As filed with the Securities and Exchange Commission on April ___, 2000
Registration No. 333-30474
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
Amendment No. 1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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GSI TECHNOLOGIES USA INC.
(Name of issuer in its charter)
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<CAPTION>
<S> <C> <C>
Delaware 7319 65-0902449
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code) Identification Number)
2001 McGill College Avenue Irving Rothstein, Esq.
Suite 1310 Heller, Horowitz & Feit, P.C.
Montreal H3A 1G1 Quebec 292 Madison Avenue
(514) 940-5262 CANADA New York, New York 10017
(Address and telephone number 212) 685-7600
of registrant's principal executive (Name, address and
offices and principal place of telephone number
business} of agent for service)
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Copies to:
Irving Rothstein, Esq.
Heller, Horowitz & Feit, P.C.
292 Madison Avenue
New York, New York 10017
Telephone: (212) 685-7600
Approximate date of commencement of proposed sale to public: At the discretion
of the selling stockholders.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered offering price per aggregate offering registration fee
registered security(2) price(2)
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Common stock class B, par 4,703,206 $1.00(3) $4,703,206 $1,425.22
value $0.001
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Common stock class B, par 3,674,000(1) $1.10(4) $4,041,400 $1,224.67
value $0.001
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Total 8,377,206(1) $8,377,206 $2649.89
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(1) Includes 3,674,000 shares of common stock issuable upon exercise of
currently exercisable warrants. Pursuant to Rule 416, this Registration
Statement also covers any additional shares of common stock which may be
issuable by virtue of the anti-dilution provisions in the warrants.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Based upon the price of a recent private offering.
(4) Exercise price.
The registrant hereby amends the registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SUBJECT TO COMPLETION DATED, April ___, 2000
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GSI TECHNOLOGIES USA INC.
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8,377,206 shares of common stock
This prospectus covers 8,377,206 shares of the common stock, par value
$.001 per share, of GSI Technologies USA Inc. This figure includes 3,674,000
shares of common stock that we may issue in the future if currently outstanding
warrants are exercised. The common stock will be sold by the selling
stockholders identified under the section entitled "Selling stockholders"
beginning on page 28. We will not receive any part of the proceeds from the sale
of any of these shares by the selling stockholders. However, we will receive
funds from the holders of the warrants if they choose to exercise their
warrants.
The securities offered hereby involve a high degree of risk. Please read the
"Risk factors" beginning on page 2.
The selling stockholders will sell their shares of common stock at various
times for their own account (1) in the open market at the then prevailing prices
or (2) in private transactions at such prices as may be agreed upon. The selling
stockholders will pay all expenses with respect to the offering and sale of
these shares except the costs associated with the registration of their shares
and the preparation and printing of this prospectus.
There is presently no public market for our securities. We intend to apply
for a listing on the OTC:BB.
---------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Our principal executive offices are located at 2001 McGill College Avenue,
Suite 1310, Montreal Quebec H3A 1G1 CANADA. Our telephone number is (514)
940-5262.
The date of the prospectus is ________, 2000.
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Risk factors
You should carefully consider the following facts and other information in
this prospectus before deciding to invest in the shares. If any of the following
risks actually occur, our business, financial condition or results of operations
could be materially and adversely affected. In this event, the trading price of
our common stock could decline, and you may lose all or part of your investment.
Please see the <<Special note regarding forward-looking statements>> on page 9
of this prospectus.
Risks relating to our viability
Since we have only a limited operating history, it is difficult for you to
evaluate if we are a good investment
We were incorporated in July 1998. We introduced our first products in
January 2000. Accordingly, we have only a very limited operating history, and we
face all of the risks and uncertainties encountered by early-stage companies.
Thus, our prospects must be considered in light of the risks, expenses and
difficulties associated with a new and rapidly evolving market for multimedia
entertainment and Internet technology. In sum, because of our limited history
and the youth and inherent risks of our industry, predictions of our future
performance are very difficult.
Our independent auditor has expressed concern over our ability to remain in
business
In his report on our audited financial statements, our auditor has stated
that there is a substantial doubt as to whether we will be able to remain in
business for even the next twelve months. His concern is based upon our growing
losses and no specific plan to have the funds necessary to implement our
business plan. If his concerns are proven accurate, any investment in our
securities will likely be lost.
We have incurred substantial losses and anticipate even more losses in the
future which may cause us to become insolvent
From our inception in July 1998 through October 31, 1999, we incurred an
accumulated deficit of $258,639. We anticipate continuing to incur significant
losses until, at the earliest, we generate sufficient revenues to offset the
substantial up-front expenditures and operating costs associated with developing
and commercializing products utilizing our technology. There can be no assurance
that we will ever operate profitably.
We have no customers and generate no revenues
We have not entered into any agreements to utilize our technology with any
advertisers or retailers. We do not believe that we will generate significant
revenues in the
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immediate future. We will not generate any meaningful revenues unless we obtain
contracts with a significant number of municipalities and major media groups.
There can be no assurance that we will ever be able to obtain contracts with a
significant number of customers to generate meaningful revenues or achieve
profitable operations.
Our success is dependent on successful implementation of our business plan.
This involves developing and expanding our operations on a profitable basis and
developing non-traditional marketing and promotional channels that would be
available to promote third party products on a fee basis. We are unaware of any
other entity that has attempted to accomplish what we propose to do and there is
no assurance that we will be successful or that our marketing concept will be
accepted in the industry or result in the generation of significant revenues.
We need substantial additional financing or we may have to curtail operations
Our capital requirements relating to the commercialization of our
technology have been, and will continue to be, significant. We are dependent on
the proceeds of future financing in order to continue in business and to develop
and commercialize additional proposed products. We anticipate requiring at least
$1.2 million in additional financing. There can be no assurance that we will be
able to raise the substantial additional capital resources necessary to permit
us to pursue our business plan. We have no current arrangements with respect to,
or sources of, additional financing and there can be no assurance that any such
financing will be available to us on commercially reasonable terms, or at all.
Any inability to obtain additional financing will have a material adverse effect
on us, such as requiring us to significantly curtail or cease operations.
Risks relating to technology
There still remains some question regarding the efficacy of our technology and
if it does not work we will have no business
Although considerable time and financial resources were expended in the
development of our licensed technology, there can be absolutely no assurance
that problems will not develop which would have a material adverse effect on our
business. Since we have conducted only limited tests of our hardware and
software, we are uncertain if it will perform all of the functions for which it
has been designed or prove to be sufficiently reliable in widespread commercial
use. While we have performed alpha tests in a controlled environment, we have
not completed a thorough beta testing regime covering all the interior and
particularly the exterior environmental factors we will face. The CEMU or
computerized environmental management unit, which is described below, will have
to be successfully tested under real conditions to ensure that our exterior
display products function properly in our target markets.
As described below in our plan of operations, because the interior
environment is inherently more hospitable, we will concentrate on it first
during Phase 1 of installations. A key
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challenge will be connecting each individual installation with the central
server in order to ensure reliable transmission and functioning. Representing
the greatest risk and the essential element of the software, which is also
described below, is the scheduling element. There will still be a need for
continued system refinement, enhancement and development efforts which are
subject to all of the risks inherent in the development of new products and
technologies, including unanticipated delays, expenses, technical problems or
difficulties.
Besides overcoming extreme climatic conditions, the greatest technical
challenges in the exterior environment are the access rights, and wireless
transmission when normal telephone cabling is unavailable.
Even if our basic technology works, successfully managing data from the
different content providers to our servers could be a significant problem
As well as the problems inherent in incorporating data, properly formatting
and redistributing it could present certain risks in terms of time and cost and
could substantially affect our continuing deployment.
Our infrastructure may not be reliable because it may not be large enough to
accommodate growth and because of third party disruptions
Our operations will depend upon the capacity, reliability and security of
our system infrastructure. Managing the broadcast center will present the
biggest challenge in terms of the personnel resources required to create and
maintain the display and information flow according to the anticipated volume.
We currently have only limited system capacity and will be required to
continually expand our system infrastructure to accommodate significant numbers
of remote locations. Development and/or expansion of our system infrastructure
will require substantial financial, operational and managerial resources. There
can be no assurance that we will be able to expand our system infrastructure to
meet potential demand on a timely basis or at a commercially reasonable cost.
Our failure to develop and/or expand our system infrastructure on a timely basis
would have a material adverse effect on us.
We are particularly dependent on telecommunication providers. We need a
dedicated communications system and depend on the reliability and performance of
the provider. Hardware failures or system overloads could adversely affect the
reliability of our transmissions.
Our system infrastructure will also be vulnerable to computer viruses,
break-ins and similar disruptions from unauthorized tampering with our computer
systems. Computer viruses or problems caused by third parties could lead to
material interruptions, delays or cessation in service to our customers. Hackers
breaking into targeted sites such as ours could have a direct negative impact on
the stability of the network and the broadcasting capabilities of our servers.
Security and privacy concerns of end-users may limit our ability to develop our
network of users.
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Our systems or other systems on which we depend to deliver our services may fail
Our ability to generate revenues depends upon our ability to provide
continuous service. As a result, if our service is interrupted, our reputation
will be harmed and our customers may leave. Band width is a specific concern
because of the traffic patterns at service providers and on the installed
telecommunications systems as a whole. The flow of information to our
installations could be adversely affected during peak periods. While we do not
believe our system would crash, updates of content at our installation sites
could be significantly delayed. This could cause customer dissatisfaction,
negatively affecting revenue generation.
Our systems and other systems upon which we and our customers are dependent
risk damage and/or disruption from numerous forces, including power failures and
unannounced or unexpected changes in transmission protocols or other technology.
In addition to losing customers and our revenue base, we may be subject to
legal claims and be liable for losses suffered by our customers for disruption
of service or damage to customer equipment.
Risks relating to our business plan
Our business plan involves a new concept and it is uncertain if the market will
embrace our products
Our planned broadcasting solutions for reaching great numbers of <<viewers
per day>> represents a new business concept. As is typical in the case of a new
business concept, demand and market acceptance for a newly introduced product is
subject to a high level of uncertainty. Achieving market acceptance for our new
concept will require us to expend significant efforts and expenditures to create
awareness and demand by advertising agencies, multimedia groups, municipalities
and large retailers.
Besides favorable economic and market conditions, our marketing strategy
depends on the attraction of existing media operators who have, to date, been
reluctant to enter into formal contracts until the technology has been proven
out. As described in our plan of operations we are taking the approach of
installing our products, attracting retailers directly, while continuing to seek
the support of at least one major media operator. While our approach entails
certain financial risks, we believe it is essential to provide prospective
customers with verifiable assurance of the technical and commercial viability of
our products and services.
The prospect of increased sales volume at the retail level is
critical in order to attract media operators and for them to, in turn, actually
attract retailers and advertising agencies. If we are eventually able to enter
into satisfactory marketing and distribution arrangements with media
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operators, our success will be largely dependent on the success of the
advertisements and on increased sales of the end user's products. There can be
no assurance that our strategy will result in successful product
commercialization or that our efforts will result in initial or continued market
acceptance for our proposed services.
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The market for our exterior animated display products entails specific
risks depending as it does to a large extent on the approval of municipal
authorities for the use of public sites. Without the involvement of the
traditional operators who have already succeeded to a great extent in garnering
this market for static advertising purposes, it would be very difficult to
penetrate on our own.
Even if our basic technology works, meeting end-user demands for customized
content may present unforeseen difficulties
As each advertiser will want to customize their advertisements or messages,
providing customized content on schedule, regularly updating their requirements,
and coping with increasing volume will take time and cost money and create
overload . Addressing this could delay our plans and cause us to incur
substantial additional costs.
In addition, customized content could be transmitted late or not at all,
constituting a violation of contractual obligations.
We face competition from larger and stronger companies who have the resources
and/or technological know how to utilize our concept and undercut our prices
The markets that we are entering are intensely competitive. We expect
additional competition to come from the increasing number of new market entrants
who have developed or are developing potentially competitive products. We will
face competition from large media groups which may develop and market their own
competitive products and services. The existing media operators typically have
the advantage of long term, exclusive contracts with many of the larger property
owners and we could be effectively blocked from entry to prime, high volume
locations. Similar animated display technologies could emerge and be more
economical to operate. Pending the attraction of at least one major media
operator, specific market niches will have to be identified in sufficient
quantity during the first year to ensure a viable plan of operations beyond.
Some of our competitors have certain advantages including, substantially
greater financial, technical and marketing resources; greater name recognition;
and more established relationships in the industry and may utilize these
advantages to expand their product offerings more quickly, adapt to new or
emerging technologies and changes in customer requirements more quickly, and
devote greater resources to the marketing and sale of their products
The markets for our proposed products are characterized by rapidly changing
technology and evolving industry standards. Accordingly, our ability to compete
will depend upon our ability to continually enhance and improve our software and
our display products. There can be no assurance that we will be able to compete
successfully, that competitors will not
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develop technologies or products that render our products obsolete or less
marketable or that we will be able to successfully enhance its products or
develop new products.
We may face liability because of the content transmitted over our systems
The liability we may face as a result of content disseminated through our
system could have a negative impact on our financial condition. The law relating
to the liability of businesses such as ours for content carried on or
disseminated through their system is currently unsettled. We could become
involved in litigation regarding the content transmitted over our system which
could create adverse publicity, significant defense costs and substantial damage
awards. In addition, because music content materials can be downloaded and may
be subsequently distributed to others, there is a potential that claims will be
made against us for defamation, negligence, copyright or trademark infringement
or other theories based on the nature and content of such materials. We could
also be exposed to liability in connection with the selection of materials that
may be accessible over our system.
Claims could be made against us if material deemed inappropriate for
viewing by children could be accessed or broadcast on our network as a result of
people breaking into the network in order to broadcast pornographic or other
inappropriate content. Certain ethnic or religious groups could be offended by
certain content. While we intend to carry insurance policies, our insurance may
not cover potential claims of this type or may not be adequate to cover
liability that may be imposed or related defense costs. There can be no
assurance that we will not face claims resulting in substantial liability for
which we are partially or completely uninsured. Any partially or completely
uninsured claim against us would have a material adverse effect on our ability
to operate.
We cannot patent our technology
We cannot patent our technology and the protection of our proprietary
information is limited. We regard the design and integration of the hardware and
all of the software which we have obtained under license as proprietary and
intend to attempt to protect it with copyrights, trade secret laws, proprietary
rights agreements and internal nondisclosure agreements and safeguards. However,
such methods do not afford complete protection, can be prohibitively expensive
with frequent design changes to the hardware during the development phase, and
there can be no assurance that others will not independently develop know-how or
obtain access to our know-how or software codes, concepts, ideas and
documentation.
Since aspects of our technology have been acquired from others we may be accused
of infringing the proprietary rights of others
Certain approaches to our business could have been conceived by others,
particularly the notion of animated street-level advertising. In addition,
certain elements of our hardware and
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software have been purchased from others and, although we may have substantially
modified the original appearance, third parties could emerge to claim
proprietary rights. Our business may be adversely affected by such a claim or
claims. While we have not been notified that we infringe the proprietary rights
of third parties, we might face claims of infringement in the future. Any claim,
even if not meritorious, could be time-consuming, result in costly litigation,
or require us to modify our business plan or enter into royalty or licensing
agreements. Any royalty or licensing agreements required might not be available
at all or on terms acceptable to us. Our inability to do any of the foregoing
will have an adverse impact on our ability to successfully remain in business.
General business risks we face
The success of our business depends upon our ability to retain and hire the key
personnel we need
Our success depends upon the personal efforts of J. Michel de Montigny and
Michael Laplante, and other key personnel. Our success is also dependent upon
our ability to hire and retain additional qualified management, marketing,
technical, financial, and other personnel. Competition for qualified personnel
is intense and in our current financial condition it is even more difficult to
hire or retain additional qualified personnel. If we do not attract and retain
qualified management and other personnel we will be unable to successfully
implement our business plan. At present, affordable "key person" insurance is
unavailable.
We are subject to influence from a director and executive officer who controls a
majority of our stock and shareholders will have limited ability to influence
corporate affairs and decisions
One of our stockholders owns a large enough stake in us to have an
influence on matters presented to the stockholders. Our president, CEO and
chairman, Mr. de Montigny, beneficially controls approximately 51% of our
outstanding common stock. Accordingly, he could determine, among other things,
the election and removal of directors and any merger, consolidation or sale of
all or substantially all of our assets. This concentration of ownership may
delay or prevent a change in control, merger, consolidation, takeover or other
business combination involving us. This may discourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of us. As a
result, this concentration of ownership may have an adverse effect on our value.
Special note regarding forward-looking statements
Some of the statements under <<Risk factors>> <<Plan of operations>>
<<Business>> and elsewhere in this prospectus are forward-looking statements
that involve risks and uncertainties. These
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forward-looking statements include statements about our plans, objectives,
expectations, intentions and assumptions and other statements contained in this
prospectus that are not statements of historical fact. You can identify these
statements by words such as <<may>><<will>> <<should>> <<estimates>> <<plans>>
<<expects>> <<believes>> <<intends>> and similar expressions. We cannot
guarantee future results, levels of activity, performance or achievements. Our
actual results and the timing of certain events may differ significantly from
the results discussed in the forward-looking statements. Factors that might
cause such a discrepancy include those discussed in <<Risk factors>> and
elsewhere in this prospectus. You are cautioned not to place undue reliance on
any forward-looking statements.
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Summary historical financial information
The following selected financial data for the year ended October 31, 1999
and for the period from inception on July 6, 1998 through October 31, 1999 is
derived from our audited financial statements included in this prospectus.
The following data should be read in conjunction with our financial
statements and those of our predecessor.
Statement of operations data
For the Year From 7/6/98
Ended 10/31/99 (Inception)
to 10/31/99
Net Revenues $ -0- $ -0-
Operating Loss $ 258,639 $ 258,639
Income Taxes $ -0- $ -0-
Net Loss $ 258,639 $ 258,639
Loss Per Share $ (.042) $ (.042)
(Basic and Diluted)
Balance sheet data
October 31, 1999
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Working Capital $ (15,853)
Total Assets $ 914,482
Total Liabilities $ 456,857
Stockholders' Deficit $ (258,639)
Plan of operations
The following discussion should be read in conjunction with the financial
statements and related notes which are included elsewhere in this prospectus.
Statements made below which are not historical facts are forward-looking
statements. Forward-looking statements involve a number of risks and
uncertainties including, but not limited to, general economic conditions, our
ability to complete development and then market our products and services,
competitive factors and other risk factors detailed in this prospectus.
GSI was initially formed in July 1998 and we are currently still in the
development phase and preparing to begin commercial activity in the second
quarter of 2000.
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Under a master license acquired in October 1999 from our Canadian
affiliate, GSI Technologies (3529363 Canada Inc), which is referred to as GSI
Canada in this prospectus, we now have access to some of the most advanced
technology currently available in the field of electronic advertising and
interactive information display. In addition to production capacity, through
this continuing association with GSI Canada, which, as reflected below, is
controlled by the same principal shareholders, we also benefit from their
ongoing research and development and the opportunity to broaden and enhance our
product lines. All research and development is conducted by GSI Canada. We do
not have any direct expenditures for research and development.
After four years of design and development, the full array of operating
software and systems were made available to GSI by GSI Canada on January 15,
2000. The most important technical success factors have been assuring reliable
on-line broadcasting from central locations to remote locations and the design
of the display units-- including the encasements for the computer hardware
components and glass protectors for the screens that are impervious to various
climatic conditions and vandalism.
We believe GSI is currently in the pre-launch phase, and we are now in a
position to offer a range of products designed around the concept of providing
useful information and services in an attractive, convenient format to people in
their everyday environments. These products include the various street-level
display units--the interior or Citycolumn display units, the exterior or
Novacolumn display units often referred to as "urban furniture" or "street
furniture" in the language of the major North American and European advertisers;
and the transit shelter or Servicolumn units. Following the assembly of four
prototype units and the completion of the alpha version of the software and
related systems on January 15, 2000, we began a successful period of beta
testing in an interior environment with a Citycolumn unit.
A Novacolumn and Servicolumn prototype will be on display at the Convention
of Municipalities being held at the Convention Center in Quebec on April 27-28,
2000. Following that, the Novacolumn will be installed and on permanent display
in the Old Port of Montreal.
Our initial focus is on the interior market. We anticipate production
operations will be launched in April 2000 following a revision to the original
Citycolumn prototype which is now installed in a shopping mall in Montreal. With
or without a sale to a media operator, GSI plans to deploy 35 units in the
Montreal area in phase 1. This will constitute a fully functioning model
network, a showcase for our technology, and a new testing environment for both
the broadcasting to the units and the maintenance of the units.
The operating plan for the year-ending October 31, 2000 calls for the sale
and installation of a total of 280 display units; consisting of 250 Citycolumn
units and 30
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Novacolumn units. While we believe there is the potential for some orders of the
Servicolumn units before the end of the year, we have not reflected this in the
baseline plan.
Following the installation of the model network, during phase 2 we intend
to gradually increase installations to a rate of 50 Citycolumn units a month by
September. Subject to successful negotiations with potential host
municipalities, the current plan calls for the first 15 Novacolumns to be
installed in September 2000 and another 15 in October 2000.
In addition to the software and technical operating systems, the main
direct cost elements are the screen, the casing structure, the computer, the
CEMU or computerized environmental management unit comprising cooling, heating,
and ventilating units, and the shatter-proof glass windows. On a cost-indicated
basis, product pricing has been formulated to enhance market penetration. The
basic models will likely have a target price in the range of $17,000-$18,000 per
unit. More advanced models with additional features such as internet access,
transactional capabilities, and wireless phone systems will probably sell for
approximately $23-$24,000 per unit. The high-end Citycolumn unit comes with two
or three screens and, accordingly, the price will likely be set at $35,000 per
unit.
A standard Novacolumn model is currently projected to be priced at $28,000.
The additional features that are available on the Citycolumn are also available
on the Novacolumn. Pricing for the initial Servicolumn unit has not yet been set
owing to the high level of customization likely to be required for the product.
According to this pricing, we anticipate generating an average gross margin
of approximately 35%. In addition to revenue from product sales, we anticipate
that this should be augmented by revenues from our other products and services
such as multimedia content management, network management, broadcasting,
consulting, and from the sale of sub-licenses.
The business model we continue to favor is marketing and selling our
products to the existing media companies rather than interfacing directly with
retailers and other potential end users. We believe this provides the best route
to rapid deployment of our products and services. While our principal market in
the area of advertising is mature and dominated by a relatively small number of
large, well-developed media operator companies such as Pattison, JC Decaux,
Outdoor Systems and Adshel Eller Media, we believe that the opportunity exists
to both supplant old, static forms of advertising signage and to increase
exposure in terms of hits or "viewers per day" at the street level.
Should we be unable to complete formal contracts with at least one of the
major media operators, our plan is to market directly to end users. Although our
products have widespread applications, the marketing plan for the first year of
operations is to concentrate on the North American market and to focus,
particularly during the first half of the year, on
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significant opportunities that have been identified in Canada, beginning in the
Montreal metropolitan area and Quebec City.
Depending on the availability of capital, a sales office may be opened in
New York City later in the year and we intend to pursue opportunities in the
American market. We estimate the monthly rental at $10,000 plus approximately
$50,000 in equipment costs. Major urban centers and commercial shopping malls,
theme parks, and airports will be targeted.
Building on the extensive network of affiliations and strategic alliances
of its affiliated company in Canada, we are now in a position to completely
outsource the integration and production of the required units. Orders will be
placed with a prime contractor, HiTech Neon, currently the largest and longest
operating division of GSI Canada. This affiliated supplier will also be
responsible for the production of the encasement modules.
Subject to a competitive ordering process, computer hardware components
will, at least initially, be supplied from the Lexton Group and networking and
cabling services from ITS Service Interteck, both of which are operating
divisions of GSI Canada. We intend to outsource the advertising services with
GSI Canada's New Media Division providing the content.
While all key suppliers have the required capacity to complete the planned
production schedule, the greatest challenge will be for HiTech Neon to meet
accelerating demand. Additional manpower and space will be required to gear up
to the planned production schedule. Labor relations at the HiTech Neon plant in
Montreal are considered excellent.
Under the current plan, following the successful private equity offering in
October 1999 in the amount of $1 million, we believe we have sufficient funds
until June 2000. To continue operating at the planned pace for the balance of
the year, a total of at least $1.2 million in further funding will be required
beginning in June. Any delays in funding would mean we would have to delay
implementation of the installation schedule. We would also have to curtail
spending generally while continuing to seek funding either from current
shareholders, through another private placement, or through borrowings.
Establishing operating lines of credit with commercial banks will depend on a
successful launch of commercial operations. Our spending is currently running at
approximately $100,000 a month.
As part of its strategy to grow and expand in the information technology
and multimedia industries, we intend to pursue an aggressive mergers and
acquisitions program. The program is designed to help us reach a critical mass
of activity, to achieve substantial vertical integration and control over the
production processes; as well as to create a strong financial underpinning for
the continued development of our core business. While several synergistic
opportunities have been identified, it is far too premature to make a
determination of the likelihood of the success of any transaction. Additional
funding would be required in order to help finance acquisitions and capitalize
on emerging opportunities.
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Further strengthening the senior management team, a vice-president of
business development and a corporate controller have recently been appointed. A
search is in process for a director of operations for the anticipated fast ramp
up in operations. Other required resources to effectively sustain operations are
available from GSI Canada, and, in order to maintain flexibility and minimize
overhead, outsourcing to consultants and other professionals will be made as
required. Since early February 2000, we have been based in our new principal
business office in Place Mercantile in the center of Montreal. We have a five
year lease which is secured by a letter of credit from the Canadian Imperial
Bank of Commerce or CIBC, GSI Canada's principal bank.
Office equipment is leased from GSI Capital, a division of GSI Canada. The
initial monthly cost, effective April 1, is $1,173. The capitalized value is
$42,000.
As reflected in the financial statements as of October 31, 1999, the
accumulated deficit to date of $258,639 results mainly from our recent financing
as well as professional fees. We anticipate incurring a further loss during the
first quarter of 2000 of about $200,000.
The net cash deficit at October 31 was $171,134 and our spending is
currently running at $100,000 a month, including the monthly rent for the office
in Montreal which is $8,062. The remaining obligation under consulting
agreements is $25,000 to BBT Consulting Group and will be discharged from
currently available cash.
Effect of recent accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." ("SFAS No. 133"), which requires companies to recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is effective
for fiscal years beginning after June 15, 1999. GSI does not presently enter
into any transactions involving derivative financial instruments and,
accordingly, does not anticipate the new standard will have any effect on its
financial statements.
Year 2000 disclosure
We are Year 2000 compliant and we do not anticipate any internal problems.
In the event any internal problems should arise, GSI Canada has many expert
computer technicians on their payroll and we believe that we will be able to
satisfactorily address any such problems. However, we are dependent on the
integrity of the internet being maintained to derive income from the sale of
advertising spots at remote locations via the internet and if the internet
should fail or if our hosts or internet service providers should fail, we could
be adversely impacted. Given the currently available information this does not
appear to be a likely scenario and,
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accordingly, we do not believe that our potential for profitability or
operations will be materially affected by the Year 2000 problem.
Use of proceeds
We will not receive any proceeds from the sale of the shares of common
stock by the selling stockholders. However, we will receive the exercise price
of the warrants if they are exercised.
The net proceeds to us from the exercise of all warrants for which the
underlying common stock is registered herewith, would be approximately
$4,000,000. There can be no assurance that we will receive any proceeds from the
exercise of the warrants as not all, or any, warrants may be exercised. This
could result in our receiving none or only minimal proceeds from this offering.
Any proceed received from the exercise of the warrants will be added to
working capital. We have no definite plans for the use of any proceeds from this
offering and we have made no specific allocation as to the use of such proceeds.
The proceeds could be used for current administrative, marketing and other
expenses, the acquisition of business or repayment of debt. Any such application
of the proceeds of this offering will be at the discretion of our board of
directors.
Business
The following discussion should be read in conjunction with the financial
statements and related notes which are included elsewhere in this prospectus.
Statements made below which are not historical facts are forward-looking
statements. Forward-looking statements involve a number of risks and
uncertainties including, but not limited to, general economic conditions, our
ability to complete development and then market our products and services,
competitive factors and other risk factors detailed herein.
GSI is a Delaware corporation, originally established in July 1998 as
I.B.C. Corporation. Following a change of control to the current principal
shareholders and the creation of a new business plan, we acquired an exclusive
worldwide license from GSI Canada relating to a unique technology in the field
of electronic commercial advertising. The license includes proprietary software,
hardware, and broadcasting systems enabling users to transmit and receive
full-motion video, graphics, along with compressed or uncompressed audio on any
kind of
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display units, whether mobile or static, indoor or outdoor. The technology
offers users remote control through telephone lines, LANs, the internet,
wireless systems, cell phones, global systems for mobile telecommunications, or
GSMs, fibre optics and short waves. GSI also acquired broadcasting server
technology from GSI Canada.
GSI participates in the information technology industry, specializing in
broadcasting solutions principally for media operators, advertisers and others
seeking to reach the greatest number of "viewers per day" at the street level.
Street level advertising is the strategic placement of signage so they are
readily visible to pedestrians and motorists. In addition to addressing
potential consumers in busy urban and suburban settings, public service messages
can also be conveyed using our technology.
We believe the potential market for which GSI intends to sell its products
is large with opportunities for growth. The advertising industry, for example,
is always looking for new ways to reach consumers. Having acquired our license
from GSI Canada, we believe we are now able to respond to their needs as well as
those of other industries. Whereas traditional media groups such as television,
radio, and newspapers used to specialize in their respective activities, as
reflected below our research shows that there is a clear pattern of them
utilizing newly developed electronic media in order to maintain and extend their
reaching power.
Historical background
Since 1995, Mr. J. Michel de Montigny, currently our president, has been
dedicated to fulfilling his vision of bringing television and advertising to the
street level. Working together with an accredited computer graphics artist, a
large number of potential applications became increasingly apparent. Originally
serving the casino and stadium industries, he soon identified many diverse
locations across North America in which to successfully install, and, after
appropriate Beta testing, to manage by remote control the automated network
systems. From 1996 through September 1998, he controlled large electronic
automated signs in Vancouver, Edmonton, Toronto, Montreal, Las Vegas, and
Biloxi, Mississippi.
With the rapid evolution of electronic sign capabilities via full video
broadcast signals, companies began to seek new ways of transferring images and
information from remote stations to signs in a compressed and secure
environment. Effective use of the Internet was the logical solution. In order to
respond expeditiously to market trends and to concentrate all its resources in
the completion of a fully integrated hardware-software package, GSI Canada
applied for the most innovative and advantageous Canadian governmental grants
available in the area of multimedia R&D.
In September 1998, GSI Canada was incorporated in order to qualify for and
receive a CDTI Cite Multimedia research license. Cite Multimedia is a major
government-sponsored project in Montreal designed to bring together, in the same
location,
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companies working in the information and communications technology field. The
grant is an exclusive twelve-year program of incentives which includes: 40% of
salaries, 40% of the capital cost for specialized equipment, as well as other
Federal tax credits and exemptions.
