EXHIBIT 10.28
LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT ("Loan Agreement"), is dated as of
November 19, 2003, by and between BLONDER TONGUE LABORATORIES, INC., a Delaware
corporation ("Borrower") and XXXXXX X. XXXXX, XX., an individual with a
principal residence address in New Jersey ("Lender").
W I T N E S S E T H:
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WHEREAS, Borrower desires to purchase from time to time certain
inventory from Advanced TeleMedia, LLC, consisting of television system
equipment, including, without limitation, modulators, receivers, integrated
receivers/decoders, transcoders, DirecTV receivers, Dish Network receivers,
processors, Motorola 410 receivers, Motorola 470 receivers and/or QQQT
transcoder units (collectively, the "TeleMedia Inventory");
WHEREAS, Lender has agreed to make available to Borrower a line of
credit in a principal amount not to exceed Nine Hundred Fifty Thousand Dollars
($950,000.00) (the "Maximum Amount"), the proceeds of which will be used by
Borrower to purchase the TeleMedia Inventory.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing, Borrower and Lender hereby covenant and agree as follows:
ARTICLE I - Definitions
1.1. Certain Definitions. Capitalized terms used in this Loan
Agreement have the meanings specified below, unless otherwise defined elsewhere
herein or the context clearly requires otherwise:
"Adjust Gross Profit" means as of the date of determination, an amount
equal to the cumulative Gross Profit realized by Borrower (without regard to
Cumulative Lender Profit) from the sale of TeleMedia Inventory after adjustment
for either (i) the actual Cost of Goods of and/or attributable to any unsold
TeleMedia Inventory as of such date, or (ii) the amount which Borrower and
Lender shall have mutually agreed in writing reasonably represents the Cost of
Goods of such unsold TeleMedia Inventory as of such date.
"Available Line of Credit" means as of the date of determination, an
amount equal to the Maximum Amount less Cumulative Advances, if any.
"Business Day" means any day other than a Saturday, Sunday, public
holiday under the laws of the State of New Jersey, or any other day that
National Banks located in State of New Jersey are not open for business.
"Collateral" has the meaning ascribed thereto in Section 4 hereof.
"Cost of Funds" means an amount equal to the actual cost of funds
incurred by Lender with respect to each Line of Credit Loan made hereunder
(determined as of the end of the preceding calendar month and reported to
Borrower on or before the 15th day of the then-current month) and evidenced by
such statements or other documentation as shall be acceptable to Borrower in its
reasonable and good faith discretion; provided, however, that (i) the Cost of
Funds shall be appropriately adjusted to take into account the date of
Borrower's remittances to Lender and (ii) under no circumstance shall the
aggregate Cost of Funds exceed an annual effective rate of seven percent (7%).
"Cost of Goods" means with respect to each item of TeleMedia
Inventory, an amount equal to the sum of all (i) costs of goods (such as and
including without limitation, freight, materials, labor and overhead costs)
determined in accordance with generally accepted accounting principles, and (ii)
all other costs incurred for testing, repairing, upgrading, packing and
reshipping.
"Cumulative Advances" means the aggregate amount of all Line of Credit
Loans previously made hereunder, without regard to any Line of Credit Loans that
may have been repaid by Borrower.
"Cumulative Lender Profit" means with respect to any date of
determination, the aggregate amount of all Lender Profit Allocations.
"Funding Termination Date" means the earlier to occur of (i) the date
on which the Available Line of Credit is zero, (ii) the date on which Borrower
has provided to Lender a written release of Lender's obligation to make
additional Line of Credit Loans hereunder or (iii) June 30, 2004.
"Gross Profit" means with respect to each item of TeleMedia Inventory,
an amount equal the excess of the Sale Price over the Cost of Goods.
"Lender Profit Allocation" means with respect to each item of
TeleMedia Inventory sold by Borrower, an amount equal to twenty-five percent
(25%) of the Gross Profit, if any.
"Line of Credit Loan" has the meaning ascribed thereto in Section 2.1
hereof.
"Loan Documents" means, collectively, this Loan Agreement, the Note,
and any and all other agreements, instruments and documents, executed by or on
behalf of Borrower and/or otherwise delivered to Lender with respect to this
Loan Agreement, or with respect to the transactions contemplated by this Loan
Agreement.
"Note" has the meaning ascribed thereto in Section 2.2 hereof.
