As filed with the Securities and Exchange Commission on October 30, 1996.
Registration No. 33-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0309477
(State or other jurisdiction I.R.S. Employer Identification No.)
of incorporation or organization)
1875 E. Lake Mary Blvd., Sanford, FL 32773
(Address of principal executive offices) (Zip Code)
Consulting Services Plan
(Full title of the plan)
Mr. John Kenney, President, RT INDUSTRIES, INC.
1875 E. Lake Mary Blvd., Sanford, FL 32773
(Name and address of agent for service)
(407) 322-8000
(Telephone number, including area code, of agent for service)
Copy to:
Gary A. Schonwald, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Telephone: (212) 885-5522
Facsimile: (212) 885-5001
<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Securities Amount to Price Per Offering Registra-
to be Registered be Registered Share(1) Price(1) tion Fee
- ------------------- ------------- --------- --------- ---------
Common Stock, par 35,000 shares $4.66 $163,100.00 $49.42
value $.001 per share ----- ----------- ------
(1) Estimated solely for the purposes of calculating the registration fee
and based on the average of the high and low prices for the Common Stock as
quoted on NASDAQ on October 24, 1996.
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PRELIMINARY PROSPECTUS DATED OCTOBER 30, 1996
PROSPECTUS
RT INDUSTRIES, INC.
35,000 Shares of Common Stock
This Prospectus relates to an offering by a certain consultant (the
"Consultant") of RT Industries, Inc. (the "Company") of an aggregate of up to
35,000 shares of common stock, $.001 par value, of the Company (the "Common
Stock"). The Common Stock was previously issued by the Company to the Consultant
pursuant to a consulting agreement dated October 14, 1996.
The Common Stock may be offered from time to time by the Consultant through
ordinary brokerage transactions in the over-the-counter markets, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale or at
negotiated prices. The Company will not receive any of the proceeds from the
sale of Common Stock by the Consultant. See "Selling Stockholder and Plan of
Distribution" and "Use of Proceeds."
The Company will not receive any net proceeds from the registration of the
Common Stock. See "Use of Proceeds".
The Common Stock is listed on the SmallCap Market of the NASDAQ Stock
Market, Inc. ("NASDAQ") under the symbol: RTIC. On October 24, 1996, the closing
sale price of the Common Stock as reported by NASDAQ was $4.63.
----------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK AND SHOULD NOT BE PURCHASED BY INVESTORS
WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS."
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October __, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports,
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proxy statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission located at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Suite 1400 Chicago, Illinois 60661 and 7 World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(i) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1995; (ii) Quarterly Reports on Forms 10-QSB for the quarterly periods ended
March 31, 1996 and June 30, 1996; (iii) Forms 10-C for the events dated January
20, 1996, March 29, 1996, April 19, 1996 and May 3, 1996; and (iv) the
description of the Company's Common Stock contained in its Registration
Statement on Form S-18 declared effective on April 8, 1992 (Registration No.
33-47037-A).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference herein and to be a part hereof on the date of
filing of such documents. Any statement contained in a document incorporated by
reference herein is modified or superseded for all purposes to the extent that a
statement contained in this Registration Statement or in any other subsequently
filed document which is incorporated by reference modifies or replaces such
statement.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, except for the
exhibits to such documents. Requests should be directed to RT Industries, Inc.,
Attn: President, 1875 East Lake Mary Boulevard, Sanford, Florida 32773;
telephone: (407) 322-8000.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere in or incorporated by reference into this Prospectus. Each
prospective investor is urged to read this prospectus in its entirety. Unless
otherwise indicated, all share and per share information in this prospectus
gives effect to a 1 for 5 reverse stock split on February 16, 1995 and (ii) an
increase in the total authorized capital stock of the Company from 10,000,000 to
30,000,000 shares effected on August 7, 1996.
The Company
RT Industries, Inc., a Delaware corporation formed on January 16, 1992 (the
"Company"), through its subsidiaries, Roinco Manufacturing, Inc. ("Roinco"),
Ultratech of South Florida, Inc. ("Ultratech"), RT Friction, Inc. ("RT
Friction") and Ultra Brake Corporation ("Ultra Brake"), manufactures, assembles
and/or distributes new automotive friction products (brake linings and new brake
pads) and assembles and distributes ignition wires for the automotive
aftermarket (replacement parts sold for use on motor vehicles after initial
purchase). Sales of the Company's products are made to automotive distributors,
mass merchandisers and chain stores. The Company does not market its products
directly to retail customers. The Company currently maintains a
manufacturing/assembly/ distribution facility and a warehouse facility located
in Florida.
The Company was incorporated in Delaware on January 16, 1992. Unless the
context otherwise requires, all references in this Prospectus to the Company
include the Company and its wholly-owned subsidiaries Roinco, Ultratech, RT
Friction, and Ultra Brake. The Company's executive offices are located at 1875
East Lake Mary Boulevard, Sanford, Florida 32773, and its telephone number is
(407) 322-8000.
Securities Offered ........................ 35,000 shares of Common Stock.
Common Stock Outstanding: ................. 7,837,787 shares
Use of Proceeds: .......................... The Company will not receive any
net proceeds from the
registration of the Common
Stock. See "Use of Proceeds."
NASDAQ Symbol:............................. Common Stock - RTIC
Risk Factors............................... The securities offered hereby
involve a high degree of risk.
See "Risk Factors."
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RISK FACTORS
The securities offered hereby involve a high degree of risk, including, but
not necessarily limited to, the risk factors described below. Each prospective
investor should carefully consider the following risk factors before making an
investment decision. Prospective investors should consult with their own legal,
tax and financial advisors. This Prospectus contains forward-looking statements.
The Company's actual results may differ materially from the results discussed in
the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in "Risk Factors".
1. Limited Relevant Operating History; Uncertainty of Plan of Operation.
The Company recently commenced the restructuring and consolidation of its
operations, in connection with which it closed certain manufacturing facilities
and dismissed certain members of management in an effort to consolidate
operations and reduce operating costs. The Company has a limited relevant
operating history upon which an evaluation of its prospects and performance may
be made. Prospects for the Company must be considered in light of the risks,
expenses, problems and difficulties frequently encountered in the restructuring
of a business in a continually evolving industry, characterized by an increasing
number of market entrants and intense competition. There can be no assurance
that the Company's restructuring plan will result in reduced operating costs or
significantly improved operating results. Although the Company from time to time
has and continues to evaluate potential acquisition candidates and has
identified potential targets, the Company has not entered into any written
agreements, understandings or arrangements with respect to any acquisition as of
the date of this Prospectus.
