-----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, OL2mzU2Z5wNAQhtuFO5Wzlb0TI0XiL9zjeDyo3oHEBesQbesu5m58W4Kas00xIHm vU5FhiX5UMA8zQZvdvkXRw== 0000950123-97-008585.txt : 19971016 0000950123-97-008585.hdr.sgml : 19971016 ACCESSION NUMBER: 0000950123-97-008585 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19970930 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971015 SROS: NONE 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 SEC ACT: SEC FILE NUMBER: 000-25490 FILM NUMBER: 97695931 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 1 FORM 8-K 1 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): September 30, 1997 KTI, INC. (Exact name of Registrant as specified in Charter) New Jersey 33-85234 22-2665282 - -------------------------------------------------------------------------------- (State or other juris- (Commission (IRS Employer diction of incorporation) File Number) Identification Number) 7000 Boulevard East, Guttenberg, New Jersey 07093 - -------------------------------------------------------------------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number including area code- (201) 854-7777 Not Applicable - -------------------------------------------------------------------------------- (Former name and former address, as changed since last report) 2 Item 2. Acquisition or Disposition of Assets. On September 30, 1997, KTI, Inc., a New Jersey corporation (the Company or the Registrant) purchased a 49.5% limited partnership interest in Penobscot Energy Recovery Company, Limited Partnership, a Maine limited partnership ("PERC") from The Prudential Insurance Company of America ("Prudential") for approximately $11.7 million in cash. In addition the Company assumed certain liabilities of Prudential by the payment of cash in the amount of $200,000 to Prudential and the issuance of Letters of Credit to Morgan Guaranty Trust Company of New York ("Morgan Guaranty") for approximately $3.9 million, replacing obligations of Prudential to Morgan Guaranty. At the same time, the Company purchased an option for $300,000 to buy the remaining 15.2% interest of Prudential in PERC for a price of $2.1 million. The option to purchase Prudential's remaining limited partnership interest terminates on October 31, 1998. With this purchase, the Company's interest in PERC has increased to 56.5%. Prudential owns a 15.2% limited partnership interest. A subsidiary of Pacificorp holds the remaining 28.3% interest in PERC, 3% as a general partner and 25.3% as a limited partner. PERC is located in Orrington, Maine and owns a 25 megawatt waste to energy power generating plant. Power is produced by processing approximately 250,000 tons of municipal solid waste received from 230 communities in Maine. The power is sold to Bangor Hydro-Electric Company under a long term power supply contract. PERC had $30.3 million of revenue and $6.1 million of net income in 1996. For the six months ended on June 30, 1997, PERC had revenue of $15.1 million and net income of $3.4 million. Item 5. Other Events. In early October 1997, WEXFORD KTI LLC converted all of its $5 million principal amount Convertible Subordinated Promissory Note dated as of October 23, 1996 into 618,609 shares of the Company's common stock. Item 6. Resignation of Registrant's Director. Kenneth A. Rubin, an Officer of WEXFORD KTI LLC, resigned as a director of the Company. No disagreement exists, to the knowledge of the Company, between Mr. Rubin and the Company as to the Company's operations, policies or practices. 3 Item 7. Financial Statements and Exhibits (a) Financial Statements of the business acquired. The audited balance sheet of Penobscot Energy Recovery Company, Limited Partnership, as of December 31, 1996 and 1995 and the related statements of income, changes in partners' capital and cash flow for each of the three years in the period ended December 31, 1996 were included in the Registrant's Form 10-K for the fiscal year ended December 31, 1996. (b) Pro Forma Financial information. It is impractical to provide the required pro forma financial information at this time. The results of the Registrant's investment in Penobscot Energy Recovery Company, Limited Partnership have previously been reported on an equity basis. The required consolidated financial information will be reported in the Form 10-Q for the period ended September 30, 1997. (c) Exhibits. Exhibit Number Description -------------- ----------- 4.1 PURCHASE AND OPTION AGREEMENT by and between PERC Management Company Limited Partnership and The Prudential Insurance Company of America dated September 30, 1997. The exhibits to the PURCHASE AND OPTION AGREEMENT do not contain information which is material to an investment decision. 4.2 SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP OF PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP dated as of September 29, 1997. 4.3 ASSIGNMENT AND ASSUMPTION AGREEMENT between The Prudential Insurance Company of America and PERC Management Company Limited Partnership dated as of September 29, 1997 re Penobscot Energy Recovery Company, Limited Partnership. 4.4 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT DATED as of September 29, 1997 to the Reimbursement Agreement dated as of May 28, 1991 of Penobscot Energy Recovery Company, Limited Partnership in favor of Morgan Guaranty Trust Company of New York re Penobscot Energy Recovery Company, Limited Partnership. 4 4.5 ASSIGNMENT AND ASSUMPTION AGREEMENT between The Prudential Insurance Company of America and PERC Management Company Limited Partnership dated as of September 29, 1997 re Orrington Waste Ltd., Limited Partnership. 4.6 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT DATED as of September 29, 1997 to the Reimbursement Agreement dated as of May 28, 1991 of Penobscot Energy Recovery Company, Limited Partnership in favor of Morgan Guaranty Trust Company of New York re Orrington Waste Ltd., Limited Partnership. 4.7 News release dated October 1, 1997. 4.8 Letter of Kenneth A. Rubin dated September 22, 1997. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. KTI, Inc. (the Registrant) Dated: October 15, 1997 By: /s/ Martin J. Sergi ----------------------------- Name: Martin J. Sergi Title: President 6 EXHIBIT INDEX Exhibit Number Description -------------- ----------- 4.1 PURCHASE AND OPTION AGREEMENT by and between PERC Management Company Limited Partnership and The Prudential Insurance Company of America dated September 30, 1997. The exhibits to the PURCHASE AND OPTION AGREEMENT do not contain information which is material to an investment decision. 4.2 SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP OF PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP dated as of September 29, 1997. 4.3 ASSIGNMENT AND ASSUMPTION AGREEMENT between The Prudential Insurance Company of America and PERC Management Company Limited Partnership dated as of September 29, 1997 re Penobscot Energy Recovery Company, Limited Partnership. 4.4 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT DATED as of September 29, 1997 to the Reimbursement Agreement dated as of May 28, 1991 of Penobscot Energy Recovery Company, Limited Partnership in favor of Morgan Guaranty Trust Company of New York re Penobscot Energy Recovery Company, Limited Partnership. 7 4.5 ASSIGNMENT AND ASSUMPTION AGREEMENT between The Prudential Insurance Company of America and PERC Management Company Limited Partnership dated as of September 29, 1997 re Orrington Waste Ltd., Limited Partnership. 4.6 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT DATED as of September 29, 1997 to the Reimbursement Agreement dated as of May 28, 1991 of Penobscot Energy Recovery Company, Limited Partnership in favor of Morgan Guaranty Trust Company of New York re Orrington Waste Ltd., Limited Partnership. 4.7 News release dated October 1, 1997. 