1
EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT FOR
TOTAL WASTE MANAGEMENT CORPORATION
by and among
KTI SPECIALTY WASTE SERVICES, INC. ("Buyer")
and
TOTAL WASTE MANAGEMENT CORPORATION,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Dated as of January 27, 1998
2
TABLE OF CONTENTS
OF
SECURITIES PURCHASE AGREEMENT
Section and Heading Page
------------------- ----
1. Purchase and Sale 1
1.1. Purchase and Sale of Securities 1
1.2. Method of Conveyance 1
1.3. No Assumed Obligations 2
2. Purchase Price and Closing 2
2.1. Purchase Price 2
2.2. Payment of Purchase Price 2
3. Representations and Warranties of the Sellers 2
3.1. Authorization 2
3.2. No Violation 2
3.3. Documentation 2
3.4. Leases and Permits 3
3.5. Taxes 3
3.6. Insurance 4
3.7. Employee Benefit Plans; Pension Plans 5
3.8. Brokers and Finders 6
3.9. Accuracy of Representations and Documents 6
3.10. Environmental Laws 6
3.11. Real Estate 6
3.12. Corporate Organization, Etc. 7
3.13. Authorization, Etc. 7
3.14. No Violation 7
3.15. Litigation 7
3.16. Environmental Compliance, Inc. 7
4. Representations and Warranties of Buyer 8
4.1. Corporate Organization, Etc. 8
4.2. Authorization, Etc. 8
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. No Solicitation or Negotiation of other Offers 9
5.4. Press Releases 9
5.5. Consummation of Transactions 9
5.6. Post-Closing Cooperation 9
5.7. Closing Date 9
5.8. Risk of Loss 9
3
Section and Heading Page
------------------- ----
5.9. Post-Closing Authority 9
6. Conditions to the Obligations of Sellers 10
6.1. Representations and Warranties True 10
6.2. No Proceeding, Litigation; Injunction 10
6.3. Organizational Documents 10
6.4. Employment Agreements 10
6.5. Board of Directors and Stockholder Approval 10
7. Conditions to the Obligations of Buyer 10
7.1. Representations and Warranties True 11
7.2. Performance 11
7.3. No Proceeding, Litigation, Injunction 11
7.4. Governance Documents 11
7.5. Additional Documents 11
7.6. Board of Directors Approval 11
7.7. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 11
7.8. Employment Agreements 11
8. Survival of Representations and Warranties; Indemnification 12
8.1. Survival of Representations 12
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 14
8.7. Financial Statements, Escrow 15
8.8. Environmental Indemnity 15
9. Operations - Post Closing 15
9.1. Stock Options-Employees 15
9.2. Banking Relationships 15
9.3. Board Composition 16
10. Miscellaneous Provisions 16
10.1. Amendment and Modification 16
10.2. Waiver of Compliance 16
10.3. Expenses 16
10.4. Notices 16
10.5. Binding Effect; Assignment 17
10.6. Governing Law 17
10.7. Counterparts 17
10.8. Headings 18
10.9. Entire Agreement 18
10.10. Third Parties 18
10.11. Severability 18
4
SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT dated as of January 27, 1998, by and among Total Waste Management
Corporation, a New Hampshire corporation ("Total"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇")
and ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇▇") and together with ▇▇▇▇▇▇ referred to
herein as the "Sellers" and each is individually referred to herein as a
"Seller") and KTI Specialty Waste Services, Inc., a Maine 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 Total (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 Securities. 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 Total to
provide to the Buyer an estoppel certificate signed
by each creditor (excluding trade creditors) of Total
(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. Such certificate
shall state that the creditor will not exercise any
right to
5
2
accelerate such debt under a "due on sale" clause for
a period of 90 days after the Closing. No creditor
may require a guarantee from the Buyer or KTI, Inc.
as a condition of issuing such certificate.
(d) At the Closing the Sellers shall cause Total to
provide to the Buyer a certificate signed by Total
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 Total
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: (a) $1.3 million; (b) an
additional amount equal to Total's recycled oil inventory,
measured in gallons as of January 23, 1998, times $0.25 per
gallon, which is $74,525.25 and (c) an Earnout component,
calculated in accordance with Exhibit A. The consideration set
forth in this Section 2.1 is hereinafter collectively referred
to as the "Purchase Price."
