Document:

EXHIBIT 10.1  

CREDIT AGREEMENT

THIS AGREEMENT dated for reference March 30, 2009 is between:

 

IONIC CAPITAL CORP., a British Columbia company having an office at Suite 1028, 550 Burrard Street, Vancouver, British Columbia  V6C 2B5

	
             
 	
            (the “Lender”)
 

AND:

ALLIED NEVADA GOLD CORP., a Delaware corporation, having its chief executive office at 9600 Prototype Court, Reno, Nevada 89521

	
             
 	
            (“Allied Nevada”)
 

AND:

HYCROFT RESOURCES & DEVELOPMENT, INC., a Nevada corporation, having its chief executive office at 9604 Prototype Court, Reno, Nevada 89521

	
             
 	
            (“Hycroft”)
 

(Allied Nevada and Hycroft are collectively referred to herein as the “Borrowers”)

 

BACKGROUND

A.        The Lender has agreed to lend to the Borrowers and the Borrowers have agreed to borrow from the Lender the aggregate principal amount of up to CAD$8,000,000, on the terms and subject to the conditions of this Agreement.

AGREEMENTS

For good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties agree as follows:

	
            1.
 	
            Definitions. In this Agreement:
 

	
             
  	
            (a)
 	
            “Advance” means the advance of the Facility hereunder;
 

	
             
  	
            (b)
 	
            “Allied Nevada” Allied Nevada Gold Corp., a Delaware corporation;
 

	
             
  	
            (c)
 	
            “Borrowers” means collectively, Allied Nevada and Hycroft and “Borrower” means either one of them;
 

	
             
  	
            (d)
 	
            “Business Day” means a day which is not a Saturday, Sunday or a statutory holiday in the Province of British Columbia or the State of Nevada;
 

 

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            (e)
 	
            “Collateral” has the meaning set forth in subparagraph 7(a) below;
 

	
             
  	
            (f)
 	
            “control” has the meaning set forth in subparagraph 12(n) below;
 

	
             
  	
            (g)
 	
            “Equipment” means the equipment which has been acquired by Hycroft, as described in Schedule “C” attached hereto;
 

	
             
  	
            (h)
 	
            “Event of Default” has the meaning set forth in paragraph 12 below;
 

	
             
  	
            (i)
 	
            “Exchange” means The Toronto Stock Exchange;
 

	
             
  	
            (j)
 	
            “Facility” means the $8,000,000 credit facility granted by the Lender to the Borrowers pursuant to this Agreement;
 

	
             
  	
            (k)
 	
            “Final Approval” has the meaning set forth in subparagraph 9(j) below;
 

	
             
  	
            (l)
 	
            “Financial Statements” has the meaning set forth in subparagraph 9(g) below;
 

	
             
  	
            (m)
 	
            “Hycroft” means Hycroft Resources & Development, Inc., a Nevada corporation;
 

	
             
  	
            (n)
 	
            “Hycroft Mine” means the mining properties and related interests comprising the Hycroft open pit mine located near Winnemucca, Nevada operated by Hycroft;
 

	
             
  	
            (o)
 	
            “Indebtedness” means:
 

	
             
  	
            (i)
 	
            all indebtedness for borrowed money and all obligations evidenced by notes, bonds, debentures or other similar instruments;
 

	
             
  	
            (ii)
 	
            all obligations, contingent or otherwise, in respect of letters of credit (whether or not drawn) or bankers acceptances or similar facilities;
 

	
             
  	
            (iii)
 	
            all obligations to pay the deferred purchase price of property or services (other than current trade payables that are incurred in the ordinary course of business and are not overdue for a period of more than 90 days;
 

	
             
  	
            (iv)
 	
            all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired;
 

	
             
  	
            (v)
 	
            all obligations which would be required to be disclosed on the Borrower’s balance sheet as a liability in accordance with US GAAP and which would be payable more than 12 months from the date of creation thereof (other than reserves for taxes and for contingent obligations); and
 

	
             
  	
            (vi)
 	
            all obligations of the kind referred to above in this subparagraph (o) secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights), whether or not either Borrower has become liable for the payment of such obligation;
 

	
             
  	
            (p)
 	
            “Lender” means Ionic Capital Corp., a British Columbia company;
 

 

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            (q)
 	
            “Liens” means any mortgage, charge, lien, hypothec or encumbrance, whether fixed or floating on, or any security interest in, any property, whether real, personal or mixed, tangible or intangible, any pledge or hypothecation of any property, any royalty payment obligation, any deposit arrangement, priority, conditional sale agreement, other title retention agreement or equipment trust, capital lease or other security arrangement of any kind;
 

	
             
  	
            (r)
 	
            “Note” has the meaning set forth in paragraph 8(a)(i) below;
 

	
             
  	
            (s)
 	
            “Permitted Disposition” has the meaning set forth in paragraph 4(b)(i) below;
 

	
             
  	
            (t)
 	
            “Permitted Encumbrances” means the Liens described in Schedule “D” hereto;
 

	
             
  	
            (u)
 	
            “Public Record” has the meaning set forth in paragraph 9(i) below;
 

	
             
  	
            (v)
 	
            “Outstanding Balance” has the meaning set forth in paragraph 4(a) below;
 

	
             
  	
            (w)
 	
            “Retainer” has the meaning set forth in paragraph 14 below;
 

	
             
  	
            (x)
 	
            “Secondary Mining Properties” means any mining claims, patented or unpatented, leases, permits, easements, licences, subleases, rights of way or other rights to carry out or conduct mining exploration or operations now held by any of Allied Nevada Gold Holdings LLC, Allied VNC Inc. or Victory Exploration Inc., which for greater certainty, does not include the Hycroft Mine;
 

	
             
  	
            (y)
 	
            “Structuring Fee” has the meaning set forth in paragraph 6 below;
 

	
             
  	
            (z)
 	
            “Subsidiaries” means, with respect to the Borrowers, any corporation of which at least a majority of the outstanding shares to which there is attached voting power under ordinary circumstances to elect a majority of the board of directors of such corporation, shall at the relevant time be owned directly or indirectly by the Borrowers, one or more Subsidiaries of the Borrowers, or any combination thereof, and for greater certainty, shall include those corporations listed on Schedule “B” hereto, and “Subsidiary” shall mean any one of them;
 

	
             
  	
            (aa)
 	
            “Term Sheet” means the Term Sheet for Credit Facility dated March 6, 2009, between Allied Nevada and the Lender; and
 

	
             
  	
            (bb)
 	
            “US GAAP” has the meaning set forth in paragraph 9(g) below.
 

	
            2.
 	
            Facility Advance. Subject to and upon the fulfilment of the conditions precedent contained in paragraph 8 of this Agreement, as the case may be, the Lender will advance the principal amount of the Facility to the Borrowers or as the Borrowers may otherwise direct.
 

	
            3.
 	
            Use of Proceeds. The Borrowers covenant and agree with the Lender that the Facility proceeds will be used by Hycroft for its general working capital purposes, and for no other purpose whatsoever without the express written consent of the Lender.
 

 

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            4.
 	
            Term and Prepayment.
 

	
             
  	
            (a)
 	
            Subject to the rights of the Lender under Section 13 to accelerate payment of all monies owing hereunder, the principal amount of the Advance, together with all accrued but unpaid interest, fees and other costs or charges payable hereunder from time to time (collectively the “Outstanding Balance”), will be immediately due and payable by the Borrowers to the Lender on September 30, 2010.
 

