As filed with the Securities and Exchange Commission on June 14, 1996
Registration No. 33-80087
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
POST-EFFECTIVE AMENDMENT NO. 1
ON
FORM S-3
TO
REGISTRATION STATEMENT ON FORM S-1
UNDER
THE SECURITIES ACT OF 1933
KTI, INC.
(Exact Name of Registrant as Specified in Its Charter)
NEW JERSEY 7389 22-2665282
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Identification No.)
of Incorporation or Classification Code
Organization) Number)
7000 BOULEVARD EAST ROBERT E. WETZEL, ESQ.
GUTTENBERG, NEW JERSEY 07093 KTI, INC.
(201) 854-7777 7000 BOULEVARD EAST
(Address, Including Zip Code, GUTTENBERG, NEW JERSEY 07093
and Telephone Number, Including Area Code, (201) 854-7777
of Registrant's Principal Executive Offices) (Name, Address, Including Zip
Code, and Telephone Number,
Including Area Code, of Agent
for Service)
COPIES TO:
Brian Hoffmann, Esq.
McDermott, Will & Emery
1211 Avenue of the Americas
New York, New York 10036-8701
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Section 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(C) OF
THE SECURITIES ACT OF 1933, AS AMENDED, MAY DETERMINE.
KTI, INC.
1,009,592 SHARES OF COMMON STOCK AND 363,839 SHARES
OF COMMON STOCK ISSUABLE ON THE EXERCISE OF WARRANTS
___________________________
This prospectus relates to the resale of an aggregate of 1,373,431
shares (the "Shares") of common stock, no par value (the "Common Stock"), of
KTI, Inc., a New Jersey corporation (the "Company"), presently held, or
issuable upon the exercise of warrants (the "Warrants") held, by persons
named under the caption "Selling Security Holders." The Shares will be sold
in one or more transactions (which may include block transactions) at
negotiated prices or at a price or prices related to the then current market
price of the Common Stock, less such discounts or commissions, if any, as
shall be agreed upon by a Selling Security Holder.
Of the 1,373,431 Shares offered hereby, 1,009,592 Shares are presently
issued and outstanding and 363,839 Shares are issuable upon the exercise of
the Warrants, which are exercisable at a price of $5.75 per share. The
Warrants have an expiration date of July 31, 2000 but are subject to
redemption in 1997 under certain conditions. The exercise price and the
number of shares issuable upon exercise of the Warrants are subject to
adjustment in the event of stock splits, stock combinations, mergers,
reorganizations, and other transactions involving the Company. If all of the
Warrants are exercised, the Company will receive proceeds of approximately
$2,092,074. The proceeds from the sale of the Shares held on the date of
this prospectus by the Selling Security Holders, or acquired subsequent to
the date hereof by those of the Selling Security Holders who hold Warrants,
will be received solely by the Selling Security Holders.
The Company has been advised by the Selling Security Holders that there
are no underwriting arrangements with respect to the sale of the Shares, that
such Shares will be sold from time to time in the over-the-counter market at
then-prevailing prices or in private transactions at negotiated prices, and
that usual and customary brokerage fees will be paid by the Selling Security
Holders in connection therewith. The Selling Security Holders, and any
brokers and/or dealers through which the Shares may be offered, may be deemed
to be "underwriters" within the meaning of Section 2(11) of the Securities
Act of 1933, as amended (the "Securities Act"), in which event any
compensation received by such brokers and dealers may be deemed to be
underwriters' compensation under the Securities Act.
The Common Stock is listed on the Nasdaq National Market System under
the symbol "KTIE." On June 12, 1996, the last reported sale price of the
Common Stock, as reported on the Nasdaq National Market System, was $6.25
per share.
AN INVESTMENT IN THE SECURITIES OFFERED PURSUANT TO THIS PROSPECTUS IS
SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" AT PAGES 5 TO 11.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _____________, 1996.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1, as amended by Amendment
No. 1 to Form S-1 and by Post-Effective Amendment No. 1 on Form S-3
(collectively referred to herein, together with all other amendments and
exhibits, as the "Registration Statement") under the Securities Act for the
registration of the Common Stock offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain items of which
are contained in exhibits and schedules to the Registration Statement as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement. Statements made in this
Prospectus concerning the contents of any document referred to herein are not
necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such
reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information
with the Commission. Such reports, proxy statements, and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Room 1204, Everett McKinley Dirksen Building, 210
South Dearborn Street, Chicago, Illinois 60604; 7 World Trade Center, New
York, New York 10048; and Suite 500 East, Museum Square Building, 5757
Wilshire Boulevard, Los Angeles, California 90036. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference and made a part of this Prospectus:
(i) Annual Report on Form 10-K (file no. 0-25490) for the fiscal year
ended December 31, 1995 (the "1995 10-K");
(ii) Current Report on Form 8-K (file no. 33-85234) dated January 2,
1996;
(iii) Current Report on Form 8-K (file no. 33-85234) dated April 15,
1996;
(iv) Quarterly Report on Form 10-Q (file no. 0-25490) for the quarterly
period ended March 31, 1995;
(v) Current Report on Form 8-K (file no. 33-85234) dated May 3, 1996;
and
(vi) Current Report on Form 8-KA (file no. 33-85234) dated April 11,
1996.
All documents filed with the Commission by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering relating to
this Prospectus shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified, replaced or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference
herein (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this
Prospectus incorporates). Requests should be directed to:
KTI, Inc.
7000 Boulevard East
Guttenberg, New Jersey 07093
Attention: Andrea Y. Goren
Telephone Number: (201) 854-7777
THE COMPANY
KTI, Inc. (the "Company") is primarily a holding company carrying on its
activities through subsidiaries. The Company operates in two industry
segments: integrated waste handling ("Waste Handling") and computer software
products and services ("Computer Services").
Waste Handling is engaged in the ownership, operation and development of
projects for the disposal of solid waste through the conversion of such waste
into a fuel used to generate electrical power and other solid waste-related
projects including recycling, wood waste processing and the transfer and
transportation of non-hazardous municipal and other solid wastes. The
Company has ownership interests in Maine Energy Recovery Company, a Maine
limited partnership ("Maine Energy"), and Penobscot Energy Recovery Company,
a Maine limited partnership ("PERC"), each of which owns a waste-to-energy
facility in the State of Maine, and KTI Bio Fuels Limited Partnership, a
Maine limited partnership ("KTI Bio Fuels"), which owns a wood waste
processing facility in the State of Maine.
