THIRD AMENDMENT
TO LOAN AND SECURITY AGREEMENT
This Third Amendment to Loan and Security Agreement ("Amendment") is dated
as of March 30, 2005, 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be supplemented, restated, superseded, amended or replaced from time to time,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(d) of
the Loan Agreement for the fiscal quarter ending December 31, 2004 ("Existing
Default").
D. Borrower has requested that Lender waive the Existing Default and extend
the term of Loan Agreement and Lender has agreed to such extension 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. Waiver of Existing Default. Borrower acknowledges and agrees that as of
this date, the Existing Default has occurred and remains outstanding under the
Loan Documents. Upon satisfaction of the Effectiveness Conditions, Lender waives
the Existing Default. Such waiver shall in no way constitute a waiver of any
other Event of Default which may have occurred but which is not specifically
referenced as an "Existing Default," nor shall it obligate Lender to provide any
further waiver of any other Event of Default (whether similar or dissimilar,
including any further Events of Default resulting from a failure to comply with
Section 6.8(d) of the Loan Agreement).
2. Amendments to Loan Agreement.
a. Section I of the Loan Agreement shall be amended by deleting the
definitions of "Revolving Credit Maturity Date" and "Revolving Credit Rate"
in their entirety, and replacing them as follows:
(i) Revolving Credit Maturity Date - April 1, 2006.
(ii) Revolving Credit Rate - a per annum rate equal to the Prime
Rate plus two hundred (200) basis points, but in no event shall the
Revolving Credit Rate ever be less than 5.5%.
b. Section 6.8(a) of the Loan Agreement 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, 2006, 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
of each fiscal quarter.
c. Section 6.8 (c) of the Loan Agreement shall be deleted in its
entirety and replaced as follows:
c. Consolidated Operating Income: Borrower shall have and
maintain as of each fiscal quarter end beginning with the fiscal
quarter ending March 31, 2006, a Consolidated Operating Income of Zero
Dollars ($0) or greater, measured quarterly on a rolling four quarter
basis as of the last day of each fiscal quarter.
d. Section 6.8(d) of the Loan Agreement shall be deleted in its
entirety and replaced 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, 2005 net loss of $225,000;
Quarter ending June 30, 2005 $400,000;
Quarter ending September 30, 2005 $200,000; and
Quarter ending December 31, 2005 net loss of $375,000.
e. Borrower and Lender agree that Borrower was not required to comply
with the terms of Section 6.8(c) of the Loan Agreement for the fiscal
quarters ending March 31, 2004, June 30, 2004, September 30, 2004 and
December 31, 2004.
3. 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,
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or encumbrance of any nature (other than liens in favor of Lender) on any
of the properties of Borrower.
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. After giving effect to Section 1 of this Amendment, no
Default or Event of Default exists.
4. 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 Pledged
Collateral, as defined in the Pledge Agreement).
5. 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.
6. Confirmation of Indebtedness. Borrower confirms and acknowledges that as
of the close of business on March 22, 2005, it is indebted to Lender for the
Revolving Credit (including Letters of Credit) in the principal amount of
$4,545,913.35, Term Loan A in the principal amount of $1,857,500.00, and Term
Loan B in the principal amount of $2,819,444.60, 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.
7. 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.
8. 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 extension fee of
$5,000. Borrower directs Lender to charge Borrower's operating account for
the extension fee.
c. Payment to Lender of a non-refundable fully earned waiver fee of
$10,000. Borrower directs Lender to charge Borrower's operating account for
the waiver fee.
d. Payment of all outstanding Expenses.
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9. 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.
10. 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.
11. Severability. The invalidity or unenforceability of any provision of
this Amendment shall not affect the validity or enforceability of the remaining
provisions.
12. Modification. This Amendment may not be modified, amended, or
terminated except by an agreement in writing executed by the parties hereto.
13. 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:
Name:
Title:
GUARANTOR:
BLONDER TONGUE INVESTMENT COMPANY
By:
Name:
Title:
LENDER:
COMMERCE BANK, N.A.
By:
▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
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