U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
Commission file number: 0-5887
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RTI INC.
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(Name of small business issuer in its charter)
New York 11-2163152
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
108 Lake Denmark Road, Rockaway, New Jersey 07866
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (201) 625-8400
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Securities registered under Section 12(b) of the Exchange Act: None
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.08 par value
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(Title of Class)
Check whether the issuer (l) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year - $4,352,027.
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days.
Approximately $2,620,500, based (a) for the Company's Common Stock, on
the published sale price ($2.50) on The Nasdaq Small-Cap Market on
March 15, 1996, and (b) for the Company's voting preferred stock, on
the sales price thereof on March 11, 1996.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of March
15, 1996 - 1,076,888 shares
Documents Incorporated by Reference: None.
Transitional Small Business Disclosure Format. Yes No X
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PART I
Item 1. Description of Business.
General
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RTI Inc., a New York corporation ("RTI"), with a wholly-owned
subsidiary (collectively, the "Company"), is engaged in supplying gamma
irradiation services. RTI was incorporated in August 1968.
The Company's irradiation services are supplied principally to
manufacturers whose products are prepackaged before delivery to the
Company. The Company utilizes Cobalt-60 as the source of its gamma
radiation.
The Company operates three irradiation facilities, which are
located in Rockaway, New Jersey (the "Rockaway Facility"), Alamance County,
North Carolina (the "North Carolina Facility") and Salem, New Jersey (the
"Salem Facility").
At December 31, 1995, the Company had approximately 220
customers, none of which accounted for 10% or more of the Company's 1995
revenues. The Company's top ten customers accounted for less than half of
the Company's revenues in 1995. During 1995, approximately 58% of the
Company's irradiation processing volume consisted of medical products
(medical devices and disposable medical supplies) and the balance of
cosmetics and other consumer products.
On February 26, 1996, the Company entered into an asset
acquisition agreement with SteriGenics International pursuant to which,
subject to various conditions including due diligence and approval by the
Company's shareholders, the Company will sell substantially all of its
assets (other than cash and its Rockaway, New Jersey property). See
"Proposed Transaction with Sterigenics".
Gamma Radiation Processing
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Gamma radiation accompanies the spontaneous disintegration of
radioactive materials and has proven useful for a variety of commercial
industrial applications, the most prevalent of which are the sterilization
of medical products and the sanitization of consumer products and spices.
Cobalt-60, which is relatively safe and easy to use, is the radioactive
material used for the commercial processing of the products irradiated by
the Company.
Scientifically calculated doses of gamma radiation are effective
in eliminating the viability of virtually all types of micro-organisms.
Materials exposed to gamma radiation do not accumulate radioactive energy
as a result of such exposure.
Gamma radiation has many advantages over other methods of
sterilization. Irradiation is not dependent upon ambient temperature,
pressure or humidity, thereby limiting costly variables which must be
controlled in other processes, requires no post-quarantine hold time and
produces no toxic residues in the product irradiated. In addition, gamma
radiation is able to penetrate substantially all forms of packaging
materials, including glass and metal containers, and sterilize or sanitize
the contents in a predictable manner according to pre-determined
specifications.
All products processed by the Company have a pre-determined
minimum and maximum absorbed dose authorized by the customer. Products
received by the Company are scheduled for irradiation with an exposure time
based upon the customer's pre-determined minimum and maximum
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absorbed dose. The customer's products are loaded into irradiation
carriers or onto specially designed pallet cars, which transport the
products into a shielded irradiation room for a calculated exposure to
gamma radiation. The Company maintains a rigorous quality control program,
which documents and certifies the dose received. A variety of technical
controls and detailed internal procedures minimize the possibility that a
processed product will not meet the customer's pre-determined absorbed dose
specifications. The Company's arrangements with its customers generally do
not limit the Company's legal liability for inadvertent processing errors.
Cobalt-60
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The Company has obtained the Cobalt-60 used in its operations
from either Nordion International Inc. or Amersham International plc and
its U.S. affiliates. Cobalt-60 decays at the rate of approximately 12.3% a
year and has a "half-life" of 5.27 years. The Company must periodically
replenish decayed Cobalt-60 in order to maintain its desired level of
processing capability. In 1993, the Company entered into a lease purchase
agreement to obtain from one of such suppliers, through 1998, all Cobalt-60
it acquires, up to an agreed amount per year, if competitively priced. The
Company also has obtained Cobalt-60 through direct purchase, normally
paying for such Cobalt-60 in negotiated installments. The Company believes
it is unlikely that there will be an interruption in the supply of
Cobalt-60 in the foreseeable future.
Marketing and Sales
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The Company sells its services primarily on a current purchase
order basis. A major portion of the Company's business is with customers
which have been served by the Company for more than one year, and the
Company has long-term processing arrangements with several of its
customers. To assist in its marketing efforts, the Company offers
processing information, technical guidance and test irradiation to
prospective and current customers.
Food Irradiation
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The sale of irradiated food products in the United States has
been, and continues to be, an area surrounded by debate and controversy.
Except for the irradiation of spices, the Company has not received any
significant revenues from the commercial irradiation of foods distributed
in the United States. The Company has no reason to believe that the
irradiation of food products will become a viable commercial enterprise in
the United States within the foreseeable future.
Government Regulations
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The business activities of the Company are regulated by the U.S.
Nuclear Regulatory Commission (the "NRC"), state agencies, the U.S. Food
and Drug Administration (the "FDA") and the U.S. Department of Agriculture
(the "USDA"). The Company maintains all licenses and permits necessary to
conduct its current business and believes that it will be able to continue
to do so in the future. The loss of any of the Company's licenses or
permits could have a material adverse effect on the Company's operations.
The Company's facilities are subject to periodic inspection by
various regulatory agencies. During the past three years, no enforcement
actions have been instituted by any federal or state agency against the
Company. The Company's licenses of its facilities are in good standing.
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Environmental Matters
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The Company is subject to regulation under various federal and
state laws which permit regulatory authorities to compel (or perform)
cleanup of environmental contamination.
In 1982, the New Jersey Department of Environmental Protection
(the "NJDEP") commenced an action against the Company alleging violations
of the New Jersey Spill Compensation and Control Act and the New Jersey
Water Pollution Control Act with respect to the Company's Rockaway
property. For further information concerning environmental matters related
to the Rockaway property and the effects thereof on the Company's financial
condition and results of operations, see Item 3 - "Legal Proceedings--New
Jersey Environmental Proceedings" and Item 6 - "Management's Discussion and
Analysis or Plan of Operation". See also Item 3 - "Legal Proceedings--
Nascolite Site" for information concerning environmental proceedings
relating to a disposal site the Company is alleged to have shipped
materials to during a period prior to 1982.
Employees
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At March 17, 1996, the Company employed two executive officers
and 54 other full-time employees, 46 of whom were in operations. None of
the Company's employees is represented by a labor organization and the
Company believes that its relations with its employees are good.
Competition
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Excluding research laboratories and universities, the Company
believes that there are approximately 40 gamma irradiation facilities
presently in operation throughout the United States, half of which are
operated by independent processors, including the Company, and the rest of
which are operated principally by medical supply manufacturers to irradiate
their own products. The Company competes for gamma irradiation processing
primarily with two independent processors, each of which is substantially
larger than the Company in assets and sales and, from time to time, have
had substantial excess capacity. At various times during 1995, the
Company's competitors have competed for the business of the Company's
customers by quoting processing prices significantly less than the prices
charged by the Company, some of which quotations, if matched by the
Company, would not have fully covered the Company's allocated overhead
costs.
The Company competes on the basis of quality, turnaround time,
geographic proximity and price. With some exceptions, service irradiation
is generally performed for customers within a 300-mile radius of an
irradiation facility. The Company performs most of its service irradiation
for customers in the New Jersey/New York metropolitan/Philadelphia
metropolitan area and in the North Carolina/South Carolina/Virginia area,
although some of its customers are located elsewhere in the United States.
Gamma irradiation processing competes with other methods of
sterilization, primarily the use of ethylene oxide and electron-beam
sterilization, neither of which is as effective as gamma processing in
certain instances.
Proposed Transaction With SteriGenics
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On February 26, 1996, the Company entered into an asset
acquisition agreement (the "Acquisition Agreement") with SteriGenics
International, a contract irradiation company incorporated and based in
California ("SteriGenics"). Pursuant to the Acquisition Agreement, the
Company will (a) sell to SteriGenics substantially all of the assets (the
"Purchased Assets") of the Company (other than cash items and the Company's
facilities and real estate in Rockaway, New Jersey (the "Rockaway
property")), and
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SteriGenics will assume the stated liabilities (the "Assumed Liabilities")
of the Company (other than liabilities associated with the Rockaway
property) for a purchase price (the "Purchase Price") equal to $18,000 plus
the book value of the Purchased Assets minus the book value of the Assumed
Liabilities, in each case determined in accordance with generally accepted
accounting principles ("GAAP"), and (b) net lease to SteriGenics (the
"Lease") 62 acres of the Rockaway property, a portion of which contains the
Rockaway Facility (the "Leased Property") for six years at an annual rent
sufficient to yield to the Company approximately an 8% return on the book
value of the assets being leased, with a five-year renewal option as well
as a purchase option.
In connection with entering into the Acquisition Agreement, on
March 11, 1996, SteriGenics purchased for $236,000 from the Company 118,000
shares of a newly authorized series of preferred stock of the Company (the
"Series A Preferred Stock"), which shares (a) have the same voting rights
per share as the Common Stock, and (b) constitute approximately 9.9% of the
Company's voting securities. The Series A Preferred Stock pays dividends
at the rate of $0.16 per share per annum, has a liquidation preference of
$2.00 per share, is convertible into Common Stock on a share for share
basis, is callable by the Company at a call price of $2.00 per share at any
time after January 31, 1997 and is redeemable by SteriGenics at the call
price at any time, except that if surrendered for redemption prior to
January 31, 1997, the Company may redeem the Series A Preferred Stock for a
demand note payable after February 10, 1997. SteriGenics is required to
surrender the Series A Preferred Stock in payment of $236,000 of the
Purchase Price upon the closing under the Acquisition Agreement.
Simultaneously with entering into the Acquisition Agreement, the
Company granted SteriGenics an option (the "North Carolina Option") to
purchase the Company's North Carolina Facility and related assets
(excluding cobalt) for a price equal to the book value thereof (determined
in accordance with GAAP) plus $400,000. The North Carolina Option will
become exercisable only (a) if the Acquisition Agreement is terminated by
SteriGenics as a result of (i) the Company's Board of Directors (A)
withdrawing its recommendation to the Company's shareholders to approve the
Acquisition Agreement, or (B) recommending an alternative acquisition
proposal to the Company's shareholders (including the acceptance of a
tender or exchange offer for 15% or more of the outstanding shares of
Common Stock), or (ii) the Company failing to call a meeting of its
shareholders by November 27, 1996, and (b) if the Company enters into a
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legally binding agreement relating to such an alternative acquisition
proposal. To the extent that the North Carolina Option is exercised by
SteriGenics, the closing of the sale of the North Carolina Facility will
occur immediately prior to the closing of the alternative acquisition
proposal that resulted in the North Carolina Option having become
exercisable.
Closing of the proposed sale to SteriGenics is subject to a
number of conditions, including (a) the correctness of the Company's
representations and warranties at the closing (the "Closing"), (b) approval
of the proposed sale by two-thirds of the Company's shareholders at a duly
called meeting thereof, (c) the net book value (determined in accordance
with GAAP) of the assets being purchased by SteriGenics equalling at least
$3 million, (d) receipt by SteriGenics of all necessary permits and
licenses to operate the Company's facilities, (e) the acknowledgement by
the NJDEP that upon receipt of certain amounts from the Company, the NJDEP
will release certain liens on the Leased Property and the Purchased Assets
and that the NJDEP will not regard SteriGenics as responsible for any
ongoing environmental liability of the Company with respect to the Rockaway
property, and (f) the absence of any material adverse change since February
26, 1996 in the business of the Company. The Acquisition Agreement may be
terminated by either the Company or SteriGenics if the Closing is not
consummated by November 27, 1996.
Although SteriGenics conducted preliminary due diligence prior to
entering into the Acquisition Agreement, SteriGenics did not complete its
environmental due diligence, which is expected to take from 30 to 90 days
from February 26, 1996, depending upon whether SteriGenics determines to
conduct Phase II environmental investigations with respect to the Company's
real property it will purchase
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or lease at the Closing. SteriGenics has the right to terminate the
Acquisition Agreement if such environmental due diligence exposes any
condition that could materially adversely affect its ability to operate the
facilities to be acquired or could result in any material liability for
environmental remediation.
Until Closing, the Company is required to operate its business
only in the ordinary course. The Company has agreed not to (a) solicit any
alternative proposal for a sale of the Company or a substantial part of its
assets, or (b) subject to the fiduciary obligations of the Company's Board
of Directors, negotiate with respect to, or recommend to the Company's
shareholders, any such alternative proposal.
The Company intends to call a shareholders meeting to approve the
Acquisition Agreement after satisfactory completion of SteriGenics' due
diligence review. In connection with such meeting, the Company will
furnish its shareholders with more complete information concerning the
proposed transaction. Under this timetable, the Company does not expect
that the proposed transaction will be consummated any earlier than the
summer of 1996. In connection with the proposed transaction, Theo W.
Muller, the President and Chief Executive Officer and a director of the
Company, has entered into a voting agreement (the "Voting Agreement') with
SteriGenics pursuant to which he has agreed (a) to vote all of his shares
of Common Stock, constituting approximately 11% of the Company's
outstanding voting securities, in favor of approval of the proposed
transaction, (b) not to sell, transfer, pledge or otherwise encumber, or
enter into any voting arrangements with respect to, his shares of Common
Stock, and (c) not to solicit proxies or otherwise become involved with any
other party for the purposes of opposing or competing with the consummation
of the proposed transaction with SteriGenics, except to the extent required
by the Company's Board of Directors. In addition, certain shareholders of
the Company, who currently hold approximately 12% of the outstanding Common
Stock, in the aggregate, have entered into voting agreements pursuant to
which they have agreed to vote in favor of the proposed transaction with
SteriGenics.
If the proposed transaction with SteriGenics is consummated, the
Company will cease its contract irradiation business. The Company's
Rockaway property is on the Natural Priorities List, as a "superfund site".
Until the Rockaway property is removed from the "superfund" list, which the
Company anticipates will take at least five years, the Company does not
intend to make any distributions to its shareholders unless it is certain
that adequate financial provision has been made to complete the clean-up of
the Rockaway property. The Company is evaluating possible alternative
activities, assuming consummation of the proposed SteriGenics transaction.
Item 2. Description of Property.
The Company has three irradiation facilities, each of which has a
design capacity of approximately 3 million curies.
The Rockaway Facility
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The Rockaway Facility is located in Rockaway Township, New Jersey
on approximately 15 acres owned by the Company, and adjoins a 248 acre
parcel also owned by the Company, all of which property (collectively, the
"Rockaway property") was acquired from a predecessor of Morton Thiokol,
Inc. ("Thiokol"). The Rockaway Facility, which was first licensed by the
NRC in 1970, contains approximately 30,600 square feet of building space,
which includes offices (including the Company's executive offices),
irradiation facilities and a 13,000 square foot warehouse. Approximately
80 acres of the Rockaway property are zoned as an industrial area and the
balance is zoned as a single family residential area. The Company has not
paid taxes on a tax lot consisting of 201 acres of the Rockaway property in
an amount, with interest and penalties, which aggregated approximately
$153,000 as of December 31, 1995. The failure to make such payment is non-
recourse to the Company's remaining Rockaway property and other assets.
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Since 1982, the NJDEP has been investigating the Rockaway
property for existing environmental contamination and, in 1992, indicated
that the 183-acre non-industrial portion of the Rockaway property appeared
to show no evidence of contamination. See Item 3 - "Legal Proceedings--New
Jersey Environmental Proceedings".
The North Carolina Facility
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The Company owns and operates an irradiation facility on
approximately four acres in Alamance County, North Carolina adjacent to
Interstate 85. The North Carolina Facility, which was first licensed for
operation in 1983, contains approximately 21,000 square feet of space,
which includes offices, irradiation facilities and a 15,000 square foot
warehouse. The Company is adding an additional 4,000 square feet of
warehouse space, which is anticipated to be completed by April 1, 1996.
The Salem Facility
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The Company leases an irradiation facility located on
approximately three acres in Salem, New Jersey from the City of Salem
Municipal Port Authority through December 1, 2004. This facility contains
approximately 34,000 square feet of building space which includes offices,
irradiation facilities and a 26,000 square foot warehouse. The lease
requires the Company to pay the principal of, and interest on, a City of
Salem Municipal Port Authority Port Development Revenue Bond (the "Salem
Bond") in equal annual principal installments of $250,000 through 1999 (the
proceeds of which financed the construction of and equipment for the
facility), plus rentals aggregating $317,000 (which were prepaid) and all
real estate taxes imposed on the property.
General
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At March 1, 1996, the ratio of installed Cobalt-60 to design
capacity at the Company's irradiation facilities approximated 39%.
Generally, the Company maintains only the amount of Cobalt-60 needed for
currently anticipated processing requirements. As the Company's business
grows, additional Cobalt-60 can be added to a facility to increase its
irradiation processing capacity.
The Company believes that its properties are suitable and
adequate for its present use and that such properties offer the Company the
appropriate capacity for operations in the foreseeable future.
A substantial portion of the Company's real property has been
pledged to secure certain obligations of the Company. See Item 6 -
"Management's Discussion and Analysis or Plan of Operation" and Note 5 to
Consolidated Financial Statements included under Item 7 - "Financial
Statements". The Company has granted an option to SteriGenics to acquire
its North Carolina real property under certain circumstances, as well as an
option to acquire a portion of the Rockaway property under other
circumstances. See Item 1 - "Description of Business--Proposed Transaction
with SteriGenics". The NJDEP has a priority lien on the 15 acres of the
Company's Rockaway property on which the Rockaway Facility is located, and
on the improvements thereon, to secure expenditures made by the NJDEP in
connection with the investigation of environmental conditions on the
Rockaway property. See Item 3 - "Legal Proceedings--New Jersey
Environmental Proceedings".
See also Notes 2, 3, 4, 5, 7, 9, 10 and 15(a) to Consolidated
Financial Statements included under Item 7 - "Financial Statements".
Item 3. Legal Proceedings.
The Company is involved in various legal proceedings which are
incidental to the conduct of its business and are not expected to have a
material adverse effect on the Company's consolidated
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financial position or results of its operations. In addition, the Company
is involved in the proceedings described below.
New Jersey Environmental Proceedings
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In 1982, the New Jersey Department of Environmental Protection
(the "NJDEP") commenced an action in the Superior Court of New Jersey,
Chancery Division, Morris County (Docket No. C-2453-81E) against the
Company and Dr. Martin A. Welt (the Company's then President),
individually, alleging violations of the New Jersey Spill Compensation and
Control Act and the New Jersey Water Pollution Control Act and sought
injunctive relief, by way of clean-up of the Company's Rockaway property
(which had been purchased from Thiokol), penalties and damages.
In 1983, a Consent Order was entered into requiring the
installation of monitoring wells, groundwater sampling and analysis. As a
result of the analysis of data showing the presence of halogenated
hydrocarbons in the groundwater, submitted by the NJDEP to the United
States Environmental Protection Agency during this period, a portion of the
Rockaway property was placed on the National Priorities List as a
"superfund site". Such listing was based on a 1984 evaluation of a 15 acre
portion of the Rockaway property; however, the exact boundaries of the
"superfund site" were not determined. The Company believes that the
boundaries encompass approximately 80 acres of the 263 acres which comprise
the Rockaway property.
In 1986, the NJDEP issued a directive ordering the Company and
Dr. Welt, individually, to fund the cost of a Phase I Remedial
Investigation/Feasibility Study (the "Phase I Study") to determine the
nature and extent of contamination detected primarily on the 15 acre
operating portion of the Rockaway property. Since failure to comply with
the directive could have subjected the Company to triple damages, the
Company agreed to fund the Phase I Study and to pay the administrative
costs of the NJDEP. As a result of such agreement, in 1987, a Stipulation
of Dismissal regarding the Company, only, was filed in the 1982 action.
In 1989, the NJDEP issued a second directive to the Company and
Thiokol for a Phase II Remediation Investigation/ Feasibility Study (the
"Phase II Study") primarily with respect to an additional 65 acre portion
of the Rockaway property. According to the directive, both the Company and
Thiokol were jointly and severally liable for all costs of the clean-up and
removal of hazardous substances discharged on the Rockaway property. In
1991, the Phase II Study was completed and the NJDEP advised the Company
and Thiokol that it intended to perform additional groundwater studies in
order to delineate the extent of groundwater contamination. In 1992, the
Company and Thiokol entered into an administrative consent order (the
"ACO") with the NJDEP, pursuant to which the Company (i) agreed to pay all
costs incurred in connection with the Phase II Study, and (ii) agreed to
implement appropriate actions to complete the remediation of the Rockaway
property under the supervision of the NJDEP. In connection with the ACO,
the Company, in 1992, established an accrual for its estimated costs
associated with the Phase II Study and the remediation of the Rockaway
property. During 1993, the Company was assessed additional costs related
to the Phase II Study, and the Company completed the surface cleanup of the
Rockaway property, which included, among other things, excavating soils
with PCB levels above NJDEP non-residential standards.
During 1994, the NJDEP issued a Record of Decision (the "ROD")
with respect to approximately 80 acres of the Rockaway property, which
proposed remedial action involving hydrofracturing of the cracked bedrock
and the installation of a system to pump and treat the groundwater under a
portion of the Rockaway property. During 1995, the Company conducted a
three-well pilot study, using the "Clean-Ox" hydrogen peroxide-based
remedial system, to test its effectiveness in decreasing contaminant levels
in the deep aquifer. Based upon the results of the study, in February
1996, the Company petitioned the NJDEP for a change in the Remedial Action
Work Plan under the ROD to
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permit broader use of the "Clean-Ox" system. As of December 31, 1995, the
Company had an unfunded reserve of approximately $309,000 for the
anticipated cost of groundwater remediation. However, the ultimate cost of
such remediation will be affected if the Remedial Action Work Plan under
the ROD is modified, as requested by the Company.
Nascolite Site
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In August 1994, the US Environmental Protection Agency (the
"EPA") issued an Administrative Order (No. II-CERCLA-94-0124) (the "Order")
naming the Company as a respondent in a proceeding under Section 106(a) of
CERCLA, alleging that the Company, along with two other respondents and
eight previously identified potentially responsible parties (collectively
the "PRP Group"), arranged for the disposal or transport for disposal of
one or more hazardous substances to property owned by Nascolite Corporation
(a manufacturer of polymethyl methacrylate ("MMA") plastic sheet) in
Millville and Vineland, New Jersey (the "Nascolite Site"). The Nascolite
Site was operated by Nascolite as a scrap acrylic reclamation facility from
1953 to 1980 and was placed on the National Priorities List in 1984.
Subsequently, a Remedial Investigation and Feasibility Study was conducted
and various hazardous materials were found to be on the Nascolite Site. In
1988, the EPA issued a Record of Decision for operative unit 1 ("OU1"),
which addressed ground water remediation on the Nascolite Site. A
Preliminary Waste-In-List prepared in 1990 by the EPA indicated that
5,468,455 pounds of hazardous materials, primarily liquid waste MMA, was
sent to the Nascolite Site. The Company has no current record of any such
shipments, except for a 1978 invoice reflecting that 4,400 pounds of
"sludge" was picked up by Nascolite from the Company for transport to the
Nascolite Site. The Company's present operations do not use MMA or
generate MMA sludge.
The Order requires that each of the respondents named therein
undertake and complete all response actions to implement the OU1 (estimated
to cost between $7 million and $30 million) as a joint effort and that the
Company and the PRP Group are to be jointly and severally responsible for
carrying out all of the requirements of the Order; and that if the EPA
incurs any future response costs due to a failure by the named respondents
to comply with the Order, each of the named respondents will be responsible
for triple damages, penalties of up to $25,000 per day and other penalties
under CERCLA. On January 26, 1995, the EPA also notified the Company that
it had incurred previous response costs aggregating in excess of $3.9
million with respect to the Nascolite Site, demanded payment thereof plus
interest and offered the Company the right to enter into negotiations with
the PRP Group to lead to reimbursement to the EPA of Response Costs. On
February 9, 1995, the Company, without admitting any liability, notified
the EPA that it elected to participate in good faith negotiations with the
PRP Group. Simultaneously, the Company entered into a Tolling Agreement
with the United States on behalf of the EPA, pursuant to which the EPA
agreed not to institute the alleged cause of action against the Company
prior to September 1, 1995 in order to permit the Company to pursue good
faith efforts to settle with the PRP Group the claims alleged against the
Company in the Order.
The Company has been in contact with the PRP Group and believes
that it will be able to settle with the PRP Group, if it determines to do
so, for an amount between (i) 0.5% of the costs incurred and which may be
incurred by the PRP Group to remediate the Nascolite Site plus a 100%
premium for legal and administrative costs of the PRP Group, and (ii) 0.08%
(which percentage is based upon the Company's identified percentage of the
total hazardous materials shipped to the Nascolite Site) of such costs.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of securities holders of the
Company during the fourth quarter of its 1994 fiscal year.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company's Common Stock is traded on The Nasdaq Small-Cap
Market under the symbol "RTII". Effective May 25, 1995, the Company's
certificate of Incorporation was amended to effect an eight-for-one reverse
stock split of the Common Stock. The following table sets forth the high
and low bid quotations for each quarterly period during the two calendar
years ended December 31, 1995 for the Company's Common Stock, as reported
by The Nasdaq Small-Cap Market. The quotations for the period prior to May
25, 1995 have been retroactively adjusted to reflect the reverse stock
split. These quotations represent prices between dealers, do not include
retail markup, markdown or commission and do not necessarily represent
actual transactions.
High Bid Low Bid
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1st Quarter 1994 $7 $3-1/2
2nd Quarter 1994 4-3/4 3
3rd Quarter 1994 7-1/2 3-1/4
4th Quarter 1994 5-1/2 3
1st Quarter 1995 4 3
2nd Quarter 1995 3-1/4 1-1/2
3rd Quarter 1995 1-7/8 1-1/4
4th Quarter 1995 1-7/8 1-11/16
As of December 31, 1995, the Company had approximately 2,000
holders of record of its Common Stock. During the fiscal year ended
December 31, 1995, there were transactions in the Company's Common Stock on
approximately 62% of all trading days.
The Company has not paid any dividends. The payment of cash
dividends by the Company, if any, will be made only from assets legally
available therefor and will depend generally upon the Company's short-term
and long-term cash availability, current and anticipated capital
requirements, restrictions under any then existing credit and other debt
instruments and arrangements and other factors deemed relevant by the
Company's Board of Directors. The Company's Board of Directors does not
anticipate the payment of cash dividends on the Company's Common Stock as
long as the Company's Rockaway property remains on the National Priorities
List as a 'superfund site".
Item 6. Management's Discussion and Analysis or Plan of Operation
IN REVIEWING MANAGEMENT'S DISCUSSION AND ANALYSIS, REFERENCE IS
MADE TO THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED AS ITEM 7 - "FINANCIAL STATEMENTS" IN THIS ANNUAL REPORT
ON FORM 10-KSB. AS DISCUSSED IN SUCH NOTES, THE COMPANY OWNS
PROPERTY WHICH HAS BEEN THE SUBJECT OF AN ENVIRONMENTAL
INVESTIGATION. SUCH FINANCIAL STATEMENTS, AS STATED IN THE
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS INCLUDED
THEREIN, HAVE MADE PROVISION FOR THE COSTS OF SUCH INVESTIGATION
AND RESULTING MONITORING, CLEANUP AND REMEDIATION OBLIGATIONS IN
ACCORDANCE WITH EXISTING STUDIES AND CLEANUP PLANS. HOWEVER
THERE CAN BE NO ASSURANCE
10
<PAGE>
THAT SUCH PROVISION CONSTITUTES THE ULTIMATE LIABILITY THAT MAY RESULT
UPON THE FINAL DISPOSITION OF THE ENVIRONMENTAL INVESTIGATION, CLEANUP
AND REMEDIATION PROGRAMS.
Financial Condition
- -------------------
General
Information with respect to total assets, long-term debt (net of
current portion and discount), working capital (deficiency) and certain
related ratios, as of December 31, 1995, 1994 and 1993, is as follows:
1995 1994 1993
---- ---- ----
Total assets (in thousands) $7,882 $7,920 $8,664
Long-term debt, net of current portion $2,024 $2,022 $1,919
and discount (in thousands)
Working capital (deficiency) [current ($1,116) ($510) ($101)
assets less current liabilities] (in
thousands)
Working capital ratio [current assets .38 to 1 .63 to 1 .93 to 1
to current liabilities]
Percentage of total liabilities to 149% 114% 101%
stockholders' equity
The Company has a long-term leasing arrangement (with a purchase
option) with a supplier of Cobalt-60 and also has been able to purchase
Cobalt-60 with installment payments after delivery. The Company expects
that such arrangements will continue to be available during 1996. The
Company has scheduled 1996 payments of approximately $1 million for Cobalt-
60.
The NJDEP has the statutory right to obtain a lien on the
Company's assets in an amount equal to any unreimbursed costs incurred by
the NJDEP relating to environmental remediation of the Company's Rockaway
property. Although the Company has been paying all such costs in
accordance with its NJDEP agreements, the Company has received additional
NJDEP expenditure statements showing that reimbursable NJDEP expenditures
increased by an aggregate of $143,107 with respect to NJDEP fiscal year
billing periods of 1993, 1994 and 1995. The Company has protested certain
of these oversight expenditures and the NJDEP has temporarily extended the
due dates thereof until further notification.
At December 31, 1995, the Company had cash and cash equivalents
of $77,631 and a working capital deficit of $1,116,028, compared to cash
and cash equivalents of $172,198 and a working capital deficit of $509,708
at December 31, 1994. The $606,320 increase in the working capital deficit
during 1995 was primarily due to a $439,664 increase in the current portion
of long-term debt, a $94,567 decrease in cash and a decrease in other
current assets. See Consolidated Statements of Cash Flows included under
Item 7 - "Financial Statements". The Company expects to be able to fund
its 1996 operations and budgeted expenditures, including budgeted capital
expenditures of approximately $237,000, additional cobalt leasing
obligations and the anticipated expenses (principally legal expenses
relating to the negotiation of the transaction and the preparation of proxy
solicitation materials to obtain approval thereof) of the proposed sale of
assets to SteriGenics (see Item 1 - "Description of Business--Proposed
11
<PAGE>
Transaction with SteriGenics") from (i) forecasted sales, assuming
competitive industry pressures do not further intensify, (ii) borrowings
under a $250,000 short-term line of credit obtained from Frellum
Corporation (see Item 12 - "Certain Relationships and Related
Transactions"), (iii) the $236,000 of proceeds received in March 1996 from
the sale of the Company's Series A Preferred Stock to SteriGenics, and (iv)
a $580,000 insurance settlement received in February 1996 for an
environmental liability claim previously asserted.
As of March 20, 1996, the Company did not plan to enter into any
unsecured financing arrangements. The Company does not have any current
banking credit relationships and does not know whether it will have the
ability to borrow funds other than from a related party.
As described in Note 10 to Consolidated Financial Statements
included under Item 7 - "Financial Statements", the Company is obligated to
remediate a portion of its Rockaway property. Costs relating to such
activity have been provided for in accordance with existing environmental
studies and approved cleanup plans. There can be no assurance that such
provisions will constitute the ultimate liability of the Company, although
the Company believes that such provisions are adequate. In addition, the
Company has been named a respondent in an environmental proceeding relating
to a disposal site, to which the Company shipped a relatively small amount
of materials during a period prior to 1982. The Company has established a
$30,000 unfunded reserve therefor in its financial statements; although
there can be no assurance that such provision is adequate. See Item 3 -
"Legal Proceedings--Nascolite Site".
The Company's operations are not labor intensive and the Company
does not expect any significant changes in the number of its employees
during 1995. A possible increase in the cost of Cobalt-60 in the future is
not regarded as significant in terms of the Company's operations. Infla-
tion is expected to have a minimal impact on the Company's business.
Proposed SteriGenics Transaction
On February 26, 1996, the Company entered into an asset
acquisition agreement with SteriGenics. See Item 1 - "Description of
Business--Proposed Transaction with SteriGenics". Pursuant to the
Acquisition Agreement, the Company will (a) sell to SteriGenics
substantially all of the Company's assets (other than cash items and the
Rockaway property), and SteriGenics will assume the Company's stated
liabilities (other than liabilities associated with the Rockaway property)
for a purchase price equal to $18,000 plus the book value of the purchased
assets minus the book value of the assumed liabilities, in each case
determined in accordance with GAAP, and (b) net lease to SteriGenics 62
acres of the Rockaway property, a portion of which contains the Rockaway
Facility. Simultaneously with entering into the Acquisition Agreement, the
Company granted SteriGenics an option to purchase, under certain
circumstances, the Company's North Carolina Facility and related assets
(excluding cobalt) for a price equal to the book value thereof (determined
in accordance with GAAP) plus $400,000.
Closing of the proposed sale to SteriGenics is subject to a
number of conditions. The Acquisition Agreement may be terminated by
either the Company or SteriGenics if the Closing is not consummated by
November 27, 1996. Until Closing, the Company is required to operate its
business only in the ordinary course. The Company has agreed not to (a)
solicit any alternative proposal for a sale of the Company or a substantial
part of its assets, or (b) subject to the fiduciary obligations of the
Company's Board of Directors, negotiate with respect to, or recommend to
the Company's shareholders, any such alternative proposal. The Company
intends to call a shareholders meeting to approve the Acquisition Agreement
after satisfactory completion of SteriGenics' due diligence review.
If the proposed transaction with SteriGenics is consummated, the
Company will cease its contract irradiation business. The Company's
Rockaway property is on the Natural Priorities List, as a "superfund site".
Until the Rockaway property is removed from the "superfund" list, which the
Company
12
<PAGE>
anticipates will take at least five years, the Company does not intend to
make any distributions to its shareholders unless it is certain that
adequate financial provision has been made to complete the clean-up of the
Rockaway property. The Company is evaluating possible alternative
activities, assuming consummation of the proposed SteriGenics transaction.
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of". The Company has not completed its analysis of this
pronouncement and, thus, the impact on the Company's results of operations
and financial condition has not been determined.
In October 1995, the FASB issued SFAS No. 123 "Accounting for
Stock-Based Compensation". The Company is currently studying SFAS No. 123,
but does not currently plan to adopt the fair value based method of
accounting for stock options or similar equity instruments. Accordingly,
the adoption of SFAS No. 123 is not expected to impact the Company's
results of operation or financial condition.
Results of Operations
- ---------------------
1995 Compared to 1994
Net sales in 1995 were $4,352,027, a decrease of 3.1% from net
sales of $4,492,630 in 1994. This decrease, despite increased processing
volume, was primarily due to intense competitive pricing pressures
resulting from industry overcapacity within the Company's geographic
markets.
Cost of sales in 1995 increased 19.8% to $2,921,752 from
$2,438,222 in 1994, as a result of increased product volume in 1995 and the
inclusion of operating costs for a full year of the Salem Facility which
resumed irradiation processing in the fourth quarter of 1994. Cost of
sales associated with a full year of operations of the Salem Facility
aggregated approximately $736,000. As a result, gross profit decreased
30.4% to $1,430,275 in 1995 from $2,054,408 in 1994.
Selling, general and administrative expenses decreased 12.1% to
$1,556,450 in 1995 from $1,770,348 in 1994. The decrease was due to lower
executive compensation, legal and other professional fees, partially offset
by the inclusion of a full year of selling, general and administrative
expenses relating to the Salem Facility. As a result of decreased net
sales and increased total costs, the loss from operations in 1995 was
$126,175 as compared to income from operations of $284,060 in 1994.
Investment income decreased to $9,776 in 1995 from $18,419 in
1994 due to lower amounts available for investment during 1995.
The expenses of the Salem Facility of $156,138 in 1994
represented the costs incurred during the first nine months of 1994, prior
to the resumption of irradiation processing at the Salem Facility. For the
fourth quarter of 1994 and all of 1995, Salem Facility costs were recorded
in cost of sales and selling, general and administrative expenses.
Expenses of the Rockaway Industrial Park in 1995 were $75,505, a
20% reduction from comparable 1994 expenses due to lower consultant and
maintenance costs. The loss on abandonment of building and equipment of
$374,530 in 1994 was due to the elimination of the net book value of
depreciable assets at the Rockaway Industrial Park; no comparable
transaction occurred in 1995.
13
<PAGE>
Environmental investigation, remediation and related legal
expenses in 1995 were $223,590 and consisted of NJDEP administrative costs
recognized in 1995, a $30,000 reserve for future expenses related to the
Nascolite site, and related legal expenses. Excluding the Nascolite
reserve, the remaining 1995 environmental expenses (which were related to
the Rockaway Industrial Park) were comparable to 1994 expenses.
Other interest expense of $259,968 in 1995 increased by $153,587
over 1994, primarily due to the interest rate increase on December 1, 1994
from an average rate of 4.72% to a fixed rate of 10% on $1,250,000
principal amount of City of Salem Municipal Port Authority Port Development
Revenue Bonds ($250,000 principal amount of which was paid in December
1995), and to additional long-term debt incurred during 1995 related to
Cobalt lease agreements. Other income in 1995 of $150,819 consisted
primarily of $144,830 of net proceeds received in the settlement of all
litigation with Dr. Martin A. Welt.
As a result of the foregoing, the Company recorded a loss of
$524,643 in 1995 compared to a loss of $623,128 in 1994.
1994 Compared to 1993
Net sales in 1994 were $4,492,630, an increase of 3.4% from net
sales of $4,343,408 in 1993. 1994 sales reflected increased processing
volume. However, such increase in sales was restricted by competitive
pricing, shortage of plant warehouse space and insufficient cobalt loading
to meet certain customer demand at one of its facilities.
Cost of sales in 1994 increased 19.6% to $2,438,222 from
$2,039,029 in 1993. The resumption of irradiation processing at the
reopened Salem Facility contributed over half of such increase and the
remaining increase was due primarily to increased direct processing costs,
principally employee expense. As a result, gross profit decreased 10.8% to
$2,054,408 in 1994 from $2,304,379 in 1993.
Selling, general and administrative expenses increased 5.3% to
$1,770,348 in 1994 from $1,681,061 in 1993. The increase was due primarily
to the added expenses relating to the reopened Salem Facility. Certain
other administrative expenses, such as legal expenses, decreased in 1994
but were offset by expenses of developing and documenting certain systems
and procedures to comply with existing FDA regulations and to prepare for
expected FDA regulations and possible ISO 9002 registration.
As a result of the foregoing, income from operations in 1994 was
$284,060, a decrease of 54.4%, as compared to $623,318 in 1993.
Investment income increased to $18,419 in 1994 from $14,980 in
1993, due to higher interest rates and a higher amount of investments
during a portion of the year.
The 1994 expenses of the Salem Facility of $156,138 represented
the nine month period ended September 30, 1994, after which the Salem
Facility was reopened and all such expenses were then recorded in cost of
sales, selling general and administrative expenses and other interest
expense. The Salem Facility expenses for the nine month period in 1994
decreased 19% from comparable expenses during the same 1993 period.
Expenses of the Rockaway Industrial Park in 1994 were $94,235 and
were slightly less than similar 1993 expenses. As a result of the ongoing
environmental remediation and use restrictions relating to a 65 acre
industrial portion of the Rockaway Industrial Park, the obsolescence of the
buildings and attached assets thereon, and the uncertainty of the Company's
ability to sell such industrial portion, management reduced the net asset
value of such depreciable assets to zero; the resulting charge of
14
<PAGE>
$374,530 was recorded as a loss on abandonment of building and equipment in
the Rockaway Industrial Park. Environmental investigation, remediation and
related legal expenses relating to the Rockaway Industrial Park were
$195,133 in 1994 and consisted of approximately $61,500 of legal,
professional and cleanup expenses to complete surface cleanup and to
develop a Remedial Action Work Plan for groundwater remediation and an
approximate $133,500 increase in the existing accrual for future
groundwater remediation and related NJDEP oversight costs. Comparable 1993
expenses aggregated $336,167, which was reduced to $36,167 after
application of $300,000 of related insurance proceeds received in 1993.
Proxy contest and related litigation expenses in 1993 did not
recur in 1994. Other interest expense increased to $106,381 in 1994 from
$42,545 in 1993 and consisted of $78,000 related to Cobalt-60 financing and
$28,000 of fourth quarter interest expense related to the Salem Facility.
Cobalt financing interest increased due to the acquisition of Cobalt-60 at
the end of the third quarter of 1994. Interest expense related to the
Salem Facility was included in expenses of Salem Facility in 1993, although
the amount of 1994 interest increased as a result of the higher average
interest rate in 1994 on the Salem bonds. Other income in 1993 of $110,000
resulted from the settlement of an insurance claim under a 1984 insurance
policy; no similar item was received in 1994.
As a result of the foregoing, the Company recorded a loss of
$623,128 in 1994 compared to income before income taxes of $204,955 in
1993. The estimated income tax liability of $5,000 for 1993 was the net
result of the utilization of outstanding Federal and State net operating
loss carryforwards, offset by alternate minimum income taxes and applicable
franchise taxes. The Company recorded net income of $199,955 in 1993 as
compared to a net loss of $623,128 in 1994.
Item 7. Financial Statements.
Index to Financial Statements
-----------------------------
Page
----
Report of Independent Certified Public Accountants F-1
Consolidated balance sheet:
December 31, 1995 F-2
Consolidated financial statements
for the years ended December 31:
Statements of operations
- 1995 and 1994 F-3
Statements of stockholders' equity
- 1995 and 1994 F-4
Statements of cash flows
- 1995 and 1994 F-5
Notes to consolidated financial statements F-6 to F-17
15
<PAGE>
Report of Independent Certified Public Accountants'
Board of Directors and Stockholders
RTI Inc.
Rockaway, New Jersey
We have audited the accompanying consolidated balance sheet of RTI Inc. and
subsidiaries as of December 31, 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the two years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Notes 3 and 10 to the consolidated financial statements, the
Company owns property which is the subject of continuing environmental
investigation and significant litigation.
As discussed in Note 15(a), the Company entered into an asset acquisition
agreement with a corporation pursuant to which, subject to various conditions
including due diligence and approval by the Company's stockholders, the Company
will sell substantially all of its assets (other than cash and its Rockaway, New
Jersey property).
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of RTI Inc. and
subsidiaries at December 31, 1995, and the results of their operations and cash
flows for each of the two years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
BDO Seidman, LLP
Woodbridge, New Jersey
March 15, 1996
F-1
<PAGE>
RTI INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
==============================
<TABLE>
<CAPTION>
December 31,
1995
-----------------
ASSETS
------
<S> <C>
Current:
Cash and cash equivalents $ 77,631
Accounts receivable, net of allowance for doubtful accounts of $10,000 562,811
Prepaid expenses and other 31,949
Restricted deposits (Note 10) 15,771
-----------------
TOTAL CURRENT ASSETS 688,162
Property, plant, equipment and Cobalt 60, net of accumulated depreciation and
amortization (Notes 2, 3, 4, 5, 7, 9 and 10) 7,006,886
Certificates of financial assurance - restricted (Note 11) 150,000
Deferred financing costs (Note 5(a)) 36,960
------------------
$ 7,882,008
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current:
Current portion of long-term debt (Notes 4 and 5) $ 1,047,264
Accounts payable 138,178
Accrued expenses (Notes 7(a) and 10) 618,748
------------------
TOTAL CURRENT LIABILITIES 1,804,190
Long-term debt, net of current portion and $44,000 discount (Notes 4 and 5) 2,024,050
Other liabilities (Notes 7(b) and 10) 883,713
------------------
TOTAL LIABILITIES 4,711,953
------------------
Commitments and contingencies (Notes 3, 4, 6, 8, 9 and 10)
Stockholders' equity (Note 8):
Preferred stock, $.05 par value - shares authorized 2,000,000; no shares issued
and outstanding -
Common stock, $.08 par value - shares authorized 15,000,000; issued and
outstanding 1,076,907 86,153
Additional paid-in capital 16,013,851
Deficit (12,929,949)
------------------
TOTAL STOCKHOLDERS' EQUITY 3,170,055
------------------
$ 7,882,008
==================
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
RTI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
=========================================
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1995 1994
---------------- ----------------
<S> <C> <C>
Net sales (Note 13) $4,352,027 $4,492,630
Cost of sales 2,921,752 2,438,222
---------------- ----------------
GROSS PROFIT 1,430,275 2,054,408
Operating expenses:
Selling, general and administrative expenses 1,556,450 1,770,348
---------------- ----------------
INCOME (LOSS) FROM OPERATIONS (126,175) 284,060
Other income (expense):
Investment income 9,776 18,419
Expenses of Salem facility, including interest expense of
$54,242 (Note 4) - (156,138)
Expenses of Rockaway Industrial Park - Parcel I, including
interest expense of $22,000 in both years
(Notes 3 and 5(c)) (75,505) (94,235)
Loss on abandonment of building and equipment in
Rockaway Industrial Park - Parcel I (Note 3) - (374,530)
Environmental investigation, remediation and related legal
expenses (Note 10) (223,590) (195,133)
Other interest expense (259,968) (106,381)
Other income (Note 6) 150,819 810
---------------- ----------------
NET LOSS $ (524,643) $ (623,128)
================ ================
Net loss per share $ (.49) $ (.58)
================ ================
Weighted average number of common shares outstanding 1,077,077 1,077,185
================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
RTI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(NOTE 8)
=================================================
<TABLE>
<CAPTION>
Common stock
-------------- ----------- Additional
Number of paid-in
shares Amount capital Deficit Total
-------------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 1,077,064 $86,165 $16,014,413 $(11,782,178) $4,318,400
Exercise of stock options 125 10 209 - 219
Net loss - - - (623,128) (623,128)
-------------- ----------- -------------- --------------- ---------------
BALANCE, DECEMBER 31, 1994 1,077,189 86,175 16,014,622 (12,405,306) 3,695,491
Purchase of partial shares (282) (22) (771) - (793)
Net loss - - - (524,643) (524,643)
-------------- ----------- -------------- --------------- ---------------
BALANCE, DECEMBER 31, 1995 1,076,907 $86,153 $16,013,851 $(12,929,949) $3,170,055
============== =========== ============== =============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
RTI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(NOTE 14)
=========================================
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1995 1994
------------------ -------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (524,643) $(623,128)
------------------ -------------------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 865,689 682,950
Loss on abandonment of building and equipment in
Rockaway Industrial Park - Parcel I - 374,530
Recovery of losses on accounts receivable - (2,600)
Discount of note payable 22,000 22,000
(Increase) decrease in:
Accounts receivable (21,061) (5,661)
Certificate of financial assurance - restricted - (75,000)
Prepaid expenses and other 83,290 23,742
Restricted deposits 23,257 78,587
Increase (decrease) in:
Accounts payable (96,994) (34,740)
Accrued expenses 94,869 (36,203)
Other liabilities 47,203 (67,848)
------------------ -------------------
TOTAL ADJUSTMENTS 1,018,253 959,757
------------------ -------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 493,610 336,629
------------------ -------------------
Cash flows from investing activities:
Purchases of fixed assets (93,426) (167,259)
Decrease in short-term investments - 275,801
------------------ -------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (93,426) 108,542
------------------ -------------------
Cash flows from financing activities:
Proceeds from notes payable 200,000 100,000
Payments for deferred finance costs - (60,548)
Payments on long-term debt (693,958) (692,065)
Proceeds from exercise of stock options - 219
Payments for partial shares of common stock (793) -
------------------ -------------------
NET CASH USED IN FINANCING
ACTIVITIES (494,751) (652,394)
------------------ -------------------
Net decrease in cash and cash equivalents (94,567) (207,223)
Cash and cash equivalents, beginning of year 172,198 379,421
------------------ -------------------
Cash and cash equivalents, end of year $ 77,631 $ 172,198
================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==============================================
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------------------
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of RTI Inc. and its
wholly-owned subsidiaries (the "Company"). All significant intercompany accounts
and transactions have been eliminated in consolidation.
Business Activities
- -------------------
The Company is engaged in supplying gamma irradiation services to a variety of
products, primarily medical devices and disposable medical supplies. In
addition, the Company irradiates, to a lesser extent, cosmetics and other
consumer products. The Company operates two facilities in New Jersey and one in
North Carolina and performs the majority of its irradiation services for
customers in the New Jersey/ New York metropolitan/Philadelphia metropolitan
area and North Carolina/ South Carolina/Virginia area.
Revenue Recognition
- -------------------
Sales are recorded when irradiation services are complete.
Property, Plant, Equipment and Cobalt 60
- ----------------------------------------
Property, plant and equipment are stated at cost. Provision for depreciation and
amortization is made using the straight-line method by annual charges to
operations calculated to absorb costs over the lesser of the estimated useful
lives of the assets or the terms of related leases.
The estimated useful lives are as follows:
Land improvements 10 years
Buildings and improvements 10 - 40 years
Furniture and fixtures 5 - 10 years
Machinery and equipment 4 - 20 years
Cobalt 60 is carried at cost. The balance is being amortized at a rate of 12.3%
per annum using the declining balance method, which is the approximate rate at
which Cobalt 60 decays.
Environmental Expenditures
- --------------------------
Environmental expenditures that relate to an existing condition caused by past
operations and which do not contribute to current or future revenues are
expensed. Liabilities are recorded when environmental assessments and/or
remediation are probable and such costs to the Company can be reasonably
estimated.
F-6
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===============================================
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
- ----------------------------------------------------------------
Income Taxes
- ------------
The Company accounts for its income taxes in accordance with Financial
Accounting Standards Statement No. 109, "Accounting for Income Taxes" ("SFAS
109").
SFAS 109 requires a company to recognize deferred tax liabilities and assets for
the expected future tax consequences of events that have been recognized in a
company's financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement carrying amounts and tax basis of assets and liabilities
using enacted tax rates in effect in the years in which the differences are
expected to reverse. The Company has provided a valuation allowance to offset
the benefit of any net operating loss carryforwards or deductible temporary
differences.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include all cash balances and highly liquid debt
instruments with an original maturity of three months or less.
Loss Per Share
- --------------
Loss per share is computed on the basis of the weighted average number of common
shares outstanding during the year and does not include the effect of common
stock equivalents. The computation of the weighted average number of common
shares outstanding for the years ended December 31, 1995 and 1994, considered
the one for eight reverse stock split (Note 8(a)).
Long-term Debt
- --------------
The recorded value of the Company's long-term debt approximates fair value based
on the current rates available to the Company for debt of the same remaining
maturities.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company has made various estimates including those related to the valuation
allowance on deferred tax assets (Note 7), and exposure to environmental matters
(Note 10). The costs the Company will ultimately incur and the value of assets
ultimately realized could differ in the near term from the related amounts
reflected in the accompanying financial statements.
F-7
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
=============================================
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
- ----------------------------------------------------------------
Effect of New Accounting Pronouncements
- ---------------------------------------
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
The Company has not completed its analysis of this pronouncement and, thus, the
impact on the Company's results of operations and financial condition has not
been determined. In October 1995, the FASB issued SFAS No. 123 "Accounting for
Stock- Based Compensation." The Company is currently studying SFAS No. 123, but
does not currently plan to adopt the fair value based method of accounting for
stock options or similar equity instruments. Accordingly, the adoption of SFAS
No. 123 is not expected to impact the Company's results of operation or
financial condition.
NOTE 2 - PROPERTY, PLANT, EQUIPMENT AND COBALT 60
- -------------------------------------------------
Property, plant, equipment and Cobalt 60 consist of the following at December
31, 1995:
Land and improvements $ 392,477
Buildings and improvements 3,054,025
Furniture and fixtures 157,477
Machinery and equipment 2,275,464
-------------
5,879,443
Less: Accumulated depreciation and amortization 3,227,195
-------------
2,652,248
-------------
Cobalt 60 9,367,832
Less: Accumulated amortization 5,013,194
-------------
4,354,638
-------------
TOTAL $7,006,886
=============
NOTE 3 - ROCKAWAY INDUSTRIAL PARK
- ---------------------------------
The Company owns a 248 acre parcel of land and several buildings ("Parcel I") in
Rockaway, New Jersey, that is contiguous to the 15 acre operating parcel that is
the site of one of its irradiation processing facilities ("Parcel II" and, with
Parcel I, the "Rockaway Industrial Park"). Since 1985, the Company has been
seeking a buyer for Parcel I; however, the Company's ability to sell Parcel I is
impaired until an environmental cleanup and remediation program is completed
(see Note 10).
As a result of management's evaluation of the ongoing environmental proceedings,
the accompanying restrictions on the use of the property and the obsolescence of
the buildings, machinery and equipment on Parcel I, the net book value of the
buildings, machinery and equipment was reduced in the fourth quarter of 1994
from $374,530 to zero.
F-8
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
============================================
NOTE 4 - SALEM FACILITY
- -----------------------
In June 1986, a Company subsidiary commenced irradiation processing operations
at a facility in Salem, New Jersey. The facility is located on land utilized
pursuant to a long-term lease (see Note 9) with the City of Salem Municipal Port
Authority ("Salem"). The lease has been accounted for as a capitalized lease.
Financing for the construction of the facility was provided primarily from the
proceeds of the sale of $2,500,000 of industrial revenue bonds (see Note 5(a))
and a $1,000,000 Urban Development Action Grant ("Grant"). At the expiration of
the lease, ownership of property, plant, equipment and the remaining Cobalt 60
financed by the bonds and the Grant will pass to Salem. The lease initially
expires in 2004 and permits an extension.
During 1988, due to continuing operating losses, the Board of Directors decided
to suspend operations at the Salem facility. Accordingly, the Company stopped
depreciation and amortization of the assets at the Salem facility and
transferred Cobalt 60 to another of its facilities.
In October 1994, the Company reopened the Salem facility and irradiation
services are ongoing. Depreciation and amortization of the assets at the Salem
facility was based on the remaining term of the lease (ten years) from 1994.
NOTE 5 - LONG-TERM DEBT
- -----------------------
Long-term debt consists of the following at December 31, 1995:
City of Salem Municipal Port Authority, Port Development
Revenue Bonds (a) $1,000,000
Note payable (b) 25,000
Note payable (c) 243,000
Note payable (d) 200,000
Secured Cobalt 60 financing and capital lease agreements (e) 1,603,314
------------
TOTAL 3,071,314
Less: Current portion 1,047,264
------------
TOTAL LONG-TERM DEBT $2,024,050
============
(a) These bonds (the "Bonds") were issued in 1984 to finance the construction,
improvement and equipping of an irradiation processing facility in Salem,
New Jersey (see Note 4). An irrevocable letter of credit was issued
pursuant to a guaranty agreement among a bank, the Company and a former
licensee of the Company (the "Licensee").