	
             
  	
            (b)
 	
            If after the Advance of the Facility, the Borrowers or any of their respective Subsidiaries:
 

	
             
  	
            (i)
 	
            sell or otherwise dispose of any assets outside of the ordinary course of business, except for the transfer by any of Allied Nevada Gold Holdings LLC, Allied VNC Inc. or Victory Exploration Inc. of any interest in any Secondary Mining Properties to an arms length third party for good and valuable consideration at fair market value by way of joint venture, sale or option (each, a “Permitted Disposition”); or
 

	
             
  	
            (ii)
 	
            close one or more equity or debt financings (which for greater certainty shall not include the exercise of any options or warrants validly issued by either of the Borrowers and outstanding as at the date of this Agreement),
 

the Borrowers will pay or cause to be paid to the Lender all proceeds from such sale, disposition or financing, net of reasonable selling or financing costs, up to the full amount of the Outstanding Balance, to be applied on account of the Facility.

	
             
  	
            (c)
 	
            The Borrowers may prepay the Facility in whole at any time before maturity, without penalty, provided that such prepayment occurs on the last Business Day of any calendar month during the term of the Facility and further provided that the Borrowers have delivered to the Lender written notice of its intention to prepay the Facility not less than two (2) months prior to such prepayment.
 

	
            5.
 	
            Interest. Interest will accrue on the Outstanding Balance from the date of Advance at the rate of fifteen percent (15%) per annum, calculated daily and compounded monthly (effective annual rate of 16.08%), and be payable by the Borrowers to the Lender monthly on the last Business Day of every month, as well as after maturity, default and judgment.
 

	
            6.
 	
            Structuring Fee. In consideration for the Lender entering into this Agreement, the Borrowers shall pay to the Lender a non-refundable $80,000 structuring fee concurrently with the Advance (the “Structuring Fee”).
 

	
            7.
 	
            Security. As security for the Facility the Borrowers will execute and deliver, or cause to be executed and delivered, to the Lender:
 

	
             
  	
            (a)
 	
            security agreements from the Borrowers, under which the Borrowers will grant to the Lender a first priority security interest over all of the Equipment listed on Schedule “C” hereto, together with all spare parts, accessions and accessories located with or installed on or affixed or attached to any of the Equipment from time to time, all replacements, substitutions and all proceeds thereof (collectively, the “Collateral”), subject only to Permitted Encumbrances; and
 

	
             
  	
            (b)
 	
            such other security as the Lender may reasonably require;
 

 

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all in form and terms satisfactory to the Lender and its counsel (collectively, the “Security”).

	
            8.
 	
            Conditions Precedent to the Advance. As conditions precedent to the Advance under the Facility by the Lender:
 

	
             
  	
            (a)
 	
            the Borrowers will have:
 

	
             
  	
            (i)
 	
            executed and delivered to the Lender a promissory note in the form attached hereto as Schedule “B” (the “Note”) in the principal amount of the Advance;
 

	
             
  	
            (b)
 	
            the Borrowers will have:
 

	
             
  	
            (i)
 	
            executed and delivered or caused to be executed and delivered all of the security documents referred to in paragraph 7 above and the documents, securities and instruments referred therein and the Lender will have completed all registrations and other filings that may be prudent or necessary to perfect the Lender’s security therein;
 

	
             
  	
            (ii)
 	
            delivered certified copies of their directors’ resolutions authorizing the borrowing or guaranteeing of the Facility, as the case may be, the grant of the Security and the execution and delivery of this Agreement and all agreements, documents and instruments referred to herein, together with officer’s certificates, certifying certain factual matters; and
 

	
             
  	
            (iii)
 	
            caused to be executed and delivered legal opinions of the Borrowers’ United States counsel, in form and terms satisfactory to the Lender and its counsel, acting reasonably;
 

	
             
  	
            (c)
 	
            the representations and warranties of the Borrowers contained in paragraph 9 will be true and correct in all material respects and the Borrowers will have complied with all covenants required to be complied with by them prior to the Advance under the Facility by the Lender (including but not limited to the payment of the Structuring Fee payable in connection with the Advance);
 

	
             
  	
            (d)
 	
            there shall have been no adverse material change in the business, operations, assets or ownership of the Borrowers or any of their respective Subsidiaries, taken as a whole, since the date of the Term Sheet;
 

	
             
  	
            (e)
 	
            the Lender will have completed and, in its sole and absolute discretion, be satisfied with its due diligence review of the Borrowers and their respective Subsidiaries, properties and assets, including but not limited to the Equipment and all valuations in respect thereof;
 

	
             
  	
            (f)
 	
            the Lender will, in its sole and absolute discretion, be satisfied as to the creditworthiness of the Borrowers and their respective Subsidiaries and the adequacy of the collateral security contemplated herein; 
 

	
             
  	
            (g)
 	
            the Lender shall have completed the syndication of the Facility; and
 

	
             
  	
            (h)
 	
            the Lender shall have received the approval of its board of directors;
 

 

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all in form and terms satisfactory to the Lender and its counsel. If any of the foregoing conditions precedent are not satisfied or waived by the Lender in writing on or before April 3, 2009, this Agreement will terminate, and the Lender will be under no further obligation to the Borrowers in connection with the transaction contemplated herein.

	
            9.
 	
            Representations and Warranties. The Borrowers represent and warrant to the Lender as follows:
 

	
             
  	
            (a)
 	
            each of the Borrowers exists as a company under the law of its jurisdiction of incorporation, and has not discontinued or been dissolved under that Law and is in good standing with respect to the filing of annual reports thereunder;
 

	
             
  	
            (b)
 	
            each of the Borrowers has the power and authority to (i) carry on its business as now being conducted and is licensed or registered or otherwise qualified in all jurisdictions where in the nature of its assets or the business transacted makes such licensing, registration or qualification necessary, (ii) acquire, own, hold, lease and mortgage or grant security in its assets including real property and personal property and (iii) enter into and perform its obligations under this Agreement and all other documents or instruments delivered hereunder;
 

	
             
  	
            (c)
 	
            this Agreement and all ancillary instruments or documents issued, executed and delivered hereunder by each of the Borrowers, has been duly authorized by all necessary action of each of the Borrowers and each constitutes or will constitute a legal, valid and binding obligation of each, enforceable against each of the Borrowers in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights and remedies of creditors and to the general principles of equity;
 

	
             
  	
            (d)
 	
            neither of the Borrowers nor any Subsidiary is in breach of or in default under any agreement which if terminated or cancelled could reasonably be expected to have a material adverse effect on the business, properties or assets of the Borrowers, or any obligation in respect of borrowed money and the execution and delivery of this Agreement and all ancillary instruments or documents issued and delivered hereunder or thereunder, and the performance of the terms hereof and thereof will not be, or result in, a violation or breach of, or default under the Borrowers’ or any Subsidiary’s constating documents, any law, any judgment, agreement or instrument to which they are a party or may be bound;
 

	
             
  	
            (e)
 	
            on closing, the Security will create a valid first registered charge, lien and security over the Collateral, subject only to Permitted Encumbrances;
 

	
             
  	
            (f)
 	
            no litigation or administrative proceedings before any court or governmental authority are presently ongoing, or have been threatened in writing, or to the best of the Borrowers’ knowledge are pending, against either of the Borrowers or any Subsidiary or any of their respective properties or assets or affecting any of their properties or assets which could reasonably be expected to have a material adverse effect on their business, properties or assets;
 

	
             
  	
            (g)
 	
            the audited annual consolidated financial statements for Allied Nevada for the fiscal year ended December 31, 2008, including all notes and management’s discussion and analysis publicly disclosed in connection therewith (collectively, the “Financial Statements”), 
 

