10.1
FINANCING AGREEMENT
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as agent for itself and for
CIT FINANCIAL LTD.
(as Lender)
and
RONSON CORPORATION.
RONSON CONSUMER PRODUCTS CORPORATION
RONSON AVIATION, INC.
and
RONSON CORPORATION OF CANADA LTD.
(as Borrowers)
Dated: July 31, 2006
TABLE OF CONTENTS
Page
SECTION 1. Definitions...............................................................1
1.1 Defined Terms.................................................................1
SECTION 2. Conditions Precedent.....................................................15
SECTION 3. Revolving Loans and Collections..........................................18
3.1 Funding Conditions and Procedures............................................18
3.2 Handling of Proceeds of Collateral; Cash Dominion............................19
3.3 Collective Borrowing Arrangement; Revolving Loan Account.....................20
3.4 Repayment of Overadvances....................................................20
3.5 Application of Proceeds of Collateral........................................21
3.6 Monthly Statement............................................................21
3.7 Access to CIT's System.......................................................21
SECTION 4. Term Loans...............................................................22
4.1 Promissory Notes Evidencing Term Loans.......................................22
4.2 Initial Term Loan............................................................22
4.4 Provisions Regarding all Term Loans..........................................22
SECTION 5. Letters of Credit........................................................23
5.1 Assistance and Purpose.......................................................23
5.2 Authority to Charge Revolving Loan Account...................................23
5.3 Indemnity Relating to Letters of Credit......................................23
5.4 Compliance of Goods, Documents and Shipments with Agreed Terms...............23
5.5 Handling of Goods, Documents and Shipments...................................23
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5.6 Compliance with Laws; Payments of Levies and Taxes...........................24
5.7 Subrogation Rights...........................................................24
SECTION 6. Collateral...............................................................24
6.1 Grant of Security Interest...................................................24
6.2 Limited License..............................................................25
6.3 Representations, Covenants and Agreements Regarding Collateral Generally.....25
6.4 Representations Regarding Accounts and Inventory.............................25
6.5 Covenants and Agreements Regarding Accounts and Inventory....................26
6.6 Covenants and Agreements Regarding Equipment.................................26
6.7 General Intangibles..........................................................27
6.8 Commercial Tort Claims.......................................................27
6.9 Letter of Credit Rights......................................................27
6.10 Special Provisions Relating to Specified Intellectual Property..............27
6.12 Reference to Other Loan Documents...........................................27
6.13 Credit Balances; Additional Collateral......................................27
SECTION 7. Representations, Warranties and Covenants................................28
7.1 Representations and Warranties...............................................28
7.2 Affirmative Covenants........................................................29
7.3 Financial Covenants..........................................................35
7.4 Negative Covenants...........................................................36
SECTION 8. Interest, Fees and Expenses..............................................37
8.1 Interest.....................................................................37
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8.2 Default Interest Rate........................................................38
8.3 Fees and Expenses Relating to Letters of Credit..............................38
8.4 Out of Pocket Expenses.......................................................39
8.5 Line of Credit Fee; Collection Days..........................................39
8.6 Loan Facility Fee; Application of Deposits and Commitment Fee................39
8.7 Administrative Management Fee................................................39
8.8 Standard Operational Fees....................................................39
8.9 Intentionally left blank.....................................................39
8.10 Intentionally left blank....................................................39
8.11 Early Termination Fee and Prepayment Premium................................39
8.12 Capital Adequacy............................................................39
8.13 Taxes, Reserves and Other Conditions........................................40
8.14 Authority to Charge Revolving Loan Account..................................40
SECTION 9. Powers...................................................................41
9.1 Authority....................................................................41
9.2 Limitations on Exercise......................................................41
SECTION 10. Events of Default and Remedies..........................................41
10.1 Events of Default...........................................................41
10.2 Remedies With Respect to Outstanding Loans..................................42
10.3 Remedies With Respect to Collateral.........................................43
10.4 General Indemnity...........................................................44
SECTION 11. Termination.............................................................44
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SECTION 12. Miscellaneous...........................................................45
12.1 Waivers.....................................................................45
12.2 Entire Agreement; Amendments................................................45
12.3 Usury Limit.................................................................45
12.4 Severability................................................................45
12.5 Waiver of Jury Trial; Service of Process....................................45
12.6 Notices.....................................................................46
12.7 Joint and Several Liability.................................................47
12.8 Choice of Law...............................................................48
12.9 Choice of Forum.............................................................48
12.10 Interpretative Provisions..................................................48
12.11 Counterparts, Etc..........................................................48
EXHIBITS
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Exhibit A - Form of Initial Term Loan Promissory Note
Exhibit B - Form of Initial Additional Term Loan Promissory Note
Exhibit C - Form of Compliance Certificate
SCHEDULES
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Schedule 1.1(a) - Permitted Encumbrances
Schedule 1.1(b) - Permitted Indebtedness
Schedule 1.1(c) - Permitted Tax Liens
Schedule 1.1(d) - Description of Real Estate
Schedule 7.1(b) - Company and Collateral Information
Schedule 7.1(f) - Environmental Matters Schedule 7.1(g) - Litigation
Schedule 7.1(h) - Subsidiaries and Affiliates
Schedule 7.4(i) - Related Party Transactions
Schedule 7.4(l) - Bank Accounts
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THE CIT GROUP/COMMERCIAL SERVICES, INC., a New York corporation, with
an office located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, as agent
("CIT") for itself and for CIT FINANCIAL LTD., an Ontario corporation ("Canadian
Lender") (collectively "Lenders"), is pleased to confirm the terms and
conditions under which CIT shall make revolving loans, a term loan and other
financial accommodations to XXXXXX XXXXXXXXXXX, ,x New Jersey corporation, with
a principal place of business at Corporate Xxxx XXX-Xxxxxx Xxxxx, Xxxxxxxx, XX
00000 ("Ronson"), RONSON AVIATION, INC., a New Jersey corporation, with a
principal place of business at Trenton-Xxxxxx Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxx, XX
00000 ("RAI"), RONSON CONSUMER PRODUCTS COMPANY a New Jersey corporation, with a
principal place of business at Corporate Xxxx XXX-Xxxxxx Xxxxx, Xxxxxxxx, XX
00000 ("RCPC"), and RONSON CORPORATION OF CANADA LTD., an Ontario corporation,
with a principal place of business at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxx
X0X 0X0 ("Ronson Canada", and together with Ronson, RAI, and RCPC, individually,
a "Company" and collectively, the "Companies").
SECTION 1. Definitions
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1.1 Defined Terms. As used in this Financing Agreement:
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Accounts shall mean all of the Companies' present and future: (a)
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accounts (as defined in the UCC); (b) instruments, documents, chattel paper
(including electronic chattel paper) (all as defined in the UCC); (c) unpaid
seller's or lessor's rights (including rescission, replevin, reclamation,
repossession and stoppage in transit) relating to the foregoing or arising
therefrom; (d) rights to any goods represented by any of the foregoing,
including rights to returned, reclaimed or repossessed goods; (e) reserves and
credit balances arising in connection with or pursuant to this Financing
Agreement; (f) guaranties, other supporting obligations, payment intangibles and
letter of credit rights (all as defined in the UCC); (g) insurance policies or
rights relating to any of the foregoing; (h) general intangibles pertaining to
any of the foregoing (including rights to payment, including those arising in
connection with bank and non-bank credit cards), and all books and records and
any electronic media and software relating thereto; (i) notes, deposits or other
property of the Companies' account debtors securing the obligations owed by such
account debtors to the Companies; and (j) all Proceeds of any of the foregoing.
Administrative Management Fee shall mean an amount equal to $15,000 per
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annum, payable in accordance with Section 8.7 of this Financing Agreement.
Airport Lease shall mean that certain agreement and lease dated May 14,
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1975 (as amended, modified or supplemented from time to time) between the County
of Xxxxxx and RAI, relating to those certain premises located at the
Trenton-Xxxxxx County Airport as more particularly described therein.
Applicable Margin shall mean, with respect to (a) the Revolving Loans,
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one half of one percent (0.50%) per annum, and (b) the Term Loans, three percent
(3.00%) per annum, and (c) documentary Letters of Credit, two percent (2.0%) per
annum, and (d) standby Letters of Credit, two and one half percent (2.5%) per
annum.
Appraisal Deficiency shall have the meaning given to such term in
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Section 7.2(i) of this Financing Agreement.
Availability Reserve shall mean, as to any Company, an amount equal to
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the sum of:
(a) the Ronson Tax Lien Reserve and any other reserve which CIT may
establish from time to time pursuant to the express terms of this
Financing Agreement; plus
(b) (i) three (3) months rental payments or similar charges for each
Company's leased premises or other Collateral locations for which such
Company has not delivered to CIT a landlord's waiver in form and
substance reasonably satisfactory to CIT within thirty (30) days after
the Closing Date, and (ii) three (3) months estimated payments (plus
any other fees or charges owing by any Company) to any applicable
warehousemen or third party processor for which such Company has not
delivered to CIT a warehouseman's or processor's waiver in form and
substance reasonably satisfactory to CIT within thirty (30) days after
the Closing Date (as determined by CIT in the exercise of its
reasonable business judgment), provided that any of the foregoing
amounts shall
be adjusted from time to time hereafter upon (x) delivery to CIT of any
such acceptable waiver, (y) the opening or closing of a Collateral
location and/or (z) any change in the amount of rental, storage or
processor payments or similar charges; plus
(c) any reserve that CIT may establish from time to time with respect
to Priority Payables for Ronson Canada; plus
(d) such other reserves against Net Availability as CIT deems necessary
in the exercise of its reasonable business judgment as a result of (i)
negative forecasts and/or trends in any Company's business, industry,
prospects, profits, operations or financial condition or (ii) other
issues, circumstances or facts that could otherwise negatively impact
any Company or its business, prospects, profits, operations, industry,
financial condition or assets.
Borrowing Base shall mean as to any Company, at any time the sum at
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such time of: (a) eighty-five percent (85%) of such Company's outstanding
Eligible Accounts Receivable, provided, however, that if the then Dilution
Percentage is greater than five percent (5%), then the rate of advance herein
shall be reduced by the amount of such excess Dilution Percentage; plus (b) an
amount not to exceed the lesser of (i) fifty five percent (55%) of aggregate
value of such Company's Eligible Inventory, valued at the lower of cost or
market on a first in, first out basis; or (ii) eighty five percent (85%) of the
Net Orderly Liquidation Value of such Company's Inventory, less (c) the amount
of the Availability Reserve in effect at such time. Notwithstanding anything
herein to the contrary, (a) the aggregate advances to all of the Companies
against Eligible Inventory shall not exceed $1,500,000, and (b) the aggregate
advances to Ronson Canada shall not exceed $600,000 (or the Canadian Dollar
Equivalent thereof).
Business Day shall mean any day on which CIT and JPMorgan Chase Bank
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are open for business.
Canadian Business Day shall mean any day in which Canadian chartered
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banks in Toronto, Ontario and the Canadian Lender are open for business.
Canadian Dollar Equivalent" shall mean at any time (a) as to any amount
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denominated in Canadian Dollars, the amount thereof and (b) as to any amount
denominated in U.S. Dollars or any other currency, the equivalent amount in
Canadian Dollars calculated by Agent at such time using the then applicable
Exchange Rate in effect on the Business Day of determination.
Canadian Dollar(s) shall mean the lawful currency of Canada.
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Canadian Prime Rate shall mean a fluctuating interest rate per annum
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equal to at all times to the rate of interest announced publicly from
time-to-time by publication as the Bloomberg PRIMECAN Screen as its base rate;
provided that such rate is not necessarily the best rate offered by Canadian
Lender to its customers, and should CIT be unable to determine such rate, such
other indication of the prevailing prime rate of interest as may reasonably be
chosen by CIT.
Canadian Rate Loans shall mean any loans or advances made pursuant to
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this Financing Agreement that bear interest based upon the Canadian Prime Rate.
The parties acknowledge that all Revolving Loans to Ronson Canada are Canadian
Rate Loans.
Capital Expenditures shall mean, for any period, the aggregate
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expenditures of the Companies during such period on account of property, plant,
equipment or similar fixed assets that, in conformity with GAAP, are required to
be reflected on a Consolidated Balance Sheet.
Capital Lease shall mean any lease of property (whether real, personal
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or mixed) which, in conformity with GAAP, is accounted for as a capital lease or
a Capital Expenditure on a Consolidated Balanced Sheet.
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Casualty Proceeds shall mean (a) payments or other proceeds from an
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insurance carrier with respect to any loss, casualty or damage to Collateral,
and (b) payments received on account of any condemnation or other governmental
taking of any of the Collateral.
Change of Control shall mean either: (a) the failure of Xxxxx X.
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Xxxxxxx II to remain actively engaged in the management of the Companies; (b)
the failure of Xxxxx X. Xxxxxxx XX (together with his spouse) to own of record
and beneficially (in the aggregate), at least 25% of the issued and outstanding
common stock of Ronson; or (c) the failure of Ronson to continue to own 100% of
the issued and outstanding capital stock in any other Company.
Chase Bank Rate shall mean the rate of interest per annum announced by
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JPMorgan Chase Bank (or its successor) from time to time as its "prime rate" in
effect at its principal office in New York City. (The prime rate is not intended
to be the lowest rate of interest charged by JPMorgan Chase Bank to its
borrowers).
Chase Bank Rate Loans shall mean any loans or advances made pursuant to
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this Financing Agreement that bear interest based upon the Chase Bank Rate. The
parties acknowledge that all Revolving Loans to the Domestic Companies and both
Term Loans are Chase Bank Rate Loans.
CIT's Bank Account shall mean CIT's bank account at JPMorgan Chase Bank
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(or its successor) in New York, New York
CIT's Canadian Bank Account shall mean Canadian Lender's U.S. Dollar
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bank account and Canadian Lender's Canadian Dollar bank account, at Canadian
Imperial Bank of Commerce (or its successor) in Xxxxxxx, Xxxxxxx, Xxxxxx or at
such other financial institution in Canada as CIT shall determine.
CIT's System shall mean CIT's StuckeyNet or other internet-based loan
accounting and reporting system.
Closing Date shall mean the date on which this Financing Agreement is
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executed by the parties hereto and delivered to CIT.
Collateral shall mean all assets of the Companies, including without
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limitation, all present and future Accounts, Equipment, Inventory and other
Goods, Documents of Title, General Intangibles, Investment Property, the Airport
Lease and Other Collateral, but in all cases other than the Real Property
Collateral and the Minority Ronson Canada Interest; provided, however, that the
Collateral shall extend to Specified Intellectual Property solely in order to
secure the Obligations consisting of and arising from the Initial Additional
Term Loan (it being acknowledged that upon satisfaction of such Obligations,
CIT's security interest in the Specified Intellectual Property shall be released
and the Specified Intellectual Property shall no longer constitute Collateral).
Collection Days shall mean a period of one (1) Business Day after the
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deposit of proceeds of Collateral or other monies into CIT's Bank Account or
CIT's Canadian Bank Account, as the case may be, for which interest may be
charged on the aggregate amount of such deposits at the rate provided for in
Section 8.1 or 8.2 (if applicable) of this Financing Agreement.
Commitment Letter shall mean the Commitment Letter dated June 29, 2006
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issued by CIT to, and accepted by, the Companies.
Consolidated Balance Sheet shall mean a consolidated balance sheet for
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the Companies, eliminating all inter-company transactions and prepared in
accordance with GAAP.
Consolidating Balance Sheet shall mean a Consolidated Balance Sheet of
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the Companies plus individual balance sheets for the Companies, showing all
eliminations of inter-company transactions and prepared in accordance with GAAP.
Copyrights shall mean all of the Companies' present and hereafter
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acquired copyrights, copyright registrations, recordings, applications, designs,
styles, licenses, marks, prints and labels bearing any of the foregoing, all
reissues and
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renewals thereof, all licenses thereof, all other general intangible,
intellectual property and other rights pertaining to any of the foregoing,
together with the goodwill associated therewith, and all income, royalties and
other Proceeds of any of the foregoing.
Default shall mean any event specified in Section 10.1 hereof,
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regardless of whether any requirement for the giving of notice, the lapse of
time, or both, or any other condition, event or act, has occurred or been
satisfied.
Default Rate of Interest shall mean a rate of interest equal to two
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percent (2%) per annum greater than the interest rate accruing on the
Obligations pursuant to Section 8.1 hereof, which CIT shall be entitled to
charge the Companies in the manner set forth in Section 8.2 of this Financing
Agreement.
Depository Account shall mean each bank account (and the related
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lockbox, if any) subject to CIT's control that is established by CIT or the
Companies pursuant to Section 2.1(j) or Section 3.2(c) of this Financing
Agreement.
Depository Account Control Agreement shall mean a three-party agreement
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in form and substance satisfactory to CIT among CIT, the applicable Company and
the bank which will maintain a Depository Account, (a) which provides CIT with
control of such Depository Account and provides for the transfer of funds in a
manner consistent with the provisions of Section 3.2(b) of this Financing
Agreement, and (b) pursuant to which such bank agrees that (i) all cash, checks,
wires and other items received or deposited into the Depository Account are the
property of CIT, and (ii) except as otherwise provided in the Depository Account
Control Agreement, such bank has no lien upon, or right of set off against, the
Depository Account and any cash, checks, wires and other items from time to time
on deposit therein.
Dilution Percentage shall mean, with respect to the Companies in the
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aggregate during any period of measurement, the quotient (expressed as a
percentage) obtained by dividing (a) the aggregate amount of the Companies'
non-cash reductions against Trade Accounts Receivable, during such period, by
(b) the aggregate amount of the Companies' gross sales during such period, as
determined by CIT in the exercise of its reasonable business judgment. The
Dilution Percentage shall be determined by CIT based on its reviews of the
periodic financial and collateral reports submitted by the Companies to CIT as
well as the results of the periodic field examinations of the Companies
conducted by CIT from time to time. The period of measurement for calculating
the Dilution Percentage shall be determined by CIT from time to time in the
exercise of its reasonable business judgment.
Documentation Fees shall mean (a) all reasonable expenses incurred in
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connection with or by CIT's in-house and outside legal counsel in negotiating,
documenting, preparing for and attending a closing with respect to this
Financing Agreement, the Collateral and/or Obligations (exclusive of
Out-of-Pocket Expenses), plus (b) subsequent to the Closing Date, the reasonable
fees of CIT's legal counsel, whether or not in-house legal counsel, relating to
any and all modifications, waivers, releases, legal file reviews or additional
collateral with respect to this Financing Agreement, the Collateral and/or the
Obligations (all exclusive of Out-of-Pocket Expenses).
Documents of Title shall mean all present and future documents (as
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defined in the UCC), and any and all warehouse receipts, bills of lading,
shipping documents, chattel paper, instruments and similar documents, all
whether negotiable or non-negotiable, together with all Inventory and other
Goods relating thereto, and all Proceeds of any of the foregoing.
Domestic Company(ies) shall mean each and all of Ronson, RCPC and RAI,
----------------------
as the context may require.
Early Termination Date shall mean a date prior to any Termination Date
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on which (i) the Companies (or any one of them) terminate this Financing
Agreement or the Revolving Line of Credit or (ii) after the occurrence of an
Event of Default that has not been waived in writing by CIT, this Financing
Agreement is terminated as contemplated by Section 10.2 hereof (whether
automatically or by CIT).
Early Termination Fee shall mean an amount equal to the product
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obtained by multiplying (a) the maximum amount of the Revolving Line of Credit
times (b) (i) two percent (2%) if the Early Termination Date occurs on or before
the first anniversary of the Closing Date, (ii) one percent (1%) if the Early
Termination Date occurs after the first anniversary of the Closing Date but on
or before the second anniversary of the Closing Date; and (iii) one-half percent
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(0.5%) if the Early Termination Date occurs after the second anniversary of the
Closing Date but prior to the date which is ten (10) Business Days prior to the
initial or any subsequent Termination Date.
EBITDA shall mean, for any period, all net earnings of the Companies on
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a consolidated basis for such period, plus all interest, tax obligations and
depreciation and amortization expense of the Companies on a consolidated basis
for such period, all determined in conformity with GAAP on a basis consistent
with the latest audited financial statements of the Companies, but excluding the
effect of extraordinary and/or nonrecurring gains or losses for such period.
Electronic Transmission shall have the meaning given to such term in
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Section 7.2(g) of this Financing Agreement.
Eligible Accounts Receivable shall mean, as to any Company, the gross
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amount of such Company's Trade Accounts Receivable that are subject to a valid,
exclusive, first priority and fully perfected security interest in favor of CIT
(and as to Accounts owned by Ronson Canada, such Accounts are subject to valid
exclusive first priority liens under the PPSA), which conform to the warranties
contained herein and which, at all times, continue to be acceptable to CIT in
the exercise of its reasonable business judgment, less, without duplication, the
sum of:
(a) actual returns, discounts, claims, credits and allowances of any
nature (whether issued, owing, granted, claimed or outstanding), plus
(b) reserves for such Trade Accounts Receivable that arise from, or are
subject to or include: (i) sales to the United States of America, any
state or other governmental entity (domestic or foreign)or to any
agency, department or division thereof, except for any such sales to
the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, as to which such Company
has complied with the Assignment of Claims Act of 1940 or any other
applicable statute, rules or regulation to CIT's satisfaction in the
exercise of its reasonable business judgment; (ii) foreign sales, other
than sales which otherwise comply with all of the other criteria for
eligibility hereunder and are (x) secured by letters of credit (in form
and substance satisfactory to CIT) issued or confirmed by, and payable
at, banks acceptable to CIT having a place of business in the United
States of America or, in the case of Ronson Canada, a place of business
in Canada, or are covered by foreign accounts credit insurance
satisfactory to CIT in all respects on which CIT is noted as additional
insured and loss payee, or (y) as to Accounts owned by Ronson, RAI or
RCPC, to customers residing in Canada, provided that such Accounts are
payable in United States Dollars and as to Accounts owned by Ronson
Canada, to customers residing in Canada, then in either U.S. Dollars or
Canadian Dollars (provided, that, at any time promptly upon CIT's
request, Ronson Canada (or any other Company, upon the request of CIT)
shall execute and deliver, or cause to be executed and delivered, such
other agreements, documents and instruments as may be required by CIT
to perfect the security interests of CIT and/or Canadian Lender in
those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the PPSA and
other applicable laws of the Province of Canada in which such chief
executive office or principal place of business is located and take or
cause to be taken such other and further actions as CIT may request to
enable CIT and/or Canadian Lender as secured party with respect thereto
to collect such Accounts under the applicable Federal or Provincial
laws of Canada) ; (iii) Accounts that remain unpaid more than the
earlier of ninety (90) days from invoice date or sixty (60) days from
due date; (iv) contra accounts; (v) sales to any subsidiary (direct or
indirect), or parent (direct or indirect), of any Company, or to any
other person or entity otherwise affiliated with any Company or with
any shareholder known by Ronson to own greater than three percent (3%)
of the issued and outstanding capital stock of such Company, subsidiary
(direct or indirect) or parent (direct or indirect) of any Company in
any way; (vi) xxxx and hold (deferred shipment, consignment sales,
guaranteed sales, sale and return, sale on approval or other terms
under which payment by the account debtor may be conditional or
contingent; (vii) sales to any customer which is either (w) insolvent,
(x) the debtor in any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal
or state law, (y) negotiating, or has called a meeting of its creditors
for purposes of negotiating, a compromise of its debts, or (z)
financially unacceptable to CIT or has a credit rating unacceptable to
CIT; (viii) all sales to any customer if fifty percent (50%) or more of
the aggregate dollar amount of all outstanding invoices to such
customer are unpaid more than the earlier of ninety (90) days from
invoice date or sixty (60) days from due date; (ix) sales to any
customer and/or its affiliates to the extent the aggregate outstanding
amount of such sales
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at any time exceed thirty percent (30%) or more of all Eligible
Accounts Receivable of all Companies, in the aggregate, at such time;
(x) pre-billed receivables and receivables arising from progress
xxxxxxxx; (xi) sales by Ronson, RAI or RCPC not payable in United
States currency; and (xii) sales by Ronson Canada not payable in either
U.S. Dollars or Canadian Dollars; plus
(c) reserves established by CIT to account for increases in the
Companies' Dilution Percentage above five percent (5.0%), and such
other reserves against Trade Accounts Receivable as CIT deems necessary
in the exercise of its reasonable business judgment and which are
customary either in the commercial finance industry or in the lending
practices of CIT.
Eligible In-Transit Inventory shall mean all finished goods Inventory,
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which is in overseas transit to one of the Company's locations, and which (a)
has been paid for and is owned by such Company, (b) is fully insured, (c) is
subject to a first priority security interest in and lien upon such goods in
favor of CIT (except for any possessory lien upon such goods in the possession
of a freight carrier or shipping company securing only the freight charges for
the transportation of such goods to such Company), (d) is evidenced or
deliverable pursuant to documents, notices, instruments, statements and bills of
lading that are satisfactory to CIT in its sole discretion and have been
delivered to CIT or an agent acting on its behalf, and (e) is otherwise deemed
to be "Eligible Inventory" hereunder.