4.8 Letter of Kenneth A. Rubin dated September 22, 1997. EX-99.4.1 2 PURCHASE AND OPTION AGREEMENT 1 ============================================================================== PURCHASE AND OPTION AGREEMENT by and between PERC Management Company Limited Partnership and The Prudential Insurance Company of America September 1997 ============================================================================== 2 PURCHASE AND OPTION AGREEMENT This PURCHASE AND OPTION AGREEMENT (the "Agreement"), dated as of September __, 1997, is made and entered into by and between PERC Management Company Limited Partnership, a Maine limited partnership ("Buyer"), and The Prudential Insurance Company of America, a New Jersey mutual insurance company ("Seller"). WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, on the terms and subject to the conditions set forth in this Agreement, 77% of Seller's right, title and interest as a limited partner in and to Penobscot Energy Recovery Company, Limited Partnership, a Maine limited partnership (the "PERC Partnership") and of its right, title and interest in, to and under the Second Amended and Restated Agreement and Certificate of Limited Partnership, dated as of May 15, 1986, among Buyer, Energy National, Inc., a Utah corporation ("ENI"), and Seller, as amended by the First Amendment, dated as of June 14, 1991 (as so amended, the "PERC Partnership Agreement"), which 77% interest in the PERC Partnership and PERC Partnership Agreement is hereinafter referred to as the "PERC Assigned Interest." WHEREAS, Seller desires to grant to Buyer, and Buyer desires to purchase from Seller, on the terms set forth in this Agreement, an option to purchase the remaining 23% of the Seller's right, title and interest as a limited partner in and to the PERC Partnership and the PERC Partnership Agreement (including any distributions of, or resulting from, warrants currently held or that may be acquired by the PERC Partnership that entitle the holder to acquire securities of Bangor Hydro-electric Company, a Maine corporation, but excluding the next annual distribution of "Net Cash Flow" (as defined in the PERC Partnership Agreement) to be made in respect of such 23% limited partnership interest pursuant to Section 5 of the PERC Partnership Agreement (expected to be made in or about April 1998), any other distributions of Net Cash Flow made in respect of such 23% limited partnership interest for the period commencing on the Closing Date (as hereinafter defined) and ending on the Exercise Date (as hereinafter defined) and any distributions made as a result of a Refunding (defined below) (provided such Refunding occurs during the Option Term (defined below)), which 23% interest (after giving effect to the foregoing adjustments) in the PERC Partnership is hereafter referred to as the "Option Interest." WHEREAS, Seller desires to sell, and Buyer desires to purchase from Seller, on the terms and subject to the conditions set forth in this Agreement, all of Seller's right, title and interest as a limited partner (comprising an 83.333% limited partnership interest) in and to Orrington Waste, Ltd. Limited Partnership, an Oregon limited partnership (the "OWL Partnership"), and all of Seller's right, title and interest in, to and under the Agreement of Limited Partnership, dated January 8, 1993, between Pacific Orrington Energy, Inc., an Oregon corporation ("OEI"), and Seller (the "OWL Partnership Agreement"), which interest in and to the OWL Partnership and in, to and under the OWL Partnership Agreement is hereinafter referred to as the "OWL Assigned Interest." -2- 3 NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements and the conditions set forth in this Agreement, Buyer and Seller hereby agree as follows: ARTICLE I - TRANSFER OF INTERESTS AND PURCHASE PLAN 1.01 Transfer of PERC Assigned Interest and OWL Assigned Interest. On the terms and subject to all of the conditions set forth in this Agreement, at the Closing (as hereinafter defined), Seller shall sell, transfer and assign to Buyer, and Buyer shall purchase and acquire from Seller, all of Seller's right, title and interest, as of the date hereof, in and to the PERC Assigned Interest and all of Seller's right, title and interest in and to the OWL Assigned Interest. 1.02 Amount. The purchase price for the PERC Assigned Interest shall be Eleven Million Seven Hundred Thirty-Six Thousand Nine Hundred and Five Dollars ($11,736,905) (the "PERC Purchase Price") and the purchase price for the OWL Assigned Interest shall be Two Hundred Thousand Dollars ($200,000) (the "OWL Purchase Price"). 1.03 Manner of Payment. On the terms and subject to all of the conditions set forth in this Agreement, Buyer shall pay to Seller the PERC Purchase Price and the OWL Purchase Price by wire transfer of such amounts (in immediately available funds) on the Closing Date to Bank of New York, New York, New York, ABA No.021u000u018, Account No.89003-05290, PIC Misc. Pooled Asset Account, Penobscot LP, or to such other account as Seller may notify Buyer of in writing. ARTICLE II - OPTION AND OPTION PRICE 2.01 Grant of Option. On the terms and subject to all of the conditions set forth in this Agreement, Seller hereby grants to Buyer, effective as of the Closing Date, the option to purchase the Option Interest (the "Option"). 2.02 Option and Exercise Price. The purchase price of the Option shall be Three Hundred Thousand Dollars ($300,000) (the "Option Price"). The exercise price of the Option shall be Two Million One Hundred Thousand Dollars ($2,100,000) (the "Exercise Price"). If the Option is exercised, the Option Price shall not be applied to the Exercise Price. 2.03 Option Term. Buyer may exercise the Option at any time from the Closing Date until the later of (i) the thirteenth (13th) month following the Closing Date, and (ii) seven months following the closing date of the refunding of the Floating Rate Demand Resource Recovery Revenue Bonds (Penobscot Energy Recovery Company Project -- Series 1986 A and B (the "Refunding")), issued by the Town of Orrington, Maine, pursuant to that certain Trust Indenture, dated April 1, 1986 between the Town of Orrington and Mellon Bank, N.A., as trustee, as supplemented, but in no event shall the Option expire later than December 31, 1998 (the "Option Term"). -3- 4 2.04 Manner of Payment of Option Price. On the terms and subject to all of the conditions set forth in this Agreement, Buyer shall pay to Seller the Option Price by wire transfer of such amount (in immediately available funds) on the Closing Date to the account named in Section 1.03 or to such other account as Seller may notify Buyer of in writing. 2.05 Method of Exercise and Payment of Exercise Price. The Option may be exercised by delivery, within the Option Term, of written notice to the Seller at least 30 days prior to the intended date of exercise (the "Exercise Date") of the Option. On the Exercise Date, Buyer and Seller shall follow the same closing and payment procedures as are described in Articles III and VI of this Agreement. ARTICLE III - CLOSING 3.01 Closing. The closing of the transactions contemplated by Article I (the "Closing") and Article II of this Agreement shall take place at the offices of Buyer. The Closing shall take place on the date hereof or at such other location, time or date as may be agreed to in writing between Seller and Buyer (such date of the Closing being herein called the "Closing Date"). 3.02 General Procedure. At the Closing, each party shall deliver to the party entitled to receipt thereof the documents required to be delivered pursuant to Articles VI and VII hereof and such other documents, instruments and materials (or complete and accurate copies thereof, where appropriate) as may be reasonably required in order to effectuate the intent and provisions of this Agreement, and all such documents, instruments and materials shall be reasonably satisfactory in form and substance to counsel for the receiving party. The conveyance, transfer, assignment and delivery of the PERC Assigned Interest, the OWL Assigned Interest, or the Option Interest, as the case may be, shall be effected by Seller's execution and delivery to Buyer of an assignment substantially in the form attached hereto as Exhibit A (the "PERC Assignment"), Exhibit B hereto (the "OWL Assignment") or Exhibit C hereto (the "PERC Option Assignment"), respectively, and such other instruments of conveyance, transfer, assignment and delivery as Buyer shall reasonably request to cause Seller to transfer, convey, assign and deliver the PERC Assigned Interest, the OWL Assigned Interest or the Option Interest, as the case may be, to Buyer. ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants to Buyer that: 4.01 Execution, Delivery; Valid and Binding Agreement. The execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby have been duly and validly authorized by Seller and no other proceedings on its part are necessary to authorize the execution, delivery and performance of this Agreement. This Agreement has been duly executed and delivered by Seller and, assuming that this Agreement is the valid and binding agreement of Buyer, constitutes the valid and binding obligation of Seller, enforceable in accordance with its terms, except as such enforcement may be limited by applicable -4- 5 bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights or by general principles of equity. 4.02 No Breach. The execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby do not conflict with or result in any breach of any of the provisions of, or constitute a default under, result in a violation of, result in the creation of a right of termination or acceleration or any lien, security interest, charge or authorization, consent, approval, exemption or other action by or notice to any court or other governmental body, under the provisions of any indenture, mortgage, lease, loan agreement or other agreement or instrument by which Seller, the PERC Assigned Interest, the OWL Assigned Interest or the Option Interest are bound or affected or any law, statute, rule or regulation or order, judgment or decree to which Seller, the PERC Assigned Interest or the Option Interest are subject. 