2. Significant Continuing and Increasing Losses; Declining Revenues; Explanatory
Paragraph in Report of Independent Certified Public Accountants. The Company has
generated limited revenues and incurred substantial and increasing losses since
its inception. For the years ended December 31, 1994 and 1995 and the six months
ended June 30, 1996, the Company incurred net losses of $3,298,587, $4,179,642
and $1,628,542, respectively, resulting in an accumulated deficit of $6,691,752
at June 30, 1996. Losses are continuing through the date of this Prospectus. The
Company also expects it will continue to incur significant operating expenses in
connection with its operations. As a result of these expenses, the Company
anticipates that it will continue to incur significant operating losses for the
foreseeable future, and until such time, if ever, as the Company is able to
attain adequate sales levels to support operations, sufficiently reduce its
operating expenses and fully implement its restructuring. The generation of that
level of revenues and reduction of operating expenses is dependent upon the
Company's re-establishing satisfactory relationships with suppliers and
successfully implementing its restructuring plan. There can be no assurance that
the Company's revenues will not decline further in the future, that the Company
will be able to reduce operating expenses, that losses will not continue, or
that the Company will ever achieve profitable operations. The Company's
independent certified public accountants have included an explanatory paragraph
in their report on the Company's financial statements as of year end 1995
stating that the Company has experienced significant operating losses, has an
accumulated deficit and is in default on a note payable to its primary lender.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern.
3. Inability to Obtain Trade Credit. Many suppliers and contractors of the
Company require cash payments prior to supplying goods or rendering services to
it. Although the Company has been able to arrange for credit with some of such
suppliers and contractors, if the Company does not generate and collect revenues
in a timely manner, its ability to pay its suppliers and contractors on a cash
basis could be severely curtailed. The Company's inability to obtain credit to
purchase supplies has in the past had a materially adverse effect on the
Company, significantly decreasing the Company's ability to satisfy the Company's
then existing demand for its products, resulting in the significant decrease in
the Company's revenues. Continued inability to obtain adequate sources of supply
in the future could continue to have a materially adverse effect on the
Company's operating results, including a further decrease in revenues, and could
require the Company to further limit or cease operations entirely.
4. Risks Relating to Important Debt Restructuring. The Company recently
completed a restructuring of certain outstanding trade debt. In connection with
the debt restructuring, a committee of the Company's unsecured trade creditors
(the "Trade Creditors") on March 7, 1995 declared as effective an agreement (the
"Composition Agreement") providing for repayment by the Company of the unsecured
trade debt (the "Trade Debt") of the Company's Trade Creditors electing to
participate in the Composition Agreement, representing approximately $2,732,000
of the $3,032,000 Trade Debt. Trade Creditors, representing approximately
$2,500,000 of the Trade Debt, elected a lump sum payment of $0.35 for every
$1.00 of the Trade Debt and have been paid. Trade Creditors, representing
$232,000 of the Trade Debt, who elected periodic payments have received fifteen
percent (15%) of the periodic payments. The Company is required to continue to
make payments of approximately $25,000 every six months, with the next payment
due in the first fiscal quarter 1997. There can be no assurance that the Company
will be able to satisfy its obligations. Failure to do so could have a material
adverse effect on the Company.
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<PAGE>
5. Significant Capital Requirements; Dependence on Offering Proceeds;
Possible Need for Additional Financing. The Company's capital requirements have
been and will continue to be significant. The Company has been dependent upon
placements of its equity and debt securities, which have raised an aggregate of
$5,267,000 during 1996, borrowings under its line of credit with Congress
Financial Corporation ("Congress") and equipment leases in order to satisfy its
working capital requirements. The Company continues to operate with severe cash
flow restraints and the amount of cash generated by the Company's operations is
currently insufficient to satisfy the Company's cash requirements. Accordingly,
the Company will require significant financing to continue operations. Other
than a line of credit with Congress, the Company currently has no other sources
of financing. The Company currently has available an additional borrowing base
of $81,000 under the Congress line of credit, determined on an asset valuation
basis. Moreover, the Company's line of credit matures in April 1997 and
automatically renews on a yearly basis, unless terminated by either party in
accordance with the loan and security agreement. Additionally, to the extent
that the Company incurs additional indebtedness or issues debt securities in
connection with any acquisition, the Company will be subject to risks associated
with incurring substantial indebtedness, including the risks that interest rates
may fluctuate and cash flow may be insufficient to pay principal and interest on
any such indebtedness. There can be no assurance that the Company will be able
to increase its borrowing base, that the line of credit will be extended or
refinanced or that the Company will be able to obtain additional financing on
commercially reasonable terms, or at all. Any additional equity financing may
involve substantial dilution to the interests of the Company's then existing
stockholders.
6. Significant Outstanding Indebtedness; Security Interests; Restrictive
Covenants; Defaults Under Outstanding Indebtedness. In order to finance the
Company's capital requirements, the Company has incurred substantial
indebtedness. The Company currently has significant outstanding indebtedness,
including $734,956 (at October 22, 1996) under its secured line of credit,
approximately $200,000 to the Trade Creditors, approximately $700,000 under an
existing mortgage and approximately $258,000 of equipment lease financing
indebtedness. The line of credit, the mortgage and the equipment leases are
secured by security interests in substantially all of the assets of the Company.
The Company is currently in default under substantially all of its outstanding
indebtedness. While Congress has verbally informed the Company that it will not
call its loan with the Company, provided the Company is in compliance with
certain applicable lending formulas, there can be no assurance that such default
may not cause Congress to accelerate the loan. Congress has not waived the
Company's defaults and, as such, can cease funding the credit line and/or
accelerate the loan and demand payment in full of the outstanding balance.
Although the Company has been able to obtain renewals of its credit facilities
in the past, there can be no assurance that Congress will continue its lending
arrangements with the Company. The Company has been advised by the mortgagee
that the creditor has sold the subject property and the Company believes that
the creditor will release the Company from its obligation. There can be no
assurance, however that any release will be granted. As a result, Congress or
the morgatgee could declare the Company's obligations immediately due and
payable and foreclose on the Company's assets. To the extent that all of the
Company's assets continue to be pledged to secure outstanding indebtedness, such
assets will not be available to secure additional indebtedness. The Company's
loan agreement relating to the line of credit with Congress restricts the
ability of the Company to incur additional indebtedness and requires the Company
to satisfy certain financial ratios. The terms of the secured indebtedness may
limit the ability of the Company to obtain additional financing on terms
favorable to the Company or at all.
7. Litigation Relating to Default Under a Security Agreement. The Company
was named as a defendant in criminal and civil matters arising out of an alleged
default under a security agreement relating to equipment lease financing. The
civil matter was filed in the United States District Court, Western District of
Missouri in February 1996. The plaintiff alleged that the Company moved the
assets subject to the security agreement in violation of the terms of such
agreement, demanded payments on the related loan and alleged criminal fraud as a
result of the Company's actions. The civil action has subsequently been
dismissed and the Company has negotiated the terms of a settlement arrangement
with the creditor. A written settlement agreement, however, has not been reached
and the criminal complaint has not been dismissed. There can be no assurance
that a written settlement agreement will be entered into on terms favorable to
the Company or at all, or that the criminal matter will be resolved in a manner
favorable to the Company. Failure to do either of the foregoing would have a
material adverse effect on the Company.
