Exhibit (b)(ii)
[EXECUTION COPY]
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SUBORDINATED LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL __, 2007
BETWEEN
WHX CORPORATION
AS BORROWER
AND
STEEL PARTNERS II, L.P.,
AS LENDER
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TABLE OF CONTENTS
(continued)
Page
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS...................................1
SECTION 1.1. Certain Defined Terms..............................1
SECTION 1.2. Terms Generally....................................7
SECTION 1.3. Computation of Time Periods........................7
SECTION 1.4. Accounting Terms...................................7
ARTICLE II. AMOUNTS AND TERMS OF THE ADVANCE..................................8
SECTION 2.1. Advance............................................8
SECTION 2.2. The Note...........................................8
SECTION 2.3. Interest...........................................8
ARTICLE III. PAYMENTS, PREPAYMENTS, INCREASED COSTS AND TAXES................8
SECTION 3.1. Payments and Computations..........................8
SECTION 3.2. Mandatory Prepayments..............................9
SECTION 3.3. Voluntary Prepayments..............................9
SECTION 3.4. Taxes..............................................9
ARTICLE IV. SECURITY.........................................................10
SECTION 4.1. Grant of Security Interest........................10
SECTION 4.2. Delivery of Additional Documentation
Required..........................................10
ARTICLE V. CONDITIONS OF LENDING.............................................10
SECTION 5.1. Conditions Precedent to the Advance...............10
ARTICLE VI. REPRESENTATIONS AND WARRANTIES...................................12
SECTION 6.1. Existence.........................................12
SECTION 6.2. Power and Authorization...........................13
SECTION 6.3. Binding Obligations...............................13
SECTION 6.4. Government Approvals..............................13
SECTION 6.5. Taxes; Governmental Charges.......................13
SECTION 6.6. Compliance with Law...............................13
SECTION 6.7. Title to Properties; Liens........................13
SECTION 6.8. Litigation........................................13
SECTION 6.9. No Default or Event of Default....................13
ARTICLE VII. AFFIRMATIVE COVENANTS OF THE BORROWERS..........................13
SECTION 7.1. Compliance with Laws, Etc.........................14
SECTION 7.2. Reporting and Notice Requirements.................14
SECTION 7.3. Use of Proceeds...................................14
SECTION 7.4. Taxes and Liens...................................14
SECTION 7.5. Maintenance of Property...........................14
SECTION 7.6. Right of Inspection...............................14
SECTION 7.7. Insurance.........................................15
SECTION 7.8. Notice of Litigation..............................15
SECTION 7.9. Maintenance of Office.............................15
SECTION 7.10. Existence.........................................15
SECTION 7.11. Further Assurances................................15
ARTICLE VIII. NEGATIVE COVENANTS.............................................16
SECTION 8.1. Impairment of Rights..............................16
SECTION 8.2. Restrictions on Debt..............................16
SECTION 8.3. Restrictions on Liens.............................17
SECTION 8.4. Mergers and Acquisitions..........................17
SECTION 8.5. Issuance of Equity Interests......................18
SECTION 8.6. Restrictions on Amendments of Existing
Senior Facility...................................18
ARTICLE IX. EVENTS OF DEFAULT................................................18
SECTION 9.1. Events of Default.................................18
ARTICLE X. MISCELLANEOUS.....................................................20
SECTION 10.1. Survival of Representations and Warranties........20
SECTION 10.2. Amendments, Etc...................................20
SECTION 10.3. Notices, Etc......................................20
SECTION 10.4. No Waiver; Remedies...............................20
SECTION 10.5. Expenses and Attorneys' Fees......................20
SECTION 10.6. Indemnity.........................................21
SECTION 10.7. Right of Set-off..................................22
SECTION 10.8. Binding Effect....................................22
SECTION 10.9. Assignments and Participations....................22
SECTION 10.10. Limitation on Agreements..........................22
SECTION 10.11. Severability......................................23
SECTION 10.12. Governing Law.....................................23
SECTION 10.13. SUBMISSION TO JURISDICTION; WAIVERS...............23
SECTION 10.14. Special Provisions Relating to Bairnco and the
Bairnco Subsidiaries..............................24
SECTION 10.15. Execution in Counterparts.........................24
EXHIBITS:
Exhibit A - Form of Note
ii
SUBORDINATED LOAN AND SECURITY AGREEMENT
This Subordinated Loan and Security Agreement, dated as of April __,
2007 (this "AGREEMENT"), is made between WHX Corporation, a Delaware Corporation
(the "BORROWER), and Steel Partners II, L.P., a Delaware limited partnership
(the "LENDER").
RECITALS:
WHEREAS, Borrower has acquired a new wholly owned subsidiary, BZ
Acquisition Corp., a Delaware corporation ("BZ ACQUISITION"), for the purposes
of BZ Acquisition acquiring (the "ACQUISITION") no less than 50% of the
outstanding common stock of Bairnco Corporation, a Delaware Corporation
("BAIRNCO") through the shareholders of Bairnco tendering their Equity Interests
(as defined herein) in Bairnco to BZ Acquisition for purchase and the subsequent
merger of BZ Acquisition with and into Bairnco with Bairnco being the surviving
corporation and a subsidiary of the Borrower (the "Merger").
WHEREAS, Lender has agreed to loan money to the Borrower for the
purposes of partly funding the Acquisition and the Merger and to pay expenses of
the Borrower incurred in connection with the Acquisition and the Merger, on the
terms and subject to the provisions contained herein.
NOW THEREFORE, in consideration of the premises and the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms shall have the following meanings:
"ACQUISITION" has the meaning in the recitals.
"ADVANCE" means an advance under Section 2.1.
"AFFILIATE" means any Person which, directly or indirectly,
controls or is controlled by or is under common control with another
Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the power to direct or
cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities
or by contract or otherwise.
"AMENDMENT TO EXISTING SENIOR FACILITY" means Second Amendment
to Loan and Security Agreement, dated as of the date hereof, by and
between the Senior Lender, Bairnco, and the Bairnco Subsidiaries named
therein, in form and substance reasonably satisfactory to Lender.
"BAIRNCO SUBSIDIARIES" means any Subsidiary of Bairnco that is
a borrower or guarantor under the Existing Senior Facility.
"BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978, as
amended, and codified as 11 U.S.C. Sections 101 ET SEQ.
"BORROWER" has the meaning in the preamble.
"BRIDGE FACILITY" means that certain Loan and Security
Agreement, dated as of the date hereof, by and among BZ Acquisition,
Bairnco, and the Lender as in effect on the date of this Agreement.
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in New York, New York.
"CAPITAL LEASE" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use)
any property (whether real, personal or mixed, immovable or movable) that
is required to be classified and accounted for as a capitalized lease
obligation under GAAP.
"CHANGE OF CONTROL" shall be deemed to have occurred at such
time following the Acquisition and the Merger as:
(i) any "person" (as that term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act")) (other than Lender or its Affiliates) becomes, directly or
indirectly, the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act as in effect on the date hereof) of securities
representing fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of any of the
Borrower or Bairnco or any successor of any of the Borrower or
Bairnco;
(ii)during any period of two (2) consecutive years or less,
individuals who at the beginning of such period constituted the
Board of any of the Borrower or Bairnco cease, for any reason, to
constitute at least a majority of such Board, unless the election or
nomination for election of each new member of such Board was
approved by a vote of at least two-thirds of the members of such
Board then still in office who were members of such Board at the
beginning of the period;
(iii) the equityholders of any of the Borrower or Bairnco
approve any merger or consolidation to which any of the Borrower or
Bairnco is a party as a result of which the persons who were
equityholders of any of the Borrower or Bairnco, as the case may be,
immediately prior to the effective date of the merger or
consolidation (and excluding, however, any shares held by any party
to such merger or consolidation and their Affiliates) shall have
beneficial ownership of less than fifty percent (50%) of the
combined voting power for election of members of the Board (or
equivalent) of the surviving entity following the effective date of
such merger or consolidation; or
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(iv) the equityholders of any of the Borrower or Bairnco
approve any merger or consolidation as a result of which the equity
interests of the Borrower or Bairnco, as the case may be, shall be
changed, converted or exchanged (other than a merger with a
wholly-owned Subsidiary of the Borrower or Bairnco, as the case may
be) or any liquidation of the Borrower or Bairnco or any sale or
other disposition of fifty percent (50%) or more of the assets or
earnings power of the Borrower or Bairnco, as the case may be.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute.