 

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fairly present the financial affairs of Allied Nevada and its Subsidiaries as of the date to which they are made, and have been prepared in accordance with United States of America generally accepted accounting principles, consistently applied (“US GAAP”);

	
             
  	
            (h)
 	
            Allied Nevada is in compliance, in all material respects, with its continuous disclosure obligations under applicable securities laws and, without limiting the generality of the foregoing, there has been no adverse material change (actual, contemplated or threatened) in the property, assets, business or operations of either of the Borrowers or any of their respective Subsidiaries, taken as a whole, since the date of release of the Financial Statements, other than as publicly disclosed in writing by Allied Nevada prior to the date of this Agreement;
 

	
             
  	
            (i)
 	
            the information circulars, prospectuses, annual information forms, offering memoranda, financial statements, material change reports and news releases filed with the Exchange and the Securities Commissions in those jurisdictions in which Allied Nevada is a reporting issuer on or during the twelve (12) months preceding the date hereof (collectively, the “Public Record”), is complete and accurate in all material respects and omits no facts, the omission of which makes the Public Record, or any particulars therein, misleading, misrepresentative or incorrect in any material respect;
 

	
             
  	
            (j)
 	
            the Borrowers and their respective Subsidiaries have conducted and are conducting their respective businesses in compliance with all applicable laws, bylaws, rules and regulations of each jurisdiction in which their businesses are now carried on and hold all licenses, registrations, permits, consents or qualifications (whether governmental, regulatory or otherwise) required in order to enable their businesses to be carried on as now conducted and all such licenses, registrations, permits, consents and qualifications are valid and subsisting and in good standing and neither of the Borrowers nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such licenses, registrations, permits, consents or qualifications which could reasonably be expected to have any materially adverse affect on, the
condition of such businesses, operations, condition (financial or otherwise) or income of the Borrowers or any Subsidiary;
 

	
             
  	
            (k)
 	
            no order ceasing or suspending trading in securities of either of the Borrowers or prohibiting the sale of securities by either of the Borrowers has been issued and no proceedings for this purpose have been instituted, are pending, contemplated or threatened;
 

	
             
  	
            (l)
 	
            neither Canada Revenue Agency, the Internal Revenue Service, nor any other taxation authority has asserted or, to the best of the Borrowers’ knowledge, has threatened to assert any assessment, claim or liability for taxes due or to become due in connection with any review or examination of the tax returns of either of the Borrowers or any Subsidiary filed for any year which would have material adverse effect on the assets, properties, business, results of operations, prospects or condition (financial or otherwise) of the Borrowers or any Subsidiary;
 

	
             
  	
            (m)
 	
            neither of the Borrowers nor any Subsidiary is a party to any material contract other than as disclosed in the Public Record;
 

	
             
  	
            (n)
 	
            Allied Nevada is a reporting issuer under the Securities Acts of all Canadian Provinces and the Yukon Territory and is in compliance with its material obligations under those 
 

 

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Acts and under the rules, regulations and policies of the Exchange, and will use its best efforts to maintain such status, without default, from the date hereof until repayment in full of the Facility to the Lender;

	
             
  	
            (o)
 	
            as at the date of this Agreement, except as disclosed in the Financial Statements, in any filings within any governmental body or securities regulatory authority or to the Lender in writing and as contemplated by this Agreement, no holder of outstanding shares in the capital of the Borrowers will be entitled to any pre-emptive or any similar rights to subscribe for any of the shares in the capital of the Borrowers or other securities of the Borrowers, and no rights, warrants or options to acquire, or instruments convertible into or exchangeable for any shares in the capital of the Borrowers are outstanding;
 

	
             
  	
            (p)
 	
            except as disclosed on Schedule “B” hereto, the Borrowers have no direct or indirect subsidiary corporations;
 

	
             
  	
            (q)
 	
            all factual information previously or contemporaneously furnished to the Lender by or on behalf of the Borrowers for purposes of or in connection with this Agreement or any transaction contemplated hereby, is true and accurate in every material respect and such information is not incomplete by the omission of any material fact necessary to make such information not misleading;
 

	
             
  	
            (r)
 	
            the Borrowers and their respective Subsidiaries are solvent and are generally able to pay their debts as they come due and will be able to do so after giving effect to the transactions contemplated in this Agreement; and
 

	
             
  	
            (s)
 	
            the chief executive, principal place of business and place where each of the Borrowers and each Subsidiary keep their books and records is located at 9600 Prototype Court, Reno, Nevada 89521.
 

	
            10.
 	
            Positive Covenants of the Borrowers. The Borrowers covenant and agree that so long as any monies will be outstanding under this Agreement, they will:
 

	
             
  	
            (a)
 	
            at all times maintain their corporate existence and the corporate existence of all of their Subsidiaries;
 

	
             
  	
            (b)
 	
            duly perform their obligations under this Agreement and all other agreements and instruments executed and delivered hereunder or thereunder;
 

	
             
  	
            (c)
 	
            promptly pay when due all agency or finders’ fees payable in connection with the Facility or this Agreement and indemnify and save harmless the Lender from all claims in respect of any such fees;
 

	
             
  	
            (d)
 	
            carry on and conduct their business in a proper business-like manner in accordance with good business practice and will keep or cause to be kept proper books of account in accordance with US GAAP;
 

	
             
  	
            (e)
 	
            at all times comply with all applicable laws, except where such voluntary non-compliance could not reasonably be expected to have a material adverse effect on the business, properties or assets of either of the Borrowers or any Subsidiary;
 

 

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            (f)
 	
            pay and discharge promptly when due, all taxes, assessments and other governmental charges or levies imposed upon it or upon its properties or assets or upon any part thereof, as well as all claims of any kind (including claims for labour, materials and supplies) which, if unpaid, would by law become a lien, charge, trust or other claims upon any such properties or assets, provided however that the Borrowers shall not be required to pay any such tax, assessment, charge or levy or claim so long as it remains secured by a Permitted Lien;
 

	
             
  	
            (g)
 	
            give to the Lender within three (3) Business Days of filing on SEDAR copies of all documents or instruments publicly filed by Allied Nevada on SEDAR, together with such other financial or other management reports, certificates, updated financial statements, including monthly internal financial and operational reports and documents and such other information with respect to the Borrowers or the Subsidiaries as the Lender may reasonably request from time to time during the term of this Agreement;
 

	
             
  	
            (h)
 	
            provide the Lender with written notice of any proposed financing made by or to the Borrowers concurrently with, but not prior to, public disclosure of such financing;
 

	
             
  	
            (i)
 	
            furnish and give to the Lender (if such is the case) notice that an Event of Default has occurred and, if applicable, is continuing or notice in respect of any event which would constitute an Event of Default hereunder and specifying the nature of same; and
 

	
             
  	
            (j)
 	
            perform and do all such acts and things as are necessary to perfect and maintain the Security provided to the Lender pursuant to this Agreement.
 

	
            11.
 	
