is not
entitled to full indemnification under the terms of the Indemnification
Agreements.
Third, in the event the Company shall be obligated to pay the expenses
of any proceeding against the Indemnitee, the Company shall be entitled to
assume the defense of such proceeding, with counsel approved by the indemnified
party, which approval shall not be unreasonably withheld, upon the delivery to
the Indemnitee of written notice of its election to do so. The Company shall
have the right to conduct such defense as it sees fit in its sole discretion,
including the right to settle any claim against Indemnitee without the consent
of the Indemnitee.
Fourth, indemnification provided by the Indemnification Agreements is
not exclusive of any rights to which the Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested directors, or otherwise. The indemnification
provided under the Indemnification Agreements continues for any action taken or
not taken while serving in an indemnified capacity even though the Indemnitee
may have ceased to serve in such capacity at the time of the action, suit or
other covered proceeding.
Finally, the Indemnification Agreements provide for certain exceptions
to indemnification which include the following: (a) indemnification for
liabilities where the law prohibits indemnification; (b) indemnification or
advancement of expenses with respect to proceedings or claims initiated or
brought voluntarily by an Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under the Indemnification Agreements or any statute or law or
otherwise as required under Delaware law; and (c) indemnification for expenses
in the payment of profits arising from the purchase and sale by the Indemnitee
of securities in violation of Section 16(b) of the Exchange Act or any similar
or successor statute.
18
<PAGE>
PART F/S
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<PAGE>
Collins
Barrow
Chartered Accountants
150 Richmond Street
PO Box 218
Chatham, Ontario
N7M 5K3
AUDITOR'S REPORT
To the Shareholders of
Go Call Inc.
We have audited the consolidated balance sheets of Go Call Inc. as at December
31, 1998 and February 28, 1998 and the consolidated statements of operations,
changes in shareholders' deficit and cash flow for the periods then ended.
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.
Except as explained in the following paragraph, we conducted our audit in
accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
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.
Because we were appointed auditors during the prior period and the figures for
the period July 1, 1996 to June 30, 1997 were reported on by another public
accountant under a review engagement, we were unable to satisfy ourselves
concerning the opening balance sheet figures for the eight month period ended
February 28, 1998 by alternative audit procedures. Since the opening
consolidated balance sheet figures affect the determination of net income and
cash flow, we were unable to determine whether adjustments, if any, to sales,
cost of sales, income, opening deficit and cash flow provided from operations
for the period ended February 28, 1998 might be necessary.
In our opinion, except for the effect on the consolidated financial statements
for the period ended February 28, 1998 of adjustments, if any, which might
have been determined to be necessary had we been able to satisfy ourselves as
to opening balance sheet items, as described in the preceding paragraph, the
consolidated statements of operations, changes in shareholders' equity
(deficit) and cash flows for the periods ended December 31, 1998 and February
28, 1998 present fairly, in all material respects, the results of the
company's operations and cash flows for the periods then ended in accordance
with generally accepted accounting principles in the United States. Further,
in our opinion, the consolidated balance sheets present fairly, in all
material respects, the financial position of the company as at December 31,
1998 and February 28, 1998 in accordance with generally accepted accounting
principles in the United States.
Chatham, Ontario
April 5, 1999 CHARTERED ACCOUNTANTS
<PAGE>
GO CALL INC.
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
PERIODS ENDED DECEMBER 31,1998 AND FEBRUARY 28,1998
<CAPTION>
COMMON STOCK ACCUMULATED OTHER TOTAL
OUTSTANDING ACCUMULATED COMPREHENSIVE CONVERTIBLE SHAREHOLDERS'
SHARES CAPITAL DEFICIT INCOME (LOSS) DEBT EQUITY
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 2,250,000 $ - $ (336,027) $ (87,524) $ - $ (423,551)
Comprehensive income:
Net loss - - (893,967) - - (893,967)
Foreign currency translation
adjustment - - - 3,000 - 3,000
Issuance of stock on business
combination (note 2) 5,906,175 3,314,734 - - - 3,314,734
Issuance of convertible
debt - - - - 100,000 100,000
------------ ------------ ------------ ------------ ----------- ------------
February 28, 1998 8,156,175 3,314,734 (1,229,994) (84,524) 100,000 2,100,216
Comprehensive income:
Net loss - - (796,137) - - (796,137)
Foreign currency translation
adjustment - - - (149,592) - (149,592)
Subscriptions for stock 100,000 42,000 - - - 42,000
Issuance of stock for cash 4,260,500 564,319 - - - 564,319
Issuance of convertible debt - - - - 150,000 150,000
Issuance of stock for
product or services 280,000 74,000 - - - 74,000
Conversion of debt
into stock 333,333 250,000 - - (250,000) -
Stock allocated for products,
not issued at year end 170,000 102,000 - - - 102,000
Stock allocated for cash
not issued at year end 166,667 50,000 - - - 50,000
------------ ------------ ------------ ----------- ----------- ------------
December 31, 1998 13,466,675 $ 4,397,053 $(2,026,131) $ (234,116) $ - $ 2,136,806
------------ ------------ ------------ ------------ ----------- ------------
</TABLE>
AUTHORIZED CAPITAL STOCK
20,000,000 common shares, without par value
2
<PAGE>
GO CALL INC.
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
PERIODS ENDED DECEMBER 31, 1998 AND FEBRUARY 28, 1998
<CAPTION>
10 months ended 8 months ended
December 31, 1998 February 28, 1998
<S> <C> <C>
REVENUE $ 2,479,793 $ 303,836
COST OF SALES 2,278,431 217,185
------------ ------------
GROSS PROFIT 201,362 86,651
------------ ------------
EXPENSES
Amortization 57,383 43,890
Bank charges and interest 9,174 6,081
General and administrative 930,942 430,647
------------ ------------
997,499 480,618
------------ ------------
LOSS FROM OPERATIONS (796,137) (393,967)
HOTEL WRITE DOWN TO
NET RECOVERABLE VALUE (note 5) - 500,000
------------ ------------
NET LOSS $ (796,137) $ (893,967)
------------ ------------
Loss per common share from operations $ (0.09) $ (0.07)
------------ ------------
Net loss per common share $ (0.09) $ (0.15)
------------ ------------
Weighted average shares outstanding $ 9,351,425 $ 5,906.175
------------ ------------
</TABLE>
3
<PAGE>
GO CALL INC.
<TABLE>
CONSOLIDATED BALANCE SHEET
DECEMBER 31,1998 AND FEBRUARY 28,1998
<CAPTION>
ASSETS
CURRENT ASSETS December 31, 1998 February 28, 1998
<S> <C> <C>
Cash $ 42,962 $ 25,677
Accounts receivable (note 3) 124,367 16,138
Inventories 5,233 9,690
Other assets 42,126 4,139
------------ ------------
214,688 55,644
CAPITAL ASSETS (note 4) 2,237,529 2,253,956
OTHER ASSETS (note 6) 104,139 -
------------ ------------
$ 2,556,356 $ 2,309,600
------------ ------------
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued charges $ 180,759 $ 97,528
Foreign taxes payable 10,000 4,643
------------ ------------
190,759 102,171
DUE TO SHAREHOLDERS (note 7) 228,791 107,213
------------ ------------
419,550 209,384
------------ ------------
SHAREHOLDERS' EQUITY
CONVERTIBLE DEBT (note 8) - 100,000
CAPITAL STOCK 4,397,053 3,314,734
EQUITY (2,026,131) (1,229,994)
ACCUMULATED OTHER COMPREHENSIVE LOSS (234,116) (84,524)
------------ ------------
2,136,806 2,100,216
------------ ------------
2,556,356 309,600
------------ ------------
</TABLE>
ON BEHALF OF THE BOARD
SIGNED: DIRECTOR
4
<PAGE>
GO CALL INC.
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOW
PERIODS ENDED DECEMBER 31, 1998 AND FEBRUARY 28, 1998
<CAPTION>
10 MONTHS ENDED 8 MONTHS ENDED
DECEMBER 31, 1998 FEBRUARY 28, 1998
CASH PROVIDED BY (USED IN)
<S> <C> <C>
OPERATIONS
Net loss $ (796,137) $ (893,967)
Items not requiring cash:
Amortization 57,383 43,890
Services paid with common shares 74,000 -
Write down of hotel - 500,000
----------- -----------
(664,754) (350,077)
Net change in non-cash working
capital items affecting operations (note 14) (53,171) 102,703
----------- -----------
(717,925) (247,374)
----------- -----------
INVESTING
Purchase of other long-term assets (6,667)
Purchase of capital assets (36,428) (108,701)
----------- -----------
(43,095) (108,701)
----------- -----------
FINANCING
Due to shareholders 121,578 82,707
Convertible debt issued 150,000 100,000
Issue of common shares 614,319 186,719
Share subscriptions outstanding 42,000 -
----------- -----------
927,897 369,426
----------- -----------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH (149,592) 3,000
----------- -----------
INCREASE IN CASH POSITION 17,285 16,351
CASH POSITION, BEGINNING 25,677 9,326
----------- -----------
CASH POSITION, ENDING $ 42,962 $ 25,677
----------- -----------
</TABLE>
Net loss includes cash paid for interest in the amount of $9,174, (February
$6,081) and taxes of $nil (February $nil).
5
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND FEBRUARY 28, 1998
1. NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF ACTIVITIES
The company was incorporated in the State of Louisiana on March 1, 1994, as Omni
Advantage Inc. Effective February 12, 1998, the company formed a subsidiary
company, Go Call Inc., in the State of Delaware. Pursuant to a Certificate of
Merger, February 17, 1998 the company has merged with the subsidiary company and
continues operations as Go Call Inc. The resulting company resides in the City
of Washington in the State of Delaware. The company holds a 100% interest in a
Canadian subsidiary corporation which provides telecommunication and Internet
products and services. All of the company's operations and related assets and
liabilities are held by the Canadian subsidiary.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The consolidated financial statements are presented in United States dollars and
are presented on the basis of accounting principles that are generally accepted
in the United States.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the company and
its 100% owned subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.
INVENTORIES
Inventories are valued at the lower of cost and net realizable value. Cost is
determined on the first-in, first-out basis.
6
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND FEBRUARY 28, 1998
1. NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (continued)
CAPITAL ASSETS
Amortization of capital assets other than leasehold improvements is calculated
using the diminishing balance method at the following rates:
Buildings 5%
Equipment 20%
Furniture and fixtures 20%
Vehicles 30%
Computer 30%
Computer software 100%
Half of the fall rates are used in the year of acquisition.
Leasehold improvements are amortized using the straight-line method over
5 years.
The hotel did not commence active operations until January 1999, as a result, no
amortization has been calculated on the hotel assets for the current period.
OTHER ASSETS
Other assets consist of purchases of specialized software and distribution
rights. They are amortized over management's estimate of their useful life which
is 2 years.
NON-CASH SECURITIES ISSUANCE
Shares of common stock issued for other than cash have been assigned amounts
equivalent to the fair value of the services or products received in exchange.
