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): June 1, 1999
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KTI, INC.
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(Exact Name of Registrant as specified in its Charter)
New Jersey
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(State or Other Jurisdiction of Incorporation)
33-85234 22-2665282
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(Commission File Number) (IRS Employer Identification No.)
(201)854-7777
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(Registrant's Telephone Number, including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
On June 1, 1999, the Registrant entered into an agreement with Loop Paper
Recycling, Inc., an Illinois corporation to sell substantially all the assets of
the Registrant's commercial recycling facility located in Franklin Park,
Illinois for an aggregate consideration of approximately $1,757,000. The
Registrant recorded a loss before income taxes of approximately $444,000 as a
result of this transaction.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description
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99.1 Agreement for the Purchase of Assets dated June 1, 1999, by
and between KTI Recycling of Illinois, Inc. and Loop Paper
Recyclling, Inc. The schedules to this Exhibit 99.1 do not
contain information which is material to an investment
decision. The Company hereby agrees to furnish a copy of
any omitted schedule to the Commission upon request.
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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 hereto duly authorized.
Date: October 27, 1999 KTI, INC.
(Registrant)
By: /s/ Martin J. Sergi
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Martin J. Sergi
President
AGREEMENT FOR THE PURCHASE
OF ASSETS
THIS AGREEMENT dated as of June 1, 1999, by and between KTI Recycling of
Illinois, Inc., a Delaware corporation ("Seller") and Loop Paper Recycling,
Inc., an Illinois corporation ("Buyer").
Seller is located in Franklin Park, Illinois and desires to sell certain
of its assets, listed on Schedule A attached hereto (the "Assets"), to Buyer.
Buyer desires to purchase the Assets as a going concern but does not
desire to accept any of the liabilities of the Seller for the period prior to
June 1, 1999, except as expressly listed on Schedule B of this Agreement.
In consideration of the mutual terms, conditions and covenants hereinafter
set forth Seller and Buyer agree as follows:
1. Seller shall sell the Assets to the Buyer on the Closing Date. The Assets
shall be (a) the equipment listed on Schedule A, all records of the Seller
pertaining to the operation of such equipment, currently in the Seller's
possession; (b) contracts between the Seller and third parties, listed on
Schedule A and all records of the Seller pertaining to such accounts, currently
in the Seller's possession; (c) the Seller's goodwill, franchises (other than
the Seller's franchises as a corporation), permits and licenses and the Seller's
current telephone numbers. (The Seller shall have reasonable access to all
records transferred to the Buyer for the purposes of preparing its final tax
returns and for participation in tax audits, if any.) The Seller shall have 30
calendar days to remove any equipment not purchased. During such 30-day calendar
period, beginning on the Closing Date, the Buyer shall store such equipment in a
secure location at 10601 Waveland Avenue, Franklin Park, Illinois at no cost to
the Seller and shall ensure that its employees do not use such equipment. The
Seller shall be obligated to remove equipment not purchased by the Buyer at the
Seller's cost within 30 calendar days of the Closing Date. Any equipment not
removed within 30 calendar days shall be stored at the Seller's cost.
2. The Seller is not selling and the Buyer is not buying any assets of the
Seller not listed on Schedule A. Assets not listed on Schedule A are "Excluded
Assets". Excluded Assets include, but are not limited to cash, deposits in
banks, the consideration to be paid by the Buyer to the Seller pursuant to this
Agreement, all insurance policies, the Seller's franchises as a corporation, the
Seller's minute books, corporate seals and stock books, the shares of capital
stock of the Seller, the Seller's name or any name similar thereto, an EC-lSTSM
Hydro Baler with infeed, any prepaid taxes or expenses or deferred charges in
connection therewith and accounts receivable for the period ending on May 31,
1999. To the extent that the Buyer does not wish to purchase any non-saleable
inventory in the real estate commonly known as 10601 Waveland Avenue, Franklin
Park, Illinois, the Buyer shall so advise the Seller in writing, not later than
the day prior to the Closing Date. Such writing shall clearly state the
non-saleable inventory to be moved. The Seller shall remove such non-saleable
inventory, or the portion thereof, not desired by the Buyer, at the Seller's
cost. The Buyer's right to have non-saleable inventory removed is waived if such
notice is not delivered in a timely fashion.
