FIRST AMENDMENT TO
CREDIT AND SECURITY AGREEMENT
FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT, executed on the 29th day
of March, 2006, to be effective on the 30th day of March, 2006 (the "Effective
Date"), by and among Blonder Tongue Laboratories, Inc., a Delaware corporation
("BTL"), BDR Broadband, LLC, a Delaware limited liability company ("BDR") (BTL
and BDR are each, a "Borrower" and collectively, the "Borrowers"), Blonder
Tongue Investment Company, a Delaware corporation "BTIC"), National City
Business Credit, Inc., an Ohio corporation (the "Lender"), and National City
Bank of Pennsylvania, a national banking association, as the Issuer (the
"Issuer") (this "First Amendment").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit and Security Agreement, effective
December 29, 2005, by and among the Borrowers, the Guarantors party thereto, the
Lender and the Issuer (the "Credit Agreement"), the Lender, among other things,
extended to the Borrowers a (i) revolving credit facility in the aggregate
principal amount not to exceed Ten Million and 00/100 Dollars ($10,000,000.00)
and (ii) a term loan facility in the original principal amount of Three Million
Five Hundred Thousand and 00/100 Dollars ($3,500,000.00); and
WHEREAS, the Borrowers desire to amend certain provisions of the Credit
Agreement, and the Lender and the Issuer desire to permit such amendments
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises contained herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. All capitalized terms used herein which are defined in the Credit
Agreement shall have the same meaning herein as in the Credit Agreement unless
the context clearly indicates otherwise.
2. Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definition in the appropriate alphabetical order:
"Covenant Compliance Date" shall mean the date on which the
Lender receives a certificate of BTL signed by BTL's Chief
Financial Officer pursuant to Section 9.8 of this Agreement
demonstrating, among other things, compliance with Section 6.5 of
this Agreement as of the end of such fiscal quarter and such
certificate shall constitute the second consecutive certificate
received by the Lender demonstrating compliance with Section 6.5
(i.e., Section 6.5 shall have been complied with as of the end of
two (2) consecutive fiscal quarters).
3. Section 1.01 of the Credit Agreement is hereby amended by amending and
restating the definitions of "EBITDA" and "Contract Rate" as follows:
"EBITDA" shall mean for any fiscal period the sum of (i)
Earnings Before Interest and Taxes for such period, plus (ii)
depreciation expenses of BTL and its Subsidiaries determined on a
consolidated basis for such period, plus (iii) amortization
expenses of BTL and its Subsidiaries determined on a consolidated
basis, plus (iv) non-cash charges incurred with respect to the
granting of options to acquire the stock of BTL and its
Subsidiaries determined on a consolidated basis, each for such
period in accordance with GAAP; provided, however, that the
amount permitted to be added pursuant to subsection (iv) of this
definition shall not exceed Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) for such period.
"Contract Rate" shall mean, as applicable, the Revolving
Interest Rate or the Term Loan Rate; provided, however, that from
and including March 30, 2006 through and including the Covenant
Compliance Date, the "Contract Rate" shall mean, as applicable,
the Revolving Interest Rate plus one quarter of one percent
(0.25%) or the Term Loan Rate plus one quarter of one percent
(0.25%).
4. Section 2.1(a) of the Credit Agreement is hereby deleted in its entirety
and in its stead is inserted the following:
Subject to the terms and conditions set forth in this
Agreement including, without limitation, Section 2.1(b), the
Lender will make Revolving Advances to the Borrowers in aggregate
amounts outstanding at any time equal to the lesser of (x) the
Maximum Revolving Advance Amount less the aggregate amount of
outstanding Letters of Credit or (y) an amount equal to the sum
of:
(i) up to eighty-five percent (85%), subject to the
provisions of Section 2.1(b) hereof ("Receivables Advance Rate"),
of Eligible Receivables, plus
(ii) up to the lesser of (A) eighty-five percent (85%) of
the Gross Orderly Liquidation Value (expressed as a percentage of
cost based on the most recent inventory appraisal) of Eligible
Inventory, subject to the provisions of Section 2.1(b) hereof
(the "Inventory Advance Rate") (the Receivables Advance Rate and
the Inventory Advance Rate are collectively, the "Advance
Rates"), or (B) Three Million Five Hundred Thousand and 00/100
Dollars ($3,500,000.00) in the aggregate at any one time, plus
(iii) One Million Four Hundred Seventy One Thousand Four
Hundred and 00/100 Dollars ($1,471,400.00); provided, however,
that for each fiscal quarter ending after the Closing Date the
amount set forth in this Section 2.1(a)(y)(iii) shall reduce by
the Eligible Rights of Entry Amortization Amount, minus
(iv) the aggregate amount of outstanding Letters of Credit,
minus
(v) from and including March 30, 2006 through and including
the Covenant Compliance Date, Five Hundred Thousand and 00/100
Dollars ($500,000.00), minus
(vi) such reserves as the Lender may reasonably deem proper
and necessary from time to time.
The amount derived from the sum of Sections 2.1(a)(i), (ii)
and (iii) minus the sum of Section 2.1(a) (iv), (v) and (vi) at
any time and from time to time shall be referred to as the
"Formula Amount".
Revolving Advances shall be evidenced by one or more secured
promissory notes (collectively, the "Revolving Credit Note")
substantially in the form attached hereto as Exhibit 2.1(a).