7
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
1. NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (continued)
SEGMENT REPORTING
The company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information", during 1998 which requires disclosures about products
an services, geographic areas and major customers. The adoption of SFAS No. 131
did not affect results of operations or financial position. The company has
provided comparable information for prior periods.
2. BUSINESS COMBINATION
Pursuant to a share exchange agreement effective March 1, 1998, the company
issued 5,906,175 common shares representing 72% of the issued share capital of
the company to the shareholders of Go Phone Inc., a Canadian company, in
exchange for all the issued and outstanding shares of Go Phone Inc. Go Phone
Inc. has been combined with an inoperative subsidiary of the company, Omni
Advantage Canada Limited and is now operating as Go Call Canada Inc. The
business combination has been accounted for as a reverse takeover by the
purchase method. In accordance with reverse takeover accounting, these financial
statements are a continuation of Go Phone Inc. and the comparative period
presented is that of Go Phone Inc. The capital structure (authorized shares and
issued shares) is according to the articles of amalgamation of the resulting
subsidiary, Go Call Inc., combining Go Phone Inc. and Omni Advantage Canada
Limited. The results of operations of Go Call Inc. are included in the accounts
from the effective date of acquisition.
At the date of acquisition, Go Call Inc. had nominal assets and liabilities and
Go Phone Inc. had assets and liabilities as follows:
Current assets $ 55,644
Capital assets 2,253,956
Current liabilities (102,171)
Long-term liabilities (107,213)
Accumulated deficit 1,214,518
------------
Net assets acquired $ 3,314,734
------------
8
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
<TABLE>
<CAPTION>
3. ACCOUNTS RECEIVABLE December 31, 1998 February 28, 1998
<S> <C> <C>
Trade accounts (net of allowance of $3,516) $ 56,467 $ 16,138
Share subscriptions 67,900
--------- ---------
$124,367 $ 16,138
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
4. CAPITAL ASSETS December 31, 1998 February 28, 1998
ACCUMULATED
COST AMORTIZATION NET NET
<S> <C> <C> <C> <C>
Land $ 70,000 $ 70,000 $ 70,000
Hotel 1,914,337 1,914,337 1,962,208
Equipment 34,999 6,995 28,004 29,824
Furniture and fixtures 109,009 18,015 90,994 69,441
Vehicles 46,057 13,151 32,906 36,404
Computer 137,503 88,003 49,500 42,894
Computer software 16,161 11,513 4,648 6,448
Leasehold improvements 33,953 7,315 26,638 8,334
Telephone equipment 55,465 34,963 20,502 28,403
------------ ------------ ------------ ------------
$ 2,417,484 $ 5,179,955 $ 2,237,529 $ 2,253,956
------------ ------------ ------------ ------------
</TABLE>
5. HOTEL WRITE DOWN
In the prior period, the company acquired a hotel in exchange for 3,360,000
common shares for an agreed upon purchase price of $2,500,000. Subsequent to the
purchase, the value of the land and buildings was appraised for $500,000 less
than the original purchase price. The hotel land and buildings have been written
down to reflect the estimated net recoverable value of the assets based on an
appraisal issued February 8, 1998.
9
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
<TABLE>
<CAPTION>
6. OTHER ASSETS DECEMBER 31, 1998 FEBRUARY 28,1998
<S> <C> <C>
Software and distribution rights, at cost $ 108,667 $ -
Accumulated amortization (4,528)
---------- ----------
$ 104,139 $ -
---------- ----------
</TABLE>
Pursuant to purchase agreements with 866621 Ontario Inc., dated between November
16 and December 8, 1998, the company issued 170,000 common shares valued at
$0.60 per share plus cash in the amount of $6,667 as consideration for assets of
the company related to specialized software and distribution rights, including
the International Programmers Guild, Las Vegas Palace, Internet Advertising
Group and the related facilities and support services.
<TABLE>
<CAPTION>
7. DUE TO SHAREHOLDERS DECEMBER 31, 1998 FEBRUARY 28,1998
<S> <C> <C>
Unsecured advances from a shareholder, bearing
interest at the rate of 1% per month with no
specified due date $ 66,667 $ -
Unsecured advances from a member of
management who is a shareholder, interest
free with no specified terms of repayment 104,141 107,213
Unsecured advances from a shareholder, interest
free with no specified terms of repayment 57,983 -
---------- ----------
$ 228,791 $ 107,213
---------- ----------
</TABLE>
Interest in the amount of $6,667 was paid on the $66,667 advances indicated
above during the year.
10
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
8. CONVERTIBLE DEBT
The company received additional financing in the amount of $150,000 in
convertible debt during the year. Pursuant to a resolution of the board of
directors and accepted by the board of directors of the financing company, all
of the debt, $250,000 in total, was converted into 333,333 common shares
effective December 10, 1998.
9. STOCK OPTIONS
At December 31, 1998, the company had outstanding stock options, enabling the
holders to acquire further shares as follows:
<TABLE>
<CAPTION>
Number Exercise
of shares Price Exercisable Dates
<S> <C> <C>
150,000 $1.00 November 13, 1999 - November 13, 2001
150,000 $2.00 November 13, 2000 - November 13, 2002
150,000 $2.00 November 13, 2001 - November 13, 2003
150,000 $2.00 November 13, 2002 - November 13, 2004
200,000 $5.00 November 13, 2002 - November 13, 2004
500,000 $1.00 expires December 31, 2004
500,000 $3.00 unlimited
52,000 $1.00 unlimited
50,000 15% discount
from market unlimited
</TABLE>
No options have been exercised as of the year end.
11
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
<TABLE>
<CAPTION>
10. INCOME TAXES December 31, 1998 February 28,1998
DEFERRED INCOME TAXES
<S> <C> <C>
Deferred tax assets consist of the following:
Gross deferred tax assets:
Net operating losses $ 671,794 $ 282,734
Amortization 278,360 264,878
---------- ----------
Net deferred tax assets 950,154 547,612
Valuation allowance (950,154) (547,612)
---------- ----------
$ - $ -
</TABLE>
The company has provided a valuation allowance for net deferred tax assets of
its operations since realization of these benefits cannot be reasonable assured.
The change in the valuation allowance for net deferred tax assets from February
28, 1998 to December 31, 1998 related to additional losses in the period.
INCOME TAX RATE
The company did not recognize any current income tax expense or benefit for
December 3 1, 1998 or February 28, 1998, and no cash was paid for income taxes
in December 31, 1998 or February 28, 1998. There are no reconciling items
between the effective rate of income tax assessed against the company's loss
from operations and the statutory rate of income tax of 44.62%.
FUTURE INCOME TAX BENEFITS
The company and its Canadian subsidiary have not generated taxable income since
inception. As a result, no provision for income taxes has been made.
Income tax returns for the Canadian subsidiary have not yet been assessed by
Revenue Canada. As of February 28, 1998 the company's active operations have
been in Canada and as such, the company is subject only to Canadian income tax
on operations.
The U.S. company has not filed income tax returns since its inception. As such,
it is unclear whether expenses for services rendered in exchange for common
shares could be deducted under current federal tax law. Assuming the recipients
of such services included the fair value of their services in income on their
personal and corporate tax returns, the company could be able to deduct such
losses.
12
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
10. INCOME TAXES (continued)
Assuming that the company is able to deduct as expenses the services rendered to
it in exchange for common shares, the company can carry forward net operating
losses as follows:
<TABLE>
<CAPTION>
Expiry Date CANADIAN U.S.
(in Cdn funds) (in U.S. funds)
<S> <C> <C>
December 2002 $ 121,248 -
December 2003 339,119 -
December 2004 490,106 -
December 2005 1,307,911 -
December 2009 - 20,000
December 2011 - 50,000
------------ -----------
$ 2,258,384 70,000
------------ -----------
</TABLE>
<TABLE>
<CAPTION>
11. INDUSTRY SEGMENT AND GEOGRAPHIC
INFORMATION
10 months ended December 31,1998 8 months ended February 28, 1998
In accordance with statutory requirements, the Board of Directors has determined
that the company and its subsidiary are engaged in one principal industry
segment, as a provider of Internet gaming and other telecommunication and
Internet products and services as follows:
<S> <C> <C>
Revenue:
Internet gaming $ 1,957,095 $ -
Other telecommunication products and services 522,501 303,836
------------ -------------
$ 2,479,596 $ 303,836
------------ -------------
Loss from operations:
Internet gaming $ 33,253 $ -
Other telecommunication products and services 762,951 893,967
------------ -------------
$ 796,204 $ 893,967
------------ -------------
</TABLE>
13
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
<TABLE>
<CAPTION>
11. INDUSTRY SEGMENT AND GEOGRAPHIC
INFORMATION (continued)
10 MONTHS ENDED 8 MONTHS ENDED
DECEMBER 31, 1998 FEBRUARY 28, 1998
Identifiable assets are located in Canada and in the
Dominion Republic as follows:
<S> <C> <C>
Canada $ 237,859 $ 221,748
Dominion Republic 1,999,670 2,032,208
------------ ------------
$ 2,237,529 $ 2,253,956
------------ ------------
</TABLE>
12. MEASUREMENT UNCERTAINTY
The company has recorded in its accounts payable certain accounts which are in
dispute but for which the company is being pursued for payment in the courts.
These liabilities have been recorded in the books for the full amount of the
claims The company may be able to successfully negotiate settlements for an
amount less than the full claim. Any changes in the conditions and circumstances
resulting in a change in the settlement amount of the liabilities, which could
be material, will be booked in the period of change.
The U.S. company has not filed income tax returns since its inception. As such,
it is unclear whether expenses for services rendered in exchange for common
shares could be deducted under current federal tax law. Assuming the recipients
of such services included the fair value of their services in income on their
personal and corporate tax returns, the company could be able to deduct such
losses. The company has not recognized any net value to these losses in the
calculation it its assets and liabilities. Any changes which would result in the
company not being able to utilize these losses would be adjusted through the
valuation allowance in the period of change.
14
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
13. FINANCIAL INSTRUMENTS AND CREDIT RISK
FAIR VALUE OF FINANCIAL INSTRUMENTS
The company's financial instruments consist of cash, accounts receivable,
accounts payable and amounts due to related parties. Unless otherwise noted, it
is management's opinion that the company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. The fair
values of these financial instruments approximate their carrying values, unless
otherwise noted.
FOREIGN EXCHANGE RISK MANAGEMENT
The company does not use forward exchange contracts or other hedging instruments
to manage exposures resulting from foreign exchange fluctuations in the ordinary
course of business. Unless otherwise disclosed in the notes to the financial
statements, the estimated fair value of foreign denominated assets and
liabilities approximates carrying value, translated at the prevailing exchange
rates at year end.
CONCENTRATION OF CREDIT RISK
Of the trade receivables outstanding at year end, $49,251 relates to internet
gaming proceeds due from the management organization contracted to process
client bids and pay outs. The company monitors the activity of the gaming
operations and deposits from the management organization on a regular basis.
