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SECURITIES PURCHASE AGREEMENT FOR
▇. ▇▇▇▇▇▇▇ & SONS, INC.,
and
DATA DESTRUCTION SERVICES, INC.
by and among
KTI RECYCLING, INC. ("Buyer")
and
▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Sellers")
Dated as of July 29, 1997
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TABLE OF CONTENTS
OF
SECURITIES PURCHASE AGREEMENT
Section and Heading Page
------------------- ----
1. Purchase and Sale 1
1.1. Purchase and Sale of Assets 1
1.2. Method of Conveyance 1
1.3. No Assumed Obligations 2
2. Purchase Price and Closing 2
2.1. Purchase Price 2
3. Representations and Warranties of the Sellers 2
3.1. Authorization 2
3.2. No Intention to Sell 2
3.3. No Violation 2
3.4. Documentation 3
3.5. Leases 3
3.6. Taxes 3
3.7. Insurance 4
3.8. Employee Benefit Plans: Pension Plans 5
3.9. Brokers and Finders 6
3.10. Accuracy of representations and Documents 6
3.11. Projected Earnings 6
3.12 Environmental Laws 6
3.13 Real Estate 6
3.14 Corporate Organization, Etc. 7
3.15 Authorization, Etc. 7
3.16 No Violations 7
4. Representations and Warranties of Buyer 7
4.1. Corporate Organization, Etc. 7
4.2. Authorization, Etc. 7
4.3. No Violation 8
5. Certain Covenants and Agreements 8
5.1. Full Access 8
5.2. Notice of Claims and Investigations 8
5.3. Deposit for No Solicitation or Negotiation of Other Offers 8
5.4. Press Releases 8
5.5. Consummation of Transactions 8
5.6. Post-Closing Cooperation 9
5.7 Closing Date 9
5.8 Risk of Loss 9
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Section and Heading Page
------------------- ----
5.9. Post-Closing Authority 9
6 Conditions to the Obligations of Sellers 9
6.1. Representations and Warranties True 9
6.2. No Proceeding, Litigation; Injunction 10
6.3. Organizational Documents 10
6.4 Employment Agreements 10
6.5. Covenants Not to Compete 10
6.6. Registration Rights Agreement 10
6.7 Real Estate Purchase 10
7. Conditions to the Obligations of Buyer 10
7.1. Representations and Warranties True 10
7.2. Performance 11
7.3. No Proceeding, Litigation, Injunction 11
7.4. Additional Documents 11
7.5. Board of Directors Approval 11
7.6. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 11
7.7 Employment Agreements 11
7.8 Covenants not to Compete 11
7.9 Real Estate Purchase 11
8. Survival of Representations and Warranties; Indemnification 11
8.1. Survival of Representations 11
8.2. Statements as Representations and Warranties 12
8.3. Remedies Cumulative 12
8.4. Buyer's Indemnity 12
8.5. Sellers' Indemnity 12
8.6. Indemnity Procedure 13
9. Operations - Post Closing 13
9.1. Stock Options 14
9.2. Banking Relationships 14
9.3. Board Composition 14
10. Miscellaneous Provisions 14
10.1. Amendment and Modification 14
10.2. Waiver of Compliance 14
10.3. Expenses 14
10.4. Notices 14
10.5. Binding Effect; Assignment 15
10.6. Governing Law 15
10.7. Counterparts 16
10.8. Headings 16
10.9. Entire Agreement 16
10.10. Third Parties 16
10.11. Severability 16
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SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT dated as of July 29, 1997, by and among ▇. ▇▇▇▇▇▇▇ & Sons, Inc.,
a Maine corporation ("▇. ▇▇▇▇▇▇▇"), Data Destruction Services, Inc., a Maine
corporation ("DDS"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Zaitlin"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇")
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇" and together with Zaitlin and ▇▇▇▇▇ referred to
herein as the "Sellers" and each is individually referred to herein as a
"Seller") and KTI Recycling, Inc., a Delaware corporation (the "Buyer").
The Buyer desires to purchase from the Sellers, and Sellers desire to sell,
assign and transfer to the Buyer all of Sellers' stock in ▇. ▇▇▇▇▇▇▇ and DDS
(the "Securities") as more specifically described in Section 1.1 of the
disclosure schedule attached hereto (the "Disclosure Schedule"), all on the
terms and subject to the conditions hereinafter set forth.
1. Purchase and Sale.
1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions herein set forth, the Buyer shall purchase from the
Sellers all of the Securities, as of the Closing Date (as such
term is heretofore defined), owned by the Sellers or in which
any Seller has an interest.
1.2. Method of Conveyance.
(a) The sale, transfer, conveyance, assignment and
delivery by Sellers of the Securities to the Buyer in
accordance with Section 1.1 hereof shall be effected
on the Closing Date by Sellers' execution and
delivery of the Securities and the customary stock
powers, duly guaranteed and other appropriate
documents (collectively, the "Instruments of
Conveyance") to the Buyer, or its assignees.