The outstanding Bonds were redeemed on December 1, 1994 and simultaneously
remarketed at the redemption price to new bondholders. At the same time,
the Bonds' interest rate was converted to a fixed interest rate of 10%.
The average interest rate was 4.72% for the eleven months ended November
30, 1994.
F-9
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===============================================
NOTE 5 - LONG-TERM DEBT (continued)
- -----------------------
The Company is obligated to make equal annual principal installment
payments of $250,000 through December 1999.
(b) Simultaneously with the remarketing of the Bonds, the Company borrowed
$100,000 from the Licensee. The Company is obligated to make quarterly
principal installment payments of $25,000 on March 31, 1995, June 30,
1995, October 2, 1995 and January 2, 1996. Interest is payable quarterly
at the applicable Federal rate of interest in effect. The borrowings are
collateralized by the following: (i) all rights to the use of the property
constructed with the proceeds of the Bonds; and (ii) certain property,
plant, equipment and Cobalt 60 owned by the Company.
(c) In connection with the Company's settlement of certain litigation (see
Note 10), New Jersey Economic Development Authority (the "Authority")
bonds were cancelled, the owner thereof acquired from the Authority the
Company's note in an amount equal to the cancelled bonds and such owner
agreed to suspend, for a period of five years, the Company's obligation
to make principal and interest payments. As a result, a $287,000
obligation was discounted by $110,000 to $177,000 at December 31, 1992.
The resulting credit from this discounting was applied to reduce the
Company's net environmental clean up expense. The debt will be increased
annually by $22,000 during the five year period the Company is not
obligated to make principal and interest payments. Commencing January 1,
1998, the note will bear interest at a rate of 10.61% per annum and
principal payments will be made in annual installments of $41,000 through
January 1, 2004.
(d) In November 1995, the Company entered into an agreement for a revolving
line of credit from a corporation controlled by the President of the
Company. The line of credit provides for maximum principal borrowings of
$315,000 and expires April 28, 1997. Interest payments (fixed rate of 8%)
are due monthly. The revolving credit facility is secured by all accounts
receivable of the Company. In connection with the line of credit, the
Company issued to the corporation a warrant, expiring November 28, 1997,
to acquire 25,000 shares of the Company's Common Stock at $1.75 per share
(104% of the last sale price on the day immediately prior to such
issuance).
(e) In October 1993, the Company entered into an agreement to lease Cobalt 60
which has been accounted for as a capital lease. During the year ended
December 31, 1995, the Company leased additional Cobalt 60 under this
agreement. The total future minimum lease payments are due as follows:
1996 - $454,885; 1997 - $386,505; 1998 - $258,791; 1999 - $179,346; 2000
-$9,232; and thereafter - $64,830. The amount representing interest is
$190,908.
In September 1994, the Company entered into a secured financing agreement
to purchase Cobalt 60. The agreement provides for thirty-six equal monthly
principal installments of $16,333 plus accrued interest beginning April
1995. Interest is adjusted quarterly at prime plus 1.75%.
F-10
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==============================================
NOTE 5 - LONG-TERM DEBT (continued)
- -----------------------
Principal amounts due in connection with long-term debt for each of the five
years subsequent to December 31, 1995 are as follows:
1996 $1,047,264
1997 782,019
1998 570,426
1999 457,916
2000 45,887
Thereafter 211,802
--------------
$3,115,314
==============
NOTE 6 - EXECUTIVE TERMINATION AGREEMENTS AND LITIGATION
- --------------------------------------------------------
The Company and Dr. Martin A. Welt, who resigned as Chief Executive Officer of
the Company in 1986, have been in litigation since 1987, arising from the
Company failing to pay Dr. Welt under a consulting agreement and the
Company's claims against Dr. Welt for damages arising out of actions of
Dr. Welt.
In 1995, the Company and Dr. Welt settled all litigation, whereby, Dr. Welt paid
$144,830 to the Company.
NOTE 7 - ACCRUED EXPENSES AND OTHER LIABILITIES
- -----------------------------------------------
(a) Accrued expenses consist of the following at December 31, 1995:
Property taxes $200,091
Remedial investigation and environmental
cleanup costs (Note 10) 179,987
Payroll and related costs 104,681
Professional fees 64,482
Other 69,507
-----------
TOTAL $618,748
===========
(b) Other liabilities consists of $883,713 relating to the non-current portion
of remedial investigation and environmental cleanup costs (see Note 10).
F-11
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===============================================
NOTE 8 - STOCKHOLDERS' EQUITY
- -----------------------------
(a) Common and Preferred Stock Authorized, Issued and Outstanding
Effective May 25, 1995, the Company's Certificate of Incorporation was
amended to effect a one for eight reverse stock split of common stock and
authorize 2,000,000 shares of preferred stock. No preferred stock was
issued as of December 31, 1995 and the outstanding common stock as of
December 31, 1995 was an estimate (since fractional shares were not
issuable) based on the actual number of shares converted one for eight and
the remaining shares to be converted.
(b) Stock Options
The Company's 1987 stock option plan (the "Plan") authorizes the issuance
of options for common stock until November 3, 1997. The options granted
may be either incentive stock options, which are exercisable one year or
more from the date of grant or non-qualified stock options, which may be
exercisable immediately. Details, which reflect the one for eight reverse
stock split effective May 1995, of stock option transactions under the
1987 Plan for the two years, are as follows:
Exercise price
Options per share Exercisable
----------- -------------- ------------
OUTSTANDING, DECEMBER 1, 1993 5,250 $1.76 - 7.76 2,062
============
Cancelled (500) 6.48 - 7.76
Exercised (125) 1.76
----------- -------------
OUTSTANDING, DECEMBER 31, 1994 4,625 6.48 - 7.76 3,208
============
Granted 1,250 4.00
Cancelled (939) 6.48 - 7.76
----------- -------------
OUTSTANDING, DECEMBER 31, 1995 4,936 $4.00 - 7.76 3,686
=========== ============= ============
NOTE 9 - LEASE COMMITMENTS
- --------------------------
The Company leases the land for its Salem irradiation processing facility under
a long-term capital lease (see Note 4). The initial 20-year term of the lease
commenced in December 1984. The lease requires the Company to pay the principal
and interest on the City of Salem Municipal Port Authority, Port Development
Revenue Bonds (see Note 5(a)), and rent aggregating $317,000 for the entire
initial term of the lease, all of which rent was prepaid as of December 31,
1986. The prepaid rent was charged to operations in 1988. The building and fixed
assets located on this land become the property of the City of Salem Municipal
Port Authority at the end of the lease. The lease contains a provision for
negotiation for renewal for an additional ten-year period.
F-12
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
============================================
NOTE 10 - ENVIRONMENTAL INVESTIGATION, REMEDIATION AND RELATED LITIGATION
- -------------------------------------------------------------------------
As a result of engineering tests that commenced in 1981, the New Jersey
Department of Environmental Protection (formerly the New Jersey Department of
Environmental Protection and Energy) (the "DEP") issued a directive in 1986
ordering the Company and its former Chief Executive Officer (Dr. Martin A.
Welt), individually, to fund the cost of a remedial investigation and
feasibility study (the "Study") designed to determine the nature and extent of
contamination detected primarily on the Rockaway, New Jersey operating Parcel II
(see Note 3). The Company agreed to pay the costs of the Study and entered into
an Administrative Consent Order ("ACO") with the DEP. The Company accrued the
estimated cost of the Study (see Note 7) as of December 31, 1986. In accordance
with the terms of the ACO, the Company posted an $825,000 letter of credit which
was an amount equal to the estimated costs of the Study and the DEP
administrative costs. As of December 31, 1995, there is a balance of $15,771
remaining which is held as restricted funds.
In June 1989, the DEP issued a Second Directive ("Directive II") seeking payment
from the Company and the prior owner of the property (the "Prior Owner") for
approximately $1,200,000 to pay for a Phase II Remedial Investigation ("Phase
II"). According to Directive II, both the Company and the Prior Owner were
jointly and severally liable for all costs to investigate and clean up hazardous
substances on the property. The Phase II investigation was designed to conduct
further studies on Parcel II and evaluate the nature of and extent of
contamination, if any, on the 65-acre area of the property where the Prior Owner
conducted its various testing activities. In November 1991, the DEP issued its
"Remedial Investigation Report".
In 1989, the Company filed a lawsuit against the Prior Owner under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"
or "Superfund"), seeking contribution for all costs incurred by the Company in
connection with on-site investigation and cleanup activities. In 1992, the
Company released the Prior Owner from any liability under the Phase I and Phase
II investigations and the Prior Owner paid the Company $900,000 (the "Settlement
Agreement") as a partial payment against the DEP's claims for reimbursement of
expenditures for the Phase II investigation. A portion of these funds was
permitted to be used to support the surface cleanup required by the DEP. The
Prior Owner will only become subject to further liability in the event that the
Company becomes unable to perform the cleanup action(s) required by the DEP. In
addition, the Prior Owner suspended for five years the Company's obligation to
make principal and interest payments on the note issued to support the purchase
of a portion of the Rockaway Industrial Park (see Note 5(c)).
The Company has agreed to indemnify the Prior Owner against generally all claims
for past or future costs associated with studies, cleanups and/or other
remediation activities to the Rockaway Industrial Park. The Company has executed
a mortgage ("Mortgage") on the Rockaway Industrial Park in the amount of
$900,000 securing the Prior Owner to the extent the Company does not meet its
obligations under the Settlement Agreement. After the development of an
acceptable cost estimate for the implementation of remedial actions, the Prior
Owner has agreed to adjust the Mortgage to the amount of the cost estimate. If
the cost estimate exceeds the actual fair value of the mortgaged property (minus
any other liens on the mortgaged property), then the Company will execute an
additional mortgage for the difference which will be secured by the Company's
personal property at its Salem facility. If the cost estimate is less than
$900,000, then the Mortgage will be reduced to the estimated amount.
F-13
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==============================================
NOTE 10 - ENVIRONMENTAL INVESTIGATION, REMEDIATION AND RELATED LITIGATION
- -------------------------------------------------------------------------
(continued)
In 1993, and in conjunction with the Settlement Agreement, the Company and the
Prior Owner entered into an Administrative Consent Order ("ACO II") with the
DEP. In accordance with ACO II, the Company agreed to pay DEP's investigation
and oversight costs for the Phase II investigation, estimated to be $1.2
million, which was charged to operations in 1992. An initial payment of $600,000
was made in 1993 under ACO II. The remaining liability for the Phase II study is
being paid in quarterly installments through June 1997. In 1993, the Company
charged approximately $200,000 to operations for additional costs related to the
Phase II study and deposited $100,000 in a segregated interest-bearing account.
Funds in this account were withdrawn after certain provisions of ACO II were met
by the Company.
Both ACO II and the Settlement Agreement provide that the Company is responsible
for all further cleanup actions required by the DEP. Estimated costs under ACO
II and the Settlement Agreement were recorded by the Company in 1992. The
Company and the DEP have entered into a Memorandum of Agreement ("MOA") which
stipulated the responsibilities for an approved work plan for the surface
cleanup and remediation required to be performed by the Company. The Company
accrued and charged to operations approximately $200,000 in 1992 for surface
cleanup which was completed in 1994 and additional costs are not expected.
In 1994, the DEP issued its Record of Decision ("ROD") for the Rockaway
Industrial Park. The Company is required by the DEP to perform certain
groundwater remediation actions and implement a groundwater monitoring program.
A Remedial Action Work Plan ("RAWP") to implement the ROD is being reviewed by
the DEP. As of December 31, 1995, the Company has accrued approximately $309,000
for the anticipated costs of groundwater programs. The Company has petitioned
the DEP for changes in RAWP, which, if accepted, may decrease the anticipated
costs of groundwater programs.
In connection with the Phase II investigation, the DEP filed a First Priority
Lien against Parcel II and 65 acres of Parcel I. A general lien was placed on
all Company properties in the State of New Jersey and all revenues of the
Company. Each lien was in the amount of $329,670. In February 1995, the DEP
discharged all of its liens except for its liens on the revenues of the Company,
on Parcel II and on the Company's property located on Parcel II, and reset its
liens in the aggregate amount of $560,490.
Parcel II and a portion of Parcel I (see Note 3) have been placed on the
National Priorities List (the "List"). The Company believes its ability to
dispose of Parcel I acreage will be impaired until it has been remediated and
removed from the List. Additionally, there can be no assurances that the cleanup
and remediation efforts provided for by the Company will represent its ultimate
liability.
In addition, the Company has been named a respondent in an environmental
proceeding relating to a disposal site, which the Company shipped a small amount
of materials during 1982. The Company has recorded an accrual for the estimated
liability of $30,000 as of December 31, 1995. The Company, based upon all
available information, is of the opinion that the accrual is adequate and that
the ultimate disposition of this environmental proceeding will not have a
material adverse effect on these financial statements.
F-14
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===============================================
NOTE 11 - CERTIFICATES OF FINANCIAL ASSURANCE
- ---------------------------------------------
During 1990 and 1994, the Company was required by the NRC to post $75,000
Certificates of Financial Assurance ("CFA") in accordance with NRC regulations
applicable to companies with similar NRC licenses. The CFA is intended to
provide assurance that funds will be available if needed for decommissioning
activities and removal of Cobalt 60. The Company has elected to use trust funds
to provide such financial assurance. The funds are on deposit in restricted bank
accounts.
NOTE 12 - INCOME TAXES
- ----------------------
At December 31, 1995, the Company had a deferred tax asset amounting to
approximately $5,100,000. The deferred tax asset consisted primarily of the tax
benefit of net operating loss carryforwards and a temporary difference resulting
from environmental accruals (see Notes 7 and 10) and is fully offset by a
valuation allowance of the same amount.
The net change in the valuation allowance for deferred tax assets was an
increase of approximately $150,000 and $500,000 in 1995 and 1994, respectively.
The net change is primarily due to the recording of certain environmental
liabilities (see Note 10) and increases in net operating loss carryforwards.
Recoveries for income taxes differs from the amount of income recoveries
determined by applying the applicable U.S. statutory Federal income tax rate to
pretax loss from continuing operations as a result of the increase in the
valuation allowance to offset the increase in the deferred tax asset.
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $11,400,000 available to offset future Federal taxable income.
These carryforwards will expire from 1997 through 2010.
For state income tax purposes, primarily related to New Jersey, the Company has
net operating loss carryforwards of approximately $9,600,000, which will expire
through 2002.
NOTE 13 - MAJOR CUSTOMER
- ------------------------
During 1994, one customer accounted for approximately 12% of net sales.
NOTE 14 - STATEMENTS OF CASH FLOWS
- ----------------------------------
Supplemental disclosures of cash flow information are as follows:
1995 1994
-------------- -------------
Interest paid $283,000 $162,000
============== =============
The Company financed purchases of Cobalt 60 amounting to approximately $914,000
and $588,000 in 1995 and 1994, respectively.
F-15
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
==============================================
NOTE 15 - SUBSEQUENT EVENTS
- ---------------------------
a) Proposed Transactions With SteriGenics
--------------------------------------
On February 26, 1996, the Company entered into an asset acquisition
agreement (the "Acquisition Agreement") with SteriGenics International
("SteriGenics"). Pursuant to the Acquisition Agreement, the Company will
(a) sell to SteriGenics substantially all of the assets (the "Purchased
Assets") of the Company (other than cash items and the Company's
facilities and real estate in Rockaway, New Jersey) and SteriGenics will
assume the stated liabilities ("Assumed Liabilities") of the Company
(other than liabilities associated with the Rockaway property) for a
purchase price equal to $18,000, plus the book value of the Purchased=
Assets, minus the book value of the Assumed Liabilities, and (b) net lease
to SteriGenics that portion of the Rockaway property on which the Rockaway
Facility is located for six years at an annual rent sufficient to yield to
the Company approximately an 8% return on the book value of the assets
being leased, with a five-year renewal option, as well as, a purchase
option. Book values are to be determined in accordance with generally
accepted accounting principles.
On March 11, 1996, SteriGenics purchased for $236,000 from the Company
118,000 shares of a newly authorized series of preferred stock of the
Company (the "Series A Preferred Stock"), which shares (a) have the same
voting rights per share as the common stock, and (b) constitute
approximately 9.9% of the Company's voting securities. The Series A
Preferred Stock pays dividends at the rate of $0.16 per share per annum,
has a liquidation preference of $2.00 per share, is convertible into
Common Stock on a share for share basis, is callable by the Company at a
call price of $2.00 per share at any time after January 31, 1997 and is
redeemable at the call price at any time, except that if surrendered for
redemption prior to January 31, 1997, the Company may redeem the Series A
Preferred Stock for a demand note payable after February 10, 1997.
SteriGenics is required to surrender the Series A Preferred Stock in
payment of $236,000 of the Purchase Price upon the closing under the
Acquisition Agreement.
The Company granted SteriGenics an option to purchase the Company's North
Carolina Facility and related assets (excluding Cobalt 60) for a price
equal to the book value, to be determined in accordance with generally
accepted accounting principles, thereof, plus $400,000. The North Carolina
Option will become exercisable only (a) if the Acquisition Agreement is
terminated by SteriGenics as a result of (i) the Company's Board of
Directors (A) withdrawing its recommendation to the Company's shareholders
to approve the Acquisition Agreement, or (B) recommending an alternative
acquisition proposal to the Company's shareholders (including the
acceptance of a tender or exchange offer for 15% or more of the
outstanding shares of common stock), or (ii) the Company failing to call a
meeting of its shareholders by November 27, 1996, and (b) if the Company
enters into a legally binding agreement relating to such an alternative
acquisition proposal. To the extent that the North Carolina Option is
exercised by SteriGenics, the closing of the sale of the North Carolina
Facility will occur immediately prior to the closing of the alternative
acquisition proposal that resulted in the North Carolina Option having
become exercisable.
F-16
<PAGE>
RTI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
=============================================
NOTE 15 - SUBSEQUENT EVENTS (continued)
- ---------------------------
Closing of the proposed sale to SteriGenics is subject to a number of
conditions, including (a) the correctness of the Company's representations
and warranties at the closing (the "Closing"), (b) approval of the
proposed sale by two-thirds of the Company's shareholders at a duly called
meeting thereof, (c) the net book value of the assets being purchased by
SteriGenics equalling at least $3,000,000, (d) receipt by SteriGenics of
all necessary permits and licenses to operate the Company's facilities,
(e) the acknowledgement by the DEP that upon receipt of certain amounts
from the Company, the DEP will release certain liens and that the DEP will
not regard SteriGenics as responsible for any ongoing environmental
liability of the Company with respect to the Rockaway property, and (f)
the absence of any material adverse change since February 26, 1996 in the
business of the Company. The Acquisition Agreement may be terminated by
either the Company or SteriGenics if the Closing is not consummated by
November 27, 1996. The proposed transactions with SteriGenics are subject
to the aforementioned conditions, accordingly, no assurance can be given
with respect to their consummation.
b) Insurance Claim Settlement
On January 29, 1996, the Company and Birmingham Fire Insurance Company
("Birmingham") entered into a Settlement Agreement and Release
("Agreement") for environmental claims primarily relating to the Company's
Rockaway, New Jersey property covered under Birmingham's insurance policy
for the period May 30, 1980 to May 30, 1983. On February 20, 1996, the
Company received a total of $580,000 for settlement in accordance with the
Agreement.
F-17
<PAGE>
Item 8. Changes In and Disagreements With Accountants On Accounting and
Financial Disclosure.
BDO Seidman, LLP, independent auditors, currently is, and for
more than the Company's last two fiscal years has been, the Company's
independent auditors. Since the beginning of such two fiscal year period
(i) BDO Seidman, LLP, has not expressed reliance, in its audit report, on
the audit services of any other accounting firm and (ii) there have been no
reported disagreements between the Company and BDO Seidman, LLP, on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Directors of the Company
- ------------------------
The directors of the Company are as follows:
Name Age Position with the Company
---- --- ---------------------------
Sanders Davies 49 Director since 1986
C.W. McMillan 70 Director since 1985
Theo W. Muller 57 Director, President and Chief
Executive Officer since
January 1995
George M. Whitmore, Jr. 68 Director since 1988
Each director was elected as such at the Annual Meeting of
Shareholders held on May 16, 1995, and holds his office until the next
Annual Meeting of shareholders and until his successor is elected or until
his earlier resignation.
Sanders Davies has been a partner in the firm of O'Connor, Davies
& Co., certified public accountants, and its predecessor firm, Davies &
Davies, for more than the past five years.
C. W. McMillan has been president of C.W. McMillan Co. and its
predecessor, McMillan & Farrell Associates, Inc., agribusiness consultants,
for more than the past five years. From 1981 through March 1985, Mr.
McMillan was an Assistant Secretary of Agriculture of the United States.
Theo W. Muller was elected President and Chief Executive Officer
of the Company on January 3, 1995. Mr. Muller has been an independent
investor for more than the past five years and is a partner of Saler
Associates, a residential real estate developer. From 1985 until December
1994, Mr. Muller was president of Frellum Corporation ("Frellum"), an
aircraft leasing, and oil and gas production company. Mr. Muller was a
director of the Company from May 1990 to November 1993.
George M. Whitmore, Jr. has been managing director of Whitmore &
Company, a management consulting firm, for more than the past five years.
Previously, Mr. Whitmore was the
33
<PAGE>
chairman of the board and secretary of Rathbone, King & Seeley, Inc., an
insurance holding company which, on January 8, 1993, filed a petition for
liquidation under Chapter 7 of the United States Bankruptcy Code; Mr.
Whitmore's duties for such company were to chair meetings of its board of
directors, occasionally prepare minutes of such meetings and, from time to
time, attest to actions duly taken by such board.
The Company pays its directors (other than full-time employees of
the Company) at the rate of $5,000 per year and reimburses its directors
for their out-of-pocket expenses incurred in connection with their services
to the Company.
No family relationship exists among the directors of the Company
or between any of such persons and the executive officers of the Company.
Executive Officers of the Company
- ---------------------------------
The executive officers of the Company are as follows:
Name Age Position With the Company
---- --- -------------------------
Theo W. Muller 57 President and Director
R. Stephen Maico 44 Controller, Secretary and
Treasurer
The business experience of Theo W. Muller is set forth above.
R. Stephen Maico has been Controller, chief financial officer,
Secretary and Treasurer of the Company since 1990.
Executive officers are appointed by, and serve at the discretion
of, the Board of Directors for a term beginning after the first regular
meeting of the Board of Directors following the Annual Meeting of
shareholders and until their respective successors are duly appointed and
qualified.
Section 16(a) of the Securities Exchange Act of 1934 requires
executive officers, directors and persons who own more than 10% of the
Company's Common Stock to file within prescribed periods initial statements
of beneficial ownership and statements of changes in beneficial ownership
of their shares of Common Stock with the Securities and Exchange Commission
and The Nasdaq Small-Cap Market, on which the Company's Common Stock is
traded. Such persons also are required to furnish the Company with copies
of all such statements they file. Based on its review of the copies of
such statements received by it and written representations from certain of
such persons, the Company believes that, during 1995, all such filing
requirements applicable to such persons were duly complied with, except
that Theo W. Muller inadvertently failed to report the acquisition of 18
shares of Common Stock on December 4, 1995 and the acquisition on November
29, 1995 by Frellum of a warrant to purchase 25,000 shares of Common Stock,
which was corrected when he filed a Form 5 with the Securities and Exchange
Commission in March 1996.
Item 10. Executive Compensation.
No person who was an executive officer of the Company in 1995
received annual compensation exceeding $100,000 during any of the three
years ended December 31, 1995. The following table sets forth information
concerning compensation for services in all capacities awarded or paid to,
or earned by, Theo W. Muller, the Company's President and Chief Executive
Officer, during the year ended December 31, 1995. No stock appreciation
rights, stock options or other long-term compensation awards
34
<PAGE>
have ever been granted to Mr. Muller. During the year ended December 31,
1995, Mr. Muller did not hold any options to acquire any securities of the
Company.
Annual Compensation
-------------------
Name and Principal Position Year Salary
- --------------------------- ---- ------
Theo W. Muller 1995 $6,000
President and Chief Executive Officer
Employment Contracts and Termination of Employment and Change-in-Control
- ------------------------------------------------------------------------
Arrangements
- ------------
The Company does not have any employment agreement or termination
or change in control arrangement with any of its executive officers.
1987 Stock Option Plan
- ----------------------
The 1987 Plan was adopted by the Board of Directors of the
Company on November 4, 1987 and approved by the shareholders of the Company
on May 25, 1988. The 1987 Plan, as amended, authorized the issuance,
within ten years from the date of its adoption, of options covering up to
90,625 shares of Common Stock (subject to adjustment in certain
circumstances) to such key employees or other individuals (including
executive officers and directors of and consultants to the Company) who
have performed, or reasonably may be expected to perform, services of
special importance to the management, operation or development of the
business of the Company. As of March 20, 1996, options for an aggregate of
4,936 shares of Common Stock, at an average exercise price of approximately
$5.96 per share, were outstanding under the 1987 Plan and 11,562 shares of
Common Stock were available for the grant of future options under the 1987
Plan. The 1987 Plan is intended to provide an incentive to continued
employment of such key employees and other individuals by enabling them to
acquire a proprietary interest in the Company and by offering comparable
incentives to enable the Company better to attract, compete for and retain
highly qualified employees and consultants.
Options granted under the 1987 Plan may be either "Incentive
Stock Options" as that term is defined in Section 422 of the Internal
Revenue Code of 1986 (the "Code"), or options which do not qualify as
Incentive Stock Options ("Non-Qualified Stock Options"). Incentive Stock
Options may be granted only to key individuals, including executive
officers and directors, who are employees of the Company. An Incentive
Stock Option must expire within ten years from the date it is granted (five
years in the case of such options granted to holders of more than 10% of
the outstanding Common Stock). Incentive Stock Options are first
exercisable not earlier than one year from the date of grant. The exercise
price of an Incentive Stock Option must be at least equal to the fair
market value of the Common Stock on the date such Incentive Stock Option is
granted and must be paid in cash or in capital stock of the Company valued
at its then fair market value. To the extent the aggregate fair market
value of Incentive Stock Options that are exercisable for the first time by
an optionee during any calendar year exceeds $100,000, such options will be
treated as Non-Qualified Stock Options.
In addition, the Company may issue Non-Qualified Stock Options
under the 1987 Plan to executive officers, directors and key employees of
the Company and advisors and consultants to the Company. The exercise
price of these options is not limited and may be below fair market value.
Incentive Stock Options terminate three months after the
optionee's relationship with the Company is terminated (one year if
termination is by reason of death or disability). In the case of Non-
Qualified Stock Options, such options terminate as determined by the Board
of Directors, and set forth in the option agreement between the Company and
the optionee.
35
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
SteriGenics International, with its principal executive offices
at 4020 Clipper Court, Fremont, California 94538, owns beneficially and of
record 118,000 shares of Series A Preferred Stock, which shares are
entitled to vote on all matters submitted to the holders of the Common
Stock, as a single class. The shares of Series A Preferred Stock held by
SteriGenics International constitute 9.9% of the outstanding voting
securities of the Company and all the outstanding shares of Series A
Preferred Stock.
Set forth below is information, as of March 15, 1996, with
respect to (i) each person who is known by the Company to be the beneficial
owner of more than 5% of the Common Stock, and (ii) the beneficial
ownership of Common Stock by all current directors of the Company and all
executive officers of the Company, as a group (five persons).
Number of Shares Percent
Name and Address of Owner of Common Stock of Class
- ------------------------- --------------- --------
Theo W. Muller 143,393(a) 13.0%
20 Peach Hill Road
Darien, Connecticut 06820
John N. Scandalios 62,500 5.8%
46 Shrewsbury Drive
Rumson, New Jersey 07760
Sanders Davies 1,500 *
C.W. McMillan 52 *
George M. Whitmore, Jr. 3,125 0.3%
All directors and executive 149,016(b) 13.7%
officers, as a group
- ---------------
* Represents less than 0.1% of the issued and outstanding shares of
Common Stock.
(a) Consists of (i) 118,393 shares owned by Theo W. Muller and (ii) 25,000
shares issuable at $1.75 per share upon exercise of a warrant issued
to Frellum (see Item 12 - "Certain Relationships and Related
Transactions").
(b) Consists of (i) 1,500 shares owned by an individual retirement account
of Sanders Davies, 52 shares owned by C.W. McMillan, 118,393 shares
owned by Theo W. Muller, and 3,125 shares owned by George M. Whitmore,
Jr., directors of the Company, (ii) 25,000 shares issuable at $1.75
per share upon exercise of a warrant issued to Frellum, and (iii) 937
shares issuable at $6.50 per share upon exercise of incentive options
granted to R, Stephen Maico under the 1987 Plan.
The Company does not know of any arrangements, including any
pledge by any person of securities of the Company, the operation of which
at a subsequent date may result in a change in control of the Company.
36
<PAGE>
Item 12. Certain Relationships and Related Transactions.
In December 1994, Theo W. Muller purchased at par from the
remarketing agent $250,000 aggregate principal amount of 10% City of Salem
Municipal Port Authority Bonds, the principal and interest of which are
paid by the Company.
In 1993, the Company sold, in a private placement, an aggregate
of 175,000 shares of Common Stock to several investors, including Theo W.
Muller, and agreed to register such shares within a period of approximately
one year. In December 1994, at the request of the Company and to postpone
the cost of such registration, the investors agreed to defer their rights
to registration of such shares for an indefinite period.
During January 1995, Mr. Muller settled for $50,000 an account
payable of the Company, which was repaid to Mr. Muller, without interest,
in March 1995.
On November 29, 1995, Frellum, a Delaware company which is 50.1%
owned by Mr. Muller, agreed to make available to the Company a $250,000
line of credit. The line of credit, which initially was scheduled to
expire on October 29, 1996, has been extended to April 28, 1997 and the
line of credit has been increased to $315,000. Loans under such credit
line are secured by the Company's accounts receivable, bear interest at 8%
per annum, may be repaid at any time and become due 30 days after written
demand therefor is made, which demand may not be made prior to the
expiration of such credit line. During the year ended December 31, 1995,
$200,000 of loans were made by Frellum under the credit line, all of which
were outstanding at December 31, 1995, and $1,333 of interest had been
accrued with respect thereto. All of such loans were repaid on February
21, 1996. As part of such transaction, the Company issued to Frellum a
warrant, expiring November 28, 1997, to acquire 25,000 shares of the
Company's Common Stock at $1.75 per share (104% of the last sale price of
the Common Stock on The Nasdaq Small-Cap Market on the day immediately
prior to such issuance). Frellum also was granted certain piggyback
registration rights with respect to such shares if the Company registers
its securities under certain circumstances with the Securities and Exchange
Commission prior to November 28, 1997.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits.*
--------
All financial statements required to be filed as part of this
Annual Report on Form 10-KSB are filed under Item 7 of this Form 10-KSB. A
listing of such financial statements is set forth in Item 7, which listing
is incorporated herein by reference.
3. Articles of incorporation and by-laws.
3.1 (a) Certificate of Incorporation, as filed by the New York
Department of State on August 27, 1968. (1)
(b) Certificate of Amendment of Certificate of Incorporation, as
filed by the New York Department of State on December 18, 1968 (1)
(c) Certificate of Change, as filed by the New York Department
of State on September 28, 1970. (1)
- --------------------
* Footnotes to Exhibits are at the end of this listing of Exhibits. Except as
specifically noted, the Exhibits listed herein have been filed previously and
are incorporated herein by reference.
37
<PAGE>
(d) Certificate of Amendment of Certificate of Incorporation, as
filed by the New York Department of State on October 15, 1971. (1)
(e) Certificate of Amendment of Certificate of Incorporation, as
filed by the New York Department of State on July 9, 1983. (1)
(f) Certificate of Amendment to Certificate of Incorporation, as
filed by the New York Department of State on June 6, 1988. (3)
(g) Certificate of Merger of Process Technology (NC), Inc. into
RTI Inc., as filed by the New York Department of State on
December 20, 1991. (11)
(h) Certificate of Amendment to Certificate of Incorporation, as
filed by the New York Department of State on May 25, 1995. (15)
(i) Certificate of Amendment to Certificate of Incorporation, as
filed by the New York Department of State on February 27, 1996.
3.2 By-laws. (14)
4. Instruments defining the rights of security holders, including
indentures.
4.1 Form of Common Stock certificate. (1)
4.2 Form of Preferred Stock certificate.
9. Voting trust agreement and amendments -- none
10. Material contracts.
10.1 Salem Facility - City of Salem Municipal Port Authority Port
Development Revenue Bond (South Jersey Process Technology, Inc.
Project) Series of 1984 Financing.
(a) Sublease and Security Agreement, dated as of December 1,
1984, between City of Salem Municipal Port Authority and South
Jersey Process Technology, Inc., with Assignment of sublessor's
interest to The Farmers and Merchants National Bank of Bridgeton,
as trustee. (1)
(b)(i) TENR Services and Remarketing Agreement, dated as of
December 1, 1984, between South Jersey Process Technology, Inc.
and Bankers Trust Company. (1)
(b)(ii) Appointment of E.A. Moos & Company, dated November 8,
1994, as Successor Remarketing Agent under the TENR Services and
Remarketing Agreement. (14)
(b)(iii) Notice of Remarketing Agent, dated November 29, 1994,
establishing a fixed rate on the Bonds. (14)
(b)(iv) Specimen bond. (14)
10.2 (a) Administration Consent Order in the Matter of Radiation
Technology, Inc., dated March 10, 1987, of the State of New
Jersey Department of Environmental Protection Division of
Hazardous Waste Management. (1)
38
<PAGE>
(b) Directive II, dated June 30, 1989, from the State of New
Jersey Department of Environmental Protection in the Matter of
the Radiation Technology Site and Morton Thiokol, Inc. and RTI
Inc. respondents. (6)
(c)(i) Administrative Consent Order, dated December 7, 1992, of
the State of New Jersey Department of Environmental Protection
and Energy, in the Matter of RTI Inc. Site, RTI Inc. and Thiokol
Corporation. (12)
(c)(ii) Amendment to Administrative Consent Order, dated August
2, 1994, of the State of New Jersey Department of Environmental
Protection and Energy. (14)
(d) Record of Decision - Radiation Technology Incorporated (RTI)
with respect to a site in Rockaway Township, Morris County, New
Jersey, issued in 1994 by the New Jersey Department of
Environmental Protection and Energy. (14)
10.3 Trust Agreement, dated July 24, 1990, between RTI Inc. and
National Community Bank of New Jersey, Trust Division, to fund
decommissioning of facility at 108 Lake Denmark Road, Rockaway,
New Jersey. (9)
10.4 (a) Credit Agreement, dated as of December 1, 1978, among New
Jersey Economic Development Authority, Radiation Technology, Inc.
and New Jersey National Bank. (1)
(b) Bond Purchase Agreement, dated as of December 1, 1978, among
New Jersey Economic Development Authority, Radiation Technology,
Inc. and Thiokol Corporation. (1)
(c) Promissory Note, dated December 14, 1978, from Radiation
Technology, Inc. to New Jersey Economic Development Authority in
the principal amount of $820,000. (1)
(d) Mortgage, dated December 14, 1978, between Radiation
Technology, Inc. and New Jersey Economic Development Authority. (1)
(e) Assignment of Leases and Rents, dated December 14, 1978,
from Radiation Technology, Inc. (1)
(f) Settlement Agreement, dated December 18, 1992, between RTI
Inc. and Thiokol Corporation. (12)
(g) Mortgage, dated December 18, 1992, between RTI Inc. and
Thiokol Corporation. (12)
(h) Escrow Agreement, dated January 18, 1993, among RTI Inc.,
Thiokol Corporation and Archer & Greiner, a Professional
Corporation. (12)
(i) Assignment of Mortgage, Note, Assignment of Leases and
Rents, Credit Agreement and Pledge of Revenues, dated January 29,
1993, by New Jersey National Bank. (12)
10.5 (a) Administrative Order of the United States Environmental
Protection Agency, dated August 9, 1994, In the Matter of the
Nascolite Corporation Site. (14)
(b) Nascolite Corporation Superfund Site Tolling Agreement, dated
February 2, 1995, between the United States of America and RTI
Inc. (14)
39
<PAGE>
10.6 Agreement, made as of October 1, 1993, between Amersham
International plc and RTI Inc. (13)
10.7 Invoice, dated September 27, 1994, from Nordion International
Inc. to RTI Inc., with related agreement. (14)
10.8 (a) Credit Agreement, dated November 29, 1995, between RTI Inc.
and Frellum Corporation.
(b) Revolving Credit Note, dated November 29, 1995, in the
principal amount of $250,000 from RTI Inc. to Frellum
Corporation.
(c) Amendment to Credit Agreement and Revolving Credit Note,
dated February 2, 1996, between RTI Inc. and Frellum Corporation.
(d) Amendment to Revolving Credit Note, dated March 25, 1996,
between RTI Inc. and Frellum Corporation.
(e) Security Agreement, dated November 29, 1995, between RTI Inc.
and Frellum Corporation.
(f) Warrant Agreement, dated November 29, 1995, between RTI Inc.
and Frellum Corporation.
(g) Warrant Certificate for 25,000 shares of RTI Common Stock
issued to Frellum Corporation on November 29, 1995.
10.9 (a) Asset Acquisition Agreement, dated as of February 26, 1996,
between SteriGenics International and RTI Inc.
(b) Option Agreement, dated as of February 26, 1996, between
SteriGenics International and RTI Inc.
(c) Series A Preferred Stock Purchase Agreement, dated as of
February 26, 1996, between SteriGenics International and RTI Inc.
(d) Form of Escrow Agreement among SteriGenics International, RTI
Inc. and the Escrow Agent named therein.
(e) Form of Lease Agreement between SteriGenics International and
RTI Inc.
(f) Voting Agreement, dated as of February 26, 1996, between
SteriGenics International and Theo W. Muller.
(g) Form of Voting Agreement between SteriGenics International
and certain shareholders of RTI Inc.
11. Statement re computation of per share earnings - not required
since such computation can be determined clearly from the
material contained in this Annual Report on Form 10-KSB.
13. Annual report to security holders, Form 10-Q or quarterly report
to security holders - not applicable.
40
<PAGE>
16. Letter on change in certifying accountant - not applicable.
18. Letter on change in accounting principles - none.
21. Subsidiaries of the small business issuer.
(a) Process Technology, Inc. (incorporated in Arkansas) (inactive)
(b) South Jersey Process Technology, Inc. (incorporated in New
Jersey)
22. Published report regarding matters submitted to vote of security
holders - not applicable.
23. Consents of experts and counsel.
(a) Consent of BDO Seidman, LLP, to incorporation of financial
statements in Form S-8 Registration Statement (No. 33-34063).
24. Power of attorney - none.
27. Financial Data Schedule
28. Information from reports furnished to state insurance regulatory
authorities - not applicable.
99. Additional exhibits - none.
- ---------------
(1) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form 10-K for its fiscal year ended December 31,
1986.
(2) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form 10-K for its fiscal year ended December 31,
1987.
(3) Incorporated by reference; filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended September
30, 1987.
(4) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form 10-K for its fiscal year ended December 31,
1988.
(5) Incorporated by reference; filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended March 31,
1989.
(6) Incorporated by reference; filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended June 30,
1989.
(7) Incorporated by reference; filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended September
30, 1989.
(8) Incorporated by reference; filed as an Exhibit to the Company's
Current Report on Form 8-K dated as of November 30, 1989.
(9) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form 10-K for its fiscal year ended December 31,
1990.
41
<PAGE>
(10) Incorporated by reference; filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended March 31,
1991.
(11) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form
10-K for its fiscal year ended December 31, 1991.
(12) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form 10-KSB for its fiscal year ended December 31,
1992.
(13) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form 10-KSB for its fiscal year ended December 31,
1993.
(14) Incorporated by reference; filed as an Exhibit to the Company's
Annual Report on Form 10-KSB for its fiscal year ended December 31,
1994.
(15) Incorporated by reference; filed as an Exhibit to the Company's
Quarterly Report on Form 10-QSB for its fiscal quarter ended June 30,
1995.
(b) Reports on Form 8-K. No report on Form 8-K was filed by the Company
-------------------
during the fourth quarter of its fiscal year ended December 31, 1995.
42
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: March 29, 1996
RTI INC.
By: THEO W. MULLER
----------------------------
Theo W. Muller, President
(Principal Executive Officer)
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Dated:
March 29, 1996 SANDERS DAVIES
----------------------------------
Sanders Davies, Director
March 29, 1996 C.W. McMILLAN
----------------------------------
C. W. McMillan, Director
March 29, 1996 THEO W. MULLER
----------------------------------
Theo W. Muller, Director
March 29, 1996 GEORGE M. WHITMORE, JR.
----------------------------------
George M. Whitmore, Jr., Director
March 29, 1996 R. STEPHEN MAICO
----------------------------------
R. Stephen Maico, Controller
(Principal Financial and
Accounting Officer)
43
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
RTI INC.
Under Section 805 of the Business Corporation Law
---------------------------
It is hereby certified that:
FIRST: The name of the Corporation is RTI Inc. The name under
which the Corporation was formed is Radiation Technology, Inc.
SECOND: The certificate of incorporation of the Corporation was
filed by the Department of State of the State of New York on August 27, 1968.
THIRD: The amendment of the certificate of incorporation of the
Corporation effected by this certificate of amendment is as follows:
To add a provision stating the number, designation, relative
rights, preferences and limitations of the shares of Series A Preferred Stock as
fixed by the Board of Directors of the Corporation pursuant to the authorization
contained in the certificate of incorporation of the Corporation.
FOURTH: To accomplish the foregoing amendment, the following new
Article SIXTH is added to the certificate of incorporation of the Corporation as
follows:
"SIXTH" (a) Designation of Series. The series of Preferred
---------------------
Shares established herein shall be designated "Series A Preferred Stock"
(hereinafter called "Series A Preferred Stock") and the authorized number of
shares of Series A Preferred Stock shall be 200,000 shares. The shares of Series
A Preferred Stock, upon issuance for a consideration of $2.00 per share, shall
be fully-paid and non-assessable. All shares of Series A Preferred Stock
redeemed or otherwise purchased or acquired by the Corporation (including shares
of Series A Preferred Stock acquired upon conversion in accordance with clause
(e) of this Article SIXTH) shall have the status of authorized but unissued
shares of Preferred Shares and any such shares may be reissued as shares of such
series of Preferred Shares as
<PAGE>
may be designated by the Board of Directors of the Corporation.
(b) Dividends. The holders of shares of Series A Preferred
---------
Stock shall be entitled to receive, when and as declared by the Board of
Directors out of funds legally available for the purpose, dividends in cash at
the rate of $0.16 per share per annum. Dividends on shares of Series A
Preferred Stock will accumulate and will be payable annually on December 31 of
each year. Dividends on shares of Series A Preferred Stock will be cumulative
whether or not earned or declared and whether or not there shall be funds of the
Corporation legally available for the payment of such dividends. Accruals and
accumulations of dividends shall not bear interest.
So long as any shares of Series A Preferred Stock shall be
outstanding, the Corporation shall not declare or pay, or set apart for payment,
any dividends or make any distribution in cash or other property on any Common
Shares of the Corporation, nor shall any Common Shares of the Corporation be
redeemed or purchased by the Corporation, nor shall any monies be paid to or
made available for a sinking fund for the redemption or purchase of any Common
Shares of the Corporation, unless in each instance all dividends accrued on all
outstanding shares of Series A Preferred Stock as of the record date for the
taking of any such actions shall have been paid or provided for.
(c) Liquidation Rights. In the event of any liquidation,
------------------
dissolution, or winding up of the Corporation, whether voluntary or involuntary,
after payment or provision for the payment of the debts and other liabilities of
the Corporation, the Corporation shall pay to the holders of shares of Series A
Preferred Stock, before any distribution shall be made to the holders of any
other capital stock of the Corporation, an amount equal to $2.00 per share of
Series A Preferred Stock held by each such holder, plus an amount equal to all
accrued dividends unpaid thereon to the date of final distribution to such
holders. For the purposes of this section (c), any sale, conveyance, exchange
or transfer (for cash, shares of stock, securities, or other consideration) of
all or substantially all of the property or assets of the Corporation,
reorganization of the Corporation, or consolidation or merger of the Corporation
with one or more corporations, shall be deemed to be a liquidation, dissolution
or winding up, voluntary or involuntary.
2
<PAGE>
(d) Voting. (i) Except as otherwise provided by law, the
------
holders of record of shares of Series A Preferred Stock shall be entitled to
vote at any election of directors and on any other matter submitted to the
holders of Common Shares, voting together with the holders of Common Shares (and
any other class or series which may similarly be entitled to vote with the
Common Shares) as a single class, and shall be entitled to one vote per share of
Series A Preferred Stock held by them.
(e) Conversion into Common Stock. (i) Each share of
----------------------------
Series A Preferred Stock shall be convertible at any time, at the option of the
holder thereof, into one Common Share, subject to the adjustments hereinafter
provided.
(ii) Each holder of record of outstanding shares of
Series A Preferred Stock may exercise the conversion right provided in clause
(i) of this section (e) as to all or any portion of such shares by delivering to
the Corporation during regular business hours, at the principal office of the
Corporation or at such other place as may be designated in writing by the
Corporation, the certificate or certificates for the shares to be converted,
duly endorsed and assigned to the Corporation, accompanied by written notice
stating that the holder elects to convert such shares into Common Shares and
stating the name or names (with address and applicable social security or other
tax identification number) in which the certificate or certificates for Common
Shares are to be issued. A conversion shall be deemed to have been effected on
the date (the "Conversion Date") when such delivery is made. As promptly as
practicable thereafter, the Corporation shall issue and deliver to or upon the
written order of such holder, at such office or other place designated by the
Corporation, a certificate or certificates for the number of Common Shares to
which such holder is entitled. For all purposes, the rights of a converting
holder of shares of Series A Preferred Stock, as such, shall cease as to the
shares converted and the person or persons in whose name or names the
certificates for Common Shares issuable upon such conversion are to be issued
shall be deemed to have become the record holder or holders of such Common
Shares, at the close of business on the day on which delivery of such notice
shall be made. The Corporation shall pay all issue and transfer taxes, if any,
incurred in respect of Common Shares delivered on conversion; provided, however,
that the Corporation shall not be required to pay transfer or other
3
<PAGE>
taxes, if any, incurred by reason of the issuance or delivery of such Common
Shares in a name or names other than those in which the shares of Series A
Preferred Stock surrendered for conversion are registered, and no such issuance
or delivery shall be made unless and until there has been paid to the
Corporation the amount of any such taxes, or there shall have been established
to the satisfaction of the Corporation that such taxes have been paid.
In the event of the liquidation, dissolution or winding up of the
Corporation, such right of conversion shall end at the close of business on the
10th business day prior to the date fixed for the first distribution of the
assets of the Corporation to the holders of shares of Series A Preferred Stock.
Upon conversion, the Corporation shall pay a dividend on the shares of Series A
Preferred Stock surrendered for conversion in an amount per share equal to the
amount accrued at the applicable dividend rate for the number of days in the
period between (i) the end of the last completed dividend period as to which
dividends have been paid, and (ii) the Conversion Date.
(f) Adjustments. The number of Common Shares into which
-----------
each share of the Series A Preferred Stock is convertible shall be subject to
the following adjustments from time to time and after the happening of each of
the following events only as follows:
(i) If the Corporation shall (w) pay a dividend or make
a distribution on the outstanding Common Shares payable in Common Shares, (x)
subdivide the outstanding Common Shares into a larger number of shares, (y)
combine the outstanding Common Shares into a smaller number of shares, or (z)
issue by reclassification of the Common Shares any shares of the Corporation,
each holder shall thereafter be entitled upon conversion to receive for each
share of the Series A Preferred Stock held by such holder the number of Common
Shares which such holder would have owned or have been entitled to receive after
the happening of any of the events described above in this clause (i) had such
shares of the Series A Preferred Stock been converted immediately prior to the
happening of such event. Such adjustment shall become effective on the day next
following (x) the record date of such dividend or distribution, or (y) the day
upon which such subdivision, combination or reclassification shall become
effective.
4
<PAGE>
(ii) If the Corporation shall consolidate or merge into
or with another corporation or other entity, or if the Corporation shall sell or
convey to any other person or persons all or substantially all of the property
of the Corporation, then each holder of shares of Series A Preferred Stock then
outstanding shall have the right thereafter to convert each share of Series A
Preferred Stock held by such holder into the kind and amount of any shares of
stock, other securities, cash, and property receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of Common Shares into which
such share might have been converted immediately prior to such consolidation,
merger, sale or conveyance, and shall have no other conversion rights. In any
such event, effective provision shall be made, in the certificate or articles of
incorporation of the resulting or surviving corporation or otherwise in any
contracts of sale and conveyance such that, insofar as appropriate and as nearly
as reasonably may be, the provisions set forth herein for the protection of the
conversion rights of the Series A Preferred Stock shall thereafter be made
applicable.
(iii) No fractional Common Shares shall be issued upon
any conversion but, in lieu thereof, there shall be paid to each holder of
shares of the Series A Preferred Stock surrendered for conversion who but for
the provisions of this clause (iii) would be entitled to receive a fraction of a
Common Share on such conversion, as soon as practicable after the date such
shares are surrendered for conversion, an amount in cash equal to the same
fraction of the market value of a full Common Share. For purposes of this
clause (iii), the market value of a share shall be (x) the last sale price per
Common Share on the date immediately preceding the Conversion Date on the
principal stock exchange or The Nasdaq Stock Market, as the case may be, on
which the Common Shares are then traded or, if there is no such price on such
date, then the last price on such exchange or The Nasdaq Stock Market, on the
date nearest preceding such date, or (y) if the Common Shares are not listed on
any stock exchange or The Nasdaq Stock Market, the average of the bid and asked
price for a Common Share in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), or (z) if the Common Shares
are not publicly traded, the fair market value of a Common Share as determined
by the Board of Directors of the Corporation in good faith.
5
<PAGE>
(iv) No adjustment in the number of Common Shares into
which each share of the Series A Preferred Stock is convertible shall be
required unless such adjustment would require an increase or decrease of more
than one-quarter of a share in the number of Common Shares into which such share
is then convertible; provided, however, that any adjustments which by reason of
this clause (iv) are not required to be made shall be carried forward
cumulatively and taken into account in any subsequent calculation.
(v) Whenever any adjustment is required in the shares
into which each share of the Series A Preferred Stock is convertible, the
Corporation shall keep available at its principal office and the principal
office of each of the transfer agent or transfer agents for the Series A
Preferred Stock and for the Common Shares a statement describing in reasonable
detail the adjustment and the method of calculation used.
In the event cash, property or securities other than Common Shares
shall be payable, deliverable, or issuable by the Corporation upon conversion as
aforesaid, then references to Common Shares in this section (f) shall be deemed
to apply so far as appropriate and as nearly as may be, to such cash, property
or other securities.
(g) Redemption by Holders (i) Subject to and upon
---------------------
compliance with the provisions of this section (g), the holder of a share of
Series A Preferred Stock shall have the option, but not the obligation, to
require the Corporation to redeem all, but not less than all, of such holder's
shares of Series A Preferred Stock at a price of $2.00 per share (the
"Redemption Price"), payable in accordance with the provisions of clause (iii)
of this section (g).
(ii) Each holder of record of outstanding shares of
Series A Preferred Stock may exercise the redemption right provided in clause
(i) of this section (g) as to all, but not less than all, of such shares by
delivering to the Corporation during regular business hours, at the principal
office of the Corporation or at such other place as may be designated in writing
by the Corporation, the certificate or certificates for the shares to be
redeemed, duly endorsed and assigned to the Corporation, accompanied by written
notice (the "Notice") stating that the holder elects to cause the Corporation to
redeem such shares. A redemption pursuant to this section (g) shall be
6
<PAGE>
deemed to have been effected on the date (the "Redemption Date") when such
delivery is made.
(iii) The Corporation shall, at its option, pay the
Redemption Price either (x) in cash or (y) by delivery of a demand note from the
Corporation in the principal amount of the Redemption Price and otherwise in the
form of Exhibit A annexed hereto (the "Demand Note"); provided, however, that if
the Notice shall have been delivered after January 31, 1997, the Redemption
Price shall be paid in cash.
(iv) As promptly as practicable following its receipt
of the Notice, the Corporation shall pay to the holder of the Series A Preferred
Stock which has been surrendered for redemption, and deliver to or upon the
written order of such holder, at such office or other place designated by the
Corporation, the Redemption Price. For all purposes, the rights of a holder of
shares of Series A Preferred Stock, as such, shall cease as to the shares
redeemed at the close of business on the date of delivery of the Notice.
(v) Notwithstanding anything to the contrary otherwise
contained in this section (g), the Corporation shall have no obligation to
redeem any shares of Series A Preferred Stock, and a holder of shares of Series
A Preferred Stock shall have no rights under this section (g), if such
redemption would violate the provisions of Section 513 of the New York Business
Corporation Law (the "BCL"). Notwithstanding the foregoing, the Corporation
shall be obligated to redeem the maximum number of shares of Series A Preferred
Stock to be redeemed pursuant to this section (g) which would not cause it to
violate the provisions of Section 513 of the BCL and shall be obligated to
redeem any remaining shares of Series A Preferred Stock at such other time or
times as permitted by Section 513 of the BCL.
(vi) In the event of the liquidation, dissolution or
winding up of the Corporation, such right of redemption shall end at the close
of business on the 10th business day prior to the date fixed for the first
distribution of the assets of the Corporation to the holders of shares of Series
A Preferred Stock. Upon redemption, the Corporation shall pay a dividend on the
shares of Series A Preferred Stock surrendered for redemption in an amount per
share equal to the amount accrued at the applicable dividend rate for the number
of days in the period between (A) the end of the last completed
7
<PAGE>
dividend period as to which dividends have been paid, and (B) the Redemption
Date.
(h) Redemption by the Corporation (i) The Series A
-----------------------------
Preferred Stock may be redeemed, at the option of the Corporation, in whole but
not in part, at any time after January 31, 1997, at a price of $2.00 per share,
in cash.
(ii) If the Corporation desires to redeem the shares of
Series A Preferred Stock, the Corporation shall give the holders thereof notice
of such redemption, which notice shall set forth the number of shares to be
redeemed and the place and date fixed for redemption, which date shall be not
less than five days after the date of such notice. On the date fixed for
redemption (the "Corporation Redemption Date"), the holders of shares of Series
A Preferred Stock shall surrender the certificates therefor and, as promptly as
practicable thereafter, the Corporation shall issue and deliver to or upon the
written order of such holder, at such office or other place designated by the
Corporation, an amount equal to $2.00 multiplied by the number of shares of
Series A Preferred Stock surrendered by such holder. For all purposes, the
rights of a holder of shares of Series A Preferred Stock, as such, shall cease
as to the shares redeemed at the close of business on the Corporation Redemption
Date.