8. Seasonality, Fluctuations and Operating Results. The Company's operating
results may vary from period to period as a result of purchasing patterns of
potential customers, the timing of introduction of new products by the Company's
suppliers and competitors, variations in sales by distribution channels, product
availability and pricing and the seasonal nature of the Company's business. The
Company's business has a seasonal decline during the colder winter months of the
first and fourth fiscal quarters which corresponds to a decline in retail sales
of the Company's products. Results for one period, however, are not indicative
of sales for the year.
9. Dependence on Third Party Marketing and Sales Efforts. The Company has
relied, and intends to continue relying to a large extent, on arrangements with
independent sales representatives to market its products as well as sell and
distribute its products. The Company's prospects will depend upon its ability to
develop and maintain strategic marketing relationships with additional
independent sales representatives and upon the marketing and distribution
efforts of its distributors and other strategic partners.
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Moreover, the arrangements with such sales representatives may be
terminated at any time by the sales representatives or the Company. While the
Company believes that any independent sales representative with which it enters
into such arrangements will have an economic motivation to commercialize the
Company's products, the time and resources devoted to these activities generally
will be controlled and contributed by such representatives and not by the
Company. There can be no assurance that the Company will be able, for financial
or other reasons, to finalize any additional third-party distribution, marketing
or joint venture arrangements, that such arrangements, if finalized, will result
in the successful commercialization of any of the Company's products or that the
Company's sales representatives will apply substantial efforts or resources to
sales of the Company's products.
10. Dependence on Third-Party Suppliers and Contractors. The Company is
dependent on third-party arrangements for the manufacture and supply of
component parts, including steel, the largest material component in the
production of brake pads. The Company does not maintain supply contracts with
any of its manufacturers and purchases components pursuant to purchase orders
placed from time to time in the ordinary course of business. For the eight
months ended August 31, 1996, the Company purchased approximately 44.6% of its
component requirements from one manufacturer. Such purchases represented all of
the Company's purchases of steel during such period. Although the Company
currently has four sources for this component and believes that additional
alternative sources are readily available, failure by such manufacturer to
continue to supply the Company with components on commercially reasonable terms,
or at all, in the absence of readily available alternative sources, could have a
material adverse effect on the Company. The Company is substantially dependent
on the ability of its manufacturers, among other things, to satisfy performance
and quality specifications and dedicate sufficient production capacity for
components within scheduled delivery times. There can be no assurance that the
Company's suppliers will have sufficient production capacity to satisfy the
Company's component requirements during any period of sustained demand. Failure
or delay by the Company's suppliers in supplying necessary components to the
Company could adversely affect the Company's ability to obtain material
components and deliver its products on a timely and competitive basis.
11. Lack of Patent Protection; Proprietary Rights Risks. The Company has
developed and currently owns certain proprietary processes and formulas with
respect to the production and manufacture of its integrally molded brake pads.
The Company's products have not been patented and the Company relies on a
combination of contractual rights, non-disclosure agreements with its employees,
distributors and customers, and technical measures to establish and protect the
ideas, concepts, and documentation of its proprietary technology and know-how.
Such methods, however, may not afford complete protection, and there can be no
assurance that third parties will not independently develop such know-how or
obtain access to the Company's know-how, ideas, concepts, and documentation.
Although the Company believes that its technology has been developed
independently and does not infringe on the proprietary rights of others, there
can be no assurance that the technology does not and will not so infringe or
that third parties will not assert infringement claims against the Company in
the future. In the case of infringement, the Company would, under certain
circumstances, be required to modify its products or obtain a license. There can
be no assurance that the Company will have the financial or other resources
necessary to defend successfully a patent infringement or other proprietary
rights infringement action. Failure to do any of the foregoing could have a
material adverse effect on the Company. Furthermore, if the Company's products
or technologies are deemed to infringe upon the rights of others, the Company
could become liable for damages, which would have a material adverse effect on
the Company.
12. Collection of Accounts Receivable. The Company's sales to resellers and
distributors are made on credit terms and it does not hold collateral to secure
payment. As of September 30, 1996, approximately $1,192,884 of account
receivables were overdue and payable, of which $928,119 were outstanding over 90
days. There can be no assurance that uncollectible receivables will not exceed
the Company's reserves for doubtful accounts ($823,058 as of September 30,
1996). Any significant increase in uncollected accounts receivables beyond
reserves could have a material adverse effect on the Company's business, results
of operation and financial condition. Continued delays in collection or
uncollectability of accounts receivable could have a material adverse effect on
the Company's liquidity and working capital position and could result in the
write off of any such account receivable which could have a material adverse
effect on the Company's operating results in the future.
13. Competition. The distribution of automotive replacement parts is a
highly competitive business. The Company competes in its market area with other
auto parts manufacturers and distributors. Many of the Company's competitors
have greater financial, marketing, personnel and other resources than the
Company, better name recognition and wider or otherwise stronger distribution
networks which may position such competitors to more effectively compete for the
sale of automotive replacement parts. Competition in the automotive aftermarket
industry is based on service provided to customers, price of products, speed of
delivery, order fill and customer convenience. As in the case of most
distributors, the Company's products are priced based upon the competitive
situation and purchaser volume. Distributors larger than the Company may be able
to offer large discounts and offer better terms on volume purchases than those
offered by the Company. Many of the Company's competitors in both the jobber and
specialty brake parts distribution markets are larger and have greater capital
and management
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resources than the Company. There can be no assurance that the Company will be
able to compete successfully or that competitors will not develop products that
render the Company's products less marketable or its equipment obsolete. There
are no significant barriers to entry into the business operated by the Company.
There are usually no proprietary rights which can be protected from competition
by patents, copyrights or similar intellectual property protections. Many of the
Company's current and potential competitors have significantly greater
financial, manufacturing, marketing and personnel and other resources than the
Company. Accordingly, there can be no assurance that the Company will be able to
successfully compete against such existing and potential competitors.
14. Possible Volatility of the Securities. The market prices of the
securities may respond to quarterly variations in operating results and other
events or factors, including, but not limited to, the sale or attempted sale of
a large amount of the securities into the market. Additionally, in recent years,
the stock market has experienced extreme levels of price and volume volatility,
particularly in the securities of smaller companies. These fluctuations have had
a substantial effect on the market prices of many companies, often unrelated to
the operating performance of the specific companies. Similar events in the
future may adversely affect the market prices of the securities.