2.2. Payment of Purchase Price. The Purchase Price shall be paid as
follows: (a) Buyer shall pay to Sellers the sum of
$1,124,525.25 to be paid at Closing by wire transfer, and (b)
Buyer shall deposit the sum of $250,000.00 into escrow
pursuant to the Escrow Agreement of even date herewith (the
"Escrow Agreement").
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 or she 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 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.
3.3. Documentation.
6
3
(a) The Sellers shall cause Total to deliver a
certificate stating whether Section 3.3 (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 Total to
deliver a list of all accounts payable as of the
close of the monthly financial statement of Total.
(b) Each Seller has and will have at the Closing, good
and valid title to the Securities being conveyed by
him or her hereunder.
3.4. Leases and Permits.
(a) Section 3.4 (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 Total is a party, as lessee and
permits required to operate the businesses of Total
as they are presently operated (the "Permits").
(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.
3.5. Taxes. Except as set forth in Section 3.5 of the Disclosure
Schedule:
(a) The Sellers shall cause Total to deliver a
certificate stating whether Total has duly and
accurately filed or caused to be filed all tax
reports and returns (including information returns)
required to be filed in connection with its
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 Total has 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.
7
4
(b) The Sellers shall cause Total to deliver complete
copies of all of its tax returns, both income tax and
otherwise, for the five most recent tax years.
(c) The Sellers shall cause Total to advise the Buyer
whether there are any tax liens upon any of its
Assets except liens for current taxes not yet due and
payable.
(d) Total 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 Total 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.
3.6. Insurance.
(a) Section 3.6 of the Disclosure Schedule. The Sellers
shall cause Total 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 Total which relate to or
provide coverage for the business of Total. The
Sellers will cause Total 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 Total 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 Total and no notice of
cancellation or termination has been received with
respect to any such policy.
(c) The Sellers shall cause Total to deliver a
certificate stating whether such policies are
sufficient for compliance with all requirements of
law and of all agreements to which Total is a party;
are valid, outstanding and enforceable policies;
provide adequate insurance coverage for the assets
and operations of the business of Total; 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.
8
5
3.7. Employee Benefit Plans: Pension Plans.
(a) The Sellers shall cause Total to deliver a
certificate stating whether, except as set forth on
Section 3.7 of the Disclosure Schedule, Total 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
Total 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 Total to deliver a
certificate stating whether Section 3.7 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 Total to deliver a
certificate stating whether Section 3.7 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 Total to deliver a
certificate stating whether there have been any
"prohibited transaction," to which Total 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 3.7(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 3.7(b) 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 deficiency,"
as such term is defined in Section 412 of the Code,
whether or not waived, since the effective date of
said Section 412.
9
6
(c) The Sellers shall cause Total to deliver a
certificate stating whether Section 3.7 (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 Total ("Welfare
Plans"). Except as set forth in Section 3.7 (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 Total to deliver a certificate stating whether
Total 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.
3.8. Brokers and Finders. No person has been authorized by the
Sellers, Total 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.
3.9. Accuracy of Representations and Documents. No representation
or warranty made by Sellers or Total 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 Total 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.
3.10. Environmental Laws. To the best of the Sellers' knowledge,
after diligent inquiry, Total 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 the Buyer with
all available information with respect to environmental
matters of Total.
3.11. Real Estate. To the best of the Sellers' knowledge, after
diligent inquiry, all real estate occupied by Total is
structurally sound and has no material 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 Total have been cancelled or
may be cancelled due to a change of ownership of Total.
10
7
3.12. Corporate Organization, Etc. Total is a corporation duly
formed, validly existing and in good standing under the laws
of the State of New Hampshire and any other state in which
such corporation conducts business and has all requisite power
and authority to carry on its businesses as they are 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.
3.13. Authorization, Etc. Total has all requisite power and
authority to execute, deliver and perform its obligations
under this Agreement. This Agreement is valid and binding upon
Total, enforceable in accordance with its terms.