GSI will benefit directly from this association with GSI Canada by
effectively outsourcing its R & D which will facilitate the continuing
development of leading-edge broadcasting systems and related products in the
field of multimedia. A total of $116,000 has been received to date by GSI Canada
with a projected 12 month total of $350,000.
In January 1999, Mr. Yves LeBel, an experienced entrepreneur and business
consultant, joined the GSI Canada team as executive vice-president and chief
financial officer. A series of acquisitions have since been completed in Canada,
first to achieve a degree of vertical integration as well as to continue the
process of horizontal expansion and growth.
These include the acquisition in August of Lexton Group which assembles and
markets computer products, the acquisition in September of of HiTech Neon which
produces and markets electronic signs, and the acquisition in October of ITS
Service Inter Teck which provides computer networking products and services.
Further strengthening the senior management team of GSI Canada, in June
1999 Michel Laplante joined as vice president research and development and chief
information officer.
In June 1999, Mr de Montigny and a group of founding shareholders, mainly
investors in GSI Canada, acquired control of I.B.C. Corporation, by then a
dormant company originally incorporated in Delaware on July 6, 1998. In October
1999 the name was changed to GSI Technologies USA Inc. While our principal
business office is in Montreal the head office continues to be in Ft.
Lauderdale, Florida, providing a base for pursuing significant market
opportunities in the region.
By August 1999, GSI Canada had finished preliminary testing of the basic
server system and software package required to reliably operate and broadcast.
In October 1999 the rights to the technology were acquired by GSI.
The Technology
The basic technological advance achieved by GSI Canada and available to us
by way of the master licensing agreement is the successful integration of
various hardware components and specialty software for the transmission of
broadcast signals in real time. Using our Multimedia Pack Technology which is
described below, we have the unique capability to broadcast from a central
server to full video screens in remote locations anywhere in the world. The
system is capable of updating pinpoint information minute by minute by way of
video compressing systems and other fully automated software systems.
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By utilizing our products and services, media and advertisers will have an
improved way of reaching consumers right in their daily environment, outside
their homes, and especially in the downtown cores where thousands of people
circulate daily as pedestrians, by car or as they use public transportation
going to and from work or to shop. One such location can represent 100,000 and
more "viewers per day". This could result, for example, from 10,000 people
seeing the same message in a particular location 10 times during the course of a
single day downtown.
Hardware
To achieve its sales goals, GSI is commercializing products such as
Citycolumn, Novacolumn, Parcom, Servicolumn and Skycolumn. The latter is still
in the design phase. In addition to two Citycolumn prototypes, a Novacolumn and
a Parcom prototype have been built and a Servicolumn prototype will be completed
by the end of April, 2000. Still to be successfully integrated into these
outdoor prototypes are the environmental control features. The latest Citycolumn
model prototype was installed at a local mall on the South Shore of Montreal in
late 1999 and is ready for the application of the remote broadcasting feature.
Citycolumn is an interior display unit or kiosk consisting of three screens
36" wide. Full-size video, 3D animations and stereo sound can be broadcast on
these units and they can be remotely controlled and reprogrammed via GSI's
software from anywhere in the world. Adding a remote control unit can also
extend Citycolumn's capabilities by providing advertisers with interactivity.
The combination of video and computer digital displays makes changing
commercials almost instantaneous, allowing for short advertising campaigns,
special promotions, and the latest news headlines. In addition to the animated
display there are two backlit display panels 28" wide and 40" high. Other
features of the interactive kiosk include a tactile menu on a 15" tactile
screen, promotional windows for advertisers and as well as directories and
location maps. The production lead time from the ordering of components to
assembly and integration is six weeks. Once an order is received, the
installation of cabling can commence in parallel.
In the category of what major advertisers call <<urban furniture>> or
<<street furniture,>> Novacolumn, is designed for outdoor displays and meeting
the requirements of traditional advertisers. Via a single projector and
providing a field of view of from 5 to 300 feet, the main display side features
a large screen 36" wide by 42" high, the dimensions of a regular advertising
poster. The other two sides include space for static backlit posters. This kiosk
can be remotely controlled and reprogrammed via GSI's software from anywhere in
the world.
As with Citycolumn, the combination of video and computer digital display
makes changing commercials almost instantaneous, allowing for short advertising
campaigns, special promotions, and the latest headlines. Adding a remote control
unit can also extend Novacolumn's capabilities, providing advertisers with
interactive applications. For instance, the
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Novacolumn can be made to control another one of GSI's product offerings, the
interactive parking meter.
Novacolumn's specifications include sturdy, composite materials and each
unit is molded in sections. Providing climate control for installations in
environments that will periodically experience extreme weather conditions,
including hot and/or cold, Novacolumn is equipped with a CEMU or computerized
environmental management unit. The production lead time from the ordering of
components to assembly and integration is currently estimated at ten weeks.
A smaller unit with the same dimensions as the standard installations found
in most cities, Parcom is an interactive parking meter. An outdoors application,
the same basic specifications apply for Parcom as for Novacolumn. The production
lead time from the ordering of components to assembly and integration is
currently estimated at ten weeks.
Servicolumn is a customized, outdoor, self-contained unit that is being
designed to be incorporated in the display portion of transit shelters. Our aim
for this unit is to replace the static back-lit display in the offerings of
other manufacturers. 24" in depth, on one side will be a 36" X 48" display of
animated content and on the other side pedestrians and public transportation
users will have access to a 14" touch-screen, a smart card reader, and a
wireless phone providing informational content, transactional functions and
access to emergency or information phone numbers. A prototype will be completed
and ready for display by the end of April.
Skycolumn is conceptually a giant outdoor screen (16,7 million color),
capable of transmitting video images from a server located anywhere in the
world. Potential installation sites include airports, sport stadiums, and large
expressways.
These products can all be marketed directly by GSI or via sub-licensing
agreements with media operators.
GSI's objective is to offer the possibility of what we call a Total Vision
Network, linking large numbers of installations of our products in various
locations. Animated advertising displays and information of public interest can
be efficiently and economically managed from strategically placed central
locations. The content broadcast on the network will be continuously updated.
For optimal exposure, the content will consist of a three minute loop divided
into eighteen segments of ten seconds each. Besides advertising, these segments
will include messages of public interest issued by our newsroom, drawing on the
technical support of our control room. For example, six of the segments can be
dedicated to local advertising while the other twelve are made available for
regional or national advertising and the messages of public interest. The
involvement of the radio and television networks is being sought for this part
of the network's offering.
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Software
A key feature of GSI's offerings is the software, marketed as the GSI Multimedia
Pack, and which provides what we consider to be innovative broadcasting
capabilities in the field of street-level advertising. Provided under license,
this pack enables users to access multimedia databases and make their selection.
It consists of three sub-packs, each with its own applications, enabling users
to schedule and send content to all display units and then to play it. All
together, the GSI Multimedia Pack consists of five applications and three
sub-packs:
Applications
o Database Graphical User Interface (GUI)
o Schedule Manager
o Billing Manager
o File Transfer Manager
o Multimedia Player
Sub-Packs
o Master Pack
o Universal Pack
o Terminal Pack
The workstations using the Master Pack and the Universal Pack are either
connected to the Internet through telephone lines, wireless systems, or ISDN.
Workstations using the Terminal Pack are connected to the workstations using
Universal Pack via a LAN.
Master Pack
The broadcasting server located at GSI Canada's Operating Centre uses this
pack and most of the operations take place in it. The database of the GSI
Multimedia Pack is kept on the broadcasting server. The pack consists of four
applications:
o Database Graphical User Interface
o Schedule Manager
o Billing Manager
o File Transfer Manager
Universal pack
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This pack is the transition zone between the Master and Terminal Packs.
Mid-level software, it allows the transmission and retrieval of information
without an operator as required in a multi-server environment. This pack
consists of two applications:
o File Transfer Manager
o Multimedia Player
Terminal Pack
Workstations using this pack are connected via a LAN to the workstations
using the Universal Pack. It receives all animations and schedule files and
reports to the workstation which is directly connected to it. It consists of two
applications:
o File Transfer Manager
o Multimedia Player
The GSI Multimedia Pack manages the system.
Database Graphical User Interface (GUI)
The database GUI manages all information in the database such as kiosk
identification, terminals, clients, animations, etc. This application makes it
possible to add, change or delete any field in the database in a user-friendly
interface.
Schedule Manager
In a user-friendly manner, this application enable users to create specific
broadcast schedules.
Billing Manager
Available on demand, this application can be connected to invoicing
software and various databases such as Oracle's.
File Transfer Manager
FTM is a multilevel application which enables users to select and send the
content to the specified site. Consisting of two sub-applications, File Sender
and Remote Receiver, FTM also confirms to the Multimedia Player being monitored
by the GSI control room dministrator that animations are in fact being played at
the remote locations.
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Multimedia Player
Multimedia Player runs the animation files according to a time schedule
generated by Schedule Manager. Our proprietary media player plays compressed or
uncompressed multimedia files in all the animation formats that Windows Media
Player is capable of playing, including .avi, .mpg, etc.
Other enhancements are under development including a module to enable
advertisers to get information on the products and services broadcast on the
Total Vision Network; to reserve time slots on specific columns that will put
their commercials to best use; and to help advertisers in selecting the number
of columns to be reserved along with specific site information. GSI will offer
access to the Total Vision Network on the Internet through GSITV.COM. Multimedia
interactive screen savers containing advertisements are also available and can
be updated through channels or active server pages.
Service
On site service and maintenance is available for all installations
worldwide. We will offer our customers continuous 24 hour broadcasting;
customized advertising and multimedia content; "state-of-the-art" software
packages; network management and maintenance service with 24 hour monitoring and
technical support.
While our customers are primarily responsible for the content of what is
broadcast, as an internal policy we will attempt to monitor the content and only
broadcast information and graphic images that are in accordance with locally
accepted standards.
Our products are susceptible to defacement at installation sites, but are
designed to be relatively impervious to other forms of vandalism and to most
weather conditions as well.
The advertising market
GSI participates in the information technology industry, specializing in
broadcasting solutions principally for advertisers and others seeking to reach
the greatest number of <<viewers per day>> as well as to achieve other
commercial and public service objectives.
We have identified the potential market for our products in terms of
territory and the principal media groups. Globalization is the dominant trend.
Once branded in their domestic markets, companies are seeking opportunities to
penetrate elsewhere, particularly in non-traditional, non-exploited markets such
as Russia, Eastern Europe, Africa, and South
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America. But the viability of our business depends on our assessment of current
trends in traditional markets. In our view and discussed below, expansion in the
traditional North American and European sites that typically attract a high
volume of<<viewers per day>> will occur by way of replacing older, static
billboard poster facilities with animated multimedia products broadcast by way
of advanced telecommunications systems and over the Internet.
The major media companies are Clear Channel Communications, JC Decaux, TDI,
and Outdoor Systems. Doing business on five continents, the largest is Clear
Channel. Our information about them and the overall market has been obtained
mainly from their publications and websites, as well as from industry
publications such as Advertising Age.
A diversified media company with two business segments, broadcasting and
out-of-home advertising, Clear Channel (www.clearchannel.com) currently operates
in 32 countries. It has 830 radio and 19 television stations in the United
States and has equity interests in over 240 radio stations internationally. It
also operates over 550,000 display faces. With consolidated sales approaching $3
billion in 1999, their subsidiaries include Adshel, a leading world brand in
street furniture, More Group, a leading outdoor advertising company in Europe
and Asia, and the Eller Media Company which is based in San Antonio, Texas and
is the oldest outdoor advertising company in the world. They recently acquired
Universal Outdoor in Chicago.
Operating in 23 countries and over 1200 cities, JC Decaux
(www.jcdecaux.com) is the largest marketer of street furniture in the world,
including bus shelters, newsstands, and public information panels. Their most
recent acquisition was Avenir Publicite Group, a $2 billion transaction in July
1999. Their inventory of installations includes over 160,000 backlit advertising
panels, and over 205,000 pieces of street furniture installed, 67,000 bus
shelters, 4,000 automatic public toilets, 53,000 columns and free standing
panels.
Based in Phoenix, Outdoor Systems, Inc. (www.outdoorsytems.com) is the
largest out-of-home media company in North America with approximately 112,500
bulletin, poster, mall and transit advertising display faces in 90 metropolitan
markets in the United States, 13 metropolitan markets in Canada, and 44
metropolitan markets in Mexico and approximately 125,000 subway advertising
display faces in New York City.
One of the largest media firms in the world, TDI (www.tdi.com) considers
itself the most diversified out-of-home advertising provider. They provide a
variety of media forms including bus and rail displays, phone kiosks, and large
posters. They operate 100 franchises in 26 U.S. cities as well as operating
throughout the U.K. and Holland.
The Out-Of-Home Media Group, Canada's largest outdoor advertising company
currently claiming a 45% market share and the Jim Pattison Sign Group, the
world's largest
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custom electric sign company are parts of the Pattison Group, (www.pattison.com)
one of Canada's largest diversified companies.
GSI has been exploring opportunities to sell its products and services to
and possibly form strategic alliances with JC Decaux, Adshel (www.adshel.com).
Outdoor Systems, and Pattison. While no contracts have been signed to date,
discussions are continuing. It is the premature to speculate on the outcome of
these discussions, or even if ultimately successful, the structure or format of
any relationship that might ensue.
According to a Government of Canada (www.infoexport.gc.ca) research
document of 1997 entitled <<The Advertising Services Market in the United
States>> the American advertising industry accounts for over 40% of global
advertising expenditures. As reflected in another Advertising Age Dataplace
table of September 27, 1999 shown at www.adage.com, although outdoor advertising
represented only 2% of the total national advertising spending of $201.6 million
by media during 1998, there was a 38% increase in spending on that form by the
top 100 global marketers over the prior year. This was the second largest
spending increase after the 45.4% increase in the Internet by the top 100
marketers in 1998.
While television's relative position has been maintained, advances in
technology now enable the consumer to select from more than 500 television
channels at home. Many of these are specialized channels and pay television that
do not broadcast advertising. As a result, TV broadcasters cannot pretend to
reach the same number of in-home "viewers per day" as they used to. Since
in-home advertising does not offer the same "viewers per day" reach, it has
become strategically imperative for the advertisers and advertising agencies to
seek other out-of-home possibilities. Mainly through mergers and acquisitions,
media groups are now increasingly able to offer the advertisers a variety of
multimedia-based approaches.
Examples abound in North America. In the US Market, Clear Channel
Communications is the second largest radio broadcasting group following the
acquisition of Jacor. In Canada, Radio-Mutuel, the broadcasting company, was
strictly involved in radio as late as 7 years ago. Since then it has acquired
Omni outdoor advertising, Much Music Broadcast, CKMF, CKVL, and other stations.
Another media company based in Canada and now a major multinational, Quebecor,
was once only in newspaper publishing and printing. During its rapid growth it
has acquired TQS, a broadcasting firm, Archambault a music and multimedia
products distributor, and Quebec-Livre a book distributor. Videotron, another
major example in Canada, which initially offered only cable television is now
operating TVA, a large broadcasting network and with whom they have become
associated in order to create an Internet service.
Outdoor advertising
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Innovations in outdoor advertising have led to increased spending. Total
spending in 1997 was just under $1.5 billion. Spending in 1998 would increase to
approximately $1.6 billion. While this market is mature and dominated by the
relatively small number of large, well-developed companies identified above, the
opportunities to both supplant old, static forms of advertising signage and to
increase exposure in terms of viewers per day at the street level are
substantial.
According to an article in Agency Magazine (www.aaaa.org) entitled <<The
Great Outdoors>> by Andrea MacDonald, the point is made that after spending so
many years as the last line on the media plan, out-of-home is hot and it's
getting hotter thanks largely to the surge in dot-com advertising. Another point
is made that the out-of-home media category itself has also expanded beyond
billboards and transit to include everything from cinema ads, to postcards in
bars and nightclubs, to stencils and laser light logos on the sidewalk.
A recent article by Joan Voight in Adweek Online and entitled <<Media
Outlook - Outdoor: Spectacular Results>> (http://www.adweek.com/mediaoutlook)
provides other pertinent information. In the field of outdoor advertising, 1999
saw a tendency towards bigger and bigger billboards as well as towards the
formation of bigger companies. Consolidation among outdoor media operators and
an increase in oversized outdoor boards called <<spectaculars>> attracted more
advertising dollars from a variety of major national clients, including Ford.,
Apple, and Levi's jeans. At the same time, more industries such as the
technology, telecommunications, entertainment, media and healthcare industries
joined the many apparel, auto, travel and leisure companies that traditionally
use out-of-home advertising. These changes were expected to trigger a 6.5 %
increase in advertising revenue in 1999, according to Zenith Media, bringing the
total expenditures for 1999 to just over $2 billion.
Demand from the entertainment and amusements industries are driving prices
up, according to Craig Alexander, Managing Director of Outdoor Services in San
Francisco, a buying service. In 1997 that category accounted for 15.7% of his
company's business, followed by business consumer services at 12.2%, which
included computer advertising.
The restrictions on outdoor ads for cigarettes has turned out to be a boon
for the industry, according to Alexander. The tobacco ads often had premium
locations, but due to 10 to 20-year contracts they were paying discount rates
for the space. The major outdoor companies are quickly reselling the newly
available space for "50 to 100 percent more than the tobacco advertisers were
paying."
Other points are made in the article explaining trends in the outdoor
advertising market. High-tech companies are looking at outdoor as a way to sell
product as well as attract talented employees, according to Ted Block, media
director at the advertising agency Foote, Cone & Belding in San Francisco.
"Advertisers and agencies see public spaces as a
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[cost-effective] way to make a bold and clever statement." Apple, one of the
world's largest computer manufacturers, has been a leader in technology outdoor
ads, using billboards, spectaculars, walls, large buildings and bus wraps for
its national "Think Different" campaign created by TBWA Chiat/Day of Venice,
California and featuring portraits of Picasso, Einstein, Maria Callas, and
others.
Indoor advertising
We have observed that the major media companies in the field of outdoor
advertising are now seeking opportunities to penetrate the indoor advertising,
commercial, and information display market which is largely untapped and still
in an embryonic stage of development.
Shopping centers offer excellent opportunities. A source of information
about the shopping center industry was Scope 1999 from the website www.icsc.org
of the ICSC. According to the National Research Bureau, there were a total of
43,600 shopping centers in the United States in 1998, an increase of 1.7% from
1997. Revenue potential from advertising is large. Retail sales in shopping
centers increased by 5.0% to 1,044.6 billion, representing 51% of total retail
sales in the country, excluding sales of automotive dealers. In a typical month,
189 million adults shop at shopping centers. 94% of the population over 18 years
of age.
Reflecting the relationship in population of about 10% between Canada and
the United States, there were 4,298 shopping centers in Canada by the end of
1998, generating $94.2 billion in retail sales.
Interactive television
The convergence of television, telecommunications, and computers presents
the advantages of interactivity including choice of content and the ability to
order on demand. New products being developed such as set-top boxes incorporate
Internet, audio and video, as well as informational databases. GSI Canada is
currently developing a similar product which will be marketed by GSI. This
product allows easy and cost-effective hook-ups to the Internet and access of
home viewers to GSI.COM and the Total Vision Network,
Key success factors
Experience
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GSI has an available pool of knowledge and experience regarding the rapidly
evolving market. Our associated companies, the GSI Canada family of companies,
have been controlling signs from remote locations since 1994 and selling
advertising on electronic screens since 1995; as well as using and selling
internet and other software since 1992. Extensive experience has been gained in
dealing with various electronic signs manufacturers and companies involved in
controlling interactivity such as Dacktronics, Saco, Smartvision, Adtronics,
A.D.E.
Intellectual property
We have acquired an exclusive worldwide license from GSI Canada, which has
proprietary rights on the software required to operate the system. These rights
are governed and protected by applicable commercial law. We intend to take all
reasonable and practicable steps to obtain patent and trademark protection, when
available, to protect our rights to the licensed technology.
On-going research and development
GSI Canada qualifies for a 12-year program of grants and governmental
support which will facilitate the continuing development of leading-edge
broadcasting systems and related products in the field of multimedia. GSI
expects to derive economic benefits directly from this association in terms of
lower product cost and the ability to obtain cutting edge technology.
Effective marketing
Our expertise is in the creation of three minutes loops, based on
advertising <<spots>> of 10 seconds each and, through GSI Canada, in the
assembly and the integration of various hardware products. The content of the
broadcast information has been developed after considerable market research and
target customers have been identified and are being approached by our
representatives. We believe we can effectively respond to our customers' needs
by pinpointing specific services and information sponsored by the advertisers.
A strategic licensing plan has been developed for the worldwide deployment
of our products and services. Outside the North American market our approach
would be to identify potential partners in selected locations. Interested
companies would be offered a license to market GSI's products and have access to
GSI's technology for a certain territory. While possibilities are being explored
in parallel with the start up of operations in North America, operations under
sub-license would commence at a later period.
Sales and marketing strategy
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Our products are designed to provide a highly reliable, efficient means of
broadcasting information that addresses the needs of people in fast-paced
environments and brings the advantages of interactive multimedia to the street
level. Our main targets are:
o media owners
o municipalities
o consumers
The urban pedestrian, motorist and consumer will have the benefit of daily
pinpoint area information, i.e., "news you can use", and interactive
capabilities such as:
o weather reports
o traffic conditions reports
o news updates
o sports results
o local community messages
o emergency alerts
o postings of local events
The advertiser will have the opportunity to reach many more consumers per
day, and to increase brand recognition by providing better information content.
Municipal governments will be able to reach their citizens on a daily basis
and to better measure the impact of their community programs and services. They
will also be able to share in revenues derived from renting city space for the
installation of the networks and to communicate information about local events
or emergencies instantly with a simple phone call, fax, or e-mail.
The media industry will benefit from GSI's Total Vision Network. Linking
installations and various locations, they will be able to broadcast information
in specific locations by remote access and reach millions of "viewers per day".
Advertising can be sold at very high quality standards and at very affordable
prices giving local businesses the same opportunities to this point enjoyed by
large companies.
The infrastructure created by the installation of our products and services
may also generate other beneficial associations; for example, in the area of
video-conferencing; with electronic smart card distributors; with municipal
parking meter authorities; and with ticket distributors for entertainment and
sporting events.
We will provide back-up for the installed networks at GSI Canada's Research
Center located in Montreal, Canada. We are currently working on creating our own
server system to minimize dependence upon other hosts and internet service
providers.
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As a way of demonstrating the public service power of the product, we plan
to associate ourselves with child finding organizations worldwide. Using its
pinpoint and instant remote broadcasting capability, pictures of missing
children can be shown in a specific area on short notice, thereby increasing the
chances of a successful recovery. Our first association was established in
Montreal in 1999 with an organization called The Missing Children's Network
Canada.
Employees
We currently have nine full time employees of which three are executives,
three are engaged in financial activities and three are engaged in sales and
marketing activities. In addition, we share three administration personnel with
GSI Canada at the main office in Montreal. Additional financing permitting, we
intend to hire up to five additional employees. None of our employees are
represented by a labor union. We believe that relations with our employees are
good.
Properties
Our facilities are located in approximately 6,000 square feet of leased
office space in Montreal shared with GSI Canada and we share some office space
in Ft. Lauderdale. The lease in Montreal expires on December 31, 2004 and
provides for an annual rental of approximately $75,000 and in Ft. Lauderdale the
lease expires on December 1, 2001 and provides for an annual rental of
approximately $3,800. We have only negligible costs relating to environmental
compliance laws.
Legal proceedings
We are not involved in any material legal proceedings.
Management
Officers and directors
Our officers and directors are as follows:
Name Age Position
- ---- --- --------
J. Michel de Montigny 41 president, chief executive officer
and chairman
James A. Hone 55 senior vice president administration,
chief financial officer, secretary
and director
Michel Laplante 42 senior vice president sales and
marketing and director
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<PAGE>
J. Michel de Montigny founded the Company in 1998 and has been its
president, CEO and chairman since such time. Mr. de Montigny has over twenty
years of hands-on and management experience in the multimedia/advertising
industry. In 1995 he founded Solcom Group. From 1990 to 1992, he was president
of Groupe Actuel Design, crafting the design concepts behind the Bell Canada
Boutiques, the Yves Rocher boutiques and the Societe des Alcools du Quebec
Stores. From 1988 to 1990 he was president of College Inter-Dec, a technical
college in Montreal. Prior thereto, he was director of operations and director
of marketing in a variety of companies. As an advertising and marketing
consultant, he was the driving force behind some of Montreal's most innovative
advertising campaigns of the 1990's. A consultant to companies such as Labatt,
Budweiser, and Michelin, he was also involved in projects creating an
interactive bus shelter for Budweiser, special effects for the film Mortal
Kombat (Alliance Films), and the inauguration campaign for a new Air Canada
aircraft. Mr. de Montigny received an MBA from the University of Quebec.
James A. Hone joined the Company in June 1999 as its chief financial
officer. A graduate of McGill University and York University in Commerce and
Business Administration in 1966 and 1969, respectively, Mr. Hone has extensive
financial management and administrative experience with five major multinational
companies in the automotive, aerospace, building systems, forest products, and
telecommunications industries. After 10 years with Ford Motor Company, both in
Toronto and Detroit, where he achieved the position of manager, collection he
became treasurer of Pratt & Whitney Canada in Montreal until 1982. He then
served as assistant treasurer-international-finance of United Technologies
Corporation in Hartford, Connecticut until 1988; as vice president-treasurer of
Abitibi-Price in Toronto and as vice-president finance of the Commercial Paper
Group based in Quebec City and New York City until 1994; and, most recently, as
vice president-finance and Administration of TMI Communications, a subsidiary of
BCE Inc. in Ottawa.
Michel Laplante joined the Company in June 1999 and became its senior vice
president sales and marketing in December 1999. Mr. Laplante has been involved
in the multimedia industry for the past 20 years. He has acquired extensive
experience in the field of television broadcasting and recording and expertise
in the area of training in high-tech environments. From 1985 to 1991 he served
as an account manager for Yamaha. From 1991 to 1992 he was a consultant for
various firms such as Commodore Business Machines and Kawai. In 1992 he became
national sales manager for MDL Technologies, a desktop video equipment
distributor and integrator based in Montreal, serving clients such as Department
of National Defense and top Fortune 500 companies. Before joining GSI Canada in
June 1999 as vice-president of research and development and chief information
officer, Mr. Laplante owned a consulting firm specializing in audio and video
computer applications, IT, networking, video compression and broadcasting. He
has also served as a Multimedia consultant to the multimedia division of CESAM,
a large consortium with representation from, among others, Bell Canada, CAE
Electronics, Quebecor Multimedia, Teleglobe, and the four universities in
Montreal.
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<PAGE>
Indemnification of directors and officers
Neither our certificate of incorporation nor our by-laws currently provide
indemnification to our officers or directors. In an effort to continue to
attract and retain qualified individuals to serve as our directors and officers,
we intend to adopt provisions providing for the maximum indemnification
permitted by Delaware law.
Compensation of directors
Directors do not receive any compensation for their service as members of
the board of directors.
Security ownership of certain
beneficial owners and management
The following table sets forth, as of December 31, 1999, information
regarding the beneficial ownership of our common stock based upon the most
recent information available to us for
o each person known by us to own beneficially more than five (5%)
percent of our outstanding common stock,
o each of our officers and directors and
o all of our officers and directors as a group.
Each stockholder's address is c/o GSI Technologies USA Inc., 2001 McGill
College Avenue, Suite 1310, Montreal, Quebec, CANADA, H3A 1G1.
Number of
Shares Owned
Name Beneficially % of Total
- ---- ------------ ----------
3633730 Canada Inc. (1)(2) 8,037,128 39.9%
3633632 Canada Inc. (1)(3) 1,397,938 6.8%
Totalcom Inc. (1)(4) 1,546,794 7.6%
J. Michel de Montigny(5) 500,000 2.4%
Michel Laplante (6) 20,000 *
James A. Hone (7) 90,000 *
All Officers and Directors
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<PAGE>
as a Group (3 persons) (8) 11,591,860 54.2%
- ------------------
* less than 1%
(1) Owned by J. Michel de Montigny, our president, CEO and chairman.
(2) Includes 260,954 shares underlying currently exercisable warrants.
(3) Includes 347,938 shares underlying currently exercisable warrants.
(4) Includes 34,794 shares underlying currently exercisable warrants.
(5) Consists of currently exercisable warrants. president, CEO and chairman.
(6) Vice president sales and marketing and a director.
(7) Includes 50,000 shares underlying currently exercisable warrants.
(8) Includes the shares owned indirectly by Mr. de Montigny through wholly owned
entities and an aggregate of 1,193,686 shares underlying currently exercisable
warrants.
Executive compensation
From inception through the fiscal year ended October 31, 1999, no
compensation was paid to any of our executive officers.
Employment agreements
On October 29, 1999, Mr. de Montigny entered into a three year employment
agreement commencing January 1, 2000. The agreement provides for an annual
salary of $100,000 and warrants to purchase 500,000 shares at an exercise price
of $1.10 per share. Mr. de Montigny may also receive bonuses as determined by
the board of directors.
On October 29, 1999, Mr. Hone entered into a one year employment agreement
commencing January 1, 2000. The agreement provides for an annual salary of
$60,000, warrants to purchase 50,000 shares at an exercise price of $1.10 per
share and 50,000 shares vesting equally over five months. Mr. Hone may also
receive bonuses as determined by the board of directors.
On January 1, 2000, Mr. Laplante entered into a two year employment
agreement. He will receive an annual salary of $72,800 for 2000. In addition, he
will receive bonuses based on the achievement of quarterly sales targets. He
will also be eligible to receive additional shares and warrants during the
course of his contract.
Certain relationships and related transactions
We delivered a note payable dated October 31, 1999 in the amount of
$279,667 to GSI Canada, one of our stockholders, for payment of license fees of
$200,000 and reimbursement of expenditures in the amount of $79,667 paid by GSI
Canada on our behalf
33
<PAGE>
during the fiscal year ended October 31, 1999. The note is unsecured and bears
interest of prime plus two percent and matures on October 31, 2000. We also
issued GSI Canada 600,000 shares of common stock as payment for the license,
valued at $1.00 per share.
On October 31, 1999, we accrued financing expenses in the amount of $10,000
due to Totalcom Inc., one of our stockholders, for finder fees associated with
our October 1999 private offering. Mr. J. Michel de Montigny, our president, CEO
and chairman, owns Totalcom Inc.
On October 31, 1999, we accrued financing expenses in the amount of $15,000
due to 3633730 Canada Inc., one of our stockholders, for finder fees associated
with our October 1999 private offering. Mr. J. Michel de Montigny, our
president, CEO and chairman, is now a 100 percent shareholder of 3633730 Canada
Inc.