15. Limitations on Use of Net Operating Loss Carry Forwards. As of December
31, 1995, the Company had net operating loss carry forwards of approximately
$4,600,000, in respect of future federal income taxes, and approximately
$2,300,000, in respect of future Delaware and Florida franchise taxes, which
expire in the years 2009 and 2010, respectively, but may be utilized in the
interim period until expiration. The Company's use of its net operating loss
carry forwards to offset taxable income in any period subsequent to the
consummation of its 1992 initial offering may be subject to certain annual
limitations as a result of an "ownership change" (as defined in Section 382 of
the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder), which may have occurred or which may recur in the
future. If one or more "ownership changes" is deemed to have occurred, there can
be no assurance as to the specific amount of net operating loss carry forwards
available in any post-change year since the calculation is based upon a
fact-dependent formula.
16. Shares Eligible for Future Sale; Registration Rights of Certain
Stockholders. Of the 7,837,787 shares of Common Stock outstanding as of the date
of this Prospectus, 4,250,884 shares are "restricted securities" (as that term
is defined under Rule 144 promulgated under the Securities Act). Such securities
are eligible for resale under Rule 144. The Company also has outstanding
warrants and options to purchase, and debt convertible to, an aggregate of
6,863,025 shares of Common Stock. The Company intends to file a separate
registration statement to permit the sale of substantially all of the restricted
securities of the Company, as well as the shares issuable upon the election or
conversion of warrants, options and convertible debt. Under Rule 144, a person
who has held restricted securities for a period of two years may, every three
months, sell, in ordinary brokerage transactions or in transactions directly
with a market maker, an amount equal to the greater of 1% of the Company's
then-outstanding common stock or the average weekly trading volume during the
four calendar weeks prior to such sale. Rule 144 also permits the sale of shares
without any quantity limitations by a person who is not an affiliate of the
Company and has satisfied a three-year holding period. Sales in the future of
restricted securities under Rule 144 or pursuant to any registration statement
that may be filed with respect to the shares of Common Stock currently
outstanding may depress the price of the Common Stock in any market on which
such security is traded. To the extent any of the unregistered shares of Common
Stock or underlying shares of Common Stock are registered, such shares may be
sold at any time by the holders thereof or their transferees as long as there is
a current prospectus filed with the Securities and Exchange Commission covering
such securities. No prediction can be made as to the effect, if any, that sales
of such shares will have on the market prices prevailing from time to time.
Nevertheless, sales (or availability for sale) of such shares or the shares of
Common Stock underlying the warrants, options and convertible debt, or even the
existence of the right to exercise or convert the warrants, options or
convertible debt, may depress the market price of the Common Stock at which such
shares are traded and could impair the Company's ability to raise capital
through the sale of its equity securities.
17. Recent Changes in Management. The Company has recently undergone
certain changes in personnel, including the
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termination of certain key personnel engaged in executive, marketing and
managerial capacities. In addition, certain of the Company's executive officers
and directors recently joined the Company. The success of the Company is largely
dependent upon its ability to hire and retain qualified management, technical,
marketing, financial and other personnel. There can be no assurance that the
Company will be able to hire or retain such necessary personnel or that any such
personnel will become sufficiently familiar with the Company's operations or
customer base in a timely manner. Failure to hire such personnel could have a
material adverse effect on the Company.
18. Delaware Anti-Takeover Law. The Company, a Delaware corporation, is
subject to the General Corporation Law of the State of Delaware, including
Section 203, an anti-takeover law enacted in 1988. In general, the law prohibits
a public Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder unless: (i)
prior to such date, the board of directors approved the business combination; or
(ii) upon becoming an interested stockholder, the stockholder then owns at least
85% of the voting securities, as defined in Section 203; or (iii) subsequent to
such date, the business combination is approved by both the board of directors
and the stockholders. "Business combination" is defined to include mergers,
asset sales and certain other transactions with an "interested stockholder." An
"interested stockholder" is defined as a person who, together with affiliates
and associates, owns (or, within the prior three years, did own) 15% or more of
a corporation's voting stock. Although Section 203 permits the Company to elect
not to be governed by its provisions, to date, the Company has not made this
election. As a result of the application of Section 203, potential acquirors of
the Company may be discouraged from attempting to effect an acquisition
transaction with the Company, thereby possibly depriving holders of the
Company's securities of certain opportunities to sell or otherwise dispose of
such securities at above-market prices pursuant to such transactions.
19. No Cash Dividends. To date, the Company has not paid any cash dividends
on its Common Stock and does not expect to declare or pay any such dividends in
the foreseeable future. Moreover, the Company is currently prohibited from
paying dividends on its Common Stock pursuant to the terms of its line of credit
with Congress, and otherwise, and does not anticipate that it will be able to,
for this and other reasons, pay any such dividends in the foreseeable future.
20. Requirements for Continued Listing on NASDAQ; Risk of Low-Priced
Securities. The Common Stock is listed on the NASDAQ SmallCap Market (the
"SmallCap Market"). The National Association of Securities Dealers, Inc. has
established certain standards for the initial listing and continued listing of a
security on the SmallCap Market. The standards for initial listing require,
among other things, that an issuer have total assets of $4,000,000 and capital
and surplus of at least $2,000,000; that the minimum bid price for the listed
securities be $3.00 per share; and that the minimum market value of the public
float (the shares held by non-insiders) be at least $2,000,000. For continued
listing, an issuer must, among other things, maintain at least $2,000,000 in
total assets, a $200,000 market value of the public float, and at least
$1,000,000 in total capital and surplus. In addition, continued listing requires
a minimum of two market makers and a minimum bid price of $1.00 per share. A
deficiency in the market value of the public float or the bid price maintenance
standard will be deemed to exist if the issuer fails the individual stated
requirement for ten consecutive trading days. If an issuer falls below the bid
price maintenance standard, it may remain on NASDAQ if the market value of the
public float is at least $1,000,000 and the issuer has $2,000,000 in equity.
There can be no assurance that the Company will continue to satisfy requirements
for maintaining a NASDAQ listing. If the Company's securities were excluded from
NASDAQ, it would adversely affect the prices of such securities and the ability
of holders to sell them, and the Company would be required to comply with, among
other things which may be at issue, the initial listing requirements to be
relisted on NASDAQ. Delisting may restrict investors' interest in the Company's
securities and materially adversely affect the trading market and prices for
such securities and the Company's ability to issue additional securities or to
secure additional financing. It is anticipated that if the Company's securities
are delisted, trading, if any, in such securities would be conducted in the
over-the-counter market on the National Association of Securities Dealers, Inc.