"Obligations" means and includes all Line of Credit Loans, advances,
debts, liabilities, and obligations owing, arising, due or payable from Borrower
to Lender pursuant to the Loan Documents, whether or not evidenced by any note
or other instrument, absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising.
"Permitted Liens" means (i) liens, encumbrances or security interests
granted by Borrower to Lender or to Commerce Bank, N.A., (ii) liens for current
taxes or governmental claims not yet due and payable or which are being
contested in good faith, (iii) statutory liens of landlords and liens of
carriers, warehousemen, bailees, mechanics, materialmen and other like liens
imposed by law, created in the ordinary course of business and for amounts not
yet due (or which are being contested in good faith, by appropriate proceedings
or other appropriate actions which are sufficient to prevent imminent
foreclosure of such liens) and with respect to which adequate reserves or other
appropriate provisions are being maintained by Borrower and (iv) liens,
encumbrances or security interests existing as of the date hereof.
"Sale Price" means with respect to each item of TeleMedia Inventory,
an amount equal to Borrower's gross sales revenue actually collected and derived
from the sale of such item of TeleMedia Inventory, less the sum of the following
expenses, charges, and credits attributable to such sale: (i) shipping,
insurance and freight costs, (ii) sale returns and allowances, (iii) trade
discounts, (iv) restocking charges, (v) FFP credits as and to the extent earned
by a customer and (vi) import, export, excise and sales taxes, value added
taxes, customs duties and any other taxes or tariffs imposed upon such item of
TeleMedia Inventory or its sale.
"Transaction Proceeds" means the cumulative Sale Price of TeleMedia
Inventory.
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ARTICLE II - Payments to Lender
2.1. Amount of Loans.
(a) Subject to the terms and conditions hereinafter set forth,
and in reliance on the representations and warranties set forth in this Loan
Agreement and the other Loan Documents, Lender agrees to make loans (each a
"Line of Credit Loan") to Borrower at any time prior to the Funding Termination
Date, not to exceed the Available Line of Credit. Upon written request of
Borrower, provided that no Event of Default has occurred and is continuing, and
all representations of Borrower made to Lender herein or in any of the other
Loan Documents are true and correct as of the date upon which a request for a
Line of Credit Loan is made, and subject to the terms and conditions of this
Agreement, Lender shall make the proceeds of any Line of Credit Loan available
to Borrower within one (1) Business Day, via wire transfer to an account
specified by Borrower in writing.
(b) Borrower acknowledges and agrees that as of the date hereof,
Lender has previously advanced to Borrower the following sums for the express
purposes of purchasing TeleMedia Inventory ($485,000.00), and that such sums
shall be deemed to be Line of Credit Loans, constituting Obligations hereunder:
(i) $183,000.00 together with accrued interest thereon since
October 23, 2003;
(ii) $92,000.00 together with accrued interest thereon since
October 31, 2003; and
(iii) $210,000.00 together with accrued interest thereon since
November 5, 2003.
2.2. The Note. The Line of Credit Loans shall be evidenced by the
Non-Recourse Line of Credit Note of Borrower in the maximum principal amount of
$950,000.00, payable to the order of Lender in the form attached as Exhibit A
hereto and by this reference made a part hereof, dated of even date herewith
(together with any amendments, restatements, supplements or other modifications
thereto, the "Note").
2.3. Interest. Interest shall accrue on the unpaid principal balance
of the Note from time to time outstanding in an amount equal to the Cost of
Funds. Interest shall not accrue on accrued unpaid interest, the payment of
which is delayed for want of sufficient Transaction Proceeds.
2.4. Manner of Payment.
(a) Contingent upon and solely to the extent of unpaid
Transaction Proceeds (calculated as of the end of the preceding calendar month
and reported to Lender on or before the 15th day of the then-current month), if
any, Borrower shall pay to Lender on the last day of each month during the term
of this Loan Agreement (i) interest and principal on the Note, until such Note
is paid in full and (ii) commencing after the Funding Termination Date, unpaid
Cumulative Lender Profit, if any; provided, however, that any payments made by
Borrower in respect of the Obligations hereunder shall be, to the extent
available, allocated as follows: first, to pay all accrued and unpaid interest
under the Note; second, to reduce the outstanding principal balance under the
Note; and third, to pay to Lender unpaid Cumulative Lender Profit.
