Exhibit (b)(i)
[EXECUTION COPY]
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LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL __, 2007
BETWEEN
BZ ACQUISITION CORP.
AND
BAIRNCO CORPORATION
AS BORROWERS
AND
STEEL PARTNERS II, L.P.,
AS LENDER
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TABLE OF CONTENTS
Page
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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.............................................8
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.......................................................10
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.............................................11
SECTION 5.1. Conditions Precedent to the Advance.........................11
ARTICLE VI. REPRESENTATIONS AND WARRANTIES...................................13
SECTION 6.1. Existence...................................................13
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.........................................14
SECTION 6.7. Title to Properties; Liens..................................14
SECTION 6.8. Litigation..................................................14
SECTION 6.9. No Default or Event of Default..............................14
ARTICLE VII. AFFIRMATIVE COVENANTS OF THE BORROWERS..........................14
SECTION 7.1. Compliance with Laws, Etc...................................14
SECTION 7.2. Reporting and Notice Requirements...........................14
SECTION 7.3. Use of Proceeds.............................................15
SECTION 7.4. Taxes and Liens.............................................15
SECTION 7.5. Maintenance of Property.....................................15
TABLE OF CONTENTS
(continued)
Page
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SECTION 7.6. Right of Inspection.........................................15
SECTION 7.7. Insurance...................................................16
SECTION 7.8. Notice of Litigation........................................16
SECTION 7.9. Maintenance of Office.......................................16
SECTION 7.10. Existence...................................................16
SECTION 7.11. Further Assurances..........................................16
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....................................18
SECTION 8.5. Issuance of Equity Interests................................18
SECTION 8.6. Related Party Transactions..................................18
SECTION 8.7. Restrictions on Amendments of Existing Senior Facility......18
SECTION 8.8. Asset Dispositions..........................................19
ARTICLE IX. EVENTS OF DEFAULT................................................19
SECTION 9.1. Events of Default...........................................19
ARTICLE X. MISCELLANEOUS.....................................................21
SECTION 10.1. Survival of Representations and Warranties..................21
SECTION 10.2. Amendments, Etc.............................................21
SECTION 10.3. Notices, Etc................................................21
SECTION 10.4. No Waiver; Remedies.........................................21
SECTION 10.5. Expenses and Attorneys' Fees................................21
SECTION 10.6. Indemnity...................................................22
SECTION 10.7. Right of Set-off............................................22
SECTION 10.8. Binding Effect..............................................23
SECTION 10.9. Assignments and Participations..............................23
SECTION 10.10. Limitation on Agreements....................................23
SECTION 10.11. Severability................................................24
SECTION 10.12. Governing Law...............................................24
SECTION 10.13. SUBMISSION TO JURISDICTION; WAIVERS.........................24
SECTION 10.14. Special Provisions Relating to Bairnco and the Bairnco
Subsidiaries................................................25
SECTION 10.15. Execution in Counterparts...................................25
EXHIBITS:
Exhibit A - Form of Note
ii
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of April __, 2007 (this
"AGREEMENT"), is made by and among BZ Acquisition Corp., a Delaware corporation
("BZ ACQUISITION"), Bairnco Corporation, a Delaware Corporation ("BAIRNCO," and
together with BZ Acquisition, the "BORROWERS"), and Steel Partners II, L.P., a
Delaware limited partnership (the "LENDER").
RECITALS:
WHEREAS, Lender has agreed to loan money to the Borrowers for the
purposes of BZ Acquisition acquiring (the "ACQUISITION") no less than 50% of the
outstanding common stock of Bairnco through the shareholders of Bairnco
tendering their Equity Interests in Bairnco to BZ Acquisition for purchase and
the subsequent merger of BZ Acquisition with and into Bairnco with Bairnco being
the surviving corporation (the "MERGER"), and to pay expenses 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.
"ASSET DISPOSITION" means a sale, lease, license, consignment,
transfer or other disposition of Property of a Loan Party, including a
disposition of Property in connection with a sale-leaseback transaction or
synthetic lease.
"BAIRNCO SUBSIDIARIES" means any Subsidiary of Bairnco that is
a borrower or a 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.
"BORROWERS" has the meaning in the preamble.
"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.
"CASH INTEREST RATE" means a rate per annum equal to the Prime
Rate of JPMorgan Chase plus 1.75 percent.