<TABLE>
<CAPTION>
14. NET CHANGE IN NON-CASH WORKING
CAPITAL ITEMS
10 Months ended 8 months ended
December 31, 1998 February 28, 1998
<S> <C> <C>
Accounts receivable $ (108,229) $ 145,471
Inventory 4,457 7,841
Other assets (37,987) 5,947
Accounts payable and accrued charges 83,231 (61,199)
Foreign taxes 5,357 4,643
------------ ------------
$ (53,171) $ 102,703
------------ ------------
</TABLE>
15
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998 AND FEBRUARY 28,1998
15. COMMITMENTS
The company's subsidiary leases a number of premises expiring December 31, 2002
and September 5, 1006. Minimum lease payments over the next five years are as
follows:
1999 $ 37,008
2000 37,008
2001 37,008
2002 37,008
2003 18,950
---------
$166,982
---------
16. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. In addition, similar problems may arise in
some systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced prior to, on or
subsequent to January 1, 2000. It is not possible to be certain that all aspects
of the Year 2000 Issue affecting the entity, including those related to the
efforts of customers, suppliers or other third parties, will be fully resolved.
Therefore, an entity's ability to conduct normal business operations may be
impacted. This impact may range from significant system failure to minor errors.
The company possesses a level of expertise in technology and has initiated a
review of all of the hardware and software to ensure that its computer related
applications will not fail or create erroneous results at the turn of the
century. In addition, the company has contacted all major suppliers to ensure
that any potential disruptions caused by third parties will be minimized.
17. COMPARATIVE FIGURES
The presentation of certain accounts of the previous period has been changed to
conform with the presentation adopted for the current period.
16
<PAGE>
GO CALL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND FEBRUARY 28, 1998
18. SUBSEQUENT EVENT
Pursuant to a Share Purchase Agreement dated March 11, 1999, the company has
issued 4,552,751 common shares in exchange for 650,393 common shares which,
based on preliminary information, represents controlling interest of Country
Star Restaurants, Inc., a company incorporated in the state of Delaware. This
acquisition will be accounted for as a purchase business combination and
accordingly the assets and liabilities and results of operations of Country Star
Restaurants, Inc. will be included in the company's financial statements from
the date of acquisition. According to the preliminary unaudited balance of
Country Star Restaurants, Inc. as at December 31, 1998, the company had assets
and liabilities valued at approximately $4,837,000 USD and $3,555,000 USD
respectively.
According to the latest financial information available for Country Star
Restaurants, Inc., the company's independent certified public accountants
included an explanatory paragraph in their report for the years ended December
31, 1996 and December 31, 1997, which indicated a substantial doubt as to the
ability of the company to continue as a going concern due to significant losses
in 1996 and 1997 and cash flow shortages. The financial statements for the year
ended December 31, 1998 have not yet been finalized. Pursuant to SFAS 121,
Accounting for the impairment of long-lived assets and for long-lived assets to
be disposed of, there will likely be a material adjustment to the valuation of
certain assets owned by the company as of December 31, 1998. We are unable to
estimate the financial affect of this acquisition on the future operations of
the company.
17
<PAGE>
Go Call Inc.
<TABLE>
<CAPTION>
Comparative Income Statement (unaudited) (unaudited)
Feb 28 Dec 31 June 30 June 30
1998 1998 1998 1999
INCOME STATEMENT
<S> <C> <C> <C> <C>
Gross wagers placed $ - $ 1,957,095 $ - $ 26,017,249
============== ============== ============== =============
Revenue
Casino $ - $ 1,934,239 $ - $ 672,484
Telecommunications & Hospitality 303,836 545,554 181,467 150,256
-------------- -------------- -------------- -------------
Gross revenues 303,836 2,479,793 181,467 822,740
Cost of sales
Casino - 1,868,313 - 336,242
Telecommunications & Hospitality 217,185 410,118 169,099 86,705
-------------- -------------- -------------- -------------
217,185 2,278,431 169,099 422,947
-------------- -------------- -------------- -------------
Gross profit 86,651 201,362 12,368 399,793
General expenses 480,618 997,499 289,537 500,253
-------------- -------------- -------------- -------------
Loss from operations 393,967 796,137 277,169 100,460
Hotel write down 500,000 - - -
-------------- -------------- -------------- -------------
Net loss $ 893,967 $ 796,137 $ 277,169 $ 100,460
============== ============== ============== =============
Loss per common share from operations $ (0.07) $ (0.09) $ (0.05) $ (0.01)
============== ============== ============== =============
Net loss per common share $ (0.15) $ (0.09) $ (0.05) $ (0.01)
============== ============== ============== =============
Weighted average shares outstanding 5,906,175 9,351,425 5,323,213 16,978,050
============== ============== ============== =============
</TABLE>
Notes:
1) The above results do not reflect the results of operations for Country Star
Restaurants for the period from March 11, 1999 to June 30, 1999.
2) The investment in Country Star Restaurants has been reduced to reflect the
value which was agreed upon subsequent to June 30, 1999.
18
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
3.1 Revised and Restated Certificate of Incorporation.
3.2 Bylaws.
10.1 Form of Indemnification Agreement.
10.2 Stock Option Plan.
27.1 Financial Data Schedule.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
GO CALL, INC.
Dated: September 28, 1999 By: /s/ Michael Ruge
-----------------------
Michael Ruge,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
Dated: September 28, 1999 By: /s/ Irving Insik Moon
-----------------------
Irving Insik Moon
Director
Dated: September 28, 1999 By: /s/ Michael Ruge
-----------------------
Michael Ruge
Director
RESTATED
CERTIFICATE OF INCORPORATION
OF
GO CALL, INC.
This Restated Certificate of Incorporation (the "Certificate") of GO
CALL, INC. (the "Corporation"), was duly adopted by the Board of Directors of
the Corporation on August 31, 1999 and the stockholders of the Corporation on
August 31, 1999, as set forth below, in accordance with Sections 228, 242 and
245 of the General Corporation Law of the State of Delaware. The original
Certificate of Incorporation was filed on February 13, 1999.
The following Restated Certificate of Incorporation was adopted on
August 31, 1999 by the vote of the stockholders of the Corporation. The vote of
stockholders of the Corporation by which the foregoing Restated Certificate of
Incorporation was adopted by consent of the holders of 8,200,586 of shares of
Common Stock which constituted a majority of the 15,414, 551 shares issued and
outstanding. The number of shares voted for the Restated Certificate of
Incorporation was sufficient for approval.
The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated and further amended to read in its entirety as
follows:
FIRST: The name of the corporation is Go Call, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware shall be at Corporation Trust Center, 1209 Orange Street, City
of Wilmington, County of New Castle, Delaware 19801. The name and address of the
Corporation's registered agent in the State of Delaware is The Corporation Trust
Company, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware
19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under the
General Corporation Law of the State of Delaware.
FOURTH: 1. The total number of shares of stock which the Corporation
shall have authority to issue is One Hundred and Two Million (102,000,000)
shares, consisting of One Hundred Million (100,000,000) shares of Common Stock,
par value $0.001 per share (the "Common Stock"), and Two Million (2,000,000)
shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock").
1
<PAGE>
2. Shares of Preferred Stock may be issued from time to time in one or
more series as may be established from time to time by resolution of the Board
of Directors of the Corporation (the "Board of Directors"), each of which series
shall consist of such number of shares and have such distinctive designation or
title as shall be fixed by resolution of the Board of Directors prior to the
issuance of any shares of such series. Each such class or series of Preferred
Stock shall have such voting powers, full or limited, or no voting powers, and
such preferences and relative, participating, optional or other special rights
and such qualifications, limitations or restrictions thereof, as shall be stated
in such resolution of the Board of Directors providing for the issuance of such
series of Preferred Stock. The Board of Directors is further authorized to
increase or decrease (but not below the number of shares of such class or series
then outstanding) the number of shares of any series subsequent to the issuance
of shares of that series.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute and subject to Article Sixth hereof, the Board of Directors is expressly
authorized to adopt, repeal, rescind, alter or amend in any respect the Bylaws
of the Corporation (the "Bylaws").
SIXTH: Notwithstanding Article Fifth hereof, the Bylaws may be adopted,
rescinded, altered or amended in any respect by the stockholders of the
Corporation, but only by the affirmative vote of the holders of not less than 66
2/3% of the voting power of all outstanding shares of voting stock regardless of
class and voting together as a single voting class; PROVIDED, HOWEVER, that
where such action is approved by a majority of the continuing directors the
affirmative vote of a majority of the voting power of all outstanding shares of
voting stock, regardless of class and voting together as a single voting class,
shall be required for approval of such action.
SEVENTH: The business and affairs of the Corporation shall be managed
by and under the direction of the Board of Directors. Except as may otherwise be
provided pursuant to Section 2 of Article Fourth hereof in connection with
rights to elect additional directors under specified circumstances which may be
granted to the holders of any series of Preferred Stock, the exact number of
directors of the Corporation shall be determined from time to time by a Bylaw or
Amendment thereto provided that the number of directors shall not be reduced to
less than three (3), except that there need be only as many directors as there
are stockholders in the event that the outstanding shares are held of record by
fewer than three (3) stockholders.
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
EIGHTH: Each director shall serve until his successor is elected and
qualified or until his death, resignation or removal; no decrease in the
authorized number of directors shall shorten the term of any incumbent director;
and additional directors, elected pursuant to Section 2 of Article Fourth hereof
in connection with rights to elect such additional directors under specified
circumstances which may be granted to the holders of any series of Preferred
Stock, shall not be included in any class, but shall serve for such term or
terms and pursuant to such other provisions as are specified in the resolution
of the Board of Directors establishing such series.
2
<PAGE>
NINTH: Except as may otherwise be provided pursuant to Section 2 of
Article Fourth hereof in connection with rights to elect additional directors
under specified circumstances which may be granted to the holders of any series
of Preferred Stock, newly created directorships resulting from any increase in
the number of directors, or any vacancies on the Board of Directors resulting
from death, resignation, removal or other causes, shall be filled solely by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until such director's death, resignation or
removal, whichever first occurs.
TENTH: Except for such additional directors as may be elected by the
holders of any series of Preferred Stock pursuant to the terms thereof
established by a resolution of the Board of Directors pursuant to Article Fourth
hereof, any director may be removed from office with or without cause and only
by the affirmative vote of the holders of not less than 66 2/3% of the voting
power of all outstanding shares of voting stock entitled to vote in connection
with the election of such director regardless of class and voting together as a
single voting class; PROVIDED, HOWEVER, that where such removal is approved by a
majority of the continuing directors, the affirmative vote of a majority of the
voting power of all outstanding shares of voting stock entitled to vote in
connection with the election of such director, regardless of class and voting
together as a single voting class, shall be required for approval of such
removal.
ELEVENTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called Annual Meeting
or at a special meeting of stockholders of the Corporation, PROVIDED, HOWEVER,
that in the event where such action is approved by the majority of the
continuing directors, such action required or permitted to be taken by the
stockholders of the Corporation may be effected either at a duly called Annual
Meeting or at a special meeting of stockholders of the Corporation or by the
written consent of the stockholders of the corporation.
