FILED PURSUANT TO RULE 424b3
REGISTRATION NO. 333-72405
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 12, 1999)
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PROSPECTUS SUPPLEMENT
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R-TEC TECHNOLOGIES, INC.
1,250,000 SHARES
COMMON STOCK
This prospectus supplement supplements the prospectus dated November
12, 1999 (the "Prospectus"), to which this prospectus supplement is attached.
This prospectus supplement should be read in conjunction with the Prospectus,
which is to be delivered with this prospectus supplement. This prospectus
supplement is qualified by reference to the Prospectus to the extent that the
information in this prospectus supplement supersedes the information contained
in the Prospectus. All capitalized terms used but not defined in this prospectus
supplement have the meanings given to them in the Prospectus.
---------------------------------------
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of the prospectus or this prospectus supplement.
Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is January 7, 2000.
Page S-1
<PAGE>
PURPOSE OF SUPPLEMENT
On December 7, 1999, R-Tec amended its placement agent agreement
with Thornhill Group, Inc. in the following respects:
|_| Thornhill's commission was lowered from 10% to 9%
|_| Thornhill's non-accountable expense allowance was lowered from 3% to 2.25%
|_| The exercise price of warrants issuable to Thornhill was increased from
$8.00 per share to $13.20 per share
|_| Thornhill's right of first refusal to act as placement agent for two years
following the conclusion of the offering was deleted
The effect of amending the placement agent agreement is to increase R-Tec's net
proceeds by $175,000 if all shares are sold; $87,500 if 62,500 shares are
sold; and $17,500 if the minimum is sold. R-Tec will use the additional net
proceeds resulting from the amendment for research and development.
On December 14, 1999, R-Tec amended its consulting contract with
Stenton Leigh Capital Corp. to reduce its twelve-month consulting fee from
$5,000 per month to $2,000 per month. The agreement was amended again on
January 6, 2000 to eliminate reimbursement for expenses.
SUPPLEMENTAL INFORMATION TO "THE OFFERING" (Prospectus Cover)
The Offering
- ------------
Public Price Commissions Total to R-Tec
------------ ----------- --------------
Per Share...................... $ 8.00 $ .72 $ 7.28
Proceeds to R-Tec from
Minimum Offering............. $ 1,000,000 $ 90,000 $ 910,000
Proceeds to R-Tec from
Maximum Offering............. $ 10,000,000 $ 900,000 $ 9,100,000
SUPPLEMENTAL INFORMATION TO "THE OFFERING" (Prospectus page 4)
Estimated Net Proceeds
(assuming the minimum
number of shares offered
are sold)..........................................................$ 807,500
Estimated Net Proceeds
(assuming all offered
shares are sold)...................................................$ 8,795,000
Page S-2
<PAGE>
SUPPLEMENTAL INFORMATION TO "DILUTION" (Prospectus page 8)
As of June 30, 1999, R-Tec's common stock had a deficit in net
tangible book value of $(590,805) or approximately $(.20) per share. The
following table sets forth the difference between the price to be paid by new
shareholders and the negative net tangible book value per share at June 30,
1999, as adjusted to give effect to this offering.
<TABLE>
<CAPTION>
1,250,000 shares 625,000 shares 125,000 shares
sold sold sold
<S> <C> <C> <C>
Assuming a public offering price of $8.00 $8.00 $8.00
Net proceeds to R-Tec $8,795,000.00 $4,357,500.00 $807,500.00
Net tangible book deficit per share for existing ($0.20) ($0.20) ($0.20)
shareholders before offering
Increase per share attributable to payment of $2.12 $1.24 $0.27
shares purchased by new investors
Pro forma net tangible book value after offering $1.92 $1.04 $0.07
Dilution per share to new investors $6.08 $6.96 $7.93
</TABLE>
Page S-3
<PAGE>
SUPPLEMENTAL INFORMATION TO "USE OF PROCEEDS" (Prospectus pages 9-11)
The chart below represents the use of proceeds if $10,000,000 of
common stock is sold. Sale of 1,250,000 of the shares offered would provide
sufficient funds for R-Tec to operate 36 to 48 months without revenue.
ESTIMATED
PERCENT OF
PURPOSE AMOUNT PROCEEDS
- ------- ------ --------
Research and Development Activities $2,546,080.00 28.95%
Salary Expense 2,135,000.00 24.28%
Parts and Supplies Expense 800,000.00 9.10%
Office Expense 1,853,920.00 21.08%
Patent Expense 450,000.00 5.12%
Sales and Marketing Expense 500,000.00 5.69%
Travel Expense 100,000.00 1.14%
Insurance Expense 350,000.00 3.98%
Existing Debt 60,000.00 .68%
Total $8,795,000.00 100%
Offering Expenses 305,000.00
Commissions 900,000.00
Page S-4
<PAGE>
The chart below represents the use of proceeds if the 625,000 shares
offered are sold. Sale of the 625,000 shares offered would provide sufficient
funds for R-Tec to operate 24 to 36 months without revenue.
ESTIMATED
PERCENT OF
PURPOSE AMOUNT PROCEEDS
- ------- ------ ---------
Research and Development Activities $1,767,420.00 40.56%
Salaries Expense 1,100,000.00 25.24%
Parts and Supplies Expense 226,160.00 5.19%
Office Expense 353,920.00 8.12%
Sales and Marketing Expense 200,000.00 4.59%
Patent Expense 450,000.00 10.33%
Travel Expense 50,000.00 1.15%
Insurance Expense 150,000.00 3.44%
Existing Debt 60,000.00 1.38%
Total $4,357,500.00 100.00%
Offering Expenses 192,500.00
Possible Commissions 450,000.00
Page S-5
<PAGE>
The chart below represents the use of proceeds if the Minimum number
of shares offered are sold. Mr. Scola, Mr. Lacqua and Ms. Vitolo would defer a
portion of their salaries, if necessary, until sufficient funds were available.
We may be able to retain our present employees and hire three additional
employees for $82,500 within the budget stated below. If the anticipated budget
is inadequate, we will hire the additional employees and defer officers'
salaries to the extent necessary. Sale of the 125,000 shares offered would
provide sufficient funds for R-Tec to operate 12 months without revenue.
