Document:

angeion104130_ex10-1.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 10.1

 

AGREEMENT

 

This Agreement is entered into as of the 18th
day of August, 2010 between Angeion Corporation, a Minnesota corporation,
(“Angeion’) and BlueLine Partners, LLC, a California limited liability company
and its affiliated parties (“BlueLine”).

 

RECITALS

 

WHEREAS, on August 10, 2010, BlueLine filed an Amended
Schedule 13D (“August 10, 2010 Schedule 13D”) with the Securities and Exchange
Commission (“SEC”), that, among other things, (i) proposed the reformation of
the Board of Directors of Angeion, (ii) proposed the calling of a Special
Meeting of Shareholders of Angeion to remove the current Board of Directors and
replace the Board with new directors, and (iii) requested that current
shareholders of Angeion complete and provide BlueLine with a “Demand by
Shareholder for Special Meeting.”

 

WHEREAS, Angeion and BlueLine entered into discussions
with respect to resolving the matters discussed in the BlueLine August 10, 2010
Schedule 13D and have agreed that it is the best interests of the Company’s
shareholders, employees and customers to establish a framework under which
Angeion can continue to operate and can implement some of the suggestions of
BlueLine without calling a Special Meeting of Shareholders and incurring the
expense of a proxy fight.

 

Therefore,
Angeion and BlueLine hereby agree as follows:

 

1.                  
As soon as practical after
execution of this Agreement, but in no event more than 10 business days from
the date of this Agreement, Angeion and Blue Line will establish a
reconstituted Board of Directors, following the process set forth in this
Agreement.

 

2.                  
The reconstituted board will
consist of seven members, four of whom, including Scott A. Shuda, are existing
directors of Angeion.  The three continuing directors of Angeion other than Mr.
Shuda will be current directors of Angeion initially acceptable to BlueLine
and, together with Mr. Shuda, are designated as “Continuing Directors.”

 

3.                  
The Continuing Directors will
select three new directors, each of whom must be reasonably acceptable to each of
the Continuing Directors.

 

4.                  
Subject to the other provisions of
this agreement, in selecting new directors, the Continuing Directors will take
all steps necessary to ensure continued compliance by Angeion with the
applicable rules of the Nasdaq Stock Market and Angeion committee charters.

 

5.                  
Concurrent with the execution of
this Agreement, each current director other than Mr. Shuda will deliver to the
Board of Directors and to BlueLine a letter agreement in substantially the Form
attached as Exhibit A, under which the director will agree to resign from the
Angeion Board, with the resignation to be effective upon acceptance by the
Board.

 

6.                  
The Special Committee of the Board
of Directors of Angeion referred to in the August 10, 2010 Schedule 13D has
completed its investigation, reported its results to the Board of Directors
and, the Board of Directors, finding that the Special Committee has concluded
its investigation, has prior to the execution of this Agreement, caused the
Special Committee to be disbanded.

 

7.                  
Promptly after execution of this
Agreement, Angeion will issue a press release, subject to BlueLine’s prior
approval, outlining the terms of this Agreement and resolution of the BlueLine
request for a Special Meeting of Shareholders.

 

 

 

 

 

8.                   BlueLine will immediately abandon all efforts to call a Special Meeting of Shareholders, and will promptly file an amended Schedule 13D with the SEC, withdrawing its request for a Special Meeting and will return or destroy all completed “Demand by Shareholder for Special Meeting” requests in its custody.

 

9.                   Angeion will promptly file a Form 8-K with the SEC disclosing the terms of this Agreement.

 

	
 

	
 

	
ANGEION CORPORATION

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By: 

	
/s/ K. James Ehlen

	
 

	
      

	
K. James Ehlen, Chair

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
BLUELINE PARTNERS, L.L.C.,

individually and on behalf of BlueLine

Capital Partners, L.P., BlueLine Capital

Partners II., L.P. and BlueLine Partners II, L.L.C.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By: 

	
/s/ Scott A.Shuda

	
 

	
     

	
Scott A. Shuda, Managing Directorangeion104130_ex10-2.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 10.2

 

August 18, 2010

 

K. James Ehlen, Chair

Angeion Corporation

350 Oak Grove Parkway

Saint Paul, Minnesota   55127-8599

 

BlueLine Partners, L.L.C.

c/o Scott Shuda

Managing Director 

402 Railroad Avenue, Suite 201

Danville, California  94526

 

Gentlemen, 

 

In connection with the execution of the Agreement dated as of August 18, 2010 between Angeion Corporation (“Angeion’) and BlueLine Partners, L.L.C., individually and on behalf of the other entities listed in the Joint Filing Agreement attached as Exhibit A to the Schedule 13D/A dated August 10, 2010 (collectively “BlueLine”):

 

I hereby tender my resignation as a director of Angeion to be effective upon acceptance by the Board of Angeion;

 

I agree that I may not revoke this resignation until the earlier of (i) the date that Angeion and BlueLine complete the process of reconstituting the Angeion Board of Directors by accepting three resignations of current directors of Angeion and (ii) September 2, 2010.

 

 

 

	
 

	
[Resigning Director Name]ex10-1.htm

     

     

    

    
      	
              DEBTOR-IN-POSSESSION

              CREDIT
      AND SECURITY AGREEMENT

              BY
      AND AMONG

              RCLC,
      INC.,

              RONSON
      AVIATION, INC.,

              RCPC
      LIQUIDATING CORP. , AND

              RCC
      INC.

              AND

              WELLS
      FARGO BANK, NATIONAL ASSOCIATION

              Acting
      through its Wells Fargo Capital Finance operating division

               

            
	
              August
      ___, 2010

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
              TABLE OF CONTENTS

            
	 
      	 
      	
              Page

            
	
               

            	 
      	 
      
	
              Article
      I DEFINITIONS

            	
              5

            
	
              Section
      1.1.

            	
              Definitions

            	
              5

            
	
              Section
      1.2.

            	
              Other
      Definitional Terms; Rules of Interpretation

            	
              19

            
	
              Article
      II AMOUNT AND TERMS OF THE CREDIT FACILITY

            	
              20

            
	
              Section
      2.1.

            	
              Advances

            	
              20

            
	
              Section
      2.2.

            	
              Procedures
      for Requesting Advances

            	
              20

            
	
              Section
      2.3.

            	
              Reserved

            	
              21

            
	
              Section
      2.4.

            	
              Reserved

            	
              21

            
	
              Section
      2.5.

            	
              Reserved

            	
              21

            
	
              Section
      2.6.

            	
              Reserved

            	
              21

            
	
              Section
      2.7.

            	
              Interest;
      Default Interest Rate; Application of Payments; Participations;
      Usury.

            	
              21

            
	
              Section
      2.8.

            	
              Fees

            	
              22

            
	
              Section
      2.9.

            	
              Time
      for Interest Payments; Payment on Non-Business Days; Computation of
      Interest and Fees

            	
              23

            
	
              Section
      2.10.

            	
              Lockbox
      and Collateral Account; Sweep of Funds

            	
              24

            
	
              Section
      2.11.

            	
              Voluntary
      Prepayment; Reduction of the Maximum Line Amount; Termination of the
      Credit Facility by the Borrower

            	
              24

            
	
              Section
      2.12.

            	
              Mandatory
      Prepayment

            	
              24

            
	
              Section
      2.13.

            	
              Revolving
      Advances to Pay Indebtedness

            	
              25

            
	
              Section
      2.14.

            	
              Use
      of Proceeds

            	
              25

            
	
              Section
      2.15.

            	
              Liability
      Records

            	
              25

            
	
              Section
      2.16.

            	
              Single
      Loan

            	
              25

            
	
              Section
      2.17.

            	
              Grants,
      Rights and Remedies

            	
              25

            
	
              Section
      2.18.

            	
              Perfection

            	
              25

            
	
              Section
      2.19.

            	
              Waiver
      of any Priming Rights and Violative Use of Cash Collateral

            	
              26

            
	
              Section
      2.20.

            	
              Waiver
      of Claims to Surcharge

            	
              26

            
	
              Article
      III SECURITY INTEREST; OCCUPANCY; SETOFF

            	
              26

            
	
              Section
      3.1.

            	
              Grant
      of Security Interest

            	
              26

            
	
              Section
      3.2.

            	
              Lien
      Perfection; Further Assurances

            	
              26

            
	
              Section
      3.3.

            	
              Superpriority
      Administrative Expense Claim

            	
              28

            
	
              Section
      3.4.

            	
              Notification
      of Account Debtors and Other Obligors

            	
              28

            
	
              Section
      3.5.

            	
              Assignment
      of Insurance

            	
              29

            
	
              Section
      3.6.

            	
              Occupancy

            	
              29

            
	
              Section
      3.7.

            	
              License

            	
              29

            
	
              Section
      3.8.

            	
              Reserved

            	
              30

            
	
              Section
      3.9.

            	
              Setoff

            	
              30

            
	
              Section
      3.10.

            	
              Collateral

            	
              30

            
	
              Section
      3.11.

            	
              Survival

            	
              30

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              Article
      IV CONDITIONS OF LENDING

            	
              31

            
	
              Section
      4.1.

            	
              Conditions
      Precedent to the Initial Advances

            	
              31

            
	
              Section
      4.2.

            	
              Conditions
      Precedent to All Advances

            	
              32

            
	 	 
	
              Article
      V REPRESENTATIONS AND WARRANTIES

            	
              33

            
	
              Section
      5.1.

            	
              Existence
      and Power; Name Chief Executive Office; Inventory and Equipment Locations;
      Federal Employer Identification Number and Organizational Identification
      Number

            	
              33

            
	
              Section
      5.2.

            	
              Capitalization

            	
              33

            
	
              Section
      5.3.

            	
              Authorization
      of Borrowing; No Conflict as to Law or Agreements

            	
              33

            
	
              Section
      5.4.

            	
              Legal
      Agreements

            	
              34

            
	
              Section
      5.5.

            	
              Subsidiaries

            	
              34

            
	
              Section
      5.6.

            	
              Budget

            	
              34

            
	
              Section
      5.7.

            	
              Litigation

            	
              34

            
	
              Section
      5.8.

            	
              Regulation
      U

            	
              34

            
	
              Section
      5.9.

            	
              Taxes

            	
              34

            
	
              Section
      5.10.

            	
              Titles
      and Liens

            	
              34

            
	
              Section
      5.11.

            	
              Intellectual
      Property Rights

            	
              34

            
	
              Section
      5.12.

            	
              Reserved

            	
              35

            
	
              Section
      5.13.

            	
              Default

            	
              35

            
	
              Section
      5.14.

            	
              Reserved

            	
              36

            
	
              Section
      5.15.

            	
              Submissions
      to Lender

            	
              36

            
	
              Section
      5.16.

            	
              Financing
      Statements

            	
              36

            
	
              Section
      5.17.

            	
              Rights
      to Payment

            	
              36

            
	
              Section
      5.18.

            	
              Reserved

            	
              36

            
	
              Section
      5.19.

            	
              Inactive
      Subsidiaries

            	
              36

            
	
              Section
      5.20.

            	
              Administrative
      Priority; Lien Priority

            	
              36

            
	
              Section
      5.21.

            	
              Appointment
      of Trustee or Examiner; Liquidation

            	
              37

            
	
              Section
      5.22.

            	
              The
      Chapter 11 Case

            	
              37

            
	 	 
	
              Article
      VI COVENANTS

            	
              37

            
	
              Section
      6.1.

            	
              Reporting
      Requirements

            	
              37

            
	
              Section
      6.2.

            	
              Financial
      Covenants

            	
              39

            
	
              Section
      6.3.

            	
              Permitted
      Liens; Financing Statements

            	
              40

            
	
              Section
      6.4.

            	
              Indebtedness

            	
              41

            
	
              Section
      6.5.

            	
              Guaranties

            	
              41

            
	
              Section
      6.6.

            	
              Investments
      and Subsidiaries

            	
              41

            
	
              Section
      6.7.

            	
              Dividends
      and Distributions

            	
              42

            
	
              Section
      6.8.

            	
              Salaries

            	
              42

            
	
              Section
      6.9.

            	
              Intentionally
      Omitted

            	
              42

            
	
              Section
      6.10.

            	
              Books
      and Records; Collateral Examination, Inspection and
    Appraisals

            	
              42

            
	
              Section
      6.11.

            	
              Account
      Verification

            	
              43

            
	
              Section
      6.12.

            	
              Compliance
      with Laws

            	
              43

            
	
              Section
      6.13.

            	
              Payment
      of Taxes and Other Claims

            	
              43

            
	
              Section
      6.14.

            	
              Maintenance
      of Properties

            	
              44

            
	
              Section
      6.15.

            	
              Insurance

            	
              44

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              Section
      6.16.

            	
               Preservation
      of Existence

            	
              44

            
	
              Section
      6.17.

            	
              Delivery
      of Instruments, etc

            	
              45

            
	
              Section
      6.18.

            	
              Sale
      or Transfer of Assets; Suspension of Business Operations

            	
              45

            
	
              Section
      6.19.

            	
              Consolidation
      and Merger; Asset Acquisitions

            	
              45

            
	
              Section
      6.20.

            	
              Sale
      and Leaseback

            	
              45

            
	
              Section
      6.21.

            	
              Restrictions
      on Nature of Business

            	
              45

            
	
              Section
      6.22.

            	
              Accounting

            	
              46

            
	
              Section
      6.23.

            	
              Discounts,
      etc

            	
              46

            
	
              Section
      6.24.

            	
              Reserved

            	
              46

            
	
              Section
      6.25.

            	
              Place
      of Business; Name

            	
              46

            
	
              Section
      6.26.

            	
              Constituent
      Documents; S Corporation Status

            	
              46

            
	
              Section
      6.27.

            	
              Performance
      by the Lender

            	
              46

            
	
              Section
      6.28.

            	
              Affiliate
      Transactions

            	
              47

            
	
              Section
      6.29.

            	
              Sale
      Transaction

            	
              47

            
	
              Section
      6.30.

            	
              Financing
      Orders; Administrative Priority; Lien Priority; Payment of
      Claims

            	
              47

            
	 	 
	
              Article
      VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES

            	
              48

            
	
              Section
      7.1.

            	
              Events
      of Default

            	
              48

            
	
              Section
      7.2.

            	
              Rights
      and Remedies

            	
              51

            
	
              Section
      7.3.

            	
              Reserved

            	
              52

            
	
              Section
      7.4.

            	
              Certain
      Notices

            	
              52

            
	 	 
	
              Article
      VIII MISCELLANEOUS

            	
              52

            
	
              Section
      8.1.

            	
              No
      Waiver; Cumulative Remedies; Compliance with Laws

            	
              52

            
	
              Section
      8.2.

            	
              Amendments,
      Etc

            	
              53

            
	
              Section
      8.3.

            	
              Notices;
      Communication of Confidential Information; Requests for
      Accounting

            	
              53

            
	
              Section
      8.4.

            	
              Further
      Documents

            	
              53

            
	
              Section
      8.5.

            	
              Costs
      and Expenses

            	
              54

            
	
              Section
      8.6.

            	
              Indemnity

            	
              54

            
	
              Section
      8.7.

            	
              Participants

            	
              55

            
	
              Section
      8.8.

            	
              Execution
      in Counterparts; Telefacsimile Execution

            	
              55

            
	
              Section
      8.9.

            	
              Retention
      of Loan Party’s Records

            	
              55

            
	
              Section
      8.10.

            	
              Binding
      Effect; Assignment; Complete Agreement; Sharing Information;
      Confidentiality

            	
              55

            
	
              Section
      8.11.

            	
              Severability
      of Provisions

            	
              56

            
	
              Section
      8.12.

            	
              Headings

            	
              56

            
	
              Section
      8.13.

            	
              Cross
      Guaranty; Subordination

            	
              56

            
	
              Section
      8.14.

            	
              Judgment
      Currency

            	
              59

            
	
              Section
      8.15.

            	
              Appointment
      of Borrower Representative; Reliance on Notices

            	
              59

            
	
              Section
      8.16.

            	
              Governing
      Law; Jurisdiction, Venue

            	
              60

            
	
              Section
      8.17.

            	
              Lender
      as Party-in-Interest

            	
              61

            
	
              Section
      8.18.

            	
              Waiver
      of Right to Obtain Alternative Financing

            	
              61

            
	
              Section
      8.19.

            	
              Credit
      Bids

            	
              61

            
	
              Section
      8.20.

            	
              Application
      of Payments to Obligations; Application of Proceeds of
      Collateral

            	
              61

            
	 
      	 
      	 
      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    DEBTOR-IN-POSSESSION
CREDIT AND SECURITY AGREEMENT

     

    Dated
August ___, 2010

     

    RCLC, INC
(f/k/a Ronson Corporation), a New Jersey corporation and a debtor-in-possession
(“RCLC”), RCPC, INC., (f/k/a Ronson Consumer Products Corporation) a New Jersey
corporation and a debtor-in-possession (“RCPC”), and RONSON AVIATION, INC., a
New Jersey corporation and a debtor-in-possession (“RAI”, and together with RCLC
and RCPC, are collectively and individually referred to herein as the “Borrower”
or “Borrowers”), RCC INC. (f/k/a Ronson Corporation of Canada Ltd), a
corporation organized under the laws of the Provence of Ontario, Canada (“RCC”),
as guarantor, and WELLS FARGO BANK, NATIONAL ASSOCIATION (as more fully defined
in Article I herein, the “Lender”) acting through its  Wells Fargo
Capital Finance operating division, hereby agree as follows:

     

    WHEREAS,
on August 17, 2010 (the “Petition Date”), the
Borrowers commenced a case under Chapter 11 of Title 11 of the United States
Code in the United States Bankruptcy Court for the District of New Jersey, and
the Borrowers have retained possession of their assets and are authorized under
the Bankruptcy Code to continue the operation of their businesses as
debtors-in-possession;

     

    WHEREAS,
the Loan Parties and the Lender are party to that certain Credit and Security
Agreement dated May 30, 2008 (as amended, modified and restated from time to
time, including pursuant to that certain Forbearance Agreement dated as of March
29, 2009,  the “Pre-Petition Credit
Agreement”), pursuant to which the Lender has made and the Loan Parties
are indebted to the Lender for certain prepetition loans, advances and other
amounts thereunder (including, without limitation, accrued but unpaid interest
(including default interest), fees and expenses collectively, the “Pre-Petition
Obligations”);

     

    WHEREAS,
Borrowers are unable to obtain funds or credit on any other terms;
and

     

    WHEREAS,
the Borrowers have asked the Lender to make post-petition loans and advances to
the Borrowers consisting of a debtor-in-possession revolving credit facility in
an aggregate principal amount not to exceed $2,700,000 at any time outstanding;
and

     

    WHEREAS,
Lender is willing to provide such financing, subject to the terms and conditions
set forth herein, including that all of the Obligations hereunder and under the
other Loan Documents constitute allowed superpriority administrative expense
claims pursuant to Sections 364(c) and 364(d)(1) of the Bankruptcy Code in the
Chapter 11 Case and are secured by a priming first priority lien on
substantially all of Borrowers’ personal property, in each case as set forth
herein and in the Financing Orders;

     

    NOW
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein, the parties hereto agree as follows:

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ARTICLE
I

     

    DEFINITIONS

     

    Section
1.1.                      Definitions.  Except
as otherwise expressly provided in this Agreement, the following terms shall
have the meanings given them in this Section:

     

    “Accommodation
Overadvance” is defined in Section 2.1.1

     

    “Accommodation
Overadvance Limit” means up to $2,450,000 from the Closing Date through the
Termination Date.

     

    “Accommodation
Overadvance Funding Date” shall mean the Closing Date.

     

    “Accounts”
shall have the meaning given it under the UCC.

     

    “Accounts
Advance Rate” means up to eighty-five percent (85%), or such lesser rate as the
Lender in its sole discretion may deem appropriate from time to time; provided
that, as of any date of determination, the Accounts Advance Rate shall be
reduced by one (1) percentage point for each percentage by which Dilution is in
excess of five percent (5.0%).

     

    “Advance”
means a Revolving Advance.

     

    “Affiliate”
or “Affiliates” means Parent and any other Person controlled by, controlling or
under common control with the Borrowers, including any Subsidiary of the
Borrowers.  For purposes of this definition, “control,” when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.

     

    “Agreement”
means this Debtor-in-Possession Credit and Security Agreement, as same may be
amended, modified or supplemented from time to time in accordance with the terms
hereof.

     

    “Availability”
means the amount, if any, by which the Borrowing Base exceeds the outstanding
principal balance of the Revolving Note.

     

    “Bankruptcy
Code”, means Title 11 of the United States Code, as amended from time to
time.

     

    “Bankruptcy
Court” means the United States Bankruptcy Court for the District of New Jersey
or any other court having competent jurisdiction over the Chapter 11
Case.

     

    “Borrower
Representative” is defined in Section 8.15.

     

    “Borrowing
Base” means at any time the lesser of:

     

    (a)           The
Maximum Line Amount; or

     

     (b)           Subject
to change from time to time in the Lender’s sole discretion, the sum
of:

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (i)           The
product of the Accounts Advance Rate times Eligible Accounts, plus

     

    (ii)           The
lesser of (A) thirty-six percent (36%), or such lesser rate as the Lender in its
sole discretion may deem appropriate from time to time, of Eligible Inventory
owned by RAI, (B) eighty-five percent (85%), or such lesser rate as the Lender
in its sole discretion may deem appropriate from time to time, of the Net
Orderly Liquidation Value of Eligible Inventory owned by RAI, or (C) $200,000,
less,

     

    (iii)           The
Borrowing Base Reserve, less

     

    (iv)           The
amount of all Pre-Petition Obligations owing to Lender (excluding however from
the calculation of Pre-Petition Obligations for purposes of this paragraph (iv),
the outstanding principal balance of the Real Estate Term Advance, as such term
is defined in the Pre-Petition Credit Agreement), less

     

    (v)           the
amount of the Carveout, less

     

    (vi)           Indebtedness
that Borrowers owe to the Lender that has not yet been advanced on the Revolving
Note, and an amount that the Lender in its reasonable discretion finds on the
date of determination to be equal to the Lender’s net credit exposure with
respect to any swap, derivative, foreign exchange, hedge, deposit, treasury
management or other similar transaction or arrangement extended to the Borrowers
by the Lender that is not described in Article II of this
Agreement  and any indebtedness owed by the Borrowers to Wells Fargo
Merchant Services, L.L.C.

