EXHIBIT 10.1
SECOND AMENDMENT AND WAIVER
TO LOAN AND SECURITY AGREEMENT
This Second Amendment and Waiver to Loan and Security Agreement
("Amendment") is dated as of March 29, 2004, by and between BLONDER TONGUE
LABORATORIES, INC. ("Borrower") a Delaware corporation, and COMMERCE BANK, N.A.,
a national banking association ("Lender").
BACKGROUND
A. Pursuant to the terms of a certain Loan and Security Agreement dated
March 20, 2002, by and between Borrower and Lender (as the same has been or may
be supplemented, restated, superseded, amended or replaced from time to time,
the "Loan Agreement"), Lender made available to Borrower certain credit
facilities. All capitalized terms used herein without further definition shall
have the respective meanings set forth in the Loan Agreement.
B. The Loans are secured by, inter alia, continuing perfected security
interests in and first liens upon all existing or thereafter arising assets of
Borrower.
C. As of the date hereof, an Event of Default exists under the terms of the
Loan Agreement by virtue of Borrower's failure to comply with Section 6.8(a) of
the Loan Agreement, for the period ending December, 31 2003. Such Event of
Default, for the period referenced, is referred to herein as the "Existing
Default."
D. Borrower has requested that Lender waive the Existing Default and
modify, in certain respects, the terms of the Loan Agreement, and Lender has
agreed to such waiver and modifications in accordance with, and subject to, the
satisfaction of the conditions hereof.
NOW, THEREFORE, with the foregoing Background incorporated by reference and
intending to be legally bound hereby, the parties agree as follows:
1. Amendments to Loan Agreement .
a. Section I of the Loan Agreement shall be amended by adding the
following definition:
Consolidated Pre-Tax Income - For any period, consolidated net income
before taxes (including extraordinary gains and losses) of Borrower as such
would appear on Borrower's consolidated statement of income, prepared in
accordance with GAAP.
b. Section I of the Loan Agreement shall be amended by deleting the
definitions of "Maximum Revolving Credit Amount" and "Revolving Credit Maturity
Date" in their entirety, and replacing them as follows:
(i) Maximum Revolving Credit Amount - The sum of Six Million
Dollars ($6,000,000).
(ii) Revolving Credit Maturity Date - April 1, 2005, or such
later date as Lender may, in its sole and absolute discretion, designate in
writing to Borrower.
c. Section 2.9 shall be amended by adding a Section 2.9(d) as follows:
2.9(d) Upon receipt by Borrower of any payments on account of the
TVMAX Notes ("TVMAX Proceeds"), Borrower shall make prepayment(s)
against the outstanding principal amount of Term Loan A (applied in
their inverse order of maturity) equal to 100% of such TVMAX Proceeds,
up to an aggregate amount of Five Hundred Thousand Dollars ($500,000).
Notwithstanding anything to the contrary in this Agreement, there
shall not be a prepayment premium payable in connection with a
prepayment(s) under this Section 2.9(d).
d. Section 6.8(a) shall be deleted in its entirety and replaced as
follows::
6.8(a) Cash Flow Coverage Ratio: Borrower shall have and maintain, as
of each fiscal quarter end beginning with the fiscal quarter ending March 31,
2005, a Cash Flow Coverage Ratio of not less than 1.15 to 1.0, measured
quarterly on a rolling four quarter basis as of the last day of each fiscal
quarter.
e. Section 6.8 shall be amended by adding a Section 6.8(d) as follows:
6.8(d) Minimum Consolidated Pre-Tax Income - Borrower shall have and
maintain a Consolidated Pre-Tax Income of not less (or, with respect to any net
loss, not more) than the following amounts (non-cumulative) for the following
periods:
Period Amount
------ ------
Quarter ending March 31, 2004 net loss of $575,000;
Quarter ending June 30, 2004 $650,000;
Quarter ending September 30, 2004 $75,000; and
Quarter ending December 31, 2004 net loss of $450,000.
2. Representations and Warranties. Borrower warrants and represents to
Lender as of the date hereof that:
a. Prior Representations. By execution of this Amendment, Borrower
reconfirms all warranties and representations made to Lender under the Loan
Agreement and the other Loan Documents respectively and restates such warranties
and representations as of the date hereof, all of which shall be deemed
continuing until all of the Obligations due to Lender are indefeasibly paid and
satisfied in full.
b. Authorization. The execution and delivery by Borrower of this
Amendment and the performance by Borrower of the transactions herein
contemplated (i) are and will be within its powers and (ii) are not and will not
be in contravention of any order of court or other agency of government, of law
or of any material indenture, agreement or undertaking to which Borrower is a
party or by which the property of Borrower is bound, or be in conflict with,
result in a breach of, or constitute (with due notice and/or lapse of time) a
default under, any such material indenture, agreement, or undertaking, or result
in the imposition of any lien, charge, or encumbrance of any nature (other than
liens in favor of Lender) on any of the properties of Borrower.
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c. Valid, Binding and Enforceable. This Amendment and any assignment
or other instrument, document or agreement executed and delivered in connection
herewith, will be valid, binding and enforceable in accordance with their
respective terms.
d. No Default. Other than the Existing Default that is being waived by
Lender hereunder, no Default or Event of Default exists.
3. Collateral. As security for the payment of the Obligations, and
satisfaction by Borrower of all covenants and undertakings contained in the Loan
Agreement, Borrower hereby confirms its prior grant to Lender of a continuing
lien on and security interest in, upon and to all of Borrower's now owned or
hereafter acquired, created or arising Collateral (including the TVMax Notes and
all Supporting Obligations related thereto, and the Pledged Collateral, as
defined in the Pledge Agreement).
