-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UPsJEQyRNsmj6MpE85eoBeh8KrF8XU6zUod9AaoCsLg1FUR8RjvvATmI/UcTQ/fo ugoXlwm50lKD8Awa2C6xzA== 0000914121-99-001091.txt : 19991115 0000914121-99-001091.hdr.sgml : 19991115 ACCESSION NUMBER: 0000914121-99-001091 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990601 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KTI INC CENTRAL INDEX KEY: 0000931581 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 222665282 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25490 FILM NUMBER: 99746619 BUSINESS ADDRESS: STREET 1: 7000 BLVD E CITY: GUTTENBERG STATE: NJ ZIP: 07093 BUSINESS PHONE: 2018547777 MAIL ADDRESS: STREET 1: 7000 BOULEVARD EAST CITY: GUTTENBERG STATE: NJ ZIP: 07093 8-K/A 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A 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 - -------------------------------------------------------------------------------- KTI, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as specified in its Charter) New Jersey - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 33-85234 22-2665282 ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) (201)854-7777 --------------------------------------------------- (Registrant's Telephone Number, including Area Code) Not Applicable ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 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 (b) Unaudited Pro Forma Financial Information The KTI, Inc. unaudited pro forma historical statements of operations for the six months ended June 30, 1999 and the twelve months ended December 31, 1998 include the effect of KTI's sale of substantially all assets of KTI Recycling of Illinois, Inc. on June 1, 1999, as if the sale had occurred on January 1, 1998. The KTI unaudited pro forma historical financial statements are not necessarily indicative of the results of operations which would have been achieved had this transaction been completed at January 1, 1998 and should not be construed as representative of future operations. KTI, INC. UNAUDITED PRO FORMA HISTORICAL STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 (IN THOUSANDS, EXCEPT PER SHARE DATA)
COMPLETED SALE KTI RECYCLING PRO FORMA KTI, INC. OF ILLINOIS KTI, INC. ------------------ ---------------------- -------------------- Revenues $130,921 $(792) $130,129 Cost of operations 109,246 (986) 108,260 ----------------- ---------------- --------------- Gross Profit 21,675 194 21,869 Selling, general and administrative 12,181 (91) 12,090 Restructuring charge 3,719 3,719 Asset impairment charge 3,000 3,000 ----------------- ---------------- --------------- Income from operations 2,775 285 3,060 Interest expense, net 9,053 9,053 Loss on sale of business 444 (444) - Equity loss in subsidiary 294 294 Other charges 131 131 Other expenses, net 123 123 ----------------- ---------------- --------------- Loss from continuing operations before minority interest, benefit for income taxes, extraordinary item, and cumulative effect of change in accounting principle (7,270) 729 (6,541) Minority interest 1,176 1,176 ----------------- ---------------- --------------- Loss from continuing operations before benefit for income taxes extraordinary item, and cumulative effect of change in accounting principle (8,446) 729 (7,717) Benefit for income taxes (2,565) 291 (2,274) ----------------- ---------------- --------------- Loss from continuing operations before extraordinary item and cumulative effect of change in accounting principle $ (5,881) $438 $(5,443) ================= ================ =============== Pro forma loss per share from continuing operations before extraordinary item and cumulative effect of change in accounting principle: Basic $(0.43) $ (0.40) ================= =============== Diluted $(0.43) $ (0.40) ================= =============== Weighted average common shares outstanding: Basic 13,818,290 13,818,290 ================= =============== Diluted 13,818,290 13,818,290 ================= ===============
KTI, INC. UNAUDITED PRO FORMA HISTORICAL STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA)
COMPLETED SALE KTI RECYCLING PRO FORMA KTI, INC. OF ILLINOIS KTI, INC. -------------------- ---------------------- -------------------- Revenues $179,007 $(2,491) $176,516 Cost of operations 156,664 (3,053) 153,611 --------------- ---------------- -------------- Gross Profit 22,343 562 22,905 Selling, general and administrative 7,947 (15) 7,932 --------------- ---------------- -------------- Income from operations 14,396 577 14,973 Interest expense, net (10,667) 3 (10,664) --------------- ---------------- -------------- Income from continuing operations before minority interest, benefit for income taxes and extraordinary item 3,729 580 4,309 Minority interest 3,702 3,702 --------------- ---------------- -------------- Income from continuing operations before benefit for income taxes and extraordinary item 27 580 607 Benefit for income taxes (3,023) 232 (2,791) --------------- ---------------- -------------- Income from continuing operations before extraordinary item $3,050 $348 $3,398 =============== ================ ============== Pro forma earnings per share from continuing operations before extraordinary item: Basic $0.29 $0.32 =============== ============== Diluted $0.27 $0.30 =============== ============== Weighted average common shares outstanding: Basic 10,548,570 10,548,570 =============== ============== Diluted 11,398,151 11,398,151 =============== ==============
KTI, INC. NOTES TO UNAUDITED PRO FORMA HISTORICAL FINANCIAL STATEMENTS 1. DESCRIPTION OF TRANSACTION On June 1, 1999, KTI sold substantially all the assets of KTI Recycling of Illinois, Inc. ("Illinois") for approximately $1.8 million in cash. The KTI unaudited pro forma historical financial statements are not necessarily indicative of the results of operations which would have been reported if the sale of Illinois had occurred on January 1, 1998 nor are they necessarily indicative of the future operating results of KTI. In the opinion of management, all adjustments necessary to present fairly such pro forma historical statement of operations have been made. The KTI unaudited pro forma historical financial statements should be read in conjunction with the historical consolidated financial statements of KTI. 2. EARNINGS PER SHARE The pro forma earnings per share calculations are based on the historical basic and diluted weighted average number of shares outstanding as of December 31, 1998. 3. IMPACT ON BALANCE SHEET AS OF MARCH 31, 1999 The impact of this transaction on the balance sheet as of March 31, 1999 would be to decrease property, equipment and leasehold improvements by approximately $2.2 million, accounts payable by approximately $1.8 million, and stockholders' equity by approximately $0.4 million. (c) Exhibits Exhibit No. Description - -------------- --------------- 99.1 Agreement for the Purchase of Assets dated June 1, 1999, by and between KTI Recycling of Illinois, Inc. and Loop Paper Recycling, Inc. The schedules to this Exhibit 99.1 do not contain information which is material to an investment decision. The Registrant hereby agrees to furnish a copy of any omitted schedule to the Commission upon request. 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: November 5, 1999 KTI, INC. (Registrant) By: /s/ Martin J. Sergi ---------------------------------- Martin J. Sergi President EX-99.1 2 AGREEMENT FOR THE PURCHASE OF ASSETS 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. 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 -2- 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. -3- (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 -4- 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. -5- 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. -6- 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. -7- IN WITNESS WHEREOF, the parties have executed this Agreement. KTI RECYCLING OF ILLINOIS, INC., a Delaware corporation By: /s/ Robert E. Wetzel -------------------- Senior Vice President (Seller) LOOP PAPER RECYCLING, INC., an Illinois corporation By: /s/ George Ward --------------------- Its: VP (Buyer) -----END PRIVACY-ENHANCED MESSAGE-----