UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GINSITE MATERIALS, INC.
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(Name of Small Business Issuer in its charter)
FLORIDA 65-0774999
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization )
6781 W. Sunrise Blvd., Plantation, FL
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(Address of principal place of business) Zip Code
Issuer's telephone number: (954) 321-9616
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which each
to be so registered class to be registered
None
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Securities to be registered under Section 12(g) of the Act:
(Common Stock, $.001 par value)
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(Title of class)
Copies of Communications Sent to:
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480;
Tel: (561) 832-5696
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Part I
Forward-Looking Statements
This Report on Form 10-SB includes certain statements that may be deemed to
be "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The sections of this Report on Form 10-SB
containing such forward-looking statements include "Description of Business,"
"Growth," "Acquisitions," "Product and Services," "Marketing and Sales,"
"Markets," "Competition," and "Year 2000 Issues" under Item 1 below, and
"Management's Discussion and Analysis or Plan of Operation" under Item 2 below.
Statements in this Form 10-SB which address activities, events or developments
that we expect or anticipate will or may occur in the future, including such
topics as future issuances of shares, future capital expenditures (including the
amount and nature thereof), expansion and other development and technological
trends of industry segments in which the proposed registrant is active, business
strategy, expansion and growth of the registrant's and its competitors' business
and operations and other such matters are forward-looking statements. Although
we believe the expectations expressed in such forward-looking statements are
based on reasonable assumptions within the bounds of our knowledge of our
business, a number of factors could cause actual results to differ materially
from those expressed in any forward-looking statements, whether oral or written,
made by or on our behalf.
Our operations are subject to factors outside our control. Any one, or a
combination, of these factors could materially affect the results of our
operations. These factors include: (a) changes in levels of competition from
current competitors and potential new competitors; (b) loss of a significant
customer; and (c) changes in availability or terms of working capital financing
from vendors and lending institutions. The foregoing should not be construed as
an exhaustive list of all factors that could cause actual results to differ
materially from those expressed in forward-looking statements made by us.
Forward-looking statements made by or on our behalf are based on a knowledge of
our business and the environment in which we operate, but because of the factors
listed above, actual results may differ from those anticipated results described
in these forward- looking statements. Consequently, all of the forward-looking
statements made are qualified by these cautionary statements and it is possible
that the actual results or developments anticipated by us will not be realized
or, even if substantially realized, that they will not have the expected
consequences to or effects on our business or operations.
Item 1: Description of Business
(a) Business Development
Ginsite Materials, Inc. (hereinafter referred to as the "Company" or
"GSIT") was organized under the laws of the State of Florida on August 7, 1997.
The Company was organized by Mr. Murray Ginsberg, Chairman, President and
Director of the Company for the purpose of manufacturing GINSITE(TM), a
resin-bound innovative coating material which is non-porous, waterproof and
bonds directly to various surfaces. The product is manufactured exclusively for
the construction and marine markets. The Company has retained the services of
Ms. Audrey Max as Executive Vice President and CEO; Henry V. Lione, Vice
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President and Secretary/Treasurer; Eugene Ladin, Vice President and Chief
Financial Officer; and Henry Max, Vice President & COO to bring GINSITE(TM) to
the marketplace. It is anticipated that the Company will greatly benefit from
the synergy expected to result from the combination of professional experience
provided by the above executives. The Company has been active as a manufacturing
development stage company since its incorporation on August 7, 1997. The
Company's stock is quoted for trade on the OTC Bulletin Board under the symbol
"GSIT". The Company's executive offices and manufacturing plant are located at
6781 W. Sunrise Blvd., Plantation, Florida 33313, and its telephone number is:
954-321- 9616.
The Company is filing this Form 10-SB on a voluntary basis in order that
the public will have access to the required periodic reports on the Company's
current status and financial condition. The Company will file periodic reports
in the event its obligation to file such reports is suspended under the
Securities and Exchange Act of 1934 (the "Exchange Act".)
In August, 1997, the Company issued 200,000 shares of common stock pursuant
to Section 4(2) of the Act for the sum of $1,500 to First Equity Group, Inc. for
services to be rendered . The offering was made to a Florida corporation in the
State of Florida.
The Company in September 1997 accepted subscriptions in the amount of
$1,000,000 for the sale of 3,000,000 shares of common stock , $0.001 par value
per share(in units consisting of 14 warrants for each share of common stock,
each warrant convertible at $0.35 per share into one (1) share of common stock
on or before November 30, 1998) in a private placement conducted pursuant to an
exemption from registration contained in section and 3(b) of the Act and Rule
504 of Regulation D promulgated thereunder. The offering was made to Florida
residents in the State of Florida. A Private Placement Memorandum was used in
connection with this offering which was disclosed to each prospective
investor.(See: Part II, Item 4, "Recent Sales of Unregistered Securities"). In
September 1998 the Company accepted subscriptions in the amount of $45,000.00
from the sale of 67,164 shares of common stock in a private placement to
accredited investors conducted pursuant to an exemption from registration
contained in section 4(2) of the Act and Rule 506 of Regulation D promulgated
thereunder.(See: Part II, Item 4. "Recent Sales of Unregistered Securities"). In
November, 1998 the Company accepted subscriptions in the amount of $4,899.00 for
the sale of 13,998 shares of common stock in a private placement conducted
pursuant to an exemption from registration contained in sections 3(b) of the Act
of 1933 and Rule 504 of Regulation D promulgated thereunder. The offering was
made to Florida residents in the State of Florida.(See: Part II, Item 4. "Recent
Sales of Unregistered Securities"). In March and April 1999, (prior to April 7,
1999) the Company accepted subscriptions in the amount of $330,250.00 for the
sale of 3,585,611 shares of common stock in a private placement conducted
pursuant to an exemption from registration contained in sections 3(b) of the Act
and Rule 504 of Regulation D promulgated thereunder. The offering was made to
Florida residents in the State of Florida(See: Part II, Item 4. "Recent Sales of
Unregistered Securities"). All of the above subscriptions were fully funded.
All required state forms were filed in New York and Florida in compliance
with all Blue Sky laws under the terms of the exemption under which the above
offering was made.(See Part II, Item4. "Recent Sales of Unregistered
Securities.")
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There are no preliminary agreements or understandings between the Company
and its officers and directors or affiliates or lending institutions with
respect to any loan agreements or arrangements other than those disclosed in
Item 7: "Certain Relationships and Related Transactions."( See Part I, Item 7:
"Certain Relationships and Related Transactions")
The Company intends to offer additional securities under Rule 506 of
Regulation D under the Act. ("Rule 506") to fund its short term and medium term
expansion plans as needed by demand for GINSITE(TM).
The name and address of the transfer agent is Florida Atlantic Stock
Transfer, Inc., 5701 N. Pine Island Road, Suite 310B, Tamarac, Florida 33321.
See (b) "Business of Issuer" immediately below for a description of the
Company's business plan for the manufacturing and marketing of GINSITE(TM).
b) Business of Issuer
General
The Company was formed in August 7, 1997. The Company is engaged in product
development, manufacturing and sales of GINSITE(TM), a non-porous, resin-bound
coating material that can enhance wood, concrete, metals, fiberglass and other
costly materials in the construction, plywood, roofing, tile and marine
industries. GINSITE(TM) can fortify and in some instances replace materials
ranging from roof tiles to boating hulls. The Company is actively developing two
distinct markets for the end use of its product: (1) the construction market
which can utilize GINSITE(TM) in a variety of applications from the
fortification of exterior walls, facades, roofing tile, plywood, "drywall" and
even brickwork, from as simple an application as an exterior coating with
whatever finish is desired, i.e. a smooth flat surface to a very rough stucco
texture, in either a clear coat and/or a specific color; and (2) the boating and
marine market, in which GINSITE(TM) can be molded into the shape of a boat hull
and/or applied as a coating upon a variety of marine surfaces. The product is a
waterproof resilient material which can be raked onto roofs and flat surfaces,
poured into molds and sprayed onto metal and other materials; and is clear in
appearance and/or is offered in different colors.
As a reporting company, the Company will be required to file quarterly on
Form 10- QSB and annually on Form 10-KSB and in each case, will be required to
provide the financial and other information specified in such forms. In
addition, the Company would be required to file on Form 8-K in the event there
was a change of control, if the Company acquires or disposes of assets, if there
is a bankruptcy or receivership, if the Company changes its certified
accountants, upon the occurrence of other events which may be pertinent to the
security holders, and after certain resignations of directors. Being subject to
such reporting requirements reduces the pool of potential acquisitions or merger
candidates for the Company since such transactions require that certified
financial statements must be provided for the acquiring, acquired or merging
candidate within a specified period of time. At such time as the Company will
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seek acquisitions or mergers, it will limit itself to companies which either
already have certified financial statements or companies whose operations lend
themselves to review for a certified audit within the required time.
Management
The current Company management is totally committed to the Company and the
product, GINSITE(TM). All have made a commitment for "the long haul" concerning
the Company and have dedicated their professional efforts for the betterment of
the Company making whatever sacrifices are necessary to ensure a profitable
business venture. Although Murray Ginsberg is a principal in Progressive
Technology, Inc. (PTI) and New Era Medical, Inc.(formerly known as Y2K, Inc.),
such relationships do not conflict with his commitment to the Company. The
directors and/or executive staff devote their full time, expertise and efforts
to the Company. There are no conflicting interests on the part of any of the
board member and/or officer of the Company at the present time that can be
perceived to be in conflict with the Company. (See: Part I, Item 7: "Certain
Relationships and Related Transactions")
Business Strategy
The Company's business strategy, which is dependent on its obtaining
sufficient additional financing, of which there is no assurance, entails the
commercialization and market acceptance of GINSITE(TM). The Company has filed
for and is awaiting the granting by the U.S. Patent Office of a Patent
Protection for GINSITE(TM) applicable to both the United States and
Internationally. At present GINSITE(TM) is Patent Pending and is in limited
production at the Company's manufacturing plant which is located in Plantation,
Florida.
The Construction Market
The Company will market GINSITE(TM) through a distributorship network
located in specific geographic areas within the United States and throughout the
world. The Company recognizes the applicability of the product in two distinct
markets: (1) the Construction Market and, (2) the Marine Industry. The Company's
immediate need for cash flow leads it to focus primarily on the construction
market and, specifically, roofing and exterior wall covering applications.
The specific product names which will be given to the GINSITE(TM) based
products in the Construction Market will be: (1)MR1000 Sealer, which will be
marketed to coat and seal driveways, sidewalks, retaining walls, pavers, brick,
foam, drywall/gypsum, appliances, tiles, floors, ceilings and asphalt; (2)
MR2000 Roof Coat/Patch, which will be marketed to coat, seal and patch all roof
surfaces, their critical seams and leak prone areas; and (3) MR3000 Pool &
Patio, which will be marketed to coat and seal concrete and fiberglass pools &
spas in addition to the patio surface around a pool.
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Licensing & Distributorship
The Company initiated a distributorship system as a result of initial
interest from various parts of the country. The Company has executed four (4)
Distributorship Agreements (See: Part II. Item 15. "Additional Exhibits -
Material Contracts: Distributorship Agreements") for the marketing of
GINSITE(TM). These agreements are with established sales representatives located
in Florida, New York, New Jersey, New England, Mexico, Canada and China. These
form Distributorship Agreements have been drafted and are attached.( See: Pat
III. Item 1. "Index to Exhibits: - 10.1: Distributorship Agreement - Form Of").
The Company also plans to develop Licensing Agreements to manufacture
GINSITE(TM) at satellite locations around the world. These form Licensing
Agreements have been drafted and are attached. ( See: Pat III. Item 1. "Index to
Exhibits: - 10.2: License Agreement - Form Of") To date one (1) license
agreement has been issued by the Company to Concession Management of Palm Beach,
Inc. whose objective is to promote GINSITE(TM) applications in the boatlift and
marine industry.( See: Part III. Item 1. Index to Exhibits: - License Agreement
- - 10.2: License Agreement, Concession Management of Palm Beach, Inc.)
The Marine/Boating Market
The specific product name which will be given to the GINSITE(TM) based
products in the Marine/Boating Market will be: (1)MR4000 Marine Coat, which will
be marketed to coat and seal the bottom of boats. MR4000 Marine Coat may also be
used on docks and buoys.
Patent Pending & Trademark Status
Mr. Ginsberg filed an early patent application on July 28, 1995 for
GINSITE(TM) with the U.S. Patent Office. On August 7, 1997, Mr. Ginsberg
formally assigned a certain patent pending originally dated July 28, 1995 and
international rights to Ginsite Materials, Incorporated. The Patent has a
historical cost of $50,976. (See: See: Part III. Item 1. Index to Exhibits:
10.9A - Assignment of Patent & Trademark, and 10.9B Patents). A subsequent full
patent application was filed on October 20, 1998. In discussions with the
company's patent attorney, the company has been advised that the final patent
approval should be granted in the year 2000. The issuance of patent protection
is not guaranteed. In the event the Company fails to obtain patent protection
for GINSITE(TM) its operating revenues may be severally impacted by the entrance
of other competitors in the marketplace who may or may not attempt to establish
their own distribution of GINSITE(TM) like products.
Research & Development
For Fiscal years 1997 and 1998, the Company expended $50,976 and $29,536
respectively, on research and development. These expenditures represented 100 %
and 0.80%, respectively, of total company expenditures for such fiscal years.
The principal increase in the cost of research and development for fiscal years
1997 and 1998 was the additional cost, time and expenses incurred for the
manufacturing and conducting of displays and field demonstrations of product
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applicability. Furthermore, ongoing research and development of product
capability and applicability will continue.
At the current time, none of the costs associated with research and
development are borne directly by the customer; however, there is no guarantee
that such costs will not be borne by customers in the future and, at the current
time, the Company does not know the extent to which such costs may be borne by
the customer, if at all.
The Company has in effect research and development efforts to design
machinery and molds for use in the production of products made from GINSITE(TM).
The Company believes that leasing GINSITE EQUIPMENT and/or selling GINSITE(TM)
will expand its market diversification and broaden its revenue stream. For
example, the Company has designed spraying equipment for the exclusive use of
spraying GINSITE(TM). This equipment will bear the GINSITE(TM) name and be
distributed exclusively through the Company. This equipment will be utilized in
various market applications and, in fact, will be required by the Company to
ensure proper product application which will further ensure product performance
as well as help meet product warranties. The roofing and marine markets will
require such proprietary equipment to properly apply the GINSITE(TM) material in
order to maintain product effectiveness. The Company plans to make the purchase
and/or lease of such equipment as a condition precedent to a valid warranty,
especially when GINSITE(TM)'s, Limited Warranty will be linked to its
"certified" application.
Marketing
As with all start-up companies and with those introducing a newly-
manufactured product, time and acceptance of the product are factors which will
ultimately determine the success or failure of the Company. The Company believes
in order to avoid direct market resistance, the Company's marketing program will
emphasize how GINSITE(TM) "enhances" and does not necessarily "replace" other
known and accepted products. This program will continue to emphasize getting the
GINSITE(TM) trademark and its attributes in front of the construction and marine
market end users as a viable and cost effective compliment as supported by
independent laboratory test results as well as proven applications and use of
the product.
Quality Control Issues
The Company recognizes that a significant element of success will depend on
the performance of the product, GINSITE(TM), and its competitive environment.
Therefore, quality control becomes paramount in the manufacturing of
GINSITE(TM), pricing which will be directly dependent on cost efficiency in
managing the Company, raw material costs, personnel, and other overhead costs.
Specific policies concerning invoices, orders, payment schedules, etc. have been
established in order to relieve the cash flow burden and enable the Company to
remain competitive in the marketplace with business.
Risk Management Program - Workmen's Compensation
Being a manufacturing company, the Company believes that a pro-active
prevention program and aggressive controls will reduce Workers' Compensation
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costs. The Company will seek to prevent workplace injuries by implementing a
variety of training, safety and mandatory drug-free workplace programs including
pre-employment screening, random drug testing and post-accident drug monitoring
to ensure that safety awareness is heightened within the company. Further, the
Company will insist that all employees adhere to ongoing safety practices in all
areas of the corporate headquarters and manufacturing facilities as well as
other sites as they become available through expansion and/or acquisitions. The
Company has obtained adequate Workers' Compensation insurance at sufficient
deductible per accident levels so as to cover the intended risk management
objectives. As an employer, the Company is subject to all federal, state and
local statutes and regulations governing its relationship with its employees and
affecting business generally.
Employees
The Company is comprised of five(5) managers, who have officially been
assigned Officer's titles; however, all officers have been actively involved in
all aspects of the Company. In addition to the 5 managers there are two(2) plant
employees who are involved in the direct manufacturing of GINSITE(TM). The
Company plans to hire a sales force which will be compensated on a commission
basis. The sales force will add to the operating expenses of the Company but
such expenses will be absorbed directly by the additional revenue that this
sales force will be able to generate for the Company. As sales increase the
Company will add as required one (1) quality assurance person, two(2) additional
manufacturing mixers, and one(1) receiving and shipping person. The
administrative side of the Company is anticipated to need two (2) additional
secretaries and two (2) internal accountants as sales and operating revenues
increase.
The Company's primary direct costs will be (i) salaries and wages of
work-site employees (payroll cost), (ii) employment related taxes, (iii) health
benefits (iv) workers' compensation benefits and insurance, (v) materials
required in the manufacturing of GINSITE(TM), and (vi) administrative/office
supplies including rent, utilities, etc.. Staffing will consist of corporate
officers with specific responsibilities, and that number of manufacturing staff
required depending on business/sales orders. The sales force will be on direct
commission with no draw or salary advances. To attract qualified personnel,
salaries for all personnel will be fair, equitable and competitive regarding the
job description and work to be accomplished. Employment related taxes consist of
the employer's portion of payroll taxes required under the Federal Income
Contribution Act ("FICA"), which includes Social Security and Medicare, and
federal and state unemployment taxes. The federal tax rates are defined by the
appropriate federal regulations. State of Florida unemployment tax rates are
affected by claims experience, of which the Company has none at this time.
Health benefits are comprised primarily of medical insurance costs, but also
include costs of other employee benefits such as prescription coverage.
When the Company is in a financial position, it will offer its employees
appropriate retirement and other benefit plans such as group life insurance all
of which would be subject to " ERISA" rules and regulations.
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Sales Staffing
The Company recognizes that the concentration in direct sales requires a
quality staff and professional follow-up. The Company has in place Sales Manuals
and Training Materials which are being distributed to interested persons.
However, the Company has not met with great success in attracting and hiring its
own sales force. The Company believes its lack of an established "draw on sales"
in lieu of salary has been a major stumbling block to its recruiting. In
addition, individuals have been reluctant to invest their own time and money in
selling a new product. Therefore, the Company has hired an in-house sales person
to follow up on all leads and contacts as well as to personally call on
prospects in both the local construction and marine industries. The Company will
strategically place advertisements for sales personnel on an as-needed basis.
Such commitments will begin only after professional employees are in a place to
service increased sales. In addition, the Company has initiated the
establishment of its own Web Site in order to introduce GINSITE on a more Global
and cost- effective scale.
Customer Base/Market
Through the business opportunities outlined, the Company believes it will
generate a stream of revenue that will cover its operational costs and also
yield excellent profit margins. All of the preceding will be dependent upon an
adequate infusion of additional capital and the further penetration and
acceptance in the marketplace of GINSITE(TM). The Company identifies its
immediate market as the residential and commercial housing markets. In 1994,
according to US Department of Commerce statistics, the total dollar volume in
the construction industry was estimated at $460,000,000,000. The Company
believes its penetration of the residential and commercial customer base will
expand as the market gains further recognition of GINSITE(TM). It is also
believed that expansion of the market for GINSITE(TM) will result through the
establishment of satellite production locations resulting from developing
additional distributorships. The Company also believes that the establishment of
such economies of scale may maintain competitive pricing of GINSITE(TM) in the
market place. However, there is no assurance that such market penetration will
occur or that the economies of scale will be achieved.
The Company recognizes that increased labor costs and increased costs of
raw materials which comprise the manufacturing of GINSITE(TM) may affect
profitability. The Company's gross profit margin will be determined in part by
its ability to estimate and control direct costs and its ability to incorporate
such costs in the distributorship and licensing fees charged. The Company's
operating plan anticipates changes in primary direct costs and it will make
product price and fees adjustments to customers, distributors, etc. to remain
competitive in the market place. However, these adjustments will be subject to
the market's ability to absorb such adjustments. There are no assurances that
the Company will be able to pass on to the consumer increases in labor costs and
raw material costs
Competition
There are many coatings on the market which appear to be in competition
with Ginsite. Each have specific characteristics, however, only Ginsite combines
a number of the individual attributes of each of the products. The Company is
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careful not to compare Ginsite to paint, epoxies and/or other types of coatings
or sealants. Thus, the Web Site and printed materials use the term "enhance"
since Ginsite will enhance any product it bonds to and thereby greatly reduce
direct competition.
Research and Development
These expenses consist primarily of costs associated with personnel,
equipment, field demonstrations and tests. The Company's research and
development activities include the encapsulating of a house in Loxahatchee,
Florida with a complete GINSITE(TM) coating. The constructing of a "show place"
house in Broward County is underway - GINSITE is being used to coat a house and
will be stained a light peach color. The finish will be a "knock-down Stucco."
The coating of two OSB boards with a Styrofoam core either four (4") inches or
six (6") thick is currently being tested in the tri-county (Dade, Broward and
Palm Beach County, Florida) area. The manufacturing of a mold to produce
GINSITE(TM) barrel roof tile made out of Styrofoam and coated on all side with
GINSITE(TM) and, the molding of GINSITE(TM) into a brick facade is in
development by the Company. The Company is presently negotiating to manufacture
a GINSITE(TM) brick facade product to encapsulate a thirty-six (36) story
condominium to be built in Canada.
Since inception, the Company has spent approximately $80,512 on research
and development. For the years ended December 31, 1997 and December 31, 1998,
research and development expenses were approximately $50,976 (which was
capitalized and amortized as the patent's value) and $29,536, respectively.
During 1997, research and development expenses were significant as the Company
concentrated on GINSITE(TM) applications The Company made enhancements to
GINSITE(TM) in 1998, and the majority of these related costs were capitalized
and will be amortized over a period not to exceed five (5) years. The Company
intends to continue to invest significant resources to continue the development
of new products and expects that research and development expenses in 1999 will
increase in absolute dollars as compared to 1998.
Industry Regulation
Many of the Standard Building Code test requirements have already been met
through various laboratory testings. One remaining test is the UV (ultraviolet)
test which is currently underway. There are specific building and constructions
codes and requirements in all of the various counties in Florida, the State of
Florida and, in addition, throughout the entire United States. As the Company
enters various geographic areas, various local code enforcement departments will
be contacted in order to learn what is required in the specific area.
The Company has obtained the Hurricane Testing Center in Florida's approval
of Ginsite for impact and uplift standards. The approval by the Hurricane
Testing Center provides Ginsite with a critical requirement needed to be
favorably received by the construction and marine industry in the hurricane
prone tri-county area of Palm Beach, Broward and Dade County, Florida.
The Company has applied for and obtained approvals from the American
Society For Testing and Materials (ASTM) with regard to meeting the approvals
for the use of Ginsite in the residential and commercial construction markets.
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In addition, the Company has performed specific Underwriters Laboratory(UL)
Tests, Hurricane Test Laboratory Tests as well as specific Roof and Building
Covering Material Tests.
The Florida Department of Transportation is presently testing Ginsite for
use on roads and other areas in the State. Port Authorities in New York and New
Jersey are testing the product along with the Corp of Engineers regarding the
use of Ginsite to cover bridges in the State of New York, New Jersey and Mass.
In addition, the United States Coast Guard has been contacted regarding the use
of Ginsite for buoys and commercial vessels.
With regard to the Marine Industry, the U.S. Coast Guard has specific code
requirements for governmental projects as well as for commercial ships, etc. The
Company has in its possession and is fully aware of these requirements. However,
in the consumer marine industry there are no specific construction code
requirements that would prevent GINSITE from being used as a coating on a boat,
dock, oil rig, etc. The Coast Guard codes are limited to commercial ships, etc.,
and not "small" water craft constructed out of aluminum, fiberglass and/or wood.
Furthermore, since Ginsite has no hazardous material content it is approved for
inter, intra and international shipping purposes.
Environmental Impact/Approvals
The Company's product may be subject to regulation under the state and
Federal laws regarding environmental protection and hazardous substances
control, including the Occupational Safety and Health Act, the Environmental
protection Act, and Toxic Substance Control Act. However, the Company believes
that it is in material compliance with the current and other applicable laws and
that its continual compliance therewith will not have a material adverse effect
on its business.
All of the materials that are used to manufacture Ginsite are, based upon
test data received from the manufacturers of the components, non-toxic and
friendly to the environment. All the products are earthen in nature and
composition. No special equipment or safeguards must be taken for the personnel
in manufacturing Ginsite. Water is used to rinse and clean any tools used in
manufacturing Ginsite. Material Safety Data Sheets (MSDS) sheets have been
accepted by all delivery agencies such as Federal Express, UPS and various
commercial trucking corporations. In addition, the US Customs Agency has
accepted the shipping of the components of Ginsite to such countries as Canada,
the Ukraine, China, Taiwan, Mexico and South America.
Seasonality
The Company recognizes that cash flow is paramount to the success of the
Company's efforts and, therefore, will as quickly as possible, establish a cash
reserve to off-set any drop in cash flow to cover normal operational monthly
charges. However, the Company believes that its marketing approach is
sufficiently diversified to minimize any possible seasonality of revenues. In
addition, the abundant availability of raw materials and direct labor for
production purposes is not subject to seasonal influences and, therefore, the
Company feels seasonality will have little to no effect on its operating results
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c) Risk Factors
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
Company.
1. Development Stage Company. GSIT was only recently organized on August 7,
1997, and accordingly, is in the early stages of development and must be
considered promotional. Management's efforts, since inception, have been
allocated primarily to product research and development and fund raising
activities and the ability of the Company to establish itself as a going concern
is dependent upon the receipt of additional funds from operations or other
sources to continue those activities and to commence more aggressive marketing
and sales of GINSITE(TM). Potential investors should be aware of the
difficulties normally encountered by a new enterprise in its development stage,
including under-capitalization, cash shortages, limitations with respect to
personnel, technological, financial and other resources and lack of a client
base and market recognition, most of which are beyond the Company's control. The
likelihood that the Company will succeed must be considered in light of the
problems, expenses and delays frequently encountered in connection with the
markets in which the Company will operate. The Company's success depends to a
large extent on establishing market awareness and acceptance of GINSITE(TM) as a
viable and cost effective alternative. There is no guarantee that the Company's
proposed activities will attain the level of market acceptance and recognition
necessary for the Company to attain a niche in the construction and marine
markets. There exists in both the construction and marine markets many
established companies with proven products which have long histories of reliable
performance. Several of these companies are not only positioned in these markets
but also are better financed than the Company. There can be no assurance that
the Company will be able to compete with these companies and achieve
profitability. (See Part I, Item l. "Description of Business.")
2. Operating History, Revenue or Earnings. Although the Company has been in
business since August 7, 1997 it has been a manufacturing development stage
company actively engaged in research and development of its product since
inception and the Company has only recently begun shipping GINSITE(TM). As of
March 31, 1999, the Company had total assets of $351,180, a net loss from
operations of $5,314,762 on revenue of $25,136 and stockholders equity of
$139,044. Due to the Company's operating history and limited resources, among
other factors, there can be no assurance that profitability or that significant
revenue will occur in the immediate future.
3. Need for Additional Capital: Going Concern Qualification Expressed by
Auditor. Without an infusion of Capital or profits from the sale of GINSITE(TM),
the Company may not be expected to continue in operation. Accordingly, the
Company may not become a viable business entity unless additional equity and/or
debt financing is obtained. GSIT's independent certified public accountant has
expressed this as a "going concern" qualification to the opinion of Durland and
Company, CPAs P.A. on the Company's financial statements. The Company does not
anticipate the receipt of sufficient revenues from the sale of GINSITE(TM) until
management successfully implements its business plan, which is not assured.
<PAGE>
Further, GSIT may incur significant unanticipated expenditures which deplete its
capital at a more rapid rate because of among other things, the development
stage of its business, its limited personnel and other resources and its lack of
market penetration and product recognition. Because of these and other factors,
management is presently unable to predict what additional costs might be
incurred by the Company beyond those currently contemplated to obtain additional
financing and achieve market penetration on a commercial scale in its proposed
line of business, i.e. product manufacturing and sales. GSIT has no identified
sources of funds, and there can be no assurance that resources will be available
to the Company when needed.
4. Dependence on Management: Management's Lack of Experience in Construction
Marketing and Marine Product Sales. The possible success of the Company is
expected to be largely dependent on the continued services of its President, Mr.
Murray Ginsberg, the inventor of GINSITE(TM) and the director of research and
development. Although, Murray Ginsberg, Audrey Max, Henry V. Lione, Eugene Ladin
nor Henry Max have limited direct experience in product manufacturing, marketing
and sales to the construction and/or marine markets they do possess extensive
experience and skills in the marketing and management of small and mid-sized
companies. Virtually all decisions concerning the marketing and sales of
GINSITE(TM), the recruitment of experienced sales professionals, their training
and marketing decisions are being made in an industry in which management has
limited direct experience.
The loss of Murray Ginsberg and his creative genius as a product inventor and
developer would adversely affect the conduct of the Company's business and its
prospects for the future. The Company presently holds key-man life insurance and
an Indemnification Agreement and Covenant Not To Sue with Mr. Ginsberg. In
addition, the Company has in place employment agreements with each key employee
including, Murray Ginsberg, Audrey Max, Henry Max, Henry Lione, Eugene Ladin and
Barry Grieper. ( See: Part II. Item 1. Index to Exhibits -10.4A through F-
Employment Agreements) The Company recognizes the need to hire an experienced
construction products and marine products marketing executive to fill the void
of experience applicable to the industry; however, there is no assurance that
the Company will be successful in attracting a competent executive with the
experience required.
5. No Existing Market Penetration or Customer Base. The Company was only
recently organized. While GSIT intends to distribute GINSITE(TM) to residential
and commercial construction contractors and the marine markets, the Company
currently has no substantial sales, licenses or distributorship agreements in
place. Further, the very limited funding currently available to the Company will
not permit it to effectively penetrate the construction and marine markets
except on a very limited scale. There can be no assurance that the debt and/or
equity financing, which is expected to be required by the Company in order for
GSIT to continue in business after the expiration of the next six to twelve
months, will be available. The Company has very few customers presently and
there can be no assurance that it will be successful in obtaining customers in
its initial prospective markets. GSIT does aim to obtain long-term contracts;
however, management believes that the Company must, in order to survive,
ultimately obtain the loyalty of a large volume of customers. The Company
expects to be limited in the number of sales personnel it is capable of
employing as a result of its limited operating capital. Thus, the Company could
be expected to experience substantial difficulty in attracting the high volume
of customers in the prospective target markets which would enable GSIT to
<PAGE>
achieve commercial viability. (See Part I, Item 1. "Description of Business,"
(b) "Business of Issuer - Business Strategy; "Sales and Marketing.")
6. No Assurance of Product Quality: Performance and Reliability. The Company
expects that their customers and ultimately their distributors will continue to
establish demanding specifications for product quality, performance and
reliability. Although the Company attempts to maintain and adhere to stringent
manufacturing standards, there can be no assurance that problems will not occur
in the future with respect to quality, performance and reliability as well as
price. If such problems occur, the Company could experience increased costs,
delays in or cancellations of orders or shipments and product returns and
discounts, any would have a material adverse effect on the Company's business,
financial conditions and results of operations.
7. No Assurance of Sales Force Quality: Performance and Reliability. The Company
does not have adequate expertise and experience in construction and marine
industry sales and recognizes the need to hire a competent and experienced sales
manager and/or managers for these markets. Although the Company expects to hire
a competent sales manager[s], there can be no assurance that problems will not
occur in the future with respect to the effectiveness and success these sales
manager[s] will have in establishing a market presence for GINSITE(TM). If the
sales manager[s] fails to establish such a presence and is also unable to
establish substantial distributorship arrangements, the Company will not realize
the necessary revenues it requires to achieve commercial viability.
8. Uncertainty of Market Acceptance. The future operating results of the Company
depend upon the continued need of the construction and marine markets to
identify and apply products deeded necessary, useful, convenient, affordable and
competitive to their eventual end users/consumers. There can be no assurance
that the Company's product, GINSITE(TM), will achieve the market penetration and
recognition necessary for the Company to grow and become profitable on a
sustained basis, especially given the alternatives that already exist in the
marketplace from more established and have better financial strength than the
Company. (See "Part I, Item 1. "Description of Business.")
9. Seasonal Variations in Results. The Company expects to experience higher
revenues during the warmer weather months, i.e April through September, when
construction and marine markets experience their highest demand volumes. These
seasonal variations in results may become greater once the Company established a
presence in more northern locations where winters can be severe and construction
and marine activity significantly decreases. In addition, the company expects
negative and/or less attractive results in its operating revenues in the winter
months, i.e. October through March, when unfavorable weather conditions and
lower overall economic activity is present. Nevertheless, to date the company
has not experienced any seasonality in its operating revenues and feels that it
is adequately diversified in its market exposure, sourcing of raw materials and
abundance of labor to effectively neutralize any possible seasonality of
revenues. There is no assurance, however, that there will not eventually result
a definite seasonality of revenues to the Company.
10. Raw Material Costs. Raw materials necessary for the manufacture of
GINSITE(TM) are readily available from numerous third-party suppliers. The
Company does not rely on any principal suppliers for any of its raw materials.
Currently, there are four major suppliers (oil producing companies) in the
United States, through which the company can obtain its major raw material. At
<PAGE>
the present, the company buys its major raw material ingredient from a major
distributor of one of the oil producing companies. However, if this one major
oil producer would make the decision not to produce the major raw material
required by the company in its formulation; then, the other three oil producing
companies may sell the major raw material at a higher price than the company is
currently paying. This would increase the raw material costs to the company and
negatively impact profitability. In addition, a national or international
crisis, may require the oil companies to discontinue producing the major raw
material which the company needs to manufacture its product. Such an event would
have serious detrimental effects on the ongoing viability of the Company .
The Company's cost of raw materials and profitability will also be subject to
the pricing of oil in the open market and the influence on by-product production
goals that the open market may place on oil companies. The Company may be unable
to obtain critical raw materials if oil refineries change their production
schedules and by-product production goals and, instead, emphasize other product
production goals that do not produce the by-products which the Company requires
for the manufacture of GINSITE(TM).
11. Lack of Working Capital Funding Source. GSIT anticipates that receivables
from the sale of GINSITE(TM) will be structured such that 50% of the purchase
price shall be due upon the order being placed, 25% will be due upon product
shipment and the remaining 25% shall be due upon product receipt. In the event
of the default by a customer on any balances due and payable, the Company will
need to establish a reserve to protect its need for working capital. The Company
has no current source of working capital funds, and should the Company be unable
to secure additional financing on acceptable terms, its business, financial
condition, results of operations and liquidity would be materially adversely
affected.
12. Conflicts of Interest. There are existing and potential conflicts of
interest, including time, effort and corporate opportunity, involved in the
participation by the Company's President, Murray Ginsberg in other business
entities and transactions. Mr. Ginsberg, the inventor of GINSITE(TM), is also
the principal shareholder of Progressive Technology, Inc.(PTI) Murray Ginsberg
created GINSITE(TM) while working with PTI. All rights to this invention were
assigned by PTI to Murray Ginsberg and then subsequently assigned by Murray
Ginsberg to the Company pursuant to the terms of an assignment and note payable
to him by the Company..( See Part I, Item 3, "Description of Property" and, Item
1 (c) "Risk Factors," subparagraph 18: Patent, Copyrights and Trademarks.) In
addition, the Company has made a series of advances to PTI, a company under
common control, in the form of collateralized promissory notes.(See Part I, Item
7. "Certain Relationships and Related Transactions.") To the extent that Murray
Ginsberg has interests in areas not in common with the Company he may divide his
time and effort between the Company and his existing interests in PTI.
Furthermore, he may have conflicting financial interests due to the obligations
existing between both parties.
13. Increased Employee Costs. A major portion of the Company's primary direct
costs will be (i) salaries and wages of worksite employees (payroll cost), (ii)
employment related taxes, (iii) health benefits and (iv) workers' compensation
benefits and insurance. Staffing will consist of corporate officers with
specific responsibilities, and that number of manufacturing staff required
depending on business/sales orders. The sales force will be on direct commission
<PAGE>
with no draw down or salary advances. To attract qualified personnel, salaries
for all personnel will be fair, equitable and competitive regarding the job
description and work to be accomplished. Employment related taxes consist of the
employer's portion of payroll taxes required under the Federal Income
Contribution Act ("FICA"), which includes Social Security and Medicare, and
federal and state unemployment taxes. State of Florida unemployment tax rates
are affected by claims experience, of which the Company has none at this time.
Health benefits are comprised primarily of medical insurance costs, but also
include costs of other employee benefits such as prescription coverage.
As the Company grows, it will offer its employees appropriate retirement and
other benefit plans such as group life insurance all of which would be in
compliance with " ERISA" rules and regulations. There can be no assurance that
the Company will be able to increase the prices of its products to cover
increased costs related to Worker's Compensation, unemployment insurance or
health insurance benefits which may be extended to worksite employees.
The Company anticipates an increase of manufacturing personnel, administrative,
accounting, clerical and secretarial personnel as demand for the Company's
products increases. Due to the present state of the economy which is
experiencing an historically low unemployment rate it is anticipated that future
employee hiring costs will become a major operating expense to the Company.
14. Liability for Workers Compensation Claims. The Company has acquired Workers'
Compensation insurance and believes it is adequately covered. (See Part I, Item
1. "Description of Business," (b) "Business of Issuer - Risk Management Program
- - Workers Compensation")
15. Ability to Grow. The Company expects to grow through increasing sales,
developing distributorships and by granting licensing rights. The Company plans
to expand its business from its current location and by entry into other
geographical markets. There can be no assurance that the Company will be able to
create a market presence, or if such market is created, to expand its market
presence or successfully enter other markets. The ability of the Company to grow
will depend on a number of factors, including the availability of working
capital to support such growth, existing and emerging competition and the
Company's ability to maintain sufficient profit margins in the face of pricing
pressures. The Company must also manage costs in a changing regulatory
environment, adapt its infrastructure and systems to accommodate growth and
recruit and train qualified managers and personnel.
The Company also plans to expand its business, in part, through the acquisition
of ancillary product manufacturers primarily in the construction industry.
Although the Company will continuously review potential acquisition candidates,
it has not entered into any agreement, understanding or commitment with respect
to any acquisitions at this time. There can be no assurance that the Company
will be able to successfully identify suitable acquisition candidates, complete
acquisitions on favorable terms, or at all, or integrate acquired businesses
into its operations. Moreover, there can be no assurance that acquisitions will
not have a material adverse affect on the Company's operating results,
particularly in the fiscal quarters immediately following the consummation of
such transactions, while the operations of the acquired business are being
<PAGE>
integrated into the Company's operations. Once integrated, acquisitions may not
achieve comparable levels of revenues, profitability or productivity as at then
existing Company-owned locations or otherwise perform as expected. The Company
is unable to predict whether or when any prospective acquisition candidate will
become available or the likelihood that any acquisitions will be completed. The
Company will be competing for acquisition and expansion opportunities with
entities that have substantially greater resources than the Company. In
addition, acquisitions involve a number of special risks, such as diversion of
management's attention, difficulties in the integration of acquired operations
and retention of personnel, unanticipated problems or legal liabilities, and tax
and accounting issues, some of all of which could have a material adverse effect
on the Company's results of operations and financial condition.
Distribution and Licensing growth poses the additional risk of the inability of
the Company to control the quality of services provided by its distributors and
licensees. Moreover, the failure of any Distributor and/or Licensee to pay fees
due to the Company could have a material adverse effect on the Company's
financial condition and results of operations (See Part I, Item 1. "Description
of Business (b) "Business Strategy.")
16. Potential Legal Liability. The Company may be subject to claims relating to
the actions of their employees (including their workaday employees if utilized
to demonstrate and train their customers regarding the application of
GINSITE(TM)).including possible claims of other civil actions or torts.
Management intends to adopt and implement policies and guidelines to reduce its
exposure to these risks. However, the failure of any Company employee to follow
these policies and guidelines may result in negative publicity, injunctive
relief and the payment by the Company of money damages or fines. There can be no
assurance that the Company will not experience such problems.
As an employer, the Company may be subject to a wide variety of
employment-related claims such as claims for injuries, wrongful death,
harassment, discrimination, wage and hour violations and other matters. In
addition, at such time as the Company enters into Distributorship and Licensing
agreements, the Company plans to have a standard agreement which establishes a
contractual division of responsibilities between the Company and each
Distributor and/or Licensee. However, the Company may be subject to liability
for legal violations despite these contractual provisions even if it does not
participate in such violations. Although such agreements are expected to provide
that the Distributor and/or Licensee is to indemnify the Company for any
liability attributable to the Distributor's and/or Licensee's failure to comply
with its contractual obligations and the requirements imposed by law, the
Company may not be able to collect on such contractual obligation claims and
thus may be responsible for satisfying such liabilities. The Company has in
place a liability insurance policy, but there can be no assurance that any such
insurance will be sufficient to cover any judgments, settlements or costs
relating to any future claims, suits or complaints or that sufficient insurance
will be available to the Company or such providers in the future on satisfactory
terms, if at all. If insurance is not sufficient to cover any judgements,
settlements or costs relating to any claims, suits or complaints, the Company's
business, financial condition, results of operations and liquidity could be
materially adversely affected. (See Part I, Item 1. "Description of Business"
(b) "Business of Issuer-Industry Regulation.")
<PAGE>
At such time as the Company enters into Distributor and/or Licensing agreements,
the Company may be subject to claims asserting that it is vicariously liable for
the damages allegedly caused by the Distributor and/or Licensee. The Company
intends for its distributor an/or licensing agreements to state that the parties
are not agents and that the distributors and/or licensees control the day-to-day
operations of their businesses. Furthermore, it is intended that the distributor
and/or licensing agreements will require the distributor and/or licensee to
undertake certain efforts to inform the public that they are not agents of the
Company and that they are independently owned and operated businesses. Moreover,
the Company will take certain additional steps to insulate its potential
liability based on claims from the distributor's and/or licensee's conduct
including requiring the distributor and/or licensee to indemnify the Company for
such claims and mandating that the distributor's and/or licensee's carry certain
insurance coverage naming the Company as an additional insured. Despite these
efforts to minimize the risk of vicarious liability, there can be no assurance
that a claim will not be made against the Company, nor that the indemnification
requirements and insurance coverage will be sufficient to cover any judgments,
settlements or costs relating to such a claim.
17. Competition. Although the Company identifies no direct competition in the
market of a comparable product to GINSITE(TM) the construction supply industry
is highly competitive with several major companies involved. The Company will be
competing with larger competitors who supply product that the Company intends to
enhance and possibly replace. Many of the Company's competitors may not wish to
allow GINSITE(TM) to establish a presence and may through their greater
marketing, financial and other resources deter GINSITE(TM)'s market penetration.
There can be no assurance that the Company will be able to compete effectively
against such competitors in the future.(See Part I. Item 1. "Description of
Business," (b) "Business of Issuer-Competition.")
18. Patent, Copyrights and Trademarks. Murray Ginsberg invented GINSITE(TM)
while working with PTI. Mr Ginsberg obtained full rights to his invention
pursuant to an assignment by PTI to him which he then assigned to GSIT.(See Part
I, Item 7. "Certain Relationships and Related Transactions; Part II. Item 15.
Additional Exhibits - Assignment of Patent")
Mr. Ginsberg filed an early patent application on July 28, 1995 for GINSITE(TM)
with the U.S. Patent Office. On August 7, 1997, Mr. Ginsberg formally assigned a
certain patent pending, originally dated July 28, 1995, and international rights
to Ginsite Materials, Incorporated.(See: Part III. Item 1. Index to Exhibits -
10.9A - Assignment of Patent - 10.9B Patent Application & Status). The Company
obtained the Trademark rights to GINSITE(TM) upon receipt of the assignment from
Murray Ginsberg. Such trademark was registered on April 20, 1998.(See: Part III.
Item 1. Index to Exhibits - 10.9B - Patent Application & Status; Trademark
Application & Status). A subsequent full patent application was filed on October
20, 1998. In discussions with the company's patent attorney, the company has
been advised that the final patent approval should be granted in the year 2000.
The issuance of patent protection is not guaranteed. In the event the Company
fails to obtain patent protection for GINSITE(TM) its operating revenues may be
severally impacted by the entrance of other competitors in the marketplace who
may or may not attempt to establish their own distribution of GINSITE(TM) like
products.
<PAGE>
The Company is actively engaged in research and development and has the rights
to several new product concepts in various stages of development. These products
are derivations of GINSITE(TM) for which patent and trademark protection is in
progress or will be initiated in the near future.
19. Uncertainty Regarding Protection of Proprietary Rights. The Company attempts
to protect its intellectual property rights through patents, trademarks, secrecy
agreements, trade secrets and a variety of other measures. However, there can be
no assurance that such measures will provide adequate protection for the
Company's trade secrets or other proprietary information, that disputes with
respect to the ownership of its intellectual property rights will not arise,
that the Company's trade secrets or proprietary products will not otherwise
become known or be independently developed by competitors or that the Company
can otherwise meaningfully protect its intellectual property rights. There can
be no assurance that any patent owned by the Company will not be invalidated,
circumvented or challenged, that the rights granted thereunder will provide
competitive advantages to the Company or that any of the Company's pending or
future patent applications will be issued with the scope of the claims sought by
the Company, if at all. Furthermore, there can be no assurance that others will
not develop similar products, duplicate the Company's products or design around
the patents owned by the Company or that third parties will not assert
intellectual property infringement claims against the Company. In addition,
there can be no assurance that foreign intellectual property laws will
adequately protect the Company's intellectual property rights abroad. The
failure of the Company to protect its proprietary rights could have a material
adverse affect on its business, financial condition and results of operations.
Litigation may be necessary to protect the Company's intellectual property
rights and trade secrets, to determine the validity of and scope of the
proprietary rights of others or to defend against claims of infringement or
invalidity. Such litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
infringement, invalidity, right to use or ownership claims will not be asserted
by third parties or claims for indemnification resulting from infringement
claims will not be asserted in the future. If any claims or actions are asserted
against the Company, the Company may seek to obtain a license under a third
party's intellectual property rights. There can be no assurance, however, that a
license will be available under reasonable terms or at all. In addition, should
the company decide to litigate such claims, such litigation could be extremely
expensive and time consuming and could materially adversely affect the Company's
business, financial condition and results of operations, regardless of the
outcome of the litigation. (See Part I, Item 1. "Description of Business- (b)
Business of Issuer - Patents, Copyrights and Trademarks.")
20. Cash Flow Commitments: 9% Convertible Notes. The company issued $254,000 in
Convertible Notes carrying a 9% annual interest rate as collateral for a loan to
the Company for $254,000. The funds borrowed have been used to meet the
company's outstanding liabilities, past and current cash flow needs. (See: Part
III. Item 1. Index to Exhibits - 4.1B Note Purchase Agreement, The Augustine
Fund)
<PAGE>
21. Possible Adverse Effect of Penny Stock Regulations on Liquidity of Common
Stock in any Secondary Market. The Common Stock of the Company presently falls
within the meaning of the term "penny stock" under 17 CAR 240.3a51-1 because
such shares are issued by a small company; are low-priced (under five dollars);
and are not traded on NASDAQ or on a national stock exchange. The Securities and
Exchange Commission has established risk disclosure requirements for
broker-dealers participating in penny stock transactions as part of a system of
disclosure and regulatory oversight for the operation of the penny stock market.
Rule 15g-9 under the Securities Exchange Act of 1934, as amended, obligates a
broker-dealer to satisfy special sales practice requirements, including a
requirement that it make an individualized written suitability determination of
the purchaser and receive the purchaser's written consent prior to the
transaction. Further, the Securities Enforcement Remedies and Penny Stock Reform
Act of 1990 require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure instrument that provides information
about penny stocks and the risks in the penny stock market. Additionally, the
customer must be provided by the broker-dealer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and the
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. For so long as the
Company's Common Stock is considered penny stock, the penny stock regulations
can be expected to have an adverse effect on the liquidity of the Common Stock
in the secondary market.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Discussion and Analysis
The Company was founded in 1997 to provide the construction industry with
an alternative to its mass consumption of wood based materials by supplementing
and enhancing such materials with a resin based coating that can, when bonded to
wood, provide a strengthening characteristic without adding more wood. The
Company has broadened its mission to expand the application of GINSITE(TM) and,
its many derivations, to research, develop and market GINSITE(TM) to the
construction, home improvement, boating and marine markets. Since its inception
the Company has focused primarily on organizational and capital raising
activities. For the period from inception (August 7, 1997) through March 31,
1999, the Company had revenues of $25,136.00 from operations and $5,339,898.00
in cumulative operating expenses. The Company started manufacturing GINSITE(TM)
in May, 1998, following the initial purchase of appropriate mixing and other
equipment and start-up materials. The management of the Company made the
decision to market GINSITE(TM) through a distributorship network in specific
geographic areas within the United States and throughout the world. The Company
has received a large number of inquires regarding GINSITE(TM) which are
presently being followed up on by Company officers. Interest is being received
from organizations from the Pacific Rim region, Eastern and Western Europe,
Canada, Latin America, the Caribbean as well as within the United States from
the West coast to the East coast. However, actual sales have been limited, due
to the newness of the product. Furthermore, due to the Company's operating
history and limited resources, among other factors, there can be no assurance
that profitability or significant revenues on a quarterly or annual basis will
occur in the future. Moreover, the Company expects to continue to incur
<PAGE>
operating losses through at least the third quarter 1999. And there can be no
assurance that losses will not continue after such date.
The Company is currently educating the market about GINSITE(TM) through
persistent dissemination of product information identifying GINSITE(TM)'s
features and benefits. Being under capitalized, the Company has not been able to
launch a major national or even local marketing/advertizing program. Therefore
the Company has decided to promote GINSITE(TM) through a combination of factors,
such as advertising, product reputation, word-of-mouth success stories,
qualified distributors, representatives, the Internet GINSITE(TM) Web-Site and
strategic alliances using other major corporations' marketing network.
The Company is currently producing only GINSITE(TM); however, it is
presently developing many other applications from the base formula which can be
utilized in numerous other commercial situations. [See Part I, Item 1
Description of Business, (b) Business of Issuer, The Construction Market and The
Marine/Boating Market.] The Company expects to introduce other products by the
end of 1999, and expects to continue to invest significant resources in at least
four(4) new products and enhancements by 2000.
Upon obtaining increased market awareness and subsequent sales, the Company
expects to experience a period of growth, which will require it to significantly
increase the scale of its operations. This increase will include the hiring of
additional manufacturing personnel and production equipment which will
contribute to significantly higher operating expenses. The increase in operating
expenses is expected to be partially funded by an increase in revenues. However,
the Company's net loss may continue to increase. Expansion of the Company's
operations may cause a significant strain on the Company's management, financial
and other resources. The Company's ability to manage recent and any possible
future growth, should it occur, will depend upon a significant expansion of its
research and development, accounting and other internal management systems and
the implementation and subsequent improvement of a variety of systems,
procedures and controls. There can be no assurance that significant problems in
these areas will not occur. Any failure to expand these areas and implement and
improve such systems, procedures and controls in an efficient manner at a pace
consistent with the Company's business could have a material adverse affect on
the Company's business, financial condition and results of operations. As a
result of such expected expansion and the anticipated increase in its operating
expenses, as well as the difficulty in forecasting revenue levels, the Company
expects to continue to experience significant fluctuations in its revenues,
costs and gross margins, and therefore its results of operations. (See Part I,
Item 1. "Description of the Business - (b) Business of the Issuers - Risk
Factors - 15. Ability to Grow".)
12 Month Plan of Operations
The Company's plan of operations for the next twelve months is to focus on
building revenue by proceeding with an aggressive establishment of regional
distributors. Furthermore, the Company will continue installing GINSITE(TM) and
GINSITE(TM) based products on a case by case field demonstration basis. The
Company presently has one such demonstration in place on a house in Loxahatchee,
Florida, and is under contract to complete another house in Broward County,
Florida. (See: Part II. Item 15. Additional Exhibits- Material Contracts:
<PAGE>
Florida Model Ginsite Home ) The Company will apply a GINSITE(TM) coat with a
"knock-down stucco" finish, in light peach color. This will be completed by the
end of July and will become a "show place" for GINSITE(TM) in the county.
The company is negotiating a contract to coat three-hundred HUD approved
homes in Stuart, Florida, with GINSITE(TM). In addition, an exclusive Agreement
has been signed to use GINSITE(TM) on newly-designed Styrofoam and steel boats
being constructed in Florida by the ECO MARINE MATERIALS, INC.(See: Part II.
Item 15. Additional Exhibits- Material Contracts: ECO MARINE MATERIALS, INC.
Purchase and Sale Agreement) Furthermore, the Company has in place a license
Agreement with CONCESSION MANAGEMENT OF PALM BEACH, INC., (hereinafter "CMPB")
to actively market and promote the use of GINSITE within the boatlift industry.
In addition, the Company has granted CMPB the ability right to solicit and sell
"sub- distributorships and/or sub-license agreements". (See: Part II. Item 15.
Additional Exhibits-Material Contracts- License Agreements: CONCESSION
MANAGEMENT OF PALM BEACH, INC.")
The Company has signed the following four(4) distributorship agreements:
(1) Fred Roneker Distributor Agreement, who has the limited distribution
territory of Brevard County, Florida.. (See: Part II. Item 15. "Material
Contract:" Distributorship Agreements - Fred Roneker); (2)Marcus Dean Rogozinski
Distributor Agreement, who has the limited distribution territory of Orange
County, Florida.. (See: Part II. Item 15. "Material Contract:" Distributorship
Agreements - Marcus Dean Rogozinski); (3) MJ INNOVATIONS, Jean-A. Medici/Michael
Alderman Distributor Agreement, who have the limited distribution territory of
Quebec State, Canada, Mexico and China. (See: Part II. Item 15. "Material
Contract:" Distributorship Agreements - M J INNOVATIONS, Jean-A. Medici/Michael
Alderman Distributor Agreement); and James F. Powers and Adam G. Hart, Sr.
Distributor Agreement, who have the Exclusive Territory of The State of New
York, New Jersey and New England.(See: Part II. Item 15. "Material Contract:"
Distributorship Agreements - James F. Powers and Adam G. Hart, Sr. Distributor
Agreement) In addition, the Company has completed negotiations to manufacture a
brick facade facsimile made of GINSITE(TM) to encapsulate a thirty-six (36)
floor condominium to be built in Canada with Millennium 3 Concept, Inc. which is
pending the receipt by Millennium of its contract before GSIT can be provided
their contract.
As part of the Company's effort to provide GINSITE(TM) to the marine
industry, candidates for the Distributor Agreement are being contacted to serve
in several areas in the United States. Specifically, the Company is negotiating
a Distributorship Agreement for the West Gulf Coast region to include Texas,
Louisiana, Alabama and Mississippi. In addition, negotiations are underway with
a distributor for the East Gulf Coast which will cover the Florida "panhandle"
and to the West Coast of Florida down to Tampa. GINSITE(TM) can be used on
various seagoing vessels, including, but not limited to the upper decks and
hulls of barges, cargo transports, offshore oil drilling rigs, and pleasure
crafts.
The Company's aim is to become a major subcontractor to the construction
industry through joint venture projects to manufacture and coat with GINSITE(TM)
an OSB board wall panel to be known as the GINSITE(TM) Americana Panel System.
Two OSB boards coated with GINSITE(TM) with a Styrofoam core either four (4")
<PAGE>
inches or six (6") inches thick are currently being tested in order to obtain
the tri-county (Dade, Broward and Palm Beach, Florida) approvals required for
home and/or commercial construction. In addition, two other products are under
way, namely the brick facsimile facade (mold being made) and a barrel roof tile
made out of Styrofoam and coated on all sides with GINSITE(TM).
The core mission of the Company plan is to become a major supplier of end
user products dedicated to the residential and commercial construction market,
marine and other industries interested in the varied applications of
GINSITE(TM). Furthermore, the Company will identify niche markets and strive to
penetrate these markets and, where justified, enter into joint ventures and/or
license agreements to manufacture and distribute GINSITE(TM).
The Company is positioned today to start serving both the construction and
marine industries. Its production facility has in place four (4) mixers which
are prepared to produce Ginsite. The Company has also in place an automated
conveyor packaging system to be delivered when production levels require its
installation. Furthermore, the Company believes additional personnel shall be
required in the form of one(1) quality assurance person; one (1) receiving and
shipping person; two (2) secretaries; and two (2) accounting related persons as
GINSITE(TM) sales increase.
Results of Operations - Full Fiscal Years & 1st Quarters: 3/31/98 - 3/31/99
Revenues
To date, a limited number of customers and one distributor have accounted
for substantially all of the Company's revenues with respect to product sales.
The Company anticipates that the main focus of its selling efforts will be to
focus on the immediate geographic construction, home improvement and marine
markets. For the fiscal year ending December 31, 1997, the Company has not
derived any revenue from sales of GINSITE(TM). The Company was in its research
and development efforts and did not have any product sales in 1997. For fiscal
year ending December 31, 1998, the Company derived approximately 70% of its
revenue from product sales. Product sales amounted to $15,830.00, the remaining
revenue was derived from a distributor's fees in the amount of $6,980.00 by 1998
fiscal year end. (See: PART F/S - Statement of Loss - F-4).
The Company has in place four distributorship agreements as of the close of
the Company's 1998 fiscal year end. [See: Part III. Item 1. Index to Exhibits -
10.1 - Distributorship Agreements] Although the Company is in active
negotiations with various potential distributors there are only four (4)
distributorship agreements in effect at present. However, there are no
assurances that the Company will be able to obtain adequate distribution of its
products through the above distributorship agreements. In addition, most
successful distributors carry an extensive line of products and various of these
products may compete with each other as to function, price or other factors. In
addition, numerous construction and marine product distributors are not
themselves well capitalized and their financial condition may impact their
ability to properly distribute the Company's products.
The Company's ability to achieve revenues in the future will depend in
significant part upon its ability to obtain orders from, maintain relationships
<PAGE>
with and provide support to, existing and new customers, as well as the
condition of its customers. As a result, any cancellation, reduction or delay in
orders by or shipments to any customer or the inability of any customer to
finance its purchases of the Company's products may materially adversely affect
the Company's business, financial condition and results of operations. There can
be no assurance that the Company's revenues will increase in the future. In
addition, the Company expects that the average selling price of a particular
product will also decline as such products mature, and as competition increases
in the future. Accordingly, the Company's ability to maintain or increase
revenues will depend in part upon its ability to increase unit sales volumes of
its products and to introduce and sell new products at prices sufficient to
compensate for reduced revenues resulting from declines in the average selling
price of the Company's more mature products. ( See Part I, Item 1. "Description
of the Business - (b), Business of the Issuers - Risk Factors -15. Ability to
Grow")
If the Company is unable to generate sufficient revenue from operations to
implement its marketing plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings. Depending upon the amount of revenue,
if any, generated by the Company, management anticipates that it will be able to
satisfy its cash requirements for the next approximately two (2) to four (4)
months without raising funds via debt and/or equity financing or from third
party funding sources. Accordingly, management expects that it will be necessary
for GSIT to raise additional funds in the next two (2) months commencing
approximately one (1) month from the date hereof. A management team comprising
of Henry V. Lione and Henry Max, at least initially, will be solely responsible
for marketing and sales of GINSITE(TM). However, at such time, if ever, as
sufficient operating capital becomes available, management expects to employ a
sales manager[s] and additional manufacturing and sales personnel. In addition,
the Company expects to continuously engage in market research in order to
monitor market trends, seasonality factors and other critical information deemed
relevant to GSIT's business through the development of a sophisticated
computerized system.
The Company will operate out of the existing 12,500 square foot
manufacturing and office facility located in Plantation, Florida. The location
is in close proximity to transportation facilities at the Ft.
Lauderdale/Hollywood International Airport and the Ft. Lauderdale Port
Everglades cargo and shipping facilities. In addition, this site is located in
close proximity to Florida's major highway system such as I-95 and the Florida
Turnpike(Ronald Reagan Turnpike.(See: Part I. Item 3. Description of Property;
and Part III. Index to Exhibits - 10.3 - Lease Agreement)
Net Sales
For the year ended December 31, 1997, a discussion regarding net sales and
the cost of sales is not applicable due to the fact that research and
development costs were not able to be offset to any extent since 1997 product
sales were zero. Cumulative net sales for the year ended December 31, 1998 of
$22,810 are comprised of sales of GINSITE(TM) and the partial payment on a
distributorship agreement. Cumulative net sales as of the end of the 1st Quarter
ending March 31, 1999 total $25,136 and are comprised of sales of GINSITE(TM)
and the partial payment on a distributorship agreement. Product sales and
related costs for the year ended December 31, 1998, would again not be
applicable due to the fact that product sales of $25,136 remain de-minimus when
<PAGE>
measured against the research and development cost and other costs related to
the Company's marketing and sales efforts.
In addition, the Company has not established a production history or sales
history due to the fact of its start-up nature and the need to focus on research
and development in addition to promotional activities. As a result, it would not
be meaningful to discuss the possible profit margin that Ginsite can produce for
the Company. Without the benefit of real sales volumes against which a cost of
production can be attributed there can not be a meaningful discussion of a net
sales figure against which a profit margin can be attributed. To attempt to
discuss such would be pure conjecture and would rely on forward looking
estimates of which there may be no assurance.
Nevertheless, the Company has an ongoing program to reduce the costs of
manufacturing its products. As part of this program, the Company has been
attempting to achieve cost reductions principally through engineering and
manufacturing improvements, product economies. The success of these cost
reduction programs will not be known until production volumes are scaled up.
There can be no assurance that the Company's ongoing or future programs can be
accomplished or that they will increase gross profits.
To the extent the Company is unable to reduce its production costs or
introduce new products with higher margins, the Company's results of operations
could be materially adversely affected. The Company's results may also be
affected by a variety of other factors, including mix of products sold;
production, reliability or quality problems; market competition; and warranty
expenses and discounts.
Operating Expenses
Sales and Marketing: These expenses consist of advertising, meetings and
conventions and entertainment related to product exhibitions and the related
travel expenses. Since inception, the Company has spent approximately $ 76,931
on sales and marketing expenses. For the years ended December 31, 1997 and
December 31, 1998, sales and marketing expenses were $ 5,000 and $71,931,
respectively. In 1998, the Company increased its promotional advertising and
hired additional sales and marketing personnel during 1998. The Company has
invested significant resources to expand its sales and marketing effort,
including the hiring of additional personnel and establishing the infrastructure
necessary to support future operations. The Company expects that such expenses
in 1999 will increase in absolute dollars as compared to 1998.
General and Administrative: These expenses consist primarily of the general
and administrative expenses for salaries, contract labor and other expenses for
management and finance and accounting, legal and other professional services
including ongoing expenses as a publicly owned Company related to legal,
accounting and other administrative services and expenses. From inception(August
7, 1997) to March 31, 1999, the Company has spent approximately $1,648,118 on
general and administrative expenses. For the years ended December 31, 1997 and
December 31, 1998, general and administrative expenses were $25,936 and
$717,069, respectively. The increase of $691,133 is due primarily to research
and development expenses, legal and accounting fees associated with the
Company's SEC filings, higher depreciation and amortization and rent for the
Company's headquarters. The Company expects general and administrative expenses
to increase in absolute dollars in 1999 as compared to 1998, as the Company
continues to expand its operations. For the 1st quarter ended March 31, 1998
<PAGE>
and 1st quarter ended March 31, 1999, general and administrative expenses were
$140,667 and $905,113, respectively. The increase of $764,446 is due primarily
to research and development expenses, legal and accounting fees associated with
the Company's SEC filings, higher depreciation and amortization and rent for the
Company's headquarters.(See: PART F/S - Statement of Loss - F-3).
As of March 31, 1999 the Company had total cumulative expenses of
$5,339,898 of which $4,182,094 is attributable to the Company's granting stock
in lieu of cash compensation to its officers and key employees and third
parties. Accordingly, after excluding the Company's grants of stock to the
officers, key employees and third parties, the total adjusted operating expenses
incurred for the three months ended March 31, 1999 are $1,563,530 of the
$5,339,898 total cumulative operating expenses listed above. Furthermore, of the
$1,563,530 total operating expenses, insurance expenses amounted to $62,054;
total property and equipment expenses (less accumulated depreciation) amounted
to $149,895; cumulative lease expenses equaled $182,262; cumulative interest
expense equaled $89,792; and bad debt to a related party amounted to $105,750
for a total of $589,753 or 37.71% of the above adjusted operating expenses.(See:
PART F/S Statement of Loss - F-3).
For 12 month period from January 1, 1998 to December 31, 1998 the Company
reported a net loss from operations of $3,713,765 which includes $2,878,657 in
stock grants to officers and key employees. When the aforementioned stock grants
are subtracted from the Company's net loss in this 12 month period a more
accurate net loss from operations is obtained in the amount of $835,108.(See:
PART F/S - Statement of Loss - F-3).
For the three month period from January 1, 1998 to March 31, 1998, (1st.
Quarter), the Company reported a net loss from operations of $1,834,934 which
includes $1,687,047 in stock grants to officers, key employees and third
parties. When the aforementioned stock grants are subtracted from the Company's
net loss in this 3 month period a more accurate net loss from operations is
obtained in the amount of $147,887 of which $140,667 is related to general and
administrative costs.(See: PART F/S - Statement of Loss - F-3).
For the three month period from January 1, 1999 to March 31, 1999, (1st.
Quarter), the Company reported a net loss from operations of $1,561,204 which
includes $648,171 in stock grants to officers, key employees and third parties.
