Exhibit 10.1
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CREDIT AND SECURITY AGREEMENT
BY AND AMONG
RONSON CORPORATION,
RONSON AVIATION, INC.,
RONSON CONSUMER PRODUCTS CORPORATION AND
RONSON CORPORATION OF CANADA LTD.
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION
Acting through its Wells Fargo Business Credit operating
division
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May 30, 2008
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS....................................................................................4
Section 1.1.
Definitions.........................................................................4
Section 1.2.
Other
Definitional Terms; Rules of
Interpretation..................................19
ARTICLE II AMOUNT AND TERMS OF THE CREDIT
FACILITY......................................................19
Section 2.1.
Revolving
Advances.................................................................19
Section 2.2.
Procedures
for Requesting
Advances.................................................19
Section 2.3.
LIBOR
Advances.....................................................................20
Section 2.4.
Letters of
Credit..................................................................21
Section 2.5.
Special
Account....................................................................22
Section 2.6.
Term
Advances......................................................................22
Section 2.7.
Payment of
Term
Notes..............................................................22
Section 2.8.
Interest;
Default Interest Rate; Application of Payments; Participations;
Usury....23
Section 2.9.
Fees...............................................................................24
Section 2.10.
Time
for Interest Payments; Payment on Non-Business Days; Computation of
Interest
and Fees
..........................................................................26
Section 2.11.
Lockbox and Collateral Account; Sweep of
Funds.....................................26
Section 2.12.
Voluntary Prepayment;
Reduction of the Maximum Line Amount; Termination of the
Credit Facility by the
Borrower....................................................27
Section 2.13.
Mandatory
Prepayment...............................................................27
Section 2.14.
Revolving Advances to Pay
Indebtedness.............................................28
Section 2.15.
Use
of
Proceeds....................................................................28
Section 2.16. Liability
Records..................................................................28
ARTICLE III SECURITY INTEREST; OCCUPANCY;
SETOFF........................................................28
Section 3.1.
Grant of
Security
Interest.........................................................28
Section 3.2.
Notification of Account Debtors and Other
Obligors.................................28
Section 3.3.
Assignment
of
Insurance............................................................29
Section 3.4.
Occupancy..........................................................................29
Section 3.5.
License............................................................................30
Section 3.6.
Financing
Statement................................................................30
Section 3.7.
Setoff.............................................................................31
Section 3.8.
Collateral.........................................................................31
ARTICLE IV CONDITIONS OF
LENDING........................................................................31
Section 4.1.
Conditions
Precedent to the Initial Advances and Letter of
Credit..................31
Section 4.2.
Conditions
Precedent to All Advances and Letters of
Credit.........................33
ARTICLE V REPRESENTATIONS AND
WARRANTIES................................................................34
Section 5.1.
Existence
and Power; Name Chief Executive Office; Inventory and Equipment
Locations; Federal
Employer Identification Number and Organizational
Identification
Number..............................................................34
Section 5.2.
Capitalization.....................................................................34
Section 5.3.
Authorization of Borrowing; No Conflict as to Law or
Agreements....................34
Section 5.4.
Legal
Agreements...................................................................35
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Section 5.5.
Subsidiaries.......................................................................35
Section 5.6.
Financial
Condition; No Adverse
Change.............................................35
Section 5.7.
Litigation.........................................................................35
Section 5.8.
Regulation
U.......................................................................35
Section 5.9.
Taxes..............................................................................35
Section 5.10.
Titles and
Liens...................................................................35
Section 5.11.
Intellectual Property
Rights.......................................................35
Section 5.12.
Plans..............................................................................36
Section 5.13.
Default............................................................................37
Section 5.14.
Intentionally
Omitted..............................................................37
Section 5.15.
Submissions to
Lender..............................................................37
Section 5.16.
Financing
Statements...............................................................37
Section 5.17.
Rights to
Payment..................................................................37
Section 5.18.
Financial
Solvency.................................................................37
Section 5.19.
Inactive
Subsidiaries..............................................................38
ARTICLE VI
COVENANTS....................................................................................38
Section 6.1.
Reporting
Requirements.............................................................38
Section 6.2.
Financial
Covenants................................................................41
Section 6.3.
Permitted
Liens; Financing
Statements..............................................42
Section 6.4.
Indebtedness.......................................................................43
Section 6.5.
Guaranties.........................................................................43
Section 6.6.
Investments and
Subsidiaries.......................................................43
Section 6.7.
Dividends
and
Distributions........................................................44
Section 6.8.
Salaries...........................................................................44
Section 6.9.
Intentionally
Omitted..............................................................44
Section 6.10.
Books and Records; Collateral Examination, Inspection and
Appraisals...............44
Section 6.11.
Account
Verification...............................................................45
Section 6.12.
Compliance with
Laws...............................................................45
Section 6.13.
Payment of Taxes and Other
Claims..................................................45
Section 6.14.
Maintenance of
Properties..........................................................45
Section 6.15.
Insurance..........................................................................46
Section 6.16.
Preservation of
Existence..........................................................46
Section 6.17.
Delivery of Instruments,
etc.......................................................46
Section 6.18.
Sale
or Transfer of Assets; Suspension of Business
Operations......................46
Section 6.19.
Consolidation and Merger; Asset
Acquisitions.......................................46
Section 6.20.
Sale
and
Leaseback.................................................................46
Section 6.21.
Restrictions on Nature of
Business.................................................46
Section 6.22.
Accounting.........................................................................46
Section 6.23.
Discounts,
etc.....................................................................47
Section 6.24.
Plans..............................................................................47
Section 6.25.
Place of Business;
Name............................................................47
Section 6.26.
Constituent Documents; S Corporation
Status........................................47
Section 6.27.
Performance by the
Lender..........................................................48
Section 6.28.
Affiliate
Transactions.............................................................48
ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND
REMEDIES......................................................48
Section 7.1.
Events of
Default..................................................................48
Section 7.2.
Rights and
Remedies................................................................50
Section 7.3.
Right of
Redemption with Respect to Owned Intellectual
Property....................51
Section 7.4.
Certain
Notices....................................................................51
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ARTICLE VIII
MISCELLANEOUS..............................................................................51
Section 8.1.
No Waiver;
Cumulative Remedies; Compliance with
Laws...............................51
Section 8.2.
Amendments,
Etc....................................................................51
Section 8.3.
Notices;
Communication of Confidential Information; Requests for
Accounting........51
Section 8.4.
Further
Documents..................................................................52
Section 8.5.
Costs and
Expenses.................................................................52
Section 8.6.
Indemnity..........................................................................52
Section 8.7.
Participants.......................................................................53
Section 8.8.
Execution
in Counterparts; Telefacsimile
Execution.................................53
Section 8.9.
Retention
of Loan Party's
Records..................................................53
Section 8.10.
Binding Effect; Assignment; Complete Agreement; Sharing
Information;
Confidentiality....................................................................53
Section 8.11.
Severability of
Provisions.........................................................54
Section 8.12.
Headings...........................................................................54
Section 8.13.
Cross Guaranty;
Subordination......................................................54
Section 8.14.
Judgment
Currency..................................................................56
Section 8.15.
Appointment of Borrower Representative; Reliance on
Notices........................57
Section 8.16.
Governing Law; Jurisdiction, Venue; Waiver of Jury
Trial...........................57
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CREDIT AND SECURITY AGREEMENT
DATED MAY 30, 2008
RONSON CORPORATION,
a New Jersey Corporation ("Parent"), RONSON
CONSUMER PRODUCTS
CORPORATION,
a New Jersey corporation, ("RCPC"), RONSON
AVIATION, INC.,
a New Jersey
Corporation
("RAI") and RONSON
CORPORATION
OF
CANADA LTD.,
an Ontario corporation ("Ronson Canada") (RCPC and RAI are
collectively and
individually
referred to as the "Domestic Borrower" or
"Domestic Borrowers";
the Domestic Borrower
and Ronson Canada are collectively
and individually referred to as the "Borrower" or "Borrowers"),
and WELLS FARGO
BANK, NATIONAL
ASSOCIATION
(as more fully
defined in Article I herein, the
"Lender") acting
through its Wells Fargo Business Credit operating division,
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions. Except as
otherwise expressly
provided in
-----------
this Agreement,
the following terms
shall have the meanings given them in this
Section:
"Accounts" shall have
the meaning given it
under the UCC or the PPSA,
as applicable.
"Accounts Advance Rate" means up to eighty-five percent (85%), or such
lesser rate as the Lender in its sole discretion may deem
appropriate from
time
to time; provided
that, as of any date of determination, the Accounts Advance
Rate shall be reduced by one (1) percentage point for each percentage by which
Dilution is in excess of five percent (5.0%).
"Advance" means a Revolving Advance, an Equipment Term Advance or
Real
Estate Term Advance.
"Affiliate" or
"Affiliates"
means
Parent and any other Person
controlled by, controlling or under common control with the
Borrowers, including
any Subsidiary of the
Borrowers. For
purposes of this
definition,
"control,"
when used with respect to any specified 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.
"Aggregate Face
Amount" means the
aggregate amount that may then be
drawn under each
outstanding Letter of
Credit, assuming
compliance
with all
conditions for drawing.
"Agreement" means this Credit and Security Agreement.
"Availability" means
the amount, if any, by
which the Borrowing
Base
exceeds the sum of (i) the outstanding principal balance of the Revolving
Notes
and (ii) the L/C Amount.
"Bonus Factors" means
the factors and formulas of Parent's Management
Incentive Plan, based
on the annually
budgeted sales and earnings amounts for
each of the Borrowers,
upon which the annual
bonus amounts of the
Borrowers'
officers are calculated.
"Borrower Representative" is defined in Section 8.15.
"Book Net Worth" means the aggregate of the Owners' equity in the Loan
Parties, on a consolidated basis, determined in accordance with
GAAP.
"Borrowing Base" means
the Domestic Borrower
Borrowing Base and the
Ronson Canada Borrowing Base.
