Document:

ex10-1.htm

     

     

     

    
 

    Exhibit
10.1

    

    TWELFTH AMENDMENT TO
FORBEARANCE AGREEMENT

    

    This
Twelfth Amendment to Forbearance Agreement (the “Amendment”) is
entered into as of this 5th day of March, 2010 by and among RCLC, Inc. (formerly
known as Ronson Corporation), a New Jersey corporation (“Parent”), RCPC
Liquidating Corp. (formerly known as Ronson Consumer Products Corporation), a
New Jersey corporation (“RCPC”), Ronson
Aviation, Inc., a New Jersey corporation (“RAI”) and RCC Inc.
(formerly known as Ronson Corporation of Canada Ltd.), an Ontario corporation
(“Ronson
Canada”) (RCPC and RAI are collectively and individually referred to as
the “Domestic
Borrower” or “Domestic Borrowers”;
the Domestic Borrower and Ronson Canada are collectively and individually
referred to as the “Borrower” or “Borrowers”, and the
Borrowers, together with Parent are collectively and individually referred to as
the “Obligors”)
and Wells Fargo Bank, National Association (“Lender”), acting
through its Wells Fargo Business Credit operating division.

     

    RECITALS:

     

    Borrowers
and Lender are parties to a certain Credit and Security Agreement dated as of
May 30, 2008 (as amended, modified, supplemented or restated from time to time,
the “Credit
Agreement”), relating to financing by Lender to
Borrowers.  Capitalized terms used but not specifically defined herein
shall have the meanings provided for such terms in the Credit
Agreement.

     

    Certain
Events of Default occurred under the Credit Agreement and, as a result thereof,
Lender and Borrowers entered into that certain Forbearance Agreement dated as of
March 29, 2009 (as amended modified, supplemented or restated from time to time,
the “Forbearance
Agreement”), whereby Lender agreed to forbear from exercising certain of
its rights and remedies available under the Loan Documents as a result of the
Existing Events of Default.

     

    The
Forbearance Agreement expires pursuant to its terms not later than March 5,
2010.

     

    On
February 2, 2010, Parent, RCPC and Ronson Canada consummated a transaction (the
“Zippo Sale”)
pursuant to which RCPC and Ronson Canada sold substantially all of their assets
to Zippo Manufacturing Company and Nosnor, Inc., pursuant to an Asset Purchase
Agreement dated as of October 5, 2010.  The net proceeds of the Zippo
Sale were delivered to Lender in accordance with the terms of that certain
letter agreement by and among Lender and Obligors dated as of February 2, 2010
(the “Feb. 2
Letter”).

     

    Borrowers
have requested that Lender amend the definition of Termination Event to extend
the stated expiration date in the Forbearance Agreement from March 5, 2010 to
March 31, 2010 in order to provide Borrowers with additional time to consummate
the sale of RAI’s assets to Hawthorne TTN Holdings, LLC (“Hawthorne”) pursuant
to that certain Asset Purchase Agreement dated as of May 15, 2009 (as amended,
the “RAI APA”)
and to amend certain terms and conditions of the Credit Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Lender
has considered Borrowers’ requests and, in an effort to continue working with
Borrowers, hereby agrees to amend the Forbearance Agreement and the Credit
Agreement on the terms and conditions set forth below.

     

    NOW,
THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

     

    1.            Amendment to Forbearance
Agreement.  As of the date hereof, Section 2(b) of the
Forbearance Agreement shall be amended and restated in its entirety to read as
follows:

     

    (b)           For
purposes of this Agreement, a “Termination Event”
shall mean the earliest to occur of (i) March 31, 2010 and (ii) any one or more
of the following:

     

    (A)           the
failure of the Obligors to comply with the terms, covenants, agreements and
conditions of this Agreement;

     

    (B)           any
representation or warranty made herein shall be incorrect in any material
respect;

     

