SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 15, 1997
KTI, INC.
(Exact name of Registrant as specified in Charter)
New Jersey 33-85234 22-2665282
(State or other juris - (Commission (IRS Employer
diction of incorporatio n) File Number) Identification
Number)
7000 Boulevard East, Guttenberg, New Jersey 07093
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code (201) 854-7777
Not Applicable
(Former name and former address, as changed since last report)
ITEM 5. OTHER EVENTS
On August 15 through 19, 1997, KTI, Inc. (the "Company" or the
"Registrant") consummated the offering of its 8.75% Series B Convertible
Exchangeable Preferred Stock (the "Series B Convertible Preferred"). The
Company issued 856,000 shares of the Series B Convertible Preferred at a price
of $25.00 per share, The gross proceeds of the offering were $21.4 million.
Transaction costs and the placement agent's fees are estimated at $1,395,000,
resulting in estimated proceeds to the Company of $20,005,000.
The Series B Convertible Preferred is convertible into common stock at
$11.75 per share and is redeemable, at the option of the Company: (a) on August
15, 1999 for $26.47 per share if the bid price of the Common Stock has averaged
not less than 1.5 times the then conversion price during the preceding 20
consecutive trading days; and (b) at $26. 1 0 on August 15, 2000 and declining
at approximately $0.37 per share as of August 15 of each subsequent year until
August 15, 2003 when the Series B Convertible Preferred may be called at $25.00
per share. The Series B Convertible Preferred is subject to mandatory
redemption at $25.00 per share on August 15, 2004. At the option of the
Company, such mandatory redemption of the Series B Convertible Preferred may be
made in cash or in shares of Common Stock of the Company, valued at 95% of the
average closing price of the Common Stock during the 20 trading days prior to
such redemption date. The Series B Convertible Preferred is also subject to
mandatory redemption upon the occurrence of a change of control, at the option
of the shareholders holding a majority of the Series B Convertible Preferred.
In such event, the Company must purchase any Series B Convertible Preferred
(other than shares owned by a Series B Convertible Preferred shareholder who
voted in favor of the change of control transaction) tendered in cash for a
price equal to $25.00 per share plus any accumulated and unpaid dividends
through the last dividend payment date.
So long as any shares of the Series B Convertible Preferred are
outstanding, the Company may not issue any new securities in parity with, or
senior to, the Series B Convertible Preferred unless: (a) the proforma ratios
for the latest twelve months of net income available for preferred dividends is
not less than 1:1; and (b) earnings before interest, taxes, depreciation and
amortization, exclusive of non recurring items, less capital expenditures,
securities amortization and redemption, cash, taxes and changes in working
capital to preferred dividends is not less than 1.2:1, unless an affirmative
vote or consent of the majority of the outstanding shares of Series B
Convertible Preferred has been received.
The Company, at its option, may exchange all, but not less than all, of the
then outstanding shares of Series B Convertible Preferred into 8.75% Convertible
Subordinated Notes due August 15, 2004 (the "8.75% Convertible Subordinated
Notes") on the first business day of February, May, August or November of any
year. If the 8.75% Convertible Subordinated Notes are issued, the Company is
obligated to qualify the trust indenture for the 8.75% Convertible Subordinated
Notes and the trustee appointed thereby under the Trust Indenture Act of 1939,
as amended.
The Series B Convertible Preferred have no voting rights, other than with
respect to matters specifically affecting the rights of the Series B Convertible
Preferred shareholders as a class, unless the Company shall have failed to: (a)
declare and pay in full dividends accumulated for more than four consecutive
quarters; or (b) to satisfy any mandatory redemption obligation.
Credit Research & Trading LLC acted as the placement agent for the issuance
of the Series B Convertible Preferred and provided advisory services to the
Company in connection therewith. In partial consideration for their services,
Credit Research & Trading LLC received a warrant (the "Warrant") to purchase
95,750 shares of common stock of the Company at $11.75 for such advisory
services. The warrant expires on August 15, 2002, unless exercised sooner.
The Company has agreed to register the Series B Convertible Preferred, the
8.75% Convertible Subordinated Notes, if issued, the underlying shares of Common
Stock of the Company into which the Series B Convertible Preferred or the 8.75%
Convertible Subordinated Notes may be converted and the underlying shares of
Common Stock of the Company to be issued upon the exercise of the Warrant.
The Company has appointed the American Stock Transfer and Trust Company
("American Stock Transfer"), 40 Wall Street, New York, New York 10005 as
transfer agent for the Series B Convertible Preferred. On September 2, 1997,
American Stock Transfer will become the successor transfer agent for the
Company's Common Stock.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Exhibits
Exhibit Number Description
4.1 Certificate of Amendment to the Restated Certificate of
Incorporation of KTI, Inc., filed August 8, 1997,
10.1 Placement Agreement dated August 7, 1997 between KTI, Inc. and
Credit Research & Trading LLC.
10.2 Warrant Agreement dated August 7, 1997 between KTI, Inc. and
Credit Research & Trading LLC.
10.3 Registration Rights Agreement dated August 15, 1997 between KTI,
Inc. and the purchases named therein.
99.1 Press release issued by KTI, Inc, on August 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KTI, Inc.
(the Registrant)
Dated: August 22, 1997 By: /s/ Martin J. Serigi
Name: Martin J. Sergi
Title: President
Exibit 4.1
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF KTI, INC.
Pursuant to the provisions of Sections 14A:7-2(4) and 14A:9-2(2),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:
1. The name of the corporation is KTI, Inc. (the "Corporation").
2. The following resolution was adopted by the Board of Directors of
the Corporation:
Resolved that a new ARTICLE ELEVENTH relating to the designation,
number rights, preferences and limitation of a series of preferred stock shall
be added to the Restated Certificate of Incorporation, as amended, and shall
read in its entirety as follows:
"ARTICLE ELEVENTH
Section 1. Designation and Amount. There is hereby created out of
the authorized and unissued shares of preferred stock of the Corporation a
series of preferred stock, no par value, designated as the "8 3/4% Series B
Convertible Exchangeable Preferred Stock" (the "Series B Preferred"). The
number of shares constituting such series shall be 880,000. The liquidation
preference of the Series B Preferred (the "Liquidation Preference") shall be
$25.00 per share.
Section 2. Rank. The Series B Preferred shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank (i) senior to all classes of Common Stock
of the Corporation and to each other class of capital stock or series of
preferred stock established after the Series B Preferred Issue Date by the Board
of Directors, the terms of which do not expressly provide that it ranks senior
to or on a parity with the Series B Preferred as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the
Corporation (collectively referred to with the Common Stock of the Corporation
as "Junior Securities"); (ii) on a parity with the Corporation's Series A
Preferred Stock and, subject to certain conditions, with any class of capital
stock or series of preferred stock issued by the Corporation which was
established after the Series B Preferred Issue Date by the Board of Directors,
the terms of which expressly provide that such class or series will rank on a
parity with Series B Preferred as to dividend distributions and distributions
upon the liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Parity Securities"); and (iii) subject to certain
conditions, junior to each class of capital stock or series of preferred stock
issued by the Corporation which was established after the Series B Preferred
Issue Date by the Board of Directors, the terms of which expressly provide that
such class or series will rank senior to the Series B Preferred as to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation (collectively referred to as "Senior Securities"). The Series B
Preferred shall be subject to the issuance of series of Junior Securities,
Parity Securities and Senior Securities, provided that the Corporation may not
issue any new class of Parity Securities or Senior Securities without the
approval of the Holders of at lease a majority of the shares of Series B
Preferred then outstanding, voting or consenting, as the case may be, together
as one class unless the pro forma ratios for the latest twelve months of (i) net
income available for preferred dividends to preferred dividends is not less than
1:1 and (ii) EBITDA less capital expenditures, securities amortization and
redemption, cash taxes and changes in working capital to preferred dividends is
not less than 1.2:1. The Series B Preferred shall rank junior in right of
payment to all indebtedness and other debt obligations of the Corporation.
Section 3. Dividends.
(a) Beginning on the Series B Preferred Issue Date, the Holders
of the outstanding shares of Series B Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors, from any
source of funds legally available therefor, distribution in the form of
cash dividends on each share of Series B Preferred, at a rate per annum
equal to 8 3/4% of the Liquidation Preference per share of the Series B
Preferred plus accumulated and unpaid dividends thereon as of the last
Dividend Payment Date, payable quarterly; provided that if the Corporation
fails to register the Series B Preferred pursuant to the terms of, and
within the time periods set forth in, the Registration Rights Agreement
dated August 7, 1997 between the Corporation and Credit Research & Trading
LLC, then the dividend rate shall increase 0.5% per annum for each period
during which such registration is not effective. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the
Series B Preferred Issue Date and shall be payable quarterly in arrears on
each Dividend Payment Date, commencing on November 1, 1997. Each
distribution in the form of a dividend shall be payable to the Holders of
record as they appear on the stock register of the Corporation on the
record date for such purpose fixed by the Board of Directors, which shall
not be less than 10 nor more than 60 days preceding the related Dividend
Payment Date. Dividends shall cease to accumulate in respect of shares of
the Series B Preferred on the Exchange Date or on the date of their earlier
redemption unless the Company shall have failed to issue the appropriate
aggregate principal amount of Exchange Notes in respect of the Series B
Preferred on the Exchange Date or shall have failed to pay the relevant
redemption price on the date fixed for redemption.
(b) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any cash
dividends on shares of the Series B Preferred at any time.
(c) Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption pursuant to
Section 6(a) may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to Holders of record on such date, not more
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(d) Except as set forth in the following sentence, no dividends
shall be declared by the Board of Directors or paid or funds set apart for
the payment of dividends by the Corporation on any Parity Securities for
any period unless full cumulative dividends shall have been or
contemporaneously are declared and paid in cash or declared and a sum in
cash set apart sufficient for such payment of the Series B Preferred for
all Dividend Periods terminating on or prior to the date of payment of such
dividends on such Parity Securities. If full dividends in cash are not so
paid upon the shares of the Series B Preferred and any other Parity
Securities, all dividends declared upon the Series B Preferred and other
Parity Securities shall be declared pro rata so that the amount of
dividends declared on each class or series of the Series B Preferred and
such Parity Securities shall in all cases bear to each other the same ratio
that the aggregate accumulated dividends on the Series B Preferred and such
Parity Securities bear to each other.
(e) (i) Holders of shares of the Series B Preferred shall be
entitled to receive the dividends provided for in Section 3(a) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.
(ii) So long as any shares of Series B Preferred are
outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any Junior Securities or make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of, any
Junior Securities or any warrants, rights, calls or options
exercisable for or convertible into any Junior Securities, or make any
distribution in respect thereof, either directly or indirectly, and
whether in cash, obligations or shares of the Corporation or other
property (other than distributions or dividends in Junior Securities
to the holders of Junior Securities), and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any Junior Securities or any such
warrants, rights, calls or options unless full cumulative dividends
determined in accordance herewith have been paid or deemed paid in
full on the Series B Preferred for all past Dividend Periods.
(iii) So long as any shares of the Series B Preferred are
outstanding, the Corporation shall not make any payment on account of,
or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption or other retirement of, any Parity
Securities or any warrants, rights, calls or options exercisable for
or convertible into any Parity Securities, and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any Parity Securities or any such
warrants, rights, calls or options unless the dividends determined in
accordance herewith on the Series B Preferred have been paid or deemed
paid in full for all past Dividend Periods.
(f) Dividends payable on shares of the Series B Preferred for
any period of less than a year shall be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed in any
period of less than one month. If any Dividend Payment Date occurs on a
day that is not a Business Day, any accumulated dividends otherwise payable
on such Dividend Payment Date shall be paid on the next succeeding Business
Day.
Section 4. Liquidation Preference.
(a) Upon any voluntary or involuntary dissolution or winding-up
of the Corporation, the Holders of shares of Series B Preferred then
outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution, the Liquidation Preference, plus an
amount in cash equal to accumulated and unpaid dividends thereon as of the
last Dividend Payment Date prior to the date fixed for dissolution or
winding-up (including an amount in cash equal to a prorated dividend for
the period from the last Dividend Payment Date to the date fixed for
liquidation, dissolution or winding-up), before any payment shall be made
or any assets distributed to the holders of any Junior Securities,
including, without limitation, Common Stock of the Corporation. If, upon
any voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, the amount payable with respect to the Series B Preferred and
all other Parity Securities is not paid in full, then the Holders of the
Series B Preferred and the Parity Securities shall share equally and
ratably in any distribution of assets of the Corporation in proportion to
the full Liquidation Preference and accumulated and unpaid dividends
thereon as of the last Dividend Payment Date prior to the date of such
voluntary or involuntary dissolution or winding-up, to which each is
entitled. After payment of the full amount of the Liquidation Preferences
and accumulated and unpaid dividends thereon as of the last Dividend
Payment Date to which they are entitled, the Holders of shares of Series B
Preferred shall not be entitled to any further participation in any
distribution of assets of the Corporation.
(b) For the purposes of this Section 4 only, neither the sale,
lease, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of
the Corporation with or into one or more entities shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation.
Section 5. Conversion.
(a) A Holder of shares of Series B Preferred may convert such
shares into Common Stock at any time. For the purposes of conversion, each
share of Series B Preferred shall be valued at the Liquidation Preference
plus accumulated and unpaid dividends thereon as of the last Dividend
Payment Date, which shall be divided by the Conversion Price in effect on
the Conversion Date to determine the number of shares issuable upon
conversion, except that the right to convert shares of Series B Preferred
called for redemption shall terminate at the close of business on the
Business Day preceding the Redemption Date and shall cease if not exercised
prior to that time (unless the Corporation shall default in making the
payment due upon redemption). Immediately following such conversion, the
rights of the Holders of converted Series B Preferred shall cease and the
persons entitled to receive the Common Stock upon the conversion of Series
B Preferred shall be treated for all purposes as having become the owners
of such Common Stock.
(b) To convert Series B Preferred, a Holder must (i) surrender
the certificate or certificates evidencing the shares of Series B Preferred
to be converted, duly endorsed in a form satisfactory to the Corporation,
at the office of the Corporation or the Corporation's transfer agent for
the Series B Preferred, (ii) notify the Corporation at such office that he
elects to convert Series B Preferred and the number of shares he wishes to
convert, (iii) state in writing the name or names in which he wishes the
certificate or certificates for shares of Common Stock to be issued, and
(iv) pay any transfer or similar tax if required. In the event that a
Holder fails to notify the Corporation of the number of shares of Series B
Preferred which he wishes to convert, he shall be deemed to have elected to
convert all shares represented by the certificate or certificates
surrendered for conversion. The date on which the Holder satisfies all
those requirements is the "Conversion Date." As soon as practical, the
Corporation shall deliver a certificate for the number of full shares of
Common Stock issuable upon the conversion, a payment in cash for any
fractional share and a new certificate representing the unconverted
portion, if any, of the shares of Series B Preferred represented by the
certificate or certificates surrendered for conversion. The person in
whose name the Common Stock certificate is registered shall be treated as
the shareholder of record on and after the Conversion Date. No payment or
adjustment will be made for accumulated and unpaid dividends on converted
shares of Series B Preferred or for dividends on any Common Stock issued
upon such conversion. A share of Series B Preferred surrendered for
conversion during the period from the close of business on any record date
for the payment of dividends to the opening of business of the
corresponding Dividend Payment Date must be accompanied by a payment in
cash in an amount equal to the dividend payable on such Dividend Payment
Date, unless such share of Series B Preferred has been called for
redemption on a Redemption Date occurring during the period from the close
of business on any record date for the payment of dividends to the close of
business on the Business Day immediately following the corresponding
Dividend Payment Date. The dividend payment with respect to a share of
Series B Preferred called for redemption on a date during the period from
the close of business on any record date for the payment of dividends to
the close of business on the Business Day immediately following the
corresponding Dividend Payment Date will be payable on such Dividend
Payment Date to the record Holder of such share on such record date,
notwithstanding the conversion of such share after such record date and
prior to such Dividend Payment Date, and the Holder converting such share
of Series B Preferred need not include a payment of such dividend amount
upon surrender of such share of Series B Preferred for conversion. If a
Holder of Series B Preferred converts more than one share at a time, the
number of full shares of Common Stock issuable upon conversion shall be
based on the total value of all shares of Series B Preferred converted. If
the last day on which Series B Preferred may be converted is not a Business
Day, Series B Preferred may be surrendered for conversion on the next
succeeding Business Day.
(c) The Corporation shall not issue a fractional share of Common
Stock upon conversion of Series B Preferred. Instead the Corporation shall
pay a cash adjustment for the current market value of the fractional share.
The current market value of a fraction of a share shall be determined as
follows: Multiply the current market price of a full share by the
fraction. Round the result to the nearest cent. The current market price
of a share of Common Stock is the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date.
(d) If a Holder converts shares of Series B Preferred, the
Corporation shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the conversion.
However, the Holder shall pay any such tax that is due because the shares
are issued in a name other than the Holder's name.
(e) The Corporation has reserved and shall continue to reserve
out of its authorized but unissued Common Stock or its Common Stock held in
treasury enough shares of Common Stock to permit the conversion of the
Series B Preferred in full. All shares of Common Stock that may be issued
upon conversion of Series B Preferred shall be fully paid and
nonassessable. The Corporation shall endeavor to comply with all
securities laws regulating the offer and delivery of shares of Common Stock
upon conversion of Series B Preferred and shall endeavor to list such
shares on each national securities exchange on which the Common Stock is
listed.
