RTI INC.
300 Antone Rd.
Sunland Park, NM 88063
REVISED NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 10, 1998
To the stockholders of RTI Inc.:
Notice is hereby given that the Annual Meeting of Stockholders
("Annual Meeting") of RTI Inc., a New York corporation ("Company"), will be held
at the offices of the Company at 301 Antone Rd., Sunland Park, NM 88063 on
Thursday, September 10, 1998, at the hour of 11:00 local time for the following
purposes:
(1) To elect five directors for a one year term expiring in 1999;
(2) To ratify the purchase of certain assets from Bacchus
Industries, Inc., an affiliated company, in exchange for
450,000 shares of the Company's Common Stock;
(3) To approve a private placement of Units (each Unit to consist
of two (2) shares of Common Stock and one (1) five (5) year
Common Stock Purchase Warrant to purchase one (1) share of
Common Stock at an exercise price of $3.00) on the revised
terms set forth in the Revised Proxy Statement;
(4) To approve the granting of performance options for up to
1,564,000 shares of Common Stock to certain members of
management of the Company on the terms set forth in the Proxy
Statement;
(5) To approve an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of
Common Stock from 15,000,000 to 25,000,000; and
(6) To transact such other business as may properly come before the
Meeting.
Only stockholders of record at the close of business on July
27, 1998 are entitled to notice of and to vote at the meeting or any
continuation or adjournment thereof.
By Order of the Board of Directors
Rocky Bacchus, Secretary
August 21, 1998
IF YOU WISH TO VOTE IN FAVOR OF THE REVISED PROPOSAL No. 3,
CHECK THE APPROPRIATE BOX AND SIGN, DATE AND RETURN THE ENCLOSED PROXY
IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IN ANY EVENT, YOUR PROMPT RETURN OF A SIGNED AND DATED
PROXY WILL BE APPRECIATED.
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ANNUAL MEETING OF STOCKHOLDERS
OF
RTI Inc.
September 10, 1998
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REVISED PROXY STATEMENT
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GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of Common
Stock, $.08 par value per share ("Common Stock"), of RTI Inc. ("Company") in
connection with the solicitation of proxies on behalf of the Board of Directors
of the Company for use at the Annual Meeting of Stockholders ("Annual Meeting")
to be held on September 10, 1998, or at any continuation or adjournment thereof,
pursuant to the accompanying Revised Notice of Annual Meeting of Stockholders.
The purpose of the meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting of Stockholders. The Board of Directors
knows of no other business which will come before the meeting.
REVISED PROXIES ARE BEING SOLICITED ONLY IN CONNECTION WITH
THE PROPOSED EQUITY FINANCING DESCRIBED IN PROPOSAL NO. 3 AS THE TERMS OF SUCH
FINANCING HAVE MATERIALLY CHANGED AS A RESULT OF A DECLINE IN THE MARKET PRICE
OF THE COMPANY'S COMMON STOCK. ANY PROXY CARD PREVIOUSLY SUBMITTED WILL BE VOTED
AS SUBMITTED WITH THE EXCEPTION OF ANY VOTES ON PROPOSAL NO. 3, WHICH SHALL BE
NULL AND VOID AND OF NO LEGAL EFFECT WHATSOEVER. IF YOU WISH TO VOTE ON PROPOSAL
NO. 3, YOU MUST MARK, SIGN, DATE AND RETURN THE ENCLOSED NEW PROXY CARD IN A
TIMELY FASHION AS ANY PRIOR VOTES ON SUCH PROPOSAL WILL NOT BE COUNTED FOR ANY
PURPOSE.
Proxies for use at the meeting will be mailed to stockholders
on or about August 28, 1998 and will be solicited chiefly by mail, but
additional solicitation may be made by telephone, telegram or other means of
telecommunications by directors, officers, consultants or regular
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employees of the Company. The Company may enlist the assistance of brokerage
houses, fiduciaries, custodians and other like parties in soliciting proxies.
All solicitation expenses, including costs of preparing, assembling and mailing
the proxy material, will be borne by the Company.