On August 17, 1999, we entered into an agreement with Maxima Capital Inc.,
one of our stockholders, for services related to obtaining a OTC:BB listing. The
fee for such services totaled $12,000 of which $7,500 has been accrued in the
financial statements. On October 31, 1999, on the basis of time spent, we
accrued expenses in the amount of $86,500 due to Maxima Capital Inc. for finder
fees associated with our October 1999 private offering as well as for other
services. Maxima Capital is our principal financial advisor and has acted as
placement agent and trustee. Mr. Pierre Saint-Aubin is the Director of Maxima
Capital Inc. and one of our stockholders. Maxima Capital is a licensed brokerage
firm in Canada and the offering was only made to Canadians.
Our policy is to obtain all supplies and services on a normal competitive
basis, but that, all things being equal, to purchase from affiliated or related
entities. All related party transactions must be reviewed by the board of
directors to assure that we are not paying higher than fair market arms-length
prices.
Disclosure of commission position on
indemnification for securities act liabilities
Neither our by-laws nor our certificate of incorporation currently provide
indemnification to our officers or directors. In an effort to continue to
attract and retain qualified individuals to serve as our directors and officers,
we intend to adopt provisions providing for the maximum indemnification
permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons,
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable.
34
<PAGE>
Description of securities
Authorized and outstanding stock
Our authorized capital stock consists of 55,000,000 shares of Class B
common stock, $.001 par value, and 5,000,000 shares of Class A common stock,
$1.00 par value. As of December 31, 1999, there were 20,185,472 shares of Class
B common stock outstanding, which were held by approximately 252 stockholders of
record and no shares of Class A common stock were outstanding.
Common stock
Subject to legal and contractual restrictions on payment of dividends, the
holders of common stock are entitled to receive such lawful dividends as may be
declared by the board of directors. In the event of our liquidation, dissolution
or winding up, the holders of shares of common stock are entitled to receive all
of our remaining assets available for distribution to stockholders after
satisfaction of all liabilities and preferences. Holders of our common stock do
not have any preemptive, conversion or redemption rights and there are no
sinking fund provisions applicable to our common stock. Record holders of our
common stock are entitled to vote at all meetings of stockholders and at those
meetings are entitled to cast one vote for each share of record that they own on
all matters on which stockholders may vote. Stockholders do not have cumulative
voting rights in the election of our directors. As a result, the holders of a
plurality of the outstanding shares can elect all of our directors, and the
holders of the remaining shares are not able to elect any of our directors. All
outstanding shares of common stock are fully paid and non-assessable, and all
shares of common stock to be offered and sold in this offering will be fully
paid and non-assessable.
Warrants
We currently have 3,674,000 warrants outstanding, each of which entitles
the registered holder thereof to purchase, at any time until the close of
business on January 31, 2002, one share of Class B common stock at a price of
$1.10. All of the warrants contain provisions which protect the holders thereof
against dilution by adjustment of the exercise price and number of warrants, in
certain events, such as stock dividends, stock splits, mergers, sale of
substantially all of our assets, and for other extraordinary events.
Transfer agent and registrar
The stock transfer agent and registrar for our common stock is
Intercontinental Registry and Stock Transfer, located at 900 Buchanan blvd # 1,
Boulder City, Nevada 89005-2100.
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<PAGE>
Dividend policy
Under applicable law, dividends may only be paid out of legally available
funds as proscribed by a statute, subject to the discretion of the board of
directors. In addition, it is currently our policy to retain internally
generated funds to support future expansion of our business. Accordingly, even
if we do generate earnings, and even if we are not prohibited from paying
dividends, we do not currently intend to declare or pay cash dividends on our
common stock for the foreseeable future.
Shares available for future sale
On the date of this prospectus, all 4,703,206 shares included in this
prospectus will generally be freely tradable without restriction imposed by, or
further registration under, the Securities Act. An additional 15,482,266 shares
of our common stock may be deemed "restricted securities," as that term is
defined under Rule 144 promulgated under the Securities Act. Such shares may be
sold to the public, subject to volume restrictions, as described below.
Commencing at various dates, these shares may be sold to the public without any
volume limitations.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including one of our
affiliates, or persons whose shares are aggregated with affiliates, who has
owned restricted shares of common stock beneficially for at least one year is
entitled to sell, within any three-month period, a number of shares that does
not exceed 1% of the total number of outstanding shares of the same class. In
the event our shares are sold on an exchange or are reported on the automated
quotation system of a registered securities association, you could sell during
any three-month period the greater of such 1% amount or the average weekly
trading volume as reported for the four calendar weeks preceding the date on
which notice of your sale is filed with the SEC. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about us. A person who has not been
one of our affiliates for at least the three months immediately preceding the
sale and who has beneficially owned shares of common stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
the limitations described above.
You should note that we anticipate that our shares of common stock will
initially be included for quotation on the OTC Bulletin Board. Pursuant to SEC
regulations, the OTC Bulletin Board is not considered an <<automated quotation
system of a registered securities association>> and Rule 144 will only permit
sales of up to 1% of the outstanding shares during any three month period.
Plan of distribution
36
<PAGE>
The sale of the shares of common stock by the selling stockholders may be
effected by them from time to time in the over the counter market or in such
other public forum where our shares are publicly traded or listed for quotation.
These sales may be made in negotiated transactions through the timing of options
on the shares, or through a combination of such methods of sale, at fixed
prices, which may be charged at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
selling stockholders may effect such transactions by selling the shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of the shares for which such broker-dealer may act as
agent or to whom they sell as principal, or both. The compensation as to a
particular broker-dealer may be in excess of customary compensation.
The selling stockholders and any broker-dealers who act in connection with
the sale of the shares hereunder may be deemed to be underwriters within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and any profit on any sale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
Selling stockholders
We are registering
o Shares of common stock purchased by investors in our 1999 private
placement offerings,
o a portion of the shares of common stock owned by our founders,
o a portion of the shares of common stock received as a distribution
from GSI Canada; and
o 3,674,000 shares of common stock underlying currently outstanding
warrants.
Other than the costs of preparing this prospectus and a registration fee to
the SEC, we are not paying any costs relating to the sales by the selling
stockholders. Each of the selling stockholders, or their transferees, and
intermediaries to whom such securities may be sold may be deemed to be an
"underwriter" of the common stock offered in this prospectus, as that term is
defined under the Securities Act. Each of the selling stockholders, or their
transferees, may sell these shares from time to time for his own account in the
open market at the prevailing prices, or in individually negotiated transactions
at such prices as may be agreed upon. The net proceeds from the sale of these
shares by the selling stockholders will inure entirely to their benefit and not
to ours.
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<PAGE>
Except as indicated below, none of the selling stockholders has held any
position or office, or had any material relationship with us or any of our
predecessors or affiliates within the last three years, and after completion of
this offering will own the amount of our outstanding common stock listed
opposite their name. The shares reflected by each selling stockholder is based
upon information provided to us by our transfer agent and from other available
sources in December 1999.
These shares may be offered for sale from time to time in regular brokerage
transactions in the over-the-counter market, or, either directly or through
brokers or to dealers, or in private sales or negotiated transactions, or
otherwise, at prices related to the then prevailing market prices. Thus, they
may be required to deliver a current prospectus in connection with the offer or
sale of their shares. In the absence of a current prospectus, if required, these
shares may not be sold publicly without restriction unless held by a
non-affiliate for two years, or after one year subject to volume limitations and
satisfaction of other conditions. The selling stockholders are hereby advised
that Regulation M of the General Rules and Regulations promulgated under the
Securities Exchange Act of 1934 will be applicable to their sales of these
shares. These rules contain various prohibitions against trading by persons
interested in a distribution and against so-called "stabilization" activities.
The selling stockholders, or their transferees, might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Act and any profit on
the resale of these shares as principal might be deemed to be underwriting
discounts and commissions under the Act. Any sale of these shares by selling
shareholders, or their transferees, through broker-dealers may cause the
broker-dealers to be considered as participating in a distribution and subject
to Regulation M promulgated under the Securities Exchange Act of 1934, as
amended. If any such transaction were a "distribution" for purposes of
Regulation M, then such broker-dealers might be required to cease making a
market in our equity securities for either two or nine trading days prior to,
and until the completion of, such activity.
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<PAGE>
Shares Beneficially Owned
Before After
Name of Selling Security Holder Offering Offering Offering
3633730 Canada inc. (1) 7,776, 174 288,000 7,488,174
Tim McLean 209, 888 69,000 140,888
3633632 Canada inc. (1) 1,050, 000 38,000 1,012,000
Totalcom inc. (1) 1,512, 000 56,000 1,456,000
9035-2899 Quebec inc 70,000 23,000 47,000
Denis Renaud 70,000 23,000 47,000
Interlink Investment And Holding 258,982 85,000 173,982
Chambers Investment And Holding 258,982 85,000 173,982
Paul A. Cyr 100,000 33,000 67,000
Michel Laplante (2) 20,000 7,000 13,000
Knick-knack Investment And Holding 147,000 49,000 98,000
Illaria Investment And Holding 154,162 51,000 103,162
Pierre Addison 5, 000 2,000 3,000
Tony Della Cioppa 7, 500 2,000 5,500
Mario Iannicello 7, 500 2,000 5,500
Israel Martineau 50, 000 17,000 33,000
Anthony Santucci 2, 284 1,000 1,284
George Zervakos 10, 000 3,000 7,000
Melanie Lacombe 1, 000 -- 1,000
W.A.F.A. Corporation 662,500 219,000 443,500
O.S.F.A. Corporation 175,000 58,000 117,000
Paul Roy 175,000 58,000 117,000
9064-6167 Quebec inc 175,000 58,000 117,000
Maxima Capital Inc (3) 281,250 93,000 188,250
Pierre Saint-Aubin (3) 281,250 93,000 188,250
Lipalsc 700,000 231,000 469,000
Majella Boucher 87,500 29,000 58,500
Renee Sylvestre 87,500 29,000 58,500
Daniel Riopel 87,500 29,000 58,500
Steve Larochelle 87,500 29,000 58,500
Gerald Deslandes 87,500 29,000 58,500
Jocelyne Langelier 87,500 29,000 58,500
Alain Chicoine 87,500 29,000 58,500
Gilles Leduc 87,500 29,000 58,500
Monique Petit 87,500 29,000 58,500
Jean-Guy Petit 87,500 29,000 58,500
Patrick Petit 87,500 29,000 58,500
Marcel Hebert 87,500 29,000 58,500
Serge Paquin 52,500 17,000 35,000
Suzie Beauchemin 35,000 12,000 23,000
Ginette Barnabe 87,500 29,000 58,500
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<PAGE>
Shares Beneficially Owned
Before After
Name of Selling Security Holder Offering Offering Offering
Robert Bazinet 87, 500 29,000 58,500
Pierre Champagne 87, 500 29,000 58,500
Serge Cote 87, 500 29,000 58,500
Yves Tremblay 87, 500 29,000 58,500
Gilles Villemaire 87, 500 29,000 58,500
Michel Lefebvre 87, 500 29,000 58,500
Monique Lussier 87, 500 29,000 58,500
Gestion Jacques Plantes inc 262,500 87,000 175,500
Denis Adam 87, 500 29,000 58,500
Francine Goyette 87, 500 29,000 58,500
Isabel Marques 87, 500 29,000 58,500
Yvan Dery 87, 500 29,000 58,500
Danielle Dubuc 175,000 58,000 117,000
Renald Racine 87,500 29,000 58,500
D. et M. Gariepy 87,500 29,000 58,500
Louise Beauvolsk 87,500 29,000 58,500
Sebastien Leduc 87,500 29,000 58,500
Louise Nadeau 87,500 29,000 58,500
Juliette A. Bourque 87,500 29,000 58,500
Richard Bourque 87,500 29,000 58,500
Jean-Jacques Lajoie 175,000 58,000 117,000
Paul-Andre Lepage 87, 500 29,000 58,500
Simon Francoeur 87, 500 29,000 58,500
Bruno Girouard 87, 500 29,000 58,500
Investissement Dumont 87, 500 29,000 58,500
Paul Nolin Auto 87, 500 29,000 58,500
Power Group 50, 000 17,000 33,000
Andre Desjardins 25, 000 8,000 17,000
BBT Consulting Group 500,000 158,206 341,794
3529363 Canada inc. (1) 600,000 600,000 0
Addison, Pierre 1,000 1,000 0
Akhavan, Hooman 2,000 2,000 0
Anagnostaras, Con 5,000 5,000 0
Anderson, Vivian 1,000 1,000 0
Angers, Dyan 1,000 1,000 0
Angers, Jocelyne 1,000 1,000 0
Angers, Sylvain 2,000 2,000 0
Anthabian, Tigran 1,500 1,500 0
Antun, Emilio 2,000 2,000 0
Araujo, Jose 15,000 15,000 0
Araujo, Jose 5,000 5,000 0
Arvanitakis, Irene 1,500 1,500 0
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<PAGE>
Shares Beneficially Owned
Before After
Name of Selling Security Holder Offering Offering Offering
Arvanitakis, Maria 2,000 2,000 0
Audate, Martine 1,847 1,847 0
Bachellerie, Yan 1,000 1,000 0
Batchelder, Todd 1,000 1,000 0
Bao, Nick 2,000 2,000 0
Bazinet, Marie-France 10,000 10,000 0
Bazzarelli, Ernest 1,000 1,000 0
Beheshti-Zavareth, Hossein 728 728 0
Beaudin, Bert 2,000 2,000 0
Beaulieu, Pauline 1,981 1,981 0
Beauregard, Micheline 3,855 3,855 0
Beauregard, Sonia 1,313 1,313 0
Benoit, Gaetan 5,000 5,000 0
Berger, Louise 3,000 3,000 0
Blais, Francine 1,981 1,981 0
Blais, Sylvain 930 930 0
Boivert, Jacques 2,000 2,000 0
Bouchard D'amico, Louise 5,000 5,000 0
Boucher, Yan 1,981 1,981 0
Brouillard, M 3,220 3,220 0
Bussiere, Robert 2,300 2,300 0
Cardinal, Frederic 1,998 1,998 0
Cardinal, Raymond 1,146 1,146 0
Cardinal, Carole 1,153 1,153 0
Calisto, Mike 2,000 2,000 0
Campagnale, Vince 2,000 2,000 0
Cannuli, Diane 1,000 1,000 0
Carnevale, Benny 1,500 1,500 0
Carruthers, William 33,000 33,000 0
Chiminian, Hagop 1,000 1,000 0
Christofaro, Joseph 2,650 2,650 0
Chu, Kun Chu 30,000 30,000 0
Coiteux, F 3,250 3,250 0
Collins, Ginette 2,000 2,000 0
Cote, Michel 6,661 6,661 0
Cote, Pierre-Paul 2,740 2,740 0
Courchesne, Lyne 1,000 1,000 0
Cunningham, Diane 1,000 1,000 0
Daigle, Claude 5,000 5,000 0
D'Amico, Carlo 1,500 1,500 0
Dansereau, J. F 1,417 1,417 0
Daviau, Louise 9,800 9,800 0
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Shares Beneficially Owned
Before After
Name of Selling Security Holder Offering Offering Offering
De Nardis, Luigi 10,000 10,000 0
De Nardis, Mena 1,000 1,000 0
Deruyter, Ellen 2,670 2,670 0
Desjardins, G 20,000 20,000 0
Disalvo, Joseph 5,000 5,000 0
Dore, Michelle 5,274 5,274 0
Dolar, Jirayr 10,000 10,000 0
Dulude, Valerie 4,000 4,000 0
Dugas, Yves 975 975 0
Ediflex inc 3,318 3,318 0
Edition Louis Martin 3,318 3,318 0
Eliopoulos, Georges 2,000 2,000 0
Fafard, Andree 14,400 14,400 0
Favas, Emanuel 11,936 11,936 0
Felsher, Melvyn 10,000 10,000 0
Ferner, Susan 2,000 2,000 0
First-Guardian International Corporation 10,000 10,000 0
Fontaine, Bernard 1,600 1,600 0
Ford, Marjorie 20,000 20,000 0
Fortier, Denis 4,000 4,000 0
Foster, Linda J 2,000 2,000 0
Furman, Mitchel 2,000 2,000 0
Giannini, Giuseppe 3,000 3,000 0
Goldfinch, Stephanie 1,000 1,000 0
Gravas, Spiros et Arvanitakis, Panayiota 2,000 2,000 0
Guerin, Carl 2,665 2,665 0
Guerin, Gilles 3,961 3,961 0
Guerin, Jean-Francois 1,336 1,336 0
Guernon, Jean 3,278 3,278 0
Hancock, Richard 10,000 10,000 0
Hancock, Richard 4,989 4,989 0
Harel, Hubert 10,000 10,000 0
Hartvigsen, Kris 1,200 1,200 0
Hebert, Fernande 10,000 10,000 0
Hebert, Jean 23,300 23,300 0
Hebert, Jean 23,396 23,396 0
Hoyt, Randy 1,000 1,000 0
Jamalouden, Nazmoon 15,000 15,000 0
Kaklamanos, Leonidas 3,000 3,000 0
Kalafatidis, James 3,400 3,400 0
Kastelorizios, Maria 8,000 8,000 0
Karteris, Maria 13,422 13,422 0
42
<PAGE>
Shares Beneficially Owned
Before After
Name of Selling Security Holder Offering Offering Offering
Karteris, John 16,680 16,680 0
Karteris, John 16,780 16,780 0
Kirakossian, Garabet 11,000 11,000 0
Kirakossian, Hourie 2,500 2,500 0
Kirakossian, Vartivar 6,000 6,000 0
Lachapelle, Sylvain 5,200 5,200 0
Lacroce, Vincenzo 3,000 3,000 0
Lalande, Sophie 3,000 3,000 0
Lamorgese, Caroline 1,000 1,000 0
Lamorgese, Tony 2,000 2,000 0
Lanoie, Pierre 2,130 2,130 0
Laverdiere, Chantal 1,000 1,000 0
Lebel, Yannick 1,000 1,000 0
Leroux, Guylaine 8,000 8,000 0
L.I.B. Invest. Club 2,000 2,000 0
Lintzeris, Peter 2,000 2,000 0
Luniewski, Renee 2,000 2,000 0
Mady, Chady 3,014 3,014 0
Malenfant, Robert 20,700 20,700 0
Malenfant, Veronique 7,950 7,950 0
Marcos, Marcel 1,000 1,000 0
Markov, Nikolaos 1,500 1,500 0
Martin, Jacques 50,000 50,000 0
Martin, Philippe 2,000 2,000 0
Martinez, Alvaro 2,000 2,000 0
Mathieu, Josee 4,916 4,916 0
Mineo, Serge 1,000 1,000 0
Morazain, Luc 2,000 2,000 0
Morel, Remy 600 600 0
Morin, Pierre 9,460 9,460 0
Morissette, Solange 900 900 0
Morgia, Anne-Marie 1,000 1,000 0
Muller, Peter 1,000 1,000 0
Natale R. Gennaro 8,000 8,000 0
Pacheco John et Pacheco Joe 1,313 1,313 0
Panaccione, Fabio 10,000 10,000 0
Papadakos, Georgia 15,000 15,000 0
Pappappicco, Mariella 5,000 5,000 0
Pare, Richard 3,341 3,341 0
Perreault, Daniel 1,600 1,600 0
Petit, Patrice 3,137 3,137 0
Pires, Joa 20,000 20,000 0
43
<PAGE>
Shares Beneficially Owned
Before After
Name of Selling Security Holder Offering Offering Offering
Poulin, Christian 1,336 1,336 0
Poulopoulos, N 5,000 5,000 0
Purcell, Anita 1,000 1,000 0
Rea, Karen 3,000 3,000 0
Renaud, Denis 3,318 3,318 0
Richard, Martin 1,500 1,500 0
Riopel, Nicole 1,400 1,400 0
Rioux, Pierre Sam 2,015 2,015 0
Roque, Christina 1,000 1,000 0
Salas Fernandez, Carlos Luis 1,982 1,982 0
Santucci, Anthony 1,000 1,000 0
Santucci, Gianni 10,000 10,000 0
Santucci, Mario 1,000 1,000 0
Santucci, Mario 16,500 16,500 0
Sauve, Diane 2,000 2,000 0
Shou, Judy 1,000 1,000 0
Sistatsis, Georges 1,000 1,000 0
Stefaros, Bill 12,000 12,000 0
Stinziani, Giovanni 8,000 8,000 0
Stockden, Gary 2,000 2,000 0
Taddeo, Anthony 1,000 1,000 0
Tartaglia, Nick 5,929 5,929 0
Tassone, Vittoria 5,000 5,000 0
Tolias, Maria 4,000 4,000 0
Therrien, Eric 2,500 2,500 0
Therrien, Ghislaine 2,500 2,500 0
Tremblay, Marc 16,700 16,700 0
Trudeau, Wayne 3,000 3,000 0
Vaccarella, Vincent 14,000 14,000 0
Vassiliou, Joanne 1,000 1,000 0
Vassiliou, Vicky 3,400 3,400 0
Veilleux, Vincent 6,661 6,661 0
Virgilio, Giuseppe 6,500 6,500 0
Ward, Lance 1,660 1,660 0
Woods, James 5,000 5,000 0
Winikoff, Mark 1,000 1,000 0
Zervakos, Georges 29,000 29,000 0
Zervakos, Georges 4,989 4,989 0
Zervakos, Kostantinos 2,000 2,000 0
Zervakos, Melinda 2,000 2,000 0
Zervakou, Rosa 1,000 1,000 0
3101-5464 Quebec inc 35,000 35,000 0
9008-5085 Quebec inc 15,000 15,000 0
44
<PAGE>
(1) Controlled by our president, CEO and chairman.
(2) Our senior vice president sales and marketing and a director.
(3) Mr. Pierre Saint-Aubin is a director of this entity.
Warrants beneficially owned*
before after
Name of warrant holder offering offering offering
3633730 Canada inc. (1) 260,954 260,954 0
3633632 Canada inc. (1) 347,938 347,938 0
Totalcom inc. (1) 34,794 34,794 0
9035-2899 Quebec inc 34,794 34,794 0
Denis Renaud 26,095 26,095 0
Interlink Investment And Holding 17,397 17,397 0
Chambers Investment And Holding 17,397 17,397 0
W.A.F.A. Corporation 75,000 75,000 0
O.S.F.A. Corporation 75,000 75,000 0
Paul Roy 75,000 75,000 0
9064-6167 Quebec inc 75,000 75,000 0
Maxima Capital Inc. (2) 375,000 375,000 0
Pierre Saint-Aubin (2) 104,381 104,381 0
Lipalsc 100,800 100,800 0
Majella Boucher 12,600 12,600 0
Renee Sylvestre 12,600 12,600 0
Daniel Riopel 12,600 12,600 0
Steve Larochelle 12,600 12,600 0
Gerald Deslandes 12,600 12,600 0
Jocelyne Langelier 12,600 12,600 0
Alain Chicoine 12,600 12,600 0
Gilles Leduc 12,600 12,600 0
Monique Petit 12,600 12,600 0
Jean-Guy Petit 12,600 12,600 0
Patrick Petit 12,600 12,600 0
Marcel Hebert 12,700 12,600 0
Serge Paquin 7,560 7,560 0
Suzie Beauchemin 5,040 5,040 0
Ginette Barnabe 12,600 12,600 0
Robert Bazinet 12,600 12,600 0
Pierre Champagne 12,600 12,600 0
Serge Cote 12,600 12,600 0
Yves Tremblay 12,600 12,600 0
Gilles Villemaire 12,600 12,600 0
45
<PAGE>
Warrants beneficially owned*
before after
Name of warrant holder offering offering offering
Michel Lefebvre 12,600 12,600 0
Monique Lussier 12,600 12,600 0
Gestion Jacques Plantes inc 37,800 37,800 0
Denis Adam 12,600 12,600 0
Francine Goyette 12,600 12,600 0
Isabel Marques 12,600 12,600 0
Yvan Dery 12,600 12,600 0
Danielle Dubuc 25,225 25,225 0
Renald Racine 12,600 12,600 0
D. et M. Gariepy 12,600 12,600 0
Louise Beauvolsk 12,600 12,600 0
Sebastien Leduc 12,600 12,600 0
Louise Nadeau 12,600 12,600 0
Juliette A. Bourque 12,600 12,600 0
Richard Bourque 12,600 12,600 0
Jean-Jacques Lajoie 25,225 25,225 0
Paul-Andre Lepage 12,600 12,600 0
Simon Francoeur 12,600 12,600 0
Bruno Girouard 12,600 12,600 0
Investissement Dumont 12,600 12,600 0
Paul Nolin Auto 12,600 12,600 0
BBT Consulting Group 500,000 500,000 0
Addison, Pierre 1,000 1,000 0
Akhavan, Hooman 2,000 2,000 0
Anagnostaras, Con 5,000 5,000 0
Anderson, Vivian 1,000 1,000 0
Angers, Dyan 1,000 1,000 0
Angers, Jocelyne 1,000 1,000 0
Angers, Sylvain 2,000 2,000 0
Anthabian, Tigran 1,500 1,500 0
Antun, Emilio 2,000 2,000 0
Araujo, Jose 15,000 15,000 0
Araujo, Jose 5,000 5,000 0
Arvanitakis, Irene 1,500 1,500 0
Arvanitakis, Maria 2,000 2,000 0
Audate, Martine 1,847 1,847 0
Bachellerie, Yan 1,000 1,000 0
Batchelder, Todd 1,000 1,000 0
Bao, Nick 2,000 2,000 0
Bazinet, Marie-France 10,000 10,000 0
Bazzarelli, Ernest 1,000 1,000 0
Beheshti-Zavareth, Hossein 728 728 0
46
<PAGE>
Warrants beneficially owned*
before after
Name of warrant holder offering offering offering
Beaudin, Bert 2,000 2,000 0
Beaulieu, Pauline 1,981 1,981 0
Beauregard, Micheline 3,855 3,855 0
Beauregard, Sonia 1,313 1,313 0
Benoit, Gaetan 5,000 5,000 0
Berger, Louise 3,000 3,000 0
Blais, Francine 1,981 1,981 0
Blais, Sylvain 930 930 0
Boivert, Jacques 2,000 2,000 0
Bouchard D'amico, Louise 5,000 5,000 0
Boucher, Yan 1,981 1,981 0
Brouillard, M 3,220 3,220 0
Bussiere, Robert 2,300 2,300 0
Cardinal, Frederic 1,998 1,998 0
Cardinal, Raymond 1,146 1,146 0
Cardinal, Carole 1,153 1,153 0
Calisto, Mike 2,000 2,000 0
Campagnale, Vince 2,000 2,000 0
Cannuli, Diane 1,000 1,000 0
Carnevale, Benny 1,500 1,500 0
Carruthers, William 33,000 33,000 0
Chiminian, Hagop 1,000 1,000 0
Christofaro, Joseph 2,650 2,650 0
Chu, Kun Chu 30,000 30,000 0
Coiteux, F 3,250 3,250 0
Collins, Ginette 2,000 2,000 0
Cote, Michel 6,661 6,661 0
Cote, Pierre-Paul 2,740 2,740 0
Courchesne, Lyne 1,000 1,000 0
Cunningham, Diane 1,000 1,000 0
Daigle, Claude 5,000 5,000 0
D'Amico, Carlo 1,500 1,500 0
Dansereau, J. F 1,417 1,417 0
Daviau, Louise 9,800 9,800 0
De Nardis, Luigi 10,000 10,000 0
De Nardis, Mena 1,000 1,000 0
Deruyter, Ellen 2,670 2,670 0
Desjardins, G 20,000 20,000 0
Disalvo, Joseph 5,000 5,000 0
Dore, Michelle 5,274 5,274 0
Dolar, Jirayr 10,000 10,000 0
Dulude, Valerie 4,000 4,000 0
47
<PAGE>
Warrants beneficially owned*
before after
Name of warrant holder offering offering offering
Dugas, Yves 975 975 0
Ediflex inc 3,318 3,318 0
Edition Louis Martin 3,318 3,318 0
Eliopoulos, Georges 2,000 2,000 0
Fafard, Andree 14,400 14,400 0
Favas, Emanuel 11,936 11,936 0
Felsher, Melvyn 10,000 10,000 0
Ferner, Susan 2,000 2,000 0
First-Guardian International Corporation 10,000 10,000 0
Fontaine, Bernard 1,600 1,600 0
Ford, Marjorie 20,000 20,000 0
Fortier, Denis 4,000 4,000 0
Foster, Linda J 2,000 2,000 0
Furman, Mitchel 2,000 2,000 0
Giannini, Giuseppe 3,000 3,000 0
Goldfinch, Stephanie 1,000 1,000 0
Gravas, Spiros et Arvanitakis, Panayiota 2,000 2,000 0
Guerin, Carl 2,665 2,665 0
Guerin, Gilles 3,961 3,961 0
Guerin, Jean-Francois 1,336 1,336 0
Guernon, Jean 3,278 3,278 0
Hancock, Richard 10,000 10,000 0
Hancock, Richard 4,989 4,989 0
Harel, Hubert 10,000 10,000 0
Hartvigsen, Kris 1,200 1,200 0
Hebert, Fernande 10,000 10,000 0
Hebert, Jean 23,300 23,300 0
Hebert, Jean 23,396 23,396 0
Hoyt, Randy 1,000 1,000 0
Jamalouden, Nazmoon 15,000 15,000 0
Kaklamanos, Leonidas 3,000 3,000 0
Kalafatidis, James 3,400 3,400 0
Kastelorizios, Maria 8,000 8,000 0
Karteris, Maria 13,422 13,422 0
Karteris, John 16,680 16,680 0
Karteris, John 16,780 16,780 0
Kirakossian, Garabet 11,000 11,000 0
Kirakossian, Hourie 2,500 2,500 0
Kirakossian, Vartivar 6,000 6,000 0
Lachapelle, Sylvain 5,200 5,200 0
Lacroce, Vincenzo 3,000 3,000 0
Lalande, Sophie 3,000 3,000 0
48
<PAGE>
Warrants beneficially owned*
before after
Name of warrant holder offering offering offering
Lamorgese, Caroline 1,000 1,000 0
Lamorgese, Tony 2,000 2,000 0
Lanoie, Pierre 230 2,130 0
Laverdiere, Chantal 1,000 1,000 0
Lebel, Yannick 1,000 1,000 0
Leroux, Guylaine 8,000 8,000 0
L.I.B. Invest. Club 2,000 2,000 0
Lintzeris, Peter 2,000 2,000 0
Luniewski, Renee 2,000 2,000 0
Mady, Chady 3,014 3,014 0
Malenfant, Robert 20,700 20,700 0
Malenfant, Veronique 7,950 7,950 0
Marcos, Marcel 1,000 1,000 0
Markov, Nikolaos 1,500 1,500 0
Martin, Jacques 50,000 50,000 0
Martin, Philippe 2,000 2,000 0
Martinez, Alvaro 2,000 2,000 0
Mathieu, Josee 4,916 4,916 0
Mineo, Serge 1,000 1,000 0
Morazain, Luc 2,000 2,000 0
Morel, Remy 600 600 0
Morin, Pierre 9,460 9,460 0
Morissette, Solange 900 900 0
Morgia, Anne-Marie 1,000 1,000 0
Muller, Peter 1,000 1,000 0
Natale R. Gennaro 8,000 8,000 0
Pacheco John et Pacheco Joe 1,313 1,313 0
Panaccione, Fabio 10,000 10,000 0
Papadakos, Georgia 15,000 15,000 0
Pappappicco, Mariella 5,000 5,000 0
Pare, Richard 3,341 3,341 0
Perreault, Daniel 1,600 1,600 0
Petit, Patrice 3,137 3,137 0
Pires, Joa 20,000 20,000 0
Poulin, Christian 1,336 1,336 0
Poulopoulos, N 5,000 5,000 0
Purcell, Anita 1,000 1,000 0
Rea, Karen 3,000 3,000 0
Renaud, Denis 3,318 3,318 0
Richard, Martin 1,500 1,500 0
Riopel, Nicole 1,400 1,400 0
Rioux, Pierre Sam 2,015 2,015 0
49
<PAGE>
Warrants beneficially owned*
before after
Name of warrant holder offering offering offering
Roque, Christina 1,000 1,000 0
Salas Fernandez, Carlos Luis 1,982 1,982 0
Santucci, Anthony 1,000 1,000 0
Santucci, Gianni 10,000 10,000 0
Santucci, Mario 1,000 1,000 0
Santucci, Mario 16,500 16,500 0
Sauve, Diane 2,000 2,000 0
Shou, Judy 1,000 1,000 0
Sistatsis, Georges 1,000 1,000 0
Stefaros, Bill 12,000 12,000 0
Stinziani, Giovanni 8,000 8,000 0
Stockden, Gary 2,000 2,000 0
Taddeo, Anthony 1,000 1,000 0
Tartaglia, Nick 5,929 5,929 0
Tassone, Vittoria 5,000 5,000 0
Tolias, Maria 4,000 4,000 0
Therrien, Eric 2,500 2,500 0
Therrien, Ghislaine 2,500 2,500 0
Tremblay, Marc 16,700 16,700 0
Trudeau, Wayne 3,000 3,000 0
Vaccarella, Vincent 14,000 14,000 0
Vassiliou, Joanne 1,000 1,000 0
Vassiliou, Vicky 3,400 3,400 0
Veilleux, Vincent 6,661 6,661 0
Virgilio, Giuseppe 6,500 6,500 0
Ward, Lance 1,660 1,660 0
Woods, James 5,000 5,000 0
Winikoff, Mark 1,000 1,000 0
Zervakos, Georges 29,000 29,000 0
Zervakos, Georges 4,989 4,989 0
Zervakos, Kostantinos 2,000 2,000 0
Zervakos, Melinda 2,000 2,000 0
Zervakou, Rosa 1,000 1,000 0
3101-5464 Quebec inc 35,000 35,000 0
9008-5085 Quebec inc 15,000 15,000 0
- ----------
* We are registering the shares underlying the warrants. References in the
chart to <<warrants>> before or after sale are all references to the underlying
shares. The list has been presented in two parts to distinguish between the
actual shares and the shares underlying the warrants. Each warrant is
exercisable into one share of Class B common stock at a price of $1.10.