(f) In case the Corporation shall pay or make a dividend or
other distribution on any class of capital stock of the Corporation in
Common Stock, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator of
which shall be the sum of such number of shares and the total number shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination of the holders entitled to such
dividends and distributions. For the purposes of this Section 5(f), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation. The Corporation will not
pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Corporation.
(g) In case the Corporation shall issue rights, options or
warrants to all holders of its Common Stock entitling them to subscribe
for, purchase or acquire shares of Common Stock at a price per share less
than the current market price per share (determined as provided in Section
5(k) below) of Common Stock on the date fixed for the determination of
shareholders entitled to receive such rights, options or warrants, the
Conversion Price in effect at the opening of business on the day following
the date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription, purchase or acquisition would
purchase at such current market price and the denominator of which shall be
the number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription, purchase or acquisition, such
reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination of the holders
entitled to such rights, options or warrants. However, upon the expiration
of any right, option or warrant to purchase Common Stock, the issuance of
which resulted in an adjustment in the Conversion Price pursuant to this
Section 5(g), if any such right, option or warrant shall expire and shall
not have been exercised, the Conversion Price shall be recomputed
immediately upon such expiration and effectively immediately upon such
expiration shall be increased to the price it would have been (but
reflecting any other adjustments to the Conversion Price made pursuant to
the provisions of this Section 5 after the issuance of such rights, options
or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights, options or warrants been made on the basis of
offering for subscription or purchase only that number of shares of Common
Stock actually purchased upon the exercise of such rights, options or
warrants. No further adjustment shall be made upon exercise of any right,
option or warrant if any adjustment shall have been made upon the issuance
of such security. For the purposes of this Section 5(g), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Corporation. The Corporation will not issue
any rights, options or warrants in respect of shares of Common Stock held
in the treasury of the Corporation.
(h) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be reduced, and,
conversely, in case the outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be increased to equal
the product of the Conversion Price in effect on such date and a fraction
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such subdivision or combination, as the
case may be, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such subdivision or combination,
as the case may be. Such reduction or increase, as the case may be, shall
become effective immediately after the opening of business on the day
following the date upon which such subdivision or combination becomes
effective.
(i) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock (i) evidences of its
indebtedness or (ii) shares of any class of capital stock, cash or other
assets (including securities, but excluding (A) any rights, options or
warrants referred to in Section 5(g) above, (B) any dividend or
distribution referred to in Section 5(f) above and (C) cash dividends paid
from the Corporation's retained earnings, unless the sum of (1) all such
cash dividends and distributions made within the preceding 12 months in
respect of which no adjustment has been made and (2) any cash and the fair
market value of other consideration paid in respect of any repurchases of
Common Stock by the Corporation or any of its subsidiaries within the
preceding 12 months in respect of which no adjustment has been made,
exceeds 20% of the Corporation's market capitalization (being the product
of the then current market price per share (determined as provided in 5(k)
below) of the Common Stock times the aggregate number of shares of Common
Stock then outstanding) on the record date for such distribution), then in
each case, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of holders of Common
Stock entitled to receive such distribution shall be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
shall be the current market price per share (determined as provided Section
5(k) below) of the Common Stock on such date of determination (or, if
earlier, on the date on which the Common Stock goes "ex-dividend" in
respect of such distribution) less the then fair market value as determined
by the Board of Directors (whose determination shall be conclusive and
shall be described in a statement which shall be available upon request) of
the portion of the capital stock, cash or other assets or evidences of
indebtedness so distributed (and for which an adjustment to the Conversion
Price has not previously been made pursuant to the terms of this Section 5)
applicable to one share of Common Stock, and the denominator shall be such
current market price per share of the Common Stock, such adjustment to
become effective immediately after the opening of business on the day
following such date of determination of the holders entitled to such
distribution. The following transactions shall be excluded from the
foregoing clauses (1) and (2): (I) repurchases of Common Stock issued under
the Corporation's stock incentive programs and (II) dividends or
distributions payable-in-kind in additional shares of, or warrants, rights,
calls or options exercisable for or convertible into additional shares of
Junior Securities.
(j) The reclassification or change of Common Stock into
securities, including securities other than Common Stock, (other than any
reclassification upon a consolidation or merger to which Section 5(r) below
shall apply) shall be deemed to involve (i) a distribution of such
securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date
fixed for the determination of holders of Common Stock entitled to receive
such distribution" within the meaning of Section 5(i) above), and (ii) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into
the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be "the
day upon which such subdivision becomes effective" or "the day upon which
such combination becomes effective," as the case may be, and "the day upon
which such subdivision or combination becomes effective" within the meaning
of Section 5(h) above).
(k) For the purpose of any computation under Section (g) or (i)
above, the current market price per share of Common Stock on any day shall
be deemed to be the average of the Closing Prices of the Common Stock for
the 10 consecutive Trading Days preceding such day.
(l) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 5 shall be made to the nearest cent or to the nearest 1/100th
of a share, as the case may be.
(m) For purposes of this Section 5, "Common Stock" includes any
stock of any class of the Corporation which has no preference in respect of
dividends or of amounts payable the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation and which is not
subject to redemption by the Corporation. However, subject to the
provisions of Section 5(r) below, shares issuable on conversion of shares
of Series B Preferred shall include only shares of the class designated as
Common Stock of the Corporation on the Series B Preferred Issue Date or
shares of any class or classes resulting from any reclassification thereof
and which have no preferences in respect of dividends or amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation and which are not subject to redemption by
the Corporation; provided that, if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
(n) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock. No
adjustment in the Conversion Price need be made under Sections 5(f), (g)
and (i) above if the Corporation issues or distributes to each Holder of
Series B Preferred the shares of Common Stock, evidences of indebtedness,
assets, rights, options or warrants referred to in those Sections which
each Holder would have been entitled to receive had Series B Preferred been
converted into Common Stock prior to the happening of such event or the
record date with respect thereto.
(o) Whenever the Conversion Price is adjusted, the Corporation
shall promptly mail to Holders of Series B Preferred, first class, postage
prepaid, a notice of the adjustment. The Corporation shall file with the
transfer agent for the Series B Preferred, if any, a certificate from the
Corporation's independent public accountants briefly stating the facts
requiring the adjustment and the manner of computing it. Subject to
Section 5(p) below, the certificate shall be conclusive evidence that the
adjustment is correct.
(p) The Corporation from time to time may reduce the Conversion
Price if it considers such reductions to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the holders of Common Stock by any
amount, but in no event may the Conversion Price be less than the par value
of a share of Common Stock. Whenever the Conversion Price is reduced, the
Corporation shall mail to Holders of Series B Preferred a notice of the
reduction. The Corporation shall mail, first class, postage prepaid, the
notice at least 15 days before the date the reduced Conversion Price takes
effect. The notice shall state the reduced Conversion Price and the period
it will be in effect. A reduction of the Conversion Price does not change
or adjust the Conversion Price otherwise in effect for purposes of Sections
5(f), (g), (h) and (i) above.
(q) If:
(i) the Corporation takes any action which would require an
adjustment in the Conversion Price pursuant to Section 5(g), (i) or
(j) above;
(ii) the Corporation consolidates or merges with, or
transfers all or substantially all of its assets to, another
corporation, and shareholders of the Corporation must approve the
transaction; or
(iii) there is a dissolution or liquidation of the
Corporation;
the Corporation shall mail to Holders of the Series B Preferred, first
class, postage prepaid, a notice stating the proposed record or effective
date, as the case may be. The Corporation shall mail the notice at least
10 days before such date. However, failure to mail the notice or any
defect in it shall not affect the validity of any transaction referred to
in clause (i), (ii) or (iii) of this Section 5(q).
(r) In the case of any consolidation of the Corporation or the
merger of the Corporation with or into any other entity or the sale or
transfer of all or substantially all of the assets of the Corporation
pursuant to which the Corporation's Common Stock is converted into other
securities, cash or assets, upon consummation of such transaction, each
share of Series B Preferred shall automatically become convertible into the
kind and amount of securities, cash or other assets receivable upon the
consolidation, merger, sale or transfer by a holder of the of shares of
Common Stock into which such share of Series B Preferred might have been
converted immediately prior to such consolidation, merger, transfer or sale
(assuming such holder of Common Stock failed to exercise any rights of
election and received per share the kind and amount receivable per share by
a plurality of non-electing shares). Appropriate adjustment (as determined
by the Board of Directors of the Corporation) shall be made in the
application of the provisions herein set forth with respect to the rights
and interests thereafter of the Holders of Series B Preferred, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustment of the Conversion Price) shall thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other securities or property thereafter deliverable upon the
conversion of Series B Preferred. If this Section 5(r) applies, Sections
5(f), (g), (h), (i) and (j) do not apply.
(s) In any case in which this Section 5 shall require that an
adjustment as a result of any event become effective from and after a
record date, the Corporation may elect to defer until after the occurrence
of such event (A) the issuance to the Holder of any shares of Series B
Preferred converted after such record date and before the occurrence of
such event of the additional shares of Common Stock issuable upon such
conversion over and above the shares issuable on the basis of the
Conversion Price in effect immediately prior to adjustment and (B) a cash
payment for any remaining fractional shares of Common Stock as provided in
Section 3(c) above; provided, however, that if such event shall not have
occurred and authorization of such event shall be rescinded by the
Corporation, the Conversion Price shall be recomputed immediately upon such
recision to the price that would have been in effect had such event not
been authorized, provided that such recision is permitted by and effective
under applicable laws.
(t) All shares of Series B Preferred converted pursuant to this
Section 5 shall be restored to the status of authorized and unissued shares
of preferred stock, without designation as to series and may thereafter be
reissued as shares of any series of preferred stock.
Section 6. Redemption.
(a) Optional Redemption. (i) The Corporation may, at the
option of the Board of Directors, redeem at any time on or after August 15,
2000, from any source of funds legally available therefor, from time to
time, in whole or in part, in the manner provided in Section 6(c) hereof,
any or all of the shares of the Series B Preferred, at the redemption
prices set forth below if redeemed during the 12-month period beginning on,
August 15 of each of the years indicated below:
Year Redemption Prices
2000 . . . . . . . . . . . . . . . . $26.10 per share
2001 . . . . . . . . . . . . . . . . $25.73 per share
2002 . . . . . . . . . . . . . . . . $25.37 per share
2003 . . . . . . . . . . . . . . . . $25.00 per share
plus, in each case, an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Redemption Date) (the "Optional Redemption Price"), provided, that no
optional redemption pursuant to this Section 6(a)(i) shall be authorized or
made unless prior to giving the applicable Redemption Notice all
accumulated and unpaid dividends for Dividend Periods ended prior to the
date of such Redemption Notice shall have been paid in cash.
(ii) Notwithstanding subsection (i) above, on or after
August 15, 1999, the Corporation may, at its option, redeem the Series
B Preferred at $26.47 per share plus accumulated and unpaid dividends
thereon as of the last Dividend Payment Date if the Common Stock bid
price has averaged not less than 1.5 times the Conversion Price during
the preceding 20 consecutive Trading Days.
(iii) In the event of a redemption pursuant to Section
6(a)(i) or Section 6(a)(ii) hereof of only a portion of the then
outstanding shares of the Series B Preferred, the Corporation shall
effect such redemption pro rata according to the number of shares held
by each Holder of the Series B Preferred or by lot, as may be
determined by the Corporation in its sole discretion; provided that
the Corporation may redeem all shares held by Holders of fewer than
100 shares of Series B Preferred (or by Holders that would hold fewer
than 100 shares of Series B Preferred following such redemption) prior
to its redemption of other shares of Series B Preferred.
(b) Mandatory Redemption. (i) On August 15, 2004, the
Corporation shall redeem from any source of funds legally available
therefor, in the manner provided in Section 6(c), all of the then
outstanding shares of Series B Preferred at a redemption price equal to
100% of the then effective Liquidation Preference per share, plus an amount
equal to all accumulated and unpaid dividends thereon as of the last
Dividend Payment Date (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Redemption Date) (the "Mandatory Redemption Price"). The Mandatory
Redemption Price shall be made at the option of the Corporation either in
(a) cash or (b) Common Stock valued at 95% of the average Closing Price of
the Common Stock during the 20 Trading Days prior to such redemption date.
(ii) If the Corporation is unable or shall fail to
discharge its obligation to redeem all outstanding shares of Series B
Preferred pursuant to this Section 6(b) (the "Mandatory Redemption
Obligation"), the Mandatory Redemption Obligation shall be discharged
as soon as the Corporation is able to discharge such Mandatory
Redemption Obligation. If and so long as the Mandatory Redemption
Obligation with respect to the Series B Preferred shall not be fully
discharged, the Corporation shall not, directly or indirectly, redeem,
purchase or otherwise acquire any Parity Security or discharge any
mandatory or optional redemption, sinking fund or other similar
obligation in respect of any Parity Securities.
(c) Procedures for Redemption. (i) At least 30 days and not
more than 60 days prior to the Redemption Date of the Series B Preferred,
the Corporation shall make a public announcement of the redemption, and
shall mail written notice (the "Redemption Notice") by first class mail,
postage prepaid, to each Holder of record on the record date fixed for such
redemption of the Series B Preferred at such Holder's address as the same
appears on the stock register of the Corporation, provided that no failure
to give such notice nor any deficiency therein shall affect the validity of
the procedure for the redemption of any shares of Series B Preferred to be
redeemed except as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state:
(A) that the redemption is pursuant to Section 6(a)(i)
or 6(b)(i), as applicable hereof;
(B) the redemption price;
(C) whether all or less than all the outstanding
shares of the Series B Preferred are to be redeemed and the total
number of shares of the Series B Preferred being redeemed;
(D) the number of shares of Series B Preferred, held
as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(E) the Redemption Date;
(F) that the Holder is to surrender to the
Corporation, at the place or places where certificates for shares
of Series B Preferred are to be surrendered for redemption, in
the manner and at the price designated, his certificate or
certificates representing the shares of Series B Preferred to be
redeemed;
(G) the name of any bank or trust company performing
the duties referred to in Section 6(c)(iv) hereof; and
(H) that dividends on the shares of the Series B
Preferred to be redeemed shall cease to accumulate on such
Redemption Date unless the Corporation defaults in the payment of
the redemption price.
(ii) Each Holder of Series B Preferred shall surrender the
certificate or certificates representing such shares of Series B
Preferred to the Corporation, duly endorsed, in the manner and at the
place designated in the Redemption Notice, and on the Redemption Date
the full redemption price for such shares shall be payable in cash to
the Person whose name appears on such certificate or certificates as
the owner thereof, and each surrendered certificate shall be canceled
and retired. In the event that less than all of the shares
represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(iii) Unless the Corporation defaults in the payment in
full of the applicable redemption price, dividends on the Series B
Preferred called for redemption shall cease to accumulate on the
Redemption Date, and the Holders of such redemption shares shall cease
to have any further rights with respect thereto on the Redemption
Date, other than the right to receive the redemption price without
interest.
(iv) If a Redemption Notice shall have been duly given or
if the Corporation shall have given to the bank or trust company
hereinafter referred to irrevocable authorization promptly to give
such notice, and if on or before the Redemption Date specified therein
an amount in cash equal to the full redemption price shall have been
segregated and irrevocably deposited by the Corporation with such bank
or trust company in trust for the pro rata benefit of the Holders of
the Series B Preferred called for redemption, then, notwithstanding
that any certificate for shares so called for redemption shall not
have been surrendered for cancellation, from and after the close of
business on the day on which such funds are so deposited, all shares
so called, or to be so called pursuant to such irrevocable
authorization, for redemption shall no longer be deemed to be
outstanding and all rights with respect of such shares shall forthwith
cease and terminate and, for the purposes of Section 6(c)(i)(H) and
6(c)(iii) above, the Corporation will be deemed to have paid the
redemption price on the Redemption Date, except only the right of
Holders thereof to receive from such bank or trust company at any time
after the time of such deposit the funds so deposited, without
interest, and the right of the Holders thereof to convert such shares
as provided in Section 5 hereof to the Business Day preceding the
Redemption Date. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the Unites States of
America or any state thereof, shall have capital, surplus and
undivided profits aggregating at least $100,000,000 according to its
last published statement of condition, and shall be identified in the
Redemption Notice. Any interest accrued on such funds shall be paid to
the Corporation from time to time. Any funds so set aside or
deposited, as the case may be, in respect of shares of the Series B
Preferred that are subsequently converted shall be promptly returned
to the Corporation. Any funds so set aside or deposited, as the case
may be, and unclaimed at the end of three years from such redemption
shall, to the extent permitted by law, be released or repaid to the
Corporation, after which repayment the Holders of the shares so called
for redemption shall look only to the Corporation for payment thereof.
Section 7. Voting Rights.
(a) The Holders of shares of Series B Preferred, except as
otherwise required under New Jersey law, the Restated Certificate of
Incorporation of the Corporation, as amended (the "Restated Certificate of
Incorporation"), or as set forth in Sections 7(b), (c) or (d) below, shall
not be entitled or permitted to vote on any matter required or permitted to
be voted upon by the shareholders of the Corporation.