TWELFTH: 1. At the first Annual Meeting of Stockholders of the
Corporation (the "Annual Meeting") after the authorized number of directors is
eight (8) or more, the Board of Directors shall be divided into three (3)
classes: Class I, Class II and Class III. The number of directors in each class
shall be the whole number contained in such quotient obtained by dividing the
authorized number of directors by three (3). If a fraction is also contained in
such quotient, then additional directors shall be apportioned as follows: If
such fraction is one-third, the additional director shall be a member of Class
III; and if such fraction is two-thirds, one of the additional directors shall
be a member of Class II and the other shall be a member of Class III. Each
director shall serve for a term ending on the date of the third Annual Meeting
following the Annual Meeting at which such director was elected; PROVIDED,
HOWEVER, that the directors first elected to Class I shall serve for a term
ending on the date of the first Annual Meeting following their election, the
directors first elected to Class II shall serve for a term ending on the date of
the second Annual Meeting following their election and the directors first
elected to Class III shall serve for a term ending on the date of the third
Annual Meeting following their election.
3
<PAGE>
Whenever the authorized number of directors shall be reduced to less
than eight (8) directors, the existing directors shall serve out the remainder
of their terms based upon their respective classes and each subsequently elected
director shall serve for a one (1) year term. At such subsequent time as the
authorized number of directors is seven (7) or more directors, the prior
paragraph shall again become operative.
2. Notwithstanding the foregoing provisions of this Article Twelfth:
each director shall serve until his successor is elected and qualified or until
his death, resignation or removal; no decrease in the authorized number of
directors shall shorten the term of any incumbent director; and additional
directors, elected pursuant to Section 2 of Article Fourth hereof in connection
with rights to elect such additional directors under specified circumstances
which may be granted to the holders of any series of Preferred Stock, shall not
be included in any class, but shall serve for such term or terms and pursuant to
such other provisions as are specified in the resolution of the Board of
Directors establishing such series.
THIRTEENTH: Meetings of stockholders of the Corporation may be held
within or without the State of Delaware, as the Bylaws may provide. The books of
the Corporation may be kept (subject to any provision of applicable law) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the Bylaws.
FOURTEENTH: For the purposes of this Restated Certificate of
Incorporation, the following definitions shall apply:
(a) "continuing director" means: (i) any member of the Board of
Directors who (A) is not an interested stockholder or an
affiliate or associate of an interested stockholder and (B)
was a member of the Board of Directors prior to the time that
an interested stockholder became an interested stockholder;
and (ii) any person who is elected or nominated to succeed a
continuing director, or to join the Board of Directors, by a
majority of the continuing directors.
(b) The terms "affiliate," "associate," "control," "interested
stockholder," "owner," "person" and "voting stock" shall have
the meanings set forth in Section 203(c) of the Delaware
General Corporation Law.
FIFTEENTH: The provisions set forth in this Article Fifteenth and in
Articles Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh and
Twelfth hereof may not be repealed, rescinded, altered or amended in any
respect, and no other provision or provisions may be adopted which impair(s) in
any respect the operation or effect of any such provision, except by the
affirmative vote of the holders of not less than 66 2/3% of the voting power of
all outstanding shares of voting stock regardless of class and voting together
as a single voting class, and, where such action is proposed by an interested
stockholder or by any associate or affiliate of an interested stockholder, the
affirmative vote of the holders of a majority of the voting power of all
outstanding shares of voting stock, regardless of class and voting together as a
single class, other than shares held by the interested stockholder which
proposed (or the affiliate or associate of which proposed) such action, or any
affiliate or associate of such interested stockholder; PROVIDED, HOWEVER, that
where such action is approved by a majority of the continuing directors, the
affirmative vote of a majority of the voting power of all outstanding shares of
voting stock, regardless of class and voting together as a single voting class,
shall be required for approval of such action.
4
<PAGE>
SIXTEENTH: The Corporation reserves the right to adopt, repeal,
rescind, alter or amend in any respect any provision contained in this
Certificate in the manner now or hereafter prescribed by applicable law, and all
rights conferred on stockholders herein are granted subject to this reservation.
Notwithstanding the preceding sentence, the provisions set forth in Articles
Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth and
Fifteenth may not be repealed, rescinded, altered or amended in any respect, and
no other provision or provisions may be adopted which impair(s) in any respect
the operation or effect of any such provision, unless such action is approved as
specified in Article Fifteenth hereof.
SEVENTEENTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware General Corporation Law,
or (d) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law. Any
repeal or modification of this Section by the stockholders of the Corporation
shall be prospective only and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification.
EIGHTEENTH: No contract or other transaction of the Corporation with
any other person, firm or corporation, or in which this corporation is
interested, shall be affected or invalidated by: (a) the fact that any one or
more of the directors or officers of the Corporation is interested in or is a
director or officer of such other firm or corporation; or, (b) the fact that any
director or officer of the Corporation, individually or jointly with others, may
be a party to or may be interested in any such contract or transaction, so long
as the contract or transaction is authorized, approved or ratified at a meeting
of the Board of Directors by sufficient vote thereon by directors not interested
therein, to which such fact of relationship or interest has been disclosed, or
the contract or transaction has been approved or ratified by vote or written
consent of the stockholders entitled to vote, to whom such fact of relationship
or interest has been disclosed, or so long as the contract or transaction is
fair and reasonable to the Corporation. Each person who may become a director or
officer of the Corporation is hereby relieved from any liability that might
otherwise arise by reason of his contracting with the Corporation for the
benefit of himself or any firm or corporation in which he may in any way be
interested.
5
<PAGE>
IN WITNESS WHEREOF GO CALL. has caused this Restated Certificate of
Incorporation to be executed by its Chief Executive Officer as of the 31st day
of August, 1999.
GO CALL, INC.
By: Michael Ruge
----------------------
Michael Ruge
Chief Executive Officer
BYLAWS
OF
GO CALL, INC.
(A DELAWARE CORPORATION)
The foregoing are the Bylaws of GO CALL, INC., a Delaware corporation
(the "Corporation"), effective as of August 18, 1999, after approval by the
Corporation's Board of Directors and stockholders:
ARTICLE I
Offices
Section 1.01. PRINCIPAL EXECUTIVE OFFICE. The principal executive
office of the Corporation shall be located at 15 Queen Street East, Cambridge,
Ontario N3C2A7. The Board of Directors of the Corporation (the "Board of
Directors") may change the location of said principal executive office.
Section 1.02. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.01. ANNUAL MEETINGS. The annual meeting of stockholders of
the Corporation shall be held at a date and at such time as the Board of
Directors shall determine. At each annual meeting of stockholders, directors
shall be elected in accordance with the provisions of Section 3.03 hereof and
any other proper business may be transacted.
Section 2.02. SPECIAL MEETINGS. Special meetings of stockholders for
any purpose or purposes may be called at any time by a majority of the Board of
Directors, by the Chairman of the Board or by holders of not less than
sixty-five percent (65%) of the voting power of all outstanding shares of voting
stock regardless of class and voting together as a single voting class. The term
"voting stock" as used in these Bylaws shall have the meaning set forth in
Section 203(c) of the Delaware General Corporation Law. Special meetings may not
be called by any other person or persons. Each special meeting shall be held at
such date and time as is requested by the person or persons calling the meeting,
within the limits fixed by law.
1
<PAGE>
Section 2.03. PLACE OF MEETINGS. Each annual or special meeting of
stockholders shall be held at such location as may be determined by the Board of
Directors or, if no such determination is made, at such place as may be
determined by the Chairman of the Board. If no location is so determined, any
annual or special meeting shall be held at the principal executive office of the
Corporation.
Section 2.04. NOTICE OF MEETINGS. Written notice of each annual or
special meeting of stockholders stating the date and time when, and the place
where, it is to be held shall be delivered either personally or by mail to
stockholders entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting. The purpose or purposes for
which the meeting is called may, in the case of an annual meeting, and shall, in
the case of a special meeting, also be stated. If mailed, such notice shall be
directed to a stockholder at his address as it shall appear on the stock books
of the Corporation, unless he shall have filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address, in which case such notice shall be mailed to the address
designated in such request.
Section 2.05. CONDUCT OF MEETINGS. All annual and special meetings of
stockholders shall be conducted in accordance with such rules and procedures as
the Board of Directors may determine subject to the requirements of applicable
law and, as to matters not governed by such rules and procedures, as the
chairman of such meeting shall determine. The chairman of any annual or special
meeting of stockholders shall be the Chairman of the Board. The Secretary, or in
the absence of the Secretary, a person designated by the Chairman of the Board,
shall act as secretary of the meeting.
Section 2.06. QUORUM. At any meeting of stockholders of the
Corporation, the presence, in person or by proxy, of the holders of record of a
majority of the shares then issued and outstanding and entitled to vote at the
meeting shall constitute a quorum for the transaction of business; provided,
however, that this Section 2.06 shall not affect any different requirement which
may exist under statute, pursuant to the rights of any authorized class or
series of stock, or under the Certificate of Incorporation of the Corporation,
as amended or restated from time to time (the "Certificate"), for the vote
necessary for the adoption of any measure governed thereby.
In the absence of a quorum, the stockholders present in person or by
proxy, by majority vote and without further notice, may adjourn the meeting from
time to time until a quorum is attained. At any reconvened meeting following
such adjournment at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.07. VOTES REQUIRED. The affirmative vote of a majority of the
shares present in person or represented by proxy at a duly called meeting of
stockholders of the Corporation, at which a quorum is present and entitled to
vote on the subject matter, shall be sufficient to take or authorize action upon
any matter which may properly come before the meeting, except that the election
of directors shall be by plurality vote, unless the vote of a greater or
different number thereof is required by statute, by the rights of any authorized
class of stock or by the Certificate.
2
<PAGE>
Unless the Certificate or a resolution of the Board of Directors
adopted in connection with the issuance of shares of any class or series of
stock provides for a greater or lesser number of votes per share, or limits or
denies voting rights, each outstanding share of stock, regardless of class or
series, shall be entitled to one (l) vote on each matter submitted to a vote at
a meeting of stockholders.
Section 2.08. PROXIES. A stockholder may vote the shares owned of
record by him either in person or by proxy executed in writing (which shall
include writings sent by telex, telegraph, cable or facsimile transmission) by
the stockholder himself or by his duly authorized attorney-in-fact. No proxy
shall be valid after three (3) years from its date, unless the proxy provides
for a longer period. Each proxy shall be in writing, subscribed by the
stockholder or his duly authorized attorney-in-fact, and dated, but it need not
be sealed, witnessed or acknowledged.
Section 2.09. STOCKHOLDER ACTION. Any action required or permitted to
be taken by the stockholders of the Corporation must be effect at a duly called
Annual Meeting or at a special meeting of stockholders of the Corporation.
Section 2.10. LIST OF STOCKHOLDERS. The Secretary of the Corporation
shall prepare and make (or cause to be prepared and made), at least ten (10)
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order and showing the
address of, and the number of shares registered in the name of, each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the duration thereof, and may be inspected by any stockholder
who is present.
