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EXHIBIT 10.22
FOURTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment"),
dated as of December 29, 1998, is entered into between FINOVA CAPITAL
CORPORATION, a Delaware corporation ("FINOVA"), and Oakhurst Company, Inc., a
Delaware corporation ("Oakhurst"), Steel City Products, Inc., a Delaware
corporation ("SCPI"), Xxxxxxx'x Fleet Service Co., Inc., a New York corporation
("DFS"), Oakhurst Management Corporation, a Texas corporation ("OMC"), Oakhurst
Holdings, Inc., a Delaware corporation ("OH"), and G & O Sales Company, a
Pennsylvania corporation ("G&O"), jointly and severally (individually, a
"Borrower" and collectively "Borrowers").
RECITALS
A. Borrowers and FINOVA have previously entered into that certain Loan
and Security Agreement dated as of March 28, 1996, as amended by that certain
First Amendment to Loan and Security Agreement dated as of June, 1996, that
certain Second Amendment to Loan and Security Agreement effective as of June 1,
1997 and that certain Third Amendment to Loan and Security Agreement effective
as of October 31, 1997(collectively, the "Loan Agreement"), pursuant to which
FINOVA has made certain loans and financial accommodations available to
Borrowers. Terms used herein without definition shall have the meanings ascribed
to them in the Loan Agreement.
B. Borrowers have informed FINOVA that Oakhurst is in the process of (i)
issuing 1,730,056 shares of common stock of Oakhurst, $0.01 par value per share
("Oakhurst Common Stock"), to KTI, Inc., a New Jersey corporation ("KTI"), at a
price of $.50 per share pursuant to the terms and conditions of that certain
Investment Agreement dated as of December 29, 1998 (the "Investment Agreement")
by and among KTI, Oakhurst and Oakhurst Technology, Inc., a Delaware corporation
and a wholly owned subsidiary of Oakhurst ("OTI") and (ii) incurring
subordinated indebtedness from KTI in the initial aggregate amount of Eleven
Million Five Hundred Thousand Dollars ($11,500,000), which amount may be
increased to an amount not to exceed Seventeen Million Dollars ($17,000,000)
(the "KTI Subordinated Indebtedness") pursuant to the terms and conditions of
that certain Letter Loan Agreement dated as of December 29, 1998 by and among
KTI, OTI and Oakhurst (collectively with any and all agreements, documents
and/or instruments executed by Oakhurst or any Affiliate in connection
therewith, the "KTI Financing Agreements"). Borrowers have further informed
FINOVA that Oakhurst intends to use all the proceeds from the issuance of
Oakhurst Common Stock to KTI and the KTI Subordinated Indebtedness to form OTI
and to make additional capital contributions to OTI from time to time and that
the KTI Subordinated Indebtedness will be secured by a pledge of the capital
stock of OTI. OTI will then acquire fifty percent (50%) of the outstanding
capital stock of New Heights Recovery & Power, LLC, a Delaware limited liability
company ("New Heights"), pursuant to an amended plan of reorganization dated as
of November 17, 1998 (the "Plan"). Borrowers hereby acknowledge and confirm that
the incurrence of the KTI Subordinated Indebtedness and the capital
contributions to OTI without the consent of FINOVA would constitute Events of
Default
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under the Loan Agreement. Accordingly, Borrowers have requested that FINOVA
consent to and amend the Loan Agreement to reflect the incurrence of the KTI
Subordinated Indebtedness and the capital contributions to OTI by Oakhurst.
