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Exhibit 10(a)
AMENDMENT TO LOAN DOCUMENTS
THIS AMENDMENT TO LOAN DOCUMENTS (the "Amendment") made this 11th day
of January, 2006, by and among RONSON CONSUMER PRODUCTS CORPORATION, a New
Jersey corporation ("Products"), RONSON AVIATION, INC., a New Jersey corporation
("Aviation"), RONSON CORPORATION, a New Jersey corporation ("Parent"), and BANK
OF AMERICA, N.A., successor to Summit Bank ("Bank").
BACKGROUND
A. On or about January 6, 1995, Products and Bank entered into a loan
and security agreement (as amended, the "Products Loan Agreement"). The
obligations of Products under the Products Loan Agreement are guaranteed by
Parent and Aviation and are secured by a perfected security interest in all of
the assets (except to the extent limited by the Products Loan Agreement) of
Products and Aviation, as well as a subordinate mortgage from Products
encumbering the property located at 0-0 Xxxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx
(the "Mortgaged Property")
B. On or about December 1, 1995, Products and Parent executed a
mortgage note in favor of Bank in the principal sum of $1,300,000. (as amended,
the "Mortgage Note"). Products' obligations under the Mortgage Note are
guaranteed by Aviation and are secured by a mortgage and security agreement (the
"Mortgage") and an assignment of rents and leases (the "Assignment of Rents")
encumbering the Mortgaged Property.
C. On or about August 28, 1997, Aviation and Bank entered into a loan
and security agreement (as amended, the "Aviation Loan Agreement"). The
obligations of Aviation under the Aviation Loan Agreement are guaranteed by
Parent and Products and are secured by a perfected security interest in all of
the assets of Aviation and Products, as well as the subordinate mortgage
identified in Paragraph A above.
D. The Products Loan Agreement, the Mortgage Note, and the Aviation
Loan Agreement, together with all promissory notes, guaranties, mortgages, all
documents relating to any collateral, together with all documents collateral to
any of the foregoing, all as the same may have been modified, revised,
supplemented, replaced, and/or amended from time to time, are referred to herein
as the "Loan Documents".
E. The parties' obligations under the Products Loan Agreement, the
Mortgage Note, and the Aviation Loan Agreement were modified pursuant to several
amendments. Pursuant to the most recent amendments, the maturity date under the
Products Loan Agreement and the Aviation Loan Agreement is December 31, 2005.
The parties desire to modify the terms of the Loan Documents so that all
obligations of Products, Aviation, and Parent to the Bank will be satisfied no
later than January 31, 2007.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
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1. Confirmation of Background. The statements set forth in the
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Background section to this Amendment are herein incorporated by reference, made
a part hereof, and acknowledged by the parties hereto to be true and correct as
of the date of this Amendment.
2. Confirmation of Existing Indebtedness. The parties hereto
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acknowledge that as of December 19, 2005 the amounts outstanding under the
Products Loan Agreement, the Mortgage Note, and the Aviation Loan Agreement are
as follows, and said amounts are owed without defense, set off, counterclaim,
discount or charge:
PRODUCTS LOAN AGREEMENT:
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Principal $1,500,000.00
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Interest $5,687.50
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TOTAL $1,505,687.50
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There is an outstanding letter of credit
in the sum of $150,000.00 which expires
June 30, 2006
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MORTGAGE NOTE:
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Principal $1,240,343.62
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Interest $4,702.97
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TOTAL $1,245,046.59
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AVIATION LOAN AGREEMENT:
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Principal $0
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Interest $0
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TOTAL $0
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There is an outstanding letter of credit
in the sum of $60,000.00 which expires
June 30, 2006
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3. Ratification, Reaffirmation and Confirmation.
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3.1 Products, Aviation, and Parent hereby ratify, confirm and
reaffirm in all respects and without condition all the terms, covenants, and
conditions set forth in the Loan Documents, and hereby agree that Products,
Aviation, and Parent remain unconditionally liable to the Bank in accordance
with the respective terms, covenants, and conditions of the Loan Documents.