Eligible Inventory shall mean the gross amount of the Companies'
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Inventory that is subject to a valid, exclusive, first priority and fully
perfected security interest in favor of CIT and which conforms to the warranties
contained herein and which, at all times continues to be acceptable to CIT in
the exercise of its reasonable business judgment, including, without limitation,
Eligible In-Transit Inventory, less, without duplication, (a) all
work-in-process, (b) all supplies (other than raw materials), (c) as to Ronson,
RAI and RCPC, all Inventory not present in the United States of America, and as
to Ronson Canada, all Inventory not present in Canada, (d) all Inventory
returned or rejected by such Company's' customers (other than goods that are
undamaged and resalable in the normal course of business) and goods to be
returned to such Company's suppliers, (e) all Inventory in transit (other than
Eligible In-Transit Inventory) or in the possession of a warehouseman, bailee,
third party processor, or other third party, unless such warehouseman, bailee or
third party has executed a notice of security interest agreement (in form and
substance satisfactory to CIT), and (f) the amount of such other reserves
against Inventory as CIT deems necessary in the exercise of its reasonable
business judgment, including, without limitation, reserves for special order,
licensed or private label goods, discontinued, slow-moving and obsolete
Inventory, market value declines, xxxx and hold (deferred shipment), consignment
sales, shrinkage and any applicable customs, freight, duties and Taxes.
Equipment shall mean all of each Company's present and hereafter
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acquired equipment (as defined in the UCC) including, without limitation, all
machinery, equipment, rolling stock, furnishings and fixtures, and all
additions, substitutions and replacements thereof, wherever located, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto and all Proceeds of any of the foregoing.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
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as amended from time to time, and the rules and regulations promulgated
thereunder from time to time.
Event(s) of Default shall have the meaning given to such term in
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Section 10.1 of this Financing Agreement.
Exchange Rate shall mean the prevailing spot rate of exchange of JP
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Xxxxxx Xxxxx Bank or, if such rate is not available from XX Xxxxxx Xxxxx Bank,
or such other bank as Agent may reasonably select for the purpose of conversion
of one currency to another, at or around 11:00 a.m. New York City time, on the
date on which any such conversion of currency is to be made under this
Agreement.
Financing Agreement shall mean this Financing Agreement and all
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exhibits and schedules attached or otherwise identified hereto, as the same may
be amended, modified, restated or supplemented from time to time.
Fixed Charge Coverage Ratio shall mean, for any period, the quotient
----------------------------
(expressed as a ratio) obtained by dividing (a) EBITDA of the Companies on a
consolidated basis for such period by (b) Fixed Charges of the Companies on a
consolidated basis for such period.
6
Fixed Charges shall mean, for any period, the sum of (a) all interest
-------------
obligations (including the interest component of Capital Leases) of the
Companies on a consolidated basis paid or due during such period, (b) the amount
of all scheduled fees paid to CIT during such period, (c) the amount of
principal repaid or scheduled to be repaid on the Term Loans and other
Indebtedness of the Companies on a consolidated basis (other than the Revolving
Loans) during such period, (d) unfinanced Capital Expenditures (other than
Qualified Hangar Construction Expenses), as incurred by the Companies on a
consolidated basis during such period, (e) all federal, state and local income
and capital tax expenses (other than on account of the Ronson Tax Lien) due and
payable by the Companies on a consolidated basis during such period, and (f) the
amount of all distributions or dividends, or the purchase, redemption or other
acquisition of equity interests by Ronson, for cash in an amount during any
fiscal year in an amount not to exceed $200,000 for such fiscal year, provided,
however, that no Default or Event of Default shall have occurred or would occur
or result from the making of any such distribution.
Funds Administrator shall mean Ronson Corporation., in its capacity as
-------------------
the borrowing agent and loan funds administrator for itself and the other
Companies under this Financing Agreement.
GAAP shall mean generally accepted accounting principles in the United
----
States of America as in effect from time to time and for the period as to which
such accounting principles are to apply.
General Intangibles shall mean all of each Company's present and
--------------------
hereafter acquired general intangibles (as defined in the UCC), and shall
include, without limitation, all present and future right, title and interest in
and to: (a) all Trademarks, (b) Patents, utility models, industrial models, and
designs, (c) Copyrights, (d) trade secrets, (e) licenses, permits and
franchises, (f) any other forms of intellectual property, (g) all customer
lists, distribution agreements, supply agreements, blueprints, indemnification
rights and tax refunds, (h) all monies and claims for monies now or hereafter
due and payable in connection with the foregoing, including, without limitation,
payments for infringement and royalties arising from any licensing agreement
between any Company and any licensee of any of such Company's General
Intangibles, and (i) all Proceeds of any of the foregoing.
Goods shall mean all present and hereafter acquired "Goods", as defined
-----
in the UCC, and all Proceeds thereof.
Guaranteed Obligations shall mean any and all obligations of a
-----------------------
Guarantor under any Guaranty executed and delivered to CIT by such Guarantor.
Guaranty(ies) shall mean each and all of the guaranty agreements
-------------
executed and delivered to CIT by Guarantors.
Guarantors shall mean the Limited Guarantor, Ronson Hydraulics and any
----------
future guarantor of all or any part of the Obligations.
Indebtedness shall mean, without duplication, with respect to any
------------
Person, all liabilities and obligations, whether or not contingent, (a) in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (other than an account payable to a trade
creditor incurred in the ordinary course of business of such Person and payable
in accordance with customary trade practices); (c) representing obligations as
lessee under leases which have been, or should be, in accordance with GAAP
recorded as Capital Leases; (d) any contractual obligation, contingent or
otherwise, of such Person to pay or be liable for the payment of any
indebtedness described in this definition of another Person, including, without
limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof, or to maintain solvency, assets, level of income,
or other financial condition; (e) with respect to redeemable stock and
redemption or repurchase obligations under any capital stock or other equity
securities issued by such Person; (f) with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker's acceptances, drafts or
similar documents or instruments issued for such Person's account; (g) in
respect of indebtedness of another Person for borrowed money or indebtedness of
another Person otherwise described in this definition which is secured by any
consensual lien, security interest, collateral assignment, conditional sale,
mortgage, deed of trust, or other encumbrance on any asset of such Person,
whether or not such obligations, liabilities or indebtedness are assumed by or
7
are a personal liability of such Person, all as of such time; (h) arising under
swap agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in interest
rates or currency or commodity values; (i) of any partnership or joint venture
in which such Person is a general partner or a joint venturer to the extent such
Person is liable therefor as a result of such Person's ownership interest in
such entity, except to the extent that the terms of such indebtedness expressly
provide that such Person is not liable therefor or such Person has no liability
therefor as a matter of law; and (j) relating to the principal and interest
portions of all rental obligations of such Person under any synthetic lease or
similar off-balance sheet financing where such transaction is considered to be
borrowed money for tax purposes but is classified as an operating lease in
accordance with GAAP.
Indemnified Party shall have the meaning given to such term in Section
------------------
10.4 of this Financing Agreement.
Initial Additional Term Loan shall mean the term loan in the principal
-----------------------------
amount of $750,000 made by CIT to Ronson, RCPC and RAI, jointly and severally,
on or about the Closing Date on the terms and conditions set forth in Section
4.2 of this Financing Agreement
Initial Term Loan shall mean the term loan in the principal amount of
-----------------
$195,000 made by CIT to Ronson, RCPC and RAI, jointly and severally, on or about
the Closing Date on the terms and conditions set forth in Section 4.2 of this
Financing Agreement.
Inventory shall mean all of each Company's present and hereafter
---------
acquired inventory (as defined in the UCC) including, without limitation, all
merchandise and inventory in all stages of production (from raw materials
through work-in-process to finished goods), and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping of the
foregoing, and all Proceeds of any of the foregoing.
Investment Property shall mean all of each Company's present and
--------------------
hereafter acquired "Investment Property", as defined in the UCC, together with
all stock and other equity interests in the Companies' subsidiaries, and all
Proceeds thereof.
Issuing Bank shall mean any bank issuing a Letter of Credit for a
-------------
Company.
Letters of Credit shall mean all letters of credit issued for or on
------------------
behalf of a Company with the assistance of CIT by an Issuing Bank in accordance
with Section 5 hereof.
Letter of Credit Guaranty shall mean any guaranty or similar agreement
-------------------------
delivered by CIT to an Issuing Bank of a Company's reimbursement obligation
under such Issuing Bank's reimbursement agreement, application for letter of
credit or other like document.
Letter of Credit Guaranty Fee shall mean the fee that CIT may charge
-------------------------------
the Companies under Section 8.3(a) of this Financing Agreement for issuing a
Letter of Credit Guaranty or otherwise assisting the Companies in obtaining
Letters of Credit.
Letter of Credit Sub-Line shall mean the commitment of CIT to assist
--------------------------
Ronson, RAI and RCPC in obtaining Letters of Credit in an aggregate amount of up
to $500,000.
Limited Guarantor shall mean Xxxxx X. Xxxxxxx XX in the limited
------------------
capacity set forth in his Guaranty.
Line of Credit shall mean the commitment of CIT in an aggregate amount
--------------
equal to $3,945,000 to (a) make Revolving Loans pursuant to Section 3 of this
Financing Agreement, (b) assist any Company in opening Letters of Credit
pursuant to Section 5 of this Financing Agreement and (c) make the Term Loans
pursuant to Section 4 of this Financing Agreement,.
Line of Credit Fee shall mean, for any month, the product obtained by
------------------
multiplying (a) (i) the amount of the Revolving Line of Credit minus (ii) the
average daily principal balance of Revolving Loans and the average daily
8
undrawn amount of Letters of Credit outstanding during such month, times (b) one
quarter of one percent (0.25%) per annum for the number of days in said month.
Loan Documents shall mean this Financing Agreement, the Promissory
---------------
Notes, the Guaranties, the other closing documents executed by the Companies or
the Guarantors, and any other ancillary loan and security agreements executed by
the Companies or the Guarantors from time to time in connection with this
Financing Agreement, all as may be renewed, amended, restated or supplemented
from time to time.
Loan Facility Fee shall mean the fee payable to CIT in accordance with,
-----------------
and pursuant to, the provisions of Section 8.6 of this Financing Agreement.
Material Adverse Effect shall mean a material adverse effect on either
------------------------
(a) the business, condition (financial or otherwise), operations, performance,
properties or prospects of any Company, (b) the ability of any Company to
perform its obligations under this Financing Agreement or any other Loan
Document, or to enforce its rights against account debtors of such Company, (c)
the value of the Collateral or (d) the ability of CIT and/or the Lenders to
enforce the Obligations or its rights and remedies under this Financing
Agreement or any of the other Loan Documents.
Minority Ronson Canada Interest shall mean the interest of Ronson in
---------------------------------
thirty-four percent (34%) of the shares of Ronson Canada.
Net Availability shall mean, as to any Company, at any time, the amount
----------------
by which (a) the Borrowing Base of such Company at such time exceeds (b) the sum
at such time of (i) the principal amount of all outstanding Revolving Loans of
such Company, plus (ii) the undrawn amount of all outstanding Letters of Credit
issued on behalf of such Company.
Net Orderly Liquidation Value shall mean, at any time, the aggregate
-------------------------------
value, expressed as a percentage of cost, of the Companies' Inventory at such
time in an orderly liquidation, taking into account all costs, fees and expenses
estimated to be incurred by CIT in connection with such liquidation, as
determined by CIT, based upon the most recent appraisal of the Companies'
Inventory conducted by an independent appraiser satisfactory to CIT in all
respects, including, without limitation, the form, scope and methodology
pursuant to which such appraiser conducts such appraisal, and such other factors
as CIT may deem appropriate in the exercise of its reasonable business judgment.
Obligations shall mean: (a) all loans, advances and other extensions of
-----------
credit made by CIT and/or Lenders to the Companies (or any of them) or to others
for the Companies' account (including, without limitation, all Revolving Loans,
all Term Loans and all obligations of CIT under Letter of Credit Guaranties);
(b) any and all other indebtedness, obligations and liabilities which may be
owed by the Companies (or any of them) to CIT and/or the Lenders and arising out
of, or incurred in connection with, this Financing Agreement or any of the other
Loan Documents (including all Out-of-Pocket Expenses and any applicable
Documentation Fees), whether (i) now in existence or incurred by the Companies
(or any of them) from time to time hereafter, (ii) secured by pledge, lien upon
or security interest in any Company's assets or property or the assets or
property of any other person, firm, entity or corporation, (iii) such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect, or (iv) the Companies are liable to CIT and/or the Lenders
for such indebtedness as principal, surety, endorser, guarantor or otherwise;
(c) all indebtedness, obligations and liabilities owed by the Companies (or any
of them) to CIT and/or the Lenders under any other agreement or arrangement now
or hereafter entered into between the Companies (or any of them), on the one
hand, and CIT and/or the Lenders, on the other hand, whether or not such
agreement or arrangement relates to the transactions contemplated by this
Financing Agreement; (d) indebtedness, obligations and liabilities incurred by,
or imposed on, CIT and/or the Lenders as a result of environmental claims
relating to any Company's operations, premises or waste disposal practices or
disposal sites; (e) the Companies' liabilities to CIT and/or the Lenders as
maker or endorser on any promissory note or other instrument for the payment of
money; and (f) the Companies' liabilities to CIT and/or the Lenders under any
instrument of guaranty or indemnity, or arising under any guaranty, endorsement
or undertaking which CIT and/or the Lenders may make or issue to others for the
account of the Companies (or any of them), including any accommodations extended
by CIT with respect to applications for Letters of Credit, CIT's and/or the
Lenders' acceptance of drafts or CIT's and/or the Lenders' endorsement of notes
or other instruments for the Companies' account and benefit.
9
Operating Leases shall mean all leases of property (whether real,
-----------------
personal or mixed) other than Capital Leases.
Other Collateral shall mean all of the Companies': (a) present and
-----------------
hereafter established lockbox, blocked account and other deposit accounts
maintained with any bank or financial institution into which the proceeds of
Collateral are or may be deposited (including the Depository Accounts); (b) cash
and other monies and property in the possession or control of CIT (including
negative balances in the Revolving Loan Account and cash collateral held by CIT
pursuant to this Financing Agreement); (c) books, records, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
credit files and other data relating to the Collateral or any account debtor,
together with tapes, disks and related data processing software at any time
evidencing or containing information relating to any of the Collateral described
herein or otherwise necessary or helpful in the collection thereof or
realization thereon; and (d) all Proceeds of any of the foregoing.
Out-of-Pocket Expenses shall mean all of CIT's and/or the Lenders'
-----------------------
present and future costs, fees and expenses incurred in connection with this
Financing Agreement and the other Loan Documents, including, without limitation,
(a) the cost of lien searches (including tax lien and judgment lien searches),
pending litigation searches and similar items, (b) fees and taxes imposed in
connection with the filing of any financing statements or other personal
property security documents; (c) all costs and expenses incurred by CIT and/or
the Lenders in opening and maintaining the Depository Accounts and any related
lockboxes, depositing checks, and receiving and transferring funds (including
charges imposed on CIT and/or the Lenders for "insufficient funds" and the
return of deposited checks); (d) any amounts paid by, incurred by or charged to
CIT by an Issuing Bank under any Letter of Credit or the reimbursement agreement
relating thereto, any application for Letter of Credit, Letter of Credit
Guaranty or other like document which pertains either directly or indirectly to
Letters of Credit, and CIT's standard fees relating to the Letters of Credit and
any drafts thereunder; (e) title insurance premiums, real estate survey costs,
note taxes, intangible taxes and mortgage or recording taxes and fees; (f) all
appraisal fees and expenses payable by the Companies hereunder, and all costs,
fees and expenses incurred by CIT and/or the Lenders in connection with any
action taken under Section 7.2(a) hereof, including reasonable travel, meal and
lodging expenses of CIT and/or the Lenders personnel; (g) all costs that CIT
and/or the Lenders may incur to maintain the Required Insurance, and all
reasonable costs, fees and expenses incurred by CIT and/or the Lenders in
connection with the collection of Casualty Proceeds and the monitoring of any
repair or restoration of any Real Estate; (h) all reasonable costs, fees,
expenses and disbursements of outside counsel hired by CIT and/or the Lenders to
consummate the transactions contemplated by this Financing Agreement (including
the documentation and negotiation this Financing Agreement, the other Loan
Documents and all amendments, supplements and restatements thereto or thereof),
and to advise CIT and/or the Lenders as to matters relating to the transactions
contemplated hereby; (i) all costs, fees and expenses incurred by CIT and/or the
Lenders in connection with any action taken under Section 10.3 hereof; and (j)
without duplication, all costs, fees and expenses incurred by CIT and/or the
Lenders in connection with the collection, liquidation, enforcement, protection
and defense of the Obligations, the Collateral and CIT's and/or the Lenders'
rights under this Financing Agreement, including, without limitation, all fees
and disbursements of in-house and outside counsel to CIT and/or the Lenders
incurred as a result of a workout, restructuring, reorganization, liquidation,
insolvency proceeding and in any appeals arising therefrom, whether incurred
before, during or after the termination of this Financing Agreement or the
commencement of any case with respect to the Companies (or any of them), any
Guarantor or any subsidiary of a Company (as the case may be) under the United
States Bankruptcy Code or any similar statute.
Overadvances shall mean, at any time, the amount by which (a) the sum
------------
at such time of the principal amount of all outstanding Revolving Loans plus the
undrawn amount of all outstanding Letters of Credit exceeds (b) the aggregate
Borrowing Base at such time (all as determined based on U.S. Dollar
Equivalents).
Patents shall mean all of the Companies' present and hereafter acquired
-------
patents, patent applications, registrations, all reissues and renewals thereof,
all licenses thereof, all inventions and improvements claimed thereunder, all
general intangible, intellectual property and other rights of any Company with
respect thereto, and all income, royalties and other Proceeds of the foregoing.
Permitted Distributions shall mean:
-----------------------
(a) dividends from a wholly-owned subsidiary of a Company to such
Company;
10
(b) dividends payable solely in stock or other equity interests of the
Companies;
(c) distributions or dividends by a Company to Ronson in an amount
sufficient to enable Ronson to pay such Company's reasonable share of
income or franchise Taxes owed by Ronson, due as a result of the filing
by Ronson of a consolidated, combined or unitary tax return in which
the operations of the Companies are included;
(d) distributions or dividends, or the purchase, redemption or other
acquisition of equity interests, for cash in an amount during any
fiscal year in an amount not to exceed $200,000 for such fiscal year,
provided, however, that no Default or Event of Default shall have
occurred or would occur as a result of or after giving effect to any
such distribution; and
(e) the payment of management fees by the other Companies to Ronson in
an aggregate amount not to exceed $2,750,000 for the fiscal year ended
2006, and for each fiscal year thereafter, an amount not greater than
10% more than the maximum amount permitted hereunder for the
immediately preceding fiscal year.
Permitted Encumbrances shall mean: (a) liens existing on the Closing
-----------------------
Date on specific items of Equipment as set forth on Schedule 1.1(a) attached
hereto; (b) Purchase Money Liens; (c) statutory liens of landlords and liens of
carriers, warehousemen, bailees, mechanics, materialmen and other like liens
imposed by law, created in the ordinary course of business and securing amounts
not yet due (or which are being contested in good faith, by appropriate
proceedings or other appropriate actions which are sufficient to prevent
imminent foreclosure of such liens), and with respect to which adequate reserves
or other appropriate provisions are being maintained by the Companies in
accordance with GAAP; (d) deposits made (and the liens thereon) in the ordinary
course of business of any Company (including, without limitation, security
deposits for leases, indemnity bonds, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids,
contracts (other than for the repayment or guarantee of borrowed money or
purchase money obligations), statutory obligations and other similar obligations
arising as a result of progress payments under government contracts; (e) liens
granted to CIT and/or the Lenders by the Companies; (f) liens of judgment
creditors, provided that such liens do not exceed $50,000 in the aggregate at
any time (other than liens bonded or insured to the reasonable satisfaction of
CIT); (g) Permitted Tax Liens; (h) easements (including, without limitation,
reciprocal easement agreements and utility agreements), encroachments, minor
defects or irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate, if applicable,
and which in the aggregate (i) do not materially interfere with the occupation,
use or enjoyment by any Company of its business or property so encumbered and
(ii) in the reasonable business judgment of CIT, do not materially and adversely
affect the value of such Real Estate, (i) liens against the Real Property
Collateral, arising in connection with a Permitted Realty Financing; (j)
statutory, common law or contractual rights of set-off or liens on money coming
into possession of any depository or other financial institution in the ordinary
course of business; and (k) any lien renewing, or extending any lien permitted
by clauses (a) through (j) hereof.
Permitted Indebtedness shall mean: (a) current Indebtedness maturing in
----------------------
less than one year and incurred in the ordinary course of business for raw
materials, supplies, equipment, services, Taxes or labor; (b) Indebtedness
secured by Purchase Money Liens; (c) Indebtedness arising under the Letters of
Credit and this Financing Agreement; (d) deferred Taxes and other expenses
incurred in the ordinary course of business; (e) Subordinated Debt; (f)
Permitted Intercompany Loans; (g) Indebtedness arising in connection with a
Permitted Realty Financing, (h) other Indebtedness existing on the Closing Date
and set forth on Schedule 1.1(b) attached hereto, (i) guarantees of any Company
in respect of Indebtedness otherwise permitted hereunder; (j) loans and advances
to Ronson Hydraulics and Prometcor pursuant to and in accordance with Section
7.4(h)(ii)(w) hereof, and (k) obligations (contingent or otherwise) of any
Company under any swap transaction or similar transaction entered into in the
ordinary course of business and not for speculative purposes, consistent with
past practices.
Permitted Intercompany Loan shall mean a loan made by a Company to
-----------------------------
another Company, but only so long as (a) such loan is evidenced by a promissory
note, the original of which shall be delivered to CIT, and (b) the promissory
note evidencing such loan provides (in form and substance satisfactory to CIT)
that the repayment thereof is subordinated to the full and final payment of the
Obligations.
11
Permitted Realty Financing shall mean the incurrence of Indebtedness to
--------------------------
a third party institutional lender in the amount of at least $1,800,000, secured
only by a first lien and mortgage upon the Real Property Collateral, or any part
thereof, on terms and conditions reasonably satisfactory to CIT, provided that
(i) no Default that has not been cured or Event of Default that has not been
waived in writing by CIT has occurred, (ii) no Default or Event of Default would
occur as a result of the Permitted Realty Financing, and (iii) contemporaneously
with the consummation after the date hereof of the Permitted Realty Financing,
the proceeds of such Permitted Realty Financing are paid to CIT and applied
against the outstanding balance of the Companies' Revolving Line of Credit.
Permitted Tax Liens shall mean (a) liens existing on the Closing Date
--------------------
as set forth on Schedule 1.1(c) attached hereto; and (b) liens for Taxes not due
and payable and liens for Taxes that any Company is contesting in good faith, by
appropriate proceedings which are sufficient to prevent imminent foreclosure of
such liens, and with respect to which adequate reserves are being maintained by
such Company in accordance with GAAP; provided that in either case under this
clause (b), such liens (i) are not filed of record in any public office, (ii)
other than with respect to Real Estate, are not senior in priority to the liens
granted by any such Company to CIT, or (iii) do not secure taxes owed to the
United States of America (or any department or agency thereof) or any State or
State authority, if applicable State law provides for the priority of tax liens
in a manner similar to the laws of the United States of America.
Person shall mean any individual, sole proprietorship, partnership,
------
corporation, limited liability company, limited liability partnership, business
trust, unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or political
subdivision thereof.
PPSA shall mean the Personal Property Security Act as in effect in the
----
Province of Ontario or any other Canadian Federal or Provincial statute
pertaining to the granting, perfecting, priority or ranking of security
interests, liens, hypothecs on personal property, and any successor statutes,
together with any regulations thereunder, in each case as in effect from time to
time. References to sections of the PPSA shall be construed to also refer to any
successor sections.
Prepayment Premium shall mean an amount equal to the product obtained
-------------------
by multiplying the principal amount of the portion of the Initial Term Loan
prepaid (irrespective of whether such prepayment is a voluntary prepayment by
the Companies (or any of them) or a mandatory prepayment following an Event of
Default (other than mandatory prepayments from Surplus Cash as contemplated by
this Financing Agreement) as a result of which the credit facilities under this
Financing Agreement and/or this Financing Agreement are terminated as
contemplated by Section 10.2 hereof (whether automatically or by CIT)) by (i)
two percent (2%) if such prepayment occurs on or before the first anniversary of
the Closing Date, (ii) one percent (1%) if such prepayment occurs after the
first anniversary of the Closing Date but on or before the second anniversary of
the Closing Date, and (iii) one-half percent (0.5%) if such prepayment occurs
after second anniversary of the Closing Date but prior to the date which is ten
(10) Business Days prior to the initial or any subsequent Termination Date. For
purpose of clarity, no Prepayment Premium shall apply to the prepayment of all
or any portion of the Initial Additional Term Loan.
