TWENTY- FIRST AMENDMENT TO FORBEARANCE AGREEMENT
Exhibit
10.1
TWENTY- FIRST AMENDMENT TO
FORBEARANCE AGREEMENT
This
Twenty-First Amendment to Forbearance Agreement (the “Amendment”) is
entered into as of this 10th day
of August, 2010 by and among RCLC, Inc. (formerly known as Ronson Corporation),
a New Jersey corporation (“Parent”), RCPC
Liquidating Corp. (formerly known as Ronson Consumer Products Corporation), a
New Jersey corporation (“RCPC”), Ronson
Aviation, Inc., a New Jersey corporation (“RAI”) and RCC Inc.
(formerly known as Ronson Corporation of Canada Ltd.), an Ontario corporation
(“Ronson
Canada”) (RCPC and RAI are collectively and individually referred to as
the “Domestic
Borrower” or “Domestic Borrowers”;
the Domestic Borrower and Ronson Canada are collectively and individually
referred to as the “Borrower” or “Borrowers”, and the
Borrowers, together with Parent are collectively and individually referred to as
the “Obligors”)
and Xxxxx Fargo Bank, National Association (“Lender”), acting
through its Xxxxx Fargo Business Credit operating division.
RECITALS:
Borrowers
and Lender are parties to a certain Credit and Security Agreement dated as of
May 30, 2008 (as amended, modified, supplemented or restated from time to time,
the “Credit
Agreement”), relating to financing by Lender to
Borrowers. Capitalized terms used but not specifically defined herein
shall have the meanings provided for such terms in the Credit
Agreement.
Certain
Events of Default occurred under the Credit Agreement and, as a result thereof,
Lender and Borrowers entered into that certain Forbearance Agreement dated as of
March 29, 2009 (as amended modified, supplemented or restated from time to time,
the “Forbearance
Agreement”), whereby Lender agreed to forbear from exercising certain of
its rights and remedies available under the Loan Documents as a result of the
Existing Events of Default.
On
February 2, 2010, Parent, RCPC and Ronson Canada consummated a transaction (the
“Zippo Sale”)
pursuant to which RCPC and Ronson Canada sold substantially all of their assets
to Zippo Manufacturing Company and Nosnor, Inc., pursuant to an Asset Purchase
Agreement dated as of October 5, 2010. The net proceeds of the Zippo
Sale were delivered to Lender in accordance with the terms of that certain
letter agreement by and among Lender and Obligors dated as of February 2, 2010
and applied by Lender in accordance with and subject to the Thirteenth Amendment
to Forbearance Agreement dated as of April 1, 2010.
The
Forbearance Agreement expired pursuant to its terms on July 26,
2010.
Obligors
have requested that Lender (i) amend the definition of Termination Event to
extend the stated expiration date in the Forbearance Agreement from July 26,
2010 to August 13, 2010, (ii) waive the Termination Event arising from the fact
that the Forbearance Agreement expired pursuant its terms on July 26, 2010 (the
“Forbearance
Default”) and (iii) amend certain terms and conditions of the Credit
Agreement.
Lender
has considered Borrowers’ requests and, in an effort to continue working with
Borrowers, hereby agrees to (i) waive the Forbearance Default and (ii) amend the
Forbearance Agreement and the Credit Agreement on the terms and conditions set
forth below.
