REGISTRATION NO. 333-72405
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM S-1
AMENDMENT NO. 1 TO REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
R-Tec Technologies, Inc.
(Exact Name of Registrant as Specified in its Charter)
New Jersey 22-3615979
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(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Classification Code Identification No.)
Incorporation or Number)
Organization)
61 Mallard Dr., P.O. Box 282, Allamuchy, New Jersey, 07820, (888) 299-7832
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(Address and Telephone Number of Registrant's Principal Place of Business)
Michael K. Mullen, Esq.
Schenck, Price, Smith & King
10 Washington Street
P.O. Box 905
Morristown, New Jersey 07963-0905
(973) 593-1000
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(Name, Address and Telephone Number of Agent for Service)
Copies to:
Sirota & Sirota LLP
747 Third Avenue
New York, New York 10017
(212) 759-5555
Approximate Date of Proposed Sale to the Public: As soon as practicable from
time to time after this registration statement becomes effective.
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]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of each
Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Share (1) Price Registration Fee
- ----------------- ---------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
common stock 3,750,000 Shares $8.00 $30,000,000.00 $8,340.00
(.00001 par value per share.)
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
_____________________
1 Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act.
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R-Tec Technologies, Inc.
CROSS-REFERENCE SHEET
Item Number and Heading Heading in Prospectus
- ----------------------- ---------------------
1. Front of the Registration
Statement and Outside Front
Cover Page of Prospectus . . . Facing pages; Front
Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus . . Inside Front and Outside
Back Cover Pages of Prospectus
3. Summary Information and Risk
Factors . . . . . . . . . . . Prospectus Summary; Risk Factors
4. Use of Proceeds . . . . . . . Prospectus Summary; Use of
Proceeds; Description of Business
5. Determination of
Offering Price . . . . . . . . Cover Page; Prospectus Summary;
Risk Factors; Determination of
Offering Price
6. Dilution . . . . . . . . . . Dilution; Comparative Data
7. Selling Security Holders . . . Not applicable
8. Plan of Distribution . . . . . Front Cover Page; Plan of
Distribution
9. Description of the Securities Description of Securities
10. Interest of Named Experts and
Counsel . . . . . . . . . . . Not Applicable
11(a) Description of Business . . . Description of Business
11(b). Description of Property . . . Management - Facilities
11(c). Legal Proceedings . . . . . . Legal Matters
11(d). Market for Common Equity and
Related Stockholder Matters . Front Cover Page; Risk Factors;
Shares Eligible For Future Sale
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11(e)(f) Financial Statements . . . . . Financial Statements
(g).
11(h). Management's Discussion and
Analysis or Plan of Operation . Plan of Operations
11(i). Changes In and Disagreements
with Accountants on Accounting
and Financial Disclosure . . Not Applicable
11(j) Directors, Executive Officers,
Promoters and Control Persons Directors, Executive Officers,
Promoters and Control Persons
11(k). Executive Compensation . . . . Executive Compensation
11(l). Security Ownership of Certain
Beneficial Owners and
Management . . . . . . . . . . Security Ownership of Certain
Beneficial Owners and Management
11(m) Certain Relationships and
Related Transactions . . . . . Related Transactions
12. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities . . Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
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Subject to Completion, Dated April 28, 1999
PROSPECTUS
3,750,000 Shares
R-Tec Technologies, Inc.
COMMON STOCK
------------
This is an initial public offering of shares of common stock of R-Tec
Technologies, Inc. All of the shares to be sold in the offering are being sold
by R-Tec Technologies, Inc. There is currently no public market for the common
stock. R-Tec Technologies, Inc. expects that the public offering price of the
common stock will be $8.00 per share.
Until at least 625,000, the minimum number of shares, are fully
subscribed, all subscription payments will be deposited into an escrow account
at the Bank of New York. If the minimum number of shares is not subscribed to
within three (3) months after the effective date of this prospectus or within
six months after the effective date of the prospectus if R-Tec Technologies,
Inc. elects to exercise its option to extend the offering period three (3)
months, all proceeds will be promptly refunded in full, without interest, and
without any deduction for expenses.
While it does not plan to do so at this time, R-Tec Technologies, Inc.
may engage the services of broker-dealers to assist in selling the shares. If
so, the maximum commission paid to any such broker-dealer will be 10% of the
offering price.
The shares will be quoted on the NASD Electronic Bulletin
Board under the symbol "_______."
Investing in the common stock involves a high degree of risk and the
stock should be purchased only by persons or entities who can afford to lose
their entire investment. See "Risk Factors" beginning on page 8.
Price To Proceeds To
Public R-Tec Technologies, Inc.
-------------- ------------------------
Per Share. . . . . . . . . . . . . . $ 8.00 $ 8.00
Total Minimum (625,000 Shares). . . 5,000,000.00 5,000,000.00
Total Maximum (3,750,000 Shares). . 30,000,000.00 30,000,000.00
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.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. The securities may not be sold
until the registration statement is effective. The information in this
prospectus is not complete and may be changed. This prospectus is not an offer
to sell securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
The date of this prospectus is April 28, 1999
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TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . 5
RISKS FACTORS . . . . . . . . . . . . . .. . . . . . . . . 8
If We Sell Only The Minimum Number Of Shares,
We May Not Be Able To Operate For More Than
Twelve Months Without Revenue Or Additional Financing 8
R-Tec Technologies, Inc. Is A Start-Up Company With
Limited Operating History . . . . . . . . . . . . . . 8
All Of Our Products Are New And May Not
Be Commercially Feasible . . . . . . . . . . . . . . 8
We Do Not Have Our Own Facilities At This Time
To Produce Our Products And Our Office Space Is
Inadequate For Future Needs . . . . . . . . . . . . . 9
Shareholders May Be Unable To Sell Stock
Since There Is No Active Market At Present . . . . . 9
R-Tec Technologies, Inc.'s Business Is Dependent On
Patent Protection Which Cannot Be Assured . . . . . . 9
There Is A Risk That Our Products Will
Not Work As Intended . . . . . . . . . . . . . . . . 10
Management Has Broad Discretion In The
Use Of Proceeds Of This Offering . . . . . . . . . . 10
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Present Stockholders Will Derive Greater Benefits
If We Are Successful And Have Less Risk . . . . . . 10
R-Tec Technologies, Inc. May Have Numerous Larger
And Better Financed Competitors . . . . . . . . . . . 11
R-Tec Technologies, Inc.'s Products May Not
Conform To Government Regulations . . . . . . . . . . 11
Since R-Tec Technologies, Inc. Has No Underwriter,
There Is A Greater Risk That No Market Will
Develop For R-Tec Technologies, Inc. Stock. . . . . . 12
The Offering Price Was Arbitrarily Determined
By R-Tec Technologies, Inc. . . . . . . . . . . . . . 12
We May Not Be Able To Obtain Or Maintain
A Listing On The NASDAQ Small Cap Market
Or The OTC Bulletin Board, So You May Not
Be Able To Sell Your Shares Easily . . . . . . . . . 13
A Portion Of The Offering Proceeds Will Be Used
To Beneift Our Officers, Directors And Related Parties 13
There Is No Assurance That The Minimum Number
Of Shares Will Be Sold . . . . . . . . . . . . . . . 14
Broker-Dealers May Be Unable To Sell Our Stock
Because Of The Low Price . . . . . . . . . . . . . . 14
Additional Funding May Be Necessary and
There Is No Assurance It Can Be Obtained . . . . . . 14
New Investors Will Experience A High Level
Dilution . . . . . . . . . . . . . . . . . . . . . . 15
Future Sales Of Stock By Our Officers And
Directors May Depress The Market Price . . . . . . . 15
We May Be Unable To Sell Stock In Some
States Due To Blue Sky Regulations . . . . . . . . . 15
R-Tec Technologies, Inc. Does Not Intend To Pay
Dividends So No Current Income From Your Stock
Purchase Can Be Expected . . . . . . . . . . . . . . 16
Recent Developments . . . . . . . . . . . . . . . . . 16
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . 16
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 17
SUMMARY OF FINANCIAL INFORMATION . . . . . . . . . . . . . . . 20
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . 20
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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MANAGEMENT AND AFFILIATES. . . . . . . . . . . . . . . . . . . 32
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . 37
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS. . . . . . . . . . . . . . . . . 38
ORGANIZATION WITHIN LAST FIVE YEARS. . . . . . . . . . . . . . 40
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . 40
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 43
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 44
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 47
This prospectus contains forward-looking statements which involve risk
and uncertainties. R-Tec Technologies, Inc. 's actual results may differ
significantly from the results discussed in those forward-looking statements.
Some of the factors that might cause such a difference are discussed in "Risk
Factors" beginning on page ___ of this prospectus.
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Prospectus Summary
This summary highlights information contained elsewhere in this
prospectus and may not contain all of the information that you should consider
before investing in the common stock. You should read the entire prospectus
carefully, including the "Risk Factors" section and the financial statements and
the notes to those statements.
R-Tec Technologies, Inc.
R-Tec Technologies, Inc. was formed in October, 1998 for the purpose of
commercially exploiting its proprietary technology for detecting gas leaks. R-
Tec Technologies, Inc. has not yet commenced commercial operations. We do not
have our own facility to produce our products,although we have a contract with a
manufacturer,Anscott Chemical Corp. We do not have commercial quantities of our
products, and the efficacy of the products have not been confirmed by
independent third-parties, except that Motors & Armatures Corp. tested one of
our products for its sensitivity. To date, R-Tec Technologies, Inc. has devoted
all of its energies to its initial organization, product research and
development, developing a business plan, fundraising efforts and primarily
preparing the documentation related to this offering.
Proprietary Technology. R-Tec Technologies, Inc.'s proprietary
technologies are protected by a patent that has been assigned to it. We plan to
use these technologies to develop a product line of gas detecting paints that
will be used in a variety of industrial and manufacturing settings to coat pipe
junctions. The paints are designed to change color when gas escapes through the
coated junction allowing for rapid detection of small gas leaks. We believe that
our products will have broad application in areas such as the manufacture and
installation of air conditioning and refrigeration systems. We believe that our
products are ready for commercial production based on tests conducted under the
supervision of Shawn P. Walsh, a scientific consultant to R-Tec Technologies,
Inc. and a director. See "Directors, Officers and Key Employees." The tests
studied the stability of the product under weathering, aging and storage, the
sensitivity to certain gases and the products' ability to react to those gases
in the presence of other chemicals. Other tests were conducted on the
compatibility of the products with materials that they will come into contact in
consumer usage, such as metal pipe surfaces, packaging materials, etc. Tests
also explored the feasibility of the products to production in large commercial
quantities and the toxicity and environmental profile of all of the products'
components. Motors & Armatures Corp., which has entered into an distribution
agreement with us, also conducted tests regarding the products' sensitivity.
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In addition to detecting leaks, we believe that some of our products
will also neutralize the chloroflurocarbon contained in the leaking gas by
removing the chlorine and fluoride and, possibly, rendering the leaking gas
inert and potentially harmless to the ozone layer.
R -Tec Technologies, Inc. has a two phase plan for developing its
business. Phase 1 involves establishing manufacturing and distribution
relationships and commencing the distribution of three products. Phase 2 will
address expanding our product lines. Because of the lead times necessary to
implement this strategy, we do not expect to realize significant revenues from
sales before at least six months following completion of this offering. There
are numerous risks and uncertainties regarding R-Tec Technologies, Inc.'s
business plans which are described in detail under "Risk Factors."
R-Tec Technologies, Inc. believes that our products' ability to detect
gas and leaks will develop into a series of significant market opportunities. We
believe that our products have the potential to meet the needs of users who face
situations where gas leaks can expose the user to significant monetary losses or
result in life threatening situations.
R-Tec Technologies, Inc. believes it will achieve growing revenues as
its initial products gain market acceptance. As the original product lines
continue to grow, we expect to develop additional products during Phase 2 which
will be marketed to the users identified in Phase 1.
We believe that our R-Tect 12 reactive paint product developed for
automotive applications to detect R-12 freon gas, our R-Tect 22 reactive paint
product designed to detect R-22 freon gas, our R-Tect carbon dioxide reactive
paint product, designed to detect carbon dioxide leaks and our R-Tect natural
gas detection reactive paint product will be available for distribution during
Phase 1, with the transition to Phase 2 being marked by the introduction of our
next product - a propane leak detection reactive paint product.
In addition to the propane leak detection reactive paint product, we
hope to develop leak detection systems for other gases, such as ammonia, butane,
etc., using our patented technology.
Other potential applications of R-Tec Technologies, Inc.'s detection
technology are as a method for measuring blood gases, for measuring the
freshness of packaged poultry, and for detecting gas leaks in electrical
transformers. At present, we have not taken steps to determine feasibility of
other potential applications of our technology.
At present, we do not have commercial quantities of any of our products
and do not have our own facilities to produce our products. We do have a
contract, however, with Anscott Chemical Corp. to manufacture some of our
products. There can be no assurance that R-Tec Technologies, Inc.'s products
when produced in commercial quantities will perform as intended. See "Risk
Factors". In addition, if only the minimum number of shares are sold, there can
be no assurance that R-Tec Technologies, Inc. can produce sufficient product in
commercial quantities to be profitable. See "Risk Factors."
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The Offering
Common Stock Offered: Minimum - 625,000 shares
Maximum - 3,750,000 shares
Offering Price $8.00 per share
Proposed Trading Market
and Symbol NASD Electronic Bulletin Board
"------"
Total Number of
Shares Outstanding
After the Offering
(assuming all offered
shares are sold) 18,750,000 shares
Estimated Net Proceeds
(assuming all offered
shares are sold) $29,500,000.00
Use of Proceeds We intend to use the net
proceeds of this offering to
pay Promissory Notes of R-Tec
Technologies, Inc. to our
officers and directors and
related persons, to pay for
the patent assigned to R-Tec
Technologies, Inc., to fund the
initial business operations and
staffing of R-Tec Technologies, Inc.,
to conduct product research and
development, to develop
production and marketing
plans, for working capital and
for general corporate
purposes.
Dividend Policy We do not intend to
pay any cash dividends for
the foreseeable future.
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Risk Factors
Investing in our common stock involves a high degree of risk. In
addition to the other information in this document, you should carefully
consider the following risk factors in evaluating an investment in our common
stock.
If We Sell Only The Minimum Number Of Shares, We May Not Be Able To Operate For
More Than Twelve Months Without Revenue Or Additional Financing.
If only 625,000 shares are sold, R-Tec Technologies, Inc. may not have
sufficient capital to fund operations past twelve months, without revenues. In
addition, R-Tec Technologies, Inc. may be unable to find additional suitable
financing sources on acceptable terms. Therefore, if the minimum number of
shares are sold, R-Tec Technologies, Inc.'s operations will likely be adversely
affected after twelve months and we may not be able to undertake additional
projects or operations described in this prospectus, which may result in an
entire loss of any amounts invested.
R-Tec Technologies, Inc. Is A Start-Up Company With Limited Operating History.
There is absolutely no assurance that we will be able, upon completion
of this offering, to successfully implement our proposed business plan or that
R-Tec Technologies, Inc. will ever operate profitably.
R-Tec Technologies, Inc. was only recently incorporated, has no
significant assets other than rights to a patent which has not been valued, no
current business operations nor any history of operations and is considered to
be a development stage enterprise.
All Of Our Products Are New And May Not Be Commercially Feasible.
There can be no assurance that we will be able to introduce or market
our products or that problems will not be found in R-Tec Technologies, Inc.'s
products or that we will be able to reduce our technology into products that
will be commercially successful.
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R-Tec Technologies, Inc. may also experience difficulties that could
delay or prevent the development, introduction and marketing of its products.
R-Tec Technologies, Inc. will be dependent upon products that will be developed
in commercial quantities in the future. If we are unable on a timely basis to
develop new products or enhancements to existing products, or if our products do
not achieve market acceptance or commercial success, our business, operational
results and financial condition will be materially adversely affected and
investors could lose their entire investment. Since our products have never been
produced in commercial quantities, there can be no assurance that commercial
production will be feasible. Even if feasible, there can be no assurance that
our products will perform as intended.
We Do Not Have Our Own Facilities At This Time To Produce Our Products
And Our Office Space Is Inadequate For Future Needs.
At the present time we do not have our own facility to produce the
paints which are our principal products. However, we have a contract with
Anscott Chemical Corp. to manufacture three of our products. In addition, our
present office space is inadequate for future needs. These factors will make it
more difficult to implement our business plans.
Shareholders May Be Unable To Sell Stock Since There
Is No Active Market At Present.
You may not be able to sell your shares promptly or at all, or sell
your shares at a price equal to or above the price you paid for the shares due
to the lack of an active market at present.
At present, no public market exists for R-Tec Technologies, Inc.'s
common stock. R- Tec Technologies, Inc. hopes that it will be able, at some time
in the future, to have its common stock quoted on the NASDAQ Small Cap Market.
However, if we are unable to qualify for listing on the NASDAQ Small Cap Market,
our common stock will be quoted on the NASD inter-dealer Electronic Bulletin
Board system upon completion of this offering. There can be no assurance that
any market will develop for the securities or that if a market does develop,
that it will continue.
R-Tec Technologies, Inc.'s Business Is Dependent On Patent
Protection Which Cannot Be Assured.
There can be no assurance that foreign patent, trade secret or
copyright laws will protect our technologies or that we will not be vulnerable
to competitors who attempt to copy or use our products or processes.
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The technology for developing R-Tec Technologies, Inc.'s products will
be protected by a patent exclusively assigned to R-Tec Technologies, Inc.
However, due to a typographical error this assignment was erroneously made to an
unrelated company named "R-Tec, Inc." We have taken all steps recommended by the
U.S. Patent Office to correct this error and other measures which we believe to
be prudent to rectify the mistake.
There can be no assurance that any of our future patent applications
will be granted, that any current or future patent or patent applications will
provide significant protection for our products or technology, be of commercial
benefit or that the validity of such patents or patent applications will not be
challenged.
There Is A Risk That Our Products Will Not Work As Intended.
We have never produced any commercial quantities of our products and
they have never been tested by consumers. However, Motors & Armatures Corp. has
tested the sensitivity of our products. There is no assurance that our products
will work for consumers as intended and no assurance can be given that our
products will not cause damage which will result in liability for R-Tec
Technologies, Inc. If our products are not commercially viable, it will have an
adverse impact on us and may result in our terminating operations.
Management Has Broad Discretion In The Use of
Proceeds Of This Offering.
Management has broad discretion in the use of proceeds and the
allocations set forth are only estimates, subject to adjustment in the opinion
of management based on events which may arise in the future. See "Use of
Proceeds."
Present Stockholders Will Derive Greater Benefits If We Are
Successful And Have Less Risk.
Present stockholders will benefit from a disproportionately greater
share of R-Tec Technologies, Inc., if successful, while investors in this
offering risk a disproportionally greater loss of cash invested if R- Tec
Technologies, Inc. is not successful.
Three of our officers and directors collectively have paid a total
price of $578,923.11 for the 15,000,000 presently outstanding shares of R-Tec
Technologies, Inc.'s common stock. Investors in this offering will pay a total
purchase price of $30,000,000, assuming all 3,750,000 shares are sold. The
officers and directors will own 80% of the outstanding shares and investors in
this offering will own 20% of the outstanding shares. Investors in this offering
will contribute to the capital of R-Tec Technologies, Inc. a disproportionately
greater percentage than the ownership they receive.
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R-Tec Technologies, Inc. May Have Numerous Larger And Better
Financed Competitors.
There can be no assurance that we will be able to compete successfully
against current or future competitors or technologies or that competitive
pressures faced by R-Tec Technologies, Inc. will not materially adversely affect
our business, operating results and financial condition. Many of our competitors
may have the financial resources necessary to enable them to withstand
substantial price and product competition, to implement extensive advertising
and promotional programs, and to introduce new products. R-Tec Technologies,
Inc.'s ability to compete successfully will depend on its ability to anticipate
and respond to competitive factors affecting the industry, including new
products, changes in customer preferences, and pricing strategies by
competitors.
We believe that our technology is unique and provides us with the
ability to compete successfully. However, there can be no assurance that we will
be able to become profitable or successfully market our products or implement
our business plan. Competition will be based on many factors including price and
the quality of products.
Some of our competitors may have greater financial, marketing and
manufacturing resources. This, together with the limited capital available to
R-Tec Technologies, Inc. which will limit its marketing efforts, creates a
significant competitive disadvantage. If we are not able to compete
successfully, regardless of the quality of our products and the success of this
offering, we will have little chance of succeeding and it is likely investors
will lose their entire investment.
R-Tec Technologies, Inc.'s Products May Not Conform To Government
Regulations.
There can be no assurance that our products will comply in the future
with all applicable regulations and standards. However, in the opinion of our
consultant and a director, our products currently comply with all applicable
governmental regulations. Because the future scope of these and other
regulations and standards cannot be predicted, there can be no assurance that we
will be able to comply in the future with all regulations or industry standards.
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R-Tec Technologies, Inc.'s products may be subject to numerous
governmental regulations designed to protect the health and safety of consumers
and the environment. We will take all reasonable steps to insure that our
products will comply with all applicable material governmental health and safety
regulations and standards. However, non-compliance could result in governmental
restrictions on sales or reductions in customer acceptance of our products.
Compliance may also require significant product modifications, which may result
in increased costs and impaired product performance, which will adversly affect
our profitability.
Since R-Tec Technologies, Inc. Has No Underwriter There Is A
Greater Risk That No Market Will Develop For Our Stock.
Lack of an underwriter or broker/dealer participation in the offering
is likely to increase the risk that no market for our securities will develop
upon completion of the offering. Because R-Tec Technologies, Inc. has not
engaged the services of an underwriter, the independent due diligence review of
R-Tec Technologies, Inc., its affairs and financial condition, which would
ordinarily be performed by an underwriter, have not been performed.
The Offering Price Was Arbitrarily Determined By R-Tec
Technologies, Inc.
The public offering price should not be regarded as an indicator of
value or of any future market price of our securities.
The $8.00 offering price of the common stock was arbitrarily determined
by management of R-Tec Technologies, Inc. and was set at a level substantially
in excess of the price recently paid by management for their shares of common
stock. The price bears no relationship to our assets, book value, net worth or
other economic or recognized criteria of value. However, R-Tec Technologies,
Inc. has the rights to a patent which we believe, based on the opinion of our
scientific consultant who is also a director, has significant value.
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We May Not Be Able To Obtain Or Maintain A Listing On The NASDAQ Small Cap
Market Or The OTC Bulletin Board, So You May Not Be Able To Sell
Your Shares Easily.
Because we may not be able to obtain or maintain a listing on the
NASDAQ Small Cap Market or the OTC Bulletin Board, your shares may be difficult
or impossible to sell.
Trading in our common stock, if any, is intended to be conducted on the
NASDAQ Small Cap Market, after the initial offering period. However, if we are
unable to qualify for this listing, we believe that our stock will trade on
over-the-counter market in the so-called "pink sheets" or the OTC Bulletin
Board, which was established for securities that do not meet the Nasdaq Small
Cap Market listing requirements. Consequently, selling your common stock would
be more difficult because smaller quantities of stock could be bought and sold,
transactions could be delayed, and security analysts' and news media's coverage
of R-Tec Technologies, Inc. may be reduced. These factors could result in lower
prices and larger spreads in the bid and ask price for our stock.
A Portion Of The Offering Proceeds Will Be Used To Benefit Our
Officers, Directors And Related Parties.
A portion of the proceeds from this offering will be used to pay debt
to our officers, directors and related parties rather than to fund operations or
implement our business plan.
R-Tec Technologies, Inc. issued four Promissory Notes to its officers,
directors and related parties totalling $184,920.11. In addition, we are
obligated to pay four hundred and twenty-five thousand dollars ($425,000.00) out
of the proceeds of this offering, plus two percent (2%) of our net profits for
three years, for the patent which was assigned to us. Thus, if only the minimum
is sold, R-Tec Technologies, Inc.'s level of operations could be materially
adversely affected and R-Tec Technologies, Inc. may not succeed. This event
would significantly increase the risk of loss to persons who invest in this
offering.
13
<PAGE>
There Is No Assurance That The Minimum Number Of Shares Will Be
Sold.
If the minimum number of shares have not been fully subscribed within
three months after the effective date of this prospectus or within six months if
we exercise the option to extend the offering period three additional months,
all monies deposited in the escrow account will be refunded to the subscribers,
without interest and without any deduction for expenses. During this period,
purchasers will be subscribers and not shareholders of R-Tec Technologies, Inc.
During this time period, subscribers will have no right to a return of their
payment.
No commitment exists by anyone to purchase any of the common stock
offered. Consequently, no assurance can be given that any common stock will be
sold or that even the minimum will be sold.
Broker-Dealers May Be Unable To Sell Our Stock
Because Of The Low Price.
Although we intend to be listed on the NASDAQ Small Cap Market, if we
are able to qualify in the future, or on the OTC Bulletin Board, there is no
assurance however that we will obtain this listing. Because our stock may only
be sold on the over-the-counter market, certain rules which apply will make it
more difficult for you to sell your stock.
Since our common stock may not be listed on the Nasdaq Small Cap Market
and/or any stock exchange in the future, it may become subject to Rule 15g-9
under the Exchange Act. That rule imposes additional sales practice requirements
on broker-dealers that sell low-priced securities to persons other than
established customers and institutional accredited investors. For transactions
covered by this rule, a broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. Consequently, the rule may affect the
ability of broker-dealers to sell our shares and may affect the ability of
holders to sell common stock in the secondary market.
Additional Funding May Be Necessary And There Is No Assurance
That It Can Be Obtained
R-Tec Technologies, Inc. believes that if the maximum number of shares
are sold we will have sufficient capital to implement our business plan for a
period of 24-60 months without revenues. If only the minimum is sold, additional
financing may be necessary to engage in all of the activities we have planned
after a twelve month period without revenues. However, even if the maximum is
sold, there is no assurance that additional funding will not be required and
there is no assurance that such funding can be obtained. If additional financing
is required and cannot be obtained, it will have a material adverse impact on R-
Tec Technologies, Inc.
14
<PAGE>
New Investors Will Experience A High Level Of Dilution
New investors will suffer a significant dilution in the value of their
stock immediately after making the investment in R-Tec Technologies, Inc. based
on our net tangible book value. See "Dilution." If the maximum is sold, dilution
to investors in this offering on a per share basis is $6.43. If the minimum is
sold, dilution to investors in this offering on a per share basis is $7.72.
Future Sales Of Stock By Our Officers And Directors May Depress
The Market Price.
All 15,000,000 shares of R-Tec Technologies, Inc.'s common stock owned
by our officers and directors are "restricted securities" and may in the future
be sold in compliance with Rule 144 adopted under the Securities Act of 1933.
Future sales of those shares under Rule 144 could depress the market price of
the common stock in any market that may develop in that the officers and
directors own a large percentage of R-Tec Technologies, Inc.'s outstanding
shares. The current outstanding shares become eligible for sale pursuant to Rule
144 on December 4, 1999.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
R-Tec Technologies, Inc., or persons whose shares are aggregated, 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
the greater of 1% of the total number of outstanding shares of the same class
or, the average weekly trading volume during the four calendar weeks preceding
the sale. A person who has not been an affiliate 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.
On April 18, 1999 the Board of Directors adopted a policy against
insider trading which bars all officers, directors and employees and their
family members from trading in our stock while possessing material non-public
information. Philip Lacqua was designated our Insider Trading Compliance Officer
to review and either approve or prohibit all proposed trades.
Prior to this offering, there has been no market for the common stock,
and no prediction can be made as to the effect, if any, that market sales of
currently restricted shares of common stock or the availability of such shares
for sale will have on the market price prevailing from time to time.
Nevertheless, the possibility that substantial amounts of common stock may be
sold in the public market may adversely affect the price of R-Tec Technologies,
Inc.'s equity securities in any trading market which may develop.
We May Be Unable To Sell Stock In Some States Due To Blue Sky
Regulations.
Since R-Tec Technologies, Inc. is not using an underwriter, we must
register the securities in any state where we desire to sell our common stock.
We must also register our officers and directors in any state in which we seek
to sell our common stock. There can be no assurance that any or all stock
registrations in various states will be approved. If a registration is not
approved, it will be more difficult for us to sell the minimum number of shares.
We intend to use our best efforts to register in every state where we believe
there is a significant market for our stock.
Should any or all stock registrations not be approved, this would
likely result in impeading our ability to sell the 3,750,000 shares offered for
sale and would also result in investors finding it more difficult to sell their
securities.
15
<PAGE>
R-Tec Technologies, Inc. Does Not Intend To Pay Dividends So No
Current Income From Your Stock Purchase Can Be Expected.
R-Tec Technologies, Inc. does not currently intend to pay cash
dividends on its common stock and does not anticipate paying such dividends at
any time in the foreseeable future. Thus, you may not receive any income from
your purchase of our stock for the foreseeable future.
Recent Developments
On February 24, 1999, a press release was issued by R-Tec Technologies,
Inc. for distribution on the Internet which contained several inaccurate
statements or statements which require clarification. The press release stated
inaccurately that R-Tec Technologies, Inc. obtained worldwide recognition with
their global patent which was filed in 104 countries. In fact, the recognition
referred to is R-Tec Technologies, Inc.'s patent application which was filed in
96 countries. The press release's statement that R-Tec Technologies, Inc.'s
products are "revolutionary" and our technology instrumental in reducing CFC
emissions and global warming were based on the opinions of Shawn P. Walsh, a
consultant to R-Tec Technologies, Inc. However, R-Tec Technologies, Inc.'s
products are not yet in consumer use and have never been instrumental in
reducing CFC emissions or global warming. The press release also stated
inaccurately that Underwriters Laboratories were unable to produce a standard
for R-Tec Technologies, Inc.'s technology because it is so advanced. In fact,
Underwriters Laboratories stated that it did not have a published standard with
which to evaluate R-Tec Technologies, Inc.'s R-Tect 22 product due to the
uniqueness of this product. Finally, the reference in the press release to a
contact by the Deputy Commissioner of New York City Environmental Protection
Agency failed to indicate that his evaluation of R-Tec Technologies, Inc.'s
products was based on statements made to him by R-Tec Technologies, Inc.
concerning the product's performance and efficacy.
Where You Can Find Additional Information
In connection with the offering of the common stock, R-Tec
Technologies, Inc. has filed a registration statement with the Securities and
Exchange Commission. There is additional information concerning R-Tec
Technologies, Inc. contained in the registration statement that is not contained
in this prospectus. In addition, beginning with the effective date of this
prospectus, we will be required to file annual quarterly and special reports and
proxy statements with the SEC. You may read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the Public Reference Room.
Our SEC filings will also be available at our web site at
http:www.rtectechnologies.com or at the SEC's web site http:www.sec.gov. You may
also request a copy of these filings, at no cost, by writing at R-Tec
Technologies, Inc., 61 Mallard Drive, P.O. Box 282, Allamuchy, New Jersey 07820.
Dilution
Dilution is the difference between the offering price of $8.00 per
share for the common stock and the net tangible book value per share of common
stock immediately after its purchase. R-Tec Technologies, Inc. 's net tangible
book value per share of common stock is calculated by subtracting R-Tec
Technologies, Inc.'s total liabilities from its total assets less intangible
assets, and then dividing by the number of shares then outstanding. The net
tangible book value of R-Tec Technologies, Inc., based on the December 31, 1998,
audited financial statements was $(572,567.00), or approximately $(0.04) per
share of common stock. Assuming no changes in net tangible book value subsequent
to December, 1998, other than those resulting from the sale of all the common
stock offered hereby, the post offering pro forma net tangible book value of
R-Tec Technologies, Inc. would be $29,427,433, or approximately $1.57 per share,
representing an immediate increase in net tangible book value of $1.61 per share
to existing stockholders and an immediate dilution of $6.43 per share or (80%)
to new investors. The following table illustrates the foregoing information with
respect to dilution of new investors on a per share basis.
Offering price per share $ 8.00
Net book value per share prior to offering $(0.04)
Increase attributable to purchase of shares by new investors $ 1.61
Post offering pro forma net book value per share $ 1.57
Dilution to investors in this offering $ 6.43
Assuming R-Tec Technologies, Inc. can sell only the minimum number of
shares, the post offering pro forma net tangible book value of R-Tec
Technologies, Inc. would be $4,427,433, or approximately $0.28 per share,
representing an immediate increase in net tangible book value of $0.32 per share
to existing stockholders and an immediate dilution of $7.72 per share or (97%)
to new investors. The following table illustrates the foregoing information with
respect to dilution of new investors on a per share basis.
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<PAGE>
Offering price per share $ 8.00
Net book value per share prior to offering $(0.04)
Increase attributable to purchase of shares by new investors $ 0.32
Post offering pro forma net book value per share $ 0.28
Dilution to investors in this offering $ 7.72
The following chart illustrates the pro-forma proportionate ownership
in R-Tec Technologies, Inc., upon completion of the offering of present
stockholders and of investors in this offering, compared to the relative amounts
paid and contributed to capital of R-Tec Technologies, Inc. by present
stockholders and by investors in this offering, assuming no changes in net
tangible book value other than those resulting from the offering.
<TABLE>
<CAPTION>
Shares Owned Cash Paid Percent Price/Share
------------ -------------- ------- -----------
<S> <C> <C> <C> <C>
Present Stockholders 15,000,000 $ 578,923.00 80% $0.04/Share
New Investors-Maximum 3,750,000 $30,000,000.00 20% $8.00/Share
Present Stockholders 15,000,000 $ 578,923.00 96% $0.04/Share
New Investors-Minimum 625,000 $ 5,000,000.00 4% $8.00/Share
</TABLE>
Use Of Proceeds
The net proceeds to R-Tec Technologies, Inc. from the sale of common
stock offered here are estimated to be $29,500,000.00 if the maximum is sold,
after deducting estimated offering expenses of $500,000.00 for legal,
accounting, printing and advertising in connection with the offering. R-Tec
Technologies, Inc. does not expect to pay sales commissions or other
compensation in connection with the offering because the common stock will be
offered and sold by R-Tec Technologies, Inc. through its officers and directors
who will not be compensated for their sales efforts. The net proceeds will be
used principally to provide for research and development activities and working
capital for 24-60 months following successful completion of this offering if the
maximum is sold. The chart below represents the use of proceeds if the maximum
is sold. Research and development activities consist of the salaries of our
scientists, the cost of equipment, supplies, leasing laboratory space and
purchase or construction of a laboratory. Office expenses, include rent for the
executive offices, purchase or construction of a building, and lease of
warehouse space. Parts and supplies expense consists of the cost of raw
materials and inventory. Salary expense consists of salaries of R-Tec
Technologies, Inc.'s officers and directors, internal accounting, administrative
and other personnel. Sales and marketing expense consists of advertising and
public relations costs. Promissory Note expense consists of the amount owed as a
result of all of the Promissory Notes outstanding for reimbursement of expenses
through December 31, 1998. Patent expense consists of the payment due under the
Promissory Note for the patent. Insurance expense consists of the cost of
general liability, officers and directors liability, life, health, workers'
compensation and automobile insurance.
ESTIMATED
PERCENT OF
PURPOSE AMOUNT PROCEEDS
- --------- -------------- ----------
Research and Development Activities $10,251,159.80 34.7%
Salary Expense 5,485,000.00 18.6%
Parts and Supplies Expense 3,700,000.00 12.5%
Office Expense 6,253,920.11 21.2%
Sales and Marketing Expense 2,000,000.00 6.8%
Promissory Note Expense 184,920.11 0.6%
Patent Expense 425,000.00 1.4%
Travel Expense 500,000.00 1.7%
Insurance Expense 700,000.00 2.4%
-------------- ----
TOTAL $29,500,000.00 100%
Offering Expenses 500,000.00
17
<PAGE>
If R-Tec Technologies, Inc. sells shares worth $20,000,000.00 the
proceeds are to be used as follows for a period of 25 to 48 months:
ESTIMATED
PERCENT OF
PURPOSE AMOUNT PROCEEDS
- --------- -------------- ----------
Research and Development Activities $ 7,226,159.78 37.1%
Salary Expense 4,485,000.00 23.1%
Parts and Supplies Expense 1,800,000.00 9.2%
Office Expense 3,653,920.11 18.8%
Patent Expense 425,000.00 2.2%
Promissory Note Expense 184,920.11 0.85%
Sales and Marketing Expense 1,000,000.00 5.1%
Travel Expense 200,000.00 1.0%
Insurance Expense 525,000.00 2.7%
------------- ------
TOTAL $19,500,000.00 100%
Offering Expenses $ 500,000.00
If R-Tec Technologies, Inc. sells shares worth $10,000,000
the proceeds are to be used as follows for a period of 13-24
months:
ESTIMATED
PERCENT OF
PURPOSE AMOUNT PROCEEDS
- --------- -------------- ----------
Research and Development Activities $ 2,401,159.78 25.3%
Salary Expense 2,885,000.00 30.4%
Parts and Supplies Expense 800,000.00 8.4%
Office Expense 1,853,920.11 19.2%
Patent Expense 425,000.00 4.5%
Promissory Note Expense 184,920.11 1.3%
Sales and Marketing Expense 500,000.00 5.3%
Travel Expense 100,000.00 1.0%
Insurance Expense 350,000.00 3.7%
-------------- ----
TOTAL $ 9,500,000.00 100%
Offering Expenses $ 500,000.00
18
<PAGE>
If R-Tec Technologies, Inc. is only able to sell the minimum shares,
the net proceeds to R-Tec Technologies, Inc. would be estimated to be $4,500,000
after deducting estimated offering expenses of $500,000.00 for legal,
accounting, printing and advertising in connection with this offering. The
following summary reflects how R-Tec Technologies, Inc. intends to use the
proceeds for up to twelve months:
ESTIMATED
PERCENT OF
PURPOSE AMOUNT PROCEEDS
- --------- -------------- ----------
Research and Development Activities 1,425,000.00 31.7%
Salaries Expense 1,485,000.00 33.0%
Parts and Supplies Expense 226,159.78 5.0%
Office Expense 353,920.00 8.2%
Sales and Marketing Expense 200,000.00 4.4%
Promissory Note Expense 184,920.11 3.8%
Patent Expense 425,000.00 9.5%
Travel Expense 50,000.00 1.1%
Insurance Expense 150,000.00 3.3%
--------------- -----
Total $ 4, 500,000.00 99.8%
Offering Expenses $ 500,000.00
The foregoing represents management's current estimate of how the
proceeds of this offering will be used and is subject to change based on
changing circumstances and differing needs of R-Tec Technologies, Inc. as they
may exist in the future. R-Tec Technologies, Inc. may reallocate the proceeds in
the above described categories or to other purposes in response to changes in
its plans, industry conditions, and R-Tec Technologies, Inc.'s future revenues
and expenditures.
