<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
RECYCLING CENTERS OF AMERICA, INC.
(NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
COLORADO 84-0703717
(State of Incorporation) (IRS Employer ID No.)
23832 ROCKFIELD BOULEVARD, SUITE 275
LAKE FOREST, CALIFORNIA 92630
(Address of Principal Executive Offices)
(949) 609-0590
(Registrant's Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
6,389,304 COMMON SHARES $0.01 PAR VALUE
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PART I
ITEM 1: DESCRIPTION OF BUSINESS
I. INTRODUCTION
Recycling Centers of America, Inc., a Colorado corporation ("RCAI" or
the "Company" or the "Registrant") , is a development stage company with no
significant operating results to date, which is engaged in the business of the
sale, construction and servicing of municipal and industrial waste stream
processing and recycling equipment.
Recycling Centers of America, Inc., is a Colorado corporation,
originally formed in 1976 under the name Vac-Tec Systems, Inc., and reorganized
as a public shell corporation without significant assets in early 1997, after
the Company ceased operations in the glass vacuum coating business.
In November of 1997, a merger transaction with Aquadynamic Technologies,
Inc. ("ATI"), was completed, and ATI, a Minnesota corporation, became a
wholly-owned subsidiary of RCAI. ATI had two wholly-owned subsidiaries, Aquatek,
Inc. ("AQT") and Wil-Flow, Inc. ("WFI"). WFI on March 8, 1999, was dissolved and
returned to its former owner and president as a result of the resolution of a
lawsuit between the parties.
In November of 1997, RCAI entered into a joint venture agreement with
Oil Re-Refining Company ("ORRCO"), an Oregon corporation in order to enter the
re-refining industry, under the joint venture name of Energy & Material
Recovery. This joint venture was dissolved in October of 1999, and the Company
no longer has activities in this industry.
In June of 1999, the Company acquired all of the business accounts of
Bruce Selk, dba Sierra Technologies, and in December of 1999, the Company
acquired all of the assets and business of Brody Special Projects, Inc. The
businesses conducted by these two predecessor companies now constitute the bulk
of Registrant's current business.
II. BUSINESS
The Company's primary business is the marketing and sales, construction
and servicing of municipal and industrial waste stream processing and recycling
equipment.
The Company has obtained a License from Pall Filter Corp. to market and
sell, and currently markets and sells Pallsep(TM) Vibrating Membrane Treatment
Filters to the dairy industry, the food industry, the beverage industry, and the
pharmaceutical industry.
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The Company also markets and sells VSEP(TM) Fibrating Membrane Filters
manufactured by New Logic International, Inc. ("New Logic") to non-food
industries, including water, wastewater, mining and chemical industries,
although the Company does not have a current License agreement in effect with
New Logic.
Through its wholly-owned subsidiary, Aquatek, Inc., the Company also
provides engineering services to wastewater treatment and potable water
treatment facilities.
The Company also operates a small wholesale chemical brokerage business,
under the fictitious business name Sierra Technologies, shipping bulk chemicals
and petroleum products to various customers in the United States and Canada. As
a part of this business, the company is under contract with Tosco, to provide
one rail car per week of residual oil waste products from steel mills to Tosco.
(a) Products and Services
(i) V*SEP Filtration. The Company markets, sells and acts as a
general contractor to install Filtration membranes manufactured by New
Logic and patented membrane type filtration systems, under the trade
name "VSEP" Systems. These systems filter out solids suspended in
various liquid material streams generated by various manufacturing
processes. Applications for the V*SEP system range through all
industries where efficient and rapid processing of wastewater and
product streams is required. V*SEP compete with evaporators, biological
systems, crosflow filters and centrifuges. Management believes the
advantages of V*SEP over its competitors are as follows:
- Filtration rates 10 x that of its competitors
- Incorporated Self-cleaning and anti-fouling
characteristics
- Achieves high solids removal
- High efficiency (99% energy conversion)
- Dependability (self-repairing with only two moving
parts)
- Compact design
- Low capital and operating costs
The system can be used for a wide variety of streams and
applications, including removal of BOD ("Biochemical Oxygen Demand" - A
test that indicates the organic strength of wastewaters. The test
procedure measures the amount of free dissolved oxygen that aerobic
bacteria consume in a standard test time of 5 days incubated at 20
degrees C); COD ("Chemical Oxygen Demand" - A test for the organic
strength of a wastewater that uses strong chemical oxidants to break
down organics in the wastewater. Bacteria are not used; TDS ("Total
Dissolved Solids" - A test to measure the amount of dissolved solids in
a liquid through weight; TSS color ("Total Suspended Solids" - A test
whereby a sample is filtered through a fine filter medium (0.45 micron).
The weight of sample collected on the filter is the TSS, usually
measured in mgt); FOG ("fats oils and greases" - metals, deionization
and
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the dewatering of dyes, pigments, clays, catalysts, silicas, latexes and
many more). The Company does not currently have a license or OEM
Contract with New Logic but continues to sell their equipment under an
informal working arrangement with New Logic.
(ii) Pal-SEP Filtration. The Pall-SEP filtration system is
similar to the V*SEP technology, and is designed for use in the food
processing and pharmaceutical industries. It is manufactured by Pall
Filter Corporation.
The Company has a non-exclusive license to sell Pal-SEP
Filtration in the Western Hemisphere to specified markets as part of
integrated systems.
(iii) Engineering Services to Wastewater Treatment Facilities.
Through its wholly-owned subsidiary, Aquatek, Inc., the Company provides
engineering services to wastewater treatment and potable water treatment
facilities. These services include detailed design layout, feasibility
studies, specification and instrumentation selection, contract
programming, and some fabrication/assembly of motor and process control
centers.
Aquatek, Inc. markets its engineering expertise to other
wastewater treatment facilities, potable water treatment facilities,
flood prevention systems, water transfer pumping stations and private
industrial processing facilities requiring automated control systems,
such as the automotive food processing, packaging, textile and recycling
industries.
(iv) Brokerage of Chemicals. Through the fictitious name, Sierra
Technology, the Company is in the business of buying and selling
industrial chemicals. The Company acts purely as a broker and receives a
commission on the materials sold. This business was originally
established as a sole proprietorship by Bruce Selk in June of 1997, and
the business and accounts were transferred by Mr. Selk to the Company
when he joined the Company in June of 1997.
(b) Marketing and Sales
The Company's marketing program includes the development of
compliance data, sales materials, plant tours and daily phone leads. The
Company also utilizes three sales representatives nationwide, who
operate under contract to assist the Company in locating prospective
customers.
This is a two-step project. Step one - sale of unit. Step two -
installation of unit along with the sale and installation of ancillary
equipment. RCAI began marketing the VSEP/PALLSEP technology in June
1999. RCAI has sold one unit to Dairy Farmers of America (DFA). The
application of this unit is in treatment of wastewater to a milk
biochemical condensing plant. This wastewater stream was a high BOD
(biologic oxygen demand) stream. The high BOD is the result of some milk
being generated as a waste in the process and being released as
discharge to the city wastewater plant. The use of this technology
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allows the capture of those milk byproducts from the water, thereby
reducing the BOD. The treated water is then released to the city
wastewater facility.
The marketing of this technology is a sophisticated sale. The
equipment is typically a capital cost item, and at many companies may
need to go through a yearly capital costing budget process. Making a
sale typically requires on-site testing at the customer's operating
facility and specific testing of a number of different membranes trialed
under an assortment of operating parameters.
RCAI has been conducting on-site tests at Leprino Foods in
Colorado the last three months. This potential customer is a major
manufacturer of mozzarella cheese in the U.S.
The company also has ongoing testing at facilities operated by
Safeway (ice cream plant); Daisy Brand (yogurt); West Farm Foods (milk
processing) and Excide (metals/water) and has agreements to start
testing facilities operated by Wright Corp (chemicals/water) and
Dynachem Technologies, Inc. (antifreeze/water).
(c) Competition
The Company's two primary competitors are the two manufacturers
of the two systems, Pal Filter Corp. and New Logic, each of whom market
their systems directly to users, as well as through OEMs such as the
Company.
More generally, the Company competes with numerous other
companies who have competing technologies, many of whom are larger, with
greater financial resources and larger organizations.
Competition in this industry focuses on price, quality,
features, performance, specialization, expertise, reliability,
technology, customer relationships, marketing, advertising, sales,
publicity, distribution, serving particular market niches, and appealing
to particular consumers.
(d) Raw Materials
The Company's filters are manufactured with off the shelf
components available from many sources, with the exception of the
membranes themselves and the patented vibrating mechanisms, which are
proprietary to Pall and New Logic.
Pall Filter Corp. and New Logic International in each case
manufacture their own filters, and the Company is dependent on these
firms for purchase of the technology and for production of the
membranes.
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(e) Dependence on One or a Few Major Customers
The Company has in process over three jobs, one of which is for
installation, and two of which are for testing, and is in the process of
bidding on thirteen additional jobs, for installation of filtration
systems products.
There is no single customer that currently or in the future is
expected to dominate the Company's business.
(f) Patents, Trademarks, Licenses, Etc.
(i) Patents and Trademarks
The Company has no patents and no trademarks.
(ii) License of Technology
In June of 1999, the Company's predecessor, Brody Special
Projects Company, a Utah corporation ("Brody"), entered into an OEM
Agreement with Pall Filtron, Inc. ("Pall"), having a three year terms,
and covering various proprietary filtration products manufactured by
Pall. Pursuant to this Agreement, Pall granted Brody a nontransferable
license to integrate, market, sell, install and support Pall's
proprietary filtration products, as an integrated system only, on a
nonexclusive basis, limited to certain specified markets and certain
specified territories.
The markets are fixed as the food, beverage, dairies,
pharmaceutical, biotech and cosmetics applications, including
intermediates and wastewaters resulting from their processing. Drinking
water is excluded from the defined market. The specified territory is
the Western Hemisphere, consisting of North, Central and South America.
The system must be sold in a configuration which includes a feed
pump, piping and vales and an integrated control system. Brody is
specifically precluded from selling the Pall filtration products without
integrating the products into a system.
Pall is permitted under the contract to compete with Brody, and
market its products direct in the designated markets and territory.
Brody is assigned the responsibilities under the contract to run samples
and field trials, purchase membranes at discount for certain systems,
and design and specify and quote prices for purchase and installation of
an integrated system using the filtration products.
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The assets of Brody were acquired by RCAI in December of 1999,
including an assignment of Brody's rights under this Pall OEM Agreement.
Subsequently, in December of 1999, Pall approved the assignment of
Brody's rights under the Pall OEM Agreement to RCAI.
Brody also had a License Agreement to sell VSEP filtration
systems manufactured by New Logic. However, New Logic declined to grant
the required consent in order for Brody to transfer this License to the
Company. As a result, the Company now continues to market and sell VSEP
products under an informal understanding with New Logic that is not
embodied in a written contract.
(g) Government Regulation
There are certain FDA (Food and Drug Administration) regulations
which regulate the installation and operation of the Company's
Filtration Systems, primarily in the food industry. The Company's two
filtration manufacturers, Pall Corp. and New Logic, are responsible for
compliance with these regulations, and the Company has not assumed any
responsibility or liability for compliance..
(h) After Market Sales Responsibility
Pall and New Logic both provide the customer with a performance
guarantee. The performance guarantee is created by gathering data on
each customer's specific stream through the testing protocol.
(i) Research and Development
The technology sold by the company is in the early stages of
market acceptance. As a result, in order to accomplish a sale, a
customer will typically require a significant research and development
effort, in the form of testing and trials of different types of
membranes and differing operating parameters. These costs are funded in
part by the Company, and expensed as sales expense.
(j) Compliance with Environmental Laws
RCAI, including all of its wholly-owned subsidiaries, is not
responsible for systems (PALLSEP/VSEP) that do not meet specific
environmental discharge standards. Both PALL and New Logic International
issue performance guarantees that their units, based on certain influent
characteristics, will meet all environmental standards for discharge.
(k) Employees
The Company has 8 full time employees, including 2 located in
California, 3 located in Utah, 1 located in Colorado, and 2 located in
Savannah, Georgia (Aquatek).
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview
The Company during the last two fiscal years ending June 30, 1999 and
1998, has unsuccessfully attempted to form a group of operating companies that
were to offer the marketing and advanced technologies to become the leader in
the recycling of liquid wastes. The results of operations reflect the
significant costs associated with the unsuccessful ventures including Wil-Flow,
Inc. and Energy & Material Recovery, Inc. (EMRI).
The Company has become revitalized with the change in management
effective June 1, 1999 and the incorporation of revenue producing entities. On
June 1, 1999, the Company purchased Sierra Technologies, a company that operates
in the purchasing, treatment and brokerage of chemical and petroleum products
throughout North America. In addition, in December 1999, the Company completed a
buyout of Brody Special Projects Company a supplier of advance filtration
technologies.
Statement of Operations
The Company has incurred net losses of $796,916 for the fiscal year
ended June 30, 1999, as compared to a net loss of $466,788 for the period ended
June 30, 1998. These losses can be primarily attributed as stated above to
significant costs incurred in both years from the dissolution of Wil-Flow, Inc.
in March 1999, and the termination of the joint venture with EMRI in October
1999. Not only were the costs associated with the winding up of these ventures
significant, the effect on Retained Earnings because of the write-off of Patents
and Goodwill was $182,226.
The Company realized the majority of its revenues in fiscal years ending
June 30, 1999 and 1998 from the consulting of Aquatek, Inc., a wholly-owned
subsidiary which specializes in automated process control systems for wastewater
treatment applications. The Contract Revenue in fiscal years ending June 30,
1999 has been primarily to Cass Water Engineers.
The Cost of Goods sold represents fifty eight percent (58%) of sales for
the fiscal year ending June 30, 1999 as compared to sixty nine percent (69%) as
of June 30, 1998. The Costs of Goods are not consistent between years because
the varying nature of the consulting projects in any given year.
Operating expenses consist primarily of general and administrative
expenses. For the fiscal year ended June 30, 1999 operating expenses totaled
$945,242 as compared to $646,559 for the fiscal year ended June 30, 1998. This
substantial increase in operating expenses between years can be attributed to an
increase in wages of $385,929 and an increase in Professional fees of $41,997.
The increase in wages was caused by substantial management fees due to
promotional programs designed to attract capital investment toward the Company
in 1999 and the hiring of management personnel because of joint venture with
EMRI. The increase in Professional Fees can be attributed to legal costs
associated with the Wil-Flow, Inc. litigation and the termination of the joint
venture with EMRI.
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Interest expense and other finance charges increase from $4,403 for the
fiscal year ended June 30, 1998 to $17,438 for the fiscal year ended June 30,
1999. The increase between years can be attributed to the increase in Notes
payable from $130,500 in 1998 to $260,000 in 1999 and the accrual of interest
relating to the Notes payable from the dissolution of Wil-Flow, Inc.
Liquidity and Capital Resources
As of June 30, 1999, the Company had cash and cash equivalents of
$109,958 as compared to cash and cash equivalents of $80,111 as of June 30,
1998. At June 30, 1999, the Company had a working capital deficiency (total
current liabilities in excess of total current assets) of $72,865 as compared to
a working capital deficit (total current liabilities in excess of total current
assets) of $299,960 as of June 30, 1998. The significant improvement in working
capital in 1999 is due to the forgiveness of payment on the Note Payable to the
President of Wil-Flow, Inc. of $360,000, of which $160,000 was included in
short-term liabilities and the increase in Accounts Receivable as a result of
the acquisition of Sierra Technologies of $72,662.
The principal use of cash for fiscal years ended June 30, 1999 and 1998
was to fund the net loss from operations. The Company raised a total of $669,984
and $275,992 in fiscal years 1999 and 1998 respectively, from the issuance of
common stock to fund the loss from operations. In addition, the Company borrowed
$129,500 and $107,940 from shareholders in fiscal year 1999 and 1998
respectively.
The management of the Company has committed to covering the operating
expenses of the Company until adequate sales are generated, and intends to raise
money privately through an additional private offering to Accredited Investors.
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ITEM 3. DESCRIPTION OF PROPERTY
Facilities
The Company maintains corporate offices in Lake Forest, California, in a
900 square foot facility, under a 36 month lease, expiring in April, 2002, at a
rent of $1533 per month.
The Company maintains a shop and office facility in Linden, Utah, in a
1000 square foot facility, under a 36 month lease, expiring in January, 2002, at
a rent of $475 per month.
The Company's wholly owned subsidiary, Aquatek, maintains an office
facility in Savannah Georgia, in a 1500 square foot facility, under a month to
month lease, at a rent of $1350 per month.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the holdings of common stock by each
person who, as of February 1, 2000, held of record, or was known by the Company
to own beneficially, more than 5% of the outstanding common stock of the
company, by all directors individually, and by all officers and directors as a
group.
<TABLE>
<CAPTION>
Amount and
Nature of
Title of Name & Address of Beneficial Percent
Class Beneficial Owner Ownership of Class
----- ---------------- --------- --------
<S> <C> <C> <C>
Common Stock Michael C. Davies(1) 871,366 13.64
Common Stock Gordon W. Davies(2) 971,900 15.21
Common Stock Bruce Selk(3) 1,170,000 18.31
Common Stock Canvasback Company, 450,000 7.04
Ltd.
Common Stock Kurt Baum 599,835 9.39
- ----------------- --------- -----
All Officers and
Directors as a Group 3,013,266 47.16
--------- -----
</TABLE>
Footnote Warrants and Options
(1) Includes 200,000 Vested Options and 550,000 Unvested Options held by Michael
C. Davies, pursuant to the terms of his Employment Contract.
(2) Includes 200,000 Vested Options and 550,000 Unvested Options held by Gordon
W. Davies, pursuant to the terms of his Employment Contract.
(3) Includes 390,000 Vested Options and 780,000 Unvested Options held by Bruce
Selk, pursuant to the terms of his Employment Contract.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS
PROMOTERS AND CONTROL PERSONS
The names, ages and positions of the directors and executive officers of
the Company as of February 1, 2000, are as follows:
<TABLE>
<CAPTION>
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
O. Bruce Selk 44 Chief Executive Officer and June 1999
a Director
Michael C. Davies 30 Chief Financial Officer, Dec. 1997
Vice President and a Director
Gordon W. Davies 31 President and a Director Dec. 1997
</TABLE>
The Directors serve until the next annual meeting of shareholders, or
until their successors are elected.
MR. O. BRUCE SELK
Bruce Selk, the Company's Chief Executive Officer and a Director, joined
the Company in June of 1999, and transferred his wholesale chemicals business
accounts from his sole proprietorship, Sierra Technologies, to the Company. Mr.
Selk owned and operated Sierra Technologies from July of 1997 to May when he
joined the Company on a full time basis. From November of 1996 through June of
1999, he was the President of International Products Group, Inc., a Company
which manufactured and marketed innovative concrete block. From November of 1994
through July of 1995, Mr. Selk served as an opportunity specialist with
Kingsfield Capital Corporation, a company which marketed different technologies
to the chemical industry. From January 1993 to October 1994, Mr. Selk was a team
leader with Tri Waste Technisol, Inc., a full service environmental firm.
Mr. Selk has a Certificate as Masters Electrician from Lethbridge
Community College, Lethbridge, Alberta, Canada, and later attended the Southern
Alberta Institute of Technology.
MR. MICHAEL C. DAVIES
From 1988 to 1991 Mr. Davies was the Owner/Manager of Fuel Oil Polishing
Company located in Vancouver, British Columbia, Canada. Mr. Davies' company was
in the sales, marketing and project management of fuel oils polishing within the
Province of British Columbia.
From 1991 to 1993 he was an Accounts Executive with Innovative
Environmental Services, Ltd. in Vancouver, a company in the business of sales
and marketing of wastewater treatment equipment.
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From 1993 to 1994 he was the Marketing Manager for Transenviro, Inc.,
located in Irvine, California. Transenviro is an international supplier of
wastewater treatment equipment and process design engineering.
From 1994 to 1996 Mr. Davies was the Marketing Manager for Babcock
King-Wilkinson, LP, Irvine, California, a wastewater treatment business.
From 1996 to the present Mr. Davies has held the positions of Vice
President and a Director for Aquadynamic Technologies, Inc. and Aquatek, Inc.,
which is a wholly-owned subsidiary of Aquadynamic Technologies. These companies
are international suppliers of computer-automated process and motor control
systems for water and wastewater treatment systems worldwide.
From 1996 to 1998 Mr. Davies held the position of Vice President,
Sales/Director for Wil-Flow, Inc., the sole supplier of its patented RGD (Rapid
Gravity Dewatering) wastewater sludge dewatering system.
From 1997 to the present, Mr. Davies has been the Vice President and a
Director of RCAI. Mr. Davies is the brother of Gordon Davies.