When the aforementioned stock grants are subtracted from the Company's net loss
in this 3 month period a more accurate net loss from operations is obtained in
the amount of $913,033 of which $905,113 is related to general and
administrative costs. (See: PART F/S - Statement of Loss - F-3).
Research and Development
These expenses consist primarily of costs associated with personnel and
equipment costs and field demonstrations and tests. The Company's research and
development activities include the encapsulating of a house in Loxahatchee,
Florida with a complete GINSITE(TM) coating. The coating of two OSB boards with
a Styrofoam core either four (4") inches or six (6") thick currently being
tested in the tri-county (Dade, Broward and Palm Beach County, Florida) area for
the required approvals for home and/or commercial construction. The
manufacturing of a mold to produce GINSITE(TM) barrel roof tile made out of
Styrofoam and coated on all side with GINSITE(TM) and, the molding of
<PAGE>
GINSITE(TM) into a brick facade. The Company has completed negotiations to
manufacture a GINSITE(TM) brick facade product to encapsulate a thirty-six (36)
floor condominium being built in Canada.
Since inception, the Company has spent approximately $80,512 on research
and development. For the years ended December 31, 1997 and December 31, 1998,
research and development expenses were approximately $50,976 and $29,536,
respectively. During 1997, research and development expenses were significant as
the Company concentrated on GINSITE(TM) applications The Company made
enhancements to GINSITE(TM)n 1998, and the majority of these related costs were
capitalized and will be amortized over a period not to exceed five (5) years.
The Company intends to continue to invest significant resources to continue the
development of new products and expects that research and development expenses
in 1999 will increase in absolute dollars as compared to 1998.
Patent Pending & Trademark Status
Mr. Ginsberg filed an early patent application on July 28, 1995 for
GINSITE(TM) with the U.S. Patent Office. On August 7, 1997, Mr. Ginsberg
formally assigned a certain patent pending originally dated July 28, 1995 and
international rights to Ginsite Materials, Incorporated. The Patent has a
historical cost of $50,976. (See: Part III. Index to Exhibits - 10.9A Assignment
of Patent & Trademark Rights , and 10.9B Patents). A subsequent full patent
application was filed on October 20, 1998. In discussions with the company's
patent attorney, the company has been advised that the final patent approval
should be granted in the year 2000. The issuance of patent protection is not
guaranteed. In the event the Company fails to obtain patent protection for
GINSITE(TM) its operating revenues may be severally impacted by the entrance of
other competitors in the marketplace who may or may not attempt to establish
their own distribution of GINSITE(TM) like products.
Interest and Other Income (Expense), Net
Cumulative interest and other income (expense), net of $87,087, consists
primarily of interest expenses accrued on the direct loan to the Company less
interest income earned from loans to related parties under the assignment of the
patent and trademark rights to GINSITE. (See Part I, Item 2. "Management's
Discussion and Analysis or Results of Operations - Financial Condition, Capital
Resources and Liquidity; Part F/S - Notes to Financial Statements - F-7")
Financial Condition, Capital Resources and Liquidity
As of March 31, 1999, the Company had assets totaling $351,180.00 and
liabilities of $212,136.00. Since the Company's inception, it has accepted
subscriptions in the amount of $1,121,214 in cash as consideration for the
issuance of shares of Common Stock and $254,000 in cash from the issuance of
convertible debt.. (See: PART F/S - Statement of Cash Flows - F-6)
On November 15, 1997, the Company entered into a 10 year Office/Warehouse
Lease Agreement. Total lease expenses for the period ending December 31, 1997
were $7689; 1998 lease expenses were $139,806; 1999 lease expenses will be
$133,866; 2000 lease expense will be $140,560; 2001 lease expense will be
$147,588; 2002 lease expense will be $154,967; the Company has the right at any
<PAGE>
time from the signing of the lease, to purchase 50% of this building for $1.00,
after two (2) years from signing the Office/Warehouse Lease the Company may
acquire the 50% balance remaining for the greater of 1/2 of the appraisal value
less mortgages or $50,000. [See: Part III. Item 1. Index to Exhibits - 10.3 -
Lease Agreement, Steven J. Cooperman, Trustee]
In September, 1997 accepted subscriptions in the amount of $1,000,000.00
from the sale of 3,000,000 shares of common stock in a private placement
conducted pursuant to an exemption from registration contained in sections 3(b)
of the Act and Rule 504 of Regulation D promulgated thereunder. The offering was
made in the State of Florida, Pennsylvania and New York. A Private Placement
Memorandum was used in connection with this offering which was disclosed to each
prospective investor.(See: Part II, Item 4. "Recent Sales of Unregistered
Securities"). In September, 1998, the Company accepted subscriptions in the
amount of $45,000 from the sale of 67,164 shares of common stock in a private
placement to accredited investors conducted pursuant to an exemption from
registration contained in sections 4(2) of the Securities Act of 1933 and Rule
506 of Regulation D promulgated thereunder.(See: Part II, Item 4. "Recent Sales
of Unregistered Securities").
In October 1998 the Company accepted subscriptions in the amount of $4,899
from the sale of 13,998 shares of common stock in a private placement to
accredited investors conducted pursuant to an exemption from registration
contained in sections 3(b) of the Act and Rule 504 of Regulation D promulgated
thereunder. The offering was made in the State of Florida.(See: Part II, Item 4.
"Recent Sales of Unregistered Securities").
In March and April 1999, (prior to April 7, 1999) the Company accepted
subscriptions in the amount of $499,500 from the sale of 3,685,611 shares of
common stock in a private placement to accredited investors conducted pursuant
to an exemption from registration contained in section 3(b) of the Act and Rule
504 of Regulation D promulgated thereunder. The offering was made in the State
of Florida. All of the above subscriptions were fully funded. (See: Part II,
Item 4. "Recent Sales of Unregistered Securities").
The Company has made a series of advances to PTI, a related company under
common control, in the form of unsecured promissory notes. Unpaid amounts,
including any accrued interest, were $89,461 and $76,500 as of March 31, 1999
and December 31, 1998 respectively. Accrued interest at March 31, 1999 and 1998
was $2,705 and $0, respectively.(See Notes to Financial Statement - F7) These
PTI advances are related to the following: (i) on August 7, 1987, the Company
issued a 360 day note( renewable at the option of the note holder for an
additional 360 days) with an annual interest rate of 6.343%, to Murray Ginsberg,
executive officer and director of GSIT, for $50,976.00. Unpaid principal was
$43,058 at March 31, 1999. Accrued interest at March 31, 1999 and December 31,
1998 was $5,125 and $3,949, respectively. (See Notes to Financial Statements -
F7); (ii) as of January 1, 1998, the Company provided personnel services to and
shared certain building expenses with PTI.. The Company is reimbursed for the
costs of these items and records the reimbursements as a reduction of its
operating expenses. Charges were $10,901 and $11,808 for the periods ended March
31, 1999 and 1998 respectively. Unpaid amounts as of March 31, 1999 and December
31, 1998 were $57,597 and $46,696, respectively.(See: Notes to Financial
Statements - F7); (iii) on September 23, 1998, Murray Ginsberg, as President for
PTI, and witnessed by Audrey Max, as Executive Vice President for PTI executed a
Promissory Note to the Company for $45,000 with interest at the rate of 10%,
<PAGE>
payable in 360 days after signing. The note may be extended for an additional
360 days at the option of the holder; (iv) on November 2, 1998,Murray Ginsberg,
as President for Progressive Technology, Inc. (PTI), and witnessed by Audrey
Max, as Executive Vice President for PTI executed a (Limited) Guaranty and
Pledge to the Company in exchange for the Company's extension of credit to PTI.
This (Limited) Guaranty and Pledge contains an interest of not less than 10% per
annum and the notes evidencing this pledge shall not exceed $75,000 in the
aggregate. Murray Ginsberg has pledged and liened GSIT stock belonging to him
and in an amount necessary to satisfy the PTI notes made payable to the Company.
In March 1999, the Company was offered debt financing in the form of
non-interest bearing loans for up to $581,000, to be loaned on an as needed
basis throughout the remainder of 1999. There is no formal written agreement
regarding the repayment of these loans. During April and May, 1999, the Company
received total proceeds of $168,000 drawn against these loans.
On January 2, 1999, the Company, through the mutual consent of a majority
of its shareholders, authorized two amendments to the Article of Incorporation
effective January 2, 1999 to authorize the following: (1) the issuance of up to
50,000,000 shares of common stock and, (2) up to 10,000,000 shares of Preferred
Stock (See Part I, Item 4. "Security Ownership of Certain Beneficial Owners and
Management" and Part I, Item 7. "Certain Relationships and Related
Transactions.")
The Company has no potential capital resources from any outside sources at
the current time. The Company believes that it will require nine (9) to
twelve(12) months in order to determine the market demand, distributorship and
licensing potential for GINSITE(TM).
The ability of the Company to continue as a going concern is dependent upon
increasing revenues from the sale of GINSITE(TM) and obtaining additional
capital and financing. The Company believes that in order to be able to expand
its initial operations, it must increase sales of GINSITE(TM) substantially and
when financially feasible hire an experienced sales manager[s].
Net Operating Losses
The Company
The Company has net operating loss carry-forwards of $802,745 which expire
in the year beginning December 31, 2117. The company has deferred tax assets,
cumulative as of December 31, 1998 of $157,940 resulting from the loss
carry-forwards, for which it has established a valuation allowance of $164,254,
as the Company has no history of profitable operations. Until the Company's
current operations begin to produce earnings, it unclear as to the ability of
the Company to utilize such carry-forwards.
Year 2000 Compliance
The Company is currently in the process of evaluating its information
technology for Year 2000 compliance. The Company does not expect that the cost
to modify its information technology infrastructure to be Year 2000 compliant
will be material to its financial condition or results of operations. The
Company does not anticipate any material disruption in its operations as a
result of any failure by the Company to be in compliance.
<PAGE>
Item 3. Description of Property:
The Company's manufacturing facility and executive offices are located at
6781 W. Sunrise Blvd., Plantation, Florida 33313. Its telephone number is (954)
321-9616 and its facsimile number is (954) 321-9667.
On November 15, 1997, the Company entered into a 10 year Office/Warehouse
Lease Agreement. Total lease expenses for the period ending December 31, 1997
were $7689; 1998 lease expenses were $139,806; 1999 lease expenses will be
$133,866; 2000 lease expense will be $140,560; 2001 lease expense will be
$147,588; 2002 lease expense will be $154,967; the Company has the right at any
time from the signing of the lease, to purchase 50% of this building for $1.00,
after two (2) years from signing the Office/Warehouse Lease the Company may
acquire the 50% balance remaining for the greater of 1/2 of the appraisal value
less mortgages or $50,000. [See: Part III. Item 1. Index to Exhibits - 10.3 -
Lease Agreement, Steven J. Cooperman, Trustee]
The Company owns no real property and its personal property consists of
manufacturing equipment, telephone systems, office furniture, computer system,
prototype molds and deposits on property and equipment valued at $185,174 on
March 31, 1999. In addition, the Company has on hand inventories and raw
materials totaling $20,557 as of march 31, 1999.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information as of May 31, 1999 regarding the
ownership of the Company's stock
<TABLE>
<CAPTION>
(1)
Name of Title of Amount & Nature Percent of
Beneficial Owner Class of Beneficial Owner Class
- ------------------------------------------------------------
<S> <C> <C> <C>
Murray Ginsberg Common 10,517,750 50.82
Audrey Max Common 764,875 3.70
Henry V. Lione Common 475,000 2.30
Eugene Ladin Common 250,000 1.21
S. Barry Grieper Common 439,875 2.13
Henry Max Common 100,000 0.48
========== ======
All Officers and Directors 12,547,500 60.63
as group(six (6) persons)
- ---------------------
</TABLE>
(1) Based on 20,695,273 shares issued and outstanding as of May 31, 1999.
<PAGE>
There are no arrangements which may result in the change of control of the
Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
As of March 31, 1999 the following are the names, ages, positions, with the
Company and experiences of the executive officers and directors of the company.
Mr. Grieper resigned as a director as of March 1999, and the Company Controller
as of December 31, 1998.
<TABLE>
<CAPTION>
Name Age Position(s) with Company
<S> <C> <C>
Murray Ginsberg 73 Chairman, President & Director
Audrey Max 56 Executive Vice President, CEO & Director
Henry V. Lione 70 Vice President, Secretary/Treasurer & Director
Eugene Ladin 71 Vice President & CFO & Director
Henry Max 60 Vice President & COO & Director
</TABLE>
All directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Directors. The officers and directors will
devote such time and effort to the business and affairs of the Company as may be
necessary. Except for the above officers, there are no other persons whose
activities will be material to the operation of the Company. Concerning family
relationships, the only family relationship that exists among the executive
officers and directors of the Company is that of Henry Max and Audrey Max who
are husband and wife.
Murray Ginsberg has served as President, Chairman , and a Director of the
Company since its inception on August 7, 1997. Prior to the formation of the
Company, Mr. Ginsberg has designed and developed numerous laboratory and
clinical instrumentation devices for various physicians and investigators which
resulted in more than $80 million into the South Florida economy. His list of
credentials include: the invention and design of instrumentation for the
University of Miami, School of Medicine, and Tissue Banks used for research
throughout the United States. Prior to joining the University of Miami as a
Department Chairperson, Mr. Ginsberg was a missile systems engineer working for
the Belock Instruments Company in New York where he worked on Hawk surface
- -to-air missiles and the Atlas missile for the United States Defense Department.
Mr. Ginsberg was presented with the challenge of providing a material to enhance
low cost housing around the globe hence the development of the product
GINSITE(TM). He hold a Masters Degree in Mechanical Engineering from Pratt
Institute in the York City and is a Navy Veteran.
Audrey Max, Executive Vice President, CEO and Director has been an officer
and Director since the inception of the company on August 7, 1997. Mrs. Max
holds a Bachelor of Science Degree from Boston University and an Associate
Degree for Business Administration from Miami Dade Community College. For over
fifteen years, Mrs. Max has had extensive experience holding positions in both
college and university administration specifically as a professional Staff
Associate at the University of Miami, School of Medicine. Her experiences
includes expertise in financial management and accountability of a multi-million
dollar department. Mrs. Max provides the Company with a sound foundation in
<PAGE>
managerial and financial administration. Audrey Max is the spouse of Henry Max.
Henry V. Lione, Vice President, Secretary/Treasurer and Director has been
with the company since October 1997. Mr. Lione graduated from New York
University holding a bachelor Degree as well as a Masters Degree. Mr. Lione
brings to the Company over thirty years of experience in establishing and
directing development foundations, including two national health foundations,
private corporations, in addition to officer level positions with hospitals and
the University of Miami, School of Medicine. Such experience has earned him
recognition as one of the country's finest management/business consultants. He
holds such prestigious awards as the Harold J. (Si) Seymore National Honors
Award, the MacEachern Public Relations Award, the University of Miami School of
Medicine Dean's Award. Mr. Lione has specifically served as the Executive
Director of the Pacific Medical Foundation, President and founder of the Advent
Corporation, the President of the Good Samaritan Hospital Foundation, National
Director of the Cystic Fibrosis Foundation and as Assistant Vice President of
the School of Medicine at the University of Medicine raising more than $517
million and is a veteran of the United States Army.
Eugene Ladin: Vice President & Chief Financial Officer and Director , has
held this position since June, 1998. Mr. Ladin has a diversified background in
financial and management endeavors. In the United States Air Force Mr. Ladin
audited defense contracts and negotiated such contracts with the airline and
contractors achieving the rank of Captain until his Honorable Discharge in
November, 1960. Prior experience was with the Rand Corporation performing
research in financial management. In addition he has served as Chief Financial
officer for medium and large corporations such as the Landis & Gyr, Inc.,
headquartered in New York and Switzerland; the Puerto Rico Telephone Company &
Telephone Authority; Director of Financial Planning for COMSAT Corporation,
Washington D.C. Mr. Ladin holds an undergraduate degree form Pace University,
New York City and a Masters Degree from the Air University, Air Force Institute
of Technology, Graduate School of Business Administration, Post Graduate Work
from George Washington University's Graduate School of Business. His past
experience includes teaching accounting, controller ship, management and
Investment Security Analysis both at the Graduate and Undergraduate educational
levels.
Henry Max: Vice President & COO and Director, has been with the company
since May 1998. Mr. Max holds a Bachelor Degree from Bryant College, Providence,
Rhode Island in Business Administration. In addition Mr. Max holds a degree from
Boston University in Marketing. Mr. Max has more than twenty years of experience
in the field of marketing and corporate development with emphasis on the
communications field. Mr. Max has served as Vice President of Icannect, an
Internet service provider where he was involved in establishing the company by
initiating methods to attract new nation-wide customers to a new start-up
company. Prior to this position, Mr. Max was Vice President of Teltec Saving
Communications Company, a long distance telephone company at which he launched a
nation-wide marketing program to attract new clients. In addition, he served as
President and CEO of Worldwide Communications, Inc., an agent for resellers of
low cost long distance telephone service. Henry Max is the spouse of Audrey Max.
<PAGE>
Item 6. Executive Compensation.
Executive Compensation
<TABLE>
<CAPTION>
Name and Post Year Salary #144 Stock Grants Total
- ------------- ---- ----- Shares $ Compensation
------------------------ ------------
<S> <C> <C> <C> <C> <C>
Murray Ginsberg 1999 $52,000 500,000 $281,250.00 $333,250.00
Chairman/President 1998 $52,000 100,000 $256,000.00 $316,167.00
1997 7,917,750*
thru 4/99 8,517,750
Audrey Max 1999 $36,400 225,000 $126,562.00 $162,962.00
Exec. V.P./C.E.O. 1998 $36,400 100,000 $256,000.00 $292,839.00
1997 439,875 $ 439.00 $ 439.88
thru 4/99 764,875
Eugene Ladin 1999 $38,500 $ 38,500.00
V.P./ C.F.O. 1998 $38,500 250,000 $474,438.00 $512,938.00
1997 N/A N/A N/A N/A
thru 4/99 250,000
Henry V. Lione 1999 $ 0 225,000 $126,562.50 $126,562.50
V.P./Secretary & 1998 $ 0 250,000 $626,562.00 $626,562.00
Treasurer 1997 $ 0
thru 4/99 475,000
Barry S. Grieper 1999 $ 0 $ 0 $ 0
Controller 1998 $36,400 $ 0 $ 36,400.00
1997 439,875 $ 439.00 $ 439.88
thru 4/99 439,875
Henry Max 1999 $36,400 $ 36,400.00
V.P./Marketing 1998 $36,400 100,000 $ 12,500.00 $ 48,900.00
1997
thru 4/99 100,000
</TABLE>
* Mr. Ginsberg received 7,917,750 shares of restricted common stock as
consideration for the full assignment of GINSITE(TM) to the Company; therefore,
these shares are not reflected as compensation in 1997.
The Company has agreed that the salary of its Chairman/President will be
pursuant to a long-term employment contract. This contract provides for a
minimum amount base salary, to be paid when the Company's financial situation
warrants such payment, and to be increased each year as the Board of Directors
may grant to be determined as a function of the Company's performance. The Board
of Directors has set Mr. Ginsberg's base salary at $250,000, to be paid when the
Company's financial situation warrants such payment, and is in recognition of
Mr. Ginsberg's outstanding contribution to the Company, as well as his
compensation in line with that of Chairman/President's of other comparable
<PAGE>
companies. As a result of the financial position of the company, currently Mr.
Ginsberg in fact is receiving $52,000 per annum.
Base salaries for executive officers other than Mr. Ginsberg has been set
at competitive levels in consultation with the Board, giving due consideration
to individual performance and time in position. It has been the Company
philosophy that shareholder's interests are best served by encouraging
executives to have ownership interests in the company. To that end, the Company
through its board and Chairman granted stock ownership to its executives based
on individual executive performance and contribution in achieving the Company's
objectives and profitability. Base salaries for the executive positions are as
follows when the Company is in a financial position to award such salaries:
Audrey Max, Executive Vice President & CEO: $125,000, in fact is receiving:
$36,400 per annum; Mr. Henry V. Lione, Vice President, Secretary/Treasurer
$125,000. Mr. Lione has not accepted any salary to date.; Mr. Eugene Ladin Vice
President & CFO $125,000, in fact is receiving $36,500 per annum; Henry Max,
Vice President & COO $100,000, in fact is receiving $36,400 per annum. The
Company does not provide officers with a pension plan or key man insurance
except Mr. Ginsberg. Long term incentives, key man insurance, etc. will be
implemented when the Company is in a financial position to offer such benefits.
Item 7. Certain Relationships and Related Transactions.
On September 10, 1997, at inception, the Company issued 7,917,750 shares of
common stock, restricted under Rule 144, to Mr. Ginsberg, the Company's
Chairman, President and Director, in consideration for the assignment of the
full rights to GINSITE(TM). On March 2, 1998, 100,000 shares of common stock
restricted under Rule 144 were issued to Mr. Ginsberg for services rendered. In
March 1999, a total of 500,000 shares of common stock restricted under Rule 144
were issued to Mr. Ginsberg for services rendered, and in May 1999, a total of
2,000,000 shares of common stock restricted under Rule 144 were issued to Mr.
Ginsberg for services rendered. His total shareholdings to date equal 10,517,750
and beneficial owner of approximately 50.82% of the Company's outstanding common
stock.
On September 10, 1997, the Company issued 439,875 shares of common stock
restricted under Rule 144 to Audrey Max, Executive Vice President, CEO, Director
and record, in consideration and exchange therefore for services in connection
with the organization preformed by her for the Company. In April 1998, a total
of 100,000 shares of common stock restricted under Rule 144 and in March 1999, a
total of 225,000 shares of common stock restricted under Rule 144 were issued to
Ms. Max for services rendered bringing her total shareholdings to 764,875 and
beneficial owner of approximately 3.70% of the Company's outstanding common
stock **
On September 10, 1997, the Company issued a total of 439,875 shares of
common stock restricted under Rule 144 to S. Barry Grieper, former Controller
and Director and beneficial owner of approximately 2.13% of the Company's
outstanding common stock, in consideration and exchange for services in
connection with the organization performed by him for the Company at the time of
the initial private placement.
On March 2, 1998 the Company issued a total of 200,000 shares of common
stock and on April 21, 1998, a total of 50,000 shares of common stock restricted
under Rule 144 to Henry V. Lione, Vice President & Secretary/Treasurer and a
Director, in consideration and exchange for services performed by him for the
<PAGE>
Company. In March 1999 the Company issued a total of 225,000 shares of common
stock restricted under Rule 144 in consideration and exchange for services
performed by Mr. Lione for the Company bringing his total shareholdings to
475,000 and beneficial owner of approximately 2.30% of the Company's outstanding
common stock
On July 22, 1998 the Company issued a total of 200,000 shares of common
stock restricted under Rule 144 and on October 13, 1998, a total of 50,000
shares of common stock restricted under Rule 144 to Eugene Ladin, Vice President
& CFO and a Director and beneficial owner of approximately 1.21% of the
Company's outstanding common stock in consideration and exchange for services
performed by him for the Company.
On February 8, 1999, the Company issued a total of 100,000 shares of common
stock restricted under Rule 144 to Henry Max, Vice President & Director of
Marketing, and a Director and beneficial owner of approximately .48% of the
Company's outstanding common stock in consideration of services performed by him
for the Company. **
**Audrey Max and Henry Max are husband and wife and as such together their total
shareholdings amount to 864,875 shares of common stock and beneficial owners of
approximately 4.18% of the Company's outstanding common stock.
Any stock issued and to be issued by the Company to its executive staff/
directors has been and will be in accordance with authorized personnel practices
and pursuant to 4(2) and/or Rule 506 of Regulation D of the Securities Act of
1933.
Item 8. Description of Securities.
The Company's authorized stock when incorporated on August 7, 1997,
consisted of common stock in the amount of 17,250,000 with a par value of $0.001
per share. On January 2, 1999, the Company increased the number of authorized
common shares, $0.001 par value, from17,250,000 to 50,000,000 shares.(See: Part
II. Item 15. "Additional Exhibits - 3(i)2 Articles of Amendment to Articles of
Incorporation") In addition, the Company concurrently authorized the issuance of
10,000,000 shares of preferred stock with no determined par value as needed in
the future. As of May 31, 1999, the Company has 20,695,273 shares of common
stock outstanding.
Description of Common Stock
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as fully
paid and non-assessable shares. Cumulative voting in the election of directors
is not permitted; which means that the holders of a majority of the issued and
outstanding shares of Common Stock represented at any meeting at which a quorum
is present will be able to elect the entire Board of Directors if they so choose
and, in such event, the holders of the remaining shares of Common Stock will not
be able to elect any director. In the event of liquidation of the Company, each
shareholder is entitled to receive a proportionate share of the Company's assets
available for distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any, to be distributed to
<PAGE>
holders of any Preferred Stock. All shares of the Company's Common Stock issued
and outstanding are fully-paid and non-assessable.
Dividend Policy
Holders of shares of Common Stock are entitled to share pro rata in
dividends and distribution with respect to the Common Stock when, as and if
declared by the Board of Directors out of funds legally available therefore,
after requirements with respect to preferential dividends on, and other matters
relating to, the Preferred Stock, if any, have been met. The Company has not
paid any dividends on its Common Stock to date and intends to retain earnings,
if any, to finance the development and expansion of its business. Future
dividend policy is subject to the discretion of the Board of Directors and will
depend upon a number of factors, including future earnings, capital requirements
and the financial condition of the Company.
Rights of Dissenting Shareholders
In accordance with Florida Statute Section 607.1103, the Company intends to
provide its shareholders with any plan or merger, and as soon as available, all
audited financial statements, concerning a target company and its business prior
to any merger or acquisition. Dissenters have rights as defined and set forth in
Florida Statue Sections 607.1301, 607.1302, the procedure of which is set forth
in Florida Section 607.1320. Essentially such statutes provide that a dissenting
shareholder has the right to receive payment of the fair market value of his
shares.
Preliminary Merger Discussions
The Company's officers and directors are constantly pursuing additional
business opportunities in the form of mergers, acquisitions and joint-ventures.
To date none of the efforts by the Company have resulted in any final conclusive
agreements with respect to such efforts. However, on June 30, 1999, the Company
announced that it is presently engaged in preliminary discussions with Envirocon
Corporation, a Denver- based construction industry supplier, to merge
operations. The preliminary agreement is subject to due diligence by both
parties. The terms of the potential merger have not been finalized at this time.
Transfer Agent
The Transfer Agent and Registrar for the Company's Common Stock is Florida
Atlantic Stock Transfer which is located at 5701 North Pine Island Road, Suite
310B, Tamarac, Florida 33321.
Certain Provisions of Florida Law
Section 607.0902 of the Florida Business Corporation Act prohibits the
voting of shares in a publicly-held Florida Corporation that are acquired in a
"control share acquisition" unless the holders of a majority of the
corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition or
unless the corporation's articles of incorporation or bylaws specifically state
that this section does not apply. A "control share acquisition" is defined as an
acquisition that immediately thereafter entitles the acquiring party to vote in
the election of directors within each of the following ranges of voting power:
<PAGE>
(I) one-fifth or more, but less that one-third of such voting power: (ii)
one-third or more, but less than a majority of such voting power; and (iii) more
than a majority of such voting power.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
Since the Company's inception it has not declared nor paid any stock or
cash dividends to its shareholders. The price of the Company stock has ranged
from a high of $5 35/64 to a low of 13/64th. First Equity Group participated in
a public relations program disseminating information on the Company and its
product, GINSITE(TM). This created the initial market.
The first annual shareholders meeting was held October 15, 1998 at the
Company Corporate Headquarters, Plantation, Florida, to which all registered
shareholders were invited. The Company has specific plans to initiate a major
public relations program to create an interest in and to enhance the new product
GINSITE(TM).
Market Information The Company's Common Stock has been quoted for trades on
the over-the-counter/bulletin board (OTC/BB) market since January 2, 1998, and,
since January 2, 1998, has been quoted on the OTC/Bulletin Board System under
the symbol "GSIT". The following table sets forth the high and low closing sales
prices for the Common Stock for each quarterly period within the Company's two
most recent fiscal years on the National Market System..
<TABLE>
<S> <C> <C>
1999 HIGH LOW
- ------- ------- -----
Quarter ended December 1998 2 3/8 1 13/32
March 31, 1999 1 61/64 13/64
June 30, 1999
September 30, 1999
1998 HIGH LOW
- ------ ---- ---
Quarter ended December 31, 1997 N/A N/A
March 31, 1998 5 35/64 13/64
June 30, 1998 5 3/8 3 15/16
September 30, 1998 4 3/4 1 1/8
1997 HIGH LOW
- ----- ---- ---
Inception to September 30, 1997 N/A N/A
</TABLE>
Holders of Common Stock As of March 31, 1999 there were approximately 44
holders of record of the Company's Common Stock.
<PAGE>
Dividends The Company has never paid cash dividends on its Common Stock,
and does not anticipate paying cash dividends in the foreseeable future. Any
future determination as to the payment of cash dividends will be dependent upon
the Company's financial condition and results of operations and other factors
then deemed relevant by the Board of Directors.
Item 2. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgements against the Company.
Item 3. Changes In and Disagreements with Accountants.
The Certified Public Accountants, Durland and Company, CPA's, P.A. 340
Royal Palm Way, Suite 204 Palm Beach, Florida 33480, performed an audit as of
December 31, 1997, and prepared non- audited financial statements as of March
31, 1999. Durland and Company continue to be the Company's accountants through
the date hereof and there is no disagreement on accounting and financial
disclosure between Durland and Company and the Company.
Item 4. Recent Sales of Unregistered Securities.
In August, 1997, the Company issued 200,000 shares of common stock pursuant
to Section 4(2) of the Act for the sum of $1,500 to First Equity Group, Inc. for
services to be rendered . The facts relied upon by the Company for such
exemption are (i) the issuance of the shares did not involve a public offering
and (ii) the purchaser is an accredited investor and had full access to the
information regarding the Company necessary to make an informed investment
decision. The offering was made to a Florida corporation in the State of
Florida.
In September, 1997, the Company accepted subscriptions in the amount of
$1,000,000 from the sale of 3,000,000 shares of common stock , $0.001 par value
per share (in units consisting of 14 warrants for each share of common stock,
each warrant convertible at $.35 per share into one(1) share of common stock on
or before November 30, 1998) in a private placement conducted pursuant to an
exemption from registration contained in sections 3(b) of the Act and Rule 504
of Regulation D promulgated thereunder. The offering was made to Florida
residents in the State of Florida. These warrants were exercised and fully
funded.
On November 7, 1997, the Company issued 7,917,750 shares of common stock to
Murray Ginsberg in exchange for the assignment of the full patent rights to
GINSITE(TM) valued at par; (ii) on November 7, 1997 the Company issued 439,875
shares of common stock to Barry Grieper in exchange for services valued at par;
(iii) on November 7, 1997 the Company issued 439,875 shares of common stock to
Audrey Max in exchange for services valued at par; and (iv) on November 7, 1997
the Company issued 50,000 shares of common stock to Gary Blume, Esq., its legal
advisor valued at par. The Company relied upon an exemption under Section 4(2)
of the Act and Rule 506 of Regulation D promulgated thereunder. Such reliance
was based upon the fact that (i) the issuance of the shares did not involve a
public offering and (ii) each of the parties is an accredited investor and had
full access to the information regarding the Company necessary to make an
informed investment decision by virtue of his or her position as an officer and
director of the Company and/or as a party related to an officer or director. The
<PAGE>
offering was made to Florida residents in the State of Florida. (See Part I,
Item 6. "Executive Compensation)
In December, 1997, the Company issued 30,000 shares of common stock to
Howard J. Voren and Kathleen M. Voren in exchange for services valued at $300.
The Company relied upon an exemption under Section 4(2) of the Act and Rule 506
of Regulation D promulgated thereunder. Such reliance was based upon the fact
that (i) the issuance of the shares did not involve a public offering and (ii)
each of the parties is an accredited investor and had full access to the
information regarding the Company necessary to make an informed investment
decision. The offering was made to Florida residents in the State of Florida.
In January, 1998, the Company issued 125,000 shares of common stock to
Marco D'alanzo in exchange for services valued at $13,672; (ii) in January,
1998, the Company issued 125,000 shares of common stock to Douglas Baker in
exchange for services valued at $13,750.00; and, (iii) in January 1998 the
Company issued 125,000 shares of common stock to Joseph M. Vazquez, III for
services rendered valued at $13,750.00; (iv) in January 1998 the Company issued
125,000 shares of common stock to Suzanne Davis for services valued at
$13,750.00. The Company relied upon an exemption under Section 4(2) of the Act
and Rule 506 of Regulation D promulgated thereunder. Such reliance was based
upon the fact that (i) the issuance of the shares did not involve a public
offering and (ii) each of the parties is an accredited investor and had full
access to the information regarding the Company necessary to make an informed
investment decision. The offering was made to Florida residents in the State of
Florida.
In March, 1998, the Company issued 200,000 shares of common stock to Henry
V. Lione for services rendered valued at $498,438; (ii) in April, 1998, the
Company issued 25,000 shares of common stock to Albert Medina for services
rendered valued at $68,164; (iii) in April, 1998, the Company issued 100,000
shares of common stock to Frederick B. Carroll for services rendered valued at
$272,656; (iv) in April, 1998, the Company issued 200,000 shares of common stock
to Harvey J. Berse for services rendered valued at $545,312; (v) in April, 1998,
the Company issued 100,000 shares of common stock to Igor Vasershteyn for
services rendered valued at $272,656; (vi) in April, 1998, the Company issued
50,000 shares of common stock to Henry V. Lione for services rendered valued at
$128,125; (vii) in April, 1998, the Company issued 100,000 shares of common
stock to Audrey Max for services rendered valued at $256,250; (viii) in April,
1998, the Company issued 100,000 shares of common stock to Murray Ginsberg for
services rendered valued at $256,250; and, (ix) in July and October, 1998, the
Company issued 250,000 shares respectively of common stock to Eugene Ladin for
services rendered for a total value of $473,438.00. The Company relied upon the
exemption under Section 4(2) of the Act and Rule 506 of Regulation D promulgated
thereunder. Such reliance was based upon the fact that (i) the issuance of the
shares did not involve a public offering and (ii) each of the parties is an
accredited investor and had full access to the information regarding the Company
necessary to make an informed investment decision by virtue of his or her
position as an employee, officer and/or director of the Company and/or as a
party related to an officer or director. The offering was made to Florida
residents in the State of Florida.
In September 1998, the Company issued 44,776 shares of common stock to
James Weintraub for services rendered valued at $29,999.90; (ii) in September
1998, the Company issued 14,925 shares of the Company's common stock to
Greenwolf Investments for services rendered valued at $9,999.90; and (iii) in
September 1998, the Company issued 7,463 shares of common stock to Greenwolf
<PAGE>
Investments for services rendered valued at $5,000.20. The Company relied upon
the exemption under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated thereunder. Such reliance was based upon the fact that (i) the
issuance of the shares did not involve a public offering and (ii) each of the
parties are accredited investors and had full access to the information
regarding the Company necessary to make an informed investment decision. The
offering was made to Florida residents in the State of Florida.
In November 1998, the Company accepted subscriptions in the amount of
$4,899 for the sale of 13,998 shares of common stock in a private placement
conducted pursuant to an exemption from registration contained in sections 3(b)
of the Act and Rule 504 of Regulation D promulgated thereunder. The offering was
made to Florida residents in the State of Florida.
In February, 1999, the Company issued 1,000 shares of common stock to Jan
Michael Morris for services rendered valued at $1,766; (ii) in February, 1999,
the Company issued 100,000 shares of common stock to Henry Max for services to
be rendered valued at $157,812; (iii) in March, 1999, the Company issued 500,000
shares of common stock to Murray Ginsberg for services to be rendered valued at
$207,031; (iv) in March, 1999, the Company issued 225,000 shares of common stock
to Audrey Max for services to be rendered valued at $93,164; (v) in March, 1999,
the Company issued 225,000 shares of common stock to Henry V. Lione for services
to be rendered valued at $93,164; (vi) in March, 1999, the Company issued 75,000
shares of common stock to Albert Medina for services to be rendered valued at
$19,500; (vii) in March, 1999, the Company issued 100,000 shares of common stock
to Keith D. Foutz for services rendered valued at $26,000. The Company relied
upon the exemption under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated thereunder. Such reliance was based upon the fact that (i) the
issuance of the shares did not involve a public offering and (ii) each of the
parties is an accredited investor and had full access to the information
regarding the Company necessary to make an informed investment decision by
virtue of his or her position as an employee, officer and/or director of the
Company and/or as a party related to an officer or director.
On March 31, 1999, the Company executed a Note Purchase Agreement payable
to The Augustine Fund,, in the principal amount of $254,000.00, plus interest
thereon at the rate of 9% per annum, and convertible into the common stock of
the Company. The Company satisfied the Note Purchase Agreement in full by
issuing 1,035,611 shares of common stock in accordance with the terms of the
Note. The Note Purchase Agreement was executed pursuant to an exemption from
registration contained in sections 3(b) of the Act and Rule 504 of Regulation D
promulgated thereunder. The offering was made to Florida Residents in the State
of Florida.
In March, 1999, the Company issued 250,000 shares of common stock to
Monetary Advancement International, Inc., as consideration for services to be
rendered valued at $422,500. In June, 1999, by mutual consent of the parties,
150,000 shares of the aforementioned stock was canceled due to the lack of
performance of the consulting agreement with the Company. Monetary Advancement
International, Inc. retained 100,000 shares of the common stock valued at
$168,750. The Company relied upon the exemption from registration contained in
sections 3(b) of the Act and Rule 504 of Regulation D promulgated thereunder.
The offering was made to a New York corporation in the State of New York.
In April, 1999, the Company accepted subscriptions, in the amount of
$76,250, from the sale of 2,550,000 shares of the Company's common stock to the
following parties: (i) Donald F. Mintmire subscribed to 50,000 shares of common
<PAGE>
stock for $1,250; (ii) Joseph M. Vazquez, III subscribed to 750,000 shares of
common stock for $22,500; (iii) Dan Campbell subscribed to 750,000 shares of
common stock for $22,500; (iv) Infinity Financial Group subscribed to 1,000,000
shares of common stock for $30,000. The Company relied upon an exemption from
registration contained in sections 3(b) of the Act and Rule 504 of Regulation D
promulgated thereunder. The offering was made to Florida residents in the State
of Florida.
In May, 1999, the Company issued 2,000,000 shares of common stock to Murray
Ginsberg for services to be rendered valued at $531,250. The Company relied upon
the exemption under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated thereunder. Such reliance was based upon the fact that (i) the
issuance of the shares did not involve a public offering and (ii) each of the
parties is an accredited investor and had full access to the information
regarding the Company necessary to make an informed investment decision by
virtue of his or her position as an officer and/or director of the Company. The
offering was made to a Florida resident in the State of Florida.
The facts relied upon the by the Company to make the federal exemption
available exemption under Section 3(b) of the Act and Rule 504 of Regulation D
promulgated thereunder include the following: (i) the aggregate offering price
for the offering of the shares of common stock (with attached warrants) did not
exceed $1,000,000, less the aggregate offering price for all securities sold
within the twelve months before the start of and during the offering of the
shares in reliance on any exemption under Section 3(b); (ii) no general
solicitation or advertising was conducted by the Company in connection with the
offering of any of the shares; (iii) the fact that the Company has not been
since its inception (a) subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended; (b) an "investment
Company" within the meaning of the Investment Company Act of 1940, as amended;
or (c) a development stage Company that either has no specific business plan or
purpose or has indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies, or other entity or
person; and, (iv) the required number of manually executed originals and true
copies of Form D were filed.
The facts relied upon to make the New York Exemption available include the
following: (i) the aggregate number of persons purchasing the Company's stock
during the 12 month period ending on the date of issuance did not exceed 40;
(ii) neither the offer nor the sale of any of the shares was accomplished by a
public solicitation or advertisement; (iii) that at the time of filing no
offering had yet been made to any resident of the State of New York, (iv) that
the offering is to be made to personal friends, relatives and business
associates and other principals of the issuer, (v) that these common shares have
been issued or sold in reliance of Section 359-f(2) of the New York General
Business Law, (vi) each purchaser executed a statement to the effect that the
securities purchased have been purchased for their own account; (vii) that they
have adequate means of providing for their current needs and possible personal
contingencies; and (viii) they do not have a need for liquidity of this
investment.
The facts relied upon to make the Florida exemption available include the
following: (i) sales of the shares of Common Stock were not made to more than 35
persons; (ii) neither the offer nor the sale of any of the shares was
accomplished by the publication of any advertisement; (iii) all purchasers
either had a preexisting personal or business relationship with one or more of
the executive officers of GSIT or, by reason of their business or financial
experience, could be reasonably assumed to have the capacity to protect their
own interests in connection with the transaction; (iv) each purchaser
represented that he was purchasing for his own account and not with a view to or
for sale in connection with any distribution of the shares; and (v) prior to
<PAGE>
sale, each purchaser had reasonable access to or was furnished all material
books and records of the Company, all material contracts and documents relating
to the proposed transaction, and had an opportunity to question the executive
officers of the Company. Pursuant to Rule 3E-500.005, in offerings made under
Section 517.061(11) of the Florida Statutes, an offering memorandum is not
required; however each purchaser (or his representative) must be provided with
or given reasonable access to full and fair disclosure of material information.
An issuer is deemed to be satisfied if such purchaser or his representative has
been given access to all material books and records of the issuer; all material
contracts and documents relating to the proposed transaction; and an opportunity
to question the appropriate executive officer. In this regard, the Company's
Executives supplied such information and was available for such questioning.
Item 5. Indemnification of Directors and Officers.
Article XVI of the Company's Articles of Incorporation contains provision
providing for the indemnification of directors and officers of the Company as
follows:
The Corporation shall indemnify a director or officer of the Corporation
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the director or officer was a party because the director or
officer is or was a director or officer of the Corporation against reasonable
attorney fees and expenses incurred by the director or officer in connection
with the proceedings. The Corporation may indemnify an individual made a party
to a proceeding because the individual is or was a director, officer, employee
or agent of the corporation against liability if authorized in the specific case
after determination, in the manner required by the Board of Directors, that
indemnification of the director, officer, employee or agent, as the case may be,
is permissible in the circumstances because the director, officer, employee or
agent has met the standard of conduct set forth by the board of Directors. The
indemnification and advancement of attorney fees and expenses for directors,
officers, employees and agents of the Corporation shall apply when such persons
are serving at the Corporation's request while a director, officer, employee or
agent of the Corporation, as the case may be, as a director, officer, partner,
trustee, employee or agent of another foreign or domestic Corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
whether or not for profit, as well as in their official capacity with the
Corporation. The Corporation may also pay for or reimburse the reasonable
attorney fees and expenses incurred by a director, officer, employee or agent of
the Corporation who is a party to a proceeding in advance of final disposition
of the proceeding. The Corporation also may purchase and maintain insurance on
behalf of an individual arising from the individual's status as a director,
officer, employee or agent of the Corporation, whether or not the Corporation
would have power to indemnify the individual against the same liability under
the law. All references in these Articles of Incorporation are deemed to include
any amendment or successor thereto. Nothing contained in these Articles of
Incorporation shall limit or preclude the exercise of any right relating to
indemnification or advance of attorney fees and expenses to any person who is or
was a director, officer, employee or agent of the Corporation or the ability of
the Corporation otherwise to indemnify or advance expenses to any such person by
contract or in any other manner. In any word, clause or sentence of the
foregoing provisions regarding indemnification or advancement of the attorney
fees or expenses shall be held invalid as contrary to law or public policy, it
shall be severable and the provisions remaining shall not be otherwise affected.
All references in these Articles of Incorporation to "directors", "officer",
"employee" and "agent" shall include the heirs, estates, executors,
administrators and personal representatives of such persons.
<PAGE>
The Company has no agreements with any of its directors or executive offices
providing for indemnification of any such persons with respect to liability
arising out of their capacity or status as officers and directors.
At present, there is no pending litigation or proceeding involving a director or
executive officer of the Company as to which indemnification is being sought.
<PAGE>
PART F/S
The Financial Statements of GSIT, and Notes to Financial Statements
together with the Independent Auditor's Report of Durland and Company, CPA's,
P.A., required by this Item 13 commence on page F-1 hereof and are incorporated
herein by this reference.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report............................F-2
Balance Sheets..........................................F-3
Statements of Loss......................................F-4
Statements of Changes in Stockholders' Equity...........F-5
Statements of Cash Flows................................F-6
Notes to Financial Statements...........................F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO: The Board of Directors
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Fort Lauderdale, Florida
We have audited the accompanying balance sheet of Ginsite Materials, Inc., a
development stage enterprise, as of December 31, 1998 and the related statements
of loss, changes in stockholders' equity and cash flows for the year ended
December 31, 1998 and from August 7, 1997 (Inception) through December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ginsite Materials, Inc. as of
December 31, 1998 and the results of its operations and its cash flows for the
year ended December 31, 1998 and from August 7, 1997 (Inception) through
December 31,1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note11 to the
financial statements, the Company has experienced a loss since inception. The
Company's financial position and operating results raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 11. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Durland & Company, CPAs, P.A.
Palm Beach, Florida
March 4, 1999
F-2
The accompanying notes are an integral part
of the financial statements.
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Balance Sheets
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
(unaudited)
------------------------- ---------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 43,687 $ 360
Accounts receivable
Trade 1,348 1,323
Related party 29,597 18,696
Inventories 20,557 23,379
Advance to related party 30,000 0
Note receivable-related party 14,416 0
------------------------- ---------------------------
Total current assets 139,605 43,758
------------------------- ---------------------------
PROPERTY AND EQUIPMENT
Equipment 128,624 128,624
Leasehold improvements 56,550 56,550
Less: Accumulated depreciation (25,279) (19,021)
------------------------- ---------------------------
Total property and equipment 159,895 166,153
=======
------------------------- ---------------------------
OTHER ASSETS
Deposits 13,448 13,448
Intangible asset-patent pending 38,232 40,781
------------------------- ---------------------------
Total other assets 51,680 54,229
------------------------- ---------------------------
Total Assets $ 351,180 $ 264,140
========================= ===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 30,325 $ 68,352
Accounts payable-related party 4,350 4,350
Salaries payable 0 4,816
Payroll taxes payable 20,278 14,834
Note payable-related party 48,183 47,007
------------------------- ---------------------------
Total current liabilities 103,136 139,359
LONG TERM DEBT 109,000 0
------------------------- ---------------------------
Total Liabilities 212,136 139,359
------------------------- ---------------------------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, authorized
10,000,000 shares; 0 issued and outstanding 0 0
Common stock, $0.001 par value, authorized
50,000,000 shares; 18,087,570 and
13,783,662 issued and outstanding, respective 18,088 13,784
Additional paid-in capital 5,486,472 3,867,255
Deficit accumulated during the development stage (5,401,849) (3,756,258)
Beneficial conversion feature 36,333 0
------------------------- ---------------------------
Total Stockholders' Equity 139,044 124,781
------------------------- ---------------------------
Total Liabilities and Stockholders' Equity $ 351,180 $ 264,140
========================= ===========================
</TABLE>
F-3
The accompanying notes are an integral
part of the financial statements.
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Statements of Loss
<TABLE>
<CAPTION>
Period from Period from
Three months ended August 7, 1997 August 7, 1997
--------------------------------------- Year ended (Inception) to (Inception) to
March 31, March 31, 1998 December 31, December 31, March 31, 1999
1999(unaudited) (unaudited) 1998 1997 (unaudited)
------------------- ------------------- ------------------ ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Revenues
Product sales 2,326 0 15,830 0 18,156
Distributor fees 0 0 6,980 0 6,980
------------------- ------------------- ------------------ ---------------- ----------------------
Total revenues 2,326 0 22,810 0 25,136
------------------- ------------------- ------------------ ---------------- ----------------------
Costs and expenses
Compensation :
Officers 414,142 518,738 1,698,850 0 2,112,992
Other 234,029 1,168,309 1,179,807 0 1,413,836
Related party 1,440 3,000 6,240 13,500 21,180
Depreciation and amortization 8,806 4,220 28,859 357 38,022
General and Administrative 905,113 140,667 717,069 25,936 1,648,118
Bad debt - related party 0 0 105,750 0 105,750
------------------- ------------------- ------------------ ---------------- ----------------------
Total expenses 1,563,530 1,834,934 3,736,575 39,793 5,339,898
------------------- ------------------- ------------------ ---------------- ----------------------
Loss from operations (1,561,204) (1,834,934) (3,713,765) (39,793) (5,314,762)
Other income (expense)
Interest income 1,455 0 1,250 0 2,705
Interest expense (85,842) 0 (2,804) (1,146) (89,792)
------------------- ------------------- ------------------ ---------------- ----------------------
Net loss (1,645,591) (1,834,934) (3,715,319) (40,939) (5,401,849)
------------------- ------------------- ================== ================ ======================
Net loss per weighted average
share, basic $ (0.11) $ (0.16) $ (.30) (.004) (.45)
basic basic basic
basic
basicbascbasic
=================== =================== ================== ================ ======================
Weighted average number of
shares, 15,293,219 11,383,676 12,560,147 9,198,364 12,136,159
basic
=================== =================== ================== ================ ======================
</TABLE>
F-4
The accompanying notes are an integral
part of the financial statements.
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the Total
Number of Common Paid-in Bene Conv Development Stockholders'
Shares Stock Capital Feature Stage Equity
----------- ----------- ------------ ------------ ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE,
August 7, 1997 (Inception) 0 $ 0 $ 0 $ 0 $ 0 $ 0
Third quarter - cash ($0.0075/sh) 200,000 200 1,300 0 0 1,500
Third quarter - services ($0.001/sh) 50,000 50 0 0 0 50
Third quarter - services ($0.001/sh)* 879,750 880 0 0 0 880
Third quarter - loan repayment ($0.001/sh) 7,917,750 7,918 0 0 0 7,918
Fourth quarter - cash ($0.10/sh) 200,000 200 19,800 0 0 20,000
Fourth quarter - cash ($0.35/sh) 58,000 58 20,242 0 0 20,300
Fourth quarter - offering costs 0 0 (5,485) 0 0 (5,485)
Fourth quarter - cash ($0.01/sh) 30,000 30 270 0 0 300
Net loss 0 0 0 0 (40,939) (40,939)
----------- ---------- ------------ ----------- ------------- -------------------
BALANCE, December 31, 1997 9,335,500 9,336 36,127 0 (40,939) 4,524
First quarter - cash ($0.35/sh) 754,986 755 263,490 0 0 264,245
First quarter - services ($0.11/sh) 500,000 500 54,188 0 0 54,688
First quarter - services ($2.49/sh)* 200,000 200 498,238 0 0 498,438
First quarter - services ($2.73/sh)** 425,000 425 1,158,363 0 0 1,158,788
Second quarter - cash ($0.35/sh) 879,300 879 306,876 0 0 307,755
Second quarter - services ($2.56/sh)* 250,000 250 640,375 0 0 640,625
Third quarter - cash ($0.35/sh) 646,714 647 225,703 0 0 226,350
Third quarter - cash ($0.67/sh) 67,164 67 44,933 0 0 45,000
Third quarter - services ($2.13/sh)* 200,000 200 424,800 0 0 425,000
Fourth quarter - cash ($0.35/sh) 474,998 475 165,774 0 0 166,249
Fourth quarter - services ($0.97/sh)* 50,000 50 48,388 0 0 48,438
Net loss 0 0 0 0 (3,715,319) (3,715,319)
----------- ---------- ------------- ---------- ------------- -------------------
BALANCE, December 31, 1998 13,783,662 13,784 3,867,255 0 (3,756,258) 124,781
----------- ---------- ------------- ----------- ------------ -------------------
First quarter - cash/compensation ($0.26/sh) 2,500,000 2,500 647,500 0 0 650,000
First quarter - services 151,000 151 183,365 0 0 183,516
First quarter - services ($1.58/sh)** 100,000 100 157,712 0 0 157,812
First quarter - services ($.26/sh)** 175,000 175 45,325 0 0 45,500
First quarter - services ($.41/sh)* 950,000 950 392,409 0 0 393,359
First quarter - debt conversion 427,908 428 144,572 0 0 145,000
Beneficial conversion feature 0 0 0 84,667 0 84,667
First quarter - convertible debt conversion 0 0 48,334 (48,334) 0 0
Net loss 0 0 0 0 (1,645,591) (1,645,591)
----------- ---------- ------------- ---------- ------------- -------------------
BALANCE, March 31, 1999 (Unaudited) 18,087,570 $ 18,088 $ 5,486,472 $ 36,333 $ (5,401,849) $ 139,044
=========== ========== ============= ========== ============= ===================
</TABLE>
* Shares issued to officers in lieu of cash
** Shares issued to non-officer
employees in lieu of cash
F-5
The accompanying notes are an
integral part of the financial statements.
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterpris)
Statement of Cash Flows
<TABLE>
<CAPTION>
Period
Period from August
from August 7, 1997
Three months ended 7, 1997 (Inception)
----------------------------- Year ended (Inception) to March
March 31, March 31, 1998 December to December 31, 1999
1999(unaudited) (unaudited) 31, 1998 31, 1997 (unaudited)
--------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ (1,645,591) $(1,834,934) $(3,715,319) $(40,939) $(5,401,849)
Adjustments to reconcile net loss to net
cash used by development activities
Amortization of beneficial conversion feature 84,667 0 0 0 84,667
Amortization-other 2,549 2,549 10,195 0 12,744
Depreciation 6,258 1,671 18,664 357 25,279
Stock issued in lieu of cash-third parties 758,515 54,687 54,687 0 813,202
Stock issued in lieu of cash-officers and employees 596,672 1,657,228 2,771,290 930 3,368,892
Bad debt-related party 0 0 105,750 0 105,750
Changes in assets and liabilities
Increase in accounts receivable-trade (25) 0 (1,323) 0 (1,348)
Increase in accounts receivable-related party (10,901) (240) (46,696) 0 (57,597)
(Increase) decrease in inventory 2,822 (4,245) (22,681) (698) (20,557)
Advance to related party (30,000) 0 0 0 (30,000)
Increase in accrued interest on note rec-related party (1,455) 0 (1,250) 0 (2,705)
Increase in deposits 0 (11,108) (13,448) 0 (13,448)
Increase (decrease) in accounts payable (38,027) 41,242 53,972 14,380 30,325
Increase (decrease) in accounts payable-related party 0 0 (15,650) 20,000 4,350
Increase (decrease) in salaries payable (4,816) 0 4,816 0 0
Increase in payroll taxes payable 5,444 1,525 14,834 0 20,278
Increase in accrued interest on note payable-related party 1,176 0 2,803 1,146 5,125
------------- -------------- -------------- -------- -----------
Net cash used by development activities (272,712) (91,625) (779,356) (4,824) (1,056,892)
------------- -------------- -------------- -------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Issuance of note receivable - related party (12,961) 0 (66,500) (10,000) (89,461)
Purchase of property and equipment 0 (152,737) (171,174) (4,000) (175,174)
Purchase of property and equipment - related party 0 0 0 (10,000) (10,000)
------------- -------------- -------------- -------- -----------
Net cash used by investing activities (12,961) (152,737) (237,674) (24,000) (274,635)
------------- -------------- -------------- -------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 75,000 264,243 1,009,599 36,615 1,121,214
Proceeds from issuance of convertible debt 254,000 0 0 0 254,000
------------- -------------- -------------- --------- -----------
Net cash provided by financing activities 329,000 264,243 1,009,599 36,615 1,375,214
------------- -------------- -------------- -------- -----------
Net increase (decrease) in cash 43,327 19,881 (7,431) 7,791 43,687
CASH, beginning of period 360 7,791 7,791 0 0
------------- -------------- -------------- --------- -----------
CASH, end of period $ 43,687 $ 27,672 $ 360 $ 7,791 $ 43,687
============= ============== ============== ========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash investing and
financing activities:
Acquisition of patent from shareholder $ 0 $ 0 $ 0 $(50,976) $ (50,976)
============= ============== ============== ========= ===========
Issuance of common stock for patent $ 0 $ 0 $ 0 $ 7,918 $ 7,918
============= ============== ============== ========= ===========
Due to shareholder for patent $ 0 $ 0 $ 0 $ 43,058 $ 43,058
============= ============== ============== ========= ===========
Conversion of convertible debt $ (145,000) $ 0 $ 0 $ 0 $ (145,000)
============= ============== ============== ========= ===========
Issuance of common stock through conversion of
convertible debt $ 145,000 $ 0 $ 0 $ 0 $ 145,000
============= ============== ============== ========= ===========
</TABLE>
F-6
The accompanying notes are an integral part of
the financial statements.
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to periods ended March 31, 1999 and 1998 is unaudited)
(1) Summary of Significant Accounting Principles
The Company Ginsite Materials, Inc., is a Florida chartered development
stage corporation which conducts business from its headquarters in
Fort Lauderdale, Florida. The Company was incorporated on August 7,
1997.
The Company is principally involved in the manufacturing, marketing
and sales of the Ginsite formulation, a material that enhances or
replaces wood, concrete and similar construction materials. Current
activities include raising additional equity and negotiating with
potential national distributors.
The Company is in the development stage and has just begun to acquire
the necessary operating assets to carry on its proposed business.
While the Company is negotiating with potential customer distribution
channels, there is no assurance that any benefit will result from such
activities. The Company will not receive significant operating
revenues until the commencement of operations, but will nevertheless
continue to incur expenses until then.
The financial statements for the three months ended March 31, 1999 and
1998 include all adjustments which, in the opinion of management, are
necessary for fair presentation.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Use of estimates The financial statements have been prepared in
conformity with generally accepted accounting principles. In preparing
the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, as of the date of the statements of financial condition,
and revenues and expenses for the period then ended. Actual results
may differ significantly from those estimates.
b) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred following Statement of Position (SOP)
98-5. This SOP sets forth the generally accepted accounting principles
for costs of start-up activities of development stage entities.
c) Net loss per share Basic is computed by dividing the net loss by
the weighted average number of common shares outstanding during the
period. Diluted is not presented because the inclusion of common share
equivalents would be anti-dilutive.
d) Compensation for services rendered for stock The Company issues
shares of common stock in exchange for services rendered and in
payment of shareholder loans. The costs of the services are valued
according to generally accepted accounting principles and have been
charged to operations.
e) Inventories Inventories are valued at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method for
substantially all inventory.
f) Deposits Deposits are primarily payments made as security deposits
on the building lease and utilities.
g) Intangible asset - patent pending Patents are recorded at
historical cost and amortized, beginning the date the patents are
placed in service over their estimated useful lives, using the
straight-line method.
h) Property and equipment All property and equipment are recorded at
cost and depreciated over their estimated useful lives, using the
straight-line method. Upon sale or retirement, the costs and related
accumulated depreciation are eliminated from their respective
accounts, and the resulting gain or loss is included in the results of
operations. Repairs and maintenance charges which do not increase the
useful lives of the assets are charged to operations as incurred. F-7
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(2) Inventories Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
(unaudited)
-------------------------- --------------------------
<S> <C> <C>
Raw materials $ 12,627 $ 14,855
Containers 1,421 1,672
Labels 6,509 6,852
-------------------------- --------------------------
Total inventories $ 20,557 $ 23,379
========================== ==========================
</TABLE>
(3) Intangible Asset - Patent Pending On August 7, 1997, a majority shareholder
formally assigned to the Company a certain patent pending with the United
States Patent and Trademark Office of the Department of Commerce. The
patent was recorded at its historical cost of $50,976, which represents the
accumulated expenditures of the majority shareholder to refine the patent
process. The patent is being amortized over a period of five years, its
estimated useful life, which began in 1998, the year the patent process was
placed in service. Amortization expense for the periods ended December 31,
1998 and 1997 and March 31, 1999 and 1998 was $10,195, $0, $2,549 and
$2,549, respectively.
(4) Deposits As of March 31, 1999 (unaudited) and December 31, 1998, deposits
consist of payments for the following:
Building lease $ 10,558
Utilities 2,890
---------
$ 13,448
(5) Property and Equipment Property and equipment are summarized by major
classifications as follows:
<TABLE>
<CAPTION>
March 31, 1999 December 31,
(unaudited) 1998
--------------------- ---------------------
<S> <C> <C>
Property and equipment $ 65,290 $ 65,290
Deposit on property and equipment 7,072 7,072
Telephone system 11,412 11,412
Office furniture 21,094 21,094
Computer system 23,756 23,756
Leasehold improvements 56,550 56,550
--------------------- ---------------------
185,174 185,174
Less accumulated depreciation (25,279) (19,021)
--------------------- ---------------------
$ 159,895 $ 166,153
--------
===================== =====================
</TABLE>
Depreciation expense for the periods ended December 31, 1998 and 1997 and
March 31, 1999 and 1998 was $18,664, $357, $ 6,258 and $1,671,
respectively.
(6) Long Term Debt In February 1999, the Company issued a 9% convertible note
due on February 1, 2001 for $254,000 cash. The note is convertible into
shares of the Company's common stock at a conversion price equal to the
lesser of 100% of the lowest of the closing bid prices for the common stock
for the five trading days prior to the date of the note, or 75% of the
lowest of the closing bid prices for the common stock for the five trading
days immediately prior to the conversion date. As of March 31, 1999,
$145,000 of the debt was converted into 427,908 shares of common stock at
prices ranging from $0.19 to $0.66 per share. Subsequent to March 31, 1999,
the remaining $109,000 in debt was converted into 607,703 shares of common
stock at prices ranging from $0.17 to $0.19 per share.
The Company recognized a beneficial conversion feature discount, in
accordance with EITF Topic D-60 amounting to $84,665. The discount was
immediately amortized as the notes were immediately convertible.
F-8
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(6) Long Term Debt (cont.) The amount of reclassification from beneficial
conversion feature to additional paid-in capital due to conversion of the
related debt for the period ended March 31, 1999 was $48,334.
In March 1999, the Company was offered debt financing in the form of
non-interest bearing loans for up to $581,000, to be loaned on an as needed
basis throughout the remainder of 1999. There is no formal written
agreement regarding the repayment of these loans. During April and May,
1999, the Company received total proceeds of $168,000 drawn against these
loans.
(7) Stockholders' Equity The shareholders, in January 1999, consented to
increase the number of authorized common shares, $0.001 par value, from
17,250,000 to 50,000,000 shares. Concurrently, 10,000,000 shares of
preferred stock with no determined par value were authorized. The Company
had 18,087,570 and 13,783,662 shares of common stock issued and outstanding
at March 31, 1999 and December 31, 1998, respectively. There were no shares
of preferred stock issued as of March 31, 1999.
In August 1997, the Company issued 929,750 shares of restricted common
stock for the fair market value of services rendered of $930, and 7,917,750
shares of restricted common stock for the repayment of a shareholder loan
for par value of $0.001 per share. The Company, in September 1997, issued
200,000 shares of restricted common stock in exchange for $1,500 in cash.
On September 10, 1997, the Company authorized a Regulation D Rule 504
Private Placement for 200,000 units at $0.10 per unit. Each unit consists
of one share of common stock and fourteen stock purchase warrants,
entitling the holder to purchase one share of common stock at a purchase
price of $0.35 per share. The warrants can be exercised any time after the
purchase of a unit and expire on September 10, 1998. In October 1997, the
Company received cash proceeds from the sale of 200,000 units totaling
$20,000 and cash proceeds from the exercise of 58,000 warrants totaling
$20,300. Offering costs of $5,485 related to this private placement were
charged to paid-in capital as the proceeds were received. In December 1997,
the Company issued 30,000 shares of common stock for $300 in cash.
During the first quarter of 1998, the Company issued a total of 1,125,000
shares of restricted common stock for services rendered at a total value of
$1,711,914, the current market price less marketability discount. 200,000
of these shares were issued to officers and 425,000 to employees of the
Company. Also, during the first quarter of 1998, the Company issued 754,986
shares through the exercise of warrants for $264,245 in cash. In the second
quarter of 1998, the Company issued 250,000 shares of restricted common
stock for services rendered by officers of the Company at a total value of
$640,625, based on the current market price less any marketability
discount. The Company, in the second quarter of 1998, issued 879,300 shares
through the exercise of warrants for $307,755 in cash. During the third
quarter of 1998, the Company issued 200,000 shares of restricted common
stock for services rendered by officers of the Company at a total value of
$425,000, based on the current market price less marketability discount.
Cash proceeds totaling $271,350 were received during the third quarter from
the issuance of 646,714 shares through the exercise of warrants and from
the issuance of 67,164 shares for cash. During the fourth quarter, the
Company issued 50,000 shares of restricted common stock for services
rendered by officers of the Company at a total value of $48,437, based on
the current market price less marketability discount. Cash proceeds
totaling $166,249 were received during the fourth quarter from the issuance
of 474,998 shares through the exercise of warrants.
During the first quarter of 1999, the Company issued a total of 1,226,000
shares of restricted common stock for services rendered at a total value of
$598,438, the current market price less any applicable marketability
discount. 1,050,000 of these shares were issued to officers, 175,000 to
employees of the Company and 1,000 to a third party. The Company issued a
total of 150,000 shares of unrestricted common stock to third parties for
services rendered at a total value of $181,750. During the same quarter,
$145,000 of convertible debt was converted to 427,908 shares of
unrestricted common stock. The number of shares issued under the conversion
was determined according to the terms of the note (Note 6), with conversion
prices ranging from $0.19 per share to $0.66 per share. Also during the
first quarter of 1999, the Company issued 2,500,000 shares of unrestricted
common stock for $75,000 in cash. In accordance with generally accepted
accounting principles, these shares have been recorded at the stock's
market value on the date of obligation of $0.26 per share. F-9
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(8) Operating Lease Compensation expense of $575,000 has been charged to
operations. The Company leases warehouse and office space located in the
Fort Lauderdale area. Total rent expense for the periods ended December 31,
1998 and 1997 and March 31, 1999 and 1998 was $139,806, $7,689, $34,767 and
$28,483, respectively.
Future minimum lease payments under the noncancellable operating lease at
December 31, 1998 are as follows:
1999 $ 133,866
2000 140,560
2001 147,588
2002 154,967
2003 162,715
Thereafter 710,593
$1,450,289
(9) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax and
financial reporting purposes. The Company had net operating loss
carry-forwards for income tax purposes of approximately $802,745, which
expire beginning December 31, 2117.