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"Business Day" means a
day on which the
Federal Reserve
Bank of New
York is open for business and, if such day relates to a LIBOR
Advance, a day on
which dealings are carried on in the London interbank eurodollar
market.
"Canada Borrowing Base Reserve" means, as of any date of
determination,
such amounts
(expressed as either a
specified amount or as
a percentage of a
specified category or
item) as the Lender may from time to time establish and
adjust in reducing Availability (a) to reflect events, conditions,
contingencies
or risks which, as determined by the Lender, do or may affect (i)
the Collateral
of Ronson Canada, or its value, including without limitation
Priority Payables,
(ii) the assets,
business or prospects of Ronson Canada, or (iii) the security
interests and other
rights of the Lender
in the Collateral
of Ronson Canada
(including the
enforceability,
perfection
and priority
thereof), or (b) to
reflect the Lender's reasonable judgment that any collateral report
or financial
information furnished
by or on behalf of the
Borrower to the Lender
is or may
have been incomplete,
inaccurate or misleading in any material respect, or (c)
in respect
of any state of facts
that constitutes a Default or an Event of
Default.
"Canada L/C Amount" means the sum of (i) the Aggregate Face Amount of
any outstanding
Letters of Credit for
which Ronson Canada
was the applicant,
plus (ii) the amount of each Obligation of Reimbursement
attributable to
Ronson
Canada that either remains unreimbursed or has not been paid
through a Revolving
Advance on the Credit Facility.
"Canadian Benefit
Plans" means any plan,
fund, program, or policy,
whether oral or
written, formal or
informal, funded or
unfunded, insured or
uninsured, providing
employee benefits, including medical, hospital care,
dental, sickness, accident, disability, life insurance,
pension, retirement
or
savings benefits, under which a Loan Party has any liability with
respect to any
employee or former employee, but excluding any Canadian Pension
Plans.
"Canadian Insolvency
Statutes" includes the
Bankruptcy and Insolvency
Act (Canada),
the Companies' Creditors Arrangement Act (Canada) and the
Winding-up and
Restructuring
Act (Canada) and any
other present or future law
relative to bankruptcy, insolvency or other relief for debtors or
for or against
the benefit of creditors, as amended from time to time.
"Canadian Pension
Plans" means each pension plan required to be
registered under
Canadian federal or
provincial pension
benefits law that
is
maintained or
contributed
to by a Loan
Party for its employees or former
employees, but does
not include the Canada
Pension Plan or the Quebec Pension
Plan as maintained
by the Government of Canada or the Province of Quebec,
respectively.
"Capital Expenditures"
means for a period,
any expenditure of money
during such period for the lease, purchase or other acquisition of any capital
asset which is capitalized on a balance sheet in accordance
with GAAP,
whether
payable currently or in the future.
"Change of
Control" means the occurrence of any of the following
events:
(a) Any Person or "group" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) who is not a Five
Percent Owner on
the Funding Date is or becomes the "beneficial owner" (as defined
in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, except that a Person will
be deemed to have "beneficial ownership" of all securities that
such Person has
the right to acquire,
whether such right is
exercisable
immediately
or only
after the passage of time), directly or indirectly, of more than twenty percent
(20%) of the voting power of all classes of equity securities of a
Borrower;
(b) Any Person or "group" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) who is not a Five
Percent Owner on
the Funding Date is or becomes the "beneficial owner" (as defined
in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, except that a Person will
be deemed to have "beneficial ownership" of all securities that
such Person has
the right to acquire,
whether such
5
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right is exercisable immediately or only after the passage of
time), directly or
indirectly, of more than twenty percent (20%) of the voting power
of all classes
of equity securities of Parent;
(c) During any
consecutive two-year
period, individuals who at the
beginning of such
period constituted
the board of
Directors of the Borrower
(together with any new Directors whose election to such board of
Directors, or
whose nomination for
election by the Owners of the Borrower, was approved by a
vote of two thirds
of the Directors then still in office who were either
Directors at the beginning of such period or whose election or nomination for
election was
previously
so approved) cease for any reason to
constitute
a
majority of the board of Directors of the Borrower then in
office;
(d) During any
consecutive two-year
period, individuals who at the
beginning of such
period constituted the board of Directors of the Parent
(together with any new Directors whose election to such board of
Directors, or
whose nomination for
election by the Owners of the Borrower, was approved by a
vote of a majority
of the Directors then still in office who were either
Directors at the beginning of such period or whose election or nomination for
election was
previously
so approved) cease for any reason to
constitute
a
majority of the board of Directors of the Parent then in office;
or
(e) Any one or more of Louis V. Aronson II or Erwin M. Ganz shall
cease
to actively manage the
Borrower's
day-to-day
business activities; provided
however, a Change of
Control shall not be
deemed to have
occurred if Erwin M.
Ganz shall
cease to actively manage the Borrower's day-to-day business
activities and a replacement officer, reasonably acceptable to Lender,
assumes
the duties and responsibilities vacated by Erwin M. Ganz within
thirty (30) days
thereafter.
"Collateral" means all
right of title and
interest of the Borrower in
and to Accounts,
chattel paper and electronic chattel paper, deposit accounts,
documents,
documents of
title, Equipment, General Intangibles, goods,
instruments, Inventory, Investment Property, letter-of-credit
rights, letters of
credit, all sums on
deposit in any
Collateral
Account, and any items in any
Lockbox; together with
(i) all substitutions
and replacements for and products
of any of the foregoing; (ii) in the case of all goods,
all accessions;
(iii)
all accessories,
attachments,
parts, equipment and repairs now or hereafter
attached or affixed to or used in connection with any goods;
(iv) all warehouse
receipts, bills of lading and other documents of title now or
hereafter covering
such goods; (v) all
collateral
subject to the Lien of
any Security
Document;
(vi) any money, or
other assets of the Borrower that now or hereafter come into
the possession,
custody, or control of the Lender; (vii) all sums on deposit in
the Special Account; (viii) proceeds of any and all of the
foregoing; (ix) books
and records of the Borrower, including all mail or electronic
mail addressed to
the Borrower;
and (x) all of the
foregoing,
whether now owned or
existing or
hereafter acquired
or arising or in which
the Borrower
now has or
hereafter
acquires any rights.
"Collateral Account"
means the "Lender Account" as defined in the
Wholesale Lockbox and
Collection Account
Agreement,
and any similar
account
established from time
to time by any Borrower with a depositary bank acceptable
to Lender and which is subject to an agreement among Lender, such Borrower and
such depositary bank, in form and substance acceptable to
Lender.
"Commercial Letter of
Credit Agreement"
means an agreement
governing
the issuance of documentary letters of credit by the Lender entered
into between
the Borrower as applicant and the Lender as issuer, in Lender's
customary form.
"Commitment" means the Lender's commitment to make Advances to ,
and to
issue Letters of Credit for the account of, the Borrower.
"Constituent
Documents" means
with respect to any Person, as
applicable, such
Person's
certificate
of incorporation, articles of
incorporation,
by-laws, certificate
of formation,
articles of
organization,
limited liability company agreement, management agreement, operating
agreement,
shareholder agreement,
partnership
agreement or similar
document or agreement
governing such
Person's existence, organization or management or concerning
disposition of
ownership interests of
such Person or voting
rights among such
Person's owners.
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"Credit Facility"
means the credit
facility under which Revolving
Advances and
Letters of Credit may
be made available
to the Borrower by the
Lender under Article II.
"Current Maturities of
Long Term Debt" means during a period beginning
and ending on designated dates, the amount of the Borrower's
long-term debt and
capitalized leases which became due during that period.
"Cut-off Time" means 11:59 a.m. Central Time.
"Debt" means of a Person as of a given date, all items of
indebtedness
or liability
which in accordance with GAAP would be included in
determining
total liabilities as
shown on the liabilities side of a balance sheet for
such
Person and shall also include the aggregate payments required to be
made by such
Person at any time under any lease that is considered a capitalized
lease under
GAAP.
"Default"
means an event that, with giving of notice or passage of time
or both, would constitute an Event of Default.
"Default Period"
means any period of time beginning on the day a
Default or Event of Default occurs and ending on the date identified by the
Lender in writing as
the date that such
Default or Event of
Default has been
cured or waived.
"Default Rate" means an annual interest rate in effect during a
Default
Period or following the Termination Date, which interest rate shall be
equal to
three percent (3%) over the applicable Floating Rate or the LIBOR Advance
Rate,
as the case may be, as such rate may change from time to time.
"Deposit Account Control Agreement" means each deposit
account control
agreement relating to
each deposit
account maintained by a Borrower with a
depository bank, among
Lender, such Borrower
and such depositary bank, in form
and substance acceptable to Lender.
"Dilution" means, as of any date of determination, a percentage, based
upon the experience
of the trailing six
(6)month period ending
on the date of
determination, which
is the result of dividing (a) actual bad debt write-downs,
discounts, advertising allowances, credits, or other dilutive items
with respect
to the Accounts
as determined by Lender in its sole discretion during such
period, by
(b) the Borrower's net sales during such period (excluding
extraordinary items) plus the amount of clause (a).
"Director" means a
director if the Loan Party is a corporation, a
governor or
manager if the Loan Party is a limited
liability company, or a
general partner if the Loan Party is a partnership.
"Dollars" or "$" means lawful currency of the United States of
America.