Products, Aviation, and Parent further hereby ratify, confirm, and reaffirm that
all collateral, liens, assignments, security interest, and pledges created
pursuant to the Loan Documents and/or referred to herein continue unimpaired and
in full force and affect, except as expressly modified hereby, and do secure and
shall continue to secure all of the debts, liabilities, and obligations of
Products, Aviation, and Parent to the Bank.
3.2 Neither this Amendment nor any other agreement entered into
connection herewith or pursuant to the terms hereof shall be deemed or construed
to be a compromise, satisfaction, reinstatement, accord and satisfaction,
novation or release of any of the Loan Documents, or any rights or obligations
thereunder, or a waiver by Bank of any of its rights under the Loan Documents or
at law or in equity.
4. Representations and Warranties. Products, Aviation, and Parent
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jointly and severally represent and warrant to the Bank as follows:
4.1 Products, Aviation, and Parent are corporations duly formed and
validly existing under the laws of the State of New Jersey.
4.2 The execution, delivery and performance of this Amendment by
Products, Aviation, and Parent has been duly authorized by Products, Aviation,
and Products and the persons who have executed this Amendment on behalf of
Products, Aviation, and Parent have been duly authorized to do so. The execution
of this Amendment by Products, Aviation, and Parent constitutes a valid and
binding obligation of Products, Aviation, and Parent.
4.3 No consent, approval or authorization of, or filing,
registration or qualification with, any person or entity is required to be
obtained by Products, Aviation, or Parent in connection with the execution and
delivery of this Amendment or the undertaking or performance of any obligations
hereunder.
5. Amendments to Loan Documents.
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5.1 Commencing on January 1, 2006, and on the first day of each
month thereafter, Products, Aviation, and Parent shall pay to Bank monthly
payments of interest on the principal balance due on the Products Loan Agreement
at a rate of prime plus one half percent.
5.2 Commencing on January 1, 2006, and on the first day of each
month thereafter, Aviation, Products, and Parent shall pay to Bank monthly
payments of interest on the principal balance due on the Aviation Loan Agreement
at a rate of prime plus 1 percent.
5.3 On or before January 31, 2007, Products, Aviation, and Parent
shall pay in full the outstanding principal balance due on the Products Loan
Agreement, the Mortgage Note, and the Aviation Loan Agreement, together with all
accrued interest.
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5.4 Until such time as the Products Loan Agreement, the Mortgage
Note, and the Aviation Loan Agreement shall have been paid in full, Products,
Aviation, and Parent shall pay to the Bank the following fees:
Date Amount
---- ------
February 28, 2006 $10,000.00
March 31, 2006 $10,000.00
April 30, 2006 $10,000.00
May 31, 2006 $10,000.00
June 30, 2006 $50,000.00
July 31, 2006 $20,000.00
August 31, 2006 $20,000.00
September 30, 2006 $20,000.00
October 31, 2006 $20,000.00
November 30, 2006 $20,000.00
December 31, 2006 $20,000.00
January 31, 2007 $20,000.00
5.5 Products, Aviation, and Parent shall pay all of the Bank's legal
fees and expenses incurred in connection with the preparation, negotiation,
modification or enforcement of this Amendment and the instruments and documents
referred to herein.
5.6 Until such time as the Products Loan Agreement, the Mortgage
Note, and the Aviation Loan Agreement shall have been paid in full, Parent, on a
consolidated basis, shall maintain a minimum EBITDA for each quarter as set
forth herein. As used herein, "EBITDA" means net income plus interest expense
plus income tax expense plus depreciation plus amortization. For the quarter
ending December 31, 2005, Parent have EBITDA of not less than $250,000. For the
quarter ending March 31, 2006, Parent shall have EBITDA of not less than
$280,000. For the quarter ending June 30, 2006, Parent shall have EBITDA of not
less than $175,000. For the quarter ending September 30, 2006, Parent shall have
EBITDA of not less than $450,000.
6. Financial Information.
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6.1 Products and Aviation shall provide to the Bank, on a monthly
basis, no later than 30 days after the last day of each month, copies of their
balance sheets, profit and loss statements, accounts receivable and accounts
payable aging reports for that month.
