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EXHIBIT 10.1
FIFTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment"),
dated as of March 29, 1999, is entered into between FINOVA CAPITAL CORPORATION,
a Delaware corporation ("FINOVA"), and Oakhurst Company, Inc., a Delaware
corporation ("Oakhurst"), Steel City Products, Inc., a Delaware corporation
("SCPI"), Dowling's Fleet Service Co., Inc., a New York corporation ("DFS"),
Oakhurst Management Corporation, a Texas corporation ("OMC"), Oakhurst Holdings,
Inc., a Delaware corporation ("OH"), and G & O Sales Company, a Pennsylvania
corporation ("G&O"), jointly and severally (individually, a "Borrower" and
collectively "Borrowers").
RECITALS
A. Borrowers and FINOVA have previously entered into that certain Loan
and Security Agreement dated as of March 28, 1996, as amended by that certain
First Amendment to Loan and Security Agreement dated as of June, 1996, that
certain Second Amendment to Loan and Security Agreement effective as of June 1,
1997, that certain Third Amendment to Loan and Security Agreement effective as
of October 31, 1997 and that certain Fourth Amendment to Loan and Security
Agreement effective as of December 29, 1998 (collectively, the "Loan
Agreement"), pursuant to which FINOVA has made certain loans and financial
accommodations available to Borrowers. Terms used herein without definition
shall have the meanings ascribed to them in the Loan Agreement.
B. Borrowers have requested that FINOVA renew the term of the Loan
Agreement for a period of one year after the expiration of the current Renewal
Term (said new Renewal Term to expire on March 28, 2000) and in connection with
such renewal, FINOVA and Borrowers wish to (i) increase the advance rate with
respect to the Eligible Inventory of SCPI, (ii) increase the interest rate with
respect to the outstanding Obligations, (iii) amend the negative covenant
relating to Capital Expenditures and (iv) add a financial covenant relating to
Borrowers' EBITDA.
C. FINOVA is willing to give such consent and further renew and amend
the Loan Agreement under the terms and conditions set forth in this Amendment.
Each Borrower is entering into this Amendment with the understanding and
agreement that, except as specifically provided herein, none of FINOVA's rights
or remedies as set forth in the Loan Agreement is being waived or modified by
the terms of this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
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1. Renewal Term of Loan Agreement. FINOVA and each Borrower hereby
confirm and agree that the term of the Loan Agreement shall be renewed for a
period of one (1) year after the expiration of the current Renewal Term. The new
Renewal Term shall expire March 28, 2000.
2. Amendments to the Loan Agreement. FINOVA and each Borrower hereby
agree that the following amendments to the Loan Agreement shall become effective
upon the satisfaction of the conditions set forth in paragraph 3 below:
(a) Amendment to Section 1.1 (Total Facility). Section 1.1 of
the Schedule to Loan Agreement is hereby amended and restated to read
in its entirety as follows:
"The Total Facility for Revolving Loans is Seven Million
Dollars ($7,000,000)."
(b) Amendments to Section 1.2 (Loans).