The amount recorded as deferred tax assets, cumulative as of December 31,
1998, is $157,940 which represents the amount of tax benefits of loss
carry-forwards. The Company has established a valuation allowance for this
deferred tax asset of $164,254, as the Company has no history of profitable
operations.
(10) Related parties In January 1999, the Company advanced funds in the amount
of $30,000 to Progressive Technology, Inc., a company under common control.
These funds are considered a temporary advance and are expected to be
repaid within the subsequent year. As of March 31, 1999, the unpaid amount
was $30,000 and is presented in Advance to related party.
As of January 1, 1998, the Company provides personnel services for and
shares certain building expenses with Progressive Technology, Inc., a
company under common control. The Company is reimbursed for the cost of
providing these items and records the reimbursements as a reduction of
operating expenses. Charges were $46,696, $0, $10,901 and $11,808 for the
periods ended December 31, 1998 and 1997 and March 31, 1999 and 1998,
respectively. Unpaid amounts at March 31, 1999 and December 31, 1998 were
$57,597 and $46,696, respectively and are presented, net of allowance for
doubtful accounts of $28,000, in Accounts receivable - related party. The
Company has made a series of advances to Progressive Technology, Inc., a
company under common control, in the form of promissory notes. The notes
are payable on demand and are secured by shares of the Company's common
stock owned by a majority shareholder. One note in the amount of $26,500
bears no interest. Three additional notes, totaling $62,961 bear interest
of 10% annually. Unpaid principal amounts were $89,461 and $76,500 at March
31, 1999 and December 31, 1998, respectively. Accrued interest at December
31, 1998 and 1997 and March 31, 1999 and 1998 was $1,250, $0, $2,705 and
$0, respectively. Both the principal and accrued interest amounts are
presented in Note receivable - related party. As the related party entity
has minimal revenues currently, the Company has established a reserve of
$77,750 for those notes. During 1997, the Company paid $10,000 to
Progressive Technology, Inc., a company under common control, for the
design, labor and material necessary to build certain property and
equipment. This purchase is presented in property and equipment at
historical cost, net of accumulated depreciation. During the period ended
December 31, 1998, the Company was advanced funds from Y2K Medical, Inc., a
company under common control. Unpaid amounts were $4,350 at March 31, 1999
and December 31, 1998 and are presented in Accounts payable - related
party. Y2K Medical, Inc. is currently inactive and awaiting a formal
dissolution with the State of Florida.
During 1997, a majority shareholder formally assigned a certain patent
pending (Note 3) to the Company in exchange for a note bearing interest of
6.343% annually. The note is unsecured and is due within one year.
F-10
<PAGE>
Ginsite Materials, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(10) Related parties (continued) The shareholder has the option to permit an
extension of the repayment period for an additional year if the Company so
requests. The unpaid principal amount was $43,058 at March 31, 1999 and
December 31, 1998. Accrued interest at March 31, 1999 and December 31, 1998
was $5,125 and $3,949, respectively. Both principal and accrued interest
amounts are presented in Note payable - related party.
(11) Going Concern The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company's
financial position and operating results raise substantial doubt about its
ability to continue as a going concern, as reflected by the net loss of
$5,401,849 accumulated from August 7, 1997 (Inception) through March 31,
1999. The ability of the Company to continue as a going concern is
dependent upon developing sales and obtaining additional capital and
financing. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
The Company is currently negotiating with potential national distributors
and seeking additional capital and financing to allow it to continue its
planned operations.
(12) Subsequent events In May 1999, the Company authorized the issuance of
2,000,000 shares of restricted common stock to its President, in order to
maintain his majority holding of shares of the Company. The Company expects
to record $531,250 in compensation expense as a result of this transaction.
See Note (6) regarding the subsequent issuance of shares of unrestricted
common stock due to the conversion of long term debt.
See Note (6) regarding the subsequent receipt of loan proceeds.
F-11
<PAGE>
PART III
Item 1. Index to Exhibits
3Item 1. Index to Exhibits
3.(i).1 Articles of Incorporation of Ginsite Materials, Inc. filed August
7, 1997
3.(i).2 Articles of Amendment to the Articles of Incorporation of Ginsite
Materials, Inc. filed April 16, 1999
3.(ii) Bylaws of Ginsite Materials, Inc.
4.1A Form of Private Offering
4.1B Note Purchase Agreement, The Augustine Fund, L.P., dated February
8, 1999
10.1A Distributorship Agreement, M J INNOVATIONS, Jean-A. Medici,
Michael Alderman, dated March 29, 1999
10.1B Distributorship Agreement, Marcus Dean Rogozinski, dated June 1,
1998
10.1C Distributorship Agreement, Fred Roneker, dated May 28, 1999
10.2 License Agreement, Concession Management of Palm Beach, Inc.,
dated December 28, 1998
10.3 Lease Agreement, Steven J. Cooperman, Trustee, dated November 15,
1998
10.4A Employment Agreement Murray Ginsberg, dated April 1, 1999
10.4B Employment Agreement Audrey Max, dated April 1, 1999
10.4C Employment Agreement Henry Lione, dated April 1, 1999
10.4D Employment Agreement Eugene Ladin, dated April 1, 1999
10.4E Employment Agreement Barry Grieper, dated April 1, 1999
10.4F Employment Agreement Henry Max, dated April 1, 1999
10.5 Indemnification Agreement & Covenant Not To Sue between Ginsite
Materials and Murray Ginsberg, dated August 20, 1997
10.6 Independent Marketing Services Agreement with Wayne A. Doss,
dated April 15, 1999
10.7 Purchase & Sale Agreement with ECO Marine Materials, Inc., dated
August 26, 1998
10.8A Consulting Agreement, Intercontinental Capital Corp., December 1,
1998
10.8B Consulting Agreement, Monetary Advancement International, Inc.,
dated February 3, 1999
10.8B.1 Consulting Agreement Termination & Mutual Release, Monetary
Advancement International, Inc., dated February 3, 1999
10.9A Assignment of Patent by Murray Ginsberg, dated August 7, 1997
10.9B Patent Application & Status; Trademark Application & Status,
dated October 20, 1998
10.10.A.1 Promissory Note , Murray Ginsberg and Ginsite, patent assignment,
dated August 7, 1997
10.10.A.2 Promissory Note between Ginsite and Progressive Technology, dated
January 14, 1999
10.10.A.3 Promissory Note between Ginsite and Progressive Technology, dated
January 14, 1999
27.1 Financial Data Schedule
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GINSITE MATERIALS, INC.
(Registrant)
Date: June 30, 1999 By: /s/ Murray Ginsberg
----------------------
Murray Ginsberg, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- -------- -----
June 30, 1999 By: /s/ Murray Ginsberg President and Director
------------------------
Murray Ginsberg
June 30, 1999 By: /s/ Henry V. Lione Secretary and Treasurer
-------------------------
Henry V. Lione
Exhibit 3.(i).1
ARTICLES OF INCORPORATION
OF
GINSITE MATERIALS, INC.
The undersigned subscriber to these Articles of Incorporation is a natural
person competent to contract and hereby form a Corporation for profit under
Chapter 607 of the Florida Statutes.
ARTICLE 1 - NAME
The name of the Corporation is GINSITE MATERIALS, INC., (hereinafter,
"Corporation").
ARTICLE 2 - PURPOSE OF CORPORATION
The Corporation shall engage in any activity or business permitted under
the laws of the United States and of the State of Florida.
ARTICLE 3 - PRINCIPAL OFFICE
The address of the principal office of this Corporation is 1910 Northeast
Miami Court, Miami, Florida 33132-1027 and the mailing address is the same.
ARTICLE 4 - INCORPORATION
The name and street address of the incorporator of this Corporation is:
Elsie Sanchez
343 Almeria Avenue
Coral Gables, Florida 33134
ARTICLE 5 - OFFICERS
The officers of the Corporation shall be:
President: Murray Ginsberg
Secretary: Murray Ginsberg
Treasurer: Murray Ginsberg
whose addresses shall be the same as the principal office of the Corporation.
ARTICLE 6 - DIRECTOR(S)
The Director(s) of the Corporation shall be: Murray Ginsberg
whose addresses shall be the same as the principal office of the Corporation.
<PAGE>
ARTICLE 7 - CORPORATE CAPITALIZATION
7.1 The maximum number of shares that this Corporation is authorized to
have outstanding at any time is SEVENTEEN MILLION TWO HUNDRED FIFTY THOUSAND
(17,250,000) shares of common stock, each share having the par value of ONE
THOUSANDTH OF ONE CENT ($0.001).
7.2 No holder of shares of stock of any class shall have any preemptive
right to subscribe to or purchase any additional shares of any class, or any
bonds or convertible securities of any nature; provided, however, that the Board
of Director(s) may, in authorizing the issuance of shares of stock of any class,
confer any preemptive right that the Board of Director(s) may deem advisable in
connection with such issuance.
7.3 The Board of Director(s) of the Corporation may authorize the issuance
form time to time of shares of its stock of any class, whether now or hereafter
authorized, or securities convertible into shares of its stock of any class,
whether nor or hereafter authorized, for such consideration as the Board of
Director(s) may deem advisable, subject to such restrictions or limitations, if
any, as may be set forth in the bylaws of the Corporation.
7.4 The Board of Director(s) of the Corporation may, by Restated Articles
of Incorporation, classify or reclassify any unissued stock from time to time by
setting or changing the preferences, conversions or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or term or conditions
of redemption of the stock.
ARTICLE 8 - SHAREHOLDERS' RESTRICTIVE AGREEMENT
All of the shares of stock of this Corporation may be subject to a
Shareholders' Restrictive Agreement containing numerous restrictions on the
rights of shareholders of the Corporation and transferability of the shares of
stock of the Corporation. A copy of the Shareholder's Restrictive Agreement, fi
any, is on file at the principal office of the Corporation.
ARTICLE 9 - POWERS OF CORPORATION
The Corporation shall have the same powers as an individual to do all
things necessary or convenient to carry out its business and affairs, subject to
any limitations or restrictions imposed by applicable law or these Articles of
Incorporation.
ARTICLE 10 - TERM OF EXISTENCE
This Corporation shall have perpetual existence.
ARTICLE 11 - REGISTERED OWNER(S)
The Corporation, to the extent permitted by law, shall be entitled to treat
the person in whose name any share or right is registered on the books of the
Corporation as the owner thereto, for all purposes, and except as may be agreed
<PAGE>
in writing by the Corporation, the Corporation shall not be bound to recognize
any equitable or other claim to, or interest in, such share or right on the part
of any other person, whether or not the Corporation shall have notice thereof.
ARTICLE 12 - REGISTERED OFFICE AND REGISTERED AGENT
The initial address of registered office of this Corporation is AMERILAWYER
Chartered, located at 343 Almeria Avenue, Coral Gables, Florida 33134. The name
and address of the registered agent of this Corporation is AmeriLawyer
Chartered, 343 Almeria Avenue, Coral Gables, Florida 33134.
ARTICLES 13 - BYLAWS
The Board of Director(s) of the Corporation shall have power, without the
assent or vote of the shareholders, to make, alter, amend or repeal the Bylaws
of the Corporation, but the affirmative vote of a number of Directors equal to a
majority of the number who would constitute a full Board of Director(s) at the
time of such action shall be necessary to take any action for the making,
alteration, amendment or repeal of the Bylaws.
ARTICLE 14 - EFFECTIVE DATE
These Articles of Incorporation shall be effective immediately upon
approval of the Secretary of State, State of Florida.
ARTICLE 15 - AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, or in any amendment
hereto, or to add any provision to these Articles of Incorporation or to any
amendment hereto, in any manner now or hereafter prescribed or permitted by the
provisions of any applicable statute of the State of Florida, and all rights
conferred upon shareholders in these Articles of Incorporation or any amendment
hereto or granted subject to this reservation.
ARTICLE 16 - INDEMNIFICATION
The Corporation shall indemnify a director or officer of the Corporation
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the director or officer was a party because the director or
officer is or was a director or officer of the Corporation against reasonable
attorney fees and expenses incurred by the director or officer in connection
with the proceeding. The Corporation may indemnify an individual made a party to
a proceeding because the individual is or was a director, officer, employee or
agent of the Corporation against liability if authorized in the specific case
after determination, in the manner required by the board of directors, that
indemnification of the director, officer, employee or agent, as the case may be,
is permissible in the circumstances because the director, officer, employee or
agent has met the standard of conduct set forth by the board of directors. The
<PAGE>
indemnification and advancement of attorney fees and expenses for directors,
officers, employees and agent of the Corporation shall apply when such persons
are serving at the Corporation's request while a director, officer, employee or
agent of the Corporation, as the case may be, asa a director, officer, partner,
trustee, employee or agent of another foreign or domestic Corporation,
partnership, joint venture, trust, employee or agent of the Corporation who is a
party to a proceeding in advance of final disposition of the proceeding. The
Corporation also may purchase and maintain insurance on behalf of an individual
arising from the individual's status as a director, officer, employee or agent
of the corporation, whether or not the Corporation would have power to indemnify
the individual against the same liability under the law. All references in these
Articles of Incorporation are deemed to include any amendment or successor
thereto. Nothing contained in these Articles of Incorporation shall limit or
preclude the exercise of any right relating to indemnification or advance of
attorney fees and expense to any person who is or was a director, officer,
employee or agent of the Corporation or the ability of the Corporation otherwise
to indemnify or advance expenses to any such person by contract or in any other
manner. If any word, clause or sentence of the foregoing provisions regarding
indemnification or advancement of the attorney fees or expenses shall be held
invalid as contrary to law or public policy, it shall be severable and the
provisions remaining shall not be otherwise affected. All references in these
Articles of Incorporation to "director", "officer", "employee" and "agent" shall
include the heirs, estates, executors, administrators and personal
representatives of such person.
IN WITNESS WHEREOF, I have hereunto set my hand and seal, acknowledged and
filed the foregoing Articles of Incorporation under the laws of the State of
Florida, this 8/7/97.
/s/ Elsie Sanchez
-----------------
Elsie Sanchez, Incorporator
ACCEPTANCE OF REGISTERED AGENT DESIGNATED
IN ARTICLES OF INCORPORATION
AmeriLawyer Chartered, having a business office identical with the
registered office of the Corporation name above, and having been designated as
the Registered Agent in the above and foregoing Articles of Incorporation, is
familiar with and accepts the obligations of the position of Registered Agent
under the applicable provisions of the Florida Statutes.
AmeriLawyer Chartered
BY: /s/Natailia Utrera
----------------------
Natalia Utrera, Vice President
Exhibit 3.(i).2
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
GINSITE MATERIALS, INC.
Article 1 of the articles of incorporation of GINSITE MATERIALS, INC. was
amended by the corporation's shareholders on January 2, 1999. The corporation is
filing these articles of amendment to articles of incorporation pursuant to F.S.
607.1006 .
The name of the corporation is GINSITE MATERIALS, INC.
Article 7.1 of the articles of incorporation of GINSITE MATERIALS, INC. is
amended as follows:
FIRST: The maximum number of shares that this Corporation is
authorized to issue is FIFTY MILLION (50,000,000) shares
of common stock, each share having the par value of ONE
THOUSANDTH OF ONE CENT ($0.001).
Article 7.15 is added to the articles of incorporation of GINSITE
MATERIALS, INC. as follows:
SECOND: The Corporation is authorized to issue TEN MILLION
(10,000,000) shares of Preferred Stock. The board of
directors is authorized to provide for the issuance of
such Preferred Stock and, by filing the appropriate
articles of amendment with the Secretary of State of
Florida, is authorized to establish the preferences,
limitations, and relative rights of the Preferred Stock.
The foregoing amendments to the articles of incorporation have been duly
adopted by a majority of shareholders and the necessary written consents have
been given in accordance with the provisions of F.S. 607.0704.
Exhibit 3.(ii)
BY- LAWS
OF
GINSITE MATERIALS, INC.
ARTICLE 1 - OFFICES
The Principal office of the corporation shall be established and maintained as
designated in the Articles of Incorporation. The corporation may also have
offices at such places within or without the State of Florida s the Board of
Directors (hereinafter, "Board") may from time to time establish.
ARTICLE II - STOCKHOLDERS
1. PLACE OF MEETINGS. Meetings of the Stockholders shall be held at the
principal office of the corporation or at such place within or without the State
of Florida as the Board shall authorize.
2. ANNUAL MEETING. The annual meeting of Stockholders shall be held on the first
Monday of each year in the month which this Corporations initial Articles of
Incorporation were first filed with the Secretary of State; however, if such day
falls on a legal holiday, then on the next business day following at the same
time, the Stockholders shall elect a Board and transact such other business as
may properly come before the meeting.
3. SPECIAL MEETINGS. Special meetings of the Stockholders may be called by the
Board or by the President or at the written request of Stockholders owning a
majority of the stock entitled to vote at such meeting. A meeting requested by
the Stockholders shall be called for a date not less than ten nor more than
sixty days after a request is made. The Secretary shall issue the call for the
meeting unless the President, the board or the Stockholders shall designate
another to make said call.
4. NOTICE OF MEETINGS. Written Notice of each meeting of Stockholders shall
state the purpose of the meeting and the time and place of the meeting. Notice
shall be mailed to each Stockholder having the right and entitled to vote at
such meetings, at his last address as it appears on the records of the
corporation, not less than ten nor more than sixty days before the date set
forth such meeting. Such notice shall be sufficient for the meeting and any
adjournment thereof. If any Stockholder shall transfer his stock after notice,
it shall not be necessary to notify the transferee. Any Stockholder may waive
notice of any meeting either before, during or after the meeting.
5. RECORD DATE. The Board may fix a record date not more than forty days prior
to the date set for a meeting of Stockholders as the date of which the
Stockholders of record who have the right to and are entitled to notice of and
to vote at such meeting and any adjournment thereof shall be determined. Notice
that such date has been fixed may be published in the city, town or county where
<PAGE>
the principal office of the corporation is located and in each city or town
where a transfer agent of the stock of the corporation is located.
6. VOTING. Every Stockholder shall be entitled at each meeting and upon each
proposal presented at each meeting to one vote for each share of voting stock
recorded in his name on the books of the corporation on the record date as fixed
by the Board. If not record date was fixed, on the date of the meeting the book
of records of Stockholders shall be produced at the meeting upon the request of
any Stockholder. Upon demand of any Stockholder, the vote for Directors and the
vote upon any question before the meeting, shall be by ballot. All elections for
Directors shall be decided by plurality vote; all other questions shall be
decided by majority vote.
7. QUORUM. The presence, in person or by proxy, of Stockholders holding a
majority of the stock of the corporation entitled to vote shall constitute a
quorum at all meetings of the Stockholders. In case a quorum shall not be
present at any meeting, a majority in interest of the Stockholders entitled to
vote thereat present in person or by proxy, shall have power to adjourn the
meeting form time to time, without notice other than announcement at the
meeting, until the requisite amount of stock entitled to vote shall be present.
At any such adjourned meeting at which the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote be represented, any business may be transacted
which might have been transacted at the meeting as originally noticed; but only
those Stockholders entitled to vote at the meeting as originally noticed shall
be entitled to vote at any adjournment or adjournments thereof.
8. PROXIES. At any Stockholders' meeting or any adjournment thereof, any
Stockholder or record having the right and entitled to vote thereat may be
represented and vote by proxy appointed in a written instrument. No such proxy
shall be voted after three years from the date of the instrument unless the
instrument provides for a longer period. In the event that any such instrument
provides for two or more persons to act as proxies, a majority of such persons
present at the meeting, or if only one be present, that one, shall have all the
powers conferred by the instrument upon all persons so designated unless the
instrument shall otherwise provide.
9. STOCKHOLDER LIST. After fixing a record date for a meeting, the corporation
shall prepare an alphabetical list of the names of all its Stockholders who are
entitled to notice of a Stockholders' meeting. Such list shall be arranged by
voting group with the names and addresses of, and the number and class and
series if any, of shares held by each. This list shall be available for
inspection by any Stockholder for a period of ten days prior to the meeting.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS. The business of the corporation shall be managed and its
corporate powers exercised by a Board each of whom shall be of full age. It
shall not be necessary for Directors to be Stockholders. The number of
Director(s) shall be determined by the Stockholders at their annual meeting.
2. ELECTION AND TERM OF DIRECTORS. Directors shall be elected at the annual
<PAGE>
meeting of Stockholders and each Director elected shall hold office until his
successor has been elected and qualified, or until the Director's prior
resignation or removal.
3. VACANCIES. If the Office of any Director, member of a committee or other
office becomes vacant the remaining Directors in office, by a majority vote, may
appoint any qualified person to fill such vacancy, who shall hold office for the
unexpired term and until a successor shall be duly chosen.
4. REMOVAL OF DIRECTORS. Any or all of the Directors may be removed with or
without cause by vote of a majority of all the stock outstanding and entitled to
vote at a special meeting of Stockholders called for that purpose.
5. NEWLY CREATED DIRECTORSHIP. The number of Directors may be increased by
amendment of these By-laws by the affirmative vote of a majority of the
Directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the Stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional Directors may be chosen
at such meeting to hold office until the next annual election and until their
successors are elected and qualify.
6. RESIGNATION. A Director may resign at any time by giving written notice to
the Board, the President or the Secretary of the Corporation. Unless otherwise
specified in the notice, the resignation shall not be necessary to make it
effective.
7. QUORUM OF DIRECTORS. A majority of the Directors shall constitute a quorum
for the transaction of business. If at any meeting of the Board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
until a quorum is obtained and no further notice thereof need be given other
than by announcement at the meeting which shall be so adjourned.
8. PLACE AND TIME OF BOARD MEETINGS. The Board may hold its meetings at the
office of the corporation or at such other places either within or without the
State of Florida s it may from time to time determine.
9. REGULAR ANNUAL MEETING. A regular meeting of the Board shall be held
immediately following the annual meeting of the Stockholders at the place of
such annual meeting of Stockholders.
10. NOTICE OF MEETINGS OF THE BOARD. Regular meetings of the Board may be held
without notice at such time and place as it shall form time to time determine.
Special meetings of the Board shall be held upon notice to the Directors and may
be called by the President upon three days notice to each Director either
personally or by mail or by wire or by facsimile; special meetings shall be
called by the President or by the Secretary in a like manner on written request
by two Directors. Notice of a meeting need not be given to any Director who
submits a Waiver of Notice whether before or after the meeting or who attends
the meeting without protesting prior thereto or at its commencement, the lack of
notice to him.
<PAGE>
11. EXECUTIVE AND OTHER COMMITTEES. The Board, by resolution, may designate two
or more of their number to one or more committees, which, to the extent provided
in said resolution or these By-laws may exercise the powers of the Board in the
management of the business of the corporation.
12. COMPENSATION. No compensation shall be paid to Directors, as such for their
services, but by resolution of the Board a fixed sum and expenses for actual
attendance, at each regular or special meeting of the Board may be authorized.
Nothing herein contained shall be construed to preclude any Director from
Serving the corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV - OFFICERS
1. OFFICERS, ELECTION AND TERM.
1.1 The Board may elect or appoint a Chairman, a President, one or
more Vice- Presidents, a Secretary, an Assistant Secretary, a
Treasurer and an Assistant Treasurer and such other officers as
it may determine who shall have duties and powers as hereinafter
provided.
1.2 All officers shall be elected or appointed to hold office until
the meeting of the Board following the next annual meeting of
Stockholders and until their successors have been elected or
appointed and qualified.
2. REMOVAL, RESIGNATION, SALARY, ETC.
2.1 Any officer elected or appointed by the board may be removed by
the Board with or without cause.
2.2 In the event of the death, resignation or removal of an officer,
the Board in its discretion may elect or appoint a successor to
fill the unexpired term.
2.3 Any two or more offices may be held by the same person.
2.4 The salaries of all officers shall be fixed by the Board.
2.5 The Directors may require any officer to give security for the
faithful performance of his duties.
3. CHAIRMAN. The Chairman of the Board, if one be elected, shall preside at all
meetings of the Board and shall have and perform such other duties from time to
time as may be assigned to him by the Board or the executive committee.
4. PRESIDENT. The President may be the chief executive of the corporation and
shall have the general powers and duties of supervision and management usually
vested in the office of the President of the corporation. The President shall
preside at all meetings of the Stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board, at all meetings of the
Board, and shall have general supervision direction and control of the business
of the corporation. Except as the board shall authorize the execution thereof in
some other manner, the President shall execute bonds, mortgages and other
<PAGE>
contracts in behalf of the corporation and shall cause the seal to be affixed to
any instrument requiring it and when so affixed, the seal shall be attested by
the signature of the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer.
5. VICE PRESIDENTS. During the absence or disability of the President, the
Vice-President, or if there be more than one, the executive Vice-President,
shall have all the powers and functions of the President. Each Vice-President
shall perform such other duties as the Board shall prescribe.
6. SECRETARY. The Secretary shall attend all meetings of the Board and of the
Stockholders, record all votes and minutes of all proceedings in a book to kept
for that purpose, give or cause to be given notice of all meetings of
Stockholders and of meetings and special meetings of the Board, keep in safe
custody the seal of the corporation and affix it to any instrument when
authorized by the Board or the President, when required, prepare or cause to be
prepared wand available at each meeting of Stockholders a certified list in
alphabetical order of the names of Stockholders entitled to vote thereat,
indicating the number of shares of each respective class held by each, keep all
the documents and records of the corporation as required by law or otherwise in
a proper and safe manner, and perform such other duties as may be prescribed by
the Board or assigned by the President.
7. ASSISTANT SECRETARIES. During the absence or disability of the Secretary, the
Assistant-Secretary, or if there are more than one, the one so designated by the
Secretary or by the Board, shall have all the powers and functions of the
Secretary.
8. TREASURER. The Treasurer shall have the custody of the corporate funds and
securities, keep full and accurate accounts of receipts and disbursements in the
corporate books, deposit all money and other valuables in the name and to the
credit of the corporation in such depositories as may be designated by the
Board, disburse the funds of the corporation as may be ordered or authorized by
the Board and preserve proper vouchers for such disbursements, render to the
President and Board at the regular meetings of the Board, or whenever they
require it, an account of all the transactions made as Treasurer and of the
financial condition of the corporation. The Treasurer shall also render a full
financial report at the annual meeting of the Stockholders if so requested. The
Treasurer may request and shall be furnished by all corporate officers and
agents with such reports and statements as he may require as to all financial
transactions of the corporation, and perform such other duties as are designated
by these By-laws or as from time to time are assigned by the Board.
9. ASSISTANT TREASURERS. During the absence or disability of the treasurer, the
Assistant Treasurer, or if there be more than one, the one so designated by the
Treasurer or the Board, shall have all the powers and functions of the
Treasurer.
10. SURETIES AND BONDS. In case the Board shall so require, any officer or agent
of the corporation shall execute to the corporation a bond in such sum and with
such surety or sureties as the Board may direct, conditioned upon the faithful
performance of duties to the corporation and including responsibility for
<PAGE>
negligence and for the accounting of all property, funds or securities of the
corporation which the officer or agent may be responsible for.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES. The shares of the corporation shall be represented by
certificates. They shall be numbered and entered int the books of the
corporation as they are issued. They shall exhibit the holder's name, the number
of shares and shall be signed by the President and Secretary and shall bear the
corporate seal. When such certificates are signed by the transfer agent or an
assistant transfer agent or by a transfer clerk acting on behalf of the
corporation and a registrar, the signatures of such officers may be facsimiles.
2. LOST OR DESTROYED CERTIFICATES. The Board may direct a new certificate or
certificates to be issued in place of any certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board may, in its discretion as a condition preceding the issuance thereof,
require the owner of such lost or destroyed certificate or certificates, or the
owner's legal representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sun and with such surety or
sureties as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost or destroyed.
3. TRANSFER OF SHARES. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office. Whenever a transfer shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer ledger. No
transfer shall be mad within ten days next preceding the annual meeting of the
Stockholders.
4. CLOSING TRANSFER BOOKS. The Board shall have the power to close the share
transfer books of the corporation for a period of not more than ten days during
the thirty day period immediately preceding
4.1 any Stockholder's meeting, or
4.2 any date upon which Stockholders shall be called upon to or have
a right to take action without a meeting, or
4.3 any date fixed for the payment of a dividend or any other form of
distribution, and only those Stockholders of record at the time
the transfer books are closed, shall be recognized as such for
the purpose of
4.3.1 receiving notice of or voting at such meeting or
<PAGE>
4.3.2 allowing them to take appropriate action, or
4.3.3 entitling them to receive any dividend or other form of
distribution.
ARTICLE VI - DIVIDENDS
The Board may out of funds legally available, at any regular or special meeting,
declare dividends upon the capital stock of the corporation as and when it deems
expedient. Before declaring any dividend there may be set apart out of any funds
of the corporation available for dividends, such sum or sums as the Board from
time to time in their discretion deem proper for working capital or as a reserve
fund to meet contingencies or for equalizing dividends for such other purposes
as the Board shall deem conductive to the interest of the corporation.
ARTICLE VII - CORPORATE SEAL
The seal of the corporation shall bear the name of the corporation, the year of
its organization and the words "CORPORATE SEAL, FLORIDA" or "OFFICIAL CORPORATE
SEAL, FLORIDA". The seal may be used by causing it to be impressed directly on
the instrument or writing to be sealed, or upon adhesive substance affixed
thereto. The seal on the certificates for shares or on any corporate obligation
for the payment of money may be facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the Board may from time to time designate. All checks, drafts or
other orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers, agent or agents of the corporation, and in such manner as shall be
determined from time to time by resolution of the Board.
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin on the first day of each year.
ARTICLE X - NOTICE AND WAIVER OF NOTICE
1. SUFFICIENCY OF NOTICE. Whenever any notice is required by these By-laws to be
given, personal notice is not meant unless expressly so stated, and any notice
so required shall be deemed to be sufficient if given by depositing the same in
a United States Postal Service post office mail collecting container in a sealed
postage-paid wrapper, addressed to the person entitled thereto at the last known
post office address, and such notice shall be deemed to have been given on the
day of such mailing. Stockholders not entitled to vote shall not be entitled to
receive notice of any meetings except as otherwise provided by Statute.
2. WAIVERS. Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Articles of Incorporation
of the corporation or these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE XI - CONSTRUCTION
Whenever a conflict arises between the language of these By-laws and the
Articles of Incorporation, the Articles of Incorporation shall govern.
ARTICLE XII - CLOSE CORPORATION
1. CONDUCT OF BUSINESS WITHOUT MEETINGS. Any action of the Stockholders,
Directors, or committee may be taken without a meeting of consent in writing,
setting forth the action so taken, shall be signed by all persons who would be
entitled to vote on such action at a meeting and filed with the Secretary of the
corporation as part of the proceedings of the Stockholders, Director or
committees as the case may be.
2. MANAGEMENT BY STOCKHOLDERS. In the event the Stockholders are named in the
Articles of Incorporation and are empower therein to manage the affairs of the
corporation in lieu of Directors, the Stockholders of the corporation shall be
deemed Directors for the purpose of these By-laws and wherever the words
"Directors", "Board of Directors" or "Board" appear in these By-laws those words
shall be taken to mean Stockholders.
3. MANAGEMENT BY A BOARD. The Stockholders may, by majority vote, create a Board
to manage the business of the corporation and exercise its corporate powers.
ARTICLE XIII - AMENDMENTS
These By-laws may be altered or repealed and By-laws may be made at any annual
meeting of the Stockholders or at any special meeting thereof if notice of the
proposed alteration or repeal to made contained in the notice of such special
meeting, by the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, or by the affirmative vote of a
majority of the Board if notice of the proposed alternation or repeal to be made
is contained in the notice of such special meeting.
ARTICLE XIV - EMERGENCY BY-LAWS
1. CONDUCT OF BUSINESS WITHOUT MEETINGS. Pursuant to Florida Statute 607.0207
the corporation adopts the following By-laws, which shall be effective only if a
quorum of the Directors of the corporation cannot be readily assembled because
of some catastrophic event.
2. CALLING A MEETING. In the event of such catastrophic event, any member of the
Board shall be authorized to call a meeting of the Board. Such member calling an
emergency meeting shall use any means of communication at their disposal to
notify all other members of the Board of such meeting.
<PAGE>
3. QUORUM. Any one member of the Board shall constitute a quorum of the Board.
The members of the Board meeting during such an emergency, may select any person
or persons as additional Board members, officers or agents of the corporation.
4. INDEMNIFICATION. The members of such emergency Board are authorized to
utilize any means at their disposal to preserve and protect the assets of the
corporation. Any action taken in good faith and acted upon in accordance with
these By-laws shall bind the corporation; and the corporation shall hold
harmless any Director, officer, employee or agent who undertakes an action
pursuant to these By-laws.
5. TERMINATION OF EMERGENCY BY-LAWS. These emergency By-laws shall not be
effective at the end of the emergency period.
Exhibit 4.1A
CONFIDENTIAL
NOT TO BE REPRODUCED OR DISTRIBUTED
Memorandum No. __________________
Name of Prospective Purchaser: ______________________________
PRIVATE PLACEMENT MEMORANDUM
GINSITE MATERIALS INCORPORATED
(a Florida corporation ) ("Company")
200,000 Shares of Stock at $0.10 per Share with Warrants
for 14 Shares of Stock Purchased
$0.35 Per Warrant Exercise Price
Principal Executive Offices:
1910 N.E. Miami Court
Miami, FL 33132
305-576-4207
The date of this Memorandum is September 10, 1997
<PAGE>
PRIVATE PLACEMENT MEMORANDUM Copy No.__________
GINSITE MATERIALS INCORPORATED
200,000 Units $0.10 per Unit
EACH UNIT CONSISTS OF
1 SHARE OF COMMON STOCK
AND 14 STOCK PURCHASE WARRANTS
Ginsite Materials Incorporated (the "Company") hereby offers for sale
200,000 Units (the "Units") at $0.10 per Unit to residents of the States of
Pennsylvania, Florida, Delaware and New York. Each Unit consists of 1 Share of
Common Stock ($0.001 par value) and 14 Stock Purchase Warrants. Each Warrant
entitles the holder to purchase 1 Share of Common Stock of the Company at a
purchase price of $0.35 per share. The Warrants expire September 10, 1998.
THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS."
These securities are offered pursuant to an exemption from registration
with the United States Securities and Exchange Commission ("The Commission")
contained in sections 3(b) and 4(2) of the Securities Act of 1933 and Rule 504
of Regulation D promulgated thereunder. No registration statement or application
to register these securities has been or will be filed with the Commission or
any state securities commission.
These securities are subject to restrictions of transferability and resale
and may not be transferred or resold except as permitted under the Securities
Act of 1933, as amended, and the applicable state securities laws, pursuant to
the registration or exemption therefrom. Investors should be aware that they may
be required to bear the financial risk of these restrictions.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENT IN SMALL BUSINESS INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS
SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" FOR THE RISK FACTORS THAT MANAGEMENT
BELIEVES PRESENT THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS OFFERING.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Price to Selling Proceeds to Investors Commissions(1) the Company(2)
<S> <C> <C> <C>
Per Share $0.10 $0.01 $0.09
<PAGE>
Total Offering 200,000 Shares $20,000.00 $2,000.00 $18,000.00
Exercise of Warrants (2,800,000) $980,000.00 $98,000.00 $882,000.00
</TABLE>
- ------------------------------------------------------------------------------
A) The Company is offering the Shares directly and no person is obligated to
purchase any Shares. The Company may, in its discretion, accept
subscriptions for Shares received through broker-dealers that are members
of the National Association of Securities Dealers, Inc. ("NASD") and will,
in connection with such sales, pay a commission of 10% of the price of each
Share sold.
B) Before deducting expenses of this offering which are estimated to be
approximately $10,000, including legal, accounting, printing, escrow and
other 3expenses. See "ESTIMATED USE OF PROCEEDS."
The date of this Memorandum is September 10, 1997
THESE SECURITIES ARE SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL
IMMEDIATE DILUTION. SEE "RISK FACTORS" AND "DILUTION". _________________________
The Units are offered by the Company to residents of the state of Pennsylvania,
Florida, Delaware and new York subject to prior sale, to receipt and acceptance
by the Company, and to certain other conditions. It is expected that delivery of
certificates for the Units will be made within two weeks after payment for the
Units is received by the Company. The Units will be offered during an offering
period of 120 days, which may be extended for no more than an additional 60 days
at the discretion of the Company. --------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
REGULATORY AGENCY OF ANY STATE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
The Shares of Common Stock and the Warrants that compose the Units are separable
from the Units and may be separately transferred. The Warrants, however, may be
transferred only to residents of the State of Pennsylvania, State of Florida,
State of Delaware and State of New York. --------------------------
SPECIAL DISCLOSURES APPLICABLE TO PURCHASERS WHO ARE RESIDENTS OF THE STATE OF
FLORIDA:
The securities are being sold in reliance upon Florida's transactional
exemption from registration pursuant to Section 517.061(12) of the Florida
Securities Act.
<PAGE>
I further represent that I understand the SECURITIES BEING OFFERED HAVE NOT
BEEN REGISTERED WITH THE FLORIDA DIVISION OF SECURITIES. Such securities are
being sold either through a registered dealer in the State of Florida, through
an associated person of the issuer meeting the qualification for exclusion from
the definition of a dealer, pursuant to Section 517.021(9) and/or (9)(b),
Florida Statutes, or through the issuer firm which is registered as an
issuer/dealer to sell its own securities.
I also understand that if sales of these securities are made to five or
more persons in Florida, any sale in this State made pursuant to the above
referenced and claimed exemption from registration, is voidable by me either
within three days after the first tender of consideration is made by me to the
issuer or its agent, or its escrow agent, or some other escrow agent, or within
three days after the availability of that privilege is communicated to me,
whichever occurs later.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE FLORIDA SECURITIES ACT IN RELIANCE UPON
EXEMPTION PROVISIONS CONTAINED THEREIN. THEREFORE ANY SALE MADE PURSUANT TO SUCH
EXEMPTION PROVISIONS IS VOIDABLE BY THE PURCHASER. THESE SECURITIES CANNOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
LAWS OF THIS STATE, IF SUCH REGISTRATION IS REQUIRED.
RESIDENTS OF THE STATE OF FLORIDA WHO SUBSCRIBE FOR UNITS HAVE THE RIGHT,
PURSUANT TO SECTION 517.061(a)(5) OF THE FLORIDA SECURITIES ACT, TO WITHDRAW
THEIR SUBSCRIPTIONS AND RECEIVE A FULL REFUND OF ALL MONIES PAID WITHIN THREE
DAYS AFTER RECEIPT OF THIS PRIVATE PLACEMENT MEMORANDUM OR WITHIN THREE DAYS
AFTER THE FIRST TENDER OF MONEY OR OTHER CONSIDERATION TO THE ISSUER, AN AGENT
OF THE INSURER, OR AN ESCROW AGENT, WHICHEVER OCCURS LATER. SPECIAL DISCLOSURES
APPLICABLE TO PURCHASERS WHO ARE RESIDENTS OF PENNSYLVANIA:
These securities are being sold in reliance upon the Pennsylvania
Transactional exemption {Sec. 203(D)}of the Pennsylvania Securities Act of 1972,
as amended (the "Act").
THE TRANSFERABILITY OF SUCH SECURITIES IS RESTRICTED.
As a purchaser of the above referenced securities, I hereby agree not to
sell said securities within 12 months after the date of purchase unless the
securities are subsequently registered under the Act.
As a purchaser of the above referenced securities, I hereby represent that
I either have a pre-existing personal or business relationship with the offeror
or one of its partners, officers, directors or controlling persons, or have the
n
<PAGE>
capacity to protect my own interests in connectio wit this transaction by reason
of my own business or financial experience.
PRIOR TO OFFERING THE UNITS TO ANY PENNSYLVANIA RESIDENTS, THE COMPANY WILL
FILE A NOTICE UNDER SECTION 203(D) OF THE PENNSYLVANIA SECURITIES ACT WHICH
PROVIDES AN EXEMPTION FROM THE PENNSYLVANIA PROVISIONS OF SAID ACT UNDER CERTAIN
CIRCUMSTANCES. EACH OFFEREE WHO IS A PENNSYLVANIA RESIDENT SHALL HAVE THE RIGHT
TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE SELLER OR ANY
OTHER PERSON WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE COMPANY OF
HIS SUBSCRIPTION AGREEMENT, OR, WITHIN TWO BUSINESS DAYS AFTER HE MAKES THE
INITIAL PAYMENT FOR THE UNITS BEING OFFERED. IN ADDITION, IN ACCORDANCE WITH
SECTION 203(D)(I) OF THE PENNSYLVANIA SECURITIES ACT, PENNSYLVANIA RESIDENTS MAY
NOT RESELL OR TRANSFER OR CONVEY THE UNITS FOR A PERIOD OF TWELVE MONTHS AFTER
THE DATE OF PURCHASE.
EACH PERSON ENTITLED TO EXERCISE THE RIGHT TO WITHDRAW GRANTED BY SECTION
207(M), AND WHO WISHES TO EXERCISE SUCH RIGHT, MUST WITHIN TWO BUSINE3SS DAYS
AFTER HE DELIVERS A SUBSCRIPTION AGREEMENT, OR MAKES ANY PAYMENT FOR THE UNITS
OR THE EXEMPTION BECOMES EFFECTIVE, WHICHEVER IS LATER, CAUSE A WRITTEN NOTICE
OR TELEGRAM TO BE SENT TO THE COMPANY AT THE ADDRESS PROVIDED IN THIS
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM INDICATING HIS INTENTION TO WITHDRAW.
SUCH LETTER OR TELEGRAM MUST BE SENT AND POSTMARKED ON OR PRIOR TO SUCH SECOND
BUSINESS DAY. IF A PERSON IS SENDING A LETTER, IT IS PRUDENT TO SEND IT BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO
TO EVIDENCE THE TIME WHEN IT WAS MAILED. SHOULD A PERSON MAKE THIS REQUEST
ORALLY, HE MUST ASK FOR WRITTEN CONFIRMATION THAT HIS REQUEST HAS BEEN RECEIVED.
SPECIAL DISCLOSURES APPLICABLE TO PURCHASERS WHO ARE RESIDENTS OF DELAWARE:
THE UNITS HAVE NOT BEEN REGIST3ERED UNDER THE SECURITIES LAWS OF DELAWARE
AND MAY NOT BE TRANSFERRED OR SOLD EXCEPT IN TRANSACTIONS THAT ARE EXEMPT UNDER
THE DELAWARE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION THEREUNDER.
SPECIAL DISCLOSURES APPLICABLE TO PURCHASERS WHO ARE RESIDENTS OF NEW YORK:
THIS PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY
THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE
<PAGE>
STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION OF THE CONTRARY IS UNLAWFUL.
THIS PRIVATE PLACEMENT MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A
MATERIAL FACT AND DOES NOT OMIT ANY MATERIAL FACT NECESSARY TO MAKE THE
STATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS
PURPORTED TO BE SUMMARIZED HEREIN.
<PAGE>
TABLE OF CONTENTS
Page
COVER PAGE........................................................1
OFFERING SUMMARY..................................................2
DISCLAIMERS AND STATE NOTICES.....................................3
BUSINESS AND PROPERTIES...........................................8
RISK FACTORS......................................................9
DILUTION.........................................................11
ESTIMATED USE OF PROCEEDS........................................12
PROPOSED BUSINESS................................................13
MANAGEMENT.......................................................14
PLAN OF OPERATION................................................16
PRINCIPLE SHAREHOLDERS...........................................17
DESCRIPTION OF COMMON STOCK......................................17
DIVIDEND POLICY..................................................18
TERMS OF THE OFFERING............................................19
PLAN OF PLACEMENT................................................19
LITIGATION.......................................................19
LEGAL MATTERS....................................................19
ADDITIONAL INFORMATION...........................................19
EXHIBITS
EXHIBIT A - Subscription Agreement
EXHIBIT B - Common Stock Purchase Warrant
EXHIBIT C - Share Holder List
<PAGE>
OFFERING SUMMARY
This summary is qualified in its entirety by the more detailed information
appearing elsewhere in this Memorandum and exhibits attached hereto and
agreements and other documents referenced herein which are available to
prospective investors or their advisors upon request. This Memorandum contains
certain forward-looking statements and the Company intends that such
forward-looking statements be subject to safe harbors for such statements under
the Securities Act of 1933 and the Securities and Exchange Act of 1934, as
amended.
The Company Ginsite Materials Incorporated ("Ginsite") is a development
stage company currently engaged in raising capital for the
manufacturing, marketing, and sales of the Ginsite
formulation, a material formulation that can enhance or
replace wood, concrete and other costly materials in the
construction, plywood, drywall/gypsum, roofing, tile, and
marine industries, in addition to other numerous
undetermined applications. Ginsite was incorporated as a
Florida corporation on August 7, 1997 with 17,250,000
authorized shares, par value $0.001. The Company holds no
properties other than its rented office space at 1910 N.E.
Miami Court, Miami, Florida 33131 and the Patent rights
discussed elsewhere. Mr. Ginsberg is the President and CEO
of the Corporation, Ms. Max is the Vice President, Secretary
and Treasurer, Mr. Grieper is the Vice President of
Structural Design and Mr. Berse is the Vice President of
Marketing.
Units The Company is offering for sale 200,000 Units (the "Units")
at $0.10 per Unit to residents of the States of
Pennsylvania, Florida, Delaware and New York. Each Unit
consists of 1 Share of Common Stock ($0.001 par value) and
14 Stock Purchase Warrants. Each Warrant entitles the holder
to purchase 1 Share of Common Stock of the Company at a
purchase price of $0.35 per share. The Warrants expire
September 10, 1998. See "Description of the Units."
Capital Stock The Company is authorized to issue 17,250,000 shares
of common stock with a par value of $0.001. No preemptive
rights are authorized and the board of directors is
authorized to determine classes, rights and restrictions to
stock to be issued.
Use of Proceeds If only the shares are sold and none of the warrants
exercised proceeds will be used for working capital and for
inventory. Assuming the warrants are exercised, the proceeds
of this offering will be used for the purchase of Production
Equipment, Mixers and Raw Material. Additional funds will be
used for Marketing, Administration, Research and Development
Training and Working Capital. See "USE OF PROCEEDS."
<PAGE>
Investor Qualifications The Units are offered to citizens of the
states of Delaware, Pennsylvania, New York and Florida in
reliance on Regulation D, Rule 504 of the Securities Act of
1933 (the "Act"). Each investor who proposes to purchase any
Units offered hereby will be required to deliver to the
Company certain subscription documents (Appendix B) together
with the full purchase price. See "PLAN OF DISTRIBUTION."
Risk Factors Investors should carefully consider the factors
under the heading "RISK FACTORS." The Company is essentially
a development stage company with minimal operating history
and has no proven record.
THE COMPANY
Business and Properties
Ginsite Materials Incorporated ("Ginsite") is a developmental stage company
currently engaged in raising capital for the manufacturing, marketing, and sales
of the Ginsite formulation, a material formulation that can enhance or replace
wood, concrete and other costly materials in the construction, plywood,
drywall/gypsum, roofing, tile, and marine industries, in addition to other
numerous undetermined applications. Ginsite was incorporated as a Florida
corporation on August 7, 1997 with 17,250,000 authorized shares, par value
$0.001. The directors of the Company include Murray Ginsberg, Audrey Max, Barry
Grieper and Harvey Berse. There are currently no shareholders in the
corporation. The Company holds no properties other than its rented office space
at 1910 N.E. Miami Court, Miami, Florida 33132. Mr. Ginsberg is the President
and CEO of the Corporation, Mr. Max is the Vice President, Secretary, Treasurer,
Mr. Grieper is the Vice President of Structural Design and Mr. Berse is the Vice
President of Marketing. Including the officers listed above, the Company
consists of four full-time employees. Ginsite currently has no employment
contracts in place with any of its employees and has no pension or
profit-sharing arrangements.
Ginsite's accountant is Sartori & Co., P.A., 275 Commercial Boulevard,
Suite 260, Lauderdale By The Sea, Florida, 33308, and their banker is Great
Western Bank, 1400 N.W. 17th Avenue, Miami, Florida 33125.
The Company is not currently involved in litigation or other legal dispute,
is not the subject of any pending government investigation and is not involved
in any other significant disputes.
<PAGE>
Patents
Mr. Murray Ginsburg filed patent application GINMPA0195 on July 28th, 1995
for Ginsite, a formulation that is four times stronger than concrete and
one-fourth of the weight. Ginsite is also non-porous, Ginsite will adhere to
most anything, repels mildew, can be flexible or rigid and comes in all colors
except pure white and clear due to its components. Ginsite will not shatter and
can be cut or drilled with conventional tools. Ginsite will encapsulate any
bullet from penetration into a minimum of two inches.
On August 7th, 1997, Mr. Murray Ginsberg formally assigned a certain patent
pending originally dated July 28, 1995 known by its serial number GINMPA0195 to
Ginsite Materials Incorporated (SEE "ASSIGNMENT OF PATENT")
RISK FACTORS
Investment in the Company involves a number of risks. In addition to the
risks and investment considerations discussed elsewhere in the Memorandum, the
following factors should be considered prior to purchasing the Units offered
through this Memorandum:
Absence of Public Market; Illiquidity
The issuance of the Common Stock will not be registered under the
Securities Act, and there is no public market for the Common Stock. It is
unlikely that a market will develop due to the limited number of investors. This
stock is being sold in reliance on Regulation D, Rule 504, which has no
restrictions on the transferability of the stock. This freedom from restrictions
does not guarantee a market will exist. The ability of all shareholders to sell
their stock may be detrimental to an individual investor. The Company does not
contemplate filing a registration statement with the SEC any time in the near
future and may or may not register the shares to be traded on a national market.
This means that while the shares are free from restrictions on the sales, an
investor may not be able to sell them to any third person.
Lack of Operating History
The Company was organized in 1997 and has been continually developing its
products since that time. Since the Company has not proven the essential
elements of profitable operations, investors in the offering will be furnishing
venture capital to the Company and will bear the risk of complete loss of their
investment in the event the Company's business plan is unsuccessful.
Paid in Capital Has funded Operations
All of the operating capital of the company since its inception has come
from cash paid in by Principal Shareholders. The Company has not been
profitable, nor has it generated sufficient capital to cover the on-going
operating expenses. The Company has no current revenues at this time.
<PAGE>
Dependence on Key Personnel
The Company is dependent upon the services and effort of its executives and
operating officers. The loss of one of its executives and operating officers
could have a materially adverse effect on the Company.
Market restrictions on Broker-Dealers
The Company's Units, Common Stock, and Warrants are covered by Securities
and Exchange Commission Rule that imposes additional sales practice requirements
on broker-dealers who sell such securities to persons other than established
customers and Accredited Investors (generally institutions with assets in excess
of $5 million or individuals with net worth in excess of $1 million or annual
income exceeding $200,000 or $300,000 jointly with their spouse).
The transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
effect the ability of broker-dealers to sell the Company's securities in the
secondary market. Further, (i) the Company's securities will initially not be
quoted on a NASD inter-dealer system called "the Bulletin Board," but may some
time in the future, (ii) The Company will not have $4 million in assets or $2
million in stockholder's equity, which are both required for it to qualify for
quotation on NASDAQ, and (iii) the Company's securities are not being sold at $5
a share or $5 per warrant are not expected to soon command a market price of $5
per share or a warrant, the price required for a non- NASDAQ quoted security to
escape the trading severity's imposed by the Securities and Exchange Commission
on so-called "Penny Stocks." These trading severity's tend to reduce
broker-dealer and investor interest in "Penny Stocks" and could operate to
inhibit the ability of the Company's securities to reach a $3 per share trading
price that would make them eligible for quotation on NASDAQ even should they
otherwise qualify for quotation on NASDAQ.
Need for Additional Capital
The net proceeds from the sale of the Unites offered herein may be
insufficient to achieve the business plan or attain the economic projections
described herein. To do, the Warrants contained in the Units must be exercised
within the exercise period. No assurance can be given, and none is given, that
the Company's Common Stock will trade at levels high enough to cause the
Warrants to be exercised by that time or, even, at all. Should the Warrants not
be exercised, additional capital will have to be raised to achieve the business
plan.
Dependence Upon Offering Proceeds
There is no assurance that such additional financing will be available when
required in order to proceed with the business plan or that the Company's
ability to respond to competition or changes in the marketplace or to exploit
opportunities will not be limited by lack of available capital financing. If the
Company is unsuccessful in securing the additional capital needed to continue
operations within the time required, the Company will not be in a position to
continue operations and the purchasers of the Units in this offering may lose
their entire investment.
<PAGE>
Continued Control by Existing Management
The Company's management currently owns substantially all of the company's
outstanding Common Stock. Even if the maximum number of Units is sold, current
management will control approximately 73.0% of the voting stock which, in either
case, may be sufficient to elect all of the Company's directors and control the
management, policies and operation of the Company. Accordingly, new shareholders
will lack an effective vote with respect to the election of direct and other
corporate matters. See "PRINCIPAL SHAREHOLDERS" and "DESCRIPTION OF COMMON
STOCK."
Best Efforts Offering
The offering made on a "best efforts, no minimum offering" basis. This
provides that all funds are put into an escrow account but are available to the
Company to be used immediately according to the detailed "ESTIMATED USE OF
PROCEEDS". Because the offering is made on a best-efforts basis, there can be no
assurance that all or any of the Units offered hereunder will be sold. If less
than the complete Offering is sold, the Company may experience additional
financial pressures that will involve risks for the Company that will not be
present if all of the Units are sold in the offering. In that event, the Company
will be forced to seek additional capital sooner than would otherwise be the
case in order to proceed with the Company's business plan. No person has
committed to provide the Company with the additional capital needed by the
Company and there can be no assurance that additional funds will be available
when required on terms acceptable to the Company. See "ESTIMATED USE OF
PROCEEDS" and "RISK FACTORS."
Arbitrary Determination of Offering Price
The offering price of the Common Stock was arbitrarily set by the Company.
No independent investment banking firm was retained to assist in determining the
offering price. No market exists for the Common Stock of the Company and there
can be no assurance that a trading market will develop for the Common Stock in
the future. The offering price of the Common Stock may not bear any relation to
the actual value of the Common Stock. Among the factors considered in
determining the price were estimates of the prospects of the Company, the
background and capital contributions of Management and current conditions in the
securities markets and the data processing industry. There is, however, no
relationship between the offering price of the Common Stock and the Company's
assets, earnings, book value or any objective criteria of value.
Regulation of Product
Although the products of the Company are not currently subject to any
regulatory body, there is no guarantee that this will remain the case. It is
determined at a later date that the Company falls under the jurisdiction of a
regulatory authority, this may curtail sales of the product or force
modifications that may affect sales. The future plans of the company do not
include any funds or compliance with any regulations, state or federal.
<PAGE>
DILUTION
"Dilution" is normally defined as the difference between the offering price
per share of Common Stock and the net tangible book value per share of Common
Stock immediately after the offering. The following table illustrates the
dilution on a per share basis of the Company's Common Stock, assumes the sale of
all 200,000 Units offered herein, and the exercise of all 2,800,000 Warrants
contained in the Units.
Investors' offering price per share of Common Stock $0.100
Investors' offering price per Warrant $0.350
Investors' contribution considering all stock and warrants are
purchased and exercised (This total is per share.) $0.333
Net tangible book value per share of Common Stock prior to this offering $0.000
PROFORMA net tangible book value after this offering $0.085
Dilution to the investors $0.248
ESTIMATED USE OF PROCEEDS
The net proceeds of the sale of all the Units will be $20,000. The offering
expenses includes fees payable to attorneys, accountants and experts, printing
and escrow expenses and other costs related to the offering and will be paid
from proceeds of the offering.
The Company anticipates that the net proceeds will be used as follows and
in the following order of priority as and to the extent funds are received from
the sale of the Units:
Item Estimated Amount
Working Capital $16,000
Inventory $4,000
Total $20,000
Assuming the exercise of all 2,800,000 Warrants contained in the Units
offered herein, the $980,000 proceeds from such exercise of Warrants shall be
used as follows:
Item Estimated Amount
Production Equipment and Mixers $200,000
Ray Material (Inventory) $100,000
Leases $ 25,000
<PAGE>
Marketing $200,000
Administration $100,000
Working Capital $200,000
Research and Development $ 50,000
Training of Specialists $ 50,000
Legal Costs for Patent and Corporate Work $ 55,000
Total $980,000
The net proceeds of this offering, assuming all Units are sold, will be
sufficient to sustain the planned marketing and development activities of the
Company for a period of 12 months, depending upon the number of Units sold in
the offering and other factors. Even if all Units offered hereunder are sold,
the Company will require additional capital in order to fund continued
development activities and capital expenditures that must be made. There can be
no assurances that any securities offerings will take place in the future, or
that funds sufficient to meet any of the foregoing needs or plans will be raised
from operations or any other source. See "PLAN OF OPERATION."
PROPOSED BUSINESS
Ginsite Materials Incorporated, was incorporated in Florida in 1997 for the
purpose of developing, manufacturing and marketing the Ginsite formulation, a
material formulation (Ginsite) that can enhance or replace wood, concrete,
stucco and tile and other costly materials in the construction and marine
industries in addition to other numerous undetermined applications.
Business Strategy
The Company plans to complete development of the system and enter into
agreements with roofing contractors, warehouse developers and owners.
Products
One of the Company's products is the Ginsite formulation. Ginsite is a
resin bound material coating that is four times stronger than concrete and one
forth the weight. Ginsite is also non-porous and is water-proof. Ginsite will
adhere to most anything, can be sprayed, brushed or rolled on. It can repel
mildew, can be flexible or rigid and comes in all colors except pure white and
clear due to its components. Ginsite will not shatter and can be cut or drilled
with conventional tools. Ginsite will encapsulate any bullet from penetration
into a minimum of two inches.
Ginsite Materials Incorporated has patents pending covering all aspects of
these concepts, thus allowing it complete control of these markets.
<PAGE>
The Market
Wood
The exploding work population has severely limited wood supply as a prime
resource for building homes and shelter for humans. Most all of the World
Communities now recognize the urgency to address the destruction of the world's
tree supply (rainforest destruction). One consequence is an innovative building
construction element needed as a replacement for wood, concrete and other costly
materials.
The destructive force of nature has been clearly illustrated by devastation
which have completely obliterated communities throughout the United States and
the other world countries. Creating a simple, inexpensive, superior, more
durable construction element that can be inexhaustibly resourced for all
environments plus geared to any skilled level of labor is a giant step forward
in providing permanent housing solutions. The Company will look to build a
strategic alliance with the large modular home building replacing components
with Ginsite.
Concrete
Concrete is the most versatile and widely used building material. It is of
such importance that almost every civil engineering structure uses it. On a
worldwide basis the yearly production of concrete amounts to approximately one
ton per capita. However, concrete is not without its flaws. Concrete is porous,
therefore not completely waterproof. It is subject to shrinkage and expansion.
Pressure caused by expansion of freezing water may be sufficient to cause
deterioration of concrete. Growth of ice crystals under the surface of pavements
causes concrete to scale. (Potholes, cracks)
Ginsite Materials
Ginsite can be used to coat existing concrete products such as septic
tanks, bridges and water pipes to protect and preserve. Ginsite can also be
missed with concrete to increase strength and reduce weight.
None of the flaws that are inherent in using concrete and wood are
applicable to Ginsite blocks. One of the most important materials in the
building construction industry, Concrete Building Block, will be enhanced by
Ginsite. Ginsite is challenging not only the formation of concrete accepted in
building materials but its structural integrity.
Marketing
The Company anticipates using a deliberate path for marketing Ginsite.
Through a series of national and international agreements and/or joint ventures,
a continuing source of revenue can be provided. Ginsite Materials, Inc.
anticipates three (3) distinct sources of revenue:
1. Sales of material formulation
2. Licensing
3. Leasing charges for machinery and equipment
<PAGE>
This three stage revenue approach should generate a continuing revenue
stream to cover its operations while developing and expanding a diversified
commercial construction product line and all other Ginsite applications for the
various cited industries.
The Company has decided to concentrate initially to roofing contractors and
warehouse developers. The demand to waterproof existing flat roofs at lower
costs than to replace them will use up the majority of capacity for the first
production plant.
The initial emphasis upon the Construction market will allow the Company to
grow steadily over the next five years. According to US Department of Commerce,
in 1994 total $ volume in Construction was estimated at $460,000,000,000.
This focus will produce a high volume of sales applications such as
exterior wall covering to replace stucco processing, kitchen and bathroom
counters/sinks/shower areas, street/driveway pavers, driveway resurfacing,
tiles/floor/ceiling and various decorative items and uses.
Competition
The Corporation has applied for a patent (application number GINMPA0195, on
August 28, 1995). There is no active competition of the material formulation at
the present time. To the Company's best knowledge, no other entity or person has
an existence, nor has an application been filed, for any similar technology.
Personnel
Murray Ginsberg, President and CEO, Mr. Murray Ginsberg has been CEO/President
of the Company since inception. Prior to the formation of the Company, Murray
Ginsberg has designed and developed numerous laboratory and clinical devices for
various doctors and investigators which has brought in more than $80 million
into the South Florida economy. His list of credentials include: the invention
and design of numerous medical instruments for the University of Miami School of
Medicine Tissue Bank used for medical research at the UM/Jackson Memorial
Medical Center. He has developed a new head holder and a sterotaxic device for
brain tumors for the Department of Radiation Oncology University School of
Medicine. Prior to joining University of Miami Medical Instrument Laboratories,
Mr. Ginsberg was a former missile systems engineer working for Belock
Instruments in Whitestone, NY., where he worked on Hawk surface-to-air missiles
and the Atlas missile for the United States Defense Department. Mr. Ginsberg
hold a Masters degree in Mechanical Engineering at the Pratt Institute.
Audrey Max, Vice President, Secretary, and Treasurer, Ms. Audrey Max graduated
with a Bachelor of Science degree at Boston University and an Associates Degree
for Business. Administration at Miami Dade Community College. For over 15 years,
she has had experience with both college and university administrations. Her
background included expertise in financial management and has been actively
involved in director responsibilities as a staff associate at the University of
Miami School of Medicine Department of Medical Instrumentation. She provides
<PAGE>
the company with a sound foundation for financial strategies.
Barry Grieper, Vice President of Structural Design, Mr. Barry Grieper served in
the United States Navy as an Electrician. After receiving an honorable discharge
he received his Associate Degree from Miami Dade Junior College and a Bachelor
of Science Degree from the University of Miami. For over 18 years his expertise
has been in home improvements and shell subcontracting. From 1978 to present,
Mr. Grieper's was owner of Global Industries and Manufacturing, a home
improvement and shell subcontracting company. Mr. Grieper will provide his many
years of construction design development to the company.
Harvey J. Berse, Vice President of Marketing, For 14 years, Mr. Harvey Berse has
been actively involved in sales and marketing in the TV & Major Appliance
wholesale distribution & manufacturing industry. He has been Sales Manager &
Production Specialist for Westinghouse Sales & Service Co., New York. He was
also District Sales Manager for the home entertainment division for Sylvania
Home Electronics.
PLAN OF OPERATION
General
Once manufacturing has begun, Company intends to begin operations by
concentrating solely on the Construction, Concrete, Drywall and Plywood Market
in the United States. After 5 years, the Corporation plans to expand slowly into
the International market and other types of markets such as boating and tile.
The Company will also require additional capital in order to be successful.
Marketing Strategy
The Company believes much of its marketing will be to builders, warehouse
developers and owners and roofing contractors. The Company will however, engage
in product demonstrations, attend Trade Shows throughout the US and develop a
video presentation. The product will also be marketed to dealers throughout the
US
Pricing
The Ginsite formula is priced ver competitively. There is a demand to
waterproof existing flat roofs and to use superior, cheaper materials for
building and construction. The structure will be flexible and specific to each
application.
The Future
The Company plans to raise additional capital for its long-term needs by
examining merger or acquisition candidates. Potential candidates will be
compatible with the goals for further taking the patented product to market and
providing for raising funds in the public securities market.
<PAGE>
MANAGEMENT
Directors and Executive Officers
Murray Ginsberg, President & CEO
Audrey Max, vice President, Secretary, Treasurer
Barry Grieper, Vice President of Structural Design
Harvey Berse, Vice President of Marketing
Executive Compensation
Estimated Cash Compensation Table
<TABLE>
<CAPTION>
Name of individual or Capacities in Cash Compensation
Number in group which served Pre-operating Post Operating
- --------------- ------------ ------------- --------------
<S> <C> <C> <C>
Murray, Ginsberg President, CEO $0 $40,000
Audrey Max VP, Sec, Treas $0 $25,000
Barry Grieper VP Structural Design $0 $25,000
Harvey Berse VP of Marketing $0 $25,000
</TABLE>
All of the foregoing amounts are estimates based upon the Company's
internal forecast and budget. There can be no assurance that the amount of
compensation actually paid, or persons to whom it is paid, will not differ
materially form the above estimates.
Employment and Consulting Agreements
The Company has no current employment contract or consulting agreements in
place.
Stock Options
The Corporation has not authorized, nor does it have in place, any stock
option plans.
