EXHIBIT 4.4
June 19, 1997
IT IS THE DIRECTION OF THIS COURT THAT THE SUCCESSFUL
PARTY SERVE A FILED COPY OF THIS ORDER UPON ALL PARTIES
TO THIS ACTION.
ROSENMAN & COLIN LLP
JEFF J. FRIEDMAN (JF-7661)
KEVIN T. FINGERET (KF-3547)
575 Madison Avenue
New York, New York 10022-2585
(212) 940-8800
ROSENMAN & COLIN
JEFF J. FRIEDMAN (JF-7661)
Suite 2600
1 Gateway Center
Newark, New Jersey 07102-5397
(201) 645-0572
Attorneys for Prins Recycling Corp.
(f/k/a Ankap, Inc.)
Prins Recycling Corp.
Prins Recycling (Mass) Corp.
Prins of Pennsylvania, Inc.
Prins of Newark, Inc.
d/b/a Recycling Systems, Inc.
Prins Recycling (Maryland) Corp.
Paper Chase Exchange, Inc.
Basic Waste Systems, Inc.
Prins of Newark II, Inc.,
d/b/a P. Pepe & Sons, Inc.
Vic Barick Paper Co., Inc.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
- ------------------------------------------------------x
:
In re : Chapter 11
:
PRINS RECYCLING CORP., et al. : Case Nos. 96-26125 (WT)
: through 96-26134 (WT)
Debtors. :
: Oral Argument requested
- ------------------------------------------------------x
ORDER APPROVING DEBTOR'S MOTION PURSUANT TO SECTIONS 105, 327 AND 363 OF THE
BANKRUPTCY CODE AUTHORIZING AND APPROVING: (A) A BREAK-UP FEE AND OVERBID
MINIMUM WITH RESPECT TO THE PROSPECTIVE SALE OF THE DEBTORS' BUSINESSES TO KTI
RECYCLING, INC., (B) AN AGREEMENT TO SELL THE ASSETS OF THE DEBTOR PAPER CHASE
EXCHANGE, INC. NO LATER THAN SEPTEMBER 16, 1997 FOR $2 MILLION SUBJECT TO HIGHER
AND BETTER OFFERS IF THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS IS NOT
CONSUMMATED THROUGH A PLAN OF REORGANIZATION BY SEPTEMBER 16, 1997, AND (C) A
MANAGEMENT AGREEMENT BETWEEN THE DEBTORS AND KTI OPERATIONS, INC.
Upon the Motion of the above-captioned debtors, as debtors and debtors-in-
possession (the "Debtors"), pursuant to sections 105 and 363 of title 11 of the
United States Code (the "Bankruptcy Code") for an order authorizing and
approving: (a) a break-up fee, overbid minimum and no further solicitation
provision with respect to the prospective sale of all or substantially all of
the Debtors' businesses (the "All Facilities Sale") to KTI Recycling, Inc. (the
"Buyer"), a wholly-owned subsidiary of KTI, Inc. ("KTI") pursuant to a plan of
reorganization, (b) an agreement to sell the assets of the Debtor Paper Chase
Exchange, Inc. pursuant to section 363(b) of the Bankruptcy Code no later than
July 31, 1997 for $2 million subject to higher and better offers if the All
Facilities Sale is not consummated through a plan of reorganization prior to
July 25, 1997, (c) an Operation and Maintenance Agreement between the Debtors'
and KTI Operations, Inc. ("Operations") pursuant to which Operations will manage
the Debtors' businesses (the "Management Agreement"), all as more fully set
forth in the certification of Clifford H. Straub, Jr., the Debtors' Chief
Financial Officer, dated April 25, 1997 filed in support of the Motion (the
"Certification"), the Term Sheet between the Debtors and KTI annexed to the
Certification as Exhibit "A" (the "Term Sheet"), and the Management Agreement
annexed to the certification as Exhibit "B"; and upon the affidavit of Nicholas
Menonna, Jr., the Chief Executive Officer of Operations, pursuant to Bankruptcy
Rule 2014(a), sworn to on April 24, 1997; and upon the Memorandum of Law, dated
April 25, 1997 filed in support of the motion; and the Court having fixed May
13, 1997 at 2:00 p.m. as the date and time for a hearing on the Motion pursuant
to its Order Shortening Time dated April 28, 1997 (the "Scheduling Order"); and
notice having been given in accordance with the Scheduling Order which notice is
hereby deemed good and sufficient; and an objection to the Motion having been
interposed by the Creditors' Committee and a Response to the Motion having been
filed by Ally Capital Corporation; and the hearing on the Motion having been
adjourned to May 19, 1997 and thereafter to May 22, 1997; and, in an effort to
resolve the Creditors' Committee's objection, the Creditors' Committee, the
Buyer, PNC Bank, N.A. ("PNC") and the Debtors having negotiated certain
modifications to the Term Sheet, which modifications are set forth in the
Amended Term Sheet attached as Exhibit "A" hereto and executed by the Debtors,
KTI, PNC and the Creditors' Committee (the "Amended Term Sheet") and which
modifications were also set forth on the record and are beneficial to holders of
general unsecured claims; and the Creditors' Committee, in consideration for the
modifications to the Term Sheet having agreed that the treatment of PNC under a
plan as contemplated by the Amended Term Sheet constitutes "impairment" pursuant
to section 1124 of the Bankruptcy Code; and if Rosenman & Colin LLP agrees with
the Creditors' Committee, subject to certain terms and conditions, to cap their
total allowable fees and disbursements, PNC has agreed that in the event that it
exercises its remedies as a secured creditor to sell its collateral securing the
Debtors' obligations to PNC, and without limiting the Debtors' rights under
applicable law, the sale of the Debtors' Facilities in Boston shall be sold by
public auction conducted in a commercially reasonable manner; and upon the
arguments of counsel and evidence adduced at the hearing conducted before the
Court on May 22, 1997; and upon the record of such hearing; and after due
deliberation, sufficient cause appearing therefor,
IT IS ON THIS 12th day of June, 1997,
ORDERED THAT:
1. The Motion be, and it hereby is, granted;
2. The Break-Up Fee as such term is defined and explained in the