Computer Services develops and markets computer software products and
related services and also provides computer consulting services primarily
through a wholly-owned operating subsidiary of the Company, DataFocus
Incorporated ("DataFocus"). DataFocus has extensive experience in the
Microsoft Corporation ("Microsoft") Windows and Windows NT operating system
environments and has been a "Microsoft Solution Provider" as part of the
Microsfot Solution Provider Program since November 1992, whereby DataFocus
works closely with Microsoft in developing, testing, and consulting for
customers using Microsoft computer software products. The business of
the Computer Services segment was acquired on February 8, 1995 by way of
the merger (the "Merger") of Convergent Solutions, Inc. ("CSI") with and
into the Company. The Company has recently been exploring strategic
alternatives for its Computer Services business in order to refocus on its
core waste handling business. The Company currently has no agreements
with regard to such strategic alternatives.
The principal executive offices of the Company are located at 7000
Boulevard East, Guttenberg, New Jersey 07093. Its telephone number is (201)
854-7777.
INTRODUCTION
This prospectus relates to the resale of unregistered shares of the
Common Stock sold to, or acquired by, certain holders with whom the Company
has entered into registration rights agreements.
During July and August 1995, the Company privately placed 619,440 shares
of Common Stock at $4.41 per share and Warrants representing the right to
acquire an additional 363,839 shares of Common Stock, which together
constitute 983,279 of the Shares offered hereby. The purchase price of the
Warrants was $0.01 per underlying share of Common Stock. The exercise price
of the Warrants is $5.75 per share of Common Stock, subject to adjustment,
and they are exercisable through July 31, 2000. The market price of the
Common Stock at the time of the private placement was approximately $5.50 per
share. As part of the private placement transaction, the Company entered
into a registration rights agreement with each purchaser of Common Stock and
Warrants under which the Company agreed to file the Registration Statement of
which this prospectus is a part.
The remaining 402,152 Shares offered hereby are beneficially owned
equally by Nicholas Menonna, Jr. and Martin J. Sergi. Messrs. Menonna and
Sergi are senior officers and directors of the Company. See "Selling
Security Holders."
RISK FACTORS
Investors should consider very carefully each of the following risk
factors and all other information contained in this prospectus.
LOSSES AND ACCUMULATED DEFICIT OF THE COMPANY AND UNCERTAINTY OF FUTURE
FINANCIAL RESULTS
The Company has historically not operated at a profit and has
historically lacked cash resources. As of March 31, 1996, the Company had an
accumulated deficit of $26,583,864. During the fiscal year ended December
31, 1995, the Company had a net loss of $1,331,494, and during the quarter
ended March 31, 1996, the Company had net income of $22,130. There can be no
assurance that the Company will be able to operate profitably in the future.
Continued operating losses could impact the long-term viability of the
Company.
HOLDING COMPANY STATUS OF THE COMPANY; RESTRICTION ON UTILIZATION OF ASSETS
The Company is a legal entity separate and distinct from its
subsidiaries and an affiliate, which operate substantially all of the
Company's businesses. Accordingly, the right of the Company to utilize any
assets or earnings of any one subsidiary or the affiliate to finance the
growth of any other of its subsidiaries or affiliate is necessarily subject
to the prior claims of creditors of the subsidiaries and the affiliate. In
addition, the payment of management fees and the distribution of the cash
flow generated by certain subsidiaries and the affiliate of the Company are
subject to substantial restrictions as a result of agreements with their
lenders. Certain financing and the long-term waste handling agreements of
Maine Energy, the owner and operator of a waste-to-energy facility in which
the Company has an approximately 74.2% ownership interest, require that all
available cash flow be applied to the redemption of indebtedness in full
before any distribution to partners. The Company's current ability to
utilize internally generated cash flow as a means of financing expansion is
limited. As a result, the liquidity of the Company is adversely affected,
which could result in the need to raise additional cash through the sale of
securities of the Company, some of which may include sales of Common Stock at
less than the then prevailing market prices which may dilute existing
stockholders and make less likely the payment of cash dividends on Common
Stock.
NEED FOR ADDITIONAL FINANCING; LIQUIDITY
The Company's strategy to foster expansion of its business includes, in
part, the development of new businesses or the acquisition of the ownership
of, or operational responsibility for, additional businesses in the waste
handling industry. This strategy is likely to require the Company to raise
additional cash through offerings of either stock or debt or both, including
sales of Common Stock at prices less than the then prevailing market price.
The success of the Company's planned expansion will depend upon a number of
factors not entirely within the Company's control, including, among others,
the terms and availability of additional financing, the regulatory climate in
which the Company operates, and other general economic and business
conditions. There can be no assurance that additional financing, through bank
borrowings, debt or equity financings or otherwise, will be available to the
Company on acceptable terms.
COMPETITION; NEW TECHNOLOGIES
WASTE HANDLING
The Company's waste disposal business competes with numerous other firms
in the solid waste industry, many of which have greater financial resources
than the Company. In order to sustain profitability at Maine Energy and
PERC, which owns a waste-to-energy facility in Maine and in which the Company
has a 7% interest and is co-general partner, a continuous supply of
municipal solid waste ("MSW"), which is converted into a fuel and then
combusted to generate electricity, will be required. While the Company's
development of an integrated waste handling and disposal business is designed
to afford the Company a competitive advantage, there can be no assurance that
increasingly successful recycling efforts and competition from other
companies in the solid waste industry will not overcome the Company's
marketing efforts. In addition, technological developments in the
combustion process could put competitive pressures on the Company's
operations. The foregoing may cause Maine Energy and PERC to incur
increased capital expenditures to remain competitive, which could reduce
profitability. The wood waste processing business of KTI Bio Fuels
experiences substantial competition from operators of portable wood
chipping equipment who have the ability to move such equipment directly
to demolition and other wood waste sites.