     

    “Borrowing
Base Reserve” means, as of any date of determination, such amounts (expressed as
either a specified amount or as a percentage of a specified category or item) as
the Lender may from time to time establish and adjust in reducing Availability
(a) to reflect events, conditions, contingencies or risks which, as determined
by the Lender, do or may affect (i) the Collateral of Borrower, or its value,
(ii) the assets, business or prospects of the Borrower, or (iii) the security
interests and other rights of the Lender in the Collateral (including the
enforceability, perfection and priority thereof), or (b) to reflect the Lender’s
reasonable judgment that any collateral report or financial information
furnished by or on behalf of the Borrower to the Lender is or may have been
incomplete, inaccurate or misleading in any material respect, or (c) in respect
of any state of facts that constitutes a Default or an Event of
Default.

     

    “Budget”
means the projections showing all projected cash receipts and all projected cash
disbursements (with reasonable detail as to sources of cash receipts and
identification of cash disbursements) for the Borrower delivered pursuant to
Section 5.6 to the Lender, covering the period commencing on the Closing Date
and ending on October 1, 2010.  The Budget shall be substantially in
the form of Exhibit
A annexed hereto and made a part hereof.

     

    “Budget
Compliance Certificate” means a written certificate, substantially in the form
annexed hereto as Exhibit B, signed by
an authorized officer of the Borrower, who shall be acceptable to the Lender,
delivered weekly pursuant to Section 6.2(a) to the Lender, which shall, inter alia, (i) reflect the
Borrower’s cash receipts and cash disbursements for the immediately preceding
week, including a comparison of such cash receipts and cash disbursements with
those projected for such week, (ii) confirm that the proceeds of the Advances to
be used during the upcoming week are for one of the types of cash disbursements
set forth in the Budget and in compliance with the maximum amounts permitted to
be expended thereunder for the relevant time period in accordance with the
Budget, and (iii) certify that no Default or Event of Default has occurred
and/or is continuing, or, if a Default or an Event of Default has occurred
and/or is continuing, that a Default or Event of Default has occurred together
with the description of such Default or Event of Default.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    “Business
Day” means a day on which the Federal Reserve Bank of New York is open for
business.

     

    “Carveout”
means all fees required to be paid to the Clerk of the Bankruptcy Court and to
the Office of the U.S. Trustee pursuant to 28 U.S.C. § 1930(a).

     

    “Capital
Expenditures” means for a period, any expenditure of money during such period
for the lease, purchase or other acquisition of any capital asset which is
capitalized on a balance sheet in accordance with GAAP, whether payable
currently or in the future.

     

    “Cash
Collateral” means the value from time to time of cash or cash equivalents
pledged to the Lender by the Borrowers.

     

    “Chapter
11 Case” means the Chapter 11 case commenced by the Borrowers on the Petition
Date in the Bankruptcy Court.

     

    “Change
of Control” means the occurrence of any of the following events:

     

    (a)           Any
Person or “group” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) who is not a Five Percent Owner on the Funding
Date is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a Person will be deemed
to have “beneficial ownership” of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than twenty percent (20%) of
the voting power of all classes of equity securities of a Borrower;

     

    (b)           Any
Person or “group” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) who is not a Five Percent Owner on the Funding
Date is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a Person will be deemed
to have “beneficial ownership” of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than twenty percent (20%) of
the voting power of all classes of equity securities of Parent;

     

    (c)           During
any consecutive two-year period, individuals who at the beginning of such period
constituted the board of Directors of the Borrower (together with any new
Directors whose election to such board of Directors, or whose nomination for
election by the Owners of the Borrower, was approved by a vote of two thirds of
the Directors then still in office who were either Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
Directors of the Borrower then in office;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (d)           During
any consecutive two-year period, individuals who at the beginning of such period
constituted the board of Directors of the Parent (together with any new
Directors whose election to such board of Directors, or whose nomination for
election by the Owners of the Borrower, was approved by a vote of a majority of
the Directors then still in office who were either Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
Directors of the Parent then in office; or

     

    (e)           Any
one or more of Louis V. Aronson II or Erwin M. Ganz shall cease to actively
manage the Borrower’s day-to-day business activities; provided however, a Change
of Control shall not be deemed to have occurred if Erwin M. Ganz shall cease to
actively manage the Borrower’s day-to-day business activities and a replacement
officer, reasonably acceptable to Lender, assumes the duties and
responsibilities vacated by Erwin M. Ganz within thirty (30) days
thereafter.

     

    “Claim”
has the meaning ascribed to such term in section 101(5) of the Bankruptcy
Code.

     

    “Closing
Date” means the date upon which the Interim Financing Order has been entered and
all conditions precedent to the initial Advance and this Agreement have been
satisfied or waived by Lender in writing.

     

    “Collateral”
means all right of title and interest of the Borrower in and to Accounts,
chattel paper and electronic chattel paper, deposit accounts, documents,
documents of title, Equipment, General Intangibles, goods, instruments,
Inventory, Investment Property, letter-of-credit rights, letters of credit, all
sums on deposit in any Collateral Account, and any items in any Lockbox;
together with (i) all substitutions and replacements for and products of any of
the foregoing; (ii) in the case of all goods, all accessions; (iii) all
accessories, attachments, parts, equipment and repairs now or hereafter attached
or affixed to or used in connection with any goods; (iv) all warehouse receipts,
bills of lading and other documents of title now or hereafter covering such
goods; (v) all collateral subject to the Lien of any Security Document; (vi) any
money, or other assets of the Borrower that now or hereafter come into the
possession, custody, or control of the Lender; (vii) proceeds of any and all of
the foregoing; (viii) books and records of the Borrower, including all mail or
electronic mail addressed to the Borrower; and (ix) all of the foregoing,
whether now owned or existing or hereafter acquired or arising or in which the
Borrower now has or hereafter acquires any rights.

     

    “Collateral
Account” means the “Lender Account” as defined in the Wholesale Lockbox and
Collection Account Agreement, and any similar account established from time to
time by any Borrower with a depositary bank acceptable to Lender and which is
subject to an agreement among Lender, such Borrower and such depositary bank, in
form and substance acceptable to Lender.

     

    “Commitment”
means the Lender’s commitment to make Advances to the Borrowers.

     

     “Constituent
Documents” means with respect to any Person, as applicable, such Person’s
certificate of incorporation, articles of incorporation, by-laws, certificate of
formation, articles of organization, limited liability company agreement,
management agreement, operating agreement, shareholder agreement, partnership
agreement or similar document or agreement governing such Person’s existence,
organization or management or concerning disposition of ownership interests of
such Person or voting rights among such Person’s owners.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    “Credit
Facility” means the credit facility under which Revolving Advances may be made
available to the Borrower by the Lender under Article II.

     

    “Cut-off
Time” means 11:59 a.m. Central Time.

     

    “Debt”
means, of a Person as of a given date, all items of indebtedness or liability
which in accordance with GAAP would be included in determining total liabilities
as shown on the liabilities side of a balance sheet for such Person and shall
also include the aggregate payments required to be made by such Person at any
time under any lease that is considered a capitalized lease under
GAAP.

     

    “Default”
means an event that, with giving of notice or passage of time or both, would
constitute an Event of Default.

     

    “Default
Period” means any period of time beginning on the day a Default or Event of
Default occurs and ending on the date identified by the Lender in writing as the
date that such Default or Event of Default has been cured or
waived.

     

    “Default
Rate” means an annual interest rate in effect during a Default Period or
following the Termination Date, which interest rate shall be equal to three
percent (3%) over the applicable Floating Rate, as such rate may change from
time to time.

     

    “Deposit
Account Control Agreement” means each deposit account control agreement relating
to each deposit account maintained by a Borrower with a depository bank, among
Lender, such Borrower and such depositary bank, in form and substance acceptable
to Lender.

     

    “Dilution”
means, as of any date of determination, a percentage, based upon the experience
of the trailing six (6) month period ending on the date of determination, which
is the result of dividing (a) actual bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts as determined by Lender in its sole discretion during such period, by
(b) the Borrower’s net sales during such period (excluding extraordinary items)
plus the amount of clause (a).

     

    “Director”
means a director if the Loan Party is a corporation, a governor or manager if
the Loan Party is a limited liability company, or a general partner if the Loan
Party is a partnership.

     

    “Dollars”
or “$”  means lawful currency of the United States of
America.

     

    “Effective
Date” means the date upon which a plan of reorganization has become effective
that provides for the termination of all of the Lender’s commitments to make
further loans or Advances under this Agreement and payment in full, in cash, of
all Pre-Petition Obligations and the payment in full, in cash, of all
Obligations, in a manner satisfactory to the Lender.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    “Eligible
Accounts” means all unpaid Accounts of a Borrower arising from the sale or lease
of goods or the performance of services, net of any credits, but excluding any
such Accounts having any of the following characteristics:

     

    (i)           That
portion of Accounts unpaid 90 days or more after the invoice date;

     

    (ii)           That
portion of Accounts related to goods or services with respect to which the
Borrower has received notice of a claim or dispute, which are subject to a claim
of offset or a contra account, or which reflect a reasonable reserve for
warranty claims or returns;

     

    (iii)           That
portion of Accounts not yet earned by the final delivery of goods or that
portion of Accounts not yet earned by the final rendition of services by the
Borrower to the account debtor, including with respect to both goods and
services, progress billings, and that portion of Accounts for which an invoice
has not been sent to the applicable account debtor;

     

    (iv)           Accounts
constituting (i) proceeds of copyrightable material unless such copyrightable
material shall have been registered with the United States Copyright Office or
(ii) proceeds of patentable inventions unless such patentable inventions have
been registered with the United States Patent and Trademark Office;

     

    (v)           Accounts
owed by any unit of government, whether foreign or domestic (except that there
shall be included in Eligible Accounts that portion of Accounts owed by such
units of government for which the Borrower has provided evidence satisfactory to
the Lender that (A) the Lender has a first priority perfected security interest
and (B) such Accounts may be enforced by the Lender directly against such unit
of government under all applicable laws; provided, however, that at no time
shall Eligible Accounts due from the United States government exceed
$100,000);

     

    (vi)           Accounts
denominated in any currency other than United States dollars;

     

    (vii)           Accounts
owed by an account debtor located outside the United States which are not
(A) backed by a bank letter of credit naming the Lender as beneficiary or
assigned to the Lender, in the Lender’s possession or control, and with respect
to which a control agreement concerning the letter-of-credit rights is in
effect, and acceptable to the Lender in all respects, in its sole discretion, or
(B) covered by a foreign receivables insurance policy acceptable to the
Lender in its sole discretion and to the extend applicable, naming the Lender as
beneficiary or assigned to the Lender;

     

    (viii)           Accounts
owed by an account debtor that is insolvent, the subject of bankruptcy
proceedings or has gone out of business;

     

    (ix)           Accounts
owed by a Five Percent Owner, Subsidiary, Affiliate, Officer or employee of the
Borrower, including, without limitation, any Accounts owed from a Loan Party to
another Loan Party;

     

    (x)           Accounts
not subject to a duly perfected security interest in the Lender’s favor or which
are subject to any Lien (other than a Permitted Lien described in Section
6.3(a)(iii) and 6.3(a)(vii)) in favor of any Person other than the
Lender;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    (xi)           That
portion of Accounts that has been restructured, extended, amended or
modified;

     

    (xii)           That
portion of Accounts that constitutes advertising, finance charges, service
charges or sales or excise taxes;

     

    (xiii)           Accounts
owed by an account debtor, regardless of whether otherwise eligible, to the
extent that the aggregate balance of such Accounts exceeds twenty percent (20%)
of the aggregate amount of all Eligible Accounts;

     

    (xiv)           Accounts
owed by an account debtor, regardless of whether otherwise eligible, if
twenty-five percent (25%) or more of the total amount of Accounts due from such
debtor is ineligible under clauses (i), (ii), or (xi) above; and

     

    (xv)           Accounts,
or portions thereof, otherwise deemed ineligible by the Lender in its sole
discretion.

     

    “Eligible
Inventory” means all Inventory of a Borrower, valued at the lower of cost or
market in accordance with GAAP; but excluding any Inventory having any of the
following characteristics:

     

    (i)           Inventory
that is: in-transit; located at any warehouse, job site or other premises not
approved by the Lender in writing; not subject to a duly perfected first
priority security interest in the Lender’s favor; subject to any lien or
encumbrance (other than a Permitted Lien described in Section 6.3(a)(iii) and
6.3(a)(vii)), that is subordinate to the Lender’s first priority security
interest; covered by any negotiable or non-negotiable warehouse receipt, bill of
lading or other document of title; on consignment from any Person; on
consignment to any Person or subject to any bailment unless such consignee or
bailee has executed an agreement with the Lender;

     

    (ii)           Supplies,
packaging, maintenance parts or sample Inventory, or customer supplied parts or
Inventory;

     

    (iii)           Work-in-process
Inventory;

     

    (iv)           Inventory
that is damaged, defective, obsolete, slow moving or not currently saleable in
the normal course of the Borrower’s operations, or the amount of such Inventory
that has been reduced by shrinkage;

     

    (v)           Inventory
that the Borrower has returned, has attempted to return, is in the process of
returning or intends to return to the vendor thereof;

     

    (vi)           Inventory
that is perishable or live;

     

    (vii)           Inventory
manufactured by the Borrower pursuant to a license unless the applicable
licensor has agreed in writing to permit the Lender to exercise its rights and
remedies against such Inventory;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    (viii)           Inventory
that is subject to a Lien (other than a Permitted Lien described in Section
6.3(a)(iii) and 6.3(a)(vii)) in favor of any Person other than the
Lender;

     

    (ix)           Inventory
stored at locations not owned or leased by Borrower;

     

    (x)           Inventory
stored at locations owned or leased by Borrower holding less than ten (10%) of
the aggregate value of the Borrower’s Inventory, other than Inventory of RAI;
and

     

    (xi)           Inventory
otherwise deemed ineligible by the Lender in its sole discretion.

     

    “Environmental
Law” means any federal, state, provincial, local or other governmental statute,
regulation, law or ordinance dealing with the protection of human health and the
environment.

     

    “Equipment”
shall have the meaning given it under the UCC.

     

    “Event of
Default” is defined in Section 7.1.

     

    “Executive
Officer” means, when used with reference to a Loan Party, its president, its
chief executive officer, its chief financial officer and any vice president of
the Parent in charge of a principal business unit, division or function (such as
sales, administration or finance).

     

    “Financial
Covenants” means the covenants set forth in Section 6.2.

     

    “Final
Financing Order” means a final order of the Bankruptcy Court pursuant to section
364 of the Bankruptcy Code, approving this Agreement, the other Loan Documents,
confirming the Interim Financing Order, and authorizing on a final basis the
incurrence by the Borrower of permanent post-petition secured and super priority
indebtedness in accordance with this Agreement, and as to which no stay has been
entered and which has not been reversed, modified, vacated or overturned, in
substantially the form of Exhibit C hereto and
which is in form and substance satisfactory to the Lender in its sole
discretion.

     

    “Financing
Orders” means each and both the Interim Financing Order and the Final Financing
Order.

     

    “First
Day Orders” means all orders entered by the Bankruptcy Court in the Chapter 11
Case based on motions filed on the Petition Date.

     

    “Five
Percent Owner” means the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934), directly or indirectly, of an amount
equal or greater than five percent (5%) of the voting power of all classes of
equity securities of Parent.

     

    “Floating
Rate” means with respect to (i) Revolving Advances evidenced by the Revolving
Note (other than the Accommodation Overadvance), an annual interest rate equal
to the sum of the Prime Rate plus three and one-half percent (3.50%) and (ii)
with respect to the Accommodation Overadvance, an annual interest rate equal to
the sum of the Prime Rate plus eight percent (8.00%).

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    “Floating
Rate Advance” means an Advance bearing interest at the Floating
Rate.

     

    “Funding
Date” is defined in Section 2.1.

     

    “GAAP”
means generally accepted accounting principles, applied on a basis consistent
with the accounting practices applied in the financial statements described in
Section 6.1

     

    “General
Intangibles” means “general intangibles” as defined in under the
UCC.

     

    “Guarantor”
means RCC and every other Person now or in the future who agrees to guaranty the
Indebtedness.

     

    “Guaranty”
means each unconditional continuing guaranty executed by a Guarantor in favor of
the Lender.

     

    “Hazardous
Substances” means pollutants, contaminants, hazardous substances, hazardous
wastes, petroleum and fractions thereof, and all other chemicals, wastes,
substances and materials listed in, regulated by or identified in any
Environmental Law.

     

    “Inactive
Subsidiaries” means Prometcor and Ronson Hydraulics.

     

    “Indebtedness”
is used herein in its most comprehensive sense and means any and all advances,
debts, obligations and liabilities of the Borrower to the Lender, heretofore,
now or hereafter made, incurred or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, including under any swap, derivative,
foreign exchange, hedge, deposit, treasury management or other similar
transaction or arrangement at any time entered into by the Borrower with the
Lender or with Wells Fargo Merchant Services, L.L.C., and whether the Borrower
may be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable.

     

    “Indemnified
Liabilities” is defined in Section 8.6

     

    “Indemnitees”
is defined in Section 8.6.

     

    “IRC”
means the Internal Revenue Code of 1986, as amended from time to
time.

     

    “Infringement”
or “Infringing” when used with respect to Intellectual Property Rights means any
infringement or other violation of Intellectual Property Rights.

     

    “Intangible
Assets” means all intangible assets as determined in accordance with GAAP and
including Intellectual Property Rights, goodwill, accounts due from Affiliates,
Directors, Officers or employees, customer lists, deferred charges or any
securities or Debt of the Borrower or any other securities unless the same are
readily marketable in the US or entitled to be used as a credit against federal
income tax liabilities, non-compete agreements and any other assets designated
from time to time by the Lender, in its sole discretion.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    “Intellectual
Property Rights” means all actual or prospective rights arising in connection
with any intellectual property or other proprietary rights, including all rights
arising in connection with copyrights, patents, service marks, trade dress,
trade secrets, trademarks, trade names, designs or mask works.

     

    “Interest
Payment Date” is defined in Section 2.9(a).

     

    “Interim
Facility” means that portion of the Permanent Facility made available to the
Borrower prior to entry of the Final Financing Order, as approved by the Interim
Financing Order.

     

    “Interim
Financing Order” means that certain order entered by the Bankruptcy Court in
substantially the form of Exhibit D hereto and
otherwise in form and substance satisfactory to the Lender in its sole
discretion.

     

    “Inventory”
shall have the meaning given it under the UCC.

     

    “Investment
Property” shall have the meaning given it under the UCC.

     

    “Lender”
means Wells Fargo Bank, National Association in its broadest and most
comprehensive sense as a legal entity, and is not limited in its meaning to
Lender’s Wells Fargo Capital Finance operating division, or to any other
operating division of Lender.

     

    “Licensed
Intellectual Property” is defined in Section 5.11(c).

     

    “Lien”
means any security interest, mortgage, deed of trust, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device,
including the interest of each lessor under any capitalized lease and the
interest of any bondsman under any payment or performance bond, in, of or on any
assets or properties of a Person, whether now owned or subsequently acquired and
whether arising by agreement or operation of law.

     

    “Loan
Documents” means this Agreement, the Revolving Notes, each Guaranty, the
Financing Orders, the Environmental Indemnification Agreement, and the Security
Documents, together with every other agreement, note, document, contract or
instrument to which a Loan Party now or in the future may be a party and which
is required by the Lender.

     

    “Loan
Party” or “Loan Parties” shall mean individually and collectively, the Borrowers
and RCC.

     

    “Lockbox”
means “Lockbox” as defined in the Wholesale Lockbox and Collection Account
Agreement, and any other lockbox established from time to time by any Borrower
with a lockbox agent acceptable to Lender and which is subject to an agreement
among Lender, such Borrower and such lockbox agent, in form and substance
acceptable to Lender.

     

    “Material
Adverse Effect” means any of the following:

     

    (i)           A
material adverse effect on the business, operations, results of operations,
assets, liabilities or financial condition of any Loan Party;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    (ii)           A
material adverse effect on the ability of any Loan Party to perform its
obligations under the Loan Documents;

     

    (iii)           A
material adverse effect on the ability of the Lender to enforce the Obligations
or to realize the intended benefits of the Security Documents, including a
material adverse effect on the validity or enforceability of any Loan Document
or of any rights against any Guarantor, or on the status, existence, perfection,
priority (subject to Permitted Liens) or enforceability of any Lien securing
payment or performance of the Indebtedness; or

     

    (iv)           Any
claim against any Loan Party or threat of litigation which if determined
adversely to such Loan Party would cause such Loan Party to be liable to pay an
amount, after allowance for all applicable insurance coverage, exceeding $75,000
or would result in the occurrence of an event described in clauses (i), (ii) or
(iii) above.

     

    “Maturity
Date” means October 1, 2010.

     

    “Maximum
Line Amount” means $2,700,000, unless this amount is reduced pursuant to Section
2.11, in which event it means such lower amount.

     

    “Mortgage”
means that certain Leasehold Mortgage and Assignment of Rents and Leases dated
as of the date of the Pre-Petition Credit Agreement upon the Mortgaged Property,
as the same may be modified, amended or restated from time to time.

     

    “Mortgaged
Property” means that certain real property located in Mercer County, New Jersey
subject to that certain lease between Ronson Helicopters, Inc. (now known as
Ronson Aviation, Inc.), as lessee, and County of Mercer, as lessor, dated May
14, 1975, as amended, as more particularly described in the
Mortgage.