4.03 Good Title; No Liens. Seller owns good title to the PERC Assigned Interest, the Option Interest and the OWL Assigned Interest, free and clear of all liens and encumbrances. Seller has not previously sold, transferred or assigned any of its interest in the PERC Partnership (other than previous partial sales of such interest to Buyer, if any) or the OWL Partnership, nor has it acquired any of its interest in the PERC Partnership during the past twelve months. Seller agrees not to sell, assign, transfer or in any way encumber the Option Interest during the Option Term. ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Seller that: 5.01 Execution, Delivery; Valid and Binding Agreement. The execution, delivery and performance of this Agreement by Buyer and the consummation of the transactions contemplated hereby have been duly and validly authorized by Buyer, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming that this Agreement is the valid and binding agreement of Seller, constitutes the valid and binding obligation of Buyer, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights or by general principles of equity. 5.02 No Breach. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby do not conflict with or result in any breach of any of the provisions of, constitute a default under, result in a violation of, result in the creation of a right of termination or acceleration or any lien, security interest, charge or encumbrance upon any assets of Buyer, or require any authorization, consent, approval, exemption or other action by or notice to any bank, trustee or other person (however constituted) or any court or other governmental body, under the provisions of any indenture, mortgage, lease, loan agreement or other agreement or instrument by which Buyer is bound or affected (other than those obtained and in full force and effect as of the Closing Date or closing -5- 6 date for the exercise of the Option, as applicable), or any law, statute, rule or regulation or order, judgment or decree to which Buyer is subject. The execution of the Agreement and the Assignment Agreement is authorized by the PERC Partnership Agreement and no further consent or approval of the partners of the PERC Partnership, other than those expressly contemplated in Section VII hereof, is required. 5.03 Accredited Investor; Investment Purposes. Buyer is an "accredited investor" as defined under Regulation D promulgated under the Securities Act of 1933, as amended. Buyer is acquiring the PERC Assigned Interest, the OWL Assigned Interest, and the Option, and, upon exercise of the Option will acquire the Option Interest, for its own account for investment and not with a view to, or for sale or resale in connection with, any public distribution thereof or with any present intention of selling, distributing or otherwise disposing of the PERC Assigned Interest, the OWL Assigned Interest, the Option or the Option Interest, except such sales thereof as are made not in violation of the Securities Act of 1933, as amended, the applicable securities or "blue sky" laws of any State and any other applicable law. Buyer possesses sufficient knowledge and experience in financial and business matters so that it is capable of evaluating the merits and risks of purchasing the PERC Assigned Interest, the OWL Assigned Interest, the Option and the Option Interest, as the case may be. 5.04 Investigation. Buyer has performed such investigations and undertaken such due diligence in respect of the PERC Partnership, the OWL Partnership, the assets of each such partnership, the PERC Partnership Agreement, the OWL Partnership Agreement and the documents and agreements related thereto as it in the exercise of its independent judgment deemed necessary under the circumstances. Buyer is entering into this Agreement and the transactions contemplated hereby without reliance upon any representation or warranty from Seller other than such representations and warranties as are expressly set forth in this Agreement and the agreements, certificates and other documents executed and delivered by Seller as of the Closing Date. 5.05 Access to Information. Buyer has provided to Seller full access to all of the books and records of the PERC Partnership and has caused OEI to provide to Seller full access to all of the books and records of the OWL Partnership and has provided to Seller all agreements (including the most recent drafts of documents proposed to be entered into in connection with the Refunding) material to an appraisal by Seller of the value of the PERC Assigned Interest, the OWL Assigned Interest, the Option and the Option Interest. Buyer hereby represents that, other than the Refunding, the restructuring of the power purchase agreement with Bangor Hydro-electric Company and the related waste disposal agreements, there are no pending or proposed transactions, and neither the Buyer nor PERC Partnership are currently involved in any negotiations, that are or could be material to an appraisal by Seller of the value of the PERC Assigned Interest, the OWL Assigned Interest, the Option and the Option Interest. ARTICLE VI - THE CLOSING 6.01 Seller's Closing Obligations. On the Closing Date (or the closing date of the Option Interest, if the Option is exercised), Seller shall have (a)delivered to Buyer the PERC Assignment -6- 7 and the OWL Assignment (on the Closing Date) or the PERC Option Assignment (on the Exercise Date) and such other instruments of conveyance, transfer, assignment and delivery as Buyer shall have reasonably requested pursuant to Section 3.02 hereof; and (b)satisfied (or Buyer has waived in writing) each of the conditions to Buyer's obligations as set forth in Article VI. 6.02 Buyer's Closing Obligations. On the Closing Date (or the closing date of the Option Interest, if the Option is exercised), Buyer shall have (a)delivered to Seller a wire transfer in immediately available funds in the amount of $12,236,905 (or $2,100,000, upon exercise of the Option) and a duly executed counterpart of each of the PERC Assignment and the OWL Assignment; and (b)satisfied (or Seller has waived in writing) each of the conditions to Seller's obligations set forth in Article VII. ARTICLE VII - CONDITIONS TO CLOSING 7.01 Conditions to Seller's Obligations. The obligations of Seller hereunder are subject to the satisfaction, or waiver in writing by Buyer, as of the Closing Date, of the following conditions: (a) Amendment of PERC Partnership Agreement. The PERC Partnership Agreement shall have been amended as of the Closing Date, (i) to adjust the percentage interests of partners to reflect the sale of the PERC Assigned Interest, (ii) to relieve Seller of all obligations under the PERC Partnership Agreement to make capital contributions or other payments to the PERC Partnership, (iii) to provide for the transfer of the Option Interest upon exercise of the Option without further amendment of the PERC Partnership Agreement or consent of the other partners, (iv) to provide that the indemnity contained in Section 8.1(b) shall survive the transfer of the PERC Partnership Agreement and the Option Interest with respect to any claims Seller may have arising out of actions or events occurring prior to the transfer of the Option Interest, and (v) to make such other amendments thereof as are necessary to reflect the transactions contemplated hereby, all by a Second Amendment in substantially the form attached hereto as Exhibit D. (b) PERC Capital Contribution Agreement. Buyer shall have caused Seller to be released from all of its remaining obligations under that certain Capital Contribution Agreement, dated May 15, 1986, as amended, between Seller and the PERC Partnership, and shall have obtained the consent of Morgan Guaranty Trust Company ("Morgan") to such release, and shall have obtained the consents of the Required Banks (as defined in the Credit Agreement) to such release and the transfers which are the subject matter of this Agreement, such release and consents each to be in form and substance satisfactory to Seller. (c) OEI Consent. Buyer shall have obtained for the benefit of Seller the consent of OEI to the transfer of the OWL Partnership Interest. (d) OWL Capital Contribution Agreement. Buyer shall have caused Seller to be released from all of its remaining obligations under that certain Capital Contribution Agreement, dated January 15, 1993, between Seller and the OWL Partnership, and shall have -7- 8 obtained for the benefit of Seller the consent of Morgan to such release, such release and consent each to be in form and substance satisfactory to Seller. (e) Opinions; Certificates. Buyer shall have delivered to Seller an opinion of counsel in form and substance satisfactory to Seller. ARTICLE VIII - MISCELLANEOUS 8.01 Expenses. Except as otherwise expressly provided for herein, Seller and Buyer will pay all of their own expenses in connection with the negotiation of this Agreement, the performance of their respective obligations hereunder and the consummation of the transactions contemplated by this Agreement (whether consummated or not); provided that Buyer shall pay, when invoiced, Seller's attorney's fees incurred in connection with the transactions contemplated by the Agreement. 