Section 2.11. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors may appoint Inspectors of Election to act
at such meeting or at any adjournment or adjournments thereof. If such
Inspectors are not so appointed or fail or refuse to act, the chairman of any
such meeting may (and, upon the demand of any stockholder or stockholder's
proxy, shall) make such an appointment.
The number of Inspectors of Election shall be one (1) or three (3). If
there are three (3) Inspectors of Election, the decision, act or certificate of
a majority shall be effective and shall represent the decision, act or
certificate of all. No such Inspector need be a stockholder of the Corporation.
Subject to any provisions of the Certificate of Incorporation, the
Inspectors of Election shall determine the number of shares outstanding, the
voting power of each, the shares represented at the meeting, the existence of a
quorum and the authenticity, validity and effect of proxies; they shall receive
votes, ballots or consents, hear and determine all challenges and questions in
any way arising in connection with the right to vote, count and tabulate all
votes or consents, determine when the polls shall close and determine the
result; and finally, they shall do such acts as may be proper to conduct the
3
<PAGE>
election or vote with fairness to all stockholders. On request, the Inspectors
shall make a report in writing to the secretary of the meeting concerning any
challenge, question or other matter as may have been determined by them and
shall execute and deliver to such secretary a certificate of any fact found by
them.
ARTICLE III
Directors
Section 3.01. POWERS. The business and affairs of the Corporation shall
be managed by and be under the direction of the Board of Directors. The Board of
Directors shall exercise all the powers of the Corporation, except those that
are conferred upon or reserved to the stockholders by statute, the Certificate
or these Bylaws.
Section 3.02. NUMBER. The number of directors shall be fixed from time
to time by resolution of the Board of Directors but shall not be less than three
(3) nor more than nine (9).
Section 3.03. ELECTION AND TERM OF OFFICE. Each director shall serve
until his successor is elected and qualified or until his death, resignation or
removal, no decrease in the authorized number of directors shall shorten the
term of any incumbent director, and additional directors elected in connection
with rights to elect such additional directors under specified circumstances
which may be granted to the holders of any series of Preferred Stock shall not
be included in any class, but shall serve for such term or terms and pursuant to
such other provisions as are specified in the resolution of the Board of
Directors establishing such series.
Section 3.04. ELECTION OF CHAIRMAN OF THE BOARD. At the organizational
meeting immediately following the annual meeting of stockholders, the directors
shall elect a Chairman of the Board from among the directors who shall hold
office until the corresponding meeting of the Board of Directors in the next
year and until his successor shall have been elected or until his earlier
resignation or removal. Any vacancy in such office may be filled for the
unexpired portion of the term in the same manner by the Board of Directors at
any regular or special meeting.
Section 3.05. REMOVAL. Any director may be removed from office only as
provided in the Certificate of Incorporation.
Section 3.06. VACANCIES AND ADDITIONAL DIRECTORSHIPS. Newly created
directorships resulting from death, resignation, disqualification, removal or
other cause shall be filled solely by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the class of directors
in which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
4
<PAGE>
Section 3.07. REGULAR AND SPECIAL MEETINGS. Regular meetings of the
Board of Directors shall be held immediately following the annual meeting of the
stockholders; without call at such time as shall from time to time be fixed by
the Board of Directors; and as called by the Chairman of the Board in accordance
with applicable law.
Special meetings of the Board of Directors shall be held upon call by
or at the direction of the Chairman of the Board, the President or any two (2)
directors, except that when the Board of Directors consists of one (1) director,
then the one director may call a special meeting. Except as otherwise required
by law, notice of each special meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least three
days before the day on which the meeting is to be held, or shall be sent to him
at such place by telex, telegram, cable, facsimile transmission or telephoned or
delivered to him personally, not later than the day before the day on which the
meeting is to be held. Such notice shall state the time and place of such
meeting, but need not state the purpose or purposes thereof, unless otherwise
required by law, the Certificate of Incorporation or these Bylaws.
Notice of any meeting need not be given to any director who shall
attend such meeting in person (except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened) or who shall waive notice thereof, before or after such meeting, in a
signed writing.
Section 3.08. QUORUM. At all meetings of the Board of Directors, a
majority of the fixed number of directors shall constitute a quorum for the
transaction of business, except that when the Board of Directors consists of one
(1) director, then the one director shall constitute a quorum.
In the absence of a quorum, the directors present, by majority vote and
without notice other than by announcement, may adjourn the meeting from time to
time until a quorum shall be present. At any reconvened meeting following such
an adjournment at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 3.09. VOTES REQUIRED. Except as otherwise provided by
applicable law or by the Certificate of Incorporation, the vote of a majority of
the directors present at a meeting duly held at which a quorum is present shall
be sufficient to pass any measure.
Section 3.10. PLACE AND CONDUCT OF MEETINGS. Each regular meeting and
special meeting of the Board of Directors shall be held at a location determined
as follows: The Board of Directors may designate any place, within or without
the State of Delaware, for the holding of any meeting. If no such designation is
made: (a) any meeting called by a majority of the directors shall be held at
such location, within the county of the Corporation's principal executive
office, as the directors calling the meeting shall designate; and (b) any other
meeting shall be held at such location, within the county of the Corporation's
principal executive office, as the Chairman of the Board may designate or, in
the absence of such designation, at the Corporation's principal executive
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office. Subject to the requirements of applicable law, all regular and special
meetings of the Board of Directors shall be conducted in accordance with such
rules and procedures as the Board of Directors may approve and, as to matters
not governed by such rules and procedures, as the chairman of such meeting shall
determine. The chairman of any regular or special meeting shall be the Chairman
of the Board, or, in his absence, a person designated by the Board of Directors.
The Secretary, or, in the absence of the Secretary, a person designated by the
chairman of the meeting, shall act as secretary of the meeting.
Section 3.11. FEES AND COMPENSATION. Directors shall be paid such
compensation as may be fixed from time to time by resolution of the Board of
Directors: (a) for their usual and contemplated services as directors; (b) for
their services as members of committees appointed by the Board of Directors,
including attendance at committee meetings as well as services which may be
required when committee members must consult with management staff; and (c) for
extraordinary services as directors or as members of committees appointed by the
Board of Directors, over and above those services for which compensation is
fixed pursuant to items (a) and (b) in this Section 3.11. Compensation may be in
the form of an annual retainer fee or a fee for attendance at meetings, or both,
or in such other form or on such basis as the resolutions of the Board of
Directors shall fix. Directors shall be reimbursed for all reasonable expenses
incurred by them in attending meetings of the Board of Directors and committees
appointed by the Board of Directors and in performing compensable extraordinary
services. Nothing contained herein shall be construed to preclude any director
from serving the Corporation in any other capacity, such as an officer, agent,
employee, consultant or otherwise, and receiving compensation therefor.
Section 3.12. COMMITTEES OF THE BOARD OF DIRECTORS. To the full extent
permitted by applicable law, the Board of Directors may from time to time
establish committees, including, but not limited to, standing or special
committees and an executive committee with authority and responsibility for
bookkeeping, with authority to act as signatories on Corporation bank or similar
accounts and with authority to choose attorneys for the Corporation and direct
litigation strategy, which shall have such duties and powers as are authorized
by these Bylaws or by the Board of Directors. Committee members, and the
chairman of each committee, shall be appointed by the Board of Directors. The
Chairman of the Board, in conjunction with the several committee chairmen, shall
make recommendations to the Board of Directors for its final action concerning
members to be appointed to the several committees of the Board of Directors. Any
member of any committee may be removed at any time with or without cause by the
Board of Directors. Vacancies which occur on any committee shall be filled by a
resolution of the Board of Directors. If any vacancy shall occur in any
committee by reason of death, resignation, disqualification, removal or
otherwise, the remaining members of such committee, so long as a quorum is
present, may continue to act until such vacancy is filled by the Board of
Directors. The Board of Directors may, by resolution, at any time deemed
desirable, discontinue any standing or special committee. Members of standing
committees, and their chairmen, shall be elected yearly at the regular meeting
of the Board of Directors which is held immediately following the annual meeting
of stockholders. The provisions of Sections 3.07, 3.08, 3.09 and 3.10 of these
Bylaws shall apply, mutatis mutandis, to any such Committee of the Board of
Directors.
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ARTICLE IV
Officers
Section 4.01. DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation
shall have a Chairman of the Board, a President, Treasurer, such senior vice
presidents and vice presidents as the Board of Directors deems appropriate, a
Secretary and such other officers as the Board of Directors may deem
appropriate. These officers shall be elected annually by the Board of Directors
at the organizational meeting immediately following the annual meeting of
stockholders, and each such officer shall hold office until the corresponding
meeting of the Board of Directors in the next year and until his successor shall
have been elected and qualified or until his earlier resignation, death or
removal. Any vacancy in any of the above offices may be filled for the unexpired
portion of the term by the Board of Directors at any regular or special meeting.
Section 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors shall preside at all meetings of the directors and shall have such
other powers and duties as may from time to time be assigned to him by the Board
of Directors.
Section 4.03. PRESIDENT. The President shall be the chief executive
officer of the Corporation and shall, subject to the power of the Board of
Directors, have general supervision, direction and control of the business and
affairs of the Corporation. He shall preside at all meetings of the stockholders
and, in the absence of the Chairman of the Board, at all meetings of the
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
duties as may be assigned to him from time to time by the Board of Directors.
Section 4.04. TREASURER. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and records of
account of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings and shares. The books of account shall at all
reasonable times be open to inspection by the directors.
The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositaries as may be designated
by the Board of Directors. He shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, shall render to the President and
directors, whenever they request it, an account of all of his transactions as
the Treasurer and of the financial condition of the Corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors or the Bylaws.
Section 4.05. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, the Board of Directors and all committees. He
shall be the custodian of the corporate seal and shall affix it to all documents
which he is authorized by law or the Board of Directors to sign and seal. He
also shall perform such other duties as may be assigned to him from time to time
by the Board of Directors or the Chairman of the Board or President.
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Section 4.06. ASSISTANT OFFICERS. The President may appoint one or more
assistant secretaries and such other assistant officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as may be specified from time to time by
the President.
Section 4.07. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case
of absence or disability of an officer of the Corporation or for any other
reason that may seem sufficient to the Board of Directors, the Board of
Directors or any officer designated by it, or the President, may, for the time
of the absence or disability, delegate such officer's duties and powers to any
other officer of the Corporation.
Section 4.08. OFFICERS HOLDING TWO OR MORE OFFICES. The same person may
hold any two (2) or more of the above-mentioned offices.
Section 4.09. COMPENSATION. The Board of Directors shall have the power
to fix the compensation of all officers and employees of the Corporation.
Section 4.10. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors, to the President, or to the
Secretary of the Corporation. Any such resignation shall take effect at the time
specified therein unless otherwise determined by the Board of Directors. The
acceptance of a resignation by the Corporation shall not be necessary to make it
effective.
Section 4.11. REMOVAL. Any officer of the Corporation may be removed,
with or without cause, by the affirmative vote of a majority of the entire Board
of Directors. Any assistant officer of the Corporation may be removed, with or
without cause, by the President or by the Board of Directors.
