1
EXHIBIT 10.26
WIND-UP AGREEMENT
KTI, INC., XXXXXXX WASTE SYSTEMS, INC., OAKHURST COMPANY, INC.
AND OAKHURST TECHNOLOGY, INC.
THIS WIND-UP AGREEMENT (this "Agreement") is made as of the 19th day of April,
2001 by and between KTI, INC., a New Jersey corporation (hereinafter referred to
as "KTI;") XXXXXXX WASTE SYSTEMS, INC., a Delaware corporation (hereinafter
referred to as the "Casella;"); OAKHURST COMPANY, INC., a Delaware corporation
(hereinafter referred to as "OCI;") and OAKHURST TECHNOLOGY, INC., a Delaware
corporation (hereinafter referred to as "OTI.")
BACKGROUND
The parties entered into that certain Investment Agreement dated as of December
29, 1998 (the "Investment Agreement") pursuant to which KTI purchased 1,730,056
shares of OCI's common stock, $0.01 par value per share, (the "OCI Stock.")
Pursuant to the Investment Agreement, KTI, OCI and OTI entered into a Letter
Loan Agreement dated December 29, 1998 (the "Loan Agreement") providing for the
loan to OCI of up to $11.5 million in connection with the purchase by OCI of the
common stock of OTI and the use by OTI of the proceeds of such purchase to
satisfy as KTI's "affiliate" certain obligations of KTI to fund the operations
of New Heights Recovery & Power, LLC ("New Heights") pursuant to New Heights'
bankruptcy plan and for certain other purposes, including investments having the
potential of expanding or enhancing the recycling of rubber tires.
In connection with the Loan Agreement, OCI entered into a Pledge Agreement dated
as of December 29, 1998 (the "Pledge Agreement") pursuant to which OCI pledged
to KTI as security for the repayment of amounts borrowed under the Loan
Agreement the stock of OTI that OCI had purchased.
As provided in New Heights' bankruptcy plan, OTI acquired a 50% interest in New
Heights pursuant to its funding of New Heights' operations. As contemplated by
the bankruptcy plan, KTI Operations, a subsidiary of KTI operated New Heights
and its related businesses for the benefit of its members. In addition, OCI used
certain amounts borrowed under the Loan Agreement to pay certain expenses of OTI
and to fund in part the purchase (for aggregate consideration of $2,525,000) of
certain equity and subordinated debt securities (the "First Tranche") of
Sterling Construction Company of Houston, Texas.
By an Amendment Agreement dated as of May 3, 2000 (the "Amendment Agreement")
the parties amended the Loan Agreement and entered into certain other agreements
pursuant to which, among other things, OTI agreed to transfer 25% of its
interest in New Heights to KTI in consideration of direct funding by KTI of $3
million of New Heights' working capital needs, and OCI pledged the First Tranche
to KTI (the "Sterling Pledge Agreement") as security for the purchase price
thereof.
By a series of stock purchase agreements dated December 1999, KTI transferred
80% of the common stock of SeaGlass, Inc. to OCI, which in turn transferred the
shares to OTI, which in turn transferred the shares to New Heights as part of
the funding of New Heights (the "SeaGlass Transactions.")
In addition, Casella has acquired all of the outstanding capital stock of KTI.
The parties now wish to provide for (a) the transfer to KTI or its designee or
designees of all of OTI's interest in New Heights; (b) the transfer by KTI to
OCI or its designee or designees of the OCI Stock and the return to OCI of all
securities pledged to KTI by OCI and/or OTI as security under the Loan
Agreement; (c) the cancellation of all but $1 million of the debt
Page 1 of 9
2
(including accrued interest thereon) owed by OCI to KTI and the exchange of that
remaining $1 million of debt for a subordinated, promissory note of OCI in the
amount of $1,000,000 and the issuance by OCI to KTI of a ten-year warrant to
purchase shares of OCI common stock, $0.01 par value per share; (d) certain
indemnifications by the parties; and (e) a general release and waiver of all
claims known or unknown by one party against the others, all on the terms and
conditions set forth herein.
1. CONSIDERATION. The parties are entering into this Agreement for and in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
2. TRANSFERS AT THE CLOSING.
(a) Transfers by KTI. At the consummation of the transactions described
in this Agreement (the "Closing,") KTI shall deliver to OCI or to
such other entity or person as OCI shall direct in a writing given
to KTI prior to the Closing --
(i) The OCI Stock free and clear of all liens and encumbrances of
any kind or nature together with an executed stock power in
form and substance reasonably satisfactory to OCI;
(ii) All of the shares of OTI and all of the equity and debt
securities comprising the First Tranche that are under KTI's
possession or control, free and clear of all liens and
encumbrances of any kind or nature imposed thereon by KTI, if
any;
(iii) That certain promissory note dated December 29, 1998 in the
original principal amount of $11.5 million (the "Original
Note") marked "paid in full" together with a written waiver of
all interest accrued thereon and not paid as of the Closing,
free and clear of all liens and encumbrances of any kind or
nature imposed thereon by KTI, if any; and
(iv) The written resignations from the Board of Directors of OCI
and/or OTI of Messrs. Pirasteh, Sergi, and Xxxxx.
(b) Transfers by OCI and OTI. At the Closing, OCI and/or OTI shall
deliver to KTI or to such other person or entity as KTI shall direct
in a writing given to OCI prior to the Closing --
(i) A subordinated promissory note of OCI in the form attached
hereto as Exhibit A (the "Promissory Note.")
(ii) A ten-year warrant to purchase shares of the common stock of
OCI in the form attached hereto as Exhibit B (the "Warrant.")
(iii) An assignment in the form attached hereto as Exhibit C of all
of OTI's interest in New Heights free and clear of all liens
and encumbrances of any kind or nature imposed thereon by or
through OCI or OTI.
(iv) An amendment to the New Heights limited liability company
agreement in the form attached hereto as Exhibit D, duly
executed by New Heights, OTI and each other member of New
Heights.
3. REPRESENTATIONS AND WARRANTIES OF KTI AND CASELLA. KTI and Casella jointly
and severally represent and warrant to OCI and OTI as follows:
(a) Organization and Qualification. KTI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
New Jersey. KTI has the
Page 2 of 9
3
requisite corporate power and authority to carry on its business as
it is now being conducted.
(b) Authority Relative to this Agreement. KTI has all necessary power
and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery by KTI of this Agreement and the agreements provided for
herein, and the consummation by KTI of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite
corporate and stockholder action. This Agreement has been duly
executed and delivered by KTI and constitutes a valid and legally
binding obligation of KTI enforceable against it in accordance with
its terms except as enforceability may be limited by bankruptcy and
insolvency laws and by general equitable principles.
(c) No Conflicts & Required Consents. The execution and delivery of this
Agreement does not, and the performance of this Agreement will not:
(i) conflict with or violate the Certificate of Incorporation or
By-laws of KTI; (ii) conflict with or violate in any material
respect any laws, rules or regulations applicable to KTI or by which
any property or asset of KTI is bound; or (iii) result in any
material default under any contract, instrument, note, mortgage or
agreement to which KTI is a party or by which any property or asset
of KTI is bound. The execution and delivery of this Agreement by KTI
does not, and the performance of this Agreement will not, require
any consent of any governmental entity.
(d) Title. KTI has all right, title and interest in and to the OCI Stock
and the Original Note, free and clear of all covenants, conditions,
restrictions, voting trust arrangements, liens and encumbrances,
options and adverse claims whatsoever.
(e) The Promissory Note and the Warrant.
(i) KTI is acquiring the Promissory Note and the Warrant for its
own account for investment and not with a view to any resale
or "distribution" thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act.")
(ii) KTI understands that because the sale of the Promissory Note
and the Warrant to it has not been registered under the
Securities Act or under the "blue sky" laws of any state, KTI
cannot dispose of either of them until their sale is
registered under the Securities Act and such state laws or
pursuant to an exemption therefrom.
(iii) KTI acknowledges that OCI is issuing the Promissory Note and
Warrant pursuant to this Agreement in reliance upon, among
other things, the representations and warranties of KTI and
Casella contained in this Section 3(e).
(f) New Heights Value. At the date hereof, neither KTI nor Casella has
entered into any agreement, is not in the process of negotiating
and/or has not received any offer for the purchase of any interest
New Heights that would result on a pro rata basis in the interest in
New Heights to be transferred hereunder by OCI to KTI having a value
in excess of the debt (including interest thereon) to be forgiven
hereunder.
(g) Litigation. There are no legal or governmental proceedings pending
or to KTI's or Xxxxxxx'x knowledge threatened to which KTI, Casella
or any of their affiliates is a party which would prevent or delay
KTI in the performance of its obligations hereunder.
(h) Brokers and Finders. No agent, broker, finder, investment banker,
lawyer, entity or other firm or person is or will be entitled to any
broker's or finder's fee or other
Page 3 of 9
4
similar commission or other fee in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
KTI or Casella.
Except as set forth in this Agreement, neither KTI nor Casella makes any
other representation or warranty and in particular, makes no other
representations or warranties with respect to the OCI Stock or the
securities comprising the First Tranche.
