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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):
January 15, 1998
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 incorporation) 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)
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Item 5. Other Events.
On January 15, 1998, KTI, Inc., a New Jersey corporation
(the Company or the Registrant) purchased Vel-A-Tran Recycling, Inc., a
Massachusetts corporation ("Vel-A-Tran") for cash in the amount of $1.1 million.
The Company is purchasing Vel-A-Tran subject to existing funded debt of
$150,000.
Vel-A-Tran has its headquarters in Billerica, Massachusetts.
Vel-A-Tran is in the business of recycling high-grade paper and fiber products
in the New England area. The Company expects to consolidate Vel-A-Tran's
operations into the Company's facilities in Charlestown, Massachusetts.
Vel-A-Tran had revenues of approximately $1 million in 1997.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit Number Description
4.1 SECURITIES PURCHASE AGREEMENT dated as of January 1, 1998, by
and among Vel-A-Tran Recycling, Inc., a Massachusetts
corporation ("Vel-A-Tran"), Raymond Vellucci ("Raymond
Vellucci" or the "Seller") and KTI Recycling of New England,
Inc., a Delaware corporation (the "Buyer"). The exhibits to
the SECURITIES PURCHASE AGREEMENT do not contain information
which is material to an investment decision.
4.2 News Release dated January 15, 1998
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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: January 15, 1998 By: /s/ Martin J. Sergi
-----------------------
Name: Martin J. Sergi
Title: President
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SECURITIES PURCHASE AGREEMENT FOR
VEL-A-TRAN RECYCLING, INC.,
by and between
KTI RECYCLING OF NEW ENGLAND, INC. ("Buyer")
and
Raymond Vellucci ("Seller")
Dated as of January 1, 1998
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TABLE OF CONTENTS
OF
SECURITIES PURCHASE AGREEMENT
Section and Heading Page
1 Purchase and Sale 1
1.1 Purchase and Sale of Securities 1
1.2 Method of Conveyance 1
1.3 No Assumed Obligations 2
2 Purchase Price and Closing 2
2.1 Purchase Price 2
3 Representations and Warranties of the Seller 2
3.1 Authorization 2
3.2 No Intention to Sell 2
3.3 No Violation 2
3.4 Documentation 3
3.5 Leases 3
3.6 Taxes 3
3.7 Insurance 4
3.8 Employee Benefit Plans: Pension Plans 5
3.9 Brokers and Finders 6
3.10 Accuracy of representations and Documents 6
3.11 Projected Earnings 6
3.12 Environmental Laws 6
3.13 Real Estate 6
3.14 Corporate Organization, Etc. 7
3.15 Authorization, Etc. 7
3.16 No Violations 7
4 Representations and Warranties of Buyer 7
4.1 Corporate Organization, Etc. 7
4.2 Authorization, Etc. 7
4.3 No Violation 8
5 Certain Covenants and Agreements 8
5.1 Full Access 8
5.2 Notice of Claims and Investigations 8
5.3 Deposit for No Solicitation or Negotiation of Other Offers 8
5.4 Press Releases 8
5.5 Consummation of Transactions 8
5.6 Post-Closing Cooperation 9
5.7 Closing Date 9
5.8 Risk of Loss 9
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Section and Heading Page
5.9 Post-Closing Authority 9
6 Conditions to the Obligations of Seller 9
6.1 Representations and Warranties True 9
6.2 No Proceeding, Litigation; Injunction 10
6.3 Organizational Documents 10
6.4 Employment Agreements 10
6.5 Covenants Not to Compete 10
6.6 Registration Rights Agreement 10
6.7 Real Estate Purchase 10
7 Conditions to the Obligations of Buyer 10
7.1 Representations and Warranties True 10
7.2 Performance 11
7.3 No Proceeding, Litigation, Injunction 11
7.4 Additional Documents 11
7.5 Board of Directors Approval 11
7.6 Hart Scott Rodino 11
7.7 Employment Agreements 11
7.8 Covenants not to Compete 11
7.9 Real Estate Purchase 11
8 Survival of Representations and Warranties; Indemnification 11
8.1 Survival of Representations 11
8.2 Statements as Representations and Warranties 11
8.3 Remedies Cumulative 12
8.4 Buyer's Indemnity 12
8.5 Seller' Indemnity 12
8.6 Indemnity Procedure 13
9 Operations - Post Closing 13
9.1 Stock Options 14
9.2 Banking Relationships 14
9.3 Board Composition 14
10 Miscellaneous Provisions 14
10.1 Amendment and Modification 14
10.2 Waiver of Compliance 14
10.3 Expenses 14
10.4 Notices 14
10.5 Binding Effect; Assignment 15
10.6 Governing Law 15
10.7 Counterparts 16
10.8 Headings 16
10.9 Entire Agreement 16
10.10 Third Parties 16
10.11 Severability 16
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SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT dated as of January 1, 1998, by and among Vel-A-Tran Recycling,
Inc., a Massachusetts corporation ("Vel-A-Tran"), Raymond Vellucci ("Raymond
Vellucci" or the "Seller") and KTI Recycling of New England, Inc., a Delaware
corporation (the "Buyer").