MR. GORDON W. DAVIES
From 1991 to 1993 Mr. Davies was an Accounts Executive for Innovative
Environmental Services, Ltd., located in Vancouver, British Columbia, which is a
company in the business of wastewater treatment equipment.
From 1993 to 1993 he held a Sales Manager position at Transenviro, Inc.
in Irvine, California. From 1994 to 1996, Mr. Davies was the Sales/Marketing &
Proposals Manager for Babcock King-Wilkinson, LP in Irvine, California, and in
1996 he was the acting CEO for this company. Babcock King-Wilkinson, LP is in
the business of process design/engineering and equipment supply operations on a
worldwide basis.
From 1996 to the present Mr. Davies has been the President and a
Director of Aquadynamic Technologies, Inc. He is also a Director of Aquatek,
Inc., the wholly-owned subsidiary of Aquadynamic Technologies, Inc. Aquatek,
Inc. is an engineering design house and supplier of computer-automated process
and motor control systems for water and wastewater treatment systems.
From 1996 to 1998 Mr. Davies was the General Manager of Wil-Flow, Inc.
From 1997 to the present, Mr. Davies has held the position of Vice
President and a Director for RCAI. Gordon Davies is the brother of Michael
Davies.
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ITEM 6. EXECUTIVE COMPENSATION
(a) The following table sets forth the annual compensation paid and
accrued by the Company during its last three fiscal years to its Chief Executive
Officer. No other executive officer received annual salary and bonus in excess
of $100,000.
<TABLE>
<CAPTION>
Summary Compensation
--------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Other Secur-
Name Annual Restricted ities All Other
and Compen- Stock Underlying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) $ ($) SARs (#) ($) ($)
- -------- ---- --- --- --- --- -------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
O. Bruce
Selk,
CEO 1999 $72,916 0 0 260,000 0 0
Gordon
Davies,
Pres. 1998 $60,000 0 0 0 0 0
1997 $60,000 0 0 0 0 0
</TABLE>
The Company has no stock option program, long term incentive plans, and
no Awards were made in its last fiscal year. The only options, warrants or
rights outstanding and in the hands of the Company's officers or directors are
options granted to them pursuant to the terms of their Employment Contracts.
The Company has no Long-Term Incentive Plans and no Awards were
made in its Last Fiscal Year.
(b) The Company has entered into the following 5 Employment
Contracts with Senior Management.
Bruce Selk
The Company entered into a 3 year Employment Agreement with
Bruce Selk on May 26, 1999, which provided for a salary of $125,000 for
the first year, and $150,000 per year thereafter. Mr. Selk also receives
a vehicle allowance of $550 per month.
In addition, the contract grants Mr. Selk options to purchase
1,300,000 shares of the Company's Common Stock, which vest and become
exercisable based on the Company's stock trading in the public markets
at certain levels as set forth below:
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<TABLE>
<CAPTION>
Market Price Options
Of Stock Which Vest
-------- ----------
<S> <C>
$1.00 130,000
$1.50 130,000
$2.00 130,000
$2.50 130,000
$3.00 130,000
$3.50 130,000
$4.00 130,000
$4.50 130,000
$5.00 130,000
</TABLE>
At February 1, 2000, 260,000 of these options had vested, and -0-
options had been exercised. The options are exercisable at an option exercise
price of $0.30 per share, and expire if not exercised by January 1, 2002.
Michael Davies
The Company entered into a 5 year Employment Agreement with Michael
Davies in June of 1999, which provides for a salary of $96,000 per year, and a
car allowance of $550 per month.
In addition, the contract grants Mr. Michael Davies options to purchase
750,000 shares of the Company's Common Stock, which vest, become exercisable,
and have an option exercise price as follows:
<TABLE>
<CAPTION>
No. Of Options Date of Vesting Option Exercise Price
-------------- --------------- ---------------------
<S> <C> <C>
200,000 June 1, 1999 $0.30
275,000 June 1, 2000 $0.40
275,000 June 1, 2001 $0.40
</TABLE>
At February 1, 2000, 200,000 of these options had vested, and -0-
options had been exercised. The options expire, if not exercised, by December
31, 2001.
Gordon Davies
The Company entered into a 5 year Employment Agreement with Gordon
Davies in June of 1999, which provides for a salary of $96,000 per year, and a
car allowance of $550 per month.
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In addition, the contract grants Mr. Gordon Davies options to purchase
750,000 shares of the Company's Common Stock, which vest, become exercisable,
and have an option exercise price as follows:
<TABLE>
<CAPTION>
No. Of Options Date of Vesting Option Exercise Price
-------------- --------------- ---------------------
<S> <C> <C>
200,000 June 1, 1999 $0.30
275,000 June 1, 2000 $0.40
275,000 June 1, 2001 $0.40
</TABLE>
At February 1, 2000, 200,000 of these options had vested, and -0-
options had been exercised. The options expire, if not exercised, by December
31, 2001.
Steve Madsen
The Company entered into a 3 year Employment Contract with Steve Madsen
in December, of 1999, which provides for a salary of $120,000 per year, plus a
vehicle allowance of $550 per month.
In addition, the contract grants 450,000 options to purchase shares of
the Company's Common Stock at an exercise price of $0.40 per share. The options
vest in each year in lots of 150,000 options per year, starting January 1, 2001,
and expire if they are not exercised within two years after the vesting date.
John Ewing
The Company entered into a 3 year Employment Contract with John Ewing in
November, of 1999, which provides for a salary of $120,000 per year, plus a
vehicle allowance of $550 per month.
In addition, the contract grants 450,000 options to purchase shares of
the Company's Common Stock at an exercise price of $0.40 per share. The options
vest in each year in lots of 150,000 options per year, starting January 1, 2001,
and expire if they are not exercised within two years after the vesting date.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1. Joint Venture with Oil Re-Refining Company
RCAI and Oil Re-Refining Company established a joint venture partnership
called Energy and Material Recovery, Inc. in November of 1997. RCAI issued and
contributed 1,500,000 shares of its Common Stock at an agreed valuation of $2.00
per share, to the Energy and Material Recovery Joint Venture Oil Re-Refining,
contributed operating equipment, buildings, trucks, land and other assets having
an agreed value of $3,000,000 to the Joint Venture.
This partnership was dissolved due to disagreements among management as
to the best course for future operations of the Joint Venture, in October of
1999. The 1,500,000 shares of the Company's Common Stock contributed to the
Joint Venture were returned to RCAI and have been designated treasury shares.
2. Acquisition of Business Customers of Bruce Selk, dba Sierra
Technologies
Sierra Technologies was established by Bruce Selk in June 1997 and was
in the business of buying and selling industrial chemicals. In June of 1999,
RCAI offered Mr. Selk a position of CEO. As part of these negotiations, Mr. Selk
transferred all of his business done under the name, Sierra Technologies, into
RCAI.
3. Acquisition of Brody Special Projects, Inc.
In December of 1999, the Company acquired from Steve Madsen and John
Ewing certain of the assets formerly belonging to Brody Special Projects
Company, a Utah corporation, which were utilized by Brody in the business of
marketing, selling and leasing VSEP and Pall Sep Systems. Also transferred and
assigned to the Registrant were the rights to sell and lease VSEP and Pall Sep
Units under OEM Agreements originally held by Brody with New Logic International
and Pall Filtron, Inc., respectively. Under the purchase agreement with Messrs.
Madsen and Ewing, the Company paid $300,000 in staged cash payments to Brody on
behalf of Messrs. Madsen and Ewing, and agreed to assume and pay to Brody,
$300,000 out of future sales. The cash payments based on future sales are
payable as follows:
<TABLE>
<S> <C> <C>
December 13, 1999 100,000 Paid
December 31, 1999 50,000 Paid at the Closing
</TABLE>
The balance of the cash payment is payable in three instalments
of $50,000 each, payable on March 30, 2000, June 30, 2000 and
September 30, 2000.
The $300,000 to be paid out of future sales is to be paid (i) at the
rate of 25% of net sales proceeds, or (ii) the sum of $6,250, whichever is
greater, on each Pall Sep and VSEP Unit sold to certain specified customers. The
Registrant also assumed approximately $212,000 in liabilities of Brody that had
been assumed by Messrs. Madsen and Ewing.
17
<PAGE> 18
The assets acquired under this Agreement are being used by the
Registrant, but title to the assets has been escrowed, and the assets pledged to
secure performance of the Company's obligation under the Agreement.
New Logic subsequently declined to approve a transfer of the New Logic
OEM Agreement to the Company. However, New Logic continues to sell its VSEP
Units to RCAI under an informal relationship.
As a part of the consideration for this acquisition, the Company agreed
to pay Steve Madsen, an owner of Brody, the sum of $36,000 over a six month
period, in six equal payments of $6,133, beginning January 15, 2000, and issued
50,000 stock options to Steve Madsen and $50,000 stock options to John Ewing
(also an owner of Brody), to acquire shares of the Company's Common Stock at
$0.40 per share. The options are vested, and have a five year term, and expire
on November 15, 2004. In addition, Messrs. Madsen and Ewing were each issued
200,000 additional options, at an exercise price of $0.40 per share, in 50,000
increments to each individual, for each $4,000,000 in gross sales which are
generated by the Company's Membrane Filtration business. These options also
expire, if not vested and exercised by November 15, 2004.
4. Issuance of Common Stock and/or Options to Officers and
Directors
In September of 1999, the Company privately issued 50,000 common shares,
valued at $0.50 per share to Michael Davies, in satisfaction of $25,000 in
corporate debt owed to Mr. Davies.
In September of 1999, the Company privately issued 50,000 common shares
to Gordon Davies, in satisfaction of $25,000 in corporate debt owed to Mr.
Davies.
In August of 1999, the company privately issued 358,720 shares to Fred
Davies (the father of Michael Davies and Gordon Davies), in satisfaction of
$179,360 in consulting fees the Company owned to Mr. Frederick S. Davies for
consulting services fully performed.
In October of 1999, the Company privately issued 325,000 shares to
Canvasback Company, Ltd., in satisfaction of $65,000 in corporate debt owed to
Canvasback Company, Ltd.
In June of 1999, the Company privately issued 100,000 shares of Common
Stock to Fred Davies, in satisfaction of $50,000 in consulting fees owed to Mr.
Davies.
In June of 1999, the Company privately issued 50,000 shares of its
Common Stock to Gordon Davies in satisfaction of $25,000 in compensation owed to
Mr. Davies.
In June of 1999, the Company privately issued 50,000 shares of its
Common Stock to Michael Davies in satisfaction of $25,000 in compensation owed
to Mr. Davies.
18
<PAGE> 19
In June of 1999, the Company privately issued 100,000 shares of its
Common Stock to Fred Davies in satisfaction of $50,000 in compensation owed to
Mr. Davies.
In June of 1998, the Company privately issued 56,800 shares of its
Common Stock to Gordon Davies in satisfaction of $16,050 in personal loans owed
to Mr. Davies.
The only outstanding options issued to officers and directors are those
provided for as a part of their Employment Contracts (see "Compensation of
Executive Officers").
5. Outstanding Loans Owed to Officers, Directors and Principal
Shareholders
Michael C. Davies is currently owed $2,044 as of September 24, 1999, and
is currently an account payable. This figure represents past management salaries
from 1998 to 1999.
Gordon Davies is currently owed $4,782 as of September 24, 1999, and is
currently an account payable. This figure represents past management salaries
from 1998 to 1999.
19
<PAGE> 20
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of Recycling Centers of America, Inc.,
consists of 10,000,000 shares of common stock, no par value, and 100,000 shares
of preferred stock, par value $1.00 per share. The Articles of Incorporation
authorize the Company's Board of Directors to establish by resolution different
classes or series of the undesignated shares and to fix the relative rights and
preferences of such shares in any class or series. Under Colorado law, no
further action by the Company's shareholders is necessary and only the action of
the Board of Directors is required to authorize the issuance of any undesignated
shares. There is currently no Preferred Stock outstanding.
COMMON STOCK
As of February 1, 2000, there were 6,389,304 shares of Common Stock
outstanding and held of record by 608 stockholders. The holders of Common Stock
are entitled to one vote for each share held of record on all matters submitted
to a vote of the holders of Capital Stock. Holders of Common Stock are entitled
to receive ratably such dividends as may be declared by the Board of Directors
out of funds legally available therefor. In the event of a liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any preferred stock that might be issued in
the future. Holders of Common Stock have no preemptive or subscription rights,
and there are no redemption or conversion rights with respect to such shares.
All outstanding shares of Common Stock are fully paid and nonassessable.
This summary of certain provisions of the Common Stock of the Company
does not purport to be complete and is subject to, and qualified in its entirety
by the Company's Articles of Incorporation, as amended, and its Bylaws (which
documents are available and will be supplied upon request).
WARRANTS
The Company has 222,670 Warrants outstanding to acquire 222,670 Shares
of its Common Stock, at a warrant exercise price of $3.50 per share. These
warrants expire on June 14, 2000.
20
<PAGE> 21
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS
ON REGISTRANT'S COMMON STOCK
EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock trades over-the-counter on the NASD Bulletin
Board Market under the symbol "RCAI". The closing sales price as of February 22,
2000, was $2.00.
Set forth below is the high and low bid information for the Company's
Common Stock for each full quarterly period within the two most recent fiscal
years.
<TABLE>
<CAPTION>
High Low High Low
Period Bid Bid Ask Ask
------ --- --- --- ---
<S> <C> <C> <C> <C>
4th Quarter 1999 1.2500 0.3125 1.3750 0.5313
3rd Quarter 1999 0.7500 0.2500 1.0000 0.3125
2nd Quarter 1999 0.9375 0.8125 1.4375 1.4375
1st Quarter 1999 1.9375 0.5313 2.1875 0.9375
4th Quarter 1998 0.8750 0.2500 1.0625 0.4375
3rd Quarter 1998 1.00 0.5625 1.0625 0.75
2nd Quarter 1998 1.75 0.6875 2.125 1.00
1st Quarter 1998 2.3125 0.3125 2.50 1.0625
4th Quarter 1997 4.00 1.00 5.00 2.625
3rd Quarter 1997 4.50 2.00 7.25 2.50
</TABLE>
At January, 2000, the Company had approximately 600 Shareholders of
record.
The Company has not paid a dividend since its incorporation, and
management does not anticipate the Company will pay dividends in the near
future.
ITEM 2. LEGAL PROCEEDINGS
There is no litigation outstanding, and management is not aware of any
potential claims which might be asserted.
21
<PAGE> 22
ITEM 3. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS.
None.
22
<PAGE> 23
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
All Common Stock ("com.")
<TABLE>
<CAPTION>
Sales of Shares
For Cash
Date or Period Shares Class to Offering Total Capital Total Exemption
of Offering Title Sold Whom Sold Price Raised Comm. Relied Upon
- ----------- ----- ---- --------- ----- ------ ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
09/03/98 - 04/14/99 com. 570,816 9 Accredited $ 0.60 $ 342,490 $ 0.0 4(2)
30 Sophisticated
03/15/99 com. 2,000 1 Sophisticated $ 0.80 $ 2,000 $ 0.0 4(2)
03/16/99 com. 176,786 3 Accredited $ 0.70 $ 123,750 $ 0.0 4(2)
03/17/99 com. 11,111 1 Accredited $ 0.90 $ 10,000 $ 0.0 4(2)
04/14/99 com. 2,667 1 Sophisticated $ 0.75 $ 2,000 $ 0.0 4(2)
04/19/99 - 4/29/00 com. 102,000 1 Accredited $ 0.70 $ 50,000 $ 0.0 4(2)
05/01/99 - 07/02/99 com. 314,180 2 Accredited $ 0.45 $ 141,381 $ 0.0 504
2 Sophisticated
07/03/99 - 07/06/99 com. 132,500 1 Accredited $ 0.40 $ 53,000 $ 0.0 4(2)
1 Sophisticated
10/12/99 - 02/15/00 com. 1,551,463 11 Accredited $ 0.45 $ 698,159 $ 0.0 504
28 Sophisticated
</TABLE>
Shares issued for services:
<TABLE>
<S> <C> <C>
27-Jan-00 Dewey Lake 80,000 shares valued at $1.00 per share for
services, Section 4(2) exemption (construction
EMRI)
12-Feb-99 Rocky Baisch 37,000 shares valued at $0.60 per share for
services, Section 4(2) exemption (consulting
services)
12-Feb-00 Scott Carpenter 4,125 shares valued at $0.60 per share for
services, Section 4(2) exemption (consulting
services)
25-Feb-00 First Capital 28,000 shares valued at $0.45 per share for
services, Section 4(2) exemption (consulting
/504 doc)
</TABLE>
Below are shares issued for loans
<TABLE>
<S> <C> <C>
15-Jun-99 Mike Davies 100,000 shares in lieu of $50,000 cash payment
owed to Mr. Davies by the company. Section 4(2)
exemption
15-Jun-99 Gordon Davies 100,000 shares in lieu of $50,000 cash payment
owed to Mr. Davies by the company. Section 4(2)
exemption
18-June-00 John Hewgill 33,333 shares in lieu of interest on loan of
$66,666, Section 4(2) exemption
18-June-00 Gail Hewgill 33,333 shares in lieu of interest on loan of
$33,333, Section 4(2) exemption
25-Feb-00 Canvasback 100,000 shares in lieu for $75,000 loan payment
to J. Hewgill, Section 4(2) exemption
16-Aug-99 Fred Davies 358,720 shares for services in lieu of
$179,360.34 cash payment owed by the company.
Section 4(2) exemption
10-Oct-99 Canvasback 325,000 shares in lieu of $65,000 cash payment
which amount was loaned to the company on
September 14, 1999 ($50,000) and October 1, 1999
($15,000) by Canvasback Company, Ltd. and
represents payment in full for such loans,
Section 4(2) exemption
10Jun-99 Fred Davies 100,000 shares in lieu of $50,000, which amount
was subtracted from the total cash amount owed to
Mr. Davies under his Personal Services /
Consulting contract(s) with the company, Section
4(2) exemption
06-Jan-00 Donna Drain 5,000 shares in lieu of any and all cash payments
for interest on her loan to the company of
$15,000 on or about August 2, 1996, Section 4(2)
exemption.
</TABLE>
- --------------------------------------------------------------------------------
Below are shares issued in lieu of settlements
<TABLE>
<S> <C> <C>
25-Feb-00 William Briggs 30,000 shares for dissolution of EMRI
</TABLE>
23
<PAGE> 24
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification
Each director, officer, employee or agent, past and present of the
corporation, and each person who serves or may have served at the
request of the corporation as a director, employee or agent of another
corporation or employee benefit plan, and their respective heirs,
administrators and executors, shall be indemnified by the corporation in
accordance with, and to the fullest extent permissible under, the
provisions of applicable corporate law.
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.
24
<PAGE> 25
PART F/S
FINANCIAL STATEMENTS
25
<PAGE> 26
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report ............................................... F-2
Balance Sheets ............................................................. F-3
Statement of Operations .................................................... F-4
Statements of Stockholders' Equity (Deficit) ............................... F-5
Statements of Cash Flows ................................................... F-6
Notes to the Financial Statements .......................................... F-7
</TABLE>
F-1
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Recycling Centers of America, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheets of Recycling Centers of America,
Inc. and Subsidiaries as of June 30, 1999 and 1998 and the related statements of
operations, stockholder's equity (deficit) and cash flows for the years then
ended 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Recycling Centers of America,
Inc. and Subsidiaries as of June 30, 1999 and 1998 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note L to the
financial statements, the Company has no equity and has no significant operating
results to date that together raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note L. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Stuart Rubin, CPA
March 1, 2000
F-2
<PAGE> 28
RECYCLING CENTERS OF AMERICA, INC.
Balance Sheets
<TABLE>
<CAPTION>
June 30,
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents 109,958 80,111
Accounts receivable, net 159,229 60,506
Inventory - 29,000
---------- ----------
Total Current Assets 269,187 169,617
Equipment, net 29,390 84,632
Other Assets 9,673 1,291
TOTAL ASSETS 308,250 255,540
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 162,449 97,398
Contract payable 168,221 161,331
Note payable 10,034 193,000
Taxes payable 1,348 748
Accrued interest - 17,100
---------- ----------
Total current liabilities 342,052 469,577
Long-term notes payable - 180,000
Loans from officers and shareholders 205,000 75,500
---------- ----------
TOTAL LIABILITES 547,052 725,077
Common stock; 75,000,000 authorized of $.01 par value,
5,066,677 and 3,460,120 shares issued and outstanding
as of June 30, 1999 and 1998 respectively 2,230,178 1,560,194
Preferred stock 380 380
Retained earnings (1,672,444) (1,563,323)
Net income (796,916) (466,788)
---------- ----------
Total stockholders' equity (238,802) (469,537)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 308,250 255,540
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
<PAGE> 29
RECYCLING CENTERS OF AMERICA, INC.
Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended June 30,
----------------------------
1999 1998
---------- -----------
<S> <C> <C>
REVENUES
Contract income 685,360 605,680
Cost of sales 396,832 416,740
---------- ----------
Gross Profit 288,528 188,940
OPERATING EXPENSES
Wages and payroll taxes 675,864 289,935
Office expenses 95,123 76,130
Bad debt expense 4,000 74,951
Professional fees 90,801 48,914
Stock transfer fees 12,785 47,630
Travel expenses 11,909 34,073
Marketing expenses 11,218 27,590
Depreciation expense 3,160 14,452
Insurance 18,997 11,500
Auto expense 13,599 10,781
Royalties - 5,296
Engineering expenses 52 2,962
Dues and subscriptions 7,734 2,345
---------- ----------
Total operating expenses 945,242 646,559
OTHER EXPENSE
Interest expense 17,438 4,403
Other expense 4,384 4,766
---------- ----------
Total other expense 21,822 9,169
Loss before loss on discontinued operations (678,536) (466,788)
Loss from discontinued operations (118,380) -
NET LOSS (796,916) (466,788)
---------- ----------
LOSS PER SHARE (0.19) (0.14)
WEIGHTED AVERAGE NUMBER OF SHARES 4,263,399 3,281,320
OUTSTANDING
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE> 30
RECYCLING CENTERS OF AMERICA, INC.
Statements of Cash Flow
<TABLE>
<CAPTION>
For the Years Ended June 30,
----------------------------
1999 1998
---------- -----------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (796,916) (466,788)
Adjustments to reconcile net
income (loss) to net cash:
Depreciation 3,160 14,452
Loss on disposition of equipment (55,242) -
Changes in assets and liabilities:
(Increase) decrease in accounts receivables (98,723) 99,359
(Increase) decrease in inventory 29,000 (29,000)
(Increase) decrease in other assets 8,382 25,025
Increase (decrease) in accounts payable and
other current liabilities 55,441 190,611
---------- ----------
Net Cash Provided (Used) by
Operating Activities (854,898) (166,341)
---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets 5,070
Wil-Flow Settlement 85,261 (141,017)
---------- ----------
Net Cash Provided (Used) by
Investing Activities 85,261 (135,947)
---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from shareholder loans 129,500 107,940
Common stock issued for cash 669,984 275,992
---------- ----------
Net Cash Provided (Used) by
Financing Activities 799,484 383,932
NET INCREASE (DECREASE) IN CASH 29,847 76,574
CASH AT THE BEGINNING OF PERIOD 80,111 3,537
---------- ----------
CASH AT END OF PERIOD 109,958 80,111
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE> 31
RECYCLING CENTERS OF AMERICA, INC.
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Total
-------------------------- ------------------------ Accumulate Stockholder
Shares Amount Shares Amount Deficit Deficit
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1997 3,104,000 1,284,202 52,902 380 (976,038) 308,544
Write-off of Wil-Flow Patent - - - - (105,690) (105,690)
Write-off of Wil-Flow Goodwill - - - - (434,203) (434,203)
Merger with Vac-Tek - - - - (47,392) (47,392)
Issuance of Common Stock 356,120 275,992 - - - 275,992
Net loss for the year ended
June 30, 1998 - - - - (466,788) (466,788)
---------- ---------- ---------- ---------- ---------- ----------
Balance, June 30, 1998 3,460,120 1,560,194 52,902 380 (2,030,111) (469,537)
Issuance of Common Stock 1,606,557 669,984 - - - 669,984
Foregiveness of Wil-flow Note Payable 357,667 357,667
Net loss for the year ended
June 30, 1999 - - - - (796,916) (796,916)
---------- ---------- ---------- ---------- ---------- ----------
Balance, June 30, 1999 5,066,677 2,230,178 52,902 380 (2,469,360) (238,802)
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE> 32
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE A - COMPANY BACKGROUND
Recycling Centers of America, Inc. (RCAI), is a Colorado corporation,
originally formed in 1976. RCAI as of June 30, 1998 was comprised of three
companies Aquadynamic Technologies, Inc. (ATI), and its subsidiaries
Aquatek, Inc. and Wil-Flow, Inc. Wil-flow, Inc., on March 8, 1999, became
non operational and the patents on the technology were returned to its
former owner and president as a result of the resolution of a lawsuit
between the parties. On June 1, 1999 ATI acquired Sierra Technologies, Inc.
ATI markets its products and services through its two distinct wholly owned
subsidiaries. Aquateck, Inc. was organized and incorporated in 1995 to
engage in providing comprehensive contract engineering services for
automated process control systems. It's primary emphasis has been focused
toward offering its broad engineering expertise to the domestic and foreign
wastewater treatment industries. Wil-Flow, Inc. became a subsidiary of ATI
in January of 1996 and was a technology company specializing in the design
and fabrication of sludge dewatering equipment for the municipal and
industrial markets.
Sierra's main business is the purchasing, treatment and brokerage of
chemical and petroleum products throughout North America.
F-7
<PAGE> 33
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Company's significant accounting policies consistently
applied in the preparation of the accompanying consolidated financial
statements follows:
1. Principles of Consolidation
The consolidated financial statements include the accounts of
Aquadynamic Technologies, Inc.,its wholly owed subsidiaries Aquatek,
Inc. and Wil-Flow, Inc. and Sierra Technologies, Inc. All material
intercompany balances and transactions including investments in
subsidiaries have been eliminated.
2. Using Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. Depreciation and Amortization
Depreciation and amortization are provided in amounts sufficient to relate
the cost of depreciable to operations over their estimated service lives as
defined below.
Transportation Equipment 3-5 years
Office Furniture and Fixtures 5-7 years
Machinery and Equipment 3-10 years
The straight-line method of depreciation is used for substantially all
assets for financial reporting purposes.
4. Income Taxes
The Company and its wholly owned subsidiaries are organized as a
C-corporations. The Company does not file consolidated tax returns and
has not filed tax returns since 1996.
F-8
<PAGE> 34
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
There has been no provision for income taxes as current and previous
operations of the Company have resulted in taxable losses. There is no
determinable benefit of these net operating losses which can be carried
forward for 15 years because of the significant losses incurred by the
Companies.
5. Fair Value of Financial Instruments
The carrying amount of cash, accounts and notes receivable, lines of credit,
and other liabilities due in less than one year approximated fair value as
of June 30, 1999 and 1998 due to the relatively short maturity of these
instruments.
The carrying value of long-term liabilities approximated fair value as of
June 30, 1999 and 1998 based on the current rates offered to the Company for
similar debt of the same remaining maturities.
NOTE C - ACCOUNTS RECEIVABLE
All accounts Receivable are trade related. These receivables are current and
collection is fully expected. No reserve for uncollectable accounts is
deemed necessary.
NOTE D - PLANT PROPERTY AND EQUIPMENT
Plant, Property and Equipment consisted of the following at June 30,
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
Computers and Office Equipment $ 62,191 $ 62,191
Transportation Equipment 13,191 65,273
---------- ----------
75,382 127,464
Less accumulated depreciation (45,992) (42,832)
---------- ----------
Balance $ 29,390 $ 84,632
</TABLE>
F-9
<PAGE> 35
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE D - PLANT PROPERTY AND EQUIPMENT, Continued
The reduction in Plant, Property and Equipment between years is attributed
to the dissolution of Wil-Flow, Inc. in March 1999. Depreciation expense was
$14,452 and $3,160 for the years ended June 30, 1999 and 1998.
NOTE E - NOTES PAYABLE
Notes payable consisted of the following at June 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
Note payable to President of Wil-Flow, Inc.,
Interest accruing at 9.5 % per annum,
unsecured, payable each in installments of
$90,000 payable each January 8th until year
2000. $ 0 $ 360,000
Note payable to First Union Bank for the
purchase of a vehicle 10,034 13,000
---------- ----------
Total $ 10,034 $ 373,000
Less long-term portion 0 (180,000)
Current Portion $ 10,034 $ 193,000
</TABLE>
A lawsuit was pending with the former President of Wil-flow, Inc. which was
resolved on March 8, 1999 and the note payments due the President were
forgiven. See Note I for more details.
F-10
<PAGE> 36
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE F - RELATED PARTY TRANSACTIONS
Certain of the Company's principals and family members of these principals
have loaned money to the Company at various times. The consolidated
long-term loans as of June 30, 1999 and 1998 from related parties are
$205,000 and $75,500 respectively. It is the intent of the Company to
convert these notes into common shares of stock and therefore these loans do
not bear any interest.
Fred Davies, a major shareholder of the Company, is also a major debtor to
the Company. As of June 30, 1999 and 1998 he is owed $168,221 and $161,333
respectively for unpaid portion of his management contract and also for
loans to the Company.
Intercompany loans and transactions occur on a regular basis among the
parent and two wholly owned subsidiaries. No intercompany profits are
recorded.
NOTE G - COMMITMENTS AND CONTINGENCIES
The Company conducts its operations utilizing leased facilities and
equipment under noncancellable operating lease agreements expiring at
various dates through the year 2003. Future minimum lease commitments,
excluding property taxes and insurance, are approximately as follows:
<TABLE>
<CAPTION>
Year ending June 30,
<S> <C>
2000 $24,096
2000 63,000
2001 24,096
2002 21,030
2003 2,850
$72,072
</TABLE>
Rent expense for all leased facilities and equipment was approximately
$41,748 and $34,935 for the years ended June 30, 1999 and 1998,
respectively.
F-11
<PAGE> 37
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE G - COMMITMENTS AND CONTINGENCIES, Continued
The Company has no pending lawsuits. Management is not aware of any
potential lawsuits that will have a material adverse effect on the financial
position of the Company.
NOTE H - MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
The Company maintains its cash balances in more than one financial
institution. At times, the Company's balances exceed the amounts insured by
the Federal Deposit Insurance Corporation. The Company has not experienced
any losses in such accounts and believes it is not exposed to any
significant credit risk on cash and cash equivalents.
The majority of the Sales in 1999 and 1998 are to one customer. At June 30,
1999 and 1998, the largest customer comprised approximately $40,567 and
$3,083 of the Company's accounts receivable. Management believes that
customer acceptance, billing, and collection policies are adequate to
minimize potential risk on trade receivables.
NOTE I - RESOLUTION OF THE LAWSUIT WITH WIL-FLOW, INC.
In November 1995, the Company purchased all of the outstanding common stock
of Wil-Flow, Inc. for a total consideration of $575,000. The purchase price
exceeded the book value and fair market value of the assets. As a result of
the settlement of the lawsuit with the former President of Wil-Flow, Inc.
the excess consideration paid for Wil-Flow, Inc was written-off the books.
This amount was offset by the debt not paid by the Company to the former
President of Wil-Flow, Inc. The total loss from the dissolution of Wil-Flow,
Inc. is $118,380. This loss does not include the operational losses which
were incurred during the period of ownership.
F-12
<PAGE> 38
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE J - JOINT VENTURE WITH ENERGY & MATERIAL RECOVERY, INC.
In September 1997 the Company entered into a joint venture agreement with
Energy & Material Recovery, Inc. (EMRI). The Company contributed 1,500,000
shares of common stock and EMRI contributed two operating companies,
Industrial Oil, Inc. and Fuel Processors, Inc. The purpose of the joint
venture was to develop proprietary processes to convert a wide range of
industrial waste streams into raw materials for new products and uses. In
October 1999 the Company dissolved its joint venture and the 1,500,000 common
shares were returned to the Company. The financial statements reflect the
expenses incurred for this joint venture.
NOTE K - ACQUISITION OF SIERRA TECHNOLOGIES, INC.
On June 1, 1999 the Company purchased Sierra Technologies, Inc whose business
includes purchasing, treatment and brokerage of chemical and petroleum
products throughout North America. The net purchase price was $22,299 which
represents the difference between the amount owed to Sierra Technologies,
Inc. vendors and the Accounts Receivable due from its customers. The
President of Sierra Technologies, Inc. entered into a three year employment
with the Company and will hold the title of Chief Executive Officer of
Recycling Centers of America, Inc.
NOTE L - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has incurred significant losses which have result in an
accumulated deficit of $ 2,469,360 at June 30, 1999 which raises substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments relation to
the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might result from the outcome of this
uncertainty. It is the intent of management to create additional revenues
through its technologies and to rely upon additional equity financing if
required to sustain operations. The management of the Company has committed
to covering the operating expenses of the Company until adequate sales are
generated.
F-13
<PAGE> 39
Recycling Centers of America, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
NOTE M - SUBSEQUENT EVENTS
In October 1999, the Company through a Private Placement Memorandum in
accordance with SEC Regulation 504 D, began to raise one million dollars
($1,000,000) in equity capital. The Company is offering common shares at
forty five cents ($.45)per share.
In December 1999, the Company completed a merger with Brody Special Projects
Company at a cost of $300,000. The Company acquired the international
marketing agreements with New Logic and Pall Filtron for the marketing and
sale of their respective technologies.
F-14
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
RECYCLING CENTERS OF AMERICA, INC.
/s/ Michael Davies
------------------------------------
Michael Davies.
Date: March 2, 2000 Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been duly signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Chairman of the Board,
Director, and
/s/ Bruce Selk Chief Executive Officer March 2, 2000
- ----------------------------
Bruce Selk
Chief Financial Officer
/s/ Michael Davies and a Director March 2, 2000
- -----------------------------
Michael Davies
/s/ Gordon Davies Secretary and a Director March 2, 2000
- -----------------------------
Gordon Davies
</TABLE>
<PAGE> 41
PART III
ITEM 1. INDEX TO EXHIBITS
3 (i) Articles of Incorporation of Recycling Centers of America,
Inc.
3 (ii) Bylaws of Recycling Centers of America, Inc.
10. Material Contracts
(a) Employment Contract with Bruce Selk
(b) Employment Contract with Michael Davies
(c) Employment Contract with Gordon Davies
(d) OEM (License) Contract with Pall Filtron, Inc.
(e) Transfer Agreement covering assets of Brody Special
Projects Company
11. Statement Re: Computation of Per Share Earnings
12. Subsidiaries of Registrant
<PAGE> 1
EXHIBIT 3.(i)
ATTACHMENT I
Form d1 (Rev. 10/76)
ARTICLES OF INCORPORATION
(SEE INSTRUCTIONS BELOW)
We, the undersigned natural persons of the age of twenty-one years or more,
acting as incorporators of a corporation under the Colorado Corporation Act,
adopt the following Articles of Incorporation for such corporation:
FIRST: The name of the corporation is Vac-Tec Systems, Inc.
-------------------------------------
SECOND: The period of duration is Perpetual
-----------------------------------------
(a standard number of years,
or the word PERPETUAL)
THIRD: The purpose or purposes for which the corporation is organized
Manufacture and sale of vacuum coating equipment
- --------------------------------------------------------------------------------
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is 50,000 with par value of $1.00 each
-----------------------------------
FIFTH: Cumulative voting of shares of stock is authorized.
---------
SIXTH: Provisions limiting or denying to shareholders the preemptive right
to acquire additional or treasury shares of the corporation are:
SEVENTH: The address of the initial registered office of the corporation is
1898 S. Flatirons Court, Boulder, CO 80303
- --------------------------------------------------------------------------------
(Address must include Building Number, Street (or rural route number), Town or
City, County and Zip code.)
and the name of its initial registered agent at such address is Ted Van Vorous
----------------
EIGHTH: Address of the place of business:
1898 S. Flatirons Court, Boulder, CO
- --------------------------------------------------------------------------------
(if different from registered office)
NINTH: The number of directors constituting the initial board of directors
of the corporation is three, and the names and addresses of the persons who are
to serve as directors until the first annual meeting of shareholders or until
their successors are elected and shall qualify are: (At least 3.)
<TABLE>
<CAPTION>
NAME ADDRESS
- ---------------- ----------------------------
<S> <C>
Ted Van Vorous 355 South 41st Street
Mary Van Vorous Boulder, CO 80302
David Van Vorous (Address above same for all)
</TABLE>
TENTH: The name and address of each incorporator is: (At least 3).
<TABLE>
<CAPTION>
NAME ADDRESS
- ---------------- ----------------------------
<S> <C>
Ted Van Vorous 355 South 41st Street
Mary Van Vorous Boulder, CO 80302
David Van Vorous (Address above same for all)
/s/ TED VAN VOROUS
STATE OF Colorado) ----------------------------------------
) SS.
COUNTY OF Boulder) /s/ MARY T. VAN VOROUS
----------------------------------------
/s/ DAVID VAN VOROUS
----------------------------------------
</TABLE>
I, Earlene F. Peyton, a notary public, hereby certify that the above named
persons personally appeared before me Ted Van Vorous, Mary Van Vorous and David
Van Vorous who being by me first duly sworn, severally declared that they are
the persons who signed the foregoing document as incorporators, and that the
statements therein contained are true.
In witness whereof I have hereunto set my hand and seal this 27th day of
February A.D. 1976.
My Commission expires September 8, 1979
/s/ EARLENE F. PEYTON
----------------------------------------
Notary Public
Submit in duplicate
Note: If this form is used "SUBMIT IN DUPLICATE" the original and carbon
copy -- TYPED.
Shares of stock must have a dollar amount par value or a statement
that each share is of "no par value."
ADDRESS means street name and number, city or town, and United States post
office zip code designation. In the event that by reason of rural location, or
otherwise, a street address, number, town or city shall be used, other
appropriate "address" fixing as near as possible the actual physical location
may be substituted, but in all such exceptional cases the rural delivery route,
the county, and the United States post office zip code designation shall be
included.
<PAGE> 2
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Act, the undersigned
corporation adopts the following Articles of Amendment to its Articles of
Incorporation:
FIRST: The name of the corporation in (note 3) Vac-Tec Systems, Inc.
SECOND: The following amendment was adopted by the shareholders of the
corporation on March 22nd, 1979, in the manner prescribed by the Colorado
Corporation Act.
"Be it resolved that Vac-Tec Systems, Inc. Articles of Incorporation are
amended to authorize the corporation to issue 20,000 shares of Preferred Class
A, Non-Voting Stock at no par."
THIRD: The number of shares of the corporation outstanding at the time of
such adoption was 45,000; and the number of shares entitled to vote thereon was
45,000.
FOURTH: The description and number of outstanding shares of each entitled
to vote thereon as a class were as follows:
(Note 1)
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES
----- ----------------
<S> <C>
COMMON 45,000
</TABLE>
FIFTH: The number of shares voted for such amendment was 45,000 and the
number of shares voted against such amendment was 0.
SIXTH: The number of shares of each class entitled to vote thereon as a
class voted for and against such amendment, respectively, was:
(Note 1)
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES
------ -----------------
<S> <C> <C>
For Against
------ -------
Common 45,000 0
</TABLE>
SEVENTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows:
(Note 2)
No Change
EIGHTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital as changed by such
amendment, are as follows:
(Note 2)
No Change
[SEAL] Vac-Tec Systems, Inc.
-------------------------- (Note 3)
By: /s/ THEODORE VAN VOROUS
--------------------------
(Its President)
)
STATE OF COLORADO, ) and /s/ MARY T. VAN VOROUS ) (Note 4)
) ss --------------------------)
County of Boulder) (Its) Secretary)
- ------------
Before me, Carol Gianos, a Notary Public in and for the said County and
State, personally appeared Ted Van Vorous who acknowledged before me that he is
the President of Vac-Tec Systems, Inc.
---------------- -------------------------
(Title of office) (Name of the corporation)
a Colorado corporation and that he signed the foregoing Articles of Amendment as
his free and voluntary act and deed for uses and purposes therein set forth, and
that the facts contained therein are true.
In witness whereof I have hereunto set my hand and seal this 22 day of
March A.D. 1979
My Commission Expires September 13, 1981
/s/ CAROL GIANOS
----------------
(Notary Public)
NOTES: 1. If inapplicable, insert "None."
2. If inapplicable, insert "No change."
3. Exact corporate name of corporation adopting the Articles of
Amendment. (If this is a change of name amendment the name before this
amendment is filed)
4. Signatures and titles of officers signing for the corporation.
SUBMIT IN DUPLICATE means original TYPED copy and first carbon copy, or xerox
copies both having original signatures & verifications.
<PAGE> 3
STATE OF COLORADO
DEPARTMENT OF [SEAL] PROFIT
STATE CERTIFICATE OF
INCORPORATION
I, MARY ESTILL BUCHANAN,
Secretary of State of the State of Colorado, hereby certify that pursuant
to the provisions of the Colorado Corporation Aol. Articles of Incorporation
were delivered to this office, found to conform to law, and filed in this
office.