"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 Bairnco or any
successor thereof;
(ii)during any period of two (2) consecutive years or less,
individuals who at the beginning of such period constituted the
Board of Bairnco cease, for any reason, to constitute at least a
majority of the Board, unless the election or nomination for
election of each new member of the Board was approved by a vote of
at least two-thirds of the members of the Board then still in office
who were members of the Board at the beginning of the period;
(iii) the equityholders of Bairnco approve any merger or
consolidation to which Bairnco is a party as a result of which the
persons who were equityholders of Bairnco, 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
(iv) the equityholders of Bairnco approve any merger or
consolidation as a result of which the equity interests of Bairnco,
shall be changed, converted or exchanged (other than a merger with a
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wholly-owned Subsidiary of Bairnco) or any liquidation of Bairnco or
any sale or other disposition of fifty percent (50%) or more of the
assets or earnings power of Bairnco.
"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 up to $90,000,000.
"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.
"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).
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"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, the Borrowers
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,
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" means collectively the Cash Interest Rate and
the PIK Interest Rate, PROVIDED THAT, in no event shall the Interest Rate
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be (i) less than 14.5% per annum for the ninety day period following the
Issue Date or thereafter, 15% per annum or (ii) at any time in excess of
18% per annum.
"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 WHX
Guarantee, the Guarantee, Pledge and Security Agreement, the Intercreditor
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 each Borrower 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, assets, Property,
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) June 30,
2008, (b) the Borrowers obtaining replacement financing for the Note, or
(c) such earlier time to which the Obligations may be accelerated under
Section 9.1.
"NOTE" means the promissory note issued under this Agreement
pursuant to Section 2.2.
"OBLIGATIONS" means all of the obligations of the Borrowers
now or hereafter existing under the Loan Documents, whether for principal,
interest, fees, expenses, indemnification or otherwise.
"PERMITTED ASSET DISPOSITION" - as long as no Default or Event
of Default exists and all net proceeds are remitted to Lender, an Asset
5
Disposition that is (a) a sale of inventory in the ordinary course of
business; (b) a disposition of equipment that, in the aggregate during any
12 month period, has a fair market or book value (whichever is more) of
$1,000,000 or less; (c) a disposition of Inventory that is obsolete,
unmerchantable or otherwise unsaleable in the ordinary course of business;
(d) termination of a lease of real or personal Property that is not
necessary for the ordinary course of business, could not reasonably be
expected to have a Material Adverse Effect and does not result from a Loan
Party's default; (e) a disposition of the Acquired Residential Properties
(as defined in the Existing Senior Facility); or (f) approved in writing
by Lender.
"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.
"PIK INTEREST RATE" means, for the ninety-day period following
the Issue Date, 4.5% per annum, and thereafter shall mean 5% per annum.
"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 respect to Bairnco, the chief
financial officer or the chief accounting officer of Bairnco, as
designated in reports filed with the Securities and Exchange Commission
(the "SEC"), and with respect to BZ Acquisition, means any officer of BZ
Acquisition.
"SENIOR DEBT" means the "Obligations" under (and as defined
in) the Existing Senior 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
6
otherwise) under any Loan Documents, or made any conveyance in connection
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.
"WHX" means WHX Corporation, a Delaware corporation.
"WHX GUARANTEE" means the Guarantee Agreement, dated as of the
date hereof, by and between WHX Corporation and Lender, in form and
substance reasonably satisfactory to Lender.
"WHX SUBORDINATED LOAN" means the Subordinated Loan and
Security Agreement, dated as of the date hereof, by and between Lender and
WHX Corporation pursuant to which Lender will agree to make an extension
of credit to WHX Corporation in the aggregate principal amount of
$15,000,000 on the terms and subject to the conditions set forth therein.
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,
7
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 of Bairnco as filed with
the SEC under the Exchange Act.
ARTICLE II.
AMOUNTS AND TERMS OF THE ADVANCE
SECTION 2.1. ADVANCE. Lender agrees, on the terms and conditions
hereinafter set forth, to make one or more advances (collectively, the
"Advance") consisting of a term loan in an amount no greater than 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 Borrowers shall jointly and severally
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 (together with all interest which
is paid in kind thereunder) shall bear interest from and including the Issue
Date at the Interest Rate. as adjusted from time to time. 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.
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(b) 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 cash and in kind as follows:
(i) Interest shall be payable in cash at the Cash
Interest Rate; and
(ii) Interest shall be payable in kind at the PIK
Interest Rate, with the amount payable under such
payment in kind evidenced by the Lender recording
such interest payment on the grid contained in the
Schedule to the Note. Any amounts so recorded
shall become Obligations of Borrowers under this
Agreement, shall bear interest in accordance with
Section 2.1 hereof and shall be payable in full on
the Maturity Date.