"COLLATERAL" has the same meaning given such term in the
Guarantee, Pledge and Security Agreement.
"COMMITMENT" means $15,000,000.
"CONTROL" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"DEBT" means (without duplication), for any Person, (a)
indebtedness of such Person for borrowed money or arising out of any
extension of credit to or for the account of such Person (including,
without limitation, extensions of credit in the form of reimbursement or
payment obligations of such Person relating to letters of credit issued
for the account of such Person) or for the deferred purchase price of
property or services; (b) indebtedness of the kind described in clause (a)
of this definition which is secured by (or for which the holder of such
debt has any existing right, contingent or otherwise, to be secured by)
any Lien upon or in Property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has
assumed or become liable for the payment of such indebtedness or
obligations; (c) all obligations as lessee under any Capital Lease; (d)
all contingent liabilities and obligations under direct or indirect
guarantees in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (a) through (c) above; and (e) any monetary
obligation of a Person under or in connection with a sale-leaseback or
similar arrangement.
"DEBTOR LAWS" means all applicable liquidation,
conservatorship, bankruptcy, moratorium, arrangement, receivership,
insolvency, reorganization or similar laws including the Bankruptcy Code,
or general equitable principles from time to time in effect affecting the
rights of creditors generally.
"DEFAULT" means any event the occurrence of which does, or
with the lapse of time or giving of notice or both would, constitute an
Event of Default.
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"EQUITY INTERESTS" of any Person shall mean any and all
shares, rights to purchase, options, warrants, general, limited or limited
liability partnership interests, member interests, participation or other
equivalents of or interest in (regardless of how designated) equity of
such Person, whether voting or nonvoting, including common stock,
preferred stock, convertible securities or any other "equity security" (as
such term is defined in Rule 3a11-1 under the Securities Exchange Act of
1934).
"EVENTS OF DEFAULT" has the meaning specified in Section 9.1.
"EXISTING SENIOR FACILITY" means that certain Loan and
Security Agreement, dated as of November 9, 2006, by and among Bairnco,
the Bairnco Subsidiaries named therein, and Bank of America, N.A., a
national banking association, individually as a lender thereunder and as
agent for the lenders from time to time thereunder, as the same has been
amended by that certain Waiver and First Amendment to Loan and Security
Agreement dated March 23, 2007, and as further amended by the Amendment to
Existing Senior Facility, and by any other amendment, restatement,
supplement or other modification made in accordance with the Intercreditor
Agreement.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants, and
statements and pronouncements of the Financial Accounting Standards Board.
"GOVERNMENTAL AUTHORITY" means any (domestic or foreign)
federal, state, county, municipal, parish, provincial, or other
government, or any department, commission, board, court, agency, or any
other instrumentality of any of them or any other political subdivision
thereof, and any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of, or pertaining to, government,
including, without limitation, any arbitration panel, any court, or any
commission.
"GUARANTEE, PLEDGE AND SECURITY AGREEMENT" means the
Guarantee, Pledge and Security Agreement between the Lender, BZ
Acquisition, Bairnco and the Bairnco Subsidiaries, dated as of the date
hereof, in form and substance reasonably satisfactory to the Lender.
"HIGHEST LAWFUL RATE" means the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged, or received with respect to the Note or on other
amounts, if any, due to the Lender pursuant to this Agreement or any other
Loan Document under laws applicable to the Lender which are presently in
effect or, to the extent allowed by law, under such applicable laws which
may hereafter be in effect.
"INSOLVENCY PROCEEDING" means in any case or proceeding
commenced by or against a Person under any state, federal or foreign law
for, or any agreement of such Person to, (a) the entry of an order for
relief under the U.S. Bankruptcy Code, or any other insolvency, debtor
relief or debt adjustment law; (b) the appointment of a receiver, trustee,
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liquidator, administrator, conservator or other custodian for such Person
or any part of its Property; or (c) an assignment or trust mortgage for
the benefit of creditors.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement,
dated as of the date hereof, by and between the Senior Lender and Lender.
"INTEREST RATE" has the meaning specified in Section 2.3.
"ISSUE DATE" means the date on which the Note is issued
pursuant to this Agreement.
"LEGAL REQUIREMENT" means any order, constitution, law,
ordinance, principle of common law, regulation, rule, statute or treaty of
any applicable Governmental Authority.
"LIEN" means any security interest, mortgage, pledge,
hypothecation, charge, claim, option, right to acquire, adverse interest,
assignment, deposit arrangement, encumbrance, restriction, statutory or
other lien, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing,
and the filing of any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction).
"LOAN DOCUMENTS" means this Agreement, the Note, the
Guarantee, Pledge and Security Agreement, and each other certificate,
instrument, agreement or document delivered by any Loan Party in
connection with the transactions contemplated by this Agreement.
"LOAN PARTY" means the Borrower, BZ Acquisition, Bairnco
and each Bairnco Subsidiary.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
on the transactions contemplated hereby (including a material adverse
effect on the ability of any party hereto to perform its obligations
hereunder) or (ii) an adverse effect on the business, Property, assets,
liabilities, operations, results of operations, condition (financial or
otherwise) or prospects of the Loan Parties, if any, that is material to
the Loan Parties, taken as a whole, other than as a result of adverse
economic conditions in the United States generally or as a result of any
act or omission contemplated by this Agreement.
"MATURITY DATE" means the earliest to occur of (a) the second
anniversary of the Issue Date of the Note, or (b) such earlier time to
which the Obligations may be accelerated under Section 9.1.
"MERGER" has the meaning in the recitals.
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"NOTE" means the promissory note issued under this Agreement
pursuant to Section 2.2.
"OBLIGATIONS" means all of the obligations of the Borrower now
or hereafter existing under the Loan Documents, whether for principal,
interest, fees, expenses, indemnification or otherwise.
"PERMITTED LIENS" has the meaning specified in Section 8.3.
"PERSON" means an individual, partnership, limited liability
company (including a business trust or a real estate investment trust),
joint stock company, trust, unincorporated association, corporation, joint
venture or other entity, or a government or any political subdivision or
agency thereof.
"PLAN" means the WHX Pension Plan.
"PLAN WAIVER OBLIGATIONS" means Debt of the Borrower to the
Plan to the extent of $15,505,353, which is the outstanding balance of the
waiver granted by the Internal Revenue Service by letter dated December
20, 2006 for contributions owed to the Plan for the 2005 Plan year, plus
interest, costs, reasonable attorneys' fees, and other costs of
collection, and including other obligations that may arise thereunder.
"PROPERTY" means any interest or right in any kind of property
or asset, whether real, personal, or mixed, owned or leased, tangible or
intangible, and whether now held or hereafter acquired.
"RESPONSIBLE OFFICER" means with the chief financial officer
or the chief accounting officer of Borrower, as designated in reports
filed with the Securities and Exchange Commission ("SEC").