(b) (i) So long as any shares of the Series B Preferred are
outstanding, the Corporation shall not authorize or issue any new class of
Parity Securities or Senior Securities, or increase the authorized number
of shares of any such class or series, or reclassify any authorized stock
of the Corporation into any such class or series, or authorize any
obligation or security convertible into or evidencing the right to purchase
any such Parity Securities or Senior Securities unless the pro forma ratios
for the latest twelve months of (A) net income available for preferred
dividends to preferred dividends is not less than 1:1 and (B) EBITDA less
capital expenditures, securities amortization and redemption, cash, taxes
and changes in working capital to preferred dividends is not less than
1.2:1 without the affirmative vote or consent of Holders of at least a
majority of the outstanding shares of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting.
(ii) So long as any shares of the Series B Preferred are
outstanding and without the affirmative vote or consent of Holders of
at least a majority of the issued and outstanding shares of Series B
Preferred, voting or consenting, as the case may be, as one class,
given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting, the Corporation shall not
amend the Restated Certificate of Incorporation so as to affect
adversely the voting rights, preferences, privileges or relative,
participating, optional or other specified rights of Holders of shares
of Series B Preferred or to authorize the issuance of any additional
shares of Series B Preferred; provided that any such amendment that
adversely changes the dividend payable on, or the Liquidation
Preference of, the Series B Preferred shall require the affirmative
vote or consent of all Holders of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or
special meeting.
(iii) and so long as any shares of the Series B Preferred
are outstanding, the Corporation shall not, amend or modify the
Exchange Note Indenture from the form as existing on the date of issue
of the Series B Preferred (except as expressly provided therein),
until the exchange of Series B Preferred for Exchange Notes) without
the affirmative vote or consent of Holders of at least a majority of
the issued and outstanding shares of Series B Preferred, voting or
consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or
special meeting.
(c) (i) If the Corporation fails to (A) declare and pay in full
dividends accumulated and owing on any Dividend Payment Date for more than
four consecutive Dividend Payment Dates (a "Dividend Default"); or (B)
satisfy any Mandatory Redemption Obligation with respect to the Series B
Preferred or to make a Series B Preferred Change of Control Offer or to
repurchase all of the Series B Preferred validly tendered in a Series B
Preferred Change of Control Offer pursuant to the provisions of Section 9
hereof (a "Change of Control Default") (in each case, a "Voting Rights
Triggering Event"), then the number of directors consisting the Board of
Directors shall thereupon automatically be increased by one, in the case of
clause (A) above and two, in the case of clause (B) above, and the Holders
of a majority of the outstanding shares of Series B Preferred, voting
separately as one class (or as a class together with the holders of shares
of Parity Securities, if such holders are entitled to elect additional
directors pursuant to any provisions of the Restated Certificate of
Incorporation that are similar to those of the Holders of the Series B
Preferred), shall be entitled to elect such members to the Board of
Directors at a special meeting therefor called upon the occurrence of such
Voting Rights Triggering Event and at every subsequent meeting at which the
terms of office of the directors so elected expire. In no event shall the
holders of the Series B Preferred and the holders of Parity Securities
voting together as a class be entitled to elect a total of more than two
additional directors to the Board of Directors of the Corporation.
(ii) The right of the Holders of Series B Preferred voting
separately as one class to elect members of the Board of Directors as
set forth in Section 7(c)(i) above shall continue until such time as
(A) in the event such right arises due to a Dividend Default, all
accumulated dividends that are in arrears on the Series B Preferred
are paid in full; and (B) in the event such right arises because a
Change of Control Default, the Corporation remedies any such failure,
breach or default, at which time (Y) the special right of such Holders
so to vote for the election of directors and (Z) the term of office of
any directors elected pursuant to Section 7(c)(i) shall terminate, and
the directors elected by the holders of Common Stock shall constitute
the entire Board of Directors and the authorized number of directors
of the Corporation shall thereupon return to the number of authorized
directors otherwise in effect, but subject always to the same
provisions for the renewal and divestment of such special voting
rights in the case of any future Voting Rights Triggering Event. At
any time after voting power to elect directors shall have become
vested and be continuing in the Holders of shares of the Series B
Preferred pursuant to Section 7(c)(i) hereof or if vacancies shall
exist in the offices of directors elected by the Holders of shares of
the Series B Preferred, a proper officer of the Corporation may, and
upon the written request any Holder of record of shares of Series B
Preferred then outstanding addressed to the Secretary of the
Corporation shall, call a special meeting of the Holders of Series B
Preferred, for the purpose of electing the directors that such Holders
are entitled to elect. If such meeting shall not be called by the
proper officer of the Corporation within 30 days after personal
service of such written request upon the Secretary of the Corporation,
or within 30 days after mailing the same within the United States by
certified mail, addressed to the Secretary of the Corporation at its
principal executive offices, then any Holder of record of outstanding
shares of the Series B Preferred may designate in writing one of their
number to call such meeting at the expense of the Corporation, and
such meeting may be called by the Person so designated upon the notice
required for special meetings of shareholders of the Corporation and
shall he held at the place for holding the annual meetings of
shareholders or such other place in the United States as shall be
designated in such notice. Notwithstanding the provisions of this
Section 7(c)(ii), no such special meeting shall be called if any such
request is received less than 30 days before the date fixed for the
next ensuing annual or special meeting of shareholders of the
Corporation. Any Holder of shares of the Series B Preferred so
designated shall have, and the Corporation shall provide, access to
the lists of Holders of shares of the Series B Preferred for purposes
of calling a meeting pursuant to the provisions of this Section
7(c)(ii).
(iii) At any meeting held for the purpose of electing
directors at which the Holders of Series B Preferred shall have the
right, voting separately as one class, to elect directors as
aforesaid, the presence in person or by proxy of the Holders of at
least a majority of the outstanding Series B Preferred shall be
required to constitute a quorum of such Series B Preferred.
(iv) Directors elected pursuant to this Section 7 shall
serve until the earlier of (A) the next annual meeting of the
shareholders and until their successors are qualified or (B) the time
specified in Section 7(c)(ii) above. Any vacancy occurring in the
office of a director elected by the Holders of shares of the Series B
Preferred may be filled by the Board of Directors with a Person
nominated by the remaining director elected by the Holders of shares
of Series B Preferred (or such Holders and holders of such Parity
Securities) unless and until such vacancy shall be filled by the
Holders of shares of the Series B Preferred (or such Holders and
holders of such Parity Securities) by calling a special meeting of
such Holders as provided in Section 7(c)(ii).
(d) In any case in which the Holders of shares of the Series B
Preferred shall be entitled to vote pursuant to this Section 7 or pursuant
to New Jersey law, each Holder of shares of the Series B Preferred shall be
entitled to one vote for each share of Series B Preferred held.
Section 8. Exchange.
(a) (i) The Corporation at its option may exchange all, but not
less than all, of the then outstanding shares of Series B Preferred into
the Corporation's 8 3/4% Convertible Subordinated Notes due 2004 (the
"Exchange Notes") on any Dividend Payment Date, provided that within 60
days of the Exchange Date, the Corporation shall send a written notice (the
"Exchange Notice") of exchange by mall to each Holder, which notice shall
state: (A) that the Corporation is exercising its option to exchange the
Series B Preferred into Exchange Notes pursuant to the Restated Certificate
of Incorporation; (B) the date of the exchange (the "Exchange Date"), which
date shall not be less than 30 days nor more than 60 days following the
date on which the Exchange Notice is mailed; (C) that the Holder is to
surrender to the Corporation, at the place or places where certificates for
shares of Series B Preferred are to be surrendered for exchange, in the
manner designated in the Exchange Notice, his certificate or certificates
representing the shares of Series B Preferred to be exchanged; (D) that
dividends on the shares of Series B Preferred to be exchanged shall cease
to accumulate on the Exchange Date whether or not certificates for shares
of Series B Preferred are surrendered for exchange on the Exchange Date
unless the Corporation shall default in the delivery of Exchange Notes; and
(E) that interest on the Exchange Notes shall accrue from the Exchange Date
whether or not certificates for shares of Series B Preferred are
surrendered for exchange on the Exchange Date. On the Exchange Date, if the
conditions set forth in clauses (U) through (Y) below are satisfied, the
Corporation shall issue Exchange Notes in exchange for the Series B
Preferred as provided in Section 8(a)(ii), provided that on the Exchange
Date: (U) there are no accumulated and unpaid dividends on the Series B
Preferred (including the dividends payable on such date) or other
contractual impediment to such exchange; (V) there shall be legally
available funds sufficient therefor; (W) the Exchange Note Indenture and
the trustee thereunder shall have been qualified under the Trust Indenture
Act; (X) immediately after giving effect to such exchange, no Default or
Event of Default (each as defined in the Exchange Note Indenture) would
exist under the Exchange Note Indenture; and (Y) the Corporation shall have
delivered to the trustee under the Exchange Note Indenture a written
opinion of counsel, dated the Exchange Date, regarding the satisfaction of
the conditions set forth in clauses (U), (V), and (W). In the event that
the issuance of the Exchange Notes is not permitted on the Exchange Date or
any of the conditions set forth in clauses (U) through (X) of the preceding
sentence are not satisfied on the Exchange Date, the Corporation shall use
its best efforts to satisfy such conditions and effect such exchange as
soon as practicable.
(ii) Upon any exchange pursuant to Section 8(a)(i), Holders
of outstanding shares of Series B Preferred shall be entitled to
receive $1,000 principal amount of Exchange Notes for each 40 shares
of Series B Preferred, plus an amount in cash equal to accumulated and
unpaid dividends (including an amount in cash equal to a prorated
dividend for the period from the last Dividend Payment Date to the
Exchange Date); provided, that the Corporation shall pay cash in lieu
of issuing an Exchange Note in a principal amount of less than $1,000.
On and after the Exchange Date, unless the Corporation defaults in the
issuance of Exchange Notes in exchange for the Series B Preferred,
dividends will cease to accumulate on the outstanding shares of Series
B Preferred, and all rights of the Holders of Series B Preferred
(except the right to receive the Exchange Notes, an amount in cash
equal to the accumulated and unpaid dividends to the Exchange Date and
cash in lieu of any Exchange Note that is in an amount that is not an
integral multiple of $1,000) will terminate. The Person entitled to
receive the Exchange Notes issuable upon such exchange will be treated
for all purposes as the registered holder of such Exchange Notes.
(b) (i) On or before the Exchange Date, each Holder of Series B
Preferred shall surrender the certificate or certificates representing such
shares of Series B Preferred, in the manner and at the place designated in
the Exchange Notice. The Corporation shall cause the Exchange Notes to be
executed on the Exchange Date and, upon surrender in accordance with the
Exchange Notice of the certificates for any shares of Series B Preferred so
exchanged (properly endorsed or assigned for transfer, if the notice shall
so state), such shares shall be exchanged by the Corporation into Exchange
Notes. The Corporation shall pay interest on the Exchange Notes at the
rate and on the dates specified therein from the Exchange Date.
(ii) If notice has been mailed as aforesaid, and if before
the Exchange Date specified in such notice (A) the Exchange Note
Indenture shall have been duly executed and delivered by the
Corporation and the trustee and (B) all Exchange Notes necessary for
such exchange shall have been duly executed by the Corporation and
delivered to the trustee with irrevocable instructions to authenticate
the Exchange Notes necessary for such exchange, then dividends shall
cease to accumulate on the outstanding shares of Series B Preferred,
and all rights of the Holders of Series B Preferred (except the right
to receive the Exchange Notes, an amount in cash equal to the
accumulated and unpaid dividends to the Exchange Date and cash in lieu
of any Exchange Note that is in an amount that is not an integral
multiple of $1,000) will terminate. The Person entitled to receive the
Exchange Notes issuable upon such exchange will be treated for all
purposes as the holder of such Exchange Notes.
Section 9. Change of Control.
(a) Subject to Section 9(e) hereof, upon the occurrence of a
Change of Control, at the option of the Holders of a majority of the Series
B Preferred, the Corporation shall be required to make an offer (a "Series
B Preferred Change of Control Offer") to each Holder of shares of Series B
Preferred to repurchase all or any part of such Holder's shares of Series B
Preferred at an offer price in cash equal to 100% of the aggregate
Liquidation Preference thereof plus an amount in cash equal to all
accumulated and unpaid dividends (including an amount in cash equal to a
prorated dividend for the period from the last Dividend Payment Date to the
Change of Control Payment Date) thereon to the date of repurchase (the
"Change of Control Payment").
(b) Within 30 days following any Change of Control, the
Corporation shall mail a notice to each Holder describing the transaction
that constitutes the Change of Control, together with such other
information as may be required pursuant to the securities laws, and
stating: (i) that the Change of Control Offer is being made pursuant to the
Restated Certificate of Incorporation and that, to the extent lawful, all
shares of Series B Preferred validly tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"); (iii) that any shares of Series B
Preferred not tendered will continue to accumulate dividends in accordance
with the terms of the Restated Certificate of Incorporation; (iv) that,
unless the Corporation defaults in the payment of the Change of Control
Payment, all shares of Series B Preferred accepted for payment pursuant to
the Change of Control Offer shall cease to accumulate dividends on the
Change of Control Payment Date; and (v) a description of the procedures to
be followed by such Holder in order to have its shares of Series B
Preferred repurchased.
(c) On the Change of Control Payment Date, (i) the Corporation
shall, to the extent lawful, (A) accept for payment shares of Series B
Preferred validly tendered pursuant to the Change of Control Offer and (B)
promptly mail to each Holder of shares of Series B Preferred so accepted
payment in an amount equal to the purchase price for such shares and (ii)
unless the Corporation defaults in the payment for the shares of Series B
Preferred tendered pursuant to the Series B Preferred Change of Control
Offer, dividends will cease to accumulate with respect to the shares of
Series B Preferred tendered and all rights of Holders of such tendered
shares will terminate, except for the right to receive payment therefor, on
the Change of Control Payment Date. The Corporation shall publicly
announce the results of the Series B Preferred Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
(d) The Corporation shall comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of shares of the Series B Preferred in connection with a Change
of Control.
(e) Notwithstanding the foregoing, prior to complying with this
Section 9, but in any event within 90 days following a Change of Control,
the Corporation shall either repay all outstanding indebtedness or obtain
the requisite consents, if any, under all agreements governing outstanding
indebtedness necessary to permit the repurchase of the Preferred stock
required by this Section 9.
(f) Notwithstanding the foregoing, the Corporation will not be
required to make a Change of Control Offer following a Change of Control if
a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in the Restated
Certificate of Incorporation applicable to a Change of Control Offer made
by the Corporation and purchases all of the Series B Preferred validly
tendered and not withdrawn under such Change of Control Offer.
Section 10. Preemptive Rights. No shares of Series B Preferred
shall have any rights of preemption whatsoever as to any securities of the
Corporation, or any warrants, rights or options issued or granted with respect
thereto, regardless of how such securities or such warrants, rights or options
may be designated, issued or granted.
Section 11. Reissuance of Series B Preferred. Shares of Series B
Preferred that have been issued and reacquired in any manner, including shares
purchased or redeemed or exchanged, shall (upon compliance with any applicable
provisions of the laws of the State of New Jersey) have the status of authorized
but unissued shares of preferred stock of the Corporation undesignated as to
series and may with any and all other authorized buy unissued shares of
preferred stock of the Corporation be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of the
Corporation, except that any issuance or reissuance of such shares of Series B
Preferred must be in compliance with the terms hereof.
Section 12. Business Day. If any payment, redemption or exchange
shall be required by the terms hereof to be made on a day that is not a Business
Day, such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
Section 13. Merger, Consolidation and Sale of Assets. Without the
vote or consent of the Holders of a majority of the then outstanding shares of
Series B Preferred, the Corporation may not consolidate or merge with or into,
or sell, assign, transfer, lease, convey or otherwise dispose of 80% or more of
its assets to, any person unless (a) the entity formed by such consolidation or
merger (if other than the Corporation) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (in any
such case, the "resulting entity") is a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia;
(b) if the Corporation is not the resulting entity, the Series B Preferred is
converted into or exchanged for and becomes shares of such resulting entity,
having in respect of such resulting entity the same (or more favorable) powers,
preferences and relative, participating, optional or other special rights
thereof that the Series B Preferred had immediately prior to such transaction;
and (c) immediately after giving effect to such transaction, no Voting Rights
Triggering Event has occurred and is continuing. The resulting entity of such
transaction shall thereafter be deemed to be the "Corporation" for all purposes
of the Restated Certificate of Incorporation. If a Holder votes in favor of any
of the events specified above, such Holder may not exercise any rights such
Holder may have under Section 9 hereof as a result of the occurrence of such
event.
Section 14. Reports. Whether or not the Corporation is required to
do so by the rules and regulations of the Commission, the Corporation shall file
with the Commission (unless the Commission will not accept such a filing) and,
within 15 days of filing, or attempting to file, the same with the Commission,
furnish to the Holders of the Series B Preferred (a) all quarterly and annual
financial and other information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Corporation were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Corporation's certified
independent accountants, and (b) all current reports that would be required to
be filed with the Commission on Form 8-K if the Corporation were required to
file such reports. In addition, the Corporation shall furnish to the Holders of
the Series B Preferred, prospective purchasers of shares of Series B Preferred
and securities analysts, upon their request, the information, if any, required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 15. Mutilated or Missing Series B Preferred Certificates. If
any of the Series B Preferred certificates shall be mutilated, lost, stolen or
destroyed, the Corporation shall issue, in exchange and in substitution for and
upon cancellation of the mutilated Series B Preferred certificate, or in lieu of
and substitution for the Series B Preferred certificate lost, stolen or
destroyed, a new Series B Preferred certificate of like tenor and representing
an equivalent amount of shares of Series B Preferred, but only upon receipt of
evidence of such loss, theft or destruction of such Series B Preferred
certificate and indemnity, if requested, satisfactory to the Corporation and the
transfer agent (if other than the Corporation).