3.14. No Violation. Neither the execution and delivery of this
Agreement by Total nor the consummation of the transactions
contemplated hereby by Total will violate any provisions of
the Certificate of Incorporation of Total, 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 Total is a
party or by which Total is bound, or violate any statute or
law or any judgment, decree, order, regulation or rule of any
court or governmental authority.
3.15. Litigation. Except as set forth in Section 3.15 of the
Disclosure Schedule, there is no decree, judgment, order,
litigation at law or in equity, arbitration proceeding or
proceeding before or by any commission, agency or other
administrative or regulatory body or authority pending or, to
the best knowledge of Sellers, threatened (i) to which Total
is a party, (ii) to which Total is subject, (iii) which might
adversely affect the right, title, or interest of Total, or
(iv) which might result in any material adverse change in the
business or condition (financial or otherwise) of Total.
Sellers do not know or have reasonable grounds to know of any
basis for any such claim, proceeding, litigation or
investigation. There is no investigation by any commission,
agency, or other administrative or regulatory body or
authority pending or to the best knowledge of Sellers,
threatened, which is specifically concerned with the
operations, business or affairs of Total.
3.16. Environmental Compliance, Inc. Buyer and Seller understand
that Buyer is in the process of acquiring all of the assets of
Environmental Compliance, Inc., a New Hampshire corporation
("ECI") with a place of business at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇. Seller represents that as part of
that acquisition Total will be assuming those obligations
and/or liabilities of ECI listed on Schedule 3.16 attached to
this Agreement. Seller represents that there are no other
outstanding liabilities of ECI and agrees to indemnify Total
for and against any claims, loss, costs, damage or expense
arising from any liabilities of ECI which exist as of the date
hereof and which are not listed on Schedule 3.16 attached
hereto and made a part hereof and which are asserted against
Total.
11
8
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 Maine 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.
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 Total, 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 Total in order that
Buyer may have full opportunity to make such investigations as
it shall desire to make of the affairs of Total.
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.
12
9
5.3. No Solicitation or Negotiation of Other Offers. Each Seller
agrees that from the date hereof through the Closing Date he
or she 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 him, her or 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 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
February 10, 1998.
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 or she 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 Total.
(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
13
10
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.
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 Maine; (ii) a certificate of good
standing; and (ii) a Certificate of Incumbency setting forth
the officers of the Buyer.
6.4. Employment Agreements. ▇▇▇▇▇▇▇▇▇▇▇ shall have offered an
Employment Agreement in the form of Exhibits 6.4 hereto.
6.5. Board of Directors and Stockholder Approval. Total shall have
received the approval of their Board of Directors and
stockholders prior to Closing
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.
14
11
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.
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. Governance Documents. Sellers shall have delivered to Buyers (i) a copy
of the Certificate of Incorporation of Total, certified by the
Secretary of State of New Hampshire; and (ii) a certificate of good
standing in each state in which Total does business.
7.5. 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.
7.6. Board of Directors Approval. KTI, Inc. shall have received the approval
of its Board of Directors prior to Closing.
7.7. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. 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.
7.8. Employment Agreements. ▇▇▇▇▇▇▇▇▇▇▇ shall have executed and delivered an
Agreement in the form of Exhibit 6.4 hereto, including Exhibit B,
containing the bonus provisions (the "Employment Agreement").
15
12
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 September 15, 1999.
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.