We believe that the net proceeds from the sale of the common stock
offered , assuming that all shares offered are sold, will provide R-Tec
Technologies, Inc. sufficient capital to fund initial operations, and for
development and expansion of business for approximately the first 24 to 60
months following completion of this offering. If only the minimum is sold, R-Tec
Technologies, Inc. believes it will be able to operate for up to twelve months
if no revenue is generated from its operations. Many factors may affect R-Tec
Technologies, Inc.'s cash needs, including the possible failure to develop
sufficient revenues from the sale of its products. R-Tec Technologies, Inc. may
not have sufficient capital for its funding requirements and may be unable to
find suitable financing on acceptable terms. If R-Tec Technologies, Inc. is
unable to obtain such additional financing, our ability to maintain our level of
operations could be materially adversely affected and R-Tec Technologies, Inc.
may not succeed. This event would significantly increase the risk of loss to
those persons who invest in this offering.
If less than all the shares are sold, the net proceeds to R-Tec
Technologies, Inc. will be reduced and the allocations presented will have to be
substantially revised. The likely effect of any reduction in the net proceeds
received will be to lengthen the time it takes us to develop additional
products, delays in the introduction of our products to market and the need for
R-Tec Technologies, Inc. to seek additional funding.
A portion of the proceeds of this offering will be used to pay
Promissory Notes to certain of our officers and directors. These Promissory
Notes, which bear interest at 6% per annum, were provided to reimburse these
individuals for certain expenses they incurred prior to and in connection with
the offering. See "Certain Relationships and Related Transactions."
In addition, a portion of the proceeds will be used to pay a Promissory
Note provided in order to obtain our patented technology. Under the terms of
this note $425,000.00 is payable within 30 days of completion of this offering.
The balance consists of the payment of two percent (2%) of our net profits for a
three year period. If we have no net profit during the three year period, no
additional payments are due.
19
<PAGE>
Any portion of the net proceeds not required for immediate expenditure
will be deposited in R-Tec Technologies, Inc.'s corporate checking account,
interest-bearing accounts or invested in short-term government notes, treasury
bills, or short-term obligations of financial institutions.
We reserve the right to change the use of proceeds in the event that we
determine, based on our marketing efforts and research and testing of our
products, that an adjustment in the proceeds of this offering is warranted in
the opinion of management. However, there will be no adjustment in any amounts
utilized to pay the Promissory Notes and patent expense.
Summary Of Financial Information
R-Tec Technologies, Inc. is a development stage company and has no
revenues or earnings from operations. As of December 31, 1998:
Total Assets . . . . . . . . . . . $ 887,353
Total Liabilities. . . . . . . . . $ 609,920
Shareholders Equity. . . . . . . . $ 277,433
Net Tangible Book Value. . . . . . $(572,567)
Net Tangible Book Value per share. $ (0.04)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction
with R-Tec Technologies, Inc.'s consolidated financial statements and the Notes
associated with them contained elsewhere in this prospectus.
R-Tec Technologies, Inc. is a start up company with a patented
technology for paints which may be used to detect leaks of various gases from
pipes.
We believe that our R-Tect 12 reactive paint, R-Tect 22 reactive paint
and R-Tect carbon dioxide reactive paint products are ready for commercial
production and we have an order of 5,000 kits of R-Tect 22 reactive paint from
Motors & Armatures Corp., one of the largest distributors of air conditioning,
refrigeration and heating parts and supplies to wholesalers and original
equipment manufacturers in the United States.
We also have a manufacturing contract with Anscott Chemical Industries,
Inc., a manufacturer of specialty chemical products. Anscott has the exclusive
right under the contract to manufacture R-Tect 12, R-Tect 22 and R-Tect carbon
dioxide reactive paints for a five-year period.
20
<PAGE>
From its inception in 1998 R-Tec Technologies, Inc. has been engaged
primarily in activities devoted towards obtaining the patent rights to the
technology, general business operations, negotiating license agreements and
obtaining financing for this offering. There have been no revenues to date and
we have provided Promissory Notes to our officers and directors to reimburse
various expenses they incurred on behalf of R-Tec Technologies, Inc.
It is difficult for R-Tec Technologies, Inc. to forecast its revenue or
earnings accurately. We believe that period-to-period comparisons of our
operating results may not be meaningful and should not be relied upon as an
indication of future performance.
As a result of our extremely limited operating history, we do not have
historical financial data for a significant number of periods on which to base
planned operating expenses. Our expense levels are based upon our expectations
concerning future revenue. Thus, quarterly revenue and results of operation are
difficult to forecast. In one or more quarters, the results of operations may
fall below expectations of securities analysts and investors and in such event,
the trading price of our common stock will likely be materially adversely
affected.
Because of R-Tec Technologies, Inc.'s limited operating history, its
prospects are subject to the risks, expenses and uncertainties frequently
encountered by companies whose products are believed to be new and are not
available in commercial quantities. See "Risk Factors."
21
<PAGE>
Business
History of Our Company
R-Tec Technologies, Inc., was recently incorporated under the laws of
the State of New Jersey on October 22, 1998. R-Tec Technologies, Inc. is a
development stage company. R-Tec Technologies, Inc. has no significant assets
(See "Financial Statements") with the exception of the rights to a patent whose
value has not been determined at this time. To date, activities have been
limited to organizational matters, product research, developing a corporate
business plan, patent filings, negotiating license agreements and the
preparation and filing of the registration statement of which this prospectus is
a part.
Our Proposed Business
R-Tec Technologies, Inc. was formed to reduce to industrial production
the proprietary technology contained in a patent assigned to R-Tec Technologies,
Inc. and to use this proprietary technology to develop and manufacture reactive
paints that could be used to coat pipe junctions, valves, caps, joints, etc.
Once sealed with the paint, if gas escapes through the junction, the gas would
pass through the paint causing a chemical reaction resulting in a visible color
change of the paint.
For example, during the manufacture and installation of air
conditioning and refrigeration systems, e.g., in homes, vehicles and commercial
buildings, the manufacturer or installer may apply our paint to the joints of
the system. The application, placed externally on the system, waits for leaking
gas to pass through it. When this occurs, the blue paint should change to a
bright florescent yellow that is easily visible, thereby, identifying a leak
from the inside out only and does not react with gas in the environment. Thus,
the exact location of the leak is identified. Our paint not only detects gas
leaks from a system, but we believe it also neutralizes the chloroflurocarbons's
passing through it by removing the chlorine and fluoride from the gas, making
the gas inert and possibly harmless to the ozone layer. Freon gas is trapped in
our paint as it escapes from the leaking pipe. A chemical which reacts with the
freon causes it to change its structure through a polymer which traps the
chemical and prevents the release of harmful gases into the air.
22
<PAGE>
In addition, the paint may react to the leak before any refrigerant gas
escapes from the system and the owner of the equipment experiences any failure
or need to replace the gas, thereby reducing the need for further production of
chloroflurocarbons. Although there are calls for reducing the amount of
chloroflurocarbon production, due to the overwhelming use of this product
worldwide, these gases will be produced overseas and domestically until the year
2040.
The first of R-Tec Technologies, Inc.'s products we plan to make
available for sale are R-Tect 22 reactive paint developed as an external
application paint designed to detect R-22 freon leaks in air conditioning units,
R-Tect 12 reactive paint, developed for automotive application to detect R-12
gas, R-Tect carbon dioxide reactive paint developed as an external application
paint designed to detect carbon dioxide leaks in pipe systems which contain
gaseous or liquid carbon dioxide , and R-Tect natural gas reactive paint
developed as an external application paint which is designed to detect natural
gas leaks in a variety of systems. Other products nearing the end of development
are R-Tect 134A reactive paint, developed to detect R-134, a gas in air
conditioning applications.
We expect R-Tect natural gas reactive paint, R-Tect carbon dioxide
reactive paint and R-Tect 22 reactive paint to be available for commercial
production in October 1999. R-Tect 12 reactive paint should be available in
November 1999, along with R-Tect 134A reactive paint. However, no assurance can
be given that commercial production will, in fact, occur on this timetable.
Our Business Plan
Our business plan is based on implementing our strategy in two phases:
Phase 1 - Establish Manufacturing and Distribution Relationships and Begin
Distribution of Three Initial Products and Phase 2 - Expand Product Lines. The
key elements of each phase of our strategy are described below:
o Phase 1 - Establish Manufacturing and Distribution
Relationships and Begin Distribution of the Three Initial
Products
R-Tec Technologies, Inc.'s primary strategic goals for Phase 1 are:
o The selection of appropriate manufacturing and distribution
partners; and
o The commencement of commercial distribution of our reactive
paint products, R-Tect 12, R-Tect 22, and R- Tect carbon
dioxide reactive paints.
23
<PAGE>
During Phase 1, we will incur significant operating expenses, including
payments pursuant to Promissory Notes given to officers, directors and related
parties of $184,920.00. A Promissory Note provided for patent expense will also
be payable during this period. We do not expect to generate significant
operating revenues for a period of at least six months after the completion of
this offering. However, R-Tec Technologies, Inc. has already received a purchase
order from Motors & Armatures for 5,000 R-Tect 22 leak detection kits at $44.00
per kit for a total of $220,000.00.
The current status of R-Tec Technologies, Inc.'s efforts to implement
its Phase 1 strategy is outlined below:
o Manufacturing and Distribution Relationships.
One of R-Tec Technologies, Inc.'s first stage goals is to
establish beneficial relationships with strategic
manufacturing and distribution partners. With this strategy,
we hope to eliminate the need to build a large and costly
production and sales infrastructure and to benefit from the
inclusion of our products in our partners' products and
marketing efforts.
R-Tec Technologies, Inc. has entered into a manufacturing
contract with Anscott Chemical Industries, Inc., a nationally
recognized manufacturer of specialty chemical products located
in Wayne, New Jersey.
Anscott will be the exclusive manufacturer of our leak
detection products R-Tect 12, R-Tect 22, and R-Tect carbon
dioxide reactive paints. The agreement is for five years. The
manufacturing exclusivity rights granted to Anscott under the
agreement are limited to these three specified products and to
the United States. Anscott's exclusivity rights with respect
to R-Tect carbon dioxide reactive paint is further limited to
the dry cleaning industry. Anscott will manufacture our
products based on purchase orders received from R-Tec
Technologies, Inc. R-Tec Technologies, Inc. intends to locate
a quality control technician employed by us at Anscott's
offices, but there is no provision in our contract with
Anscott which requires Anscott to accept such supervision.
We have also signed a distribution agreement with Motors &
Armatures. Motors & Armatures is believed to be one of the
largest distributors of air conditioning, refrigeration, and
heating parts and supplies to wholesalers and original
equipment manufacturing accounts in the U.S. It sells
primarily to North America, with a concentration of sales in
the U.S. and Canada. Motors & Armatures is served by more than
50 independent manufacturing representatives for 13 companies
who sell its products to wholesalers and original equipment
manufacturers.
24
<PAGE>
Motors & Armatures has placed an initial order for 5,000 kits
of R-Tect 12 reactive paint at $44.00 per kit. We believe that
it will distribute R-Tect kits R-Tect 12, R-Tect 22, and later
R-Tect 134A reactive paints, primarily to organizations that
will in turn sell them to air conditioning or refrigeration
contractors. We expect to deliver 5,000 kits to Motors &
Armatures by October 31, 1999. Motors & Armatures has advised
us that it intends to create artwork for our products which it
will be distributing and intends to hire an exclusive
representative to work on the R-Tec product line. This
specialist will travel with Motors & Armatures' sales
representatives to train and educate its clients in the use of
our products. Motors & Armatures has orally represented to us
that it has allocated $156,000 for advertising in the first
year for R-Tec Technologies, Inc.'s products and that it will
also provide a direct mail campaign to reinforce the
advertising program.
Motors & Armatures has proposed a six month test marketing
program to determine the volume level of sales. It intends to
promote R-Tec Technologies, Inc.'s products as both leak
detectors and as preventative maintenance products.
o R-Tec Technologies, Inc.'s Efforts To Expand
Commercial Use of Initial Products
During Phase 1 R-Tec Technologies, Inc. also intends to pursue
direct sales to end-users and the original equipment
manufacturing market. We will also complete research and
development of our remaining initial products and will pursue
marketing of these products. Potential users include public
utility companies, automotive, marine, aviation, aerospace
companies, and commercial real estate owners and developers.
There has been to date no contact directly with potential
users such as public utility companies. We have also
identified government agencies and municipalities where our
products can reduce maintenance, overhead and provide another
means to detect harmful gases. We also intend to pursue
licensing arrangements with select end-users.
We believe a marketing opportunity will also develop from
insurance companies that underwrite risk associated with gas
explosions. R-Tec Technologies, Inc. will introduce its
products to these insurance companies and will attempt to
persuade them either to mandate the use of R-Tec Technologies,
Inc.'s reactive paint products or to provide financial
incentives such as discounted insurance rates to companies
that utilize R-Tec Technologies, Inc.'s detection products.
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We believe that a marketing opportunity will develop for the
use of R-Tec Technologies, Inc.'s reactive paint products to
detect natural gas and propane leaks. Specifically, during the
installation of a gas pipe the installer would apply our paint
to pipe joints. Owners could also apply our reactive paint to
pipe joints in existing structures. If natural gas or propane
leaks through a stress crack, the paint is designed to change
colors, indicating a leak, and warning anyone who examines the
pipe joint.
We also believe a market may exist for our reactive paint
products in chemical plants. Chemical plants utilizing our
reactive paint products could reduce the chance of significant
damage caused by a toxic chemical or gas leak by applying our
products to pipe joints in their manufacturing facilities.
We also believe our reactive paint products could be used in
the aerospace and aviation markets. We believe that aircraft
utilizing our reactive paint products could possibly avert
disasters caused by gas leaks if, during a routine inspection,
a mechanic notes a change in color of the paints applied to
pipe joints aboard the aircraft. Should there be a leak, it
could be detected and repaired prior to the aircraft taking
off.
o Phase 2-Expand Product Lines and Expand Internal Sales
We believe that revenues from Phase 1 operation will continue to grow
and expand in the markets identified. R-Tec Technologies, Inc. further
anticipates that additional product lines will be realized in Phase 2 and
marketed to the users identified in Phase 1. R-Tec Technologies, Inc. will
continue to pursue new business with public utilities as specialized gases and
industry specific requirements for R-Tec Technologies, Inc.'s gas leak detection
products are addressed.
The speed with which we can develop, introduce, test market and expand
sales of the additions to the R-Tec Technologies, Inc. product line will
determine the timing of the realization of our Phase 2 goals. This phase will be
characterized by new product introductions, test marketing, expanded sales
efforts, and industry driven mandates for the use of R-Tec Technologies, Inc.'s
products.
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We expect that the R-Tect natural gas reactive paint will be made
available for distribution during Phase 1 and the transition into Phase 2 will
occur with the next gas leak detection system: propane. We also expect to
attempt to develop the following gas leak detection systems:
Ammonia Chlorine Methane
Butane Ethane Methyl Mercaptan
Carbon Monoxide Isobutane Sulphur Hexaflouride
Acetylene Carbon Sulfide 2-Methylpropene
Acetyl Fluoride Carbon Tetrafluoride Nitric Oxide
Allene Hexafluoropropane Nitrogen
Arsine Hydrogen Nitrous Oxide
Boron Trichloride Hydrogen Chloride Other Refrigerants
Boron Trifluoride Isobutylene Phosgene
Bromotrifluoromethane Methyl Ether Propene
1,3-Butadiene Methanethiol Sulphur Dioxide
2-Methylpropane Trimthylamines
o Other Potential Applications Of R-Tec Technologies,
Inc.'s Detection Technology.
A Method For Measuring Blood Gases.
R-Tec Technologies, Inc. believes there may be an interest in the use
of our technology in the field of blood gases. Blood travels from the heart to
the lungs, liver, kidneys and other major organs. During this trip it is
carrying a percentage of oxygen, carbon dioxide and certain other metabolic
gases. However, when there is a restriction in this flow, possibly due to
coronary artery disease, the heart and lungs are unable to supply the proper
amount of oxygen to the blood. Therefore, the oxygen level begins to decrease
and the carbon dioxide level will increase.
R-Tec Technologies, Inc. believes that by detecting gas on a molecular
basis at the rate of -10 to the 64th power, the medical field may have the
ability to detect a change in the amount of carbon dioxide in the blood. This
may help patients with a family history or high risk of heart attack or stroke
to possibly know if they have a serious medical condition. For example, a person
might be able to rub some gel on their wrist once a month. This gel would
consist of a form of R-Tec Technologies, Inc.'s product and dimethyl sulfoxide,
a substance that carries medicine into the body. If the blood flowing through
the arteries has a higher than normal level of carbon dioxide, which is
indicative of a restriction of blood flow and oxygen, the gel would turn from
one color to another, possibly warning the individual that they may be within
weeks of suffering a stroke or heart attack. This pre-warning system will allow
a person to seek medical attention and relieve the arterial restriction before
suffering the damage caused by a heart attack or stroke. Since smog does not
affect a person's arterial blood gas level because the level of these gases is
maintained internally, there is little likelihood of external factors affecting
the potential product. The feasibity of this potential product cannot be
assured.
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We also intend to research the feasibility of using a small strip
across the top of wrapped chicken parts as a means of measuring freshness. This
fine lined strip would be the color green, indicating the chicken is fresh. If
this strip turns red, this would indicate that the chicken is diseased or
tainted with salmonella. This would alert both the retailer and the consumer to
the presence of a disease that might not have been detected without this safety
strip.
We intend to work with utility companies on the detection of SF6 gas.
This gas is used as an insulator in transformers and takes the place of harmful
PCP's. When these gases leak out of a transformer, they may cause the
electricity passing through the gas to spark and cause an explosion. Currently,
the only way the utility company can detect a leak is when the transformer blows
up and it must be replaced at great cost to the utility and the consumer. R-Tec
Technologies, Inc. proposes that when a transformer is assembled, the utility
company place a strip of our paint around the top of the transformer so that
utility workers will be able to easily detect a change in the color of a
transformer hanging on a utility pole, if a leak occurs.
Los Alamos National Laboratory
Los Alamos National Laboratory, developers of the atomic weapons
program, has requested a sample of our leak detection products. R-Tec
Technologies, Inc. intends to explore the possibility of using its technology
for the carbon dioxide experimental facility at Los Alamos.
The Industry
Presently, there are three major methods used to detect gas leaks. The
oldest method is to coat suspected leak sites with a liquid, such as soap
bubbles. Pressure from the escaping gas causes bubbles to form which confirms a
leak at the site. Although inexpensive and generally applicable, this method
lacks the ability to locate small leaks which over time can allow large volumes
of gas to escape. The second major method is the use of electronic ionization
detectors. Although more expensive than the pressure-based detection method,
false results have been noted due to interaction with metallic pipes. However,
electronic ionization detectors are limited to the specific gas they are
designed to detect and are limited in their ability to find the smallest leaks.
The third, and perhaps most effective currently available detection method, is
the internal injection of liquid based dyes. The dye leaks through the opening
and can be seen on the outside of the pipe. This method necessitates purchasing
expensive equipment, hiring trained technicians, and purchasing costly dyes for
each application. Recently, some hardware manufacturers have declared due to the
invasive nature of these dyes, that their use may void the manufacturer's
warranty. Our products are designed as an external coating which is noncorrosive
and will not interfere with the operation of the pipe or equipment and we
believe the manufacturer's warranties will not be affected. Moreover, none of
the competitive methods provide any form of passive leak detection.
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R-Tec Technologies, Inc. believes that its technology is unique and
provides it with a significant marketing opportunity. The benefits that would
result from early detection of leaks in gas lines may be substantial. By
specifically identifying the source of a gas leak and permitting the early
detection of the escaping gas, our products may reduce environmental damage
caused by leaks of gases, which are believed to cause ozone depletion and other
environmental problems. In addition, by specifically indicating the location of
a leak, our products may enable owners or operators to promptly and cost
effectively repair the leak and reduce the gas replacement cost incurred as a
result of leakage.
There can be no assurance that R-Tec Technologies, Inc. will be able to
successfully manufacture and profitably market its existing products or develop,
manufacture and profitably market additional products. The risks of failure are
high because we may find it more difficult than anticipated to reduce to
commercial production the basic concepts contained in our patent. At present we
do not have any commercial quantities of our products and have not yet attempted
to produce these products in commercial amounts. There can be no assurance that
the market will accept these products or that new competitive processes will not
be developed. At this time, we are not aware of any products which are directly
competitive to our products.
Employees
R-Tec Technologies, Inc. currently has twelve full-time employees.
Three employees are officers and directors, two are scientists, six are
clerical, secretarial or accounting personnel and one is a consultant and
director. Upon successful completion of this offering, assuming all the shares
are sold, we plan to hire approximately thirty to fifty additional full-time
employees. If the minimum is sold, we expect to retain at least nine of the
present employees and hire approximately ten additional personnel.
Facilities
R-Tec Technologies, Inc.'s executive offices are located at 61 Mallard
Drive, P.O. Box 282, Allamuchy, New Jersey 07820. Our rent is $2,000.00 a month
under a lease which expires on October 30, 2000. We also have an office at 499
Van Brunt Street, Suite 4B, Brooklyn, New York 11231. Our rent for that space is
$1,000.00 a month under a lease which expires on October 23, 1999.
Management believes that R-Tec Technologies, Inc.'s existing offices
are unsuitable and inadequate for their future needs. We hope, following the
successful completion of this offering, to purchase a building which will
contain our offices, warehouse, research and development laboratory, and
manufacturing operation at one location. We expect we will need a 50,000 to
75,000 square foot facility. If we leased such facility, the expected annual
lease cost may be estimated at $125,000.00-$200,000.00.
Patent Licensing & Marketing Agreements
On November 2, 1998 Muriel Kaiser assigned all right, title and
interest together with all rights of priority in U.S. patent #5783110, issued
July 21, 1998, based on Serial No. 08/837355 filed April 17, 1997 to R-Tect,
Inc. This assignment has been filed with the U.S. Patent and Trademark office. 6
This patent covers the proprietary technology that is the basis of our business.
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Due to a clerical error this assignment was erroneously made to a
company named "R-Tec, Inc." We have taken all steps recommended by the U.S.
Patent Office to correct this typographical error as well as additional steps
which we believe are prudent. On March 30, 1999 Muriel Kaiser executed a new
assignment to R-Tec Technologies, Inc. to correct the error.
R-Tect, Inc. is a New York corporation presently owned by Nancy Vitolo,
Philip Lacqua and Marc M. Scola, who are also officers and directors of R-Tec
Technologies, Inc. R-Tect, Inc. has no assets or employees and is dormant. We
expect R-Tect, Inc. will be dissolved at the end of December 1999.
As of December 1, 1998 R-Tec Technologies, Inc. executed a Promissory
Note to Nancy Vitolo and Muriel Kaiser in consideration for the U.S. Patent
assigned to R- Tec Technologies, Inc. The Note provides for the payment of
$425,000 plus two (2%) percent of R-Tec Technologies, Inc.'s net profits for a
three year period from the commencement of operations. The initial payment of
$425,000 is payable within thirty (30) days after the completion of this
offering. If R-Tec Technologies, Inc. does not have any net profit in any of the
first three years, then no additional payments are due under the Promissory
Note.
The following is a brief abstract of the U.S. Patent which was filed in 96
countries around the world.
5783110: Composition for the detection of electrophilic gases and
methods of use thereof.
------------------------------------------------------
INVENTORS: Verdicchio, Robert J., Succasunna, N.J.
Kaiser, Stewart R., Hackenttstown, N.J.
Walsh, Shawn, Branchburg, N.J.
ASSIGNEES: R-Tect, Inc., ISSUED: July 21, 1998 FILED: April 17, 1997
SERIAL NUMBER: 08/837355 MAINT. STATUS: INTL. CLASS (Ed. 6): BO1J 13/00; GO1M
3/20 U.S. CLASS: 252/315.1; 252/189; 252/964; 64/125; 73/40; 73/40.7; FIELD OF
SEARCH: 252/68; 194, 184, 252/189, 192, 315.1, 315.2, 315.3, 960, 961, 963, 964;
62/125; 73/40, 40.7;
ABSTRACT: There is provided a composition for the detection of an
electrophilic gas, such as chlorodifluoromethane or carbon dioxide, which
comprises a Lewis base capable of removing a proton from the gas or reacting
therewith in a similar electrophilic manner; a dye capable of visibly indicating
a color change on protonation or deprotonation; a solvent for the dye, the base
and the gas; and a rheology modifier capable of producing a non-newtonian gel of
all of these components which is sufficiently translucent to permit visual
detection of change of color of the dye and of sufficient
pseudoplasticity/thixotropy to provide adhesion to vertical and horizontal
surfaces.
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There can be no assurance that any of our future patent applications
will be granted, that any current or future patent or patent application will
provide significant protection for our products or technology, be of commercial
benefit or that the validity of such patents or patent applications will not be
challenged. Moreover, there can be no assurance that foreign patent, trade
secret or copyright laws will protect our technologies or that we will not be
vulnerable to competitors who attempt to copy or use our products or processes.
See "RISK FACTORS."
Governmental Regulations And Industrial Standards
R-Tec Technologies, Inc.'s products will be subject to numerous
governmental regulations designed to protect the health and safety of consumers
and the environment.
We believe, based on the opinion of our consultant who is also a
director, that our products presently comply with all applicable material
governmental health and safety regulations and standards. However, there can be
no assurance that our products will comply with all applicable regulations and
standards in the future. Because the future scope of these and other regulations
and standards cannot be predicted, there can be no assurance that we will be
able to comply with all future regulations or industry standards. Non-compliance
could result in governmental restrictions on sales or reductions in customer
acceptance of our products. Compliance may also require significant product
modifications, which may result in increased costs and impaired product
performance.
2000
We do not expect any Year 2000 issues to affect the development of our
products. No software programs we intend to use will be written with code that
would cause a Year 2000 problem. The only uncertainties that could or could not
develop, of which R-Tec Technologies, Inc. cannot give any assurances, would be
if suppliers, distributors and manufacturers of our products would be unable to
resolve any Year 2000 issues that adversely affect their operations. If this
were the case, it could cause delays in the development, production and sale of
our products, which would have a material adverse effect on the continued
development and growth of our business.
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We have taken any steps to determine if Anscott, the principal supplier
of raw materials for our products, is Year 2000 ready, but we have not yet
received an answer from Anscott on this issue. In the event Anscott is not Year
2000 compliant, we will explore engaging another company to provide raw
materials.
Management And Affiliates
Directors, Executive Officers And Key Employees
The names, addresses, ages and respective positions of the current
directors and officers of R-Tec Technologies, Inc. are as follows:
Name Age Position
- ----- ---- --------
Philip Lacqua 50 President, Treasurer and
1127 83rd Street a Director
Brooklyn, New York 11228
Nancy Vitolo 36 Vice President, Secretary
290 Green Road and a Director
Sparta, New Jersey 07871
Marc M. Scola 32 Vice President, General
61 Mallard Drive Counsel and a Director
Allamuchy, New Jersey 07820
Damon E. Palmer 35 Director
8380 SW 39 Court
Davie, Florida 33328
Shawn P. Walsh 24 Director
538 Wren Way
Branchburg, New Jersey 08876
Each director is elected for a period of one year and serves until his
successor is elected by our shareholders.
Biographies
Philip Lacqua, age 50, will serve as the President, Treasurer and as a
director of R-Tec Technologies, Inc. His duties will include responsibility for
the overall management of R-Tec Technologies, Inc. and sales.
Mr. Lacqua was awarded a Bachelor of Science degree from Central
University of Iowa in 1970 with a major in Political Science.
Since 1970, Mr. Lacqua has served as President and Vice-President for
various companies. In 1971, Mr. Lacqua started Container Maintenance Corp.,
which was in the business of repairing ocean-going containers, trailers and
chassis. At the same time he started CMC Haulage, Inc., which provided for
interstate and intrastate trucking. In 1973, Mr. Lacqua merged his companies
with others and formed Marine Repair Services, Inc. He assumed the title of
Vice-President of Sales. Marine Repair was primarily in the business of
repairing containers, trailers and chassis in the New York area. In December,
1977, Mr. Lacqua sold his interests in CMC Haulage and Marine Repair.
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In February, 1978, Mr. Lacqua formed Eastern Industrial Supply Corp., a
ship supply company. Mr. Lacqua then formed Marine Technical Services, Inc., and
served as a Director and President, overseeing all aspects of that company.
Marine Technical specialized in sales to the Far East, the Middle East and
Europe. In June, 1998, Mr. Lacqua resigned as an officer and director of Marine
Technical Service, Inc. to devote all of his attention to R-Tec Technologies,
Inc. Mr. Lacqua commenced work for R-Tec Technologies, Inc. in May 1996, prior
to its incorporation.
Nancy Vitolo, age 36, will serve as a Vice-President, Secretary and as
a Director of R-Tec Technologies, Inc. As such her duties will include public
relations. Ms. Vitolo was elected Secretary of Garden State Heating and Air
Conditioning Corporation in July of 1994. Garden State became one of the top 50
Bryant/Carrier Dealers in gross sales in the continental U.S. and Canada. Ms.
Vitolo was also a sales representative for Yves Saint Laurent for the ten years
prior to her association with Garden State.
In 1995, Ms. Vitolo began a research project to open a laboratory and
hire scientists to research the viability of a paint which could detect and
neutralize harmful gases. The research project was intended to determine the
feasibility of creating a better method for detecting minute gas leaks. A
laboratory was leased in Warren County, New Jersey and chemists and other
scientists were engaged to perform research in this area and conduct
experiments. This project was the basis of R- Tec Technologies, Inc. Ms. Vitolo
has since managed and overseen the development of R-Tec Technologies, Inc. with
the help of corporate and patent attorneys, business personnel, financial
advisors and scientists since May 1996, prior to its incorporation.
Marc M. Scola, age 32, will serve as a Vice-President, General Counsel
and a Director of R-Tec Technologies, Inc. His duties will include preparing and
negotiating R-Tec Technologies, Inc.'s license agreements, contracts, and
various other legal and corporate matters. Mr. Scola was an attorney in private
law practice for six (6) years.
Mr. Scola was awarded a Bachelor of Arts degree from Seton Hall
University in South Orange, New Jersey in 1988. He then was awarded his Juris
Doctorate ( J.D.) degree by Texas Southern University School of Law in Houston,
Texas in 1992. Mr. Scola obtained a Graduate Law Degree (L.L.M.) in Taxation
from Temple University School of Law in Philadelphia, Pennsylvania in 1996.
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Mr. Scola began his law practice as a solo practitoner in 1993 with the
Law Firm of Marc M. Scola, Esq., P.C. located in Florham Park, New Jersey. In
January of 1996, Mr. Scola joined the Law Firm of Scola & Walterschied, P.C., a
two-attorney firm, located in Roseland, New Jersey, as a partner. In 1997, Mr.
Scola continued in solo practice with Marc M. Scola, Esq., P.C., in Allamuchy,
New Jersey. Since May 1996, Mr. Scola has been working on the R-Tec
Technologies, Inc. project.
Mr. Scola, served as counsel to a wide variety of businesses, including
construction companies, physician practices, manufacturing operations, and
computer consulting firms. Mr. Scola has been involved in the review,
negotiation, financing, employment issues, and restructuring of the business
entities. He also had experience in the preparation of shareholder, partnership
and limited liability company, stock option, employment, leasing and other types
of commercial agreements.
Damon E. Palmer, age 35, was elected to serve as a director of R-Tec
Technologies, Inc. on April 14, 1999 and he is also a member of the Compensation
and Audit Committees of the Board. Mr. Palmer is Vice President and Chief
Financial Officer of Trinity Industrial Services, a computer consulting company,
since 1998. From 1996 until 1998 he was Controller of Marine Technical Services,
which was formed by Mr. Lacqua. Between 1994 and 1996 he was an office
administrator for Edward Jones, C.P.A. From 1989 until 1994 he was a manager of
a branch of the Glidden Company, which engaged in the business of manufacturing
and selling paint products.
Shawn P. Walsh, age 24, was elected to serve as a director on April 14,
1999. He graduated from John Hopkins University in Baltimore, Maryland in 1996
with a Bachelor of Science degree in Chemistry. He worked for R.W. Johnson
Pharmaceautical Research Institute in Raritan, New Jersey from December 1996 to
March 1999 as a scientist.
R-Tec Technologies, Inc. has a one year consulting Agreement with Mr.
Walsh which terminates on January 1, 2000. Mr. Walsh has been engaged to perform
consulting services regarding scientific experiments and research on reactive
paints. R-Tec Technologies, Inc. is to pay Mr. Walsh $1,000.00 per month for a
total of $12,000.00 plus all reasonable out of pocket expenses.
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Key Employees And Consultants
The following biographical information relates to our consultants:
Name Position
- ----- ---------
Stewart R. Kaiser Consultant
Shawn P. Walsh Scientific Consultant, Director
Robert J. Verdicchio Scientific Consultant
Stewart R. Kaiser, age 32, is a graduate of Union County Technical
College in Scotch Plains, New Jersey. He received a degree in the Heating,
Ventilation and Air Conditioning Mechanical Program. Mr. Kaiser was the
technical manager of Garden State Air Conditioning and Heating from 1991 to
1994. Mr. Kaiser was one of three inventors of our patented proprietary
technology which has been assigned to R-Tec Technologies, Inc. Mr. Kaiser is the
husband of Nancy Vitolo, and the son of Muriel Kaiser. Mr. Kaiser has no
ownership rights to the patent. On November 4, 1998, Mr. Kaiser filed for
Chapter 7 Bankruptcy protection in the United States Bankruptcy Court, District
of New Jersey. On December 16, 1998, Mr. Kaiser moved to voluntarily withdraw
his Bankruptcy Petition. On or before December 16, 1998, Mr. Kaiser's motion was
granted and the Bankruptcy Petition was dismissed.
R-Tec Technologies, Inc. has a one year Consulting Agreement with
Stewart R. Kaiser, which terminates on January 1, 2000. Mr. Kaiser has been
engaged to perform consulting services regarding scientific experiments and
research on reactive paints. R-Tec Technologies, Inc. is to pay Mr. Kaiser
$1,000.00 per month for a total of $12,000.00 plus all reasonable out of pocket
expenses.
Shawn P. Walsh, age 24, is a director of R-Technologies, Inc. since
April 14, 1999. See "Directors, Executive Officers and Key Employees -
Biographies" for a description of his background.
Robert J. Verdicchio, age 65, is employed by Verdi Enterprises, Inc. of
Succasunna, New Jersey, of which he is the principal owner. He has worked for
R-Tec Technologies, Inc. as a consultant since July 1996. Prior to his
employment at Verdi, he was employed by Johnson and Johnson Consumer Products in
Skillman, New Jersey since 1973. He received a Ph.D in Metaphysical Science in
1994 from the University of Metaphysics in Los Angeles, California, a Master of
Science degree in 1990 from Fairleigh Dickinson University, and a Bachelor of
Science degree in Organic Chemistry in 1962 from Rutgers University. He was one
of three inventors of the patented proprietary technology which has been
assigned R-Tec Technologies, Inc. Mr. Verdicchio has no ownership rights to the
patent. R- Tec Technologies, Inc. has not entered into an employment or written
consulting agreement with Dr. Verdicchio.
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Executive Compensation
R-Tec Technologies, Inc. was only recently incorporated, and has not
paid any compensation to its executive officers and directors. R-Tec
Technologies, Inc. has entered into employment agreements dated April 4, 1999
with Marc M. Scola, Nancy Vitolo and Philip Lacqua, its officers and directors.
The agreement with Mr. Scola provides for the payment of $330,000.00 plus bonus
per year retroactive from January 1, 1999 for a five year term and will commence
upon the sale of the minimum number of shares. Mr. Scola is employed as
Vice-President, director and General Counsel of R-Tec Technologies, Inc.
The employment agreement with Ms. Vitolo provides for the payment of
$330,000.00 plus bonus per year retroactive from January 1, 1999 for a five year
term and will also commence upon the sale of the minimum number of shares. Ms.
Vitolo is employed as Vice-President, Secretary and director of R-Tec
Technologies, Inc.
The employment agreement with Mr. Lacqua provides for the payment of
$330,000.00 plus bonus per year retroactive from January 1, 1999 for a five year
term and will commence upon sale of the minimum number of shares. Mr. Lacqua is
employed as President, Treasurer and director of R-Tec Technologies, Inc.
In addition, R-Tec Technologies, Inc. established a Stock Option Plan
on April 15, 1999 which provides that all regular full-time employees and key
executives may be issued options to purchase a total of up to one million shares
of our common stock at a price not less than 100% of the fair market value of
the shares on the date the option is granted. The plan is to be administrated by
the Stock Option and Compensation Committee of the Board of Directors,
consisting of at least two disinterested directors. On April 14, 1999 the Board
formed a Compensation Committee which consists of a total three directors with
two disinterested directors. We also intend to implement a Pension Plan in the
near future.
All of our officers are also directors of R-Tec Technologies, Inc. and
are, therefore, not independent. No independent person has reviewed the
employment agreements. However, since April 14, 1999 the Board of R-Tec
Technologies, Inc. includes two disinterested directors who are members of the
Compensation and Audit Committees.
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R-Tec Technologies, Inc. signed a Promissory Note to Columbia Trading
Corporation for $101,500.00 as reimbursement for secretaries, legal fees,
postage, travel, office lease, electric, telephone, gas and utilities, etc., of
R-Tec Technologies, Inc.'s New York office for the thirty month period prior to
incorporation. Columbia Trading is owned by Mr. Lacqua. The Note dated April 22,
1999 provided for the payment of $101,500.00 of within 30 days of completion of
the offering and it carries a 6% interest rate per annum.
A Promissory Note to Mr. Scola for $37,500.00 was provided by R-Tec
Technologies, Inc. as reimbursement for secretarial staff, postage, travel,
office lease, electric, gas and utilities, etc., for a twelve month period prior
to incorporation for R-Tec Technologies, Inc.'s New Jersey office. Within 30
days of completion of this offering this Note is payable. The Note has 6%
interest rate per annum. R-Tec Technologies, Inc. has also signed a Promissory
Note payable to Mr. Scola for $14,920.11 as reimbursement for legal fees and
miscellaneous business expenses associated with this offering. This Note is
payable within 30 days of completion of this offering and has a 6% interest rate
per annum.
A Promissory Note for $31,000.00 was provided to Ms. Vitolo for legal
fees and miscellaneous business expenses incurred by her in connection with this
offering. This Note has an interest rate of 6% annum and is payable within 30
days of completion of this offering.
