SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
TOPCLICK INTERNATIONAL, INC.,
A Delaware corporation (Exact
name of registrant as specified in its charter)
DELAWARE 330755473
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Suite 200, 1636 West 2nd Street, Vancouver, British Columbia, Canada V6J 1H4
(Address of registrant's principal executive offices) (Zip Code)
(604) 737-1127
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par value $.001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 68
Exhibit Index is specified on Page 21
1
<PAGE>
TopClick International, Inc.,
a Delaware corporation
Index to Form 10-SB Registration Statement
Item Number and Caption Page
PART I
1. Description of Business 3
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
3. Description of Property 13
4. Security Ownership of Certain Beneficial Owners and Management 14
5. Directors, Executive Officers, Promoters and Control Persons 15
6. Executive Compensation - Remuneration of Directors and Officers 16
7. Certain Relationships and Related Transactions 17
8. Legal Proceedings 18
9. Market for Common Equity and Related Shareholder Matters 18
10. Recent Sales of Unregistered Securities 19
11. Description of Securities 19
12. Indemnification of Officers and Directors 20
13. Financial Statements 20
14. Changes in and Disagreements with Accountants 20
15. Financial Statements and Exhibits 20
15(a) Index to Financial Statements 20
Financial Statements F-1 through F-3
15(b) Index to Exhibits 21
Exhibits E-1 through E-27
Signatures 68
2
<PAGE>
Item 1. Description of Business.
The Company was originally incorporated for the purpose of facilitating the
consumption of information, products and services via the Internet. To this end,
the Company currently provides Internet users with a one-stop information index
to the top Internet guides, which allows users to view and then quickly select
the best guide for their needs based on their choice of information subject. The
Company's services allow Internet users to locate their subject categories
easily and provides those users with the freedom to roam back and forth from
guide to guide. For example, inside the Company's Internet golf environment, the
Company has packaged all of the top Internet guides to golf, such as Yahoo!,
Excite and Lycos.
Development of the Company. TopClick International, Inc., a Delaware
corporation formerly named Galveston Oil & Gas, Inc. ("Company"), was
incorporated in the State of Delaware on October 3, 1996. The Company changed
its name to TopClick International, Inc. on or about February 5, 1999 by filing
an amendment to its Certificate of Incorporation with the Delaware Secretary of
State. Pursuant to an Acquisition Agreement dated January 28, 1999, the Company
acquired all of the shares of TopClick Corporation, a Delaware corporation
incorporated on July 8, 1998 ("TC") which, in turn, had previously acquired
certain assets from E.Z.P.C. Canada Inc., which was incorporated on September
28, 1994, under the Canada Business Corporations Act with one common share owned
by Helpful By Design, Inc., a Canadian federal jurisdiction corporation ("HBD").
The Acquisition Agreement was part of a Financing Agreement specified more
completely below. TC is now a wholly-owned subsidiary of the Company.
On or about July 14, 1998, the name of E.Z.P.C. Canada, Inc., was changed
to TopClick (Canada) Inc. In September, 1998, HBD sold the TopClick website
(which website is described more specifically below) and related assets,
including the one common share of TopClick (Canada) Inc., to TC for the issuance
of 7,000,000 shares of $.001 par value common stock of TC to HBD and forgiveness
of indebtedness owed by HBD to TopClick (Canada) Inc. The TopClick website and
related assets were valued by the Board of Directors of HBD ("HBD Board") at
US$700,000 (all amounts are in United States currency unless otherwise
specified.) The HBD Board valued the forgiveness of a debt in the amount of
$480,000 in Canadian Dollars ("CDN$") at $315,789, at an exchange rate of
approximately 1.52 CDN$ to one United States Dollar. The HBD Board believes that
total consideration for the sale of the TopClick website and related assets was,
therefore, approximately $1,015,789. As part of this transaction, TC agreed to
convert the shares of preferred stock held by shareholders of TopClick (Canada)
Inc. into shares of common stock of TC.
On or about January 30, 1999, TC entered into a Financing Agreement with
the Company, Sonora Capital Corporation ("Sonora"), HBD, and other parties
whereby investors represented by Sonora provided $2,000,000 to the Company. As
part of a series of related transactions, HBD and the shareholders of TC
transferred their shares of TC to the Company so that TC became a wholly-owned
subsidiary of the Company. A copy of the Financing Agreement is attached as
Exhibit 4 to this Registration Statement. A copy of the Acquisition Agreement is
attached to that Financing Agreement as Exhibit B thereto.
Business of the Company. As set forth above, the Company owns and operates
the TopClick website, a unique information retrieval guide for Internet users.
The TopClick website contains the first comprehensive Internet "superguide" to
the major Internet guides, designed to help Internet users find the answers to
their searches more quickly and effectively than they can through conventional
single guides or search engines. TopClick makes it easy for Internet users to
find their subjects and move back and forth from guide to guide without having
to visit each guide's homepage and conduct individual searches. The TopClick
website is located at the Internet address www.topclick.com. The TopClick
website's features include "central keyword searching", which provides one-stop
keyword searching across the top portal sites, including Yahoo!, Excite, Lycos,
GoTo.com, Go Network, Ask Jeeves, Dogpile, Northern Light, Looksmart, Infoseek,
Snap!, Webcrawler, AOL Netfind, HotBot and Alta Vista. The TopClick website also
features top Internet brands across thousands of information subjects, organized
into
3
<PAGE>
51 easy-to-use information categories. The website currently houses over 8,000
top sites and anticipates adding additional top sites.
The Company has built and is continuing to develop a complex database of
HTML links arranged into predefined categories and subjects across the top
guides on the Internet. The TopClick guide currently includes links from Yahoo!,
Excite, Lycos, Infoseek, Looksmart, Webcrawler, AOL, Snap! and Magellan. There
are two principal ways to use the TopClick guide: (1) users can quickly click
through three levels of information: Group, Category and Subject, users can then
"click out" to any of the top Internet guides; or (2) alternatively, users can
keyword-search the Top 12 Internet Guides from the TopClick Home page.
Transition of Website. In March, 1999 the Company entered into a Master
Service Agreement with Frontier GlobalCenter, Inc. ("Frontier") for Internet
connectivity services, the purchase of equipment to provide such services, space
to store and operate that equipment, and the licensing of software, all of which
allowed the Company to move its website to allow for more rapid growth. Frontier
specializes in scalable high-speed hosting services, and hosts many of the
world's busiest websites, including Yahoo!, Netscape, Playboy, Pacific Bell,
Quote.com, and USA Today. The Company has installed a high-speed server and
software system together with a leading statistical analysis and tracking
software solution from Marketwave Corporation of Seattle, Washington
("Marketwave"), all supported by a 12-month maintenance contract. Marketwave is
a leading innovator in real-time Internet data mining and traffic analysis
software, with more than 40,000 licensed corporate customers, including industry
names such as Intel, Dell, AT&T, Cox Communications, Volvo and NBC Europe. The
new hosting architecture incorporates a fully redundant system supported by a
"high-availability" load-balancing solution which distributes peak traffic
across the servers to improve performance.
Limited Operating History. The Company has a very limited operating history
upon which an evaluation of the Company's prospects can be made. The Company's
prospects must be considered speculative, considering the risks, expenses, and
difficulties frequently encountered in the establishment of a new business,
specifically the risks inherent in the development and operation of websites and
services on the Internet. There can be no assurance that unanticipated technical
or other problems will not occur which would result in material delays in future
product and service commercialization or that the efforts of the Company will
result in successful product and service commercialization. There can be no
assurance that the Company will be able to achieve profitable operations.
Employees. The Company and its subsidiaries currently have eight employees,
all of which are full-time employees. Management of the Company anticipates
using consultants for business, accounting, engineering, and legal services on
an as-needed basis.
Key Employees. The Company's key employees are Chris Lewis, the President
and Chief Executive Officer; Terry Livingstone, the Chief Operating Officer;
Jason Wilkes, Vice President in charge of business development; and Rory Wadham,
lead programmer.
Reports to Security Holders. Once this Registration Statement becomes
effective, the Company will become a reporting company with the Securities and
Exchange Commission ("SEC"), and will thereafter provide an annual report to its
security holders, which will include audited financial statements. The public
may read and copy any materials filed with the SEC at the SEC's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. The address of that site is
http://www.sec.gov. The Company currently maintains its own Internet address at
www.topclick.com.
4
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Information retrieval is already a significant market on the Internet, but
the growth of the Internet requires continued advances in Internet guide
services. Because of the expanding volume of information on the Internet, no
single company has been able to monopolize Internet guides and referencing
indexes. The Company believes that the continued rapid expansion of the Internet
provides opportunities for the Company's innovations and will further provide
the Company with markets which the major search engines and guides do not
control or dominate. The Company believes that there is a window of opportunity
to establish a package of the best Internet guides into one environment.
Marketing Strategy. The Company anticipates that it will market itself to
the Internet community as a clearinghouse and an encyclopedia of quality
Internet guides. The Company believes that by December, 1999, it will be capable
of developing monthly traffic volumes of 30 million unique searches and 90
million page views and achieving market acceptance and name recognition as a
provider of packaged top guide information. By December, 2000, the Company hopes
that it will have created a top 10 portal site and top 10 site by visitor
traffic. The overall marketing plan for the Company's products and services is
based on two separate promotional phases: (1) the Initial Site Launch Plan and
(2) the Market Development Plan.
Initial Site Launch Plan. The Company anticipates that it will launch
multiple online tactical programs to create awareness of the Company's websites
and services with the goal of inducing potential clients to visit the Company's
websites, where demonstrations of the Company's products and services will be
displayed. The Company believes that by keeping the information current,
subscribers will return to the Company's websites, the ultimate goal being
increased usage over time.
The Company believes that over 80% of all Internet searches originate
through the top 8 guides. The Company intends to submit its website to those top
8 guides and to use an automated software package to submit the TopClick website
to the other 1,000 guides on the Internet. The Company hopes to ultimately build
the Company's websites and brands into well-known Internet properties.
The Company intends to submit Topclick.com to the top 10 site award
businesses on the Internet through the use of electronic press releases. The
Company intends to use the same methods to submit Topclick.com to the Top 10
Cool Sites/What's New Sites website to gain further recognition with Internet
customers. The Company anticipates that it will send out press releases to the
principal media groups that cover the Internet such as ABC, CNN, and CBS, as
well as to technology news suppliers such as PointCast. The Company also
anticipates that it will provide automated announcements to specific interest
groups at Internet chat environments and present its guide to mass community
sites, such as Geocites, as a complimentary service which the Company believes
will enhance the value of its core products. The Company will concentrate on
disseminating information about its products and services to specific
opinion-forming communities, such as teachers and marketing professionals via
e-mail announcements.
Market Development Plan. The Company plans to advertise in the top Internet
and computer industry publications, such as Internet World and Internet Users,
as well as in major mainstream newspapers, magazines, and other media. For new
Internet customers, the Company contemplates that it will establish channel
development programs to Internet service providers, cable companies, telephone
companies, satellite companies and web television businesses, with the intention
of placing a link to TopClick in their software, as a starting point for those
new Internet users. The Company also anticipates that it will seek logo and URL
contra-linking arrangements with targeted sites. The Company intends to develop
"tell-a-friend" extensions to the TopClick site to make it easy for existing
users to electronically tell friends about the Company's services.
5
<PAGE>
The Company may decide to provide free content enhancement and free
advertising on a by-subject approach to the top Internet guides. For example,
the Company may provide the Yahoo Golf website with links and coverage on the
Company's Golf Guide page. The Company anticipates entering into certain
strategic partnership agreements to provide content and links to existing
high-value news information providers, such as ESPN in its "sports" section and
PointCast in its "business" section. The Company further intends to promote its
products and services by developing on-site competitive games and contests.
Developing Site Traffic. The Company believes that it must develop volume
traffic on its site in order to be successful. Once traffic volume has been
established, the Company believes that it will become a distribution point for
advertisers and will develop opportunities to participate in sponsorship
agreements, electronic commerce agreements and joint marketing ventures. The
Company intends to increase its traffic (that is, page views) and then intends
to develop multiple revenue streams as a broker of diverse audience interests.
Initially, the Company will offer its products and services free to its
customers, strategic partners and media partners.