C. Lender is willing to give such consent and further amend the Loan
Agreement under the terms and conditions set forth in this Amendment. Borrowers
are entering into this Amendment with the understanding and agreement that,
except as specifically provided herein, none of Lender's rights or remedies as
set forth in the Loan Agreement is being waived or modified by the terms of this
Amendment.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Consent by FINOVA. Subject to the terms and conditions set forth
herein, FINOVA hereby consents to the incurrence of the KTI Subordinated
Indebtedness by Oakhurst and the capital contributions to OTI by Oakhurst;
provided, however, that (a) any amounts now or hereafter contributed to OTI from
Oakhurst shall be made only from the proceeds of funds received from KTI; (b)
the KTI Subordinated Indebtedness shall not exceed Seventeen Million Dollars
($17,000,000) at any time; (c) KTI shall have entered into a Intercreditor
Agreement with FINOVA, in form and substance satisfactory to FINOVA, which shall
include, without limitation, an agreement by KTI that any payments made with
respect to the KTI Subordinated Indebtedness shall be made only in accordance
with such Intercreditor Agreement; (d) without the prior written consent of
FINOVA, the capital contribution by Oakhurst to OTI contemplated herein shall
not exceed Seventeen Million Dollars ($17,000,000) at any time; (e) the KTI
Subordinated Indebtedness shall be secured only by a pledge of the capital stock
of OTI and shall be incurred without recourse to the Collateral; (f) FINOVA
shall have received fully executed copies of the Investment Agreement and the
KTI Financing Agreements, the terms and conditions of all of which shall be
acceptable to FINOVA and its counsel; (g) the Plan is confirmed by order of the
United States Bankruptcy Court, District of Delaware; (h) KTI shall have entered
into a management agreement with New Heights; and (i) any audit costs or
expenses relating to OTI and incurred by any Borrower shall be promptly and
fully reimbursed by OTI. Borrowers hereby acknowledge that FINOVA has relied
upon information furnished by Borrowers to FINOVA as of the date hereof in
granting the foregoing consent, including copies of the Investment Agreement
Term Sheet, the Investment Agreement and the KTI Financing Agreements provided
by Borrowers to FINOVA. In the event FINOVA after the date hereof shall discover
that any such information was materially incorrect or shall discover additional
relevant facts that cause the information furnished by Borrowers to have been
materially incorrect, FINOVA reserves the right to amend, modify or revoke the
consent set forth herein as FINOVA shall determine.
2. Amendments to the Loan Agreement.
(a) The paragraph under the heading "Indebtedness" set forth in
Section 14 of the Schedule Loan Agreement (entitled "Negative Covenants")
is hereby amended, effective upon satisfaction of the conditions set forth
in paragraph 1 above, to read in its entirety as follows:
"Indebtedness. The Borrower shall not create, incur, assume or permit to
exist any
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Indebtedness (including Indebtedness in connection with
Capital Leases) in excess of One Hundred Thousand Dollars
($100,000) in the aggregate, in any year without the prior
written consent of FINOVA, other than (i) the Obligations,
(ii) trade payables and other contractual obligations to
suppliers and customers incurred in the ordinary course of
business, (iii) other Indebtedness existing on the date of
this Agreement and reflected in the Prepared Financials
(other Indebtedness paid on the date of this Agreement from
proceeds of the initial advance hereunder), (iv)
Indebtedness incurred by Oakhurst in favor of KTI, in an
amount not to exceed Seventeen Million Dollars ($17,000,000)
at any time, provided, that such Indebtedness shall at all
times be subject to the terms and conditions of the KTI
Intercreditor Agreement, and (v) Indebtedness permitted
under 'Permitted Intercompany Transactions' below."
(b) The following is hereby added as paragraph (o) to
Section 17.1 of the Loan Agreement (entitled "Events of
Default"):
"(o) That certain Investment Agreement dated as of December
29, 1998 among KTI, Oakhurst, and Oakhurst Technology, Inc.
or that certain Letter Loan Agreement dated as of December
29, 1998 among Oakhurst, Oakhurst Technology, Inc. and KTI
or any other agreements, documents or instruments executed
in connection therewith by Oakhurst or any of its Affiliates
is amended, modified or changed in any way without the prior
written consent of FINOVA."