COMPUTER SERVICES
The computer industry, both as to software and hardware, is highly
competitive and subject to rapid technological change. Failure to keep pace
with technological advances could adversely affect the competitive position
and future prospects of the Computer Services segment.
The Computer Services segment faces significant competition for its
services business primarily from other Microsoft Solution Providers, some of
which have far greater resources and visibility in the market than the
Company. In addition, several other companies have software products that
compete both directly and indirectly with the Company's software product
known as NuTCRACKER(TM). Competition for sales of the Company's software
product CS/ADS, which is a Fourth Generation Development Language, is
significant and the technology on which CS/ADS is based is no longer
competitive with many newer product offerings. However, the Company
anticipates a continued, albeit declining, ongoing support and maintenance
revenue stream, as well as sales of new licenses, to existing customers.
RELIANCE ON ELECTRIC UTILITIES AND POWER PURCHASE AGREEMENTS
Pursuant to the power purchase agreement between Central Maine Power
Company ("Central Maine") and Maine Energy with a term through December 31,
2012 (the "Central Maine PPA") and the power purchase agreement between the
Bangor Hydro-Electric Company ("Bangor-Hydro") and PERC with a term through
February 14, 2018 (the "Bangor-Hydro PPA"), these utilities have agreed to
purchase electricity generated by the Maine Energy and PERC waste-to-energy
facilities, respectively, at contractually agreed rates. The Central Maine
PPA was recently restructured, resulting in a payment to Maine Energy of
$85,000,000 in exchange for a reduction of the purchase price of electricity
under the agreement and an extension of the term of the agreement from 2007
to 2012. Sales of electricity to these utilities accounted for approximately
77% and 62% of the revenues of Maine Energy and PERC, respectively, in 1995.
The pricing under the Central Maine PPA prior to its restructuring and under
the Bangor-Hydro PPA, which was designed to reflect a projection of the
utilities' "avoided costs" of generating the electricity themselves or
purchasing the power from other sources, was set in the early 1980s at a time
when petroleum costs were at historical highs and expected to go even higher.
Today, however, the utilities can purchase electricity on the open market at
prices substantially less than the contractual prices under the Central Maine
PPA prior to its restructuring and the Bangor-Hydro PPA. The high prices
paid by Central Maine for the purchase of electricity from Maine Energy was
one factor contributing to the recent restructuring of the Central Maine PPA.
While the Bangor-Hydro PPA continues in full force and effect, there can be
no assurance that there will not be a change of law which could compel
renegotiation of the pricing terms. Each of Central Maine and Bangor Hydro
has reportedly "bought out" a selected number of their long-term power
purchase agreements, as Central Maine has done with Maine Energy.
The projected future cash flows of Maine Energy have been reduced as a
consequence of the restructuring of the Central Maine PPA, which resulted in
lower rates for the purchase by Central Maine of electricity from Maine
Energy. The Company believes, however, that such reductions will be offset
by reduced debt service costs due to the repayment of Maine Energy's long-
term debt and a substantial reduction of Maine Energy's subordinated
indebtedness in connection with the restructuring. In the event that the
sales price for electricity is reduced for PERC or reduced further for Maine
Energy, the projected cash flows at both Maine Energy and PERC could be
negatively affected. Any further reduction of the cash flows from the
utilities could adversely affect the financial condition of the Company.
DEPENDENCE ON SOURCES OF SUPPLY OF FUEL
The waste-to-energy facilities operated by Maine Energy and PERC are
dependent upon MSW and, if required, supplementary fuel sources (including
wood chips such as those produced by KTI Bio Fuels) that are processed in
order to generate electricity. In 1995, approximately 70% of the total MSW
processed by Maine Energy was received from sources other than parties with
whom Maine Energy has long-term waste disposal agreements. Competition
within the waste handling and disposal industry for spot market MSW may
impede a steady, reliable supply of MSW and may also result in decreased
tipping fees for the disposal of such MSW. Moreover, even under the long-
term agreements, the volume of MSW is seasonal in nature. A decrease in the
availability of MSW might force the Maine Energy and PERC facilities to
utilize supplemental fuels in their electric generating processes. Maine
Energy and PERC are paid tipping fees for the disposal of MSW, but must
expend money for the purchase of supplemental fuels as required, which
increases their overall fuel costs. Maine Energy is currently utilizing no
supplemental fuels for its electric generating processes as it has been able
to meet its fuel supply needs through MSW disposal contracts. Maine Energy
intends to use as little supplemental fuel as possible over the term of the
Central Maine PPA due to the decreased prices for the electricity that it
will generate and sell to Central Maine. The PERC facility is currently
utilizing supplemental fuels for its electric generating processes but
currently purchases no wood chips for use as supplemental fuel from the KTI
Bio Fuels wood waste processing business, which currently is selling its
entire output of wood chips to purchasers other than Maine Energy and
PERC.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL RISKS
Federal, state, and local environmental laws govern discharges of
pollutants and the generation, transportation, storage, treatment and
disposal of solid waste. These laws (i) establish standards governing most
aspects of the operation of the waste-to-energy facilities of Maine Energy
and PERC and KTI Bio Fuels' wood waste processing facility and (ii) generally
require multiple governmental permits in order to continue the operation of
these facilities. The Company believes it has all permits necessary to
operate the Maine Energy, PERC, and KTI Bio Fuels facilities as each of them
is currently operating. However, there can be no assurance that all required
permits will be renewed following their expiration. In some cases the
renewal process may entail public hearings.
The standards established pursuant to environmental statutes and
regulations, the interpretation of statutes and regulations and the policies
governing their enforcement may change, requiring new pollution control
technology or stricter standards for the control of discharge of air or water
pollutants or for solid waste or ash handling and disposal. For example, the
United States Supreme Court, in a 1994 decision interpreting the Resource
Conservation and Recovery Act, held that ash from the combustion of non-
hazardous household and commercial waste, if tested and found to have
hazardous characteristics, will be treated as a hazardous waste. In
addition, new statutory and regulatory provisions may be implemented which
could have retroactive application. Both Maine Energy and PERC have been
testing their ash since initial start-up and the ash has generally tested as
non-hazardous. Hazardous waste, if any is detected, is disposed of
appropriately at costs generally in excess of usual solid waste disposal
costs.