     

    “Net Cash
Proceeds” means in connection with any asset sale, the cash proceeds (including
any cash payments received by way of deferred payment whether pursuant to a
note, installment receivable or otherwise, but only as and when actually
received) from such asset sale, net of (i) attorneys’ fees, accountants’ fees,
investment banking fees, brokerage commissions and amounts required to be
applied to the repayment of any portion of the Debt secured by a Lien not
prohibited hereunder on the asset which is the subject of such sale, and (ii)
taxes paid or reasonably estimated to be payable as a result of such asset
sale.

     

    “Net
Orderly Liquidation Value” means a professional opinion of the estimated most
probable Net Cash Proceeds which could typically be realized at a properly
advertised and professionally managed liquidation sale, conducted under orderly
sale conditions for an extended period of time (usually six to nine months),
under the economic trends existing at the time of the appraisal.

     

    “Obligations”
means each and every other debt, liability and obligation of every type and
description which the Borrower may now or at any time hereafter owe to the
Lender or its Affiliates or Subsidiaries, including without limitation, all
Advances, Indebtedness and other  obligations hereunder and under the
other Loan Documents or the Pre-Petition Credit Agreement, whether such debt,
liability or obligation now exists or is hereafter created or incurred, whether
it arises in a transaction involving the Lender alone or in a transaction
involving other creditors of the Borrower, and whether it is direct or indirect,
due or to become due, absolute or contingent, primary or secondary, liquidated
or unliquidated, or sole, joint, several or joint and several, and including all
Pre-Petition Obligations and all Post-Petition Obligations, and whether arising
under any Loan Document between the Borrower and the Lender, whether now in
effect or subsequently entered into.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    “Officer”
means with respect to the Loan Parties, an officer if the applicable Loan Party
is a corporation, a manager if the applicable Loan Party is a limited liability
company, or a partner if the applicable Loan Party is a
partnership.

    

    “OFAC” is
defined in Section 6.12(b).

    

    “Overadvance”
means the amount, if any, by which the then outstanding principal balance of the
Revolving Note is in excess of the then-existing Borrowing Base.

     

    “Owned
Intellectual Property” is defined in Section 5.11(a).

     

    “Owner”
means with respect to the Loan Parties, each Person having legal or beneficial
title to an ownership interest in the Loan Parties or a right to acquire such an
interest.

     

    “Parent”
means RCLC, Inc.

     

    “Patent
and Trademark Security Agreement” shall have the meaning set forth in the
Pre-Petition Credit Agreement.

     

    “Payments”
means transfers of cash from Borrower to Lender on account of the
Obligations.

     

    “Permanent
Facility” means the revolving loan facility made available to the Borrower under
this Agreement, as approved by the Final Financing Order.

     

    “Permitted
Lien” and “Permitted Liens” are defined in Section 6.3(a).

     

    “Person”
means any individual, corporation, partnership, joint venture, limited liability
company, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

     

    “Petition
Date” has the meaning set forth in the recitals of this Agreement.

     

    “Post-Petition
Obligations” means all Obligations of Borrower to Lender arising under this
Agreement.

     

    “Premises”
means all locations where the Borrower conducts its business and has any rights
of possession, including the locations legally described in Exhibit E attached
hereto.

     

    “Pre-Petition
Credit Agreement” has the meaning set forth in the recitals of this
Agreement.

     

    “Pre-Petition
Lender” means the Lender, in its capacity as the “Lender” under the Pre-Petition
Credit Agreement.

     

    “Pre-Petition
Loan Documents” means the Pre-Petition Credit Agreement and each of the “Loan
Documents” as defined therein.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    “Pre-Petition
Obligations” has the meaning set forth in the recitals of this
Agreement.

     

    “Prime
Rate” means at any time the rate of interest most recently announced by the
Lender at its principal office as its Prime Rate, with the understanding that
the Prime Rate is one of the Lender’s base rates, and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof in such internal
publication or publications as the Lender may designate.  Each change
in the rate of interest shall become effective on the date each Prime Rate
change is announced by the Lender.

     

    “Prometcor”
means Prometcor, Inc., a New Jersey corporation.

     

    “Revolving
Advance” is defined in Section 2.1.

     

    “Revolving
Note” means the Borrowers’ revolving promissory note, payable to the order of
the Lender in substantially the form of Exhibit E hereto, as same may be renewed
and amended from time to time, and all replacements thereto.

     

    “Ronson
Hydraulics” means Ronson Hydraulics Units Corporation, a North Carolina
corporation.

     

    “Sale
Order” means a final order approved by the Bankruptcy Court and no longer
subject to appeal or the possibility of appeal, approving the Sale Transaction
in form and substance satisfactory to Lender.

     

    “Sale
Transaction” shall mean the sale or disposition pursuant to Section 363 of
the Bankruptcy Code, which may be accomplished by one or more individual sales
or dispositions, by Borrowers of all, substantially all, or a significant
portion of the assets of RAI (other than sales or other dispositions of
Inventory in the ordinary course of Borrowers’ business) pursuant to the terms
and conditions of a Sale Transaction Agreement.

     

    “Sale
Transaction Agreement” shall mean, as applicable, (i) the Stalking Horse
Agreement, or (ii) such other agreement that provides for the sale or
disposition pursuant to Section 363 of the Bankruptcy Code, which may be
accomplished by one or more individual sales or dispositions, by Borrower of
all, substantially all, or a significant portion of the assets of RAI (other
than sales or other dispositions of Inventory in the ordinary course of
Borrowers’ business) on such terms and conditions acceptable to the Lender in
its reasonable discretion and approved by the Bankruptcy Court in accordance
with the Sale Transaction Schedule.

     

    “Sale
Transaction Bidding Procedures” shall mean certain procedures approved by the
Bankruptcy Court and acceptable to the Lender pursuant to which Borrowers shall
conduct the Sale Transaction pursuant to the Sale Transaction Schedule,
including without limitation, the solicitation of competing offers, the review
and evaluation of offers, the conducting of an auction, the deadline by which
responses to the Sale Transaction Motion and replies thereto are to be filed,
and the time periods by which such events or tasks are to be accomplished or
occur.

     

    “Sale
Transaction Motion” shall mean a motion filed in the Chapter 11 Case seeking
approval by the Bankruptcy Court of the Sale Transaction Bidding Procedures and
the Sale Transaction in accordance with the Sale Transaction Schedule and
pursuant to the terms of a Sale Transaction Agreement.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    “Sale
Transaction Schedule” shall mean the following schedule of events by which the
Sale Transaction is to occur and be accomplished on or prior to the applicable
date:

     

    
      	
               
      

            	
              i.

            	
              the
      Stalking Horse Agreement shall be executed on or before August 26,
      2010;

            

    

     

    
      	
               
      

            	
              ii.

            	
              the
      Sale Transaction Motion shall have been filed and approved by the
      Bankruptcy Court on or before August 31,
2010;

            

    

     

    
      	
               
      

            	
              iii.

            	
              the
      Freeholders of the County of Mercer, New Jersey shall have approved the
      assignment of that certain lease between RAI, as lessee, and County of
      Mercer, as lessor, dated May 14, 1975, as amended, as more particularly
      described in the Mortgage, to the proposed purchaser under the Sale
      Transaction Agreement on or before September 7,
  2010;

            

    

     

    
      	
               
      

            	
              iv.

            	
              Borrower
      shall have completed an auction with respect to the Sale Transaction and
      filed a motion to approve the sale of all of the Borrower’s assets
      pursuant to Section 363(b) of the Bankruptcy Code on or before September
      27, 2010;

            

    

     

    
      	
               
      

            	
              v.

            	
              the
      Bankruptcy Court shall have entered the Sale Order on or before September
      29, 2010; and

            

    

     

    
      	
               
      

            	
              vi.

            	
              the
      Sale Transaction shall be consummated pursuant to the terms of the
      applicable Sale Transaction Agreement on or before October 1,
      2010.

            

    

     

    “Security
Agreements” means each Security Agreement or Collateral Pledge Agreement now or
hereafter executed by a Loan Party in favor of the Lender dated the same date as
this Agreement

     

    “Security
Documents” means the Pre-Petition Credit Agreement, this Agreement, the
Wholesale Lockbox and Collection Account Agreement, the Deposit Account Control
Agreements, the Mortgage, the Patent Security Agreements, the Trademark Security
Agreements, the Security Agreements, any other Pre-Petition Loan Document, Loan
Document and other document delivered to the Lender from time to time to secure
the Pre-Petition Obligations and the Post-Petition Obligations.

     

    “Security
Interest” is defined in Section 3.1.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    “Stalking
Horse Agreement” shall mean the agreement to be executed by and between the
Borrowers, as seller, and Ross Aviation, or its designee (“Purchaser”), in form
and substance reasonably acceptable to the Lender, which shall serve as a
baseline bid against which all other bids shall be measured in connection with a
Sale Transaction.

     

    “Subordinated
Creditors” has the meaning set forth in the Pre-Petition Credit Agreement and
those creditors that are subordinated pursuant to the terms of the Financing
Orders.

     

    “Subordinated
Indebtedness” has the meaning set forth in the Pre-Petition Credit Agreement and
that indebtedness that is subordinated pursuant to the terms of the Financing
Orders.

     

    “Subordination
Agreement” means a subordination agreement executed by a Subordinated Creditor
in favor of the Lender and acknowledged by the Borrower.

     

    “Subsidiary”
means any Person of which more than fifty percent (50%) of the outstanding
ownership interests having general voting power under ordinary circumstances to
elect a majority of the board of directors or the equivalent of such Person,
regardless of whether or not at the time ownership interests of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency, is at the time directly or indirectly owned by the Borrower, by
the Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries.

     

    “Termination
Date” means the earliest of (i) the Maturity Date, (ii) the date the Borrowers
terminate the Credit Facility pursuant to the terms hereof, or (iii) the date
the Lender demands payment of the Obligations, following an Event of Default,
pursuant to Section 7.2.

     

    “Trademark
Security Agreement” has the meaning set forth in the Pre-Petition Credit
Agreement.

     

    “UCC”
means the Uniform Commercial Code in effect in the state designated in this
Agreement as the state whose laws shall govern this Agreement, or in any other
state whose laws are held to govern this Agreement or any portion of this
Agreement.

     

    “Unused
Amount” is defined in Section 2.8(b).

     

    “Wholesale
Lockbox and Collection Account Agreement” means the Wholesale Lockbox and
Collection Account Agreement by and between the Borrower and the
Lender.

     

    Section
1.2.                      Other
Definitional Terms; Rules of Interpretation.  The
words “hereof”, “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.  All accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP.  All terms defined in the UCC and not otherwise defined herein
have the meanings assigned to them in the UCC.  References to
Articles, Sections, subsections, Exhibits, Schedules and the like, are to
Articles, Sections and subsections of, or Exhibits or Schedules attached to,
this Agreement unless otherwise expressly provided.  Terms used herein
but not otherwise defined shall have the meanings ascribed to such terms in the
Pre-Petition Credit Agreement and the Financing Orders.  The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”.  Unless the context in which used herein
otherwise clearly requires, “or” has the inclusive meaning represented by the
phrase “and/or”.  Defined terms include in the singular number the
plural and in the plural number the singular.  Reference to any
agreement (including the Loan Documents), document or instrument means such
agreement, document or instrument as amended or modified and in effect from time
to time in accordance with the terms thereof (and, if applicable, in accordance
with the terms hereof and the other Loan Documents), except where otherwise
explicitly provided, and reference to any promissory note includes any
promissory note which is an extension or renewal thereof or a substitute or
replacement therefor.  Reference to any law, rule, regulation, order,
decree, requirement, policy, guideline, directive or interpretation means as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect on the determination date, including rules and regulations promulgated
thereunder.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ARTICLE
II

     

    AMOUNT
AND TERMS OF THE CREDIT FACILITY

     

    Section
2.1.                      Advances

     

    (a)           Revolving
Advances.  The Lender agrees, subject to the terms and
conditions of this Agreement and the Financing Orders, to make advances
(“Revolving Advances”) to (a) the Borrower Representative on behalf of the
Borrowers, from time to time from the date that all of the conditions set forth
in Section 4.1 are satisfied (the “Funding Date”) to and until (but not
including) the Termination Date in an amount not in excess of the Maximum Line
Amount.  The Lender shall have no obligation (a) to make a Revolving
Advance to the extent that the amount of the requested Revolving Advance exceeds
Availability or (b) to make a Revolving Advance to or for the benefit of the
Borrowers to the extent the amount of the requested Revolving Advance exceeds
the Borrowing Base.  The Borrowers’ obligation to pay the Revolving
Advances shall be evidenced by the Revolving Note and shall be secured by the
Collateral.  Within the limits set forth in this Section 2.1, the
Borrowers may borrow, prepay pursuant to Section 2.12, and
reborrow.

     

    (b)           Accommodation
Overadvance  Notwithstanding anything contained in Section 2.1
or otherwise in this Agreement to the contrary, the Lender agrees, subject to
the terms and conditions of this Agreement, to make Revolving Advances to the
Borrowers in amounts which may cause the outstanding balance of the aggregate
Revolving Advances to exceed the Availability or which may cause the outstanding
balance of Revolving Advances to exceed the Borrowing Base (any such excess
Revolving Advances are herein referred to collectively as “Accommodation
Overadvances”); provided that the aggregate of any such Accommodation
Overadvances outstanding at any one time shall not exceed the Accommodation
Overadvance Limit.  All Accommodation Overadvances shall constitute
Revolving Advances and in no event shall the total of Revolving Advances exceed
the Maximum Line Amount.  The Accommodation Overadvance shall be
exempt from the provisions of Section 2.12(a) of this Agreement.

     

    Section
2.2.                      Procedures for Requesting
Advances.  The
Borrowers shall comply with the following procedures in requesting Revolving
Advances:

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (a)           Type
of Advances.  Each Advance shall be funded as a Floating Rate
Advance.

     

    (b)           Time
for Requests.  The Borrower shall request each Advance so that it is
received by Lender not later than the Cut-off Time on the Business Day on which
the Advance is to be made.  Each request that conforms to the terms of
this Agreement shall be effective upon receipt by the Lender, shall be in
writing or by telephone or telecopy transmission, and shall be confirmed in
writing by the Borrower if so requested by the Lender, by (i) an Officer of the
Borrower; or (ii) a Person designated as the Borrower’s agent by an Officer of
the Borrower in a writing delivered to the Lender; or (iii) a Person whom the
Lender reasonably believes to be an Officer of the Borrower or such a designated
agent.  The Borrower shall repay all Advances even if the Lender does
not receive such confirmation and even if the Person requesting an Advance was
not in fact authorized to do so.  Any request for an Advance, whether
written or telephonic, shall be deemed to be a representation by the Borrower
that the conditions set forth in Section 4.2 have been satisfied as of the time
of the request.

     

    (c)           Disbursement.  Upon
fulfillment of the applicable conditions set forth in Article IV, the Lender
shall disburse the proceeds of the requested Advance by crediting the Borrower’s
operating account maintained with the Lender unless the Lender and the Borrower
shall agree to another manner of disbursement.  The Lender may also
initiate an Advance and disburse the proceeds to any third Person in such
amounts as the Lender, in its sole discretion, deems necessary to protect its
interest in any Collateral or to purchase Collateral or to exercise any other
rights granted to it by the Borrower under Section 6.27.

     

    Section
2.3.                      Reserved.

     

    Section
2.4.                      Reserved.

     

    Section
2.5.                      Reserved.

     

    Section
2.6.                      Reserved.

     

    Section
2.7.                      Interest; Default Interest
Rate; Application of Payments; Participations; Usury.

     

    (a)           Interest. Except as provided
in Section 2.7(b) and Section 2.7(e), the principal amount of each Advance shall
bear interest as a Floating Rate Advance.

     

    (b)           Default Interest
Rate.  At any time during any Default Period or following the
Termination Date, in the Lender’s sole discretion and without waiving any of its
other rights or remedies, the principal of the Revolving Note shall bear
interest at the Default Rate or such lesser rate as the Lender may determine,
effective as of the first day of the fiscal quarter  in which any
Default Period begins through the last day of such Default Period, or any
shorter time period that the Lender may determine.  The decision of
the Lender to impose a rate that is less than the Default Rate or to not impose
the Default Rate for the entire duration of the Default Period shall be made by
the Lender in its sole discretion and shall not be a waiver of any of its other
rights and remedies, including its right to retroactively impose the full
Default Rate for the entirety of any such Default Period or following the
Termination Date.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (c)           Application of
Payments.  Payments shall be applied to the Indebtedness on the
Business Day of receipt by the Lender in the Lender’s general account, but the
amount of principal paid shall continue to accrue interest at the interest rate
applicable under the terms of this Agreement from the calendar day the Lender
receives the payment, and continuing through the end of the first Business Day
following receipt of the payment.  Lender shall apply payments in
satisfaction of Indebtedness in the order set forth in Section
8.20.

     

    (d)           Participations.  If
any Person shall acquire a participation in the Advances, the Borrower shall be
obligated to the Lender to pay the full amount of all interest calculated under
this Section 2.7, along with all other fees, charges and other amounts due under
this Agreement, regardless if such Person elects to accept interest with respect
to its participation at a lower rate than that calculated under this Section
2.7, or otherwise elects to accept less than its pro rata share of such fees,
charges and other amounts due under this Agreement.

     

    (e)           Usury.  In any event
no rate change shall be put into effect which would result in a rate greater
than the highest rate permitted by law.  Notwithstanding anything to
the contrary contained in any Loan Document, all agreements which either now are
or which shall become agreements between the Borrower and the Lender are hereby
limited so that in no contingency or event whatsoever shall the total liability
for payments in the nature of interest, additional interest and other charges
exceed the applicable limits imposed by any applicable usury laws.  If
any payments in the nature of interest, additional interest and other charges
made under any Loan Document are held to be in excess of the limits imposed by
any applicable usury laws, it is agreed that any such amount held to be in
excess shall be considered payment of principal hereunder, and the indebtedness
evidenced hereby shall be reduced by such amount so that the total liability for
payments in the nature of interest, additional interest and other charges shall
not exceed the applicable limits imposed by any applicable usury laws, in
compliance with the desires of the Borrower and the Lender.  This
provision shall never be superseded or waived and shall control every other
provision of the Loan Documents and all agreements between the Borrower and the
Lender, or their successors and assigns.

     

    Section
2.8.                      Fees.

     

    (a)           Origination
Fee.  The Borrowers shall pay the Lender an origination fee of
$10,000, which fee shall be (i) fully earned and non-refundable upon execution
of this Agreement, (ii) added to the Indebtedness due and owing hereunder and
(iii) shall be paid by the Borrowers on the Termination Date.

     

    (b)           Unused Line
Fee.  For the purposes of this Section 2.8(b), “Unused Amount”
means the Maximum Line Amount reduced by outstanding Revolving
Advances.  The Borrower agrees to pay to the Lender an unused line fee
at the rate of one-quarter of one percent (.25%) per annum on the average daily
Unused Amount from the date of this Agreement to and including the Termination
Date, due and payable monthly in arrears on the first day of the month and on
the Termination Date.

     

    (c)           Collateral Monitoring
Fee.  The Borrower agrees to pay to the Lender a monthly
monitoring fee in the amount of $1,000 per month, due and payable monthly in
arrears on the first day of each month and on the Termination Date.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    (d)           Collateral Exam
Fees.  The Borrower shall pay the Lender  fees in
connection with any collateral exams, audits or inspections conducted by or on
behalf of the Lender of any Collateral or of the Borrower’s operations or
business at the rates established from time to time by the Lender (which fees
are currently $950 per day per collateral examiner), together with any
reasonable related out-of-pocket costs and expenses incurred by the
Lender.

     

    (e)           Collateral Monitoring Service
Fees. The Borrower shall pay the Lender fees in connection with any
service conducted by or on behalf of the Lender for purposes of identifying
ineligible Collateral, calculating the Borrowing Base, and performing related
collateral monitoring services at the rates established from time to time by the
Lender (which fees currently include a monthly fee of $100 for each such aging),
together with any reasonable out-of-pocket costs and expenses incurred by
Lender, which fees shall be due and payable monthly in arrears on the first day
of the month and on the Termination Date.

     

    (f)           Reserved

     

    (g)           Reserved.

     

    (h)           Reserved.

     

    (i)           Reserved.

     

    (j)           Overadvance
Fees.  The Borrower shall pay an Overadvance fee in the amount
of $500.00 for each day or portion thereof during which an Overadvance exists
(other than the Accommodation Overadvance), unless the Overadvance has been
agreed to in writing in advance by the Lender without payment of any
fee.  The acceptance of payment of an Overadvance fee by the Lender
shall not be deemed to constitute either consent to the Overadvance or a waiver
of the resulting Event of Default, unless the Lender specifically consents to
the Overadvance in writing and waives the Event of Default on whatever
conditions the Lender deems appropriate in its reasonable
discretion..

     

    (k)           Other Fees and
Charges.  The Lender may from time to time impose additional
fees and charges as consideration for Advances made in excess of Availability or
for other events that constitute an Event of Default or a Default hereunder,
including fees and charges for the administration of Collateral by the Lender,
and fees and charges for the late delivery of reports, which may be assessed in
the Lender’s sole discretion on either an hourly, periodic, or flat fee basis,
and in lieu of or in addition to imposing interest at the Default
Rate.

     

    Section
2.9.                      Time for Interest
Payments; Payment on Non-Business Days; Computation of Interest and
Fees.

     

    (a)           Time For Interest
Payments.  Accrued and unpaid interest accruing on Floating
Rate Advances shall be due and payable on the first day of each month and on the
Termination Date (each an “Interest Payment Date”), or if any such day is not a
Business Day, on the next succeeding Business Day. Interest will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of advance to the Interest Payment Date.  If an
Interest Payment Date is not a Business Day, payment shall be made on the next
succeeding Business Day.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    (b)           Payment on Non Business
Days.  Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of interest on the Advances or the fees
hereunder, as the case may be.

     

    (c)           Computation of Interest and
Fees.  Interest accruing on the outstanding principal balance
of the Advances and fees hereunder outstanding from time to time shall be
computed on the basis of actual number of days elapsed in a year of 360
days.

     

    Section
2.10.                      Lockbox and Collateral
Account; Sweep of Funds.