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ARTICLE V
Indemnification of Directors, Officers
Employees end other Corporate Agents
Section 5.01. ACTION, ETC. OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise (all such persons being
referred to hereinafter as an "Agent"), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
Section 5.02. ACTION, ETC., BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was an Agent against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
Section 5.03. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Sections 5.01 or 5.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the Agent is proper in the circumstances
because the Agent has met the applicable standard of conduct set forth in
Sections 5.01 and 5.02 hereof, which determination is made (a) by the Board of
Directors, by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.
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Section 5.04. INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article V, to the extent that an
Agent has been successful on the merits or otherwise, including the dismissal of
an action without prejudice or the settlement of an action without admission of
liability, in defense of any action, suit or proceeding referred to in Sections
5.01 or 5.02 hereof, or in defense of any claim, issue or matter therein, such
Agent shall be indemnified against expenses, including attorneys' fees actually
and reasonably incurred by such Agent in connection therewith.
Section 5.05. ADVANCES OF EXPENSES. Except as limited by Section 5.06
of this Article V, expenses incurred by an Agent in defending any civil or
criminal action, suit, or proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding, if the Agent shall
undertake to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified as authorized in this Article V.
Notwithstanding the foregoing, no advance shall be made by the Corporation if a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum of disinterested directors, or (if such a quorum is
not obtainable or, even if obtainable, a quorum of disinterested directors so
directs) by independent legal counsel in a written opinion, that, based upon the
facts known to the Board of Directors or counsel at the time such determination
is made, such person acted in bad faith and in a manner that such person did not
believe to be in or not opposed to the best interest of the Corporation, or,
with respect to any criminal proceeding, that such person believed or had
reasonable cause to believe his conduct was unlawful.
Section 5.06. RIGHT OF AGENT TO INDEMNIFICATION UPON APPLICATION;
PROCEDURE UPON APPLICATION. Any indemnification or advance under this Article V
shall be made promptly, and in any event within ninety days, upon the written
request of the Agent, unless a determination shall be made in the manner set
forth in the second sentence of Subsection 5.05 hereof that such Agent acted in
a manner set forth therein so as to justify the Corporation's not indemnifying
or making an advance to the Agent. The right to indemnification or advances as
granted by this Article V shall be enforceable by the Agent in any court of
competent jurisdiction, if the Board of Directors or independent legal counsel
denies the claim, in whole or in part, or if no disposition of such claim is
made within ninety (90) days. The Agent's expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any such proceeding shall also be indemnified by the Corporation.
Section 5.07. OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article V
shall not be deemed exclusive of any other rights to which an Agent seeking
indemnification or advancement of expenses may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be an Agent and shall inure
to the benefit of the heirs, executors and administrators of such a person. All
rights to indemnification under this Article V shall be deemed to be provided by
a contract between the Corporation and the Agent who serves in such capacity at
any time while these Bylaws and other relevant provisions of the Delaware
General Corporation Law and other applicable law, if any, are in effect. Any
repeal or modification thereof shall not affect any rights or obligations then
existing.
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Section 5.08. INSURANCE. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on behalf of any
person who is or was an Agent against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article V.
Section 5.09. CONSTITUENT CORPORATIONS. For the purposes of this
Article V, references to "the Corporation" shall include, in addition to the
resulting corporation, all constituent corporations (including all constituents
of constituents) absorbed in a consolidation or merger as well as the resulting
or surviving corporation, which, if the separate existence of such constituent
corporation had continued, would have had power and authority to indemnify its
Agents, so that any Agent of such constituent corporation shall stand in the
same position under the provisions of the Article V with respect to the
resulting or surviving corporation as that Agent would have with respect to such
constituent corporation if its separate existence had continued.
Section 5.10. OTHER ENTERPRISES, FINES, AND SERVING AT CORPORATION'S
REQUEST. For purposes of this Article V, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
V.
Section 5.11. SAVINGS CLAUSE. If this Article V or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Agent as to expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article V that shall not have been invalidated, or by any other applicable law.
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ARTICLE VI
Stock
Section 6.01. CERTIFICATES. Except as otherwise provided by law, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number and class (and series, if appropriate) of
shares of stock owned by him in the Corporation. Each certificate shall be
signed in the name of the Corporation by the Chairman of the Board or a
Vice-Chairman of the Board or the President or a Vice President, together with
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary. Any or all of the signatures on any certificate may be a facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
Section 6.02. TRANSFER OF SHARES. Shares of stock shall be transferable
on the books of the Corporation only by the holder thereof, in person or by his
duly authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed, to the Corporation's transfer
agent, if the Corporation has a transfer agent, or to the Corporation's
registrar, if the Corporation has a registrar, or to the Secretary, if the
Corporation has neither a transfer agent nor a registrar. The Board of Directors
shall have power and authority to make such other rules and regulations
concerning the issue, transfer and registration of certificates of the
Corporation's stock as it may deem expedient.
Section 6.03. TRANSFER AGENTS AND REGISTRARS. The Corporation may have
one or more transfer agents and one or more registrars of its stock whose
respective duties the Board of Directors or the Secretary may, from time to
time, define. No certificate of stock shall be valid until countersigned by a
transfer agent, if the Corporation has a transfer agent, or until registered by
a registrar, if the Corporation has a registrar. The duties of transfer agent
and registrar may be combined.
Section 6.04. STOCK LEDGERS. Original or duplicate stock ledgers,
containing the names and addresses of the stockholders of the Corporation and
the number of shares of each class of stock held by them, shall be kept at the
principal executive office of the Corporation or at the office of its transfer
agent or registrar.
Section 6.05. RECORD DATES. The Board of Directors may fix, in advance,
a date as the record date for the purpose of determining stockholders entitled
to notice of, or to vote at, any meeting of stockholders or any adjournment
thereof, or stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or in order to make a
determination of stockholders for any other proper purpose. Such date in any
case shall be not more than sixty (60) days, and in case of a meeting of
stockholders, not less than ten (10) days, prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
Only those stockholders of record on the date so fixed shall be entitled to any
of the foregoing rights, notwithstanding the transfer of any such stock on the
books of the Corporation after any such record date fixed by the Board of
Directors.
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FORM OF
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of the day
of , 1999 by and between GO CALL, INC., a Delaware corporation (the "Company"),
and ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance have been severely
limited;
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and, in
part, in order to induce Indemnitee to continue to provide services to the
Company, wishes to provide for the indemnification and advancement of expenses
to Indemnitee to the maximum extent permitted by law; and
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified by the Company as set forth herein.
NOW, THEREFORE, the Company and Indemnitee hereby agrees as follows:
1. INDEMNIFICATION.
a. INDEMNIFICATION OF EXPENSES. The Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "Claim") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any subsidiary of the Company (regardless of whether it was a
subsidiary of the Company at the time of the event giving rise to Claim), or is
or was serving at the request of the Company as a director, officer, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action or inaction on the part of
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Indemnitee while serving in such capacity (hereinafter an "Indemnifiable Event")
against any and all expenses (including attorneys' fees and all other costs,
expenses and obligations incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in, any such action, suit, proceeding,
alternative dispute resolution mechanism, hearing, inquiry or investigation),
judgments, fines, penalties and amounts paid in settlement (if such settlement
is approved in advance by the Company, which approval shall not be unreasonably
withheld) of such Claim and any federal, state, local or foreign taxes imposed
on the Indemnitee as a result of the actual or deemed receipt of any payments
under this Agreement (collectively, hereinafter "Expenses"), including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses. Such payment of Expenses shall be made by the Company
as soon as practicable but in any event no later than five (5) days after
written demand by Indemnitee therefor is presented to the Company.
b. REVIEWING PARTY. Notwithstanding the foregoing: (i) the
obligations of the Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "Expense Advance") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; PROVIDED, HOWEVER, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 1(c) hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Part determines that
Indemnitee substantively would not be permitted to be indemnified in whole or in
part under applicable law, Indemnitee shall have the right to commence
litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.
c. CHANGE IN CONTROL. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of Indemnitee to payments of Expense
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and Expense Advances under this Agreement or any other agreement or under the
Company's Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorney's fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.
d. MANDATORY PAYMENT OF EXPENSES. Notwithstanding any other
provision of this Agreement other than Section 9 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit, proceeding, inquiry or investigation referred to in Section(1)(a)
hereof or in the defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee in connection
therewith.
2. EXPENSES; INDEMNIFICATION PROCEDURE.
a. ADVANCEMENT OF EXPENSES. The Company shall advance all
Expenses incurred by Indemnitee. The advances to be made hereunder shall be paid
by the Company to Indemnitee as soon as practicable but in any event no later
than five (5) days after written demand by Indemnitee therefor to the Company.
b. NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.
c. NO PRESUMPTIONS; BURDEN OF PROOF. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of NOLO
CONTENDERE, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law. In addition, neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by the
Reviewing Party that Indemnitee has not met such standard of conduct or did not
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have such belief, prior to the commencement of legal proceedings by Indemnitee
to secure a judicial determination that Indemnitee should be indemnified under
applicable law, shall be a defense to Indemnitee's claim or create a presumption
that Indemnitee has not met any particular standard of conduct or did not have
any particular belief. In connection with any determination by the Reviewing
Party or otherwise as to whether the Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
d. NOTICE TO INSURERS. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such action,
suit, proceeding, inquiry or investigation in accordance with the terms of such
policies.
e. SELECTION OF COUNSEL. In the event the Company shall be
obligated hereunder to pay the Expenses of any Claim, the Company shall be
entitled to assume the defense of such Claim with counsel approved by
Indemnitee, which approval shall not be unreasonably withheld, upon the delivery
to Indemnitee of written notice of its election so to do. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same Claim; provided, that: (i) Indemnitee shall have the right
to employ Indemnitee's counsel in any such Claim at Indemnitee's expense, and
(ii) if (A) the employment of counsel by Indemnitee has been previously
authorized by the Company, (B) Indemnitee shall have reasonably concluded that
there be a conflict of interest between the Company and Indemnitee in the
conduct of any such defense, or (C) the Company shall not continue to retain
such counsel to defend such Claim, then the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company. The Company shall have the right
to conduct such defense as it sees fit in its sole discretion, including the
right to settle any claim against Indemnitee without the consent of the
Indemnitee.
3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
a. SCOPE. The Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a corporation of the
Company's state of incorporation to indemnify a member of its board of directors
or an officer, employee, agent or fiduciary, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits
afforded by such change. In the event of any change in any applicable law,
statute or rule which narrows the right of a corporation of the Company's state
of incorporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, such change, to the extent not otherwise required
by such law, statute or rule to be applied to this Agreement, shall have no
effect on this Agreement or the parties' rights and obligations hereunder except
as set forth in Section 8(a) hereof.
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b. NONEXCLUSIVITY. The indemnification provided by this
Agreement shall be in addition to any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested directors, the laws of the Company's state
of incorporation, or otherwise. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action Indemnitee took or did
not take while serving in an indemnified capacity even though Indemnitee may
have ceased to serve in such capacity.
4. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.
5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
6. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's rights under public policy to indemnify Indemnitee.