50
<PAGE>
(1) Controlled by our president, CEO and chairman.
(2) Our senior vice president sales and marketing and a director.
(3) Mr. Pierre Saint-Aubin is a director of this entity.
51
<PAGE>
Legal matters
Certain legal matters in connection with this offering are being passed
upon by the law firm of Heller, Horowitz & Feit, P.C., New York, New York.
Experts
Our audited financial statements as of October 31, 1999 and for the fiscal
year then ended are included in this prospectus in reliance upon the report of
Mark Cohen C.P.A., an independent certified public accountant, and upon the
authority of said person as an expert in accounting and auditing.
Available information
Commencing on the date of this prospectus, we will be subject to the
information requirements of the Securities Exchange Act of 1934, as amended.
This Act requires us to file reports, proxy statements and other information
with the Securities and Exchange Commission. Copies of the reports, proxy
statements and other information we file can be inspected at the Headquarters
Office of the Securities and Exchange Commission located at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at certain of its regional offices
at the following addresses:
o 7 World Trade Center, 13th Floor, New York, New York 10048; and
o 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the material we file may be obtained from the Public Reference
Section of the Commission, at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. at prescribed rates. The Public Reference Room can be reached at (202)
942-8090. The Commission also maintains a web site that contains reports, proxy
and information statements and other information regarding us. This material can
be found at http://www.sec.gov.
52
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
AT OCTOBER 31, 1999
Assets
Current Assets
Cash and cash equivalents $ 350,019
Receivables, net 90,985
---------
Total current assets 441,004
Other assets 473,478
---------
Total assets 914,482
=========
Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable 119,000
Note Payable 279,667
Other current liabilities 58,190
---------
Total current liabilities 456,857
Shareholder's Equity
Common Stock, class A, $1.00 par value; authorized --
5,000,000 shares; issued and outstanding none in 1999
Common Stock, class B, $.001 par value; authorized 19,608
55,000,000 shares; issued and outstanding 19,608,372 in 1999
Paid in Capital 696,656
Deficit accumulated during the development stage (258,639)
---------
Total Shareholder's Equity 457,626
Total liabilities and shareholder's equity $ 914,482
=========
Read the accompanying summary of significant accounting policies
and notes to financial statements, both of which are an integral
part of this financial statement.
53
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF INCOME
FOR THE YEAR ENDED OCTOBER 31, 1999
Year Ended
October 31, 1999
----------------
Operating Expenses:
Selling, general and administrative expenses $ 258,639
-----------
Net Loss $ (258,639)
===========
Basic weighted average common shares outstanding 6,185,628
===========
Basic Loss per common share $ (0.0418)
===========
Read the accompanying summary of significant accounting policies
and notes to financial statements, both of which are an integral
part of this financial statement.
54
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF SHAREHOLDER'S EQUITY
FOR THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
Common Class A Common Class B
----------------------- --------------------------------------
Shares Amount Shares Par Value Amount
------ ------ ------ --------- ------
<S> <C> <C> <C> <C> <C>
Balance, beginning: -- $ -- -- $ --
June 30, 1999
Proceeds from the sale of Class B 18,085,472 0.001 18,085
September 16, 1999
Contract Settlement - BBT Consulting Group, Inc. -- -- 500,000 0.001 500
October 22, 1999
Proceeds from the sale of Class B through 384,700 0.001 385
circular offering
October 26, 1999
Issuance of stock to GSI Technologies 600,000 0.001 600
(3529363 Canada Inc.) for license rights
Dividend to affiliate - GSI Technologies
(3529363 Canada Inc.) for license rights
October 27, 1999
Proceeds from the sale of Class B through 18,000 0.001 18
circular offering
October 29, 1999
Proceeds from the sale of Class B through 20,200 0.001 20
circular offering
Net loss year ended October 31, 1999
---------- ---------- ---------- ------ ----------
Balance, ending: -- $ -- 19,608,372 $0.001 $ 19,608
========== ========== ========== ====== ==========
<CAPTION>
Accumulated
Deficit during
Paid in Development Cost per
Capital Stage Share
------- ----- -----
<S> <C> <C> <C>
Balance, beginning: $ -- $ --
June 30, 1999
Proceeds from the sale of Class B -- -- 0.001
September 16, 1999
Contract Settlement - BBT Consulting Group, Inc. -- -- 0.001
October 22, 1999
Proceeds from the sale of Class B through 384,315 -- 1.000
circular offering
October 26, 1999
Issuance of stock to GSI Technologies 599,400 -- 1.000
(3529363 Canada Inc.) for license rights
Dividend to affiliate - GSI Technologies (325,221)
(3529363 Canada Inc.) for license rights
October 27, 1999
Proceeds from the sale of Class B through 17,982 -- 1.000
circular offering
October 29, 1999
Proceeds from the sale of Class B through 20,180 -- 1.000
circular offering
Net loss year ended October 31, 1999 (258,639)
--------- --------- -----
Balance, ending: $ 696,656 $(258,639) 0.037
========= ========= =====
</TABLE>
Read the accompanying summary of significant accounting policies
and notes to financial statements, both of which are an integral
part of this financial statement.
55
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED OCTOBER 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(258,639)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 1,301
Issuance of stock for contract settlement 500
Changes in Operating assets and liabilities:
Accounts Receivable (90,985)
Accounts Payable and Accrued Liabilities 177,190
---------
Net cash provided by/(used in) operating activities (170,634)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by/(used in) investing activities --
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Notes payable, principally related parties 79,667
Sales of common stock 440,985
---------
Net cash provided by/(used in) financing activities 520,652
---------
Net increase (decrease) in cash and cash equivalents 350,019
Cash and cash equivalents, beginning of period --
---------
Cash and cash equivalents, end of period $ 350,019
=========
Read the accompanying summary of significant accounting policies
and notes to financial statements, both of which are an integral
part of this financial statement.
56
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
YEAR ENDED OCTOBER 31, 1999
Basis of accounting:
GSI Technologies USA, Inc. prepares its financial statements in accordance
with generally accepted accounting principles. This basis of accounting
involves the application of accrual accounting; consequently, revenues and
gains are recognized when earned, and expenses and losses are recognized
when incurred. Financial statement items are recorded at historical cost
and may not necessarily represent current values.
Management estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Certain amounts included in the financial
statements are estimated based on currently available information and
management's judgment as to the outcome of future conditions and
circumstances. Changes in the status of certain facts or circumstances
could result in material changes to the estimates used in the preparation
of financial statements and actual results could differ from the estimates
and assumptions. Every effort is made to ensure the integrity of such
estimates.
Fair value of financial instruments:
The carrying amounts of cash and equivalents, accounts receivable, accounts
payable and accrued liabilities approximate their fair values because of
the short duration of these instruments.
Impairment of long-lived assets:
Long-lived assets and certain identifiable intangibles held and used by the
Company are reviewed for possible impairment whenever events or
circumstances indicate the carrying amount of an asset may not be
recoverable. Intangible assets have been written down to their net
estimated realizable value.
Cash and cash equivalents:
The Company considers all highly liquid investments with original
maturities of ninety days or less to be cash and cash equivalents. Such
investments are valued at quoted market prices.
Receivables:
The Company believes that the carrying amount of receivables at October 31,
1999 approximates the fair value at such date.
License rights:
License rights are recorded at cost, less accumulated amortization.
Licenses are amortized to operations using the straight-line method over
the remaining term. The remaining term is 59 months for the current and
only license which the company has rights to.
57
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
YEAR ENDED OCTOBER 31, 1999
Per share amounts:
Loss per share is computed by dividing net loss by the weighted average
number of shares outstanding throughout the year.
Recent Accounting Pronouncements:
The Statement of Financial Accounting Standards Board (SFAS) No. 130,
"Reporting Comprehensive Income," was issued by the Financial Accounting
Standards Board (FASB) in June 1997. This Statement establishes standards
for the reporting and display of comprehensive income and its components.
Comprehensive income including, among other things, foreign currency
translation adjustments and unrealized gains and losses on certain
investments in debt and equity securities. Also in June 1997, the FASB
issued SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information." This Statement establishes standards for reporting
information about operating segments in annual financial statements, and
requires that an enterprise report selected information about operating
segments in interim reports issued to shareholders. Both of these
Statements are effective for fiscal periods beginning after December 15,
1997. The Company does not expect the adoption of these statements to have
a material impact on its financial condition or results of operations.
58
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1999
1. Organization and business
GSI Technologies USA, Inc., formerly I.B.C. Corporation, was incorporated
in the State of Delaware on July 06, 1998. The Company participates in the
Information Technology (IT) industry, specializing in broadcasting
solutions principally for advertisers and others seeking to reach the
greatest number of "viewers per day" as well as to achieve other commercial
and public service objectives. The basic advanced technology available to
the company by way of a Master Licensing agreement is the successful
integration of various hardware components and specialty software for the
transmission of broadcast signals in real time via the Internet to remote
locations. Using its universal transcoder system, the company has a unique
capability in broadcasting from a central server to full video screens in
remote locations anywhere in the world. The system is capable of updating
pinpoint information minute by minute by way of video compressing systems
and other fully automated software systems.
2. Concentrations of credit risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash, cash equivalents
and accounts receivable. The credit risk associated with cash and cash
equivalents is considered low due to the credit quality of the financial
institutions. The Company maintains, when appropriate, an allowance for
uncollectible receivables. Therefore, no additional credit risk beyond
amounts provided for collection losses is believed inherent in the
Company's receivables and to date have been within management's
expectations.
3. Details of financial statement components
Receivables:
Receivable - GSI Technologies, Canada $ 18,085
Receivable - Maxima Capital 72,900
---------
$ 90,985
Other Assets:
License rights $ 474,779
(Acquired from affiliate and recorded at
predecessor basis with the cost over such
basis recorded as a dividend to affiliate).
Accumulated amortization (1,301)
---------
$ 473,478
Other Current Liabilities:
Due to A. Adouelouafa $ 5,900
Accrued Expenses 52,290
---------
$ 58,190
4. Commitments, contingencies and litigation
OTC Bulletin Board Listing:
The company contracted on September 16, 1999 with BBT Consulting Group Ltd.
to assist in obtaining a (NASDAQ) OTC Bulletin Board listing of its common
shares. The agreement states a fee of $50,000.00 to BBT Consulting Ltd..
all of which has been accrued in the financial statements.
59
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1999
Commitments, contingencies and litigation (continued)
Employment Contracts:
On October 29, 1999, the Company executed a three year employment agreement
(which starts on January 01, 2000) with its President, Mr. J. Michel de
Montigny. On October 29, 1999, the Company executed a one year employment
agreement (which starts on January 01, 2000) with its Vice President
Finance, Mr. James Hone.
Year 2000 compliance:
The year 2000 issue is the result of computer programs being written using
two (2) digits rather than four (4) digits to define the year. Any of the
Company's computer programs that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than 2000. This problem could
force computers to either shut down or provide incorrect data or
information. The Company utilizes generic software programs developed,
maintained and upgraded by independent computer software providers. In
response to the year 2000 issue, management is of the opinion that the
providers of these software programs will resolve the date sensitive issue
so that all critical systems will be in compliance prior to the year 2000.
The Company does not anticipate any material adverse impact on the
business.
Going Concern:
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The company reported a net loss
of $258,639 for the year ended October 31, 1999. As reported on the
statement of cash flows, the Company incurred negative cash flows from
operating activities of $171,134 from inception. To date, this has been
financed principally through the sale of common stock ($440,985) and short
term debt ($79,667) which is related party debt. Management believes the
company has sufficient funds available until June 2000 due to the October
1999 offering. In October 1999, the Company acquired the licensing rights
to market the technology, processes, methods and techniques to provide
electronic advertising services on a commercial basis The operating plan
for the year ending October 31, 2000 reflects the sale and installation of
a total of 280 display units, beginning with the first installation of 20
units in April 2000. These installations will generate revenue and cash
flow to the company. Additional capital and/or borrowings may be necessary
in order for the Company to continue in existence until attaining and
sustaining profitable operations. The company has available the option to
seek additional funds from current shareholders through borrowings or
equity financing. Management has continued to develop a strategic plan to
develop a management team, maintain reporting compliance and seek new
expansive areas in broadcasting solutions. Management anticipates that an
additional investment of several million dollars will be needed to develop
an effective sales and marketing program and fund purchases of future
acquisitions before the organization will generate sufficient cash flow
from operations to meet current operating expenses and overhead.
5. Comprehensive income (loss)
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income". SFAS 130 establishes standards for
the reporting and display of comprehensive income (loss) and its components
in the financial statements. The adoption of this statement did not result
in a change in the Company's disclosure.
60
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1999
6. Related Parties
License rights:
On October 26, 1999, the Company entered into a license rights agreement
with GSI Technologies (3529363 Canada Inc.), a shareholder of the company
and an affiliate. The amount of the license agreement was $800,000. On
October 26, 1999, the Company issued 600,000 shares of common stock, class
B, to GSI Technologies (3529363 Canada Inc.), a shareholder of the company,
in settlement of the license rights agreement in the amount of $600,000 and
also issued a note payable for the balance of $200,000 (refer to note
payable to stockholder below). The license was capitalized at predecessor
cost for an amount of $474,779 with the difference of $325,221 treated as a
dividend to affiliate. The $325,221 dividend to affiliate was applied
against paid in capital.
Note payable to stockholder:
The company has a note payable dated October, 31, 1999 in the amount of
$279,667 to GSI Technologies (3529363 Canada Inc.), a shareholder of the
company. This note is for settlement of payment for license rights
agreement of $200,000 and reimbursements of expenditures in the amount of
$79,667 paid by GSI Technologies (3529363 Canada Inc.) during the fiscal
year ended October 31, 1999 on behalf of GSI Technologies USA, Inc. The
note is unsecured and bears interest of prime plus two percent and matures
on October 31, 2000.
Accrued financing expenses:
On October 31, 1999, the Company accrued financing expenses in the amount
of $10,000 due to Totalcom Inc., a shareholder of the company. This amount
is for finder fees associated with the circular offering. Mr. J. Michel de
Montigny is a 49 percent shareholder of Totalcom Inc. as well.
On October 31, 1999, the Company accrued financing expenses in the amount
of $15,000 due to 3633730 Canada Inc., a shareholder of the company. This
amount is for finder fees associated with the circular offering. Mr. J.
Michel de Montigny is a 100 percent shareholder of 3633730 Canada Inc. as
well.
On October 31, 1999, the Company accrued financing expenses in the amount
of $15,000 due to 9035-2899 Quebec Inc., a shareholder of the company. This
amount is for finder fees associated with the circular offering.
On October 31, 1999, the Company accrued financing expenses in the amount
of $86,500 due to Maxima Capital Inc., a shareholder of the company. This
amount is for finder fees associated an agreement entered into on August
17, 1999 with the Company. Mr. Pierre Saint-Aubin is the Director of Maxima
Capital Inc. and a shareholder of GSI Technologies USA, Inc.
Professional services:
On August 17, 1999, the Company entered into an agreement with Maxima
Capital Inc., a shareholder of the company, for consulting services related
to obtaining an OTC Bulletin Board listing. The fee for such services
totaled $12,000 of which $7,500 has been accrued in the financial
statements. Mr. Pierre Saint-Aubin is a Director of Maxima Capital Inc. and
a shareholder of GSI Technologies USA, Inc.
61
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1999
7. Income Taxes
The Company did not provide any current or deferred United States federal,
state or foreign income tax provision or benefit for the period presented
because it has experienced operating losses since inception. The Company
has provided a full valuation allowance on the deferred tax asset,
consisting primarily of net operating loss carryforwards, because of
uncertainty regarding its realizability.
8. Common Stock
The company has 5,000,000 shares of class A common stock which to date have
never been issued. Management has no intent of issuing any of these shares
and will be canceling these shares by filing an amendment to the articles
of incorporation with the State of Delaware.
9. Warrants and Options
On June 30, 1999, the Company issued 2,174,000 warrants to founding
shareholders. Each warrant entitles the registered holder thereof to
purchase at any time one share of common stock at a price of $1.10.
On September 16, 1999, the Company issued 500,000 warrants to BBT
Consulting Group, Inc. as part of its contractual agreement to obtain a
(NASDAQ) OTC Bulletin Board listing of its common shares. Each warrant
entitles the registered holder thereof to purchase at any time one share of
common stock at a price of $1.10.
From October 22, 1999 to October 29, 1999, the Company, in accordance with
it offering circular to sell no less than 300,000 and up to 1,000,000 units
(each unit consisting of one (1) share of common stock and (1) warrant),
sold 422,900 shares of common stock. Each warrant entitles the registered
holder thereof to purchase at any time from the date of the offering until
the close of business January 31, 2002, one share of common stock at a
price of $1.10.
On October 29, 1999, the Company executed a three year employment agreement
(which starts on January 01, 2000) with its President, Mr. J. Michel de
Montigny, which allows the purchasing of up to 500,000 warrants at $1.10
cents per warrant during his employment.
10. Earnings (Loss) per common share
Basic earnings (loss) per share is computed using the weighted-average
number of common shares outstanding during the period.
11. Subsequent Events
Circular Offering:
From November 01, 1999 to November 30, 1999, the Company, in accordance
with it offering circular to sell no less than 300,000 and up to 1,000,000
units (each unit consisting of one (1) share of common stock and (1)
warrant), completed its offering by selling the remaining 577,100 shares of
common stock. Each warrant entitles the registered holder thereof to
purchase at any time from the date of the offering until the close of
business January 31, 2002, one share of common stock at a price of $1.10.
Office rent agreement:
On November 01, 1999, the company entered into an office rent agreement
with Fernand Lamothe Inc. for office space. This agreement is for a term of
1 year and the annual rental amount is $3,816. Mr. Fernand Lamothe, the
president of Fernand Lamothe Inc., is also the President of Power Group
Consultants, LLC., a shareholder in GSI Technologies USA, Inc.
62
<PAGE>
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1999
Subsequent Events (continued):
Consulting agreement:
On November 04, 1999, the Company entered into a consulting agreement with
Power Group Consultants, LLC., a shareholder of the company. The fee is
$10,000 and relates to preparation of financial statements for management
and assisting management throughout the audit of the October 31, 1999
financial statements.
63
<PAGE>
================================================================================
You should only rely on the information contained in this document or other
information that we refer you to. We have not authorized anyone to provide you
with any other information that is different. You should note that even though
you received a copy of this Prospectus, there may have been changes in our
affairs since the date of this Prospectus. This Prospectus does not constitute
an offer to sell securities in any jurisdiction in which such offer or
solicitation is not authorized
TABLE OF CONTENTS
PAGE
Risk Factors 3
Special Note Regarding
Forward-Looking Statements 8
Summary Historical Financial
Information 9
Plan of Operations 9
Use of Proceeds 13
Business 14
Management 27
Security Ownership of Certain
Beneficial Owners and Management 29
Executive Compensation 30
Certain Relationships
and Related Transactions 30
Disclosure of Commission Position
on Indemnification for Securities
Act Liability 31
Description of Securities 26
Plan of Distribution 33
Selling Stockholders 33
Legal Matters 47
Experts 47
Available Information 47
Index to Financial Statements F-
================================================================================
8,377,206 Shares of Common Stock
GSI TECHNOLOGIES USA INC.
----------
PROSPECTUS
----------
_____________ , 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other expenses of issuance and distribution
The following statement sets forth the estimated expenses in connection
with the offering described in the Registration Statement, all of which will be
borne by the Registrant.
Securities and Exchange Commission Fee ....................... $ 2,650
Accountants' Fees ............................................ $15,000
Legal Fees ................................................... $20,000
Company's Administrative Expenses ............................ $30,000
Printing and engraving ..................................... $10,000
Miscellaneous ................................................ $ 2,350
Total $80,000
=======
Item 14. Indemnification of directors and officers.
Neither our By-Laws nor our Certificate of Incorporation currently provide
indemnification to our officers or directors. In an effort to continue to
attract and retain qualified individuals to serve as our directors and officers,
we intend to adopt provisions providing for the maximum indemnification
permitted by Delaware law.
Item 15. Recent sales of unregistered securities
In June 1999, Registrant sold an aggregate of 18,085,472 shares at par
value and issued an aggregate of 2,174,000 warrants to purchase one share of
Class B Common Stock at $1.10. All of shares were restricted and were issued to
non-U.S. persons pursuant to the exemption from registration contained in
Regulation S.
In September 1999, Registrant issued 500,000 restricted shares to one
consultant as payment for consulting services pursuant to the exemption from
registration contained in Section 4(2). The consultant assisted Registrant in
obtaining an OTC:BB listing and overseeing SEC compliance and had complete
access to all of Registrant's files. The shares were valued at $0.001 per share.
In October 1999, Registrant issued 600,000 restricted shares to GSI Canada,
an affiliated entity, as a licensing fee. This issuance was pursuant to the
exemption from registration contained in Section 4(2). The affiliate should be
deemed to have complete
II-II
<PAGE>
knowledge of Registrant's activities due to overlapping directorships and the
fact Registrant's business is predicated on the licensed technology. The shares
were valued at $1.00 per share.
In October/November 1999, Registrant sold 1,000,000 units consisting of one
share of Class B Common Stock and one warrant to purchase one share of Class B
Common Stock at a price of $1.10. The Units were sold pursuant to the exemptions
from registration contained in Regulation S and Regulation D, Rule 506.
Item 16. Exhibits and financial statements schedules.
3.1 Certificate of Incorporation, as amended*
3.2 By-Laws*
4.1 Specimen Common Stock Certificate*
4.2 Specimen Warrant Certificate*
5 Opinion of Heller, Horowitz & Feit, P.C.*
10.1 Master License Agreement between GSI Technologies USA Inc. and
GSI Technologies (3529363 Canada Inc.)*
Other material contracts
10.1(a) Leases
Employment agreements
10.1(b) De Montigny
10.1(c) Hone
10.1(d) Laplante
10.1(e) Maxima Capital
10.1(f) BBT agreement
23.1 Consent of Heller, Horowitz & Feit, P.C. (included in the Opinion
filed as Exhibit 5)
23.2 Consent of Mark Cohen, C.P.A.
27 Financial data schedule, as amended
- ----------
* Previously filed
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and
II-III
<PAGE>
notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be reflected in the
form of prospectus filed with Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(iv) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
II-IV
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and has authorized this registration
statement or amendment to be signed on its behalf by the undersigned, in the
City of Montreal on the ___ day of April, 2000.
GSI TECHNOLOGIES USA INC.
By: /s/ J. Michel de Montigny
---------------------------------------
J. Michel de Montigny, president and CEO
In accordance with the requirements of the Securities Act, this
registration statement or amendment was signed by the following persons in the
capacities and on the dates stated:
Signature Title Date
--------- ----- ----
By: /s/ J.Michel de Montigny
------------------------
J. Michel de Montigny President, Chief April 19, 2000
Executive Officer
and Chairman
By: /s/ James A. Hone
------------------------
James A. Hone Senior Vice President April 19, 2000
Administration, Chief
Financial Officer
and Director
By: /s/ Michel Laplante
------------------------
Michel Laplante Senior Vice President April 19, 2000
Sales and Marketing
and Director
II-V
AGREEMENT OF LEASE
signed on January 6th, 2000
between
2849-3930 Quebec inc
duly represented by mandatory
SITQ inc.
(the "Lessor")
and
GSI TECHNOLOGIE USA INC.
(the "Lessee")
Office Lease (net)
2001 Mc Gill College
Suite 1310
Revised (January 1999)
<PAGE>
Table of contentS
titles PAGES
PARTIES......................................................................1
Article 1 ESSENTIAL DISPOSITIONS, DEFINITIONS AND INTENT...................1
Article 2 LEASE AND DELIVERY OF LEASED PREMISES............................6
Article 3 SERVICES FURNISHED TO THE LESSEE.................................7
Article 4 RENT.............................................................8
Article 5 OPERATING EXPENSES AND REAL ESTATE TAXES.........................9
Article 6 TAXES of lessee and occupation's certificate.....................9
Article 7 USE AND MAINTENANCE OF LEASED PREMISES..........................10
Article 8 LEASEHOLD IMPROVEMENTS..........................................11
Article 9 INSURANCE.......................................................13
Article 10 ACCESS BY LESSOR TO LEASED PREMISES.............................15
Article 11 DAMAGE AND DESTRUCTION..........................................15
Article 12 EXPROPRIATION...................................................15
Article 13 DAMAGES.........................................................16
Article 14 SIGNS AND ADVERTISING...........................................16
Article 15 COMPLIANCE WITH LAWS AND INDEMNIFICATION........................16
Article 16 SUBLET AND ASSIGNMENT...........................................17
Article 17 ASSIGNMENT BY LESSOR............................................19
Article 18 DEFAULT AND RECOURSE............................................19
Article 19 NOTICE 22.......................................................21
Article 20 TERMINATION OF LEASE............................................21
Article 21 UNAVOIDABLE DELAY...............................................21
Article 22 MODIFICATION OF LEASE AND PERFORMANCE BY A THIRD PARTY..........21
Article 23 MISCELLANEOUS...................................................21
Article 24 MOVABLE HYPOTHEC................................................23
Article 25 REGULATIONS.....................................................23
Article 26 SPECIAL PROVISIONS/SCHEDULES....................................23
SCHEDULES
SCHEDULE "A" GUARANTY(IES) IN FAVOUR OF THE LESSOR
SCHEDULE "B" DESCRIPTION OF LAND
SCHEDULE "C" WORK BY THE LESSOR AND BY THE LESSEE
SCHEDULE "D" PLAN OF LEASED PREMISES
SCHEDULE "E" REGULATIONS
SCHEDULE "F" LESSEE'S RESOLUTION
SCHEDULE "G" STATUS REPORT
<PAGE>
AGREEMENT OF LEASE
BETWEEN: 2849-3930 Quebec inc., duly represented by mandatory, SITQ INC., a
company duly incorporated under the laws of the Province of Quebec,
having its head office at Centre de Commerce Mondial de Montreal, 380
St. Antoine Street West, Suite 6000, in the City of Montreal, Province
of Quebec, H2Y 3X7, hereinacting and represented by Mr. Daniel
Archambault, Vice-president, Office Buildings and Business Parks and
Mr. Denis Perreault, Leasing Director, duly authorised for the
purposes hereof, as they so declare;
(hereinafter referred to as the "Lessor")
AND: GSI TECHNOLOGIES USA INC., a company duly incorporated under a company
incorporated under the law of Delaware United States, the law of
Delaware, united States, having its head office at 2001 McGill College
bureau 1310 Place Mercantile hereinacting and duly represented by J.
Michel de Montigny, its President duly authorised for the purposes
hereof, as declared and as more fully set forth in the resolution
attached hereto as Schedule "F";
THE PARTIES HEREBY MUTUALLY AGREE AS FOLLOWS:
ARTICLE 1
ESSENTIAL DISPOSITIONS, DEFINITIONS AND INTENT
1.1 Essential dispositions - Following are certain essential dispositions
of the Lease which are further acknowledged in the Lease:
1.1.1 LEASED PREMISES: means premises of an approximate area of
seven thousands eight hundred ninety nine square feet (7899
sq. ft. ) ("Leasable Area of the Leased Premises"),
identified as premises number 1310 ("Leased Premises") of
the building located at 2001 McGill College, Montreal,
Quebec, H3A 1G1 ("Building").
1.1.2 TERM: the period ("Term") beginning , the first of January
or the date on which the Lessee takes possession of the
Leased Premises, understanding the earliest of the two dates
("Commencement of the Lease"), and terminating December 31st
2004 ("Termination of Lease"), unless the Lessee exercises
its option (s) to renew the Lease provided in article 1.1.12
(Special Provisions) of the Lease, in which case the Lease
shall terminate December 31st 2009.
