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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 17, 2000
COMPOSITECH LTD.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-20701 11-2710467
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(Commissioner File Number) (IRS Employer Identification Number)
120 Ricefield Lane
Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 436-5200
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Item 5. Other Events.
On February 17, 2000, Compositech Ltd. executed a Settlement Agreement with
its joint venture partner/licensee in Taiwan, which terminates the joint
venture agreement and the license granted to licensee for use of the
proprietary technology of Compositech Ltd. in Taiwan. Under the terms of
the settlement, the Company will retain the $1 million license down payment
it received in 1998 and in exchange therefore will issue 587,372 shares of
its common stock to the licensee. Additionally, the Company will return its
investment in the joint venture and retain the $500,000 advance it received
from licensee to make the investment.
On March 6, 2000, Compositech Ltd. announced that merger negotiations with
Netdirect International Corporation (OTC BB: VTCO) have terminated.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits. The following exhibits accompany this Report:
Exhibit
Number Exhibit Description
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10.1 Taiwan Settlement Agreement dated February 17, 2000, by and
between Compositech Ltd., Cheng Xin Technology Development
Corporation (as successor in interest to Fidelity Venture
Capital Corp.), Composite Technologies. Inc. and investors
in Composite Technologies, Inc.
99 Compositech Ltd. press release dated February 29, 2000
announcing that the Company executed a Settlement Agreement
with its joint venture/licensee in Taiwan, which terminates
their license.
99.1 Compositech Ltd. press release dated March 6, 2000
announcing that merger negotiations with Netdirect
International Corporation have terminated.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMPOSITECH LTD.
By: /s/ Samuel S. Gross
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Samuel S. Gross
Executive Vice President, Secretary
and Treasurer
Date: March 7, 2000
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Index to Exhibits
Exhibit Sequentially
Number Description of Exhibit Numbered Page
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10.1 Taiwan Settlement Agreement dated February 17, 2000,
by and between Compositech Ltd., Cheng Xin Technology
Development Corporation (as successor in interest to
Fidelity Venture Capital Corp.), Composite
Technologies. Inc. and investors in Composite
Technologies, Inc.
99 Compositech Ltd. press release dated February 29, 2000
announcing that the Company executed a Settlement
Agreement with its joint venture/licensee in Taiwan,
which terminates their license.
99.1 Compositech Ltd. press release dated March 6, 2000
announcing that merger negotiations with Netdirect
International Corporation have terminated.
2
Exhibit 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is made and entered into on the
17th of February, 2000, between COMPOSITECH LTD., a Delaware, U.S.A. corporation
with its principal place of business at 120 Ricefield Lane, Hauppauge, New York
11788-2008, U.S.A. ("Compositech"), CHENG XIN TECHNOLOGY DEVELOPMENT CORPORATION
(as successor in interest to Fidelity Venture Capital Corp.), a Taiwanese
corporation with its principal place of business at 6th Fl., Bld. 143, Sec. 2,
Min-Sheng East Road, Taipei, Taiwan, Republic of China ("CXTDC"), COMPOSITE
TECHNOLOGIES, INC., a Taiwanese company with its principal place of business at
6th Fl., Bld. 143, Sec. 2, Min-Sheng East Road, Taipei, Taiwan, Republic of
China ("Technologies"), and investors in Technologies (the "Investors").
(Compositech, CXTDC, Technologies and the Investors are referred to collectively
as the "Parties").
WHEREAS, Compositech, CXTDC and the Investors entered into an Agreement to
Form a Joint Venture, dated February 9, 1998, for the establishment of a joint
venture at Hsin-Chiu Science Base, Taiwan (the "Joint Venture Agreement"), and
Compositech and the joint venture company incorporated pursuant to the Joint
Venture Agreement as Technologies entered into a related Patent Information and
Trademark Agreement, dated February 9, 1998 (the "Patent License Agreement"),
whereby Compositech granted certain patent and trademark licenses to
Technologies in exchange for certain royalty payments by Technologies; and
WHEREAS, the Parties wish to terminate the Joint Venture Agreement and the
Patent License Agreement.
