Exhibit 10.1
KTI, INC.
PLACEMENT AGREEMENT
August 7, 1997
Credit Research & Trading LLC
Xxx Xxxxxxx Xxxxx, Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
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 XxXxxxxxx, Will & Xxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx, 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
XxXxxxxxx, Will & Xxxxx, counsel for the Company to the effect set forth in
Exhibit D, and Xxxxxx X. Xxxxxx, 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, Xxxxxx & Xxxxxxx, 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 0000 Xxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxx X. Xxxxx, with a copy to
XxXxxxxxx, Will & Xxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx Xxxxxxxx, Esq. and (b) if to the Placement Agent, to Credit
Research & Trading LLC, Xxx Xxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxx, XX 00000,
Attention: Xxxxxxx Xxxxxxxxxx, with a copy to Winthrop, Stimson, Xxxxxx &
Xxxxxxx, Financial Centre, 695 East Main Street, Post Office Box 6760, Stamford,
Connecticut 06904-6760, Attention: Xxxxxx X. Xxxxxxxxx, 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/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
Agreed, August 7, 1997
CREDIT RESEARCH & TRADING LLC
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Managing Director