1.1.3 USE OF THE LEASED PREMISES : the Leased Premises shall be
used for no other purpose than office purposes.
OU
1.1.4 MINIMUM RENT : Throughout the Term, an annual guaranteed
minimum rent (the "Minimum Rent") equal to :
- for the period commencing on the January 1st 2000 and
terminating on December 31st 2004, an annual rent of
(142 182$ ), payable in advance, in equal monthly and
consecutive instalments of ( 11 848.50$ ) each, on the
first day of each month during for this period, based
on a net rate per square foot ( 18.00$ /sq. ft. ) of
the Leasable Area of the Leased Premises;
-1-
<PAGE>
- The Minimum Rent is payable to the Lessor in accordance
to article 4.1 of the Lease
1.1.5 PROPORTIONATE SHARE: means the ratio of the Leasable Area of
the Leased Premises to the leasable area of the Building
2001 McGill College; this ratio may vary in the event of an
increase or a decrease in the Leasable Area of the Leased
Premises or in the leasable area of the Building;
1.1.6 OPERATING EXPENSES OF THE BUILDING: An annual estimated
Proportionate Share for the 1999 Fiscal Period of ( 5.50$ )
per square foot of the Leasable Area of the Leased Premises,
which Proportionate Share is payable, adjusted and increased
according to the provisions of article 5.1 of the Lease.
1.1.7 REAL ESTATE TAXES: An annual estimated Proportionate Share
for the 1999 Fiscal Period of ( 40.00$ ) per square foot of
the Leasable Area of the Leased Premises (including the
surtax on non residential buildings estimated at ( 0.27$ )
per square foot of the Leasable Area of the Leased
Premises), which Proportionate Share will be payable,
adjusted and increased according to the provisions of
article 5.2 of the Lease.
1.1.8 ELECTRICITY: An annual estimated Proportionate Share for the
1999 Fiscal Period of ( 0.85$ ) per square foot of the
Leasable Area of the Leased Premises, which Proportionate
Share will be payable, adjusted and increased according to
the provisions of article 3.6 of the Lease.
OR
1.1.9 BUSINESS HOURS: means the period between 7h00 a.m. to 18h00
p.m., Monday to Friday on business days excluding legal
holidays and such other times as the Lessor may set from
time to time;
1.1.10 PAYMENT OF RENT: All payments that must be effected
according to the Lease shall be effected in money having
legal tender in Canada to the order of SITQ - 2001 McGill
College.
1.1.11 NOTICE AND REQUEST:
i) in case of a notice to the Lessor :
SITQ Inc.
2001, McGill College avenue, Suite 1000
Montreal (Quebec) H3A 1G1
Care of: Vice-President
With a copy to the Property Manager to the following
address:
SITQ inc.
2001 McGill College
Bureau 510
Montreal, Quebec
H3A 1G1
-2-
<PAGE>
Care of: Property Manager
ii) in case of a notice to the Lessee :
GSI TECHNOLOGIES USA INC.
2001 McGill College
bureau 1310
Montreal, Quebec
H3A 1G1
Attention: J.Michel De Montigny
1.1.12 SPECIAL PROVISIONS
i) FREE INSTALLATION PERIOD
ii) RENEWAL OPTION FOR FIVE (5) YEARS AT THE SAME TERM AND
CONDITIONS
1.2 DEFINITIONS - When used in this Lease, and unless incompatible with
the context in which they are utilised, the following words and
expressions have the meaning hereinafter set forth:
1.2.1 "Additional Rent": means all of the financial obligations of
the Lessee other than the Minimum Rent;
1.2.2 "Common Areas and Facilities": means all areas and
facilities of the Immovable which are not intended for the
exclusive benefit of any lessee in particular, as determined
by the Lessor from time to time;
1.2.3 "Contaminants and Hazardous Materials": have the meaning
attributed thereto in the Environmental Legislation and
include any material which, because of its properties,
presents a real or potential hazard to the environment or
the health of users of the Immovable or of the Leased
Premises;
1.2.4 "Environmental Legislation": means all federal, provincial
or municipal legislative and regulatory environmental
provision, including, in all cases, any judgements, orders,
notices, notices of offence, decrees, codes, rules,
instructions, policies, guidelines and guides,
authorisations, certificates of authorisation, approvals,
permits and licenses issued by any authority having
jurisdiction, the whole as amended from time to time;
1.2.5 "Fiscal Period": means a period commencing on the first
(1st) day of January of the year and ending on the last day
of December next following, with the exception of the first
Fiscal Period, which shall begin at the same time as this
Lease and terminate on the thirty-first (31st) day of
December next following, and with the exception of the last
Fiscal Period, which shall terminate at the same time as
this Lease; however, the Lessor expressly reserves the right
to change the Fiscal Period and its duration. Should the
Fiscal Period be modified or should a part only of a Fiscal
Period be comprised in the Term, the parties shall
immediately make the necessary adjustments.
1.2.6 "Immovable": means the land described in Schedule "B", plus
the Building and other structures erected thereon from time
to time;
1.2.7 "Land": means all lots or parts of lots described in
Schedule "B" of this Lease;
1.2.8 "Leasable Area of the Leased Premises": means the area of
the Leased Premises as calculated according to the criteria
of BOMA. At any time during the Term, the Lessor's architect
or land surveyor may definitely determine the Leasable Area
of the Leased Premises. The architect's or land surveyor's
certificate with respect to the Leasable Area of the Leased
Premises shall be conclusive and shall bind all parties
herein retroactively to the Commencement of the Lease;
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1.2.9 "Lease": means and refers to this agreement and its
schedules, as well as any amendments thereto;
1.2.10 "Leased Premises": means the premises outlined in red in
Schedule "D", as described in article 1.1.1 of this
Agreement and subject to the Lessor's architect's or land
surveyor's measurement;
1.2.11 "Lessee": means the Lessee or its successor;
1.2.12 "Lessor": means the owner of the Immovable or its mandatory;
1.2.13 "Operating Expenses": means, all costs incurred in the
operation, administration, maintenance, repair, supervision
and management of the Immovable, including, namely:
1.2.13.1. salaries, wages and costs related to fringe
benefits and pension plan benefits for all
employees of the Lessor engaged in the
operation, maintenance, repair, surveillance,
supervision and management of the Immovable;
1.2.13.2. the cost of all goods and services furnished,
employed or utilised in the operation,
maintenance, repair, surveillance, supervision
and management of the Immovable, except for the
cost of special goods and services furnished to
certain lessees of the Immovable, for which the
said lessees are responsible;
1.2.13.3. the reasonable rental value of the space
occupied by employees of the Lessor engaged in
the administration, supervision or management
of the Immovable, and by all administrative
services of the Lessor, as well as of any space
required or utilised in the Immovable for
security, welfare, health, protection or other
similar services, for the benefit of the
Immovable and its users in general;
1.2.13.4. the costs related to the maintenance of a
public order and security service;
1.2.13.5. the costs of auditing, accounting and
management incurred in the operation of the
Immovable;
1.2.13.6. the costs related to the planning, maintenance,
repair and decoration of the Common Areas and
Facilities of the Immovable, including the
cleaning of windows and exterior walls, snow
removal, cleaning, repair and maintenance of
the Land, and contracts with independent
contractors;
1.2.13.7. the cost of all repairs to the Immovable,
including the replacement of any equipment,
apparatus, machinery or other property of the
Immovable;
1.2.13.8. the cost of any modifications and improvements
to the Immovable, including, without limiting,
modifications or improvements to the machinery
and equipment contained therein and the cost of
any modifications and additional equipment and
specialised services needed in the Immovable
for energy conservation measures, when, in the
opinion of the Lessor, these expenditures are
likely to reduce the Operating Expenses or be
such as to improve the welfare or the security
of the lessees or other occupants of the
Immovable, or when such equipment,
modifications, materials or improvements are
required by law;
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1.2.13.9. the total capital depreciation or amortisation,
calculated according to the straight-line
depreciation method, based on the useful life
of the capital assets, or on any other shorter
period of time as may be reasonably determined
by the Lessor, on the cost of all equipment,
apparatus or machinery and other property
required for the operation, maintenance,
repair, surveillance, supervision, management,
modification or improvement of the Immovable
and the establishing of energy conservation
measures which, in the opinion of the Lessor,
have a useful life longer than one Fiscal
Period and the cost of which has not been fully
included in the Operating Expenses of the
Fiscal Period of their acquisition (in
accordance with generally accepted accounting
principles) with interest at the Prime Rate
upon the undepreciated or unamortized portion
of the cost of said asset(1)
1.2.13.10. the cost of energy to ensure: the humidifying,
the heating, the ventilating, the
air-conditioning and the lighting of the
Immovable and not exceeding the standards of
these presents, the supply of domestic hot
water at all times all other services of the
Immovable requiring energy excluding the sums
payable by the Lessee in conformity with
Article 3.6 of these presents.
1.2.13.11. the real cost of all insurance premiums paid by
the Lessor with respect to the Immovable, in
accordance with prudent insurance practices or
as may be required by the creditors of the
Lessor, as well as payment for the franchises.
No co-insurance - Notwithstanding the fact the
Lessee pays its Proportionate Share of the
Lessor's insurance policy premiums, the Lessee
acknowledges that it shall not be a co-insured,
that it shall not have any insurable interest
in the said policies and that it shall remain
liable for any damage that might be caused by
its fault, negligence, acts or omissions or
those of the persons the Lessee permits to use
or to have access to the Leased Premises. The
Lessor or its insurers shall not waive their
right to claim from the Lessee any damage that
the Lessee is responsible for under the Lease
or the Law.
1.2.13.12. annual administration fees of fifteen per cent
(15 %), calculated on the total of the
Operating Expenses.
1.2.14 "Prime Rate": means the rate designated by the National Bank
of Canada as being its prime rate, plus five ( 5 )
percentage points.
1.2.15 "Real Estate Taxes": means all levies of any nature
whatsoever on the ownership or operation of the Immovable,
including interest on deferred payments, but excluding tax
on the income or on the capital of the Lessor (except that
part of the tax on the capital attributable to the
Immovable, which is included) and excluding any tax on real
estate transfers;
1.2.16 "Rent": means the Minimum Rent and the Additional Rent;
1.2.17 "Surtax": means any surtax on non-residential immovable or
any other tax imposed under the Municipal Taxation Act
L.R.Q., c. F- 2.1, as modified by L.Q. 1991. c. 32 and L.Q.
1992, c. 532 and any other future modifications.
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(1) in 1986, the amortisation of these measures and the energy bought with
the Loto-Quebec computer centre in connection with this Article is
twenty-nine cents per square feet ($0.29/sq.ft.) to be included in the
Operating Expenses.
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1.2.18 "Taxes": means all governmental levies usually paid by
lessees (e.g. water and business taxes, GST, Quebec Sales
Tax), in connection with the Leased Premises, the contents
thereof or the business conducted therein;
1.2.19 "Taxing Authority": means any governmental authority
whatsoever, legally authorised to impose taxes;
1.2.20 "Term": means the period commencing on the date stipulated
as the Commencement of the Lease and terminating on the date
stipulated as the Termination of the Lease;
1.2.21 "Unavoidable Delay": means a delay caused by circumstances
(except for the financial situation of either of the
parties), which are reasonably beyond the control of the
Lessor or the Lessee, as the case may be;
1.3 Intent - It is the intent of the parties to this Lease that it be
totally net to the Lessor. The Lessor shall not be liable during the
Term for any costs of any nature whatsoever relating to the Leased
Premises and the Lessee shall be solely responsible for any such
costs, except as expressly otherwise provided herein.
ARTICLE 2
LEASE AND DELIVERY OF LEASED PREMISES
2.1 Lease of Leased Premises - The Lessor hereby leases to the Lessee the
Leased Premises for the Term and in consideration of the Rent to be
paid by the Lessee hereunder and of the other provisions and
obligations to be observed and executed by the Lessee hereunder.
2.2 Delivery and Finishing of Leased Premises - The Lessee acknowledges
having carefully examined the Leased Premises in their present state
and declares being fully satisfied therewith. If such examination has
not been made, the Lessee undertakes to do so at the time of delivery
of the Leased Premises and to notify the Lessor in writing within ten
( 10 ) days of taking delivery of any defect in the Leased Premises.
Should the Lessee fail to do so, the Lessee shall be deemed to have
taken delivery of the Leased Premises in a good state and to be
satisfied therewith, and to acknowledge that i) the Lessor has
discharged all its obligations in the preparation and delivery of the
Leased Premises and ii) the Leased Premises may be used for the
purposes for which they have been leased. Schedule "C" describes the
work to be undertaken by each parties and allocates the costs thereof.
2.3 Minor Deficiencies - Notwithstanding that the Leasehold Improvements
are not fully completed at the Commencement of the Lease, the Leased
Premises shall be deemed ready for delivery and the Term shall not be
affected so long as such incomplete work does not significantly
interfere with the use of the Leased Premises.
2.4 Delay in the improvements of the Lessee - If the Lessor allows the
Lessee to undertake the leasehold improvements in the Leased Premises,
article 8 and in Schedule "C" and, in the event such leasehold
improvements are not completed prior to the Commencement of the Lease,
the Term shall in no case be affected.
2.5 Delay in the improvements of the Lessor - If the Lessor accepts to
undertake the leasehold improvements in the Leased Premises, article 8
and in Schedule "C", and these improvements are not completed prior to
the Commencement of the Lease for a cause attributable to the Lessee,
the Term shall in no case be affected. If the delay is attributable to
the Lessor, the Lessee shall not make any claim for damages. However,
the Commencement of the Lease shall be deferred by the number of days
equal to the number of days of delay.
2.6 Relocation - The Lessor shall have the right, at any time, to replace
the Leased Premises with any other premises located in the Building so
long as the premises are substantially comparable to the Leased
Premises, with respect to the space and the usage for which the Lessee
had leased the Leased Premises.
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In the event the Leased Premises are occupied by the Lessee at the
time of the relocation, the Lessor shall assume all reasonable costs
related to the Lessee's moving in the new premises and the Lessor
shall ensure that such move is performed diligently and shall make its
best possible efforts not to inconvenience the Lessee.
Prior to such relocation and, in the event the Lessee is already
occupying the Leased Premises, the Lessor shall give a thirty ( 30 )
days written notice, such notice to precede the date to which the
relocation has been scheduled. In any other event, the Lessor shall
then give the Lessee a fifteen ( 15 ) days written notice prior to the
scheduled relocation.
The new premises assigned to the Lessee shall then be designated as
the "Leased Premises" and the Minimum Rent and the Additional Rent
shall then be adjusted according to the new leasable area of the new
premises.
ARTICLE 3
SERVICES FURNISHED TO THE LESSEE
3.1 Description of Services - The Lessor agrees to supply to the Lessee
the following services:
3.1.1 "Air-Conditioning": The Lessor shall supply, during Business
Hours, air-conditioning to the Leased Premises. All special
requests shall be at the expense of the Lessee. The Lessee
shall be liable for the improper functioning of the system
caused by non-conforming partitions, by changes to the
Leased Premises, by the absence of sunshields, by the
excessive use of electrical power, or by the use of
apparatus resulting in the releasing of excessive heat by
the Lessee.
3.1.2 "Elevators": The Lessor shall supply passenger elevators
during Business Hours. At all other times, limited elevator
service shall be available.
The Lessee shall have the use of escalators, if any, and
elevators, in conjunction with all other persons having
access thereto.
The freight elevator, if any, shall be used for the
conveyance of furniture to the Leased Premises, the whole
pursuant to the Lessor's guidelines. Any deliveries shall be
made at the loading ramp of the Building only, and may be
made solely by the representatives of the Lessee.
3.1.3 "Heating": The Lessor shall heat the Leased Premises during
Business Hours. The Lessee shall be liable for any
malfunctioning of the system attributable to non-conforming
partitions or to changes to the Leased Premises.
3.1.4 "Lighting": The Lessor shall provide, at its cost, at the
Commencement of the Lease, standard electrical equipment of
the Immovable as well as the "Supplies" necessary for its
functioning such as bulbs and starters. Thereafter, the
Supplies shall be at the cost of the Lessee, the Lessor
reserving its right to replace all of the Supplies in whole
or in part, should this practice be in conformity with
proper real estate management.
3.1.5 "Business Hours": The Building shall be open during Business
Hours. At all other times, the Lessor shall ensure that the
Leased Premises are reasonably accessible.
3.1.6 "Cleaning": The Lessor shall have the Leased Premises
cleaned, outside of Business Hours, according to the
Lessor's usual standards. The Lessee shall leave the Leased
Premises in a proper state. Should, however, the wall or
floor coverings of the Leased Premises differ from the
standard coverings of the Building, or should additional
services be required by the Lessee, the Lessee shall pay the
Lessor the resulting supplementary costs, as Additional
Rent.
3.2 Use of Common Areas and Facilities - The Lessee shall be entitled to
use and to benefit from the Common Areas and Facilities of the
Immovable, in conjunction with all others also entitled to
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such and having access thereto. The Lessor may at any time change the
form and destination of the Immovable and of its Common Areas and
Facilities insofar as the enjoyment of the Leased Premises are not
substantially affected.
3.3 Supplies and Services - Only the Lessor or its designated suppliers
may provide electrical supplies and services, which shall be billed at
comparable market rates.
3.4 Suspension of Services - In the event of an accident or for the
purpose of affecting work, or for any reason beyond the Lessor's
control, the Lessor shall be entitled to suspend or to modify any
service required to be provided under the Lease for such time deemed
reasonable by the Lessor.
3.5 Additional Services - All additional services or services provided
outside Business Hours, which the Lessor accepts to provide, shall be
so provided upon sufficient prior notice and at the expense of the
Lessee. The costs and expenses incurred by the Lessor in rendering
such additional services shall be subject to an increase of fifteen
per cent ( 15 % ) for administration fees.
The energy consumed in the Leased Premises shall be billed on a
monthly basis to the Lessee, based on the Electricity rate as
currently estimated and shall be subject to all increases set by
Hydro-Quebec in the following years.
The Lessor shall supply electrical power to the Leased Premises, of a
capacity to meet a maximum demand of forty ( 40 ) watts per square
metre.
The Lessor shall bill the Lessee for the above as Additional Rent
which Additional Rent shall be calculated so as not to exceed the
amount which the Lessee would otherwise pay under the general service
rates set by Hydro-Quebec and either registered on a separate meter
and/or according to an estimation of the energy consumed in conformity
with Hydro-Quebec's rates. The Lessor's undertaking hereunder is made
subject to the rules and regulations of Hydro-Quebec or any other
competent authority.
Notwithstanding the foregoing, the Lessor shall have the right to
install one or several sub-metres in which case the Lessee shall pay
to the Lessor the energy consumed as indicated on the sub-metre(s),
the whole in conformity with Hydro-Quebec's rates.
The Lessee undertakes to never consume an amount of electrical power
exceeding the capacity of the facilities supplying the Leased
Premises. The Lessor shall be entitled to make the necessary
verifications.
3.7 Damages caused during the provision of services - The Lessor shall not
be liable to any person for any damages in connection with the
services described in this Article, whether the services are provided
or not, unless caused by the fault or negligence of the Lessor or of
its employees. However, in no case shall the Lessee have the right to
a reduction of the Rent or to resiliate the Lease. The Lessor shall,
however, to the extent possible, remedy the situation with due
diligence and within a reasonable delay.
ARTICLE 4
RENT
4.1 The Rent shall be paid on the first (1st) day of each month, with the
exception of the Proportionate Share of Real Estate Taxes which shall
be payable as provided for in Article 5.2 hereof, at the address
indicated by the Lessor without notice and without any abatement or
compensation whatsoever. Adjustments for parts of months shall be made
on a per diem basis.
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ARTICLE 5
OPERATING EXPENSES AND REAL ESTATE TAXES
5.1 OPERATING EXPENSES:
5.1.1 Upon the Commencement of the Lease and thereafter prior to
or at the beginning of each Fiscal Period, the Lessor shall
estimate the amount of the Operating Expenses for the
upcoming Fiscal Period and shall bill the Lessee for its
Proportionate Share, which shall be payable as Additional
Rent.
5.1.2 At the end of each Fiscal Period, the Lessor shall provide
the Lessee with a statement audited by an independent firm
of chartered accountants indicating the actual Operating
Expenses for the said Fiscal Period. This statement shall
bind the parties. If it is determined that the payments made
by the Lessee are greater or lesser than the payments which
the Lessee should have made, the parties shall make the
necessary adjustments.
5.1.3 Modification in the estimate of the Operating Expenses - The
Lessor may during the course of the Fiscal Period,
re-evaluate its estimate of the Operating Expenses and in
such a case, the Additional Rent shall be adjusted
accordingly.
5.1.4 Notwithstanding anything herein contained in the present
Lease, if at any time during a Fiscal Period the leasable
area of the Building is not one hundred per cent ( 100 % )
occupied, then for the purpose of the calculation of the
Operating Expenses, the Lessee's Proportionate Share shall
have as its denominator the leased area of the Building
provided that the leased area of the Building shall be
deemed never to be less than eighty-five per cent ( 85 % )
of the leasable area of the Building.
5.2 REAL ESTATE TAXES:
5.2.1 During the course of each Fiscal Period, the Lessee shall
pay its Proportionate Share of Real Estate Taxes upon
receipt of an invoice from the Lessor. However, the Lessor
reserves the right to modify the method of collecting the
Real Estate Taxes and to bill them in a manner similar to
that provided for the Operating Expenses or otherwise.
5.2.2 If the Lessor decides in its absolute discretion to contest
the Real Estate Taxes, all of the expenses relating thereto
shall be included as Operating Expenses and any
reimbursement of Real Estate Taxes shall be credited to the
Operating Expenses.
5.2.3 If during the Term, the system of real estate taxation is
modified or replaced or if in addition to the Real Estate
Taxes, a new tax or levy is imposed with respect to the
Immovable, the words Real Estate Taxes shall include such
new tax or levy.
ARTICLE 6
TAXES AND OCCUPATION CERTIFICATE
6.1 The Lessee shall pay all Taxes as they become due. Should the method
of collecting the Taxes be altered so as to make the Lessor liable for
payment thereof, the Lessee shall reimburse the Lessor on demand.
6.2 The Lessee shall obtain from the concerned authority and pay for the
occupation certificate and send a copy to the Lessor. If the Lessee
does not fulfil its obligation to obtain the occupation certificate
within thirty ( 30 ) days of its occupation of the Leased Premises,
the Lessor shall consider the omission as a default under the Lease
and the Lessee shall reimburse the Lessor on demand for any penalty
the Lessor could have paid without prejudice to any other recourse the
Lessor can benefit from the law or the present Lease.
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ARTICLE 7
USE AND MAINTENANCE OF LEASED PREMISES
As an essential condition of the Lease, it is agreed that the Lessee shall use
the Leased Premises as determined in article 1.1.3 of the Lease and in
conformity with the dispositions of the present article.
7.1 Use of the Leased Premises - The Lessee undertakes to use the Leased
Premises with prudence and diligence. The Lessee undertakes not to
disturb the peaceful enjoyment of the other lessees, failing which,
the Lessee will be liable towards the Lessor and the other lessees for
any damage that may result, whether such damage is caused by the
Lessee's own acts or by the acts of persons which the Lessee has
allowed to use or have access to the Leased Premises. The Lessee
acknowledges and agrees that it is only one of many other lessees in
the Building and that therefore the Lessee shall conduct its business
in the Leased Premises in a manner consistent with the best interest
of the Immovable as a whole.
7.2 Prohibited Use - Without limiting the generality of the foregoing and
without derogating from the Lessee's obligations as provided in
Article 7.1 hereof, the Lessee will not use or permit or suffer the
use of the Leased Premises, or any part thereof, for any of the
following businesses or activities, in or from the Leased Premises:
7.2.1 any unethical or fraudulent practice;
7.2.2 any business or activity in respect of which the Lessor has
granted an "exclusive" provision in other leases or offers
to lease entered into by the Lessor and concerning which the
Lessor has given the Lessee written notice. The Lessee
agrees not to conduct its business in the Leased Premises in
a manner that would cause the Lessor to be in contravention
of such exclusive clauses and agrees to indemnify and save
the Lessor harmless against and from any actions or claims
and for all costs and expenses in connection therewith. If,
in the Lessor's opinion, the use by the Lessee of the Leased
Premises is prohibited by a provision of another lease, the
Lessee shall immediately discontinue such use, upon written
notice by the Lessor, failing which, the Lessor shall have
the right to a payment of a penalty equal to four times the
Minimum Rent payable for each day of default or terminate
this Lease by written notice, without prejudice to any of
its other rights and recourses.
The Lessee hereby acknowledges and agrees that, for the
purposes of Article 16.4 hereof, the Lessor, in refusing any
sublet or assignment for any of the aforesaid businesses or
activities, shall not be considered as unreasonably
withholding its consent. Moreover, the Lessor may insist
that the Lessee cease all prohibited activity forthwith upon
demand.
7.3 Occupancy of the Leased Premises - The Lessee shall occupy the Leased
Premises and shall continuously and actively operate its business in
the entire area of the Leased Premises during the whole Term; the
Lessee shall not leave the Leased Premises vacant or unoccupied at any
time during the Term, and shall keep therein the moveable property
which is normally used in the operation of its business, the whole at
all times throughout the Term. The Lessee acknowledges that its
obligations pursuant to this Article 7.3 are of the utmost importance
to the Lessor in order to avoid the appearance and impression
generally created by vacant space, to facilitate the leasing of space
in the Building, and to maintain the character, quality and image of
the Building. Furthermore, the Lessee acknowledges that the Lessor
shall suffer important, serious and irreparable damages if the Lessee
does not conform to the provisions of the present Article 7.3, and
this, even if the Lessee continues to promptly pay all Rent and
Additional Rent herein provided.
7.4 Maintenance and Repair of the Leased Premises - The Lessee shall
assume and pay for all expenses related to the use and the maintenance
of the Leased Premises. In this regard, the Lessee undertakes to
effect, at its cost, all replacements and repairs necessary to
maintain the Leased Premises in a good state, with the exception of
such replacements and repairs due to ageing and normal wear and tear.
The present provision includes the Lessee's obligations to pay for
replacements and repairs related to the structure or to the
electro-mechanical systems of the
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Building when such replacements or repairs are attributable to an act
or omission of the Lessee or of any person the Lessee allows to use or
to have access to the Leased Premises. It is expressly agreed that all
work or replacements to the electro-mechanical systems shall only be
effected by the Lessor.
In addition, the Lessor may, at all times, without court
authorisation, effect all necessary work, replacements, repairs and
maintenance which, in its opinion, is deemed to be necessary in order
to ensure the conservation and the enjoyment of the Immovable and the
Leased Premises. If the Lessor proceeds with such work, it shall
ensure that the enjoyment of the Leased Premises is not materially
diminished. If necessitated by the nature of the work, replacements,
repairs and maintenance, the Lessor may require the Lessee, without
court authorisation, to vacate or to be temporarily dispossessed of
the Leased Premises. The Lessor shall exercise its right in a
reasonable manner and indemnify the Lessee. Notwithstanding the
foregoing, the Lessee shall in no event resiliate or request a
reduction of Rent.
7.5 Inspection and Repairs - The Lessor and its representatives may enter
the Leased Premises at all times to examine their condition and to
make such modifications which they deem necessary or useful for the
operation and the proper maintenance of the Immovable or of its
electro-mechanical systems.
7.6 Right of Access- If the Lessor deems it necessary to install in the
Leased Premises those portions of systems serving the Immovable, the
Lessee shall authorise the Lessor to carry out such work without being
compensated, provided that the enjoyment of the Leased Premises is not
materially diminished.
7.7 Refuse - The Lessee shall follow the instructions of the Lessor with
respect to refuse.
7.8 Notice of Defects - The Lessee shall notify the Lessor within a
reasonable delay, of any defect or deterioration which is susceptible
of damaging the Leased Premises, the Building or the Common Area and
Facilities.
ARTICLE 8
LEASEHOLD IMPROVEMENTS
8.1 All Leasehold Improvements carried out in the Leased Premises before or
during the Term, shall be first approved by the Lessor, and shall meet
the following conditions:
8.1.1 In order to avoid the suspension of work, the Lessee shall
have the work performed, at its own expense, by contractors
and subcontractors approved by the Lessor. Such contractors
and subcontractors shall:
Before the beginning of the work:
a) provide the Lessor with the plans and specifications,
beforehand signed by the Lessee, showing the proposed
Leasehold Improvements, as well as all documents
necessary to work approval, like construction permits,
architecture plan bearing the architects seal,
elevation plan and finish samples, plan of mechanical
and electrical distribution, bearing the seal of a
specialised engineer, if need be. Should the plans and
specifications be approved by the Lessor and bear the
Lessors seal, the Leasehold Improvements must be
carried out in conformity with such plans and
specifications. No Leasehold Improvements shall be
performed by the Lessee as long as the plans are not
approved by the Lessor and attested by the Lessors
seal;
b) provide the certificates of compliance, as well as the
following documents:
- Company signing resolution;
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- Bid bond (when required; the bid bond must be
presented with the tender);
- Performance bond (when required);
- Licence from the Regie des entreprises de
construction;
- Certificate of compliance with CCQ; (competency
card, permits, etc.)
- Certificate of compliance with CSST;
(contributions paid, etc.)
- List of subcontractors;
c) obtain the necessary permits and authorisations;
d) carry out the Leasehold Improvements, according to the
Lessors instructions;
e) contract, and provide copy of, an insurance against
civil liability, covering their activities in the
Building, until the date of issuance of the certificate
of total performance of work, for an amount of at least
two million dollars ( $ 2,000,000.00 ), as well as a
general property insurance policy covering at least the
amount of the price of the contract and full value of
the specified products to be provided by the contractor
in order to be incorporated to the work. The insurance
contract shall include the Lessor as a co-insured party
and comprise an undertaking clause by such insurers to
notify the Lessor in case of cancellation or
modification of the insurance policy, at least thirty (
30 ) days in advance. To this effect, the contractor
shall be responsible for all damage caused by its
contractors, subcontractors, as well as its suppliers.
Moreover, it is expressly agreed that all work related to
the electromechanical systems will be performed only and
solely by the Lessor.
It is also agreed that the Lessee shall be responsible for
all the professionals and contractors hired on this project.
The Lessee shall also designate a representative who will
communicate with the Lessors supervisor.
8.1.2 It is acknowledged that the Lessee is in no way acting as
the Lessors mandatory with respect to the Leasehold
Improvements carried out in the Leased Premises, and that
such Leasehold Improvements are performed by the Lessee for
its own benefit, even if the Lessor grants the Lessee an
allowance for the work, as it is common practice on the
market.