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3. Any invoices issued by either the Buyer or the Seller after the Closing Date
for services or goods shipped prior to the Closing Date shall prorate such
accounts receivable for the period prior to June 1, 1999 and the period
including June 1, 1999 and thereafter. Accounts receivable for the period prior
to the June 1, 1999 shall be payable to the Seller, and accounts receivable
thereafter shall be payable to the Buyer. Cash received by the Buyer or Seller
relating to a specific customer shall be applied to accounts receivable by
invoice number or invoice, date if indicated, or ship date. If either the Buyer
or the Seller receives funds due to the other party, the receiving party shall
promptly transmit such funds to the other party. The Seller hereby agrees to pay
all accounts payable not accepted by the Buyer in accordance with their terms
and hereby agrees to indemnify the Buyer for any claim brought against the Buyer
due to any breach of this covenant by the Seller. The Buyer shall deposit
$64,000.00 of the purchase price in an interest-bearing account in the names of
the Buyer and the Seller at a bank designated by the Seller. Such account shall
be maintained for 30 calendar days following the Closing Date as security for
the obligations of the Seller to pay accounts payable. During such 30-calendar
day period, Seller may withdraw funds from such account only to pay accounts
payable. The Buyer must consent to such withdrawals. At the termination of the
30-day period, the balance of said account shall be distributed to the Seller
unless known, unpaid obligations payable by the Seller remain outstanding. If
the parties disagree as to the existence of such known and unpaid obligations,
either party may instigate arbitration proceedings through the American
Arbitration Association in Chicago, Illinois. The losing party shall pay all
expenses of arbitration.
4. All liabilities to be assumed by the Buyer are listed on Schedule B, attached
hereto. The Seller hereby represents that the Assets, as of the Closing Date,
will not be subject to any liens, security interests, encumbrances or other
claims other than those listed on Schedule B.
5. The purchase price for the Assets shall be: (a) cash in the amount of
$557,050.00; and (b) the assumption or payoff of any liabilities listed on
Schedule B. The purchase price, other than the $64,000.00 referred to in Section
3 above and the $45,000 referred to in Section 11 below, shall be paid by the
wire transfer of immediately available funds to an account of the Seller at
KeyBank, National Association.
6. Buyer shall operate the facility at 10601 Waveland Avenue, Franklin Park,
Illinois in the ordinary course of business from the date of execution of this
Agreement until the Closing Date, consistent with its current practices.
7. The Business of the Seller is defined as: (a) the processing of waste paper
products, generated within 50 miles of and processed at 10601 Waveland Avenue,
Franklin Park, Illinois; and (b) the brokerage of waste paper products generated
within 50 miles of, but not processed at, 10601 Waveland Avenue, Franklin Park,
Illinois by entities which are currently customers of the Seller or which have
been customers of the Seller during the period commencing on November 14, 1997
and ending on the day prior to the Closing Date. Such entities are "Customers".
If a Customer operates a generating facility or facilities outside of such 50
mile radius area, the entity is not a Customer for such facility unless the
Seller has processed waste paper products from such facility at 10601 Waveland
Avenue, Franklin Park, Illinois during the period commencing on November 14,
1997 and ending on the Closing Date. This provision shall not restrict any
services conducted or which may be conducted at the New Heights Recovery &
Power, L.L.C. ("New Heights") facility at Ford Heights, Illinois in the future,
except
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that New Heights may not solicit any Customers or offer employment to any
Employee, as hereinafter defined, during such 5-year period. The Seller and
other entities under common control with the Seller shall not: (A) compete with
the Business bought by the Buyer; (b) solicit Business from a Customer for a
period of five years beginning on the Closing Date; or (c) disclose confidential
information concerning the Business or a Customer to any third party, other than
pursuant to a court order or as otherwise required by law. If the Seller or
entities under common control with the Seller purchase an entity existing in
such restricted area, such purchased entity may continue in its activities as of
the date of purchase but may not solicit Customers during such period, unless
already serviced by such purchased entity or offer employment to an Employee, as
hereinafter defined. The Seller shall notify the Buyer of any Customers served
by such entity or entities within 30 days of the date of acquisition of such
entity or entities. If the Seller is requested to disclose confidential
information, the Seller shall give the Buyer as much notice as possible to
permit the Buyer to appear before such court or other body to contest such
request at the Buyer's expense. Nothing in this Section shall preclude the
Seller or other entities under common control with the Seller from purchasing
material from, or brokering material for, the Buyer. The Buyer shall have the
right to offer employment to all or any of the employees of the Seller, other
than Carlos Abrios (collectively, "Employees" or individually, "Employee"), that
are currently working at 10601 Waveland Avenue, Franklin Park, Illinois as of
the Closing Date hereof, on such terms and conditions determined by the Buyer in
its sole discretion. The Seller shall not offer employment after the Closing
Date to any Employee. The Buyer shall be responsible for all costs of operating
the facility at 10601 Waveland Avenue, Franklin Park for the period after May
31, 1999 excluding salary costs relating to Carlos Abrios. To the extent that
the Buyer advances funds for such costs, it shall be promptly reimbursed by the
Seller.