(b) At the Closing, good and valid title to all of the
Securities shall be transferred, conveyed, assigned
and delivered by the Sellers to the Buyer, or its
assignees, pursuant to this Agreement and the
Instruments of Conveyance, free and clear of any and
all Liens (as defined below). For the purposes of
this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or
charge of any kind whatsoever.
(c) At the Closing, the Sellers shall cause ▇. ▇▇▇▇▇▇▇
and DDS to provide to the Buyer an estoppel
certificate signed by each creditor (excluding trade
creditors) of ▇. ▇▇▇▇▇▇▇ and DDS (the "Third Party
Funded Debt"), each certificate indicating the
balance due on the Third Party Funded Debt, including
any accrued and unpaid interest thereon, as of the
end of the preceding month, together with a per diem
interest rate during the month in which the Closing
occurs.
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(d) At the Closing the Sellers shall cause ▇. ▇▇▇▇▇▇▇ and
DDS to provide to the Buyer a certificate signed by
▇. ▇▇▇▇▇▇▇ and DDS indicating the balance of trade
accounts payable ("Trade Accounts Payable") due to
third parties, including any accrued and unpaid
interest thereon, as of the end of the preceding
month, together with a per diem interest rate during
the month in which the Closing occurs.
1.3. No Assumed Obligations. Pursuant to this Agreement, the Buyer
does not assume any of the liabilities or obligations of ▇.
▇▇▇▇▇▇▇ or DDS whether absolute, accrued, contingent or
otherwise, whenever incurred.
2. Purchase Price and Closing.
2.1. Purchase Price. The consideration for the Securities to be
sold, transferred and conveyed by the Sellers to the Buyer
pursuant to this Agreement shall be shares of KTI, Inc. Common
Stock, having a market value of $2 million to be delivered at
the Closing. The market value per share shall be the average
of the closing sales price of the common stock of KTI, Inc.
for the ten business days immediately preceding the execution
of this Agreement, subject to a minimum price per share of
$10.00. The stock certificates evidencing such shares shall
bear a customary restrictive legend indicating that such
shares are unregistered. The consideration set forth in this
Section 2.1 is hereinafter collectively referred to as the
"Purchase Price." The parties intend that the exchange of the
Common Stock of KTI, Inc. for the stock of ▇. ▇▇▇▇▇▇▇ and DDS
shall be treated as a tax free reorganization under Section
368 (a) (1) (B) under the Internal Revenue Code of 1986, as
amended.
3. Representations, Warranties and Agreements of the Sellers.
Sellers hereby represent, warrant and agree that:
3.1. Authorization. Each Seller has all requisite power and
authority to sell the Securities which he owns. This Agreement
is, and when executed and delivered, the Instruments of
Conveyance will be, the legal, valid and binding obligation of
Sellers, enforceable in accordance with their respective
terms.
3.2. No Intention to Sell. None of the Sellers has any present
intention to sell any of the shares of KTI Common Stock to be
received under this Agreement.
3.3. No Violation. The execution and delivery of this Agreement by
the Sellers and the consummation of the transactions
contemplated hereby will not violate any statute or law or any
judgment, decree, order, regulation or rule of any domestic or
foreign court or governmental authority.
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3.4. Documentation.
(a) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS
to deliver a certificate stating whether
Section 3.4 (a) of the Disclosure Schedule
contains an accurate and complete list of
all Equity Securities, all Third Party
Funded Debt and all Trade Accounts Payable,
indicating the balance due, including
accrued and unpaid interest thereon, as of
the close of the preceding month and a per
diem interest factor for the month of
Closing. Estoppel or payoff letters from
each third party lender (excluding trade
creditors) shall be attached to such
schedule. The Sellers shall cause ▇. ▇▇▇▇▇▇▇
and DDS to deliver a list of all accounts
payable as of the close of the monthly
financial statement of ▇. ▇▇▇▇▇▇▇ and DDS.
(b) Each Seller has and will have at the
Closing, good and valid title to the
Securities being conveyed by him hereunder.
3.5. Leases.
(a) Section 3.5 (a) of the Disclosure Schedule
constitutes a complete and accurate list of
all real and personal property leases,
subleases, conditional sales agreements or
other title retention agreements
(collectively the "Leases" and individually
a "Lease") to which either of ▇. ▇▇▇▇▇▇▇ or
DDS is a party, as lessee.
(b) All Leases are valid and binding on all parties
thereto and enforceable against such parties in
accordance with their terms, and are in full
force and effect; and with respect to each such
Lease, there are no existing defaults
thereunder (whether or not waived by lessor)
and no event has occurred which (whether with
or without notice, lapse of time or both, or
the happening of any other event) would
constitute default thereunder.
(c) Each lessor shall provide an estoppel
certificate or payoff letter satisfactory in
form and substance to the Buyer.