Certification and paragraph 7 of the Amended Term Sheet, is hereby approved and
shall be payable solely out the proceeds of a sale of Boston or Newark Facility
assets to a party or parties other than the Buyer or KTI; provided, however,
that in the event Buyer is entitled to a Break-Up Fee hereunder, Buyer shall
submit reasonably detailed time and disbursement records evidencing the actual
and necessary fees, costs and disbursements incurred to the Debtors, the
Creditors' committee and PNC and such Break-Up Fee shall be paid unless an
objection to the reasonableness of such fees and disbursements is filed within
10 days of the receipt of said records, in which event payment of the Break-Up
Fee shall be withheld pending a hearing to be scheduled by the objector(s) or
Buyer and further order of the Court;
3. The Overbid Minimum as such term is defined and explained in the
Certification and in paragraph 8 of the Amended Term Sheet, is hereby approved;
4. The Debtor shall give notice of the opportunity for parties to bid for
the Facilities, subject to the $300,000 Overbid Minimum by mailing within 10
days of the entry hereof a copy of this Order and the Amended Term Sheet to
persons who have expressed interest in acquiring one or more of the Debtors'
Facilities, and by promptly mailing this Order and the Amended Term Sheet to
other interested parties who may express interest hereafter. The Debtors shall
further provide (i) upon request by a party in interest, a form of asset
purchase agreement to be used by a successful offeror, and (ii) upon request by
a bona fide prospective offeror, reasonable access during normal business hours
to conduct due diligence;
5. Any party desiring to submit a proposal (an "Alternate Proposal") to
acquire one or more of the Facilities (other than a proposal to acquire only the
Chicago Facility which proposal shall be subject to Sections 8 - 11 hereof) for
a purchase price at least $300,000 in excess of the $13,600,000 purchase price
being paid by Buyer for the Facilities shall submit such proposal in writing to
the counsel for the Debtors, the Creditors' Committee and PNC on or before 5:00
p.m. EDT on July 10, 1997 (the "July 10 Proposal Deadline"). Such Alternate
Proposal shall include a provision for such party to acquire the Chicago
Facility (as defined below) on the same or better financial terms than KTI, Inc.
(as described in the Certification and below) in the event that a plan based on
such party's Alternate Proposal is not timely confirmed, and, if such Alternate
Proposal is other than entirely for cash and/or if subject to third party
financing or if such party seeks modifications to the proposed form of asset
purchase agreement (the "Form Asset Purchase Agreement") to be provided by the
Debtors' upon the request of a party considering making an Alternate Proposal,
such party shall submit with such Alternate Proposal information to enable the
Debtors, PNC and the Creditors' Committee to evaluate any non-cash consideration
and/or financing contingencies, together with any proposed changes to the Form
Asset Purchase Agreement;
6. If one or more Alternate Proposals are submitted by the July 10
Proposal Deadline, a hearing shall be held before the court on July 17, 1997 at
10:00 a.m. at the United States Bankruptcy Court, King Federal Bldg., 50 Walnut
Street, Newark, NJ to consider such Alternate Proposal(s) and such higher or
better offers as may be made by Buyer or a party making such an Alternate
Proposal; provided that if an Alternate Proposal is accepted by the Court, the
successful party shall be required to sign immediately the Form Asset Purchase
Agreement, subject to only to changes agreed to by the Debtors', Creditors'
Committee and PNC and deposit in escrow with the Debtors' counsel a down payment
of $1,000,000 (by certified check or a letter of credit acceptable to
the,Debtors', the Creditors' Committee and PNC and approved by them in advance
of such hearing) which shall be forfeitable in accordance with the terms of
Asset Purchase Agreement. Such successful party shall thereafter cooperate
fully with the Debtors to negotiate, formulate and confirm a plan of
reorganization based on such Alternate Proposal;
7. Unless and until the Buyer and/or KTI advises the Debtors that they
are no longer interested in acquiring the Debtors' assets (other than the
Chicago Facility pursuant to the Chicago Guarantee (as such term is defined in
the Certification)), or the Buyer and/or KTI breach their obligations and the
Debtors exercise their right not to proceed with the transaction, the Debtors'
shall not actively solicit further offers for their assets; provided, however,
(i) that nothing herein or in the Amended Term Sheet shall prohibit the Debtors'
from responding and providing information, including due diligence information,
to parties expressing interest in the Debtors' assets and from providing notice
of any motions or hearings to such parties relating to the transactions with the
Buyer and KTI, (ii) upon the request of any bona fide prospective offeror, the
Debtors shall have an affirmative duty to provide access and information
necessary for such offeror to perform due diligence, and (iii) that nothing
herein shall prohibit the disposition of unnecessary assets in accordance with
the provisions of the Amended Term Sheet,and the Bankruptcy Code; and
8. In the event that the All Facilities Sale is not approved pursuant to
a confirmed plan of reorganization in these cases by September 16, 1997, the
Court shall hold a hearing on the later of (i) September 16, 1997 at 10:00 a.m.