Accordingly the undersigned, by virtue of the authority vested in me by
law, hereby issues this Certificate of Incorporation of
- -----------------------------Vac-Tec Systems, Inc.-----------------------------
- -------------------------------------------------------------------------------
(A COLORADO CORPORATION)
Dated this Tenth day of March, A.D. 1976
/s/ MARY ESTILL BUCHANAN
-------------------------------
SECRETARY OF STATE
<PAGE> 4
05770 SECRETARY OF STATE
1674 SNOWDEN STREET
DENVER COLORADO 81313
299893
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
????? [ ] CASH [ ] CHECK [X] PENDING
----------------------------------------------------------------
Vac-Tec Systems, Inc. ARTICLES OF INCORPORATION OR FOREIGN AUTHORITY 25
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] DOMESTIC [ ] NONPROFIT TYPE [ ] MISCELLANEOUS OLD AGE PENSION FEE 2
[ ] FOREIGN [X] PROFIT [ ] PHOTO [ ] CERTIFIED COPY ----------------------------------------------------------------
DOM FRANCHISE TAX OR FGN LICENSE FEE 10
- ------------------------------------------------------------------------------------------------------------------------------------
NO. COPIES CERTIFICATE OF ARTICLES OF AMENDMENT
- ------------------------------------------------------------------------------------------------------------------------------------
CHARACTER OF DOCUMENT
ELECTION TO ACCEPT
ARTICLES OF INCORPORATION ----------------------------------------------------------------
INTENT TO DISSOLVE
----------------------------------------------------------------
ARTICLES OF DISSOLUTION
----------------------------------------------------------------
REINSTATEMENT FEE
----------------------------------------------------------------
RESERVATION OF CORPORATE NAME
----------------------------------------------------------------
----------------------------------------------------------------
ANNUAL REPORT
- ------------------------------------------------------------------------------------------------------------------------------------
ORDERED/RECEIVED BY
Vacuum Technology Systems ----------------------------------------------------------------
TRADE NAME
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS (Street No. or ????)
P.O. Box 3276 ----------------------------------------------------------------
TRADE MARK
- ------------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE
Boulder, Colo. 80303 ----------------------------------------------------------------
SEARCHES
- ------------------------------------------------------------------------------------------------------------------------------------
ATTENTION DELIVERED BY PHONE NO. ADDITIONAL CERTIFICATE
[ ] MAIL [ ] PICK-UP ----------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DATE FILED DATE ORDERED DATE COMPLETED CERTIFIED -- PHOTO COPIES
3/10/76 3-22-76 ----------------------------------------------------------------
REFUND (Overpayment will be processed & mailed in 16 days)
- ------------------------------------------------------------------------------------------------------------------------------------
CLERK (Signature) STENO (Signature) DISTRIBUTION: TOTAL OF ORDER PAID $37
Herman /s/ [Signature Illegible] WHITE -- Customer
CANARY -- Transaction
PINK -- Audit
GOLDENROD --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
ARTICLES OF INCORPORATION
If there is no statutory form for the Articles of Incorporation, a form
similar to the following, prepared by the Committee on Corporation Laws of the
American Bar Association, may be used:
ARTICLES OF INCORPORATION
1. The name of the corporation is Vac-Tec Systems, Inc.
2. The period of its duration is perpetual.
3. Its purpose is to transact the Corporation business and all other business
not forbidden by law.
4. The corporation shall have authority to issue shares, all without par
value.
5. The corporation will not commence business until at least $1,000 has been
received as consideration for issuance of shares.
6. The address of its initial registered office is 1898 S. Flatirons Ct.,
Boulder, Colorado. The name of its initial registered agent at such address is
7. The number of directors constituting the initial board of directors is
three. They are:
Ted Van Vorous
John L. Robbins
John R. Kadlersk
8. Every director and officer shall be indemnified against all liabilities,
civil and criminal, incurred in relation to his duties, including all
reasonable expenses of defense, except to the extent that he shall have been
finally adjudged to be liable for negligence or misconduct in the matter out of
which the liability arises.
(Date) May 12, 1976
/s/ THEODORE VAN VOROUS
--------------------------------
/s/ JOHN L. ROBBINS
--------------------------------
/s/ JOHN R. KADLERSK
--------------------------------
<PAGE> 6
RECORDING
In some States the statute requires the Certificate or Articles of
Incorporation to be recorded with some County officer, such as the Recorder of
Deeds or the County Clerk. Recording requirements should be checked and the
requirements fulfilled.
PUBLICATION
In some States the statute requires a notice of incorporation to be
published. The publication requirements of the state should be checked and the
requirements fulfilled.
(A memorandum of recording and affidavit of publication,
if required, should be attached here.)
<PAGE> 7
[STATE OF COLORADO SEAL]
STATE OF COLORADO
DEPARTMENT OF STATE
CERTIFICATE
I, VICTORIA BUCKLEY, SECRETARY OF STATE OF THE STATE OF COLORADO
HEREBY CERTIFY THAT
ACCORDING TO THE RECORDS OF THIS OFFICE
RECYCLING CENTERS OF AMERICA, INC.
(COLORADO CORPORATION)
FILE # 19871299893 WAS FILED IN THIS OFFICE ON March 10, 1976 AND HAS COMPLIED
WITH THE APPLICABLE PROVISIONS OF THE LAWS OF THE STATE OF COLORADO AND ON THIS
DATE IS IN GOOD STANDING AND AUTHORIZED AND COMPETENT TO TRANSACT BUSINESS OR
TO CONDUCT ITS AFFAIRS WITHIN THIS STATE.
Dated: March 26, 1999
/s/ VICTORIA BUCKLEY
-----------------------------
SECRETARY OF STATE
<PAGE> 8
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
VAC-TEC SYSTEMS, INC.
Pursuant to the provision of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Vac-Tec Systems, Inc.
SECOND: The following amendment was adopted by the shareholders of the
corporation on February 15, 1998, in the manner prescribed by the Colorado
Corporation Code:
ARTICLE I was deleted and the following ARTICLE I was substituted
therefore:
"ARTICLE I"
NAME OF CORPORATION
The name of the corporation is Recycling Centers of America, Inc.
VAC-TEC SYSTEMS, INC.
By /s/ WILBUR L. BRIGGS
--------------------------------
Wilbur L. Briggs
President
By /s/ GORDON W. DAVIES
--------------------------------
Gordon W. Davies
Secretary
STATE OF OREGON ) SS
COUNTY OF MULTNOMAH )
BEFORE ME, Melvin Anderson, a Notary Public in and for said County and
State on this 4 day of March, 1999, personally appeared Wilbur L. Briggs, who
acknowledged before me that he is the President of VAC-TEC SYSTEMS, INC., a
Colorado corporation, and that he executed the foregoing Articles of Amendment
as his free and voluntary act and deed for the uses and purposes therein set
forth, and that the facts contained therein are true.
IN WITNESS THEREOF, I have hereunto set my hand and affixed my notarial
seal the 4 day of March, 1999.
/s/ MELVIN ANDERSON
----------------------------------
Notary Public
My Commission Expires: Dec. 4, 2000
(Notary's Seal) [SEAL] FILED CUSTOMER COPY
VICTORIA BUCKLEY
COLORADO SECRETARY OF STATE
19991056985
$40.00
SECRETARY OF STATE
03-26-1999 11:42:44
** Total Page.002 **
<PAGE> 1
EXHIBIT 3.(ii)
BY-LAWS
OF
VAC-TEC SYSTEMS, INC.
ARTICLE 1
OFFICES
Section 1. Offices:
The principal office of the Corporation shall be at 5500 Central Avenue,
in the City of Boulder, County of Boulder, State of Colorado, and the
Corporation shall have other offices at such places as the Board of Directors
may from time to time determine.
ARTICLE II
STOCKHOLDER'S MEETINGS
Section 1. Place:
The place of stockholders' meetings shall be the principal office of the
Corporation unless some other place either within or without the State of
Colorado shall be determined and designated from time to time by the Board of
Directors.
Section 2. Annual Meeting:
The annual meeting of the stockholders of the Corporation for the
election of directors to succeed those whose terms expire, and for the
transaction of such other business as may properly come before the meeting,
shall be held each year on the third Monday in July beginning in the year 1981.
If the annual meeting of the stockholders be not held, or if held and directors
shall not have been elected for any reason, then the election of directors may
be held at any meeting of stockholders thereafter called pursuant to these
By-laws and the laws of Colorado.
Section 3. Special Meetings:
Special meetings of the stockholders for any purpose or purposes may be
called by the President, the Board of Directors, or the holders of ten percent
(10%) or more of all the share entitled to vote at such meeting, by the giving
of notice in writing as hereinafter described.
Section 4. Voting:
At all meetings of stockholders, voting may be viva voce; but any
qualified voter may demand a stock vote, whereupon such vote shall be taken by
ballot and the Secretary shall record the name of the stockholder voting, the
number of shares voted, and, if such vote shall be by proxy, the name of the
proxy holder. Voting may be in person or by proxy appointed in writing,
manually
Page 1 of 10
<PAGE> 2
signed by the stockholder or his duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from the date of its execution, unless
otherwise provided therein.
Each stockholder shall have such rights to vote as the Articles of Incorporation
provide for each share of stock registered in his name on the books of the
Corporation, except where the transfer books of the Corporation shall have been
closed or a date shall have been fixed as a record date, not to exceed, in any
case, fifty (50) days preceding the meeting, for the determination of
stockholders entitled to vote. The Secretary of the Corporation shall make, at
least ten (10) days before each meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list, for a period of ten (10) days prior to such meeting,
shall be kept on file at the principal office of the Corporation and shall be
subject to inspection by any stockholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any stockholder during the
whole time of the meeting.
Section 5. Order of Business:
The order of business at any meeting of stockholders shall be as
follows:
1. Calling the meeting to order.
2. Calling of roll.
3. Proof of notice of meeting.
4. Report of the Secretary of the stock represented at the meeting and
the existence or lack of a quorum.
5. Reading of minutes of last previous meetings and disposal of any
unapproved minutes.
6. Reports of officers.
7. Reports of committees.
8. Election of directors, if appropriate.
9. Unfinished business.
10. New business.
11. Adjournment.
12. To the extent that these By-laws do not apply, Roberts' Rules of
Order shall prevail.
Page 2 of 10
<PAGE> 3
Section 6. Notices:
Written or printed notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than fifty
(50) days before the date of the meeting, either personally or by mail, by or at
the direction of the President, the Secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting,
except that, if the authorized capital stock is to be increased, at least thirty
(30) days' notice shall be given, If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon prepaid.
Section 7. Quorum:
A quorum at any annual or special meeting shall consist of the
representation in person or by proxy of a majority in number of shares of the
outstanding capital stock of the Corporation entitled to vote at such meeting.
In the event a quorum be not present, those present may adjourn the meeting for
a period not to exceed sixty (60) days at any one adjournment; and no further
notice of the meeting or its adjournment shall be required. The stockholders
entitled to vote, present either in person or by proxy at such adjourned
meeting, shall, if equal to a majority of the shares entitled to vote at the
meeting, constitute a quorum, and the votes of a majority of those present in
numbers of shares entitled to vote shall be deemed the act of the shareholders
at such adjourned meeting.
Section 8. Action by Shareholders Without a Meeting:
Any action required to be or which may be taken at a meeting of the
shareholders of the corporation may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Organization and Powers:
The Board of Directors shall constitute the policy-making or legislative
authority of the Corporation. Management of the affairs, property, and business
of the Corporation shall be vested in the Board of Directors, which shall
consist of not less than three nor more than eight members, who shall be elected
at the annual meeting of stockholders by a plurality vote for a term of one (1)
year, and shall hold office until their successors are elected and qualify.
Directors need not be stockholder. Directors shall have all powers with respect
to the management, control, and determination of policies of the Corporation
that are not limited by these By-laws, the Articles of Incorporation, or the
statutes of the State of Colorado, and the enumeration of any power shall not be
considered a limitation thereof.
Page 3 of 10
<PAGE> 4
Section 2. Vacancies:
Any vacancy in the Board of Directors, however caused or created, shall
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the board, or at a special meeting of the
stockholders called for that purpose. The directors elected to fill vacancies
shall hold office for the unexpired term and until their successors are elected
and qualify.
Section 3. Regular Meetings:
A regular meeting of the Board of Directors shall be held, without other
notice than this By-law, immediately after and at the same place as the annual
meeting of stockholders or any special meeting of stockholders at which a
director or directors shall have been elected. The Board of Directors may
provide by resolution the time and place, either within or without the State of
Colorado, for the holding of additional regular meetings without other notice
than such resolution.
Section 4. Special Meeting:
Special meetings of the Board of Directors may be held at the principal
office of the Corporation, or such other place as may be fixed by resolution of
the Board of Directors for such purpose, at any time on call of the President or
of any member of the Board, or may be held at any time and place without notice,
by unanimous written consent of all the members, or with the presence and
participation of all members at such meeting. A resolution in writing signed by
all the directors shall be as valid and effectual as if it had been passed at a
meeting of the directors duly called, constituted, and held.
Section 5. Notices:
Notices of both regular and special meetings, save when held by
unanimous consent or participation, shall be mailed by the Secretary to each
member of the Board not less than two days before any such meeting and notices
of special meetings may state the purposes thereof. No failure or irregularity
of notice or any regular meeting shall invalidate such meeting or any proceeding
thereat.
Section 6. Quorum and Manner of Acting:
A quorum for any meeting of the Board of Directors shall be a majority
of the Board of Directors as then constituted. Any act of the majority of the
directors, present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Any action of such majority, although not at a regularly
called meeting, and the record thereof, if assented to in writing by all of the
other member of the Board, shall always be as valid and effective in all
respects as if otherwise duly taken by the Board of Directors.
Section 7. Executive Committee:
The Board of Directors may by resolution of a majority of the Board
designate two (2) or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
Corporation; but the designation of such committee and the delegation of
Page 4 of 10
<PAGE> 5
authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed on it or him by law.
Section 8. Order of Business:
The order of business at any regular or special meeting of the Board of
Directors, unless otherwise prescribed for any meeting by the Board, shall be as
follows:
1. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
6. To the extent that these By-laws do not apply, Roberts' Rules of
Order shall prevail.
Section 9. Remuneration:
No stated salary shall be paid to directors for their services as such,
but, by resolution of the Board of Directors, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board. Members of special or standing committees may be allowed
like compensation for attending meetings. Nothing herein contained shall be
construed to preclude any director from receiving compensation for serving the
Corporation in any other capacity, subject to such resolutions of the Board of
Directors as may then govern receipt of such compensation.
ARTICLE IV
OFFICERS
Section 1. Titles:
The officers of the Corporation shall consist of a President, one or more Vice
Presidents, a Secretary, and a Treasurer, the last two of which offices may be
combined and held by one person, who shall be elected for one (1) year by the
directors at their first meeting following the annual meeting of stockholders.
Such officers shall hold office until their successors are elected and qualify.
The Board of Directors may appoint from time to time such subordinate officers,
as it deems desirable. Subordinate officers shall serve during such terms as may
be fixed by the Board at a duly held meeting.
Page 5 of 10
<PAGE> 6
Section 2. President:
The President shall preside at all meetings of stockholders and, in the
absence of a, or the, Chairman of the Board of Directors, at all meetings of the
directors. He shall be generally vested with the power of the chief executive
officer of the Corporation and shall countersign all certificates, contracts,
and other instruments of the Corporation as authorized by the Board of Directors
or required by law. He shall make reports to the Board of Directors and
stockholders and shall perform such other duties and services as may be required
of him from time to time by the Board of Directors.
Section 3. Vice President:
The Vice President shall perform all the duties of the President if the
President is absent or for any other reason is unable to perform his duties and
shall have such other duties as the Board of directors shall authorize or
direct.
Section 4. Secretary:
The Secretary shall issue notices of all meetings of stockholders and
directors, shall keep minutes of all such meetings, and shall record all
proceedings. He shall have custody and control of the corporate records and
books, excluding the books of account together with the corporate seal. He shall
make such reports and perform such other duties as may be consistent with his
office or as may be required of him from time to time by the Board of Directors.
Section 5. Treasurer:
The Treasurer shall have custody of all moneys and securities of the
Corporation and shall have supervision over the regular books of account. He
shall deposit all moneys, securities, and other valuable effects of the
Corporation in such banks and depositaries as the Board of Directors may
designate and shall disburse the funds of the Corporation in payment of just
debts and demands against the Corporation, or as they may be ordered by the
Board of Directors, shall render such account of his transactions as may be
required of him by the President or the Board of Directors from time to time and
shall otherwise perform such duties as may be required of him by the Board of
Directors.
The Board of Directors may require the Treasurer to give a bond
indemnifying the Corporation against larceny, theft, embezzlement, forgery,
misappropriation, or any other act of fraud or dishonesty resulting from his
duties as Treasurer of the Corporation, which bond shall be in such amount as
appropriate resolution or resolutions of the Board of Directors may require.
Section 6. Vacancies or Absences:
If a vacancy in any office arises in any manner, the directors then in
office may choose, by a majority vote, a successor to hold office for the
unexpired term of the officer. If any officer shall be absent or unable for any
reason to perform his duties, the Board of Directors, to the extent not
otherwise inconsistent with these By-laws, may direct that the duties of such
officer during such absence or inability shall be performed by such other
officer or subordinate officer as seems advisable to the Board.
Page 6 of 10
<PAGE> 7
Section 7. Compensation:
No officer shall receive any salary or compensation for his services
unless and until the Board of Directors authorizes and fixes the amount and
terms of such salary or compensation.
ARTICLE V
STOCK
Section 1. Certificates of Shares:
Each holder of stock of the Corporation shall be entitled to a stock
certificate signed by the President or Vice President and also by the Secretary
or an assistant secretary of the Corporation. The certificates of shares shall
be in such form, not inconsistent with the Certificate of Incorporation or
Articles of Incorporation, as shall be prepared or approved by the Board of
Directors. (All certificates shall be prepared or approved by the Board of
Directors). All certificates shall be consecutively numbered. Each certificate
shall state upon its face that the Corporation is organized under the laws of
this state; the name of the person to whom issued; the number and class of
shares; and the designation of the series, if any, which such certificate
represents; the par value of each share represented by the certificate, or a
statement that the shares are without par value. The name of the person owning
the shares represented thereby, with the number of such shares and the date of
issue, shall be entered on the Corporation's books, and no certificate shall be
valid unless it be signed by the President or Vice President and by the
Secretary or an assistant secretary of the Corporation. The seal of the
Corporation affixed to stock certificates may be a facsimile. The signatures of
officers as above described on any such certificate may be a facsimile if a
transfer agent countersigns the certificate, or registered by a registrar, other
than the Corporation itself or an employee of the Corporation.
Section 2. New Certificates:
All certificates surrendered to the Corporation shall be canceled and no
new certificate shall be issued, except to evidence transfer of stock from the
unissued stock or treasury of the Corporation, or, in the case of a lost
certificate, except upon posting a bond of indemnity in such form and with such
surety or sureties and for such amount as shall be satisfactory to the directors
and upon producing by affidavit or otherwise such evidence of loss or
destruction as the Board may require, until the former certificates for the same
number of shares have been surrendered and canceled.
Section 3. Transfer of Shares:
Shares in the capital stock of the Corporation shall be transferred only
on the books of the Corporation by the holder thereof in person, or by his
attorney, upon surrender and cancellation of certificates for a like number of
shares. The delivery of a certificate of stock of this Corporation to a bona
fide purchaser or pledgee for value, together with a written transfer of the
same or a written power of attorney to sell, assign, and transfer the same,
signed by the owner of the certificate, shall be a sufficient delivery to
transfer the title against all persons except the Corporation. No transfer of
stock shall be valid against the Corporation until it shall have been registered
upon the books of the Corporation.
Page 7 of 10
<PAGE> 8
Section 4. Closing of Transfer Books or Provisions for Record Date:
The stock transfer books may be closed by the Board of Directors for a
period not exceeding fifty (50) days prior to any meeting of the stockholders or
prior to the payment of dividends; or the Board of Directors may fix in advance
a day not more than fifty (50) days prior to the holding of any such meeting of
stockholders or payment of dividends as the day as of which stockholders
entitled to notice of and to vote at such meeting or to payment of dividends, as
the case may be, shall be determined; and only stockholders of record on such
day shall be entitled to notice or to vote at such meeting, or to receive
dividends, as the case may be.
Section 5. Regulations:
The Board of Directors shall have power and authority to take all such
rules and regulations as they deem expedient concerning the issue, transfer, and
registration of certificates for shares of the capital stock of the Corporation.