8.02 Amendment and Waiver. This Agreement may not be amended or waived except in a writing executed by the party against which such amendment or waiver is sought to be enforced. No course of dealing between any persons having any interest in this Agreement will be deemed effective to modify or amend any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement. 8.03 Complete Agreement. This Agreement contains the complete agreement between the parties and supersedes any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the transfer of the PERC Assigned Interest, the Option , the Option Interest or the OWL Assigned Interest. 8.04 Counterparts. This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. 8.05 Governing Law. The internal law, without regard to conflicts of laws principles, of the State of New York will govern all questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement. 8.06 Survival. The covenants, representations and warranties contained in this Agreement shall survive the Closing. -8- 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. PERC MANAGEMENT COMPANY LIMITED PARTNERSHIP BY: PERC, INC., General Partner By /s/ Martin J. Sergi ---------------------------------- Its: President THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By /s/ John Wand ---------------------------------- Its: Vice President -9- 10 EXHIBIT A - ASSIGNMENT OF PERC PARTNERSHIP INTEREST THIS AGREEMENT, made and entered into as of the ____ day of ________, 199__, by and between PERC Management Company Limited Partnership ("Buyer") and The Prudential Insurance Company of America (the "Seller"). WITNESSETH: WHEREAS, Seller owns a limited partnership interest in Penobscot Energy Recovery Company, Limited Partnership (the "Partnership"); and WHEREAS, Seller desires to sell to Buyer 77% of Seller's right, title and interest in and to such partnership interest (the "PERC Assigned Interest"); and WHEREAS, the Buyer desires to purchase the PERC Assigned Interest in consideration of the cash payment to Seller of Eleven Million Seven Hundred Thirty-Six Thousand Nine Hundred Five Dollars ($11,736,905). NOW THEREFORE, Seller hereby transfers to Buyer all of Seller's right, title and interest in and to the PERC Assigned Interest from and after the date hereof. 1. Buyer hereby, and by these presents, accepts the Sellers tender of the PERC Assigned Interest and assumes Seller's obligations in respect thereof. 2. Seller and Buyer each warrants and represents that it is not in default under any provision of the PERC Partnership Agreement. 3. This Agreement shall bind the parties hereto, their heirs, successors, legal representatives and assigns. IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first above written. BUYER: SELLER: PERC MANAGEMENT COMPANY THE PRUDENTIAL INSURANCE LIMITED PARTNERSHIP COMPANY OF AMERICA BY: PERC, INC., General Partner By___________________________ By_______________________________ Its__________________________ Its______________________________ A-10 11 EXHIBIT B - ASSIGNMENT OF OWL PARTNERSHIP INTEREST THIS AGREEMENT, made and entered into as of the ____ day of ___________, 199__, by and between PERC Management Company Limited Partnership ("Buyer") and The Prudential Insurance Company of America (the "Seller"). WITNESSETH: WHEREAS, Seller owns a limited partnership interest in Orrington Waste, Ltd. Limited Partnership, an Oregon limited partnership (the "Partnership"); and WHEREAS, Seller desires to sell to Buyer all of Seller's right, title and interest in and to such partnership interest (the "Assigned Interest"); and WHEREAS, the Buyer desires to purchase the Assigned Interest in consideration of the cash payment to Seller of Two Hundred Thousand Dollars ($200,000). NOW THEREFORE, Seller hereby transfers to Buyer all of Seller's right, title and interest in and to the Assigned Interest from and after the date hereof. 1. Buyer hereby, and by these presents, accepts the Seller's tender of the Assigned Interest and assumes Seller's obligations in respect thereof. 2. Seller and Buyer each warrants and represents that it is not in default under any provision of the Agreement of Limited Partnership, dated January 8, 1993, as amended. 3. This Agreement shall bind the parties hereto, their heirs, successors, legal representatives and assigns. IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first above written. BUYER: SELLER: PERC MANAGEMENT COMPANY THE PRUDENTIAL INSURANCE LIMITED PARTNERSHIP COMPANY OF AMERICA By: PERC, INC., General Partner By___________________________ By_______________________________ Its__________________________ Its______________________________ B-11 12 EXHIBIT C - ASSIGNMENT OF REMAINING PERC PARTNERSHIP INTEREST THIS AGREEMENT, made and entered into as of the ____ day of ___________, 199__, by and between PERC Management Company Limited Partnership ("Buyer") and The Prudential Insurance Company of America (the "Seller"). WITNESSETH: WHEREAS, Seller originally owned a limited partnership interest in Penobscot Energy Recovery Company, Limited Partnership (the "Partnership"); and WHEREAS, on _________, 1997, Buyer purchased from Seller 77% of Seller's right, title and interest in and to such partnership interest (the "Initial Assignment"); and WHEREAS, in conjunction with the Initial Assignment, Seller granted to Buyer an option (the "Option") to purchase all of Seller's remaining right, title and interest in and to the Partnership that was not transferred at the time of the Initial Assignment (the "Option Interest"); and WHEREAS, the Buyer desires to exercise the Option in consideration of the cash payment to Seller of Two Million One Hundred Thousand Dollars ($2,100,000). NOW THEREFORE, Seller hereby transfers to Buyer all of Seller's right, title and interest in and to the Option Interest from and after the date hereof. 1. Buyer hereby, and by these presents, accepts the Seller's tender of the Option Interest and assumes Seller's obligations in respect thereof. 2. Seller and Buyer each warrants and represents that it is not in default under any provision of the PERC Partnership Agreement. 3. This Agreement shall bind the parties hereto, their heirs, successors, legal representatives and assigns. IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first above written. BUYER: SELLER: PERC MANAGEMENT COMPANY THE PRUDENTIAL INSURANCE LIMITED PARTNERSHIP COMPANY OF AMERICA BY: PERC, INC., General Partner By___________________________ By_______________________________ Its__________________________ Its______________________________ C-12 EX-99.4.2 3 SECOND AMENDMENT TO AMENDED LIMITED PARTNERSHIP 1 SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP OF PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP This Second Amendment dated as of September 29, 1997 amends the Second Amended and Restated Agreement and Certificate of Limited Partnership of Penobscot Energy Recovery Company, Limited Partnership originally entered into as of May 15, 1986 and amended by First Amendment dated June 14, 1991 (the "Partnership Agreement"). The purpose of this Second Amendment is to provide for the partial transfer of the limited partnership interest held by The Prudential Insurance Company of America ("PRU") to PERC Management Company Limited Partnership ("PERC") pursuant to a Purchase and Option Agreement between PRU and PERC dated September, 1997 (the "Purchase Agreement") and to make certain conforming changes to the Partnership Agreement. The Partners hereby agree as follows: 1. The Partners confirm that effective May 18, 1994 the Partnership name was changed to Penobscot Energy Recovery Company, Limited Partnership. 2. The Partners consent to the transfer by PRU to PERC of a Seventy-Seven Percent (77%) interest in PRU's right, title and interest as a Limited Partner in the Partnership and under the Partnership Agreement, which constitutes a 49.50002% interest in the entire Partnership in accordance with the Purchase Agreement and in granting such consent the Partners hereby (a) waive the provisions of subsections 10.2 (a) (ii), (a) (iv) and (b) (i) to the extent such provisions may still be applicable to, or binding upon, PRU and (b) consent to the admission of PERC as a new Limited Partner under Section 10.4. PERC represents that the transfer of all of PRU's interests to PERC shall not prevent the Project from being owned and operated as a Qualifying Facility. 