Revocability and Voting of Proxy
A form of proxy for use at the meeting and a return envelope
for the proxy are enclosed. Stockholders may revoke the authority granted by
their execution of proxies at any time before their effective exercise by filing
with the Secretary of the Company a written revocation or duly executed proxy
bearing a later date or by voting in person at the meeting. Shares represented
by executed and unrevoked proxies will be voted in accordance with the choice or
instructions specified thereon. If no specifications are given, the proxies
intend to vote "FOR" Proposal No. 3 set forth herein. Proxies marked as
abstaining will be treated as present for purposes of determining a quorum for
the Annual Meeting, but will not be counted as voting in respect of any matter
as to which abstinence is indicated. If any other matters properly come before
the meeting or any continuation or adjournment thereof, the proxies intend to
vote in accordance with their best judgment.
Record Date and Voting Rights
Only stockholders of record at the close of business on July
27, 1998 are entitled to notice of and to vote at the Annual Meeting or any
continuation or adjournment thereof. Each share of Common Stock is entitled to
one vote per share. Any share of Common Stock held of record on July 27, 1998
shall be assumed by the Board of Directors to be owned beneficially by the
record holder thereof for the period shown on the Company's stockholder records.
The affirmative vote of a majority of the shares present is required for the
approval of Proposal No.3.
The Directors and the executive officers of the Company own
approximately 18.14% of the Company's outstanding Common Stock and have
indicated their intent to vote their shares FOR Proposal No.3.
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REVISED PROPOSAL NO. 3
PRIVATE PLACEMENT OF UNITS
As shown in the financial statements included in its Annual
Report on Form 10-KSB for the year ended December 31, 1997, the Company has a
pressing need for additional financing. In a letter dated, February 26, 1998,
Nasdaq informed the Company that it was not in compliance with a Nasdaq
Marketplace Rule which requires that companies maintain "Net Tangible Assets"
(defined in such rule as total assets (less goodwill) minus total liabilities)
of at least $2,000,000. The Company must complete the Second Bridge Offering and
the Equity Offering (such terms hereinafter defined) in order to comply with
such rule and not be delisted from Nasdaq.
Pursuant to Nasdaq's procedures, the Company has submitted a
Plan of Compliance ("Plan") of which the Second Bridge Offering and the Equity
Financing are a part. In a letter dated August 19, 1998, Nasdaq informed the
Company that it would grant the Company an exemption pursuant to the Plan,
provided that the Company file a Report on Form 8-K with a pro forma balance
sheet indicating Net Tangible Assets of at least $4,000,000 and full compliance
with all other continued listing requirements. In addition, the Company's symbol
will, until it complies with all of Nasdaq's maintenance requirements, change
from "RTII" to "RTIIC" to indicate the Common Stock's conditional listing
status. The Company issued a press release disclosing such change. No assurances
can be given that the Company will be able to meet any of such criteria and that
Nasdaq will not delist the Company's Common Stock.
Nasdaq has an additional rule, however, which states that
companies whose securities are quoted on Nasdaq may not issue securities
amounting to 20% or more of its outstanding securities at a price below market
value without shareholder approval. At July 31, 1998, the Company had 1,606,166
shares of Common Stock outstanding. Given that the proposed offering described
below constitutes in excess of 20% of the Company's outstanding Common Stock,
the Company cannot proceed with the Equity Financing without the affirmative
vote of the majority of the Company's stockholders voting on this Proposal.
After due consideration the Board of Directors has decided
that the following proposed private placement is in the Company's best
interests. The Company has agreed with an investment banking firm to act as
Placement Agent for a private offering generating minimum gross proceeds of
$2,000,000 and maximum gross proceeds of $5,000,000 ("Equity Financing") at a
contemplated offering price per Unit to be calculated as follows: if, on the
trading day prior to date of each closing of the Equity Financing the average of
the closing bid and asked prices of the Common Stock is $1.625 or higher, then
the Unit price for such closing shall be $2.00; if the Closing Price is between
$1.624 and $1.375, then the Unit price shall be $1.75; if the Closing Price is
between $1.00 and $1.374, then the Unit price shall be $1.25 and if the Closing
Price is below $1.00, then the Unit price shall be $1.00, with such price to be
recalculated prior to each closing ("Offering Price.")