FIFTH: The foregoing amendment of the certificate of incorporation
was authorized by the Board of Directors of the Corporation pursuant to the
authority vested in said Board under the provisions of the certificate of
incorporation of the Corporation and of Section 502 of the Business Corporation
Law.
8
<PAGE>
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained herein have been examined by us and are true and correct.
Dated: February 27, 1996
THEO W. MULLER
-----------------------
Theo W. Muller
President
R. STEPHEN MAICO
-----------------------
R. Stephen Maico
Secretary
9
<PAGE>
EXHIBIT A
DEMAND NOTE
-----------
$ Rockaway, New Jersey
--------------
Dated:
A. GENERAL; TERMS OF PAYMENT
-------------------------
1. FOR VALUE RECEIVED, the undersigned, RTI INC., a corporation
organized under the laws of the State of New York (the "Maker"), promises to pay
to the order of (the "Payee"), at its office at
-------------------
or at such other place as may be
- -----------------------------------------
designated by the holder hereof in writing, the principal sum of
, together with interest thereon, ten (10) days
- -------------------------------
following the date the Payee makes a demand for payment hereunder; provided that
Payee shall not be entitled to make demand for payment hereunder prior to
January 31, 1997. Interest shall accrue on the unpaid principal amount hereof at
the rate of eight (8%) percent per annum.
2. Prepayment. The Maker shall have the right to prepay this Note in
----------
whole at any time or in part from time to time, without penalty or premium,
provided that on each prepayment the Maker shall pay accrued interest on the
principal amount so prepaid to the date of such prepayment.
3. Manner of Payment. All payments by the Maker on account of
-----------------
principal, interest or fees hereunder shall be made in lawful money of the
United States of America, by wire transfer to an account designated by the
holder of this Note (if such payment is in excess of $10,000) or by certified
check or bank cashier's check.
B. EVENTS OF DEFAULT
-----------------
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
(a) the Maker shall commence any case, proceeding or other
action (i) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts; or (ii) seeking appointment of a receiver,
custodian or other similar official for it or for all or any substantial
<PAGE>
part of its assets, or make a general assignment for the benefit of its
creditors; or
(b) there shall be commenced against the Maker any case,
proceeding or other action of a nature referred to in clause (a) above which
results in the entry of an order for relief or any such adjudication or
appointment and which remains undismissed, undischarged or unbonded for a period
of ninety (90) days; or
(c) there shall be commenced against the Maker any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, restraint or process against all or any substantial part of its
assets which results in the entry of an order for such relief which shall not
have been vacated, discharged, stayed or bonding pending appeal within ninety
(90) days from the entry thereof; or
(d) the Maker shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due,
then, and in any such event, the Payee may at any time (unless all defaults
shall theretofore have been remedied) at its option, declare this Note to be due
and payable, whereupon this Note shall forthwith mature and become due and
payable, together with interest accrued thereon, without presentment, demand,
protest or notice, all of which are hereby waived.
C. MISCELLANEOUS
-------------
1. No Waiver; Rights and Remedies Cumulative. No failure on the part
-----------------------------------------
of the holder of this Note to exercise, and no delay in exercising any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the holder of this Note of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies herein provided are cumulative and not exclusive of any remedies or
rights provided by law or by any other agreement between the Maker and the
Payee.
2. Amendments. No amendment, modification or waiver of any provision
----------
of this Note nor consent to any departure therefrom by the Maker shall be
effective unless the same shall be in writing and signed by the holder of this
Note and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
2
<PAGE>
3. Construction. This Note shall be governed by the laws of the
------------
State of New York, without giving effect to its choice of law principles.
4. Successors and Assigns. This Note shall be binding upon the Maker
----------------------
and its successors and assigns and the terms hereof shall inure to the benefit
of the Payee and its successors and permitted assigns.
5. Severability. The provisions of this Note are severable, and if
------------
any provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
6. Waiver of Notice. The Maker hereby waives presentment, demand
----------------
for payment, notice of protest and all other demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note.
RTI INC.
By:
----------------------------
Theo W. Muller, President
3
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
SERIES A PREFERRED STOCK CERTIFICATE
No. A- Shares
-- ----------
RTI INC.
(Incorporated under the laws of the State of New York)
THIS IS TO CERTIFY THAT
---------------------------------------------------
is the registered owner of
-----------------------------------------------------
fully paid and nonassessable shares of Series A Preferred Stock, $.05 par value,
of RTI INC., transferable on the books of the Corporation by the registered
owner in person or by duly authorized attorney upon surrender of this
certificate properly endorsed.
WITNESS the seal of the Corporation and the signatures of its duly
authorized officers.
Dated:
-----------------------------------
Theo W. Muller
President
[SEAL]
-----------------------------------
R. Stephen Maico
Secretary
The Corporation will furnish to any shareholder, upon request and without
charge, a full statement of the designations, relative rights, preferences and
limitations of each series of preferred shares so far as the same have been
fixed and the authority of the board of directors of the Corporation to
designate and fix the relative rights, preferences and limitations of other
series of preferred shares.
<PAGE>
NOTICE TO CONVERT SHARES OF
SERIES A PREFERRED STOCK
The undersigned, being the registered holder of shares of Series A
Convertible Preferred Stock (the "Series A Preferred Stock") of RTI Inc. (the
"Corporation") hereby irrevocably elects to convert all the shares of Series A
Preferred Stock registered in such holder's name into shares of Common Stock,
par value $.08 per share (the "Common Stock"), of the Corporation, in accordance
with the terms of the Series A Preferred Stock, and directs that the certificate
for the shares of Common Stock issuable and deliverable upon such conversion be
issued and delivered to the name of the registered holder.
Date:
------------------
[Name of Holder}
By:
---------------------------
Exhibit 10.8(a)
CREDIT AGREEMENT
----------------
CREDIT AGREEMENT, dated November 29, 1995, between RTI INC., a New
York corporation having its principal office at 108 Lake Denmark Road, Rockaway,
New Jersey 07866 (the "Borrower"), and FRELLUM CORPORATION, a Delaware
corporation having an office at 20 Peach Hill Road, Darien, Connecticut 06820
(the "Lender").
R E C I T A L:
- - - - - - -
The Borrower desires, and the Lender is willing, subject to and upon
the terms and conditions set forth herein, to make loans in the aggregate
principal amount not in excess of $250,000 at any time outstanding.
Accordingly, the Borrower and the Lender agree as follows:
SECTION 1. FINANCING.
---------
1.1. Revolving Credit Facility.
-------------------------
1.1.1. Revolving Loans. Subject to and upon the terms and
---------------
conditions of this Agreement, the Lender agrees to make cash advances (each a
"Revolving Loan" and collectively the "Revolving Loans") to the Borrower at any
time and from time to time from the date hereof to, but not including, the
thirtieth (30th) day immediately prior to the day on which the Note (as
hereinafter defined) matures in accordance with its terms (in the absence of
acceleration); provided, however, that (i) an Event of Default (as hereinafter
-------- -------
defined) has not occurred and is continuing, and (ii) the aggregate principal
sum of the Revolving Loans outstanding at any time shall in no event exceed
$250,000. The Borrower may borrow, repay and reborrow Revolving Loans as
provided in this Agreement; provided, however, that each Revolving Loan shall be
-------- -------
in the minimum principal sum of $10,000.
1.1.2. Borrowing Notice. The Borrower shall give the Lender
----------------
notice of each proposed borrowing of Revolving Loans at least three (3) Business
Days before such proposed borrowing. The notice of borrowing shall specify (i)
the date of such borrowing (which shall be a Business Day), (ii) the requested
amount of such borrowing (which shall be in accordance with the provisions of
this Agreement) and (iii) the bank account to be credited with
<PAGE>
the proceeds of such borrowing. For purposes of this Agreement, a Business Day
shall mean any day on which commercial banks in the State of New Jersey are not
closed (as required or permitted by law) for business.
1.1.3. Revolving Credit Note. Concurrently with the execution
---------------------
and delivery of this Agreement, the Borrower shall evidence its obligation to
pay the principal of and interest on the Revolving Loans by executing and
delivering to the Lender a promissory note in the principal sum of $250,000 in
the form annexed hereto as Exhibit A (the "Note").
1.2. Prepayment of Revolving Loans. The Borrower shall have the
-----------------------------
right to prepay the outstanding principal sum of the Revolving Loans in whole at
any time or in part from time to time.
1.3. Security Agreement. Concurrently with the execution and
------------------
delivery of this Agreement, the Borrower is granting a security interest to the
Lender in the accounts receivable of the Borrower and its subsidiaries pursuant
to a separate security agreement in the form annexed hereto as Exhibit B (the
"Security Agreement").
SECTION 2. EVENTS OF DEFAULT/REMEDIES.
--------------------------
2.1. Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default":
(a) default shall be made in the payment of any principal of the Note
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise, and such default shall continue unremedied for a
period of ten (10) or more days;
(b) default shall be made in the payment of any interest on the Note,
or any fee or any other amount payable thereunder, when and as the same
shall become due and payable, and such default shall continue unremedied
for a period of ten (10) or more days;
(c) if this Agreement, the Note or the Security Agreement shall
terminate, be terminable or be terminated or become void or unenforceable
for any reason whatsoever without the prior written consent of the Lender;
2
<PAGE>
(d) the Borrower or any subsidiary of the Borrower shall (i)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code or any other Federal or state
bankruptcy, insolvency, receivership, liquidation or similar law, (ii)
consent to the institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing of any such petition,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Borrower or any such
subsidiary or for a substantial part of its property or assets, (iv) file
an answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due, or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(e) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Borrower or any subsidiary of the Borrower, or of
a substantial part of its property or assets, under Title 11 of the United
States Code or any other Federal or state bankruptcy, insolvency,
receivership liquidation or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar official for the
Borrower or any such subsidiary or for a substantial part of its property
or assets, or (iii) the winding-up or liquidation of the Borrower or any
such subsidiary; and such proceeding or petition shall continue undismissed
for sixty (60) days or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for sixty (60) days; or
(f) this Agreement, the Note or the Security Agreement shall for any
reason cease to be, or shall be asserted by the Borrower or any subsidiary
of the Borrower not to be, a legal, valid and binding obligation of the
Borrower or such subsidiary (as the case may be), enforceable in accordance
with its terms, or the security interest or lien purported to be created by
the Security Agreement shall for any reason cease to be, or be asserted by
the Borrower or any such subsidiary not to be, a valid, perfected security
interest in any of the collateral covered thereby (the "Collateral"),
except to the extent otherwise permitted
3
<PAGE>
under the Security Agreement, or if the Borrower or any such subsidiary
shall be in default under the Security Agreement in excess of the grace
period, if any, provided therein.
2.2. Remedies. Upon the occurrence of any one or more of Events of
--------
Default, the Lender may, at its option, without presentment for payment, notice
of dishonor or notice of protest, all of which are hereby expressly waived by
the Borrower, declare any and all of the Revolving Loans to be due and payable;
provided, however, that if such event is an event specified in clause (d) or (e)
- -------- -------
of Section 2.1, then the Revolving Loans automatically shall become due and
payable. The Lender shall have all of the rights and remedies of a Secured
Party under the Uniform Commercial Code of the State of New Jersey and under the
Uniform Commercial Code of any other state in which any Collateral may be
situated, and, additionally, all of the rights and remedies set forth in this
Agreement, the Note and the Security Agreement, and under any other applicable
law relating to this Agreement, the Note or the Security Agreement.
SECTION 3. MISCELLANEOUS.
-------------
3.1. Survival of Agreement. All agreements, representations and
---------------------
warranties contained herein or made in writing by the parties hereto in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, the Note and the Security Agreement and the
consummation of the transactions contemplated herein or therein regardless of
any investigation made by or on behalf of the Lender.
3.2. No Waiver; Cumulative Remedies. No failure to exercise, and no
------------------------------
delay in exercising on the part of the Lender, any right, power or privilege
under this Agreement, the Note or the Security Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power and privilege. The rights and
remedies of the Lender hereunder and under the Note and the Security Agreement
and under any other present and future agreements between the Lender and the
Borrower are cumulative and not exclusive of any rights or remedies provided by
law, and all such rights and remedies may be exercised successively or
concurrently.
4
<PAGE>
3.3. Notices. All notices, approvals, consents, requests, demands or
-------
other communications (collectively, "Communications") to or upon the respective
parties hereto shall be made in writing in one of the following ways and shall
be deemed to have been given, received and dated: if by hand, immediately upon
delivery; if by express mail or any other overnight delivery service, one
business day after dispatch; and if by certified mail, return receipt requested,
four business days after mailing. All Communications are to be given to the
parties at the respective addresses set forth at the beginning of this Agreement
(or to such other address as any party may designate by Communication in
accordance with this Section).
3.4. Amendments and Waivers. Neither this Agreement, nor any
----------------------
instrument or document referred to herein may be changed, waived, discharged or
terminated, except by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
3.5. Applicable Law. This Agreement is being executed and delivered
--------------
in Rockaway, New Jersey and shall be construed and interpreted in accordance
with the laws of the State of New Jersey applied to agreements entered into and
performed therein.
3.6. Successors. This Agreement and any other document referred to
----------
herein shall be binding upon and inure to the benefit of and be enforceable by
the parties and their respective heirs, successors and assigns, except that the
Borrower may not assign its rights hereunder or thereunder without the prior
written consent of the Lender.
3.7. Partial Invalidity. If any provision of this Agreement is held
------------------
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement, but this Agreement shall be construed as though it
did not contain the particular provision or provisions held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by law.
3.8. Headings and Word Meanings. The headings used herein are for
--------------------------
convenience only and do not constitute matters to be considered in interpreting
this Agreement. The words "herein," "hereinabove," "hereof," and "hereunder,"
when used anywhere in this Agreement, refer to this Agreement as a whole and not
merely to a subdivision in
5
<PAGE>
which such words appear, unless the context otherwise requires. The singular
shall include the plural, the masculine gender shall include the feminine and
neuter and the disjunctive shall include the conjunctive, and vice versa, unless
the context otherwise requires.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
RTI INC.
By: R. STEPHEN MAICO
--------------------
R. Stephen Maico
Vice President and
Chief Financial Officer
FRELLUM CORPORATION
By: ROBERT C. SABIN
-------------------------
Treasurer
6
Exhibit 10.8(b)
REVOLVING CREDIT NOTE
---------------------
$250,000.00 Rockaway, New Jersey
November 29, 1995
A. GENERAL; TERMS OF PAYMENT
-------------------------
1. FOR VALUE RECEIVED, the undersigned, RTI INC., a New York
corporation (the "Borrower") promises to pay to FRELLUM CORPORATION, a Delaware
corporation ("Frellum"), or order the principal sum of TWO HUNDRED FIFTY
THOUSAND ($250,000.00) DOLLARS or, if less, the aggregate unpaid principal sum
of all Revolving Loans made by Frellum to the Borrower from time to time
pursuant to a credit agreement, dated the date hereof, between the Borrower and
Frellum (the "Credit Agreement"), in one installment thirty (30) days after
written demand therefor is made, which demand may be made at any time commencing
eleven (11) months after the date hereof.
Frellum is authorized to enter on the schedule attached hereto the
amount of each Revolving Loan and each payment of principal thereon, without any
further authorization on the part of the Borrower, but Frellum's failure to make
such entry will not limit or otherwise affect the obligations of the Borrower on
this Note.
The Borrower will pay interest on the unpaid principal amount of each
Revolving Loan from time to time outstanding, computed on the basis of a 360-day
year, at a rate of eight percent (8%) per annum. Interest will not be
compounded. Interest on the unpaid principal amount of this Note accrued
during each calendar month will be payable on the tenth (10th) day of each
immediately succeeding calendar month, at maturity (whether by acceleration or
otherwise) and upon the making of any prepayment as herein provided. In
addition, the Borrower will pay interest on any overdue installment of principal
for the period for which overdue, on demand, at a rate equal to 4% per annum
above the rate of interest hereinabove indicated.
2. Prepayment. The Borrower will have the right to prepay this Note,
----------
in whole or in part, at any time without penalty or premium.
3. Manner of Payment. All payments by the Borrower on account of
-----------------
principal, interest or costs
<PAGE>
hereunder will be made in lawful money of the United States of America, in
immediately available funds. If any payment of principal or interest becomes
due on a day on which banks in the State of New Jersey are closed (as required
or permitted by law or otherwise), such payment will be made not later than the
next succeeding business day.
B. DEFAULT
-------
Upon the occurrence of an Event of Default, as defined in the Credit
Agreement, and during the continuance thereof, the entire unpaid principal
amount of this Note and all interest unpaid hereon may be declared to be due and
payable in the manner and with the effect provided in the Credit Agreement.
C. SECURITY
--------
Payment of this Note is secured by a security interest in all
"Accounts" (as such term is defined in the Uniform Commercial Code) of the
Borrower, pursuant to a security agreement, dated the date hereof, between the
Borrower and Frellum, as the same may be amended from time to time as provided
therein.
D. MISCELLANEOUS
-------------
1. No Waiver: Rights and Remedies Cumulative. No failure on the
------------------------------------------
part of Frellum to exercise, and no delay in exercising any right hereunder will
operate as a waiver thereof; nor will any single or partial exercise by Frellum
of any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Borrower and Frellum.
2. Costs and Expenses. The Borrower will reimburse Frellum for all
------------------
costs and expenses incurred by it, including the reasonable fees and
disbursements of counsel to Frellum in connection with the enforcement of
Frellum's rights accruing hereunder after the occurrence of an Event of Default.
3. Amendments. No amendment, modification or waiver of any provision
----------
of this Note, nor consent to any departure by the Borrower therefrom, will be
effective unless the same is in writing and signed by Frellum and then such
waiver or consent will be effective only in the
2
<PAGE>
specific instance and for the specific purpose for which given.
4. Construction. This Note shall be governed by the laws of the
------------
State of New Jersey, without giving effect to its choice of law principles.
5. Successors and Assigns. This Note is to be binding upon the
----------------------
Borrower and its successors and the terms hereof shall inure to the benefit of
Frellum and its successors and assigns, including subsequent holders hereof.
6. Severability. The provisions of this Note are severable, and if
------------
any provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
7. Waiver of Notice; Set-off. The Borrower hereby waives
-------------------------
presentment, demand for payment (except as expressly provided herein), notice of
protest and all other demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
8. Credit Agreement. This Note is the Note referred to in the Credit
----------------
Agreement and the holder hereof is entitled to the benefits thereof.
RTI INC.
By: R. STEPHEN MAICO
---------------------------
R. Stephen Maico
Vice President and
Chief Financial Officer
3
Exhibit 10.8(c)
CREDIT AGREEMENT
----------------
REVOLVING CREDIT NOTE
---------------------
AMENDMENT
Rockaway, New Jersey
February 2, 1996
The Credit Agreement and Revolving Credit Note dated November 29,
1995 between RTI Inc. and Frellum Corporation are amended to change
the "aggregate principal amount" or "principal sum" of TWO HUNDRED
FIFTY THOUSAND ($250,000) DOLLARS to THREE HUNDRED FIFTEEN THOUSAND
($315,000) DOLLARS.
RTI INC. FRELLUM CORPORATION
By: /s/ R. STEPHEN MAICO By: /s/ ROBERT C. SABIN
--------------------- -------------------
R. Stephen Maico Treasurer
Secretary, Treasurer
Chief Executive Officer
Exhibit 10.8(d)
REVOLVING CREDIT NOTE
---------------------
AMENDMENT
Rockaway, New Jersey
March 25, 1996
The Revolving Credit Note dated November 29, 1995 between RTI
Inc. and Frellum Corporation is amended to change; A. GENERAL:
----------
TERMS OF PAYMENT 1. "which demand may be made at any time
- ---------------
commencing eleven (11) months after the date hereof" to "which
demand may be made at any time commencing seventeen (17) months
after the date hereof".
The amendment increases the effective term of the Revolving
Credit Note by six months.
RTI Inc. FRELLUM CORPORATION
By: /s/ R. STEPHEN MAICO By: /s/ ROBERT C. SABIN
--------------------- -------------------
R. Stephen Maico Treasurer
Secretary, Treasurer
Exhibit 10.8(e)
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, made the 29th day of November, 1995, between
Frellum Corporation, a Deleware corporation, having an address at 20 Peach Hill
Road, Darien, Connecticut 06820 (the "Secured Party"), and RTI Inc., a New York
corporation, and South Jersey Process Technology, Inc., a New Jersey corporation
and a wholly-owned subsidiary of RTI, Inc., each having its offices at 108 Lake
Denmark Road, Rockaway, New Jersey 07866 (individually and collectively, the
"Debtor").
W I T N E S S E T H :
-------------------
To secure the payment of the indebtedness evidenced by the note
attached hereto as Exhibit "A" of the Debtor to the Secured Party (hereinafter
called the "Indebtedness"), the Debtor hereby grants and conveys a security
interest in the Collateral.
1. Description of Collateral. The collateral subject to this
-------------------------
Security Agreement (this "Agreement"), hereinafter referred to as "Collateral",
consists of all accounts, as such term is defined in the Uniform Commercial Code
of the State of New Jersey, arising from time to time, including without
limitation receivables arising from sales, whether or not in the ordinary course
of business.
2. Obligations of Debtor, Generally. The Debtor shall pay to the
--------------------------------
Secured Party the sum evidenced by the Indebtedness and any renewals or
extensions thereof.
3. Warranties, Covenants and Agreements. The Debtor warrants,
------------------------------------
covenants and agrees as follows:
(a) To pay the Indebtedness when due and pay and timely perform
all of the obligations secured by this Agreement according to their terms.
(b) To defend the title to the Collateral against all persons
and against all claims and demands whatsoever, which Collateral, except for the
security interest granted hereby, is lawfully owned by the Debtor, free and
clear of any and all liens, security interests, claims, charges, encumbrances,
taxes and assessments.
(c) At any reasonable time and from time to time, upon demand of
the Secured Party, the Debtor shall:
<PAGE>
(i) give, execute, deliver, file and/or record any notice, statement,
instrument, document, agreement or other papers that may be necessary or
desirable, or that the Secured Party may request, in order to create, preserve,
perfect, or validate any security interest granted pursuant hereto or to enable
the Secured Party to exercise and enforce its rights hereunder or with respect
to such security interest and pay all costs of filing in connection therewith;
(ii) keep and stamp or otherwise mark any and all documents and chattel paper
and its individual books and records relating to the Collateral in such manner
as the Secured Party may require; and (iii) permit representatives of the
Secured Party to inspect the Debtor's tangible property which is part of the
Collateral and to inspect and make abstracts from the Debtor's books and records
pertaining to the Collateral.
(d) To keep the Collateral at its present locations and not to
remove same (except in the usual course of business for temporary periods)
without the written consent of the Secured Party.
(e) To keep the Collateral free and clear of all liens, charges,
encumbrances, taxes and assessments, subject only to the security interest of
the Secured Party and any subordinate lien of the New Jersey Department of
Environmental Protection (the "DEP Lien").
(f) To pay, when due, all taxes, assessments and license fees
relating to the Collateral and its business activities.
(g) Until full performance by the Debtor of its obligations
hereunder and payment in full of the Indebtedness, the Secured Party shall
retain its security interest in the Collateral and the Debtor shall not obtain
free and clear title to the Collateral.
(h) To immediately notify the Secured Party in writing of any
change in or discontinuance of the Debtor's place or places of business.
(i) To carry on the Debtor's business only in the ordinary
course.
(j) The making and performance of this Agreement are within the
Debtor's powers, has been duly authorized by all necessary action, has received
any necessary governmental approval and does not contravene any
2
<PAGE>
law or governmental or contractual restrictions binding upon the Debtor or the
Collateral.
(k) This Agreement is a legal and binding obligation of the
Debtor, enforceable in accordance with its terms.
(l) The Debtor will notify the Secured Party promptly of all
information which the Debtor may receive in regard to any receivables included
in the Collateral, or in regard to the relative account debtor, which may in any
way adversely affect the value of such receivables or any rights or remedies of
the Secured Party with respect thereto.
(m) Each account to be included in the Collateral shall be the
valid and enforceable obligation of a bona fide customer of the Debtor having
(to the best of the Debtor's knowledge, after reasonable investigation) legal
capacity to contract, to whom the Debtor shall have sold and delivered goods or
services which prior thereto were owned by the Debtor solely and absolutely,
free of all encumbrances of every nature except the Secured Party's lien and any
subordinate DEP Lien and except that when materials used in such goods or on
which such services were performed were supplied to the Debtor by or on behalf
of the account debtor who retained its ownership therein, in which event such
account debtor's lien shall be permitted to the extent it existed at the time
such materials were delivered to the Debtor. The entire amount thereof stated
in the schedule or copy of invoice delivered to the Secured Party shall be due
and payable at the time and by the account debtor named therein, free of any
defense, setoff or counterclaim, except as specifically noted thereon or on an
attachment thereto, in which event such defense, setoff or counterclaim shall
have arisen in the ordinary course of business. The Debtor shall be the sole
and absolute owner thereof, free of all encumbrances, claims and security
interests of every nature (except as aforesaid and except as may thereafter
arise in the ordinary course of business) with the unrestricted right and power
to assign the same to the Secured Party. All obligations of the Debtor in
connection with the transaction from which the account arose shall have been
duly and fully performed and no dispute with or claim by the account debtor will
be pending. There shall be no agreement between the Debtor and an account
debtor in conflict with or varying from the amount and terms of payment of its
account as set forth in the schedule or copy of invoice delivered to the Secured
Party. All financial and credit information that the Debtor may furnish to the
Secured Party at any time,
3
<PAGE>
relating to an account debtor, shall to the best of the Debtor's knowledge be
true, complete and not misleading.
(n) The Debtor shall furnish, immediately after the occurrence
thereof, notice in writing of any event which would result in any material
adverse change in the prospects, condition or operations, financial or
otherwise, of the Debtor.
(o) The Debtor shall furnish, as promptly as possible and in any
event within five (5) days after the occurrence thereof, notice in writing of
any default hereunder or of any event which, with notice or the lapse of time or
both, would constitute such default, setting forth the details thereof and the
action which the Debtor proposes to take with respect thereto.
(p) The Debtor shall furnish such other information regarding
the operations, business, affairs and condition, financial or otherwise, of the
Debtor or pertinent to any covenant or condition of this Agreement, as may
reasonably be requested by the Secured Party to enable the Secured Party to
enforce its rights under this Agreement and to confirm the accuracy of the
representations and warranties contained herein and the fulfillment of the
covenants contained herein.
4. Financing Statements. The right is expressly granted to the
--------------------
Secured Party, at its discretion, to file one or more financing statements under
the Uniform Commercial Code or under any other law appropriate for the
perfection of Collateral naming the Debtor as debtor and the Secured Party as
secured party and indicating therein the types or describing the terms of
Collateral herein specified. Without the prior written consent of the Secured
Party, the Debtor shall not file or authorize or permit to be filed in any
jurisdiction any such financing or like statement in which the Secured Party is
not named as the sole secured party.
5. Possession of Collateral. With respect to the Collateral, or any
------------------------
part thereof, which at any time shall come into the possession or custody or
under the control of the Secured Party or any of its agents, for any purpose,
the right is expressly granted to the Secured Party, at its discretion after the
occurrence of a default hereunder, to transfer or register in the name of itself
or of its nominee, any of the Collateral, and whether or not so transferred or
registered, to receive the income and
4
<PAGE>
dividends thereon, and to hold the same as a part of the Collateral and/or apply
the same as hereinafter provided; to exchange any of the Collateral for other
property upon the reorganization, recapitalization or other readjustment of the
Debtor and, in connection therewith, to deposit any of the Collateral with any
committee or depositary upon such terms as it may determine; and to exercise or
cause its nominee to exercise all or any powers with respect thereto with the
same force and effect as an absolute owner thereof; all without notice and
without liability except to account for property actually received by it.
6. Secured Party's Rights Upon Default.
-----------------------------------
A. Upon a default hereunder, the Secured Party at its
discretion, in its name or in the name of the Debtor or otherwise, may demand,
sue for, collect or receive any money or property at any time payable or
receivable on the Collateral, but shall be under no obligation so to do, and the
Secured Party may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any of the
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the Debtor. The Secured Party shall not
be required to take any steps necessary to preserve any rights against prior
parties to any of the Collateral.
B. Upon a default hereunder (whether such default be that of the
Debtor or of any other party obligated thereon), the Debtor shall, at the
request of the Secured Party, assemble the Collateral at such place or places as
the Secured Party designates in its request, provided that the Secured Party
shall not request that any Collateral be moved from the Debtor's principal place
of business. The Secured Party shall have the rights and remedies with respect
to the Collateral of a secured party under the Uniform Commercial Code (whether
or not the Code is in effect in the jurisdiction where the rights and remedies
are asserted). In addition, with respect to the Collateral, or any part there-
of, which shall then be or shall thereafter come into the possession or custody
of the Secured Party or any of its agents, the Secured Party may sell or cause
to be sold in one or more sales or parcels, at such price as the Secured Party
may deem best, and for cash or on credit or for future delivery, without
assumption of any credit risk, all or any of the Collateral, at any broker's
board or at public or private sale, without demand of performance or notice of
intention to sell or of time or
5
<PAGE>
place of sale (except such notice as is required by applicable statute and
cannot be waived), and the Secured Party or anyone else may be the purchaser of
any or all of the Collateral so sold and thereafter hold the same absolutely,
free from any claim or right of whatsoever kind, including any equity of
redemption of the Debtor, any such demand, notice or right and equity being
hereby expressly waived and released. The Debtor shall pay to the Secured Party
all expenses (including expense for legal services of every kind) of, or
incidental to, the enforcement of any of the provisions of this Agreement or of
any Indebtedness, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof, and for the care of the Collateral and defending or asserting
the rights and claims of the Secured Party in respect thereof, by litigation or
otherwise; and all such expenses shall be Indebtedness within the terms of this
Agreement. The Secured Party, at any time, at its option, may apply the net
cash receipts from the Collateral to the payment of principal of and/or interest
on any of the Indebtedness, whether or not then due, making proper rebate of
interest or discount. Notwithstanding that the Secured Party, whether in its
own behalf and/or on behalf of another or others, may continue to hold the
Collateral and regardless of the value thereof, the Debtor shall be and remain
liable for the payment in full, principal and interest, of any balance of the
Indebtedness and expenses at any time unpaid.
C. If the Debtor has made any false or misleading representation
or warranty to the Secured Party; or if the Indebtedness is not paid when due,
whether upon acceleration or otherwise; or if Debtor shall default in the
performance of any of its agreements made hereunder to the Secured Party; or if
Debtor defaults in the performance of any of its agreements made in any written
instrument or document delivered to the Secured Party (other than with respect
to the payment of the Indebtedness), whether prior to, simultaneously with or
after the date of this Agreement, which default is not cured within five (5)
days after notice thereof by the Secured Party; or the Debtor shall become
insolvent (however such insolvency may be evidenced), commit any act of
bankruptcy or make a general assignment for the benefit of creditors; or if the
Debtor shall suspend the transaction of its usual business; or any proceeding,
procedure or remedy supplementary to or in enforcement of judgment shall be
resorted to or commenced against, on or with respect to any property of, the
Debtor; or if a petition in bankruptcy or for any relief under any law
6
<PAGE>
relating to the relief debtors, readjustment of indebtedness, reorganization,
composition or extension shall be filed, or any proceeding shall be instituted
under any such law, by or against the Debtor; or if any governmental authority
or any court at the instance thereof shall take possession of any substantial
part of the property of, or assume control over the affairs or operations of, or
a receiver shall be appointed for any substantial part of the property of, or a
writ or order of attachment or garnishment shall be issued or made against any
of the property of, the Debtor; or if the Debtor shall be a party to any merger
or consolidation without the written consent of the Secured Party, which shall
not be unreasonably withheld; then, and in any such event, the Debtor shall be
deemed to be in default under this Agreement and the Secured Party shall have
all the rights, remedies and privileges with respect to repossession, retention
and sale of the Collateral and disposition of the proceeds as set forth herein
and as accorded by the applicable sections of the Uniform Commercial Code
respecting "Default".
D. Upon a default, in addition to any other remedies which may
be available, the Secured Party, or its designee, at the Debtor's cost and
expense, may exercise at any time all or any of the following powers which,
being coupled with an interest, shall be irrevocable until all Indebtedness has
been paid in full:
(i) To receive, take, endorse, assign and deliver in the
name of the Secured Party, or of the Debtor, any and all checks, notes, drafts,
and other instruments;
(ii) To receive, open and dispose of all mail addressed to
the Debtor, and to notify postal authorities to change the address for delivery
thereto to such address as the Secured Party may designate; and
(iii) To notify persons of the Secured Party's interest in
the Collateral and request that any persons owing money to the Debtor make
payment directly to the Secured Party.
E. The Secured Party may assign, transfer and/or deliver to any
transferee of any of the Indebtedness any or all of the Collateral, to the
extent that such Collateral may be in the possession of the Secured Party, and
thereafter shall be fully discharged from all responsibility with respect to the
Collateral so assigned,
7
<PAGE>
transferred and/or delivered. Such transferee shall be vested with all the
powers and rights of the Secured Party hereunder with respect to such
Collateral, but the Secured Party shall retain all rights and powers hereby
given with respect to any of the Collateral not so assigned or transferred. No
delay on the part of the Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude any other or further exercise
thereof or the exercise of any other power or right. The rights, remedies and
benefits herein expressly specified are cumulative and not exclusive of any
rights, remedies or benefits which the Secured Party may otherwise have. The
Debtor hereby waives presentment, notice of dishonor and protest of all
instruments included in or evidencing the Indebtedness or the Collateral and,
after a default hereunder, any and all other notices and demands whatsoever,
whether or not relating to such instruments.
F. Unless the context otherwise requires, all terms used herein
which are defined in the Uniform Commercial Code shall have the meanings therein
stated.
7. Notes. Notes, if any, executed in connection with this Agreement,
-----
are separate instruments and may be negotiated by the Secured Party without
releasing the Debtor or the Collateral. The Debtor consents to any extension of
time of payment.
8. Notices. Notices shall be in writing and shall be delivered
-------
personally or by mail addressed to the party at the address herein set forth or
otherwise designated in writing.
9. Termination. When the Indebtedness shall have been paid or
-----------
otherwise satisfied in full, this Agreement shall terminate and the Secured
Party shall forthwith assign, transfer and deliver to the Debtor, or its
designee, without representation, warranty or recourse, against appropriate
receipt, the Collateral then held by it in pledge hereunder and shall forthwith
deliver to the Debtor appropriate termination notices to file in appropriate
jurisdictions to evidence the termination of the Secured Party's security
interest set forth herein in the Collateral. Upon the failure of the Secured
Party to comply with the provisions of this Section 9 after notice thereof to
the Secured Party, the Debtor is hereby appointed the attorney-in-fact for the
Secured Party, with full power of
8
<PAGE>
substitution, for the purpose of carrying out the provisions of this Section 9.
10. Additional Instruments and Assurances. The Debtor agrees to
-------------------------------------
promptly execute and deliver, from time to time, any and all further, or other,
instruments, and to perform such acts, as the Secured Party may reasonably
request to effect the purposes of this Agreement and to secure to the Secured
Party, and to all persons who may from time to time be holders of any of the
Indebtedness, the benefits of all rights, authorities and remedies conferred
upon the Secured Party by the terms of this Agreement.
11. Benefit. This Agreement shall be binding upon the Debtor and its
-------
successors and assigns including, but not limited to, any corporation which may
acquire all or substantially all of their assets and business or with which or
into which they may be consolidated or merged. This Agreement is for the
benefit of all future holders of the Indebtedness, any of whom shall, without
further act, become a party hereto by becoming a holder of Indebtedness.
12. Waiver, Modification or Cancellation. Any waiver, alteration or
------------------------------------
modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the parties hereto.
13. Entire Agreement. This Agreement supersedes any and all other
----------------
agreements, either oral or in writing, between the parties hereto with respect
to the subject matter hereof and contains all of the covenants, agreements,
representations and other valid statements between the parties with respect to
such matter. Each party to this Agreement acknowledges that no representations,
inducements, promises or statements, orally or otherwise, have been made with
respect to this Agreement and the subject hereof by any party hereto or anyone
acting on behalf of any party hereto which are not embodied herein and agrees
that no other agreement, covenant, representation, inducement, promise or
statement with respect to the subject matter hereof not set forth in writing in
this Agreement shall be valid or binding.
14. Applicable Law. This Agreement shall be construed in accordance
--------------
with the laws of the State of New Jersey and, with respect to the right of the
Secured Party to dispose of the Collateral after default, in
9
<PAGE>
accordance with the laws of the various jurisdictions where the Collateral is or
may be located at such time.
IN WITNESS WHEREOF, the parties have executed this Agreement at
Rockaway, New Jersey, the day and year first above written.
RTI INC. SOUTH JERSEY PROCESS
TECHNOLOGY, INC.
By:R. STEPHEN MAICO By: R. STEPHEN MAICO
----------------- ------------------
R. Stephen Maico R. Stephen Maico
Vice President Vice President
FRELLUM CORPORATION
By: ROBERT C. SABIN
----------------
Robert C. Sabin
Treasurer
10
Exhibit 10.8(f)
WARRANT AGREEMENT dated November 29, 1995 between RTI INC., a New York
corporation (the "Company"), and FRELLUM CORPORATION, a Delaware corporation
("Frellum").
W I T N E S S E T H:
- - - - - - - - - -
Frellum, pursuant to a revolving credit agreement (the "Credit
Agreement") dated the date hereof between the parties hereto, is agreeing to
lend the Company from time to time up to $250,000 as set forth in the Credit
Agreement. In connection therewith, the Company proposes to issue to Frellum a
warrant (the "Warrant") to purchase 25,000 shares of common stock, $.08 par
value, of the Company ("Common Stock").
NOW, THEREFORE, in consideration of the premises, the agreements
herein set forth, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
1. Grant. The Holder (as defined in Section 3 hereof) is hereby
-----
granted the right to purchase, at any time until 5:30 P.M., New York time, on
the second anniversary of the date of this Agreement, up to 25,000 shares of
Common Stock, subject to the terms and conditions of this Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
--------------------
Certificates") delivered and to be delivered pursuant to this Agreement will be
in the form set forth in Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
3. Exercise of Warrant. Warrants initially are exercisable at an
-------------------
exercise price (subject to adjustment as provided in Section 8 hereof) per share
of Common Stock set forth in Section 6 hereof, payable by certified or official
bank check in New York Clearing House funds. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the exercise price for the shares of Common Stock
purchased, at the Company's principal offices, the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but
<PAGE>
not as to fractional shares of Common Stock). In the case of the purchase of
less than all the shares of Common Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Common Stock purchasable thereunder.
4. Issuance of Certificates. Upon the exercise of the Warrant, the
------------------------
issuance of certificates for shares of Common Stock or other securities,
properties or rights underlying the Warrant shall be made promptly (and in any
event within ten (10) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates (subject to the provisions of
Sections 5 and 7 hereof) will be issued in the name of, or in such names as may
be directed by, the Holder thereof; provided, however, that the Company will not
-------- -------
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company will not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
5. Restrictions on Transfer. The Holder of a Warrant Certificate, by
------------------------
its acceptance thereof, covenants and agrees that the Warrant described therein
is, and the Warrant Securities (as defined in Section 7 hereof) will be,
acquired as an investment and not with a view to the distribution thereof, and
may not be sold or transferred in whole or in part unless the Holder thereof
first shall have given notice to the Company describing such sale or transfer
and furnished to the Company either (a) an opinion of counsel, which counsel and
opinion (in form and substance) shall be reasonably satisfactory to the Company
and its counsel, to the effet that the proposed sale or transfer may be made
without registration under the Securities Act of 1933 (the "Act") and applicable
state blue sky or securities laws, or (b) an interpretive letter from the
Securities and Exchange Commission (the "Commission") to the effect that no
enforcement action will be recommended if the proposed sale or transfer is made
without registration under the Act; provided, however, that the foregoing will
-------- -------
not apply if there is in effect a registration statement with respect to
2
<PAGE>
the Warrant Securities at the time of the proposed sale or transfer.
6. Exercise Price. Except as otherwise provided in Section 8 hereof,
--------------
the initial exercise price of each Warrant Security will be $ per share of
----
Common Stock. The adjusted exercise price of each Warrant Security will be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Section 8 hereof.
7. Registration Rights.
-------------------
7.1. Registration Under the Securities Act of 1933. The Warrants and
---------------------------------------------
the shares of Common Stock or other securities issuable upon exercise of the
Warrants (such shares or other securities being collectively the "Warrant
Securities"), have not been registered under the Act. Each Warrant Certificate
and upon exercise of the Warrant Certificates, in part or in whole, the
certificates representing the Warrant Securities will bear the following legend:
These securities have not been registered under the
Securities Act of 1933 (the "Act") or the "Blue Sky" or
securities laws of any state and may not be offered, sold,
pledged, hypothecated, assigned or transferred except (i)
pursuant to a Registration Statement under the Act which has
become effective and is current with respect to these
securities, or (ii) pursuant to a specific exemption from
registration under the Act but only upon the holder hereof
first having obtained the written opinion of counsel,
reasonably satisfactory to the Company and its counsel, that
the proposed disposition is consistent with all applicable
provisions of the Act as well as any applicable "Blue Sky"
or similar securities law.
7.2. Piggyback Registration.
----------------------
(a) If, at any time within two years from the date of this Agreement,
the Company proposes to register any of its securities under the Act (other than
in connection
3
<PAGE>
with a merger, consolidation with another company, any acquisition or dividend
reinvestment plans or stock option or other employee benefit plans) which are of
the same class as the Warrant Securities, it will give written notice by
registered mail, at least thirty (30) days prior to the filing of such
registration statement, to all Holders of record of the Warrants and the Warrant
Securities of its intention to do so. If any such Holders notify the Company
within twenty (20) days after receipt of any such notice of its or their desire
to include any Warrant Securities in such proposed registration statement, the
Company will afford such Holders the opportunity to have any such Warrant
Securities registered under such registration statement. Notwithstanding the
foregoing, the Company will have the right at any time after it shall have given
written notice pursuant to this Section 7.2 (irrespective of whether a written
request for inclusion of any Warrant Securities shall have been made) to elect
not to file any such proposed registration statement, or to withdraw the same
after the filing but prior to the effective date thereof.
(b) If (i) a registration pursuant to this Section 7.2 involves an
underwritten offering, whether or not for sale for the account of the Company,
to be distributed by or through one or more underwriters under underwriting
terms appropriate for such transaction, and (ii) the managing underwriter of
such underwritten offering shall inform the Company and the Holders requesting
such registration by letter of its belief that the number of securities
requested to be included in such registration exceeds the number which can be
sold in (or during the time of) such offering or that the inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein, then the Company may include all securities of the Company proposed by
the Company to be sold for its own account and may decrease the number of
Warrant Securities so proposed to be sold and so requested to be included in
such registration (pro rata on the basis of the percentage of the Warrant
Securities held by such Holders) to the extent necessary to reduce the number of
securities to be included in the registration to the level recommended by the
managing underwriter. Notwithstanding the foregoing, if the registration
referred to herein involves an underwritten offering of securities being
registered for sale by holders of securities other than Holders of Warrant
Securities, the Company will include in such registration the securities
proposed by such holders to be sold and may decrease the number of Warrant
Securities proposed to be sold in such registration to the extent necessary to
reduce
4
<PAGE>
the number of securities to be included in the registration to the level
recommended by the managing underwriter.
7.3. Covenants of the Company with Respect to Registration. In
-----------------------------------------------------
connection with any registration under Section 7.2 hereof, the Company covenants
and agrees as follows:
(a) The Company will furnish each Holder desiring to sell Warrant
Securities such number of prospectuses as reasonably shall be requested.
(b) The Company will pay all costs, fees and expenses incurred by the
Company in connection with all registration statements filed pursuant to Section
7.2 hereof including, without limitation, the Company's legal and accounting
fees, printing expenses and blue sky fees and expenses. The Holders of Warrant
Securities will pay all costs, fees and expenses incurred by them (including
underwriting or selling commissions) in connection with any such registration
statement.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Warrant Securities for offering and sale under
the securities or blue sky laws of such states as reasonably are requested by
the Holders thereof upon payment of the cost thereof by such Holders; provided,
--------
however, that the Company will not be obligated to execute or file any general
- -------
consent to do business under the laws of any such jurisdiction.
(d) The Company will indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), from
and against any and all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement, except to
the extent that the same arises out of or is based upon information supplied or
omitted to be supplied in such registration statement by such Holders.
(e) The Holders of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, will severally, and
not jointly,
5
<PAGE>
indemnify the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, from and against any and all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement.
(f) The Company will deliver promptly to each Holder participating in
the offering requesting the correspondence and memoranda described below and to
the managing underwriter copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the registration statement, and
will permit each Holder and underwriter to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation will include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as any such Holder shall reasonably request.
(g) The Holders will be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Securities and may, at their
option, require that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriter shall also be made to and
for the benefit of such Holders. Such Holders will not be required to make any
representations or warranties to or agreements with the Company or the
underwriter except as they may relate to such Holders and their intended methods
of distribution.
8. Adjustments to Exercise Price and Number of Securities.
------------------------------------------------------
(a) The number of shares of Common Stock covered by each Warrant
Certificate and the exercise price thereof will be proportionately adjusted by
the Company for any change in corporate structure and for any increase or
6
<PAGE>
decrease in the number of issued shares of capital stock resulting from a
subdivision or consolidation of shares, stock split or the payment of a stock
dividend.
(b) If the Company enters into any merger or consolidation, each
outstanding Warrant Certificate shall pertain and apply to the securities to
which a holder of the number of Warrant Securities obtainable upon the exercise
thereof would have been entitled to receive as a result of such merger or
consolidation.
(c) In the event of a change in the Common Stock as presently
constituted, which is limited to a change of all authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed to be the
Common Stock contemplated by this Agreement.
(d) Except as expressly provided in this Section 8, a Holder of a
Warrant Certificate shall have no rights by reason of any subdivision or
consolidation of shares of capital stock of any class, stock split, or the
payment of any stock dividend or any other increase or decrease in the number of
shares of capital stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or spin-off of assets or capital stock of
another corporation. No issue by the Company of (i) shares of capital stock of
any class, or (ii) other securities convertible into shares of capital stock of
any class, shall affect, nor shall any adjustment by reason thereof be made with
respect to, the number or price of Warrant Securities subject to a Warrant
Certificate.
9. Exchange and Replacement of Warrant Certificates.
------------------------------------------------
(a) Each Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of Warrant
Securities in such denominations as shall be designated by the Holder thereof at
the time of such surrender.
(b) Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of any Warrant Certificate,
and, in case of loss, theft or destruction, of indemnity or
7
<PAGE>
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrant Certificate, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
-----------------------------------
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, but shall pay cash in lieu of fractional
interests.
11. Reservation and Listing of Securities. The Company will at all
-------------------------------------
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the exercise price therefor,
all shares of Common Stock and other securities issuable upon such exercise will
be duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as the Warrants shall be
outstanding, the Company will use its best efforts to cause all shares of Common
Stock issuable upon the exercise of the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges, if any, on which the
Common Stock issued to the public may then be listed and/or quoted on NASDAQ.
12. Notices to Warrant Holders. Nothing contained in this Agreement
--------------------------
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
8
<PAGE>
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of said events, the Company will give written notice of
such event at least ten (10) days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice will specify such record date or
the date of closing of the transfer books, as the case may be. Failure to give
such notice or any defect therein will not affect the validity of any action
taken in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
13. Notices. All notices, requests, consents and other
-------
communications hereunder will be in writing and will be deemed to have been duly
made when delivered, or three (3) business days after being mailed by registered
or certified mail, return receipt requested:
(a) if to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) if to the Company, to its principal executive offices or to such
other address as the Company may designate by notice to the Holders.
14. Successors. All the covenants and provisions of this Agreement
----------
will be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
9
<PAGE>
15. Termination. This Agreement will terminate at the close of
-----------
business on the second anniversary of the date of this Agreement.
Notwithstanding the foregoing, the indemnification provisions of Section 7
hereof will survive for a period of six (6) years after the sale of the Warrant
Securities issued pursuant hereto.
16. Governing Law; Submission to Jurisdiction. This Agreement and
-----------------------------------------
each Warrant Certificate issued hereunder will be deemed to be a contract made
under the laws of the State of New Jersey and for all purposes will be construed
in accordance with the laws of said State, without giving effect to the rules of
said State governing the conflicts of laws.
17. Entire Agreement; Modification. This Agreement contains the
------------------------------
entire understanding between the parties with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
18. Severability. If any provision of this Agreement shall be held
------------
to be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
19. Captions. The caption headings of the Sections of this Agreement
--------
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and will be given no substantive effect.
20. Benefits of this Agreement. Nothing in this Agreement will be
--------------------------
construed to give to any person or corporation other than the Company and any
registered Holders of the Warrant Certificates or Warrant Securities any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
will be for the sole and
10
<PAGE>
exclusive benefit of the Company and any registered Holders of the Warrant
Certificates or Warrant Securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
RTI INC.
By: R. STEPHEN MAICO
--------------------------
R. Steven Maico
Vice President and
Chief Financial Officer
FRELLUM CORPORATION
By:ROBERT C. SABIN
--------------------------
Name:Robert C. Sabin
Title:Treasurer
11
Exhibit 10.8(g)
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
No. W-1 Warrant to Purchase
---
25,000 Shares of Common Stock
------
WARRANT CERTIFICATE
This Warrant Certificate certifies that Frellum Corporation, or
registered assigns, is the registered holder of a Warrant to purchase initially,
at any time until 5:30 p.m. New York time on November 28, 1997 ("Expiration
Date"), up to 25,000 fully-paid and non-assessable shares of common stock, par
------
value $.08 per share("Common Stock"), of RTI Inc., a New York corporation (the
"Company"), (one share of Common Stock referred to individually as a "Security"
and collectively as the "Securities") at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $1.75 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of November
29, 1995 between the Company and Frellum Corporation (the "Warrant Agreement").
Payment of the Exercise Price shall be made by certified or official bank check
in New York Clearing House funds payable to the order of the Company.
This Warrant may not be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time this Warrant, unless exercised prior thereto,
thereafter shall be void.
This Warrant is part of a duly authorized issue of Warrants issued
pursuant to the Warrant Agreement, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of
<PAGE>
the Company's securities issuable thereupon may, subject to certain conditions,
be adjusted. In such event, the Company will, at the request of the holder,
issue a new Warrant Certificate evidencing the adjustment in the Exercise Price
and the number and/or type of securities issuable upon the exercise of this
Warrant; provided, however, that the failure of the Company to issue such new
-------- -------
Warrant Certificate shall not in any way change, alter, or otherwise impair, the
rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate the right to
acquire a like number of Securities shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the rights evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such unexercised rights.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: November 29, 1995
RTI INC.
By: R. STEPHEN MAICO
--------------------------
Name: R. Stephen Maico
Title: Vice President and
Chief Financial Officer
<PAGE>
[FORM OF EXERCISE NOTICE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of RTI Inc.
------
Common Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of RTI
Inc. in the amount of $ , all in accordance with the terms of Section 3
---------
of the Warrant Agreement dated November 29, 1995 between RTI Inc. and Frellum
Corporation. The undersigned requests that a certificate for such Securities be
registered in the name of
------------------------------------------------------
whose address is
---------------------------------------------------------------
and that such Certificate be delivered to
--------------------------------------
whose address is .
--------------------------------------------------------------
Dated: FRELLUM CORPORATION
--------------------------
By:
-------------------------
-------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED, Frellum Corporation hereby sells, assigns and
transfers unto
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ,
----------------------------
as attorney, to transfer the within Warrant Certificate on the books of RTI
Inc., with full power of substitution in accordance with the terms of the
Warrant Agreement.
FRELLUM CORPORATION
Dated: By:
------------------- ---------------------
--------------------------
(Insert Social Security or
Other Identifying Number
of Assignee)
Exhibit 10.9(a)
ASSET ACQUISITION AGREEMENT
---------------------------
This Agreement is entered into as of February 26, 1996, by and among
SteriGenics International, a California corporation ("Sterigenics"), and RTI
Inc., a New York corporation ("RTI").
RECITAL
RTI desires to sell and Sterigenics desires to purchase certain
tangible and intangible assets of RTI, and Sterigenics agrees to assume certain
liabilities and obligations of RTI, as set forth under the terms of this
Agreement.
NOW, THEREFORE, in consideration of the representations, warranties
and agreements herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined herein, when used in this Agreement the
following terms shall have the following meanings:
1.1 "Assumed Liabilities" shall mean (a) the Contracts, (b) the Trade
-------------------
Payables, (c) the Salem Guarantee, to the extent RTI is not released therefrom
at or prior to the Closing, and (d) the obligations of RTI under leases and
notes related to the financing of the Cobalt set forth on Schedule 1.1 attached
------------
hereto and any leases or notes related to the financing of Cobalt acquired by
RTI in the ordinary course of business from the date hereof through the Closing
Date.
1.2 "Closing" shall mean the closing of the transactions contemplated
-------
by this Agreement.
1.3 "Closing Date" shall mean the third business day after the
------------
conditions set forth in Articles IX and X are satisfied but not later than
November 27, 1996, or such other date as the parties mutually have agreed to in
writing.
1.4 "Cobalt" shall mean the Cobalt 60 listed by serial number on
------
Schedule 1.4 attached hereto and any additional Cobalt 60 acquired hereafter by
- ------------
RTI through the Closing in the ordinary course of business.
1.5 "Contracts" shall mean the contracts calling for future payments
---------
to or from RTI of less than $25,000 per annum, the contracts listed on
Schedule 1.5 attached hereto and any contracts entered into by RTI through the
- ------------
Closing in accordance with Section 6.3.
1.6 "Excluded Liabilities" shall mean any and all liabilities,
--------------------
obligations or commitments of any nature of RTI and its Subsidiaries (other than
the South Jersey Subsidiary), whether known or unknown, contingent or fixed or
otherwise, including without limitation, all liabilities related to Hazardous
Materials or compliance with Environmental Laws (each as defined in Section 4.15
below), all liabilities related to the employment and/or termination of
personnel on or prior to the Closing, all taxes due and all sales, use,
withholding and payroll taxes accrued to (but not including) the Closing, except
the Assumed Liabilities.
1.7 "Immaterial Liens" shall include liens on any Purchased Assets
----------------
where the aggregate value of the Purchased Assets subject to all such liens is
less than $30,000.