If R-Tec Technologies, Inc. sells the maximum amount of shares,
$5,485,000.00 represents an estimate of the total employee compensation for 24
to 60 months, including salaries for its officers and staff. The consulting
agreements in effect do not cover full-time employment by these consultants,
which must be negotiated at the appropriate time in the future.
Principal Shareholders
The following table presents the shares of common stock of R-Tec
Technologies, Inc. owned of record or beneficially by each person known to own
more than 5% of R-Tec Technologies, Inc.'s common stock, and the name and
shareholdings of each officer and director and all officers and directors as a
group. Each of our officers also serves as a director of R-Tec Technologies,
Inc.
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Principal Stockholder's Number of Percent Prior Percent
Name and Addresses Shares Owned to Offering Post-Offering
- ----------------------- ------------ ------------- ----------
Philip Lacqua 5,000,000 33 1/3% 26.66%
1127 83rd Street
Brooklyn, New York 11228
Nancy Vitolo 5,000,000 33 1/3% 26.66%
290 Green Road
Sparta, New Jersey 07871
Marc M. Scola 5,000,000 33 1/3% 26.66%
61 Mallard Drive
Allamuchy, New Jersey 07820
All Officers and
Directors as a Group 15,000,000 100% 80%
Certain Relationships and Related Transactions
The 15,000,000 presently outstanding shares of our common stock were
purchased by the founders of R-Tec Technologies, Inc. for a total of $578,923.
See "Principal Shareholders."
The patent covering R-Tec Technologies, Inc.'s proprietary technology
was assigned to us by Muriel Kaiser. Ms. Kaiser is the mother of Stewart Kaiser
and Nancy Vitolo's mother-in-law. Ms. Vitolo is the wife of Stewart Kaiser. In
consideration for the patent, we executed a Promissory Note in favor of Nancy
Vitolo and Muriel Kaiser. Pursuant to the Promissory Note, R-Tec Technologies,
Inc. was obligated to pay $425,000 payable in full within thirty (30) days of
the completion of this offering and two percent (2%) of the net profits for a
three period. If we are not profitable during this three year period, no
additional money is owed. In the event the offering is unsuccessful and the
minimum is not sold, R-Tec Technologies, Inc. will seek alternative financing
sources. If those efforts are not successful, R-Tec Technologies, Inc. will
assign the patent back to Ms. Kaiser.
R-Tec Technologies, Inc. also executed an agreement in favor of Philip
Lacqua, Nancy Vitolo and Marc M. Scola under which R-Tec Technologies, Inc.
agreed to reimburse Mr. Lacqua, Ms. Vitolo and Mr. Scola for all expenses
advanced by such individuals prior to and after the date of R-Tec Technologies,
Inc.'s incorporation. Such expenses include, but are not limited to, attorneys'
fees, accountant fees, office leases, advertising, travel, and general expenses
of this offering. Expenses prior to December 31, 1998 are incorporated into the
four Promissory Notes described below.
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<PAGE>
R-Tec Technologies, Inc. issued four Promissory Notes totaling
$184,920.11 to Nancy Vitolo, Marc M. Scola and Columbia Trading, Inc. Columbia
Trading, Inc. is a New York Corporation and Mr. Lacqua is its sole shareholder.
These Promissory Notes represent reimbursement of fees and expenses incurred in
connection with efforts to take R-Tec Technologies, Inc. public and
administrative expenses of R-Tec Technologies, Inc. prior to December 31, 1998.
All of these Promissory Notes carry an interest rate of six percent per annum.
R-Tec Technologies, Inc. presently has two independent directors. The
transactions noted above were ratified by these independent directors who do not
have an interest in the transactions. Any future transactions undertaken by
R-Tec Technologies, Inc. with its officers, directors or 5% shareholders will be
on terms no less favorable to R-Tec Technologies, Inc. than could be obtained
from unaffiliated parties.
Indemnification
R-Tec Technologies, Inc.'s Articles of Incorporation, as amended,
provide that, to the extent not inconsistent with applicable law, R-Tec
Technologies, Inc. shall indemnify and hold harmless its officers, directors,
employees and agents from liability and reasonable expense from actions in which
he or she may become involved by reason of the fact that he or she was an
officer, director, employee or agent. We expect to obtain an insurance liability
policy for this purpose at a cost of approximately $75,000 - $150,000.
39
<PAGE>
Disclosure Of Commission Position On Indemnification For
Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of R-Tec Technologies, Inc. pursuant to the foregoing provisions, or
otherwise, R-Tec Technologies, Inc. has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that any claim for indemnification against such
liabilities, other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the small
business issuer in the defense of any action, suit or proceeding, is asserted by
such director, officer or controlling person in connection with the securities
being registered, R-Tec Technologies, Inc. will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of the Court of such issue.
Organization Within Last Five Years
R-Tec Technologies, Inc. is a development stage company and has no
operating history. As soon as the money from this offering is made available,
R-Tec Technologies, Inc. expects to make all arrangements necessary so that it
can commence commericial operations in 1999.
Description of Securities
The following statements summarize detailed provisions of R-Tec
Technologies, Inc.'s Articles of Incorporation and Bylaws, copies of which will
be furnished to an investor upon written request. See "Where You Can Find
Additional Information."
Authorized Capital
Our authorized capital stock consists of 50,000,000 shares of .00001
par value common stock. We have outstanding 15,000,000 shares of s common stock,
all of which are validly issued, fully paid and non-assessable.
Common Stock
The shares being offered are shares of common stock. Currently, there
are no markets for the common stock and there can be no assurance there will
ever be a public market in the future.
R-Tec Technologies, Inc. is presently authorized to issue 50,000,000
shares of .00001 par value common stock. There are 15,000,000 shares issued and
outstanding, and a maximum of 3,750,000 shares are for sale in this offering.
40
<PAGE>
The shares of common stock being sold will be, when issued in
accordance with the terms of the offering, fully paid and non-assessable.
The holders of common stock are entitled to equal dividends and
distributions per share with respect to the common stock when as and if declared
by the Board of Directors from funds which are legally available. R-Tec
Technologies, Inc. has not paid any dividends on common stock to date and does
not anticipate paying dividends on common stock in the foreseeable future. No
holder of common stock has a pre-emptive right to subscribe for any securities
nor are any common shares subject to redemption or convertible into other
securities of R-Tec Technologies, Inc. Upon liquidation, dissolution or winding
up of R-Tec Technologies, Inc., and after payment of creditors and preferred
stockholders, if any, the remaining assets will be divided pro-rata on a
share-for-share basis among the holders of the shares of common stock. All
shares of common stock now outstanding are fully paid, validly issued and
non-assessable. Each share of common stock is entitled to one vote with respect
to the election of any director or any other matter upon which stockholders are
required or permitted to vote. Holders of common stock do not have cumulative
voting rights so that the holders of more than 50% of the combined shares voting
for the election of directors may elect all of the directors, if they choose to
do so and, in that event, the holders of the remaining shares will not be able
to elect any alternate members to the Board of Directors.
Preferred Stock
R-Tec Technologies, Inc. is currently authorized to issue shares of
Preferred Stock. Accordingly, the Board of Directors could authorize and the
issuance of shares of Preferred Stock. Preferred Stock may, if and when issued,
have rights superior to those of the common stock offered hereby. The Board of
Directors may approve the issuance of Preferred Stock without a vote by
shareholders and conversion rights may adversely affect the voting power of
holders of common stock.
Transfer Agent
The Bank of New York, Inc., 1 Wall Street, New York, New York 10286, is
the Transfer Agent and Registrar for our common stock.
Escrow Agent
The Bank of New York, Inc., 1 Wall Street, New York, New York 10286 is
the Escrow Agent for subscriptions until the minimum number of shares is sold.
41
<PAGE>
Dividend Policy
We have not paid any dividends on common stock to date and we do not
anticipate paying dividends on common stock in the foreseeable future. We intend
for the foreseeable future to follow a policy of retaining all of its earnings
to finance the development and expansion of our business.
Shares Eligible for Future Sale.
Upon the consummation of this offering at the maximum, we will have
18,750,000 shares of common stock outstanding. Of these shares, the 3,750,000
shares sold in this offering will be freely tradable without restriction or
further registration under the Securities Act, except for any shares purchased
by an affiliate of R-Tec Technologies, Inc., in general, a person who has a
control relationship with R-Tec Technologies, Inc. , which will be subject to
limitations of Rule 144 promulgated by the Commission under the Securities Act.
All of the remaining 15,000,000 shares are deemed to be restricted securities,
as that term is defined under Rule 144 promulgated under the Securities Act, in
that such shares were issued in private transactions not involving a public
offering. All of such shares are not eligible for sale under Rule 144 until
December 4, 1999 at which time they will have been held longer than one year.
42
<PAGE>
Plan Of Distribution
R-Tec Technologies, Inc., is offering a minimum of 625,000 shares and a
maximum of 3,750,000 shares of common stock through it officers and directors on
a "best-efforts" basis. Until the minimum number of shares are fully subscribed,
all subscription payments will be deposited into an escrow account at the Bank
of New York. If less than the minimum number of shares are subscribed within
three months after the effective date of this prospectus or within six months
after the effective date if we elect to exercise the option to obtain an
extension of the offering period, all proceeds will be promptly refunded in
full, without interest, and without any deduction of expenses. Upon sale of the
minimum number of shares, the escrow will be terminated and subscriptions will
go directly to R-Tec Technologies, Inc. This offering will end on the earlier of
the following:
(1) three months from the effective date of this prospectus if the
minimum number of shares are not sold and fully paid for, or within six months
from the effective date if we elect to exercise the option to obtain this
extension,
(2) the sale of the 3,750,000 shares,
(3) twelve months after the effective date of this prospectus or the
date on which R-Tec Technologies, Inc. decides to close the offering, which will
not exceed twelve months from the effective date of this prospectus.
The offering will be managed by R-Tec Technologies, Inc. without any
underwriter. Our officers and directors will receive no sales commissions or
other compensation, except for reimbursement of expenses actually incurred for
such activities. In connection with their efforts, they will rely on the safe
harbor provisions the Securities and Exchange Act of 1934. Generally speaking,
this rule provides an exemption from the broker/dealer registration requirements
of the 1934 Act for associated persons of an issuer. Our officers and directors
will use their best efforts to find purchasers for the shares.
Investors should be aware that while this offering is being conducted
through our officers and directors. R-Tec Technologies, Inc. retains the right
to utilize the services of broker/dealers who are members of the National
Association of Securities Dealers, Inc. We reserve the right to pay commissions
for sales made by broker/dealers in an amount not to exceed 10% of the sales
price. Before the involvement of any broker/dealers in the offering, R-Tec
Technologies, Inc. must obtain a no objection position from the NASD for any
compensation arrangements. Any broker/dealers that sell securities in this
offering may be deemed an underwriter as defined in Section 2(11) of the
Securities Act. R-Tec Technologies, Inc. will amend the prospectus and the
registration statement of which it is a part to identify any selected
broker/dealers at such time as such broker/dealers sells 5% or more of the
offering.
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<PAGE>
R-Tec Technologies, Inc. has not made any efforts to retain an
underwriter. We believe that we can sell our stock without utilizing an
underwriter and thus, maximize the net proceeds to fund our business plan.
Penny Stock Rules
Broker/dealer practices in connection with transactions in "penny
stocks" are regulated by certain penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with a price
of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the Nasdaq system, provided that current price
and volume information with respect to transactions in such securities is
provided by the exchange or system). The penny stock rules require a
broker/dealer, prior to a transaction in a penny stock to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. The broker/dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker/dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker/dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules.
Since R-Tec Technologies, Inc. is offering the shares without the
participation of an underwriter, the offering price has not been determined by
negotiation with an underwriter, as is customary in most offerings, and instead
has been set arbitrarily by R-Tec Technologies, Inc. Investors are therefore
subject to an increased risk that the price of the shares which have been
arrived at arbitrarily is not an indication of value or net worth.
Legal Matters
To the knowledge of management there is no material litigation pending
or threatened against R-Tec Technologies, Inc. Legal counsel for R-Tec
Technologies, Inc. in connection with this offering is Sirota & Sirota LLP, 747
Third Avenue, New York, New York 10017.
Experts
The financial statements of R-Tec Technologies, Inc. as of December 31,
1998, included in this prospectus have been audited by Jurewicz and Duca, CPA's,
P.C., independent certified public accountants, as indicated in their report
with respect thereto, and are included herein in reliance on such report given
upon the authority of that firm as experts in accounting and auditing.
How To Invest In R-Tec Technologies, Inc.
If you want to purchase shares of R-Tec Technologies, Inc. in this
offering please fill in the information requested below and return with a check
payable to "Bank of New York, Escrow, R- Tec Technologies, Inc." The account
#301472 should be placed in the margin of the check. If you wish to have the
shares issued in "street name", in the name of the brokerage firm where you have
an account, please complete the bottom portion of the form. If you are a
resident of a state where we are not authorized to sell stock, your subscription
will be rejected and returned to you in full, without interest or deduction.
44
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
To: R-Tec Technologies, Inc., Escrow, P.O. Box 282, Allamuchy,
New Jersey 07820
Please issue shares of R-Tec Technologies, Inc.'s common stock in the
amount(s) and name(s) shown below. My signature acknowledges that I have
received and had an opportunity to read the Prospectus by which the shares are
offered, that I am purchasing for investment, that I am capable of evaluating
the merits and risks of the prospective investment, because my knowledge and
experience in financial and business matters and that the amount of my
investment is not more than 10% of my net worth.
Signature________________________ Date_____________
Enclosed is payment for ____________ shares, at $8.00 per share, totaling
$_______________. Please make payable to "Bank of New York, Escrow, R-Tec
Technologies, Inc.," and indicate account #301472 in the margin of check.
Minimum Investment is $504.00 (63 shares)
Register the shares in the following name(s) and amount(s):
Name Number of Shares
A)____________________________ __________________
B)____________________________ __________________
C)____________________________ __________________
As (Circle One):
Individual Joint Tenants Trust
Tenants in Common Corporation Other
Name:________________________
Mailing Address:_____________________________
City:________________ State:_______________ Zip Code:_____
Telephone No.,___________ Business:____________ Home:_________________
Social Security or Taxpayer ID Number:_______________________
45
<PAGE>
If you would like your stock to be transferred to your Brokerage Account
complete this section. (Complete only if shares will be in the name of the
Brokerage Firm)
Name on Account:___________________________________________
Name of Brokerage Firm:____________________________________
Mailing Address of Brokerage Firm:_________________________
City:___________ State:_____________ Zip Code:______
Telephone Nubmer of Broker:________________________________
Social Security Nuber or Taxpayer I.D. Nubmer:__________________
Broker Account Number:__________________________________________
Please make checks payable to "Bank of N.Y., Escrow, R-Tec,
Technologies, Inc." and indicate account #301472 in the margin of
check.
================================================================
PLEASE ATTACH ANY SPECIAL MAILING INSTRUCTIONS OTHER THAN SHOWN
ABOVE. YOU WILL BE MAILED A SIGNED COPY OF THIS AGREEMENT TO
RETAIN FOR YOUR RECORDS.
----------------------------------------------------------------
SUBSCRIPTION ACCEPTED BY R-TEC TECHNOLOGIES, INC.:
____________________________________ Dated_____________
Marc M. Scola, Esq.
V.P. & General Counsl
MAIL TO: R-Tec Technologies, Inc. Escrow, P.O. Box 282,
Allamuchy, New Jersey 07820
46
<PAGE>
JUREWICZ & DUCA
Certified Public Accountants, P.C.
666 OLD COUNTRY ROAD
GARDEN CITY, NEW YORK 11530
Telephone 516.227.6660
JOSEPH P. JUREWICZ 203.426.9800
MICHAEL A. DUCA Facsimile 516.227.1126
To the Board of Directors and Shareholders
of R-Tec Technologies, Inc.
We have audited the accompanying balance sheet of R-Tec Technologies, Inc. (a
corporation) as of December 31, 1998, and the related statement of operations,
stockholders' equity and cash flows for the period from inception, October 22,
1998 (inception) to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of R-Tec Technologies, Inc. as of
December 31, 1998, and the results of its operations and its cash flows from
October 22, 1998 (inception), to December 31, 1998 in conformity with generally
accepted accounting principles.
Garden City, New York
January 7, 1999
47
<PAGE>
R-TEC TECHNOLOGIES, INC.
BALANCE SHEET
(A DEVELOPMENT STAGE CORPORATION)
DECEMBER 31, 1998
ASSETS
Current Assets
Cash $ 36,353
---------
Total Current Assets $ 36,353
Intangible Assets
Patent $ 850,000
---------
Total Intangible Assets 850,000
Other Assets
Rent Security 1,000
--------
Total Other Assets 1,000
Total Assets $ 887,353
==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities
Note Payable-Patent Acquisition $ 425,000
Loan Payable-Shareholders 184,920
---------
Total Liabilities $ 609,920
Shareholders' Equity
Common Stock, 50,000,000 shares
authorized, .00001 par value,
15,000,000 shares issued
and outstanding 578,923
Retained Deficit (301,490)
Total Shareholders' Equity 277,433
----------
Total Liabilities and
Shareholders' Deficit $ 887,353
==========
The accompanying notes are an integral part of these financial statement.
48
<PAGE>
R-TEC TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 22, 1998 INCEPTION TO DECEMBER 31, 1998
Expenses:
Organizational Costs $ 288,068
Office Supplies and Printing $ 7,587
Professional Fees 789
Travel 2,504
Telephone 1,000
Internet Service/Web Site 1,542
--------
Total Expenses $301,490
--------
Net Loss ($301,490)
Retained Earnings,
beginning of period -0-
Retained Deficit
end of period ($301,490)
Earnings (Loss) Per Share ( .02)
=========
The accompanying notes are an integral part of these financial statement.
49
<PAGE>
R-TEC TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD OCTOBER 22, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (301,490)
----------
Net Cash Used by Operating
Activities $ (301,490)
CASH FLOWS FROM FINANCING ACTIVITIES
Patent (850,000)
Security Deposit (1,000)
Shareholder's Loans 184,920
Note Payable-Patent Acquisition 425,000
Net Cash Provided by Financing
Activities (241,080)
CASH FLOW FROM INVESTING ACTIVITIES
Stock Purchase 578,923
----------
Net Cash Provided by Investing
Activities 578,923
---------
Net Increase in Cash 36,353
Cash at Beginning of Period -0-
Cash at End of Period $ 36,353
=========
The accompanying notes are an integral part of the financial statements.
50
<PAGE>
R-TEC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Nature of Business
R-Tec Technologies, Inc. is a research and development company
which has recently obtained a patent on the detection of
electrophilic gases and uses there of. R- Tec Technologies,
Inc. will be involved in research to ascertain the application
of this technology in different industries. The Company will
produce this product in consumer form as a paint. This product
will be available to the general public for use in detecting
harmful gases in their homes and businesses such as freon,
natural gas and other gases.
B) Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that effect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
NOTE 2 - PATENT
The Company has obtained a patent which is valued at the
patent's development cost. The Company did not incur
expenses related to the patent's development. The patent's
development costs were incurred by the patent's original
owners. One half of the patent was sold to the Company and the
other half was contributed to the Company in exchange for
common stock.
NOTE 3 -LEASES
The Company leases two office facilities under operating
leases. The Brooklyn lease is a one year lease with a monthly
rental of $1,000, with one month security. The lease for the
New Jersey office is a two year lease with a monthly rent f
$2000 and no security. The details of these obligations are as
follows:
Years Ending
-----------------
December 31, 1999 $34,000
December 31, 2000 20,000
December 31, 2001 -0-
-------
$54,000
=======
51
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R-TEC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 4 - NOTES PAYABLE - PATENT ACQUISITION
The Comopany has signed a promissory note, dated April 14,
1999, for the acquisition of a patent. The note is for four
hundred twenty five thousand dollars ($425,000.00) payable
within thirty days of the completion of the Initial Public
Offering.
If the Company's Initial Public Offering is not completed,
alternative financing will be sought. If alternative financing
is not obtained, the patent will remain with the original
owners.
NOTE 5 - PROMISSORY NOTES/LOANS PAYABLE-SHAREHOLDERS
The Corporation entered into promissory notes totalling
$184,920 with the three organizing shareholders, and a company
wholly owned by one of the organizing shareholders, to
reimburse them for their efforts and expenses incurred toward
the company prior to incorporation. The notes were signed
April 22, 1999 and carry an interest rate of six percent per
annum with the notes payable in full within 30 days of the
completion of the funding of the initial public offering.
NOTE 6 - SUBSEQUENT EVENT
The Company is attempting to raise capital by taking the
Company public with an initial public offering. The Company
expects to raise between $5,000,000 and $30,000,000.
There is no assurance the offering will be successful.
52
<PAGE>
We have not authorized any dealer, salesperson or other person to give
any information or represent anything not contained in this prospectus. You must
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction where it is unlawful. The information in
this prospectus is current as of February __, 1999.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . 5
RISKS FACTORS . . . . . . . . . . . . . .. . . . . . . . . 8
If We Sell Only The Minimum Number Of Shares,
We May Not Be Able To Operate For More Than
Twelve Months Without Revenue Or Additional Financing 8
R-Tec Technologies, Inc. Is A Start-Up Company With
Limited Operating History . . . . . . . . . . . . . . 8
All Of Our Products Are New And May Not
Be Commercially Feasible . . . . . . . . . . . . . . 8
We Do Not Have Our Own Facilities At This Time
To Produce Our Products And Our Office Space Is
Inadequate For Future Needs . . . . . . . . . . . . . 9
Shareholders May Be Unable To Sell Stock
Since There Is No Active Market At Present . . . . . 9
R-Tec Technologies, Inc.'s Business Is Dependent On
Patent Protection Which Cannot Be Assured . . . . . . 9
There Is A Risk That Our Products Will
Not Work As Intended . . . . . . . . . . . . . . . . 10
Management Has Broad Discretion In The
Use Of Proceeds Of This Offering . . . . . . . . . . 10
Present Stockholders Will Derive Greater Benefits
If We Are Successful And Have Less Risk . . . . . . 10
R-Tec Technologies, Inc. May Have Numerous Larger
And Better Financed Competitors . . . . . . . . . . . 11
R-Tec Technologies, Inc.'s Products May Not
Conform To Government Regulations . . . . . . . . . . 11
Since R-Tec Technologies, Inc. Has No Underwriter,
There Is A Greater Risk That No Market Will
Develop For R-Tec Technologies, Inc. Stock. . . . . . 12
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The Offering Price Was Arbitrarily Determined
By R-Tec Technologies, Inc. . . . . . . . . . . . . . 12
We May Not Be Able To Obtain Or Maintain
A Listing On The NASDAQ Small Cap Market
Or The OTC Bulletin Board, So You May Not
Be Able To Sell Your Shares Easily . . . . . . . . . 13
A Portion Of The Offering Proceeds Will Be Used
To Beneift Our Officers, Directors And Related Parties 13
There Is No Assurance That The Minimum Number
Of Shares Will Be Sold . . . . . . . . . . . . . . . 14
Broker-Dealers May Be Unable To Sell Our Stock
Because Of The Low Price . . . . . . . . . . . . . . 14
Additional Funding May Be Necessary and
There Is No Assurance It Can Be Obtained . . . . . . 14
New Investors Will Experience A High Level
Dilution . . . . . . . . . . . . . . . . . . . . . . 15
Future Sales Of Stock By Our Officers And
Directors May Depress The Market Price . . . . . . . 15
We May Be Unable To Sell Stock In Some
States Due To Blue Sky Regulations . . . . . . . . . 15
R-Tec Technologies, Inc. Does Not Intend To Pay
Dividends So No Current Income From Your Stock
Purchase Can Be Expected . . . . . . . . . . . . . . 16
Recent Developments . . . . . . . . . . . . . . . . . 16
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . 16
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 17
SUMMARY OF FINANCIAL INFORMATION . . . . . . . . . . . . . . . 20
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . 20
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 22
MANAGEMENT AND AFFILIATES. . . . . . . . . . . . . . . . . . . 32
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . 37
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS. . . . . . . . . . . . . . . . . 38
ORGANIZATION WITHIN LAST FIVE YEARS. . . . . . . . . . . . . . 40
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . 40
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 43
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 44
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 47
Until __________, 1999, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may be
required to deliver a prospectus. This is in addition to the obligation of
dealers to deliver a prospectus when acting as underwriters with respect to
their unsold allotments or subscriptions. This prospectus should be read in its
entirety by any prospective investor prior to his or her investment.
R-Tec Technologies, Inc.
3,750,000 Shares
PROSPECTUS
April __, 1999
54
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated costs and expenses to be
paid by the Company in connection with the Offering described in the
Registration Statement.
SEC registration fee $ 8,340.00
Blue sky fees and expenses $ 25,000.00
Printing and shipping expenses $ 20,000.00
Legal fees and expenses $200,000.00
Accounting fees and expenses $ 50,000.00
Transfer and Escrow Expenses $ 45,000.00
Advertising Expenses and Miscellaneous $151,660.00
Total $500,000.00
* All expenses except SEC registration fee are estimated.
ITEM 14. Indemnification of Directors and Officers.
The Registrant's Articles of Incorporation, Article Eight, provide that
the company shall indemnify and hold harmless its directors, employees and
agents from liability and reasonable expenses from actions in which he or she
may become involved by reason of the fact that he or she was an officer,
director, employee or agent.
Insofar as indemnification for liabilities arising under the Securities
Act, indemnification may be provided to directors, officers or persons
controlling the Registrant pursuant to the foregoing section. The Registrant has
been informed 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.
ITEM 15. Recent Sales of Unregistered Securities
On November 26, 1998, Mr. Lacqua, Ms. Vitolo and Mr. Scola purchased a
total of 15,000,000 shares for a total of $578,923.11 in conjunction with
formation of R-Tec Technologies, Inc. As of this date, Mr. Lacqua owns 5,000,000
shares of restricted common stock of the Company, Ms. Vitolo owns 5,000,000
shares and Mr. Scola owns 5,000,000 shares.
ITEM 16. Exhibits and Financial Statement Schedules
(a) Exhibits
55
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------
1.0* Certificate of Incorporation dated October 21,
1998.
1.1* Amended and Restated Articles of Incorporation,
dated November 24, 1998
1.2* Amended and Restated Articles of Incorporation,
dated December 18, 1998
1.3+ Certificate of Amendment to the Certification of
Incorporation of R-Tec Technologies, Inc., dated
April 18, 1999
2.0* By-laws, dated November 4, 1998
3.0* Form of common stock certificate
4.0* Opinion and consent of counsel with respect to the
legality of the shares being registered
5.0* Patent Assignment dated November 2, 1998 between
Muriel Kaiser and R-Tec Technologies, Inc.
5.1+ Patent Assignment dated March 30, 1999 between Muriel
Kaiser and R-Tec Technologies, Inc.
6.0+ Promissory Note dated April 14, 1999 between Nancy Vitolo,
Muriel Kaiser and R-Tec Technologies, Inc.
7.0+ Promissory Note dated January 6, 1999 between Nancy Vitolo
and R-Tec Technologies, Inc. for reimbursement of start
up costs
7.1+ Promissory Note dated April 22, 1999 between Marc M. Scola
and R-Tec Technologies, Inc. for reimbursement of start
up costs
7.2+ Promissory Note dated April 22, 1999 between R-Tec
Technologies, inc. and Marc M. Scola for reimbursement of
office lease, secretaries, postage, and other cost
incurred, prior to incorporation
7.3+ Promissory Note dated April 22, 1999 between Columbia
Trading, Inc. and R-Tec Technologies, Inc. for
reimbursement of consulting fees and start up costs
56
<PAGE>
7.4* Expense Reimbursement Agreement between Marc M.
Scola, Philip Lacqua and Nancy Vitolo and R-Tec
Technologies, Inc. dated October 24, 1998 regarding
start up costs
8.0+ Employment Agreement between R-Tec Technologies, Inc.
and Marc M. Scola
8.1+ Employment Agreement between R-Tec Technologies, Inc.
and Nancy Vitolo
8.2+ Employment Agreement between R-Tec Technologies, Inc.
and Philip Lacqua
9.0* Consultant Agreement dated January 5, 1999 between
Stewart Kaiser and R-Tec Technologies, Inc.
10.0* Consultant Agreement dated January 11, 1999 between
Shawn Walsh and R-Tec Technologies, Inc.
11.0* Exclusive Manufacturer's Agreement dated October
21, 1998 between Anscott Chemical Industries and R-
Tec Technologies, Inc.
12.0+ Distribution Agreement between R-Tec Technologies, Inc.
and Motors & Armatures Corp.
13.0* Stock Transfer Agency Agreement between R-Tec
Technologies, Inc. and Bank of New York dated as of
January, 1999
14.0* Subscription Escrow Agreement between R-Tec
Technologies Inc. and Bank of New York dated as of
January 26, 1999.
15.0+ R-Tec Technologies, Inc. Policy Against Insider Trading
16.0* Consent of Jurewicz & Duca, CPA's, P.C.
17.0+ Financial Data Schedule
- -----------------
* Previously filed
+ To be filed by amendment
57
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULE
The Financial Statement Schedule as of December 31, 1998 and the Report
of Independent Public Accountants on such schedule are included in this
Registration Statement. All other schedules are omitted because they are not
applicable or are not required under Regulation S-X.
ITEM 17. Undertakings
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred to that section. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to its Articles of
Incorporation or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question, whether or not such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The Registrant hereby undertakes to:
1. 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 arising after the
effective date of the registration statement (or most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information in the registration statement.
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 end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Securities and Exchange 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; and to
58
<PAGE>
(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.
2. For determining liability under the Securities Act each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
securities being registered that remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
59
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-1 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
New York, State of New York, on April 28, 1999.
R-Tec Technologies, Inc.
By:/s/ Philip Lacqua
------------------
Philip Lacqua
Director and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Philip Lacqua Director, President April 28, 1999
- ------------------ and Treasurer
Philip Lacqua
/s/ Nancy Vitolo Director, Vice President April 28, 1999
- ------------------ and Secretary
Nancy Vitolo
/s/ Marc M. Scola Director, Vice President April 28, 1999
- ------------------ and General Counsel
Marc M. Scola
60
EXHIBIT 1.0
FILED
DEC 22 1998
JAMES A.DiELEUTERIO, JR.
STATE TREASURER
CERTIFICATE OF INCORPORATION
of
R-Tec Technologies, Inc.
THIS IS TO CERTIFY THAT there is hereby organized a corporation under
and by virtue of N.J.S. 14A:1-1 et seq., the "New Jersey Business Corporation
Act."
FIRST: The name of the corporation is R-Tec Technologies, Inc.
SECOND: The address of the corporation's initial registered office is 290 Green
Road, Sparta, NJ 07871. The name of the registered agent at such address is
Nancy Vitolo.
THIRD: The purpose for which this corporation is organized is to engage in any
activity within the pruposes for which corporations may be organized under the
"New Jersey Business Corporation Act," N.J.S. 14A:1-1 et seq.
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is 5,000,000 shares without par value.
FIFTH: The number of directors constituting the initial Board of Directors of
this corporation is two (2). The name and adress of each person who is to serve
as such Director is:
Nancy Vitolo, P.O. Box 70, Allamuchy, N.J. 07820. Phillip Lacqua, 499 Van Brunt
Street, Brooklyn, N.Y. 11228.
SIXTH: The name and address of the incorporator is Capitol Information Services,
Inc., 172 West State Street, Trenton, N.J. 08608
In Witness Whereof, each individual incorporator, being over eighteen
years of age has signed this certificate; or if the incorporator be a
corporation has caused this certificate to be signed by its duly authorized
officer this 21st day of October, 1998.
/s/ Ruth Schneider
------------------------
Ruth Schneider
Executive Vice President
FILED FOR: Marc M. Scola, Esq. Capital Information Services, Inc.
Marc M. Scola, 172 West State Street
A Professional Corporation Trenton, New Jersey 08608
61 Mallard Drive
P.O. Box 282
Allamuchy, N.J. 07820
EXHIBIT 1.1
FILED
NOV. 30, 1998
JAMES A. DiELEUTERIO, JR.
STATE TREASURER
CERTIFICATE OF AMENDMENT TO THE CERTIFICATION OF INCORPORATION
OF
R-TEC TECHNOLOGIES, INC.
Federal Employer Identification No. 22-3615979
Pursuant to the provision of Section 14A:9-2(4) and Section 14A:9-
4(3), Corporations, General, of the New Jersey Statutes, the undersigned
corporation executes the following Certificate of Amendment to its Certificate
of Incorporation:
1. The name of the corporation is: R-Tec Technologies, Inc.
2. The following amendment to the Certification of Incorporation was approved by
the directors and thereafter duly adopted by the shareholders of the corporation
on the 24th day of November, 1998:
RESOLVED, that Article Second of the Certificate of Incorporation be
amended to read as follows:
The Registered Agent of the Corporation shall be amended as follows:
Michael K. Mullen, Esq.
Schenck, Price, Smith & King
10 Washington Street
P.O. Box 905
Morristown, New Jersey 07963-0905
(973) 539-1000 Telephone
(973) 540-7300 Facsimile
RESOLVED, that Article Fourth, the aggregate number of shares which the
corporation shall have authority to issue shall be amended to twenty (20)
million shares without par value.
3. The number of shares outstanding at the time of the adoption of the amendment
was 1,000,000. The total number of shares entitled to vote thereon was
1,000,000.
4. The number of shares voting for and against such amendment is as follows:
Number of Shares Number of Shares
Voting for Amendment Voting against Amendment
-------------------- ------------------------
1,000,000 - 0 -
5. The effective date of this Amendment to the Certificate of Incorporation
shall be the date of filing.
Dated this 24th day of November, 1998.
R-TEC TECHNOLOGIES, INC.
By: /s/
MARC M. SCOLA
VICE PRESIDENT AND
GENERAL COUNSEL
EXHIBIT 1.2
FILED
DEC. 22 1998
JAMES A. DiELEUTERIO, JR
STATE TREASURER
CERTIFICATE OF AMENDMENT TO THE CERTIFICATION OF INCORPORATION
OF
R-TEC TECHNOLOGIES, INC.
Federal Employer Identification No. 22-3615979
Pursuant to the provision of Section 14A:9-2(4) and Section 14A:9-
4(3), Corporations, General, of the New Jersey Statutes, the undersigned
corporation executes the following Certificate of Amendment to its Certificate
of Incorporation:
1. The name of the corporation is: R-Tec Technologies, Inc.
2. The following amendment to the Certification of Incorporation was approved by
the directors and thereafter duly adopted by the shareholders of the corporation
on the 18th day of December, 1998:
RESOLVED, that Article Fourth, the aggregate number of shares which the
corporation shall have authority to issue shall be amended to twenty five (25)
million shares without par value.
RESOLVED, that Article Seventh, the corporation is authorized to issue
Preferred Stock upon approval of the Board of Directors.
RESOLVED, that Article Eighth, the Corporation shall indemnify and hold
harmless its Officers, Directors, Employees and Agents from liability and
reasonable expense from actions in which he or she may become involved by reason
of the fact that he or she was an Officer, Director, Employee or Agent.
3. The number of shares outstanding at the time of the adoption of the amendment
was 1,000,000. The total number of shares entitled to vote thereon was
1,000,000.
4. The number of shares voting for and against such amendment is as follows:
Number of Shares Number of Shares
Voting for Amendment Voting against Amendment
--------------------- ------------------------
1,000,000 -0-
5. The effective date of this Amendment to the Certificate of Incorporation
shall be the date of filing.
Dated this 18th day of December, 1998.
R-TEC TECHNOLOGIES, INC.
By: /s/
MARC M. SCOLA
VICE PRESIDENT AND
GENERAL COUNSEL
EXHIBIT 1.3
FILED
April 21, 1999
JAMES A. DiELEUTERIO, JR
STATE TREASURER
CERTIFICATE OF AMENDMENT TO THE CERTIFICATION OF INCORPORATION
OF
R-TEC TECHNOLOGIES, INC.
Federal Employer Identification No. 22-3615979
Pursuant to the provision of Section 14A:9-2(4) and Section 14A:9-4(3),
Corporations, General, of the New Jersey Statutes, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:
1. The name of the corporation is: R-Tec Technologies, Inc.
2. The following amendment to the Certification of Incorporation was approved by
the directors and thereafter duly adopted by the shareholders of the corporation
on the 18th day of April, 1999:
RESOLVED, that Article Fourth, the aggregate number of shares which the
corporation shall have authority to issue shall be amended to fifty (50) million
shares with par value of .00001.
3. The number of shares outstanding at the time of the adoption of the amendment
was 15,000,000. The total number of shares entitled to vote thereon was
15,000,000.
4. The number of shares voting for and against such amendment is as follows:
Number of Shares Number of Shares
Voting for Amendment Voting against Amendment
-------------------- ------------------------
15,000,000 - 0 -
5. The effective date of this Amendment to the Certificate of Incorporation
shall be the date of filing.
Dated this 18th day of April, 1999.
R-TEC TECHNOLOGIES, INC.
By:/s/_________________________
MARC M. SCOLA
VICE PRESIDENT AND
GENERAL COUNSEL
EXHIBIT 2.0
Minutes and By-Laws
of
R-TEC TECHNOLOGIES, INC.
Commencing November 4, 1998
Ending
<PAGE>
BY-LAWS
OF
R-TEC TECHNOLOGIES, INC.
-----------------------------------------------------------------
Adopted
ARTICLE I
OFFICES
1. Registration Office and Agent. -- The registered office of the Corporation
in the State of New Jersey is at
14A:4-1
290 Green Road
Sparta, New Jersey 07871
The registered agent of the Corporation at such office is
Nancy Vitolo
2. Principal Place of Business. -- The principal place of business of the
Corporation is
61 Mallard Drive
Allumachy, New Jersey 07820
3. Other Places of Business. -- Branch or subordinate places of business or
offices may be established at any time by the Board at any place or places
where the Corporation is qualified to do business. c/o
B1
<PAGE>
ARTICLE II
SHAREHOLDERS
14A:5-2
14A:5-4(1) 1. Annual Meeting.--The annual meeting of shareholders shall
be held upon not less than ten nor more than sixty days
written notice of the time, place, and purposes of the meeting
at 11:30 o'clock a.m. on the 4th day of the month of November
of each year at
61 Mallard Drive
Allamuchy, New Jersey 07820
14A:5-1 or at such other time and place as shall be specified in the
notice of meeting, in order to elect directors and transact
such other business as shall come before the meeting. If that
date is a legal holiday, the meeting shall be held at the same
hour on the next succeeding business day.