            Negative Covenants of the Borrowers. The Borrowers covenant and agree with the Lender that the Borrowers will not without first obtaining the written consent of the Lender:
 

	
             
  	
            (a)
 	
            except for the Security and Permitted Encumbrances, make, give, create or permit or attempt to make, give or create any mortgage, charge, lien, security interest or other encumbrance over any assets of the Borrowers or any Subsidiary;
 

	
             
  	
            (b)
 	
            change the name of either Borrower or any Subsidiary;
 

	
             
  	
            (c)
 	
            allot and issue any new shares of any Subsidiary, unless in the case of a Subsidiary whose shares have been pledged or otherwise subject to a security interest in favour of the Lender as part of the Security, the share certificates representing all such new shares allotted and issued are delivered to the Lender, together with powers of attorney and such other transfer documents as the Lender or its counsel may require, to be held by the Lender pursuant to the Security as additional security for the obligations of the Borrowers to the Lender in respect of the Facility;
 

	
             
  	
            (d)
 	
            in the case of the Borrowers, declare or provide for any dividends or other payments or distributions based on share capital;
 

	
             
  	
            (e)
 	
            in the case of the Borrowers, redeem or purchase any of its shares;
 

	
             
  	
            (f)
 	
            make any sale of or dispose of any substantial or material part of its business, assets or undertaking, or that of any Subsidiary, including their interest in the Hycroft Mine or the shares or assets of any Subsidiary outside of the ordinary course of business, but 
 

 

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excluding a Permitted Dispostion by any of Allied Nevada Gold Holdings LLC, Allied VNC Inc. or Victory Exploration Inc.;

	
             
  	
            (g)
 	
            save and except for the Facility and purchase money security interests, chattel mortgages and equipment leases entered into in the ordinary course of business, incur any Indebtedness or cause any Subsidiary to incur any Indebtedness, without first obtaining and delivering to the Lender a duly signed assignment and postponement of claim by such person in favour of the Lender, in form and terms satisfactory to the Lender;
 

	
             
  	
            (h)
 	
            in respect of itself or any Subsidiary, pay out any shareholders loans or other indebtedness to non-arm’s length parties or enter into any transactions with any non-arm’s length parties other than on commercially reasonable terms, unless such payment or transaction is with one of the other Borrowers hereto and the proceeds of such payment and all benefits of such transaction continue to be subject to the Security after giving effect to such payment or transaction; or
 

	
             
  	
            (i)
 	
            in respect of itself or any Subsidiary, guarantee the obligations of any other person, directly or indirectly, other than obligations permitted by this Agreement.
 

	
            12.
 	
            Events of Default. Each and every of the events set forth in this paragraph will be an event of default (“Event of Default”):
 

	
             
  	
            (a)
 	
            if the Borrowers fail to make any payment of principal or interest when due hereunder, and such failure continues for two (2) Business Days;
 

	
             
  	
            (b)
 	
            if either of the Borrowers defaults in observing or performing any material term, covenant or condition of this Agreement or any Security or other document delivered hereunder or in connection with the Facility, other than the payment of monies as provided for in subparagraph (a) hereof, on their part to be observed or performed and such failure continues for five (5) Business Days;
 

	
             
  	
            (c)
 	
            if either of the Borrowers commits an event of default under the Security;
 

	
             
  	
            (d)
 	
            if Allied Nevada is in default of any material prescribed filings with applicable securities regulatory authorities, the stock exchange or market on which its shares trade (collectively, the “Authorities”), or are subject to any suspension in excess of two (2) trading days or cease trade order issued by any such Authority;
 

	
             
  	
            (e)
 	
            if any of the Borrowers’ representations, warranties or other statements in this Agreement or any other collateral document delivered hereunder or in connection with the Facility were at the time given false or misleading in any material respect;
 

	
             
  	
            (f)
 	
            if either of the Borrowers are in default under any agreement which if terminated could reasonably be expected to result in a material adverse effect on the operations, business or assets of either of the Borrowers and written notice of such default has been given to the Borrowers by the other party thereto;
 

	
             
  	
            (g)
 	
            if either of the Borrowers default in any material respect in observing or performing any term, covenant or condition of any debt instrument or obligation in respect of borrowed money by which they are bound in an aggregate amount of not less than $100,000;
 

 

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            (h)
 	
            if either of the Borrowers permit any sum which has been admitted as due, or is not disputed to be due, and which forms or is capable of being made a charge upon any of the assets or undertaking of either of the Borrowers to remain unpaid or not challenged for 30 days after proceedings have been taken to enforce the same;
 

	
             
  	
            (i)
 	
            if either of the Borrowers, directly or indirectly through any Subsidiary, cease or threaten to cease to carry on business;
 

	
             
  	
            (j)
 	
            if any order is made or issued by a competent regulatory authority prohibiting the trading in shares of Allied Nevada or if Allied Nevada’s common shares are suspended or de-listed from trading on any stock exchange;
 

	
             
  	
            (k)
 	
            if, in the reasonable opinion of the Lender, an adverse material change occurs in the financial condition of either of the Borrowers;
 

	
             
  	
            (l)
 	
            if the Lender in good faith and on commercially reasonable grounds believes that the ability of the Borrowers, taken as a whole, to pay any of the Outstanding Balance to the Lender or to perform any of the covenants contained in this Agreement or any Security or other agreement or document delivered hereunder is impaired or any security granted by the Borrowers or any Subsidiary to the Lender is or is about to be impaired or in jeopardy in any material respect;
 

	
             
  	
            (m)
 	
            if either of the Borrowers or any Subsidiary petitions or applies to any tribunal for the appointment of a trustee, receiver or liquidator or commences any proceedings under any bankruptcy, insolvency, readjustment of debt or liquidation law of any jurisdiction, whether now or hereafter in effect; 
 

	
             
  	
            (n)
 	
            any change of control of either of the Borrowers (“control” being defined as ownership of or control or direction over, directly or indirectly, 20% or more of the outstanding voting securities of either such Borrowers); or
 

	
             
  	
            (o)
 	
            if any petition or application for appointment of a trustee, receiver or liquidator is filed, or any proceedings under any bankruptcy, insolvency, readjustment of debt or liquidation law are commenced, against either of the Borrowers or any Subsidiary which is not opposed by such Borrowers or Subsidiary in good faith, or an order, judgment or decree is entered appointing any such trustee, receiver, or liquidator, or approving the petition in any such proceeding.
 

	
            13.
 	
            Effect of Event of Default. If any one or more of the Events of Default occur or occurs and is or are continuing, the Lender may without limitation in respect of any other rights it may have in law or pursuant to this Agreement or any other document or instrument delivered hereunder, demand immediate payment of all monies owing hereunder.
 

	
            14.
 	
            Lender’s Expenses. The Borrowers will pay for the Lender’s reasonable legal fees (on a solicitor and own client basis) and all other reasonable costs, charges and expenses (including all due diligence expenses) of and incidental to the preparation, execution and completion of this Agreement and the contemplated security hereunder, all as may be reasonably required by the Lender, in its sole and absolute discretion, to complete this transaction, as well as all legal fees (on a solicitor and own client basis) and all other costs, charges and expenses of and incidental to the collection or recovery of all amounts owing hereunder, including but not limited to the enforcement of the Security granted hereunder or otherwise, which secures repayment of the 
 

 

- 12 -

 

Facility. In connection therewith, the Borrowers have delivered to the Lender CAD$30,000 as a retainer for such fees and expenses (the “Retainer”). All amounts payable hereunder will be paid firstly from the Retainer. In connection with the Advance, the Lender may deduct such additional retainer from the proceeds of the Advance as it may require to cover all such fees and expenses incurred up to and including the closing of the transactions contemplated herein. All amounts payable under this paragraph 14 thereafter will be payable by the Borrowers to the Lender within 30 days of presentment of an invoice. If not paid within that time, such amount will be added to and form part of the principal amount of the Facility and shall accrue interest from such date as if it had been advanced by the Lender to the Borrowers hereunder.

	
            15.
 	