"SENIOR DEBT" means the Obligations under (and as defined in)
the Existing Senior Facility and the Bridge Facility.
"SENIOR LENDER" means Bank of America, N.A., a national bank,
as agent for the financial institutions party to the Existing Senior
Facility from time to time as lenders.
"SOLVENT" means as to any Person, such Person (a) owns
Property whose fair salable value is greater than the amount required to
pay all of its debts (including contingent, subordinated, unmatured and
unliquidated liabilities); (b) owns Property whose present fair salable
value (as defined below) is greater than the probable total liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities) of such Person as they become absolute and matured; (c) is
able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its
business and transactions and all business and transactions in which it is
about to engage; (e) is not "insolvent" within the meaning of Section
101(32) of the U.S. Bankruptcy Code; and (f) has not incurred (by way of
assumption or otherwise) any obligations or liabilities (contingent or
otherwise) under any Loan Documents, or made any conveyance in connection
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therewith, with actual intent to hinder, delay or defraud either present
or future creditors of such Person or any of its Affiliates. "Fair salable
value" means the amount that could be obtained for assets within a
reasonable time, either through collection or through sale under ordinary
selling conditions by a capable and diligent seller to an interested buyer
who is willing (but under no compulsion) to purchase.
"SUBSIDIARY" when used with respect to any Person, shall mean
any corporation or other organization, whether incorporated or
unincorporated, of which (i) such Person or any other Subsidiary of such
Person is a general partner or (ii) at least such number and kind of the
securities or other interests having by their terms ordinary voting power
to elect at least 50% of the board of directors or others performing
similar functions with respect to such corporation or other organization
is directly or indirectly owned or controlled by such Person, by any one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
SECTION 1.2. TERMS GENERALLY. The definitions in Section 1.1 apply
equally to both the singular and plural forms of the terms defined. Whenever the
context requires, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be construed as if followed by the words "without limitation". The words
"herein", "hereof" and "hereunder" and words of similar import refer to this
Agreement (including the Exhibits hereto) in its entirety and not to any part
hereof, unless the context otherwise requires. All references herein to
Articles, Sections, and Exhibits are references to Articles and Sections of, and
Exhibits to, this Agreement unless the context otherwise requires. Unless the
context otherwise requires, any references to any agreement or other instrument
or statute or regulation are to such agreement, instrument, statute or
regulation as amended and supplemented from time to time (and, in the case of a
statute or regulation, to any successor provisions). Any reference in this
Agreement to a "day" or number of "days" (without the explicit qualification of
"business") shall mean a calendar day or number of calendar days. If any action
or notice is to be taken or given on or by a particular day, and such day is not
a business day, then such action or notice shall be deferred until, or may be
taken or given on, the next Business Day.
SECTION 1.3. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
unless otherwise specified herein the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding".
SECTION 1.4. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with those
applied in the preparation of the financial statements filed by Borrower with
the SEC under the Exchange Act.
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ARTICLE II.
AMOUNTS AND TERMS OF THE ADVANCE
SECTION 2.1. ADVANCE. Lender agrees, on the terms and conditions
hereinafter set forth, to make an advance ("ADVANCE") on the Issue Date
consisting of a term loan in an amount equal to the Commitment. The amount
outstanding on such Advance shall be payable in accordance with Section 3.1
hereof and shall mature and all outstanding principal thereof, together with
accrued and unpaid interest thereon, shall be due and payable on the Maturity
Date.
SECTION 2.2. THE NOTE. The Borrower shall execute and deliver to the
Lender to evidence the Advance, a term note (the "NOTE") in the amount of the
Commitment. The Note shall be substantially in the form of Exhibit A hereto with
the blanks appropriately filled, and shall mature on the Maturity Date, at which
time all principal and accrued and unpaid interest then outstanding thereunder
shall become due and payable.
SECTION 2.3. INTEREST. The Advance shall bear interest from and
including the Issue Date, at a rate per annum equal at all times to the Prime
Rate of JPMorgan Chase plus 7.75 percent (the "INTEREST RATE"), adjusted from
time to time, provided that, in no event shall the Interest Rate be less than 16
percent per annum or in excess of 19 percent per annum. Interest shall be
payable monthly in arrears on the first day of each succeeding month, commencing
one month from the Issue Date in accordance with Section 3.1.
After the occurrence and during the continuance of an Event of
Default the Advance and all other Obligations shall, at the election of the
Lenders, bear interest at a rate per annum equal to two percent (2%) PLUS the
applicable Interest Rate (the "DEFAULT RATE"). The additional interest amount
shall be paid in cash monthly in arrears.
All computations of interest hereunder pursuant to this Article II
shall be made on the basis of a year of 360 days, in each case including the
first day but excluding the last day occurring in the period for which such
interest is payable.
ARTICLE III.
PAYMENTS, PREPAYMENTS, INCREASED
COSTS AND TAXES
SECTION 3.1. PAYMENTS AND COMPUTATIONS
(a) The outstanding principal balance of the Advance shall be
payable on the Maturity Date, when all unpaid principal of, and
accrued and unpaid interest on, the Advance shall be due and
payable.
(b) Interest due under the Note shall be payable in kind at
the Interest Rate monthly in arrears on the first day of each
succeeding month, commencing one month from the Issue Date. The
amount payable under such payment in kind shall be evidenced by the
Lender recording such interest payment on the grid contained in the
Schedule to the Note. Any amounts so recorded shall become
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Obligations of the Borrower under this Agreement, shall bear
interest in accordance with Section 2.3 hereof and shall be payable
in full on the Maturity Date.
(c) All interest payable on the Maturity Date shall be paid in
cash.
(d) Whenever any payment under the Note shall be stated to be
due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of
interest.
SECTION 3.2. MANDATORY PREPAYMENTS
If, while any amount of principal or accrued but unpaid interest
remain outstanding on the Note, any Loan Party conducts any sales of its
securities or any sale of its assets permitted under the Loan Documents, the
Borrower shall cause such Loan Party, immediately upon receipt of the net
proceeds of such sale, to pay to the Lender all of such net proceeds up to an
amount equal to the aggregate amount of principal of and accrued interest on the
Note. Lender shall apply any such proceeds, in its sole discretion, to prepay
amounts of principal of and/or accrued interest on the Note then outstanding,
without any penalty or premium.
SECTION 3.3. VOLUNTARY PREPAYMENTS. The Borrower may, upon at least
five (5) Business Days' prior written notice to the Lender, prepay all or any
portion of the principal balance of the Obligations without penalty or premium.
Such notice shall be irrevocable and the payment amount specified in such notice
shall be due and payable on the prepayment date described in such notice. Any
portion of the principal amount of the Advance which is prepaid in accordance
with this Section shall reduce the principal amount of the Note and may not be
reborrowed.
SECTION 3.4. TAXES
(a) Any and all payments by the Borrower under the Note shall
be made, in accordance with Section 3.1, free and clear of and
without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Lender, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which the Lender is organized or any
political subdivision thereof. If the Borrower shall be required by
law to deduct any such amounts from or in respect of any sum payable
under the Note to the Lender, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this Section 3.4) the Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law. The Borrower further
agree to pay any present or future stamp or documentary taxes or any
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other excise or property taxes, charges or similar levies which
arise from any payment made under the Note or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement or the Note.
(b) The Borrower will indemnify the Lender for the full
amounts payable pursuant to Section 3.4(a) (including, without
limitation, any taxes or such other amounts imposed by any
Governmental Authority on amounts payable under this Section 3.4)
paid by the Lender and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or
not such amounts were correctly or legally asserted.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
Section 3.4 shall survive the payment in full of principal and interest under
the Note.