"Domestic Borrower Borrowing Base" means at any time the lesser
of:
(a) The Maximum Line Amount (less Advances made to or for the benefit
of Ronson Canada under this Agreement); or
(b) Subject
to change from time to time in the Lender's sole
discretion, the sum of:
(i) The product
of the Accounts Advance Rate times Eligible
Accounts owned by the Domestic Borrowers, plus
(ii) The lesser of (A) sixty percent (60%), or such lesser rate
as
the Lender in its sole
discretion may deem
appropriate
from time to time,
of
Eligible Inventory
owned by the Domestic
Borrowers, (b)
eighty-five
percent
(85%), or such
lesser rate as the Lender in its sole discretion may deem
appropriate from time to time, of the Net Orderly Liquidation Value of Eligible
Inventory owned by the Domestic Borrowers, or (C)
7
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$2,250,000 less
Advances made to or
for the benefit of Ronson Canada against
Eligible Inventory owned by Ronson Canada, less
(iii) The L/C Amount (less the Ronson Canada L/C Amount), less
(iv) The Domestic Borrowing Base Reserve, less
(v) Indebtedness
that the Domestic
Borrowers owe to the Lender
that has not yet been
advanced on the
Revolving Note,
and an amount that
the
Lender in its reasonable discretion finds on the date of determination to be
equal to the Lender's net credit exposure with respect to any swap,
derivative,
foreign exchange,
hedge,
deposit, treasury management or other similar
transaction or arrangement extended to the Domestic Borrowers by
the Lender that
is not described in Article II of this Agreement and any indebtedness owed by
the Domestic Borrowers to Wells Fargo Merchant Services, L.L.C.
"Domestic
Borrowing Base
Reserve" means, as of any date of
determination, such
amounts (expressed as either a specified amount or as a
percentage of a specified category or item) as the Lender
may from time to time
establish and adjust in reducing Availability (a) to reflect
events, conditions,
contingencies or risks which, as determined by the Lender,
do or may affect
(i)
the Collateral of RCPC
and/or RAI, or its value, (ii) the assets, business or
prospects of the Borrower, or (iii) the security interests and other rights of
the Lender in the
Collateral (including
the enforceability, perfection and
priority thereof), or
(b) to reflect the Lender's reasonable judgment that any
collateral report or
financial information furnished by or on behalf of the
Borrower to the Lender is or may have been incomplete, inaccurate or misleading
in any material respect, or (c) in respect of any state of facts that
constitutes a Default or an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended from time to time.
"ERISA
Affiliate" means
any trade or business (whether or not
incorporated) that is
a member of a group which includes the Borrower and which
is treated as a single employer under Section 414 of the IRC.
"Eligible Accounts"
means all unpaid
Accounts of a Borrower
arising
from the sale or lease of goods or the performance of services, net of any
credits, but
excluding any such Accounts having any of the following
characteristics:
(i) That portion
of Accounts unpaid 90 days or more
after the
invoice date;
(ii) That
portion of Accounts
related to goods or
services with
respect to which the Borrower has received notice of a claim or dispute,
which
are subject
to a claim of
offset or a contra account, or which reflect a
reasonable reserve for warranty claims or returns;
(iii) That
portion of Accounts not yet earned by the final
delivery of goods or
that portion
of Accounts not yet earned by the final
rendition of services
by the Borrower to the
account debtor,
including with
respect to both goods
and services,
progress billings, and that portion of
Accounts for
which an invoice has not been sent to the applicable account
debtor;
(iv) Accounts constituting (i) proceeds of copyrightable
material
unless such
copyrightable material
shall have been
registered with the United
States Copyright Office or Canadian Intellectual Property Office,
as applicable,
or (ii) proceeds of patentable inventions unless such patentable
inventions have
been registered with
the United States Patent and Trademark Office or Canadian
Intellectual Property Office, as applicable;
(v) Accounts owed by any unit of government, whether foreign or
domestic (except that there shall be included in Eligible
Accounts that
portion
of Accounts owed by such units of government for which the Borrower
has provided
evidence satisfactory
to the Lender
that (A) the Lender
has a first
priority
perfected
8
<PAGE>
security interest and
(B) such Accounts may be enforced by the Lender directly
against such unit of
government
under all applicable laws and (C) as to any
Accounts due from any Canadian governmental unit, the applicable Borrower has
complied with the Financial Administration Act (Canada); provided,
however, that
at no time shall Eligible Accounts due from the United
States government exceed
$100,000);
(vi) Accounts denominated in any currency other than United
States
dollars or Canadian dollars;
(vii) Accounts
owed by (1) an account debtor located in the
Province of Quebec,
Canada or (2) an account debtor located outside the United
States or any Province in Canada (other than Quebec) which are not
(A) backed by
a bank letter of
credit naming the
Lender as beneficiary
or assigned to the
Lender, in the
Lender's possession or control, and with respect to which a
control agreement
concerning
the letter-of-credit rights is in effect, and
acceptable to the Lender in all respects, in its sole discretion,
or (B) covered
by a foreign
receivables insurance
policy acceptable to the Lender in its sole
discretion;
(viii) Accounts owed
by an account debtor that is insolvent, the
subject of bankruptcy proceedings or has gone out of business;
(ix) Accounts owed by a Five Percent Owner, Subsidiary,
Affiliate,
Officer or employee of the Borrower, including, without limitation,
any Accounts
owed from a Loan Party to another Loan Party;
(x) Accounts not subject to a duly perfected security interest in
the Lender's favor or which are subject to any Lien (other than a
Permitted Lien
described in Section
6.3(a)(iii) and
6.3(a)(vii)) in favor of any Person other
than the Lender;
(xi) That portion of Accounts that has been restructured,
extended, amended or modified;
(xii) That
portion of
Accounts that constitutes advertising,
finance charges, service charges or sales or excise taxes;
(xiii) Accounts owed by an account debtor, regardless of whether
otherwise eligible,
to the extent that the
aggregate balance of
such Accounts
exceeds twenty percent (20%) of the aggregate amount of all
Eligible Accounts;
(xiv) Accounts owed by
an account debtor,
regardless of
whether
otherwise eligible, if
twenty-five percent (25%) or more of the total amount of
Accounts due from such debtor is ineligible under clauses (i), (ii), or (xi)
above; and
(xv) Accounts, or portions thereof, otherwise deemed ineligible
by
the Lender in its sole discretion.
"Eligible
Equipment" means
Equipment of the Domestic Borrowers
designated by the
Lender as eligible
from time to time in its sole discretion
but excluding any Equipment having any of the following
characteristics:
(i) Equipment
that is subject to any
Lien other than in favor of
the Lender (other than a Permitted Lien described in Section 6.3(a)(iii) and
6.3(a)(vii));
(ii) Equipment that has not been delivered to the Premises;
(iii) Equipment in which the Lender does not hold a first
priority
security interest;
(iv) Equipment that is obsolete or not currently saleable;
9
<PAGE>
(v) Equipment that is not covered by standard "all risk"
insurance
for an amount equal to its forced liquidation value;
(vi) Equipment
that requires proprietary software in order to
operate in the manner in which it is intended when such software is not freely
assignable to the Lender or any potential purchaser of such
Equipment;
(vii) Equipment
consisting
of computer hardware, software,
tooling, or molds; and
(viii) Equipment
otherwise deemed
unacceptable by the
Lender in
its sole discretion.
"Eligible Inventory"
means all Inventory of a Borrower, valued at the
lower of cost or market in accordance with GAAP; but excluding any Inventory
having any of the following characteristics:
(i) Inventory that is: in-transit (other than in-transit
Inventory
subject to a Letter of Credit issued by the Lender); located at any warehouse,
job site or other premises not approved by the Lender in writing;
not subject to
a duly perfected first priority security interest in the Lender's
favor; subject
to any lien or
encumbrance (other
than a Permitted Lien
described in
Section
6.3(a)(iii) and 6.3(a)(vii)), that is subordinate to the Lender's
first priority
security interest;
covered by any negotiable or non-negotiable warehouse
receipt, bill of
lading or other
document of title; on
consignment
from any
Person; on
consignment
to any Person or
subject to any
bailment unless
such
consignee or bailee has executed an agreement with the Lender;
(ii) Supplies,
packaging, maintenance
parts or sample Inventory,
or customer supplied parts or Inventory;
(iii) Work-in-process Inventory;
(iv) Inventory that is damaged, defective, obsolete, slow moving
or not currently saleable in the normal course of the Borrower's
operations, or
the amount of such Inventory that has been reduced by
shrinkage;
(v) Inventory
that the Borrower has
returned, has attempted to
return, is in the
process of returning or intends to return to the vendor
thereof;
(vi) Inventory that is perishable or live;
(vii) Inventory manufactured by the Borrower pursuant to a
license
unless the
applicable
licensor has agreed in writing to permit
the Lender to
exercise its rights and remedies against such Inventory;
(viii) Inventory that is subject to a Lien (other than a
Permitted
Lien described in Section 6.3(a)(iii) and 6.3(a)(vii)) in favor of any
Person
other than the Lender;
(ix) Inventory
stored at locations not owned or leased by
Borrower;
(x) Inventory
stored at locations owned or leased by Borrower
holding less than ten (10%) of the aggregate value of the
Borrower's
Inventory,
other than Inventory of RAI; and
(xi) Inventory
otherwise deemed
ineligible by the
Lender in its
sole discretion.
"Environmental Law"
means any federal,
state, provincial, local or
other governmental
statute, regulation, law or ordinance dealing with the
protection of human health and the environment.
"Equipment" shall have
the meaning given it under the UCC or the PPSA,
as applicable.
10
<PAGE>
"Equipment Term Advance" has the meaning set forth in Section
2.6.1.
"Equipment Term Note" means the Domestic Borrower's promissory note,
payable to the order of the Lender, in substantially the form of Exhibit B-1
hereto, as
same may be renewed and amended from time to time, and all
replacements therefor.
"Event of Default" is defined in Section 7.1.
"Excess Cash Flow" means for a given period, on a consolidated basis
for the Loan Parties,
the difference between
(i) sum of (1) Net Income and (2)
depreciation and
amortization, minus,
(ii) the sum of (1)
unfinanced Capital
Expenditures to the extent permitted herein, (2) regularly
scheduled principal
payments on the Equipment Term Note, the Real Estate Term Note,
other long term
Debt and capital
leases to the extent
permitted under this
Agreement and (3)
dividends, to the extent permitted herein; each as determined for
such period in
accordance with GAAP.