            Indemnity. The Borrowers agree to indemnify and save harmless the Lender and each of its directors, officers, employees and agents from and against all liabilities, claims, losses, damages and reasonable costs and expenses in any way caused by or arising directly or indirectly from or in consequence of the occurrence of any Event of Default under this Agreement.
 

	
            16.
 	
            Notices. In this Agreement:
 

	
             
  	
            (a)
 	
            any notice or communication required or permitted to be given under this Agreement will be in writing and will be considered to have been given if delivered by hand, transmitted by facsimile transmission or mailed by prepaid registered post to the address or facsimile transmission number of each party set out below:
 

	
             
  	
            (i)
 	
            if to the Lender:
 

Ionic Capital Corp..

Suite 1028, 550 Burrard Street

Vancouver, BC  V6C 2B5

	
             
 	
            Attention:
 	
            A. Murray Sinclair
 

	
             
 	
            Fax No:
 	
            (604) 681-4692
 

	
             
  	
            (ii)
 	
            if to either of the Borrowers:
 

c/o Allied Nevada Gold Corp.

9600 Prototype Court

Reno, Nevada 89521

	
             
 	
            Attention:
 	
            Hal Kirby
 

	
             
 	
            Fax No:
 	
            (775) 358-4458
 

or to such other address or facsimile transmission number as any party may designate in the manner set out above; and

	
             
  	
            (b)
 	
            notice or communication will be considered to have been received:
 

	
             
  	
            (i)
 	
            if delivered by hand during business hours on a Business Day, upon receipt by a responsible representative of the receiver, and if not delivered during business hours, upon the commencement of business on the next Business Day;
 

	
             
  	
            (ii)
 	
            if sent by facsimile transmission during business hours on a Business Day, upon the sender receiving confirmation of the transmission, and if not transmitted 
 

 

- 13 -

 

during business hours, upon the commencement of business on the next Business Day; and

	
             
  	
            (iii)
 	
            if mailed by prepaid registered post upon the fifth Business Day following posting; except that, in the case of a disruption or an impending or threatened disruption in postal services every notice or communication will be delivered by hand or sent by facsimile transmission.
 

	
            17.
 	
            Assignment. The Borrowers acknowledge and agree that the Lender may assign all or part of the Facility, this Agreement and all collateral agreements, documents or instruments delivered hereunder to one or more assignees, free from any right of set-off or counterclaim or equity (other than such as arise under this Agreement or the Security), subject only to the Lender’s notification of such assignment or assignments being given in writing to the Borrowers.
 

	
            18.
 	
            Agreement to Pay. Upon receipt of written notice and direction from the Lender, the Borrowers covenant and agree to make all payments of interest, bonus, standby, principal and structuring fees due under this Agreement to the Lender and any assignee, pro rata in accordance with their respective proportionate interests in the Facility as set out in such written notice and direction, absent which all such payments may be made to the Lender.
 

	
            19.
 	
            Enurement. This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
 

	
            20.
 	
            Waivers. No failure or delay on the Lender’s part in exercising any power or right hereunder will operate as a waiver thereof.
 

	
            21.
 	
            Joint Obligations. The agreements of, and all obligations and covenants to be performed and observed by, the Borrowers hereunder will be the joint and several agreements, obligations and covenants of each of the persons comprising the Borrowers and any request or authorization given to the Lender by any of the persons comprising the Borrowers will be considered to be the joint and several requests or authorizations of each of the persons comprising the Borrowers.
 

	
            22.
 	
            Remedies are Cumulative. The Lender’s rights and remedies hereunder are cumulative and not exclusive of any rights or remedies at law or in equity.
 

	
            23.
 	
            Time. Time is of the essence of this Agreement and all documents or instruments delivered hereunder.
 

	
            24.
 	
            Criminal Code Compliance. In this paragraph the terms “interest”, “criminal rate” and “credit advanced” have the meanings ascribed to them in Section 347 of the Criminal Code (Canada) as amended from time to time. The Borrowers and the Lender agree that, notwithstanding any agreement to the contrary, no interest on the Facility or the credit advanced by the Lender under this Agreement will be payable in excess of that permitted under the laws of Canada. If the effective rate of interest, calculated in accordance with generally accepted actuarial practices and principles, would exceed the criminal rate on the credit advanced, then:
 

	
             
  	
            (a)
 	
            the elements of return which fall within the term “interest” will be reduced to the extent necessary to eliminate such excess;
 

	
             
  	
            (b)
 	
            any remaining excess that has been paid will be credited towards prepayment of the Facility; and
 

 

- 14 -

 

	
             
  	
            (c)
 	
            any overpayment that may remain after such crediting will be returned forthwith to the Borrowers upon demand, and, in the event of dispute, a Fellow of the Canadian Institute of Actuaries appointed by the Lender will perform the relevant calculations and determine the reductions, modifications and credits necessary to effect the foregoing and the same will be conclusive and binding on the parties. This Agreement, the Note and all related agreements and documents will automatically be modified to reflect such modifications without the necessity of any further act or deed of the Borrowers and the Lender to give effect to them.
 

	
            25.
 	
            Invalidity. If at any time any one or more of the provisions hereof is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof will not in any way be affected or impaired thereby to the fullest extent possible by law.
 

	
            26.
 	
            Governing Laws. This Agreement will be governed by and interpreted in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The Borrowers submit to the non-exclusive jurisdiction of the Courts of the Province of British Columbia and agree to be bound by any suit, action or proceeding commenced in such Courts and by any order or judgment resulting from such suit, action or proceeding, but the foregoing will in no way limit the right of the Lender to commence suits, actions or proceedings based on this Agreement in any jurisdiction it may deem appropriate.
 

	
            27.
 	
            Amendment. This Agreement supersedes the Term Sheet and all prior agreements and discussions between the parties with respect to the subject matter set forth herein. This Agreement may be varied or amended only by or pursuant to an agreement in writing signed by the parties hereto.
 

	
            28.
 	
            Schedules. All Schedules attached hereto will be deemed fully a part of this Agreement.
 

	
            29.
 	
            Currency. All references herein to “dollars” or “$” are to Canadian dollars, unless otherwise indicated. 
 

	
            30.
 	
            Counterparts. This Agreement may be signed in one or more counterparts, originally or by facsimile, each such counterpart taken together will form one and the same agreement.
 

 

[Signature page follows]

TO EVIDENCE THEIR AGREEMENT each of the parties has executed this Agreement on the date first above written.

 

IONIC CAPITAL CORP.

 

	
            Per:  
                   
                    
                        
 

	
             
 	
            Authorized Signatory
 

 

ALLIED NEVADA GOLD CORP.

 

	
            Per:  
                   
                    
                        
 

	
             
 	
            Authorized Signatory
 

 

HYCROFT RESOURCES & DEVELOPMENT, INC.

 

	
            Per:  
                   
                    
                        
 

	
             
 	
            Authorized Signatory
 

 

 

SCHEDULE “A”

PROMISSORY NOTE

 

Principal Amount:  CAD$8,000,000

For value received, ALLIED NEVADA GOLD CORP. and HYCROFT RESOURCES & DEVELOPMENT, INC. (the “Borrowers”) hereby jointly and severally promise to pay to or to the order of IONIC CAPITAL CORP. (the “Lender”) the principal amount of EIGHT MILLION CANADIAN DOLLARS (CAD$8,000,000) (the “Principal Amount”) on (subject to the rights of the Lender to accelerate payment under the Credit Agreement dated for reference March 30, 2009 is between the Lender and the Borrowers) September 30, 2010, together with interest accruing on the outstanding Principal Amount from the date hereof at a rate of FIFTEEN PERCENT (15%) per annum, compounded monthly (effective rate of 16.08% per annum), before and after each of maturity, default and judgment, payable
monthly on the last Business Day of every month. All payments under this promissory note will be made by certified cheque, bank draft or wire transfer (pursuant to wire transfer instructions provided by the Lender from time to time) and delivered to the Lender at Suite 1028, 550 Burrard Street, Vancouver, British Columbia  V6C 2B5.