The Buyer desires to purchase from the Seller, and the Seller desires to sell,
assign and transfer to the Buyer all of the Seller's stock in Vel-A-Tran (the
"Securities") as more specifically described in Section 1.1 of the disclosure
schedule attached hereto (the "Disclosure Schedule"), all on the terms and
subject to the conditions hereinafter set forth.
1. Purchase and Sale.
1.1 Purchase and Sale of Securities. On the terms and subject to
the conditions herein set forth, the Buyer shall purchase from
the Seller all of the Securities, as of the Closing Date (as
such term is heretofore defined), owned by the Seller or in
which the Seller has an interest.
1.2. Method of Conveyance.
(a) The sale, transfer, conveyance, assignment and
delivery by the Seller of the Securities to the Buyer
in accordance with Section 1.1 hereof shall be
effected on the Closing Date by the Seller's
execution and delivery of the Securities and the
customary stock powers, duly guaranteed and other
appropriate documents (collectively, the "Instruments
of Conveyance") to the Buyer, or its assignees.
(b) At the Closing, good and valid title to all of the
Securities shall be transferred, conveyed, assigned
and delivered by the Seller to the Buyer, or its
assignees, pursuant to this Agreement and the
Instruments of Conveyance, free and clear of any and
all Liens (as defined below). For the purposes of
this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or
charge of any kind whatsoever.
(c) At the Closing, the Seller shall cause Vel-A-Tran to
provide to the Buyer an estoppel certificate signed
by each creditor (excluding trade creditors) of
Vel-A-Tran (the "Third Party Funded Debt"), each
certificate indicating the balance due on the Third
Party Funded Debt, including any accrued and unpaid
interest thereon, as of the end of the preceding
month, together with a per diem interest rate during
the month in which the Closing occurs. Such
certificate shall state that the creditor will not
exercise any right to accelerate such debt under a
"due on sale" clause for a period of 5 business days
after the Closing.
(d) At the Closing the Seller shall cause Vel-A-Tran to
provide to the Buyer a certificate signed by
Vel-A-Tran indicating the balance of trade accounts
payable ("Trade Accounts Payable") due to third
parties, including any
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accrued and unpaid interest thereon, as of the end of
the preceding month, together with a per diem
interest rate, if any, during the month in which the
Closing occurs.
1.3. No Assumed Obligations. Pursuant to this Agreement, the Buyer
does not assume any of the liabilities or obligations of
Vel-A-Tran whether absolute, accrued, contingent or otherwise,
whenever incurred.
2. Purchase Price and Closing.
2.1. Purchase Price. The consideration for the Securities to be
sold, transferred and conveyed by the Seller to the Buyer
pursuant to this Agreement shall be cash in the amount of $1.1
million to be delivered at the date of closing by wire
transfer of funds pursuant to written wire transfer
instructions delivered to the Buyer not later than five days
prior to the Closing Date. The consideration set forth in this
Section 2.1 is hereinafter referred to as the "Purchase
Price."
2.2. Repayment of Funded Debt. The Buyer will agree to repay the
loans to Vel-A-Tran from Raymond Vellucci, Cosmo Vellucci and
Enterprise Bank by wire transfer of immediately available
funds on the Closing Date, if the Closing is completed prior
to noon. If not, the funds will be wired the following
business day. Written wire transfer instructions must be
delivered to New England not less than 5 days prior to the
Closing. The Buyer will repay all other funded debt within a
5-business day period by issuance of checks.
2.3. Closing. The closing will be held at the offices of Bernstein,
Shur, Sawyer & Nelson, 100 Middle Street, Portland, Maine
04104, not later than January 30, 1998.
3. Representations, Warranties and Agreements of the Seller.
Seller hereby represents, warrants and agrees that:
3.1. Authorization. The Seller has all requisite power and
authority to sell the Securities that he owns. This Agreement
is, and when executed and delivered, the Instruments of
Conveyance will be, the legal, valid and binding obligation of
the Seller, enforceable in accordance with their respective
terms.
3.2. No Violation. The execution and delivery of this Agreement by
the Seller and the consummation of the transactions
contemplated hereby will not violate any statute or law or any
judgment, decree, order, regulation or rule of any domestic or
foreign court or governmental authority.
3.3. Documentation.
(a) The Seller shall cause Vel-A-Tran to deliver a
certificate stating whether Section 3.3 (a) of the
Disclosure Schedule contains an accurate and complete
list of all Equity Securities, all Third Party Funded
Debt and all Trade Accounts Payable, indicating the
balance due, including accrued
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and unpaid interest thereon, as of the close of the
preceding month and a per diem interest factor, if
any, for the month of Closing. Estoppel or payoff
letters from each third party lender (excluding trade
creditors) shall be attached to such schedule. The
Seller shall cause Vel-A-Tran to deliver a list of
all accounts payable as of the close of the latest
available monthly financial statement of Vel-A-Tran.