(b) Payment of principal (including any prepayment), interest,
and any other amount required to be paid to Lender pursuant to the Loan
Documents (which payment may be made by Borrower's check drawn on its bank)
shall be made to Lender at the address specified for Lender in Section 8.2 below
(or such other place designated by Lender by notice to Borrower).
(c) If any payment hereunder or under the other Loan Documents
becomes due and payable on any day which is not a Business Day, then such due
date shall be extended to the next succeeding Business Day; provided that
interest shall continue to accrue during the period of any such extension.
(d) In the event that on or before November 23, 2003 (i) Borrower
has fully paid the Note and (ii) at the time of such payment the Funding
Termination Date has occurred, then notwithstanding anything herein to the
contrary, Lender shall not be entitled to receive any Cumulative Lender Profit.
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2.5. Purpose of Loan. Borrower will use the proceeds of all Line of
Credit Loans as described in the preambles to this Agreement.
2.6. Prepayments. Borrower may prepay any and all outstanding Line of
Credit Loans in whole or in part from time to time on any Business Day, without
premium or penalty.
2.7. Fees and Expenses. In addition to any other fees or expenses of
Lender payable by Borrower pursuant to the Loan Documents, any and all fees and
expenses charged by Lender's attorneys in connection with the negotiation and/or
preparation of the Loan Documents shall be invoiced to Lender but shall be borne
by Borrower up to a maximum of Five Thousand Dollars ($5,000.00). Borrower will
promptly pay the invoices rendered by Lender's counsel.
2.8. Recourse Limited to Collateral. Notwithstanding anything
contained in this Loan Agreement or the other Loan Documents to the contrary,
the Obligations owing by Borrower to Lender under this Loan Agreement and the
other Loan Documents are absolutely non-recourse, subject only to the rights
which Lender has pursuant hereto in the Collateral and Borrower shall not
otherwise have any liability (outside of Borrower's ownership interest in the
Collateral) for any deficiency which may exist in the event that the proceeds of
the Collateral do not xxxxxx sufficient funds to satisfy the Obligations owing
by Borrower to Lender under this Loan Agreement or the other Loan Documents.
Lender agrees to look solely to the Collateral for payment and satisfaction of
the Obligations hereunder.
2.9. Gross Profit True-Up/Termination.
(a) On June 30, 2004, or such earlier date as Borrower and Lender
shall mutually agree (the "True-Up Date"), Borrower shall provide Lender with a
written statement evidencing the Adjusted Gross Profit, for the period
commencing as of the date hereof through and including the True-Up Date (the
"True-Up Statement"). If the True-Up Statement demonstrates that:
(i) Twenty-five percent (25%) of Adjusted Gross Profit exceeds
Cumulative Lender Profit, then Cumulative Lender Profit shall be
increased by such excess, and to the extent of Transaction
Proceeds, if any, all unpaid Cumulative Lender Profit shall be
due and payable to Lender as of the True-Up Date; or
(ii) Cumulative Lender Profit exceeds twenty-five percent (25%)
of Adjusted Gross Profit, then to the extent of such excess (the
"Overpayment"), Cumulative Lender Profit shall be reduced;
provided however that to the extent that unpaid Cumulative Lender
Profit, which shall be credited against the Overpayment, is
insufficient to satisfy the Overpayment, Lender shall (A) reduce
the amount of Borrower's outstanding Obligations hereunder, if
any, by the Overpayment (or applicable portion thereof), and any
Overpayment remaining shall be paid by Lender to Borrower within
three (3) Business Days, or (B) if no Obligations are then
outstanding, Lender shall pay Borrower the Overpayment within
three (3) Business Days.
(b) If and to the extent that any Obligations remain outstanding
after giving effect to the provisions of Section 2.9(a) hereof, then Borrower at
its option may satisfy such outstanding Obligations by surrendering to Lender
all or a portion of the TeleMedia Inventory (the value of which shall be deemed
to be Borrower's Cost of Goods, or such other value as Borrower and Lender shall
mutually agree); provided, that, in the event that the value of such TeleMedia
Inventory is insufficient to satisfy such Obligations, then upon surrender of
all such TeleMedia Inventory to Lender, all of Borrower's Obligations hereunder
shall be deemed to be fully paid, satisfied and forever released.