Section 16. Headings of Subdivisions. The headings of various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions thereof.
Section 17. Severability of Provisions. If any right, preference or
limitation of the Series B Preferred set forth in the Restated Certificate of
Incorporation as amended hereby (or as the Restated Certificate of Incorporation
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule or law or public policy, all other rights,
preferences and limitations set forth in the Restated Certificate of
Incorporation, as amended, which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
Section 18. Notice of the Corporation. All notices other
communications required or permitted to be given to the Corporation hereunder
shall be made by first class mail, postage prepaid, to the Corporation at its
principal executive offices (currently located on the date of the adoption of
these resolutions at the following address: KTI, Inc., 7000 Boulevard East,
Guttenberg, New Jersey 07093, Attention: General Counsel). Minor imperfections
in any such notice shall not affect the validity thereof.
Section 19. Limitations. Except as may otherwise be required by law,
the shares of Series B Preferred shall not have any powers, preferences or
relative, participating, optional or other special rights other than those
specifically set forth in the Restated Certificate of Incorporation (as it may
be amended from time to time).
Section 20. Definitions. As used in the Restated Certificate of
Incorporation, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
"Affiliate" of any specified Person means an "affiliate" of such
Person, as such term is defined for purposes of Rule 144 under the Securities
Act.
"Business Day" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) or corporate stock or
partnership interests, whether common or preferred.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Corporation and is subsidiaries,
taken as a whole; (ii) the adoption of a plan relating to the liquidation or
dissolution of the Corporation; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" or "group" (as such terms are used in Section 13(d)(3) of
the Exchange Act), other than a group including any one of Nicholas Mennona Jr.,
Martin Sergi or Ross Piratesh, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, of more than 50% of the voting
power of the outstanding voting stock of the Corporation, unless the Closing
Price per share of Common Stock for any five Trading Days within the period of
ten consecutive Trading Days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the Conversion Price in effect on
each such Trading Day; or (iv) the first day on which more than a majority of
the Board of Directors are not Continuing Directors; provided, however, that a
transaction in which the Corporation becomes a subsidiary of another entity
shall not constitute a Change of Control if (A) the shareholders of the
Corporation immediately prior to such transaction "beneficially own" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly through one or more intermediaries, at least a majority of the
voting power of the outstanding voting stock of the Corporation immediately
following the consummation of such transaction and (B) immediately following the
consummation of such transaction, no "person" or "group" (as such terms are
defined above), other than such other entity (but including holders of equity
interests of such other entity), "beneficially owns" (as such term is defined
above), directly or indirectly through one or more intermediaries, more than 50%
of the voting power of the outstanding voting stock of the Corporation.
"Change of Control Default" has the meaning set forth in Section 7(c)
hereof.
"Change of Control Payment" has the meaning set forth in Section 9(a)
hereof.
"Change of Control Payment Date" has the meaning set forth in Section
9(b) hereof.
"Closing Price" means, for each Trading Day, the last reported sale
price regular way on the principal exchange, including the Nasdaq National
Market, on which the applicable security is listed or quoted or, if the
applicable security is not so listed or quoted, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Corporation for
that purpose. In the event that the Closing Price cannot be determined as
aforesaid, the Board of Directors of the Corporation shall determine the Closing
Price on the basis of such quotations as it in good faith considers appropriate.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, no par value, of the
Corporation.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Corporation who (i) was a member of the
Board of Directors on the date of original issuance of the Series B Preferred or
(ii) was nominated for election to the Board of Directors with the approval of,
or whose election to the Board of Directors was ratified by, at least two-thirds
of the Continuing Directors who were members of the Board of Directors at the
time of such nomination or election.
"Conversion Date" has the meaning set forth in Section 5(b) hereof.
"Conversion Price" shall initially mean $11.75 and thereafter shall be
subject to adjustment from time to time pursuant to the terms of Section 5
hereof.
"Dividend Default" has the meaning set forth in Section 7(c) hereof.
"Dividend Payment Date" means February 1, May 1, August 1 and November
1 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization, excluding any non-recurring items.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" has the meaning set forth in Section 8(a) hereof.
"Exchange Notes" has the meaning set forth in Section 8(a) hereof.
"Exchange Note Indenture" means that certain indenture under which the
Exchange Notes will be issued.
"Exchange Notice" has the meaning set forth in Section 8(a) hereof.
"Holder" means a holder of shares of Series B Preferred as reflected
in the stock records of the Corporation or the transfer agent for the Series B
Preferred.
"Initial Dividend Period" means the dividend period commencing on the
Series B Preferred Issue Date and ending on October 31, 1997.
"Junior Securities" has the meaning set forth in Section 2 hereof.
"Liquidation Preference" has the meaning set forth in Section 1
hereof.
"Mandatory Redemption Obligation" has the meaning set forth in Section
6(b) hereof.
"Mandatory Redemption Price" has the meaning set forth in Section 6(b)
hereof.
"Optional Redemption Price" has the meaning set forth in Section 6(a)
hereof.
"Parity Securities" has the meaning set forth in Section 2 hereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Quarterly Dividend Period" shall mean the quarterly period commencing
on each February 1, May 1, August 1 and November 1 and ending on the day before
the following Dividend Payment Date.
"Redemption Date" with respect to any shares of Series B Preferred,
means the date on which such shares of Series B Preferred are redeemed by the
Corporation.
"Redemption Notice" has the meaning set forth in Section 6(c) hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement with respect to the Series B Preferred, dated as of August 7, 1997, by
and between the Corporation and Credit Research & Trading LLC, as such agreement
may be amended, modified or supplemented from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Securities" has the meaning set forth in Section 2 hereof.
"Series B Preferred" has the meaning set forth in Section 1 hereof.
"Series B Preferred Change of Control Offer" has the meaning set forth
in Section 9(a) hereof.
"Series B Preferred Issue Date" means August 15, 1997.
"Trading Day" means any day on which (i) the Nasdaq National Market or
other applicable stock exchange or market is open for business and (ii) the
Common Stock is traded.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Voting Rights Triggering Event" has the meaning set forth in Section
7(c) hereof."
3. Such resolution was duly adopted by the Board of Directors of the
Corporation on August 7, 1997.
4. The Restated Certificate of Incorporation, as amended, is amended
so that the designation and number of shares of each class and series acted upon
in the resolution, and the relative rights, preferences and limitations of each
such class and series, are as stated in the resolution.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 7th day of August, 1997.
KTI, Inc.
By: /s/ Robert E. Wetzel
Name: Robert E. Wetzel
Title: Senior Vice President
Exhibit 10.1
KTI, INC.
PLACEMENT AGREEMENT
August 7, 1997
Credit Research & Trading LLC
One Fawcett Place, Third Floor
Greenwich, CT 06830
Dear Sirs:
KTI, Inc., a New Jersey corporation (the "Company"), proposes to issue
and sell, to purchasers who have completed a Subscription Agreement,
substantially in the form attached hereto as Exhibit A, and which has been
accepted by the Company, in a non-public offering and sale, pursuant to the
exemptions provided by Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act"), up to 880,000 shares of the Company's
8-3/4% Series B Convertible Exchangeable Preferred Stock, no par value, which
will be mandatorily redeemable on the seventh anniversary of the issue date (the
"Preferred Stock"), as set forth in the Restated Certificate of Incorporation of
the Company, as amended (the "Certificate of Incorporation"), relating to the
Preferred Stock, and will be convertible, at the option of the holder, in whole
or in part, at any time, into shares of the Company's common stock, no par value
(the "Common Stock").
Subject to the terms and conditions set forth in this Placement
Agreement (this "Agreement"), the Company hereby appoints you, effective the
date hereof and terminating on September 30, 1997, unless sooner terminated
pursuant to Section 8 hereof, as its exclusive agent (the "Placement Agent") to
offer and sell the Preferred Stock on its behalf (including general marketing
and sales activities, including assistance in the structuring, negotiation,
documentation and settlement of the Preferred Stock), on a "best efforts" basis,
until the Preferred Stock has been sold (the "Placement Services"). In
addition, you agree to provide advisory services with respect to the offering
and sale of the Preferred Stock, including, without limitation, due diligence
activities and financial and transaction feasibility analyses (the "Advisory
Services"). By your confirmation hereof you agree to act in such capacity and
to use your best efforts as agent for the Company to find Purchasers (as defined
below) for the Preferred Stock acceptable to the Company on terms and conditions
set forth below.
The purchasers of the Preferred Stock, which may include the Placement
Agent (the "Purchasers") and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement, to be dated the
Closing Date (as defined below) and to be substantially in the form attached
hereto as Exhibit B (the "Registration Rights Agreement").
In connection with the sale of the Preferred Stock, the Company has
prepared an offering memorandum (the "Memorandum") setting forth or including a
description of the terms of the Preferred Stock, the terms of the offering and a
description of the Company and its business. As used herein, the term
"Memorandum" shall include in each case the documents attached thereto as
exhibits.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that as of the date hereof:
(a) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and attached as an exhibit to the Memorandum complied or will
comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations thereunder and (ii) the Memorandum does
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(a) do not apply
to statements or omissions in the Memorandum based upon information
relating to the Placement Agent furnished to the Company in writing by the
Placement Agent for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its Associated Entities (as defined below), taken
as a whole.
(c) Schedule 1(c) hereto sets forth all the active entities in which
the Company has an equity interest (the "Associated Entities," and
individually, an "Associated Entity") and each Associated Entity has been
duly organized, is validly existing and in good standing under the laws of
the jurisdiction of its organization, has the corporate, partnership or
other power and authority to own its property and to conduct its business
as described in the Memorandum and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its Associated Entities, taken as a whole.
(d) This Agreement has been duly authorized, executed and delivered
by the Company.
(e) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable
and, except as set forth on Schedule 1(e) hereto, are not subject to any
preemptive or similar rights; and the authorized, issued and outstanding
capital stock of the Company conforms in all material respects to the
description thereof contained in the Memorandum.
(f) The Preferred Stock has been duly authorized by the Company and,
when issued and delivered to and paid for by the Purchasers in accordance
with the terms of this Agreement, will be validly issued, fully paid and
non-assessable and, except as set forth on Schedule 1(f) hereto, will not
be subject to any preemptive or similar rights; and the Preferred Stock
conforms in all material respects to the description thereof contained in
the Memorandum.
(g) The Warrants (as defined below) (i) have been duly authorized by
the Company and, when issued and delivered to the Placement Agent in
accordance with the terms of this Agreement, will be legally valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as (A) the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, receivership, moratorium and other similar laws affecting the
rights and remedies of creditors generally and (B) rights of acceleration,
if applicable, and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h) The shares of Common Stock, that may be issued upon conversion of
the Preferred Stock or exercise of the Warrants, have been duly authorized
and reserved for by the Company and, when issued and delivered in
accordance with the terms of this Agreement, the Certificate of
Incorporation or the Warrant Certificate (as defined below), will be
validly issued, fully paid and non-assessable and, except as set forth on
Schedule 1(h) hereto, will not be subject to any preemptive or similar
rights.
(i) The Certificate of Incorporation creating the Preferred Stock,
the proposed form of which has been furnished to you, will have been duly
filed with the Secretary of State of the State of New Jersey and with all
other offices where such filing is required, on or before the Closing Date.
(j) The Registration Rights Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable against the Company in accordance with its terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, receivership, moratorium
and other similar laws affecting the rights and remedies of creditors
generally, (ii) rights of acceleration, if applicable, and the availability
of equitable remedies may be limited by equitable principles of general
applicability and (iii) any right to indemnity and contribution may be
limited by federal and state securities laws and public policy
considerations.
(k) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Certificate of
Incorporation, the Warrant Certificate, the Registration Rights Agreement
and the Preferred Stock will not contravene (i) any provision of applicable
law, (ii) the certificate of incorporation or by-laws of the Company, (iii)
any agreement or other instrument binding upon the Company or any
Associated Entity that is material to the Company and its Associated
Entities, taken as a whole, or (iv) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any Associated Entity the contravention of which would have a material
adverse effect on the Company or would prevent the consummation of the
transactions contemplated hereby and, other than the filing of the
Certificate of Incorporation with the Secretary of State of the State of
New Jersey, and except for such consents, approvals, authorizations or
orders, the failure of which to receive would not have a material adverse
effect on the Company, no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Certificate of Incorporation, the Warrant Certificate, the Registration
Rights Agreement or the Preferred Stock, except such as may be required by
the securities or Blue Sky laws of the various states in connection with
the offer and sale of the Preferred Stock.
(l) There has not occurred any material adverse change, or any
development reasonably likely to result in a material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and the Associated Entities, taken as a whole,
from that set forth in the Memorandum.
(m) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any Associated
Entity is a party or to which any of the properties of the Company or any
Associated Entity is subject, other than proceedings accurately described
in all material respects in the Memorandum and proceedings that would not
have a material adverse effect on the Company and the Associated Entities,
taken as a whole, or on the power or ability of the Company to perform its
obligations under this Agreement, the Certificate of Incorporation, the
Warrant Certificate, the Registration Rights Agreement, the Preferred Stock
or the offering of the Preferred Stock and the Warrants.
(n) The Company and each Associated Entity has all necessary
consents, authorizations, approval, orders, certificates and permits of and
from, and has made all declarations and filings with, all federal, state,
local and other governmental authorities, all self-regulatory organizations
and all courts and other tribunals, to own, lease, license and use its
properties and assets and to conduct its business in the manner described
in the Memorandum, except to the extent where the failure to obtain any
such consents, authorizations, approvals, orders, certificates or permits
or make any such declaration or filing would not have a material adverse
effect on the Company and the Associated Entities, taken as a whole.
(o) Neither the Company nor any Associated Entity has, to the
knowledge of the Company, directly, or through any agent, (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Preferred Stock in a manner that would
require the registration under the Securities Act of the Preferred Stock or
(ii) engaged in any form of general solicitation or general advertising in
connection with the offering of the Preferred Stock (as those terms are
used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(p) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(q) Subject to the accuracy of the representations and warranties
made by the Placement Agent, the Purchasers and their transferees, it is
not necessary in connection with the offer, sale and delivery of the
Preferred Stock to the Purchasers in the manner contemplated by this
Agreement to register the Preferred Stock under the Securities Act.
(r) Except as described in the Memorandum, the Company and the
Associated Entities (i) are in material compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in material compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and the
Associated Entities, taken as a whole.
(s) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and the Associated Entities, in
the course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any material capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any material permit, license or
approval, any related constraints on operating activities material to the
Company and the Associated Entities, taken as a whole, and any potential
material liabilities to third parties). On the basis of such review, the
Company has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a material adverse effect on
the Company and the Associated Entities, taken as a whole.
(t) The summary financial information of the Company included in the
Memorandum, together with the related exhibits and notes, as well as the
summary financial information, schedules and notes of any of the Associated
Entities included therein, present fairly the financial position of the
Company and its Associated Entities at the dates indicated and for the
periods specified. The summary financial information included in the
Memorandum present fairly the information shown therein. In addition, any
pro forma financial statements of the Company and the Associated Entities
and the related notes thereto included in the Memorandum present fairly the
information shown therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein.
2. Offering and Compensation. (a) You have advised the Company
that you shall offer and sell the Preferred Stock on a "best efforts" basis, as
such Preferred Stock is described in the Memorandum as soon as practicable after
this Agreement is entered into as in your judgment is advisable.
(b) The Company shall pay you, on the Closing Date (as defined below)
as compensation for the Placement Services, a placement fee equal to (i)
6.5% (six and one-half percent) of the gross proceeds received by the
Company from the sale of the first $15,000,000 of the Preferred Stock and
(ii) 5.0% (five percent) of the gross proceeds received by the Company from
the sale of the next $5,000,000 of the Preferred Stock effected at such
Closing (the "Placement Fees") by wire transfer or certified check in same
day funds to accounts specified by you in writing.
(c) In addition, the Company shall issue to you, on the Closing Date
as compensation for your Advisory Services, the warrants (the "Warrants")
to purchase the number of shares of Common Stock equal to 7.5% (seven and
one-half percent) of the number of shares of Common Stock issuable pursuant
to the offering and sale of the first $15,000,000 of Preferred Stock (the
"Advisory Fees"). The terms and conditions of the Warrants shall be set
forth in the Warrant Certificate substantially in the form attached hereto
as Exhibit C (the "Warrant Certificate").
(d) If the Closing does not occur and if the Preferred Stock, or a
similar security, is sold by the Company or an Associated Entity, at any
time after the date hereof and prior to July 15, 1998 (unless you have
terminated this Agreement pursuant to Section 8 or the Company has
terminated this Agreement because you have failed to perform your
obligations hereunder), then the Company shall pay you 50% of the Placement
Fees and Advisory Fees which would have been due absent such termination.
(e) The Company shall reimburse you in full in a timely fashion for
your reasonable, documented out-of-pocket expenses incurred during the
period of your engagement hereunder with respect to the rendering of the
Advisory Services and the Placement Services. In addition, the Company
shall also reimburse you in full in a timely fashion for the reasonable
fees and expenses of your legal counsel (which must be approved in writing
in advance by the Company), legal fees and expenses related to Blue Sky
compliance and the fees and expenses of your consultants.
