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. [INTENTIONALLY LEFT BLANK] 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/ James A. Luksch Name: James A. Luksch Title: CEO BDR Broadband, LLC By: /s/ Robert J. Pallé Name:Robert J. Pallé Title: Managing Member GUARANTOR: Blonder Tongue Investment Company By: /s/James A. Luksch Name: James A. Luksch Title: CEO and President LENDER: National City Business Credit, Inc., as Lender By: /s/ Michael Fine Name: Michael Fine Title: Director ISSUER: National City Bank, a national banking association, as Issuer By: /s/ Joseph Kwasny Name: Joseph Kwasny Title: Senior Vice President
Blonder Tongue Laboratories (BDRL) 10-Q2006 Q1 Quarterly report
Filed: 12 May 06, 12:00am