3. Section 1.56 of the Partnership Agreement is hereby amended and restated to read in its entirety as follows: 1.56. LP Sharing Ratios. "LP Sharing Ratios" shall mean, with respect to each Limited Partner, the following percentages: ENI 28.5714% PRU 16.4286% PERC 55.0000% 4. Section 2.1 of the Partnership Agreement is amended by adding thereto the following sentence: -1- 2 In furtherance of the foregoing, the General Partners are authorized and directed to execute and deliver a Restated Certificate of Limited Partnership for the Partnership in the form attached at Exhibit A and to file the Restated Certificate with the Maine Secretary of State. 5. Section 2.3 of the Partnership Agreement is amended by changing the Partnerships address to PERC Management Company Limited Partnership, 110 Main Street, Suite 1308, Saco, Maine 04072. 6. Section 2.8 of the Partnership Agreement is amended by adding the following name and address of a Limited Partner: PERC Management Company Limited Partnership 110 Main Street, Suite 1308 Saco, Maine 04072 7. Article 3 of the Partnership Agreement is amended by adding thereto new Sections 3.16 and 3.17: 3.16 No Capital Contributions Due from PRU. The Partners, jointly and severally, acknowledge that upon the effective date of this Second Amendment, PRU shall have no further obligation to make Capital Contributions, Subordinated Loans or other advances to the Partnership and shall be, and hereby is, released of any and all obligations to the Partnership under Sections 3.1, 3.2, 3.3 and 3.4 of the Partnership Agreement. PRU and PERC have each entered into a separate Assignment and Assumption Agreement (the "Assumption Agreement") whereby PERC has assumed all of PRU's obligations under the separate PRU Capital Contribution Agreement as defined in Section 1.74 of the Partnership Agreement and PRU has been released from those obligations. 3.17 Assumption of Obligations of PRU. From and after the effective date of the Assumption Agreement, PERC shall assume and be responsible for any and all obligations to the Partnership of PRU under Sections 3.2 and 3.4 of the Partnership Agreement. 8. Article 8 of the Partnership Agreement is amended by adding thereto the following new Section 8.3: 8.3 Preservation of Indemnification. The rights of PRU to indemnification under Article 8 are vested and shall survive and remain binding on the Partnership notwithstanding consummation of the transfer affected pursuant to this Second Amendment and notwithstanding consummation of the anticipated complete withdrawal of PRU as a Limited Partner pursuant the exercise by PERC of the Option granted to PERC under the Purchase Agreement. -2- 3 9. The Partners hereby consent to the further transfer by PRU of up to all of its remaining limited partnership interest to PERC pursuant to the Option granted in the Purchase Agreement, and in connection therewith, hereby consent to the complete withdrawal of PRU as a limited partner and authorize and direct the General Partners to execute and deliver any and all documents reasonably deemed necessary or appropriate to give effect to such withdrawal, including such amendments as are necessary to reflect accurately the LP Sharing Ratios applicable from and after such withdrawal. 10. PERC, in its capacity a new Limited Partner, agrees to be bound by all of the terms, provisions and conditions of the Partnership Agreement, as amended hereby. 11. The terms used herein, unless otherwise specifically defined, shall have the meanings provided in the Partnership Agreement. Except as amended hereby, the Partnership Agreement remains in full force and effect. Dated: , 1997 THE GENERAL PARTNERS: PERC MANAGEMENT COMPANY LIMITED PARTNERSHIP BY: PERC, INC. General Partner /s/ Martin J. Sergi ------------------------------ Its: President ENERGY NATIONAL, INC. /s/ Franklin D. Wareham ------------------------------ Its: Vice President THE LIMITED PARTNERS: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA /s/ John Wand ------------------------------ Its: Vice President -3- 4 ENERGY NATIONAL, INC. /s/ Franklin D. Wareham ------------------------------ Its: Vice President PERC MANAGEMENT COMPANY LIMITED PARTNERSHIP BY: PERC, INC. General Partner /s/ Martin J. Sergi ------------------------------ Its: Vice President -4- EX-99.4.3 4 ASSIGNMENT AND ASSUMPTION AGREEMENT 1 ASSIGNMENT AND ASSUMPTION AGREEMENT The Prudential Insurance Company of America ("Prudential") and PERC Management Company Limited Partnership, a Maine limited partnership ("PERC Management") are entering into this Assignment and Assumption Agreement (this "Agreement"), as of this 29th day of September, 1997. Section 1. Recitals. 1.1 Prudential and Penobscot Energy Recovery Company, Limited Partnership, a Maine limited partnership (the "Partnership") have entered into that certain Capital Contribution Agreement dated as of May 16, 1986, as amended by Consent Agreement and Amendment No. 1 to Capital Contribution Agreement dated as of June 30, 1989, Amendment No. 2 to Capital Contribution Agreement dated as of May 28, 1991, and Consent Agreement and Amendment No. 3 to Capital Contribution Agreement dated as of June 14, 1991 (collectively, the "Equity Capital Contribution Agreement"). 1.2 Morgan Guaranty Trust Company of New York (the "Equity Bank") has issued Irrevocable Letter of Credit No. S-864556 (the "Equity Letter of Credit") dated May 30, 1991, in the original stated amount of $6,071,430 (of which $3,571,430 is available as of the date hereof) for the account of the Partnership in favor of the Agent and Mellon Bank, N.A., as Trustee (the "Trustee") under the Trust Indenture of dated as of April 1, 1986, as amended and supplemented (the "Indenture") between the Town of Orrington, Maine and the Trustee. 1.3 The Partnership has assigned and granted a security interest in its interests in the Equity Capital Contribution Agreement to the Equity Bank pursuant to an Assignment of Capital Contribution Agreement dated as of May 28, 1991 (the "Equity Assignment"), in order to secure its obligations under the Reimbursement Agreement dated as of May 28, 1991 (the "Equity Credit Agreement"). 1.4 Key Bank of New York ("Key Bank") has issued to the Equity Bank a letter of credit in the stated amount of $3,571,430 (the "Key Bank LOC") and, in consideration of its receipt thereof, the Equity Bank has entered into a First Amendment of Reimbursement Agreement dated the date hereof, pursuant to which the Equity Bank has consented to this Agreement and released Prudential from its obligations under the Equity Capital Contribution Agreement upon the assumption thereof by PERC Management pursuant to this Agreement. 1.5 The Partnership, PERC Management, Energy National, Inc. ("ENI"), Bankers Trust Company, as Agent (the "Agent") and each of the financial institutions parties thereto (the "Banks") have entered into a Credit Agreement dated as of May 15, 1986, as amended (the "Credit Agreement"). 1.6 PERC Management and Prudential have entered into that certain Purchase and Option Agreement dated as of the date hereof (the "LP Purchase Agreement"), pursuant -1- 2 to which PERC Management has purchased a portion of Prudential's limited partnership interests in the Partnership (the "LP Purchase") and has purchased an option to purchase the remainder of Prudential's limited partnership interests in the Partnership (the "Option") and, in connection therewith, Prudential agreed to assign to PERC Management, and PERC Management agreed to assume, the rights and obligations of Prudential under the Equity Capital Contribution Agreement. 1.7 In connection with the LP Purchase Agreement, the partnership agreement of the Partnership has been further amended by a Second Amendment to Second Amended and Restated Partnership Agreement of Penobscot Energy Recovery Company dated as of the date hereof (the "Partnership Agreement Amendment"). 1.8 Under Sections 6.2(k) and 6.2(n) of the Credit Agreement, the Partnership has agreed not to change its equity structure or permit the transfer of a limited partnership interest in the Partnership except as contemplated by Sections 10.2 or 10.5 of the partnership agreement of the Partnership, or to amend, modify or assign the partnership agreement of the Partnership or the Equity Capital Contribution Agreement, unless it obtains the consent thereto of the Required Banks (as defined in the Credit Agreement). The Partnership, PERC Management and Prudential have requested that the Agent and the Banks consent to this Agreement, the Partnership Agreement Amendment and the transfer of Prudential's limited partnership interests in the Partnership in accordance with the LP Purchase Agreement. 