     

    (a)           Lockbox and Collateral
Account.

     

    (i)           The
Borrower shall instruct all account debtors to pay all Accounts directly to the
Lockbox.  If, notwithstanding such instructions, the Borrower receives
any payments on Accounts, the Borrower shall deposit such payments into the
Collateral Account.  The Borrower shall also deposit all other cash
proceeds of Collateral regardless of source or nature directly into the
Collateral Account.  Until so deposited, the Borrower shall hold all
such payments and cash proceeds in trust for and as the property of the Lender
and shall not commingle such property with any of its other funds or
property.  All deposits in the Collateral Account shall constitute
proceeds of Collateral and shall not constitute payment of the
Indebtedness.

     

    (ii)           All
items deposited in the Collateral Account shall be subject to final
payment.  If any such item is returned uncollected, the Borrower will
immediately pay the Lender, or, for items deposited in the Collateral Account,
the bank maintaining such account, the amount of that item, or such bank at its
discretion may charge any uncollected item to the Borrower’s commercial account
or other account.  The Borrower shall be liable as an endorser on all
items deposited in the Collateral Account, whether or not in fact endorsed by
the Borrower.

     

    (b)           Sweep of Funds.  The
Lender shall from time to time, in accordance with the Wholesale Lockbox and
Collection Account Agreement, cause funds in the Collateral Account to be
transferred to the Lender’s general account for payment of the
Indebtedness.  Amounts deposited in the Collateral Account shall not
be subject to withdrawal by the Borrower, except after payment in full and
discharge of all Indebtedness.

     

    Section
2.11.                      Voluntary
Prepayment; Reduction of the Maximum Line Amount; Termination of the Credit
Facility by the Borrower.  Except
as otherwise provided herein, the Borrower may prepay the Advances in whole at
any time or from time to time in part.  The Borrower may terminate the
Credit Facility or reduce the Maximum Line Amount at any time if it gives the
Lender at least 3 calendar days advance written notice prior to the proposed
Termination Date.  Any reduction in the Maximum Line Amount shall be
in multiples of $100,000, and with a minimum reduction of at least
$500,000.  If the Borrower terminates the Credit Facility or reduces
the Maximum Line Amount to zero, all Indebtedness shall be immediately due and
payable.

     

    Section
2.12.                      Mandatory
Prepayment.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (a)           Without
notice or demand, unless the Lender shall otherwise consent in a written
agreement that sets forth the terms and conditions which the Lender in its
discretion may deem appropriate, including without limitation the payment of an
Overadvance fee, if an Overadvance shall at any time exist with respect to the
Credit Facility (other than the Accommodation Overadvance), then the Borrower
shall immediately prepay the Revolving Advances to the extent necessary to
eliminate such excess.  Any voluntary or mandatory prepayment received
by the Lender may be applied to the Indebtedness, in such order and in such
amounts as the Lender in its sole discretion may determine from time to
time.

     

    Section
2.13.                      Revolving Advances to Pay
Indebtedness.  Notwithstanding
the terms of Section 2.1, the Lender may, in its discretion at any time or from
time to time, without the Borrower’s request and even if the conditions set
forth in Section 4.2 would not be satisfied, make a Revolving Advance in an
amount equal to the portion of the Indebtedness from time to time due and
payable and may deliver the proceeds of any such Revolving Advance to Wells
Fargo Merchant Services, L.L.C. in satisfaction of any unpaid obligations due to
Wells Fargo Merchant Services, L.L.C.

     

    Section
2.14.                      Use of
Proceeds.  The
Borrower shall use the proceeds of Advances for the purpose of funding
post-petition operations in accordance with the Budget.  No proceeds
of any Advance may be utilized by the Borrower to finance in any way any
professional fees, disbursements, costs or expenses incurred in connection with
asserting, investigating, or preparing any claims or causes of action against
the Lender, or its counsel or advisors (including advisors to their counsel),
arising from or relating to the Pre-Petition Credit Agreement or this Agreement
and/or investigating, challenging or raising any defenses to the Indebtedness
and/or Liens under the Pre-Petition Credit Agreement or this
Agreement.

     

    Section
2.15.                      Liability
Records.  The
Lender may maintain from time to time, at its discretion, records as to the
Indebtedness.  All entries made on any such record shall be presumed
correct until the Borrower establishes the contrary.  Upon the
Lender’s demand, the Borrower will admit and certify in writing the exact
principal balance of the Indebtedness that the Borrower then asserts to be
outstanding.  Any billing statement or accounting rendered by the
Lender shall be conclusive and fully binding on the Borrower unless the Borrower
gives the Lender specific written notice of exception within 30 days after
receipt.

     

    Section
2.16.                      Single
Loan.  All
Advances to Borrowers and all of the other Indebtedness of Borrowers arising
under this Agreement and the other Loan Documents shall constitute one general
obligation of Borrowers secured by all of the Collateral.

     

    Section
2.17.                      Grants, Rights and
Remedies.  The
Liens, security interests and the administrative priority granted pursuant to
Article III may be independently granted by the Loan Documents and by other Loan
Documents hereafter entered into.  This Agreement, the Interim
Financing Order, the Final Financing Order and such other Loan Documents
supplement each other, and the grants, priorities, rights and remedies of the
Lender hereunder and thereunder are cumulative.

     

    Section
2.18.                      Perfection.  The
Liens and security interests securing the Indebtedness, as granted in Article
III, shall be deemed valid and perfected by entry of the Interim Financing Order
and entry of the Interim Financing Order shall have occurred on or before the
date of any Advance hereunder.  The Lender shall be permitted, but is
not required, to file any financing statements, mortgages, leasehold mortgages,
notices of Lien or similar instruments in any jurisdiction or filing office or
to take any other action in order to validate or perfect the Liens and security
interests granted by or pursuant to this Agreement, the Financing Orders or any
other Loan Document, and such Liens and security interests shall be deemed
perfected without Lender taking any action
whatsoever.  Notwithstanding the foregoing, Borrower agrees, promptly
upon request by Lender, to take all actions reasonably requested by Lender to
perfect a first priority Lien in all or any portion of the
Collateral.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
2.19.                      Waiver of any Priming Rights
and Violative Use of Cash Collateral.  Upon
the Closing Date, and on behalf of itself and its estates, and for so long as
any Indebtedness shall be outstanding, the Borrowers hereby irrevocably waive
any right pursuant to Sections 364(c) or 364(d) of the Bankruptcy Code or
otherwise to grant any Lien of equal or greater priority than the Lien securing
the Indebtedness, or to approve a claim of equal or greater priority than the
Indebtedness, or to seek use of Pre-Petition Lender’s cash collateral except as
expressly set forth in this Agreement, the Financing Orders or otherwise agreed
to by the Pre-Petition Lender in writing.

     

    Section
2.20.                      Waiver of Claims to
Surcharge.  In
accordance with the Interim Financing Order and Final Financing Order,
Borrowers, their Subsidiaries and Affiliates and the Borrowers’ bankruptcy
estate hereby waive and shall cause each of their respective Subsidiaries to
waive, any claims to surcharge the Collateral under section 506(c) of the
Bankruptcy Code, excluding, however, any such claims for matters provided for in
the Budget and incurred prior to the occurrence of an Event of Default and
termination of this Agreement but not paid by the Borrowers (subject to Lender’s
rights to object to any such claims).

     

    ARTICLE
III

     

    SECURITY
INTEREST; OCCUPANCY; SETOFF

     

    Section
3.1.                      Grant of Security
Interest. The
Borrower hereby pledges, assigns and grants to the Lender, for the benefit of
itself and as agent for Wells Fargo Merchant Services, L.L.C., a continuing
first priority lien and security interest (subject only to (i) the Carveout, and
(ii) Permitted Liens), in accordance with Section 364(d)(1) of the Bankruptcy
Code (collectively referred to as the “Security Interest”) in the Collateral, as
security for the payment and performance of the Indebtedness due hereunder and
the Pre-Petition Obligations. Upon request by the Lender, the Borrower will
grant to the Lender, for the benefit of itself and as agent for Wells Fargo
Merchant Services, L.L.C. and to the Pre-Petition Lender, a security interest in
all commercial tort claims that the Borrower may have against any
Person.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
3.2.                      Lien Perfection; Further
Assurances.  The
Interim Financing Order, and if and when it becomes effective, the Final
Financing Order, shall be sufficient and conclusive evidence of the validity,
perfection and priorities of the Lender’s Liens upon the Collateral, without the
necessity of filing or recording any financing statement, assignment, mortgage,
leasehold mortgage, preferred mortgages (formerly known as preferred ship
mortgages) or other instrument or document which may otherwise be required under
the law of any jurisdiction or the taking of any other action to validate or
perfect the Liens of the Lender in and to the Collateral or to entitle the
Lender to the priorities granted herein; provided, however, the
Borrower shall  execute such instruments, assignments, mortgages, ship
mortgages, or documents as are necessary to perfect Lender’s Liens upon any of
the Collateral and shall take such other action as may be reasonably required to
perfect or to continue the perfection of Lender’s Liens upon the
Collateral.  The Borrower hereby irrevocably authorizes the Lender at
any time and from time to time to file in any UCC jurisdiction any initial
financing statements and amendments thereto that (a) indicate the Collateral (i)
as all assets of the Borrower or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC of the State of New York or such other jurisdiction, or
(ii) as being of an equal or lesser scope or with greater detail, and (b)
contain any other information required by part 5 of Article 9 of the UCC of the
State of Borrower’s location for the sufficiency or filing office acceptance of
any financing statement or amendment, including (i) whether the Borrower is an
organization, the type of organization and any organization identification
number issued to the Borrower, and, (ii) in the case of a financing statement
filed as a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which the
Collateral relates.  The Borrower agrees to furnish any such
information to the Lender promptly upon request.  The Borrower also
ratifies its authorization for the Lender to have filed in any UCC jurisdiction
any initial financing statements or amendments thereto if filed prior to the
date hereof.  No such filing or recordation shall be necessary or
required in order to create or perfect any such Lien.  At Lender’s
request, Borrower shall also promptly execute or cause to be executed and shall
deliver to Lender any and all documents, instruments and agreements deemed
necessary by Lender to give effect to or carry out the terms or intent of the
Loan Documents; provided, however, that same shall not increase the Obligations,
representations, warranties or covenants of the Loan Parties
hereunder.  For purposes of any such financing statements, the Loan
Parties represent and warrant that the following information is true and
correct:

     

    Name and
address of Loan Parties:

    

    RCLC,
Inc.

    1480
Route 9 North, Suite 301

    Woodbridge,
New Jersey 07095

    Federal
Employer Identification No. 22-0743290

    Organizational
Identification No. 7693250000

     

    RCPC
Liquidating Corp.

    1480
Route 9 North, Suite 301 Woodbridge, New Jersey 07095

    Federal
Employer Identification No.  22-2380407

    Organizational
Identification No.  0100153715

     

    Ronson
Aviation, Inc.

    1480
Route 9 North, Suite 301

    Woodbridge,
New Jersey 07095

    Federal
Employer Identification No. 21-0729844

    Organizational
Identification No. 7693211000

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    RCC
INC.

    1480
Route 9 North, Suite 301

    Woodbridge,
New Jersey 07095

    Federal
Employer Identification No. 12177 8682 RC0001

    Organizational
Identification No. 629727

     

    Name and
address of Secured Party:

     

    Wells
Fargo Bank, National Association119 West
40th
Street, 16th
Floor

     

    New York,
New York 10018

     

    Section
3.3.                      Superpriority Administrative
Expense Claim.  Subject
to the Carveout and Permitted Liens,  the Indebtedness of the
Borrowers arising hereunder after the Closing Date shall constitute, in
accordance with Section 364(c) of the Bankruptcy Code, a superpriority
administrative claim having priority over any and all administrative expenses of
and unsecured claims against the Borrower now existing or hereafter arising, of
any kind or nature whatsoever, including, without limitation, all administrative
expenses of the kind specified in, or arising or ordered under, Sections 105,
326, 328, 503(b), 506(c), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy
Code.  Lender shall have a superpriority administrative expense claim
against the Borrower’s estate pursuant to Section 364(c) of the Bankruptcy Code
for the Indebtedness and all related costs and expenses, which shall be prior,
senior and superior to any other claim, including any other superpriority
administrative expense claim of any kind or nature, except as provided herein
and/or in the Financing Orders.  The Indebtedness of the Borrowers
hereunder are claims to be afforded priority over administrative expenses
pursuant to Section 364(c)(1) of the Bankruptcy Code, as provided herein and/or
in the Financing Orders and secured by liens pursuant to Section 364 of the
Bankruptcy Code as provided herein.

     

    Section
3.4.                      Notification of Account
Debtors and Other Obligors.  The
Lender may, at any time during a Default Period, notify any account debtor or
other Person obligated to pay the amount due that such right to payment has been
assigned or transferred to the Lender for security and shall be paid directly to
the Lender.  The Borrower will join in giving such notice if the
Lender so requests.  At any time after the Borrower or the Lender
gives such notice to an account debtor or other obligor, the Lender may, but
need not, in the Lender’s name or in the Borrower’s name, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of, or securing, any such right to payment, or grant any extension to,
make any compromise or settlement with or otherwise agree to waive, modify,
amend or change the obligations (including collateral obligations) of any such
account debtor or other obligor.  Upon the occurrence of an Event of
Default and during the continuation thereof, the Lender may, in the Lender’s
name or in the Borrower’s name, as the Borrower’s agent and attorney-in-fact,
notify the United States Postal Service and/or Canada Post to change the address
for delivery of the Borrower’s mail to any address designated by the Lender,
provided that Lender shall also notify Borrower promptly after it provides such
notice to the United States Postal Service and/or Canada Post, otherwise
intercept the Borrower’s mail, and receive, open and dispose of the Borrower’s
mail, applying all Collateral as permitted under this Agreement and holding all
other mail for the Borrower’s account or forwarding such mail to the Borrower’s
last known address.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
3.5.                      Assignment of
Insurance.  As
additional security for the payment and performance of the Indebtedness, the
Borrower hereby assigns to the Lender any and all monies (including proceeds of
insurance and refunds of unearned premiums) due or to become due under, and all
other rights of the Borrower with respect to, any and all policies of insurance
now or at any time hereafter covering the Collateral or any evidence thereof or
any business records or valuable papers pertaining thereto, and the Borrower
hereby directs the issuer of any such policy to pay all such monies directly to
the Lender.  At any time, whether or not a Default Period then exists,
the Lender may (but need not), in the Lender’s name or in the Borrower’s name,
execute and deliver proof of claim, receive all such monies, endorse checks and
other instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such
policy.  Any monies received as payment for any loss under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to the Lender to be applied, at the option of the
Lender, either to the prepayment of the Indebtedness or shall be disbursed to
the Borrower under staged payment terms reasonably satisfactory to the Lender
for application to the cost of repairs, replacements, or
restorations.  Any such repairs, replacements, or restorations shall
be effected with reasonable promptness and shall be of a value at least equal to
the value of the items or property destroyed prior to such damage or
destruction.

     

    Section
3.6.                      Occupancy.

     

    (a)           The
Borrower hereby irrevocably grants to the Lender the right to take possession of
the Premises at any time during a Default Period without notice or consent, to
the exclusion of Borrower.

     

    (b)           The
Lender may use the Premises only to hold, process, manufacture, sell, use,
store, liquidate, realize upon or otherwise dispose of items that are Collateral
and for other purposes that the Lender may in good faith deem to be related or
incidental purposes.

     

    (c)           The
Lender’s right to hold the Premises shall cease and terminate upon the earlier
of (i) payment in full and discharge of all Indebtedness and termination of the
Credit Facility, and (ii) final sale or disposition of all items constituting
Collateral and delivery of all such items to purchasers.

     

    (d)           The
Lender shall not be obligated to pay or account for any rent or other
compensation for the possession, occupancy or use of any of the Premises;
provided, however, that if the Lender does pay or account for any rent or other
compensation for the possession, occupancy or use of any of the Premises, the
Borrower shall reimburse the Lender promptly for the full amount
thereof.  In addition, the Borrower will pay, or reimburse the Lender
for, all taxes, fees, duties, imposts, charges and expenses at any time incurred
by or imposed upon the Lender by reason of the execution, delivery, existence,
recordation, performance or enforcement of this Agreement or the provisions of
this Section 3.6.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
3.7.                      License.  Without
limiting the generality of any other Security Document, each Loan Party hereby
grants to the Lender a non-exclusive, worldwide and royalty-free license to use
or otherwise exploit all Intellectual Property Rights of the Loan Party for the
purpose of:  (a) completing the manufacture of any in-process
materials during any Default Period so that such materials become saleable
Inventory, all in accordance with the same quality standards previously adopted
by the Loan Party for its own manufacturing and subject to the Loan Party’s
reasonable exercise of quality control; and (b) selling, leasing or otherwise
disposing of any or all Collateral during any Default Period.

     

    Section
3.8.                      Reserved.

     

    Section
3.9.                      Setoff.  The
Lender may at any time or from time to time, at its sole discretion and without
demand and without notice to anyone, setoff any liability owed to the Borrower
by the Lender, whether or not due, against any Indebtedness, whether or not
due.  In addition, each other Person holding a participating interest
in any Indebtedness shall have the right to appropriate or setoff any deposit or
other liability then owed by such Person to the Borrower, whether or not due,
and apply the same to the payment of said participating interest, as fully as if
such Person had lent directly to the Borrower the amount of such participating
interest.

     

    Section
3.10.                      Collateral.  This
Agreement does not contemplate a sale of accounts, contract rights or chattel
paper, and, as provided by law, the Borrower is entitled to any surplus and
shall remain liable for any deficiency.  The Lender’s duty of care
with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if it exercises reasonable care in physically keeping such Collateral,
or in the case of Collateral in the custody or possession of a bailee or other
third Person, exercises reasonable care in the selection of the bailee or other
third Person, and the Lender need not otherwise preserve, protect, insure or
care for any Collateral.  The Lender shall not be obligated to
preserve any rights the Borrower may have against prior parties, to realize on
the Collateral at all or in any particular manner or order or to apply any cash
proceeds of the Collateral in any particular order of
application.  The Lender has no obligation to clean-up or otherwise
prepare the Collateral for sale.  The Borrower waives any right it may
have to require the Lender to pursue any third Person for any of the
Indebtedness.

     

    Section
3.11.                      Survival.  The
Liens, lien priority, administrative priorities and other rights and remedies
granted to the Lender pursuant to this Agreement, the Financing Orders and the
other Loan Documents (specifically including, but not limited to, the existence,
perfection and priority of the Liens and security interests provided herein and
therein, and the administrative priority provided herein and therein) shall not
be modified, altered or impaired in any manner by any other financing or
extension of credit or incurrence of indebtedness by the Borrower (pursuant to
Section 364 of the Bankruptcy Code or otherwise), or by any dismissal or
conversion of the Chapter 11 Case, or by any other act or omission
whatsoever.  Without limitation, notwithstanding any such order,
financing, extension, incurrence, dismissal, conversion, act or
omission:

     

    (a)           except
for the Carveout and Permitted Liens, no costs or expenses of administration
which have been or may be incurred in the Chapter 11 Case or any conversion of
the same or in any other proceedings related thereto, and no priority claims,
are or will be prior to or on a parity with any claim of the Lender against the
Borrower in respect of any Indebtedness;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (b)           except
as provided in Section 3.1, the Liens in favor of the Lender set forth in
Section 3.1 hereof shall constitute valid and perfected priming first
priority Liens and security interests and shall be prior to all other Liens and
security interests, now existing or hereafter arising, in favor of any other
creditor or any other Person whatsoever; and

     

    (c)           the
Liens in favor of the Lender set forth herein and in the other Loan Documents
shall continue to be valid and perfected without the necessity that the Lender
file or record financing statements, mortgages or otherwise perfect its Lien
under applicable non-bankruptcy law.

     

    ARTICLE
IV

     

    CONDITIONS
OF LENDING

     

    Section
4.1.                      Conditions Precedent to the
Initial Advances.  The
Lender’s obligation to make the initial Advances shall be subject to the
condition precedent that the Lender shall have received all of the following,
each properly executed by the appropriate party and in form and substance
satisfactory to the Lender:

     

    (a)           This
Agreement.

     

    (b)           The
Revolving Note.

     

    (c)           Each
other Loan Document.

     

    (d)           The
Interim Financing Order shall have been entered by the Bankruptcy Court not
later than August 19, 2010, and the Lender shall have received a certified copy
of such order, and such order shall be in full force and effect and shall not
have been reversed, modified, amended, subject to a pending appeal, stayed or
vacated absent the prior written consent of the Lender.

     

    (e)           Certificates
of the insurance required hereunder, with all hazard insurance containing a
lender’s loss payable endorsement in the Lender’s favor and with all liability
insurance naming the Lender as an additional insured.

     

    (f)           A
separate Guaranty from each Guarantor, pursuant to which each Guarantor
unconditionally guarantees the full and prompt payment of all
Indebtedness.

     

    (g)           Payment
of all fees due under the terms of this Agreement through the date of the
initial Advance and payment of all expenses incurred by the Lender through such
date and that are required to be paid by the Borrower under this
Agreement.

     

    (h)           A
Customer Identification Information form and such other forms and verification
as the Lender may need to comply with the U.S.A. Patriot Act.

     

    (i)           On
or before the Closing Date, Lender shall have received the Budget, in form and
substance satisfactory to the Lender.  The Budget will be in the form
of the 10-week Budget dated August 9, 2010 and annexed hereto as Exhibit A, with such
modifications (if any) as are agreed to by the Borrower and Lender.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (j)           Borrower
shall have acknowledged the full amount of the Pre-Petition Obligations owing to
Lender, and shall have executed a release in favor of Lender with respect to any
and all claims and defenses that may be asserted by the Borrower; provided, however,
that the official creditors’ committee appointed in the Chapter 11 Case will
have the ability to investigate such matters and the foregoing releases and
acknowledgements shall be binding on the estates if the creditors’ committee
does not initiate an adversary proceeding on or before September 30,
2010.