"Executive Officer"
means, when used with reference to a Loan
Party,
its president, its
chief executive officer, its chief financial officer and any
vice president of the Parent in charge of a principal business
unit, division or
function (such as sales, administration or finance).
"Existing Capital One
Mortgage" means that certain Mortgage made by
RCPC to North Fork Bank (now known as Capital One, N.A.) dated September 27,
2006 and recorded with the Clerk of Middlesex County, New Jersey on October 10,
2006 in Mortgage Book
11875, Page 534 and re-recorded in the same office on
October 22, 2007 in Mortgage Book 12672, Page 0459, as modified by the Note
and
Mortgage Modification
Agreement dated March 26, 2008 and recorded April 8, 2008
with the Clerk of Middlesex County, New Jersey in Book 147 at Page
617, a copy
of which is attached hereto as Exhibit E.
"Financial Covenants" means the covenants set forth in Section
6.2.
"Five Percent Owner" means the "beneficial owner" (as defined in Rules
13d-3 and 13d-5
under the Securities Exchange Act of 1934), directly or
indirectly, of an
amount equal or
greater than five percent (5%) of the voting
power of all classes of equity securities of Parent.
"Floating Rate" means with respect to (i) Revolving Advances evidenced
by the Revolving
Note, an annual interest rate equal to the sum of
the Prime
Rate plus one-half of one percent (.50%), (ii) Equipment Term
Advances evidenced
by the Equipment Term
Note, the Prime Rate plus three-quarters of one percent
(.75%) and (iii) Real Estate Term Advances evidenced by the Real Estate Term
Note, the Prime Rate plus one percent (1.00%).
"Floating Rate
Advance" means an Advance bearing interest at the
Floating Rate.
"Funding Date" is defined in Section 2.1.
"Funds from
Operations" means for
a given period, on a
consolidated
basis for the Loan Parties, the sum of (i) Net Income,
(ii) depreciation and
amortization, (iii)
any increase (or decrease) in deferred income taxes, (iv)
any increase (or decrease) in lifo reserves, and (v) other non-cash items,
each
as determined for such period in accordance with GAAP.
"GAAP" means generally
accepted accounting
principles,
applied on a
basis consistent
with the accounting practices applied in the financial
statements described in Section 5.6.
"General Intangibles"
means "general
intangibles" as defined in under
the UCC and "intangibles" as defined in the PPSA, as
applicable.
11
<PAGE>
"Guarantor" means
Parent and every other
Person now or in the
future
who agrees to guaranty the Indebtedness.
"Guaranty" means each unconditional continuing guaranty executed by a
Guarantor in favor of the Lender.
"Hazardous Substances"
means pollutants, contaminants, hazardous
substances, hazardous
wastes, petroleum and
fractions thereof,
and all other
chemicals,
wastes, substances
and materials listed in, regulated by or
identified in any Environmental Law.
"Inactive Subsidiaries" means Prometcor and Ronson Hydraulics.
"Indebtedness" is used herein in its most comprehensive sense and
means
any and all advances,
debts, obligations and liabilities of the Borrower to the
Lender, heretofore,
now or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, whether due or not due,
absolute
or contingent, liquidated or unliquidated, determined or
undetermined, including
under any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or arrangement at any
time entered into
by the Borrower with the Lender or with Wells Fargo Merchant
Services, L.L.C.,
and whether the Borrower may be liable individually or jointly with
others, or
whether recovery
upon such Indebtedness may be or hereafter becomes
unenforceable.
"Indemnified Liabilities" is defined in Section 8.6
"Indemnitees" is defined in Section 8.6.
"IRC" means the Internal Revenue Code of 1986, as amended
from time to
time.
"Infringement" or
"Infringing" when used
with respect to Intellectual
Property Rights
means any infringement or other violation of Intellectual
Property Rights.
"Intangible Assets"
means all intangible assets as determined in
accordance with GAAP
and including
Intellectual
Property Rights, goodwill,
accounts due from Affiliates, Directors, Officers or employees,
customer lists,
deferred charges
or any securities or Debt of the Borrower or any other
securities unless the
same are readily
marketable in the US
or entitled to be
used as a credit against federal income tax liabilities,
non-compete
agreements
and any other assets
designated
from time to time by
the Lender, in its
sole
discretion.
"Intellectual Property
Rights" means all actual or prospective rights
arising in
connection
with any intellectual property or other proprietary
rights, including all
rights arising in connection with copyrights, patents,
service marks, trade dress, trade secrets, trademarks, trade names, designs or
mask works.
"Interest Payment Date" is defined in Section 2.10(a).
"Interest Period" means the period that commences on (and includes)
the
Business Day on which either a LIBOR Advance is made or continued or on
which a
Floating Rate
Advance is converted to a LIBOR Advance and ending on (but
excluding) the Business Day numerically corresponding to such date that is
one,
three or six months
thereafter as
designated
by the Borrower, during which
period the
outstanding
principal balance of the LIBOR Advance shall bear
interest at the LIBOR Advance Rate; provided, however, that:
-------- -------
(a) No Interest Period
may be selected for an
Advance for a principal
amount less than
Five-Hundred Thousand
Dollars ($500,000), and no more than
three (3) different Interest Periods may be outstanding at any one
time;
12
<PAGE>
(b) If an Interest
Period would otherwise
end on a day which is not a
Business Day,
then the Interest Period shall end on the next Business Day
thereafter, unless
that Business Day is the first Business Day of a month,
in
which case
the Interest Period shall end on the last Business Day of the
preceding month);
(c) No Interest Period
applicable to a Revolving Advance may end later
than the Maturity Date; and
(d) In no event shall the Borrower select Interest Periods with
respect
to Advances which, in the aggregate, would require payment of a
contracted funds
breakage fee under this Agreement in order to make required
principal payments.
"Inventory" shall have
the meaning given it under the UCC or the PPSA,
as applicable.
"Investment Property"
shall have the meaning given it under the UCC or
the PPSA, as applicable.
"L/C Amount"
means the sum of (i)
the Aggregate
Face Amount of any
outstanding Letters
of Credit, plus (ii) the amount of each Obligation of
Reimbursement that
either remains
unreimbursed or has
not been paid through a
Revolving Advance on the Credit Facility.
"L/C Application"
means an application
for the issuance of standby or
documentary letters
of credit pursuant to the terms of a Standby Letter of
Credit Agreement or a
Commercial Letter of
Credit Agreement in form acceptable
to the Lender.
"Lender" means Wells Fargo Bank, National Association in its broadest
and most comprehensive sense as a legal entity, and is not limited in its
meaning to Lender's Wells Fargo Business Credit operating division, or to any
other operating division of Lender.
"Letter of Credit" is defined in Section 2.4(a).
"LIBOR" means the rate per annum (rounded upward, if necessary,
to the
nearest whole 1/8th of
one percent (1%))
determined pursuant to
the following
formula:
LIBOR = Base LIBOR
------------------------------------
100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States
dollar
deposits quoted by the
Lender as the Inter-Bank Market Offered Rate, with the
understanding that
such rate is quoted by the Lender for the purpose of
calculating effective
rates of interest for loans making reference thereto, on
the first day of a
Interest Period
for delivery of funds on said date for a
period of time approximately equal to the number of days in such
Interest Period
and in an amount
approximately equal to
the principal
amount to which such
Interest Period applies. The Borrower understands and agrees that
the Lender may
base its quotation of
the Inter-Bank
Market Offered Rate upon such offers
or
other market indicators of the Inter-Bank Market as the Lender in
its discretion
deems appropriate
including the rate
offered for U.S.
dollar deposits on
the
London Inter-Bank Market.
(ii) "LIBOR
Reserve Percentage" means the reserve percentage
prescribed by the
Board of Governors
of the Federal Reserve System (or any
successor) for
"Eurocurrency
Liabilities"
(as defined in
Regulation D of the
Federal Reserve Board, as amended), adjusted by the Lender for
expected changes
in such reserve percentage during the applicable Interest
Period.
"LIBOR Advance"
means a Revolving Advance or a portion of the Real
Estate Term Advance bearing interest at the LIBOR Advance Rate.
13
<PAGE>
"LIBOR
Advance Rate" means with respect to (i) Revolving Advances
evidenced by the
Revolving Note,
an annual interest rate equal to the sum
of
LIBOR plus
three-percent
(3%) and (ii)
Real Estate Term Advances, annual
interest rate equal to the sum of LIBOR plus three and one-half
percent (3.5%).
"Licensed Intellectual Property" is defined in Section 5.11(c).
"Lien" means any security interest, mortgage, deed of trust, pledge,
lien, charge, encumbrance, title retention agreement or
analogous instrument or
device, including the
interest of each lessor under any capitalized lease and
the interest of any bondsman under any payment or performance bond,
in, of or on
any assets or properties of a Person, whether now owned or
subsequently acquired
and whether arising by agreement or operation of law.
"Loan Documents"
means this Agreement,
the Revolving Notes,
the Term
Notes, each
Guaranty, each L/C Application, each Standby Letter of Credit
Agreement, each
Commercial
Letter of Credit Agreement and the Security
Documents, together
with every other
agreement, note,
document, contract or
instrument to which a
Loan Party now or in
the future may be a party and which
is required by the Lender.
"Loan Party"
or "Loan Parties" shall mean individually and
collectively, Parent and the Borrowers.
"Lockbox" means
"Lockbox" as defined in the Wholesale Lockbox and
Collection Account
Agreement,
and any other lockbox
established from time
to
time by any Borrower
with a lockbox
agent acceptable to Lender and which is
subject to an agreement among Lender, such Borrower and such lockbox
agent, in
form and substance acceptable to Lender.