3.6. Taxes. Except as set forth in Section 3.6 of the
Disclosure Schedule:
(a) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether ▇.
▇▇▇▇▇▇▇ and DDS have duly and accurately filed
or caused to be filed all tax reports and
returns (including information returns)
required to be filed in connection with their
businesses for all periods ending on the date
hereof and will make all such filings required
to be made prior to the Closing Date. The
certificate shall further state that ▇. ▇▇▇▇▇▇▇
and DDS have duly paid all taxes and other
charges due or claimed to be due from them to
any federal, state, local or foreign taxing
authority (including, without limitation, those
due in respect of properties, income,
franchises, licenses, sales or payrolls),
except for taxes being contested in good faith.
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(b) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver complete copies of all of their tax
returns, both income tax and otherwise, for the
five most recent tax years.
(c) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
advise the Buyer whether there are any tax
liens upon any of their Assets except liens for
current taxes not yet due and payable.
(d) Each of ▇. ▇▇▇▇▇▇▇ and DDS has made, for all
periods ending on or before the Closing Date,
all required declarations of estimated Federal,
state, local and foreign income taxes
(including, without limitation, those due in
respect of properties, income, franchises,
licenses, sales or payrolls) and has paid or
provided for all taxes as shown on such
declarations.
(e) There are no facts which exist or have existed
which would constitute grounds for the
assessment of any tax liability against any of
the Sellers or ▇. ▇▇▇▇▇▇▇ and DDS and neither
the Internal Revenue Service nor any other
taxing authority is now asserting, to the
knowledge of any of the Sellers, or threatening
to assert, any deficiency or claim for
additional taxes or interest thereon or
penalties in connection therewith.
3.7. Insurance.
(a) Section 3.7 of the Disclosure Schedule. The
Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate containing an accurate
and complete list of all policies of fire,
disability, workers' compensation, products
liability, and other forms of insurance owned
or held by or beneficially for ▇. ▇▇▇▇▇▇▇ or
DDS which relate to or provide coverage for the
business of ▇. ▇▇▇▇▇▇▇ or DDS. The Sellers will
cause ▇. ▇▇▇▇▇▇▇ and DDS to deliver a copy of
each such policy to the Buyer not less than 5
business days prior to the Closing.
(b) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether all such
policies are in full force and effect, all
premiums with respect thereto covering all
periods through the Closing have been or will
be paid by ▇. ▇▇▇▇▇▇▇ or DDS, and no notice of
cancellation or termination has been received
with respect to any such policy.
(c) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether such
policies are sufficient for compliance with all
requirements of law and of all agreements to
which either of ▇. ▇▇▇▇▇▇▇ or DDS is a party;
are valid, outstanding and enforceable
policies; provide adequate insurance coverage
for the assets and operations of the business
of ▇. ▇▇▇▇▇▇▇ and DDS; and, with respect to
periods prior to the Closing, will not in any
way be affected by, or terminate or lapse by
reason of, the transactions contemplated by
this Agreement.
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3.8. Employee Benefit Plans: Pension Plans.
(a) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether, except
as set forth on Section 3.8 of the Disclosure
Schedule, ▇. ▇▇▇▇▇▇▇ and DDS have any bonus,
deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option,
phantom stock, medical, post-retirement medical
or any other employee benefit plan, arrangement
or practice, whether written or unwritten (an
"Employee Benefit Plan"). The Sellers shall
cause ▇. ▇▇▇▇▇▇▇ and DDS to deliver true copies
of each written Employee Benefit Plan and an
accurate and complete written description of
each oral Employee Benefit Plan to Buyer. The
Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether Section
3.8 of the Disclosure Schedule sets forth the
annual amounts paid or accrued in connection
with each Employee Benefit Plan as of December
31, 1996, and an estimate of the amounts
payable or accruable in connection therewith
through June 30, 1997, to the extent such
amounts are presently fixed or determinable.
(b) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether Section
3.8 of the Disclosure Schedule is a list of
each "employee pension benefit plan" in the
meaning of the Employee Retirement Income
Security Act of 1974 and the regulations
thereunder ("ERISA"), maintained or contributed
to by either Seller (the "Pension Plans") and,
except as noted thereon, no Pension Plan is a
"multi-employer plan" within the meaning of
ERISA. The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and
DDS to deliver a certificate stating whether
there have been any "prohibited transaction,"
to which ▇. ▇▇▇▇▇▇▇ or DDS has been a party,
within the meaning of Section 4975 of the
Internal Revenue Code of 1986 (the "Code"), or
Section 406 of ERISA, with respect to any
Pension Plan which might subject any such plan
or related trust, or any trustee or
administrator thereof, or Seller to the tax or
penalty imposed by Section 4975 of the Code or
to a civil penalty imposed by Section 502 of
ERISA. Except as set forth in Section 3.8(b) of
the Disclosure Schedule, each of the Pension
Plans is and has been in material compliance
with the applicable provisions of ERISA and the
Code.