    (C)           the
occurrence of any Event of Default under the Credit Agreement, other than (i)
the Existing Events of Default or (ii) breach by Obligors of their obligation
pursuant to (a) Section 6.1(a) of the Credit Agreement to deliver audited year
end annual financial statements for the fiscal year ending December 31, 2008
within 90 days of the end of such fiscal year or (b) Section 6.1(c) of the
Credit Agreement to deliver monthly financial statements to Lender for the
months ending October 31, 2009, November 30, 2009, December 31,
2009,  January 31, 2010, and February 28, 2010 within 30 days of the
end of such months;

     

    (D)           Obligors
shall fail to employ a CRO (as defined below) throughout the term of this
Agreement;

     

    (E)           in
the Lender’s discretion, it determines that Parent is no longer actively
pursuing a Liquidity Transaction; and

     

    (F)           any
Person, other than Lender, shall exercise its rights and remedies against the
Obligors as a result of defaults or events of defaults arising under any
agreement between Obligors and such Person due to cross-defaults arising from
the Existing Events of Default.

     

    2.            Amendments to Credit and
Security Agreement.

     

    A.            The
following definitions set forth in Section 1.1 of the Credit Agreement shall be
amended and restated in their entirety to read as follows:

     

    “Accommodation
Overadvance Limit” means up to $1,000,000 from the Accommodation Overadvance
Funding Date through the occurrence of a Termination

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Event (as
such term is defined in the Forbearance Agreement); provided, however, upon
Lender’s receipt of evidence, satisfactory to Lender in its sole discretion,
that (i) the New Jersey Economic Development Authority (the “EDA”) has approved
the bond issuance to finance Hawthorne TTN Holdings, LLC’s acquisition of the
assets of RAI pursuant to the  Asset Purchase Agreement dated as of
May 15, 2009, at a meeting to be held by the EDA on March 9, 2010 and (ii) no
Termination Event has occurred, the Accommodation Overadvance Limit shall
automatically be increased to $1,500,000.

     

    “Maximum
Line Amount” means $1,400,000; provided, however, upon
Lender’s receipt of evidence, satisfactory to Lender in its sole discretion,
that (i) the EDA has approved the bond issuance to finance Hawthorne TTN
Holdings, LLC’s acquisition of the assets of RAI pursuant to the Asset Purchase
Agreement dated as of May 15, 2009, at a meeting to be held by the EDA on March
9, 2010 and (ii) no Termination Event has occurred, the Maximum Line Amount
shall automatically be increased to $1,900,000, unless this amount is reduced
pursuant to Section 2.12, in which event it means such lower
amount.

     

    B.            Sections
2.9(h) (Termination and Line Reduction Fees) and 2.9(i)(i) (Prepayment Fee,
Equipment Term Note and Real Estate Term Note) of the Credit Agreement shall be
deemed deleted in their entirety from the Credit Agreement.

     

    3.            Funding of RAI Pending
Closing of the RAI Sale.  Obligors acknowledge and agree that
as a result of the consummation of the Zippo Sale, RCPC and Ronson Canada shall
no longer be permitted to request Advances under the Credit Agreement and any
remaining assets of RCPC and/or Ronson Canada shall no longer be considered in
any borrowing base calculation.  Notwithstanding the foregoing, Lender
and Obligors agree that RAI shall be authorized, pending the closing of the
transaction contemplated by the RAI APA and until the occurrence of a
Termination Event, to request Advances subject to the terms of the Credit
Agreement as modified by this Amendment.  Obligors and Lender further
agree that Lender shall have no obligation to make Advances to RAI (i) after the
occurrence of a Termination Event or (ii) if the Governor of the State of New
Jersey vetoes or fails to approve the minutes of the New Jersey Economic
Development Authority approving the bond issuance (the “EDA Bonds”) to
finance Pharos' financing of Hawthorne’s acquisition of RAI’s assets pursuant to
the RAI APA or (iii) if  Lender, in its reasonable discretion,
believes that the issuance of the EDA Bonds is not expected to occur by March
31, 2010.

     

    4.            Feb. 2
Letter.  Obligors and Lender agree that Lender’s agreement set
forth in the Feb. 2 Letter to reduce, for purposes of calculating interest, the
amount of Indebtedness attributable to Advances made to or for the benefit of
Parent and RAI by the amount of the balance of the Wells Payment (as defined in
the Feb. 2 Letter) shall be deemed deleted effective as of February 2, 2010 and
of no further force or effect and the Feb. 2 Letter shall be deemed amended for
such purpose.