"Material Adverse Effect" means any of the following:
(i) A material adverse effect on the business, operations,
results
of operations, assets, liabilities or financial condition of any
Loan Party;
(ii) A material adverse effect on the ability of any Loan Party
to
perform its obligations under the Loan Documents;
(iii) A material
adverse effect on the
ability of the Lender
to
enforce the
Indebtedness or to
realize the intended
benefits of the
Security
Documents, including a material adverse effect on the validity or
enforceability
of any Loan Document or of any rights against any Guarantor, or on the status,
existence, perfection,
priority (subject to
Permitted Liens) or enforceability
of any Lien securing payment or performance of the Indebtedness;
or
(iv) Any claim against
any Loan Party or threat of litigation
which if determined
adversely to such Loan Party would cause such Loan Party to
be liable to pay an amount, after allowance for all applicable insurance
coverage, exceeding
$75,000 or would result in the occurrence of an event
described in clauses (i), (ii) or (iii) above.
"Maturity Date" means May 30, 2013.
"Maximum Line Amount" means $4,000,000, unless this amount is reduced
pursuant to Section 2.12, in which event it means such lower
amount.
"Mortgage" means that
certain Leasehold
Mortgage and
Assignment
of
Rents and Leases of even date herewith upon the Mortgaged Property,
as the same
may be modified, amended or restated from time to time.
14
<PAGE>
"Mortgaged Property" means that certain real property located in
Mercer
County, New Jersey
subject to that
certain lease between
Ronson
Helicopters,
Inc. (now known as Ronson Aviation, Inc.), as lessee, and County of Mercer, as
lessor, dated May 14,
1975, as amended, as
more particularly
described in the
Mortgage.
"Multiemployer Plan"
means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which the Borrower or any ERISA Affiliate
contributes or
is obligated to contribute.
"Net Cash Flow" means for a given period, on a consolidated basis for
the Loan Parties, Net Income, plus depreciation and amortization,
minus the sum
of (a) unfinanced Capital Expenditures, (b) Current Maturities of
Long Term Debt
and (c) distributions
and dividends paid by Borrowers, to the extent permitted
under this Agreement.
"Net Cash Proceeds"
means in connection
with any asset sale, the cash
proceeds (including
any cash payments received by way of deferred payment
whether pursuant to a note, installment receivable or otherwise,
but only as and
when actually
received) from such asset sale, net of (i) attorneys' fees,
accountants' fees,
investment banking fees, brokerage commissions and amounts
required to be applied to the repayment of any portion of the
Debt secured by a
Lien not prohibited
hereunder on the asset which is the subject
of such sale,
and (ii) taxes paid or
reasonably estimated
to be payable as a
result of such
asset sale.
"Net Forced
Liquidation Value"
means a professional opinion of the
estimated most probable Net Cash Proceeds which could typically be
realized at a
properly advertised
and conducted
public auction sale
without reserve,
held
under forced sale conditions and under economic trends current
within 60 days of
the appraisal.
The opinion
may consider physical location, difficulty of
removal, adaptability,
specialization,
marketability,
physical condition,
overall appearance and psychological appeal.
"Net Income" means for a given period, on a consolidated
basis for the
Loan Parties,
fiscal
year-to-date
after-tax
net income from continuing
operations, including
extraordinary losses
but excluding
extraordinary gains,
all as determined in accordance with GAAP; provided, however, to
the extent that
option expenses have been deducted in calculating Net Income, the
amount of such
expenses shall be added back to Net Income for purposes of
computing
compliance
with Financial Covenants.
"Net Loss" means for a given period, on a consolidated basis for the
Loan Parties, fiscal
year-to-date after-tax net loss from continuing operations
as determined in accordance with GAAP; provided, however, to the extent that
option expenses have
been deducted in calculating Net Loss, the amount of such
expenses shall be
added back to Net Loss for purposes of computing compliance
with Financial Covenants.
"Net Orderly
Liquidation Value"
means a professional
opinion of the
estimated most probable Net Cash Proceeds which could typically be
realized at a
properly advertised and professionally managed liquidation sale,
conducted under
orderly sale
conditions
for an extended
period of time
(usually six to
nine
months), under the economic trends existing at the time of the
appraisal.
"Obligation of
Reimbursement" means
the obligation of the Borrower to
reimburse the
Lender pursuant to the terms of the Standby Letter of Credit
Agreement and the Commercial Letter of Credit Agreement and any applicable
L/C
Application.
"Officer" means with
respect to the Loan
Parties, an officer if the
applicable Loan Party
is a corporation, a
manager if the applicable Loan Party
is a limited liability
company, or a partner
if the applicable Loan Party is a
partnership.
"OFAC" is defined in Section 6.12(c).
15
<PAGE>
"Overadvance" means
the amount, if any, by which the outstanding
principal balance of
the Revolving Note,
plus the L/C Amount,
is in excess of
the then-existing
Domestic Borrower Borrowing Base or the Ronson Canada
Borrowing Base, as applicable.
"Owned Intellectual Property" is defined in Section 5.11(a).
"Owner" means with
respect to the Loan
Parties, each Person having
legal or beneficial
title to an
ownership interest in the Loan Parties or a
right to acquire such an interest.
"PPSA" means the Personal Property Security Act (Ontario) as
in effect
from time to time.
"Parent" means Ronson Corporation, a New Jersey corporation.
"Patent and
Trademark Security Agreement" means each Patent and
Trademark Security
Agreement now or hereafter executed by a Loan Party in favor
of the Lender.
"Pension Plan"
means a pension
plan (as defined in Section 3(2) of
ERISA) maintained
for employees of the Borrower or any ERISA
Affiliate and
covered by Title IV of ERISA.
"Permitted Lien" and "Permitted Liens" are defined in Section
6.3(a).
"Person" means any individual, corporation, partnership, joint
venture,
limited
liability
company,
association,
joint stock
company,
trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
"Plan" means an
employee benefit
plan (as defined in
Section 3(3) of
ERISA) maintained for employees of the Borrower or any ERISA
Affiliate.
"Premises" means all locations where the Borrower conducts its
business
and has any rights of possession, including the locations
legally described
in
Exhibit D attached hereto.
"Prime Rate"
means at any time the
rate of interest most recently
announced by the
Lender at its
principal office as
its Prime Rate,
with the
understanding that the
Prime Rate is one of the Lender's base rates, and serves
as the basis upon which effective rates of interest are calculated for those
loans making reference
thereto, and is evidenced by the recording
thereof in
such internal
publication or
publications as the
Lender may designate.
Each
change in the rate of interest shall become effective on the date each Prime
Rate change is announced by the Lender.
"Priority Payables" means amounts due under applicable law and not
paid
for vacation pay or other employee benefits, amounts due and not paid under
any
legislation relating
to workers'
compensation,
mechanics liens or
employment
insurance, all amounts
deducted or withheld
and not paid and remitted when due
under the Income Tax Act (Canada) or other provincial taxation
statutes, amounts
currently or past due and not contributed, remitted or paid to any
Plan or under
the Canada Pension
Plan, the Quebec Pension Plan, the Pension Benefits Act
(Ontario), or any
similar legislation and amounts determined by the Lender from
time to time in respect of such portion of the Collateral as represents a
sales
tax, excise tax, goods and services tax or harmonized tax.
"Prometcor" means Prometcor, Inc., a New Jersey corporation.
"Real Estate Term Advance" has the meaning set forth in Section
2.6.2.
"Real Estate Term Note" means the Domestic Borrower's promissory note,
payable to the order of the Lender, in substantially the form of Exhibit B-2
hereto, as
same may be renewed and amended from time to time, and all
replacements therefor.
16
<PAGE>
"Reportable Event" means a reportable event (as defined in Section
4043
of ERISA), other than
an event for which the 30-day notice requirement under
ERISA has been waived
in regulations
issued by the Pension
Benefit Guaranty
Corporation.
"Revolving Advance" is defined in Section 2.1.
"Revolving Note" means
the Domestic
Borrower's revolving
promissory
note, payable to the
order of the Lender in
substantially the form
of Exhibit
A-1 hereto,
as same may be
renewed and amended from time to time, and all
replacements thereto.
"Revolving Notes"
means the Revolving Note and the Ronson Canada
Revolving Note.
"Ronson Canada
Borrowing Base" means, at any time the lesser of:
(a) $700,000; or
(b) Subject
to change from time to time in the Lender's sole
discretion, the sum of:
(i) The product
of the Accounts Advance Rate times Eligible
Accounts owned by Ronson Canada, plus
(ii) The lesser of (A) sixty percent (60%), or such lesser rate
as
the Lender in its sole
discretion may deem
appropriate
from time to time,
of
Eligible Inventory owned by Ronson Canada, (b) eighty-five percent
(85%),or such
lesser rate as the Lender in its sole discretion may deem
appropriate from
time
to time, of the Net Orderly Liquidation Value of Eligible Inventory owned by
Ronson Canada, or (C) $700,000, less
(iii) The Canada L/C Amount, less
(iv) The Canada Borrowing Base Reserve, less
(v) Indebtedness
that Ronson
Canada owes to the
Lender that has
not yet been advanced on the Ronson Canada Revolving Note, and an amount that
the Lender in its reasonable discretion finds on the date of
determination to be
equal to the Lender's net credit exposure with respect to any swap,
derivative,
foreign exchange,
hedge,
deposit, treasury management or other similar
transaction or
arrangement extended
to Ronson Canada by the Lender that is not
described in Article II of this Agreement and any indebtedness owed by Ronson
Canada to Wells Fargo Merchant Services, L.L.C.
"Ronson Canada
Indebtedness" is used herein in its most comprehensive
sense and means any and all advances, debts, obligations and liabilities of
Ronson Canada to the
Lender, heretofore,
now or hereafter
made, incurred or
created, whether
voluntary or
involuntary and however arising, whether due or
not due, absolute or
contingent,
liquidated
or unliquidated, determined or
undetermined,
including under any swap, derivative, foreign exchange, hedge,
deposit, treasury
management or other similar transaction or arrangement at any
time entered into by Ronson Canada with the Lender or with Wells
Fargo Merchant
Services, L.L.C.,
and whether Ronson Canada may be liable individually or
jointly with
others, or whether recovery upon such Indebtedness may be or
hereafter becomes unenforceable.