14A:5-3 2. Special Meetings. -- A special meeting of shareholders may
be called for any purpose by the president or the Board. A
special meeting shall be held upon not less than one nor more
than sixty days written notice of the time, place, and
purposes of the meeting.
B2
<PAGE>
14A:5-6 3. Action Without Meeting. -- The shareholders may act without
a meeting by written consent in accordance with N.J.S.A.
14A:5-6. Such consents may be executed together, or in
counterparts, and shall be filed in the Minute Book. Special
rules apply to the annual election of directors, mergers,
consolidations, acquisitions of shares or the sales of assets.
14A:5-9(1) 4. Quorum. -- The presence at a meeting in person or by proxy
of the holders of shares entitled to cast (51%) fifty one
percent of the votes shall constitute a quorum.
B3
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
14A:6-2 1. Number and Term of Office. -- The Board shall consist of no
more than five and no less than two members. The precise
number shall be set by the directors or by the 14A:3-3
shareholders at each annual meeting before the election of
directors. Each director shall be elected by the shareholders
at each annual meeting and shall hold office until that
director's successor shall have been elected and qualified.
14A:6-10 2. Regular Meetings. -- A regular meeting of the Board shall
be held without notice immediately following and at the same
place as the annual shareholders' meeting for the purposes of
electing officers and conducting such other business as may
come before the meeting. The Board, by resolution, may provide
for additional regular meetings which may be held without
notice, except to members not present at the time of the
adoption of the resolution.
14A:6-10(2) 3. Special Meeting. -- A special meeting of the Board may be
called at any time by the president or by directors for any
purpose. Such meeting shall be held upon days notice if given
orally (either by telephone or in person,) or by telegraph, or
by 10 days notice if given by depositing the notice in the
United States mails, postage prepaid. Such notice shall
specify the time and place of the meeting.
B4
<PAGE>
14A:6-7.1(5) 4. Action Without Meeting. -- The Board may act without a
meeting if, prior to subsequent to such action, each member of
the Board shall consent in writing to such action. Such
written consent or consents shall be filed in the minute book.
14A:6-7.1(3) 5. Quorum. -- Two of the entire Board shall constitute a
quorum for the transaction of business.
14A:6-5 6. Vacancies in Board of Directors. -- Any vacancy in the
Board may be filled by the affirmative vote of a majority of
the remaining directors, even though less than a quorum of the
Board, or by a sole remaining director.
14A:6-6 7. Removal of Directors. -- Any director may be removed for
cause, or without cause unless otherwise provided in the
certificate of incorporation, by a majority vote of
shareholders.
B5
<PAGE>
14A:6-10(3) 8. Presence at Meetings. -- Where appropriate communication
facilities are reasonably available, any or all directors
shall have the right to participate in all or any part of a
meeting of the board or a committee of the board by means of
conference telephone or any means of communication by which
all persons participating in the meeting are able to hear each
other.
B6
<PAGE>
ARTICLE IV
WAIVER OF NOTICE
14A:55(1)
14A:6-10(2) Any notice required by these by-laws, by the certificate of
incorporation, or by the New Jersey Business Corporation Act
may be waived in writing by any person entitled to notice. The
waiver or waivers may be executed either before or after the
event with respect to which notice is waived. Each director or
shareholder attending a meeting without protesting, prior to
its conclusion, the lack of proper notice shall be deemed
conclusively to have waived notice of the meeting.
B6
<PAGE>
ARTICLE V
OFFICERS
14A:6-15(1) 1. Election. -- At its regular meeting following the
annual meeting of shareholders, the Board shall elect a
14A:6-15(2) resident, a treasurer, a secretary, and it may elect
such other officers, including one or more vice
presidents, as it shall deem necessary. One person may
hold two or more offices.
14A:6-15(4) 2. Duties and Authority of President. -- The president
shall be chief executive officer of the Corporation.
Subject only to the authority of the Board, he shall
have general charge and supervision over, and
responsibility for, the business and affairs of the
Corporation. Unless otherwise directed by the Board, all
other officers shall be subject to the authority and
supervision of the president. THe president may enter
into and execute in the name of the Corporation
contracts or other instruments in the regular course of
business or contracts or other instruments not in the
regular course of business which are authorized, either
generally or specifically, by the Board. He shall have
the general powers and duties of management usually
vested in the office of president or a corporation.
B7
<PAGE>
14A:6-15(4) 3. Duties and Authority of Vice President. -- The vice
president shall perform such duties and have such
authority as from time to time may be delegated to him
by the president or by the Board. In the absence of the
president or in the event of his death, inability, or
refusal to act, the vice president shall perform the
duties and be vested with the authority of the
president.
14A:6-15(4) 4. Duties and Authority of Treasurer. -- The treasurer
shall have the custody of the funds and securities of
the Corporation and shall keep or cause to be kept
regular books of account for the Corporation. The
treasurer shall perform such other duties and possess
such other powers as are incident to that office or as
shall be assigned by the president or the Board.
14A:6-15(4) 5. Duties and Authority of Secretary. -- The secretary
shall cause notices of all meetings to be served as
prescribed in these by-laws and shall keep or cause to
be kept the minutes of all meetings of the shareholders
and the Board. The secretary shall have charge of the
seal of the Corporation. The secretary shall perform
such other duties and possess such other powers as are
incident to that office or as are assigned by the
president of the Board.
B8
<PAGE>
14A:6-16 6. Removal and Resignation of Officers; Filling of
Vacancies.
A. Any officer elected by the board may be removed
by the board with or without cause. An officer elected
by the shareholders may be removed, with or without
cause, only by vote of the shareholders but his
authority to act as an officer may be suspended by the
board for cause. The removal of an officer shall be
without prejudice to his contract rights, if any.
Election of an officer shall not of itself create
contract rights.
B. An officer may resign by written notice to the
corporation. The resignation shall be effective upon
receipt thereof by the corporation or at such subsequent
time as shall be specified in the notice of resignation.
C. Any vacancy occurring among the officers,
however caused, shall be filled by the board.
B9
<PAGE>
ARTICLE VI
AMENDMENTS TO AND EFFECT OF BY-LAWS;
FISCAL YEAR
1. Force and Effect of By-Laws. -- These by-laws are
subject to the provisions of the New Jersey Business
Corporation Act and the Corporation's certificate of
incorporation, as it may be amended from time to time.
If any provision in these by-laws is inconsistent with a
provision in the Act or the certificate of in
corporation, the provision of that Act or the
certificate of incorporation shall govern.
2. Wherever in these by-laws references are made to more
than one incorporator, director, or shareholder, they
shall, if this is a sole incorporator, director,
shareholder corporation, be construed to mean the
solitary person; and all provisions dealing with the
quantum of majorities of quorums shall be deemed to mean
the action by the one person constituting the
corporation.
14A:22-9(1) 3. Amendments to By-laws. -- These by-laws may be
altered, amended, or repealed by the shareholders or the
board. Any by-law adopted, amended, or shareholders or
the board. Any by-law adopted, amended, or repealed by
the shareholders may be amended or repealed by the
board, unless the resolution of the shareholders
adopting such by-law expressly reserves to the
shareholders the right to amend or repeal it.
4. Fiscal Year. -- The fiscal year of the corporation
shall begin on the first day of January of each year.
B10
<PAGE>
MINUTES OF FIRST MEETING OF
SHAREHOLDERS
A meeting of the shareholders of R-TEC TECHNOLOGIES, INC. was held at
11:30 o'clock a.m., November 4, 1998 at
61 Mallard Drive
Allamuchy, New Jersey 07820
The following persons, constituting a quorum, were present in person or
by proxy:
The president presided as chairman of the meeting, and the secretary
recorded the minutes of the meeting.
The president reported on the organization of the Corporation, noting
that the Board had adopted by-laws, elected officers, and determined to
undertake certain activities.
S2
<PAGE>
The next matter to be considered was the election of directors to hold
office until the next annual meeting of shareholders. The president noted that
the Corporation's by-laws provide for no more than five and no less than two
directors. The following persons were nominated as directors and, there being no
other nominations, were unanimously elected:
Nancy Vitolo - Secretary
Philip Lacqua - President
Marc M. Scola - Vice President, Treasurer
And General Counsel
There being no further business presented, the meeting was duly
adjourned.
/s/Nancy Vitolo
-----------------------
Nancy Vitolo, Secretary
S3
<PAGE>
WAIVER OF NOTICE OF
MEETING OF SHAREHOLDERS
The undersigned, each being a shareholder of R-TEC
TECHNOLOGIES, INC. waive all notice required by the Corporation's by-laws and
the laws of the State of New Jersey of the time, place, and purposes of a
meeting of the shareholders and fix November 4, 1998, as the date, 11:30 o'clock
a.m. as the time, and
61 Mallard Drive, Allamuchy, New Jersey 07820
as the place, and the following as the purposes:
Electing a Board of Directors, approving By-Laws and various
other documents of the corporation.
The transaction of such other business as may properly come
before the meeting.
/s/Marc M. Scola
----------------
Marc M. Scola
/s/Philip Lacqua
----------------
Philip Lacqua
Dated: November 4, 1998 /s/Nancy Vitolo
----------------
Nancy Vitolo
S6
<PAGE>
I HEREBY CERTIFY that all shareholders of the Corporation were
present at the foregoing meeting and that none protested the absence of notice
of the meeting.
Dated: November __, 1998 /s/Nancy Vitolo
-----------------------
Nancy Vitolo, Secretary
S7
<PAGE>
THE UNDERSIGNED, being all of the shareholders of the
Corporation, acknowledge that they attended the foregoing meeting without
protest of absence of notice and that the foregoing minutes accurately reflect
the actions taken at that meeting.
/s/Nancy Vitolo
---------------
Nancy Vitolo
/s/Marc M. Scola
----------------
Marc M. Scola
/s/Philip Lacqua
----------------
Philip Lacqua
Dated: November 4, 1998
S8
EXHIBIT 3.0
<TABLE>
<CAPTION>
Certificate No. 4 For Shares Issued to ______________________________ Transferred from / /
-------- -------- ---------------------------------
No. Original Certificate No. Original Shares No. Of Shares Transfered
Dated , Receipt Acknowledged
===================================================================================================
| NUMBER SHARES |
| ---------- ------------ |
| | 4 | INCORPORATED UNDER THE LAWS OF | | |
| ---------- --------------------------------- ------------ |
| ------------------------------ THE STATE OF --------------------------- |
| | NEW JERSEY | |
| | | |
| | | |
| | | |
| | | |
| | R-TEC TECHNOLOGIES, INC. | |
| | 25,000,000 SHARES COMMON STOCK, NO PAR VALUE | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | THIS CERTIFIES THAT VOID is the owner of fully paid | |
| | ---------------------------------- | |
| | and non-assessable Shares of the Capital Stock of the above named Corporation | |
| | transferable only on the books of the Corporation by the holder hereof in person or | |
| | by duly authorized Attorney upon surrender of this Certificate properly endorsed. | |
| | | |
| | | |
| | In Witness Whereof, the said Corporation has caused this Certificate to be | |
| | signed by its duly authorized officers and its Corporate Seal to be | |
| | hereunto affixed this ___________ day of __________________ A.D. ____________ | |
| | | |
| | VOID ___________________ _________________ | |
| | ------------------------ | |
| | TREASURER/SECRETARY PRESIDENT | |
| | | |
| ---------------------------------------------------------------------------------------- |
| VOID |
| |
===================================================================================================
<S> <C>
</TABLE>
EXHIBIT 4.0
[Letterhead of Sirota & Sirota LLP]
April __, 1999
Board of Directors
R-TEC Technologies, Inc.
61 Mallard Drive
P.O. Box 282
Allamuchy, New Jersey 07820
Re: Opinion and Consent of Counsel With
Respect to Registration Statement on Form S-1
Gentlemen:
You have requested the opinion and consent of this law firm, as
counsel, with respect to the proposed issuance and public distribution of
certain securities of the Company pursuant to the filing of a registration
statement on Form S-1 with the Securities and Exchange Commission.
The proposed offering and public distribution relates to a minimum of
625,000 shares and a maximum of 3,750,000 shares of the Company's common stock
to be offered and sold to the public at a price of $8.00 per share. It is this
firm's opinion that the common stock will, when issued in accordance with the
terms and conditions set forth in the registration statement, be duly
authorized, validly issued, fully paid and nonassessable in accordance with the
corporation laws of the State of New York.
We hereby consent to be named as counsel for the Company in the
registration statement and prospectus included therein.
Very truly yours
Howard B. Sirota
HBS:mc
EXHIBIT 5.0
Assignment GSEN3.0-001
FOR GOOD AND VALUABLE CONSIDERATION,
I, Muriel Kaiser residing at 10110 Boynton Place Circle, Boynton Beach,
Florida 33437 do hereby sell, assign and transfer unto R-Tec, Inc. a corporation
organized under the laws of the State of NEW JERSEY and having an address for
service at P.O. Box 70, Allamuchy, New Jersey 07820 herein sometimes called
"ASSIGNEE," the entire right, title and interest, together with all rights of
priority, in and to the invention for
COMPOSITION FOR THE DETECTION OF ELECTROPHILIC GASES AND METHODS OF USE THEREOF
as described and/or claimed in the Letters Patent of the United States of
America, #5 783 110, issued July 21, 1998, based on Serial No. 08/837355 filed
April 17, 1997 which was assigned to me by mesne assignments and as described
and/or claimed in any and all applications for Letter Patent based thereon
including divisions, continuations and reissues thereof as well as all foreign
counterparts thereof together with all Letters Patent issuing on any of the
aforesaid applications for Letters Patent, the same to be held and enjoyed by
ASSIGNEE, its successors, assigns or other legal representatives, to the full
ends of the terms of all said Letter Patent therefor which may be granted.
And I Hereby Authorize Assignee to make applications for and to receive
Letters Patent for said invention in any countries in its owns name, or in my
name, at its election.
And I Hereby Covenant and Agree that I will execute or procure any
further necessary assurance of title to said invention and any Letters Patent
which may issue therefor and that I will, at any time, upon the request and at
the expense of ASSIGNEE deliver any testimony in any legal proceedings and
execute all papers that may be necessary or desirable to perfect the title to
said invention or any Letters Patent which may be granted therefor in ASSIGNEE,
its successors, assigns, or other legal representatives, and that I will, at any
time, upon the request and at the expense of ASSIGNEE execute any continuations,
divisions, reissues, or any other additional applications for Letters Patent for
said invention or any part or parts thereof, all of which applications and any
letters Patent issuing thereon are hereby assigned to ASSIGNEE, and will make
all rightful oaths, and do all lawful acts requisite for procuring the same
therein, without further compensation, but at the expense of ASSIGNEE, its
successors, assigns or other legal representatives.
I covenant with said assignee, its successors, assigns and legal
representatives, that the rights and property herein conveyed are free and clear
of any encumbrance, and that I have full right to convey the same herein
expressed.
<PAGE>
And I Hereby Authorized and Request the Commissioner of Patents and
Trademarks to issue any and all Letters Patent of the United States for said
invention, resulting from any of the aforesaid applications to said as sole
assignee.
Witness My hand and seal this . . . . . . day of November 1998
/s/Muriel Kaiser
----------------
Muriel Kaiser
Acknowledgment
State of Florida )
)ss.:
County of Palm Beach)
On this 2 day of November 1998, Muriel Kaiser personally appeared
before me Audrey Morreale, a Notary Public of the State of Florida, to me known,
and known by me to be the same person described in and who executed the
foregoing instrument in my presence, and acknowledged that she they executed the
same, of here own free will and for the purposes set forth.
/s/Audrey J. Morreale
---------------------
Notary Public
Audrey J. Morreale
My Commission # CC616621
Expires: February 9, 2001
Bonded thru Notary Public
EXHIBIT 5.1
Assignment
FOR GOOD AND VALUABLE CONSIDERATION,
I, Muriel Kaiser residing at 10110 Boynton Place Circle, Boynton Beach,
Florida 33437 do hereby sell, assign and transfer unto R-Tec Technologies, Inc.
a corporation organized under the laws of The State of NEW JERSEY and having an
address for service at PO Box 70, Allamuchy, New Jersey 07820 herein sometimes
called "ASSIGNEE," the entire right, title and interest, together with all
rights of priority, in and to the invention for
COMPOSITION FOR THE DETECTION OF ELECTROPHILIC GASES AND METHODS OF USE THEREOF
as described and/or claimed in Letters Patent of the United States of America,
Serial No. 5 783 110 issued July 21, 1998 which was assigned to me mesne
assignments the last being to me from R- Tect, Inc in a document of assignment
of three pages, dated October 19, 1998 and recorded in the United States Patent
and Trademark office on November 2, 1998 under reel 9586 and frame 0264 and as
described and/or claimed in any and all applications for Letters Patent based
thereon including divisions, continuations and reissues thereof as well as all
foreign counterparts thereof together with all Letters Patent issuing on any of
the aforesaid applications for Letters Patent, the same to be held and enjoyed
by ASSIGNEE, its successors, assigns or other legal representatives, to the full
ends of the terms of all said Letters Patent therefor which may be granted.
The purpose of this assignment is to correct the assignment intended to
transfer said letters patent to R-Tec Technologies, Inc. but through
inadvertence and without deceptive intent, executed in favor of R-Tec Inc.
having the same address. Said transfer being recorded in the United States
Patent and Trademark Office at Reel 9576 Frame 0152 on November 12, 1998.
And I Hereby Authorize Assignee to make applications for and to receive
Letters Patent for said invention in any foreign countries in its own name, or
in my our name, at its election.
And I Hereby Covenant and Agree that I will execute or procure any
further necessary assurance of title to said invention and any Letters Patent
which may issue therefor and that I will, at any time, upon the request and at
the expense of ASSIGNEE deliver any testimony in any legal proceedings and
execute all papers that may be necessary or desirable to perfect the title to
said invention or any Letters Patent which may be granted therefor in ASSIGNEE,
its successors, assigns, or other legal representatives, and that I will, at any
time, upon the request and at the expense of ASSIGNEE execute any continuations,
divisions, reissues, or any other additional applications for Letters Patent for
said invention or any part parts thereof, all of which applications and any
Letters Patent issuing thereon are hereby assigned to ASSIGNEE, and will make
all rightful oaths, and do all lawful acts requisite for procuring the same
therein, without further compensation, but at the expense of ASSIGNEE, its
successors, assigns or other legal representatives.
<PAGE>
And I Hereby Authorize and Request the Commissioner of Patents and
Trademarks to issue any and all Letters Patent of the United States for said
invention, resulting from any of the aforesaid applications to as sole assignee.
Witness My hand and seal the 30 day of March 1999
/s/Muriel Kaiser
-----------------
Muriel Kaiser
Acknowledgment
State of Florida
County of Palm Beach: SS
On this 30 day of March 1999, before me Jeanette Y. DeVaughn Murray, a
Notary Public of the State of Florida personally appeared Muriel Kaiser
to me known, and known by me to be the same person described in and who executed
the foregoing instrument in my presence, and acknowledged that she they executed
the same, of her own free will and for the purposes set forth.
/s/Jeanette Y. DeVaughn Murray
------------------------------
Notary Public
Jeanette Y. DeVaughn Murray
My Comm. Exp. 12/17/2002
No. CC0797701
EXHIBIT 6.0
PROMISSORY NOTE
$425,000.00 Warren County, New Jersey
Six Percent (5.0%) April 14, 1999
FOR VALUE RECEIVED, the undersigned and maker of this Note, R-TEC
TECHNOLOGIES, INC. promises to PAY TO THE ORDER OF MURIEL KAISER at the address
of 10110 Boynton Place Circle, Boynton Beach, Florida 33437 (the "holders") the
sum of Four Hundred Twenty Five Thousand Dollars ($425,000.00) plus two (2%)
percent of the Companies net profits for three (3) years from the date of
commencement of operations.
$425,000.00 will be paid to the holder within thirty (30) days of the
completion of the makers Initial Public Offering. The holders will be entitled
to two (2%) percent of the net profits of the maker for its first three (3)
years from the date of commencement of operations.
ADDRESS OF MAKER: The undersigned represents and warrants that the
undersigned is located at 61 Mallard Drive, Allamuchy, New Jersey, and agrees to
notify the holder of any change of residence within 10 days of such change.
WAIVERS: The undersigned hereby waives (1) presentment, demand,
protest, notice of dishonor and/or protest and notice of nonpayment; (2) the
right, if any, to the benefit of, or to direct the application of, any security
hypothecated to the holder until all indebtedness of the undersigned to the
holder, howsoever arising, shall have been paid; and (3) the right to require
the holder to proceed against or to pursue any remedy against any party other
than the undersigned.
INSOLVENCY: It is agreed that if the undersigned, at any time fail in
business or become insolvent, or commit an act of bankruptcy, or if any deposit
account or other property of the undersigned be attempted to be obtained or held
by writ of execution, garnishment, attachment or other legal process, or if any
assessment for taxes against the undersigned other than taxes on real property,
is made by the federal or state government, or any department thereof, or if the
undersigned fails to notify the holder of any material change in its financial
condition, then in such case all of the obligations of the undersigned shall, at
the option of the holder, become due and payable immediately without demand or
notice.
If the maker does not have any net profits in any of the first three
(3) years, then no such additional payment will be made. There will be no carry
forward of profits. The holders have given up all rights, title and interest in
the Patent once the $425,000.00 is paid.
<PAGE>
WARRANTY OF RECEIPT OF VALUE: The undersigned does hereby expressly
represent and warrant to the holder with the intent that the holder rely on such
representation and warranty as a specific inducement to the making of this
instrument, that the undersigned have received full value for this note.
ASSIGNABILITY: This note shall be assignable only by the holder
provided that such assignment shall not impair or enlarge the obligations of the
undersigned. The undersigned shall not assign obligations under this note to any
third party without the written consent of the holder.
LAW GOVERNING: This Promissory Note shall be governed by the laws of
the State of New Jersey and the undersigned do hereby voluntarily submit
generally to the jurisdiction of the courts of New Jersey should it become
necessary for the holder hereof to enforce any of his rights under the terms
hereof.
DEFAULT: The maker also agrees to pay all costs and expenses incurred
by the holder hereof, including all reasonable attorneys' fees for the
collection of this Note and the indebtedness evidenced hereby, or the
enforcement of the holder's rights hereunder or under any other instruments
creating any collateral security or guaranty now or hereinafter given to secure
this loan.
The maker acknowledges that the $425,000.00 or otherwise due the
holders of this Note arose from the sale of a Patent on April 14, 1999.
ACCELERATION: The maker further agrees that if the Corporation is
subsequently sold or transferred, all payments due and owing under this Note
will become due at the time of the subsequent sale.
Attested: R-TEC TECHNOLOGIES, INC.
By: /s/ L.S.
- ----------------------- --------------------------
MARC M. SOCLA, ESQ.
Vice President and
General Counsel
Dated: April 14, 1999 Dated: April 14, 1999
By: /s/
- ----------------------- --------------------------
PHILIP LACQUA
President
EXHIBIT 7.0
PROMISSORY NOTE
$ 31,000.00 Warren County, New Jersey
Six Percent (6.0%) January 6, 1999
FOR VALUE RECEIVED, the undersigned and maker of this Note, R- TEC
TECHNOLOGIES, INC. promises to PAY TO THE ORDER OF NANCY VITOLO at the address
of 290 Green Road, Sparta, New Jersey 07871 (the "holder") the sum of Thirty One
Thousand Dollars ($31,000.00) at Six Percent (6.0%) per annum payable in full
within thirty (30) days of the completion of the funding of the initial public
offering.
ADDRESS OF MAKER: The undersigned represents and warrants that the
undersigned is located at 61 Mallard Drive, Allamuchy, New Jersey, and agrees to
notify the holder of any change of residence within 10 days of such change.
WAIVERS: The undersigned hereby waives (1) presentment, demand,
protest, notice of dishonor and/or protest and notice of nonpayment; (2) the
right, if any, to the benefit of, or to direct the application of, any security
hypothecated to the holder until all indebtedness of the undersigned to the
holder, howsoever arising, shall have been paid; and (3) the right to require
the holder to proceed against or to pursue any remedy against any party other
than the undersigned.
INSOLVENCY: It is agreed that if the undersigned, at any time fail in
business or become insolvent, or commit an act of bankruptcy, or if any deposit
account or other property of the undersigned be attempted to be obtained or held
by writ of execution, garnishment, attachment or other legal process, or if any
assessment for taxes against the undersigned other than taxes on real property,
is made by the federal or state government, or any department thereof, or if the
undersigned fails to notify the holder of any material change in its financial
condition, then in such case all of the obligations of the undersigned shall, at
the option of the holder, become due and payable immediately without demand or
notice.
WARRANTY OF RECEIPT OF VALUE: The undersigned does hereby expressly
represent and warrant to the holder with the intent that the holder rely on such
representation and warranty as a specific inducement to the making of this
instrument, that the undersigned have received full value for this note.
ASSIGNABITY: This note shall be assignable only by the holder provided
that such assignment shall not impair or enlarge the obligations of the
undersigned. The undersigned shall not assign obligations under this note to any
third party without the written consent of the holder.
<PAGE>
Promissory Note/R-Tec Technologies, Inc./Vitolo/Page Two
LAW GOVERNING: This Promissory Note shall be governed by the laws of
the State of New Jersey and the undersigned do hereby voluntarily submit
generally to the jurisdiction of the courts of New Jersey should it become
necessary for the holder hereof to enforce any of his rights under the terms
hereof.
DEFAULT: The maker also agrees to pay all costs and expenses incurred
by the holder hereof, including all reasonable attorneys' fees for the
collection of this Note and the indebtedness evidenced hereby, or the
enforcement of the holder's rights hereunder or under any other instruments
creating any collateral security or guaranty now or hereinafter given to secure
this loan.
The maker acknowledges that the $31,000.00 of this Note represents
reimbursement of monies paid in an effort to bring the Company R-Tec
Technologies, Inc. public.
ACCELERATION: The maker further agrees that if the Corporation is
subsequently sold or transferred, all payments due and owing under this Note
will become due at the time of the subsequent sale.
Attested By: R-TEC TECHNOLOGIES, INC.
/s/NANCY VITOLO By:/s/PHILIP LACQUA L.S.
- --------------- --------------------
NANCY VITOLO, PHILIP LACQUA,
Secretary President
Dated: January 6, 1999 Dated: January 6, 1999
EXHIBIT 7.1
PROMISSORY NOTE
$ 14,920.11 Warren County, New Jersey
Six Percent (6.0%) April 22, 1999
FOR VALUE RECEIVED, the undersigned and maker of this Note, R-TEC
TECHNOLOGIES, INC. promises to PAY TO THE ORDER OF MARC M. SCOLA at the address
of 61 Mallard Drive, Hackettstown, New Jersey 07840 (the "holder") the sum of
Fourteen Thousand Nine Hundred Twenty Dollars and Eleven Cents ($14,920.11) at
Six Percent (6.0%) per annum payable in full within thirty (30) days of the
completion of the funding of the initial public offering.
ADDRESS OF MAKER: The undersigned represents and warrants that the
undersigned is located at 61 Mallard Drive, Allamuchy, New Jersey, and agrees to
notify the holder of any change of residence within 10 days of such change.
WAIVERS: The undersigned hereby waives (1) presentment, demand,
protest, notice of dishonor and/or protest and notice of nonpayment; (2) the
right, if any, to the benefit of, or to direct the application of, any security
hypothecated to the holder until all indebtedness of the undersigned to the
holder, howsoever arising, shall have been paid; and (3) the right to require
the holder to proceed against or to pursue any remedy against any party other
than the undersigned.
INSOLVENCY: It is agreed that if the undersigned, at any time fail in
business or become insolvent, or commit an act of bankruptcy, or if any deposit
account or other property of the undersigned be attempted to be obtained or held
by writ of execution, garnishment, attachment or other legal process, or if any
assessment for taxes against the undersigned other than taxes on real property,
is made by the federal or state government, or any department thereof, or if the
undersigned fails to notify the holder of any material change in its financial
condition, then in such case all of the obligations of the undersigned shall, at
the option of the holder, become due and payable immediately without demand or
notice.
WARRANTY OF RECEIPT OF VALUE: The undersigned does hereby expressly
represent and warrant to the holder with the intent that the holder rely on such
representation and warranty as a specific inducement to the making of this
instrument, that the undersigned have received full value for this note.
ASSIGNABILITY: This note shall be assignable only by the holder
provided that such assignment shall not impair or enlarge the obligations of the
undersigned. The undersigned shall not assign obligations under this note to any
third party without the written consent of the holder.
<PAGE>
LAW GOVERNING: This Promissory Note shall be governed by the laws of
the State of New Jersey and the undersigned do hereby voluntarily submit
generally to the jurisdiction of the courts of New Jersey should it become
necessary for the holder hereof to enforce any of his rights under the terms
hereof.
DEFAULT: The maker also agrees to pay all costs and expenses incurred
by the holder hereof, including all reasonable attorneys' fees for the
collection of this Note and the indebtedness evidenced hereby, or the
enforcement of the holder's rights hereunder or under any other instruments
creating any collateral security or guaranty now or hereinafter given to secure
this loan.
The maker acknowledges that the $29,840.22 of this Note represents
reimbursement of monies paid in an effort to bring the Company R-Tec
Technologies, Inc. public.
ACCELERATION: The maker further agrees that if the Corporation is
subsequently sold or transferred, all payments due and owing under this Note
will become due at the time of the subsequent sale.
Attested By: R-TEC TECHNOLOGIES, INC.
/s/NANCY VITOLO By:/s/PHILIP LACQUA L.S.
- --------------- --------------------
NANCY VITOLO, PHILIP LACQUA,
Secretary President
Dated: April 22, 1999 Dated: April 22, 1999
EXHIBIT 7.2
PROMISSORY NOTE
$37,500.00 Warren County, New Jersey
Six Percent (6.0%) April 22, 1999
FOR VALUE RECEIVED, the undersigned and maker of this Note, R-TEC
TECHNOLOGIES, INC. promises to PAY TO THE ORDER OF MARC M. SCOLA at the address
of 61 Mallard Drive, Hackettstown, New Jersey 07840 (the "holder") the sum of
Thirty Seven Thousand Five Hundred Dollars ($37,500.00) at Six Percent (6.0%)
per annum payable as follows:
$37,500.00 within thirty (30) days of the completion of the Companys
Initial Public Offering.
ADDRESS OF MAKER: The undersigned represents and warrants that the
undersigned is located at 61 Mallard Drive, Allamuchy, New Jersey, and agrees to
notify the holder of any change of residence within 10 days of such change.
WAIVERS: The undersigned hereby waives (1) presentment, demand,
protest, notice of dishonor and/or protest and notice of nonpayment; (2) the
right, if any, to the benefit of, or to direct the application of, any security
hypothecated to the holder until all indebtedness of the undersigned to the
holder, howsoever arising, shall have been paid; and (3) the right to require
the holder to proceed against or to pursue any remedy against any party other
than the undersigned.
INSOLVENCY: It is agreed that if the undersigned, at any time fail in
business or become insolvent, or commit an act of bankruptcy, or if any deposit
account or other property of the undersigned be attempted to be obtained or held
by writ of execution, garnishment, attachment or other legal process, or if any
assessment for taxes against the undersigned other than taxes on real property,
is made by the federal or state government, or any department thereof, or if the
undersigned fails to notify the holder of any material change in its financial
condition, then in such case all of the obligations of the undersigned shall, at
the option of the holder, become due and payable immediately without demand or
notice.
WARRANTY OF RECEIPT OF VALUE: The undersigned does hereby expressly
represent and warrant to the holder with the intent that the holder rely on such
representation and warranty as a specific inducement to the making of this
instrument, that the undersigned have received full value for this note.
<PAGE>
Promissory Note/R-Tec Technologies, Inc./Scola/Page Two
ASSIGNABILITY: This note shall be assignable only by the holder
provided that such assignment shall not impair or enlarge the obligations of the
undersigned. The undersigned shall not assign obligations under this note to any
third party without the written consent of the holder.
LAW GOVERNING: This Promissory Note shall be governed by the laws of
the State of New Jersey and the undersigned do hereby voluntarily submit
generally to the jurisdiction of the courts of New Jersey should it become
necessary for the holder hereof to enforce any of his rights under the terms
hereof.
DEFAULT: The maker also agrees to pay all costs and expenses incurred
by the holder hereof, including all reasonable attorneys' fees for the
collection of this Note and the indebtedness evidenced hereby, or the
enforcement of the holder's rights hereunder or under any other instruments
creating any collateral security or guaranty now or hereinafter given to secure
this loan.
The maker acknowledges that the $75,000.00 of this Note represents
reimbursement for use of office, office lease, secretaries, postage, fax
machine, printing, copying, and other miscellaneous office services prior to
Incorporation in furtherance of the Corporation.
ACCELERATThe maker further agrees that if the Corporation is
subsequently sold or transferred, all payments due and owing under this Note
will become due at the time of the subsequent sale.
Attested By: R-TEC TECHNOLOGIES, INC.
/s/ By: /s/ L.S.
- ----------------------- --------------------------
NANCY VITOLO, PHILIP LACQUA,
Secretary President
Dated: April 22, 1999 Dated: April 14, 1999
EXHIBIT 7.3
PROMISSORY NOTE
$101,500.00 Warren County, New Jersey
Six Percent (6.0%) April 22, 1999
FOR VALUE RECEIVED, the undersigned and maker of this Note, R-TEC
TECHNOLOGIES, INC. promises to PAY TO THE ORDER OF COLUMBIA TRADING, INC. at the
address of 499 Van Brunt Street, Brooklyn, New York 11231 (the "holder") the sum
of One Hundred One Thousand Five Hundred Dollars ($101,500.00) at Six Percent
(6.0%) per annum payable as follows:
$101,500.00 within thirty (30) days of the completion of the Companys
Initial Public Offering.
ADDRESS OF MAKER: The undersigned represents and warrants that the
undersigned is located at 61 Mallard Drive, Allamuchy, New Jersey, and agrees to
notify the holder of any change of residence within 10 days of such change.
WAIVERS: The undersigned hereby waives (1) presentment, demand,
protest, notice of dishonor and/or protest and notice of nonpayment; (2) the
right, if any, to the benefit of, or to direct the application of, any security
hypothecated to the holder until all indebtedness of the undersigned to the
holder, howsoever arising, shall have been paid; and (3) the right to require
the holder to proceed against or to pursue any remedy against any party other
than the undersigned.
INSOLVENCY: It is agreed that if the undersigned, at any time fail in
business or become insolvent, or commit an act of bankruptcy, or if any deposit
account or other property of the undersigned be attempted to be obtained or held
by writ of execution, garnishment, attachment or other legal process, or if any
assessment for taxes against the undersigned other than taxes on real property,
is made by the federal or state government, or any department thereof, or if the
undersigned fails to notify the holder of any material change in its financial
condition, then in such case all of the obligations of the undersigned shall, at
the option of the holder, become due and payable immediately without demand or
notice.
WARRANTY OF RECEIPT OF VALUE: The undersigned does hereby expressly
represent and warrant to the holder with the intent that the holder rely on such
representation and warranty as a specific inducement to the making of this
instrument, that the undersigned have received full value for this note.
<PAGE>
Promissory Note/R-Tec Technologies, Inc./Columbia Trad./Page Two
ASSIGNABILITY: This note shall be assignable only by the holder
provided that such assignment shall not impair or enlarge the obligations of the
undersigned. The undersigned shall not assign obligations under this note to any
third party without the written consent of the holder.
LAW GOVERNING: This Promissory Note shall be governed by the laws of
the State of New Jersey and the undersigned do hereby voluntarily submit
generally to the jurisdiction of the courts of New Jersey should it become
necessary for the holder hereof to enforce any of his rights under the terms
hereof.
DEFAULT: The maker also agrees to pay all costs and expenses incurred
by the holder hereof, including all reasonable attorneys' fees for the
collection of this Note and the indebtedness evidenced hereby, or the
enforcement of the holder's rights hereunder or under any other instruments
creating any collateral security or guaranty now or hereinafter given to secure
this loan.
The maker acknowledges that the $101,500.00 of this Note represents
reimbursement of consulting fees and monies paid in an effort to bring the
Company R-Tec Technologies, Inc. public.
ACCELERATION: The maker further agrees that if the Corporation is
subsequently sold or transferred, all payments due and owing under this Note
will become due at the time of the subsequent sale.
Attested By: R-TEC TECHNOLOGIES, INC.
/s/ By: /s/ L.S.
- ----------------------- --------------------------
NANCY VITOLO, MARC M. SCOLA
Secretary Vice President and
General Counsel
Dated: April 22, 1999 Dated: April 22, 1999
EXHIBIT 7.4
AGREEMENT
THIS AGREEMENT, made as of the 24th day of October, 1998, by and
between R-TEC TECHNOLOGIES, INC., A New Jersey Corporation with a business
address at 290 Green Road, Sparta, New Jersey 07871, hereinafter the "Company"
and MARC M. SCOLA, having an address at 61 Mallard Drive, Allamuchy, New Jersey
07820 and PHILIP LACQUA, having an address at 1127 83rd Street, Brooklyn, New
York 11228 and NANCY VITOLO, individually having an address at 290 Green Road,
Sparta, New Jersey 07871, hereinafter called "Individuals".
WHEREAS, the Individuals have advanced numerous amounts of money to
finance the Company both after its date of incorporation of October 22, 1998 and
prior to its incorporation for several years. The Company guarantees that all
expenses advanced by the individuals both prior to and after the date of
incorporation will be reimbursed to each individual. The Company will attempt to
reimburse each individual lump sum as soon as it is financially able.
Some of the expenses that will be reimbursed, but not limited to are as
follows:
Attorneys Fees, Accountants Fees, Office Leases, etc.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
Witness:
/s/ MARC M. SCOLA
- --------------------- -----------------------
MARC M. SCOLA,
Individually
Witness:
/s/ PHILIP LACQUA
- --------------------- -----------------------
PHILIP LACQUA,
Individually
Witness:
/s/ NANCY VITOLO
- --------------------- -----------------------
NANCY VITOLO,
Individually
<PAGE>
AGREEMENT - PAGE TWO
Witness: R-TEC TECHNOLOGIES, INC.
By:/s/NANCY VITOLO
- --------------------- -------------------
NANCY VITOLO,
Secretary
Witness: R-TEC TECHNOLOGIES, INC.
By:/s/MARC M. SCOLA
- --------------------- -------------------
MARC M. SCOLA,
Vice President and
General Counsel
Witness: R-TEC TECHNOLOGIES, INC.