NOW, THEREFORE, the Parties agrees as follows:
1. Termination of Agreements. Effective as of the date hereof, the Parties
hereby terminate the Joint Venture Agreement, the Patent License Agreement, and
any other related agreements, whether written or oral, between the Parties
except for this Agreement (collectively, the "Prior Agreements").
2. Exclusive Settlement Terms; No Claim of Liabilities. This Agreement states
exclusively, the terms and conditions of the settlement of all the rights and
obligations of the Parties under the Prior Agreements. None of the Parties shall
make any claims or charges against any other for any liability under or in
connection with the termination of any of the Prior Agreements except, if
necessary, with respect to the rights and obligation set forth herein. Each of
the Parties hereby mutually releases and forever discharges each other Party
from any action, suits, debts, liens, contracts, promises, liabilities, claims,
demands, damages, losses, costs or expenses known or unknown, contingent or
otherwise ("Claims") that such Party has now or may ever have based on, by
reason of, or arising out of the Prior Agreements or the transactions
contemplated thereby except for those Claims arising out of rights and
obligations set forth herein.
3. Satisfaction of Loans. Compositech hereby acknowledges the receipt of U.S.
$500,000 (NTD $16,000,000) as a loan (the "Loan") from Technologies which amount
was used to
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purchase 1,600,000 shares of the common stock of Technologies. Technologies and
Compositech hereby agree that all shares of common stock of Technologies held of
record by Compositech, including the 1,600,000 shares of common stock purchased
and the Technical Investment Shares (as such term is defined in the Patent
License Agreement) (the "Shares") shall be transferred as of the date hereof to
Technologies on the books and records of Technologies in full satisfaction of
all debts owed by Compositech to Technologies including, without limitation, the
Loan. Technologies hereby acknowledges that no certificates representing the
Shares were issued to Compositech and agrees that it will take all actions
necessary to effect the transfer of the Shares on its books and records.
4. Conversion of Initial Royalties to Compositech Shares. As of the date hereof,
that portion of Initial Royalties (as defined in Section 5.2.a of the Patent
License Agreement) in the amount of US $1.0 million paid by Technologies to
Compositech shall be converted into a number of shares of common stock, par
value $.01, of Compositech equal to 1,000,000 divided by US $1.7025 rounded to
the nearest share (the "Compositech Shares") and shall be held of record by
Technologies. Compositech will take all actions necessary to issue the
Compositech Shares and will cause a certificate representing the Compositech
Shares to be issued to Technologies as soon as practicable.
5. No Restriction on Business. As of the date hereof, no restrictions, other
than those imposed by applicable law and contractual obligations, if any, with
third parties, shall exist on the ability of either Compositech or Technologies
to manufacture or sell any products or operate their respective businesses in
Taiwan or elsewhere.
6. Return of Information by Parties. Compositech and Technologies shall cause
the return of "Licensor's Information" and "Licensee's Information," as such
concepts are defined in the Patent License Agreement, to Compositech and
Technologies, respectively. Technologies agrees that it will not hereafter
disclose, use or pass on in any way Licensor's Information at any time and will
continue in all respects to fully protect Licensor's Information in accordance
with Article IX of the Patent License Agreement.
7. Compositech Trademark. Technologies shall immediately cease and desist from
all use of the Trademark (as defined in the Patent License Agreement) in any
way. Technologies shall not at any time, adopt or use any mark or symbol which
is similar to or is likely to be confused with the Trademark. Technologies shall
change its company name so as not to include the word "Composite."
8. Indemnification. a) Technologies and CXTDC, jointly and severally, agree to
indemnify and hold harmless Compositech and its officers, directors and
employees from and against any and all costs, liability, damages, expenses
(including reasonable attorneys fees and disbursements) arising out of or
related to (i) actions or omissions of Technologies, its officers or directors
after the date hereof or (ii) claims of Investors relating to this Agreement or
the Prior Agreements; and (b) Compositech agrees to indemnify and hold harmless
Technologies, CXTDC, their officers, directors and employees and the Investors
from and against any and all costs, liability, damages, expenses (including
reasonable attorneys fees and disbursements) arising out of or related to
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actions or omissions of Compositech, its officers or directors after the date
hereof with respect to Technologies or the Prior Agreements.