8. KTI, Inc., New Jersey corporation and the parent of the Seller, shall
indemnify the Buyer from and against all claims against the Buyer relating to
undisclosed liabilities, not paid by the Seller, including, without limitation,
liabilities for Illinois unemployment compensation and any taxes of any kind
whatsoever due from the Seller to the State of Illinois. Such indemnification
shall be in the form attached hereto as Schedule C.
9. Seller represents and warrants to Buyer:
(a) The Seller represents that it is not, to the best of its knowledge
after diligent inquiry, in breach of any contract, lease or other written
commitment to be assigned pursuant to this Agreement. The Seller represents that
it has not received any notice of a breach of any contract, lease or other
written commitment to be assigned pursuant to this Agreement from the other
party or parties thereto.
(b) Seller makes no representation or warranty as to the future conduct of
the Business and the continued relationship with the Customers of the Business.
(c) Neither the Seller nor the Buyer have used a broker in connection with
the transaction described in this Agreement. Each party hereto agrees to
indemnify and hold the other harmless from any broker's or finder's fee or
alleged broker's or finder's fee incurred by the other party, or any claim by
any party that the other entered into an agreement calling for a broker's or
finder's fee.
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(d) The consent of the general partners of DRAW ENTERPRISES MANUFACTURING,
L.P. is required to carry out the transaction contemplated by this Agreement.
Such consent shall be obtained not later than June 4, 1999, or this Agreement
shall be null and void. If Seller does not receive written notice of the
rejection of this Agreement from the Buyer by June 4, 1999, the Buyer shall be
deemed irrefutably to have waived this condition.
(e) This Agreement is subject to the receipt of approval of this Agreement
by the Board of Directors of KTI, Inc. not later than June 4, 1999 and to the
receipt of a consent from KeyBank, National Association, as Agent. If the Buyer
does not receive written notice from KTI, Inc. of the rejection of this
Agreement by June 4, 1999, the Seller shall be deemed irrefutably to have waived
this condition.
10. Closing on this Agreement will be on June 4, 1999 if: (a) Seller deposits
with Chicago Title Insurance Company, or its affiliate, those documents required
to be deposited by the escrow agreement between the Seller and DRAW ENTERPRISES
MANUFACTURING, L.P., (b) DRAW ENTERPRISES MANUFACTURING, L.P. wires $900,000.00,
less prorations, in immediately available funds to the Seller and deposits
$300,000.00 with Chicago Title Insurance Company, or its affiliate, in escrow
and (c) the Seller and DRAW ENTERPRISES MANUFACTURING, L.P. execute a
reconveyance agreement in the form of Schedule D hereto, all in connection with
the transfer of real estate commonly known as 10601 Waveland Avenue, Franklin
Park, Illinois.
11. The sale and delivery by the Seller of the Assets to the Buyer hereof shall
be effected on the Closing Date by the Seller's execution and delivery of
assignments of leases, bills of sale and other instruments of conveyance and
transfer as applicable substantially in the forms attached hereto as Schedule E
(collectively the "Instruments of Conveyance"). The Buyer and the Seller
acknowledge that the Seller has been unable to locate the title for eleven
trailers. $45,000 of the purchase price shall be deposited into an escrow with
Chicago Title Insurance Company, or its affiliate, to held until the titles for
such trailers, or replacement titles, if necessary, have been delivered to the
Buyer, appropriately endorsed to permit transfer to the Buyer.
12. The Buyer and Seller agree that the purchase price is allocated among the
Assets being purchased hereunder as set forth on Schedule A hereto. Such
allocation of the purchase price limits the liability of the Seller to the Buyer
with respect to damages, liabilities or expenses incurred by the Buyer with
respect to any breach of the Seller's representations, warranties, covenants or
agreements set forth herein.
13. The Buyer represents and warrants to the Seller that: (a) the Buyer is a
duly formed corporation, validly existing and in good standing under the laws of
the State of Illinois; (b) the Buyer has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement; (c) this
Agreement is valid and binding upon the Buyer, enforceable in accordance with
its terms; (d) neither the execution and delivery of this Agreement by the Buyer
nor the consummation of the transactions contemplated hereby by 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
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or commitment to which the 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.