6.2 Upon the Bank's request, Products, Aviation, and Parent shall
provide access and produce any information and documentation requested by the
Bank, to confirm the financial
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condition of Products and Aviation. Products, Aviation, and Parent shall
reimburse the Bank for the cost of any such field examinations. If Products,
Aviation, and Parent provide to Bank a fully executed commitment letter no later
than May 1, 2006 which will provide sufficient funds to satisfy the balance due
under the Products Loan Agreement, the Mortgage Note, and the Aviation Loan
Agreement no later than June 30, 2006, and the loan closes by June 30, 2006, the
Bank will not require a field examination.
6.3 Upon the Bank's request, Products shall provide access and
produce any information and documentation requested by the Bank so that the Bank
can obtain an appraisal of the Mortgaged Property. Products, Aviation, and
Parent shall reimburse the Bank for the cost of any such appraisal. If Products,
Aviation, and Parent provide to Bank a fully executed commitment letter no later
than May 1, 2006 which will provide sufficient funds to satisfy the balance due
under the Products Loan Agreement, the Mortgage Note, and the Aviation Loan
Agreement no later than June 30, 2006, and the loan closes by June 30, 2006, the
Bank will not require an appraisal.
6.4 Products, Aviation, and Parent shall provide to Bank when due
all documentation and information as required by the Products Loan Agreement,
the Mortgage Note, and the Aviation Loan Agreement.
7. Consent of Guarantors. Each Guarantor hereby consents to the
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provisions of this Amendment and confirms and agrees that: (a) such Guarantor's
obligations under its Guaranty shall be unimpaired by this Amendment; (b) such
Guarantor has no defenses, set offs, counterclaims, discounts or charges of any
kind against the Bank, its officers, directors, employees, agents or attorneys
with respect to the Guaranty; and (c) all of the terms, conditions and covenants
in the Guaranty remain unaltered and in full force and effect and are hereby
ratified and confirmed and apply to all obligations of the Borrower to the Bank,
as modified by the Amendment. Each Guarantor certifies that all representations
and warranties made in its Guaranty are true and correct. Each Guarantor
ratifies and confirms the indemnification and waiver of jury trial provisions
contained in its Guaranty.
8. Forbearance.
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8.1 Bank agrees to forbear from exercising its rights and remedies
under the Loan Documents during the period commencing on the date of execution
of this Amendment and ending on the earlier of (i) January 31, 2007, or (ii) the
date of an Event of Default as defined herein occurs (the "Forbearance Period").
For purposes of this Amendment, an Event of Default shall mean the occurrence of
any of the following: (a) the occurrence of an Event of Default after the
expiration of any applicable cure period under any of the Loan Documents; (b)
failure to make any payment due under this Amendment; (c) breach any warranty,
representation or other non-monetary obligation under this Amendment; and (d)
failure to provide Bank with the financial information required by this
Amendment.
8.2 Products, Aviation, and Parent expressly understand and further
agree that upon an occurrence and continuation of an Event of Default, the
Forbearance Period may be terminated by the Bank without notice or demand to
Products, Aviation, and Parent, in which event all sums due and owing under the
Loan Documents shall be immediately due and payable in full. The Bank is relying
upon all terms and conditions of this Amendment, including, without limitation,
the Bank's right to terminate the Forbearance Period as aforesaid as a material
inducement to the Bank to enter into this Amendment.
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8.3 The termination of the Forbearance Period in this Amendment
shall not affect the ratifications, reaffirmations, and confirmations made by
Products, Aviation, and Parent in Section 3 of this Amendment.
9. Default. An Event of Default by Products, Aviation, or Parent under
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this Amendment shall be considered an Event of Default under the Products Loan
Agreement, the Mortgage Note, and the Aviation Loan Agreement.
10. No Defenses. Products, Aviation, and Parent hereby confirm that, as
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of the date hereof, there are no existing defenses, claims, counterclaims or
rights of recoupment or set-off against the Bank in connection with the loans or
the negotiation, preparation, execution, performance or any other matters
relating to this Amendment or the Loan Documents. Products, Aviation, and Parent
further acknowledge and agree that, notwithstanding anything to the contrary set
forth in this Amendment, the Bank has no obligation to further amend the Loan
Documents, or enter into any other instruments, agreements or documents
regarding any of the same with Products, Aviation, or Parent, and that the Bank
and its representatives have not made any agreements with, or commitments or
representations or warranties to, Products, Aviation, and Parent (either in
writing or orally) other than as expressly stated in this Amendment. Products,
Aviation, and Parent further acknowledge and agree that, except as expressly set
forth in this Amendment, upon the occurrence of an Event of Default, the Bank
has no obligation to forbear from the exercise of its rights and remedies to
collect the indebtedness described in this Amendment.