7. LIABILITY INSURANCE. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company's key
employees, agents or fiduciaries, if Indemnitee is not an officer or director
but is a key employee, agent or fiduciary.
8. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
a. EXCLUDED ACTION OR OMISSIONS. To indemnify Indemnitee for
Indemnitee's acts, omissions or transactions from which Indemnitee may not be
relieved of liability under applicable law.
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b. CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, except: (i) with respect to proceedings
brought to establish or enforce a right to indemnification under this Agreement
or any other agreement or insurance policy or under the Company's Certificate of
Incorporation or Bylaws now or hereafter in effect relating to Claims for
Indemnifiable Events, (ii) in specific cases if the Board of Directors has
approved the initiation or bringing of such suit, or (iii) as otherwise as
required under the laws of the Company's state of incorporation, regardless of
whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
c. LACK OF GOOD FAITH. To indemnify Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
d. CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any similar successor
statute.
9. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; PROVIDED, HOWEVER, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
10. CONSTRUCTION OF CERTAIN PHRASES.
a. For purposes of this Agreement, references to the "Company"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees,
agents or fiduciaries, so that if Indemnitee is or was serving at the request of
such constituent corporation as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, Indemnitee shall stand in the same position
under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
b. For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
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include any service as a director, officer, employee, agent or fiduciary of the
Company which imposes duties on, or involves services by, such director,
officer, employee, agent or fiduciary with respect to an employee benefit plan,
its participants or its beneficiaries; and if Indemnitee acted in good faith and
in a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.
c. For purposes of this Agreement, a "Change in Control" shall
be deemed to have occurred if: (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 20% of the total voting power represented by the Company's then
outstanding Voting Securities, (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders was approved
by a vote of at least two- thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all or substantially all of the
Company's assets.
d. For purposes of this Agreement, "Independent Legal Counsel"
shall mean an attorney or firm of attorneys, selected in accordance with the
provision of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).
e. For purposes of this Agreement, a "Reviewing Party" shall
mean any appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the Board
of Directors who is not party to the particular Claim for which Indemnitee is
seeking indemnification, or Independent Legal Counsel.
f. For purposes of this Agreement, "Voting Securities" shall
mean any securities of the Company that vote generally in the election of
directors.
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11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representative. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect with respect to Claims relating to Indemnifiable Events
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary of the Company or any other enterprise at the
Company's request.
13. ATTORNEY'S FEES. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless as a part of such action, a
court of competent jurisdiction over such action determines that each of the
materials assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and expenses
incurred with respect to Indemnitee's counterclaims and cross-claims made in
such action), and shall be entitled to the advancement of Expenses with respect
to such action, unless, as a part of such action, the court having jurisdiction
over such action determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
14. NOTICE. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given and shall in any
event be deemed to be given: (a) five (5) after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day
after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid, or (d) one day after the business day of delivery by
facsimile transmission, if delivered by facsimile transmission, with copy by
first class mail, postage prepaid, and shall be addressed if to Indemnitee, at
the Indemnitee's address as set forth beneath Indemnitee's signature to this
Agreement and if to the Company at the address of its principal corporate
offices or at such other address as such party may designate by ten days'
advance written notice to the other party hereto.
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15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
16. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law. Furthermore, to the fullest
extent possible, the provisions of this Agreement (including, without
limitations, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
17. CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Delaware, as applied to contracts between Delaware residents, entered into and
to be performed entirely within the State of Delaware, without regard to the
conflict of laws principles thereof.
18. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
20. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
21. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written at Cambridge, Ontario.
GO CALL, INC.
By:
AGREED TO AND ACCEPTED AS OF
THE DATE FIRST WRITTEN ABOVE:
[Name of Indemnitee]
Address:
Telecopier No.
10
GO CALL, INC.
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Go Call, Inc. 1999 Stock Option Plan
(the "Plan"), is to provide an incentive to officers, directors, employees,
independent contractors, and consultants of Go Call, Inc., a Delaware
corporation (sometimes referred to herein as the "Company"), and any parent
companies and subsidiaries (together with the Company herein collectively
referred to as "GCI") to remain in the employ of GCI or provide services to GCI
and contribute to its success.
As used in the Plan, the term "Code" shall mean the Internal Revenue
Code of 1986, as amended, and any successor statute, and the terms "Parent" and
"Subsidiary" shall have the meanings set forth in Sections 424(e) and (f) of the
Code.
This Plan was adopted by the Board of Directors as of April 12, 1999
and the stockholders of the Company as of August 18, 1999.
2. ADMINISTRATION. The Plan shall be administered by a Plan Committee
which shall be established by the Board of Directors of the Company (the
"Board"). The Plan Committee shall be comprised of at least two members who
shall be outside directors of the Company, as defined in Section 162(m) of the
Code or any successor provision. Members of the Plan Committee shall be
appointed, both initially and as vacancies occur, by the Board. The Board may
serve as the Plan Committee if by the terms of the Plan all members of the Board
are otherwise eligible to serve on the Plan Committee. The Board, at any time it
so desires, may increase or decrease, but not below two, the number of members
of the Plan Committee, may remove from membership on the Plan Committee all or
any portion of its members, and may appoint such person or persons as it desires
to fill any vacancy existing on the Plan Committee, whether by removal,
resignation or otherwise. The provisions of the Plan and all option and stock
appreciation right (SAR) agreements executed pursuant thereto, and its decisions
shall be conclusive and binding upon all interested persons. Subject to the
provisions of the Plan, the Plan Committee shall have the sole authority to
determine:
(a) The persons (hereinafter, "optionees") to whom options to
purchase shares of Common Stock of the Company ("Stock") and SARs shall be
granted;
(b) The number of options and SARs to be granted to each
optionee;
(c) The price to be paid for each share of Stock upon the
exercise of each option;
(d) The period within which each option and SAR shall be
exercised and, with the consent of the optionee, any extensions of such period
(provided, however, that the original period and all extensions shall not exceed
the maximum period permissible under the Plan); and
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(e) The terms and conditions of each stock option and/or SAR
agreement entered into between the Company and persons to whom the Company has
granted an option or SAR and of any amendments thereto (provided that the
optionee consents to each such amendment).
The Plan Committee shall meet at such times and places as it
determines, including by means of a telephone conference call. A majority of the
members shall constitute a quorum, and a decision of a majority of those present
at any meeting at which a quorum is present shall constitute the decision of the
Plan Committee. A memorandum signed by all of the members of the Plan Committee
shall constitute the decision of the Plan Committee without the necessity, in
such event, for holding an actual meeting.
3. ELIGIBILITY. Officers, directors and employees of GCI independent
contractors, consultants and other persons providing significant services to GCI
shall be eligible to receive grants of options under the Plan.
4. STOCK SUBJECT TO PLAN. There shall be reserved for issue, upon the
exercise of options granted under the Plan, 1,500,000 shares of Stock or the
number of shares of Stock, which, in accordance with the provisions of Section 9
hereof, shall be substituted therefor. Such shares may be treasury shares. If an
option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, unpurchased shares subject thereto shall again be
available for the purposes of the Plan. The maximum number of shares with
respect to which options which may be granted to an optionee who is an employee
of GCI shall not exceed 90,000 shares in any fiscal year during the term of the
Plan.
5. TERMS OF OPTIONS AND SARS.
(a) INCENTIVE STOCK OPTIONS. It is intended that options
granted pursuant to this Section 5(a) qualify as incentive stock options as
defined in Section 422 of the Code. Incentive stock options shall be granted
only to employees of GCI. Each stock option agreement evidencing an incentive
stock option shall provide that the option is subject to the following terms and
conditions and to such other terms and conditions not inconsistent therewith as
the Plan Committee may deem appropriate in each case:
(1) OPTION PRICE. The price to be paid for each share
of Stock upon the exercise of each incentive stock option shall be determined by
the Plan Committee at the time the option is granted, but shall in no event be
less than 100% of the Fair Market Value (as defined below) of the shares on the
date the option is granted, or not less than 110% of the Fair Market Value of
such shares on the date such option is granted in the case of an individual then
owning (within the meaning of Section 424(d) of the Code) 10% or more of the
total combined voting power of all classes of stock of the Company or of its
Parent or Subsidiaries. As used in this Plan, the term "date the option is
granted" means the date on which the Plan Committee authorizes the grant of an
option hereunder or any later date specified by the Plan Committee. For the
purposes of the Plan, Fair Market Value of the shares shall be (i) the closing
sales price of shares of Stock sold on the New York Stock Exchange, American
Stock Exchange or the NASDAQ National Market System on the date the option is
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granted (or if there was no sale on such date, the highest asked price for the
Stock on such date), (ii) if the Stock is not listed on either of those
exchanges or traded on the NASDAQ National Market System on the date the option
is granted, the mean between the "bid" and "asked" price of the Stock in the
National Over-The-Counter Market (or other similar market quotation system) on
the date the option is granted, or (iii) if the Stock is not traded in any
market, the price determined by the Plan Committee to be the fair market value,
based upon such evidence as it may deem necessary or desirable.
(2) PERIOD OF OPTION AND EXERCISE. The period or
periods within which an option may be exercised shall be determined by the Plan
Committee at the time the option is granted, but in no event shall any option
granted hereunder be exercised more than ten years from the date the option was
granted nor more than five years from the date the option was granted in the
case of an individual then owning (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all classes of stock
of the Company or of its Parent or Subsidiaries.
(3) PAYMENT FOR STOCK. The option exercise price for
each share of Stock purchased under an option shall be paid in full at the time
of purchase. The Plan Committee may provide that the option price be payable, at
the election of the holder of the option and with the consent of the Plan
Committee, in whole or in part either in cash or by delivery of Stock in
transferable form, such Stock to be valued for such purpose at its Fair Market
Value on the date on which the option is exercised. No share of Stock shall be
issued upon exercise until full payment therefor has been made, and no optionee
shall have any rights as an owner of Stock until the date of issuance to him of
the stock certificate evidencing such Stock.
(4) LIMITATION ON AMOUNT BECOMING EXERCISABLE IN ANY
ONE CALENDAR YEAR. Subject to the overall limitations of Section 4 hereof
(relating to the aggregate shares subject to the Plan), the aggregate Fair
Market Value (determined as of the time the option is granted) of Stock with
respect to which incentive stock options are exercisable for the first time by
the optionee during any calendar year (under the Plan and all other incentive
stock option plans of the Company, the Parent, and Subsidiaries) shall not
exceed $100,000.
(b) NONQUALIFIED STOCK OPTIONS. Nonqualified stock options may be
granted not only to employees but also to directors who are not employees of GCI
and to consultants, independent contractors and other persons who provide
substantial services to GCI. Each nonqualified stock option granted under the
Plan shall be evidenced by a stock option agreement between the person to whom
such option is granted and the Company. Such stock option agreement shall
provide that the option is subject to the following terms and conditions and to
such other terms and conditions not inconsistent therewith as the Plan Committee
may deem appropriate in each case:
(1) OPTION PRICE. The price to be paid for each share
of Stock upon the exercise of an option shall be determined by the Plan
Committee at the time the option is granted, but in no event shall be less than
85% of the Fair Market Value of the shares on the date the option is granted. As
used in this Plan, the term "date the option is granted" means the date on which
the Plan Committee authorized the grant of an option hereunder or any later date
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specified by the Plan Committee. To the extent that the fair market value of
Stock is relevant to the pricing of the option by the Plan Committee, fair
market value of the Stock shall be determined as set forth in Section 5(a)(1)
hereof.