In keeping with this strategy, the Company will concentrate its marketing
efforts on increasing site traffic. Promotional space and other content on the
site will be provided free to content partners, to increase traffic. The Company
intends to form strategic relationships with the existing top Internet guides,
including providing free content links to areas of their sites that those guides
want to promote (for example, by providing free content links to the Yahoo Golf
Guide). Through the use of free space inside the TopClick guide, the Company
intends to develop a database of advertising contacts, media contacts, and
Internet guide contacts. At the same time, the Company will attempt to increase
volume to the Company's site using an integrated marketing communications
program to existing and new Internet users. The Company further intends to
develop piggy-back marketing programs and cross-promotional opportunities with
other online media. The Company anticipates increasing its top sites to 25,000
top sites from 5,000 top sites during the next 12 months. The TopClick guide
will be offered free to users, strategic partners (such as existing Internet
guides) and other media partners.
The Company will retain records of and analyze information areas that users
visit most frequently on its website, allowing the Company to develop specific
indexes and guides based on user demand.
Name Identification. The Company has purchased additional domain names and
will attempt to prevent third parties from adopting names similar to TopClick.
The Company has entered into various domain name registration agreements for
Topsearches.com, Mytopclick.com, Topclicking.com, Topclick-Inc.com,
Topclickinc.com, Top-Clicks.net, Topclick.net, Topclicks.net, Topclicks.com,
Top-click.com, Top-clicks.com, Top-click.net, Lookmarks.com with Network
Solutions, Inc. ("NSI"). NSI is responsible for the registration of second-level
Internet domain names in the top level COM, ORG, NET, and EDU domains. NSI
registers these second-level domain names on a first come, first served basis.
By registering a domain name, NSI does not determine the legality of the domain
name registration, or otherwise evaluate whether that registration or use may
infringe upon the rights of a third party. Effective February 25, 1998, NSI
revised its domain name dispute policy which provides, among other things, that
if a registrant files a civil action related to the registration and use of a
domain name, and provides NSI with a copy of the file-stamped complaint, NSI
will maintain the status of the domain name record pending a final or temporary
decision of that court. In such cases, NSI will deposit control of the domain
name into the registry of the court by supplying the registrant with the
registry certificate for deposit. While the domain name is in the registry of
the court, NSI will not make any changes to the domain name record unless
ordered by the court.
The Company believes that this revision to NSI's domain name dispute policy
will discourage frivolous claims against the domain names held by the Company.
Domain name registrations are effective for two years and may be renewed
year-to-year thereafter.
Expanding Internet Markets. Nua, one of Europe's leading online consultants
and developers, estimates that there were approximately 100 million Internet
users worldwide in January, 1998. According to a recent report
6
<PAGE>
in Computer Intelligence, the growth rate of Internet users may have increased
by as much as 30% in 1998. The Company anticipates that it may benefit from that
growth; however, no guaranty can be provided that such will occur.
North American Internet users represent more than 80% of all users. Until a
year ago, almost 99% of the 13 million servers hooked to the Internet were
distributed throughout North America, Western Europe and Japan. Internet
advertising revenue has grown significantly since 1996, and, in 1998, approached
the total advertising revenue for all domestic national newspaper revenues. Most
analysts predict that this significant growth rate will continue through the
year 2000. Netscape World recently predicted that Internet advertising revenues
will surpass those of all domestic national newspaper revenues by this year. The
Company should benefit from such growth; however, no guaranty can be provided
that the Company will so benefit.
Competition. Competition to provide Internet Guides to Internet users is
significant and the Company expects the competition to increase. The Company
will compete directly with other companies and businesses that have developed
and are in the process of developing technologies and services which will be
competitive with the technologies and services developed and offered by the
Company. There can be no assurance that other technologies or services which are
functionally equivalent or similar to the technologies and services, of the
Company have not been developed or are not in development. The Company expects
that there are companies or businesses which may have developed or are
developing such technologies and services, as well as other companies and
businesses which have the expertise which would encourage them to develop and
market services directly competitive with those developed and marketed by the
Company. To the extent that customers exhibit loyalty to the supplier that first
supplies them with a particular service or technology, the competitors of the
Company may have an advantage over the Company with respect to services and
technologies first developed by such competitors. As a result of their size and
breadth of their service offerings, certain of these competitors have been and
will be able to establish managed accounts by which they seek to gain a
disproportionate share of users for their services and technologies. Such
managed accounts present significant competitive barriers to the Company. It is
anticipated that the Company will benefit from its participation in niche
markets which, as they expand, may attract the attention of the competitors of
the Company.
There can be no assurance that competitors have not or will not succeed in
developing technologies and services that are more effective than any which have
been or are being developed by the Company or which would render the services
and products of the Company obsolete and noncompetitive. The Company has
significant competition which includes, but is not limited to, the Browser
companies; Internet Distribution Companies; existing established content
providers; Internet search and directory sites; broadband communications
companies; large media conglomerates; commercial and non-commercial computer
operating systems companies; software development companies; directory companies
(e.g. Yellow Pages); and Bookmark Managers.
Many of the Company's existing competitors, as well as a number of
potential new competitors, have longer operating histories in the Web market,
greater name recognition, larger customer bases and databases and significantly
greater financial, technical and marketing resources than the Company. Such
competitors may be able to undertake more extensive marketing campaigns, adopt
more aggressive pricing policies and make more attractive offers to potential
employees, distribution partners, advertisers and content providers. Further,
there can be no assurance that the Company's competitors will not develop Web
search and retrieval services that are equal or superior to those of the Company
or that achieve greater market acceptance than the Company's products and
services in the area of name recognition, performance, ease of use and
functionality. There can also be no assurance that ISPs, OSPs, Web browsers and
other Web content providers will not be perceived by advertisers as having more
desirable Web sites for placement of advertisements. In addition, a number of
the Company's competitors have established collaborative relationships with
ISPs, OSPs and other Web content providers. Accordingly, there can be no
assurance that the Company will be able to retain a customer base of advertisers
or maintain or increase traffic on its network or that competitors will not
experience greater growth in traffic than the Company as a result
7
<PAGE>
of such relationships, which could have the effect of making their Web sites
more attractive. There can also be no assurance that the Company will be able to
compete successfully against its current or future competitors or that
competition will not have a material adverse effect on the Company's business,
results of operations and financial condition.
Regulation. The Internet has been under increasing scrutiny by various
state, federal and international regulatory agencies. The Company may be subject
to various existing or proposed forms of government regulations, including
restrictions on interstate telecommunications to promote certain transactions
and age-based content restrictions. Any future violation of, and the cost of
compliance with, these laws and regulations could have a material adverse effect
on the Company's business, financial condition and results of operations.
Third-Party Reliance. The Company may become dependent upon various third
parties for one or more significant services required for the business of the
Company, which services will be provided to the Company pursuant to agreements
with such providers. Inasmuch as the capacity for certain services by certain
third parties may be limited, the inability of the Company, for economic or
other reasons, to continue to receive services from existing providers or to
obtain similar services from additional providers could have a material adverse
effect on the Company.
The Company currently owns and also licenses from third parties its
technologies. As it continues to introduce new services that incorporate new
technologies, it may be required to license technology from others. There can be
no assurance that these third-party technology licenses will be available to the
Company on commercially reasonable terms, if at all. The inability of the
Company to obtain any of these technology licenses could result in delays or
reductions in the introduction of new services or could adversely affect the
performance of its services until equivalent technology could be identified,
licensed and integrated.
Market Forces. The Company's results of operations may vary from period to
period due to a variety of factors, including the level of research and
development of the Company, the introduction of new products or services by the
Company or its competitors, cost increases from third-party service providers,
changes in marketing and sales expenditures, market acceptance of the products
and services of the Company, competitive pricing pressures, and general economic
and industry conditions that affect customer demand.
As with any relatively new business enterprise operating in a specialized
and intensely competitive market, the Company is subject to many business risks
which include, but are not limited to, unforeseen marketing and promotional
expenses, unforeseen negative publicity, competition, and lack of operating
experience. Many of the risks may be unforeseeable or beyond the control of the
Company. There can be no assurance that the Company will successfully implement
its business plan in a timely or effective manner, or that management of the
Company will be able to market its services and sell enough products to generate
sufficient revenues and continue as a going concern.
Business Interruption; Reliance on Computer and Telecommunications
Infrastructure. The Company's success will be dependent in large part on its
continued investment in sophisticated telecommunications and computer systems
and computer software. The Company anticipates making significant investments in
the acquisition, development, and maintenance of such technologies in an effort
to remain competitive and anticipates that such expenditures will be necessary
on an on-going basis. Moreover, computer and telecommunication technologies are
evolving rapidly and are characterized by short product lifecycles, which
requires the Company to anticipate technological developments. There can be no
assurance that the Company will be successful in anticipating, managing or
adopting such technological changes on a timely basis or that the Company will
have the capital resources available to invest in new technologies. In addition,
the Company's business is highly dependent on its computer and
telecommunications equipment and software systems, the temporary or permanent
loss of which, through physical damage or operating malfunction, could have a
material adverse effect on the Company's
8
<PAGE>
business. Operating malfunctions in the software systems of financial
institutions, market makers, and other parties might have an adverse affect on
the operations of the Company. The Company's business is materially dependent on
service provided by various local and long distance telephone companies. A
significant increase in the cost of telephone services that is not recoverable
through an increase in the price of the Company's services, or any significant
interruption in telephone services, could have a material adverse effect on the
Company.
Reliance on Growth and Use of the Internet. The substantial growth in the
use of and interest in the Internet and the Web is a recent phenomenon. There
can be no assurance that communication or commerce over the Internet will become
more widespread or that extensive content will continue to be provided over the
Internet. The Internet may not prove to be a viable commercial marketplace for a
number of reasons, including potentially inadequate development of the necessary
infrastructure, such as a reliable network backbone, or timely development and
commercialization of performance improvements, including high speed modems. In
addition, to the extent that the Internet continues to experience significant
growth in the number of users and level of use, there can be no assurance that
the Internet infrastructure will continue to be able to support the demands
placed upon it by such potential growth or that the performance or reliability
of the Web will not be adversely affected by this continued growth. In addition,
the Internet could lose its viability due to delays in the development or
adoption of new standards and protocols required to handle increased levels of
Internet activity, or due to increased governmental regulation. Changes in or
insufficient availability of telecommunications services to support the Internet
also could result in slower response times and adversely affect usage of the Web
and the Company's online media properties. If use of the Internet does not
continue to grow, or if the Internet infrastructure does not effectively support
growth that may occur, the Company's business, operating results and financial
condition would be materially and adversely affected.
Uninsured Loss; Acts of God. The Company is required to carry and maintain
a comprehensive general liability insurance policy, an employer's liability
policy, and worker's compensation, as specified in the Master Service Agreement
with Frontier attached hereto as Exhibit 5. The Company is also required to
maintain liability insurance pursuant to the commercial lease for its business
premises. The Company may also carry and maintain other business insurance of
the types customarily carried by similar businesses. However, there are certain
types of extraordinary occurrences which may be either uninsurable or not
economically insurable. For example, in the event of a major earthquake, the
Company's telecommunications and computer systems could be rendered inoperable
for protracted periods of time, which would adversely affect the Company's
financial condition. In the event of a major civil disturbance, the Company's
operations could be adversely affected. Should such an uninsured loss occur, the
Company could lose significant revenues and financial opportunities in amounts
which would not be partially or fully compensated by insurance proceeds.
The strategy of the Company for growth is substantially dependent upon its
ability to market its services successfully. There can be no assurance that the
Company will be able to market its services on acceptable terms, or at all.
Failure of the Company to market its services successfully could have a material
adverse effect on the Company's business, financial condition or results of
operations.
Regulatory and Market Influences. The Internet is subject to changing
political, economic and regulatory influences that will affect the procurement
practices and operation of Internet directory service organizations. Changes in
current Internet directory service reimbursement systems could result in the
need for unplanned product enhancements, in delays or cancellations, or in the
revocation of endorsement of the services of the Company. Any of these
occurrences could have a material adverse effect on the Company's business,
financial condition and results of operations. During the past several years,
various Internet directory service industries and telecommunications industries
have been subject to an increase in governmental and international regulation.