The Board of Directors may appoint a Transfer Agent and a Registrar and may
require all stock certificates to bear the signature of such Transfer Agent or
such Registrar.
Section 6. Restrictions on Stock:
The Board of Directors may restrict any stock issued by giving the
corporation or any stockholder "first right of refusal to purchase" the stock,
by making the stock redeemable or by restricting the transfer of the stock,
under such terms and in such manner as the directors may deem necessary and as
are not inconsistent with the Articles of Incorporation or the laws of the State
of Colorado. Any stock so restricted must carry a stamped legend setting out the
restriction or conspicuously noting the restriction and stating where it may be
found in the records of the Corporation.
ARTICLE VI
DIVIDENDS AND FINANCES
Section 1. Dividends:
Dividends may be declared by the directors and paid out of any funds
legally available therefor under the laws of Colorado, as may be deemed
advisable from time to time by the Board of Directors of the Corporation. Before
declaring any dividends, the Board of Directors may set aside out of net profits
or earned or other surplus such sums as the Board may think proper as a reserve
fund to meet contingencies or for other purposes deemed proper and to the best
interests of the Corporation.
Section 2. Moneys:
The moneys, securities, and other valuable effects of the Corporation
shall be deposited in the name of the Corporation in such bank or trust
companies as the Board of Directors shall designate and shall be drawn out or
removed only as may be authorized by the Board of Directors from time to time.
Page 8 of 10
<PAGE> 9
Section 3. Fiscal Year:
Unless and until the Board of Directors by resolution shall determine
otherwise, the fiscal year shall begin on the first day of March and end on the
last day of February.
ARTICLE VII
SEAL
The Board of Directors shall provide a corporate seal which shall be in
the form of a circle and shall have inscribed thereon the name of the
corporation and the words "SEAL, Colorado," and shall be entrusted in the care
of the Secretary or such other officer of the Corporation as the Board of
Directors shall designate.
ARTICLE VIII
NOTICES
Section 1. Requirements:
Whenever a notice shall be required by the statutes of the State of
Colorado or by these By-laws, such notice may be given in writing by depositing
the same in the United States mails in a postpaid, sealed envelope addressed to
the person for whom such notice is intended to his or her home or other address,
as the same shall appear on the stock transfer books of the Corporation. The
time of mailing shall be deemed to be the time of giving such notice. A waiver
of any notice in writing, signed by a stockholder, director, or officer, whether
before, at, or after the time stated in such waiver for holding a meeting, shall
be deemed the equivalent of duly giving such notice.
Section 2. Presence:
The presence of any officer at a meeting, or the presence of any
stockholder or director at a meeting, unless such presence is for the sole
purpose of objecting to the holding of such meeting on the ground that it is not
duly held or convened, shall in all events be considered a waiver of notice
thereof; and failure to vote thereat shall not defeat the effectiveness of such
waiver.
Section 3. Ratification:
The ratification or approval in writing of the minutes of any meeting of
officers, stockholders, or directors shall have the same force and effect as if
the ratifying or approving officer, director, or stockholder were present in
person at said meeting.
Page 9 of 10
<PAGE> 10
AMENDMENTS
These By-laws may be altered, amended, or repealed by the Board of Directors by
resolution of a majority of the Board.
CERTIFICATE
I do hereby certify that I was secretary of the meeting of the Board of
Directors duly called and held on the 25th day of April, 1980, and do hereby
certify that the above and foregoing By-laws were duly adopted as the By-laws of
said Corporation at such meeting.
Tavia C. Rech
(SEAL)
Page 10 of 10
<PAGE> 1
EXHIBIT 10.(a)
EMPLOYMENT, CONFIDENTIALITY AND NONCOMPETITION
AGREEMENT
The undersigned, Recycling Centers of America, Inc., hereinafter referred to as
the `Company', and the undersigned, Bruce Selk, hereinafter referred to as
`Employee', enter into this Agreement this 26th day of May 1999.
WHEREAS, the Company desires to retain the services of the Employee under
certain terms and conditions as set forth hereunder; and
WHEREAS, the Employee deems it to be in his best interest to become an Employee
of the Company, representing it in a professional manner under the terms and
conditions contained herein;
NOW THEREFORE IT IS AGREED
1. EMPLOYMENT AND TERM
Subject to other provisions of this Agreement, the Company hereby
offers, and Employee accepts, employment as Chief Executive Officer of
Recycling Centers of America, Inc., as of the date of this Agreement.
Employment is for a term of three (3) years from the date hereof,
subject to termination by the Company pursuant to Section 6 hereof and
automatically renewable for an additional two-year term hereafter,
unless notice of termination is given by either party hereto on or
before thirty (30) days prior to the expiration of any term (the
`Employment Period').
2. SALARY AND OTHER COMPENSATION
(a) Employee shall receive for services hereunder during the Employment
Period an annual salary of $125,000.00 for the first year of
employment and $150,000.00 for each of the second and third years.
Employee and the Company for the 2-year term following shall
mutually determine gross salary. A further increase would be
expected for satisfactory performance. Salary will be payable in
bi-monthly installments on the first and the fifteenth day of each
month (or, if such day is not a business day, the next business day
thereafter). All payments shall be deemed gross salary, and shall be
subject to all applicable withholding and other taxes applicable to
Employees of the Company.
(b) The option to purchase 1,300,000 shares of common stock in RCAI has
been granted in Employee's name. These options shall be released to
Employee as per the schedule below. The corresponding number of
share options shall be granted to Employee at a value of $0.30 per
share immediately following the Company's market shares trading at
the indicated values for a period of at least 5 consecutive days.
<TABLE>
<S> <C> <C>
$1.00 - 130,000 $2.50 - 130,000 $4.00 - 130,000
$1.50 - 130,000 $3.00 - 130,000 $4.50 - 130,000
</TABLE>
1
<PAGE> 2
<TABLE>
<S> <C> <C>
$2.00 - 130,000 $3.50 - 130,000 $5.00 - 260,000
</TABLE>
(c) Employee shall be entitled to three (3) weeks (fifteen working
days) paid vacation and the observance of major holidays as
specified by the Company.
(d) The Company shall provide employee and his immediate family with
complete medical and dental coverage for the entire term of this
Agreement.
(e) The Company shall reimburse Employee for all business expenses
incurred by Employee for all business activities on behalf of the
Company.
(f) Employee shall be entitled to a vehicle allowance of up to
$550.00 per month.
3. POSITION AND DUTIES
Employee will devote his time, energy and attention to the management
of Recycling Centers of America, Inc and shall use his best efforts to
build the Company's business over the term of this Agreement such that
the share values described in item 2B are met. These tasks include (not
listed in order of importance), but are not limited to, the following:
(a) GENERAL
Employee shall be responsible for overseeing the business
activities of the Company, including those of its subsidiary
companies. Reports detailing these activities shall be prepared
and submitted to Employee by corporate Officers designated by
Employee. Employee shall determine the content and schedule of
submission dates for these reports.
(b) ADMINISTRATION
Employee shall be ultimately responsible for the following:
i. Approval of personnel programmes, including hiring and
firing.
ii. Submission of all reports and/or filings to regulatory
entities.
iii. Review of quarterly and annual financial statements,
audited financial statements on the Company and
presentation of said reports to the Board of Directors.
iv. Approval of all Company News Releases, advertising and
promotional information prior to dissemination/release by
the Company.
v. Maintenance and defense of patents and for the filing of
2
<PAGE> 3
new patents by the Company or any of its subsidiaries.
vi. Approval of proposed corporate acquisitions by the Company
and for the submission of detailed reports describing such
acquisitions to the Board of Directors of the Company.
vii. Final approval of all contracts entered into by the
Company.
viii. Final approval of all share issuances by the Company.
ix. Final approval of any/all capital raising activities by
the Company including Private Placement Memorandums
and/or any other stock offerings.
x. Final approval of any/all stock option plans offered by
the Company.
xi. Courteous and professional representation of Recycling
Centers of America, Inc. at all times.
The above list is an overview only and shall not be considered a
complete listing of Employee's duties and responsibilities.
4. DISCLOSURE OF INFORMATION BY EMPLOYEE
As per Attachment `A' - Confidentiality Agreement
5. DURATION OF THIS AGREEMENT
This Agreement will remain in full force and effect for a period of
three (3) years from the date hereof. Thereafter, it shall continue as
per Section 1 of this Agreement until terminated.
6. TERMINATION OF AGREEMENT
Either party shall have the privilege, with cause, to terminate this
Agreement by giving the party 60 days notice, in writing, of such
termination. Upon termination of this Agreement, Employee agrees to
return all equipment, furnishings, promotional materials along with all
copies of this Agreement and any other forms, proposals, or quotations
relating to Company's activities. Any termination of this Agreement
shall not terminate the Company's rights to enforce provisions contained
in this paragraph. Immediately upon notice of termination, Employee will
no longer have the right to obligate Company in any way shape or form.
Should Employee incur "non-approved" debts during the 60-day notice
period, Company reserves the rights to hold final paycheques until
nature of debts are satisfied.
7. COMPLETE AND FINAL AGREEMENT
3
<PAGE> 4
The parties hereto agree that any and all former written or verbal
agreements between Company and Employee are hereby canceled. By
execution, hereof, the parties agree that this instrument contains the
entire agreement of the parties. This instrument may not be changed
orally, but only by the agreement, in writing, signed by the parties
against whom enforcement of any waiver or change, modification,
extension or discharge is sought.
8. WAIVER OR BREACH
The waiver by Company or Employee's breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach by the Employee.
9. INTERPRETATION
This Agreement, having been executed by both parties in the State of
California, shall be enforceable in and under the laws of the State of
California.
10. PARTIAL INVALIDITY
If any provision of this Agreement or any specific application shall be
invalid or unenforceable, the remainder of this Agreement shall not be
effected and each provision of this Agreement shall be valid and
enforceable to the maximum extent permitted by law.
IN WITNESS WHEREOF, the parties have hereto set their hands and seals
the day and year first above written.
By: By:
---------------------------- ----------------------------------
Bruce Selk Gordon W. Davies
President, Director
Recycling Centers of America, Inc.
4
<PAGE> 1
EXHIBIT 10.(b)
EMPLOYMENT AGREEMENT
The undersigned, Recycling Centers of America, Inc., hereinafter referred to as
the `Company', and the undersigned, Michael C. Davies, hereinafter referred to
as `Employee', enter into this Agreement this 1st day of June 1999.
WHEREAS, the Company desires to retain the services of the Employee under
certain terms and conditions as set forth hereunder; and
WHEREAS, the Employee deems it to be in his best interest to become an employee
of the Company, representing it in a professional manner under the terms and
conditions contained herein;
NOW THEREFORE IT IS AGREED:
1. EMPLOYMENT AND TERM
Subject to other provisions of this Agreement, the Company hereby
offers, and Employee accepts, employment as Vice President of Recycling
Centers of America, Inc., as of the date of this Agreement. Employment
is for a term of five (5) years from the date hereof, subject to
termination by the Company pursuant to Section 6, hereof, automatically
renewable for additional one-year terms hereafter unless notice of
termination is given by either party hereto on or before thirty (30)
days prior to the expiration of any term (the `Employment Period').
2. SALARY AND OTHER COMPENSATION
(a) Employee shall receive for services hereunder during the Employment
Period an annual salary of $96,000.00, subject to increase upon each
anniversary date in the sole discretion of the Company. Normal
increases would be expected for satisfactory performance. Salary
will be payable in bi-monthly installments on the first and the
fifteenth day of each month (or, if such day is not a business day,
the next business day thereafter). All payments shall be deemed
gross salary, and shall be subject to all applicable withholding and
other taxes applicable to employees of the Company.
(b) The option to purchase 750,000 shares of common restricted stock in
RCAI has been granted in Employee's name. Options will be vested
annually, subject to continued employment, and released to Employee
as per the schedule below. The corresponding number of share options
shall be vested to Employee at the purchase values and on the dates
indicated.
<TABLE>
<CAPTION>
No. Options Date Available Exercise Price
----------- -------------- ---------------
<S> <C> <C>
200,000 1 June 1999 $0.30 per share
275,000 1 June 2000 $0.40 per share
275,000 1 June 2001 $0.40 per share
</TABLE>
Additional stock options shall be granted to Employee each year
following the above schedule on the anniversary date of this
agreement, the amount and price of which to be determined solely
by the Company.
<PAGE> 2
(b) Employee shall be entitled to a vehicle allowance of up to $550.00
per month.
(c) Employee shall be entitled to three (3) weeks (fifteen working days)
paid vacation, the observance of major holidays as specified by the
Company.
(d) The Company shall reimburse Employee for all business expenses
incurred by Employee for all business activities on behalf of the
Company.
3. POSITION AND DUTIES
Employee will devote his time, energy and attention to the management
of Recycling Centers of America, Inc. matters. These matters will
include (not listed in order of importance), but shall not be limited
to, the following:
(a) Monitoring of and Reporting on Subsidiary Companies
Employee shall be responsible for monitoring and reporting on the
efforts of each of the Company's subsidiary companies' business
activities. Employee shall prepare and submit to the Chief
Executive Officer of Recycling Centers of America, Inc. on a
monthly basis detailed sales, marketing, financial (cash flow and
profit and loss statements), contract and general company status
reports for each of the subsidiary companies.
(a) ADMINISTRATION
Employee shall be responsible for:
i. Development and implementation of personnel programs,
preparation and maintenance of personnel files and hiring and
firing personnel as determined by the Company's Chief
Executive Officer and Board of Directors.
ii. Insuring that all required filings and reports to regulatory
entities (e.g. SEC) by the Company are filed correctly and in
a timely fashion.
iii. Participation in coordinating the preparation of quarterly and
annual financial statements and audited financial statements
on the Company for submission to the Chief Executive Officer
of the Company.
iv. Preparation and submission to the Chief Executive Officer of
the Company for approval, all News Releases from the Company
to its shareholders and be responsible for the dissemination
of such News Releases along with any advertising/promotional
material.
v. Employee will provide courteous and professional
representation of Recycling Centers of America, Inc. at all
times.
vi. Maintenance and defense of patents and for the filing of new
patents by the Company or any of its subsidiaries and shall
submit reports regarding such to the Chief Executive Officer
of the Company.
vii. Review of proposed corporate acquisitions by the Company and
for the submission of detailed reports on such proposed
<PAGE> 3
acquisitions to the Chief Executive Officer of the Company.
4. DISCLOSURE OF INFORMATION BY EMPLOYEE
Employee recognizes and acknowledges that the list of Company's
customers, suppliers, representative firms, the purchase and sales
agreements used and terms thereof, together with other documents and
Company's methods of business operations which Employee may have access
to are valuable, special and unique assets of the Company. Employee,
therefore, will not DURING, OR FOR A PERIOD OF ONE YEAR AFTER the term
of this association with Company, disclose the list of Company's
customers, suppliers or representative firms or any part thereof to any
person, firm, corporation, association or entity for any reason or
purpose whatsoever, nor disclose to such entities the method of
operation of Company unless Company gives prior written approval of said
use.
5. DURATION OF THIS AGREEMENT
This Agreement will remain in full force and effect from the date hereof
through (five years from date). Thereafter, it shall continue until
terminated.
6. TERMINATION OF THIS AGREEMENT
Either party shall have the privilege, with cause, to terminate this
Agreement by giving the party six months notice, in writing, of such
termination. Upon termination of the Agreement, Employee agrees to
return all equipment, furnishings, promotional materials along with all
copies of this Agreement and any other forms, proposals, or quotations
relating to Company's activities. Any termination of this Agreement
shall not terminate the Company's rights to enforce provisions contained
in this paragraph. Immediately upon notice of termination, Employee will
no longer have the right to obligate Company in any way shape or form.
Should Employee incur "non-approved" debts during the six-month notice
period, Company reserves the rights to hold final paychecks until nature
of debts are satisfied. Employee shall be paid six months salary plus
any unused vacation pay immediately upon any termination.
7. COMPLETE AND FINAL AGREEMENT
The parties hereto agree that any and all former written or verbal
agreements between Company and Employee are hereby canceled. By
execution, hereof, the parties agree that this instrument contains the
entire agreement of the parties. This instrument may not be changed
orally, but only by the agreement in writing signed by the parties
against whom enforcement of any waiver or change, modification,
extension or discharge is sought.
8. WAIVER OR BREACH
The waiver by Company or Employee's breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach by the Employee.
9. INTERPRETATION
This Agreement, having been executed by both parties in the State of
California, shall be
<PAGE> 4
enforceable in and under the laws of the State of California.
10. PARTIAL INVALIDITY
If any provision of this Agreement or any specific application shall be
invalid or unenforceable, the remainder of this Agreement shall not be
effected and each provision of this Agreement shall be valid and
enforceable to the maximum extent permitted by law.
IN WITNESS WHEREOF, the parties have hereto set their hands and seals
the day and year first above written.
By: By:
---------------------------- -----------------------------------
Michael C. Davies O. Bruce Selk, CEO/Director
Recycling Centers of America, Inc.
Date: Date:
---------------------------- ----------------------------------
<PAGE> 1
EXHIBIT 10.(c)
EMPLOYMENT AGREEMENT
The undersigned, Recycling Centers of America, Inc., hereinafter referred to as
the `Company', and the undersigned, Gordon W. Davies, hereinafter referred to as
`Employee', enter into this Agreement this 1st day of June 1999.
WHEREAS, the Company desires to retain the services of the Employee under
certain terms and conditions as set forth hereunder; and
WHEREAS, the Employee deems it to be in his best interest to become an Employee
of the Company, representing it in a professional manner under the terms and
conditions contained herein;
NOW THEREFORE IT IS AGREED:
1. EMPLOYMENT AND TERM
Subject to other provisions of this Agreement, the Company hereby
offers, and Employee accepts, employment as Vice President of Recycling
Centers of America, Inc., as of the date of this Agreement. Employee's
employment is for a term of five (5) years from the date hereof, subject
to termination by the Company pursuant to Section 6, hereof,
automatically renewable for additional one-year terms hereafter unless
notice of termination is given by either party hereto on or before
thirty (30) days prior to the expiration of any term (the `Employment
Period').
2. SALARY AND OTHER COMPENSATION
(a) Employee shall receive for services hereunder during the Employment
Period an annual salary of $96,000.00, subject to increase upon the
anniversary date in the sole discretion of the Company. Normal
increases would be expected for satisfactory performance. Salary
will be payable in bi-monthly installments on the first and the
fifteenth of each month (or, if such day is not a business day, the
next business day thereafter). All payments shall be deemed gross
salary, and shall be subject to all applicable withholding and other
taxes applicable to employees of the Company.
(b) The option to purchase 750,000 shares of common restricted stock in
RCAI has been granted in Employee's name. Options will be vested
annually, subject to continued employment and released to Employee
as per the schedule below. The corresponding number of share options
shall be vested to Employee at the purchase values and on the dates
indicated.
<TABLE>
<CAPTION>
No. Options Date Available Exercise Price
------------ ------------- --------------
<S> <C> <C>
200,000 1 June 1999 $0.30 per share
275,000 1 June 2000 $0.40 per share
275,000 1 June 2001 $0.40 per share
</TABLE>
Additional stock options shall be granted to Employee each year
following the above schedule on the anniversary date of this
Agreement, the amount and price of which to be determined solely
by the Company.
<PAGE> 2
(c) Employee shall be entitled to a vehicle allowance of up to
$550.00 per month.
(d) Employee shall be entitled to three (3) weeks (fifteen working
days) paid vacation and the observance of major holidays, as
specified by the Company.
(e) The Company shall reimburse Employee for all business expenses
incurred by Employee for all business activities on behalf of the
Company.
3. POSITION AND DUTIES
Employee will devote his time, energy and attention to the management
of Recycling Centers of America, Inc. matters. These matters will
include (not listed in order of importance), but shall not be limited
to, the following:
(a) MONITORING OF AND REPORTING ON SUBSIDIARY COMPANIES
Employee shall be responsible for monitoring the efforts of each
of the Company's subsidiary companies' sales, marketing,
financial, project management and Company management personnel in
their duties, review and track monthly sales and financial
reports from each subsidiary company. Employee shall submit to
the Board of Directors of Recycling Centers of America, Inc. on a
monthly basis detailed sales, marketing, contract and general
company status reports for each of the subsidiary companies.