PRINCIPAL SHAREHOLDERS
The following tables set forth as of the date of this Memorandum the amount
of the Company's Common Stock beneficially owned by each officer and director of
the Company and by each person owning more than five percent of any class of the
Company's voting securities. As of the date of the Memorandum, there are no
other equity securities of the Company outstanding, other than the Common Stock.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name of Before Percentage of Percentage of
Beneficial Owner Offering Outstanding After Offering Outstanding
<S> <C> <C> <C> <C>
Murray Ginsberg 7,917,750 87.5% 7,917,750 65.7%
Barry Grieper 439,875 4.9% 439,875 3.6%
Audrey Max 439,875 4.9% 439,875 3.6%
Other Shareholders 250,000 2.7% 250,000 2.2%
Placement Shares 0 0 3,000,000 24.9%
Total Outstanding 9,047,500 100.0% 12,047,500 100.0%
Officers and Directors
As a Group 8,797,500 97.2% 8,797,500 73.0%
</TABLE>
DESCRIPTION OF COMMON STOCK
Common Stock
Holders of the Common Stock are entitled to one vote for each share held by
them on record on the books of the Company in all matters to be voted on by the
stockholders. Holders of Common Stock are entitled to receive such dividends as
may be declared from time to time by the Board of Directors out of funds legally
available, and in the event of liquidation, dissolution or winding up of the
Company, to share ratable of liabilities. Declaration of dividends of Common
Stock is subject to the discretion of the board of directors and will depend
upon a number of factors, including the future earnings, capital requirements
and financial condition of the Company. The Company has not declared dividends
on its Common Stock in the past and the Management currently anticipates that
retained earnings, if any, in the future will be applied to the expansion and
the development of the Company rather than the payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and are
not subject to further calls or assessments by the company. There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock currently outstanding is, and the Common Stock offered by the Company
hereby will, when issued, be validly issued, fully paid and non-assessable.
Limitations of Directors Liability
The Company's Certificate of Incorporation Eliminates, subject to certain
exceptions, the personal liability of directors tot he Company or its
Stockholders from monetary damages for breaches of fiduciary duty by such
directors. The Certificate of Incorporation does not provide for the elimination
of or any limitation on the personal liability of directors for (i) any breach
of the directors duty of loyalty to the company or its Stockholders, (ii) acts
or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) unlawful corporate distributions, or (iv) any
transaction from which such director derives an improper personal benefit. This
provision of the certificate of incorporation will limit the remedies available
to a Stockholder who is dissatisfied with a decision of the board of directors
protected by this provision; such stockholders only remedy may be to bring a
suit to prevent the action of the board. This remedy may not be effective in
<PAGE>
many situations because stockholders are often unaware of a transaction or event
prior to board action in respect of such transaction or event. In these cases,
the Stockholders and the Company could be injured by a boards' decision and have
no effective remedy.
Securities Restrictions
Purchasers of the Units of Common Stock offered hereby must be aware of the
long-term nature of their investment and be able to bear the economic risk of
their investment for an indefinite period of time. There is no public trading
market for the Units of Common stock and there can be no assurance that any such
market will develop in the foreseeable future. The Shares of Common Stock have
not been registered under the Securities Act or the Securities Laws of any
state, except as required in the State of New York. The right of any purchaser
to sell, transfer, pledge or otherwise dispose of such securities is limited by
the Securities Act and state securities laws and the regulations promulgated
thereunder. The shares of stock are not restricted as that term is defined in
Rule 144 of the Act, but no market for the resale of the securities exists at
this time. Rule 504 provides that the shares can be issued with no restrictive
language but no national market exists for the trading of these securities.
Warrants
Each purchaser of the Units will entitle the record owner to purchase
fourteen (14) shares of the Company's Common Stock at a purchase price of $0.35
per share. This warrant must be exercised and fully paid prior to September 01,
1998 as provided under the Warrant Agreement provided to each purchaser of the
Units. The Warrants are also offered for sale in reliance on Rule 504 and are
free trading upon exercise. At this time no market for the resale of those
securities exists and investors may not be able to sell their securities.
DIVIDEND POLICY
The Company's Board of directors presently intends to cause the Company to
follow a policy of retaining earnings, if any, for the purpose of increasing the
net worth and reserves of the Company. Therefore, there can be no assurance that
any holder of Common Stock will receive any cash, stock or other dividends on
his shares of Common Stock. To date, the Company has neither declared nor paid
any dividends on its Common Stock nor does the Company anticipate that dividends
will be paid in the foreseeable future. Rather, the Company intends to apply
earnings to the expansion and development of its business.
TERMS OF PLACEMENT
The Company may extend the offering period beyond December 10, 1997 for an
additional period through January 9, 1998 for the sale of the Offering. All
Units are offered on a "best efforts, no minimum offering" basis. There can be
no assurance that any Units of the Offering will be sold. The warrants must be
exercised by September 10, 1998 or they will lapse. This limitation exists
regardless of when the Units are purchased. Funds will be delivered to the
<PAGE>
Company and checks will be made out to Ginsite Materials, Inc. and tendered to
the Company. No escrow account will be set up and all proceeds will be directly
available to the Company.
PLAN OF PLACEMENT
The Units are offered directly by the Company in accordance with the terms
and conditions set forth in this Memorandum. The Company offers the Units on a
"best efforts, no minimum" basis which means that no person or participating
dealers is obligated to purchase any shares. The Company will use its best
efforts to sell the Units to investors. There can be no assurance that all or
any of the Units offered hereunder will be sold. The company will provide no
escrow fund and the proceeds of the offering will be available to the Company
immediately for use as provided for in this offering.
LITIGATION
There are no pending legal proceedings to which the Company is a party.
LEGAL MATTERS
Gary R. Blume, Esquire, 11801 North Tatum Boulevard, Suite 108, Phoenix,
Arizona, 85028, will pass upon certain matters for the Company. Mr. Blume is
also a shareholder of the Company, having 50,000 shares of Common Stock. The
Company consents and understands this potential conflict of interest.
ADDITIONAL INFORMATION
In the opinion of the Board of Directors of the Company, this Memorandum
contains a fair presentation of the subjects discussed herein and does not
contain a misstatement of a material fact or fail to state a material fact
necessary to make any statements made herein not misleading. Persons to whom
offers are made will be furnished with such additional information concerning
the Company and other matters discussed herein as they, or their purchaser
representative or other advisors, may reasonably request. The Company shall, to
the extent such information is available or can be acquired without unreasonable
effort or expense, endeavor to provide the information to such persons. All
officers are urged to make such personal investigations, inspections or
inquiries as they deem appropriate.
<PAGE>
EXHIBIT A
GINSITE MATERIALS, INC.
Subscription Document
1. The undersigned hereby subscribes for _______________ units of common stock
(hereinafter "Shares"), as described in the Private Offering Memorandum
dated September 01, 1997 ("Memorandum"), of Ginsite Materials, Inc., a
Florida corporation (the "Company"), being offered by the Company for a
purchase price of $0.10 per share and tenders herewith the sum of
$__________ in payment therefor, together with tender of this Subscription
Agreement.
2. The undersigned represents and warrants that he is a bona fid resident of
the State of ______________________ and the county of
___________________________.
3. The undersigned acknowledges:
1. Receipt of a copy of the Private Offering Memorandum;
2. That this subscription, if accepted by the Company, if legally binding
and irrevocable;
3. That the Company has a very limited financial and operating history;
4. That the Shares have not been registered under the Securities Act of
1933, as amended, in reliance upon exemptions contained in that Act,
and that the Shares have not been registered under the securities acts
of any state in reliance upon exemptions contained in certain state's
securities laws; and
5. That the representations and warranties provided in this Subscription
Document are being relied upon by the Company as the basis for the
exemption from the registration requirements of the Securities Act of
1933 and of the applicable state's securities laws.
4. The undersigned represents and warrants as follows:
1. That the undersigned subscriber is purchasing the Shares as an
investment and the Shares are purchased solely for the undersigned's
own account.
2. That the undersigned subscriber has sufficient knowledge and
experience in financial and business matters to evaluate the merits
and risks of an investment in the Shares;
3. That the undersigned subscriber is able to bear the economic risk of
an investment in the Shares;
<PAGE>
4. That the undersigned subscriber has read and is thoroughly familiar
with the Private Offering Memorandum and represents and warrants that
the subscriber is aware of the high degree of risk involved in making
an investment in the Shares;
5. That the undersigned subscriber's decision to purchase the Shares is
based solely on the information contained in the Private Offering
Memorandum and on written answers to such questions as he has raised
concerning the transaction;
6. That the undersigned subscriber is purchasing the Shares directly from
the Company and understands that neither the Company nor the Offering
is associated with; endorsed by nor related in any way with any
investment company, national or local brokerage firm or other broker
dealer. The undersigned subscriber's decision to purchase the Shares
is not based in whole or in part on any assumption or understanding
that an investment company, national or local brokerage firm or other
broker dealer is involved in any way in this Offering or has endorsed
or otherwise recommended an investment in these Shares.
7. That the undersigned subscriber has an investment portfolio of
sufficient value that he could suitably absorb a high risk illiquid
addition such as an investment in the Shares.
8. The undersigned further represents that (INITIAL APPROPRIATE
CATEGORY):
[ ] I am a natural person whose individual net worth, or joint worth
with my spouse at the time of purchase, exceeds $200,000;
[ ] I am a natural person who had an individual income in excess of
$50,000 or joint income with my spouse in excess of $50,000 in
each of the two most recent years and who reasonably expects an
income in excess of those amounts in the current year;
(a) That Regulation D requires the Company to conclude that each investor
has sufficient knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the shares, or to verify that the investor has retained
the services of one or more purchaser representatives for the purpose
of evaluating the risks of investment in the shares, and hereby
represents and warrants that he has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of an investment in the shares and of making an
informed investment decision and will not require a purchaser
representative.
5. The undersigned understands and agrees that this subscription is made
subject to each of the following terms and conditions:
<PAGE>
1. The Company shall have the right to accept or reject this
subscription, in whole or part, for any reason. Upon receipt of each
Subscription Document, the Company shall have until December 10, 1997
in which to accept or reject it. If no action is taken by the Company
within said period, the subscription shall be deemed to have been
accepted. In each case where the subscription is rejected, the Company
shall return the entire amount tendered by the subscriber, without
interest;
2. That the undersigned subscriber will, from time to time, execute and
deliver such documents or other instruments as may be requested by the
Company in order to aid the Company in the consummation of the
transactions contemplated by the Memorandum.
6. The undersigned hereby constitutes and appoints the Company, with full
power of substitution, as attorney-in-fact for the purpose of executing and
delivering, swearing to and filing, any documents or instruments related to
or required to make any necessary clarifying or conforming changes in the
Subscription Document so that such document is correct in all respects.
7. As used herein, the singular shall include the plural and the masculine
shall include the feminine where necessary to clarify the meaning of this
Subscription Document. All terms not defined herein shall have the same
meanings as in the Memorandum.
IN WITNESS WHEREOF, the undersigned as executed this Subscription Document
this ____________ day of _______________________, 1997.
Number of Shares _____________________
Total amount tendered $____________________
INDIVIDUAL OWNERSHIP: _________________________________________
Name (Please Type or Print)
------------------------------------------
Signature
------------------------------------------
Social Security Number
JOINT OWNERSHIP: __________________________________________
Name (Please Type or Print)
------------------------------------------
Social Security Number
------------------------------------------
Name (Please Type or Print)
<PAGE>
OTHER OWNERSHIP: __________________________________________
Name (Please Type or Print)
By:____________________________________
(Signature), Title:___________________
------------------------------------------
Employer Identification Number
ADDRESS:____________________________________________________________________
Street City State Zip
Phone (Residence)_______________________; Phone (Business) ____________________
I, __________________________, do hereby certify that the representations
made herein concerning my financial status are true, and that all other
statements contained herein are true, accurate and complete to the best of my
knowledge.
Date: _______________________, 1997
------------------------------------------
Signature
CERTIFICATE OF DELIVERY
I hereby acknowledge that I delivered the foregoing Subscription Document
to ________ ____________________ on the ___________ day of
______________________, 1997.
------------------------------------------
Signature
ACCEPTANCE
This Subscription is accepted by Ginsite Materials, Inc. as of the
__________ day of ___________________, 1997.
GINSITE MATERIALS, INC.
By:_____________________________________
Murray Ginsberg, President
<PAGE>
EXHIBIT B
Warrant # W ______________ To Purchase ________ Shares of
Common Stock ($0.001 par value)
WARRANT OF
GINSITE MATERIALS INCORPORATED
INCORPORATED UNDER THE LAWS OF
THE STATE OF FLORIDA
Section 1.1 Basic Terms. This certifies that, for value received, the
registered owner is entitled, subject to the terms and conditions of this
Warrant, until the expiration date, to purchase the number of shares of the
Common Stock, par value $0.001 (the "Common Stock"), of Ginsite Materials
Incorporated (the "Corporation") from the Corporation at the purchase price
shown below, on delivery of this Warrant to the Corporation with the exercise
form duly executed and payment of the purchase price (in cash or by certified or
bank cashier's check payable to the order of the Corporation) for each share
purchased.
Registered Owner: ________________________________
================================
Purchase Price: Zero and 35/100 Dollars ($0.35) per share.
Expiration date: 5:00 p.m. Eastern Standard Time, September 01, 1998, unless
terminated sooner under this Warrant.
Section 1.2 Corporation's Covenants as to Common Stock. Shares deliverable
on the exercise of this Warrant shall, at delivery, be fully paid and
non-assessable, free from taxes, liens, and charges with respect tot their
purchase. The Corporation shall take any necessary steps to assure that the par
value per share of the Common Stock is at all times equal to or less than the
then current Warrant purchase price per share of the Common Stock issuable
pursuant to this Warrant. The Corporation shall at all times reserve and hold
available sufficient shares of Common Stock to satisfy all conversion and
purchase rights of outstanding convertible securities, options and warrants.
Section 1.3 Method of Exercise; Fractional Shares. The purchase rights
represented by this Warrant are exercisable at the option of the registered
owner in whole at any time, or in part, from time to time, within the period
above specified, provided, however, that purchase rights are not exercisable
with respect to a fraction of a share of Common Stock. In lieu of issuing a
fraction of a share remaining after exercise of this Warrant as to all full
shares covered hereby, the Corporation shall either (a) pay therefor cash equal
to the same fraction of the then current Warrant purchase price per share or, at
its option, (b) issue scrip for the fraction, in registered or bearer from
approved by the Board of Directors of the Corporation, which shall entitle the
holder to receive a certificate for a full share of Common Stock on surrender of
scrip aggregating a full share. Scrip may become void after a reasonable period
(but not less than six months after the expiration date of this Warrant)
determined by the Board of Directors and specified in the scrip. IN case of the
<PAGE>
exercise of this Warrant for less than all the shares available for purchase,
the Corporation shall cancel the Warrant and execute and deliver a new Warrant
of like tenor and date for the balance of the shares purchasable.
Section 1.4 Adjustment of Shares Available for Purchase. The number of
shares available for purchase hereunder and the purchase price per share are
subject to adjustment from time to time as specified in this Warrant.
Section 1.5 Limited Rights of Owner. This Warrant does not entitle the
owner to any voting rights or other rights as a Stockholder of the Corporation,
or to any other rights whatsoever except the rights herein expressed. No
dividends are payable or will accrue on this Warrant or the shares available for
purchase hereunder until, and except that the extent that, this Warrant is
exercised.
Section 1.6 Exchange for Other Denominations. This Warrant is exchangeable,
on its surrender by the registered owner to the Corporation, for new Warrants of
like tenor and date representing in the aggregate the right to purchase the
number of shares available for purchase hereunder in denominations designated by
the registered owner at the time of surrender.
Section 1.7 Transfer. Except as otherwise above provided, this Warrant is
transferable only on the books of the Corporation by the registered owner in
person or by attorney, on surrender of this Warrant, properly indorsed.
Section 1.8 Recognition of Registered Owner. Prior to due presentment for
registration of transfer of this Warrant, the Corporation may treat the
registered owner as the person exclusively entitled to receive notices and
otherwise to exercise rights hereunder.
Section 1.9 Effect of Stock Split, Etc. If the Corporation, by stock
dividend, split, reverse split, reclassification of shares, or otherwise,
changes as a whole the outstanding Common Stock into a different number or class
of shares, then:
(a) the number and class of shares so changed shall, for the purpose of
this Warrant, replace the shares outstanding immediately prior to the change;
and
(b) the Warrant purchase price in effect, and the number of shares
available for purchase under this War4rant, immediately prior to the date upon
which the change becomes effective, shall be proportionately adjusted (the price
to the nearest cent). Irrespective of any adjustment or change in the Warrant
purchase price or the number of shares purchasable under this or any other
Warrant of like tenor, the Warrants theretofore and thereafter issued may
continue to express the Warrant purchase price per share and the number of
shares available for purchase as the Warrant purchase price per share and the
number of shares available for purchase were expressed in the Warrants when
initially issued.
Section 1.10 Effect of Merger, Etc. If the Corporation consolidates with or
merges into another corporation, the registered owner shall thereafter be
entitled on exercise to purchase, with respect to each share of Common Stock
<PAGE>
purchasable hereunder immediately before the consolidation or merger becomes
effective, the securities or other consideration to which a holder of one share
of Common Stock is entitled in the consolidation or merger without any change in
or payment in addition to the Warrant purchase price in effect immediately prior
to the merger or consolidation. The Corporation shall take any necessary steps
in connection with a consolidation or merger to assure that all the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
to any securities or other consideration so deliverable on exercise of this
Warrant. The Corporation shall not consolidate or merge unless, prior to
consummation, the successor Corporation (if other than the Corporation) assumes
the obligations of this paragraph by written instrument executed and mailed to
the registered owner at the address of the owner on the books of the
Corporation. A sale or lease of all or substantially all the assets of the
Corporation for a consideration (apart from the assumption of obligations)
consisting primarily of securities is a consolidation or merger for the
foregoing purposes.
Section 1.11 Notice of Adjustment. On the happening of an event requiring
an adjustment of the Warrant purchase price or the shares available for purchase
hereunder, the Corporation shall forthwith give written notice to the registered
owner stating the adjusted Warrant purchase price and the adjusted number and
kind of securities or other property available for purchase hereunder resulting
from the event and setting forth in reasonable detail the method of calculation
and the facts upon which the calculation is based. The Board of Directors of the
Corporation, acting in good faith, shall determine the calculation.
Section 1.12 Notice and Effect of Dissolution, Etc. In case a voluntary or
involuntary dissolution, liquidation, or winding up of the Corporation (other
than in connection with a consolidation or merger covered by paragraph (Section
1.10) above) is at any time proposed, the Corporation shall give at least a 30
day written notice to the registered owner. Such notice shall contain: (a) the
date on which the transaction is to take place; (b) the record date (which shall
be at least 30 days after the giving of the notice) as of which holders of
Common Shares will be entitled to receive distributions as a result of the
transaction; (c) a brief description of the transaction; (d) a brief description
of the distributions to be made to holders of Common Stock as a result of the
transaction; and (e) an estimate of the fair value of the distributions. On the
date of the transaction, if it actually occurs, this Warrant and all rights
hereunder shall terminate.
Section 1.13 Method of Giving Notice; Extent Required. Notices shall be
given by first class mail, postage prepaid, addressed to the registered owner at
the address of the owner appearing in the records of the Corporation. No notice
to warrant holders is required except as specified herein.
Witness the seal of the Corporation and the signatures of its authorized
Officers.
GINSITE MATERIALS, INC.
Dated:_________________ [Seal]
By:__________________________
<PAGE>
Signature:
- ----------------------------
Title:________________________
ASSIGNMENT FORM
[To be executed by the registered owner to transfer the Warrant]
For value received the undersigned hereby sells, assigns, and transfers to:
Name: ____________________________
Address: ___________________________
---------------------------
this Warrant and irrevocably appoints: ______________________ attorney (with
full power of substitution) to transfer this Warrant on the books of the
Corporation.
Date:_________________ _________________________________
(Please sign exactly as name appears on Warrant)
Taxpayer ID No. __________________________
In the presence of: Signature guaranteed by
- -------------------------- -------------------------------
Exhibit 4.1B
NOTE PURCHASE AGREEMENT
GINSITE MATERIALS, INC.
THE SECURITIES WHICH ARE THE SUBJECT OF THIS NOTE PURCHASE AGREEMENT (AS IT MAY
BE AMENDED FORM TIME TO TIME, THE "AGREEMENT") HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE AND WILL BE OFFERED AND SOLD IN RELIANCE
ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THESE LAWS BY VIRTUE OF THE
INTENDED COMPLIANCE OF GINSITE MATERIALS, INC., WITH SECTION 3(b) OF THE
SECURITIES ACT, THE PROVISIONS OF RULE 504 REGULATION D UNDER SUCH ACT AND
SIMILAR EXEMPTIONS UNDER STATE LAW. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC"), AND STATE
SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This Agreement has been executed by the undersigned purchaser (hereafter,
the "Purchaser") in connection with the private placement of that certain 9%
Convertible Promissory Note (referred to herein as the "Note"), of Ginsite
Materials, Inc. (the "Company"), a publicly-held and traded corporation formed
under the laws of the State of Florida. The Note is being offered and sold in
reliance upon the exemption from securities registration afforded by the
provisions of rule 504 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act" or the "Securities Act").
This Note Purchase Agreement (this "Agreement") is made as of the 8th day of
February, 1999.
Section 1.1 Purchase and Sale of the Note. Upon the following terms and
conditions, the Company shall issue and sell the Note to the Purchaser, and the
Purchaser shall purchase the Note from the Company. The Note shall be
represented in the form of Exhibit A attached hereto and incorporated herein by
reference. The Note is convertible in accordance with its terms into
non-legended common stock of the Company, $.001 par value per share ("Common
Stock"). The Note shall be in the aggregate principal amount of US$254,000.00,
and shall be sold at the Purchase Price (defined below), at the Closing (defined
below). Interest on the note shall be paid in accordance with the terms of the
Note.
Section 1.2 Purchase Price. The total aggregate purchase price for the Note
(the "Purchase Price") shall be One Hundred Thousand Dollars ($100,000.00). The
parties acknowledge their execution of that certain notice purchase agreement
(including all exhibits and addenda thereto as executed by the parties, the
"Prior Agreement") between themselves dated as of January 6, 1999, pursuant to
which the Company undertook certain obligations as described the Prior Agreement
(the "Obligations"), including without limitation the execution and delivery of
a promissory note (the "Prior Note") in the amount of US$150,000.00. If the
obligations were not timely met by the Company, the Purchaser had the right to
<PAGE>
to call the Prior Note due at any time. The Company has acknowledged and does
hereby acknowledge that the Obligations have not been and will not be timely
met, and that the Purchaser has or will have the right to demand repayment of
the amounts due under the Prior Note. The parties have agreed that, in lieu of
the Purchaser requiring repayment of the amounts due under the Prior Note, the
said amounts (along with the penalty described in Section 1.6 of the Prior
Agreement) would be treated as a portion of the consideration for the Note, and
added to the principal amount for the Note, for a total consideration of US
$254,000.00. The parties agree that, so long as (and only if) each of the
parties fulfills each and every one of its respective obligations as contained
in this Agreement (and in the exhibits and addenda attached hereto as executed
by the parties), then as of the date of this Agreement, the Prior Agreement and
the Prior Note shall be and are hereby terminated and canceled.
Section 1.3 Closing.
(a) the closing of the purchase and sale of the Note (the "Closing"), shall
take place at the law offices of H. Glenn Bagwell, Jr. (the "Escrow Agent"),
3005 Anderson Drive, Suite 204, Raleigh, N.C., USA 27609 (telephone:
919.785.3113, telecopier 919.785.3116), on the later of the following (the
"Closing Date"): (i) the date on which the last to be fulfilled or waived of the
conditions set forth in Sections 4.1 and 4.2 hereof and applicable to the
Closing shall be fulfilled or waived in accordance herewith, or (ii) such other
time and place and/or on such other date as the Purchaser and the Company may
agree.
(b) On the Closing Date, the Company shall, through the Escrow Agent,
deliver to the Purchaser the Note issued in the name of the Purchaser, and the
Escrowed Shares (defined below). The Purchaser shall on the Closing Date deliver
to the Escrow Agent on behalf of the Company the Purchase Price for the Note by
wire transfer in immediately available funds to such account as shall be
designated in writing by the Escrow Agent. Upon receipt of the Note and the
Escrowed Shares, the Escrow Agent shall immediately deliver via wire transfer
the Purchase Price (less any fees agreed to be paid by the Company) to the
Company, and the note to the Purchaser. The Escrowed Shares shall be held by the
Escrow Agent in accordance with the terms of the Escrow Agreement (defined
below), pending conversion of the Note in accordance with their terms. In
addition to the above, each party shall deliver to the Escrow Agent on behalf of
the other all documents, instruments and writings required to be delivered by
such party pursuant to this Agreement at or prior to the Closing.
Section 1.4 Reporting Status: Compliance with rule 504. The Company
represents and warrants that, as of the date of this Agreement, the Company is
not subject to the reporting requirements of Section 13 or 15(d) of the
Securities 19343 Act of 1934, as amended (the "1934 Act"), the Company is not an
investment company or a developmental stage company that either has no specific
business plan or purpose, and the Company is otherwise in compliance with the
requirements of Rule 504 of Regulation D with respect to the offerings
contemplated hereby, and is able to and does hereby offer and sell the note and
the underlying Common Stock (collectively the "Securities") in accordance with
the provisions of Rule 504. The Company is able to issue the Note and the
Escrowed Shares in accordance with Rule 504.
<PAGE>
Section 2.1 Representations and Warranties of the Purchaser. The Purchaser
makes the following representations and warranties to the Company.
(a) Accredited Investor. The Purchaser is an "accredited investor" under
the definition set forth in Rule 501(a) of Regulation D, promulgated under the
Securities Act.
(b) Speculative Investment. The Purchaser is aware that an investment in
the Securities is highly speculative and subject to substantial risks. The
Purchaser is capable of bearing the high degree of economic risk and the burden
of this venture, including, but not limited to, the possibility of complete loss
of the Purchaser's investment in the Securities which make liquidation of this
investment impossible for the indefinite future.
(c) Privately Offered. The offer to acquire the Note was directly
communicated to the Purchaser in such manner that the Purchaser was able to ask
questions of an receive answers concerning the terms and conditions of this
transaction. At not time was the Purchaser presented with or solicited by or
through any leaflet, public promotional meeting, television advertisement, or
any other form of general advertising.
(d) Purchase of Note. The Note is being acquired solely for the Purchaser's
own account, and is not being purchased with view to the resale, distribution,
subdivision or fractionalization of the Note without proper registration with
applicable securities administrators or an applicable exemption from such
registration (including without limitation Rule 504).
(e) Access to Information. Purchaser or Purchaser's professional advisor
has been granted the opportunity to ask questions or and receive answers from
representatives of the company, its officers, directors, employees and agents
concerning the terms and conditions of the offering of Securities, the Company,
its business and prospects, and to obtain any additional information which
Purchaser or Purchaser's professional advisor deems necessary to verify the
accuracy and completeness of the information received.
(f) Reliance on Own Advisors. Purchaser has relied on the advice of, or has
consulted with, Purchaser's own tax, investment, legal or other advisors and has
not relied on the Company or any of its affiliates, officers, directors,
attorneys, accountants or any affiliates of any thereof and each other person,
if any, who controls any thereof, within the meaning of Section 15 of the
Securities Act for any tax or legal advice. The foregoing, however, does not
limit or modify Purchaser's right to rely upon representations and warranties of
the Company in Section 2.2 of this Agreement and any representations of any
third parties acting as agents for or on the Company's behalf.
(g) Capability to Evaluate. Purchaser has such knowledge and experience in
financial and business matters so as to enable such Purchaser to utilize the
information made available to it in connection with the offer of the Securities
in order to evaluate the merits and risks of the prospective investment.
(h) Authority. Purchaser has full power and authority to execute and
deliver this Agreement and each other document included herein for which a
<PAGE>
signature is required in such capacity and on behalf of the subscribing
individual, partnership, trust, estate, corporation or other entity for whom or
which Purchaser is executing this Agreement.
Section 2.2 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization and Qualification. The Company (and each of its
subsidiaries, if applicable) is a corporation duly incorporated and existing in
good standing under the laws of the State of Florida and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each subsidiary, if any, is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary other than those in which the failure so to qualify
would not have a Material Adverse Effect. "Material Adverse Effect", for
purposes of this Agreement, means any adverse effect on the business,
operations, properties, prospects, or financial condition of the entity with
respect to which such term is used and which is material to such entity and
other entities controlled by such entity taken as a whole.
(b) Authorization; Enforcement. (i) The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue
Securities and the Escrowed Shares in accordance with the terms hereof, (ii) the
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
company or its board of Directors or stockholders is required, (iii) this
Agreement has been duly executed and delivered by the Company, (iv) this
Agreement constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application) and (v) prior to the Closing Date, any necessary amendment to the
Company's Articles of Incorporation authorizing Company to issue all of the
Securities and the Escrowed Shares will have been filed with the Secretary of
State of the state in which the Company is incorporated and will be in full
force and effect, enforceable against the Company in accordance with the terms
of such amended Articles of Incorporation.
(c) Authorized Capital; Rights or Commitments to Stock. As of December 31,
1998, the authorized capital stock of the Company consisted of 17,250,000 shares
of Common Stock, of which approximately 13,759,264 shares were issued and
outstanding as of such date.
All of the outstanding shares of the Company's Common Stock have been
validly issued and are fully paid and non-assessable. Except as stated above or
as described in Exhibit C (attached only if applicable), no shares of Common
Stock are entitled to registration rights or preemptive rights, and there are no
(I) outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities (not
including the Note) or rights convertible into, any shares of capital stock of
<PAGE>
the Company, (II) contract, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of capital
stock of the Company or (III) options, warrants, scrip, rights to subscribe to,
or commitments to purchase or acquire, any shares, or securities (wither the
Note or other notes, debentures, preferred stock or otherwise) or rights
convertible into shares of capital stock of the Company. Exhibit C shall
specifically indicate registration rights associated with any such securities
and whether the Company intends to register such securities or capital stock
underlying such securities within one (1) year after the Closing Date.
(d) Issuance of Securities. The issuance of the Securities, including also
the Escrowed Shares, has been duly authorized and, when paid for and issued in
accordance with the terms hereof, the note shall be validly issued, fully paid
and non-assessable and entitled to the rights described in Exhibit A hereto. The
Common Stock issuable upon conversion of the Note and the Escrowed Shares will
be duly authorized and reserved for issuance and, upon conversion, will be
validly issued, fully paid and non-assessable, and the holders shall be entitled
to all rights and preferences accorded to a holder of Common Stock.
(e) No Conflicts. The Company has furnished or made available to the
Purchaser true and correct copies of the Company's Articles of Incorporation as
in effect on the date hereof (the "Articles"), and the Company's By-Laws, as in
effect on the date hereof (the "By-Law"). The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby do not and will not (i) result in a
violation of the Company's Articles or By-Laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or assets of the company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect; provided that , for purposes of such
representation as to federal, state, local or foreign law, rule or regulation,
no representation is made herein with respect to any of the same applicable
solely to the Purchaser and not to the Company. The business of the Company is
not being conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations which either singly or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required under federal, state or local law, rule or regulation in the United
States to obtain any consent, authorization or order of, or make any filing
(other than any filing of a vote establishing a class or series of stock with
the Secretary of State or similar authority of the state in which the Company is
incorporated) or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Note in accordance with the terms hereof, except
the filing of Form D with the SEC; provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Purchaser
herein. The Company will send a copy of the Form D to the Escrow Agent once
<PAGE>
filed with the SEC.
(f) Reporting Status; Financial Statements. The Company is not as of the
date hereof subject to the reporting requirements of Sections 13 or 15(d) of the
1934 Act. The Company is not an investment company or a developmental stage
company that has no specific business plan or purpose.
Except as set forth in Exhibit C, no information or documentation provided
to the Purchaser as of the date hereof has contained any untrue statement of a
material fact or has omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as set forth in
Exhibit C, the financial statements of the Company provided to the Purchaser, if
any, comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the Note thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) No Material Adverse Change. Since at least December 31, 1997, no
Material Adverse Effect has occurred or exists with respect to the Company or
any of its subsidiaries.
(h) No Undisclosed Liabilities. The Company and its subsidiaries have no
material liabilities or obligations not disclosed to the Purchaser in writing,
other than those incurred in the ordinary course of the Company's or any of its
subsidiaries' respective businesses since January 31, 1999, which, individually
or in the aggregate, do not or would not have a Material Adverse Effect on the
Company or any of its subsidiaries.
(i) No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or any of its subsidiaries or
their respective businesses, properties, prospects, operations or financial
condition which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.
(j) No General Solicitation. Neither the Company, nor any of its
affiliates, or, to the best of its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) in connection with the offer
or sale of the Securities.
(k) No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any of the Company's securities or solicited any offers
<PAGE>
to buy any of such securities, under circumstances that would prevent the
Company from offering the Securities and delivering the Escrowed Shares pursuant
to Rule 504.
Section 3.1 Securities Compliance. The Company shall to the extent required
notify the SEC, NASD and NASDAQ OTC Bulletin Board Market, in accordance with
their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required by
applicable law, rule and regulation, for the legal and valid issuance of the
Note, the Common Stock issuable upon conversion thereof, to the Purchaser.
Section 3.2 Registration and Listing. Until at least one (1) year after all
of the principal of the Note has been converted into Common Stock, the company
will take all action within its power to continue the listing or trading of its
Common Stock on the NASDAQ Bulletin Board Market (or other principal market) and
will comply in all respects with the company's reporting, filing and other
obligations under the bylaws or rules of the NASD and NASDAQ. The covenants set
forth in this Section 3.2 shall not be deemed to prohibit a merger, sale of all
assets or other corporate reorganization if the entity surviving or succeeding
to the Company is bound by this Agreement with respect to its securities issued
in exchange for or in replacement of the Note or Common Stock or the
consideration received for or in replacement of the Note or Common Stock is
cash.
Section 3.3 Transfer Agent Instructions.
a. The Note. Except as noted in Section 3.4 below, upon conversion of the
Note, the Purchaser shall give a notice of conversion to the Company and the
Company shall instruct its transfer agent to issue, and deliver to Purchaser
within three business (3) days after the date of such notice of conversion, one
or more certificates representing that number of shares of Common Stock into
which the Note is convertible in accordance with the provisions regarding
conversion set forth in Exhibit A. The Company shall act as Note Registrar and
shall maintain an appropriate ledger containing the necessary information with
respect to the Note.
b. Common Stock to be Issued Without Restrictive Legend. Upon the
conversion of all or any portion of the Note, the Company shall instruct its
transfer agent to issue certificates equivalent to the number of shares of
Common Stock to be received upon such conversion, along with any shares issued
as interest in accordance with the terms of the note, without restrictive legend
in the name of the Purchaser (or its nominee) and in such denominations to be
specified at conversion by the Purchaser. The Common Stock shall be immediately
freely transferable on the books and records of the Company.
c. Registration. If upon conversion of the Note effected by Purchaser
pursuant to the terms of this Agreement the Company fails to issue certificates
for shares of Common Stock issuable upon such conversion (the "Underlying
Shares") to Purchaser bearing no restrictive legend of any kind for any reason,
then the Company shall be required, at the request of Purchaser and at the
Company's expense, to effect the registration of the Underlying Shares under the
1933 Act and all relevant "blue sky" laws as promptly as is practicable but in
any event within the time limits specified in this Paragraph 3.3(c). The
<PAGE>
Company and Purchaser shall cooperate in good faith in connection with the
furnishing of information required for such registration and the taking of such
other actions as may be legally or commercially necessary in order to effect
such registration. The Company shall file a registration statement within thirty
(30) days after Purchaser's demand therefor and shall use its best efforts to
cause such registration statement to become effective as soon as practicable
thereafter and in any event within one hundred twenty (12) days from the initial
filing thereof. Such best efforts shall include, without limitation, promptly
responding to all comments received from the SEC and providing Purchaser's
counsel with a contemporaneous copy of all written correspondence with the SEC.
Once declared effective by the SEC, the Company shall cause such registration
statement to remain effective until the earlier of: (i) the sale by Purchaser of
all Underlying Shares registered; or (ii) one hundred eighty (180) days after
the effective date of such registration statement. In the event the Company
undertakes to file a registration statement on Form S-3 in connection with the
Common Stock, upon the effectiveness of such registration, Purchaser shall have
the option to sell the Underlying Shares pursuant thereto. The foregoing shall
not in any way limit Purchaser's rights in connection with the Common Stock or
the Underlying Shares pursuant to Regulation D or otherwise. If the registration
statement required hereunder is not declared effective by the SEC within the
time limits stated in this Paragraph 3.3(c), the Company will be liable to
Purchaser for liquidated damages. Such liquidated damages shall be in the amount
of one percent (1%) of the Purchase Price for each thirty (30) day period
beginning on the date effectiveness was called for under this Paragraph 3.3(c)
and ending on the date on which such registration statement is declared
effective by the SEC. Said liquidated damages shall be pro-rated for the partial
thirty (30) day period in which the registration statement is declared
effective. Said liquidated damages shall be due and payable at the end of each
such thirty (30) day period, and shall be paid in cash at the place specified in
writing by Purchaser. After one (1) year from the Closing Date, such liquidated
damages will cease to accrue, and Purchaser may rely upon Rule 144 for
conversion of the Note into Common Stock and for all sales of Common Stock
received upon conversion.
Section 3.4 Escrow of Common Stock. As additional security for the
transactions contemplated herein (and in the other Note purchase agreements
executed by the Company and third parties with respect to this offering), the
Company has agreed to place in escrow with the Escrow Agent 650,000 shares of
non-restricted Common Stock ("Escrowed Shares"), in accordance with the terms of
that escrow agreement attached to this Agreement as Exhibit B (the "Escrow
Agreement"). With respect to the conversion of the Note, in addition to the
provisions of Section 3.3 above, upon conversion of the Note into Common Stock
in accordance with their terms, so long as a sufficient number of Escrowed
Shares are held by the Escrow Agent to effect such a conversion, the Purchaser
shall submit via facsimile a copy of each notice of conversion to the Escrow
Agent, and the Escrow Agent shall transmit to the Purchaser via electronic
transfer, or via delivery of one or more non-legended stock certificates (along
with duly executed and Medallion guaranteed stock powers) representing, such
number of Escrowed Shares as are specified in such notice of conversion. Such
transfer, so long as in accordance with the terms of this Agreement, the Escrow
Agreement and the notice of conversion delivered to the Escrow Agent, shall
satisfy the conversion requirement of any portion of the Note so converted. If
all (or such number that no further portion of the Note may be converted in full
based upon the then-prevailing conversion price) of the Escrowed Shares are
delivered to the Purchaser pursuant to conversion of the Note, but there any
portion of the Note outstanding, the Purchaser may require the Company to place
additional non-restricted Common Stock in escrow, which the Company shall place
in escrow within three (3) business days after written request form the
Purchaser to do so. The number of additional shares shall be equal to one and
one-half times [(the outstanding principal of that portion of the Note not
previously converted) divided by {(the then current bid price of the Common
Stock, determined by taking the lowest closing bid price for then ten (10)
trading days prior to such written request by Purchaser) multiplied by the then
applicable conversion rate as stated in the Note}].
Likewise, the Company agrees, and does hereby reaffirm and covenant, that,
should the Purchaser, in good faith, reasonably deem itself insecure upon
examination and consideration of the outstanding principal amount due under the
Note and the number of Escrowed Shares remaining with the Escrow Agent, then the
Purchaser may give the Company written notice of such fact via facsimile, and
the Company will immediately (but in any event within three (3) business days
after such facsimile notice) place with the Escrow Agent sufficient additional
Shares to provide reasonable security for the Purchaser. For purposes of this
paragraph, "reasonable security" on any given date shall mean a sufficient
number of Escrowed Shares that, if all of the then-remaining outstanding
principal of the Note were converted on that date at the applicable discount
rate, then there would be at least one hundred fifty percent (150%) of the
required number of Escrowed Shares to effect such conversion in full. Thus, for
example, if there were a $50,000 balance remaining on the Note, and the closing
bid price were $4.25 per share, and the conversion price were $3.40 per share,
then the Purchaser would be "reasonably secure" so long as there were 22,059
Escrowed Shares on deposit with the Escrow Agent [50,000/3.4 X 1.5 = 22,059].
Upon conversion of all of the Note, any additional shares of Common Stock
shall be returned to the Company by the Escrow Agent in accordance with the
terms of the Escrow Agreement.
Section 3.5 Use of Proceeds. The Company shall use the proceeds form the
sale of the Securities for general working capital purposes. The Company will
provide the Purchaser a schedule of the exact use of proceeds prior to Closing.
Section 4.1 General Conditions Precedent to the Obligation of the Company
to Sell the Note. The obligation hereunder of the Company to issue and/or sell
the Securities to the Purchaser is subject to the satisfaction, at the Closing,
of each of the conditions set forth below. These conditions may be waived by the
Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for any representations and warranties that are
effective as of a particular, specified date).
(b) Performance by the Purchaser. The Purchaser shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
<PAGE>
the Purchaser at or prior to the Closing.
(c) No Injunction, No Legal Action. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement. No legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
(d) [Intentionally left blank.]
(e) Execution. The Purchaser shall have executed this Agreement and the
Escrow Agreement, and delivered said documents to the Escrow Agent on behalf of
the Company.
(f) Purchase Price. The Purchaser shall have delivered the applicable
Purchase Price for the Note, in accordance with Sections 1.2 and 1.3 above.
Section 4.2 General Conditions Precedent to the Obligation of the Purchaser
to Purchase the Note. The obligation hereunder of the Purchaser to acquire and
pay for the Securities is subject to the satisfaction, at the Closing, of each
of the conditions set forth below. These conditions may be waived by the
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respect as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that are effective
as of a particular, specified date).
(b) Performance by the Company. The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company pursuant to this Agreement and the Escrow Agreement at or prior to
the Closing, unless any such agreement or condition is waived by the Purchaser
in writing at or prior to Closing.
(c) Trading and Listings. The Company shall not have received notice of,
and trading in the Company's Common Stock shall not have been, suspended by the
SEC or a national securities exchange (currently the NASDAQ OTB Bulletin Board
Market) (except for any suspension of trading of limited duration agreed to
between the Company and the principal exchange on which the Common Stock is
traded solely to permit dissemination of material information regarding the
Company) or delisted by such exchange, and trading in securities generally as
reported by such exchange shall note have at any prior time been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such exchange.
(d) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
<PAGE>
the consummation of any of the transactions contemplated by this Agreement.
(e) Execution. The Company shall have executed this Agreement, the Escrow
Agreement and the Note, and delivered such documents and the Note, along with
the Escrowed Shares, to the Escrow Agent on behalf of the Purchaser.
Section 5.1 No Legend on Stock. No certificate representing the Common
Stock issued upon conversion of the Note shall contain any restrictive legend of
any kind.
Section 6.1 Termination. This Agreement may be terminated at any time prior
to the Closing by the mutual written consent of the Company and the Purchaser.
This Agreement may be terminated by action of the respective Board of Directors
or other governing body of the Purchaser or the Company at any time if the
Closing shall not have been consummated by the fifty (5th) business day
following the date of this Agreement, provided that the party seeking to
terminate the Agreement is not in breach of the Agreement. This Agreement shall
automatically terminate without any further action of either party hereto if the
Closing shall not have occurred by the seventh (7th) business day following the
date of this Agreement, provided, however, that any such termination shall not
terminate the liability of any party which is then in breach of the Agreement.
Section 7.1 Fees and Expenses. The Company shall pay the fees, commissions
and expenses of its advisers, brokers, finders, counsel, accountants and other
experts, if any, and all other expenses associated therewith, in accordance with
their respective agreements. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of the Note and all Common Stock
pursuant thereto and hereto.
Section 7.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) The Company and the Purchaser each (i) hereby irrevocably submits to
the jurisdiction of the United States District Court and other courts of the
United States sitting in the State of Delaware for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. The Company and the
Purchaser each consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
<PAGE>
good and sufficient service of process and notice thereof. Nothing in this
paragraph shall affect or limit any right to serve process in any other manner
permitted by law.
Section 7.3 Entire Agreement: Amendment. This Agreement contains the entire
understanding of the parties with respect to the matters covered hereby and,
except as specifically set forth herein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
Section 7.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second (2nd) business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.
The addresses for such communication shall be:
to the Company: Mr. Murray Ginsberg, President
Ginsite Materials, Inc.
6781 West Sunrise Boulevard
Plantation, Florida 33313
FAX: 954.321.9667
to the Purchaser: At the address set forth at the foot of this Agreement or
as specified hereafter in writing by Purchaser.
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days' written notice of such changed address to the other
party hereto.
Section 7.5 Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, no shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
Section 7.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
Section 7.7 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware without regard to such state's principles of conflict of laws.
<PAGE>
Section 7.8 Survival. The representations and warranties of the Company and
the Purchaser contained in herein and the agreements and covenants set forth in
Section 1.1 through 1.4, 3.1 through 3.5 and 7.1 through 7.16 shall survive for
a period of three (3) years after the Closing Date.
Section 7.9 Publicity. The Company agrees that it will not disclose, and
will not include in any public announcement, the name of the Purchaser without
its consent, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
Section 7.10 NASDAQ. The Term NASDAQ or NASDAQ OTC Bulletin Board Market
herein refers to the principal market on which the Common Stock of the Company
is traded. If the Common Stock is listed on a securities exchange, or if another
market becomes the principal market on which the Common Stock is traded or
through which price quotations for the Common Stock are reported, the term
NASDAQ or NASDAQ OTC Bulletin Board Market shall be deemed to refer to such
exchange or other principal market.
Section 7.11 Acceptance. Execution and delivery of this Agreement by the
Purchaser shall constitute an offer to purchase the Note, which offer, unless
previously revoked by the purchaser, may be accepted or rejected by the Company,
in its sole discretion for any cause or for no cause and without liability to
the Purchaser. The Company shall indicate acceptance of this Agreement by
signing as indicated on the signature page hereof.
Section 7.12 Binding Agreement. Upon acceptance of this Agreement by the
Company, the Purchaser agrees that it may not cancel, terminate or revoke any
agreement of the Purchaser made hereunder, and that this Agreement shall survive
the death or disability of the Purchaser and shall be binding upon heirs,
successors, assigns, executors, administrators, guardians, conservators or
personal representative of the Purchaser.
Section 7.13 Incorporation by Reference. All information set forth on the
signature page is incorporated as integral terms of this Agreement.
Section 7.14 Counterparts. This Agreement may be signed in multiple
counterparts, which counterparts shall constitute one and the same original
instrument.
Section 7.15 Severability. If any portion of this Agreement shall be held
illegal, unenforceable, void or voidable by any court, each of the remaining
terms hereof shall nevertheless remain in full force and effect as a separate
contract.
Section 7.16 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
IN WITNESS WHEREOF, the Purchaser has executed this Agreement on the date
set forth below. [SIGNATURE PAGE TO ESCROW AGREEMENT DATED FEBRUARY 8, 1999]
<PAGE>
THE COMPANY:
GINSITE MATERIALS, INC.
By: /s/ Murray Ginsberg
-----------------------
Mr. Murray Ginsberg, President
THE BUYER:
THE AUGUSTINE FUND, L.P.
By: Augustine Capital Management, inc., a General Partner
By: /s/ Thomas Duszynski
--------------------------
Mr. Thomas F. Duszynski, CFO
<PAGE>
EXHIBIT A
US$254,000.00 NOTE #01
NINE PERCENT (9%) CONVERTIBLE NOTE
DATED FEBRUARY 8, 1999
THIS NOTE (this "Note") is one of the duly authorized issue of Convertible
Notes of GINSITE MATERIALS, INC., a Florida corporation (the "Company"), in an
aggregate principal amount of up to US$254,000.00 (collectively, the "Notes").
This Note is offered, issued and sold pursuant to an in accordance with the
exemption from securities registration afforded by Rule 504 of Regulation D
promulgated under the Securities Act of 1933, as amended.
FOR VALUE RECEIVED, the Company promises to pay to The Augustine Fund,
L.P., or the permitted registered holder hereof (the "Holder"), the principal
sum of US$254,000 (Two Hundred Fifty Four Thousand United States Dollars0 (the
"Initial Principal Amount") or such lesser principal amount following the
conversion or conversions f this Note in accordance with Paragraph 4 (the
"Outstanding Principal Amount") on February 1, 2001 (the "Maturity Date"), and
to pay interest on the Outstanding Principal Amount from time to time,
semiannually in arrears on the first business day of December and June (the
"Interest Payment Dates"), at the rate of nine percent 9% per Annum occurring
from the date of issuance.
Accrual of interest shall commence on the first day to occur after the date
hereof until repayment in full of the principal sum has been made or duly
provided for. Accrued and unpaid interest shall bear interest at the same rate
until paid. The interest so payable will be paid in shares ("Interest Shares")
of the Company's common stock, $.001 par value per share ("Common Stock") at the
then applicable conversion price (computed as described in paragraph 4 below) on
the Interest Payment Dates to the Holder on the tenth day prior to the Interest
Payment Date. The principal of this Note is payable in such coin or currency of
the United States as at the time of payment is legal tender for payment of
public and private debts, at the address last appearing on the Note Register of
the Company as designated in writing by the Holder from time to time.
The Company will pay the principal of this Note on the due date, free of
any withholding or deduction of any kind (subject to the provision of paragraph
2 below), to the Holder as of the due date and addressed to the Holder at the
address appearing on the Note Register.
The forwarding of such check and/or Interest Shares shall constitute a
payment of principal and interest hereunder and shall satisfy and discharge the
liability for principal and interest on this Note to the extent of the sum
represented by such check and/or Interest Shares.
This Note is subject to the following additional provisions:
1. These Notes are originally issuable in amounts of not less than
US$50,000.00.
2. All payments on account of the principal of this Note and all other
amounts payable under this Note (whether made by the Company or any other
person) to or for the account of the Holder hereunder shall be made free and
<PAGE>
clear of and without reduction by reason of any present and future income,
stamp, registration and other taxes, levies, duties, cost, and charges
whatsoever imposed, assessed, levied or collected by the United States or any
political subdivision or taxing authority thereof or therein, together with
interest thereon and penalties with respect thereto, if any, on or in respect of
this Note (such taxes, levies, duties, costs and charges being herein
collectively called "US Taxes").
3. If at any time there occurs a transaction in which in excess of 50% of
the Company's voting power is transferred (excluding any public or private
offering of Company equity securities) on any consolidation or merger of the
Company into any other or other entity or person (whether or not the Company is
the surviving Corporation), or any other corporate reorganization or transaction
or series of related transactions, the Holder of this Note then outstanding may
participate in any such transaction as a class with common stockholders on the
same basis as if this Note has been converted one day prior to the effective
date of such transaction; provided, however, that the option of the Holder of
this Note, such Holder may treat the effective date of any transaction that
occurs prior to February 1, 2001, as a redemption date and shall be entitled to
have the Company redeem this Note at a price equal to 130% of the Outstanding
Principal Amount of this Note. The Holder shall be entitled to make such
election at any time up to ten (10) day prior to the effective date of the
transaction. The Company shall not effect any stock split, subdivision or
combination with an effective date within three (3) trading days preceding the
effective date of a merger or consolidation. The Company shall not make, or fix
a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional Common Stock,
within an effective date within three (3) trading days prior to the effective
date of a merger or consolidation.
Notwithstanding the transfer of 50% of the Company's voting power, the
Company shall have the unequivocal right to redeem this Note at any time prior
to the Maturity Date at a price equal to 130% of the Outstanding Principal
Amount of this Note, provided that the Company shall give to the Holder five (5)
days written notice of its intention to do so and the Holder has not faxed a
Notice of Conversion with respect to the Note (or portion thereof) sought to be
redeemed. Upon notice of its right and intention to redeem the Note, the Company
shall immediately transfer the full redemption price to the Holder.
Notwithstanding anything herein to the contrary, the Company may not redeem any
portion of this Note with respect to which the Holder has delivered a Notice of
Conversion (via facsimile or otherwise) to the Company prior to the Holder's
receipt of a redemption notice. The date of facsimile delivery of the Notice of
Conversion to the Company as herein provided shall be referred to herein as the
"Conversion Date."
4. The Holder of this Note is entitled, at its option, at any time after
the issuance of this Note, to convert all or any lesser portion of the Initial
Principal Amount into Common Stock at a conversion price (the "Conversion
Price") for each share of Common Stock equal to the lesser of (x) one hundred
percent (100%) of the lowest of the closing bid prices for the Common Stock for
the five (5) trading days prior to the date of this Note, or (y) or seventy-five
percent (785%) of the lowest of the closing bid prices for the Common Stock for
the five (5) trading days immediately prior to the Conversion Date. In the event
of any stock split, dividend, combination or similar event occurring after a
<PAGE>
Conversion Date and prior to the issuance of the respective stock certificates,
the Conversion Price will be subject to appropriate adjustment. For purpose of
this section, the closing bid price of the Common Stock shall be the closing bid
price as reported by the Nasdaq Stock Market, or the closing bid price in the
over-the-counter market or, if the Common Stock is listed on another stock
market or exchange, the closing bid price on such exchange as reported in the
Wall Street Journal. Conversion of this Note into Common Stock shall be
effectuated by surrendering the Note to be converted to the Company, with the
form of conversion notice attached to the Note as Exhibit A, executed by the
Holder of the Note evidencing such Holder's intention to convert the Note.
Interest accrued or accruing from the date of issuance to the Conversion Date
(but not previously paid in cash or Interest Shares) on the amounts so converted
shall be paid in Interest Shares, calculated at the same Conversion Price (as
determined above) as would apply on the Conversion Date for the principal amount
being converted but using the discount percentage applicable as of such date and
shall constitute payment in full of any such interest on the same terms as would
otherwise apply to the conversion of the principal amount hereof.
No fractional shares or scrip representing fractions of shares of Common
Stock will be issued on conversion, but the number of shares of Common Stock
issuable shall be rounded to the nearest whole share. The date on which a Notice
of Conversion is given shall be deemed to be the date on which the Holder
notifies the Company of its intention to so convert by delivery, by facsimile
transmission or otherwise, of a copy of the Notice of Conversion. Notice of
Conversion may be given by facsimile to the Company at 954.321.9667, attn: Mr.
Murray Ginsberg, President, or if by physical delivery of the Notice of
Conversion to the Company at the address for the Company contained in the Note
Purchase Agreement. At the Maturity Date, any unconverted principal amount and
accrued interest thereon shall at the Maturity Date be paid, at the option of
the Company, in either (a) cash or (b) Common Stock valued at a price equal to
the Conversion Price determined as if the Note was converted in accordance with
its terms into Common Stock on the Maturity Date. Upon conversion of all of the
outstanding principal amount of this Note, the Holder shall submit this original
Note to the Company for cancellation.
Upon the delivery by the Holder of Conversion in the form attached hereto
as Exhibit A, properly completed and duly executed by the Holder, the Company
shall issue and, within five (5) business days after actual delivery to the
Company of the Notice of Conversion (the "Deadline"), deliver to or upon the
order of the Holder one or more certificates (the "Certificates"), with no
restrictive legends of any kind, representing that number of shares of Common
Stock into which the portion of the Note converted is convertible, as shall be
determined in accordance herewith.
Without in any way limiting the Holder's right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if
delivery of the Certificates (without restrictive legend of any kind or stop
transfer order affecting the Common Stock represented by the Certificates)
issuable upon conversion of this Note is more than one (1) day after the
Deadline, the Company shall pay to the Holder $20 per each $10,000 in principal
amount per day for each day thereafter that the Company fails to deliver the
Certificates. Such cash amount shall be paid to the Holder upon Holder's written
demand therefor. In addition, and again without in any way limiting the Holder's
<PAGE>
right to pursue other remedies, including actual damages and/or equitable
relief, the parties agree that if the Shares issuable upon conversion of this
Note are delivered more than one (1) day after the Deadline, the Holder shall
have the right (but not the obligation) to adjust the Conversion Price, by using
the date of the Holder's receipt of the Certificates as the Conversion Date and
recalculating the Conversion Price based upon such new Conversion Date. If such
recalculation results in the Holder being entitled to more shares of Common
Stock than was stated in the applicable Notice of Conversion, then the Company
shall issue such additional shares of Common Stock to the Holder, without
restrictive legend, pursuant to Rule 504 of Regulation D, within three (3) days
after the Holder's written demand therefor delivered to the Company via
facsimile.
The number of shares of Common Stock to be issued upon each conversion of
this Note shall be determined by dividing that portion of the principal amount
of the Note to be converted at such time, plus the dollar amount of all interest
that has accrued on that portion of the Note then being converted but which has
not previously been paid, by the Conversion Price in effect on the date the
Notice of Conversion is delivered via facsimile to the Company by the Holder.
The number of Interest Shares shall be determined utilizing the following
equation: [(the principal amount of the Note to be converted, multiplied by a
fraction (A) the numerator of which is the number of days elapsed since the date
of issuance of this Note and (B) the denominator of is 3650 multiplied by (9%);
the resulting number shall be divided by the Conversion Price then in effect to
determine the number of Interest Shares.
5. No provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to the payment of the principal of
this Note at the time, place and rate, and in the coin or currency herein
prescribed. This Note at the time, place and rate, and in the coin or currency
herein prescribed. This Note and all other Notes now or hereafter issued on
similar terms are direct obligations of the Company. This Note ranks equally
with or superior to all other Notes now or hereafter issued under the terms set
forth herein. In the event of any liquidation, reorganization, winding up or
dissolution, repayment of this Note shall not be subordinate in any respect to
any other indebtedness of the Company outstanding as of the date of this Note or
hereafter incurred by the Company.
Such non-subordination shall extend without limiting the generality of the
foregoing, to all indebtedness of the Company to banks, financial institutions,
other secured lenders, equipment lessors and equipment finance companies, but
shall exclude trade debts; and any warrants, options or other securities
convertible into stick of the Company shall rank pari passue with the Note in
all respects, so long as issued prior to the date hereof.
6. The Company hereby expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of dishonor, notice of acceleration or
intent to accelerate, bringing of suit and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereon, regardless of and
without notice, diligence, act or omission as or with respect to the collection
of any amount called for hereunder.
<PAGE>
7. If the Company at any time or from time to time after the date of this
Note makes a dividend or other distribution to holders of Common Stock payable
in securities of the Company other than the Interest Shares, then in each such
event provision shall be made so that the Holder shall receive upon conversion
of this Note pursuant to Paragraph 4 hereof, in addition to the number of
Interest Shares receivable thereupon, the amount of such other securities of the
Company to which the Holder on the relevant record of payment date, as
applicable, of the number of Interest Shares so receivable upon conversion would
have been entitled, plus any dividends or other distributions would have been
received with respect to such securities had the Holder thereafter, during the
period from the date of such event to and including the Conversion Date retained
such securities, subject to all other adjustments called for during such period
under this Note with respect to the rights of the Holder.
8. If at any time or from time to time after the date of this Note, the
Common Stock issuable upon the conversion of the Note is changed into the same
or different numbers of shares of any class or classes of stock, whether by
recapitalization or otherwise (other than subdivision or combination of shares
of Common Stock or stock dividend or reorganization provided for elsewhe3re in
this Note or a merger or consolidation, provided for in Paragraph 3), then in
each such event the Holder shall have the right thereafter to convert the Note
into the kind of security receivable in such recapitalization, reclassification
or other change by holders of Common Stock, all subject to further adjustment as
provided herein. In such event, the formulae set forth herein for conversion and
redemption shall be equitably adjusted to reflect such change in number of
shares or, if shares of a new class of stock are issued, to reflect the market
price of the class or classes of stock issued in connection with the above
described transaction.
9. If at any time or from time to time after the date of this Note there is
a capital reorganization of the Common Stock (other than a recapitalization,
subdivision, combination, reclassification, or exchange of shares provided for
elsewhere in this Note) then, as a part of such reorganization, provision shall
be made so that the Holder shall thereafter to be entitled to receive upon
conversion of this Note the number of shares of stock or other securities or
property to which a holder of the number of Shares deliverable upon conversion
would have been entitled on such capital reorganization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Note with respect to the rights of the Holder after the reorganization to
the end that the provisions of this Note shall be applicable after that event
and be as nearly equivalent as may be practicable, including, by way of
illustration and not limitation, by equitably adjusting the formulae set forth
herein for conversion and redemption to reflect the market price of the
securities or property issued in connection with the above described
transaction.
10. If one or more of the "Events of Default" as described in Paragraph 11
shall occur, the Company agrees to pay all costs and expenses, including
reasonably attorney's fees, which may be incurred by the Holder in collecting
any amount due under, or enforcing any terms of, this Note.
11. If more than one of the following described "Events of Default" shall
occur:
<PAGE>
(a) The Company shall default in the timely payment of principal or
interest; or
(b) Any of the representations or warranties made by the Company herein or
in the NotePurchase Agreement between the Company and Holder with respect to
this Note, or in any certificate or financial or other document heretofore or
hereafter furnished by or on behalf of the Company in connection with the
execution and delivery of this Note, shall be false or misleading any material
respect at the time made; or
(c) The Company shall fail to perform or observe any other covenant,
provision, condition, agreement or obligation of the Company under this Note and
such failure shall continue uncured for a period of thirty (30) days after
notice from the Holder of such failure (except that no cure period other than
that described in Paragraph 4 above shall be had for any violation or breach of
Paragraph 4 by the Company); or
(d) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts as they mature; (3) make an assignment for the
benefit of creditors or commence proceedings for its dissolution; or (4) apply
for or consent to the appointment of a trustee, liquidator or receiver for it or
for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or
for a substantial part of its property or business without its consent and shall
not be discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the whole
or any substantial portion of the properties or assets of the Company and shall
not be dismissed within thirty (30) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, lien or similar
process in excess of Two Hundred Thousand ($200,000) Dollars in the aggregate
shall be entered or filed against the Company or any of its properties or other
assets and shall remain unsatisfied, unvacated, unbounded or unstayed for a
period of thirty (30) days (unless such order provided for delayed payment) or n
any event later than five (5) days prior to the date of any proposed sale
thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company and if instituted
against the Company, shall not be dismissed, stayed or bonded within sixty (60)
days after such institution or the Company shall be any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any such proceeding;
or
(i) The Company shall have its common stock delisted from the exchange of
the Nasdaq Stock Market (including without limitation the OTC Bulletin Board
Market);
Then, or at any time thereafter, and in each and in every such case, unless
such Event of Default shall have been waived in writing by the Holder (which
<PAGE>
waiver shall not be deemed to be a waiver of any subsequent default), the Holder
may consider this Note immediately due or payable, without presentment, demand,
protest or notice of any kind, all of which are expressly waived, anything
herein or in any note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately demand without expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law. In such event,
this Note shall be redeemed by the Company at a redemption price per Note equal
to 130% of the Outstanding Principal Amount due hereunder.
12. If at any time on or after the date hereof and prior to conversion of
all of this Note into Common Stock as described in Paragraph 4 above, trading of
the Common Stock is suspended on the principal market or exchange for such
shares (including The Nasdaq Stock Market) for a period of five (5) consecutive
trading days, other than as a result of the suspension or trading of securities
in general, or if the Common Stock at any time becomes ineligible for trading,
then, at the Holder's option, the Company shall redeem the Note at a redemption
date designated by the Holder, and for the redemption price provided in
Paragraph 11.
13. Notwithstanding anything to the contrary contained herein, each Notice
of Conversion shall contain representations to the effect that (I) the Holder is
an "accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the SEC under the 1933 Act, and (II) the Conversion Shares are
being acquired for the Holder's own account and not as a nominee for any other
party.
14. The Holder may, subject to compliance with the Note Purchase Agreement
pursuant to which this Note was purchased, and the provisions of Rule 504 of
Regulation D under the Securities Act of 1933, as amended (the 1933 Act"),
without notice, transfer, assign, mortgage or encumber this Note, any interest
herein or any part hereof in integral multiples of $10,000 or the entire
outstanding balance to an "accredited investor" as defined in the 1933 Act that
will be acquiring the Note or interest herein for its account for the purpose of
investment and not with a view to or for sale in connection with any
distribution hereof and, each assignee, transferee or mortgage (which may
include any affiliate of the Holder) shall have the right to transfer or assign
its interest subject to the same limitations. Each such assignee, transferee and
mortgagee shall have all of the rights of the Holder under this Note. The
Company may condition registrations of transfers on the receipt of a certificate
from the assignee, transferee of mortgagee in a form acceptable to the Company
that contains representations and warranties similar to those of the Holder
contained in Section 2 of said Note Purchase Agreement, and IRS Form W-9 or an
equivalent certification under penalty of perjury in compliance with the
Internal Revenue Code of 1986, as amended from time to time.
15. The Company covenants that until all amounts due under this Note have
been paid in full, by conversion or otherwise, unless the Holder or subsequent
Holder waives compliance in writing, the Company shall:
(a) give prompt written notice to the Holder of any Event of Default or of
any other matter which has resulted in, or could reasonably be expected to
result in a materially adverse change in its financial condition or operations;
<PAGE>
(b) give prompt notice to the Holder of any claim, action or proceeding
which, in the event of any unfavorable outcome, would or could reasonably be
expected to have a Material Adverse Effect (as defined in the Note Purchase
Agreement) on the financial condition of the Company;
(c) at all times reserve and keep available out of its authorized but
unissued Common Stock, for the purpose of effecting the conversion of this Note
into Common Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of the
outstanding principal balance of this Note into Common Stock. If the Company
does not have a sufficient number of shares of Common Stock available to satisfy
the Company's obligations to the Holder upon receipt of a Notice of Conversion
or its otherwise unable to issue such shares in accordance with the terms of
this Note (a "Conversion Default"), from and after the tenth day following a
Conversion Default (which for all purposes shall be deemed to have occurred upon
the Company's facsimile receipt of the applicable Conversion Notice), the Holder
shall have the right to demand from the Company the immediate redemption of this
Note in cash at a redemption price equal to 130% of the then outstanding
Principal Amount; provided, however, that no Redemption Notice may be delivered
by the Holder subsequent to the Holder's receipt of notice from the Company
(sent by overnight or 2-day courier with a copy sent by facsimile) of
availability of sufficient shares to permit conversion (a "Post-Default
Conversion') of the Note; provided further that such right shall be reinstated
if the Company shall thereafter fail to perfect such Post-Default Conversion by
delivery of Common Stock in accordance with applicable provision of Paragraph 4
hereof with respect thereto within five (5) business days of delivery of the
notice of Post-Default Conversion. In addition to the foregoing, upon the
Conversion Default, the rate of interest on the Note shall to the maximum extend
permitted by law be increased by two percent (2%) commencing on the first day of
the thirty (30) day period (or part thereof) following a Conversion Default; an
additional two percent (2%) commencing on the first day of each second such (30)
day periods (or part thereof); and additional one percent (I%) on the first day
of each consecutive thirty (30) day period (or part thereof) thereafter until
such securities have been duly converted or redeemed as herein provided. Any
such interest which is not paid when due shall, to the maximum extent permitted
by law, accrue interest until paid at the rate from time to time applicable to
interest on the Note as to which the Conversion Default has occurred.