Subject to the limitations contained in subparagraph (b)
below:
(i) 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 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),
asserted against, imposed upon or paid, incurred or
suffered by Buyer on or before
16
13
September 15, 1999; and relating to or arising from
any occurrence or state of facts existing on or
before January 28, 1998;
(ii) 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, expenses, including without
limitation, interest, and penalties in connection
with or incident to the current lawsuit brought by
Kleen Laundry & Dry Cleaning Services ("Kleen
Laundry") against Total pending in the United States
District Court for the District of New Hampshire. The
indemnity by Seller under this Section 8.5(iii) shall
be limited to the amount of the final judgment or
settlement, and shall not include the costs incurred
by Total in defending said lawsuit. If Kleen Laundry
appeals a judgment by the trial court, Total shall
incur the costs of the appeal. If the result of a
trial is a judgment adverse to Total, Total shall
make a good faith decision, after consultation with
trial counsel, whether to appeal the judgment. If
Total decides to appeal the judgment, Total shall
incur the costs of the appeal. If Total decides not
to appeal, Sellers may appeal the adverse judgment,
and Sellers shall pay the costs, including attorneys'
fees and expenses, of such appeal. If Total or
Sellers recover any portion of the judgment or
settlement (not including recovery of fees paid by
Total to third parties) through an action for
contribution or indemnification from third parties,
such recovered sums shall belong to Sellers. The
costs, including attorneys' fees and expenses, of
seeking to obtain or obtaining a contribution or
indemnification from third parties, shall be paid by
Sellers;
(iii) 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, expenses, including without
limitation, interest, and penalties in connection
with as a result of, arising from, in connection with
or incident to any deficiency or claim for additional
taxes or interest thereon or penalties in connection
with any federal or state assessment of any tax
liability against any of the Sellers or Total by
either the Internal Revenue Service or any other
taxing authority related to tax returns filed on
behalf of Total prior to the date hereof. If the
taxing authority determines that a refund of taxes
resulting from such tax returns is due to Total, said
refund shall belong to Sellers; and
(iv) Except as set forth in Subparagraphs 8.5(i), 8.5(ii)
and 8.5(iii) above, 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
17
14
attorneys' fees and expenses arising out of any acts
or events done, or circumstances caused, by any
Seller prior to Closing Date asserted against,
imposed upon or paid, incurred or suffered by Buyer
on or before September 15, 1999.
The indemnities set forth in this Section 8.5 are intended to
and shall survive the Closing pursuant to the terms of this Agreement.
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. This Subparagraph
8.6(b) shall not apply to any indemnities under a
separate Indemnity Agreement of near or even date
regarding environmental hazards, a copy of which is
attached hereto as Exhibit B. Notwithstanding the
foregoing, Sellers shall have the right to choose
counsel for purposes of the Clean Laundry lawsuit.
Buyer shall have the right to choose counsel with
regard to the indemnity set forth in Paragraph 8.5(i)
above provided, however, that Seller consents to
Buyer's choice of counsel, which consent shall not be
unreasonably withheld or delayed. In all other
instances the foregoing provisions of this Paragraph
8.6(b) shall determine who shall select counsel in
any given action.
18
15
(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.
8.7 Financial Statements, Escrow. For a period of ninety (90) days
from the Closing Date, unless said period is extended pursuant
to this Paragraph 8.7, Two Hundred and Fifty Thousand Dollars
($250,000.00) of the Purchase Price shall be held in escrow
pursuant to the terms of the Escrow Agreement. Prior to ninety
days from the Closing Date, Buyer shall arrange for a review
of Total's financial records according to generally accepted
accounting principles. If, as a result of such review, Buyer
shall determine that the liabilities of Total are more than
One Million, Six Hundred Thousand Dollars ($1,600,000) as of
December 31, 1997, Buyer shall be entitled to the difference
between the liabilities and $1,600,000 from the Escrow
Account, and, in the event such difference exceeds $250,000,
Sellers shall be responsible to pay the excess to Buyers. If
Sellers dispute the amount of the difference, Sellers shall
notify the Escrow Agent of the amount in dispute prior to
ninety days from the Closing Date, and the Escrow Agent shall
hold the disputed amount in escrow pending resolution of the
dispute and release the balance of the escrow. If Escrow Agent
is not notified of a dispute prior to ninety days from the
Closing Date, Escrow Agent shall deliver to Sellers the
balance in escrow, apportioned equally between the Sellers. If
Buyers do not complete their review of Total's financial
records prior to the end of the Escrow Period, Sellers shall
be entitled to a release of the entire amount in escrow.
8.8. Environmental Indemnity. The parties shall enter into a
separate agreement regarding environmental hazards, a copy of
which is attached hereto as Exhibit B.