3. Purchase and Delivery. Payment for the Preferred Stock shall be
made against delivery of the Preferred Stock at a closing (the "Closing") to be
held at the office of McDermott, Will & Emery, 50 Rockefeller Plaza, New York,
New York, at 10:00 A.M., local time, on August 11, 1997, or at such other time
on the same or such other date, as shall be designated in writing by you (the
"Closing Date"). Payment for the Preferred Stock shall be made by wire transfer
or certified check in same day funds to accounts specified by the Company in
writing.
The Preferred Stock purchased by those Purchasers which are "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act) will be
represented by a global certificate, otherwise certificates for the Preferred
Stock shall be in definitive form and registered in such names and in such
denominations as the Purchasers shall request in writing not less than two full
business days prior to the Closing Date. The certificates evidencing the
Preferred Stock shall be delivered to the Purchasers on the Closing Date, with
any transfer taxes payable in connection with the transfer of the Preferred
Stock to the Purchasers duly paid, against payment of the purchase price
therefor.
4. Conditions to Closing. The several obligations of the Purchasers
to purchase the Preferred Stock will be subject to the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on and as
of the date hereof and on and as of the Closing Date, as if made on and as
of such date and the Company shall have complied in all material respects
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date.
(b) Subsequent to the date of this Agreement and prior to the Closing
Date, there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and the
Associated Entities, taken as a whole, from that set forth in the
Memorandum that, in your reasonable judgment, is material and adverse and
that makes it, in your reasonable judgment, impracticable to market the
Preferred Stock on the terms and in the manner contemplated in the
Memorandum.
(c) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a) above.
(d) You shall have received on the Closing Date an opinion of
McDermott, Will & Emery, counsel for the Company to the effect set forth in
Exhibit D, and Robert E. Wetzel, Esq., general counsel of the Company dated
the Closing Date, to the effect set forth in Exhibit E.
(e) You shall have received on the Closing Date an opinion of
Winthrop, Stimson, Putnam & Roberts, counsel for the Placement Agent, dated
the Closing Date, in form and substance satisfactory to you.
5. Covenants of the Company. In further consideration of the
agreements of the Placement Agent contained in this Agreement, the Company
covenants as follows:
(a) To furnish to you, without charge, during the period mentioned in
paragraph (c) below, as many copies of the Memorandum, and any supplements
and amendments thereto as you may reasonably request and to use its
reasonable efforts to deliver such copies to you by 5 P.M. (New York time)
on the business day next following the execution of this Agreement.
(b) Before amending or supplementing the Memorandum, to furnish to
you a copy of each such proposed amendment or supplement and, unless
advised by counsel that such use is required by applicable law, not to use
any such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the
date on which all of the Preferred Stock shall have been placed by the
Placement Agent, any event shall occur or condition exist as a result of
which it is necessary in your judgment to amend or supplement the
Memorandum in order to make the statements therein, in the light of the
circumstances when the Memorandum was delivered to a Purchaser, not
misleading, or if, in the opinion of counsel to the Placement Agent it is
necessary to amend or supplement the Memorandum to comply with applicable
law, forthwith to prepare and furnish, at its own expense, to the Placement
Agent, either amendments or supplements to the Memorandum so that the
statements in the Memorandum as so amended or supplemented will not, in the
light of the circumstances when the Memorandum is delivered to a Purchaser,
be misleading or so that the Memorandum, as so amended or supplemented,
will comply with applicable law; provided, however, that if any such
amendment or supplement relates to material furnished by you in writing for
use in the Memorandum, you shall bear the expense of preparing and
furnishing such amendments or supplements.
(d) To endeavor to qualify the Preferred Stock for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) Whether or not any sale of the Preferred Stock is consummated, to
pay all expenses incident to the performance of its obligations under this
Agreement, including: (i) the preparation of the Memorandum and all
amendments and supplements thereto, (ii) the preparation, issuance and
delivery of the Preferred Stock, (iii) the fees and disbursements of the
Company's counsel and accountants, the transfer agent for the Preferred
Stock, (iv) the qualification of the Preferred Stock under securities or
Blue Sky laws in accordance with the provisions of Section 5(d), including
filing fees and the reasonable fees and disbursements of counsel for the
Placement Agent in connection therewith and in connection with the
preparation of any Blue Sky or legal investment memoranda, (v) the printing
and delivery to the Placement Agent in quantities as hereinabove stated of
copies of the Memorandum and any amendments or supplements thereto,
(vi) all fees and expenses due the Placement Agent in accordance with the
provisions of Section 2, (vii) the fees and expenses, if any, incurred in
connection with the admission of such Preferred Stock for trading in PORTAL
or any other appropriate market system, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the Preferred Stock,
including, without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of
the Company, travel and lodging expense of the representatives and officers
of the Company and any such consultants, (ix) all fees and disbursements
for one counsel for the Purchasers and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section.
(f) Neither the Company nor any Associated Entity will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated with
the sale of the Preferred Stock in a manner which would require the
registration under the Securities Act of the Preferred Stock.
(g) Not to solicit any offer to buy or offer to sell the Preferred
Stock by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
(h) While any of the Preferred Stock remains outstanding, to make
available, upon request, to any seller of the Preferred Stock the
information specified in Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to Section 13 or 15(d) of the Exchange Act.
(i) To use its reasonable efforts to permit the Preferred Stock to be
designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the PORTAL Market.
6. Offering of Preferred Stock; Restrictions on Transfer. The
Placement Agent agrees with the Company that (i) the Placement Agent will not
solicit offers for, or offer or sell, Preferred Stock by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act, including, but not limited
to, (A) any advertisement, article, notice or other communication published in
any newspaper, magazine or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, or (B) any
seminar or meeting whose attendees have been invited by general solicitation or
advertising and (ii) the Placement Agent will solicit offers for such Preferred
Stock only from, and will offer such Preferred Stock only to, a person that the
Placement Agent reasonably believes to be an institutional accredited investor
(as defined in Rule 501(a) (1), (2), (3) or (7) under the Securities Act) that,
prior to its purchase of the Preferred Stock, delivers to the Company the
Subscription Agreement.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Placement Agent, and each person, if any, who
controls such Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, the Placement Agent, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by the Placement Agent or any such
controlling or affiliated person in connection with investigating, preparing to
defend or defending any lawsuit, claim or other proceeding) arising in any
manner out of or in connection with the rendering of services by the Placement
Agent hereunder, including all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Memorandum (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or any omission or alleged omission to
state therein a material fact necessary to make the statements therein in light
of the circumstances under which they were made not misleading, unless (i) such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to the Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use therein, (ii) it is finally
judicially determined that such losses, claims, damages or liabilities arose out
of the gross negligence, bad faith or willful misconduct of the Placement Agent
or (iii) the Placement Agent failed to deliver, if required by this Agreement,
prior to the time of the written confirmation of the sale of Preferred Stock, to
the person asserting the claim or action, any amendment or supplement to the
Memorandum and such untrue statement or omission had been corrected in such
supplement or amendment; provided, that such supplement or amendment was timely
received by the Placement Agent.
(b) The Placement Agent agrees to indemnify and hold harmless the
Company, its directors, its officers and each person, if any, who controls, or
is under common control with or is controlled by the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to the Placement
Agent, but only with reference to information relating to the Placement Agent
furnished to the Company in writing by the Placement Agent expressly for use in
the Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing (provided that the
failure to so notify shall not relieve the indemnifying party from any liability
that it may otherwise have to the indemnified party, unless such failure
prejudices the indemnifying party) and the indemnifying party shall retain
counsel as requested by the indemnified party, to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such reasonable fees and expenses shall be
reimbursed as they are incurred. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 7 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Placement Agent, on the other hand, from the
offering of such Preferred Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Placement Agent on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Placement Agent on the other hand in connection
with the offering of such Preferred Stock shall be deemed to be in the same
respective proportions as the net proceeds from the offering of such Preferred
Stock (before deducting expenses) received by the Company and the total fees and
commissions received by the Placement Agent in respect thereof bear to the
aggregate offering price of such Preferred Stock. The relative fault of the
Company on the one hand and of the Placement Agent on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Placement Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Placement Agent agree that it would not be
just or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall the amount to be contributed by
the Placement Agent exceed the amount of the Placement Fees actually received by
the Placement Agent hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of the Placement Agent or any person controlling the Placement Agent or
by or on behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Preferred Stock. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
8. Termination. This Agreement shall terminate on September 30,
1997. This Agreement shall be subject to termination by notice given by you to
the Company, if (a) after the execution and delivery of this Agreement and prior
to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the NASD, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in your judgment, is material and adverse and (b) in
the case of any of the events specified in clauses (a)(i) through (iv), such
event singly or together with any other such event makes it, in your judgment,
impracticable to market the Preferred Stock on the terms and in the manner
contemplated in the Memorandum.
This Agreement may be terminated by the Company if (i) the Placement
Agent fails or refuses to comply with any material term of this Agreement, or if
for any reason the Placement Agent shall be unable to perform a material
obligation under this Agreement, and (ii) upon 30 days' prior written notice of
either party. If there is a wilful breach of this Agreement by the Placement
Agent, the Company shall not be required to reimburse the Placement Agent for
any expenses.
9. Confidentiality; Advertisements. Except as contemplated by the
terms hereof or as required by applicable law, the Placement Agent shall keep
confidential all material non-public information provided to it by the Company,
and shall not disclose such information to any third party, or to any of its
employees or advisors except those who have a need to know to perform hereunder.
Except as required by applicable law, any advice to be provided by the Placement
Agent hereunder shall not be disclosed publicly or made available to third
parties without the prior written approval of the Placement Agent, which
approval shall not be unreasonably withheld or delayed. The Company agrees that
the Placement Agent shall have the right to place advertisements in financial
and other newspapers and journals at its own expense describing its services to
the Company hereunder; provided that the Placement Agent will submit a copy of
any such advertisements to the Company for its prior approval, which approval
shall not be unreasonably withheld or delayed.
10. Miscellaneous. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
If this Agreement shall be terminated by the Placement Agent because
of any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will promptly reimburse the Placement Agent for all out-of-pocket
expenses (including the fees and disbursements of its counsel) reasonably
incurred by the Placement Agent in connection with this Agreement or the 7.5
offering contemplated hereunder.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (a) if the Company, to it at 7000 Boulevard East,
Guttenberg, New Jersey 07096, Attention: Martin J. Sergi, with a copy to
McDermott, Will & Emery, 50 Rockefeller Plaza, New York, New York 10020,
Attention: Brian Hoffmann, Esq. and (b) if to the Placement Agent, to Credit
Research & Trading LLC, One Fawcett Place, Third Floor, Greenwich, CT 06830,
Attention: Stephen Wertheimer, with a copy to Winthrop, Stimson, Putnam &
Roberts, Financial Centre, 695 East Main Street, Post Office Box 6760, Stamford,
Connecticut 06904-6760, Attention: George P. Barbaresi, or in any case to such
other address as the person to be notified may have requested in writing.
This Agreement will inure to the benefit of and be binding upon the parties
hereto and their direct and indirect transferees, and no other person will have
any right or obligation hereunder.
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
KTI, INC.
By: /s/ Robert E. Wetzel
Name: Robert E. Wetzel
Title: Senior Vice President
Agreed, August 7, 1997
CREDIT RESEARCH & TRADING LLC
By: /s/ Jeremy Bloom
Name: Jeremy Bloom
Title: Managing Director
Exhibit 10.2
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL FOR THE
COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND LAWS IS
AVAILABLE.
VOID AFTER 5:00 P.M. NEW YORK TIME,
ON AUGUST 15, 2002
KTI, INC.
WARRANT CERTIFICATE
No. F-1 KTI 95,750 Warrants
Dated as of August 15, 1997
Warrants to Purchase Common Stock
KTI, Inc., a corporation duly organized and existing under the laws of the
State of New Jersey (the "Company"), hereby certifies that, for value received,
Credit Research & Trading, LLC, or its registered assigns, is the registered
owner of NINETY-FIVE THOUSAND SEVEN HUNDRED AND FIFTY (95,750) Warrants (the
"Warrants," and each individually, a "Warrant"), each of which will entitle the
registered holder thereof to purchase one share, as adjusted from time to time
as provided in Section 7 hereof, of the Common Stock, no par value, of the
Company (the "Common Stock," each such share being a "Warrant Share," and all
such shares being the "Warrant Shares") at the exercise price of $9.875 per
share (such exercise price, as adjusted from time to time as provided in Section
7 hereof, the "Exercise Price"), at any time and from time to time on or before
August 15, 2002 (the "Expiration Date"). All Warrants are subject to the
following terms and conditions:
Section 1 Registration of Holder of Warrants. The Company shall register
each Warrant, upon records to be maintained by the Company for that purpose, in
the name of the record holder of such Warrant from time to time. The Company
may deem and treat the registered holder of each Warrant as the absolute owner
thereof for the purpose of any exercise thereof or any distribution to the
holder thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary. In addition, and without limiting the
foregoing, the Company shall not be bound to recognize any equitable or other
claim to or interest in such Warrant on the part of any person other than the
record holder of the Warrant, and shall not be liable for the registration of
transfer of Warrants, as provided in Section 2(a) hereof, which are registered
or are to be registered in the name of a fiduciary or the nominee of the
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith.
Section 2 Registration of Transfers and Exchanges.
(a) Provided that any transfer of Warrants complies with all the terms and
conditions of this Warrant Certificate, the Company shall register the transfer
of any Warrants upon records to be maintained by the Company for that purpose,
upon surrender of this Warrant Certificate, with the Form of Assignment attached
hereto duly completed and signed, to the Company at the office specified in or
pursuant to Section 3(c) hereof. Upon any such registration of transfer, a new
Warrant Certificate, in substantially the form of this Warrant Certificate,
evidencing the Warrants so transferred shall be issued to the transferee and a
new Warrant Certificate, in similar form, evidencing the remaining Warrants not
so transferred, if any, shall be issued to the then registered holder thereof.
(b) Warrant Certificates Exchangeable for Different Denominations. This
Warrant Certificate is exchangeable, upon the surrender hereof by the holder
hereof at the office of the Company specified in or pursuant to Section 3(c)
hereof, for new Warrant Certificates, in substantially the form of this Warrant
Certificate, evidencing in the aggregate the right to purchase the number of
Warrant Shares which may then be purchased hereunder, each of such new Warrant
Certificates to be dated the date of such exchange and to represent the right to
purchase such number of Warrant Shares as shall be designated by such holder
hereof at the time of such surrender.
Section 3 Duration and Exercise of Warrants.
(a) Warrants shall be exercisable by the registered holder thereof on any
business day before 5:00 p.m., Eastern time, on or before the Expiration Date;
provided, however, that any such exercise shall be in respect of an aggregate of
at least 100 (one hundred) Warrants (or such lesser number of Warrants as shall
at the time be outstanding). At 5:00 p.m., Eastern time, on the Expiration
Date, each Warrant not exercised prior thereto shall be and become void and of
no value. The Warrants cannot be called or redeemed by the Company prior to the
Expiration Date.
(b) Subject to the provisions of this Warrant Certificate, including
adjustments to the number of Warrant Shares issuable on the exercise of each
Warrant and to the Exercise Price pursuant to Section 7 hereof, the holder of
each Warrant on or prior to the Expiration Date shall have the right to purchase
from the Company (and the Company shall be obligated to issue and sell to such
holder of a Warrant) at the Exercise Price one Warrant Share which, when issued,
shall be validly issued, fully paid and non-assessable.
(c) (i) Subject to Sections 4 and 9 hereof, upon surrender of this
Warrant Certificate, with the Form of Election to Purchase attached hereto duly
completed and signed, to the Company at its principal place of business at 7000
Boulevard East, Guttenberg, New Jersey 07093, Attention: President, or at such
other address as the Company may specify in writing to the then registered
holder of the Warrants, and upon payment of the Exercise Price multiplied by the
number of Warrant Shares then issuable upon exercise of the Warrants being
exercised, in lawful money of the United States of America, all as specified by
the holder of this Warrant Certificate in the Form of Election to Purchase, the
Company shall promptly, and in no event later than ten (10) days following the
Date of Exercise (as defined below), issue and cause to be delivered to or upon
the written order of the registered holder of such Warrants, and in such name or
names as such registered holder may designate, a certificate for the Warrant
Shares issued upon such exercise of such Warrants; provided that such exercise
is in compliance with the Securities Act and the rules and regulations
promulgated thereunder. Any person so designated to be named therein shall be
deemed to have become the holder of record of such Warrant Shares as of the Date
of Exercise of such Warrants.
(ii) The holder of this Warrant Certificate may pay the applicable
Exercise Price pursuant to this Section 3(c), at the option of such holder:
(A) by certified check made payable to the Company and issued by a bank
organized in the United States of America;
(B) by wire transfer of immediately available funds to the account
which shall be indicated in writing by the Company to the holder;
(C) by any combination of the methods described in (A) or (B) above.
(iii) The "Date of Exercise" of any Warrant means the date on which the
Company shall have received (i) this Warrant Certificate, with the Form of
Election to Purchase attached hereto duly completed and signed, and (ii)
payment of the Exercise Price for each such Warrant.
(d) In lieu of any holder of this Warrant Certificate exercising any or all
of the Warrants for cash, such holder may, in connection with such exercise,
elect to satisfy the Exercise Price with respect to the Warrants being exercised
by exchanging solely such Warrants being exercised for a number of Warrant
Shares equal to the product of (i) the number of Warrant Shares issuable upon
exercise of the portion of the Warrants being converted, multiplied by (ii) a
fraction, the numerator of which is the Market Price (as defined in Section
7(f)) per share of Common Stock at the time of such exercise minus the Exercise
Price per share of Common Stock at the time of such exercise, and the
denominator of which is the Market Price per share of Common Stock at the time
of such exercise.