     

    (k)           Such
other documents as the Lender in its sole discretion may require.

     

    Section
4.2.                      Conditions Precedent to All
Advances.  The
Lender’s obligation to make each Advance shall be subject to the further
conditions precedent that:

     

    (a)           The
representations and warranties contained in Article V are correct in all
material respects on and as of the date of such Advance as though made on and as
of such date, except to the extent that such representations and warranties
relate solely to an earlier date;

     

    (b)           no
event has occurred and is continuing, or would result from such Advance which
constitutes a Default or an Event of Default;

     

    (c)           the
making of such Loan shall not contravene any law, rule or regulation applicable
to the Lender;

     

    (d)           the
Lender shall have received such other agreements, instruments, approvals, and
other documents referenced hereunder, each in form and substance satisfactory to
the Lender, as the Lender may reasonably request;

     

    (e)           with
respect to Advances to be made subsequent to August 31, 2010, the Final
Financing Order shall have been entered by the Bankruptcy Court and the Lender
shall have received a certified copy of such order and such order shall be in
full force and effect and shall not have been reversed, stayed, modified or
amended absent prior written consent of the Lender (which consent shall not be
implied from any other action, inaction or acquiescence of the
Lender);

     

    (f)           on
the date of any such Advance, the Interim Financing Order or the Final Financing
Order, as the case may be, shall have been entered by the Bankruptcy Court, and
the Lender shall have received a certified copy of the same and such order shall
be in full force and effect and shall not have been reversed, stayed, modified
or amended absent the consent of the Lender; and

     

    (g)           on
the date of any Advance, Borrower shall have timely met all deadlines set forth
in the Sale Transaction Schedule, unless otherwise expressly agreed to in
writing by Lender in its sole discretion.

     

    ARTICLE
V

     

    REPRESENTATIONS
AND WARRANTIES

     

    Each Loan
Party represents and warrants to the Lender as follows:

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
5.1.                      Existence and Power; Name
Chief Executive Office; Inventory and Equipment Locations; Federal Employer
Identification Number and Organizational Identification
Number.  Parent,
RCPC and RAI are corporations, duly organized, validly existing and in good
standing under the laws of the State of New Jersey and are duly licensed or
qualified to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary, except where failure so to be
licensed or qualified would not have a Material Adverse Effect.  RCC
is a corporation, duly organized, validly existing and in good standing under
the laws of  the Province of Ontario and is duly licensed or qualified
to transact business in all jurisdictions where the character of the property
owned or leased or the nature of the business transacted by it makes such
licensing or qualification necessary, except where failure so to be licensed or
qualified would not have a Material Adverse Effect.  Each Loan Party
has all requisite power and authority to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents.  During the seven (7) years preceding the
Funding Date, each Loan Party has done business solely under the names set forth
in Schedule 5.1 or as set forth in the recitals hereof.  Each Loan
Party’s chief executive office and principal place of business is located at the
address set forth in Schedule 5.1, and all of the Loan Party’s records relating
to its business or the Collateral are kept at that location.  All
Inventory and Equipment is located at that location or at one of the other
locations listed in Schedule 5.1.  The Loan Party’s federal employer
identification number and organization identification number are correctly set
forth in Section 3.6.

     

    Section
5.2.                      Capitalization.  Schedule
5.2 constitutes a correct and complete list of all ownership interests of the
Borrowers and rights to acquire ownership interests including the record holder,
number of interests and percentage interests on a fully diluted basis, and an
organizational chart showing the ownership structure of all Subsidiaries of the
Loan Parties.

     

    Section
5.3.                      Authorization of Borrowing;
No Conflict as to Law or Agreements.  The
execution, delivery and performance by the Loan Parties of the Loan Documents
and the borrowings from time to time hereunder have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the Loan Parties’ Owners; (ii) other than entry of the Financing
Orders, require any authorization, consent or approval by, or registration,
declaration or filing with, or notice to, any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any third party, except such authorization, consent, approval, registration,
declaration, filing or notice as has been obtained, accomplished or given prior
to the date hereof; (iii) violate any provision of any law, rule or regulation
(including Regulation X of the Board of Governors of the Federal Reserve System)
or of any order, writ, injunction or decree presently in effect having
applicability to any Loan Party or of any Loan Party’s Constituent Documents;
(iv) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other material agreement, lease or instrument to
which any Loan Party is a party or by which it or its properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any Lien
(other than the Security Interest) upon or with respect to any of the properties
now owned or hereafter acquired by any Loan Party.

     

    Section
5.4.                      Legal
Agreements.  This
Agreement constitutes and, upon due execution by each Loan Party, the other Loan
Documents will constitute the legal, valid and binding obligations of the Loan
Parties, enforceable against the Loan Parties in accordance with their
respective terms, subject to entry of the Financing Orders acceptable to the
Lender in its sole discretion.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
5.5.                      Subsidiaries.  Except
as set forth in Schedule 5.5 hereto, the Loan Parties have no
Subsidiaries.

     

    Section
5.6.                      Budget.  On
or before the Closing Date, the Borrower has furnished to the Lender the
Budget.  The Budget when delivered shall be believed by the Borrower
at the time furnished to be reasonable, shall have been prepared on a reasonable
basis and in good faith by the Borrower, and shall have been based on
assumptions believed by the Borrower to be reasonable at the time made and upon
the best information then reasonably available to the Borrower, and the Borrower
shall not be aware of any facts or information that would lead it to believe
that such Budget is incorrect or misleading in any material
respect.

     

    Section
5.7.                      Litigation.  There
are no actions, suits or proceedings pending or, to the Loan Parties’ knowledge,
threatened against or affecting any Loan Party or any of their Affiliates or the
properties of the any Loan Party or any of their Affiliates before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which is reasonably likely to have a Material Adverse
Effect, except as set forth on Schedule 5.7.

     

    Section
5.8.                      Regulation
U.  The
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin
stock.

     

    Section
5.9.                      Taxes.  The
Loan Parties have paid or caused to be paid to the proper authorities when due
all federal, state, provincial, and local taxes required to be withheld by each
of them.  The Loan Parties have filed all federal, provincial, state
and local tax returns which to the knowledge of the Officers of the Borrower,
are required to be filed, and, except as set forth on Schedule 5.9, the Loan
Parties have paid or caused to be paid to the respective taxing authorities all
taxes as shown on said returns or on any assessment received by any of them to
the extent such taxes have become due.

     

    Section
5.10.                      Titles and
Liens.  The
Loan Parties have good and absolute title to all Collateral free and clear of
all Liens other than Permitted Liens.  No financing statement filed
pursuant to the UCC naming any Loan Party as debtor is on file in any office
except to perfect only Permitted Liens.

     

    Section
5.11.                      Intellectual Property
Rights.

     

    (a)           Owned Intellectual
Property.  Schedule 5.11 is a complete list of all patents,
applications for patents, registered trademarks, applications to register
trademarks, registered service marks, applications to register service marks,
registered designs, mask works, trade dress and copyrights for which a Loan
Party is an owner of record as of the date hereof (the “Owned Intellectual
Property”).  Except as disclosed on Schedule 5.11, (i) the Loan
Parties own the Owned Intellectual Property free and clear of all restrictions
(including covenants not to sue a third party), court orders, injunctions,
decrees, writs or Liens, whether by written agreement or otherwise, other than
Permitted Liens (ii) no Person other than the Loan Parties owns or, except in
the ordinary course of business and set forth on Schedule 5.11, has been granted
any right in the Owned Intellectual Property, (iii) all material Owned
Intellectual Property is valid, subsisting and enforceable and (iv) the Loan
Parties have taken all commercially reasonable action necessary to maintain and
protect the Owned Intellectual Property.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (b)           Reserved.

     

    (c)           Intellectual Property Rights Licensed
from Others.  Schedule 5.11 is a complete list of all
agreements under which the Loan Parties have licensed Intellectual Property
Rights from another Person (“Licensed Intellectual Property”)as of the date
hereof other than readily available, non-negotiated licenses of computer
software and other intellectual property used solely for performing accounting,
word processing and similar administrative tasks (“Off-the-shelf Software”) and
a summary of any ongoing payments the Loan Parties are obligated to make with
respect thereto.  Except as disclosed on Schedule 5.11 and in written
agreements, copies of which have been given to the Lender, the Loan Parties’
licenses to use the Licensed Intellectual Property are free and clear of all
restrictions, Liens (other than Permitted Liens), court orders, injunctions,
decrees, or writs, whether by written agreement or otherwise.  Except
as disclosed on Schedule 5.11, the Loan Parties are not obligated or under any
liability whatsoever to make any payments of a material nature by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any Intellectual Property Rights.

     

    (d)           Other Intellectual Property Needed
for Business.  Except for Off-the-shelf Software and as
disclosed on Schedule 5.11, the Owned Intellectual Property and the Licensed
Intellectual Property constitute all Intellectual Property Rights as of the date
hereof used or necessary to conduct the Loan Parties’ business in all material
respects as it is presently conducted or as the Loan Parties reasonably foresees
conducting it.

     

    (e)           Infringement.  Except
as disclosed on Schedule 5.11, the Loan Parties have no knowledge of, and have
not received any written claim or notice alleging, any Infringement of another
Person’s Intellectual Property Rights (including any written claim that any Loan
Party must license or refrain from using the Intellectual Property Rights of any
third party) nor, to the Loan Parties’ knowledge, is there any threatened claim,
in each case insofar as would reasonably be likely to have a Material Adverse
Effect.

     

    Section
5.12.                      Reserved.

     

    Section
5.13.                      Default.  Each
Loan Party is in compliance with all provisions of all agreements, instruments,
decrees and orders to which it is a party or by which it or its property is
bound or affected, the breach or default of which would reasonably be likely to
have a Material Adverse Effect.

     

    Section
5.14.                      Reserved.

     

    Section
5.15.                      Submissions to
Lender.  All
financial and other information provided to the Lender by or on behalf of a Loan
Party in connection with the Borrower’s request for the credit facilities
contemplated hereby (i) except as to projections, valuations or pro forma
financial statements, is true and correct in all material respects, (ii) does
not omit any material fact necessary, in light of the circumstances under which
provided, to make such information not misleading and, (iii) as to projections,
valuations or pro forma financial statements, present a good faith opinion as to
such projections, valuations and pro forma condition and results.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
5.16.                      Financing
Statements.  Notwithstanding
the provision of Section 3.2 of this Agreement, each Borrower has authorized the
filing of financing statements pursuant to the UCC sufficient when filed to
perfect the Security Interest and the other security interests created by the
Security Documents.  When the Interim Financing Order is entered, the
Lender will have a valid and perfected security interest in all Collateral which
is capable of being perfected by filing financing statements.  None of
the Collateral is or will become a fixture on real estate, unless a sufficient
fixture filing is in effect with respect thereto.

     

    Section
5.17.                      Rights to
Payment.  Each
right to payment and each instrument, document, chattel paper and other
agreement constituting or evidencing Collateral is (or, in the case of all
future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named therein or in the Borrower’s
records pertaining thereto as being obligated to pay such
obligation.

     

    Section
5.18.                      Reserved.

     

    Section
5.19.                      Inactive
Subsidiaries.  None
of the Inactive Subsidiaries own any assets, perform or conduct, or shall
perform or conduct, any business activities whatsoever, unless (a) Borrowers
provide Lender with prior written notice of the intent to purchase assets or
conduct business through an Inactive Subsidiary and (b) such Inactive Subsidiary
shall become a co-borrower hereunder or a guarantor of the Indebtedness, at
Lender’s discretion.

     

    Section
5.20.                      Administrative Priority;
Lien Priority.

     

    (a)           The
Indebtedness of the Borrowers will, at all times after the Closing Date,
constitute allowed administrative expenses in the Chapter 11 Case, having
priority in payment over all other administrative expenses and unsecured claims
against the Borrowers now existing or hereafter arising, of any kind or nature
whatsoever, including without limitation all administrative expenses of the kind
specified in, or arising or ordered under, Sections 105, 326, 327, 328, 330,
503(b), 506(c), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy
Code;

     

    (b)           Pursuant
to Section 364(d)(1) of the Bankruptcy Code and the Financing Orders, subject to
any Permitted Liens, all Indebtedness shall be secured by a perfected priming
first priority Lien on the Collateral; and

     

    (c)           On
the Effective Date, the Interim Financing Order is, and upon entry of the Final
Financing Order the Final Financing Order shall be, in full force and effect and
have not been reversed, vacated, modified, amended or stayed, except for
modifications and amendments that are reasonably acceptable to the Lender in its
sole discretion and are not subject to a pending appeal or stayed in any
respect.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
5.21.                      Appointment of Trustee or
Examiner; Liquidation.

     

    No order
has been entered or is pending in the Chapter 11 Case (i) for the appointment of
a Chapter 11 trustee, (ii) for the appointment of an examiner with enlarged
powers (beyond those set forth in Sections 1106(a)(3) and (4) of the Bankruptcy
Code) under Sections 1104(d) and 1106(b) of the Bankruptcy Code or (iii) to
convert the Chapter 11 Case to a Chapter 7 case or to dismiss the Chapter 11
Case.

     

    Section
5.22.                      The Chapter 11
Case.

     

    The
Chapter 11 Case was commenced on the Petition Date in accordance with applicable
law and proper notice thereof and has not been dismissed as of the date of this
Agreement.  The motion for approval of this Agreement was proper and
sufficient pursuant to the Bankruptcy Code, the Bankruptcy Rules and the rules
and procedures of the Bankruptcy Court.

     

    ARTICLE
VI

     

    COVENANTS

     

    So long
as the Indebtedness shall remain unpaid or the Credit Facility shall remain
outstanding, the Loan Parties will comply with the following requirements,
unless the Lender shall otherwise consent in writing:

     

    Section
6.1.                      Reporting
Requirements.  The
Loan Parties will deliver, or cause to be delivered, to the Lender each of the
following, which shall be in form and detail acceptable to the
Lender:

     

    (a)           Reserved.

     

    (b)           Reserved.

     

    (c)           Reserved.

     

    (d)           Collateral
Reports.  (i) Semi-monthly on the 15th and last day of every
month, or more frequently if the Lender so requires, each Borrower’s accounts
receivable and its accounts payable and (ii) weekly, within two (2) Business
Days after the end of each week, a detailed perpetual inventory report, an
inventory certification report, and a calculation of each Borrower’s Accounts,
Eligible Accounts, Inventory and Eligible Inventory.

     

    (e)           Reserved.

     

    (f)           Supplemental
Reports.  On the first Business Day of each calendar week, or
more frequently if the Lender so requires, the Borrower’s “daily collateral
reports”, an inventory report, receivables schedules, collection reports, credit
memos, cash receipts, copies of invoices to account debtors in excess of $5,000,
signed and dated shipment documents for goods sold to said account debtors in
excess of $5,000.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (g)           Litigation.  Immediately
after the commencement thereof, notice in writing of all litigation and of all
proceedings before any governmental or regulatory agency affecting the Loan
Parties which seek a monetary recovery against any Loan Party in excess of
$50,000.

     

    (h)           Defaults.  When any
Officer of a Loan Party becomes aware of the probable occurrence of any Default
or Event of Default, and no later than three (3) days after such Officer becomes
aware of such Default or Event of Default, notice of such occurrence, together
with a detailed statement by an Executive Officer of the Loan Party stating
whether the Default or Event of Default can be cured, and if so, the steps being
taken by the Loan Party to cure such Default or Event of Default.

     

    (i)           Reserved.

     

    (j)           Disputes.  Promptly
upon knowledge thereof, notice of (i) any disputes or claims by the Borrower’s
customers exceeding $20,000 individually or $50,000 in the aggregate during any
fiscal year; (ii) credit memos; and (iii) any goods returned to or recovered by
the Borrower.

     

    (k)           Officers and
Directors.  Promptly upon knowledge thereof, notice of any
change in the persons constituting the Loan Parties’ Executive Officers and
Directors.

     

    (l)           Collateral.  Promptly
upon knowledge thereof, notice of any loss of or material damage to any
Collateral or of any substantial adverse change in any Collateral or the
prospect of payment thereof.

     

    (m)           Commercial Tort
Claims.  Promptly upon knowledge thereof, notice of any
commercial tort claims it may bring against any Person, including the name and
address of each defendant, a summary of the facts, an estimate of the Loan
Party’s damages, copies of any complaint or demand letter submitted by the Loan
Party, and such other information as the Lender may request.

     

    (n)           Reserved.

     

    (o)           Reports to
Owners.  Promptly upon their distribution, copies of all
financial statements, reports and proxy statements which the Parent shall have
sent to its Owners.

     

    (p)           SEC
Filings.  Promptly
after the sending or filing thereof, copies of all reports and
filings which Parent shall file with the Securities and Exchange Commission or
any national securities exchange.

     

    (q)           Reserved.

     

    (r)           Violations of
Law.  Promptly upon knowledge thereof, notice of the Loan
Party’s violation of any law, rule or regulation, the non-compliance with which
would reasonably be likely to result in a Material Adverse Effect on the Loan
Party.

     

    (s)           Other Reports.  From
time to time, with reasonable promptness, any and all receivables schedules,
inventory reports, collection reports, deposit records, equipment schedules,
copies of invoices to account debtors, shipment documents and delivery receipts
for goods sold, and such other material, reports, records or information as the
Lender may request.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (t)           Reporting in
Dollars.  All financial statements, reports and other financial
information provided by Borrowers to Lender pursuant to this Agreement shall be
reported in Dollars and to the extent any amounts are converted into Dollars
from any other currency for purposes of reporting pursuant to this Agreement,
Borrower shall provide to Lender with the conversion rates used by Borrowers for
such reporting and supporting calculations and other information as Lender may
request from time to time.

     

    (u)           Weekly
Reports.  Within two (2) Business Days after the end of each
week, a reconciliation, in form and substance acceptable to the Lender
substantially consistent with the Borrower’s form of Budget annexed hereto as
Exhibit A, of
the actual cash receipts and disbursements of the Borrower and existing Advances
under this Agreement for such week to the budgeted line item amounts set forth
in the Budget for such week.

     

    (v)           Trustee
Reports.  All operating reports provided to the Office of the
United States Trustee for the District of New Jersey.

     

    (w)           Chapter 11 Case
Pleadings.  Promptly after filing thereof, copies of all
pleadings, motions, applications, financial information and other papers and
documents filed by the Borrower in the Chapter 11 Case, which papers and
documents shall also be given or served on the Lender and the Lender’s counsel;
provided, however, to
the extent the Borrowers reasonably believe any such pleadings may impair or
otherwise affect the Lender, the Pre-Petition Lender or any of their rights or
remedies, the Borrowers shall provide copies of such pleadings to the Lender and
the Lender’s counsel at least two (2) full Business Days prior to such documents
being filed.

     

    (x)           Committee
Reports.   Promptly after sending thereof, copies of all
written reports given by the Borrower to any official or unofficial creditors’
committee in the Chapter 11 Case, other than any such reports subject to
privilege; provided that the
Borrower may redact any confidential information contained in any such report if
it provides to the Lender a summary of the nature of the information so
redacted.

     

    Section
6.2.                      Financial
Covenants.

     

    (a)           Compliance with
Budget.  All Advances will be subject to the following tests
against the Budget.  Within two (2) Business Days after the end of
each week, a responsible officer of the Borrower shall submit to the Lender a
report showing (a) actual cash collections and cash disbursements, on a
cumulative basis through the previous Friday and (b) a comparison to the same
periods in the Budget.  On a cumulative basis, the actual ending loan
balance may not exceed the amount budgeted by more than 10%, unless the Lender
otherwise consents in writing.

     

    (b)           Capital
Expenditures.  The Loan Parties will not incur or contract to
incur Capital Expenditures.

     

    Section
6.3.                      Permitted Liens; Financing
Statements.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (a)           The
Loan Parties will not create, incur or suffer to exist any Lien upon or of any
of its assets, now owned or hereafter acquired, to secure any indebtedness;
excluding, however, from the operation of the foregoing, the following (each a
“Permitted Lien”; collectively, “Permitted Liens”):

     

    (i)           In
the case of any Mortgaged Property, covenants, restrictions, rights, easements
and minor irregularities in title reflected on Schedule B to a title policy
covering such Mortgaged Property and acceptable to Lender and which do not
materially interfere with the Loan Party’s business or operations as presently
conducted;

     

    (ii)           Liens
in existence on the date hereof and listed in Schedule 6.3 hereto;

     

    (iii)           The
Security Interest and Liens created by the Security Documents;

     

    (iv)           Reserved;

     

    (v)           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 Loan parties in accordance with GAAP; provided, that Loan Parties shall
immediately pay and satisfy such Lien in the event there is any risk of
forfeiture of any Collateral but may after paying and satisfying such Lien
continue to prosecute any contest relating thereto;

     

    (vi)           Deposits
made in the ordinary course of business of any Loan Party (including, without
limitation, security deposits of 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,
in an aggregate amount not to exceed $50,000;

     

    (vii)           Liens
for taxes not yet due and payable or for taxes being contested in good faith by
appropriate proceedings which are sufficient to prevent imminent foreclosure of
such Liens; provided, that Borrower shall immediately pay and satisfy such Lien
in the event there is any risk of forfeiture of any Collateral but may after
paying and satisfying such Lien continue to prosecute any contest relating
thereto;

     

    (viii)           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

     

    (ix)           Liens
in favor of Getzler Henrich & Associates LLC.

     

    (b)           The
Loan Parties will not amend any financing statements in favor of the Lender
except as permitted by law.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
6.4.                      Indebtedness.  The
Loan Parties will not incur, create, assume or permit to exist any indebtedness
or liability on account of deposits or advances or any indebtedness for borrowed
money or letters of credit issued on any Loan Party’s behalf, or any other
indebtedness or liability evidenced by notes, bonds, debentures or similar
obligations, except:

     

    (a)           Any
existing or future Indebtedness or any other obligations of the Loan Parties to
the Lender;

     

    (b)           Any
indebtedness of the Loan Parties in existence on the date hereof and listed in
Schedule 6.4 hereto;

     

    (c)           Any
indebtedness relating to Permitted Liens;

     

    (d)           Indebtedness
to trade creditors incurred in the ordinary course of business;

     

    (e)           Deferred
taxes, to the extent permitted or required to be accounted for under GAAP;
and

     

    (f)           Indebtedness
or advances to the Parent or to any Subsidiary thereof, a summary of which as of
the date hereof is set forth on Schedule 6.28.