ESTIMATED
PERCENT OF
PURPOSE AMOUNT PROCEEDS
- ------- ------ --------
Research and Development Activities $167,500.00 20.74%
Salaries Expense 232,500.00 28.79%
Parts and Supplies Expense 80,000.00 9.91%
Office Expense 150,000.00 18.58%
Sales and Marketing Expense 90,000.00 11.15%
Patent Expense 27,500.00 3.41%
Travel Expense 20,000.00 2.48%
Insurance Expense 40,000.00 4.95%
Existing Debt 0.00%
Total $807,500.00 100.00%
Offering Expenses 102,500.00
Commissions 90,000.00
Page S-6
<PAGE>
SUPPLEMENTAL INFORMATION TO "PLAN OF DISTRIBUTION" (Prospectus page 26)
Until the minimum number of shares are subscribed, all subscription
payments will be deposited into an interest-bearing bank escrow account at the
Bank of New York. All checks received from subscribers will be transmitted
directly to the Bank of New York escrow account by noon of the next business day
following receipt by Thornhill or its Selling Group. 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, with 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. 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 1,250,000 shares,
(3) twelve months after the effective date of this prospectus or
the date on which R-Tec decides to close the offering, which will not exceed
twelve months from the effective date of this prospectus.
On December 7, 1999, R-Tec entered into a best efforts agency
agreement with Thornhill Group, Inc. of Boca Raton, Florida, under which
Thornhill agreed to act as exclusive placement agent for this offering. The
agreement provides that Thornhill will be paid:
o 9% of the gross proceeds of the offering as commission
o 2.25% of the gross proceeds of the offering as a non-allocable expense
allowance
o Warrants to purchase 12,500 shares for $13.20 per share for every $1,000,000
in gross proceeds raised by the Company. The warrants will be restricted
from sale, transfer, assignment or hypothecation for one year from January
7, 2000, except to officers or partners (but not directors) of Thornhill and
members of any selling group or their officers or partners
On December 14, 1999, R-Tec entered into a consulting agreement with
Stenton Leigh Capital Corp. of Boca Raton, Florida to provide financial
consulting services. The consulting agreement as amended provides that Stenton
Leigh will be paid $2,000 per month for a period of twelve months beginning at
such time as R-Tec has raised $2,000,000 in this offering. The agreement was
amended again on January 6, 2000 to eliminate reimbursement for expenses.
Page S-7
<PAGE>
SUPPLEMENTAL INFORMATION TO "COMMON STOCK PURCHASE AGREEMENT"
(Prospectus page 29)
COMMON STOCK PURCHASE AGREEMENT
TO: Thornhill Group, Inc., Escrow. 1900 Corporate Blvd., Suite 305 West,
Boca Raton, FL 33431.
Telephone: (561) 241-9921
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 the PROSPECTUS DATED NOVEMBER ___, 1999, by which the shares are
offered.
Signature:______________________________ Date:__________________
Enclosed is payment for ______ shares, at $8.00 per share, totaling $________.
Please make checks payable to "Bank of N.Y., Escrow, R-Tec," and indicate
account #301472 in legend of check.
Name:_________________________________________________________________
Mailing Address:______________________________________________________
City:_______________________ State:_______________ Zip Code:_________
Telephone No.,______________________ Business,____________________ Home
Social Security or Taxpayer ID Number:_________________________________
Please check one of the following:
___ My income has exceeded $200,000 for the last 2 years and I expect my
income to exceed $200,000 this year.
___ My income has not exceeded $200,000 for the last 2 years.
Minimum Investment is $504.00 (U.S. Dollars) (63 shares)
Register the shares in the following name(s) and amount(s):
Name Number of Shares
A)______________________________________ ________________
B)______________________________________ ________________
C)______________________________________ ________________
As (Circle One Below):
Individual Joint Tenants Trust
Tenants in Common Corporation Other
Page S-8
<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 Number of Broker:______________________________________________
Social Security Number or Taxpayer I.D. Number:______________________________
Broker Account Number:________________________________________________________
WIRE INSTRUCTIONS
----------------
Routing No. (ABA) 021000018 (Bank of New York)
Beneficiary: GLA-111/565
Account No. 301472
Date Wired:______________________________________
Amount Wired:____________________________________
Confirm Bank Wire with R-TEC at (888) 299-7832
Please make checks payable to "Bank of N.Y., Escrow, R-Tec," and
indicate account #301472 in legend 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.
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SUBSCRIPTION ACCEPTED BY R-TEC TECHNOLOGIES, INC.:
______________________________ Dated___________________
Marc M. Scola, Esq.
V.P. & General Counsel
Page S-9
<PAGE>
VIRGINIA SUBSCRIBERS
Virginia subscribers must meet the following suitability requirement:
I certify that I am (initial blank) ________ a person who (a) has an annual
income of $60,000 and a net worth of at least $60,000 or (b) has a net worth of
at least $225,000 (in each case excluding home, home furnishings, and personal
automobiles) and that I am not investing more than 10% of my readily marketable
assets in this offering.
MAIL TO:
Thornhill Group, Inc., Escrow, 1900 Corporate Blvd., Suite 305 West
Boca Raton, Florida 33431
Telephone: (561) 241-9921
Incomplete Forms will be returned to Sender.
Page S-10
R-TEC TECHNOLOGIES, INC.
61 MALLARD DRIVE
ALLAMUCHY, NEW JERSEY 07820
(908) 850-4466
PERSONAL AND CONFIDENTIAL
December 6, 1999
Mr. Laurence S. Isaacson, President and CEO
Thornhill Group, Inc.
1900 Corporate Blvd., Suite 305 West
Boca Raton, Florida 33431
Re: Agency Agreement
Dear Mr. Isaacson:
R-TEC TECHNOLOGIES, INC. ("R-TEC", formed under the laws of the State of New
Jersey (the 'Company'), desires to offer and sell in an offering (the
"Offering") to be made exclusively through Thornhill Group, Inc. ("TGI" or the
"Placement Agent"), and pursuant to an S-1 Registration Statement ("Registration
Statement") by the Company as provided by the Securities Act of 1933, as amended
(the "Securities Act"), as set forth below, the Company's Common Stock (The
"Common Stock"). The Offering shall consist of the sale of Common Stock at a
price of $8.00 per share.