(i) Clause (ii) of Section 1.2(A)(b) of the Schedule
to Loan Agreement is hereby amended and restated to read in
its entirety as follows:
"(ii) the aggregate Inventory Loans to Borrowers in
an amount equal to the sum of: (x) fifty-five percent (55%) of
the value of Eligible Inventory of SCPI; plus (y) forty-five
percent (45%) of the value of Eligible Inventory of DFS, with
value, in each instance, calculated at the lower of cost or
market determined on a first-in, first-out basis, but not to
exceed with respect to each Borrower, the amounts set forth
below:
Maximum Advance
Borrower Against Eligible Inventory
-------- --------------------------
Oakhurst $ 0
SCPI $ 2,750,000
DFS $ 1,750,000
OMC $ 0
OH $ 0
G&O $ 0"
provided, however, that FINOVA shall also advance Inventory
Loans to the Borrowers, subject to the foregoing subline
limits, in an amount equal to twenty-five percent (25%) of the
value of that portion of each Borrower's Inventory, which
would otherwise be deemed ineligible because such Inventory
had been held by a Borrower in excess of 180 days and
therefore considered slow moving, consisting of out-of-season
Inventory purchased under special purchase arrangements and
held in anticipation of being sold at the next seasonal
market; provided further, however, that
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(x) the aggregate outstanding principal amount of Inventory
Loans to the Borrowers shall not exceed at any time Four
Million Five Hundred Thousand Dollars ($4,500,000), (y) the
aggregate outstanding amount of Revolving Loans advanced to
SCPI against its Eligible Receivables and Eligible Inventory
shall not exceed at any time Four Million Two Hundred Fifty
Thousand Dollars ($4,250,000) and (z) the aggregate
outstanding amount of Revolving Loans advanced to DFS against
its Eligible Receivables and Eligible Inventory shall not
exceed at any time Two Million Seven Hundred Fifty Thousand
Dollars ($2,750,000); and provided, further, however, that
FINOVA may, in its discretion, from time to time, reduce the
applicable advance rate with respect to the Eligible Inventory
of any Borrower to the extent that FINOVA determines that the
appraised value of Eligible Inventory, or any category
thereof, has decreased in any material respect as reported in
the updated appraisals delivered to FINOVA pursuant to Section
6.5 hereof."
(ii) Subsection (B) of Section 1.2 of the Schedule to
the Loan Agreement (entitled "Fixed Asset Loan") is hereby
deleted in its entirety.
(c) Amendment to Section 3.1 (Interest and Fees). The first
sentence of the paragraph under the heading "Interest" set forth in
Section 3.1 of the Schedule to the Loan Agreement (entitled "INTEREST
AND FEES") is hereby amended and restated to read in its entirety as
follows:
"The Borrowers shall pay FINOVA interest on the daily
outstanding balance of the Borrowers' loan account at a per
annum rate of two (2) percentage points in excess of the rate
of interest announced publicly by Citibank, N.A., from time to
time as its base rate (or any successor thereto), which may
not be such institution's lowest rate (the `Base Rate')."
(d) Amendment to Section 6 (Collateral Reporting; Inventory).
The following is hereby added to Section 6 of the Loan Agreement as
Section 6.5:
"6.5 Inventory Appraisals. Borrowers shall, at its expense,
no less than once in any six (6) month period, but at any time
or times as FINOVA may request upon the occurrence of an Event
of Default, deliver or cause to be delivered to FINOVA, at
FINOVA's sole discretion, either verbal reports of desktop
appraisals or written reports of full appraisals as to the
Inventory, in form, scope and methodology acceptable to FINOVA
by an appraiser acceptable to FINOVA, addressed to FINOVA and
upon which FINOVA is expressly permitted to rely (with the
understanding that FINOVA may reduce the advance rates of
Eligible Inventory based on the results of such appraisals as
set forth in Section 1.2(A) of the Schedule)."
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(e) Amendments to Section 13.14 (Financial Covenants).