Certain proposals to reform the telecommunications and Internet service systems
are periodically under consideration by the appropriate regulators. These
programs may contain proposals to increase government involvement in Internet
directory services and otherwise change the operating environment for the
customers of the Company. The Company cannot
9
<PAGE>
predict what impact, if any, such factors might have on its business, financial
condition and results of operations. In addition, many Internet directory
service providers are consolidating to create integrated Internet directory
service delivery systems with greater regional market power. As a result, these
emerging systems could have greater bargaining power, which may lead to price
erosion of the products of the Company. The failure of the Company to maintain
adequate price levels would have a material adverse effect on the Company's
business, financial condition and results of operations. Other legislative or
market-driven reforms could have unpredictable effects on the Company's
business, financial condition and results of operations.
Growth of Business. Since its inception, the Company has experienced
significant change and expansion in its business and operations, which have
placed significant demands on the Company's administrative, operational,
financial, and other resources. Future growth, if any, could place a significant
strain on the Company's management, operational, financial, and other resources.
The Company's ability to manage future growth will depend upon a significant
expansion of its accounting and other internal management systems and the
implementation and subsequent improvement of a variety of systems, procedures,
and controls. Moreover, the Company will need to continue to train, motivate,
and manage its employees and attract and retain qualified senior managers and
technical professionals. If the Company's management is unable to manage growth
effectively, there could be a material adverse effect on the Company's business,
financial condition, and operating results.
Key Personnel. The future success of the Company will depend in part on the
service of its key personnel and, additionally, its ability to identify, hire
and retain additional qualified personnel. There is intense competition for
qualified personnel in the areas of the activities of the Company, and there can
be no assurance that the Company will be able to continue to attract and retain
such personnel necessary for the development of the business of the Company.
Because of the intense competition, there can be no assurance that the Company
will be successful in adding personnel as needed to satisfy the staffing
requirements of the Company. Failure to attract and retain key personnel could
have a material adverse effect on the Company.
Dependence on Management. The Company is dependant on the efforts and
abilities of its senior management. The loss of various members of that
management could have a material adverse effect on the business and prospects of
the Company. The members of the Board of Directors of the Company believe that
all commercially reasonable efforts have been made to minimize the risks
attendant with the departure by key personnel from the service of the Company.
There is no assurance, however, that upon the departure of key personnel from
the service of the Company that replacement personnel will cause the Company to
operate profitably.
Although the Company intends to pursue a strategy of aggressive marketing
and development of its primary product, Topclick.com, a new Internet information
retrieval guide, and related Internet products and services, implementation of
this strategy will depend in large part on its ability to (i) establish a
significant customer base and maintain favorable relationships with those
customers; (ii) effectively operate its websites and Internet services; (iii)
obtain adequate financing on favorable terms to fund its business strategy; (iv)
maintain appropriate procedures, policies, and systems; (v) hire, train, and
retain skilled employees; and (vi) continue to operate in the face of increasing
competition. The inability of the Company to obtain or maintain any or all of
these factors could impair its ability to successfully implement its business
strategy, which could have a material adverse effect on the results of
operations and financial condition of the Company.
Impact of the Year 2000. The Year 2000 (commonly referred to as "Y2K")
issue results from the fact that many computer programs were written using two,
rather than four, digits to identify the applicable year. As a result, computer
programs with time-sensitive software may recognize a two digit code for any
year in the next century as related to this century. For example, "00", entered
in a date-field for the year 2000, may be interpreted as the year 1900,
resulting in system failures or miscalculations and disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in other normal business activities.
10
<PAGE>
In order to improve operating performance, the Company has undertaken a
number of significant systems initiatives. All hardware, software and
communication systems owned by or supplied to the Company have been analyzed by
reviewing all relevant product and service manuals, contacting vendors, and
on-line research of relevant vendor websites. The Company telephoned its phone
systems provider, its alarm monitoring company, and its website hosting provider
to ensure Y2K compliance. The Company also conducted on-line vendor reviews of
its desktop Pentium computers and its Windows 95 and Microsoft Office software.
For other software, the Company contacted the providers, reviewed the relevant
manuals, and reviewed vendor websites to ensure Y2K compliance. The Company also
considered and reviewed Y2K compliance of its power-backup systems suppliers.
An ancillary benefit of the Company's systems initiatives specified above
is that the resulting systems are Year 2000 compliant. The Company (i) has
completed an assessment of each of its operations and their Year 2000 readiness,
(ii) has determined that appropriate actions have been and are being taken, and
(iii) believes that it has completed its overall Year 2000 remediation prior to
any anticipated impact on its operations. The Company has determined that the
Year 2000 issue will not pose significant operational problems for its computer
systems. However, although the Company has initiated formal communications with
a number of its significant suppliers to determine the extent to which the
Company's interface systems are vulnerable to those third parties' failure to
remediate their own Year 2000 issues, and will initiate similar communication
with major customers as well as the balance of its major suppliers in 1999,
there is no guarantee that the systems of other companies on which the Company's
systems rely will be timely converted and would not have an adverse effect on
the Company's systems.
In a worst case scenario, the Company's primary service, an information
retrieval guide for Internet users, could be adversely affected by the
non-compliance of banks, communications providers, utilities, common carriers,
the Company's customers, potential customers and other sources known and unknown
to the Company. Widespread breakdowns in the telecommunications industry would
have an adverse affect on the Company's operations. The ultimate impact of the
Y2K issue cannot be reasonably estimated at this time. Many Y2K problems might
not be readily apparent when they first occur, but instead could imperceptibly
degrade technology systems and corrupt information stored in computerized
databases, in some cases before January 1, 2000.
State of Readiness for Y2K. The Company has performed an assessment of the
Company's information technology ("IT") systems as well as its non-IT systems
(such as embedded technology in manufacturing or process control equipment
containing microprocessors or other similar circuitry). The Company evaluated
all hardware and software for Y2K compliance by using sources from the Internet,
by contacting manufacturers, and by contacting third party suppliers of phone
systems and security systems. Additionally, the Company reviewed product
documentation for Y2K compliance where such was available.
The in-house workstations of Company employees and subcontractors are
Pentium Personal Computers which utilize Windows 95 and Office 97+ software. The
Company believes that all critical applications of that software are Y2K
compliant. The Company has one additional workstation which is also Y2K
compliant.
Built on a UNIX platform, the server hardware and software for the
webserver environments used to host and serve the TopClick website are also Y2K
compliant. After conducting testing and evaluation, the Company believes that
its phone system, its Network Hub, its power backup systems and its security
system are all Y2K compliant. The Company's facsimile machine, however, is not
Y2K compliant.
Cost to Address the Company's Y2K Issues. The only significant equipment
replacement cost the Company anticipates is approximately CDN$600 to replace the
Company's facsimile machine. The Company does not anticipate any additional
upgrade, replacement, or equipment servicing charges to become Y2K compliant.
The Company will monitor external service providers through the Year 2000 at a
cost of approximately CDN$125.00. Therefore, based on current estimates, the
costs of addressing this issue are not expected to have a material adverse
11
<PAGE>
effect on the Company's financial position, results of operations or cash flows.
The potential impact of the Y2K issue on significant customers, vendors and
suppliers of the Company cannot be reasonably estimated at this time.
Third-Party Y2K Risks to the Company. The Company believes that the most
significant Y2K risks to the Company's continued operations are the Company's
dependence on (i) electrical power and (ii) phone and data lines. Power failures
or shortages resulting from British Columbia Hydro's failure to become Y2K
compliant would hinder the Company's operations. Moreover, system-wide failures
in the Company's telecommunications provider, BC Tel, resulting from BC Tel's
failure to become Y2K compliant, would similarly hinder the Company's
operations. The Company might also lose data which the Company stores in-house.
The Company's Contingency Plans. To prevent electrical failures from
adversely affecting the Company's operations, the Company performs regularly
scheduled data backups and connects its computer system to backup power systems.
Through the Year 2000, the Company will continue to communicate with its
electrical and telecommunications providers to remain informed about (i) the
status of such suppliers' Y2K compliance, and (ii) the potential impact that the
failure of these suppliers to become Y2K compliant will have on the Company.
Liquidity and Capital Resources. As set forth above, on or about January
30, 1999, the Company entered into a Financing Agreement which provided the
Company with $2,000,000. The Company believes that it may be able to acquire
additional financing at commercially reasonable rates. Because the Company is
not generating any revenues from the sale or licensing of their service
products, the Company's only external source of liquidity is the sale of its
capital stock.
Results of Operations. The Company has not yet realized any revenue from
operations.
Item 3. Description of Property
Property held by the Company. As of the dates specified in the following
table, the Company held the following property:
================================================================================
Property February 28, 1999
- - --------------------------------------------------------------------------------
Cash $1,850,000
================================================================================
Intellectual Property (estimated value) $ unknown
- - --------------------------------------------------------------------------------
Property and Equipment $148,900
- - --------------------------------------------------------------------------------
The Company owns the TopClick website and all proprietary software
incidental to the operation thereof. The Company has purchased additional domain
names similar to TopClick in an attempt to prevent third parties from exploiting
the TopClick brand name. On or about August 3, 1998, TC purchased office
furniture and communications systems to furnish the Company offices located at
Suite 200, 1636 West 2nd Avenue, Vancouver, British Columbia, Canada V6J 1H4. TC
acquired office workstations and fixtures with an inventory value of $74,000 for
the actual purchase price of $22,000; a Telecomms System for $14,000; 10
personal computers, a laptop computer, and servers, for $23,700; software and
databases for $29,000; 3 printers and personal computer accessories for $6,500;
and an office security system for $1,700.
12
<PAGE>
The Company has become the successor-in-interest to TopClick (Canada)
Inc.'s commercial lease for the premises located at #200-1636 W. Second Avenue
in Vancouver, British Columbia. That lease commenced August 1, 1998 and expires
July 31, 2001, and consists of approximately 3,500 square feet designated for
use as Internet software and related business offices. The annual base rental is
$42,000, paid in monthly installments and subject to typical common area charges
and pro rata tax charges. The Company shall have the right to renew the lease
for an additional 3 year period if the Company is not in default under the lease
at the date of expiration.
Intellectual Property Strategy. The Company will attempt to protect its
proprietary technology and domain names (see the discussion under the heading
entitled "Name Identification" on Page 6 of this Registration Statement). The
Company exclusively owns any and all software that it develops and retains the
right to license its products to third parties. The Company may rely on a
combination of copyright, NIS registration, trademark and trade secrecy laws,
and confidentiality agreements with its employees and subcontractors, to protect
its intellectual property rights in its products.
The Company faces a challenge unique to the software and computing
industry. While it is possible to protect a product's "look and feel", it is
almost impossible for a company to protect its Internet and software features
and functions. This means that another organization may elect to use the
Company's products as prototypes or guides for their own development. This can
drastically shorten a competitor's product development cycle. The Company
intends to remain among the top innovators and most customer-focused providers
of Internet information retrieval systems. This will require the Company to
spend significant funds for continuing research and development activities. The
Company regards its technology as proprietary and may attempt to protect its
technology with copyrights, trademarks, trade secret laws, restrictions on
disclosure and transferring title and other methods, and has plans to seek a
patent with respect to certain aspects of its searching and indexing technology.
There can be no assurance that any patents that may issue from these
applications will be sufficient to protect the Company's technology. In
addition, there can be no assurance that any patents that may be issued will not
be challenged, invalidated or circumvented, or that any rights granted
thereunder would provide proprietary protection to the Company. Failure of any
patents to provide protection of the Company's technology may make it easier for
the Company's competitors to offer technology equivalent to or superior to the
Company's technology.
The Company also anticipates entering into confidentiality or license
agreements with its employees and consultants and generally controls access to
and distribution of its documentation and other proprietary information. Despite
these precautions, it may be possible for a third party to copy or otherwise
obtain and use the Company's services or technology without authorization, or to
develop similar technology independently. In addition, effective copyright,
trademark and trade secret protection may be unavailable or limited in certain
foreign countries, and the global nature of the Web makes it virtually
impossible to control the ultimate destination of the Company's services.
