EXHIBIT 10(a)
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of this 30th day of June, 2002, by and between RONSON CONSUMER PRODUCTS
CORPORATION, a New Jersey corporation (the "Borrower") and SUMMIT BUSINESS
CAPITAL CORP. (successor-in-interest to Summit Bank) (the "Lender").
WHEREAS, the Borrower and the Lender are parties to a certain Loan and
Security Agreement dated January 6, 1995 as amended from time to time
(collectively, the "Loan Agreement"), relating to financing by the Lender to the
Borrower (all capitalized terms used, but not specifically defined herein, shall
have the meaning provided for such terms in the Loan Agreement); and
WHEREAS, the Borrower has requested and the Lender has agreed to make
certain revisions to the terms and conditions of the Loan Agreement, as amended
by the Amendment; and
WHEREAS, to induce the Lender to amend certain terms and conditions of the
Loan Agreement, the Borrower has offered to execute and deliver the Amendment.
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lender and the Borrower agree as follows:
1. As of the date of this Amendment, Section 1.1 (aq) of the Loan Agreement
is amended in its entirety as follows:
(aq) "Revolving Loan Final Maturity Date": June 30, 2005.
2. As of the date of this Amendment, Subsection 2.1(i) of the Loan
Agreement is amended in its entirety to read as follows:
(i) Should this Borrower terminate the Revolving Loan prior to the
Revolving Loan Final Maturity Date, the Borrower shall pay all other fees due to
the Lender under the Loan Agreement, including, without limitation, any deferred
fees set forth herein, along with a prepayment/termination premium in an amount
equal to:
(i) one (1%) percent of the maximum amount of the Revolving Loan
if terminated on or before June 30, 2003;
(ii) three-quarters (.75%) percent of the maximum amount of the
Revolving Loan if terminated on or before June 30, 2004; and
(iii)one-half (.50%) percent of the maximum amount of the
Revolving Loan if terminated on or before June 30, 2005.
3. As of the date of this Amendment, Subsection 2.1(c) of the Loan
Agreement is hereby amended by adding the following after the last sentence
thereof:
Provided no Event of Default has occurred or is continuing, commencing
December 31, 2002 and each quarter-end thereafter, if Borrower's ratio of EBITDA
to Fixed Charges (as set forth in Subsection 6.33(e)) is greater than 1.2 to 1.0
and the ratio of unsubordinated debt to Minimum Tangible Capital Funds is less
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than 2.5 to 1.0 for such quarter, the interest rate applicable to Revolving
Loans may be reduced to the Floating Base Rate plus one (1%) percent per annum
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effective the fiscal quarter after determination by the Lender of such financial
covenant compliance. Otherwise, the rate applicable to Revolving Loans shall be
the Floating Base Rate plus one and one-half (1.5%) percent per annum. For the
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purposes herein, the term "Floating Base Rate" shall mean the rate of interest
announced or quoted by Fleet National Bank ("Bank") from time to time as its
prime rate for commercial loans, whether or not such rate is the lowest rate
charged by Bank to its most preferred borrowers; and, if such prime rate for
commercial loans is discontinued by Bank as a standard, a comparable reference
rate designated by Bank as a substitute therefor shall be the Floating Base
Rate.
4. As of the date of this Amendment, Subsection 2.1(j) of the Loan
Agreement is deleted in its entirety with no material to be placed in its stead.
Any reference in the Loan Agreement to "Acceptances" shall be deemed deleted and
no further Acceptances shall be made available to the Borrower.
5. As of the date of this Amendment, Sections 5.9, 5.12 and 5.14 of the
Loan Agreement are hereby amended to read as follows:
5.9. Ownership and Liens. The Borrower has good and marketable title
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to all of its properties and assets, including, without limitation, the
Collateral, or the power to transfer its properties and assets
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and its title in such properties and assets including the Collateral, subject to
no Liens except for permitted exceptions. The security interest granted in
Subsection 3.1 constitutes valid Liens in the Collateral, subject to no equal or
prior Liens except for permitted exceptions described in Subsection 6.7.