(d) Upon receipt by the Company of evidence from the Holder reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note,
(i) in the case of loss, theft or destruction, upon provision of indemnify
reasonably satisfactory to it and/or its transfer agent; or
(ii) in the case of mutilation, upon surrender and cancellation of this
Note,
then the Company at its expense will execute and deliver to the Holder a new
Note, dated the date of the lost, stolen, destroyed or mutilated note, and
evidencing the outstanding and unpaid principal amount of the lost, stolen,
<PAGE>
destroyed or mutilated Note.
16. The Holder, by acceptance hereof, acknowledges that the Holder will not
offer, sell or otherwise dispose of this Note or the Common Stock issuable upon
conversion hereof except under circumstances which will not result in a
violation of the 1933 Act or any applicable state securities laws.
17. In the case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that its
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Note will not in any way be affected
impaired thereby.
19. The Note and the Note Purchase Agreement between the Company and the
Holder (including all Exhibits thereto) constitute the full and entire
understanding and agreement between the Company and the Holder with respect to
the subject hereof. Neither this Note nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the Company and the Holder.
19. This Note shall be governed by and construed in accordance with the
internal laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: February 8, 1999
GINSITE MATERIALS, INC.
By:/s/ Murray Ginsberg, Pres.
-----------------------------
Mr. Murray Ginsberg, President
<PAGE>
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in Order to Convert the Note.)
The undersigned hereby irrevocably elects to convert $
_______________________ of the Nine Percent (9%) Convertible Note Due February
1, 2001, No. O1, into shares of common stock of Ginsite Materials, Inc., (the
"Company"), according to the terms and conditions set forth in the Note, as of
the date written below. If securities are to be issued to a person other than
the Undersigned, the Undersigned agrees to pay all applicable transfer taxes
with respect thereto.
The Undersigned represents that it, as of this date, is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D promulgated by
the SEC under the 1933 Act.
The Undersigned also represents that the Conversion Shares are being
acquired for the Holder's own account and not as a nominee for any other party.
The Undersigned represents and warrants that all offers and sales by the
Undersigned of the Conversion Shares shall be made pursuant to an exemption from
registration under the 1933 Act. The Undersigned understands that pursuant to
the representation of the Company regarding Rule 504 of Regulation D, the shares
of Common Stock to be received upon conversion of the Note shall not contain an
restrictive legend of any kind.
Conversion Date: *_________________________
Applicable Conversion Price: __________________
Holder (Print True Legal Name): The Augustine Fund, L.P.
/s/ Murray Ginsberg, Pres.
- --------------------------
(Signature of Duly Authorized Representative of Holder)
Address of Holder: 6781 W. Sunrise Blvd.
Plantation, FL 33313
*This Notice of Conversion (whether by facsimile or otherwise as permitted in
the Note) must be received by the Company by the first business day following
the Conversion Date.
<PAGE>
EXHIBIT B
STOCK ESCROW AND SECURITY AGREEMENT
THIS STOCK ESCROW AND SECURITY AGREEMENT (this "Agreement") is dated as of
February 8, 1999, by and among GINSITE MATERIALS, INC., a corporation organized
under the laws of the State of Florida, U.S.A. (The "Company"), the undersigned
buyer (the "Buyer") and H. GLENN BAGWELL, JR., a duly licensed attorney who
practices law in the State of North Carolina, U.S.A., as Escrow Agent (the
"Escrow Agent").
W I T N E S S E T H:
WHEREAS, the buyer and the Company have entered into that Note Purchase
Agreement dated as of February 8, 1999 (the "Securities Purchase Agreement"),
pursuant to which the Company has agreed to sell, and the buyer has agreed to
purchase, in a closing or closings as described in the Securities Purchase
Agreement (each a "Closing"), that 9% Convertible Promissory Note of the Company
(the "Note"), which is convertible into shares of common stock of the Company,
$.001 par value per share ("Common Stock") (collectively, the "Securities"); and
WHEREAS, the buyer has requested certain additional security as partial
consideration for buyer's undertakings as described in the Securities Purchase
Agreement and the note; and
WHEREAS, it is a condition of the Buyer's obligation to purchase the
Securities, that this Agreement be executed and delivered by all of the parties
named above, and that the undertakings described herein be performed; and
WHEREAS, the Escrow Agent is willing to act hereunder on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth below, the parties hereto hereby agree as follows:
A) ESCROW ACCOUNT.
1.1 Deposit. On or before the date of the Closing, by electronic
transfer or by delivery of one or more certificates, the Company shall deposit
six hundred fifty thousand (650,000) shares of unrestricted, free-trading Common
Stock (each a "Share" and collectively the "Shares") with the Escrow Agent, to
be held by the Escrow Agent in a separation brokerage account (the "Escrow
Account") established with Wachovia Securities, Inc., or Bear Stearns & Co. (as
applicable, the "Brokerage"), subject to the terms and provisions contained
herein. The parties hereto acknowledge that the first Closing shall not occur
prior to the deposit of the Shares into the Escrow Account.
B) DISBURSEMENT OF SHARES.
<PAGE>
2.1 Disbursement. None of the Shares shall be disbursed other than in
accordance with the terms hereof, or in accordance with the written instructions
of both the Company and the buyer delivered to the Escrow Agent. In no event
shall the Escrow Agent release or transfer any Shares to any party other than to
the buyer or to the Company in accordance with this Agreement, absent express
written instructions from the Company to transfer Shares to a third party. The
Shares (or such portion as may be applicable) shall be disbursed by the Escrow
Agent under the following circumstances.
(a) At any time, in accordance with the terms of the Note, the Buyer
exercises its right to convert the Note (or any portion thereof) into Common
Stock, the buyer shall in addition to the steps required under the Note, deliver
via facsimile a copy of the Conversion Notice (as defined in the Note) to the
Escrow Agent. The Escrow Agent shall, as soon as practicable upon receipt
thereof but in any event within two (2) days after receipt of the Conversion
Notice. The Escrow Agent shall have no discretion with respect to the number of
Shares to be delivered pursuant to a Conversion Notice, but shall deliver that
number specified in such Conversion Notice.
(b) Upon conversion into Common Stock of all of the outstanding
principal amount of the Note offered and sold pursuant to the Securities
Purchase Agreement, and upon delivery of that number of Shares which is
equivalent to the number of shares of Common Stock to have been received by the
buyer upon conversion of all of the note so offered and sold, the Company and
the Buyer shall send via facsimile written notice to the Escrow Agent that all
of the outstanding principal amount of the Note has been fully converted and
that the parties do not intend to sell and purchase any further Notes. The
written notice from the Company shall also provide instructions with respect to
the return of all remaining Shares (if any) to the Company. The Escrow Agent
shall, within three (3) business days after receipt of such notice from the
parties, return all remaining Shares to the Company pursuant to such
instructions.
2.2 Controversies. If any controversy arises between two or more of the
parties hereto, or between any of the parties hereto and any person not a party
hereto, as to whether or not or to whom the Escrow Agent shall deliver the
Shares or any portion thereof or as to any other matter arising out of or
relating to this Escrow Agreement, the Escrow Agent shall not be required to
determine the same and need not make any delivery of the Escrow concerned or any
portion thereof but may retain the same until the rights of the parties to the
dispute shall have been finally determined by agreement or by final judgment of
a court of competent jurisdiction after all appeals have been finally determined
(or the time for further appeals has expired without an appeal having been made)
(notwithstanding the above, the provisions of the paragraph next above this one
shall apply in all event without exception). The Escrow Agent shall deliver that
portion of the Escrow concerned covered by such agreement or final order, if any
is then held by the Escrow Agent, within five (5) days after the Escrow Agent
receives a copy thereof. The Escrow Agent shall assume that no such controversy
has arisen unless and until it receives written notice from the buyer and/or the
Company that such controversy has arisen, which refers specifically to this
Agreement and identities the adverse claimants to the controversy.
2.3 No Other Disbursements. No portion of the Shares shall be disbursed
or otherwise transferred except in accordance with this Section 2, Section 4 or
Section 5.1(b).
<PAGE>
3. ESCROW AGENT. The acceptance by the Escrow Agent of his duties
hereunder is subject to the following terms and conditions, which the parties to
this Agreement hereby agree shall govern and control with respect to the rights,
duties,. Liabilities and immunities of the Escrow Agent:
3.1 The Escrow Agent shall not be responsible or liable in any manner
whatever for the sufficiency, correctness, genuineness or validity of any cash,
Shares, certificates, investments or other amounts deposited with or held by it.
3.2 The Escrow Agent shall be protected in acting upon any written
notice, certificate, instruction, request or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
3.3 The Escrow Agent shall not be liable for any act done hereunder
except in the case of its reckless or willful misconduct or actions taken in bad
faith.
3.4 The Escrow Agent shall not be obligated or permitted to investigate
the correctness or accuracy of any document or to determine whether or not the
signatures contained in said documents are genuine or to require documentation
or evidence substantiating any such document or signature.
3.5 The Escrow Agent shall have no duties as Escrow Agent except those
which are expressly set forth herein, and in any modification or amendment
hereof; provided, however, that no such modification or amendment hereof shall
affect its duties unless it shall have given its written consent thereto. The
Escrow Agent shall not be prohibited from owning an equity interest in the
Company, the buyer, another buyer, any of their respective subsidiaries or any
third party that is in any way affiliated with or conducts business with either
the Company, the buyer or another buyer.
3.6 The Company and the Buyer specifically acknowledge that the Escrow
Agent is a practicing attorney, and may have worked with the Company, the buyer,
one or more stockholders of the Company or affiliates of either of them on other
unrelated transactions, and that they and each of them has specifically
requested that the Escrow Agent draft some or all of the documents for the said
transactions and act as Escrow Agent with respect to the said transactions. Each
party represents that it has retained legal and other counsel of its choosing
with respect to the transactions. Each party represents that it has retained
legal and other counsel of its choosing with respect to the transactions
contemplated herein and in the Securities Purchase Agreement, and is satisfied
in its sole discretion with the form and content of the documentation drafted by
the Escrow Agent. The Escrow Agent may own an equity interest in the Company
and/or may be an equity owner of the buyer or another buyer, and may increase or
sell any such interest, so long as in accordance with any and all applicable
law. The said parties hereby waive any objection to the Escrow Agent so acting
based upon conflict of interest or lack of impartiality. The Escrow Agent agrees
to act impartially and in accordance with the terms of this Agreement and with
the parties' respective instructions, so long as they are not in conflict with
the terms of this Agreement.
<PAGE>
4. TERMINATION. This Agreement shall terminate on the later of (a) the
date on which all of the Shares and any other escrowed documents and things
described herein shall have been fully disbursed in accordance with the terms
and conditions of this Agreement, (b) any other date agreed to jointly by the
buyer and the Company, or (c) ten (10) business days after the conversion of the
last of the outstanding principal amount of the Note to have been issued by the
Company to Buyer in accordance with the terms of the Securities Purchase
Agreement
5. MISCELLANEOUS.
5.1 Indemnification of Escrow Agent.
(a) The Company and Buyer each agree, jointly and severally, to
indemnify the Escrow Agent for, and to hold him harmless against, any loss
incurred without reckless or willful misconduct or bad faith on the Escrow
Agent's part, arising out of or in connection with the administration of this
Agreement, including the costs and expenses of defending himself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. This indemnification shall not apply to a party with
respect to a direct claim against the Escrow Agent by such party alleging in
good faith a breach of this Agreement by the Escrow Agent, which claim results
in a final non-appealable judgment against the Escrow Agent with respect to such
claim.
(b) In the event of any dispute as to the nature of the rights or
obligations of the Buyer, the Company or the Escrow Agent hereunder, the Escrow
Agent may at any time or from time to time interplead,, deposit and/or pay all
or any part of the Shares with or to a court of competent jurisdiction sitting
in Wake County, North Carolina or in any appropriate federal court, in
accordance with the procedural rules thereof. The Escrow Agent shall give notice
of such action to the Company and the Buyer. Upon such interpleader, deposit or
payment, the Escrow Agent shall immediately and automatically be relieved and
discharged from all further obligations and responsibilities hereunder,
including the decision to interplead, deposit or pay such funds.
5.2 Amendments. This Agreement may be modified or amended only by a
written instrument executed by each of the parties hereto.
5.3 Notices. All communications required or permitted to be given under
this Agreement to any party hereto shall be sent by first class mail or
facsimile to such party at the address, of such party set forth on the signature
page of this Agreement.
5.5 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that the Escrow Agent shall not assign its duties under this
Agreement.
5.6 Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North Carolina.
5.7 Counterparts. This Agreement may be executed in three or more
<PAGE>
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
5.8 Facsimile. This Agreement may be accepted via facsimile, and a
facsimile transmission of the executed signature page hereof shall make this
Agreement legally binding upon the party so executing and faxing such signature
page to the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE COMPANY:
GINSITE MATERIALS, INC.
By:/s/ Murray Ginsburg
----------------------
Mr. Murray Ginsberg, President
THE BUYER:
THE AUGUSTINE FUND, L.P.
By: Augustine Capital Management, Inc., a General Partner
By: /s/ Thomas Duszynski
---------------------------
Mr. Thomas F. Duszynski, CFO
ESCROW AGENT:
/s/ H Glenn Bagwell
H. GLENN BAGWELL, JR., ESQ.
Address: 3005 Anderson Drive, Suite 204
Raleigh, North Carolina USA 27609
Telephone 919.785.3113
Telecopier 919.785.3116
<PAGE>
EXHIBIT C
LIST OF SHAREHOLDERS AND
REGISTRATION RIGHTS
==============================================================================
Exhibit 10.1A
DISTRIBUTOR AGREEMENT
THIS AGREEMENT is made this 29th day of March, 1999, by and between GINSITE
MATERIALS, INC, with its principal place of business located at 6781 WEST
SUNRISE BOULEVARD, PLANTATION, FLORIDA 33313 (the"Company")and MJ INNOVATIONS,
JeanA. Medici/Michael Alderman, "Distributor", 1717 Bayshore Drive, Suite #3854
Miami, Florida 33132, USA/ 340 Rue Bachman, Montfort, Quebec JOT1Y0
NOW, THEREFORE, for the sum of TEN DOLLARS ($10.00) and other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF DISTRIBUTORSHIP
1. Distribution Right. The Company hereby appoints and grants Distributor
the non-exclusive and assignable right to sell that certain product of the
Company known as GINSITE (hereinafter referred to as "GINSITE" or the "Product")
listed in the then current "Price List" (Exhibit "A" attached hereto). The
distribution right shall be limited to customers who have places of business in,
and will initially use the Company's products in the geographic area set forth
in Exhibit "B" attached hereto.
2. Prices. All prices stated are FOB the Company's offices in Plantation,
Florida. Prices do not include transportation costs which shall be borne by
Distributor. Prices do not include federal, state or local taxes applicable to
the products sold under this Agreement.
3. Terms. Unless otherwise specified in writing, terms are NET cash upon
delivery, except where satisfactory credit is established in which case terms
are:
a. Fifty percent (50%) of total invoice with Order.
b. Twenty-five percent (25%) of total invoice upon delivery by the
Company.
c. The balance of any invoice shall be due within thirty (30)days
from delivery by the Company.
The Company reserves the right to revoke any credit extended at the Company's
sole discretion. Invoices not paid within thirty (30) days of the invoice date
will have one and one-half percent (1- 1/2%) per month finance charge assessed
against the unpaid balance from the date of invoice until the date of payment.
4. Title to GINSITE. The Company hereby reserves a purchase money security
interest in each unit of GINSITE sold or to be sold under this Agreement and in
the proceeds thereof, if Distributor shall have sold a unit(s) to another party
prior to Distributor paying Company the purchase price for such Unit as set
forth herein, in the amount of such unit's purchase price. These interests will
be satisfied by payment in full. A copy of this Agreement may be filed with the
appropriate authorities at any time after the signature by the Company as a
financing statement in order to perfect the Company's security interest. On the
<PAGE>
request of the Company, Distributor shall execute financing statement(s) and
other instruments the Company shall desire to perfect a security interest1 in
the GINSITE for its purchase price. Title to the GINSITE shall pass to
Distributor upon receipt by the Company of payment in full for all amounts due
for such units of GINSITE
5. Competitive Products. Distributor agrees not to represent or sell other
products which are deemed to be competitive with GINSITE unless agreed to by the
Company by written notice. Said competitive products include, but are not
limited to; stucco products, waterproofing products, cement, concrete blocks,
sealers or similar products.
ARTICLE II
MARKETING AND SUPPORT
1. Sales. Distributor shall use its best efforts to promote the sale and
distribution of GINSITE.
2. Advertising. Company shall assist the Distributor on all advertising,
sales promotions, and public relations.
3. Training. Company shall furnish training of Distributor's sales and
technical representatives at various times and locations as shall be designated
for this purpose by Company.
ARTICLE III
DELIVERY
1. Purchase Orders. Distributor shall order GINSITE by written notice to
Company. Each order shall specify the number of units (as identified by Company
model number or other designations indicated in the Price List) to be shipped,
the intended use of the Product including any optional requirements, the desired
method of shipment and the installation site.
2. Product Acceptance. The sole criterion for acceptance of GINSITE by
Distributor shall be the successful receipt of the GINSITE by Distributor or its
purchaser. The Company acknowledges that said GINSITE will conform to all
specifications for GINSITE using Company's standard test procedures and
diagnostic test programs applicable to the product and application involved. The
Company shall not be responsible for improper preparation, application, mixing,
misuse or abuse or other defects caused as a direct/indirect result of improper
use.
3. Shipment. All shipments of GINSITE shall be made FOB Company's plant and
liability for loss or damage in transit, or thereafter, shall pass to
Distributor upon Company's delivery of GINSITE to a common carrier for shipment.
Distributor shall bear all costs of transportation and insurance and will
promptly reimburse Company if Company prepays or otherwise pays for such
expenses. Company shall not be in default by reason of any failure in its
performance under this Agreement.
4. Delay. Distributor may delay for a period of thirty (30) days upon
giving the Company written notice at least fifteen (15) days prior to the
scheduled delivery date. In the event distributor delays delivery for more than
<PAGE>
thirty (30) days with notification as set forth above, or for a period of more
than five (5) days written notice, Distributor shall pay to Company, as a
service charge, an amount equal to 1/360th of twenty-five percent (25%) of the
Purchase Price for each day of such delay to be computed from the first day of
such delay through the termination of such delay.
5. Force Majeure. No party hereto shall be liable for delay or failure to
perform any obligations hereunder (other than the payment of money) if such
delay or failure arises out of causes beyond its reasonable control and without
its fault or negligence, including, but not limited to, labor disputes and
strikes, wars, riots, insurrection, piracy, and civil commotion, federal, state
or municipal action, statue, ordinance, regulations, rule or order, fire,
earthquake, floods or other unusually severe weather, accidents, nuclear
radiation, embargos, epidemics, shortage of power or any act of God. Any party
seeking excuse for delay or failure to perform on the basis of this provision
shall promptly notify the other party hereto upon learning of any event which
may result in any delay or failure to perform. In addition, the affected party
shall make every effort to eliminate and/or correct the effect of such condition
or event as completely and rapidly as is reasonably possible. In such case, the
time of delivery or performance shall be deferred until force majeure event as
provided in this paragraph.
6. Cancellation. Distributor may, within five (5) days from making an order
cancel any or all GINSITE on order upon giving timely written notice.
ARTICLE IV
PROPRIETARY RIGHTS
1. Use of Company Name. Company expressly prohibits any direct or indirect
use, or reference to GINSITE, or other employment of its name, trademarks, or
trade name exclusively licensed to Company, except as specified in this
Agreement or as expressly authorized by Company in writing. All advertising and
other promotional material will be submitted to Company at least two weeks in
advance and will only be used if Company consents thereto, which consent shall
not be unreasonably withheld.
Authorized legend shall be the following:
AUTHORIZED DISTRIBUTOR OF: GINSITE
2. If the authorized legend is used on any stationery, invoices, promotion
material or otherwise by Distributor, Distributor will, on termination of this
Agreement, or upon request of Company, discontinue the use of such legend on any
stationery, invoices, promotion material or otherwise and thereafter will not
use, either directly or indirectly in connection with its business, such legend
or any other names, titles of expressions so nearly resembling the same as would
likely lead to confusion or uncertainty, or to deceive the public.
3. Drawings and Data. The Company supplies all necessary data for the
proper application, and maintenance of GINSITE. Portions of this data are
proprietary in nature and will be so marked. The Distributor agrees to abide by
the terms of such markings and to be liable for all loss or damage incurred by
<PAGE>
the Company as a result of the improper or unauthorized use of such data.
4. Title to Products and Documentation Package. Distributor acknowledges
that the GINSITE and any documentation are and shall remain the property of
Company, and that the products are being made available to Distributor in
confidence and solely on the basis of its confidential relationship to Company,
Distributor agrees not to print, copy, provide or otherwise make available, in
whole or in part, any portion of an original or modified GINSITE and/or
Documentation Package or related materials.
ARTICLE V
WARRANTY
1. GINSITE Warranty. Company warrants that Distributor shall acquire
GINSITE purchased hereunder free and clear of all liens and encumbrances except
for Company's purchase money security interest defined in Article I, 4. above.
Company further warrants all GINSITE to be free from defects in material or
workmanship under normal and intended use and service for a period of One (1)
year from the date of delivery as outlined in Exhibit C.
ARTICLE VI
DURATION OF AGREEMENT
1. Term. The term of this Agreement shall be for 5 YEARS(S) from the date
hereof, unless sooner terminated. The Company, at its sole option, shall have a
right to renew this agreement, under the same terms and conditions, for
consecutive additional 5 YEAR terms, upon thirty (30) days written notice to
Distributor, prior to the expiration each of the then current term. Termination
shall not relieve either party of obligations incurred prior thereto.
2. Termination. This Agreement may be terminated only:
(a) By either party for substantial breach of any material provision of
this Agreement by the other, provided due notice has been given to the other of
the alleged breach and such other party has not cured the breach within thirty
(30) days thereof; or
(b) By the Company if: there is an unacceptable change in the control or
management of the Distributor; if the Distributor ceases to function as a going
concern or makes an assignment for the benefit of creditors; if a petition in
bankruptcy is filed by or against the Distributor, resulting in an adjudication
of bankruptcy; or, if the Distributor fails to pay its debts as they become due
and provided due notice has been given by the Company to the Distributor and the
Distributor has not cured such breach within thirty (30) days thereof; or
(c) Upon termination of this Agreement all further rights and obligations
of the parties shall cease, except that Distributor shall not be relieved of
(I) its obligation to pay any monies due, or to become due, as of or
after the date of termination, and
<PAGE>
(II) any other obligation set forth in this Agreement which is to take
effect after the date of termination. The Distributor may only
sell unsold inventory of GINSITE to either the Company or another
authorized Distributor.
(d) Failure of the Distributor to meet or exceed the Minimum Requirements
set forth in Exhibit A.
ARTICLE VII
NOTICES
1. Notice or Communication. Any notice or communication required or
permitted hereunder (other than Administrative Notice) shall be in writing and
shall be sent by certified mail, return receipt requested, postage prepaid and
addressed to the addresses set forth below or to such changed address as any
party entitled to notice shall have communicated in writing to the other party.
Notices and communications to Company shall be sent to:
GINSITE MATERIALS, INC.
6781 WEST SUNRISE BLVD.
PLANTATION, FL 33313
Notices or communications to Distributor shall be sent to address shown on first
page of this Agreement. Any notices or communications to either party hereunder
shall be deemed to have been given when deposited in the mail, addressed to the
then current address of such party.
Date of Effectiveness. Any such notice or communication so mailed shall be
deemed delivered and effective seventy-two (72) hours after mailing thereof in
the United States.
ARTICLE VIII
GENERAL PROVISIONS
1. Relationship of Parties. The relationship between the parties
established by this Agreement shall be solely that of vendor and vendee and all
rights and powers not expressly granted to the Distributor are expressly
reserved to the Company.
2. Independence of Parties. Nothing contained in this Agreement shall be
construed to make the Distributor the agent for the Company for any purpose, and
neither party hereto shall have any right whatsoever to incur any liabilities or
obligations on behalf or binding upon the other party. The Distributor
specifically agrees that it shall have no power or authority to represent the
Company in any manner; that it will solicit orders for products as an
independent contractor in accordance with the terms of this Agreement; and that
it will not at any time represent the Company in any manner; that it will
solicit orders for products as an independent contractor in accordance with the
terms of this Agreement; and that it will not at any time represent orally or in
writing to any person or corporation or other business entity that it has any
right, power or authority not expressly granted by this Agreement.
3. Indemnity. The Distributor agrees to hold the Company free and harmless
<PAGE>
from any and all claims, damages, and expenses of every kind or nature
whatsoever (a) arising from acts of the Distributor; (b) as a direct or indirect
consequence of termination of this Agreement in accordance with its terms; or
(c) arising from acts of third parties in relation to products sold to the
Distributor under this Agreement, including, but not limited to execution of
liens and security interests by third parties with respect to any such products.
4. Assignment. This Agreement constitutes a personal contract and
Distributor shall not transfer or assign same or any part thereof without the
advance written consent of Company.
5. Entire Agreement. The entire Agreement between the Company and the
Distributor covering the GINSITE is set forth herein and any amendment or
modification shall be in writing and shall be executed by duly authorized
representatives in the same manner as this Agreement. The provisions of this
Agreement are severable, and if any one or more such provisions are determined
to be illegal or otherwise unenforceable, in whole or in part, under the laws of
any jurisdiction, the remaining provisions or portions hereof shall,
nevertheless, be binding on and enforceable by and between the parties hereto.
6. Applicable Law. This Agreement shall be governed by the laws of the
State of FLORIDA and is accepted by Company at its Corporate Office in
Plantation, Florida.
7. Separate Provisions. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date and year indicated above.
GINSITE MATERIALS, INC. (COMPANY)
By:_/s/ Murray Ginsberg, Pres. WITNESS:_________________________
(Authorized Officer)
(DISTRIBUTOR)
By:_/s/ Jean Aime Medici WITNESS:_________________________
(Authorized Officer)
State of Florida)
County of Dade)
Sworn to and subscribed before me this 31 day of March of the year 1999, by Mr.
Jean-Aime Medici, who produced ID U.S. Passport # 044785208.
Notary Public - State of Florida
/s/ Rosario Borja Swing My Commission CC662995 Expires July 13, 2001
- -----------------------
<PAGE>
EXHIBIT B
DESCRIPTION OF THE TERRITORY
The following state, country, territory or counties shall constitute the
Territory:
Quebec State, Canada; Mexico; China
[Describe Geographic Areas]
Exhibit 10.1B
DISTRIBUTOR AGREEMENT
THIS AGREEMENT is made this 1st day of June, 1998, by and between GINSITE
MATERIALS, INC, with its principal place of business located at 6781 WEST
SUNRISE BOULEVARD, PLANTATION, FLORIDA 33313 (the "Company") and [Name of
Distributor], Marcus Dean Rogozinski (the "Distributor"), [Address] 3601
Nashville St.,Orlando STATE Florida ZIP 32839 COUNTY Orange
NOW, THEREFORE, for the sum of TEN DOLLARS ($10.00) and other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF DISTRIBUTORSHIP
1. Distribution Right. The Company hereby appoints and grants Distributor
the exclusive and assignable right to sell that certain product of the Company
known as GINSITE (hereinafter referred to as "GINSITE" or the "Product") listed
in the then current "Price List" (Exhibit "A" attached hereto). The distribution
right shall be limited to customers who have places of business in, and will
initially use the Company's products in the geographic area set forth in Exhibit
"B" attached hereto.
2. Prices. All prices stated are FOB the Company's offices in Plantation,
Florida. Prices do not include transportation costs which shall be borne by
Distributor. Prices do not include federal, state or local taxes applicable to
the products sold under this Agreement.
3. Terms. Unless otherwise specified in writing, terms are NET cash upon
delivery, except where satisfactory credit is established in which case terms
are:
a. Fifty percent (50%) of total invoice with Order.
b. Twenty-five percent (25%) of total invoice upon delivery by the
Company. c. The balance of any invoice shall be due within thirty
(30)days from delivery by the Company.
The Company reserves the right to revoke any credit extended at the Company's
sole discretion. Invoices not paid within thirty (30) days of the invoice date
will have one and one-half percent (1- 1/2%) per month finance charge assessed
against the unpaid balance from the date of invoice until the date of payment.
4. Title to GINSITE. The Company hereby reserves a purchase money security
interest in each unit of GINSITE sold or to be sold under this Agreement and in
the proceeds thereof, if Distributor shall have sold a unit(s) to another party
prior to Distributor paying Company the purchase price for such Unit as set
forth herein, in the amount of such unit's purchase price. These interests will
be satisfied by payment in full. A copy of this Agreement may be filed with the
appropriate authorities at any time after the signature by the Company as a
financing statement in order to perfect the Company's security interest. On the
<PAGE>
request of the Company, Distributor shall execute financing statement(s) and
other instruments the Company shall desire to perfect a security interest in the
GINSITE for its purchase price. Title to the GINSITE shall pass to Distributor
upon receipt by the Company of payment in full for all amounts due for such
units of GINSITE
5. Competitive Products. Distributor agrees not to represent or sell other
products which are deemed to be competitive with GINSITE unless agreed to by the
Company by written notice. Said competitive products include, but are not
limited to; stucco products, waterproofing products, cement, concrete blocks,
sealers or similar products.
ARTICLE II
MARKETING AND SUPPORT
1. Sales. Distributor shall use its best efforts to promote the sale and
distribution of GINSITE.
2. Advertising. Company shall assist the Distributor on all advertising,
sales promotions, and public relations.
3. Training. Company shall furnish training of Distributor's sales and
technical representatives at various times and locations as shall be designated
for this purpose by Company.
ARTICLE III
DELIVERY
1. Purchase Orders. Distributor shall order GINSITE by written notice to
Company. Each order shall specify the number of units (as identified by Company
model number or other designations indicated in the Price List) to be shipped,
the intended use of the Product including any optional requirements, the desired
method of shipment and the installation site.
2. Product Acceptance. The sole criterion for acceptance of GINSITE by
Distributor shall be the successful receipt of the GINSITE by Distributor or its
purchaser. The Company acknowledges that said GINSITE will conform to all
specifications for GINSITE using Company's standard test procedures and
diagnostic test programs applicable to the product and application involved. The
Company shall not be responsible for improper preparation, application, mixing,
misuse or abuse or other defects caused as a direct/indirect result of improper
use.
3. Shipment. All shipments of GINSITE shall be made FOB Company's plant and
liability for loss or damage in transit, or thereafter, shall pass to
Distributor upon Company's delivery of GINSITE to a common carrier for shipment.
Distributor shall bear all costs of transportation and insurance and will
promptly reimburse Company if Company prepays or otherwise pays for such
expenses. Company shall not be in default by reason of any failure in its
performance under this Agreement.
<PAGE>
4. Delay. Distributor may delay for a period of thirty (30) days upon
giving the Company written notice at least fifteen (15) days prior to the
scheduled delivery date. In the event distributor delays delivery for more than
thirty (30) days with notification as set forth above, or for a period of more
than five (5) days written notice, Distributor shall pay to Company, as a
service charge, an amount equal to 1/360th of twenty-five percent (25%) of the
Purchase Price for each day of such delay to be computed from the first day of
such delay through the termination of such delay.
5. Cancellation. Distributor may, within five (5) days from making an order
cancel any or all GINSITE on order upon giving timely written notice.
ARTICLE IV
PROPRIETARY RIGHTS
1. Use of Company Name. Company expressly prohibits any direct or indirect
use, or reference to GINSITE, or other employment of its name, trademarks, or
trade name exclusively licensed to Company, except as specified in this
Agreement or as expressly authorized by Company in writing. All advertising and
other promotional material will be submitted to Company at least two weeks in
advance and will only be used if Company consents thereto, which consent shall
not be unreasonably withheld.
Authorized legend shall be the following:
AUTHORIZED DISTRIBUTOR OF: GINSITE
2. If the authorized legend is used on any stationery, invoices, promotion
material or otherwise by Distributor, Distributor will, on termination of this
Agreement, or upon request of Company, discontinue the use of such legend on any
stationery, invoices, promotion material or otherwise and thereafter will not
use, either directly or indirectly in connection with its business, such legend
or any other names, titles of expressions so nearly resembling the same as would
likely lead to confusion or uncertainty, or to deceive the public.
3. Drawings and Data. The Company supplies all necessary data for the
proper application, and maintenance of GINSITE. Portions of this data are
proprietary in nature and will be so marked. The Distributor agrees to abide by
the terms of such markings and to be liable for all loss or damage incurred by
the Company as a result of the improper or unauthorized use of such data.
4. Title to Products and Documentation Package. Distributor acknowledges
that the GINSITE and any documentation are and shall remain the property of
Company, and that the products are being made available to Distributor in
confidence and solely on the basis of its confidential relationship to Company,
Distributor agrees not to print, copy, provide or otherwise make available, in
whole or in part, any portion of an original or modified GINSITE and/or
Documentation Package or related materials.
ARTICLE V
WARRANTY
<PAGE>
GINSITE Warranty. Company warrants that Distributor shall acquire GINSITE
purchased hereunder free and clear of all liens and encumbrances except for
Company's purchase money security interest defined in Article I, 4. above.
Company further warrants all GINSITE to be free from defects in material or
workmanship under normal and intended use and service for a period of One (1)
year from the date of delivery as outlined in Exhibit C.
ARTICLE VI
DURATION OF AGREEMENT
1. Term. The term of this Agreement shall be for ONE YEAR(S) from the date
hereof, unless sooner terminated. The Company, at its sole option, shall have a
right to renew this agreement, under the same terms and conditions, for FIVE (5)
consecutive additional FIVE YEAR terms, upon thirty (30) days written notice to
Distributor, prior to the expiration each of the then current term. Termination
shall not relieve either party of obligations incurred prior thereto.
2. Termination. This Agreement may be terminated only:
(a) By either party for substantial breach of any material provision of
this Agreement by the other, provided due notice has been given to the other of
the alleged breach and such other party has not cured the breach within thirty
(30) days thereof; or
(b) By the Company if: there is an unacceptable change in the control or
management of the Distributor; if the Distributor ceases to function as a going
concern or makes an assignment for the benefit of creditors; if a petition in
bankruptcy is filed by or against the Distributor, resulting in an adjudication
of bankruptcy; or, if the Distributor fails to pay its debts as they become due
and provided due notice has been given by the Company to the Distributor and the
Distributor has not cured such breach within thirty (30) days thereof; or
(c) Upon termination of this Agreement all further rights and obligations
of the parties shall cease, except that Distributor shall not be relieved of
(I) its obligation to pay any monies due, or to become due, as of or
after the date of termination, and
(II) any other obligation set forth in this Agreement which is to take
effect after the date of termination. The Distributor may only
sell unsold inventory of GINSITE to either the Company or another
authorized Distributor.
(d) Failure of the Distributor to meet or exceed the Minimum Requirements
set forth in Exhibit A.
ARTICLE VII
NOTICES
<PAGE>
1. Notice or Communication. Any notice or communication required or
permitted hereunder (other than Administrative Notice) shall be in writing and
shall be sent by certified mail, return receipt requested, postage prepaid and
addressed to the addresses set forth below or to such changed address as any
party entitled to notice shall have communicated in writing to the other party.
Notices and communications to Company shall be sent to:
GINSITE MATERIALS, INC.
6781 WEST SUNRISE BLVD.
PLANTATION, FL 33313
Notices or communications to Distributor shall be sent to address shown on first
page of this Agreement. Any notices or communications to either party hereunder
shall be deemed to have been given when deposited in the mail, addressed to the
then current address of such party.
Date of Effectiveness. Any such notice or communication so mailed shall be
deemed delivered and effective seventy-two (72) hours after mailing thereof in
the United States.
ARTICLE VIII
GENERAL PROVISIONS
1. Relationship of Parties. The relationship between the parties
established by this Agreement shall be solely that of vendor and vendee and all
rights and powers not expressly granted to the Distributor are expressly
reserved to the Company.
2. Independence of Parties. Nothing contained in this Agreement shall be
construed to make the Distributor the agent for the Company for any purpose, and
neither party hereto shall have any right whatsoever to incur any liabilities or
obligations on behalf or binding upon the other party. The Distributor
specifically agrees that it shall have no power or authority to represent the
Company in any manner; that it will solicit orders for products as an
independent contractor in accordance with the terms of this Agreement; and that
it will not at any time represent the Company in any manner; that it will
solicit orders for products as an independent contractor in accordance with the
terms of this Agreement; and that it will not at any time represent orally or in
writing to any person or corporation or other business entity that it has any
right, power or authority not expressly granted by this Agreement.
3. Indemnity. The Distributor agrees to hold the Company free and harmless
from any and all claims, damages, and expenses of every kind or nature
whatsoever (a) arising from acts of the Distributor; (b) as a direct or indirect
consequence of termination of this Agreement in accordance with its terms; or
(c) arising from acts of third parties in relation to products sold to the
Distributor under this Agreement, including, but not limited to execution of
liens and security interests by third parties with respect to any such products.
4. Assignment. This Agreement constitutes a personal contract and
Distributor shall not transfer or assign same or any part thereof without the
advance written consent of Company.
<PAGE>
5. Entire Agreement. The entire Agreement between the Company and the
Distributor covering the GINSITE is set forth herein and any amendment or
modification shall be in writing and shall be executed by duly authorized
representatives in the same manner as this Agreement. The provisions of this
Agreement are severable, and if any one or more such provisions are determined
to be illegal or otherwise unenforceable, in whole or in part, under the laws of
any jurisdiction, the remaining provisions or portions hereof shall,
nevertheless, be binding on and enforceable by and between the parties hereto.
6. Applicable Law. This Agreement shall be governed by the laws of the
State of FLORIDA and is accepted by Company at its Corporate Office in
Plantation, Florida.
7. Separate Provisions. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date and year indicated above.
GINSITE MATERIALS, INC. (COMPANY)
By:/s/ Murray Ginsberg, Pres.
- -----------------------------
(Authorized Officer)
/s/Marcus Dean Rogozinski
- -------------------------
Marcus Dean Rogozinski(DISTRIBUTOR)
<PAGE>
EXHIBIT A
PRICE LIST AS:
1. DISTRIBUTOR SHALL TENDER TO THE COMPANY, AN INITIAL NON-REFUNDABLE
DEPOSIT OF FIFTY THOUSAND ($50,000.00) (US FUNDS) FOR THE EXCLUSIVE
GEOGRAPHIC TERRITORY OUTLINED IN EXHIBIT B,
A. DISTRIBUTOR SHALL PLACE AN INITIAL ORDER OF TEN THOUSAND (10,000)
GALLONS OF GINSITE UPON EXECUTION OF THIS AGREEMENT.
B. DISTRIBUTOR SHALL ORDER A MINIMUM OF TEN THOUSAND (10,000) GALLONS OF
GINSITE WITHIN THREE (3) MONTHS FROM THE DATE HEREIN.
C. DISTRIBUTOR SHALL ORDER A MINIMUM OF FIVE THOUSAND (5,000) GALLONS OF
GINSITE PER MONTH FROM THE INITIAL THREE (3) MONTH ORDER.
D. FAILURE TO MEET OR EXCEED THE MINIMUM REQUIREMENTS SET FORTH
ABOVE, SHALL RESULT IN THE CANCELLATION OF THIS AGREEMENT AT
COMPANY'S SOLE DISCRETION.
2. ORDER NO. 1____________________________$ Enclosed
ADDENDUM:
DISTRIBUTOR AGREES TO THE FOLLOWING JUNE 16, 1998:
A DEPOSIT TOWARDS THE DISTRIBUTORS AGREEMENT OF $2,500.00 ON ALL GALLONS
OF ROOF AND WALL MATERIALS PAID FOR, G.M.I. WILL KEEP $15.00 TOWARDS AGREEMENT.
FOR ALL GALLONS OF MAR MATERIAL PAID FOR, G.M.I. WILL KEEP $15.00 TOWARD
AGREEMENT UNTIL THE $50,000.00 AGREEMENT IS PAID FOR.
<PAGE>
EXHIBIT B
DESCRIPTION OF THE TERRITORY
Subject to the provisions of sections A and B of this Agreement, the following
state, country, territory or counties shall constitute the Territory:
Orange County
[Describe Geographic Areas]
Exhibit 10.1C
DISTRIBUTOR AGREEMENT
THIS AGREEMENT is made this 29th day of May, 1998, by and between GINSITE
MATERIALS, INC, with its principal place of business located at 6781 WEST
SUNRISE BOULEVARD, PLANTATION, FLORIDA 33313 (the "Company")and Fred Roneker
[Name of Distributor], (the "Distributor"),[Address] 1305 So. Atlantic Ave.
#510, Cocoa Beach STATE FL ZIP 32931 COUNTRY USA
NOW, THEREFORE, for the sum of TEN DOLLARS ($10.00) and other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF DISTRIBUTORSHIP
1. Distribution Right. The Company hereby appoints and grants Distributor
the non-exclusive and assignable right to sell that certain product of the
Company known as GINSITE (hereinafter referred to as "GINSITE" or the "Product")
listed in the then current "Price List" (Exhibit "A" attached hereto). The
distribution right shall be limited to customers who have places of business in,
and will initially use the Company's products in the geographic area set forth
in Exhibit "B" attached hereto.
2. Prices. All prices stated are FOB the Company's offices in Plantation,
Florida. Prices do not include transportation costs which shall be borne by
Distributor. Prices do not include federal, state or local taxes applicable to
the products sold under this Agreement.
3. Terms. Unless otherwise specified in writing, terms are NET cash upon
delivery, except where satisfactory credit is established in which case terms
are:
a. Fifty percent (50%) of total invoice with Order.
b. Twenty-five percent (25%) of total invoice upon delivery by the
Company.
c. The balance of any invoice shall be due within thirty (30)days
from delivery by the Company.
The Company reserves the right to revoke any credit extended at the Company's
sole discretion. Invoices not paid within thirty (30) days of the invoice date
will have one and one-half percent (1- 1/2%) per month finance charge assessed
against the unpaid balance from the date of invoice until the date of payment.
4. Title to GINSITE. The Company hereby reserves a purchase money security
interest in each unit of GINSITE sold or to be sold under this Agreement and in
the proceeds thereof, if Distributor shall have sold a unit(s) to another party
prior to Distributor paying Company the purchase price for such Unit as set
forth herein, in the amount of such unit's purchase price. These interests will
be satisfied by payment in full. A copy of this Agreement may be filed with the
<PAGE>
appropriate authorities at any time after the signature by the Company as a
financing statement in order to perfect the Company's security interest. On the
request of the Company, Distributor shall execute financing statement(s) and
other instruments the Company shall desire to perfect a security interest1 in
the GINSITE for its purchase price. Title to the GINSITE shall pass to
Distributor upon receipt by the Company of payment in full for all amounts due
for such units of GINSITE
5. Competitive Products. Distributor agrees not to represent or sell other
products which are deemed to be competitive with GINSITE unless agreed to by the
Company by written notice. Said competitive products include, but are not
limited to; stucco products, waterproofing products, cement, concrete blocks,
sealers or similar products.
ARTICLE II
MARKETING AND SUPPORT
1. Sales. Distributor shall use its best efforts to promote the sale and
distribution of GINSITE.
2. Advertising. Company shall assist the Distributor on all advertising,
sales promotions, and public relations.
3. Training. Company shall furnish training of Distributor's sales and
technical representatives at various times and locations as shall be designated
for this purpose by Company.
ARTICLE III
DELIVERY
1. Purchase Orders. Distributor shall order GINSITE by written notice to
Company. Each order shall specify the number of units (as identified by Company
model number or other designations indicated in the Price List) to be shipped,
the intended use of the Product including any optional requirements, the desired
method of shipment and the installation site.
2. Product Acceptance. The sole criterion for acceptance of GINSITE by
Distributor shall be the successful receipt of the GINSITE by Distributor or its
purchaser. The Company acknowledges that said GINSITE will conform to all
specifications for GINSITE using Company's standard test procedures and
diagnostic test programs applicable to the product and application involved. The
Company shall not be responsible for improper preparation, application, mixing,
misuse or abuse or other defects caused as a direct/indirect result of improper
use.
3. Shipment. All shipments of GINSITE shall be made FOB Company's plant and
liability for loss or damage in transit, or thereafter, shall pass to
Distributor upon Company's delivery of GINSITE to a common carrier for shipment.
Distributor shall bear all costs of transportation and insurance and will
promptly reimburse Company if Company prepays or otherwise pays for such
expenses. Company shall not be in default by reason of any failure in its
performance under this Agreement.
<PAGE>
4. Delay. Distributor may delay for a period of thirty (30) days upon
giving the Company written notice at least fifteen (15) days prior to the
scheduled delivery date. In the event distributor delays delivery for more than
thirty (30) days with notification as set forth above, or for a period of more
than five (5) days written notice, Distributor shall pay to Company, as a
service charge, an amount equal to 1/360th of twenty-five percent (25%) of the
Purchase Price for each day of such delay to be computed from the first day of
such delay through the termination of such delay.
5. Cancellation. Distributor may, within five (5) days from making an order
cancel any or all GINSITE on order upon giving timely written notice.
ARTICLE IV
PROPRIETARY RIGHTS
1. Use of Company Name. Company expressly prohibits any direct or indirect
use, or reference to GINSITE, or other employment of its name, trademarks, or
trade name exclusively licensed to Company, except as specified in this
Agreement or as expressly authorized by Company in writing. All advertising and
other promotional material will be submitted to Company at least two weeks in
advance and will only be used if Company consents thereto, which consent shall
not be unreasonably withheld.
Authorized legend shall be the following:
AUTHORIZED DISTRIBUTOR OF: GINSITE
2. If the authorized legend is used on any stationery, invoices, promotion
material or otherwise by Distributor, Distributor will, on termination of this
Agreement, or upon request of Company, discontinue the use of such legend on any
stationery, invoices, promotion material or otherwise and thereafter will not
use, either directly or indirectly in connection with its business, such legend
or any other names, titles of expressions so nearly resembling the same as would
likely lead to confusion or uncertainty, or to deceive the public.
3. Drawings and Data. The Company supplies all necessary data for the
proper application, and maintenance of GINSITE. Portions of this data are
proprietary in nature and will be so marked. The Distributor agrees to abide by
the terms of such markings and to be liable for all loss or damage incurred by
the Company as a result of the improper or unauthorized use of such data.
4. Title to Products and Documentation Package. Distributor acknowledges
that the GINSITE and any documentation are and shall remain the property of
Company, and that the products are being made available to Distributor in
confidence and solely on the basis of its confidential relationship to Company,
Distributor agrees not to print, copy, provide or otherwise make available, in
whole or in part, any portion of an original or modified GINSITE and/or
Documentation Package or related materials.
<PAGE>
ARTICLE V
WARRANTY
1. GINSITE Warranty. Company warrants that Distributor shall acquire
GINSITE purchased hereunder free and clear of all liens and encumbrances except
for Company's purchase money security interest defined in Article I, 4. above.
Company further warrants all GINSITE to be free from defects in material or
workmanship under normal and intended use and service for a period of One (1)
year from the date of delivery as outlined in Exhibit C.
ARTICLE VI
DURATION OF AGREEMENT
1. Term. The term of this Agreement shall be for 3 Months from the date
hereof, unless sooner terminated. The Company, at its sole option, shall have a
right to renew this agreement, under the same terms and conditions, for
consecutive additional ---- YEAR terms, upon thirty (30) days written notice to
Distributor, prior to the expiration each of the then current term. Termination
shall not relieve either party of obligations incurred prior thereto.
2. Termination. This Agreement may be terminated only:
(a) By either party for substantial breach of any material provision of
this Agreement by the other, provided due notice has been given to the other of
the alleged breach and such other party has not cured the breach within thirty
(30) days thereof; or
(b) By the Company if: there is an unacceptable change in the control or
management of the Distributor; if the Distributor ceases to function as a going
concern or makes an assignment for the benefit of creditors; if a petition in
bankruptcy is filed by or against the Distributor, resulting in an adjudication
of bankruptcy; or, if the Distributor fails to pay its debts as they become due
and provided due notice has been given by the Company to the Distributor and the
Distributor has not cured such breach within thirty (30) days thereof; or
(c) Upon termination of this Agreement all further rights and obligations
of the parties shall cease, except that Distributor shall not be relieved of
(I) its obligation to pay any monies due, or to become due, as of or
after the date of termination, and
(II) any other obligation set forth in this Agreement which is to take
effect after the date of termination. The Distributor may only
sell unsold inventory of GINSITE to either the Company or another
authorized Distributor.
(d) Failure of the Distributor to meet or exceed the Minimum Requirements
set forth in Exhibit A.
<PAGE>
ARTICLE VII
NOTICES
1. Notice or Communication. Any notice or communication required or
permitted hereunder (other than Administrative Notice) shall be in writing and
shall be sent by certified mail, return receipt requested, postage prepaid and
addressed to the addresses set forth below or to such changed address as any
party entitled to notice shall have communicated in writing to the other party.
Notices and communications to Company shall be sent to:
GINSITE MATERIALS, INC.
6781 WEST SUNRISE BLVD.
PLANTATION, FL 33313
Notices or communications to Distributor shall be sent to address shown on first
page of this Agreement. Any notices or communications to either party hereunder
shall be deemed to have been given when deposited in the mail, addressed to the
then current address of such party.
Date of Effectiveness. Any such notice or communication so mailed shall be
deemed delivered and effective seventy-two (72) hours after mailing thereof in
the United States.
ARTICLE VIII
GENERAL PROVISIONS
1. Relationship of Parties. The relationship between the parties
established by this Agreement shall be solely that of vendor and vendee and all
rights and powers not expressly granted to the Distributor are expressly
reserved to the Company.
2. Independence of Parties. Nothing contained in this Agreement shall be
construed to make the Distributor the agent for the Company for any purpose, and
neither party hereto shall have any right whatsoever to incur any liabilities or
obligations on behalf or binding upon the other party. The Distributor
specifically agrees that it shall have no power or authority to represent the
Company in any manner; that it will solicit orders for products as an
independent contractor in accordance with the terms of this Agreement; and that
it will not at any time represent the Company in any manner; that it will
solicit orders for products as an independent contractor in accordance with the
terms of this Agreement; and that it will not at any time represent orally or in
writing to any person or corporation or other business entity that it has any
right, power or authority not expressly granted by this Agreement.
3. Indemnity. The Distributor agrees to hold the Company free and harmless
from any and all claims, damages, and expenses of every kind or nature
whatsoever (a) arising from acts of the Distributor; (b) as a direct or indirect
consequence of termination of this Agreement in accordance with its terms; or
(c) arising from acts of third parties in relation to products sold to the
Distributor under this Agreement, including, but not limited to execution of
liens and security interests by third parties with respect to any such products.
<PAGE>
4. Assignment. This Agreement constitutes a personal contract and
Distributor shall not transfer or assign same or any part thereof without the
advance written consent of Company.
5. Entire Agreement. The entire Agreement between the Company and the
Distributor covering the GINSITE is set forth herein and any amendment or
modification shall be in writing and shall be executed by duly authorized
representatives in the same manner as this Agreement. The provisions of this
Agreement are severable, and if any one or more such provisions are determined
to be illegal or otherwise unenforceable, in whole or in part, under the laws of
any jurisdiction, the remaining provisions or portions hereof shall,
nevertheless, be binding on and enforceable by and between the parties hereto.
6. Applicable Law. This Agreement shall be governed by the laws of the
State of FLORIDA and is accepted by Company at its Corporate Office in
Plantation, Florida.
7. Separate Provisions. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date and year indicated above.
GINSITE MATERIALS, INC. (COMPANY)
By:/s/ Henry A. Max
- ---------------------
(Authorized Officer)
(DISTRIBUTOR)
By:/s/ Fred Roneker
- -------------------
(Authorized Officer)
<PAGE>
EXHIBIT A
PRICE LIST AS:
1. DISTRIBUTOR SHALL NOT TENDER TO THE COMPANY, AN INITIAL DEPOSIT FOR A
NON-EXCLUSIVE GEOGRAPHIC TERRITORY.
A. DISTRIBUTOR SHALL PLACE AN INITIAL ORDER OF ________
GALLONS OF GINSITE UPON EXECUTION OF THIS AGREEMENT.
B. DISTRIBUTOR SHALL ORDER A MINIMUM OF _________ GALLONS
OF GINSITE PER MONTH FOLLOWING THE INITIAL ORDER.
C. FAILURE TO MEET OR EXCEED THE MINIMUM REQUIREMENTS
SET FORTH ABOVE SHALL RESULT IN THE CANCELLATION OF
THIS AGREEMENT AT COMPANY'S SOLE DISCRETION (SEE
ADDENDUM ATTACHED).
2. ORDER NO. 1____________________________$ Enclosed
- -------------------------------------------
Distributor
See Addendum
<PAGE>
EXHIBIT A
ADDENDUM: MAY 29, 1998
Mr. Fred Roneker has placed and paid for an initial order this date for 60
gallons of Ginsite and delivered a check in the amount of $42000.00. Therefore,
Ginsite materials, Inc. will postpone the Distributorship Agreement Fee of
$50,000.00 for a period of three (3) months from the date of this signed
Addendum.
During this three (3) month period, Mr. Roneker will put forth every effort to
market and sell Ginsite. Should Mr. Roneker be fortunate to obtain a large order
during this three (3) month period, a portion of the profit would be sent to
Ginsite Materials, Inc. to be credited to the Distributorships Agreement Fee.
Ginsite Materials, Inc. agrees that during this three (3) month period, no other
distributor will be assigned the designated geographic area assigned to Mr.
Roneker. Ginsite Materials, inc., will forward all sales leads from the assigned
geographic area to Mr. Roneker directly.
Should Mr. Roneker introduce a large company (customer) to Ginsite Materials,
inc. from another area in the United States where Ginsite Materials, Inc. does
not have a Distributor Agreement, Ginsite Materials, Inc. would be willing to
approve Mr. Roneker as the exclusive Distributor for that company in that area.
Approved:
/s/ Henry A. Max
- -----------------
Ginsite Materials, Inc.
/s/ Fred Roneker
- ----------------
Mr. Fred Roneker
<PAGE>
EXHIBIT B
DESCRIPTION OF THE TERRITORY
The following state, country, territory or counties shall constitute the
Territory:
Brevard County, Florida
[Describe Geographic Areas]
<PAGE>
DISTRIBUTORSHIP APPLICATION
FIRM NAME: FRED RONEKER - GINSITE DISTR.
ADDRESS: 1305 S. Atlantica Ave #510
CITY: Cocoa Beach STATE: FL ZIP: 32931
YEARS in BUSINESS: FEDERAL ID #:
DUNS #:
PHONE: ( ) 407-799-2720 FAX: ( ) 407-784-4028
- ------------------------------ --------------------------------------
PRINCIPALS: (NAMES of OFFICERS or OWNERS)
FRED RONEKER Position OWNER
S.S.#: ###-##-####
COMPANY CONTACT:___________________________________
BANK NAME:______________________PHONE: ( )_____________________________
ACCOUNT NUMBER: _______________________________
BUSINESS:
Include: Current Financial Statement - Past Five (5) Year History
GEOGRAPHIC AREA REQUESTED:
BREVARD COUNTY
ANY ACCOUNT ANYWHERE THAT THERE IS NO EXISTING DISTRIBUTOR.
MARKETING APPROACH: State specific plans for distributing GINSITE in an assigned
geographic area.________________________________________________________________
- ------------------------------------------------------------------------------
<PAGE>
CREDIT REFERENCES:
PLEASE LIST NAME, ADDRESS, TELEPHONE & ACCOUNT NUMBER (IF APPLICABLE)
OF TWO (2) TRADE REFERENCES WHICH WILL BE CONTACTED FOR CREDIT
INFORMATION:
1._____________________________________________________________________________
2.____________________________________________________________________________
The above information is submitted in connection with our request to establish
an open credit account with GINSITE MATERIALS, INC. (GMI). It is our
understanding that the below signature represents our authorization to (GMI) to
request any credit information that may be needed/required in connection with
our application. We also understand that, upon approval, all charges must be
paid within specified credit terms of Net 15 days. All information obtained for
this application will be held in strict confidence.
PRINT NAME: FRED RONEKER
SIGNATURE: /s/ Frederick Roneker, Jr.
---------------------------
Exhibit 10.2
License Agreement
This Agreement made and entered into this 28 day of December, 1998 by and
between GINSITE MATERIALS, INC., a Florida corporation (hereinafter "Licensor")
and CONCESSION MANAGEMENT OF PALM BEACH, INC., a Florida corporation
(hereinafter "Licensee")
W I T N E S S E T H
Whereas, the Licensor has developed and perfected a substance used to create an
external covering or coating which may be applied to the exterior surface of
various and sundry materials to form a hard, protective, impervious coating
commonly referred to as "Ginsite"; and
Whereas, the Licensee is involved in the manufacture, distribution, sale and
maintenance of mechanical equipment developed for and used in the lifting of
boats and watercraft of all sizes and nature; and in the lifting of supplies,
materials, dingnies, lifeboats, etc. from the water onto larger boats and/or
vessels; and
Whereas, the Licensor wishes to offer the Ginsite product to that portion of the
marine industry in which the Licensee is involved; and
Whereas, The Licensee wishes to obtain and exclusive right to represent and
market the Ginsite products on behalf of the Licensor to that particular segment
of the marine industry.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
together with other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. The foregoing recitals are true and correct and are incorporated herein by
reference as though set forth in full.
2. The Licensor is the owner of all right, title and interest in and to the
substance known as Ginsite and owns all patent rights as well as trade
names and copyrights pertaining to said materials. The Licensor has the
full right to sell or assign marketing rights to the Ginsite product to any
entity or to license such marketing right to any entity without violation
of any agreement of any kind whatsoever.
3. The Licensee is involved in the manufacturing, marketing, distribution and
maintenance of benefits and other lifting devices used in and around boats
and the marine industry. Licensee is capable of introducing the Ginsite
material to its portion of the marine industry and is otherwise capable and
willing to assist the Licensor in marketing the Ginsite product to this
particular segment of the marine industry. The Licensor does hereby grant
unto the Licensee the sole and exclusive right to represent the Licensor in
marketing, distributing and supplying the Ginsite material to any and all
entities or persons involved in the sale, manufacture, distribution or
maintenance of boatlifts, lifting devices used on board boats for lifting
<PAGE>
boats and other materials onto the boats, docks, dock products and all
other items used in and around boats for docking purposes including but not
limited to boatlifts, cleats, electrical bosses, pilings, decking (outside
of Florida), storage, fish cleaning benches, etc.
4. Licensee does hereby accept the license as above described and does hereby
agree to diligently pursue marketing and selling the Ginsite material to
manufacturers, contractors, boatlift owners and others for use in and on
their products that fall within the description of the products set forth
above.
5. Licensor warrants onto the Licensee that it has the capacity to manufacture
and produce Ginsite in sufficient quantity to satisfy the marketing demand
created by the Licensee and to otherwise support the Licensee in all sales
efforts so as to not prohibit the Licensee from being able to attain the
maximum possible rate of sales. The price of the Ginsite material to be
charged by the Licensor to the Licensee will be the same price commonly
charged by the Licensor from time to time for other contractors,
wholesalers, distributors, licensees, and others.
6. The scope of this license is restricted to the products and products lines
as above described but is not restricted to any geographic area (with the
exception of decking which is outside Florida only). This will permit the
Licensee to market the Ginsite products to any and all entities and/or
persons involved in the manufacture, distribution and sales of the above
described product throughout the world.
7. Licensee covenants and agrees that as a condition t the continuation of
this License, the Licensee shall:
A) Promote the product within the boatlift industry by marketing,
advertising, participation in trade shows, boat shows and other
methods deemed advisable from time to time.
B) Purchase a minimum of one thousand (1,000) gallons per year beginning
in 2000 with a one thousand (1,000) gallon per year increase through
2002 (for a total of 3,000 gallons per annum).
C) Actively solicit and sell geographic sub-Distributorships or
sub-licensee agreements in various areas and remit to Licensor thirty
(30%) percent of all sums received for such Distributorships.
8. In the event of default of any covenant or term herein, the non-defaulting
party will give the defaulting party thirty (30) days written notice of
such default during which time the defaulting party will either cure the
default or begin whatever stops are necessary to cure the default and will
diligently pursue the cure until completion. In the event of failure to
cure as set forth, the non-defaulting party may terminate this Agreement or
take whatever other action it deems proper to enforce the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals
the date first above written.
<PAGE>
GINSITE MATERIALS, INC.
By:/s/ Murray S. Ginsberg
- --------------------------
Murray S. Ginsberg, President
CONCESSION MANAGEMENT
OF PALM BEACH, INC.
By: /s/ David E. Graham
- ------------------------
David E. Graham, Vice President
Exhibit 10.3
OFFICE/WAREHOUSE LEASE AGREEMENT
The lease made and entered into at Broward County, Florida, the 15th day of
November, 1998, by and between
STEVEN J. COOPERMAN, TRUSTEE
hereinafter called "LESSOR" and
GINSITE MATERIALS, INC.
hereinafter called "LESSEE", the terms "LESSOR" and "LESSEE" being intended to
include the permitted successors and permitted assigns of the original parties
and the heirs, legal representatives, permitted successors and permitted assigns
of the respective persons who from time to time are Lessor and Lessee, Wherever
the context of this Lease so requires or admits.
W I T N E S S E T H
That the Lessor, for and in consideration of the rents herein reserved to
be paid by the Lessee, for and in consideration of the Covenants to be kept and
performed by the Lessee, does hereby lease, let the demise unto the Lessee, the
following warehouse unit/or units situated in Broward County, Florida,
consisting of a total of approximately 12,670 square feet located at and
described as follows:
Address: 6781 West Sunrise Boulevard
Sunrise, FL 33313
The parties hereby stipulate for purposes of all calculations hereunder,
that the gross leasable area of the premises is 12,670 square feet, regardless
of the actual area.
1. ACCEPTANCE OF DEMISE BY LESSEE: The Lessee, in consideration of the demise
of said property by the Lessor, and for the further considerations herein set
out, has rented, leased and hired, and does hereby rent, lease and hire the said
property from the Lessor, on the terms and conditions hereinafter stated.
2. DURATION OF TERM:
A. The Primary Term and duration of the Lease shall be for a period of 10
years, 0 months, commencing the 15th day of November, 1997.
B. Provided the Lessee has not defaulted under the terms of this Lease,
the Lessee shall have the right, privilege and option of extending this Lease
for an additional period of 2 x 5 years (hereinafter referred to as Secondary
Term) commencing upon the termination date of the Primary Term set forth above.
The Lessee shall exercise its option for the Secondary term of this Lease by
delivering written notice to the Lessor at least 180 days prior to, and nor more
than 210 days prior to, the expiration of the Primary Term by Certified Mail./
3. AMOUNT OF RENT AND MANNER OF PAYMENT:
A. The Lessee shall pay unto the Lessor the minimum rent for the Primary
Term of this Lease the total rental in the sum of See Below Dollars, said sum to
be paid monthly in advance as follows:
From 11/15/97 through 1/14/98 - $20,000.00 + applicable Florida Sales &
Use Tax From 1/15/98 through 11/14/98 - $10,558.33 + applicable Florida
Sales & Use Tax Commencing 11/15/98 and annually thereafter, the rent
shall increase 5% per annum.
<PAGE>
B. In the event the commencement date is adjusted by reason of
construction, rent shall be paid and pro rated to the first day of the following
month in order that rent shall always be paid monthly in advance.
C. In addition to the payments of minimum rent to the Lessor, the Lessee
shall also pay the following, as and for, and hereby defined as "additional
rent":
(1) REAL ESTATE TAXES: Lessee agrees to pay its proportionate share
of the real estate taxes during the term of this Lease and any renewal or
extension thereof, including any period during which Lessee shall transact
business in the Demised Premises prior to the commencement of the term of this
Lease. For the purposes of this Article, the term "Real Estate Taxes" shall
include all real estate taxes, assessments, water and sewer charges, betterment
assessments, sales and/or rent taxes, special assessments, other governmental
impositions and charges of every kind and nature whatsoever, extraordinary as
well as ordinary, foreseen and unforeseen and each and every installment thereof
which shall or may, during the Lease term, be levied, assessed, imposed, become
due and payable, or liens upon or arising in connection with the use, occupancy
or possession of or grow due or payable out of, or for, the STEVEN J. COOPERMAN,
TRUSTEE or any part thereof, and all costs incurred by Lessor in contesting,
litigating or negotiating the same with the governmental authority. Lessee's
proportionate share shall be computed by multiplying the total amount of the
real estate taxes each year by a fraction, the numerator of which shall be the
gross leasable areas of the Demised Premises and the denominator of which is the
gross leasable area of all building or portion thereof (including the Demised
Premises) occupied by Lessee in the STEVEN J. COOPERMAN, TRUSTEE determined as
of the Commencement Date of the Lease and thereafter as of the beginning of the
calendar year in which such taxes are paid. Lessee hereby waives any right it
may have by statute or otherwise to protect real estate taxes to any public
taxing authority. Nothing herein contained shall be construed to include as a
tax which shall be the basis of real estate taxes, any inheritance, estate,
succession, transfer, gift, franchise, corporation, income or profit tax or
capital levy that is or may be imposed upon Lessor; provided, however, that if
any time after the date hereof, the methods of taxation shall be altered so that
in lieu of or as a substitute for the whole or any part of the taxes now levied,
assessed or imposed (a) a tax on the rents receive3d from such real estate, or
(b) a license fee measured by the rents receivable by Lessor which is otherwise
measured by or based in whole or in part upon the STEVEN J. COOPERMAN, TRUSTEE
or any portion thereof, or (c) an income or franchise tax, then the same shall
be included in the computation of real estate taxes hereunder, computed as if
the amount of such tax or fee so payable were that due if the STEVEN J.