The present value of all accrued benefits,
whether vested or not, under the Pension
Plans subject to Title IV of ERISA do not
exceed the value of the assets of such plans
allocable to such accrued benefits. Except
as set forth in Section 3.8(c) of the
Disclosure Schedule, none of the Pension
Plans subject to Title IV of ERISA has,
since December 31, 1996, been completely or
partially terminated, nor has there been any
"reportable event," as such term is defined
in Section 4043(b) of ERISA, with respect to
any such plan since the effective date of
said Section 4043(b). None of the Pension
Plans or trusts have incurred any
"accumulated funding
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deficiency," as such term is defined in
Section 412 of the Code, whether or not
waived, since the effective date of said
Section 412.
(c) The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether Section
3.8 (c) of the Disclosure Schedule is a list of
all "employee welfare benefit plans," within
the meaning of ERISA, whether or not insured,
maintained by ▇. ▇▇▇▇▇▇▇ or DDS ("Welfare
Plans"). Except as set forth in Section 3.8 (c)
of the Disclosure Schedule, each Welfare Plan
is and has been in material compliance with the
applicable provisions of ERISA and the Code.
The Sellers shall cause ▇. ▇▇▇▇▇▇▇ and DDS to
deliver a certificate stating whether ▇.
▇▇▇▇▇▇▇ and DDS have complied in all material
respects with all of their obligations, if any,
including the making of all required
contributions, under each of the Welfare Plans.
3.9. Brokers and Finders. No person has been authorized by
the Sellers, ▇. ▇▇▇▇▇▇▇ or DDS or by anyone acting on
their behalf, to act as a broker, finder or in any
other similar capacity in connection with the
transactions contemplated by this Agreement.
3.10 Accuracy of Representations and Documents. No
representation or warranty made by Sellers, ▇.
▇▇▇▇▇▇▇ or DDS in this Agreement or in the Disclosure
Schedule hereto (which is an integral part hereof)
nor any statement, certificate or other document
furnished as an exhibit hereto, or any other document
furnished by Sellers, ▇. ▇▇▇▇▇▇▇ or DDS to Buyer or
any of their representatives in connection with this
Agreement is, or will be when so furnished, false or
misleading in any material respect or contains any
material misstatement of fact or omits to state any
fact necessary to be stated make the statements made
in any such representation or warranty false or
misleading in any material respect.
3.11 Projected Earnings Before Taxes. The Projected
Earnings before Taxes were prepared in good faith
and, subject to the limitations and uncertainties
inherit in trying to project future economic and
business trends or results, represent the good faith
opinion of ▇. ▇▇▇▇▇▇▇ and DDS and their senior
management and have a reasonable basis.
3.12 Environmental Laws. To the best of the Sellers'
knowledge, after diligent inquiry, ▇. ▇▇▇▇▇▇▇ and DDS
are in material compliance with all applicable
Environmental Laws, including without limitation, the
Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, and other similar
Federal and state laws. None of these parties has
received any communication that alleges, or is aware
of any pending allegation of, any current violation
of applicable Environmental Laws. The Sellers will
provide KTI with all available information with
respect to environmental matters of ▇. ▇▇▇▇▇▇▇ and
DDS.
3.13 Real Estate. To the best of the Sellers' knowledge,
after diligent inquiry, all real estate occupied by
▇. ▇▇▇▇▇▇▇ and DDS is structurally sound and has no
material
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defects, which would affect its current or reasonably
foreseeable use. No notices of any violations may
have been received with respect to zoning laws,
building code or setback violations or environmental
matters. All equipment is operable and, to the best
of the Sellers' knowledge, after diligent inquiry, is
in good repair, taking into account its age and use.
No permits and licenses necessary to operate ▇.
▇▇▇▇▇▇▇ or DDS have been cancelled or may be
cancelled due to a change of ownership of ▇. ▇▇▇▇▇▇▇
or DDS.
3.14 Corporate Organization, Etc. ▇. ▇▇▇▇▇▇▇ and DDS are
corporations duly formed, validly existing and in
good standing under the laws of the State of Maine
and any other state in which such corporations
conduct business and have all requisite power and
authority to carry on their businesses as they are
now being conducted and to own, and operate their
properties and assets as and in the places where such
business is now conducted and where such properties
and assets are now owned or operated.
3.15 Authorization, Etc. ▇. ▇▇▇▇▇▇▇ and DDS have all
requisite power and authority to execute, deliver and
perform their obligations under this Agreement. This
Agreement is valid and binding upon ▇. ▇▇▇▇▇▇▇ and
DDS, enforceable in accordance with its terms.