Priority Payables shall mean, as to Ronson Canada at any time, (i) the
------------------
full amount of the liabilities of Ronson Canada at such time which (1) have a
trust imposed to provide for payment or a security interest, pledge, lien,
hypothec or charge ranking or capable of ranking senior to or pari passu with
security interests, liens, hypothecs or charges securing the Obligations on any
of the Accounts or Inventory of Ronson Canada under Federal, Provincial,
Territorial, county, district, municipal, or local law in Canada or (2) have a
right imposed to provide for payment ranking or capable of ranking senior to or
pari passu with the Obligations under local or national law, regulation or
directive, including, but not limited to, claims for unremitted and/or
accelerated rents, taxes, wages, withholdings taxes, VAT and other amounts
payable to an insolvency administrator, employee withholdings or deductions and
vacation pay, workers' compensation obligations, government royalties or pension
fund obligations in each case to the extent such trust, or security interest,
lien, hypothec or charge has been or may be imposed, and (ii) the amount equal
to the percentage applicable to Inventory in the calculation of the Borrowing
Base of Ronson Canada multiplied by the aggregate value of the Eligible
Inventory which CIT, in good faith, considers is or may be subject to retention
of title by a supplier or a right of a supplier to recover possession thereof
under Federal, Provincial, Territorial, county, district, municipal, or local
law in Canada, where such supplier's right has priority over the security
interests, liens, hypothecs or charges securing the Obligations,
12
including, without limitation, Eligible Inventory subject to a right of a
supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and
Insolvency Act (Canada) or any applicable laws granting revendication or similar
rights to unpaid suppliers or any similar laws of Canada or any other applicable
jurisdiction (provided, that, to the extent Inventory has been identified and
has been excluded from Eligible Inventory, the amount owing to the supplier
shall not be considered a Priority Payable).
Proceeds shall have the meaning given to such term in the UCC,
--------
including, without limitation, all Casualty Proceeds.
Prometcor shall mean Prometcor, Inc., a New Jersey corporation.
---------
Promissory Notes shall mean the notes in the form of Exhibit A attached
----------------
hereto, delivered by the Companies (or any of them) to CIT to evidence the Term
Loan(s).
Purchase Money Liens shall mean liens on any item of Equipment acquired
--------------------
by a Company after the date of this Financing Agreement, provided that (a) each
such lien shall attach only to the Equipment acquired, (b) a description of the
Equipment so acquired is furnished by such Company to CIT, and (c) the
indebtedness incurred by the Companies in connection with such acquisitions
shall not exceed $50,000 in the aggregate in any fiscal year of the Companies.
Qualified Hangar Construction Expenses shall mean all costs and
-----------------------------------------
expenses incurred by one or more of the Companies in connection with the
construction of and improvements to the premises located at the Trenton-Xxxxxx
County Airport consisting of a hangar facility and ancillary improvements
covering approximately 19,200 square feet of space, which costs and expenses
shall not exceed $2,250,000 in the aggregate during the term of this Financing
Agreement.
Real Estate shall mean all of the Companies' present and future fee,
-----------
leasehold and appurtenant and other interests in real property, including,
without limitation, the real property owned by the Companies as of the Closing
Date and described on Schedule 1.1(d) attached hereto, and the improvements
thereto (to the extent constituting an interest in real property) and all
fixtures attached to or installed in or upon such improvements, and all leases
and rights of use and occupancy and all rent and other payments with respect to
the foregoing.
Real Property Collateral shall mean all Real Estate (other than the
--------------------------
Airport Lease), including, without limitation, (i) that certain real property,
together with all improvements thereon owned in fee by RCPC and located at 0
Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx, and (ii) that certain real property,
together with all improvements thereon owned in fee by RCPC and located at 0
Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx, together with all Proceeds therefrom,
including, without limitation, the collateral securing the obligations incurred
in connection with the Permitted Realty Financing.
Regulatory Change shall mean any change after the Closing Date in
------------------
United States federal, state or foreign law or regulation (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System), or the adoption or making after the Closing Date of any interpretation,
directive or request applying to a class of lenders including CIT of or under
any United States federal, state or foreign law or regulation, in each case
whether or not having the force of law and whether or not failure to comply
therewith would be unlawful.
Required Insurance shall have the meaning provided for in Section
-------------------
7.2(c) of this Financing Agreement.
Revolving Line of Credit shall mean the commitment of CIT to make
--------------------------
Revolving Loans pursuant to Section 3 of this Financing Agreement and assist
Ronson, RAI and RCPC in opening Letters of Credit pursuant to Section 5 of this
Financing, in an aggregate amount equal to $3,000,000; except that Revolving
Loans to Ronson Canada shall be limited to $600,000 (or the Canadian Dollar
Equivalent thereof).
Revolving Loan Account shall mean the account on CIT's books, in each
-----------------------
Company's name , in which each Company will be charged with all applicable
Obligations under this Financing Agreement when due or incurred by CIT, whether
consisting of Revolving Loans, Term Loans or other Obligations.
13
Revolving Loans shall mean the loans and advances made from time to
----------------
time to or for the account of each of the Companies by CIT pursuant to Section 3
of this Financing Agreement.
Ronson Canada Obligations shall mean: (a) all loans, advances and other
-------------------------
extensions of credit made by CIT and/or Lenders to Ronson Canada or to others
for Ronson Canada's account (including, without limitation, all Revolving Loans
and all obligations of CIT under Letter of Credit Guaranties for the benefit of
Ronson Canada); (b) any and all other indebtedness, obligations and liabilities
which may be owed by Ronson Canada to CIT and/or the Lenders and arising out of,
or incurred in connection with, this Financing Agreement or any of the other
Loan Documents (including all Out-of-Pocket Expenses attributable to the Ronson
Canada Obligations and any applicable Documentation Fees attributable to the
Ronson Canada Obligations), whether (i) now in existence or incurred by Ronson
Canada from time to time hereafter, (ii) secured by pledge, lien upon or
security interest in Ronson Canada's assets or property or the assets or
property of any other person, firm, entity or corporation, (iii) such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect, or (iv) Ronson Canada is liable to CIT and/or the Lenders
for such indebtedness as principal, surety, endorser, guarantor or otherwise;
(c) all indebtedness, obligations and liabilities owed by Ronson Canada to CIT
and/or the Lenders under any other agreement or arrangement now or hereafter
entered into between Ronson Canada, on the one hand, and CIT and/or the Lenders,
on the other hand, whether or not such agreement or arrangement relates to the
transactions contemplated by this Financing Agreement; (d) indebtedness,
obligations and liabilities incurred by, or imposed on, CIT and/or the Lenders
as a result of environmental claims relating to any of Ronson Canada's
operations, premises or waste disposal practices or disposal sites; (e) Ronson
Canada's liabilities to CIT and/or the Lenders as maker or endorser on any
promissory note or other instrument for the payment of money; and (f) Ronson
Canada's liabilities to CIT and/or the Lenders under any instrument of guaranty
or indemnity, or arising under any guaranty, endorsement or undertaking which
CIT and/or the Lenders may make or issue to others for the account of Ronson
Canada, including any accommodations extended by CIT with respect to
applications for Letters of Credit, CIT's and/or the Lenders' acceptance of
drafts or CIT's and/or the Lenders' endorsement of notes or other instruments
for Ronson Canada's account and benefit.
Ronson Hydraulics shall mean Ronson Hydraulic Units Corporation, a
------------------
North Carolina corporation.
Ronson Tax Lien shall mean that certain lien of the State of New
----------------
Jersey, Division of Taxation, for unpaid taxes, penalties and other charges,
against Ronson, recorded on May 24, 2006 with the Superior Court of New Jersey,
Law Division, County of Somerset, at Book 5897, Page 1134-1136, Instrument No.
2006033607.
Ronson Tax Lien Reserve shall mean that certain Availability Reserve in
-----------------------
an amount of not less than the sum of the outstanding balance due at any time of
the Ronson Tax Lien.
Solvent shall mean, with respect to any Company on a particular date,
-------
that on such date (a) the fair value of the tangible and intangible property of
such Company is greater than the total amount of liabilities, including
contingent liabilities, of such Company; (b) the present fair salable value of
the tangible and intangible assets of such Company is not less than the amount
that will be required to pay the probable liability of such Company on its debts
as they become absolute and mature; (c) such Company does not intend to, nor
does it believe (or reasonably should have believed) that it will, incur debts
or liabilities beyond its ability to pay as such debts and liabilities mature;
and (d) such Company is not engaged in a business or transaction, and is not
about to engage in a business or transaction, for which such Company's property
would constitute an unreasonably small capital or would be considered
unreasonably small in relation to such business or transaction. The amount of
contingent liabilities (such as litigation, guarantees and pension plan
liabilities) at any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the net present
value of the amount which can be reasonably be expected to become an actual or
matured liability.
Specified Intellectual Property shall mean all of Ronson's right title
--------------------------------
and interest in and to the registered trademark "Ronson" under applicable United
States trademark law and under common law, together with all of the Companies'
right, title and interest in and to Trademarks, Copyrights, Patents and other
proprietary and intellectual property rights, and all Proceeds of any of the
foregoing.
14
Subordinated Debt shall mean all indebtedness of Ronson Hydraulics and
------------------
the Companies (and the note(s) evidencing such indebtedness) that is
subordinated to the prior payment and satisfaction of the Obligations pursuant
to a Subordination Agreement.
Subordination Agreement shall mean (a) an agreement (in form and
------------------------
substance satisfactory to CIT) among one or more of the Companies, a
subordinating creditor and CIT, pursuant to which Subordinated Debt is
subordinated to the prior payment and satisfaction of the Obligations, and (b)
any note, indenture, note purchase agreement or similar instrument or agreement,
pursuant to which the indebtedness evidenced thereby or issued thereunder is
subordinated to the Obligations by the express terms of such note, indenture,
note purchase agreement or similar instrument or agreement.
Surplus Cash shall mean for any fiscal year of the Companies, the
-------------
excess of the EBITDA of the Companies for such fiscal year minus the Fixed
Charges of the Companies for such fiscal year.
Taxes shall mean all federal, state, provincial, municipal and other
-----
governmental taxes, levies, charges, claims and assessments which are or may be
owed or collected by the Companies with respect to their business, operations,
Collateral or otherwise.
Term Loans shall mean collectively the Initial Term Loan, the Initial
----------
Additional Term Loan and any additional term loans.
Termination Date shall mean the date occurring three (3) years from the
----------------
Closing Date and the same date in every year thereafter.
Trade Accounts Receivable shall mean that portion of each Company's
---------------------------
Accounts which arises from the sale of Inventory or the rendition of services in
the ordinary course of such Company's business.
Trademarks shall mean all of the Companies' present and hereafter
----------
acquired trademarks, trademark registrations, recordings, applications,
tradenames, trade styles, corporate names, business names, service marks, logos
and any other designs or sources of business identities, prints and labels (on
which any of the foregoing may appear), all reissues and renewals thereof, all
licenses thereof, all other general intangible, intellectual property and other
rights pertaining to any of the foregoing, together with the goodwill associated
therewith, and all income, royalties and other Proceeds of any of the foregoing.
UCC shall mean the Uniform Commercial Code as the same may be amended
---
and in effect from time to time in the State of New York; provided, however, in
the event that, by reason of mandatory provisions of law, the attachment,
perfection or priority of CIT's security interest in any Collateral is governed
by the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the state of New York, or if CIT's security interest in any Collateral is
governed by the PPSA, then the term "UCC" shall mean the Uniform Commercial Code
(including the PPSA) as enacted and in effect in such other jurisdiction solely
for the purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
U.S. Dollar Equivalent shall mean at any time (a) as to any amount
------------------------
denominated in U.S. Dollars, the amount thereof at such time, and (b) as to any
amount denominated in any other currency, the equivalent amount in U.S. Dollars
calculated by CIT in good faith at such time using the Exchange Rate in effect
on the Business Day of determination.
U.S. Prime Rate shall mean a fluctuating interest rate per annum equal
---------------
to at all times to the rate of interest announced publicly from time-to-time by
publication as the Bloomberg PRIME Screen as its U.S. prime rate; provided that
such rate is not necessarily the best rate offered by Canadian Lender to its
customers, and should CIT be unable to determine such rate, such other
indication of the prevailing prime rate of interest as may reasonably be chosen
by CIT.
Working Day shall mean any Business Day on which dealings in foreign
-----------
currencies and exchanges between banks may be transacted.
15
SECTION 2. Conditions Precedent to Initial Funding.
---------------------------------------
The obligation of CIT to make the initial loans and to assist the
Companies in obtaining initial Letters of Credit hereunder, immediately prior to
or concurrently with the making of such loans or the issuance of such Letters of
Credit, is subject to the satisfaction or waiver in writing by CIT of the
following conditions precedent:
(a) Lien Searches. CIT shall have received tax lien, judgment lien,
--------------
litigation, UCC and PPSA searches from all jurisdictions reasonably required by
CIT, and such searches shall verify that CIT has a first priority security
interest in the Collateral, subject to Permitted Encumbrances.
(b) Casualty Insurance. Each Company shall have delivered to CIT
-------------------
evidence satisfactory to CIT that all Required Insurance is in full force and
effect, and CIT shall have confirmed that CIT has been named as a loss payee or
additional insured with respect to the Required Insurance in a manner
satisfactory to CIT.
(c) UCC Filings. All UCC financing statements and similar documents
-----------
required to be filed in order to create in favor of CIT a first priority and
exclusive perfected security interest in the Collateral and all assets of the
Guarantors (to the extent that such a security interest may be perfected by a
filing under the UCC or applicable law), shall have been properly filed in each
office in each jurisdiction required (provided that, in the case of the Limited
Guarantor, such security interest shall relate solely to the assets pledged
thereby). CIT shall have received (i) acknowledgement copies of all such filings
(or, in lieu thereof, CIT shall have received other evidence satisfactory to CIT
that all such filings have been made), and (ii) evidence that all necessary
filing fees, taxes and other expenses related to such filings have been paid in
full.
(d) Resolutions. CIT shall have received a copy of the resolutions of
-----------
the Board of Directors of each Company authorizing the execution, delivery and
performance of the Loan Documents to be executed by each Company, certified by
the Secretary or Assistant Secretary of each Company as of the date hereof,
together with a certificate of such Secretary or Assistant Secretary as to the
incumbency and signature of the officer(s) executing the Loan Documents on
behalf of each Company.
(e) Organizational Documents. CIT shall have received a copy of the
-------------------------
Certificate or Articles of Incorporation of each Company, certified by the
applicable authority in each Company's State of incorporation, and copies of the
by-laws (as amended through the date hereof) of each Company, certified by the
Secretary or an Assistant Secretary thereof.
(f) Officer's Certificate. CIT shall have received an executed
----------------------
Officer's Certificate for each Company, satisfactory in form and substance to
CIT, certifying that as of the Closing Date (i) the representations and
warranties contained herein are true and correct in all material respects, (ii)
each Company is in compliance with all of the terms and provisions set forth
herein and (iii) no Default or Event of Default has occurred.
(g) Appraisals. CIT shall have received and be satisfied with an
----------
appraisal of the Companies' Inventory conducted by an appraiser selected by CIT.
In addition, CIT shall have received appraisals of the Companies' fixed assets,
which appraisals shall be by an appraiser acceptable to CIT and shall indicate a
net orderly liquidation value of a minimum amount acceptable to CIT in its sole
discretion, with respect to the Equipment on which CIT has (or will have) a
first priority security interest. CIT hereby acknowledges that CIT is satisfied
with the results of the appraisals of (i) the Companies' Inventory dated on or
around May 11, 2006, and (ii) the Companies' fixed assets dated on or around
April 30, 2006, each of which was performed by HILCO, which appraiser is
acceptable to CIT.
(h) Disbursement Authorizations. The Companies shall have delivered to
---------------------------
CIT all information necessary for CIT to issue wire transfer instructions on
behalf of each Company for the initial and subsequent loans and/or advances to
be made under this Financing Agreement, including disbursement authorizations in
form acceptable to CIT.
(i) Examination & Verification; Net Availability; Projections. CIT
------------------------------------------------------------
shall have completed and be satisfied with an updated examination and
verification of the Trade Accounts Receivable, Inventory and books and
16
records of the Companies, and such examination shall indicate that (i) after
giving effect to all loans, advances and extensions of credit to be made at
closing, the Companies shall have opening aggregate Net Availability of not less
than $600,000 (with all of the Companies' aggregate debts, obligations and
accounts payable being within sixty (60) days of their stated due date or within
otherwise agreed-upon terms, and with all fees and expenses associated with
entering into the Line of Credit having been paid), and (ii) no change has
occurred since March 30, 2006 having a Material Adverse Effect. In addition, the
Companies shall have delivered to CIT, and CIT shall be satisfied with, balance
sheet, income statement, cash flows and Net Availability projections for the
Companies on a consolidated basis, after giving effect to the financing
arrangements contemplated herein, prepared on a monthly basis through December
31, 2006 and on a quarterly basis through December 31, 2007.
(j) Depository Accounts; Payment Direction. (i) The Companies or CIT
----------------------------------------
shall have established one or more Depository Accounts with respect to the
collection of Accounts and the deposit of proceeds of Collateral, and (ii) CIT,
the applicable Company and each depository bank shall have entered into a
Depository Account Control Agreement with respect to each Depository Account.
(k) Existing Credit Agreements. (i) The Companies' existing credit
----------------------------
agreements with Bank of America, N.A. and Canadian Imperial Bank of Commerce
shall be terminated, (ii) all loans and obligations of the Companies and the
Guarantors with respect thereto shall be paid or satisfied in full utilizing the
proceeds of the initial Revolving Loans and the initial Term Loans to be made
under this Financing Agreement, and (iii) all liens and security interests in
favor of Bank of America, N.A. and Canadian Imperial Bank of Commerce in
connection therewith shall be terminated and/or released upon such payment.
(l) Guaranty and Related Documents. The Guarantors shall have executed
------------------------------
and delivered to CIT (i) the Guaranties and all other agreements, certificates
and instruments required by CIT in connection therewith, and (ii) if applicable,
the items described in Sections 2.1(d), 2.1(e) and 2.1(m) hereof with respect to
the Guarantors.
(m) Opinions. Subject to the filing, priority and remedies provisions
--------
of the UCC, the provisions of the Bankruptcy Code, insolvency statutes or other
like laws, the equity powers of a court of law and such other matters as may be
agreed upon with CIT, counsel for the Companies and the Guarantors shall have
delivered to CIT opinion(s) satisfactory to CIT opining, inter alia, that each
Loan Document to which any Company or any Guarantor is a party is valid, binding
and enforceable in accordance with its terms, as applicable, and that the
execution, delivery and performance by each Company and each Guarantor of the
Loan Documents to which such person or entity is a party are (i) duly
authorized, (ii) do not violate any terms, provisions, representations or
covenants in the articles of incorporation, by-laws or other organizational
agreement of such Company or such Guarantor (other than the Limited Guarantor),
as the case may be, and (iii) to the best knowledge of such counsel, do not
violate any terms, provisions, representations or covenants in any loan
agreement, mortgage, deed of trust, note, security agreement, indenture or other
material contract to which any Company is a signatory, or by which any Company
or any Guarantor (or any Company's or any Guarantor's assets) are bound,
together with such other opinions reasonably requested by CIT.
(n) Legal Restraints/Litigation. As of the Closing Date, there shall be
---------------------------
no (x) injunction, writ or restraining order restraining or prohibiting the
consummation of the financing arrangements contemplated under this Financing
Agreement, or (y) suit, action, investigation or proceeding (judicial or
administrative) pending against any Company, any Guarantor, any subsidiary of
any Company or any of their assets, which, in the opinion of CIT, if adversely
determined, could have a Material Adverse Effect.
(o) Additional Documents. The Companies shall have executed and
---------------------
delivered to CIT the Loan Documents necessary to consummate the lending
arrangement contemplated by this Financing Agreement.
(p) Background Checks. CIT shall have received and be satisfied with
------------------
background checks on key managers and stockholders of each Company as CIT shall
designate.
(q) Landlord/Warehouseman/Bailee Waivers. CIT shall have received
-------------------------------------
executed waiver and subordination letters in form and substance satisfactory to
CIT from all third party landlords, warehouseman and bailees where Collateral is
located.
17
(r) Commitment Letter. Each Company shall have fully complied with all
-----------------
of the terms and conditions of the Commitment Letter.
(s) Pledge Agreement Each Company shall have executed and delivered to
-----------------
CIT a stock pledge agreement in form and substance satisfactory to CIT covering
all capital stock in such Company's subsidiaries owned by such Company (except
that the pledge by Ronson of its shares of Ronson Canada shall be limited to 66%
of such outstanding shares of Ronson Canada) together with all stock
certificates and duly executed stock powers (undated and in blank) with respect
thereto.
(t) Collateral Assignment of Airport Lease. RAI shall have executed and
--------------------------------------
delivered to CIT an executed collateral assignment of lease with respect to the
Airport Lease, in form and substance satisfactory to CIT.
(u) Subordinated Debt. CIT shall have received a Subordination
-------------------
Agreement executed by each holder of the Subordinated Debt (or the trustee or
agent for such holder).
Upon the execution of this Financing Agreement and the initial disbursement of
the initial loans hereunder, all of the above conditions precedent shall have
been deemed satisfied, except as the Companies and CIT shall otherwise agree in
a separate writing.
SECTION 3. Revolving Loans and Collections
-------------------------------
3.1 Funding Conditions and Procedures.
---------------------------------
(a) Amounts and Requests. Subject to the terms and conditions of this
--------------------
Financing Agreement, CIT agrees to make loans and advances to the Funds
Administrator on behalf of the Companies on a revolving basis (i.e. subject to
the limitations set forth herein, each Company, through the Funds Administrator,
may borrow, repay and reborrow Revolving Loans). In no event shall CIT have an
obligation to make a Revolving Loan to any Company, nor shall the Funds
Administrator or any Company be entitled to request or receive a Revolving Loan,
if (i) a Default or Event of Default shall have occurred and remain outstanding
on the date of request for such Revolving Loan or the date of the funding
thereof, (ii) the amount of such Revolving Loan, when added to the principal
amount of the Revolving Loans outstanding plus the undrawn amount of all Letters
of Credit on the date of the request therefor or the funding thereof, would
exceed the Revolving Line of Credit, or (iii) amount of such Revolving Loan
would exceed the Net Availability of the Companies on the date of the request
therefor or the funding thereof. Any request for a Revolving Loan (i) by or on
behalf of a Domestic Company must be received from the Funds Administrator by an
officer of CIT no later than 11:00 a.m., New York City time, on the Business Day
on which such Revolving Loan is required and (ii) by or on behalf of Ronson
Canada must be received from the Fund's Administrator by an officer of CIT no
later than 11:00 a.m. New York City time on the Canadian Business Day prior to
the Canadian Business Day on which such Revolving Loan is required. For purposes
of this Financing Agreement and notwithstanding anything herein or in any other
Loan Document to the contrary, (i) all Loans advanced to Ronson Canada (or to
the Funds Administrator on behalf of Ronson Canada and whether requested by
Ronson Canada or the Funds Administrator) shall be made by and accounted for on
the books of Canadian Lender (whether or not administered by CIT) and all
payments of interest thereon and repayments of principal thereof made by Ronson
Canada or on Ronson Canada's behalf by the Funds Administrator (whether remitted
directly to Canadian Lender or to CIT) shall be deemed made to and shall be
accounted for on the books of Canadian Lender, (ii) all requests for Loans by
Ronson Canada (or by the Funds Administrator on behalf of Ronson Canada) will be
denominated in either U.S. Dollars or Canadian Dollars, as requested by the
Funds Administrator, however all financial reports and financial summaries
provided by Ronson Canada to Lender will be denominated in U.S. Dollars, (iii)
all Loans advanced to the Companies, excluding Ronson Canada (or to the Funds
Administrator on behalf of any Company), will be advanced in U.S. Dollars and
all Loans advanced to Ronson Canada (or to the Funds Administrator on behalf of
Ronson Canada) whether advanced by CIT or by Canadian Lender, will be advanced
in either U.S. Dollars or Canadian Dollars, as requested by Ronson Canada (or
the Funds Administrator), (iv) all rights, powers and remedies of CIT under this
Financing Agreement or the other Loan Documents(including without limitation
those arising after an Event of Default), as they relate to Ronson Canada may,
in CIT's sole discretion, be delegated to and carried out and enforced by
Canadian Lender, (v) the amount of any Revolving Loan to be made to Ronson
Canada shall not exceed the Net Availability for
18
Ronson Canada on the date of the request therefor or the funding thereof, (vi)
the amount of the Revolving Loans to be made to Ronson Canada, when added to the
principal amount of the Revolving Loans outstanding to Ronson Canada plus the
undrawn amount of all Letters of Credit issued for the account of Ronson Canada
(if any) on the date of request therefor or the funding thereof, may not exceed
$600,000, and (vii) Ronson Canada shall be liable under this Financing Agreement
and the other Loan Documents for the Ronson Canada Obligations only.
(b) Phone and Electronic Loan Requests. The Companies hereby authorize
----------------------------------
CIT to make Revolving Loans to the Funds Administrator based upon a telephonic
or e-mail request (or, if permitted by CIT, based upon a request posted on CIT's
System) made by any officer or other employee of the Funds Administrator that
the Funds Administrator has authorized in writing to request Revolving Loans
hereunder, as reflected by CIT's records. Each telephonic, e-mail or posted
request by the Funds Administrator shall be irrevocable, and the Funds
Administrator agrees to confirm any such request for a Revolving Loan in a
writing approved by CIT and signed by such authorized officer or employee,
within one (1) Business Day of CIT's request for such confirmation. CIT shall
have the right to rely on any telephonic, e-mail or posted request for a
Revolving Loan made by anyone purporting to be an officer or other employee of
the Funds Administrator that the Funds Administrator has authorized in writing
to request Revolving Loans hereunder, without further investigation.