Each Unit shall consist of two (2) shares of Common Stock and
one (1) four (4) year Common Stock Purchase Warrant to purchase one (1) share of
Common Stock at an exercise price
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of $3.00 ("Equity Financing Warrants.") The Equity Financing Warrants will be
redeemable at any time after the Common Stock underlying the Equity Financing
Warrants is registered for public distribution under the Securities Act of 1933,
as amended ("Act,") and is listed on a national exchange or the Nasdaq Stock
Market; provided, that during the 20 consecutive trading days ending within 10
days of the date of the notice of redemption, the closing bid price of the
Company's Common Stock is not less than $7.00 per share ("Closing Price") and
the average trading volume of the Common Stock is not less than 30,000 shares
per day. The redemption price shall be $.25 per Equity Financing Warrant. The
Equity Financing would be made pursuant to Rule 506 of Regulation D promulgated
under the Act and would be made to Accredited Investors only, as such term is
defined in Rule 501 of Regulation D.
The financing portion of the Plan would be accomplished in
three stages, only the last of which requires shareholder approval. The first
stage (which closed in April 1998) involved a $541,502 bridge financing in the
form of nine-month Promissory Notes bearing 10% interest (collectively " First
Bridge Notes") and five-year Warrants to purchase an aggregate of 87,501 shares
of Common Stock at an exercise price of $4.50 per share ("First Bridge
Warrants.") The First Bridge Notes are secured by a security interest in the
Company's assets with the understanding that should the Company enter into a
borrowing with a financial institution, then the security interest would be
converted to a junior and subordinate lien to the lien of such financial
institution. The First Bridge Notes will automatically rollover into the Equity
Financing upon shareholder approval of this Proposal. If this Proposal is not so
approved, the First Bridge Notes will remain debt instruments and become due at
maturity. In addition, the Company intends to (i) issue an aggregate of an
additional 454,001 First Bridge Warrants to the investors in such offering (to
give such investors the same ratio of warrants per dollar invested as granted to
those investors in the proposed Second Bridge Financing Described below) and
(ii) reduce the exercise price of all of such First Bridge Warrants from $4.50
per share to a price per share equal to the closing price of the Common Stock on
the trading day immediately preceding the closing of the Second Bridge Financing
(hereinafter defined.) The Company intends to make such adjustments even though
it is not contractually obligated to do so.
The second step contemplates an additional $500,000 bridge
financing ("Second Bridge Financing") in the form of one year Promissory Notes
bearing 10% interest (collectively "Second Bridge Notes") and five-year Warrants
to purchase an aggregate of 500,000 shares of Common Stock at an exercise price
per share equal to the closing price of the Common Stock on the trading day
immediately preceding the closing of the Second Bridge Financing ("Second Bridge
Warrants.") The principal amount of the Second Bridge Notes may, at the option
of the Holder, rollover into the Equity Financing upon shareholder approval of
this Proposal and shall (i) become immediately due and payable and (ii) bear
interest at the rate of 20% per annum if the Company does not consummate the
Offering within 120 days of the closing of the Second Bridge Financing. Assuming
that this Proposal is approved by shareholders, the third step will involve the
commencement of the Equity Financing.
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In consideration for its services rendered in the Second
Bridge Financing and the Equity Financing, the Placement Agent will receive
compensation consisting of (i) sales commissions in an amount equal to 10%
percent of the proceeds raised in the Second Bridge Financing and the Equity
Financing; (ii) a non-accountable expense allowance in an amount equal to 3% of
the proceeds raised in the Second Bridge Financing and the Equity Financing and
(iii) warrants, for nominal consideration, to purchase a number of shares of
Common Stock equal to (i) 25% of the dollar value of the Second Bridge Notes and
(ii) 25% of the number of Units placed in the Equity Financing (collectively
"Placement Agent Warrants.")