(b) ADMINISTRATION
Employee will be responsible for:
i. Development of personnel programs, prepare and maintain
personnel files and hire and fire personnel as determined
by Board of Directors.
ii. Employee will participate in insuring that all required
submissions and reports to regulatory entities (e.g. SEC)
by the Company are filed correctly and in a timely
fashion.
iii. Employee will participate in the coordination and
preparation of quarterly and annual financial statements
and audited financial statements on the Company.
iv. Employee will prepare and submit to the Board of Directors
of the Company for approval and be responsible for the
dissemination of all News Releases from the Company to its
shareholders.
v. Employee will provide courteous and professional
representation of the Company at all times.
vi. Employee shall be responsible for the maintenance and
defense of patents and for the filing of new patents by
the Company or any of its subsidiaries.
vii. Employee will participate in the review and approval of
proposed corporate acquisitions by the Company and for the
submission
<PAGE> 3
of detailed reports on proposed acquisitions to
the Board of Directors of the Company for final approval.
4. DISCLOSURE OF INFORMATION BY EMPLOYEE
Employee recognizes and acknowledges that the list of Company's
customers, suppliers, representative firms, the purchase and sales
agreements used and terms thereof, together with other documents and
Company's methods of business operations which Employee may have access
to are valuable, special and unique assets of the Company. Employee,
therefore, will not DURING, OR FOR A PERIOD OF ONE YEAR AFTER the term
of this association with Company, disclose the list of Company's
customers, suppliers or representative firms or any part thereof to any
person, firm, corporation, association or entity for any reason or
purpose whatsoever, nor disclose to such entities the method of
operation of the Company unless the Company gives prior written approval
of said use.
5. DURATION OF THIS AGREEMENT
This Agreement will remain in full force and effect from the date hereof
through (five years from date). Thereafter, it shall continue until
terminated with cause by either party.
6. TERMINATION OF AGREEMENT
Either party shall have the privilege, with cause, to terminate this
Agreement by giving the party six months notice, in writing, of such
termination. Upon termination of the Agreement, Employee agrees to
return all equipment, furnishings, promotional materials along with all
copies of this Agreement and any other forms, proposals, or quotations
relating to Company's activities. Any termination of this Agreement
shall not terminate the Company's rights to enforce provisions contained
in this paragraph. Immediately upon notice of termination, Employee will
no longer have the right to obligate Company in any way shape or form.
Should Employee incur "non-approved" debts during the six-month notice
period, Company reserves the rights to hold final paychecks until nature
of debts are satisfied. Employee shall be paid six months salary plus
any unused vacation pay immediately upon any termination.
7. COMPLETE AND FINAL AGREEMENT
The parties hereto agree that any and all former written or verbal
agreements between Company and Employee are hereby canceled. By
execution, hereof, the parties agree that this instrument contains the
entire agreement of the parties. This instrument may not be changed
orally, but only by the agreement in writing signed by the parties
against whom enforcement of any waiver or change, modification,
extension or discharge is sought.
8. WAIVER OR BREACH
The waiver by Company or Employee's breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach by the Employee.
9. INTERPRETATION
<PAGE> 4
This Agreement, having been executed by both parties in the State of
California, shall be enforceable in and under the laws of the State of
California.
10. PARTIAL INVALIDITY
------------------
If any provision of this Agreement or any specific application shall be
invalid or unenforceable, the remainder of this Agreement shall not be
effected and each provision of this Agreement shall be valid and
enforceable to the maximum extent permitted by law.
IN WITNESS WHEREOF, the parties have hereto set their hands and seals the day
and year first above written.
By: By:
---------------------------- ---------------------------------
Gordon W. Davies O. Bruce Selk, CEO/Director
Recycling Centers of America, Inc.
Date: Date:
---------------------------- --------------------------------
<PAGE> 1
EXHIBIT 10.(d)
OEM AGREEMENT
THIS AGREEMENT is entered into this 30th day of June, 1999, by and between
Pall Filtron, Inc., a New York corporation, with offices at Northborough, MA,
USA (hereinafter "Pall"), and Brody Special Projects Company, a Utah
corporation with offices at 4825 South 6200 West, West Valley, Utah 84118
(hereinafter "Original Equipment Manufacturer or OEM").
WHEREAS, Pall has conceived, developed and owns or has obtained rights to
certain proprietary filtration products more particularly described in Exhibit
A, attached hereto (the "Products"); and,
WHEREAS, Pall has the authority to grant rights and enter into other
contractual arrangements relative to the Products; and,
WHEREAS, Pall is desirous of granting rights to OEM for marketing and
servicing the Products as an integrated system including at a minimum feed pump
piping and valves and an integrated control system designed and integrated by
the OEM within the market areas herein specified, see Exhibit B attached hereto
and the territory identified in Exhibit C attached hereto, and OEM is desirous
of undertaking responsibility for designing the integrated system, marketing
and servicing of the Products as an integrated system in such market areas and
territory; and,
WHEREAS, OEM certifies that it has sufficient facilities, resources and
personnel to adequately design, build, market and service the Products within
such market areas and territory and perform its duties under this Agreement and
is not precluded by any existing arrangements, contractual or otherwise, from
entering into this Agreement;
NOW THEREFORE, in consideration of the foregoing and in consideration of
the mutual covenants hereinafter set forth, it is agreed by and between the
parties hereto as follows:
1. Appointment of OEM; Market Area; Territory
Pall hereby grants OEM the personal, non-transferable license to integrate,
market, use, sell, install and support the Products as an integrated system
only the extent of which may be amended from time to time at the sole
discretion of Pall to include new
<PAGE> 2
components, for Market Areas as hereinafter defined in Exhibit B ("the Market
Area") and in the Territory as hereinafter defined in Exhibit C ("the
Territory"). OEM's rights in the Market Area and Territory shall be
non-exclusive.
OEM must design and sell the Products as an integrated system that includes as
a minimum a feed pump, piping and valves and an integrated control system. OEM
does not have the right to buy and resell the Products without integration into
a system.
OEMs are specifically chosen due to their expertise in the Market Area.
Therefore, the OEM has the rights to market into that Market Area only.
Exceptions to this can be made by Pall only if requested by the OEM in writing.
Market Areas specifically included are: Filtration of fluid streams during the
production or processing of pharmaceutical, bio-pharmaceutical, cosmetics, food,
dairy or beverage products, additives or intermediates for human or animal
consumption and or the waste streams resulting from such production or
processing and the products themselves. (Drinking water not included.) All
applications not specifically mentioned above or described in Exhibit B are
excluded.
The rights granted hereto are restricted to activities relating to the Products
in the Market Area. For the avoidance of doubt, Pall is not prohibited from
marketing any service or product in the Market Area.
2. Responsibilities of OEM
The OEM is responsible for the following:
- - Run samples at their facility and run PS10 and PS400 field trials per the
recommendations of Pall.
- - Provide Pall with test data to confirm performance expectation.
- - Purchase membranes for trial programs at special demo price of 75% of list
for PS10 Systems only.
- - Design, specify and quote integrated system design.
- - Actively market and sell the Products in the Market Area and Territory
with the goal to generate $5 Million worth of sales within the period of
this contract.
The OEM can, if desired, identify accounts for which they want "protection".
For the purposes of this agreement, "protection" will be defined as follows:
Pall will register the account in its database with a source code from the OEM.
The "protected" account must be an end user and must include the name, address
and specific
2
<PAGE> 3
application for the project. Once the "protected" account is registered in the
database, via receipt by Pall or OEM's customer protection form, Exhibit E
attached hereto, said account is a "protected account" for the time periods set
forth therein. Pall will make its best effort to turn over all direct inquiries
from the account back to the OEM. Pall cannot, however, prevent other OEM's or
distributors from approaching the account; Also, protection may not be granted
if other Pall distributors already have a relationship with that account.
3. Ordering Procedures
OEM shall use all reasonable endeavors to promote and solicit orders for the use
of the Products within the Territories. OEM shall prepare and forward to Pall
all reports, material and information reasonably requested by Pall including but
not limited to customer prospect lists and sales status. In conjunction with
OEM, Pall shall directly participate with OEM's prospects and customers to such
extent as Pall reasonably determines. In addition, OEM will provide Pall access
to all documents and correspondence between OEM and prospects and customers in
connection with the Products. OEM shall, to the greatest extent possible,
provide, upon request by Pall in Pall's name, copyright and/or trademark
protection for the Products, within the Territory and any expenses associated
with this request shall be borne by Pall.
OEM shall, from time to time, prepare and submit to Pall purchase orders stating
the number and category of Products that OEM desires to receive and proposed
delivery dates. OEM's purchase orders shall be in writing and shall constitute
binding commitments to accept the number and category of Products stated
therein, in accordance with the terms and conditions of this Agreement. OEM may
cancel a purchase order only with the prior written approval of an authorized
representative of Pall. No additional terms stated in OEM's form of purchase
order shall be accorded any legal effect.
4. Technical Information and Marketing Materials
Pall shall make available to OEM as promptly as possible following the signing
of this Agreement, one (1) copy of available technical information and marketing
materials possessed by Pall with respect to the Products which may be necessary
to enable OEM to effectively market, install and service the Products. Such
documentation will be delivered in the form and condition available. All such
materials shall be in English and OEM shall be responsible for translation and
the organization of such materials for use within the Territory. All such
translations shall acknowledge copyright ownership by Pall. If OEM elects to use
Pall's technical and marketing materials without translation or modification,
Pall shall furnish a reasonable supply of materials to OEM.
3
<PAGE> 4
5. Installation of Products
OEM shall be responsible for installing the Products at each customer's site.
6. Fee Remittances, Prices, Taxes and Costs
6.1 Prices
Except as otherwise provided in this Clause 6, the prices payable by OEM for
each Product shall be stated in U.S. Dollars and shall be the OEM price for the
Product set forth in the Pall's OEM/Distributor Price List (the "Price List")
which is in effect on the date Pall receives OEM's order. The current Price List
is attached as Exhibit D and OEM's cost is 85% of Pall's list price. Pall may
change the Price List at any time. If OEM quotes a firm price to an end-user
based upon the Price List in effect at that time and if the quote results in the
execution of an order by OEM's customer within 60 days of the quote, then the
Price List in effect on the date of the quote will apply if, but only if, Pall
receives evidence of the quote at the time the order is placed.
6.2 Taxes, Duties
List prices do not include any taxes, duties, levies, deductions or similar
governmental charges, however designated, which may be imposed by any
jurisdiction, including, without limitation, withholding, customs, privilege,
excise, sales, use, value-added and property taxes levied or based on gross
revenues, the Products, their sale, possession or operation, or this Agreement
("Taxes"). OEM shall pay all Taxes without obligation to Pall (excluding taxes
solely based on the income of Pall).
6.3 Costs, shipment F.O.B.
All prices are F.O.B. Northborough, MA or Cortland, NY. All insurance, freight
and other transportation costs shall be paid by OEM.
6.4 OEM's prices
Nothing in the Agreement shall restrict or in any way establish the prices at
which OEM re-sells the Products, or at which OEM offers service and support to
its customers. OEM shall give Pall notice of its proposed prices if requested.
Time-and-material work, as mutually agreed, will be provided to OEM by Pall at
Pall's billing rates plus expenses.
Title-and-material work, as mutually agreed, will be provided to OEM by Pall at
Pall's billing rates, plus expenses.
4
<PAGE> 5
Title of individual Products covered by this Agreement shall pass to OEM upon
full payment of the Agreement price regardless of when or where OEM takes
physical possession. Until paid in full by OEM, Pall shall retain a security
interest in such Products. OEM agrees to provide any security instruments Pall
may reasonably require in conformance with the UCC in order to secure its
interest in such equipment items.
Risk of loss or damage to Products shall remain with Pall until and shall pass
to OEM upon delivery to a common carrier for shipment to OEM. OEM shall be
responsible for costs of insurance for delivery and delivery costs.
7. Sale of Permeate
In the event that OEM sells permeate to a customer rather than the Products,
Pall will supply the products at its cost and receive a mutually agreed percent
of the monthly stipend paid by the customer and that OEM and Pall mutually agree
on the following:
The per gallon price to be paid by the customer.
The monthly minimum to be paid by the customer.
The length of the customers permeate agreement.
8. Payment
8.1 Payment terms
Payment for equipment orders may be made in either of 2 ways, as follows: a) 10%
of purchase price due on order, 40% of purchase price due 30 days prior to
shipment, 40% of purchase price due upon shipment and 10% of the purchase price
due 30 days after shipment. b) X% down with remainder financed at 8% interest
over 18 months where X equals
50% of total purchase price if total price is less than $100,000;
35% of total purchase price if total price is between $100,000
and $200,000;
20% of the total purchase price if total price is above $200,000.
Exceptions to payment terms outlined above will be made on a case by case basis.
8.2 Late Payment
Late Payments hereunder are subject to a delinquency charge of one and one-half
percent (1-1/2%), or such lesser rate as may be allowed by applicable law, for
each month or portion thereof commencing with the payment date.
5
<PAGE> 6
Pall reserves the right to terminate this Agreement by written notice in the
event that payments due to Pall hereunder are not made promptly and Pall has
provided OEM written notice to this effect. Such termination shall not relieve
the parties from their prior and continuing obligations under this Agreement.
9. Modifications, Enhancements, Specific Changes and New Products
Pall shall promptly notify OEM of all updates and improvements pertaining to the
Products and shall make such updates and improvements and the documentation
pertaining thereto available to OEM for the benefit of OEM and its customers on
the same terms and conditions upon which such updates and improvements are made
available to Pall's distributors or other customers. Pall has the right to
discontinue any Product and Pall's support thereof.
Where OEM or any of its customers makes a modification, enhancement or change to
the Products, then such modifications, enhancements or changes shall become the
property of Pall and shall be promptly reported to Pall. The OEM and its
customers shall provide all support necessary for Pall to perfect title to any
such modifications at Pall's expense and shall execute any documents required to
effect vesting of title in Pall.
10. Support Training
OEM will provide the primary support and maintenance services for the Products
licensed to its customers. OEM shall define the terms and conditions for support
and maintenance granted to customers.
Upon execution of this agreement, OEM will schedule at a minimum one person from
their organization to visit Pall for a minimum of 1 week of training. This
person will become the product specialist for the OEM. If at any time this
person leaves the OEM or is given other responsibilities, the OEM will assign
another person to become the product specialist and the new person must visit
Pall for the 1 week of training.
Pall may provide a second level of support and maintenance to the extent this is
mutually established.
Pall may support OEM's marketing activities on terms to be mutually established.
11. Use of Trade Names, Advertising
OEM and/or Pall may issue or release articles, advertisements or publicity
relating to this Agreement, may mention or use the Pall name or logo, may
utilize the Pall name or logo in conjunction with OEM's name provided such
release does not include any confidential or proprietary information. OEM may
indicate on its stationary, calling cards and other printed material that it is
an authorized
6
<PAGE> 7
OEM for the Products within the Territory. Pall's proprietary words or symbols
may be used only (i) in conjunction with the Products and (ii) in accordance
with Pall's trademark usage rules and (iii) only with Pall's prior approval.
Nothing contained in the Agreement shall be deemed to grant OEM any right,
interest in goodwill, title or interest in the Trademarks. OEM shall not
register the Trademarks or any confusingly similar trademarks and shall not
challenge directly or indirectly the Trademarks, OEM shall not use or otherwise
conduct business with the word "Pall" in its name and shall inform its customers
concerning the source of all products supplied in conjunction with the Products
that are not purchased or licensed from Pall.
12. Warranty
Pall represents and warrants that:
a) It has full power, right and authority to enter into this Agreement.
b) It owns legally and beneficially or has the right to grant the rights
continued herein pertaining to the copyright and all other intellectual property
rights in the Products.
c) Equipment furnished will be free from defects in material or workmanship
and substantially conform to the specifications and/or user documentation
provided to OEM by Pall for a period of 360 days.
d) OEM shall give prompt written notice to Pall of any breach of warranties
within ten (10) days after discovery of such defect.
e) Any equipment corrected or furnished in a replacement pursuant to this
article shall also be subject to all the provisions of this article to the same
extent as equipment initially delivered. The warranty with respect to such
equipment or parts thereof shall be equal in duration to that set forth in
paragraph c above and shall run from the date of the installation of the
original equipment.
f) The above warranty specifically excludes pumps, if a pump is provided Pall
will pass through the manufacturer's warranty as its sole obligation hereunder.
g) The above warranty includes the filter pack for mechanical integrity only.
It specifically excludes the filter pack's performance as it relates to process
material throughput or quality. Filter pack performance warranty will be
addressed on a case by case basis with OEM being responsible for developing
data required by Pall to provide filter pack warranty.
7
<PAGE> 8
h) This Warranty is immediately null and void should the Buyer make any
alterations or changes to the equipment and/or material without the prior
written approval of Seller or if Buyer fails to comply with the operations and
maintenance instructions as indicated in Seller's applicable equipment
operations manual.
13. Limitation of Liability and Infringements
13.1 THE WARRANTIES, LIABILITIES, OBLIGATIONS OF SUPPORT AND INDEMNITIES HEREIN
CONTAINED ARE EXPRESSLY IN LIEU OF ALL OTHER REPRESENTATIONS, WARRANTIES AND
CONDITIONS IN RESPECT OF THE PRODUCTS (STATUTORY, EXPRESS OR IMPLIED) AND ALL
SUCH (EXCEPT ANY WHICH MAY NOT BE LAWFULLY EXCLUDED) ARE HEREBY EXPRESSLY
EXCLUDED, INCLUDING WITHOUT PREJUDICE TO THE GENERALITY OF THE FOREGOING THE
IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
OEM ACKNOWLEDGES AND AGREES THAT THE PURCHASE PRICES CHARGED HEREUNDER DO NOT
INCLUDE ANY CONSIDERATION FOR ASSUMPTION BY Pall OF THE RISK OF OEM'S
CONSEQUENTIAL OR INCIDENTAL DAMAGES WHICH MAY ARISE IN CONNECTION WITH THE USE
OF THE EQUIPMENT. ACCORDINGLY, OEM AGREES THAT Pall SHALL NOT BE RESPONSIBLE TO
OEM OR OEM'S CUSTOMERS FOR ANY LOSS-OF-PROFIT, DIRECT, INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF THE EQUIPMENT EVEN
IF IT HAS BEEN ADVISED OF THE POSSIBILITY THEREOF. FURTHER THERE WILL BE NO
LIABILITY TO Pall FOR ANY DETRIMENTAL RELIANCE.
Pall shall have no liability to OEM under this Clause with respect to any claim
of infringement which is based upon (i) the combination of any Product with any
machine, or devise, not furnished or prescribed by Pall, or (ii) any
modification of any Product by a party other than Pall, or (iii) OEM's failure
to install changes as instructed by Pall.
OEM shall defend, and indemnify, at its expense, any action brought against
Pall by OEM's customers or other persons relating in any way to the Products or
OEM's activity and shall pay any costs and damages finally awarded against Pall
in any such action except to the extent that it is based on a claim that any
Product infringes a patent or copyright or that the Products fail to perform in
the manner described in the then current Pall technical documentation. OEM's
obligation under the preceding sentence is subject to the conditions that (i)
Pall promptly notifies OEM in writing of such claim and (ii) OEM shall have
sole control of such defense and all negotiations for any settlement or
compromise, although Pall may participate in the same at OEM's request.
Except for liability for patent infringement, as set forth herein, Pall shall
not be liable to Buyer for cumulative damages greater that the total amount
paid by Buyer to Seller under this Agreement.
8
<PAGE> 9
13.2 Possible infringement; Defense of Suit
a) Pall shall defend any suit, matter, claim, allegation or proceeding
brought against OEM insofar as the same is based upon a claim that the Products,
or any portion thereof supplied by Pall hereunder ("Infringing Product")
constitute an infringement of any United States patent or copyright.
b) OEM acknowledges that Pall will be notified promptly in writing of such
claims and will be given full control, authority, information and assistance
for the defense of same and all negotiations for any settlement or compromise;
and Pall will pay all damages and costs finally awarded therein against OEM,
except to the extent that such damages or costs arose because of negligence or
misconduct of OEM.
c) Pall will, within ten (10) days of becoming aware of such claim, notify
OEM in writing of any pending patent or copyright dispute. If such claims have
occurred, or in Pall's opinion is likely to occur, OEM agrees to permit Pall, at
Pall's option and expense, either to procure for OEM and its customers the right
to continue using the Infringing Product in question or to replace or modify
such Infringing Product to cure such potential infringement or to remove the
Infringing Product and to refund to OEM all charges paid by OEM to Pall in
connection with such Infringing Product. Upon such refund, Pall shall be
discharged of all further liability hereunder. OEM shall indemnify and protect
Pall in the same terms with respect to all Products, which have been altered,
modified or otherwise changed by OEM.