(i) The paragraph under the heading "Tangible Net
Worth" as set forth in Section 13.14 of the Schedule to the
Loan Agreement (entitled "FINANCIAL COVENANTS") is hereby
amended and restated to read in its entirety as follows:
"Tangible Net Worth: Each of the Borrowers listed
below shall maintain at all
times a Tangible Net Worth of
not less than the amounts set
forth opposite their names
below:
Borrower Tangible Net Worth
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SCPI $3,500,000
DFS $2,000,000
(ii) The following paragraph is hereby added to the
end of Section 13.14 of the Schedule to the Loan Agreement
(entitled "FINANCIAL COVENANTS"):
"EBITDA: As of the end of each fiscal quarter ending
during the periods set forth below,
Borrowers shall have consolidated EBITDA
(net of EBITDA of any Affiliate of a
Borrower not a `Borrower' hereunder) of not
less than the applicable amount indicated
below, measured on a trailing twelve (12)
month basis ending as of the measuring date:
Quarter Ending Amount
-------------- ----------
May 1999 $ 200,000
August 1999 through $ 500,000
November 1999
February 2000 and thereafter $ 700,000"
(f) Amendment to Section 14 (Negative Covenants). The
paragraph under the heading "Capital Expenditures" set forth in Section
14 of the Schedule to Loan and Security (entitled "NEGATIVE COVENANTS")
is hereby amended and restated to read in its entirety as follows:
"Capital Expenditures: The Borrowers shall not make or incur any
Capital Expenditure, that is not financed, if after giving effect
thereto, the aggregate amount of all unfinanced Capital Expenditures
actually made by Borrowers in any fiscal year would exceed Two Hundred
Thousand Dollars ($200,000)."
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(g) Amendment to Section 18.1 (Defined Terms). The following
definition is hereby added to Section 18.1 of the Loan Agreement
(entitled "Defined Terms") in its proper alphabetical order:
"`EBITDA' for any fiscal period of a Borrower, means the net
income of such Borrower for such fiscal period, plus interest
expense, depreciation and amortization and provision for
income taxes for such fiscal period, and excluding
non-recurring miscellaneous income and expenses, all
calculated in accordance with GAAP."
3. Effectiveness of this Amendment. The effectiveness of this Amendment
and the consents provided herein and before FINOVA is required to extend any
credit to Borrowers as provided for by this Amendment is subject to the
fulfillment, of each of the following conditions:
(a) Amendment. FINOVA shall have received this Amendment,
fully executed in a sufficient number of counterparts for distribution
to FINOVA and Borrowers.
(b) Authorizations. FINOVA shall have received evidence that
the execution, delivery and performance by each Borrower and each
guarantor or subordinating creditor of this Amendment and any
instrument or agreement required under this Amendment have been duly
authorized.
(c) Representations and Warranties. The Representations and
Warranties set forth in the Loan Agreement must be true and correct.
(d) Payment of Amendment and Renewal Fees. Borrowers shall
have paid to FINOVA an amendment fee equal to Forty Thousand Dollars
($40,000) in consideration of the amendments provided herein and a
renewal fee equal to Thirty Five Thousand Dollars ($35,000) in
consideration of the renewal of the term of the Loan Agreement, which
fees shall be fully earned and payable as of the date hereof.
(e) Other Required Documentation. All other documents and
legal matters in connection with the transactions contemplated by this
Amendment shall have been delivered or executed or recorded and shall
be in form and substance satisfactory to FINOVA.
4. Fees and Expenses. Each Borrower hereby confirms that pursuant to
Section 13.1 of the Loan Agreement, Borrowers shall reimburse FINOVA for all
costs, fees and expenses incurred by FINOVA in connection with the negotiation,
preparation, execution, delivery, administration and enforcement of this
Amendment, including, but not limited to, attorneys' fees.
5. Representations and Warranties. The Borrowers, jointly and
severally, represent and warrant as follows:
(a) Authority. Each Borrower has the requisite corporate power
and authority to execute and deliver this Amendment, and to perform its
obligations hereunder and
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under the Loan Documents (as amended or modified hereby) to which it is
a party. The execution, delivery and performance by each Borrower of
this Amendment, and the performance by each Borrower of each Loan
Document (as amended or modified hereby) to which it is a party have
been duly approved by all necessary corporate action of such Borrower
and no other corporate proceedings on the part of such Borrower are
necessary to consummate such transactions.
(b) Enforceability. This Amendment has been duly executed and
delivered by each Borrower. This Amendment and each Loan Document (as
amended or modified hereby) is the legal, valid and binding obligation
of each Borrower hereto or thereto, enforceable against such Borrower
in accordance with its terms, and is in full force and effect.