COOPERMAN, TRUSTEE were the only property of Lessor subject thereto.
(A) Lessee agrees to pay to the Lessor the sum of $11,694.97
Dollars per annum payable in monthly installments of $974.58 on the first day of
each calendar month as its estimated payment of Real Estate taxes until the
STEVEN J. COOPERMAN, TRUSTEE is assessed as substantially completed. For each
year thereafter Lessee shall pay Lessor monthly one-twelfth (1/12) of the amount
of Lessee's proportionate tax liability based on the actual taxes for the
preceding calendar year. Lessor shall notify Lessee in writing of the actual
amount due by Lessee for the preceding calendar year when determined. Any amount
paid by Lessee which exceeds the true amount due shall be credits on the next
succeeding payment due pursuant to this Section. If the Lessee has paid less
than the true amount due, Lessee shall pay the difference within ten (10) days
of receipt of notice from Lessor. If the term of this Lease shall begin or end
other than on the first or last day of a calendar year, these charges shall be
billed and adjusted on the basis of such fraction of a calendar year. Should the
<PAGE>
taxing authorities include in such real estate taxes, machinery, equipment,
fixtures, inventory or other personal property or assets of the Lessee, then
Lessee shall also pay its proportionate share of the entire real estate taxes
for such items.
(B) Lessee shall pay to Lessor, together with each installment of
Rent, all sales or rent taxes from time to time imposed in connection with rents
paid by Lessee under this Lease.
2) COMMON AREAS:
(A) Lessor shall make available within or adjacent to the STEVEN
J. COOPERMAN, TRUSTEE such Common Areas, together with any Common Areas made
available by means of cross easements and/or reciprocal construction, operating
and easement agreements, as Lessor shall from time to time, deem to be
appropriate for the STEVEN J. COOPERMAN, TRUSTEE and Lessor shall operate and
maintain such Common Areas for their intended purpose. Lessee shall have the
non-exclusive right during the term of this Lease to use (for their intended
purposes) the Common Areas for itself, its employees, agents, customers,
invitees, licensees and concessionaires subject, however, to the provisions of
this Article.
(B) All Common Areas shall be subject to the exclusive control
and management of Lessor, and Lessor shall have the right, at any time and from
time to time, to establish, modify, amend and enforce uniform rules and
regulations with respect to the common Areas and the use thereof. Lessee agrees
to abide by and conform with such rules and regulations upon notice thereof, to
cause its concessionaires, invitees and licensees and its and their employees
and agents, to abide and conform. Lessor shall have the right (a) to close, if
necessary, all or any portion of the Common Areas to such extent as may in the
opinion of Lessor's counsel be reasonably necessary to prevent a dedication or
public taking thereof or the accrual of any rights of any person or of the
public therein, (b) to close temporarily all or any portion of the Common Areas
to discourage non- customers' use, (c) to use portions of the Common Areas while
engaged in making additional improvements or repairs or alterations to the
STEVEN J. COOPERMAN, TRUSTEE, (d) to transfer, in whole or in part, any of
Lessor's rights and/or obligations under this Article, to any other Lessee(s)
sub-lessee(s) or other occupant(s) of the STEVEN J. COOPERMAN, TRUSTEE or to
such other party(ies) or designee(s) as lessor may from time to time determine,
and (e) to do and perform such other acts (whether similar or dissimilar to the
foregoing) in, to and with respect to, the Common Areas as in the use of good
business judgment Lessor shall determine to be appropriate for the STEVEN J.
COOPERMAN, TRUSTEE, lessee agrees to cause its officers, employees, agents,
licensees and any concessionaires to park their respective automobiles, trucks
and other vehicles only in such parking places in the Common Areas designated by
the Lessor from time to time as the employee parking area. Lessee further
agrees, upon request, to furnish to Lessor the motor vehicle license numbers
assigned to the vehicles of Lessee and any concessionaire, their respective
officers, agents, employees and licensees, Lessor, after notice to Lessee that
Lessee or any of its officers, employees, agents, licensees, or concessionaires,
are not parking in said employee parking area, may at its option, in addition to
any other remedies it may have, tow away any such vehicle at Lessee's expense
and/or impose a parking fine of $10.00 for each vehicle for each day or portion
thereof that such violation(s) continues after five (5) days notice to Lessee.
Lessee shall not at any time interfere with the rights of Lessor and other
tenants, their officers, employees, agents, licensees, customers, invitees and
concessionaires, to use any part of the parking areas and other Common Areas.
(C) In consideration of Lessor's agreement to operate and
maintain the Common Areas, Lessee covenants and agrees to pay Lessee's Pro Rata
Share of the Common Area Costs (as such terms are defined below) for each Lease
<PAGE>
Fiscal Year. Lessor shall notify Lessee from time to time of the amount which
Lessor estimates will be the amount of the Common Area Costs for such Lease
Fiscal Year and Lessee shall pay to Lessor Lessee's Pro Rata Share of such
amount in equal monthly installments in advance, on or before the first day of
each month. Lessor shall submit to Lessee annually a statement showing the
Common Area Costs to be paid by Lessee with respect to such year, the amount
heretofore paid by lessee during such Lease Fiscal and the amount of the
resulting balance due thereon, or overpayment thereof, as the case may be.
Appropriate adjustment shall thereupon be made between the parties, on demand,
on the basis of such statement. Each statement shall be binding upon Lessee, its
successors and assigns, as to the matters set forth therein, if no objection is
raised with respect thereto within thirty (30) days after submission of each
statement to Lessee. Lessee shall have the right, at Lessee's expense, to
examine Lessor's books and records at the office of Lessor during ordinary
business hours not more than once in each Lease Fiscal year for the purpose of
verifying the matters set forth in the statement for immediately preceding Lease
Fiscal Year. (1) "Common Area Costs" shall mean the total costs and expenses
incurred by Lessor, its agents and/or designees for operating, maintaining,
repairing and/or replacing all or any part of the Common Areas (and any
installation therein, thereon, thereunder, or thereover), which costs and
expenses shall include, but shall not be limited to, the following: the total
costs and expenses incurred in cleaning, planting, replanting and maintaining
the landscaping of the common facilities of the STEVEN J. COOPERMAN, TRUSTEE;
the cost of all Lessor's insurance, including, but not limited to, fire and
other casualty, bodily injury, public liability, property damage liability,
automobile parking lot liability insurance, sign insurance, workmans
compensation insurance and other insurance carried by Lessor for the Common
Areas; assessments; repairs; repairing; line repainting; exterior repainting;
rental and maintenance of signs and equipment; lighting; sanitary control;
removal of trash, rubbish, garbage and other refuse; depreciation of machinery
and equipment used in such maintenance; depreciation of roof and paved areas;
repair and/or replacement of on-site water lines, electric lines, gas lines,
sanitary sewer lines and storm water lines; all electrical, water, sewer or
other utility charges for serving the Common Area (including any on-site and/or
off-site sanitary treatment plant(s) serving the STEVEN J. COOPERMAN, TRUSTEE
and all pipes leading to and from same); the cost of personnel to implement such
services, including directing of parking; wages and salaries (including employee
benefits, unemployment insurance and social security payments) of any personnel
necessary to implement the operation, maintenance and repairs of the STEVEN J.
COOPERMAN, TRUSTEE (excluding the cost of any work performed at Lessor's home
office); personal property taxes, sales and use taxes on material, equipment,
supplies and services; fees for required license and permits; fire, security and
police protection, sprinkler system; public address system(s)' public toilets;
reasonable straight line of depreciation of, and rental charges for movable
equipment, supplies, material and labor. (2) "Lease Fiscal Year" means each
period of January 1 through December 31 during the term hereof except that the
first Lease Fiscal Year shall be the period from the commencement of the term
hereof through the December 31 next following the commencement date and the last
Lease Fiscal Year shall be the period from the January 1 next proceeding the
termination date to and including the termination date of the lease term. (3)
"Lessee's Pro-rata Share" is defined as a fraction, the numerator of which is
the gross leasable area of the Demised Premises and the denominator of which is
the gross leasable area
<PAGE>
of all buildings or portions thereof (including the Demised Premises) occupied
by Lessee in the STEVEN J. COOPERMAN, TRUSTEE. All amounts due and payable under
this Article 3, whether minimum Rent, Common Area Maintenance, Real Estate Tax,
or Sales Tax, are hereby deemed and defined as "Rent".
4. LESSEE'S SUBORDINATION TO MORTGAGE:
It is specifically understood and agreed by and between the Lessor and the
Lessee that the Lessor may from time to time secure mortgages on the Demised
Premises from a bank, savings and loan association, insurance company or other
lender, and that this Lease is and shall be subordinate to the lien of any
mortgages; and the Lessee agrees that it will execute and or provide as the case
may be such subordination and other documents, including but not limited to
estoppel certificates and financial statements, or agreements as may be
requested or required by such lender; however, that the mortgage and/or
subordination agreement, as the lender may direct, shall contain a provision
which states, in effect, that the Lessee shall not be disturbed in its
possession and occupancy of the Demised Premises during the term of this Lease,
notwithstanding any such mortgage or mortgages, provided that the Lessee shall
comply with and perform its obligations hereunder.
5. COVENANTS OF THE LESSEE: The Lessee hereby covenants and agrees with the
Lessor as follows:
A. That it will promptly pay the rent as herein specified without notice.
B. That it will keep the interior and exterior portion of the demised
premises and the improvements placed thereon and therein in a good state of
repair, and it will be responsible for all repairs including but not limited to
the painting, maintenance and interior repairs to the interior of the building
including all windows, doors and openings, all electrical, heating, plumbing,
air conditioning and other systems installed within or without the building. It
is acknowledged that if Lessee installs and maintains T.V. antennas, air
conditioning and/or signs, lightening, and/or other equipment, objects or
materials and the like, on the roof of the premises (and such installation shall
be only on the roof directly over the premises leased by the Lessee), the Lessee
shall be solely responsible for all of said area over the Demised Premises and
any other area affected by the installation or maintenance work thereon
C. INDEMNITY AND INSURANCE:
(1) Lessee agrees to save Lessor harmless from, and indemnify Lessor
against, and covenants not to sue Lessor for, to the extent permitted by law,
any and all injury, loss or damage and any and all claims of injury, loss or
damage, of whatever nature (a) caused by or resulting from, or claimed to have
been caused by or to have resulted from , any act, omission or negligence of
Lessor, by Lessee or anyone claiming under Lessee (including, bit without
limitation subtenants and concessionaires of Lessee and, employees and
contractors of Lessee or its subtenants or concessionaires), no matter where
occurring and (b) occurring upon or about the Demised Premises, including but
not limited to common areas, parking lots, landscaped areas, no matter how
caused, all of the foregoing REGARDLESS OF ANY NEGLIGENCE OF LESSOR'S PART. This
covenant, indemnity and hold harmless agreement shall include indemnity against
all costs, expenses and liabilities incurred in connection with any such injury,
loss or damage or any such claim, or any proceeding brought thereon or the
defense thereof. If Lessee or anyone claiming under Lessee, or the whole or any
part of the property of Lessee or anyone claiming under Lessee shall be injured,
lost or damaged by theft, fire, water or steam or in steam or in any other way
or manner whether similar or dissimilar to the foregoing, no part of said
injury, loss or damage is to be borne by lessor. Lessee covenants not to sue
Lessor for, and agrees that Lessor shall not be liable to Lessee or anyone
<PAGE>
claiming under Lessee for any injury, loss or damage that may be caused by or
result from the fault or negligence of any persons occupying adjoining premises
or any other part of the Entire Premises, or as the result of criminal acts by
third parties, regardless of forseability.
(2) Lessee will maintain general comprehensive public liability
insurance, with respect to the Demised Premises and its appurtenances, naming
Lessor and Lessee as insured, in the amounts not less than One Million
($1,000,000.00) Dollars with respect to injuries to any one person wand not less
than One Million ($1,000,000.00) Dollars with respect to injuries suffered in
any one accident, and not less than One Million ($1,000,000.00) Dollars with
respect to property, said policy to apply as the primary source of recovery in
the event of any occurrence, loss, or damage. Additionally, Lessee shall obtain
rent loss insurance and Lessee will keep all plate glass insured naming Lessor
and Lessee as insured as their interest may appear. Lessor may, from time to
time, increase the amount of such Public Liability Insurance coverage by giving
ninety (90) days prior written notice thereof to Lessee, in which event, all
subsequent policies acquired by Lessee shall conform to the new insurance
requirements. Lessee shall deliver to Lessor the policies of such insurance, or
certificates thereof, at least fifteen days prior to the commencement of the
term of this lease, and each renewal policy or certificate thereof, at least
fifteen (15) days prior to the expiration of the policy it renews. In the event
Lessee does not deliver the policies and certificates of insurance to Lessor as
aforesaid, Lessor shall have the right to purchase said insurance on behalf of
Lessee, and upon submission to Lessee of a bill for the amount paid by Lessor,
Lessee shall remit within five (5) days of receipt of said statement the amount
owed, together with interest thereon at a rate equal to the highest rate allowed
by law to be charged by Lessor per annum.
D. That Lessee may not assign this Lease, or let, underlet, or sublet,
the whole or any part of said premises without the written consent of the
Lessor, which consent shall not be unreasonably withheld. No assignment or
subletting shall exonerate Lessee from its' obligations hereunder.
E. That Lessee will not occupy or use said premises, nor permit the same
to be occupied or used for any business which is unlawful. That it will comply
with all lawful requirements of the Board of Health, Police Department, Fire
Department, Municipal, County, State, Federal and any and all other agents,
agencies or authorities respecting the manner in which it uses the leased
premises.
F. That at the expiration of said term or any extension or renewal
thereof, it will quit and surrender the demised premises in a good and
substantial state of repair, reasonable wear and tear excepted. The Lessee shall
be responsible for any damage created by reason or by virtue of the conduct of
its business; and shall return the demised premises in its original state,
reasonable wear and tear excepted.
G. That Lessee shall not use the premises for any purpose which may
increase the standard rate of fire, windstorm, extended coverage and liability
insurance; that in the event standard rates of insurance cannot be obtained by
reason of the Lessee's use of the demised premises, then and in that event, the
Lessee shall, forthwith upon notice, at Lessor's option, either desist from said
unacceptable use and/or pay such additional insurance premiums.
H. That not withstanding the terminology contained in sub-paragraph B
above, or elsewhere in this Lease Agreement, signs shall not be erected and/or
attached to any portion of the demised premises without the express written
consent of the Lessor. Lessee acknowledges that the Lessor demands uniformity
and the sole discretionary right to determine the size, materials and lighting
thereof; and accordingly, the Lessor may at its option, order and have installed
the signs from one source, same to be at the sole cost and expense of the
<PAGE>
Lessee; provided, however, that theLessee shall first approve same. Violation of
this restriction shall allow Lessor to remove such signs without notice and at
cost of Lessee.
I. That Lessee shall not use the interior and/or exterior portion of the
demised premises, or any portion of the common areas, parking lot, landscaped
areas, or other portions of the property so as to cause any noise, noxious
odors, accumulation of materials, supplies, equipment vehicles, waste, discharge
or accumulation or storage of hazardous waste, or garbage, vibrations, damage or
any other disturbance or nuisance whatsoever which may create undue annoyance or
hardship to another Lessee of the Lessor, and/or to the Lessor and/or a hazard
or element of waste to Lessor's property. The Lessee shall not make any change
to the exterior and/or interior portion of the building without the express
written consent of the Lessor, and particularly the Lessee will not cause
anything to be done which may impair the overall appearance of the Lessor's
building. Although the demised premises is intended to include the exterior
walls and parking spaces immediately in front of the premises, the Lessee
covenants that it shall not use the exterior portion of the demised premises
except for parking and ingress and egress. The Lessee shall not cause the access
street or streets in the STEVEN J. COOPERMAN, TRUSTEE to be blocked so as to
cause any disruption of traffic by reason of loading, deliveries, etc.
J. That Lessee accepts the demised premises in its present ("as is")
condition. In the event that the demised premises have not been completely
constructed as of the execution of the Lease, then in that event, the Lessee
acknowledges that Lessee has inspected the plans and specifications and accepts
substantial completion of same pursuant to the plans; there being no further
representations or warranty by Lessor.
K. That the Lessor or Lessor's agent may at any reasonable time enter and
view said premises and make repairs, if Lessor should elect to do so.
L. That the Lessee takes all risk of any damage to lessee's property that
may occur by reason of water or the bursting or leaking of any pipes or waste
water about said premises, or from any act of negligence of any co-tenant or
occupants of the building, or of any other person, or fire, or hurricane, or
other act of God, or from any cause whatsoever, except for the negligence of the
Lessor.
M. That Lessee covenants not to sue Lessor for, and shall indemnify and
save harmless the said Lessor from and against any and all claims, suits,
actions, damages and/or causes of action arising during the term of this Lease
for any personal injury, loss of life and/or damage to property sustained in or
about the leased premises, by reason or as a result of the Lessee's occupancy
thereof, and from and against any orders, judgements, and/or decrees which may
be entered thereon, and from and against all cost, counsel fees, expenses and
liabilities incurred in and about the defense of any such claim and the
investigation thereof, REGARDLESS OF ANY NEGLIGENCE ON LESSOR'S PART.
6. COVENANTS OF THE LESSOR: The Lessor hereby covenants and agrees with the
Lessee as follows:
A. That upon the breach of any of the covenants, conditions and
stipulations herein contained to be kept and performed by the Lessee, the Lessor
may immediately without notice and without the necessity of legal process
re-enter said premises, and thereupon, at the Lessor's option, said lease shall
forthwith be terminated and/or the Lessor may exercise any of the options
hereinbefore provided for the Lessor's benefit in case of default on the part of
the Lessee.
<PAGE>
B. That in the event improvements on the demised premises shall be
partially damaged by fire or other casualty but not rendered untenantable, the
same shall be repaired with due diligence by the Lessor and at its expense, to
the extent insurance proceeds are available therefor, and subject to delay for
causes beyond Lessor's control, e.g., act of God, strikes, shortages, or
unavailability of equipment/material. If the demised premises shall be damaged
by fire, the elements or unavoidable casualty, leaving not less than 60% of the
lease floor space usable for Lessee's purposes and rendering the premises unfit
for occupancy the lessor shall, within sixty (60) days after said damage advise
the Lessee of its intention to rebuild the premises. Provided that the Lessor
elects to rebuild the premises, the Lessor shall proceed with such construction
and complete same with all reasonable diligence. In the event the Lessor elects
not to reconstruct, then and in that event, the Lease shall be deemed terminated
as of the date of Lessee's removal provided that the Lessee removes itself from
the premises within thirty (30) days of the date of said election. In the event
of said damage, but rendering the premises not more than 25% untenantable the
Lessee, the rent provided for herein shall not be abated. If said premises are
rendered more than 25% untenantable, then and in that event, the rent during the
period that the premises are in said condition, shall be reduced in direct
proportion to that portion of the premises which is in fact untenantable.
C. That simultaneously with the execution of this Lease, the Lessee has
deposited with the Lessor the sum of $10,558.33 Dollars, receipt of which said
sum is hereby acknowledged by the Lessor, as a security deposit to guarantee the
full and faithful performance of all of the terms, conditions and obligations to
be performed by the Lessee under the terms hereof; same to be returned upon the
expiration of this Lease.
D. That the covenants and agreements contained in this Lease are
interdependent and are binding on the parties hereto, their successors and
assigns. This Lease has been prepared in several counterparts, each of which
said counterpart, when executed, shall be deemed to be an original hereof. There
shall be no construction or interpretation of this Lease favorable or
unfavorable to either party by virtue of its' preparation by Lessor. The parties
hereby waive any right to trial by jury. In the event of any litigation, the
prevailing party shall recover reasonable attorney fees and costs incurred. Any
claim whatsoever that Lessee may have against Lessor shall not be asserted as a
counterclaim by Lessee in an eviction action commenced by Lessor, but rather
shall be brought by Lessee as a separate action.
E. That if the Lessee shall not pay the rents herein reserved at the time
and in the manner stated, or shall fail to keep and perform any other condition,
stipulation or agreement herein contained on the part of the Lessee to be kept
and performed, or in the event that any petition or suit shall be filed by or
against the Lessee under the bankruptcy laws (state or federal) more make any
assignment for the benefit of creditors, or should there be appointed a receiver
to take charge of the premises either in the state courts, or in the federal
courts, then in any of such events, the Lessor may, at Lessor's option,
terminate and end this Lease and re-enter upon the property, whereupon the term
hereby granted and at the Lessor's option, terminate and end this Lease and
re-enter upon the property, whereupon the term hereby granted and at the
Lessor's option, elect to declare the entire rent for the balance of the term
due and payable forthwith, and may proceed to collect the same by distress or
otherwise, and thereupon said term shall terminate, at the option of the Lessor
or else and said Lessor may take possession of the premises and rent the same
for the account of the Lessee, the exercise of any of which option herein
contained shall not be deemed the exclusive Lessor's remedy, the expression
"entire rent for the balance of the term" as used herein, shall mean all of the
rent prescribed to be paid by the Lessee unto the Lessor for the full term of
the Lease; less, however, any payments that shall have been made on account of
and pursuant to the terms of said Lease. Lessor shall immediately be entitled to
relief from the automatic stay provided by Section 362 of the bankruptcy code;
<PAGE>
irrespective of the requirements of Section 362, and Lessor shall not be
obligated to satisfy those requirements in order to obtain relief. This
provision is a material inducement to Lessor entering into this Lease.
F. That at Lessor's option if the Lessee shall abandon, vacate or remove
the major portion of the goods, wares, merchandise, machinery, equipment and any
other material held on these premises in the course of business, usually kept on
said premises when the same is open for business and shall cease doing business
in said premises, then and in such event, this Lease shall immediately become
canceled and null and void and all payments made by said Lessee shall be
retained by the Lessor as payment in full for the period of time the premises
are occupied by the Lessee and Lessee shall not be entitled to any monies to
paid by it, even though such payment is for time subsequent to such closing of
the premises and removal of the goods, wares, merchandise, machinery, equipment,
etc
G. If, as a result of Lessee's failure to timely pay rent,
Lessor, by and through its Property Manager, provides Lessee with a three day
notice to pay or vacate, Lessee agrees to pay to Lessor a fee of $75.000 for the
Property Manager's time and effort in providing the three day notice. This
$75.00 is hereby defined and deemed as "rent" hereunder. Lessee agrees that in
case of the failure of the said Lessee to pay the rent herein reserved whom the
same shall become due and it becomes necessary for the Lessor to collect said
rent through an attorney, the Lessee will further pay a reasonable attorney's
fee together with all costs and charges thereof.
H. That if Lessee shall hereafter install, at its expense, any shelving,
lighting and other fixtures, until heaters, portable air conditioning units,
portable partitions or any trade fixtures, or if Lessee shall hereafter install
or apply any advertising signs or other standard identifications of Lessee, any
article so installed or any identification so applied shall be the property of
Lessee, which Lessee may remove at the termination of this Lease, provided that
in such removal Lessee shall repair any damage occasioned to the demised
premises, in good workman-like manner. The Lessee shall not remove any fixtures,
equipment, or additions which are normally considered to be affixed to the
realty, such as, but not limited to, electrical conduit and wiring, panel or
circuit boxes, terminal boxes, partition walls, paneling, central air
conditioning and ducts, plumbing fixtures, or any other equipment or material
affixed to the structure.
I. That Lessor shall have the right to affix a reasonable sign to the
premises six months prior to the termination of the Lease advertising same for
rent and the Lessor shall have the right to exhibit the premises during said six
months, provided that same is during business hours and not more frequently than
once every day.
J. That notices as herein provided shall be given by registered or
certified mail, return receipt requested, to the Lessor at:
STEVEN J. COOPERMAN, TRUSTEE
6601 N.W. 14th Street, Suite #1
Plantation, FL 33313
and to the Lessee at the demised premises, except that three day notices for
nonpayment of Rent may be hand delivered or posted. The address for giving said
notices may be changed by the Lessor or Lessee in writing, at the addresses set
forth herein, or as modified.
K. That any provision herein contained which shall appear to be
intended to survive the expiration of this Lease shall survive such expiration
date.
L. That the Lessee shall use and occupy the premises for medical technology
& building product technology and manufacturer, and for no other purpose.
<PAGE>
M. Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present a health risk to
persons who are exposed to it over time. Levels of radon that exceed Federal and
State Guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing can be obtained from your county public health
unit.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals
on the day and year first above written.
WITNESSES: LESSOR:
/s/ /s/ Steven J. Cooperman
- -------------------------- ------------------------------
Steven J. Cooperman, Trustee
/s/ Audrey Max LESSEE:
- ---------------------------- GINSITE MATERIALS, INC.
By: /s/ Murray Ginsberg
-----------------------
<PAGE>
ADDENDUM TO LEASE BETWEEN LESSOR - STEVEN J. COOPERMAN, TRUSTEE
AND LESSEE - GINSITE MATERIAL, INC.
This addendum sets forth additional provisions between Lessor - STEVEN J.
COOPERMAN, TRUSTEE and Lessee - GINSITE MATERIALS, INC. In the event of any
conflict between this Addendum and the Lease, then the provisions set forth in
this Addendum shall prevail.
1. Lessee has the right at any time, to acquire a 50% interest in the
ownership entity - STEVEN J. COOPERMAN, TRUSTEE for $1.00. For the first ten
years of the lease, said 50% interest shall be pledged by Lessee for the
performance of Lessee under the terms of the Lease.
2. Any time after 2 years, Lessee may acquire the 50% balance of the Trust for
the greater of:
1. One half of appraised (M.A.I.) Value less mortgages Or
2. $50,000 cash.
3. Paragraph #1 above is subject to:
1. John Alden's (Mortgage Lender) approval of the transaction.
2. The release of Norman Elson from the Loan Guarantee.
4. Paragraph #2 above is subject to:
1. John Alden's (Mortgage Lender) approval of the transaction.
2. The release of Steven J. Cooperman from the Loan Guarantee.
5. Lessee agrees to pay a late charge fee of ten (10%) percent of the monthly
rent or Fifty ($50.00) Dollars, whether shall be greater, for any monthly
payment received by Lessor after the third (3rd) day of the month on which the
rental payment is due. This late charge fee is hereby deemed "Rent". If any
payment of rent, or additional rent, is made by check, and the check is
dishonored for any reason, including but not limited to insufficient funds or
uncollected funds, Lessee shall reimburse Lessee with cash or a cashier's check
in the amount of the dishonored check, plus a dishonored check fee in the amount
of 10%. This 10% dishonored check fee is hereby defined and deemed as "rent"
hereunder.
WITNESSES: LESSOR:
/s/ /s/ Steven J. Cooperman
- --------------------- --------------------------
Steven J. Cooperman, Trustee
LESSEE:
GINSITE MATERIALS, INC.
/s/ By: /s/ Murray Ginsberg
- -------------------- ------------------------
Exhibit 10.4A
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of April 1, 1999
(the"Effective Date ") between GINSITE MATERIALS, INC., (the "Company") and Mr.
Murray Ginsberg (the "Employee").
WITNESSETH:
A. The Company desires to employ the Employee as its Chairman and President
and on the terms and conditions set forth in this Agreement.
B. The Employee desires to accept such employment on the terms and
conditions set forth in this Agreement and
NOW,THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Term: The term of this Agreement shall commence on the Effective Date and
shall continue for a period of one (1) year and shall be automatically renewable
for additional one (1) year terms unless either party gives the other party
prior written notice of intent not to renew at least 90 days prior to the
expiration of the then current term.
2. Duties: The Employee is engaged to act as Chairman and President of the
Company or in such other capacity as the Board of Directors shall direct to
conduct the Company's business. In addition the Employee shall have such other
duties as may from time to time be reasonably assigned to him by the Board of
Directors of the Company.
3. Time Devoted: During the period of his employment hereunder and except for
illness, reasonable vacation periods and reasonable leaves of absence, the
Employee shall devote substantially all of his business time, attention, skill
and efforts in the faithful performance of his duties hereunder. However, the
Employee may serve or continue to serve on the Boards of Directors of, and hold
any other offices or positions in companies or organizations which, in the
judgement of the Board of Directors of the Company, will not present any
conflict of interest with the Company or materially affect the performance of
the Employee's duties pursuant to this Agreement.
4. Compensation: For the services to be rendered by Employee under this
Agreement the Company agrees to pay him while he is rendering such services and
performing his obligations hereunder, and the Employee shall accept as full
payment for such service, a base compensation calculated at an annual rate of
$200,000. payable in equal installments beginning not later than on the last
business day of April, 1, 1999 and continuing thereafter on a monthly basis
during the period of employment. Such base compensation shall be periodically
increased to take into account superior performance or increases, if any, in the
annual cost of living, and may be supplemented by discretionary bonuses or other
<PAGE>
benefits payable from time to time. All as determined by action of the Company's
Board of Directors.
A. Periodic adjustments:
1. Salary Range:
(1) April 1, 1999 to March 31, 2000: $200,000. Plus one (1) share
of common unrestricted stock for each dollar income earned.
2. Incremental increase of 10 but no more than 15% for year 2000.
Plus one (1) share of common unrestricted stock for each dollar
income earned.
5. Vacation: Fringe Benefits: Reimbursement of Expenses: The Employee shall be
entitled to three (3) weeks of fully paid vacation during each annual period
within the term of this Agreement. He shall be entitled to vacation pay for
vacation time to which he is entitled but does not take. The timing of vacation
periods shall be within the discretion of the Company reasonably exercised so as
not to inconvenience the Employee.
The Employee shall further be entitled to (a) an automobile expense
allowance of up to but not in excess of $300.00 per month, (b) such leave by
reason of physical or mental disability, or incapacity and to such participation
in medical and life insurance, pension benefits, disability and fringe benefit
plans as the Company may make generally available to all of its executive
employees from time to time: subject, however, as to such plans to such
budgetary constraints or other limitations as may be imposed by the Company from
time to time; and (d) reimbursement for all normal and reasonably expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to reasonable substantiation requirements as may be imposed by the
Company.
The Employee shall have the right to utilize the Company's corporate legal
and accounting services up to 40 hours per year for personal matters, and shall
have the right to be represented by corporate legal and accounting consuls with
the total expense borne by the Company on any and all personal matters that are
related to GINSITE MATERIALS, INC. or its subsidiaries.
6. Bonuses: The Company shall pay a quarterly cash bonus of 5% (five percent) of
the Company's net profits before Income Taxes for the quarter in which the
profits occurred. Payout will be made in a lump sum no later that 90 calendar
days after the close of a quarter.
7. Key Man Insurance: During the term of this Agreement the Company will
maintain a keyman life insurance policy on the Employee in the amount of not
less than ($1,000,000) one million dollars. The Company will be named as a
beneficiary of said policy in the amount of 50% of the amount payable in the
event of the Employee's death. One or more beneficiaries designated by the
Employee will have rights to the remaining 50% of the amount payable in the
event of the Employee's death. The Company will be responsible for and pay 100%
of the premiums for said policy.
8. Mergers and Acquisitions: It is recognized and agreed to by both the Company
and the Employee that activities which result in a merger of the Company with
<PAGE>
another operating entity or the acquisition of the Company by an outside entity
or an acquisition by the Company of an outside entity is outside the scope of
the normal duties of the Employee. Any such occurrence in which the Employee
acted as the primary negotiator or one of the negotiators for the Company will
be paid for by the Company to the Employee as an additional bonus. Said bonus
will be paid using a formula determined by the type of occurrence as set forth
below:
A. Merger of the Company with an outside entity: Formula: The lessor of
5% of the total outstanding common share float of the combined companies
resulting from the merger or 1,000,000 shares. In either case, full voting
rights are to be provided in said shares provisions for 100% of the shares given
to the Employee and said shares shall be freely tradeable.
B. Acquisition of the Company by an outside organization: Formula: 5% of
the value of the Company based on total outstanding shares X .05. paid in voting
share of common stock.
C. Acquisition of an outside organization by the Company: Formula: 5% of
the value of the acquired organization based on total company share and asset
amounts used for said acquisition X .05. paid in voting shares of common stock
of the Company.
D. Takeover of the Company deemed by the Board as "Hostile": The Employee
will immediately receive 1,000,000 voting shares of the Company's common stock.
F. Acquisition of more than 30% of the Company's outstanding stock by any
investor, company organization or group: The Employee will immediately receive
1,000,000 voting shares of the Company's common stock.
G. In the event that the Company elects through a Board of Directors
Resolution and share holders vote to rearrange its capital structure through a
"reversal stock split" then the Officers and Directors of the Company, because
of their dedicated and loyal service to the Company will not be negatively or
adversely affected by any "reversal stock split" of the Company's common stock.
In any of the events defined above, it is at the Company's discretion to
pay the Employee in U.S. Currency, free-trading common stock or Rule 144 stock.
It is herein agreed by both the Company and Employee that both U.S. Currency and
free-trading stock are deemed to carry equal value. It is further agreed that
Rule 144 stock, due to its one (1) year restrictive period, carried a
significantly lower value to the Employee. In order to adequately and equitably
adjust for this fact, the rate of payment per Rule 144 stock will be made at
twice the amounts formulated for U.S. Currency or free trading common. The
formulas shown above assume U.S. Currency or free-trade common stock as their
basis for determining amounts paid to the Employee. Therefore, the decision to
utilize Rule 144 stock effectively doubles the totals in any of the above
formulas.
9. Disability and Death:
A. If the Employee has a "Disability", (as hereinafter defined) the
Company shall continue his compensation for a period of two years, (104) weeks
from the date of Disability, but shall thereafter not be required to pay
<PAGE>
compensation so long as such Disability continues. If the Employee shall not
have resumed his duties within twenty-four (24) months of the date of
Disability, the Employee's employment hereunder shall thereafter be deemed
terminated. Upon termination pursuant to this Section, the Company shall pay to
Employee's deferred compensation five (5) times the annual compensation of the
Employee as of the date of Disability, such payment to be made by the Company in
sixty (60) monthly installments.
For the purposes of this Agreement, the Employee shall be deemed disabled
when, by reason of physical or mental illness or injury, he is unable to perform
the duties required of him in connection with the business of the Company for an
aggregate of fifty-two (52) weeks during any one hundred four (104) week period.
B. In the event of the Employee's death, the Company shall pay to the
estate of the Employee as deferred compensation an amount equal to five (5)
times the annual compensation of the Employee immediately proceeding the
Employee's death, such amount to be paid within one year of the date of death,
or from the proceeds of any Life Insurance on the life of the Employee held by
the Company.
10. Termination for Cause:
A. The Employee may be terminated immediately following notice by the
Company for "cause". For the purpose the term "cause" shall mean:
(1) The material breach of provision of this Agreement by the
Employee which is deemed to adversely effect the operation of the Company.
(2) The arrest and conviction and interment for more than one (1)
year of the Employee for a felony.
(3) The commission or participation by the Employee in an injurious
act of fraud against the Company.
B. After receipt of notice, the Employee shall have ten (10) days to
remedy such breach. If the Employee has not cured such breach at the end of the
ten (10) day period, the Company shall give notice of termination to the
Employee and the parties shall thereafter be relieved of all further obligations
hereunder, except with respect to any unpaid but accrued salary and bonus.
C. In the event of Employees termination with or without cause, the
Employee will be entitled to receive compensation at five times (5x) the annual
salary as so stipulated in this Agreement. The buy out, at the discretion of the
existing Board of Directors, will be either immediately upon the Employee's
termination, or over a period of sixty (60) months. Where the election is
determined to be over a sixty month (60) period, and in the event of the demise
of the Employee or restructuring of the Company because of insolvency, the
Employee's payout will be accelerated and in use to either the Employee's
beneficiary or estate, or directly to the Employee whichever the circumstances
require.
D. The Employee may terminate his employment with the Company upon thirty
(30) days written notice to the Company in which case the Employee shall receive
a salary for a maximum of six (6) months to be determined by the Board of
Directors and the Company shall have no further obligation under this Agreement
<PAGE>
E. Notwithstanding anything to the contrary in this Paragraph 10, in the
event of the termination or resignation of the Employee, the Employee shall
continue to be obligated or adhere to all obligations under Paragraph 9 and 11
hereunder.
11. Information: Without prior written consent of the Company or as required by
law, the Employee will not at any time either during or after his employment by
the Company, directly or indirectly divulge or disclose to any person, firm,
association, or company, or use for his own benefit, gain, or others, any plans,
products, data, results of tests and data, customer lists, or any other trade
secrets or confidential materials or like information of the Company, including
(but not by way of limitation) any and all information and instructions,
technical or otherwise prepared or issued for the use of the Company
(collectively, the "Confidential Information") it being the intent of the
Company with which intent the Employee hereby agrees to restrict him from
dissemination or using any like information that is unpublished or not readily
available to the general public.
12. Termination without cause: In the event the Employee is terminated without
cause, the Employee shall be paid five (5) times his annual compensation of the
Employee on the date of such termination. The payout, at the discretion of the
existing Board of Directors as per paragraph 10C.
13. Restrictive Covenant: Employee agrees that during the term of his employment
hereunder and for the six month period following the termination thereof for any
reason other than the Company's discontinuance of activities or a premature
termination of the Employee by the Company, the Employee shall not, directly or
indirectly engage or become interest in, render any service to, enter the
employment of, or solicit for any business which competes with any activity of
the Company conducted at any time during the Employee's period of employment and
which is located in any county of the State of Florida in which the Company
shall maintain any activity. The parties expressly agree that the duration and
geographical area of this restrictive covenant are reasonable.
This covenant shall be construed as an Agreement independent of any other
provision herein, and the existence of any claim or cause of action of the
Employee against the Company regardless of how arising, shall not constitute a
defense to the enforcement by the Company of its terms. If any portion of the
covenant is held to be unenforceable, for whatever reason it shall be considered
divisible both as to time and period of time and each county within the State of
Florida a separate geographical area so that the lessor period of time or
geographical area shall remain effective so long as the same is not determined
to be unenforceable, and in that regard the parties agree that any such lesser
time period or geographical area shall be specifically enforceable against the
Employee.
Notwithstanding any statement contained in this section to the contrary, legal
or beneficial ownership by the Employee of a less than fifteen percent interest
in a competitive corporation, at least one class of capital stock of which is
publicly traded on a national or regional stock exchange or by means of an
electronic interdealer quotation system, shall not be deemed to constitute a
breach by the Employee of the terms hereof.
<PAGE>
14. Violation of Covenant: The Employee agrees and acknowledges that the
services to be rendered by him hereunder are of a special and original character
that gives unique value, that the provisions of Paragraph 11 are, in view of the
nature of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, that his violation of any of the covenants
or agreements hereof would cause irreparable injury to the Company, that the
remedy at law for any violation or threatened violation thereof would be
inadequate and that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief as it may deem appropriate without the
accounting of all earnings, profits, and other benefits arising from any such
violation, which rights shall be cumulative and in addition to any rights or
remedies available to the Company. The Employee hereby agrees that in the event
of any such violation, the Company shall be entitled to commence an action for
any such preliminary and permanent injunctive relief and other equitable relief.
15. Rules and Regulations: As part of the consideration for this Agreement, the
Employee agrees to comply with, and abide by, such rules and directives of the
Company as may be established from time to time, and recognizes the right of the
Company to change, modify or adopt new policies and practices affecting the
employment relationship, not inconsistent with this Agreement, which will be
effective retroactively, as deemed appropriate by the Company.
16. Inception of Employment Relationship: The Employee represents and agrees
that he has not been pressured, mislead or induced to enter this Agreement based
upon any representation by the Company or its agents not contained herein.
Employee represents that he has entered into this Agreement voluntarily, and
after having the opportunity to consult with representatives of his own choosing
and that his agreement is freely given. The Employee represents that he has no
claims, charges, or causes of action presently accrued or pending against the
Company and if any such claims or causes of actions exist, the Employee, in
consideration of his employment hereby releases the Company, its employees,
agents, successors and assigns, from any and all such claims.
17. References: The Company agrees that, upon termination of employment under
this Agreement, it will furnish references to third parties, including
prospective employers, regarding Employee. In consideration of the Company's
agreement to furnish such references, the Employee releases the Company from any
and all claims and causes of action, including but not limited to, any claims
for defamation, and agrees to hold the Company harmless for any claims made in
relation thereto.
18. Notice: Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified or registered mail,
return receipt requested, to the parties as recorded in the Employees official
personnel file and the Company's place of business.
19. Waiver of Breach: The waiver by the Company of a breach of any condition of
the Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
20. Assignment: This Agreement may not be assigned by either party without prior
written consent of both parties.
<PAGE>
21. Attorneys Fees: In the event either party is required to seek legal counsel
to enforce the terms and provisions of this Agreement, the prevailing party in
any action shall be entitled to recover attorneys fees and costs (including on
appeal).
22. Governing Law: This Agreement shall be governed by the Laws of the State of
Florida and the proper jurisdiction and venue shall be the Circuit Court in Dade
County, Florida. The parties agree that service or process in any such action,
suit or proceeding shall be deemed valid if made by registered mail, return
receipt requested, sent to officially noted addresses.
23. Entire Agreement: This Agreement contains the entire Agreement of the
parties. It may be changed only by agreement in writing signed by both parties.
24. Headings: The headings are for convenience of reference only and shall not
be deemed to be part of the substance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYEE COMPANY:
GINSITE MATERIALS, INC.
By:s/s Murray Ginsberg, Pres. By: /s/ Murray Ginsberg, Pres.
- ---------------------------- ------------------------------
Authorized Signature
Exhibit 10.4B
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of April 1, 1999
(the"Effective Date ") between GINSITE MATERIALS, INC., (the "Company") and Mrs.
Audrey Max (the "Employee").
WITNESSETH:
A. The Company desires to employ the Employee as its Executive Vice
President, Chief Executive Officer and on the terms and conditions set forth in
this Agreement.
B. The Employee desires to accept such employment on the terms and
conditions set forth in this Agreement and
NOW,THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Term: The term of this Agreement shall commence on the Effective Date and
shall continue for a period of one (1) year and shall be automatically renewable
for additional one (1) year terms unless either party gives the other party
prior written notice of intent not to renew at least 90 days prior to the
expiration of the then current term.
2. Duties: The Employee is engaged to act as Executive Vice President, Chief
Executive Officer of the Company or in such other capacity as the Board of
Directors shall direct to conduct the Company's business. In addition the
Employee shall have such other duties as may from time to time be reasonably
assigned to him by the Board of Directors of the Company.
3. Time Devoted: During the period of his employment hereunder and except for
illness, reasonable vacation periods and reasonable leaves of absence, the
Employee shall devote substantially all of his business time, attention, skill
and efforts in the faithful performance of his duties hereunder. However, the
Employee may serve or continue to serve on the Boards of Directors of, and hold
any other offices or positions in companies or organizations which, in the
judgement of the Board of Directors of the Company, will not present any
conflict of interest with the Company or materially affect the performance of
the Employee's duties pursuant to this Agreement.
4. Compensation: For the services to be rendered by Employee under this
Agreement the Company agrees to pay him while he is rendering such services and
performing his obligations hereunder, and the Employee shall accept as full
payment for such service, a base compensation calculated at an annual rate of
$150,000. payable in equal installments beginning not later than on the last
business day of April, 1, 1999 and continuing thereafter on a monthly basis
during the period of employment. Such base compensation shall be periodically
<PAGE>
increased to take into account superior performance or increases, if any, in the
annual cost of living, and may be supplemented by discretionary bonuses or other
benefits payable from time to time. All as determined by action of the Company's
Board of Directors.
A. Periodic adjustments:
1. Salary Range:
(1) April 1, 1999 to March 31, 2000: $150,000. Plus one (1)
share of common unrestricted stock for each dollar income
earned.
2. Incremental increase of 10 but no more than 15% for year
2000. Plus one (1) share of common unrestricted stock for
each dollar income earned.
5. Vacation: Fringe Benefits: Reimbursement of Expenses: The Employee shall be
entitled to three (3) weeks of fully paid vacation during each annual period
within the term of this Agreement. He shall be entitled to vacation pay for
vacation time to which he is entitled but does not take. The timing of vacation
periods shall be within the discretion of the Company reasonably exercised so as
not to inconvenience the Employee.
The Employee shall further be entitled to (a) an automobile expense
allowance of up to but not in excess of $300.00 per month, (b) such leave by
reason of physical or mental disability, or incapacity and to such participation
in medical and life insurance, pension benefits, disability and fringe benefit
plans as the Company may make generally available to all of its executive
employees from time to time: subject, however, as to such plans to such
budgetary constraints or other limitations as may be imposed by the Company from
time to time; and (d) reimbursement for all normal and reasonably expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to reasonable substantiation requirements as may be imposed by the
Company.
The Employee shall have the right to utilize the Company's corporate legal
and accounting services up to 40 hours per year for personal matters, and shall
have the right to be represented by corporate legal and accounting consuls with
the total expense borne by the Company on any and all personal matters that are
related to GINSITE MATERIALS, INC. or its subsidiaries.
6. Bonuses: The Company shall pay a quarterly cash bonus of 5% (five percent) of
the Company's net profits before Income Taxes for the quarter in which the
profits occurred. Payout will be made in a lump sum no later that 90 calendar
days after the close of a quarter.
7. Key Man Insurance: During the term of this Agreement the Company will
maintain a keyman life insurance policy on the Employee in the amount of not
less than ($500,000) five hundred thousand dollars. The Company will be named as
a beneficiary of said policy in the amount of 50% of the amount payable in the
event of the Employee's death. One or more beneficiaries designated by the
<PAGE>
Employee will have rights to the remaining 50% of the amount payable in the
event of the Employee's death. The Company will be responsible for and pay 100%
of the premiums for said policy.
8. Mergers and Acquisitions: It is recognized and agreed to by both the Company
and the Employee that activities which result in a merger of the Company with
another operating entity or the acquisition of the Company by an outside entity
or an acquisition by the Company of an outside entity is outside the scope of
the normal duties of the Employee. Any such occurrence in which the Employee
acted as the primary negotiator or one of the negotiators for the Company will
be paid for by the Company to the Employee as an additional bonus. Said bonus
will be paid using a formula determined by the type of occurrence as set forth
below:
A. Merger of the Company with an outside entity: Formula: The lessor of
5% of the total outstanding common share float of the combined companies
resulting from the merger or 1,000,000 shares. In either case, full voting
rights are to be provided in said shares provisions for 100% of the shares given
to the Employee and said shares shall be freely tradeable.
B. Acquisition of the Company by an outside organization: Formula: 5% of
the value of the Company based on total outstanding shares X .05. paid in voting
share of common stock.
C. Acquisition of an outside organization by the Company: Formula: 5% of
the value of the acquired organization based on total company share and asset
amounts used for said acquisition X .05. paid in voting shares of common stock
of the Company.
D. Takeover of the Company deemed by the Board as "Hostile": The
Employee will immediately receive 1,000,000 voting shares of the Company's
common stock.
F. Acquisition of more than 30% of the Company's outstanding stock by
any investor, company organization or group: The Employee will immediately
receive 1,000,000 voting shares of the Company's common stock.
G. In the event that the Company elects through a Board of Directors
Resolution and share holders vote to rearrange its capital structure through a
"reversal stock split" then the Officers and Directors of the Company, because
of their dedicated and loyal service to the Company will not be negatively or
adversely affected by any "reversal stock split" of the Company's common stock.
In any of the events defined above, it is at the Company's discretion to pay the
Employee in U.S. Currency, free-trading common stock or Rule 144 stock. It is
herein agreed by both the Company and Employee that both U.S. Currency and
free-trading stock are deemed to carry equal value. It is further agreed that
Rule 144 stock, due to its one (1) year restrictive period, carried a
<PAGE>
significantly lower value to the Employee. In order to adequately and equitably
adjust for this fact, the rate of payment per Rule 144 stock will be made at
twice the amounts formulated for U.S. Currency or free trading common. The
formulas shown above assume U.S. Currency or free-trade common stock as their
basis for determining amounts paid to the Employee. Therefore, the decision to
utilize Rule 144 stock effectively doubles the totals in any of the above
formulas.
9. Disability and Death:
A. If the Employee has a "Disability", (as hereinafter defined) the
Company shall continue his compensation for a period of two years, (104) weeks
from the date of Disability, but shall thereafter not be required to pay
compensation so long as such Disability continues. If the Employee shall not
have resumed his duties within twenty-four (24) months of the date of
Disability, the Employee's employment hereunder shall thereafter be deemed
terminated. Upon termination pursuant to this Section, the Company shall pay to
Employee's deferred compensation five (5) times the annual compensation of the
Employee as of the date of Disability, such payment to be made by the Company in
sixty (60) monthly installments.
For the purposes of this Agreement, the Employee shall be deemed
disabled when, by reason of physical or mental illness or injury, he is unable
to perform the duties required of him in connection with the business of the
Company for an aggregate of fifty-two (52) weeks during any one hundred four
(104) week period.
B. In the event of the Employee's death, the Company shall pay to the
estate of the Employee as deferred compensation an amount equal to five (5)
times the annual compensation of the Employee immediately proceeding the
Employee's death, such amount to be paid within one year of the date of death,
or from the proceeds of any Life Insurance on the life of the Employee held by
the Company.
10. Termination for Cause:
A. The Employee may be terminated immediately following notice by the
Company for "cause". For the purpose the term "cause" shall mean:
(1) The material breach of provision of this Agreement by the
Employee which is deemed to adversely effect the operation of the Company.
(2) The arrest and conviction and interment for more than one (1)
year of the Employee for a felony.
(3) The commission or participation by the Employee in an
injurious act of fraud against the Company.
B. After receipt of notice, the Employee shall have ten (10) days to
remedy such breach. If the Employee has not cured such breach at the end of the
ten (10) day period, the Company shall give notice of termination to the
Employee and the parties shall thereafter be relieved of all further obligations
hereunder, except with respect to any unpaid but accrued salary and bonus.
<PAGE>
C. In the event of Employees termination with or without cause, the
Employee will be entitled to receive compensation at five times (5x) the annual
salary as so stipulated in this Agreement. The buy out, at the discretion of the
existing Board of Directors, will be either immediately upon the Employee's
termination, or over a period of sixty (60) months. Where the election is
determined to be over a sixty month (60) period, and in the event of the demise
of the Employee or restructuring of the Company because of insolvency, the
Employee's payout will be accelerated and in use to either the Employee's
beneficiary or estate, or directly to the Employee whichever the circumstances
require.
D. The Employee may terminate his employment with the Company upon
thirty (30) days written notice to the Company, in which case, the Employee
shall receive a salary for a maximum of six (6) months to be determined by the
Board of Directors and the Company shall have no further obligation under this
Agreement.
E. Notwithstanding anything to the contrary in this Paragraph 10, in
the event of the termination or resignation of the Employee, the Employee shall
continue to be obligated or adhere to all obligations under Paragraph 9 and 11
hereunder.
11. Information:
Without prior written consent of the Company or as required by law,
the Employee will not at any time either during or after his employment by the
Company, directly or indirectly divulge or disclose to any person, firm,
association, or company, or use for his own benefit, gain, or others, any plans,
products, data, results of tests and data, customer lists, or any other trade
secrets or confidential materials or like information of the Company, including
(but not by way of limitation) any and all information and instructions,
technical or otherwise prepared or issued for the use of the Company
(collectively, the "Confidential Information") it being the intent of the
Company with which intent the Employee hereby agrees to restrict him from
dissemination or using any like information that is unpublished or not readily
available to the general public.
12. Termination without cause:
In the event the Employee is terminated without cause, the Employee
shall be paid five (5) times his annual compensation of the Employee on the date
of such termination. The payout, at the discretion of the existing Board of
Directors as per paragraph 10C.
13. Restrictive Covenant: Employee agrees that during the term of his employment
hereunder and for the six month period following the termination thereof for any
reason other than the Company's discontinuance of activities or a premature
termination of the Employee by the Company, the Employee shall not, directly or
indirectly engage or become interest in, render any service to, enter the
employment of, or solicit for any business which competes with any activity of
the Company conducted at any time during the Employee's period of employment and
which is located in any county of the State of Florida in which the Company
shall maintain any activity. The parties expressly agree that the duration and
geographical area of this restrictive covenant are reasonalbe.
<PAGE>
This covenant shall be construed as an Agreement independent of any other
provision herein, and the existence of any claim or cause of action of the
Employee against the Company regardless of how arising, shall not constitute a
defense to the enforcement by the Company of its terms. If any portion of the
covenant is held to be unenforceable, for whatever reason it shall be considered
divisible both as to time and period of time and each county within the State of
Florida a separate geographical area so that the lessor period of time or
geographical area shall remain effective so long as the same is not determined
to be unenforceable, and in that regard the parties agree that any such lesser
time period or geographical area shall be specifically enforceable against the
Employee.
Notwithstanding any statement contained in this section to the contrary,
legal or beneficial ownership by the Employee of a less than fifteen percent
interest in a competitive corporation, at least one class of capital stock of
which is publicly traded on a national or regional stock exchange or by means of
an electronic interdealer quotation system, shall not be deemed to constitute a
breach by the Employee of the terms hereof.
14. Violation of Covenant: The Employee agrees and acknowledges that the
services to be rendered by him hereunder are of a special and original character
that gives unique value, that the provisions of Paragraph 11 are, in view of the
nature of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, that his violation of any of the covenants
or agreements hereof would cause irreparable injury to the Company, that the
remedy at law for any violation or threatened violation thereof would be
inadequate and that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief as it may deem appropriate without the
accounting of all earnings, profits, and other benefits arising from any such
violation, which rights shall be cumulative and in addition to any rights or
remedies available to the Company. The Employee hereby agrees that in the event
of any such violation, the Company shall be entitled to commence an action for
any such preliminary and permanent injunctive relief and other equitable relief.
15. Rules and Regulations: As part of the consideration for this Agreement, the
Employee agrees to comply with, and abide by, such rules and directives of the
Company as may be established from time to time, and recognizes the right of the
Company to change, modify or adopt new policies and practices affecting the
employment relationship, not inconsistent with this Agreement, which will be
effective retroactively, as deemed appropriate by the Company.
16. Inception of Employment Relationship: The Employee represents and agrees
that he has not been pressured, mislead or induced to enter this Agreement based
upon any representation by the Company or its agents not contained herein.
Employee represents that he has entered into this Agreement voluntarily, and
after having the opportunity to consult with representatives of his own
<PAGE>
choosing and that his agreement is freely given. The Employee represents that he
has no claims, charges, or causes of action presently accrued or pending against
the Company and if any such claims or causes of actions exist, the Employee, in
consideration of his employment hereby releases the Company, its employees,
agents, successors and assigns, from any and all such claims.
17. References: The Company agrees that, upon termination of employment under
this Agreement, it will furnish references to third parties, including
prospective employers, regarding Employee. In consideration of the Company's
agreement to furnish such references, the Employee releases the Company from any
and all claims and causes of action, including but not limited to, any claims
for defamation, and agrees to hold the Company harmless for any claims made in
relation thereto.
18. Notice: Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified or registered mail,
return receipt requested, to the parties as recorded in the Employees official
personnel file and the Company's place of business.
19. Waiver of Breach: The waiver by the Company of a breach of any condition of
the Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
20. Assignment: This Agreement may not be assigned by either party without prior
written consent of both parties.
21. Attorneys Fees: In the event either party is required to seek legal counsel
to enforce the terms and provisions of this Agreement, the prevailing party in
any action shall be entitled to recover attorneys fees and costs (including on
appeal).
22. Governing Law: This Agreement shall be governed by the Laws of the State of
Florida and the proper jurisdiction and venue shall be the Circuit Court in Dade
County, Florida. The parties agree that service or process in any such action,
suit or proceeding shall be deemed valid if made by registered mail, return
receipt requested, sent to officially noted addresses.
23. Entire Agreement: This Agreement contains the entire Agreement of the
parties. It may be changed only by agreement in writing signed by both parties.
24. Headings: The headings are for convenience of reference only and shall not
be deemed to be part of the substance of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYEE COMPANY:
GINSITE MATERIALS, INC.
By:s/s Audrey Max By: /s/ Murray Ginsberg, Pres.
- ----------------- ----------------------------
Authorized Signature
Exhibit 10.4C
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of April 1, 1999
(the"Effective Date ") between GINSITE MATERIALS, INC., (the "Company") and Mr.
Henry Lione (the "Employee").
WITNESSETH:
A. The Company desires to employ the Employee as its Vice President,
Secretary/Treasurer and on the terms and conditions set forth in this Agreement.
B. The Employee desires to accept such employment on the terms and
conditions set forth in this Agreement and
NOW,THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Term: The term of this Agreement shall commence on the Effective Date and
shall continue for a period of one (1) year and shall be automatically renewable
for additional one (1) year terms unless either party gives the other party
prior written notice of intent not to renew at least 90 days prior to the
expiration of the then current term.
2. Duties: The Employee is engaged to act as Vice President, Secretary/Treasurer
of the Company or in such other capacity as the Board of Directors shall direct
to conduct the Company's business. In addition the Employee shall have such
other duties as may from time to time be reasonably assigned to him by the Board
of Directors of the Company.
3. Time Devoted: During the period of his employment hereunder and except for
illness, reasonable vacation periods and reasonable leaves of absence, the
Employee shall devote substantially all of his business time, attention, skill
and efforts in the faithful performance of his duties hereunder. However, the
Employee may serve or continue to serve on the Boards of Directors of, and hold
any other offices or positions in companies or organizations which, in the
judgement of the Board of Directors of the Company, will not present any
conflict of interest with the Company or materially affect the performance of
the Employee's duties pursuant to this Agreement.
4. Compensation: For the services to be rendered by Employee under this
Agreement the Company agrees to pay him while he is rendering such services and
performing his obligations hereunder, and the Employee shall accept as full
payment for such service, a base compensation calculated at an annual rate of
$125,000. payable in equal installments beginning not later than on the last
business day of April, 1, 1999 and continuing thereafter on a monthly basis
during the period of employment. Such base compensation shall be periodically
increased to take into account superior performance or increases, if any, in the
annual cost of living, and may be supplemented by discretionary bonuses or other
benefits payable from time to time. All as determined by action of the Company's
Board of Directors.
<PAGE>
A. Periodic adjustments:
1. Salary Range:
(1) April 1, 1999 to March 31, 2000: $125,000. Plus one (1) share
of common unrestricted stock for each dollar income earned.
2. Incremental increase of 10 but no more than 15% for year 2000.
Plus one (1) share of common unrestricted stock for each dollar
income earned.
5. Vacation: Fringe Benefits: Reimbursement of Expenses: The Employee shall be
entitled to three (3) weeks of fully paid vacation during each annual period
within the term of this Agreement. He shall be entitled to vacation pay for
vacation time to which he is entitled but does not take. The timing of vacation
periods shall be within the discretion of the Company reasonably exercised so as
not to inconvenience the Employee.
The Employee shall further be entitled to (a) an automobile expense
allowance of up to but not in excess of $300.00 per month, (b) such leave by
reason of physical or mental disability, or incapacity and to such participation
in medical and life insurance, pension benefits, disability and fringe benefit
plans as the Company may make generally available to all of its executive
employees from time to time: subject, however, as to such plans to such
budgetary constraints or other limitations as may be imposed by the Company from
time to time; and (d) reimbursement for all normal and reasonably expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to reasonable substantiation requirements as may be imposed by the
Company.
The Employee shall have the right to utilize the Company's corporate legal
and accounting services up to 40 hours per year for personal matters, and shall
have the right to be represented by corporate legal and accounting consuls with
the total expense borne by the Company on any and all personal matters that are
related to GINSITE MATERIALS, INC. or its subsidiaries.
6. Bonuses: The Company shall pay a quarterly cash bonus of 5% (five percent) of
the Company's net profits before Income Taxes for the quarter in which the
profits occurred. Payout will be made in a lump sum no later that 90 calendar
days after the close of a quarter.
7. Key Man Insurance: During the term of this Agreement the Company will
maintain a keyman life insurance policy on the Employee in the amount of not
less than ($500,000) five hundred thousand dollars. The Company will be named as
a beneficiary of said policy in the amount of 50% of the amount payable in the
event of the Employee's death. One or more beneficiaries designated by the
Employee will have rights to the remaining 50% of the amount payable in the
event of the Employee's death. The Company will be responsible for and pay 100%
of the premiums for said policy.
8. Mergers and Acquisitions: It is recognized and agreed to by both the Company
and the Employee that activities which result in a merger of the Company with
another operating entity or the acquisition of the Company by an outside entity
or an acquisition by the Company of an outside entity is outside the scope of
the the normal duties of the Employee. Any such occurrence in which the employee
<PAGE>
acted as the primary negotiator or one of the negotiators for the Company will
be paid for by the Company to the Employee as an additional bonus. Said bonus
will be paid using a formula determined by the type of occurrence as set forth
below:
A. Merger of the Company with an outside entity: Formula: The lessor of 5%
of the total outstanding common share float of the combined companies resulting
from the merger or 1,000,000 shares. In either case, full voting rights are to
be provided in said shares provisions for 100% of the shares given to the
Employee and said shares shall be freely tradeable.
B. Acquisition of the Company by an outside organization: Formula: 5% of
the value of the Company based on total outstanding shares X .05. paid in voting
share of common stock.
C. Acquisition of an outside organization by the Company: Formula: 5% of
the value of the acquired organization based on total company share and asset
amounts used for said acquisition X .05. paid in voting shares of common stock
of the Company.
D. Takeover of the Company deemed by the Board as "Hostile": The Employee
will immediately receive 1,000,000 voting shares of the Company's common stock.
F. Acquisition of more than 30% of the Company's outstanding stock by any
investor, company organization or group: The Employee will immediately receive
1,000,000 voting shares of the Company's common stock.
G. In the event that the Company elects through a Board of Directors
Resolution and share holders vote to rearrange its capital structure through a
"reversal stock split" then the Officers and Directors of the Company, because
of their dedicated and loyal service to the Company will not be negatively or
adversely affected by any "reversal stock split" of the Company's common stock.
In any of the events defined above, it is at the Company's discretion to pay the
Employee in U.S. Currency, free-trading common stock or Rule 144 stock. It is
herein agreed by both the Company and Employee that both U.S. Currency and
free-trading stock are deemed to carry equal value. It is further agreed that
Rule 144 stock, due to its one (1) year restrictive period, carried a
significantly lower value to the Employee. In order to adequately and equitably
adjust for this fact, the rate of payment per Rule 144 stock will be made at
twice the amounts formulated for U.S. Currency or free trading common. The
formulas shown above assume U.S. Currency or free-trade common stock as their
basis for determining amounts paid to the Employee. Therefore, the decision to
utilize Rule 144 stock effectively doubles the totals in any of the above
formulas.
9. Disability and Death:
A. If the Employee has a "Disability", (as hereinafter defined) the Company
shall continue his compensation for a period of two years, (104) weeks from the
date of Disability, but shall thereafter not be required to pay compensation so
long as such Disability continues. If the Employee shall not have resumed his
duties within twenty-four (24) months of the date of Disability, the Employee's
employment hereunder shall thereafter be deemed terminated. Upon termination
<PAGE>
pursuant to this Section, the Company shall pay to Employee's deferred
compensation five (5) times the annual compensation of the Employee as of the
date of Disability, such payment to be made by the Company in sixty (60) monthly
installments.
For the purposes of this Agreement, the Employee shall be deemed disabled
when, by reason of physical or mental illness or injury, he is unable to perform
the duties required of him in connection with the business of the Company for an
aggregate of fifty-two (52) weeks during any one hundred four (104) week period.
B. In the event of the Employee's death, the Company shall pay to the
estate of the Employee as deferred compensation an amount equal to five (5)
times the annual compensation of the Employee immediately proceeding the
Employee's death, such amount to be paid within one year of the date of death,
or from the proceeds of any Life Insurance on the life of the Employee held by
the Company.
10. Termination for Cause:
A. The Employee may be terminated immediately following notice by the
Company for "cause". For the purpose the term "cause" shall mean:
(1) The material breach of provision of this Agreement by the
Employee which is deemed to adversely effect the operation of the Company.
(2) The arrest and conviction and interment for more than one (1)
year of the Employee for a felony.
(3) The commission or participation by the Employee in an injurious
act of fraud against the Company.
B. After receipt of notice, the Employee shall have ten (10) days to remedy
such breach. If the Employee has not cured such breach at the end of the ten
(10) day period, the Company shall give notice of termination to the Employee
and the parties shall thereafter be relieved of all further obligations
hereunder, except with respect to any unpaid but accrued salary and bonus.
C. In the event of Employees termination with or without cause, the
Employee will be entitled to receive compensation at five times (5x) the annual
salary as so stipulated in this Agreement. The buy out, at the discretion of the
existing Board of Directors, will be either immediately upon the Employee's
termination, or over a period of sixty (60) months. Where the election is
determined to be over a sixty month (60) period, and in the event of the demise
of the Employee or restructuring of the Company because of insolvency, the
Employee's payout will be accelerated and in use to either the Employee's
beneficiary or estate, or directly to the Employee whichever the circumstances
require.
D. The Employee may terminate his employment with the Company upon thirty
(30) days written notice to the Company, in which case, the Employee shall
receive a salary for a maximum of six (6) months to be determined by the Board
of Directors and the Company shall have no further obligation under this
Agreement.
E. Notwithstanding anything to the contrary in this Paragraph 10, in the
<PAGE>
event of the termination or resignation of the Employee, the Employee shall
continue to be obligated or adhere to all obligations under Paragraph 9 and 11
hereunder.
11. Information: Without prior written consent of the Company or as required by
law, the Employee will not at any time either during or after his employment by
the Company, directly or indirectly divulge or disclose to any person, firm,
association, or company, or use for his own benefit, gain, or others, any plans,
products, data, results of tests and data, customer lists, or any other trade
secrets or confidential materials or like information of the Company, including
(but not by way of limitation) any and all information and instructions,
technical or otherwise prepared or issued for the use of the Company
(collectively, the "Confidential Information") it being the intent of the
Company with which intent the Employee hereby agrees to restrict him from
dissemination or using any like information that is unpublished or not readily
available to the general public.