Policing unauthorized use of the Company's technology is difficult. There can be
no assurance that the steps taken by the Company will prevent misappropriation
or infringement of its technology. In addition, litigation may be necessary in
the future to enforce the Company's intellectual property rights, to protect the
Company's trade secrets or to determine the validity and scope of the
proprietary rights of others. Such litigation could result in substantial costs
and diversion of resources and could have a material and adverse effect on the
Company's business, results of operations and financial condition.
Many parties are actively developing search, indexing and related Web
technologies at the present time. The Company believes that they will take steps
to protect these technologies, including seeking patent protection. As a result,
the Company believes that disputes regarding the ownership of such technologies
will probably occur in the future.
The Company may, in the future, receive notice of claims of infringement of
other parties' proprietary rights, including claims for infringement resulting
from the downloading of materials by the online or Web services operated or
facilitated by the Company. Although the Company investigates claims and
responds as it deems
13
<PAGE>
appropriate, there can be no assurance that infringement or invalidity claims
(or claims for indemnification resulting from infringement claims) will not be
asserted or prosecuted against the Company or that any assertions or
prosecutions will not materially and adversely affect the Company's business,
results of operations and financial condition. Irrespective of the validity or
the successful assertion of such claims, the Company would incur significant
costs and diversion of resources with respect to the defense thereof which could
have a material adverse effect on the Company's business, results of operations
and financial condition. If any claims or actions were asserted against the
Company, the Company might seek to obtain a license under a third party's
intellectual property rights. There can be no assurance, however, that under
such circumstances a license would be available on commercially reasonable
terms, or at all.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of April 15, 1999, by (i) each person
or entity known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of common stock, (ii) each of the Company's directors and
named executive officers, and (iii) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of Class of Beneficial Owner of Beneficial Owner Percent of Class
- - -------------- ------------------- ------------------- ----------------
<S> <C> <C> <C>
$.001 Par Value Common Stock Chris Lewis Officer and Director; 40.27%
5,280,571 common shares
(also holds 225,000 options)
$.001 Par Value Common Stock Terry Livingstone Chief Operating Officer; 1.75%
229,675 common shares
(also holds 225,000 options)
</TABLE>
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("Commission") and generally includes voting
or investment power with respect to securities. In accordance with Commission
rules, shares of the Company's common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities identified in the table above have sole voting and
investment power with respect to all shares of the Company's common stock
indicated as beneficially owned by them.
Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is defined by
the provisions of Item 403(c) of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and principal executive officers of the Company are as
specified on the following table:
14
<PAGE>
================================================================================
Name Age Position
- - --------------------------------------------------------------------------------
Chris Lewis 42 President, Chief Executive Officer, Chairman
of the Board of Directors.
- - --------------------------------------------------------------------------------
Terry Livingstone Chief Operating Officer
- - --------------------------------------------------------------------------------
Biographical Information on Company's Officers and Directors:
President, Chairman of the Board and Chief Executive Officer. Chris Lewis
is the Company's President and Chief Executive Officer, as well as Chairman of
the Board of Directors. Mr. Lewis developed the TopClick Guide concept and has
responsibility for the strategic planning relating to the products and services
currently under development by the Company. Mr. Lewis has significant experience
in business planning and marketing and has participated in the development and
commercial exploitation of 19 products, including the world's first alphanumeric
paging service. His marketing and communications experience includes small
regional direct mail advertising campaigns to full national television
advertising campaigns supported by print advertising, outdoor poster activities,
product design and packaging, 1-800 telephone response facilities and full media
launch presentations.
During the past 25 years Mr. Lewis has held sales and marketing management
positions in a number of industries, including men's fashion clothing, mobile
communications, telecommunications, computer software and Internet applications,
and the Do-It-Yourself handyman industry.
In 1987 he was selected as one of eight managers (in a company employing
185,000 people) to attend the Accelerated Business Degree in Business Planning,
International Marketing and Marketing Communications (a sub-MBA program) from
the Chartered Institute of Marketing. In 1989, working with Paul Fifield, a
European marketing strategist (now a member of the Company's advisory board),
Mr. Lewis developed a new approach to market segmentation called "Context
Marketing" which British Telecom tested in a customer research program and then
implemented as a principal methodology in its marketing approach.
In 1992 Mr. Lewis emigrated from London, England to join his family in
Western Canada, leaving a position he had held for 6 years at British Telecom as
a strategic marketing manager for personal communications. At British Telecom he
served as the company representative on a multi-company and university
Pan-European Study of Global Social Change to identify the changing customer
attitudes, values and expectations that drive consumer purchase behavior. He
also worked on several corporate business initiatives as a Marketing Futurist
including personal communications, broadband networks, and other specialized
projects.
Chief Operating Officer. Terry Livingstone was recently appointed Chief
Operating Officer of the Company. Prior to this appointment, Mr. Livingstone was
the Western United States and Canada Project Manager for Nortel Networks, and
was responsible for managing complex telecommunications and multiple
Internet-related projects with up to 50 staff under his co-ordination, including
the areas of computer operations, programming, systems analysis, design and
project implementation. Prior to working for Nortel Networks, Mr. Livingstone
was a Senior Project Manager with MacDonald Dettwiler, where he oversaw projects
in Taiwan, Egypt, and north America for DGPS and radar surveillance systems.
Terry has also worked at Want Canada, where he managed multiple development
teams and product applications for government and commercial customers across
Canada. He has also managed projects in Saudi Arabia and the Philippines in
planning, organizing, controlling and implementing turnkey nation-wide systems.
15
<PAGE>
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Any compensation received by officers, directors, and management personnel
of the Company will be determined from time to time by the Board of Directors of
the Company. Officers, directors, and management personnel of the Company will
be reimbursed for any out-of-pocket expenses incurred on behalf of the Company.
Summary Compensation Table. The table set forth below summarizes the annual
and long-term compensation for services in all capacities to the Company payable
to the Chief Executive Officer of the Company and the other executive officers
of the Company whose total annual salary and bonus is anticipated to exceed
$50,000 during the year ending December 31, 1999. The Board of Directors of the
Company may adopt an incentive stock option plan for the Company's executive
officers which would result in additional compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
- - ---------------------------------------
Name Other Annual All Other
and Principal Position Year Salary($) Bonus($) Compensation($) Compensation($)
---------------------- ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Chris Lewis, 1999 $144,000 None None None
President and Chief Executive
Officer
Terry Livingstone 1999 $100,000 None None None
Chief Operating Officer
</TABLE>
Compensation of Directors. The Company anticipates that the Board of
Directors of the Company will approve a stock option and compensation plan for
non-executive directors (that is, directors who do not also serve as executive
officers of the Company). The Company anticipates that those non-executive
directors shall receive shares of the Company's $.001 par value common stock
worth $5,000 each quarter, and an additional $1,250 per quarter designated as a
"meeting attendance fee". Therefore, the total compensation paid to each
non-executive director shall be equivalent to $25,000 annually.
The Company also anticipates that, beginning in the first quarter of 1999,
Chris Lewis, the President and a director of the Company, shall receive $12,000
per month as compensation for his services as a director and executive officer,
and Mr. Livingstone shall receive approximately $8,350 per month as compensation
for his services as an executive officer. Neither Mr. Lewis nor Mr. Livingstone
has earned, or is entitled to, any stock options, stock appreciation rights,
stock-based compensation or other forms of non-cash compensation in lieu of a
portion of this anticipated annual compensation.
Specified below, in tabular form, is the aggregate annual remuneration of
the Company's Chief Executive Officer and the four (4) most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of the Company's last completed fiscal year.
16
<PAGE>
================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group remuneration was received remuneration
- - --------------------------------------------------------------------------------
All Executive Officers(1) None None
================================================================================
None of the Company's executive officers received any compensation in the
last fiscal year.
Item 7. Certain Relationships and Related Transactions
Related Party Transactions. The Acquisition Agreement attached as Exhibit B
to the Financing Agreement provides, among other things, that as part of a
series of related transactions, HBD and the shareholders of TC transferred their
shares of TC to the Company so that TC became a wholly-owned subsidiary of the
Company. As set forth previously, the Company, HBD and TC have some common
directors and management and therefore the Acquisition Agreement was not the
result of arm's-length bargaining.
The September, 1998 transaction between the Company's wholly-owned
subsidiary, TC, and HBD was not the result of arm's-length negotiations. The
TopClick website and related assets were valued by the Board of Directors of HBD
("HBD Board") at $700,000. The HBD Board valued the forgiveness of a debt in the
amount of CDN$480,000 at $315,789, at an exchange rate of 1.52 Canadian dollars
to one United States dollar. The HBD Board believes that total consideration for
the sale of the TopClick website and related assets was, therefore,
approximately $1,015,789. However, the real cost to HBD of designing, developing
and building the TopClick website, assembling the development personnel, and
developing a business plan and strategy for the TopClick website, during a
period of approximately 18 months, was approximately CDN$1,000,000. Therefore,
the sale resulted in a profit of approximately 50% to HBD.
Item 8. Legal Proceedings
There are no legal actions pending against the Company nor are any such
legal actions contemplated.
Item 9. Market for Common Equity and Related Stockholder Matters
The Company participates in the OTC Bulletin Board, an electronic quotation
medium for securities traded outside the Nasdaq Stock Market, and maintained by
the National Association of Securities Dealers, Inc. The Company's common stock
trades on the OTC Bulletin Board under the trading symbol "TOCK". The Company's
common stock has closed at a low of 2 1/2 and a high of 8 1/8 for the 52-week
period ending April 16, 1999, and closed at 3 1/2 on that date. This market is
extremely limited and the prices for the Company's common stock quoted by
brokers is not necessarily a reliable indication of the value of the Company's
common stock.
- - --------
(1) The officers and directors of the Company received no direct compensation
from the Company during the Company's most recent fiscal year. The officers
and directors of the Company are reimbursed for expenses incurred on behalf
of the Company.
17
<PAGE>
There are approximately 2,000 holders of the Company's common stock. There
have been no cash dividends declared on the Company's common stock since the
Company's inception. Dividends will be declared at the sole discretion of the
Company's Board of Directors.
The Company has granted stock options to 4 full time employees. As
specified above, Chris Lewis was granted options to acquire 225,000 shares and
Terry Livingstone was granted options to acquire 25,000 shares. Jason Wilkes,
manager of product development, was granted options to acquire 150,000 shares of
the Company's $.001 par value common stock and Rory Wadham, a senior programmer,
was granted options to acquire 35,000 shares of the Company's $.001 par value
common stock. The options are at a price of $0.50 per share and vest 20% per
annum during a 3 year period (except for Mr. Livingstone's options, which expire
after one year). The Plan provides that if an employee's employment with the
Company is terminated for cause, that employee forfeits all options; and further
provides that, in the event an employee voluntarily terminates his or her
employment with the Company, any available options vested on the date of
termination must be exercised within 30 days.
Item 10. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three
(3) years which would be required to be disclosed pursuant to Item 701 of
Regulation S-B, except for the following:
On or about January 30, 1999, the Company sold 4,912,500 shares of its
$.001 par value common stock for $0.20 per share. The shares were issued in
reliance upon the exemption from the registration requirements of the Securities
Act of 1933 set forth in Section 3(b) of that act and Rule 504 of Regulation D
promulgated by the Securities and Exchange Commission. The offering price for
the shares was arbitrarily set by the Company and had no relationship to assets,
book value, revenues or other established criteria of value. The gross proceeds
to the Company were $982,500. The Company used $150,000 of these funds to repay
an outstanding loan of $150,000 from a group of investors represented by Sonora
Capital Corporation, a British Columbia corporation.
On or about March 28, 1999, the Company sold 400,000 shares of its $0.001
par value common stock for $2.50 per share. The shares were issued in reliance
upon the exemption from the registration requirements of the Securities Act of
1933 set forth in Regulation S promulgated by the Securities and Exchange
Commission. Specifically, the offer was made to "non U.S. persons," as that term
is defined under applicable federal securities laws. The offering price for
those shares was arbitrarily set by the Company and had no relationship to
assets, book value, revenues or other established criteria of value. The net
proceeds to the Company were $1,000,000.
Item 11. Description of Securities
The Company is authorized to issue 100,000,000 shares of common stock,
$.001 par value, each share of common stock having equal rights and preferences,
including voting privileges. The Company is not authorized to issue shares of
preferred stock. As of April 2, 1999, 13,112,740 shares of the Company's common
stock were issued and outstanding.