9. Further Actions. Each of the Parties hereby covenants and agrees to execute
such documents and to take such further action as may be necessary to implement
this Agreement and to otherwise act in good faith and deal fairly hereunder.
10. Governing Law. This Agreement shall be deemed a contract made under the laws
of the State of New York, U.S.A. and for all purposes, including matters
pertaining to its form and validity shall be construed and enforced in
accordance with the laws of said State without regard to its conflicts of laws
principles.
11. Counterparts. This Agreement may be executed in several counterparts, with
each of such counterparts being deemed an original and all of which together
comprise the whole.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
day and year first above written.
COMPOSITECH LTD.
By: /s/ Jonas Medney
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Name: Jonas Medney
Title: Chairman of the Board
CHENG XIN TECHNOLOGY DEVELOPMENT
CORPORATION
By: /s/ Chen Ming Lee
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Name: Cheng Ming Lee
Title: President
COMPOSITE TECHNOLOGIES, INC.
By: /s/ Chen Ming Lee
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Name: Cheng Ming Lee
Title: Chairman of the Board (Interim)
INVESTORS:
By: /s/ Chen Ming Lee
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Name: Cheng Ming Lee
Exhibit 99
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Press Release
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For Immediate Release
COMPOSITECH LTD. PURSUES LICENSING RELATIONSHIPS WITH
MAJOR LAMINATE MANUFACTURERS;
ANNOUNCES SETTLEMENT OF TAIWAN LICENSE
International Licensing Network Will Direct Discussions
HAUPPAUGE, N.Y, February 29, 2000 -- Compositech Ltd. (NASDAQ: CTEK), a
developer of high tech laminates for the printed circuit board industry,
announced today that it plans to license its patented technology to major
laminate manufacturers.
Compositech's customers-- such as Teradyne, Inc. (NYSE: TER) and Tyco
International Ltd. (NYSE: TYC)-- have expressed an increasing need for its high
performance CL200+ laminates to help them economically build the increased
circuit density required by OEMs in Internet servers, telecommunications
equipment, personal computers, workstations and data communications.
"We have demonstrated that our uniquely constructed laminate can be
processed with the same multi-opening presses used by conventional laminators.
Based on this development, we believe we can grow efficiently by licensing our
technology and transferring our expertise in filament winding, resin
impregnation and other processes," said Compositech Chairman and CEO Jonas
Medney, co-inventor of the technology. "The major laminators possess the
structure, marketing resources and critical mass needed to maximize the growth
of laminate sales using the Compositech technology."
Compositech has engaged the International Licensing Network ("ILN"), a
world-renowned firm specializing in technology, licensing and acquisitions to
direct licensing discussions. "We accepted the Compositech licensing assignment
because their technology base is outstanding -- it truly is a breakthrough in
electronic laminate technology," said ILN founder and Chairman Robert
Goldscheider. "Starting with an already established base, an outside company
would need to make only a modest commitment to successfully market the Company's
products and should be able to rapidly increase their existing market share."
"Licensing is the fastest route to maximizing the value of our technology
for our shareholders," added Medney. "We will concentrate our initial efforts on
helping ILN negotiate the licenses, and then we will work on advancing the
technology. CL200+ is only the first product developed from Compositech's
versatile technology. The composites industry that spawned this invention has a
long history of replacing woven fabric reinforcements with less expensive
reinforcement construction such as filament winding. Their objective, just like
ours, was to produce a better product at a lower cost."
-more-
<PAGE>
COMPOSITECH LTD. PURSUES LICENSING RELATIONSHIPS WITH MAJOR
LAMINATE MANUFACTURERS; ANNOUNCES SETTLEMENT OF TAIWAN
LICENSE
Page 2
Compositech also announced a settlement agreement with its joint
venture/licensee in Taiwan, which terminates their license. Under the terms of
the settlement, the Company will retain the $1 million license down payment it
received in 1998 in exchange for the issuance of 587,372 shares of its common
stock to the licensee. Additionally, the Company will return its investment in
the joint venture and retain the $500,000 advance it received on a stock
purchase to make the investment. Consequently, the effect of the settlement on
the Company's balance sheet is not significant. "The joint venture was started
by a venture capital group who informed us they couldn't complete the necessary
financing because their investors were adversely affected by last year's
earthquake," said Medney. "This opens up the territory for licensing to an
industry company as part of our licensing program with ILN."