The waste-to-energy facilities in which the Company has an interest are
also subject to the provisions of various federal and state energy laws and
regulations including the Public Utility Regulatory Policies Act of 1978, as
amended ("PURPA"). The legal status of such facilities could be materially
and adversely affected if the various benefits of PURPA were repealed or
substantially reduced.
Changes in laws, regulations or policies or new interpretations of
existing laws, regulations or policies, could have a material impact on the
profitability, level of capital expenditures or continued operation of the
waste-to-energy facilities and wood processing operations in which the
Company has an interest.
FLOW CONTROL
The availability of reliable and continuous sources of MSW or other
processable wastes is critical to the operations of the waste-to-energy
facilities in which the Company has an interest. MSW availability has been
assured, to some extent, by the enactment by municipalities in the service
territories of Maine Energy and PERC of ordinances requiring that waste
generated within their respective jurisdictions be brought exclusively to the
Maine Energy or PERC facilities. Such ordinances are referred to as legal
flow control. A 1994 decision of the United States Supreme Court overturned
a flow control ordinance of a New York municipality on the basis that it was
an improper regulation of interstate commerce. Accordingly, the present
questionable validity of all flow control ordinances introduces some degree
of uncertainty in the waste handling business. The Company does not believe
that its operations will be materially impacted by the loss of flow control
for several reasons including the facts that the Maine Energy and PERC long-
term waste disposal agreements with municipalities require the delivery of
stated quantities of MSW on a "put-or-pay" basis and the tipping fees of
Maine Energy and PERC are, at present, less than the tipping fees at
alternate disposal sites. However, Maine Energy relies on the receipt of MSW
from sources other than its long-term contract communities to a significant
extent, and due to competition for supplies of MSW that could result from the
loss of flow control, it is possible that there will be downward pressure on
tipping fees for spot market MSW in the short term which may affect
profitability.
COMPUTER SERVICES' LACK OF HISTORICAL OPERATING PROFITS AND DEPENDENCE ON
PRINCIPAL CUSTOMERS
During the period from February 8, 1995, the date of the acquisition of
CSI by the Company by way of the Merger, to December 31, 1995 the operations
of Computer Services were not profitable. In the five pre-merger fiscal
years and in the first quarter of 1996, the business operations of CSI, after
eliminating income from investments, were not profitable. The Federal Home
Loan Mortgage Corporation ("FHLMC") and two other major customers accounted
for approximately 33% of CSI's operating revenues during CSI's fiscal year
ended September 30, 1994, and a major contract with FHLMC has been completed.
The Computer Services segment of the Company has a continually changing base
of principal customers. For the period from February 8, 1995 to December 31,
1995, the five highest sales volume customers accounted for 33% of Computer
Services' revenue, the highest of which accounted for 14% and the lowest of
which accounted for 4%. The loss of any of these customers could materially
adversely affect the business of the Computer Services segment.
NO DIVIDENDS
The Company has not paid any cash dividends on its Common Stock to date
and the Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future.
POTENTIAL ANTI-TAKEOVER EFFECTS OF STATE LAW; POSSIBLE ADVERSE EFFECTS OF
AUTHORIZATION OF PREFERRED STOCK; SUPERMAJORITY AND FAIR PRICE PROVISIONS
Certain provisions of New Jersey law and the Company's Restated
Certificate of Incorporation could delay or impede the removal of incumbent
directors and could make it more difficult for a third party to acquire, or
discourage a third party from attempting to acquire, control of the Company.
Such provisions could limit the price that certain investors might be willing
to pay in the future for the Company's securities.
Shares of preferred stock may be issued by the Board of Directors of the
Company without stockholder approval on such terms and conditions, and having
such rights, privileges and preferences, as the Board of Directors may
determine. The issuance of preferred stock could make the possible takeover
of the Company or the removal of management of the Company more difficult,
discourage hostile bids for control of the Company in which stockholders may
receive premiums for their shares of Common Stock, or otherwise dilute the
rights of holders of the Common Stock and depress the market price of the
Company's securities.
In addition, the Restated Certificate of Incorporation of the Company
provides for "supermajority" and "fair price" anti-takeover measures which
could affect the price stockholders could receive for shares of Common Stock.
The supermajority provision requires that in the event of a merger or
consolidation of the Company with another corporation or the sale, lease,
exchange or other disposition of all or substantially all the assets of the
Company, an affirmative vote of at least 80% of all outstanding shares of
voting stock shall be required to approve such transaction unless it is
approved by at least the greater of three fourths of the directors or two
directors who are not affiliated with said transaction.
The fair price provision as set forth in the Restated Certificate of
Incorporation requires a potential acquiring entity to obtain the approval of
at least 80% of all outstanding shares of voting stock of the Company, obtain
the approval of at least three fourths of the directors on the Board who are
not affiliated with the transaction, or satisfy several conditions that
include, among other things, holders of capital stock of the Company
receiving fair market value for their shares, the payment of all outstanding
dividends on capital stock of the Company, the receipt of a proxy or
information statement by all holders of Common Stock describing the proposed
transaction and complying with the requirements of the Exchange Act and the
approval of not less than the majority of the directors not affiliated with
said transaction. See "Description of Common Stock."
LIMITATION ON USE OF TAX LOSS CARRYFORWARDS
As of December 31, 1995, the Company had net operating loss
carryforwards ("NOLs") for federal income tax purposes of approximately
$22,650,000. As a result of an "ownership change" which occurred during
1994, the Company's ability to utilize its pre-ownership change NOLs is
limited under Section 382 of the Internal Revenue Code of 1986, as amended
(the "Code"), to an amount equal to approximately $1,100,000 of taxable
income per year. If the value of the Company's capital stock immediately
before the 1994 ownership change were determined to be lower than that
calculated by management of the Company, the annual allowable NOL deduction
of $1,100,000 per year would be reduced proportionately. This limitation may
be increased if the Company recognizes a gain on the disposition of an asset
which had a fair market value greater than its tax basis on the date of the
ownership change.