The undersigned are entitled to prepay this promissory note, in whole or in part, without penalty, provided that such prepayment occurs on the last Business Day of any calendar month during the term of the Facility (as defined in the Credit Agreement) and further provided that the Borrowers have delivered to the Lender written notice of its intention to prepay the Facility not less than two (2) months prior to such prepayment. The undersigned waives demand and presentment for payment, notice of non-payment, protest, notice of protest and notice of dishonour. This promissory note will be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein. In this promissory note, “Business Day” means a day which is not a Saturday, Sunday or a statutory holiday in the Province of
British Columbia or the State of Nevada.

Dated:  March 30, 2009.

 

ALLIED NEVADA GOLD CORP.

 

	
            Per:  
                   
                    
                        
 

	
             
 	
            Authorized Signatory
 

 

 

HYCROFT RESOURCES & DEVELOPMENT, INC.

 

	
            Per:  
                   
                    
                        
 

	
             
 	
            Authorized Signatory
 

 

SCHEDULE “B”

SUBSIDIARIES

 

	
            •
 	
            Allied Nevada Gold Holdings LLC, a Nevada limited liability company
 

	
            •
 	
            Hycroft Resources & Development, Inc. , a Nevada corporation
 

	
            •
 	
            Allied VGH Inc. , a Nevada corporation
 

	
            •
 	
            Allied VNC Inc. , a Nevada corporation
 

	
            •
 	
            Victory Gold Inc. , a Nevada corporation
 

	
            •
 	
            Victory Exploration Inc. , a Nevada corporation
 

 

SCHEDULE “C”

EQUIPMENT

 

 

- 2 -

 

SCHEDULE “D”

PERMITTED ENCUMBRANCES

 

None.EXHIBIT 10.1

                              FORBEARANCE AGREEMENT

         This Forbearance Agreement (the "Agreement") is entered into as of this
                                          ---------
30th  day  of  March,  2009  by  and  among  Ronson  Corporation,  a New  Jersey
Corporation  ("Parent"),  Ronson  Consumer  Products  Corporation,  a New Jersey
               ------
corporation  ("RCPC"),  Ronson Aviation,  Inc., a New Jersey Corporation ("RAI")
               ----                                                        ---
and 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  same  may  be  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).

         Parent has guaranteed  payment and  performance of the  Indebtedness of
Borrowers to Lender, pursuant to a certain Guaranty Agreement dated May 30, 2008
(the "Guaranty").
      --------

         The following  Events of Default have occurred and are continuing under
the Credit Agreement (the "Existing Events of Default"):
                           --------------------------

         (a) Borrowers breached the terms of that certain Post-Closing Agreement
dated as of May 30,  2008,  by and among  Borrowers  and  Lender by  failing  to
deliver all open items as required therein;

         (b) Borrowers failed to maintain Tangible Net Worth as of September 30,
2008 of not less than <$1,500,000>,  as required by Section 6.2(a) of the Credit
Agreement;

         (c) Borrowers  failed to achieve Net Income as of September 30, 2008 of
not less than <$437,000>, as required by Section 6.2(b) of the Credit Agreement;

         (d) Borrowers  failed to achieve Net Cash Flow as of September 30, 2008
of not less than  <$280,000>,  as  required  by  Section  6.2(c)  of the  Credit
Agreement;

         (e) Borrowers  failed to deliver their quarterly  financial  statements
for the fiscal  quarter ending  December 31, 2008,  within 45 days of the end of
such fiscal quarter as required by Section 6.1(b) of the Credit Agreement;

         (f) Borrowers failed to deliver their monthly financial  statements for
the month  ending  December  31, 2008 and January 31, 2009 within 30 days of the
end of such months as required by Section 6.1(c) of the Credit Agreement;

                                       1
<PAGE>

         (g) Obligors provided  inaccurate exhibits to each of the Trademark and
Patent  Security  Agreements  and an  inaccurate  Schedule  5.11  to the  Credit
Agreement; and

         (h) Any other Event of Default  consisting of a  cross-default  arising
under other  indebtedness  of the Obligors  resulting from any Existing Event of
Default.

         Lender has recently  been advised that Parent and the  stockholders  of
Parent are actively pursuing either a sale of all of the capital stock of RAI or
of all or substantially  all of the assets of RAI or financing to be provided by
another  lender  (each a "Liquidity  Transaction"),  in either case in an amount
                          ----------------------
sufficient to enable the Obligors to fully pay and satisfy the Indebtedness.  As
a result, Obligors have requested that Lender forbear from exercising its rights
and remedies  under the Loan  Documents  as a result of the  Existing  Events of
Default and amend certain terms of the Credit Agreement.

         Lender has reviewed  this request and, in an effort to continue to work
with the Obligors,  Lender has agreed to forbear from exercising  certain of its
rights and remedies and to amend  certain  terms of the Credit  Agreement as set
forth herein.

         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. Acknowledgments of Obligors. Obligors acknowledge and agree that:
            ---------------------------

         (a) The  recital  of  facts  set  forth in this  Agreement  is true and
correct in all material respects.

         (b) Lender has a valid and  perfected  security  interest in and to the
Collateral.

         (c) The Existing Events of Default have occurred and are continuing.

         (d)  Lender's  rights and  remedies  contained  in the Loan  Documents,
including  without  limitation  the right to charge and collect  interest at the
Default Rate pursuant to Section 2.8(b) of the Credit Agreement, effective as of
July 1, 2008, have vested.

         (e) Lender's  agreement to forbear as provided in this Agreement  shall
not invalidate, impair, negate, or otherwise affect Lender's ability to exercise
its rights and remedies under the Loan Documents and otherwise.

         2. Forbearance.
            -----------

         (a) In  consideration  for, and subject to,  compliance by the Obligors
with the terms and conditions of this Agreement, Lender hereby agrees to forbear
from exercising its rights and remedies under the Loan Documents  (except as set
forth in Paragraph 7 below) and  applicable law as a result of the occurrence of
the Existing  Events of Default until the occurrence of a Termination  Event (as
such  term  is  defined  below).  This  forbearance  is  given  as  a  one  time
accommodation  by Lender to the  Obligors  and nothing  contained  herein  shall
require  Lender  to waive  any  Default  or Event of  Default  or  forbear  from
exercising  any of its rights or remedies

                                       2
<PAGE>

with respect to the occurrence of any other Default or Event of Default existing
on the effective date of this Agreement or occurring after the effective date of
this Agreement.

         (b) For purposes of this  Agreement,  a "Termination  Event" shall mean
                                                  ------------------
the  earliest  to occur of (i) four  weeks  from the  Accommodation  Overadvance
Funding Date, (ii) April 24, 2009, and (iii) 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 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;

                  (D)      Obligors  shall  fail to  employ  a CRO  (as  defined
                           below) throughout the Forbearance Period;

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

                  (F)      Obligors  shall  fail  to  deliver  their   quarterly
                           financial  statements  for the fiscal  quarter ending
                           December 31, 2008  required by Section  6.1(b) of the
                           Credit Agreement on or before April 1, 2009;

                  (G)      Obligors   shall  fail  to  deliver   their   monthly
                           financial  statements  for the months ending  January
                           31,  2009 and  February  28,  2009,  as  required  by
                           Section 6.1(c) of the Credit Agreement,  on or before
                           April 15, 2009; and

                  (H)      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.