(b) The Seller has and will have at the Closing, good and
valid title to the Securities being conveyed by him
hereunder.
3.4. Leases and Permits.
(a) Section 3.4 (a) of the Disclosure Schedule
constitutes a complete and accurate list of all real
and personal property leases, subleases, conditional
sales agreements or other title retention agreements
(collectively the "Leases" and individually a
"Lease") to which Vel-A-Tran is a party, as lessee
and permits required to operate the businesses of
Vel-A-Tran as they are presently operated (the
"Permits").
(b) All Leases are valid and binding on all parties
thereto and enforceable against such parties in
accordance with their terms, and are in full force
and effect; and with respect to each such Lease,
there are no existing defaults thereunder (whether or
not waived by the lessor) and no event has occurred
which (whether with or without notice, lapse of time
or both, or the happening of any other event) would
constitute default thereunder. All leases for rental
real estate are cancelable: (1) on not more than 30
days prior written notice; and (2) without the
payment of any penalty.
(c) Each lessor shall provide an estoppel certificate or
payoff letter satisfactory in form and substance to
the Buyer.
3.5. Taxes. Except as set forth in Section 3.5 of the Disclosure
Schedule:
(a) The Seller shall cause Vel-A-Tran to deliver a
certificate stating whether Vel-A-Tran has duly and
accurately filed or caused to be filed all tax
reports and returns (including information returns)
required to be filed in connection with its
businesses for all periods ending on the date hereof
and will make all such filings required to be made
prior to the Closing Date. The certificate shall
further state that Vel-A-Tran has duly paid all taxes
and other charges due or claimed to be due from them
to any federal, state, local or foreign taxing
authority (including, without limitation, those due
in respect of properties, income, franchises,
licenses, sales or payrolls), except for taxes being
contested in good faith.
(b) The Seller shall cause Vel-A-Tran to deliver complete
copies of all of its tax returns, both income tax and
otherwise, for the five most recent tax years to the
Buyer, not later than January 9, 1998.
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(c) The Seller shall cause Vel-A-Tran to advise the Buyer
whether there are any tax liens upon any of its
Assets except liens for current taxes not yet due and
payable.
(d) Vel-A-Tran has made, for all periods ending on or
before the Closing Date, all required declarations of
estimated Federal, state, local and foreign income
taxes (including, without limitation, those due in
respect of properties, income, franchises, licenses,
sales or payrolls) and has paid or provided for all
taxes as shown on such declarations.
(e) There are no facts which exist or have existed which
would constitute grounds for the assessment of any
tax liability against the Seller or Vel-A-Tran and
neither the Internal Revenue Service nor any other
taxing authority is now asserting, to the knowledge
of the Seller, or threatening to assert, any
deficiency or claim for additional taxes or interest
thereon or penalties in connection therewith.
3.6. Insurance.
(a) Section 3.6 of the Disclosure Schedule. The Seller
shall cause Vel-A-Tran to deliver a certificate
containing an accurate and complete list of all
policies of fire, disability, workers' compensation,
products liability, and other forms of insurance
owned or held by or beneficially for Vel-A-Tran which
relate to or provide coverage for the business of
Vel-A-Tran. The Seller will cause Vel-A-Tran to
deliver a copy of each such policy to the Buyer not
later than January 9, 1998.
(b) The Seller shall cause Vel-A-Tran to deliver a
certificate stating whether all such policies are in
full force and effect, all premiums with respect
thereto covering all periods through the Closing have
been or will be paid by Vel-A-Tran and no notice of
cancellation or termination has been received with
respect to any such policy.
(c) The Seller shall cause Vel-A-Tran to deliver a
certificate stating whether such policies are
sufficient for compliance with all requirements of
law and of all agreements to which Vel-A-Tran is a
party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage for the
assets and operations of the business of Vel-A-Tran;
and, with respect to periods prior to the Closing,
will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by
this Agreement.
3.7. Employee Benefit Plans: Pension Plans.
(a) The Seller shall cause Vel-A-Tran to deliver a
certificate stating whether, except as set forth on
Section 3.7 of the Disclosure Schedule, Vel-A-Tran
have any bonus, deferred compensation, pension,
profit-sharing, retirement, stock purchase, stock
option, phantom stock, medical, post-retirement
medical or any other employee benefit plan,
arrangement
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or practice, whether written or unwritten (an
"Employee Benefit Plan"). The Seller shall cause
Vel-A-Tran to deliver true copies of each written
Employee Benefit Plan and an accurate and complete
written description of each oral Employee Benefit
Plan to Buyer, not later than January 9, 1998. The
Seller shall cause Vel-A-Tran to deliver a
certificate stating whether Section 3.7 of the
Disclosure Schedule sets forth the annual amounts
paid or accrued in connection with each Employee
Benefit Plan as of December 31, 1997, and an estimate
of the amounts payable or accruable in connection
therewith through December 31, 1997, to the extent
such amounts are presently fixed or determinable.