OTC Electronic Bulletin Board established for securities that do not meet the
NASDAQ listing requirements or quoted in what are commonly referred to as the
"pink sheets." As a result, an investor may find it more difficult to dispose
of, or to obtain accurate price quotations and volume information concerning,
the Common Stock. Moreover, if the Common Stock is delisted from the SmallCap
Market because trading price of the Common Stock is less than $1.00 per share,
such securities might be subject to the low priced security or so-called "penny
stock" rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally defined as investors with a net
worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with a spouse). For any transaction involving a penny stock, unless
exempt, the rules require, among other things, the delivery, prior to the
transaction, of a disclosure schedule required by the Securities and Exchange
Commission relating to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Although the
Company believes that the
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<PAGE>
Common Stock will not be defined as a penny stock due to their listing on The
NASDAQ SmallCap Market, in the event such securities subsequently become
characterized as a penny stock, the market liquidity for such securities could
be severely affected. In such an event, the regulations relating to penny stocks
could limit the ability of broker-dealers to sell such securities and, thus, the
ability of purchasers in this offering to sell their shares of Common Stock in
the secondary market.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
by the Consultant.
SELLING STOCKHOLDER AND PLAN OF DISTRIBUTION
An aggregate of thirty-five thousand (35,000) shares of Common Stock may be
offered and sold pursuant to this Prospectus by the Consultant. The Company has
agreed to register such shares under the Securities Act and to pay all expenses
in connection therewith (other than brokerage commissions and fees and expenses
of counsel). Such shares have been included in the Registration Statement of
which this Prospectus forms a part. The Consultant has never held any position
or office with the Company or had any other material relationship with the
Company.
The following table sets forth certain information with respect to the
Consultant:
===============================================================================
Beneficial Ownership
of Shares of Common Shares to be Sold in Shares Beneficially
Consultant Stock the Owned After the
Prior to Sale (1) Offering Offering
- -------------------------------------------------------------------------------
John Flynn 35,000 35,000 0
===============================================================================
The Common Stock held by the Consultant may be offered and sold from time
to time as market conditions permit in the over-the-counter market, or
otherwise, at prices and terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions which may be below the
prevailing market price. The shares offered hereby may be sold by one or more of
the following methods, without limitation: (a) a block trade in which a broker
or dealer so engaged will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the Consultant
may arrange for other brokers or dealers to participate. Such broker or dealers
may receive commissions or discounts from the Consultant or selling stockholders
in amounts to be negotiated. Such brokers and dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales.
INDEMNIFICATION
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit director's liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not made in good faith or which involve intentional misconduct of
knowing violations of law; (iii) liability for dividends paid or stock
repurchased or redeemed in violation of the Delaware General Corporation Law; or
(iv) any transaction from which the director derived an improper personal
benefit. Section 102(b)(7) does not authorize any limitation on the ability of
the corporation or its stockholders to obtain injunctive relief, specific
performance or other equitable relief against directors.
-11-
<PAGE>
Article SIXTH of the Company's Amended Certificate of Incorporation and
Article X of the Company's By-laws provide that all persons who the Company is
empowered to indemnify pursuant to the provisions of Section 145 of the General
Corporation law of the State of Delaware (or any similar provision or provisions
of applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The foregoing right of indemnification is not
deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
Article SEVENTH of the Company's Amended Certificate of Incorporation
provides that no director of the Company will be personally liable to the
Company or its stockholders for any monetary damages (i) for breaches of
fiduciary duty of loyalty to the Company or its stockholders' (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the General Corporation of Law of
the state of Delaware; or (iv) for any transaction from which the director
derived an improper personal benefit.
Insofar as indemnification for liabilities under the Act may be permitted
to directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Tenzer Greenblatt LLP, New York, New York.
EXPERTS
The consolidated financial statements for the year ended December 31, 1995
incorporated by reference in this Prospectus have been audited by BDO Seidman,
LLP, independent certified public accountants, to the extent and for the period
set forth in their report incorporated herein by reference, and are incorporated
herein by reference in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements for the year ended December 31, 1994
incorporated by reference in this Prospectus have been audited by Marks Shron &
Company, LLP, independent certified public accountants, to the extent and for
the period set forth in their report incorporated herein by reference, and are
incorporated herein by reference in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission, a registration statement (the
"Registration Statement"), under the Act with respect to the securities offered
by this Prospectus. This Prospectus, filed as part of such Registration
Statement, does not contain all of the information set forth in, or annexed as
exhibits to, the Registration Statement, certain portions of which have been
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and this offering, reference is
made to the Registration Statement, including the exhibits filed therewith,
which may be inspected without charge at the Office of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of the Registration Statement may
be obtained from the Commission at its principal office upon payment of
prescribed fees. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete and, where the
contract or other document has been filed as an exhibit to the Registration
Statement, each statement is qualified in all respects by reference to the
applicable document filed with the Commission.
-12-
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by the Company, the Selling
Stockholders or any Underwriter. This Prospectus does not constitute an offer to
sell or the solicitation of an offer to buy and security other than the Common
Stock offered by this Prospectus, or an offer to sell or a solicitation of an
offer to buy any security by any person in any jurisdiction in which such offer
or solicitation would be unlawful. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, imply that the
information in this Prospectus is correct as of any time subsequent to the date
of this Prospectus.
-----------------
TABLE OF CONTENTS
Page
----
Available Information.................... 3
Information Incorporated by Reference.... 4
Prospectus Summary....................... 5
Risk Factors............................. 6
Use of Proceeds.......................... 11
Selling Stockholder and Plan of
Distribution.......................... 11
Indemnification ......................... 11
Legal Matters............................ 12
Experts.................................. 12
Additional Information................... 12
RT INDUSTRIES, INC.
----------------------
PROSPECTUS
----------------------
October 30, 1996
----------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed by the registrant with the
Securities and Exchange Commission (the "Commission") are incorporated by
reference in this Registration Statement:
(1) The registrant's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995;
(2) The registrant's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996;
(3) The registrant's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1996;
(4) The registrant's Form 10-C dated January 20, 1996;
(5) The registrant's Form 10-C dated March 29, 1996;
(6) The registrant's Form 10-C dated April 19, 1996;
(7) The registrant's Form 10-C dated May 3, 1996; and
(8) The description of the registrant's common stock, par value $.001 per
share (the "Common Stock"), contained in the registrant's Registration Statement
on Form S-18 filed with the Commission on April 8, 1992 (Registration No.
33-47037-A); and
-3-
<PAGE>
(9) All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the respective date of filing of such documents. Any
statement contained in a document incorporated by reference herein is modified
or superseded for all purposes to the extent that a statement contained in this
Registration Statement or in any other subsequently filed document which is
incorporated by reference modifies or replaces such statement.
Item 4. Description of Securities.
The class of securities to be offered is registered under Section 12 of the
1934 Securities and Exchange Act.
Item 5. Interests of Named Experts and Counsel.
The legality of the Common Stock offered hereby will be passed upon for the
registrant by the law firm of Tenzer Greenblatt LLP.
Item 6. Indemnification of Directors and Officers.