5.12. Name Change, Mergers. Within the last six (6) years, the
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Borrower has not changed its name, been the surviving corporation of a merger or
consolidation, changed its state of incorporation or acquired all or
substantially all of the assets of any Person.
5.14. Location of Collateral and Books and Records.
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(a) All of the Collateral is located only at Corporate Park III,
Somerset New Jersey and 0 Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx.
(b) All of the records of the Borrower relating to the
Collateral, and the other books, records, journals, orders, receipts, and
correspondence of the Borrower, are located at only the principal place of
business and other places of business of the Borrower set forth in Subsection
5.13, except the corporate minute book and related records of the Borrower which
are or may be maintained at the office of the Borrower's counsel.
(c) The Borrower's chief executive office is located in Somerset,
New Jersey and the state of incorporation is New Jersey.
(d) The Borrower's exact legal name is set forth in the preamble
of this Amendment.
6. As of the date of this Amendment, Subsection 6.31 and 6.32 of the Loan
Agreement is amended to read as follows:
6.31 The Borrower shall pay to the Lender an annual collateral
management fee in an amount equal to Eight Thousand ($8,000.00) Dollars to be
paid by the Borrower in equal consecutive quarterly installments commencing
September 30, 2002 and continuing during the term of the Loan Agreement. The
collateral management fee shall be deemed fully earned and non-refundable upon
each due date hereof.
6.32 The Borrower shall pay to the Lender an annual documentary letter
of credit facility fee in an amount equal to one-half of one (1/2%) percent of
the maximum amount of the Revolving Loan available for documentary letters of
credit, to be paid by the Borrower in equal consecutive quarterly installments
commencing September 30, 2002 and continuing for the term of the Loan Agreement.
The documentary letter of credit fee shall be deemed fully earned and
non-refundable upon each due date hereof.
7. As of the date of this Amendment, Subsections 6.33(a), 6.33(b) and
6.33(d) of the Loan Agreement are amended in their entirety to read as follows:
(a) Minimum Tangible Capital Funds of not less than Two Million Five
Hundred Fifty Thousand ($2,550,000.00) Dollars at any time (to be tested
quarterly). For the purposes of this covenant, Accounts due from Ronson
Corporation of Canada, Ltd. shall not be included in the calculation.
(b) A ratio of unsubordinated debt to Minimum Tangible Capital Funds
of not greater than 3.00 to 1 at any time (to be tested quarterly).
(d) A Minimum Net Profit of not less than Fifty Thousand ($50,000.00)
Dollars (net of management charges/fees and taxes) for the fiscal year ending
December 31, 2002 and at each fiscal year end thereafter.
8. As of the date of this Amendment, Subsection 6.33(c) is deleted in its
entirety with no material to be placed in its stead.
9. As of the date of this Amendment, a new Subsection 6.33(e) is hereby
added to the Loan Agreement as follows:
(e) A ratio of EBITDA to Fixed Charges of not less than 1.1 to 1.0 (to
be tested on a rolling four quarter basis commencing September 30, 2002). For
the purpose of this covenant, EBITDA shall mean for any period, a Person's
earnings (or loss) (but excluding therefrom extraordinary items and
non-recurring gains) before interest, taxes, depreciation and amortization plus
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management administration charges minus unfunded capital expenditures minus cash
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taxes paid minus cash transfers to Affiliates made in the ordinary course of
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business minus distributions (if any). Cash transfers to Affiliates shall be
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permitted under the Loan Agreement and reported to the Lender on a monthly basis
in summary form acceptable to the Lender. Fixed Charges shall mean the current
portion of long term indebtedness plus interest for any period, all determined
in accordance with generally accepted accounting principles, consistently
applied. As used herein, Person shall mean an individual, corporation,
partnership, limited liability company, association, unincorporated organization
or any other legally recognizable entity.
10. As of the date of this Amendment, Subsection 6.35(a)(v), (c)(iv) and
(f) and 6.37(d) are hereby deleted with no material to be placed in its stead.