(b) The Seller shall cause Vel-A-Tran to deliver a
certificate stating whether Section 3.7 of the
Disclosure Schedule is a list of each "employee
pension benefit plan" in the meaning of the Employee
Retirement Income Security Act of 1974 and the
regulations thereunder ("ERISA"), maintained or
contributed to by either Seller or Vel-A-Tran (the
"Pension Plans") and, except as noted thereon, no
Pension Plan is a "multi-employer plan" within the
meaning of ERISA. The Seller shall cause Vel-A-Tran
to deliver a certificate stating whether there have
been any "prohibited transaction," to which
Vel-A-Tran has been a party, within the meaning of
Section 4975 of the Internal Revenue Code of 1986
(the "Code"), or Section 406 of ERISA, with respect
to any Pension Plan which might subject any such plan
or related trust, or any trustee or administrator
thereof, or the Seller to the tax or penalty imposed
by Section 4975 of the Code or to a civil penalty
imposed by Section 502 of ERISA. Except as set forth
in Section 3.7(b) of the Disclosure Schedule, each of
the Pension Plans is and has been in material
compliance with the applicable provisions of ERISA
and the Code.
The present value of all accrued benefits, whether
vested or not, under the Pension Plans subject to
Title IV of ERISA do not exceed the value of the
assets of such plans allocable to such accrued
benefits. Except as set forth in Section 3.7(b) of
the Disclosure Schedule, none of the Pension Plans
subject to Title IV of ERISA has, since December 31,
1996, been completely or partially terminated, nor
has there been any "reportable event," as such term
is defined in Section 4043(b) of ERISA, with respect
to any such plan since the effective date of said
Section 4043(b). None of the Pension Plans or trusts
have incurred any "accumulated funding deficiency,"
as such term is defined in Section 412 of the Code,
whether or not waived, since the effective date of
said Section 412.
(c) The Seller shall cause Vel-A-Tran to deliver a
certificate stating whether Section 3.7 (c) of the
Disclosure Schedule is a list of all "employee
welfare benefit plans," within the meaning of ERISA,
whether or not insured, maintained by Vel-A-Tran
("Welfare Plans"). Except as set forth in Section 3.7
(c) of the Disclosure Schedule, each Welfare Plan is
and has been in material compliance with the
applicable provisions of ERISA and the Code. The
Seller shall cause Vel-A-Tran to deliver a
certificate stating whether Vel-A-Tran have complied
in all material respects with all of
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their obligations, if any, including the making of
all required contributions, under each of the Welfare
Plans.
3.8. Brokers and Finders. No person has been authorized by the
Seller, Vel-A-Tran or by anyone acting on their behalf, to act
as a broker, finder or in any other similar capacity in
connection with the transactions contemplated by this
Agreement.
3.9 Accuracy of Representations and Documents. No representation
or warranty made by the Seller or Vel-A-Tran in this Agreement
or in the Disclosure Schedule hereto (which is an integral
part hereof) nor any statement, certificate or other document
furnished as an exhibit hereto, or any other document
furnished by the Seller or Vel-A-Tran to Buyer or any of their
representatives in connection with this Agreement is, or will
be when so furnished, false or misleading in any material
respect or contains any material misstatement of fact or omits
to state any fact necessary to be stated make the statements
made in any such representation or warranty false or
misleading in any material respect.
3.10 Environmental Laws. To the best of the Seller' knowledge,
after diligent inquiry, Vel-A-Tran are in material compliance
with all applicable Environmental Laws, including without
limitation, the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act, and other similar
Federal and state laws. None of these parties has received any
communication that alleges, or is aware of any pending
allegation of, any current violation of applicable
Environmental Laws. The Seller will provide the Buyer with all
available information with respect to environmental matters of
Vel-A-Tran.
3.12 Real Estate and Equipment.To the best of the Seller'
knowledge, after diligent inquiry, all real estate occupied by
Vel-A-Tran is structurally sound and has no material defects,
which would affect its current or reasonably foreseeable use.
No notices of any violations may have been received with
respect to zoning laws, building code or setback violations or
environmental matters. All equipment is operable and, to the
best of the Seller's knowledge, after diligent inquiry, is in
good repair, taking into account its age and use. Such
equipment may be removed from its present location to the
Buyer's Charlestown facility without undue damage to either
Vel-A-Trans' existing rental real estate or Vel-A-Tran's
equipment. No permits and licenses necessary to operate
Vel-A-Tran have been cancelled or may be cancelled due to a
change of ownership of Vel-A-Tran.
3.13 Corporate Organization, Etc. Vel-A-Tran is a corporation duly
formed, validly existing and in good standing under the laws
of the State of Massachusetts and any other state in which
such corporation conducts business and has all requisite power
and authority to carry on its businesses as they are now being
conducted and to own, and operate its properties and assets as
and in the places where such business is now conducted and
where such properties and assets are now owned or operated.
3.14 Authorization, Etc. Vel-A-Tran has all requisite power and
authority to execute, deliver and perform its obligations
under this Agreement. This Agreement is valid and binding upon
Vel-A-Tran, enforceable in accordance with its terms.