1.9 Capitalized terms used herein and not otherwise defined have the meanings given them in the Credit Agreement. Section 2. Assignment, Assumption and Release. Prudential hereby assigns to PERC Management, and PERC Management hereby assumes, each of the rights and obligations of Prudential in, under and to the Equity Capital Contribution Agreement, and the Partnership hereby releases Prudential from any and all obligations under the Equity Capital Contribution Agreement. Section 3. No Termination of Partnership. PERC Management hereby represents and warrants to Prudential, the Agent and each of the Banks that the transaction contemplated or effected by the LP Purchase Agreement and this Agreement with respect to the LP Purchase will not cause a termination of the Partnership under Section 708(b) of the Internal Revenue Code of 1986, as amended. Section 4. Ratification of Equity Capital Contribution Agreement and Acknowledgment of Equity Letter of Credit. In all other respects the Equity Capital Contribution Agreement is hereby ratified and confirmed, and all references in the Credit Agreement or the Indenture to the Equity Capital Contribution Agreement shall mean the Equity Capital Contribution Agreement as assigned and assumed pursuant to this Agreement and the LP Purchase Agreement, and all references to Prudential with respect thereto contained therein shall hereafter be to PERC Management, as assignee of Prudential under this Agreement. The Equity Letter of Credit remains outstanding and unaffected hereby and the parties hereto acknowledge -2- 3 that nothing in this Agreement is intended to or shall be interpreted as modifying or amending the Equity Letter of Credit. Section 5. Amendment of LP Purchase Agreement. PERC Management and Prudential agree that they will not amend, supplement or otherwise modify the LP Purchase Agreement without the consent of the Required Banks. Section 6. Additional Representations and Agreements of PERC Management. PERC Management hereby represents and warrants to the Agent and each of the Banks that the Agent and the Trustee have been provided true and correct copies of each of the agreements relating to the subject matter hereof, in the forms of such agreements as executed and delivered, and that such agreements constitute the entire understanding and agreement relating to the subject matter hereof and of the LP Purchase Agreement, other than certain agreements relating to the purchase by PERC Management of Prudential's limited partnership interests in Orrington Waste Ltd., Limited Partnership. PERC Management hereby agrees that it will pay the costs and expenses, including attorney's fees, of the Agent and the Banks in connection with the preparation, review, consent and enforcement of this Agreement; provided, however, that nothing herein shall otherwise affect or cause to be waived the Agent's or Banks' rights, or the Partnership's obligations under the Credit Agreement. Section 7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. Section 8. Governing Law. This Agreement shall be governed by the laws of the State of New York without regard to principles of conflicts of law. -3- 4 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above. PERC MANAGEMENT COMPANY LIMITED PARTNERSHIP By PERC, Inc., Its General Partner By_______________________________ Its______________________________ THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By_______________________________ Its______________________________ -4- 5 Accepted and agreed to as of the date first set forth above. PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP By PERC Management Company Limited Partnership, A General Partner By PERC, Inc., Its General Partner By /s/ Martin J. Sergi ------------------------------ Its: President By Energy National, Inc., A General Partner By /s/ Franklin D. Wareham ------------------------------ Its: Vice President -5- 6 Acknowledged as of the date first set forth above. MELLON BANK, N.A., as Trustee By /s/ B. W. Schenler ------------------------------ Title Vice President ------------------------------ Accepted and agreed to as of the date first set forth above. BANKERS TRUST COMPANY, Individually and as Agent By /s/ Allan M. Stewart ------------------------------ Title Managing Director ------------------------------ THE TORONTO-DOMINION BANK By /s/ Eileen M. Spengler ------------------------------ Title Vice President and Director ------------------------------ CANADIAN IMPERIAL BANK OF COMMERCE (NEW YORK) By /s/ Christine M. Galler ------------------------------ Title Vice President and Director ------------------------------ FLEET BANK OF MAINE By ------------------------------ Title Authorized Signatory ------------------------------ KEYBANK NATIONAL ASSOCIATION By /s/ Richard A. McNaughton ------------------------------ Title Vice President ------------------------------ THE BANK OF NOVA SCOTIA By /s/ Stephen Foley ------------------------------ Title Authorized Signatory ------------------------------ -6- EX-99.4.4 5 AM #1 TO REIMBURSEMENT AGREEMENT 1 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT THIS AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT (this "Amendment"), dated as of the __ day of September, 1997, relates to that certain Reimbursement Agreement dated as of May 28, 1991 (the "Agreement"), by Penobscot Energy Recovery Company, Limited Partnership, a Maine limited partnership (the "Company"), in favor of Morgan Guaranty Trust Company of New York (the "Bank"). WHEREAS, the Bank has issued the Letter of Credit in the original stated amount of $6,071,430, which amount has been reduced to the current amount of $3,571,430; and WHEREAS, The Prudential Insurance Company of America (the "Limited Partner") has heretofore entered into the Contribution Agreement, which the Company has assigned to the Bank to secure repayment of amounts due the Bank under the Agreement pursuant to the Assignment; and WHEREAS, the Company has asked the Bank to reassign the Contribution Agreement to the Company and to accept in substitution therefor a letter of credit to be issued by Key Bank of New York for the account of KTI, Inc. ("KTI") in the stated amount of $3,571,430, in favor of the Bank, and to amend the Agreement to so provide, and the Bank has agreed to do so, as set forth herein. Terms used herein and defined in the Agreement are used herein as therein defined. NOW, THEREFORE, the parties hereto agree as follows: Section 1. Amendments. The Agreement is amended as follows: 1.1 Section 1(a)(i) is amended by adding at the end thereof, the following clause; provided that, the Company's repayment obligation set forth in this Section 1(a) shall be satisfied upon the drawing by the Bank of a like amount under an irrevocable letter of credit issued by Key Bank of New York in the original stated amount of $3,571,430, for the account of KTI, Inc., in the form of Exhibit C (the "Key Bank Letter of Credit"). 1.2 A new Exhibit C (the form of Key Bank Letter of Credit) is added to the Agreement in the form attached hereto as Exhibit C. Section 2. Release, Termination and Reassignment. The Bank hereby releases and terminates the Assignment and reassigns the Contribution Agreement to the Company. Section 3. Deadline Drawing. If a Deadline Drawing has been made, the Bank shall hold the proceeds of such Deadline Drawing as collateral for any drawings made on the Letter of Credit from December 1, 1997 until December 31, 1997. The Bank will deposit such proceeds in an interest-bearing money market savings account (the "Pledged Account") established with the -1- 2 Bank (or its designated affiliate) in the name of KTI which account is hereby pledged and a security interest granted to the Bank. To the extent a drawing occurs under the Letter of Credit after December 1, 1997, the Bank shall apply funds from the proceeds of the Deadline Drawing as reimbursement for such drawing and all other amounts payable to the Bank under the Reimbursement Agreement. At such time as the Letter of Credit is returned to the Bank for cancellation and all Obligations under the Agreement have been paid or provided for, the Bank shall pay over to KTI all funds and amounts then remaining in the Pledged Account. Section 4. Further Assurances. The Bank agrees to execute such releases, terminations, reassignments, financing statement terminations or amendments or such other like documents to effect such release, termination and reassignment as the Company or the Limited Partner may reasonably request. Section 5. No Consent or Waiver. Except as expressly provided for herein, this Amendment shall not constitute a consent