12. Termination without cause: In the event the Employee is terminated without
cause, the Employee shall be paid five (5) times his annual compensation of the
Employee on the date of such termination. The payout, at the discretion of the
existing Board of Directors as per paragraph 10C.
13. Restrictive Covenant: Employee agrees that during the term of his employment
hereunder and for the six month period following the termination thereof for any
reason other than the Company's discontinuance of activities or a premature
termination of the Employee by the Company, the Employee shall not, directly or
indirectly engage or become interest in, render any service to, enter the
employment of, or solicit for any business which competes with any activity of
the Company conducted at any time during the Employee's period of employment and
which is located in any county of the State of Florida in which the Company
shall maintain any activity. The parties expressly agree that the duration and
geographical area of this restrictive covenant are reasonable.
This covenant shall be construed as an Agreement independent of any other
provision herein, and the existence of any claim or cause of action of the
Employee against the Company regardless of how arising, shall not constitute a
defense to the enforcement by the Company of its terms. If any portion of the
covenant is held to be unenforceable, for whatever reason it shall be considered
divisible both as to time and period of time and each county within the State of
Florida a separate geographical area so that the lessor period of time or
geographical area shall remain effective so long as the same is not determined
to be unenforceable, and in that regard the parties agree that any such lesser
time period or geographical area shall be specifically enforceable against the
Employee.
Notwithstanding any statement contained in this section to the contrary,
legal or beneficial ownership by the Employee of a less than fifteen percent
interest in a competitive corporation, at least one class of capital stock of
which is publicly traded on a national or regional stock exchange or by means of
an electronic interdealer quotation system, shall not be deemed to constitute a
breach by the Employee of the terms hereof.
14. Violation of Covenant: The Employee agrees and acknowledges that the
services to be rendered by him hereunder are of a special and original character
<PAGE>
that gives unique value, that the provisions of Paragraph 11 are, in view of the
nature of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, that his violation of any of the covenants
or agreements hereof would cause irreparable injury to the Company, that the
remedy at law for any violation or threatened violation thereof would be
inadequate and that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief as it may deem appropriate without the
accounting of all earnings, profits, and other benefits arising from any such
violation, which rights shall be cumulative and in addition to any rights or
remedies available to the Company. The Employee hereby agrees that in the event
of any such violation, the Company shall be entitled to commence an action for
any such preliminary and permanent injunctive relief and other equitable relief.
15. Rules and Regulations: As part of the consideration for this Agreement, the
Employee agrees to comply with, and abide by, such rules and directives of the
Company as may be established from time to time, and recognizes the right of the
Company to change, modify or adopt new policies and practices affecting the
employment relationship, not inconsistent with this Agreement, which will be
effective retroactively, as deemed appropriate by the Company.
16. Inception of Employment Relationship: The Employee represents and agrees
that he has not been pressured, mislead or induced to enter this Agreement based
upon any representation by the Company or its agents not contained herein.
Employee represents that he has entered into this Agreement voluntarily, and
after having the opportunity to consult with representatives of his own choosing
and that his agreement is freely given. The Employee represents that he has no
claims, charges, or causes of action presently accrued or pending against the
Company and if any such claims or causes of actions exist, the Employee, in
consideration of his employment hereby releases the Company, its employees,
agents, successors and assigns, from any and all such claims.
17. References: The Company agrees that, upon termination of employment under
this Agreement, it will furnish references to third parties, including
prospective employers, regarding Employee. In consideration of the Company's
agreement to furnish such references, the Employee releases the Company from any
and all claims and causes of action, including but not limited to, any claims
for defamation, and agrees to hold the Company harmless for any claims made in
relation thereto.
18. Notice: Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified or registered mail,
return receipt requested, to the parties as recorded in the Employees official
personnel file and the Company's place of business.
19. Waiver of Breach: The waiver by the Company of a breach of any condition of
the Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
20. Assignment: This Agreement may not be assigned by either party without prior
written consent of both parties.
21. Attorneys Fees: In the event either party is required to seek legal counsel
to enforce the terms and provisions of this Agreement, the prevailing party in
<PAGE>
any action shall be entitled to recover attorneys fees and costs (including on
appeal).
22. Governing Law: This Agreement shall be governed by the Laws of the State of
Florida and the proper jurisdiction and venue shall be the Circuit Court in Dade
County, Florida. The parties agree that service or process in any such action,
suit or proceeding shall be deemed valid if made by registered mail, return
receipt requested, sent to officially noted addresses.
23. Entire Agreement: This Agreement contains the entire Agreement of the
parties. It may be changed only by agreement in writing signed by both parties.
24. Headings: The headings are for convenience of reference only and shall not
be deemed to be part of the substance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYEE COMPANY:
GINSITE MATERIALS, INC.
By: s/s Henry V. Lione By: /s/ Murray Ginsberg, Pres.
- --------------------- ------------------------------
Authorized Signature
Exhibit 10.4D
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of April 1, 1999
(the"Effective Date ") between GINSITE MATERIALS, INC., (the "Company") and Mr.
Eugene Ladin (the "Employee").
WITNESSETH:
A. The Company desires to employ the Employee as its Vice President, Chief
Financial Officer and on the terms and conditions set forth in this Agreement.
B. The Employee desires to accept such employment on the terms and
conditions set forth in this Agreement and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Term: The term of this Agreement shall commence on the Effective Date and
shall continue for a period of one (1) year and shall be automatically renewable
for additional one (1) year terms unless either party gives the other party
prior written notice of intent not to renew at least 90 days prior to the
expiration of the then current term.
2. Duties: The Employee is engaged to act as Vice President, Chief Financial
Officer of the Company or in such other capacity as the Board of Directors shall
direct to conduct the Company's business. In addition the Employee shall have
such other duties as may from time to time be reasonably assigned to him by the
Board of Directors of the Company.
3. Time Devoted: During the period of his employment hereunder and except for
illness, reasonable vacation periods and reasonable leaves of absence, the
Employee shall devote substantially all of his business time, attention, skill
and efforts in the faithful performance of his duties hereunder. However, the
Employee may serve or continue to serve on the Boards of Directors of, and hold
any other offices or positions in companies or organizations which, in the
judgement of the Board of Directors of the Company, will not present any
conflict of interest with the Company or materially affect the performance of
the Employee's duties pursuant to this Agreement.
4. Compensation: For the services to be rendered by Employee under this
Agreement the Company agrees to pay him while he is rendering such services and
performing his obligations hereunder, and the Employee shall accept as full
payment for such service, a base compensation calculated at an annual rate of
$125,000. payable in equal installments beginning not later than on the last
business day of April, 1, 1999 and continuing thereafter on a monthly basis
during the period of employment. Such base compensation shall be periodically
increased to take into account superior performance or increases, if any, in the
annual cost of living, and may be supplemented by discretionary bonuses or other
benefits payable from time to time. All as determined by action of the Company's
Board of Directors.
<PAGE>
A. Periodic adjustments:
1. Salary Range:
(1) April 1, 1999 to March 31, 2000: $125,000. Plus one (1) share
of common unrestricted stock for each dollar income earned.
2. Incremental increase of 10 but no more than 15% for year 2000.
Plus one (1) share of common unrestricted stock for each dollar
income earned.
5. Vacation: Fringe Benefits: Reimbursement of Expenses: The Employee shall be
entitled to three (3) weeks of fully paid vacation during each annual period
within the term of this Agreement. He shall be entitled to vacation pay for
vacation time to which he is entitled but does not take. The timing of vacation
periods shall be within the discretion of the Company reasonably exercised so as
not to inconvenience the Employee.
The Employee shall further be entitled to (a) an automobile expense
allowance of up to but not in excess of $300.00 per month, (b) such leave by
reason of physical or mental disability, or incapacity and to such participation
in medical and life insurance, pension benefits, disability and fringe benefit
plans as the Company may make generally available to all of its executive
employees from time to time: subject, however, as to such plans to such
budgetary constraints or other limitations as may be imposed by the Company from
time to time; and (d) reimbursement for all normal and reasonably expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to reasonable substantiation requirements as may be imposed by the
Company.
The Employee shall have the right to utilize the Company's corporate legal
and accounting services up to 40 hours per year for personal matters, and shall
have the right to be represented by corporate legal and accounting consuls with
the total expense borne by the Company on any and all personal matters that are
related to GINSITE MATERIALS, INC. or its subsidiaries.
6. Bonuses: The Company shall pay a quarterly cash bonus of 5% (five percent) of
the Company's net profits before Income Taxes for the quarter in which the
profits occurred. Payout will be made in a lump sum no later that 90 calendar
days after the close of a quarter.
7. Key Man Insurance: During the term of this Agreement the Company will
maintain a keyman life insurance policy on the Employee in the amount of not
less than ($500,000) five hundred thousand dollars. The Company will be named as
a beneficiary of said policy in the amount of 50% of the amount payable in the
event of the Employee's death. One or more beneficiaries designated by the
Employee will have rights to the remaining 50% of the amount payable in the
event of the Employee's death. The Company will be responsible for and pay 100%
of the premiums for said policy.
8. Mergers and Acquisitions: It is recognized and agreed to by both the Company
and the Employee that activities which result in a merger of the Company with
another operating entity or the acquisition of the Company by an outside entity
or an acquisition by the Company of an outside entity is outside the scope of
the normal duties of the Employee. Any such occurrence in which the Employee
<PAGE>
acted as the primary negotiator or one of the negotiators for the Company will
be paid for by the Company to the Employee as an additional bonus. Said bonus
will be paid using a formula determined by the type of occurrence as set forth
below:
A. Merger of the Company with an outside entity: Formula: The lessor of 5%
of the total outstanding common share float of the combined companies resulting
from the merger or 1,000,000 shares. In either case, full voting rights are to
be provided in said shares provisions for 100% of the shares given to the
Employee and said shares shall be freely tradeable.
B. Acquisition of the Company by an outside organization: Formula: 5% of
the value of the Company based on total outstanding shares X .05. paid in voting
share of common stock.
C. Acquisition of an outside organization by the Company: Formula: 5% of
the value of the acquired organization based on total company share and asset
amounts used for said acquisition X .05. paid in voting shares of common stock
of the Company.
D. Takeover of the Company deemed by the Board as "Hostile": The Employee
will immediately receive 1,000,000 voting shares of the Company's common stock.
F. Acquisition of more than 30% of the Company's outstanding stock by any
investor, company organization or group: The Employee will immediately receive
1,000,000 voting shares of the Company's common stock.
G. In the event that the Company elects through a Board of Directors
Resolution and share holders vote to rearrange its capital structure through a
"reversal stock split" then the Officers and Directors of the Company, because
of their dedicated and loyal service to the Company will not be negatively or
adversely affected by any "reversal stock split" of the Company's common stock.
In any of the events defined above, it is at the Company's discretion to pay the
Employee in U.S. Currency, free-trading common stock or Rule 144 stock. It is
herein agreed by both the Company and Employee that both U.S. Currency and
free-trading stock are deemed to carry equal value. It is further agreed that
Rule 144 stock, due to its one (1) year restrictive period, carried a
significantly lower value to the Employee. In order to adequately and equitably
adjust for this fact, the rate of payment per Rule 144 stock will be made at
twice the amounts formulated for U.S. Currency or free trading common. The
formulas shown above assume U.S. Currency or free-trade common stock as their
basis for determining amounts paid to the Employee. Therefore, the decision to
utilize Rule 144 stock effectively doubles the totals in any of the above
formulas.
9. Disability and Death:
A. If the Employee has a "Disability", (as hereinafter defined) the Company
shall continue his compensation for a period of two years, (104) weeks from the
date of Disability, but shall thereafter not be required to pay compensation so
long as such Disability continues. If the Employee shall not have resumed his
duties within twenty-four (24) months of the date of Disability, the Employee's
employment hereunder shall thereafter be deemed terminated. Upon termination
<PAGE>
pursuant to this Section, the Company shall pay to Employee's deferred
compensation five (5) times the annual compensation of the Employee as of the
date of Disability, such payment to be made by the Company in sixty (60) monthly
installments.
For the purposes of this Agreement, the Employee shall be deemed disabled
when, by reason of physical or mental illness or injury, he is unable to perform
the duties required of him in connection with the business of the Company for an
aggregate of fifty-two (52) weeks during any one hundred four (104) week period.
B. In the event of the Employee's death, the Company shall pay to the
estate of the Employee as deferred compensation an amount equal to five (5)
times the annual compensation of the Employee immediately proceeding the
Employee's death, such amount to be paid within one year of the date of death,
or from the proceeds of any Life Insurance on the life of the Employee held by
the Company.
10. Termination for Cause:
A. The Employee may be terminated immediately following notice by the
Company for "cause". For the purpose the term "cause" shall mean:
(1) The material breach of provision of this Agreement by the
Employee which is deemed to adversely effect the operation of the Company.
(2) The arrest and conviction and interment for more than one (1)
year of the Employee for a felony.
(3) The commission or participation by the Employee in an injurious
act of fraud against the Company.
B. After receipt of notice, the Employee shall have ten (10) days to remedy
such breach. If the Employee has not cured such breach at the end of the ten
(10) day period, the Company shall give notice of termination to the Employee
and the parties shall thereafter be relieved of all further obligations
hereunder, except with respect to any unpaid but accrued salary and bonus.
C. In the event of Employees termination with or without cause, the
Employee will be entitled to receive compensation at five times (5x) the annual
salary as so stipulated in this Agreement. The buy out, at the discretion of the
existing Board of Directors, will be either immediately upon the Employee's
termination, or over a period of sixty (60) months. Where the election is
determined to be over a sixty month (60) period, and in the event of the demise
of the Employee or restructuring of the Company because of insolvency, the
Employee's payout will be accelerated and in use to either the Employee's
beneficiary or estate, or directly to the Employee whichever the circumstances
require.
D. The Employee may terminate his employment with the Company upon thirty
(30) days written notice to the Company, in which case, the Employee shall
receive a salary for a maximum of six (6) months to be determined by the Board
of Directors and the Company shall have no further obligation under this
Agreement.
E. Notwithstanding anything to the contrary in this Paragraph 10, in the
<PAGE>
event of the termination or resignation of the Employee, the Employee shall
continue to be obligated or adhere to all obligations under Paragraph 9 and 11
hereunder.
11. Information: Without prior written consent of the Company or as required by
law, the Employee will not at any time either during or after his employment by
the Company, directly or indirectly divulge or disclose to any person, firm,
association, or company, or use for his own benefit, gain, or others, any plans,
products, data, results of tests and data, customer lists, or any other trade
secrets or confidential materials or like information of the Company, including
(but not by way of limitation) any and all information and instructions,
technical or otherwise prepared or issued for the use of the Company
(collectively, the "Confidential Information") it being the intent of the
Company with which intent the Employee hereby agrees to restrict him from
dissemination or using any like information that is unpublished or not readily
available to the general public.
12. Termination without cause: In the event the Employee is terminated without
cause, the Employee shall be paid five (5) times his annual compensation of the
Employee on the date of such termination. The payout, at the discretion of the
existing Board of Directors as per paragraph 10C.
13. Restrictive Covenant: Employee agrees that during the term of his employment
hereunder and for the six month period following the termination thereof for any
reason other than the Company's discontinuance of activities or a premature
termination of the Employee by the Company, the Employee shall not, directly or
indirectly engage or become interest in, render any service to, enter the
employment of, or solicit for any business which competes with any activity of
the Company conducted at any time during the Employee's period of employment and
which is located in any county of the State of Florida in which the Company
shall maintain any activity. The parties expressly agree that the duration and
geographical area of this restrictive covenant are reasonable.
This covenant shall be construed as an Agreement independent of any other
provision herein, and the existence of any claim or cause of action of the
Employee against the Company regardless of how arising, shall not constitute a
defense to the enforcement by the Company of its terms. If any portion of the
covenant is held to be unenforceable, for whatever reason it shall be considered
divisible both as to time and period of time and each county within the State of
Florida a separate geographical area so that the lessor period of time or
geographical area shall remain effective so long as the same is not determined
to be unenforceable, and in that regard the parties agree that any such lesser
time period or geographical area shall be specifically enforceable against the
Employee.
Notwithstanding any statement contained in this section to the contrary,
legal or beneficial ownership by the Employee of a less than fifteen percent
interest in a competitive corporation, at least one class of capital stock of
which is publicly traded on a national or regional stock exchange or by means of
an electronic interdealer quotation system, shall not be deemed to constitute a
breach by the Employee of the terms hereof.
14. Violation of Covenant: The Employee agrees and acknowledges that the
<PAGE>
services to be rendered by him hereunder are of a special and original character
that gives unique value, that the provisions of Paragraph 11 are, in view of the
nature of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, that his violation of any of the covenants
or agreements hereof would cause irreparable injury to the Company, that the
remedy at law for any violation or threatened violation thereof would be
inadequate and that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief as it may deem appropriate without the
accounting of all earnings, profits, and other benefits arising from any such
violation, which rights shall be cumulative and in addition to any rights or
remedies available to the Company. The Employee hereby agrees that in the event
of any such violation, the Company shall be entitled to commence an action for
any such preliminary and permanent injunctive relief and other equitable relief.
15. Rules and Regulations: As part of the consideration for this Agreement, the
Employee agrees to comply with, and abide by, such rules and directives of the
Company as may be established from time to time, and recognizes the right of the
Company to change, modify or adopt new policies and practices affecting the
employment relationship, not inconsistent with this Agreement, which will be
effective retroactively, as deemed appropriate by the Company.
16. Inception of Employment Relationship: The Employee represents and agrees
that he has not been pressured, mislead or induced to enter this Agreement based
upon any representation by the Company or its agents not contained herein.
Employee represents that he has entered into this Agreement voluntarily, and
after having the opportunity to consult with representatives of his own choosing
and that his agreement is freely given. The Employee represents that he has no
claims, charges, or causes of action presently accrued or pending against the
Company and if any such claims or causes of actions exist, the Employee, in
consideration of his employment hereby releases the Company, its employees,
agents, successors and assigns, from any and all such claims.
17. References: The Company agrees that, upon termination of employment under
this Agreement, it will furnish references to third parties, including
prospective employers, regarding Employee. In consideration of the Company's
agreement to furnish such references, the Employee releases the Company from any
and all claims and causes of action, including but not limited to, any claims
for defamation, and agrees to hold the Company harmless for any claims made in
relation thereto.
18. Notice: Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified or registered mail,
return receipt requested, to the parties as recorded in the Employees official
personnel file and the Company's place of business.
19. Waiver of Breach: The waiver by the Company of a breach of any condition of
the Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
20. Assignment: This Agreement may not be assigned by either party without prior
written consent of both parties.
21. Attorneys Fees: In the event either party is required to seek legal counsel
to enforce the terms and provisions of this Agreement, the prevailing party in
<PAGE>
any action shall be entitled to recover attorneys fees and costs (including on
appeal).
22. Governing Law: This Agreement shall be governed by the Laws of the State of
Florida and the proper jurisdiction and venue shall be the Circuit Court in Dade
County, Florida. The parties agree that service or process in any such action,
suit or proceeding shall be deemed valid if made by registered mail, return
receipt requested, sent to officially noted addresses.
23. Entire Agreement: This Agreement contains the entire Agreement of the
parties. It may be changed only by agreement in writing signed by both parties.
24. Headings: The headings are for convenience of reference only and shall not
be deemed to be part of the substance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYEE COMPANY:
GINSITE MATERIALS, INC.
By: s/s Eugene Ladin By: /s/ Murray Ginsberg, Pres.
- -------------------- --------------------------
Authorized Signature
Exhibit 10.4E
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of April 1, 1999
(the"Effective Date ") between GINSITE MATERIALS, INC., (the "Company") and Mr.
Barry Grieper (the "Employee").
WITNESSETH:
A. The Company desires to employ the Employee as its Controller and on the
terms and conditions set forth in this Agreement.
B. The Employee desires to accept such employment on the terms and
conditions set forth in this Agreement and
NOW,THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Term: The term of this Agreement shall commence on the Effective Date and
shall continue for a period of one (1) year and shall be automatically renewable
for additional one (1) year terms unless either party gives the other party
prior written notice of intent not to renew at least 90 days prior to the
expiration of the then current term.
2. Duties: The Employee is engaged to act as Controller of the Company or in
such other capacity as the Board of Directors shall direct to conduct the
Company's business. In addition the Employee shall have such other duties as may
from time to time be reasonably assigned to him by the Board of Directors of the
Company.
3. Time Devoted: During the period of his employment hereunder and except for
illness, reasonable vacation periods and reasonable leaves of absence, the
Employee shall devote substantially all of his business time, attention, skill
and efforts in the faithful performance of his duties hereunder. However, the
Employee may serve or continue to serve on the Boards of Directors of, and hold
any other offices or positions in companies or organizations which, in the
judgement of the Board of Directors of the Company, will not present any
conflict of interest with the Company or materially affect the performance of
the Employee's duties pursuant to this Agreement.
4. Compensation: For the services to be rendered by Employee under this
Agreement the Company agrees to pay him while he is rendering such services and
performing his obligations hereunder, and the Employee shall accept as full
payment for such service, a base compensation calculated at an annual rate of
$50,000. payable in equal installments beginning not later than on the last
business day of April, 1, 1999 and continuing thereafter on a monthly basis
during the period of employment. Such base compensation shall be periodically
increased to take into account superior performance or increases, if any, in the
annual cost of living, and may be supplemented by discretionary bonuses or other
benefits payable from time to time. All as determined by action of the Company's
Board of Directors.
<PAGE>
A. Periodic adjustments:
1. Salary Range:
(1) April 1, 1999 to March 31, 2000: $50,000. Plus one (1) share
of common unrestricted stock for each dollar income earned.
2. Incremental increase of 10 but no more than 15% for year 2000.
Plus one (1) share of common unrestricted stock for each dollar
income earned.
5. Vacation: Fringe Benefits: Reimbursement of Expenses: The Employee shall be
entitled to three (3) weeks of fully paid vacation during each annual period
within the term of this Agreement. He shall be entitled to vacation pay for
vacation time to which he is entitled but does not take. The timing of vacation
periods shall be within the discretion of the Company reasonably exercised so as
not to inconvenience the Employee.
The Employee shall further be entitled to (a) an automobile expense
allowance of up to but not in excess of $300.00 per month, (b) such leave by
reason of physical or mental disability, or incapacity and to such participation
in medical and life insurance, pension benefits, disability and fringe benefit
plans as the Company may make generally available to all of its executive
employees from time to time: subject, however, as to such plans to such
budgetary constraints or other limitations as may be imposed by the Company from
time to time; and (d) reimbursement for all normal and reasonably expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to reasonable substantiation requirements as may be imposed by the
Company.
The Employee shall have the right to utilize the Company's corporate legal
and accounting services up to 40 hours per year for personal matters, and shall
have the right to be represented by corporate legal and accounting consuls with
the total expense borne by the Company on any and all personal matters that are
related to GINSITE MATERIALS, INC. or its subsidiaries.
6. Bonuses: The Company shall pay a quarterly cash bonus of 5% (five percent) of
the Company's net profits before Income Taxes for the quarter in which the
profits occurred. Payout will be made in a lump sum no later that 90 calendar
days after the close of a quarter.
7. Key Man Insurance: During the term of this Agreement the Company will
maintain a keyman life insurance policy on the Employee in the amount of not
less than ($500,000) five hundred thousand dollars. The Company will be named as
a beneficiary of said policy in the amount of 50% of the amount payable in the
event of the Employee's death. One or more beneficiaries designated by the
Employee will have rights to the remaining 50% of the amount payable in the
event of the Employee's death. The Company will be responsible for and pay 100%
of the premiums for said policy.
8. Mergers and Acquisitions: It is recognized and agreed to by both the Company
and the Employee that activities which result in a merger of the Company with
another operating entity or the acquisition of the Company by an outside entity
or an acquisition by the Company of an outside entity is outside the scope of
the normal duties of the Employee. Any such occurrence in which the Employee
<PAGE>
acted as the primary negotiator or one of the negotiators for the Company will
be paid for by the Company to the Employee as an additional bonus. Said bonus
will be paid using a formula determined by the type of occurrence as set forth
below:
A. Merger of the Company with an outside entity: Formula: The lessor of 5%
of the total outstanding common share float of the combined companies resulting
from the merger or 1,000,000 shares. In either case, full voting rights are to
be provided in said shares provisions for 100% of the shares given to the
Employee and said shares shall be freely tradeable.
B. Acquisition of the Company by an outside organization: Formula: 5% of
the value of the Company based on total outstanding shares X .05. paid in voting
share of common stock.
C. Acquisition of an outside organization by the Company: Formula: 5% of
the value of the acquired organization based on total company share and asset
amounts used for said acquisition X .05. paid in voting shares of common stock
of the Company.
D. Takeover of the Company deemed by the Board as "Hostile": The Employee
will immediately receive 1,000,000 voting shares of the Company's common stock.
F. Acquisition of more than 30% of the Company's outstanding stock by any
investor, company organization or group: The Employee will immediately receive
1,000,000 voting shares of the Company's common stock.
G. In the event that the Company elects through a Board of Directors
Resolution and share holders vote to rearrange its capital structure through a
"reversal stock split" then the Officers and Directors of the Company, because
of their dedicated and loyal service to the Company will not be negatively or
adversely affected by any "reversal stock split" of the Company's common stock.
In any of the events defined above, it is at the Company's discretion to pay the
Employee in U.S. Currency, free-trading common stock or Rule 144 stock. It is
herein agreed by both the Company and Employee that both U.S. Currency and
free-trading stock are deemed to carry equal value. It is further agreed that
Rule 144 stock, due to its one (1) year restrictive period, carried a
significantly lower value to the Employee. In order to adequately and equitably
adjust for this fact, the rate of payment per Rule 144 stock will be made at
twice the amounts formulated for U.S. Currency or free trading common. The
formulas shown above assume U.S. Currency or free-trade common stock as their
basis for determining amounts paid to the Employee. Therefore, the decision to
utilize Rule 144 stock effectively doubles the totals in any of the above
formulas.
9. Disability and Death:
A. If the Employee has a "Disability", (as hereinafter defined) the Company
shall continue his compensation for a period of two years, (104) weeks from the
date of Disability, but shall thereafter not be required to pay compensation so
long as such Disability continues. If the Employee shall not have resumed his
duties within twenty-four (24) months of the date of Disability, the Employee's
employment hereunder shall thereafter be deemed terminated. Upon termination
<PAGE>
pursuant to this Section, the Company shall pay to Employee's deferred
compensation five (5) times the annual compensation of the Employee as of the
date of Disability, such payment to be made by the Company in sixty (60) monthly
installments.
For the purposes of this Agreement, the Employee shall be deemed disabled
when, by reason of physical or mental illness or injury, he is unable to perform
the duties required of him in connection with the business of the Company for an
aggregate of fifty-two (52) weeks during any one hundred four (104) week period.
B. In the event of the Employee's death, the Company shall pay to the
estate of the Employee as deferred compensation an amount equal to five (5)
times the annual compensation of the Employee immediately proceeding the
Employee's death, such amount to be paid within one year of the date of death,
or from the proceeds of any Life Insurance on the life of the Employee held by
the Company.
10. Termination for Cause:
A. The Employee may be terminated immediately following notice by the
Company for "cause". For the purpose the term "cause" shall mean:
(1) The material breach of provision of this Agreement by the
Employee which is deemed to adversely effect the operation of the Company.
(2) The arrest and conviction and interment for more than one (1)
year of the Employee for a felony.
(3) The commission or participation by the Employee in an injurious
act of fraud against the Company.
B. After receipt of notice, the Employee shall have ten (10) days to remedy
such breach. If the Employee has not cured such breach at the end of the ten
(10) day period, the Company shall give notice of termination to the Employee
and the parties shall thereafter be relieved of all further obligations
hereunder, except with respect to any unpaid but accrued salary and bonus.
C. In the event of Employees termination with or without cause, the
Employee will be entitled to receive compensation at five times (5x) the annual
salary as so stipulated in this Agreement. The buy out, at the discretion of the
existing Board of Directors, will be either immediately upon the Employee's
termination, or over a period of sixty (60) months. Where the election is
determined to be over a sixty month (60) period, and in the event of the demise
of the Employee or restructuring of the Company because of insolvency, the
Employee's payout will be accelerated and in use to either the Employee's
beneficiary or estate, or directly to the Employee whichever the circumstances
require.
D. The Employee may terminate his employment with the Company upon thirty
(30) days written notice to the Company, in which case, the Employee shall
receive a salary for a maximum of six (6) months to be determined by the Board
of Directors and the Company shall have no further obligation under this
Agreement.
<PAGE>
E. Notwithstanding anything to the contrary in this Paragraph 10, in the
event of the termination or resignation of the Employee, the Employee shall
continue to be obligated or adhere to all obligations under Paragraph 9 and 11
hereunder.
11. Information: Without prior written consent of the Company or as required by
law, the Employee will not at any time either during or after his employment by
the Company, directly or indirectly divulge or disclose to any person, firm,
association, or company, or use for his own benefit, gain, or others, any plans,
products, data, results of tests and data, customer lists, or any other trade
secrets or confidential materials or like information of the Company, including
(but not by way of limitation) any and all information and instructions,
technical or otherwise prepared or issued for the use of the Company
(collectively, the "Confidential Information") it being the intent of the
Company with which intent the Employee hereby agrees to restrict him from
dissemination or using any like information that is unpublished or not readily
available to the general public.
12. Termination without cause: In the event the Employee is terminated without
cause, the Employee shall be paid five (5) times his annual compensation of the
Employee on the date of such termination. The payout, at the discretion of the
existing Board of Directors as per paragraph 10C.
13. Restrictive Covenant: Employee agrees that during the term of his employment
hereunder and for the six month period following the termination thereof for any
reason other than the Company's discontinuance of activities or a premature
termination of the Employee by the Company, the Employee shall not, directly or
indirectly engage or become interest in, render any service to, enter the
employment of, or solicit for any business which competes with any activity of
the Company conducted at any time during the Employee's period of employment and
which is located in any county of the State of Florida in which the Company
shall maintain any activity. The parties expressly agree that the duration and
geographical area of this restrictive covenant are reasonable.
This covenant shall be construed as an Agreement independent of any other
provision herein, and the existence of any claim or cause of action of the
Employee against the Company regardless of how arising, shall not constitute a
defense to the enforcement by the Company of its terms. If any portion of the
covenant is held to be unenforceable, for whatever reason it shall be considered
divisible both as to time and period of time and each county within the State of
Florida a separate geographical area so that the lessor period of time or
geographical area shall remain effective so long as the same is not determined
to be unenforceable, and in that regard the parties agree that any such lesser
time period or geographical area shall be specifically enforceable against the
Employee.
Notwithstanding any statement contained in this section to the contrary,
legal or beneficial ownership by the Employee of a less than fifteen percent
interest in a competitive corporation, at least one class of capital stock of
which is publicly traded on a national or regional stock exchange or by means of
an electronic interdealer quotation system, shall not be deemed to constitute a
breach by the Employee of the terms hereof.
14. Violation of Covenant: The Employee agrees and acknowledges that the
<PAGE>
services to be rendered by him hereunder are of a special and original character
that gives unique value, that the provisions of Paragraph 11 are, in view of the
nature of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, that his violation of any of the covenants
or agreements hereof would cause irreparable injury to the Company, that the
remedy at law for any violation or threatened violation thereof would be
inadequate and that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief as it may deem appropriate without the
accounting of all earnings, profits, and other benefits arising from any such
violation, which rights shall be cumulative and in addition to any rights or
remedies available to the Company. The Employee hereby agrees that in the event
of any such violation, the Company shall be entitled to commence an action for
any such preliminary and permanent injunctive relief and other equitable relief.
15. Rules and Regulations: As part of the consideration for this Agreement, the
Employee agrees to comply with, and abide by, such rules and directives of the
Company as may be established from time to time, and recognizes the right of the
Company to change, modify or adopt new policies and practices affecting the
employment relationship, not inconsistent with this Agreement, which will be
effective retroactively, as deemed appropriate by the Company.
16. Inception of Employment Relationship: The Employee represents and agrees
that he has not been pressured, mislead or induced to enter this Agreement based
upon any representation by the Company or its agents not contained herein.
Employee represents that he has entered into this Agreement voluntarily, and
after having the opportunity to consult with representatives of his own choosing
and that his agreement is freely given. The Employee represents that he has no
claims, charges, or causes of action presently accrued or pending against the
Company and if any such claims or causes of actions exist, the Employee, in
consideration of his employment hereby releases the Company, its employees,
agents, successors and assigns, from any and all such claims.
17. References: The Company agrees that, upon termination of employment under
this Agreement, it will furnish references to third parties, including
prospective employers, regarding Employee. In consideration of the Company's
agreement to furnish such references, the Employee releases the Company from any
and all claims and causes of action, including but not limited to, any claims
for defamation, and agrees to hold the Company harmless for any claims made in
relation thereto.
18. Notice: Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified or registered mail,
return receipt requested, to the parties as recorded in the Employees official
personnel file and the Company's place of business.
19. Waiver of Breach: The waiver by the Company of a breach of any condition of
the Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
20. Assignment: This Agreement may not be assigned by either party without prior
written consent of both parties.
21. Attorneys Fees: In the event either party is required to seek legal counsel
to enforce the terms and provisions of this Agreement, the prevailing party in
<PAGE>
any action shall be entitled to recover attorneys fees and costs (including on
appeal).
22. Governing Law: This Agreement shall be governed by the Laws of the State of
Florida and the proper jurisdiction and venue shall be the Circuit Court in Dade
County, Florida. The parties agree that service or process in any such action,
suit or proceeding shall be deemed valid if made by registered mail, return
receipt requested, sent to officially noted addresses.
23. Entire Agreement: This Agreement contains the entire Agreement of the
parties. It may be changed only by agreement in writing signed by both parties.
24. Headings: The headings are for convenience of reference only and shall not
be deemed to be part of the substance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYEE COMPANY:
GINSITE MATERIALS, INC.
By: s/s S. Barry Grieper By: /s/ Murray Ginsberg, Pres.
- ----------------------- --------------------------
Authorized Signature
Exhibit 10.4F
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of April 1, 1999
(the"Effective Date ") between GINSITE MATERIALS, INC., (the "Company") and Mr.
Henry Max (the "Employee").
WITNESSETH:
A. The Company desires to employ the Employee as its Vice President, Chief
Operating Officer and on the terms and conditions set forth in this Agreement.
B. The Employee desires to accept such employment on the terms and
conditions set forth in this Agreement and
NOW,THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Term: The term of this Agreement shall commence on the Effective Date and
shall continue for a period of one (1) year and shall be automatically renewable
for additional one (1) year terms unless either party gives the other party
prior written notice of intent not to renew at least 90 days prior to the
expiration of the then current term.
2. Duties: The Employee is engaged to act as President, Chief Operating Officer
of the Company or in such other capacity as the Board of Directors shall direct
to conduct the Company's business. In addition the Employee shall have such
other duties as may from time to time be reasonably assigned to him by the Board
of Directors of the Company.
3. Time Devoted: During the period of his employment hereunder and except for
illness, reasonable vacation periods and reasonable leaves of absence, the
Employee shall devote substantially all of his business time, attention, skill
and efforts in the faithful performance of his duties hereunder. However, the
Employee may serve or continue to serve on the Boards of Directors of, and hold
any other offices or positions in companies or organizations which, in the
judgement of the Board of Directors of the Company, will not present any
conflict of interest with the Company or materially affect the performance of
the Employee's duties pursuant to this Agreement.
4. Compensation: For the services to be rendered by Employee under this
Agreement the Company agrees to pay him while he is rendering such services and
performing his obligations hereunder, and the Employee shall accept as full
payment for such service, a base compensation calculated at an annual rate of
$100,000. payable in equal installments beginning not later than on the last
business day of April, 1, 1999 and continuing thereafter on a monthly basis
during the period of employment. Such base compensation shall be periodically
increased to take into account superior performance or increases, if any, in the
annual cost of living, and may be supplemented by discretionary bonuses or other
benefits payable from time to time. All as determined by action of the Company's
Board of Directors.
<PAGE>
A. Periodic adjustments:
1. Salary Range:
(1) April 1, 1999 to March 31, 2000: $100,000. Plus one (1) share
of common unrestricted stock for each dollar income earned.
2. Incremental increase of 10 but no more than 15% for year 2000.
Plus one (1) share of common unrestricted stock for each dollar
income earned.
5. Vacation: Fringe Benefits: Reimbursement of Expenses: The Employee shall be
entitled to three (3) weeks of fully paid vacation during each annual period
within the term of this Agreement. He shall be entitled to vacation pay for
vacation time to which he is entitled but does not take. The timing of vacation
periods shall be within the discretion of the Company reasonably exercised so as
not to inconvenience the Employee.
The Employee shall further be entitled to (a) an automobile expense
allowance of up to but not in excess of $300.00 per month, (b) such leave by
reason of physical or mental disability, or incapacity and to such participation
in medical and life insurance, pension benefits, disability and fringe benefit
plans as the Company may make generally available to all of its executive
employees from time to time: subject, however, as to such plans to such
budgetary constraints or other limitations as may be imposed by the Company from
time to time; and (d) reimbursement for all normal and reasonably expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to reasonable substantiation requirements as may be imposed by the
Company.
The Employee shall have the right to utilize the Company's corporate legal
and accounting services up to 40 hours per year for personal matters, and shall
have the right to be represented by corporate legal and accounting consuls with
the total expense borne by the Company on any and all personal matters that are
related to GINSITE MATERIALS, INC. or its subsidiaries.
6. Bonuses: The Company shall pay a quarterly cash bonus of 5% (five percent) of
the Company's net profits before Income Taxes for the quarter in which the
profits occurred. Payout will be made in a lump sum no later that 90 calendar
days after the close of a quarter.
7. Key Man Insurance: During the term of this Agreement the Company will
maintain a keyman life insurance policy on the Employee in the amount of not
less than ($500,000) five hundred thousand dollars. The Company will be named as
a beneficiary of said policy in the amount of 50% of the amount payable in the
event of the Employee's death. One or more beneficiaries designated by the
Employee will have rights to the remaining 50% of the amount payable in the
event of the Employee's death. The Company will be responsible for and pay 100%
of the premiums for said policy.
8. Mergers and Acquisitions: It is recognized and agreed to by both the Company
and the Employee that activities which result in a merger of the Company with
another operating entity or the acquisition of the Company by an outside entity
or an acquisition by the Company of an outside entity is outside the scope of
the normal duties of the Employee. Any such occurrence in which the Employee
<PAGE>
acted as the primary negotiator or one of the negotiators for the Company will
be paid for by the Company to the Employee as an additional bonus. Said bonus
will be paid using a formula determined by the type of occurrence as set forth
below:
A. Merger of the Company with an outside entity: Formula: The lessor of 5%
of the total outstanding common share float of the combined companies resulting
from the merger or 1,000,000 shares. In either case, full voting rights are to
be provided in said shares provisions for 100% of the shares given to the
Employee and said shares shall be freely tradeable.
B. Acquisition of the Company by an outside organization: Formula: 5% of
the value of the Company based on total outstanding shares X .05. paid in voting
share of common stock.
C. Acquisition of an outside organization by the Company: Formula: 5% of
the value of the acquired organization based on total company share and asset
amounts used for said acquisition X .05. paid in voting shares of common stock
of the Company.
D. Takeover of the Company deemed by the Board as "Hostile": The Employee
will immediately receive 1,000,000 voting shares of the Company's common stock.
F. Acquisition of more than 30% of the Company's outstanding stock by any
investor, company organization or group: The Employee will immediately receive
1,000,000 voting shares of the Company's common stock.
G. In the event that the Company elects through a Board of Directors
Resolution and share holders vote to rearrange its capital structure through a
"reversal stock split" then the Officers and Directors of the Company, because
of their dedicated and loyal service to the Company will not be negatively or
adversely affected by any "reversal stock split" of the Company's common stock.
In any of the events defined above, it is at the Company's discretion to pay the
Employee in U.S. Currency, free-trading common stock or Rule 144 stock. It is
herein agreed by both the Company and Employee that both U.S. Currency and
free-trading stock are deemed to carry equal value. It is further agreed that
Rule 144 stock, due to its one (1) year restrictive period, carried a
significantly lower value to the Employee. In order to adequately and equitably
adjust for this fact, the rate of payment per Rule 144 stock will be made at
twice the amounts formulated for U.S. Currency or free trading common. The
formulas shown above assume U.S. Currency or free-trade common stock as their
basis for determining amounts paid to the Employee. Therefore, the decision to
utilize Rule 144 stock effectively doubles the totals in any of the above
formulas.
9. Disability and Death:
A. If the Employee has a "Disability", (as hereinafter defined) the
Company shall continue his compensation for a period of two years, (104) weeks
from the date of Disability, but shall thereafter not be required to pay
compensation so long as such Disability continues. If the Employee shall not
have resumed his duties within twenty-four (24) months of the date of
Disability, the Employee's employment hereunder shall thereafter be deemed
terminated. Upon termination pursuant to this Section, the Company shall pay to
<PAGE>
Employee's deferred compensation five (5) times the annual compensation of the
Employee as of the date of Disability, such payment to be made by the Company in
sixty (60) monthly installments.
For the purposes of this Agreement, the Employee shall be deemed disabled
when, by reason of physical or mental illness or injury, he is unable to perform
the duties required of him in connection with the business of the Company for an
aggregate of fifty-two (52) weeks during any one hundred four (104) week period.
B. In the event of the Employee's death, the Company shall pay to the
estate of the Employee as deferred compensation an amount equal to five (5)
times the annual compensation of the Employee immediately proceeding the
Employee's death, such amount to be paid within one year of the date of death,
or from the proceeds of any Life Insurance on the life of the Employee held by
the Company.
10. Termination for Cause:
A. The Employee may be terminated immediately following notice by the
Company for "cause". For the purpose the term "cause" shall mean:
(1) The material breach of provision of this Agreement by the
Employee which is deemed to adversely effect the operation of the Company.
(2) The arrest and conviction and interment for more than one (1)
year of the Employee for a felony.
(3) The commission or participation by the Employee in an injurious
act of fraud against the Company.
B. After receipt of notice, the Employee shall have ten (10) days to remedy
such breach. If the Employee has not cured such breach at the end of the ten
(10) day period, the Company shall give notice of termination to the Employee
and the parties shall thereafter be relieved of all further obligations
hereunder, except with respect to any unpaid but accrued salary and bonus.
C. In the event of Employees termination with or without cause, the
Employee will be entitled to receive compensation at five times (5x) the annual
salary as so stipulated in this Agreement. The buy out, at the discretion of the
existing Board of Directors, will be either immediately upon the Employee's
termination, or over a period of sixty (60) months. Where the election is
determined to be over a sixty month (60) period, and in the event of the demise
of the Employee or restructuring of the Company because of insolvency, the
Employee's payout will be accelerated and in use to either the Employee's
beneficiary or estate, or directly to the Employee whichever the circumstances
require.
D. The Employee may terminate his employment with the Company upon thirty
(30) days written notice to the Company, in which case, the Employee shall
receive a salary for a maximum of six (6) months to be determined by the Board
of Directors and the Company shall have no further obligation under this
Agreement.
<PAGE>
E. Notwithstanding anything to the contrary in this Paragraph 10, in the
event of the termination or resignation of the Employee, the Employee shall
continue to be obligated or adhere to all obligations under Paragraph 9 and 11
hereunder.
11. Information: Without prior written consent of the Company or as required by
law, the Employee will not at any time either during or after his employment by
the Company, directly or indirectly divulge or disclose to any person, firm,
association, or company, or use for his own benefit, gain, or others, any plans,
products, data, results of tests and data, customer lists, or any other trade
secrets or confidential materials or like information of the Company, including
(but not by way of limitation) any and all information and instructions,
technical or otherwise prepared or issued for the use of the Company
(collectively, the "Confidential Information") it being the intent of the
Company with which intent the Employee hereby agrees to restrict him from
dissemination or using any like information that is unpublished or not readily
available to the general public.
12. Termination without cause: In the event the Employee is terminated without
cause, the Employee shall be paid five (5) times his annual compensation of the
Employee on the date of such termination. The payout, at the discretion of the
existing Board of Directors as per paragraph 10C.
13. Restrictive Covenant: Employee agrees that during the term of his employment
hereunder and for the six month period following the termination thereof for any
reason other than the Company's discontinuance of activities or a premature
termination of the Employee by the Company, the Employee shall not, directly or
indirectly engage or become interest in, render any service to, enter the
employment of, or solicit for any business which competes with any activity of
the Company conducted at any time during the Employee's period of employment and
which is located in any county of the State of Florida in which the Company
shall maintain any activity. The parties expressly agree that the duration and
geographical area of this restrictive covenant are reasonable.
This covenant shall be construed as an Agreement independent of any other
provision herein, and the existence of any claim or cause of action of the
Employee against the Company regardless of how arising, shall not constitute a
defense to the enforcement by the Company of its terms. If any portion of the
covenant is held to be unenforceable, for whatever reason it shall be considered
divisible both as to time and period of time and each county within the State of
Florida a separate geographical area so that the lessor period of time or
geographical area shall remain effective so long as the same is not determined
to be unenforceable, and in that regard the parties agree that any such lesser
time period or geographical area shall be specifically enforceable against the
Employee.
Notwithstanding any statement contained in this section to the contrary, legal
or beneficial ownership by the Employee of a less than fifteen percent interest
in a competitive corporation, at least one class of capital stock of which is
publicly traded on a national or regional stock exchange or by means of an
electronic interdealer quotation system, shall not be deemed to constitute a
breach by the Employee of the terms hereof.
14. Violation of Covenant: The Employee agrees and acknowledges that the
<PAGE>
services to be rendered by him hereunder are of a special and original character
that gives unique value, that the provisions of Paragraph 11 are, in view of the
nature of the business of the Company, reasonable and necessary to protect the
legitimate interests of the Company, that his violation of any of the covenants
or agreements hereof would cause irreparable injury to the Company, that the
remedy at law for any violation or threatened violation thereof would be
inadequate and that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief as it may deem appropriate without the
accounting of all earnings, profits, and other benefits arising from any such
violation, which rights shall be cumulative and in addition to any rights or
remedies available to the Company. The Employee hereby agrees that in the event
of any such violation, the Company shall be entitled to commence an action for
any such preliminary and permanent injunctive relief and other equitable relief.
15. Rules and Regulations: As part of the consideration for this Agreement, the
Employee agrees to comply with, and abide by, such rules and directives of the
Company as may be established from time to time, and recognizes the right of the
Company to change, modify or adopt new policies and practices affecting the
employment relationship, not inconsistent with this Agreement, which will be
effective retroactively, as deemed appropriate by the Company.
16. Inception of Employment Relationship: The Employee represents and agrees
that he has not been pressured, mislead or induced to enter this Agreement based
upon any representation by the Company or its agents not contained herein.
Employee represents that he has entered into this Agreement voluntarily, and
after having the opportunity to consult with representatives of his own choosing
and that his agreement is freely given. The Employee represents that he has no
claims, charges, or causes of action presently accrued or pending against the
Company and if any such claims or causes of actions exist, the Employee, in
consideration of his employment hereby releases the Company, its employees,
agents, successors and assigns, from any and all such claims.
17. References: The Company agrees that, upon termination of employment under
this Agreement, it will furnish references to third parties, including
prospective employers, regarding Employee. In consideration of the Company's
agreement to furnish such references, the Employee releases the Company from any
and all claims and causes of action, including but not limited to, any claims
for defamation, and agrees to hold the Company harmless for any claims made in
relation thereto.
18. Notice: Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified or registered mail,
return receipt requested, to the parties as recorded in the Employees official
personnel file and the Company's place of business.
19. Waiver of Breach: The waiver by the Company of a breach of any condition of
the Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
20. Assignment: This Agreement may not be assigned by either party without prior
written consent of both parties.
21. Attorneys Fees: In the event either party is required to seek legal counsel
to enforce the terms and provisions of this Agreement, the prevailing party in
<PAGE>
any action shall be entitled to recover attorneys fees and costs (including on
appeal).
22. Governing Law: This Agreement shall be governed by the Laws of the State of
Florida and the proper jurisdiction and venue shall be the Circuit Court in Dade
County, Florida. The parties agree that service or process in any such action,
suit or proceeding shall be deemed valid if made by registered mail, return
receipt requested, sent to officially noted addresses.
23. Entire Agreement: This Agreement contains the entire Agreement of the
parties. It may be changed only by agreement in writing signed by both parties.
24. Headings: The headings are for convenience of reference only and shall not
be deemed to be part of the substance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYEE COMPANY:
GINSITE MATERIALS, INC.
By: s/s Henry Max By: /s/ Murray Ginsberg, Pres.
- ---------------- --------------------------
Authorized Signature
Exhibit 10.5
INDEMNIFICATION AGREEMENT
AND
COVENANT NOT TO SUE
AGREEMENT, made and entered into as of 20 August 1997, between GINSITE
MATERIALS, INC., a Florida corporation (the "Company"), and Murray Ginsberg,
(herein, "Indemnitee").
W I T N E S S E T H
WHEREAS, at the request of the Corporation, Indemnitee currently serves as
Officer and/or Director of the Corporation and may, therefore, be subjected to
actions, suits or proceedings by reason of such service; and
WHEREAS, as an inducement to Indemnitee to continue to serve as Officer and
Director, the Corporation has agreed not to sue and to indemnify Indemnitee
against expenses and costs incurred by Indemnitee in connection with any such
actions, suits or proceedings, to the fullest extent permitted by laws; and
WHEREAS, the parties desire to set forth their agreement regarding
indemnification;
NOW, THEREFORE, for an in consideration of the mutual promises contained
herein, and other good and valuable consideration, the parties agree as follows:
1. Acts or Omissions Covered By this Agreement. This Agreement shall cover
any act or omission by Indemnitee which:
1.1 occurs or is alleged to have occurred by reason of its being or
having been the Officer and/or Director of the Corporation;
1.2 occurs or is alleged to have occurred before, during or after the
time when the Indemnitee served as Officer and/or Director of the
Corporation; and
1.3 gives rise to, or is the direct or indirect subject of claim in
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, at any
time or times whether during or after Indemnitee's services as
Officer and/or Director of the Corporation.
2. Indemnity and Covenant Not to Sue. Subject to the provisions of Florida
Statute Section 607.0850:
2.1 The Corporation shall indemnify, to the fullest extent permitted
by the Corporation's articles of incorporation and by laws, and
regardless of any by-law provision to the contrary, Indemnitee,
from and against any expanses (including attorneys' fees),
<PAGE>
judgments, fines, taxes, penalties and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that Indemnitee is or was an Officer and/or
Director of the Corporation or was serving at the request of the
Corporation as the Officer and/or Director of another
corporation, partnership, joint venture, trust or other
enterprise and whether or not such action is by or in the right
of the Corporation or such other corporation, partnership, joint
venture, trust or other enterprise with respect to which the
Indemnitee serves or has served.
2.2 The Corporation agrees that it will never institute any action or
suit at law or in equity against Indemnitee, nor institute,
prosecute, or in any way aid in the institution or prosecution of
any claim, demand, action, or cause of action for damages, costs,
loss of services, expenses, or compensation for or on account of
any damage, loss or injury either to person or property, or both,
whether developed or undeveloped, resulting or to result, known
or unknown, past,, present, or future, arising out of
Indemnitiees' services to the Corporation.
3. Successful Defense; Burden of Proof; Settlement; No Presumption.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful or unsuccessful on the merits in defense of any
action, suit or proceeding or in defense of any issue or matter therein,
including, without limitation, dismissal without prejudice, Indemnitee shall be
indemnified against any and all expenses (including attorney fees), judgments,
fines, taxes, penalties and amounts paid in settlement with respect to such
action, suit or proceeding.
3.1 Indemnitee shall be presumed to be entitled to indemnification
for any act or omission covered under this Agreement. The burden
of proof of establishing that Indemnitee is not entitled to
indemnification because of the failure to fulfill some
requirement of Federal or Florida Law, the Corporation's Articles
of Incorporation or By-Laws or this Agreement shall be on the
Corporation.
3.2 The Corporation shall not settle any action or claim in any
manner which would impose any penalty or limitation on Indemnitee
without Indemnitee's prior written consent. Indemnitee shall not
unreasonably withhold consent to any proposed settlement.
3.3 For purposes of this Agreement, the termination of any action,
suit or proceeding, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea or nolo
contendere, or its equivalent, shall not create a presumption
that Indemnitee does not meet any particular standard of conduct
or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law or this
Agreement
4. Notice by Indemnitee. Indemnitee shall notify the Corporation in writing of
any matter with respect to which Indemnitee intends to seek indemnification
hereunder as soon as reasonably practicable following the receipt by Indemnitee
<PAGE>
of written threat thereof; provided, however, that failure to so notify the
Corporation shall not constitute a waiver by Indemnitee of his or her rights
hereunder.
5. Advancement of Expenses. In the event of any action, suit or proceeding
against Indemnitee which may give rise to a right of indemnification from the
Corporation pursuant to this Agreement, following written request to the
Corporation by Indemnitee, the Corporation shall advance to the Indemnitee
amounts to cover expenses (including attorney fees) incurred by Indemnitee in
defending any such action, suit or proceeding in advance of the final
disposition thereof upon receipt of reasonably satisfactory evidence as to the
amount of such expenses. Indemnitee's written certification together with a copy
of any expense statement paid or to be paid by Indemnitee shall constitute
satisfactory evidence as to the amount of expenses.
6. Non-Exclusivity of Right of Indemnification. The indemnification rights
granted to Indemnitee under this Agreement shall not be deemed exclusive of, or
in limitation of, any other rights to which Indemnitee may be entitled under
Florida or Federal Law, the Corporation's articles of incorporation or by-laws,
any other agreement, any vote of shareholders or Directors or otherwise. To the
extent Florida or Federal law, the Corporation's articles of incorporation or
by-laws or other applicable law, as in effect on the date hereof or at any time
in the future, permit greater indemnification than is provided for in this
Agreement, Indemnitee shall enjoy such greater benefits so afforded, and this
agreement shall be deemed amended without any further action by the Corporation
or Indemnitee to grant such greater benefits. Indemnitee shall be entitled, in
the sole discretion of Indemnitee, to elect to have Indemnitees' rights
hereunder interpreted on the basis of applicable law in effect at the time of
execution of this Agreement, at the time of the occurrence of the indemnifiable
event giving rise to a claim or at the time indemnification is sought.
7. Termination of Agreement and Survival of Right of Indemnification. Subject to
Section 7.1, this Agreement shall terminate when Indemnitee's services to the
Corporation as Officer and/or Director end.
7.1 The rights granted to Indemnitee hereunder shall continue after
termination and shall inure to the benefit of Indemnitee, his or
her heirs, personal representatives and assigns, and this
Agreement shall be binding upon the Corporation and its
successors and assigns.
8. Mediation and Arbitration. Any disputes arising hereunder which the parties
cannot resolve between themselves using good faith shall be referred to a court
certified mediator of the circuit Court in the County of the principal office of
the Corporation, and any mediation and or arbitration shall be held in the
County of the principal office of the Corporation, and shall be the exclusive
legal remedies of the parties. The parties shall share equally in the cost of
said mediation. In the event that said dispute is not resolved in mediation, the
parties shall submit the dispute to an arbitrator certified by the Circuit Court
in the County of the principal office of the Corporation. The decision of the
arbitrator shall be final and binding. Judgment upon the award may be entered in
any court of competent jurisdiction pursuant to Florida Statutes Chapter 682, as
amended, The Arbitration Code.
<PAGE>
9. Interpretation of Agreement. The parties acknowledge that this Agreement is
the product of mutual efforts by the parties and their respective agents. This
Agreement shall be interpreted neither more favorable in favor of one party, nor
less favorably in favor of another party.
10. Entire Agreement. This Agreement constitutes the entire understanding of the
parties and supersedes all prior discussions, negotiations, and understandings,
whether oral or written, with respect to its subject matter.
11. Modification. No change or modification of this Agreement shall be valid
unless it is in writing and signed by all the parties who are bound by the terms
of this Agreement.
12. Attorneys' fees; Costs. In any mediation, arbitration or litigation arising
out of this Agreement, the prevailing party in such litigation shall be entitled
to recover reasonable attorneys' fees and costs at both the trial and appellate
levels.
13. Severability. If any provision of this Agreement is held invalid,
unenforceable, or void by a court of competent jurisdiction, this Agreement
shall be consider3ed divisible as to such provision, and the remainder of the
Agreement shall be valid and binding as though such provision were not included
in this Agreement.
14. Authorization. The Corporation is authorized to enter into this Agreement by
virtue of a resolution adopted as a meeting of Directors held the 20 August
1997.
15. Benefits; Binding Effects. This Agreement shall be binding upon and shall
operate for the benefit of the parties hereto and their respective heirs,
personal representative, administrators, successors, and assigns.
16. Venue and Jurisdiction. Should a lawsuit be necessary to enforce this
Agreement the parties agree that jurisdiction and venue are waived and suit
shall be brought in the county of the principal office of the Corporation.
17. Notices. All notices, offers, acceptances and other communications provided
for in this Agreement shall be deemed delivered if sent in writing and delivered
either personally or by certified mail to the Corporation at its principal
office, or to the Indemnitee's address appearing on the records of the
Corporation, or to such other address as may be designated in writing by the
Corporation or the Indemnitee.
18. No-Waivers. The waiver by any party of any other party's breach of any
provision of this Agreement shall not operate nor be construed as a waiver of
any subsequent breach, and the waiver by any party to exercise any right or
remedy shall not operate nor be construed as a waiver or bar to the exercise of
such right or remedy upon the occurrence of any subsequent breach.
19. Headings. Headings in this Agreement are for convenience only and shall not
be used to interpret or construe its provisions.
<PAGE>
20. Governing Law. This Agreement shall be governed by the laws of the State of
Florida (without regard to the laws that might be applicable under principles of
conflicts of law) as to all matters, including, but not limited to, matters of
validity, construction, effect and performance.
21. Counterparts. This Agreement may be executed in two or more parts, each of
which shall be deemed an original but all of which together shall be one and the
same instrument.
22. Facsimile Copy. A facsimile copy of this Agreement and any signatures
affixed hereto shall be considered for all purposes as originals.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above stated.
/s/ Murray Ginsberg
---------------------
GINSITE MATERIALS, INC.
By: /s/ Murray Ginsberg
--------------------------
Murray Ginsberg, President
Exhibit 10.6
AGREEMENT
IT IS HEREBY AGREED, THAT GINSITE MATERIALS, INC. WILL PAY THE SUM OF 20%
COMMISSION ON ALL SALES GENERATED FROM THE INTERNET FOR THE PERIOD OF ONE YEAR
FROM THE DATE OF THE FIRST SALE, AND A 10% COMMISSION STARTING THE DAY AFTER THE
FIRST YEAR EXPIRATION AND CONTINUING FOR ONE YEAR. THE SUM OF THE MONTHLY
COMMISSION DUE SHALL BE CALCULATED AT THE END OF THE CALENDAR MONTH AND PAID NO
LATER THAN THE 7TH OF THE FOLLOWING MONTH. THE SUM OF THE COMMISSION PAYABLE
SHALL BE SPLIT IN EQUAL PAYMENTS AND PAID TO WAYNE A. DOSS, ###-##-####, AT 1021
CREEKFORD DRIVE, FT. LAUDERDALE, FL 33326; AND COMPUSOURCE. THE COMMISSION
PAYABLE SHALL BE CONSIDERED PAYMENT IN FULL FOR ALL DEVELOPMENT COST ASSOCIATED
WITH THE INTRANET, INCLUDING THE PROGRAMMING AND MARKETING EFFORTS. AT THE END
OF THE COMMISSION PERIOD, GINSITE MATERIALS, INC. SHALL OWN FULL AND CLEAR, ANY
ASSET VALUE OF SAID INTERNET, INCLUDING ANY ENHANCEMENTS DURING THE COMMISSION
PERIOD. IN THE EVENT OF CHANGE IN OWNERSHIP OF GINSITE MATERIALS INC., THIS
CONTRACT SHALL BE ENFORCED UNDER FLORIDA LAW IN THE EVENT OF ANY DISPUTES. THE
TERMS OF THE CONTRACT SHALL BE ASSIGNED TO THE NEW OWNER IN THE EVENT OF SALE,
OR MAY BE BOUGHT OUT UNDER TERNS ACCEPTABLE TO BOTH PARTIES.
WE FURTHER AGREE, THAT GINSITE MATERIALS INC. SHALL PAY THE SUM OF 10% ON THE
NON-INTERNET SALES THAT ARE THE DIRECT RESULT OF WAYNE A. DOSS, (including sales
from internet communications not booked on the Internet, direct mail, email,
phone, accounts brought directly to the company, previous contacts that did not
purchase but do so now from his contact). THESE SALES CONSTITUTE BOTH INDIVIDUAL
ORDERS AND REPEAT CORPORATE CUSTOMERS. THIS COMMISSION SHALL BE PAID UNDER THE
SAME PAYMENT TERMS AS ABOVE, EXCEPT ALL COMMISSION PAYABLE WILL BE PAID TO WAYNE
A. DOSS. THE TERM OF REPEAT CUSTOMERS SHALL RUN FOR NOT MORE THAN TWO (2) YEARS
FROM THE DATE OF THE FIRST SALE. AT THE END OF THE COMMISSION PERIOD (2 YEARS)
GINSITE WILL HAVE THE RIGHT TO CONVERT THESE ACCOUNTS TO THE STATUS OF A HOUSE
ACCOUNT AND NOT FURTHER COMMISSION SHALL BE PAYABLE OR DUE WAYNE A. DOSS.
IF DURING THE EFFORTS OF DEVELOPING MARKETS AND MARKET SHARE FOR GINSITE OR
REPRESENTING GINSITE ANY CAPACITY, THESE EFFORTS OF WAYNE A. DOSS SHOULD PRODUCE
A BUYER FOR THE COMPANY OR PRODUCT LINE, HE SHALL BE COMPENSATED AT A RATE OF 5%
OF THE PURCHASE PRICE. THE PAYMENT SHALL BECOME DUE AND PAYABLE AT THE TIME SUCH
SALE IS CONSIDERED COMPLETE OR TRANSFER OF OWNERSHIP OCCURS.
IN CONSIDERATION OF THIS AGREEMENT WAYNE A. DOSS SHALL SIGN A CONFIDENTIALITY
AGREEMENT AND FURTHER AGREE TO PROTECT THE INTEREST
<PAGE>
OF GINSITE MATERIALS, INC. AT ALL TIMES. WAYNE A DOSS SHALL KEEP GINSITE
INFORMED OF HIS EFFORTS AND GIVE ADVANCE NOTICE WHEN HIS EFFORTS COULD PRODUCE
MAJOR IMPACT ON THE COMPANY. TRAVELING TO DEVELOP AND SERVE THE BEST INTEREST OF
GINSITE MATERIALS, INC. SHALL BE COMMUNICATED AND APPROVED IF THAT TRAVEL IS
EXPECTED TO BE REIMBURSED.
/s/ M. Ginsburg, Pres. /s/ Wayne A. Doss
- --------------------- --------------------
GINSITE WAYNE A. DOSS
4/15/99
Exhibit 10.7
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALES AGREEMENT is make and entered into as of the 26th
Day of August, 1998, by and between GINSITE MATERIALS, INC., a Florida
Corporation headquarters at 6781 W. Sunrise Blvd., Plantation, Florida 33313
(Seller) and ECO MARINE MATERIALS, INC., headquartered at 4248 Okeechobee Blvd.,
West Palm Beach, Florida 33409 (Buyer).
RECITALS:
A. Seller is in the business of manufacturing and supplying, among other
things, Ginsite for use in the construction and marine industries.
B. Seller produces a type of coating material it currently markets under
the label Ginsite.
C. Buyer is also in the business of manufacturing and supplying certain
products for use in the construction and marine industries.
D. Buyer has developed specific applications as set forth on Exhibit A
attached hereto (the Foam Marine Application) which is not currently covered by
Seller's marketing and sales efforts.
E. Buyer desires, under the terms and conditions of this Agreement, to (i)
purchase Ginsite Marine Formula under the label Ginsite (the Product), (ii)
repackage the Product under the Buyer's own label and market it in both domestic
and foreign markets for use in composite Foam Marine Applications, and (iii) use
the product in the manufacture of two (2) products to be marketed under the
labels ECO Marine Resin A and ECO Marine Resin B, the ECO Marine Materials, Inc.
new Relabeled Product.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Sale of product: Marketing Restrictions.
(A) Except as otherwise provided herein, Seller agrees to sell
to Buyer, and Buyer agrees to purchase from Seller, Ginsite Marine Formula.
Buyer or its agents will repackage Ginsite under the Buyer's label (the
Relabeled product), and Buyer will use the Product to manufacture the Foam
Marine Product. Buyer or its agents will market and sell the Relabeled Product
in both foreign and domestic markets for use only in the Foam Marine
Applications. Buyer or its agents will not promote or market the Relabeled
Product for use in any application or manner covered by Seller's marketing or
sales efforts, including but not limited to, the specific applications set forth
on Exhibit B attached hereto.
(B) Seller agrees that it will not develop or promote in any
foreign or domestic market products designed or intended to compete with the
Foram Marine Application nor will it market or sell the Foam Marine Application
<PAGE>
product to persons or entities other than the Buyer. Notwithstanding anything to
the contrary herein, this Agreement shall not limit in any manner the ability of
Seller to manufacture, market and sell Ginsite Marine Formula to any other
persons or entities for use in applications other than the Foam Marine
Application. (C) Buyer is requested to maintain adequate insurance to cover the
new labled product liability; or otherwise. Buyer is subject to inspections by
the Seller to insure product integrity and quality control.
2. Quantity Requirements:
Buyer shall place an initial order of fifty (50) gallons of
Ginsite Marine Formula upon execution of this Agreement and within the first
year a minimum order of five thousand (5,000) gallons. The Buyer shall order a
minimum of three thousand (3,000) gallons of the Ginsite Marine Formula per
month the second year. There will be a six month review of the monthly
performance at which time this amount may be adjusted accordingly. Buyer is
required to perform in accordance with this agreed schedule which may only be
adjusted upon approval by the Seller.