4. Ratification of Loan Documents. This Amendment is hereby incorporated
into and made a part of the Loan Agreement and all other Loan Documents
respectively, the terms and provisions of which, except to the extent modified
by this Amendment are each ratified and confirmed and continue unchanged in full
force and effect. Borrower acknowledges and agrees that it has no deductions,
defenses, setoffs, claims or counterclaims of any nature, with respect to its
obligations to Lender. Any reference to the Loan Agreement and all other Loan
Documents respectively in this or any other instrument, document or agreement
related thereto or executed in connection therewith shall mean the Loan
Agreement and all other Loan Documents respectively as amended by this
Amendment.
5. Confirmation of Indebtedness. Borrower confirms and acknowledges that as
of the close of business on March 26, 2004, it is indebted to Lender for the
Revolving Credit (including Letters of Credit) in the principal amount of
$3,835,913.35, Term Loan A in the principal amount of $4,667,500, and Term Loan
B in the principal amount of $3,052,777.88, without any deduction, defense,
setoff, claim or counterclaim, of any nature, plus all fees, costs, and expenses
(including reasonable attorneys' fees) incurred to date in connection with the
Loan Documents.
6. Confirmation of Guarantor. Guarantor hereby consents to and acknowledges
the terms and conditions of this Amendment and agrees that its Surety Agreement
dated March 20, 2002 shall continue in full force and effect and shall continue
to cover all obligations of Borrower outstanding from time to time under the
Loan Agreement as amended hereby.
7. Effectiveness Conditions. This Amendment shall become effective upon
satisfaction of the following conditions ("Effectiveness Conditions"):
a. Execution and delivery by Borrower of this Amendment to Lender.
b. Payment to Lender of a non-refundable fully earned waiver fee of
$10,000 of which $4,000 shall be shared with the participating lender. Borrower
directs Lender to charge Borrower's operating account for the waiver fee and
Lender agrees that it shall cause such charge to be made on or before 5 p.m.
Philadelphia time on March 30, 2004.
c. Payment to Lender of a non-refundable fully earned extension fee of
$60,000. Borrower directs Lender to charge Borrower's operating account for the
extension fee and Lender agrees that it shall cause such charge to be made on or
before 5 p.m. Philadelphia time on
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March 30, 2004.
d. Payment of all outstanding Expenses.
8. Further Assurances and Affirmative Covenant.
a. Borrower shall pay any and all costs or expenses incurred by Lender
in connection with the appraisal of Borrower's Real Property currently being
prepared by Xxxxxx Xxxxxxxx.
b. Borrower shall, at its sole cost and expense, continue the
engagement of Executive Sounding Board Associates ("ESBA") pursuant to the terms
of the engagement letter between Borrower and ESBA dated February 2, 2004.
c. Borrower covenants and agrees that there shall not be any material
differences between the financial statements for period ending December 31, 2003
prepared in connection with Borrower's draft 10-k (and submitted to Lender on
March 26, 2004) and Borrower's final audited financial statements for the same
period.
d. Borrower shall collect all amounts due under the TVMAX Notes on or
before May 31, 2004.
9. Waiver - Upon satisfaction of the Effectiveness Conditions set forth
above, Lender shall be deemed to have waived the Existing Default, provided that
Lender's waiver shall not be deemed to be a waiver of any subsequent Default or
Events of Default or a waiver of any other Defaults or Events of Default, which
may have occurred, but are not specifically referred to, herein. Nothing
contained herein shall obligate Lender to grant any future waiver of any
Defaults or Events of Default.
10. Release and Waiver of Claims. For and in consideration of the mutual
covenants and obligations set forth in this Amendment, and other good and
valuable consideration the receipt of which is hereby acknowledged, Borrower
hereby releases and forever discharges, remises, and holds harmless, Lender and
each of its affiliates, subsidiaries (direct or indirect), officers, directors,
employees, agents or attorneys, successors and assigns, of and from and against
all manner of actions, causes of action, suits, damages, losses, costs,
expenses, claims and demands whatsoever, in law or in equity (collectively,
"Claims"), which Borrower ever had, or now has, by reason of any matter, claim
or cause of action of any kind whatsoever to the date of this Amendment, whether
known or unknown (other than Claims arising from Lender's gross negligence or
willful misconduct, as finally determined by a court of competent jurisdiction),
including without limitation, those relating in any way to: (i) the Loan
Documents, (ii) any acts, transactions, or events that are the subject matter of
the Loan Documents, (iii) the communications and business dealings among Lender
and Borrower (or any officer, director, or shareholder of Borrower) from the
beginning of communications and business dealings between Lender on the one
hand, and Borrower on the other, related in any way to the Loan Documents, the
negotiation and execution of this Amendment, or the transactions contemplated
hereby or thereby.
11. Governing Law. This Amendment and all instruments, documents and
agreements, and all matters relating or arising therefrom, and the rights and
obligations of the parties hereto and thereto, shall be governed by and
interpreted in accordance with the laws of the State of New Jersey.
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12. Severability. The invalidity or unenforceability of any provision of
this Amendment shall not affect the validity or enforceability of the remaining
provisions.
13. Modification. This Amendment may not be modified, amended, or
terminated except by an agreement in writing executed by the parties hereto.
14. Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
execution page of which when so executed and delivered shall be an original, but
all of which shall together constitute on and the same instrument.
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IN WITNESS WHEREOF, the undersigned parties have executed this Amendment
the day and year first above written.
BORROWER:
BLONDER TONGUE LABORATORIES, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Chairman & CEO
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GUARANTOR:
BLONDER TONGUE INVESTMENT COMPANY
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: President
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LENDER:
COMMERCE BANK, N.A.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Vice President
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