(c) Upon the payment in full of Borrower's Obligations hereunder,
this Loan Agreement and the other Loan Documents shall be automatically
terminated and released and Borrower is hereby authorized to file in the name of
Lender such Uniform Commercial Code termination statements as Borrower shall
deem necessary or appropriate in connection therewith.
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(d) As of May 31, 2004 and notwithstanding anything herein to the
contrary, any and all of Lender's liens and security interests in the Collateral
shall be automatically terminated and released and Borrower is hereby authorized
to file in the name of Lender such Uniform Commercial Code termination
statements as Borrower shall deem necessary or appropriate in connection
therewith; provided, that, to the extent that principal or interest remains
unpaid under the Note as of such date, Borrower shall surrender to Lender all
TeleMedia Inventory, or such lesser amount of TeleMedia Inventory having a value
(which shall be deemed to be Borrower's Cost of Goods, or such other value as
Borrower and Lender shall mutually agree) sufficient to satisfy any such unpaid
interest or principal.
ARTICLE III - Representations and Warranties of Borrower
Borrower represents and warrants to Lender (which representations and
warranties shall survive the delivery of the documents mentioned herein and the
making of a Line of Credit Loan until such time as all Line of Credit Loans are
repaid in full) that:
3.1. Incorporation. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the corporate power to own its properties and to carry on its business as now
being conducted, and is duly qualified as a foreign corporation to do business
in every jurisdiction in which the failure to so qualify would have a material
adverse effect on it or its business.
3.2. Power and Authority. Borrower is duly authorized under its
Certificate of Incorporation and bylaws, and all applicable laws to execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and all corporate action on its part required for the lawful execution,
delivery and performance hereof and thereof has been duly taken; and each of the
Loan Documents to which Borrower is a party, upon the due execution and delivery
thereof and assuming due execution, delivery and performance of Lender
thereunder where required, will be the valid and binding obligation of Borrower,
enforceable in accordance with its terms, subject to (a) general principles of
equity and (b) applicable bankruptcy, insolvency, reorganization and other
similar laws affecting the rights of creditors generally.
3.3. No Conflict. Neither the execution or delivery of the Loan
Documents to which Borrower is a party, nor the fulfillment of or compliance
with their respective provisions and terms, nor the consummation of the
transactions contemplated thereby, will, in any manner that would adversely
affect Lender's rights under the Loan Documents to which Borrower is a party or
have any material adverse effect on Borrower, its businesses and properties, or
Borrower's ability to repay or otherwise perform its Obligations (a) conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a violation of or default under or require any waiver, consent,
notice or filing (other than those heretofore given, made or received) under any
applicable law, regulation, judgment, writ, order or decree to which Borrower or
any of its properties, is subject, or under its Certificate of Incorporation or
bylaws, or (b) create any lien, charge or encumbrance (other than in favor of
Lender) upon any of the property or assets of Borrower pursuant to the terms of
any agreement or instrument to which Borrower is a party or is bound.
ARTICLE IV - Security
4.1. Grant of Security Agreement . As security for the full and timely
payment and performance by Borrower of the Obligations, Borrower hereby grants
to Lender a lien and security interest in all of Borrower's right, title and
interest, in and to, the TeleMedia Inventory, whether now owned or hereafter
acquired, together with any and all accessions and attachments thereto, as well
as the products and proceeds (including, without limitation, identifiable cash
proceeds) arising therefrom and any and all insurance proceeds relating thereto
(all of the foregoing, the "Collateral"). The security interest granted
hereunder is intended to be a purchase money security interest to the full
extent permitted under applicable law.
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ARTICLE V - Affirmative Covenants
Until all the Obligations have been performed and paid in full, and
for so long as any Obligations under this Loan Agreement or the other Loan
Documents shall be outstanding, unless Lender shall otherwise consent in
writing, Borrower will:
5.1. Business and Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and continue to engage in the business, and in the lines of business,
substantially as heretofore conducted and in which they have been heretofore
engaged.
5.2. Insurance. Keep its business and TeleMedia Inventory insured at
all times by responsible insurance companies and carry such types and amounts of
insurance (including without limitation fire and extended coverage on all its
properties, liability insurance and workers' compensation insurance) as are
customarily carried by companies operating similar businesses, and provide
evidence of such insurance reasonably satisfactory to Lender promptly upon
Lender's request.