4. REPRESENTATIONS AND WARRANTIES OF OCI AND OTI. OCI and OTI jointly and
severally represent and warrant to KTI as follows:
(a) Organization and Qualification. That each of OCI and OTI is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. That each of OCI and OTI
has the requisite corporate power and authority to carry on its
business as it is now being conducted.
(b) Authority Relative to this Agreement. That each of OCI and OTI has
all necessary power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
That the execution and delivery by each of OCI and OTI of this
Agreement and the agreements provided for herein, and the
consummation by each of OCI and OTI of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite
corporate and stockholder action. That this Agreement has been duly
executed and delivered by each of OCI and OTI and constitutes its
valid and legally binding obligation, enforceable against it in
accordance with its terms except as enforceability may be limited by
bankruptcy and insolvency laws and by general principles of equity.
(c) No Conflicts & Required Consents. That the execution and delivery of
this Agreement does not, and the performance of this Agreement will
not: (i) conflict with or violate the Certificate of Incorporation
or By-laws or OCI or OTI; (ii) conflict with or violate in any
material respect any laws, rules or regulations applicable to OCI or
OTI or by which any of the property or asset of OCI or OTI is bound;
or (iii) result in any material default under any contract,
instrument, note, mortgage or agreement to which OCI or OTI is a
party or by which any of the property or asset of OCI or OTI is
bound. That its execution and delivery of this Agreement by OCI and
OTI does not, and the performance of this Agreement will not,
require any consent of any governmental entity.
(d) Title. OTI has all right, title and interest in and to the New
Heights interest to be transferred hereunder, free and clear of all
covenants, conditions, restrictions, voting trust arrangements,
liens and encumbrances, options and adverse claims or rights
whatsoever.
(e) Litigation. That there are no legal or governmental proceedings
pending or to OCI's or OTI's knowledge threatened to which OCI or
OTI or any of their respective affiliates is a party or which would
prevent or delay OCI or OTI in the performance of its obligations
hereunder.
(f) Solvency. Immediately after giving effect to the transactions
contemplated by this Agreement, each of OCI and OTI shall be able to
pay its debts as they become due and shall own property having a
fair saleable value greater than the amounts required to pay its
debts (including a reasonable estimate of the amount of all
contingent liabilities, discounted by the probability that the
collection of such contingent liabilities will occur). Immediately
after giving effect to the transactions contemplated by this
Agreement, each of OCI and OTI shall have adequate capital to
Page 4 of 9
5
carry on its business. No transfer of property is being made and no
obligation is being incurred in connection with the transactions
contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors.
(g) Brokers and Finders. No agent, broker, finder, investment banker,
lawyer, entity or other firm or person is or will be entitled to any
broker's or finder's fee or other similar commission or other fee in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of OCI or OTI.
Except as set forth herein, neither OCI nor OTI makes any other
representation or warranty and in particular, makes no other
representations or warranties with respect to the interest in New Heights
to be transferred to KTI pursuant to Section 2(b)(iii), above.
5. INDEMNITIES BY KTI AND CASELLA. By the execution hereof, KTI and Casella
jointly and severally hereby agree to indemnify and hold harmless, OCI,
OTI and each of their officers, directors and employees (any or all of the
foregoing being hereinafter referred to as an "OCI Indemnified Person")
from and against any and all claims, debts, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or due or to become due or otherwise), monetary
damages, fines, fees, penalties, interest obligations, deficiencies,
losses and expenses (including without limitation amounts paid in
settlement, interest, court costs, costs of investigators, reasonable fees
and expenses of attorneys, accountants, financial advisors and other
experts, and other expenses of litigation) ("Damages") incurred or
suffered by an OCI Indemnified Person or any affiliate thereof:
(a) resulting from or constituting any breach of a representation or
warranty contained in this Agreement or the failure to perform any
covenant or agreement of KTI set forth herein;
(b) resulting from or relating to any failure by KTI to have good, valid
and marketable title to the OCI Stock or the Original Note, free and
clear of all liens, claims, pledges, options, adverse claims or
charges of any nature whatsoever;
(c) resulting from or relating to the SeaGlass Transactions, including
that certain law suit pending in the Superior Court of New Jersey,
Essex County, commenced by Xxxx Xxxxxx, plaintiff, against SeaGlass,
Inc. and others (including OCI,) defendants; and
(d) resulting from or relating to OTI's status as KTI's "affiliate"
pursuant to New Heights' bankruptcy plan; provided, however, that
neither KTI nor Casella shall be obligated to indemnify any OCI
Indemnified Person from any Damages resulting from or relating to
any actions taken by any such OCI Indemnified Person or any breach
of their fiduciary responsibilities.
6. INDEMNITIES BY OCI AND OTI. By the execution hereof, OCI and OTI hereby
jointly and severally agree to indemnify and hold harmless KTI and its
affiliates and their respective officers, directors, and employees (any or
all of the foregoing being hereinafter referred to as a "KTI Indemnified
Person") from and against any and all Damages incurred or suffered by a
KTI Indemnified Person:
(a) resulting from or constituting any breach of a representation or
warranty contained in this Agreement or the failure to perform any
covenant or agreement of OCI or OTI set forth herein;
(b) resulting from or relating to any failure by OCI to have good, valid
and marketable title to the New Heights interest to be transferred
hereunder, free and clear of all
Page 5 of 9
6
liens, claims, pledges, options, adverse claims or charges of any
nature whatsoever; or
(c) resulting from or relating to any actions taken by any OCI
Indemnified Person with respect to OTI's ownership of an interest in
New Heights.
7. SURVIVAL. Unless otherwise specified in this Section 7 or elsewhere in
this Agreement, all provisions of this Agreement shall survive the Closing
and the consummation of the transactions contemplated hereby and shall
continue forever in full force and effect in accordance with their terms.
Except for claims based on fraud, the representations and warranties of
the parties set forth in Section 3 and Section 4 of this Agreement, and
the indemnification obligations set forth in Section 5 and Section 6 of
this Agreement, and shall survive the Closing and the consummation of the
transactions contemplated hereby until the third anniversary of the
Closing; provided, however, that the representation and warranties set
forth in Sections 3(a), (b) and (d) and Section 4(a), (b) and (d) shall
survive the Closing without limitation.
8. LIMITATIONS. Notwithstanding anything to the contrary contained in this
Agreement, the following limitations shall apply:
(a) The aggregate liability of KTI and Casella for the sum of all
Damages payable by it under this Agreement shall not exceed
$2,000,000.
(b) The aggregate liability of OCI and OTI for the sum of all Damages
payable by them under this Agreement shall not exceed the sum of (i)
the fair market value of the OCI Stock at the time of Closing; and
(ii) the principal and all interest due under the Original Note at
the time of Closing.
(c) KTI and Casella shall be liable under Section 5 for only that
portion of the aggregate Damages which exceeds $10,000 (it being
understood that neither KTI nor Casella shall be liable, in any
event, for the first $10,000 of said Damages); provided, however,
that such limitation shall not apply to Damages under Sections 5(b),
(c) or (d);
(d) OCI and OTI shall be liable under Section 6 for only that portion of
the aggregate Damages which exceeds $10,000 (it being understood
that OCI and OTI shall not be liable, in any event, for the first
$10,000 of said Damages); provided, however, that such limitation
shall not apply to Damages under Section 6(b) or (c).
(e) In no event shall any party be responsible and liable for any
Damages or other amounts that are consequential, in the nature of
lost profits, diminution in value, damage to reputation or the like,
special or punitive or otherwise not actual Damages (it being
understood that for purposes of this sentence, actual Damages
includes all amounts required to be paid to third parties pursuant
to any judgment or judgments.) Each party shall use commercially
reasonable efforts to minimize the Damages for which indemnification
is provided by the other party under this Agreement.
9. THE CLOSING.
(a) The obligations of KTI, OCI and OTI to proceed to Closing are
conditioned upon the simultaneous closing of the sale pursuant to
that certain Purchase Agreement dated March 6, 2001 (the "Rubber
Recovery Agreement.") to Rubber Recovery Technologies Acquisition
LLC (or its nominee) ("RRT") by KTI of its 12.5% interest in New
Heights and of the 37.5% interest in New Heights to be transferred
to KTI pursuant to this Agreement.
Page 6 of 9
7
(b) If the sale to RRT is consummated, the Closing shall occur at the
same time and at the same location as such sale.
(c) If such sale is not consummated as a result of the termination of
the Rubber Recovery Agreement, this Agreement may be terminated by
KTI by written notice to OCI and OTI given within 10 business days
following the termination of the Rubber Recovery Agreement.
(i) If this Agreement is terminated by KTI pursuant to Section
9(c), this Agreement shall be void and of no further force or
effect; provided, however, that no party shall be released
from liability for any breach of such party's obligations
hereunder to the extent such breach caused the termination of
the Rubbery Recovery Agreement.
(ii) If this Agreement is not so terminated, the Closing shall
occur within five (5) business days following the expiration
of such 10-business-day period.