While the Company intends to maintain its current business enterprise,
in the event that it does not do so at all times during the two year period
beginning on the date of the 1994 ownership change, the Company will not be
able to use any of its pre-ownership change NOLs. A change in the tax law
could also limit or eliminate the Company's use of its NOLs.
FORWARD-LOOKING STATEMENTS
All statements contained herein or incorporated by reference herein that
are not historical facts, including but not limited to statements regarding
the Company's current business strategy, prospective joint ventures, and
plans for future development and operations, are based upon current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties. Actual results may differ materially.
Among the factors that could cause actual results to differ materially are
the following: (i) the availability of sufficient capital to finance the
Company's business plan on terms satisfactory to the Company; (ii)
competitive factors such as availability of less expensive waste disposal
outlets or expanded recycling programs that may significantly reduce the
amount of waste products available to the Company's facilities; (iii) any
further restructuring of the Company's power purchase agreement with
Central Maine or any restructuring of the Company's power purchase agreement
with Bangor-Hydro; (iv) changes in labor, equipment and capital costs;
(v) the ability of the Company to consummate any contemplated joint
ventures and/or restructuring on terms satisfactory to the Company;
(vi) changes in regulations affecting the waste disposal and recycling
industries; (vii) the ability of the Company to comply with the restrictions
imposed upon it in connection with its outstanding indebtedness; (viii)
future acquisitions or strategic partnerships; (ix) general business and
economic conditions; and (x) other factors described from time to time in
the Company's reports filed with the Commission. The Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which statements are made pursuant to the Private Litigation
Reform Act of 1995 and, as such, speak only as of the date made.
USE OF PROCEEDS
The Company will not receive proceeds from the sale of any of the Shares
offered by the Selling Security Holders pursuant to this prospectus.
However, the Company will receive the maximum amount of $2,092,074 upon the
exercise of the Warrants, any of which the Company currently plans to use as
working capital for general corporate purposes. No assurance can be given
that any or all of the Warrants will be exercised.
The use of proceeds set forth above represents the Company's present
intention on the basis of circumstances at the date of this prospectus.
Changes in circumstances may result in the reallocation of the net proceeds
to other unexpected uses. Pending such uses, the proceeds will be invested
in short term certificates of deposit or other interest bearing
instruments.
SELLING SECURITY HOLDERS
The following sets forth certain information with respect to the Selling
Security Holders which has been provided to the Company by each such Selling
Security Holder. The Company has no knowledge of the intentions of any of
the Selling Security Holders to actually sell any of the shares listed under
the column "Shares Available for Sale." Each of the Selling Security
Holders, other than Messrs. Menonna and Sergi, has contractual restrictions
on the right to sell shares. No Selling Security Holder has a material
relationship with the Company other than as a result of ownership of the
Shares and the Warrants, except as described below.
<TABLE>
<CAPTION>
OWNERSHIP SHARES PERCENTAGE OF
PRIOR TO AVAILABLE CLASS OWNED
SELLING SHAREHOLDER OFFERING FOR SALE (1)(2) AFTER OFFERING (3)
<S> <C> <C> <C>
Clifford A. Ackerman 6,352 6,352 *
Linda Berley 66,000 66,000 *
Carolyn Berley 1994 Credit 20,000 20,000 *
Shelter Trust
Alexander Berley 1994 20,000 20,000 *
Credit Shelter Trust
David J. Bershad 72,019 72,019 *
Candlewood Trust 136,000 136,000 *
Faversham Corporation, N.V. 250,977 250,977 *
Jasminville Corporation, N.V. 15,888 15,888 *
Mark D. Kalimian 79,000 79,000 *
Mona Kalimian 240,000 155,000 1.4%
Melvyn I. Weiss 72,019 72,019 *
Mandelay Corporation, N.V. 33,334 33,334 *
Burham Corporation, N.V. 56,690 44,690 *
Nicholas Menonna, Jr. (4) 1,112,386 201,076 14.9%
Martin J. Sergi (4) 968,444 201,076 12.6%
TOTAL 1,373,431
*Less than one percent.
(1) Assuming the exercise of all of the Warrants to acquire 363,839 shares
of Common Stock held by the Selling Security Holders.
(2) The amounts indicated are as of the date of this prospectus.
(3) Based on the total number of shares of Common Stock outstanding as of
the date of this prospectus and assuming the sale of all the Shares
offered hereby, including Shares obtained upon the exercise of all of
the Warrants.
(4) Messrs. Menonna and Sergi are each an officer and director of the
Company.
</TABLE>
PLAN OF DISTRIBUTION
The Common Stock held by the Selling Security Holders and the Common
Stock issuable to Selling Security Holders upon exercise of the Warrants may
be offered and sold from time to time as market conditions permit on the
Nasdaq National Market System, or otherwise, at prices and terms then
prevailing or at prices related to the then-current market price, or in
negotiated transactions. The shares offered hereby may be sold by one or
more of the following methods, without limitation: (a) a block trade in
which a broker or dealer so engaged will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; (b) purchases by a broker or dealer as principal and resale
by such broker or dealer for its account pursuant to the prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (d) face-to-face transactions between sellers and purchasers
without a broker-dealer. In effecting sales, brokers or dealers engaged by
the Selling Security Holders may arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or discounts
from Selling Security Holders in amounts to be negotiated. Such brokers and
dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with
such sales.
DESCRIPTION OF COMMON STOCK
AUTHORIZED STOCK
The Company's Restated Certificate of Incorporation, as amended,
authorizes the issuance of 13,333,333 shares of Common Stock and 10,000,000
shares of "blank check" preferred stock, no par value. As of May 31, 1996
there were 5,736,751 shares of Common Stock issued and outstanding and held
of record by 199 stockholders of record, and no shares of the Company's
preferred stock outstanding.
Common Stock. Stockholders are entitled to one vote for each share of
the Common Stock held of record on all matters to be voted by stockholders.
Stockholders are not entitled to cumulate their votes in the election of
directors. Subject to the prior rights of holders of preferred stock of the
Company which may be issued, the holders of Common Stock are entitled to
dividends, when and if declared by the Board of Directors, out of funds
legally available therefor. See "Risk Factors No Dividends." In the event of
the liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities and the liquidation preferences of any outstanding
shares of preferred stock. Holders of Common Stock have no preemptive rights
and have no right to convert Common Stock into any other securities. All
outstanding shares of Common Stock are fully paid and nonassessable.