(c) Reaffirmation of Representations and Warranties. Except for the
-------------------------------------------------
representations and warranties set forth in Sections 6.8 and 6.9, all of the
representations and warranties made by the Companies in this Financing Agreement
shall be deemed to be remade by the Companies each time that the Funds
Administrator requests a Revolving Loan or a Letter of Credit under this
Financing Agreement, and each such request shall also constitute a
representation and warranty by the Companies that, after giving effect to the
requested Revolving Loan or Letter of Credit, no Default or Event of Default
shall have occurred and remain outstanding.
(d) Funds Administrator Appointment. Each Company hereby irrevocably
---------------------------------
appoints the Funds Administrator, as agent for such Company on its behalf, to
(i) request Revolving Loans from CIT, (ii) to give and receive notices under the
Loan Documents and (iii) take all other action which the Funds Administrator or
the Companies are permitted or required to take under this Financing Agreement.
(e) Foreign Currency Obligations. Each Company will make payments
------------------------------
relative to each Obligation in the currency (the "Original Currency") in which
such Company receives loans and advances. If such Company makes payments
relative to any Obligation to CIT in a currency (the "Other Currency") other
than the Original Currency (whether voluntarily or pursuant to an order or
judgment of a court or tribunal of any jurisdiction), such payment will
constitute a discharge of the liability of such Company hereunder in respect of
such Obligation only to the extent of the amount of the Original Currency which
CIT is able to purchase at New York, New York with the amount it receives on the
date of receipt. If the amount of the Original Currency which CIT is able to
purchase is less than the amount of such currency originally due to it in
respect to the relevant Obligation, such Company will indemnify and save CIT
harmless from and against any loss or damage arising as a result of such
deficiency. This indemnity will constitute an obligation separate and
independent from the other obligations contained in this Financing Agreement,
will give rise to a separate and independent cause of action, will apply
irrespective of any indulgence granted by CIT and will continue in full force
and effect notwithstanding any judgment or order in respect of any amount due
hereunder or under any judgment or order.
3.2 Handling of Proceeds of Collateral; Cash Dominion.
-------------------------------------------------
(a) Collection of Accounts and Other Proceeds. The Companies, at their
-----------------------------------------
expense, will enforce and collect payments and other amounts owing on all
Accounts in the ordinary course of the Companies' business subject to the terms
hereof. The Companies agree to direct their account debtors to send payments on
all Accounts directly to a lockbox associated with a Depository Account, and to
include on all of the Companies' invoices the address of such a lockbox as the
sole address for remittance of payment. Notwithstanding the foregoing, should
any Company ever receive any payment on an Account or other Proceeds of the sale
of Collateral, including checks, cash, receipts from credit card sales and
receipts, notes or other instruments or property with respect to any Collateral,
such Company agrees to hold such proceeds in trust for CIT, separate from such
Company's other property and funds, and to deposit such proceeds directly into a
Depository Account on or before the next Business Day after receipt by such
Company.
19
(b) Transfer of Funds from Depository Accounts. Funds remaining on
--------------------------------------------
deposit in a Depository Account shall be transferred to CIT's Bank Account (in
the case of the Domestic Companies) and to CIT's Canadian Bank Account (in the
case of Ronson Canada) on each Business Day (and in the case of Ronson Canada,
on each Canadian Business Day) in accordance with the terms and provisions of
the applicable Depository Account Control Agreement, and the Companies agree to
take all actions reasonably required by CIT or any bank at which a Depository
Account is maintained in order to effectuate the transfer of funds in this
manner. Subject to charges for Collection Days, all amounts received from a
Depository Account and any other Proceeds of the Collateral deposited into CIT's
Bank Account or CIT's Canadian Bank Account, as the case may be, will, for
purposes of calculating Net Availability and interest, be credited to the
respective Company's Revolving Loan Account on the date of deposit in CIT's Bank
Account or CIT's Canadian Bank Account, as the case may be. No checks, drafts or
other instruments received by CIT shall constitute final payment to CIT unless
and until such instruments have actually been collected.
(c) New Depository Accounts. Each Company agrees not to open any
-------------------------
lockbox or new bank account into which Proceeds of Collateral are to be
delivered or deposited unless concurrently with the opening of such lockbox
and/or bank account, CIT, such Company and the bank which will maintain such
lockbox or at which such account will be maintained, execute a Depository
Account Control Agreement with respect to such lockbox and/or related bank
account. Upon compliance with the terms set forth above, such lockbox and/or
bank account shall constitute a Depository Account for purposes of this
Financing Agreement.
(d) Credit Card Receipts. The Companies agree to direct all credit card
--------------------
processors handling proceeds of sale of Inventory to transfer all funds due to
such Companies pursuant to such arrangement directly to a Depository Account.
Promptly after the establishment of any credit card processing or depository
relationship, such Company agrees to notify CIT in writing of the establishment
of such relationship and shall cause the credit card processor to execute and
deliver to CIT an agreement in form and substance satisfactory to CIT, pursuant
to which the credit card processor agrees to deposit all sums due to the Company
pursuant to such arrangement directly to a Depository Account.
3.3 Collective Borrowing Arrangement; Revolving Loan Account.
--------------------------------------------------------
(a) Management of Borrowing Arrangements. The Companies have informed
-------------------------------------
CIT that: in order to increase the efficiency and productivity of each Company,
and to best utilize the borrowing powers of the Companies in the most effective
and cost efficient manner and to avoid adverse effects on the operating
efficiencies of each Company and the existing back office practices of the
Companies, each Company has requested that all Revolving Loans, Term Loans and
other advances be disbursed solely upon the request of the Funds Administrator
and to bank accounts in the name of the respective Companies, managed solely by
the Funds Administrator, it being the intent and desire of the Companies that
the Funds Administrator manage for the benefit of each Company the expenditure
and usage of such funds.
(b) Revolving Loan Account. CIT shall charge the applicable Company's
----------------------
Revolving Loan Account for all loans and advances made by CIT for the benefit of
such Company, as requested by the Funds Administrator or otherwise for any
Company's account, and for all any other Obligations of such Company, including
Out-of-Pocket Expenses, when due and payable hereunder. Subject to the
provisions of Section 3.5 below, CIT will credit the applicable Company's
Revolving Loan Account with all amounts received by CIT from each Depository
Account or from others for such Company's' account, including, as set forth
above, all amounts received by CIT in payment of Accounts, and such amounts will
be applied to payment of the Obligations of such Company in the order and manner
set forth herein. In no event shall prior recourse to any Account or other
security granted to or by the Companies be a prerequisite to CIT's right to
demand payment of any of the Obligations. In addition, the Companies agree that
CIT shall have no obligation whatsoever to perform in any respect any of the
Companies' contracts or obligations relating to the Accounts.
3.4 Repayment of Overadvances. If at any time (a) the sum of the
---------------------------
outstanding balance of Revolving Loans and undrawn amount of Letters of Credit
exceed the Revolving Line of Credit (all as determined based on U.S. Dollar
Equivalents), or (b) an Overadvance exists, the amount of such excess (in the
case of clause (a)) or the amount of the Overadvance (in the case of clause (b))
shall be immediately due and payable, unless CIT otherwise agrees in writing.
20
Should CIT for any reason honor requests for Overadvances, such Overadvances
shall be made in CIT's sole discretion and subject to any additional terms CIT
deems necessary.
3.5 Application of Proceeds of Collateral.
-------------------------------------
(a) Generally. Unless this Financing Agreement expressly provides
---------
otherwise, so long as no Event of Default shall have occurred and remain
outstanding, CIT agrees to apply (i) all Proceeds of a Company's Trade Accounts
Receivable to such Company's Revolving Loans, (ii) all Proceeds of all other
Collateral of the Domestic Companies, first to the last maturing installments of
principal of the Initial Additional Term Loan until fully repaid, and then to
the last maturing installments of principal of the Initial Term Loan (in order
of first to mature) until fully repaid, and (iii) any other payment received by
CIT with respect to the Obligations, in such order and manner as CIT shall elect
in the exercise of its reasonable business judgment. Subject to the terms of the
preceding sentence, so long as no Event of Default shall have occurred and
remain outstanding, if CIT receives Proceeds of Collateral or other payments
that exceed the outstanding principal amount of Revolving Loans, the Funds
Administrator may request, in writing, that CIT remit such excess to the Funds
Administrator.
(b) Application of Proceeds During an Event of Default. If an Event of
--------------------------------------------------
Default shall have occurred and remain outstanding, CIT may apply all Proceeds
of Collateral and all other payments received by CIT to the payment of the
Obligations in such manner and in such order as CIT may elect in its sole
discretion.
3.6 Monthly Statement. After the end of each month, CIT agrees to
------------------
prepare and make available to the Companies (by mail, facsimile, e-mail or
posting to CIT's System, as mutually agreed to by the Funds Administrator and
CIT), a statement showing the accounting for the charges, loans, advances and
other transactions occurring between CIT and the Companies and the Funds
Administrator during that month. Absent manifest error, each monthly statement
shall be deemed correct and binding upon each Company and the Funds
Administrator and shall constitute an account stated between the Companies and
the Funds Administrator and CIT unless CIT receives a written statement of
exception from the Companies or the Funds Administrator within thirty (30) days
of the date of such monthly statement.
3.7 Access to CIT's System. CIT shall provide to the Funds
--------------------------
Administrator access to CIT's System during normal business hours, for the
purposes of (i) obtaining information regarding loan balances and Net
Availability, and (ii) if permitted by CIT, making requests for Revolving Loans
and submitting borrowing base certificates. Such access shall be subject to the
following terms, in addition to all terms set forth on the website for CIT's
System:
(a) CIT shall provide to the Funds Administrator an initial password
for secured access to CIT's System. The Funds Administrator shall provide CIT
with a list of officers and employees that are authorized from time to time to
access CIT's System, and the Funds Administrator agrees to limit access to the
password and CIT's System to such authorized officers and employees. After the
initial access, the Funds Administrator shall be solely responsible for (i)
changing and maintaining the integrity of the Funds Administrator's password and
(ii) any unauthorized use of the Funds Administrator's password or CIT's System
by any Company's officers and employees.
(b) The Companies shall use CIT's System and the Companies' information
thereon solely for the purposes permitted above, and shall not access CIT's
System for the benefit of third parties or provide any information obtained from
CIT's System to third parties. CIT makes no representation that loan balance or
Net Availability information is or will be available, accurate, complete,
correct or current at all times. CIT's System may be inoperable or inaccessible
from time to time, whether for required website maintenance, upgrades to CIT's
System, or for other reasons, and in any such event the Funds Administrator must
obtain loan balance and Net Availability information, and (if permitted by CIT)
make requests for Revolving Loans and submit borrowing base certificates using
other available means.
(c) The Companies hereby confirm and agree that CIT's System consists
of proprietary software, data, tools, scripts, algorithms, business logic,
website designs and interfaces and related intellectual property, information
and documentation. CIT's System and related intellectual property, information
and documentation are the sole and exclusive property of CIT, and the Companies
shall have no right, title or interest therein or thereto, except for the
limited right to access CIT's System for the purposes permitted above. Upon
termination of this Financing Agreement, the Companies agree to cease any use of
CIT's System.
21
(d) All agreements, covenants and representations and warranties made
by the Funds Administrator and/or the Companies in any borrowing base
certificate submitted to CIT by means of CIT's System are incorporated herein by
reference and shall be deemed made by each Company.
SECTION 4. Term Loans
----------
4.1 Promissory Notes Evidencing Initial Term Loan and Initial
------------------------------------------------------------------
Additional Term Loan. The Domestic Companies agree to execute and deliver to CIT
--------------------
Promissory Notes, dated the date hereof, to evidence the Initial Term Loan and
the Initial Additional Term Loan to be extended to the Domestic Companies by
CIT.
4.2 Initial Term Loan and Initial Additional Term Loan
--------------------------------------------------
(a) Funding of Initial Term Loan and Initial Additional Term Loan. Upon
-------------------------------------------------------------
CIT's receipt of the Promissory Notes evidencing the Initial Term Loan and the
Initial Additional Term Loan, and the satisfaction of the conditions set forth
in Section 2.1, CIT agrees to make such Term Loans to the Domestic Companies.
(b) Repayment of Initial Term Loan and Initial Additional Term Loan.
-----------------------------------------------------------------
The principal amount of the Initial Term Loan and the Initial Additional Term
Loan shall be due and payable in sixty (60) equal consecutive monthly principal
installments of $3,250.00 in respect of the Initial Term Loan and $12,500.00 in
respect of the Initial Additional Term Loan, in both cases, commencing on
September 1, 2006 and on the first day of each month thereafter until paid in
full, subject to acceleration and payment in full, as more fully set forth in
Section 4.4(a).
4.3 Reserved.
--------
4.4 Provisions Regarding all Term Loans.
-----------------------------------
(a) Repayment Upon Termination. In the event this Financing Agreement
--------------------------
or the Revolving Line of Credit is terminated automatically as contemplated by
Section 10.2 herein or by either CIT or the Companies for any reason whatsoever,
all Term Loans, together with all accrued interest thereon and the applicable
Prepayment Premium, shall be due and payable in full on the effective date of
such termination, notwithstanding any other provision of this Financing
Agreement or the Promissory Notes to the contrary.
(b) Optional Prepayments. The Domestic Companies, at their option, may
--------------------
prepay any Term Loan at any time, in whole or in part, provided that on the date
of such prepayment, there shall be due and payable (i) accrued interest on the
principal so prepaid to the date of such prepayment and (ii) the Prepayment
Premium due with respect to such prepayment (except with respect to any
prepayment of all or a portion of the Initial Additional Term Loan).
(c) Mandatory Prepayments from Surplus Cash. In the event that the
------------------------------------------
Companies have generated Surplus Cash in any fiscal year, on the date which is
one hundred twenty (120) days after the end of such fiscal year, there shall be
due and payable from the Domestic Companies a mandatory prepayment of the
Initial Additional Term Loan in an amount equal to thirty-five percent (35%) of
the Surplus Cash for such fiscal year.
(d) Application of Prepayments. Except as CIT and the Domestic
----------------------------
Companies shall otherwise agree in a separate writing, each prepayment of the
Term Loans (whether voluntary or mandatory) shall be applied to the last
maturing installments of principal of the Term Loans until fully repaid.
(e) No Reborrowing. To the extent repaid, the principal amount of any
--------------
Term Loan may not be reborrowed under this Section 4.
(f) Authority to Charge Revolving Loan Account. The Domestic Companies
------------------------------------------
hereby authorize CIT, without notice to the Domestic Companies, to charge their
Revolving Loan Accounts with all payments due under this Section 4 as such
amounts become due. Any amount charged to the Revolving Loan Accounts shall be
deemed a Chase Bank Rate Loan hereunder and shall bear interest at the rate
provided in Section 8.1 (or Section 8.2, if applicable) of this
22
Financing Agreement. The Domestic Companies confirm that any charges which CIT
may make to the Revolving Loan Accounts as provided herein will be made as an
accommodation to the Domestic Companies and solely at CIT's discretion.
SECTION 5. Letters of Credit.
-----------------
In order to assist Ronson, RAI and/or RCPC in establishing or opening
Letters of Credit with an Issuing Bank, the Companies have requested that CIT
join in the applications for such Letters of Credit, and/or guarantee payment or
performance of such Letters of Credit and any drafts or acceptances thereunder
through the issuance of one or more Letter of Credit Guaranties, thereby lending
CIT's credit to such Companies, and CIT has agreed to do so. These arrangements
shall be handled by CIT subject to satisfaction of the conditions set forth in
Section 2.1 hereof and the terms and conditions set forth below.
5.1 Assistance and Purpose. Within the Revolving Line of Credit and
-----------------------
subject to sufficient Net Availability, CIT shall assist Ronson, RAI, and RCPC
in obtaining Letters of Credit in an aggregate undrawn amount outstanding at any
time not to exceed the Letter of Credit Sub-Line. The term, form and purpose of
each Letter of Credit and all documentation in connection therewith, and any
amendments, modifications or extensions thereof, must be mutually acceptable to
CIT, the Issuing Bank and the Funds Administrator, provided that the Companies
shall not request a Letter of Credit to support the purchase of domestic
Inventory or to secure present or future Indebtedness owed to suppliers of
domestic Inventory. Notwithstanding any other provision of this Financing
Agreement to the contrary, if a Default or an Event of Default shall have
occurred and remain outstanding, CIT's assistance in connection with any Letter
of Credit shall be in CIT's sole discretion.
5.2 Authority to Charge Revolving Loan Account. The Companies hereby
-------------------------------------------
authorize CIT, without notice to the Companies, to charge their Revolving Loan
Accounts with the amount of all indebtedness, liabilities and obligations of any
kind incurred by CIT under a Letter of Credit Guaranty, including the charges of
an Issuing Bank, as such indebtedness, liabilities and obligations are charged
to or paid by CIT, or, if earlier, upon the occurrence of an Event of Default.
Any amount charged to a Revolving Loan Account shall be deemed a Chase Bank Rate
Loan hereunder and shall incur interest at the rate provided in Section 8.1 (or
Section 8.2, if applicable) of this Financing Agreement. The Companies confirm
that any charges which CIT may make to the Revolving Loan Accounts as provided
herein will be made as an accommodation to the Companies and solely at CIT's
discretion.
5.3 Indemnity Relating to Letters of Credit. Subject to Section 3.1(a),
---------------------------------------
each Company, jointly and severally, unconditionally indemnifies CIT and holds
CIT harmless from any and all loss, claim or liability incurred by CIT arising
from any transactions or occurrences relating to Letters of Credit established
or opened for any Company's account, the Collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any
such loss, claim or liability arising from any error, omission, negligence,
misconduct or other action taken by an Issuing Bank, other than for any such
loss, claim or liability arising out of the gross negligence or willful
misconduct by CIT with respect to a Letter of Credit Guaranty. This indemnity
shall survive the termination of this Financing Agreement and the repayment of
the Obligations.
5.4 Compliance of Goods, Documents and Shipments with Agreed Terms. CIT
--------------------------------------------------------------
shall not be responsible for: (a) the existence, character, quality, quantity,
condition, packing, value or delivery of the goods purporting to be represented
by any documents relating to any Letter of Credit; (b) any difference or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in such documents; (c) the validity,
sufficiency or genuineness of such documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (d) the time, place, manner or
order in which shipment is made; (e) partial or incomplete shipment, or failure
or omission to ship any or all of the goods referred to in the Letters of Credit
or documents relating thereto; (f) any deviation from instructions; (g) delay,
default, or fraud by the shipper and/or anyone else in connection with the goods
or the shipping thereof; or (h) any breach of contract between the shipper or
vendors and any Company.
5.5 Handling of Goods, Documents and Shipments. The Companies agree
--------------------------------------------
that any action taken by CIT, if taken in good faith, or any action taken by the
Issuing Bank of whatever nature, under or in connection with the Letters
23
of Credit, the Letter of Credit Guaranties, drafts or acceptances relating to
Letters of Credit, or the goods subject thereto, shall be binding on each
Company and shall not result in any liability whatsoever of CIT to the
Companies. CIT shall have the full right and authority, in CIT's name, to (a)
clear and resolve any questions of non-compliance of documents, (b) give any
instructions as to acceptance or rejection of any documents or goods, (c)
execute any and all steamship or airway guaranties (and applications therefor),
indemnities or delivery orders, (d) grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances, or
documents, and (e) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, the Letters of Credit, the Letter of Credit Guaranties or drafts
or acceptances relating to Letters of Credit. An Issuing Bank shall be entitled
to comply with and honor any and all such documents or instruments executed by
or received solely from CIT, without any notice to or any consent from the
Companies or the Funds Administrator. Notwithstanding any prior course of
conduct or dealing with respect to the foregoing (including amendments to and
non-compliance with any documents, and/or the Companies' or the Funds
Administrator's instructions with respect thereto), CIT may exercise its rights
under this Section 5.5 in its sole but reasonable business judgment. In
addition, each Company and the Funds Administrator agree, in connection with, as
the case may be, the Letters of Credit, the Letter of Credit Guaranties, drafts
or acceptances relating to Letters of Credit, or the goods subject thereto, not
to: (a) at any time, (i) execute any application for steamship or airway
guaranties, indemnities or delivery orders, (ii) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents, or (iii) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances;
and (b) if an Event of Default shall have occurred and remain outstanding, (i)
clear and resolve any questions of non-compliance of documents or (ii) give any
instructions as to acceptances or rejection of any documents or goods.
5.6 Compliance with Laws; Payment of Levies and Taxes. The Companies
---------------------------------------------------
agree that (a) all necessary import and export licenses and certificates
necessary for the import or handling of the Collateral will be promptly
procured, (b) all foreign and domestic governmental laws and regulations in
regard to the shipment and importation of the Collateral or the financing
thereof will be promptly and fully complied with, and (c) any certificate in
that regard that CIT may at any time request will be promptly furnished to CIT.
In connection herewith, the Companies represent and warrant to CIT that all
shipments made under any Letter of Credit are and will be in compliance with the
laws and regulations of the countries in which the shipments originate and
terminate, and are not prohibited by any such laws and regulations. The
Companies assume all risk, liability and responsibility for, and agree to pay
and discharge, all present and future local, state, provincial, federal or
foreign Taxes, duties, or levies pertaining to the importation and delivery of
the Collateral. Any embargo, restriction, law, custom or regulation of any
country, state, provincial, city, or other political subdivision, where the
Collateral is or may be located, or wherein payments are to be made, or wherein
drafts may be drawn, negotiated, accepted, or paid, shall be solely the
Companies' risk, liability and responsibility.
5.7 Subrogation Rights. Upon any payments made to an Issuing Bank under
------------------
a Letter of Credit Guaranty, CIT shall acquire by subrogation, any rights,
remedies, duties or obligations granted to or undertaken by the Companies, or
any of them, to the Issuing Bank in any application for Letter of Credit, any
standing agreement relating to Letters of Credit or otherwise, all of which
shall be deemed to have been granted to CIT and apply in all respects to CIT and
shall be in addition to any rights, remedies, duties or obligations contained
herein.
SECTION 6. Collateral
----------
6.1 Grant of Security Interest. (a) As security for the prompt payment
--------------------------
in full of all Obligations, each Company hereby pledges and grants to CIT for
the benefit of all Lenders a continuing general lien upon, and security interest
in, all the Collateral in which such Company has rights, provided, however, that
the foregoing pledge, grant, lien and security interest shall (x) not extend to
any asset or property not assignable or capable of being encumbered as a matter
of law, and (y) extend to the Specified Intellectual Property solely in order to
secure the Obligations consisting of and arising from the Initial Additional
Term Loan, and shall be released at such time as the Obligations consisting of
and arising from the Initial Additional Term Loan have been fully and
indefeasibly paid, satisfied and discharged.
(b) Extent of Security Interests. The security interests granted
------------------------------
hereunder shall, subject to the provisions contained in paragraph (a)
immediately preceding, extend and attach to:
24
(i) all Collateral which is presently in existence or hereafter
acquired and which is owned by any Company or in which any Company has any
interest, whether held by such Company or by others for such Company's account,
and wherever located, and, if any Collateral is Equipment, whether such
Company's interest in such Equipment is as owner, lessee or conditional vendee;
(ii) all Equipment whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, molds, tables, accretions, component parts thereof
and additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with, or attached to, the Equipment; and
(iii) all Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either CIT or the Companies from the
Companies' customers, as well as to all supplies, goods, incidentals, packaging
materials, labels and any other items which contribute to the finished goods or
products manufactured or processed by the Companies, or to the sale, promotion
or shipment thereof.
(c) Ronson Canada. Notwithstanding any provision to the contrary in
this Financing Agreement or any other Loan Document, the liens and security
interests granted by Ronson Canada hereunder shall secure the Ronson Canada
Obligations only.
6.2 Limited License. Regardless of whether CIT's security interests in
---------------
any of the General Intangibles has attached or is perfected, each Company hereby
irrevocably grants to CIT a royalty-free, non-exclusive license to use such
Company's Trademarks, Copyrights, Patents and other proprietary and intellectual
property rights, in connection with the (i) advertisement for sale, and the sale
or other disposition of, any finished goods Inventory by CIT in accordance with
the provisions of this Financing Agreement, and (ii) the manufacture, assembly,
completion and preparation for sale of any unfinished Inventory by CIT in
accordance with the provisions of this Financing Agreement.
6.3 Representations, Covenants and Agreements Regarding Collateral
----------------------------------------------------------------
Generally.
---------
(a) Representations and Warranties. The Companies hereby represent and
------------------------------
warrant to CIT that except for Permitted Encumbrances, (i) upon the filing of
UCC financing statements covering the Collateral in all required jurisdictions,
this Financing Agreement creates a valid, perfected, first priority and
exclusive security interest in all personal property of the Companies
constituting Collateral as to which perfection may be achieved by filing, (ii)
CIT's security interests in the Collateral constitute, and will at all times
constitute, first priority and exclusive liens on the Collateral, and (iii) each
Company is, or will be at the time additional Collateral is acquired by such
Company, the absolute owner of such additional Collateral with full right to
pledge, sell, transfer and create a security interest therein, free and clear of
any and all claims or liens other than Permitted Encumbrances.
(b) Covenants. The Companies, at their expense, agree to forever
---------
warrant and defend the Collateral from any and all claims and demands of any
other person, other than holders of Permitted Encumbrances.