Sections 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit director's liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not made in good faith or which involve intentional misconduct of
knowing violations of law; (iii) liability for dividends paid or stock
repurchased or redeemed in violation of the Delaware General Corporation Law; or
(iv) any transaction from which the director derived an improper personal
benefit. Section 102(b)(7) does not authorize any
-4-
<PAGE>
limitation on the ability of the corporation or its stockholders to obtain
injunctive relief, specific performance or other equitable relief against
directors.
Article SIXTH of the registrant's Certificate of Incorporation, as amended
and restated, and Article X of the registrant's By-laws provide that all persons
who the registrant is empowered to indemnify pursuant to the provisions of
Section 145 of the General Corporation Law of the State of Delaware (or any
similar provision or provisions of applicable law at the time in effect), shall
be indemnified by the registrant to the full extent permitted thereby. The
foregoing right of indemnification shall not be deemed to be exclusive of any
other rights to which those seeking indemnification may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors, or
otherwise.
Article SEVENTH of the registrant's Certificate of Incorporation, as
amended and restated, provides that no director of the registrant shall be
personally liable to the registrant or its stockholders for any monetary damages
for breaches of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the registrant or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the General Corporation Law
of the State of Delaware; or (iv) for any transaction from which the director
derived an improper personal benefit.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit No. Description
----------- -----------
4.1 Instruments Defining Rights of
Securities Holders (incorporated by
reference from Registration Statement on
Form S-18 filed with the Commission on
April 8, 1992 (SEC File No. 33-47037-A))
5.1 Opinion of Tenzer Greenblatt
LLP
-5-
<PAGE>
10.1 Form of Consulting Agreement
pursuant to which securities
offered hereunder were granted
24.1 Consent of BDO Seidman, LLP
24.2 Consent of Marks Shron &
Company, LLP
24.3 Consent of Tenzer Greenblatt
LLP (included in Exhibit 5.1)
25.1 Powers of Attorney (included on
Page 8 of this Registration
Statement)
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
-6-
<PAGE>
(c) 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.
-7-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sanford, State of Florida, on this 28th day of
October, 1996.
RT INDUSTRIES, INC.
-----------------------------
(Registrant)
By: /s/ John Kenney
--------------------------
John Kenney, President
Each person whose individual signature appears below hereby authorizes John
Kenney as his true and lawful attorney-in-fact with full power of substitution
to execute in the name and on behalf of each person, individually and in each
capacity stated below, and to file, any and all amendments to this Registration
Statement, including any and all post-effective amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ------------- ----- ----
/s/ John Kenney Chairman of the October 28, 1996
- --------------- Board, President and
John Kenney Director
/s/ David Love Director October 28, 1996
- --------------
David Love
/s/ Mandel Sherman Director October 25, 1996
- ------------------
Mandel Sherman
/s/ Alfred H. Paul Chief Financial Officer October 28, 1996
- ------------------
Alfred H. Paul
-8-
<PAGE>
Exhibit Index
-------------
Exhibit No. Description
- ----------
Page
----
4.1 Instruments Defining Rights of Securities
Holders (incorporated by reference from
Registration Statement on Form S-18 filed with
the Commission on April 8, 1992 (SEC File No.
33-47037-A))
5.1 Opinion of Tenzer Greenblatt LLP
10.1 Form of consulting agreement pursuant to which
securities offered hereunder were granted
24.1 Consent of BDO Seidman, LLP
24.2 Consent of Marks Shron &
Company, LLP
24.3 Consent of Tenzer Greenblatt LLP (included in
Exhibit 5.1)
25.1 Powers of Attorney (included
on Page 8 of the
Registration Statement)
October 30, 1996
Securities Transfer Corporation
16910 Dallas Parkway, Suite 100
Dallas, TX 75248
Attention: Compliance Department
Re: RT Industries, Inc.
Gentlemen:
Our opinion has been requested with respect to the issue and sale by RT
Industries, Inc. (the "Company") of thirty-five thousand (35,000) shares of
Common Stock of the Company, par value $.001 per share (the "Shares"), to John
Flynn.
John Flynn has represented that he is acquiring the Shares for his own
account for investment purposes only and not with a view to the sale or
distribution thereof. With respect to the representations of John Flynn as to
factual matters, we have not undertaken any independent investigation to
determine the existence or absence of such factual conditions or circumstances,
and have relied exclusively upon the representations of and communications of
John Flynn.
In rendering our opinion, we have examined originals, or copies, certified
or otherwise indentified to our satisfaction of such corporate records of the
Company, certificates of public officials, certificates of officers of the
Company and other documents as we deemed necessary as a basis for the opinion
hereinafter expressed. In such examination, we have assumed the authenticity of
all documents submitted to us as originals and the conformity with originals of
all documents submitted as certified or otherwise satisfactorily indentified.
Based on the foregoing, it is our opinion that the Shares have been issued
in a transaction exempt from registration under the Securities Act of 1933, as
amended (the "Act"), pursuant to Section 4(2) promulgated thereunder.
<PAGE>
Securities Transfer Corporation
October 30, 1996
Page 2
You may therefore issue a certificate representing said Shares to John
Flynn, provided that such certificate contains the following restrictive legend
regarding transfers under the Act:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933,
as amended (the "Act"). The shares may not be sold or transferred in the
absence of such registration or an exemption therefrom under the Act."
You are also instructed to place stop transfer orders against the Shares
regarding transfers under the Act.
This opinion is solely for the benefit of the addressee hereof and may not
be relied upon in any manner by any other person.
Sincerely,
TENZER GREENBLATT LLP
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, made as of October __, 1996 by and between R.T.
INDUSTRIES, INC., a Delaware corporation, with offices located at 1875 E. Lake
Mary Boulevard, Sanford, Florida 32773 (the "Company") and JOHN FLYNN, an
individual residing at 920 Silvermine Road, New Canaan, CT 06840 ("Consultant").
WHEREAS, Consultant possesses knowledge of the industry in which the
Company operates and routinely provides his services to businesses in the
industry; and
WHEREAS, the Company wishes to have Consultant provide such assistance in
connection with the analysis and identification of possible acquisition targets
in the industry.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein contained, the parties hereto, intending to be
legally bound, hereby agree that the Company has retained Consultant as a
consultant upon the terms and conditions set forth below.
1. Duties of Consultant.
(a) Consultant shall provide the Company with financial advisory
services pertaining to the identification and analysis of other persons,
corporations and business entities as possible acquisition targets for the
Company, including without limitation: i) familiarizing himself to the
extent appropriate with the business operations, properties, financial and
other condition and prospects of the Company and any prospective target
entity; ii) developing lists and reports of potential acquisition targets
for the Company; iii) advising and assisting management of the Company in
presentations to the Board of Directors of the Company concerning general
acquisition strategy, potential targets and proposed transactions; iv)
advising and assisting the Company in developing general negotiating
strategies for accomplishing various transactions, including cooperating
with any third party advisor to the company with respect to pricing issues
and rendering of a fairness opinion and other terms and conditions to be
incorporated by the Company in its negotiations strategy; and v) rendering
such other financial advisory services as may from time to time be agreed
upon by Consultant and the Company.