     

    Section
6.5.                      Guaranties.  The
Loan Parties will not assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:

     

    (a)           The
endorsement of negotiable instruments by the Loan Parties for deposit or
collection or similar transactions in the ordinary course of
business;

     

    (b)           Guaranties,
endorsements and other direct or contingent liabilities in connection with the
obligations of other Persons, in existence on the date hereof and listed in
Schedule 6.4 hereto; and

     

    (c)           Guaranties
of any indebtedness or other obligation of any Loan Party, such as long-term
equipment leases, or any other Subsidiary of Parent, consented to in writing by
Lender.

     

    Section
6.6.                      Investments and
Subsidiaries.  The
Loan Parties will not make or permit to exist any loans or advances to, or make
any investment or acquire any interest whatsoever in, any other Person or
Affiliate, including any partnership or joint venture, nor purchase or hold
beneficially any stock or other securities or evidence of indebtedness of any
other Person or Affiliate, except:

     

    (a)           Investments
in direct obligations of the United States of America or any agency or
instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America having a maturity of one year or
less, commercial paper issued by U.S.  corporations rated “A 1” or “A
2” by Standard & Poor’s Ratings Services or “P 1” or “P 2” by Moody’s
Investors Service or certificates of deposit or bankers’ acceptances having a
maturity of one year or less issued by members of the Federal Reserve System
having deposits in excess of $100,000,000 (which certificates of deposit or
bankers’ acceptances are fully insured by the Federal Deposit Insurance
Corporation);

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (b)           Travel
advances or loans to the Borrower’s Officers and employees not exceeding at any
one time an aggregate of $10,000;

     

    (c)           Prepaid
rent not exceeding one month or security deposits;

     

    (d)           Investments
in Subsidiaries in existence on the date hereof and listed on Schedule 5.5
hereto;

     

    (e)           Reserved;

     

    (f)           Advances
on behalf of Officers and Directors under applicable indemnification agreements;
and

     

    (g)           Investments
in marketable securities in the amounts listed on Schedule 6.6
hereto.

     

    Section
6.7.                      Dividends and
Distributions.  No
Loan Party shall declare or pay any dividends (other than dividends payable
solely in stock of the Loan Parties) on any class of its stock, or make any
payment on account of the purchase, redemption or other retirement of any shares
of such stock, or other securities or evidence of its indebtedness or make any
distribution in respect thereof, either directly or indirectly;  provided however, that the Loan
Parties may declare and pay cash dividends if, (i) Lender gives its prior
written consent and (ii) after giving effect to any such payment, the Loan
Parties would remain in compliance with the terms of this
Agreement.

     

    Section
6.8.                      Salaries.  The
Loan Parties shall not pay excessive or unreasonable salaries, bonuses,
commissions, consultant fees or other compensation; or increase the salary,
bonuses, commissions, consultant fees or other compensation of any Director,
Officer or consultant, or any member of their families, by more than ten percent
(10%) in any one year, either individually or for all such persons in the
aggregate, or pay any such increase from any source other than profits earned in
the year of payment.

     

    Section
6.9.                      Intentionally
Omitted.

     

    Section
6.10.                      Books and Records;
Collateral Examination, Inspection and Appraisals.

     

    (a)           Each
Loan Party will keep accurate books of record and account for itself pertaining
to the Collateral and pertaining to the its business and financial condition and
such other matters as the Lender may from time to time request in which true and
complete entries will be made in accordance with GAAP and, upon the Lender’s
request, will permit any officer, employee, attorney, accountant or other agent
of the Lender to audit, review, make extracts from or copy any and all company
and financial books and records of the Borrower at all times during ordinary
business hours, to send and discuss with account debtors and other obligors
requests for verification of amounts owed to the Loan Party, and to discuss the
Loan Party’s affairs with any of its Directors or Executive
Officers.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (b)           Each
Loan Party hereby irrevocably authorizes all accountants and third parties to
disclose and deliver to the Lender or its designated agent, at the Loan Party’s
expense, all financial information, books and records, work papers, management
reports and other information in their possession regarding the Loan
Party.

     

    (c)           Each
Loan Party will permit the Lender or its employees, accountants, attorneys or
agents, to examine and inspect any Collateral, the Mortgaged Property or any
other property of any Loan Party at any time during ordinary business
hours.

     

    (d)           The
Lender may also, from time to time, obtain at the Borrower’s expense an
appraisal of Collateral and the Mortgaged Property by an appraiser acceptable to
the Lender in its sole discretion.  Borrower’s obligation to reimburse
Lender for the costs of such appraisals shall be limited to one appraisal of
each Mortgaged Property and one appraisal of the other Collateral per calendar
year, provided that Borrower shall also be obligated for the costs of any
appraisals obtained by Lender during a Default Period.

     

    Section
6.11.                      Account
Verification.  The
Lender or its agent may at any time and from time to time send or require the
Loan Party to send requests for verification of accounts or notices of
assignment to account debtors and other obligors.  The Lender or its
agent may also at any time and from time to time telephone account debtors and
other obligors to verify accounts.

     

    Section
6.12.                      Compliance with
Laws.

     

    (a)           The
Loan Parties shall (i) comply, and cause each Subsidiary to comply, with the
requirements of applicable laws and regulations, including, without limitation,
the Financing Orders, the non-compliance with which would materially and
adversely affect its business or its financial condition and (ii) use and keep
the Collateral, and require that others use and keep the Collateral, only for
lawful purposes, without violation of any federal, state, provincial or local
law, statute or ordinance.

     

    (b)           The
Loan Parties shall (i) ensure, and cause each Subsidiary to ensure, that no
Owner shall be listed on the Specially Designated Nationals and Blocked Person
List or other similar lists maintained by the Office of Foreign Assets Control
(“OFAC”), the Department of the Treasury or included in any Executive Orders,
(ii) not use or permit the use of the proceeds of the Credit Facility or any
other financial accommodation from the Lender to violate any of the foreign
asset control regulations of OFAC or other applicable law, (iii) comply, and
cause each Subsidiary to comply, with all applicable Bank Secrecy Act laws and
regulations, as amended from time to time, and (iv) otherwise comply with the
USA Patriot Act as required by federal law and the Lender’s policies and
practices.

     

    Section
6.13.                      Payment of Taxes and Other
Claims.  The
Loan Parties will pay or discharge, when due, (a) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income or profits,
upon any properties belonging to it (including the Collateral) or upon or
against the creation, perfection or continuance of the Security Interest, prior
to the date on which penalties attach thereto, (b) all federal, state,
provincial and local taxes required to be withheld by it, and (c) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
Lien upon any properties of the Loan Parties; provided, that the Loan Parties
shall not be required to pay any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which proper reserves have been
made.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
6.14.                      Maintenance of
Properties.

     

    (a)           The
Loan Parties will keep and maintain the Collateral and all of their other
properties necessary or useful in its business in all material respects in good
condition, repair and working order (normal wear and tear excepted) and will
from time to time replace or repair any material worn, defective or broken
parts; provided, however, that nothing
in this covenant shall prevent the Loan Parties from discontinuing the operation
and maintenance of any of their properties if such discontinuance is, in the
Loan Parties’ judgment, desirable in the conduct of the Loan Parties’ business
and not disadvantageous in any material respect to the Lender.  Each
Loan Party will take all commercially reasonable steps necessary to protect and
maintain its material Intellectual Property Rights.

     

    (b)           The
Loan Parties will defend the Collateral against all Liens (other than Permitted
Liens), claims or demands of all Persons (other than the Lender) claiming the
Collateral or any interest therein.  The Loan Parties will keep all
Collateral free and clear of all Liens except Permitted Liens.  Each
Loan Party will take all commercially reasonable steps necessary to prosecute
any Person Infringing its material Intellectual Property Rights and to defend
itself against any Person accusing it of Infringing any Person’s Intellectual
Property Rights which would reasonably be likely to result in a Material Adverse
Effect.

     

    Section
6.15.                      Insurance.  The
Loan Parties will obtain and at all times maintain insurance with insurers
acceptable to the Lender, in such amounts, on such terms (including any
deductibles) and against such risks as may from time to time be required by the
Lender, but in all events in such amounts and against such risks as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which the Loan Parties operate.  Without
limiting the generality of the foregoing, the Loan Parties will at all times
maintain business interruption insurance, and keep all tangible Collateral
insured against risks of fire (including so-called extended coverage), theft,
collision (for Collateral consisting of motor vehicles) and such other risks and
in such amounts as the Lender may reasonably request, with any loss payable to
the Lender to the extent of its interest, and all policies of such insurance
shall contain a lender’s loss payable endorsement for the Lender’s benefit
consistent with this Agreement.

     

    Section
6.16.                      Preservation of
Existence.  Each
Loan Party will preserve and maintain its existence and all of its material
rights, privileges and franchises necessary or desirable in the normal conduct
of its business and shall conduct its business in all material respects in an
orderly, efficient and regular manner.

     

    Section
6.17.                      Delivery of Instruments,
etc.  Upon
request by the Lender, each Loan Party will promptly deliver to the Lender in
pledge all instruments, documents and chattel paper constituting Collateral,
duly endorsed or assigned by the Borrower.

     

    Section
6.18.                      Sale or Transfer of Assets;
Suspension of Business Operations.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (a)           Except
as contemplated by the Sale Transaction Agreement, this Agreement or otherwise
expressly consented to in writing by Lender, no Loan Party will sell, lease,
assign, transfer or otherwise dispose of (i) the stock of any Subsidiary, (ii)
all or a substantial part of its assets, or (iii) any Collateral or any interest
therein (whether in one transaction or in a series of transactions) to any other
Person other than the sale of Inventory in the ordinary course of business and
will not liquidate, dissolve or suspend business operations.  Other
than as contemplated by the Sale Transaction Agreement, this Agreement and
pursuant to a Sale Order, or otherwise expressly consented to in writing by
Lender, no Loan Party will transfer any part of its ownership interest in any
material Intellectual Property Rights or permit any agreement under which it has
licensed material Licensed Intellectual Property to lapse, except that the Loan
Party may transfer such rights or permit such agreements to lapse if it shall
have reasonably determined that the applicable Intellectual Property Rights are
no longer useful in its business.  If the Loan Party transfers any
Intellectual Property Rights for value, the Loan Party will pay over the
proceeds to the Lender for application to the Indebtedness.  No Loan
Party will license any other Person to use any of the Loan Party’s Intellectual
Property Rights, except that the Loan Parties may (i) grant licenses in the
ordinary course of their business in connection with sales of Inventory or
provision of services to their customers, and (ii) otherwise license their
Intellectual Property Rights with the prior written consent of Lender, which
consent shall not be unreasonably withheld; and

     

    (b)           Borrower
shall timely meet all deadlines set forth in the Sale Transaction Schedule,
unless otherwise expressly agreed to by Lender in writing in its sole
discretion.

     

    Section
6.19.                      Consolidation and Merger;
Asset Acquisitions.  The
Loan Parties will not consolidate or amalgamate with or merge into any Person,
or permit any other Person to merge into it, or acquire (in a transaction
analogous in purpose or effect to a consolidation, amalgamation or merger) all
or substantially all the assets of any other Person.

     

    Section
6.20.                      Sale and
Leaseback.  The
Loan Parties will not enter into any arrangement, directly or indirectly, with
any other Person whereby any Loan Party shall sell or transfer any real or
personal property, whether now owned or hereafter acquired, and then or
thereafter rent or lease as lessee such property or any part thereof or any
other property which the Loan Party intends to use for substantially the same
purpose or purposes as the property being sold or transferred.

     

    Section
6.21.                      Restrictions on Nature of
Business.  The
Loan Parties will not engage in any line of business materially different from
that presently engaged in by the Loan Parties and will not purchase, lease or
otherwise acquire assets not related to its business.

     

    Section
6.22.                      Accounting.  The
Loan Parties will not adopt any material change in accounting principles other
than as required by GAAP.  The Loan Parties will not adopt, permit or
consent to any change in its fiscal year.

     

    Section
6.23.                      Discounts,
etc.  After
notice from the Lender during a Default Period, the Loan Parties will not grant
any discount, credit or allowance to any customer of the Loan Parties or accept
any return of goods sold.  If a Default Period does not exist, Loan
Parties will not grant any discount, credit or allowance to any customer of the
Loan Parties or accept any return of goods sold other than in the ordinary
course of their business in accordance with past practices and Borrower shall
include reference to such amounts in its reports provided to Lender under
Section 6.1 hereof.  The Loan Parties will not at any time modify,
amend, subordinate, cancel or terminate the obligation of any account debtor or
other obligor of the Loan Parties without Lender’s prior written
consent.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
6.24.                      Reserved.

     

    Section
6.25.                      Place of Business;
Name.  No
Loan Party will transfer its chief executive office or principal place of
business, or move, relocate, close or sell any business location.  No
Loan Party will permit any tangible Collateral or any records pertaining to the
Collateral to be located in any state, province or area in which, in the event
of such location, a financing statement covering such Collateral would be
required to be, but has not in fact been, filed in order to perfect the Security
Interest.  No Loan Party will change its name or jurisdiction of
organization except upon 30 days’ prior written notice to Lender.

     

    Section
6.26.                      Constituent Documents; S
Corporation Status.  No
Loan Party will become an S Corporation.  None of RCPC, RAI or RCC
will amend its Constituent Documents except to comply with applicable law and
shall promptly provide Lender with copies of any required amendments after
execution of same.

     

    Section
6.27.                      Performance by the
Lender.  If
any Loan Party at any time fails to perform or observe any of the foregoing
covenants contained in this Article VI or elsewhere herein, and if such failure
shall continue for a period of ten Business Days after the Lender gives the Loan
Parties written notice thereof (or in the case of the agreements contained in
Section 6.13 and Section 6.15, immediately upon the occurrence of such failure,
without notice or lapse of time), the Lender may, but need not, perform or
observe such covenant on behalf and in the name, place and stead of the Loan
Party (or, at the Lender’s option, in the Lender’s name) and may, but need not,
take any and all other actions which the Lender may reasonably deem necessary to
cure or correct such failure (including the payment of taxes, the satisfaction
of Liens, the performance of obligations owed to account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments); and the Loan Party shall thereupon pay to the Lender on demand
the amount of all monies expended and all costs and expenses (including
reasonable attorneys’ fees and legal expenses) incurred by the Lender in
connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Lender, together with interest
thereon from the date expended or incurred at the Default Rate.  To
facilitate the Lender’s performance or observance of such covenants of the Loan
Parties, each Loan Party hereby irrevocably appoints the Lender, or the Lender’s
delegate, acting alone, as the Loan Party’s attorney in fact (which appointment
is coupled with an interest) with the right (but not the duty) from time to time
to create, prepare, complete, execute, deliver, endorse or file in the name and
on behalf of the Borrower any and all instruments, documents, assignments,
security agreements, financing statements, applications for insurance and other
agreements required to be obtained, executed, delivered or endorsed by the Loan
Party hereunder.

     

    Section
6.28.                      Affiliate
Transactions.  No
Loan Party shall enter into or be a party to any agreement or transaction with
any Affiliate (including without limitation any other Loan Party) except in the
ordinary course of, and pursuant to the reasonable requirements of, such Loan
Party’s business and upon fair and reasonable terms that are no less favorable
to such Loan Party than it would obtain in a comparable arms length transaction
with a Person not an Affiliate of such Loan Party, and except as set forth on
Schedule 6.28.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
6.29.                      Sale
Transaction.

     

    (a)           The
Stalking Horse Agreement shall be executed and in full force and effect on or
before August 26, 2010, and at all times thereafter until closing, and any such
agreement, together with any order entered by the Bankruptcy Court approving
such agreement, shall not be modified, amended, superseded, or terminated absent
the prior written consent of the Lender which shall not be unreasonably
withheld, conditioned or delayed; such agreement shall provide for the
consummation of the Sale Transaction in accordance with the Sale Transaction
Schedule.

     

    (b)           The
Borrower shall comply with the Sale Transaction Schedule.  Without
limiting the foregoing and for the purposes of clarity, on or before October 1,
2010 (or such other later date as the Lender may agree to in its sole
discretion), Borrower shall have consummated a Sale Transaction on terms and
conditions acceptable to the Lender in its reasonable discretion.

     

    Section
6.30.                      Financing Orders;
Administrative Priority; Lien Priority; Payment of Claims.

     

    The
Borrower will not:

     

    (a)           At
any time, seek, consent to or suffer to exist any reversal, modification,
amendment, stay or vacation of any of the Financing Orders, except for
modifications and amendments agreed to by the Lender in its sole discretion in
advance and in writing;

     

    (b)           at
any time, suffer to exist a priority for any administrative expense or unsecured
claim against any Borrower (now existing or hereafter arising of any kind or
nature whatsoever, including without limitation any administrative expenses of
the kind specified in, or arising or ordered under, Sections 105, 326, 327, 328,
330, 503(b), 506(c), 507(a), 507(b), 546(c) 726 and 1114 of the Bankruptcy Code)
equal or superior to the priority of the Lender in respect of the
Obligations;

     

    (c)           at
any time, suffer to exist any Lien on the Collateral having a priority equal or
superior to the Liens in favor of the Lender in respect of the Collateral,
except for Permitted Liens; and

     

    (d)           prior
to the date on which all Obligations have been fully and indefeasibly paid and
satisfied, the Borrower shall not pay any administrative expense claims except
(i) Obligations due and payable hereunder, (ii) administrative expenses incurred
in the ordinary course of the Borrower’s business as contemplated by this
Agreement and the Budget annexed hereto as Exhibit A, and (iii) any
administrative expenses subject to the Carveout.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ARTICLE
VII

     

    EVENTS
OF DEFAULT, RIGHTS AND REMEDIES

     

    Section
7.1.                      Events of
Default.  “Event
of Default”, wherever used herein, means any one of the following
events:

     

    (a)           Default
in the payment of the Revolving Note, or any default with respect to payment of
any other Indebtedness due from the Loan Parties to Lender as such Indebtedness
becomes due and payable;

     

    (b)           The
Borrower shall fail to comply or shall Default in the performance of any term,
covenant or agreement contained in this Agreement, the Budget, the Pre-Petition
Credit Agreement, the Pre-Petition Loan Documents, the Loan Documents, the
Financing Orders, the Sale Order or any documents executed in connection with
any of the foregoing;

     

    (c)           An
Overadvance (other than the Accommodation Overadvance) arises as the result of
any reduction in the Borrowing Base, or arises in any manner on terms not
otherwise approved of in advance by the Lender in writing, and such Overadvance
continues for three (3) Business Days;

     

    (d)           Except
as otherwise permitted by this Agreement or otherwise consented to in writing by
the Lender, any ownership interest in the assets of a Borrower shall be sold or
transferred in any transaction other than a Sale Transaction, or shall become
subject to a Lien;

     

    (e)           The
filing by any of the Loan Parties of any motion or proceeding that could
reasonably be expected to result in impairment of the Lender’s rights under this
Agreement, including any motion to surcharge the Lender or the Collateral under
11 U.S.C. § 506(c) or otherwise;

     

    (f)           The
filing of a motion by any of the Loan Parties for entry of an order staying or
otherwise prohibiting the prosecution of any enforcement action or any motion or
pleading seeking to challenge the Lender’s or the Prepetition Lenders’ Liens or
otherwise commencing any cause of action against the Lender or the Prepetition
Lenders;

     

    (g)           The
Final Financing Order has not been entered by the Bankruptcy Court on or before
August 31, 2010 or any of the following Sale Transaction Schedule milestones
have not been met:  (i) execution of the Sale Transaction Agreement on
or before August 26, 2010; (ii) filing of a motion and approval of the Sale
Transaction Bidding Procedures by August 31, 2010; (iii) approval by the
Freeholders of the County of Mercer, New Jersey of the assignment of that
certain lease between RAI, as lessee, and County of Mercer, as lessor, dated May
14, 1975, as amended, as more particularly described in the Mortgage, to the
proposed purchaser under the Sale Transaction Agreement on or before September
7, 2010; (iv) filing on
or before September 27, 2010 of a motion pursuant to section 363(b) of the
Bankruptcy Code to approve the sale of substantially all of the Debtors’ assets;
(v) entry of the Sale Order on or before September 29, 2010; and (vi) closing
date of such sale on or before October 1, 2010;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (h)           Expiration
or termination of the Borrowers’ exclusive periods to file and confirm a plan of
reorganization;

     

    (i)           Any
representation or warranty made by any Loan Party in this Agreement, by any
Guarantor in any Guaranty delivered to the Lender, or by any Loan Party (or any
of its Officers) or any Guarantor in any agreement, certificate, instrument or
financial statement or other statement contemplated by or made or delivered
pursuant to or in connection with this Agreement or any such Guaranty shall be
incorrect in any material respect;

     

    (j)           The
rendering against any Borrower of an arbitration award, a final judgment, decree
or order for the payment of money in excess of $25,000 or a postpetition lien on
any of the Collateral and the continuance of such arbitration award, judgment,
decree or order unsatisfied and in effect for any period of 30 consecutive days
without a stay of execution;

     

    (k)           A
default under any bond, debenture, note or other evidence of material
indebtedness of the Loan Parties owed to any Person other than the Lender, or
under any indenture or other instrument under which any such evidence of
indebtedness has been issued or by which it is governed, or under any material
lease or other material contract, and the expiration of the applicable period of
grace, if any, specified in such evidence of indebtedness, indenture, other
instrument, lease or contract;

     

    (l)           A
Change of Control occurs;

     

    (m)           An
event of default shall occur and be continuing under any Security
Document;

     

    (n)           Default
in the payment of any amount owed by a Loan Party to the Lender other than any
Indebtedness arising hereunder and all applicable cure periods shall have
expired without cure thereof;