(c) From time to time, Lender and Borrowers may agree in
writing to adjust the Cash Interest Rate component and the PIK
Interest Rate component of the Interest Rate without affecting the
overall Interest Rate payable.
(d) All interest payable on the Maturity Date (including
interest referred to in Section 3.1(b)(ii), above) shall be paid in
cash.
(e) 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
After payment in full of the Senior Debt and termination of Senior
Lender's commitment under the Existing Senior Facility, 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 Borrowers 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 all 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 Borrowers 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.
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SECTION 3.4. TAXES
(a) Any and all payments by the Borrowers 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 any 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
Borrowers shall make such deductions and (iii) the Borrowers shall
pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law. The Borrowers
further agree 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 the Note or from the
execution, delivery or registration of, or otherwise with respect
to, this Agreement or the Note.
(b) The Borrowers 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 Borrowers
hereunder, the agreements and obligations of the Borrowers 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. The Borrowers, the Bairnco
Subsidiaries and Lender have entered into the Guarantee, Pledge and Security
Agreement in order to grant to Lender (subject only to Permitted Liens) a first
priority lien and security interest in and to all Property of the Borrowers, and
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 Borrowers of their
covenants and duties under the Loan Documents.
SECTION 4.2. DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. The
Borrowers shall, and shall cause the Bairnco Subsidiaries to execute and deliver
to the Lender, prior to or concurrently with the Borrowers' execution and
10
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. The Note representing the aggregate amount of the
Advance, duly executed by the Borrowers and payable to the order of
the Lender.
(b) EXECUTED LOAN AND SECURITY AGREEMENT. This Agreement, duly
executed by the Borrowers.
(c) CORPORATE AUTHORIZATIONS. Resolutions of the board of
directors of such Borrower approving and authorizing the execution,
delivery, and performance by such Borrower of each Loan Document,
the notices and other documents to be delivered by such 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 each Borrower in its jurisdiction
of incorporation.
(e) GUARANTEE, PLEDGE AND SECURITY AGREEMENT. The duly
executed Guarantee, Pledge and Security Agreement.
(f) WHX GUARANTEE. The duly executed WHX Guarantee.
(g) AMENDMENT TO EXISTING SENIOR FACILITY. The duly executed
Amendment to Existing Senior Facility.
(h) INTERCREDITOR AGREEMENT. The duly executed Intercreditor
Agreement.
(i) 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.
(j) 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
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first priority liens on the Collateral, subject only to Permitted
Liens.
(k) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrowers and each other Loan Party 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.
(l) 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.
(m) 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.
(n) 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.
(o) 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.
(p) 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.
(q) 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.
(r) MATERIAL ADVERSE CHANGE. Since December 31, 2006, there
shall have been no material adverse change in the business,
12
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
(s) 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
Borrowers jointly and severally represent and warrant 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.
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 on or before the Issue Date be duly and effectively taken.
SECTION 6.3. BINDING OBLIGATIONS. Each Loan Document constitutes or
will on or before the Issue Date constitute the legal, valid and binding
obligation of each Loan 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 thereto of 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.
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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.
ARTICLE VII.
AFFIRMATIVE COVENANTS OF THE BORROWERS
Until such time as all Obligations shall be indefeasibly paid in
full, each Borrower covenants and agrees that, unless the Lender shall otherwise
consent in writing:
SECTION 7.1. COMPLIANCE WITH LAWS, ETC. The Borrowers will comply,
in all material respects with all applicable Legal Requirements; provided,
however, that Borrowers will comply in full with any applicable Legal
Requirement the failure with which to comply could be reasonably expected to
have a Material Adverse Effect.
SECTION 7.2. REPORTING AND NOTICE REQUIREMENTS. The Borrowers will
furnish to the Lender:
(a) NOTICE OF DEFAULT. Promptly after any officer of a
Borrower knows or has reason to know that any Default or Event of
Default has occurred, a written statement of such officer of such
Borrower setting forth the details of such Default or Event of
Default and the action which such Borrower has taken or proposes to
take with respect thereto.
(b) NOTIFICATION OF CLAIM AGAINST COLLATERAL. Each 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.
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(c) Copies of Senior Lender Information and Notices. Each
Borrower will promptly provide to Lender, copies of all information
or notices required to be provided to Senior Lender under Section
10.1.2 or 10.1.3 of the Existing Senior Facility.