or (ii) following a decision of the Court to deny confirmation of a plan (the
"Chicago Sale Hearing"), pursuant to which the assets comprising the Chicago
Facility of Debtor Paper Chase Exchange, Inc. shall be sold to KTI, Inc. or its
designee, for $2 million net to the estate with the consideration payable as
provided in paragraph 3(a)(vii) of the Amended Term Sheet, subject to higher and
better offers (but not subject to the $300,000 Overbid Minimum) to be considered
at the Chicago Sale Hearing;
9. The Debtors shall give notice of the Chicago Sale Hearing by mailing,
within 10 days of the entry hereof a copy of this Order and the Amended Term
Sheet to persons who have expressed interest in acquiring assets of the Debtors,
including the Chicago Facility, and by promptly mailing this Order and the Term
Sheet to other interested parties who may express interest hereafter. The
Debtors shall further provide (i) upon request by a party in interest, a form of
asset purchase agreement to be used by a successful offeror for the Chicago
Facility, and (ii) upon request by a bona fide prospective offeror, reasonable
access during normal business hours to conduct due diligence;
10. Parties desiring to make a higher and better offer for the Chicago
Facility (i.e., an offer which yields net proceeds to the estate of more than $2
million, after assumption or payment of all post-petition obligations and
executory contract cure amounts), other than entirely for cash or which is
subject to third party financing or where such party seeks modifications to the
proposed form of asset purchase agreement, shall submit the proposed offer to
the Debtors at least 10 days in advance of the Chicago Sale Hearing and shall
submit therewith information to enable the Debtors and PNC to evaluate any non-
cash consideration and/or financing contingencies, together with any proposed
changes to the form of asset purchase agreement;
11. The successful offeror for the Chicago Facility shall be required to
deposit a down payment equal to $1 million in cash or cash equivalent acceptable
to the Debtors and PNC and to close the sale within five business days, subject
to a provision in the Court order approving the sale of the Chicago Facility
that such offeror is entitled to the protections of section 363(m) of the
Bankruptcy Code;
12. Subject to execution of a definitive asset purchase agreement by Buyer
and the Debtors consistent with the Amended Term Sheet and in form and substance
reasonably acceptable to PNC, the Debtors and the Creditors' Committee, the
Management Agreement is hereby approved in all respects; provided, however, that
any Fixed Fee payable to Operations thereunder shall be payable by PNC if the
All Facilities Sale to the Buyer contemplated by the Amended Term Sheet closes
or a sale to a third party closes whereby the Debtors' obligations to PNC are
paid in full, including principal and interest; and
13. Entry into and performance under the Management Agreement by
Operations shall impose on Operations only the duties, responsibilities and
liabilities specified therein.
14. All notices, proposals and objections provided for herein shall be
served on (i) counsel for the Debtors, Rosenman a Colin LLP, 575 Madison Avenue,
New York, NY 10022-2585 (Attn: Jeff J. Friedman, Esq.), (ii) counsel for the
Creditors' Committee, Shanley & Fisher, P.C., 131 Madison Avenue, Morristown, NJ
07962-1979 (Attn: Robert K. Malone, Esq.), (iii) counsel for PNC, Sills Cummins,
Zuckerman Radin Tischman Epstein & Gross, One Riverfront Plaza, Newark, NJ 07102
(Attn: Jack M. Zackin, Esq.), and (iv) counsel for KTI, Wasserman, Jurista &
Stolz, 225 Millburn Avenue, Millburn, NJ 07041 (Attn: Steven Z. Jurista, Esq.).
/s/ William F. Tuohey
Hon. William F. Tuohey
United States Bankruptcy Judge