(c) The definition of "Loan Documents" set forth in Section
18.1 of the Loan Agreement (entitled "Defined Terms") is hereby
amended to read in its entirety follows:
"'Loan Documents' means, collectively, this Agreement, any
note or notes executed by the Borrowers and payable to
FINOVA, and any other agreement entered into in connection
with this Agreement, including, without limitation, the KTI
Intercreditor Agreement, together with all alterations,
amendments, changes, extensions, modifications,
refinancings, refundings, renewals, replacements,
restatements, or supplements, of or to any of the
foregoing."
(d) The definition of "Loan Party" set forth in Section
18.1 of the Loan Agreement (entitled "Defined Terms") is hereby
amended to read in its entirety as follows:
"'Loan Party' means the Borrowers, the Validator, KTI, and
each other party, if any (other than FINOVA), to any Loan
Document."
(e) The following definitions are hereby added to Section
18.1 of the Loan Agreement (entitled "Defined Terms") in their
respective alphabetical order:
"'KTI' means KTI, Inc., a New Jersey corporation.
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"'KTI Intercreditor Agreement' means that certain
Intercreditor Agreement dated as of December 29, 1998 among
FINOVA, KTI and Oakhurst."
3. Effectiveness of this Amendment. In addition to the
conditions set forth in paragraph 1 above, FINOVA must have received the
following items, in form and content acceptable to FINOVA, before this
Amendment and the consents provided herein are effective and before FINOVA
is required to extend any credit to Borrowers as provided for by this
Amendment.
(a) Amendment. This Amendment fully executed in a sufficient
number of counterparts for distribution to FINOVA and Borrowers.
(b) Authorizations. Evidence that the execution, delivery and
performance by each Borrower and each guarantor or subordinating
creditor of this Amendment and any instrument or agreement required
under this Amendment have been duly authorized.
(c) Representations and Warranties. The Representations and
Warranties set forth in the Loan Agreement must be true and correct.
Payment of Amendment Fee. Payment by Borrowers to FINOVA of an
amendment fee equal to Fifteen Thousand Dollars ($15,000) in
consideration of the consents and amendment provided herein, which fee
shall be fully earned as of the date hereof and payable on January 4,
1999.
Other Required Documentation. All other documents and legal
matters in connection with the transactions contemplated by this
Agreement shall have been delivered or executed or recorded and shall
be in form and substance satisfactory to FINOVA, including, without
limitation, a certificate of the secretary of each Borrower as to
board resolutions and the incumbency of officers.
4. Fees and Expenses. Borrowers hereby confirm that pursuant to
Section 13.1 of the Loan Agreement, Borrowers shall reimburse FINOVA for
all costs, fees and expenses incurred by FINOVA in connection with the
negotiation, preparation, execution, delivery, administration and
enforcement of this Amendment, including, but not limited to, attorneys'
fees.
5. Representations and Warranties. The Borrowers, jointly and
severally, represent and warrant as follows:
(a) Authority. Each Borrower has the requisite corporate power
and authority to execute and deliver this Amendment, and to perform
its obligations hereunder and under the Loan Documents (as amended or
modified hereby) to which it is a party. The execution, delivery and
performance by each Borrower of this Amendment, and the performance by
each Borrower of each Loan Document (as amended or modified hereby) to
which it is a party have been duly approved by all necessary corporate
action of such Borrower and no other corporate proceedings on the part
of such Borrower are necessary to consummate such transactions;
(b) Enforceability. This Amendment has been duly executed and
delivered by each Borrower. This Amendment and each Loan Document (as
amended or modified
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hereby) is the legal, valid and binding obligation of each Borrower
hereto or thereto, enforceable against such Borrower in accordance
with its terms, and is in full force and effect;
(c) Representations and Warranties. The representations and
warranties contained in each Loan Document (other than any such
representations or warranties that, by their terms, are specifically
made as of a date other than the date hereof) are correct on and as of
the date hereof as though made on and as of the date hereof; and
(d) No Default. No event has occurred and is continuing that
constitutes an Event of Default.