NOW,
THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Amendment to Forbearance
Agreement. As of the date hereof, Section 2(b) of the
Forbearance Agreement shall be amended and restated in its entirety to read as
follows:
(b) For
purposes of this Agreement, a “Termination Event”
shall mean the earliest to occur of (i) August 16, 2010 and (ii) any one or more
of the following:
(A) the
failure of the Obligors to comply with the terms, covenants, agreements and
conditions of this Agreement;
(B) any
representation or warranty made herein shall be incorrect in any material
respect;
(C) the
occurrence of any Event of Default under the Credit Agreement, other than (i)
the Existing Events of Default or (ii) breach by Obligors of their obligation
pursuant to (a) Section 6.1(a) of the Credit Agreement to deliver audited year
end annual financial statements for the fiscal year ending December 31, 2008
within 90 days of the end of such fiscal year or (b) Section 6.1(c) of the
Credit Agreement to deliver monthly financial statements to Lender for the
months ending October 31, 2009, November 30, 2009, December 31,
2009, January 31, 2010, February 28, 2010, March 31, 2010, April 30,
2010, May 31, 2010 and June 30, 2010 within 30 days of the end of such
months;
(D) Obligors
shall fail to employ a CRO (as defined below) throughout the term of this
Agreement;
(E) subject
to Paragraph 6(b) below, Obligors shall fail to employ an investment banking
firm reasonably acceptable to Lender to market and sell RAI or its assets
throughout the term of this Agreement and/or such investment banking firm shall
fail to diligently pursue such sale consistent with the terms of its
retention;
(F) in
the Lender’s discretion, it determines that Parent is no longer actively
pursuing a Liquidity Transaction;
(G) any
Person, other than Lender, shall exercise its rights and remedies against the
Obligors as a result of defaults or events of defaults arising under any
agreement between Obligors and such Person due to cross-defaults arising from
the Existing Events of Default; and
(H) Obligors
shall have executed an asset purchase agreement for the sale of RAI’s assets and
the Freeholders of Xxxxxx County, New Jersey shall have formally approved the
assignment of that certain lease by and between Ronson Helicopters, Inc. (now
known as RAI), as lessee, and County of Xxxxxx, as lessor, dated May 14, 1975
(as amended, the “Lease”) to the
proposed purchaser under such asset purchase agreement.
2. Funding of RAI Pending
Closing of the RAI Sale. Obligors acknowledge and agree that
as a result of the consummation of the Zippo Sale, RCPC and Ronson Canada shall
no longer be permitted to request Advances under the Credit Agreement and any
remaining assets of RCPC and/or Ronson Canada shall no longer be considered in
any borrowing base calculation. Notwithstanding the foregoing, Lender
and Obligors agree that RAI shall be authorized, until the occurrence of a
Termination Event, to request Advances subject to the terms of the Credit
Agreement as modified by this Amendment. Obligors and Lender further
agree that Lender shall have no obligation to make Advances to
RAI after the occurrence of a Termination Event.
3. Limited
Waiver. Lender hereby waives the Forbearance
Default. This waiver shall be effective upon Obligor’s execution and
delivery of this Amendment to Lender. This waiver is being given as a
one time accommodation only and shall not obligate Lender, or be construed to
require Lender, to waive any other or future Defaults or Events of Default under
the Credit Agreement, the Forbearance Agreement or any other or future defaults
or events of default under any other Loan Document. This waiver shall
not release Obligors in any way from any of their duties, obligations, covenants
or agreements under the Loan Documents or the Forbearance Agreement or from the
consequences of any other or future Defaults or Events of Default under the
Credit Agreement, the Forbearance Agreement or from any other or future defaults
or events of default under the other Loan Documents.
4. Amendments to Credit and
Security Agreement. The following definitions set forth in
section 1.1 of the Credit Agreement shall be amended and restated in their
entirety to read as follows:
“Accommodation
Overadvance Limit” means an amount up to $2,275,000 from the date of
that certain Twenty-First Amendment to Forbearance Agreement through the
occurrence of a Termination Event (as such term is defined in the Forbearance
Agreement).
“Maximum
Line Amount” means $2,500,000, unless such amount is reduced pursuant to Section
2.12, in which case it means such lower amount.”
5. Fee. In
consideration for Lender’s agreement to (i) enter into this Amendment, and (ii)
negotiate a debtor in possession financing facility with the Obligors (and
consent to the use of cash collateral in the event of a bankruptcy filing,
consistent with an agreed-upon budget), Obligors shall pay to Lender a fee in an
amount equal to Two-Hundred Twenty-Five Thousand Dollars ($225,000), which shall
be (i) fully earned and non-refundable upon execution and delivery of this
Amendment, (ii) included as part of the Indebtedness of Obligors to Lender under
the Credit Agreement and (iii) charged as a Revolving Advance under the Credit
Agreement upon execution of this Amendment. Obligors acknowledge and
agree that the fee provided for herein shall be in addition to the forbearance
fee paid to Lender pursuant to the Forbearance Agreement, as modified by that
certain Seventh Amendment to Forbearance Agreement dated as of July 31,
2009.