The Common Stock is to be sold at the prices and in the amounts set forth in
Section 2 below. The Offering will be limited to maximum gross proceeds of
$10,000,000 with a minimum of $1,000,000. The Offering period shall end
according to the Registration Statement, unless extended by the Company. It is
understood that the Offering will be conducted on a "professional best efforts"
basis with TGI acting as exclusive Placement Agent for the Company, and which
offering shall be conducted under the following terms and conditions:
SECTION 1. Type of Offering: Exemptions:
The Offering will be conducted as a self-underwritten S-1 registration as
required by the Securities Act, pursuant to the provisions of the Securities and
Exchange Commission ("SEC"). Investors will be required to subscribe
("Subscribers") for the Common Stock by executing the appropriate subscription
agreement (the "Subscription Agreement") in the forms set forth in a
Registration Statement to be completed by the Company and exhibits thereto, as
the same may be supplemented or amended from time to time.
SECTION 2. Appointment: Basic Terms:
On the basis of the representations and warranties and covenants herein
contained, but subject to the terms and conditions herein set forth:
( a ) TGI is hereby appointed as the exclusive Placement Agent for the
Company during the period herein specified for the purpose of finding
Subscribers for the Common Stock.
( b ) The Offering shall commence on the date hereof and shall continue
according to the Registration Statement, unless extended by the Company
(the "Offering Period").
( c ) Subject to the performance by the Company of all of its obligations to be
performed hereunder and to the completeness and accuracy of all material
representations and warranties of the Company, TGI agrees, on the terms and
conditions herein set forth, to use its professional best efforts during the
Offering Period to find Subscribers for the Common Stock. TGI's agency hereunder
is coupled with an interest, is not terminable by the Company prior the
expiration of the Registration Statement, without TGI's consent and shall
continue until the termination of the Offering Period except as may be otherwise
provided herein. TGI shall have the right to appoint one or more additional
agents and/or selected dealers (who shall be members of the National Association
of Securities Dealers, Inc.) to assist in finding Subscribers for the Common
Stock and any such additional agents or selected dealers may rely upon the
representations, warranties and covenants of the Company along with the Due
Diligence of TGI as set forth in this Agreement.
( d ) The minimum price of a Common Stock Unit to be sold to each
Subscriber in the Offering shall be $ 504.00 ( 63 shares of Common Stock times
$8.00 per share).
Page 1 of 10 INITIALS __PL__ __LI___
<PAGE>
( e ) Subscription checks will be made payable to "Bank of New York, Escrow,
R-Tec Technologies, Inc. #301472." Funds received from Subscribers in the
Offering shall be deposited in an escrow account with The Bank of New York, Inc.
One Wall Street, New York, New York 10286. The escrow account shall be an
interest-bearing bank account with the Bank of New York.
( f ) All checks received by TGI and its Selling Group or R-Tec will be
transmitted to the escrow agent by Noon on the next business day following
receipt. TGI and the Selling Group shall strictly comply with Rule 15c2-4
promulgated by the Securities and Exchange Commission and NASD Notices to
Members 84-7 and 84-64.
SECTION 3. Representations and Warranties of the Company:
The Company represents and warrants to TGI, for TGI's benefit and for the
benefit of the Subscribers of the Common Stock that, except as otherwise set
forth in the offering materials (copies of which shall be provided to each
Subscriber):
( a ) The Common Stock to be sold in the Offering will be, when issued, duly
registered, delivered and paid for in accordance with the terms of the Offering,
duly and validly issued, fully paid and non-assessable; all presently
outstanding shares of Common Stock of the Company have been duly authorized,
validly issued and are fully paid and non-assessable; the holders of the shares
of Common Stock offered herein are not and will not be subject to personal
liability by reason of being such holders; the shares of Common Stock being sold
in the Offering are not being issued in violation of the preemptive rights of
any of the Company's security holders; all action required to be taken by the
Company to authorize thc issuance and sale of the Common Stock to qualified
Subscribers has been or, prior to the sale thereof, will have been taken.
( b ) The capitalization of the Company, including the outstanding shares of the
Company's Capital Stock and any warrants, options or other rights to subscribe
to or purchase shares of capital stock is as represented to subscribers of the
Common Stock.
( c ) The Company is duly incorporated, validly existing and in good standing as
a corporation under the laws of its jurisdiction of incorporation.
( d ) The Company is duly qualified to do business as a corporation and is in
good standing in each jurisdiction in which its activities or its ownership or
leasing of property requires such qualification, other than those jurisdictions
in which failure to so qualify would not have a material adverse effect on the
business, operations or prospects or condition (financial or otherwise) of the
Company.
( e ) This Agreement has been duly and validly authorized and executed and
delivered by and on behalf of the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms subject to any applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and similar laws of general applicability
relating to or effecting creditor's rights generally and to general principles
of equity and the enforceability of the indemnity and contribution provisions
contained in Section 10 of this Agreement.
( f ) The Company is not in violation of (i) any term or provision of its
charter or by-laws or (ii) any material term or provision of any indenture,
mortgage, deed of trust, note, agreement, or other material agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any or its material assets, property or business is or may be subject,
or (iii) any material term of any significant indebtedness, or (iv) of any
statute or (v) to the best of the Company's knowledge any material judgment,
decree order rule or regulation applicable to the Company of any court,
regulatory body or administrative agency or other federal, state or other
governmental body, domestic or foreign having jurisdiction over it or its
material assets, property or business, which violation or violations, either in
any case or in the aggregate, might result in any material adverse change,
financial or otherwise, in the assets, properties, condition, business, earnings
or prospects of the Company and to the best of the Company's knowledge, the
execution and delivery by the Company of this Agreement, the consummation by the
Company of the transactions herein contemplated, and the compliance by the
Company with the terms of this Agreement will not result in any such material
violation or violations. All material licenses, approvals or permits from the
federal or any state, local or foreign government or agency thereof having
jurisdiction over the Company reasonably required for the conduct of the
business or operations of the Company have been obtained and are outstanding;
and there are no proceedings pending or to the Company's knowledge threatened
seeking to cancel, terminate or limit such licenses, approvals or permits.
( g ) Other than reported on Form S-1, there are no actions, investigations,
statutes, rules or regulations or other proceedings of any nature in effect or
pending or to the Company's knowledge threatened, as the case may be, which,
Page 2 of 10 INITIALS __PL__ __LI__
<PAGE>
either in any case or in the aggregate, if decided adversely, might reasonably
be expected to result in any material adverse change, financial or otherwise, in
the assets, properties, condition, business, prospects of the Company or which
question the validity of the capital stock of the Company, this Agreement or any
action taken or to be taken by the Company pursuant to or in connection with
this Agreement. The Company has filed all of the required financial statements
with the Securities and Exchange Commission in the Form S-1. The audited
financial statements provided to TGI present fairly the financial position of
the Company as of the respective dates thereof and the results of operations and
cash flows for the respective periods covered thereby. Since the dates of the
financial statements, there has been no material adverse change, financial or
otherwise, in the assets, properties, condition, business, earnings or prospects
of the Company. The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated
accept as described in this Agreement or in the Company's SEC filings.