(e) The Warrants evidenced by this Warrant Certificate shall be exercisable,
either as an entirety or, from time to time, only for part of the number of
Warrants evidenced by this Warrant Certificate. If fewer than all of the
Warrants evidenced by this Warrant Certificate are exercised at any time, the
Company shall issue, at its expense, a new Warrant Certificate, in substantially
the form of this Warrant Certificate, for the remaining number of Warrants
evidenced by this Warrant Certificate.
Section 4 Payment of Taxes and Expenses. The Company shall pay all expenses
and taxes and other governmental charges attributable to the preparation,
execution, issuance and delivery of any new Warrant Certificate and the Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
in respect of the transfer of the Warrants, or the issuance or delivery of
certificates for the Warrant Shares or other securities in respect of the
Warrant Shares upon the exercise of the Warrants, to a person or entity other
than a then existing registered holder of the Warrants or an Affiliate of such
registered holder. An "Affiliate" of any person or entity means any other
person or entity directly or indirectly controlling, controlled by, or under
direct or indirect common control with such person or entity.
Section 5 Mutilated or Missing Warrant Certificate. If this Warrant
Certificate shall be mutilated, lost, stolen or destroyed, upon request by the
registered holder hereof, the Company shall, at its expense, issue, in exchange
for and upon cancellation of the mutilated Warrant Certificate, or in
substitution for the lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate, in substantially the form of this Warrant Certificate, of
like tenor and representing the equivalent number of Warrants, but, in the case
of loss, theft or destruction, only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of this Warrant
Certificate and, if requested by the Company, indemnity also reasonably
satisfactory to it.
Section 6 Reservation, Listing and Issuance of Warrant Shares.
(a) The Company shall at all times have authorized, and reserve and keep
available for the purpose of enabling it to satisfy any obligation to issue the
Warrant Shares upon the exercise of the Warrants, the number of Warrant Shares
deliverable upon exercise of the Warrants. After such Warrant Shares have been
issued upon exercise of the Warrants pursuant to the terms and conditions of
this Warrant Certificate and such Warrant Shares have been registered pursuant
to all applicable federal and state securities laws, the Company will, at its
expense, use its commercially reasonable efforts to cause such Warrant Shares to
be listed or quoted, as applicable, on any stock exchange or automated quotation
systems on which the Common Stock is so listed or quoted not later than the date
on which the Common Stock is first listed or quoted on any such exchange or
automated quotation system, as the case may be, and will thereafter maintain
such listing or quotation of all Warrant Shares from time to time issued upon
exercise of the Warrants.
(b) The Company covenants that all Warrant Shares, upon issuance in
accordance with the terms of this Warrant Certificate and assuming that the
Exercise Price for each Warrant has been paid, will be (i) duly authorized,
fully paid and non-assessable, and (ii) free from all taxes with respect to the
issuance thereof and from all liens, charges and security interests.
Section 7 Adjustments of Exercise Price and Number of Warrant Shares.
(a) The Exercise Price of each Warrant shall be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of such Exercise
Price pursuant to this Section 7, the holder of such Warrant shall thereafter
prior to the Expiration Date thereof be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of such Warrant immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
(b) Adjustment of Exercise Price upon Issuance of Common Stock. If and
whenever after the date hereof, the Company shall issue or sell any shares of
Common Stock for a consideration per share less than the Market Price (as
defined below) at the time of such issue or sale, then forthwith upon such issue
or sale, the Exercise Price shall be reduced to the price (calculated to the
nearest full cent) equal to the Exercise Price in effect immediately prior to
the time of such issuance or sale multiplied by a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale multiplied by the Market Price
immediately prior to such issuance or sale, plus (B) the consideration received
by the Company upon such issuance or sale, and the denominator of which shall be
the product of (C) the total number of shares of Common Stock outstanding
immediately after such issuance or sale, multiplied by (D) the Market Price
immediately prior to such issuance or sale.
No adjustment of any Exercise Price, however, shall be made in an amount less
than one cent per share, but any such lesser adjustment shall be carried forward
and shall be taken into account in any subsequent adjustment.
(c) For the purposes of any computation to be made in accordance with Section
7(b), the following clauses shall also be applicable:
(i) Stock Dividends. In case the Company shall declare a dividend or make
any other distribution upon any stock of the Company payable in Common
Stock or Convertible Securities, any Common Stock or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued immediately after the
opening of business on the day following the record date for the
determination of stockholders entitled to receive such dividends or other
distribution and shall have been deemed to have been issued without
consideration.
(ii) Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights or options or warrants to purchase any
such Common Stock or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of
Common Stock or Convertible Securities or any rights or options or warrants
to purchase any such Common Stock or Convertible Securities shall be issued
or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be deemed to be
the fair value of such consideration, as determined, in good faith and in
the exercise of reasonable business judgment, by the board of directors of
the Company (the "Board"), without deduction of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Company
in connection therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options or warrants to purchase such shares of
Common Stock or Convertible Securities shall be issued in connection with
any merger or consolidation in which the Company is the surviving
corporation (other than any consolidation or merger in which the previously
outstanding shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another corporation), the
amount of consideration therefor shall be deemed to be the fair value, as
determined, in good faith and in the exercise of reasonable business
judgment, by the Board, of such portion of the assets and business of the
non-surviving corporation as such Board may determine to be attributable to
such shares of Common Stock, Convertible Securities, rights or options or
warrants, as the case may be.
(iii) Record Date. In case the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in Convertible
Securities, or (B) to subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(d) Issuance of Rights, Options or Warrants and Convertible Securities. (A)
In case at any time after the date hereof the Company shall (A) grant (whether
directly or by assumption in a merger or otherwise) any rights to subscribe for
or to purchase, or any options or warrants for the purchase of, Common Stock or
any stock or securities convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein called "Convertible
Securities") or (B) issue or sell (whether directly or by assumption in a merger
or otherwise) any Convertible Securities (other than Convertible Securities
issuable upon exercises of options or warrants referred to above to purchase
Convertible Securities), whether or not such rights or options or warrants or
the right to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such right or options or warrants or upon conversion or exchange of
such Convertible Securities (determined as provided below) shall be less than
the Market Price determined as of the date of granting such rights or options or
warrants or the issue or sale of such Convertible Securities, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options or warrants or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon the exercise of such
rights or options or warrants (as of the date of granting of such rights or
options or warrants or the issue or sale of such Convertible Securities) shall
be deemed to be outstanding and to have been issued, (X) in the case of any such
rights, options or warrants, for a consideration equal to the minimum purchase
price per share provided for in such rights, options or warrants (to the extent
that such minimum purchase price can be reasonably determined at the time of
such grant), plus the consideration (determined in the same manner as
consideration received upon the issue or sale of shares of Common Stock in
accordance with the terms of this Warrant Certificate), if any, received by the
Company for the granting of such rights, options or warrants, and, (Y) in the
case of Convertible Securities, for a consideration equal to the consideration
(determined in the same manner as consideration received upon the issue or sale
of shares of Common Stock in accordance with the terms of this Warrant
Certificate) received by the Company for such Convertible Securities, plus the
minimum consideration, if any, receivable by the Company upon the conversion or
exchange thereof (to the extent that any such minimum purchase price can
reasonably be determined at the time of issuance). Except as provided in
Section 7(d)(ii), no further adjustments of any Exercise Price shall be made
upon the actual issue of such Common Stock or of such Convertible Securities
upon the exercise of such rights or options or warrants or upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) Change in Option Price or Conversion Rate. If the purchase price
provided for in any rights or options or warrants referred to in Section
7(d)(i), or the additional consideration, if any, payable upon the
conversion or exchange of Convertible Securities referred to in Section
7(d)(i), or the rate at which any Convertible Securities referred to in
Section 7(d)(i) are convertible into or exchangeable for Common Stock,
shall change (other than under or by reason of provisions designed to
protect against dilution), then the Exercise Price in effect at the time of
such change shall forthwith be readjusted to the Exercise Price which would
have been in effect at such time had such rights or options or warrants or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold; and on the expiration of any
such right or option or warrant or the termination of any such right to
convert or exchange such Convertible Securities, the Exercise Price then in
effect hereunder shall forthwith be readjusted to the Exercise Price which
would have been in effect at the time of such expiration or termination had
such right, option, warrant or Convertible Security, to the extent
outstanding immediately prior to such expiration or termination, never been
issued, and the Common Stock issuable thereunder shall no longer be deemed
to be outstanding.
(e) Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of Sections 7(b) and (d).
(f) Definition of Market Price. (B) As used in this Warrant Certificate,
the term "Market Price" shall mean the average of the daily closing prices per
share of the Common Stock for the ten consecutive trading days on which the
Common Stock was traded immediately preceding the day as of which Market Price
is being determined. If shares of the Common Stock are not quoted through
Nasdaq or any similar organization, or listed or admitted for trading on any
national securities exchange (in which case the Market Price shall be the last
reported sales price on such exchange) the Market Price shall be deemed to be
the fair value of a share of Common Stock as determined, in good faith and in
the exercise of reasonable business judgment, by the Board.
(ii) Determination of Market Price under Certain Circumstances. Anything
herein to the contrary notwithstanding, in case the Company shall issue any
shares of Common Stock or Convertible Securities in connection with the
acquisition by the Company of the stock or assets of any other corporation
or the merger of any other corporation into the Company, the Market Price
shall be determined as of the date the number of shares of Common Stock or
Convertible Securities to be issued (or in the case of Convertible
Securities other than stock, the aggregate principal amount of Convertible
Securities) was determined (as set forth in a written agreement between the
Company and the other party to the transaction) rather than on the date of
issuance of such shares of Common Stock or Convertible Securities.
(g) Adjustment for Certain Special Dividends. In case the Company shall
declare a dividend upon the Common Stock payable otherwise than out of earnings
or earned surplus, determined in accordance with generally accepted accounting
principles, and otherwise than in Common Stock or Convertible Securities, the
Exercise Price in effect immediately prior to the declaration of such dividend
shall be reduced by an amount equal, in the case of a dividend in cash, to the
amount per share of the Common Stock so declared as payable otherwise than out
of earnings or earned surplus or, in the case of any other dividend, to the fair
value per share of the Common Stock of the property so declared as payable
otherwise than out of earnings or earned surplus, as determined, in good faith
and in the exercise of reasonable business judgment, by the Board. For the
purposes of the foregoing, a dividend other than in cash shall be considered
payable out of earnings or earned surplus only to the extent that such earnings
or earned surplus are charged an amount equal to the fair value of such dividend
as determined, reasonably and in good faith, by the Board. Such reductions
shall take effect as of the date on which a record is taken for the purpose of
such dividend, or, if a record is not taken, the date as of which the holders of
Common Stock of record entitled to such dividend are determined.
(h) Subdivisions or Combinations of Stock. In case the Company shall at any
time subdivide the outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced, and conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.
(i) Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,
etc. In case the Company (i) consolidates with or merges into any other
corporation and is not the continuing or surviving corporation of such
consolidation or merger, or (ii) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock is changed into or exchanged for stock or other securities of any other
corporation or cash or any other assets, or (iii) transfers all or substantially
all of its properties and assets to any other corporation, or (iv) effects a
capital reorganization or reclassification of the capital stock of the Company
in such a way that holders of the Common Stock shall be entitled to receive
stock, securities, cash and/or assets with respect to or in exchange for the
Common Stock, then, and in each such case, proper provision shall be made so
that, upon the basis and upon the terms and in the manner provided in this
subsection (i), the holder of this Warrant Certificate, upon the exercise of
each Warrant at any time after the consummation of such consolidation, merger,
transfer, reorganization or reclassification, shall be entitled to receive (at
the aggregate Exercise Price in effect for all shares of Common Stock issuable
upon such exercise immediately prior to such consummation as adjusted to the
time of such transaction), in lieu of shares of Common Stock issuable upon such
exercise prior to such consummation, the stock and other securities, cash and/or
assets to which such holder would have been entitled upon such consummation if
such holder had so exercised such Warrant immediately prior thereto (subject to
adjustments subsequent to such corporate action as nearly equivalent as possible
to the adjustments provided for in this Section 7).
(j) Notice of Adjustment. The Company shall deliver on or before each
January 15 prior to the Expiration Date to the registered holder of the Warrants
written notice of any adjustments of any Exercise Price during the previous
calendar year. Such notice shall consist of a certificate of a duly authorized
officer of the Company, and shall state the Exercise Price resulting from such
adjustment, and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of each Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(k) Other Notices. In case at any time:
(i) the Company shall declare any cash dividend on its Common Stock;
(ii) the Company shall pay any dividend payable in stock upon its Common
Stock or make any distribution (other than regular cash dividends) to the
holders of its Common Stock;
(iii) the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other rights;
(iv) the Company shall authorize the distribution to all holders of its
Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of earnings or earned surplus or
dividends payable in Common Stock);
(v) there shall be any capital reorganization, or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation (other than a subsidiary of the Company in which the
Company is the surviving or continuing corporation and no change occurs in the
Company's Common Stock), or sale of all or substantially all of its assets to
another corporation;
(vi) there shall be a voluntary or involuntary dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, or winding up of the
Company; or
(vii) the Company proposes to take any other action or an event occurs
which would require an adjustment of the Exercise Price pursuant to subsection
(i) of this Section 7;
then, the Company shall give written notice (except in the case of a proposed
action referred to in subclause (vii) hereof if the giving of such notice would
violate federal or state securities law), addressed to the registered holder of
this Warrant Certificate at the address of such holder as shown on the books of
the Company, with respect to any event specified in clauses (i) through (iv), at
least fifteen (15) days prior to the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, subscription rights
or distribution, or entitled to vote on such proposed reorganization,
reclassification, consolidation or merger, and with respect to any event
specified in clauses (v) through (vii), as soon as commercially reasonable after
the occurrence of such event. Such notice, with respect to any event specified
in clauses (i) through (iv), shall specify such record date or the date of
closing the transfer books, as the case may be, and with respect to any event
specified in clauses (v) through (vii), shall specify the nature of the event
and on which date such event occurred. Failure to give the notice specified in
this Section 7(k) or any defect therein shall not affect the validity of any
action taken in connection with the declaration or payment of any such dividend,
or the issuance of any such subscription rights, or any proposed reorganization,
reclassification, consolidation or merger.
(l) Certain Events. If any event occurs as to which in the reasonable
opinion of the holder hereof, in good faith, the other provisions of this
Section 7 are not strictly applicable but the lack of any adjustment would not
in the opinion of the holder hereof fairly protect the purchase rights of the
holder of this Warrant Certificate in accordance with the basic intent and
principles of such provisions, or if strictly applicable would not fairly
protect the purchase rights of the holder of this Warrant Certificate in
accordance with the basic intent and principles of such provisions, then the
holder hereof shall give written notice thereof to the Company. If the Company
and the holder hereof cannot agree with respect to an adjustment to the Exercise
Price hereof within fifteen (15) days of the delivery of such notice by the
holder hereof to the Company, then the Company shall appoint a firm of
independent certified public accountants (which may be the regular auditors of
the Company) of recognized national standing, which shall give their opinion
upon the adjustment, if any, on a basis consistent with the basic intent and
principles established in the other provisions of this Section 7, necessary to
preserve, without dilution, the exercise rights of the registered holder of this
Warrant Certificate. Upon receipt of such opinion, the Company shall forthwith
make the adjustments described therein. The costs of obtaining such opinion
shall be shared equally between the Company and the holder seeking the
adjustment.
(m) Excluded Securities. Notwithstanding anything herein to the contrary,
the Exercise Price shall not be adjusted pursuant to this Section 7 by virtue of
the issuance and/or sale of "Excluded Securities", which means the following:
(a) shares of Common Stock issuable upon the exercise of the Warrants; (b)
shares of Common Stock, options, warrants, rights or Convertible Securities to
be issued and/or sold to employees, advisors (including, without limitation,
financial, technical and legal advisers), directors, or officers of, or
consultants to, the Company or any of its subsidiaries pursuant to a share
grant, share option plan, share purchase plan, pension or profit sharing plan or
other share agreement or arrangement existing as of the date hereof and which
has been approved by the Board of Directors of the Company; (c) the reissuance
of any expired and unexercised, canceled or forfeited options, warrants, rights
or convertible securities under any plan referred to in the preceding clause;
(d) the issuance of shares of Common Stock, options, warrants, rights and/or
Convertible Securities pursuant to options, warrants, rights and Convertible
Securities outstanding as of the date of this Agreement; or (e) the issuance of
shares of Common Stock issuable upon conversion of the Company's Series B
Convertible Exchangeable Preferred Stock. For all purposes of this Section 7,
all shares of Common Stock which are Excluded Shares shall be deemed to have
been issued for an amount of consideration per share equal to the Market Price
in effect at the time of such issuance.
Section 8 No Rights or Liabilities as a Stockholder. No holder of this
Warrant Certificate, as such, shall be entitled to vote or be deemed the holder
of Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained herein be
construed to confer upon the holder of this Warrant Certificate, as such, the
rights of a stockholder of the Company or the right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as provided herein), or
to receive dividends or subscription rights or otherwise, until the Date of
Exercise of the Warrants shall have occurred. No provision of this Warrant
Certificate, in the absence of affirmative action by the registered holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights and privileges of the holder hereof, shall give rise to any liability of
such holder for the Exercise Price or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
Section 9 Fractional Warrants and Fractional Warrant Shares.