9. Operations - Post Closings.
9.1. Stock Options - Employees. Stock Options may be granted
pursuant to the KTI, Inc. 1994 Long-Term Incentive Award Plan
(the "Plan") to key employees of Total at the sole discretion
of the Compensation Committee of the Board of Directors of
KTI, Inc.
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.
19
16
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 Total. If such
releases are not received by March 31, 1998, such debt will be
refinanced with other lenders who do not require guarantees
from the Sellers. Existing debt of Total owed to Sellers will
be repaid promptly.
9.3. Board Composition. The Board of Directors of Total will have
five directors postclosing, two of whom shall be designated by
the Sellers. The remaining three directors will be appointed
by the Buyer.
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: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
20
17
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer: KTI Specialty Waste Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Bernstein, Shur, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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 agreement for
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, shall be governed by the laws of the
State of New York, without regard to the provisions relating
to 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 New Hampshire shall
govern the Employment Agreement.
21
18
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.
22
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
Total Waste Management Corp.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Title: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
KTI Specialty Waste Services, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------- ----------------------------
Title: Senior Vice President ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
23
20
EXHIBIT A
EARNOUT CALCULATION
EBITDA is defined as Earnings before interest, taxes, depreciation and
amortization, as determined by generally accepted accounting principles, as
amended from time to time.
The EBITDA of the Company shall be as determined by the Company. If there shall
be a disagreement as to the EBITDA of the Company, the determination of such
EBITDA shall be conclusively determined by the firm of nationally recognized
auditors then auditing KTI, pursuant to an "agreed procedure" to determine such
EBITDA. The party which does not prevail shall pay all costs of the agreed
procedure. To the extent that neither the Employee or the Company are correct,
the fees shall be allocated in proportion to the error of each party, subject to
the following exception. If either party shall propose a number, which if it had
been accepted by the other party, would have permitted: (a) the Employee to
receive at least the amount to which the Employee is actually entitled; or (b)
would have not required the Company to pay more than the amount actually due,
then such party shall not be liable for any fees in connection with such "
agreed procedure".
The Earnout shall be calculated as follows: The EBITDA of the Company, less
$400,000 ("Adjusted EBITDA") in each of the five fiscal years following the
acquisition of the stock of the Company by KTI.
"Fiscal year" is the twelve month period, commencing on January 1 of each year
and ending on December 31 of each year.
The Bonus shall be as follows:
1st year 10 percent of Adjusted EBITDA
2nd year 15 percent of Adjusted EBITDA
3rd year 25 percent of Adjusted EBITDA
4th year 25 percent of Adjusted EBITDA
5th year 25 percent of Adjusted EBITDA
24
21
EXHIBIT B
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT is entered into as of January 27, 1998, by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ("Sellers"), KTI Specialty Waste
Services, Inc., a Maine corporation ("Buyer") and Total Waste Management
Corporation, a New Hampshire corporation ("Total").
WHEREAS, Sellers are the sole shareholders of Total; and
WHEREAS, Buyer is buying all of the stock of Total; and
WHEREAS, Buyer has agreed to pay the purchase price for the stock of
Total based on certain assumptions and representations made by Sellers regarding
the assets and liabilities of Total; and
WHEREAS, Sellers have agreed to give Buyer an indemnity to cover
certain issues which may arise as a result of claims made against Total and
which may affect or which had they been known by Buyer would have affected the
purchase price paid by Buyer,
NOW, THEREFORE, for one dollar and other good and valuable
consideration including the payment of the purchase price Buyer, Sellers and
Total agree as follows:
1. The following definitions shall apply to this Indemnity Agreement:
(a) "Claims" shall mean any and all liabilities, claims, demands,
actions, causes of action, suits, debts, benefits, obligations, lost
profits, out-of-pocket costs, out-of-pocket fees, out-of-pocket
attorneys' fees, setoffs, losses, and claims and defenses of every
nature and kind, whether at law, equity or in administrative
proceedings, whether at common law (tort, contract or other theory) or
pursuant to federal, state or local statute, ordinance or regulation,
whether vested or contingent, whether known or unknown, whether
liquidated or unliquidated, whether matured or unmatured, whether
disputed or undisputed, against Total. Notwithstanding the foregoing,
"Claims" shall not include any "in-house" expenses or time incurred by
Total employees or officers expended in response to or defense against
any Claim.
