EXHIBIT 10.2
SECOND AMENDMENT TO
CREDIT AND SECURITY AGREEMENT
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT, executed on the 14th day
of December 2006, to be effective on the 15th day of December, 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, a national banking association, as the Issuer (the "Issuer") (this "Second
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, as amended by that certain (i) First Amendment to Credit
and Security Agreement, effective March 30, 2006, by and among the Borrowers,
the Guarantors party thereto, the Lender and the Issuer, (ii) Letter Agreement,
dated September 11, 2006, by and among the Borrowers, the Guarantors party
thereto, the Lender and the Issuer, (iii) Letter Agreement, dated November 8,
2006, by and among the Borrowers, the Guarantors party thereto, the Lender and
the Issuer, (iv) Letter Agreement, dated December 1, 2006, by and among the
Borrowers, the Guarantors party thereto, the Lender and the Issuer, and (v)
Letter Agreement, dated December 15, 2006, by and among the Borrowers, the
Guarantors party thereto, the Lender and the Issuer (the "Fourth Letter
Agreement") (as amended, 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);
WHEREAS, pursuant to the Fourth Letter Agreement, the Lender, among other
things, consented to the sale by the BTL of all of the outstanding membership
interest in BDR to a third party, which necessitates the removal of BDR as a
"Borrower" under the Credit Agreement; 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 deleting the
following definitions in their entirety:
"BDR"
"Covenant Compliance Date"
"Eligible Rights of Entry"
"Eligible Rights of Entry Amortization Amount"
"Rights of Entry"
3. Section 1.01 of the Credit Agreement is hereby amended by amending and
restating the following definitions as follows:
"Borrower" shall mean BTL and any other Person who may hereafter
become a party hereto as a borrower and "Borrowers" shall collectively mean
all such Persons.
"Contract Rate" shall mean, as applicable, the Revolving Interest Rate
or the Term Loan Rate.
"Fixed Charges" shall mean, with respect to any fiscal period, the sum
of (a) interest expense of BTL and its Subsidiaries determined on a
consolidated basis with respect to such period in accordance with GAAP,
plus (b) scheduled principal payments on Indebtedness of BTL and its
Subsidiaries on a consolidated basis with respect to such period, plus (c)
for the fiscal year 2006, an amount equal to Two Hundred Twenty Thousand
Seven Hundred Ten and 00/100 Dollars ($220,710.00).
"Pledge Agreement" shall mean (i) the Pledge Agreement executed and
delivered by BTL to the Lender for the benefit of itself and the Issuer
with respect to all of the issued and outstanding capital stock of BTIC
owned by BTL, (ii) the Pledge Agreement executed and delivered by BTL to
the Lender for the benefit of itself and the Issuer with respect to all of
the issued and outstanding capital stock of Hybrid Networks, LLC, a
Delaware limited liability company, owned by BTL and (iii) any other Pledge
Agreement executed and delivered by any Loan Party to the Lender with
respect to the Subsidiary Stock, together with all amendments, supplements,
modifications, substitutions and replacements thereto and thereof and
"Pledge Agreements" means collectively, all such Pledge Agreements.
4. Section (h) of the definition of "Collateral" contained in Section 1.01
of the Credit Agreement is hereby deleted in its entirety and in its stead is
inserted the following:
(h) [Reserved];
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5. 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, minus
(iii) the aggregate amount of outstanding Letters of Credit,
minus
(iv) 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) and (ii)
minus the sum of Section 2.1(a) (iii) and (iv) 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).
6. Section 3.2(a)(y) of the Credit Agreement is hereby amended by deleting
the parenthetical "(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%))" in its entirety.
7. Section 4.3 of the Credit Agreement is hereby amended by deleting the
parenthetical "(including, but not limited to, with respect Rights of Entry,
expiration)" in its entirety.
8. All references to "Rights of Entry" contained in Sections 8.1(k), (w)
and (z) are hereby deleted in their entirety.
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9. Section 9.2(b) is hereby deleted in its entirety and in its stead is
inserted the following:
(b) [Reserved].
10. Section 9.12 of the Credit Agreement is hereby amended by deleting the
parenthetical "(including an income statement for each calendar month and a
balance sheet as at the end of each calendar month and a separate operating
budget and cash flow for BDR)" in its entirety.
11. The following schedules to the Credit Agreement are hereby deleted in
their entirety and replaced by the corresponding schedules attached hereto: 4.5,
4.15(c), 4.15(g), 5.2(a), 5.2(b), 5.4 and 5.21.