(a) The Company shall not be required to issue fractions of Warrants or to
distribute Warrant Certificates which evidence fractional Warrants. If any
fraction of a Warrant would, except for the provisions of this Section 9(a), be
issuable, the Company shall pay to the holder an amount in cash equal to (i) the
current Market Price for one share of Common Stock, as defined in Section 7(f),
on the trading day immediately preceding the date the fractional Warrant would
have been issued less the Exercise Price multiplied by (ii) the amount of the
fractional share.
(b) The Company shall not be required to issue fractions of Warrant Shares
upon exercise of the Warrants or to distribute certificates which evidence
fractional Warrant Shares. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 9(b), be issuable on the exercise of any Warrant
(or specified portion thereof), the Company shall pay to the holder an amount in
cash equal to the current Market Price for one share of Common Stock, as defined
in Section 7(f), on the trading day immediately preceding the date the Warrant
is presented for exercise, multiplied by the amount of the fractional share.
Section 10 Registration of Warrants and Warrant Shares.
(c) No Registration under Securities Act. Neither the Warrants nor the
Warrant Shares have been registered under the Securities Act.
The holder of this Warrant Certificate by acceptance hereof, represents
that it is acquiring the Warrants to be issued to it for its own account and not
with a view to the distribution thereof, and agrees not to sell, transfer,
pledge or hypothecate any Warrants or any Warrant Shares unless a registration
statement is effective for such Warrants or Warrant Shares under the Securities
Act or in the opinion of such holder's counsel (which counsel shall be
reasonably acceptable to the Company), a copy of which opinion shall be
delivered to the Company, such transaction is exempt from the registration
requirements of the Securities Act; provided that Warrants and Warrant Shares
issued to such holder may be transferred to any Affiliate of such holder,
without any such registration or opinion, subject to the foregoing restriction
on any further sale, transfer, pledge or hypothecation by such Affiliate.
Subject to the provisions of the following paragraph of this Section 10(a),
each Certificate for Warrant Shares shall be stamped or otherwise imprinted with
a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED. SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THE WARRANT CERTIFICATE, DATED AUGUST 15, 1997
BETWEEN THE COMPANY AND THE INITIAL HOLDER OF THE WARRANTS NAMED THEREIN, A
COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER OF THIS
SHARE WITHOUT CHARGE UPON WRITTEN REQUEST.
The restrictions and requirements set forth in the foregoing paragraph
shall apply only with respect to any Warrant Shares unless and until such
Warrant Shares are sold or otherwise transferred pursuant to an effective
registration statement under the Securities Act or are otherwise no longer
subject to the restrictions of the Securities Act, at which time the Company
agrees to promptly cause such restrictive legends to be removed and such stop
transfer restrictions to be rescinded.
The Company will use its commercially reasonable efforts to comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act (whether or
not it shall be required to do so pursuant to such sections) and will use its
best efforts to comply with all other public information reporting requirements
of the Securities and Exchange Commission (such Commission or any successor to
any or all of its functions being hereinafter referred to as the "Commission")
(including, without limitation, Rule 144 promulgated by the Commission under the
Securities Act) from time to time in effect and relating to the availability of
an exemption from the Securities Act for sale of restricted securities. The
Company also will cooperate with the holder of this Warrant Certificate and with
each holder of any Warrant Shares in supplying such information as may be
necessary for any such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of restricted
securities.
(b) "Piggyback" Registration. Whenever the Company proposes to file under
the Securities Act a registration statement relating to the sale of any of its
Common Stock for cash (other than a registration statement required to be filed
in respect of employee benefit plans of the Company on Form S-8 or any similar
form from time to time in effect) the Company shall at least fifteen days prior
to such filing give effective written notice of such proposed filing to the
registered holder of each Warrant or Warrant Share. Upon receipt by the Company
not more than fifteen days after such effective notice of a written request or
written requests from one or more of such holders for registration of Warrant
Shares under such registration statement, the Company shall (A) include in such
registration statement or, at the option of the Company, in a separate
registration statement concurrently filed, and shall use its commercially
reasonable efforts to cause such registration statement to become effective with
respect to, the Warrant Shares as to which such holder or holders request
registration and (B) if such proposed registration is in connection with an
underwritten offering of Common Stock, upon request of such holder or holders
use its commercially reasonable efforts to cause the managing underwriter
therefor to include in such offering the Warrant Shares as to which such holder
or holders request such inclusion, on terms and conditions comparable to those
of the securities offered on behalf of the Company, provided that, in the case
of an underwritten public offering, the representative of the underwriters
participating in the sale and distribution of the Company's securities covered
by such registration statement agrees that a number of Warrant Shares may be
included in the registration statement without materially adversely affecting
the distribution of securities being registered solely for the account of the
Company. Notwithstanding anything to the contrary contained herein, if the
Company, whether before or after the holder of Warrant Shares has made a written
request for registration of such Warrant Share, reasonably determines that the
participation of such holder in such registration would adversely affect the
distribution of the securities to be registered, the Company may decline to
include such securities in any registration statement.
In the event that (i) the representative of the participating underwriters
determines that, taken together with the Warrant Shares sought to be registered
in such registration, the inclusion of the shares of Common Stock of selling
stockholders requesting inclusion in the registration statement would materially
adversely affect the distribution of the securities being registered for the
account of the Company or (ii) the Company determines that the participation of
such Warrant Shares in such registration would adversely affect the distribution
of the securities to be registered (each a "Cut-Back Notice"), the holders of
the Warrant, with respect to the first such registration as to which a Cut-Back
Notice has been given, shall be included in such registration to the extent
practicable. If as a result of a Cut-Back Notice the holders of the Warrants
shall not be able to include all of their Warrant Shares sought by them to be
registered in such registration (such Warrant Shares not included being called
the "Excluded Warrant Shares"), then as to each subsequent registration the
holders of the Warrants shall, subject to any Cut-Back Notice in any such
subsequent registration statement, have priority for inclusion in such
registration such Excluded Warrant Shares until such time as all of their
Warrant Shares as to which a Cut-Back Notice has been given have been included
in a registration. Notwithstanding the foregoing, if a holder of the Warrants
shall decline to include all or any portion of its Warrant Shares in a
registration as to which effective notice of filing has been given then as to
any subsequent registration such holder shall no longer be entitled to priority
of inclusion in the registration for its Warrant Shares.
If at 5:00 p.m., Eastern time, on the Expiration Date, any or all of the
Warrants have not been exercised and, during the preceding five years, the
holders of the Warrants have not had an opportunity to sell all of their Warrant
Shares in a registration statement (including as a result of a Cut-Back Notice),
the Expiration Date of the Warrants represented by this Certificate shall
automatically and successively be extended for each Warrant as to which such
opportunity has not been granted until the date on which the holders of the
Warrants shall decline to include their Warrant Shares in a registration.
All fees, disbursements and expenses incurred by the Company in connection
with the registration (except for underwriting discounts and commissions
attributable to the Warrants and Warrants Shares, which shall be borne by the
holders thereof), and all reasonable fees and disbursements of one counsel for
the holders of Warrants or Warrant Shares, shall, except to the extent
prohibited by applicable law, be borne by the Company, including, without
limitation, all registration and filing fees, all costs of preparation and
printing (in such quantities as the holders of Warrants or Warrant Shares may
reasonably request) of any registration statement and related prospectus and any
amendments or supplements thereto, all fees and disbursements of counsel for the
Company, the expenses of complying with applicable securities or blue sky laws,
and all costs in connection with the preparation and delivery of such legal
opinions, auditors' comfort letters or other closing documents as the holders of
Warrants or Warrant Shares shall reasonably request.
The Company will indemnify and hold harmless each holder of Warrants or
Warrant Shares and each person or entity, if any, who controls such holder
within the meaning of the Securities Act, against any losses, claims, damages,
liabilities, costs or expenses, joint or several, or actions in respect thereof
to which such holder or controlling person or entity may become subject under
the Securities Act, or otherwise, insofar as such losses, claims, damages,
liabilities, costs, expenses or actions in respect thereof arise out of, or are
based upon, or are related to, any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which Warrant
Shares of or pertaining to such holder were registered under the Securities Act,
any preliminary prospectus, amended preliminary prospectus, or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of, or
are based upon, or are related to, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such holder or controlling
person or entity for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided that to the extent that any such loss, claim,
damage or liability arises out of, or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, preliminary prospectus, amended preliminary prospectus
or final prospectus or any amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company in an instrument
duly executed by any authorized representative of such holder, specifically for
use therein, the Company will not be so liable to such holder.
Section 11 Notices. All notices, requests, demands and other communications
relating to this Warrant Certificate shall (a) be in writing (which shall
include communications by telecopy); (b) be (i) sent by registered or certified
mail, postage prepaid, return receipt requested, by telecopier or by a
nationally recognized overnight courier service, or (ii) delivered by hand; (c)
be given at the following respective addresses and telecopier numbers and to the
attention of the following persons:
(i) if to the registered holder hereof, to it at the address or telecopier
number furnished by such registered holder to the Company.
(ii) if to the Company, to it at:
KTI, Inc.
7000 Boulevard East
Guttenberg, New Jersey 07093
Telecopier No.:
Telephone No.:
Attention:
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify in a
notice to the other party specifically captioned "Notice of Change of Address";
and (d) be effective or deemed delivered or furnished (i) if given by mail, on
the third business day after such communication is deposited in the mail,
addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section 11 and the appropriate confirmation is received or
receipt is otherwise acknowledged, (iii) if given by overnight courier, on the
day after deposit with such overnight courier, and (iv) if given by hand
delivery, when left at the address of the addressee addressed as above provided.
Section 12 Reports. The Company shall furnish to the registered holder of
this Warrant Certificate and the holders of Warrant Shares issued upon exercise
of the Warrants the financial and operating performance data as is provided to
the holders of the Company's Common Stock.
Section 13 Binding Effect. This Warrant Certificate shall be binding upon
and inure to the sole and exclusive benefit of the Company, its successors and
assigns, and the registered holder or holders from time to time of the Warrants
and the Warrant Shares.
Section 14 Survival of Rights and Duties. This Warrant Certificate shall
terminate and be of no further force and effect on the earlier of 5:00 p.m.,
Eastern time, on the Expiration Date (as it may be extended hereunder) or on the
date on which all of the Warrants have been exercised, except that the
provisions of Section 10(a) hereof shall continue in full force and effect after
such termination date.
SECTION 15 GOVERNING LAW. THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
Section 16 Section Headings. The Section headings in this Warrant
Certificate are for purposes of convenience only and shall not constitute a part
hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed under its corporate seal by its officers thereunto duly authorized
as of the date hereof.
KTI, INC.
By: /s/ Robert E. Wetzel
Name: Robert E. Wetzel
Title: Senior Vice President
ATTEST:
Name:
Title:
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if the holder desires to exercise
Warrants evidenced by the foregoing Warrant Certificate)
To: [ ]
The undersigned hereby irrevocably elects to exercise _________ Warrants
evidenced by the foregoing Warrant Certificate for, and to purchase thereunder,
_________ full shares of Common Stock issuable upon satisfaction by the
undersigned of both (a) either (i) the exercise of such Warrants and the
delivery of $__________ pursuant to Subsection 3(c)(ii) of the Warrant
Certificate or (ii) the exercise of such Warrants and the exchange therefor of
_______________ Warrants pursuant to Section 3(d) of the Warrant Certificate,
and (b) the delivery of any applicable taxes payable by the undersigned pursuant
to such Warrant Certificate.
The undersigned requests that certificates for such shares be issued in the
name of:
TAX IDENTIFICATION NUMBER
If such number of Warrants shall not be all the Warrants evidenced by the
foregoing Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so exercised be issued in the name of
and delivered to:
(Please print name and address)
Dated:
By ________________________
Name:
Title:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED,
hereby sells, assigns and transfers to each assignee set forth below all of the
rights of the undersigned in and to the number of Warrants (as defined in and
evidenced by the foregoing Warrant Certificate) set opposite the name of such
assignee below and in and to the foregoing Warrant Certificate with respect to
such Warrants and the shares of Common Stock issuable upon exercise of such
Warrants:
Number of
Name of Assignee Address Warrants
If the total of such Warrants shall not be all the Warrants evidenced by the
foregoing Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so assigned be issued in the name of and
delivered to the undersigned.
Name of Holder (print)
Dated: By:
Title:
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of August 7, 1997, between KTI, INC., a New Jersey corporation (the
"Company") and CREDIT RESEARCH & TRADING LLC (the "Placement Agent").
This Agreement is made pursuant to the Placement Agreement dated August 7,
1997, between the Company and the Placement Agent (the "Placement Agreement"),
which provides for (i) the Company to issue and sell in a non-public offering
and sale, pursuant to the exemption provided by Regulation D promulgated under
the 1933 Act (as defined below), up to 800,000 shares of the Company's Series B
Convertible Exchangeable Preferred Stock, no par value, which will be
mandatorily redeemable on the seventh anniversary of the issue date (the
"Shares"), as set forth in the Restated Certificate of Incorporation of the
Company, as amended, relating to the Shares (the "Certificate of
Incorporation"), and will be convertible, at the option of the holder, in whole
or in part, at any time, into shares of the Company's common stock, no par value
(the "Common Stock"), and (ii) the Placement Agent, as the Company's exclusive
agent, to offer and sell the Shares on its behalf, on a "best efforts" basis,
until the Shares have been sold or the termination of the Placement Agreement
and to provide advisory services with respect to the offering and sale of the
Shares. In order to induce the Placement Agent to enter into the Placement
Agreement, the Company has agreed to provide to the purchasers of the Shares
(the "Purchasers") and their direct and indirect transferees the registration
rights with respect to the Registrable Shares (as defined below) set forth in
this Agreement. The execution of this Agreement is a condition to the closing
under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Certificate of Incorporation" shall have the meaning set forth in the
preamble.
"Closing Date" shall mean the Closing Date as defined in the Placement
Agreement.
"Common Stock" shall have the meaning set forth in the preamble.
"Company" shall have the meaning set forth in the preamble and shall also
include the Company's successors.
"Holder" shall mean a holder of Registrable Shares.
"Interested Persons" shall mean Placement Agent and the Holders of Registrable
Shares included within the coverage of the Shelf Registration.
"Majority Holders" shall mean the Holders of a majority of the aggregate
liquidation preference of outstanding Registrable Shares; provided that whenever
the consent or approval of Holders of a specified percentage of Registrable
Shares is required hereunder, Registrable Shares held by the Company or any
Associated Entity (as defined in the Placement Agreement) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage or amount.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Placement Agent" shall have the meaning set forth in the preamble.
"Placement Agreement" shall have the meaning set forth in the preamble.
"Prospectus" shall mean the prospectus included in a Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement, including a prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Shares covered by a Shelf Registration Statement, and by all other amendments
and supplements to such prospectus, and in each case including all material
incorporated by reference therein.
"Registrable Shares" shall mean the Shares and the underlying Common Stock;
provided, however, that the Shares and the underlying Common Stock shall cease
to be Registrable Shares (i) when a Shelf Registration Statement with respect to
such Shares and the underlying Common Stock shall have been declared effective
under the 1933 Act and such Shares and the underlying Common Stock shall have
been disposed of pursuant to such Shelf Registration Statement, (ii) when such
Shares and such Common Stock have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A) under the
1933 Act or (iii) when such Shares and such underlying Common Stock shall have
ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
Underwriters or Holders in connection with blue sky qualification of any of the
Registrable Shares), (iii) all expenses of any Persons retained by the Company
in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, (iv) the fees and disbursements of counsel for the Company and, in
the case of a Shelf Registration Statement, the fees and disbursements of one
counsel for the Holders (which counsel shall be selected by the Majority Holders
and which counsel may also be counsel for the Placement Agent) and (v) the fees
and disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, but excluding fees and
expenses of counsel to the Underwriters (other than fees and expenses set forth
in clause (ii) above) or the Holders and underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of Registrable
Shares by a Holder.
"Registration Statement" shall mean any registration statement of the Company
that covers any of the Registrable Shares pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall have the meaning set forth in the preamble.
"Shelf Registration" shall mean a registration effected pursuant to Section
2(a) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement of
the Company pursuant to the provisions of Section 2(a) of this Agreement which
covers all of the Registrable Shares on an appropriate form under Rule 415 under
the 1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"Transfer Agents" shall mean American Stock Transfer Company, 40 Wall Street,
New York, New York 10005.
"Underwriters" shall have the meaning set forth in Section 3 hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean a registered
offering in which Registrable Shares are sold to an Underwriter for reoffering
to the public.
2. Registration Under the 1933 Act.
(a) As promptly as possible, but in no event later than 180 days after the
Closing Date, the Company shall prepare and file with the SEC the Shelf
Registration Statement. The Company shall use its commercially reasonable
efforts to (i) cause such Shelf Registration Statement to be declared effective
by the SEC on or prior to the 90th day following such filing and (ii) keep such
Shelf Registration Statement effective until the earlier of (A) the sale by the
Holders of all the Registrable Shares relating to such Shelf Registration
Statement or (B) two years after the Closing Date; provided, however, that no
Holders shall be entitled to have Registrable Shares held by such Holder covered
by such Shelf Registration Statement unless the Holder agrees to be bound by all
of the provisions of this Agreement applicable to such Holder.