6.4 Representations Regarding Accounts and Inventory. The Companies
--------------------------------------------------
represent and warrant to CIT that:
(a) each Trade Account Receivable is based on an actual and bona fide
sale and delivery of Inventory or rendition of services to customers, made by
the Companies in the ordinary course of their business;
(b) the Inventory being sold and the Trade Accounts Receivable created
by such sales are the exclusive property of the Companies and are not subject to
any lien, consignment arrangement, encumbrance, security interest or financing
statement whatsoever, other than Permitted Encumbrances;
(c) the invoices evidencing such Trade Accounts Receivable are in the
name of the Companies;
(d) the Inventory or services giving rise to any Trade Account
Receivable have been shipped or rendered, as the case may be, and the customers
therefor owe and are obligated to pay the full amounts stated in the invoices
25
according to their terms, without dispute, offset, defense, counterclaim or
contra, except for disputes and other matters arising in the ordinary course of
business of which the Companies have notified CIT pursuant to Section 7.2(g)
hereof; and
(e) the Companies' Inventory is marketable in the ordinary course of
the Companies' businesses, and no Inventory has been produced in violation of
the Fair Labor Standards Act (29 U.S.C. ss.201 et seq.), as amended.
6.5 Covenants and Agreements Regarding Accounts and Inventory.
---------------------------------------------------------
(a) Each Company confirms to CIT that all Taxes and fees relating to
such Company's business, such Company's sales, and the Accounts or Inventory
relating thereto, are such Company's sole responsibility, and that same will be
paid by such Company when due, subject to Section 7.2(d) hereof, and that none
of said Taxes or fees represent a lien on or claim against the Accounts, other
than a Permitted Tax Lien.
(b) Each Company agrees not to acquire any Inventory on a consignment
basis, nor co-mingle its Inventory with any goods of its customers or any other
person (whether pursuant to any xxxx and hold sale or otherwise).
(c) Each Company agrees to maintain such books and records regarding
Accounts and Inventory as CIT reasonably may require and agrees that the books
and records of such Company will reflect CIT's interest in the Accounts and
Inventory. In support of the continuing assignment and security interest of CIT
in the Accounts and Inventory, the Companies also agree to deliver to CIT all of
the schedules, reports and other information described in Section 7.2(g) of this
Financing Agreement. The Companies' failure to maintain their books in the
manner provided herein or to deliver to CIT any of the foregoing information
shall in no way affect, diminish, modify or otherwise limit the security
interests granted to CIT in the Accounts and Inventory.
(d) Each Company agrees to issue credit memoranda promptly after
accepting returns or granting allowances, and to deliver to CIT copies of such
credit memoranda as and when required to do so under Section 7.2(g) hereof.
(e) Each Company agrees to safeguard, protect and hold all Inventory
for CIT's account and to make no sale or other disposition thereof except in the
ordinary course of such Company's business, on open account and on commercially
reasonable terms consistent with such Company's past practices. Notwithstanding
the ordinary course of any Company's business or any Company's past practices,
each Company agrees not to sell Inventory on a consignment basis, nor retain any
lien on or security interest in any Inventory sold by such Company. As to any
sale or other disposition of Inventory, CIT shall have all of the rights of an
unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Each Company agrees to handle all Proceeds of sales of Inventory in
accordance with the provisions of Section 3.2 hereof.
6.6 Covenants and Agreements Regarding Equipment.
--------------------------------------------
(a) Maintenance of Equipment. Each Company agrees to (i) maintain the
------------------------
Equipment in as good and substantial repair and condition as the Equipment owned
by such Company is now maintained (or at the time that CIT's security interest
may attach to such Equipment), reasonable wear and tear excepted, (ii) make any
and all repairs and replacements when and where necessary, and (iii) safeguard,
protect and hold all Equipment owned by such Company in accordance with the
terms hereof and subject to CIT's security interest. The Equipment will only be
used by the Companies in the operation of their respective businesses and will
not be sold or held for sale or lease, except as expressly provided in Section
6.6(b) below.
(b) Sales of Equipment. The Companies may sell obsolete Equipment or
------------------
surplus Equipment from time to time, provided that in each such instance: (i) no
Event of Default shall have occurred and remain outstanding at the time of such
sale; (ii) the aggregate fair market value of the Equipment subject to sale does
not exceed $50,000 in any fiscal year of the Companies; and (iii) all net
proceeds of such sales are either (x) promptly delivered by the Companies to CIT
by deposit to the Depository Account, for application against the Term Loans in
the manner provided in Section 4.4(d) hereof (and if the Term Loans have been
fully repaid, for application to other Obligations
26
in such manner and in such order as CIT may elect in the exercise of its
reasonable business judgment), or (y) within 90 days of such sale, used to
purchase replacement Equipment that the Companies determine in their reasonable
business judgment to have a value at least equal to the Equipment sold. Except
as set forth above, the Companies agree not to sell, transfer, lease or
otherwise dispose of any item of Equipment without CIT's prior written consent.
Upon the sale, transfer, lease or other disposition of Equipment, CIT's security
interest in the Equipment shall, without break in continuity and without further
formality or act, continue in, and attach to, all Proceeds. All such Proceeds
shall not be commingled with the Companies; other property, but shall be
delivered promptly by the Companies to CIT by deposit to the Depository Account,
and the Companies shall notify CIT promptly of the deposit and the amount of
such Proceeds. As to any such sale, transfer, lease or other disposition, CIT
shall have all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation.
6.7 General Intangibles. Each Company represents and warrants to CIT
--------------------
that such Company possesses all General Intangibles necessary to conduct its
business as presently conducted. Each Company agrees to maintain such Company's
rights in, and the value of, all such General Intangibles, and to pay when due
all payments required to maintain in effect any licensed rights. The Companies
shall provide CIT with adequate notice of the acquisition of rights with respect
to any additional Patents, Trademarks and Copyrights so that CIT may, to the
extent permitted under the documentation granting such rights or applicable law,
perfect its security interest hereunder in such rights in a timely manner.
6.8 Commercial Tort Claims. Each Company represents and warrants to CIT
----------------------
that as of the date hereof, such Company holds no interest in any commercial
tort claim. If any Company at any time holds or acquires a commercial tort
claim, such Company agrees to promptly notify CIT in writing of the details
thereof, and in such writing such Company shall grant to CIT a security interest
in such commercial tort claim and in the Proceeds thereof, all upon the terms of
this Financing Agreement.
6.9 Letter of Credit Rights. Each Company and the Funds Administrator
-----------------------
represents and warrants to CIT that as of the date hereof, such Company or the
Funds Administrator is not the beneficiary of any letter of credit. If any
Company or the Funds Administrator becomes a beneficiary under any letter of
credit, such beneficiary agrees to promptly notify CIT, and upon request by CIT,
such beneficiary agrees to either (a) cause the issuer of such letter of credit
to consent to the assignment of the proceeds of such letter of credit to CIT
pursuant to an agreement in form and substance satisfactory to CIT, or (b) cause
the issuer of such letter of credit to name CIT as the transferee beneficiary of
such letter of credit.
6.10 Special Provisions Relating to Specified Intellectual Property.
-----------------------------------------------------------------
Upon the full payment, satisfaction and discharge of the Initial Additional Term
Loan, CIT will thereupon release its lien upon and security interest in the
Specified Intellectual Property.
6.11 Intentionally left blank.
------------------------
6.12 Reference to Other Loan Documents. Reference is hereby made to the
---------------------------------
other Loan Documents for additional representations, covenants and other
agreements of the Companies regarding the Collateral covered by such Loan
Documents.
6.13 Credit Balances; Additional Collateral.
--------------------------------------
(a) The rights and security interests granted to CIT hereunder shall
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the Revolving Loan Account may from time to
time be temporarily in a credit position, until the termination of this
Financing Agreement and the full and final payment and satisfaction of the
Obligations (other than Obligations in respect of Letter of Credit Guaranties
collateralized pursuant to Section 11 hereof). Any reserves or balances to the
credit of the Companies (in the Revolving Loan Account or otherwise), and any
other property or assets of the Companies (or any of them) in the possession of
CIT, may be held by CIT as Other Collateral, and applied in whole or partial
satisfaction of such Obligations when due, subject to the terms of this
Financing Agreement. The liens and security interests granted to CIT herein and
any other
27
lien or security interest which CIT may have in any other assets of the
Companies secure payment and performance of all present and future Obligations,
subject to the terms of this Financing Agreement.
(b) Notwithstanding CIT's security interests in the Collateral, to the
extent that the Obligations are now or hereafter secured by any assets or
property other than the Collateral, or by the guaranty, endorsement, assets or
property of any other person, CIT shall have the right in its sole discretion to
determine which rights, security, liens, security interests or remedies CIT
shall at any time pursue, foreclose upon, relinquish, subordinate, modify or
take any other action with respect to, without in any way modifying or affecting
any of such rights, security, liens, security interests or remedies, or any of
CIT's rights under this Financing Agreement.
SECTION 7. Representations, Warranties and Covenants
-----------------------------------------
7.1 Initial Disclosure Representations and Warranties. The Companies
---------------------------------------------------
represent and warrant to CIT that:
(a) Financial Condition. (i) The amount of each Company's assets, at
--------------------
fair valuation, exceeds the book value of such Company's liabilities, (ii) each
Company is generally able to pay its debts as they become due and payable, and
(iii) each Company does not have unreasonably small capital to carry on its
business as currently conducted absent extraordinary and unforeseen
circumstances. All financial statements of the Companies previously furnished to
CIT present fairly, in all material respects, the financial condition of the
Companies as of the date of such financial statements. The Companies,
individually and on a consolidated basis are Solvent after giving effect to (a)
the Revolving Loans, the Term Loans, and the Letters of Credit (if any) to be
made or extended on the Closing Date or such other date as the Revolving Loans,
Term Loans, and Letters of Credit requested hereunder are made or extended, (b)
the disbursement of the proceeds of such Revolving Loans and Term Loans pursuant
to the instructions of the Funds Administrator, and (c) the payment and accrual
of all transaction costs in connection with the foregoing, and (d) the
termination of all Indebtedness owed to Bank of America, N.A. and Canadian
Imperial Bank of Commerce.
(b) Organization Matters; Collateral Locations. Schedule 7.1(b)
----------------------------------------------
attached hereto correctly and completely sets forth (i) each Company's exact
name, as currently reflected by the records of such Company's jurisdiction of
incorporation or formation, (ii) each Company's jurisdiction of incorporation or
formation, (iii) each Company's federal employer or business identification
number and State organization or other identification number (if any), and (iv)
the address of each Company's chief executive office and all locations of
Collateral.
(c) Power and Authority; Conflicts; Enforceability.
----------------------------------------------
(i) Each Company has full power and authority to execute and deliver
this Financing Agreement and the other Loan Documents to which such Company is a
party, and to perform all of such Company's obligations thereunder.
(ii) The execution and delivery by each Company of this Financing
Agreement and the other Loan Documents to which such Company is a party, and the
performance of such Company's obligations thereunder, have been duly authorized
by all necessary corporate or other relevant action, and do not (w) require any
consent or approval of any director, shareholder, partner or member of such
Company that has not been obtained, (x) violate any term, provision or covenant
contained in the organizational documents of such Company (such as the
certificate or articles of incorporation, certificate of origin, partnership
agreement, by-laws or operating agreement), (y) violate, or cause such Company
to be in default under, any law, rule, regulation, order, judgment or award
applicable to such Company or its assets, or (z) violate any term, provision,
covenant or representation contained in, or constitute a default under, or
result in the creation of any lien under, any loan agreement, lease, indenture,
mortgage, deed of trust, note, security agreement or pledge agreement to which
such Company is a signatory or by which such Company or any of such Company's
assets are bound or affected.
(iii) This Financing Agreement and the other Loan Documents to which
the Companies (or any of them) are parties constitute legal valid and binding
obligations of the Companies, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
transfer and other laws affecting creditors' rights generally, and subject to
general principles of equity, regardless of whether considered in a proceeding
at law or in equity.
28
(d) Schedules. Each of the Schedules attached to this Financing
---------
Agreement set forth a true, correct and complete description of the matter or
matters covered thereby.
(e) Compliance with Laws. Each Company and such Company's properties
---------------------
are in compliance with all federal, provincial, state and local acts, rules and
regulations, and all orders of any federal, state or local legislative,
administrative or judicial body or official, except to the extent the failure to
so comply would not have a Material Adverse Effect. Each Company has obtained
and maintains all permits, approvals, authorizations and licenses necessary to
conduct its business as presently conducted, except to the extent the failure to
have such permits, approvals, authorizations or licenses would not have a
Material Adverse Effect.
(f) Environmental Matters. Except as set forth on Schedule 7.1(f):
---------------------
(i) None of the operations of any Company are the subject of any
federal, provincial, state or local investigation to determine whether any
remedial action is needed to address the presence or disposal of any
environmental pollution, hazardous material or environmental clean-up of the
Real Estate or any of such Company's leased real property that could reasonably
be expected to have a Material Adverse Effect. No enforcement proceeding,
complaint, summons, citation, notice, order, claim, litigation, investigation,
letter or other communication from a federal, provincial, state or local
authority has been filed against or delivered to any Company, regarding or
involving any release of any environmental pollution or hazardous material on
any real property now or previously owned or operated by such Company that could
reasonably be expected to have a Material Adverse Effect.
(ii) No Company has any known contingent liability with respect to any
release of any environmental pollution or hazardous material on any real
property now or previously owned or operated by such Company that could
reasonably be expected to have a Material Adverse Effect.
(iii) Each Company is in compliance with all environmental statutes,
acts, rules, regulations and orders applicable to the operation of such
Company's business, except to the extent that the failure to so comply would not
have a Material Adverse Effect.
(g) Pending Litigation. Except as set forth in Schedule 7.1(g), there
------------------
exist no actions, suits or proceedings of any kind by or against any Company
pending in any court or before any arbitrator or governmental body or, to the
best of such Company's knowledge, threatened against such Company, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(h) Subsidiaries and Affiliates. Except as set forth in Schedule
-----------------------------
7.1(h), the Companies have no existing subsidiaries. Each of Ronson Hydraulics
and Prometcor, (i) is inactive and engaged in no business or operations (except
for Prometcor, which is engaged in ongoing environmental clean-up activities),
and (ii) other than deferred income tax assets, and in the case of Ronson
Hydraulics, a note receivable from Ronson in the approximate amount of $188,931,
has net assets of less than $10,000.
7.2 Affirmative Covenants. Until the termination of this Financing
----------------------
Agreement and the full and final payment and satisfaction of the Obligations
(other than Obligations in respect of Letter of Credit Guaranties collateralized
pursuant to Section 11 hereof), and unless otherwise approved in writing by CIT:
(a) Maintenance of Financial Records; Inspections. Each Company agrees
----------------------------------------------
to maintain books and records pertaining to such Company's financial matters in
such detail, form and scope as CIT reasonably shall require. The Companies agree
that CIT or its agents may enter upon any Company's premises at any time during
normal business hours, and from time to time, in order to (i) examine and
inspect the books and records of any Company, and make copies thereof and take
extracts therefrom, and (ii) verify, inspect and perform physical counts and
other valuations of the Collateral and any and all records pertaining thereto.
The Companies irrevocably authorize all accountants and third parties to
disclose and deliver directly to CIT, at the Companies' expense, all financial
statements and information, books, records, work papers and management reports
generated by them or in their possession regarding the Companies
29
or the Collateral. All costs, fees and expenses incurred by CIT in connection
with such examinations, inspections, physical counts and other valuations shall
constitute Out-of-Pocket Expenses for purposes of this Financing Agreement.
(b) Further Assurances. Each Company agrees to comply with the
-------------------
requirements of all state, provincial and federal laws in order to grant to CIT
valid and perfected first priority security interests in the Collateral, subject
only to the Permitted Encumbrances. CIT is hereby authorized by the Companies to
file any financing statements, continuations and amendments covering the
Collateral without the Companies' signatures in accordance with the provisions
of the UCC. The Companies hereby consent to and ratify the filing of any
financing statements covering the Collateral by CIT on or prior to the Closing
Date. The Companies agree to do whatever CIT reasonably may request from time to
time, by way of (i) filing notices of liens, financing statements, amendments,
renewals and continuations thereof, (ii) cooperating with CIT's agents and
employees, (iii) keeping Collateral records, (iv) transferring proceeds of
Collateral to CIT's possession in accordance with the terms hereof and (v)
performing such further acts as CIT reasonably may require in order to effect
the purposes of this Financing Agreement, including the execution of control
agreements with respect to Depository Accounts and Investment Property.
(c) Insurance and Condemnation.
--------------------------
(i) Required Insurance. The Companies agree to maintain insurance on
-------------------
all Real Estate, Equipment and Inventory under such policies of insurance, with
such insurance companies, in such reasonable amounts and covering such insurable
risks as are at all times reasonably satisfactory to CIT (the "Required
Insurance"). All policies covering the Equipment and Inventory are, subject to
the rights of any holder of a Permitted Encumbrance having priority over the
security interests of CIT, to be made payable solely to CIT, in case of loss,
under a standard non-contributory "mortgagee", "secured party" or "lender's loss
payable" clause or endorsement, and are to contain such other provisions as CIT
reasonably may require to fully protect CIT's interest in the Inventory and
Equipment and to any payments to be made under such policies. Each loss payable
endorsement in favor of CIT shall provide (x) for not less than thirty (30) days
prior written notice to CIT of the exercise of any right of cancellation and (y)
that CIT's right to payment under any property insurance policy will not be
invalidated by any act or neglect of, or any breach of warranty or condition by,
the Companies (or any of them) or any other party. If an Event of Default shall
have occurred and remain outstanding, CIT, subject to the rights of any holder
of a Permitted Encumbrance having priority over the security interests of CIT,
shall have the sole right, in the name of CIT or the Companies (or any of them),
to file claims under any insurance policies, to receive, receipt and give
acquittances for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(ii) CIT's Purchase of Insurance. Unless the Companies provide CIT with
---------------------------
evidence of the Required Insurance in the manner set forth in Section 7.2(c)(i)
above, CIT may purchase insurance at the Companies' expense to protect CIT's
interests in the Collateral. The insurance purchased by CIT may, but need not,
protect the Companies' interests in the Collateral, and therefore such insurance
may not pay any claim which the Companies may make or any claim which is made
against the Companies in connection with the Collateral. The Companies may later
request that CIT cancel any insurance purchased by CIT, but only after providing
CIT with satisfactory evidence that the Companies have the Required Insurance.
If CIT purchases insurance covering all or any portion of the Collateral, the
Companies shall be responsible for the costs of such insurance, including
interest (at the applicable rate set forth hereunder) and other charges accruing
on the purchase price therefor, until the effective date of the cancellation or
the expiration of the insurance, and CIT may charge all of such costs, interest
and other charges to the Revolving Loan Account. The costs of the premiums of
any insurance purchased by CIT may exceed the costs of insurance which the
Companies may be able to purchase on their own. In the event that CIT purchases
insurance, CIT will notify the Companies of such purchase within thirty (30)
days after the date of such purchase. If, within thirty (30) days after the date
of receipt of such notice, the Companies provide CIT with proof that the
Companies had the Required Insurance as of the date on which CIT purchased
insurance and the Companies have continued at all times thereafter to have the
Required Insurance, then CIT agrees to cancel the insurance purchased by CIT and
credit the Revolving Loan Account for the amount of all costs, interest and
other charges associated with such insurance that CIT previously charged to the
Revolving Loan Account.
(iii) Application of Insurance and Condemnation Proceeds. So long as no
--------------------------------------------------
Default or Event of Default shall have occurred and remain outstanding as of the
date of CIT's receipt of any Casualty Proceeds:
30
(w) In the event of any loss or damage to any Inventory by
condemnation, fire or other casualty, CIT agrees to apply the Casualty Proceeds
first to repay the outstanding Revolving Loans, and then to repay the Term Loans
in the manner set forth in Section 4.4(d).
(x) In the event of any loss or damage to any item of Collateral other
than Inventory by condemnation, fire or other casualty, if the Casualty Proceeds
relating to such condemnation, fire or other casualty are less than or equal to
$50,000, CIT agrees to apply such Casualty Proceeds to repay the outstanding
Revolving Loans.
(y) In the event of any loss or damage to any item of Equipment by
condemnation, fire or other casualty, if the Casualty Proceeds relating to such
condemnation, fire or other casualty exceed $50,000, the Companies may elect (by
delivering written notice to CIT within ten (10) Business Days following CIT's
receipt of such Casualty Proceeds) to replace or repair such item of Equipment.
If the Companies elect to replace or repair any item of Equipment, CIT initially
shall apply all such Casualty Proceeds to the outstanding Revolving Loans and
will establish an Availability Reserve in an amount equal to such Casualty
Proceeds. CIT agrees to reduce this Availability Reserve dollar-for-dollar as
and when payments then are due under the contract(s) for the purchase of
replacement Equipment or the repair of such item of Equipment. Upon the
replacement or completion of repair of such item of Equipment, CIT will
eliminate any remaining Availability Reserve established hereunder.
(z) In the event of any loss or damage to any Real Estate leased by the
Companies by condemnation, fire or other casualty, the Companies may use the
Casualty Proceeds in the manner required or permitted by the lease agreement
relating thereto.
If a Default or an Event of Default shall have occurred and remain outstanding
as of the date of CIT's receipt of any Casualty Proceeds, or if the Companies do
not or cannot elect to use the Casualty Proceeds in the manner set forth in
paragraphs (y) or (z) above, CIT may, subject to the rights of any holder of a
Permitted Encumbrance having priority over the security interests of CIT, apply
the Casualty Proceeds to the payment of the Obligations in such manner and in
such order as CIT may elect in its sole discretion.
(d) Payment of Taxes. The Companies agree to pay when due all Taxes
----------------
lawfully levied, assessed or imposed upon the Companies or the Collateral
(including all sales taxes collected by the Companies on behalf of the
Companies' customers in connection with sales of Inventory and all payroll taxes
and contributions collected by the Companies on behalf of the Companies'
employees), unless the Companies are contesting such Taxes in good faith, by
appropriate proceedings, and is maintaining adequate reserves for such Taxes in
accordance with GAAP. Notwithstanding the foregoing, if a lien securing any
Taxes is filed in any public office or a garnishment order issued for the
payment of such Taxes and such lien is not a Permitted Tax Lien, then the
Companies shall pay all Taxes secured by such lien or the subject of such
garnishment order immediately and remove such lien of record promptly. Pending
the payment of such Taxes and removal of such lien, CIT may, at its election and
without curing or waiving any Event of Default which may have occurred as a
result thereof, (i) establish an Availability Reserve in the amount of such
Taxes (or such other amount as CIT shall deem appropriate in the exercise of its
reasonable business judgment) or (ii) pay such Taxes on behalf of the Companies,
and the amount paid by CIT shall become an Obligation which is due and payable
on demand by CIT.
(e) Compliance With Laws.
--------------------
(i) The Companies agree to comply with all federal, provincial, state
and local acts, rules and regulations, and all orders of any federal,
provincial, state or local legislative, administrative or judicial body or
official, if the failure to so comply would have a Material Adverse Effect,
provided that the Companies may contest any acts, rules, regulations, orders and
directions of such bodies or officials in any reasonable manner which CIT
determines, in the exercise of its reasonable business judgment, will not
materially and adversely effect CIT's rights or priorities in the Collateral.
(ii) Without limiting the generality of the foregoing, each Company
agrees to comply with all environmental statutes, acts, rules, regulations or
orders, as presently existing or as adopted or amended in the future, applicable
to the ownership and/or use of such Company's real property and operation of
such Company's business, if the
31
failure to so comply would have a Material Adverse Effect. No Company shall be
deemed to have breached any provision of this Section 7.2(e) if (x) the failure
to comply with the requirements of this Section 7.2(e) resulted from good faith
error or innocent omission, (y) such Company promptly commences and diligently
pursues a cure of such breach and (z) such failure is cured within thirty (30)
days following the Companies' receipt of notice from CIT of such failure, or if
such breach cannot in good faith be cured within thirty (30) days following the
Companies' receipt of such notice, then such breach is cured within a reasonable
time frame based on the extent and nature of the breach and the necessary
remediation, and in conformity with any applicable consent order, consensual
agreement and applicable law.
(f) Notices Concerning Environmental, Employee Benefit and Pension
------------------------------------------------------------------
Matters. The Companies agree to notify CIT in writing of:
-------
(i) any expenditure (actual or anticipated) in excess of $50,000 for
environmental clean-up, environmental compliance or environmental testing and
the impact of said expenses on the affected Company's working capital;
(ii) any Company's receipt of notice from any local, state, provincial
or federal authority advising the Companies of any environmental liability (real
or potential) arising from such Company's operations, its premises, its waste
disposal practices, or waste disposal sites used by such Company; and
(iii) any Company's receipt of notice from any governmental agency or
any sponsor of any "multiemployer plan" (as that term is defined in ERISA) to
which such Company has contributed, relating to any of the events described in
Section 10.1(g) hereof.
The Companies agree to provide CIT promptly with copies of all such notices and
other information pertaining to any matter set forth above if CIT so requests.