5.3. Refurbish and Sell TeleMedia Inventory/ Segregation. Unless
Borrower in its reasonable business judgment deems that it is not economically
feasible to do so, use commercially reasonable efforts to refurbish or otherwise
repair the TeleMedia Inventory and, from time to time, cause such TeleMedia
Inventory to be sold to Borrower's customers on such terms and conditions a
Borrower shall deem appropriate. Borrower shall keep and maintain the TeleMedia
Inventory separate and apart from its other items of inventory collateral.
5.4. Books of Record and Accounts. Keep proper books of record and
accounts in which full, true and correct entries shall be made of its
transactions as necessary to prepare financial statements in accordance with
generally accepted accounting principles.
5.5. Observe all Laws. Conform to and duly observe in all material
respects all applicable laws, regulations and other valid requirements of any
regulatory authority with respect to the conduct of its business.
5.6. Further Assurances. Borrower agrees to take such other and
further actions and execute and deliver such other and further documents and
instruments and provide such other and further certificates and assurances as
Lender may reasonably request in order to facilitate the administration of the
Line of Credit and to effect or evidence Borrower's compliance with its
obligations hereunder and under the other Loan Documents.
ARTICLE VI - Covenant Against Other Liens
6.1 Other Liens. Until all the Obligations of Borrower under the Loan
Documents shall have been performed and paid in full, and for so long as any
Obligations under this Loan Agreement or the other Loan Documents shall be
outstanding, unless Lender shall otherwise consent in writing, Borrower shall
not, directly or indirectly grant or permit to exist any lien, encumbrance or
security interest in or on any of the Collateral (other than Permitted Liens).
ARTICLE VII - Default
7.1. Events of Default. Each of the following shall constitute an
Event of Default under this Loan Agreement:
(a) Borrower shall fail or neglect to pay any amount when due and
payable, or keep or observe any of the material covenants, promises, agreements,
requirements, conditions or other terms or provisions contained in this Loan
Agreement or any of the other Loan Documents, and such breach is not remediable
or, if remediable, continues unremediated for a period of twenty (20) Business
Days after the date on which Lender shall have notified Borrower of such breach;
or
(b) If any representation, warranty, material certification or
material statement made by Borrower herein or in any of the other Loan
Documents, or in any report or other writing furnished to Lender by or
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on behalf of Borrower in connection with the Line of Credit Loans or pursuant to
any of the Loan Documents shall have been false, misleading or incomplete in any
material respect on the date as of which made; or
(c) Liquidation or dissolution of Borrower or suspension of the
business of Borrower or filing by Borrower of a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any bankruptcy or
insolvency act or law, foreign, state or federal, now or hereafter existing, or
any other action of Borrower indicating its consent to, approval of, or
acquiescence in any such petition or proceeding; the application by Borrower
for, or the appointment by or with the consent or acquiescence of Borrower of, a
receiver, a trustee or a custodian for it, the application by Borrower for, or
the consent to or acquiescence of Borrower in, an assignment for the benefit of
creditors; or the inability of Borrower, or the admission by Borrower of its
inability to pay its debts as they mature; or
(d) Filing of an involuntary petition against Borrower in
bankruptcy or seeking reorganization, arrangement, readjustment of its debts or
for any other relief under any bankruptcy or insolvency act or law, foreign,
state or Federal, now or hereafter existing; or the involuntary appointment of a
receiver, a trustee or a custodian of either of Borrower or for all or a
substantial part of its property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of the property of
Borrower and the continuance of any of such event or events for thirty (30) days
undismissed or undischarged.
7.2. Remedies. Upon the occurrence of any Event of Default and at any
time thereafter, Lender may, at its option, declare the Note and all other
Obligations to be immediately due and payable in full, whereupon the Note and
all other Obligations shall forthwith become due and payable in full, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived. Inasmuch as Borrower's Obligations under this Agreement
are non-recourse in nature, as described in Section 2.8 herein, Lender
acknowledges that Lender's sole remedy and the enforcement of Lender's rights
hereunder shall be limited to claims against and recovery of the Collateral.
ARTICLE VIII - Miscellaneous
8.1. Successors and Assigns. This Loan Agreement and the other Loan
Documents to which Borrower is or becomes a party shall be binding upon
Borrower, its successors and assigns, and all rights against Borrower arising
under this Loan Agreement and the other Loan Documents shall be for the benefit
of Lender, its heirs, personal representatives and assigns, all of whom shall be
entitled to enforce performance and observance of this Loan Agreement and the
other Loan Documents to the same extent as if they were parties hereto. Lender
shall be entitled to bring any suit, action or proceeding against Borrower for
the enforcement of any provision of this Loan Agreement or the other Loan
Documents in Lender's name, without exhausting any other remedies which Lender
may have pursuant to the terms of the other Loan Documents.