Preferred Stock. No shares of preferred stock of the Company are
outstanding. The Board of Directors has the authority without further
stockholder approval, to issue authorized but unissued shares of preferred
stock in one or more series and to determine the preferences, rights,
privileges and restrictions of any series, including the dividend rights,
conversion rights, voting rights, rights and terms of redemption, liquidation
preferences, the number of shares constituting any such series, and the
designation of such series. Such issuance of preferred stock may adversely
affect, among other things, the voting rights of existing stockholders. The
Company has no present plans to issue any shares of preferred stock.
OTHER PROVISIONS OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
The Company's Restated Certificate of Incorporation contains certain
provisions known as "supermajority" and "fair price" provisions which are
anti-takeover measures and could affect the price stockholders could receive
for shares of Common Stock.
Supermajority Provision. The "supermajority" provision is intended to
encourage a corporation seeking to enter into a merger or consolidation with
the Company or a sale of all or substantially all of the assets of the
Company to negotiate these transactions with the "Disinterested Directors"
(as defined) to ensure that such transactions have the substantial support of
such directors before submission to the stockholders.
The supermajority provision requires for approval of a merger or
consolidation between the Company and another corporation, or a sale of
substantially all of the assets of the Company, the affirmative vote of at
least 80% of the combined voting power of the then outstanding voting stock
voting together as a single class (an "80% Stockholder Vote") in addition to
any other Stockholder vote required. The 80% Stockholder Vote would not
apply if the proposed transaction is approved by the greater of (i) at least
three-fourths of the Disinterested Directors or (ii) two Disinterested
Directors. A Disinterested Director is any person who is a member of the
Board of Directors, while such person is a member of the Board, who is not an
Affiliate, Associate (as those terms are defined in Rule 12b-2 under the
Exchange Act) or representative of the other party to the transaction with
the Company and who was either a member of the Board at the time the
supermajority provision was approved by the Board, or who was recommended for
election to the Board, or elected to fill a vacancy on the Board, by a
majority of Disinterested Directors.
Fair Price Provision. The "fair price" provision is intended to
(i) override New Jersey's corporation law which provides that a majority in
interest of stockholders voting thereon is required for a merger by a
corporation, unless such corporation's certificate of incorporation specifies
a higher percentage and (ii) prevent a two-tier front-end loaded pricing
method for corporate takeovers. In this type of takeover attempt, the bidder
tenders for that percentage of shares which will give it sufficient votes to
approve a merger providing for the elimination of minority stockholders, as
the method of buying the remaining shares. The consideration given for a
corporation's shares in this type of merger can be, and frequently is, in a
different form than that given in the tender offer. For example, the bidder
may pay cash to purchase a controlling position and thereafter approve a
merger in which the remaining stockholders receive securities of the bidder
(or one of its subsidiaries). Moreover, the value of the securities
exchanged in the second step may be substantially less than the amount of
cash or the value of the other consideration given in the first step.
Accordingly, the stockholders are induced to tender initially.
The fair price provision requires an 80% Stockholder Vote for certain
transactions with an Interested Shareholder (as defined) unless specified
price criteria and procedural requirements are met and a majority of the
entire Board of Directors approves the Business Combination (as defined) or
the approval of not less than three-fourths of the Continuing Directors (as
defined) is given. If the latter occurred, then the proposed Business
Combination would be subject to the normal approval requirements under New
Jersey law.
An "Interested Shareholder" is defined as any person, other than the
Company or any subsidiary or any employee benefit plan of the Company or of
any subsidiary or fiduciary of such a plan, or any person who was a director
of the Company on the date the provision was adopted by the Board of
Directors (such persons being Messrs. Nicholas Menonna, Jr., Martin J. Sergi
and Marshall S. Sterman) who (i) is the beneficial owner of voting stock
representing 10% or more of the votes entitled to be cast by the holders of
all then outstanding shares of voting stock, (ii) is an Affiliate (as
defined) or Associate of the Company and within the prior two years was the
beneficial owner of voting stock representing 10% or more of the votes
entitled to be cast by the holders of all then outstanding shares of voting
stock, or (iii) is the assignee of or has otherwise succeeded to the
beneficial ownership of any voting stock beneficially owned by an Interested
Shareholder within such two-year period, if such assignment or succession
occurred pursuant to a transaction or any series of transactions not
involving a public offering within the meaning of the Securities Act. The
term "beneficial owner" includes any person directly or indirectly owning or
having the right to vote or acquire shares.
The terms "Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act, as in effect on
December 31, 1993.
A "Business Combination" includes the following transactions: (1) a
merger or consolidation of the Company or any of its subsidiaries with an
Interested Shareholder or any other corporation which is or after such
transaction becomes an Affiliate or Associate of an Interested Shareholder;
(2) the sale or other disposition to, with or by any Interested Shareholder
or any Affiliate or Associate of an Interested Shareholder involving any
assets or securities of the Company, any subsidiary or any Interested
Shareholder or any Affiliate or Associate of an Interested Shareholder valued
at $20,000,000 or more; (3) the adoption of any plan or proposal for the
liquidation or dissolution of the Company proposed by or on behalf of an
Interested Shareholder or any Affiliate or Associate of an Interested
Shareholder; (4) any reclassification of securities or recapitalization of
the Company, merger or consolidation of the Company with any subsidiary or
other transaction which has the effect, directly or indirectly, of increasing
the proportionate share of any class or series of the Company's stock, or
securities convertible into stock of any class or series of the Company's
stock or into equity securities of any subsidiary, that is beneficially owned
by an Interested Shareholder or any Affiliate or Associate of an Interested
Shareholder; or (5) any agreement, contract or other arrangement providing
for any one or more of the actions referred to above.
A "Continuing Director" is any member of the Board, while a member of
the Board, who is not an Affiliate or Associate or a representative of the
Interested Shareholder and either was a director at the time the fair price
provision was adopted by the Board or was recommended for election to the
Board, or elected to fill a vacancy on the Board, by a majority of the
Continuing Directors.