3. Purchase Price.
The purchase price (the Purchase Price) for Ginsite Marine
Formula sold during the first six months of the term of this Agreement shall be
set forth on Exhibit C attached hereto. The Seller may increase the Purchase
Price during each subsequent six month period of the term of this Agreement
based on (i) the increase in price to Seller of the raw materials required to
manufacture Ginsite Marine Formula or on (ii) increased container costs. In no
event, however, shall any such increase in the Purchase price exceed ten percent
(10%) of the Purchase Price during the preceding year. Seller shall notify the
Buyer in writing ninety (90) days in advance of any such price increase.
4. Payment and Delivery:
For all orders for Ginsite Marine Formula payment shall be
according to the following schedule:
A. Fifty percent (50%) of total invoice with order
B. Twenty-five percent (25%) of total invoice upon delivery by
the Seller C. The balance of any invoice shall be due within
thirty (30) days form delivery by Seller
All sales will be on a Cash with Order basis until a credit line is established
for the Buyer. The Seller reserves the right to revoke any credit extended at
the Seller's sole discretion. In addition, in the event (i) that one or more
payment is past due, (ii) of the institution by or against Buyer of proceedings
under any bankruptcy, insolvency, reorganization or similar laws, or (iii)
Seller otherwise3 deems itself insecure, then Seller may elect to ship only a
prepayment basis or take other measures to ensure prompt payment. Invoices not
paid within thirty (30) days of the invoice date will have one and one-half
percent (1-1/2) per month finance charge assessed against the unpaid balance
from the date of the invoice until the date of payment.
5. Shipment:
All shipments of Ginsite Marine Formula shall be made FOB the
Seller's manufacturing plant and liability for loss or damage in transit, or
thereafter, shall pass to the Buyer upon Seller's delivery of Ginsite Marine
Formula to a common carrier for shipment. The Buyer shall bear all costs of
<PAGE>
transportation and insurance.
6. Inspection by Buyer:
Buyer shall test each shipment of Ginsite Marine Formula within
one (i) Week of delivery to assure that the material meets the specifications
and quality standards set forth on Exhibit D attached hereto (the
Specifications). Seller agrees that it will maintain strict process and quality
control standards, and its records related to such standards will be made
available to the Buyer in the event of a quality dispute upon the request of the
Buyer.
7. Warranty:
Seller offers a LIMITED WARRANTY on its product Ginsite Marine
Formula as per Exhibit D attached hereto.
8. Indemnification:
The Buyer agrees to hold the Seller free and harmless from any
and all claims, damages, and expenses of every kind or nature whatsoever (a)
arising from act of the Buyer; (b) as a direct or indirect consequence of
termination of this Agreement in accordance with its terms; or (c) arising from
acts of third parties in relation to the sale of Ginsite Marine Formula to the
Buyer under this Agreement, including, but not limited to execution of liens and
security interests by third parties with respect to any such products.
9. Confidentiality:
(A) During the term of this Agreement, Buyer agrees not to
disclose or cause to be disclosed to any third party the know-how or other trade
secrets of proprietary information in manufacturing Ginsite Marine Formula that
is not generally known to Seller's competitors (all such information provided to
Buyer is hereinafter collectively referred to as "Seller Confidential
Information". Seller Confidential Information shall not include any information
that the Seller has voluntary disclosed to the public, or that has been
independently developed by others, or that otherwise enters the public domain
through lawful means. The Seller Confidential Information constitutes
confidential and privileged information which is the property of the Seller.
Buyer covenants, during the term of this Agreement, and such two year (2) period
following the termination of this Agreement that such Seller Confidential
Information remains confidential, not to publish or disclose any Seller
Confidential Information without prior written consent of Seller, which consent
may be freely granted or withheld. Buyer agrees that the Seller Confidential
Information shall be used solely by Buyer in connection with the obligation
hereunder and for no other purpose.
(B) During the term of this Agreement, Seller agrees not to
disclose or cause to be disclosed to any third party the applications that Buyer
has developed for the Foam Marine Application that is not generally known to
Buyer's competitors (all such information provided to Seller is hereinafter
collectively referred to as Buyer Confidential Information. Buyer Confidential
Information shall not include any information that Buyer has voluntarily
disclosed to the public, or that has been independently developed and disclosed
by others, or that otherwise enters the public domain through lawful means. The
Buyer Confidential Information constitutes confidential and privileged
information which is the property of the Buyer. Seller covenants, during the
term of this Agreement, and such two year (2) period following the termination
of this Agreement that such Buyer Confidential Information without prior written
<PAGE>
consent of Buyer, which consent may be freely granted or withheld. Seller agrees
that the Buyer Confidential Information shall be used solely by Buyer in
connection with the obligations hereunder and for no other purpose.
10. Intellectual Property:
Buyer acknowledges and agrees that all proprietary rights in
Ginsite Marine Formula and the process for manufacturing said product are and
shall remain at all times with the Seller. Buyer further acknowledges and agrees
that nothing in this Agreement creates in or gives to Buyer any right or license
whatsoever in or to any proprietary rights or information of Seller except the
right to offer Relabeled Product for sale and to use Ginsite Marine Formula in
accordance with this Agreement.
11. Relationship of the Parties:
This Agreement does not create a relationship of principal or
agent, master and servant, employer and employee, or franchisor and franchisee
between the employer and employee between the parties, and the parties are not
joint venturers or partners of each other. Buyer and Seller agree that neither
party is authorized to make any arrangement, contract or representation on
behalf of the other, or to create any obligation, either express or implied, on
behalf of the other
12. Law and Jurisdiction:
This Agreement shall be governed by the internal laws of the
State of Florida, without regard for choice of law considerations.
13. Successors and Assigns:
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors, transferces and assigns,
whether by merger, consolidation or otherwise, as well as associated and allied
companies of the parties.
14. Waiver/Breach:
The waiver or breach of any term or condition of this Agreement
shall not be deemed to constitute the continuing waiver of the same or any other
term or condition. The breaching party shall be liable to the other party for
all costs, including reasonable attorney's fees, of enforcing any provision of
this Agreement.
15. Notices:
Any notice or communication required or permitted hereunder
(other than Administrative Notice) shall be in writing and shall be sent by
certified mail, return receipt requested, postage prepaid and addressed to the
addresses set forth below or to such changed address as any party entitled to
notice shall have communicated in writing to the other party. Notices and
communications to the Seller shall be sent to:
GINSITE MATERIALS, INC.
6781 WEST SUNRISE BLVD.
PLANTATION, FL 33313
<PAGE>
Any notice and communications to the Buyer shall be sent to:
ECO MARINE MATERIAL, INC.
4248 OKEECHOBEE BLVD.
WEST PALM BEACH 33409
16. Term:
the initial term of this Agreement shall commence on the date set
forth above and subject to the provision of Paragraph 17 hereof, shall continue
in effect for a period of one year. Thereafter, the term of this Agreement shall
automatically renew for additional terms of one (1) year, unless Buyer provides
Seller with written notice of its decision not to renew this Agreement not less
than sixty (60) days prior to the expiration rate.
17. Right to Terminate:
(A) Either party may terminate this Agreement upon thirty (30)
days written notice to the other party in the event the Buyer ceases to use
Ginsite Marine Formula for the benefit of its customers in the ordinary course
of its business.
(B) If at any time during the term of this Agreement either party
breaches or defaults under the terms of this Agreement and such breach or
default continues unremedied for more that thirty (30) days after written notice
thereof is delivered to the b reaching or defaulting party by the other party,
then such other party may terminate this Agreement by giving written notice to
the breaching or defaulting party.
(C) If at any time during the term of this Agreement (i) either
party admits an inability to pay its debts, (ii) either party ceases to function
as a going concern, (iii) either party ceases to conduct its operations in the
ordinary course of business, (iv) a receiver for either party is appointed, or
(v) either party otherwise takes advantages of any insolvency, bankruptcy,
moratorium or similar laws or an involuntary proceeding under any such laws is
initiated against either party and such involuntary proceeding is not dismissed
within ninety (90) days after it is initiated, then the other party may
terminate this Agreement by giving written notice thereof to the party with
respect to which any such event has occurred.
(D) If at any time during the term of this Agreement the
performance of this Agreement by either party is delayed by a force majeure
event described in paragraph 20 hereof for a period of longer than one hundred
twenty (120) days, the other party may terminate this Agreement by giving
written notice thereof to the party whose performance has been delayed.
18. Effect of Termination:
Upon any termination or expiration of this Agreement, all of the
rights and obligations of the parties hereunder shall end immediately, except
that the provisions of this Agreement shall continue to apply with respect to
(1) all product purchased and sold pursuant to the provisions hereof, and (2)
all provisions herein relating to confidentiality.
19. Mediation; Arbitration:
If a dispute arises out of or relates to this Agreement, or the
breach thereof, and if such dispute cannot be settled through negotiation, the
parties agree first to try in good faith to settle the dispute by mediation
under the Commercial Mediation Rules of the American Arbitration Association,
before resorting to arbitration, litigation, or some other dispute resolution
procedure. In the event such mediation does not result in a suitable resolution
of such dispute then any controversy, claim or cause of action arising out of or
<PAGE>
relating to this Agreement, shall be settled by binding arbitration by three (3)
arbitrators in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitrators shall have power to grant equitable remedies in addition to imposing
monetary damages. The arbitration shall include (I) a provision that the
prevailing party in such arbitration shall recover its costs of the arbitration
and reasonable attorneys' fees from the other party, and (ii) the amount of such
costs and fees. Any such mediation or arbitration shall be held in the State of
Florida. Any cause of action arising out of or related to this Agreement not
submitted to arbitration within three (3) years after such cause of action has
accrued shall be deemed barred, notwithstanding any longer statue of limitations
period available at law.
20. Force Majeure:
No party hereto shall be liable for delay or failure to perform
any obligations hereunder (other than the payment of money) if such delay or
failure arises out of causes beyond its reasonable control and without its fault
or negligence, including, but not limited to, labor disputes and strikes, wars,
riots, insurrection, piracy, and civil commotion, federal, state or municipal
action, statute, ordinance, regulations, rule or order, fire, earthquake, floods
or other unusually severe weather, accidents, nuclear radiation, embargoes,
epidemics, shortages of power or any act of God. Any party seeking excuse for
delay or failure to perform on the basis of this provision shall promptly notify
the other party hereto upon learning of any event which may result in any delay
or failure to perform. In addition, the affected party shall make every effort
to eliminate and/or correct the effect of such condition or event as completely
and rapidly as is reasonably possible. In such case, the time of delivery or
performance shall be deferred until force majeure event as provided in this
paragraph.
21. Severability:
Any provision of this Agreement which is invalid, prohibited or
unenforceable in any jurisdiction shall, s to such jurisdiction, be ineffective
to the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such invalidity,
prohibition or unenforceability in any such jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
22. Paragraph Headings:
All paragraph headings contained herein are for convenience or
reference only and are not intended to define or limit the scope of any
provision of this Agreement.
23. Entire Agreement:
This Agreement contains the final, complete and exclusive
statement of the agreement between the parties with respect to the transactions
contemplated herein and all prior written agreements and all prior and
contemporaneous oral agreements with respect to the subject matter hereof are
merged within. This Agreement may not be amended, supplemented or modified (or
any right or power granted hereunder waived) except by a written instrument
signed by the parties hereto.
24. Counterparts:
This Agreement may be executed in two or more counterparts, each
<PAGE>
of which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
25. Authority:
Seller and Buyer each represent and warrant to the other that is
has the power and authority to enter into this Agreement and that the execution
of this Agreement and the performance of its obligations and duties hereunder
does not and will not constitute a breach or violation of its organizational
documents or bylaws or a violation of any agreement, instrument, order,
judgment, law, rule or decree by which it is bound or to which it or its assets
are subject.
26. Applicable Law:
This Agreement shall be construed and performed in accordance
with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties have executed this Agreement.
ATTEST: GINSITE MATERIALS, INC.
/S/ H.V. Lione By /s/ Murray Ginsberg
- --------------- ---------------------------
ATTEST: ECO MARINE MATERIALS, INC.
/S/ H.V. Lione By /s/ Steve Hammond
- -------------- ---------------------------
President
<PAGE>
EXHIBIT A
FOAM MARINE APPLICATION:
PRODUCT NAME USE MARKETS PACKAGING
ECO Marine Resin A+B Styrene & urethane Marine Industry One (1) Gallon
Foam Coating Five (5) Gallon
ECO Marine Resin Bulk Manufacturing Marine Industry 55 Gallon Drums
3,000 Gallon bulk
- --------------------------------------------------------------------------------
Eco Marine Resin A+B Use as styrene and/or urethane coating or bonding agent
in Field application
ECO Marine Resin Bulk Use as styrene and/or
urethane coating or bonding agent for Making
panels, blocks and ancillary items
manufactured
- --------------------------------------------------------------------------------
Foam Marine Application is the application of Ginsite under a new product label:
ECO Marine Resin A+B/bulk - a new light weight, high strength composite
construction material - to newly designed boats manufactured by ECO Marine
Materials, Inc. and other products so listed:
Styrene foam logs and shapes Metal extrusions Floating docks Platform
Barges Starship Marine (newly designed boats) Sea wall components
<PAGE>
EXHIBIT B
GINSITE MATERIALS INC.
The following applications are currently recommended and marketed by
Ginsite Materials, Inc.:
Construction Industry:
Ginsite seals: Exterior Walls
Roofs: Flat
Cement barrel roof tiles
Asphalt tiles
Pool decks
Poles
Sidewalks
Stepping Stones
Pavers
Walkways
Drywall/gypsum
Floor tiles
Masonry coating
Cement block
Masonry repairs
Cement
Wood coating
Styrfoam
Marine Industry:
Boats
Fiber Glass
Aluminum hulls
Steel hulls
Wooden
Bouys
Docks
Decks
<PAGE>
EXHIBIT C
<TABLE>
<CAPTION>
PRICING:
The following pricing will remain in effect for six (6) months from the
date of this Agreement. All pricing is subject to change as outlined in the
terms of this Agreement
<S> <C> <C>
Product: Ginsite Marine Formula
Packaging: Five (5) Gallon container Five (5) Gallon container
Mfg. Location 6781 W. Sunrise Blvd. 6781 W. Sunrise Blvd.
Plantation, Florida 33313 Plantation, Florida 33313
Minimum order: Per Agreement Per Agreement
FOB Prices: Gallons Price Gallons Price
1 to 50,000 $22.00 1 to 10,000 $42.00
50,001 to 100,000 21.00 10,000 plus 40.00
100,001 to 500,000 20.00
500,001 to 1 million+ 18.00
</TABLE>
<PAGE>
EXHIBIT D
To be supplied by Seller
Exhibit 10.8A
Consulting Agreement
THIS CONSULTING AGREEMENT ("Agreement") is entered into this 1st day of
December 1998 by ad between Ginsite Materials, Inc. (NASDAQ BB: GSIT) a Florida
corporation ("The Company:), and Intercontinental Capital Corp. ("Consultant") a
Georgia corporation.
RECITALS
A. Consultant, through the expenditure of considerable money, time and
effort, has created and developed, and is continuing to improve an efficient
system for providing financial services (The "Services") to private and public
companies.
B. The Company desires to obtain the assistance of Consultant, and
Consultant is willing to provide such assistance, with respect to the Services.
Now, Therefore, in consideration of the mutual covenants and promises contained
herein, the sufficiency of which is hereby acknowledged by each of the parties.
The Company and Consultant hereby agrees as follows:
1. Appointment as Consultant / Scope of Services. The Company hereby engages
Consultant as a consultant in connection with the Services. Consultant hereby
agrees to perform such consulting services upon the terms and conditions
hereinafter set forth. Consultant shall have an exclusive right to perform such
services agreed upon regarding the placement of common shares of GSIT.
2. Term. This Agreement shall be initially for a period of Three (3) months, and
is subject to continued acceptable performance as determined by the Company. The
Company reserves the right to cancel this agreement if Consultants performance
is not acceptable at the sole discretion of the Company. Any additional closings
or advances made between the parties introduced through this agreement for a
period of One (1) year form this date shall provide for the same terms and
conditions regarding compensation as identified in section 4 of this agreement.
At the conclusion of 1 year from the signing of this agreement no additional
payments will be made to the Consultant unless a new agreement is entered into.
3. Services of the Consultant. (A) Consultant agrees that during the term of
this agreement, unless this agreement is sooner terminated pursuant to its
terms, consultant shall perform the Services, including more specifically those
services described in Schedule (A) attached hereto and incorporated herein by
reference (collectively "The Services"). The parties agree that the work
performed by Consultant will be governed by the general terms and conditions of
this agreement, which will be controlling. (B) The services performed by
Consultant may be performed at days and times, and in the order and sequence as
consultant deems desirable
Note: Per Eugene Ladin, CFO, contract was not renewed after 3 month period due
to non- performance by Intercont'l. /s/CMH 3/3/99
<PAGE>
4. Compensation. As compensation for Consultant's services as a consultant
pursuant hereto, the Company agrees to: Pay consultant for its services (a
"Closing") for any purchaser/Securities firm etc. it identified and that is
acceptable to GSIT/Seller a fee equal to 5.0% of the gross proceeds. Company
further authorized the payment of the cash portion of this agreement to be
deducted from the gross proceeds at closing and paid per Consultant's wire
instructions from either the Seller or from the Company.
5. Expenses. Consultant shall be responsible for any and all of its expenses
incurred in connection with the performance of the services.
6. Arbitration. The parties shall resolve any disputes arising hereunder before
a panel of three arbitrators selected to pursuant to and run in accordance with
the rules of the American Arbitration Association. The arbitration shall be held
in Miami. Each party shall bear their own attorney's fees and costs of such
arbitration. Disputes under this agreement as well all of the terms and
conditions of this Agreement shall be governed in accordance with and by the
laws of the State of Florida (without regard to its conflicts of law
principles). The successful party in the arbitration proceedings shall be
entitled to seek an award of reasonable attorney's fee's from the Arbitrators.
7. Obligations of the Company. The Company hereby agrees to cooperate with the
Consultant and to provide Consultant with access to all information reasonably
requested by Consultant related to the services.
8. Representations and Warranties of the Consultant. Consultant hereby
represents and warrants as of the date hereof each of the following: (a)
Consultant has the requisite power and authority to enter into this agreement
and to carry out its obligations hereunder. The execution and delivery of this
agreement by Consultant and the consummation by Consultant of the transactions
contemplated hereby have been duly authorized by Consultant, and no other action
on the part of the Consultant is necessary to authorize this agreement and such
transaction.
9. Representations and Warranties of the Company. Company hereby represents and
warrants as of the date hereof each of the following: (a) The Company has the
requisite corporate power and authority to enter into the agreement and to carry
out its obligations hereunder. The execution and delivery of this agreement by
the Company and the consummation by Company of the transactions contemplated
hereby have been duly authorized by the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this agreement
and such transaction.
I. The Consultants services shall include but not be limited to the following:
a. Consultant shall act generally as an adviser to the Company with
respect to potential investors introduced to the Company by the Consultant.
b. As the Company shall request or direct, Consultant shall assist in
establishing and advising the Company with respect to meetings with members of
the financial community, both in the United States and foreign.
<PAGE>
II. The Parties recognize that certain responsibilities and obligations are
imposed by both US and foreign securities laws as well as by the applicable
rules and regulations of the NASDAQ, in-house "due diligence" or "compliance"
departments of Brokerage houses, etc. Accordingly Consultant agrees to the
following limitations on services:
1. Consultant shall NOT release any financial or other information or
data about the Company without the consent and approval of the Company.
2. Consultant shall NOT conduct any meeting with financial analyst
without informing the Company in advance of the proposed meeting and the format
or agenda of such meeting and the Company may elect to have a representative of
the Company attend such meeting.
3. Consultant shall NOT release and information of data about the
Company to any selected or limited person(s) entity, or group if Consultant is
aware that such such information of data has been generally released or
promulgated.
4. Consultant shall NOT take any action or advise or knowingly permit
the Company to take any actions, which would violate any foreign securities laws
or rules and regulations issued thereunder.
III. It is understood that this agreement is reciprocal between the signatories
concerning their privileged information and contracts, including but not limited
to the covenants, terms and conditions contained therein.
IV. The signatories of this document agree that no effort shall be made to
circumvent this agreement or the agreed terms thereof in an effort to gain fees,
commissions, remunerations or considerations to the benefit of one or more of
the signatories of this document, while excluding equal or agreed benefit to any
other signatories of this document.
10. Notices. Any notice of communication to be given under the terms of this
agreement shall be in writing and delivered in person or deposited certified or
registered, in the United States mail, postage prepaid, addressed as follows:
If to Consultant: Intercontinental Capital Corp.
Att: Gerald Alexander
8351 Roswell Rd. #239
Atlanta, Ga. 30350 770-551-9570 fx: 551-9503
If to the Company: Ginsite Materials, Inc.
Att: Mr. Eugene Ladin, CFO
6781 West Sunrise Blvd.
Plantation, Fl. 33313 954-321-9616 fx: 321-9667
11. Entire Agreement. This agreement constitutes and embodies the full and
complete understanding and agreement of the Parties hereto with respect to the
subject matter hereof and
<PAGE>
supersedes all prior understandings whether oral or in writing and may not be
modified except by writing signed by the Parties hereto.
IN WITNESS WHEREOF, this Consulting Agreement has been executed as of the day
and year first written below.
Company: Ginsite Materials, Inc.
By: /s/ Eugene Ladin date: Dec. 1, 1998
--------------------------
Eugene Ladin, CFO
Consultant: Intercontinental Capital Corp.
By: /s/ Gerald Alexander Date: December 1, 1998
- ----------------------------
Gerald Alexander, President
8351 Roswell Rd #329, Atlanta, Ga. 30350 770-551-9570 fx 9503
Exhibit 10.8B
Monetary Advancement Int'l., Inc.
International Banking Investment Services Tel (212) 732-3400
Fax (212) 406-9266
Consulting Agreement
THIS FINANCIAL PUBLIC CONSULTING AGREEMENT, made this 3rd day of
February, 1999 by and between Monetary Advancement International, Inc.
(Herein after referred to as CONSULTANT) located at 120 Broadway, 28th
Floor, New York, New York 10271 and Ginsite Materials, inc. (Herein
after referred to as COMPANY), located 6781 W. Sunrise Blvd.,
Plantation, Florida 33313.
WITNESSETH THAT:
WHEREAS, the COMPANY requires media and other public relations services
and desires to employ CONSULTANT to provide such services as an
independent contractor, consultant, and CONSULTANT is agreeable to such
employment, and the parties desire a written document formalizing and
defining their relation and evidencing the terms of their agreement.
NOW, THEREFORE, intending to be legally bound, and in consideration of
the mutual promises and convenants, the parties have agreed as follows:
1) APPOINTMENT. The COMPANY hereby appoints CONSULTANT as its media and public
relations advisor and hereby retains and employs CONSULTANT on the terms
and conditions of this agreement. CONSULTANT accepts such appointment and
agrees to perform the services upon the terms and conditions of this
agreement.
2) TERM. The term of this agreement shall be three months from the date
hereof, plus an automatic renewal of three months, unless written notice
not to continue the service is received by the consultant 15 days before
expiration.
3) SERVICES.
A) CONSULTANT shall act, generally, as media and public relations
advisor, and it intends to provide the following services:
B) locate and introduce COMPANY to fund managers, buy-sides analysts and
____________________ retail and institution brokers;
C) introduce the COMPANY to the investment and other newsletter writers;
<PAGE>
D) arrange for "paid" promotional exposure in radio, television, and
print media on behalf of the COMPANY;
E) produce a feature story on COMPANY and publish same on Stock-Line.Com;
F) publish a feature story on COMPANY in Wall Street reporter Magazine or
a similar publication;
G) arrange for a quarterly CEO interview on Stock-Line.com, which will
also be published in Wall Street reporter Magazine or a similar
publication.
H) disseminate all corporate news announcements on Stock-Line.com and
Wall Street Reporter or a similar publication.
4. LIMITATION ON SERVICES. The parties recognize that certain responsibilities
and obligations are imposed by federal and state securities laws and by the
applicable rules and regulations stock exchanges. The National Association
of Securities Dealers, Inc., the in- house "due diligence" or "compliance"
departments of brokerage houses, etc. Accordingly,
CONSULTANT AGREES:
1. CONSULTANT shall NOT release any financial or other
information or data about the COMPANY without the prior
consent and approval of the COMPANY.
2. CONSULTANT shall NOT conduct meetings with analysts without
informing the COMPANY in advance of the proposed meeting and
the format or agenda of such meeting and the COMPANY may
elect to have a representative of the COMPANY attend at such
meeting.
3. CONSULTANT shall not release any information or data about
COMPANY to any selected or limited person(s), entity, or
group if CONSULTANT is aware that such information has not
been generally released or promulgated.
4. After notice by the COMPANY of filing of a proposed public
offering of securities of the COMPANY, and during any period
of restriction on publicity, CONSULTANT shall not engage in
any public relations efforts not in the normal course
without approval of counsel for the COMPANY and of counsel
for the Underwriter(s), if any.
5) DUTIES OF COMPANY.
(a) COMPANY shall supply CONSULTANT, on a regular and timely
basis, with all approved data and information about the
COMPANY, its management, its products, and its operations
<PAGE>
and COMPANY shall be responsible for advising CONSULTANT of
any facts which would affect the accuracy of any prior data
and information previously supplied to CONSULTANT so that
CONSULTANT may take corrective action.
(b) COMPANY shall promptly supply CONSULTANT with: copies of all
filings with all federal and state securities agencies; full
and complete copies of shareholder reports and
communications whether or not prepared with CONSULTANT's
assistance; all data and information supplied to any
financial community, and all produce/service brochures,
sales materials, etc.
(c) COMPANY shall promptly notify CONSULTANT of the filing of
any registration statement for the sale of securities and of
any other event that triggers of results in any restrictions
on publicity.
(d) COMPANY shall contemporaneously if any information or data
being supplied to CONSULTANT has not been generally released
or promulgated.
6) REPRESENTATION AND INDEMIFICATION
(a) The COMPANY shall be deemed to make a continuing
representation of the accuracy of any and all material
facts, material, information and data which it supplied to
CONSULTANT and the COMPANY acknowledges its awareness that
CONSULTANT will reply on such continuing representation in
disseminating such information and otherwise performing it's
public relation functions.
(b) CONSULTANT, in the absence of notice in writing from
COMPANY, will rely on the continuing accuracy of material,
information and data supplied by the COMPANY.
(c) COMPANY hereby agrees to indemnify CONSULTANT against, and
to hold CONSULTANT harmless from, any claims, CONSULTANT's
reliance upon the accuracy and continuing accuracy of such
facts, material, information and data, duties and
obligations hereunder.
7) COMPENSATION. The COMPANY agrees to pay 250,000 freely traded shares of
it's common stock at the time of signing this agreement.
8) RELATIONSHIP OF PARTIES. CONSULTANT is an independent contractor,
responsible for compensation of its agents employees and representatives,
as well as all applicable withholding therefrom and taxes thereon
(including unemployment compensation) and all workmen's compensation
insurance. This agreement does not establish any partnership, joint
venture, or other business entity or association between the parties and
neither party is intended to have any interest in the business or property
of the other. (i) TERMINATION. This agreement may not be terminated by
<PAGE>
either party prior to the expiration of the term provided in paragraph 2
above except as follows:
(a) Upon failure of the other party to cure a default under, or a breach
of, this agreement within ten days after written notice is given as to
such or breach by terminating party;
(b) Upon the bankruptcy or liquidation of the other party, whether
voluntary or involuntary;
(c) Upon the other party having or applying for a receiver appointed for
all a substantial part of such party's assets or business. Nothing in
this section preludes either party from terminating this agreement at
the end of each three-month period.
9) ATTORNEY'S FEES. Should either party default in the terms or conditions of
this agreement and suit be filed as result of such default, the prevailing
party shall be entitled to recover all costs incurred as a result of such
default all costs and reasonable attorney's fees, expense and court costs
through trial and appeal.
10) WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach by the other party.
1l) ASSIGNMENT. The rights and obligation of the parties under this agreement
shall inure to the benefit of, and shall be binding upon, the successors
and assigns of the parties.
12) NOTICES. Any notice required or permitted to be given under this agreement
shall be sufficient if in writing, and if sent by certified mail; return
receipt requested, to the principal office of the party being notified.
13) OTHER. Both parties to this agreement agree that signature sent by
facsimile transmission are legally binding.
14) ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties and may be modified only by agreement in writing, signed by the
party against whom enforcement of any waiver, change, modification,
extension or discharged is sought. This agreement shall be governed for all
purposes by the laws of the state of New York. If any provision of this
agreement shall be deemed unenforceable, such provision alone shall e
severed from this agreement, the remainder of which shall otherwise remain
in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be bound, have executed
this agreement, as of the date first written above.
Monetary Advancement Int'l, Inc.
By: /s/Raymond Burghard
------------------------
Raymond Burghard
President
Agreed to by:
/s/ Murray Ginsberg, Pres.
- --------------------------
Ginsite Materials, Inc.
6 month agreement /s/M.G.
Exhibit 10.8B.1
TERMINATION AND SETTLEMENT AGREEMENT
THIS TERMINATION AND SETTLEMENT AGREEMENT (the "Agreement") is made and
entered into as of this 3rd day of February, 1999, by and between a Monetary
Advancement International, Inc., a ___________________ Corporation whose
business address is 120 Broadway, New York City, New York 10271, 28th Floor
("Monetary") and GINSITE MATERIALS, INC., a Florida Corporation ("Ginsite").
R E C I T A L S :
A. MONETARY and GINSITE executed a Consulting Agreement dated as of the 3rd
day of February, 1999 (the "Contract") a copy of which is attached hereto as
Exhibit "A".
B. Pursuant to the Contract, GINSITE delivered two hundred fifty thousand
(250,000.00) shares of the common stock of GINSITE (the "Stock") to MONETARY.
C. GINSITE and MONETARY have agreed to terminate all of the duties,
burdens, obligations and agreements of the Contract pursuant to the terms of
this Agreement.
NOW, THEREFORE, for Ten ($10.00) Dollars and other good and valuable
considerations the receipt and sufficiency of which is hereby acknowledged,
included but not limited to the parties agreement to terminate the Contract, the
Parties hereto agree as follows:
1. Termination. The Contract shall be terminated and be considered null,
void and of no effect with all parties being relieved of all benefits, duties,
burdens and obligations thereunder immediately upon the execution of this
Agreement by GINSITE and MONETARY.
2. Return of Certain Shares of the Stock. Immediately upon the execution of
this Agreement by MONETARY, MONETARY shall deliver to GINSITE (free and clear of
all claims, liens and/or encumbrances) one hundred fifty thousand (150,00.00)
shares of the Stock (the "Returned Shares"). In the event it is impracticable
for MONETARY to deliver the Returned Shares upon the execution of this Agreement
then, in such event, MONETARY shall deliver the Returned Shares to GINSITE no
later than fifteen (15) days after the date of this Agreement.
3. Mutual Release. Other than MONETARY's obligation to deliver the Returned
Share to GINSITE, MONETARY and GINSITE, and each of their respective officers,
directors, control persons and shareholders, and their respective personal
representatives, heirs, successors and/or assigns, as applicable, do hereby
mutually release, acquit, satisfy and forever discharge each other, individually
and corporately, as applicable, from all, and all manner of action and actions,
cause and causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever, in law or in equity, which they and each of them
ever had, now has or shall or may hereafter have, against them and each of them,
<PAGE>
for upon or by reason of any matter, cause or thing whatsoever pertaining to the
Contract, and the agreements or transactions related thereto, and each party
hereto agrees to indemnify and hold harmless the other against all loss, cost
and expense (including without limitation reasonable attorneys fees) incurred by
the other as a result of any claim or action brought against the other by the
indemnifying party or another party on its behalf, for any reason whatsoever,
other than a breach of this Agreement by the non-identifying party. It is
understood and agreed that the foregoing release by GINSITE of MONETARY is
subject to and conditioned upon the receipt by GINSITE of the Returned Shares.
MONETARY shall be responsible for any costs, damages and the like associated
with MONETARY's failure to deliver the Returned Shares including but not limited
to loss of value of the Returned Shares and attorneys fees and court costs
incurred by GINSITE in enforcing its rights under this Agreement.
4. Rights of the Parties. Nothing herein express or implied is intended or
shall be construed to confer upon or give to any person, firm, corporation or
other entity, other than the parties hereto, any rights, remedies or benefits
under or by reason of this Agreement.
5. Counterpart Execution. This Agreement may be executed simultaneously or
at different times, and in multiple counterparts, each of which shall be deemed
an original but all of which taken together shall constitute on and the same
instrument. This Agreement may be accepted by either or both parties via
facsimile, by faxing an executed original of this Agreement to the other party.
An executed original of this Agreement submitted to the other party as a
facsimile shall be binding upon the party so submitting this Agreement via
facsimile.
6. Entire Agreement. This Agreement and the Exhibits and Schedules attached
hereto contain every obligation and understanding between the parties relating
to the subject hereof and merge all prior discussions, negotiations and
agreements, if any, between them, and none of the parties shall be bound by any
conditions, definitions, understandings, warranties or representations other
than as expressly provided or referred to herein.
7. Governing Law. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof.
8. Assignment; Binding Effect. This Agreement may not be assigned by any
party without the written consent of the other party. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.
9. Notices. All notices, demands, claims, consents, approvals or other
communications under this Agreement shall be in writing and shall be deemed to
have been given upon the delivery or mailing thereof, as the case may be, if
delivered personally or sent by certified mail, return receipt requested,
postage prepaid or by overnight courier such as Federal Express or DHL or by
telefax with machine printed confirmation report maintained by the sender, to
the parties at the following addresses (or at such other address as a party may
specify by notice to the others):
<PAGE>
If to the MONETARY to: MONETARY ADVANCEMENT INTERNATIONAL, INC.
ATT: Raymond Burghard
120 Broadway, 28th Floor
New York City, New York 10271
Telefax No.: 212-732-3400
Telephone No.: 212-406-9266
With required copy to: H. Glenn Bagwell, Jr., Esq.
3005 Andersen Drive #204
Raleigh, North Carolina, 27609
Telefax No.: 919-785-3116
Telephone No.: 919-785-3113
If to the GINSITE to: GINSITE MATERIALS, LLC.
ATT: Chief Executive Officer
6781 West Sunrise Boulevard
Plantation, Florida 33313
Telefax No.: (954) 321-9616
Telephone No.: (954) 321-9667
With required copy to: Richard J. Alan Cahan, Esq.
Becker & Poliakoff, P.A.
5201 Blue Lagoon Drive
Suite 100
Miami, Florida 33126
Telefax No.: 305-262-4504
Telephone No.: 305-262-4433
10. Severability. In the event that any one or more of the provisions
contained in this Agreement is declared invalid, void or unenforceable, the
remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.
11. Recitals. The Recitals set forth in the preamble of this Agreement are
true and correct and incorporated herein by this reference.
12. Section Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
13. Jurisdiction; Venue. All suits, actions or proceedings against any
party with respect to this Agreement or any judgment entered by any court in
respect of the Agreement may be brought in the courts of Broward County, Florida
and the parties accept the nonexclusive jurisdiction of those courts for the
purpose of all such suits, actions, or proceedings. IN addition, the parties
irrevocably waive, to the fullest extent permitted by law, all objections which
they may now or hereafter have to the fixing of venue of a suit, action or
proceeding arising out of or relating to this Agreement, or any judgment entered
<PAGE>
by any court in respect hereof brought in Broward County, Florida has been
brought in an inconvenient forum.
14. Litigation; Prevailing Party. If litigation is brought with regard to
this Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall immediately pay upon
demand, all reasonable fees and expenses of counsel for the prevailing party at
all trial and appellate court levels.
15. Joint Preparation. The preparation of this Agreement has been a joint
effort of the parties and the resulting document shall not, solely as a matter
of judicial construction, be construed more severally against one of the parties
than the other.
16. Remedies Cumulative. The remedies provided in this Agreement shall be
cumulative and shall not preclude assertion by any party of any other rights or
the seeking of any remedies against any other party. Each party hereto shall
maintain the right of specific performance and all other equitable remedies
which may be applied for on an emergency basis and without bond under any
circumstances in order to protect the rights of all parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first hereinabove written.
MONETARY ADVANCEMENT INTERNATIONAL, INC.
By: /s/ Raymond Burghard, Pres.
------------------------------
(Duly Authorized Officer)
GINSITE MATERIALS, INC.
By: /s/ Murray Ginsberg, Pres.
-----------------------------
(Duly Authorized Officer)
<PAGE>
EXHIBIT A
Monetary Advancement Int'l., Inc.
International Banking Investment Services Tel (212) 732-3400
Fax (212) 406-9266
Consulting Agreement
THIS FINANCIAL PUBLIC CONSULTING AGREEMENT, made this 3rd day of
February, 1999 by and between Monetary Advancement International, Inc.
(Herein after referred to as CONSULTANT) located at 120 Broadway, 28th
Floor, New York, New York 10271 and Ginsite Materials, inc. (Herein
after referred to as COMPANY), located 6781 W. Sunrise Blvd.,
Plantation, Florida 33313.
WITNESSETH THAT:
WHEREAS, the COMPANY requires media and other public relations services
and desires to employ CONSULTANT to provide such services as an
independent contractor, consultant, and CONSULTANT is agreeable to such
employment, and the parties desire a written document formalizing and
defining their relation and evidencing the terms of their agreement.
NOW, THEREFORE, intending to be legally bound, and in consideration of
the mutual promises and convenants, the parties have agreed as follows:
1) APPOINTMENT. The COMPANY hereby appoints CONSULTANT as its media and public
relations advisor and hereby retains and employs CONSULTANT on the terms
and conditions of this agreement. CONSULTANT accepts such appointment and
agrees to perform the services upon the terms and conditions of this
agreement.
2) TERM. The term of this agreement shall be three months from the date
hereof, plus an automatic renewal of three months, unless written notice
not to continue the service is received by the consultant 15 days before
expiration.
3) SERVICES.
A) CONSULTANT shall act, generally, as media and public relations
advisor, and it intends to provide the following services:
B) locate and introduce COMPANY to fund managers, buy-sides analysts and
____________________ retail and institution brokers;
C) introduce the COMPANY to the investment and other newsletter writers;
<PAGE>
D) arrange for "paid" promotional exposure in radio, television, and
print media on behalf of the COMPANY;
E) produce a feature story on COMPANY and publish same on Stock-Line.Com;
F) publish a feature story on COMPANY in Wall Street reporter Magazine or
a similar publication;
G) arrange for a quarterly CEO interview on Stock-Line.com, which will
also be published in Wall Street reporter Magazine or a similar
publication.
H) disseminate all corporate news announcements on Stock-Line.com and
Wall Street Reporter or a similar publication.
4. LIMITATION ON SERVICES. The parties recognize that certain responsibilities
and obligations are imposed by federal and state securities laws and by the
applicable rules and regulations stock exchanges. The National Association
of Securities Dealers, Inc., the in- house "due diligence" or "compliance"
departments of brokerage houses, etc. Accordingly,
CONSULTANT AGREES:
1. CONSULTANT shall NOT release any financial or other
information or data about the COMPANY without the prior
consent and approval of the COMPANY.
2. CONSULTANT shall NOT conduct meetings with analysts without
informing the COMPANY in advance of the proposed meeting and
the format or agenda of such meeting and the COMPANY may
elect to have a representative of the COMPANY attend at such
meeting.
3. CONSULTANT shall not release any information or data about
COMPANY to any selected or limited person(s), entity, or
group if CONSULTANT is aware that such information has not
been generally released or promulgated.
4. After notice by the COMPANY of filing of a proposed public
offering of securities of the COMPANY, and during any period
of restriction on publicity, CONSULTANT shall not engage in
any public relations efforts not in the normal course
without approval of counsel for the COMPANY and of counsel
for the Underwriter(s), if any.
5) DUTIES OF COMPANY.
(a) COMPANY shall supply CONSULTANT, on a regular and timely
basis, with all approved data and information about the
COMPANY, its management, its products, and its operations
<PAGE>
and COMPANY shall be responsible for advising CONSULTANT of
any facts which would affect the accuracy of any prior data
and information previously supplied to CONSULTANT so that
CONSULTANT may take corrective action.
(b) COMPANY shall promptly supply CONSULTANT with: copies of all
filings with all federal and state securities agencies; full
and complete copies of shareholder reports and
communications whether or not prepared with CONSULTANT's
assistance; all data and information supplied to any
financial community, and all produce/service brochures,
sales materials, etc.
(c) COMPANY shall promptly notify CONSULTANT of the filing of
any registration statement for the sale of securities and of
any other event that triggers of results in any restrictions
on publicity.
(d) COMPANY shall contemporaneously if any information or data
being supplied to CONSULTANT has not been generally released
or promulgated.
6) REPRESENTATION AND INDEMIFICATION
(a) The COMPANY shall be deemed to make a continuing
representation of the accuracy of any and all material
facts, material, information and data which it supplied to
CONSULTANT and the COMPANY acknowledges its awareness that
CONSULTANT will reply on such continuing representation in
disseminating such information and otherwise performing it's
public relation functions.
(b) CONSULTANT, in the absence of notice in writing from
COMPANY, will rely on the continuing accuracy of material,
information and data supplied by the COMPANY.
(c) COMPANY hereby agrees to indemnify CONSULTANT against, and
to hold CONSULTANT harmless from, any claims, CONSULTANT's
reliance upon the accuracy and continuing accuracy of such
facts, material, information and data, duties and
obligations hereunder.
7) COMPENSATION. The COMPANY agrees to pay 250,000 freely traded shares of
it's common stock at the time of signing this agreement.
8) RELATIONSHIP OF PARTIES. CONSULTANT is an independent contractor,
responsible for compensation of its agents employees and representatives,
as well as all applicable withholding therefrom and taxes thereon
(including unemployment compensation) and all workmen's compensation
insurance. This agreement does not establish any partnership, joint
venture, or other business entity or association between the parties and
neither party is intended to have any interest in the business or property
of the other. (i) TERMINATION. This agreement may not be terminated by
<PAGE>
either party prior to the expiration of the term provided in paragraph 2
above except as follows:
(a) Upon failure of the other party to cure a default under, or a breach
of, this agreement within ten days after written notice is given as to
such or breach by terminating party;
(b) Upon the bankruptcy or liquidation of the other party, whether
voluntary or involuntary;
(c) Upon the other party having or applying for a receiver appointed for
all a substantial part of such party's assets or business. Nothing in
this section preludes either party from terminating this agreement at
the end of each three-month period.
9) ATTORNEY'S FEES. Should either party default in the terms or conditions of
this agreement and suit be filed as result of such default, the prevailing
party shall be entitled to recover all costs incurred as a result of such
default all costs and reasonable attorney's fees, expense and court costs
through trial and appeal.
10) WAIVER OF BREACH. The waiver by either party of a breach of any provision
of this agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach by the other party.
1l) ASSIGNMENT. The rights and obligation of the parties under this agreement
shall inure to the benefit of, and shall be binding upon, the successors
and assigns of the parties.
12) NOTICES. Any notice required or permitted to be given under this agreement
shall be sufficient if in writing, and if sent by certified mail; return
receipt requested, to the principal office of the party being notified.
13) OTHER. Both parties to this agreement agree that signature sent by
facsimile transmission are legally binding.
14) ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties and may be modified only by agreement in writing, signed by the
party against whom enforcement of any waiver, change, modification,
extension or discharged is sought. This agreement shall be governed for all
purposes by the laws of the state of New York. If any provision of this
agreement shall be deemed unenforceable, such provision alone shall e
severed from this agreement, the remainder of which shall otherwise remain
in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be bound, have executed
this agreement, as of the date first written above.
Monetary Advancement Int'l, Inc.
By: /s/Raymond Burghard
------------------------
Raymond Burghard
President
Agreed to by:
/s/ Murray Ginsberg, Pres.
- --------------------------
Ginsite Materials, Inc.
6 month agreement /s/M.G.
Exhibit 10.9A
ASSIGNMENT OF PATENT
THIS IS TO FORMALLY ASSIGN THAT CERTAIN PATENT PENDING DATED JULY 28, 1995 KNOWN
BY ITS SERIAL NUMBER GINMPA0195 FROM MURRAY GINSBERG TO "GINSITE" MATERIALS,
INC.
/s/ Audrey Max 8/7/97 /s/ Murray Ginsberg
- ------------- ----- -------------------
WITNESS DATE ASSIGNOR: MURRAY GINSBERG
/s/ Audrey Max 8/7/97 /s/ Murray Ginsberg
- ------------- ------ --------------------
WITNESS DATE ACCEPTED BY:
ASSIGNEE GINSITE MATERIALS, INC.
BY: MURRAY GINSBERG, PRESIDENT/CEO
<PAGE>
Assignment of Patent
This is to formally assign that certain Patent Pending dated July 28.1995 known
by its serial number GINMPA0195 from Progressive Technologies, Inc. (P.T.I.) to
Murray Ginsberg.
/s/ Audrey Max 8/7/97 /s/ Murray Ginsberg
- ------------- ------- -------------------
Witness Date Assignor:
Progressive Technology, Inc.
Murray Ginsberg, President/CEO
/s/ Audrey Max 8/7/97 /s/ Murray Ginsberg
- ------------- ------ --------------------
Accepted By:
Assignee:
Murray Ginsberg
<PAGE>
Word Mark GINSITE
Owner Name (APPLICANT) GINSITE MATERIALS, INC.
Owner Address 6781 West Sunrise Blvd. Plantation FLORIDA 33313
CORPORATION FLORIDA
Attorney of
Records RICHARD ROSS
Serial Number 74-470271
Filing Date 04/20/1998
Section 1(B)
indicator SECTION 1 (B)
Mark Drawing
Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark TRADEMARK
-----------------------------------
International
Class 002
Goods and A resin-bound, non-porous and waterproof coating for application to
all Services surfaces used in the construction and marine industries.
- ------------- --------------------------
Exhibit 10.9B
FILING RECEIPT UNITED STATES DEPARTMENT OF COMMERCE
[SEA] Patent and Trademark Office
ASSISTANT SECRETARY AND COMMISSIONER
OF PATENTS AND TRADEMARKS
Washington, D.C. 20231
APPLICATION FILING GRP ART FIL FEE ATTORNEY DRWGS TOT CL IND CL
NO. DATE UNIT REC'D DOCKET NO.
09/175,929 10/20/98 1755 $557.00 GINS002 0 31 4
JO KATHERINE D'AMBROSIO
PAYNE LUNDEAN D'AMBROSIO & ARISMENDI
1700 WEST LOOP SOUTH STE 1230
HOUSTON, TX 77027-3008
Receipt is acknowledged of this nonprovisional Patent Application. It will bee
considered in its order and you will be notified as to the results of the
examination. Be sure to provide the U.S. APPLICATION NUMBER, FILING DATE, NAME
OF APPLICANT, and TITLE OF INVENTION when inquiring about this application. Fees
transmitted by check or draft are subject to collection. Please verify the
accuracy of the date presented on this receipt. If any error is noted on this
Filing Receipt, please write to the Application Processing Division's Customer
Correction Branch within 10 days of receipt. Please provide a copy of the Filing
Receipt with the changes noted thereon.
Applicant(s):
MURRAY GINSBERG, PLANTATION, FL
FOREIGN FILING LICENSE GRANTED 11/03/98 * SMALL ENTITY *
TITLE
BUILDING COMPOSITION AND METHOD FOR MAKING THE SAME
PRELIMINARY CLASS: 106
RECEIVED NOV 9 1998
<PAGE>
Word Mark GINSITE
Owner Name (APPLICANT) GINSITE MATERIALS, INC.
Owner Address 6781 West Sunrise Blvd. Plantation FLORIDA 33313
CORPORATION FLORIDA
Attorney of Record RICHARD S ROSS
Serial Number 75-470271
Filing Date 04/20/1998
Section 1(B) indicator SECTION 1(B)
Mark Drawing Code (1) TYPED DRAWING
Register PRINCIPAL
Type of Mark TRADEMARK
--------------------------------------------
International Class 019
Goods and Services A COATING COMPOSITION FOR BUILDING MATERIALS
<PAGE>
SROUFE, PAYNE, LUNDEEN & D'AMBROSIO, L.L.P.
Attorneys at Law
1700 WEST LOOP SOUTH, SUITE 1230
HOUSTON, TEXAS 77027-3008
ALTON W. PAYNE, Ph.D* INTELLECTUAL PROPERTY LAW
DANIEL N. LUNDEEN*
JO KATHERINE D'AMBROSIO TELEPHONE (713) 840-8008
MARK R. WISNER TELEFAX (713) 840-8088
------
DELMAR L. SROUFE* E-MAIL: [email protected]
MALCOLM H. SKOLNICK, Ph.D., J.D. File No.: GINS002
OF COUNSEL
--------
*A PROFESSIONAL CORPORATION
December 9, 1998
Murray Ginsberg
6718 W. Sunrise Blvd.
Plantation, FL 33313
Re: U.S. Patent Application No. 09/175,929, BUILDING COMPOSITION AND METHOD
FOR MAKING THE SAME - Filing Receipt
Dear Murray:
Enclosed is a copy of the official Filing Receipt which has been
received in the captioned patent application. This receipt advises that the
application was filed in the United States Patent and Trademark Office (PTO) on
October 20, 1998 and assigned Serial No.: 09/175,929. This receipt also advises
that a foreign license was granted on November 03, 1998.
You should now begin marking advertisements, brochures and other
literature pertaining to the invention covered in the claims of the application
with the notation "Patent Pending" or "Patent Applied For." However, the
application is maintained in secrecy by the PTO, and we do not recommend that
you disclose the filing date, serial number and details of the application to
anyone not under confidentiality obligations.
Patent laws in the United States provide that a patent application
originally filed here may be filed in foreign countries upon the earlier of one
year after the date of the U.S. filing or upon receipt of a foreign filing
license from the U.S. Patent and Trademark Office. Since the captioned case has
received a foreign filing license, a decision on filing foreign counterpart
applications can be made at any time. If changes have been made since the
application was filed, we should consider the mater bow, especially if you are
about to sell or otherwise publicly disclose the invention.
<PAGE>
The advantage to filing within one year is that you can claim the
benefit of the filing date of the U.S. filing in many foreign countries, thereby
avoiding intervening prior art. These priority rights extend only to counterpart
applications filed within one year of filing the U.S. Patent application, in
this case prior to October 20, 1999. Please let us know no later that about July
01, 1999 if you wish to make any foreign filings.
In other countries, only the actual date of the foreign filing counts as
the filing date. Some of these countries invalidate the application if the
invention has been in public use before that foreign filing date.
Filing foreign counterpart applications can be a lengthy process. If you
are considering filing this application in any foreign countries, it would be
advisable to consult us soon. It would be especially helpful if you could have a
list of those countries when you call.
Very truly yours,
/s/
Jo Katherine D'Ambrosio
JKD/lo
Enclosure
<PAGE>
FILING RECEIPT UNITED STATES DEPARTMENT OF COMMERCE
[SEA] Patent and Trademark Office
ASSISTANT SECRETARY AND COMMISSIONER
OF PATENTS AND TRADEMARKS
Washington, D.C. 20231
APPLICATION FILING GRP ART FIL FEE ATTORNEY DRWGS TOT CL IND CL
NO. DATE UNIT REC'D DOCKET NO.
09/175,929 10/20/98 1755 $557.00 GINS002 0 31 4
JO KATHERINE D'AMBROSIO
PAYNE LUNDEAN D'AMBROSIO & ARISMENDI
1700 WEST LOOP SOUTH STE 1230
HOUSTON, TX 77027-3008
Receipt is acknowledged of this nonprovisional Patent Application. It will bee
considered in its order and you will be notified as to the results of the
examination. Be sure to provide the U.S. APPLICATION NUMBER, FILING DATE, NAME
OF APPLICANT, and TITLE OF INVENTION when inquiring about this application. Fees
transmitted by check or draft are subject to collection. Please verify the
accuracy of the date presented on this receipt. If any error is noted on this
Filing Receipt, please write to the Application Processing Division's Customer
Correction Branch within 10 days of receipt. Please provide a copy of the Filing
Receipt with the changes noted thereon.
Applicant(s):
MURRAY GINSBERG, PLANTATION, FL
FOREIGN FILING LICENSE GRANTED 11/03/98 * SMALL ENTITY *
TITLE
BUILDING COMPOSITION AND METHOD FOR MAKING THE SAME
PRELIMINARY CLASS: 106
RECEIVED NOV 9 1998
<PAGE>
LICENSE FOR FOREIGN FILING UNDER Title 35, United
States Code, Section 184
Title 37, Code of Federal Regulations, 5.11 & 5.15
GRANTED
The applicant has been granted a license under 35 U.S.C. 184, if the phrase
"FOREIGN FILING LICENSE GRANTED" followed by a date appears on the reverse side
of this form. Such licenses are issued in all applications where the conditions
for issuance of a license have been met, regardless of whether or not a license
may be required as set forth in 37 CFR 5.15(a) unless an earlier license has
been issued under 37 CFR 5.15(b). The license is subject to revocation upon
written notification. The date indicated is the effective date of the license,
unless an earlier license of similar scope has been granted under 37 CFR 5.13 or
5.14.
This license is to be retained by the licensee and may be used at any time on or
after the effective date thereof unless it is revoked. This license is
automatically transferred to any related application(s) filed under 37 CFR 1.62
which meets the provisions of 37 CFR 5.15(a). This license is not retroactive.
The grant of a license does not in any way lessens the responsibility of a
licensee for the security of the subject matter as imposed by any Government
contract or the provisions of existing laws relating to espionage and the
national security or the export of technical data. Licensees should apprise
themselves of current regulations, especially with respect to certain countries,
of other agencies, particularly the Office of Defense Trade Controls, Department
of State (with respect to Arms, Munitions and Implements of War (22 CFR Parts
121-128); the Office of Foreign Assets Control, Department of Treasury (31 CFR
Part 500+) and the Department of Energy.
NOT GRANTED
No license under 35 U.S.C. 184 has been granted at this time, if the phrase
"FOREIGN FILING LICENSE GRANTED" DOES NOT appear on the reverse side of this
form. Applicant may still petition for a license under 37 CFR 5.12, if a license
is desired before the expiration of 6 months from the filing date of the
application. If 6 months has lapsed from the filing date of this application and
the licensee has not received any indication of a secrecy order under 35 U.S.C.
181, the licensee may foreign file the application pursuant to 37 CFR 5.15(b).
<PAGE>
Jo Katherine D'Ambrosio
Sroufe, Payne, Lundeen & D'Ambrosio, L.L.P.
1700 West Loop South, Suite 1230
Specializing in Patent Telephone (713) 840-8008
Trademark and Copyright Law Facsimile (713) 840-8088
E-Mail [email protected]
File No. GINS001
February 6, 1998
Murray Ginsberg
1901 N.E. Miami Court
Miami, Florida 33132-1027
Re: U.S. Patent Application No. 60/063 181, METHOD FOR PRODUCING A
LIGHTWEIGHT, WATERPROOF COMPOSITION FOR BUILDING MATERIALS -
Filing receipt
Dear mr. Ginsberg:
Enclosed is a copy of the official Filing Receipt which has been received
in the captioned patent application. This receipt advises that the application
was filed in the United States Patent and trademark Office (PTO) on October 20,
1997 and assigned Serial No. 60.063,181. This receipt also advises that a
foreign license was granted on January 30, 1998.
You should now begin marketing advertisements, brochures and other
literature pertaining to the invention covered in the claims of the application
with the notation "Patent Pending" or "Patent Applied For." However, the
application is maintained in secrecy by the PTO, and we do not recommend that
you disclose the filing date, serial number and details of the application to
anyone not under confidentiality obligations.
Patent laws in the United States provide that a patent application
originally filed here may be filed in foreign countries upon the earlier of one
year after the date of the U.S. filing or upon receipt of a foreign filing
license from the U.S. Patent and Trademark Office. Since the captioned case has
received a foreign filing license, a decision on filing foreign counterpart
applications can be made at any time. If changes have been made since the
application was filed, we should consider the mater bow, especially if you are
about to sell or otherwise publicly disclose the invention.
The advantage to filing within one year is that you can claim the benefit
of the filing date of the U.S. filing in many foreign countries, thereby
avoiding intervening prior art. These priority rights extend only to counterpart
applications filed within one year of filing the U.S. Patent application,in this
<PAGE>
case prior to October 20, 1999. Please let us know no later that about July 01,
1999 if you wish to make any foreign filings.
In other countries, only the actual date of the foreign filing counts as
the filing date. Some of these countries invalidate the application if the
invention has been in public use before that foreign filing date.
Filing foreign counterpart applications can be a lengthy process. If you
are considering filing this application in any foreign countries, it would be
advisable to consult us soon. It would be especially helpful if you could have a
list of those countries when you call.
Very truly yours,
/s/ Jo Katherine D'Ambrosio
----------------------------
Jo Katherine D'Ambrosio
JKD/lo
Enclosure
<PAGE>
FILING RECEIPT UNITED STATES DEPARTMENT OF COMMERCE
[SEA] Patent and Trademark Office
ASSISTANT SECRETARY AND COMMISSIONER
OF PATENTS AND TRADEMARKS
Washington, D.C. 20231
APPLICATION FILING DATE FIL FEE REC'D ATTORNEY DRWGS
NUMBER DOCKET NO.
60.063,181 10/20/97 $75.00 GINS001 0
JO KATHERINE D'AMBROSIO
SROUFE PAYNE & LUNDEEN
1700 WEST LOOP SOUTH
SUITE 1230
HOUSTON, TX 77027
Receipt is acknowledged of this Provisional Application. This Provisional
Application will not be examined for patentability. Be sure to provide the
PROVISIONAL APPLICATION NUMBER, FILING DATE, NAME OF APPLICANT, and TITLE OF
INVENTION when inquiring about this application. Fees transmitted by check or
draft are subject to collection. Please verify the accuracy of the date
presented on this receipt. If an error is noted on this Filing Receipt, please
write to the Box Provisional Application within 10 days of receipt. Please
provide a copy of the Filing Receipt with the changes noted thereon. This
Provisional Application will automatically be abandoned twelve (12) months after
this filing date and will not be subject to revival to restore it to pending
status beyond a date which is after twelve (12) months from its filing date.
Applicant(s):
MURRAY GINSBERG, MIAMI, FL
FOREIGN FILING LICENSE GRANTED 1/3O/98 * SMALL ENTITY *
TITLE
METHOD FOR PRODUCING A LIGHTWEIGHT, WATERPROOF COMPOSITION FOR
BUILDING MATERIALS
<PAGE>
LICENSE FOR FOREIGN FILING UNDER Title 35, United
States Code, Section 184
Title 37, Code of Federal Regulations, 5.11 & 5.15
GRANTED
The applicant has been granted a license under 35 U.S.C. 184, if the phrase
'FOREIGN FILING LICENSE GRANTED" followed by a date appears on the reverse side
of this form. Such licenses are issued in all applications where the conditions
for issuance of a license have been met, regardless of whether or not a license
may be required as set forth in 37 CFR 5.15(a) unless an earlier license has
been issued under 37 CFR 5.15(b). The license is subject to revocation upon
written notification. The date indicated is the effective date of the license,
unless an earlier license of similar scope has been granted under 37 CFR 5.13 or
5.14.
This license is to be retained by the licensee and may be used at any time on or
after the effective date thereof unless it is revoked. This license is
automatically transferred to any related application(s) filed under 37 CFR 1.62
which meets the provisions of 37 CFR 5.15(a). This license is not retroactive.
The grant of a license does not in any way lessens the responsibility of a
licensee for the security of the subject matter as imposed by any Government
contract or the provisions of existing laws relating to espionage and the
national security or the export of technical data. Licensees should apprise
themselves of current regulations, especially with respect to certain countries,
of other agencies, particularly the Office of Defense Trade Controls, Department
of State (with respect to Arms, Munitions and Implements of War (22 CFR Parts
121-128); the Office of Foreign Assets Control, Department of Treasury (31 CFR
Part 500+) and the Department of Energy.
NOT GRANTED
No license under 35 U.S.C. 184 has been granted at this time, if the phrase
"FOREIGN FILING LICENSE GRANTED" DOES NOT appear on the reverse side of this
form. Applicant may still petition for a license under 37 CFR 5.12, if a license
is desired before the expiration of 6 months from the filing date of the
application. If 6 months has lapsed from the filing date of this application and
the licensee has not received any indication of a secrecy order under 35 U.S.C.
181, the licensee may foreign file the application pursuant to 37 CFR 5.15(b).
<PAGE>
ASSIGNMENT OF PATENT
THIS IS TO FORMALLY ASSIGN THAT CERTAIN PATENT PENDING DATED JULY 28,
1995 KNOWN BY ITS SERIAL NUMBER GINMPA0195 FROM MURRAY GINSBERG TO
"GINSITE" MATERIALS, INC.
/s/ 8/7 /s/ Murray Ginsberg
--------------- ---- -------------------
WITNESS: DATE: ASSIGNOR: MURRAY GINSBERG
/s/ /s/ Murray Ginsberg
------------- --- ---------------------
WITNESS: DATE: ACCEPTED BY:
ASSIGNEE GINSITE
MATERIALS, INC.
BY: MURRAY GINSBERG,
PRESIDENT/CEO
<PAGE>
Assignment of Patent
This is to formally assign that certain Patent Pending dated July 28, 1995 known
by its serial number GINMPA0195 from Progressive Technologies, Inc. (P.T.I.) To
Murray Ginsberg.
/s/ /s/ Murray Ginsberg
- ------------------- ---- -------------------
WITNESS: DATE: ASSIGNOR:
Progressive Technology, Inc.
Murray Ginsberg, President/CEO
/s/ /s/ Murray Ginsberg
- ------------------ ---- --------------------
WITNESS: DATE: ACCEPTED BY:
ASSIGNEE:
MURRAY GINSBERG
Exhibit 10.10.A.1
Promissory Note
$50,976.00 August 7, 1997
For value received, for the assignment of that certain patent pending dated July
28, 1995, know by serial number GINPA015 assigned by Mr. Murray Ginsberg, to
Ginsite Materials, Inc. Three Hundred and Sixty (360) days after date, the
undersigned promise(s) to pay Mr. Murry Ginsberg or order the sum of Fifty
Thousand and Nine Hundred and Seventy Six ($50,976.00) dollars, in Three Hundred
Sixty (360) days after date the entire amount of this note is fully paid and
satisfied with interest at the rate of 6.343% per annum payable at the due date
of said promissory note. Mr. Murray Ginsberg at his options can renew said
promissory note for any additional Three Hundred Sixty (360) days with the same
terms and conditions.
This said note is unsecured by any collateral or personal guarantees by Mr.
Murray Ginsberg by Ginsite Materials, Inc.
Default in payment after due date, shall at the option of the holder render the
entire amount of this note individually due and payable, with costs of
collection including a reasonable attorney's fee.
Each and every party to this instrument, either as makers, endorser, or
otherwise, hereby waives for presentment for payment, notice of dishonor,
protest, and notice of protest hereof, and also waives any and all defenses on
the ground of any extensions or partial payments which may be accepted by the
holder hereof or after default.
/s/Audrey Max /s/ Murray Ginsberg
- ------------- -------------------
Audrey Max, Secretary Murray Ginsberg, President/CEO
For Ginsite Materials, Inc. For Ginsite Materials, Inc.
Exhibit 10.10.A.2
PROMISSORY NOTE
$12,961.00 January 14, 1999
For value received, the undersigned promise(s) to pay to GINSITE
MATERIALS, INC., on order the sum of Twelve Thousand, Nine Hundred Sixty-One
Dollars ($12,961.00) in three hundred and sixty days (360) after date the entire
amount of this note is fully paid and satisfied with interest at the rate of ten
percent (10%) per annum, payable at this date of said promissory note. Ginsite
Materials, Inc., at its option can renew said promissory note for an additional
three hundred and sixty days (360) with the same terms and conditions.
This said note is unsecured by any collateral or personal guarantees by the
company Progressive Technology, Inc. and/or its officers.
Default in payment after due date, shall at the option of the holder under
the entire amount of this note individually due and payable, with costs of
collection including a reasonable attorney's fee.
Each and every party to this instrument, either as makers, endorser, or
otherwise, hereby waives for presentment for payment, notice of dishonor,
protest, and notice of protest hereof, and also waives any and all defenses on
the ground of any extensions or partial payments which may be accepted by the
holder hereof or after default.
/s/Audrey Max /s/ Murray Ginsberg
- ------------- ---------------------
Audrey Max, Secretary Murray Ginsberg, President/CEO
for Progressive Technology, Inc. For Progressive Technology, Inc.
Exhibit 10.10.A.3
PROMISSORY NOTE
$47,039.00 January 14, 1999
For value received, the undersigned promise(s) to pay to GINSITE MATERIALS,
INC., on order the sum of Forty-Seven Thousand and thirty-Nine Dollars
($47,039.00) in three hundred and sixty days (360) after date the entire amount
of this note is fully paid and satisfied with interest at the rate of ten
percent (10%) per annum, payable at this date of said promissory note. Ginsite
Materials, Inc., at its option can renew said promissory note for an additional
three hundred and sixty days (360) with the same terms and conditions.
This said note is unsecured by any collateral or personal guarantees by the
company Progressive Technology, Inc. and/or its officers.
Default in payment after due date, shall at the option of the holder under
the entire amount of this note individually due and payable, with costs of
collection including a reasonable attorney's fee.
Each and every party to this instrument, either as makers, endorser, or
otherwise, hereby waives for presentment for payment, notice of dishonor,
protest, and notice of protest hereof, and also waives any and all defenses on
the ground of any extensions or partial payments which may be accepted by the
holder hereof or after default.
/s/Audrey Max /s/ Murray Ginsberg
- ------------- ------------------
Audrey Max, Secretary Murray Ginsberg, President/CEO
for Progressive Technology, Inc. For Progressive Technology, Inc.
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