<PAGE>
1.8 "Improvements" shall mean all structures, buildings, improvements
------------
and fixtures, including without limitation all equipment and appliances used in
connection with the operation or occupancy thereof, such as heating and air-
conditioning systems and facilities used to provide any utility services,
parking services, refrigeration, ventilation, trash disposal or other services
owned by RTI or its Subsidiaries and located on or used in connection with the
Real Properties.
1.9 "Intangible Assets" shall mean all of RTI's and its Subsidiaries'
-----------------
interests in intellectual property rights, including without limitation,
patents, trademarks, service marks, copyrights and applications therefor and
registrations thereof, trade names, trade styles, trade secrets, know-how,
processes, formulae, business and marketing plans, and confidential and other
proprietary information that are owned by RTI and its Subsidiaries or that may
be assigned by RTI and its Subsidiaries; and all of RTI's and its Subsidiaries'
interest in computer software and data, including without limitation, all source
and object codes, all manuals and other user materials, and all intangible data
contained in or stored on computer hardware used in RTI's and its Subsidiaries'
business as of the Closing Date.
1.10 "IRB" shall mean the City of Salem Municipal Port Authority Port
---
Development Revenue Bond (South Jersey Process Technology, Inc. Project) Series
of 1984 Financing.
1.11 "IRB Documentation" shall mean all documents relating to the
-----------------
indebtedness evidencing the IRB, including without limitation all indenture
agreements, lease agreements, security agreements, guaranties, and bonds
relating to the Salem Property (all as amended) and as set forth in Exhibit
10.1 to RTI's Annual Report on Form 10-KSB for the year ended December 31, 1994
and as set forth in the Trust Indenture dated as of December 1, 1984 between the
City of Salem Municipal Port Authority and The Farmers and Merchants National
Bank of Bridgeton.
1.12 "North Carolina Property means the real property and the
-----------------------
Improvements thereon located in Haw River, North Carolina, owned by RTI or its
Subsidiary and legally described in Exhibit 1.12 hereof.
------------
1.13 "Permitted Encumbrances" shall mean (i) the assessments due under
----------------------
the IRB, (ii) the liens and encumbrances incurred by RTI or its Subsidiaries in
connection with obtaining financing for the purchase of the Cobalt, (iii) the
Permitted Exceptions (as defined in Section 6.5(a) hereof), (iv) liens for taxes
not yet due, (v) Immaterial Liens, (vi) encumbrances other than liens which do
not materially affect or interfere with the use of the Real Property in the
manner presently used by RTI, value or transferability of the Purchased Assets,
(vii) UCC financing statements filed by lessors of personal property which
relate solely to property owned by such lessors and leased to RTI; and
(viii) liens held by NJDEP provided that the condition set forth in Section 9.8
below is satisfied.
1.14 "Prepaid Expenses" shall mean any prepaid expenses of RTI in the
----------------
following categories: prepaid taxes, prepaid insurance premiums (to the extent
such insurance policy is assignable) and prepaid supplies.
1.15 "Purchased Assets" shall mean the Cobalt, the Tangible Assets,
----------------
the Real Property Assets, the Subsidiary Stock, the Prepaid Expenses, the
Receivables and the Intangible Assets.
1.16 "Real Property" and "Real Properties" means, individually and
------------- ---------------
collectively as the case may be, each of the North Carolina Property, the
Rockaway Property and the Salem Property.
1.17 "Real Property Assets" means the right, title and interest of RTI
--------------------
in the North Carolina Property and RTI's right to lease the Rockaway Property,
together with the right, title and interest of RTI in the Improvements (other
than improvements located on the Rockaway Property which shall be leased to
Sterigenics) and in and to all intangible property owned by RTI and used in
<PAGE>
connection with such Real Properties (other than the Rockaway Property),
including (i) all right, title and interest in all plans, drawings,
specifications, land surveys, entitlements and approvals, engineering reports
and other technical reports, if any, in the possession of RTI or which are
available to RTI without additional cost and which were prepared in connection
with the development of the Real Properties or the construction of the
Improvements for such Real Properties; (ii) all hereditaments, privileges,
tenements and appurtenances belonging to the Real Properties; (iii) all right,
title and interest of RTI in and to all open or proposed highways, streets,
roads, avenues, alleys, easements, strips, gores and rights-of-way in, on,
across, in front of, contiguous to, abutting or adjoining the Real Properties;
(iv) all right, title and interest of RTI in and to any transferable licenses,
permits and warranties now in effect with respect to the Improvements; and
(v) all right, title and interest of RTI in and to any transferable warranties,
guaranties, indemnities and claims relating to the construction, operation or
maintenance of the Real Properties and/or the Improvements.
1.18 "Receivables" shall mean all accounts receivable of RTI as of the
-----------
Closing.
1.19 "Rockaway Property" shall mean the real property shown as lots 1
-----------------
through 10 of Block 30102 as shown on the assessment maps for the Township of
Rockaway attached as Exhibit 1.19 hereof and the Improvements (including RTI's
------------
irradiation facility) thereon located in Rockaway, New Jersey, owned by RTI or
its Subsidiary.
1.20 "Salem Guarantee" shall mean the obligations of RTI pursuant to
---------------
the IRB Documentation and the Agreement dated December 28, 1994 among the City
of Salem, Municipal Port Authorities, RTI and the South Jersey Subsidiary, as
amended.
1.21 "Salem Property" shall mean the real property legally described
---------------
on Exhibit 1.21 hereof and the Improvements (including RTI's irradiation
------------
facility) thereon located in Salem, New Jersey, which is leased by the South
Jersey Subsidiary.
1.22 "Subsidiary" or "Subsidiaries" shall mean, with respect to any
---------- ------------
party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
1.23 "Subsidiary Stock" shall mean all the outstanding shares of
----------------
Capital Stock of South Jersey Process Technology, Inc., a New Jersey corporation
and a wholly-owned subsidiary of RTI (the "South Jersey Subsidiary").
1.24 "Tangible Assets" shall mean all of the fixed assets, furniture,
---------------
equipment and other tangible assets (other than cash, cash equivalents, Rockaway
Property and the fixtures located on the Rockaway Property) as of the Closing
Date.
1.25 "Trade Payables" shall mean the accounts payable of RTI which are
--------------
incurred through the Closing in the ordinary course of business.
3
<PAGE>
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale. Subject to and upon the terms and conditions
-----------------
of this Agreement, on the Closing Date, RTI shall sell, assign, transfer, convey
and deliver to Sterigenics (or its wholly-owned Subsidiaries) and Sterigenics
(or its wholly-owned Subsidiaries) shall purchase from RTI, free and clear of
all liens and encumbrances, except the Permitted Encumbrances, all of RTI's
right, title and interest in and to the Purchased Assets (the "Acquisition").
RTI acknowledges that Sterigenics intends to assign certain of its rights and
obligations hereunder to its wholly-owned Subsidiaries.
2.2 Further Assurances; Instruments of Transfer. RTI shall execute
-------------------------------------------
and deliver such bills of sale and other recordable instruments of assignment,
transfer and conveyance as Sterigenics shall reasonably request to document the
sale, assignment, transfer, conveyance and delivery of the Purchased Assets;
provided, however, that to the extent that any such request is made after the
Closing, Sterigenics shall pay the out-of-pocket costs incurred by RTI
responding to such request.
2.3 Closing Balance Sheet. The book value of the Purchased Assets
---------------------
and Assumed Liabilities shall be set forth on a separate statement of the
consolidated assets and liabilities as of commencement of business on the
Closing Date (the "Closing Balance Sheet") which shall be delivered by RTI to
Sterigenics within thirty (30) days of the Closing Date. The book value of the
Subsidiary Stock for purposes of the Closing Balance Sheet shall exclude any
intercompany transactions and any assets and liabilities unrelated to the
business of the Salem Property facility. The Closing Balance Sheet shall be
prepared by RTI in accordance with generally accepted accounting principles
("GAAP"), applied on a consistent basis with RTI's preceding year's audited
consolidated financial statements. The Closing Balance Sheet shall contain
appropriate pro-rata accruals to the Closing Date with respect to the Assumed
Liabilities. Within thirty (30) days following the delivery of the Closing
Balance Sheet, Sterigenics shall advise RTI as to whether Sterigenics elects, at
its option and sole expense, to have the Closing Balance Sheet audited by Ernst
& Young LLP ("Ernst & Young"). Such audit shall commence within such thirty
(30) day period and shall proceed diligently to completion. In auditing the
Closing Balance Sheet, Ernst & Young shall apply GAAP on a basis consistent with
RTI's prior year's audited consolidated financial statements and, to the extent
consistent with GAAP, shall follow the same accounting practices as employed by
RTI's independent accountants. Sterigenics' failure to audit the Closing
Balance Sheet shall in no manner limit Sterigenics' claims related to a breach
of any representation or warranty contained in Article IV below.
2.4 Consideration. As consideration for the Purchased Assets,
-------------
Sterigenics (or its wholly-owned Subsidiaries) shall pay RTI a sum equal to the
book value of the Purchased Assets less the book value of the Assumed
Liabilities (as derived from RTI's Quarterly Report on Form 10-QSB (the "March
Form 10-QSB") for the period ended March 31, 1996, plus $18,000 (the "Purchase
Price"), subject to adjustment as provided below, to be payable as follows:
(a) Subject to Section 9.1 and Section 9.4, an amount equal to
the Purchase Price less (i) $1,036,000 and (ii) the amount required to be paid
to the New Jersey Department of Environmental Protection ("NJDEP") to release
its liens on the Purchased Assets as specified in a letter to RTI from the NJDEP
dated within five (5) business days prior to the Closing (the "Lien Amount")
shall be paid at the Closing, payable, at the option of RTI, by delivery of a
certified check of immediately available funds to RTI or by wire transfer to an
account designated in writing by RTI.
(b) The Lien Amount shall be paid at the Closing by delivery to
RTI by certified check made payable to NJDEP which RTI shall deliver by courier
to NJDEP within one (1) business day following the Closing.
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(c) 118,000 shares of convertible, redeemable Series A Preferred
Stock of RTI, valued at $2.00 per share or an aggregate of Two Hundred Thirty-
Six Thousand Dollars ($236,000), to be tendered to RTI.
(d) The sum of Eight Hundred Thousand Dollars ($800,000) (the
"Escrow Amount"), subject to adjustment as described below, shall be held in
escrow and paid as follows: (i) upon the resolution of all claims for a
Purchase Price Adjustment (as defined in Section 11.2 below) or the expiration
of the period in which Sterigenics is entitled to make such a claim as set forth
in clause (e) below, an aggregate of Four Hundred Thousand Dollars ($400,000)
less the amount of any such Purchase Price Adjustment, and (ii) upon the six-
month anniversary of the Closing, an aggregate of Four Hundred Thousand Dollars
($400,000), less any amounts delivered to Sterigenics in satisfaction of Claims
(as defined in Section 11.2 below), other than Claims for a Purchase Price
Adjustment, made by Sterigenics and any amounts subject to pending but
unresolved Claims of Sterigenics pursuant to the terms of the Escrow Agreement
attached hereto as Exhibit 2.4(d) (the "Escrow Agreement"). At the Closing,
--------------
Sterigenics shall deposit the Escrow Amount with Lowenstein, Sandler, Kohl,
Fisher & Boylan (the "Escrow Agent"), located at 65 Livingston Avenue, Roseland,
New Jersey 07068-1791, pursuant to the terms of the Escrow Agreement.
(e) If the book value of the Purchased Assets less the book
value of the Assumed Liabilities, as contained in the Closing Balance Sheet, is
greater than the Purchase Price less $18,000 (the "Adjusted Price"), Sterigenics
shall pay to RTI by wire transfer to an account designated in writing by RTI an
additional amount equal to the amount of such difference within ten (10) days of
the earlier of (i) the completion of any audit of the Closing Balance Sheet by
Ernst & Young or (ii) Sterigenics' election not to have the Closing Balance
Sheet audited by Ernst & Young, as provided in Section 2.3 above. If the book
value of the Purchased Assets less the book value of the Assumed Liabilities, as
contained in the Closing Balance Sheet, is less than the Adjusted Price,
Sterigenics shall be entitled to indemnification for the amount of any such
difference as provided in Section 11.2 below. If Ernst & Young has conducted an
audit of the Closing Balance Sheet, the book value of the Purchased Assets and
the Assumed Liabilities shall be determined by the Closing Balance Sheet as
audited by Ernst & Young and any differences between the Closing Balance Sheet
provided by RTI and the Closing Balance Sheet as audited by Ernst & Young shall
be identified in reasonable detail to RTI at the time the audit is delivered to
RTI; provided, however, that if RTI objects in writing to the Closing Balance
Sheet as audited by Ernst & Young within thirty (30) days after the delivery by
Sterigenics to RTI of the results of the Ernst & Young audit, the dispute shall
be conclusively settled by arbitration in accordance with Section 13.14;
provided, however, that the arbitrator shall be a partner of one of the ten
largest certified public accounting firms in the United States, excluding Ernst
& Young and BDO Seideman, who shall be selected by agreement of RTI and
Sterigenics. If RTI and Sterigenics are unable to agree upon an arbitrator
within fifteen (15) days, RTI and Sterigenics shall each select an arbitrator,
and the two arbitrators so selected shall select a third arbitrator who meets
the above criteria.
2.5 Assumption of Liabilities. (a) Subject to the terms and
-------------------------
conditions herein, effective upon the Closing, Sterigenics hereby assumes and
agrees to perform, pay and discharge the Assumed Liabilities. Notwithstanding
the foregoing, Sterigenics does not hereby assume or agree to perform, pay or
discharge, and RTI shall remain unconditionally liable for, from and after the
date hereof, any and all Excluded Liabilities. (b) Nothing herein shall be
deemed to deprive Sterigenics of any defenses, set-offs or counterclaims against
third parties which RTI may have had or which Sterigenics shall have with
respect to any of the obligations, liabilities and commitments hereby assumed
(the "Defenses and Claims"). Effective at the Closing, RTI hereby transfers,
conveys and assigns to Sterigenics all Defenses and Claims and agrees to
cooperate with Sterigenics at Sterigenics' expense to maintain, secure, perfect
and enforce such Defenses and Claims, including the signing of any documents,
the giving of any testimony or the taking of any such other action as is
reasonably requested by Sterigenics in connection with such Defenses and Claims.
(c) Sterigenics shall pay all sales, use and
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transfer taxes, if any, due upon the sale or transfer of the Purchased Assets.
All non-delinquent personal and real property taxes arising as a result of the
operation of RTI's business (other than taxes on income) shall be pro-rated
between the parties as of the Closing Date based on most recently available
figures, provided that RTI shall be solely responsible for all real property
taxes related to the Rockaway Property, except as otherwise provided in the
Rockaway Lease (as defined in Section 9.7 hereof). Any supplemental taxes
attributable to events occurring prior to the Closing Date shall be the sole
responsibility of RTI, irrespective of when such taxes are assessed. If
supplemental taxes for which RTI is responsible hereunder are assessed after the
Closing Date, RTI shall promptly pay the same upon receiving notice thereof from
Sterigenics.
2.6 Closing Costs. Sterigenics shall pay all transfer taxes and all
-------------
costs for preparing, executing and acknowledging the deeds and other conveyance
documents (including without limitation lease assignment and assumption
instruments) transferring title or a leasehold interest, as the case may be, in
the Real Properties to Sterigenics and any other recorded documents together
with the cost of the Title Policies (as defined in Section 6.5(e) hereof).
2.7 Purchase Price Allocation. The Purchase Price shall be allocated
-------------------------
as set forth in the Allocation of Purchase Price to be provided to RTI by
Sterigenics with ten (10) days prior to Closing. RTI and Sterigenics each agree
to use such allocation in filing Internal Revenue Form 8594.
ARTICLE III
THE CLOSING
3.1 The Closing. The Closing shall take place at the offices of
-----------
Warshaw Burstein Cohen Schlesinger & Kuh, LLP or at such other location as RTI
and Sterigenics may agree, at 10:00 a.m. Eastern Daylight Savings Time, on the
Closing Date.
3.2 Instruments of Transfer and Sale. At the Closing, RTI will
--------------------------------
deliver to Sterigenics (or its wholly-owned Subsidiaries) all documents and
instruments, including bills of sale and the like, described in Section 9.20 and
Sterigenics (or its wholly-owned Subsidiaries) will deliver to RTI all documents
and instruments described in Section 10.9.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RTI
RTI hereby represents and warrants to Sterigenics that the statements
contained in this Article IV are true and correct, except as set forth in the
disclosure schedule delivered by RTI to Sterigenics on or before the date of
this Agreement (the "RTI Disclosure Schedule"). The RTI Disclosure Schedule
shall be arranged in Sections corresponding to the numbered and lettered
Sections contained in this Article IV; provided, however, that the failure to
make a disclosure in reference to a particular representation shall not give
rise to a breach of this Agreement if the applicability to such representation
of exceptions to other representations is obvious on its face without any
investigation by Sterigenics. No fact or circumstance disclosed to Sterigenics
shall constitute an exception to these representations and warranties unless
such fact or circumstance is set forth in the RTI Disclosure Schedule. As used
in this Agreement, "knowledge" shall mean the actual knowledge of the executive
officers of RTI after reasonable inquiry.
4.1 Organization. Each of RTI and the South Jersey Subsidiary is a
------------
corporation duly and validly existing and in good standing under the laws of the
State of New York and New Jersey, respectively. Each of RTI and the South
Jersey Subsidiary is qualified to do business as a foreign corporation in each
state of the United States in which it is required to be qualified, except in
states in
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which the failure to qualify, in the aggregate, would not have a material
adverse effect on the Purchased Assets or the assets of the South Jersey
Subsidiary. All of the outstanding shares of capital stock of the South Jersey
Subsidiary are duly authorized, validly issued, fully paid and nonassessable and
all such shares are owned by RTI and are held by RTI free and clear of all
limitations on voting rights.
4.2 Subsidiaries. Other than the South Jersey Subsidiary, RTI has no
------------
Subsidiaries which currently are engaged in any active business or have any
material assets or liabilities.
4.3 Authorization. This Agreement and the Option Agreement have
-------------
been, and each of the Escrow Agreement, the Rockaway Lease (as defined in
Section 9.7) and lease memorandum, and all deeds and other conveyance documents
used in order to consummate the Acquisition (collectively, the "Ancillary
Documents") will prior to the Closing be, duly and validly executed and
delivered by RTI. This Agreement and the Option Agreement do and the Ancillary
Agreements will constitute valid and binding agreements of RTI, enforceable
against RTI in accordance with their terms. RTI has all requisite power and
authority to execute and deliver this Agreement, the Option Agreement and the
Ancillary Documents and, subject to approval by RTI's shareholders, at the time
of the Closing will have all requisite power and authority to enable it to carry
out the transactions contemplated by this Agreement and the Ancillary Documents.
All necessary corporate action on the part of RTI and its Subsidiaries has been
taken to authorize the execution and delivery of this Agreement, the Option
Agreement and the Ancillary Documents and, subject to shareholder approval,
consummation of the transactions contemplated thereby.
4.4 No Conflicts; Consents.
----------------------
(a) The execution and the delivery of this Agreement, the Option
Agreement and the Series A preferred stock purchase agreement to be entered into
concurrently with this Agreement between RTI and Sterigenics dated as of the
date hereof do not, the execution and delivery of the other Ancillary Documents
by RTI will not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, result in a
breach by RTI of, constitute a default (with or without notice or lapse of time,
or both) by RTI under or violation by RTI of, or result in the creation of any
lien, charge or encumbrance pursuant to any provision of the Certificate of
Incorporation or Bylaws of RTI or its Subsidiaries, any order, rule, law or
regulation of any court or governmental authority, foreign or domestic, or any
provision of any material agreement, instrument, understanding, order, judgment
or decree to which RTI or its Subsidiaries is a party or by which any of RTI or
its Subsidiaries or any of their properties or assets is bound or affected, nor
will such actions give to any other person or entity any interests or rights of
any kind, including rights of termination, acceleration or cancellation, in or
with respect to any of the Purchased Assets or the assets of the South Jersey
Subsidiary.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to RTI or its Subsidiaries in connection
with the execution and delivery of this Agreement by RTI or the consummation by
RTI of the transactions contemplated hereby, except for (i) filings in order to
comply with all applicable bulk sales laws, (ii) the filing of a definitive
proxy statement with the Securities and Exchange Commission (the "SEC") in
accordance with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country in which RTI conducts any
business or owns any property or assets, (iv) the filing by RTI of a Current
Report on Form 8-K with the SEC, and (v) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
be reasonably likely to have a material adverse effect on RTI.
7
<PAGE>
4.5 SEC Filings; Financial Statements. (a) RTI has filed all forms,
---------------------------------
reports and documents required to be filed by RTI with the SEC since January 1,
1995 (collectively, the "RTI SEC Reports"). The RTI SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the Exchange Act,
as the case may be, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such filing) contain any untrue statement of a material fact or omit to state
a material fact required to be stated in such RTI SEC Reports or necessary in
order to make the statements in such RTI SEC Reports, in the light of the
circumstances under which they were made, not misleading; (b) each of the
financial statements (including, in each case, any related notes) contained in
the RTI SEC Reports, including any RTI SEC Reports filed after the date of this
Agreement until the Closing, complied or will comply as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was or will be prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted by Form 10-QSB of the SEC) and fairly presented or will fairly
present in all material respects the consolidated financial position of RTI as
at the respective dates and the results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which are not
expected as of the date of this Agreement to be material in amount. The audited
year-end consolidated financial statements of RTI as of December 31, 1994 and
the unaudited interim consolidated financial statements for the quarter ended
September 30, 1995 are referred to herein as the "RTI Financial Statements."
The date of the RTI Financial Statements shall be the date of the latest interim
balance sheet, unless otherwise specified; (c) RTI's consolidated balance sheet
as of March 31, 1996 (the "March Balance Sheet"), when delivered prior to
Closing, will be accurate and complete in all material respects and will have
been prepared in accordance with GAAP applied on a basis consistent with the
preparation of the RTI Financial Statements; (d) the Closing Balance Sheet, when
delivered pursuant to Section 2.3 above, shall fairly state the Purchased Assets
and Assumed Liabilities and shall have been prepared in accordance with GAAP on
a basis consistent with the preparation of the March Balance Sheet. Other than
the IRB, there are no liabilities of the South Jersey Subsidiary that, if they
were liabilities of RTI, would not constitute Assumed Liabilities under the
terms of this Agreement.
4.6 Absence of Certain Changes or Events. Since the date of the RTI
------------------------------------
Financial Statements, RTI and the South Jersey Subsidiary have conducted their
respective businesses in the ordinary course and in a manner consistent with
past practices, and since such date, except as disclosed in the SEC Reports, RTI
has not: (a) suffered any material adverse change in its financial condition,
results of operations or business, or any material adverse changes in its
consolidated balance sheet (analyzed as if prepared according to GAAP) (a
"Material Adverse Change"), including but not limited to cash distributions or
material decreases in the net assets of RTI; (b) suffered any damage,
destruction or loss, whether covered by insurance or not, materially and
adversely affecting the Purchased Assets, the Rockaway Property, the assets of
the South Jersey Subsidiary or RTI's business; (c) sold, leased, abandoned or
otherwise disposed of any real property or any material amounts of machinery,
equipment or other operating property other than in the ordinary course of
business; (d) sold, assigned, transferred, licensed or otherwise disposed of any
material patent, trademark, trade name, brand name, copyright (or pending
application for any patent, trademark or copyright), invention, work of
authorship, process, know-how, formula or trade secret or interest thereunder or
other material intangible asset except in the ordinary course of its business;
(e) entered into any material commitment or transaction (including without
limitation any borrowing or capital expenditure) that would be included in the
Assumed Liabilities under the terms of this Agreement, other than in the
ordinary course of business; (f) incurred any liabilities that would be included
in the Assumed Liabilities under the terms of this Agreement, except in the
ordinary course of business and consistent with past practice which would be
required to be disclosed in financial statements prepared in accordance with
GAAP; (g) permitted or allowed any of the Purchased Assets, the assets of the
South Jersey Subsidiary or the Rockaway Property to be subjected
8
<PAGE>
to any mortgage, deed of trust, pledge, lien, security interest or other
encumbrance of any kind, except Permitted Encumbrances and any purchase money
security interests incurred in the ordinary course of business and mechanic's or
materialmen's liens incurred in connection with ongoing construction of an
addition to the North Carolina Property; (h) made any material amendment to or
terminated any agreement which, if such agreement not so amended or terminated,
would be required to be disclosed on the RTI Disclosure Schedule; (i) agreed to
take any action described in Section 6.3 or which would constitute a material
breach of any of the representations contained in this Agreement; or (j) taken
any other action that would have required the consent of Sterigenics pursuant to
Section 6.3 of this Agreement (and which has not been obtained) had such action
occurred after the date of this Agreement and that would be reasonably likely to
have a material adverse effect on RTI.
4.7 No Undisclosed Liabilities. Except as disclosed in the RTI SEC
--------------------------
Reports, the South Jersey Subsidiary does not have any liabilities, either
accrued or contingent (whether or not required to be reflected in financial
statements in accordance with GAAP), and whether due or to become due, which
individually or in the aggregate, would be reasonably likely to have a material
adverse effect on the South Jersey Subsidiary other than (i) liabilities
reflected in the RTI Financial Statements, (ii) liabilities specifically
described in this Agreement, and (iii) normal or recurring liabilities incurred
since the date of the RTI Financial Statements in the ordinary course of
business consistent with past practices.
4.8 Tangible Assets. The Tangible Assets being used in the operation
---------------
of RTI's business are, and at the Closing Date will be, in good operating
condition and repair, ordinary wear and tear and routine maintenance excepted.
4.9 Receivables. The Receivables constitute all of the accounts
-----------
receivable of RTI and its Subsidiaries and are valid and genuine; have arisen
solely out of bona fide sales and deliveries of goods, performance of services
and other business transactions in the ordinary course of business consistent
with past practice; are not subject to valid defenses, set-offs or
counterclaims; and are collectible (using a level of effort consistent with that
currently used by RTI) within 12 months of the date hereof at the full recorded
amount thereof, less the customary allowance for collection losses, which
allowance has been determined in accordance with GAAP consistent with past
practices; provided, however, that RTI makes no representation or warranty as to
the ultimate collection thereof.
4.10 Compliance With Other Instruments. Neither RTI nor its
---------------------------------
Subsidiaries is a party to, nor bound by, any written or oral material contract,
agreement, license, indenture, mortgage, debenture, note or other instrument
under the terms of which performance by RTI or its Subsidiaries according to the
terms of this Agreement, the Option Agreement and the Ancillary Documents will
be a default or an event of acceleration, or whereby timely performance by RTI
or its Subsidiaries according to the terms of this Agreement, the Option
Agreement and the Ancillary Documents may be prohibited, prevented or delayed.
4.11 Litigation. Except as disclosed in the RTI SEC Reports, there is
----------
no material action, suit, proceeding or investigation in progress or pending
before any court or governmental agency, against or relating to RTI or its
Subsidiaries or their properties (including the Real Properties), assets or
business, nor, to the knowledge of RTI, any threat thereof. Neither RTI nor its
Subsidiaries is a party to any decree, order or arbitration award (or agreement
entered into in any administrative, judicial or arbitration proceeding with any
governmental authority) with respect to any material portion of the properties,
assets, personnel or business activities of RTI's and its Subsidiaries'
business.
4.12 Compliance with Laws and Regulations; Governmental Licenses, Etc.
----------------------------------------------------------------
Except as set forth in the RTI SEC Reports, to RTI's knowledge, each of RTI and
its Subsidiaries and each of the
9
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Real Properties and the Improvements are in compliance in all material respects
with all statutes, laws, rules and regulations with respect to or affecting the
Real Properties, the Improvements and Sterigenics' continued use and enjoyment
of the Purchased Assets and the assets of the South Jersey Subsidiary,
including, without limitation, laws, rules and regulations relating to
occupational health and safety, equal employment opportunities, fair employment
practices, and sex, race, religious and age discrimination, except where the
failure to comply would not have a material adverse effect on RTI. Neither RTI
nor its Subsidiaries is subject to any order, injunction or decree issued by any
governmental body, agency, authority or court which could impair the ability of
RTI to consummate the transactions contemplated hereby or which could materially
adversely affect Sterigenics' ownership, use and enjoyment of the Purchased
Assets or the assets of the South Jersey Subsidiary or the value thereof. RTI
and its Subsidiaries (i) possess all licenses, permits and governmental or other
regulatory approvals and authorizations which are required in order for RTI and
its Subsidiaries to operate their facilities or carry on their sterilization
business as presently conducted, including, without limitation, all required
licenses, permits and approvals of the Nuclear Regulatory Commission ("NRC"),
NJDEP, the North Carolina Department of Radiological Health ("NCDRH") and the
Food and Drug Administration ("FDA") and (ii) are in compliance in all material
respects with all such licenses, permits, approvals and authorizations, except
where the failure to comply would not have a material adverse effect on RTI.
4.13 Taxes. All Federal, state, local and other returns and reports
-----
relating to any and all taxes or any other governmental charges, obligations or
fees for taxes and any related interest or penalties ("Tax" or "Taxes") required
to be filed with respect to the South Jersey Subsidiary have been timely filed
within the time period for filing or any extension granted with respect thereto
and such returns and reports are true and correct, unless such late filings or
inaccuracies would not have a material adverse effect on the Purchased Assets,
the assets of the South Jersey Subsidiary, the Rockaway Property or the business
of RTI. The South Jersey Subsidiary has paid all Taxes, if any, shown to be due
and payable on said returns and reports and has withheld with respect to
employees all Federal and state income Taxes, FICA, FUTA and other Taxes
required to be withheld and has timely paid all sales, use and similar Taxes.
No income, sales, use or similar Tax return or report with respect to the South
Jersey Subsidiary has been examined or audited by the Internal Revenue Service
or any state taxing authority. There are no pending or, to RTI's knowledge,
threatened audits, examinations, assessments, asserted deficiencies or claims
for additional Taxes with respect to the South Jersey Subsidiary.
4.14 Employees. Neither RTI nor the South Jersey Subsidiary is a
---------
party to any collective bargaining agreement, nor has RTI experienced any
strikes, written material grievances, claims of unfair labor practices or other
collective bargaining disputes within the past two (2) years. As of the date of
this Agreement, RTI and the South Jersey Subsidiary have not been notified of
any pending claims by employees or former employees for workman's compensation.
4.15 Environmental Matters.
---------------------
(a) Except as separately and specifically disclosed otherwise in
the RTI SEC Reports: (i) RTI has obtained all Material Environmental Approvals
required in connection with its business, and all such Environmental Approvals
are current, valid and in good standing in all Material respects, and there are
no proceedings commenced or to RTI's knowledge threatened to revoke or amend any
Environmental Approvals; (ii) all operations of the business on the Real
Property while occupied by RTI, have been and are now in compliance with all
Environmental Laws; (iii) neither RTI nor its operations has been or is now the
subject of any Remedial Order, nor does RTI have any knowledge of any
investigation or evaluation commenced as to whether any such Remedial Order is
necessary nor has any threat of any such Remedial Order been made nor are there
any circumstances which could result in the issuance of any such Remedial Order;
(iv) within the past 10 years, RTI has never been prosecuted for or convicted of
any offense under Environmental Laws, nor has RTI been found liable in any
proceeding to pay any fine or judgment to any Person as a result of any Release
or
10
<PAGE>
threatened Release of any Hazardous Material into the Environment or the breach
of any Environmental Law and to the knowledge of RTI, there is no basis for any
such proceeding; (v) all material environmental data and studies (including,
without limitation, the results of any environmental audit) relating to the
business have been delivered or made available to Sterigenics; (vi) RTI is not
aware of any Release which is now present in, on or under any of the Real
Properties (including underlying soils and substrata, surface water and
groundwater) at levels which exceed any action levels or remediation standards
under any Environmental laws or standards published or administered by those
Governmental Authorities responsible for establishing or applying such
standards; (vii) RTI has no knowledge of any Hazardous Materials in, on, or
under the Real Properties or any other assets relating to RTI's business;
(viii) RTI has no knowledge of any Hazardous Materials originating from any
neighboring or adjoining properties which has migrated onto, or is migrating
towards any of the Real Properties or any other asset of RTI's business; and
(ix) the business of RTI in New Jersey is not in a Standard Industrial
Classification code covered by the Industrial Site Recovery Act.
(b) With respect to Environmental Matters separately and
specifically disclosed in the RTI SEC Reports: (i) RTI is in full compliance
with all Remedial Orders; (ii) RTI is current with respect to all charges,
assessments, or claims for which a lien against the Real Properties or other
assets of RTI's business under any Environmental Law may be filed or asserted,
and there are no unpaid liens or assessments outstanding; and (iii) RTI is not
in default of any obligation or demand from any Governmental Authority with
respect to investigations or remediation activities which RTI is obligated to
undertake.
(c) As used in this Section 4.15, the following terms have these
meanings:
(i) "Environmental Laws" means all applicable statutes,
rules, regulations, ordinances, orders, decrees, judgments, permits, licenses,
consents, approvals, authorizations, and governmental requirements or directives
or other obligations lawfully imposed by governmental authority under federal,
state or local law pertaining to the protection of the environment, protection
of public health, protection of worker health and safety (excluding OSHA and
comparable state laws, which are covered under Section 4.12 above), the
treatment, emission and/or discharge of gaseous, particulate and/or effluent
pollutants, and/or the Handling of Hazardous Materials, including without
limitation, the Clean Air Act, 42 U.S.C. Sec. 7401, et seq., the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42
U.S.C. Sec. 9601, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
Sec. 1321, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Sec.
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901,
et seq. ("RCRA"), and the Toxic Substances Control Act, 15 U.S.C. Sec. 2601, et
seq.
(ii) "Hazardous Material(s)" means any substance, waste,
material, chemical, compound or mixture which is (or which contains any
substance, waste, material, chemical, compound, or mixture which is) flammable,
ignitable, corrosive, reactive, radioactive, or explosive, or is defined,
listed, designated, described or characterized under Environmental Laws or under
any rules, guidances, policies, or regulations promulgated thereunder, as
hazardous, toxic, a contaminant, a pollutant or words of similar import, and
includes without limitation any "hazardous substance" under CERCLA, any
"hazardous waste" under RCRA, asbestos, petroleum (including crude oil or any
fraction or distillate thereof), natural gas, natural gas liquids, and liquified
natural gas.
(iii) "Material" means anything that reasonably could be
expected to lead to the imposition of any significant penalties or fines, that
could reasonably be expected to require a capital expenditure of more than
$100,000, or that reasonably could be expected to interfere, interrupt or
threaten to interfere or interrupt in a significant manner the continued
operation of RTI's business as currently conducted.
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(iv) "Person" means any natural person, corporation,
partnership, business trust or other business entity or enterprise.
(v) "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing.
(vi) "Environmental Approval(s)" means all permits,
certificates, licenses, authorizations, consents, instructions, registrations,
directions or approvals, issued or required by Governmental Authorities pursuant
to Environmental Laws with respect to the operations of RTI in connection with
its business.
(vii) "Governmental Authorities" means any government,
regulatory authority, governmental department, agency, commission, board,
tribunal, or court or other law, rule or regulation-making entity having or
purporting to have jurisdiction over Environmental Laws on behalf of the
United States, or any state or other subdivision thereof, or any municipality.
(viii) "Remedial Order(s)" means any judicial or
administrative order, directive, complaint or sanction issued, filed or imposed
by any Governmental Authority pursuant to any Environmental Laws, and includes,
without limitation, any order requiring any remediation or cleanup of any
Hazardous Materials, or requiring that any Release or any other activity be
reduced, modified, abated, or eliminated.
4.16 Proprietary Rights. RTI owns all right, title and interest in
------------------
and to or has a license to use all technology, software, software tools,
know-how, processes, trade secrets, trade names and other proprietary rights
used in or necessary for the conduct of RTI's and its Subsidiaries' business as
conducted on the date hereof or contemplated by RTI free and clear of all liens,
claims and encumbrances (all of which are referred to as "Proprietary Rights").
No material claims have been asserted against RTI or its Subsidiaries (and RTI
is not aware of any claims which are likely to be asserted against RTI or its
Subsidiaries or which have been asserted against others) by any person
challenging RTI's or its Subsidiaries' use of any trademarks, tradenames,
copyrights, trade secrets, software, technology, know-how or processes utilized
by RTI or its Subsidiaries or challenging or questioning the validity or
effectiveness of any license or agreement relating thereto.
4.17 Employee Benefit Plans. There is no unfunded prior service cost
----------------------
with respect to any bonus, deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option, or other employee benefit or fringe
benefit plans, whether formal or informal, maintained by RTI. RTI has no bonus,
deferred compensation, pension, profit-sharing, retirement, stock purchase,
stock option, or other employee benefit or fringe benefit plans, whether formal
or informal, which is required to conform with the Employees Retirement Income
Security Act of 1974.
4.18 Contracts.
---------
(a) None of the Contracts related to irradiation services are
currently expected to result in any loss (before allocation of Cobalt
amortization, overhead and administrative costs) upon completion or performance
thereof. Except for the Contracts listed on Schedule 1.5, none of the Contracts
call for fixed and/or contingent payments or expenditures by or to RTI and its
Subsidiaries of more than $50,000.
(b) All material contracts, agreements and instruments to which
RTI and its Subsidiaries are a party are valid, binding, in full force and
effect, and, assuming each is a valid obligation of the other party, enforceable
by RTI in accordance with their respective terms. No such material contract,
agreement or instrument contains any material liquidated-damages, penalty or
similar
12
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provision. To RTI's knowledge, no party to any such material contract,
agreement or instrument intends to cancel, withdraw, modify or amend such
contract, agreement or arrangement.
(c) RTI and its Subsidiaries are not in default under or in
breach or violation of, nor, to RTI's knowledge, is there any valid basis for
any claim of default by RTI or its Subsidiaries under, or breach or violation by
RTI or its Subsidiaries of, any material contract, commitment or restriction to
which RTI or its Subsidiaries is a party or to which it or any of its properties
is bound, where such defaults, breaches, or violations would, in the aggregate,
have a material adverse effect on the Purchased Assets, the assets of the South
Jersey Subsidiary, the Rockaway Property or the operation of the business of
RTI. To RTI's knowledge, no other party is in default under or in breach or
violation of any Contract listed in Schedule 1.5.
4.19 No Misrepresentation. No representation, warranty or covenant by
--------------------
RTI in this Agreement, the Option Agreement, any other Ancillary Document, nor
any statement, certificate or schedule furnished or to be furnished by or on
behalf of RTI pursuant to this Agreement, when taken together with the
foregoing, contains or shall contain any untrue statement of material fact or
omits or shall omit to state a material fact required to be stated therein or
necessary in order to make such statements, in light of the circumstances under
which they were made, not materially misleading. RTI has delivered or otherwise
made available true and complete copies of all documents requested by
Sterigenics and which are referred to in this Article IV or in any Schedule
delivered by RTI to Sterigenics.
4.20 Restrictions on Business Activities. There is no material
-----------------------------------
agreement, judgment, injunction, order or decree binding on RTI or its
Subsidiaries which has or reasonably would be expected to have the effect of
prohibiting or materially impairing any material current business practice of
RTI and its Subsidiaries, any acquisition of material property by RTI or its
Subsidiaries, or the conduct of business by RTI as currently conducted or as
proposed to be conducted.
4.21 Transfers. Except for this Agreement, the Option Agreement and
---------
the Ancillary Documents, neither RTI nor its Subsidiaries have entered into any
pending agreement to convey, sell, assign, lease, transfer or encumber the Real
Properties or any material portion of the other Purchased Assets or the assets
of the South Jersey Subsidiary, and neither RTI nor its Subsidiaries shall do so
prior to the Closing Date without Sterigenics' prior written consent, which may
be granted or withheld in Sterigenics' discretion reasonably exercised.
4.22 Title.
-----
(a) Except as set forth in the RTI SEC Reports, RTI or its
Subsidiaries owns the North Carolina Property and the Rockaway Property free and
clear of all liens, leases, occupancy agreements, licenses, encumbrances,
covenants, conditions, restrictions, rights-of-way, easements, and other matters
affecting title, except as to the Permitted Encumbrances, those particular items
disclosed in the applicable Title Reports (as defined in Section 6.5(a) hereof)
and other encumbrances and restrictions which in the aggregate would not have a
material adverse effect on the use in the manner presently used by RTI, value or
transferability of the Real Property Assets. Except as set forth in the RTI SEC
Reports, the South Jersey Subsidiary has a binding and enforceable leasehold
interest in the Salem Property. To RTI's knowledge, except as disclosed in the
Title Reports, no other person or entity has claimed or is entitled to claim any
legal or equitable interest in the Real Properties.
(b) RTI and its Subsidiaries have good and marketable title to
all of the Purchased Assets (excluding the Real Property Assets) and the assets
of the South Jersey Subsidiary owned by RTI and its Subsidiaries and valid,
binding and enforceable leasehold interests in all Tangible Assets that are
subject to leases. Except as disclosed in the RTI SEC Reports, all of the
Purchased Assets
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(except the Real Property Assets) and all of the assets of the South Jersey
Subsidiary are free and clear of restrictions on or conditions to transfer or
assignment, and free and clear of all claims, liabilities, liens, pledges,
mortgages, restrictions and encumbrances of any kind, whether accrued, absolute,
contingent or otherwise ("Encumbrances") affecting the Purchased Assets (except
the Real Property Assets) or the assets of the South Jersey Subsidiary except
for Permitted Encumbrances. At the Closing, RTI will sell, convey, assign,
transfer and deliver to Sterigenics good, valid and marketable title and all
RTI's right and interest in and to all of the Purchased Assets (excluding the
Real Property Assets), free and clear of any Encumbrances, except for Permitted
Encumbrances. At the Closing, all of the assets of the South Jersey Subsidiary
will be free and clear of any Encumbrances, except for Permitted Encumbrances.
4.23 No Condemnation. To RTI's knowledge, there is no condemnation or
---------------
other like proceeding pending or threatened against the Real Properties or any
part thereof and no such proceeding is being contemplated.
4.24 Governmental Commitments. To RTI's knowledge, no commitment to
------------------------
or agreement with any governmental or quasi-governmental authority exists which
could affect the Real Properties, including but not limited to any formation of
any special assessment district or community facilities district, except as
disclosed in this Agreement.
4.25 Easements. To RTI's knowledge, all existing water, drainage,
---------
sewage and utility facilities relating to the Real Properties, from the boundary
thereof until entering the public right-of-way or other public facility, are
situated within valid easements granted by all persons or other entities having
any interest in or right or title to any property which is subject to such
easement and are referenced in the Title Reports.
4.26 Maintenance of Real Properties. Prior to the Closing Date and
------------------------------
the actual transfer to Sterigenics of title to the North Carolina Property and
the Subsidiary Stock and delivery of the executed Rockaway Lease, RTI shall
maintain the Real Properties and the Improvements in substantially their present
condition, reasonable wear and tear or loss due to the elements excepted. In
the event that prior to the Closing any of the Real Properties or the
Improvements are destroyed or damaged and the cost to repair such damage exceeds
Two Hundred Fifty Thousand Dollars ($250,000), such event shall be deemed to
constitute a material adverse change under Section 9.12 hereof.
4.27 Condition of Improvements. To RTI's knowledge the Improvements
-------------------------
(including the roof and roof membrane, exterior and structural walls,
foundations, floor slabs, and other load-bearing components of the Improvements)
are in operable condition and repair (as hereinafter defined). To RTI's
knowledge all elevators, heating, ventilation and air conditioning systems
("HVAC"), plumbing, electrical, wiring, life safety, and other equipment,
appurtenances, systems and improvements are in operable condition and repair.
For purposes of this Section, the term "operable condition and repair" means
that there are no material defects or state of disrepair that have a material
adverse effect on the operations of the business as currently conducted by RTI
from each of the Real Properties.
4.28 Compliance With Laws. RTI has received no written notice from
--------------------
any governmental authority that the Improvements fail to comply with any
applicable codes, statutes, ordinances, regulations, permits, orders,
directives, or other laws in any material respects. As of the Closing the
Improvements and all parts thereof shall be in a safe and habitable condition.
4.29 Industrial Revenue Bonds. RTI has provided Sterigenics with
------------------------
true, complete and correct copies of the IRB Documentation. Except with the
prior written consent of Sterigenics, which may be withheld or granted in
Sterigenics' sole and absolute discretion, RTI and its Subsidiaries shall not
amend or modify the IRB Documentation.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF STERIGENICS
Sterigenics hereby represents and warrants to RTI as follows:
5.1 Organization. Sterigenics is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of California.
5.2 Authorization. This Agreement has been, and each of the
-------------
Ancillary Documents will prior to the Closing be, duly and validly executed and
delivered by Sterigenics. This Agreement does and the Ancillary Agreements will
constitute valid and binding agreements of Sterigenics, enforceable against
Sterigenics in accordance with their terms. Sterigenics has all requisite power
and authority to execute and deliver this Agreement and the Ancillary Documents
and to enable it to carry out the transactions contemplated by this Agreement
and the Ancillary Documents. All necessary corporate action on the part of
Sterigenics has been taken to authorize the execution and delivery of the
Agreement and the Ancillary Documents.
5.3 Effect of Agreement; Consents. The execution and delivery of
-----------------------------
this Agreement by Sterigenics and the execution and delivery of the Ancillary
Documents by Sterigenics do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, result in a breach of, constitute a default (with or without notice or
lapse of time, or both) under or violation of, or result in the creation of any
lien, charge or encumbrance pursuant to any provision of the Articles of
Incorporation or Bylaws of Sterigenics, any order, rule, law or regulation of
any court or governmental authority, foreign or domestic, or any provision of
any material agreement, instrument, understanding, order, judgment or decree to
which Sterigenics is a party or by which Sterigenics is bound. No consent or
approval of any third party or any governmental authority is required to be
obtained on the part of Sterigenics to permit the consummation of the
transactions contemplated by this Agreement or the Ancillary Documents.
5.4 Compliance With Other Instruments. Sterigenics is not a party
---------------------------------
to, or bound by, any written or oral contract, agreement, license, indenture,
mortgage, debenture, note or other instrument under the terms of which
performance by Sterigenics according to the terms of this Agreement and the
Ancillary Documents will be a default or an event of acceleration, or whereby
timely performance by Sterigenics according to the terms of this Agreement and
the Ancillary Documents may be prohibited, prevented or delayed.
5.5 Sufficient Financing. Sterigenics has, and at the Closing will
--------------------
have, sufficient financing available to it to consummate the Acquisition.
ARTICLE VI
COVENANTS OF RTI
6.1 No Solicitation.
---------------
(a) From and after the date of this Agreement until the Closing
Date, RTI shall not, directly or indirectly, through any officer, director,
employee, representative or agent of RTI (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of all or substantially all of the assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving RTI, other than the transactions contemplated by this
15
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Agreement (any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to, approve or
recommend any Acquisition Proposal; provided, however, that nothing contained in
-------- -------
this Agreement shall prevent RTI or its Board of Directors from (A) furnishing
non-public information to, or entering into discussions or negotiations with,
any person or entity in connection with an unsolicited bona fide written
Acquisition Proposal by such person or entity which is received after the date
hereof or recommending an unsolicited bona fide written Acquisition Proposal
which is received after the date hereof to the shareholders of RTI, if and only
to the extent that (1) the Board of Directors of RTI believes in good faith
(after consultation with its financial advisor) that such Acquisition Proposal
would, if consummated, result in a transaction more favorable to RTI's
shareholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal") and the Board of Directors of RTI
determines in good faith after consultation with outside legal counsel that such
action is necessary to comply with its fiduciary duties to shareholders under
applicable law and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, the Board
of Directors receives from such person or entity an executed confidentiality
agreement with terms no less favorable to such party than those contained in the
Confidentiality Agreement dated October 3, 1995 between Sterigenics and RTI (the
"Confidentiality Agreement") or (B) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to an Acquisition Proposal. Notwithstanding the
provisions of this Section 6.1(a), in connection with furnishing non-public
information under Section (A), RTI may refer any third party to this Section 6.1
or make a copy of this Agreement available to a third party, and in response to
an unsolicited oral Acquisition Proposal, RTI may notify the party making the
proposal that it is unable to respond to oral offers and provide such third
party with a copy of this Section 6.1(a).
(b) RTI shall notify Sterigenics no later than one (1) business
day after receipt by RTI of any Acquisition Proposal or any request for
nonpublic information in connection with an Acquisition Proposal or for access
to the properties, books or records of RTI by any person or entity that informs
RTI that it is considering making, or has made, an Acquisition Proposal. Such
notice shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact.
6.2 Cooperation. RTI will take all reasonable actions necessary to
-----------
comply promptly with all legal requirements which may be imposed with respect to
the consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to Sterigenics in connection
with any such requirements imposed upon Sterigenics in connection with the
consummation of the transactions contemplated by this Agreement. RTI will take
all reasonable actions necessary to obtain (and will cooperate with Sterigenics
in obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any governmental entity, domestic or
foreign, or other person, required to be obtained or made by RTI (or by
Sterigenics) in connection with the taking of any action contemplated by this
Agreement. Sterigenics shall reimburse RTI for all out-of-pocket costs incurred
after the Closing Date pursuant to compliance with this Section 6.2.
6.3 Conduct of Business. During the period on and from the date of
-------------------
this Agreement to the Closing, RTI will use its reasonable commercial efforts to
maintain and preserve intact (i) the business organization, rights and
privileges pertinent to RTI's business, and (ii) RTI's relationships with its
employees, consultants, independent contractors, licensors, suppliers,
distributors and other customers and all others with whom it deals, all in
accordance with the ordinary and usual course of business. During the period on
and from the date of this Agreement to the Closing, RTI and its Subsidiaries
will not without the prior written consent of Sterigenics, which consent shall
not be unreasonably withheld or delayed: (a) encumber or permit to be further
encumbered any of the
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Purchased Assets, any of the assets of the South Jersey Subsidiary or the
Rockaway Property, except mechanic's or materialmen's liens incurred in
connection with ongoing construction of an addition to the North Carolina
Property; (b) dispose of any Purchased Assets, the Rockaway Property or any
assets of the South Jersey Subsidiary, except in the ordinary course of
business; (c) fail to operate its business and facilities in compliance in all
material respects with all material requirements of the NRC, the NJDEP, the
NCDRH and the FDA; (d) fail to maintain the Purchased Assets, the Rockaway
Property and the Improvements thereon and the assets of the South Jersey
Subsidiary in good working condition and repair according to the general
standards it has maintained up to the date of this Agreement, subject only to
ordinary wear and tear; (e) fail to pay and discharge any Trade Payables in the
ordinary course unless disputed in good faith; (f) change accounting methods;
(g) amend or terminate any Contract listed on Schedule 1.5, except in the
ordinary course of business; (h) waive or release any material right or claim
relating to any Purchased Assets or the assets of the South Jersey Subsidiary,
except in the ordinary course of business; (i) enter into any contract providing
for a term of over one (1) year or providing for payments to or from RTI of more
than $50,000 per annum; (j) incur any indebtedness or obligation that would
become an Assumed Liability under the terms of this Agreement other than in the
ordinary course of business; (k) take any action or fail to take any action
where such action or failure to act would not be in the ordinary course of
business; or (l) agree to do any of the things described in the preceding
clauses of this Section 6.3.
6.4 Access to Information. RTI shall make available to Sterigenics
---------------------
and Sterigenics' agents and representatives all information concerning the
operation, business and prospects of RTI and related entities as may be
reasonably requested by Sterigenics, including, without limitation, the
accounting and tax working papers of RTI's independent certified public
accountants. After the last to occur of (i) satisfaction of the condition set
forth in Section 9.18(ii) and termination or waiver of all contingencies
permitting termination of the Agreement under Section 6.5 hereof, RTI will
reasonably cooperate with Sterigenics for the purpose of permitting Sterigenics
to discuss RTI's business and prospects with RTI's customers, creditors,
suppliers and other persons having business dealings with RTI; provided,
however, that Sterigenics agrees that it shall not have any discussions with
RTI's customers unless a representative of RTI is present. RTI agrees to make a
representative available for such purposes during normal business hours upon at
least three (3) business days' prior notice. Sterigenics further agrees that,
without RTI's prior written consent, it will have discussions with no more than
ten (10) of RTI's top twenty (20) customers, and will have no discussions with
other customers of RTI. Unless otherwise required by law, the parties will hold
any such information which is nonpublic in confidence in accordance with the
Confidentiality Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 6.4 shall affect or be deemed to modify
any representation or warranty construed in this Agreement or the conditions to
the obligations of the parties to consummate the Acquisition. RTI shall permit
Sterigenics to audit the financial statements contained in the March Form 10-
QSB; provided, however, that no adjustment shall be required to be made thereto
by RTI as a result thereof.
6.5 Real Estate Matters.
-------------------
(a) Approval of Title. Sterigenics hereby approves the
-----------------
condition of title of the Rockaway Property, as shown on the title commitment
for the Rockaway Property attached hereto as Exhibit 6.5(a), excluding only
--------------
Exception No's 5(a-h), 6, 9, 11, 12, 13, 14, 18, 19 through 22 and 25 thereof
(but with respect to exceptions 19 through 22 and 25 only to the extent that (i)
such exceptions materially adversely impact or could materially adversely impact
the use of the Rockaway Property as the site of a contract irradiation facility
in the manner heretofore used and (ii) in such event, RTI does not provide
Sterigenics with a title policy insuring that such encumbrances will not
interfere with Sterigenics use of the Rockaway Property as currently used).
Sterigenics hereby approves the condition of title of the North Carolina
Property, as shown on the title commitment attached hereto as Exhibit 6.5(c),
--------------
excluding only Exception No's 3, 4, 5 (items a, b, c and g), 6 and 7 thereof.
The foregoing title
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commitments are referred to herein as the "Title Reports," and the exceptions to
title approved by Sterigenics including such exceptions as are approved with
respect to the Salem Property under paragraph (b) below and with respect to the
Rockaway Property under paragraph (c) below, are collectively referred to herein
as the "Permitted Exceptions." The title insurance companies issuing the Title
Reports are referred to herein individually as a "Title Company" and
collectively as the "Title Companies."