(d) Following the Closing, none of OCI, OTI or any of their respective
affiliates, successors or assigns shall have any recourse to the New
Heights interest being transferred to KTI under this Agreement. Any
claims of any such parties by reason of a breach of an obligation
hereunder; the failure of a representation or warranty made herein
to be true and correct; or otherwise shall be made solely against
the other assets of KTI and/or Casella, and each of OCI and OTI
acknowledge that RRT will be a holder in due course of the New
Heights interest being transferred under this Agreement free and
clear of any claims of OCI, OTI or any of their respective
affiliates successors or assigns.
10. WAIVERS, RELEASES & DISCHARGES.
(a) KTI's Waiver, Release & Discharge. By the execution hereof, each of
KTI and Casella for and on behalf of itself, and their affiliates,
hereby waives, and releases and discharges OCI and OTI and each of
their affiliates, officers, directors, employees, agents and
representatives (collectively the "OCI Released Parties") from, any
and all claims, demands, losses, damages, actions or causes of
action, obligations, debts and liabilities of any kind or nature
whatsoever, known or unknown, now existing or hereafter existing,
which any of them now has or may hereafter have against any one or
more of the OCI Released Parties arising out of any matter, cause or
event occurring on or prior to the Closing including the Investment
Agreement, the Loan Agreement, the Amendment Agreement, the Pledge
Agreement and the Sterling Pledge Agreement; provided, however, that
nothing contained herein shall operate to release any obligation of
OCI or OTI arising under this Agreement, the Promissory Note or the
Warrant. In the event the Closing does not occur and this Agreement
is terminated, the foregoing release shall be void ab initio and of
no force or effect.
(b) Waivers, Releases & Discharges of OCI and OTI. By the execution
hereof, each of OCI and OTI for and on behalf of itself, any parent
company and their affiliates, hereby waives, and releases and
discharges each of KTI and Casella and their affiliates, and each of
their officers, directors, employees, agents and representatives
(collectively the "KTI Released Parties") from, any and all claims,
demands, losses, damages, actions or causes of action, obligations,
debts and liabilities of any kind or nature whatsoever, known or
unknown, now existing or hereafter existing, which any of them now
has or may hereafter have against any one or more of the KTI
Released
Page 7 of 9
8
Parties arising out of any matter, cause or event occurring on or
prior to the Closing including the Investment Agreement, the Loan
Agreement, the Amendment Agreement, the Pledge Agreement and the
Sterling Pledge Agreement; provided, however, that nothing contained
herein shall operate to release any obligation of KTI or Casella
arising under this Agreement, the Promissory Note or the Warrant. In
the event the Closing does not occur and this Agreement is
terminated, the foregoing release shall be void ab initio and of no
force or effect.
11. NOTICES. All notices hereunder given by one party to the others shall be
in writing and shall be either hand delivered against a receipt or sent by
overnight delivery service, with all charges prepaid, in any case, to such
party's address set forth below. All such notices and correspondence shall
be deemed given when received or when delivery is refused.
If to KTI or Casella, at: If to OTI or OCI at:
00 Xxxxxx Xxxx Xxxx 0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000 Xxxxxxxxx, Xxxxx 00000
Attention: President Attention: President
or to such other address of a party as such party may by notice hereunder
designate to the other parties.
12. SEVERABILITY. If any provision or part of a provision of this Agreement is
finally declared to be invalid by any tribunal of competent jurisdiction,
such part shall be deemed automatically adjusted, if possible, to conform
to the requirements for validity, but, if such adjustment is not possible,
it shall be deemed deleted from this Agreement as though it had never been
included herein. In either case, the balance of any such provision and of
this Agreement shall remain in full force and effect.
13. MISCELLANEOUS.
(a) This Agreement together with the exhibits referred to herein
contains the entire understanding of the parties on the subject
matter hereof except as otherwise expressly contemplated herein;
shall not be amended except by written agreement of the parties
signed by each of them; shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns;
and shall not be assignable by a party without the prior written
consent of the other party.
(b) This Agreement may be (i) executed and delivered by telecopier or
other facsimile transmission with the same force and effect as if
the same were a fully executed and delivered original manual
counterpart; and (ii) may be executed in any number of counterparts,
each of which may be executed by fewer than all of the parties
hereto (provided that each party executes one or more counterparts),
each of which shall be enforceable against the parties executing
such counterparts, and all of which together shall constitute one
and the same agreement.
(c) Construction.
(i) The words "hereof," "herein," "hereunder," "this Agreement"
and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists
or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
Page 8 of 9
9
(ii) The words "include" "includes" "including" and words of
similar import shall mean considered as part of a larger
group and not limited to any one or more enumerated items.
(iii) The captions of the paragraphs herein are for convenience
only and shall not be used to construe or interpret this
Agreement.
(iv) Each provision of this Agreement shall be interpreted and
enforced without the aid of any canon, custom or rule of
law requiring or suggesting construction against the party
drafting or causing the drafting of such provision.
(d) Waivers. Failure by a party to insist upon strict compliance with
any term, covenant or condition, or to exercise any right,
contained herein shall not be deemed a waiver of such term,
covenant, condition or right; and no waiver or relinquishment of
any term, covenant, condition or right at any one or more times
shall be deemed a waiver or relinquishment thereof at any other
time or times.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving
effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or of any other jurisdiction) that would cause
the application hereto of the laws of any jurisdiction other than the
State of New York.
15. JURISDICTION. Each of the parties submits to the jurisdiction of any state
or federal court sitting in the State and County of New York in any action
or proceeding arising out of or relating to this Agreement and agrees that
all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any
other court.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first above
written.
KTI, INC. OAKHURST COMPANY, INC.
By: /s/ XXXX X. XXXXXXX By: /s/ MAARTEN X. XXXXXXX
--------------------------------- -----------------------------------
Xxxx X. Xxxxxxx, President Maarten X. Xxxxxxx, President
XXXXXXX WASTE SYSTEMS, INC. OAKHURST TECHNOLOGY, INC.
By: /s/ XXXX X. XXXXXXX By: /s/ MAARTEN X. XXXXXXX
--------------------------------- -----------------------------------
Xxxx X. Xxxxxxx, President Maarten X. Xxxxxxx, President
Page 9 of 9
10
PROMISSORY NOTE
DATE: JULY 3, 2001 $1,000,000
OAKHURST COMPANY, INC.
OAKHURST COMPANY, INC., a Delaware corporation (together with its successors
and assigns the "Issuer") for value received hereby promises to pay to KTI,
INC., a New Jersey corporation, or order, (the "Noteholder") by wire transfer
of immediately available funds to an account designated by the Noteholder by
notice to the Issuer the principal sum of one million dollars ($1,000,000),
together with interest on the unpaid principal balance of this Note from time
to time outstanding at the rate of 12% per year, compounded annually on each
anniversary of the date of this Note. The interest on this Note shall accrue
and shall be payable with the principal amount of this Note on the Maturity
Date (as defined herein) in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
1. Definitions. The following terms for all purposes of this Note shall have the
respective meanings specified below. All accounting terms used herein and not
expressly defined shall have the meanings given to them in accordance with
generally accepted accounting principles as in effect from time to time. The
terms defined in this Section 1 include the plural as well as the singular.
(a) "Acceleration Notice" shall have the meaning set forth in Section 2.
(b) "Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with,
such Person.
(c) "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized by law to
close.
(d) "Debt" means at any date an amount equal to or greater than $100,000 of
(i) all obligations of the Issuer for borrowed money; (ii) all
obligations of the Issuer evidenced by bonds, debentures, notes, or other
similar instruments; (iii) all obligations of the Issuer in respect of
letters of credit or other similar instruments (or reimbursement
obligations with respect thereto;) (iv) all obligations of the Issuer to
pay the deferred purchase price of property or services, except trade
payables; (v) all obligations of the Issuer as lessee under capitalized
leases; and (vi) all Debt of others secured by a Lien on any asset of the
Issuer, whether or not such Debt is assumed by such Person.
(e) "Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
(f) "Event of Default" shall have the meaning set forth in Section 3.
(g) "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Note, the Issuer shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
capitalized lease or other title retention agreement relating to such
asset.
Page 1 of 5
11
(h) "Maturity Date" means 5:00 p.m. Eastern Time on the fourth anniversary
of the date hereof.
(i) "Notice of Default" shall have the meaning set forth in Section 2.
(j) "Person" means any individual, corporation, partnership, firm,
association, joint venture, joint stock company, trust, unincorporated
organization or other entity, or any government or regulatory,
administrative or political subdivision or agency, department or
instrumentality thereof.
(k) "Senior Indebtedness" means indebtedness to any bank or other lending
institution, including, but not limited to (i) all currently
outstanding indebtedness of the Issuer to Finova Capital Corporation
(the "Senior Lender"), as the same may be amended, modified, increased
or decreased from time to time, by agreement between the Senior Lender
and the Issuer; and (ii) any and all replacements or refinancings of
the indebtedness to the Senior Lender with one or more other lending
entities, whether any such refinancing is for a greater or lesser
amount than the current indebtedness to the Senior Lender.
2. PAYMENT OF PRINCIPAL.
(a) Payment Obligation. No provision of this Note shall alter or impair
the obligations of the Issuer to pay the principal of or interest on
this Note at the place and time, and in the currency, herein
prescribed.