     

    5.            Reaffirmation of Forbearance
Fee.  Obligors hereby reaffirm their agreement to pay Lender a
forbearance fee in the amount of Five-Hundred Thousand Dollars ($500,000) in
accordance with the terms and conditions set forth in the Seventh Amendment to
Forbearance Agreement dated as of July 31, 2009.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6.            Sums Secured;
Estoppel.  The Obligors acknowledge and reaffirm that their
obligations to Lender as set forth in and evidenced by the Loan Documents are
due and owing without any defenses, set-offs, recoupments, claims or
counterclaims of any kind as of the date hereof.  To the extent that
any defenses, set-offs, recoupments, claims or counterclaims may exist as of the
date hereof, the Obligors waive and release Lender from the same.

     

    7.            No Other Changes.
Except as explicitly amended by this Amendment, all of the terms and conditions
of the Forbearance Agreement shall remain in full force and effect.

     

    8.            References.  All
references in the Forbearance Agreement to “this Agreement” shall be deemed to
refer to the Forbearance Agreement as amended hereby.

     

    9.            No Waiver. Except as
specifically set forth in Paragraph 1 above, the execution of this Amendment
shall not be deemed to be a waiver of any Default or Event of Default under the
Credit Agreement, a waiver of any Termination Event under the Forbearance
Agreement or breach, default or event of default under any Loan Documents or
other document held by Lender, whether or not known to Lender and whether or not
existing on the date of this Amendment.

     

    10.            Waiver and Release of Claims
and Defenses.  The Obligors hereby waive and release all claims
and demands of any nature whatsoever that they now have or may have against
Lender, whether arising under the Loan Documents or by any acts or omissions of
Lender, or any of its directors, officers, employees, affiliates, attorneys or
agents, or otherwise, and whether known or unknown, existing as of the date of
the execution of this Amendment, and further waive and release any and all
defenses of any nature whatsoever to the payment of the Obligations or the
performance of their obligations under Loan Documents.

     

    11.            Reaffirmation of Loan
Documents.  The Obligors hereby agree with, reaffirm and
acknowledge their representations and warranties contained in the Loan
Documents.  Furthermore, the Obligors represent that their
representations and warranties contained in the Loan Documents continue to be
true and in full force and effect.  This agreement, reaffirmation and
acknowledgment is given to Lender by the Obligors without defenses, claims or
counterclaims of any kind.  To the extent that any such defenses,
claims or counterclaims against Lender may exist, the Obligors waive and release
Lender from same.

     

    12.            Ratification and
Reaffirmation of Loan Documents.  The Obligors ratify and
reaffirm all terms, covenants, conditions and agreements contained in the Loan
Documents.

     

    13.            No Preferential
Treatment.  No Obligor has entered into this Amendment to
provide any preferential treatment to Lender or any other
creditor.  No Obligor intends to file for protection or seek relief
under the United States Bankruptcy Code or any similar federal or state law
providing for the relief of debtors.

     

    14.            Legal
Representation.  Each of the parties hereto acknowledge that
they have been represented by independent legal counsel in connection with the
execution of this Amendment, that they are fully aware of the terms and
conditions contained herein, and that they have entered into and executed the
within Amendment as a voluntary action and without coercion or duress of any
kind.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    15.            Partial Invalidity; No
Repudiation. If any of the provisions of this Amendment shall contravene
or be held invalid under the laws of any jurisdiction, this Amendment shall be
construed as if not containing such provisions and the rights, remedies,
warranties, representations, covenants, and provisions hereof shall be construed
and enforced accordingly in such jurisdiction and shall not in any manner affect
such provision in any other jurisdiction, or any other provisions of this
Amendment in any jurisdiction.

     

    16.            Binding
Effect.  This Amendment is binding upon the parties hereto and
their respective heirs, administrators, executors, officers, directors,
representatives and agents.

     

    17.            Governing
Law.  This Amendment shall be governed by the laws of the State
of New York.

     

    18.            WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL
BY JURY, AS TO ANY ACTION WHICH MAY ARISE AS A RESULT OF THE LOAN DOCUMENTS,
THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH.