"Ronson Canada
Revolving Note" means the revolving promissory note of
Ronson Canada, payable
to the order of the Lender in substantially the form of
Exhibit A-2 hereto, as
same may be renewed and amended from time to time, and
all replacements thereto.
"Ronson Hydraulics" means Ronson Hydraulics Units Corporation,
a North
Carolina corporation.
17
<PAGE>
"Security Agreements"
means each
Security Agreement or Collateral
Pledge Agreement
now or hereafter executed by a Loan Party in favor of the
Lender dated the same date as this Agreement
"Security Documents"
means this Agreement,
the Wholesale Lockbox
and
Collection Account
Agreement,
the Deposit Account
Control Agreement(s),
the
Security Agreement(s),
the Mortgage, the Patent Security Agreement(s), and the
Trademark Security Agreement(s), and any other document delivered
to the Lender
from time to time to secure the Indebtedness.
"Security Interest" is defined in Section 3.1.
"Special Account" means a specified cash collateral account maintained
with Lender
or another financial institution acceptable to the Lender in
connection with Letters of Credit, as contemplated by Section
2.5.
"Standby Letter of Credit Agreement" means an agreement
governing the
issuance of
standby letters of credit by Lender entered into between the
Borrower as applicant and Lender as issuer, in Lender's customary
form.
"Subordinated
Creditors" means every
Person now or in the
future who
agrees to subordinate
indebtedness
of the Borrower held
by that Person to the
payment of the Indebtedness.
"Subordinated
Indebtedness"
means
indebtedness
subject to
a
Subordination Agreement acceptable to Lender in its discretion.
"Subordination Agreement" means a subordination agreement executed
by a
Subordinated Creditor in favor of the Lender and acknowledged by
the Borrower.
"Subsidiary" means any Person of which more than fifty percent
(50%) of
the outstanding
ownership interests
having general voting power under ordinary
circumstances to elect a majority of the board of directors or the
equivalent of
such Person, regardless of whether or not at the time ownership
interests of any
other class or classes
shall have or might have voting power by reason of the
happening of any contingency, is at the time directly or indirectly
owned by the
Borrower, by the Borrower and one or more other Subsidiaries,
or by one or more
other Subsidiaries.
"Tangible Net
Worth" means Book Net Worth, plus Subordinated
----
Indebtedness of the
Loan Parties, on a
consolidated basis,
minus Intangible
-----
Assets of the Loan Parties, on a consolidated basis.
"Term Advances" or "Term Advances" means collectively and individually
the Equipment Term Advance and the Real Estate Term Advance.
"Termination Date"
means the earliest of (i) the Maturity Date, (ii)
the date the Borrower
terminates
the Credit
Facility, or (iii) the date the
Lender demands
payment of the
Indebtedness,
following an Event of Default,
pursuant to Section 7.2.
"Term Note" or "Term Notes" means collectively and individually the
Equipment Term Note and the Real Estate Term Note.
"Trademark Security
Agreement" means each Trademark Security Agreement
now or hereafter
executed by a Loan Party in favor of the Lender dated the same
date as this Agreement.
"UCC" means
the Uniform Commercial Code in effect in the state
designated in
this Agreement as the state whose laws shall govern this
Agreement, or in any other state whose laws are held to govern this
Agreement or
any portion of this Agreement.
18
<PAGE>
"Unused Amount" is defined in Section 2.9(b).
"Wholesale
Lockbox and
Collection
Account
Agreement"
means the
Wholesale Lockbox and
Collection Account
Agreement by and between the Borrower
and the Lender.
Section 1.2. Other Definitional Terms; Rules of Interpretation. The
----------------------------------------------------
words "hereof",
"herein" and
"hereunder" and words of similar import when used
in this Agreement
shall refer to this Agreement as a whole and not to any
particular provision
of this Agreement.
All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance
with GAAP. All
terms defined in the
UCC and not otherwise
defined herein have the meanings
assigned to them in the UCC. References to Articles, Sections, subsections,
Exhibits, Schedules
and the like, are to Articles, Sections and subsections of,
or Exhibits or Schedules attached to, this Agreement unless
otherwise
expressly
provided. The words "include", "includes" and "including" shall
be deemed to be
followed by the phrase
"without limitation".
Unless the context in
which used
herein otherwise clearly requires, "or" has the inclusive meaning
represented by
the phrase "and/or". Defined terms include in the singular number
the plural and
in the plural number the singular. Reference to any agreement (including the
Loan Documents),
document or instrument means such agreement, document or
instrument as amended
or modified and in effect from time to time in accordance
with the terms thereof (and, if applicable, in accordance with the terms
hereof
and the other Loan Documents), except where otherwise explicitly
provided, and
reference to any
promissory
note includes any promissory note which is an
extension or renewal thereof or a substitute or replacement
therefor.
Reference
to any law, rule, regulation, order, decree, requirement, policy, guideline,
directive or interpretation means as amended, modified, codified, replaced or
reenacted, in
whole or in
part, and in effect on the determination date,
including rules and regulations promulgated thereunder.
ARTICLE II
AMOUNT AND TERMS OF THE CREDIT FACILITY
Section 2.1. Revolving
Advances. The Lender agrees, subject to the
-------------------
terms and conditions of this Agreement, to make advances ("Revolving
Advances")
to (a) the Borrower Representative on behalf of the Domestic
Borrowers, and (b)
to Ronson Canada on
behalf of Ronson
Canada, from time to time from the
date
that all of the
conditions set forth in Section 4.1 are satisfied (the "Funding
Date") to and until (but not including) the Termination Date in an
amount not in
excess of the Maximum Line Amount. The Lender shall have no
obligation
(a) to
make a Revolving
Advance to the extent that the amount of the requested
Revolving Advance exceeds Availability or (b) to make a
Revolving Advance to or
for the benefit
of the Domestic Borrowers to the extent the amount of the
requested Revolving
Advance exceeds the Domestic Borrower Borrowing Base or (c)
make a Revolving
Advance to or for the
benefit of Ronson
Canada to the extent
the amount of the Revolving Advance exceeds the Ronson Canada
Borrowing Base.
The Borrower's
obligation to pay the
Revolving Advances
shall be evidenced by
the Revolving Notes
and shall be secured by the Collateral. Within the limits
set forth in this
Section 2.1, the
Borrower may borrow, prepay pursuant to
Section 2.12, and reborrow. Notwithstanding any other provision contained in
this Agreement
or in any other Loan
Document, Ronson Canada shall be liable
under this Agreement
and under the other
Loan Documents for the
Ronson Canada
Indebtedness only.
Section 2.2.
Procedures for
Requesting Advances.
The Borrower shall
------------------------------------
comply with the following procedures in requesting Revolving
Advances:
(a) Type of Advances. Each Advance shall be funded as either a
Floating
Rate Advance or a
LIBOR Advance,
as the Borrower
shall specify in a request
delivered to the
Lender conforming
to the requirements of Section 2.2(b);
Floating Rate Advances and LIBOR Advances may be outstanding at the same time.
Each request for a LIBOR Advance shall be in multiples of $100,000, with a
minimum request of at
least $500,000.
LIBOR Advances shall not be available
during Default Periods.
19
<PAGE>
(b) Time for Requests.
The Borrower shall request each Advance so that
it is received by Lender not later than the Cut-off Time on the Business Day on
which the Advance is to be made. Each request that conforms to the
terms of this
Agreement shall be effective upon receipt by the Lender,
shall be in writing
or
by telephone or telecopy transmission, and shall be confirmed in writing
by the
Borrower if so requested by the Lender, by (i) an Officer of the
Borrower; or
(ii) a Person
designated as the Borrower's agent by an Officer of the
Borrower
in a writing
delivered to the Lender; or (iii) a Person whom the Lender
reasonably believes to
be an Officer of the Borrower or such a designated agent
, which confirmation
shall specify whether the Advance shall be a Floating Rate
Advance or a LIBOR Advance and, with respect to any LIBOR Advance,
shall specify
the principal
amount of the LIBOR
Advance and the Interest Period applicable
thereto. The
Borrower shall repay all Advances even if the Lender does not
receive such
confirmation and even if the Person requesting an Advance was not
in fact authorized
to do so. Any request
for an Advance,
whether written or
telephonic, shall be
deemed to be a
representation by the
Borrower that the
conditions set forth
in Section 4.2 have been satisfied as of the time of the
request.
(c) Disbursement.
Upon fulfillment of the applicable
conditions set
forth in Article IV, the Lender shall disburse the proceeds of the requested
Advance by crediting the Borrower's operating account maintained
with the Lender
unless the
Lender and the Borrower shall agree to another manner of
disbursement. The
Lender may also initiate an Advance and disburse the proceeds
to any third Person in such amounts as the Lender, in its sole
discretion, deems
necessary to protect its interest in any Collateral or to purchase
Collateral or
to exercise any other rights granted to it by the Borrower under
Section 6.27.
Section 2.3. LIBOR Advances.
--------------
(a) Converting Floating Rate Advances to LIBOR Advances;
Procedures. So
long as no Default Period is in effect, the Borrower may convert
all or any part
of the principal
amount of any
outstanding Floating
Rate Advance into a LIBOR
Advance by requesting
that the Lender
convert same no later than the Cut-off
Time on the Business
Day immediately
preceding the Business Day on which the
Borrower wishes the conversion to become effective. Each request that conforms
to the terms of this Agreement shall be effective upon receipt by
the Lender and
shall be confirmed
in writing by the
Borrower if the Lender so requests by any
Officer or designated
agent identified in
Section 2.2(b) or Person reasonably
believed by the Lender to be such an Officer or designated agent,
which request
shall specify the Business Day on which the conversion is to occur, the total
amount of the Floating Rate Advance to be converted, and the
applicable Interest
Period. Each such
conversion
shall occur on a
Business Day, and the aggregate
amount of Floating Rate Advances converted to LIBOR Advances shall be in
multiples of $100,000,
with a minimum
conversion amount of
at least $500,000;
provided, however
that at no time shall
LIBOR Advances
constitute
more than
seventy-five percent
(75%) of the aggregate
outstanding
principal amount of
Advances.