The Company further agrees to supplement or amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement
or by the 1933 Act or by any other rules and regulations thereunder for shelf
registration or if reasonably requested by a Holder with respect to information
relating to such Holder, and to use its commercially reasonable efforts to cause
any such amendment to become effective and such Shelf Registration Statement to
become usable as soon as practicable thereafter. The Company agrees to furnish
to the Holders of Registrable Shares copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
(b) The Company shall pay all
Registration Expenses in connection with the registration pursuant to Section
2(a). Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Shares pursuant to the Shelf Registration Statement.
(c) A Shelf Registration Statement
pursuant to Section 2(a) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Shares
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference until the offering of
Registrable Shares pursuant to such Registration Statement may legally resume.
If the Shelf Registration Statement is not filed on or prior to 180 days
following the Closing Date or declared effective on or prior to 90 days
following such filing the dividend rate on the Shares will increase 0.5% per
annum for each period during which such registration statement is not so filed
or declared effective.
(d) Without limiting the remedies
available to the Interested Persons, the Company acknowledges that any failure
by the Company to comply with its obligations under Section 2(a) hereof may
result in material irreparable injury to the Interested Persons for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of any such failure, the
Interested Persons may obtain such relief as may be required to specifically
enforce the Company's obligations under Section 2(a).
3. Registration Procedures.
In connection with the obligations of the Company with respect to the Shelf
Registration Statement pursuant to Section 2(a) hereof, the Company shall as
expeditiously as possible:
(a) prepare and file with the SEC a Shelf Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall be available for the sale of the Registrable Shares by the
selling Holders thereof; and which Shelf Registration Statement shall comply as
to form in all material respects with the requirements of the applicable form
and include all financial statements required by the SEC to be filed therewith,
and the Company shall use commercially reasonable efforts to cause such Shelf
Registration Statement to become effective and remain effective in accordance
with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act and to keep
each Prospectus current during the period described under Section 4(3) and Rule
174 under the 1933 Act that is applicable to transactions by brokers or dealers
with respect to the Registrable Shares;
(c) furnish to the Interested Persons and their counsel, and to each
Underwriter of an Underwritten Offering of Registrable Shares, if any, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents as
such Interested Persons or Underwriter may reasonably request, in order to
facilitate the public sale or other disposition of the Registrable Shares; and
the Company consents to the use of such Prospectus and any amendment or
supplement thereto in accordance with applicable law by each of the Interested
Persons and any such Underwriters in connection with the offering and sale of
the Registrable Shares covered by and in the manner described in such Prospectus
or any amendment or supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify, by the time the Shelf
Registration Statement is declared effective by the SEC, the Registrable Shares
under all applicable state securities or "blue sky" laws of such jurisdictions
as any Holder of Registrable Shares covered by the Shelf Registration Statement
shall reasonably request in writing, to cooperate with such Holder in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in
each such jurisdiction of such Registrable Shares owned by such Holder;
provided, however, that the Company shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (ii) file
any general consent to service of process or (iii) subject itself to taxation in
any such jurisdiction if it is not otherwise so subject;
(e) notify the Interested Persons and their counsel promptly and, if
requested by any of the Interested Persons or their counsel, confirm such advice
in writing (i) when a Shelf Registration Statement has become effective and when
any post-effective amendment thereto has been filed and becomes effective, (ii)
of any request by the SEC or any state securities authority for amendments and
supplements to the Shelf Registration Statement and Prospectus or for additional
information after the Shelf Registration Statement has become effective, (iii)
of the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the effective
date of the Shelf Registration Statement and the closing of any sale of
Registrable Shares covered thereby, the representations and warranties of the
Company contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to the offering cease to be true and
correct in all material respects or if the Company receives any notification
with respect to the suspension of the qualification of the Registrable Shares
for sale in any jurisdiction or the initiation of any proceeding for such
purpose, (v) of the happening of any event during the period the Shelf
Registration Statement is effective which makes any statement made in such Shelf
Registration Statement or the related Prospectus untrue in any material respect
or which requires the making of any changes in such Shelf Registration Statement
or Prospectus in order to make the statements therein not misleading and (vi) of
any determination by the Company that a post-effective amendment to the Shelf
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement at the earliest
possible moment and provide immediate notice to the Interested Persons of the
withdrawal of any such order;
(g) furnish to the Interested Persons, without charge, at least one
conformed copy of the Shelf Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
(h) cooperate with the Interested Persons to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold and not bearing any restrictive legends and enable such Registrable Shares
to be in such denominations (consistent with the provisions of the Certificate
of Incorporation) and registered in such names as the Holders may reasonably
request at least two business days prior to the closing of any sale of
Registrable Shares;
(i) upon the occurrence of any event contemplated by Section 3(e)(v) hereof,
use its best efforts to prepare a supplement or post-effective amendment to the
Shelf Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Shares, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees to
notify the Interested Persons to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and the Holders hereby agree
to suspend use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(j) within a reasonable time prior to the filing of the Shelf Registration
Statement, any Prospectus, any amendment to the Shelf Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into the Shelf Registration Statement (except the
Company's filings under the 1934 Act) or a Prospectus after initial filing of
the Shelf Registration Statement, provide copies of such document to the
Interested Persons and their counsel and make such representatives of the
Company as shall be reasonably requested by the Interested Persons and their
counsel available for discussion of such document, and shall not at any time
file or make any amendment to the Shelf Registration Statement, any Prospectus
or any amendment of or supplement to the Shelf Registration Statement or a
Prospectus or any document which is to be incorporated by reference into the
Shelf Registration Statement or a Prospectus, of which the Interested Persons
and their counsel, shall not have previously been advised and furnished a copy
or to which the Interested Persons and their counsel, shall reasonably object,
except for any amendment or supplement or document (a copy of which has been
previously furnished to the Interested Persons and their counsel) which counsel
to the Company shall advise the Company, in the form of a written legal opinion,
is required in order to comply with applicable law. The Interested Persons
agree that, if they receive timely notice and drafts under this clause (j), they
will not take actions or make objections pursuant to this clause (j) such that
the Company is unable to comply with its obligations under Section 2(a);
(k) obtain a CUSIP number and, if applicable, a CINS number, for all
Registrable Shares, not later than the first effective date of the Shelf
Registration Statement;
(l) make available for inspection by a representative of the Interested
Persons, any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and attorneys and accountants designated by the
Interested Persons, at reasonable times and in a reasonable manner, all
financial and other records, pertinent documents and properties of the Company
(collectively, "Records"), as shall be reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company to supply all information reasonably
requested by any such representative, Underwriter, attorney or accountant in
connection with a Shelf Registration Statement. Records which the Company
determines, in good faith, to be confidential and any Records which it notifies
any representative of the Holders or any Underwriter are confidential shall not
be disclosed by such persons, unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such Shelf
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena from a court of competent jurisdiction or (iii) the information in
such Records has generally been made available to the public. Each Holder will
be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company unless and
until such information is made generally available to the public. Each Holder
will be required to further agree that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company to undertake appropriate action to prevent
disclosure of the Records deemed confidential at its expense;
(m) if requested by the Majority Holders, use its commercially reasonably
efforts to cause all Registrable Shares to be listed or quoted, as applicable on
any securities exchange or any automated quotation system on which similar
securities issued by the Company are then listed or quoted to the extent such
Registrable Shares satisfy applicable listing or quotation requirements;
(n) if reasonably requested by any Holder of Registrable Shares covered by a
Registration Statement, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information with respect to such Holder as such
Holder reasonably requests to be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as the Company has received notification of the matters to be incorporated in
such filing; and
(o) In connection with an Underwritten Offering pursuant to a Shelf
Registration Statement, take all actions as are reasonably requested by the
managing underwriter in order to facilitate the disposition of the Registrable
Shares, and in such connection, (i) to the extent possible, make such
representations and warranties to the Holders and any Underwriters of such
Registrable Shares with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii) obtain
opinions of counsel to the Company (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the Holders and such
Underwriters and its counsel) addressed to each Holder and Underwriter of
Registrable Shares, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) obtain "cold comfort" letters from
the independent certified public accountants of the Company (and, if applicable,
any other certified public accountant of any business acquired by the Company
for which financial statements and financial data are or are required to be
included in the Registration Statement) addressed to each Holder and Underwriter
of Registrable Shares, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection with
underwritten offerings, and (iv) deliver such documents and certificates as may
be reasonably requested by the Holders of a majority in principal amount of the
Registrable Shares being sold or the Underwriters, and which are customarily
delivered in underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in an
underwriting agreement.
The Company may require each Holder of Registrable Shares to furnish to the
Company such information regarding the Holder and the proposed distribution by
such Holder of such Registrable Shares as the Company may from time to time
reasonably request in writing. The Company may exclude from a Registration
Statement the Registrable Shares of any Holder who fails to furnish such
information in writing to the Company within 20 business days (or such longer
period if the Company agrees in writing) after receiving such request. Each
Holder of Registrable Shares included within the coverage of any Registration
Statement agrees to furnish promptly to the Company all information required by
applicable law to be disclosed by such Holder in order to make the information
previously furnished to the Company not misleading.
Each Holder agrees that, upon receipt of any notice from the Company (a
"Suspension Notice") of the happening of any event of the kind described in
Section 3(e) (iii), (iv), (v) or (vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Shares pursuant to the Shelf Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Shares current at the
time of receipt of the Suspension Notice or until such Holder is advised in
writing (the "Advice") by the Company that the use of the applicable prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. If the Company shall give a Suspension Notice to suspend the
disposition of Registrable Shares pursuant to the Shelf Registration Statement,
the Company shall extend the period during which the Shelf Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of the
Suspension Notice to and including the date when the Holders shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions or the Advice.
The Holders of Registrable Shares covered by a Shelf Registration Statement
who desire to do so may sell such Registrable Shares in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Shares included in such offering and shall be reasonably acceptable
to the Company.
No Holder may participate in an Underwritten Offering hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the persons or entities
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
4. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement, the Company agrees to
indemnify and hold harmless each Holder of Registrable Shares included in such
Shelf Registration Statement, and each Person, if any, who controls any such
Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of
the 1934 Act, or is under common control with, or is controlled by any such
Holder (the "Indemnified Party"), from and against all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Indemnified Party in connection with defending or
investigating any such action or claim), to which any Indemnified Party may
become subject, under the Securities Act or otherwise, insofar as any such loss,
claim, damage or liability is caused by (i) any untrue statement or alleged
untrue statement of a material fact contained in the Shelf Registration
Statement (or any amendment thereto) pursuant to which Registrable Shares were
registered under the 1933 Act, including all documents incorporated therein by
reference, (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or caused by any untrue statement or alleged untrue statement of
a material fact contained in any Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or (iii)
any omission or alleged omission to state therein a material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or alleged omission based upon information relating to the
Interested Persons furnished to the Company in writing by the Interested
Persons, expressly for use therein. In connection with any Underwritten
Offering permitted by Section 3 of this Agreement, the Company will also
indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the 1933 Act and the 1934 Act) to the same extent as provided above
with respect to the indemnification of the Indemnified Party, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Interested Persons, and each of their directors,
officers and employees and each Person, if any, who controls the Company, or the
Interested Persons within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act, to the same extent as the foregoing indemnity from
the Company to the Interested Persons, but only with reference to information
relating to such Holder furnished to the Company in writing by such Holder
expressly for use in the Shelf Registration Statement (or any amendment thereto)
or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any Person in respect of which indemnity may be sought
pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing; provided,
however, that the failure to notify the indemnifying party shall not relieve it
of any liability which it may have under this Section 4 except to the extent
that it has been materially prejudiced by such failure. The indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. If any such
claim or action shall be brought against an indemnified party, and it shall have
notified the indemnifying party, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similar notified indemnifying party, to assume the defense of thereof with
counsel reasonably satisfactory to be the indemnified party. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party has failed to assume
the defense on behalf of the indemnified party, (ii) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (iii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate counsel (in addition to any local counsel)
designated in writing by each indemnified party, and that all such reasonable
fees and expenses shall be reimbursed as they are incurred. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party for such fees
and expenses of counsel in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph (b) of
this Section 4 is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
obligations to contribute pursuant to this Section 4(d) are several in
proportion to the principal amount of Registrable Shares of such Holder that
were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4, no Holder shall be required to contribute any amount in excess of the
amount by which the total price at which Registrable Shares were sold by such
Holder exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 4 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
(f) Survival. The indemnity and contribution provisions contained in this
Section 4 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Interested Persons or any person controlling the Interested Persons, or
by or on behalf of the Company, its officers or directors or any Person
controlling the Company, and (iii) any sale of Registrable Shares pursuant to
the Shelf Registration Statement.
5. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into, and on or
after the date of this Agreement will not enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Shares in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Numbers of Registrable Shares. All numbers of Registrable Shares set
forth herein refer to amounts as of the date hereof and shall be adjusted in the
event of any subsequent changes in the outstanding Common Stock of the Company
by reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, sales or exchanges of assets, combinations, or other
exchanges of shares or offerings of subscription rights so that the percentage
of shares held by each Holder after the subsequent change shall equal the
percentage of Shares held by such Holder as of the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of at least a
majority in aggregate liquidation preference of the outstanding Registrable
Shares affected by such amendment, modification, supplement, waiver or consent;
provided, however, that no amendment, modification, supplement, waiver or
consents to any departure from the provisions of Section 4 hereof shall be
effective as against any Holder of Registrable Shares unless consented to in
writing by such Holder.
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 5(d),
which address initially is, with respect to the Placement Agent, the address set
forth in the Placement Agreement, with a copy to Winthrop, Stimson, Putnam &
Roberts, Financial Centre, 695 Main Street, Stamford, Connecticut 06904-6760,
Attention: George P. Barbaresi, Esq.; (ii) if to the Company, initially at 7000
Boulevard East, Guttenberg, New Jersey 07093, Attention: Robert E. Wetzel, with
a copy to McDermott, Will & Emery, 50 Rockefeller Plaza, New York, New York
10020, Attention: Brian Hoffmann, and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section 5(d).
All such notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the next business
day if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Transfer Agents, at
First City Transfer Company, 111 Wood Avenue South, Suite 206, Iselin, New
Jersey 08830.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Shares in
violation of the terms of the Placement Agreement. If any transferee of any
Holder shall acquire Registrable Shares, in any manner, whether by operation of
law or otherwise, such Registrable Shares shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Shares such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such person shall be
entitled to receive the benefits hereof. The Placement Agent (solely in its
capacity as Placement Agent) shall have no liability or obligation to the
Company with respect to any failure by a Holder to comply with, or any breach by
any Holder of, any of the obligations of such Holder under this Agreement.
(f) Third Party Beneficiary. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Company, on the one hand, and the
Placement Agent, on the other hand, and each Holder shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed manually or by telecopier
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
KTI, INC.
By: /s/ Robert E. Wetzel
Name: Robert E. Wetzel
Title: Senior Vice President
Confirmed and accepted as of
the date first above written:
CREDIT RESEARCH & TRADING LLC
By: /s/ Jeremy Bloom
Name: Jeremy Bloom
Title: Managing Director
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
KTI ISSUES $21.4 MILLION IN !CONVERTIBLE PREFERRED STOCK
GUTTENBERG, N. J. (AUG. 18, 1997) -- KTI. Inc. announced today that it has
closed a placement of $21,400,000 in Series B convertible, exchangeable
preferred stock. The issue is convertible at $11.75 per share.
The issue which carries an 8.75% dividend coupon, was sold to institutional
buyers and is exchangeable for convertible debentures at the company's option.
Martin J. Sergi, president of KTI, Inc., said, "The proceeds from this
transaction are earmarked for acquisitions presently being negotiated in the
energy and recycling fields augmenting our current business lines."
KTI is an award winning environmental company engaged in integrated waste
processing and management in diversified services and markets. The company
processes over one million tons of material a year and is best known for its
expertise in the waste-to-waste sector. KTI was organized in 1983 to develop
and own waste-to-energy facilities; with the dual purpose of providing a means
of disposal for non-hazardous municipal solid waste and of generating
electricity from alternative fuel sources. Since then, KTI's operations have
expanded to include the development of an integrated waste management business
providing not only municipal solid waste handling and disposal services, but
also wood waste processing, ash and municipal waste recycling, specialty waste
disposal, transportation facilitation services and transfer station operations.
The company owns and operates two waste-to-energy facilities in Maine which
convert non-hazardous solid waste from residential, commercial and industrial
sources into electric power. KTI has developed and operates a wood waste
processing and recycling facility in Maine.
KTI also hold a majority interest in America's only commercially
operational municipal waste ash recycling facility in Nashville, Tenn., a
Maryland company specializing in marketing post-industrial recycled plastics and
a Maine-based recycling company.
For further information, contact Marty Sergi at KTI, Inc. (201) 854-7777 or
Frank N. Hawkins, Jr., Hawk Associates, Inc. at (305) 852-2383.
Copies of KTI press releases, SEC filings, current price quotes, stock
charts, analysts' comments and other valuable information for investors may be
found on the website HTTP://WWW.HAWKASSOCIATES.COM.
This release contains various forward looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 which represent the company's expectations or beliefs
concerning future events of the company's financial performance. These forward
looking statements are qualified by important factors that could cause actual
results to differ materially from those in the forward looking statements.
Results actually achieved may differ materially from expected results included
in these statements.