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3.15 No Violation. Neither the execution and delivery of this
Agreement by Vel-A-Tran nor the consummation of the
transactions contemplated hereby by Vel-A-Tran will violate
any provisions of the Certificate of Incorporation of
Vel-A-Tran, or be in conflict with, or constitute a default
(or an event which, with or without notice, lapse of time or
both, would constitute a default) under, or result in the
termination or invalidity of, or accelerate the performance
required by, or cause the acceleration of the maturity of any
debt or obligation pursuant to, any agreement or commitment to
which Vel-A-Tran is a party or by which Vel-A-Tran is bound,
or violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority.
3.16 Contracts to purchase Vel-A-Tran Stock. No contracts or other
agreements, written or oral, exist which would permit any
person or entity, other than the Seller, to purchase stock of
Vel-A-Tran of any type whatsoever.
3.17 Dividends, Salary Increases, Bonuses. No dividends have been
declared or paid, no salary increases have been given to any
management level employees and no bonuses have been given or
paid since May 31, 1997.
3.18 No Material Adverse Change. No material adverse change has
occurred in the business of Vel-A-Tran since May 31, 1997.
4. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller as follows:
4.1. Corporate Organization. Etc. The Buyer is a corporation duly
formed, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and
authority to carry on its business as it is now being
conducted and to own, and operate its properties and assets as
and in the places where such business is now conducted and
where such properties and assets are now owned or operated.
4.2. Authorization Etc. The Buyer has all requisite power and
authority to execute, deliver and perform its obligations
under this Agreement. This Agreement is valid and binding upon
the Buyer, enforceable in accordance with its terms.
4.3. No Violation. Neither the execution and delivery of this
Agreement by the Buyer nor the consummation of the
transactions contemplated hereby the Buyer will violate any
provisions of the Certificate of Incorporation of the Buyer,
or be in conflict with, or constitute a default (or an event
which, with or without notice, lapse of time or both, would
constitute a default) under, or result in the termination or
invalidity of, or accelerate the performance required by, or
cause the acceleration of the maturity of any debt or
obligation pursuant to, any agreement or commitment to which
Buyer is a party or by which the Buyer is bound, or violate
any statute or law or any judgment, decree, order, regulation
or rule of any court or governmental authority.
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5. Certain Covenants and Agreements.
5.1. Full Access. The Seller agree to cause Vel-A-Tran, without in
any way detracting from his representations, warranties and
agreements set forth in this Agreement, to afford the Buyer
and its counsel, accountants and other representatives, after
the date hereof, full access during normal business hours to
the plants, offices, warehouses, properties, employees,
counsel, accountants and other representatives, books and
records, including accountant's workpapers, of Vel-A-Tran in
order that the Buyer may have full opportunity to make such
investigations as it shall desire to make of the affairs of
Vel-A-Tran.
5.2. Notice of Claims and Investigations. Each party will
immediately give notice to the other of, and confer with the
other with respect to, any claims, investigations by
governmental authorities or threatened litigation relating to
the transactions contemplated by this Agreement.
5.3. No Solicitation or Negotiation of Other Offers. The Seller
agrees that from the date hereof through the Closing Date he
will not pursue, encourage or solicit any inquiries or
proposals by, or engage in any discussions or negotiations
with, any person, any sale of the Securities by the Seller, or
any other exchange, or disposition involving the Securities
5.4. Press Releases. Without the written consent of the other
parties, which shall not be unreasonably withheld, each of the
parties hereto agrees not to make any public announcements or
press releases regarding the transactions contemplated hereby
until such transactions are consummated, unless otherwise
required by law.
5.5. Consummation of Transactions. Each of the parties agrees to
use its best efforts to bring about the satisfaction of the
conditions required to be performed, fulfilled or complied
with by him or it hereunder and to take or cause to be taken,
all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as
practicable. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of
this Agreement, the appropriate party will take all such
necessary action, including without limitation, the execution
and delivery of such further instruments and documents as may
be reasonably requested by the other party or parties for such
purposes or otherwise to complete or perfect the transactions
contemplated hereby.
5.6. Post-Closing Cooperation. After the Closing, the Buyer and the
Seller shall cooperate fully with each other and shall make
available to each other all information, records or documents
reasonably requested in connection with matters involved in
the sale of the Securities.
5.7 Closing Date. The Buyer and the Seller shall use commercially
reasonable efforts to complete the transaction on or before
January 30, 1998.
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5.8 Risk of Loss. Prior to the Closing, the risk of loss on the
Securities shall remain with the Seller.
5.9. Post-Closing Authority.
(a) The Seller agrees that, unless duly authorized in
writing by the Buyer, or required by law, he will not
at any time reveal, divulge or make known to any
person (other than the Buyer or any affiliate of the
Buyer) any confidential or proprietary data or
information relating to the business of Vel-A-Tran.
(b) If any of the covenants contained in this Section is
held to be invalid or unenforceable because of the
duration of such provision or the area covered
thereby, the parties agree that the court making such
determination shall have the power to reduce the
duration or area of such provision to the extent
necessary to render such provision valid and
enforceable and, in its reduced form, said provision
shall then be valid and enforceable.