11. No Modification. Except as amended hereby, all terms and conditions
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of the Loan Documents, are and shall remain unmodified and in full force and
effect. No right, remedy, privilege or power of Bank mentioned herein shall be
construed in derogation of any right, remedy, privilege or power of Bank granted
in the Loan Documents. Nothing herein contained, and no transaction entered into
in connection herewith, shall alter, impair or diminish the validity and
efficacy of any lien, security interest, right, power or privilege now held by
Bank in connection with the Loan Documents or the indebtedness evidenced
thereby.
12. Release of Bank. To induce the Bank to enter into this Amendment,
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Products, Aviation, and Parent hereby waive and release and forever discharge
the Bank and its officers, directors, attorneys, agents, and employees from any
liability, damage, claim, loss or expense of any kind that they may have against
the Bank or any of them. Products, Aviation, and Parent hereby further agree to
indemnify and hold the Bank and its officers, directors, attorneys, agents and
employees harmless from any loss, damage, judgment, liability or expense
(including attorneys' fees) suffered by or rendered against the Bank or any of
them on account of any claims arising out of or relating to the Loan. Products,
Aviation, and Parent further state that they have carefully read the foregoing
release, know the contents thereof and grant the same as their own free act and
deed. This release does not extend to any ongoing obligations of the Bank or its
affiliates to Products, Aviation, and Parent.
13. Additional Documents and Future Actions. Products, Aviation, and
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Parent shall take such actions and deliver to Bank such additional documents as
the Bank may reasonably require.
14. Amendment and Waiver. This Amendment may be amended and any
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provision hereof waived only in a writing executed by the parties hereto. A
waiver by Bank of any breach or failure to enforce any of the terms or
conditions of this Amendment shall not in any way affect, limit or waive Bank's
rights hereunder at any time to enforce strict compliance thereafter with any
term or condition
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of this Amendment. No partial or single exercise of any right under this
Amendment shall constitute a waiver of that or any other right, unless expressly
provided herein.
15. Governing Law. The interpretation and construction of this
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Amendment, and all matters relating hereto, shall be governed by and construed
in accordance with the laws of the State of New Jersey.
16. Binding Effect. This Amendment shall inure to the benefit of and
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shall be binding upon the parties hereto and their heirs, executors,
administrators, successors and assigns. This Amendment constitutes the entire
agreement between the parties with respect to the subject matter contained
herein, and supersedes all prior and contemporaneous oral and written
communications and agreements with respect thereto.
17. Headings. Headings of sections shall be deemed to be included for
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purposes of convenience only and shall not affect the interpretation of this
Amendment.
18. Waiver of Right to Trial by Jury. PRODUCTS, AVIATION, PARENT, AND
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BANK WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION ARISING UNDER THIS AMENDMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED
TO HEREIN OR DELIVERED IN CONNECTION HEREWITH OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF PRODUCTS, AVIATION, OR PARENT WITH
RESPECT TO THIS AMENDMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO HEREIN
OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
PRODUCTS, AVIATION, PARENT, AND BANK AGREE AND CONSENT THAT ANY SUCH CLAIM,
DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. PRODUCTS, AVIATION, AND
PARENT ACKNOWLEDGE THAT THEY HAVE HAD AN OPPORTUNITY TO CONSULT WITH COUNSEL
REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND EFFECT
AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives, under seal, the day and year
first above written.
RONSON CONSUMER PRODUCTS
CORPORATION
Attest: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx XX
Title: President
RONSON AVIATION, INC.
Attest: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx XX
Title: President
RONSON CORPORATION
Attest: /s/ Xxxxx Xxxxxxx By: Xxxxx X. Xxxxxxx XX
Title: President
BANK OF AMERICA, N.A.
Attest: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxxx
Title: Senior Vice President