Compositech Ltd. has developed innovative and superior copper-clad and
fiberglass epoxy laminates used to make printed circuit boards, which are
essential components of personal computers, workstations, data communications,
Internet servers and telecommunications equipment.
Compositech(TM) and CL200+(TM) are trademarks of Compositech Ltd.
The statements made in this press release contain certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934 that involve a number of risks and
uncertainties. Actual events or results may differ from the Company's
expectations. In addition to the matters described in this press release, risk
factors listed from time to time in the Company's SEC reports and filings,
including, but not limited to, its reports on Form 10-QSB for the quarter ended
September 30, 1999, its registration statement on Form S-3 declared effective by
the Securities and Exchange Commission on June 15, 1999 and its report on Form
10-KSB for the year ended December 31, 1998, may affect the results achieved by
the Company.
# # #
CONTACT:
Compositech Ltd. Investor Realtions Services
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Jonas Medney, Chairman and CEO Dan Kinnison
Samuel S. Gross, CFO 490 N. Causeway
120 Ricefield Lane New Smyrna Beach, FL 32169
Hauppauge, NY 11788-2008 904-409-0200
631-436-5200 [email protected]
[email protected] --------------------
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Exhibit 99.1
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Press Release
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For Immediate Release
COMPOSITECH LTD. ANNOUNCES TERMINATION
OF MERGER NEGOTIATIONS WITH
NETDIRECT INTERNATIONAL CORPORATION
Will Continue to Pursue Licensing Program and Resume Other Merger
Discussions
HAUPPAUGE, N.Y, March 6, 2000 -- Compositech Ltd. (NASDAQ: CTEK), a
developer of high tech laminates for the printed circuit board industry,
announced today that merger negotiations with Netdirect International
Corporation (OTC BB: VTCO) have terminated.
"The timetable for the merger was delayed because of Netdirect's pending
acquisition of HardwareStreet.com," said Compositech Chairman and CEO Jonas
Medney. "This caused Netdirect to revise their business plan to emphasize
strategic partnerships directly in their line of business."
Greg Appelhof, President and CEO of Netdirect stated: "Compositech's
technology, while very exciting, would require us to divert our focus from the
new business strategy."
"This releases us from our stand-still obligations," Medney added. "We are
now free to pursue other merger and acquisition discussions and financing
sources to sustain our reduced level of operations while we proceed with our
previously announced licensing and development programs. We believe these steps
will enable us to maximize the potential of our technology and, in turn, our
shareholder value."
Compositech recently announced the engagement of International Licensing
Network - a world-renowned firm specializing in technology, licensing and
acquisitions - to direct licensing programs and negotiations with several major
laminate manufacturers.
Compositech Ltd. has developed innovative and superior copper-clad and
fiberglass epoxy laminates used to make printed circuit boards, which are
essential components of personal computers, workstations, data communications,
Internet servers and telecommunications equipment.
Compositech(TM) and CL200+(TM) are trademarks of Compositech Ltd.
The statements made in this press release contain certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934 that involve a number of risks and
uncertainties. Actual events or results may differ from the Company's
expectations. There is no assurance that the Company will be successful in its
merger or acquisition efforts, the obtaining of financing or the sale of
licenses. In addition to the matters described in this press release, risk
factors listed from time to time in the Company's SEC reports and filings,
including, but not limited to, its reports on Form 10-QSB for the quarter ended
September 30, 1999, its registration statement on Form S-3 declared effective by
the Securities and Exchange Commission on June 15, 1999 and its report on Form
10-KSB for the year ended December 31, 1998, may affect the results achieved by
the Company.
# # #
Contact: Compositech Ltd. Investor Relations Services
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Jonas Medney, Chairman and CEO Dan Kinnison
Samuel S. Gross, CFO 490 N. Causeway
Compositech Ltd. New Smyrna Beach, FL 32169
120 Ricefield Lane 904/409-0200
Hauppauge, NY 11788-2008 [email protected]
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631/436-5200
[email protected]
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