(b) Prepayment. The principal hereunder shall be subject to prepayment by
the Issuer at any time without the consent of the Noteholder and
without premium or penalty.
(c) Events of Default and Remedies. In case one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(i) default in the payment of the principal of or interest on this
Note as and when the same shall become due and payable, at
maturity, upon any redemption, by declaration or otherwise; or
(ii) failure on the part of the Issuer duly to observe or perform (i)
any other of the covenants or agreements on the part of the
Issuer contained herein (other than those covered by clause (i),
above;) or (ii) any material covenants or agreements on the part
of the Issuer contained in any other agreement between the Issuer
and the Noteholder, including, but not limited to, that certain
Wind-Up Agreement of even date herewith, in either such case for
a period of 30 days after the date on which written notice
specifying such failure, stating that such notice is a "Notice of
Default" hereunder and demanding that the Issuer remedy the same,
shall have been given by registered or certified mail, return
receipt requested, to the Issuer; or
(iii) the prepayment of any Subordinated Note (as hereinafter defined)
in violation of the provisions of Section 6 of this Note; or
(iv) any event or condition shall occur which results in the
acceleration of the maturity of any Debt or enables or, with the
giving of notice or lapse of time or both, would enable the
holder of such Debt or any Person acting on such holder's behalf
to accelerate the maturity thereof; or
(v) the Issuer pursuant to or within the meaning of any bankruptcy or
insolvency law: (A) commences a voluntary case or proceeding; (B)
consents to the entry of an
Page 2 of 5
12
order for relief against it in an involuntary case or proceeding;
(C) consents to the appointment of a receiver or custodian of it
or for all or substantially all of its property; (D) makes a
general assignment for the benefit of its creditors; or (E)
admits in writing its inability to pay its debts as the same
become due.
then, subject to the last sentence of this Section 2, in each case where an
Event of Default specified in Section 2(c)(i) through 2(c)(iv) occurs, the
Holder, by notice in writing to the Issuer (the "Acceleration Notice") may
declare the principal hereunder to be due and payable immediately, and upon
any such declaration the same shall become immediately due and payable;
provided, however, that if an Event of Default specified in Section 2(c)(v)
occurs, the principal hereunder shall become and be immediately due and
payable without any declaration or other act on the part of the Holder.
3. REIMBURSEMENT OF EXPENSES. The Issuer shall reimburse the Noteholder, on
demand, for any and all costs and expenses, including reasonable attorneys'
fees and court costs, incurred by the Noteholder in collecting or otherwise
enforcing this Note or in attempting to do any of the foregoing.
4. POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT A WAIVER OF DEFAULT.
(a) No right or remedy herein conferred upon or reserved to the Holder is
intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other
appropriate right or remedy.
(b) No delay or omission of the Holder to exercise any right or power
accruing upon any Default or Event of Default occurring and continuing
as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Default or Event of Default or an
acquiescence therein; and every power and remedy given by this Note or
by law may be exercised from time to time, and as often as shall be
deemed expedient, by the Holder.
5. WAIVER OF PAST DEFAULTS.
(a) The Noteholder may waive any past Default or Event of Default
hereunder and its consequences. In the case of any such waiver, the
Issuer and the Noteholder shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent
thereon.
(b) Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Default or Event
of Default arising therefrom shall be deemed to have been cured, and
not to have occurred for every purpose of the Notes; but no such
waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.
6. SUBORDINATION.
(a) No payment on account of principal of or interest on the Subordinated
Notes shall be made, and no Subordinated Notes shall be redeemed or
purchased directly or indirectly by the Issuer (or any of its
subsidiaries), if at the time of such payment or
Page 3 of 5
13
purchase or immediately after giving effect thereto, (i) there shall
exist a default in any payment with respect to the Senior Indebtedness
or (ii) there shall have occurred an event of default as defined in
the instrument under which the same is outstanding (other than a
default in the payment of amounts due thereon) with respect to the
Senior Indebtedness, permitting the holders thereof to accelerate the
maturity thereof, and such event of default shall not have been cured
or waived or shall not have ceased to exist.
(b) Subject to payment in full of the Senior Indebtedness, the holders of
the Subordinated Notes shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of
the assets of the Issuer made on such Senior Indebtedness until all
principal and interest on the Subordinated Notes shall be paid in
full; and for purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash,
property or securities to which any holders of the Subordinated Notes
would be entitled except for the subordination provisions of this
Section 6 shall, as between the holders of the Subordinated Notes and
the Issuer and/or its creditors other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior
Indebtedness.
(c) The provisions of this Section 6 are and are intended solely for the
purposes of defining the relative rights of the holders of the
Subordinated Notes and the holders of Senior Indebtedness and nothing
in this Section 6 shall impair, as between the Issuer and any holders
of the Subordinated Notes, the obligation of the Issuer, which is
unconditional and absolute, to pay to the holders of the Subordinated
Notes the principal thereof and interest thereon, in accordance with
the terms of the Subordinated Notes, nor shall anything herein prevent
any holders of the Subordinated Notes from exercising all remedies
otherwise permitted by applicable law or hereunder upon default,
subject to the rights set forth above of holders of Senior
Indebtedness to receive cash, property or securities otherwise payable
or deliverable to the holders of the Subordinated Notes.
(d) Upon any payment (including by redemption) which is not a payment in
full of all of the principal amount and accrued interest of all
outstanding Subordinated Notes, the aggregate amount of the payments
shall be allocated to all the Subordinated Notes then outstanding in
proportion to the amounts of principal and interest due thereunder, so
that the amount of principal and interest paid under this Note shall
bear the same ratio to the aggregate principal and accrued interest
paid under all of the Subordinated Notes as the then outstanding
principal and accrued interest then owed under this Note bears to the
aggregate principal and accrued interest then owed under all
Subordinated Notes then outstanding.
7. MODIFICATION OF NOTE. This Note may be modified only with the written
consent of the Noteholder and the Issuer.
8. MISCELLANEOUS. This Note shall be governed by and be construed in
accordance with the laws of the State of New York without regard to the
conflicts of law rules of such state. The Issuer hereby waives presentment,
demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this Note,
except as specifically provided herein, and assents to extensions of the
time of payment, or forbearance or other indulgence without notice. The
section headings herein are for convenience only and shall not affect the
construction hereof. THE ISSUER AND THE NOTEHOLDER HEREBY IRREVOCABLY WAIVE
ALL RIGHT TO
Page 4 of 5
14
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS NOTE.
9. SUBMISSION TO JURISDICTION. The Issuer irrevocably submits to the
exclusive jurisdiction of the Supreme Court of the State of New York,
New York County, and the United States District Court for the
Southwestern District of New York, for the purposes of any suit,
action or other proceeding arising out of this Note. The Issuer
further agrees that service of any process, summons, notice or
document by U.S. registered mail to the Issuer address set forth below
shall be effective service of process for any action, suit or
proceeding in the State of New York with respect to any matters to
which it has submitted to jurisdiction in this paragraph. The Issuer
irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Note in
the Supreme Court of the State of New York, New York County, or the
United States District Court for the Southern District of New York,
and hereby and thereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed
as of the date first set forth above.
OAKHURST COMPANY, INC.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
By: /s/ MAARTEN X. XXXXXXX
-----------------------------
Maarten X. Xxxxxxx, President
Page 5 of 5
15
EXHIBIT B
THE SALE AND ISSUANCE OF THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED,
SOLD, PLEDGED, OR TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE ACT
IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS
IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION
OR (ii) THERE IS AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY
TO THE COMPANY, THAT AN EXEMPTION THEREFROM IS AVAILABLE AND THAT SUCH OFFER,
SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY
STATE OR OTHER JURISDICTION.
WARRANT NO. KTI-1 321,296 Shares
(subject to adjustment and increase)
DATE: July 3, 2001
WARRANT TO PURCHASE COMMON STOCK
OF
OAKHURST COMPANY, INC.
Void after July 3, 2011
This certifies that for value received, KTI, INC., a New Jersey corporation, or
registered assigns (the "Holder") is entitled, subject to the terms set forth
below, to purchase from Oakhurst Company, Inc., a Delaware corporation (the
"Company") (i) the greater of Three Hundred Twenty-One Thousand Two Hundred
Ninety-Six (321,296) shares of the Common Stock, $0.01 par value per share, of
the Company (the "Common Stock") or ten percent (10%) of the issued and
outstanding common stock of the Company on the Warrant Issue Date (as defined
below;) plus (ii) ten percent (10%) of the number of shares of Common Stock
issued to the shareholders of Sterling Construction Company of Houston, Texas
existing on the date hereof (collectively, the "Warrant Shares") upon surrender
hereof, at the principal office of the Company referred to below, with the
subscription form attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States or otherwise as hereinafter
provided, at the Exercise Price set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall include
this Warrant and any warrants delivered in substitution or exchange therefor as
provided herein.
This Warrant is issued effective April 19, 2001 (the "Warrant Issue Date") in
connection with that certain Windup Agreement dated as of April 19, 2001 between
the Company, Oakhurst Technology, Inc and KTI, Inc.