     

    (o)           Any
Guarantor shall repudiate, purport to revoke or fail to perform any obligation
under such Guaranty  in favor of the Lender, or any Guarantor shall
cease to exist;

     

    (p)           The
Lender believes in good faith that the prospect of payment in full of any part
of the Indebtedness, or that full performance by a Loan Party under the Loan
Documents, is impaired, or that there has occurred after the Petition Date any
material adverse change in the business or financial condition of a Loan
Party;

     

    (q)           There
has occurred any breach, default or event of default by or attributable to, any
Owner of at least twenty percent (20%) of the issued and outstanding common
stock of a Loan Party, Director, Executive Officer, Guarantor or Subsidiary of
the Parent under any agreement between such person and Lender and all applicable
notice and cure periods have expired;

     

    (r)           The
indictment of any Director, Executive Officer, Guarantor, or any Owner of at
least twenty percent (20%) of the issued and outstanding common stock of a Loan
Party for a felony offense under state, provincial or federal law;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (s)           Borrowers’
failure to pay when due, after giving effect to any applicable grace period,
postpetition obligations which materially affect the Borrowers'
operations;

     

    (t)           The
Borrower shall liquidate, dissolve, terminate or suspend its business operation
or otherwise fail to operate its business in the ordinary course (provided that
“operating in the ordinary course” shall be satisfied if a Debtor is operating
in substantially the same manner as such Debtor did as of the Petition Date),
merge with another Person unless the Borrower is the surviving entity; or sell
or attempt to sell all or substantially all of its assets, without the Lender’s
prior written consent, except as contemplated under the Sale Transaction
Agreement and Sale Order;

     

    (u)           (i)
Any impairment of the Collateral that has a Material Adverse Effect, (ii)
termination of RAI’s lease with the County of Mercer, New Jersey for the
property that is the subject of the Lender’s Mortgage or (iii) the termination
of any state or federal license or authorization or contract that has a Material
Adverse Effect;

     

    (v)           The
Borrower (except following the Lender’s prior written request or with the
Lender’s express prior written consent, which consent shall not be implied from
any other action, inaction, or acquiescence of the Lender) shall file a motion
with the Bankruptcy Court or any other court with jurisdiction in the matter
seeking an order, or an order is otherwise entered, modifying, reversing,
revoking, staying, rescinding, vacating, or amending the Financing Orders or any
of the Loan Documents;

     

    (w)           The
Borrower shall file, or any other person shall obtain Bankruptcy Court approval
of a Disclosure Statement for a plan of reorganization which does not provide
for the full, final, and irrevocable repayment of all of the Obligations of the
Borrower to the Lender upon the effectiveness of such plan, unless the Lender
has expressly joined in or consented to such plan in writing;

     

    (x)           The
Borrower shall file any motion or application, or the Bankruptcy Court allows
the motion or application of any other Person, which seeks approval for or
allowance of any claim, lien, security interest ranking equal or senior in
priority to the claims, liens and security interests granted to the Lender under
the Financing Orders or the Loan Documents or any such equal or prior claim,
lien, or security interest shall be established in any manner, except, in any
case, as expressly permitted hereunder or under the Financing
Orders;

     

    (y)           The
Bankruptcy Court shall not have entered the Financing Orders or the Financing
Orders shall cease to be in full force and effect after the date of entry
thereof (whether due to modification, reversal, revocation, remand, stay,
recission, vacation, amendment, or otherwise) without the prior written consent
of Lender (and no such consent shall be implied from any other authorization or
acquiescence by Lender);

     

    (z)           The
entry of an order converting the Chapter 11 Case to a Chapter 7 case under the
Bankruptcy Code, or dismissing the Chapter 11 Case or any subsequent Chapter 7
case either voluntarily or involuntarily;

     

    (aa)           The
entry of an order (a) which provides relief from the automatic stay otherwise
imposed pursuant to Section 362 of the Bankruptcy Code with respect to any
material contract, lease, or obligation or against any critical vendor; (b)
allowing a third party to proceed against any material assets or contracts of
the Borrowers; (c) staying or otherwise prohibiting the prosecution of any
enforcement action by Lender; or (d) otherwise adversely affecting the Lender’s
or Prepetition Lenders’ liens, claims, or rights and remedies;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (bb)           If
any creditor of the Borrower receives any adequate protection payment which is
not fully acceptable to the Lender in its sole discretion, other than as set
forth in the Financing Orders, or any Lien is granted as adequate protection
other than as set forth in the Financing Orders;

     

    (cc)           Borrower
suspends or discontinues, or is enjoined by any court or governmental agency
from continuing to conduct, all or any material part of its business (in a
manner inconsistent with the Sale Transaction or such other orderly wind-down
acceptable to Lender);

     

    (dd)           A
custodian or a trustee or examiner with special powers is appointed pursuant to
Section 1104 of the Bankruptcy Code for the Borrower or any of its properties;
or

     

    (ee)           The
Stalking Horse Agreement, once executed, and thereafter any applicable Sale
Transaction Agreement, shall cease to be in full force and effect and any order
entered by the Bankruptcy Court approving such Sale Transaction Agreement shall
be modified, reversed, superseded, revoked, remanded, stayed, rescinded, vacated
or amended on appeal or by the Bankruptcy Court without the prior written
consent of Lender (and no such consent shall be implied from any other
authorization or acquiescence by Lender).

     

    Section
7.2.                      Rights and
Remedies.  During
any Default Period, the Lender may exercise any or all of the following rights
and remedies, and the automatic stay provided under Section 362 of the
Bankruptcy Code shall be deemed lifted or modified to the extent necessary to
allow the Lender to take the actions described in this Section, or under any
other Loan Document, without further notice or a hearing, and the Borrowers
hereby waive all rights with respect to any such action by Lender:

     

    (a)           The
Lender may, by notice to the Loan Parties, declare the Commitment to be
terminated, whereupon the same shall forthwith terminate;

     

    (b)           The
Lender may, by notice to the Loan Parties, declare the Indebtedness to be
forthwith due and payable, whereupon all Indebtedness shall become and be
forthwith due and payable, without presentment, notice of dishonor, protest or
further notice of any kind, all of which the Loan Parties hereby expressly
waive;

     

    (c)           The
Lender may, without notice to the Loan Parties and without further action, apply
any and all money owing by the Lender to the Loan Parties to the payment of the
Indebtedness (in accordance with Section 8.20 hereof), in the Lender’s sole
discretion;

     

    (d)           The
Lender may exercise and enforce any and all rights and remedies available upon
default to a secured party under the UCC, including the right to take possession
of Collateral, or any evidence thereof, proceeding without judicial process or
by judicial process (without a prior hearing or notice thereof, which the Loan
Parties hereby expressly waive) and the right to sell, lease or otherwise
dispose of any or all of the Collateral (with or without giving any warranties
as to the Collateral, title to the Collateral or similar warranties), and, in
connection therewith, the Loan Parties will on demand assemble the Collateral
and make it available to the Lender at a place to be designated by the Lender
which is reasonably convenient to both parties;

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (e)           Reserved;

     

    (f)           The
Lender may exercise and enforce its rights and remedies under the Loan
Documents;

     

    (g)           The
Lender may without regard to any waste, adequacy of the security or solvency of
the Loan Parties, apply for the appointment of a receiver of the Collateral, to
which appointment the Loan Parties hereby consent, whether or not foreclosure
proceedings have been commenced under the Security Documents and whether or not
a foreclosure sale has occurred;

     

    (h)           The
Lender may exercise any other rights and remedies available to it by law or
agreement; and

     

    (i)           The
Lender shall be entitled to seek the appointment of a Chapter 11 trustee and
have an expedited hearing with respect to such request, on not less than three
(3) Business Days notice, subject to the Bankruptcy Court’s
calendar;

     

    If the
Lender sells any of the Collateral on credit, the Indebtedness will be reduced
only to the extent of payments actually received.  If the purchaser
fails to pay for the Collateral, the Lender may resell the Collateral and shall
apply any proceeds actually received to the Indebtedness.

     

    Section
7.3.                      Reserved.

     

    Section
7.4.                      Certain
Notices.  If
notice to a Loan Party of any intended disposition of Collateral or any other
intended action is required by law in a particular instance, such notice shall
be deemed commercially reasonable if given (in the manner specified in Section
8.3) at least ten calendar days before the date of intended disposition or other
action.

     

    Article
VIII

     

    MISCELLANEOUS

     

    Section
8.1.                      No Waiver; Cumulative
Remedies; Compliance with Laws.  No
failure or delay by the Lender in exercising any right, power or remedy under
the Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents.  The remedies provided in the Loan Documents
are cumulative and not exclusive of any remedies provided by law.  The
Lender may comply with any applicable state, provincial or federal law
requirements in connection with a disposition of the Collateral and such
compliance will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
8.2.                      Amendments,
Etc.  No
amendment, modification, termination or waiver of any provision of any Loan
Document or consent to any departure by the Loan Parties therefrom or any
release of a Security Interest shall be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No notice to or demand on the Loan Parties in any case shall
entitle the Loan Parties to any other or further notice or demand in similar or
other circumstances.

     

    Section
8.3.                      Notices; Communication of
Confidential Information; Requests for Accounting.  Except
as otherwise expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
shall be (a) personally delivered, (b) sent by first class United States mail,
(c) sent by overnight courier of national reputation, (d) transmitted by
telecopy, or (e) sent as electronic mail, in each case delivered or sent to the
party to whom notice is being given to the business address, telecopier number,
or e mail address set forth below next to its signature or, as to each party, at
such other business address, telecopier number, or e mail address as it may
hereafter designate in writing to the other party pursuant to the terms of this
Section.  All such notices, requests, demands and other communications
shall be deemed to be an authenticated record communicated or given on (a) the
date received if personally delivered, (b) when deposited in the mail if
delivered by mail, (c) the date delivered to the courier if delivered by
overnight courier, or (d) the date of transmission if sent by telecopy or by e
mail, except that notices or requests delivered to the Lender pursuant to any of
the provisions of Article II shall not be effective until received by the
Lender.  All notices, financial information, or other business records
sent by any party to this Agreement may be transmitted, sent, or otherwise
communicated via such medium as the sending party may deem appropriate and
commercially reasonable; provided, however, that the
risk that the confidentiality or privacy of such notices, financial information,
or other business records sent by either party may be compromised shall be borne
exclusively by the Loan Parties.  All requests for an accounting under
Section 9-210 of the UCC (i) shall be made in a writing signed by a Person
authorized under Section 2.2(b), (ii) shall be personally delivered, sent by
registered or certified mail, return receipt requested, or by overnight courier
of national reputation, (iii) shall be deemed to be sent when received by the
Lender and (iv) shall otherwise comply with the requirements of Section 9-210 of
the UCC.  The Loan Parties request that the Lender respond to all such
requests which on their face appear to come from an authorized individual and
releases the Lender from any liability for so responding.  The Loan
Parties shall pay the Lender the maximum amount allowed by law for responding to
such requests.

     

    Section
8.4.                      Further
Documents.  The
Loan Parties will from time to time execute, deliver, endorse and authorize the
filing of any and all instruments, documents, conveyances, assignments, security
agreements, financing statements, control agreements and other agreements and
writings that the Lender may reasonably request in order to secure, protect,
perfect or enforce the Security Interest or the Lender’s rights under the Loan
Documents (but any failure to request or assure that a Loan Party executes,
delivers, endorses or authorizes the filing of any such item shall not affect or
impair the validity, sufficiency or enforceability of the Loan Documents and the
Security Interest, regardless of whether any such item was or was not executed,
delivered or endorsed in a similar context or on a prior occasion); provided,
however, that same shall not increase the Obligations, representations or
warranties of the Loan Parties hereunder.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
8.5.                      Costs and
Expenses.  The
Loan Parties shall pay on demand all actual costs and expenses, including
reasonable attorneys’ fees, incurred by the Lender in connection with the
Indebtedness, this Agreement, the Loan Documents, and any other document or
agreement related hereto or thereto, and the transactions contemplated hereby,
including all such costs, expenses and fees incurred in connection with the
negotiation, preparation, execution, amendment, administration, performance,
collection and enforcement of the Indebtedness and all such documents and
agreements and the creation, perfection, protection, satisfaction, foreclosure
or enforcement of the Security Interest.

     

    Section
8.6.                      Indemnity.  In
addition to the payment of expenses pursuant to Section 8.5, the Loan Parties
shall indemnify, defend and hold harmless the Lender, and any of its
participants, parent corporations, subsidiary corporations, affiliated
corporations, successor corporations, and all present and future officers,
directors, employees, attorneys and agents of the foregoing (the “Indemnitees”)
from and against any of the following (collectively, “Indemnified
Liabilities”):

     

    (i)           Any
and all transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of the Loan
Documents or the making of the Advances;

     

    (ii)           Any
claims, loss or damage to which any Indemnitee may be subjected if any
representation or warranty contained herein proves to be incorrect in any
respect or as a result of any violation of the covenant contained in Section
6.12(b) ; and

     

    (iii)           Any
and all other liabilities, losses, damages, penalties, judgments, suits, claims,
costs and expenses of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel) in connection with the foregoing and any
other investigative, administrative or judicial proceedings, whether or not such
Indemnitee shall be designated a party thereto, which may be imposed on,
incurred by or asserted against any such Indemnitee, in any manner related to or
arising out of or in connection with the making of the Advances and the Loan
Documents or the use or intended use of the proceeds of the
Advances.

     

    Notwithstanding
the foregoing, the Borrower shall not be obligated to indemnify any Indemnitee
for any Indemnified Liability caused by the gross negligence or willful
misconduct of such Indemnitee, as finally determined by a court of competent
jurisdiction.

     

    If any
investigative, judicial or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, upon such Indemnitee’s request, the
Loan Parties, or counsel designated by the Loan Parties and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Loan Parties’ sole cost and
expense.  Each Indemnitee will use its best efforts to cooperate in
the defense of any such action, suit or proceeding.  If the foregoing
undertaking to indemnify, defend and hold harmless may be held to be
unenforceable because it violates any law or public policy, the Loan Parties
shall nevertheless make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.  The Loan Parties’ obligations under this Section 8.6 shall
survive the termination of this Agreement and the discharge of the Loan Parties’
other obligations hereunder.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
8.7.                      Participants.  The
Lender and its participants, if any, are not partners or joint venturers, and
the Lender shall not have any liability or responsibility for any obligation,
act or omission of any of its participants.  All rights and powers
specifically conferred upon the Lender may be transferred or delegated to any of
the Lender’s participants, successors or assigns.

     

    Section
8.8.                      Execution in Counterparts;
Telefacsimile Execution.  This
Agreement and other Loan Documents may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts, taken together, shall constitute but
one and the same instrument.  Delivery of an executed counterpart of
this Agreement or any other Loan Document by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement or
such other Loan Document.  Any party delivering an executed
counterpart of this Agreement or any other Loan Document by telefacsimile also
shall deliver an original executed counterpart of this Agreement or such other
Loan Document but the failure to deliver an original executed counterpart shall
not affect the validity, enforceability, and binding effect of this Agreement or
such other Loan Document.

     

    Section
8.9.                      Retention of Loan Party’s
Records.  The
Lender shall have no obligation to maintain any electronic records or any
documents, schedules, invoices, agings, or other papers delivered to the Lender
by any Loan Party or in connection with the Loan Documents for more than 30 days
after receipt by the Lender.  If there is a special need to retain
specific records, the Loan Parties must inform the Lender of its need to retain
those records with particularity, which must be delivered in accordance with the
notice provisions of Section 8.3 within 30 days of the Lender taking control of
same.

     

    Section
8.10.                      Binding Effect; Assignment;
Complete Agreement; Sharing Information; Confidentiality.  The
Loan Documents shall be binding upon and inure to the benefit of the Loan
Parties and the Lender and their respective successors and assigns, except that
the Loan Parties shall not have the right to assign their rights thereunder or
any interest therein without the Lender’s prior written consent.  To
the extent permitted by law, the Loan Parties waive and will not assert against
any assignee any claims, defenses or set-offs which the Loan Parties could
assert against the Lender.  This Agreement shall also bind all Persons
who become a party to this Agreement as a borrower.  This Agreement,
together with the Loan Documents, comprises the complete and integrated
agreement of the parties on the subject matter hereof and supersedes all prior
agreements, written or oral, on the subject matter hereof.  To the
extent that any provision of this Agreement contradicts other provisions of the
Loan Documents, this Agreement shall control. Without limiting the Lender’s
right to share information regarding the Loan Parties and their Affiliates with
the Lender’s participants, accountants, lawyers and other advisors, the Lender
and each direct and indirect subsidiary of Wells Fargo & Company may share
with each other any information that they may have in their possession regarding
the Loan Parties and their Affiliates, and the Loan Parties waive any right of
confidentiality they may have with respect to all such sharing of
information.  Any other provision of this Agreement or the other Loan
Documents notwithstanding, Lender and such other parties shall use reasonable
efforts in accordance with its policies and procedures in place from time to
time to maintain the confidentiality of the financial and business information
it obtains from the Loan Parties and to prevent the inappropriate dissemination
and disclosure thereof, provided, that nothing in this Agreement or the other
Loan Documents shall prohibit the Lender from providing any information
regarding the Borrower and its Affiliates to internal auditors, other operating
divisions of Lender, Lender affiliates, or in response to a request from a
regulatory authority having jurisdiction over Lender.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
8.11.                      Severability of
Provisions.  Any
provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.

     

    Section
8.12.                      Headings.  Article,
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

     

    Section
8.13.                      Cross Guaranty;
Subordination.

     

    (a)           Each
Borrower hereby agrees that such Loan Party is jointly and severally liable for,
and hereby absolutely and unconditionally guarantees to Lender, the full and
prompt payment (whether at stated maturity, by acceleration or otherwise)
and  performance of, all Indebtedness owed or hereafter owing to
Lender by each other Loan Party (including, without limitation, RCC; provided, however, that RCC
shall be and is individually liable for all obligations owed under that certain
Continuing Guaranty dated as of the date hereof).  Each Loan Party
agrees that its guaranty obligation hereunder is a continuing guaranty of
payment and performance and not of collection, that its obligations under this
Section shall not be discharged until payment and performance, in full, of the
Indebtedness has occurred, and that its obligations under this Section shall be
absolute and unconditional, irrespective of, and unaffected by:

     

    (1)           the
genuineness, validity, regularity, enforceability or any future amendment of, or
change in, this Agreement, any other Loan Document or any other agreement,
document or instrument to which any Loan Party is or may become a
party;

     

    (2)           the
absence of any action to enforce this Agreement (including this Section) or any
other Loan Document or the waiver or consent by Lender with respect to any of
the provisions thereof;

     

    (3)           the
existence, value or condition of, or failure to perfect its security interest in
or lien against, any security for the Indebtedness or any action, or the absence
of any action, by Lender in respect thereof (including the release of any such
security);

     

    (4)           the
insolvency of any Loan Party or Guarantor; or

     

    (5)           any
other action or circumstances that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.

     

    Each Loan
Party shall be regarded, and shall be in the same position, as principal debtor
with respect to the Indebtedness guaranteed hereunder.

     

    (b)           Waivers by Loan
Parties.  Each Loan Party expressly waives all rights it may
have now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to subrogation, to compel Lender to marshal assets or to
proceed in respect of the Indebtedness guaranteed hereunder against any other
Loan Party or Guarantor, any other party or against any security for the payment
and performance of the Indebtedness before proceeding against, or as a condition
to proceeding against, such Loan Party.  It is agreed among each Loan
Party and Lender that the foregoing waivers are of the essence of the
transaction contemplated by this Agreement and the other Loan Documents and
that, but for the provisions of this Section and such waivers, the Lender would
decline to enter into this Agreement.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (c)           Benefit of
Guaranty.  Each Loan Party agrees that the provisions of this
Section are for the benefit of the Lender and its successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
other Loan Party and the Lender, the obligations of such other Loan Party under
the Loan Documents.

     

    (d)           Election of
Remedies.  If the Lender may, under applicable law, proceed to
realize its benefits under any of the Loan Documents giving Lender a security
interest in or lien upon any Collateral, whether owned by any Loan Party or by
any Guarantor, either by judicial foreclosure or by non judicial sale or
enforcement, the Lender may, at its sole option, determine which of its remedies
or rights it may pursue without affecting any of its rights and remedies under
this Section.  If, in the exercise of any of its rights and remedies,
Lender shall forfeit any of its rights or remedies, including its right to enter
a deficiency judgment against any Loan Party or any other Guarantor, whether
because of any applicable laws pertaining to “election of remedies” or the like,
each Loan Party hereby consents to such action by Lender and waives any claim
based upon such action.  Any election of remedies that results in the
denial or impairment of the right of Lender to seek a deficiency judgment
against any Loan Party shall not impair any other Loan Party’s obligation to pay
the full amount of the Indebtedness.  In the event Lender shall bid at
any foreclosure or trustee’s sale or at any private sale permitted by law or the
Loan Documents, Lender may bid all or less than the amount of the Indebtedness
and the amount of such bid need not be paid by Lender but shall be credited
against the Indebtedness.  The amount of the successful bid at any
such sale, whether Lender or any other party is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Indebtedness
shall be conclusively deemed to be the amount of the Indebtedness guaranteed
under this Section, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Lender might otherwise be entitled but for such bidding at any
such sale.

     

    (e)           Liability
Cumulative.  The liability of each Loan Party under this
Section 8.13 is in addition to and shall be cumulative with all liabilities of
each Loan Party to Lender under this Agreement and the other Loan Documents to
which such Loan Party is a party or in respect of any Indebtedness or obligation
of the other Loan Party, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.

     

    (f)           Subordination.