         (c) Upon the occurrence of a Termination  Event,  Lender's agreement to
forbear from  exercising  its rights and remedies  under the Loan  Documents and
applicable  law shall  automatically  terminate,  with or without  notice to the
Obligors.

         (d)  Nothing in this  paragraph 2 shall be deemed a waiver by Lender of
the Existing Events of Default or of future  compliance by the Obligors with the
covenants set forth above or otherwise set forth in the Loan Documents.

         (e) This  Agreement  is written  without  prejudice as to the rights of
Lender to pursue any and all remedies  available to Lender  pursuant to the Loan
Documents,  at law and in equity,  upon the  occurrence of a Termination  Event.
This Agreement  shall not constitute a waiver or

                                       3
<PAGE>

modification  of any of Lender's  rights and  remedies,  the Existing  Events of
Default, any other Default or Event of Default under the Loan Documents,  or any
of the terms, conditions, warranties,  representations or covenants contained in
the Loan Documents.

         3. Conditions. Lender's agreement to forbear from exercising its rights
            ----------
and remedies pursuant to this Agreement is conditioned upon:

         (a)  execution  and  delivery  by  the  Obligors  and  Lender  of  this
Agreement;

         (b) Obligors' agreement to cooperate with Hilco Appraisal Services, LLC
in its  efforts to cause an updated  appraisal  of  Borrowers'  Inventory  to be
delivered  to Lender  on or before  March 25,  2009,  which  appraisal  shall be
acceptable to Lender in form and substance;

         (c)  execution  and  delivery by the  Obligors of Amended and  Restated
Patent and Trademark Security  Agreements,  in form and substance  acceptable to
Lender;

         (d)  execution  and  delivery  by Parent  of an  Amended  and  Restated
Security Agreement, in form and substance acceptable to Lender;

         (e) receipt by Lender of evidence  that  Obligors  have engaged a Chief
Restructuring Officer ("CRO"), on terms and conditions set forth below; and

         (f) such other matters as Lender may require.

         4.  Chief  Restructuring  Officer.  Obligors  shall  deliver  to Lender
             -----------------------------
evidence  establishing  that the  Obligors  have  engaged a Chief  Restructuring
Officer ("CRO"), including, without limitation,  copies of any engagement letter
executed by the Obligors with a CRO and a certified  copy of the  resolutions of
the Board of Directors of the Obligors approving the engagement of a CRO, all of
which  shall be in form and  substance  acceptable  to Lender.  The CRO shall be
selected by Obligors and  acceptable to Lender.  At all times during the term of
this  Agreement,  Obligors  will continue to employ the CRO with such duties and
responsibilities  as shall be approved by the Board of Directors of the Obligors
and  acceptable to the Lender.  Obligors  consent to Lender having access to the
CRO and Obligors hereby agree and consent to Lender meeting with the CRO without
Obligors  present  and  Obligors  hereby  release  and agree to hold the CRO and
Lender  harmless from any  information or  discussions  held between the CRO and
Lender.

         5. Forbearance Fee. In  consideration  for Lender's  agreement to enter
            ---------------
into this Agreement, Obligors shall pay to Lender a forbearance fee in an amount
equal to Four Hundred Fifty Thousand  Dollars  ($450,000),  which shall be fully
earned and non-refundable  upon execution and delivery of this Agreement,  shall
be included as part of the  Indebtedness  of Obligors to Lender under the Credit
Agreement and shall be charged as a Revolving Advance under the Credit Agreement
upon the earlier of (a) the occurrence of a Termination  Event or (b) payment of
the Indebtedness.

         6. Amendments to Credit and Security Agreement.

         (a) Section 1.1 of the Credit  Agreement  shall be amended by adding or
amending, as the case may be, the following definitions:

                                       4
<PAGE>

                  "Accommodation Overadvance" is defined in Section 2.1.1

                  "Accommodation  Overadvance  Funding Date" shall mean the date
         the Forbearance Agreement is executed.

                  "Accommodation  Overadvance  Limit" means up to $500,000  from
         the Accommodation  Overadvance Funding Date through the occurrence of a
         Termination   Event  (as  such  term  is  defined  in  the  Forbearance
         Agreement).

                  "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%).

                  "Domestic  Borrower  Borrowing  Base"  means  at any  time the
         lesser of:

         (b) The Maximum Line Amount (less  Advances  made to or for the benefit
of Ronson Canada under this Agreement); or

         (c)  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  owned by the Domestic  Borrowers,
                           plus

                  (ii)     The lesser of (A) sixty percent (60%), or such lesser
                           rate as the  Lender in its sole  discretion  may deem
                           appropriate from time to time, of Eligible  Inventory
                           owned  by the  Domestic  Borrowers,  (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 the Domestic  Borrowers,
                           or (C)  $700,000  less  Advances  made  to or for the
                           benefit of Ronson Canada against  Eligible  Inventory
                           owned by Ronson Canada, less

                  (iii)    The L/C Amount  (less the Ronson  Canada L/C Amount),
                           less

                  (iv)     The Domestic Borrowing Base Reserve, less

                  (v)      Indebtedness  that the Domestic  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  Domestic  Borrowers by the Lender that is not
                           described  in  Article II of this  Agreement  and any
                           indebtedness owed by the Domestic  Borrowers to Wells
                           Fargo Merchant Services, L.L.C.

                                       5
<PAGE>

                  "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  one-half of one percent  (0.50%),  (ii) with  respect to the
         Accommodation Overadvance,  an annual interest rate equal to the sum of
         the Prime  Rate plus  eight  percent  (8.00%),  (iii)  with  respect to
         Equipment Term Advances evidenced by the Equipment Term Note, the Prime
         Rate plus  three-quarters  of one percent (0.75%) and (iv) with respect
         to Real Estate Term  Advances  evidenced  by the Real Estate Term Note,
         the Prime Rate plus one percent (1.00%).

                  "Forbearance  Agreement"  shall mean that certain  Forbearance
         Agreement  executed  by and among  Obligors  and Lender and dated as of
         March 30, 2009.

                  "Maximum Line Amount" means $2,000,000,  unless this amount is
         reduced  pursuant to Section  2.12,  in which event it means such lower
         amount.

         (d)  Section  2.1 of the  Credit  Agreement  is  amended  by adding the
following new Section 2.1.1 which shall provide as follows:

                           2.1.1  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 Domestic  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 2.13(a) of this Agreement.

         (e) Section 3.1 of the Credit Agreement shall be amended in restated in
its entirety to provide as follows:

                  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  lien  and  security  interest
                  (collectively  referred to as the "Security  Interest") in the
                  Collateral,  as security for the payment and  performance  of:
                  (a) all present and future Indebtedness of the Borrower to the
                  Lender;  (b) all obligations of the Borrower and rights of the
                  Lender  under this  Agreement;  and (c) all present and future
                  obligations of the Borrower to the Lender of other kinds. 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.,  a  security  interest  in  all
                  commercial  tort claims that the Borrower may have against any
                  Person.   Notwithstanding   any   provision  to  the  contrary
                  contained in this Agreement, (a) the Security Interest granted
                  by Parent in its interest in Ronson Canada shall be

                                       6
<PAGE>

                  limited as provided  in the  Security  Agreement  by Parent in
                  favor of  Lender  and (b) the  Security  Interest  granted  by
                  Ronson Canada hereunder  (including,  without limitation,  the
                  rights  under  Section  3.3  hereof)  shall  secure the Ronson
                  Canada  Indebtedness only. This Section 3.1, as amended by the
                  Forbearance  Agreement,  is  not  intended  to  create  a  new
                  relationship  between  Lender  and  Borrower,  but  rather  to
                  restate and supplement the terms,  conditions,  and provisions
                  of an existing  relationship and shall be deemed to ratify the
                  existing  Security Interest of Lender in the Collateral to the
                  extent  such  Security  Interest  existed  prior  to the  date
                  hereof,  and to create a Security  Interest to the extent that
                  no Security Interest therein existed in favor of Lender.