12. The following exhibits to the Credit Agreement are hereby deleted in
their entirety and replaced by the corresponding exhibits attached hereto:
Exhibit A, Exhibit 2.1(a), and Exhibit 2.4.
13. Exhibit A to that certain Pledge Agreement, effective December 29,
2005, made by BTL in favor of the Lender (for its benefit and the benefit of the
Issuer), originally with respect to all of the issued and outstanding membership
interests of BDR and Hybrid Networks, LLC, a Delaware limited liability company
owned by BTL is hereby deleted in its entirety and replaced by the corresponding
Exhibit A (Pledge Agreement) attached hereto.
14. The provisions of Sections 2 through 13 and 15 of this Second Amendment
shall not become effective until the Lender has received the following, each in
form and substance acceptable to the Lender:
(a) this Second Amendment, duly executed by each Loan Party, the
Lender and the Issuer;
(b) the documents listed on the Preliminary Closing Agenda set forth
on Exhibit "A" attached hereto and made a part hereof;
(c) a prepayment of the Term Loan in an amount at least equal to One
Million Five Hundred Thousand and 00/100 Dollars;
(d) consummation of the Rights of Entry Transfer, the Trademarks
Transfer, the Membership Interest Sale and the Trademarks License (each as
defined in the Fourth Letter Agreement); and
(e) such other documents as may be reasonably requested by the Lender.
15. The Lender hereby releases (i) the pledge and lien granted by BTL
pursuant to that certain Pledge Agreement, effective December 29, 2005, made by
BTL in favor of the Lender (for its benefit and the benefit of the Issuer), with
respect to all of the issued and outstanding membership interests of BDR owned
by BTL, (ii) BDR from the Credit Agreement and, therefore, BDR has no further
obligations pursuant to the Credit Agreement and shall cease to be a "Loan
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Party" thereto, (iii) BDR from the Environmental Indemnity and, therefore, BDR
has no further obligations pursuant to the Environmental Indemnity, (iv) BDR
from the Intellectual Property Security Agreement and, therefore, BDR has no
further obligations pursuant to the Intellectual Property Security Agreement,
(v) all liens, security interests and other encumbrances under the Credit
Agreement, the Intellectual Property Security Agreement or the Other Documents
or otherwise in the Collateral that is owned by BDR, and (vi) BDR from any and
all obligations or liabilities whatsoever in favor of the Lender and/or the
Issuer. The Lender agrees that it will file a discharge of security interest in
the form of Exhibit B attached hereto and made a part hereof and will file any
other release documents or instruments reasonably necessary to discharge the
security interest of the Lender in the Collateral that is owned by BDR
including, without limitation, UCC-3 Termination Statements with respect to all
UCC-1 Financing Statements filed of record against BDR or assignments.
16. 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.
17. Each Loan Party acknowledges and agrees that, except for such
documents, instruments or agreements that are being released pursuant to
Paragraph 15 of this Second Amendment, 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.
18. 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
Second Amendment; (ii) the officers of such Loan Party executing this Second
Amendment have each been duly authorized to execute and deliver this Second
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 Second Amendment and all other documents executed or to
be executed by such Loan Party in connection herewith constitute valid and
binding obligations of such Loan Party in every respect, enforceable in
accordance with their respective terms.
19. 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 Second Amendment or the
performance or observance of any provision hereof, (ii) the Schedules attached
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to and made a part of the Credit Agreement, as amended by this Second 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.
20. 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.
21. The agreements contained in this Second 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 Second Amendment amends the Credit Agreement and is not a novation thereof.
22. This Second 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.
23. This Second 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 Second 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/ James A. Luksch
Name: James A. Luksch
Title: Chief Executive Officer
BDR Broadband, LLC
By: /s/ James A. Luksch
Name: James A. Luksch
Title: Member
GUARANTOR:
Blonder Tongue Investment Company
By: /s/ James A. Luksch
Name: James A. Luksch
Title: President
LENDER:
National City Business Credit, Inc., as Lender
By: /s/Terry A. Graffis
Name: Tery A. Graffis
Title: Vice President
ISSUER:
National City Bank, a national banking association,
as Issuer
By: /s/ Joseph Kwasney
Name: Joseph Kwasney
Title: Senior Vice President
Blonder Tongue Laboratories (BDRL)
Filed: 21 Dec 06, 12:00am