Exibit 10.2
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LOAN AND SECURITY AGREEMENT
DATED AS OF OCTOBER 30, 2006
BETWEEN
BNS HOLDING, INC.
AS THE BORROWER
AND
STEEL PARTNERS II, L.P.,
AS THE LENDER
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TABLE OF CONTENTS
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Section Page
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS....................................1
SECTION 1.1. Certain Defined Terms...............................1
SECTION 1.2. Terms Generally.....................................4
SECTION 1.3. Computation of Time Periods.........................4
SECTION 1.4. Accounting Terms....................................5
ARTICLE II. AMOUNTS AND TERMS OF THE ADVANCE...................................5
SECTION 2.1. Advance.............................................5
SECTION 2.2. The Note............................................5
SECTION 2.3. Interest............................................5
ARTICLE III. PAYMENTS, PREPAYMENTS, INCREASED COSTS AND TAXES.................5
SECTION 3.1. Payments and Computations...........................5
SECTION 3.2. Mandatory Prepayments...............................6
SECTION 3.3. Voluntary Prepayments...............................6
SECTION 3.4. Taxes...............................................6
ARTICLE IV. SECURITY...........................................................7
SECTION 4.1. Grant of Security Interest..........................7
SECTION 4.2. Delivery of Additional Documentation Required.......7
ARTICLE V. CONDITIONS OF LENDING...............................................7
SECTION 5.1. Conditions Precedent to the Advance.................7
ARTICLE VI. REPRESENTATIONS AND WARRANTIES.....................................8
SECTION 6.1. Existence...........................................8
SECTION 6.2. Power and Authorization.............................8
SECTION 6.3. Binding Obligations.................................8
SECTION 6.4. Government Approvals................................8
SECTION 6.5. Taxes; Governmental Charges.........................8
SECTION 6.6. Compliance with Law.................................9
SECTION 6.7. Absence of Financing Statements.....................9
SECTION 6.8. Litigation..........................................9
SECTION 6.9. No Default or Event of Default......................9
ARTICLE VII. AFFIRMATIVE COVENANTS OF THE BORROWER.............................9
SECTION 7.1. Compliance with Laws, Etc...........................9
SECTION 7.2. Reporting and Notice Requirements...................9
SECTION 7.3. Use of Proceeds....................................10
SECTION 7.4. Taxes and Liens....................................10
SECTION 7.5. Maintenance of Property............................10
SECTION 7.6. Right of Inspection................................10
SECTION 7.7. Insurance..........................................11
SECTION 7.8. Notice of Litigation...............................11
SECTION 7.9. Maintenance of Office..............................11
SECTION 7.10. Existence..........................................11
SECTION 7.11. Further Assurances.................................11
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ARTICLE VIII. NEGATIVE COVENANTS..............................................12
SECTION 8.1. Impairment of Rights...............................12
SECTION 8.2. Restrictions on Debt...............................12
SECTION 8.3. Restrictions on Liens..............................13
SECTION 8.4. Mergers and Acquisitions...........................13
SECTION 8.5. Issuance of Equity Securities......................14
SECTION 8.6. Related Party Transactions.........................14
SECTION 8.7. Issuance of Equity Securities by Xxxxxxx Holding............14
ARTICLE IX. EVENTS OF DEFAULT.................................................14
SECTION 9.1. Events of Default..................................14
ARTICLE X. MISCELLANEOUS......................................................16
SECTION 10.1. Survival of Representations and Warranties.........16
SECTION 10.2. Amendments, Etc....................................16
SECTION 10.3. Notices, Etc.......................................16
SECTION 10.4. No Waiver; Remedies................................16
SECTION 10.5. Costs, Expenses and Taxes..........................16
SECTION 10.6. Right of Set-off...................................17
SECTION 10.7. Binding Effect.....................................17
SECTION 10.8. Assignments and Participations.....................17
SECTION 10.9. Limitation on Agreements...........................17
SECTION 10.10. Severability.......................................18
SECTION 10.11. Governing Law......................................18
SECTION 10.12. SUBMISSION TO JURISDICTION; WAIVERS................18
SECTION 10.13. Execution in Counterparts..........................19
EXHIBITS:
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Exhibit A - Form of Note
Exhibit B - Pledge and Security Agreement
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of October 30, 2006
(this "Agreement"), is made between BNS Holding, Inc., a Delaware corporation
(the "Borrower"), and Steel Partners II, L.P., a Delaware limited partnership
(the "Lender").