An 80% Stockholder Vote would not be required if the proposed Business
Combination is approved by not less than three-fourths of the Continuing
Directors or certain minimum price criteria and procedural requirements are
satisfied and not less than a majority of the entire Board of Directors
approves the transaction.
DESCRIPTION OF WARRANTS
GENERAL
A total of 363,839 Warrants were issued in connection with the Company's
private placement that was completed in August 1995. The Warrants have a
term through July 31, 2000 (the "Expiration Date"). The Company has
authorized and reserved for issuance such number of shares of Common Stock as
shall be issuable upon the exercise of all outstanding Warrants. Such shares
of Common Stock, when paid for and issued, will be duly and validly issued
and fully paid and non-assessable. The Company has agreed that, so long as
any unexpired Warrants remain outstanding, it will maintain the effectiveness
of the Registration Statement with respect to sales of shares of Common Stock
from time to time upon exercise of the Warrants. The following summary,
which describes certain material provisions of the Warrants, does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, the Warrants, including the definitions therein of capitalized
terms not defined herein.
METHOD OF EXERCISE OF WARRANTS
The Warrants are exercisable at any time prior to the Expiration Date.
Each Warrant entitles the holder thereof to acquire one share of Common Stock
upon payment of the Exercise Price, which initially is $5.75 per share,
subject to adjustment as described below. All outstanding Warrants will
terminate and shall become void as of the Expiration Date. Warrants may be
exercised by delivery of the Exercise Price, the Warrant, and a duly executed
exercise form to the Company. The exercise form will evidence the Warrant
holder's election to exercise all or a portion of the number of shares of
Common Stock evidenced by the Warrant. Upon surrender of the exercise form
and the Exercise Price, the exercising holder will be deemed to be the holder
of record of the shares of Common Stock issuable upon such exercise, and if
the Warrant is exercised in part only, the Company will deliver a new Warrant
evidencing the rights of the holder thereof to purchase the balance of the
shares evidenced thereunder.
ANTI-DILUTION PROVISIONS
The Exercise Price and the number of shares of Common Stock issuable
upon the exercise of each Warrant are subject to adjustment upon the
occurrence of certain events, including (i) any dividend on the outstanding
Common Stock payable in shares of Common Stock, stock split, or stock
combination, (ii) any issuance or sale of Common Stock for a consideration of
less than $4.41 per share, (iii) any issuance of options, rights, or warrants
to subscribe for shares of Common Stock, or (iv) any issuance of securities
convertible into or exchangeable for shares of Common Stock, with certain
exceptions. In addition, in the event of a reorganization, consolidation or
merger of the Company, transfer of all or substantially all of the Company's
property, or a dissolution of the Company, holders of Warrants would be
entitled to receive such consideration as they would have been entitled to if
they had exercised their Warrants immediately prior thereto. No adjustment
of the Exercise Price will be made unless the aggregate of such adjustment is
greater than or equal to $0.005 per share. Any adjustment in the number of
shares issuable upon exercise of Warrants will be rounded to the nearest
whole amount of shares, and no fractional shares will be issued upon the
exercise of a Warrant.
NO RIGHTS AS STOCKHOLDERS
Holders of Warrants are not entitled, by virtue of being such holders,
to any of the rights of a shareholder of the Company, including the rights to
receive dividends or subscription rights, vote, consent, exercise any
preemptive right or receive notice as shareholders of the Company in respect
of any meeting of shareholders for the election of directors of the Company
or any other matter, or exercise any other rights whatsoever as shareholders
of the Company. The rights of holders of Warrants are limited to those
expressed in the Warrants and are not enforceable against the Company except
to the extent set forth therein.
REDEMPTION OF WARRANTS
The Warrants are redeemable at the option of the Company at a Redemption
Price of $3.00 per share (subject to adjustment as described below) two years
after the date of issuance thereof, provided that the closing price of the
Common Stock has equaled or exceeded $12.00 per share for a period of ten
(10) consecutive trading days. Notice of such redemption will include the
Redemption Price and the date fixed for redemption (the "Redemption Date")
and shall be given to holders of Warrants not less than thirty (30) days
prior to the Redemption Date. The right to exercise the Warrant will
terminate on the close of business of the Redemption Date. Any event that
results in an adjustment in the Exercise Price will cause a corresponding
proportional adjustment in the Redemption Price.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation provides that it
shall indemnify its officers, directors, employees and agents to the full
extent permitted by law. This indemnification may include indemnification
for liabilities arising under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
LEGAL MATTERS
The law firm of Crummy, Del Deo, Dolan, Griffinger & Vecchione, a
Professional Corporation, One Riverfront Plaza, Newark, New Jersey 07102
acted as counsel for the Company in connection with the validity of the
Common Stock offered hereby.
EXPERTS
The consolidated financial statements and schedule of KTI, Inc.
appearing in the Company's Annual Report (Form 10-K) for the year ended December
31, 1995, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference which as to the year ended December 31, 1993 is based, in part, on the
report of Ouellette, LaBonte, Roberge & Allen, independent auditors. Such
consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
The financial statements of PERC at December 31, 1995 and 1994 and for
each of the three years in the period ended December 31, 1995 appearing in KTI,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1995 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The financial statements of MERC at December 31, 1993 and for each of
the two years in the period ended December 31, 1993 appearing in KTI, Inc.'s
Annual Report (Form 10-K) for the year ended December 31, 1995 have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
PART II
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The registrant's Restated Certificate of Incorporation provides that it
shall indemnify its officers, directors, employees and agents to the full
extent permitted by law.
Statutory authority for such indemnification is contained in Title 14A,
New Jersey Business Corporation Act, Revised Statutes of New Jersey, N.J.S.A.
14A:3-5, the material provisions of which may be summarized as follows:
NON-DERIVATIVE PROCEEDINGS (PROCEEDINGS OTHER THAN THOSE BROUGHT BY OR
IN THE RIGHT OF THE CORPORATION). A corporation may indemnify an actual or
prospective party to a proceeding or investigation if he became such because
he is or was a director, officer, employee or agent of the corporation, or of
a constituent corporation absorbed by such corporation in a consolidation or
merger, or is or was serving at the request of the indemnifying or
constituent corporation as a director, officer, trustee, employee or agent of
another enterprise. To be eligible for such indemnity, the party must have
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and also, in a criminal
proceeding, he must have had no reasonable cause to believe that his conduct
was unlawful. Such indemnity may be against judgments, fines, settlements,
and penalties and reasonable expenses (including counsel fees) incurred in
connection with such proceeding.