8.1.3 On the date of the end of work at the latest, the Lessee
shall pay the Lessor an amount equal to five percent ( 5 % )
of the costs of the Leasehold Improvements, in order to
compensate the Lessor for the management and supervision of
the work and the approval of the plans. Should the case
arise when the Lessor pays the Lessee an Allowance, as
described in Schedule "C" herein, the Lessor shall deduct an
amount equal to five percent ( 5 % ) on the Allowance, in
compensation for the management, supervision of the work and
approval of the plans. Such Allowance shall become due and
claimable by the Lessee, according to the terms of Schedule
"C" herein, if the case arises.
8.1.4 Furthermore, at least ten ( 10 ) days before the work in the
Leased Premises begin, the Lessee shall provide the Lessor
with, and this at the Lessors discretion, a security bond on
the construction or a banks letter of credit for the value
of the work to be done, which form and content shall be
subject to the Lessors approval acting reasonably, or a
notice of waiver and a commitment of release for all legal
hypothec or right of legal hypothec that could arise out of
the materials supplied. Should the Lessee default in
providing the Lessor with the guaranties required, the
Lessor can order the immediate ending of the work being done
or to be carried out by such contractor or subcontractor in
the Leased Premises.
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8.1.5 Should an hypothec or other security be registered, the
Lessee shall have such hypothec or security cancelled within
fifteen ( 15 ) days. Should this cancellation not be done,
the Lessee shall provide the Lessor with a sufficient
deposit to pay the said hypothec or other security, along
with the pertaining legal fees. Such amount will be
reimbursed to the Lessee, less the expenses incurred by the
Lessor, upon proof of cancellation of the hypothec or
security. If the Lessee defaults in depositing the required
amount, the Lessor shall have the right to cancel such
hypothec or security, and then claim from the Lessee the
reimbursement of the incurred expenses, along with the fees
and the interests, at the Prime Rate.
8.1.6 Each contractor shall respect the working rules of the
Building, a list of which shall be given to the contractors
at the moment of the granting of the contract. The
contractors shall also respect all construction codes. All
work shall be performed after the Business Hours of the
Building. Should some work have to be executed during the
Business Hours, said work shall first be authorised and
permitted by the Buildings manager. Moreover, should the
Lessee have work executed in an area other than the Leased
Premises, or should the Lessee use the freight elevator,
during the performance of work in the Leased Premises, the
Lessor shall provide the services of a security guard, at
the Lessees expense.
The contractor shall be responsible for all damage caused by
its subcontractors, as well as its suppliers, and therefore
the Lessee shall ensure that the contractor has suitable
insurance to this effect.
8.1.7 The Lessee shall provide the Lessor with the plans as
constructed, shop drawings mechanical balancing report,
plans approved by the City, and operating manuals, within
two (2) weeks following the completion of work.
Furthermore, should the Leasehold Improvements be executed
by the Lessor, by the Lessee with no allowance from the
Lessor, or by the Lessee with an allowance from the Lessor,
all other terms and conditions, as well as the list of work,
are described in Schedule "C" herein.
8.2 All Leasehold Improvements shall become the Lessors property, as soon
as they are installed in the Leased Premises and shall be surrendered
with the Leased Premises at the Termination of the Lease, without any
compensation whatsoever to the Lessee. Notwithstanding the foregoing,
the Lessee shall, at the End of Term or at the moment of any
anticipated resiliation of the Term, at its own costs, remove all
Leasehold Improvements for which the removal has been demanded by the
Lessor, should it have been brought in the Leased Premises before or
after the Commencement of the Lease, by the Lessor or the Lessee, or
by the Lessor for the previous Lessee. Should the Lessor require so,
the Lessee shall, at its own expense, leave the Leased Premises in
base building state. The Lessee shall, at its own expense, leave the
Leased Premises in good state and clean, under reserve of the repairs
due to normal ageing, and repair all damage caused to the Building due
to the removal of the Leasehold Improvements.
Provided that the Lessee executed its obligations in virtue of the
Lease, at the moment of the End of the Lease, the Lessee shall be
entitled to remove from the Leased Premises all its movable properties
in the Leased Premises. However, all movable properties left in the
Leased Premises after the End of the Lease shall be deemed to be
abandoned, and the Lessor may dispose of such properties as it sees
fit, without compensation of any nature to the Lessee.
ARTICLE 9
INSURANCE
9.1 The Lessee shall, at its own expense and throughout the Term, keep in
force:
a) insurance coverage for public liability of businesses, covering
all acts the Lessee could be held responsible for and covering
the Leased Premises and the property located therein, for an
amount equal to a minimum of five million dollars
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($5,000,000.00) for each occurrence or for any greater amount
which the Lessor may reasonably request from time to time, which
insurance must contain such guarantees as required by the Lessor;
b) a broad form insurance coverage for all of the property located
in the Leased Premises, and namely the leasehold improvements,
for an amount equal to their replacement cost, without any
deductions for depreciation, which insurance shall, in addition,
have the following endorsements: replacement value and any other
endorsements required by the Lessor;
c) broad form comprehensive boiler and machinery insurance as well
as insurance against the breakdown of equipment and machinery
(under pressure or otherwise) "combined form" and protecting in
the Leased Premises the destruction of such equipment and
machines, damages caused by all such occurrences and the
interruption of business resulting therefrom, for an amount equal
to total forceable damages, without any deduction for
depreciation, which insurance must include such endorsements as
required by the Lessor.
d) business interruption insurance "broad form" providing standard
coverage of a minimum period of twelve ( 12 ) months, in such
amount to compensate the Lessee for all loss of earnings and for
additional expenses attributable namely to the perils to be
insured against pursuant to sub-paragraphs (a), (b) and (c)
mentioned above, which insurance shall also include such
endorsements as required by the Lessor;
e) all other insurance which the Lessor may reasonably require from
time to time.
9.2 All insurance policies shall:
a) be acceptable to the Lessor in form and in substance;
b) be subscribed from insurers acceptable to the Lessor;
c) provide that they will not be permitted to expire or to be
modified unless the insurer gives the Lessor a ten ( 10 ) days
written notice to that effect;
d) name the Lessor and the Lessee as insured, according to their
interests;
e) contain a waiver of subrogation of all rights which the Lessee's
insurers may have against the Lessor and for persons for whom it
is in law responsible.
9.3 Increase of Risk - The Lessee shall:
a) not do anything which increases the risk of fire and the
insurance premium rates for the Immovable;
b) comply with the requirements of the Lessor's insurers or of any
associations of insurers having jurisdiction in such matters; and
c) not keep dangerous materials in the Leased Premises unless such
materials are required for its business and, in such a case, in
such quantities as are permitted by the Lessor's insurance
policies, failing which the Lessee shall pay to the Lessor any
resulting increase of the insurance premiums.
9.4 Certificates - The Lessee shall furnish the Lessor with certificates
of insurance at least ten ( 10 ) days prior to taking possession of
the Leased Premises and thereafter, within ten ( 10 ) days of the
renewal thereof.
9.5 If the Lessee fails to maintain the insurance for which it is bound,
the Lessor may do so in the name of the Lessee and in such event, all
premiums paid by the Lessor shall be reimbursed by the Lessee.
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ARTICLE 10
ACCESS BY LESSOR TO LEASED PREMISES
10.1 Visiting the Leased Premises - During the last twelve ( 12 ) months of
the Term of this Lease, the Lessee shall permit any person interested
in leasing the Leased Premises to visit the Leased Premises during
Business Hours.
The Lessee shall permit the Leased Premises to be visited by any
broker, purchaser, lender or evaluator of the Immovable. The Lessor
shall exercise its right in a reasonable manner.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 Destruction of Leased Premises - Should the Leased Premises be
destroyed or damaged, the Lessor shall state its intention to the
Lessee by way of written notice transmitted to the Lessee within
thirty ( 30 ) days of the loss, to the effect that the Leased Premises
are:
11.1.1 wholly uninhabitable or that their use is dangerous and
cannot be reasonably repaired within one hundred and eighty
( 180 ) days following the loss, in which case either party
may resiliate the Lease with retroactive effect to the date
of the loss; if such notice is not given within five ( 5 )
days following the notice provided for in Article 11.1, the
Rent shall abate from the date of the loss until the Leased
Premises are repaired and are ready to be occupied by the
Lessee.
11.1.2 wholly uninhabitable or that their use is dangerous but are
reasonably reparable within one hundred and eighty ( 180 )
days following the loss, as the case may be, the payment of
Rent shall abate from the date of the loss until such time
that the Leased Premises are repaired and are ready to be
occupied by the Lessee;
11.1.3 reasonably reparable within one hundred and eighty ( 180 )
days following the loss and are partly usable in the
interim; as the case may be, payment of Rent shall abate,
with respect to the unusable area, from the date of the loss
until such time that the damages have been substantially
repaired.
11.2 Destruction of the Building - If the Lessor is of the opinion, which
shall be given by notice within thirty ( 30 ) days of the loss, that
twenty per cent ( 20 % ) or more of the leasable area of the Building
is damaged, or if the Lessor is of the opinion that the Building is
hazardous and that the Building cannot be reasonably repaired within
one hundred and eighty ( 180 ) days or, that the proceeds of insurance
do not cover the cost of repairs, then the Lessor may resiliate the
Lease effective retroactively as of the date of the loss, all
adjustments to the Rent to be made as of such date.
11.3 No Obligation to Rebuild - The Lessor shall be under no obligation to
repair or rebuild the Building, the Leased Premises or contents
thereof, the Lessee's alterations, improvements or other property.
ARTICLE 12
EXPROPRIATION
12.1 Resiliation of the Lease - In the case of an expropriation or of a
taking of possession ("Expropriation") by a competent authority which,
according to the Lessor, renders the Building or the Leased Premises
unusable, the Lessor may terminate the Lease from the date of the
Expropriation by way of a written notice to the Lessee. The Lessee may
claim any damages from the expropriating party but not from the
Lessor.
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12.2 No Obligation to Contest - The Lessor is under no obligation to contest
the Expropriation. The parties hereby reserve all their rights to claim
future damages against the expropriating authority.
ARTICLE 13
DAMAGES
13.1 Liability of the Lessor - Notwithstanding any provision to the
contrary, the Lessor shall not be liable for damages occurring in the
Leased Premises or in the Immovable resulting from any cause
whatsoever, unless such damages are directly attributable to the fault
of the Lessor. The Lessor shall not be liable for damages suffered by
the Lessee resulting from the fault attributable to a lessee or a
third party even if such third party is a person whom the Lessee or
another lessee of the Building has allowed to use or to have access to
the Leased Premises.
13.2 Limited Liability - Even if the damages are due to the fault of the
Lessor, its liability shall extend only to the movable property and to
the ordinary fixtures of the Lessee located in the Leased Premises and
shall not extend to special equipment, documents and securities.
13.3 No Reduction of Rent - Unless as otherwise stipulated in the Lease,
the Lessee shall not in any case with respect to an occurrence
relating to the Immovable or the Leased Premises or to an act of the
Lessor of any nature whatsoever, have the right to a reduction of Rent
or to the resiliation of the Lease. Nevertheless, the Lessee may, if
granted by a court of law, obtain from the Lessor compensation
resulting from damages directly attributable to the fault of the
Lessor.
ARTICLE 14
SIGNS AND ADVERTISING
14.1 Consent of Lessor - Any sign or advertising material visible from the
exterior of the Leased Premises or which may be distributed in the
Immovable must be approved by the Lessor who may require that the
Lessee ceases the use thereof, without delay. Should the Lessee not
comply with the Lessor's request, the Lessor shall be entitled to do
so at its cost and at the expense of the Lessee.
14.2 Maintenance of Signs - The Lessee shall, at its expense, maintain all
signs and shall indemnify the Lessor for any damage which may be
caused to the Lessor.
14.3 Injurious Advertising - The Lessee shall not publish any advertisement
injurious to the reputation of the Lessor, the Lessor or another
lessee of the Immovable, and shall immediately cease any such
advertising at the request of the Lessor.
ARTICLE 15
COMPLIANCE WITH LAWS AND INDEMNIFICATION
15.1 Compliance with Laws - The Lessee shall comply with all laws and
regulations governing the business conducted in the Leased Premises.
The Lessee shall carry out any changes to the Leased Premises or to
the business conducted therein, which may be legally required by the
competent authorities, failing which, the Lessor, after having given
written notice to the Lessee, may carry out such changes in its place
and at its expense.
15.2 Indemnity of Lessor - The Lessee shall indemnify the Lessor against
any penalty payable by the Lessor resulting from the Lessee's breach
to comply with the present article, including all related expenses,
including legal fees incurred by the Lessor to protect its rights.
15.3 Environmental Clause - During the Term and its renewal, the Lessee
agrees to respect the Environmental Legislation and comply therewith
promptly at its expense and to immediately notify
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the Lessor of any release and discharge and presence inside or outside
the Leased Premises of any Contaminants and Hazardous Materials which
are in breach of the Environmental Legislation.
The Lessee is liable for any damage whatsoever caused in or to the
Immovable or the Leased Premises as a result of its non-compliance
with the Environmental Legislation, which damage may also entail the
termination of the Lease.
Notwithstanding anything to the contrary, the Lessee undertakes to
save and hold harmless the Lessor, its representatives, agents or
employees from any claims, losses, costs, fees, expenses, damages for
bodily injury, moral damages, property damages, actions, suits or
proceedings arising from or attributable to Lessee's act, refusal,
negligence or omission to comply with the Environmental Legislation.
ARTICLE 16
SUBLET AND ASSIGNMENT
16.1 Mandatory Consent of the Lessor - The Lessee shall not assign the
Lease or sublet the Leased Premises in whole or in part, nor suffer
the Leased Premises to be utilised by another person (such utilisation
being, for the purposes hereof, considered as a sublease) without the
written consent of the Lessor, which consent may not be withheld
without a serious reason.
16.1.1 In the event of an assignment or of the subletting of the
whole or any part of the Leased Premises, unless a specific
written consent to this effect is obtained from the Lessor,
no options whatsoever contained in this Lease shall benefit
such sub-lessee or assignee.
16.1.2 The occupancy of a part or of the totality of the Leased
Premises by a third party or the Lessor's tolerance of such
occupancy or its acceptance of any payment shall in no way
constitute a waiver of the Lessee's obligation to obtain the
Lessor's consent for an assignment or a sublet.
16.2 Deemed Assignment - If the Lessee is a company, a corporation or a
partnership, any change in the effective control thereof is deemed to
be an assignment of the Lease and the Lessee and the assignee shall
comply with the present Section 16.
16.3 Information to be provided - The request of the Lessee with respect to
obtaining the consent of the Lessor to the sublease or the assignment
shall include the following:
16.3.1 the name, address and telephone number of the true proposed
sub-lessee or assignee, or in the case of the change of
effective control of a corporation or of a company, those of
the senior executives of the corporation or of the company
as well as of those persons who are acquiring the control
thereof;
16.3.2 information acceptable to the Lessor with respect to the
commercial experience of the persons;
16.3.3 references from banks and other credit institutions,
financial statements (if available) and any other
information which the Lessor may reasonably require for the
purpose of its evaluation;
16.3.4 if the sub-lessee or the assignee is a partnership or a
company, the declarations or constituting documents thereof,
as amended;
16.3.5 the sub-lessee or the assignee's written undertaking to
respect all and every obligations of the present Lease
including, without limitation, the obligation to grant to
Lessor the same sureties as previously granted by the Lessee
or any other surety that the Lessor may reasonably request.
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16.3.6 complete disclosure of all consideration, rental, terms and
conditions of the proposed assignment or sublease, as well
as all information and documents relating to the proposed
sublease or assignment.
16.4 Justified Refusal - The Lessor may refuse to consent to the proposed
sublease or assignment of the Lease, for any serious reason,
including, without limitation:
16.4.1 failure to provide the information or documents required
pursuant to Article 16.3;
16.4.2 the poor reputation, lack of business experience or lack of
commercial success of the proposed sub-lessee or assignee;
16.4.3 if the use which the proposed assignee or sublessee intends
to make of the Leased Premises is in conflict, in whole or
in part, with any exclusivity right then already granted by
the Lessor to another lessee in the Building; or is
incompatible with the image, character or quality of the
Building;
16.4.4 if the proposed assignee or sublessee is already a lessee or
occupant of the Building and other space is available for
such party in the Building or will become available within
the next following six ( 6 ) months; or
16.4.5 if the proposed assignee or sublessee does not intend to
physically occupy the Leased Premises and actively operate
its business therein in good faith; or
16.4.6 if the proposed assignment or sublease becomes effective
before the date on which the Lessee has physically occupied
the Leased Premises and commenced to actively operate its
business therein in good faith.
16.4.7 if the Lessor has reasonable grounds to believe that the
proposed assignee or sublessee does not have the financial
capacity to meet all its obligations, including, without
limitation, the obligations of the Lessee towards the Lessor
under the Lease.
16.5 Answer of the Lessor - Within thirty ( 30 ) days from the receipt of
the Lessee's complete request for the Lessor's consent, together with
all the required information and documents, the Lessor shall inform
the Lessee:
a) of its refusal to consent, stipulating the reasons therefor, or
b) of its consent, or
c) that the Lessor has chosen, as an alternative to its consent
(without affecting its other rights and without being obliged
thereto), to become itself the sublessee or the assignee, as the
case may be, for the same consideration, rentals, terms and
conditions as those of the proposed sublease or assignment, in
the place of the proposed assignee or sublessee, or
d) that the Lessor has chosen, as an alternative to its consent
(without affecting its other rights and without being obliged
thereto), to terminate the Lease as of the fifteenth ( 15th ) day
following the date on which the Lessor so informs the Lessee, it
being understood that the Lessee shall, however, have the right
to withdraw its request for consent to the proposed assignment or
sublease within such fifteen ( 15 ) days delay.
16.6 Delay for Sublet or Assignment - Should the Lessee not sublet or
assign the Leased Premises within sixty ( 60 ) days after having
obtained the consent of the Lessor, said consent shall be considered
null and the Lessee shall recommence the procedure for carrying out
the sublease or the assignment.
16.7 Should the Lessor fail to perform its obligations for which it is
bound to the Lessee, the sub-lessee may not exercise the rights and
remedies of the Lessee against the Lessor.
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16.8 Solidarity - Notwithstanding any sublease or assignment, the Lessee's
liability shall remain solidary with the assignee or the sub-lessee,
as the case may be for all of the obligations of the Lessee pursuant
to the Lease, so that the Lessor may compel the Lessee, and the Surety
(if any), to observe all of the obligations of the Lease as if no
assignment or sublease had occurred.
16.9 Expenses of the Sublease or the Assignment - If the sublease or the
assignment is accepted, the Lessee shall reimburse the Lessor for the
related administrative expenses, subject to the approval of the
sublease or the assignment, which shall be payable by certified cheque
and shall be remitted at the time of signature of the agreement of
sublease or of assignment.
16.10 Approval of Publicity - The sublease or the assignment may not be
publicised in any manner whatsoever, without the express approval of
the Lessor with respect to the form and substance of such publicity,
all advertising in relation to the sublease or the assignment of the
Lease may be injurious to the Immovable.
ARTICLE 17
ASSIGNMENT BY LESSOR
17.1 Assignment by Lessor - In the event of a sale, transfer or an
assignment of the Immovable or any part of the Immovable by the
Lessor, or an assignment by the Lessor of this Lease or any interest
in the Lease hereunder, the Lessor shall be freed of all liability
with respect to any obligations in virtue of the Lease or of the law
if such purchaser or assignee assumes the Lessor's obligations
according to the Lease or law.
17.2 Lessees Certificates - At any time and from time to time upon not less
than ten ( 10 ) days prior notice at the request of the Lessor, the
Lessee shall execute and deliver, as directed by the Lessor, a
certificate of an officer of the Lessee certifying as at the date
thereof whether this lease is in full force and effect, whether or not
it has been modified (and if so in what respect), the status of annual
rent and other accounts between the Lessor and Lessee, whether or not
there are any existing defaults on the part of the Lessor of which the
Lessee has notice (and if so, specifying them) and as to any other
matters in connection with this lease in respect of which such a
certificate is reasonably requested.
17.3 Lessors Certificates - At any time and from time to time upon not less
than ten ( 10 ) days prior notice at the request of the Lessee, and
for the purposes only of a transaction contemplated by Article 17, the
Lessor shall execute and deliver, as directed by the Lessee, a
certificate of an officer of the Lessor certifying as at the date
thereof whether this lease is in full force and effect, whether or not
it has been modified (and if so in what respect), the status of annual
rent and other accounts between the Lessor and Lessee, whether or not
there are any existing defaults on the part of the Lessee which the
Lessor has notice (and if so, specifying them) and as to any other
matters in connection with this lease in respect of which such
certificate is reasonably requested.
17.4 Effect of Certificates - Any statement delivered pursuant to the
provisions of this Article 17 may be conclusively relied upon only by
the person to which such statement is addressed but shall not preclude
any rights of the party giving such statement with respect to defaults
not set forth in such statement but of which the party giving such
statement had no actual knowledge at the date thereof as against the
other immediate party to this lease.
ARTICLE 18
DEFAULT AND RECOURSE
18.1 A default shall occur in the following cases:
a) if the Lessee does not fulfil any of its obligations pursuant to
the Lease and if this default continues:
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i) in the cases of a pecuniary obligation, for more than five (
5 ) days following the receipt by the Lessee of a written
notice from the Lessor;
ii) in all other cases, for more than fifteen ( 15 ) days
following the receipt of a written notice from the Lessor
(unless it constitutes a default otherwise provided for in
this paragraph 18.1 or unless the default cannot be cured
within said delay, in which case the Lessee shall have
commenced to cure the default within the prescribed delay
and to continue to do so with diligence) or within a shorter
delay stipulated in the Lease (the latter delay taking
precedence);
b) if the Lessee is the object of bankruptcy, insolvency,
dissolution or liquidation proceedings or loses control of the
property located in the Leased Premises;
c) if the Lessee makes a sale of an enterprise or if the property
located in the Leased Premises is seized and that a release
thereof is not obtained within fifteen ( 15 ) days;
d) if the Lessee do not continuously operate its business in the
entire area of the Leased Premises, leaves the Leased Premises
vacant during five ( 5 ) consecutive days or if the Leased
Premises are used by a person who is not authorised pursuant to
the Lease; or
e) if a sublease or an assignment is attempted or if the Lessee
grants a guarantee that affects the Lessor's own guaranties
provided in the Lease.
The mere lapse of the delays provided for in paragraph 18.1 or as
otherwise provided for in the Lease shall have the effect of deeming
the Lessee in default.
18.2 Default and Recourses - Each time that an event of default occurs,
subject to the other rights and recourses which are granted to the
Lessor pursuant to the Lease or law and notwithstanding any other
provision of the law, the Lessor shall have the following rights and
remedies, which shall be cumulative and not alternative:
a) the right to terminate the Lease by notice to the Lessee and
following such notice, the Lessee shall not be entitled to remedy
the default;
b) the Lessor may enter the Leased Premises as mandatory of the
Lessee, re-let them for the duration of the Term and on such
conditions which the Lessor may determine at its discretion,
collect the Rent, take possession, as mandatory of the Lessee, of
all moveable property located in the Leased Premises and, in such
a case store the moveable property at the cost and risk of the
Lessee or sell or assign it in such manner as the Lessor deems
appropriate without notice to the Lessee; make modifications to
the Leased Premises in order to facilitate their re-letting;
apply the proceeds of any sale or re-letting to the payment of
all expenses incurred by the Lessor in connection with such
re-letting or of such sale and to any other debt of the Lessee
towards the Lessor and, lastly, to the payment of Rent in arrears
or of future payments of Rent which are to become due. The Lessee
shall remain liable to the Lessor for any deficiency;
c) the right to remedy or attempt to remedy, at the expense of the
Lessee and with no liability on the part of the Lessor, any
default of the Lessee pursuant to the Lease on behalf of the
Lessee and to enter the Leased Premises for such purposes.
d) the right to recover from the Lessee all damages suffered as well
as all expenses incurred by the Lessor pursuant to the default of
the Lessee
18.3 Indemnity - Should the Lessor retain the services of legal counsel in
connection with the non performance by the Lessee of its obligations
pursuant to these presents, the Lessee shall pay the Lessor as
damages, judicial costs, and fees of fifteen per cent ( 15 % ) of the
amount of the Rent due in connection with such legal services.
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ARTICLE 19
NOTICE
19.1 Any notice to be given under this Lease shall be sent by registered
mail or by telecopier transmission or delivered in person at the
addresses indicated above at article 1.1.12. The Lessor reserves the
right to change its address.
Notices sent by mail shall have been deemed to be received on the
third business day following the mailing thereof and those by
telecopier the business day following their transmission.
The Lessee elects domicile in the Leased Premises for all purposes in
connection with these presents.
ARTICLE 20
TERMINATION OF LEASE
20.1 Any occupation of the Leased Premises by the Lessee after the
Termination of the Lease shall not have the effect of extending, or
expressly or tacitly renewing the Lease.
20.2 The Lessor may allow the Lessee in the event the Lessee occupies the
Leased Premises after the Termination of the Lease, to continue its
occupation pursuant to a monthly Lease in consideration of a monthly
Minimum Rent which is fifty per cent ( 50 % ) greater than the last
monthly Minimum Rent of the Term, the other terms and conditions of
the Lease remaining the same.
ARTICLE 21
UNAVOIDABLE DELAY
21.1 Except for the payment of an amount of money, each time the Lease
provides for the performance of an obligation, the obligation shall be
performed subject to Unavoidable Delay. The Lessee and the Lessor
shall be deemed not to be in default in the performance of any
obligation under this Lease if they are prevented from so doing by
Unavoidable Delay, and any period of time for the performance of such
obligation shall be extended accordingly.
The Lessee and the Lessor shall notify each other respectively without
delay at the outset of the cause, the duration and the effect, to
their knowledge, of any Unavoidable Delay.
ARTICLE 22
MODIFICATION OF LEASE AND PERFORMANCE BY A THIRD PARTY
22.1 Modification of Lease - Any modification of the Lease shall be valid
only if expressly agreed to in writing by the Lessor, the Lessee and
the Surety (if any).
22.2 Performance by Third Party - A third party may not acquire any rights
pursuant to these presents in performing an obligation of the Lessee.
ARTICLE 23
MISCELLANEOUS
23.1 Declaration of intent - This Lease is intended to be a simple document
drafted in ordinary language. When words or expressions of a general
meaning are used, the widest possible meaning is to be given to them
unless the context clearly indicates otherwise.
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23.2 Absence of Waiver - The fact that one or the other party has not
exercised any of its rights hereunder shall not constitute a waiver
thereof.
23.3 Cancellation of Previous Agreements - This Lease represents the entire
agreement between the parties in connection with the Leased Premises.
It replaces all previous documents and discussions between the
parties.
23.4 Successors and Assigns- The Lease shall bind the successors and
assignees of the parties.
23.5 Brokerage Commission - The Lessee warrants to the Lessor that it has
not retained the services of any broker in respect with this
transaction. Any brokerage commission with respect to the present
transaction shall be borne exclusively by the Lessee who shall
indemnify the Lessor against any claim with respect thereto, except in
the case where the Lessor has given a specific written mandate to an
agent with respect to this transaction.
23.6 Brokerage Commission - The Lessee guarantees to the Lessor that the
only broker involved in this transaction was Madame Vittoria Tassone.
The Lessor shall be responsible to pay the leasing commission
pertaining to the present Lease upon the terms and conditions
stipulated in a commission agreement to intervene between the Lessor
and the broker.
23.7 Conversion - The Parties to this Lease agree to the following metric
factors :
1 metre = 3.2808 feet
1 square metre = 10.7643 square feet
1 foot = 0.3048 metres
1 square foot = 0.0929 square metres
23.8 Cumulative Rights - The rights conferred to the Lessor shall not be
exclusive but shall be cumulative.
23.9 Undertaking to Cooperate - The parties agree to sign all documents and
do all things necessary or desirable in order to give effect to the
intention of the parties.
23.10 Publication of Lease - The Lessee shall have the right to publish the
Lease, after having obtained the prior approval of the Lessor as to
the form and as to the other terms of the publication, without however
mentioning any of the Lease's financial terms, failing which, the
Lessor may radiate such publication at the Lessee's cost. Such
publication shall be made solely at the Lessee's cost, including
publication fees and the cost of a published copy for the Lessor. In
cases of publication, the Lessee shall, at the Termination of the
Lease, cause the publication to be cancelled at its cost, failing
which the Lessor may do so at the expense of the Lessee.
23.11 Partial Invalidity - All of the parts of this Lease are divisible. If
for any reason whatsoever a provision thereof is judged to be illegal
or unenforceable, the other provisions of the Lease shall remain in
effect mutatis mutandis.
23.12 Interpretation - In this Lease, unless the context dictates otherwise:
i) the masculine includes the feminine and the singular the plural,
and
ii) the words "hereinabove" and "these presents" or any words or
expressions having similar import shall refer to the Lease in its
entirety.
23.13 Laws - This Lease shall be governed by the Laws in effect in the
province of Quebec. In addition, by these presents, all the parties
elect domicile in the Court of jurisdiction for the judicial district
of Montreal, for all judicial proceedings which may be taken in
connection with the application of the present Lease, notwithstanding
the fact that one or the other parties may have signed this Lease
outside of the judicial district of Montreal.
23.14 Late Payments - The acceptance by the Lessor of post-dated cheque or
of any late payment shall be considered as a means of collection only,
subject to the rights of the Lessor pursuant to these presents. Any
sums unpaid by the Lessee shall bear interest at the Prime Rate.
-22-
<PAGE>
23.15 Solidary liability - If several persons have signed this lease, their
liability is solidary, so that each person shall be liable for all of
the obligations under this Lease, without division and discussion
benefits.
23.16 Titles - The titles and the numbering of the articles have been
inserted as a matter of convenience and shall not be used to interpret
the text thereof.
23.17 Time is of the Essence - All delays provided for in the Lease in
connection with an undertaking or an obligation of the Lessee or of
the Lessor are of the essence.
23.18 Prohibition to sell by auction - In the event of the Lessee's
bankruptcy, there shall be no sale by auction, performed by any
competent authority whatsoever, permitted in the Leased Premises.
ARTICLE 24
MOVABLE HYPOTHEC
ARTICLE 25
REGULATIONS
25.1 The Lessee shall observe the regulations respecting the use of the
Immovable, which are annexed hereto as Schedule "E", as such
regulations may be modified by the Lessor, to the extent that they are
not in contradiction with the Lease. The regulations may differ
depending on the type of business located in the Immovable but may not
be discriminatory.
ARTICLE 26
SPECIAL PROVISIONS/SCHEDULES
26.1 The schedules form an integral part of this Lease.
-23-
<PAGE>
In witness whereof the Lessee acknowledges that, notwithstanding that the Lease
was drawn up and submitted by the Lessor, the Lessee has negotiated the Lease,
that it understands all of its provisions and that it was given adequate
explanations as to the nature and extent of the Lease. The Lessee has signed
these presents on the this ____________________th day of ____________________
__________.
GSI TECHNOLOGIES USA INC.