RECITALS:
WHEREAS, Lender has agreed to loan money to the Borrower for
the purposes of acquiring 80% of the outstanding common stock of Xxxxxxx I
Holding Corp., a Delaware corporation ("Xxxxxxx Holding"), 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:
"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.
"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.
"BNS SUBSIDIARIES" means any Subsidiary of the
Borrower other than Xxxxxxx Holding.
"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.
"CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
"COMMITMENT" means $14,000,000.
"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.
"EVENTS OF DEFAULT" has the meaning specified in
Section 9.1.
"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.
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"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
any 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.
"ISSUE DATE" means the date on which any 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, any Note, the
Pledge and Security Agreement, and any document or instrument executed
in connection with any of the foregoing.
"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) a material adverse effect on the
business, assets, liabilities, operations, results of operations,
condition (financial or otherwise) or prospects of the Borrower, if
any, that is material to the Borrower, 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 fifty-eight month anniversary of the Issue Date, or (b) such
earlier time to which the Obligations may be accelerated under Section
9.1.
"NOTE" means any promissory note issued under this
Agreement pursuant to Section 2.2 or Section 3.1(b).
"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.
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"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.
"PLEDGE AND SECURITY AGREEMENT" means the pledge and
security agreement between the Lender and the Borrower executed and
delivered simultaneously with this Agreement, in the form attached
hereto as Exhibit B.
"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 the chief financial
officer or the chief accounting officer of the Borrower, as designated
in reports filed by the Borrower with the Securities and Exchange
Commission.
"SUBSIDIARY" when used with respect to any Person,
shall mean any corporation or other organization, whether incorporated
or unincorporated, of which such Person or any other Subsidiary of such
Person is a general partner or at least 50% 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".
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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
referred to in Section 7.2.
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 date
hereof consisting of a term loan in an amount not to exceed 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 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 15%,
payable quarterly commencing three months from the Issue Date in accordance with
Section3.1.
All computations of interest hereunder pursuant to this
Article II shall be made on the basis of a year of 365 or 366 days, as the case
may be, in each case for the actual number of days (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) Each quarterly payment of interest due under the
Note (other than at the Maturity Date) shall be payable in
kind through the issuance and delivery to the Lender by the
Borrower of an additional Note in the principal amount of the
interest payment then due, bearing interest at the rate of 15%
per annum and payable as to principal and all accrued but
unpaid interest on the Maturity Date, which Notes shall be
substantially in the form of Exhibit A hereto with the blanks
appropriately filled.
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(c) Whenever any payment under any 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 or fee, as the case may be.
SECTION 3.2. MANDATORY PREPAYMENTS
If, while any amount of principal or accrued but unpaid
interest remain outstanding on any Note, Borrower conducts any sales of
Borrower's securities or any sale of its assets permitted under the Loan
Documents, the Borrower shall, immediately upon receipt of the net proceeds of
such sale, 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 all Notes. Lender
shall apply any such proceeds, in its sole discretion, to prepay amounts of
principal of and/or accrued interest on any Note or Notes then outstanding.
SECTION 3.3. VOLUNTARY PREPAYMENTS. Following the two year
anniversary of the Issue Date, 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. 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 amount of the Advance which is
prepaid in accordance with this Section may not be reborrowed.
SECTION 3.4. TAXES
(a) Any and all payments by the Borrower under any
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 any 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 agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made
under any Note or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any Note.
(b) The Borrower will indemnify the Lender for the
full amounts payable pursuant to Section 3.4(a) (including,
without limitation, any such amounts imposed by any
jurisdiction on amounts payable under this Section 3.3) 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.
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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
all Notes.
ARTICLE IV.
SECURITY
SECTION 4.1. GRANT OF SECURITY INTEREST. The Borrower and
Lender have entered into the Pledge and Security Agreement in order to grant to
Lender a first priority lien and security interest in and to all Property of the
Borrower and any other Collateral (as defined in the Pledge and Security
Agreement) to secure prompt repayment of any and all Obligations and in order to
secure prompt performance by Borrower of its covenants and duties under the Loan
Documents.
SECTION 4.2. DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.
The Borrower shall 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
Property 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 Lender shall have received on the date hereof, in form and
substance satisfactory to the Lender:
(a) A Note representing the aggregate amount of the
Advance, duly executed by the Borrower and payable to the
order of the Lender.
(b) This Agreement, duly executed by the Borrower.
(c) A certificate of an officer of the Borrower
certifying the 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.
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(d) Certificates of appropriate officials as to the
existence and good standing of the Borrower in its
jurisdiction of incorporation.
(e) The duly executed Pledge and Security Agreement.