(b) Approval of Salem Title. Sterigenics shall cause to be
-----------------------
prepared a title report or title commitment showing the condition of title to
the Salem property. Sterigenics shall have five business (5) days after receipt
of such title commitment and copies of all exceptions thereto to deliver to RTI
and the applicable Title Company written notice (the "Preliminary Title Notice")
of Sterigenics' approval, conditional approval, or disapproval of the title
matters disclosed in the title commitment. All matters with respect to the
Salem Property not approved in writing by Sterigenics except the Permitted
Encumbrances shall be deemed disapproved and are referred to herein as "Salem
Disapproved Exceptions;" provided, however, that Sterigenics agrees that the
Salem Disapproved Exceptions shall be limited to those exceptions which (i)
relate to monetary liens securing obligations with a face amount of $10,000 or
more individually or $50,000 or more in the aggregate or (ii) materially
adversely impact or could materially adversely impact the use of the Salem
Property as the site of a contract irradiation facility in the manner currently
used. RTI shall have five (5) business days (or such longer period as RTI may
reasonably request) after receipt of Sterigenics' Preliminary Title Notice to
give Sterigenics and the Title Company written notice (the "Salem Removal
Notice") of those Disapproved Exceptions that have been or will be removed from
title on or before the Closing. If RTI is unable or unwilling to remove a Salem
Disapproved Exception or fails to give notice as to whether it will remove a
Salem Disapproved Exception, Sterigenics shall have the option, within five (5)
business days of receipt of the Salem Removal Notice or, if RTI fails to deliver
such notice, within ten (10) business days (which period shall be extended on a
day for day basis as a result of any extension requested by RTI for delivery of
the Salem Renewal Notice) after delivery of the Preliminary Title Notice, to
terminate this Agreement by written notice to RTI, or to waive its objection to
the Disapproved Exceptions in question by delivering notice of such waiver to
RTI and thereafter proceed to the Closing. If Sterigenics fails to deliver the
waiver notice described in the preceding sentence, Sterigenics shall be deemed
to have elected to terminate this Agreement.
(c) Rockaway Survey. RTI and Sterigenics hereby acknowledge
---------------
that the Title Report prepared for the Rockaway Property (the "Rockaway Title
Report") describes the real property defined herein as the "Rockaway Property"
together with certain other real property (the "Excluded Property") that RTI
intends to retain and that shall not be leased or otherwise transferred to
Sterigenics pursuant to this Agreement. The parties believe that certain
exceptions in the Title Report relating to tax liens shown in Schedule B of the
Rockaway Title Report relate solely to the Excluded Property and not to the
Rockaway Property. In order to determine the exact boundaries of the Rockaway
Property and which of the title exceptions apply to the Rockaway Property,
Sterigenics shall obtain at its cost an ALTA survey (the "Survey") of the
Rockaway Property which Survey shall locate the easements described in
exceptions Nos. 19-22 and 25 to the extent they affect the Rockaway Property.
During such period, RTI hereby grants Sterigenics and its agents, contractors
and employees the right to enter upon the Rockaway Property to prepare the
Survey and to prepare a legal description of the Rockaway Property. Upon
completion of the Survey, (i) Sterigenics shall provide RTI with a copy of the
Survey and legal description, (ii) from and after the delivery to RTI of the
Survey and the legal description, all references in this Agreement to the
Rockaway Property shall be deemed to mean the real property shown on the Survey
as the Rockaway Property and described by such legal description, and
(iii) Sterigenics shall deliver the Survey and the legal description to the
Title Company and shall cause the Title Company to prepare an update to the
Rockaway Title Report to reflect the new legal description and the title
exceptions thereto. If such updated Title Report shows exceptions other than
those shown on the prior Rockaway Title Report, Sterigenics shall have five (5)
business days after receipt of such updated
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title report and copies of all exceptions to title referred to therein to
deliver to RTI and the Title Company written notice (the "Rockaway Title
Notice") of Sterigenics' approval, conditional approval, or disapproval of the
title matters disclosed in the updated title commitment. All matters with
respect to the Rockaway Property not approved in writing by Sterigenics except
the Permitted Encumbrances shall be deemed disapproved and are referred to
herein as "Rockaway Disapproved Exceptions;" provided, however, that Sterigenics
agrees that the Rockaway Disapproved Exceptions shall be limited to those
exceptions which (i) relate to monetary liens securing obligations with a face
amount of $10,000 or more individually or $50,000 or more in the aggregate or
(ii) materially adversely impact or could materially adversely impact the use of
the Rockaway Property as the site of a contract irradiation facility in the
manner currently used. RTI shall have five (5) business days (or such longer
period as RTI shall reasonably request) after receipt of Sterigenics' notice to
give Sterigenics and the Title Company written notice (the "Rockaway Removal
Notice") of those Rockaway Disapproved Exceptions that have been or will be
removed from title on or before the Closing. If RTI is unable or unwilling to
remove a Rockaway Disapproved Exception or fails to give notice as to whether it
will remove a Rockaway Disapproved Exception, Sterigenics shall have the option,
within five (5) business days of receipt of the Rockaway Removal Notice or, if
RTI fails to deliver such notice, within ten (10) business days (which period
shall be extended on a day for day basis as a result of any extension requested
by RTI for delivery of the Rockaway Removal Notice) after delivery of the
Rockaway Title Notice to terminate this Agreement by written notice to RTI, or
to waive its objection to the Rockaway Disapproved Exceptions in question by
delivering notice of such waiver to RTI and thereafter proceed to the Closing.
If Sterigenics fails to deliver the waiver notice described in the preceding
sentence, Sterigenics shall be deemed to have elected to terminate this
Agreement.
(d) Environmental Inspection. RTI hereby grants Sterigenics the
------------------------
right to enter upon and to inspect the Real Properties and the environmental
risks and conditions (including the soil and groundwater) of the Real
Properties. For the purpose of Sterigenics' physical inspections, RTI agrees to
provide Sterigenics and its authorized agents reasonable access to each Real
Property during normal business hours during the period starting on the date of
this Agreement and ending thirty (30) days thereafter (the "Initial Due
Diligence Period"), upon at least twelve (12) hours' prior notice to RTI, and
Sterigenics shall use reasonable good faith efforts to avoid disruption of the
operation of the Real Properties. Sterigenics may, at its option, extend the
Initial Due Diligence Period for an additional sixty (60) days by giving notice
to RTI prior to the expiration of the Initial Due Diligence Period that it
intends to conduct Phase II environmental investigation at one or more of the
Real Properties. The Initial Due Diligence Period and any such extension are
referred to collectively as the "Due Diligence Period." Without limiting the
foregoing, Sterigenics and Sterigenics' agents may, at the sole cost of
Sterigenics and upon prior notice to RTI, perform engineering and soils surveys,
geological work or other studies desired by Sterigenics. Sterigenics and
Sterigenics' agents shall be entitled, at Sterigenics' own expense, to conduct
Phase I and Phase II environmental investigations of the Real Properties.
Sterigenics agrees to hire as its contractor for such environmental
investigation a firm which maintains adequate liability insurance. If the
Closing does not occur, Sterigenics shall provide to RTI copies of all
environmental reports it caused to be prepared. If the Closing does not occur,
Sterigenics promptly shall repair and restore any damage caused to the North
Carolina Property and the Salem Property by reason of Sterigenics' or
Sterigenics' agents' entry on or investigation of the North Carolina Property
and the Salem Property. Whether or not the Closing occurs, Sterigenics shall
promptly repair and restore any damage caused to the Rockaway Property by reason
of Sterigenics' or Sterigenics' agents' entry on or investigation of the
Rockaway Property. Sterigenics shall provide to RTI copies of all invoices for
work performed to repair and restore any damage to the Real Properties along
with evidence that such invoices have been paid. Sterigenics hereby agrees to
indemnify RTI and to hold RTI, RTI's agents and employees and the Real
Properties harmless from and against any and all losses, costs, damages, claims
or liabilities including, but not limited to, mechanic's and materialmen's liens
and reasonable attorneys' fees, arising out of or in connection with
Sterigenics' or its agent's access to or entry upon the Real Properties under
this Section 6.5. If, upon any such inspection, any aspect of the condition of
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the Property would have a material adverse effect on Sterigenics' ability to
operate the business of RTI as currently operated or could result in any
material liability on the part of Sterigenics for environmental remediation,
Sterigenics shall have the right during the Due Diligence Period, which it shall
exercise promptly, to terminate this Agreement by delivering three (3) business
days' prior written notice of such termination to RTI, which notice shall
specifically identify the conditions providing the basis for termination.
(e) Title Policies. At the Closing for the North Carolina
--------------
Property the applicable Title Company shall issue to Sterigenics, at
Sterigenics' expense, an ALTA owner's policy of title insurance, form B (as
amended 10-17-92) (the "North Carolina Title Policy"), in the amount of the
Purchase Price allocated thereto pursuant to Section 2.7, subject only to the
-----------
Permitted Exceptions therefor. In addition, the Title Company shall issue to
Sterigenics ALTA leasehold and optionee's policies of title insurance, form B
(as amended 10-17-92) for the Rockaway Property (collectively, the "Leasehold
Policy"), in an amount determined by Sterigenics, insuring the validity and
priority of the Rockaway Lease and Sterigenics' option to purchase the Rockaway
Property granted pursuant to the Rockaway Lease. Sterigenics shall have the
right to have an ALTA survey the (the "ALTA Survey") prepared for any Real
Property, the costs of which shall be paid by Sterigenics. The North Carolina
Title Policy and the Leasehold Title Policy individually are referred to herein
as a "Title Policy" and collectively as the "Title Policies."
6.6 Proxy Statement. As promptly as practical after the execution of
---------------
this Agreement and in conjunction with the filing of its Annual Report on Form
10-KSB, RTI shall prepare a proxy statement (the "Proxy Statement") to obtain
the approval of shareholders of RTI for this Agreement and the transactions
contemplated hereby. RTI shall provide reasonable opportunity for Sterigenics
to review and comment on the contents of the Proxy Statement. The Proxy
Statement shall include the recommendation of the Board of Directors of RTI in
favor of this Agreement and Acquisition; provided that the Board of Directors of
RTI may withdraw such recommendation if such Board of Directors believes in good
faith that a Superior Proposal has been made and shall have determined in good
faith, after consultation with its outside legal counsel, that the withdrawal of
such recommendation is necessary for such Board of Directors to comply with its
fiduciary duties under applicable law. Promptly after the last to occur of (i)
satisfaction of the condition set forth in Section 9.18(ii) and termination or
waiver of all contingencies permitting termination of the Agreement under
Section 6.5 hereof, RTI shall complete and file the Proxy Statement with the
SEC. Within ten (10) business days after all SEC comments on the Proxy
Statement have been resolved, RTI will cause the Proxy Statement to be sent to
the shareholders of RTI.
6.7 Shareholders Meeting. RTI shall call a meeting of its
--------------------
shareholders (the "RTI Shareholders' Meeting) to be held as promptly as
practicable after RTI has been advised by the SEC that it has no further
comments on the Proxy Statement for the purpose of voting upon this Agreement
and the Acquisition. RTI shall use reasonable efforts, including the engagement
of a proxy solicitation firm reasonably acceptable to Sterigenics (one half of
the cost of which will be paid directly by Sterigenics), to solicit from its
shareholders proxies in favor of such matters.
6.8 Risk of Loss. Until the Closing, all risk of loss, damages or
------------
destruction to the Purchased Assets or the assets of the South Jersey Subsidiary
shall be borne by RTI.
6.9 Regulatory Approvals; Transfer of Permits. Prior to the Closing,
-----------------------------------------
at Sterigenics' expense, RTI will execute and file, or join in the execution and
filing, of any application or other document that may be necessary in order to
obtain the authorization, approval or consent of any governmental entity that
may be reasonably required, or that Sterigenics may reasonably request, in
connection with the consummation of the transactions contemplated by this
Agreement. RTI will promptly prepare and file with the appropriate Governmental
Entity all applications necessary to obtain
20
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the transfer of the licenses, approvals and permits referred to in Section 9.5.
Sterigenics will reimburse RTI for all out of pocket costs, including reasonable
legal fees, incurred in connection with obtaining such transfers.
6.10 Execution of Amendment Agreement. RTI shall use its best efforts
---------------------------------
(not including the payment of any monetary amounts) to promptly cause Farmers
Merchant National Bank of Bridgeton, as trustee under the IRB, to execute that
certain Amendment Agreement dated April 2, 1985 amending the designation of the
Salem Property as attached as Exhibit A to the sublease for the Salem Property.
ARTICLE VII
COVENANTS OF STERIGENICS
7.1 Access to Documents. If, after the Closing Date, (i) in order to
-------------------
properly prepare its tax returns or other documents or reports required to be
filed with governmental authorities or its financial statements; (ii) in
connection with any threatened or pending litigation or claim which involves or
may involve RTI; or (iii) for any other reasonable purpose, it is necessary that
RTI be furnished with additional information or documents relating to the
Purchased Assets, the assets of the South Jersey Subsidiary or the Assumed
Liabilities and such information or documents are in Sterigenics' possession,
and can reasonably be furnished to RTI, Sterigenics shall, upon written request
therefor, promptly furnish such information or documents to RTI. RTI shall
reimburse Sterigenics for the cost of copying or shipping any requested
documents.
7.2 Cooperation. Sterigenics will take all reasonable actions
-----------
necessary to comply promptly with all legal requirements which may be imposed
with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to RTI in
connection with any such requirements imposed upon RTI in connection with the
consummation of the transactions contemplated by this Agreement. Sterigenics
will take all reasonable actions necessary to obtain (and will cooperate with
RTI in obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any governmental entity, domestic or
foreign, or other person, required to be obtained or made by Sterigenics (or by
RTI) in connection with the taking of any action contemplated by this Agreement.
7.3 Future Administrative Support Related to Environmental Issues.
-------------------------------------------------------------
Until the date five (5) years after the Closing, Sterigenics shall provide RTI
with certain administrative services, including (a) supervision of the Rockaway
Property monitoring program (including payment of costs up to $10,000 per annum)
following completion of the clean-up program at the Rockaway Property, and (b)
general corporate administrative support, including reasonable access to use of
former RTI employees who are employed by Sterigenics.
7.4 Employment of RTI Employees by Sterigenics. Sterigenics (or its
------------------------------------------
wholly-owned Subsidiary) shall offer employment to all existing employees (as of
the Closing) of RTI except Theo Muller. Sterigenics agrees not to terminate any
former RTI employee for at least 90 days after the Closing except for cause.
7.5 Release of Salem Guarantee. Sterigenics shall use reasonable
--------------------------
efforts to cause RTI to be released from the Salem Guarantee.
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ARTICLE VIII
COVENANTS OF STERIGENICS AND RTI
8.1 Legal Conditions. Subject, as to RTI, to Section 6.1(a), each of
----------------
Sterigenics and RTI will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
the Acquisition (which actions shall include, without limitation, furnishing all
information required in connection with approvals of or filings with any
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon either of them
in connection with the Acquisition.
8.2 Public Disclosure. Prior to Closing, Sterigenics and RTI shall
-----------------
consult with each other before issuing any press release or otherwise making any
public statement (other than at the RTI Shareholders' Meeting) with respect to
the Acquisition or this Agreement and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law.
8.3 Additional Agreements; Reasonable Efforts. Subject to the terms
-----------------------------------------
and conditions of this Agreement, including Section 6.1(a), each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, subject to the appropriate vote of
shareholders of RTI described in Section 6.7, including cooperating fully with
the other party, including by provision of information. In case at any time
after the Closing Date any further action is necessary or desirable to carry out
the purposes of this Agreement or to vest Sterigenics with full title to all
properties, assets, rights, approvals, immunities and franchises of the
Purchased Assets or the assets of the South Jersey Subsidiary, the proper
officers and directors of each party to this Agreement shall take all such
necessary action; provided, however that out-of-pocket costs incurred by RTI
pursuant to this Section 8.3 after the Closing Date shall be reimbursed by
Sterigenics.
8.4 Access to Documents. If, after the Closing Date, (i) in order to
-------------------
properly prepare its tax returns or other documents or reports required to be
filed with governmental authorities or its financial statements; (ii) in
connection with any threatened or pending litigation or claim which involves or
may involve Sterigenics or RTI; or (iii) for any other reasonable purpose, it is
necessary that Sterigenics or RTI be furnished with additional information or
documents relating to the Purchased Assets, the assets of the South Jersey
Subsidiary or the Assumed Liabilities and such information or documents are in
the possession of the other party, and can reasonably be furnished to the
requesting party, the other party shall, upon written request therefor, promptly
furnish such information or documents to the requesting party. The requesting
party shall reimburse the other party for the cost of copying or shipping any
requested documents.
ARTICLE IX
STERIGENICS' CONDITIONS PRECEDENT TO CLOSING
The obligations of Sterigenics at the Closing are subject to
satisfaction of the following conditions (any or all of which may be waived by
Sterigenics in its sole discretion), all of which are for Sterigenics' sole
benefit:
9.1 Representations and Warranties. The representations and
------------------------------
warranties of RTI contained in this Agreement shall be true and correct in all
material respects on the Closing Date with the same effect as though made on
that date; provided that this condition will be deemed satisfied if inaccuracies
in the representations and warranties of RTI would merely result in (a) positive
adjustments
22
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to RTI's consolidated balance sheet or (b) negative adjustments to RTI's
consolidated balance sheet of (i) up to $200,000 in the aggregate (which would
give rise to a Purchase Price Adjustment in a corresponding amount), or (ii) an
amount between $200,000 and $500,000 in the aggregate if the cash portion of the
Purchase Price as set forth in Section 2.4(a) is reduced by the aggregate amount
of the resulting adjustments to the consolidated balance sheet. To the extent
that any inaccuracies in the representations and warranties would not result in
adjustments to RTI's consolidated balance sheet, this condition will be deemed
satisfied unless such inaccuracies, in the aggregate, would have a material
adverse effect on the value of the Purchased Assets or the assets of the South
Jersey Subsidiary or on the ability of Sterigenics to conduct the business of
RTI as conducted prior to the Closing.
9.2 Shareholder Approval. This Agreement and the transactions
--------------------
contemplated by it shall have been approved by RTI's shareholders and RTI shall
have delivered to Sterigenics copies, certified by the Secretary of RTI, of the
resolutions of the shareholders of RTI regarding such approval.
9.3 Ownership of Purchased Assets by RTI. RTI or its Subsidiaries
------------------------------------
shall hold all right, title and interest in the Purchased Assets and the assets
of the South Jersey Subsidiary.
9.4 Net Book Value of Purchased Assets. The net book value of the
----------------------------------
Purchased Assets (as determined by RTI in good faith) at the Closing shall be at
least $3,500,000; provided, however, that if the net book value (as determined
by RTI in good faith) is between $3,000,000 and $3,500,000, this condition will
be deemed satisfied if the cash portion of the Purchase Price as set forth in
Section 2.4(a) is reduced by an amount equal to the difference between
$3,500,000 and the net book value of the Purchased Assets.
9.5 Receipt of Required Permits. Sterigenics shall have received all
---------------------------
licenses, permits and governmental or other regulatory approvals and
authorizations which are required in order for Sterigenics to engage in the full
operation of RTI's sterilization facilities located on the Real Properties,
including, without limitation, all necessary permits, approvals and
authorizations of the NRC, the NJDEP, the NCDRH and the FDA; provided, if all of
the other conditions set forth in Article IX and X have been satisfied or waived
and this condition is not satisfied by June 30, 1996, Sterigenics shall be
required to waive this condition if RTI undertakes, subject to the terms of a
management agreement to be negotiated in good faith by RTI and Sterigenics, such
management activities as are necessary to permit the full operation by
Sterigenics of RTI's sterilization facilities as currently operated until all
necessary permits, approvals and authorizations are obtained and all costs and
expenses incurred by RTI pursuant to its performance of such agreement shall be
reimbursed or paid by Sterigenics as incurred.
9.6 Delivery of All Assets. RTI shall have delivered and conveyed
----------------------
all of the Purchased Assets and the assets of the South Jersey Subsidiary free
and clear of all Encumbrances, whether direct or indirect, accrued, absolute,
contingent or otherwise, except the Permitted Encumbrances.
9.7 Rockaway Property Lease and Purchase Option. Sterigenics and RTI
-------------------------------------------
shall have entered into a six-year lease and purchase option, with an option for
Sterigenics to extend the lease for five (5) additional years, for the Rockaway
Property in substantially the form attached hereto as Exhibit 9.7, including a
-----------
six-year option for Sterigenics to purchase the Rockaway Property (the "Rockaway
Lease"). Pursuant to the Rockaway Lease, RTI shall have the right to require
Sterigenics to exercise the purchase option on the sixth anniversary of the
Closing if the environmental remediation has been completed to such an extent
that Sterigenics would not have any material liability for further environmental
remediation and the Rockaway Property has been removed from the National
Priorities List. In addition, a memorandum or short-form of the Rockaway Lease
shall have been provided to Sterigenics in recordable form in accordance with
applicable New Jersey law so as to impart constructive notice of the Rockaway
Lease to third parties.
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9.8 Letter Regarding Spill Act Lien. RTI shall have delivered to
-------------------------------
Sterigenics a letter from the NJDEP dated within five (5) business days prior to
the Closing Date stating that NJDEP will take all actions and execute all
documents necessary to release all liens it has on the Purchased Assets and the
Rockaway Property upon receipt of a certified check in the Lien Amount if such
check is delivered within ten (10) days following the date of the letter.
9.9 Title Policies. The Title Companies shall have committed in
--------------
writing to issue the Title Policies to Sterigenics for each of the North
Carolina Property and the Rockaway Property, subject only to the Permitted
Exceptions applicable thereto.
9.10 FIRPTA. RTI shall have executed and delivered to the Title
------
Company a certificate satisfying the requirements of Section 1445 of the
Internal Revenue Code of 1986, as amended (the "FIRPTA Certificate").
9.11 No Insolvency Event. At the Closing there shall not be any
-------------------
pending sequestration, attachment or foreclosure of or execution on any material
part of the Purchased Assets or any of the material assets of the South Jersey
Subsidiary or any proceeds from the sale thereof nor shall RTI be subject to a
voluntary or involuntary petition to commence a proceeding under the United
States Bankruptcy Code to declare RTI to be bankrupt or insolvent.
9.12 No Material Adverse Change. No material adverse change shall
--------------------------
have occurred in the business of RTI or the assets of the South Jersey
Subsidiary since the execution of this Agreement which, in the reasonable
judgment of Sterigenics, may have a material adverse effect on the value to
Sterigenics of the Purchased Assets or the assets of the South Jersey
Subsidiary.
9.13 No Legal Prohibition. No temporary restraining order,
--------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Acquisition or limiting or restricting
Sterigenics' conduct or operation of the business of RTI after the Acquisition
shall have been issued, nor shall any action or suit related to the Acquisition
or its consummation which could, in the opinion of Sterigenics' counsel, result
in material liability for Sterigenics, be pending or threatened, nor shall any
proceeding brought by an administrative agency or commission or other
governmental entity, seeking any of the foregoing, be pending; nor shall there
be any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Acquisition which makes the consummation of
the Acquisition illegal.
9.14 Escrow Agreement. Sterigenics and RTI shall have entered into
----------------
the Escrow Agreement.
9.15 Closing Certificate. RTI shall deliver to Sterigenics a
-------------------
certificate dated the Closing Date and signed by the President of RTI confirming
that the conditions set forth in Sections 9.1, 9.2, 9.4, 9.6, 9.11, 9.12 and
9.17 have been satisfied.
9.16 Recordable Documents. RTI shall have provided the appropriate
--------------------
Title Company issuing the Title Policies the special warranty deed for the North
Carolina Property and the memorandum of lease for the Rockaway Property duly
executed, notarized, and otherwise in recordable form at least two (2) business
days prior to the Closing so that the documents are in a position to be recorded
in the applicable public records immediately upon Closing.
9.17 Appraisal Rights. Holders of less than 20% of the outstanding
----------------
shares of RTI Common Stock shall continue to be entitled to seek appraisal
rights with respect to the Acquisition pursuant to the New York Business
Corporation Law.
24
<PAGE>
9.18 Environmental Matters. RTI shall have obtained from the NJDEP:
---------------------
(i) a letter of non-applicability pursuant to the Industrial Site Recovery Act
(ISRA), N.J.S.A. 13:1K-6 et seq., with respect to the transactions contemplated
by this Agreement; and (ii) written acknowledgment, in form reasonably
satisfactory to Sterigenics' counsel, that the NJDEP does not and will not
regard Sterigenics or any of its subsidiaries as the successor or assign of RTI
or as otherwise responsible for any ongoing environmental liability of RTI.
9.19 Removal of Title Exceptions. RTI shall provide Sterigenics with
---------------------------
evidence of the removal of all Salem Disapproved Exceptions and all Rockaway
Disapproved Exceptions which were set forth in the Salem Removal Notice and the
Rockaway Removal Notice, respectively.
9.20 Closing Deliveries. Sterigenics shall have received at or prior
------------------
to the Closing each of the following documents: (a) a bill of sale in a form
reasonably satisfactory to Sterigenics; (b) such instruments of conveyance,
assignment and transfer, in form and substance reasonably satisfactory to
Sterigenics, as shall be appropriate to convey, transfer and assign to, and to
vest in, Sterigenics, good, clear and marketable title to the Purchased Assets
and the assets of the South Jersey Subsidiary; (c) evidence of termination of
all liens (other than Permitted Encumbrances) filed against the Purchased Assets
and the assets of the South Jersey Subsidiary reasonably satisfactory to
Sterigenics; (d) cross-receipt executed by Sterigenics and RTI; (e) March
Balance Sheet; (f) with respect to the North Carolina Property, a special
warranty deed in recordable form and in the form previously approved by
Sterigenics properly executed on behalf of RTI, conveying to Sterigenics title
to the Real Properties and the Improvements in fee simple, subject only to the
Permitted Exceptions therefor; (g) with respect to the Rockaway Property, the
Rockaway Lease and a memorandum or short-form thereof, in form and content
approved by Sterigenics, which shall be recorded, at Sterigenics' expense, in
the manner provided under applicable New Jersey law to impart constructive
notice thereof to third parties; and (h) any other documents, records or
agreements called for hereunder that have not been previously delivered to
Sterigenics.
9.21 Landlord Letter. RTI shall deliver to Sterigenics a letter from
---------------
the City of Salem Municipal Port Authority confirming that the South Jersey
Subsidiary has a valid and binding leasehold interest in the Salem Property.
ARTICLE X
RTI'S CONDITIONS PRECEDENT TO CLOSING
The obligations of RTI at the Closing are subject to satisfaction of
the following conditions (any or all of which may be waived by RTI), all of
which are for RTI's sole benefit:
10.1 Representations and Warranties. The representations and
------------------------------
warranties of Sterigenics contained in this Agreement will be true and correct
in all material respects at the date of the Closing with the same effect as
though made at that date, and Sterigenics will have delivered to RTI a
certificate dated that date and signed by the President of Sterigenics to that
effect.
10.2 Shareholder Approval. This Agreement and the transactions
--------------------
contemplated by it shall have been approved by RTI's shareholders.
10.3 Rockaway Lease. Sterigenics and RTI have entered into the
--------------
Rockaway Lease.
10.4 Insolvency Event. At the Closing, Sterigenics shall not have
----------------
been subject to a voluntary or involuntary petition to commence a proceeding
under the United States Bankruptcy Code to declare Sterigenics to be bankrupt or
insolvent.
25
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10.5 No Legal Prohibition. No temporary restraining order,
--------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Acquisition or limiting or restricting RTI's
conduct or operation of the business of RTI after the Acquisition shall have
been issued, nor shall any proceeding brought by an administrative agency or
commission or other governmental entity, seeking any of the foregoing be
pending, nor shall there be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Acquisition
which makes the consummation of the Acquisition illegal, nor shall any action or
suit related to the Acquisition or its consummation which could, in the opinion
of RTI's counsel, result in material personal liability for RTI directors. be
pending or threatened; provided, however, that RTI shall be required to waive
this condition as to any pending or threatened action or suit if Sterigenics
agrees to indemnify the directors of RTI against any costs, expenses or
judgments resulting from such action or suit.
10.6 Escrow Agreement. Sterigenics, RTI and the Escrow Agent shall
----------------
have entered into the Escrow Agreement.
10.7 Closing Certificate. Sterigenics shall deliver to RTI a
-------------------
certificate dated the Closing Date and signed by an officer of Sterigenics
confirming that the conditions set forth in Sections 10.1, 10.2, 10.4 and 10.5
have been satisfied.
10.8 Appraisal Rights. Holders of less than 20% of the outstanding
----------------
shares of RTI Common Stock shall continue to be entitled to seek appraisal
rights with respect to the Acquisition pursuant to the New York Business
Corporation Law.
10.9 Closing Deliveries. RTI shall have received at or prior to the
------------------
Closing each of the following documents: (a) payment of the Purchase Price in
accordance with Section 2.4; (b) cross-receipt executed by Sterigenics and RTI;
and (c) such instruments, in form and substance satisfactory to RTI, as shall
be necessary and appropriate for Sterigenics to assume and agree to perform the
Assumed Liabilities.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; ESCROW
11.1 Survival of Representations. The representations and warranties
---------------------------
made by the parties in Articles IV (except Section 4.22(a) and 4.23 through
4.27, which shall terminate upon the Closing) and V of this Agreement shall
survive the Closing for a period of twelve (12) months and shall in no manner be
limited by any investigation of the subject matter thereof made by or on behalf
of either party or by the satisfaction of any condition to the Closing,
provided, however, that if RTI gives Sterigenics written notice prior to Closing
specifying a breach of a representation or warranty and as a result would not be
able to meet the condition in Section 9.1 and Sterigenics waives such breach in
order to proceed to Closing, Sterigenics shall not be entitled to make a Claim
(as defined below) as a result of such specified breach. After the expiration
of such period, such representations and warranties shall expire and be of no
further force and effect unless a Claim or Claims (as defined in Section 11.2
below) with respect to any such representation or warranty shall have been
asserted by Sterigenics with respect thereto on or before the expiration of such
period.
11.2 Indemnification by Parties.
--------------------------
(a) RTI shall indemnify and save harmless Sterigenics, its
wholly-owned Subsidiaries and its and their respective shareholders, directors,
officers and agents from and against (A)
26
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any difference between (i) the Adjusted Price and (ii) the book value of the
Purchased Assets less the book value of the Assumed Liabilities, as contained in
the Closing Balance Sheet (as audited by the independent certified accounting
firm of Ernst & Young, if Sterigenics elected to have Ernst & Young audit the
Closing Balance Sheet, provided that RTI may object as set forth in
Section 2.4(d) (the "Purchase Price Adjustment") and (B) any and all losses,
liabilities, expenses (including, without limitation, fees and disbursements of
counsel and expenses of investigation), claims, liens, damages, demands,
judgments, fines, penalties, costs or other obligations whatsoever (hereinafter
individually a "Claim" or collectively "Claims"), which shall not include any
component of damages for business lost after the Closing, imposed on or incurred
by Sterigenics or any such indemnified party as a result of (i) the breach of
any representation or warranty made by RTI in this Agreement or otherwise
thereafter made in writing and delivered by RTI to Sterigenics in connection
with the transactions contemplated hereby; (ii) any failure of RTI to perform or
comply in any material respect with any of its covenants and agreements set
forth herein or in any other document executed in connection with the
transactions contemplated hereby; (iii) any liabilities, obligations or
commitments of, and all claims against RTI, its shareholders, directors,
officers and agents, other than with respect to the Assumed Liabilities and
claims arising as a result of a breach by Sterigenics; (iv) any Excluded
Liabilities or (v) the waiver by Sterigenics of compliance by RTI with the
provisions of applicable bulk sales laws. "Claims" as used herein are not
limited to matters asserted by third parties, but include claims incurred,
sustained or properly accrued by Sterigenics in the absence of claims by a third
party; provided that the amount of any accrual that is not ultimately utilized
shall be paid to RTI. Claims shall first be satisfied pursuant to the terms of
the Escrow Agreement. Notwithstanding anything to the contrary set forth in
this Agreement, RTI shall be liable only as to any individual Claim, other than
Claims with respect to any Purchase Price Adjustment, if it exceeds Five
Thousand Dollars ($5,000). Other than with respect to any Purchase Price
Adjustment, no indemnification obligation shall arise hereunder unless and until
the aggregate amount of Claims which individually exceed Five Thousand Dollars
($5,000.00) hereunder exceeds One Hundred Thousand Dollars ($100,000) (the
"Basket"). In the event that the amount of all Claims which individually exceed
Five Thousand Dollars ($5,000.00) exceeds the Basket, Sterigenics shall be
entitled to collect the full amount of such Claims.
(b) From and after the Closing, Sterigenics shall indemnify and
save harmless RTI, its shareholders, directors, officers and agents from and
against any and all losses, liabilities or expenses imposed on or incurred by
RTI or any such indemnified party as a result of (i) any failure by Sterigenics
to discharge the Assumed Liabilities or (ii) any failure of Sterigenics to
perform or comply in any material respect with any of the covenants and
agreements of Sterigenics set forth herein or in any document executed in
connection with the transactions contemplated hereby.
(c) As used in this Article XI, the term "Indemnitor" means the
party against whom indemnification hereunder is sought, and the term
"Indemnitee" means the party seeking indemnification hereunder. The following
are conditions precedent to any liability of an Indemnitor under Section 11.2(a)
or 11.2(b): (i) Indemnitee shall give Indemnitor prompt written notice of any
event or assertion of which it has knowledge concerning any Claims and as to
which it may request indemnification, which notice must be given within twelve
(12) months of the Closing; (ii) Indemnitee shall cooperate with and assist
Indemnitor in defending or settling the Claims; (iii) Indemnitee shall permit
Indemnitor to control the defense or settlement of the Claims, including
selection of counsel to represent Indemnitor and Indemnitee, provided that such
counsel shall be reasonably satisfactory to Indemnitee; provided that Indemnitee
may maintain separate counsel at its own cost and expense in connection with any
Claim; (iv) in no event shall Indemnitee compromise or settle a Claim without
the prior written approval of Indemnitor, which approval shall not be
unreasonably withheld; and (v) the assumption of the defense of any Claim by
Indemnitor shall be an acknowledgment by Indemnitee that such Claim is subject
to indemnification under the provisions of this Article XI unless notice to the
contrary is given and that such provisions are binding on Indemnitee. If,
however, Indemnitor fails or refuses to undertake the defense of such Claim
within ten (10) days after written notice of such Claim
27
<PAGE>
has been delivered to Indemnitor by Indemnitee, Indemnitee shall have the right
to undertake the defense, and, subject to Subsection (iv) above, compromise and
settlement of such Claim with counsel of its own choosing. Failure of
Indemnitee to furnish written notice to Indemnitor of a Claim shall not release
Indemnitor from Indemnitor's obligations hereunder, except to the extent
Indemnitor is prejudiced by such failure.
(d) The indemnification obligations of Indemnitor under
Section 11.2(c) shall continue in full force and effect as to any Claim as to
which notice has been given pursuant to Section 11.2(c)(i) above until such
Claim has been settled either by mutual agreement of the parties concerned, by
arbitration in accordance with the provisions of this Agreement or, in the event
of a Claim resulting from legal action by a third party, by the final order,
decree or judgment of a court of competent jurisdiction in the United States of
America (the time for appeal having expired with no appeal having been taken).
The right of an Indemnitee to be indemnified under this Section 11.2 shall not
limit, reduce or otherwise affect any other rights and remedies each may have
with respect to the matters indemnified under this Agreement.
11.3 Resolution of Disputes. Any dispute over an indemnity claim
----------------------
under Section 11.2 above (a "Contested Claim") shall be settled by arbitration
in the New York City metropolitan area and, except as herein specifically
stated, in accordance with Section 13.15 below. Sterigenics and RTI agree that
any of the parties may elect to postpone the arbitration of all Contested Claims
until one year from the Closing in order to consolidate the arbitration of all
Contested Claims.
ARTICLE XII
TERMINATION AND AMENDMENT
12.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing (with respect to Sections 12.1(b) through 12.1(g), by written
notice by the terminating party to the other party), whether before or after
approval of the matters presented in connection with the purchase and sale of
the Purchased Assets by the shareholders of RTI: (a) by mutual written consent
of Sterigenics and RTI; or (b) by either Sterigenics and RTI if the Acquisition
shall not have been consummated by November 27, 1996 (provided that the right to
terminate this Agreement under this Section 12.1(b) shall not be available to
any party whose failure to fulfill any material obligation under this Agreement
has been the cause of or resulted in the failure of the Acquisition to occur on
or before such date); or (c) by either Sterigenics or RTI, if a court of
competent jurisdiction or other Governmental Entity shall have issued a
nonappealable final order, decree or ruling or taken any other action, in each
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Acquisition, except, if the party relying on such order, decree
or ruling or other action has not materially complied with its obligations under
Article IX or Article X, as applicable, of this Agreement; or (d) by Sterigenics
if any of the conditions to Sterigenics' obligations to effect the Acquisition
which are specified in Article IX have not been met or waived by Sterigenics at
such time as such condition is no longer reasonably capable of satisfaction,
including the failure to obtain any required approval of shareholders of RTI at
a duly held meeting of shareholders or at an adjournment or postponement thereof
(provided Sterigenics is not otherwise in material breach of its
representations, warranties, covenants or agreements under this Agreement);
(e) by RTI if any of the conditions to RTI's obligation to effect the
Acquisition which are specified in Article X have not been met or waived by RTI
at such time as such condition is no longer reasonably capable of satisfaction
(provided RTI is not otherwise in material breach of its representations,
warranties, covenants or agreements under this Agreement); (f) by Sterigenics or
RTI, if there has been a material breach of any representation, warranty,
covenant or agreement on the part of the other party set forth in this
Agreement, which breach shall not have been cured (in the case of RTI, a breach
of representation and warranty will be deemed to have been cured for purposes of
this Section 12.1 if the condition to Closing set forth in Section 9.1 can be
met), in the
28
<PAGE>
case of a representation or warranty, prior to the Closing or, in the case of a
covenant or agreement, within (ten) 10 business days following receipt by the
breaching party of written notice of such breach from the other party; or (g) by
Sterigenics, if (i) the Board of Directors of RTI shall have withdrawn or
modified in a manner adverse to Sterigenics its recommendation of this Agreement
and the Acquisition in a manner adverse to Sterigenics or shall have resolved to
do either of the foregoing; (ii) the Board of Directors of RTI shall have
recommended to the shareholders of RTI an Acquisition Proposal; (iii) a tender
offer or exchange offer for 15% or more of the outstanding shares of RTI Common
Stock is commenced (other than by Sterigenics or an affiliate of Sterigenics)
and the Board of Directors of RTI recommends that the shareholders of RTI tender
their shares in such tender or exchange offer; or (iv) for any reason RTI fails
to hold the RTI Shareholders' Meeting by November 27, 1996.
12.2 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 12.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Sterigenics,
RTI or their respective officers, directors, stockholders or shareholders, as
the case may be, or affiliates, except as set forth in Sections 12.3 and 12.4
and further except to the extent that such termination results from the
intentional breach by a party of any of its representations, warranties or
covenants set forth in this Agreement; provided that the provisions of
Sections 6.4 (5th sentence), 6.5(d) (5th, 6th, 7th and 8th sentences), 12.3 and
12.4 of this Agreement shall remain in full force and effect and survive any
termination of this Agreement.
12.3 Fees and Expenses.
-----------------
(a) Subject to Section 12.3(b) and 12.3(c), if (i) the
Acquisition is consummated or (ii) this Agreement is terminated in accordance
with Section 12.1(b), 12.1(c), 12.1(d) or 12.1(e) hereof other than as a result
of a breach by either party, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
(b) Except as otherwise provided in this Section 12.3(b): (i) if
this Agreement is terminated as provided in Section 12.1(f) hereof, the
breaching party shall pay to the terminating party, within five business days
after receipt of a written request therefor, in same day funds, an amount equal
to all costs and expenses reasonably incurred by the terminating party in
connection with this Agreement and the transactions contemplated hereby,
including all reasonable legal, accounting, financial advisory, printing and
other professional and service fees and expenses not to exceed Two Hundred Fifty
Thousand Dollars ($250,000); provided, however, in the event that this Agreement
is terminated by a party as provided in Section 12.1(f) and the breaching party
also has the right to terminate this Agreement as provided in Section 12.1(f)
and notifies the terminating party thereof within ten (10) days after receipt by
the breaching party of notice of termination pursuant to this Section 12.1(f),
then the costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid only as set forth in
Section 12.3(a); (ii) if this Agreement is terminated (x) by Sterigenics
pursuant to Section 12.1(b) hereof or (y) by Sterigenics pursuant to
Section 12.1(d) as a result of the failure to receive the requisite vote to
approve this Agreement and the Acquisition at the RTI Shareholders' Meeting
(including any adjournments or postponements thereof) in each case if, at the
time of such failure, there shall have been announced an Acquisition Proposal
which shall not have been absolutely and unconditionally withdrawn or abandoned,
RTI shall pay Sterigenics, within five (5) business days after receipt of a
written request therefor, in same day funds, an amount equal to all costs and
expenses reasonably incurred by Sterigenics in connection with this Agreement
and the transactions contemplated hereby, including all reasonable legal,
accounting, financial advisory, printing and other professional and service fees
and expenses, not to exceed Two Hundred Fifty Thousand Dollars ($250,000).
29
<PAGE>
(c) If this Agreement is terminated by Sterigenics as provided
in Section 12.1 as a result of the failure of Sterigenics to obtain the permits
necessary to operate the business of RTI, Sterigenics shall pay RTI, within five
(5) business days after receipt of a written request therefor, in same day
funds, an amount equal to all costs and expenses reasonably incurred by RTI in
connection with this Agreement and the transactions contemplated hereby,
including all reasonable legal, accounting, financial advisory, printing and
other professional and service fees and expenses, not to exceed Two Hundred
Fifty Thousand Dollars ($250,000).
12.4 Option to Purchase North Carolina Property. Upon the execution
------------------------------------------
by RTI of a definitive agreement resulting from an Acquisition Proposal,
Sterigenics shall have the option to purchase the North Carolina Property,
including its Improvements and the plant, property, equipment located thereon,
but excluding all Cobalt, free and clear of all Encumbrances other than the
Permitted Encumbrances for a purchase price equal to the book value of the North
Carolina Property as of the closing associated with the exercise of the option
plus Four Hundred Thousand Dollars ($400,000). The purchase option may be
exercised within sixty (60) days after the execution of such definitive
agreement, and the closing of Sterigenics' acquisition of the North Carolina
Property pursuant to the purchase option shall occur immediately prior to the
closing of the transaction contemplated by such definitive agreement. The terms
of such purchase option shall be as specified in the Option Agreement attached
hereto as Exhibit 12.4.
------------
12.5 Amendment. This Agreement may be amended by the parties hereto,
---------
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Acquisition by the shareholders of RTI, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
12.6 Extension; Waiver. At any time prior to the Closing Date, the
-----------------
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE XIII
GENERAL
13.1 Expenses. Except as otherwise provided below in this Agreement,
--------
the parties will each pay their own legal, accounting and other professional
expenses in connection with the transactions contemplated hereby.
13.2 Brokers. Each party represents and warrants to the other that no
-------
person has acted as a broker, a finder or in any similar capacity in connection
with the transactions contemplated hereby, except TM Capital Corporation who
shall be paid by Sterigenics. Each party shall indemnify the other against, and
agrees to hold the other harmless from, all liabilities and expenses (including
reasonable attorneys' fees and expenses) in connection with any claim by anyone
for compensation as a broker, a finder or in any similar capacity, other than TM
Capital Corporation, who is to be paid by Sterigenics at the Closing, by reason
of services allegedly rendered to the indemnifying party in connection with the
transactions contemplated hereby.
30
<PAGE>
13.3 Entire Agreement. Except for that certain Confidentiality
----------------
Agreement by and between RTI and Sterigenics, dated October 3, 1995, this
Agreement, the Option Agreement and the Ancillary Documents contain the entire
agreement among the parties with respect to the matters contemplated hereby and
all prior negotiations, understandings and agreements among them, are superseded
by this Agreement.
13.4 Assignment. Neither this Agreement nor any right of any party
----------
under it may be assigned without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that
Sterigenics may assign its rights under this Agreement following the Closing to
any party that acquires Sterigenics through a merger or consolidation, purchase
of substantially all of Sterigenics' stock or a purchase of substantially all of
Sterigenics' assets. Notwithstanding the foregoing, RTI agrees that Sterigenics
may assign its rights to purchase the Purchased Assets and lease the Rockaway
Property and its obligations to assume the Assumed Liabilities to one or more
wholly-owned subsidiaries of Sterigenics; provided, however, that in the event
of such assignment, Sterigenics shall remain liable for the performance of such
subsidiaries under the terms of this Agreement and shall execute and deliver to
RTI a guarantee in a form reasonably satisfactory to RTI with respect thereto.
13.5 Notices. Any notice or other communication required or permitted
-------
to be given under this Agreement shall be in writing and will be deemed
effective when delivered in person, on the first business day after the day on
which sent by confirmed facsimile, if promptly confirmed in writing, on the
third business day after the day on which mailed by first class mail from within
the United States of America, or the business day following delivery to a
national overnight courier service to the following addresses or to such other
address as either party may specify in writing to the other party in accordance
with the provisions of this Section 13.5.
If to Sterigenics: With a copy to:
Sterigenics International Gunderson Dettmer Stough
4020 Clipper Court Villeneuve
Fremont, CA 94538-6540 Franklin & Hachigian, LLP
600 Hansen Way, Second Floor
Palo Alto, CA 94304
Facsimile No. (510) 770-9000 Facsimile No.: (415) 843-0314
Attention: James F. Clouser Attention: Carla S. Newell
If to RTI: With a copy to:
RTI, Inc. Warshaw Burstein Cohen
108 Lake Denmark Road Schlesinger & Kuh, LLP
Rockaway, New Jersey 07866 555 Fifth Avenue
Attention: Theo Muller New York, NY 10017
Facsimile No.: (212) 972-9150
Attention: Arthur Katz
13.6 Governing Law. This Agreement will be governed by, and construed
-------------
under, the laws of the State of California without reference to principles of
conflicts of laws.
13.7 Amendment. This Agreement may be amended only by a document in
---------
writing signed by the parties.
31
<PAGE>
13.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
13.9 Public Disclosure. No party shall disclose the terms of this
-----------------
Agreement without the written consent of Sterigenics and RTI, except as required
by law or pursuant to the disclosure obligations of RTI under the rules and
regulations of the Securities and Exchange Commission.
13.10 Further Assurances. Each party agrees to execute such further
------------------
instruments and documents and to do such further acts as may be reasonably
requested by any other party to carry out the transactions contemplated hereby.
13.11 No Rights Conferred Upon Third Parties. No provisions of this
--------------------------------------
Agreement are intended or shall be interpreted to provide or create any rights
of any kind in any third party unless specifically provided otherwise herein,
and, except as so provided, all provisions hereof shall be personal solely to
the parties to this Agreement.
13.12 Attorneys' Fees. In any litigation relating to this Agreement,
---------------
including litigation with respect to any instrument, document or agreement made
under or in connection with this Agreement, the prevailing party shall be
entitled to recover its costs and reasonable attorneys' fees and expenses.
13.13 Headings. Captions and headings used herein are for convenience
--------
only and are not a part of this Agreement and shall not be used in construing
it.
13.14 Arbitration. Any disputes between Sterigenics and RTI with
-----------
respect to this Agreement shall be settled by binding, final arbitration in the
New York City metropolitan area and in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect ("AAA
Rules"). However, in all events, the following arbitration provisions shall
govern over any conflicting rules which may now or hereafter be contained in the
AAA Rules. Any judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction over the subject matter thereof. The
arbitrator shall have the authority to grant any equitable and legal remedies
that would be available. Sterigenics and RTI shall each advance fifty percent
(50%) of the initial compensation to be paid to the arbitrator in any such
arbitration and fifty percent (50%) of the costs of transcripts and other normal
and regular expenses of the arbitration proceedings; provided, however, that the
arbitrator shall have the discretion to grant to the prevailing party in any
arbitration an award of attorneys' fees and costs, and all costs of arbitration.
Arbitration shall be the sole and exclusive remedy of the parties for a breach
of this Agreement in the absence of fraud.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date shown on the first page.
STERIGENICS INTERNATIONAL RTI INC.
By: /s/ James F. Clauser By: /s/ Theo W. Muller
------------------------------- ------------------------------------
Title: President and Title: President and
Chief Executive Officer Chief Executive Officer
---------------------------- ---------------------------------
32
Exhibit 10.9(b)
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into as of this
26th day of February, 1996 (the "Execution Date"), by and between RTI Inc., a
New York corporation ("RTI"), and Sterigenics International, a California
corporation ("Sterigenics").
RECITALS
--------
A. RTI and Sterigenics are parties to an Asset Acquisition Agreement
dated February 26, 1996 (the "Acquisition Agreement"), pursuant to which
Sterigenics or its wholly-owned subsidiaries acquired the right to purchase from
RTI certain real property and tangible and intangible assets.
B. Pursuant to Section 12.4 of the Acquisition Agreement, RTI has granted
Sterigenics the exclusive right and option to purchase from RTI certain real
property located in Haw River, North Carolina, as more particularly described in
Exhibit "A" attached hereto (the "Real Property"), together with all
- -----------
Improvements thereon and the Personal Property (as those terms are defined in
Paragraph 1 below).
C. RTI and Sterigenics desire to enter into this Agreement for the
purpose of setting forth the covenants, terms, conditions and price pursuant to
which Sterigenics shall have the right to purchase the Real Property, the
Improvements, and the Personal Property.
NOW THEREFORE, the parties agree as follows:
AGREEMENT
---------
1. Grant of Option. RTI hereby grants to Sterigenics, within the time
---------------
period specified in Paragraph 3 below and upon the other terms and conditions
hereinafter set forth, the exclusive right and option (the "Option") to purchase
the following (all of which collectively is referred to as the "Property"): (a)
the Real Property; (b) all structures, buildings, improvements and fixtures
located on the Real Property (collectively, the "Improvements"); (c) all
tangible plant, property and equipment located on or used in connection with the
operation or occupancy of the Real Property and the Improvements, including all
heating and air-conditioning systems and facilities used to provide any utility
services, parking services, refrigeration, ventilation, and trash disposal or
other services (collectively, the "Equipment"); and (d) all right, title and
interest of RTI in (i) all plans, drawings, specifications, land surveys,
entitlements and approvals, engineering reports and other technical reports, if
any, in the possession of RTI or which are available to RTI without additional
cost and which were prepared in connection with the development of the Real
Property or the construction of the Improvements for such Real Property; (ii)
all hereditaments, privileges, tenements and appurtenances belonging to the Real
Property; (iii) all open or proposed highways, streets, roads, avenues, alleys,
easements, strips, gores and rights-of-way in, on, across, in front of,
contiguous to, abutting or adjoining the Real Property; (iv) all transferable
licenses, permits and warranties now in effect with respect to the Improvements;
and (v) all transferable warranties, guaranties, indemnities and claims relating
to the construction, operation or maintenance of the Real Property and/or the
Improvements (the "Intangible Property"). The Equipment and the Intangible
Property collectively are referred to herein as the "Personal Property."
Personal Property expressly excludes any Cobalt 60.
<PAGE>
2. Consideration.
-------------
2.1 Option Consideration. As the option consideration for the
--------------------
granting of the Option and for other good and valuable consideration, the
receipt and adequacy of which hereby are acknowledged, Sterigenics has entered
into the Acquisition Agreement and has paid to RTI concurrently with the
execution and delivery of this Agreement the sum of One Thousand Dollars
($1,000.00) (the "Option Consideration"), the receipt of which hereby is
acknowledged by RTI. The Option Consideration shall be nonrefundable to
Sterigenics except as otherwise provided herein.
2.2 Application of Option Consideration. If Sterigenics exercises
-----------------------------------
the Option as provided in Paragraph 4 below, the Option Consideration paid to
RTI shall be applied as a credit against the Purchase Price (as defined in
Paragraph 5 below).
3. Option Term. The term of the Option (the "Option Term") shall
-----------
commence upon satisfaction of both of the Option Conditions (as hereinafter
defined) and shall expire on the first to occur of (a) January 1, 2000, or (b)
the date that is sixty (60) days after the satisfaction of the Option Conditions
or (c) November 27, 1996 if RTI has not received an Acquisition Proposal prior
to such date. For purposes of this Paragraph 3, the term "Option Conditions"
means that (i) the Acquisition Agreement shall have been terminated by
Sterigenics pursuant to Section 12.1(g) thereof and written notice of such
termination shall have been given by Sterigenics or RTI, as the case may be, to
the other party in accordance with the Acquisition Agreement, and (ii) RTI shall
have entered into a legally binding and enforceable agreement relating to an
"Acquisition Proposal" (as defined in Section 6.1(a) of the Acquisition
Agreement). RTI shall notify Sterigenics in writing immediately upon execution
of such agreement.
4. Exercise of Option. The Option shall be exercised, if at all, prior
------------------
to the expiration of the Option Term by delivery to RTI of a written notice
executed by Sterigenics and specifying therein Sterigenics' election to exercise
the Option. If Sterigenics fails to exercise the Option in a timely manner as
herein provided, or if Sterigenics is in breach of its obligations to complete
the purchase of the Real Property as provided herein, then (i) all Option
Consideration shall be retained by RTI as earned consideration for the granting
of the Option, (ii) all instruments and documents deposited with the Closing
Agent (as defined in Paragraph 9.2 hereof) or delivered to the other party shall
be returned to the depositing parties, (iii) this Agreement shall terminate and
be of no further force or effect; and (iv) neither party shall have any further
obligation hereunder to the other.
5. Purchase Price. Upon exercise of the Option, Sterigenics shall be
--------------
obligated to purchase and RTI shall be obligated to sell the Property at a
purchase price equal to the book value of the Property as of the Closing plus
Four Hundred Thousand Dollars ($400,000.00) (the "Purchase Price"). The
Purchase Price shall be payable, at the option of RTI, by certified check or
wire transfer of immediately available funds on the Closing Date (defined in
Paragraph 9.1), subject to credit to Sterigenics for payment of the Option
Consideration.
6. Documents. To the extent not previously provided by RTI pursuant to
---------
the Acquisition Agreement, within five (5) days after the commencement of the
Option Term, RTI shall deliver to Sterigenics all reports, tests, studies,
diagrams, maps, plans, specifications, and other documents, including soils,
geological and Hazardous Material (as defined in Paragraph 10.9 hereof) reports
in its possession or control, prepared for or provided to RTI with respect to
the
<PAGE>
environmental condition of the Real Property, the Improvements, and the soil and
ground water under or within 1,000 feet of the boundaries of the Real Property.
7. Inspection. RTI hereby grants Sterigenics the right to enter upon and
----------
to inspect the Real Property during the Option Term and to approve the
environmental risks and conditions (including the soil and groundwater) of the
Real Property. For the purpose of Sterigenics' physical inspections, RTI agrees
to provide Sterigenics and its authorized agents with reasonable access to the
Real Property during normal business hours during the Option Term upon at least
twelve (12) hours' prior notice to RTI, and Sterigenics shall use reasonable
good faith efforts to avoid disruption of the operation of the Real Property.