6. Custodial
Funds. Obligors, and their counsel, Cole, Schotz, Meisel,
Xxxxxx & Xxxxxxx, P.A. (“Xxxx Xxxxxx”), hereby
acknowledge and agree that Lender’s agreement set forth in that certain (i)
Thirteenth Amendment to Forbearance Agreement (the “13th Amendment”) and (ii)
email correspondence from Xxxxx X. Xxxx, Esq., to the Obligors and Lender dated
March 11, 2010 (the “March 11th Email”), to apply
the Custodial Funds (as defined in the 13th
Amendment) in accordance with the term of the 13th
Amendment and the March 11th
Email are hereby modified as follows:
(a) The
amount to be restored to the Custodial Account (as defined in the 13th
Amendment) by Lender shall be in an amount equal to the lesser of (i)
$2,527,556.71, and (ii) that portion of the proceeds of sale of RAI’s assets
(the “RAI
Sale”) in excess of the amount of the then outstanding Indebtedness due
and owing by Obligors immediately prior to the closing of the RAI Sale and
attributable to RAI (such amount being referred to as the “Restored Custodial
Funds”);
(b) Immediately
prior to the closing of the RAI Sale, Lender shall make an Advance to RCPC (the
“RCPC Advance”)
directly into the Custodial Account in an amount equal to the amount of the
Restored Custodial Funds;
(c) The
payoff amount to be received by Lender upon the closing of the RAI Sale shall be
the total amount of the then outstanding Indebtedness due and owing by Obligors
on such date (which for purposes of clarity shall include the amount of the RCPC
Advance, plus all other amounts due and owing to Lender by Obligors upon the
closing of the RAI Sale) (the “Payoff
Amount”);
(d) Upon
receipt by Lender of the Payoff Amount, Lender shall apply the Payoff Amount to
the repayment in full of all Indebtedness due and owing to Lender by the
Obligors (including the amount of the RCPC Advance); and
(e) The
Restored Custodial Funds shall be returned to Parent and RCPC immediately after
the receipt by Lender of the Payoff Amount, subject to payment of any ordinary
and customary fees and expenses associated with maintaining the Custodial
Account, upon request and in accordance with instructions provided to Lender by
Obligors consistent with this Amendment.
Xxxx
Xxxxxx acknowledges and agrees that it has received payment in full of the fees
and expenses that were the subject of the March 11th
email from the funds previously earmarked for that purpose. Obligors
and Xxxx Xxxxxx hereby (i) release Lender from its obligation to apply the
Custodial Funds on the terms and conditions set forth in the 13th
Amendment and the March 11th
email and (ii) acknowledge and agree that the terms as set forth above, shall be
substituted for the terms of the 13th
Amendment and the March 11th
Email as they relate to the Custodial Funds.
7. Interest Rate on
Accommodation Overadvance. Obligors acknowledge and agree that
interest on the Accommodation Overadvance shall accrue at a rate equal to the
Prime Rate plus eight percent (8.00%) per annum.
8. Conditions. Lender’s
agreement to further forbear from exercising its rights and remedies pursuant to
this Agreement is conditioned upon:
(a) execution
and delivery by the Obligors and Lender of this Agreement; and
(b) such
other matters as Lender may reasonably require.
9. Sums Secured;
Estoppel. The Obligors acknowledge and reaffirm that their
obligations to Lender as set forth in and evidenced by the Loan Documents are
due and owing 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 Obligors waive and release Lender from the same.
10. No Other Changes.
Except as explicitly amended by this Amendment, all of the terms and conditions
of the Forbearance Agreement shall remain in full force and effect.
11. References. All
references in the Forbearance Agreement to “this Agreement” shall be deemed to
refer to the Forbearance Agreement as amended hereby.
12. No Waiver. The
execution of this Amendment shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement, a waiver of any Termination Event
under the Forbearance Agreement or breach, default or event of default under any
Loan Documents or other document held by Lender, whether or not known to Lender
and whether or not existing on the date of this Amendment.