(f) Such other documents and instruments with respect
to the transactions contemplated hereby as the Lender may
reasonably
request.
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 that:
SECTION 6.1. EXISTENCE. The Borrower, each of the BNS
Subsidiaries and Xxxxxxx Holding 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 would have a
Material Adverse Effect.
SECTION 6.2. POWER AND AUTHORIZATION. The Borrower is duly
authorized and empowered to execute, deliver, and perform its obligations under
each Loan Document and all corporate or other action on the Borrower's part
requisite for the due execution, delivery, and performance of each Loan Document
has been duly and effectively taken.
SECTION 6.3. BINDING OBLIGATIONS. Each Loan Document
constitutes the legal, valid and binding obligation of the Borrower enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies.
SECTION 6.4. GOVERNMENT APPROVALS. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents to
which the Borrower 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 agency or authority other than those already obtained.
SECTION 6.5. TAXES; GOVERNMENTAL CHARGES. The Borrower, each
of the BNS Subsidiaries and Xxxxxxx Holding 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.
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SECTION 6.6. COMPLIANCE WITH LAW. The business and operations
of the Borrower, each of the BNS Subsidiaries and Xxxxxxx Holding, as conducted,
are in compliance in all material respects with all Legal Requirements.
SECTION 6.7. ABSENCE OF FINANCING STATEMENTS. Except as
provided herein, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, the Property of the Borrower or any rights relating thereto.
SECTION 6.8. LITIGATION. There are no actions, suits,
proceedings or investigations of any kind pending or threatened against the
Borrower, any of the BNS Subsidiaries or Xxxxxxx Holding 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 materially
adversely affect the properties, assets, financial condition or business of the
Borrower or its Subsidiaries or materially impair the right of the Borrower, its
Subsidiaries and Xxxxxxx Holding, considered as a whole, to carry on business
substantially as now conducted by them, or result in any substantial liability
not adequately covered by insurance, or for which adequate reserves are not
maintained on the consolidated balance sheet of the Borrower, or which question
the validity of this Agreement or any of the other Loan Documents, or might
impair or prevent any action taken or to be taken pursuant hereto or thereto.
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.
ARTICLE VII.
AFFIRMATIVE COVENANTS OF THE BORROWER
So long as any Obligation shall remain unpaid, 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.
SECTION 7.2. REPORTING AND NOTICE REQUIREMENTS. The Borrower
will furnish to the Lender:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as
available and in any event within forty-five (45) days after
the end of each fiscal quarter of the Borrower (excluding the
fourth quarter), balance sheets (which are to be consolidated,
if applicable) of the Borrower as of the end of such quarter
and statements of income (or loss), stockholder's equity (or
deficiency) and cash flow (which are to be consolidated, if
applicable) of the Borrower for the period commencing at the
end of the previous fiscal year of the Borrower and ending
with the end of such fiscal quarter, all in reasonable detail
and certified by a Responsible Officer as presenting fairly
the financial position (on a consolidated basis, if
applicable) of the Borrower as of the date indicated and the
results of their operations and changes in financial position
(on a consolidated basis, if applicable) for the period
indicated in conformity with GAAP, consistently applied,
subject to changes resulting from year-end adjustments.
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(b) ANNUAL FINANCIAL STATEMENTS. As soon as available
and in any event within ninety (90) days after the end of each
fiscal year of the Borrower, statements of income (or loss),
shareholder's equity (or deficiency) and cash flow (which are
to be consolidated, if applicable) of the Borrower for such
fiscal year, and balance sheets (which are to be consolidated,
if applicable) of the Borrower as of the end of such fiscal
year, all in reasonable detail and satisfactory in form,
substance, and scope to the Lender and certified by a
Responsible Officer as presenting fairly the financial
position (on a consolidated basis, if applicable) of the
Borrower as of the date indicated and the results of their
operations and changes in financial position (on a
consolidated basis, if applicable) for the period indicated in
conformity with GAAP, consistently applied (except for such
inconsistencies which may be disclosed in such report).
(c) 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.
(d) NOTIFICATION OF CLAIM AGAINST PROPERTY. 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 Property, or the Lender's rights
with respect to the Property, are subject.
SECTION 7.3. USE OF PROCEEDS. The proceeds of the Advance will
be exclusively used by the Borrower to acquire 80% of the outstanding common
stock of Xxxxxxx Holding.
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.
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.
10
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 the Borrower, examine the Borrower's corporate books or financial
records, take copies and extracts therefrom, and discuss the affairs, finances,
and accounts of the Borrower with the Borrower's officers or certified public
accountants, 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 the Borrower.