(g) Collateral Reporting and Information. (i) The Companies agree to
--------------------------------------
furnish to CIT:
(1) On each date on which the Companies request or are to receive a
Revolving Loan or the issuance of a Letter of Credit (but more frequently upon
CIT's reasonable request), a borrowing base certificate in form and substance
satisfactory to CIT, certified by the treasurer or chief financial officer of
the Funds Administrator (or any other authorized officer satisfactory to CIT),
together with such confirmatory schedules of Trade Accounts Receivable and
Inventory (in form and substance satisfactory to CIT) as CIT may request,
including, without limitation, sales journals, invoice registers, cash receipts
journals or collection reports, deposit and receipts detail, copies of invoices
and shipping evidence, credit and debit memos and/or adjustment registers, and
updated inventory reports.
(2) On or before the 15th day of each month, a detailed and summary
aging report of Trade Accounts Receivable existing as of the last day of the
preceding month and a roll-forward of Trade Accounts Receivable from the first
day of the preceding month through the last day of the preceding month, all in
such form as CIT reasonably shall require, certified by the treasurer or the
chief financial officer of the Funds Administrator (or any other authorized
officer satisfactory to CIT), together with (x) a reconciliation, as of the last
day of the preceding month, of the Companies' Trade Accounts Receivable aging
report to the Companies' general ledger, and (y) information sufficient to allow
CIT to (A) reconcile, as of the date of such report, the Companies' Trade
Accounts Receivable aging report to the applicable borrowing base certificate
delivered by the Companies to CIT, and (B) update the amount of ineligible Trade
Accounts Receivable.
(3) At least once each week (but more frequently upon CIT's reasonable
request), a summary of Inventory (containing such detail from the Companies'
perpetual inventory as CIT may require) as of the last Business Day of the
preceding week, together with information sufficient to allow CIT to update the
amount of ineligible Inventory.
(4) On or before the 15th day of each month, an aged trial balance of
all the Companies' accounts payable as of the last day of the preceding month.
(5) On or before the last day of each month, a copy of the bank
statement for the Companies' primary operating account for the preceding month.
32
(6) Together with the collateral information described in clause (i)
above, disclosure of (x) all matters adversely affecting the value,
enforceability or collectibility of the Trade Accounts Receivable of the
Companies, (y) all customer disputes, offsets, defenses, counterclaims, returns,
rejections and all reclaimed or repossessed merchandise or goods, and (z) all
matters adversely effecting the value of the Inventory, all in such detail and
format as CIT reasonably may require.
(7) Prior written notice of any change in the location of any
Collateral and any material change in type, quantity, quality or mix of the
Inventory.
(8) From time to time, access to the Companies' computers, electronic
media, software programs (including any electronic records, contracts and
signatures) and such other documentation and information relating to the Trade
Accounts Receivable, Inventory and other Collateral as CIT reasonably may
require.
(ii) The Companies may deliver to CIT any borrowing base certificate,
collateral report or other material that the Companies are required to deliver
to CIT under clauses (1), (2), (3) and (4) of Section 7.2(g)(i) by e-mail or
other electronic transmission (an "Electronic Transmission"), subject to the
following terms:
(1) Each Electronic Transmission must be sent by the treasurer or chief
financial officer of the Funds Administrator (or any other authorized officer
satisfactory to CIT), and must be addressed to the loan officer and the
collateral analyst of CIT that handle the Companies' account, as designated by
CIT from time to time. If any Electronic Transmission is returned to the sender
as undeliverable, the material included in such Electronic Transmission must be
delivered to the intended recipient in the manner required by Section 12.6
hereof.
(2) Each certificate, collateral report or other material contained in
an Electronic Transmission must be in a "pdf" or other imaging format and, to
the extent that such material must be certified by an officer of the Funds
Administrator under this Section 7.2(g), must contain the signature of the
officer submitting the Electronic Transmission. As provided in Section 12.6, any
signature on a certificate, collateral report or other material contained in an
Electronic Transmission shall constitute a valid signature for purposes hereof.
CIT may rely upon, and assume the authenticity of, any such signature, and any
material containing such signature shall constitute an "authenticated" record
for purposes of the Uniform Commercial Code and shall satisfy the requirements
of any applicable statute of frauds.
(3) Each Electronic Transmission must contain the name and title of the
officer of the Funds Administrator transmitting the Electronic Transmission, and
shall include following text in the body of the Electronic Transmission:
"Pursuant to the Financing Agreement dated July [___], 2006 among The
CIT Group/Commercial Services, Inc. ("CIT"), Ronson Corporation,
Ronson Aviation, Inc., Ronson Consumer Products Corporation and Ronson
Corporation of Canada, Ltd. (collectively, the "Companies"), the
undersigned __________ [title of submitting officer] of the Funds
Administrator hereby delivers to CIT the Companies' ____________
[describe submitted reports]. The Funds Administrator, on behalf of
the Companies, represents and warrants to CIT that the materials
included in this Electronic Transmission are true, correct, and
complete in all material respects. The name of the officer of the
Funds Administrator set forth in this e-mail constitutes the signature
of such officer, and this e-mail shall constitute an authenticated
record of the Company."
(4) The Companies agree to maintain the original versions of all
certificates, collateral reports and other materials delivered to CIT by means
of an Electronic Transmission and agrees to furnish to CIT such original
versions within five (5) Business Days of CIT's request for such materials,
signed and certified (to the extent required hereunder) by the officer
submitting the Electronic Transmission.
(iii) Each Company authorizes the Funds Administrator, on behalf of such
Company, to deliver to CIT all borrowing base certificates, collateral reports
and other material that the Companies are required to deliver to CIT under this
Section 7.2(g). Each Company hereby authorizes CIT to regard such Company's
printed name or rubber stamp signature on assignment schedules or invoices as
the equivalent of a manual signature by such Company's authorized officers or
33
agents. The Companies' failure to promptly deliver to CIT any schedule, report,
statement or other information set forth in this Section 7.2(g) shall not
affect, diminish, modify or otherwise limit CIT's security interests in the
Collateral.
(h) Financial Reporting. The Companies agree to furnish to CIT:
-------------------
(i) within (x) ninety (90) days after the end of each fiscal year of
each Company, a Consolidated Balance Sheet as at the close of such year, and
consolidated statements of profit and loss and cash flow of the Companies for
such year, and (y) one hundred twenty (120) days after the end of each fiscal
year of each Company, a Consolidating Balance Sheet as at the close of such
year, and consolidating statements of profit and loss and cash flow of the
Companies for such year, in each case audited by independent public accountants
selected by the Companies and satisfactory to CIT, together with (1) the
unqualified opinion of the accountants preparing such financial statements and
(2) if requested by CIT, such accountants' management practice letter.
(ii) within thirty (30) days after the end of each month, (x) a
Consolidated Balance Sheet and a Consolidating Balance Sheet as at the end of
such month, (y) consolidated and consolidating statements of profit and loss and
cash flow of the Companies for such month and for the period commencing on the
first day of the current fiscal year through the end of such month, and (z)
comparative statements of profit and loss and cash flow of the Companies for the
same month and same fiscal year-to-date period in the prior fiscal year,
certified by the treasurer or chief financial officer of the Funds Administrator
(or any other authorized officer satisfactory to CIT);
(iii) within ten (10) days after filing by each Company, copies of all
(x) financial reports, registration statements and other documents filed by such
Company with the U.S. Securities and Exchange Commission, as and when filed by
such Company, and (ii) annual reports filed pursuant to ERISA (or similar
applicable Canadian laws) in connection with each benefit plan of such Company
subject to ERISA (or such similar applicable Canadian laws); and
(iv) no later than thirty (30) days prior to the beginning of each
fiscal year of the Companies, monthly projections of the Companies' Consolidated
Balance Sheet and Consolidating Balance Sheet, and consolidated and
consolidating statements of profits and loss and cash flow of the Companies, as
well as monthly projected Net Availability for the Companies for such fiscal
year.
Each financial statement which the Companies are required to submit
pursuant to clauses (i) and (ii) above must be accompanied by an officer's
certificate substantially in the form set forth on Exhibit C attached hereto,
signed by the treasurer or chief financial officer of the Funds Administrator
(or any other authorized officer satisfactory to CIT). In addition, should the
Companies modify their accounting principles and procedures from those in effect
on the Closing Date, the Companies agree to prepare and deliver to CIT
statements of reconciliation in form and substance reasonably satisfactory to
CIT.
(i) Asset Appraisals. From time to time upon the request of CIT (but
-----------------
not more frequently than once in any twelve-month period, so long as no Default
or Event of Default shall have occurred during such period), the Companies agree
to permit CIT to perform appraisals of the Companies' Inventory and Equipment.
The Companies agree to reimburse CIT for the costs and expenses relating to (i)
one Equipment appraisal in any twelve-month period, so long as no Event of
Default shall have occurred and remain outstanding, and (ii) all such appraisals
performed while an Event of Default remains outstanding. All appraisals shall be
performed by qualified appraisers selected by CIT. To the extent that the
Companies are required by this Section 7.2(i) to reimburse CIT for CIT's costs
and expenses relating to appraisals, such costs and expenses shall constitute
Out-of-Pocket Expenses. If the sum of eighty five percent (85%) of the net
orderly liquidation value of the machinery and equipment that served as a basis
for the amount advanced under the Initial Term Loan as set forth in any updated
Equipment appraisal is less than the then outstanding balance of the Initial
Term Loan ("Appraisal Deficiency"), then the Companies (other than Ronson
Canada) shall pay the Appraisal Deficiency to CIT on the first day of the first
month immediately following the date of such updated Equipment Appraisals, as a
prepayment against the Initial Term Loan (free of any Prepayment Premium). The
prepayments contemplated by this Section 7.2(i) are in addition to, and not in
lieu of, the payments due under the Term Loans, as set forth in Section 4 of
this Financing Agreement.
34
(j) Business Qualification. The Companies agree to qualify to do
-----------------------
business, and to remain qualified to do business and in good standing, in each
jurisdiction where the failure to so qualify or to remain qualified or in good
standing, would have a Material Adverse Effect.
(k) Anti-Money Laundering and Terrorism Regulations. The Companies
--------------------------------------------------
agree to comply with all applicable anti-money laundering and terrorism laws,
regulations and executive orders in effect from time to time (including, without
limitation, the USA Patriot Act (Pub. L. No. 107-56)). The Companies also agree
to ensure that no person who owns a controlling interest in or otherwise
controls the Companies (or any of them) is a person designated under Section
1(b), (c) or (d) of Executive Order No. 13224 (issued September 23, 2001) or any
other similar Executive Order. The Companies acknowledge that CIT's performance
hereunder is subject to compliance with all such laws, regulations and executive
orders, and in furtherance of the foregoing, the Companies agree to provide to
CIT all information about the Companies' ownership, officers, directors,
customers and business structure as CIT reasonably may require to comply with,
such laws, regulations and executive orders.
(l) Ronson Tax Lien. The Companies agree to make payments on account of
---------------
the Ronson Tax Lien in an amount of at least $25,000 each month, or such other
greater amounts necessary to ensure that the Ronson Tax Lien is satisfied in
full on or before February 1, 2007. The Companies further agree to submit to CIT
evidence of each and every such payment made within five (5) days after such
payment is made. Upon receipt by CIT of satisfactory evidence of a payment, CIT
shall reduce the Ronson Tax Lien Reserve by the amount of such payment.
(m) Environmental Reports. The Companies agree to deliver to CIT copies
---------------------
of any environmental reports (including the Companies' waste disposal practices)
conducted in connection with and in contemplation of the Permitted Realty
Financing within thirty (30) days after the Closing Date. The reports must be
satisfactory to CIT in its reasonable business judgment, and must not disclose
or indicate any liability (real or potential) arising out of any Company's
premises, its operations, its waste disposal practices or waste disposal sites
used by any Company, that could reasonably be expected to have a Material
Adverse Effect.
7.3 Financial Covenants. Until termination of this Financing Agreement
-------------------
and the full and final payment and satisfaction of all Obligations (other than
Obligations in respect of Letter of Credit Guaranties collateralized pursuant to
Section 11 hereof), the Companies agree on a consolidated basis:
(a) Intentionally left blank
------------------------
35
(b) Fixed Charge Coverage. To maintain a Fixed Charge Coverage Ratio,
----------------------
calculated for each of the periods set forth below, of not less than:
Fiscal Period Ratio
------------- -----
3-month period ending September 30, 2006 1.0 to 1.0
6-month period ending December 31, 2006 1.15 to 1.0
9-month period ending March 31, 2007 1.05 to 1.0
12-month period ending June 30, 2007, and each 1.0 to 1.0
12-month period ending at the end of each fiscal
quarter thereafter 1.05 to 1.0
(c) Operating Leases and Capital Expenditures. Not to (i) enter into
-------------------------------------------
any Operating Lease if after giving effect thereto the aggregate obligations
with respect to Operating Leases during any fiscal year would exceed $350,000;
or (ii) contract for, purchase, make expenditures for, lease pursuant to a
Capital Lease or otherwise incur obligations with respect to Capital
Expenditures (whether subject to a security interest or otherwise) during any
fiscal year of the Companies in the aggregate amount in excess of:
(x) $2,700,000 for the fiscal year ending December 31, 2006;
(y) $1,000,000 for the fiscal year ending December 31, 2007; and
(z) $400,000 for the fiscal year ending December 31, 2008, and for
each fiscal year thereafter.
7.4 Negative Covenants. Until termination of this Financing Agreement
-------------------
and full and final payment and satisfaction of all Obligations (other than
Obligations in respect of Letter of Credit Guaranties collateralized pursuant to
Section 11 hereof), and unless otherwise approved in writing by CIT, each
Company agrees not to, and will cause each Guarantor (other than the Limited
Guarantor) and each subsidiary of such Company not to:
(a) Liens and Encumbrances. Mortgage, assign, pledge, transfer or
-----------------------
otherwise permit any lien, charge, security interest, encumbrance or judgment
(whether as a result of a purchase money or title retention transaction, or
other security interest, or otherwise) to exist on any of the Collateral or its
other assets, whether now owned or hereafter acquired, except for the Permitted
Encumbrances.
(b) Indebtedness. Incur or create any Indebtedness other than the
------------
Permitted Indebtedness.
(c) Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
--------------
of (i) Collateral, except as otherwise specifically permitted by this Financing
Agreement, or (ii) all or any substantial part of its assets, if any, which do
not constitute Collateral, except as otherwise specifically permitted by this
Financing Agreement.
(e) Corporate Change. (i) Merge, consolidate or amalgamate with any
-----------------
other entity (other than a Company), (ii) change its name or principal place of
business, (iii) change its structure or organizational form, or reincorporate or
reorganize in a new jurisdiction, (iv) enter into or engage in any operation or
activity materially different from that presently being conducted by the
Company, any Guarantor or any subsidiary of such Company, as the case may be;
provided that any Company, any Guarantor and any subsidiary of such Company may
change its name or its principal place of business so long as the Companies
provide CIT with thirty (30) days prior written notice thereof and such Company,
any Guarantor or any subsidiary of such Company, as the case may be, executes
and delivers to CIT, prior to making such change, all documents and agreements
required by CIT in order to ensure that the liens and security interests granted
to CIT hereunder continue in effect without any break or lapse in perfection.
(f) Guaranty Obligations. Assume, guarantee, endorse, or otherwise
---------------------
become liable upon the obligations of any person, firm, entity or corporation,
except (i) pursuant to the cross-corporate guarantees and by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, and (ii) Permitted Indebtedness.
36
(g) Dividends and Distributions. Declare or pay any dividend or
-----------------------------
distribution of any kind on, or purchase, acquire, redeem or retire, any of its
equity interests (of any class or type whatsoever), whether now or hereafter
issued and outstanding, other than Permitted Distributions.
(h) Investments; Loans. (i) Create any new subsidiary, or (ii) make any
------------------
advance or loan to, or any investment in, any firm, entity, person or
corporation, other than (w) Permitted Intercompany Loans; and loans and advances
to Ronson Hydraulics and Prometcor in an aggregate amount not in excess of
$20,000 per annum solely for the payment of taxes and other amounts required by
such entities to otherwise comply with all laws, (x) advances to employees for
business expenses arising in the ordinary course of business in the aggregate
outstanding amount not in excess of $50,000 per annum, (y) investments in the
form of cash equivalents or marketable securities (as defined under GAAP), swap
contracts or similar transactions entered into in the ordinary course of
business and not for speculative purposes and extensions of credit in the
ordinary course of business (in each case, consistent with past practice), and
(z) advances on behalf of officers and directors under applicable
indemnification arrangements, consistent with past practice, provided, however,
that no Event of Default shall have occurred and be outstanding at the time any
such advance is made, or would occur as a result of the making of any such
advance, or (iii) acquire all or substantially all of the assets of, or any
capital stock or any equity interests in, any firm, entity or corporation, other
than current investments of such Company in existing subsidiaries of such
entities.
(i) Related Party Transactions. Except as set forth on Schedule 7.4(i),
--------------------------
enter into any transaction, including, without limitation, any purchase, sale,
lease, loan or exchange of property, with any shareholder, officer, director,
parent (direct or indirect), subsidiary (direct or indirect) or other person or
entity otherwise affiliated with the Companies, or any subsidiary of a Company
(other than a transaction with one or more other Companies), unless (i) such
transaction otherwise complies with the provisions of this Financing Agreement,
(ii) such transaction is pursuant to the reasonable requirements of the
Companies, or any subsidiary of a Company, as the case may be, and upon fair and
reasonable terms no less favorable to such entity than such entity could obtain
in a comparable arms length transaction with an unrelated third party, and (iii)
no Event of Default shall have occurred and remain outstanding at the time such
transaction occurs, or would occur after giving effect to such transaction.
(j) Restricted Payments. (i) Make any payment of the principal of, or
--------------------
interest on, any Subordinated Debt, or purchase, acquire or redeem any of the
Subordinated Debt, unless (x) such payment, purchase, acquisition or redemption
is expressly permitted by the terms of the applicable Subordination Agreement
and (y) no Default or Event of Default shall have occurred and remain
outstanding on the date on which such payment or transaction occurs, or would
occur as a result thereof; (ii) other than with respect to a Permitted
Distribution, pay any management, consulting or other similar fees to any
shareholder, director, parent (direct or indirect), subsidiary (direct or
indirect) or other person or entity otherwise affiliated with the Companies, or
any subsidiary of a Company.
(k) Fiscal Year. Change such Company's fiscal year.
-----------
(l) Bank Accounts. Establish any depository, checking or other bank
--------------
account of any kind with any financial institution (other than the accounts set
forth on Schedule 7.4(l)) without CIT's prior written consent.
SECTION 8. Interest, Fees and Expenses
---------------------------
8.1 Interest.
--------
(a) Interest on Revolving Loans. Interest on the outstanding principal
---------------------------
balance of the Revolving Loans shall be due and payable monthly on the first day
of each month and shall accrue at a rate per annum equal to the Applicable
Margin plus (i) in the case of loans to the Domestic Companies (all of which
shall be denominated in U.S. Dollars), the Chase Bank Rate, and (ii) in the case
of U.S. Dollar denominated loans to Ronson Canada, the U.S. Prime Rate, and in
the case of Canadian Dollar denominated loans to Ronson Canada, the Canadian
Prime Rate, in each case on the average net principal balance of such Revolving
Loans at the close of each day during the immediately preceding month, as
reflected by CIT's System. In the event of any change in said Chase Bank Rate,
U.S. Prime Rate or Canadian Prime Rate, as the case may be, the rate set forth
in the first sentence of this Section 8.1(a) shall change, effective as of the
date of such change, so as to remain equal to the Applicable Margin plus the new
Chase Bank Rate, new U.S. Prime
37
Rate, or new Canadian Prime Rate, as the case may be. All interest rates shall
be calculated based on a 360-day year and actual days elapsed.
(b) Interest on Term Loans. Interest on the portions of the principal
----------------------
balance of the Term Loans shall be payable monthly on the first day of each
month and shall accrue at a rate per annum equal to the Applicable Margin plus
the Chase Bank Rate. In the event of any change in said Chase Bank Rate, the
rate set forth in the first sentence of this Section 8.1(b) shall change,
effective as of the date of such change, so as to remain equal to the Applicable
Margin plus the new Chase Bank Rate. All interest rates shall be calculated
based on a 360-day year and actual days elapsed.
(c) Additional Disclosure Regarding Interest on Loans to Ronson Canada.
------------------------------------------------------------------
(i) For purposes of disclosure under the Interest Act
(Canada), where interest is calculated pursuant thereto at a rate based upon a
three hundred sixty (360) day year or three hundred sixty-five (365) day year
(the "First Rate"), the rate or percentage of interest on a yearly basis is
equivalent to such First Rate multiplied by the actual number of days in the
year divided by three hundred sixty (360) or three hundred sixty-five (365), as
applicable.
(ii) Notwithstanding the provisions of this Section 8 or any
other provision of this Financing Agreement, in no event shall the aggregate
"interest" (as that term is defined in Section 347 of the Criminal Code
(Canada)) with respect to any Loans by or on behalf of Canadian Lender exceed
the effective annual rate of interest on the "credit advanced" (as defined
therein) lawfully permitted under Section 347 of the Criminal Code (Canada). The
effective annual rate of interest for such purpose shall be determined in
accordance with generally accepted actuarial practices and principles over the
term of the applicable Loan by or on behalf of Canadian Lender, and in the event
of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by Agent will be conclusive for the purposes of such determination.
(iiii) A certificate of an authorized signing officer of CIT
as to each rate of interest payable hereunder from time to time absent manifest
error shall be conclusive evidence of such rate.
(iv) For greater certainty, unless otherwise specified in this
Financing Agreement or any of the other Loan Documents, as applicable, whenever
any amount is payable under this Financing Agreement or any of the other Loan
Documents by the Companies as interest or as a fee which requires the
calculation of an amount using a percentage per annum, each party to this
Financing Agreement acknowledges and agrees that such amount shall be calculated
as of the date payment is due without application of the "deemed reinvestment
principle" or the "effective yield method." As an example, when interest is
calculated and payable monthly, the rate of interest payable per month is one
twelfth (1/12) of the stated rate of interest per annum.
8.2 Default Interest Rate. Upon the occurrence of an Event of Default,
----------------------
all Obligations may thereafter, at the election of CIT, bear interest at the
Default Rate of Interest irrespective of whether such Event of Default is
waived. The Default Rate of Interest may be applied retroactively from the date
upon which the Event of Default occurred, notwithstanding that CIT obtained
knowledge of such Event of Default at a later date. If an Event of Default is
waived by CIT, any Default Rate of Interest imposed by CIT shall not apply and
continue beyond the end of the fiscal quarter then in effect at the time such
Event of Default is waived.
8.3 Fees and Expenses Relating to Letters of Credit.
-----------------------------------------------
(a) Letter of Credit Guaranty Fee. In consideration of the issuance of
-----------------------------
any Letter of Credit Guaranty by CIT or other assistance of CIT in obtaining
Letters of Credit pursuant to Section 5 hereof, Ronson, RAI and RCPC agree to
pay to CIT a Letter of Credit Guaranty Fee equal to the Applicable Margin per
annum on the face amount of each Letter of Credit. All Letter of Credit Guaranty
Fees shall be due and payable monthly on the first day of each month.
(b) Charges of Issuing Bank. Ronson, RAI and RCPC agree to reimburse
------------------------
CIT for any and all charges, fees, commissions, costs and expenses charged to
CIT for their account by an Issuing Bank in connection with, or arising out of,
Letters of Credit or out of transactions relating thereto, when charged to or
paid by CIT, or as may be due upon any termination of this Financing Agreement.
38
8.4 Out-of Pocket Expenses. The Companies agree to reimburse CIT for
-----------------------
all Out-of-Pocket Expenses when charged to or paid by CIT.
8.5 Line of Credit Fee; Collection Days. On the last day of each month,
-----------------------------------
commencing with the month in which the Closing Date occurs,(a) the Companies
agree to pay to CIT the Line of Credit Fee, and (b) CIT shall charge the
Companies for interest at the rate set forth in Section 8.1 (or Section 8.2, if
applicable) hereof on the Collection Days for the immediately preceding month.
8.6 Loan Facility Fee; Application of Deposits and Commitment Fee. To
---------------------------------------------------------------
induce CIT to enter into this Financing Agreement and to extend to the Companies
the Line of Credit, the Companies agreed to pay to CIT a Loan Facility Fee in
the amount of $39,450.00, which was paid by the Companies and fully earned by
CIT as a commitment fee in connection with the issuance of the Commitment
Letter. Any unused due diligence deposit held by CIT pursuant to the Commitment
Letter shall be credited to the Revolving Loan Account.
8.7 Administrative Management Fee. On the Closing Date and on the first
-----------------------------
day of the month following the month in which each annual anniversary of the
Closing Date occurs, the Companies agree to pay to CIT the Administrative
Management Fee, which shall be fully earned when paid.
8.8 Standard Operational Fees. In addition to the Administrative
---------------------------
Management Fee and all Out-of-Pocket Expenses incurred by CIT in connection with
any action taken under Section 7.2(a) hereof (but without duplication), the
Companies agree to pay to CIT (a) all Documentation Fees, (b) CIT's standard
charges for any employee of CIT used to conduct any of the examinations,
verifications, inspections, physical counts and other valuations described in
Section 7.2(a) hereof (currently $1,000 per person, per day), and CIT's standard
charges for each wire transfer made by CIT to or for the benefit of the
Companies (currently $30) and for Xxxx and Bradstreet searches conducted by CIT
for any Company's account (currently $65), provided that such standard charges
may be increased by CIT from time to time. Such charges shall be due and payable
in accordance with CIT's standard practices, as in effect from time to time.