to any action or transaction or a waiver or modification of any provision, term or condition of any of the Agreement. Section 6. Agreement Continues in Effect. All terms, provisions, covenants, representations, warranties, agreements and conditions contained in the Agreement shall remain in full force and effect except as expressly provided for herein. Section 7. Counterparts. This Amendment may be executed in any number of counterparts, each of which counterpart when executed and delivered shall be deemed an original and all of which counterparts, when taken together, shall constitute one and the same Amendment. Section 8. Governing Law. This Amendment shall be construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws. Section 9. References to Agreement. From and after the effectiveness of this Amendment any reference to the Agreement shall be deemed to be a reference to the Agreement as amended by this Amendment. -2- 3 IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date first written above. PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP By: PERC Management Company Limited Partnership, A General Partner thereof By: PERC, Inc., the General Partner thereof By /s/ Martin J. Sergi -------------------------------- Its: President By: ENERGY NATIONAL, INC. A General Partner thereof By: /s/ Franklin D. Wareham -------------------------------- Its: Vice President PERC MANAGEMENT COMPANY LIMITED PARTNERSHIP By: PERC, Inc., the General Partner thereof By /s/ Martin J. Sergi -------------------------------- Its: President -3- 4 ENERGY NATIONAL, INC. By /s/ Franklin D. Wareham ------------------------------- Its: Vice President -4- 5 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Maria H. Dell'Aquila --------------------------------- Title Vice President -5- 6 KTI, INC. is entering into this Amendment for purposes of granting the security interest in the Pledged Account under Section 3 of this Amendment. Dated: September _________, 1997 KTI, INC. By /s/ Martin J. Sergi ------------------------------ Its: President Accepted and acknowledged as of this ____ day of September, 1997. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By /s/ John Wand ------------------------------ Its: Vice President -6- EX-99.4.5 6 ASSIGNMENT AND ASSUMPTION AGREEMENT 1 ASSIGNMENT AND ASSUMPTION AGREEMENT The Prudential Insurance Company of America ("Prudential") and PERC Management Company Limited Partnership, a Maine limited partnership ("PERC Management") are entering into this Assignment and Assumption Agreement (this "Agreement"), as of this ____ day of September, 1997. Section 1. Recitals. 1.1 Prudential and Orrington Waste Ltd., Limited Partnership, an Oregon limited partnership (the "Partnership") have entered into that certain Capital Contribution Agreement dated as of January 15, 1993, as amended (the "OWL Capital Contribution Agreement"). 1.2 Morgan Guaranty Trust Company of New York (the "Bank") has issued Irrevocable Letter of Credit No. S-866156 (the "Morgan Letter of Credit") dated January 22, 1993, in the original stated amount of $1,000,000 (of which $200,000 is available as of the date hereof) for the account of the Partnership in favor of Jensen, Baird, Gardner & Henry, as trustee (the "Trustee") under a Trust Agreement dated as of January 15, 1993, between the Trustee and the City of Ellsworth, and the Towns of Pittsfield, Newport, Detroit, Winterport, Frankfort, Prospect and Monroe. 1.3 The Partnership has assigned and granted a security interest in its interests in the OWL Capital Contribution Agreement to the Bank pursuant to an Assignment of Capital Contribution Agreement dated as of January 15, 1993 (the "Assignment"), in order to secure its obligations under the Reimbursement Agreement dated as of January 15, 1993 (the "Reimbursement Agreement"). 1.4 Key Bank of New York ("Key Bank") has issued to the Bank a letter of credit in the stated amount of $200,000 (the "Key Bank LOC") and, in consideration of its receipt thereof, the Bank has entered into a First Amendment of Reimbursement Agreement dated the date hereof, pursuant to which the Bank has consented to this Agreement and released Prudential from its obligations under the OWL Capital Contribution Agreement upon the assumption thereof by PERC Management pursuant to this Agreement. 1.5 PERC Management and Prudential have entered into that certain Purchase and Option Agreement dated as of the date hereof (the "LP Purchase Agreement"), pursuant to which PERC Management has purchased Prudential's limited partnership interests in the Partnership and, in connection therewith, Prudential agreed to assign to PERC Management, and PERC Management agreed to assume, the rights and obligations of Prudential under the OWL Capital Contribution Agreement. 1.6 Capitalized terms used herein and not otherwise defined have the meanings given them in the Reimbursement Agreement. -1- 2 Section 2. Assignment, Assumption and Release. Prudential hereby assigns to PERC Management, and PERC Management hereby assumes, each of the rights and obligations of Prudential in, under and to the OWL Capital Contribution Agreement, and the Partnership hereby releases Prudential from any and all obligations under the OWL Capital Contribution Agreement and acknowledges that the obligations of PERC Management under the OWL Capital Contribution Agreement shall be satisfied (to the extent received by the Bank) by the payment of a drawing or drawings under the Key Bank LOC. Section 3. Ratification of OWL Capital Contribution Agreement. In all other respects the OWL Capital Contribution Agreement is hereby ratified and confirmed, and all references to Prudential with respect thereto contained therein shall hereafter be to PERC Management, as assignee of Prudential under this Agreement. Section 4. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. Section 5. Governing Law. This Agreement shall be governed by the laws of the State of New York without regard to principles of conflicts of law. [Remainder of this page left blank intentionally] -2- 3 IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date first written above. PERC MANAGEMENT COMPANY LIMITED PARTNERSHIP By PERC, Inc., Its General Partner By /s/ Martin J. Sergi ------------------------------ Its: President THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By /s/ John Wand ------------------------------ Its: Vice President -3- 4 Accepted and agreed to as of the date first set forth above. ORRINGTON WASTE LTD., LIMITED PARTNERSHIP By Pacific Orrington Energy, Inc., General Partner By: /s/ Franklin D. Wareham -------------------------------- Its: Vice Presdident -4- EX-99.4.6 7 AM #1 TO REIMBURSEMENT AGREEMENT 1 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE OF ASSIGNMENT (OWL) THIS AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT (this "Amendment"), dated as of the __ day of September, 1997, relates to that certain Reimbursement Agreement dated as of January 15, 1993 (the "Agreement"), by Orrington Waste, Ltd. Limited Partnership, an Oregon limited partnership (the "Company"), in favor of Morgan Guaranty Trust Company of New York (the "Bank"). WHEREAS, the Bank has issued the Letter of Credit in the original stated amount of $1,000,000, which amount has been reduced to the current amount of $200,000; and WHEREAS, The Prudential Insurance Company of America (the "Limited Partner") has heretofore entered into the Contribution Agreement, which the Company has assigned to the Bank to secure repayment of amounts due the Bank under the Agreement pursuant to the Assignment; and WHEREAS, pursuant to a Purchase and Option Agreement dated as of the date hereof (the "LP Purchase Agreement") between the Limited Partner and PERC Management Company Limited Partnership, a Maine limited partnership ("PMC"), the Limited Partner has sold to PMC all of its rights and interests in and to its limited partnership interest in the Company; and WHEREAS, the Limited Partner, PMC and the Company have asked the Bank to reassign the Contribution Agreement to the Company and to accept in substitution therefor a letter of credit to be issued by Key Bank of New York for the account of PMC's affiliate, KTI, Inc., a New Jersey corporation ("KTI"), in the stated amount of $200,000, in favor of the Bank, and to amend the Agreement to so provide, and the Bank has agreed to do so, as set forth herein. Terms used herein and defined in the Agreement are used herein as therein defined. NOW, THEREFORE, the parties hereto agree as follows: Section 1. Amendments. The Agreement is amended as follows: 1.1 Section 1(a)(i) is amended by adding at the end thereof, the following clause: provided that, the Company's repayment obligation set forth in this Section 1(a) shall be satisfied upon the drawing by the Bank of a like amount under an irrevocable letter of credit issued by Key Bank of New York in the original stated amount of $200,000, for the account of KTI, Inc., in the form of Exhibit C (the "Key Bank Letter of Credit"). 