By:/s/PHILIP LACQUA
- --------------------- -------------------
PHILIP LACQUA,
President
EXHIBIT 8.0
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is made as of this 4th day of April, 1999,
by and among MARC M. SCOLA, having an address at 61 Mallard Drive, Allamuchy,
New Jersey 07820 hereinafter referred to as the ("Employee") and R-TEC
TECHNOLOGIES, INC., a New Jersey Corporation with a business address at 61
Mallard Drive, Allamuchy, New Jersey 07820 (hereinafter collectively referred to
as "Employer").
RECITALS
WHEREAS, Employee is licensed to practice law in the State of New
Jersey; and
WHEREAS, Employer desires to employ the Employee as Vice President and
General Counsel for the Employer corporation, and Employee desires to be so
employed upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual obligations
and undertakings contained herein, the parties agree as follows:
STATEMENT OF AGREEMENT
SECTION 1. EMPLOYMENT
a. Position. Employer wishes to employ and Employee hereby accepts the
position of Vice President and General Counsel of the Employer corporation for
the term of this Agreement. Since Employee will serve as an officer and director
of Employer, his duties in those capacities shall be as determined from time to
time by Employer's Board of Directors or as set forth in any applicable
corporate documents, including without limitation Employer's Code of Regulations
and Bylaws, as they may be amended from time to time.
b. Employee's Commitment. Employee shall consider his employment by
Employer as his principal employment when employed on a full-time basis as
described herein, shall devote the necessary time and attention to duties and
responsibilities under this Agreement, and shall perform them to the best of his
abilities. While subject to any provision of this Agreement, Employee shall
maintain loyalty to Employer, and shall take no action that would directly or
indirectly promote any competitor to injure Employer's interests. Subject to the
foregoing, Employee may engage in other charitable or business activities to the
extent that they do not interfere with his obligations under this Agreement;
provided that employee first discloses any such activities to Employer, and
Employee's continued participation in those activities shall not be detrimental
to Employer's interests.
<PAGE>
c. Duties. Employee's primary duties and responsibilities as Vice
President and General Counsel shall be to:
(1) Act as General Counsel to each of the Employer corporation by
rendering legal advice on matters Employer;
(2) Review, prepare and negotiate contracts and other legal documents
affecting each of such corporations.
(3) Attend to all litigation and regulatory matters affecting each of
such corporation, including the retention of outside counsel to handle any such
matters, all within the discretion of the Employee;
(4) Take any and all further actions as Employee may deem necessary and
proper in his position as General Counsel and which actions will be for the
benefit of each of such corporation.
SECTION 2. TERMINATION OF EMPLOYMENT
a. Initial Term. Unless terminated earlier in accordance with this
Agreement, the initial term of Employee's employment shall be for a term of five
(5) years commencing on January 1, 1999, and terminating on December 31, 2003,
unless terminated sooner as provided herein.
b. Termination. Notwithstanding any other provision of this Agreement,
Employee's employment shall terminate at any time before the expiration of the
term specified in the preceding subsection, as follows:
(1) The Employee party may terminate Employee's employment for any or
no reason, with or without cause, upon 60 days' written notice to the other
party;
(2) Employee's employment shall terminate without notice upon
Employee's date of death;
(3) This Agreement shall terminate without notice upon the sale of
substantially all of Employer's assets, or the cessation of its existence by
dissolution, merger, consolidation, or otherwise;
(4) This Agreement shall terminate without notice if Employer becomes
subject to voluntary or involuntary bankruptcy, insolvency, receivership,
assignment for the benefit of creditors, or any other type of federal or state
law debtor's proceedings which are not dismissed or removed within 60 days of
their initiation.
c. Termination for "Reasonable Cause". Employee's employment may also
be terminated by Employer at any time without prior notice upon a showing of
"reasonable cause." Should Employee be terminated by Employer for "reasonable
cause", no severance pay will be paid to Employee nor will his health insurance
benefits be continued by Employer at its expense for any period of time as
addressed in Section 4 of this Agreement.
<PAGE>
(1) "Reasonable cause" shall be defined for the purposes of this
Agreement as being:
(a) Any act of omission which reasonably constitutes dishonesty,
disloyalty, fraud, deceit, gross negligence, willful misconduct or recklessness,
including, but not limited to the willful violation of Employer's bylaws or code
of regulations, and which is directly or indirectly detrimental to Employer's
best interests;
(b) The limitation, suspension or revocation of Employee's license to
practice law;
(c) Inattention to, neglect of, or any other failure to competently
perform any assigned duties after receiving notice and a reasonable opportunity
to cure;
(d) Any act that constitutes a felony under the laws of the state of
New Jersey or the United States; or
(e) Breach of any material portion of this Agreement.
d. Death or Disability
(1) The terms of this Agreement shall expire upon the death or
disability of the Employee.
(2) Employee shall be deemed to be disabled if he is unable to perform,
on a full-time basis the regular activities of his employment for a period of:
(a) Six (6) consecutive months or
(b) A total of 26 weeks during any 12 month period; provided that
authorized vacations or other leaves of absence shall not be counted.
(3) The date of disability shall be the date on which the earlier of
the requirements stated in (a) or (b) of this section are satisfied.
(4) Upon disability or death of Employee during the term of this
Agreement, Employer shall continue to provide for 90 days, at its own expense,
the same level of health insurance, and if applicable, life insurance, as was in
effect at the time of the permanent disability or death of Employee.
<PAGE>
e. Termination Without Cause - Exception
(1) Notwithstanding anything herein to the contrary, in the event that
Employee's employment is terminated by Employer upon sixty (60) days written
notice and without cause as defined in Section 2(b)(1), then and in such event,
Employer shall be obligated to pay to Employee the balance of the salary to
which employee would have been entitled had this Agreement run for the full
Initial Term. Employer recognized and acknowledges that reasonableness of this
provision given the fact that Employee terminated his law practice in reliance
upon his Employment Agreement and the provisions contained therein.
f. Termination Upon Sale - Exception
(1) Notwithstanding anything herein to the contrary, in the event that
this Agreement shall terminate upon the sale of substantially all of Employer's
assets, or the cessation of its existence by dissolution, merger, consolidation,
or otherwise, then and in such event, Employer agrees that the balance of the
Initial Term of the Employee's employment under this Agreement shall be made
part of any included in any such sale, dissolution, merger, consolidation or
otherwise, and the purchaser or surviving entity must agree to be responsible
for the balance of the Initial Term of such contract by paying to the Employee
all amounts to which he would have been entitled has this Agreement run for the
complete Initial Term. In the event that the Employer is unable to have any such
purchaser or succeeding or surviving entity agree to such a provision, then the
responsibility for the payment to be made to the Employee for the balance of the
Initial Term is hereby specifically assumed by Employer and all payments due and
owing to Employee in connection with the balance of the Initial Term shall be
made to Employee by Employer prior to the completion of any sale, dissolution,
merger, consolidation or otherwise as may occur.
SECTION 3. COMPENSATION, BENEFITS AND EXPENSES
a. Salary. Subject to Subsection 3b, Employer shall pay employee an
annual base salary based upon full time employment of $330,000.00 plus bonus
retroactive from January 1, 1999, which will commence upon the funding of at
least $5,000,000.00 to the above mentioned Employer corporation. Employee's
Bonus shall be decided by the Board of Directors. Employee shall receive a raise
in base salary in compensation of at least ten (10%) percent annually.
b. Salary - When Paid. The salary to be paid to employee under
subsection a or b herein shall be payable in accordance with employer's payroll
practices in effect from time to time.
c. Benefits. Employee shall be entitled to all the rights, benefits,
and privileges (including vacation, health insurance, pension or other fringe
benefits, and compensation programs as are set forth on Exhibit A attached
hereto).
<PAGE>
d. Withholdings. Employer shall withhold from any amounts payable as
compensation all federal, state, municipal, or other taxes as are required by
any law, regulation, or ruling. Notwithstanding the foregoing provision of this
Section 3, Employee shall be liable for the payment, if any, of any federal,
state or local taxes incurred by him as a result of Employer's provision of
benefits hereunder.
e. Effect of Termination on Salary and Benefits. Employee's salary and
benefits under Subsection 3 shall terminate effective immediately on the date of
any termination of Employee's employment or this Agreement, and from that date
Employee shall be entitled to severance benefits under Section 4 if and only to
the extent they are then payable and subject to the provisions of Section 2(e)
and (f) herein and any other provisions of this Agreement which provide for the
continuation of salary and/or benefits beyond termination.
g. Effect of Termination on Other Provisions. This Agreement shall
continue in effect upon and after the termination of Employee's employment for
any reason necessary to enforce the provisions of this Agreement which apply
subsequent to any such termination, including any provisions relating to
confidentiality, non-competition, release, or indemnification.
h. Professional Development. Employer agrees that employee shall be
permitted to continue to attend professional development training at Employer's
expense up to an aggregate annual amount of no more than two (2) percent of
Employee's annual salary.
SECTION 4. SEVERANCE
a. Severance Payments and Benefits. Subject to Subsection 4b, if
Employee's employment under this Agreement is terminated by employer without a
showing of reasonable cause, as defined under Subsection 2.c(1), employee shall
be entitled to receive the following Severance Payments and Benefits from
Employer:
(1) A continuation of Employee's wages equal to the amount of his
regular salary as of the date of his termination for the balance of the Initial
Term as set forth in Section 2(e) and (f) above, or if such termination occurs
beyond the Initial Term of employment, for a period of eighteen (18) months
following such termination.
(2) Payment of health insurance premiums under COBRA for twelve (12)
months.
(3) Outplacement services selected by the Employer up to the sum of
Five Thousand Dollars ($5,000.00).
<PAGE>
b. Execution of Release. Employer's obligation to pay severance
benefits under Subsection 4.a is expressly conditioned upon Employee's execution
and delivery to Employer a Release and Agreement, as drafted at the time of
Employee's termination of employment, including, but not limited to:
(1) An unconditional release of all rights to any claims, charges,
complaints, grievances, known or unknown to Employee, against employer, its
affiliates or assigns, through the date of Employee's termination from
employment;
(2) A representation and warranty that Employee has not filed or
assigned any claims, charges, complaints, or grievance against Employer, its
affiliates, or assigns;
(3) An Agreement not to use, disclose or make copies of any
confidential information of Employer, as well as to return any such confidential
information and property to Employer upon execution of release;
(4) An Agreement to maintain the confidentiality of the release; and
(5) An Agreement to indemnify Employer, or its affiliates or assigns,
in the event that Employee breaches any portion of the Agreement or Release.
c. No Admission. Employee acknowledges such an Agreement and Release
shall not be construed as an admission by Employer or any other release of
wrongdoing whatsoever against Employee, and all of the releases specifically
deny any such wrongdoing.
d. Payments Upon employee's Death or Disability. If severance benefits
are payable because of Employee's death or disability, they shall be deemed to
be made as compensation for Employee's past services to Employer.
e. Termination of Employer's Severance Obligation. Employer's
obligation to provide Employee with severance pay shall cease upon the earlier
of the expiration of the Severance Pay Period or when Employee obtains a
position comparable to that which he held with Employer. Similarly, Employer's
obligation to provide Employee with the health insurance continuation premium
shall cease upon the earlier of the expiration of the Severance Pay Period or
when Employee is eligible to participate in a comparable health insurance plan.
<PAGE>
SECTION 5. CONFIDENTIALITY
a. Confidential Information. "Confidential Information" mans
information in whatever form, including information that is written,
electronically stored, orally transmitted, or memorized, that is of commercial
value to Employer and that was created, discovered, developed, or otherwise
becomes known to Employee, or in which property rights are held, assigned to, or
otherwise acquired by or conveyed to Employer, including any Employee
Invention(as subsequently defined) or idea, knowledge, know how, process,
system, method, technique, research and development, technology, software,
technical information, trade secret, trademark, copyrighted material, reports,
records, documentation, data, customer or supplier list, tax or financial
information, business or marketing plan, strategy, or forecast. Confidential
Information does not include information that is or becomes generally known
within Employer's industry through no act or omission by Employee; provided,
however, that the compilation, manipulation, or other exploitation of generally
known information may constitute Confidential Information.
b. Employee Invention. "Employee Invention" means any idea, invention,
software, technique, modification, process, improvement, or similar item,
whether or not reduced to writing or stored electronically or otherwise, and
whether or not protectible by patent, trademark, copyright, or other
intellectual property law, that is created, conceived, or developed by Employee
or under his direction, whether solely or with others, during or after his
employment by Employer, that relates in any way to, or is useful in any manner
in, the business now or then conducted or proposed to be conducted by Employer
or which is based upon or otherwise derives from or makes use of the
Confidential Information.
c. Ownership; Disclosure. Any Confidential Information, whether nor not
developed by employee, shall at all times be Employer's exclusive property.
Employee shall promptly disclose any employee Invention to Employer in writing.
d. Restrictions. During the term of this Agreement, and for as long
after its termination as any confidential Information is subject to protection
under applicable law, Employee shall not, without Employer's prior written
consent specifically referring to this covenant.
(1) Use any Confidential Information for the benefit of himself or any
other party other than Employer or disclose it to any other person or entity;
(2) Remove any Confidential Information or other documentation, device,
plan, or other record or evidence pertaining to Employer's business form
Employer's premises, except when specifically authorized to do so in pursuit of
Employer's business; or
(3) Retain copies of other records of any such items.
<PAGE>
e. Purpose. The parties acknowledge and agree that the confidential
Information is a valuable business asset, and that this Section is necessary to
protect employer's legitimate business interests.
SECTION 6. ADDITIONAL REPRESENTATIONS AND WARRANTIES
In addition to his other representations and warranties set forth in
this Agreement, Employee further represents and warrants as follows:
a. Employee's performance of this Agreement shall not breach any
agreement to which he is or was a party that requires him to hold any
information in confidence or in trust;
b. Employee has not and shall not breach any such Agreement;
c. Employee shall not bring to Employer or use in connection with his
employment any confidential or proprietary information belonging to another
entity without first delivering a written release of that information to
Employer.
SECTION 7. REMEDIES
a. Irreparable Harm. The parties acknowledge and agree that irreparable
harm would result in the event of a breach or threat of a breach by Employee of
Section 5 or the making of any untrue representation or warranty by Employee in
this Agreement. Therefore, in such an event, and notwithstanding any other
provision of this Agreement.
(1) Employer shall be entitled to a restraining order, order of
specific performance, or other injunctive relief, without showing actual damage
and without bond or other security; and
(2) Employer's obligation to make any payment or provide any benefit
under this Agreement, including without limitation any severance benefits, shall
immediately cease.
b. Remedies Not Exclusive. Employer's remedies under this Section are
not exclusive, and shall not prejudice or prohibit any other rights or remedies
under this Agreement or otherwise. To the extent required to be enforceable by
applicable law, the cessation of Employer's obligation to make payments or
continue benefits under this Section shall be deemed to be in the nature of
liquidated damages and not a penalty.
c. Cessation of Payments. In the event Employer obtains relief as
provided in this Section, or in the event of Employee's breach of Section 5 or
the making of any untrue representation or warranty by Employee in this
Agreement, Employer's obligation to make any payment or provide any benefit
under this Agreement, including any severance benefits, shall immediately cease.
<PAGE>
SECTION 8. INDEMNIFICATION
a. Either Party. Each party shall indemnify and hold the other harmless
from and against any and all liability and expense of any kind, including legal
costs and reasonable attorney's fees, arising from the indemnifying party's
fraud, deceit, gross negligence, or willful misconduct with respect to the
performance of this Agreement, or breach of any provisions of this Agreement.
SECTION 9. RETURN OF COMPANY PROPERTY
a. Immediately upon termination of his employment or upon Employer's
earlier request, Employee shall return to Employer all Confidential Information
and other items described in Section 5 and all originals and copies of any other
property or information owned by Employer or relating to its business, that
Employee has in his possession or under his control, including all credit cards,
papers, books, equipment, files and samples.
SECTION 10. LEGAL COUNSEL
a. Understanding, Voluntary Agreement. Employee and Employer represent
and warrant that each party has been afforded a reasonable opportunity to review
this Agreement, to understand its terms, and to discuss it with any attorney of
their choice, and that each party knowingly and voluntarily enters this
Agreement.
b. Waiver of Separate Representation. To the extent Employer has not
engaged separate legal counsel to represent it in connection with this
agreement, the parties acknowledge and agree that their respective interests in
this Agreement are in conflict, that they have the right to retain independent
counsel, that they have been fully informed about this right and the conflicts
of interest that arise from retaining the same legal counsel to represent both
of them, and that this Section constitutes written disclosure of these
conflicts. The parties further affirm that they are waiving separate
representation freely, voluntarily, and with full knowledge of the effects of
this waiver. No party shall at any time claim that this Agreement is void or
unenforceable in any respect because of the lack of use of independent counsel,
or that the legal counsel who prepared this Agreement acted improperly in doing
so.
SECTION 11. CONFIDENTIAL AGREEMENT
This Agreement is confidential. Employee shall keep its provisions
confidential and shall not disclose them to anyone, including any past, present,
or prospective employee of Employer; provided, that this Section shall not
prohibit Employee from discussing this Agreement in confidential communications
with his family members, attorneys, accountants, or other professional advisors,
provided that the provisions of Section 5 shall at all times apply to
communications with any such persons.
<PAGE>
SECTION 12. MISCELLANEOUS PROVISIONS
a. Notes. Unless otherwise agreed in writing by a party entitled to
notice, all notices required by this Agreement shall be in writing and shall be
deemed given when physically delivered to and acknowledged by receipt by a party
or its duly authorized attorney or legal representative, or when deposited
postage paid, registered or certified mail, addressed to the party at its
principal business or residence as set forth above.
b. Waivers. No assent, express or implied, by any party to any breach
or default under this Agreement shall constitute a waiver of or assent to any
breach or default of any other provision of this Agreement or any breach or
default of the same provision of any other occasion.
c. Entire Agreement, Modification. This Agreement constitutes the
entire agreement of the parties concerning its subject matter and supersedes all
other oral or written understandings, discussions, and agreement, and may be
modified only in writing signed by both parties.
d. Binding Effect; No Third Party Beneficiaries. This Agreement shall
bind and benefit the parties and their respective heirs, devisees,
beneficiaries, grantees, donees, legal representatives, successors, and assigns.
Nothing in this Agreement shall be construed to confer any rights or benefits on
third party beneficiaries.
e. Assignment. Neither Party may assign its interest in this Agreement
without the other's prior written consent; provided that Employer may assign its
interest to another entity which it controls, is controlled by, or is under
common control with.
f. Captions. Titles or captions contained in this Agreement are for
convenience and are not intended to affect the substantive meaning of any
provision.
g. Severability. If any provision of this Agreement shall be declared
invalid or illegal for any reason whatsoever, then notwithstanding such
invalidity or illegality, the remaining terms and provisions of this Agreement
shall remain in full force and effect in the same manner as if the invalid or
illegal provision shad not been contained herein.
h. Counterparts. This Agreement may be executed in one or more
counterpart, each of which shall be deemed and original, but all of which
together shall constitute one and same instrument.
j. Effect of Termination. This Agreement shall continue in effect upon
and after the termination of Employee's employment for any reason to the extent
necessary for the enforcement of any of its provision that apply subsequent any
such termination.
<PAGE>
j. Governing Law. This Agreement shall be governed by and construed
under the laws of the United States and the State of New Jersey.
k. The parties acknowledge that they have read and fully understand the
contents of this Agreement and execute it after having an opportunity to consult
with legal counsel.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as specified above.
WITNESS: EMPLOYEE:
/s/ /s/
- ----------------------- --------------------------
MARC M. SCOLA
ATTEST: EMPLOYER:
R-TEC TECHNOLOGIES, INC.
/s/ /s/
- ----------------------- --------------------------
PHILIP LACQUA, President
<PAGE>
EXHIBIT A
BENEFITS
A. Health Insurance.
B. Life Insurance - $500,000.00 policy.
C. Disability Insurance.
D. Vacation - Not less than five (5) weeks per year.
E. Pension Plan.
F. 401(K) Retirement Plan or Comparable Plan.
G. Expense Allowance.
H. Company Car - All insurance and related expenses of the automobile
will be a cost payable by Employer.
I. Continuation of Legal Malpractice/Liability Insurance Policy of at
least $1,000,000.00.
All of the above referenced benefits shall be provided by Employer to
Employee at no cost to Employee.
EXHIBIT 8.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is made as of this 4th day of April, 1999,
by and among NANCY C. VITOLO, having an address at 290 Green Road, Sparta, New
Jersey 07871 hereinafter referred to as the ("Employee") and R-TEC TECHNOLOGIES,
INC., a New Jersey Corporation with a business address at 61 Mallard Drive,
Allamuchy, New Jersey 07820 (hereinafter collectively referred to as
"Employer").
RECITALS
WHEREAS, Employer desires to employ the Employee as an Officer of the
Employer corporation, and Employee desires to be so employed upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual obligations
and undertakings contained herein, the parties agree as follows:
STATEMENT OF AGREEMENT
SECTION 1. EMPLOYMENT
a. Position. Employer wishes to employ and Employee hereby accepts the
position of Officer of the Employer corporation for the term of this Agreement.
Since Employee will serve as an officer and director of Employer, his duties in
those capacities shall be as determined from time to time by Employer's Board of
Directors or as set forth in any applicable corporate documents, including
without limitation Employer's Code of Regulations and Bylaws, as they may be
amended from time to time.
b. Employee's Commitment. Employee shall consider his employment by
Employer as his principal employment when employed on a full-time basis as
described herein, shall devote the necessary time and attention to duties and
responsibilities under this Agreement, and shall perform them to the best of his
abilities. While subject to any provision of this Agreement, Employee shall
maintain loyalty to Employer, and shall take no action that would directly or
indirectly promote any competitor to injure Employer's interests. Subject to the
foregoing, Employee may engage in other charitable or business activities to the
extent that they do not interfere with his obligations under this Agreement;
provided that employee first discloses any such activities to Employer, and
Employee's continued participation in those activities shall not be detrimental
to Employer's interests.
<PAGE>
c. Duties. Employee's primary duties and responsibilities as Officer
shall be to:
(1) Act as to the Director of Customer Service for the corporation by
rendering advice on matters affecting Sales and Marketing;
(2) Review and negotiate customer service and other such documents
affecting Employer.
(3) Take any and all further actions as Employee may deem necessary and
proper in his position as an Officer and which actions will be for the benefit
of the corporation.
SECTION 2. TERMINATION OF EMPLOYMENT
a. Initial Term. Unless terminated earlier in accordance with this
Agreement, the initial term of Employee's employment shall be for a term of five
(5) years commencing on January 1, 1999, and terminating on December 31, 2003,
unless terminated sooner as provided herein.
b. Termination. Notwithstanding any other provision of this Agreement,
Employee's employment shall terminate at any time before the expiration of the
term specified in the preceding subsection, as follows:
(1) The Employee may terminate Employee's employment for any or no
reason, with or without cause, upon 60 days' written notice to the other party;
(2) Employee's employment shall terminate without notice upon
Employee's date of death;
(3) This Agreement shall terminate without notice upon the sale of
substantially all of Employer's assets, or the cessation of its existence by
dissolution, merger, consolidation, or otherwise;
(4) This Agreement shall terminate without notice if Employer becomes
subject to voluntary or involuntary bankruptcy, insolvency, receivership,
assignment for the benefit of creditors, or any other type of federal or state
law debtor's proceedings which are not dismissed or removed within 60 days of
their initiation.
c. Termination for "Reasonable Cause". Employee's employment may also
be terminated by Employer at any time without prior notice upon a showing of
"reasonable cause." Should Employee be terminated by Employer for "reasonable
cause", no severance pay will be paid to Employee nor will his health insurance
benefits be continued by Employer at its expense for any period of time as
addressed in Section 4 of this Agreement.
(1) "Reasonable cause" shall be defined for the purposes of this
Agreement as being:
(a) Any act of omission which reasonably constitutes dishonesty,
disloyalty, fraud, deceit, gross negligence, willful misconduct or recklessness,
including, but not limited to the willful violation of Employer's bylaws or code
of regulations, and which is directly or indirectly detrimental to Employer's
best interests;
<PAGE>
(b) Inattention to, neglect of, or any other failure to competently
perform any assigned duties after receiving notice and a reasonable opportunity
to cure;
(c) Any act that constitutes a felony under the laws of the state of
New Jersey or the United States; or
(d) Breach of any material portion of this Agreement.
d. Death or Disability
(1) The terms of this Agreement shall expire upon the death or
disability of the Employee.
(2) Employee shall be deemed to be disabled if he is unable to perform,
on a full-time basis the regular activities of his employment for a period of:
(a) Six (6) consecutive months or
(b) A total of 26 weeks during any 12 month period; provided that
authorized vacations or other leaves of absence shall not be counted.
(3) The date of disability shall be the date on which the earlier of
the requirements stated in (a) or (b) of this section are satisfied.
(4) Upon disability or death of Employee during the term of this
Agreement, Employer shall continue to provide for 90 days, at its own expense,
the same level of health insurance, and if applicable, life insurance, as was in
effect at the time of the permanent disability or death of Employee.
e. Termination Without Cause - Exception
(1) Notwithstanding anything herein to the contrary, in the event that
Employee's employment is terminated by Employer upon sixty (60) days written
notice and without cause as defined in Section 2(b)(1), then and in such event,
Employer shall be obligated to pay to Employee the balance of the salary to
which employee would have been entitled had this Agreement run for the full
Initial Term. Employer recognized and acknowledges that reasonableness of this
provision given the fact that Employee terminated his law practice in reliance
upon his Employment Agreement and the provisions contained therein.
<PAGE>
f. Termination Upon Sale - Exception
(1) Notwithstanding anything herein to the contrary, in the event that
this Agreement shall terminate upon the sale of substantially all of Employer's
assets, or the cessation of its existence by dissolution, merger, consolidation,
or otherwise, then and in such event, Employer agrees that the balance of the
Initial Term of the Employee's employment under this Agreement shall be made
part of any included in any such sale, dissolution, merger, consolidation or
otherwise, and the purchaser or surviving entity must agree to be responsible
for the balance of the Initial Term of such contract by paying to the Employee
all amounts to which he would have been entitled has this Agreement run for the
complete Initial Term. In the event that the Employer is unable to have any such
purchaser or succeeding or surviving entity agree to such a provision, then the
responsibility for the payment to be made to the Employee for the balance of the
Initial Term is hereby specifically assumed by Employer and all payments due and
owing to Employee in connection with the balance of the Initial Term shall be
made to Employee by Employer prior to the completion of any sale, dissolution,
merger, consolidation or otherwise as may occur.
SECTION 3. COMPENSATION, BENEFITS AND EXPENSES
a. Salary. Subject to Subsection 3b, Employer shall pay employee an
annual base salary based upon full time employment of $330,000.00 plus bonus
retroactive from January 1, 1999, which will commence upon the funding of at
least $5,000,000.00 to the above mentioned Employer corporation. Employee's
Bonus shall be decided by the Board of Directors. Employee shall receive a raise
in base salary in compensation of at least ten (10%) percent annually.
b. Salary - When Paid. The salary to be paid to employee under
subsection a or b herein shall be payable in accordance with employer's payroll
practices in effect from time to time.
c. Benefits. Employee shall be entitled to all the rights, benefits,
and privileges (including vacation, health insurance, pension or other fringe
benefits, and compensation programs as are set forth on Exhibit A attached
hereto).
d. Withholdings. Employer shall withhold from any amounts payable as
compensation all federal, state, municipal, or other taxes as are required by
any law, regulation, or ruling. Notwithstanding the foregoing provision of this
Section 3, Employee shall be liable for the payment, if any, of any federal,
state or local taxes incurred by him as a result of Employer's provision of
benefits hereunder.
e. Effect of Termination on Salary and Benefits. Employee's salary and
benefits under Subsection 3 shall terminate effective immediately on the date of
any termination of Employee's employment or this Agreement, and from that date
Employee shall be entitled to severance benefits under Section 4 if and only to
the extent they are then payable and subject to the provisions of Section 2(e)
and (f) herein and any other provisions of this Agreement which provide for the
continuation of salary and/or benefits beyond termination.
<PAGE>
g. Effect of Termination on Other Provisions. This Agreement shall
continue in effect upon and after the termination of Employee's employment for
any reason necessary to enforce the provisions of this Agreement which apply
subsequent to any such termination, including any provisions relating to
confidentiality, non-competition, release, or indemnification.
SECTION 4. SEVERANCE
a. Severance Payments and Benefits. Subject to Subsection 4b, if
Employee's employment under this Agreement is terminated by employer without a
showing of reasonable cause, as defined under Subsection 2.c(1), employee shall
be entitled to receive the following Severance Payments and Benefits from
Employer:
(1) A continuation of Employee's wages equal to the amount of his
regular salary as of the date of his termination for the balance of the Initial
Term as set forth in Section 2(e) and (f) above, or if such termination occurs
beyond the Initial Term of employment, for a period of eighteen (18) months
following such termination.
(2) Payment of health insurance premiums under COBRA for twelve (12)
months.
(3) Outplacement services selected by the Employer up to the sum of
Five Thousand Dollars ($5,000.00).
b. Execution of Release. Employer's obligation to pay severance
benefits under Subsection 4.a is expressly conditioned upon Employee's execution
and delivery to Employer a Release and Agreement, as drafted at the time of
Employee's termination of employment, including, but not limited to:
(1) An unconditional release of all rights to any claims, charges,
complaints, grievances, known or unknown to Employee, against employer, its
affiliates or assigns, through the date of Employee's termination from
employment;
(2) A representation and warranty that Employee has not filed or
assigned any claims, charges, complaints, or grievance against Employer, its
affiliates, or assigns;
(3) An Agreement not to use, disclose or make copies of any
confidential information of Employer, as well as to return any such confidential
information and property to Employer upon execution of release;
<PAGE>
(4) An Agreement to maintain the confidentiality of the release; and
(5) An Agreement to indemnify Employer, or its affiliates or assigns,
in the event that Employee breaches any portion of the Agreement or Release.
c. No Admission. Employee acknowledges such an Agreement and Release
shall not be construed as an admission by Employer or any other release of
wrongdoing whatsoever against Employee, and all of the releases specifically
deny any such wrongdoing.
d. Payments Upon employee's Death or Disability. If severance benefits
are payable because of Employee's death or disability, they shall be deemed to
be made as compensation for Employee's past services to Employer.
e. Termination of Employer's Severance Obligation. Employer's
obligation to provide Employee with severance pay shall cease upon the earlier
of the expiration of the Severance Pay Period or when Employee obtains a
position comparable to that which he held with Employer. Similarly, Employer's
obligation to provide Employee with the health insurance continuation premium
shall cease upon the earlier of the expiration of the Severance Pay Period or
when Employee is eligible to participate in a comparable health insurance plan.
SECTION 5. CONFIDENTIALITY
a. Confidential Information. "Confidential Information" mans
information in whatever form, including information that is written,
electronically stored, orally transmitted, or memorized, that is of commercial
value to Employer and that was created, discovered, developed, or otherwise
becomes known to Employee, or in which property rights are held, assigned to, or
otherwise acquired by or conveyed to Employer, including any Employee
Invention(as subsequently defined) or idea, knowledge, know how, process,
system, method, technique, research and development, technology, software,
technical information, trade secret, trademark, copyrighted material, reports,
records, documentation, data, customer or supplier list, tax or financial
information, business or marketing plan, strategy, or forecast. Confidential
Information does not include information that is or becomes generally known
within Employer's industry through no act or omission by Employee; provided,
however, that the compilation, manipulation, or other exploitation of generally
known information may constitute Confidential Information.
b. Employee Invention. "Employee Invention" means any idea, invention,
software, technique, modification, process, improvement, or similar item,
whether or not reduced to writing or stored electronically or otherwise, and
whether or not protectible by patent, trademark, copyright, or other
intellectual property law, that is created, conceived, or developed by Employee
or under his direction, whether solely or with others, during or after his
employment by Employer, that relates in any way to, or is useful in any manner
in, the business now or then conducted or proposed to be conducted by Employer
or which is based upon or otherwise derives from or makes use of the
Confidential Information.
<PAGE>
c. Ownership; Disclosure. Any Confidential Information, whether nor not
developed by employee, shall at all times be Employer's exclusive property.
Employee shall promptly disclose any employee Invention to Employer in writing.
d. Restrictions. During the term of this Agreement, and for as long
after its termination as any confidential Information is subject to protection
under applicable law, Employee shall not, without Employer's prior written
consent specifically referring to this covenant.
(1) Use any Confidential Information for the benefit of himself or any
other party other than Employer or disclose it to any other person or entity;
(2) Remove any Confidential Information or other documentation, device,
plan, or other record or evidence pertaining to Employer's business form
Employer's premises, except when specifically authorized to do so in pursuit of
Employer's business; or
(3) Retain copies of other records of any such items.
e. Purpose. The parties acknowledge and agree that the confidential
Information is a valuable business asset, and that this Section is necessary to
protect employer's legitimate business interests.
SECTION 6. ADDITIONAL REPRESENTATIONS AND WARRANTIES
In addition to his other representations and warranties set forth in
this Agreement, Employee further represents and warrants as follows:
a. Employee's performance of this Agreement shall not breach any
agreement to which he is or was a party that requires him to hold any
information in confidence or in trust;
b. Employee has not and shall not breach any such Agreement;
c. Employee shall not bring to Employer or use in connection with his
employment any confidential or proprietary information belonging to another
entity without first delivering a written release of that information to
Employer.
<PAGE>
SECTION 7. REMEDIES
a. Irreparable Harm. The parties acknowledge and agree that irreparable
harm would result in the event of a breach or threat of a breach by Employee of
Section 5 or the making of any untrue representation or warranty by Employee in
this Agreement. Therefore, in such an event, and notwithstanding any other
provision of this Agreement.
(1) Employer shall be entitled to a restraining order, order of
specific performance, or other injunctive relief, without showing actual damage
and without bond or other security; and
(2) Employer's obligation to make any payment or provide any benefit
under this Agreement, including without limitation any severance benefits, shall
immediately cease.
b. Remedies Not Exclusive. Employer's remedies under this Section are
not exclusive, and shall not prejudice or prohibit any other rights or remedies
under this Agreement or otherwise. To the extent required to be enforceable by
applicable law, the cessation of Employer's obligation to make payments or
continue benefits under this Section shall be deemed to be in the nature of
liquidated damages and not a penalty.
c. Cessation of Payments. In the event Employer obtains relief as
provided in this Section, or in the event of Employee's breach of Section 5 or
the making of any untrue representation or warranty by Employee in this
Agreement, Employer's obligation to make any payment or provide any benefit
under this Agreement, including any severance benefits, shall immediately cease.
SECTION 8. INDEMNIFICATION
a. Either Party. Each party shall indemnify and hold the other harmless
from and against any and all liability and expense of any kind, including legal
costs and reasonable attorney's fees, arising from the indemnifying party's
fraud, deceit, gross negligence, or willful misconduct with respect to the
performance of this Agreement, or breach of any provisions of this Agreement.
SECTION 9. RETURN OF COMPANY PROPERTY
a. Immediately upon termination of his employment or upon Employer's
earlier request, Employee shall return to Employer all Confidential Information
and other items described in Section 5 and all originals and copies of any other
property or information owned by Employer or relating to its business, that
Employee has in his possession or under his control, including all credit cards,
papers, books, equipment, files and samples.
<PAGE>
SECTION 10. LEGAL COUNSEL
a. Understanding, Voluntary Agreement. Employee and Employer represent
and warrant that each party has been afforded a reasonable opportunity to review
this Agreement, to understand its terms, and to discuss it with any attorney of
their choice, and that each party knowingly and voluntarily enters this
Agreement.
b. Waiver of Separate Representation. To the extent Employer has not
engaged separate legal counsel to represent it in connection with this
agreement, the parties acknowledge and agree that their respective interests in
this Agreement are in conflict, that they have the right to retain independent
counsel, that they have been fully informed about this right and the conflicts
of interest that arise from retaining the same legal counsel to represent both
of them, and that this Section constitutes written disclosure of these
conflicts. The parties further affirm that they are waiving separate
representation freely, voluntarily, and with full knowledge of the effects of
this waiver. No party shall at any time claim that this Agreement is void or
unenforceable in any respect because of the lack of use of independent counsel,
or that the legal counsel who prepared this Agreement acted improperly in doing
so.
SECTION 11. CONFIDENTIAL AGREEMENT
This Agreement is confidential. Employee shall keep its provisions
confidential and shall not disclose them to anyone, including any past, present,
or prospective employee of Employer; provided, that this Section shall not
prohibit Employee from discussing this Agreement in confidential communications
with his family members, attorneys, accountants, or other professional advisors,
provided that the provisions of Section 5 shall at all times apply to
communications with any such persons.
SECTION 12. MISCELLANEOUS PROVISIONS
a. Notes. Unless otherwise agreed in writing by a party entitled to
notice, all notices required by this Agreement shall be in writing and shall be
deemed given when physically delivered to and acknowledged by receipt by a party
or its duly authorized attorney or legal representative, or when deposited
postage paid, registered or certified mail, addressed to the party at its
principal business or residence as set forth above.
b. Waivers. No assent, express or implied, by any party to any breach
or default under this Agreement shall constitute a waiver of or assent to any
breach or default of any other provision of this Agreement or any breach or
default of the same provision of any other occasion.
<PAGE>
c. Entire Agreement, Modification. This Agreement constitutes the
entire agreement of the parties concerning its subject matter and supersedes all
other oral or written understandings, discussions, and agreement, and may be
modified only in writing signed by both parties.
d. Binding Effect; No Third Party Beneficiaries. This Agreement shall
bind and benefit the parties and their respective heirs, devisees,
beneficiaries, grantees, donees, legal representatives, successors, and assigns.
Nothing in this Agreement shall be construed to confer any rights or benefits on
third party beneficiaries.
e. Assignment. Neither Party may assign its interest in this Agreement
without the other's prior written consent; provided that Employer may assign its
interest to another entity which it controls, is controlled by, or is under
common control with.
f. Captions. Titles or captions contained in this Agreement are for
convenience and are not intended to affect the substantive meaning of any
provision.
g. Severability. If any provision of this Agreement shall be declared
invalid or illegal for any reason whatsoever, then notwithstanding such
invalidity or illegality, the remaining terms and provisions of this Agreement
shall remain in full force and effect in the same manner as if the invalid or
illegal provision shad not been contained herein.
h. Counterparts. This Agreement may be executed in one or more
counterpart, each of which shall be deemed and original, but all of which
together shall constitute one and same instrument.
j. Effect of Termination. This Agreement shall continue in effect upon
and after the termination of Employee's employment for any reason to the extent
necessary for the enforcement of any of its provision that apply subsequent any
such termination.
j. Governing Law. This Agreement shall be governed by and construed
under the laws of the United States and the State of New Jersey.
k. The parties acknowledge that they have read and fully understand the
contents of this Agreement and execute it after having an opportunity to consult
with legal counsel.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as specified above.