Without limiting the foregoing, Sterigenics and Sterigenics' agents may, at the
sole cost of Sterigenics and upon prior notice to RTI, perform engineering and
soils surveys, geological work or other studies desired by Sterigenics.
Sterigenics and Sterigenics' agents shall be entitled, at Sterigenics' own
expense, to conduct Phase I and Phase II environmental investigations of the
Real Property. Sterigenics agrees to hire as its contractor for such
environmental investigation a firm which maintains adequate liability insurance.
If the Closing does not occur, Sterigenics shall provide to RTI copies of all
environmental reports it caused to be prepared. If the Closing does not occur
Sterigenics promptly shall repair and restore any damage caused to the Real
Property by reason of Sterigenics' or Sterigenics' agents' entry on or
investigation of the Real Property. Sterigenics shall provide to RTI copies of
all invoices for work performed to repair and restore any damage to the Real
Property along with evidence that such invoices have been paid. Sterigenics
hereby agrees to indemnify RTI and to hold RTI, RTI's agents and employees and
the Real Property harmless from and against any and all losses, costs, damages,
claims or liabilities including, but not limited to, mechanic's and
materialmen's liens and reasonable attorneys' fees, arising out of or in
connection with Sterigenics' or its agent's access to or entry upon the Real
Property under this Paragraph 7 and the agreements, covenants and
indemnification of Sterigenics contained in this Paragraph 7 shall survive any
termination of the Option or this Agreement.
8. Title to Real Property.
----------------------
8.1 Approval of Title. Sterigenics hereby approves the condition of
-----------------
title of the Real Property, as shown on the title commitment (the "Title
Report") issued by Chicago Title Insurance Company (the "Title Company"), 201
South College Street, Suite 1465, Charlotte, North Carolina 282440-4485, as its
Order No. 9600468, dated January 29, 1996, a copy of which is attached hereto as
Exhibit B; provided, however, that Sterigenics hereby disapproves Exception No's
- ---------
1(b), 3, 4, 5 (items a through g inclusive), 6, and 7 thereof (the "Unpermitted
Exceptions"). All exceptions to title shown in the Title Report (other than the
Unpermitted Exceptions) are referred to herein as the "Permitted Exceptions."
8.2 Title Policies. At the Closing for the Real Property the Title
--------------
Company shall issue to Sterigenics, at Sterigenics' expense, an ALTA owner's
policy of title insurance, form B (as amended 10-17-92) (the "Title Policy"), in
the amount of the Purchase Price, subject only to the Permitted Exceptions
therefor.
8.3 Survey. Sterigenics shall have the right to have an ALTA survey
------
the (the "ALTA Survey") prepared for the Real Property, the costs of which shall
be paid by Sterigenics.
3
<PAGE>
9. Closing Date; Closing Meeting; Closing Costs.
--------------------------------------------
9.1 Closing Date. If Sterigenics timely exercises the Option, the
------------
closing date (the "Closing Date") shall occur immediately prior to the closing
of the transaction that results in the satisfaction of the Option Conditions as
set forth in Section 3(b).
9.2 Closing. The parties shall meet at the offices of Parker, Poe,
-------
Adams & Bernstein, 2500 Charlotte Plaza, Charlotte North Carolina 28244, or at
such other location in the State of North Carolina acceptable to the parties,
and shall execute such instruments and documents (specifically excluding any gap
indemnity or similar agreement) and deposit such funds with the Closing Agent as
are necessary to consummate on the Closing Date the purchase and sale of the
Property as contemplated by this Agreement. The Purchase Price shall be
delivered to Sterigenics' North Carolina legal counsel, Parker, Poe, Adams &
Bernstein, or other legal counsel designated by Sterigenics (the "Closing
Agent"), to be held by the Closing Agent in a trust account for the benefit of
Sterigenics and released to RTI at the Closing. The term "Closing" shall mean
the moment on the Closing Date at which the warranty deed conveying the Real
Property to Sterigenics is recorded in the Office of the Recorder of Alamance
County, subject only to the Permitted Exceptions.
9.3 Closing Costs. Sterigenics shall pay all transfer taxes and all
-------------
costs for preparing, executing and acknowledging the deeds and other conveyance
documents due in connection with the conveyance to Sterigenics of the Real
Property and all other fees and costs of the Closing, together with the cost of
the Title Policy. Real property taxes, assessments, rents and other costs and
income items subject to proration shall be prorated as of the Closing.
9.4 Possession. At the Closing, RTI shall deliver to Sterigenics
----------
possession of the Real Property and the other Property.
10. Representations and Warranties of RTI.
-------------------------------------
10.1 General. RTI hereby represents and warrants to Sterigenics that
-------
as of the date hereof the statements contained in this Section 10 are true and
correct, except as set forth in the RTI Disclosure Schedule attached to the
Asset Agreement or Closing Certificate (as referred to in Paragraph 13.9 below).
No fact or circumstance disclosed to Sterigenics shall constitute an exception
to these representations and warranties unless such fact or circumstance is set
forth in the Closing Certificate. As used in this Agreement, "knowledge" shall
mean the actual knowledge of the executive officers of RTI after reasonable
inquiry.
10.2 Organization. RTI is a corporation duly and validly existing and
------------
in good standing under the laws of the State of New York. RTI is qualified to
do business as a foreign corporation in North Carolina.
10.3 Authorization. This Agreement has been, and all deeds and other
-------------
conveyance documents used in order to consummate this Agreement, will prior to
the Closing be, duly and validly executed and delivered by RTI. This Agreement
constitutes valid and binding agreements of RTI, enforceable against RTI in
accordance with their terms. RTI has all requisite power and authority to
execute and deliver this Agreement and at the time of the Closing will have all
requisite power and authority to enable it to carry out the transactions
contemplated by this Agreement. All necessary corporate action on the part of
RTI has been taken to authorize the
4
<PAGE>
execution and delivery of this Agreement and, subject to shareholder approval,
consummation of the transactions contemplated thereby.
10.4 No Conflicts. The execution and the delivery of this Agreement
------------
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, result in a
breach of, constitute a default (with or without notice or lapse of time, or
both) under or violation of, or result in the creation of any lien, charge or
encumbrance pursuant to any provision of the Certificate of Incorporation or
Bylaws of RTI of any order, rule, law or regulation of any court or governmental
authority, foreign or domestic, or any provision of any material agreement,
instrument, understanding, order, judgment or decree to which RTI is a party or
by which RTI or any of its properties or assets is bound or affected, nor will
such actions give to any other person or entity any interests or rights of any
kind, including rights of termination, acceleration or cancellation, in or with
respect to any of the Property.
10.5 Personal Property. The Personal Property is in good operating
-----------------
condition and repair, ordinary wear and tear and routine maintenance excepted
and RTI will maintain the Personal Property in substantially the same condition
prior to the Closing Date.
10.6 Compliance With Other Instruments. RTI is not a party to, or
---------------------------------
bound by, any written or oral material contract, agreement, license, indenture,
mortgage, debenture, note or other instrument under the terms of which
performance by RTI according to the terms of this Agreement will be a default or
an event of acceleration, or whereby timely performance by RTI according to the
terms of this Agreement may be prohibited, prevented or delayed.
10.7 Litigation. Except as disclosed in the forms, reports and
----------
documents required to be filed by RTI with the Securities and Exchange
Commission since January 1, 1995 (collectively, the "RTI SEC Reports"), there is
no material action, suit, proceeding or investigation in progress or pending
before any court or governmental agency, against or relating to the Property or
the assets or business of RTI conducted from the Real Property nor, to the
knowledge of RTI, any threat thereof. RTI is not a party to any decree, order
or arbitration award (or agreement entered into in any administrative, judicial
or arbitration proceeding with any governmental authority) with respect to any
material portion of the Property, or the assets, personnel or business
activities of RTI's business conducted from the Real Property.
10.8 Compliance with Laws and Regulations; Governmental Licenses, Etc.
----------------------------------------------------------------
Except as set forth in the RTI SEC Reports, to RTI's knowledge, RTI, the Real
Property and the Improvements are in compliance in all material respects with
all statutes, laws, rules and regulations with respect to or affecting the Real
Property, the Improvements and Sterigenics' use and enjoyment of the Personal
Property, including, without limitation, laws, rules and regulations relating to
occupational health and safety, equal employment opportunities, fair employment
practices, and sex, race, religious and age discrimination, except where the
failure to comply would not have a material adverse effect on RTI. RTI is not
subject to any order, injunction or decree issued by any governmental body,
agency, authority or court which could impair the ability of RTI to consummate
the transactions contemplated hereby or which could materially adversely affect
Sterigenics' ownership, use and enjoyment of the Personal Property or the value
thereof. RTI possesses all licenses, permits and governmental or other
regulatory approvals and authorizations which are required in order for RTI to
operate the Real Property or to carry on its sterilization business from the
Real Property as presently conducted, including, without limitation, all
required licenses, permits and approvals of the Nuclear Regulatory Commission
("NRC"), the North Carolina
5
<PAGE>
Department of Radiological Health ("NCDRH") and the Food and Drug Administration
("FDA"). RTI is in compliance in all material respects with all such licenses,
permits, approvals and authorizations relating to its operations conducted from
the Real Property, except where the failure to comply would not have a material
adverse effect on RTI.
10.9 Environmental Matters.
---------------------
(a) General. Except as separately and specifically disclosed in
-------
the RTI SEC Reports, (i) RTI has obtained all Material Environmental Approvals
required in connection with its business conducted from the Real Property, and
all such Environmental Approvals are current, valid and in good standing in all
material respects, and there are no proceedings commenced or to RTI's knowledge
threatened to revoke or amend any Environmental Approvals; (ii) all operations
of the business on the Real Property while occupied by RTI have been and are now
in compliance in all material respects with all Environmental Laws;
(iii) neither RTI nor its operations conducted from the Real Property has been
or is now the subject of any Remedial Order, nor does RTI have any knowledge of
any investigation or evaluation commenced as to whether any such Remedial Order
is necessary nor has any threat of any such Remedial Order been made nor are
there any circumstances known to RTI which could result in the issuance of any
such Remedial Order; (iv) within the past 10 years, RTI has never been
prosecuted for or convicted of any offense under Environmental Laws, nor has RTI
been found liable in any proceeding to pay any fine or judgment to any Person as
a result of any Release or threatened Release from the Real Property of any
Hazardous Material into the Environment or the breach of any Environmental Law
and to the knowledge of RTI, there is no basis for any such proceeding; (v) all
material environmental data and studies (including, without limitation, the
results of any environmental audit) relating to the business conducted from the
Real Property have been delivered or made available to Sterigenics; (vi) RTI is
not aware of any Release which is now present in, on or under the Real Property
(including underlying soils and substrata, surface water and groundwater) at
levels which exceed any action levels or remediation standards under any
Environmental laws or standards published or administered by those Governmental
Authorities responsible for establishing or applying such standards; (vii) RTI
has no knowledge of any Hazardous Materials in, on, or under the Real Property
or any other assets relating to RTI's business conducted from the Real Property;
and (viii) RTI has no knowledge of any Hazardous Materials originating from any
neighboring or adjoining properties which has migrated onto, or is migrating
towards the Real Property.
(b) Matters Disclosed in SEC Reports. With respect to
--------------------------------
Environmental Matters separately and specifically disclosed in the RTI SEC
Reports relating to the Real Property: (i) RTI is in full compliance with all
Remedial Orders; (ii) RTI is current with respect to all charges, assessments,
or claims for which a lien against the Real Property or other assets of RTI's
business under any Environmental Law may be filed or asserted, and there are no
unpaid liens or assessments outstanding which are currently due; and (iii) RTI
is not in default of any obligation or demand from any Governmental Authority
with respect to investigations or remediation activities which RTI is obligated
to undertake.
(c) Definitions. As used herein, the following terms have these
-----------
meanings:
(i) "Environmental Laws" means all applicable statutes,
rules, regulations, ordinances, orders, decrees, judgments, permits, licenses,
consents, approvals, authorizations, and governmental requirements or directives
or other obligations lawfully imposed
6
<PAGE>
by governmental authority under federal, state or local law pertaining to the
protection of the environment, protection of public health, protection of worker
health and safety (excluding OSHA and comparable state laws), the treatment,
emission and/or discharge of gaseous, particulate and/or effluent pollutants,
and/or the Handling of Hazardous Materials, including without limitation, the
Clean Air Act, 42 U.S.C. Sec. 7401, et seq., the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Sec.
9601, et seq., the Federal Water Pollution Control Act, 33 U.S.C. Sec. 1321,
et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901, et seq.
("RCRA"), and the Toxic Substances Control Act, 15 U.S.C. Sec. 2601, et seq.
(ii) "Hazardous Material(s)" means any substance, waste,
material, chemical, compound or mixture which is (or which contains any
substance, waste, material, chemical, compound, or mixture which is) flammable,
ignitable, corrosive, reactive, radioactive, or explosive, or is defined,
listed, designated, described or characterized under Environmental Laws or under
any rules, guidances, policies, or regulations promulgated thereunder, as
hazardous, toxic, a contaminant, a pollutant or words of similar import, and
includes without limitation any "hazardous substance" under CERCLA, any
"hazardous waste" under RCRA, asbestos, petroleum (including crude oil or any
fraction or distillate thereof), natural gas, natural gas liquids, and liquified
natural gas.
(iii) "Material" means anything that reasonably could be
expected to lead to the imposition of any significant penalties or fines, that
could reasonably be expected to require a capital expenditure of more than
$100,000, or that reasonably could be expected to interfere, interrupt or
threaten to interfere or interrupt in a significant manner the continued
operation of RTI's business as currently conducted from the Real Property.
(iv) "Person" means any natural person, corporation,
partnership, business trust or other business entity or enterprise.
(v) "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing.
(vi) "Environmental Approval(s)" means all permits,
certificates, licenses, authorizations, consents, instructions, registrations,
directions or approvals, issued or required by Governmental Authorities pursuant
to Environmental Laws with respect to the operations of RTI in connection with
the Real Property.
(vii) "Governmental Authorities" means any government,
regulatory authority, governmental department, agency, commission, board,
tribunal, or court or other law, rule or regulation-making entity having or
purporting to have jurisdiction over Environmental Laws on behalf of the
United States, or the state of North Carolina or other subdivision thereof, or
any municipality therein.
(viii) "Remedial Order(s)" means any judicial or
administrative order, directive, complaint or sanction issued, filed or imposed
by any Governmental Authority pursuant to any Environmental Laws, and includes,
without limitation, any order requiring any remediation or cleanup of any
Hazardous Materials, or requiring that any Release or any other activity be
reduced, modified, abated, or eliminated.
7
<PAGE>
10.10 No Misrepresentation. No representation, warranty or covenant
--------------------
by RTI in this Agreement, nor any statement, certificate or schedule furnished
or to be furnished by or on behalf of RTI pursuant to this Agreement, when taken
together with the foregoing, contains or shall contain any untrue statement of
material fact or omits or shall omit to state a material fact required to be
stated therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not materially misleading. RTI has
delivered or otherwise made available true and complete copies of all documents
requested by Sterigenics and which are referred to in this Agreement.
10.11 Transfers. Except for this Agreement and the Acquisition
---------
Agreement, RTI has not entered into any agreement to convey, sell, assign,
lease, transfer or encumber the Real Property or any material portion of the
other Property, and RTI shall not do so prior to the Closing Date without
Sterigenics' prior written consent, which may be granted or withheld in
Sterigenics' discretion reasonably exercised.
10.12 Title to Real Property. Except as set forth in the RTI SEC
----------------------
Reports or the Title Report, RTI owns the Real Property free and clear of all
liens, leases, occupancy agreements, licenses, encumbrances, covenants,
conditions, restrictions, rights-of-way, easements, and other matters affecting
title, except as to the Permitted Exceptions. To RTI's knowledge, except as
disclosed in the RTI SEC Reports or the Title Reports, no other person or entity
has claimed or is entitled to claim any legal or equitable interest in the Real
Property.
10.13 Title to Personal Property. RTI has good and marketable title
--------------------------
to the Personal Property and Improvements. Except as disclosed in the RTI SEC
Reports, the Personal Property and Improvements are and as of the Closing shall
be transferred to Sterigenics free and clear of restrictions on or conditions to
transfer or assignment, and free and clear of all claims, liabilities, liens,
pledges, mortgages, restrictions and encumbrances of any kind, whether accrued,
absolute, contingent or otherwise affecting the Personal Property and
Improvements.
10.14 No Condemnation. To RTI's knowledge, there is no condemnation
---------------
or other like proceeding pending or threatened against the Real Property or any
part thereof and no such proceeding is being contemplated.
10.15 Governmental Commitments. To RTI's knowledge, no commitment to
------------------------
or agreement with any governmental or quasi-governmental authority exists which
could affect the Real Property, including but not limited to any formation of
any special assessment district or community facilities district, except as
disclosed in this Agreement.
10.16 Easements. To RTI's knowledge, all existing water, drainage,
---------
sewage and utility facilities relating to the Real Property, from the boundary
thereof until entering the public right-of-way or other public facility, are
situated within valid easements granted by all persons or other entities having
any interest in or right or title to any property which is subject to such
easement and are referenced in the Title Reports.
10.17 Maintenance of Real Property. Prior to the Closing Date and the
----------------------------
actual transfer to Sterigenics of title to the Real Property, RTI shall maintain
the Real Property and the Improvements in substantially their present condition,
reasonable wear and tear or loss due to the elements excepted.
8
<PAGE>
10.18 Condition of Improvements. To RTI's knowledge, the Improvements
-------------------------
(including the roof and roof membrane, exterior and structural walls,
foundations, floor slabs, and other load-bearing components of the Improvements)
are in operable condition and repair (as hereinafter defined). To RTI's
knowledge all elevators, heating, ventilation and air conditioning systems
("HVAC"), plumbing, electrical, wiring, life safety, and other equipment,
appurtenances, systems and improvements are in operable condition and repair.
For purposes of this paragraph, the term "operable condition and repair" means
that there are no material defects or state of disrepair that have a material
adverse effect on the operations of the business as currently conducted by RTI
from the Real Property.
10.19 Compliance With Laws. RTI has received no written notice from
--------------------
any governmental authority that the Improvements fail to comply with any
applicable codes, statutes, ordinances, regulations, permits, orders,
directives, or other laws in any material respects. As of the Closing the
Improvements and all parts thereof shall be in a safe and habitable condition.
11. Cooperation. RTI will take all reasonable actions necessary to comply
-----------
promptly with all legal requirements which may be imposed with respect to the
consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to Sterigenics in connection
with any such requirements imposed upon Sterigenics in connection with the
consummation of the transactions contemplated by this Agreement. RTI will take
all reasonable actions necessary to obtain (and will cooperate with Sterigenics
in obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any governmental entity, domestic or
foreign, or other person, required to be obtained or made by RTI (or by
Sterigenics) in connection with the taking of any action contemplated by this
Agreement. Sterigenics shall reimburse RTI for all out-of-pocket costs incurred
pursuant to compliance with this Paragraph 11.
12. Termination Memorandum. Sterigenics agrees to promptly execute a
----------------------
Termination of Memorandum of Option, duly executed and acknowledged and in
recordable form, pursuant to which Sterigenics shall relinquish all right, title
and interest arising under the Memorandum of Option (the "Termination
Memorandum"). The Termination Memorandum shall be held in escrow by Warshaw
Burstein Cohen Schlesinger & Kuh, LLP. Upon the expiration or prior termination
of the Option, RTI shall have the right to require release of the Termination
Option and to record the Termination Memoradum.
13. Risk of Loss. Until the Closing, all risk of loss, damage or
------------
destruction to the Property shall be borne by RTI. In the event that prior to
the Closing all or any part of the Property is destroyed or damaged and the cost
to repair such damage exceeds Two Hundred Fifty Thousand Dollars ($250,000),
Sterigenics shall be entitled to terminate this Agreement (whether or not the
Option has been exercised) and to recover from RTI the Option Consideration paid
upon written notice to RTI within five (5) business days of receipt of notice
from RTI that such a loss has occurred. If Sterigenics does not have the right
to terminate this Agreement in accordance with this paragraph, or if Sterigenics
has the right to terminate this Agreement pursuant to this paragraph but elects
not to exercise (or does not timely exercise) such termination right, then RTI
shall assign to Sterigenics all insurance proceeds (whether or not such
insurance proceeds are sufficient to repair such damage or destruction and
whether or not such proceeds are paid before or after the Closing Date) and this
Agreement shall remain in full force and effect.
9
<PAGE>
14. Sterigenics' Conditions Precedent to Closing. The obligations of
--------------------------------------------
Sterigenics at the Closing are subject to satisfaction of the following
conditions (any or all of which may be waived by Sterigenics in its sole
discretion), all of which are for Sterigenics' sole benefit:
14.1 Representations and Warranties. The representations and
------------------------------
warranties of RTI contained in this Agreement shall be true and correct in all
material respects on the Closing Date with the same effect as though made on
that date.
14.2 Receipt of Required Permits. Sterigenics shall have received all
---------------------------
licenses, permits and governmental or other regulatory approvals and
authorizations which are required in order for Sterigenics to operate the Real
Property and its business.
14.3 Delivery of All Assets. RTI shall have delivered and conveyed
----------------------
all of the Property free and clear of all encumbrances, other than the Permitted
Exceptions.
14.4 Title Policy. The Title Company shall have committed in writing
------------
to issue the Title Policy to Sterigenics for the Real Property, subject only to
the Permitted Exceptions.
14.5 FIRPTA. RTI shall have executed and delivered to the Title
------
Company a certificate satisfying the requirements of Section 1445 of the
Internal Revenue Code of 1986, as amended (the "FIRPTA Certificate").
14.6 No Insolvency Event. At the Closing there shall not be any
-------------------
pending sequestration, attachment or foreclosure of or execution on any material
part of the Property or any proceeds from the sale thereof nor shall RTI have
been subject to a voluntary or involuntary petition to commence a proceeding
under the United States Bankruptcy Code to declare RTI to be bankrupt or
insolvent.
14.7 No Material Adverse Change. No change shall have occurred that
--------------------------
would have a material adverse effect on the Property.
14.8 No Legal Prohibition. No temporary restraining order,
--------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of this Agreement shall have been issued, nor shall
any action or suit related to the Agreement or its consummation be pending or
threatened, nor shall any proceeding brought by an administrative agency or
commission or other governmental entity, seeking any of the foregoing, be
pending; nor shall there be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Agreement which
makes the consummation of the Agreement illegal.
14.9 Closing Certificate. RTI shall deliver to Sterigenics a
-------------------
certificate dated the Closing Date and signed by the President of RTI confirming
that since the Execution Date, no action by RTI has resulted in a lien, pledge,
mortgage, restriction or encumbrance of any kind affecting the Real Property and
the Personal Property or Improvements.
14.10 Recordable Documents. RTI shall have provided the Closing Agent
--------------------
or the Title Company issuing the Title Policy the warranty deed for the Real
Property, fully executed and notarized and in recordable form, at least two (2)
business days prior to the Closing so that the deed
10
<PAGE>
may be registered or recorded in the appropriate real estate records of Alamance
County immediately upon Closing.
14.11 Closing Deliveries. Sterigenics shall have received at or prior
------------------
to the Closing each of the following documents: (a) a bill of sale in a form
reasonably satisfactory to Sterigenics; (b) a special warranty deed in form and
content appropriate to convey, transfer and assign to, and to vest in,
Sterigenics, good, clear and marketable fee simple title to the Real Property,
subject only to the Permitted Exceptions therefor; (c) any other documents,
records or agreements called for hereunder that have not been previously
delivered to Sterigenics.
15. RTI's Conditions Precedent to Closing. The obligations of RTI at the
-------------------------------------
Closing are subject to satisfaction of the following conditions (any or all of
which may be waived by RTI in its sole discretion), all of which are for RTI's
sole benefit:
15.1 Representations and Warranties. The representations and
------------------------------
warranties of Sterigenics contained in this Agreement shall be true and correct
in all material respects on the Closing Date with the same effect as though made
on that date.
15.2 No Insolvency Event. At the Closing Sterigenics shall not be
-------------------
subject to a voluntary or involuntary petition to commence a proceeding under
the United States Bankruptcy Code to declare Sterigenics to be bankrupt or
insolvent.
15.3 No Legal Prohibition. No temporary restraining order,
--------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of this Agreement shall have been issued, nor shall
any proceeding brought by an administrative agency or commission or other
governmental entity, seeking any of the foregoing, be pending; nor shall there
be any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Agreement which makes the consummation of
the Agreement illegal.
16. Default; Remedies.
-----------------
16.1 RTI's Remedies. STERIGENICS AND RTI EACH AGREE THAT IN THE EVENT
--------------
OF A MATERIAL DEFAULT OR BREACH HEREUNDER BY STERIGENICS, THE DAMAGES TO RTI
WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN, AND THAT THE OPTION
CONSIDERATION PAID BY STERIGENICS PLUS THE SUM OF TWENTY-FIVE THOUSAND DOLLARS
($25,000) ("STIPULATED SUM") SHALL SERVE AS LIQUIDATED DAMAGES FOR SUCH BREACH
OR DEFAULT BY STERIGENICS, AS A REASONABLE ESTIMATE OF THE DAMAGES TO RTI.
DELIVERY TO AND RETENTION OF THE OPTION CONSIDERATION AND THE STIPULATED SUM BY
RTI SHALL BE RTI'S SOLE AND EXCLUSIVE REMEDY AGAINST STERIGENICS IN THE EVENT OF
A DEFAULT OR BREACH BY STERIGENICS, AND RTI WAIVES ANY AND ALL RIGHT TO SEEK
OTHER RIGHTS OR REMEDIES AGAINST STERIGENICS WITH RESPECT TO STERIGENICS'
OBLIGATION TO PURCHASE THE PROPERTY, INCLUDING WITHOUT LIMITATION, SPECIFIC
PERFORMANCE. THE PAYMENT AND RETENTION OF THE OPTION CONSIDERATION AND THE
STIPULATED SUM AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY
BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO RTI. UPON ANY SUCH BREACH OR
DEFAULT BY STERIGENICS HEREUNDER, THIS AGREEMENT SHALL BE TERMINATED AND THE
PARTIES SHALL HAVE NO FURTHER OBLIGATIONS TO EACH OTHER HEREUNDER.
11
<PAGE>
16.2 Sterigenics' Remedies. RTI acknowledges that the Property is
---------------------
unique and, for that reason, among others, Sterigenics will be irreparably
damaged if this Agreement is not specifically enforced. Accordingly, in the
event of any breach or default of this Agreement or any of the covenants or
agreements contained in this Agreement by RTI, Sterigenics shall have the right
to demand and have specific performance of this Agreement. Provided that RTI
has not taken any action after the date of this Agreement to cause the
representations and warranties in Section 10 to be inaccurate as of the Closing,
RTI shall have no liability to Sterigenics' for any failure to meet the
condition set forth in Section 14.1 and Sterigenics shall have no right to sue
RTI for any breach of the representations and warranties.
16.3 Termination of Representations and Warranties. The
---------------------------------------------
representations and warranties contained in this Agreement shall terminate upon
the Closing.
17. General.
-------
17.1 Expenses. Except as otherwise provided below in this Agreement,
--------
the parties will each pay their own legal, accounting and other professional
expenses in connection with the transactions contemplated hereby.
17.2 Brokers. Each party represents and warrants to the other that no
-------
person has acted as a broker, a finder or in any similar capacity in connection
with the transactions contemplated hereby, except TM Capital Corporation who
shall be paid by Sterigenics. Each party shall indemnify the other against, and
agrees to hold the other harmless from, all liabilities and expenses (including
reasonable attorneys' fees and expenses) in connection with any claim by anyone
for compensation as a broker, a finder or in any similar capacity, other than TM
Capital Corporation, which is to be paid by Sterigenics at the Closing, by
reason of services allegedly rendered to the indemnifying party in connection
with the transactions contemplated hereby.
17.3 Entire Agreement. Except for that certain Confidentiality
----------------
Agreement by and between RTI and Sterigenics, dated October 3, 1995, and those
specific provisions and definitions expressly incorporated herein from the
Acquisition Agreement, this Agreement contains the entire agreement among the
parties with respect to the matters contemplated hereby and all prior
negotiations, understandings and agreements among them, are superseded by this
Agreement.
17.4 Notices. Any notice or other communication required or permitted
-------
to be given under this Agreement shall be in writing and will be deemed
effective when delivered in person, first business day after sent by confirmed
facsimile, if promptly confirmed in writing, on the third business day after the
day on which mailed by first class mail from within the United States of
America, or the business day following delivery to a national overnight courier
service to the following addresses or to such other address as either party may
specify in writing to the other party in accordance with the provisions of this
Paragraph 15.4.
If to Sterigenics: With a copy to:
Sterigenics International Gunderson Dettmer Stough
4020 Clipper Court Villeneuve Franklin & Hachigian
Fremont, CA 94538-3540 600 Hansen Way, 2nd Floor
Facsimile No.: (510) 770-1499 Palo Alto, CA 94304
Attention: James F. Clouser Facsimile No.: (415) 843-0314
Attention: Carla S. Newell
12
<PAGE>
If to RTI: With a copy to:
RTI Inc. Warshaw Burstein Cohen
108 Lake Denmark Road Schlesinger & Kuh, LLP
Rockaway, NJ 07886 555 Fifth Avenue
Attention: Theo Muller New York, NY 10017
Facsimile No.: (212) 972-9150
Attention: Arthur Katz
18. Governing Law. This Agreement will be governed by, and construed
-------------
under, the laws of the State of New York.
19. Amendment. This Agreement may be amended only by a document in
---------
writing signed by the parties.
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
21. Further Assurances. Each party agrees to execute such further
------------------
instruments and documents and to do such further acts as may be reasonably
requested by any other party to carry out the transactions contemplated hereby.
22. No Rights Conferred Upon Third Parties. No provisions of this
--------------------------------------
Agreement are intended or shall be interpreted to provide or create any rights
of any kind in any third party unless specifically provided otherwise herein,
and, except as so provided, all provisions hereof shall be personal solely to
the parties to this Agreement.
23. Attorneys' Fees. In any litigation relating to this Agreement,
---------------
including litigation with respect to any instrument, document or agreement made
under or in connection with this Agreement, the prevailing party shall be
entitled to recover its costs and reasonable attorneys' fees and expenses.
24. Headings. Captions and headings used herein are for convenience only
--------
and are not a part of this Agreement and shall not be used in construing it.
25. No Assignment. The Agreement may not be assigned (including by
-------------
operation of law) by either party without the prior written consent of the other
party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Execution Date.
STERIGENICS INTERNATIONAL RTI INC.
By: JAMES F. CLAUSER By: THEO W. MULLER
-------------------------------- -------------------------------------
Title: President and CEO Title: President & CEO
----------------------------- ----------------------------------
13
Exhibit 10.9(c)
RTI INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is entered into as of February 26, 1996 by and among RTI
Inc., a New York corporation, (the "Company") and Sterigenics International., a
California corporation ("Purchaser").
A. WHEREAS, the Company and the Purchaser have entered into an Asset
Acquisition Agreement (the "Asset Agreement") dated as of the date hereof,
pursuant to which the Purchaser has agreed to purchase certain assets and assume
certain liabilities of the Company. Capitalized terms used in this Agreement
and not otherwise defined herein will have the meanings given to them in the
Asset Agreement.
B. WHEREAS, Purchaser has agreed that it will purchase shares of the
Company's preferred stock in order to provide the Company with additional cash
to fund the purchase of additional Cobalt and to allow the Company to run its
operations at full capacity until the closing of the transactions contemplated
by the Asset Agreement.
C. WHEREAS, the parties hereto desire to establish the terms and
conditions pursuant to which the Purchaser will purchase from the Company shares
of the Company's preferred stock.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth below, the parties mutually agree as follows:
1. Authorization and Sale of the Shares.
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1.1 Authorization; Filing of Corporate Documents. The Company has
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authorized the issuance and sale of up to 118,000 shares of its Series A
Preferred Stock pursuant to the terms and conditions of this Agreement. The
term "Preferred Shares" means such 118,000 shares of Series A Preferred Stock.
Attached hereto as Exhibit A is the Certificate of Amendment to the Certificate
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of Incorporation of the Company (the "Certificate of Amendment") which sets
forth the powers, preferences, rights and other matters relating to the Series A
Preferred Stock to be filed by the Company with the Department of State of the
State of New York.
1.2 Issuance and Sale. Subject to the terms and conditions of this
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Agreement, at the Closing (as defined below) the Company will issue and sell to
the Purchaser, and the Purchaser will purchase from the Company, the Preferred
Shares at the Closing (as defined below) at a purchase price of Two
Dollars ($2.00) per share.
2. Closing; Delivery.
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2.1 Closing. The closing (the "Closing") of the purchase and sale of
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the Preferred Shares to the Purchaser shall occur on the business day
immediately following the satisfaction of the conditions set forth in Section 6.
2.2 Delivery. Subject to the terms of this Agreement, at the Closing
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the Company will deliver to the Purchaser a stock certificate representing the
Preferred Shares against payment of the purchase price therefor by certified
check payable to the order of the Company or by wire transfer, at RTI's option.
3. Representations and Warranties of the Company. The Company represents
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and warrants to the Purchaser as follows:
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3.1 Organization and Standing; Certificate of Incorporation and
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Bylaws. The Company is a corporation duly and validly existing under, and by
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virtue of, the laws of the State of New York and is in good standing under such
laws. The Company has the requisite corporate power to own and operate its
properties and assets, and to carry on its business as presently conducted. The
Company has made available to the Purchaser or its special counsel copies of the
Company's Certificate of Incorporation and Bylaws, each as amended to date, and
copies of all proceedings of the Company's Board of Directors and shareholders
with respect to the period from January 1, 1995 through the date hereof. Said
copies are true, correct and complete copies of the original documents.
3.2 Corporate Power. The Company has all requisite legal and
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corporate power to enter into this Agreement, to sell the Preferred Shares
hereunder, and to carry out and perform its obligations under the terms of this
Agreement.
3.3 SEC Filings; Financial Statements.
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(a) The Company has filed all forms, reports and documents
required to be filed by the Company with the SEC since January 1, 1995
(collectively, the "RTI SEC Reports"). The RTI SEC Reports (i) at the time they
were filed, complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act") and the
Securities Exchange Act of 1934, as amended, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in such RTI SEC Reports or necessary in order to make the statements
in such RTI SEC Reports, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the financial statements (including, in each case,
any related notes) contained in the RTI SEC Reports complied as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted by Form 10-QSB of the Securities and Exchange Commission) and
fairly presented the consolidated financial position of RTI as at the respective
dates and the results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were subject
to normal and recurring year-end adjustments which were not expected to be
material in amount.
3.4 Capitalization. As of the date hereof, the authorized capital
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stock of the Company consisted of 15,000,000 shares of Common Stock and
2,000,000 shares of Preferred Stock, of which 200,000 shares will be designated
as Series A Preferred Stock. As of the date of this Agreement, there were
issued and outstanding 1,076,907 shares of Common Stock and no shares of
Series A Preferred Stock. All such issued and outstanding shares of Common
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, subject to Section 630 of the New York Business Corporate Law.
As of the date hereof, there were no outstanding rights, plans, options,
warrants, conversion rights or agreements for the purchase or acquisition from
the Company of any shares of its capital stock, except as disclosed in the RTI
SEC Reports and except that an aggregate of 118,000 shares of Common Stock have
been reserved for issuance upon the conversion of the Preferred Shares (the
"Common Shares").
3.5 Authorization.
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(a) All corporate action on the part of the Company, its
officers, directors and shareholders necessary for (i) the sale and issuance of
the Preferred Shares pursuant hereto, (ii) the issuance of the Common Shares,
and (iii) the execution, performance and delivery by the Company of the
Agreement has been taken. The Agreement is a valid and binding obligation of
the Company, enforceable against it
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<PAGE>
in accordance with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and rules or laws
concerning equitable remedies.
(b) The Preferred Shares and the Common Shares (collectively,
the "Securities"), when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable, subject to
Section 630 of the New York Business Corporate Law, and will be free of any
liens or encumbrances; provided, however, that the Securities may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein or otherwise required by such laws at the time a transfer is proposed.
(c) No shareholder of the Company has any right of first refusal
or any preemptive rights in connection with the issuance of the Securities.
4. Representations and Warranties of Purchaser; Restrictions on Transfer.
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4.1 Representations and Warranties by the Purchaser. The Purchaser
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represents and warrants to the Company as follows:
(a) The Purchaser is able, without impairing the Purchaser's
financial condition, to bear the economic risk of the purchase of the Preferred
Shares pursuant to the terms of this Agreement, to hold the Securities for an
indefinite period of time and to suffer a complete loss of Purchaser's
investment.
(b) The Purchaser has such knowledge and experience in financial
and business matters that the Purchaser is capable of (i) evaluating the merits
and risks of the purchase of the Securities pursuant to the terms of this
Agreement and (ii) protecting the Purchaser's interests in connection therewith.
(c) The Securities are being acquired for the Purchaser's own
account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act.
(d) The Purchaser has the full capacity, right, power and
authority to enter into and perform the Agreement, and the Agreement constitutes
the valid and binding obligation of the Purchaser enforceable in accordance with
its terms.
(e) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the
Purchaser is required in connection with the valid execution and delivery of the
Agreement and consummation of the transaction contemplated hereunder.
(f) The Purchaser is legally permitted to purchase the Preferred
Shares.
4.2 Legends. Each certificate or instrument representing the
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Securities will be endorsed with the following legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR
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<PAGE>
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.
(b) Any other legends required by applicable state blue sky
laws.
The Company need not register a transfer of any Securities, and may also
instruct its transfer agent not to register the transfer of the Securities,
unless the conditions specified in this Agreement are satisfied.
4.3 Removal of Legend and Transfer Restrictions.
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(a) Any legend endorsed on a certificate pursuant to
Section 4.2(a) and any stop transfer instructions applicable to such certificate
regarding the restrictions set forth in such legend will be removed and the
Company will issue a certificate without such legend to the holder thereof if
such Securities are registered under the Securities Act and a prospectus meeting
the requirements of Section 10 of the Securities Act is available (provided,
however, that the Company has no obligation to register the Securities), if such
legend may be properly removed under the terms of Rule 144 promulgated under the
Securities Act, or if such holder provides the Company with an opinion of
counsel for such holder which opinion is reasonably satisfactory to legal
counsel for the Company, to the effect that a public sale, transfer or
assignment of such Securities may be made without registration.
(b) Any legend endorsed on a certificate pursuant to
Section 4.2(b) and the stop transfer instructions with respect to such
Securities will be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
5. Covenants of the Parties.
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5.1 Covenant of the Company. During the period that the Purchaser is
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a holder of the Securities, the Company agrees to pay all debts, wages or
salaries (within the meaning of Section 630 of the New York Business Corporation
Law) due and owing to any of its laborers, servants or employees other than
contractors for services performed by them for the Company, unless such debts,
wages or salaries are contested by the Company in good faith.
5.2 Covenant of the Purchaser. Purchaser agrees that it will not
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sell, pledge or otherwise encumber the Preferred Shares, nor will it convert the
Preferred Shares into Common Stock or redeem the Preferred Shares, prior to
either the Closing of the Acquisition (as defined in the Asset Agreement) or the
termination of the Asset Agreement.
6. Conditions to Closing. The obligation of the Purchaser to purchase
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Preferred Shares at the Closing and the obligation of the Company to sell the
Preferred Shares at the Closing is subject to the fulfillment on or prior to the
time of the Closing of the following conditions:
(a) Filing with the New York Secretary of State. The Company
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shall have received a certified copy of the Certificate of Amendment from the
Secretary of State of New York.
(b) Legal Investment. At the time of the Closing, the purchase
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of the Preferred Shares by the Purchaser hereunder will be legally permitted by
all laws and regulations to which the Purchaser and the Company are subject.
7. Miscellaneous.
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<PAGE>
7.1 Amendment. This Agreement may not be modified, amended, altered
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or supplemented except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
7.2 Governing Law. This Agreement will be governed in all respects
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by the laws of the State of New York as such laws are applied to agreements
between New York residents entered into and to be performed entirely within New
York.
7.3 Survival. The representations, warranties, covenants and
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agreements made herein will survive the execution of this Agreement and the
Closing of the transactions contemplated hereby for a period of one year from
the Closing.
7.4 Successors and Assigns. Except as otherwise expressly provided
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herein, the provisions hereof will inure to the benefit of, and be binding upon,
the successors, permitted assigns, heirs, executors and administrators of the
parties hereto. The Purchaser may not assign its rights to purchase the
Preferred Shares and the Company may not assign its rights to receive the
proceeds of such purchase.
7.5 Entire Agreement. This Agreement, the exhibits to this Agreement
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and the other documents delivered pursuant hereto or incorporated by reference
herein and the Asset Agreement constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof and
supersede all prior oral and written understandings, agreements and commitments
with regard to such subjects by or among the parties hereto.
7.6 Notices. Any notice or other communication required or permitted
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to be given under this Agreement shall be in writing and will be deemed
effective when delivered in person, first business day after sent by confirmed
facsimile, if promptly confirmed in writing, on the third business day after the
day on which mailed by first class mail from within the United States of
America, or the business day following delivery to a national overnight courier
service to the following addresses or to such other address as either party may
specify in writing to the other party in accordance with the provisions of this
Section 6.6.
If to Purchaser With a copy to:
Sterigenics International Gunderson Dettmer Stough Villeneuve
4020 Clipper Court Franklin & Hachigian, LLP
Fremont, CA 600 Hansen Way, Second Floor
94538-6540 Palo Alto, CA 94304
Facsimile No.: (510) 770-1499 Facsimile No.: (415) 843-0314
Attention: James F. Clouser Attention: Carla S. Newell
If to the Company: With a copy to:
RTI Inc. Warshaw Burstein Cohen
108 Lake Denmark Road Schlesinger & Kuh, LLP
Rockaway, NJ 07866 555 Fifth Avenue
Facsimile No.: (201) 625-7820 New York, NY 10017
Attention: Theo Muller Facsimile No.: (212) 972-9150
Attention: Arthur Katz
7.7 No Waivers. No failure on the part of any party to exercise or
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delay in exercising any right hereunder will be deemed a waiver thereof, nor
will any such failure or delay, or any single or partial exercise of any such
right, preclude any further or other exercise of such right or any other right.
5
<PAGE>
7.8 Separability. If any provision of this Agreement, or the
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application thereof, is for any reason and to any extent determined by a court
of competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement and the application of such provision to other persons or
circumstances will be interpreted so as best to reasonably effect the intent of
the parties hereto. The parties agree to use their best efforts to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision which will achieve, to the extent greatest possible, the economic,
business and other purposes of the void or unenforceable provision.
7.9 Expenses. The Company and the Purchaser shall each bear its
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respective expenses and legal fees incurred with respect to this Agreement and
the transactions contemplated hereby.
7.10 Titles and Subtitles. The titles of the sections and subsections
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of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.11 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which will be an original, but all of which together will
constitute one instrument.
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<PAGE>
The parties have executed this Agreement as of the day and year first
above written.
RTI INC.
By:
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Title:
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STERIGENICS INTERNATIONAL
By:
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Title:
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7
<PAGE>
Exhibit A
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Certificate of Amendment to the
Certificate of Incorporation of the Company
<PAGE>
The parties have executed this Agreement as of the day and year first
above written.
RTI INC.
By: THEO W. MULLER
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Title: President and CEO
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STERIGENICS INTERNATIONAL
By: JAMES F. CLAUSER
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Title: President and CEO
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7
Exhibit 10.9(d)
ESCROW AGREEMENT
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This Escrow Agreement (the "Agreement") is entered into as of
, 1996 by and among Sterigenics International, a
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California corporation ("Purchaser"), RTI Inc., a New York corporation
("Seller"), and the Escrow Agent named herein.
RECITALS
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A. Purchaser and Seller have entered into an Asset Acquisition Agreement
dated as of February 26, 1996 (the "Asset Agreement"). Capitalized terms used
in this Agreement and not otherwise defined herein will have the meanings given
them in the Asset Agreement.
B. The Asset Agreement provides for Eight Hundred Thousand Dollars
($800,000) of the Consideration (the "Escrow Amount") to be placed in an escrow
account (the "Escrow Account") to secure certain obligations to Purchaser under
the Asset Agreement on the terms and conditions set forth therein and herein.
C. The parties hereto desire to establish the terms and conditions
pursuant to which the Escrow Amount will be deposited, held in, and disbursed
from the Escrow Account.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Escrow.
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(a) Escrow of Escrow Amount. The Escrow Amount will be held in
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escrow by Lowenstein, Sandler, Kohl, Fisher & Boylan, (the "Escrow Agent"),
located at 65 Livingston Avenue, Roseland, New Jersey 07068-1791, as collateral
for obligations of Seller under Article XI of the Asset Agreement, until such
Escrow Amount is to be released pursuant to the terms of this Agreement. The
Escrow Agent agrees to accept delivery of the Escrow Amount and to hold such
Escrow Amount in escrow subject to the terms and conditions of this Agreement.
(b) Claims Under Indemnity Obligations. The parties agree that the
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Escrow Amount will be partial security for the obligations of Seller under
Article XI of the Asset Agreement. Promptly after the receipt by Purchaser of
notice or discovery of any Claim giving rise to rights under Section 11.2 of the
Asset Agreement, Purchaser will give the Seller and the Escrow Agent written
notice of such Claim in accordance with Section 3 hereof. Failure of Purchaser
to furnish written notice to Seller of a Claim shall not release Seller from
Seller's obligations hereunder, except to the extent Seller is prejudiced by
such failure.
2. Deposit of Escrow Amount; Release from Escrow.
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(a) Delivery of Escrow Amount. On the Closing Date, the Escrow
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Amount will be delivered by Purchaser to the Escrow Agent by certified check
made payable to the Escrow Account.
(b) Distribution to Seller. Promptly following the termination of
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the period in which Purchaser is entitled to make a claim for a Purchase Price
Adjustment, the Escrow Agent shall release from the Escrow Account to the Seller
(the "First Release Date") an aggregate of Four Hundred Thousand Dollars
($400,000), less the amount of any outstanding claims for a Purchase Price
Adjustment (the "First Release Amount"). Promptly following the resolution of
any claim for a Purchase Price Adjustment, the Escrow Agent shall release from
the Escrow Account (the "Second Release Date") to the Seller an aggregate of
Four Hundred Thousand Dollars ($400,000), less (i) the First Release Amount and
(ii) the amount of any
<PAGE>
Purchase Price Adjustment. On the six month anniversary of the Closing Date
(the "Third Release Date"), the Escrow Agent shall release from the Escrow
Account to the Seller the other Four Hundred Thousand Dollars ($400,000) of the
Escrow Amount, less (i) any amounts delivered to Purchaser in satisfaction of
Claims by Purchaser (other than Claims with respect to a Purchase Price
Adjustment) and (ii) any amounts withheld with respect to any pending but
unresolved Claims of Purchaser (each a "Released Amount").
(c) Release of Escrow Amount. The Escrow Amount will be held by the
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Escrow Agent until required to be released pursuant to Section 2(b) above.
Within three (3) business days after each of the First Release Date, the Second
Release Date and the Third Release Date, the Escrow Agent will deliver to the
Seller the Released Amount to be released on such date, together with interest
accrued on such Released Amount. Amounts retained pursuant to Section 2(b)(ii)
above shall be released to Seller within three (3) business days after the
pending Claim corresponding to the retained amount is conclusively resolved,
less any amounts delivered to Purchaser in satisfaction of such Claim.
(d) Investment of Escrow Account. The Escrow Agent shall invest the
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Escrow Account as directed in writing by the Seller (or by Purchaser if the
Seller does not so direct) in any of the following:
(i) obligations issued or guaranteed by the United States of
America or any agency or instrumentality thereof;
(ii) certificates of deposit or interest bearing accounts with
banks or corporations endowed with trust powers having capital and surplus in
excess of Fifty Million Dollars ($50,000,000);
(iii) commercial paper that at the time of investment is rated A-
1 by Standard & Poor's Corporation or Prime-1 by Moody's Investors Service,
Inc.;
(iv) repurchase agreements with any bank or corporation described
in clause (ii) fully secured by obligations described in clause (i);
(v) money market mutual funds; or
(vi) as Purchaser and Seller mutually agree in writing.
The Escrow Agent will incur no liability with respect to the
insolvency or other loss in value of any investments directed by either the
Seller or the Purchaser.
(e) Interest. Accrued interest on the Released Amounts shall be paid
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to the Seller on the Release Date. Accrued interest on the balance of the
Escrow Amount due the Seller at the expiration of any period during which any
Claims are contested pursuant to Section 4(b) below shall be paid to the Seller.
Accrued interest on any amounts delivered to Purchaser in satisfaction of Claims
by Purchaser shall be paid to Purchaser at the time such amount is delivered to
Purchaser. The Seller certifies that its taxpayer identification number is 11-
2163152 and the Purchaser certifies that its taxpayer identification number is
95-3323502.
(f) No Encumbrance. No interest in the Escrow Account or any
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beneficial interest therein may be pledged, sold, assigned or transferred, other
than by operation of law, by any party hereto or be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of any
party hereto, prior to the delivery to the Seller of the Released Amounts by the
Escrow Agent.
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<PAGE>
3. Notice of Claim.
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(a) Each notice of a Claim by Purchaser (the "Notice of Claim") shall
be in writing to the Seller and the Escrow Agent and shall contain the following
information to the extent it is reasonably available to Purchaser:
(i) Purchaser's good faith estimate of the reasonably
foreseeable maximum amount of the Claim; and
(ii) A brief description in reasonable detail of the facts,
circumstances or events giving rise to the Claim.
(b) Purchaser shall provide written notice of any third party claim
which could result in a Notice of Claim promptly after Purchaser becomes aware
of such third party claim. Purchaser agrees not to settle such claims without
the prior written consent of Seller, which shall not be unreasonably withheld.
(c) The Escrow Agent will not release any of the Escrow Amount held
in the Escrow Account to Purchaser pursuant to a Notice of Claim until such
Notice of Claim has been resolved in accordance with Section 4 below.
4. Resolution of Notice of Claim and Transfer of Escrow Funds . Any
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Notice of Claim received by Seller and the Escrow Agent pursuant to Section 3
above will be resolved as follows:
(a) Uncontested Claims. In the event that the Seller does not
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contest a Notice of Claim in writing to the Escrow Agent and Purchaser or pay
the amount demanded within thirty (30) calendar days after such Notice of Claim
is deemed delivered pursuant to Section 6 below, the Escrow Agent will on the
second business day following the expiration of such thirty (30) day period
deliver to Purchaser an amount equal to the amount specified in the Notice of
Claim and notify the Seller of such transfer.
(b) Contested Claims. In the event that the Seller gives written
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notice contesting all or a portion of a Notice of Claim to Purchaser and the
Escrow Agent (a "Contested Claim") within the thirty (30) day period provided
above, Seller and Purchaser shall attempt in good faith to agree upon the rights
of the respective parties with respect to such Claim. If Seller and Purchasers
should so agree, a memorandum setting forth such agreement (a "Memorandum of
Agreement") shall be prepared and signed by both parties and shall be furnished
to the Escrow Agent. The Escrow Agent shall be entitled to rely on any such
Memorandum of Agreement and distribute funds from the Escrow Fund in accordance
with the terms thereof.
If no such agreement can be reached after good faith negotiation,
either Seller or Purchaser may demand arbitration of the matter as provided in
Section 13.15 of the Asset Agreement, unless the amount of the damage or loss is
at issue in pending or threatened litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or both
Seller and Purchaser agree to arbitration. Any portion of the Notice of Claim
which is not contested by Seller and is for an agreed amount shall be resolved
as set forth above in Section 4(a). The final resolution of any Contested Claim
as provided above, including any decision of the arbitrator, shall be furnished
to the Escrow Agent, the Seller and Purchaser in writing and will constitute a
conclusive determination of the issue in question, binding upon the Seller and
Purchaser and shall not be contested by any of them. After notice that the
Notice of Claim is contested by the Seller, the Escrow Agent will continue to
hold in the Escrow Account an Escrow Amount sufficient to cover such Claim
(notwithstanding the expiration of a Release Date and subject to Released
Amounts released prior to receipt by Seller and Escrow Agent of the Notice of
Claim for such Contested Claim) until (i) execution of a settlement agreement by
Purchaser and the Seller setting forth a
3
<PAGE>
resolution of the Notice of Claim, or (ii) receipt of a copy of the final award
of an arbitrator. Upon the receipt of any settlement agreement or final
arbitrator's award, the Escrow Agent shall promptly deliver all amounts
determined to be immediately due to the parties as a result of such settlement
or award.
For the purposes of this Section 4, in any arbitration hereunder
in which any claim or the amount thereof stated in a Notice of Claim is at
issue, Purchaser shall be deemed to be the non-prevailing party unless the
arbitrators award Purchaser more than 50% of the amount in dispute, plus any
amounts not in dispute; otherwise, Seller shall be deemed to be the
non-prevailing party. The non-prevailing party to an arbitration hereunder
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of AAA, and the expenses (including, without limitation, attorneys' fees and
costs) incurred by the other party to the arbitration.
5. Limitation of Escrow Agent's Liability.
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(a) The Escrow Agent will incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other document believed by it to be genuine
and duly authorized, nor for any other action or inaction, except its own
willful misconduct or gross negligence. The Escrow Agent will not be
responsible for the validity or sufficiency of this Agreement or any agreement
amendatory or supplemental hereto. In all questions arising under the
Agreement, the Escrow Agent may rely on the advice or opinion of legal counsel,
and for anything done, omitted or suffered in good faith by the Escrow Agent
based on such advice or opinion, the Escrow Agent will not be liable to anyone.
The Escrow Agent will not be required to take any action hereunder involving any
expense unless the payment of such expense is made or provided for in a manner
satisfactory to it.
(b) In the event conflicting demands are made or notices are served
upon the Escrow Agent with respect to the Escrow Account, the Escrow Agent will
have the absolute right, at the Escrow Agent's election, to do either or both of
the following: (i) resign so a successor can be appointed pursuant to Section 9
or (ii) file a suit in interpleader and obtain an order from a court of
competent jurisdiction requiring the parties to interplead and litigate in such
court their several claims and rights among themselves. In the event such
interpleader suit is brought, the Escrow Agent will thereby be fully released
and discharged from all further obligations imposed upon it under this
Agreement, and Purchaser will pay the Escrow Agent (subject to reimbursement
from the Seller pursuant to Section 8 hereof) all costs, expenses and reasonable
attorneys' fees and expenses expended or incurred by the Escrow Agent pursuant
to the exercise of Escrow Agent's rights under this Section 5 (such costs, fees
and expenses shall be treated as extraordinary fees and expenses for the
purposes of Section 8 hereof).