8.9 Intentionally left blank.
------------------------
8.10 Intentionally left blank.
------------------------
8.11 Early Termination Fee and Prepayment Premium. In the event the
-----------------------------------------------
Companies terminate the Revolving Line of Credit or this Financing Agreement on
an Early Termination Date, the Early Termination Fee shall be due and payable in
full on the date of termination. In the event the Domestic Companies voluntarily
prepay the Initial Term Loan, in whole or in part, on an Early Termination Date,
the Prepayment Premium applicable thereto shall be due and payable in full on
the date of such prepayment. In the event this Financing Agreement is terminated
pursuant to Section 10.2 hereof (whether automatically or by CIT), an Early
Termination Fee and Prepayment Premium shall be due and payable in full on the
date of termination.
8.12 Capital Adequacy. In the event that CIT (or any financial
-----------------
institution that purchases from CIT a participation in the loans made by CIT to
the Companies hereunder), subsequent to the Closing Date, determines in the
exercise of its reasonable business judgment that (x) any change in applicable
law, rule, regulation or guideline regarding capital adequacy, or (y) any change
in the interpretation or administration thereof, or (z) compliance by CIT or
such financial institution with any new request or directive regarding capital
adequacy (whether or not having the force of law) of any central bank or other
governmental or regulatory authority, has or would have the effect of reducing
the rate of return on CIT's or such financial institution's capital as a
consequence of its obligations hereunder to a level below that which CIT or such
financial institution could have achieved but for such change or compliance
(taking into consideration CIT's or such financial institution's policies with
respect to capital adequacy) by an amount deemed material by CIT or such
financial institution in the exercise of their reasonable business judgment, the
Companies agree to pay to CIT, no later than five (5) days following demand by
CIT, such additional amount or amounts as will compensate CIT or such financial
institution for such reduction in rate of return. In determining such amount or
amounts, CIT and such financial institution may use any reasonable averaging or
attribution methods. The protection of this Section 8.12 shall be available
39
to CIT and such financial institution regardless of any possible contention of
invalidity or inapplicability with respect to the applicable law, regulation or
condition. A certificate of CIT or such financial institution setting forth such
amount or amounts as shall be necessary to compensate CIT or such financial
institution with respect to this Section 8.12 and the calculation thereof, when
delivered to the Companies, shall be conclusive and binding on each Company
absent manifest error. In the event CIT or such financial institution exercises
its rights pursuant to this Section 8.12, and subsequent thereto determines that
the amounts paid by the Companies exceeded the amount which CIT or such
financial institution actually required to compensate CIT or such financial
institution for any reduction in rate of return on its capital, such excess
shall be returned to the Companies by CIT or such financial institution, as the
case may be.
8.13. Taxes, Reserves and Other Conditions. In the event that any
---------------------------------------
applicable law, treaty or governmental regulation, or any change therein or in
the interpretation or application thereof, or compliance by CIT (or by any
financial institution that purchases from CIT a participation in the loans made
by CIT to the Companies hereunder) with any new request or directive (whether or
not having the force of law) of any central bank or other governmental or
regulatory authority, shall:
(a) subject CIT or such financial institution to any tax of any kind
whatsoever (including without limitation any withholding taxes) with respect to
this Financing Agreement or the other Loan Documents, or change the basis of
taxation of payments to CIT or such financial institution of principal, fees,
interest or any other amount payable hereunder or under any of the other Loan
Documents (except for changes in the rate of tax on the overall net income of
CIT or such financial institution by the federal government or other
jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by CIT or such
financial institution by reason of or in respect to this Financing Agreement and
the Loan Documents, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or
(c) impose on CIT or such financial institution any other condition
with respect to this Financing Agreement or any other document;
and the result of any of the foregoing is to (i) increase the cost to CIT of
making, renewing or maintaining CIT's loans hereunder (or the cost to such
financial institution in participating in such loans) by an amount deemed
material by CIT or such financial institution in the exercise of its reasonable
business judgment, or (ii) reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the loans made hereunder
by an amount that CIT or such financial institution deems to be material in the
exercise of its reasonable business judgment, the Companies agree to pay to CIT,
no later than five (5) days following demand by CIT, such additional amount or
amounts as will compensate CIT or such financial institution for such increase
in cost or reduction in payment, as the case may be. A certificate of CIT or
such financial institution setting forth such amount or amounts as shall be
necessary to compensate CIT or such financial institution with respect to this
Section 8.13 and the calculation thereof, when delivered to the Companies, shall
be conclusive and binding on each Company absent manifest error. In the event
CIT or such financial institution exercises its rights pursuant to this Section
8.13, and subsequent thereto determines that the amounts paid by the Companies
in whole or in part exceeded the amount which CIT or such financial institution
actually required to compensate CIT or such financial institution for any
increase in cost or reduction in payment, such excess shall be returned to the
Companies by CIT or such financial institution, as the case may be.
Notwithstanding any other provisions contained in this Financing
Agreement, CIT hereby acknowledges and agrees that CIT (excluding the Canadian
Lender) will not sell a participation in the loans made by CIT (excluding the
Canadian Lender) to the Companies hereunder to any financial institution that is
not a "United States person" (within the meaning of Section 7701(a)(3) of the
Internal Revenue Code of 1986, as amended), or not otherwise entitled to an
exemption from withholding tax on all or any portion of the payments to be made
hereunder.
8.14 Authority to Charge Revolving Loan Account. The Companies hereby
-------------------------------------------
authorize CIT to charge their Revolving Loan Accounts with the amount of all
payments due under this Section 8 as such payments become due. Any amount
charged to the Revolving Loan Accounts of the Domestic Companies shall be deemed
a Chase Bank Rate Loan hereunder and any amount charged to the Revolving Loan
Account of Ronson Canada shall be deemed a Canadian
40
Rate Loan hereunder and in each case shall bear interest at the rate provided in
Section 8.1 (or Section 8.2, if applicable) of this Financing Agreement. The
Companies confirm that any charges which CIT may make to the Revolving Loan
Account as provided herein will be made as an accommodation to the Companies and
solely at CIT's discretion.
SECTION 9. Powers
------
9.1 Authority. The Companies hereby authorize CIT, or any person or
---------
agent which CIT may designate, at the Companies' cost and expense, to exercise
all of the following powers, which authority shall be irrevocable until the
termination of this Financing Agreement and the full and final payment and
satisfaction of the Obligations:
(a) To receive, take, endorse, sign, assign and deliver, all in the
name of CIT or the Companies (or any of them), any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to the Companies
(or any of them) and to notify postal authorities to change the address for
delivery thereof to such address as CIT may designate;
(c) To request from customers indebted on Accounts at any time, in the
name of CIT, information concerning the amounts owing on the Accounts;
(d) To request from customers indebted on Accounts at any time, in the
name of the Companies (or any of them), any certified public accountant
designated by CIT or any other designee of CIT, information concerning the
amounts owing on the Accounts;
(e) To transmit to customers indebted on Accounts notice of CIT's
interest therein and to notify customers indebted on Accounts to make payment
directly to CIT for the Companies' account; and
(f) To take or bring, in the name of CIT or the Companies (or any of
them), all steps, actions, suits or proceedings deemed by CIT necessary or
desirable to enforce or effect collection of the Accounts.
9.2 Limitations on Exercise. Notwithstanding any other provision of
-----------------------
this Financing Agreement to the contrary, the powers set forth in Sections
9.1(b), (e) and (f) may only be exercised if an Event of Default shall have
occurred and remain outstanding.
SECTION 10. Events of Default and Remedies
------------------------------
10.1 Events of Default. Each of the following events shall constitute
-----------------
an "Event of Default" under this Agreement:
(a) the cessation of the business of any Company or any subsidiary of a
Company, or the calling of a meeting of the creditors of any Company or any
subsidiary of a Company for purposes of compromising its debts and obligations;
(b) the failure of any Company or any subsidiary of a Company to
generally meet its debts as those debts mature;
(c) (i) the commencement by any Company or any subsidiary of a Company
of any bankruptcy, insolvency, arrangement, reorganization, receivership,
assignment for the benefit of creditors or similar proceedings under any federal
or state law or under any applicable Canadian or Provincial law or statute; or
(ii) the commencement against any Company or any subsidiary of a Company of any
bankruptcy, insolvency, arrangement, reorganization, receivership, assignment
for the benefit of creditors or similar proceeding under any federal or state
law or under any applicable Canadian or Provincial law or statute by creditors
of any of them, but only if such proceeding is not contested by such Company or
any subsidiary of such Company, as applicable, within ten (10) days and not
dismissed or vacated within thirty (30) days of commencement, or any of the
actions or relief sought in any such proceeding shall occur or be authorized by
such Company or any subsidiary of a Company;
41
(d) the breach or violation by any Company of any warranty,
representation or covenant contained in this Financing Agreement (other than
those referred to in Section 10.1(e) below) or any of the other Loan Documents,
provided that such breach or violation shall not be deemed to be an Event of
Default unless such Company fails to cure such breach or violation to CIT's
satisfaction within twenty (20) days from the date of such breach or violation;
provided, however, that, such twenty (20) day period shall not apply in the case
of (i) any failure to observe any such representation, warranty or covenant
which is not capable of being cured at all or within such twenty (20) day period
or which has been the subject of a prior failure within a six (6) month period,
or (ii) an intentional breach by such Company or Guarantor of any such
representation, warranty or covenant;
(e) the breach or violation by any Company of any warranty,
representation or covenant contained in Sections 3.2, 6.3, 6.4, 6.5, 6.6(b),
7.1(a), 7.1(b), 7.1(d), 7.2(b), 7.2(c), 7.2(d), 7.2(f), 7.2(g), 7.2(h), 7.3 and
7.4;
(f) the failure of the Companies to pay any of the Obligations within
five (5) Business Days of the due date thereof, provided that nothing contained
herein shall prohibit CIT from charging such amounts to the Revolving Loan
Account on the due date thereof;
(g) any Company shall (i) engage in any "prohibited transaction" as
defined in ERISA, (ii) incur any "accumulated funding deficiency" as defined in
ERISA, (iii) incur any "reportable event" as defined in ERISA, (iv) terminate
any "plan", as defined in ERISA or (v) become involved in any proceeding in
which the Pension Benefit Guaranty Corporation shall seek appointment, or is
appointed, as trustee or administrator of any "plan", as defined in ERISA, and
with respect this Section 10.1(g), such event or condition either (x) remains
uncured for a period of thirty (30) days from date of occurrence and (y) could,
in CIT's reasonable business judgment, subject any Company to any tax, penalty
or other liability having a Material Adverse Effect;
(h) the occurrence of any default or event of default (after giving
effect to any applicable grace or cure period) under any of the other Loan
Documents, or any of the other Loan Documents ceases to be valid, binding and
enforceable in accordance with its terms;
(i) the occurrence of any default or event of default (after giving
effect to any applicable grace or cure period) under any instrument or agreement
evidencing or governing (i) the Subordinated Debt or (ii) other Indebtedness of
the Companies (or any of them) having a principal amount in excess of $50,000;
(j) the Companies (or any of them) shall modify the terms or provisions
of any agreement, instrument or other document relating to any Subordinated Debt
without CIT's prior written consent, unless such modification is permitted by
the applicable Subordination Agreement;
(k) a Change of Control shall occur;
(l) a final judgment for the payment of money in excess of $50,000
shall be rendered against any Company or any Guarantor other than the Limited
Guarantor (other than a judgment as to which a financially sound and reputable
insurance company has acknowledged coverage of such claim in writing), and
either (i) within thirty (30) days after the entry of such judgment, shall not
have been discharged or stayed pending (or if stayed pending appeal, shall not
have been discharged within thirty (30) days after the entry of a final order of
affirmance on appeal), or (ii) enforcement proceedings shall be commenced by any
holder of such judgment;
(m) any other event shall have occurred that has had or could
reasonably be expected to have a Material Adverse Effect; or.
(n) any Guarantor shall attempt to terminate its Guaranty or deny that
such Guarantor has any liability thereunder, or any Guaranty shall be declared
null and void and of no further force and effect.
10.2 Remedies With Respect to Outstanding Loans. Upon the occurrence of
------------------------------------------
a Default or an Event of Default and continuing thereafter unless and until such
Default is cured to CIT's satisfaction or such Event of Default is
42
waived by CIT in writing, at the option of CIT, all loans, advances and
extensions of credit provided for in Sections 3, 4 and 5 of this Financing
Agreement thereafter shall be made in CIT's sole discretion, and the obligation
of CIT to make Revolving Loans, and to assist the Companies in opening Letters
of Credit, shall cease. In addition, upon the occurrence of an Event of Default,
CIT may, at its option (a) declare all Obligations immediately due and payable,
(b) charge the Companies the Default Rate of Interest on all then outstanding or
thereafter incurred Obligations in lieu of the interest provided for in Sections
8.1 of this Financing Agreement, and (c) immediately terminate this Financing
Agreement upon notice to the Companies. Notwithstanding the foregoing, (x) CIT's
commitment to make loans, advances and extensions of credit provided for in
Sections 3, 4 and 5 of this Financing Agreement automatically shall terminate
without any declaration, notice or demand by CIT upon the commencement of any
proceeding described in Section 10.1(c), and (y) this Financing Agreement
automatically shall terminate and all Obligations shall become due and payable
immediately without any declaration, notice or demand by CIT, upon the
commencement of any proceeding described in clause (i) of Section 10.1(c) or the
occurrence of an Event of Default described in clause (ii) of Section 10.1(c).
The exercise of any option is not exclusive of any other option that may be
exercised at any time by CIT.
10.3 Remedies With Respect to Collateral.
-----------------------------------
(a) General. Immediately after the occurrence of an Event of Default,
CIT may, at its option, to the extent permitted by applicable law: (a) remove
from any premises where same may be located any and all books and records,
computers, electronic media and software programs associated with any Collateral
(including electronic records, contracts and signatures pertaining thereto),
documents, instruments and files, and any receptacles or cabinets containing
same, relating to the Accounts, and CIT may use, at the Companies' expense, such
of the Companies' personnel, supplies or space at any Company's places of
business or otherwise, as may be necessary to properly administer and control
the Accounts or the handling of collections and realizations thereon; (b) bring
suit, in the name of the Companies (or any of them) or CIT, and generally shall
have all other rights respecting the Accounts, including, without limitation,
the right to (i) accelerate or extend the time of payment, (ii) settle,
compromise, release in whole or in part any amounts owing on any Accounts and
(iii) issue credits in the name of the Companies (or any of them) or CIT; (c)
sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at CIT's sole option and discretion, and
CIT may bid or become a purchaser at any such sale, free from any right of
redemption, which right is hereby expressly waived by the Companies; (d)
foreclose CIT's security interests in the Collateral by any available judicial
procedure, or take possession of any or all of the Collateral without judicial
process, and to enter any premises where any Collateral may be located for the
purpose of taking possession of or removing the same; and (e) exercise any other
rights and remedies provided in law, in equity, by any other Loan Document or
contract or otherwise. CIT shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral whether in its then condition or after further preparation or
processing, in the name of the Companies (or any of them) or CIT, or in the name
of such other party as CIT may designate, either at public or private sale or at
any broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations (including, without limitation, warranties of
title, possession, quiet enjoyment and the like), and upon such other terms and
conditions as CIT in its sole discretion may deem advisable, and CIT shall have
the right to purchase at any such sale. If any Inventory and Equipment shall
require rebuilding, repairing, maintenance or preparation, CIT shall have the
right, at its option, to do such of the aforesaid as is necessary, for the
purpose of putting the Inventory and Equipment in such saleable form as CIT
shall deem appropriate. The Companies agree, at the request of CIT, to assemble
the Inventory and Equipment, and to make it available to CIT at premises of the
Companies or elsewhere and to make available to CIT the premises and facilities
of the Companies for the purpose of CIT's taking possession of, removing or
putting the Inventory and Equipment in saleable form. If notice of intended
disposition of any Collateral is required by law, it is agreed that ten (10)
days notice shall constitute reasonable notification and full compliance with
the law. The net cash proceeds resulting from CIT's exercise of any of the
foregoing rights (after deducting all Out-of-Pocket Expenses relating thereto)
shall be applied by CIT to the payment of the Obligations, whether due or to
become due, in such order as CIT may elect, and the Companies shall remain
liable to CIT for any deficiencies, and CIT in turn agrees to remit to the
Companies or their successors or assigns, any surplus resulting therefrom. Upon
CIT's request, the Companies shall pay to CIT, in immediately available funds,
an amount equal to 110% of the face amount of any outstanding Letters of Credit
to be held by CIT as cash collateral. In furtherance of the foregoing, CIT may
withhold any credit balances in the Revolving Loan Account to cover such amount.
The enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other right of CIT
under applicable law or the other Loan Documents, all of which shall be
cumulative.
43
(b) Specified Intellectual Property. Notwithstanding any provision to
the contrary contained in this Financing Agreement, CIT may not assert any
right, title or interest in or to the Specified Intellectual Property (other
than the commencement of foreclosure proceedings upon the occurrence of an Event
of Default) unless, during the period extending ninety (90) days after the
commencement of such foreclosure proceedings, the Companies have not satisfied
all Obligations consisting of and arising from the Initial Additional Term Loan.
10.4 General Indemnity. In addition to the Companies' agreement to
------------------
reimburse CIT for Out-of-Pocket Expenses, but without duplication, the Companies
hereby agree to indemnify CIT and its officers, directors, employees, attorneys
and agents (each, an "Indemnified Party") from, and to defend and hold each
Indemnified ------------------ Party harmless against, any and all losses,
liabilities, obligations, claims, actions, judgments, suits, damages, penalties,
costs, fees, expenses (including reasonable attorney's fees) of any kind or
nature which at any time may be imposed on, incurred by, or asserted against,
any Indemnified Party:
(a) as a result of CIT's exercise of (or failure to exercise) any of
CIT's rights and remedies hereunder or any other Loan Document, including,
without limitation, (i) any sale or transfer of the Collateral, (ii) the
preservation, repair, maintenance, preparation for sale or securing of any
Collateral, and (iii) the defense of CIT's interests in the Collateral
(including the defense of claims brought by the Companies (or any of them), as a
debtor-in-possession or otherwise, any secured or unsecured creditors of the
Companies (or any of them), or any trustee or receiver in bankruptcy);
(b) as a result of any environmental pollution, hazardous material or
environmental clean-up relating to the Real Estate, the Companies' operation and
use of the Real Estate, and the Companies' off-site disposal practices;
(c) arising from or relating to (i) the maintenance and operation of
any Depository Account, (ii) any Depository Account Control Agreements and (iii)
any action taken (or failure to act) by any Indemnified Party with respect
thereto;
(d) in connection with any regulatory investigation or proceeding by
any regulatory authority or agency having jurisdiction over the Companies (or
any of them); and
(e) otherwise relating to or arising out of the transactions
contemplated by this Financing Agreement and the other Loan Documents, or any
action taken (or failure to act) by any Indemnified Party with respect thereto;
provided that an Indemnified Party's conduct in connection with the any of the
foregoing matters does not constitute gross negligence or willful misconduct, as
finally determined by a court of competent jurisdiction. This indemnification
shall survive the termination of this Financing Agreement and the payment and
satisfaction of the Obligations. CIT may from time to time establish
Availability Reserves with respect to this indemnity as CIT may deem advisable
in the exercise of its reasonable business judgment, and upon termination of
this Financing Agreement, CIT may hold such reserves as cash reserves as
security for this indemnity.
SECTION 11. Termination
-----------
Except as otherwise provided in Section 10.2 hereof, CIT may terminate
this Financing Agreement and the Line of Credit only as of the initial or any
subsequent Termination Date, and then only by giving the Companies at least
ninety (90) days prior written notice of termination. If this Financing
Agreement is terminated as contemplated by Section 10.2 hereof (whether
automatically or by CIT) prior to any Termination Date, the Companies shall pay
to CIT any Early Termination Fee and Prepayment Premium due and payable
hereunder, on the date of termination. The Companies, or any one of them, may
terminate this Financing Agreement at any time prior to any Termination Date
upon thirty (30) days prior written notice to CIT, provided that the Companies
pay to CIT any Early Termination Fee and Prepayment Premium due and payable
hereunder on the date of termination. In view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of CIT's lost profits as a result thereof, such
Early Termination Fee and Prepayment Premium shall constitute a part of the
Obligations, be presumed to be the amount of damages sustained by CIT as a
result of such early termination and the Companies agree
44
that such fees are reasonable under currently existing circumstances. A
termination by any one Company shall be deemed a termination by all Companies.
THIS FINANCING AGREEMENT, UNLESS TERMINATED AS HEREIN PROVIDED, SHALL
AUTOMATICALLY CONTINUE FROM TERMINATION DATE TO TERMINATION DATE. All
Obligations shall become due and payable in full on the date of any termination
hereunder and, pending a final accounting of the Obligations, the Companies
shall pay to CIT, in immediately available funds, an amount sufficient to cover
any contingent Obligations then outstanding, including, but not limited to, 110%
of the face amount of any outstanding Letters of Credit to be held by CIT as
cash collateral. In furtherance of the foregoing, CIT may withhold any credit
balances in the Revolving Loan Account to cover such amount. All of CIT's
rights, liens and security interests granted pursuant to the Loan Documents
shall continue after any termination of this Financing Agreement until all
Obligations have been fully and finally paid and satisfied (other than
Obligations collateralized as aforesaid).
SECTION 12. Miscellaneous
-------------
12.1 Waivers. The Companies hereby waive diligence, demand,
-------
presentment, protest and any notices thereof as well as notices of nonpayment,
intent to accelerate and acceleration. No waiver of an Event of Default by CIT
shall be effective unless such waiver is in writing and signed by CIT, and shall
be binding as against both Lenders. No delay or failure of CIT to exercise any
right or remedy hereunder, whether before or after the happening of any Event of
Default, shall impair any such right or remedy, or shall operate as a waiver of
such right or remedy, or as a waiver of such Event of Default. A waiver on any
one occasion shall not be construed as a bar to or waiver of any right or remedy
on any future occasion. No single or partial exercise by CIT of any right or
remedy precludes any other or further exercise thereof, or precludes any other
right or remedy.
12.2 Entire Agreement; Amendments. This Financing Agreement and the
------------------------------
other Loan Documents: (a) constitute the entire agreement between the Companies
and CIT; (b) supersede any prior agreements (including the agreements set forth
in the Commitment Letter); (c) may be amended only by a writing signed by the
Companies and CIT (which shall be binding as against both Lenders); and (d)
shall bind and benefit the Companies and CIT and their respective successors and
assigns, except that no Company shall not have the right to assign (by operation
of law or otherwise) its rights or obligations hereunder or any interest herein
without the prior written consent of CIT. Should the provisions of any Loan
Document conflict with the provisions of this Financing Agreement, the
provisions of this Financing Agreement shall apply and govern.
12.3 Usury Limit. In no event shall the Companies, upon demand by CIT
-----------
for payment of any indebtedness relating hereto, by acceleration of the maturity
thereof, or otherwise, be obligated to pay interest and fees in excess of the
amount permitted by law. Regardless of any provision herein or in any agreement
made in connection herewith, CIT shall never be entitled to receive, charge or
apply, as interest on any indebtedness relating hereto, any amount in excess of
the maximum amount of interest permissible under applicable law. If CIT ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such. If as a result, the entire principal
amount of the Obligations is paid in full, any remaining excess shall be
refunded to the Companies. This Section 12.3 shall control every other provision
of the Financing Agreement, the other Loan Documents and any other agreement
made in connection herewith.
12.4 Severability. If any provision hereof or of any other Loan
------------
Document is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in full force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be added
automatically as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be possible.
12.5 WAIVER OF JURY TRIAL; SERVICE OF PROCESS. EACH COMPANY, CIT AND
-----------------------------------------
THE LENDERS EACH HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREUNDER. EACH COMPANY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE
OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY
45
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED. IN NO EVENT WILL CIT BE
LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
12.6 Notices. Except as otherwise herein provided, any notice or other
-------
communication required hereunder shall be in writing (messages sent by e-mail or
other electronic transmission (other than by telecopier) shall not constitute a
writing, however any signature on a document or other writing that is
transmitted by e-mail or telecopier shall constitute a valid signature for
purposes hereof), and shall be deemed to have been validly served, given or
delivered when received by the recipient if hand delivered, sent by commercial
overnight courier or sent by facsimile, or three (3) Business Days after deposit
in the United States mail, with proper first class postage prepaid and addressed
to the party to be notified as follows:
(a) if to CIT, from and after the date hereof through October 1,
2006, at:
The CIT Group/Commercial Services, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Regional Credit Manager
Telecopier No.: (000) 000-0000;
And after October 1, 2006, at:
The CIT Group/Commercial Services, Inc.
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Regional Credit Manager
Telecopier No.: (000) 000-0000;
With a courtesy copy of any notice to CIT's counsel at:
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esquire
Telecopier No.: (000) 000-0000
(b) if to the Companies (or any of them) at:
Ronson Corporation
Corporate Park III
Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxxx XX
Telecopier No.: (000) 000-0000
46
With a courtesy copy of any notice to Companies' counsel at:
XxXxxxxx & English, LLP
Four Gateway Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esquire
Telecopier No.: (000) 000-0000; or
(c) to such other address as any party may designate for itself by
like notice.