The shares of $.001 par value common stock of the Company constitute equity
interests in the Company entitling each shareholder to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
the Company's common stock are entitled to one vote for each share of record on
all matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of directors of the Company or any other matter, with
the result that the holders of more than 50% of the shares voted for the
election of those directors can elect all of the Directors. The holders of the
Company's common stock are entitled to receive dividends when, as and if
declared by the Company's Board of Directors from funds legally available
therefor; provided, however, that cash dividends are at the sole discretion of
the Company's Board of
18
<PAGE>
Directors. In the event of liquidation, dissolution or winding up of the
Company, the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of liabilities of the
Company and after provision has been made for each class of stock, if any,
having preference in relation to the Company's common stock. Holders of the
shares of Company's common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
Company's common stock. All of the outstanding shares of Company's common stock
are duly authorized, validly issued, fully paid and non-assessable.
Item 12. Indemnification of Directors and Officers
Article Seventh of the Certificate of Incorporation of the Company
provides, among other things, that directors of the Company shall not be
personally liable to the Company or its shareholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of such director's duty of loyalty to the Company or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) liability for unlawful payments of dividends or
unlawful stock purchase or redemption by the corporation; or (iv) for any
transaction from which such director derived any improper personal benefit.
Accordingly, the directors of the Company may have no liability to the
shareholders of the Company for any mistakes or errors of judgment or for any
act of omission, unless such act or omission involves intentional misconduct,
fraud, or a knowing violation of law or results in unlawful distributions to the
shareholders of the Company.
There are no indemnification provisions in the Company's Certificate of
Incorporation regarding officers of the Company. However, the Company
anticipates that it will enter into indemnification agreements with each of its
executive officers pursuant to which the Company will agree to indemnify each
such person for all expenses and liabilities, including criminal monetary
judgments, penalties and fines, incurred by such person in connection with any
criminal or civil action brought or threatened against such person by reason of
such person being or having been an officer or director or employee of the
Company. In order to be entitled to indemnification by the Company, such person
must have acted in good faith and in a manner such person believed to be in the
best interests of the Company and, with respect to criminal actions, such person
must have had no reasonable cause to believe his or her conduct was unlawful.
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION
FOR LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO
PUBLIC POLICY AND, THEREFORE, UNENFORCEABLE.
Item 13. Financial Statements
Copies of the financial statements specified in Regulation 228.310 (Item
310) are filed with this Registration Statement on Form 10-SB (see Item 15
below).
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's
accountants since the formation of the Company required to be disclosed pursuant
to Item 304 of Regulation S-B.
19
<PAGE>
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements. Page
Audited Financial Statements of the Company:
Independent Auditor's Report F-1
Balance Sheets for the Three Months Ended March 31, 1998, the Year Ended
December 31, 1997, and from October 3,
1996 (Date of Inception) to December 31, 1996 and
March 31, 1998 F-2
Statements of Operations F-3
Statement of Changes in Shareholders' Equity (Deficit) F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 to F-8
Unaudited Financial Statements of TopClick (Canada) Inc.:
Review Engagement Report F-9
Balance Sheets as of September 30, 1998
and June 30, 1998 F-10
Statements of Operations for the three-month period
ended September 30, 1998 F-11
Statement of Changes in Financial Position F-12
Notes to Financial Statements F-13 to F-14
Schedule 1 - Deferred Development Costs F-15
Schedule 2 - Deferred Development Costs F-16
(b) Index to Exhibits.
Copies of the following documents are filed with this Registration
Statement, Form 10-SB as exhibits:
Index to Exhibits Page
- - ----------------- ----
1 Certificate of Incorporation
(Charter Document) E-1
2 Amendment to Certificate of Incorporation E-2
(Charter Document)
3 Bylaws E-3 through E-12
4 Financing Agreement*
(material contract)
5 Frontier GlobalCenter, Inc. Agreement E-13 through E-17
(material contract)
* to be filed by amendment
20
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Vancouver, British Columbia, on April ___, 1999.
TopClick International, Inc.,
a Delaware corporation
By: ________________________
Its: President
21
<PAGE>
[LETTERHEAD HARLAN & BOETTGER, LLP]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Galveston Oil & Gas, Inc.:
We have audited the accompanying balance sheets of Galveston Oil & Gas, Inc. (a
development stage company) as of March 31, 1998, December 31, 1997 and 1996, and
the related statements of operations, changes in stockholders equity (deficit),
and cash flows for the three months ended March 31, 1998, the year ended
December 31, 1997, and from October 3, 1996 (date of inception) to December 31,
1996 and March 31, 1998. These financial statements are the responsibility of
the management of the Company. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of March 31,
1998, December 31, 1997 and 1996, and the results of its operations and its cash
flows for the three months ended March 31, 1998, the year ended December 31,
1997, and from October 3, 1996 (date of inception) to December 31, 1996 and
March 31, 1998 in conformity with generally accepted accounting principles.
/s/ Harlan & Boettger, LLP
San Diego, California
April 27, 1998
<PAGE>
GALVESTON OIL & GAS, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31, December 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 12,051 $ 95 $ --
-------- -------- ----
TOTAL CURRENT ASSETS 12,051 95 --
INVESTMENT, net (Notes A and C) 5,937 6,250 --
-------- -------- ----
TOTAL ASSETS $ 17.988 $ 6,345 $ --
======== ======== ====
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 5,059 $ 1,554 $ --
Note payable-related party (Note D) -- 7,500 --
-------- -------- ----
TOTAL CURRENT LIABILITIES 5,059 9,054 --
-------- -------- ----
COMMITMENTS (Note F)
STOCKHOLDERS' EQUITY (DEFICIT) (Note E)
Preferred stock, $.00l par value, 20,000
shares authorized, none issued or outstanding -- -- --
Common stock, $.001 par value, 99,980,000
shares authorized, 2,450,000, 700,000 and 0 issued
and outstanding, respectively 2,450 700 --
Additional paid-in capital 17,456 2,100 --
Deficit accumulated during development stage (6,977) (5,509) --
-------- -------- ----
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 12,929 (2,709) --
-------- -------- ----
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 17,988 $ 6,345 $ --
======== ======== ====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
GALVESTON OIL & GAS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From Cumulative
For the October 3, 1996 from
For the three year ended (date of inception) October 3, 1996
months ended December 31, to December 31, (date of inception)
March 31, 1998 1997 1996 to March 31, 1998
-------------- ------------ ----------------- -------------------
<S> <C> <C> <C> <C>
ROYALTIES $ 86 $ 215 $ -- $ 301
--------- --------- ------- ---------
OPERATING EXPENSES
General and administrative 1,241 4,474 -- 5,715
Depletion 313 1,250 -- 1,563
--------- --------- ------- ---------
TOTAL OPERATING EXPENSES 1,554 5,724 -- 7,278
--------- --------- ------- ---------
LOSS FROM OPERATIONS (1,468) (5,509) -- (6,977)
OTHER INCOME (EXPENSE) -- -- -- --
--------- --------- ------- ---------
LOSS BEFORE INCOME TAXES (1,468) (5,509) -- (6,977)
Provision for income taxes (Note H) -- -- -- --
--------- --------- ------- ---------
NET LOSS $ (1,468) $ (5,509) $ -- $ (6,977)
========= ========= ======= =========
NET LOSS PER COMMON
SHARE (Note A) $ (.00) $ (.01) $ --
========= ========= =======
WEIGHTED AVERAGE SHARES
OUTSTANDING 719,444 466,667 --
========= ========= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
GALVESTON OIL & GAS, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During Total
---------------------- Paid-In Development Stockholders'
Shares Amount Capital Stage Equity (Deficit)
------ ------ ------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Balance, October 3, 1996 -- $ -- $ -- $ -- $ --
Balance, December 31, 1996 -- -- -- -- --
Common stock issued (Note E) 525,000 525 2,100 -- 2.625
Common stock issued (Note E) 175,000 175 -- -- 175
Net loss for the period -- -- -- (5,509) (5,509)
---------- ---------- ---------- ---------- ----------
Balance. December 31, 1997 700,000 700 2,100 (5,509) (2,709)
Common stock issued (Note E) 1,750,000 1,750 15,356 -- 17,106
Net loss for the period -- -- -- (1,468) (1,468)
---------- ---------- ---------- ---------- ----------
Balance, March 31, 1998 $2,450,000 $ 2,450 $ 17,456 $ (6,977) $ 12,929
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
GALVESTON OIL & GAS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
For the From from
For the three year ended October 3, 1996 October 3, 1996
months ended December 31, (date of inception) (date of inception)
March 31, 1998 1997 to December 3l, 1996 to March 31, 1998
-------------- ----------- -------------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,468) $ (5,509) $ -- $ (6,977)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depletion 313 1,250 -- 1,563
Issuance of common stock for services -- 2,800 -- 2,800
Changes in assets and liabilities:
Accounts payable 3,505 1,554 -- 5,059
-------- -------- ---------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,350 95 -- 2,445
-------- -------- ---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment -- (7,500) -- (7,500)
-------- -------- ---------- --------
NET CASH USED IN INVESTING ACTIVITIES -- (7,500) -- (7,500)
-------- -------- ---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 17,106 -- -- 17,106
Payments on note payable-related party (7,500) -- -- (7,500)
Issuance of note payable-related party -- (7,500) -- 7,500
-------- -------- ---------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 9,606 7,500 -- 17,106
-------- -------- ---------- --------
NET INCREASE IN CASH 11,956 95 -- 12,051
CASH AT BEGINNING OF PERIOD 95 -- -- --
-------- -------- ---------- --------
CASH AT END OF PERIOD $ 12,051 $ 95 -- $ 12,051
======== ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
GALVESTON OIL & GAS. INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
A. Organization and Summary of Significant Accounting Policies:
Organization
Galveston Oil & Gas, Inc., a Delaware corporation (the "Company"), was
incorporated on October 3, 1996 for the purpose of acquiring, exploring and
developing oil and gas properties. The Company is a development stage
business (Note B).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities, and reported amounts of
revenues and expenses. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all investments with a maturity of three months or
less to be cash equivalents.
Investment
Investment consists of a joint interest in the rights to an oil producing
property (Note C). The costs associated with the acquisition of the rights
are being amortized based on the depletion of oil reserves over the
expected production life, estimated to be six years. Investment is reported
net of accumulated depletion of $1,563, $1,250, and $0 as of March 31,
1998, December 31, 1997 and 1996, respectively. It is reasonably possible
that management's estimate of the expected production life will change.
Income Taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expense (benefit) results from the net change during the year
of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Concentrations
The Company generates all of its revenue from an interest in an oil and gas
property operated by Marathon Oil Company (Note C). As such, fluctuations
in market price or demand of oil can have a significant impact on the
Company's operations.
F-6
<PAGE>
GALVESTON OIL & GAS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
A. Organization and Summary of Significant Accounting Policies: (continued)
Loss Per Share
Loss per share is provided in accordance with Stamtement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings Per Share". Due to the
Company's simple capital structure, only basic loss per per share is
presented. Basic loss per share is computed by dividing loss available to
common stockholders by the weighted average number of common shares
outstanding during the period.
B. Development Stage Business:
The Company is a development stage business engaged in the acquisition.
exploration and development of oil and gas properties. Development stage
operations for the Company began upon the incorporation of Galveston Oil &
Gas, Inc. on October 3, 1996.
C. Investment:
On May 16, 1997, the Company entered into an agreement to purchase the
rights, title and interest in an oil and gas lease property through a
related party transaction (Note I). This property, known as Airport Trust
1-10, is located in Cleveland County, Oklahoma. The acquisition entitles
the Company to a .01000 working interest and a .0075 net revenue interest
in the property from the well operator, Marathon Oil Company, for which the
Company paid $7,500 (Note D).
D. Note Payable - Related Party:
At December 31, 1997, the Company had a note payable to the President and
stockholder of the Company relating to the purchase of investment (Note C).
The unsecured, non-interest bearing note was due January 28, 1998 and was
paid in full on March 28, 1998.