( h ) The Company has filed each federal, state, local and foreign tax return
which is required to be filed, or has requested an extension therefor and has
paid or otherwise provided for all taxes shown on such return and all related
assessments to the extent that the same have become due.
( i ) All information contained in the written material concerning the Company
which has been or is being provided by the Company to TGI or to subscribers to
the Offering and all information from the Company which is included in the
Subscription Agreement (collectively, the "Offering Material") is accurate and
complete in the best of the Company's knowledge, does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
( j ) The Company has not made and will not make, any offers or sales of the
Company's capital stock or any warrants, options or other rights to subscribe to
or purchase shares of the Company's common stock in contravention at the
requirements for this Offering.
( k ) The representations and warranties made in this Agreement shall be deemed
repeated, and shall be true at the time of any closing provided for in this
Agreement
SECTION 3A. Representations and Warranties of the Placement Agent:
The Placement Agent represents and warrants to the Company for the Company's
benefit, that:
( a ) The Placement Agent has not been the subject of any investigation by any
Federal, State or local government agency during any time within five (5) years
prior to the date Agreement, or as of the date hereof, and to its knowledge, no
such investigation is currently threatened and
( b ) The Placement Agent is in compliance with all laws, rules and regulations
applicable to broker- dealers in the jurisdictions in which it conducts business
and with all applicable requirements and rules of the National Association of
Securities Dealers, Inc. ("NASD") and is a member in good standing with the
NASD.
SECTION 4. Closing:
A minimum of $1,000,000, upon SEC approval (the "Minimum") of Common Stock is
required to be sold under this Agreement according to the Registration
Statement. A closing ("Closing") for the sale of Common Stock subscribed for in
the Offering may be held on one or more occasions prior to the end of the
Offering Period, provided the Minimum in gross proceeds is reached and provided
that such Subscriptions are accepted by the Company. At each such closing,
payment of the proceeds of the Offering shall be made by certified or bank
check(s) or by wire transfer to the order of the Company pursuant to the escrow
agreement, against delivery of certificates for Common Stock, for transmittal to
the Subscribers of the Common Stock. The Company will instruct the escrow agent
to promptly remit to TGI any and all commissions, expense allowance and any
other amounts payable to TGI from the net proceeds delivered to the Company.
SECTION 5. Covenants of the Company:
The Company covenants with the Placement Agent that:
( a ) From the commencement of the Offering Period through any Closing pursuant
to Section 4 hereof, any Offering Materials will not contain any untrue
statement of a material fact or omit to state a material fact, to the extent
known to the Company, necessary in order to make the statements therein in light
of the circumstances under which they were made, not misleading.
Page 3 of 10 INITIALS __PL__ __LI__
<PAGE>
( b ) Either directly or through TGI the Company shall offer to each Subscriber,
at a reasonable time prior to his purchase of Common Stock, the opportunity to
ask questions and receive answers concerning the terms and conditions of the
Offering and to obtain any additional information, which the Company possesses
or can acquire without unreasonable effort or expense.
( c ) During the Offering Period, the parties hereto will keep each other
generally informed of offers for sale and solicitations of offers to buy Common
Stock being made
( d ) The Company shall use its best efforts, through counsel performing
services on behalf of the Company in connection with the Offering, to qualify
and register, or perfect the exemption of the Common Stock for offer and sale
under the state or foreign securities laws of the jurisdictions in which offers
and sales are proposed to be made, and shall assist TGI and such counsel in
connection with the foregoing, provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now required.
( e ) The Company shall, in a timely manner and as required, prepare and file an
amended Form S-1 and any required amendments thereto with the SEC. The Company
will use its best efforts to take all steps necessary to ensure that any and all
reports which may be required to be filed with the SEC under federal securities
laws are timely filed by the Company.
( f ) For the period of time that Placement Agent's clients are holders of
Common Stock of the Company, not to exceed two (2) years, the Company will
provide TGI with copies of any stock reports of the Company's stock transfer
agent if so requested, but only while TGI's customers continue to hold stock or
Common Stock in the Company.
( g ) The Company shall utilize the services of its current certified public
accounting firm or another firm acceptable to TGI.
( h ) For the period of time that Placement Agent's clients are holders of
Common Stock of the Company, or at least a period of two (2) years after the
Closing, the Company will furnish TGI with copies of its annual and quarterly
financial statement and reports to shareholders. In addition, during the
Offering and for a period of two (2) years after the Closing, the Company will
provide TGI with all information and documentation with respect to the Company's
business and financial condition, as reasonably requested by TGI, and will
provide to TGI during the Offering regular access to the Company's officers,
directors, auditors and counsel to discuss any aspect of the Company's business
as reasonably requested by TGI. This paragraph shall cease to be operative if,
at any time, TGI ceases to have customers who hold Common Stock in the Company.
( i ) Unless TGI shall otherwise agree in writing, the Company will not issue
any securities during the period from the date of this Agreement until the
expiration of the Offering Period, except for securities issued pursuant to this
Agreement and pre-existing option, warrant and loan commitments, or in the
ordinary course of business in which case the shares issued, shall be subject to
the same restrictions as provided for in SECTION 8 e.
( j ) To the extent the Company is duly authorized to do so, the Company will
reserve and set aside, out of its registered capital stock, the number of shares
of Additional Common Stock (as hereinafter described) issuable to TGI under this
Agreement, if any such shares, when issued, paid for and delivered upon exercise
of such warrants or options, will be duly and validly issued, fully paid and
non-assessable, and will not violate any preemptive rights of Company
shareholders.
( k ) The Company will keep confidential the identity of TGI's clients and
customers involved in this offering, except as may be otherwise required by law.
The Company will not solicit such persons directly for the sale of securities or
for other financing proposals without the express written consent of TGI, which
consent may be given on the condition that the Company agrees to compensate TGI
on the terms set forth in this Agreement for any sales made to such persons for
a period of five years after the closing.