The investors in the Second Bridge Financing and the Equity
Financing shall have the right, commencing after April 1, 1999, to demand that
the Company file, within 45 days of such demand, a registration statement with
the Securities and Exchange Commission ("Commission") to register (a) the shares
of Common Stock (i) forming a part of the Units; (ii) underlying the Second
Bridge Warrants and the Equity Financing Warrants; (iii) issuable upon the
rollover of the Second Bridge Notes and (iv) underlying the Placement Agent
Warrants as well as (b) the Second Bridge Warrants, the Equity Financing
Warrants and the Placement Agent Warrants themselves. The Company has also
agreed to use its best efforts to cause such registration statement to be
declared effective by the Commission within 60 days of such filing. Such
investors and the Placement Agent have also been granted customary piggyback
registration rights. If the Company does not cause such registration statement
to be filed within such 45 day period or declared effective within such
additional 60 day period after filing, the number of Equity Financing Warrants
shall be increased by two percent (2%) on each one month anniversary thereafter,
until such time that the number of Equity Financing Warrants equals 120% of the
original number of Equity Financing Warrants.
The Company has also agreed to (i) pay all of the expenses of
the Second Bridge Offering and the Equity Financing, including, but not limited
to, all "blue sky" filing fees, printing and mailing fees, escrow agent fees and
the Placement Agent's technical consultant's fees (not to exceed $10,000), the
Placement Agent's counsel fees (not to exceed $45,000, including fees for all
"blue sky" matters for the Second Bridge Financing and the Offering); (ii) enter
into a three (3) year Financial Consulting Agreement with the Placement Agent
for a fee of $5,000 per month and contingent fees (payable to the Placement
Agent in cash upon the closing of any merger, acquisition, joint venture or
other transaction where the Placement Agent provides investment banking services
or introduces the Company to the other party to the transaction) in an amount
equal to 5% of the first $5,000,000 in value of the transaction and 21/2% of any
additional transactional value; (iii) with a Board of Directors to consist of
five members, use its best efforts for three (3) years to elect three (3)
designees of the Placement Agent to the Company's Board of Directors (one of
which is Mr. Joel S. Kanter, whose biography was set forth in Proposal No. 1 in
the Company's Proxy Statement dated July 27, 1998), if the Placement Agent so
requests or in alternative, that the Placement Agent shall have the right to
designate a senior advisor to the Board of Directors who shall have the right to
receive notice of and to attend all meetings of the Board of Directors or any
committees thereof and (iv) give the Placement Agent a right of first refusal
for a period of three (3) years to place or underwrite any securities offered by
the Company. The Company has also agreed to indemnify the
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Placement Agent against certain liabilities in connection with the Second Bridge
Financing and the Equity Financing.
In March 1998, the Company consummated a private placement of
26 Units at a purchase price of $20,000 per Unit ("March Offering.") Each Unit
consisted of 5,000 shares of Common Stock and 2,500 redeemable warrants to
purchase one share of Common Stock at a price of $4.50 per share for a period of
five years ("March Warrants.") Upon the closing of the Equity Financing,
(assuming it is approved by the stockholders,) the Company intends to (i) issue
additional shares to the investors in the March Offering without any additional
consideration such that their basis is reduced from $4.00 per share to $1.00 per
share and (ii) lower the exercise price of the March Warrants from $4.50 per
share to $3.00 per share. The Company intends to take such actions even though
it is not contractually obligated to do so.
No offering of the securities referred to above is being made
by this Proxy Statement. This Proxy Statement shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of such
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such state.
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE "FOR" THE PRIVATE
PLACEMENT OF UNITS. (ITEM NO. 1 ON THE NEW PROXY
CARD.)
<PAGE>
RTI INC.
NEW P R O X Y
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Rick E. Bacchus and Dr. Lanny
Snodgrass as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
the common stock of RTI Inc. held of record by the undersigned on July 27, 1998,
at the annual meeting of shareholders to be held on September 10, 1998, or any
continuation or adjournment thereof.
3. To approve a private placement of Units (each Unit to consist of two (2)
shares of Common Stock and one (1) four (4) year Common Stock Purchase Warrant
to purchase one (1) share of Common Stock at an exercise price of $3.00) on the
new terms set forth in the Revised Proxy Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 3.
Please sign name exactly as appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: , 1998
Signature
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE
ENCLOSED ENVELOPE.
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