1. TERM OF WARRANT. Subject to the terms and conditions set forth herein and
except as provided below, this Warrant shall be exercisable, in whole or in
part, during the term commencing on the date that is fifty-four (54) months
after the Warrant Issue Date and ending at 5:00 p.m., Eastern Time on the
tenth (10th) anniversary of the Warrant Issue Date, and shall be void
thereafter. Notwithstanding the foregoing, this Warrant shall become
exercisable commencing immediately prior to the occurrence of any event
described in Section 11(a) below that results in a person or group of
persons acquiring more than fifty percent (50%) of the issued and
outstanding capital stock of the Company on a fully-diluted basis. For
purposes of this Warrant, a "person" shall be deemed to
Page 1 of 16
16
include natural persons, firms, corporations, partnerships, associations,
joint ventures, joint stock companies, trusts, unincorporated organizations
and any other private or public entities, whether or not any of the
foregoing are acting on their behalf or in a representative capacity.
2. EXERCISE PRICE. The Exercise Price at which this Warrant may be exercised
shall be equal to One Dollar and Fifty Cents ($1.50) per share. The
Exercise Price shall be subject to adjustment as provided below.
3. EXERCISE OF WARRANT.
(a) The purchase rights represented by this Warrant are exercisable by the
Holder in whole or in part at any time, or from time to time, during
the term hereof as set forth in Section 1, above, by the surrender of
this Warrant and the Notice of Exercise attached as Annex I hereto
duly completed and executed on behalf of the Holder, at the principal
office of the Company (or such other office or agency of the Company
as it may designate by notice in writing to the Holder at the address
of the Holder appearing on the books of the Company), upon payment by
cashier's check payable to the Company or by wire transfer of the
purchase price of the shares to be purchased.
(b) This Warrant shall be deemed to have been exercised at 5:00 p.m.
Eastern Time on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all purposes as the
holder of record of such shares at such date and time. As promptly as
practicable on or after such date and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to
the person or persons entitled to receive the same a certificate or
certificates for the number of shares issuable upon such exercise. In
the event that this Warrant is exercised in part, the Company at its
expense shall execute and deliver a new Warrant of like tenor
exercisable for the number of shares for which this Warrant may then
be exercised.
(c) Notwithstanding the provisions of Section 3(a), above, the Holder may
at its option elect to pay some or all of the purchase price payable
upon an exercise of this Warrant by canceling a portion of this
Warrant exercisable for such number of Warrant Shares as is determined
by dividing (i) the total purchase price payable in respect of the
number of Warrant Shares being purchased upon such exercise by (ii)
the excess of the Fair Market Value per share of Common Stock (as
defined below) as of the exercise date over the Exercise Price per
share.
(d) For purposes of this Warrant, the "Fair Market Value" per share of
Common Stock shall be determined as follows: (i) If the Common Stock
is listed on a national securities exchange, the Nasdaq National
Market or another nationally recognized trading system as of the
exercise date, the Fair Market Value per share of Common Stock shall
be deemed to be the average of the high and low reported sale prices
per share of Common Stock thereon on the trading day immediately
preceding the exercise date (provided that if no such price is
reported on such day, the Fair Market Value per share of Common Stock
shall be determined pursuant to the following clause (ii)); and (ii)
if the Common Stock is not listed on a national securities exchange,
the Nasdaq National Market or another nationally recognized trading
system as of the Exercise Date, the Fair Market Value per share of
Common Stock shall be deemed to be the amount most recently determined
by the Board of Directors of the Company to represent the fair market
value per share of the Common Stock. Upon request of the Holder, the
Board of Directors (or a representative thereof) shall promptly notify
the Holder of the Fair Market Value per share of Common Stock.
Page 2 of 16
17
Upon request of the Holder, the Board of Directors (or a
representative thereof) shall promptly notify the Holder of the Fair
Market Value per share of Common Stock. Notwithstanding the
foregoing, if the Board of Directors has not made such a
determination within the three-month period prior to the exercise
date, then the Board of Directors shall make a determination of the
Fair Market Value per share of the Common Stock within fifteen (15)
days of a request by the Holder that it do so; and the exercise of
this Warrant pursuant to this subsection shall be delayed until such
determination is made.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In
lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Fair Market
Value per share of Common Stock multiplied by such fraction.
5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and substance to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this
Warrant, a new warrant of like tenor and amount.
6. RIGHTS OF STOCKHOLDERS. Subject to Sections 9 and 11 of this Warrant, the
Holder, as such, shall not be entitled to vote or receive dividends or be
deemed the holder of Common Stock or any other securities of the Company
that may at any time be issuable on the exercise hereof for any purpose,
nor shall anything contained herein be construed to confer upon the Holder,
as such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to no
par value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or
otherwise until this Warrant shall have been exercised as provided herein.
7. TRANSFER OF WARRANT.
(a) Warrant Register. The Company shall maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or
Holders. Any Holder of this Warrant or any portion thereof may change
his address as shown on the Warrant Register by written notice to the
Company requesting such change. Any notice or written communication
required or permitted to be given to the Holder may be delivered or
given by mail to such Holder as shown on the Warrant Register and at
the address shown on the Warrant Register. Until this Warrant is
transferred on the Warrant Register, the Company may treat the Holder
as shown on the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary.
(b) Warrant Agent. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register,
issuing the Common Stock or other securities then issuable upon the
exercise of this Warrant, exchanging this Warrant, replacing this
Warrant, or any or all of the foregoing. Thereafter, any such
Page 3 of 16
18
registration, issuance, exchange, or replacement, as the case may be,
shall be made at the office of such agent.
(c) Transferability and Non-negotiability of Warrant.
(i) This Warrant may not be transferred or assigned in whole or in
part without compliance with all applicable federal and state
securities laws by the transferor and the transferee (including
the delivery of investment representation letters and legal
opinions reasonably satisfactory to the Company, if such are
reasonably requested by the Company.)
(ii) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (A) a transfer by the Holder to an
affiliate, provided that the transferee agrees in writing to be
subject to the terms of this Section 7; or (B) a transfer made
in accordance with Rule 144 under the Act.
(iii) Subject to the foregoing restrictions, this Warrant may be
transferred by endorsement (by the Holder executing the
Assignment Form attached as Annex II hereto) and delivery in the
same manner as a negotiable instrument transferable by
endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for
exchange, properly endorsed on the Assignment Form and subject to the
provisions of this Warrant with respect to compliance with the Act and
with the limitations on assignments and transfers contained in this
Section 7, the Company at its expense shall issue to or on the order
of the Holder a new warrant or warrants of like tenor, in the name of
the Holder or as the Holder (on payment by the Holder of any
applicable transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
(e) Compliance with Securities Laws. The Holder of this Warrant, by
acceptance hereof, acknowledges (i) that this Warrant and the shares
of Common Stock to be issued upon exercise hereof are being acquired
solely for the Holder's own account and not as a nominee for any other
party, and for investment, and (ii) that the Holder shall not offer,
sell or otherwise dispose of this Warrant or any shares of Common
Stock to be issued upon exercise hereof except under circumstances
that will not result in a violation of the Act or any state securities
laws. Upon exercise of this Warrant, the Holder shall, if requested by
the Company, confirm in writing, in a form reasonably satisfactory to
the Company, that the shares of Common Stock so purchased are being
acquired solely for the Holder's own account and not as a nominee for
any other party, for investment, and not with a view toward
distribution or resale.
8. RESERVATION OF STOCK. The Company covenants that during the term that this
Warrant is exercisable, the Company shall reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, from time
to time, shall take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock
issuable upon exercise of this Warrant. The Company further covenants that
all shares that may be issued upon the exercise of rights represented by
this Warrant, and payment of the Exercise Price, all as set forth herein,
will be free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein). The Company agrees that
its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty
Page 4 of 16
19
of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the exercise of this Warrant.
9. NOTICES.
(a) Whenever the Exercise Price or number of shares purchasable hereunder
shall be adjusted pursuant to Section 11 hereof, the Company shall
issue a certificate signed by its Chief Financial or Chief Executive
Officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Exercise Price and number of shares
purchasable hereunder after giving effect to such adjustment, and
shall cause a copy of such certificate to be mailed by first-class
mail, postage prepaid, to the Holder of this Warrant.
(b) In the event --
(i) that the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant) for the purpose of
entitling them to receive any dividend or other distribution, or
any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other
right; or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of
the assets of the Company to another corporation; or
(iii) of any voluntary dissolution, liquidation or winding-up of the
Company, then, and in each such case, the Company shall mail or
cause to be mailed to the Holder or Holders a notice specifying,
as the case may be, (1) the date on which a record is to be
taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend,
distribution or right; or (2) the date on which such
reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or securities
at the time receivable upon the exercise of this Warrant) shall
be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 15 days prior
to the date therein specified.
(c) All such notices, advice and communications shall be deemed to have
been received (i) in the case of personal delivery, on the date of
such delivery and (ii) in the case of mailing, on the third business
day following the date of such mailing.
10. AMENDMENTS & WAIVERS.
(a) Any term of this Warrant may be amended with the written consent of
the Company and the Holder.
(b) No waivers of, or exceptions to, any term, condition or provision of
this Warrant, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of or exception to any
such term, condition or provision.