( l ) Satisfactory employment agreements must be in place with key management
personnel, who have passed a satisfactory 10-year background check, prior to
commencement of the Offering, which shall include among other things,
performance based compensation and performance based incentives, satisfactory to
TGI. Compensation to approved incoming key employees, who are also existing
shareholders, shall be limited to the terms of the approved employment
agreements, which agreements shall also contain, among other things,
confidentially, non-competition, non-circumvention and other provisions
acceptable to TGI.
( m ) TGI shall have the option to receive, at TGI's expense, appropriate and
satisfactory valuations of the Common Stock being offered.
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<PAGE>
SECTION 6. The Placement Agents Covenants:
The Placement Agent covenants with the Company that:
( a ) In offering the Common Stock, the Placement Agent will advise the Company
to deliver to each potential Subscriber contacted by it, prior to accepting any
subscription from such subscriber, the appropriate form of Registration
Statement and approved Company information.
( b ) The Placement Agent will make offers to sell Common Stock to, or solicit
offers to subscribe for any Common Stock from, persons in only those
jurisdictions where the Offering and the Common Stock have been qualified or
where it has been determined that an exemption from such qualification is, or
may reasonably be anticipated to he available, under applicable securities
statutes.
( c ) TGI shall maintain a record of all information obtained by TGI indicating
that subscribers for Common Stock sold through TGI meet the criteria referred to
in subsection (6) above. At the Closing, TGI shall have no reason to believe
that the information with respect to, and the representations to each purchaser
of Common Stock as set forth in the appropriate Subscription Agreement are not
accurate.
SECTION 7 Compensation:
TGI will require, immediately prior to the commencement of the Proposed
Offering, to have the Company enter into a exclusive Placement Agent Agreement
(the "Placement Agreement") which shall contain such terms and conditions as are
customarily contained in agreements of such character and, among other things,
provide for the following:
( a ) The Company shall pay to the Placement Agent a commission of nine percent
(9%) of all the gross proceeds of the Proposed Offering, which shall be payable
to the Placement Agent at the initial Closing and each subsequent closing with
respect to the amounts raised as of such closing date;
( b ) In order to reimburse the Placement Agent for those costs, fees and
expenses customarily incurred by a placement agent in connection with the
offering process, the Company will pay to the Placement Agent two and
twenty-five one-hundredths percent (2.25%) of the gross proceeds of the amounts
raised, non-accountable expense allowance at Closing and each subsequent closing
with respect to the amounts raised as of such closing dates.
( c ) In addition to the foregoing, the Company shall bear all the Company's
fees, disbursements, Internet listing services and direct out of pocket expenses
in connection with the Proposed Offering, including, without limitation, the
Company's legal and accounting fees and disbursements. The cost of background
checks on all key management personal that TGI deems necessary, not to exceed
$3,000 and shall be paid by the Company out of the proceeds at closing, if
necessary, however, if this Agreement is terminated, then the Company shall pay
TGI upon termination.
( d ) The Placement Agent shall require the Company and Subscriber and its
principal officers and its directors to provide certain warranties and
representations against shorting or hedging of the Company's stock satisfactory
to the Placement Agent.
( e ) In addition to the compensation set forth herein,, the Company shall issue
to the Placement Agent 12,500 warrants for Common Stock, under the same terms as
the Offering, on a pro rata basis for every $1,000,000 in gross proceeds raised
by the Placement Agent exercisable at $13.20 per share for a period of five (5)
years (the "Warrants"). The Warrants shall be restricted from sale, transfer,
assignment or hypothecation for a period of one (1) year from the Offering's
effective date except to officers and partners (but not directors) of TGI or
members of the Selling Group and their officers and partners (but not
directors).
( f ) In the event TGI effectuates a merger, acquisition, joint venture, or
other similar business relationship or business transaction ("Transaction") for
the Company subsequent to the date hereof and or prior to two years from the
date of termination of this Agreement, irrespective of any reason for such
termination, and such Transaction is effectuated as a result or consequence of
any introduction made directly or indirectly by TGI through any third party
introduced by TGI to the Company, or by a person whose introduction to the
Company can be traced back to TGI, during the term of this Agreement, or which
Transaction was initiated, directly or indirectly through any person introduced
by TGI to the Company during the term of this Agreement, then the Company hereby
agrees to pay TGI the following consideration, which payment shall be due and
payable on the date of any such closing with respect thereto:
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<PAGE>
10% of the first $2,000,000 of total
consideration paid in the transaction,
plus 8% of the next $2,000,000 of total
consideration paid in the transaction,
plus 6% of the next $2,000,000 of total
consideration paid in the transaction,
plus 4% of the next $2,000,000 of total
consideration paid in the transaction,
plus 2% of the balance of total
consideration paid in the transaction.
For purposes of this Agreement, "consideration" shall mean the aggregate
consideration paid by the acquirer in connection with the merger, joint venture,
acquisition or divestiture, described herein and shall include all cash, the
principal of any notes executed as part of the purchase price for such
transaction, the value, as determined in good faith by the parties hereto, of
any securities paid or exchanged in connection with the merger, joint venture,
acquisition or divestiture and the amounts of any long-term liabilities, capital
leases, or bank financing of the acquired entity and which are paid or assumed
by the acquiring entity as part of the purchase price for the acquisition. In
the event the Company requests that TGI assists the Company in raising capital
which is not as a result of an introduction made directly or indirectly by TGI
and/or not initiated by TGI, the parties hereto agree that the compensation to
be paid to TGI for said assistance shall be 50% of the above compensation as
incorporated into this agreement.
SECTION 8. Conditions of TGI's Obligations:
TGI's obligation to offer and sell the Common Stock is subject to the accuracy
of and compliance with the representations and warranties of the Company made in
Section 3 hereof, to the performance by the Company of its obligations under
this Agreement and to the following further conditions;
( a ) At such Closing, TGI's counsel shall have been furnished with such
documents upon request, as TGI may reasonably require in order to evidence the
accuracy or completeness of each of the representations or warranties and the
compliance with each of the covenants or satisfaction of any of the conditions
herein contained; and all actions taken by the Company in connection with the
sale of the Common Stock as herein contemplated shall be reasonably satisfactory
in form and substance to TGI and TGI's counsel.
( b ) At such Closing, TGI shall receive an opinion from counsel to the Company
in form and substance reasonably satisfactory to TGI's counsel, with respect
to the matters set forth in Section 3 and 5 above.