(c) Representations and Warranties. The representations and
warranties contained in each Loan Document (other than any such
representations or warranties that, by their terms, are specifically
made as of a date other than the date hereof) are correct on and as of
the date hereof as though made on and as of the date hereof.
(d) No Default. No event has occurred and is continuing that
constitutes an Event of Default.
6. CHOICE OF LAW. THIS AMENDMENT SHALL BE INTERPRETED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE STATE OF
ARIZONA GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. EACH
BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF MARICOPA, THE STATE OF ARIZONA OR, AT THE
SOLE OPTION OF FINOVA, IN ANY OTHER COURT IN WHICH FINOVA SHALL INITIATE LEGAL
OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY. EACH BORROWER WAIVES ANY OBJECTION OF FORUM NON
CONVENIENS AND VENUE. EACH BORROWER WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON THEM, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE IN THE
MANNER SET FORTH IN SECTION 19.13 OF THE LOAN AGREEMENT FOR THE GIVING OF
NOTICE. EACH BORROWERS FURTHER WAIVES ANY RIGHT THEY MAY OTHERWISE HAVE TO
COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST THEM.
7. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment or by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Amendment.
8. Due Execution. The execution, delivery and performance of this
Amendment are within the power of each Borrower, have been duly authorized by
all necessary corporate action,
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have received all necessary governmental approval, if any, and do not contravene
any law or any contractual restrictions binding on any Borrower.
9. Reference to and Effect on the Loan Documents.
(a) Upon and after the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Loan Agreement, and
each reference in the other Loan Documents to "the Loan Agreement",
"thereof" or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as modified and
amended hereby.
(b) Except as specifically amended above, the Loan Agreement
and all other Loan Documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed
and shall constitute the legal, valid, binding and enforceable
obligations of each Borrower to FINOVA.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any FINOVA or the Agent under
any of the Loan Documents, nor constitute a waiver of any provision of
any of the Loan Documents.
(d) To the extent that any terms and conditions in any of the
Loan Documents shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this
Amendment, such terms and conditions in the Loan Documents are hereby
deemed modified or amended accordingly to reflect the terms and
conditions of the Loan Agreement as modified or amended hereby.
10. Ratification. Each Borrower hereby restates, ratifies and reaffirms
each and every term and condition set forth in the Loan Agreement, as amended
hereby, and the Loan Documents effective as of the date hereof.
11. Estoppel. To induce FINOVA to enter into this Amendment and to
continue to make advances to Borrowers under the Loan Agreement, each Borrower
hereby acknowledges and agrees that, after giving effect to this Amendment, as
of the date hereof, there exists no Event of Default and no right of offset,
defense, counterclaim or objection in favor of any Borrower as against FINOVA
with respect to the Obligations.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.
FINOVA CAPITAL CORPORATION
By: /s/ Frank Monzo
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Name: Frank Monzo
Title: Assistant Vice President
OAKHURST COMPANY, INC.
By: /s/ Maarten D. Hemsley
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Name: Maarten D. Hemsley
Title: President
STEEL CITY PRODUCTS, INC.
By: /s/ Maarten D. Hemsley
-----------------------------------
Name: Maarten D. Hemsley
Title: Chief Financial Officer
DOWLING'S FLEET SERVICE CO.
By: /s/ Maarten D. Hemsley
-----------------------------------
Name: Maarten D. Hemsley
Title: Chief Financial Officer
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OAKHURST MANAGEMENT CORPORATION
By: /s/ Maarten D. Hemsley
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Name: Maarten D. Hemsley
Title: President
OAKHURST HOLDINGS, INC.
By: /s/ Maarten D. Hemsley
-----------------------------------
Name: Maarten D. Hemsley
Title:
G & O SALES COMPANY
By: /s/ Maarten D. Hemsley
-----------------------------------
Name: Maarten D. Hemsley
Title:
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