ARTICLE IV.
SECURITY
SECTION 4.1. GRANT OF SECURITY INTEREST. BZ Acquisition, Bairnco,
the Bairnco Subsidiaries and Lender have entered into the Guarantee, Pledge and
Security Agreement in order to grant to Lender, subject only to those Liens
described in Section 8.3(a), (b), (c), (d), (e) and (g), a first priority
security interest in and to all Property of BZ Acquisition, Bairnco, the Bairnco
Subsidiaries and any other Collateral (as defined in the Guarantee, Pledge and
Security Agreement) to secure prompt repayment of any and all Obligations and in
order to secure prompt performance by the Borrower of its covenants and duties
under the Loan Documents.
SECTION 4.2. DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. The
Borrower shall, and shall cause the Bairnco Subsidiaries to, execute and deliver
to the Lender, prior to or concurrently with the Borrower's execution and
delivery of this Agreement and at any time thereafter at the request of the
Lender, all financing statements, continuation financing statements, fixture
filings, security agreements, assignments, endorsements of certificates of
title, applications for title, affidavits, reports, notices, schedules of
accounts, letters of authority, and all other documents that the Lender may
reasonably request, in form satisfactory to Lender, to perfect and maintain
perfected the Lender's security interests in the Collateral and in order to
fully consummate all of the transactions contemplated under the Loan Documents.
ARTICLE V.
CONDITIONS OF LENDING
SECTION 5.1. CONDITIONS PRECEDENT TO THE ADVANCE. The obligation of
the Lender to make the Advance is subject to the condition precedent that the
Lender shall have received, in form and substance satisfactory to the Lender:
(a) NOTE. A Note representing the aggregate amount of the
Advance, duly executed by the Borrower and payable to the order of
the Lender.
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(b) EXECUTED SUBORDINATED LOAN AND SECURITY AGREEMENT. This
Agreement, duly executed by the Borrower.
(c) CORPORATE AUTHORIZATIONS. Resolutions of the board of
directors of the Borrower approving and authorizing the execution,
delivery, and performance by the Borrower of each Loan Document, the
notices and other documents to be delivered by the Borrower pursuant
to each Loan Document, and the transactions contemplated thereunder.
(d) GOOD STANDING. Certificates of appropriate officials as to
the existence and good standing of the Borrower in its jurisdiction
of incorporation.
(e) GUARANTEE, PLEDGE AND SECURITY AGREEMENT. The duly
executed Guarantee, Pledge and Security Agreement.
(f) AMENDMENT TO EXISTING SENIOR FACILITY. The duly executed
Amendment to Existing Senior Facility.
(g) CLOSING DELIVERIES. Lender shall have received, in form
and substance reasonably satisfactory to Lender, all other
agreements, notes, certificates, orders, authorizations, financing
statements, and other documents which Lender may at any time
reasonably request.
(h) SECURITY INTERESTS. Lender shall have received
satisfactory evidence that all security interests and liens granted
to Lender for the benefit of Lender pursuant to this Agreement or
the other Loan Documents have been duly perfected and constitute
first priority liens on the Collateral, subject only to Permitted
Liens.
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrower contained herein and in the Loan
Documents shall be true, correct and complete on and as of the Issue
Date to the same extent as though made on and as of that date,
except for any representation or warranty limited by its terms to a
specific date.
(j) NO DEFAULT. No event shall have occurred and be continuing
or would result from funding the Advance that would constitute an
Event of Default or a Default.
(k) PERFORMANCE OF AGREEMENTS. Each Loan Party shall have
performed in all material respects all agreements and satisfied all
conditions which any Loan Document provides shall be performed by it
on or before the Issue Date, in each case to the satisfaction of the
Lender.
(l) NO PROHIBITION. No order, judgment or decree of any court,
arbitrator or Governmental Authority shall purport to enjoin or
restrain Lender from making the Advance.
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(m) NO LITIGATION. There shall not be pending or, to the
knowledge of any Loan Party, threatened, any action, charge, claim,
demand, suit, proceeding, petition, governmental investigation or
arbitration by, against or affecting any Loan Party or any of its
Subsidiaries or any Property of any Loan Party or any of its
Subsidiaries that has not been disclosed to Lender by Loan Parties
in writing, and there shall have occurred no development in any such
action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration that, in the reasonable
opinion of Lender, would reasonably be expected to have a Material
Adverse Effect.
(n) ACQUISITION. Each of the conditions precedent to the
consummation of the Acquisition (excluding receipt of the
Acquisition consideration) shall have been satisfied in all material
respects to the reasonable satisfaction of the Lender, and not
waived, except with the prior written consent of the Lender.
Shareholders holding at least 50% of the Equity Interests of Bairnco
(on a fully diluted basis) shall have tendered their shares under
the Acquisition.
(o) INSURANCE. Lender shall receive, within ten business days
following the Issue Date, certificates of insurance, insurance
policies or binders for insurance with respect to each Loan Party in
types and amounts, under terms and conditions satisfactory to Lender
with appropriate endorsements naming Lender as loss payee and/or
additional insured, as appropriate.
(p) MATERIAL ADVERSE CHANGE. Since December 31, 2006, there
shall have been no material adverse change in the business,
operations, assets, properties, liabilities, profits, prospects or
financial position of the Loan Parties taken as a whole as
determined by the Lender in its sole discretion
(q) SOLVENCY. Each Loan Party shall have demonstrated to
Lender that after giving effect to the transactions contemplated
hereby, such Loan Party is solvent, able to meet its obligations
(including the Obligations) as they mature and has sufficient
capital to enable it to operate its business as currently conducted
or proposed to be conducted.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement, the
Borrower represents and warrants to the Lender as of the date hereof and as of
the Issue Date that:
SECTION 6.1. EXISTENCE. Each Loan Party is duly organized, validly
existing, and in good standing under the laws of the jurisdiction in which it is
incorporated or organized and is duly qualified or licensed to do business in
all jurisdictions where the Property owned or the business transacted by it
makes such qualification necessary and where the failure to be so qualified
could reasonably be expected to have a Material Adverse Effect.
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SECTION 6.2. POWER AND AUTHORIZATION. Each Loan Party is duly
authorized and empowered to execute, deliver, and perform its obligations under
each Loan Document and all corporate or other action on such Loan Party's part
requisite for the due execution, delivery, and performance of each Loan Document
has been or will be duly and effectively taken.
SECTION 6.3. BINDING OBLIGATIONS. Each Loan Document constitutes the
legal, valid and binding obligation of each Loan Party party thereto enforceable
against such Loan Party in accordance with its terms, except as such
enforceability may be limited by any Debtor Law, or by principles governing the
availability of equitable remedies.
SECTION 6.4. GOVERNMENT APPROVALS. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Loan Party is
or is to become a party and the transactions contemplated hereby and thereby do
not require the approval or consent of, or filing with, any Governmental
Authority other than those already obtained.
SECTION 6.5. TAXES; GOVERNMENTAL CHARGES. Each Loan Party has timely
filed or caused to be timely filed all federal, state, and foreign income tax
returns which are required to be filed, and has paid or caused to be paid all
taxes as shown on such returns or on any assessment received by it to the extent
that such taxes have become due, except for such taxes and assessments as are
being contested in good faith in appropriate proceedings and reserved for in
accordance with GAAP.
SECTION 6.6. COMPLIANCE WITH LAW. The business and operations of the
Loan Parties, as conducted, are in compliance in all material respects with all
Legal Requirements.