"Lessee"
Per:
- ---------------------------------- -------------------------------------
Witness J.Michel De Montigny
Per:
- ----------------------------------- ------------------------------------
Witness
In witness whereof the Lessor has signed these presents in ____________________,
this ____________________th day of ____________________,___________.
2849-3930 QUEBEC Inc.
duly represented by mandatory SITQ INC.
"Lessor"
Per:
- ----------------------------------- -----------------------------------
Witness Denis Perreault, Leasing Director
Per:
- ------------------------------------ -----------------------------------
Witness Daniel Archambault,Vice-president
Office Buildings and Business Parks
INITIALS
---------------------------------------
LESSOR LESSEE
SURETY
---------------------------------------
---------------------------------------
-24-
<PAGE>
SCHEDULE "A" GUARANTY IN FAVOUR OF THE LESSOR
SCHEDULE "A" to the Lease between 2849-3930 QUEBEC.Inc., duly represented by
mandatory SITQ inc. ( "Lessor" ) andGSI TECHNOLOGIES USA INC. ( "Lessee" );
DEPOSIT OF A LETTER OF CREDIT
1. This Schedule relating to the deposit of a letter of credit is an integral
part of the Lease as Schedule "A". The words and expressions used herein
will have the same meaning and the same extent as those used in the Lease.
2. As security for faithful and punctual performance from the Lessee of all
and every of its duties in virtue of the Lease, the Lessee has remitted,
upon the signature of the Lease, an unconditional and irrevocable letter of
credit (hereinafter referred to as the "Letter of Credit") emitted by a
Canadian Chartered Bank, in favour of SITQ for an amount of ( 75 000$ ) for
the fouth first year of the term and of 50 000$ for the last year of the
term.. In addition of being unconditional and irrevocable, the said Letter
of Credit shall be acceptable in form to the Lessor, permit the Lessor to
transfer such Letter of Credit to any assignee, buyer or secured creditor
of the Building and permit the Lessor to cash the Letter of Credit even if
the Lease is repudiated, cancelled or otherwise resiliated in case of
bankruptcy or insolvency. The Letter of Credit shall expire thirty ( 30 )
days after the expiration of the Term of the Lease (including all and every
periods of renewal of the Lease), being specified that if such Letter of
Credit cannot be emitted for the whole Term of the Lease, it shall be
emitted and renewed for successive periods of at least twelve (12) months
each. In such case, the Lessee shall provide the Lessor, at least thirty (
30 ) days before each expiration date of the Letter of Credit, with a proof
of its renewal. Should the Lessee fail to do so, the Lessee shall be
automatically considered in default and the Lessor shall immediately be
entitled to cash such Letter of Credit.
3. Without affecting its other rights and recourses, the Lessor shall be
entitled to use the Letter of Credit, in part or in whole, as reimbursement
of any amount due to the Lessor by the Lessee in virtue of the Lease and
that the Lessee failed to pay when due. Following such allocation of the
Letter of Credit, the Lessee shall, within ten ( 10 ) days after request
from the Lessor to this effect, provide the Lessor with a new Letter of
Credit of the abovementioned amount. Moreover, the Lessor shall be entitled
to remit the Letter of Credit to any assignee of its rights in the Lease or
in the Leased Premises, provided that every such assignee has assumed the
duties of the Lessor regarding such Letter of Credit. Should the Lessor,
according to the provisions of Article "" 16 of the Lease, covenant that
the Leased Premises be sublet by a sub-lessee or that this Lease be
assigned to an assignee, the Lessor shall then be entitled to demand that
the Letter of Credit be replaced by a new Letter of Credit supplied by the
assignee or by the sub-lessee. Should they fail to do so, the Lessor shall
be entitled to realise or cash the Letter of Credit, as if the Lessee was
in default of its duties in virtue of the Lease, under reserve and without
prejudice to all of the Lessor's other rights, remedies and recourses.
4. Provided that the Lessee is not in default in virtue of the Lease and that
physical possession of the Leased Premises is given back to the Lessor, the
Lessor undertakes, within thirty ( 30 ) days after the expiration of the
Term of the Lease (including all and every cancellation before date of the
Lease or renewal of the Lease), to give back to the Lessee the Letter of
Credit.
In witness whereof the Lessee has signed in ____________________, this
____________________th day of ____________________, __________.
gsi technologies usa inc."Lessee"
Par:
- ---------------------------------- ---------------------------------------
Witness signloc
- ----------------------------------
Witness
<PAGE>
SECURITY DEPOSIT
1. The Lessee has remitted, upon the signature of the Lease, an unconditional
and irrevocable letter of credit or shall remit simultaneously upon the
signature of the Lease, a security deposit for an amount of ( 17 500$ us )
(hereinafter referred to as the "Deposit"). The Lessor shall retain such
Deposit, belonging to the Lessor, without any interest in favour of the
Lessee, as security for the faithful and punctual performance by the Lessee
of all and every of its duties in virtue of the Lease.
3. Without affecting its other rights and recourses, the Lessor shall be
entitled to use the Deposit, in part or in whole, as reimbursement of any
amount due to the Lessor by the Lessee in virtue of the Lease and that the
Lessee failed to pay when due. Following such allocation of the Deposit,
the Lessee shall, within ten (10) days after request from the Lessor to
this effect, provide the Lessor with an amount sufficient to re-establish
the Deposit to the abovementioned amount. Moreover, the Lessor shall be
entitled to remit the Deposit to any assignee of its rights in the Lease or
in the Leased Premises, provided that such assignee has assumed the duties
of the Lessor regarding such Deposit. The assignment or sublet by the
Lessee shall in no way affect the rights and obligations of the Lessee and
of the Lessor regarding the Deposit.
4. Provided that the Lessee is not in default in virtue of the Lease the
Lessor, the Lessor undertakes to give back to the Lessee an amount or money
equivalent to the Deposit or any balance of such Deposit, at the latest
December 15th 1999.
In witness whereof the Lessee has signed in ____________________, this
____________________th day of ____________________, __________.
GSI TECHNOLOGIES USA INC.
"Lessee"
Per:
- ---------------------------------- --------------------------------------
Witness J.Michel De Montigny
- ----------------------------------
Witness
<PAGE>
SCHEDULE "B"
DESCRIPTION OF LAND
Place Mercantile
An Immovable known and designated as lot number ONE MILLION THREE HUNDRED
THIRTY-NINE THOUSAND EIGHT HUNDRED EIGHTY-THREE (1 339 883) of the Cadastre of
Quebec, registration division of Montreal.
With the building thereon erected and, more particularly, the building bearing
civic numbers 2095 McGill College Avenue, in the City of Montreal, Province of
Quebec, H3A 3B4 and 752-772 Sherbrooke Street West, in the City of Montreal,
Province of Quebec, H3A 1G1.
With and subject to all rights, servitudes, active and passive, apparent or
unapparent relating to the said property.
SCHEDULE "C"
WORK BY THE LESSOR AND BY THE LESSEE
LESSORS WORK:
The Lessor covenants to pay the Lessee, for the Leasehold Improvements in the
Leased Premises, the sum of ( 23.00$ ) (hereinafter referred to as the
Allowance) less five percent ( 5 % ) for the supervision of the work executed by
the Lessee, (plus GST and QST), from the total costs of the work. The work must
be based upon the Lessee's specifications and upon approval from the Lessor. It
is specifically agreed that the Lessee shall use one hundred percent ( 100 % )
of the Allowance to proceed to the Leasehold Improvements in the Leased
Premises.
The Allowance shall be payable by the Lessor and claimable by the Lessee, upon
the following terms and conditions, provided that the improvement work be fully
completed, according to the rule book and in compliance with the plans and
specifications submitted to the Lessor, before the Commencement of the Lease.
This Allowance shall be solely spent for the uses agreed upon by the parties,
failing which the Lessor shall not be bound to any payment.
The payments shall be as follows:
1 A first (1st) amount of ( 2.30$ ), representing ten percent ( 10 % ) of the
Allowance, will be paid when the contractor has duly signed the
construction contract, a copy of which will be given to the Lessor.
2 A second (2nd) amount of ( 5.75$ ), representing twenty-five percent ( 25 %
) of the Allowance, will be paid after at least fifty percent ( 50 % ) of
the work are carried out, and after written confirmation from SITQ
Constructions supervisor to this effect, as well as upon presentation of
the invoices previously approved by the concerned professionals, to which
shall be attached the contractors and subcontractors partial discharges
testifying to the payment of these invoices.
3 A third (3rd) maximum amount of ( 5.75$ ), representing twenty-five percent
( 25 % ) of the Allowance, will be paid after at least eighty percent ( 80
% ) of the work are carried out, and after written confirmation from Lessor
Construction supervisor to this effect, as well as upon presentation of the
invoices previously approved by the concerned professionals, to which shall
be attached the contractors and subcontractors partial discharges
testifying to the payment of these invoices.
4. A fourth (4th) amount of ( 6.90$ ), representing thirty percent (30 %) of
the Allowance, (less all Lessors supervision fees) will be paid thirty ( 30
) days after approval of the work by the professionals concerned (architect
and engineer), and only after their written confirmation that the work are
completed and approved. The Lessee also shall provide the Lessor with all
and every invoices (previously approved by the concerned professionals), to
which shall be attached the contractors and subcontractors final discharges
testifying to the payment of all their invoices. Moreover, the Lessee shall
provide the Lessor with a written notice stating that the Lessee is fully
satisfied with all the work carried out in the Leased Premises.
<PAGE>
5. A last amount of ( 2.30$ ), representing ten percent ( 10 % ) of the
Allowance, and upon the following conditions:
a. that the Lessee and its contractors have respected all the Building
rules and all building codes;
b. that all the work have been performed in accordance with the plans
approved by the Lessor and attested by the Lessors seal;
c. that the Lessee has provided the Lessor with all the invoices related
to the expenses incurred for the work performed in the Leased Premises
and that the total of such invoices reach the total amount of the
Allowance;
d. that no legal hypothec has been registered against the building.
C-3
<PAGE>
SCHEDULE "D"
PLAN OF LEASED PREMISES
<PAGE>
SCHEDULE "E"
REGULATIONS
1. The Lessee agrees to observe all of the following regulations and any
additional regulations as the Lessor may from time to time prescribe with
respect to the proper management of the Immovable.
1.1 These regulations shall not be incompatible with the terms of the
Lease.
1.2 Any amendment shall be communicated in writing to the Lessee.
2. Traffic
2.1 Access to the Immovable shall at all times be under the control of the
Lessor's security officer on-duty who may require persons to identify
themselves and may refuse access for any justifiable reason;
2.2 Prohibition to Impede Traffic - The Lessee shall not leave or allow
any objects to be left that might impede the movement of traffic in
the Common Areas and Facilities of the Immovable.
2.3 Loading and Unloading - The loading and unloading of merchandise and
of furniture shall be made at the risk of the Lessee and pursuant to
instructions from the Lessor.
3. General Services The work of the Lessee at the interior of the Leased
Premises with respect to the handling of merchandise and of furniture shall
be effected by the employees of the Lessor at the cost of the Lessee at
rates which the Lessor shall from time to time determine.
4. Public Areas The use of the Common Areas and Facilities shall be under the
exclusive control of the Lessor.
5. Emergencies and Security
5.1 Any emergency situation shall be brought to the attention of the
Lessor's security officer.
5.2 Only the stairways and emergency exits shall be used in cases of
emergency.
5.3 Close coordination and cooperation shall be maintained between the
Lessee's and Lessor's security services, for the protection of the
Immovable.
5.4 Interruption of Services - Elevator, freight elevator and escalator
service in the Building may be interrupted for reasons of maintenance
or emergency.
5.5 No Smoking - Smoking in the elevators and freight elevators and Common
Areas and Facilities of the Building is prohibited.
6. Mechanical and Electrical Systems
6.1 The maintenance of the private mechanical and electrical systems of
the Lessee shall be maintained by it at its costs, unless there is an
agreement to the contrary.
6.2 The allocation of costs of supplying fluids, electrical consumption or
any other source of energy shall be made by the Lessor.
<PAGE>
7. Vehicles and Animals
7.1 It is prohibited to bring into the Building or the Leased Premises any
animal, bicycles or vehicle except for:
a) animals or vehicles serving as guides for the blind or
otherwise handicapped persons; and
b) vehicles which may be authorised in the parking areas, by
agreement with the operator of the parking lot and pursuant
to instructions from the Lessor.
8. Machinery, Equipment and Safe Except for office equipment, no machine or
piece of equipment may be brought into the Building without the approval of
the Lessor, who may refuse their installation or who may designate a
specific area in which to place heavy objects in the Leased Premises.
9. Illegal activities by the Lessee and Peddling The Lessee shall not cause a
nuisance to its neighbours and shall respect the good order and the
security of the Immovable. Any peddling and soliciting in the Immovable is
strictly prohibited and the Lessee agrees to cooperate with the Lessor in
order to prevent such activities.
10. Sales and Types of Business The sale of merchandise and of services is
prohibited without the prior approval of the Lessor.
11. Signs, Etc. The Lessee shall ensure that all signs or objects which are
visible from the exterior of the Leased Premises are in accordance with
instructions of the Lessor. All signs and advertising materials are
prohibited.
12. Advertising, Address
12.1 The words 2001 McGill College shall not be used by the Lessee
except to describe the Leased Premises or to designate the address
thereof. The words "Societe Immobiliere Trans-Quebec Inc.", "SITQ
Immobilier " and "SITQ Inc." are reserved for the business name of
the Lessor.
12.2 The Lessor reserves the right to prevent any advertising by the
Lessee which might harm the security, the reputation or the
operation of the Immovable, and, without limiting the generality
of the foregoing, the Lessor may prohibit the Lessee from
advertising any illegal activity or the sale of any illicit or
objectionable product.
12.3 The Lessor reserves the right, at any time and without notice to
the Lessee, to change the address and the postal code for the
Immovable.
13. Mechanical and Electrical Systems
13.1 Special maintenance and repair services for the mechanical and
electrical systems inside the Leased Premises shall be performed
only by the Lessor and these special services shall be charged to
the Lessee according to rates which the Lessor shall from time to
time establish.
13.2 Air-conditioning and heating services shall be provided during
Business Hours. Extra services shall be charged to the Lessee
pursuant to rates set by the Lessor from time to time.
13.3 The density of occupancy of the Leased Premises shall not exceed
one (1) person per one hundred ( 100 ) square feet of Leasable
Area.
E-6
<PAGE>
14. Utilisation of Incremental or Fan-Coil units of the Air-Conditioning and
Heating System
14.1 In order to ensure the proper functioning of the air-conditioning
system, the Lessee shall not utilise the incremental or fan-coil
units of the air-conditioning and heating system (perimeter zone)
for the storage of documents or other items, so as not to affect
the operation of said units and said system.
14.2 Any curtains mounted on the windows shall be placed so as not to
impede the operation of said units and said air-conditioning
system.
14.3 The Lessee shall at all times keep outside windows closed (where
applicable) and, while the air-conditioning system is operating,
keep the blinds of all windows exposed to direct sunlight closed
as well.
15. Entry Doors to Leased Premises
15.1 The Lessee shall not change the access systems without the consent
of the Lessor. Should more than two keys be required for each
lock, they shall be supplied by the Lessor, at the Lessee's
expenses. The Lessee shall return all keys of the Leased Premises
to the Lessor at the Termination of the Lease.
15.2 The Lessor shall furnished to the Lessee, at its costs, one ( 1 )
"high disk" to access the Immovable and the elevators, for each
four hundred ( 400 ) square feet of Leasable Area of the Leased
Premises. Should more "high disk" be required, they shall be
supplied by the Lessor, at Lessee's expenses. Every "high disk"
shall remain the Lessor's property.
16. Cleaning (Housekeeping) All cleaning services for office spaces and public
areas shall be performed only by the Lessor's employees, except by written
agreement to the contrary.
E-7
<PAGE>
SCHEDULE "F"
STANDARD RESOLUTION
Excerpt from the minutes of a meeting of the Board of Directors of GSI
TECHNOLOGIES USA INC. (hereinafter referred to as the "Company") held on
___________th day of _________, ________.-
Be it resolved:
That the Company enters into a Lease Agreement with 2849-3930 QUEBEC INC. duly
represented by mandatory SITQ inc., for the premises number located in the
Building bearing civic number , the whole in accordance with a draft Lease which
has been submitted and approved by the Board of Directors.
That J. Michel de Montigny be duly authorised to enter into a Lease for and on
behalf of the Company and to sign any and all documents necessary in order to
give effect to the Lease.
I hereby certify that the foregoing is a true copy of a resolution passed in a
meeting that has been called and held this th day of , , by all the Directors of
the Company as stated in the minutes of the said meeting and that the said
resolution is hereby still in effect.
This _________ th day of ___________, ________.
- --------------------------------------
, secretary
<PAGE>
SCHEDULE "G"
STATUS REPORT
PROPERTY : immeuble
LESSOR : bailleur
LESSEE : locataire
LEASE DATED :
TO: : The Lessor or any Person who is or may become or
contemplates to become a Secured Lender as well as to any
prospective purchaser of the property or any part thereof.
THE UNDERSIGNED, the Lessee under the above Lease, hereby certifies and
represents that:
(i) The Lessee has accepted and is in possession and in occupation of the
Leased Premises having a Leasable Area of approximately
__________________________ square feet ( _________ sq. ft. ).
(ii) The Lease has been validly executed and delivered by the Lessee (and
the Guarantor, if any) and is in force pursuant to due corporate
action properly taken by the Lessee (and the Guarantor, if any).
(iii) The Lease is presently in full force and effect and unmodified.
(iv) There is no existing default by either Lessee or Lessor pursuant to
the Lease for which a notice of default has been given.
(v) To date, the Lessee has no defences, counter claims, or claims of
offset, deduction or compensation under the Lease or otherwise against
rents or other charges due under the Lease and no event or fact has
occurred which would give the Lessee the right or the option to
terminate the Lease prior to the expiry of the Term;
(vi) No rent under the Lease has been paid more than thirty ( 30 ) days in
advance of its due date.
(vii) The Leased Premises are free from any construction deficiencies.
(viii) All Lessor's Work has been completed to the satisfaction of the
Lessee.
The Lessee hereby certifies and represents that the above statements including
any exceptions which may have been added thereto are true and complete and may
be relied and acted upon.
SIGNED in ____________________, on this ____________th day of
____________________, __________.
LOCATAIRE
Per:
--------------------------------------------
Manager
EMPLOYMENT AGREEMENT
October 29, 1999
EMPLOYMENT AGREEMENT
BETWEEN:
GSI TECHNOLOGIES USA INC., corporation legally constituted in the State of
Delaware and located at 385, Place d'Youville, suite 300, Montreal (Quebec), H2Y
2B7, legally represented by his president, J. Michel de Montigny;
(the "Employer") OF THE FIRST PART;
AND:
J. Michel de Montigny, executive, resident at 162 des Passereaux, Verdun,
Quebec, H3E 1X5;
(the "Employee") OF THE SECOND PART.
WHEREAS the Employer desires to employ the Employee and the Employee desires to
accept such employment upon the terms and conditions set forth;
IN CONSIDERATION of the mutual covenants herein contained, the parties agree as
follows:
1. POSITION AND TITLE
The Employee agrees that he will at all times faithfully, industriously, and to
the best of his skill, ability, experience and talents, perform all of the
duties required in the position of "President of the Corporation". It is also
understood and agreed to by the Employee that his assignment, duties and
responsibilities and reporting arrangements may be changed without causing
termination of this agreement, on mutual agreement of Employee and Employer.
2. TERM
The present agreement will be effective for a period of three year, starting on
the 1st day of January 2000 and terminating on the 31th day of December 2002.
This agreement may be renewable on the terms and conditions to be agreed upon by
the parties.
3. MONETARY
As full remuneration for all services provided for herein, the Employer shall
pay to the Employee a salary of US$100 000 per annum, payable in regular
instalments in accordance with the Employer's usual paying practices. The
Employer shall annually increase the Employee's salary and may in its sole
discretion, grant the Employee a salary increase. Any such change shall be
deemed to be incorporated into this agreement.
Page 1 of 5
<PAGE>
EMPLOYMENT AGREEMENT
October 29, 1999
4. BONUSES
In addition to the compensation specified in section 3 the Employee may receive
an annual bonus of the Employer, based on performance of the Employee, to be
defined between parties.
5. WARRANTS
The Employee will have the possibility to purchase a FIVE HUNDRED THOUSAND (500
000) warrants of the corporation, at US$ 1,10 per shares, during their
employment;
6. BENEFITS
The Employee shall participate in all benefit plans which the Employer may have
or provide in the future, including without limitation medical/hospital and
extended health care benefits and life insurance.
7. VACATIONS
The Employee shall be entitled to be paid vacation in each year of four (4)
weeks, in addition to statutory holidays. Such vacations shall be taken at times
in each year as mutually agreed upon by the Employer and the Employee, or be
taken in the form of extra pay at the sole option of the Employee.
8. AUTOMOBILE EXPENSES
The Employer shall provide the Employee with an automobile allowance of CA$
800,00 per month for rental and other expenses generated by use of the
automobile.
9. STATUTORY DEDUCTIONS AND TAXES
Salary and benefit payments made pursuant to this agreement are subject to such
deductions such as income tax and any other deductions required by law or
statute.
10. REIMBURSEMENT OF EXPENSES GENERALLY
The Employer shall reimburse the Employee for all reasonable expenses actually
incurred by him on the Employer's behalf and in the course of his employment
upon presentation of substantiating receipts.
11. FULL-TIME ATTENTION TO BUSINESS
During the Employee's employment with the Employer, the Employee shall devote
himself exclusively to the business of the Employer and shall not be employed or
engaged in any capacity in any other business without the prior written approval
of the Employer. The Employee is employed on a full-time basis for the Employer.
It is understood and agreed to by
Page 2 of 5
<PAGE>
EMPLOYMENT AGREEMENT
October 29, 1999
the Employee that the hours of work involved will within reason vary and be
irregular and are those hours required to meet the objectives of the employment.
12. TERMINATION
This agreement may be terminated by the Employee at any time by giving the
Employer a two week's notice in writing. The Employer may waive the notice, in
whole or in part, but will remain responsible for payment of all salaries,
expenses and bonuses due up until the end of the notice period.
Also, this agreement may be terminated by the Employer on the giving of one
month's notice. At the conclusion of the notice period or expiry of the term or
any renewal thereof, the Employer shall pay the Employee his gross salary as set
out in this agreement for a twelve (12) month's period, payable at the
Employee's departure, along with any bonuses or expenses due to the Employee at
the date of termination.
13. NOTICE
Any notice or other communication required or permitted to be given under this
agreement shall be in writing and may be delivered personally or by prepaid
registered mail, addressed in the case of the Employer at 385, Place d'Youville,
bureau 300, Montreal, province of Quebec, H2Y 2B7, and in the case of Employee
at 162 des Passereaux, Verdun, Quebec, H3E 1X5.
Notice given by pre-paid registered mail shall be deemed to have been received
by the Recipient on the fourth business day after mailing.
Either party may change the address to which Notice must be delivered upon
simple written notice to the other party.
14. CONFIDENTIAL INFORMATION AND TRADE SECRETS "PROPRIETARY INFORMATION"
The employee shall not, either during the term of his Employment or at any time
thereafter, disclose to any person, unless required by law, any secrets or
confidential information, "Proprietary Information" concerning the business or
affairs or financial position of the Employer or any company with which the
Employer is or may hereafter be affiliated.
"Proprietary Information" shall not include any information which:
a) The employer or its Representative possess on a non-confidential basis
and not in contravention of any applicable law; or
b) Is or becomes generally available through no fault of the Employee; or
c) Is received by the Employee from an independent third party that is
lawfully in the possession of same and under no obligation to Employer
with respect thereto; or
d) Is required to be disclosed pursuant to application law or order of a
court of competent jurisdiction; or e) Any information already known
to the Employee prior to entering into the present Employment
Agreement;
Page 3 of 5
<PAGE>
15. NON-COMPETITION AND NON-SOLLICITATION
For a period of one year from the effective date of termination of the
employment hereunder, the employee shall not in any province in Canada where the
Employer is carrying on business:
(a) be directly or indirectly engaged in any company or firm which is a
direct competitor of the Employer in the business of the manufacture and
sale of computers (the "business");
(b) intentionally act in any manner that is detrimental to the relations
between the Employer and its dealers, customers, employees or others, and
(c) solicit any of the customers of the Employer or be connected with any
person, firm or corporation soliciting any of the customers of the
Employer.
16. WAIVER
The waiver by either party of any breach or violation of any provision of this
agreement shall not operate or be construed as a waiver of any subsequent breach
or violation of it.
17. AMENDMENT OF CONTRACT
This agreement contains the whole of the agreement between the Employer and the
Employee and there are no other warranties, representations, conditions or
collateral agreements except as set forth in this agreement.
Any modification to this agreement must be in writing and signed by the parties
hereto or it shall have no effect and shall be void.
18. SECTIONS AND HEADINGS
The headings in this agreement are inserted for convenience of reference only
and shall not affect interpretation.
19. SEVERABILITY
If any provision of this agreement is determined to be invalid or unenforceable
in whole or in part such invalidity or unenforceability shall attached only to
such provision or part thereof and the remaining part of such provision and all
other provisions hereof shall continue in full force and effect.
20. CHOICE OF LAW
The parties agree that this agreement be governed and interpreted according to
the laws in force in the Province of Quebec.
Page 4 of 5
<PAGE>
EMPLOYMENT AGREEMENT
October 29, 1999
The Employee acknowledges that he has read and understands this agreement, and
acknowledges that he has had the opportunity to obtain independent legal advice
with respect to it.
BOTH PARTIES HAVE REVIEWED AND AGREED ON ALL THE ABOVE ISSUES;
SIGNED IN MONTREAL, THIS 29th DAY OF OCTOBER, 1999.
Employee Employer
- ---------------------------------- -------------------------------------
J. Michel de Montigny J. Michel de Montigny, President
GSI TECHNOLOGIES USA INC.
-------------------------------------
James A. Hone, C.F.O.
Page 5 of 5
EMPLOYMENT AGREEMENT
October 29, 1999
EMPLOYMENT AGREEMENT
Ex 10.1(c)
BETWEEN:
GSI TECHNOLOGIES USA INC., corporation legally constituted in the State of
Delaware and located at 385, Place d'Youville, suite 300, Montreal (Quebec), H2Y
2B7, legally represented by its president, J. Michel de Montigny;
(the "Employer") OF THE FIRST PART;
AND:
James A. Hone, executive, resident at 390, Rideau Street, P.O. Box 20143,
Ottawa, Ontario, K1N 9P4;
(the "Employee") OF THE SECOND PART.
- --------------------------------------------------------------------------------
WHEREAS the Employer desires to employ the Employee and the Employee desires to
accept such employment upon the terms and conditions set forth;
IN CONSIDERATION of the mutual covenants herein contained, the parties agree as
follows:
1. POSITION AND TITLE
The Employee agrees that he will at all times faithfully, industriously, and to
the best of his skill, ability, experience and talents, perform all of the
duties required in the position of "Vice President C.F.O.". It is also
understood and agreed to by the Employee that his assignment, duties and
responsibilities and reporting arrangements may be changed without causing
termination of this agreement, on mutual agreement of Employee and Employer.
2. TERM
The present agreement will be effective for a period of one year, starting on
the 1st of January 2000 and terminating on the 31st day of December 2000. This
agreement may be renewable on the terms and conditions to be agreed upon by the
parties.
3. MONETARY
As full remuneration for all services provided for herein, the Employer shall
pay to the Employee a salary of SIXTY THOUSAND DOLLARS (US$60 000) per annum,
payable in regular instalments in accordance with the Employer's usual paying
practices. The Employer shall annually increase the Employee's salary and may in
its sole discretion, grant the Employee a salary increase. Any such change shall
be deemed to be incorporated into this agreement.
Page 1 of 5
<PAGE>
4. BONUSES
In addition to the compensation specified in section 3 the Employee may receive
an annual bonus of the Employer, based on performance of the Employee, to be
defined between parties.
5. SHARES AND WARRANTS
The Employee will receive FIFTY THOUSAND (50 000) shares of the corporation, at
US$ 1,00 per share and FIFTY THOUSAND (50 000) warrants of the corporation, at
US$ 1,10 per warrant;
6. BENEFITS
The Employee shall participate in all benefit plans which the Employer may have
or provide in the future, including without limitation medical/hospital and
extended health care benefits and life insurance.
7. VACATIONS
The Employee shall be entitled to be paid vacation in each year of four (4)
weeks, in addition to statutory holidays. Such vacations shall be taken at times
in each year as mutually agreed upon by the Employer and the Employee, or be
taken in the form of extra pay at the sole option of the Employee.
8. AUTOMOBILE EXPENSES
The Employer shall provide the Employee with an automobile allowance of CA$
800,00 per month for rental and other expenses generated by use of the
automobile.
9. STATUTORY DEDUCTIONS AND TAXES
Salary and benefit payments made pursuant to this agreement are subject to such
deductions such as income tax and any other deductions required by law or
statute.
10. REIMBURSEMENT OF EXPENSES GENERALLY
The Employer shall reimburse the Employee for all reasonable expenses actually
incurred by him on the Employer's behalf and in the course of his employment
upon presentation of substantiating receipts.
11. FULL-TIME ATTENTION TO BUSINESS
During the Employee's employment with the Employer, the Employee shall devote
himself exclusively to the business of the Employer and shall not be employed or
engaged in any capacity in any other business without the prior written approval
of the Employer. The
Page 2 of 5
<PAGE>
Employee is employed on a full-time basis for the Employer. It is understood and
agreed to by the Employee that the hours of work involved will within reason
vary and be irregular and are those hours required to meet the objectives of the
employment.
12. TERMINATION
This agreement may be terminated by the Employee at any time by giving the
Employer a two week's notice in writing. The Employer may waive the notice, in
whole or in part, but will remain responsible for payment of all salaries,
expenses and bonuses due up until the end of the notice period.
Also, this agreement may be terminated by the Employer on the giving of one
month's notice. At the conclusion of the notice period or expiry of the term or
any renewal thereof, the Employer shall pay the Employee his gross salary as set
out in this agreement for a six (6) month's period, payable at the Employee's
departure, along with any bonuses or expenses due to the Employee at the date of
termination.
13. NOTICE
Any notice or other communication required or permitted to be given under this
agreement shall be in writing and may be delivered personally or by prepaid
registered mail, addressed in the case of the Employer at 385, Place d'Youville,
bureau 300, Montreal, province of Quebec, H2Y 2B7, and in the case of Employee
at 390, Rideau Street, P.O. Box 20143, Ottawa, Ontario, K1N 9P4.
Notice given by pre-paid registered mail shall be deemed to have been received
by the Recipient on the fourth business day after mailing.
Either party may change the address to which Notice must be delivered upon
simple written notice to the other party.