SECTION 7.3. USE OF PROCEEDS. The proceeds of the Advance will be
exclusively used by BZ Acquisition to 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. Each Borrower will pay and discharge,
or will cause to be paid and discharged, promptly all taxes, assessments, and
governmental charges or levies imposed upon such Borrower or upon the income of
any Property of such 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 such Borrower, except such
taxes, assessments, governmental charges or levies contested in good faith by
such Borrower and for which adequate reserves are maintained in accordance with
GAAP.
SECTION 7.5. MAINTENANCE OF PROPERTY. Each 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 such Borrower, each 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 provisions of 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) 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").
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SECTION 7.7. INSURANCE. Bairnco 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. Each 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 such Borrower by any Governmental Authority, which could
reasonably be expected to adversely affect such 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. Bairnco will maintain its chief
executive office in 000 Xxxxxxx Xxxx., Xxxx Xxx, Xxxxxxx 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 Bairnco in
respect of the Loan Documents to which it is a party may be given or made.
Bairnco 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. Each Loan Party 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. Each Borrower will cooperate with
the Lender and execute, and 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.
ARTICLE VIII.
NEGATIVE COVENANTS
Until such time as all Obligations shall be indefeasibly paid in
full, each Borrower covenants and agrees that, without the written consent of
the Lender:
SECTION 8.1. IMPAIRMENT OF RIGHTS. The Borrowers will not 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 Borrowers will not, and will
not permit any Loan Party to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Debt other than:
(a) Senior Debt in principal amount not in excess of the
Maximum Lender Debt (as defined in the Intercreditor Agreement);
16
(b) Debt to the Lender arising under any of the Loan
Documents;
(c) current liabilities of a Loan Party 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;
(d) 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;
(e) 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 Loan Party 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;
(f) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(g) Debt owed by any Loan Party 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 the Loan Party's
trade vendors;
(h) All obligations of the Loan Parties in respect of the
obligations of WHX under the WHX Subordinated Loan.
SECTION 8.3. RESTRICTIONS ON LIENS. Except with respect to the
Senior Debt and the Liens securing the Senior Debt, the Borrowers will not, and
will not permit any Loan Party 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 a Loan Party 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;
17
(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);
(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 Loan Party 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
Loan Party, which defects do not individually or in the aggregate
have a Material Adverse Effect on the business of a Loan Party
individually or of the Loan Parties on a consolidated basis;
(e) purchase money security interests incurred in the ordinary
course; and
(f) liens securing the Senior Debt under the Existing Senior
Facility and the WHX Subordinated Loan.
SECTION 8.4. MERGERS AND ACQUISITIONS. The Borrowers will not, and
will not permit any Loan Party 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
Borrowers will not, and will not permit any of Loan Party to, agree to or effect
any asset acquisition or stock acquisition, other then the Acquisition and the
Merger, without the prior written consent of the Lender. The Borrowers will not
create or form any subsidiaries without prior written the consent of Lender.
SECTION 8.5. ISSUANCE OF EQUITY INTERESTS. No Loan Party will 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 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. RELATED PARTY TRANSACTIONS. No Loan Party will
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. RESTRICTIONS ON AMENDMENTS OF EXISTING SENIOR Facility.
No Loan Party shall enter into any amendment, refinancing, modification,
renewal, or extension of the Existing Senior Facility if the terms and
18
conditions of such amendment, refinancing, modification, renewal, or extension,
in Lender's reasonable judgment, materially impair the prospects of repayment of
the Obligations by Borrowers or materially impair Borrowers' 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, other than as permitted in the Intercreditor Agreement.
SECTION 8.8. Asset Dispositions. No Loan Party shall make any Asset
Disposition, except a Permitted Asset Disposition, a disposition of equipment in
the ordinary course of business, or a transfer of Property to a Loan Party.
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) any 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
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 Borrowers fail 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
19
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 the WHX
Guarantee or any interest of the Lender thereunder shall for any
reason be terminated, invalidated, void or unenforceable or any Loan
Party or WHX shall fail to perform any respective 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 or the WHX Subordinated Loan; or
(k) there shall occur any Change of Control; or
(l) there shall occur any Default or Event of Default under
the WHX Subordinated Loan or any guarantee or security agreement
securing the obligations of WHX thereunder.
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
Borrowers, declare the principal amount of the Note, 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 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 Borrowers and all interest on and principal of
all other Debt owed by the Borrowers 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 Borrowers; 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
20
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 Borrowers.