SECTION 6.7. TITLE TO PROPERTIES; LIENS. Each Loan Party has good,
sufficient and legal title to, or interest in, all of the Collateral (and any
other material Properties and assets, if any) and will have good, sufficient and
legal title to all after-acquired Collateral (and any other after-acquired
material Properties and assets, if any), in each case, free and clear of all
Liens except for the Permitted Liens. Lender has a valid, perfected and, except
for Liens set forth in clauses (c), (d) and (e) of the definition of Permitted
Liens, first priority Liens in the Collateral, securing the payment of the
Obligations, and such Liens are entitled to all of the rights, priorities and
benefits afforded by the UCC or other applicable law as enacted in any relevant
jurisdiction which relates to perfected Liens.
SECTION 6.8. LITIGATION. There are no actions, suits, proceedings or
investigations of any kind pending or threatened against any Loan Party before
any court, tribunal or administrative agency or board that, if adversely
determined, might, either in any case or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 6.9. NO DEFAULT OR EVENT OF DEFAULT. No event has occurred
or is continuing which constitutes a Default or Event of Default hereunder.
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ARTICLE VII.
AFFIRMATIVE COVENANTS OF THE BORROWERS
Until such time as all Obligations shall be indefeasibly paid in
full, the Borrower covenants and agrees that, unless the Lender shall otherwise
consent in writing:
SECTION 7.1. COMPLIANCE WITH LAWS, ETC. The Borrower will comply, in
all material respects with all applicable Legal Requirements; provided, however,
that the Borrower will comply in full with any applicable Legal Requirements the
failure with which to comply could reasonably be expected to have a Material
Adverse Effect.
SECTION 7.2. REPORTING AND NOTICE REQUIREMENTS. The Borrower will
furnish to the Lender:
(a) NOTICE OF DEFAULT. Promptly after any officer of the
Borrower knows or has reason to know that any Default or Event of
Default has occurred, a written statement of such officer of the
Borrower setting forth the details of such Default or Event of
Default and the action which the Borrower has taken or proposes to
take with respect thereto.
(b) NOTIFICATION OF CLAIM AGAINST THE COLLATERAL. The Borrower
will, immediately upon becoming aware thereof, notify the Lender in
writing of any setoff, withholdings or other defenses to which any
of the Collateral, or the Lender's rights with respect to the
Collateral, are subject.
SECTION 7.3. USE OF PROCEEDS. The proceeds of the Advance will be
exclusively used by the Borrower to partly fund the Acquisition and the Merger
and to pay expenses incurred in connection with the Acquisition and the Merger.
SECTION 7.4. TAXES AND LIENS. The Borrower will pay and discharge,
or will cause to be paid and discharged, promptly all taxes, assessments, and
governmental charges or levies imposed upon the Borrower or upon the income of
any Property of the Borrower as well as all claims of any kind (including,
without limitation, claims for labor, materials, supplies, and rent) which, if
unpaid, might become a Lien upon any Property of the Borrower, except such
taxes, assessments, governmental charges or levies contested in good faith by
the Borrower and which adequate reserves are maintained in accordance with GAAP.
SECTION 7.5. MAINTENANCE OF PROPERTY. The Borrower will at all times
maintain, preserve, protect, and keep, or cause to be maintained, preserved,
protected, and kept, its Property in good repair, working order, and condition
(ordinary wear and tear excepted) and consistent with past practice.
SECTION 7.6. RIGHT OF INSPECTION. From time to time upon reasonable
notice to the Borrower, the Borrower will permit any officer or employee of, or
agent designated by, the Lender to visit and inspect any of the Properties of
any Loan Party, examine such Loan Party's corporate books or financial records,
take copies and extracts therefrom, and discuss the affairs, finances, and
accounts of such Loan Party with its officers, certified public accountants and
legal counsel, all as often as the Lender may reasonably desire, provided that
such visits and inspections shall be made only during business hours and so as
not to interfere unreasonably with the business and operations of such Loan
Party. All confidential or proprietary information provided to or obtained by
the Lender under this section or under any other provision of this Agreement
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shall be held in confidence by the Lender in the same manner and with the same
degree of protection as the Lender exercises with respect to its own
confidential or proprietary information. For purposes of this section, all
information provided to the Lender pursuant hereto shall be presumed to
constitute "confidential and proprietary information" unless (i) Bairnco
indicates otherwise in writing, (ii) the information was or becomes generally
available to the public other than as a result of a disclosure in violation of
this section by the Lender or its representatives, (iii) the information was or
becomes available to the Lender or its representatives on a non-confidential
basis from a source other than such Loan Party, (iv) the information was within
the possession of the Lender or any of its representatives prior to being
furnished by or on behalf of such Loan Party, provided that in each case the
source of such information was not bound by a confidentiality agreement known to
Lender in respect thereof preventing disclosure to the Lender or its
representatives or (v) the information is independently developed by the Lender
(but only if it does not contain or reflect, and is not based upon, in whole or
in part, any information furnished hereunder which constitutes "confidential or
proprietary information").
SECTION 7.7. INSURANCE. The Borrower will maintain insurance of
similar types and coverages as maintained on the date hereof and consistent with
past practice with financially sound and reputable insurance companies and
associations acceptable to the Lender based on the Lender's reasonable judgment
(or as to workers' compensation or similar insurance, in an insurance fund or by
self-insurance authorized by the jurisdiction in which its operations are
carried on).
SECTION 7.8. NOTICE OF LITIGATION. The Borrower will promptly notify
Lender in writing of any litigation, legal proceeding or dispute, other than
disputes in the ordinary course of business or, whether or not in the ordinary
course of business, involving amounts in excess of $50,000, and any
investigation of the Borrower by any Governmental Authority, which could
reasonably be expected to adversely affect the Borrower or any Loan Party
whether or not fully covered by insurance, and regardless of the subject matter
thereof.
SECTION 7.9. MAINTENANCE OF OFFICE. The Borrower will maintain its
chief executive office at 000 Xxxxxxxx Xxxxx Xxxxxx, Xxx, Xxx Xxxx 00000, or at
such other place in the United States of America as it shall designate upon
written notice to the Lender, where notices, presentations and demands to or
upon the Borrower in respect of the Loan Documents to which it is a party may be
given or made. The Borrower shall notify the Lender in writing of its intent to
relocate any of its Property at least ten Business Days prior to the date of
such proposed relocation, specifying the Property to be relocated and the
location to which it will be relocated.
SECTION 7.10. EXISTENCE. The Borrower will, and will cause each Loan
Party to preserve and maintain its legal existence and all of its material
rights, privileges, licenses, contracts and Property and assets used or useful
to its business.
SECTION 7.11. FURTHER ASSURANCES. The Borrower will cooperate with
the Lender and execute, and will cause each Loan Party to execute, such further
instruments and documents as the Lender shall reasonably request to carry out to
its satisfaction the transactions contemplated by this Agreement and the other
Loan Documents.
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ARTICLE VIII.
NEGATIVE COVENANTS
Until such time as all Obligations shall be indefeasibly paid in
full, the Borrower covenants and agrees that, without the written consent of the
Lender:
SECTION 8.1. IMPAIRMENT OF RIGHTS. The Borrower will not undertake,
or permit any Loan Party to undertake, any action or engage in any transaction
or activity the intent or reasonably expected consequences of which may be to
impair the Lender's rights hereunder.