11. As of the date of this Amendment, Subsection 6.39 of the Loan Agreement
is hereby amended to read as follows:
The aggregate sum of all advances, accounts and notes receivable due
to the Borrower from Ronson Corporation and the Affiliated Companies, with the
exception of Ronson Corporation of Canada, Ltd. shall not exceed at any one time
Four Million Five Hundred Thousand ($4,500,000.00) Dollars as of December 31,
2001 and at any time thereafter (to be tested quarterly).
12. As of the date of this Amendment, Subsection 10.9 of the Loan Agreement
shall be amended by deleting the reference to the address "4900 Xxxxx 00,
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000" and inserting "4 Penn Center, 1600 Xxxx X.
Xxxxxxx Boulevard, Philadelphia, Pennsylvania 19103--Attn: Xxxxxxx Xxxxxx, Vice
President".
13. As of the date of this Amendment, the Loan Agreement is hereby amended
by adding the following:
Security Agreement Provisions Addressing Article 9
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(a) Concerning Article 9 of the Uniform Commercial Code. The
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parties acknowledge and agree to the following provisions of this Amendment
relative to the application of Article 9 of the Uniform Commercial Code as now
in effect in the State of New Jersey ("Article 9").
(b) Attachment. The Collateral is all assets of the Borrower,
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whether or not within the scope of Article 9. The Collateral shall include,
without limitation, the following categories of assets as defined in Article 9:
goods (including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, general intangibles (including payment
intangibles and software), supporting obligations and any and all proceeds of
any thereof, wherever located, whether now owned and hereafter acquired. If the
Borrower shall at any time, acquire a commercial tort claim, as defined in
Article 9, the Borrower shall immediately notify the Lender in writing signed by
the Borrower of the brief details thereof and grant the Lender in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
the Lender.
(c) Additional Grant of Security Interest in Specified Property.
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Borrower acknowledges and agrees that in addition to the items previously
described as constituting Collateral, it hereby gives, grants, bargains, assigns
and confirms that it has granted a security interest in the following now owned
or hereafter acquired and wherever located properties, assets and rights of the
Borrower:
All other goods, rights to payment of money, insurance refund
claims and all other insurance claims and proceeds, tort claims, electronic
chattel paper, securities and other investment property, rights to proceeds of
letters of credit, letter of credit rights, supporting obligations of every
nature, all tax refund claims, license fees, rights to xxx and recover for past
infringement of patents, trademarks and copyrights, computer programs, computer
software, engineering drawings, customer lists, goodwill and all licenses,
permits, agreements of any kind or nature pursuant to which (i) the Borrower
operates or has authority to operate, (ii) the Borrower possesses, uses or has
authority to possess or use property (whether tangible or intangible) of others,
or (iii) others possess, use or have authority to possess or use property
(whether tangible or intangible) of the Borrower, and all recorded data of any
kind or nature, regardless of the medium of recording, including without
limitation, all software, writings, plans, specifications and schematics.
Nothing herein contained in the Amendment or Loan Agreement shall
be construed to narrow the scope of Lender's security interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the rights, powers, privileges or remedies of the Lender hereunder except
(and then only to the extent) as mandated by Article 9 to the extent then
applicable.
The Borrower further acknowledges and agrees that the grant of
Collateral in this Agreement covers, and is intended to cover, all assets of the
Borrower.
Notwithstanding anything contained in the Amendment to the
contrary, any grant of a security interest in patents, trademarks and rights
therein is only to the extent necessary to exercise the license granted to the
Lender pursuant to Subsection 8.5 of the Loan Agreement.
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(d) Perfection by Filing. The Lender may at any time and from
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time to time, pursuant to the provisions of the Loan Agreement, file financing
statements, continuation statements and amendments thereto that describe the
Collateral as all assets Borrower or words of similar effect and which contain
any other information required by Part 5 of Article 9 for the sufficiency or
filing office acceptance of any financing statement, continuation statement or
amendment, including whether the Borrower is an organization, the type of
organization and any organization identification number issued to the Borrower.
The Borrower agrees to furnish any such information to the Lender promptly upon
request. Any such financing statements, continuation statements or amendment may
be signed by the Lender on behalf of the Borrower, as provided in the Loan
Agreement, and may be filed at any time in any jurisdiction.