All confidential or proprietary information provided to or obtained by the
Lender under this section or under this Agreement 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) the Borrower 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 the
Borrower, (iv) the information was within the possession of the Lender or any of
its representatives prior to being furnished by or on behalf of the Borrower,
provided that in each case the source of such information was not bound by a
confidentiality agreement 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 $25,000, and any
investigation of Borrower by any Governmental Authority, adversely affecting the
Borrower or any of the BNS Subsidiaries 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 in Middletown, Rhode Island, or at such other place
in the United States of America as the Borrower 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 the Borrower is a party may
be given or made. The Borrower shall notify the Lender in writing of the intent
of the Borrow to relocate any of its Property at least five Business Days prior
to the date of such proposed relocation.
SECTION 7.10. EXISTENCE. The Borrower shall 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 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.
11
ARTICLE VIII.
NEGATIVE COVENANTS
So long as any Obligation shall remain unpaid, the Borrower
covenants and agrees that, without the written consent of the Lender:
SECTION 8.1. IMPAIRMENT OF RIGHTS. The Borrower will not
undertake any action or engage in any transaction or activity to impair the
Lender's rights hereunder.
SECTION 8.2. RESTRICTIONS ON DEBT. The Borrower will not, and
will not permit any of the BNS Subsidiaries to, create, incur, assume, guarantee
or be or remain liable, contingently or otherwise, with respect to any Debt
other than:
(a) Debt to the Lender arising under any of the Loan
Documents;
(b) current liabilities of the Borrower or such
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;
(c) Debt 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;
(d) 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 the Borrower or such BNS 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;
(e) endorsements for collection, deposit or
negotiation and warranties of products or services, in each
case incurred in the ordinary course of business; and
(f) Debt owed by the Borrower or any of the BNS
Subsidiaries to trade vendors, in the amount of the cost to
the Borrower or such BNS Subsidiary of inventory held on
consignment from such trade vendors, including, without
limitation, in connection with and pursuant to agreements with
the Borrower's trade vendors.
12
SECTION 8.3. RESTRICTIONS ON LIENS. The Borrower will not, and
will not permit any of the BNS Subsidiaries to, (i) create or incur or suffer to
be created or incurred or to exist any Lien upon any of its 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 the Borrower and any Subsidiary of the
Borrower 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(d); and
(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 the Borrower or any BNS Subsidiary is a party, and other
minor liens or encumbrances none of which in the opinion of
the Borrower interferes materially with the use of the
property affected in the ordinary conduct of the business of
the Borrower or any BNS Subsidiary, which defects do not
individually or in the aggregate have a materially adverse
effect on the business of the Borrower individually or of the
Borrower and the BNS Subsidiaries on a consolidated basis.
SECTION 8.4. MERGERS AND ACQUISITIONS. The Borrower will not,
and will not permit any of the BNS Subsidiaries 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). The Borrower will not, and will not
permit any of the BNS Subsidiaries to, agree to or effect any asset acquisition
or stock acquisition without the prior written consent of the Lender. The
Borrower will not create or form any subsidiaries without the consent of Lender;
PROVIDED, HOWEVER, this shall in no way effect or limit the ability of Xxxxxxx
Holding, or any of its Subsidiaries, to take any actions they shall deem
necessary or advisable.
13
SECTION 8.5. ISSUANCE OF EQUITY SECURITIES. The Borrower will
not issue any equity securities, including, without limitation, any issuance of
warrants, options or subscription or conversion rights, unless (i) the Borrower
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. RELATED PARTY TRANSACTIONS. The Borrower will not
undertake any action or engage in any transaction or activity with any
Affiliate, other than those contemplated by the Loan Documents, without the
prior written approval of Lender, which approval shall not be unreasonably
withheld.
SECTION 8.7. ISSUANCE OF EQUITY SECURITIES BY XXXXXXX HOLDING.
The Borrower will not consent to the issuance by Xxxxxxx Holding of any equity
securities or any warrants, options or subscription or conversion rights
entitling the holder thereof to purchase or obtain any equity securities of
Xxxxxxx Holding, without the prior written consent of the Lender, which consent
will not be unreasonably withheld.