(b) "Environmental Law" shall mean any federal, state or local statute,
regulation or ordinance or any judicial or administrative decree or
decision, whether now existing or hereinafter enacted, whether civil or
criminal, promulgated or issued, with respect to any Hazardous
Materials, drinking water, groundwater, wetlands, landfills, open
dumps, storage tanks, underground storage tanks, solid waste, waste
water, storm water run-off, waste emissions or ▇▇▇▇▇. Without limiting
the generality of the foregoing, the term shall encompass each of the
following statutes and regulations promulgated thereunder and
amendments and successors to such statutes and regulations, as may be
enacted and
25
22
promulgated from time to time: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (codified in scattered
sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. ss. 9601 et
seq.); (ii) the Resource Conservation and Recovery Act of 1976 (42
U.S.C. ss. 6901 et seq.); (iii) the Hazardous Materials Transportation
Act (49 U.S.C. ss. 1801 et seq.); (iv) the Toxic Substances Control Act
(15 U.S.C. ss. 2061 et seq.); (v) the Clean Water Act (33 U.S.C. ss.
1251 et seq.); (vi) the Clean Air Act (42 U.S.C. ss. 7401 et seq.);
(vii) the Safe Drinking Water Act (21 U.S.C. ss. 349; 42 U.S.C. ss. 201
and ss. 300f et seq.); (viii) the National Environmental Policy Act of
1969 (42 U.S.C. ss. 4321); (ix) the Superfund Amendment and
Reauthorization Act of 1986 (codified in scattered sections of 10
U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (x) Title III of the
Superfund Amendment and Reauthorization Act (40 U.S.C. ss. 1101 et
seq.); (xi) the Federal Solid Waste Disposal Act (42 U.S.C. ss. 6901 et
seq.); (xii) the Uncontrolled Hazardous Substance Sites Law, 38
M.R.S.A. ss. 1361, et seq.; (xiii) the Hazardous Matter Control Law, 38
M.R.S.A. ss. 1317, et seq.; (xiv) the Maine Hazardous Waste, Septage,
and Solid Waste Management Act, 38 M.R.S.A. ss. 1301, et seq.; (xv) the
Reduction of Toxic Use, Waste and Release Law, 38 M.R.S.A. ss. 2301 et
seq.; and (xvi) the Site Location of Development Law, 38 M.R.S.A. ss.
471 et seq.
(c) "Hazardous Materials" shall mean each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified a hazardous, toxic
or special waste under any Environmental Law. Without limiting the
generality of the foregoing, the term shall mean and include:
(i) "Hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendment and
Reauthorization Act of 1986, or Title III of the Superfund
Amendment and Reauthorization Act, each as amended, and
regulations promulgated thereunder;
(ii) "Hazardous waste" as defined in the Resource
Conservation and Recovery Act of 1976, as amended, and
regulations promulgated thereunder;
(iii) "Hazardous materials" as defined in the
Hazardous Materials Transportation Act, as amended, and
regulations promulgated thereunder;
(iv) "Chemical substance or mixture" as defined in
the Toxic Substances Control Act, as amended, and regulations
promulgated thereunder;
(v) "Hazardous substances" as defined in the
Uncontrolled Hazardous Substance Sites law, as amended;
(vi) "Hazardous matter" as defined in the Hazardous
Matter Control law, as amended, and regulations promulgated
thereunder;
(vii) "Hazardous waste" as defined in the Maine
Hazardous Waste,
26
23
Septage, and Solid Waste Management Act and regulations
promulgated thereunder.
(viii) Underground storage tanks, asbestos, urea
formaldehyde insulation, polychlorinated biphenyls, dioxins,
petroleum products, asbestos and radon;
(d) "Unknown Claims" shall mean Claims which are unknown to Sellers and
to Total Waste.
2. Sellers shall indemnify Total from Claims arising from or related to:
(a) Total's acquisition of certain assets of ▇▇▇▇▇▇ West and Sons, a
Maine corporation, d/b/a Portland Oil Recycling, pursuant to an
Agreement dated May 31, 1988.