     

    (1)           Each
Loan Party covenants and agrees that the payment of all indebtedness, principal,
interest (including interest which accrues after the commencement of any case or
proceeding in bankruptcy, or for the reorganization of any Loan Party or
Guarantor), fees, charges, expenses, attorneys’ fees and any other sum,
obligation or liability owing by any other Loan Party to such Loan Party,
including any intercompany loans or trade payables or royalty or licensing fees
(collectively, the “Intercompany Obligations”), is subordinated, to the extent
and in the manner provided in this Section 8.13(f), to the prior payment in full
of all Indebtedness (herein, the “Senior Obligations”) and that the
subordination is for the benefit of the Lender, and Lender may enforce such
provisions directly.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (2)           Each
Loan Party executing this Agreement hereby (i) authorizes Lender to demand
specific performance of the terms of this Section 8.13(f), whether or not any
other Loan Party shall have complied with any of the provisions hereof
applicable to it, at any time when such Loan Party shall have failed to comply
with any provisions of this Section 8.13 which are applicable to it and (ii)
irrevocably waives any defense based on the adequacy of a remedy at law, which
might be asserted as a bar to such remedy of specific performance.

     

    (3)           Upon
any distribution of assets of any Loan Party in any dissolution, winding up,
liquidation or reorganization (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or
otherwise):

     

    (i)           The
Lender shall first be entitled to receive payment in full in cash of the Senior
Obligations before any Loan Party is entitled to receive any payment on account
of the Intercompany Obligations.

     

    (ii)           Any
payment or distribution of assets of any Loan Party of any kind or character,
whether in cash, property or securities, to which any other Loan Party would be
entitled except for the provisions of this Section 8.13(f)(3), shall be paid by
the liquidating trustee or agent or other person making such payment or
distribution directly to the Lender, to the extent necessary to make payment in
full of all Senior Obligations remaining unpaid after giving effect to any
concurrent payment or distribution or provisions therefor to the
Lender.

     

    (iii)           In
the event that notwithstanding the foregoing provisions of this Section
8.13(f)(3), any payment or distribution of assets of any Loan Party of any kind
or character, whether in cash, property or securities, shall be received by any
other Loan Party on account of the Intercompany Obligations before all Senior
Obligations are paid in full, such payment or distribution shall be received and
held in trust for and shall be paid over to the Lender for application to the
payment of the Senior Obligations until all of the Senior Obligations shall have
been paid in full, after giving effect to any concurrent payment or distribution
or provision therefor to the Lender.

     

    No right
of the Lender or any other present or future holders of any Senior Obligations
to enforce the subordination provisions herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Loan
Party or by any act or failure to act, in good faith, by any such holder, or by
any noncompliance by any Loan Party with the terms hereof, regardless of any
knowledge thereof which any such holder may have or be otherwise charged
with.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
8.14.                      Judgment
Currency.

     

    (a)           All
Indebtedness shall be payable by the Borrowers in Dollars.  The Loan
Parties’ obligations under the Loan Documents to make payments to the Lender in
Dollars shall not be discharged or satisfied by any tender or recovery pursuant
to any judgment expressed in or converted into any other currency, except to the
extent that such tender or recovery results in the effective receipt by the
Lender of the full amount of the Dollars payable to the Lender under the Loan
Documents, and the Loan Parties shall indemnify the Lender (and the Lender shall
have an additional legal claim) for any difference between such full amount and
the amount effectively received by the Lender pursuant to any such tender or
recovery.  The Lender’s determination of amounts effectively received
by it shall be conclusive absent manifest error.

     

    (b)           If
for the purpose of obtaining or enforcing any judgment against the Loan Parties
in any court in any jurisdiction, it becomes necessary to convert into any
currency other than Dollars (such currency being hereinafter in this Section
referred to as the “Judgment Currency”), the conversion shall be made, at the
option of the Lender, at the rate of exchange prevailing on the Business Day
immediately preceding the day on which the judgment is given (such business day
being hereinafter in this Section referred to as the “Conversion
Date”).

     

    (c)           If
there is a change in the rate of exchange prevailing between the Conversion Date
and the date of actual payment of the amount due, the Loan Parties covenant and
agree to pay such additional amounts (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of Dollars which could have been purchased with
the amount of Judgment Currency stipulated in the judgment or judicial award at
the rate of exchange prevailing on the Conversion Date.

     

    (d)           Any
amount due from the Loan Parties under Section 8.14(c) will be due as a separate
debt and shall not be affected by judgment being obtained for any other sums due
under or in respect of the Loan Documents.

     

    (e)           The
term “rate of exchange” in this Section means the spot rate at which the Lender
in accordance with its normal practices is able on the relevant date to purchase
Dollars with the Judgment Currency and includes in either case any premium and
costs of exchange payable by in connection with such purchase.

     

    Section
8.15.                      Appointment of Borrower
Representative; Reliance on Notices.  Each
Loan Party hereby designates Parent as its representative and agent on its
behalf (the “Borrower Representative”) for the purposes of executing and
delivering any notice of borrowing, giving instructions with respect to the
disbursement of the proceeds of Advances, effecting repayment of Advances,
giving and receiving all other notices and consents hereunder or under any of
the other Loan Documents and taking all other actions (including in respect of
compliance with covenants) on behalf of any Loan Party under the Loan
Documents.  Parent hereby accepts such appointment.  Lender
may regard any notice or other communication pursuant to any Loan Document from
Borrower Representative as a notice or communication from all Loan Parties and
shall be entitled to rely upon, and shall be fully protected in relying upon,
any such notice or communication as such, and shall give any notice or
communication required or permitted to be given to any Loan Party hereunder to
Borrower Representative on behalf of such Loan Party.  Each Loan Party
agrees that each notice, election, representation and warranty, covenant,
agreement and undertaking made on its behalf by Borrower Representative shall be
deemed for all purposes to have been made by such Loan Party and shall be
binding upon and enforceable against such Loan Party to the same extent as if
the same had been made directly by such Loan Party.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
8.16.                      Governing Law; Jurisdiction,
Venue.  The
Loan Documents shall be governed by and construed in accordance with the
substantive laws (other than conflict laws) of the State of New York, except
that at all times the provisions for the creation, perfection and enforcement of
the liens and security interests granted by RCC pursuant to the other Loan
Documents with respect to the Collateral owned by RCC may be governed by, and
construed according to, the laws of the Province of Ontario, Canada, it being
understood that, to the fullest extent permitted by the laws of such Province,
the laws of the State of New York shall govern the construction, validity and
enforceability of all Loan Documents and all of the Indebtedness arising
hereunder and thereunder.  The parties hereto hereby (i) consent to
the personal jurisdiction of the state and federal courts located in the State
of New York in connection with any controversy related to this Agreement; (ii)
waive any argument that venue in any such forum is not convenient; (iii) agree
that any litigation initiated by the Lender or the Loan Parties in connection
with this Agreement or the other Loan Documents may be venued in either the
state or federal courts located in the City of New York, New York County, New
York; and (iv) agree that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Each
Borrower hereby irrevocably designates and appoints Parent as the designee,
appointee and agent of such Borrower to receive, accept and acknowledge for and
on behalf of such Borrower and its property service of any and all legal
process, summons, notices and documents which may be served in any such action,
suit or proceeding relating to the Loan Documents or the Indebtedness, which
service may be made on Parent in accordance with legal procedures prescribed for
such courts.  Each Borrower agrees that service upon it or Parent as
provided for herein shall constitute a valid and effective personal service upon
it and that the failure of Parent to give any notice of such service to any
Borrower shall not impair or affect in any way the validity of such
service.  Nothing herein contained shall, or shall be construed so as
to, limit the right of the Lender to bring actions, suits or proceedings with
respect to the obligations and liabilities of the Borrowers under, or any other
matter arising out of or in connection with, the Loan Documents, or for
recognition or enforcement of any judgment rendered in any such action, suit or
proceeding, in the courts of whatever jurisdiction in which the office of the
Lender may be located or assets of the Borrowers may be found or otherwise shall
to Parent seem appropriate, or to affect the right to service of process in any
jurisdiction in any other manner permitted by the law.

     

    Section
8.17.                      Lender as
Party-in-Interest.  The
Borrower hereby stipulates and agrees that the Lender is and shall remain a
party in interest in the Chapter 11 Case and shall have the right to
participate, object and be heard in any motion or proceeding in connection
therewith.  Nothing in this Agreement or any other Loan Document shall
be deemed to be a waiver of any of the Lender’s rights or remedies under
applicable law or documentation.  Without limitation of the foregoing,
the Lender shall have the right to make any motion or raise any objection it
deems to be in its interest (specifically including but not limited to
objections to use of proceeds of the Advances, to payment of professional fees
and expenses or the amount thereof, to sales or other transactions outside the
ordinary course of business or to assumption or rejection of any executory
contract or lease); provided that the Lender will
not exercise such right if the action or inaction by the Borrower which is the
subject of such motion or objection is expressly permitted by any covenant or
provision of this Agreement.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Section
8.18.                      Waiver of Right to Obtain
Alternative Financing.  In
consideration of the Advances to be made to the Borrower by the Lender, Borrower
hereby further waives any right it may have to obtain an order by the Bankruptcy
Court authorizing the Borrower to obtain financing pursuant to Section 364 of
the Bankruptcy Code from any person other than the Lender, unless such financing
would result in all of the Obligations to the Lender (whether arising before, on
or after the date of this Agreement) being paid in full, in cash, on or before
the expiration of the term of this Agreement.

     

    Section
8.19.                      Credit
Bids.  Nothing
herein shall affect, and the Lender shall maintain, the Lender’s right to credit
bid its claims under this Agreement and the Financing Orders pursuant to Section
363(k) of the Bankruptcy Code.

     

    Section
8.20.                      Application of Payments to
Obligations; Application of Proceeds of Collateral.

     

    (a)           All
proceeds from Collateral, whether realized through a Sale Transaction or
otherwise, shall be immediately paid in cash by Borrower to Lender, and
shall applied by Lender (i) first in satisfaction of outstanding Pre-Petition
Obligations, and (ii) second in satisfaction of outstanding Indebtedness under
this Agreement.

     

    (b)           All
payments of Indebtedness by Borrower to Lender shall be made as and when due
hereunder, and shall applied by Lender (i) first in satisfaction of outstanding
Pre-Petition Obligations and (ii) second in satisfaction of outstanding
Indebtedness under this Agreement.

     

    [Remainder
of this page intentionally left blank]

     

     
 

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    THE LOAN
PARTIES AND THE LENDER WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW OR
IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT.

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the date set forth in
the initial caption of this Agreement.

     

    
      	
              RCLC,
      Inc.

              1480
      Route 9 North, Suite 301

              Woodbridge,
      New Jersey 07095 Telecopier: (732)-877-1789

              Attention:  Daryl
      Holcomb

              e-mail:  dholcomb@rclcinc.com

               

            	
              RCLC,
      INC.

               

              By:  ___________________________________

                     
      Name:

                     
      Title:

            
	
              RCPC
      Liquidating Corp.

              1480
      Route 9 North, Suite 301

              Woodbridge,
      New Jersey 07095 Telecopier: (732)-877-1789

              Attention:  Daryl
      Holcomb

              e-mail:  dholcomb@rclcinc.com

               

            	
              RCPC
      LIQUIDATING CORP.

               

              By:  ___________________________________

                     
      Name:

                     
      Title:

            
	
              Ronson
      Aviation, Inc.

              1480
      Route 9 North, Suite 301

              Woodbridge,
      New Jersey 07095 Telecopier: (732)-877-1789

              Attention:  Daryl
      Holcomb

              e-mail:  dholcomb@rclcinc.com

               

            	
              RONSON
      AVIATION, INC.

               

              By:  ___________________________________

                     
      Name:

                     
      Title:

            
	
              RCC
      INC.

              1480
      Route 9 North, Suite 301

              Woodbridge,
      New Jersey 07095 Telecopier: (732)-877-1789

              Attention:  Daryl
      Holcomb

              e-mail:  dholcomb@rclcinc.com

               

            	
              RCC
      INC.

               

              By:  ___________________________________

                     
      Name:

                     
      Title:

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              Wells
      Fargo Bank, National Association

              Wells
      Fargo Capital Finance

              119
      West 40th Street, 16th Floor

              New
      York, New York 10018-2500

              Telecopier:
      646-728-3279

              Attention:  Relationship
      Manager for Ronson Corporation

              e-mail: Peter.L.Gannon@wellsfargo.com

              Christopher.Hill@wellsfargo.com

               

            	
              WELLS
      FARGO BANK,

              NATIONAL
      ASSOCIATION

               

              By:  ___________________________________

                     
      Peter L. Gannon,

                     
      Vice President

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit A
to Debtor-in-Possession Credit and Security Agreement

    

    Budget

    (To be
attached)

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit
B to Debtor-in-Possession Credit and Security Agreement

     

    Budget
Compliance Certificate

     

    To:           Wells
Fargo Bank, National Association

     

    Date:           [___________________,
2010]

     

    Subject:

     

    In
accordance with our Debtor-in-Possession Credit and Security Agreement dated
August ___, 2010 (as amended from time to time, the “DIP Credit Agreement”),
attached are the financial statements of _____________ (the “Borrower”) dated
[_________________,
2010](the “Reporting Date”) and the year-to-date period then ended (the
“Current Financials”).  All terms used in this certificate have the
meanings given in the DIP Credit Agreement.

     

    A.           Preparation and Accuracy of Financial
Statements.  I certify that the Current Financials fairly and
accurately present the Borrowers’ financial condition as of the Reporting
Date.

     

    B.           Name of Borrower; Merger and
Consolidation Related Issues.  I certify that:

     

    (Check
one)

     

    
      	
               
      

            	
               ̈

            	
              The
      Borrower has not, since the date of the DIP Credit Agreement, changed its
      name or jurisdiction of organization, nor has it consolidated or merged
      with another Person.

            

    

     

    
      	
               
      

            	
               ̈

            	
              The
      Borrower has, since the date of the DIP Credit Agreement, either changed
      its name or jurisdiction of organization, or both, or has consolidated or
      merged with another Person, which change, consolidation or merger:  ̈ was
      consented to in advance by Lender in writing, and/or  ̈ is more
      fully described in the statement of facts attached to this
      Certificate.

            

    

     

    C.           Events of
Default.  I certify that:

     

    (Check
one)

     

    
      	
               
      

            	
               ̈

            	
              I
      have no actual knowledge of the occurrence of a Default or an Event of
      Default under the DIP Credit Agreement, except as previously reported to
      the Lender in writing.

            

    

     

    
      	
               
      

            	
               ̈

            	
              I
      have knowledge of a Default or an Event of Default under the DIP Credit
      Agreement not previously reported to the Lender in writing, as more fully
      described in the statement of facts attached to this
      Certificate.

            

    

     

    D.           Litigation
Matters.  I certify that:

     

    (Check
one)

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
               ̈

            	
              I
      have no actual knowledge of any material adverse change to the litigation
      exposure of the Borrower or any of its Affiliates or of any
      Guarantor.

            

    

     

    
      	
               
      

            	
               ̈

            	
              I
      have knowledge of material adverse changes to the litigation exposure of
      the Borrower or any of its Affiliates or of any Guarantor not previously
      disclosed in Schedule 5.7, as more fully described in the statement of
      facts attached to this Certificate.

            

    

     

    E.           Financial
Covenants.  I further certify that:

     

    (Check
and complete each of the following)

     

    1.           Compliance with
Budget.  Borrower  ̈ has  ̈ has not complied
in all respects with the covenants and restrictions set forth in Section 6.2(a)
of the DIP Credit Agreement, and as a consequence Borrower  ̈ is  ̈ is not in
compliance with Section 6.2(a) of the DIP Credit Agreement.

     

    2.           Capital
Expenditures.  Pursuant to Section 6.2(b) of the DIP Credit
Agreement, the Borrower has not incurred or contracted to incur any Capital
Expenses since execution of the DIP Credit Agreement.

     

    Attached
are statements of all relevant facts and computations in reasonable detail
sufficient to evidence Borrower’s compliance with the financial covenants
referred to above, which computations were made in accordance with
GAAP.

     

    
      	 
      	
              RCPC
      LIQUIDATING CORP.

               

              By:__________________________________

               

              Its:
      __________________________________

               

            
	 
      	
              RONSON
      AVIATION, INC.

               

              By:
      __________________________________

              Its:
      __________________________________

               

            
	 
      	
              RCLC,
      INC.

               

              By:
      __________________________________

              Its:
      __________________________________

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit
C to Debtor-in-Possession Credit and Security Agreement

    

    Form of
Final Financing Order

    (To be
attached)

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    Exhibit
D to Debtor-in-Possession Credit and Security Agreement

    

    Form of
Interim Financing Order

    (To be
attached)

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit
E to Debtor-in-Possession Credit and Security Agreement

     

    Premises

     

    The
Premises referred to in the Debtor-in-Possession Credit and Security Agreement
are legally described as follows:

     

    [To
be completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit
F to Debtor-in-Possession Credit and Security Agreement

     

    

     

    REVOLVING
NOTE

     

    
      	
              $2,700,000

            	
              August
      __, 2010

               

            

    

    For value
received, the undersigned, RCPC LIQUIDATING CORP. (f/ka/a Ronson Consumer
Products Corporation), a New Jersey corporation, (“RCPC”), RCLC, Inc. (f/k/a/
Ronson Corporation), a New Jersey corporation (“RCLC”) and RONSON AVIATION,
INC., a New Jersey Corporation (“RAI”) (RCPC, RCLC and RAI are collectively and
individually referred to as the “Borrower” or “Borrowers”), hereby promise to
pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Lender”),
acting through its Wells Fargo Capital Finance operating division, on the
Termination Date referenced in the Debtor-in-Possession Credit and Security
Agreement dated the same date as this Revolving Note that was entered into by
the Lender and the Borrower (as amended from time to time, the “Credit
Agreement”), at Lender’s office located at 119 West 40th Street, 16th Floor, New
York, New York 10018-2500, or at any other place designated at any time by the
holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of Two Million Seven Hundred
Thousand Dollars ($2,700,000) or the aggregate unpaid principal amount of all
Revolving Advances made by the Lender to the Borrower under the Credit
Agreement, together with interest on the principal amount hereunder remaining
unpaid from time to time, computed on the basis of the actual number of days
elapsed and a 360-day year, from the date hereof until this Revolving Note is
fully paid at the rate from time to time in effect under the Credit
Agreement.

     

    This
Revolving Note is the Revolving Note referenced in the Credit Agreement, and is
subject to the terms of the Credit Agreement, which provides, among other
things, for acceleration hereof.  Principal and interest due hereunder
shall be payable as provided in the Credit Agreement, and this Revolving Note
may be prepaid only in accordance with the terms of the Credit
Agreement.  This Revolving Note is secured, among other things,
pursuant to the Credit Agreement and the Financing Orders and Security
Documents, each as therein defined, and may now or hereafter be secured by one
or more other security agreements, mortgages, deeds of trust, assignments or
other instruments or agreements.

     

    The
Borrower shall pay all actual costs of collection, including reasonable
attorneys’ fees and legal expenses if this Revolving Note is not paid when due,
whether or not legal proceedings are commenced.

     

    Presentment
or other demand for payment, notice of dishonor and protest are expressly
waived.

     

    [Signatures
on next page]

     

     
 

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	 
      	
              RCPC
      LIQUIDATING CORP.

               

              By:
      __________________________________

               

              Its:
      __________________________________

            
	 
      	
              RONSON
      AVIATION, INC.

               

              By:
      __________________________________

              Its:
      __________________________________

            
	 
      	
              RCLC,
      INC.

               

              By:
      __________________________________

               

              Its:
      __________________________________

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    Schedule
5.1 to Debtor-in-Possession Credit and Security Agreement

     

    TRADE NAMES, CHIEF EXECUTIVE
OFFICE, PRINCIPAL PLACE OF BUSINESS,

     

    AND LOCATIONS OF
COLLATERAL

     

    TRADE
NAMES

     

    [To
be completed by Borrower]

     

    CHIEF EXECUTIVE
OFFICE/PRINCIPAL PLACE OF BUSINESS

     

    [To
be completed by Borrower]

     

    OTHER INVENTORY AND
EQUIPMENT LOCATIONS

     

    [To
be completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
5.2 to Debtor-in-Possession Credit and Security Agreement

     

    CAPITALIZATION AND
ORGANIZATIONAL CHART

     

    
      	
              Holder

            	
              Type
      of Rights/Stock

            	
              No.
      of shares (after

              exercise
      of all rights to

              acquire
      shares)

            	
              Percent
      interest on a

              fully
      diluted basis

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      

    

    

    Attach
organizational chart showing the ownership structure of all Subsidiaries of the
Borrower.

     

    [To
be completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
5.5 to Debtor-in-Possession Credit and Security Agreement

     

    SUBSIDIARIES

     

    [To
be completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
5.7 to Debtor-in-Possession Credit and Security Agreement

     

    LITIGATION MATTERS IN EXCESS
OF $10,000.00

     

    [To
be completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
5.9 to Debtor-in-Possession Credit and Security Agreement

     

    TAXES

     

    [To
be completed by Borrower]

     

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
5.11 to Debtor-in-Possession Credit and Security Agreement

     

    INTELLECTUAL PROPERTY
DISCLOSURES

     

    [To
be completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
6.3 to Debtor-in-Possession Credit and Security Agreement

     

    PERMITTED
LIENS

     

    
      	
              Creditor

            	
              Collateral

            	
              Jurisdiction

            	
              Filing
      Date

            	
              Filing
    No.

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    [To
be completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
6.4 to Debtor-in-Possession Credit and Security Agreement

     

    Permitted
Indebtedness and Guaranties

     

    INDEBTEDNESS

     

    
      	
              Creditor

            	
              Principal
      Amount

            	
              Maturity
      Date

            	
              Monthly
      Payment

            	
              Collateral

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    [To
be completed by Borrower]

     

    GUARANTIES

     

    
      	
              Primary
      Obligor

            	
              Amount and Description of
      Indebtedness Guaranteed

            	
              Beneficiary of
      Guaranty

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    [To be
completed by Borrower]

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
6.6 to Debtor-in-Possession Credit and Security Agreement

     

    Investments
in Marketable Securities

     

    [To
be completed by Borrower]

     

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    Schedule
6.28 to Debtor-in-Possession Credit and Security Agreement

     

    Intercompany
Indebtedness

     

    [To
be completed by Borrower]

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