(b) Procedures
at End of an
Interest Period. Unless the Borrower
requests a new LIBOR Advance in accordance with the procedures set forth
below,
or prepays the principal of an outstanding LIBOR Advance at the
expiration of an
Interest Period,
the Lender
shall automatically and without request of the
Borrower convert each
LIBOR Advance to a
Floating Rate Advance on the last day
of the relevant Interest Period. So long as no Default exists,
the Borrower may
cause all or any part of any maturing LIBOR Advance to be renewed
as a new LIBOR
Advance by requesting that the Lender continue the maturing Advance as a LIBOR
Advance no later than the Cut-off Time on the Business Day
immediately preceding
the Business Day
constituting the first
day of the new Interest Period. Each
such request shall be
confirmed in writing by the Borrower
upon the Lender's
request by any Officer or designated agent identified in Section 2.2(b),
which
confirmation shall be
effective upon receipt by the Lender,
and which shall
specify the
amount of the
expiring LIBOR Advance to be continued and the
applicable Interest
Period. Each new
Interest Period shall begin on a Business
Day and the amount of each LIBOR Advance shall be in multiples of
$100,000, with
a minimum Advance of at least $500,000.
20
<PAGE>
(c) Setting and Notice of Rates. The Lender shall, with respect to any
request for a LIBOR
Advance under
Section 2.2 or a
conversion or renewal of a
LIBOR Advance
under this Section
2.3, provide the
Borrower with a LIBOR quote
for each Interest Period identified by the Borrower on the Business
Day on which
the request was made,
if the request is received by the Lender
prior to the
Cut-off Time, or for requests received by the Lender after the
Cut-off Time, on
the next Business Day or on the Business Day on which the Borrower
has requested
that the LIBOR Advance be made effective. If the Borrower does not
immediately
accept a LIBOR quote,
the quoted rate shall expire and any subsequent request
from Borrower
for a LIBOR
quote shall be subject to redetermination by the
Lender of the applicable LIBOR for the LIBOR Advance.
(d) Taxes and Regulatory Costs. The Borrower shall pay the
Lender with
respect to any Advance, upon demand and in addition to any
other amounts due or
to become due hereunder, any and all (i) withholdings, interest equalization
taxes, stamp taxes or other taxes (except income and franchise
taxes) imposed by
any domestic
or foreign
governmental
authority and related in any manner to
LIBOR, and (ii)
future, supplemental,
emergency or other
changes in the LIBOR
Reserve Percentage,
assessment rates
imposed by the Federal Deposit Insurance
Corporation, or similar requirements or costs imposed by any
domestic or foreign
governmental authority
or resulting from compliance by the Lender with any
request or directive
(whether or not having
the force of law) from any central
bank or other
governmental authority
and related in any manner to LIBOR to the
extent they are not included in the calculation of LIBOR.
In determining
which
of the foregoing are
attributable to any LIBOR option available to the Borrower
hereunder, any
reasonable
allocation
made by the Lender
among its operations
shall be conclusive and binding upon the Borrower.
Section 2.4. Letters of Credit.
-----------------
(a) The Lender
agrees, subject to the terms and
conditions
of this
Agreement, to
issue, at any time after the Funding Date and prior to the
Termination Date, one
or more irrevocable
standby or
documentary
letters of
credit (each, a "Letter of Credit") for the Borrower's account.
The Lender will
not issue any Letter of Credit if the face amount of the Letter of Credit to
be
issued would exceed the lesser of:
(i) $500,000 less the L/C Amount, or
(ii) Availability.
Each Letter of Credit,
if any, shall be issued pursuant to a separate
L/C Application made by the Borrower. The terms and conditions set
forth in each
such L/C Application
shall supplement the terms and
conditions of the Standby
Letter of Credit
Agreement or the
Commercial Letter of
Credit Agreement,
as
applicable.
(b) No Letter of Credit shall be issued with an expiry
date later than
one (1) year from the date of issuance or the Maturity Date in effect as of the
date of issuance, whichever is earlier.
(c) Any request for
issuance of a Letter of Credit shall be deemed to
be a representation by the Borrower that the conditions set forth
in Section 4.2
have been satisfied as of the date of the request.
(d) If a draft is submitted under a Letter of Credit when the
Borrower
is unable, because a
Default Period exists or for any other reason, to obtain a
Revolving Advance to pay the Obligation of Reimbursement, the
Borrower shall pay
to the Lender on demand and in immediately available funds, the amount of the
Obligation of Reimbursement together with interest, accrued from
the date of the
draft until payment in full at the Default Rate. Notwithstanding the Borrower's
inability to obtain a Revolving Advance for any reason,
the Lender may, in
its
sole discretion, make
a Revolving Advance in
an amount sufficient to discharge
any outstanding
Obligation of Reimbursement and any accrued but unpaid interest
and fees payable with respect to same.
21
<PAGE>
Section 2.5. Special Account. If the Credit Facility is
terminated for
---------------
any reason
while any Letter of Credit is outstanding, the Borrower shall
thereupon pay the
Lender in immediately available funds for deposit in the
Special Account an amount equal to the L/C Amount plus any
anticipated fees
and
costs. If the
Borrower fails to promptly make any such payment in the
amount
required hereunder,
then the Lender may
make a Revolving
Advance against
the
Credit Facility in an
amount sufficient to
fulfill this obligation and deposit
the proceeds to the Special Account. The Special Account shall be an interest
bearing account
either maintained with the Lender or with a financial
institution acceptable
to the Lender. Any
interest earned on amounts deposited
in the Special Account shall be credited to the Special Account.
The Lender may
apply amounts on deposit in the Special Account at any time or from
time to time
to the Indebtedness
in the Lender's sole discretion. The Borrower may not
withdraw any
amounts on deposit in
the Special
Account as long as the
Lender
maintains a security interest therein. The Lender agrees to
transfer any balance
in the Special Account
to the Borrower
when the Lender is
required to release
its security interest in the Special Account under applicable
law.
Section 2.6. Term Advances.
-------------
2.6.1 Equipment Term Advance.
----------------------
(a) The Lender
agrees, subject to the terms and
conditions
of this
Agreement, to make a single advance to the Domestic Borrower on the
Funding Date
in the amount of $837,500 (the "Equipment Term Advance"). The Domestic
Borrower's obligation
to pay the Equipment
Term Advance shall be
evidenced by
the Equipment
Term Note and shall be
secured by the
Collateral as provided in
Article III.
(b) Upon fulfillment of the applicable conditions set forth in
Article
IV, the Lender shall
deposit the
proceeds of the requested Equipment Term
Advance by crediting the same to the Borrower's demand deposit
account specified
in Section 2.2(c).
Upon the Lender's request, the Domestic Borrower shall
promptly confirm each
request for an Equipment Term Advance or any alternative
method of disbursing a
Equipment Term Advance
by executing and
delivering an
appropriate
confirmation certificate to the Lender. The Domestic Borrower
shall
be obligated to repay all Equipment Term Advances notwithstanding the Lender's
failure to receive
such confirmation and notwithstanding the fact that the
Person requesting the
same was not in fact authorized to do so. Any request for
a Equipment Term Advance, whether written or telephonic, shall be
deemed to be a
representation by the
Domestic Borrower that the Domestic Borrower is in
compliance with the
conditions
set forth in Section
4.2 as of the time of the
request.
2.6.2 Real Estate Term Advance.
------------------------
(a) The Lender
agrees, subject to the terms and
conditions
of this
Agreement, to make a single advance to the Domestic Borrower on the
Funding Date
in the amount of
$2,922,500 (the "Real
Estate Term
Advance").
The Domestic
Borrower's obligation
to pay the Real Estate Term Advance shall be evidenced by
the Real Estate Term Note and shall be secured by the Collateral as provided in
Article III.
(b) Upon fulfillment of the applicable conditions set forth in
Article
IV, the Lender shall
deposit the
proceeds of the
requested Real Estate Term
Advance by crediting the same to the Borrower's demand deposit
account specified
in Section 2.2(c).
Upon the Lender's request, the Domestic Borrower shall
promptly confirm each
request for a Real Estate Term Advance or any alternative
method of disbursing a Real Estate Term Advance by executing
and delivering an
appropriate
confirmation certificate to the Lender. The Domestic Borrower
shall
be obligated to repay all Real Estate Term Advances notwithstanding
the Lender's
failure to receive
such confirmation and notwithstanding the fact that the
Person requesting the
same was not in fact authorized to do so. Any request for
a Real Estate Term Advance, whether written or telephonic, shall be
deemed to be
a representation by the Domestic Borrower, upon which the Lender may rely,
that
the Domestic Borrower
is in compliance with the conditions set forth in Section
4.2 as of the time of the request.
Section 2.7. Payment of Term Notes. The outstanding principal balance
---------------------
of the Term Notes shall be due and payable as follows:
22
<PAGE>
2.7.1 Equipment Term Note.
-------------------
(a) In equal monthly
installments of $13,954.17, beginning on July 1,
2008, and on the first day of each month thereafter.
(b) If the
Lender at any time obtains an appraisal of Eligible
Equipment as permitted under Section 6.10(d) herein, and the
appraisal shows the
aggregate outstanding
principal balance of the Equipment Term Note
to exceeds
(i) 85% of the Net Orderly Liquidation Value of Eligible
Equipment or (ii) 100%
of the Net Forced
Liquidation Value of
Eligible Equipment,
then the Domestic
Borrower, upon demand by the Lender, shall immediately prepay the
Equipment Term
Note in the amount of such excess.