(c) In consideration of its acceptance of the appointment as Escrow
Agent, the other parties hereto, jointly and severally, agree to indemnify and
hold the Escrow Agent harmless as to any liability incurred by it to any person,
firm or corporation by reason of its having accepted the same or in carrying out
any of the terms hereof, and to reimburse the Escrow Agent for all its costs and
expenses, including, but not limited to, reasonable attorneys' fees and
expenses, incurred by reason of any matter as to which an indemnity is paid;
provided, however, that no indemnity shall be paid by reason of the Escrow
Agent's gross negligence or willful misconduct.
(d) The Escrow Agent shall be under no obligation to deliver any
instrument or documents to a court or take any other legal action in connection
with this Agreement or towards its enforcement, or to appear in, prosecute or
defend any action or legal proceeding which, in Escrow Agent's opinion, would or
might involve it in any cost, expense, loss or liability unless, as often as
Escrow Agent may require, Escrow Agent shall be furnished with security and
indemnity reasonably satisfactory to it against all such costs, expenses, losses
or liability.
4
<PAGE>
(e) The Escrow Agent's obligations hereunder shall be as a depository
only, and Escrow Agent shall not be responsible or liable in any manner whatever
for the sufficiency, correctness, genuineness or validity of any notice, written
instructions or other instrument furnished to it or deposited with it, or for
the form of execution of any thereof, or for the identity, authority or rights
of any person executing, furnishing or depositing same except to the extent of
its gross negligence or willful misconduct.
(f) The Escrow Agent shall not have any duties or responsibilities
except those set forth in this Agreement, and shall not incur any liability in
acting upon any signature, notice, request, waiver, consent, receipt or other
paper or document reasonably believed by it to be genuine, and Escrow Agent may
presume that any person purporting to give any notice or advice on behalf of any
party in accordance with the provisions hereof has been duly authorized to do
so.
(g) The Escrow Agent shall be entitled to consult with counsel in
connection with its duties hereunder.
(h) The terms and provisions of this Agreement shall create no right
in any person, firm or corporation other than the parties hereto and their
respective successors and permitted assigns, and no third party shall have the
right to enforce or benefit from the terms hereof.
(i) The Escrow Agent has executed this Agreement solely in order to
acknowledge receipt of the Escrow Amount and to confirm that Escrow Agent will
hold same in escrow pursuant to the provisions of this Agreement.
(j) The parties acknowledge that the Escrow Agent is also local
counsel to Purchaser. Seller waives any objections to Escrow Agent's serving in
the capacity of escrow agent hereunder. Purchaser agrees that it shall not be
entitled to have the Escrow Agent serve as its legal counsel with respect to a
dispute under this Agreement or with respect to Contested Claims.
6. Notices. Any notice or other communication required or permitted to
-------
be given under this Agreement shall be in writing and will be deemed effective
when delivered in person, on the first business day after sent by confirmed
facsimile, if promptly confirmed in writing, on the third business day after the
day on which mailed by first class mail from within the United States of
America, or the first business day following delivery to a national courier
service for overnight delivery to the following addresses or to such other
address as either party may specify in writing to the other party in accordance
with the provisions of this Section 6:
If to Purchaser: With a copy to:
Sterigenics International Gunderson Dettmer Stough
4020 Clipper Court Villeneuve Franklin &
Fremont, CA 94538 Hachigian, LLP
Facsimile No.: (510) 770-1499 600 Hansen Way, Second Floor
Attention: James F. Clouser Palo Alto, CA 94304
Facsimile No.: (415) 843-0314
Attention: Carla S. Newell
If to Seller: With a copy to:
RTI Inc. Warshaw Burstein Cohen
20 Peach Hill Road Schlesinger & Kuh, LLP
Darien, CT 66820 555 Fifth Avenue
Attention: Theo Muller New York, NY 10017
Facsimile No.: (212) 972-9150
Attention: Arthur Katz
5
<PAGE>
If to the Escrow Agent:
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Avenue
Roseland, NJ 07068-1791
Attn: Michael Rodburg
7. General.
-------
(a) Governing Law; Assigns. This Agreement will be governed by and
----------------------
construed in accordance with the internal laws of the State of New Jersey
without regard to conflict-of-law principles and will be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
assigns.
(b) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(c) Entire Agreement. Except as set forth in the Asset Agreement
----------------
between Purchaser and Seller and the Ancillary Agreements, this Agreement
constitutes the entire understanding and agreement of the parties with respect
to the subject matter of this Agreement and supersedes all prior agreements or
understandings, written or oral, between the parties with respect to the subject
matter hereof.
(d) Waivers. The observance of any term of this Agreement may be
-------
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
8. Expenses of Escrow Agent. All fees and expenses of the Escrow Agent
------------------------
incurred in the ordinary course of performing its responsibilities hereunder
will be paid by Purchaser upon receipt of a written invoice by Escrow Agent.
Subject to the provisions of the last paragraph of Section 4(b), any fees,
including, but not limited to, attorneys' fees (either paid to retained
attorneys or amounts representing the value of legal services rendered to itself
based upon its standard hourly rates), or expenses incurred by the Escrow Agent
in connection with a dispute over the distribution of the Escrow Amount or the
validity of a Notice of Claim, will be paid fifty percent (50%) by Purchaser and
fifty percent (50%) by Seller. Escrow fees shall be based on the standard
hourly rate of the Escrow Agent. Seller's liability for the fees and expenses
of the Escrow Agent may be paid by Purchaser and recovered as a Claim hereunder
out of the Escrow Amount.
9. Successor Escrow Agent. In the event the Escrow Agent becomes
----------------------
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and shall be discharged from its duties or obligations hereunder by
giving resignation to the parties to this Agreement, specifying not less than
sixty (60) days' prior written notice of such a date when such resignation will
take effect. Purchaser and Seller shall agree on a successor Escrow Agent prior
to the expiration of such sixty (60) day period by giving written notice to the
Escrow Agent. The Escrow Agent will promptly deliver the Escrow Amount
remaining in the Escrow Account at such time to such designated successor. In
the event no successor Escrow Agent is appointed as described in this Section 9,
the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor Escrow Agent.
10. Limitation of Responsibility; Notices. The Escrow Agent's duties are
-------------------------------------
limited to those set forth in this Agreement and the Escrow Agent may rely upon
the written notices delivered to the Escrow Agent hereunder.
6
<PAGE>
11. Amendment. This Agreement may be amended with the written consent of
---------
Purchaser, the Escrow Agent and the Seller, provided that if the Escrow Agent
does not agree to an amendment agreed upon by Purchaser and the Seller,
Purchaser and Seller shall appoint a successor Escrow Agent in accordance with
Section 9 above.
12. Miscellaneous. The Escrow Agent may execute any of its powers or
-------------
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written and shall be effective when executed by
Purchaser, the Escrow Agent and the Seller.
STERIGENICS INTERNATIONAL
By:
--------------------------------
Title:
-----------------------------
RTI INC.
By:
--------------------------------
Title:
-----------------------------
ESCROW AGENT:
LOWENSTEIN, SANDLER, KOHL, FISHER & BOYLAN
By:
--------------------------------
Title:
-----------------------------
7
Exhibit 10.9(e)
LEASE AGREEMENT
THIS AGREEMENT, dated the day of , 1996,
--- ----------
BETWEEN RTI INC., a New York corporation having a place of business at
-------
, New Jersey ("Landlord");
---------------------------------- -------- --------
AND , a wholly owned subsidiary of STERIGENICS
----------------------------
INTERNATIONAL, a California corporation having a place of business at
, New Jersey ("Tenant");
--------------------------------- ----------- ------
CONTENTS
--------
Section Topic Page
------- ----- ----
1 Basic Terms
2 Leasing Provisions
3 Rent Provisions
4 Tenant and Landlord Work Provisions
5 Insurance Provisions
6 Condemnation Provisions
7 Default and Remedies
8 Environmental Provisions
9 Miscellaneous
10 Defined Terms; Interpretations
W I T N E S S E T H :
1. BASIC TERMS. The following terms are the basic business terms
and conditions of this lease. The capitalized terms used in this lease shall
have the meanings set forth below in this and the following sections of this
lease, including section 10. See section 10 for definitions and rules of
interpretation. The provisions of this section 1 are subject to the more
detailed, specific provisions contained elsewhere in this lease.
1.1 Premises. That certain tract of land of approximately 62 acres
--------
and the improvements located thereon in the Township of Rockaway, County of
Morris, State of New Jersey, as more particularly described in the attached
Exhibit A. The Premises includes all trade and other fixtures located at the
Premises.
1.2 Term. The Term of this lease is for a period of 6 years (plus
----
any fractional month at the beginning of the Term). The "Commencement Date" is
-----------------
, and the "Termination Date" is , or the last
- ------------------ ---------------- -----------------
day of the month in which the 6th anniversary of the Commencement Date occurs,
or upon such earlier date as may be provided in this lease whether following an
extension or renewal hereof or otherwise. The lease is subject to extension as
provided in the annexed extension rider for one (1) five (5) year term.
<PAGE>
1.3 Base Rent. The Annual Base Rent for the Term is $54,000.00 per
---------
year, payable in monthly installments of $4,500.00. [The Base Rent will be
adjusted at the time the lease is executed in accordance with the Letter
Agreement annexed hereto as Exhibit C.] Base Rent shall be absolutely net and
Tenant shall be responsible for all normal and extraordinary costs arising out
of or in connection with the use and operation of the Premises.
1.4 Permitted Use. Tenant may use the Premises for contract
-------------
irradiation services and other related businesses, and for any other lawfully
permitted use.
1.5 Security Deposit. None.
----------------
1.6 Landlord Notices Address:
------------------------
RTI Inc.
20 Peach Hill Road
Darien, CT 06820
Attention: Theo Muller
Telecopier No.: (203) 655-0381
With Courtesy Copy to Counsel:
-----------------------------
Warshaw Burstein Cohen Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Attention: Arthur A. Katz
Telecopier No.: (212) 972-9150
1.7 Tenant Notices Address:
----------------------
------------------------
Attention:
----------------
Telecopier No.:
----------------
With Courtesy Copy to Counsel:
-----------------------------
Gunderson, Dettmer, Stough, Villeneuve, Franklin & Hachigian
600 Hansen Way
Palo Alto, California 94304
Attention: Carla S. Newell
Telecopier No. (415) 843-0314
2. LEASING PROVISIONS.
2.1 Leasing. For and in consideration of the Rents, covenants and
-------
agreements hereinafter mentioned, reserved and contained, to be paid, kept and
performed by Tenant, Landlord does hereby demise and lease unto Tenant, and
Tenant does hereby lease and hire from Landlord, the Premises more particularly
described on Exhibit A annexed hereto subject to the matters disclosed by
Exhibit 6.5(a) of the Agreement ("Title Report") and the ALTA survey
------------
contemplated by section 6.5 of the Agreement ("Survey"). Tenant shall
------
2
<PAGE>
be responsible for obtaining any certificate of occupancy or other permits,
agreements and approvals in connection with its use or occupancy of the
Premises. From and after the date hereof, Tenant shall have the right and
obligation to maintain and care of Premises in order to preserve, maintain and
prevent any waste or deterioration thereof. The parties shall not record this
lease, but at the expense of Tenant shall cause a memorandum of this lease to be
recorded in the form of Exhibit 2.1 hereto.
2.2 Subordination. Tenant's rights under this lease shall have the
-------------
priority set forth in the Title Report. Landlord shall discharge (a) exceptions
in Schedule B Section 2 of the Title Report, along with any encumbrances
- ----
not disclosed in the Title Report, on or before one year from the date hereof,
and (b) any lien under the Spill Act, any lien, restriction or encumbrance in
connection with the Administrative Consent Order dated December 7, 1992, as
amended, and any listing as a "Superfund Site" under CERCLA prior to any closing
pursuant to section 9.7 hereof.
2.3 Term. The Term of this lease shall commence on the Commencement
----
Date and end on the Termination Date without the necessity of any notice from
either Landlord or Tenant to terminate the same. Tenant hereby waives notice to
vacate the Premises and agrees that Landlord shall be entitled to the benefit of
all provisions of law respecting the summary recovery of possession from a
tenant holding over to the same extent as if statutory notice had been given.
For the period of 12 months prior to the expiration of the Term, Landlord shall
have the right to show the Premises and all parts thereof to prospective tenants
and purchasers during normal business hours, provided Landlord shall comply with
Tenant's security requirements, not unreasonably interfere with Tenant's
business and furnish at least 24 hours advance written notice to Tenant before
showing the Premises.
2.4 Use. Tenant shall use the Premises solely for the Permitted Use
---
and for no other purpose whatsoever. Tenant shall not use the Premises or permit
anything to be done in or about the Premises which will in any way materially
conflict with any law, statute, ordinance or governmental rule or regulation now
in force or which may hereafter be enacted or promulgated.
2.5 Tenant's Operation.
2.5.1 General Conduct. In regard to its use and occupancy of the
---------------
Premises, Tenant will at its expense: (a) comply in all material respects
with all laws, ordinances, rules and regulations of governmental
authorities and all recommendations of the Fire Underwriters Rating Bureau
and insurers now or hereafter in effect and, in no event fail to comply
with any laws which impose any civil or criminal liability on Landlord; (b)
conduct its business in all respects in a dignified manner in accordance
with high standards of operation consistent with the quality of operation
of similar properties within Northern New Jersey; (c) not use or permit the
use of any portion of the Premises for any unlawful purpose; and (d) not
place a load upon any floor which exceeds the floor load which the floor
was designed to carry or which is allowed by law.
2.5.2 Utility Services. Tenant shall, at its own cost and expense,
----------------
arrange for or provide utility connections and service to the Premises and
shall pay all utility meter, connection and service charges allocable to
the Term, including those for gas, sewer, electricity, water and standby
sprinkler and any deposits required by utility suppliers. Tenant's use of
electric energy in the Premises shall not at any time exceed the capacity
of any of the electrical conductors and equipment serving the Premises. It
is the intention of the parties that Tenant will pay in full the costs and
charges of all utilities and services directly or indirectly charged or
billed in connection with the Premises during the Term so that the Base
Rent provided herein shall be absolutely net to Landlord, except as
expressly provided herein or in the Agreement.
3
<PAGE>
2.6 Right of Entry.
--------------
2.6.1 Inspection. Landlord, its employees and agents shall have
----------
the right to enter the Premises at all reasonable times during normal
business hours upon at least 24 hours advance written notice, and at
any time without notice in case of an emergency, for the purpose of
examining or inspecting the same, showing the same to prospective
mortgagees, making such alterations, repairs, improvements or
additions to the Premises as Landlord may deem necessary or desirable.
2.6.2 Remediation. Landlord and its agents, contractors and
-----------
sub-contractors shall be entitled to enter the Premises from time to
time for the purpose of effecting any remediation required to comply
with the Administrative Consent Order or other Remedial Orders.
Landlord shall provide reasonable advance notice to Tenant each time
it or any of its agents, contractors or sub-contractors proposes to
enter the Premises to conduct remediation activities. Landlord and
Tenant shall cooperate in the scheduling of all remediation activities
to avoid undue interference with access by Tenant to the Premises or
disruption to Tenant's business. If any remediation activities are
expected to substantially interfere with all access to the Premises or
prevent Tenant from conducting substantially all of its business for a
period in excess of seven consecutive days in any calendar year,
Landlord shall provide not less than 90 days advance written notice to
Tenant. If any interference or disruption exceeds seven consecutive
days, Landlord shall be liable to Tenant for all damages suffered
after such seven consecutive day period in consequence of the
disruption.
2.7 Sublease and Assignment. Tenant may not sublet all or any part
-----------------------
of the Premises or assign its interest in this lease without Landlord's consent.
Upon Tenant's notice to Landlord of any such proposed subletting or assignment,
Landlord shall not unreasonably withhold, delay or condition its consent to such
sublease or assignment if Tenant's business will continue to be conducted at the
Premises after such sublease or assignment. If this lease be assigned or if the
Premises or any part thereof be sublet to or occupied by anybody other than
Tenant, Landlord may collect rent from the assignee, sublessee or occupant and
apply the net amount collected to the Rent payable hereunder. Notwithstanding
any such assignment or subletting, the Tenant named herein shall remain
primarily liable for the payment of Rent reserved hereunder and for the
performance of all obligations imposed upon Tenant by this lease with respect to
the Term.
2.8 Surrender. Tenant will surrender possession of the Premises and
---------
remove all goods and chattels and other personal property in the possession of
Tenant, by whomsoever owned, at the end of the Term or at such other time as
Landlord may be entitled to re-enter and take possession of the Premises
pursuant to any provision of this lease, and shall leave the Premises in as good
order and condition as they were at the beginning of the Term, ordinary wear and
tear and damage by the elements and by casualty excepted. In default of such
surrender of possession and removal of goods and chattels, Tenant will pay to
Landlord 150% of the monthly installments of Annual Base Rent together with any
Additional Rent reserved by the terms of this lease for such period as Tenant
holds over in possession of the Premises. If Tenant fails to remove all goods
and chattels and other personal property, by whomsoever owned, at the end of the
Term or at such other time as Landlord may be entitled to re-enter and take
possession of the Premises pursuant to any provision of this lease, Tenant
hereby irrevocably makes, constitutes and appoints Landlord as the agent and
attorney-in-fact of Tenant to remove all goods and chattels and other personal
property, by whomsoever owned, from the Premises to a place of storage, such
moving and storage to be at the sole cost and expense of Tenant. Tenant
covenants and agrees to pay to Landlord all reasonable expenses which Landlord
incurs for the removal and storage of all such goods and chattels.
Alternatively or additionally, at the option of Landlord, Tenant shall be deemed
to have abandoned any or all of such goods, chattels and other personal property
and all or any portion thereof may be disposed of at Tenant's sole cost and
expense, in any manner selected by Landlord. No act or thing done by Landlord
shall be deemed an acceptance of
4
<PAGE>
the surrender of the Premises unless Landlord shall execute a written release of
Tenant. Tenant's liability hereunder shall not be terminated by the execution by
Landlord of a new lease of the Premises.
2.9 Quiet Enjoyment. Landlord covenants that Tenant, on paying the
---------------
Rent and performing its obligations under this lease, shall and may peaceably
and quietly have, hold and enjoy the Premises for the Term, subject to the
provisions of this lease.
2.10 Performance of Tenant's Obligations. Tenant covenants and agrees
-----------------------------------
to perform all obligations herein expressed on its part to be performed, and to
promptly, upon receipt of written notice specifying the action desired by
Landlord in connection with any such obligation (excluding the covenant to pay
Rent which shall be complied with without prior notice), comply with such
notice. If Tenant shall not commence and proceed diligently to comply with such
notice to the reasonable satisfaction of Landlord within 30 days after delivery
thereof, except in the event of an emergency, in which event compliance shall
commence forthwith, Landlord may (but shall have no obligation to do so) enter
upon the Premises and do the things specified in said notice. Landlord shall
have no liability to Tenant for any loss or damages resulting in any way from
such action by Landlord, and Tenant agrees to pay promptly upon demand any
reasonable expense incurred by Landlord in taking such action.
3. RENT PROVISIONS.
3.1 Rent. Tenant covenants and agrees to pay to Landlord, as rental
----
for the Premises, the Base Rent and any and all Additional Rent not otherwise
payable directly to third parties in accordance with the various sections of
this lease. Annual Base Rent shall be payable in equal monthly installments in
advance on the Commencement Date and on the first day of each calendar month
thereafter during the Term. Additional Rent payable by Tenant shall include the
following charges allocable to the Term:
(a) all Taxes and all utility charges, costs and fees; and
(b) all premiums on insurance policies required to be maintained by
Tenant on, or in connection with the use of, the Premises
pursuant to this lease; and
(c) all costs and expenses of maintaining, repairing and operating
the Premises; and
(d) except as expressly provided herein or in the Agreement, all
other expenses and charges which, from the Commencement Date
until the end of the Term, shall arise, be levied, assessed or
imposed upon or against the Premises as an incident of the
ownership thereof and which are the kind customarily paid by
owners of land and buildings by reason of such ownership,
including the full cost of complying with all laws and
regulations, and the cost of all repairs required to maintain the
Premises in good repair and condition and to comply with all
applicable provisions of law, it being the intention hereof
that, from the date hereof until the end of the Term of this
lease, Tenant shall be chargeable with and shall pay all such
above sums which an owner of the Premises would pay.
3.2 Apportionment of Taxes and Other Additional Rent. All Taxes,
------------------------------------------------
sewer and water charges and other governmental charges imposed against or levied
upon the Premises shall be apportioned as between Landlord and Tenant at the
Commencement Date and the Termination Date. If single Tax bills attributable to
a larger lot of which the Premises are only a part are submitted during the Term
by the municipal or other authorities having jurisdiction, Landlord shall remit
payments to such authorities and Tenant shall be responsible for (a) that part
of the land portion of such Tax bills determined by multiplying such land
portion by a fraction, the numerator being the total square footage of the land
comprising the
5
<PAGE>
Premises and the denominator being the total square footage of the land
comprising the entire lot, plus (b) the amount of Taxes attributable on such Tax
bills to the buildings and improvements located within the entire lot multiplied
by the percentage ratio of building floor space in the Premises to the total
building floor space in the entire lot, which ratio the parties agree for the
purpose of this lease is 100% ("Tenant's Percentage Share"), plus (c) Tenant's
-------------------------
Percentage Share of any bills for general or special assessments. In the event
of a dispute regarding the amount of Taxes attributable to buildings and
improvements, the parties agree that the attribution contained in the records of
the municipal tax assessor shall control. The allocation of Taxes hereunder
shall be done on a tax lot by tax lot basis. Each of the items payable as
Additional Rent to third persons shall be paid by Tenant on or before the date
when each becomes due. If the Landlord collects governmental charges hereunder,
Landlord shall pay the charges to the applicable entity and, at Tenant's
request, it shall provide Tenant with proof of payment to the taxing or other
governmental authority as the case may be. Landlord agrees to elect to pay any
future assessments which may be levied against the Premises in the maximum
number of installments permitted by law. Tenant shall furnish to Landlord,
within 30 days after the date upon which any charge is payable by Tenant as
hereinabove provided, copies of official receipts of the appropriate taxing or
governmental authority, or other proofs satisfactory to Landlord, evidencing the
payment of any Taxes or such other payment obligations of Tenant hereunder. If
Tenant shall fail to make any payment or do any act required of it by any
provision of this lease, Landlord may make such payment or do such act and the
amount of such payment, or the cost of doing such act, together with interest
thereon at an annual rate equal to the Default Rate shall be Additional Rent
payable by Tenant upon demand by Landlord. The making of any such payment or
the doing of any such act by Landlord shall not constitute a waiver by Landlord
of any right or remedy provided by this lease upon Tenant's default in the
making of such payment or the doing of such act. Tenant shall have the right to
contest or review by appropriate proceedings or in any other manner permitted by
law, at Tenant's sole cost and expense, in Tenant's name and/or in Landlord's
name (whenever necessary), any Taxes (including the lowering of any assessed
valuation) or any legal requirements relating to the Premises, and Landlord
shall, without expense or charge to it, cooperate with Tenant and execute any
documents or pleadings required for such purposes. If required by Landlord,
Tenant shall furnish a surety company bond or other security reasonably
satisfactory to Landlord, against any liens by reason of such contest. The
aforesaid contest by Tenant may include appeals from any judgments, decrees or
orders until a final, nonappealable determination shall be made by a court or
governmental department or authority having jurisdiction in the matter.
3.3 No Setoff. Tenant covenants to pay all Rent when due and
---------
payable, without any setoff, recoupment, deduction or demand whatsoever. Any
monies paid or expenses incurred by Landlord to correct defaults in any of
Tenant's obligations hereunder shall be payable to Landlord as Additional Rent.
Any Additional Rent payable to Landlord as provided for in this lease shall
become due with the next installment of Annual Base Rent due after Tenant's
receipt of notice of the Additional Rent from Landlord, or on demand if so
stated in Landlord's notice. Rent shall be paid or delivered to Landlord at
Landlord's Notice Address unless otherwise directed by Landlord. Neither the
receipt and acceptance by Landlord of any Annual Base Rent or Additional Rent
with knowledge of Tenant's default under any covenant or condition of this
lease, nor the acceptance of any such payment made subject to conditions imposed
by Tenant, whether under a restrictive endorsement, tendered as payment in full
or otherwise, shall be deemed a waiver of such default.
3.4 Late Charges; Interest on Late Payments. Without limiting any
---------------------------------------
other right of Landlord hereunder, there shall be due and owing from Tenant a
late charge and an interest charge on any Annual Base Rent and Additional Rent
provided for hereunder which is not paid by Tenant when due. The late charge
shall be equal to 3% of any amount not paid when due and the interest charge
shall be calculated at the Default Rate, each such calculation to be made from
the date when due. Both charges shall be payable on demand of Landlord with
respect to any Annual Base Rent not received by the 10th day of each month and
with respect to any other Additional Rent not received within 10 days after its
due date.
4. TENANT AND LANDLORD WORK PROVISIONS.
6
<PAGE>
4.1 Landlord's Work. Landlord shall deliver the Premises on the
---------------
Commencement Date in the condition contemplated by the Agreement.
4.2 Tenant Work and Repairs. Tenant shall keep and maintain, or
-----------------------
cause to be kept and maintained, the buildings and other improvements now or in
the future constructed on the Premises in good repair and condition. To fulfill
the foregoing obligation and its other covenants under this lease, including
Section 4.8, Tenant shall make or cause to be made all reasonably required
repairs and replacements of every kind and character, interior and exterior,
structural and nonstructural, ordinary and extraordinary, including the roof,
walls, plumbing, heating, ventilation, air conditioning, electrical equipment
and other systems on or supplying the Premises, lights and lighting, all glass
including plate glass, stanchions and fences, roadways (other than public
streets), sidewalks, parking lots and other paved areas, and such other public
areas the maintenance and repair of which public areas are the responsibility of
the property owner by law. Tenant will not call upon Landlord, during the Term
of this lease, for the making of any repairs, replacements, alterations or other
work whatsoever. All Tenant's Work, shall (a) be performed in a good and
workmanlike manner, and (b) be at least substantially equal in quality and
usefulness to the original work.
4.3 No Liens. If any mechanics' or construction lien shall at any
--------
time be filed against Landlord's or Tenant's interest in any part of the
Premises by reason of work, labor, services or materials performed directly or
indirectly by, through or under or furnished directly or indirectly to Tenant or
to anyone holding the Premises through or under Tenant, Tenant shall forthwith
cause the same to be discharged of record or bonded to the reasonable
satisfaction of Landlord. If Tenant shall fail to cause the lien to be so
discharged or bonded after being notified of the filing thereof, then in
addition to any of its other rights or remedies Landlord may discharge the same
by paying the amount claimed to be due, and the amount so paid by Landlord
together with interest thereon at the Default Rate and all costs and expenses,
including reasonable attorneys' fees, incurred by Landlord in procuring the
discharge of such lien shall be due and payable by Tenant to Landlord as
Additional Rent upon demand of Landlord. Landlord's consent to or acquiescence
in any Tenant's Work shall not constitute an approval by Landlord of Tenant's
contracts for such work.
4.4 Trade Fixtures. All trade fixtures and apparatus (as
--------------
distinguished from leasehold improvements) owned by the Tenant and installed in
the Premises shall remain the property of Tenant and shall be removable at the
expiration of the Term, provided Tenant repairs and restores any damage to the
Premises relating to such installation or removal. In no event shall Tenant be
responsible for restoration of Tenant's Work or for repairing floor, wall or
ceiling finishes.
4.5 Tenant Alterations.
------------------
4.5.1 General. The Tenant shall have the right to make
-------
improvements, alterations and additions to the Premises so long as it
gives Landlord at least 30 days prior written notice thereof and
obtains Landlord's consent and otherwise complies with this section
4.5. No consent by Landlord shall be required if the cost of the work
is less than $175,000 in any instance or series of related instances.
The cost of such improvements, alterations or additions shall be the
sole responsibility of the Tenant. Tenant may, at its cost and
expense, paint or decorate any part of the interior of the Premises.
Any improvements, alterations or additions to the Premises shall upon
their completion become part of the Premises and the property of the
Landlord and shall be surrendered with the Premises upon termination
of this lease without any compensation being due therefor by Landlord.
However, Tenant shall be entitled to remove any trade fixtures or
other alterations or additions, so long as it repairs any damage to
the improvements on the termination of this lease. If Tenant plans to
make any improvements, alterations or additions to the Premises that
are not consistent with the present use or reasonable continuing use
of the Premises and which is a Permitted Use,
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Landlord may, prior to the commencement of an improvement, alteration
or addition, give notice to Tenant that Landlord may require Tenant to
remove any such improvement, alteration or addition at the end of the
Term and require Tenant to restore the Premises to its condition
immediately before the improvement, alteration or addition was made,
and require Tenant to repair any damages such improvement, alteration,
or addition may have caused. Landlord's consent where required in
this section 4.5 shall not be unreasonably withheld, delayed or
conditioned.
4.5.2 General Standards. Whenever Tenant makes any alterations
-----------------
or repairs or does any other Tenant's Work in, to, on or about the
Premises as provided for in this lease:
(a) Tenant shall do the work in a good and workmanlike
manner and in compliance with all applicable laws, ordinances and
codes, and all applicable governmental rules, regulations and
requirements, and in accordance with the standards, if any, of the
Board of Fire Underwriters or other organization exercising the
functions of a board of fire underwriters whose jurisdiction includes
the Premises;
(b) Tenant will pay for all work promptly and in a manner
consistent with good business practices and Tenant will, prior to the
commencement thereof, provide Landlord with reasonable assurances of
Tenant's ability to pay for Tenant's work and in the absence of such
proof Tenant shall provide payment and performance bonds in form and
substance reasonably satisfactory to Landlord covering such work;
(c) before commencing any work Tenant shall notify Landlord
of its intention to do so, and shall (i) obtain, provide Landlord with
copies of all permits and authorizations therefor that may be required
by law for doing the work; and (ii) execute, acknowledge and deliver
to Landlord in a form reasonably approved by Landlord an agreement
under which Tenant shall indemnify Landlord against any claims arising
from the work, including the removal of any lien filed against the
Premises, or Landlord's or Tenant's interest therein, or the threat or
notice of any claim, as a result of such work;
(d) the work shall be commenced as promptly as is
practicable under then existing circumstances and once commenced shall
be pursued diligently to completion, subject to delays arising out of
causes beyond the reasonable control of Tenant, and upon completion
Tenant shall deliver to Landlord a copy of "as built" plans;
(e) the casualty and comprehensive general liability
insurance provided for in section 5 shall be extended, if necessary,
to apply to the work during the course of construction and after
completion, and a certificate naming Landlord as additional insured
shall be provided to Landlord;
(f) Tenant shall carry or cause its contractors, if any, to
carry worker's compensation insurance as required by law in connection
with the work and provide certificates thereof to Landlord prior to
the commencement of any work;
(g) Tenant shall at all times maintain in full force and
effect all permits and authorization required for such work and obtain
an official final certificate of occupancy or amended certificate of
occupancy upon completion of the work in each instance if, under local
practice, such certificates are issued by a governmental department or
officer having jurisdiction; and
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(h) thereafter during the Term, Tenant shall bear the
entire risk of loss, repair, replacement and compliance with law
responsibilities for such alterations.
4.6 Casualty Loss. If any building or any other improvement on the
-------------
Premises or any part thereof shall be damaged or destroyed by fire, explosion,
lightning, vandalism or by any other casualty or cause ("Casualty"), Tenant
--------
shall (a) give prompt notice thereof to Landlord and (b) at Tenant's own cost
and expense, and whether or not insurance proceeds shall be sufficient for the
purpose, cause to be repaired, restored, replaced and/or rebuilt such building
or other improvement to substantially the same condition and character as
existed immediately prior to the Casualty; provided, however, that Tenant may
make such changes as it may elect in conformance with and subject to the
provisions of this lease, provided the building shall, in the reasonable opinion
of Landlord after the completion of such changes, have substantially the same
commercial utility and value as it had prior to the Casualty. Such restoration,
repair, replacement, rebuilding or alteration shall be commenced promptly and
prosecuted with reasonable diligence. All insurance proceeds payable on account
of any such Casualty, less the actual cost, fees and expenses, if any, incurred
in connection with adjustment of the loss ("Net Insurance Proceeds") shall be
----------------------
payable to a bank, trust company or other entity as shall be designated by
Landlord, to hold as trustee (the "Insurance Trustee") for disposition
-----------------
hereunder. Provided that Tenant complies with the requirements of section
4.6(a) and (b), Tenant shall have the right to adjust all losses, provided that,
with the respect to any losses exceeding $175,000, the Landlord's consent shall
be obtained. All Net Insurance Proceeds shall be applied to the payment of the
cost of the demolition, restoration, repair, replacement, rebuilding or
alteration, including the costs of temporary repairs or for the protection of
property pending the completion of permanent restoration, repairs, replacements,
rebuilding or alterations (all of which temporary and permanent repairs,
replacement, rebuilding or alterations are hereinafter collectively referred to
as "Restoration"), and shall be paid out from time to time as Restoration
-----------
progresses upon the written request of Tenant which shall be accompanied by the
following:
(a) A certificate signed by Tenant, dated not more than 30
days prior to such request, and if the Restoration cost is expected to
exceed $175,000, signed by a licensed architect, setting forth the
following:
(i) That the sum then requested either has been paid by
Tenant or is justly due to contractors, subcontractors,
materialmen, engineers, architects or other persons who have
rendered services or furnished materials for the Restoration
therein specified, the names of such persons, a brief description
of such services and materials, the several amounts so paid or
due to each of said persons in respect thereof, that no part of
such expenditures has been made the basis, in any previous or
then pending request, for the withdrawal of insurance money or
has been made out of the proceeds of insurance received by
Tenant, and that the sum then requested does not exceed the value
of the services and materials described in the certificate.
Tenant shall, from time to time, upon request provide proof of
payment of all sums previously requisitioned by Tenant;
(ii) That except for the amount, if any, stated pursuant to
the foregoing clause (a) (i) in such certificate to be due for
services or materials, there is no outstanding indebtedness known
to the persons signing such certificate, after due inquiry, which
is then due for labor, wages, materials, supplies or services in
connection with such Restoration which, if unpaid, might become
the basis of a vendor's, mechanic's, laborer's, contractor's or
materialman's statutory or similar construction lien upon such
Restoration, the Premises or any part thereof or upon Landlord's
or Tenant's interest therein; and
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(iii) That the cost, as estimated by the persons signing
such certificate, of the Restoration required to be done
subsequent to the date of such certificate in order to complete
the same, is not expected to exceed the insurance money, plus any
amount which either has been deposited by Tenant to defray such
cost and remaining in the hands of the Insurance Trustee after
payment of the sum requested in such certificate, plus the
unexpended or undisbursed portion of any amount which has been
committed in writing to Tenant by a third party lender for
purposes of Restoration. Tenant will provide Landlord with
reasonable assurances of Tenant's ability to pay for Tenant's
work and in the absence of such proof Tenant shall provide
payment and performance bonds in form and substance reasonably
satisfactory to Landlord covering such work
(b) Evidence reasonably satisfactory to Landlord to the
effect that there has not been filed with respect to the Landlord's
interest in the Premises or any part thereof any construction,
vendor's, mechanic's, laborer's, materialman's, contractor's or other
lien, or any notice thereof, which has not been discharged of record
or bonded, except such as will be discharged by or concurrently with
the payment of the amount then requested. Upon compliance with the
foregoing provisions of this section, the Insurance Trustee shall, out
of such remaining Net Insurance Proceeds, pay or cause to be paid to
Tenant or the persons named in such certificate the respective amounts
stated therein to have been paid by Tenant or to be due to such other
persons, as the case may be. If the Net Insurance Proceeds at the
time held by the Insurance Trustee shall be insufficient to pay the
entire cost of Restoration, Tenant will pay the deficiency or provide
a lender's commitment to fund the deficiency as needed. Upon receipt
by Landlord of satisfactory evidence required by clauses (a) and (b)
of this section that the Restoration has been completed and paid for
in full, that all requirements of this lease relating to the
Restoration have been complied with and that there are no liens of the
character referred to herein, any balance of the Net Insurance
Proceeds at the time held by the Insurance Trustee shall first be paid
to Tenant to the extent of amounts deposited by Tenant pursuant to
clause (a)(iii) above, with any balance then paid to Landlord.
4.7 No Abatement of Rent. No destruction of or damage to the
--------------------
Premises or any part thereof by fire or any other casualty shall permit Tenant
to surrender this lease or shall relieve Tenant from its obligations to pay all
Base Rent and Additional Rent under this lease or from any of its other
obligations under this lease. Tenant waives any rights now or hereafter
conferred upon it by statute or otherwise to quit or surrender this lease or the
Premises or any part thereof, or to any suspension, diminution, abatement or
reduction of Rent on account of any such destruction or damage. Each party
expressly waives any rights now or hereafter conferred upon it pursuant to
N.J.S.A. 46:8-6, 46:8-7, or otherwise to quit or surrender this lease or the
Premises or any part thereof, or to terminate this lease, or to any suspension,
diminution, abatement or reduction of rent, on account of any such damage or
destruction. If there is a Casualty during the last two years of the Term, the
Tenant may terminate this lease, provided that Tenant's notice of termination
shall be accompanied by an assignment of the proceeds of the casualty insurance
required by section 5.1 relating to the Premises.
4.8 Compliance with Laws. Tenant shall suffer no waste or injury in
--------------------
or about the Premises and shall comply with or cause to be complied with all
laws applicable to the use and occupancy of the land, buildings and other
improvements upon the Premises, including the making of any structural or other
repairs or alterations that may be required in order to comply with said laws.
In addition, Tenant shall effect or cause to be effected the correction,
prevention and abatement of nuisances, violations or other grievances in, upon
or connected with the Premises, including the land, buildings and other
improvements thereon, and shall also promptly comply with or cause to be
complied with all rules, orders, requirements
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and regulations of the Board of Fire Underwriters or persons exercising such
powers and all insurers of the Premises.
5. INSURANCE PROVISIONS.
5.1 Casualty Insurance. Tenant shall keep the buildings and other
------------------
insurable improvements on the Premises insured under permanent policies and/or
"builder's risk" policies, as the case may be, against loss or damage by fire
and risks embraced within "all risk coverage" available in the locality where
the Premises are located, in an amount sufficient to prevent Landlord or Tenant
from being a coinsurer under the applicable policy, but in any event in an
amount not less than 100% of the full insurance value. The term "full insurance
value" as used herein means the actual replacement cost (excluding foundation,
footings and excavation costs) as defined in the standard "replacement cost"
provision or endorsement. Tenant shall also maintain in effect boiler explosion
and casualty insurance and plate glass insurance in amounts reasonably
acceptable to the Landlord and rental insurance covering at least one year's
Rent.
5.2 Liability Insurance. Tenant shall obtain and maintain
-------------------
comprehensive general liability insurance with coverage of not less than
$1,000,000.00 combined single limit, for each occurrence and in the aggregate,
for bodily injury to or death of persons, and for property damage. Tenant
shall also obtain and maintain independent contractors and blanket contractual
liability endorsements, as well as such other and additional insurance and
endorsements as reasonably prudent owners of comparable facilities generally
maintain and as reasonably requested from time to time by Landlord.
5.3 Additional Insurance. Landlord and Tenant shall, at the request
--------------------
of Landlord, consult with each other as to the scope of coverage and adequacy of
the policy limits of the insurance required by the provisions of this section 5
from time to time during the Term and Tenant shall increase the scope of
coverage and/or the policy limits to the extent reasonably required by Landlord
after such review. Tenant will obtain additional coverage and in such amounts
as reasonably required by Landlord provided that such coverage (and in such
amounts) is customarily obtained by owners and operators of similar properties.
5.4 Certificates. On or prior to the date hereof or after any
------------
request by Landlord and at least 30 days prior to the expiration date of any
insurance policies, Tenant shall deliver to Landlord certificates evidencing
that the insurance required by this lease is in effect. Prior to commencement
of construction of any of any alterations or improvements, Tenant shall deliver
to Landlord certificates evidencing the insurance required by sections 4 and 5
is then in effect. All insurance policies shall provide for 30 days advance
notice in writing to Landlord prior to cancellation.
5.5 Endorsements. All such policies shall name Landlord as an
------------
additional insured and as loss payee, as applicable, as its interest under this
lease may appear. All insurance obtained by Tenant shall be deemed "primary"
over any other collectible insurance maintained by Landlord. All policies of
insurance shall be issued by insurers authorized to conduct that type of
insurance business in New Jersey, and having at all times a policyholders rating
of "A" or better and a financial rating of "AAA" or better in the then-current
edition of Best's Insurance Guide. If Tenant shall not comply with this section
and without waiving any Event of Default, Landlord may cause insurance as
aforesaid to be issued, and in that event Tenant agrees to pay the premiums for
such insurance upon Landlord's demand as Additional Rent, together with interest
at the Default Rate until the premium cost is reimbursed to Landlord.
5.6 Indemnity. Tenant shall defend, indemnify and save harmless
---------
Landlord and Landlord's owners, principals, directors, officers,
representatives, agents and employees ("Indemnified Persons") against and from
-------------------
losses, liabilities, obligations, damages, penalties, claims, costs, charges and
expenses (including reasonable attorney's fees) which may be suffered by any
Indemnified Person or asserted by third persons against any Indemnified Person
relating to the Term or any time that Tenant may have been given access to all
of or any portion of the Premises, out of or in connection with any or all of
the following:
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(a) The activities of Tenant or any of its agents, contractors,
subcontractors, servants, employees, assigns, subtenants,
licensees or invitees in or about the Premises;
(b) Any negligent or otherwise wrongful act or omission on the part
of Tenant or any of its agents, contractors, subcontractors,
servants, employees, assigns, subtenants, licensees or invitees;
(c) Any work or thing done in, on or about the Premises by or at the
instance of Tenant or any of its agents, contractors,
subcontractors, servants, employees, assigns, subtenants,
licensees or invitees, including the assertion of any
construction liens or claims relating thereto; and
(d) Any failure on the part of the Tenant to perform or comply with
any of the covenants, agreements, terms, provisions, conditions
or limitations contained in this lease on its part to be
performed or complied with.
If any action or proceeding is brought against any Indemnified Person by reason
of any such claim, upon written notice from any Indemnified Person, Tenant shall
at Tenant's expense resist or defend such action or proceeding by counsel
approved by the Indemnified Person in writing, which approval the Indemnified
Person shall not unreasonably withhold. The provisions of this Section 5.6
shall survive the Termination Date.
5.7 No Liability of Landlord. Except as provided in the Agreement or
------------------------
under section 8 hereof, Landlord, whether as landlord, owner, contractor or in
any other capacity, shall not be liable for any damage or injury which may be
sustained by Tenant or any other person claiming under or through Tenant as a
consequence of the failure, breakage, leakage or obstruction of the water,
plumbing, steam, gas, sewer, waste or soil pipes, roof, drains, leaders,
gutters, valleys, down spouts or the like, or of the electrical, ventilation,
air-conditioning, gas, power, conveyer, refrigeration, sprinkler, heating or
other systems, elevators or hoisting equipment, if any, or any other condition
relating to the Premises; or by reason of the elements; or resulting from acts,
conduct or omissions on the part of Tenant or of Tenant's agents, employees,
guests, licensees, invitees, assignees, subtenants or successors, or on the part
of any other tenant, person or entity.
5.8 Increase in Insurance. Tenant will not do or suffer to be done,
---------------------
or keep or suffer to be kept, anything in, upon or about the Premises which will
contravene Tenant's or Landlord's policies, if any, insuring against loss or
damage by fire or other hazards (including public liability) or which will
prevent Tenant or Landlord from procuring such policies from companies
acceptable to Landlord. If anything done, omitted to be done or suffered by
Tenant to be done or kept in, upon or about the Premises shall cause the rate of
fire or other insurance on the Premises to be increased beyond the minimum rate
from time to time applicable thereto for the customary uses thereof, Tenant will
pay the amount of any such increase as Additional Rent.
5.9 Waivers of Subrogation. Tenant shall include in each of its
----------------------
policies insuring against loss, damage or destruction by fire or other insured
casualty either (a) a waiver of the insuror's right of subrogation against the
other party (and, in case of Tenant's policies, against any additional insured)
or (b) should such waiver be unobtainable, (i) an express agreement that such
policy shall not be invalidated if the insured waives or has waived before the
casualty the right of recovery against any party responsible for a covered
casualty or (ii) any other form of permission from the insuror for the release
of such responsible party and, in such event the insured shall so waive its
right of recovery or release the responsible party. If such waiver, agreement
or permission shall not be obtainable without additional charge or at all, the
insured party shall so notify the other party promptly. If such waiver,
agreement or permission shall be obtainable at additional charge, then the
Tenant agrees to pay such charge. The provisions of this paragraph shall not
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by implication require Landlord to purchase any insurance. If Landlord
purchases insurance of the type described in this Section 5.9, the provisions of
this section shall apply.
6. CONDEMNATION PROVISIONS.
6.1 Awards to Landlord. If the Premises shall be acquired, taken or
------------------
condemned by any authority having the power of eminent domain or conveyed under
a threat of eminent domain (a "Taking"), Landlord shall be entitled to collect
------
the entire award that may be made as a result of the Taking, with the award to
be payable to Landlord pursuant to the following provisions of this section 6.
Tenant agrees to execute any and all further documents that may be required in
order to facilitate collection of the award.
6.2 Total Taking. If at any time during the Term of this lease there
------------
shall be a Taking of the whole of the Premises, or of such major part that the
remaining portion of the Premises is not capable, in Tenant's opinion, of being
used for the Permitted Use (a "Total Taking"), this lease shall terminate and
------------
expire on the date of the Taking and all Base Rent and Additional Rent payable
by Tenant under this lease shall be apportioned and paid to the date of the
Total Taking. In the event of a Total Taking, Landlord shall have the exclusive
right to the proceeds of any award.
6.3 Partial Takings. If at any time during the Term there shall be a
---------------
Taking of the Premises other than a Total Taking (a "Partial Taking"), this
--------------
lease shall continue in full force and effect as to the Premises not Taken.
Tenant shall repair or replace the building or other improvements affected by
the Partial Taking, and the portion of any award relating to the value of any
Land so taken which shall, for purposes of such valuation, be considered vacant,
unencumbered and unimproved, shall belong to Landlord and the balance of the
award shall be payable to the Insurance Trustee and shall be applied to the cost
of any required Restoration of the buildings and other improvements on the
Premises, substantially in the same manner and subject to the same conditions as
apply to the use of Casualty insurance proceeds. If the costs of Restoration
shall exceed the net award available to Tenant, Tenant shall pay the deficiency.
Any balance remaining in the hands of the Insurance Trustee after payment of the
costs of Restoration as aforementioned, or if Tenant does not elect to apply the
award to Restoration as set forth above, the entire net award of the Partial
Taking, shall be paid to Landlord as if a Total Taking had occurred.
6.4 Adjustment of Rent. In the event of a Partial Taking, this lease
------------------
shall continue but the Base Rent shall be recalculated from the date of the
Partial Taking by multiplying the Base Rent by a fraction, the numerator of
which is equal to the fair market value of the Premises immediately after the
Taking and the denominator is the fair market value of the Premises immediately
prior to the Taking. Any Base Rent becoming due and payable hereunder between
the date of any the Partial Taking and the date of determination of the amount
of the Rent reduction, if any, to be made in respect thereof shall be paid at
the rate theretofore payable hereunder, or the reduced rate, if any, which
Landlord has offered or stated to be the reduced Rent rate under this section.
6.5 Temporary Taking. If the temporary use of the whole or any part
----------------
of the Premises shall be taken by any lawful power or authority, by the exercise
of the right of condemnation or eminent domain, or by agreement between Tenant
and those authorized to exercise such right, Tenant shall give prompt notice
thereof to Landlord, the Term of this lease shall not be reduced or affected in
any way, Tenant shall continue to pay in full the Base Rent and Additional Rent
herein reserved, without reduction or abatement, and Tenant shall be entitled to
receive for itself any award or payment made for such use.
6.6 Definitions. The terms "Taking," "condemnation" or similar terms
-----------
as herein used shall mean the acquisition by a public or quasi-public authority
having the right to take the same by condemnation or by power of eminent domain
or otherwise, regardless of whether such taking is the result of actual
condemnation or voluntary conveyance.
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7. DEFAULT AND REMEDIES.
7.1 Events of Default. If before or during the Term there shall
-----------------
occur any of the following events ("Events of Default"):
-----------------
(a) if Tenant shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its
debts as they become due, or shall file a petition in bankruptcy,
or shall have an order for relief entered against it or be
adjudicated a bankrupt or insolvent, or shall file a petition
seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
any law, or shall file an answer admitting or not contesting the
material allegations of a petition against it in any such
proceeding, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of Tenant or
any material part of its assets; or
(b) if, within 60 days after the commencement of any proceeding
against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any law, such proceeding shall not have been
dismissed, or if, within 60 days after the appointment without
the consent or acquiescence of Tenant of any trustee, receiver or
liquidator of Tenant, or of any material part of its assets, the
appointment shall not have been vacated; or
(c) if the interest of Tenant in the Premises shall be sold under
execution or other legal process; or
(d) if Tenant shall fail to pay any installment of Annual Base Rent
or Additional Rent on its due date and the failure continues for
10 days after Landlord gives Tenant written notice thereof ; or
(e) if Tenant shall fail to perform or observe any requirement,
obligation, agreement, covenant or condition of this lease, other
than the payment of any installment of Annual Base Rent or
Additional Rent, and the failure shall continue for 30 days after
Landlord gives Tenant written notice thereof (if the failure is
of a nature such that it cannot be remedied within 30 days, then
there shall not be an Event of Default if Tenant diligently
commences to remedy the failure within the 30-day period and
prosecutes the same to completion with diligence, and in any
event within 90 days);
THEN AT ANY TIME FOLLOWING ANY OF SUCH EVENTS OF DEFAULT, Landlord, without
waiving any other rights herein available to Landlord at law or in equity, may
either (i) give Tenant notice of termination of this lease or (ii) without
terminating this lease, give Tenant notice of Landlord's intention to re-enter
and take possession of the Premises. The giving of either of such notices to
Tenant shall terminate Tenant's right to possession of the Premises under this
lease, without prejudice to the rights of Landlord to exercise all other
available legal remedies and without discharging Tenant from any of its
liabilities hereunder.
7.2 Damages. If Landlord elects to terminate Tenant's right to
-------
possession of the Premises under section 7.1 following an Event of Default,
Landlord may re-enter and take possession of the Premises, with or without legal
process, whether by force or otherwise, and Tenant shell be obligated to pay to
Landlord as damages upon demand, and Landlord shall be entitled to recover of
and from Tenant, (a) all Annual Base Rent and Additional Rent payable to the
date of termination of Tenant's right to possession, plus (b) the cost to
Landlord of all reasonable legal and other expenses and costs (including
attorney's fees) incurred by Landlord in obtaining possession of the Premises,
in enforcing any provision of this lease, in preserving the Premises during any
period of vacancy, in making any repairs as Landlord may reasonably
14
<PAGE>
deem necessary or advisable in operating and maintaining the Premises, and in
reletting the Premises, including all reasonable brokerage commissions therefor,
plus (c) either (i) in the event of Landlord's giving notice of its intention
to re-enter and take possession without terminating this lease, damages (payable
in monthly installments, in advance, on the first day of each calendar month
following the giving of such notice and continuing until the date originally
fixed herein for the expiration of the then current Term of this lease) in
amounts equal to the Base Rent and Additional Rent herein reserved, less the net
amount of rent, if any, which may be collected and received by Landlord from the
Premises for and during the balance of the Term; Landlord may relet the
Premises, or any part or parts thereof (but in no event shall Landlord be
obligated to do so), for a term or terms which may at Landlord's option be less
than or exceed the period constituting the balance of the Term hereof, and
Landlord may grant concessions or charge a rental in excess of that provided in
this lease (Tenant shall have no right to any excess); or (ii) in the event of
Landlord's giving notice of termination of this lease, an award for liquidated
damages in an amount which, at the time of the termination, is equal to the
excess, if any, of the installments of Base Rent and the aggregate of all sums
payable hereunder as Additional Rent (for such purpose considering the annual
amount of Additional Rent to equal the amount thereof payable for the 12 months
immediately preceding the termination, or the annualized portion of Additional
Rent payable from the Commencement Date to the date of the termination if this
lease then shall have been in effect for less than 12 months) reserved hereunder
for the period which would otherwise have constituted the unexpired portion of
the then current Term of this lease, plus the value of all other considerations
to be paid or performed by Tenant during such period, over the fair rental value
of the Premises, as of the date of such termination, for such unexpired portion
of the then current Term of this lease, said liquidated damage amount to be
discounted at the then "generic" prime rate of interest as set forth in the most
recently published Wall Street Journal to determine its present value at the
time of the award. If the Entire Premises or any part thereof be relet by
Landlord for the unexpired Term or any part thereof before presentation of proof
of liquidated damages to any court, commission or tribunal, the amount of rent
reserved upon such reletting shall be deemed to be the fair and reasonable
rental value for the part or the whole of the Premises so relet during the term
of the reletting. Prior to Tenant's full payment of any liquidated damages
awarded to Landlord, Tenant shall continue to pay punctually to Landlord all
Base Rent and Additional Rent to the same extent and at the same time as if this
lease had not been terminated and receive full credit for such payments against
the award for liquidated damages. If Landlord shall elect to re-enter and take
possession without terminating this lease, Landlord shall have the right at any
time thereafter to terminate this lease for the previous default, whereupon the
provisions of this subsection with respect to termination will thereafter apply.
7.3 Multiple Actions. Landlord may sue for and collect any amounts
----------------
which may be due pursuant to the provisions of section 7.2 from time to time as
Landlord may elect, but no such suit shall bar or in any way prejudice the
rights of Landlord to enforce the collection of amounts due at any time or times
thereafter by like or similar proceedings. All legal fees and expenses incurred
by Landlord in enforcing its rights under this lease shall be deemed Additional
Rent and due and payable by Tenant upon demand. If Landlord brings any summary
action for dispossession of Tenant for failure to pay Rent, Landlord's
attorney's fees and legal expenses shall be added to and included as part of the
Rent due and owing by Tenant with respect to the periods in default. Tenant
expressly waives service of any notice of intention to re-enter that may be
required by law, and waives any and all rights to recover or regain possession
of the Premises, or to reinstate or to redeem this lease, or other right of
redemption as permitted or provided by or under any law now or hereafter in
force and effect.