6. Choice of Law. THIS AMENDMENT SHALL BE INTERPRETED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE STATE OF
ARIZONA GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. THE
BORROWERS HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF MARICOPA, THE STATE OF ARIZONA
OR, AT THE SOLE OPTION OF FINOVA, IN ANY OTHER COURT IN WHICH FINOVA SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. THE BORROWERS WAIVE ANY
OBJECTION OF FORUM NON CONVENIENS AND VENUE. THE BORROWERS WAIVE PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON THEM, AND CONSENT THAT ALL SUCH SERVICE
OF PROCESS BE MADE IN THE MANNER SET FORTH IN SECTION 19.13 OF THE LOAN
AGREEMENT FOR THE GIVING OF NOTICE. THE BORROWERS FURTHER WAIVE ANY RIGHT
THEY MAY OTHERWISE HAVE TO COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST
THEM.
7. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of
which when so executed and delivered, shall be deemed an original, and all
of which, when taken together, shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Amendment or by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Amendment.
8. Due Execution. The execution, delivery and performance of this
Amendment are within the power of Borrower, have been duly authorized by
all necessary corporate action, have received all necessary governmental
approval, if any, and do not contravene any law or any contractual
restrictions binding on any Borrower.
9. Reference to and Effect on the Loan Documents.
(a) Upon and after the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Loan Agreement, and
each reference in the other Loan Documents to "the Loan Agreement",
"thereof" or words of like import referring to the Loan Agreement,
shall
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mean and be a reference to the Loan Agreement as modified and amended
hereby.
(b) Except as specifically amended above, the Loan Agreement and
all other Loan Documents, are and shall continue to be in full force
and effect and are hereby in all respects ratified and confirmed and
shall constitute the legal, valid, binding and enforceable obligations
of Borrower to FINOVA.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any FINOVA or the Agent under any of the
Loan Documents, nor constitute a waiver of any provision of any of the
Loan Documents.
(d) To the extent that any terms and conditions in any of the
Loan Documents shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified or
amended accordingly to reflect the terms and conditions of the Loan
Agreement as modified or amended hereby.
10. Ratification. Borrowers hereby restate, ratify and reaffirm each
and every term and condition set forth in the Loan Agreement, as amended
hereby, and the Loan Documents effective as of the date hereof.
11. Estoppel. To induce FINOVA to enter into this Amendment and to
continue to make advances to Borrowers under the Loan Agreement, Borrowers
hereby acknowledge and agree that, after giving effect to this Amendment,
as of the date hereof, there exists no Event of Default and no right of
offset, defense, counterclaim or objection in favor of Borrower as against
FINOVA with respect to the Obligations.
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.
FINOVA CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Title: Assistant Vice President
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OAKHURST COMPANY, INC.
By: /s/ Maarten X. Xxxxxxx
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Name: Maarten X. Xxxxxxx
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Title: Vice President
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STEEL CITY PRODUCTS, INC.
By: /s/ Maarten X. Xxxxxxx
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Name: Maarten X. Xxxxxxx
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Title: Vice President
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XXXXXXX'X FLEET SERVICE CO.
By: /s/ Maarten X. Xxxxxxx
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Name: Maarten X. Xxxxxxx
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Title: Vice President
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OAKHURST MANAGEMENT
CORPORATION
By: /s/ Maarten X. Xxxxxxx
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Name: Maarten X. Xxxxxxx
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Title: Vice President
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OAKHURST HOLDINGS, INC.
By: /s/ Maarten X. Xxxxxxx
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Name: Maarten X. Xxxxxxx
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Title: Vice President
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G & O SALES COMPANY
By: /s/ Maarten X. Xxxxxxx
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Name: Maarten X. Xxxxxxx
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Title: Vice President
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