(c) All prepayments
of principal
with respect to the
Equipment Term
Note shall be applied to the most remote principal installment or installments
then unpaid; and
(d) On the Termination Date, the entire unpaid principal balance of
the
Equipment Term Note,
and all unpaid
interest accrued
thereon, shall also be
fully due and payable.
2.7.2 Real Estate Term Note.
---------------------
(a) In equal monthly
installments of $16,236.12, beginning on July 1,
2008, and on the first day of each month thereafter.
(b) If the Lender at any time obtains an appraisal of the Mortgaged
Property, as permitted under Section 6.10(d) herein, and the
appraisal shows the
aggregate outstanding
principal balance of
the Real Estate Term Note to exceed
70% of the fair market
value of such
Mortgaged Property, then the Domestic
Borrower, upon demand
by the Lender, shall
immediately prepay the
Real Estate
Term Note in the amount of such excess.
(c) All prepayments
of principal with
respect to the Real Estate Term
Note shall be applied to the most remote principal installment or installments
then unpaid; and
(d) On the Termination Date, the entire unpaid principal balance of
the
Real Estate Term Note, and all unpaid interest accrued thereon, shall also be
fully due and payable.
Section 2.8. Interest;
Default Interest Rate; Application of Payments;
----------------------------------------------------------
Participations; Usury.
---------------------
(a) Interest.
Except as provided in
Section 2.3, Section
2.8(b) and
Section 2.8(e),
the principal
amount of each Advance
shall bear interest as a
Floating Rate Advance.
(b) Default Interest
Rate. At any time during any Default
Period or
following the
Termination Date, in
the Lender's sole
discretion
and without
waiving any of its other rights or remedies, the principal of the
Revolving Note
and the Term Notes shall bear interest at the Default
Rate or such lesser
rate
as the Lender may determine, effective as of the first day of the
fiscal quarter
in which any Default Period begins through the last day of such
Default Period,
or any shorter time
period that the Lender may determine. The decision of the
Lender to impose a rate that is less than the Default Rate or to not impose the
Default Rate for the entire duration of the Default Period
shall be made by the
Lender in its sole
discretion
and shall not be a waiver of any of its
other
rights and
remedies, including its right to retroactively impose the full
Default Rate for the
entirety of any such Default Period or following the
Termination Date.
(c) Application
of Payments. Payments shall be applied to the
Indebtedness on the
Business Day of receipt by the Lender in the Lender's
general account,
but the amount of
principal paid shall continue to accrue
interest at the interest rate applicable under the terms of this Agreement
from
the calendar day the Lender receives the payment, and continuing
through the end
of the first Business Day following receipt of the payment.
23
<PAGE>
(d) Participations. If
any Person shall acquire a participation in the
Advances or the Obligation of Reimbursement, the Borrower shall (subject, as
to
Ronson Canada, to the
final sentence of Section 2.1) be obligated to the Lender
to pay the full amount of all interest calculated under this Section 2.8,
along
with all other fees,
charges and other amounts due under this Agreement,
regardless if such
Person elects to accept interest with respect to its
participation at a
lower rate than that
calculated under this
Section 2.8, or
otherwise elects to
accept less than its
pro rata share of such fees, charges
and other amounts due under this Agreement.
(e) Usury. In any
event no rate change
shall be put into effect which
would result
in a rate greater than the highest rate permitted by law.
Notwithstanding
anything to the contrary contained in any Loan Document, all
agreements which
either now are or
which shall become
agreements between
the
Borrower and the Lender are hereby limited so that in no contingency or event
whatsoever shall the
total liability
for payments in the nature of
interest,
additional interest
and other charges exceed the applicable limits imposed by
any applicable usury laws. If any payments in the nature of
interest, additional
interest and other charges made under any Loan Document are held to
be in excess
of the limits imposed by any applicable usury laws, it is agreed that any
such
amount held to be in excess shall be considered payment of
principal
hereunder,
and the indebtedness
evidenced hereby shall be reduced by such
amount so that
the total liability for payments in the nature of interest,
additional
interest
and other charges shall not exceed the applicable limits imposed by any
applicable usury laws,
in compliance
with the desires of
the Borrower and the
Lender. This
provision shall never be superseded or waived and shall
control
every other provision
of the Loan
Documents and all agreements between the
Borrower and the Lender, or their successors and assigns.
Section 2.9. Fees.
----
(a) Origination
Fee. The Borrower
shall pay the Lender a fully earned
and non-refundable
origination
fee of $50,000, due and payable upon the
execution of this Agreement.
(b) Unused Line Fee. For the purposes of this Section 2.9(b), "Unused
Amount" means the Maximum Line Amount reduced by outstanding
Revolving Advances
and the L/C Amount.
The Borrower agrees to pay to the Lender an unused line fee
at the rate of
one-quarter of one percent (.25%) per annum on the average
daily
Unused Amount from the date of this Agreement to and including the
Termination
Date, due and
payable monthly in arrears on the first
day of the month and on
the Termination Date.
(c) Collateral Monitoring Fee. The Borrower agrees to pay to the
Lender
a monthly monitoring
fee in the amount of
$1,000 per month,
due and payable
monthly in arrears on the first day of each month and on the
Termination Date.
(d) Collateral
Exam Fees.
The Borrower
shall pay the Lender
fees in
connection with any collateral exams, audits or inspections conducted by or on
behalf of the Lender
of any Collateral or of the Borrower's operations or
business at the rates
established from time
to time by the Lender
(which fees
are currently $950 per day per collateral examiner), together with any related
out-of-pocket costs and expenses incurred by the Lender.
(e) Collateral
Monitoring
Service Fees.
The Borrower
shall pay the
Lender fees in
connection
with any service
conducted by or on behalf of the
Lender for purposes
of identifying ineligible Collateral, calculating the
Borrowing Base, and performing related collateral monitoring services at the
rates established from
time to time by the Lender (which fees currently include
an initial set-up fee
of $1,000 and a monthly fee of $100 for each such aging),
together with any
out-of-pocket costs
and expenses incurred
by Lender, which
fees shall be due and
payable monthly in
arrears on the first day of the month
and on the Termination Date.
(f) Letter of Credit
Fees. The Domestic Borrowers shall pay to the
Lender a fee with
respect to each Letter
of Credit that has been issued to any
Borrower, and Ronson
Canada shall be obligated pay to the Lender (to the extent
not paid by the Domestic Borrowers) a fee with respect to
each Letter of Credit
that has been issued to it, which fee shall be calculated on a per
diem basis at
an annual rate equal to (i) one and one-half
24
<PAGE>
percent (1.5%) of the Aggregate Face Amount of documentary letters
of credit and
(ii) two percent (2%) of the Aggregate Face Amount of standby
letters of credit,
from and including
the date of issuance
of the Letter of Credit until the date
that the Letter of Credit terminates or is returned to the Lender, which fee
shall be due and
payable monthly in
arrears on the first day of each month and
on the date that the Letter of Credit terminates or is returned to the Lender;
provided, however,
effective as of the first day of the fiscal quarter in which
any Default Period
begins through the last day of such Default Period, or any
shorter time
period that the Lender may determine, in the Lender's sole
discretion and without
waiving any of its
other rights and remedies, such fee
shall increase
to five percent (5.0%) of the Aggregate Face Amount. The
foregoing fee shall be
in addition to any other fees, commissions and charges
imposed by Lender with respect to such Letter of Credit.
(g) Letter of Credit
Administrative Fees. The Domestic Borrowers shall
pay all administrative fees charged by Lender in connection with
the honoring of
drafts under any
Letter of Credit
issued on the
application
of a Borrower,
amendments thereto,
transfers thereof and all other activity with respect to
such Letters of Credit at the then - current rates published by Lender for such
services rendered on behalf of customers of Lender generally,
and Ronson Canada
shall pay all
administrative fees
charged by Lender in connection with the
honoring of drafts
under any Letter of Credit issues on the application of
Ronson Canada, amendments thereto, transfers thereof and all other
activity with
respect to such
Letters of Credit at the then - current
rates published by
Lender for such services rendered on behalf of customers of Lender
generally, to
the extent not paid by the Domestic Borrowers.
(h) Termination and
Line Reduction Fees. If (i) the Lender terminates
the Credit Facility during a Default Period, or if (ii) the
Borrower
terminates
or reduces the Credit
Facility on a date prior to the Maturity Date, then the
Borrower shall pay the
Lender as liquidated damages and not as a penalty a
termination fee in an
amount equal to a
percentage of the
Maximum Line Amount
(or the reduction of the Maximum Line Amount, as the case may be) calculated
as
follows: (A) two
percent (2%) if the
termination
or reduction occurs on or
before the first
anniversary of the
Funding Date;
(B) one percent (1) if
the
termination or reduction occurs after the first anniversary of the
Funding Date,
but on or before the second anniversary of the Funding Date; and
(C) one-half of
one percent (.50%) if
the termination
or reduction occurs after the second
anniversary of the Funding Date.
(i) Prepayment Fees
and Contracted
Funds Breakage Fees.
The Borrower
may prepay the
principal amount of
any LIBOR Advance and the Term Notes at any
time in any amount,
whether voluntarily or by acceleration, subject to the
payment of fees as follows:
(i) If the Equipment Term Note and/or the Real Estate Term Note
is
prepaid for any reason other than because of any mandatory
prepayment
required
pursuant to Section 2.13(b) of this Agreement, the Domestic Borrowers shall
pay
to the Lender a prepayment fee in an amount equal to (i) two
percent (2.0%) of
the amount prepaid, if
prepayment occurs on
or before the first anniversary of
the Funding Date; (ii) one percent (1.0%) of the amount
prepaid, if prepayment
occurs after the first
anniversary
of the Funding Date but on or before the
second anniversary of the Funding Date; and (iii) one-half of one
percent (.50%)
of the amount prepaid,
if prepayment occurs after the second anniversary of the
Funding Date.
(ii) If the principal amount