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, nor consent by Lender to any departure
by the Borrowers 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 Borrowers, to Bairnco at its address at 000 Xxxxxxx Xxxx., Xxxx Xxxx,
Xxxxxxx 00000, Attention: Chief Financial Officer, facsimile number (407)
875-3398; 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 Borrowers 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
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
21
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 by 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
Borrowers 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 any 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 Indemnitee 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.
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 Borrowers against any and all of the
obligations of the Borrowers now or hereafter existing under any Loan Document,
whether or not the Lender shall have made any demand under the Note and although
22
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 Borrowers and the Lender and thereafter
shall be binding upon and inure to the benefit of the Borrowers, the Lender and
their respective successors and assigns, except that neither the Borrowers 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
Borrowers and 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
Borrowers to the Lender under any Loan Document, as the case may be, such excess
shall be refunded to the Borrowers. All sums paid or agreed to be paid to the
Lender for the use, forbearance, or detention of the indebtedness of the
Borrowers 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
23
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 Borrowers 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 a 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. EACH 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;
(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.
24
(d) EACH 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 this Agreement or any other Loan Document, or be
a "Borrower" or "Loan Party" hereunder or thereunder until the consummation of
the Merger, PROVIDED that Bairnco and the Bairnco Subsidiaries shall be
considered "Borrower" or "Loan Parties", as applicable, 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 BZ
Acquisition 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]
25
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.
BZ ACQUISITION CORP.
By:
-------------------------------------
Name:
Title:
BAIRNCO CORPORATION
By:
-------------------------------------
Name:
Title:
STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.
General Partner
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Member
[Signature Page to Bridge Facility Loan Agreement]
EXHIBIT A
THE DEBT EVIDENCED BY THIS NOTE IS SUBORDINATED TO THE FULL PAYMENT OF CERTAIN
AMOUNTS DUE TO BANK OF AMERICA, N.A. ("B OF A") UNDER A LOAN AND SECURITY
AGREEMENT BETWEEN THE BORROWERS, CERTAIN SUBSIDIARIES OF BORROWERS, AND B OF A
DATED AS OF NOVEMBER 9, 2006 (AS THE SAME SHALL BE AMENDED OR SUPPLEMENTED)
SECURED NOTE
$90,000,000 April __, 2007
FOR VALUE RECEIVED, each of the undersigned (the "BORROWERS"),
HEREBY JOINTLY AND SEVERALLY PROMISE 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 Ninety Million and No/100 Dollars
($90,000,000.00) in accordance with the terms and provisions of that certain
Loan Agreement dated as of April __, 2007 by and between the Borrowers 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 Borrowers 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 cash and in kind as follows: interest shall be payable in cash at the
Cash Interest Rate; and interest shall be payable in kind at the PIK 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 in kind
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 Borrowers 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 Borrowers.
After the occurrence and during the continuance of an Event of
Default, interest shall be payable at the Default Rate.
At their option, Borrowers 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 Borrowers shall pay all then accrued and unpaid interest
(including in kind interest) on the principal amount hereof. The Obligations of
the Borrowers 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
and the WHX Guarantee, 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 Borrowers 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 Borrowers have caused this Note to be duly
executed and delivered effective as of the date first above written.
BZ ACQUISITION CORP.
By:
-------------------------------------
Name:
Title:
BAIRNCO CORPORATION
By:
-------------------------------------
Name:
Title:
[Signature Page to Bridge Facility Note]
SCHEDULE TO NOTE
Borrowers: BZ Acquisition Corp. Date of Note: April __, 2007
and Bairnco Corporation
==================================================================================
UNPAID
AMOUNT OF PRINCIPAL PRINCIPAL NAME OF PERSON
DATE INTEREST PAYMENTS BALANCE OF NOTE MAKING NOTATION
----------------------------------------------------------------------------------
May 2007
----------------------------------------------------------------------------------
June 2007
----------------------------------------------------------------------------------
July 2007
----------------------------------------------------------------------------------
August 2007
----------------------------------------------------------------------------------
September 2007
----------------------------------------------------------------------------------
October 2007
----------------------------------------------------------------------------------
November 2007
----------------------------------------------------------------------------------
December 2007
----------------------------------------------------------------------------------
January 2008
----------------------------------------------------------------------------------
February 2008
----------------------------------------------------------------------------------
March 2008
----------------------------------------------------------------------------------
April 2008
----------------------------------------------------------------------------------
May 2008
----------------------------------------------------------------------------------
June 30, 2008
==================================================================================
