EXHIBIT 10(e)
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of this 30th day of June, 2002, by and between RONSON AVIATION, INC., 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 August 28, 1997, as amended (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, Subsections 2.1 c., g. and h. of the
Loan Agreement are hereby amended and changed to read as follows:
c. Interest. The outstanding principal amount of the Revolving
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Loan shall bear interest at a rate of interest per annum equal to the Lender's
Floating Base Rate plus one (1%) percent, computed daily, with each change
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in the Lender's Floating Base Rate, for the actual number of days elapsed as if
each full calendar year consisted of three hundred sixty (360) days. For the
purposes herein, the term "Lender's 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.
g. Fees. The Borrower shall pay to the Lender an annual
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collateral management fee in an amount equal to Two Thousand ($2,000.00)
Dollars, payable 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.
h. Prepayment. Should the Borrower terminate the Revolving Loan
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or permanently reduce the maximum amount available under the Revolving Loan
prior to June 30, 2005 (the "Final Maturity Date"), the Borrower shall pay to
Lender a prepayment termination premium in an amount equal to:
(i) one (1%) percent of the maximum principal amount of the
Revolving Loan or amount permanently reduced if such termination or reduction is
made before June 30, 2003;
(ii) three-quarters of one (.75%) percent of the maximum
principal amount of the Revolving Loan or amount permanently reduced if such
termination or reduction is made on or after June 30, 2003 and prior to June 30,
2004; and
(iii) one-half of one (.50%) percent of the maximum principal
amount of the Revolving Loan or amount permanently reduced if such termination
or reduction is made on or after June 30, 2004 and prior to June 30, 2005.
2. As of the date of this Amendment, the reference in 2.1(d) of the Loan
Agreement to "June 30, 2002" as the final maturity date is replaced with "June
30, 2005" as the final maturity date.
3. 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
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title to all of its properties and assets, including, without limitation, the
Collateral, or the power to transfer its properties and assets 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. Except as set forth on Schedule 5.12,
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within the last six (6) years, the 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 the addresses set forth
on Schedule 5.13.
(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 Trenton, 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.
4. As of the date of this Amendment, Section 6.17 of the Loan Agreement
is hereby amended by deleting the last sentence thereof.
5. As of the date of this Amendment, Section 6.28 b. of the Loan
Agreement is hereby amended and changed to read as follows:
b. Maintain a maximum ratio of Debt to Net Worth of not more than
2.00 to 1.00, measured on a quarterly basis. For the purpose of this
covenant, intercompany accounts receivable shall be excluded from the
calculation.
6. As of the date of this Amendment, Section 6.28 of the Loan Agreement is
hereby amended to add a new Subsection (c) as follows:
(c) A ratio of EBITDA to Fixed Charges of not less than 1.25 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.
7. As of the date of this Amendment, Subsections 10.9(a) and (b) of the
Loan Agreement are amended by deleting references to "4900 Xxxxx 00, Xxxxxxxxxx,
Xxx Xxxxxx" and "750 Walnut Avenue, Cranford, New Jersey" and inserting "4 Penn
Center, 0000 Xxxx X. Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 - Attn:
Xxxxxxx Xxxxxx, Vice President".
8. As of the date of this Amendment, the Loan Agreement is hereby amended
by adding the following:
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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 the
Loan 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 Section 8.3 of the Loan Agreement.
(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.
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(e) Other Perfection, etc. The Borrower shall at any time and
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from time to time, 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.
9. 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.
10. 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 execution hereof, a non-refundable renewal fee in an amount equal to One
Thousand ($1,000.00) 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 the renewal fee.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. This Amendment may be executed in counterparts, each of which, when
taken together, shall be deemed to be one and the same instrument.
Executed on the date first written above.
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WITNESS: RONSON AVIATION, INC.
/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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