WITNESS: EMPLOYEE:
/s/ /s/
- ----------------------- --------------------------
NANCY C. VITOLO
ATTEST: EMPLOYER:
R-TEC TECHNOLOGIES, INC.
/s/ /s/
- ----------------------- --------------------------
PHILIP LACQUA, President
<PAGE>
EXHIBIT A
BENEFITS
A. Health Insurance.
B. Life Insurance.
C. Disability Insurance.
D. Vacation - Not less than five (5) weeks per year.
E. Pension Plan.
F. 401(K) Retirement Plan or Comparable Plan.
G. Expense Allowance.
H. Company Car - All insurance and related expenses of the automobile
will be a cost payable by Employer.
All of the above referenced benefits shall be provided by Employer to
Employee at no cost to Employee.
EXHIBIT 8.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is made as of this 4th day of April, 1999,
by and among PHILIP LACQUA, having an address at 1127 83rd Street, Brooklyn, New
York 11228 hereinafter referred to as the ("Employee") and R-TEC TECHNOLOGIES,
INC., a New Jersey Corporation with a business address at 61 Mallard Drive,
Allamuchy, New Jersey 07820 (hereinafter collectively referred to as
"Employer").
RECITALS
WHEREAS, Employer desires to employ the Employee as an Officer of the
Employer corporation, and Employee desires to be so employed upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual obligations
and undertakings contained herein, the parties agree as follows:
STATEMENT OF AGREEMENT
SECTION 1. EMPLOYMENT
a. Position. Employer wishes to employ and Employee hereby accepts the
position of Officer of the Employer corporation for the term of this Agreement.
Since Employee will serve as an officer and director of Employer, his duties in
those capacities shall be as determined from time to time by Employer's Board of
Directors or as set forth in any applicable corporate documents, including
without limitation Employer's Code of Regulations and Bylaws, as they may be
amended from time to time.
b. Employee's Commitment. Employee shall consider his employment by
Employer as his principal employment when employed on a full-time basis as
described herein, shall devote the necessary time and attention to duties and
responsibilities under this Agreement, and shall perform them to the best of his
abilities. While subject to any provision of this Agreement, Employee shall
maintain loyalty to Employer, and shall take no action that would directly or
indirectly promote any competitor to injure Employer's interests. Subject to the
foregoing, Employee may engage in other charitable or business activities to the
extent that they do not interfere with his obligations under this Agreement;
provided that employee first discloses any such activities to Employer, and
Employee's continued participation in those activities shall not be detrimental
to Employer's interests.
<PAGE>
c. Duties. Employee's primary duties and responsibilities as Officer
shall be to:
(1) Act as Sales Director to the Employer corporation by rendering
advice on matters affecting Sales and Marketing;
(2) Review, prepare and negotiate sales agreements and manufacturing
documents affecting Employer.
(3) Take any and all further actions as Employee may deem necessary and
proper in his position as an Officer and which actions will be for the benefit
of the corporation.
SECTION 2. TERMINATION OF EMPLOYMENT
a. Initial Term. Unless terminated earlier in accordance with this
Agreement, the initial term of Employee's employment shall be for a term of five
(5) years commencing on January 1, 1999, and terminating on December 31, 2003,
unless terminated sooner as provided herein.
b. Termination. Notwithstanding any other provision of this Agreement,
Employee's employment shall terminate at any time before the expiration of the
term specified in the preceding subsection, as follows:
(1) The Employee may terminate Employee's employment for any or no
reason, with or without cause, upon 60 days' written notice to the other party;
(2) Employee's employment shall terminate without notice upon
Employee's date of death;
(3) This Agreement shall terminate without notice upon the sale of
substantially all of Employer's assets, or the cessation of its existence by
dissolution, merger, consolidation, or otherwise;
(4) This Agreement shall terminate without notice if Employer becomes
subject to voluntary or involuntary bankruptcy, insolvency, receivership,
assignment for the benefit of creditors, or any other type of federal or state
law debtor's proceedings which are not dismissed or removed within 60 days of
their initiation.
c. Termination for "Reasonable Cause". Employee's employment may also
be terminated by Employer at any time without prior notice upon a showing of
"reasonable cause." Should Employee be terminated by Employer for "reasonable
cause", no severance pay will be paid to Employee nor will his health insurance
benefits be continued by Employer at its expense for any period of time as
addressed in Section 4 of this Agreement.
(1) "Reasonable cause" shall be defined for the purposes of this
Agreement as being:
(a) Any act of omission which reasonably constitutes dishonesty,
disloyalty, fraud, deceit, gross negligence, willful misconduct or recklessness,
including, but not limited to the willful violation of Employer's bylaws or code
of regulations, and which is directly or indirectly detrimental to Employer's
best interests;
<PAGE>
(b) Inattention to, neglect of, or any other failure to competently
perform any assigned duties after receiving notice and a reasonable opportunity
to cure;
(c) Any act that constitutes a felony under the laws of the state of
New Jersey or the United States; or
(d) Breach of any material portion of this Agreement.
d. Death or Disability
(1) The terms of this Agreement shall expire upon the death or
disability of the Employee.
(2) Employee shall be deemed to be disabled if he is unable to perform,
on a full-time basis the regular activities of his employment for a period of:
(a) Six (6) consecutive months or
(b) A total of 26 weeks during any 12 month period; provided that
authorized vacations or other leaves of absence shall not be counted.
(3) The date of disability shall be the date on which the earlier of
the requirements stated in (a) or (b) of this section are satisfied.
(4) Upon disability or death of Employee during the term of this
Agreement, Employer shall continue to provide for 90 days, at its own expense,
the same level of health insurance, and if applicable, life insurance, as was in
effect at the time of the permanent disability or death of Employee.
e. Termination Without Cause - Exception
(1) Notwithstanding anything herein to the contrary, in the event that
Employee's employment is terminated by Employer upon sixty (60) days written
notice and without cause as defined in Section 2(b)(1), then and in such event,
Employer shall be obligated to pay to Employee the balance of the salary to
which employee would have been entitled had this Agreement run for the full
Initial Term. Employer recognized and acknowledges that reasonableness of this
provision given the fact that Employee terminated his law practice in reliance
upon his Employment Agreement and the provisions contained therein.
<PAGE>
f. Termination Upon Sale - Exception
(1) Notwithstanding anything herein to the contrary, in the event that
this Agreement shall terminate upon the sale of substantially all of Employer's
assets, or the cessation of its existence by dissolution, merger, consolidation,
or otherwise, then and in such event, Employer agrees that the balance of the
Initial Term of the Employee's employment under this Agreement shall be made
part of any included in any such sale, dissolution, merger, consolidation or
otherwise, and the purchaser or surviving entity must agree to be responsible
for the balance of the Initial Term of such contract by paying to the Employee
all amounts to which he would have been entitled has this Agreement run for the
complete Initial Term. In the event that the Employer is unable to have any such
purchaser or succeeding or surviving entity agree to such a provision, then the
responsibility for the payment to be made to the Employee for the balance of the
Initial Term is hereby specifically assumed by Employer and all payments due and
owing to Employee in connection with the balance of the Initial Term shall be
made to Employee by Employer prior to the completion of any sale, dissolution,
merger, consolidation or otherwise as may occur.
SECTION 3. COMPENSATION, BENEFITS AND EXPENSES
a. Salary. Subject to Subsection 3b, Employer shall pay employee an
annual base salary based upon full time employment of $330,000.00 plus bonus
retroactive from January 1, 1999, which will commence upon the funding of at
least $5,000,000.00 to the above mentioned Employer corporation. Employee's
Bonus shall be decided by the Board of Directors. Employee shall receive a raise
in base salary in compensation of at least ten (10%) percent annually.
b. Salary - When Paid. The salary to be paid to employee under
subsection a or b herein shall be payable in accordance with employer's payroll
practices in effect from time to time.
c. Benefits. Employee shall be entitled to all the rights, benefits,
and privileges (including vacation, health insurance, pension or other fringe
benefits, and compensation programs as are set forth on Exhibit A attached
hereto).
d. Withholdings. Employer shall withhold from any amounts payable as
compensation all federal, state, municipal, or other taxes as are required by
any law, regulation, or ruling. Notwithstanding the foregoing provision of this
Section 3, Employee shall be liable for the payment, if any, of any federal,
state or local taxes incurred by him as a result of Employer's provision of
benefits hereunder.
e. Effect of Termination on Salary and Benefits. Employee's salary and
benefits under Subsection 3 shall terminate effective immediately on the date of
any termination of Employee's employment or this Agreement, and from that date
Employee shall be entitled to severance benefits under Section 4 if and only to
the extent they are then payable and subject to the provisions of Section 2(e)
and (f) herein and any other provisions of this Agreement which provide for the
continuation of salary and/or benefits beyond termination.
<PAGE>
g. Effect of Termination on Other Provisions. This Agreement shall
continue in effect upon and after the termination of Employee's employment for
any reason necessary to enforce the provisions of this Agreement which apply
subsequent to any such termination, including any provisions relating to
confidentiality, non-competition, release, or indemnification.
SECTION 4. SEVERANCE
a. Severance Payments and Benefits. Subject to Subsection 4b, if
Employee's employment under this Agreement is terminated by employer without a
showing of reasonable cause, as defined under Subsection 2.c(1), employee shall
be entitled to receive the following Severance Payments and Benefits from
Employer:
(1) A continuation of Employee's wages equal to the amount of his
regular salary as of the date of his termination for the balance of the Initial
Term as set forth in Section 2(e) and (f) above, or if such termination occurs
beyond the Initial Term of employment, for a period of eighteen (18) months
following such termination.
(2) Payment of health insurance premiums under COBRA for twelve (12)
months.
(3) Outplacement services selected by the Employer up to the sum of
Five Thousand Dollars ($5,000.00).
b. Execution of Release. Employer's obligation to pay severance
benefits under Subsection 4.a is expressly conditioned upon Employee's execution
and delivery to Employer a Release and Agreement, as drafted at the time of
Employee's termination of employment, including, but not limited to:
(1) An unconditional release of all rights to any claims, charges,
complaints, grievances, known or unknown to Employee, against employer, its
affiliates or assigns, through the date of Employee's termination from
employment;
(2) A representation and warranty that Employee has not filed or
assigned any claims, charges, complaints, or grievance against Employer, its
affiliates, or assigns;
(3) An Agreement not to use, disclose or make copies of any
confidential information of Employer, as well as to return any such confidential
information and property to Employer upon execution of release;
<PAGE>
(4) An Agreement to maintain the confidentiality of the release; and
(5) An Agreement to indemnify Employer, or its affiliates or assigns,
in the event that Employee breaches any portion of the Agreement or Release.
c. No Admission. Employee acknowledges such an Agreement and Release
shall not be construed as an admission by Employer or any other release of
wrongdoing whatsoever against Employee, and all of the releases specifically
deny any such wrongdoing.
d. Payments Upon employee's Death or Disability. If severance benefits
are payable because of Employee's death or disability, they shall be deemed to
be made as compensation for Employee's past services to Employer.
e. Termination of Employer's Severance Obligation. Employer's
obligation to provide Employee with severance pay shall cease upon the earlier
of the expiration of the Severance Pay Period or when Employee obtains a
position comparable to that which he held with Employer. Similarly, Employer's
obligation to provide Employee with the health insurance continuation premium
shall cease upon the earlier of the expiration of the Severance Pay Period or
when Employee is eligible to participate in a comparable health insurance plan.
SECTION 5. CONFIDENTIALITY
a. Confidential Information. "Confidential Information" mans
information in whatever form, including information that is written,
electronically stored, orally transmitted, or memorized, that is of commercial
value to Employer and that was created, discovered, developed, or otherwise
becomes known to Employee, or in which property rights are held, assigned to, or
otherwise acquired by or conveyed to Employer, including any Employee
Invention(as subsequently defined) or idea, knowledge, know how, process,
system, method, technique, research and development, technology, software,
technical information, trade secret, trademark, copyrighted material, reports,
records, documentation, data, customer or supplier list, tax or financial
information, business or marketing plan, strategy, or forecast. Confidential
Information does not include information that is or becomes generally known
within Employer's industry through no act or omission by Employee; provided,
however, that the compilation, manipulation, or other exploitation of generally
known information may constitute Confidential Information.
b. Employee Invention. "Employee Invention" means any idea, invention,
software, technique, modification, process, improvement, or similar item,
whether or not reduced to writing or stored electronically or otherwise, and
whether or not protectible by patent, trademark, copyright, or other
intellectual property law, that is created, conceived, or developed by Employee
or under his direction, whether solely or with others, during or after his
employment by Employer, that relates in any way to, or is useful in any manner
in, the business now or then conducted or proposed to be conducted by Employer
or which is based upon or otherwise derives from or makes use of the
Confidential Information.
<PAGE>
c. Ownership; Disclosure. Any Confidential Information, whether nor not
developed by employee, shall at all times be Employer's exclusive property.
Employee shall promptly disclose any employee Invention to Employer in writing.
d. Restrictions. During the term of this Agreement, and for as long
after its termination as any confidential Information is subject to protection
under applicable law, Employee shall not, without Employer's prior written
consent specifically referring to this covenant.
(1) Use any Confidential Information for the benefit of himself or any
other party other than Employer or disclose it to any other person or entity;
(2) Remove any Confidential Information or other documentation, device,
plan, or other record or evidence pertaining to Employer's business form
Employer's premises, except when specifically authorized to do so in pursuit of
Employer's business; or
(3) Retain copies of other records of any such items.
e. Purpose. The parties acknowledge and agree that the confidential
Information is a valuable business asset, and that this Section is necessary to
protect employer's legitimate business interests.
SECTION 6. ADDITIONAL REPRESENTATIONS AND WARRANTIES
In addition to his other representations and warranties set forth in
this Agreement, Employee further represents and warrants as follows:
a. Employee's performance of this Agreement shall not breach any
agreement to which he is or was a party that requires him to hold any
information in confidence or in trust;
b. Employee has not and shall not breach any such Agreement;
c. Employee shall not bring to Employer or use in connection with his
employment any confidential or proprietary information belonging to another
entity without first delivering a written release of that information to
Employer.
<PAGE>
SECTION 7. REMEDIES
a. Irreparable Harm. The parties acknowledge and agree that irreparable
harm would result in the event of a breach or threat of a breach by Employee of
Section 5 or the making of any untrue representation or warranty by Employee in
this Agreement. Therefore, in such an event, and notwithstanding any other
provision of this Agreement.
(1) Employer shall be entitled to a restraining order, order of
specific performance, or other injunctive relief, without showing actual damage
and without bond or other security; and
(2) Employer's obligation to make any payment or provide any benefit
under this Agreement, including without limitation any severance benefits, shall
immediately cease.
b. Remedies Not Exclusive. Employer's remedies under this Section are
not exclusive, and shall not prejudice or prohibit any other rights or remedies
under this Agreement or otherwise. To the extent required to be enforceable by
applicable law, the cessation of Employer's obligation to make payments or
continue benefits under this Section shall be deemed to be in the nature of
liquidated damages and not a penalty.
c. Cessation of Payments. In the event Employer obtains relief as
provided in this Section, or in the event of Employee's breach of Section 5 or
the making of any untrue representation or warranty by Employee in this
Agreement, Employer's obligation to make any payment or provide any benefit
under this Agreement, including any severance benefits, shall immediately cease.
SECTION 8. INDEMNIFICATION
a. Either Party. Each party shall indemnify and hold the other harmless
from and against any and all liability and expense of any kind, including legal
costs and reasonable attorney's fees, arising from the indemnifying party's
fraud, deceit, gross negligence, or willful misconduct with respect to the
performance of this Agreement, or breach of any provisions of this Agreement.
SECTION 9. RETURN OF COMPANY PROPERTY
a. Immediately upon termination of his employment or upon Employer's
earlier request, Employee shall return to Employer all Confidential Information
and other items described in Section 5 and all originals and copies of any other
property or information owned by Employer or relating to its business, that
Employee has in his possession or under his control, including all credit cards,
papers, books, equipment, files and samples.
<PAGE>
SECTION 10. LEGAL COUNSEL
a. Understanding, Voluntary Agreement. Employee and Employer represent
and warrant that each party has been afforded a reasonable opportunity to review
this Agreement, to understand its terms, and to discuss it with any attorney of
their choice, and that each party knowingly and voluntarily enters this
Agreement.
b. Waiver of Separate Representation. To the extent Employer has not
engaged separate legal counsel to represent it in connection with this
agreement, the parties acknowledge and agree that their respective interests in
this Agreement are in conflict, that they have the right to retain independent
counsel, that they have been fully informed about this right and the conflicts
of interest that arise from retaining the same legal counsel to represent both
of them, and that this Section constitutes written disclosure of these
conflicts. The parties further affirm that they are waiving separate
representation freely, voluntarily, and with full knowledge of the effects of
this waiver. No party shall at any time claim that this Agreement is void or
unenforceable in any respect because of the lack of use of independent counsel,
or that the legal counsel who prepared this Agreement acted improperly in doing
so.
SECTION 11. CONFIDENTIAL AGREEMENT
This Agreement is confidential. Employee shall keep its provisions
confidential and shall not disclose them to anyone, including any past, present,
or prospective employee of Employer; provided, that this Section shall not
prohibit Employee from discussing this Agreement in confidential communications
with his family members, attorneys, accountants, or other professional advisors,
provided that the provisions of Section 5 shall at all times apply to
communications with any such persons.
SECTION 12. MISCELLANEOUS PROVISIONS
a. Notes. Unless otherwise agreed in writing by a party entitled to
notice, all notices required by this Agreement shall be in writing and shall be
deemed given when physically delivered to and acknowledged by receipt by a party
or its duly authorized attorney or legal representative, or when deposited
postage paid, registered or certified mail, addressed to the party at its
principal business or residence as set forth above.
b. Waivers. No assent, express or implied, by any party to any breach
or default under this Agreement shall constitute a waiver of or assent to any
breach or default of any other provision of this Agreement or any breach or
default of the same provision of any other occasion.
<PAGE>
c. Entire Agreement, Modification. This Agreement constitutes the
entire agreement of the parties concerning its subject matter and supersedes all
other oral or written understandings, discussions, and agreement, and may be
modified only in writing signed by both parties.
d. Binding Effect; No Third Party Beneficiaries. This Agreement shall
bind and benefit the parties and their respective heirs, devisees,
beneficiaries, grantees, donees, legal representatives, successors, and assigns.
Nothing in this Agreement shall be construed to confer any rights or benefits on
third party beneficiaries.
e. Assignment. Neither Party may assign its interest in this Agreement
without the other's prior written consent; provided that Employer may assign its
interest to another entity which it controls, is controlled by, or is under
common control with.
f. Captions. Titles or captions contained in this Agreement are for
convenience and are not intended to affect the substantive meaning of any
provision.
g. Severability. If any provision of this Agreement shall be declared
invalid or illegal for any reason whatsoever, then notwithstanding such
invalidity or illegality, the remaining terms and provisions of this Agreement
shall remain in full force and effect in the same manner as if the invalid or
illegal provision shad not been contained herein.
h. Counterparts. This Agreement may be executed in one or more
counterpart, each of which shall be deemed and original, but all of which
together shall constitute one and same instrument.
j. Effect of Termination. This Agreement shall continue in effect upon
and after the termination of Employee's employment for any reason to the extent
necessary for the enforcement of any of its provision that apply subsequent any
such termination.
j. Governing Law. This Agreement shall be governed by and construed
under the laws of the United States and the State of New Jersey.=
k. The parties acknowledge that they have read and fully understand the
contents of this Agreement and execute it after having an opportunity to consult
with legal counsel.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as specified above.
WITNESS: EMPLOYEE:
/s/ /s/
- ----------------------- --------------------------
PHILIP LACQUA
ATTEST: EMPLOYER:
R-TEC TECHNOLOGIES, INC.
/s/ /s/
- ----------------------- --------------------------
MARC M. SCOLA, V.P. and
General Counsel
<PAGE>
EXHIBIT A
BENEFITS
A. Health Insurance.
B. Life Insurance.
C. Disability Insurance.
D. Vacation - Not less than five (5) weeks per year.
E. Pension Plan.
F. 401(K) Retirement Plan or Comparable Plan.
G. Expense Allowance.
H. Company Car - All insurance and related expenses of the automobile
will be a cost payable by Employer.
All of the above referenced benefits shall be provided by Employer to
Employee at no cost to Employee.
EXHIBIT 9.0
CONSULTING AND SCIENTIFIC AGREEMENT
AGREEMENT made this 5 day of January, 1999, by and between STEWART
KAISER, having an address at 290 Green Road, Sparta, New Jersey 07871
hereinafter referred to as the "Consultant", and R-TEC TECHNOLOGIES, INC., whose
principal place of business is located at 61 Mallard Drive, Allamuchy, New
Jersey 07820, hereinafter referred to as "Company".
WHEREAS, the Company desires to engage the services of the Consultant
to perform for the Company consulting services regarding scientific experiments
and research on reactive paints as an independent contractor and not as an
employee; and
WHEREAS, Consultant desires to consult with the Board of Directors, the
officers of the Company, and the administrative staff, and to undertake for the
Company consultation as to the direction of certain functions in said
development of reactive paints.
NOW, THEREFORE, it is agreed as follows:
1. Term. The respective duties and obligations of the contracting parties shall
be for a period of twelve (12) months commending on January 1, 1999, and may be
terminated by either party giving thirty (30) days' written notice to the other
party at the addresses stated above or at an address chosen subsequent to the
execution of this agreement and duly communicated to the party giving notice.
2. Consultations. Consultant shall be available to consult with the Board of
Directors, the officers of the Company, and the heads of the administrative
staff, at reasonable times, concerning matters pertaining to the organization of
the scientific staff, the fiscal policies of the Company, the relationship of
the Company with its employees or with any organization representing its
employees, and, in general, the important problems of concern in the business
affairs of the Company. Consultant shall not represent the Company, its Board of
Directors, its officers or any other members of the Company in any transactions
or communications nor shall Consultant make claim to do so.
<PAGE>
CONSULTING AND SCIENTIFIC AGREEMENT - PAGE TWO
3. Liability. With regard to the services to be performed by the Consultant
pursuant to the terms of this agreement, the Consultant shall not be liable to
the Company, or to anyone who may claim any right due to any relationship with
the Corporation, for any acts or omissions in the performance of services on the
part of the Consultant or on the part of the agents or employees of the
Consultant, except when said acts or omissions of the Consultant are due to
willful misconduct or gross negligence. The Company shall hold the Consultant
free and harmless from any obligations, costs, claims, judgments, attorneys'
fees, and attachments arising from or growing out of the services rendered to
the Company pursuant to the terms of this agreement or in any way connected with
the rendering of services, except when the same shall arise due to the willful
misconduct or gross negligence of the Consultant and the Consultant is adjudged
to be guilty or willful misconduct or gross negligence by a court of competent
jurisdiction.
4. Compensation. The Consultant shall receive at least monthly from the Company
for the performance of the services to rendered to the Company pursuant to the
terms of the agreement $1,000.00 per month for work performed by the Consultant;
however; in no event shall the compensation paid to the Consultant by the
Company be less than $1,000.00. In addition, the Company shall reimburse the
Consultant per diem for any reasonable out of pocket expenses incurred by the
Consultant pursuant to the terms of this agreement. The Consultant shall submit
itemized statements of hours of services performed and expenses incurred during
any particular month by the fifth (5th) day of the next succeeding month. The
amount shall be paid to the Consultant by the fifteenth (15th) day of the latter
month.
5. The Laws of the State of New Jersey shall apply to this Agreement.
6. All data, findings, research, patents, trademarks, experiments or ideas
obtained while working on any of the company's projects are the sole property of
the company and considered trade secrets.
7. The undersigned consultant agrees not to discuss, reveal or disclose any
information on present projects, future projects or past projects with anyone
other than the designated corporate officers. The undersigned consultant agrees
not to disclose or reveal any findings, research or experiments with any person
outside the project and not designated by the company.
8. The undersigned consultant agrees to never reveal or disclose any of the
above information, findings, research or experiments to anyone not designated by
the company after termination or expiration of this agreement.
9. The undersigned consultant understands that any disclosure of the company's
trade secrets, research, experiments, future projects and ideas could cause the
company to suffer a financial loss.
<PAGE>
CONSULTING AND SCIENTIFIC AGREEMENT - PAGE THREE
I have read the above agreement and understand its terms and
conditions.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
on the 5 day of January, 1999.
WITNESS: "R-TEC TECHNOLOGIES, INC."
By: /s/ By:/s/MARC M. SCOLA
----------------- -----------------
MARC M. SCOLA,
Vice President and
General Counsel
WITNESS:
By: /s/ By:/s/STEWART KAISER
----------------- -----------------
STEWART KAISER,
CONSULTANT
EXHIBIT 10.0
CONSULTING AND SCIENTIFIC AGREEMENT
AGREEMENT made this 11 day of January, 1999, by and between SHAWN
WALSH, having an address at 538 Wren Way, Branchburg, New Jersey 08876
hereinafter referred to as the "Consultant", and R-TEC TECHNOLOGIES, INC., whose
principal place of business is located at 61 Mallard Drive, Allamuchy, New
Jersey 07820, hereinafter referred to as "Company".
WHEREAS, the Company desires to engage the services of the Consultant
to perform for the Company consulting services regarding scientific experiments
and research on reactive paints as an independent contractor and not as an
employee; and
WHEREAS, Consultant desires to consult with the Board of Directors, the
officers of the Company, and the administrative staff, and to undertake for the
Company consultation as to the direction of certain functions in said
development of reactive paints.
NOW, THEREFORE, it is agreed as follows:
1. Term. The respective duties and obligations of the contracting parties shall
be for a period of twelve (12) months commending on January 1, 1999, and may be
terminated by either party giving thirty (30) days' written notice to the other
party at the addresses stated above or at an address chosen subsequent to the
execution of this agreement and duly communicated to the party giving notice.
2. Consultations. Consultant shall be available to consult with the Board of
Directors, the officers of the Company, and the heads of the administrative
staff, at reasonable times, concerning matters pertaining to the organization of
the scientific staff, the fiscal policies of the Company, the relationship of
the Company with its employees or with any organization representing its
employees, and, in general, the important problems of concern in the business
affairs of the Company. Consultant shall not represent the Company, its Board of
Directors, its officers or any other members of the Company in any transactions
or communications nor shall Consultant make claim to do so.
<PAGE>
CONSULTING AND SCIENTIFIC AGREEMENT - PAGE TWO
3. Liability. With regard to the services to be performed by the Consultant
pursuant to the terms of this agreement, the Consultant shall not be liable to
the Company, or to anyone who may claim any right due to any relationship with
the Corporation, for any acts or omissions in the performance of services on the
part of the Consultant or on the part of the agents or employees of the
Consultant, except when said acts or omissions of the Consultant are due to
willful misconduct or gross negligence. The Company shall hold the Consultant
free and harmless from any obligations, costs, claims, judgments, attorneys'
fees, and attachments arising from or growing out of the services rendered to
the Company pursuant to the terms of this agreement or in any way connected with
the rendering of services, except when the same shall arise due to the willful
misconduct or gross negligence of the Consultant and the Consultant is adjudged
to be guilty or willful misconduct or gross negligence by a court of competent
jurisdiction.
4. Compensation. The Consultant shall receive at least monthly from the Company
for the performance of the services to rendered to the Company pursuant to the
terms of the agreement $1,000.00 per month for work performed by the Consultant;
however; in no event shall the compensation paid to the Consultant by the
Company be less than $1,000.00. In addition, the Company shall reimburse the
Consultant per diem for any reasonable out of pocket expenses incurred by the
Consultant pursuant to the terms of this agreement. The Consultant shall submit
itemized statements of hours of services performed and expenses incurred during
any particular month by the fifth (5th) day of the next succeeding month. The
amount shall be paid to the Consultant by the fifteenth (15th) day of the latter
month.
5. The Laws of the State of New Jersey shall apply to this Agreement.
6. All data, findings, research, patents, trademarks, experiments or ideas
obtained while working on any of the company's projects are the sole property of
the company and considered trade secrets.
7. The undersigned consultant agrees not to discuss, reveal or disclose any
information on present projects, future projects or past projects with anyone
other than the designated corporate officers. The undersigned consultant agrees
not to disclose or reveal any findings, research or experiments with any person
outside the project and not designated by the company.
8. The undersigned consultant agrees to never reveal or disclose any of the
above information, findings, research or experiments to anyone not designated by
the company after termination or expiration of this agreement.
9. The undersigned consultant understands that any disclosure of the company's
trade secrets, research, experiments, future projects and ideas could cause the
company to suffer a financial loss.
<PAGE>
CONSULTING AND SCIENTIFIC AGREEMENT - PAGE THREE
I have read the above agreement and understand its terms and
conditions.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
on the ____ day of January, 1999.
WITNESS: "R-TEC TECHNOLOGIES, INC."
By: /s/ By:/s/MARC M. SCOLA
------------------- ------------------
MARC M. SCOLA,
Vice President and
General Counsel
WITNESS:
By: By:/s/SHAWN WALSH
------------------- ------------------
SHAWN WALSH,
CONSULTANT
EXHIBIT 11.0
EXCLUSIVE MANUFACTURING AGREEMENT
This Manufacturing Agreement ("Agreement") is entered into as of
October 21st, 1998, between R-Tec Technologies, Inc., a New Jersey Corporation,
with its principal place of business at P.O. Box 70, Allamuchy, NJ, 07820
("Contractor") and Anscott Chemical Industries, a New Jersey Corporation with
its principal place of business at 26 Hanes Drive, Wayne, New Jersey, 07470,
("Manufacturer").
GENERAL
The Contractor is in the business of developing, marketing and
supporting certain products (defined below). The Manufacturer wishes to
manufacture to the dealers and the remarketers of these products and assures the
Contractor that it has the facilities, personnel, and technical expertise
necessary to manufacture the products.
The Manufacturer wishes to obtain from the Contractor, and the
Contractor is willing to grant to the Manufacturer, the exclusive right to
manufacture these products for resale purposes.
In consideration for the mutual promises, covenants, and Agreements
made below, the parties, intending to be legally bound, agree as follows:
1. Definitions
For purposes of this Agreement, the following terms will have the
indicated definitions:
"Agreement." This Agreement is by and between the Contractor
and the Manufacturer.
"Information." The documentation, technical information and/or business
information, either oral or written that the Contractor or the Manufacturer
furnishes to the other marked as; proprietary or confidential or simply treated
as such by the disclosing party. The products and services, as well as any
information relating to services, developments, services, processes, plans,
financial information, customer and Contractor lists, forecasts and projections.
Information shall also include the the terms of this Agreement. A party's
information shall be deemed confidential under this Agreement unless the
information: (1) is in the public domain through no act of other party; (2) is
lawfully known by the other party from a source other than the first party with
no restriction of confidentiality; or (3) must be disclosed by requirement of
law or generally accepted accounting principles.
<PAGE>
"Term." The duration of this Agreement.
"Products." The "Leak Detection Products" developed by the Contractor
Currently specified as R-12, R-22 or CO2 in kit form.
"End-User." Any person or entity who obtains the product(s)
in kit form.
"Intellectual Property Rights." The intangible legal rights or
interests evidenced by or embodied in (1) any idea, design, concept, technique,
invention, discovery, or improvement regardless of patentability, but including
patents, patent application, trade secrets and know-how; (2) any work of
authorship, regardless of copyrightability, but including copyrights and any
moral rights recognized by law; and (3) any other similar rights, in each case
on a worldwide basis.
2. Term
2.1 Term. This Agreement shall commence on the date stated in the first section
and shall terminate October 21, 2003, unless it terminates sooner in accordance
with the provisions of this Agreement. The Parties may renew this Agreement in
writing upon mutual Agreement.
2.2 Continuation or Survival of Certain Sections. Certain section, (6.1 & 6.3)
as indicated below, will survive and remain effective even after the termination
of this Agreement. All other rights and obligations of each party to the other
shall terminate upon the termination of this Agreement.
3. Relationship
3.1 Exclusive Manufacturer. The Contractor grants the Manufacturer, and the
Manufacturer accepts from the Contractor, the exclusive right to manufacture the
products. This appointment is subject to the limitations set forth in Section 4.
3.2 Powers as Manufacturer. Except as expressly provided in this Agreement, all
aspects of the production of the finished product by the Manufacturer shall be
under the Manufacturer's sole control. Product will be produced accordingly to
the formulations and specifications provided by the Contractor to the
Manufacturer. The Manufacturer will exercise full compliance in adhering to
those standards of quality established and communicated by the Contractor. The
Manufacturer is not responsible for the performance of the finished product. The
manufacturer is responsible for correctly adhering to the formulation and
assembly of product pursuant to Contractor's written specifications.
3.3 Powers as Manufacturer. The Contractor and the Manufacturer, agree that
their relationship is that of the contractor and the manufacturer and not that
of joint venturers, principals or agents, or franchiser and franchisee. Both are
independent contractors acting for their own accounts, and neither is authorized
to make any commitment or representation, express or implied, on the other's
behalf unless authorized to do so by the other in writing.
<PAGE>
3.4 Use of Trademarks and Trade Names. No right, title or interest in or to any
trademarks, trade names, slogans, labels and designs used by either the
Contractor or the Manufacturer, nor the goodwill connected, is conveyed by this
Agreement. The Manufacturer may, in connection with the promotion and sale of
the products pursuant to the terms of this Agreement, refer to the Contractor's
applicable trade names or trademarks provided that all such references are in
conformance with the Contractor's requirements regarding such use, as such
requirements are communicated to the Manufacturer in writing from time to time
by the Contractor.
3.5 Marketing Responsibility. The Contractor shall pursue vigorously sales
policies and procedures to realize the maximum sales potential for the products.
The Manufacturer agrees to similarly pursue sales in the CO@ market defined in
section 4.1.2
4. Manufacturing Rights
In recognition of the investment to be made by the Manufacturer in connection
with the manufacturing of the products, the parties agree to each of the
following provisions:
4.1.1. The Contractor hereby grants the Manufacturer the exclusive right to
manufacture the products in the United States. The Contractor is prohibited from
importing the products into the United States.
4.1.2 The Manufacturer reserves the rights to both manufacture and re-sell the
CO@ products without restriction in the industrual gas Industry, limited to, the
use of carbon dioxide in Dry Cleaning and related applications. the Manufacturer
may produce the products and re-sell to accounts in the CO2 market worldwide. It
is the intent of the parties to enter into a re-sellers agreement for CO2
products. The Contractor will utilize its best efforts to divert all
manufacturing requirements for CO2 applications to the Manufacturer.
4.1.3 The exclusive Manufacturing rights granted to the Manufacturer pursuant to
this Agreement terminates five years following the signing date of this
contract.
4.1.4 Other Products. The Contractor shall not sell any products in kit form
with specifications comparable to R-12, R-22 or CO2, unless manufactured by the
Manufacturer.
5. Manufacturer's Responsibilities
During the term of this Agreement, the Manufacturer agrees to the
following:
5.1 Manufacturing Orders. The Manufacturer shall manufacture the products based
on purchase orders presented from the Contractor and accepted by the
Manufacturer.
5.2 Reports. The Manufacturer shall deliver upon the request of the Contractor,
a monthly report showing the Manufacturer's current inventory of each product
(listed in units); (2) the quantity of each product shipped (3) the number of
returns and (4) other relevant information for the prior month as request from
time to time by the Contractor. The Manufacturer shall cooperate with the
Contractor to make the format, microcomputer environment, and coding of its
monthly records compatible with the Contractor's record-keeping system.
<PAGE>
5.3 Compliance with Laws. The Manufacturer shall comply with all material
applicable present and future federal, state, county, local and, where
necessary, foreign laws, ordinance and regulation relating to the sale of the
products.
6. Contractor's Rights and Responsibilities
6.1 Service Manual(s). Upon execution of this Agreement, the Contractor shall
provide the Manufacturer with manuals documenting the appropriate method(s) of
servicing/installing/ using the products). The Contractor is responsible for
purchasing and providing the Manufacturer with aerosol cans and location
identification tags to be packaged into the product kit and for all printed
materials and labels to be included in the assembly of the products.
6.2 Training. The Manufacturer will not provide training to the Contractor or
its customers.
6.3 System Documentation. The Contractor shall provide at no charge to the
Manufacturer copies of each technical publication document, including without
limitation, service and installation manuals that the Contractor prepares or
uses for the products during the Term of this Agreement and for five years
thereafter. The Manufacturer may use and/or reproduce and/or translate such
materials, in whole or in part, but shall reproduce and include any copyright
and proprietary notice of the Manufacturer on all copies of such materials.
6.4 Contractor Determination of Product Content. The Contractor reserves the
right to determine the contents of the product, including its specification,
features, and functions, as well as any documentation or related materials; (2)
change or terminate any of the specifications, features, or functions of the
products. Any changes made ot the product shall be indicated in writing to the
Manufacturer. The Manufacturer may cancel any orders for discontinued products
without liability. The cancellation is limited to only those orders placed by
the manufacturer on behalf of the Contractor that the Contractor then
discontinues the use of said raw material. The Contractor will be responsible
for payment to the Manufacturer for any discontinued raw materials or for any
product or service purchased by the Manufacturer on behalf of the Contractor.
The contractor will identify any hazardous components associated with the
manufacture or distribution of it's product by the Manufacturer.
<PAGE>
7. Purchase Orders
7.1 Initial Order. The Contractor will issue all instructions to Manufacturer in
the form of a confirmed purchase order. The Initial Order shall be
non-cancelable. The Manufacturer requires a 50% deposit, paid in advance, for
this order. The Contractor will provide to the Manufacturer certain documents in
order to establish a line of credit. The documents will include a credit
application and a copy of the Incorporation Certificate. The Manufacturer will
evaluate the application for the purposes of establishing a credit limit and
terms with the Contractor.
7.2 Subsequent Orders. All subsequent orders shall be in writing or if placed
orally, shall be confirmed in writing within three business days after such oral
order. All orders, whether in writing or verbal shall specify: (1) the quantity
and description of the products; (2) requested delivery dates (3) applicable
price; and (4) any special instructions. All orders shall be governed solely by
the terms and conditions of this Agreement. No additional or different
provisions contained in the Contractor's purchase orders or any other business
forms shall be of any force or effect whatsoever unless agreed to in writing by
the other party.