13. Waiver and Release of Claims
and Defenses. The Obligors hereby waive and release all claims
and demands of any nature whatsoever that they now have or may have against
Lender, whether arising under the Loan Documents or by any acts or omissions of
Lender, or any of its directors, officers, employees, affiliates, attorneys or
agents, or otherwise, and whether known or unknown, existing as of the date of
the execution of this Amendment, and further waive and release any and all
defenses of any nature whatsoever to the payment of the Obligations or the
performance of their obligations under Loan Documents.
14. Reaffirmation of Loan
Documents. The Obligors hereby agree with, reaffirm and
acknowledge their representations and warranties contained in the Loan
Documents. Furthermore, the Obligors represent that their
representations and warranties contained in the Loan Documents continue to be
true and in full force and effect. This agreement, reaffirmation and
acknowledgment is given to Lender by the Obligors without defenses, claims or
counterclaims of any kind. To the extent that any such defenses,
claims or counterclaims against Lender may exist, the Obligors waive and release
Lender from same.
15. Ratification and
Reaffirmation of Loan Documents. The Obligors ratify and
reaffirm all terms, covenants, conditions and agreements contained in the Loan
Documents.
16. No Preferential
Treatment. No Obligor has entered into this Amendment to
provide any preferential treatment to Lender or any other creditor.
17. Legal
Representation. Each of the parties hereto acknowledge that
they have been represented by independent legal counsel in connection with the
execution of this Amendment, that they are fully aware of the terms and
conditions contained herein, and that they have entered into and executed the
within Amendment as a voluntary action and without coercion or duress of any
kind.
18. Partial Invalidity; No
Repudiation. If any of the provisions of this Amendment shall contravene
or be held invalid under the laws of any jurisdiction, this Amendment shall be
construed as if not containing such provisions and the rights, remedies,
warranties, representations, covenants, and provisions hereof shall be construed
and enforced accordingly in such jurisdiction and shall not in any manner affect
such provision in any other jurisdiction, or any other provisions of this
Amendment in any jurisdiction.
19. Binding
Effect. This Amendment is binding upon the parties hereto and
their respective heirs, administrators, executors, officers, directors,
representatives and agents.
20. Governing
Law. This Amendment shall be governed by the laws of the State
of New York.
21. WAIVER OF JURY
TRIAL. EACH OF THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL
BY JURY, AS TO ANY ACTION WHICH MAY ARISE AS A RESULT OF THE LOAN DOCUMENTS, THE
FORBEARANCE AGREEMENT, THIS AMENDMENT OR ANY DOCUMENT EXECUTED IN CONNECTION
HEREWITH.
22. Counterparts. This
Amendment and/or any documentation contemplated or required in connection
herewith may be executed in any number of counterparts, each of which shall be
deemed an original and all of which shall be considered one and the same
document. Delivery of an executed counterpart of a signature page of
this document by facsimile shall be effective as delivery of a manually executed
counterpart of this document.
[Signature
pages follow]
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, do
hereby execute this Amendment the date and year first above
written.
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RCLC,
INC. (f/k/a RONSON CORPORATION)
By: /s/ Xxxx
Xxxxxxx
Print
Name: Xxxx Xxxxxxx
Print
Title: Chief Restructuring Officer
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RCPC
LIQUIDATING CORP. (f/k/a/ RONSON
CONSUMER
PRODUCTS CORPORATION)
By: /s/ Xxxx
Xxxxxxx
Print
Name: Xxxx Xxxxxxx
Print
Title: Chief Restructuring Officer
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RONSON
AVIATION, INC.
By: /s/ Xxxx
Xxxxxxx
Print
Name: Xxxx Xxxxxxx
Print
Title: Chief Restructuring Officer
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RCC
INC. (f/k/a RONSON CORPORATION OF
CANADA
LTD.)
By: /s/ Xxxx
Xxxxxxx
Print
Name: Xxxx Xxxxxxx
Print
Title: Chief Restructuring Officer
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XXXXX
FARGO BANK, NATIONAL ASSOCIATION
By:
/s/ Xxxxx
Xxxxxx
Xxxxx
Xxxxxx, Vice President
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COLE,
SCHOTZ, MEISEL, XXXXXX & XXXXXXX, P.A., (solely to
acknowledge
the agreement set forth in Paragraph 6 hereof)
By:/s/ Xxxxx X.
Bass____________________
Xxxxx
X. Xxxx, Esq., a Member