3.16 No Violation. Neither the execution and delivery of
this Agreement by ▇. ▇▇▇▇▇▇▇ and DDS nor the
consummation of the transactions contemplated hereby
by ▇. ▇▇▇▇▇▇▇ and DDS will violate any provisions of
the Certificate of Incorporation of ▇. ▇▇▇▇▇▇▇ or
DDS, or be in conflict with, or constitute a default
(or an event which, with or without notice, lapse of
time or both, would constitute a default) under, or
result in the termination or invalidity of, or
accelerate the performance required by, or cause the
acceleration of the maturity of any debt or
obligation pursuant to, any agreement or commitment
to which ▇. ▇▇▇▇▇▇▇ or DDS is a party or by which
either of ▇. ▇▇▇▇▇▇▇ and DDS is bound, or violate any
statute or law or any judgment, decree, order,
regulation or rule of any court or governmental
authority. .
4. Representations and Warranties of Buyer.
Buyer represents and warrants to Sellers as follows:
4.1. Corporate Organization. Etc. Buyer is a corporation
duly formed, validly existing and in good standing
under the laws of the State of Delaware and has all
requisite power and authority to carry on its
business as it is now being conducted and to own, and
operate its properties and assets as and in the
places where such business is now conducted and where
such properties and assets are now owned or operated.
4.2. Authorization Etc. Buyer has all requisite power and
authority to execute, deliver and perform its
obligations under this Agreement. This Agreement is
valid and binding upon Buyer, enforceable in
accordance with its terms.
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4.3. No Violation. Neither the execution and delivery of
this Agreement by Buyer nor the consummation of the
transactions contemplated hereby by Buyer will
violate any provisions of the Certificate of
Incorporation of Buyer, or be in conflict with, or
constitute a default (or an event which, with or
without notice, lapse of time or both, would
constitute a default) under, or result in the
termination or invalidity of, or accelerate the
performance required by, or cause the acceleration of
the maturity of any debt or obligation pursuant to,
any agreement or commitment to which Buyer is a party
or by which Buyer is bound, or violate any statute or
law or any judgment, decree, order, regulation or
rule of any court or governmental authority.
5. Certain Covenants and Agreements.
5.1. Full Access. The Sellers agree to cause ▇. ▇▇▇▇▇▇▇
and DDS, without in any way detracting from their
representations, warranties and agreements set forth
in this Agreement, to afford Buyer and its counsel,
accountants and other representatives, after the date
hereof, full access during normal business hours to
the plants, offices, warehouses, properties,
employees, counsel, accountants and other
representatives, books and records, including
accountant's workpapers, of ▇. ▇▇▇▇▇▇▇ and DDS in
order that Buyer may have full opportunity to make
such investigations as it shall desire to make of the
affairs of ▇. ▇▇▇▇▇▇▇ and DDS.
5.2. Notice of Claims and Investigations. Each party will
immediately give notice to the other of, and confer
with the other with respect to, any claims,
investigations by governmental authorities or
threatened litigation relating to the transactions
contemplated by this Agreement.
5.3. No Solicitation or Negotiation of Other Offers. Each
Seller agrees that from the date hereof through the
Closing Date he will not pursue, encourage or solicit
any inquiries or proposals by, or engage in any
discussions or negotiations with, any person, any
sale of the Securities by any of the Sellers, or any
other exchange, or disposition involving the
Securities
5.4. Press Releases. Without the written consent of the
other parties, which shall not be unreasonably
withheld, each of the parties hereto agrees not to
make any public announcements or press releases
regarding the transactions contemplated hereby until
such transactions are consummated, unless otherwise
required by law.
5.5. Consummation of Transactions. Each of the parties
agrees to use its best efforts to bring about the
satisfaction of the conditions required to be
performed, fulfilled or complied with by it hereunder
and 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 as expeditiously as
practicable. In case at any time after the Closing
any further action is necessary or desirable to carry
out the
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purposes of this Agreement, the appropriate party
will take all such necessary action, including
without limitation, the execution and delivery of
such further instruments and documents as may be
reasonably requested by the other party or parties
for such purposes or otherwise to complete or perfect
the transactions contemplated hereby.
5.6. Post-Closing Cooperation. After the Closing, Buyer
and Sellers shall cooperate fully with each other and
shall make available to each other all information,
records or documents reasonably requested in
connection with matters involved in the sale of the
Securities.
5.7 Closing Date. The Buyer and the Sellers shall use
commercially reasonable efforts to complete the
transaction on or before August 1, 1997.
5.8 Risk of Loss. Prior to the Closing, the risk of loss
on the Securities shall remain with the Sellers.
5.9. Post-Closing Authority.
(a) Each Seller agrees that, unless duly
authorized in writing by Buyer, or required
by law, he will not at any time reveal,
divulge or make known to any person (other
than Buyer or any affiliate of Buyer) any
confidential or proprietary data or
information relating to the business of ▇.
▇▇▇▇▇▇▇ or DDS.
(b) If any of the covenants contained in this
Section is held to be invalid or
unenforceable because of the duration of
such provision or the area covered thereby,
the parties agree that the court making such
determination shall have the power to reduce
the duration or area of such provision to
the extent necessary to render such
provision valid and enforceable and, in its
reduced form, said provision shall then be
valid and enforceable.