         (f) Section 7.3 of the Credit  Agreement  shall be amended and restated
in its entirety to provide as follows:

                  Section 7.3      Reserved.
                  -----------

         (g) In addition to all  reporting  requirements  otherwise set forth in
the Credit  Agreement,  Borrower  shall  deliver,  or cause to be delivered,  to
Lender the  following on the second  Business Day of each  calendar week or more
frequently if Lender shall request:

                  (i)      A report  detailing the actual cash receipts and cash
                           disbursements   of  Borrowers  for  the   immediately
                           preceding  calendar week and the  deviation  from the
                           cash receipts and cash  disbursements as shown on the
                           Cash-Flow  Forecast  for such  period,  which  report
                           shall  be  certified  by the CRO as  being  true  and
                           correct;

                  (ii)     A written  summary  approved  and/or  prepared by the
                           CRO, in form and substance  acceptable to the Lender,
                           as to the  progress  in  connection  with the planned
                           sale of  stock or  assets  of RAI or  refinancing  as
                           described in this Agreement;

                  (iii)    Weekly perpetual Inventory reports;

                  (iv)     Written  updates  approved and/or prepared by the CRO
                           on the RAI sale efforts,  including,  but not limited
                           to, copies of all correspondence, whether in hardcopy
                           or  electronic   format,   a  log  of  contacts  with
                           potential buyers,  copies of all letters of interest,
                           letters  of  intent  and  asset  purchase  agreements
                           received by Borrowers,  summaries of any  significant
                           discussions  with  potential  buyers,  time lines for
                           potential   sales,   copies  of  any  and  all  proxy
                           materials  Borrowers are required to  disseminate  to
                           shareholders  of Parent  or file with the  Securities
                           Exchange Commission in connection with a sale of RAI,
                           and  such   additional   information  as  Lender  may
                           request.

         (h)  Notwithstanding  anything contained in the Credit Agreement to the
contrary,  Lender  hereby agrees that it will,  as a one time  accommodation  to
Obligors,  extend  Obligors'  time to deliver the monthly  financial  statements
required by Section 6.1(c) of the Credit Agreement for the month ending February
28, 2009 to April 15, 2009.

                                       7
<PAGE>

         7.  Default   Interest.   Obligors   acknowledge  and  agree  that  the
             ------------------
outstanding  principal  balance  of  all  Revolving  Advances  (other  than  the
Accommodation  Overadvance,  which  shall  accrue  interest  at  the  applicable
non-default  Floating Rate until the occurrence of a Termination Event) and Term
Advances shall continue to accrue interest at the Default Rate.

         8.  Payment of Term  Advances.  Notwithstanding  anything  contained in
             -------------------------
Section  2.6 or Section 2.7 of the Credit  Agreement  to the  contrary,  monthly
payments of  principal  under the  Equipment  Term Note and the Real Estate Term
Note shall be deferred until the occurrence of a Termination Event.

         9. Inventory  Advance  Rate/Appraisal.  Obligors  acknowledge and agree
            ----------------------------------
that (a) as of the date of this  Agreement  Lender  shall  reduce  the  Eligible
Inventory  advance  rate by two  percent  (2%)  until  such time as  Lender  has
received an updated  appraisal of  Borrowers'  Inventory  and (b) Lender  shall,
based upon the results of such appraisal,  adjust the Eligible Inventory advance
rates in an amount not to exceed  eighty-five  percent  (85%) of the Net Orderly
Liquidation Value of Eligible Inventory of the Domestic Borrowers.

         10. Cash Flow Forecast.  Obligors have provided Lender with a cash flow
             ------------------
forecast,  including a detailed  summary of all projected cash receipts and cash
disbursements (the "Cash-Flow  Forecast") for the 13-week period ending June 12,
2009,  a copy of  which  has  been  previously  delivered  to  Lender.  Obligors
represent  and  warrant  that such  Cash-Flow  Forecast  has been  reviewed  and
approved by Getzler  Henrich &  Associates  LLC,  and  represents  a  reasonable
estimate  of the  future  cash  flow  needs  of the  Borrowers  for  the  period
presented.  Obligors  further  agree that Lender shall only be obligated to fund
the Accommodation Overadvance in accordance with the Cash-Flow Forecast.

         11.  Permitted  Liens  and   Indebtedness.   Notwithstanding   anything
              ------------------------------------
contained in the Credit  Agreement to the contrary,  Lender hereby  acknowledges
and agrees  that the liens  granted,  or to be  granted,  by Obligors to Getzler
Henrich & Associates  LLC in connection  with those certain  engagement  letters
dated  January  6, 2009 and  March 30,  2009 by and  between  Getzler  Henrich &
Associates LLC and Obligors  (collectively,  the "Engagement Letters"),  and the
indebtedness  to be incurred by the  Obligors  and payable to Getzler  Henrich &
Associates  LLC in the amounts set forth in the  Engagement  Letters,  shall not
constitute breaches of Sections 6.3 or 6.4 of the Credit Agreement.

         12. 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.

         13.  Waiver and Release of Claims and  Defenses.  The  Obligors  hereby
              ------------------------------------------
waive and release all claims and demands of any nature  whatsoever that they now
have or may have against Lender,  whether arising under the Loan Documents or by
any acts or omissions of Lender, or any of its directors,  officers,  employees,
affiliates,  attorneys or agents,  or  otherwise,  and whether known or unknown,
existing as of the date of the  execution of this  Agreement,  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.

                                       8
<PAGE>

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

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

         16.  No  Preferential  Treatment.  No  Obligor  has  entered  into this
              ---------------------------
Agreement 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.

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

         18. Partial  Invalidity;  No  Repudiation.  If any of the provisions of
             -------------------------------------
this  Agreement  shall  contravene  or be held  invalid  under  the  laws of any
jurisdiction,  this  Agreement  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 Agreement in any jurisdiction.

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

         20.  Governing Law. This Agreement shall be governed by the laws of the
              -------------
State of New York.

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

         22. Counterparts.  This Agreement 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 page follows]

                                       9
<PAGE>

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

RONSON CORPORATION

By:   s/LOUIS V. ARONSON II
      -------------------------------
      Name: Louis V. Aronson II
      Title: President and C.E.O.
RONSON CONSUMER PRODUCTS CORPORATION

By:   s/LOUIS V. ARONSON II
      -------------------------------
      Name: Louis V. Aronson II
      Title: President and C.E.O.
RONSON AVIATION, INC.

By:   s/LOUIS V. ARONSON II
      -------------------------------
      Name: Louis V. Aronson II
      Title: President and C.E.O.
RONSON CORPORATION OF CANADA LTD.

By:   s/LOUIS V. ARONSON II
      -------------------------------
      Name: Louis V. Aronson II
      Title: President and C.E.O.

                                          WELLS FARGO BANK, NATIONAL ASSOCIATION

                                          By: s/PETER GANNON - V.P.
                                              ----------------------------------
                                                   Peter Gannon, Vice President

                                       10

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