SECTION 8.2. RESTRICTIONS ON DEBT. The Borrower will not permit
Bairnco or any Bairnco Subsidiary to create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Debt other than:
(a) Senior Debt;
(b) Debt to the Lender arising under any of the Loan
Documents;
(c) Debt in respect of Plan Waiver Obligations;
(d) current liabilities of Bairnco or any Bairnco Subsidiary
incurred in the ordinary course of business not incurred through (i)
the borrowing of money, or (ii) the obtaining of credit except for
credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services;
(e) Debt incurred in the ordinary course of business in
respect of taxes, assessments, governmental charges or levies and
claims for labor, materials and supplies to the extent that payment
therefor shall not at the time be required to be made in accordance
with the provisions of Section 7.4;
(f) Debt in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which
Bairnco or its Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of
which a stay of execution shall have been obtained pending such
appeal or review;
(g) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business; and
(h) Debt owed by any of Bairnco or any Bairnco Subsidiary to
trade vendors, in the amount of the cost to the Loan Party of
inventory held on consignment from such trade vendors, including,
without limitation, in connection with and pursuant to agreements
with such trade vendors.
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SECTION 8.3. RESTRICTIONS ON LIENS. The Borrower will not permit any
of Bairnco or any Bairnco Subsidiary to, (i) create or incur or suffer to be
created or incurred or to exist any Lien upon any of their respective Property,
or upon the income or profits therefrom; (ii) transfer any of such Property or
the income or profits therefrom for the purpose of subjecting the same to the
payment of Debt or performance of any other obligation in priority to payment of
its general creditors; (iii) acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; (iv) suffer to exist for a
period of more than thirty (30) days after the same shall have been incurred any
Debt or claim or demand against it that if unpaid might by law or upon
bankruptcy or insolvency, or otherwise, be given any priority whatsoever over
its general creditors; or (v) sell, assign, pledge or otherwise transfer any
accounts, contract rights, general intangibles, chattel paper or instruments,
with or without recourse; provided that Bairnco and any Bairnco Subsidiary may
create or incur or suffer to be created or incurred or to exist (the "PERMITTED
LIENS"):
(a) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties
to secure claims for labor, material or supplies in respect of
obligations not overdue;
(b) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(c) liens on properties in respect of judgments or awards, the
Debt with respect to which is permitted by Section 8.2(f);
(d) encumbrances on real estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which any Bairnco or
any Bairnco Subsidiary is a party, and other minor liens or
encumbrances none of which in the opinion of the Lender interferes
materially with the use of the Property affected in the ordinary
conduct of the business of the such Loan Party, which defects do not
individually or in the aggregate have a Material Adverse Effect on
the business of such Loan Party individually or of Bairnco and any
Bairnco Subsidiary on a consolidated basis;
(e) purchase money security interests incurred in the ordinary
course;
(f) Liens securing the Senior Debt under the Existing Senior
Facility.
(g) Liens securing Plan Waiver Obligations; and
(h) Liens securing the Bridge Facility.
SECTION 8.4. MERGERS AND ACQUISITIONS. The Borrower will not permit
Bairnco or any Bairnco Subsidiary to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock acquisition
(other than the acquisition of assets in the ordinary course of business
consistent with past practices) other than the Acquisition and the Merger. The
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Borrower will not permit Bairnco or any Bairnco Subsidiary to, agree to or
effect any asset acquisition or stock acquisition, other than the Acquisition
and the Merger, without the prior written consent of the Lender. The Borrower
will cause Bairnco and each Bairnco Subsidiary not to create or form any
Subsidiaries without the prior written consent of Lender.
SECTION 8.5. ISSUANCE OF EQUITY INTERESTS. The Borrower will cause
Bairnco and each Bairnco Subsidiary not to issue any Equity Interests,
including, without limitation, any issuance of warrants, options or subscription
or conversion rights (other than under any existing employee compensation
scheme), unless (i) the relevant Loan Party receives solely cash proceeds from
each such issuance, (ii) the net proceeds from such issuance are applied in
accordance with Section 3.2 hereof and (iii) no Default or Event of Default has
occurred and is continuing at the time any such issuance is consummated and none
would exist (whether or not after the expiration of time or giving of notice or
both) after giving effect thereto.
SECTION 8.6. RESTRICTIONS ON AMENDMENTS OF EXISTING SENIOR FACILITY.
The Borrower will cause Bairnco and each Bairnco Subsidiary not to enter into
any amendment, refinancing, modification, renewal, or extension of the Existing
Senior Facility if the terms and conditions of such amendment, refinancing,
modification, renewal, or extension, in Lender's reasonable judgment, materially
impair the prospects of repayment of the Obligations by Borrower or materially
impair any Loan Party's creditworthiness, or any such amendment, refinancing,
modification, renewal, or extension results in an increase in the principal
amount of the Debt so refinanced, renewed, or extended.
ARTICLE IX.
EVENTS OF DEFAULT
SECTION 9.1. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and, after written notice thereof by the
Lender to Bairnco, shall not have been cured within five calendar days (in the
case of monetary defaults) or 15 calendar days (in the case of all other
defaults) unless a shorter period of time is specified below:
(a) the Borrower shall fail to pay principal of or interest on
the Note or other amounts due under the Note or this Agreement or
any other Loan Document, when the same becomes due and payable; or
(b) any representation or warranty made any Loan Party (or any
of its officers) under or in connection with any Loan Document shall
prove to have been untrue or incorrect when made or deemed made; or
(c) any Loan Party shall fail to perform or observe any term,
covenant or agreement contained herein or in any other Loan Document
within 15 days after a senior officer has knowledge thereof or
receives notice thereof, written notice from the Lender to cure
same, whichever is sooner; or
(d) any Loan Party shall fail to pay any principal of, or
premium or interest on, any Debt in excess of $250,000 when the same
becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) unless being
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contested in good faith, and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event constituting a
default (however defined) shall occur or condition shall exist under
any agreement or instrument relating to any such Debt and shall
continue after the applicable grace period, if any, specified in
such agreement or instrument, which would give rise to a right to
accelerate such Debt; or
(e) the Borrower fails to use the proceeds from the Advance in
accordance with the stated use therefor as contemplated by Section
7.3; or
(f) any Loan Party is enjoined, restrained or in any way
prevented by any Governmental Authority from conducting any material
part of its business; any Loan Party suffers the loss, revocation or
termination of any material license, permit, lease or agreement
necessary to its business; there is a cessation of any material part
of an Loan Party's business for a material period of time; any
material Collateral or Property of an Loan Party is taken or
impaired through condemnation; any Loan Party agrees to or commences
any liquidation, dissolution or winding up of its affairs; or any
Loan Party ceases to be Solvent;
(g) any Insolvency Proceeding is commenced by any Loan Party;
an Insolvency Proceeding is commenced against any Loan Party and:
such Loan Party consents to the institution of the proceeding
against it, the petition commencing the proceeding is not timely
controverted by such Loan Party, such petition is not dismissed
within 30 days after its filing, or an order for relief is entered
in the proceeding; a trustee (including an interim trustee) is
appointed to take possession of any substantial Property of or to
operate any of the business of any Loan Party; or any Loan Party
makes an offer of settlement, extension or composition to its
unsecured creditors generally;
(h) the Guarantee, Pledge and Security Agreement or any
interest of the Lender thereunder shall for any reason be
terminated, invalidated, void or unenforceable or any Loan Party
shall fail to perform its obligation thereunder;
(i) Bairnco shall change or attempt to change (i) the number
of authorized or outstanding shares of its common stock or (ii)
attempt to liquidate or dissolve itself, without the prior written
consent of the Lender;
(j) there shall occur any default or event of default under
the Existing Senior Facility;
(k) there shall occur any default or event of default under
the Bridge Facility; or
(l) there shall occur any Change of Control.
then, and in any such event, Lender (after providing the notice and opportunity
to cure set forth in the first clause of this Section) may, by notice to the
Borrower, declare the principal amount of the Note, all interest thereon and all
19
other Obligations or amounts payable under this Agreement or any other Loan
Document to be forthwith due and payable, whereupon the Note, all such interest
and all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower and all interest on and principal of all
other Debt owed by the Borrower to the Lender shall likewise become and be
forthwith due and payable without presentment, demand, protest or further notice
of any kind, all of which are hereby expressly waived by the Borrower; PROVIDED
HOWEVER, that in the case of any Default pursuant to Subsections (g), (j), (k),
or (l) of this Section 9.1, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest, right to cure or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE X.