7.3 Manufacturer's Acceptance. All orders for products by the Contractors shall
be subject to acceptance by the Manufacturer and shall not be binding on the
Manufacturer until acceptance of the written purchase order by the Manufacturer
is confirmed in writing to the Contractor. The Manufacturer must evaluate the
terms of the purchase order to determine if the specified delivery date can be
accomplished. The Manufacturer will require a minimum production allowance of 12
weeks on the initial order and 8 weeks on all subsequent orders, subject to
change. Lead times will be reduced once Contractor is able to forecast annual
production requirements.
7.4 Controlling Terms. The terms and conditions of this Agreement shall apply to
each order accepted or shipped by the Manufacturer under this Agreement. Any
terms or conditions appearing on the face or reverse side of any purchase order,
acknowledgment, or confirmation that are different from or in addition to those
required under this Agreement shall not be binding on the parties, even if
signed and returned, unless both parties expressly agree in a separate writing
to be bound by such separate or additional terms and conditions.
7.5 Freight and Tax Charges. The Contractor shall pay the cost of freight and
any taxes, levies, duties or fees of any kind, nature or description whatsoever
applicable to the sale of any products by the Contractor. The Manufacturer shall
not be required to pay taxes for product which it provides the Contractor, by
the time of the submission of its purchase order to the Manufacturer, tax
exemption certificates or licenses acceptable to the appropriate taxing
authorities. In connection with the delivery of the products, the Contractor may
designate the carrier for shipment and the amount of insurance and nature of
coverage. If the Contractor fails to so designate any or all such items, the
Manufacturer, at its discretion, may specify any item not so designated.
<PAGE>
7.6 Acceptance Tests. The Contractor shall formulate, subject to the
Manufacturer's approval, Acceptance Test Procedures. The Contractor has the
right to conduct acceptance test on any of the products and may reject those
that fail to pass that test. Such rejection shall be evidenced by notice of
rejection to the Manufacturer, together with an indication of the basis for that
rejection. The Manufacturer shall have no obligations with respect to any
products properly manufactured by it pursuant to this Agreement.
8.0 Taxes. Prices to the Contractor do not include taxes of any nature.
8.1 Payment. After the initial order and based upon an established line of
credit, the Contractor shall pay the Manufacturer's invoices to the Contractor
within thirty days of the invoice date. The terms of any payments made to the
Manufacturer from the proceeds of letters of credit must be pre-approved by the
Manufacturer. The Contractor must maintain a current account with the
Manufacturer in order to have additional orders for product filled.
8.2 Pricing. The Contractor has agreed to pay the Manufacturer a price of $10.90
per kit for the initial order. The price of $10.90 will be guaranteed for a
period of (6) months with a minimum quantity of 5,000 kits. Pricing for orders
for less than 5,000 kits will be determined. Subsequent orders for less than
5,000 kits will be based on prevailing market prices at the time of the order.
9. Shipment, Risk of Loss and Delivery
9.1 Risk of Loss. Except as provided below, title to the products purchased
pursuant to this Agreement will pass upon delivery to the Contractor. The
Contractor assumes the risk of loss and damage of the products in transit from
the Contractor's shipping point to the point of destination.
9.2 Modifications. The Manufacturer shall not have the right to modify any of
the products, without the expressed written consent of the Contractor.
9.3 Shipment. All products shall be shipped by the Manufacturer F.O.B. Wayne,
New Jersey. Shipments shall be made to the Contractor's identified warehouse
facilities or freight forwarded to the end-user as specified by the Contractor.
Unless specified in the Contractor's order, the Manufacturer shall select the
mode of shipment and the carrier. The Contractor shall be responsible for and
shall pay all shipping, freight, and insurance charges, which charges the
Manufacturer may require the Contractor to pay in advance.
10.0 Disclaimer, No Other Warranty. The Manufacturer grants no warranties,
express or implied, by statute or otherwise. Manufacturer does warranty its
strict adherence to the contractors formulation and specification instructions.
<PAGE>
10.1 Limitation of Liability. The Manufacturer warrants and guarantees, it s
liability being limited to the purchase price of the products, strict compliance
with the expressed specifications of the Contractor in manufacturing the
products. The Manufacturer shall not be liable for the cost of procurement of
substitute goods by the customer or for an special, consequential or incidental
damages for breach of warranty.
10.2 Product Liability
10.3 Indemnification. The Manufacturer represents that it holds product
liability insurance for its operation and will provide the Contractor with proof
of same. The product liability insurance held by the Manufacturer insures
against bodily injury or property damage resulting from improperly manufactured
products. The Manufacturer will be liable for any claim resulting form the
Manufacturer's failure to adhere to the Contractor's formulation and
specifications. The Contractor shall indemnify and hold harmless the
Manufacturer for damages or expenses resulting from any claim, suit or
proceeding brought against the Manufacturer on the issue of product performance
or user liability. The Manufacturer agrees that the Contractor has the right to
defend, or at its option to settle, and the Contractor agrees that the
Contractor has the right to defend, or at its option ot settle, and the
Contractor agrees, at its own expense, to defend or at its option to settle, any
claim, suit or proceeding brought against the Manufacturer or its Customer on
the issue of product liability, subject to the limitation set forth in this
Agreement. The Contractor shall have sole control of any such action or
settlement negotiations, and the Contractor agrees to pay, subject to the
limitations of this Agreement set forth, any final judgment entered against the
Manufacturer or its Customer on such issue in any such suit or proceeding
defended by the Contractor. The Manufacturer agrees that the Contractor at its
sole option shall be relieved of the foregoing obligations unless the
Manufacturer or its Customer notifies the Contractor promptly in writing of such
claim, suit or proceeding and gives the contractor authority to proceed as
contemplated herein, and, at the Contractor's expense, gives the Contractor
proper and full information and assistance to settle and/or defend any such
claim, suit or proceeding.
10.4 Entire Liability. The foregoing provisions of this Section 10 state the
entire liability and obligations fo the Contractor and the exclusive remedy of
the Manufacturer and its Customers, with respect to any alleged product
liability suit related to the products or any part thereof.
11. Ownership Warrant and Indemnification
11.1 Contractor Ownership Warranty. The Contractor represents and warrants to
the Manufacturer that: (1) the products are the originals with the Contractor;
(2) the products do not infringe upon any patent, Copy right, trade secret or
other proprietary rights of others; (3) the Contractor has full power and
authority to grant the rights granted within this Agreement tot he Manufacturer;
and (4) the Contractor has not previously or otherwise granted any other rights
in the products to any third party the conflict with the rights in this
Agreement granted to the Manufacturer.
<PAGE>
11.2 Indemnification. The Contractor agrees to defend at its expense and hold
the Manufacturer harmless form any claim, demand, or suit against the
Manufacturer resulting form a breach of any of the warranties set forth above in
Section 11.1 and to pay any cost, damages, or expenses (including attorneys'
fees) arising from any such claim, demand, or suit. The Contractor shall have
sole control of the defense of such action and all negotiations for its
compromise or settlement. The Manufacturer shall timely notify the Contractor in
writing of any such claim, demand, or suit, and, at the Contractor's request and
expense, provide the Contractor with all available information, assistance and
authority to enable the Contractor to defend the same. The Contractor shall
indemnify the Manufacturer for all such costs, damages, and expenses as they are
incurred.
11.3 Continued Use. Following notice of a claim or demand or a threatened or
actual suit, the Contractor shall immediately, at its own expense, procure for
the Manufacturer the right to continue the use of the products subject to such
claim, demand or suit, or, having failed to obtain such rights, replace or
modify such products to make them non-infringing, or, having failed to replace
or modify the products, refund to the Manufacturer the purchase price of all
unsold products. If the Manufacturer elects to replace or modify any of the
products, such replacement or modification shall substantially meet the
performance and interface specifications of the replaced or modified products.
11.4 Modification of the Products. The Contractor shall have no liability for
any claim of infringement based on the Manufacturer's combination of the
products with products not supplied by the Contractor if such claim would have
been avoided by the use of the products without such specific products.
11.5 Survival of Warranties. The warranties and indemnities stated in this
Section 11 shall survive the expiration or termination of this Agreement.
12. Limitation of Liability
12.1 Limitation of Liability. The warranties contained in Section 10 and 11
above are in lieu of all other warranties and conditions expressed or implied,
including, but not limited to, those governing merchantability or fitness for a
particular purpose. In the event that, despite Section 10, Manufacturer is found
liable for damages based on any defect of nonconformity in the products, its
total liability for each defective product shall not exceed the discounted price
of such defective product.
12.2 Exclusion of Consequential Damages. In no event shall either party be
liable to the other or any dealer or end-user for any indirect, special or
consequential damages including, without limitation, lost profits, costs of
delay, any failure of delivery or liability to third party arising from any
source even if the party had been advised of the foreseeability of the same.
<PAGE>
13. Trademarks. The Contractor shall have and retain sole ownership of the
Trademarks, including the goodwill pertaining thereto. Subject to the
Manufacturer's compliance with the Contractor's standard cooperative advertising
policies, the Contractor hereby grants to the Manufacturer the right to use and
display the Trademarks solely in connection with and solely to the extent
reasonably necessary for the marketing, Manufacturing, and support of the
products in accordance with the terms and conditions of this Agreement.
14. Notification. The Manufacturer shall promptly notify the Contractor of (1)
any claims, allegations, or notification that its marketing, licensing, support,
or service of the products may or will infringe the Intellectual Property Rights
of any other person or entity; and (2) any determination, discovery, or
notification that any person or entity is or may be infringing the Intellectual
Property Rights of the Contractor. The Manufacturer shall n ot take any legal
action relating to the protection or defense of any Intellectual Property Rights
pertaining to the products without the prior written approval of the Contractor.
The Manufacturer shall assist in the production and defense of such Intellectual
Property Rights.
14.1 Infringement
14.1.1 If notified promptly in writing of and given sole control of the defense
and all related negotiations and settlements, the Contractor shall defend the
Manufacturer against any claim based on an allegation that a product supplied
under this Agreement infringes any United States Intellectual Property Rights.
The Contractor shall pay any resulting costs, damages, and attorney fees finally
awarded by a court with respect to any such claims.
14.1.2 Contractor shall not be liable to the Manufacturer for any claim arising
from or based upon the combination, operation, or use of any product with
equipment, data, or programming not supplied by the Contractor, or arising from
any alteration or modification of products.
14.1.3 The Contractor shall have no obligation to the Manufacturer with respect
to any infringement involving or concerning the products except as stated in
this Section 14.7.
15.1 Force Majeure. Neither party will be deemed in default of this Agreement to
the extent that performance of its obligations, or attempts to cure any breach,
are delayed or prevented by reason of circumstance beyond its reasonable
control, including without limitation fire, natural disaster, earthquake,
accident or other acts of God ("Force Majeure"), provided that the party seeking
to delay its performance gives the other written notice of any such Force
Majeure within 15 days after the discovery of the Force Majeure, and further
provided that such party uses its good faith efforts to cure the Force majeure
within 60 days of notification or will notify Contractor of it's inability to do
same.
<PAGE>
15.2 Settlement of Disputes
Each party acknowledges and agrees that, if there is any breach of this
Agreement, including without limitation, unauthorized use or disclosure of
Confidential Information or other information of the other party or failure ot
perform the terms of this contract, the matter will be resolved in accordance
with the laws and remedies of the State of New Jersey.
15.3 Proprietary Information. Each party acknowledges that it may be furnished
with or may otherwise receive or have access to information or material that
relates to past, present or future products, software, research development,
inventions, processes, techniques, designs or technical information and data,
and marketing plans. (The "Proprietary Information"). Each party agrees to
preserve and protect the confidentiality of the Proprietary Information and all
of its physical forms, whether disclosed to the other party before this
Agreement is signed or afterward, including the terms of this Agreement
15.4 Cumulative Rights. Any specific right or remedy provided in this Agreement
shall not be exclusive but shall be cumulative upon all other rights and
remedies set forth in this section and allowed under applicable law.
15.5 Governing Law. This Agreement shall be governed by the laws
of this State of New Jersey.
15.6 Severability. If any provision of this Agreement is found invalid or
unenforced according to its terms. Without limiting the previous, it is
expressly understood and agreed that each and every provision of this Agreement
that provides for a limitation of liability, disclaimer of warranties, or
exclusion of damages is intended by the parties to be severable and independent
of any other provision and to be enforced as such. Further, it is expressly
understood and agreed that if any remedy under this Agreement is determined to
have failed of its essential purpose, all other limitations of liability and
exclusion of damages set forth in this section shall remain in full force and
effect.
<PAGE>
15.7 Notices. All notices, demands or consents required or permitted under this
Agreement shall be in writing and shall be delivered or mailed certified return
receipt requested to the respective parties at the addresses set forth above or
at such other address as such party shall specify t the other party in writing.
Any notice required or permitted to be given by the provisions of this Agreement
shall be conclusively deemed to have been received on the day it is delivered to
that party by U.S. Mail with Acknowledgement of Receipt or by any commercial
courier providing equivalent acknowledgement of receipt. Captions and section
headings used in this Agreement are for convenience only and are not a part of
this contract and agree to and accept its terms and conditions. We are executing
this Agreement as of the day and year first written above.
Contractor Manufacturer
By: /s/Marc M. Scola By: /s/Jack Belluscio
- ------------------------ ---------------------
Marc M. Scola Jack Belluscio
Vice-President and General Counsel President
Date signed: October 21, 1998
EXHIBIT 12.0
DISTRIBUTION AGREEMENT
This Agreement dated March 26, 1999, between R-TEC TECHNOLOGIES, INC.,
a New Jersey Corporation with a principal place of business at 499 Van Brunt
Street, Suite 4B, Brooklyn, New York 11231, hereinafter ("R-TEC") and MOTORS
ARMATURES, INC., a New York Corporation with a principal place of business at
250 Rabro Drive East, Hauppauge, New York 11788, hereinafter ("MARS").
WHEREFORE, MARS and R-TEC will work together, exclusively to maximize
sales of kitted R-TEC products to Air Conditioning, and Refrigeration
Contractors through wholesale distribution. This agreement covers sales in North
America to all wholesale Air Conditioning and Refrigeration trade distributors
including W.W. Grainger, Johnstone Supply, Watsco, and Pameco. MARS will sell to
some distributors in the U.S., Canada, and Mexico who may then export the
product to other parts of the world as a part of their normal business.
WHEREFORE, MARS will stock R-TEC products and ship in combination with
other MARS products. This will allow trade wholesalers to combine their R-TEC
purchases for quantity discounts and rebates of their entire order from MARS.
WHEREFORE, will advertise R-TEC products to the trade wholesalers and
assist individual wholesale accounts in their local marketing and sales efforts.
R-TEC will promote and publicize their products through national advertising
media as much as possible and where feasible.
WHEREFORE, R-TEC will set contractor price levels by virtue of
establishing a list price. The list price will be the price charged to the
contractor by the wholesale distributor. MARS cost will be equal to .49 X the
list price.
WHEREFORE, R-TEC and MARS will establish mutually convenient shipment
quantities that will tend to provide economical production lots as well as
maximize inventory turns for MARS.
WHEREFORE, the initial refrigeration products offered will include
R-TEC formulations for R- 22, R-12, R-410A, R404A, and R-134A. Additional
formulations for the refrigeration industry will be developed as necessary.
R-TEC will maintain R&D facilities sufficient to adjust formulations as market
requirements may dictate.
WHEREFORE, R-TEC will make every effort to provide samples for test
marketing in August of 1999. R-TEC will make every effort to begin shipment of
5,000 R-22 kits by October 31, 1999.
<PAGE>
R-TEC reserves the right to make other agreements with other
wholesalers outside the Air Conditioning and Refrigeration trade. This
Distribution Agreement only applies to R-TEC Air Conditioning and Refrigeration
products sold to contractors in the trade.
This agreement may be terminated at any time by either party.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
Witness: R-TEC TECHNOLOGIES, INC.
/s/ /s/ MARC M. SCOLA
- ------------------- ------------------------
MARC M. SCOLA
Vice President
Witness: MOTORS & ARMATURES, INC.
/s/ /s/ FRED BARON
- ------------------- ------------------------
FRED BARON
Marketing Manager
EXHIBIT 13.0
THE
BANK OF
NEW
YORK
----------------------------------------------------
STOCK TRANSFER AGENCY AGREEMENT
between
R-TEC TECHNOLOGIES, INC.
-----------------------------------------------------------------
and
THE BANK OF NEW YORK
Dated as of January , 1999
ACCOUNT NUMBER(S)____________________________
----------------------------------------------------
<PAGE>
STOCK TRANSFER AGENCY AGREEMENT
AGREEMENT, made as of January , 1999, by and between R-Tec
Technologies, Inc., a corporation organized and existing under the laws of the
State of New York (hereinafter referred to as the "Customer"), and THE BANK OF
NEW YORK, a New York trust company (hereinafter referred to as the "Bank").
WITNESSETH:
That for and in consideration of the mutual promises hereinafter set
forth, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall
have the following meanings:
1. "Business Day" shall be deemed to be each day on which the Bank is
open for business.
2. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Bank by the Customer which is signed by any Officer, as hereinafter defined,
and actually received by the Bank.
3. "Officer" shall be deemed to be the Customer's Chief Executive
Officer, President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Treasurer, and any Assistant Secretary duly authorized
by the Board of Directors of the Customer to execute any Certificate, as such
Certificate may be amended from time to time.
4. "Shares" shall mean all or any part of each class of the shares of
capital stock of the Customer which from time to time are authorized and/or
issued by the Customer and identified in a Certificate of the Secretary of the
Customer under corporate seal, as such Certificate may be amended from time to
time, with respect to which the Bank is to act hereunder.
ARTICLE II
APPOINTMENT OF BANK
1. The Customer hereby constitutes and appoints the Bank as its agent
to perform the services described herein and as more particularly described in
Schedule I attached hereto (the "Services"), and the Bank hereby accepts
appointment as such agent and agrees to perform the Services in accordance with
the terms hereinafter set forth.
2. In connection with such appointment, the Customer shall deliver the
following documents to the Bank:
(a) A certified copy of the Certificate of Incorporation or other
document evidencing the Customer's form of organization (the
"Charter") and all amendments thereto;
(b) A certified copy of the By-Laws of the Customer;
<PAGE>
(c) A certified copy of a resolution of the Board of Directors of the
Customer appointing the Bank to perform the Services and
authorizing the execution and delivery of this Agreement;
(d) A Certificate signed by the Secretary of the Customer specifying:
the number of authorized Shares, the number of such authorized
Shares issued and currently outstanding, and the names and
specimen signatures of all persons duly authorized by the Board
of Directors of the Customer to execute any Certificate on behalf
of the Customer, as such Certificate may be amended form time to
time;
(e) A specimen Share certificate for each class of Shares in the form
approved by the Board of Directors of the Customer, together with
a Certificate signed by the Secretary of the Customer as to such
approval and covenanting to supply a new such Certificate and
specimen whenever such form shall change;
(f) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the validity of the authorized and
outstanding Shares, the obtaining of all necessary governmental
consents, whether such Shares are fully paid and non-assessable
and the status of such Shares under the Securities Act of 1933,
as amended, and any other applicable law or regulation (i.e., if
subject to registration, that they have been register and that
the Registration Statement has become effective or, if exempt,
the specific grounds therefor);
(g) A list of the name, address, social security or taxpayer
identification number of each Shareholder, number of Shares
owned, certificate numbers, and whether any "stops" have been
placed; and
(h) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the due authorization by the Customer
and the validity and effectiveness of the use of facsimile
signatures by the Bank in connection with the countersigning and
registering of Share certificates of the Customer.
3. The Customer shall furnish the Bank with a sufficient supply of
blank Share certificates and from time to time will renew such supply upon
request of the Bank. Such blank Share certificate shall be properly signed, by
facsimile or otherwise, by Officers of the Customer authorized by law or by the
By-Laws to signed, by facsimile or otherwise, by Officers of the Customer
authorized by law or by the By-Laws to sign Share certificates, and, if
required, shall bear the corporate seal or facsimile thereof.
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. The Customer shall deliver to the Bank the following
documents on or before the effective date of any increase, decrease or other
change in the total number of Shares authorized to be issued:
(a) A certified copy of the amendment to the Charter giving effect to
such increase, decrease or change;
2
<PAGE>
(b) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the validity of the Shares, the
obtaining of all necessary governmental consents, whether such
Shares are fully paid and non-assessable and the status of such
Shares under the Securities Act of 1933, as amended, and any
other applicable federal law or regulations (i.e., if subject to
registration, that they have been registered and that the
Registration Statement has become effective or, if exempt, the
specific grounds thereof); and
(c) In the case of an increase, if the appointment of the Bank was
therefore expressly limited, a certified copy of a resolution of
the Board of Directors of the Customer increasing the authority
of the Bank.
2. Prior to the issuance of any additional Shares pursuant to stock
dividends, stock splits or otherwise, and prior to any reduction in the number
of Shares outstanding, the Customer shall deliver the following documents to the
Bank:
(a) A certified copy of the resolutions adopted by the Board of
Director and/or the shareholders of the Customer authorizing such
issuance of additional Shares of the Customer or such reduction,
as the case may be;
(b) A certified copy of the order or consent of each governmental or
regulatory authority required by law as a prerequisite to the
issuance or reduction of such Shares, as the case may be, and an
option of counsel for the Customer that no other order or consent
is required; and
(c) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the validity of the Shares, the
obtaining of all necessary governmental consents, whether such
Shares are fully paid and non-assessable and the status of such
Shares under the Securities Act of 1933, as amended, and any
other applicable law or regulation (e.g., if subject to
registration, that they have ben registered and that the
Registration Statement has become effective, or, if exempt, the
specific grounds therefor).
ARTICLE IV
RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative stock split, recapitalization or other
capital adjustment requiring a change in the form of Share certificates, the
Bank will issue Share certificates in the new form in exchange for, or upon
transfer of, outstanding Share certificates in the old form, upon receiving:
(a) A Certificate authorizing the issuance of Share certificate in
the new form;
(b) A certified copy of any amendment to the Charter with respect to
the change;
(c) Specimen Share certificates for each class of Shares in the new
form approved by the Board of Directors of the Customer, with a
Certificate signed by the Secretary of the Customer as to such
approval;
3
<PAGE>
(d) A certified copy of the order or consent of each governmental or
regulatory authority required by law as a prerequisite to the
issuance of the Shares in the new form, and an option of counsel
for the Customer that the order or consent of no other
governmental or regulatory authority is required; and
(e) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the validity of the Shares in the new
form, the obtaining of all necessary governmental consents,
whether such Shares are fully paid and non-assessable and the
status of such Shares under the Securities Act of 1933, as
amended, and any other applicable law or regulation (i.e., if
subject to registration, that the Shares have been registered and
that the Registration Statement has become effective or, if
exempt, the specific grounds therefore).
2. The Customer shall furnish the Bank with a sufficient supply of
blank Share certificates in the new form, and from time to time will replenish
such supply upon the request of the Bank. Such blank Share certificates shall be
properly signed, by facsimile or otherwise, by Officers of the Customer
authorized by law or by the By-Laws to sign Share certificates and, if required,
shall bear the corporate seal or a facsimile thereof.
ARTICLE V
ISSUANCE AND TRANSFER OF SHARES
1. The Bank will issue Share certificates upon receipt of a Certificate
from an Officer, but shall not be required to issue Share certificates after it
has received from an appropriate federal or state authority written notification
that the sale of Shares ha been suspended or discontinued, and the Bank shall be
entitled to rely upon such written notification. The Bank shall not be
responsible for the payment of any original issue or other taxes required to be
paid by the Customer in connection with the issuance of any Shares.
2. Shares will be transferred upon presentation to the Bank of Share
certificates in form deemed by the Bank properly endorsed for transfer,
accompanied by such documents as the Bank deems necessary to evidence the
authority of the person making such transfer, and bearing satisfactory evidence
of the payment of applicable stock transfer taxes. In the case of small estates
where no administration is contemplated, the Bank may, when furnished with an
appropriate surety bond, and without further approval of the Customer, transfer
Shares registered in the name do the decedents where the current market value of
the Shares being transferred does not exceed such amount as may from time to
time be prescribed by the various states. The Bank reserves the right to refuse
to transfer Shares until it is satisfied that the endorsements on Share
certificates are valid and genuine, and for the purpose it may require, unless
otherwise instructed by an Officer of the Customer, a guaranty of signature by
an "eligible guarantor institution" meeting the requirements of the Bank, which
requirements include membership or participation in STAMP or such other
"signature guarantee program" as my be determinedly the Bank in addition to, or
in substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended. The Bank also reserves the right to refuse to transfer
Shares until it is satisfied that the requested transfer is legally authorized,
and it shall incur no liability for the refusal in good faith to make transfers
which the Bank, in its judgment, deems improper or unauthorized, until it is
satisfied that there is no basis to any claims adverse to such transfer. The
Bank may, in effecting transfers of Shares, rely upon those provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers or the
Uniform commercial Code, as the same may be amended from time to time,
applicable to the transfer of securities, and the Customer shall indemnify the
Bank for any act done or omitted by it in good faith in reliance upon such laws.
4
<PAGE>
3. All certificates representing Shares that are subject to restriction
on transfer (e.g., securities acquired pursuant to an investment representation,
securities held by controlling person, securities subject to stockholders'
agreement, etc.), shall be stamped with a legend describing the extent and
conditions of the restriction or referring to the source of such restriction.
The Bank assumes no responsibility with respect to the transfer of restricted
securities where counsel for the Customer advises that such transfer may be
properly effected.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
1. The Customer shall furnish to the Bank a copy of a resolution of its
Board of Directors, certified by the Secretary or any Assistant Secretary,
either (i) setting forth the date of the declaration of a dividend or
distribution, the date of accrual or payment, as the case may be, the record
date as of which shareholders entitled to payment, or accrual, as the case may
be shall be determined, the amount per Share of such dividend or distribution,
the payment date on which all previously accrued and unpaid dividends are to be
paid, and the total amount, if any, payable to the Bank on such payment date, or
(ii) authorizing the declaration of dividends and distributions on a periodic
basis and authorizing the Bank to rely on a Certificate setting forth the
information described in subsection (i) of this paragraph.
2. Prior to the payment date specified in such Certificate or
resolution, as the case may be, the Customer shall, in the case of a cash
dividend or distribution, pay the Bank on amount of cash, sufficient for the
Bank to make the payment, specified in such Certificate or resolution, to the
shareholders of record as of such payment date. The Bank will, upon receipt of
any purchase plan of the Customer, reinvest such cash dividends or distributions
in accordance with the terms of such plan, and (ii) in the case of shareholders
who are not participants in any such plan, make payment of such cash dividends
or distributions to the shareholders of record as of the record date by mailing
a check, payable to the registered shareholder, to the address of record or
dividend mailing address. The Bank shall not be liable for any improper payment
made in accordance with a Certificate or resolution described in the proceeding
paragraph. If the Bank shall not receive sufficient cash prior to the payment
date to make payments of any cash dividend or distribution pursuant to
subsection (i) and (ii) above to all shareholders of the Customer as of the
record date, the Bank shall, upon notifying the Customer, withhold payment to
all shareholders of the Customer as of the record date until sufficient cash is
provided to the Bank.
3. It is understood that the Bank shall in no way be responsible for
the determination of the rate or form of dividends or distributions due to the
shareholders.
4. It is understood that the Bank shall file such appropriate
information returns concerning the payment of dividends and distribution with
the proper federal, state and local authorities as the required by law to be
filed by the Customer but shall in no way be responsible for the collection or
withholding of taxes due on such dividends or distributions due to shareholders,
except and only to the extent required of it by applicable law.
ARTICLE VII
CONCERNING THE CUSTOMER
1. The Customer shall promptly deliver to the Bank written notice of
any change in the Officers authorized to sign Share certificates, Certificates,
notifications or requests, together with a specimen signature of each new
Officer. In the event any officer who shall have signed manually or whose
facsimile signature shall have been affixed to blank Share certificates shall
die, resign or be removed prior to assurance of such Share certificates, the
Bank may issue such Share certificates as the Share certificates of the Customer
notwithstanding such death, resignation or removal, and the Customer shall
promptly deliver to the Bank such approvals, adoptions or rectifications as may
be required by law.
5
<PAGE>
2. Each copy of the Charter of the Customer and copies of all
amendments thereto shall be certified by the Secretary of State (or other
appropriate official) of the state of incorporation, and if such Charter and/or
amendments are required by law also to be filed with a county or other officer
or official body, a certificate of such filing shall be filed with a certified
copy submitted to the Bank. Each copy of the By-Laws and copies of all
amendments thereto, and copies of resolutions of the Board of Directors of the
Customer, shall be certified by the Secretary or an Assistant Secretary of the
Customer under the corporate seal.
3. Customer hereby represents and warrants:
(a) It is a corporation duly organized and validly existing under the
laws of New Jersey.
(b) This Agreement has been duly authorized, executed and delivered
on its behalf and constitutes the legal, valid and binding
obligation of Customer. The execution, delivery and performance
of this Agreement by Customer do not and will not violate any
applicable law or regulation and do not require the consent of
any governmental or other regulatory body except for such
consents and approvals as have been obtained and are in full
force and effect.
ARTICLE VIII
CONCERNING THE BANK
1. The Bank shall not be liable and shall be fully protected in acting
upon any oral instruction, writing or document reasonably believed by it to be
genuine and to have been given, signed or made by the proper person or persons
and shall not be held to have any notice of any change of authority of any
person until receipt of written notice thereof from an Officer of the Customer.
It shall also be protected in processing Share certificates which it reasonably
believes to bear the proper manual or facsimile signature of the duly authorized
Officer or Officers of the Customer and the proper counter signature of the
Bank.
2. The Bank may establish such additional procedures, rules and
regulations governing the transfer or registration of Share certificates as it
may deem advisable and consistent with such rules and regulations generally
adopted by bank transfer agents.
3. The Bank may keep such records as it deems advisable but not
inconsistent with resolution adopted by the Board of Directors of the Customer.
The Bank may delver to the Customer from time to time at its discretion, for
safekeeping or disposition by the Customer in accordance with law, such records,
papers, Share certificates which have been cancelled in transfer or exchange and
other documents accumulated in the execution of its duties hereunder as the Bank
may deem expedient, other than those which the Bank is itself required to
maintain pursuant to applicable laws and regulations, and the Customer shall
assume all responsibility for any failure thereafter to produce any record,
paper, cancelled Share certificate or other document so returned, if and when
required. The records maintained by the Bank pursuant to this paragraph which
have not been previously delivered to the Customer pursuant to the foregoing
provisions of this paragraph shall be considered to be the property of the
Customer, shall be considered to be the property of the Customer, shall be made
available upon request for inspection by the Officers, employees and auditors of
the Customer, and shall be delivered to the Customer upon request and in any
event upon the date of termination of this Agreement, as specified in Article IX
of this Agreement, in the form and manner kept by the Bank on such date of
termination or such earlier date as may be requested by the Customer.
6
<PAGE>
4. The Bank may employ agents or attorneys-in-fact at the expense of
the Customer, and shall not be liable for any loss or expense arising out of, or
in connection with, the actions or omissions to act of its agents or
attorneys-in-fact, so long as the Bank acts in good faith and without negligence
or willful misconduct in connection with the selection of such agents or
attorneys-in-fact.
5. The Bank shall only be liable for any loss or damage arising out of
its own negligence or willful misconduct; provided, however, that the Bank shall
not be liable for any indirect, special, punitive or consequential damages.
6. The Customer shall indemnify and hold harmless the Bank from and
against any and all claims (whether with or without basis in fact or law),
costs, demands, expenses and liabilities, including reasonable attorney's fees,
which the Bank may sustain or incur or which may be asserted against the Bank
except for any liability which the Bank has assumed pursuant tot he immediately
preceding section. The Bank shall be deemed not to have acted with negligence
and not to have engaged in willful misconduct by reason of or as a result of any
action taken or omitted to be taken by the Bank without its own negligence or
willful misconduct in reliance upon (i) any provisions of this Agreement, I(ii)
any instrument, order or Share certificate reasonably believed by it to be
genuine and to be signed, countersigned or executed by any duly authorized
Officer of the Customer, (iii) any Certificate or other instructions of any
Officer, (iv) any opinion of legal counsel for the Customer or the Bank, or (v)
any law, act, regulation or any interpretation of the same even though such law,
act, or regulation may thereafter have been altered, changed, amended or
repealed. Nothing contained herein shall limit or in any way impair the right of
the Bank to indemnification under any other provision of this Agreement.
7. Specifically, but not by way of limitation, the Customer shall
indemnify and hold harmless the Bank from and against any and all claims
(whether with or without basis in fact or law), costs, demands, expenses and
liabilities, including reasonable attorney's fees, of any and every nature which
the Bank may sustain or incur or which may be asserted against the Bank in
connection with the genuineness of a Share certificate, the Bank's due
authorization by the Customer to issue Shares and the form and amount of
authorized Shares.
8. At any time the Bank may apply to an Officer of the Customer for
written instructions with respect to any matter arising in connection with the
Bank's duties and obligations under this Agreement, and the Bank shall not be
liable for any action taken or omitted to be taken by the Bank in good faith in
accordance with such instruction. Such application by the Bank for instructions
from an Officer of the Customer may, at the option of the Bank, set forth in
writing any action proposed to be taken or omitted to be taken by the Bank with
respect to its duties or obligations under this Agreement and the date on and/or
after which such action shall be taken, and the Bank shall not be liable for any
action taken or omitted to be taken in accordance with a proposal included in
any such action, the Bank has received written instructions in response to such
application specifying the action to be taken or omitted. The Bank may consult
counsel to the Customer or its own counsel, at the expense of the Customer, and
shall be fully protected with respect to anything done or omitted by it in good
faith in accordance with the advice or opinion of such counsel.
7
<PAGE>
9. When mail is used for delivery of non-negotiable Share certificates,
the value of which does not exceed the limits of the Bank's Blanket Bond, the
Bank shall send such non-negotiable Share certificates by first class mail, and
such deliveries will be covered while in transit by the Bank's Blanket Bond.
Non-negotiable Share certificates, the value of which exceed the limits of the
Bank's Blanket Bond, will be sent by insured registered mail. Negotiable Share
certificates will be sent by insured register mail. The Bank shall advise the
Customer of any Share certificates returned as undeliverable after being mailed
as herein provided for.
10. The Bank may issue new Share certificates in place of Shares
certificates represented to have been lost, stolen or destroyed upon receiving
instructions in writing from an Officer and indemnity satisfactory to the Bank.
Such instructions from the Customer shall be in such form as approved by the
Board of Directors of the Customer in accordance with applicable law or the
By-Laws of the customer governing such matters. If the Bank receives written
notification from the owner of the lost, stolen or destroyed Share certificate
within a reasonable time after he has notice of it, the Bank shall promptly
notify the Customer and shall act pursuant to written instructions signed by an
Officer. If the Customer receives such written notification from the owner of
the lost, stolen or destroyed Share certificate within a reasonable time after
he has notice of it, the Customer shall promptly notify the Bank and the Bank
shall act pursuant to written instructions signed by an Officer. The Bank shall
not be liable for any act done or omitted by it pursuant to the written
instructions described herein. The Bank may issue new Shares certificates in
exchange for, and upon surrender of, mutilated Share certificates.
11. The Bank will issue and mail subscription warrants for Shares,
Shares representing stock dividends, exchanges or splits, or act as conversion
agent upon receiving written instructions from an Officer and such other
documents as the Bank may deem necessary.
12. The Bank will supply shareholder lists to the Customer from time to
time upon receiving a request therefor from an Officer of the Customer.
13. In case of any requests or demands for the inspection of the
shareholder records of the Customer, the Bank will notify the Customer and
endeavor to secure instructions from an Officer a stop such inspection. The Bank
reserves the right, however, to exhibit the shareholder record to any person
whenever it is advised by its counsel that there is a reasonable likelihood that
the Bank will be held liable for the failure to exhibit the shareholder records
to such person.
14. At the request of an Officer, the Bank will address and mail such
appropriate notices to shareholders as the Customer may direct.
15. Notwithstanding any provisions of this Agreement to the contrary,
the Bank shall be under no duty or obligation to inquire into, and shall not be
liable for:
(a) The legality of the issue, sale or transfer of any Shares, the
sufficiency of the amount to be received in connection therewith,
or the authority of the Customer to request such issuance, sale
or transfer;
(b) The legality of the purchase of any Shares, the sufficiency of
the amount to be paid in connection therewith, or the authority
of the Customer to request such purchase;
(c) The legality of the declaration of any dividend by the Customer,
or the legality of the issue of any Shares in payment of any
stock dividend; or
8
<PAGE>
(d) The legality of any recapitalization or readjustment of the
Shares.
16. The Bank shall be entitled to received and the Customer hereby
agrees to pay to the Bank for its performance hereunder (i) out-of-pocket
expenses (including legal expenses and attorney's fees) incurred in connection
with the Agreement and its performance hereunder, and (ii) the compensation for
services as set forth is Schedule I.
17. The Bank shall not be responsible for any money, whether or not
represented by any check, draft or other instrument for the payment of money,
received by it on behalf of the Customer, until the Bank actually receives and
collects such funds.
18. The Bank shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied against the Bank in
connection with this Agreement.
ARTICLE IX
TERMINATION
Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than 60 days after the date of receipt of such notice.
In the event such notice is given by the Customer, it shall be accompanied by a
copy of a resolution of the Board of Directors of the Customer, certified by the
Secretary, electing to terminate this Agreement and designating a successor
transfer agent or transfer agents. In the event such notice is given by the
Bank, the Customer shall, on or before the termination date, deliver to the Bank
a coy of a resolution of its Board of Directors certified by the Secretary
designating a successor transfer agent or transfer agents. In the absence of
such designation by the Customer, the Bank may designate a successor transfer
agent. If the Customer fails to designate a successor Transfer agent and if the
Bank is unable to find a successor transfer agent, the Customer shall, upon the
date specified in the notice of termination of this Agreement and delivery of
the records maintained hereunder, be deemed to be its own transfer agent and the
Bank shall thereafter be relieved of all duties and responsibilities hereunder.
Upon termination hereof, the Customer shall pay to the Bank such compensation as
may be due to the Bank for any disbursements and expenses made or incurred by
the Bank and payable or reimbursalbe hereunder.
ARTICLE X
MISCELLANEOUS
1. The indemnities contained herein shall be continuing obligations of
the Customer, its successors and assigns, notwithstanding the termination of
this Agreement.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Customer shall be sufficiently given if
addressed to the Customer and mailed or delivered to it at P.O. Box 282,
Allamuchy, New Jersey 07820, or at such other place as the Customer may from
time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Bank shall be sufficiently given if addressed
to the Bank and mailed or delivered to it at its office at 101 Barclay Street
(22W), New York, New York 10286 or at such other place as the Bank may from time
to time designate in writing.