(2) PERIOD OF OPTION AND EXERCISE. The periods,
installments or intervals during which an option may be exercised shall be
determined by the Plan Committee at the time the option is granted, but in no
event shall such period exceed 10 years from the date the option is granted.
(3) PAYMENT FOR STOCK. The option exercise price for
each share of Stock purchased under an option shall be paid in full at the time
of purchase. The Plan Committee may provide that the option exercise price be
payable at the election of the holder of the option, with the consent of the
Plan Committee, in whole or in part either in cash or by delivery of Stock in
transferable form, such Stock to be valued for such purpose at its Fair Market
Value on the date on which the option is exercised. No share of Stock shall be
issued until full payment therefor has been made, and no optionee shall have any
rights as an owner of shares of Stock until the date of issuance to him of the
stock certificate evidencing such Stock.
(c) STOCK APPRECIATION RIGHTS. SARs may be granted in writing under the
Plan by the Plan Committee subject to the following terms and conditions and
such other terms and conditions as the Plan Committee may prescribe.
(1) RIGHT OF OPTIONEE. Each SAR shall entitle the
holder thereof, upon the exercise of the SAR, to receive from the Company in
exchange therefor an amount equal in value to the excess of the Fair Market
Value on the date of exercise of one share of Stock over its Fair Market Value
on the date of grant (or, in the case of an SAR granted in connection with an
option, the excess of the Fair Market Value of one share of Stock at the time of
exercise over the option exercise price per share under the option to which the
SAR relates), multiplied by the number of shares covered by the SAR or the
option, or portion thereof, that is surrendered. No SAR shall be exercisable at
a time that the amount determined under this subparagraph is negative. Payment
by the Company upon exercise of an SAR shall be made in Stock valued at the Fair
Market Value of the Stock on the date of exercise.
(2) EXERCISE. An SAR shall be exercisable only at the
time or times established by the Plan Committee. If an SAR is granted in
connection with an option, the following rules shall apply: (i) the SAR shall be
exercisable only to the extent and on the same conditions that the related
option could be exercised; (ii) upon exercise of the SAR, the option or portion
thereof to which the SAR relates terminates; and (iii) upon exercise of the
option, the related SAR or portion thereof terminates.
(3) RULES. The Plan Committee may withdraw any SAR
granted under the Plan at any time and may impose any conditions upon the
exercise of an SAR or adopt rules and regulations from time to time affecting
the rights of holders of SARs granted prior to adoption or amendment of such
rules and regulations as well as SARs granted thereafter.
4
<PAGE>
(4) FRACTIONAL SHARES. No fractional shares shall be
issued upon exercise of an SAR. In lieu thereof, cash may be paid in an amount
equal to the value of the fraction or, if the Plan Committee shall determine,
the number of shares may be rounded downward to the next whole share.
(5) SHARES SUBJECT TO PLAN. Upon the exercise of an
SAR for shares, the number of shares of Stock reserved for issuance under the
Plan shall be reduced by the number of shares issued.
6. NONTRANSFERABILITY. The options and SARs granted pursuant to the
Plan shall be nontransferable except by will or the laws of descent and
distribution of the state or country of the optionee's domicile at the time of
death or for options other than incentive stock options, pursuant to a qualified
domestic relations order as defined in the Code or Title I of the Employee
Retirement Income Security Act and shall be exercisable during the optionee's
lifetime only by him (or, in the case of a transfer pursuant to a qualified
domestic relations order, by the transferee under such qualified domestic
relations order) and after his death, by his personal representative or by the
person entitled thereto under his will or the laws of intestate succession.
7. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. Unless otherwise
specified in the applicable option and/or SAR agreement or SAR, upon termination
of the optionee's employment or other relationship with GCI, his rights to
exercise options and SARs then held by him shall be only as follows (in no case
do the time periods referred to below extend the term specified in any option):
(a) DEATH OR DISABILITY. Upon the death or disability (within
the meaning of Section 22(e)(3) of the Code) of an optionee, any option or SAR
which he holds may be exercised (to the extent exercisable at his death or
disability), unless it otherwise expires, within such period after the date of
his death (not less than six months nor more than twelve months) as the Plan
Committee shall prescribe in his option agreement or SAR, by the optionee or, in
the event of death, by the optionee's representative or by the person entitled
thereto under his will or the laws of intestate succession.
(b) RETIREMENT. Upon the retirement (either pursuant to an GCI
retirement plan, if any, or pursuant to the approval of the Board) of an
officer, director or employee, an outstanding option or SAR may be exercised (to
the extent exercisable at the date of such retirement) by him
5
<PAGE>
within such period after the date of his retirement (provided that such period
is no less than 30 days and no more than three months) as the Plan Committee
shall prescribe in his option agreement or SAR.
(c) OTHER TERMINATION. In the event an officer, director or
employee ceases to serve as an officer or director or leaves the employ of GCI
for any reasons other than as set forth in (a) and (b), above, or a nonemployee
ceases to provide services to GCI, any option or SAR which he holds shall remain
exercisable (to the extent exercisable as of the date of such termination) until
30 days after the date of such termination.
(d) PLAN COMMITTEE DISCRETION. The Plan Committee may in its
sole discretion accelerate the exercisability of any or all options or SARs.
8. TRANSFER TO RELATED CORPORATION. In the event an employee leaves the
employ of the Company to become an employee of a Parent or a Subsidiary or any
employee leaves the employ of a Parent or a Subsidiary to become an employee of
the Company or another Parent or Subsidiary, such employee shall be deemed to
continue as an employee for purposes of this Plan.
9. ADJUSTMENT OF SHARES; TERMINATION OF OPTIONS AND SARS.
(a) ADJUSTMENT OF SHARES. In the event of changes in the
outstanding Stock by reason of stock dividends, split-ups, consolidations,
recapitalizations, reorganizations or like events (as determined by the Plan
Committee), an appropriate adjustment shall be made by the Plan Committee in the
number of shares reserved under the Plan, in the number of shares set forth in
Section 4 hereof, in the number of shares and the option price per share
specified in any stock option agreement, and in the number of SARs with respect
to any unexercised shares. The determination of the Plan Committee as to what
adjustments shall be made shall be conclusive. Adjustments for any options to
purchase fractional shares shall also be determined by the Plan Committee. The
Plan Committee shall give prompt notice to all optionees of any adjustment
pursuant to this Section.
(b) TERMINATION OF OPTIONS AND SARS ON MERGER, REORGANIZATION
OR LIQUIDATION OF THE COMPANY. Notwithstanding anything to the contrary in this
Plan, in the event of any merger, consolidation or other reorganization of the
Company in which the Company is not the surviving or continuing corporation (as
determined by the Plan Committee) or in the event of the liquidation or
dissolution of the Company, all options and SARs granted hereunder shall
terminate on the effective date of the merger, consolidation, reorganization,
liquidation or dissolution unless there is an agreement with respect thereto
which expressly provides for the assumption of such options and SARs by the
continuing or surviving corporation.
10. SECURITIES LAW REQUIREMENTS. The Company's obligation to issue
shares of its Stock upon exercise of an option or SAR is expressly conditioned
upon the completion by the Company of any registration or other qualification of
such shares under any state and/or federal law or rulings and regulations of any
government regulatory body or the making of such investment representations or
other representations and undertakings by the optionee (or his legal
6
<PAGE>
representative, heir or legatee, as the case may be) in order to comply with the
requirements of any exemption from any such registration or other qualification
of such shares which the Company in its sole discretion shall deem necessary or
advisable. The Company may refuse to permit the sale or other disposition of any
shares acquired pursuant to any such representation until it is satisfied that
such sale or other disposition would not be in contravention of applicable state
or federal securities law.
11. TAX WITHHOLDING. As a condition to the exercise of an option or SAR
or otherwise, the Company may require an optionee to pay over to the Company all
applicable federal, state and local taxes which the Company is required to
withhold with respect to the exercise of an option or SAR granted hereunder. At
the discretion of the Plan Committee and upon the request of an optionee, the
minimum statutory withholding tax requirements may be satisfied by the
withholding of shares of Stock otherwise issuable to the optionee upon the
exercise of an option or SAR.
12. AMENDMENT. The Board may amend the Plan at any time, except that
without shareholder approval:
(a) The number of shares of Stock which may be reserved for
issuance under the Plan shall not be increased except as provided in Section
9(a) hereof;
(b) The option price per share of Stock subject to incentive
stock options may not be fixed at less than 100% of the Fair Market Value of a
share of Stock on the date the option is granted;
(c) The maximum period of ten (10) years during which the
options or SARs may be exercised may not be extended;
(d) The class of persons eligible to receive options or SARs
under the Plan as set forth in Section 3 shall not be changed; and
(e) This Section 12 may not be amended in a manner that limits
or reduces the amendments which require shareholder approval.
13. EFFECTIVE DATE. The Plan shall be effective upon the date of its
adoption by both the Board, and subject to the approval of the stockholders of
the Company within the 12 month period following such adoption date.
14. TERMINATION. The Plan shall terminate automatically as of the close
of business on the day preceding the 10th anniversary date of its effectiveness
or earlier by resolution of the Board, or upon consummation of any merger,
consolidation or other reorganization in which the options granted hereunder
terminate, all as described in Section 9(b) hereof. Unless otherwise provided
herein, the termination of the Plan shall not affect the validity of any option
agreement outstanding at the date of such termination.
7
<PAGE>
15. STOCK OPTION AND SAR AGREEMENT. Each option and SAR granted under
the Plan shall be evidenced by a written agreement executed by the Company and
accepted by the optionee, which (i) shall contain each of the provisions and
agreements herein specifically required to be contained therein, (ii) shall
indicate whether an option is to be an incentive stock option or a nonqualified
stock option, and if it is to be an incentive stock option, the stock option
agreement shall contain terms and conditions permitting such option to qualify
for treatment as an incentive stock option under Section 422 of the Code, (iii)
may contain the agreement of the optionee to remain in the employ of, and/or to
render services to, the Company or any Parent or Subsidiary for a period of time
to be determined by the Plan Committee, and (iv) may contain such other terms
and conditions as the Plan Committee deems desirable and which are not
inconsistent with the Plan.
16. NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any option or
SAR granted hereunder shall confer upon any optionee any right to continue in
the employ of GCI or to continue to perform services for GCI, or shall interfere
with or restrict in any way the rights of GCI to discharge or terminate any
officer, director, employee, independent contractor or consultant at any time
for any reason whatsoever, with or without good cause.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
Executed and dated as of the date first written above at Cambridge,
Ontario, Canada,
GO CALL, INC.
By:
Michael Ruge
Chief Executive Officer
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