(e) Other Perfection, etc. The Borrower shall at any time and
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from time to time, whether or not Article 9 is in effect in any particular
jurisdiction, take such steps as the Lender may reasonably request for the
Lender (a) to obtain an acknowledgment, in form and substance satisfactory to
the Lender, of any bailee having possession of any of the Collateral that the
bailee holds such Collateral for the Lender, (b) to obtain "control" of any
investment property, deposit accounts, letter-of-credit rights or electronic
chattel paper (as such terms are defined in Article 9 with corresponding
provisions in Rev. xx.xx. 9-104, 9-105, 9-106 and 9-107 relating to what
constitutes "control" for such items of Collateral), with any agreements
establishing control to be in form and substance satisfactory to the Lender, and
(c) otherwise to insure the continued perfection and priority of the Lender's
security interest in any of the Collateral and of the preservation of its rights
therein.
14. The Borrower shall pay on demand all legal fees, recording expenses and
other reasonable and necessary disbursements of the Lender and its counsel
incident to the preparation, execution and delivery of this Amendment.
15. In consideration of the Lender's agreement to (i) extend the maturity
date of the Revolving Loan and (ii) otherwise amend certain terms and conditions
of the Loan Agreement as set forth herein, the Borrower shall pay to the Lender
upon the execution hereof, a non-refundable renewal fee in an amount equal to
Five Thousand ($5,000.00) Dollars, which is and shall be deemed to be earned
upon execution hereof. The Borrower hereby authorizes the Lender to charge the
Borrower's Revolving Loan or demand deposit account maintained with the Lender
for the payment of this renewal fee.
16. The Borrower acknowledges that its obligations to the Lender pursuant
to the Loan Agreement, as amended herein, are due and owing by the Borrower to
the Lender without any defenses, set-offs, recoupments, claims or counterclaims
of any kind as of the date hereof. To the extent that any defenses, set-offs,
recoupments, claims or counterclaims may exist as of the date hereof, the
Borrower waives and releases the Lender from the same.
17. The Borrower hereby agrees with, reaffirms and acknowledges the
representations and warranties contained in the Loan Agreement. Furthermore, the
Borrower represents that the representations and warranties contained in the
Loan Agreement continue to be true and in full force and effect. This agreement,
reaffirmation and acknowledgment is given to the Lender by the Borrower without
defenses, claims or counterclaims of any kind. To the extent that any such
defenses, claims or counterclaims against the Lender may exist, the Borrower
waives and releases the Lender from the same.
18. The Borrower ratifies and reaffirms all terms, covenants, conditions
and agreements contained in the Loan Agreement. All terms, covenants,
representations and warranties made to Lender by Borrower in the Loan Agreement
are to be true, accurate and complete for the duration of the term of the Loan
Agreement.
19. All other terms and conditions of the Loan Agreement, and any and all
Exhibits annexed thereto and all other writings submitted by the Borrower to the
Lender pursuant thereto, shall remain unchanged and in full force and effect.
20. This Amendment shall not constitute a waiver or modification of any of
the Lender's rights and remedies or of any of the terms, conditions, warranties,
representations, or covenants contained in the Loan Agreement, except as
specifically set forth above, and the Lender hereby reserves all of its rights
and remedies pursuant to the Loan Agreement and applicable law.
21. The failure of the Borrower to satisfy any of the terms and conditions
of this Amendment shall constitute an Event of Default under the Loan Agreement,
and the Lender shall be entitled to all of its rights and remedies under the
Loan Agreement and applicable law.
22. This Amendment may be executed in counterparts, each of which, when
taken together, shall be deemed to be one and the same instrument.
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Executed on the date first written above.
WITNESS: RONSON CONSUMER PRODUCTS
CORPORATION
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx XX
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Xxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx, XX
Vice President and Chief President and Chief Executive Officer
Financial Officer
SUMMIT BUSINESS CAPITAL CORP.,
successor-in-interest to Summit Bank
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx, Vice President
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