8.2. Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when hand
delivered or mailed by certified or registered first class mail, postage
prepaid, using a nationally recognized overnight courier service, charges
prepaid, or sent by confirmed facsimile transmission, addressed as follows or to
such other address as the parties hereto shall have been notified pursuant to
this Section 8.2:
Borrower: Blonder Tongue Laboratories, Inc.
Xxx Xxxx Xxxxx Xxxx
Xxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
With a
copy to: Stradley, Ronon, Xxxxxxx & Young, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esquire
Facsimile: (000) 000-0000
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Lender: Xxxxxx X. Xxxxx
00 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a
copy to: Xxxxxx & Xxxxxxxx, P.C.
00 Xxxx Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxxx, Esquire
Facsimile: (000) 000-0000
except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed,
in which event said notice, request or demand shall be effective only upon
receipt by the addressee.
8.3. Amendment. This Loan Agreement may be amended, modified or
discharged only upon an agreement in writing of Borrower and Lender.
8.4. Counterparts. This Loan Agreement may be executed simultaneously
in several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.5. Severability. The invalidity or unenforceability of any one or
more phrases, sentences, clauses or Sections contained in this Loan Agreement
shall not affect the validity or enforceability of the remaining portions of
this Loan Agreement, or any part thereof.
8.6. Governing Law. This Loan Agreement shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
internal laws of the State of New Jersey (without regard to its conflicts of
laws principles).
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Borrower and Lender have caused this Loan
Agreement to be executed in their respective names as of the date first above
written.
BORROWER:
BLONDER TONGUE LABORATORIES, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------------
Xxxxx X. Xxxxxx, Chief Executive Officer
LENDER:
/s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------------------
XXXXXX X. XXXXX, XX.
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EXHIBIT A
Form of Non-Recourse Note
NON-RECOURSE LINE OF CREDIT NOTE
$950,000.00 November __, 2003
FOR VALUE RECEIVED, BLONDER TONGUE LABORATORIES, INC., a Delaware
corporation ("Borrower"), promises to pay to the order of XXXXXX X. XXXXX, Xx.
an individual with a principal residence address in the State of New Jersey
("Lender"), at such place as Lender may designate from time to time in writing,
the principal sum of NINE HUNDRED FIFTY THOUSAND DOLLARS ($950,000.00), lawful
money of the United States of America, or, if less, the outstanding principal
balance on all Line of Credit Loans made by Lender pursuant to that certain Loan
and Security Agreement of even date herewith by and between Lender and Borrower
(as the same may be amended, restated, supplemented or otherwise modified, the
"Loan Agreement"), together with interest thereon from the date of each Line of
Credit Loan at the rate hereinafter provided and payable as hereinafter
provided. Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Loan Agreement.
Borrower further agrees to pay principal and interest to Lender from
time to time as specified in Section 2 of the Loan Agreement.
If any payment on this Note becomes due and payable on any day which
is not a Business Day, then such due date shall be extended to the next
succeeding Business Day; provided that interest shall continue to accrue during
the period of any such extension.
This Note is the Note referred to in the Loan Agreement, is secured by
the Loan Agreement and evidences the Line of Credit Loans thereunder, and is
subject to, and entitled to, all provisions and benefits thereof.
Notwithstanding anything contained in this Note to the contrary, the
Obligations owing by Borrower to Lender hereunder and under the other Loan
Documents are absolutely non-recourse, subject only to the rights which Lender
has pursuant to the Loan Agreement in the Collateral and Borrower shall not
otherwise have any liability (outside of Borrower's ownership interest in the
Collateral) for any deficiency which may exist in the event that the proceeds of
the Collateral do not xxxxxx sufficient funds to satisfy the Obligations owing
by Borrower to Lender under this Note or the other Loan Documents. Lender agrees
to look solely to the Collateral for payment of the obligations hereunder.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
has executed and delivered this Note as of the date first above written.
BLONDER TONGUE LABORATORIES, INC.
By:
----------------------------------------
Xxxxx X. Xxxxxx, Chief Executive Officer
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