E. Stockholders' Equity (Deficit):
On January 20, 1998, the Company filed an offering memorandum to sell
1,750,000 common shares at $ .01 per share through a private placement
which netted the Company $17,106 in additional capital. All shares had been
sold by March 31, 1998.
On May 1, 1997, the Board of Directors authorized the issuance of 525,000
shares of common stock for services rendered valued at $2,625.
Additionally, on May 1, 1997 the Board of Directors approved the issuance
of 175,000 shares at par value ($.001), to a former director of the Company
as a bonus for a corporate loan. The values determined for the services and
the bonus were estimated by management.
F. Commitments:
On January 20, 1998, the Company entered into a month-to-month operating
lease for its office facilities. The operating lease provides that the
Company pays for insurance and certain other operating expenses applicable
to the leased premises. This agreement may be terminated by either party
with written notification. Rent expense for the three months ended March
31, 1998 was $300.
F-7
<PAGE>
GALVESTON OIL & GAS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
G. Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes and interest were as follows:
For the three For the For the
months ended year ended period ended
March 31, December 31, December 31,
1998 1997 1996
--------- ------------ ------------
Income taxes $ -- $ -- $ --
Interest -- -- --
H. Income Taxes:
The Company's net deferred tax asset as of March 31, 1998, December 31,
1997 and 1996, is as follows:
March 31, December 31, December 31,
1998 1997 1996
--------- ------------ ------------
Net operating loss carryforward $ 1,047 $ 826 $ --
Valuation allowance (1,047) (826) --
------- ------- ----
Net deferred tax asset -- $ -- $ --
======= ======= ====
The Company has a net operating loss carryforward of $6,997 which, if not
utilized, will expire at various dates though 2013. The Company's valuation
allowance increased $221, $826 and $0 for the three months ended March 31,
1998, the year ended December 31, 1997 and from October 3, 1996 (date of
inception) to December 31, 1996, respectively. It is reasonably possible
that the Company's estimate of its valuation allowance will change.
I. Related Party Transactions:
Included in accounts payable in the accompanying balance sheets, the
Company has several related party payables due to officers and directors of
the Company. These payables are created by individuals paying expenses on
behalf of the Company. As of March 31, 1998, December 31, 1997 and 1996,
the amounts due and payable to Company officers and directors was $ 1,671,
$ 1,256 and $0, respectively.
The acquisition of the investment in exchange for a note payable was made
by the Company's President and stockholder who was also president of the
company from which the rights were acquired.
The Company leases its office facilities from the Company's President.
The Company's President received shares of stock, as mentioned in Note E.
in exchange for services performed.
F-8
<PAGE>
REVIEW ENGAGEMENT REPORT
To The Directors:
We have reviewed the balance sheet of Topclick (Canada) Inc. as at September 30,
l998 and the Statements of operations and deficit and changes in financial
position for the three month period then ended. Our review was made in
accordance with generally accepted standards for review engagements and
accordingly consisted primarily of enquiry, analytical procedures and discussion
related to information supplied to us by the Company.
A review does not constitute an audit and consequently we do not express an
audit opinion on these financial statements.
Based on our review, nothing has come to our attention that causes us to believe
that these financial statements are not, in all material respects, in accordance
with generally accepted accounting principles.
Vancouver, BC
December 1, l998 Chartered Accountants
F-9
<PAGE>
TOPCLICK (CANADA) INC. 1.
(Formerly E.Z.P.C. Canada Inc.)
BALANCE SHEET
AS AT SEPTEMBER 30, 1998
(Unaudited)
As at As at
September 30, June 30,
1998 1998
ASSETS
CURRENT
Cash $ 28,649 $ 55,737
Stock and subscription -- 24,000
GST receivable 6,420 --
--------- ---------
35,069 79,737
CURRENT ASSETS (Schedule 1) 44,462 --
DEFERRED DEVELOPMENT COSTS (Schedule 2) 93,265 --
DUE FOR AFFILIATED COMPANY -- 400,500
--------- ---------
$ 172,796 $ 480,237
========= =========
LIABILITIES
CURRENT
Payables and accruals $ 6,679 $ 2,000
Deposits on shares -- $ 480,190
--------- ---------
6,679 482,190
DUE TO DIRECTOR (Note 3) 105,100 100
DUE TO PARENT COMPANY (Note 4) 68,314 --
--------- ---------
180,093 482,290
--------- ---------
SHARE CAPITAL AND DEFICIT
SHARE CAPITAL (Note 5) 1 1
DEFICIT (7,298) (2,054)
--------- ---------
(7,297) (2,053)
--------- ---------
APPROVED BY THE BOARD OF DIRECTORS: $ 172,796 $ 480,237
========= =========
___________________Director
___________________Director
See accompanying notes to the unaudited financial statements.
F-10
<PAGE>
TOPCLICK (CANADA) INC. 2.
(Formerly E.Z.P.C. Canada Inc.)
STATEMENT OF OPERATIONS AND DEFICIT
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998
(Unaudited)
Three month
Period ended Year ended
September 30, June 30,
1998 1998
REVENUE $ -- $ --
------- -------
EXPENSES
Legal and accounting 5,277 2,000
Interest and bank charges 86 54
------- -------
5,363 (2,054)
------- -------
OTHER INCOME
Interest 119 --
------- -------
NET LOSS FOR THE PERIOD (5,244) (2,054)
DEFICIT, beginning of period (2,054) --
------- -------
DEFICIT, end of year $(7,298) $(2,054)
======= =======
See accompanying notes to the unaudited financial statements.
F-11
<PAGE>
TOPCLICK (CANADA) INC. 3.
(Formerly E.Z.P.C. Canada Inc.)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998
(Unaudited)
Three month
Period ended Year ended
September 30, June 30,
1998 1998
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net loss of the period $ (5,244) $ (2,054)
Item not involving cash
Amortization 3,508 --
--------- ---------
(1,736) (2,054)
Changes in non-cash working capital items
Subscription receivable 24,000 (24,000)
Payables and accruals 4,679 2,000
GST receivable (6,240) --
--------- ---------
20,523 (24,054)
--------- ---------
INVESTING ACTIVIITES
Advances to affiliated company 400,500 (400,500)
Acquisition of capital assets (47,970) --
Deferred development costs (93,265) --
Due to parent company 68,314 --
--------- ---------
327,579 (400,500)
--------- ---------
FINANCING ACTIVITIES
Due to director 105,000 100
Deposit on shares (480,190) 480,190
--------- ---------
(375,190) 480,290
--------- ---------
INCREASE IN CASH IN PERIOD (27,088) 55,736
CASH, beginning of period 55,737 1
CASH, end of period $ 28,649 $ 55,737
========= =========
See accompanying notes to the unaudited financial statements.
F-12
<PAGE>
TOPCLICK (CANADA) INC. 4.
(Formerly E.Z.P.C. Canada Inc.)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Unaudited)
NOTES 1 INCORPORATION
The Company was incorporated on September 28, 1994 under the Canada
Business Corporation Act.
NOTE 2 SIGNIFICANT ACCOUNTING POLICY
Capital Assets
Capital Assets are recorded at cost and are amortized in the following
manner:
Computer 30% Declining Balance
Furniture and 20% Declining Balance
In the year of acquisition amortization is calculated at one-half of
the above-noted rates.
NOTE 3 DUE TO DIRECTOR
There are no specific terms of repayment to these interest-free loans.
NOTE 4 DUE TO PARENT COMPANY
There are no specific terms of repayment to these interest-free loans.
F-13
<PAGE>
TOPCLICK (CANADA) INC. 5.
(Formerly E.Z.P.C. Canada Inc.)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Unaudited)
NOTE 5 SHARE CAPITAL
Authorized: Unlimited Common Shares, no par value
September 30, June 30,
1998 1998
Issued: $ 1 $ 1
-------- --------
NOTE 6 CHANGE OF NAME
On August 4, 1998, the Company changed its name from E.Z.P.C. Canada
Inc. to Topclick (Canada) Inc.
F-14
<PAGE>
TOPCLICK (CANADA) INC. SCHEDULE 1
(Formerly E.Z.P.C. Canada Inc.)
DEFERRED DEVELOPMENT COSTS
SEPTEMBER 30, 1998
(Unaudited)
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE AMORTIZATION
COMPUTER
Additions $ 20,617 $ -- $ 20,617 $
Provision -- 773 (773) 773
----------------------------------
Closing Balance 20,617 773 19,844
----------------------------------
FURNITURE AND EQUIPMENT
Additions 27,353 -- 27,353
Provision -- 2,735 (2,735) 2,735
----------------------------------
Closing Balance 27,353 2,735 24,618
------------------------------------------------
TOTALS TO SEPTEMBER 30, 1998 $ 47,970 $ 3,508 $ 44,462 $ 3,508
================================================
F-15
<PAGE>
TOPCLICK (CANADA) INC. SCHEDULE 2
(Formerly E.Z.P.C. Canada Inc.)
DEFERRED DEVELOPMENT COSTS
SEPTEMBER 30, 1998
(Unaudited)
Consulting $34,750
Contract fees 32,823
Rent 8,745
Office and administration 5,950
Amortization 3,508
Telephone 2,577
Insurance 1,502
Auto 1,000
Meals and entertainment 1,000
Travel 1,000
Utilities 410
-------
$93,265
=======
F-16
FIELD 09:00 AM 10/03/1996
960288989 - 2658163
CERTIFICATE OF INCORPORATION
OF
GALVESTON OIL & GAS, INC.
FIRST: The name of this corporation is GALVESTON OIL & GAS, INC.
SECOND: Its registered office in the state of Delaware is to be located at 1313
N. Market Street, Wilmington, DE 19801-1151, County of New Castle. The
registered agent in charge thereof is The Company Corporation, address "same as
above".
THIRD: The nature of the business and, the objects and purposes proposed to be
transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz:
The purpose of the corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of the total authorized capital stock of this corporation is
100,000,000 shares divided into 99,980,000 Common Shares at .001 par value and
20,000 Preferred Shares at .001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regina Cephas, 1313 N. Market Street, Wilmington DE 19801-1151.
SIXTH: The Directors shall have power to make and to alter or amend the By-Laws;
to fix the amount to be reserved as working capital, and to authorize and cause
to be executed, mortgages and liens without limit as to the amount, upon the
property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a majority
of the capital stock issued and outstanding, the Directors shall have the
authority to dispose, in any manner, of the whole property of this corporation.
The By-Laws shall determine whether and to what extent the accounts and books of
this corporation, or any of them shall be open to the inspection of the
stockholders; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law or the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and keep
the books, documents, and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in the Third
paragraph hereof shall, except where otherwise specified in said paragraph, be
nowise limited or restricted by reference to or inference from the terms of any
other clause or paragraph in this certificate of incorporation, that the
objects, purposes and powers specified in the Third paragraph and in each of the
clauses or paragraphs of this charter shall be regarded as independent objects,
purposes and powers.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of
the State of Delaware, do make, file and record this Certificate and do certify
that the facts herein are true; and I have accordingly hereunto set my hand.
DATED: October 3, 1996 /s/ REGINA CEPHAS
----------------------------------------
E-1
AMENDMENT TO
CERTIFICATE OF INCORPORATION
OF
GALVESTON OIL & GAS, INC.
Galveston Oil & Gas, Inc., amends its Certificate of Incorporation as follows:
FIRST: The name of this corporation is TOPCLICK INTERNATIONAL, INC.
FOURTH: The total authorized capital stock of this corporation is 100,000,000
common shares at $0.001 par value, and the issued capital is consolidated at a
ratio of 10:1 so that 2,450,000 common shares are consolidated to 245,000
shares.
I, the undersigned president of the corporation, certify that these amendments
were adopted by the sole director and a majority of the shareholders of the
corporation on February 5 1999, in accordance with section 242(b)(1) of Delaware
General Corporation Law, and that the number of votes cast was sufficient for
approval.
February 5, 1999.
/s/ TRENT JORDAN
- - ----------------------------------
Trent Jordan, President
E-2
BYLAWS
OF
(a Delaware corporation)
GALVESTON OIL & GAS, INC.