6. Conditions to the Obligations of Sellers.
Each and every obligation of Buyer under this Agreement to be
performed on or before the Closing shall be subject to the
satisfaction, on or before the Closing, of each of the
following conditions, unless waived in writing by Sellers.
6.1. Representations and Warranties True. The
representations and warranties of Buyer contained in
this Agreement shall be true, complete and accurate
in all material respects as of the date when made and
at and as of the Closing as though such
representations and warranties were being made at and
as of the Closing Date, and except for changes
expressly permitted or contemplated by the terms of
this Agreement.
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6.2. No Proceeding. Litigation: Injunction. No suit,
action, investigation, inquiry or other proceeding by
any governmental body or other person shall have been
instituted which arises out of or relates to this
Agreement or the transactions contemplated hereby or
seeks to obtain substantial damages in respect
thereof, and, on the Closing Date, there shall be no
effective permanent or preliminary injunction, writ,
temporary restraining order or any order of any
nature issued by a court of competent jurisdiction
directing that the transactions provided for herein
not be consummated as so provided.
6.3 Organizational Documents. Buyer shall have furnished
Sellers with (i) a copy of its Certificate of
Incorporation, certified by the Secretary of State of
Delaware, (ii) certified copies of minutes of action
taken by the Board of Directors of Buyer approving
the execution and delivery of this Agreement and
related documents and the consummation of the
transaction contemplated hereunder; and (iii) a
Certificate of Incumbency setting forth the officers
of the Buyer.
6.4 Employment Agreements. Zaitlin, Suher, ▇▇▇▇▇ and
▇▇▇▇▇▇ shall have offered Employment Agreements in
the form of Exhibits 6.4a, 6.4b, 6.4c and 6.4d
hereto.
6.5 Registration Rights Agreement. The Buyer shall have
executed and delivered a Registration Rights
Agreement to the Sellers in the form of Exhibit 6.6
hereto.
6.6 Board of Directors and Stockholder Approval. ▇.
▇▇▇▇▇▇▇ and DDS shall have received the approval of
their Board of Directors and stockholders prior to
Closing.
6.7 Real Estate Purchase. All conditions to closing, and
all contingencies contained in the real estate
contract referred to in Section 7.8 below, have been
met or have been waived by the Buyer.
7. Conditions to the Obligations of Buyer.
Each and every obligation of the Sellers under this Agreement
to be performed on or before the Closing shall be subject to
the satisfaction, on or before the Closing, of each of the
following conditions, unless waived in writing by the Buyer.
7.1. Representations and Warranties True. The
representations and warranties of Sellers contained
in this Agreement including the Disclosure Schedule
attached hereto, shall be true, complete and accurate
in all material respects as of the date when made and
at and as of the Closing Date as though such
representations and warranties were being made at and
as of the Closing Date (except that representations
and warranties which refer to conditions existing on
a specific date, such as representations and
warranties regarding the Financial Statements, shall
continue to refer to that date) and except for
changes expressly permitted or contemplated by the
terms of this Agreement.
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7.2. Performance. Sellers shall have performed, fulfilled
and complied in all material respects with all
agreements, obligations and conditions required by
this Agreement to be performed, fulfilled or complied
with by them on or prior to the Closing, including
delivery to Buyer of all of the Assets.
7.3. No Proceeding. Litigation. Injunction. No suit,
action, investigation, inquiry or other proceeding by
any governmental body or other person shall have been
instituted or threatened which arises out of or
relates to this Agreement or the transactions
contemplated hereby or seeks to obtain substantial
damages in respect thereof, and, on the Closing Date,
there shall be no effective permanent or preliminary
injunction, writ, temporary restraining order or any
order of any nature issued by a court of competent
jurisdiction directing that the transactions provided
for herein not be consummated as so provided.
7.4. Additional Documents. Sellers shall have delivered to
Buyer such other documents, instruments and
certificates as shall be reasonably requested by
Buyer for the purpose of effecting the transactions
provided for and contemplated by this Agreement.
7.5 Board of Directors Approval. KTI, Inc. shall have
received the approval of its Board of Directors prior
to Closing.
7.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. Buyer shall have received on or
prior to the closing, evidence to its satisfaction
that the transaction is exempt from the rules issued
by the Federal Trade Commission under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976.
7.7 Employment Agreements. Employment Agreements.
Zaitlin, Suher, ▇▇▇▇▇ and ▇▇▇▇▇▇ shall have executed
and delivered a Agreements in the form of Exhibits
6.4a, 6.4b, 6.4c, and 6.4d hereto ("Employment
Agreements").
7.8 Covenants not to Compete. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and all
officers and sales employees of ▇. ▇▇▇▇▇▇▇ and DDS,
who have not signed Employment Agreements, shall have
signed covenants not to compete in form acceptable to
the Buyer.