Page 5 of 16
20
11. ADJUSTMENTS. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:
(a) Merger, Sale of Assets, etc.
(i) If at any time while this Warrant or any portion hereof is
outstanding and unexpired, there shall be (A) a reorganization
(other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein); (B) a
merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity or
a merger (including a reverse triangular merger) in which the
Company is the surviving entity but the shares of the Company's
capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether
in the form of securities, cash, or otherwise; or (C) a sale or
transfer of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a
part of such reorganization, merger, consolidation, sale or
transfer, lawful provision shall be made so that the holder of
this Warrant shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of
shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the shares
deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, consolidation, merger,
sale or transfer, all subject to further adjustment as provided
in this Section 11.
(ii) Notwithstanding the foregoing sentence, if (A) there shall occur
any reorganization, consolidation, merger, sale or transfer
involving the Company in which the Common Stock is converted
into or exchanged for anything other than solely equity
securities; (B) the common stock of the acquiring or surviving
company is publicly traded; and (C) the acquiring or surviving
company agrees to the following, then, as part of any such
reorganization, recapitalization, consolidation or merger, (1)
the Holder shall have the right thereafter to receive upon the
exercise of this Warrant such number of shares of common stock
of the acquiring or surviving company as is determined by
multiplying (x) the number of shares of Common Stock then
subject to this Warrant by (y) a fraction, the numerator of
which is the Fair Market Value per share of Common Stock as of
the effective date of such transaction, and the denominator of
which is the fair market value per share of common stock of the
acquiring or surviving company as of the effective date of such
transaction, as determined in good faith by the Board of
Directors of the Company (using the principles set forth in
Section 3(d) to the extent applicable); and (2) the exercise
price per share of common stock of the acquiring or surviving
company shall be the Exercise Price divided by the fraction
referred to in clause (y) above.
(iii) The foregoing provisions of this Section 11(a) shall similarly
apply to successive reorganizations, consolidations, mergers,
sales and transfers and to the stock or securities of any other
corporation that are at the time receivable upon the exercise of
this Warrant. If the per share consideration payable to the
holder hereof for shares in connection with any such transaction
is in a form other than cash or marketable securities, then the
value of such consideration shall be
Page 6 of 16
21
determined in good faith by the Company's Board of Directors. In
all events, appropriate adjustment (as determined in good faith
by the Company's Board of Directors) shall be made in the
application of the provisions of this Warrant with respect to
the rights and interest of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable
after that event, as near as reasonably may be, in relation to
any shares or other property deliverable after that event upon
exercise of this Warrant.
(b) Reclassification, etc. If the Company, at any time while this Warrant
or any portion hereof remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject
to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Exercise Price therefor shall
be appropriately adjusted, all subject to further adjustment as
provided in this Section 11.
(c) Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant or any portion hereof remains outstanding and
unexpired, shall split, subdivide or combine the securities as to
which purchase rights under this Warrant exist, into a different
number of securities of the same class, the Exercise Price for such
securities shall be proportionately decreased, and the number of
shares of such securities for which this Warrant may be exercised
shall be proportionately increased, in the case of a split or
subdivision, or the Exercise Price for such securities shall be
proportionately increased and the number of shares of such securities
for which this Warrant may be exercised shall be proportionately
decreased, in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property. If
at any time while this Warrant or any portion hereof remains
outstanding and unexpired the holders of the securities as to which
purchase rights under this Warrant exist at the time shall have
received, or, on or after the record date fixed for the determination
of eligible stockholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the
right to acquire, in addition to the number of shares of the security
receivable upon exercise of this Warrant, and without payment of any
additional consideration therefor, the amount of such other or
additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise
had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during
the period from the date hereof to and including the date of such
exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this
Section 11. Notwithstanding the foregoing, the Company agrees that it
shall not make or authorize any cash dividend or other distribution of
property (other than securities) on its capital stock to any holders
thereof unless the Warrant is or is made to become
Page 7 of 16
22
exercisable at such date and shall remain exercisable from such date
until the 10th anniversary of the Warrant Issue Date.
(e) Adjustment For Diluting Issuances.
(i) For purposes of this Section 11(e), the following definitions
shall apply:
(A) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or
indirectly convertible into or exchangeable for Common
Stock other than Excluded Securities (as defined below;)
(B) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities, other than Excluded Securities;
(C) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued (or deemed to be issued) by the
Company after the Warrant Issue Date, other than:
(1) shares of Common Stock issued or issuable upon
conversion or exchange of any Convertible Securities
outstanding on the Warrant Issue Date;
(2) Excluded Securities; or
(3) shares of Common Stock issued or issuable by reason
of a dividend, stock split, split-up or other
distribution on shares of Common Stock that are
covered elsewhere in this Section 11.
(D) "Excluded Securities" shall mean Common Stock issued to
officers, employees, or directors of, or consultants to,
the Company (including officers, employees, or directors
of, or consultants to its affiliates), pursuant to any
agreement, plan, or arrangement that has been approved by
the Board of Directors of the Company, or options to
purchase or rights to subscribe for such Common Stock or
securities by their terms convertible into or exchangeable
for such Common Stock, or options to purchase or rights to
subscribe for such convertible or exchangeable securities,
in each case as approved by the Board of Directors;
provided, however, that to the extent the number of shares
of Common Stock issued or issuable pursuant to all such
agreements, plans, arrangements, options and rights exceed
an aggregate of ten percent (10%) of the Common Stock
outstanding from time to time on a fully diluted basis,
such shares shall not be considered Excluded Securities.
(ii) In the event the Company shall at any time after the Warrant
Issue Date issue Additional Shares of Common Stock, without
consideration or for a consideration per share less than the
Exercise Price in effect immediately prior to such issue, then
and in such event, the Exercise Price shall be reduced,
concurrently with such issue, to the price (calculated to the
nearest cent) determined by multiplying such Exercise Price by a
fraction, (A) the numerator of which shall be (1) the number of
shares of Common Stock outstanding immediately prior to such
issue plus (2) the number of shares of Common Stock which the
aggregate consideration received or to be received by the
Company for the total number of Additional Shares of Common
Stock so issued would purchase at such Exercise Price; and (B)
the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the
number of such Additional Shares of Common Stock so issued;
provided that, (x) for the
Page 8 of 16
23
purpose of this subsection 11(e), all shares of Common Stock
issuable upon conversion or exchange of Convertible Securities
outstanding immediately prior to such issue shall be deemed to
be outstanding, and (ii) the number of shares of Common Stock
deemed issuable upon conversion or exchange of such outstanding
Convertible Securities shall not give effect to any adjustments
to the conversion or exchange price or conversion or exchange
rate of such Convertible Securities resulting from the issuance
of Additional Shares of Common Stock that is the subject of this
calculation. In addition, the number of Warrant Shares
purchasable upon the exercise of this Warrant shall be changed
to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant
immediately prior to such adjustment, multiplied by the Exercise
Price in effect immediately prior to such adjustment, by (ii)
the Exercise Price in effect immediately after such adjustment.
(iii) If the Company at any time or from time to time after the
Warrant Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of
shares of Common Stock (as set forth in the instrument relating
thereto without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise
of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common
Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business
on such record date, provided that Additional Shares of Common
Stock shall not be deemed to have been issued unless the
consideration per share of such Additional Shares of Common
Stock would be less than the Exercise Price in effect on the
date of and immediately prior to such issue, or such record
date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be
issued: (i) no further adjustment in the Exercise Price shall be
made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities; (ii) if
such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Company, then upon
the exercise, conversion or exchange thereof, the Exercise Price
computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible
Securities; (iii) upon the expiration or termination of any such
unexercised Option, the Exercise Price shall not be readjusted;
(iv) in the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange
of any such Option or Convertible Security, including, but not
limited to, a change resulting from the anti-dilution provisions
thereof, the Exercise Price then in effect shall forthwith be
readjusted to such Exercise Price as would have obtained had the
adjustment which was made upon the issuance of such Option or
Convertible Security not exercised, converted or exchanged prior
to such change been made
Page 9 of 16
24
upon the basis of such change; and (v) no readjustment pursuant
to clause (ii) or (iv) above shall have the effect of increasing
the Exercise Price to an amount which exceeds the lower of (A)
the Exercise Price on the original adjustment date, or (B) the
Exercise Price that would have resulted from any issuances of
Additional Shares of Common Stock between the original
adjustment date and such readjustment date. In the event the
Company, after the Warrant Issue Date, amends the terms of any
such Options or Convertible Securities (whether such Options or
Convertible Securities were outstanding on the Warrant Issue
Date or were issued after the Warrant Issue Date), then such
Options or Convertible Securities, as so amended, shall be
deemed to have been issued after the Warrant Issue Date and the
provisions of this subsection 11(e)(iii) shall apply.
(iv) The consideration per share received by the Company for
Additional Shares of Common Stock deemed to have been issued
pursuant to subsection 11(e)(iii), relating to Options and
Convertible Securities, shall be determined by dividing: (i)the
total amount, if any, received or receivable by the Company as
consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the
Company upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options
for Convertible Securities and the conversion or exchange of
such Convertible Securities, by (ii) the maximum number of
shares of Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such
Convertible Securities.