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 the Borrower, 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 any Note or other amounts due under any Note or
this Agreement or any other Loan Document, when the same
becomes due and payable; or
(b) the Borrower shall enter into any agreement or
arrangement to sell, dispose, assign, exchange, gift, lease,
pledge, hypothecate or otherwise transfer, directly or
indirectly, in one transaction or a series of transactions,
all or substantially all of the assets of the Borrower,
without prior written consent of Lender; or
(c) any representation or warranty made by the
Borrower (or any of its officers) under or in connection with
any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or
(d) the Borrower shall fail to perform or observe any
term, covenant or agreement contained herein or in any other
Loan Document within 10 days after written notice of the
Lender to cure same; or
14
(e) the Borrower or any of its Subsidiaries shall
fail to pay any principal of, or premium or interest on, any
Debt when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand
or otherwise) unless being 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
(f) the Borrower fails to use the proceeds from the
Advance in accordance with the stated use therefor as
contemplated by Section 7.3; or
(g) the Borrower shall generally not pay its debts as
such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower under the Bankruptcy Law
or any other Debtor Law seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of
it or its debts under any Debtor Laws, or seeking the entry of
an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any
substantial part of its Property and, in the case of any such
proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed
for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for
any substantial part of its Property) shall occur; or the
Borrower shall take any corporate action to authorize any of
the actions set forth above in this subsection (g);
(h) the Pledge and Security Agreement or any interest
of the Lender thereunder shall for any reason be terminated,
invalidated, void or unenforceable or the Borrower shall fail
to perform any obligation thereunder; or
(i) the Borrower shall 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;
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 any Notes, all interest thereon and
all other Obligations or amounts payable under this Agreement or any other Loan
Document to be forthwith due and payable, whereupon the Notes, 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 Subsection (g) of this
Section 9.1, all such interest and all such amounts shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower..
15
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 Notes and the making of the Advance, and shall continue after the
repayment of the Notes 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 any Note, nor consent 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, at their address at 00 Xxxxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, Attention: Xxxxxxx Xxxxxx,
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. COSTS, EXPENSES AND TAXES. The Borrower agrees
to pay all reasonable fees and out-of-pocket expenses of the Lender incurred in
connection with the preparation and execution of this Agreement. The Borrower
agrees to pay on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), reasonably incurred in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of the Loan Documents and the other documents to be delivered
under the Loan Documents, including, without limitation, reasonable counsel fees
and expenses in connection with the enforcement of rights under this Section
10.5. The Borrower shall not be responsible to the Lender for any expenses other
than those set forth in this Agreement.
16
SECTION 10.6. 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 any Note and although
such obligations may be unmatured. Lender agrees promptly to notify the Borrower
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 10.7. 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 10.8) shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the other.
SECTION 10.8. 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 any Note held by it) to any
Affiliate of Lender.
SECTION 10.9. 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 Notes 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 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 to the reduction of the principal amount owing on account of
the Notes or the amounts owing on other obligations of the Borrower 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 Notes and the
amounts owing on other obligations of the Borrower to the Lender under any Loan
Document, as the case may be, such excess 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
17
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 Notes 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 any 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 all Notes, 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 any Note or any Loan Document is reduced due to the effect of
this Section 10.9 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 10.9 shall control and supersede every other
provision of all Loan Documents.
SECTION 10.10. 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 10.11. GOVERNING LAW. This Agreement and the Notes
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 10.12. 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;
18
(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 10.13. EXECUTION IN COUNTERPARTS. This Agreement may
be executed in any number of counterparts, 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.
19
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.
BNS HOLDING, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: President and CEO
STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.
General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Member
20
EXHIBIT A
---------
NOTE
----
$14,000,000 October __, 2006
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 Fourteen Million and No/100 Dollars ($14,000,000.00) in
accordance with the terms and provisions of that certain Loan Agreement dated as
of October __, 2006 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 promises to pay interest on the unpaid principal
balance of this Note from the Issue Date until the principal balance thereof is
paid in full. Interest shall accrue on the outstanding principal balance 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. Payments of interest (other than those due on the Maturity Date,
which shall be paid in accordance with the terms of the immediately preceding
sentence) shall be payable in kind through the issuance of additional notes,
substantially in the form hereof, in the aggregate principal amount equal to
such amount of interest that would otherwise be payable and shall mature on the
Maturity Date. The Obligations of the Borrower under this Note and any
additional note issued hereunder are secured in accordance with the terms of the
Pledge and Security Agreement.
If any payment of principal or 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 interest in connection with such payment.
1 of 2
This Note is the Note provided for in, and is entitled to the
benefits of the Loan Agreement, which Loan Agreement, among other things,
contains 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.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
duly executed and delivered effective as of the date first above written.
BNS HOLDING, INC.
By:
---------------------------
Name:
Title:
2 of 2
EXHIBIT B
---------
Pledge and Security Agreement