1.2 A new Exhibit C (the form of Key Bank Letter of Credit) is added to the Agreement in the form attached hereto as Exhibit C. -1- 2 Section 2. Release, Termination and Reassignment. The Bank hereby releases and terminates the Assignment and reassigns the Contribution Agreement to the Company. Section 3. Deadline Drawing. If a Deadline Drawing has been made, the Bank shall hold the proceeds of such Deadline Drawing as collateral for any drawings made on the Letter of Credit from December 1, 1997 until December 31, 1997. The Bank will deposit such proceeds in an interest-bearing money market savings account (the "Pledged Account") established with the Bank (or its designated affiliate) in the name of KTI, which account is hereby pledged and a security interest granted to the Bank. To the extent a drawing occurs under the Letter of Credit after December 1, 1997, the Bank shall apply funds from the proceeds of the Deadline Drawing as reimbursement for such drawing and all other amounts payable to the Bank under the Reimbursement Agreement. At such time as the Letter of Credit is returned to the Bank for cancellation and all Obligations under the Agreement have been paid or provided for, the Bank shall pay over to KTI all funds and amounts then remaining in the Pledged Account. Section 4. Further Assurances. The Bank agrees to execute such releases, terminations, reassignments, financing statement terminations or amendments or such other like documents to effect such release, termination and reassignment as the Company or the Limited Partner may reasonably request. Section 5. No Consent or Waiver. Except as expressly provided for herein, this Amendment shall not constitute a consent to any action or transaction or a waiver or modification of any provision, term or condition of any of the Agreement. Section 6. Agreement Continues in Effect. All terms, provisions, covenants, representations, warranties, agreements and conditions contained in the Agreement shall remain in full force and effect except as expressly provided for herein. Section 7. Counterparts. This Amendment may be executed in any number of counterparts, each of which counterpart when executed and delivered shall be deemed an original and all of which counterparts, when taken together, shall constitute one and the same Amendment. Section 8. Governing Law. This Amendment shall be construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws. Section 9. References to Agreement. From and after the effectiveness of this Amendment any reference to the Agreement shall be deemed to be a reference to the Agreement as amended by this Amendment. [Remainder of this page left blank intentionally] -2- 3 IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date first written above. ORRINGTON WASTE, LTD. LIMITED PARTNERSHIP By: Pacific Orrington Energy, Inc. The General Partner thereof By: /s/ Franklin D. Wareham -------------------------------- Its: Vice Presdident MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Maria Dell'Acquila -------------------------------- Title: Vice President -3- 4 KTI, INC. is entering into this Amendment for purposes of granting the security interest in the Pledged Account under Section 3 of this Amendment. Dated: September __________, 1997 KTI, INC. By /s/ Martin J. Sergi ------------------------------ Its: President -4- 5 Accepted and acknowledged as of this ___ day of September, 1997. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: /s/ John Wand ----------------------------- Its: Vice President -5- 6 Accepted and acknowledged as of this ___ day of September, 1997. PERC MANAGEMENT COMPANY LIMITED PARTNERSHIP By: PERC, Inc., the General Partner thereof By /s/ Martin J. Sergi -------------------------- Its: President -6- EX-99.4.7 8 NEWS RELEASE DATED 10/01/1997 1 Exhibit 4.7 [KTI, INC. LETTERHEAD] NEWS RELEASE FOR IMMEDIATE RELEASE KTI ACQUIRES MAJORITY INTEREST IN PENOBSCOT ENERGY RECOVERY COMPANY Guttenberg, N. J. (Oct. 1, 1997) -- KTI, Inc. (Nasdaq: KTIE) announced today that it has increased its ownership in the Penobscot Energy Recovery Company (PERC) to 56.5% by purchasing a 49.5% limited partner interest from Prudential Insurance Company of America for $11.7 million. KTI previously owned a 7% general partnership interest in PERC. Prudential continues to own 15% of PERC. KTI has an option to purchase this remaining interest within the next 12 months. The remaining 28.3% of PERC is owned by Energy National, Inc. (ENT), a subsidiary of PacificCorp., which is also a general partner of PERC. Located in Orrington, Maine, PERC processes approximately 250,000 tons of municipal solid waste a year from 230 Maine communities and generates 25 megawatts of electricity which is sold to Bangor Hydro Electric Company. PERC generated $30.3 million in revenue and net income of $6.1 million in 1996. For the six months ended June 30, 1997, PERC had revenues of $15.1 million and $3.4 million of net income. Martin J. Sergi, president of KTI, said, "The completion of this transaction is part of our ongoing strategy to maximize our ownership of the waste to energy facilities which we operate. This purchase, which is accretive to earnings, will make an enhanced contribution to our operating results." KTI is an award winning environmental company engaged in integrated waste processing and management in diversified services and markets. The company processes over one million tons of material a year and is best known for its expertise in the waste-to-energy sector. KTI was organized in 1983 to develop and own waste-to-energy facilities with the dual purpose of providing a means of disposal for non-hazardous municipal solid waste and of generating electricity from alternative fuel sources. Since then, KTI's operations have expanded to include the development of an integrated waste management business providing not only municipal solid waste handling and disposal services, but also wood waste processing, ash and municipal waste recycling, specialty waste disposal, transportation facilitation services and transfer station operations. In addition to PERC, KTI owns and operates another Maine waste-to-energy facility, Maine Energy Recovery Company, in Biddeford which converts non-hazardous solid waste from residential, commercial and industrial sources into electric power. KTI has developed and operates a wood waste processing and recycling facility in Lewiston, Maine. In Telogia, Fla., KTI operates a 14-megawatt power plant and in nearby Cairo, Ga. owns a wood chipping plant. 2 KTI also holds a majority interest in America's only commercially operational municipal waste ash recycling facility in Nashville, Tenn., owns a Maryland company specializing in marketing post-industrial recycled plastics, a recycling company in Biddeford, a world wide secondary fiber marketing company based in Portland, Ore. and a Maine-based recycling company. KTI will host a conference call to discuss this transaction and other recent company events on Monday, October 6 at 11 a.m. EDT. The call will be hosted by Marty Sergi and Ross Pirasteh, chairman of KTI. To participate in this call, please telephone (800) 272-5652 any time after 10:55 a.m. on October 6. The pass code is "5989#." Please avoid using speakerphones. For further information, contact Marty Sergi at KTI, Inc. (201) 854-7777 or Frank N. Hawkins, Jr., Hawk Associates, Inc. at (305) 852-2383. Copies of KTI press releases, SEC filings, current price quotes, stock charts, analysts' comments and other valuable information for investors may be found on the website http://www.hawkassociates.com. This release contains various forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which represent the company's expectations or beliefs concerning future events of the company's financial performance. These forward looking statements are qualified by important factors that could cause actual results to differ materially from those in the forward looking statements. Results actually activated may differ materially from expected results included in these statements. **** EX-99.4.8 9 LETTER OF KENNETH A RUBLIN DATED 09/22/1997 1 EXHIBIT 4.8 WEXFORD MANAGEMENT LLC 411 West Putnam Avenue Greenwich CT 06830 (203) 862-7000 Direct Dial: 862-7428 Direct Fax: 862-7471 E-Mail: forubin@wexford.com September 22, 1997 Ross Pirasteh Chairman of the Board KTI, Inc. 7000 Boulevard East Guttenberg, NJ 07093 Dear Ross: I hereby resign effective immediately from my position as a director of KTI, Inc. and as a member of the KTI Compensation Committee and Audit Committee. Very Truly Yours, /s/ Kenneth A. Rubin - -------------------- Kenneth A. Rubin -----END PRIVACY-ENHANCED MESSAGE-----