( c ) As soon as practicable after the date hereof and immediately prior to such
Closing and with respect to any sale of Common Stock pursuant to the
Registration Statement, TGI shall receive a blue sky survey or memorandum and a
supplement thereto addressed to TGI and the Company as prepared by the Company's
counsel satisfactory to TGI and relating to the securities laws of certain
jurisdictions designated by the Company and TGI, indicating the conditions under
which offers and sale of the Common Stock may be made in the Offering in
compliance with such securities laws and advising that the appropriate action,
if any, was taken in each such jurisdiction.
( d ) The representations and warranties of the Company set forth in Section 3
hereof shall be true and correct as of the Closing, to the best knowledge of the
Company, and the Company shall have complied with all applicable terms and
conditions of this Agreement.
( e ) The Company will, prior to the completion of the initial closing of the
Offering, cause each officer and director of the Company who holds 5% or more
shares ("Insiders") of Common Stock (either individually or together with
members of his or her family or together with any affiliate) to enter into an
agreement under which each such Insider agrees to abide by Rule 144 and/or any
State escrow requirements.
( f ) If any of the conditions specified in Section 8 of this Agreement shall
not have been fulfilled when and as required by this Agreement, then this
Agreement and all of TGI's obligations hereunder may be canceled by TGI by
notifying the Company of such cancellation in writing at any time at or prior to
the subject Closing and any such cancellation will not in any way relieve the
Company of its obligations to TGI as described in Section 7, herein.
( g ) At its option, TGI shall receive one board seat. If acceptable director
and officer insurance is available, TGI may elect to designate person(s) to sit
on the Board. If there is no acceptable director and officer insurance, at its
option TGI will be an advisor to the Board. In any event, TGI shall receive
notice of all board, shareholder and committee meetings and have the right to
receive all meeting materials, financial data and other data and the right to
participate in all discussions.
SECTION 9. Conditions of the Obligations of the Company:
The obligations of the Company hereunder are subject to the accuracy of and
compliance with TGI's representations and warranties and any other firm that
participates in the Offering, to the performance by TGI of TGI's obligations
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hereunder, and to the following further conditions:
( a ) At the Closing, the Company shall receive a certificate from TGI as to the
number and identity of persons from whom subscriptions for Shares shall have
been received and accepted, which certificate shall farther be to the effect
that:
( i ) Executed Subscription Agreements have been received and
accepted only from persons who, to the best of TGI's knowledge and belief meet
the requirements for Subscribers referred to in Section 6(b,) hereof and are
acting for themselves and not on behalf of any other person; and
( ii ) TGI has complied with all applicable broker-dealer
registration requirements with respect to the Offering (but no reference need
be made as to other agents or dealers involved in the Offering)
( iii ) The representations and warranties of the Placement Agent
shall be true and correct as of the Closing, to the best knowledge of the
Placement Agent, and the Placement Agent shall have complied with all applicable
terms and conditions of this Agreement.
( b ) If any of the conditions specified in this Section 9 shall not have been
fulfilled when and as required by this Agreement, or if the Minimum of Common
Stock is not sold by the completion of the Offering Period, then this Agreement
may be canceled by the Company by notifying TGI of such cancellation in writing
at any time at or prior to the subject Closing.
( c ) Notwithstanding anything to the contrary in this Agreement, the Company
will not be required to sell and issue any securities to the extent that the
issuance of any shares underlying such securities would prevent the Company from
complying with NASDAQ or equivalent requirements (as they apply to the Company)
and the Company's charter and by-laws.
SECTION 10. Indemnification:
( a ) Indemnification by the Company. The Company agrees to indemnify and hold
harmless the Placement Agent and each person, if any, who controls the Placement
Agent within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which the Placement Agent or such
controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated regarding the Company or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or (ii) the Offering; and will reimburse the Placement Agent and each
such controlling person for any legal or other expenses reasonably incurred by
the Placement Agent or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Placement Agent for use in the preparation of the
Registration Statement.
( b ) Indemnification by the Placement Agent. The Placement Agent agrees to
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which the Company or such
controlling person may become subject, under the Securities Act or otherwise
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; in each
case to the extent but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in conformity with
information furnished in writing to the Company by the Placement Agent for use
in the preparation of the Registration Statement.
( c ) Procedure. Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 10, notify in writing the indemnifying party of the
commencement thereof; and the omission so to notify the indemnifying party will
relieve it from any liability under this Section 10 as to the particular item
for which indemnification is then being sought, but not from any other liability
which it may have to any indemnified party; provided, however, that any failure
by the Placement Agent to notify the Company shall not relieve the Company from
its obligations hereunder, unless the Company is materially prejudiced by such
failure. In
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case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent that it may
wish, jointly with any other indemnifying party, similarly notified, to assume
the defense thereof, with counsel who shall be to the reasonable satisfaction of
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. Any such indemnifying party shall not be liable to any
such indemnified party on account of any settlement of any claim or action
effected without the consent of such indemnifying party.
( d ) Contribution. To provide for just and equitable contribution, if: (i) an
indemnified party makes a claim for indemnification pursuant to Section 10(a) or
10(b) but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Securities Act,
the Exchange Act, or otherwise, then the Company, on the one hand, and the
Placement Agent, on the other hand, shall contribute to the losses, liabilities,
claims, damages, and expenses whatsoever to which any Placement Agent indemnitee
or Company indemnitee, respectively, may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Placement Agent, on the other hand; provided, however, that if
applicable law does not permit such allocation, then other relevant equitable
considerations such as the relative fault of the Company and the Placement Agent
in connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. The relative benefits received
by the Company, on the one hand, and the Placement Agent, on the other hand,
shall be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of compensation payable to the Placement Agent pursuant to Section
7 hereof but before deducting expenses) received by the Company, and (y) the
compensation received by the Placement Agent pursuant to Section 7 hereof.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Placement Agent, and
the parties, relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent
for contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section. In no case (except fraud) shall the Placement Agent by
responsible for a portion of the contribution obligation in excess of the
compensation received by it pursuant to Section 7 hereof. No person guilty of a
fraudulent misrepresentation shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls the Placement Agent within the
meaning of Section 15 of the Securities Act and each officer, director,
partners, employee, agent, and counsel of the Placement Agent, shall have the
same rights to contribution as the Placement Agent, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act and
each officer, director, employee, agent, and counsel of the Company, shall have
the same rights to contribution as the Company, subject in each case to the
provisions of this Section. Anything in this Section to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section is intended to supersede any right to contribution under the Securities
Act, the Exchange Act, or otherwise
SECTION 11. Registration Rights for Placement Agent's Stock:
The Company shall include in any registration, at its own expense, all of the
underlying Common Stock for the Warrants issued to TGI as compensation as set
forth herein in Section 7(e) provided that if the registration statement
pertains to an underwritten offering, the inclusion of any such shares shall be
subject to an underwriter's cutback if the underwriter determines, in good
faith, that the inclusion of such shares will adversely affect the offering by
the Company with such cutback to be accomplished on a pro-rata basis among all
selling shareholders or as shall be otherwise required by such underwriter.