7.9 Real Estate Purchase. I. Zaitlan shall have entered
into a binding contract, in the form of Exhibit 7.9
attached hereto, to purchase two adjacent parcels of
real estate in Biddeford, Maine presently leased to
▇. ▇▇▇▇▇▇▇, one owned by ▇▇▇ Zaitlan individually and
one owned by ▇▇▇▇▇▇▇ Road Partnership, a Maine
partnership.
8. Survival of Representations and Warranties; Indemnification.
8.1. Survival of Representations. Notwithstanding any
investigation at any time made by or on behalf of any
party hereto, all representations and warranties
contained in this Agreement shall survive the Closing
until April 15, 1999.
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8.2. Statements as Representations and Warranties. All
statements contained herein, in the Disclosure
Schedule, or in any other schedule, certificate, list
or other document delivered or to be delivered
pursuant to this Agreement shall be deemed
representations and warranties as such terms are used
in this Agreement and any material misstatement or
omission in any thereof shall be deemed a breach of a
representation or warranty hereunder.
8.3. Remedies Cumulative. The remedies provided herein
shall be cumulative and shall not preclude assertion
by any party of any other rights or the seeking of
any other remedies against any other party.
8.4. Buyer's Indemnity. The Buyer agrees to defend,
indemnify and hold harmless the Sellers from, against
and in respect of any and all demands, claims,
actions or causes of action, losses, liabilities,
damages, assessments, deficiencies, taxes, costs and
expenses, including without limitation, interest,
penalties and reasonable attorneys' fees and
expenses, asserted against, imposed upon or paid,
incurred or suffered by Sellers as a result of,
arising from, in connection with or incident to (i)
any breach or inaccuracy of any representation or
warranty of Buyer contained in this Agreement or (ii)
any breach of any covenant or agreement of Buyer
contained in this Agreement.
8.5. Sellers' Indemnity.
(a) Subject to the limitations contained in
subparagraph (b) below, the Sellers agree to
defend, indemnify and hold harmless Buyer
from, against and in respect of any and all
demands, claims, actions or causes of
action, losses, liabilities, damages,
assessments, deficiencies, taxes, costs and
expenses, including without limitation,
interest, penalties and reasonable
attorneys' fees and expenses, asserted
against, imposed upon or paid, incurred or
suffered by Buyer on or before August 1,
1999:
(i) as a result of, arising from, in
connection with or incident to (A)
any material breach or inaccuracy
of any representation or warranty
of any Seller in this Agreement or
in any Instrument of Conveyance, or
(B) any material breach of any
covenant or agreement of any Seller
contained in this Agreement or in
any Instrument of Conveyance (For
purposes of this subsection,
"material" shall mean any amount in
excess of $10,000 individually or
in aggregate.); and/or
(ii) arising out of any acts, events or
circumstances by any Seller prior
to Closing Date.
(b) Each Seller's liability to reimburse the
Buyer under this Section shall be limited be
limited to the following percentage of the
total claim of the
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Buyer (it being understood that the Buyer
may not recover more than 100% of its total
claim):
▇▇▇ ▇▇▇▇▇▇▇ 90%
▇▇▇▇▇ ▇▇▇▇▇ 30%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 30%
8.6. Indemnity Procedure.
(a) A party agreeing to indemnify against any
matter pursuant to this Agreement is
referred to herein as the "Indemnifying
Party" and the other party claiming
indemnity is referred to herein as the
"Indemnified Party."
(b) An Indemnified Party under this Agreement
shall give prompt written notice to the
Indemnifying Party of any liability which
might give rise to a claim for indemnity
under this Agreement. As to any claim,
action, suit or proceeding by a third party,
the Indemnifying Party shall have the right,
exercisable by notifying the Indemnified
Party within twenty days after receipt of
such notice from the Indemnified Party, to
assume the entire control of the defense,
compromise or settlement thereof, all at the
Indemnifying Party's expense including
employment of counsel, and in connection
therewith the Indemnified Party shall
cooperate fully to make available to the
Indemnifying Party all pertinent information
under its control. The Indemnified Party may
at its expense, if it so elects, designate
its own counsel to participate with counsel
designated by the Indemnifying Party in the
conduct of any such defense. If the defense
of any such matter is tendered to the
Indemnifying Party by notice as set forth
above and the Indemnified Party is entitled
to indemnification pursuant hereto with
respect to such matter, and the Indemnifying
Party declines or otherwise fails to (1)
promptly pay or settle the same, or (2)
vigorously investigate and defend the same,
the Indemnified Party may investigate and
defend the same and the Indemnifying Party
will reimburse the Indemnified Party for all
judgments, settlement payments and
reasonable expenses, including reasonable
attorneys' fees, incurred and paid by it in
connection therewith.
(c) An Indemnified Party shall not make any
settlement of any claim without the written
consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(d) Except as set forth in subsection (b) in the
event of any litigation brought by either
party hereto to seek indemnity under this
Agreement, the prevailing party shall be
entitled to recover attorneys' fees upon
final judgment on the merits.