(b) The services described herein shall be rendered by Consultant
without any direct supervision by the Company and at such time and place
and in such manner (whether by conference, telephone, letter, or otherwise)
as Consultant may determine.
<PAGE>
2. Compensation.
(a) As full compensation for Consultant's services hereunder, the
Company hereby irrevocably grants to Consultant, and Consultant accepts, an
aggregate amount of thirty-five thousand (35,000) shares of the capital
stock of the Company (the "Shares"), which Shares the Company agrees are
for services having been performed by the Consultant and earned as of the
date hereof.
(b) the Company agrees to deliver a certificate representing the
Shares and cause such Shares to be registered with the Securities and
Exchange Commission, by filing a registration statement pursuant to Form
S-8, as soon as practicable.
3. Representations and Warranties of Consultant. Consultant represents,
warrants and covenants to the Company as follows:
(a) That none of the Shares which may be issued to him pursuant to
this Agreement will be registered under the Securities Act of 1933, as
amended (the "Act") and that the Shares acquired by Consultant pursuant to
this Agreement are being and will be acquired for Consultant's own account
for investment and not with a view to the sale or distribution thereof; and
that no representation or warranty of any nature respecting the Acquisition
has been made to Consultant upon which Consultant relied in connection with
such Acquisition or which has induced Consultant in any manner in respect
thereof.
(b) That Consultant shall not sell, transfer, hypothecate or otherwise
dispose of such Shares in any manner whatsoever which will violate the Act
or the rules and regulations of the Securities and Exchange Commission;
that all Shares shall bear a restrictive legend setting forth the matters
contained in this paragraph, and that "stop transfer" instructions may be
given to the Company's transfer agent in respect of all Shares, and that if
so requested by the Company at the time of issuance of any Shares,
Consultant will execute such documents as the Company may reasonably
require in respect of the warranties, representations and covenants made by
Consultant in this paragraph.
(c) That all Shares must be held indefinitely unless such Shares are
subsequently registered under the Act or an exemption from such
registration becomes available; any casual sale of such Shares made in
reliance upon Rule 144 of the Act (the "Rule") can only be made in limited
amounts in accordance with the terms and conditions of the Rule; and (iii)
in the case of stock to which the Rule is not applicable, compliance with
Securities Act Regulation A or some other disclosure exemption will be
required.
-2-
<PAGE>
4. Representations, Warranties and Additional Covenants of the Company. The
Company represents, warrants and covenants that:
(a) The Company will cooperate with the Consultant by making available
such information as may be appropriate in making a reasonable investigation
of the Company and its affairs. The Company shall provide, at its expense,
credit or similar reports on such persons as we shall reasonably request,
as well as information on the Company which might be shown to candidates in
advance of transactional closure.
(b) The Company has the authority to enter into and to perform this
Agreement.
5. Term/Termination. Nothing contained herein shall be construed to alter
the fact that Consultant is retained on an "at will" basis, meaning that
Consultant may be terminated by the Company at any time for any reason or for no
reason at all.
6. Relationship. In providing services hereunder, Consultant is acting as
an independent contractor and not as an agent, employee, or other affiliate of
the Company and nothing herein shall be construed as giving rise to a
relationship other than as an independent contractor, nor shall Consultant
represent himself to be acting on behalf of the Company.
7. Employees of Consultant. Any employee, agent and independent contractors
employed or retained from time to time, by the Consultant to perform services of
the Consultant pursuant to this Agreement is entirely within the discretion of
the Consultant and the Consultant need not advice the Company of such
individuals. The consultant acknowledges and covenants that the Consultant shall
be deemed the employer of any such employee, agent or independent contractor. As
such, the Consultant shall be responsible to secure and pay any salaries, fees
or benefits (including, but not limited to, health insurance, vacation or
holiday pay, sick leave or disability insurance coverage of whatever nature)
provided to such individuals or entities as well as be responsible for all
necessary insurance and payroll deductions for such persons, including, but not
limited to, Federal, state, and local income taxes, Social Security taxes,
Unemployment Compensation taxes, Workers' Compensation coverage, etc. with
respect to such individuals or entities.
8. Indemnification.
(a) Consultant agrees to defend, indemnify, and hold the Company and
its officers and directors ("Indemnitees") harmless from and against any
claim, suit, or action and to indemnify and hold harmless the Indemnitees
from, and pay on behalf of
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<PAGE>
each of the Indemnitees, any judgment, damages, or other liability
(including reasonable legal fees and other expenses in connection with
investigating or defending any such loss, claim, suit, action, or
liability) imposed upon or incurred by any of them where any of the
foregoing arise, directly or indirectly, from or in connection with
Consultant performing its services under this Agreement; provided, however,
that Consultant shall not be required to indemnify any such person or
entity to the extent that any such claim, suit, action, damages, or
liability arises out of either (i) the bad faith or gross negligence of the
person seeking indemnification or (ii) the breach of the Company's
representations and warranties hereunder.
(b) In the event that the Consultant is named in an action against the
Company arising from (i) actions of the Company's directors, officers or
management which actions are in violation of any federal, state, or local
laws or (ii) breach by the Company or its directors, officers or management
of any representations or warranties hereunder, the Company agrees to
defend, indemnify, and hold the Consultant harmless from and against any
such action and to pay on behalf of the Consultant any judgment, damages,
or other liability (including reasonable legal fees and other expenses in
connection with investigating or defending any such loss, claim, suit,
action, or liability) imposed upon or incurred by the Consultant as a
result of any such action; provided, however, that the Company shall not be
required to indemnify the Consultant to the extent that any such claim,
suit, action, damages, or liability arises out of either (x) the bad faith
or gross negligence of the Consultant or (y) the breach of the Consultant's
representations and warranties hereunder.
(c) Anything in this Agreement to the contrary notwithstanding, the
aggregate liability of either party under this Section 8 shall in no event
exceed, in the aggregate, the amount of compensation received by the
Consultant under Section 2 hereof.
(d) Notwithstanding any termination of this Agreement, the terms of
Sections 8, 9 and 10 hereof shall survive termination and remain in full
force and effect.
9. Notice and Defense.
(a) Each party entitled to indemnification pursuant to Section 8
hereof (each, an "Indemnified Party") shall give notice to each party to
provide indemnification (each, an "Indemnifying Party") promptly after such
Indemnified Party has knowledge of any claim for Loss as to which indemnity
may be sought, and, in the event of any claim or demand asserted against an
Indemnified Party by a third party, shall permit the Indemnifying Party to
assume the defense of any such claim (and litigation resulting therefrom).