MISCELLANEOUS
SECTION 10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties in each Loan Document shall survive the delivery
of the Note and the making of the Advance, and shall continue after the
repayment of the Note and the Maturity Date until all Obligations are
indefeasibly paid in full, and any investigation at any time made by or on
behalf of the Lender shall not diminish the Lender's right to rely thereon.
SECTION 10.2. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement or the Note, or any other Loan Document, nor consent
by Lender to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Lender, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 10.3. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including by telex or telefacsimile
transmission) and shall be effective when actually delivered, or in the case of
telex notice, when sent, answerback received, or in the case of telefacsimile
transmission, when received and telephonically confirmed, addressed as follows:
if to the Borrower, to WHX Corporation at its address at 000 Xxxxxxxx Xxxxx
Xxxxxx, Xxx, Xxx Xxxx 00000, Attention: Chief Financial Officer, facsimile
number (000) 000-0000; if to the Lender, at its address at 000 Xxxxxxx Xxxxxx,
00xx xxxxx, Xxx Xxxx, XX 00000 , Attention: Xxxx XxXxxxxx, facsimile number
(000) 000-0000; or as to the Borrower or the Lender at such other address as
shall be designated by such party in a written notice to the other parties.
SECTION 10.4. NO WAIVER; REMEDIES. No failure on the part of the
Lender to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 10.5. EXPENSES AND ATTORNEYS' FEES. Whether or not the
transactions contemplated hereby shall be consummated, each Loan Party agrees to
promptly pay all fees, costs and expenses incurred in connection with any
20
matters contemplated by or arising out of this Agreement or the other Loan
Documents including the following, and all such fees, costs and expenses shall
be part of the Obligations, payable on demand and secured by the Collateral: (a)
fees, costs and expenses incurred by Lender (including reasonable attorneys'
fees and expenses and fees of consultants, accountants and other professionals
retained by Lender) incurred in connection with the examination, review, due
diligence investigation, documentation and closing of the financing arrangements
evidenced by the Loan Documents; (b) fees, costs and expenses incurred by Lender
(including reasonable attorneys' fees and expenses, the allocated costs of
Lender's internal legal staff and fees of environmental consultants, accountants
and other professionals retained by Lender) incurred in connection with the
review, negotiation, preparation, documentation, execution, syndication and
administration of the Loan Documents, the Loans, and any amendments, waivers,
consents, forbearances and other modifications relating thereto or any
subordination or intercreditor agreements, including reasonable documentation
charges assessed by Lender for amendments, waivers, consents and any other
documentation prepared by Lender's internal legal staff; (c) fees, costs and
expenses (including reasonable attorneys' fees) incurred on behalf of Lender in
creating, perfecting and maintaining perfection of Liens in favor of Lender; (d)
fees, costs and expenses incurred by Lender in connection with forwarding to
Borrower the proceeds of Loans including Lender's bank's standard wire transfer
fee; (e) fees, costs, expenses and bank charges, including bank charges for
returned checks, incurred by Lender in establishing, maintaining and handling
lock box accounts, blocked accounts or other accounts for collection of the
Collateral; (f) fees, costs, expenses (including reasonable attorneys' fees and
allocated costs of internal legal staff) of Lender and costs of settlement
incurred in collecting upon or enforcing rights against the Collateral or
incurred in any action to enforce this Agreement or the other Loan Documents or
to collect any payments due from the Borrower or any other Loan Party under this
Agreement or any other Loan Document or incurred in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise.
SECTION 10.6. INDEMNITY. In addition to the payment of expenses
pursuant to Section 10.5, whether or not the transactions contemplated hereby
shall be consummated, each Loan Party agrees to indemnify, pay and hold Lender,
and the officers, directors, and employees of, or consultants, auditors and
other persons engaged by Lender, to evaluate or monitor the Collateral,
affiliates and attorneys of Lender and such holders (collectively called the
"INDEMNITEES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement or the other Loan Documents, the
consummation of the transactions contemplated by this Agreement, the statements
contained in the commitment letters, if any, delivered by Lender, and the
Lender's agreement to make the Loans hereunder, the use or intended use of the
proceeds of any of the Loans or the exercise of any right or remedy hereunder or
under the other Loan Documents (the "INDEMNIFIED LIABILITIES"); provided that no
Loan Party shall have any obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of that Indemnitee as determined by a final non-appealable judgment by a court
of competent jurisdiction.
21
SECTION 10.7. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Debt at any time owing by the Lender to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under any Loan Document, whether or
not the Lender shall have made any demand under the Note and although such
obligations may be unmatured. Lender agrees promptly to notify Bairnco after any
such set-off and application made by such Lender, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such the
Lender may have.
SECTION 10.8. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower and the Lender and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Lender and
their respective successors and assigns, except that neither the Borrower nor
the Lender (except as provided in Section 10.9) shall have the right to assign
its rights hereunder or any interest herein without the prior written consent of
the other.
SECTION 10.9. ASSIGNMENTS AND PARTICIPATIONS. The Lender may assign
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of the Note held by it), whether pursuant
to a sale of participations or otherwise.
SECTION 10.10. LIMITATION ON AGREEMENTS. All agreements between the
Borrower or the Lender, whether now existing or hereafter arising and whether
written or oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of demand being made in respect of an amount due
under any Loan Document or otherwise, shall the amount paid, or agreed to be
paid, to the Lender for the use, forbearance, or detention of the money to be
loaned under the Note or any other Loan Document or otherwise or for the payment
or performance of any covenant or obligation contained herein or in any other
Loan Document exceed the Highest Lawful Rate. If, as a result of any
circumstance whatsoever, fulfillment of or compliance with any provision hereof
or of any of such Loan Documents at the time performance of such provision shall
be due or at any other time shall involve exceeding the amount permitted to be
contracted for, taken, reserved, charged or received by the Lender under
applicable usury law, then, ipso facto, the obligation to be fulfilled or
complied with shall be reduced to the limit prescribed by such applicable usury
law, and if, from any such circumstance, the Lender shall ever receive interest
or anything which might be deemed interest under applicable law which would
exceed the Highest Lawful Rate, such amount which would be excessive interest
shall be applied, in the Lender's sole discretion, to the reduction of the
principal amount owing on account of the Note or the amounts owing on other
Obligations of the Loan Parties to the Lender under any Loan Document and not to
the payment of interest, or if such excessive interest exceeds the unpaid
principal balance of the Note and the amounts owing on other Obligations of the
Borrower to the Lender under any Loan Document, as the case may be, such excess
22
shall be refunded to the Borrower. All sums paid or agreed to be paid to the
Lender for the use, forbearance, or detention of the indebtedness of the
Borrower to the Lender shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full of the principal (including the period of any
renewal or extension thereof) so that the interest on account of such
indebtedness shall not exceed the Highest Lawful Rate. Notwithstanding anything
to the contrary contained in any Loan Document, it is understood and agreed that
if at any time the rate of interest which accrues on the outstanding principal
balance of the Note shall exceed the Highest Lawful Rate, the rate of interest
which accrues on the outstanding principal balance of the Note shall be limited
to the Highest Lawful Rate, but any subsequent reductions in the rate of
interest which accrues on the outstanding principal balance of the Note shall
not reduce the rate of interest which accrues on the outstanding principal
balance of such Note below the Highest Lawful Rate until the total amount of
interest accrued on the outstanding principal balance of the Note, taken in the
aggregate, equals the amount of interest which would have accrued if such
interest rate had at all times been in effect and not been reduced. In the event
that any rate of interest under the Note or any Loan Document is reduced due to
the effect of this Section 10.10 and there is a subsequent increase in the
Highest Lawful Rate, such interest rate shall, automatically without any action
of the Borrower or Lender, be increased to the then applicable Highest Lawful
Rate. The terms and provisions of this Section 10.10 shall control and supersede
every other provision of all Loan Documents.