(f) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 11, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Holder of this
Warrant a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request, at
any time, of any such Holder, furnish or cause to be furnished to such
Holder a like certificate setting forth (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and
(iii) the number of shares and the amount, if any, of other property
that at the time would be received upon the exercise of the Warrant.
(g) No Impairment. The Company shall not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder
by the Company, but shall at all times in good faith assist in the
carrying out of all the provisions of this Section 11 and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder of this Warrant against
impairment.
(h) The Company represents to the Holder that attached hereto as Annex IV
is a complete and accurate list of the capitalization of the Company
including a complete and
Page 10 of 16
25
accurate list of (i) all outstanding shares of Common Stock of the
Company on a fully diluted basis (assuming the conversion into, or
exercise for, Common Stock of all securities, including warrants and
options, convertible into or exercisable for, Common Stock,)
indicating in each such case (A) the number and class or series of
Company shares subject to each option and warrant and (for Company
shares other than Common Stock) the number of share of Common Stock
(if any) into which such Company shares are convertible; (B) the
exercise price, date of grant, vesting schedule and expiration date
for each option or warrant; and (C) any terms regarding the
acceleration of vesting; (ii) all stock option plans and other stock
or equity-related plans of the Company, including an indication of the
number of shares issuable thereunder; and (iii) an estimate of the
shares and warrants anticipated to be issued in the contemplated
transaction with Sterling Construction Company.
12. REGISTRATION RIGHTS. Whenever the Company proposes to file a registration
statement under the Act with respect to the Common Stock (a "Registration
Statement") at any time and from time to time, prior to such filing it will
give written notice to the Holder of its intention to do so. Upon the
written request of the Holder given within twenty (20) days after the
Company provides such notice (which request shall state the Holder's
intended method of disposition of such shares), the Company shall use
commercially reasonable efforts to cause all Warrant Shares which the
Company has been requested by the Holder to register to be registered under
the Act to the extent necessary to permit their sale or other disposition
in accordance with the intended methods of distribution specified in the
request of the Holder. If the registration for which the Company gives such
notice is a registered public offering involving an underwriting, the
Company shall so advise the Holder and the right of the Holder to include
its Warrant Shares in such registration shall be conditioned upon the
Holder's participation in such underwriting on the terms thereof, which
terms, however, shall be no more onerous to the Holder than the terms
applicable to all stockholders registering shares under the Registration
Statement, and if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten,
the number of Warrant Shares to be included in the Registration Statement
shall be accordingly reduced; provided however, that the number of shares
that the Holder shall be entitled to include shall not be less than its pro
rata share of the shares to be registered by it and by the holders of the
Sterling Warrants (as defined below), or the shares issuable hereunder and
thereunder, based on the number of shares issuable under this Warrant in
relation to the shares issuable hereunder and under the Sterling Warrant.
(a) Registration Procedures. In connection with the filing by the Company
of a Registration Statement, the Company shall furnish to the Holder a
copy of the prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act. The Company shall use
commercially reasonable efforts to register or qualify the Warrant
Shares covered by the Registration Statement under the securities laws
of each state of the United States; provided, however, that the
Company shall not be required in connection with this Section 12(a) to
qualify as a foreign corporation or execute a general consent to
service of process in any jurisdiction. If the Company has delivered
preliminary or final prospectuses to the Holder and after having done
so the prospectus is amended or supplemented to comply with the
requirements of the Act, the Company shall promptly notify the Holder
and, if requested by the Company, the Holder shall immediately cease
making offers or sales of shares under the Registration Statement and
return all prospectuses to the
Page 11 of 16
26
Company. The Company shall promptly provide the Holder with revised or
supplemented prospectuses and, following receipt of the revised or
supplemented prospectuses, the Holder shall be free to resume making
offers and sales under the Registration Statement. The Company shall
pay the expenses incurred by it in complying with its obligations
under this Section 12, including all registration and filing fees,
exchange listing fees, fees and expenses of counsel for the Company,
and fees and expenses of accountants for the Company, but excluding
(i) any brokerage fees, selling commissions or underwriting discounts
incurred by the Holder in connection with sales under the Registration
Statement and (ii) the fees and expenses of any counsel retained by
Holder.
(b) Requirements of Holder. The Company shall not be required to include
any Warrant Shares in the Registration Statement unless:
(i) the Holder furnishes to the Company in writing such information
regarding the Holder and the proposed sale of Warrant Shares by
the Holder as the Company may reasonably request in writing in
connection with the Registration Statement or as shall be
required in connection therewith by the U.S. Securities and
Exchange Commission or any state securities law authorities;
(ii) the Holder shall have provided to the Company its written
agreement:
(A) to indemnify the Company and each of its directors and
officers against, and hold the Company and each of its
directors and officers harmless from, any losses, claims,
damages, expenses or liabilities (including reasonable
attorneys fees) to which the Company or such directors and
officers may become subject by reason of any statement or
omission in the Registration Statement made in reliance
upon, or in conformity with, a written statement by the
Holder furnished pursuant to Section 12(b)(i); and
(B) to report to the Company sales made pursuant to the
Registration Statement.
(c) Indemnification. The Company agrees to indemnify and hold harmless the
Holder against any losses, claims, damages, expenses or liabilities to
which Holder may become subject by reason of any untrue statement of a
material fact contained in the Registration Statement or any omission
to state therein a fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such
losses, claims, damages, expenses or liabilities arise out of or are
based upon information furnished to the Company by the Holder for use
in the Registration Statement.
13. GENERAL.
(a) Governing Law. This Warrant shall be governed by and construed
according to the laws of the State of Delaware.
(b) Delays or Omissions. No delay or omission to exercise any right,
power, or remedy accruing to either party upon any breach or default
under this Warrant, shall be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit,
consent, or approval of any kind or character on the part of either
party of any breach or default under this Warrant, or any waiver on
the part of either party of any provisions or conditions of this
Warrant, must be in writing and signed by the party to be bound
thereby. All remedies, either under this Warrant or by law or
otherwise afforded to either of the parties, shall be cumulative and
not alternative.
Page 12 of 16
27
(c) Captions. Captions of sections have been added only for convenience
and shall not be deemed to be a part of this Warrant.
(d) Receipt. Upon the receipt of this Warrant, KTI, Inc. shall execute and
deliver to the Company the form of Receipt attached hereto as Annex
III.
(e) Sterling Construction Company. The Company agrees that the warrants or
other rights to purchase Common Stock issuable in connection with the
Company's anticipated transactions with Sterling Construction Company
(the "Sterling Warrant") shall at all times be substantially the same
from an economic viewpoint as this Warrant (other than the number of
shares issuable thereunder and the differences in their issue dates.)
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by an
officer thereunto duly authorized.
OAKHURST COMPANY, INC.
By: /s/ MAARTEN X. XXXXXXX
-----------------------------
Maarten X. Xxxxxxx, President
Page 13 of 16
28
ANNEX I
NOTICE OF EXERCISE
TO: Oakhurst Company, Inc.:
(1) The undersigned hereby irrevocably elects to purchase _____ shares of
Common Stock of Oakhurst Company, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price
for such shares in full consisting of
$______ in lawful money of the United States; or
the cancellation of such portion of the attached Warrant as is
exercisable for a total of
__________ Warrant Shares (using a Fair Market Value per share of
Common Stock
of $________ for purposes of this calculation).
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely
for the account of the undersigned and not as a nominee for any other
party, and for investment, and that the undersigned shall not offer,
sell or otherwise dispose of any such shares of Common Stock except
under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
Common Stock, and pay any cash for any fractional share to:
NAME ADDRESS NUMBER OF SHARES
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned and/or, if the undersigned has
completed an Assignment Form in the form of Annex II to this Warrant,
in such other names and amounts as is specified in such Assignment
Form.
Dated: Holder:
--------------------- ---------------------------------
By:
-------------------------------------
Name:
Title:
Page 14 of 16
29
ANNEX II
ASSIGNMENT FORM
For value received, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:
and does hereby irrevocably constitute and appoint Attorney ____________________
to make such transfer on the books of Oakhurst Company, Inc. maintained for such
purpose, with full power of substitution in the premises.
NAME ADDRESS NUMBER OF SHARES
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of Common Stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee shall
not offer, sell or otherwise dispose of this Warrant or any shares of stock to
be issued upon exercise hereof except under circumstances which will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws.
Further, the Assignee has acknowledged that upon exercise of this Warrant, the
Assignee shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the shares of stock so purchased are being
acquired for investment and not with a view toward distribution or resale.
Dated: Holder:
--------------------- ---------------------------------
By:
-------------------------------------
Name:
Title:
Page 15 of 16
30
ANNEX III
WARRANT RECEIPT
The undersigned KTI, Inc. hereby acknowledges and represents to Oakhurst
Company, Inc. (the "Company") (i) that it has received that certain Warrant To
Purchase Common Stock dated July 3, 2001 covering the shares of the common
stock, $0.01 par value per share, of the Company provided for in the first
paragraph of such warrant (the "Warrant;") and (ii) that on the date hereof the
Warrant has a nominal value, is speculative in nature, and that there is
substantial risk that the Warrant will not be exercised.