Each of the Companies hereby designates the Funds Administrator as its
representative and agent on its behalf for the purposes of giving and receiving
all notices and consents under this Financing Agreement, the other Loan
Documents or under any other documents, instrument or agreement related thereto
and taking all other actions (including in respect of compliance with covenants)
on behalf of itself and/or each of the other Companies under the Loan Documents.
The Funds Administrator hereby accepts such appointment. CIT may regard any
notice or other communication pursuant to any of the Loan Documents from the
Funds Administrator as a notice or communication from each of the Companies, and
may give any notice or communication required or permitted to be given to any of
the Companies under any of the Loan Documents to the Funds Administrator. Each
of the Companies agrees that each notice, election, representation and warranty,
covenant, agreement and undertaking made on its behalf by the Funds
Administrator shall be deemed for all purposes to have been made by such entity
and shall be binding upon and enforceable against such entity to the same extent
as if the same had been made directly by such entity.
12.7 Joint and Several Liability.
---------------------------
(a) Joint and Several Liability. All Revolving Loans and Term Loans
made to the Domestic Companies shall be deemed jointly funded to, and received
by, such Companies. Each Domestic Company jointly and severally agrees to pay,
and shall be jointly and severally liable for the payment and performance of,
all Obligations. Each Domestic Company acknowledges and agrees that the joint
and several liability of such Company is provided as an inducement to CIT to
provide loans and other financial accommodations to the Companies, and that each
such loan or other financial accommodation shall be deemed to have been done or
extended by CIT in consideration of, and in reliance upon, the joint and several
liability of the Domestic Companies. The joint and several liability of each
Domestic Company hereunder is absolute, unconditional and continuing, regardless
of the validity or enforceability of any of the Obligations, or the fact that a
security interest or lien in any Collateral may not be enforceable or subject to
equities or defenses or prior claims in favor of others, or may be invalid or
defective in any way and for any reason. Each Domestic Company hereby waives:
(i) all notices to which such Company may be entitled as a co-obligor with
respect to the Obligations, including, without limitation, notice of (x)
acceptance of this Financing Agreement, (y) the making of loans or other
financial accommodations under this Financing Agreement, or the creation or
existence of the Obligations, and (z) presentment, demand, protest, notice of
protest and notice of non-payment; and (ii) all defenses based on (w) any
modification (or series of modifications) of this Financing Agreement or the
other Loan Documents that may create a substituted contract, or that may
fundamentally alter the risks imposed on such Company hereunder, (x) the release
of any other Company from its duties this Financing Agreement or the other Loan
Documents, or the extension of the time of performance of any other Company's
duties hereunder or thereunder, (y) the taking, releasing, impairment or
abandonment of any Collateral, or the settlement, release or compromise of the
Obligations or any other Company's or Guarantor's liabilities with respect to
all or any portion of the Obligations, or (z) any other act (or any failure to
act) that fundamentally alters the risks imposed on such Company by virtue of
its joint and several liability hereunder. It is the intent of each Domestic
Company by this paragraph to waive any and all suretyship defenses available to
such Company with respect to the Obligations, whether or not specifically
enumerated above.
(b) Subrogation and Contribution Rights. Each Domestic Company hereby
agrees that until the full and final payment and satisfaction of the Obligations
and the termination of this Financing Agreement, such Company will not exercise
any subrogation, contribution or other right or remedy against any other
Domestic Company or any security
47
for any of the Obligations arising by reason of such Domestic Company's
performance or satisfaction of its joint and several liability hereunder. In
addition, each Domestic Company agrees that (i) such Company's right to receive
any payment of amounts due with respect to such subrogation, contribution or
other rights is subordinated to the full and final payment and satisfaction of
the Obligations, and (ii) such Company agrees not to demand, xxx for or
otherwise attempt to collect any such payment until the full and final payment
and satisfaction of the Obligations and the termination of this Financing
Agreement.
12.8 CHOICE OF LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
-------------
THIS FINANCING AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN
DOCUMENT INCLUDES AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION.
12.9 Choice of Forum. . Each Company, CIT and the Lenders irrevocably
---------------
consent and submit to the non-exclusive jurisdiction of the courts of the State
of New York and the United States District Court for the Southern District of
New York, whichever CIT may elect, and waive any objection based on venue or
forum non conveniens with respect to any action instituted therein arising under
this Financing Agreement or any of the other Loan Documents or in any way
connected with or related or incidental to the dealings of the parties hereto in
respect of this Financing Agreement or any of the other Loan Documents or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that CIT shall have the right to bring any action
or proceeding against any Company or its property in the courts of any other
jurisdiction which CIT deems necessary or appropriate in order to realize on the
Collateral or to otherwise enforce its rights against such Company or its
property).
12.10 Interpretative Provisions.
-------------------------
(a) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(b) All references to the Companies, Guarantor(s) and CIT pursuant to
the definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns and, in the case of CIT,
shall refer to it individually and include the Canadian Lender, and refer to it
in its capacity as agent for itself and the Canadian Lender, where appropriate.
(c) The word "including" when used in this Financing Agreement shall
mean "including, without limitation" and the word "will" when used in this
Financing Agreement shall be construed to have the same meaning and effect as
the word "shall."
(d) A Default shall remain outstanding until such Default is cured in a
manner satisfactory to CIT, if such Default is capable of being cured as
determined by CIT and an Event of Default shall remain outstanding until such
Event of Default is waived in writing by CIT.
(e) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including," the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including."
(f) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
12.11 Counterparts, Etc. . This Financing Agreement or any of the other
--------------------
Loan Documents may be executed in any number of counterparts, each of which
shall be an original, but all of which taken together shall constitute one and
the same agreement. Delivery of an executed counterpart of this Financing
Agreement or any of the other Loan Documents by facsimile or other electronic
method of transmission shall have the same force and effect as the delivery of
48
an original executed counterpart of this Financing Agreement or any of such
other Loan Documents. Any party delivering an executed counterpart of any such
agreement by facsimile or other electronic method of transmission shall also
deliver an original executed counterpart, but the failure to do so shall not
affect the validity, enforceability or binding effect of such agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed by their proper and duly authorized officers as of the
date set forth above.
RONSON CORPORATION THE CIT GROUP/COMMERCIAL SERVICES,
INC., as agent for itself and for CIT FINANCIAL LTD.
By: /s/ Xxxxx X. Xxxxxxx XX By: /s/ Xxxxx X. Xxxxxx
------------------------------------- -------------------------------------
Name: Xxxxx X. Xxxxxxx XX Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer Title: Vice President
RONSON AVIATION, INC. RONSON CONSUMER PRODUCTS CORPORATION:
By: /s/ Xxxxx X. Xxxxxxx XX By: /s/ Xxxxx X. Xxxxxxx XX
------------------------------------- -------------------------------------
Name: Xxxxx X. Xxxxxxx XX Name: Xxxxx X. Xxxxxxx XX
Title: President and Chief Executive Officer Title: President and Chief Executive Officer
RONSON CORPORATION OF CANADA LTD CIT FINANCIAL LTD.
By: /s/ Xxxxx X. Xxxxxxx XX By: /s/ X. Xxxxxx
------------------------------------- -------------------------------------
Name: Xxxxx X. Xxxxxxx XX Name: X. Xxxxxx
Title: President and Chief Executive Officer Title: Vice President
49
EXHIBIT A
FORM OF INITIAL TERM LOAN PROMISSORY NOTE
$195,000.00 July ____, 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx
FOR VALUE RECEIVED, the undersigned, RONSON CORPORATION, a New Jersey
corporation, RONSON CONSUMER PRODUCTS CORPORATION, a New Jersey corporation, and
RONSON AVIATION, INC., a New Jersey corporation (individually and collectively,
the "Company"), hereby, jointly and severally, promise to pay to the order of
THE CIT GROUP/COMMERCIAL SERVICES, INC. ("CIT") at its office located at 1211
Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, in lawful money of
the United States of America and in immediately available funds, the principal
amount of One Hundred Ninety-Five Thousand and 00/100 Dollars ($195,000.00), in
sixty (60) equal consecutive monthly principal installments of $3,250.00 each
with the first such installment due and payable on September 1, 2006 and
subsequent installments (including the final installment) due and payable on the
first day of each month thereafter until this Note is paid in full, subject to
the payment and acceleration provisions set forth in the last paragraph of this
Note.
The Company further agrees to pay interest at said office, in
like money, on the unpaid principal amount owing hereunder from time to time
from the date hereof on the dates and at the rates specified in Section 8 of the
Financing Agreement of even date herewith between the Company and CIT (the
"Financing Agreement"). Capitalized terms used in this Note and defined in the
Financing Agreement shall have the meanings given to such terms in the Financing
Agreement unless otherwise specifically defined herein.
This Note is a Promissory Note referred to in the Financing
Agreement, evidences the Initial Term Loan made to the Company thereunder, and
is subject to, and entitled to, all provisions and benefits thereof, including
optional and mandatory prepayment, in whole or in part, as provided therein.
Notwithstanding any other provision of this Note to the contrary, upon
the occurrence of any Event of Default specified in the Financing Agreement, or
upon termination of the Financing Agreement for any reason, all amounts then
remaining unpaid on this Note may become, or be declared to be, at the sole
election of CIT, immediately due and payable as provided in the Financing
Agreement.
RONSON CORPORATION
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President and Chief Executive Officer
RONSON CONSUMER PRODUCTS
CORPORATION
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President and Chief Executive Officer
RONSON AVIATION, INC.
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President and Chief Executive Officer
50
EXHIBIT B
FORM OF INITIAL ADDITIONAL TERM LOAN PROMISSORY NOTE
$750,000.00 July ____, 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx
FOR VALUE RECEIVED, the undersigned, RONSON CORPORATION, a New Jersey
corporation, RONSON CONSUMER PRODUCTS CORPORATION, a New Jersey corporation, and
RONSON AVIATION, INC., a New Jersey corporation (individually and collectively,
the "Company"), hereby, jointly and severally, promise to pay to the order of
THE CIT GROUP/COMMERCIAL SERVICES, INC. ("CIT") at its office located at 1211
Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, in lawful money of
the United States of America and in immediately available funds, the principal
amount of Seven Hundred Fifty Thousand and 00/100 Dollars ($750,000.00), in
sixty (60) equal consecutive monthly principal installments of $12,500.00 each
with the first such installment due and payable on September 1, 2006 and
subsequent installments (including the final installment) due and payable on the
first day of each month thereafter until this Note is paid in full, subject to
the payment and acceleration provisions set forth in the last paragraph of this
Note.
The Company further agrees to pay interest at said office, in
like money, on the unpaid principal amount owing hereunder from time to time
from the date hereof on the dates and at the rates specified in Section 8 of the
Financing Agreement of even date herewith between the Company and CIT (the
"Financing Agreement"). Capitalized terms used in this Note and defined in the
Financing Agreement shall have the meanings given to such terms in the Financing
Agreement unless otherwise specifically defined herein.
This Note is a Promissory Note referred to in the Financing
Agreement, evidences the Initial Additional Term Loan made to the Company
thereunder, and is subject to, and entitled to, all provisions and benefits
thereof, including optional and mandatory prepayment, in whole or in part, as
provided therein.
Notwithstanding any other provision of this Note to the contrary, upon
the occurrence of any Event of Default specified in the Financing Agreement, or
upon termination of the Financing Agreement for any reason, all amounts then
remaining unpaid on this Note may become, or be declared to be, at the sole
election of CIT, immediately due and payable as provided in the Financing
Agreement.
RONSON CORPORATION
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President and Chief Executive Officer
RONSON CONSUMER PRODUCTS
CORPORATION
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President and Chief Executive Officer
RONSON AVIATION, INC.
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President and Chief Executive Officer
51
EXHIBIT C
COMPLIANCE CERTIFICATE
[Date]
The CIT Group/Commercial Services, Inc.
---------------------------
---------------------------
Xxxxxxx, XX 00000
RE: Financing Agreement dated as of July [___], 2006 (the
"Financing Agreement") among The CIT Group/Commercial
Services, Inc. ("CIT") and Ronson Corporation, Ronson
Aviation, Inc., Ronson Consumer Products Corporation and
Ronson Corporation of Canada, Inc. (collectively, the
"Companies")
Ladies and Gentlemen:
Reference is made to the Financing Agreement. Capitalized terms used
herein and not specifically defined shall have the meanings given to such terms
in the Financing Agreement.
Pursuant to Section 7.2(h) of the Financing Agreement, I enclose the
Companies' financial statements for the month ended _______, 200__ (the
"Reporting Month") and the fiscal year-to-date period ended _______, 200__. As
the ________ of the Funds Administrator, I hereby certify to CIT, on behalf of
the Companies, that: (a) the financial statement(s) fairly and accurately
present the Companies' financial condition at the end of the particular
accounting periods covered by such financial statements, as well as the
Companies' operating results during such accounting periods, subject to year-end
audit adjustments; (b) during the Reporting Month, (i) to my knowledge, there
has occurred no Default or Event of Default under the Financing Agreement, or,
if I have knowledge that any Default or Event of Default has occurred during
such period, a detailed description thereof is set forth on the Exhibit __
attached hereto, and (ii) the Companies have not received any notice of
cancellation with respect to its property insurance policies; and (c) Exhibit __
attached hereto sets forth detailed calculations showing compliance with all
financial covenants contained in the Financing Agreement, for the periods of
measurement covered by or ending on the last day of the Reporting Month.
Very truly yours,
[attach appropriate exhibits]
52
Schedule 1.1(a) - Permitted Encumbrances
1. Liens on automobile(s) held by XX Xxxxxx Chase NA under secured
financing due June 30, 2009.
2. Liens on automobile(s) held by Ford Motor Credit under secured
financing due March 15, 2009.
3. Liens on automobile(s) held by Ford Motor Credit under secured
financing due December 9, 2008.
4. Liens on automobile(s) held by Ford Motor Credit under secured
financing due July 12, 2008.
5. Lien on RVSM Air Data Test set held by Bevenco under Finance Agreement,
due June 30, 2011.
Schedule 1.1(b) - Permitted Indebtedness
---------------
BORROWER and LENDER TYPE SECURITY OR FINAL
LEASED ASSEPT DUE DATE
A. RONSON CORPORATION
XX Xxxxxx Chase NA Secured Term Auto 6/30/09
(monthly payment to XX Xxxxxx Chase NA is $1,685.99 and balance at June 30, 2006 is $55,009.94)
B. RONSON CONSUMER PRODUCTS CORP.
LIT-Xxxxxxxx Xxxxx Rental/TI None 02/01/11
Obligations
(monthly payment to LIT-Xxxxxxxx Xxxxx is $4,818.33 and balance at June 30, 2006 is $233,833.67)
Ford Motor Credit Secured term Auto 03/15/09
(monthly payment to Ford Motor Credit is $650.00 and balance at June 30, 2006 is $21,173.27)
Xxxxx Fargo* Equipment Lease SB Forklifts & Racking 1/2008
(monthly payment is $2,292.46 and balance at June 30, 2006 is $40,016)
Pitney Xxxxx Equipment Lease Digital Postage Machine 12/2010
(monthly payment is $330.00 and balance at June 30, 2006 is $16,726)
NHMG Financial Equipment Lease Used 2002 Yale Forklift 7/2010
(monthly payment is $306.00 and balance at June 30, 2006 is $12,879)
Banc of America Leasing Equipment Lease Xxxxxx Aerosol Line 11/2010
(monthly payment is $15,997.73 and balance at June 30, 2006 is $620,196)
Banc of America Leasing Equipment Lease Alpha Checkweigher 11/2010
(monthly payment is $540.32 and balance at June 30, 2006 is $23,020)
Banc of America Leasing Equipment Lease Kidde Firewall Fire 11/2010
System
(monthly payment is $461.50 and balance at June 30, 2006 is $19,303)
Banc of America Leasing Equipment Lease Dartonics Ink Jet 11/2010
(monthly payment is $190.58 and balance at June 30, 2006 is $7,829)
Banc of America Leasing Equipment Lease Xxxxxx Timing 9/2010
(monthly payment is $92.30 and balance at June 30, 2006 is $3,578)
Banc of America Leasing Rockford Midland 9/2009
(monthly payment is $799.12 and balance at June 30, 2006 is $30,356)
Banc of America Leasing Equipment Lease M-F Case Packer 10/2011
(monthly payment is $3,526.91 and balance at June 30, 2006 is $186,742)
Banc of America Leasing Equipment Lease Boiler 10/2011
(monthly payment is $1,339.20 and balance at June 30, 2006 is $70,908)
Banc of America Leasing Equipment Lease Xxxxxxx Cap Feeder 8/2011
(monthly payment is $443.75 and balance at June 30, 2006 is $22,890)
* Combined on one lease under the name of Ronson Corporation.
53
C. RONSON AVIATION, INC.
Ford Motor Credit Secured term Auto 12/09/08
(monthly payment to Ford Motor Credit is $194.57 and balance at June 30, 2006 is $5,158.90)
Ford Motor Credit Secured term Auto 07/12/08
(monthly payment to Ford Motor Credit is $317.83 and balance at June 30, 2006 is $7,143.06)
Xxxxx Fargo* Equipment Lease De-ice truck 1/2008
(monthly payment is $1,115.39 and balance at June 30, 2006 is $19,178.04)
Bevenco/US Bancorp. Secured term RVSM Air Data 06/30/11
Test Set
(monthly payment is $457.88 and balance at June 30, 2006 is $19,900)
* Combined on one lease under the name of Ronson Corporation.
D. Contribution Agreement dated July 31, 2006 by and between Ronson Corporation
and Xxxxx X. Xxxxxxx XX, so long as and to the extent that Ronson Corporation's
obligations to make payments thereunder are subordinate to the Obligations.
E. ISDA Agreement between Ronson Corporation and Bank of America.
F. Contribution, subrogation and other rights and remedies of any Domestic
Company against any other Company or any Collateral arising by reason of such
Domestic Company's performance or satisfaction of its joint and several
liability under the Loan Documents, so long as and to the extent that Ronson
Corporation's rights thereunder are subordinate to the Obligations.
54
Schedule 1.1(c) - Permitted Tax Liens
---------------
1. Certificate of Debt entered May 11, 2006 in the Superior Court of the State
of New Jersey, against Ronson Corporation, with a stated amount (including
penalty, interest and costs of collection) of $229,558.39, of which
approximately $123,517 is due as of the date hereof.
55
Schedule 1.1(d) - Description of Real Estate
---------------
The contiguous plot of property located at 0 Xxxxxx Xxxx and 0 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx, known as Xxx 0-X, Xxxxx 000 as shown on the Township of
Woodbridge tax map.
56
Schedule 7.1(b) - Company and Collateral Information
---------------
Exact Company Name in State of Incorporation:
--------------------------------------------
Ronson Corporation
State of Incorporation or Formation:
------------------------------------
New Jersey
F.E.I.N.:
---------
00-0000000
State Organizational No.:
-------------------------
7693250000
Address of Chief Executive Office:
----------------------------------
Corporate Park III, Campus Drive
XX Xxx 0000
Xxxxxxxx, XX 00000
Collateral Locations:
---------------------
Xxxxxxxxx Xxxx XXX, Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Exact Company Name in State of Incorporation:
--------------------------------------------
Ronson Consumer Products Corporation
State of Incorporation or Formation:
------------------------------------
New Jersey
F.E.I.N.:
---------
00-0000000
State Organizational No.:
-------------------------
0100153715
Address of Chief Executive Office:
----------------------------------
Corporate Park III, Campus Drive
XX Xxx 0000
Xxxxxxxx, XX 00000
57
Collateral Locations:
---------------------
0 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000
0 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000
000 Xxxxx Xxxx, Xxxxxx, XX 00000
Exact Company Name in State of Incorporation:
--------------------------------------------
Ronson Aviation, Inc.
State of Incorporation or Formation:
------------------------------------
New Jersey
F.E.I.N.:
---------
00-0000000
State Organizational No.:
-------------------------
7693211000
Address of Chief Executive Office:
----------------------------------
Corporate Park III, Campus Drive
XX Xxx 0000
Xxxxxxxx, XX 00000
Collateral Locations:
---------------------
Trenton-Xxxxxx Airport, Xxxxxxx, XX 00000
Exact Company Name in State of Incorporation:
--------------------------------------------
Ronson Corporation of Canada Ltd.
State of Incorporation or Formation:
------------------------------------
Ontario, Canada
F.E.I.N.:
---------
12177 8682 RC0001
State Organizational No.:
-------------------------
629727
Address of Chief Executive Office:
----------------------------------
Corporate Park III, Campus Drive
P0 Box 6707
Xxxxxxxx, XX 00000
Collateral Locations:
---------------------
0000 Xxxxxx Xxxxx, Xxxx 00
Xxxxxxxxxxx, Xxxxxxx X0X0X0
58
Schedule 7.1(f) - Environmental Matters
---------------
Groundwater contamination existing at the Prometcor, Inc. site, located at 00-00
Xxxxxxxxxxxx'x Xxxxx, Xxxxxx, Xxx Xxxxxx. The estimated liability for remedial
cost and expense associated with any remaining groundwater contamination at the
Prometcor site was estimated at a lower limit of approximately $500,000 and at
an upper limit of approximately $1.1 million.
Contamination at the site of Trenton-Xxxxxx Airport, Trenton, New Jersey. Ronson
Aviation, Inc. removed underground fuel storage tanks during the period between
1999 and 2006, as required by the New Jersey Department of Environmental
Protection. Final testing of the soil has not been completed or accepted by the
NJDEP.
Contamination, if any, in the soil from an underground storage tank used for
heating oil at the site of Ronson Consumer Products Corporation, 0 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx. When the storage tank was removed a vent pipe was noted.
Currently an investigation as to the source of the vent pipe is underway.
59
Schedule 7.1(g) - Litigation
---------------
Steel Partners II, L.P., et al v. Xxxxx X. Xxxxxxx XX, Xxxxxx X.
Xxxxxxx, Xxxxx X. Xxxx, I. Xxx Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxx
X. Xxxxxxx, Xxxx X. Xxxxxx III and Ronson Corporation (March 25, 2003; Superior
Court of New Jersey, Chancery Division, Essex County).
Steel Partners II, L.P. v. Xxxxx X. Xxxxxxx XX, Xxxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxx III, Xxxx X. Xxxxxxx, Xxxxx X. Xxxx, Xxxxx X.
Xxxxxxx, I. Xxx Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, and Xxxx X. Xxxxxxx
(April 14, 2005; United States District Court for the District of New Jersey).
Xxxxx Xxxxx and Xxxxx Xxxxx vs. Ronson Consumer Products Corporation,
Ronson Corporation, Industrial Waste Management, Inc., Cuno Incorporated, XYZ
Corporations #1-10 (fictitious parties), Xxxx and/or Xxxx Does #1-10 (fictitious
individuals) (Middlesex County, Docket No. L-3508-03).
Xxxxxx Xxxxxxx x. Xxxxxx Enterprise, Inc. (Superior Court of New
Jersey, Camden County, Xxxxxx Xx. X-0000-00).
Xxxxxx Xxxxxxxx v. Ronson Corporation of Canada Ltd. and Canada Safeway
Limited (The Queens Bench, Winnipeg Centre, File No. CL-02-01-27574).
60
Schedule 7.1(h) - Subsidiaries and Affiliates
---------------
Ronson Consumer Products Corporation, a New Jersey corporation
Ronson Corporation of Canada Ltd., an Ontario corporation
Ronson Aviation, Inc., a New Jersey corporation
Ronson Hydraulic Units Corporation, a North Carolina corporation
Prometcor, Inc., a New Jersey corporation
61
Schedule 7.4(i) - Related Party Transactions
---------------
1. Transactions described under clause (w) of Section 7.4(h) of this Financing
Agreement, which information is incorporated herein by reference.
62
Schedule 7.4(l) - Bank Accounts
---------------
A. Current Bank Accounts with Bank of America/CIBC:
Name Account No.
---- -----------
Ronson Corporation
Operating Account 940706741*
State Tax Payout Account 940707039*
401 (K) Contribution Account 4225022219*
Payroll Account 940706806*
Special Account 0313-22295*
Ronson Consumer Products Corp.
Operating Account 940706725*
Payroll Account 940706733*
Tax Payment Account 4225006078*
COD Account 009458814189*
Disbursement Account 0080212918*
Cash Collateral (not needed) 940706717++
Lockbox address XX Xxx 00000*
Xxxxxx, XX 00000
Ronson Aviation, Inc.
Operating Account 000241000203*
Payroll Account 000261000373*
Credit Card Payment Account 004284032295++
EFT Tax Transfer Account 0042220009483*
Ronson Corporation of Canada Ltd.
Operating Account 80-00816
Lockbox address XX Xxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X0X0
*This account will be closed by the Company following the Closing Date and
reopened at another financial institution reasonably satisfactory to CIT.
++This account will be closed by the Company following the Closing Date.
B. Depository Accounts with Wachovia Bank:
Name: Account number:
Ronson Corporation (CIT Account) 2000018598065
--------------------------------
Ronson Consumer Products Corporation (CIT Account) 2000017267135
--------------------------------------------------
Ronson Aviation, Inc. (CIT Account) 2000017267148
-----------------------------------
63