DERIVATIVE PROCEEDINGS (PROCEEDINGS BY OR IN THE RIGHT OF THE
CORPORATION). A corporation may indemnify such actual or prospective party
to a proceeding or investigation against his reasonable expenses (including
counsel fees) if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
but not against judgments, fines, settlements or penalties in connection with
such proceedings or investigation. However, if such party has been adjudged
to be liable to the corporation, he may be indemnified for expenses only if a
court determines that, despite such adjudication of liability, in the
circumstances of the case indemnity of such party is fair and reasonable.
DETERMINATION REGARDING INDEMNIFICATION. Indemnification of a party
(unless ordered by a court) is dependent upon a determination that such
indemnification is proper because the party has met the above standards
applicable to him, such determination to be made by (a) the Board of
Directors or a committee thereof acting by a majority vote of a quorum
consisting of directors who were not parties to or otherwise involved in the
proceedings or (b) under certain circumstances, by independent legal counsel
in a written opinion or by the shareholders of the corporation. Upon the
making of such determination in the appropriate manner, a corporation may
advance expenses in connection with a proceeding upon receipt of an
undertaking by the party to repay them if it is ultimately determined that he
is not entitled to indemnification.
OTHER MATERIAL PROVISION. In all cases, if the party has been
successful in a proceeding on the merits or otherwise, or in defense of any
matter therein, he is entitled to indemnification for his reasonable expenses
(including counsel fees). The indemnification provided by statute is not
exclusive of other rights of indemnification and inures to the benefit of the
party's legal representative. A corporation may purchase and maintain
insurance against expenses incurred by, and liabilities asserted against,
directors, officers, employees or agents whether or not the corporation would
be empowered to provide such indemnity.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to
directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
ITEM 16. EXHIBITS.
The following exhibits, which are furnished with this Registration
Statement or incorporated herein by reference, are filed as part of this
Registration Statement.
EXHIBIT INDEX
*2 Agreement and Plan of Merger (filed as Annex I to the Joint Proxy
Statement Prospectus part of the Registrant's Registration Statement on
Form S-4 (No. 33-85234) effective January 6, 1995).
*4.1 Specimen Form of Common Stock Certificate.
+4.2 Form of Warrant.
+4.8 Loan Agreement dated as of April 1, 1986 between Town of Orrington,
Maine and Penobscot Energy Recovery Company, as amended.
+4.9 Credit Agreement dated as of May 15, 1986 by and among Penobscot Energy
Recovery Company, PERC Management Company and Energy National, Inc. and
The Banking Institutions Signatory Hereto and Bankers Trust Company, as
Agent, as amended.
5 Opinion of Crummy, Del Deo, Dolan, Griffinger & Vecchione, a
Professional Corporation (filed with the Amendment No. 1 to Registration
Statement on Form S-1 dated February 2, 1996).
#23.1 Consent of Ernst & Young LLP.
#23.2 Consent of Ouellette, LaBonte, Roberge & Allen, P.A.
#23.3 Consent of KPMG Peat Marwick LLP.
+24 Power of Attorney.
_______________
* Filed as an Exhibit to Registrant's Registration Statement on Form S-4
(No. 33-85234) effective January 6, 1995.
+ Filed with the Registration Statement on Form S-1 dated December 6,
1995.
# Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this Post-
Effective Amendment No. 1 on Form S-3 to Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Guttenberg in the State of New Jersey, on June 4, 1996.
KTI, INC.
By: /s/ Nicholas Menonna, Jr.
Nicholas Menonna, Jr., Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 1 on Form S-3 to Registration Statement on Form S-1
has been signed on June 4, 1996 by the following persons in the capacities
indicated.
SIGNATURE TITLE
/s/ Nicholas Menonna, Jr.
Nicholas Menonna, Jr. Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Martin J. Sergi
Martin J. Sergi Vice Chairman, President, Chief
Operating Officer, Chief Financial
Officer, Treasurer, and Director
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Dibo Attar
Dibo Attar Director
/s/ Thomas A. Bosanko
Thomas A. Bosanko Director
/s/ Marshall S. Sterman
Marshall S. Sterman Director
/s/ Jack Polak
Jack Polak Director
/s/ Jeffrey R. Power
Jeffrey R. Power Director
/s/ Ross Pirasteh
Ross Pirasteh Director
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and the related Prospectus of KTI, Inc. (the
"Company") for the registration of 1,385,431 shares of its common stock and to
the incorporation by reference therein of our reports dated April 12, 1996,
February 8, 1996, and February 22, 1994, with respect to the consolidated
financial statements and schedule of KTI, Inc., and the financial statements of
Penobscot Energy Recovery Company (a Limited Partnership), and Maine Energy
Recovery Company (a Limited Partnership), respectively, included in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1995, filed
with the Securities and Exchange Commission.
Ernst & Young LLP
Hackensack, New Jersey
June 6, 1996
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated July 21, 1994 (except for Note 10, as to which the
date is September 16, 1994) in the Registration Statement (no. 33-80087) on Form
S-3 and the related Prospectus of KTI, Inc. for the registration of 1,385,431
shares of its common stock.
/s/ Ouellette, LaBonte, Roberge & Allen
OUELLETTE, LABONTE, ROBERGE & ALLEN, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
Lewiston, Maine
May 30, 1996
Exhibit 23.3
Accountants' Consent
The Board of Directors
American Ash Recycling Corp.
of Tennessee:
We consent to the incorporation by reference in the registration statement (No.
33-80089) on Form S-3 of KTI, Inc. of our report dated March 12, 1996, with
respect to the balance sheets of American Ash Recycling Corp. of Tennessee as of
December 31, 1995 and 1994, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended, which report
appears in the Form 8-KA of KTI, Inc. filed May 29, 1996.
KPMG Peat Marwick LLP
Jacksonville, Florida
June 12, 1996