IN NO EVENT SHALL Pall's LIABILITY TO OEM HOWSOEVER ARISING WHETHER IN CONTRACT,
TORT OR OTHERWISE FOR ANY CAUSE WHATSOEVER PURSUANT TO OR IN CONNECTION WITH
THIS AGREEMENT EXCEED THE TOTAL AMOUNT PAID TO Pall HEREUNDER FOR THE TWELVE
MONTH PERIOD PRECEDING INCURRENCE OF THE LIABILITY OR CLAIM.
IN NO EVENT SHALL Pall BE LIABLE FOR THE COST OF PROCUREMENT OF SUBSTITUTE
GOODS, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHETHER OR NOT
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR ANY DAMAGES RESULTING FROM LOSS OF
USE, DATA OR PROFITS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE
USE OF PERFORMANCE OF THE PRODUCTS. THIS EXCLUSION WILL APPLY REGARDLESS OF THE
FORM OF ACTION BROUGHT SEEKING SUCH COSTS OR DAMAGES.
14. Term of Agreement
The term of this Agreement shall commence upon execution by both OEM and Pall
and shall continue for three years from the date of this Agreement. The
Agreement will be automatically renewed for one-year periods at the end of each
term unless specifically terminated in writing by either party. This Agreement
may be terminated by either party by written notice in the event that the
9
<PAGE> 10
other party commits a material breach thereof and fails to cure such breach
within thirty days from receipt of such notice. Such notice shall specify with
particularity the details of such breach. The Agreement may be terminated by a
party in the event of the bankruptcy, voluntary or involuntary, insolvency or
appointment of a receiver for any of the properties or assets of the other party
upon written notice without the necessity of a cure period. This Agreement may
also be terminated by mutual consent, evidenced in writing.
15. Miscellaneous
OEM shall have no authority, expressed or implied, to assume or create any
obligation on behalf of Pall and shall have no authority to represent Pall in
any other capacity than as expressly herein provided. This Agreement shall not
be interpreted to create an agency or consignment relationship. This Agreement
shall be binding upon and insure to the benefit of the parties hereto and their
respective successors to its business. OEM shall not assign or part with this
Agreement or any of its rights or obligations hereunder without the prior
written consent of Pall. In the event that any provision of the Agreement is
found to be invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions of the Agreement shall continue to be enforceable in
accordance with their terms.
The rights and obligations of OEM under this Agreement are personal to OEM.
16. Notices
All notices given under this agreement must be in writing and will be effective
if delivered by hand, dispatched by telex or facsimile, or sent by airmail,
postage prepaid, or by courier service, addressed as follows:
If to Pall:
Pall Filtron, Inc.
50 Bearfoot Road
Northborough, MA 01532
Attn: Jamie P. Monat
If to OEM:
Brody Special Projects Company
4825 South 6200 West
West Valley, Utah 84118
or to such other address as either party may substitute by prior notice.
Notices dispatched by telex or facsimile shall be deemed to have been received
on the date of dispatch; notices sent by
10
<PAGE> 11
courier shall be deemed to have been received within three days from the date
sent; and notices sent by registered airmail shall be deemed to have been
received ten business days from the date sent.
17. U.S. Export Control Liability
This Agreement is made subject to any laws, regulation, orders or other
restrictions on the export of the Products, or information about the Products,
which may be imposed at any time or from time to time by the U.S. Government.
OEM (i) shall comply with all such laws, regulations, permits, orders and other
restrictions to the extent that they are applicable to OEM and (ii) shall not,
directly or indirectly, export the Products or any information about the
Products to any country for which the U.S. Government, or any agency thereof,
requires and export license or other governmental approval without first
obtaining the same.
18. Applicable Law
The law of the state of New York shall apply exclusively to this Agreement. Any
and all disputes arising hereunder shall be exclusively litigated in the state
or federal courts in Nassau county, New York and each party hereto consents to
the personal jurisdiction of such courts for such purpose, subject to effective
service of process.
19. Entire Agreement
THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF, SUPERSEDES ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF,
AND MAY NOT BE AMENDED, MODIFIED OR SUPPLEMENTED, EXCEPT BY A WRITTEN AGREEMENT
EXECUTED BY THE PARTIES HERETO. This Agreement does not limit or restrain the
right of Pall to lease, license or sell or otherwise dispose of counterparts of
the Products or part thereof to any other persons
11
<PAGE> 12
or firms, or to execute agreements providing for such transfer of right except
where prohibited for under this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as set forth below.
ORIGINAL EQUIPMENT MANUFACTURER (OEM)
Brody Special Projects Company
Accepted by: /s/ JON LIDDIARD
----------------------------------------
Jon Liddiard, President
Date: 6-23-99
----------------------------------------
Pall Filtron, Inc.
Accepted by: /s/ CHARLES J. ROBRECHT
----------------------------------------
Charles J. Robrecht, Pres
Date: 9 July 99
----------------------------------------
12
<PAGE> 13
EXHIBIT A
THE PRODUCTS
All PallSep machines, membranes, systems
and components including
PS 10
PS 400
PS 1000
PS 1300
PS 5000
(if and when it becomes available)
Membrane Filter Packs and Replacement Parts
<PAGE> 14
EXHIBIT B
THE MARKET AREA
Food, Beverage, Dairies, Pharmaceutical, Biotech and Cosmetics Applications
including intermediates and wastewaters resulting from their processing.
Specifically included market areas are: Filtration of fluid streams during the
production or processing of pharmaceutical, bio-pharmaceutical, cosmetics, food,
dairy or beverage products, additives or intermediates for human or animal
consumption and or the waste streams resulting from such production or
processing and the products themselves. (Drinking water is not included.)
<PAGE> 15
EXHIBIT C
TERRITORY
The territory is the Western Hemisphere (North, Central and South America).
<PAGE> 16
EXHIBIT D
PRICE LIST
SEE ATTACHED 1999 PRICE LIST DATED FEBRUARY 3, 1999 AND JUNE 7, 1999
<PAGE> 17
Pall Corporation PallSep Sales Manual
ALL INFORMATION CONTAINED IS COMPANY CONFIDENTIAL
3. PS1000 Pricing
PallSep System Pricing - PS1000 Machines
NOT FOR REPLACEMENT MEMBRANES OR INDIVIDUAL COMPONENTS
<TABLE>
<CAPTION>
Description Part Number List Price
<S> <C> <C>
Section A
PS1000 Machine VMFPS1000 85,000
Section B
Lo P, Ind, Auto, NA 163,000
Lo P, Ind, Semi-auto NA 129,000
Lo P, Ind, Manual NA 85,000
Lo P, "San", Auto NA 195,000
Lo P, "San", Semi-auto NA 174,000
Hi P, Ind, Auto NA 194,000
Hi P, Ind, Semi-auto NA 158,000
Hi P, Ind, Manual NA 114,000
Section C
250 stack, UNIPLATE
1.Ou PTFE VM{}H250F00100U 74,000
0.4Su PTFE VM{}H250F0045U 74,000
0.2u Super VM{}H250S0020U 85,000
0.03u Super VM{}H250S0003U 85,000
Pall NF VM{}H250N0055U 96,500
FOR "{}":
use P for antibiotics, beer, & wine
use C for corn syrups, gluten, lysine, xanthan, & wastewater
Note: Pricing for a PallSep system must always include 1 item from
each section (A, B, & C)
Example:
Manual PS1000, 0.45u "A" + "B" + "C" = Price
List Price 85,000+85,000+74,000= 244,000
</TABLE>
06/07/99
<PAGE> 18
Pall Corporation PallSep Sales Manual
ALL INFORMATION CONTAINED IS COMPANY CONFIDENTIAL
4. PS400 Pricing
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Section A
<S> <C> <C>
- --------------------------------------------------------------------------------
PS400 Machine VMFPS400U 70,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Section B: Skid NA 155,000
- --------------------------------------------------------------------------------
Low Pressure, Auto NA 120,000
- --------------------------------------------------------------------------------
Low Pressure, Semi-auto NA 74,000
- --------------------------------------------------------------------------------
Low Pressure, Manual NA 182,000
- --------------------------------------------------------------------------------
High Pressure, Auto NA 146,000
- --------------------------------------------------------------------------------
High Pressure, Semi-auto NA 94,000
- --------------------------------------------------------------------------------
High Pressure, Manual
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Section C: Membranes
- --------------------------------------------------------------------------------
10 stack, UNIPLATE
- --------------------------------------------------------------------------------
1.0u PTFE VM{}H010F00100U 29,000
- --------------------------------------------------------------------------------
0.45u PTFE VM{}H010F0045U 29,000
- --------------------------------------------------------------------------------
0.2u Supor VM{}H010S0020U 29,000
- --------------------------------------------------------------------------------
0.03u Supor VM{}H010S0003U 29,000
- --------------------------------------------------------------------------------
Pall NF VM{}H010N0055U 29,000
- --------------------------------------------------------------------------------
100 stack UNIPLATE
- --------------------------------------------------------------------------------
1.0u PTFE VM{}H100F00100U 45,000
- --------------------------------------------------------------------------------
0.45u PTFE VM{}H100F0045U 45,000
- --------------------------------------------------------------------------------
0.2u Supor VM{}H100S0020U 49,000
- --------------------------------------------------------------------------------
0.03u Supor VM{}H100S0003U 49,000
- --------------------------------------------------------------------------------
Pall NF VM{}H100N0055U 60,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
FOR "[ ]":
use P for antibiotics, beer, & wine
use C for corn syrups, gluten, lysine, xanthan, & wastewater
Note: Pricing for a PallSep system must always include 1 item from
each section (A, B & C)
EXAMPLE:
Manual PS1000, 4.45u "A" + "B" + "C" = Price
List Price 85,000+85,000+74,000 + 244,000
<PAGE> 19
Pall Corporation PallSep Sales Manual
ALL INFORMATION CONTAINED IS COMPANY CONFIDENTIAL
4. PS10 Pricing
<TABLE>
<CAPTION>
PallSep System Pricing - PS10 Machines
- --------------------------------------------------------------------------------
NOT FOR REPLACEMENT MEMBRANES OR INDIVIDUAL COMPONENTS
- --------------------------------------------------------------------------------
Description Part Number List Price
- ----------- ----------- ----------
<S> <C> <C>
Section A
- --------------------------------------------------------------------------------
PS10 Machine VMFPS10 23,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Section B: Skid
- --------------------------------------------------------------------------------
Industrial NA 17,000
- --------------------------------------------------------------------------------
"Sanitary" NA 33,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Section C: Membranes
- --------------------------------------------------------------------------------
10 stack
- --------------------------------------------------------------------------------
1.0u PTFE VMX001F0100 1,000
- --------------------------------------------------------------------------------
0.45u PTFE VMX001F0045 1,000
- --------------------------------------------------------------------------------
0.2u Supor VMX001S0020 1,000
- --------------------------------------------------------------------------------
0.03u Supor VMX001S0003 1,000
- --------------------------------------------------------------------------------
SPACER SET VMFS002 inc
- --------------------------------------------------------------------------------
GASKET SET VMFG002 inc
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Note: Pricing for PallSep system must always include 1 item from
- --------------------------------------------------------------------------------
each section (A, B, & C)
- --------------------------------------------------------------------------------
Example:
- --------------------------------------------------------------------------------
Manual PS1000, 0.45u "A" "B"
- --------------------------------------------------------------------------------
List Price 85,000 85,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 20
E X H I B I T E
BRODY SPECIAL PROJECTS COMPANY
CUSTOMER PROTECTION FORM
The purpose of this documentation is to protect your efforts in selling
products for Brody Special Projects Company. This form is to be submitted to
the Sales Manager at BSPC. It is to your advantage to return this form
immediately after your sales call. Return the form to:
Brody Special Projects
4825 S. 6200 W.
West Valley, Utah 84118
or
Fax 1-800-588-2436
DATE: ______________________ YOUR NAME: _____________________________
COMPANY NAME: __________________________________________________________________
CONTACT NAME/TITLE: ____________________________________________________________
LOCATION: ______________________________________________________________________
ANTICIPATED APPLICATION: _______________________________________________________
CATEGORIES OF PROTECTION
1. Customer has seen the video tape/brochure presentation. [ ]
2. Customer has sent samples for testing. [ ]
3. Customer has agreed to plant test. [ ]
4. Customer has agreed to or has purchased a series "I" unit. [ ]
Protection: 1 or 2 Protects you for 6 months. 3 Protects you for 1 year.
Note: Protection is application specific. If there are more applications within
the location or within the company be sure to qualify them.
Brody Special Projects Company
<PAGE> 1
EXHIBIT 10(e)
TRANSFER AGREEMENT
Agreement made November 15, 1999, between Recycling Centers of America,
Inc., a Colorado corporation, hereinafter called "RCAI" and Steve Madsen of
11718 South Brisbane Drive, Sandy, Utah, and John D. Ewing of 7339 Shoreham
Place, Castle Rock, Colorado, hereinafter called "Sellers."
1. Effective November 15, 1999. The Sellers hereby assign and transfer
to RCAI all of their rights, duties, and obligations under that
certain Agreement dated December __, 1999, between Sellers and Brody
Special Projects Company ("Agreement"). RCAI hereby agrees to assume
all duties and obligations of the Sellers under the Agreement, and
agrees to indemnify and hold Sellers harmless from all payment
obligations described in paragraphs 1 and 2 of the Agreement. All
accounts receivable, contract rights, and other benefits and
obligations arising from transactions effected by Sellers with any of
the assets, tangible or intangible, acquired by Sellers under the
Agreement. Prior to December 14, 1999, shall be assigned and
delivered to RCAI on December 14, 1999 except as noted as follows;
net fees from PallSep pilot work at West Food Farms, Safeway, Dairy
Farmers of America, Pepsi Cola General Bottlets and Leprino Foods
will pass directly to Steve and John. Assignment is made with all
assets in as is condition without representation or warranty of any
kind. RCAI acknowledges the need for consent from New Logic
International and Pall Corporation for transfer of OEM agreements.
2. In consideration of the assignment provided for in paragraph 1,
above, RCAI shall issue and pay to the Sellers the following:
(a) RCAI shall issue stock options in the amount of 50,000 shares each,
to Steve Madsen and John Ewing. Said options shall be exercisable for
a term of 5 years from the date of this agreement, at an exercise
price of $0.40 per share. Provisions for these options shall be
similar to the option conditions provided in the employment
agreements for Steve and John.
(b) RCAI shall issue stock options in the amount of 200,000 shares each,
at an exercise price of $0.40 per share, to Steve Madsen and John
Ewing. Said options are to be performance based and will be issued in
50,000 share lots for each $4,000,000 of gross sales accomplished by
the membrane filtration division of RCAI. This provision will be in
force for 5 years from the date of this agreement and will be subject
to option conditions similar to those provided in the employment
agreements for Steve and John.
(c) RCAI agrees to pay Steve Madsen the sum of $36,800 over a six-month
period in six equal increments of $6,133 beginning January 15, 2000
and on the 15th of each subsequent month until the full sum is paid.
3. On or before January 30, 2000, RCAI shall appoint John Ewing to the
board of RCAI.
/s/ BRUCE SELK /s/ STEVE MADSEN
- ------------------------------- -------------------------------
Bruce Selk/CEO RCAI Steve Madsen
/s/ JOHN EWING
-------------------------------
John Ewing
<PAGE> 2
AGREEMENT
December 23, 1999
In consideration for transferring the agreements between John Ewing and Steve
Madsen with Brody Special Projects Company, Recycling Centers of America, Inc.
agrees to assume the obligations of the Promissory Note dated December 30, 1999
from Brody Special Projects.
/s/ BRUCE SELK
------------------------------
Bruce Selk, CEO
Recycling Centers of America
4374 Imerial Way
Provo, Utah 84604
<PAGE> 3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of January __, 2000, by
and among Steve Madsen and John D. Ewing (collectively the "Purchaser"); Brody
Special Projects Company, a Utah Corporation ("Seller"); and Lehman, Jensen &
Donahue, L.C., as escrow agent (the "Escrow Agent").
RECITALS
WHEREAS, the Purchaser and the Sellers have entered into the Agreement
dated December __, 1999, ("Purchase Agreement") pursuant to which the Purchaser
agreed to purchase from Seller; certain assets of seller used in the business
of marketing, selling and leasing V-Sep and Pall-Sep systems, including
contract rights to market such systems; and
WHEREAS, Seller has agreed to deposit certain assets into escrow under the
terms and conditions set forth herein pending payment of the purchase price for
the assets in accordance with the Purchase Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and in the Purchase Agreement, and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, it is agreed as follows:
SECTION 1. Escrow Deposit.
(a) The Escrow Agent acknowledges receipt of a written assignment
from Seller to Purchaser of the OEM Agreement between Seller and Pall
Filtron, Inc., signed by Pall Filtron, Inc., on July 9, 1999, together with
the written consent to assignment from Pall Filtron, Inc. ("Pall
Assignment"), and a written assignment/termination from Seller to Purchaser
of the OEM Agreement between Seller and New Logic International, Inc.,
dated November 5, 1998 ("New Logic Assignment") and hereby confirms that
the Pall Assignment and New Logic Assignment (collectively the "Escrow")
will be held by the Escrow Agent pursuant to Section 3 of this Agreement.
(b) The Escrow Agent agrees to hold, administer and disburse the
Escrow, pursuant to the terms of this Agreement.
SECTION 2. Rights, Duties and Immunities. (a) Acceptance by the Escrow
Agent of its duties under this Agreement is subject to the following terms and
conditions, which all parties to this Agreement hereby agree shall govern and
control the rights, duties and immunities of the Escrow Agent:
(i) The Escrow Agent undertakes to perform such duties and only
such duties as are expressly set forth herein; the Escrow Agent shall
not be liable.
<PAGE> 4
except for the performance of such duties and obligations as are expressly
set forth herein; and the Escrow Agent shall not be deemed to have any
knowledge of or responsibility for the terms of any other agreement
between or among the Sellers, Sellers' Representative, the Purchaser or
any other party, including, without limitation, the Purchase Agreement.
(ii) The Escrow Agent shall not be responsible in any manner
whatsoever for any failure or inability of the Sellers, the Sellers'
Representative, the Purchaser or any third party, to deliver moneys to the
Escrow Agent or otherwise to honor any of the provisions of this
Agreement, the Purchase Agreement or any other agreement.
(iii) Purchaser shall, within ten (10) days following demand,
reimburse and indemnify the Escrow Agent for, and hold it harmless from
and against, any loss, liability or expense, including but not limited to
reasonable counsel fees, arising out of or in connection with its
acceptance of, or the performance of its duties and obligations under
this Agreement, except for losses, liabilities and expenses caused by the
willful misconduct or gross negligence of the Escrow Agent. Such costs of
indemnification shall be borne the Purchaser. The provisions of this
Section 2(a)(iii) shall survive any termination of this Agreement.
(iv) The Escrow Agent shall be fully protected in acting on and
relying upon any written notice, direction, request, waiver, consent,
receipt or other paper or document which the Escrow Agent believes in good
faith to have been signed or presented by the proper party or parties as
provided pursuant to this Agreement.
(v) The Escrow Agent shall not be liable for any error of judgment,
or for any act done or step taken or omitted by it in good faith or for
any mistake of fact or law, or for anything which it may do or refrain
from doing in connection herewith, except its own willful misconduct or
gross negligence.
(vi) The Escrow Agent may seek the advice of legal counsel in the
event of any dispute or question as to the construction of any of the
provisions of this Agreement or its duties hereunder, and it shall incur
no liability and shall be fully protected in respect of any action taken,
omitted or suffered by it in good faith in accordance with the opinion of
such counsel.
(vii) The Escrow Agent makes no representation as to the validity,
value, genuineness or collectibility of any security, document or
instrument held by or delivered to it.
(b) If a controversy or dispute arises between one or more of the parties
hereto, or between any of the parties hereto and any person not a party hereto,
as to whether or not or to whom the Escrow Agent shall deliver the Escrow or
any portion
2
<PAGE> 5
thereof or as to any other matter arising out of or relating to the Escrow
or this Agreement, the Escrow Agent shall, in its sole discretion, have the
right to (but shall not be obligated to), commence interpleader or similar
actions or proceedings for determination of such controversy or dispute,
provided, however, in no event shall the Escrow Agent commence any
interpleader or similar action or proceeding if it shall have received
written notice that such controversy or dispute shall have been settled
pursuant to a written agreement among the parties to such controversy or
dispute or by a final judgment of a court of competent jurisdiction, not
subject to further appeal; and provided, further, that notwithstanding the
commencement of interpleader or similar actions or proceedings, resolution
of the underlying dispute between Purchaser and Sellers as to payment of
the Escrow shall be made in accordance with the Purchase Agreement.
(c) The Escrow Agent shall also be entitled to reimbursement of any
other reasonable fees and expenses, including out-of-pocket costs and
expenses and reasonable attorney's fees incurred by the Escrow Agent
hereunder. The Purchaser shall be responsible for all of such fees and
expenses.