14. Without the written consent of the other party, 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; provided that, notwithstanding the
foregoing, Seller shall have the right to issue a press release and file a
report on Form 8-K disclosing the transaction contemplated by this Agreement to
the extent that it believes such disclosure is required by law.
15. Each of the parties agrees to use its best efforts to bring about the
satisfaction of the conditions required to be performed, fulfilled or complied
with by it hereunder and to take or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as practicable. In case at any
time after the Closing any further action is necessary or desirable to carry out
the 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.
16. 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, except for changes
expressly permitted or contemplated by the terms of this Agreement. The Buyer
shall have performed, fulfilled and complied with in all material respects with
all agreements, obligations and conditions required by this Agreement to be
performed, fulfilled or complied with by it on or prior to the Closing Date.
17. No suit, action, investigation, inquiry or other proceeding by any
government body or other person shall have been instituted against any party to
this Agreement or DRAW ENTERPRISES MANUFACTURING, L.P., 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.
18. The Buyer and the Seller each hereby agree to defend, indemnify and hold the
other party harmless from, against and in respect of any and all demands,
claims, actions, or causes of actions, 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 the other party
as the result of, arising from, in connection with or incident to (i) any breach
or inaccuracy of any representation or warranty of the Buyer or Seller, as the
case may be, contained in this Agreement or (ii) any breach of any covenant or
agreement of the Buyer or the Seller, as the case may be, contained in this
Agreement.
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19. 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.
20. 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 the Seller: c/o KTI, Inc.
20 Braeburn Lane
Barrington Hills, Illinois 60010
Telephone: 847-658-1528
Fax: 847-658-1516
with a copy to: Spitzer, Addis, Susman & Krull
Attention: Robert J. Krull
100 West Monroe Street
Chicago, Illinois 60603
Telephone: 312-372-0550
Fax: 312-372-8667
If to the Buyer: Loop Paper Recycling, Inc.
Attention: George Ward
2401 South Laflin
Chicago, Illinois 60608
Telephone: 312-942-0042
Fax: 312-942-0612
with a copy to: Matthew J. Carmody
10644 South Western Avenue
Chicago, Illinois 60643
Telephone: 773-233-8969
Fax: 773-233-9719
or to such other person or address as either party may furnish to the other
party in writing.
21. This Agreement shall be governed and construed in accordance with the laws
of the State of Illinois, regardless of rules of conflict of laws. The courts of
the State of Illinois or of the United States sitting in the State of Illinois
shall have the exclusive jurisdiction over any and all claims, lawsuits and
litigation relating to or arising out of this Agreement, the subject matter
hereof or the transactions contemplated hereby. Each of the parties hereto
hereby irrevocably (a) submits to the jurisdiction of such courts over such
party in connection with any litigation, proceedings or other legal action
arising out of or in connection with this Agreement, (b) waives to the fullest
extent permitted by law any objection to the venue of any litigation, proceeding
or action which is brought in such court and (c) agrees to the mailing of
service of process in any legal proceedings brought in any such court.
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22. This Agreement, which is deemed to include all exhibits, schedules and
certificates delivered pursuant to the terms hereof, embody the entire agreement
of the parties hereto with respect to the subject matter hereof and supersede
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, whether expressed or
implied (collectively, the "Prior Inducements") by either party, or any officer,
employee or representative of either party hereto with respect thereto. Both
parties acknowledge and agree that in entering into this Agreement, neither has
relied upon such Prior Inducements, and both parties agree that neither of them
will seek to initiate any suit, action, claim or defense based upon or arising
out of any Prior Inducement.
23. This Agreement shall be deemed to be the joint work product of both parties
hereto without regard to the identity of the draftsperson and any rule of
construction that a document shall be interpreted or construed against the
drafting party shall not be applicable.
24. Prior to the Closing, the risk of loss or damage to, or destruction of, any
or all of the Assets shall remain with the Seller.
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IN WITNESS WHEREOF, the parties have executed this Agreement.
KTI RECYCLING OF ILLINOIS, INC.,
a Delaware corporation
By: /s/ Robert E. Wetzel
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Senior Vice President
(Seller)
LOOP PAPER RECYCLING, INC., an
Illinois corporation
By: /s/ George Ward
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Its: VP
(Buyer)