SECTION 12. Representations and Agreements to Survive Sale and Payment:
Except as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at a Closing; and such representations, warranties and
agreements of the Placement Agent and the Company, including the indemnity
agreements contained in Section 10 hereof, shall remain operative and in full
force and effect regardless of any investigation made by you or on your behalf,
or any controlling person, or by or on behalf of the Company, and shall survive
the sale of, and payment for the
Page 8 of 10 INITIALS __PL__ __LI__
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Shares.
SECTION 13.Notices:
All notices provided for by this Agreement shall be made in writing either (a)
by actual delivery of the notice into the hands of the parties thereto entitled,
or (b) by the mailing of the notice in the United States mails to the address,
as stated below (or at such other address as may have been designated by written
notice), of the party entitled thereto, by certified or registered mail, return
receipt requested, postage prepaid or faxed with confirmation. The notice shall
be deemed to be received in the case of (a) above, on the date of its actual
receipt by the party entitled thereto, and in the case of (b) above, three days
after the date of deposit in the United States mails. All communications
hereunder, except as herein otherwise specifically provided, shall be in writing
and, if sent to the Placement Agent, shall be mailed or delivered to the
Placement Agent at the address set forth on page 1 hereof, and if sent to the
Company shall be mailed or delivered to Mr. Philip P. Lacqua, President and CEO,
R-TEC TECHNOLOGIES, INC., 61 Mallard Drive, P.O. Box 282, Allamuchy, New Jersey
07820.
SECTION 14. Governing Law:
This Agreement shall be governed by, subject to and construed in accordance with
the laws of the State of Florida and proper venue will be Palm Beach County,
Florida.
SECTION 15. Severability:
If any portion of this Agreement shall be held invalid or inoperative, then, so
far as is reasonable and possible (a) the remainder of this Agreement shall be
considered valid and operative; and (b) effect shall be given to the intent
manifested by the portion held invalid or inoperative.
SECTION 16. Counterparts:
This Agreement may be executed in a number of identical counterparts, including
facsimile signatures, each of which shall be deemed to be an original, but all
of which constitute, collectively, one and the same Agreement; but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
SECTION 17. Modification or Amendment:
This Agreement may not be modified or amended except by written agreement
executed by all the parties hereto.
SECTION 18. Other Instruments:
The parties hereto covenant and agree that they will execute such other and
further instruments and documents as are or may become necessary or convenient
to effectuate and carry out this Agreement.
SECTION 19. Captions:
The captions used in this Agreement are for convenience only and shall not be
construed in interpreting this Agreement.
SECTION 20. Parties:
This Agreement shall be binding upon and inure solely for the benefit of the
parties hereto, the controlling persons and indemnified parties referred to in
Section 10 hereof and their respective successors, legal representatives, heirs
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained.
SECTION 21.Entire Agreement:
This Agreement contains the entire understandings between the parties and
supersedes any prior understandings or written or oral agreements between them
respecting the subject matter hereof.
Page 9 of 10 INITIALS __PL__ __LI__
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If the foregoing correctly sets forth the understanding between the Placement
Agent and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding Agreement between us.
Sincerely,
R-TEC
TECHNOLOGIES,
INC.
/S/ Philip P. Lacqua
By: _____________________________
Name: Mr. Philip P. Lacqua
Title: President and CEO
ACCEPTED as of the __7th___ day of December, 1999:
THORNHILL GROUP, INC.
/s/ Laurence S. Isaacson
By: __________________________
Name: Mr. Laurence S. Isaacson
Title: President and CEO
Page 10 of 10 INITIALS ____ ____
CONSULTING CONTRACT
THIS CONTRACT, made as of this 6th day of January, 2000, by and between R-TEC
TECHNOLOGIES, INC., a New Jersey corporation, 61 Mallard Drive, P.O. Box 282
Allamuchy, New Jersey 07820 ( the "Company"), and STENTON LEIGH CAPITAL
CORP.("STENTON LEIGH"), a Florida corporation, having offices at 1900 Corporate
Boulevard, Suite 305 West, Boca Raton, Florida 33431.
WHEREAS, the Company desires to secure the services of STENTON LEIGH as a
consultant and STENTON LEIGH desires to provide such services to the Company;
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties hereto agree as follows:
1. Engagement of Consultant. The Company hereby engages STENTON
LEIGH to perform, and STENTON LEIGH hereby agrees that it will render the
financial consulting, business consulting, investor relations and strategic
planning services described in paragraph 3 below during the Term of this
Contract. If the Company should merge into, be acquired by another corporation,
or transfer its business to another corporate entity, this contract shall be
assumed by such successor corporation and the term "the Company" when used
herein includes any such successor corporation, and its successors.
2. Term of Contract. The Term of this Contract shall be effective as
of September 21, 1999, and shall continue, unless sooner terminated by the
Company or STENTON LEIGH in accordance with Paragraph 10 hereof, until September
20, 2000. This contract will renew at the end of September 20, 2000 for an
additional twelve-(12) month period automatically unless a written termination
notice is sent to STENTON LEIGH within thirty (30) days of the end of the
initial contract term.
3. Services of Consultant. During the Term of this Contract, STENTON
LEIGH will provide the following services pursuant to directions received from
the Board of Directors of the Company:
(a). STENTON LEIGH will assist the Company management in
developing strategic business goals and specific strategies to achieve those
goals.
(b). STENTON LEIGH will assist the Company's senior management
in developing a corporate financing plan to satisfy the capital requirements
contemplated in the business plan.
(c). STENTON LEIGH will act as liaison between the Company and
the financial community, in particular, STENTON LEIGH will assist the Company
with investment bankers, broker/dealers, other intermediaries, fund managers,
venture capitalists, institutional lenders and other potential funding sources.
(d).In connection with any financing transaction, STENTON LEIGH
will assist senior Company management in coordinating the activities of the
Company personnel and professionals engaged by the Company related to the
financing, as well as in the selection of professionals if requested.