SECTION 3. Release of Escrow. The Escrow Agent shall disburse the Escrow
as follows:
(a) If each of the cash payments are made from Purchaser to Seller
under paragraph 2.A. of the Purchase Agreement, then upon the final payment
the Escrow Agent shall deliver to the Purchaser all of the Escrow. Each
such cash payment shall be deposited with the Escrow Agent not less than 10
days prior to the due date under the Purchase Agreement and shall be paid
by Escrow Agent to Seller on or before the due date through a check drawn
on the Escrow Agent's trust account payable to Seller and delivered to the
office of Thomas R. Blonquist at 40 S. 600 East, Salt Lake City, Utah
84102.
(b) If any of the cash payments are not made by Purchaser to Seller
under paragraph 2.A. of the Purchase Agreement by the date specified
therein, then upon such default the Escrow Agent shall deliver to the
Seller all of the Escrow.
(c) The Escrow Agent shall, in addition, disburse the Escrow in
accordance with any joint written instructions of the Purchaser and the
Seller received by the Escrow Agent.
SECTION 4. Termination of Escrow Agreement. This Agreement shall terminate
upon the distribution of all of the Escrow held by the Escrow Agent in
accordance with the provisions hereof.
SECTION 5. Successor Escrow Agent
(a) The Escrow Agent (and any successor escrow agent) may at any time
resign as such by delivering the Escrow to any successor escrow agent
jointly designated
3
<PAGE> 6
in writing by the Purchaser and the Seller or to the court in connection
with an interpleader or similar action brought pursuant to Section 2(b)
above, whereupon the Escrow Agent shall be discharged of and from any and
all further obligations arising in connection with this Agreement. The
resignation of the Escrow Agent shall take effect on the earlier of the
appointment of a successor escrow agent or the day which is 30 days after
the date of delivery of the Escrow Agent's written notice of resignation
to the other parties hereto. In the event that a successor escrow agent
has not been appointed at the expiration of such 30-day period, the Escrow
Agent's sole responsibility hereunder shall be the safekeeping of the
Escrow and to disburse such Escrow in accordance with either the
instructions signed by the Purchaser and the Seller or the order of any
court of competent jurisdiction.
(b) If the Escrow Agent receives a written notice signed by the
Seller and the Purchaser stating that they have selected another escrow
agent, the Escrow Agent shall deliver the Escrow to the successor escrow
agent named in the aforesaid notice within 10 days of its receipt of such
notice.
SECTION 6. Governing Law. Subject to the provisions of Section 2(b)
hereof, the Agreement shall be construed under and governed by and enforced in
accordance with the laws of the State of Utah.
SECTION 7. Notice. All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be mailed by
first class, registered or certified mail, postage prepaid, or sent via
overnight courier service, or delivered personally:
If to the Escrow Agent: Lehman, Jensen & Donahue, L.C.
8 East Broadway, Suite 620
Salt Lake City, UT 84111
Attention: Mark Lehman
If to Purchaser: Steve Madsen
11718 South Brisbane Drive
Sandy, UT 8409__
If to the Seller: Brody Special Projects Company
c/o Thomas R. Blonquist
40 South 600 East
Salt Lake City, UT 84102
or to such other address of which the addressee shall have notified the sender
in writing. Notices delivered personally shall be effective upon delivery.
Notices delivered by overnight mail shall be effective one day following the
date deposited with the overnight mail service. Notices delivered by registered
or certified mail shall be effective on the date set forth on the receipt of
registered or certified mail, or three days following the date deposited in the
U.S. mail, whichever is earlier.
4
<PAGE> 7
SECTION 8. Headings. The headings of the paragraphs of this Agreement are
inserted as a matter of convenience and for reference purposes only, are of no
binding effect, and in no respect define, limit or describe the scope of this
Agreement or the intent of any paragraph.
SECTION 9. Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts hereof, and by the different parties
hereto on separate counterparts hereof, each of which shall be deemed to be
an original and all of which together constitute one and the same agreement.
Facsimile signatures on this Agreement shall be deemed original signatures.
SECTION 10. Entire Agreement. This Agreement represents the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, supersedes all prior negotiations between the parties, and can
be amended, modified, supplemented, extended, terminated, discharged or changed
only by an agreement in writing which makes specific reference to this
Agreement and which is signed by the party intended to be bound thereby.
SECTION 11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law, but only
as long as the continued validity, legality and enforceability of such
provision or application does not materially (a) alter the terms of this
Agreement, (b) diminish the benefits of this Agreement or (c) increase the
burdens of this Agreement, for any person.
SECTION 12. Joint Instructions. Notwithstanding any provision contained
herein to the contrary, the Escrow Agent shall at any time and from time to
time take such action hereunder with respect to the Escrow as shall be directed
in writing by both the Purchaser and Seller.
SECTION 13. Conflict Waiver. Seller and Purchaser are advised that the
Escrow Agent has represented the Purchaser in connection with this transaction,
and that the performance by the Escrow Agent of its duties hereunder may give
rise to a conflict of interest. The Escrow Agent may perform its duties
hereunder calling for the delivery of the Escrow to the Purchaser contrary to
the wishes of the Seller or act in some other way that the Seller considers
contrary to its interest, and the Escrow Agent may perform its duties hereunder
calling for the delivery of Escrow to the Seller contrary to the wishes of the
Purchaser or act in some other way that the Purchaser considers contrary to its
interest. Each of the Seller and Purchaser waive such conflicts, consent to the
Escrow Agent acting under this Agreement and representing the Purchaser in the
transactions contemplated by the Purchase Agreement, and release and hold the
Purchaser in the transactions contemplated by the Purchase Agreement, and
release and hold the Escrow Agent harmless from and against any claim that the
Purchaser or Seller may have against the Escrow Agent on the basis of the
performance of its duties under this Agreement, except the Escrow Agent's
willful misconduct or gross negligence.
5
<PAGE> 8
IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement
as of the date first written above.
BRODY SPECIAL PROJECTS COMPANY PURCHASERS
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ STEVE MADSEN
------------------------------- -------------------------------
Name: Steve Madsen
Title:
LEHMAN, JENSEN & DONAHUE, L.C.
By: /s/ JOHN D. EWING
------------------------------- -------------------------------
Name: Mark E. Lehman John D. Ewing
Title: Managing Member
6
<PAGE> 9
AGREEMENT
AGREEMENT made December __, 1999, between Brody Special Projects Company,
a Utah corporation, hereinafter called "Brody" and Steven Madsen of 11718 South
Brisbane Drive, Sandy Utah, and John D. Ewing of 7339 Shoreham Place,
Castlerock Colorado, hereinafter called "Buyers".
WHEREAS, the parties have reached an understanding with regard to the sale
by Brody and the purchase by Buyers of (a) certain assets of Brody and the
purchase by Buyers of (a) certain assets of Brody, which are utilized in the
business of marketing, selling and leasing V-Sep and Pall-Sep systems and (b)
the right to market, sell and lease V-Sep and Pall-Sep units under Brody's OEM
agreements with New Logic International and Pall Filtron, Inc.
IT IS THEREFORE AGREED:
1. Sale of Assets and Projects. Brody and Buyers agree that, at the
closing, Brody will sell, transfer and deliver to Buyers, for the consideration
hereinafter provided, all of the assets set forth on Exhibit "A" attached
hereto and the projects developed by Brody over the past eighteen months listed
at Exhibit "B" attached hereto, "Brody's projects" herein. Such sale shall be
made free and clear of all liabilities, obligations, security interests and
incumbrances, except only those liabilities and obligations which are to be
assumed by Buyers as hereinafter provided. Subject to the terms of this
agreement and in reliance upon the representations and warranties of Brody
contained herein,
<PAGE> 10
the Buyers shall purchase said assets and Brody's projects and, in full
consideration therefor, pay Brody $300,000 cash, as described at paragraph 2.A.
below, and $300,000 out of future sales, as described at paragraph 2.B. below,
and Buyers agree to pay or discharge Brody's liabilities and obligations only
to the extent provided at paragraph 6 below.
2. Payment of Purchase Price.
A. The $300,000 cash purchase price for the assets set forth at
Exhibit "A" and Brody's projects shown on Exhibit "B" shall be paid to Brody as
follows:
$100,000 in cash or by certified check on the execution of this
agreement, receipt of which is hereby acknowledged;
$50,000 in cash or by certified check at closing hereinafter
provided for and the balance at the rate of $50,000 on or before March 30,
2000, June 30, 2000, and September 30, 2000.
B. The Buyers agree to pay commissions to Brody on each Pall-Sep or
V-Sep unit sold from the projects listed in Exhibit "B" not to exceed a total of
$300,000 over five years from the date of this agreement. The rate of
commission will be 25% of net profit per unit or $6,250 per unit, whichever is
greater. Buyers agree to use their best efforts relative to each Brody project.
3. Granting of Rights.
A. As additional consideration for the receipt of the $300,000
described in paragraph 2.A. above, Brody agrees to grant to Buyers the right to
market and sell V-Sep and Pall-Sep units
2
<PAGE> 11
under and pursuant to Brody's OEM Agreements with New Logic International, as
to V-Sep units, and Pall Filtron, Inc., as to Pall-Sep units.
B. Nothing in this agreement shall prohibit Buyers from negotiating
OEM Agreements for themselves directly with New Logic International and/or Pall
Filtron., Inc.
C. Brody agrees to transfer its OEM agreements with New Logic
International and Pall Filtron, Inc. to Buyers when all payments described in
paragraph 2.A. above have been timely paid. The documents of transfer shall be
placed with an escrow agent under mutually agreeably escrow instructions with
the cost thereof to be borne by the Buyers.
D. Brody agrees to not transfer or grant rights under the said OEM
agreements to others so long as Buyers' payments under paragraph 2.A. above are
current.
4. Closing. The closing of the sale transaction shall take place at 40
South Sixth East, Salt Lake City Utah, at 11:00 a.m. on December 31, 1999. At
the closing, Brody shall deliver to the Buyers a) good and sufficient
instruments of transfer and conveyance as, in the option of Buyers, shall be
effective to vest in the Buyers good and marketable title to the assets to be
sold as provided in this agreement, b) transfer and conveyance of Brody's
projects to Buyers and c) written approval by Pall Filtron, Inc. to the transfer
of Brody's OEM Agreement to Buyers. The Buyers shall deliver to Brody a
certified check or bank cashier check for $50,000 and execute and deliver to
Brody an undertaking wherein the
3
<PAGE> 12
Buyers shall assume and agree to pay or discharge the Brody's liabilities and
obligations only to the extent provided in paragraph 5 below.
5. Representations and Warranties of Brody. Brody represents and
warrants as follows:
A. Brody's Authority. The execution and delivery of this agreement
to the Buyers and the sale of assets and granting of rights contemplated hereby
have been authorized by Brody's Board of Directors and Brody has delivered to
Buyers copies of the minutes of the meeting of its Board of Directors at which
such authority was granted, such copies having been certified by the Company's
secretary.
B. Title to Properties. Brody has good and marketable title to all
of the assets set forth on Exhibit "A" attached hereto, subject to no mortgage,
pledge, lien, incumbrance, security interest or charge whatsoever, except the
Pall equipment and the CAD software.
C. Pilot Expenses. All pilot expenses incurred prior to November 1,
1999, shall be reimbursed to Brody by Buyers. Pilot tests conducted are set
forth at Exhibit "C" attached hereto.
D. Reliance. The foregoing representations and warranties are made
by Brody with the knowledge and expectation that the Buyers are placing
complete reliance thereupon.
6. Buyers' Assumption of Liabilities. At the closing, the Buyers shall
execute and deliver to Brody an undertaking wherein
4
<PAGE> 13
the Buyers shall assume and agree to pay or discharge the following:
A. The liability owed to Pall Filtron in the sum of $204,000 for
the Pall-Sep units and $2,700 for filter packs.
B. The debt owed to Avatech Solutions of Colorado, Inc. in the sum
of $4,899.36.
7. Security. Brody's security for the receipt of $150,000 to be paid
during the year 2000, see paragraph 2.A., shall be all or such part of the
assets set forth at Exhibit "A" sufficient to cover the unpaid amount.
8. Indemnification. Brody shall indemnify and hold harmless the Buyers
against and in respect of all liabilities and obligations of or claims against
all of the assets set forth in Exhibit "A" except the Pall equipment and the
CAD software.
9. Representations and Warranties of Buyers. Buyers represent and
warrant as follows:
A. Intent to Perform. The execution and delivery of this agreement
constitutes evidence of Buyers' intent to comply with and perform each of their
responsibilities and duties described herein.
B. Back Salaries. Buyers waive any claim against Brody for salaries
due them prior to the date this agreement bears.
10. Benefit. This agreement shall be binding upon an inure to the benefit
of the parties hereto and their legal representatives, successors and assigns,
and this agreement is assignable by the Buyers without the prior written
consent of Brody.
5
<PAGE> 14
IN WITNESS WHEREOF the parties have executed this agreement on the day and
year first hereinabove written.
Brody Special Projects Company
Attest:
/s/ COLLETTE JACOBSON by /s/ JON LIDDIARD
- ---------------------------- ----------------------------------
Secretary Jon Liddiard
/s/ STEVE MADSEN /s/ JOHN D. EWING
- ---------------------------- -------------------------------------
Steve Madsen John D. Ewing
6
<PAGE> 15
1-Pall Industrial Unit
2-Pall Lab Units
1-NLI series L unit
1-NLI series P unit
NLI membrane inventory
Wet Chemistry Kit, Meters Probes
Barrel Heating system
Desk Top Computer
Lap Top Computer (2)
Color Printer
Fax/Copier
MS software
Portable Printer
Palm Pilot (2)
Cell Phones (2)
Office Setup
Digital Camera
CAD Software
Misc. office
EXHIBIT "A"
<PAGE> 16
<TABLE>
<CAPTION>
Company Location Application
- ------- -------- -----------
<S> <C> <C>
BP/Amoco Salt Lake City, Ut. Boiler Feedwater
Compaq Salt Lake City, Ut. Wastewater
Nestle Springville, Ut. Blancher water
American Linen Portland, Or. Wastewater
Oil ReRefining Portland, Or. Process Stream
Borg Warner Ithaca, NY Wastewater
Ralston Purina Denver, Co. Wastewater
Colorado Gold Denver, Co. Wastewater
Keebler Denver, Co. Wastewater
Bluffdale City Bluffdale, Ut. Drinking water
G&K Linen Salt Lake City, Ut. Wastewater
Con Agra Fort Morgan, Co. Wastewater
Daisy Brand Denver, Co. Wastewater
Safeway Denver, Co. Wastewater
Tyson Foods Nashville, Tn. Wastewater
Cargil Denver, Co. Wastewater
Jerome Cheese Jerome, Id. Wastewater
Valtron Salt Lake City, Ut. Wastewater
Environmental Eng. Salt Lake City, Ut. Snowbird Project
Frito Lay Salt Lake City, Ut. Wastewater
Camp Dressor McKee Los Angeles, Ca. Drinking Water
Commonwealth Salt Lake City. Ut. Africa Project
Dairygold Caldwell, Ut. Wastewater
Pepsi Cleveland, Oh. Wastewater
DFA Fort Morgan, Co. Wastewater
Redi Foods Burley, Id. Wastewater
Leprino Foods Denver, Co. Wastewater
RCAI Provo, Ut. Light Environmental
Lithium Inc. Magna, Ut. Lithium Separation
</TABLE>
EXHIBIT "B"
<PAGE> 17
<TABLE>
<CAPTION>
Company Location Application
- ------- -------- -----------
<S> <C> <C>
Safeway Denver, Co. Wastewater
Dairygold Caldwell, Id. Wastewater
Pepsi Cleveland, Oh. Wastewater
DFA Fort Morgan, Co. Wastewater
Lithium, Inc. Magna, Ut. Lithium Separation
</TABLE>
EXHIBIT "C"
<PAGE> 18
PROMISSORY NOTE
December 30, 1999
The undersigned, jointly and severally, promise to pay to the order of
Brody Special Projects at 40 South 600 East in Salt Lake City, Utah, or at
other places as the holder hereof may designate in writing, the sum of One
hundred fifty thousand Dollars ($150,000.00), payable as follows:
$50,000 on or before March 30, 2000
$50,000 on or before June 30, 2000
$50,000 on or before September 30, 2000
together both before and after judgment on the unpaid balance thereof from date
until paid at the rate of ten per cent (10%) per annum.
This note is secured by the personal property attached hereto as Exhibit
"A".
Prepayment of this note with interest to date of payment may be made at
any time without penalty.
If the holder deemed itself insecure or if default be made in payment of
the whole or any part of any installment at the time when or the place where
the same becomes due and payable as aforesaid, then the entire unpaid balance,
with interest as aforesaid, shall, at the election of the holder hereof and
without notice of said election at once become due and payable. In event of any
such default or acceleration, the undersigned, jointly and severally, agree to
pay to the holder hereof reasonable attorney's fees, legal expenses and lawful
collection costs in addition to all other sums due hereunder.
Presentment, demand, protest, notice of discharge and extension of time
without notice are hereby waived and the undersigned consent to the release of
any security, or any part thereof, with or without substitution.
Address: /s/ STEVE MADSEN
11718 South Brisbane Drive --------------------------
Sandy, Utah Steve Madsen
Address: /s/ JOHN EWING
7339 Shoreham Place --------------------------
Castlerock, Colorado John Ewing
<PAGE> 19
BILL OF SALE
(With Warranties and Corporate Acknowledgment)
KNOW ALL MEN BY THESE PRESENTS:
That Brody Special Projects Company, a Utah corporation, the SELLER, for
and in consideration of Ten DOLLARS ($10.00) in hand paid by Steve Madsen and
John D. Ewing, the BUYERS, the receipt whereof is hereby acknowledged, has
bargained, sold, assigned and transferred, and by these presents does bargain,
sell, assign and transfer unto said BUYERS, in an "as is" condition, that
certain personal property listed in Exhibit "A" attached hereto.
And the SELLER, upon the consideration recited above, warrants ownership
of said property and the right to sell the same, subject to the indebtedness
existing thereupon in the amounts described to BUYERS by SELLER.
IN WITNESS WHEREOF, SELLER, by and through its president, Jon Liddiard,
executes this document on this 13th day of December, 1999.
Brody Special Projects Company
Attest:
by /s/ [Signature Illegible] by /s/ Jon Liddiard
---------------------------- -----------------------------------
Assistant Secretary President
<PAGE> 20
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 13th day of December, 1999, personally appeared before me Jon
Liddiard and John Vigil who being duly sworn did say that Jon Liddiard is the
president of Brody Special Projects Company and that the foregoing bill of sale
was signed on behalf of said corporation by authority of a resolution of its
Board of Directors and said Jon Liddiard and John Vigil each duly acknowledged
to me that said corporation executed the same.
[SEAL] /s/ DELMA O. SANDERS
---------------------------------------
Notary Public
Residing in Salt Lake County
2
<PAGE> 21
1-Pall Industrial Unit
2-Pall Lab Units
1-NLI series L unit
1 NLI series P unit
NLI membrane inventory
Wet Chemistry Kit, Meters Probes
Barrel Heating system
Desk Top Computer
Lap Top Computer(2)
Color Printer
Fax/Copier
MS software
Portable Printer
Palm Pilot(2)
Cell Phones(2)
Office Setup
Digital Camera
CAD Software
Misc. office
EXHIBIT "A"
<PAGE> 22
Equipment Not Paid For by BSPC but assumed by Buyer.
<TABLE>
<CAPTION>
Item Serial Number Description
- ---- ------------- -----------
Amount
------
<S> <C> <C>
1. Pall Unit PS10-98 Test Unit, Pump, Tank $ 30,000
2. Pall Unit PF139 Test unit only $ 14,000
3. Pall Unit VM1749910 Industrial Unit, no stack $160,000
4. Auto Cad 2000 CAD Software $ 4,900
5. NLI Membrane na Stack DS-5DL $ 1,997
--------
Total $210,897
--------
</TABLE>
<PAGE> 1
EXHIBIT 11
RECYCLING CENTERS OF AMERICA
Statement of Computation of Earnings Per Share
<TABLE>
<CAPTION>
Average
Weighted Loss
Year Shares Loss Per Share
- ---- -------- ---- ---------
<S> <C> <C> <C>
1998 3,281,320 $(466,788) $(.14)
1999 4,263,399 $(796,916) $(.19)
</TABLE>
<PAGE> 1
EXHIBIT 12
Subsidiaries of Registrant
(a) Aquadynamic Technologies, Inc., a Minnesota corporation
(b) Aquatek, Inc., a Delaware corporation