KTI, INC.
By: /s/ XXXX X. XXXXXXX Dated: July 3, 2001
------------------------------- --------------------
Xxxx X. Xxxxxxx
President
Page 16 of 16
31
EXHIBIT C
ASSIGNMENT OF INTEREST
This Assignment of Interest dated April 19, 2001 is executed and
delivered by Oakhurst Technology, Inc., a Delaware corporation ("OTI"), to KTI,
Inc., a New Jersey corporation ("KTI"). All capitalized words and terms used in
this Assignment of Interest and not defined herein shall have the respective
meanings ascribed to them in the Wind-Up Agreement dated April 19, 2001 by and
among KTI, OTI and Oakhurst Company, Inc., a Delaware corporation (the
"Agreement").
WHEREAS, pursuant to the Agreement, OTI has agreed to sell, transfer,
convey, assign and deliver to KTI all of OTI's equity interest in New Heights;
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, OTI hereby agrees as follows:
1. OTI hereby sells, transfers, conveys, assigns and delivers to KTI,
its successors and assigns, to have and to hold forever, 5,972,625 units of
equity interest in New Heights (the "Interest"). This Assignment shall vest in
KTI, its successors and assigns, title to the Interest. The Interest comprises
all of the ownership interests of New Heights that is owned by OTI and its
affiliates.
2. OTI hereby covenants and agrees that it will, at the request of KTI
and without further consideration, execute and deliver, and will cause its
employees to execute and deliver, such other instruments of sale, transfer,
conveyance and assignment, and take such other action as may reasonably be
necessary to more effectively sell, transfer, convey, assign and deliver to, and
vest in, KTI, its successors and assigns, title to the Interest, and to put KTI
in actual possession and control thereof, to assist KTI in exercising all rights
with respect thereto and to carry out the purpose and intent of the Agreement.
3. OTI does hereby irrevocably constitute and appoint KTI, its
successors and assigns, its true and lawful attorney, with full power of
substitution, in its name or otherwise, and on behalf of OTI, or for its own
use, to claim, demand, collect and receive at any time and from time to time any
and all assets, properties, claims, accounts and other rights, tangible or
intangible, hereby sold, transferred, conveyed, assigned and delivered, or
intended so to be, and to prosecute the same at law or in equity and, upon
discharge thereof, to complete, execute and deliver any and all necessary
instruments of satisfaction and release.
4. OTI, by its execution of this Assignment of Interest, and KTI, by
its acceptance of this Assignment of Interest, each hereby acknowledges and
agrees that neither the representations and warranties nor the rights and
remedies of any party under the Agreement shall be deemed to be enlarged,
modified or altered in any way by this instrument.
[Signature page follows]
32
[SIGNATURE PAGE TO ASSIGNMENT OF INTEREST]
IN WITNESS WHEREOF, OTI and KTI have caused this instrument to be duly
executed under seal as of and on the date first above written.
OAKHURST TECHNOLOGY, INC.
By: /s/ MAARTEN X. XXXXXXX
-----------------------------------
Maarten X. Xxxxxxx
President
[Corporate Seal]
Attest:
--------------------------------------
Agreed and Accepted:
KTI, INC.
By: /s/ XXXX X. XXXXXXX
-----------------------------------
Xxxx X. Xxxxxxx
President
33
EXHIBIT D
FIRST AMENDMENT TO
NEW HEIGHTS POWER & RECOVERY, LLC
LIMITED LIABILITY COMPANY AGREEMENT
This First Amendment to the New Heights Power & Recovery, LLC Limited
Liability Company Agreement (the "Agreement") by and among the Members (as
defined therein), is effective as of this 19th day of April, 2001. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Agreement.
WHEREAS, the Members have entered into the Agreement;
WHEREAS, Oakhurst Technology, Inc., a Delaware corporation ("KTIA"),
is, on the date hereof, transferring its Company Interest to KTI, Inc., a New
Jersey corporation ("KTI");
WHEREAS, the Members desire to amend the Agreement to provide for the
admission of KTI as a Member under the Agreement in the place of KTIA;
NOW THEREFORE, in consideration of the foregoing, the Agreement is
amended as follows:
1. Insert the following paragraph immediately following Paragraph G of the
Recitals to the Agreement:
"H. Pursuant to that certain Wind-Up Agreement (the "Wind-Up
Agreement") dated as of April 19, 2001 by and among KTI, KTIA and Oakhurst
Company, Inc., a Delaware corporation, KTIA agreed to transfer all of its equity
interest in the Company to KTI and KTI agreed to assume all of the rights and
obligations of KTIA under the Agreement."
2. The defined term "KTIA Directors" in Article 1 shall be deleted and the
following shall be inserted in lieu thereof:
"KTI Directors has the meaning assigned in Section 5.2(a)."
3. The defined term "KTIA Units" in Article 1 shall be deleted and the following
shall be inserted in lieu thereof:
"KTI Units means the Units issued to KTI in consideration of its
contributions to the Company under Sections 4.1 and 4.2 hereof and the
Investment Agreement and the Units transferred by KTIA to KTI pursuant to the
Wind-Up Agreement or otherwise."
4. The defined term "Units" in Article 1 shall be deleted and the following
shall be inserted in lieu thereof:
34
"Units means units of Company Interest owned by the Members. Units
entitle the holder to vote the holder's respective Percentage Interest and to
receive a percentage Financial Interest. Total authorized Units are 15,927,000
Units. The number of Units issued on the day after the Effective Date of this
Agreement and to be held by the initial Members is 15,927,000. Total issued and
outstanding Units of the Company are divided equally between Bondholder Units
and KTI Units and certificates with respect thereto will be issued to the
Members. Bondholder Units in the amount of 7,963,500 Units will be issued
representing one (1) Unit for each $10.00 of outstanding Allowed Secured Claims,
subject to a proportionate reduction and reallocation for Units issued to the
Plan Contribution Lenders (in the maximum amount of 1,333,333 Units,
representing one (1) Unit for each $1.50 of Plan Contribution made by a Plan
Contribution Lender up to a maximum of $2,000,000), and an additional adjustment
and reallocation among the Bondholder Members for Units not issued to holders of
Allowed Secured Claims because of an election by them to receive cash in lieu of
such Units or where redemption of such Units for cash has been determined to be
necessary under the Plan to limit the number of Bondholder Members, and with
respect to which cash has been paid by the Company to the holder of an Allowed
Secured Claim in lieu of issuing such Units. Irrespective of the number of Units
redeemed and reallocated to the Bondholder Members or otherwise reallocated as a
result of the Plan Contribution by the Plan Contribution Lender or redemption of
Units for cash, the Bondholder Members will collectively own 7,963,500 Units as
of the day after the Effective Date hereof. KTI currently owns 7,963,500 Units."
5. Section 3.1 of the Agreement shall be deleted and the following shall be
inserted in lieu thereof:
"3.1 Members.
The Members of the Company and the Units allocated to each
Member are set forth on Schedule A. The Members holding Bondholder Units shall
become Members of the Company and be bound by this Agreement effective upon
their deemed contribution to the Company of their portion of the Allowed Secured
Claims exchanged for such Units pursuant to the Plan or upon their making their
proportionate share of the Plan Contribution with respect to the Plan
Contribution Lenders, and without any further action. KTI holds the KTI Units
and is a Member of the Company and is bound by this Agreement. Pursuant to the
Plan, any interest of an Old Member of Ford Heights or the Company, as successor
to Ford Heights, will be deemed extinguished immediately after the admission of
the Members to the Company."
6. All references to "KTIA" in the Agreement, except those in the Recitals and
Article 1 of the Agreement are hereby deleted, and "KTI" shall be inserted in
lieu thereof.
7. All references to "KTIA Directors" in the Agreement are hereby deleted, and
"KTI Directors" shall be inserted in lieu thereof.
8. All references to "KTIA Units" in the Agreement are hereby deleted, and "KTI
Units" shall be inserted in lieu thereof.
35
9. Schedule A to the Agreement is hereby deleted, and the following shall be
inserted in lieu thereof:
SCHEDULE A
NEW HEIGHTS RECOVERY & POWER, LLC
MEMBERS, COMPANY INTERESTS AND UNITS
MEMBER NAME AND PERCENTAGE FINANCIAL
ADDRESS UNITS INTEREST INTEREST
--------------- ----- ---------- ---------
KTI, Inc.
------------------------ 7,963,500 50.00% 50.00%
------------------------
------------------------
Xxxxx Xxxxxxxx Members % %
c/o Xxxxx Xxxxxxxx, Ltd. ---------- -------- --------
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
SCFI Members
c/o SC Fundamental Investments, L.P. % %
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx ---------- -------- --------
Xxx Xxxx, XX 00000
Resurgence Members % %
c/o Resurgence Asset
Management, L.L.C. ---------- -------- --------
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Other Investors (See Schedule A-1) % %
---------- -------- --------
TOTAL 15,927,000 100.00% 100.00%
Authorized and Outstanding Units
Total Authorized Units 15,927,000
Total Issued Units (15,927,000)
------------
Authorized But Unissued Units 0