14. CONFIDENTIAL INFORMATION AND TRADE SECRETS "PROPRIETARY INFORMATION"
The employee shall not, either during the term of his Employment or at any time
thereafter, disclose to any person, unless required by law, any secrets or
confidential information, "Proprietary Information" concerning the business or
affairs or financial position of the Employer or any company with which the
Employer is or may hereafter be affiliated.
"Proprietary Information" shall not include any information which:
a) The employer or its Representative possess on a non-confidential basis
and not in contravention of any applicable law; or
b) Is or becomes generally available through no fault of the Employee; or
c) Is received by the Employee from an independent third party that is
lawfully in the possession of same and under no obligation to Employer
with respect thereto; or
Page 3 of 5
<PAGE>
d) Is required to be disclosed pursuant to application law or order of a
court of competent jurisdiction; or
e) Any information already known to the Employee prior to entering into
the present Employment Agreement;
15. NON-COMPETITION AND NON-SOLLICITATION
For a period of one year from the effective date of termination of the
employment hereunder, the employee shall not in any province in Canada where the
Employer is carrying on business:
(a) be directly or indirectly engaged in any company or firm which is a
direct competitor of the Employer in the business of the manufacture and
sale of computers (the "business");
(b) intentionally act in any manner that is detrimental to the relations
between the Employer and its dealers, customers, employees or others, and
(c) solicit any of the customers of the Employer or be connected with any
person, firm or corporation soliciting any of the customers of the
Employer.
16. WAIVER
The waiver by either party of any breach or violation of any provision of this
agreement shall not operate or be construed as a waiver of any subsequent breach
or violation of it.
17. AMENDMENT OF CONTRACT
This agreement contains the whole of the agreement between the Employer and the
Employee and there are no other warranties, representations, conditions or
collateral agreements except as set forth in this agreement.
Any modification to this agreement must be in writing and signed by the parties
hereto or it shall have no effect and shall be void.
18. SECTIONS AND HEADINGS
The headings in this agreement are inserted for convenience of reference only
and shall not affect interpretation.
19. SEVERABILITY
If any provision of this agreement is determined to be invalid or unenforceable
in whole or in part such invalidity or unenforceability shall attached only to
such provision or part thereof and the remaining part of such provision and all
other provisions hereof shall continue in full force and effect.
Page 4 of 5
<PAGE>
20. CHOICE OF LAW
The parties agree that this agreement be governed and interpreted according to
the laws in force in the Province of Quebec.
The Employee acknowledges that he has read and understands this agreement, and
acknowledges that he has had the opportunity to obtain independent legal advice
with respect to it.
BOTH PARTIES HAVE REVIEWED AND AGREED ON ALL THE ABOVE ISSUES;
SIGNED IN MONTREAL, THIS 29th DAY OF OCTOBER, 1999.
Employee Employer
- ------------------------------ ---------------------------------
James A. Hone J. Michel de Montigny, President
GSI TECHNOLOGIES USA INC.
Page 5 of 5
EMPLOYMENT AGREEMENT
January, 1st 2000
EMPLOYMENT AGREEMENT
Ex 10.1(d)
BETWEEN:
GSI TECHNOLOGIES USA INC., a corporation legally constituted in the State of
Delaware and located in Quebec at 385, Place d'Youville, suite 300, Montreal
(Quebec), H2Y 2B7, legally represented by its president, J. Michel de Montigny;
(the "Employer") OF THE FIRST PART;
AND:
Michel Laplante, executive, resident at 3552 Charron, Mascouche, province of
Quebec, CANADA, J7K 3N5;
(the "Employee") OF THE SECOND PART.
- --------------------------------------------------------------------------------
WHEREAS the Employer desires to employ the Employee and the Employee desires to
accept such employment upon the terms and conditions set forth;
IN CONSIDERATION of the mutual covenants herein contained, the parties agree as
follows:
1. POSITION AND TITLE
The Employee agrees that he will at all times faithfully, industriously, and to
the best of his skill, ability, experience and talents, perform all of the
duties required in the position of "Vice President Sales and Marketing". It is
also understood and agreed to by the Employee that his assignment, duties and
responsibilities and reporting arrangements may be changed without causing
termination of this agreement, on mutual agreement of Employee and Employer.
2. TERM
The present agreement will be effective for a period of two (2) years, starting
on the 1st of January 2000 and terminating on the 31st day of December 2001.
This agreement may be renewable on the terms and conditions to be agreed upon by
the parties.
3. MONETARY
As full remuneration for all services rendered, the Employer shall pay to the
Employee a salary of SEVENTY-TWO THOUSAND EIGHT HUNDRED DOLLARS (US$72 800.00)
per annum, payable in regular instalments in accordance with the Employer's
usual paying practices.
Page 1 of 1
<PAGE>
EMPLOYMENT AGREEMENT
January, 1st 2000
4. BONUSES
In addition to the compensation specified in section 3 the Employee may receive
a performance bonus of TWO and HALF PERCENT (2.5%) on total sales generated by
the Employee himself. This bonus will be paid every three (3) months.
Moreover, the Employee shall receive a performance bonus of a QUARTER PER CENT
(0.25%) on total sales generated by the sale representatives under his
responsibility.
5. SHARES AND WARRANTS
The Employee will receive stock options awards, during the course of his
contract, under a pending executive compensation plan (to be defined);
6. BENEFITS
The Employee shall participate, on his own, in all benefit plans which the
Employer may have or provide in the future, including without limitation
medical/hospital and extended health care benefits and life insurance.
7. VACATIONS
The Employee shall be entitled to paid vacations of four (4) weeks, in addition
to statutory holidays. Such vacations shall be taken at times as mutually agreed
upon by the Employer and the Employee, or may be taken in the form of extra pay
at the sole option of the Employee.
8. AUTOMOBILE EXPENSES
The Employer shall provide the Employee with an automobile allowance of EIGHT
HUNDRED DOLLARS (CA$ 800.00) per month for rental and other expenses generated
by use of the automobile.
9. STATUTORY DEDUCTIONS AND TAXES
Salary and benefit payments made pursuant to this agreement are subject to such
deductions such as income tax and any other deductions required by law or
statute.
10. REIMBURSEMENT OF EXPENSES GENERALLY
The Employer shall reimburse the Employee for all reasonable expenses actually
incurred by him on the Employer's behalf and in the course of his employment
upon presentation of substantiating receipts.
Page 2 of 5
<PAGE>
EMPLOYMENT AGREEMENT
January, 1st 2000
11. FULL-TIME ATTENTION TO BUSINESS
During the Employee's employment with the Employer, the Employee shall devote
himself exclusively to the business of the Employer and shall not be employed or
engaged in any capacity in any other business without the prior written approval
of the Employer. The Employee is employed on a full-time basis for the Employer.
It is understood and agreed to by the Employee that the hours of work involved
will within reason vary and be irregular and are those hours required to meet
the objectives of the employment.
12. TERMINATION
This agreement may be terminated by the Employee at any time by giving the
Employer a two week's notice in writing. The Employer may waive the notice, in
whole or in part, but will remain responsible for payment of all salaries,
expenses and bonuses due up until the end of the notice period.
Also, this agreement may be terminated by the Employer on the giving of one
month's notice. At the conclusion of the notice period or expiry of the term or
any renewal thereof, the Employer shall pay the Employee his gross salary as set
out in this agreement for a six (6) month's period, payable at the Employee's
departure, along with any bonuses or expenses due to the Employee at the date of
termination.
13. NOTICE
Any notice or other communication required or permitted to be given under this
agreement shall be in writing and may be delivered personally or by prepaid
registered mail, addressed in the case of the Employer at 2001 McGill College,
suite 1310, Montreal, province of Quebec, H3A 1G1, and in the case of Employee
at 3552 Charron, Mascouche, province of Quebec, Canada, J7K 3N5.
Notice given by pre-paid registered mail shall be deemed to have been received
by the Recipient on the fourth business day after mailing.
Either party may change the address to which Notice must be delivered upon
simple written notice to the other party.
14. CONFIDENTIAL INFORMATION AND TRADE SECRETS "PROPRIETARY INFORMATION"
The employee shall not, either during the term of his Employment or at any time
thereafter, disclose to any person, unless required by law, any secrets or
confidential information, "Proprietary Information" concerning the business or
affairs or financial position of the Employer or any company with which the
Employer is or may hereafter be affiliated.
"Proprietary Information" shall not include any information which:
Page 3 of 5
<PAGE>
EMPLOYMENT AGREEMENT
January, 1st 2000
a) The employer or its Representative possess on a non-confidential basis
and not in contravention of any applicable law; or
b) Is or becomes generally available through no fault of the Employee; or
c) Is received by the Employee from an independent third party that is
lawfully in the possession of same and under no obligation to Employer
with respect thereto; or
d) Is required to be disclosed pursuant to application law or order of a
court of competent jurisdiction; or
e) Any information already known to the Employee prior to entering into
the present Employment Agreement;
15. NON-COMPETITION AND NON-SOLLICITATION
For a period of one year from the effective date of termination of the
employment hereunder, the employee shall not in any province in Canada where the
Employer is carrying on business:
(a) be directly or indirectly engaged in any company or firm which is a
direct competitor of the Employer in the business of the manufacture and
sale of broadcasting software and billboard business (the "business");
(b) intentionally act in any manner that is detrimental to the relations
between the Employer and its dealers, customers, employees or others, and
(c) solicit any of the customers of the Employer or be connected with any
person, firm or corporation soliciting any of the customers of the
Employer.
16. WAIVER
The waiver by either party of any breach or violation of any provision of this
agreement shall not operate or be construed as a waiver of any subsequent breach
or violation of it.
17. AMENDMENT OF CONTRACT
This agreement contains the whole of the agreement between the Employer and the
Employee and there are no other warranties, representations, conditions or
collateral agreements except as set forth in this agreement.
Any modification to this agreement must be in writing and signed by the parties
hereto or it shall have no effect and shall be void.
18. SECTIONS AND HEADINGS
The headings in this agreement are inserted for convenience of reference only
and shall not affect interpretation.
19. SEVERABILITY
If any provision of this agreement is determined to be invalid or unenforceable
in whole or in part such invalidity or unenforceability shall attached only to
such provision or part thereof and
Page 4 of 5
<PAGE>
EMPLOYMENT AGREEMENT
January, 1st 2000
the remaining part of such provision and all other provisions hereof shall
continue in full force and effect.
20. PRIORITY
The present agreement shall constitute the total and integral understanding
intervened between parties, excluding any other document, contract and previous
verbal promise or concomitance that may have taken place in the framework of the
transactions having proceeded the final performance of this agreement, that the
parties declare inadmissible as an element susceptible to modify or hinder, in
any way, one of the other provisions of the present agreement;
21. CHOICE OF LAW
The parties agree that this agreement be governed and interpreted according to
the laws in force in the Province of Quebec, Canada.
The Employee acknowledges that he has read and understands this agreement, and
acknowledges that he has had the opportunity to obtain independent legal advice
with respect to it.
BOTH PARTIES HAVE REVIEWED AND AGREED ON ALL THE ABOVE ISSUES;
SIGNED IN MONTREAL, THIS 1st DAY OF JANUARY, 2000.
Employee Employer
- -------------------------------- ------------------------------------
Michel Laplante J. Michel de Montigny, President
GSI TECHNOLOGIES USA INC.
Page 5 of 5
June 14, 1999
Mr. J. Michel De Montigny
President
GSI Technologies
385, Place d'Youville
Suite 300
Montreal, QC H2Y 2B7
Subject: Obtaining a listing on the NASD OTC Bulletin Board.
Dear Mr. de Montigny
In order to help you with the ongoing expansion of your company's activities and
to raise capital, we propose obtaining a listing on the NASD OTC BULLETIN BOARD
under RULE 504. This will serve to increase the visibility of the company and
provide a vehicle for the raising of capital for future expansion and projects.
The main elements of the plan are:
o Gain control of an existing U.S. company.
We have identified a possible arrangement with the President of IBC
Corporation (IBC).
o Engage an experienced consulting group to advise on the whole process and
to coordinate and file all of the required documents with the Securities
and Exchange Commission and other authorities.
As part of its compensation, the consulting group would receive a
certain number of shares to be held in trust and equivalent to about
15% of the control group's anticipated holdings of 11,250,000 shares;
as well as cash payments for their services.
o Introduce the company to a Market Maker for the NASD OTC BB.
Attached is a summary of the capital structure we envisage for what would
become "GSI Technologies USA."
<PAGE>
In order to determine the feasibility of the transaction outlined in this offer
appropriate due diligence would be performed by Maxima Capital Inc., including a
comprehensive review of the company's legal, tax and accounting activities..
The period from the signing of this offer until the listing on the NASD OTC
Bulletin Board will cover approximately a four month period. We are confident
that GSI Technologies possesses the fundamental corporate characteristics
required to perform on an exchange such as the NASD OTC Bulletin Board and
recommend that you proceed.
Please indicate your acceptance by signing below.
Pierre Saint-Aubin
Vice President Corporate Finance
I accept the proposal subject to normal due diligence.
J. Michel De Montigny
President
GSI Technologies
<PAGE>
ATTACHMENT
Capital Structure of GSI Technologies USA Inc.
The total number of authorized shares of IBC Corporation is currently:
5,000,000 Class A shares having a par value of $1.00 and
15,000,000 of Class B shares having a par value of $.001.
The allocation of shares in IBC Corporation, shares would be:
Control Group:
75% or 11,250,000 shares and 3,750,000 warrants and
Private Investors:
25% or 3,750,000 shares and 1,250,000 warrants.
o Private investors would include those who have already contributed to the
capital of GSI Technologies by way of a seed capital transaction in Canada.
In the formation of GSI USA, for their investment of C$1,300,000 for which
they received 650,000 shares in GSI Technologies they would receive
4,550,000 shares in IBC.
o There would be a modification of the charter of IBC Corporation, to replace
the board of directors, and change the name of the company to GSI
Technologies USA Inc.
o To provide for the raising of capital in the future, the number of
authorized shares in IBC would be increased to 55,000,000.
o The shares received, including those of the control group would remain in
trust for a period of one year from the date of the listing on the
exchange. During this period, 25% of a shareholder's position may be sold
per quarter.
<PAGE>
June 28, 1999
Mr. J. Michel De Montigny
President
GSI Technologies
385, Place d'Youville
Suite 300
Montreal, QC H2Y 2B7
Subject: Share Distributions and Consulting Group Compensation for obtaning a
listing on the NASD OTC Bulletin Board.
Dear Mr. de Montigny
Further to our mandate of June 14 to assist you in obtaining a listing on the
NASD OTC BULLETIN BOARD under RULE 504, we recommend that the consulting group's
allocation of shares to be held in trust be as follows:
SHARES WARRANTS
Maxima Capital Inc. 281,250 375,000
9017-8245 Quebec Inc. 281,250
W.A.F.A. Corporation 662,500 75,000
O.S.F.A. Corporation 175,000 75,000
Paul Roy 175,000 75,000
9064-6167 Quebec Inc. 175,000 75,000
Power Group Consultants LLC 50,000
Andre Desjardins 25,000
Yours truly,
Pierre Saint-Aubin
Vice President Corporate Finance
<PAGE>
August 17, 1999
Mr. J. Michel De Montigny
President,
GSI Technologies
385, Place d'Youville
Suite 300
Montreal, QC H2Y 2B7
Subject: Obtaining a listing on the NASD OTC Bulletin Board.
Dear Mr. de Montigny:
To facilitate your listing on the NASD OTC BULLETIN BOARD, we advise that our
fee for consulting services will be $4,000 per month over the period of four
months required to achieve the listing. "GSI Technologies USA" will reimburse
Maxima a total of $12,000 under this part of the consulting group's overall
mandate.
Please indicate your acceptance by signing below.
Pierre Saint-Aubin
Vice President Corporate Finance
Accepted:
J. Michel De Montigny
President
GSI Technologies
<PAGE>
August 17, 1999
Mr. J. Michel De Montigny
President,
GSI Technologies USA Inc.,
385, Place d'Youville
Suite 300
Montreal, QC H2Y 2B7
Subject: Offering Circular and Subscriptions
Dear Mr. de Montigny:
As part of our mandate to manage the raising of funds by way of a private
placement, this is to confirm our agreement that our finder fee compensation
will be at a rate of US$200 per hour of actual time spent to a maximum of
$100,000. The appropriate distribution will be determined at a later date and I
will advise you accordingly.
Please indicate your acceptance by signing below.
For Maxima Capital Inc.,
Pierre Saint-Aubin
Vice President Corporate Finance
For 9017-8245 Quebec Inc.,
Pierre Saint-Aubin
Accepted:
J. Michel De Montigny
President
GSI Technologies USA Inc.
<PAGE>
August 17, 1999
Mr. J. Michel De Montigny
President
GSI Technologies
385, Place d'Youville
Suite 300
Montreal, QC H2Y 2B7
Subject: Obtaining a listing on the NASD OTC Bulletin Board.
Dear Mr. de Montigny
To further assist you in the current project of transforming IBC Corporation, we
recommend the engagement of BBT Consulting Group LTD. They would arrange for the
engagement and compensation of a qualified U.S. attorney, assist with the
processing of required documentation, as well as arrange for market makers.
They have indicated that the fees for their services would be US$25,000 at the
signing of the agreement and US$25,000 payable 10 days following the listing.
In addition to the cash compensation, BBT would also receive 500,000 shares and
500,000 warrants.
We should meet with Mr. David Amsel who is based here in Montreal at your
earliest convenience.
Pierre Saint-Aubin
Vice President Corporate Finance
<PAGE>
TRUSTEE AGREEMENT
BETWEEN: GSI TECHNOLOGIES USA INC., a corporation legally constituted in the
State of Delaware, the head office being situated at 721 S.E. 17th
Street, suite 200 in Fort Lauderdale, Florida (33316) and represented
by its President, J. MICHEL De MONTIGNY, duly authorised as he so
declares
(hereinafter called the "Corporation")
AND: MAXIMA CAPITAL INC., a corporation legally constituted and situated at
321 de la Commune W. Suite 100 in Montreal, Quebec H2Y 2E1,
represented by Mr. Pierre SAINT-AUBIN duly authorised as he so
declares
(hereinafter called the " Trustee")
- --------------------------------------------------------------------------------
WHEREAS the Corporation wishes to proceed with an offering of its shares in the
form of units as described in the draft "Offering Circular" (the "Circular")
dated September 1999, which is attached to the present agreement, and, each unit
comprising one common share and one warrant, anticipates issuing a minimum of
THREE HUNDRED THOUSAND (300,000) and a maximum of ONE MILLION (1,000,000) shares
and an equal number of warrants; and
WHEREAS the Trustee consents, subject to the terms and conditions of this
agreement, to act as a Trustee for the receipt of subscriptions to the
Corporation's units.
THE PARTIES THEREFORE AGREE ON THE FOLLOWING:
1. Definitions and interpretation
1.1 The terms and expressions used in the present agreement will have the
meaning which has been agreed to in the "Circular" unless the current
agreement stipulates differently.
2. Mode of subscription and deposit of funds
2.1 The Corporation's offering of units will be made by way of a Circular,
duly filed with the Securities Exchange Commission of the United
States.
2.2 For as long as the minimum offer has not been subscribed, the Trustee
will keep in trust all subscription forms and checks received. It is
also understood that checks or money orders will be cashed on receipt.
2.3 All funds intended for the acquisition of the Corporation's securities
and the interest applicable to these amounts will be kept by the
Trustee in order to be distributed in the manner described hereafter.
<PAGE>
3. Closing session
3.1 If the minimum offer is subscribed in the period stated in the
Circular, the Trustee will return to the Corporation all subscription
forms duly completed and received to date for acceptance by the
Corporation.
3.2 On the same date, the Trustee will remit to the Corporation a
certificate stating the number and the exact amount of subscriptions
received and accepted by the Corporation, and which are being held by
the Trustee in accordance to the current agreement.
3.3 During the closing session, the Trustee will pay to the Corporation
the net amount of the current issuance, representing 100% of the
subscriptions received and accepted and taking into account the normal
clearing period in effect at the Trustee's financial institution.
3.4 The Corporation will promptly reimburse the Trustee all sums that have
been given to him and not accepted as payment by the issuing
institution .
4. Compensation of Trustee
4.1. The Corporation will pay the Trustee the fees agreed upon as well as
all expenses incurred by the Trustee in the exercise of his duties and
responsibilities.
5. Trustee's responsibilities
5.1 The Corporation agrees to compensate and relieve the Trustee of all
responsibility concerning (i) all costs and expenses incurred by the
Trustee regarding any legal procedures taken by him in order to have
the terms of this agreement respected and (ii) all fees and damages
claimed by a third party attributable from any action or any omission
by the Trustee or its representatives or employees in the exercise of
their duties. However, the Trustee will not be compensated or relieved
of damages, losses, complaints, or responsibility attributable to his
own voluntary negligence or fraudulence, or that of his
representatives.
5.2 Except for the modes of evidence required or permitted by this
agreement, the Trustee will be free to accept an attestation of a
declaration of facts in the form of a letter signed by the Corporation
as convincing proof from the latter or as authorisation from the
latter to follow up on all of the Corporation's instructions and the
Trustee will not be required in any way to require further proof or
will in any way be held responsible for losses resulting from his
failure to do so. However, by this agreement, the Corporation agrees
to compensate and to relieve the Trustee of all responsibility for
expenses or damages claimed from the Corporation by a third party.
<PAGE>
6. Notice
6.1. All notices, directives or all other document required or permitted in
the current agreement must be presented in writing and in reasonable
delays, either by prepaid mail or delivered to the designated sender's
address, as follows:
In the case of the Corporation:
GSI TECHNOLOGIES USA INC.
Att: Mr. J. Michel de MONTIGNY
721, S.E. 17TH Street
Suite 200
Fort Lauderdale (Florida)
33316
In the case of the Trustee:
MAXIMA CAPITAL INC.
Att: Mr. Pierre Saint-Aubin
321, de la Commune ouest
Montreal (Quebec)
H2Y 2 E1
All notices, directives or any other document remitted as described
above, will be considered to have been remitted on the day to which it
has been delivered or on the second working day following the day of
expedition if sent by mail, the stamp seal in witness whereof.
In case of a mail strike or a slowing in work affecting the place of
sending or of destination, this period of interruption will not be
considered.
7. General disposition
7.1 If he so desires, the trustee may resign and may be relieved of all
tasks and responsibilities as described in this agreement. However, a
one-month notice in writing must be sent to the Corporation although a
shorter time notice would be acceptable. In case of the Trustee's
resignation or in the event of his inability to assume his
responsibilities, his successor will be chosen by the Corporation.
The new trustee will have all the power, rights and responsibilities
stated in the present agreement.
7.2 The current agreement will terminate with the closing session for the
investment.
7.3 The Corporation acknowledges that no direct or indirect publicity
using or mentioning the trustee's name can be aired without his
written consent. However, this consent will not be required for the
Corporation's Circular.
<PAGE>
8. Applicable Law
8.1. This agreement will be subject and interpreted in accordance with the
laws of the Province of Quebec
IN WITHNESS THEREOF, the parties herein have signed in Montreal, on October 19,
1999.
GSI TECHNOLOGIES USA INC.
---------------------------------------
Par: J. MICHEL de MONTIGNY
President
THE TRUSTEE
MAXIMA CAPITAL INC.
---------------------------------------
Par: PIERRE SAINT-AUBIN
Vice-President Corporate Finance
<PAGE>
PROXY
WHEREAS the undersigned, as well as other shareholders, have received shares of
GSI TECHNOLOGIES USA INC. as a promoter, initial subscriber or in payment for
services rendered at $0.001 per share;
WHEREAS the undersigned and other shareholders may receive warrants;
WHEREAS each and every shareholder has agreed to sign a proxy;
WHEREAS other investors have acquired common shares in GSI TECHNOLOGIES USA INC.
for the sum of $1.00 per share in accordance with the Offering Circular which
authorises the issuance of a minimum of 300,000 shares and a maximum of
1,000,000 shares;
WHEREAS the undersigned desires equitable treatment for the investors mentioned
herein who have paid $1.00 per share;
WHEREAS it is necessary to protect the value of the shares of GSI TECHNOLOGIES
USA INC. on the stock exchange, which has a direct impact on the equity of the
company;
WHEREAS the undersigned desires to abide by certain terms and conditions
relevant to the sale of the shares in his possession;
THEREFORE, IT IS AGREED THAT:
1. The above is an integral part of the present proxy;
2. The undersigned hereby gives an irrevocable proxy to the committee
identified below for a period of TWENTY-FOUR (24) months as of the signing
date of this agreement, for the management of the rules applicable to the
sale of shares in the possession of the undersigned;
3. The following are the nominees of the committee created for the purpose of
this proxy:
J. MICHEL DE MONTIGNY, President
JAMES A. HONE, Vice-President
In the event of resignation, death or incapacity to act of a member of the
committee, the remaining member will nominate a person of his choice to act
on behalf of the former member.
<PAGE>
4. The undersigned undertakes, as part of this agreement, to open an account,
in accordance with the account management agreement, with the broker,
MAXIMA CAPITAL INC., located at:
MAXIMA CAPITAL INC.
Att: Mr. Pierre SAINT-AUBIN
321, de la Commune ouest
bureau 100
Montreal, (Quebec) H2Y 2E1
5. MAXIMA CAPITAL INC. will act as the broker for the current agreement. A
letter of acceptance from MAXIMA CAPITAL INC. is attached to the present
agreement as Attachement A. For any transactions performed by his
intermediary, a commission equivalent to the one charged by the market for
this type of transaction, will be paid to MAXIMA CAPITAL INC. by each
shareholder that sells shares.
6. The undersigned can sell his shares or shares acquired following the
exercise of his warrants in accordance with the above conditions and the
following limitations:
- TWENTY PERCENT (20%) non-cumulative per week for all shareholders
holding TWO HUNDRED THOUSAND (200 000) shares or less;
- TEN PERCENT (10%) non-cumulative per week for all associated persons,
directors and shareholders with more than TWO HUNDRED THOUSAND (200
000) shares;
- ONE HUNDRED (100%) per week for all shareholders holding FIFTY
THOUSAND (50 000) shares or less;
7. The minimum selling price for the shares must be the highest value of the
day prior to the sales notice as described below;
8. All shareholders, prior to a sale of their shares, must advise the
committee in writing. The notice submitted by the shareholder must describe
the number of shares to be sold and the sale price desired;
9. Upon receipt of said notice, the committee will offer to the other
shareholders the possibility of buying in whole or in part the share lot
being tendered by the shareholder. Shareholders receiving the offer will
have TWENTY-FOUR (24) hours to advise the Committee in writing of their
intention, if any, to buy the tendered shares. If written notice is not
received within TWENTY-FOUR (24) hours, the offer will be considered to
have been declined;
<PAGE>
10. In the event there are no shareholders interested in acquiring the shares,
or, if only a portion of the tendered lot is acquired by the recipient
shareholders, the Committee will advise the broker, MAXIMA CAPITAL INC, who
will sell the said shares as quickly as possible according to the market
available for the shares, all of which is as outlined in the conditions
described in the notice to the offering shareholder. A copy of the notice
transmitted to MAXIMA CAPITAL INC, will be forwarded to the offering
shareholder;
11. The undersigned cannot, without the written consent of the Committee, which
consent can be withheld without valid reason, to mortgage, to pawn, to
deposit as security or to give as guarantee, under any form, those shares
which form part of this proxy.
12. The undersigned cannot transfer those shares which form part of this
agreement without the written consent of the Committee, given that the
ceding shareholder must sign and agree to be bound by the present proxy;
13. The undersigned recognises that the rules enforced by the "Securities
Exchange Commission" take precedence over the application of the present
agreement;
14. All documents attached to the proxy and initialled by the undersigned for
identification are an integral part of the present proxy;
15. Except for clauses with specific provisions, every notice required by the
present proxy is sufficient if it is in writing and if it is sent by a mode
of communication by which the sender can retain proof of the transmission
to the receiver.
16. The proxy binds the undersigned, as well also his successors, heirs,
legatees, liquidators, administrators, and all other legal agents, and
which is concluded for their benefit;
IN WITNESS THEREOF, THE UNDERSIGNED HAS SIGNED THIS AGREEMENT IN
________________,ON ______________2000.
BBT CONSULTING GROUP LTD
1941 New York Ave. Office: (718) 377-1028
Brooklyn, NY 11210 Fax: (718) 377-1028
- --------------------------------------------------------------------------------
September 8, 1999
Mr J. Michel de MONTIGNY, president
GSI TECHNOLOGIES INC.
Re: I.B.C. CORPORATION - Mandate
- --------------------------------------------------------------------------------
Dear Mr de Montigny:
This letter is to confirm our agreement, whereby you will engage our firm to
assist you in your mandate to obtain a (NASD) OTC Bulletin Board listing for the
common shares of I.B.C. CORPORATION.
The Major work required:
Phase 1 (becoming public)
o Engaging and paying SEC qualified attorney;
o Filing Form D for financing (506) with an appropriate state commission;
o Filing Form 10 with SEC to become reporting company;
o Filing with various state regulatory bodies, as necessary;
o Legal opinion letter (guaranteeing that all the rules have been followed);
o Arranging for transfer agent;
o Arranging for 50 shareholders;
o Interfacing with all professional help and organising the information flow.
Phase II (getting listed)
o Arranging for marketmakers;
o Assistance in filing Form C-211 to get approved and listed for trading.
BBT will be responsible for all securities related legal work, that is , our
counsel will be engaged to complete this work. For your information please note,
that our SEC attorney is Irving Rothstein of Heller, Horowitz & Feit of New
York, NY.
However, the cost and oversight of all accounting and audit requirements will be
your responsibility.
Our fees for the above is :
o 25 000$ U.S. payable immediately;
o 25 000$ U.S. payable after the listing ;
o 500 000 common shares and 500 000 warrants ;
<PAGE>
And the expected time to accomplish the listing is approximately four (4)
months.
If you are in agreement, please sign bellow and accompany your response with a
deposit of 25 000$ U.S.
Sincerely,
DAVID AMSEL
- --------------------------------------------------------------------------------
AGREED AND ACCEPTED BY :
and on , 1999
- -------------------------- ------------------------ -----------
MICHEL de MONTIGNY PIERRE SAINT-AUBAIN
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
I consent to the use in this Registration Statement on Form SB-2 of GSI
Technologies USA Inc., of my report dated December 23,1999, appearing in the
Prospectus which is part of this Registration Statement.
I also consent to the reference to me under the heading "Experts" in such
Prospectus.
By: /s/ Mark Cohen
--------------
Mark Cohen C.P.A.
Hollywood, Florida
April 25, 2000
<TABLE> <S> <C>
<ARTICLE> 5
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> OCT-31-1999
<CASH> 350,019
<SECURITIES> 0
<RECEIVABLES> 90,985
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 441,004
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 914,482
<CURRENT-LIABILITIES> 456,857
<BONDS> 0
0
0
<COMMON> 19,608
<OTHER-SE> 438,017
<TOTAL-LIABILITY-AND-EQUITY> 914,482
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 258,639
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (0.042)
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