6. Conditions to the Obligations of the Seller.
Each and every obligation of the Buyer under this Agreement to be
performed on or before the Closing shall be subject to the
satisfaction, on or before the Closing, of each of the following
conditions, unless waived in writing by the Seller.
6.1. Representations and Warranties True. The representations and
warranties of the Buyer contained in this Agreement shall be
true, complete and accurate in all material respects as of the
date when made and at and as of the Closing as though such
representations and warranties were being made at and as of
the Closing Date, and except for changes expressly permitted
or contemplated by the terms of this Agreement.
6.2. No Proceeding. Litigation: Injunction. No suit, action,
investigation, inquiry or other proceeding by any governmental
body or other person shall have been instituted which arises
out of or relates to this Agreement or the transactions
contemplated hereby or seeks to obtain substantial damages in
respect thereof, and, on the Closing Date, there shall be no
effective permanent or preliminary injunction, writ, temporary
restraining order or any order of any nature issued by a court
of competent jurisdiction directing that the transactions
provided for herein not be consummated as so provided.
6.3 Organizational Documents. The Buyer shall have furnished the
Seller with (i) a copy of its Certificate of Incorporation
certified by the Secretary of State of Delaware, and (ii) a
Certificate of Incumbency setting forth the officers of the
Buyer.
6.4 Employment Agreements. Raymond Vellucci and Steven Vellucci
shall have been offered Employment Agreements in the form of
Exhibits 6.4a and 6.4b hereto.
<PAGE> 13
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6.5 Board of Directors and Stockholder Approval. Vel-A-Tran shall
have received the approval of its Board of Directors and
stockholder prior to Closing.
7. Conditions to the Obligations of the Buyer.
Each and every obligation of the Seller under this Agreement to be
performed on or before the Closing shall be subject to the
satisfaction, on or before the Closing, of each of the following
conditions, unless waived in writing by the Buyer.
7.1. Representations and Warranties True. The representations and
warranties of the Seller contained in this Agreement including
the Disclosure Schedule attached hereto, shall be true,
complete and accurate in all material respects as of the date
when made and at and as of the Closing Date as though such
representations and warranties were being made at and as of
the Closing Date (except that representations and warranties
which refer to conditions existing on a specific date, such as
representations and warranties regarding the Financial
Statements, shall continue to refer to that date) and except
for changes expressly permitted or contemplated by the terms
of this Agreement.
7.2. Performance. Seller shall have performed, fulfilled and
complied in all material respects with all agreements,
obligations and conditions required by this Agreement to be
performed, fulfilled or complied with by them on or prior to
the Closing, including delivery to the Buyer of all of the
Securities.
7.3. No Proceeding. Litigation. Injunction. No suit, action,
investigation, inquiry or other proceeding by any governmental
body or other person shall have been instituted or threatened
which arises out of or relates to this Agreement or the
transactions contemplated hereby or seeks to obtain
substantial damages in respect thereof, and, on the Closing
Date, there shall be no effective permanent or preliminary
injunction, writ, temporary restraining order or any order of
any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein not be
consummated as so provided.
7.4. Additional Documents. The Seller shall have delivered to the
Buyer such other documents, instruments and certificates as
shall be reasonably requested by the Buyer for the purpose of
effecting the transactions provided for and contemplated by
this Agreement.
7.5 KTI, Inc. Board of Directors Approval. KTI, Inc. shall have
received the approval of its Board of Directors prior to
Closing.
7.6 Hart-Scott-Rodino. The Buyer shall have received on or prior
to the closing, evidence, at its cost, to its satisfaction
that the transaction is exempt from the rules issued by the
Federal Trade Commission under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
7.7 Employment Agreements. Raymond Vellucci and Steven Vellucci
shall have executed and delivered Agreements in the form of
Exhibit 6.4a and 6.4b hereto (the "Employment Agreements").
<PAGE> 14
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7.8 Covenants not to Compete. All officers and sales employees of
Vel-A-Tran, who have not signed an Employment Agreement, shall
have signed covenants not to compete in form acceptable to the
Buyer.
8. Survival of Representations and Warranties; Indemnification.
8.1. Survival of Representations. Notwithstanding any investigation
at any time made by or on behalf of any party hereto, all
representations and warranties contained in this Agreement
shall survive the Closing until April 15, 2000.
8.2. Statements as Representations and Warranties. All statements
contained herein, in the Disclosure Schedule, or in any other
schedule, certificate, list or other document delivered or to
be delivered pursuant to this Agreement shall be deemed
representations and warranties as such terms are used in this
Agreement and any material misstatement or omission in any
thereof shall be deemed a breach of a representation or
warranty hereunder.
8.3. Remedies Cumulative. The remedies provided herein shall be
cumulative and shall not preclude assertion by any party of
any other rights or the seeking of any other remedies against
any other party .