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<PAGE>
4. This Agreement may not be amended or modified in any manner except
by a written agreement duly authorized and executed by both parties. Any duly
authorized Officer may amend any Certificate naming Officers authorized to
execute and deliver Certificates, instructions, notices or other instruments,
and the Secretary or any Assistant Secretary may amend any Certificate listing
the shares of capital stock of the Customer for which the Bank performs Services
hereunder.
5. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party without the prior written
consent of the other party, and provided, further, that any reorganization,
merger, consolidation, or sale of assets, by the Bank shall not be deemed to
constitute an assignment of this Agreement.
6. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
7. This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts, together, shall
constitute only one instrument.
8. The provisions of this Agreement are intended to benefit only the
Bank and the Customer, and no rights shall be granted to any other person by
virtue of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunto duly authorized and
their respective corporate seals to be hereunto affixed, as of the day and year
first above written.
Attest: R-TEC TECHNOLOGIES, INC.
/s/Phyllis Grippaldi By:/s/Marc M. Scola
- -------------------- ------------------------
Phyllis Grippaldi Name:Marc M. Scola, Esq.
Title:General Counsel and
Vice President
Attest: THE BANK OF NEW YORK
/s/ By:/s/Raymond Romanski
- --------------------- -----------------------
Name: Raymond Romanski
Title: VP
10
EXHIBIT 14.0
THE
BANK OF
NEW
YORK
----------------------------------------------------
SUBSCRIPTION ESCROW AGREEMENT
between
R-TEC TECHNOLOGIES, INC.
-----------------------------------------------------------------
and
THE BANK OF NEW YORK
Dated as of January 26 , 1999
ACCOUNT NUMBER(S) 301472
Short Title of Account R-TEC Technologies, Inc.
----------------------------------------------------
<PAGE>
ESCROW AGREEMENT
Escrow Agreement (the "Agreement"), dated as of January __, 1999, among
The Bank of New York, a New York banking corporation with its principal
corporate trust office at 101 Barclay Street, New York, New York 10286 (the
"Escrow Agent"), and R-Tec Technologies, Inc., a New Jersey corporation, with
its principal office at 61 Mallard Drive, P.O. Box 282, Allamuchy, New Jersey
07820 (the "Company").
WHEREAS, the Company intends to offer for sale (the "Offering") up to
3,750,000 shares of common stock, par value $8.00 per share of the Company in an
initial Public Offering under the Securities Act of 1933, as amended, pursuant
to its Prospectus dated January ___, 1999.
WHEREAS, the Company is expected to offer the stock on behalf of the
Company;
WHEREAS, the Company proposes to engage the Escrow Agent for the
purpose of receiving, depositing and holding in a segregated non
interest-bearing account all funds ("Proceeds" shall mean all funds wired into
the escrow account and funds resumed cleared from check deposits) from
subscribers for Units ("Subscribers") received in connection with the sale of
stock until such time as such funds are to be released to the Company or
returned to the Subscribers; and
WHEREAS, the Escrow Agent has agreed to act as escrow agent in
connection with the proposed subscription and sale of Units.
NOW, THEREFORE, it is agreed as follows:
Section 1. Establishment of Escrow Account; Deposits.
(a) The Escrow Agent shall promptly (and, in any case, on or
prior to the commencement of the Offering) cause to be opened a fully segregated
noninterest-bearing escrow account, which escrow account shall be entitled R-Tec
Technologies, Inc. - Escrow Account (the "Escrow Account") for the purpose of
holding in trust all Proceeds for the company and the Subscribers. The Company
shall, as to each Subscriber in connection with all proceeds received under the
Offering, instruct each subscriber to remit the purchase price in the form of
checks (which checks must be certified if remitted during the last five (5)
business days of the offering period) or wire transfers to (insert "the
Company") the Company for forwarding to the Escrow Agent as promptly as
possible. All such checks and wire transfers forwarded to the Escrow Agent shall
be accompanied by information identifying each Subscriber, subscription, the
Subscriber's social security or ID number and address. Wire transfers to the
Escrow Account shall be made in Federal Funds transferred as follows:
Bk of NYC
ABA No. 021000018
GLA 111-565
Cust A/C # 301472
A/C R-Tec Technologies
(b) On the terms and conditions of this Agreement, the Escrow Agent
shall deposit the Proceeds and any interest earned thereon in the Escrow
Account. The Proceeds and any interest earned thereon in the Escrow Account. The
Proceeds shall be invested as in accordance with this Agreement. All amounts
deposited in the Escrow Account shall be invested and reinvested in the manner
provided in Section 2 hereof.
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<PAGE>
(c) Except as and to the extent provided herein, the Escrow Agent shall
not be obligated nor, without the consent of the company, is it authorized to
accept instructions under Agreement directly from any Selected Dealer.
Section 2. Investment of Proceeds.
Proceeds (and any earnings thereon), and until such time as all
Proceeds and earnings thereon have bee disbursed from the Escrow Account as
provided in Section 4 and Section 5, shall be invested and reinvested by the
Escrow Agent without unreasonable delay and only in such obligations issued or
guaranteed by the United States Government or any agency thereof, or in such
commercial paper, or in such bank or trust company certificates of deposit, and
with such maturities, as shall be designated in writing fro time to time by the
Company, such writing to specify the particular investment. Temporarily
uninvested funds held hereunder shall be deposited in The Bank of New York
Deposit reserve. The Escrow Agent shall not be responsible for interest losses,
taxes or other charges on investments. Interest actually earned from the time
the Proceeds are deposited into the Escrow Account until the close of business
on the date preceding the date the proceeds are disbursed by the Escrow Agent as
provided herein shall be held intrust for the Subscribers and, upon the
occurrence of the conditions set forth in Section 4 and Section 5 hereof, shall
be payable in accordance with the provisions set forth in Section 5 hereof. If,
at the time the Escrow Agent is required to make a disbursement pursuant to
Section 5, the proceeds are invested as provided in this Section 2, the Escrow
Agent shall, in anticipation of such disbursement, sell or otherwise liquidate
such investments. Instructions from the Company as to any such investments or
the sale or other disposition thereof shall be confirmed in writing (but no
delay or failure by the Company to confirm in writing an instruction or failure
by the Company to confirm in writing an instruction given by telephone shall
effect the validity of such instruction or result in any liability to the Escrow
Agent for acting on such instruction).
Section 3. Acceptance or Rejection of Subscription.
As soon as practicable following receipt of each subscription, the
company will determine whether or not the subscription is to be accepted or
rejected in whole or in part.
With respect to each subscription which is to be accepted, the company
will notify the Escrow Agent of such acceptance. With respect to each
subscription which is to be rejected (in whole or in part), the company will
notify the Escrow Agent of such rejection in writing, and upon receipt of such
notification, the Escrow Agent will promptly as practicable transfer the amount
represented by such subscription reflected in part only) and issue a check in
the amount of the rejected Subscriber's subscription directly to the rejected
Subscriber.
Section 4. Disbursements from the Proceeds.
(a) If subscriptions of at least 625,000 shares ($5,000,000 U.S.) have
not been deposited in the Escrow Account and accepted by the Company on or
before the earlier of (i) _________________ or (ii) the date upon which the
Company elects to terminate the Offering (the "Termination Date") upon
instruction by the Company as to the amounts and recipients of the funds then
held in escrow, the Escrow Agent shall terminate the Escrow Account and return
the subscription funds to each Subscriber.
2
<PAGE>
(b) If subscriptions for at least 625,000 shares ($5,000,000) have been
deposited in the Escrow Account and accepted by the Company on or before the
Termination Date, pursuant to the instructions of the Company identifying the
Subscribers whose subscriptions are to be accepted, the Escrow Agent shall on
the date designated by the Company in such instructions (the "Interim Closing
Date") which date shall be at any time on or after the giving of such notice)
release to the Company all or a specified portion of the Proceeds held by the
Escrow Agent (including all accrued interest thereon) in the Escrow Account in
the manner described in Section 4(a). With respect to any date subsequent to the
Interim Closing Date on which the Escrow Agent is to release proceeds to the
Company, but no later than __________________, (the "Final Closing Date"),
pursuant to the instructions of the Company identifying the Subscribers whose
subscriptions are to be accepted on the Final Closing Date and delivered at any
time on or prior to such Final Closing Date, the Escrow Agent shall release to
the Company on such Final Closing Date all or the specified portion of the
Proceeds held by the Escrow Agent in the Escrow Account in the manner described
in Section 5(a).
3
<PAGE>
Section 5. Procedure for disbursement from the Escrow Account.
The proceeds held in the Escrow Account and interest earned thereon
shall be subject to, and distributed in accordance with, the following
provisions:
(a) On the Interim Closing Date and on the Final Closing Date, upon
satisfaction of the applicable requirements of Section 4 hereof, the Escrow
Agent shall (i) transfer by wire to an account designated by the Company the
Proceeds requested to be transferred on such date in the notice executed by the
Company, and (ii) the Escrow agent shall within 10 business days of the
applicable closing date transfer by check to each Subscriber any interest
actually earned on such Proceeds. At the time of such transfer, the Escrow Agent
shall confirm in writing to the Company the amount of interest earned for the
account of each Subscriber and the date such subscription was received.
(b) On the Interim Closing Date and on the Final Closing Date, the
Escrow Agent shall transfer by check the proceeds and all interest (if any)
earned thereon, of any Subscribers whose subscriptions were obtained by the
Company but rejected by the Company since the commencement of the Offering or
the most recent closing date (as applicable). At the time of such transfer, the
Escrow Agent shall identify in writing to the Company the amount of interest
earned for the account of each Subscriber and the date such subscription was
received.
(c) As soon as practicable after the Termination Date (but in no event
later than the 30th business day following the Termination Date), all proceeds
received by the Escrow Agent (other than proceeds previously disbursed or to be
distributed by the Escrow Agent pursuant to Section 5(a) or Section 5(b) shall
be returned by check directly to the Subscriber having provided such proceeds,
without deduction, penalty or expense to the Subscriber and together with each
such Subscriber's pro rata portion of the interest actually earned thereon. The
Escrow Agent shall notify the Company of the distribution of such funds to the
Subscribers.
(d) The Escrow Agent does not have any interest in the Escrowed
Property deposited hereunder but is serving as escrow holder only and having
only possession thereof. The Company shall pay or reimburse the Escrow Agent
upon request for any transfer taxes or other taxes relating to the Escrowed
Property incurred n connection herewith and shall indemnify and hold harmless
the Escrow Agent any amounts that it is obligated to pay in the way of such
taxes. Any payments of income from this Escrow Account shall be subject to
withholding regulations then in force with respect to Untied States taxes. The
parties hereto will provide the Escrow Agent with appropriate W-9 forms for tax
I.D., number certifications, W-8 forms for non-resident alien certifications. It
is understood that the Escrow Agent shall be responsible for income reporting
only with respect to income earned on investment of funds which are a part of
the Escrowed Property and is not responsible for any other reprint. This
paragraph and paragraph (9) shall survive notwithstanding any termination of
this Escrow Agreement or the resignation of the Escrow Agent.
Section 6. Termination of Escrow.
In the event of the release of all proceeds and all accrued interest in
accordance with Section 4 and Section 5 of this Agreement, this Agreement shall
terminate and the Escrow Agent shall be relieved of all responsibilities in
connection with the escrow deposits provided for in this Agreement, except
claims which are occasioned by its negligence, bad faith or willful misconduct.
4
<PAGE>
Section 7. Compensation of Escrow Agent.
(a) At the time of execution of this Agreement the Company shall pay
the Escrow Agent an acceptance fee of $1,500.00. In addition, the Company shall
pay Escrow Agent $15,000.00 annually, payable upon execution of this Agreement
and on each [Date] thereafter, for any and all services rendered by Escrow Agent
hereunder.
(b) The Company shall pay monthly an investment transaction fee of
$25.00 for each purchase or sale made by the Escrow Agent pursuant to Section 2.
(c) The Company shall reimburse the Escrow Agent upon request for all
expenses, disbursements, and advances incurred or made by the Escrow Agent in
implementing any of the provision of this Agreement, including compensation and
the expenses and disbursements of its counsel, except any such expense,
disbursement, or advance as may arise from its gross negligence or willful
misconduct.
The Company hereby grants to the Escrow Agent a lien on the
Proceeds such that, in the event that any and all charges payable under Section
7 and Section 8 shall not be timely paid by the Company, the Escrow Agent shall
have the right to pay itself from the proceeds the full amount owed, provided
that written notice of the Escrow Agent's intent to proceed under this Section 7
be given at least five (5) business days in advance of such action.
Section 8. Responsibilities of Escrow Agent; Notices.
(a) The Escrow Agent shall be under no duty to enforce
payment of any subscription which is to be paid to and held by it;
(b) The Escrow Agent shall be under no duty to accept funds,
checks, drafts or instruments for the payment of money from anyone other than
the Company or to give any receipt therefor except to the Company;
(c) The Escrow Agent shall be obligated to perform only such
duties as are expressly set forth in this Agreement. No implied covenants or
obligation shall be inferred from this Agreement against the Escrow Agent, nor
shall the Escrow Agent be bound by the provisions of any agreement among the
Company beyond the specific terms hereof.
(d) The Escrow Agent shall not be liable hereunder except for
its own gross negligence or willful misconduct and the Company agrees to
indemnify the Escrow Agent for and hold it harmless as to any loss, liability,
or expense, including attorney's fees and expenses, incurred without gross
negligence or willful misconduct on the part of the Escrow Agent and arising out
of or in connection with the Escrow Agent's duties under this Agreement.
Specifically and without limiting the foregoing, the Escrow Agent shall in no
event have any liability in connection with its investment, reinvestment or
liquidation, in good faith and in accordance with the terms hereof, of any
Escrowed Property held by it hereunder, including without limitation any
liability for any delay not resulting from gross negligence or willful
misconduct in such investment, reinvestment or liquidation, or for any loss of
income incident to any such delay.
5
<PAGE>
(e) the Escrow Agent shall be entitled to rely upon any order,
judgment, certification, instruction, notice, opinion or other writing delivered
to it in compliance with the provisions of this Agreement without being required
to determine the authenticity or the correctness of any fact stated therein or
the propriety or validity of service thereof. The Escrow agent may act in
reliance upon any instrument comporting with the provisions of this Agreement or
signature believed by it to be genuine and may assume that any person purporting
to give notice or receipt or advice or make any statement or execute any
document in connection with the provision hereof has been duly authorized to do
so.
At any time the Escrow Agent may request in writing any
instruction in writing from the Company, and may at its own option include in
such request the course of action it proposes to take and the date on which it
proposes to act, regarding any matter arising in connection with its duties and
obligations hereunder. The Escrow Agent shall not be liable for acting without
the company's consent in accordance with such a proposal on or after the date
specified therein, provided that the specified date shall be at least two (2)
business days after the Company receives the Escrow Agents request for
instructions and its proposed course of action, and provided that, prior to so
acting, the Escrow Agent has not received the written instructions requested.
(f) The Escrow Agent may act pursuant to the advice of counsel
chosen by it with respect to any matter relating to this Agreement and shall not
be liable for any action taken or omitted in accordance with such advice.
(g) The Escrow Agent makes no representation as to the
validity, value, genuineness or collectability of any security or other document
or instrument held by our delivered to it.
(h) The Escrow Agent shall not be called upon to advise any
party as to selling or retaining, or taking or refraining from taking any action
with respect to, any securities or other property deposited hereunder.
(i) No provision or this Agreement shall require the Escrow
Agent to expend or risk its own funds or otherwise incur any financial
liabilities in the performance of any of its duties hereunder.
(j) The Escrow Agent shall be deemed conclusively to have
given and delivered any notice required to be given or delivered if it is in
writing, signed by any one of its authorized officers and mailed, by express,
registered or certified mail addressed to:
The Company at:
R-Tec Technologies, Inc.
P.O. Box 282
61 Mallard Drive
Allamuchy, New Jersey 07820
Telephone: (908) 850-4466
Facsimile: (908) 850-4670
(k) The Escrow Agent shall be deemed conclusively to have
receive any notice required to be given or delivered to the Escrow Agent if it
is in writing, signed by any one of the authorized officers of the company,
mailed, by express, registered or certified mail addressed to and actually
received by:
6
<PAGE>
The Escrow Agent at:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attn: Insurance Trust & Escrow
Sharia Jones-Bey
Facsimile: (212) 815-7181
(l) the provision of Sections 7, 8 and 11 shall survive
termination of this Agreement and/or the resignation or removal of the Escrow
Agent.
Section 9. Resignation of Escrow Agent; Successor.
Notwithstanding anything to the contrary herein, the Escrow Agent may
resign at any time by giving at least 15 days written notice thereof. The
Company may remove the Escrow Agent at any time (with or without cause) by
giving at least 15 days written notice thereof. Within 10 days after receiving
such notice, the Company shall agree on and appoint a successor escrow agent at
which time the Escrow Agent shall either distribute the funds held in the Escrow
Account, less its fees, costs and expenses or other obligations owed to the
Escrow Agent as directed by the instructions of the Company or hold such funds,
pending distribution, until such fees, costs and expenses or other obligations
are paid. If a successor escrow agent has not been appointed or has not accepted
such appointment by the end of the 10 day period, the Escrow Agent may apply to
a court of competent jurisdiction for the appointment of a successor escrow
agent, or for other appropriate relief and the costs, expenses and reasonable
attorney fees which the Escrow Agent incurs in connection with such a proceeding
shall be paid by the Company.
Section 10. Dispute Resolution.
In the event of any dispute between or conflicting claims by or among
the Company or and/or any other person or entity with respect to any Proceeds
held in the Escrow Account, the Escrow Agent shall be entitled, at its sole
discretion, to refuse to comply with any and all claims, demands or instructions
with respect to such Proceeds so long as such dispute or conflict shall
continue, and the Escrow Agent shall not be or become liable in any way to the
Company for the Escrow Agent's failure or refusal to comply with such
conflicting claims, demands or instructions, except to the extent under the
circumstances such failure would constitute gross negligence, bad faith or
willful misconduct on the part of the Escrow Agent. The Escrow Agent shall be
entitled to refuse to act until, at its sole discretion, either such conflicting
or adverse claims or demands shall have been finally determined in a court of
competent jurisdiction or settled by agreement between the conflicting parties
as evidenced in writing, satisfactory to the Escrow Agent, or the Escrow agent
shall have received security or an indemnity satisfactory to the Escrow Agent
sufficient to save the Escrow Agent harmless from and against any and all loss,
liability or expenses which the Escrow Agent may incur by reason of the Escrow
agent's acting. The Escrow Agent may in addition elect at its sole discretion to
commence an interpleader action or seek other judicial relief or orders as the
Escrow Agent may deem necessary.
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<PAGE>
Section 11. Extraordinary Expense.
It is understood that fees and usual charges agreed upon for the Escrow
Agent's services shall be considered compensation for its services as
contemplated by this Agreement, and if the Escrow Agent rendered any service not
provided for in this Agreement, or if there is any assignment of any interest in
the subject matter of this Agreement by the Company or any modification of this
Agreement, or if any controversy arises under this Escrow Agreement or the
Escrow Agent is made a party to any litigation pertaining to this Agreement or
the subject matter of this Agreement, the Escrow Agent shall be reasonably
compensated for those extraordinary services and reimbursed for all costs and
expenses occasioned by such services, controversy or litigation and the Company
hereby promises to pay such sums upon demand.
Section 12. Governing Law.
This agreement shall be governed and construed in accordance with the
laws of the State of New York without reference to the principles thereof
respecting conflicts of laws. This Agreement may be executed in counterparts,
each of which so executed shall be deemed an original , and said counterparts
together shall constitute one and the same instrument.
Section 13. Maintenance of Record.
The Escrow Agent shall maintain accurate records of all transactions
hereunder. Promptly after the termination of this Agreement, and as may from
time to time be reasonably requested by the Company before such termination, the
Escrow Agent shall provide the Company with a copy of such records, certified by
the Escrow Agent to be a complete and accurate account of all transactions
hereunder. The authorized representatives of the company shall also have access
to the Escrow Agent's gooks and records to the extent relating to its duties
hereunder, during normal business hours upon notice to the Escrow Agent.
Section 14. Miscellaneous.
(a) Nothing in this Agreement is intended or shall confer upon
anyone other than the parties any legal equitable right, remedy or claim.
(b) The invalidity of any portion of this agreement shall not
affect the validity of the remainder hereof.
(c) This Agreement is the final integration of the agreement
of the parties with respect to the matters covered by it and supersedes any
prior understanding or agreement, oral or written, with respect thereto.
(d) The rights and obligations of each party hereto may not be
assigned or delegated to any other person without the written consent of the
other parties hereto. Subject to the foregoing, the terms and provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8
<PAGE>
(e) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which mentions "The
Bank of New York" by name or the rights, powers, or duties of the Escrow Agent
under this Agreement shall be issued by any other parties hereto, or on such
party's behalf, without the prior written consent of Escrow Agent.
R-TEC TECHNOLOGIES, INC.
Dated: January 26, 1999 By: /s/MARC M. SCOLA
----------------------
MARC M. SCOLA, ESQ.
Vice President
and General Counsel
THE BANK OF NEW YORK
Dated: January 27, 1999 By: /s/SHARIA JONES-BEY
----------------------
SHARIA JONES-BEY
Assistant Treasurer
9
EXHIBIT 15.0
R-TEC TECHNOLOGIES, INC.
POLICY AGAINST INSIDER TRADING
DATED APRIL 18, 1999
I. Purpose
In order to comply with federal and state securities laws governing (a) trading
in Company securities while in the possession of "material nonpublic
information" concerning the Company, and (b) tipping or disclosing material
nonpublic information to outsiders, and in order to prevent even the appearance
of improper insider trading or tipping, the Company has adopted this policy for
all of its directors, officers and employees, their family members, and
specially designated outsiders who have access to the Company's material
nonpublic information.
II. Scope
A. This policy covers all directors, officers and employees of
the company, their family members (collectively referred to as
"Insiders"), and any outsiders whom the Insider Trading
Compliance Officer may designate as Insiders because they have
access to material nonpublic information concerning the
Company.
B. The policy applies to any and all transactions in the
Company's securities, including its common stock and options
to purchase common stock, and any other type of securities
that the Company may issue, such as preferred stock,
convertible debentures, warrants and exchange-traded options
or other derivative securities.
C. The policy will be delivered to all directors, officers,
employees and designated outsiders upon its adoption by the
Company, and to all new directors, officers, employees and
designated outsiders at the start of their employment or
relationship with the company. Upon first receiving a copy of
the policy or any revised versions, each Insider must sign and
acknowledgment that he or she has received a copy and agrees
to comply with the policy's terms. Section 16 Individuals and
Key employees, as defined below, may be required to certify
compliance with the policy on an annual basis.
<PAGE>
III. Section 16 Individuals and Key Employees
A. Section 16 Individuals. The Company has designated those
persons listed on Exhibit A attached hereto as the directors
and officers who are subject to the reporting provisions and
trading restrictions of Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the
underlying rules and regulations promulgated by the SEC.
Section 16 Individuals must obtain prior approval of all
trades in Company securities from the Insider Trading
Compliance Committee in accordance with the procedures set
forth in Section VI.C below. The Company will amend Exhibit A
from time to time as necessary to reflect the addition,
resignation or departure of Section 16 Individuals.
B. Key Employees. The Company has designated those persons listed
on Exhibit B attached hereto as Key Employees who, because of
their position with the Company and their access to material
nonpublic information, must obtain the prior approval of all
trades in Company securities from the Insider Trading
Compliance Committee in accordance with the procedures set
forth in Section VI.C below. The Company will amend Exhibit B
from time to time as necessary to reflect the addition,
resignation or departure of Key Employees.
IV. Insider Trading Compliance Officer and Compliance committee.
The Company has designated the President as its Insider trading Compliance
Officer (the "Compliance Officer"). The Insider trading Compliance Committee
(the "Compliance Committee") will consist of the Compliance Officer and in house
legal counsel. The Compliance committee will review and either approve or
prohibit all proposed trades by Section 16 Individuals and Key Employees in
accordance with the procedures set forth in Section VI.C below. In addition to
the trading approval duties described in Section VI.C below, the duties of the
Compliance Officer will include the following:
A. Administering this policy and monitoring and enforcing
compliance with all policy and procedures.
B. Responding to all inquiries relating to this policy and its
procedures.
<PAGE>
C. Designating and announcing special trading blackout periods
during which no Insiders may trade in Company securities.
D. Providing copies of this policy and other appropriate
materials to all current and new directors, officers, and
employees, and such other persons who the Compliance Officer
determines have access to material nonpublic information
concerning the Company.
E. Administering, monitoring and enforcing compliance with all
federal and state insider trading laws and regulations,
including without limitation Sections 10(b), 16, 20A and 21A
of the Exchange Act and the rules and regulations promulgated
thereunder, and Rule 144 under the Securities Act of 1933 (the
"Securities Act"); and assisting in the preparation and filing
of all required SEC reports relating to insider trading in
Company securities, including without limitation Forms 3, 4, 5
and 144 and Schedules 13D and 13G.
F. Revising the policy as necessary to reflect changes in federal
or state insider trading laws and regulations.
G. Maintaining as Company records originals or copies of all
documents required by the provisions of this policy or the
procedures set forth herein, and copies of all required SEC
reports relating to insider trading, including without
limitation Forms 3, 4, 5 and 144 and Schedules 13D and 13G.
H. Maintaining the accuracy of the list of Section 16 Individuals
and Key Employees as attached on Exhibits A and B, and
updating them periodically as necessary to reflect additions
to or deletions from each category of individuals.
The Compliance Officer may designate one or more individuals who may perform the
Compliance Officer's duties or the duties of the other member of the Compliance
Committee in the event that the Compliance Officer or other Committee member is
unable or unavailable to perform such duties.
<PAGE>
V. DEFINITION OF "MATERIAL NONPUBLIC INFORMATION"
A. "MATERIAL" INFORMATION
Information about the Company is "material" if it would be expected to
affect the investment or voting decisions of the reasonable shareholder
or investor, or if the disclosure of the information would be expected
to significantly alter the total mix of the information in the
marketplace about the Company. In simple terms, material information is
any type of information which could reasonably be expected to affect
the price of Company securities. While it is not possible to identify
all information that would be deemed "material", the following types of
information ordinarily would be considered material:
* Financial performance, especially quarterly
and year-end earnings, and significant
changes in financial
performance or liquidity.
* Company projections and strategic plans.
* Potential mergers and acquisitions or the sale of
Company assets or subsidiaries.
* New major contracts, orders, suppliers, customers, or
finance sources, or the loss thereof.
* Major discoveries or significant changes or
developments in products or product lines, research or
technologies.
* Significant changes or developments in
supplies or inventory, including significant
product defects, recalls or product returns.
* Significant pricing changes.
* Stock splits, public or private securities/debt
offerings, or changes in Company dividend policies
or amounts.
* Significant changes in senior management.
* Significant labor disputes or negotiations.
* Actual or threatened major litigation, or the
resolution of such litigation.
B. "NONPUBLIC" INFORMATION
Material information is "nonpublic" if it has not been widely disseminated to
the public through major newswire services, national news services and financial
news services. For the purposes of this policy, information will be considered
public, i.e., no longer "nonpublic", after the close of trading on the second
full trading day following the Company's widespread public release of the
information.
<PAGE>
C. CONSULT THE COMPLIANCE OFFICER FOR GUIDANCE
Any Insiders who are unsure whether the information that they possess is
material or nonpublic must consult the Compliance Officer for guidance before
trading in any Company securities.
VI. STATEMENT OF COMPANY POLICY AND PROCEDURES
A. PROHIBITED ACTIVITIES
1. No Insider may trade in Company securities while
possessing material nonpublic information concerning
the Company.
2. No Insider may trade in Company securities outside of
the applicable "trading windows" described in Section
VI.B below, or during any special trading blackout
periods designated by the Compliance Officer.
3. No section 16 Individual or Key Employee listed on
Exhibits A and B attached hereto may trade in Company
securities unless the trade(s) have been approved by
the compliance Committee in accordance with the
procedures set forth in Section VI.C below. Section
16 Individuals and Key Employees who wish to sell
Company securities in order to liquidate their
profits are strongly encouraged to sell their
securities pursuant to a predetermined written plan
adopted prior to each fiscal or calendar year, which
is approved by the Compliance Committee, specifies
the dates and amounts of securities to be sold, and
cannot be modified during the year. To the extent
possible, Section 16 Individuals and Key Employees
should retain all records and documents that support
their reasons for making each trade.
4. The Compliance Officer may not trade in Company
securities unless the trade(s) have been approved by
the other member of the Compliance Committee and the
Treasurer or secretary in accordance with the
procedures set forth in Section VI.C below.
5. No Insider may "tip" or disclose material nonpublic
information concerning the Company to any outside
person (including family members, analysts,
individual investors, and members of the investment
community and news media), unless required as part of
that Insider's regular duties for the Company and
authorized by the Compliance Officer and/or the
Investor Relations Committee. In any instance in
which such information is disclosed to outsiders, the
Company will take such steps as are necessary to
preserve the confidentiality of the information,
including requiring the outsider to agree in writing
to comply with the terms of this policy and/or to
sign a confidentiality agreement. All inquiries from
outsiders regarding material nonpublic information
about the Company must be forwarded to the Compliance
Officer and/or the Investor Relations Committee.
<PAGE>
6. No Insider may give trading advice of any kind about
the Company to anyone while possession material
nonpublic information about the Company, except that
Insiders should advise others not to trade if doing
so might violate the law or this policy. The Company
strongly discourages all Insiders from giving trading
advice concerning the Company to third parties even
when the Insiders do not possess material nonpublic
information about the Company.
7. No Insider may trade in any interest or position
relating to the future price of Company securities,
such as a put, call or short sale.
8. No Insider may (a) trade in the securities of any
other public company while possessing material
nonpublic information concerning that company, (b)
"tip" or disclose material nonpublic information
concerning any other public company to anyone, or (c)
give trading advice of any kind to anyone concerning
any other public company while possessing material
nonpublic information about that company.
B. TRADING WINDOWS AND BLACKOUT PERIODS
1. Trading Windows for Section 16 Individuals and Key
Employees. After obtaining trading approval from the
Compliance Committee in accordance with the
procedures set forth in Section VI.C below, Section
16 individuals and Key Employees listed on Exhibits A
and B attached hereto may trade in Company securities
only on the first and tenth business day of any month
which does not fall on a legal holiday.
2. Trading Windows for All Other Insiders. All other
Insiders who are not Section 16 Individuals or Key
Employees may trade in Company securities only during
the period beginning at the close of trading on the
second full trading day following the Company's
widespread public release of quarterly or year-end
earnings and ending at the close of trading on the
last day of the second month of the fiscal quarter in
which the earnings are released.
<PAGE>
3. No Trading During Trading Windows While in the
Possession of Material Nonpublic Information. No
Insiders possessing material nonpublic information
concerning the Company may trade in Company
securities even during applicable trading windows.
Persons possessing such information may trade during
a trading window only after the close of trading on
the second full trading day following the Company's
widespread public release of the information.
4. No Trading During Blackout Periods. No Insiders may
trade in Company securities outside of the applicable
trading windows or during any special blackout
periods that the Compliance Officer may designate. No
Insiders may disclose to any outside third part that
a special blackout period has been designated.
5. Exceptions for Hardship Cases. The Compliance Officer
may, on a case-by-case basis, authorize trading in
Company securities outside of the applicable trading
windows (but not during special blackout periods) due
to financial hardship or other hardships, but only in
accordance with the procedures set forth in Section
VI.C.2 below.
C. PROCEDURES FOR APPROVING TRADES BY SECTION 16 INDIVIDUALS,
KEY EMPLOYEES AND HARDSHIP CASES
1. Section 16 Individuals/Key Employee Trades. No
Section 16 Individual or Key Employee may trade in
Company securities until
a. the person trading has notified the
Compliance Officer in writing of the amount
and nature of the proposed trade(s),
b. the person trading has certified to the
Compliance Officer in writing no earlier
than two business days prior to the proposed
trade(s) that (i) he or she is not in
possession of material nonpublic information
concerning the Company and (ii) the proposed
trade(s) do not violate the trading
restrictions of Section 16 of the Exchange
Act or Rule 144 of the Securities Act, and
c. the Compliance Committee has approved the
trade(s), and the Compliance Officer has
certified the Committee's approval in
writing.
<PAGE>
2. Hardship Trades. The Compliance Officer may, on a
case-by-case basis, authorize trading in Company
securities outside of the applicable trading windows
due to financial hardship or other hardships only
after
a. the person trading has notified the
Compliance Officer in writing of the
circumstances of the hardship and the amount
and nature of the proposed trade(s),
b. the person trading has certified to the
Compliance Officer in writing no earlier
than two business days prior to the proposed
trade(s) that he or she is not in possession
of material nonpublic information concerning
the Company, and
c. the Compliance Committee has approved the
trade(s) and the Compliance Officer has
certified the Committee's approval in
writing. Only the Compliance Officer's
approval is necessary for hardship trades by
Insiders who are not Section 16 Individuals
or Key Employees.
3. No Obligation to Approve Trades. The existence of the
foregoing approval procedures does not in any way obligate the
compliance Officer or Compliance Committee to approve any
trades requested by Section 16 Individuals, Key Employees or
hardship applicants. The Compliance Officer or Compliance
committee may reject any trading requests at their sole
reasonable discretion.
D. EMPLOYEE BENEFIT PLANS
1. Employee Stock Purchase Plans. The trading
prohibitions and restrictions set forth in this
policy do not apply to periodic contributions by the
Company or employees to employee benefit plans (e.g.,
pension or 401K plans) which are used to purchase
Company securities pursuant to the employee's advance
instructions. However, no officers or employees may
alter their instructions regarding the purchase or
sale of Company securities in such plans while in the
possession of material nonpublic information.
2. Stock Option Plans. The trading prohibitions and
restrictions of this policy apply to all sales of
securities acquired through the exercise of stock
options granted by the Company, but not to the
acquisition of securities through such exercises.
<PAGE>
E. PRIORITY OF STATUTORY OR REGULATORY TRADING RESTRICTIONS
The trading prohibitions and restrictions set forth in this policy will
be superseded by any greater prohibitions or restrictions prescribed by
federal or state securities laws and regulations, e.g., short-swing
trading by Section 16 Individuals or restrictions on the sale of
securities subject to Rule 144 under the Securities Act of 1933. Any
Insider who is uncertain whether other prohibitions or restrictions
apply should ask the Compliance Officer.
VII. POTENTIAL CIVIL, CRIMINAL AND DISCIPLINARY SANCTIONS
A. CIVIL AND CRIMINAL PENALTIES
The consequences of prohibited insider trading or tipping can
be severe. Persons violating insider trading or tipping rules
may be required to disgorge the profit made or the loss
avoided by the trading, pay the loss suffered by the person
who purchased securities from or sold securities to the
insider tippee, pay civil penalties up to three times the
profit made or loss avoided, pay a criminal penalty of up to
$1 million, and serve a jail term of up to ten years. The
Company and/or the supervisors of the person violating the
rules may also be required to pay major civil or criminal
penalties.
B. COMPANY DISCIPLINE
Violation of this policy or federal or state insider trading
or tipping laws by any director, officer or employee, or the
family members, may subject the director to dismissal
proceedings and the officer or employee to disciplinary action
by the Company up to and including termination for cause.
C. REPORTING OF VIOLATIONS
Any Insider who violates this policy or any federal or state
laws governing insider trading or tipping, or knows of any
such violation by any other Insiders, must report the
violation immediately to the Compliance Officer. Upon learning
of any such violation, the Compliance Officer, in consultation
with the other Compliance Committee member and the Company's
legal counsel, will determine whether the Company should
release any material nonpublic information, or whether the
Company should report the violation to the SEC or other
appropriate governmental authority.
VIII. INQUIRIES
Please direct all inquiries regarding any of the provisions or procedures of
this policy to the Compliance Officer.
PHILIP LACQUA
President and C.E.O.
<PAGE>
EXHIBIT A
OFFICERS AND DIRECTORS
MARC M. SCOLA VICE PRESIDENT, GENERAL COUNSEL AND A DIRECTOR
NANCY VITOLO SECRETARY, VICE PRESIDENT AND A DIRECTOR
PHILIP LACQUA PRESIDENT, TREASURER AND A DIRECTOR
<PAGE>
EXHIBIT B
KEY EMPLOYEES
NONE
<PAGE>
RECEIPT AND ACKNOWLEDGMENT
I, __________________________, hereby acknowledge that I have received and read
a copy of the "POLICY AGAINST INSIDER TRADING" and agree to comply with its
terms. I understand that violation of insider trading or tipping laws or
regulations may subject me to severe civil and/or criminal penalties, and that
violation of the terms of the above-title policy may subject me to discipline by
the Company up to and including termination for cause.
- ---------------------------- ----------------------------
Signature Date
<PAGE>
RECEIPT AND ACKNOWLEDGMENT
I, MARC M. SCOLA, hereby acknowledge that I have received and read a copy of the
"POLICY AGAINST INSIDER TRADING" and agree to comply with its terms. I
understand that violation of insider trading or tipping laws or regulations may
subject me to severe civil and/or criminal penalties, and that violation of the
terms of the above-title policy may subject me to discipline by the Company up
to and including termination for cause.
- ---------------------------- ----------------------------
MARC M. SCOLA Dated:
<PAGE>
RECEIPT AND ACKNOWLEDGMENT
I, PHILIP LACQUA, hereby acknowledge that I have received and read a copy of the
"POLICY AGAINST INSIDER TRADING" and
agree to comply with its terms. I understand that violation of insider trading
or tipping laws or regulations may subject me to severe civil and/or criminal
penalties, and that violation of the terms of the above-title policy may subject
me to discipline by the Company up to and including termination for cause.
- ---------------------------- ----------------------------
PHILIP LACQUA Dated:
<PAGE>
RECEIPT AND ACKNOWLEDGMENT
I, NANCY VITOLO, hereby acknowledge that I have received and read a copy of the
"POLICY AGAINST INSIDER TRADING" and agree to comply with its terms. I
understand that violation of insider trading or tipping laws or regulations may
subject me to severe civil and/or criminal penalties, and that violation of the
terms of the above-title policy may subject me to discipline by the Company up
to and including termination for cause.
- ---------------------------- ----------------------------
NANCY VITOLO Dated:
EXHIBIT 16.0
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form S-1 for R-Tec Technologies, Inc., of our
report dated January 7, 1999, relating to the December 31, 1998 financial
statements of R-Tec Technologies, Inc., which appears in such prospectus. We
also consent to the reference to us under the heading "Experts."
JUREWICZ & DUCA, CPA'S, P.C.
Garden City, New York
January 31, 1999
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