(b) Any other treatment, storage, generation, disposal or transport of
Hazardous Materials by Total occurring prior to the date hereof.
3. Total shall indemnify Seller from Claims arising from or related to any
other treatment, storage, generation, disposal or transport of Hazardous
Materials by Total occurring after the date hereof. provided, however that
Buyer's indemnity in this paragraph shall not cover or apply to any intentional
or reckless acts of Sellers.
4. Sellers and Total shall pro rate the costs of any Claims arising from
or related to any treatment, storage, generation, disposal or transport of
Hazardous Materials by Total which occur both prior to and after the date
hereof.
5. Limitations on Sellers' Indemnity.
(a) For any Unknown Claims, the indemnity of Sellers in Paragraph 3
shall be limited as follows:
(i) For the period January 27, 1998 through January
26, 2001, to an amount equal to One Million, One Hundred and
Seventy Thousand Dollars ($1,170,000.00).
(ii) For the period January 27, 2001 through January
26, 2002, to an amount equal to Eight Hundred, Seventy-Seven
Thousand, Five Hundred Dollars ($877,500).
(iii) For the period January 27, 2002 through January
26, 2003, to an amount equal to Five Hundred, Eighty-Five
Thousand Dollars ($585,000.00).
(iv) For the period January 27, 2003 through January
26, 2004, to an amount equal to Two Hundred, Ninety-Two
Thousand, Five Hundred Dollars ($292,500).
27
24
(v) After January 26, 2004, Sellers' indemnity for
then Unknown Claims shall terminate.
(b) For Claims under Paragraph 2(a), the amount of Sellers'
indemnity shall be limited to One Million, One Hundred and
Seventy Thousand Dollars ($1,170,000.00).
(c) For Unknown Claims which become known on or prior to January
26, 2004, the amount of Sellers' indemnity shall remain at the
amount of their indemnity at the time they become known,
according to Paragraph 4(a), and shall not be reduced.
(d) Each Seller's indemnity is several. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be
responsible for forty-six percent (46%) of any payment due
under Sections 5(a), (b) and (c), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
shall be responsible for fifty-four percent (54%) of the
amount of any payment due under Section 5(a), (b) and (c).
6. The covenants, agreements, indemnities, terms and conditions
contained in this Indemnity Agreement shall extend to, and be binding upon, and
shall inure to the benefit of, and may be enforced by, the Sellers, the Buyer,
their heirs, executors, administrators, successors and assigns. Wherever used,
the singular number shall include the plural, the plural the singular, the use
of any gender shall be applicable to all genders. This Indemnity Agreement shall
be governed in all respects in accordance with the laws of the State of Maine.
7. Each provision of this Indemnity Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Indemnity Agreement shall be prohibited, invalid or
ineffective under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the remainder
of such provisions or the remaining provisions of this Indemnity Agreement.
8. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party or parties shall be entitled
to recover reasonable attorney's fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
9. No consent by any Seller shall be required for any assignment or
reassignment of the rights of Buyer hereunder.
10. A counterpart of this agreement executed by facsimile signature
shall be valid as a counterpart originally executed.
11. This agreement shall terminate ten years from the date first
written above.
28
25
IN WITNESS WHEREOF, the undersigned have executed this Indemnity
Agreement as of the day and year first above written.
WITNESS: SELLERS:
---------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
BUYER: KTI SPECIALTY WASTE
SERVICES, INC.
By:
---------------------------------- ------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
TOTAL WASTE MANAGEMENT CORPORATION
By:
---------------------------------- ------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
29
26
SCHEDULE 3.16
LIABILITIES OF ECI TO BE ASSUMED BY TWM
1. Lease with K4E Co., Inc. dated May 2, 1995, relating to real property
in Manchester, New Hampshire. Rent is current through 12/31/97. No
known defaults of Landlord or Tenant.
2. ▇▇▇▇ Atlantic -- under $100 as of 1/28/98.
3. Energy North -- under $700 as of 1/28/98.
4. Manchester EPD -- under $300 as of 1/28/98.