ARTICLE I
STOCKHOLDERS
1. CERTIFICATE REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such 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 he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General
Corporation Law, the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any
E-3
<PAGE>
uncertified shares, the corporation shall send to the registered owned thereof
any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting. In order that the corporation
may determine the stockholders entitled to consent to corporate action in
writing without a meeting, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and
E-4
<PAGE>
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
E-5
<PAGE>
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time fixed,
from time to time, by the directors, provided, that the first annual meeting
shall be held on a date within thirteen months after the organization of the
corporation, and each successive annual meeting shall be held on a date within
thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such place,
within or without the State of Delaware, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the directors
or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, setting the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends the 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. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
E-6
<PAGE>
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community 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 whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary of
the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, any only as long as, it is
E-7
<PAGE>
coupled with an interest sufficient in law to support an irrevocable power. A
proxy maybe made irrevocable regardless of whether the interest with which it is
coupled is an interest in the stock itself or an interest in the corporation
generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise required by
subsection (e) of Section 231 of the General Corporation Law, the provisions of
that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one vote.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Any other action shall be authorized by a majority of the
votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall
E-8
<PAGE>
be given to those stockholders who have not consented in writing. Action taken
pursuant to this paragraph shall be subject to the provisions of Section 228 of
the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A Director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of persons. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be ____. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause may
be filled by the vote of a majority of the remaining directors then in office,
although less than a quorum, or by the sole remaining director.
4. MEETINGS
TIME. Meetings shall be held at such time as the Board shall fix except
that the first meeting of a newly elected Board shall be held as soon after its
election as the directors may conveniently assemble.
E-9
<PAGE>
PLACE. Meetings shall be held at such place within or without the State of
Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the time and
place have been fixed. Special meetings may be called by or at the direction of
the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, of
the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written, oral, or
any other mode of notice of the time and place shall be given for special
meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
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. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.
QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum
except when a vacancy or vacancies prevents such majority, whereupon a majority
of the directors in office shall constitute a quorum, provided, that such
majority shall constitute at least one-third of the whole Board. A majority of
the directors present, whether or not a quorum is present, may adjourn a meeting
to another time and place. Except as herein otherwise provided, and except as
otherwise provided by the General Corporation Law, the vote of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law and
these Bylaws which govern a meeting of directors held to fill vacancies and
newly created directorships in the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the
Board, if any and if present and acting, or the President if present and acting,
or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General
Corporation Law, any director or the entire Board of Directors may be removed,
with
E-10
<PAGE>
or without cause, by the holders of a majority of the shares then entitled to
vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers with such
titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board, if any, need be a director. Any number of offices may be held by the
same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him each officer shall
be chosen for a term which shall continue until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be prescribed
in the resolutions of
E-11
<PAGE>
the Board of Directors designating and choosing such officers and prescribing
their authority and duties, and shall have such additional authority and duties
as are incident to their office except to the extent that such resolutions may
be inconsistent therewith. The Secretary or an Assistant Secretary of the
corporation shall record all of the proceedings of all meetings and actions in
writing of stockholders, directors and committees of directors, and shall
exercise such additional authority and perform such additional duties as the
Board shall assign to him. Any officer may be removed, with or without cause, by
the Board of Directors. Any vacancy in any office may be filled by the Board of
Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY GIVEN that the foregoing is a full, true, and correct copy of the
Bylaws of GALVESTON OIL & GAS, INC., a Delaware corporation, as in effect on the
date hereof.
Dated:
/s/ [ILLEGIBLE]
---------------------------
Secretary of
(SEAL)
E-12
[LOGO] Frontier GlobalCenter
Master Service Agreement -TOPCLICK#0001.1
================================================================================
This Master Services Agreement (this "Agreement") is entered into as the
1st day of March, 1999 ("Effective Date") by and between the entity indicated on
the Services Order Form attached hereto, with an office at the address listed on
the Services Order Form, ("Client"), and Frontier GlobalCenter, Inc., a
corporation with offices at 1154 East Arques Ave., Sunnyvale, CA 94086
("GlobalCenter"), and describes the terms and conditions pursuant to which
GlobalCenter shall license to Client certain Software and provide certain
Services (As defined below).
In consideration of the mutual promises and upon the terms and conditions
set forth below, the parties agree as follows:
1. NATURE OF AGREEMENT This is an Agreement for the provision by GlobalCenter of
Internet connectivity services (the "Bandwidth"), the lease of equipment to
provide such services (the "Hardware"), the availability of space to store and
operate such Hardware ("Space") and the licensing of software to provide such
Services (the "Software"), together comprising an Internet connectivity and
collection package to be provided by GlobalCenter under this Agreement
(together, the "Services").
2. SERVICE ORDERS
2.1 Orders. Client may issue one or more service orders describing the
Bandwidth, Space, Hardware, and Software that Client desires ("Service Order").
Each Service Order will set forth the prices, initial term of Services and other
information in the form set forth in the Service Order Form. No Service Order
shall be effective until accepted by GlobalCenter. All Service Orders will be
subject to the terms an conditions of this Agreement, and the terms of this
Agreement shall supersede any terms and conditions which may appear on Client's
order form, or purchase order.
2.2 Cancellation. In the event that Client cancels or terminates a Service Order
at any time for any reason whatsoever other than expiration of a Service Order
or a Service Interruption (as defined below), Client agrees to pay GlobalCenter
as a cancellation fee all Monthly Recruiting Charges specified in the Service
Order for the balance of the term therefor, which shall become due and owing as
of the effective date of cancellation or termination.
2.3 IP Addresses. GlobalCenter may assign on a temporary basis a reasonable
number of Internet Protocol Addresses ("IP Addresses") from the address space
assigned to the GlobalCenter by InterNIC. Client acknowledges that the IP
addresses are the sole property of GlobalCenter, are assigned to Client as part
of the Service, and are not "portable," as such term is used by InterNIC.
GlobalCenter reserves the right to change the IP Address assignments at any
time; however, GlobalCenter shall use reasonable efforts to avoid any disruption
to Client resulting from such renumbering requirement. GlobalCenter will give
Client reasonable notice of any such renumbering. Client agrees that it will
have no right to IP Addresses upon termination of this Agreement, and that any
renumbering required of Client after termination shall be the sole
responsibility of Client.
3. SOFTWARE LICENSE AND RIGHTS
3.1 Licenses. During the term of the applicable Service Order, GlobalCenter
grants Client a nontransferable, nonexclusive license to use the Software in
object code form only, solely on the Hardware in conjunction with the Services.
3.2 Proprietary Rights. This Agreement transfers to Client neither tile nor any
proprietary or intellectual property rights to the Software, Hardware,
documentation, or any copyrights, patents, or trademarks, embodied or used in
connection therewith, except for the rights expressly granted herein.
3.3 License Restrictions. Client agrees that it will not itself, or through any
parent, subsidiary, affiliate, agent or other third party:
3.4.1. copy the Software except as expressly allowed under this Agreement. In
the event Client makes any copies of the Software, Client shall reproduce all
proprietary notices of GlobalCenter on any such copies;
3.4.2. reverse engineer, decompile, disassemble, or otherwise attempt to derive
source code from the Software;
3.4.3. sell, lease, license or sublicense the Software or the documentation;
3.4.4. write or develop any derivative software or any other software program
based upon the Software or any Confidential Information (as defined below); or
3.4.5. use the Software to provide processing services to third parties, or
otherwise use the Software on a service bureau basis.
4. HARDWARE TERMS AND CONDITIONS
4.1 Installation. GlobalCenter will use commercially reasonable efforts to
install the Hardware as the Hardware is shipped to GlobalCenter. At Client's
request, GlobalCenter will work with the Client on an installation plan to
define installation time frame and requirements.
4.2 Purchase and Title of Hardware. If so indicated on the Service Order, Client
shall purchase the Hardware and deliver, at Client's expense, the Hardware to
the Space. Clint agrees that the Hardware shall reside at the Space during the
term of this Agreement.
4.3 Lease of Hardware. If so indicated on the Service Order, Client shall lease
the Hardware, and GlobalCenter shall obtain and deliver to the Space the
E-26
<PAGE>
[LOGO] Frontier GlobalCenter
Master Service Agreement -TOPCLICK#0001.1
================================================================================
Hardware. In the event Client leases the Hardware, the following terms and
conditions shall apply: The Hardware is and shall remain the property of
GlobalCenter. Client shall not have taken, or attempt to take, any right, title
or interest therein or permit any third party to take any interest therein.
Client will not transfer, sell, assign, sublicense, pledge, or otherwise dispose
of, encumber or suffer a lien or encumbrances upon or against the Hardware or
any interest in the Hardware. Client will use the Hardware only at the Space.
Client will not move the Hardware from that facility without GlobalCenter's
prior written permission. Client shall be responsible for any damage to the
Hardware. Client will use the Hardware only for the purpose of exercising its
rights under this Agreement.
4.4 Rent to Own. If so indicated on the Service Order, Client shall lease the
Hardware on a "rent to own" plan. In such event, all of the terms and conditions
in Section 4.3 shall apply, and the following terms and conditions shall also
apply. At the end of the term of the Service Order, providing Client is not in
breach of this Agreement, Client shall have the option to purchase the Hardware.
The purchase price shall be as indicated on the Service Order. Upon payment by
Client of the purchase price, title in the Hardware shall pass to Client at the
Space. Unless the Service Order is extended by mutual agreement, Client shall
immediately delete or shall allow GlobalCenter to delete, all copies of the
Software, associated documentation, or any other material of GlobalCenter
resident on the Hardware.
5. SPACE
5.1 License to Occupy. GlobalCenter grants to Client a non-exclusive license to
occupy the Space. Client acknowledges that it has been granted only a license to
occupy the Space and that it has not been granted any real property interests in
the Space. In the event, however, that this arrangement shall be construed by
the owner of the building in which the Space is situated to be such a grant and
if the landlord of the building asserts such a grant to be a violation of the
lease under which GlobalCenter occupies its premises, GlobalCenter agrees to
cooperate with Client in obtaining the approvals Client may need to obtain from
the landlord.
5.2 Material and Changes. Client shall not make any construction changes or
material alterations to the interior or exterior portions of the Space,
including any cabling or power supplies for the Hardware, without obtaining
GlobalCenter's prior written approval for Client to have the work performed.
Alternatively, Client may request GlobalCenter to perform the work. GlobalCenter
reserves the right to perform and manage any construction or alterations within
the Space areas at rates to be negotiated between the Parties hereto. Client
agrees not to erect any signs or devices to the exterior portion of the Space
without submitting the request to GlobalCenter and obtaining GlobalCenter's
advance written approval.
5.3 Damage. Client agrees to reimburse GlobalCenter for all reasonable repair or
restoration costs associated with damage or destruction caused by Client's
personnel, Client's agents, Client's suppliers/contractors, or Client's visitors
during the term or as a consequence of Client's removal of the Hardware or
property installed in the Space.
5.4 Insurance. Unless otherwise agreed, Client agrees to maintain, at Client's
expense, (i) Comprehensive General Liability Insurance in an amount not less
than One Million Dollars ($1,000,000) per occurrence for bodily injury or
property damage, (ii) Employer's Liability in an amount not less than Five
Hundred Thousand Dollars ($500,000) per occurrence, and (iii) Worker's
Compensation in an amount not less than that prescribed by statutory limits.
Prior to taking occupancy of the Collocation Space, Client shall furnish
GlobalCenter with certificates of insurance which evidence the minimum levels of
insurance set forth herein. Client shall also maintain insurance covering
Hardware or property owned or leased by Client against loss or physical damage.
5.5 Regulations. Client shall comply with and not violate all of GlobalCenter's
safety, health and operational rules and regulations, which may be amended by
GlobalCenter from time to time. Client's failure to comply with GlobalCenter's
rules and regulations shall constitute a material default under this Agreement.
GlobalCenter may, in its sole discretion, limit Client's access to a reasonable
number of authorized Client employees or designees. Client shall not interfere
with any other client's of GlobalCenter, or such other clients' use of the
Space.
5.6 Disclaimer. GlobalCenter does not make any representation or warranty
whatsoever as to the fitness of the Space for Client's use. Client hereby
assumes any and all risks associated with Client, its agents or employees' use
of the Space and shall indemnify, defend and hold harmless GlobalCenter from any
an all claims, liabilities, judgments, causes of action, damages, costs, and
expenses (including reasonable attorneys' and experts' fees), caused by or
arising in connection with such use.