8.4. Buyer's Indemnity. The Buyer agrees to defend, indemnify and
hold harmless the Seller from, against and in respect of any
and all demands, claims, actions or causes of action, losses,
liabilities, damages, assessments, deficiencies, taxes, costs
and expenses, including without limitation, interest,
penalties and reasonable attorneys' fees and expenses,
asserted against, imposed upon or paid, incurred or suffered
by Seller as a result of, arising from, in connection with or
incident to (i) any breach or inaccuracy of any representation
or warranty of the Buyer contained in this Agreement or (ii)
any breach of any covenant or agreement of the Buyer contained
in this Agreement.
8.5. Seller' Indemnity.
Subject to the limitations contained in subparagraph
(b) below, the Seller agree to defend, indemnify and
hold the Buyer harmless from, against and in respect
of any and all demands, claims, actions or causes of
action, losses, liabilities, damages, assessments,
deficiencies, taxes, costs and expenses, including
without limitation, interest, penalties and
reasonable attorneys' fees and expenses, asserted
against, imposed upon or paid, incurred or suffered
by Buyer on or before August 1, 1999:
(i) as a result of, arising from, in connection
with or incident to (A) any material breach
or inaccuracy of any representation or
warranty of any Seller in this Agreement or
in any Instrument of Conveyance, or (B) any
material breach of any covenant or agreement
of any Seller contained in this Agreement or
in any Instrument of Conveyance (For
purposes of this subsection,
<PAGE> 15
-12-
"material" shall mean any amount in excess
of $10,000 individually or in aggregate.);
or
(ii) arising out of any acts or events done, or
circumstances caused, by the Seller prior to
Closing Date.
8.6. Indemnity Procedure.
(a) A party agreeing to indemnify against any matter
pursuant to this Agreement is referred to herein as
the "Indemnifying Party" and the other party claiming
indemnity is referred to herein as the "Indemnified
Party."
(b) An Indemnified Party under this Agreement shall give
prompt written notice to the Indemnifying Party of
any liability which might give rise to a claim for
indemnity under this Agreement. As to any claim,
action, suit or proceeding by a third party, the
Indemnifying Party shall have the right, exercisable
by notifying the Indemnified Party within twenty days
after receipt of such notice from the Indemnified
Party, to assume the entire control of the defense,
compromise or settlement thereof, all at the
Indemnifying Party's expense including employment of
counsel, and in connection therewith the Indemnified
Party shall cooperate fully to make available to the
Indemnifying Party all pertinent information under
its control. The Indemnified Party may at its
expense, if it so elects, designate its own counsel
to participate with counsel designated by the
Indemnifying Party in the conduct of any such
defense. If the defense of any such matter is
tendered to the Indemnifying Party by notice as set
forth above and the Indemnified Party is entitled to
indemnification pursuant hereto with respect to such
matter, and the Indemnifying Party declines or
otherwise fails to (1) promptly pay or settle the
same, or (2) vigorously investigate and defend the
same, the Indemnified Party may investigate and
defend the same and the Indemnifying Party will
reimburse the Indemnified Party for all judgments,
settlement payments and reasonable expenses,
including reasonable attorneys' fees, incurred and
paid by it in connection therewith.
(c) An Indemnified Party shall not make any settlement of
any claim without the written consent of the
Indemnifying Party, which consent shall not be
unreasonably withheld.
(d) Except as set forth in subsection (b) in the event of
any litigation brought by either party hereto to seek
indemnity under this Agreement, the prevailing party
shall be entitled to recover attorneys' fees upon
final judgment on the merits.
9. Operations - Post Closings.
9.1 Stock Options - Employees. Stock Options will be granted to
Raymond Vellucci as provided in his Employment Agreement for
the initial term of such Employment Agreement pursuant to the
KTI, Inc. 1994 Long-Term Incentive
<PAGE> 16
-13-
Award Plan (the "Plan"). Stock options under the Plan may be
granted to key employees of Vel-A-Tran and to Raymond Vellucci
after such initial term at the sole discretion of the
Compensation Committee of the Board of Directors of KTI, Inc.
These stock options will be exercisable at the closing sale
price per share on the date of grant and normally will vest at
the rate of 20% on the first and subsequent anniversaries of
the date of grant.
9.2 Lending Relationships. The Buyer will use commercially
reasonable efforts to repay Vel-A-Tran's funded debt within 5
days of the Closing Date.
9.3 Liquidation. The Buyer intends to liquidate Vel-A-Tran
promptly after the Closing Date and to cause Vel-A-Tran to
convey its assets to the Buyer. The Buyer shall be responsible
for preparing any required notices to be delivered to the
employees of Vel-A-Tran, to any governmental authorities, if
required, and for complying with any other laws relating to
such liquidation. The Buyer will cause KTI Operations, Inc. to
extend offers of employment as employees at will to
Vel-A-Tran's existing personnel at the Buyer's Charlestown
facility, subject to discussion concerning individual
employees with the management of Vel-A-Tran.
10. Miscellaneous Provisions.
10.1. Amendment and Modification. This Agreement may be amended,
modified and supplemented by the parties hereto only by
written instrument signed by or on behalf of the party to be
charged thereunder.