9. Operations - Post Closings.
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9.1 Stock Options - Employees. Stock Options will be
granted pursuant to the KTI, Inc. 1994 Long-Term
Incentive Award Plan (the "Plan") to key employees of
▇. ▇▇▇▇▇▇▇ and DDS.
These options will be exercisable at the closing sale
price per share on the date of grant and will vest at
the rate of 20% on the first and subsequent
anniversaries of the date of grant.
9.2 Banking Relationships. The Buyer will use
commercially reasonable efforts to obtain the release
of the Sellers' personal liability on existing bank
debt of ▇. ▇▇▇▇▇▇▇ and DDS. If such releases are not
available, such debt will be refinanced with other
lenders who do not require guarantees from the
Sellers. Existing debt of ▇. ▇▇▇▇▇▇▇ and DDS owed to
Sellers will be repaid promptly.
9.3 Board Composition. The Board of ▇. ▇▇▇▇▇▇▇ and DDS
will have five directors postclosing, two of whom
shall be designated by the Sellers. The remaining
three directors will be appointed by KTIR .
10. Miscellaneous Provisions.
10.1. Amendment and Modification. This Agreement may be
amended, modified and supplemented by the parties
hereto only by written instrument signed by or on
behalf of the party to be charged thereunder.
10.2. Waiver of Compliance. Any failure of Sellers, on the
one hand, or Buyer on the other hand, to comply with
any obligation, covenant, agreement or condition
herein may be expressly waived in writing by an
authorized officer of the other party, but such
waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or
estoppel with respect to any subsequent or other
failure.
10.3. Expenses. Each of the parties hereto agrees to pay
all of the respective expenses incurred by it in
connection with the negotiation, preparation,
execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated
hereby.
10.4. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall
be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, certified or
registered mail, with postage prepaid as follows:
If to Sellers: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Fax:(▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Fax:(▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Troubh, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to Buyer: KTI Recycling, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Buyer shall
furnish to Sellers in writing.
10.5. Binding Effect: Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure
to the benefit of the parties hereto and their
respective heirs, administrators, executors, legal
representatives, such successors and assigns, but
neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned
by any of the parties hereto without the prior
written consent of the other parties; provided,
however, that Buyer may freely assign this Agreement
or all or any rights it may have hereunder to any of
its subsidiaries or affiliated companies, but no such
assignment shall relieve Buyer of its obligations
hereunder.
10.6. Governing Law. All agreements, other than the
agreements relating to real estate and the employment
agreements for the four principal officers, shall be
governed by the laws of the State of New York,
without regard to the provisions relating to
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the conflicts of laws. The laws of the State in which
the real estate is located shall govern the
agreements relating to the real estate. The laws of
the State of Maine shall govern the employment
agreements.
10.7. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an
original, but all of which together shall constitute
the same instrument.
10.8. Headings. The headings of the sections and articles
of this Agreement are inserted for convenience only
and shall not constitute a part hereof or affect in
any way the meaning or interpretation of this
Agreement.
10.9. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties
hereto in respect of the subject matter contained
herein, and supersedes all prior-agreements,
promises, letters of intent, covenants, arrangements,
communications, representations or warranties,
whether oral or written, by any party hereto or by
any Related Person of any party hereto. All Exhibits
attached hereto, the Disclosure Schedule, any
exhibits thereto and all certificates, documents and
other instruments delivered or to be delivered
pursuant to the terms hereof are hereby expressly
made a part of this Agreement as fully as though set
forth herein, and all references herein to the terms
"this Agreement", "hereunder", "herein", "hereby" or
"hereto" shall be deemed to refer to this Agreement
and to all such writings.
10.10. Third Parties. Except as specifically set forth or
referred to herein, nothing in this Agreement,
expressed or implied, is intended or shall be
construed to confer upon or give to any person, firm,
partnership, corporation or other entity other than
the parties hereto and their successors or permitted
assigns, any rights or remedies under or by reason of
this Agreement.
10.11. Severability. The invalidity of any one or more of
the words, phrases, sentences, clauses, sections or
subsections contained in this Agreement shall not
affect the enforceability of the remaining portions
of this Agreement or any part hereof, all of which
are inserted conditionally on their being valid in
law, and, in the event that any one or more of the
words, phrases, sentences, clauses, sections or
subsections contained in this Agreement shall be
declared invalid by a court of competent
jurisdiction, this Agreement shall be construed as if
such invalid word or words, phrase or phrases,
sentence or sentences, clause or clauses, section or
sections, or subsection or subsections had not been
inserted.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
Data Destruction Services, Inc ▇. ▇▇▇▇▇▇▇ & Sons, Inc.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- ---------------------------
Title: President Title: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
KTI Recycling, Inc.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------- ---------------------------
Title: Senior Vice President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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