6. SERVICE INTERRUPTIONS
6.1 99% Uptime Guarantee. In the event of Downtime (as defined below), the
monthly fee payable for the Services shall be reduced as follows:
6.1.1 if the total Downtime in the calendar month is more than seven and
seven and two-tenths (7.2) hours, but does not exceed fourteen and
four-tenths (14.4) hours, the monthly fee for that month shall be reduced
by one-third (33.3%);
6.1.2 If the total Downtime in the calendar month is more than fourteen and
four-tenths (14.4) hours, but does not exceed twenty-one and six tenths
(21.6) hours, the monthly fee for that month shall be reduced by two-thirds
(66.6%); and
E-27
<PAGE>
6.1.3 If the total Downtime in the calendar month is more than twenty-one
and six-tenths (21.6) hours, the monthly fee for that month shall be
waived.
For the purposes of this Section, Downtime shall mean any interruption of one
(1) minute or more in the availability to users of any Web site residing on the
Hardware and made available through the Services, only if such interruption is
due to either (i) failure by GlobalCenter to manage a server anomaly so as to
avoid interruption in Web availability, or (ii) a disruption in the connection
between any such server and the Internet. For purposes of this Section, the
Internet is deemed to consist of services that commence where GlobalCenter
transmits a Client's content to GlobalCenter's carrier(s) at the GlobalCenter
border router port(s). Such carriers provide GlobalCenter with private and
dedicated bandwidth. GlobalCenter undertakes no obligation for the circuit or
link between GlobalCenter's facilities and such carrier's services. If router
packet loss is excess of seventy percent (70%) and is sustained for sixty (60)
seconds or more, GlobalCenter will classify this an "outage." If an "outage"
continues for a time period of more than two (2) minutes, then such outage will
be deemed Downtime.
6.2 Investigation of Service Interruptions. At Client's request, GlobalCenter
will investigate any report of Downtime, and attempt to remedy any Downtime
expeditiously. GlobalCenter reasonably determines that all facilities, systems
and equipment furnished by GlobalCenter are functioning properly, and that
Downtime arose from some other cause, GlobalCenter reserves the right to recover
labor and materials cost for services actually performed at the usual and
customary rates for similar services provided by GlobalCenter to clients in the
same locality.
6.3 Termination. Client may terminate a Service Order in the event of Downtime
of either twenty-four (24) hours of cumulative time during any continuous twelve
(12) month period, or any continuous Downtime of eight (8) hours or more.
6.4 Sole Remedy. The terms and conditions of this Section 6 shall Client's sole
remedy and GlobalCenter's sole obligation for Downtime.
7. USER CONTENT. Client is solely responsible for the content of any postings,
data, or transmission using the Services ("Content"), or any other use of the
Services by Client or by any person or entity Client permits to access the
Services (a "User"). Client represents and warrants that it and any User will
not use the services for unlawful purposes (including without limitation
infringement of copyright or trademark, misappropriation of trade secrets, wire
fraud, invasion of privacy, pornography, obscenity and libel), or to interfere
with or disrupt other network users, network services or network equipment.
Disruptions include without limitation distribution of unsolicited advertising
or chain letters, repeated harassment of other network users, wrongly
impersonating another such user, falsifying one's network identity for improper
or illegal purposes, sending unsolicited mass e-mailings, propagation of
computer worms and viruses, and using the network to make unauthorized entry to
any other machine accessible via the network. If GlobalCenter has reasonable
grounds to believe that Client or a User is utilizing the Service for any such
illegal or disruptive purposes, GlobalCenter may suspend or terminate Services
immediately upon notice to Client. Client shall defend, indemnify, hold harmless
GlobalCenter from and against all liabilities and costs (including reasonable
attorney's fees) arising from any and all claims by any person arising out of
Client's use of the Services, including without limitation any content.
8. PRICING AND PAYMENT TERMS
8.1 Payment Terms. Client shall pay the fees set forth in the Services Order
Form according to the terms set forth therein. Client agrees to pay a late
charge of two percent (2%) above the prime rate as reported by the Wall Street
Journal at the time of assessment or the maximum lawful rate, whichever is less,
for all undisputed amounts not paid within thirty (30) days of receipt of
invoice.
8.2 Late Payments. In the event of non-payment by Client of sums over-due
hereunder for more than sixty (60) days, GlobalCenter may upon written notice to
Client either retain any equipment or other assets of Client then in
GlobalCenter's possession and sell them in partial satisfaction of such unpaid
sums, or request Client to remove equipment from GlobalCenter's premises within
ten (10) days. If Client fails to so remove, GlobalCenter may deliver the
equipment to Client at the latter's address for notices at Client's expense for
shipment and insurance, and Client shall be obligated to accept such delivery.
8.3 Price Increases. GlobalCenter shall not increase the prices for services
during the initial term of any Service Order, but may thereafter change prices
upon sixty (60) days written notice.
9. MAINTENANCE AND SUPPORT GlobalCenter shall provide Client with maintenance
and support of the Software and Hardware, if any ("Maintenance and Support") as
specified in the Service Specification.
9.1 Exclusions. Maintenance and Support shall not include services for problems
arising out of (a) modification, alteration or addition or attempted
modification, alteration or addition of the Hardware or Software undertaken by
persons other than GlobalCenter or GlobalCenter's authorized representatives, or
(b) programs or hardware supplied by Client.
9.2 Client Duties. Client shall document and promptly report all errors or
malfunctions of the Hardware or Software to GlobalCenter. Client shall take all
steps necessary to carry out procedures for the rectification of errors or
malfunctions within a reasonable time after such procedures have been received
from GlobalCenter. Client shall maintain a current backup copy of all programs
and
E-28
<PAGE>
[LOGO] Frontier GlobalCenter
Master Service Agreement -TOPCLICK#0001.1
================================================================================
data. Client shall properly train its personnel in the use and application of
the Hardware and Software.
10. TERM AND TERMINATION
10.1 Term. The term of this Agreement shall commence on the Effective Date and
continue indefinitely terminated in accordance with this Section 10. The term of
each Service Order shall be as indicated therein. The term of any Service Order
may be extended upon mutual agreement.
10.2 Termination Upon Default. Either party may terminate this Agreement in the
event that the other party materially defaults in performing any obligation
under this Agreement and such default continues unremedied for a period of
thirty (30) days following written notice of default. In the event this
Agreement is terminated due to GlobalCenter's breach, GlobalCenter shall refund
to Client any Services fees on a straight line prorated basis.
10.3 Termination Upon Insolvency. This agreement shall terminate, effective upon
delivery of written notice by a party, (i) upon the institution of insolvency,
receivership or bankruptcy proceedings or any other proceedings for the
settlement of debts of the other party; (ii) upon the making of an assignment
for the benefit of creditors by the other party; or (iii) upon the dissolution
of the other party.
10.4 Effect of Termination. The provisions of Sections 1, 2.3, 3.2, 3.3, 7.
10.4, 11, 12, 13 and 14 shall survive termination of this Agreement. All other
rights and obligations of the parties shall cease upon termination of this
Agreement. The term of any license granted hereunder shall expire upon
expiration of termination of this Agreement.
11. CONFIDENTIAL INFORMATION. All information identified disclosed by either
party ("Disclosing Party") to the other party ("Receiving Party"), if disclosed
in writing, labeled as proprietary or confidential, or if disclosed orally,
reduced to writing within thirty (30) days and labeled as proprietary or
confidential ("Confidential Information") shall remain the sole property of
Disclosing Party. Except for the specific rights granted by this Agreement,
Receiving Party shall not use and Confidential Information of Disclosing Party
for its own account. Receiving Party shall use the highest commercially
reasonable degree of care to protect Disclosing Party's Confidential
Information. Receiving Party shall not disclose Confidential Information to any
third party without the express written consent of Disclosing Party (except
solely for Receiving Party's internal business needs, to employees or
consultants who are bound by a written agreement with Receiving Party to
maintain the confidentiality of such Confidential Information in a manner
consistent with this Agreement). Confidential Information shall exclude
information (i) available to the public other than by a breach of this
Agreement; (ii) rightfully received from a third party not in breach of an
obligation of confidentiality; (iii) independently developed by Receiving Party
without access to Confidential Information; (iv) known to Receiving Party at the
time of disclosure; or (v) produced in compliance with applicable law or a court
order, provided Disclosing Party is given reasonable notice of such law or order
and an opportunity to attempt to preclude or limit such production. Subject to
the above, Receiving Party agrees to cease using any and all materials embodying
Confidential Information, and to promptly return such materials to Disclosing
Party upon request.
12. LIMITATION OF LIABILITY. GLOBALCENTER'S LIABILITY FOR ALL CLAIMS ARISING OUT
OF THIS AGREEMENT SHALL BE LIMITED TO THE AMOUNT OF FEES PAID BY CLIENT TO
GLOBALCENTER UNDER THIS AGREEMENT. IN NO EVENT SHALL CLOBALCENTER BE LIABLE FOR
ANY LOSS OF DATA, LOSS OF PROFITS, COST OF COVER OR OTHER SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES ARISING FROM OR IN RELATION TO THIS AGREEMENT
OR THE USE OF THE SERVICES, HOWEVER CAUSED AND REGARDLESS OF THEORY OF
LIABILITY. THIS LIMITATION WILL APPLY EVEN IF GLOBALCENTER HAS BEEN ADVISED OR
IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES.
13. DISCLAIMER OF WARRANTIES. GLOBALCENTER SPECIFICALLY DISCLAIMS ALL WARRANTIES
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THE
SYSTEM OR SERVICES PROVIDED BY GLOBALCENTER HEREUNDER.
14. MISCELLANEOUS
14.1 Independent Contractor. The relationship of GlobalCenter and Client
established by the Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other; (ii)
constitute the parties as partners, joint ventures, co-owners or otherwise as
participants in a joint undertaking; or (iii) allow either party to create or
assume any obligation on behalf of the other party for any purpose whatsoever.
14.2 Notices. Any notice required or permitted hereunder shall be in writing and
shall be given by registered or certified mail addressed to the addresses first
written above. Such notice shall be deemed to be given upon the earlier of
actual receipt or three (3) days after it has been sent, properly addressed and
with postage prepaid. Either party may change its address for notice by means of
notice to the other party given in accordance with this Section.
14.3 Assignment. Client may not assign this Agreement, in whole or in part,
either voluntarily or by operation of law, and any attempt to do so shall be a
material default of this Agreement and shall be void.
14.4 Governing Law. This Agreement shall be interpreted according to the laws of
the State of California
E-29
<PAGE>
[LOGO] Frontier GlobalCenter
Master Service Agreement -TOPCLICK#0001.1
================================================================================
without regard to or application of choice-of-law rules or principles. The
parties hereby agree to the exclusive jurisdiction of the state and federal
courts located in Santa Clara County, California.
14.5 Entire Agreement and Waiver. This Agreement shall constitute the entire
agreement between GlobalCenter and Client with respect to the subject matter
hereof and all prior agreements, representations, and statement with respect to
such subject matter are superseded hereby, including without limitation any
non-disclosure agreement previously executed between the parties. This Agreement
may be changed only by written agreement signed by both GlobalCenter and Client.
No failure of either party to execute or enforce any of its rights under this
Agreement shall act as a waiver of subsequent breaches, and the waiver of any
breach shall not act as a waiver of subsequent breaches.
14.6 Severability. In the event any provision of this Agreement is held by a
court of other tribunal or competent jurisdiction to be unenforceable, that
provision will be enforced to the maximum extent permissible under applicable
law, and the other provisions of this Agreement will remain in full force and
effect.
14.7 Non-Solicitation. During the term of this agreement and for a period of one
(1) year thereafter, Client shall not solicit, nor attempt to solicit the
services of any employee or subcontractor of GlobalCenter without the prior
written consent of GlobalCenter.
14.8 Substitution. GlobalCenter may substitute, change or modify the Software or
Hardware at any time, but shall not thereby alter the technical parameters of
the Services.
Frontier GlobalCenter, Inc. TOPLICK International
/s/ Chris Lewis
- - --------------------------------- ---------------------------------
By: ____________________________ By: Chris Lewis
Title: __________________________ Title:President & CEO
E-30