10.2. Waiver of Compliance. Any failure of Seller, on the one hand,
or Buyer on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be expressly
waived in writing by an authorized officer of the other party,
but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to any
subsequent or other failure.
10.3. Expenses. Each of the parties hereto agrees to pay all of the
respective expenses incurred by it in connection with the
negotiation, preparation, execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby.
10.4. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail,
with postage prepaid as follows:
If to Seller: Raymond Vellucci
7 Christina Drive
Billerica, Massachusetts 01821
<PAGE> 17
-14-
Telephone: 978-667-8506
With a copy to: Joseph P. Godino, Esq.
Silverman & Godino
Executive Plaza II
44 Mall Road
Burlington, Massachusetts 01803
Telephone: (781) 273-3555
Fax: (781) 273-0565
If to Buyer: KTI Recycling of New England, Inc.
7000 Boulevard East
Guttenberg, New Jersey 07093
Telephone: (201) 854-7777
Fax: (201) 854-1771
With a copy to: Gordon Grimes, Esq.
Bernstein, Shur, Sawyer & Nelson
100 Middle Street
Portland, Maine 04104
Telephone: (207) 774-1200
Fax: (207) 774-1127
or to such other person or address as Buyer shall furnish to
Seller in writing.
10.5. Binding Effect: Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs,
administrators, executors, legal representatives, such
successors and assigns, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior
written consent of the other parties; provided, however, that
Buyer may freely assign this Agreement or all or any rights it
may have hereunder to any of its subsidiaries or affiliated
companies, but no such assignment shall relieve Buyer of its
obligations hereunder.
10.6. Governing Law. All agreements, other than the agreements
relating to real estate and the employment agreements for the
four principal officers, shall be governed by the laws of the
State of New York, without regard to the provisions relating
to the conflicts of laws. The laws of the State in which the
real estate is located shall govern the agreements relating to
the real estate. The laws of the State of Massachusetts shall
govern the Employment Agreement.
10.7. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
10.8. Headings. The headings of the sections and articles of this
Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or
interpretation of this Agreement.
<PAGE> 18
-15-
10.9. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto in respect
of the subject matter contained herein, and supersedes all
prior-agreements, promises, letters of intent, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any party hereto or by any Related
Person of any party hereto. All Exhibits attached hereto, the
Disclosure Schedule, any exhibits thereto and all
certificates, documents and other instruments delivered or to
be delivered pursuant to the terms hereof are hereby expressly
made a part of this Agreement as fully as though set forth
herein, and all references herein to the terms "this
Agreement", "hereunder", "herein", "hereby" or "hereto" shall
be deemed to refer to this Agreement and to all such writings.
10.10. Third Parties. Except as specifically set forth or referred to
herein, nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon or give to any
person, firm, partnership, corporation or other entity other
than the parties hereto and their successors or permitted
assigns, any rights or remedies under or by reason of this
Agreement.
10.11. Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained
in this Agreement shall not affect the enforceability of the
remaining portions of this Agreement or any part hereof, all
of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words,
phrases, sentences, clauses, sections or subsections contained
in this Agreement shall be declared invalid by a court of
competent jurisdiction, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, section or sections, or
subsection or subsections had not been inserted.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
Vel-A-Tran Recycling, Inc.
By: /s/ Raymond J. Vellucci
- -----------------------------------------------
Title: President
/s/ Raymond J. Vellucci
- -----------------------------------------------
Raymond Vellucci
KTI Recycling of New England, Inc.
By: /s/ Robert E. Wetzel
- -----------------------------------------------
Title: Senior Vice President
<PAGE> 1
[KTI INC. LETTERHEAD]
NEWS RELEASE
FOR IMMEDIATE RELEASE
KTI ACQUIRES VEL-A-TRAN RECYCLING, INC.
GUTTENBERG, N. J. (JAN. 15, 1998) -- KTI, Inc. (Nasdaq: KTIE) today
announced the acquisition of Vel-A-Tran Recycling, Inc. The acquisition cost
was $1.1 million in cash. The company had approximately $1 million in revenue
in 1997.
Currently headquartered in Billerica, Mass., Vel-A-Tran recycles
high-grade paper and fiber products in New England. The Billerica operations
will be moved into KTI's Charlestown commercial recycling facility.
In announcing the acquisition, KTI President Marty Sergi said, "Vel-A-Tran
is an excellent addition to the KTI Recycling operations located in
Charlestown, just outside of Boston. This greatly strengthens our source of
supply which will feed into the Boston facility giving us excellent economies of
scale."
Sergi said, "Ray Vellucci, owner and founder of Vel-A-Tran, is an industry
veteran with tremendous market knowledge. He has over 25 years of experience in
running a successful high-grade paper operation. We believe Ray is exactly what
our state-of-the-art commercial paper recycling facility needs in order to
match the success of our residential recycling facility in Charleston."
For further information, contact Marty Sergi at KTI, Inc. (201) 854-7777
or Frank N. Hawkins, Jr. or Julie Marshall at Hawk Associates, Inc. (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.
*****