(e). STENTON LEIGH will advise and assist the Company, as
requested by its Board of Directors, in maintaining satisfactory relations with
its investors, and promoting the good name and business of the Company with
investor groups and members of the financial community.
(f). STENTON LEIGH will consult with Company senior management
on business issues related to actions required to meet interim objectives and
to properly position the Company to successfully pursue its business plan.
4. Compensation for Services.
(a). In consideration of the services to be rendered
and performed by STENTON LEIGH during the term of this Contract, the Company
will pay STENTON LEIGH a fee of $2,000 per month during the first Twelve (12)
months of the Term. STENTON LEIGH agrees to begin its monthly fee until such
time as the Company has raised a minimum of $2,000,000 in the S-1 Registration
Statement.
5. Best Efforts Commitment. STENTON LEIGH will use its best efforts
to perform these services for the Company consistent with and specifically
recognizing STENTON LEIGH commitments and obligation to other businesses for
which it performs services.
INITIALS __PL___ __MB__
<PAGE>
6. Confidentiality of Information. STENTON LEIGH agrees that neither
it nor its employees or agents will, during the Term of this Contract, or at any
time thereafter, disclose or divulge or use, directly or indirectly, for its own
benefit, any confidential information, data, trade secrets, etc. in relation to
the business of the Company learned in connection with its work for the Company.
The provisions of this paragraph shall survive the termination of the Contract,
and shall continue until such information; data, trade secrets, etc. become
public knowledge through no fault of STENTON LEIGH or any of its employees or
agents.
7. Reliance of Information Furnished; Indemnification by the
Company. As a consultant for the Company, STENTON LEIGH must at all times rely
upon the information supplied to STENTON LEIGH by the Company's authorized
officers, directors, agents and employees as to accuracy and completeness.
Therefore, the Company agrees to indemnify, hold harmless and defend STENTON
LEIGH, its directors, officers, employees and agents from and against any and
all claims, actions, proceeds, losses, liabilities, costs and expenses
(including, without limitation, reasonable attorney's fees) incurred by any of
them in connection with or as a result of any material inaccuracy,
incompleteness or omission of information given to STENTON LEIGH by such officer
and/or director of the Company.
8. Indemnification. If, in connection with the services or matters
that are the subject of this Agreement, STENTON LEIGH becomes involved in any
capacity in any action or legal proceeding, due to the actions, information,
position, assertions, and/or affirmations put forth by STENTON LEIGH at the
direction of, or in reliance upon material or information furnished by the
Company, the Company agrees to reimburse STENTON LEIGH, as the case may be, for
the reasonable legal fees, disbursements of counsel, and other expenses
(including the costs of investigation and preparation) incurred. The Company
also agrees to hold harmless STENTON LEIGH against any losses, claims, damages
or liabilities, joint services or matters which are the subject of this
Agreement; provided, however, that the Company shall not be liable in respect of
any loss, claim, damage or liability to the extent, and only to the extent, that
such loss, claim, damage, or liability resulted from the gross negligence or
willful misconduct of STENTON LEIGH or no material act or omission of the
Company. The provisions of this paragraph shall survive the expiration of the
period of this Agreement, including any extensions thereof set forth herein.
9. Termination. STENTON LEIGH's services may be terminated at any
time upon written notice. If STENTON LEIGH's services are terminated, STENTON
LEIGH will be entitled to receive and retain the portion of any compensation
payable pursuant to Paragraph 4 and 5 above, including any accrued but unpaid
fees, to the end of such required payment term.
The termination of this Agreement shall be without liability or
continuing obligation to the Company or to STENTON LEIGH, except as
provided in this Agreement including specifically any indemnity and related
expense reimbursement provisions contained herein which shall remain operative
and in full force and effect regardless of any termination.
10. Non-Circumvention. The Company agrees not to contact persons or
entities introduced by STENTON LEIGH or persons or entities resulting directly
from introductions made from STENTON LEIGH without the prior consent of STENTON
LEIGH and that contact with any such parties would result in the compensation to
STENTON LEIGH contemplated herein. The spirit of mutual trust and confidence
shall be the underlying principle of this undertaking and the parties agree to
adhere thereto.
11. Illegality/Unenforceability. In the event that any provision of
this Letter of Agreement is declared illegal or unenforceable in any respect
under applicable law, rule, or court decision, or self regulatory ruling, (i)
the validity, legality, and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired, and (ii) this Letter of Agreement
shall be construed so as to effectuate as nearly as possible the intent of said
provision and the intent of the parties.
12. Notices. All notices, requests, payments or other communication
hereunder shall be in writing and shall be deemed to have been given when
delivered personally or three days after being sent by registered or certified
mail, postage prepaid or facsimile with confirmation, to the following address
or addresses or such other address as the parties may designate in writing in
accordance with this paragraph:
If to the Company: R-TEC TECHNOLOGIES, INC.
61 Mallard Drive, P.O. Box 282
Allamuchy, New Jersey 07820
ATTN: Marc M. Scola, Executive Vice President
INITIALS__PL___ __MB__
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If to STENTON LEIGH. Stenton Leigh Capital Corp.
1900 Corporate Boulevard, Suite 305 West
Boca Raton, FL 33431
ATTN: Milton H. Barbarosh, President
13. Disclosure. Any advice rendered by STENTON LEIGH pursuant to
this Agreement may not be disclosed publicly in any manner without the prior
written approval of STENTON LEIGH.
STENTON LEIGH is not registered as a broker or dealer under The
Securities Act of 1934, and certain transactions contemplated herein may require
the retention of same to consummate such transactions.
14. Governing Laws and Jurisdiction. The Company hereof hereby
waives all pleas of lack of jurisdiction, improper venue and forum
non-conveniens as not being a resident of any County in Florida where suit is
instituted and hereby specifically authorizes any action brought in connection
with the enforcement of this Agreement to be instituted and prosecuted in either
the Circuit Court of Palm Beach County, in the State of Florida, at the election
of STENTON LEIGH. This Agreement and all rights and obligations of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Florida and applicable United States federal law. Any signature on
a facsimile copy of this Agreement shall be binding and valid as if made on the
original copy of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this contract on the date
above written.
STENTON LEIGH CAPITAL CORP. R-TEC TECHNOLOGIES, INC.,
/S/ MILTON H. BARBAROSH /S/ PHILIP P. LACQUA
By: ___________________________ By:________________________________
Milton H. Barbarosh, as President Philip P. Lacqua, President and CEO
Initials ______ ______