SECTION 10.11. SEVERABILITY. In case any one or more of the
provisions contained in any Loan Document to which the Borrower is a party or in
any instrument contemplated thereby, or any application thereof, shall be
invalid, illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained therein, and any other
application thereof, shall not in any way be affected or impaired thereby.
SECTION 10.12. GOVERNING LAW. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and to be performed entirely within such state.
SECTION 10.13. SUBMISSION TO JURISDICTION; WAIVERS. THE
BORROWER AND THE LENDER IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF,
TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;
(b) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT
SUCH PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND AGREES NOT
TO PLEAD OR CLAIM THE SAME;
23
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH LEGAL ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING OF A COPY THEREOF (BY
REGISTERED OR CERTIFIED MAIL OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL POSTAGE PREPAID) TO THE ADDRESS SET FORTH IN SECTION 10.3
HEREOF OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTIES HERETO
SHALL HAVE BEEN NOTIFIED IN WRITING PURSUANT TO SECTION 10.3.
(d) THE BORROWER AND THE LENDER EACH WAIVES ITS RIGHT TO JURY
TRIAL WITH RESPECT TO ANY LEGAL ACTION ARISING UNDER THIS AGREEMENT.
SECTION 10.14. SPECIAL PROVISIONS RELATING TO BAIRNCO AND THE
BAIRNCO SUBSIDIARIES. Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, neither Bairnco nor any Bairnco Subsidiary
shall be bound by the terms of any Loan Document, or be a "Loan Party" hereunder
or thereunder until the consummation of the Merger, PROVIDED that Bairnco and
the Bairnco Subsidiaries shall be considered "Loan Parties" solely for the
purposes of any representation, warranty and covenant contained in this
Agreement or any other Loan Document, and any such representation or warranty
with respect to Bairnco or the Bairnco Subsidiaries shall be deemed made to
Lender by Borrower until the consummation of the Merger at which time Bairnco
and each Bairnco Subsidiary shall be deemed to have made each such
representation, warranty and covenant directly to Lender.
SECTION 10.15. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by facsimile, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
24
[Signature Page to Subordinated Loan Agreement (WHX)]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
WHX CORPORATION
By:
-----------------------------------
Name: Xxxxx XxXxxx
Title: Senior Vice President
STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.
General Partner
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Member
[Signature Page to Subordinated Loan Agreement (WHX)]
EXHIBIT A
SECURED SUBORDINATED NOTE
$15,000,000 April __, 2007
FOR VALUE RECEIVED, the undersigned (the "BORROWER"), HEREBY
PROMISES TO PAY to the order of Steel Partners II, L.P. (the "LENDER"), on or
before the Maturity Date (as such term is defined in the Loan Agreement), the
principal sum of Fifteen Million and No/100 Dollars ($15,000,000.00) in
accordance with the terms and provisions of that certain Subordinated Loan
Agreement dated as of April __, 2007 by and between the Borrower and the Lender
(as same may be amended, modified, increased, supplemented and/or restated from
time to time, the "LOAN AGREEMENT"; capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Loan Agreement).
The outstanding principal balance of this Note, together with all
accrued and unpaid interest thereon, shall be due and payable on the Maturity
Date. The Borrower promise to pay interest on the unpaid principal balance
(including any interest to be paid in kind hereunder) of this Note from the
Issue Date until the principal balance thereof is paid in full. Interest shall
accrue on the outstanding principal balance (including any interest to be paid
in kind hereunder) of this Note from and including the Issue Date to but not
including the Maturity Date at the rate or rates, and shall be due and payable
on the dates and paid in accordance with the terms and conditions, set forth in
the Loan Agreement.
Payments of principal, and all amounts due with respect to costs and
expenses pursuant to the Loan Agreement, shall be made in lawful money of the
United States of America in immediately available funds, without deduction,
set-off or counterclaim to the Lender to the account maintained by the Lender
not later than 11:59 a.m. (New York time) on the dates on which such payments
shall become due pursuant to the terms and provisions set forth in the Loan
Agreement. Interest due under the Note shall be payable monthly in arrears on
the first day of each succeeding month, commencing one month from the Issue
Date, in kind at the Interest Rate, with the amount payable under such payment
in kind evidenced by the Lender recording such interest payment as an addition
to the unpaid principal balance of the Note on the grid contained in the
attached Schedule. All interest so recorded shall become part of the principal
amount of this Note and shall bear interest in accordance herewith. All interest
payable on the Maturity Date shall be paid in cash. Lender is hereby authorized
by Borrower to enter and record on the schedule attached hereto the amount
outstanding from time to time under this Note and each payment and prepayment of
principal thereon without any further authorization on the part of Borrower.
After the occurrence and during the continuance of an Event of
Default, interest shall be payable at the Default Rate.
At its option, Borrower may make prepayments of principal hereof
without penalty, in whole or in part, at any time, provided that on the date of
each such prepayment Borrower shall pay all then accrued and unpaid interest on
the principal amount hereof. The Obligations of the Borrower under this Note and
any additional note issued hereunder are secured by the Liens and security
interests granted pursuant to the Loan Agreement and the other Loan Documents
and are entitled to the benefit of the Loan Agreement and the other Loan
Documents, and are subject to all of the agreements, terms and conditions
therein combined.
If any payment of principal or cash interest on this Note shall
become due on a day that is not a Business Day, such payment shall be made on
the next succeeding Business Day and such extension of time shall in such case
be included in computing cash interest in connection with such payment.
This Note is the Note provided for in, and is entitled to the
benefits of the Loan Agreement and the Guarantee, Pledge and Security Agreement,
which, among other things, contain provisions for acceleration of the maturity
hereof upon the happening of certain stated events, for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
and with the effect therein specified, and provisions to the effect that no
provision of the Loan Agreement or this Note shall require the payment or permit
the collection of interest in excess of the Highest Lawful Rate.
The Borrower and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, protest, notice of protest, notice of intent to accelerate, notice of
acceleration and diligence in collecting and bringing of suit against any party
hereto, and agree to all renewals, extensions or partial payments hereon and to
any release or substitution of security hereof, in whole or in part, with or
without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed and delivered effective as of the date first above written.
WHX CORPORATION
By:
-----------------------------------
Name: Xxxxx X. XxXxxx
Title: Senior Vice President
[Signature Page to WHX Subordinated Note]
SCHEDULE TO NOTE
Borrower: WHX Corporation Date of Note: April __, 2007
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UNPAID
AMOUNT OF PRINCIPAL PRINCIPAL NAME OF PERSON
DATE INTEREST PAYMENTS BALANCE OF NOTE MAKING NOTATION
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May 2007
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June 2007
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July 2007
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August 2007
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September 2007
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October 2007
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November 2007
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December 2007
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January 2008
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February 2008
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March 2008
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April 2008
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May 2008
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June 2008
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July 2008
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August 2008
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September 2008
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October 2008
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November 2008
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December 2008
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January 2009
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February 2009
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March 2009
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April 2009
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May 2009
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