     

    19.            Counterparts.  This
Amendment and/or any documentation contemplated or required in connection
herewith may be executed in any number of counterparts, each of which shall be
deemed an original and all of which shall be considered one and the same
document.  Delivery of an executed counterpart of a signature page of
this document by facsimile shall be effective as delivery of a manually executed
counterpart of this document.

     

    [Signature
pages follow]

     

    \

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, do
hereby execute this Amendment the date and year first above
written.

     

    
      	
              RCLC,
      INC. (f/k/a RONSON CORPORATION)

               

              By:  s/Joel
      Getzler                                        
                    
      

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

               

            
	
              RCPC
      LIQUIDATING CORP. (f/k/a/ 
RONSON CONSUMER PRODUCTS
      
CORPORATION)

               

              By:  s/Joel
      Getzler                                                
             

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

               

            
	
              RONSON
      AVIATION, INC.

               

              By:  s/Joel
      Getzler                                                       
      

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

            
	
              RCC
      INC. (f/k/a RONSON CORPORATION 
OF
      CANADA LTD.)

               

              By:  s/Joel
      Getzler                                                       
      

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

            

    

    

    
      	
              WELLS
      FARGO BANK, NATIONAL 
ASSOCIATION

               

              By:
      s/Peter
      Gannon                                                   
                                                

                        Peter
      Gannon, Vice Presidentexh10_30.htm

    Exhibit 10.30

     

    Bank of
America

     

    March 10,
2010

     

    

    Mr.
Jeffery G. Hough

    GSE
Systems, Inc.

    GSE Power
Systems, Inc.

    Senior
Vice President & CFO

    1332
Londontown Blvd.

    Suite
200

    Sykesville,
MD 21784

    

    Re:  Waiver
of Certain Financial Covenant Violations

    

    Dear
Jeff:

    

    Bank of
America, N.A (the “Bank”) and GSE Systems, Inc. (“GSE”) and GSE Power Systems,
Inc. (“Power”), as co-borrowers (GSE and Power, collectively, the “Borrowers”)
entered into that certain Loan Agreement (Ex-Im Bank-Guaranteed Transaction
Specific Revolving Credit Facility) dated as of March 28, 2008, as amended (the
“Ex-Im Line Loan Agreement”), that certain Loan Agreement (Domestic Revolving
Line of Credit) dated as of March 28, 2008, as amended (the “Domestic Revolving
Line of Credit) dated as of March 28, 2008, as amended (the “Domestic Line Loan
Agreement”, and together with the Ex-Im Line Loan Agreement, the “Loan
Agreements”), and related loan and security documents of even date therewith
(collectively, including the Loan Agreements, the “Loan
Documents”).

    

    The Loan
Agreements each provide that GSE must maintain on a consolidated basis (the
“Financial Covenants”): a Debt Service Coverage Ratio of at least 1.25 to 1.00
and a Funded Debt to EBITDA Ratio not exceeding 2.50 to 1.00.  As of
December 31, 2009, the Borrowers were in violation of the Financial Covenants as
follows:  the actual Debt Service Coverage Ratio was approximately
(1,581.97) to 1.00 and the actual Funded Debt to EBITDA Ratio was approximately
2.74 to 1.00.

    

    The
Borrowers have requested that the Bank waive the above-referenced violations of
the Financial Covenants, and the Bank has agreed to waive such violations of the
Financial Covenants as of December 31, 2009 in consideration of a waiver fee of
$5,000.00.  This limited waiver shall be effective with respect to the
Financial Covenants only for the periods specified above and shall not
constitute a waiver for any subsequent periods or of any other requirement of
the Loan Documents.  This letter shall in no way be construed as a
novation, an accord and satisfaction of any obligation or liability of the
Borrowers to the Bank, or as a modification to the Loan
Documents.  Except as expressly set forth in this letter, all terms,
conditions, rights and remedies contained in the Loan Documents shall remain in
full force and effect.

    

    Please
call with any questions.

    

    Sincerely,

    

    /s/Kevin
Mahon

    Kevin
Mahon

    Senior
Vice President

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