The Indemnifying Party shall have ten (10) business days after the
aforesaid notice is given (i) to dispute its liability for the Loss being
claimed by the Indemnified Party and (ii) to elect, by written notice given
to the Indemnified Party, to undertake, conduct and control, through
counsel of its own choosing (subject to the consent of the Indemnified
Party, which consent is not to be unreasonably withheld or delayed) and at
its sole risk and expense, the good faith settlement or defense of such
claim, and the
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<PAGE>
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith; provided that: (i) all settlements shall be made only upon the
prior reasonable consultation with the Indemnified Party and the prior
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed and (ii) the Indemnified Party shall be
entitled to participate in such settlement or defense through counsel
chosen by the Indemnified Party (provided that the fees and expenses of
such counsel shall be borne by the Indemnified Party). The Indemnified
Party shall furnish such information regarding himself or the claim in
question as the Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(b) So long as the Indemnifying Party is contesting any such claim in
good faith, the Indemnified Party shall not pay or settle any such claim;
provided, however, that notwithstanding the foregoing, the Indemnified
Party shall have the right to pay or settle any such claim at any time,
provided that in such event they shall waive any right of indemnification
therefor by the Indemnifying Party.
(c) If the Indemnifying Party fails timely to elect to undertake the
good faith defense or settlement of the claim as aforesaid, or if the
Indemnifying Party fails to proceed with the good faith defense or
settlement of the matter after making such election, then, in either such
event, the Indemnified Party shall have the right to contest, settle or
compromise (provided that all settlements or compromises require the prior
reasonable consultation with the Indemnifying Party and the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed) the claim at their exclusive discretion, at the risk
and expense of the Indemnifying Party. With respect to any dispute as to
the Indemnifying Party's liability for the Loss, the Indemnified Party may
proceed against such Indemnifying Party simultaneously with the third party
claim or demand and need not await the outcome of such third party claim or
demand before initiating any such proceeding.
10. Reimbursement and Subrogation.
(a) Subject to the provisions of Section 8, 9 and 10 hereof, upon a
determination of the amount of any Loss for which indemnification is sought
thereunder, either by payment for the Loss claimed or by entry of a final
judgment, order or decree (after exhaustion or expiration of appeal rights)
by a court of competent jurisdiction, and of the Indemnifying Party's
liability for such Loss under this Agreement, then the Indemnifying Party
shall forthwith, upon written notice from the Indemnified Party, reimburse
such Indemnified Party for the amount of such Loss. To the extent that any
Loss is paid hereunder, the Indemnified Party shall do all things
reasonably requested by the Indemnifying Party to subrogate to the
Indemnifying Party any rights of recovery (including rights to insurance or
indemnification from persons other than the Indemnifying Party) which the
Indemnified Party may have with respect to the Loss.
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<PAGE>
(b) If such amount is not paid forthwith, then the Indemnified Party
may, at its option, take legal action against the Indemnifying Party for
reimbursement in the amount of its Loss together with any costs (including
reasonable attorney's fees) to bring such legal action.
11. Confidentiality.
(a) In view of the fact that Consultant's work as a consultant to the
Company will bring it into close contact with many confidential affairs of
the Company, including matters of a business and financial nature such as
information about costs, profits, markets, sales, and any other information
not readily available to the public, and plans for future developments,
Consultant agrees on its own part and with respect to each and every
employee, agent, and independent contractors of Consultant who will, from
time to time, be designated by Consultant to perform services pursuant to
this Agreement:
i) To keep secret all confidential matters of the Company, and
not to disclose them to anyone outside Consultant (including such of
its officers, directors, and employees who have a need to know such
information to carry out the services contemplated herein), either
during or after this engagement with the Company, except with the
Company's written consent; and
ii) To deliver promptly to the Company on termination of this
Agreement, or at any time the Company may so request, all memoranda,
notes, records, reports, and other documents (and all copies thereof)
relating to the Company's business, which it may then possess or have
under its control.
(b) Consultant's obligations regarding the Confidential Information
will not apply to information (i) already known by Consultant prior to
disclosure of such information by the Company; (ii) already publicly known
at the time of its disclosure hereunder, or which becomes hereafter
publicly known otherwise than through an act of Consultant; (iii) already
known to Consultant at said time as a result of its own prior knowledge or
activities; (iv) rightly obtained at any time by Consultant from other
sources without restrictions in respect to disclosure or use; or (v)
subpoenaed by law enforcement officials with respect to any criminal
investigation or pursuant to any legal proceeding.
12. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York and the parties agree to
submit themselves to the jurisdiction of the Courts in the State of New York,
County of New York, which shall be the sole tribunals in which the parties can
initiate and maintain legal proceedings against the other arising from any
dispute hereunder.
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<PAGE>
13. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed duly given to a party
hereto when delivered in person or on the third business day after being mailed
by registered or certified mail, return receipt requested, postage prepaid or on
the date delivered if transmitted by courier service providing confirmation of
delivery at the respective addresses first above written (or to such other
address as a party shall have furnished in writing in accordance with the
foregoing provisions). Notice may be sent to the parties hereto by telefax, with
confirmatory hard copy to be sent by first class mail, with such notice deemed
to be given at the date and time of transmission of such telefax.
14. Assignment and Termination. This Agreement shall not be assignable by
any party for any reason whatsoever without the prior written consent of the
other party.
15. Amendment; Waiver. This Agreement may not be amended except by written
agreement signed by the parties hereto. No waiver by any party of any provision
or condition of this Agreement shall be deemed a waiver by such party of similar
or dissimilar provisions and conditions at the same time or any prior or
subsequent time.
16. Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
R.T. INDUSTRIES
By:
John Kenney, President
JOHN FLYNN
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CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
RT Industries, Inc.
Sanford, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Staement of our report dated March 15,
1996, except as to Note 11, which is as of March 27, 1996, relating to the
consolidated financial statements of RT Industries, Inc. appearing in the
Company's Annual Report on Form 10KSB for the year ended December 31, 1995. Our
report contains an explanatory paragraph regarding the Company's ability to
continue as a going concern.
We also consent to the reference to us under the caption "Experts", in the
Prospectus.
BDO Seidman, LLP
/s/
BDO Seidman, LLP
Orlando, Florida
October 29, 1996
RT Industries, Inc.
We hereby consent to the incorporation by reference in this Registration
Statement of RT Industries Inc. on Form S-8 of our Report dated March 4, 1995,
except for Notes referred to in such report, appearing in the Company's 1995
Annual Report on Form 10-KSB for the year ended December 31, 1994. We also
consent to the reference to our Firm under the caption "Experts" in such
Registration Statement.
/s/ Marks Shron & Company LLP
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Marks Shron & Company LLP
Certified Publis Accountants
Great Neck, New York
October 29, 1996