7.4 No Remedy Exclusive; No Waiver. No remedy conferred upon or
------------------------------
reserved to Landlord in this lease is intended to be exclusive of any other
remedy herein or by law provided, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law, in equity or by statute. The receipt and acceptance by Landlord of Annual
Base Rent or Additional Rent with knowledge of the default by Tenant in any of
Tenant's obligations under this lease shall not be deemed a waiver by Landlord
of the default. Nothing contained in this lease shall limit or prejudice the
right of Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency an amount equal to the
15
<PAGE>
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater than, equal to, or less than the amount of the loss or
damages referred to above. No waiver by Landlord of any Event of Default or any
default by Tenant in any covenant, agreement or obligation under this lease
shall operate to waive or affect any subsequent Event of Default or default in
any covenant, agreement or obligation hereunder, nor shall any forbearance by
Landlord to enforce a right or remedy upon an Event of Default or any such
default be a waiver of any of its rights and remedies with respect to such or
any subsequent default or in any other manner operate to the prejudice of
Landlord.
8. ENVIRONMENTAL PROVISIONS.
8.1 Additional Definitions. The terms "Environmental Laws,"
---------------------- ------------------
"Hazardous Substances," "Material," "Person," "Release," "Environmental
-------------------- -------- ------ ------- -------------
Approvals," "Governmental Authorities" and "Remedial Orders" defined in Article
- --------- ------------------------ ---------------
IV of the Agreement shall have the same meanings when used in this lease.
Remedial Orders shall include the "Administrative Consent Order" referred to in
----------------------------
section 9.9 hereof.
8.2 Landlord's Responsibility. Landlord shall be and remain in full
-------------------------
compliance with the Remedial Orders and Environmental Laws and otherwise be
fully responsible for the existence and remediation of any Hazardous Substances
affecting the Premises as of the Commencement Date ("Existing Conditions").
-------------------
8.3 Landlord Indemnity. Except for matters for which Tenant is
------------------
responsible pursuant to Section 8.4 below, Landlord hereby agrees to save,
defend with counsel reasonably satisfactory to Tenant, indemnify and hold
harmless Tenant and its principals, officers, directors, trustees, agents and
employees, from and against any and all claims, losses, liabilities, damages and
expenses (including reasonable cleanup costs and attorneys fees arising under
this indemnity) which may arise directly or indirectly from any use or any
Release of Hazardous Substances by Landlord on or under the Premises, and losses
of and claims against Tenant resulting from (i) Landlord's failure to comply
strictly with the provisions of this section 8, with respect to Existing
Conditions, including the Remedial Orders and the Administrative Consent Order
and (ii) any negligence or misconduct by Landlord, its employees, agents or
contractors, including any negligence in carrying out required remediation
activities.
8.4 Tenant's Responsibility. The Premises shall not be used and/or
-----------------------
occupied to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer or process Hazardous Substances, except for the use, in
accordance with law, of such substances as are customary in connection with the
Permitted Use. Tenant shall comply with all applicable Environmental Laws in
connection with its use of the Premises. The Tenant shall not permit during the
Term any intentional or unintentional action or omission of the Tenant or any
other occupant, user and/or operator of the Premises, resulting in the Release
of Hazardous Substances into the waters or onto the lands of the State of New
Jersey, or into the air or the waters outside the jurisdiction of the State of
New Jersey where damage may result to the air, lands, waters, fish, shellfish,
wildlife, biota, air or other resources owned, managed, held in trust or
otherwise controlled by, or within the jurisdiction of, the State of New Jersey.
In addition, Tenant shall be liable for any losses, damages or claims, including
claims arising from personal injury, caused by or resulting from (i) any
excavation activities conducted by Tenant at the Premises, and (ii) any use by
Tenant, its employees or invitees of any water on the Premises, including well
water, ground water or tap water.
8.5 Tenant Indemnity. Tenant hereby agrees to save, defend with
----------------
counsel reasonably satisfactory to Landlord, indemnify and hold harmless
Landlord and its principals, officers, directors, trustees, agents and
employees, from and against any and all claims, losses, liabilities, damages and
expenses (including reasonable cleanup costs and attorneys fees arising under
this indemnity) which may arise directly or indirectly from (i) any use or any
Release by Tenant of Hazardous Substances on or under the Premises, (ii) any
excavation activities undertaken by Tenant at the Premises, (iii) any use by
Tenant, its
16
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employees or invitees of any water on the Premises, including well water, ground
water or tap water, (iii) the negligence or misconduct of Tenant, its employees,
agents or contractors and (iv) losses of and claims against Landlord resulting
from Tenant's failure to comply strictly with the provisions of this section 8,
including claims for personal injury, but in any event only with respect to the
Term of this lease and any other period of possession of the Premises by Tenant.
8.6 ISRA Compliance. In connection with the termination of this
---------------
lease or Tenant's operations hereunder or the change of ownership or other
status of Tenant or other person acting by, through or under Tenant or Landlord,
or the sale of the Premises by Landlord, the Tenant shall obtain ISRA clearance,
which for the purpose of this lease means that Tenant shall either (a) obtain
from the NJDEP a "Letter of Non-Applicability," or (b) submit to and obtain the
---------------------------
approval by the NJDEP of a "Negative Declaration" or (c) obtain the issuance by
--------------------
NJDEP of a "No Further Action Letter" pursuant to ISRA and applicable
------------------------
regulations, guidance and guidelines implementing ISRA ("ISRA Requirements") and
-----------------
the Environmental Requirements. As part of its obligation to obtain either a
"Letter of Non-Applicability," a "Negative Declaration" or a "No Further Action
Letter" ("ISRA Compliance"), Tenant shall prepare and submit to NJDEP a General
---------------
Information Notice and perform and report to NJDEP on, as appropriate, a
Preliminary Site Assessment, a Site Investigation, a Remedial Investigation and
a Remedial Action Workplan. Tenant shall also, as part of its compliance with
ISRA Requirements, obtain and maintain a remediation funding source in form and
amount acceptable to NJDEP. The Tenant agrees not to submit any Remedial Action
Workplan (or its regulatory equivalent) which would return the Premises to the
Landlord at the end of the Term in a condition which includes the presence of
Hazardous Substances which were not Existing Conditions. In any event and
notwithstanding any provision to the contrary herein, with respect to Existing
Conditions the Landlord shall have the sole and exclusive responsibility to
comply at its own cost and expense with any Environmental Laws, including ISRA,
in connection with the Premises, the termination of this lease, any sale or
other change in status of Landlord or Tenant, the cessation of Tenant's
operations on the Premises or in connection with a change in ownership of
Landlord's interest in the Premises.
8.7 Other Laws' Survival. Whenever the terms ISRA and similar terms
--------------------
and regulatory and statutory references are used in this lease, they shall be
deemed to include any similar, predecessor, future or successor regulatory and
statutory references and/or terms under past or future laws as may apply to the
Premises and its use and occupancy under this lease. Landlord's and Tenant's
obligations under this section 8 shall survive the termination of this lease.
9. MISCELLANEOUS.
9.1 Bind and Inure. This lease and the covenants and conditions
--------------
herein contained shall (a) inure to the benefit of and be binding upon Landlord,
its successors and assigns, and (b) inure to the benefit of Tenant and only such
successors or assigns of Tenant whose subletting or assignment has been carried
out in accordance with this lease.
9.2 Notices. All notices from Tenant to Landlord shall be directed
-------
to Landlord's Notice Address. All notices from Landlord to Tenant shall be
directed to Tenant's Notice Address. Either party may designate in writing a
substitute address for notices, and thereafter notices shall be directed to the
substitute address. Every notice shall be deemed to have been given or served at
the time that the same shall be telecopied, hand-delivered, deposited with a
nationwide overnight courier service or deposited in the United States mails, by
registered or certified mail, postage prepaid, return receipt requested, in the
manner aforesaid.
9.3 Broker. Except as disclosed in the Agreement, Landlord and
------
Tenant respectively represent and warrant to each other that no broker has been
involved in connection with the consummation of this lease or the granting of
the purchase option or the put option and that no commission shall be paid to
any broker in consequence of the lease, the purchase option or the put option,
or the exercise of the foregoing
17
<PAGE>
options. Each party agrees to indemnify the other from and against any loss,
damage or expenses (including litigation costs and reasonable attorneys' fees)
by reason of any claim for compensation or commission by any broker based upon
an allegation of relations or negotiations between the claimant and the
indemnitor inconsistent with the representations and warranties herein made.
This representation, warranty and covenant shall survive the Termination Date.
9.4 Integration. This writing is intended by the parties as a final
-----------
expression of their agreement and as a complete and exclusive statement of the
terms thereof, all negotiations, considerations and representations between the
parties having been incorporated herein. No course of prior dealings between
the parties or their affiliates shall be relevant or admissible to supplement,
explain or vary any of the terms of this lease. Acceptance of or acquiescence
in a course of performance rendered under this or any prior agreement between
the parties or their affiliates shall not be relevant or admissible to determine
the meaning of any of the terms of this lease. No representations,
understandings, or agreements have been made or relied upon in the making of
this lease other than those specifically set forth herein. This lease can only
be modified by a writing signed by all of the parties hereto or their duly
authorized agents.
9.5 Authority. If Landlord or Tenant is a corporation, partnership
---------
or limited liability company, the undersigned officer, partner, member or
manager hereby warrants and certifies to the other party that such party is an
entity in good standing and duly organized under the laws of the state of its
organization and is authorized to do business in New Jersey. The undersigned
officer, partner, member or manager hereby further warrants and certifies to the
other party that he or she, as such officer, partner, member or manager is
authorized and empowered to bind the entity to the terms of this lease by his or
her signature thereto.
9.6 Tenant's Purchase Option. Tenant shall have the option to
------------------------
purchase the Premises from Landlord. If the option is exercised on or after the
1st anniversary of the Commencement Date, the purchase price shall be equal to
$281,000.00; if exercised on or after the 2nd anniversary of the Commencement
Date, the purchase price shall be equal to $249,000.00; if exercised on or after
the 3rd anniversary of the Commencement Date, the purchase price shall be equal
to $215,000.00; if exercised on or after the 4th anniversary of the Commencement
Date, the purchase price shall be equal to $178,000.00; if exercised on or after
the 5th anniversary of the Commencement Date, the purchase price shall be equal
to $139,000.00; and if exercised on the 6th anniversary of the Commencement
Date, the purchase price shall be equal to $96,000.00. [Amounts will be
adjusted at the time the Lease is executed in accordance with the letter
agreement annexed hereto as Exhibit C.] Tenant may exercise its option to
purchase the Premises only by delivering to Landlord a written notice of its
intention to exercise the option ("Tenant Exercise Notice") at least 60 days
----------------------
prior to the closing date desired by Tenant. The Tenant Exercise Notice must be
accompanied by an updated Title Report and Survey, together with written notice
of any title objection disclosed thereby or otherwise known to Tenant and which
Tenant believes it is not required to take title "subject to." If Tenant
exercises its option hereunder, Landlord shall deliver insurable title, subject
only to the exceptions as set forth in the Survey and Title Report, not
including any exceptions which Landlord agrees to discharge as set forth in
section 2.2 hereof. Landlord shall take no action after the date hereof which
would create any encumbrance or title question. Notwithstanding Tenant's
exercise of its option hereunder, this lease shall remain in full force and
effect until the closing of title. Tenant may not exercise this option if,
either at the time of the Tenant Exercise Notice or at the time of closing of
title, there exists any Event of Default or any event which would become an
Event of Default after the giving of notice and/or the lapse of time. The
closing of title shall terminate this lease and the date thereof shall be deemed
the Termination Date. TIME IS OF THE ESSENCE WITH RESPECT TO THE GIVING OF THE
TENANT EXERCISE NOTICE HEREUNDER STRICTLY IN ACCORDANCE WITH THE PROVISIONS OF
THIS SECTION 9.6. If this lease shall terminate for any reason prior to Tenant's
exercise of its option to purchase hereunder, the Tenant's option shall also
terminate.
18
<PAGE>
9.7 Landlord's "Put" Option. Landlord shall have the option to
-----------------------
require that Tenant purchase the Premises from Landlord on the 6th anniversary
of the Commencement Date for a purchase price equal to $96,000.00. Landlord may
exercise its option only by delivering to Tenant a written notice of its
exercise of this right ("Landlord Exercise Notice") at least 60 days prior to
------------------------
the Termination Date, accompanied by proof that environmental remediation of the
Premises has been completed to such an extent that Tenant would not have any
material liability for further environmental remediation and the Premises has
been removed from the National Priorities List established under CERCLA. The
Landlord Exercise Notice must be accompanied by an updated Title Report and
Survey showing no changes except for the discharge of the exceptions set forth
in section 2.2 hereof. If Landlord exercises its option hereunder, Landlord
shall deliver insurable title, subject only to the exceptions as set forth in
the Survey and Title Report, not including any exceptions which Landlord agrees
to discharge as set forth in section 2.2 hereof. Landlord shall take no action
after the date hereof which it knows or should know would create any encumbrance
or title question. Notwithstanding Landlord's exercise of its option hereunder,
this lease shall remain in full force and effect until the closing of title.
Landlord may not exercise this option if, either at the time of the Landlord
Exercise Notice or at the time of closing of title, there exists any default by
Landlord hereunder, under any Remedial Orders or under the Agreement. The
closing of title shall be on the Termination Date. TIME IS OF THE ESSENCE WITH
RESPECT TO THE GIVING OF THE LANDLORD EXERCISE NOTICE HEREUNDER STRICTLY IN
ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 9.7. If this lease shall
terminate for any reason prior to Landlord's exercise of its Landlord's option
hereunder, the option shall also terminate.
9.8 Tenant Right to File Applications. Tenant shall have the right to
---------------------------------
file site plan and other land use applications with respect to the Premises
prior to the expiration of the purchase option, provided that no such activities
by Tenant shall impose any present or future financial or other burdens,
conditions or other encumbrances on the Premises or Landlord. Tenant shall bear
the entire cost of any such applications and Landlord shall provide any
necessary consent thereto.
9.9 Remedial Order Restriction. This lease and any sublease,
--------------------------
assignment, sale or other transfer of any interest in the Premises is and shall
be subject to the following provisions, each of which is set forth in an
Administrative Consent Order dated December 7, 1992, as amended, affecting the
Premises and shall be included in the recorded memorandum of this lease:
(a) At least ninety (90) calendar days prior to the date of any
alienation, Landlord shall notify the NJDEP in writing of the proposed
alienation, the name of the grantee, the extent of the alienation, and a
description of the grantor's continuing obligations, if any, which grantee has
agreed to perform.
(b) At least ninety (90) calendar days prior to transfer of ownership
of the Premises, Landlord shall verify to the NJDEP that such notice of
alienation has been given.
(c) Any contract to alienate the Premises shall require the grantee
to allow the implementation and continuation of all activities and obligations
pursuant to the Administrative Consent Order and to allow Landlord, the NJDEP
and its authorized representatives access to the Premises for purposes of such
activities and obligations. No alienation shall affect Landlord's obligations
under the Administrative Consent Order.
(d) Landlord shall include in any instrument of conveyance, including
a deed, title, lease, easement or license of or for the Premises, a written
notice that the Premises is the subject of the Administrative Consent Order.
Any such instrument of conveyance shall be subject to the requirements set forth
in the Administrative Consent Order regarding the use of the Premises and deed
restrictions.
The Administrative Consent Order shall be binding, jointly and severally, on the
Landlord, its successors, assignees and any trustee in bankruptcy or receiver
appointed pursuant to a proceeding in law or equity.
19
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The use and access restrictions set forth in the Administrative Consent Order
shall run with the land and be for the benefit of and enforceable by the NJDEP
and any citizen which is or may be damaged as a result of violations of the use
and access restrictions. The use and access restrictions shall provide actual
and constructive notice to any subsequent grantee of the locations and
concentrations of all contaminants which remain at the Premises and of the use
and access restrictions imposed. Within thirty (30) calendar days after
Landlord's receipt of a written request from the NJDEP, Landlord shall record
the restrictions with the Morris County Clerk, Morris County, State of New
Jersey, and provide the NJDEP with a copy of this Administrative Consent Order
stamped "Filed" by the Morris County Clerk.
9.10 Cross-Estoppel Certificates. Each party agrees that at any time
---------------------------
and from time to time at reasonable intervals, within 10 days after written
request by the other party, the party will execute, acknowledge and deliver to
the other party and/or to its assignee, mortgagee or other secured party as may
be designated, a certificate stating: (i) that this lease is unmodified and in
full force and effect (or if there have been modifications, that this lease is
in full force and effect as modified, and identifying the modification
agreements, or if this lease is not in full force and effect the certificate
shall so state); (ii) the date to which Rent has been paid under this lease;
(iii) whether or not there is any existing default by Tenant in the payment of
Rent or other sum or money under this lease, and whether or not there is any
other existing default by either party under this lease with respect to which a
notice of default has been served, and if there is any such default, specifying
the nature and extent thereof; (iv) whether or not there are any set-offs,
defenses or counterclaims against enforcement of the obligations to be performed
by the party under this lease; and (v) such other matters relating to this lease
as may be reasonably requested by the other party or any of its designees.
9.11 Tenant's Recourse. Except for claims which Tenant may have
-----------------
against Landlord arising under Section 2.6.2, Article 8 or Section 9.6 of this
lease, Tenant shall look solely to the Premises and Landlord's equity therein
for the payment of any damages or satisfaction of any liabilities or obligations
of Landlord, and no judgment obtained by Tenant shall be enforceable against
Landlord or any property of Landlord, other than the Premises.
10. DEFINED TERMS: INTERPRETATIONS.
10.1 Defined Terms. Terms identified in the heading, recitals and in
-------------
other provisions of this agreement shall have the meanings assigned to them
either wherever initially capitalized in this agreement or as set forth below.
Additional Rent. Any and all charges or amounts other than Base
---------------
Rent payable by Tenant, whether to Landlord or directly to other persons, under
the various sections of this lease.
Agreement. The Asset Acquisition Agreement between the parties
---------
dated as of February 26, 1996.
Annual Base Rent or Base Rent. The Base Rent, payable in monthly
-----------------------------
installments in accordance with section 1.3.
Default Rate. A fluctuating rate of interest per annum equal to
------------
the Prime Rate plus 4%.
Events of Default. Events of Default shall have the meanings
-----------------
assigned in section 7.1.
Force Majeure. Any cause beyond a party's reasonable control,
-------------
including acts of God, strikes, labor troubles, shortage of materials or
services, governmental pre-emption in connection with a national or local
emergency or by
20
<PAGE>
reason of any rule, order or regulation of any governmental agency or by reason
of the conditions of supply and demand which have been or are affected by war,
hostilities or similar emergency.
Permitted Use. Permitted Use shall have the meaning set forth in
-------------
section 1.4.
Premises. The Premises commonly known as ,
-------- ----------------------
, New Jersey, as shown on the site map annexed as Exhibit A
- ---------------------
hereto. The Premises includes the buildings, driveways, parking areas and other
improvements located thereon. The Premises includes all trade and other
fixtures located at the Premises on the date hereof.
Prime Rate. A fluctuating rate of interest per annum as
----------
published from time to time by The Wall Street Journal as the generic "prime
rate" of interest.
Rent. All Base Rent and Additional Rent provided for herein.
----
Rental Year. The first Rental Year for the Premises shall
-----------
commence on the Commencement Date and shall end at the close of the 12th full
calendar month following the Commencement Date; thereafter each Rental Year
shall consist of successive periods of 12 calendar months. Any portion of the
Term remaining at the end of the last full Rental Year shall constitute the
final Rental Year and Rent shall be apportioned therefor. Landlord reserves the
right to change the Rental Year from time to time.
Taxes. Any real estate tax, special or general assessment, real
-----
estate rental receipt or gross receipt tax, unforeseen and foreseen, including
any other charge imposed with respect to the Premises or leases or rents payable
with respect thereto, by federal, state or local authorities. If at any time
during the term of this lease under the laws of the State of New Jersey or any
political subdivision thereof a tax or excise on rents is levied or assessed
against Landlord or the Base Rent as a substitution in whole or in part for or
as an addition to taxes assessed or imposed on land and buildings or on land or
buildings, such substitute tax shall be calculated as if the Premises were the
only real property owned by the Landlord, and the same shall be deemed to be
included within the term "Taxes." In no event shall Taxes include inheritance,
estate or transfer taxes. Landlord agrees to pay any special or general
assessments in the maximum number of installments permitted by the taxing
authority and Taxes shall only include those installments which are allocable to
the Term.
Tax Year. Tax Year means each 12 month period (deemed for the
--------
purposes of this section to have 365 days) established as the tax year by the
taxing authorities having lawful jurisdiction over the Premises.
Termination Date. The date provided in this lease for the end of
----------------
the Term, whether as a result of the expiration of this lease, an Event of
Default or otherwise.
10.2 Interpretations. Unless otherwise specified, the following rules
---------------
of construction shall be applicable for all purposes of this lease and all
documents or instruments supplemental hereto:
10.2.1 All references herein to numbered sections, subsections,
schedules or exhibits are references to the sections and subsections
hereof, and the schedules and exhibits attached hereto.
10.2.2 The terms "include," "including" and similar terms shall
be construed as if followed by the phrase "without being limited to."
21
<PAGE>
10.2.3 The terms "Premises" and "improvements" and like terms
shall be construed as if followed by the phrase "or any part thereof."
10.2.4 Singular words include the plural and plural words
include the singular.
10.2.5 The term "person" shall include natural persons, firms,
partnerships, trusts, corporations, limited liability companies and
any other public and private legal entities.
10.2.6 The term "provisions," when used with respect hereto or
to any other document or instrument, shall be construed as if preceded
by the phrase "terms, covenants, agreements, requirements, conditions
and/or."
10.2.7 The terms "hereto," "herein," "hereof," "hereunder" and
similar terms shall refer to this agreement in its entirety, unless
the context clearly indicates otherwise.
10.2.8 Any table of contents or section, subsection, schedule
and exhibit captions are used for convenience and reference only and
in no way define, limit or affect the construction of the provisions
hereof.
10.2.9 No inference in favor of any party shall be drawn from
the fact that any other party has drafted any portion hereof.
10.2.10 All recitals set forth in, and all schedules and
exhibits to, this agreement are incorporated in this agreement.
10.2.11 The terms "lease" or "sublease" shall mean "lease,
sublease, tenancy, subtenancy, letting, subletting, license or
sublicense" and the term "Tenant" or "tenant" shall mean "subtenant,
lessee, sublessee, licensee, sublicensee or occupant."
10.2.12 Words importing any gender or number shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or item requires.
10.2.13 This lease shall be construed, governed, and enforced
under the laws of the State of New Jersey.
10.2.14 If any provision of this lease shall to any extent be
invalid or unenforceable, the remainder of this lease, or the
application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term and provision of this
lease shall be valid and be enforced to the fullest extent permitted
by law.
10.2.15 The term "date hereof" shall mean the date a completely
executed copy of this lease has been delivered to the Landlord or its
attorney. All time periods hereunder shall commence and be measured
starting on the first calendar day following the date hereof which is
not a Saturday, Sunday or holiday on which national banks are closed
for business within the State of New Jersey.
10.2.16 The term "law" shall mean and include any present or
future statute, ordinance, rule, regulation, code, order, opinion or
similar governmental action or directive, including any executive,
court or administrative order or decision enforcing or interpreting
any of the foregoing. References to any particular statutes,
ordinances, rules or regulations
22
<PAGE>
shall be deemed to include any predecessor, successor or replacement
statutes, ordinances, rules or regulations.
10.2.17 The submission of this agreement for examination does
not constitute an offer, reservation of or option for the Premises,
and this agreement shall become binding and effective only upon
execution and delivery by all parties.
10.2.18 This agreement is intended by the parties as a final
expression of their agreement and as a complete and exclusive
statement of the terms hereof. All negotiations, considerations and
representations between the parties have been incorporated herein. No
course of prior dealing between the parties or their principals,
agents or affiliates shall be relevant or admissible to supplement,
explain or vary any of the terms of this agreement. Acceptance of or
acquiescence in a course of performance rendered under this or any
prior agreement between the parties or their principals, agents or
affiliates shall not be relevant or admissible to determine the
meaning of any of the terms of this lease. No representations,
understandings or agreements have been made or relied upon in the
making of this agreement other than those specifically set forth
herein. This agreement cannot be modified orally, but only by a
writing signed by all of the parties hereto or their duly authorized
agents.
10.2.19 This agreement may be executed in any number of
counterparts (and by facsimile signature pages), all of which taken
together shall constitute the original hereof. When counterparts have
been executed by and delivered to all parties hereto, or their
counsel, they shall have the same effect and if the signatures were
all on the same copy hereof.
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
representatives to set their hands and affix their seals as of the date first
above written.
WITNESS OR ATTEST: RTI INC., Landlord
By:
- ----------------------------------- -------------------------------------
, Assistant Secretary , Manager
- --------------- -------------------------
WITNESS OR ATTEST: , Tenant
------------------------------
By:
- ----------------------------------- -------------------------------------
, Assistant Secretary , President
- --------------- -------------------------
LIST OF EXHIBITS
Exhibit A - Description of Premises
Exhibit B - Extension Option Rider
Exhibit C - Rent Adjustment Letter
Exhibit 2.1 Form of Memorandum of Lease
23
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24
<PAGE>
[Description of Premises]
25
<PAGE>
EXTENSION OPTION RIDER
The lease dated , 199 ("Lease") between
-------------- ---
("Landlord")
- -------------------------------------------------------------------
and ("Tenant") is modified as follows:
-----------------------------------------
1. All defined terms and interpretations set forth in the Lease shall
be fully applicable to this Rider.
2. Tenant shall have one (1) option, exercisable by notice to
Landlord at least 12 months prior to the expiration of the then remaining Term,
to extend the Term for a period of 5 years upon the same terms and conditions as
are contained in the Lease. No option shall be exercisable by Tenant unless at
the time of exercise and at the beginning of the renewal Term (a) the Lease is
then in full force and effect, (b) there has been no Event of Default thereunder
during the Term (whether or not waived by Landlord or cured by Tenant) and (c)
there is no event which, upon a lapse of time or the giving of notice, or both,
would become an Event of Default. TIME IS OF THE ESSENCE for the exercise of
any option hereunder.
WITNESS OR ATTEST: RTI INC., Landlord
By:
- ----------------------------------- -------------------------------------
, Assistant Secretary , President
- --------------- -------------------------
WITNESS OR ATTEST:
----------------------------------------
Tenant
By:
- ----------------------------------- -------------------------------------
, Assistant Secretary , President
- --------------- -------------------------
<PAGE>
GUARANTY
--------
In order to induce RTI, Inc., ("Landlord") to enter into a lease dated
, 19 , ("Lease") with
- ------------------------- --- -------------------------------
("Tenant") for the Premises located in the Township of Rockaway, County of
Morris, State of New Jersey, and as more particularly described on Exhibit A to
the Lease ("Premises"), the undersigned ("Guarantor") in consideration of the
sum of Ten ($10.00) Dollars and other good and valuable consideration, the
receipt and sufficiency whereof is hereby acknowledged, irrevocably and
unconditionally guarantees to Landlord the due, prompt and punctual payment and
the prompt performance by the Tenant of all of its obligations pursuant to the
Lease, including, without limitation, Tenant's obligations, if any, under
Section 9.7 of the Lease ("Obligations"), all irrespective of the validity,
binding effect, legality or enforceability of the Lease or whether the Lease
shall have been duly executed by Tenant, any other circumstance which might now
or hereafter or otherwise constitute a legal or equitable discharge or defense
of a guarantor. Guarantor shall, upon demand, pay, perform or observe any term,
covenant or condition of the Lease in the same place and stead as Tenant.
Capitalized terms defined in the Lease and not defined herein shall have the
same meanings when used herein.
Guarantor is the parent corporation of Tenant and acknowledges that
the lease of the Premises to Tenant will provide substantial direct and indirect
benefits to Guarantor.
Guarantor agrees further that this Guaranty and Guarantor's liability
hereunder shall not be impaired or affected by any assignment, subleasing,
modification, supplement, extension or amendment of the Lease, nor by any
modification, release or other alteration of any of the Obligations hereby
guaranteed, nor by any other agreements or arrangements whatever with the Tenant
or anyone else. This Guaranty is an absolute, unconditional and irrevocable
guaranty of payment and performance (and not merely of collection). The
liability of Guarantor, as set forth above, is co-extensive with that of Tenant
and this Guaranty shall be enforceable against Guarantor without the necessity
of any suit or proceedings on Landlord's part of any kind or nature whatsoever
against Tenant and without the necessity of any notice of non-payment, non-
performance or non-observance, or any notice of acceptance of this Guaranty, or
any other notice or demand to which Guarantor might otherwise be entitled, all
of which Guarantor hereby expressly waives.
Guarantor hereby expressly waives any right of contribution from or
indemnity against Tenant, whether at law or in equity, arising from any payments
made by Guarantor pursuant to the terms of this Guaranty, and Guarantor
acknowledges that Guarantor has no right whatsoever to proceed against Tenant
for reimbursement of any such payments. In connection with the foregoing,
Guarantor expressly waives any and all rights of subrogation or otherwise to any
rights of Landlord against Tenant, and Guarantor hereby waives any rights to
enforce any remedy which Landlord may have against Tenant. In addition to and
without any way limiting the foregoing, Guarantor hereby subordinates any and
all indebtedness of Tenant now or hereafter owed to Guarantor to all Obligations
of Tenant to Landlord, and agrees with Landlord that Guarantor shall not demand
or accept any payment of principal or interest from Tenant and shall not claim
any offset or other reduction of Guarantor's obligations hereunder because of
any such indebtedness.
Guarantor hereby expressly agrees that this Guaranty shall be a
continuing guaranty and that the validity or this Guaranty and the obligations
and liability of Guarantor hereunder shall in no way be terminated, affected,
diminished or impaired by reason of (a) the assertion of or the failure by
Landlord to assert against Tenant any of the rights or remedies reserved to
Landlord pursuant to the terms, covenants and conditions of the Lease, (b) any
assignment of the Lease or subletting of the Premises, (c) any renewal or
extension of the Lease or any modification thereof, whether pursuant to the
Lease or by subsequent
<PAGE>
agreement of Landlord and Tenant, (d) any extension of time that may be granted
by Landlord to Tenant, (e) any consent, indulgence or other action, inaction or
omission under or in respect of the Lease, or (f) any dealings or transactions
or matter or thing occurring between Landlord and Tenant, (g) any bankruptcy,
insolvency, reorganization, arrangement, assignment for the benefit of
creditors, receivership or trusteeship affecting Tenant or Tenant's successors
or assigns whether or not notice thereof is given to Guarantor, (h) any
modification, amendment, revision, supplement or other change to the Lease,
whether or not made with the consent of Guarantor, or (i) any matter or thing
whatsoever, whether or not specifically mentioned herein, other than full
payment and performance of all of the Obligations.
Guarantor also agrees to indemnify Landlord and hold Landlord harmless
against all obligations, demands and liabilities, by whomever asserted, and
against all losses in any way suffered, incurred or paid by Landlord as a result
of or in any way arising out of, or following, or consequential to a breach by
Tenant of any of its Obligations and to pay all costs and expenses, including
reasonable attorneys' fees, of any proceeding by Guarantor to enforce the Lease
or this Guaranty.
Guarantor expressly waives the following: notice of acceptance
hereof; presentment and protest of any instrument, and notice thereof; notice of
default; and all other notices to which such Guarantor might otherwise be
entitled.
Guarantor represents and warrants to Landlord as follows:
A. The execution, delivery and performance by Guarantor of this
Guaranty have been duly authorized by all necessary corporate action.
B. Guarantor is not in material default in the terms and conditions
of any material agreement to which it is a party or by which it is bound, such
as would materially and adversely affect its ability to carry out the terms,
covenants and conditions of this Guaranty.
C. Guarantor has the full power, authority and legal right to
execute and deliver, and to perform and observe the provisions of, this Guaranty
including the payment of all moneys hereunder. This Guaranty constitutes the
legal, valid and binding obligation of Guarantor enforceable in accordance with
its terms, except as enforcement thereof may be limited by (a) bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally or (b) the nonavailability of equitable or legal
remedies which are discretionary with the courts.
D. Guarantor is not in violation of any decree, ruling judgment,
order or injunction applicable to it, nor any law, ordinance, rule or regulation
of whatever nature which taken alone or in the aggregate, would materially and
adversely affect its ability to carry out any of the terms, covenants, and
conditions of this Guaranty. There are no actions, proceedings, or
investigations pending or, to the best of Guarantor's knowledge, threatened
against or affecting Guarantor (or any basis therefor known to Guarantor) before
or by any court, arbitrator, administrative agency or other governmental
authority or entity, which, taken alone or in the aggregate, if adversely
decided, would materially and adversely affect its ability to carry out any of
the terms, covenants and conditions of this Guaranty.
E. Tenant is a wholly-owned subsidiary of Guarantor and accordingly
Guarantor has a substantial financial interest in Tenant and its performance
under the Lease.
No failure or delay on the part of Landlord in exercising any right,
power or privilege under this Guaranty shall operate as a waiver of or otherwise
affect any such right, power or privilege, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
2
<PAGE>
Guarantor agrees at any time and from time to time during the Term,
within 10 days after written request from Landlord, to execute, acknowledge and
deliver to Landlord or to a third party a statement in writing certifying that
this Guaranty is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications). Landlord and any such third party shall have the right to
rely upon the contents of any such written statement of Guarantor.
Guarantor acknowledges and agrees that all disputes arising directly
or indirectly, out of or relating to this Guaranty, and all actions to enforce
this Guaranty, may be dealt with and adjudicated in the state courts of New
Jersey or the Federal courts sitting in New Jersey; and hereby expressly and
irrevocably submits the person of Guarantor to the jurisdiction of such courts
in any suit, action or proceeding arising, directly or indirectly, out of or
relating to this Guaranty. So far as is permitted under applicable law, this
consent to personal jurisdiction shall be self-operative and no further
instruction or action, other than service of process in one of the manners
specified in this Guaranty, or as otherwise permitted by law, shall be necessary
in order to confer jurisdiction upon the person of Guarantor in any such court.
Provided that service of process is effected upon Guarantor in one of
the manners hereafter specified in this Guaranty or as otherwise permitted by
law, Guarantor irrevocably waives, to the fullest extent permitted by law, and
agrees not to assert, by way of motion, as a defense or otherwise, (a) any
objection which it may have or may hereafter have to the laying of the venue of
any such suit, action or proceeding brought in such court as is mentioned in the
previous paragraph, (b) any claim that any such suit, action or proceeding
brought in such a court has been brought in an inconvenient forum, or (c) any
claim that it is not personally subject to the jurisdiction of the above-named
courts. Provided that service of process is effected upon Guarantor in one of
the manners hereafter specified in this Guaranty or as otherwise permitted by
law, Guarantor agrees that final judgment from which Guarantor has not appealed
or may not appeal or further appeal in any such suit, action or proceeding
brought in such a court of competent jurisdiction shall be conclusive and
binding upon Guarantor and may, so far as it is permitted under applicable law,
be enforced in the courts of any state or any Federal court and in any other
courts to the jurisdiction of which Guarantor is subject, including, without
intending any limitation, as to the Guarantor, the courts of New Jersey by a
suit upon such judgment and that Guarantor will not assert any defense,
counterclaim, or set off in any such suit upon such judgment.
Guarantor agrees to execute, deliver and file all such further
instructions as may be necessary under the laws of the State of New Jersey, in
order to make effective the consent of Guarantor to jurisdiction of the state
courts of New Jersey and the Federal courts sitting in New Jersey.
Guarantor hereby consents to process being served in any suit, action
or proceeding of the nature referred to in this Guaranty by the mailing of a
copy thereof by registered or certified mail, postage prepaid, return receipt
requested to or to any other address of which Guarantor shall
------------------
have given written notice to Landlord (said notice being actually received).
Provided that service is made in accordance with this Section or otherwise as
permitted by law, Guarantor irrevocably waives, to the fullest extent permitted
by law, all claim of error by reason or any such service and agrees that such
service (a) shall be deemed in every respect effective service of process upon
Guarantor in any such suit, action of proceeding and (b) shall, to the fullest
extent permitted by law, be taken and held to be valid personal service upon and
personal delivery to Guarantor.
Should Landlord be obligated by any bankruptcy or other law to repay
to Tenant or Guarantor or to any trustee, receiver or other representative of
either of them, any amounts previously paid, then this Guaranty shall be
reinstated in the amount of such repayment. Landlord shall not be required to
litigate or otherwise dispute its obligation to make such repayments if it in
good faith and on the advice of counsel believes that such obligation exists.
3
<PAGE>
In the event that this Guaranty shall be held ineffective or
unenforceable by any court of competent jurisdiction, Guarantor shall be deemed
to be a tenant under the Lease with the same force and effect as if Guarantor
were expressly named as a joint tenant therein with joint and several liability.
All remedies afforded to Landlord by reason of this Guaranty are
separate and cumulative remedies and it is agreed that no one of such remedies,
whether exercised by Landlord or not, shall be deemed to be in exclusion of any
other remedy available to Landlord and shall not limit or prejudice any other
legal or equitable remedy which Landlord may have.
If any provision of this Guaranty or the application thereof to any
person or circumstance shall to any extent be held void, unenforceable or
invalid, then the remainder of this Guaranty or the application of such
provision to persons or circumstances other than those as to which it is held
void, unenforceable or invalid shall not be affected thereby and each provision
of this Guaranty shall be valid and enforced to the fullest extent permitted by
law.
As a further inducement to Landlord to make and enter into the Lease
and in consideration thereof, Guarantor hereby waives trial by jury and the
right thereto in any action or proceeding of any kind or nature, arising on,
under or by reason of or relating to, this Guaranty or any agreement collateral
hereto.
No waiver or modification of any provision of this Guaranty nor any
termination of this Guaranty shall be effective unless in writing and signed by
Landlord, nor shall any waiver be applicable, except in the specific instance
for which it is given.
If the Guarantor is a corporation or partnership, attached hereto is a
true, certified copy of corporate resolutions of the Guarantor pursuant to which
its entering into this Guaranty has been authorized by all requisite corporate
or partnership action. If this Guaranty is signed by more than one party, the
parties' liabilities shall be joint and several.
Each individual signing below represents and warrants to Landlord that
he is authorized to execute this Guaranty on behalf of Guarantor or other entity
for which he signed and that said corporation or entity is bound thereby.
4
<PAGE>
This Guaranty, all acts and transactions hereunder, and the rights and
obligations of the parties hereto shall be binding upon successors and assigns
of Guarantor, may not be changed or modified orally, and shall inure to the
benefit of Landlord's successors and assigns.
WITNESS OR ATTEST:
STERIGENICS INTERNATIONAL, INC.
- -----------------------------------
(Guarantor)
DATED: By:
---------------------------- ------------------------------------
, President
-------------------------
- -----------------------------------
, Assistant Secretary
- --------------------
[ACKNOWLEDGMENTS TO BE ADDED]
5
<PAGE>
EXHIBIT C
Letterhead of RTI INC.
February 27, 1996
Sterigenics International
Re: Rent Adjustment
---------------
Gentlemen:
Reference is made to a lease (the "Lease") relating to premises
located in the Township of Rockaway and State of New Jersey comprised of
approximately 82 acres (the "Premises"). This letter will confirm our agreement
that at the time the lease is executed, the Base Rant set forth in Section 1.3
of the Lease (presently $54,000 per annum) will be adjusted in the manner set
forth herein. Prior to the execution of the Lease RTI shall deliver a balance
sheet or fixed asset register to Sterigenics which shall specify, as of the end
of the fiscal quarter immediately preceding the date of Lease execution, the net
book value of the land, plant, and fixtures at the Premises not included in the
purchased assets ("Leased Assets").
The Annual Base Rent payable under the lease shall be $54,000
multiplied by a fraction, the numerator of which is the Leased Assets and the
denominator of which is 310,000. The monthly payments of Base Rent and the
Purchase Option, and Put Option prices shall be adjusted similarly by
multiplying the figures in the Lease Agreement by the fraction defined above.
If this letter agreement accurately sets forth your understanding with
respect to the adjustment of Base Rent, please execute a copy of this Letter
Agreement and return it to me.
RTI INC.
By:
-------------------------------------
Accepted and Agreed:
Sterigenics International
By:
--------------------------------
1
Exhibit 10.9(f)
VOTING AGREEMENT
----------------
This Voting Agreement ("Agreement") is executed as of February 26, 1996 by
and between Sterigenics International, a California corporation
("Sterigenics")and Theo Muller (the "Shareholder").
WHEREAS, concurrently with the execution of this Agreement, Sterigenics and
RTI Inc., a New York Corporation ("RTI") have entered into an Asset Acquisition
Agreement dated as of February 26, 1996 (the "Asset Agreement"), providing for
the purchase by Sterigenics or its wholly-owned subsidiaries, and the sale by
RTI, of certain assets of RTI in exchange for payment of the Purchase Price (as
defined in the Asset Agreement) by Sterigenics (the "Acquisition").
WHEREAS, the Shareholder is a holder of 118,393 outstanding shares (the
"Shares") of RTI Common Stock ("RTI Stock").
WHEREAS, in consideration of the execution of the Asset Agreement by
Sterigenics, the Shareholder agrees to vote the Shares so as to facilitate
consummation of the Acquisition.
NOW, THEREFORE, in consideration of the mutual promises and the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Agreement to Vote Shares. At every meeting of the Shareholders of RTI
------------------------
called and in every consent solicitation with respect to any of the following,
and at any adjournment thereof, the Shareholder shall vote the Shares: (i) in
favor of approval of the Asset Agreement and the Acquisition and any matter
which could reasonably be expected to facilitate the Acquisition and
(ii) against approval of any proposal made in opposition to or competition with
consummation of the Acquisition. This Agreement is intended to bind Shareholder
only with respect to the specific matters set forth herein.
2. Additional Purchases. Shares shall include any shares of RTI Stock
--------------------
which the Shareholder purchases or otherwise acquires after the execution of
this Agreement and prior to the Expiration Date, as defined herein. The
"Expiration Date" shall mean the earlier of (i) the date and time on which the
Acquisition shall become effective in accordance with the terms and provisions
of the Asset Agreement or (ii) the date on which the Asset Agreement shall be
terminated pursuant to Article XII of the Asset Agreement.
3. Representations, Warranties and Covenants of the Shareholder. The
------------------------------------------------------------
Shareholder hereby represents, warrants and covenants to Sterigenics the
following:
3.1 Ownership of Shares. The Shareholder (i) is the holder and
-------------------
beneficial owner of the Shares, which at the date hereof and at all times until
the Expiration Date will be free and clear of any liens, claims, options,
charges or other encumbrances; (ii) does not beneficially own any shares of RTI
Stock other than the Shares; and (iii) has full power and authority to make and
enter into and carry out the terms of this Agreement; provided, however, that
the Shareholder may transfer or encumber the Shares if the Shareholder obtains
Sterigenics's prior written consent (which will not be unreasonably withheld or
delayed) and either the transferee becomes a party to this Agreement or the
Shareholder retains the right to vote all of the Shares in accordance with all
of the terms of this Agreement.
3.2 No Voting Trusts and Agreements. The Shareholder will not, and
-------------------------------
will not permit any entity under the Shareholder's control (other than RTI), to
deposit any shares of RTI Stock held by the Shareholder or such entity in a
voting trust or subject any shares of RTI Stock held by the Shareholder or such
entity to any arrangement or agreement with respect to the voting of such shares
of RTI Stock, other than agreements entered into with Sterigenics.
<PAGE>
3.3 No Proxy Solicitations. The Shareholder will not, and will not
----------------------
permit any entity under the Shareholder's control (other than RTI) to,
(i) solicit proxies or become a participant in a solicitation in opposition to
or competition with the consummation of the Acquisition or otherwise encourage
or assist any party in taking or planning any action which would compete with,
restrain or otherwise serve to interfere with or inhibit the timely consummation
of the Acquisition in accordance with the terms of the Asset Agreement,
provided, however, that this Section 3.3 shall not prohibit the Shareholder from
acting at the direction of RTI's Board of Directors in his capacity as Chief
Executive Officer of RTI in connection with a Superior Proposal (as defined in
the Asset Agreement) approved by RTI's Board of Directors; (ii) initiate a
Shareholder's vote or action by consent of RTI Shareholders in opposition to or
in competition with the consummation of the Acquisition; or (iii) become a
member of a group with respect to any voting securities of RTI for the purpose
of opposing or competing with the consummation of the Acquisition.
4. Representations, Warranties and Covenants of Sterigenics. Sterigenics
--------------------------------------------------------
represents, warrants and covenants to the Shareholder as follows:
4.1 Due Authorization. This Agreement has been authorized by all
-----------------
necessary corporate action on the part of Sterigenics and has been duly executed
by a duly authorized officer of Sterigenics.
4.2 Validity; No Conflict. This Agreement constitutes the legal,
---------------------
valid and binding obligation of Sterigenics. Neither the execution of this
Agreement by Sterigenics nor the consummation of the transactions contemplated
hereby will result in a breach or violation of the terms of any agreement by
which Sterigenics is bound or of any decree, judgment, order, law or regulation
now in effect of any court or other governmental body applicable to Sterigenics.
5. Additional Documents. The Shareholder and Sterigenics hereby covenant
--------------------
and agree to execute and deliver any additional documents necessary or
desirable, in the opinion of Sterigenics or the Shareholder, as the case may be,
to carry out the intent of this Agreement.
6. Miscellaneous.
-------------
6.1 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
6.2 Binding Effect and Assignment. Neither this Agreement nor any of
-----------------------------
the rights, interests or obligations of the parties hereto may be assigned by
any of the parties without the prior written consent of the other.
6.3 Amendments and Modifications. This Agreement may not be
----------------------------
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
6.4 Specific Performance: Injunctive Relief. The parties hereto
---------------------------------------
acknowledge that Sterigenics will be irreparably harmed and that there will be
no adequate remedy at law for a violation of any of the covenants or agreements
of the Shareholder set forth herein. Therefore, it is agreed that, in addition
to any other remedies which may be available to Sterigenics upon such violation,
Sterigenics shall have the right to enforce such covenants and agreements by
specific performance, by injunctive relief or by any other means available to it
at law or in equity.
6.5 Notices. Any notice or other communication required or permitted
-------
to be given under this Agreement shall be in writing and will be deemed
effective when delivered in person, on the first
2
<PAGE>
business day after sent by confirmed facsimile, if promptly confirmed in
writing, on the third business day after the day on which mailed by first class
mail from within the United States of America, or the business day following
delivery to a national overnight courier service to the following addresses or
to such other address as either party may specify in writing to the other party
in accordance with the provisions of this Section 6.5.
If to Sterigenics: With a copy to:
Sterigenics International Gunderson Dettmer Stough
4020 Clipper Court Villeneuve Franklin & Hachigian
Fremont, CA 94538-6540 600 Hansen Way, 2nd Floor
Facsimile No.: (510) 770-1499 Palo Alto, CA 94306
Attention: James F. Clouser Facsimile No.: (415) 843-0314
Attention: Carla S. Newell
If to Shareholder: With a copy to:
Theo Muller Warshaw Burstein Cohen
20 Peach Hill Road Schlesinger & Kuh, LLP
Darien, CT 06820 555 Fifth Avenue
New York, NY 10017
Facsimile No.: (212) 972-9150
Attention: Arthur Katz
6.6 Governing Law. This Agreement shall be governed by, construed
-------------
and enforced in accordance with the laws of the State of New York without giving
effect to principles of conflicts of law.
6.7 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
6.8 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
6.9 Effect of Headings. This section headings herein are for
------------------
convenience only and shall not affect the construction or interpretation of this
Agreement.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
STERIGENICS INTERNATIONAL
By: JAMES F. CLAUSER
-----------------------------------------
Title: President & CEO
--------------------------------------
SHAREHOLDER
THEO W. MULLER
---------------------------------------------
Theo Muller
4
Exhibit 10.9(g)
VOTING AGREEMENT
----------------
This Voting Agreement ("Agreement") is executed as of March , 1996 by
---
and between Sterigenics International, a California corporation ("Sterigenics")
and (the "Shareholder").
------------------------------
WHEREAS, concurrently with the execution of this Agreement, Sterigenics and
RTI Inc., a New York Corporation ("RTI") have entered into an Asset Acquisition
Agreement dated as of February 26, 1996 (the "Asset Agreement"), providing for
the purchase by Sterigenics or its wholly-owned subsidiaries, and the sale by
RTI, of certain assets of RTI in exchange for payment of the Purchase Price (as
defined in the Asset Agreement) by Sterigenics (the "Acquisition").
WHEREAS, the Shareholder is a holder of outstanding shares of RTI Common
Stock ("RTI Stock").
WHEREAS, in consideration of the execution of the Asset Agreement by
Sterigenics, the Shareholder agrees to vote all shares of RTI Stock held by
Shareholder so as to facilitate consummation of the Acquisition.
NOW, THEREFORE, in consideration of the mutual promises and the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Agreement to Vote Shares. At every meeting of the Shareholders of RTI
------------------------
called and in every consent solicitation with respect to any of the following,
and at any adjournment thereof, the Shareholder shall vote all shares of RTI
Stock beneficially held by Shareholder at the record date for such meeting or
consent solicitation (each a "Record Date"): (i) in favor of approval of the
Asset Agreement and the Acquisition and any matter which could reasonably be
expected to facilitate the Acquisition and (ii) against approval of any proposal
made in opposition to or competition with consummation of the Acquisition. This
Agreement is intended to bind Shareholder only with respect to the specific
matters set forth herein.
2. Representations, Warranties and Covenants of the Shareholder. The
------------------------------------------------------------
Shareholder hereby represents, warrants and covenants to Sterigenics the
following:
2.1 Ownership of Shares. The Shareholder (i) is the holder and
-------------------
beneficial owner of RTI Stock and (ii) has full power and authority to make and
enter into, and will on each Record Date have full power and authority to carry
out the terms of, this Agreement.
3. Representations, Warranties and Covenants of Sterigenics. Sterigenics
--------------------------------------------------------
represents, warrants and covenants to the Shareholder as follows:
3.1 Due Authorization. This Agreement has been authorized by all
-----------------
necessary corporate action on the part of Sterigenics and has been duly executed
by a duly authorized officer of Sterigenics.
3.2 Validity; No Conflict. This Agreement constitutes the legal,
---------------------
valid and binding obligation of Sterigenics. Neither the execution of this
Agreement by Sterigenics nor the consummation of the transactions contemplated
hereby will result in a breach or violation of the terms of any agreement by
which Sterigenics is bound or of any decree, judgment, order, law or regulation
now in effect of any court or other governmental body applicable to Sterigenics.
4. Additional Documents. The Shareholder and Sterigenics hereby covenant
--------------------
and agree to execute and deliver any additional documents necessary or
desirable, in the opinion of Sterigenics or the Shareholder, as the case may be,
to carry out the intent of this Agreement.
5. Miscellaneous.
-------------
<PAGE>
5.1 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
5.2 Binding Effect and Assignment. Neither this Agreement nor any of
-----------------------------
the rights, interests or obligations of the parties hereto may be assigned by
any of the parties without the prior written consent of the other.
5.3 Amendments and Modifications. This Agreement may not be
----------------------------
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
5.4 Specific Performance: Injunctive Relief. The parties hereto
---------------------------------------
acknowledge that Sterigenics will be irreparably harmed and that there will be
no adequate remedy at law for a violation of any of the covenants or agreements
of the Shareholder set forth herein. Therefore, it is agreed that, in addition
to any other remedies which may be available to Sterigenics upon such violation,
Sterigenics shall have the right to enforce such covenants and agreements by
specific performance, by injunctive relief or by any other means available to it
at law or in equity.
5.5 Notices. Any notice or other communication required or permitted
-------
to be given under this Agreement shall be in writing and will be deemed
effective when delivered in person, first business day after sent by confirmed
facsimile, if promptly confirmed in writing, on the third business day after the
day on which mailed by first class mail from within the United States of
America, or the business day following delivery to a national overnight courier
service to the following addresses or to such other address as either party may
specify in writing to the other party in accordance with the provisions of this
Section 5.5.
If to Sterigenics: With a Copy to:
Sterigenics International Gunderson Dettmer Stough
4020 Clipper Court Villeneuve Franklin & Hachigian
Fremont, CA 94538-6540 600 Hansen Way, 2nd Floor
Palo Alto, CA 94306
Facsimile No.: (510) 770-1499 Facsimile No.: (415) 843-0314
Attention: James F. Clouser Attention: Carla S. Newell
If to Shareholder: With a copy to:
Warshaw Burstein Cohen
------------------------------
Schlesinger & Kuh, LLP
------------------------------
555 Fifth Avenue
------------------------------
New York, NY 10017
------------------------------
Facsimile No.: (212) 972-9150
Attention: Arthur Katz
5.6 Governing Law. This Agreement shall be governed by, construed
-------------
and enforced in accordance with the laws of the State of New York without giving
effect to principles of conflicts of law.
5.7 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
2
<PAGE>
5.8 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
5.9 Effect of Headings. This section headings herein are for
------------------
convenience only and shall not affect the construction or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
STERIGENICS INTERNATIONAL
By:
--------------------------------
Title:
-----------------------------
SHAREHOLDER
-----------------------------------
-----------------------------------
Print Name
3
Exhibit 23(a)
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
RTI, Inc.
Board of Directors and Stockholders
Rockaway, New Jersey
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of Registration Statement Number 33-34063 on Form S-8,
of our report dated March 15, 1996 relating to the consolidated financial
statements of RTI, Inc. and subsidiaries appearing in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1995.
BDO Seidman, LLP
Woodbridge, New Jersey
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1995 AND CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 77,631
<SECURITIES> 0
<RECEIVABLES> 572,811
<ALLOWANCES> 10,000
<INVENTORY> 0
<CURRENT-ASSETS> 688,162
<PP&E> 15,247,275
<DEPRECIATION> 8,240,389
<TOTAL-ASSETS> 7,882,008
<CURRENT-LIABILITIES> 1,804,190
<BONDS> 2,024,050
86,153
0
<COMMON> 0
<OTHER-SE> 16,013,851
<TOTAL-LIABILITY-AND-EQUITY> 7,882,008
<SALES> 4,352,027
<TOTAL-REVENUES> 4,352,027
<CGS> 2,921,752
<TOTAL-COSTS> 4,478,207
<OTHER-EXPENSES> 138,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 259,968
<INCOME-PRETAX> (524,643)
<INCOME-TAX> 0
<INCOME-CONTINUING> (524,643)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (524,643)
<EPS-PRIMARY> (.49)
<EPS-DILUTED> (.49)
</TABLE>
