Exhibit (b)(i) [EXECUTION COPY] ******************************* 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 *******************************TABLE OF CONTENTS Page ---- 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 ---- 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 2 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). 3 "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 4 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. 8 (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. 9 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 11 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. 13 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. 14 (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"). 15 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 300 Primera Blvd., Lake May, Florida 32746, 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 300 Primera Blvd., Lake Mary, Florida 32746, Attention: Chief Financial Officer, facsimile number (407) 875-3398; if to the Lender, at its address at 590 Madison Avenue, 32nd floor, New York, NY 10022, Attention: John McNamara, facsimile number (212) 520-2321; 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: Warren G. Lichtenstein 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 ==================================================================================
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SC TO-T/A Filing
Bairnco Inactive SC TO-T/AThird party tender offer statement (amended)
Filed: 12 Apr 07, 12:00am