5. Section 3.2(a)(y) of the Credit Agreement is hereby deleted in its
entirety and in its stead is inserted the following:
(y) to the Lender, a fee for each Letter of Credit, for the
period from and excluding the date of issuance of same to and
including the date of expiration or termination, equal to the
average daily face amount of each outstanding Letter of Credit
multiplied by two and one quarter of one percent (2.25%) per
annum (provided, however, that from and including March 30, 2006,
through and including the Covenant Compliance Date, such fees
shall be equal to the average daily face amount of each
outstanding Letter of Credit multiplied by two and one half of
one percent (2.5%)), such fee to be calculated on the basis of a
three hundred sixty (360) day year for the actual number of days
elapsed and to be payable monthly in arrears on the first day of
each calendar month and on the last day of the Term and
6. Effective as of December 31, 2005, Section 6.5 of the Credit Agreement
is hereby deleted in its entirety and in its stead is inserted the following:
6.5 Fixed Charge Coverage Ratio.
Maintain a Fixed Charge Coverage Ratio (for BTL and its
Subsidiaries on a consolidated basis) of not less than 1.10 to
1.00 calculated as of the last day of the fiscal month ending
June 30, 2006, for the period from the beginning of the then
current fiscal year through and including the end of such fiscal
month, and as of the last day of each fiscal month thereafter
through and including December 31, 2006, for the period from the
beginning of the then current fiscal year through and including
the end of such fiscal month. Notwithstanding any other
provisions of this Agreement to the contrary, so long as no Event
of Default has occurred and is continuing, effective January 1,
2007, the Loan Parties shall maintain a Fixed Charge Coverage
Ratio (for BTL and its Subsidiaries on a consolidated basis) of
not less than 1.10 to 1.00 calculated as of the last day of the
fiscal quarter ending March 31, 2007, for the period equal to the
four (4) consecutive fiscal quarters then ending, and as of the
last day of each fiscal quarter thereafter, for the period equal
to the four (4) consecutive fiscal quarters then ending.
7. The provisions of Sections 2 through 6 of this First Amendment shall not
become effective until the Lender has received the following, each in form and
substance acceptable to the Lender:
(a) this First Amendment, duly executed by each Loan Party, the Lender
and the Issuer;
(b) the Lender has received an amendment fee in the amount of
Twenty-Five Thousand and 00/100 Dollars ($25,000.00); and
(c) such other documents as may be reasonably requested by
the Lender.
8. Each Loan Party hereby reconfirms and reaffirms all representations and
warranties, agreements and covenants made by it pursuant to the terms and
conditions of the Credit Agreement and the Other Documents, except as such
representations and warranties, agreements and covenants may have heretofore
been amended, modified or waived in writing in accordance with the Credit
Agreement or the Other Documents, as applicable.
9. Each Loan Party acknowledges and agrees that each and every document,
instrument or agreement, if any, which at any time has secured payment of the
Obligations including, but not limited to, (i) the Credit Agreement, (ii)
Blocked Account Agreements, (iii) each Guaranty, (iv) the Pledge Agreements, (v)
the Intellectual Property Security Agreement, (vi) the Mortgage, (vii) the Lease
Assignment, and (vii) all UCC-1 financing statements executed in connection
therewith, hereby continue to secure prompt payment when due of the Obligations.
10. Each Loan Party hereby represents and warrants to the Lender that (i)
such Loan Party has the legal power and authority to execute and deliver this
First Amendment; (ii) the officers of such Loan Party executing this First
Amendment have each been duly authorized to execute and deliver this First
Amendment and all other documents executed in connection herewith and bind such
Loan Party with respect to the provisions hereof and thereof; (iii) the
execution and delivery hereof by such Loan Party and the performance and
observance by such Loan Party of the provisions hereof and all other documents
executed or to be executed herewith, do not violate or conflict with the
organizational documents of such Loan Party or any Law applicable to such Loan
Party or result in a breach of any provision of or constitute a default under
any other agreement or instrument or order, writ, judgment, injunction or decree
to which such Loan Party is a party or by which it is bound or to which it is
subject; and (iv) this First Amendment and all other documents executed or to be
executed by such Loan Party in connection herewith constitute valid and binding
obligations of such Borrower in every respect, enforceable in accordance with
their respective terms.
11. Each Loan Party represents and warrants that (i) no Event of Default
exists under the Credit Agreement or the Other Documents, nor will any occur as
a result of the execution and delivery of this First Amendment or the
performance or observance of any provision hereof, (ii) the Schedules attached
to and made a part of the Credit Agreement, as amended by this First Amendment,
if applicable, are true and correct as of the date hereof and there are no
modifications or supplements thereto and (iii) it presently has no claims or
actions of any kind at Law or in equity against the Lender arising out of or in
any way relating to the Credit Agreement or the Other Documents.
12. Each reference to the Credit Agreement that is made in the Credit
Agreement or any other document executed or to be executed in connection
therewith shall hereafter be construed as a reference to the Credit Agreement as
amended hereby.
13. The agreements contained in this First Amendment are limited to the
specific agreements contained herein. Except as amended hereby, all of the terms
and conditions of the Credit Agreement shall remain in full force and effect.
This First Amendment amends the Credit Agreement and is not a novation thereof.
14. This First Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
15. This First Amendment shall be governed by, and shall be construed and
enforced in accordance with, the Laws of the Commonwealth of Pennsylvania
without regard to the principles of the conflicts of law thereof. Each Loan
Party hereby consents to the jurisdiction and venue of the Court of Common Pleas
of Allegheny County, Pennsylvania and the United States District Court for the
Western District of Pennsylvania with respect to any suit arising out of or
mentioning this First Amendment.
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written to be effective on the Effective Date.
BORROWERS:
Blonder Tongue Laboratories, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
BDR Broadband, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Member
GUARANTOR:
Blonder Tongue Investment Company
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO and President
LENDER:
National City Business Credit, Inc., as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Director
ISSUER:
National City Bank, a national banking
association, as Issuer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President