EXHIBIT 10.1
CAPITAL CONTRIBUTION AGREEMENT
This Capital Contribution Agreement is made as of this 26th day of
March, 2003 by and between Blonder Tongue Telephone, LLC, a New Jersey limited
liability company (the "COMPANY"), Resource Investment Group, LLC, a New Jersey
limited liability company ("RIG"), H. Tyler Bell, NetLinc Communications, LLC, a
New Jersey limited liability company ("NETLINC"), and Blonder Tongue
Laboratories, Inc., a Delaware corporation ("BLONDER TONGUE").
Background
----------
The Company is a start-up enterprise that will (i) sell certain
telecommunications equipment, subject to certain limited exceptions, exclusively
to Blonder Tongue for resale by Blonder Tongue, all as more fully set forth in a
certain Distributorship Agreement between the Company and Blonder Tongue, dated
on or about the date hereof, (ii) act as a reseller of telecommunications
services to the end users of the equipment sold by the Company and Blonder
Tongue, and (iii) act as an operator of telephone, cable and high speed internet
systems.
Blonder Tongue has agreed to become a member of the Company pursuant
to the Company's Operating Agreement of even date herewith (the "OPERATING
AGREEMENT") and in return for its Membership Rights, agrees to make capital
contributions to the Company in the form of cash in an aggregate amount of up to
$3,500,000, plus 500,000 shares of Blonder Tongue common stock, pursuant to the
terms and conditions of this Agreement. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Operating
Agreement.
NOW THEREFORE, for good and valuable consideration, the parties,
intending to be legally bound, agree as follows:
1. Contributions. Blonder Tongue agrees to make the following capital
contributions to the Company each of which shall be credited, when made, to the
Capital Account of Blonder Tongue maintained by the Company pursuant to the
Operating Agreement:
(a) Upon the execution of this Agreement, Blonder Tongue shall
make an initial cash contribution to the Company of $125,000 (the "INITIAL
PAYMENT") and three (3) subsequent cash contributions of $125,000 on the first
day of each week thereafter.
(b) Upon the execution of this Agreement, Blonder Tongue shall
make a capital contribution to the Company of 500,000 shares of Blonder Tongue
common stock, par value $0.001 (the "STOCK").
(c) On the first day of the first calendar month following the
month in which the final payment contemplated by section 1(a) is scheduled to be
paid, Blonder Tongue shall make a cash contribution to the Company of $83,333.33
and shall make five subsequent cash contributions of $83,333.33 on the first day
of each calendar month thereafter.
(d) (i) In addition to the capital contributions contemplated by
sections 1(a) and 1(c) above, Blonder Tongue shall make
additional cash
contributions to the Company in the maximum amount of up to
$2,500,000, payable in twenty-four (24) equal payments of
$104,166.67 (each a "Monthly Capital Payment"), with the
first Monthly Capital Payment due upon the execution of this
Agreement, and with each additional Monthly Capital Payment
due on the 15th day of each succeeding calendar month, until
paid in full; provided, however, that, as more fully
described in section 1(d)(ii) below, Blonder Tongue's
obligation to contribute the additional capital
contributions contemplated by this section 1(d)(i) is
subject to and contingent upon the Company meeting certain
projections budgeted for the Company pursuant to the budget
attached hereto as Exhibit A (the "BUDGET").
(ii) Commencing with the fourth (4th) full month of operation of
the Company, if the Company's EBITDA (defined below) for a
calendar month does not meet or exceed eighty percent (80%)
of the Targeted EBITDA (defined below) for such month (if
the Targeted EBITDA set forth in the Budget is negative, the
Company's actual negative EBITDA as of such date shall not
be worse than 120% of the negative Targeted EBITDA for such
date set forth in the Budget), then Blonder Tongue's
obligation to make Monthly Capital Payments to the Company
as of the fifteenth day of the following month (and all
subsequent months) shall be deferred for such month(s) and
shall commence again on the fifteenth day of the next
succeeding calendar month, subject to the Company meeting
the Targeted EBITDA applicable to such succeeding month.
Commencing with the fifth (5th) full month of operation of
the Company, on the fifteenth day of each calendar month,
Blonder Tongue shall test the Company's EBITDA for the prior
month against the related Targeted EBITDA to determine
whether to pay or defer a Monthly Capital Payment for such
month.
(iii)Notwithstanding any provision of this Agreement to the
contrary, Blonder Tongue shall not be required to pay more
than the amount of one Monthly Capital Payment per calendar
month, other than under circumstances where Blonder Tongue
failed to make a Monthly Capital Payment in a prior month
that was required to be made (i.e., such Monthly Capital
Payment was not deferred pursuant to subsection 1(d)(ii)
hereof).
(iv) Notwithstanding any provision of this Agreement to the
contrary, at no time shall the BT Net Cash Contribution
exceed $1,244,075.
(v) For purposes of this Agreement, "EBITDA" shall mean, for any
calendar month, the net income (loss) of the Company and its
subsidiaries on a consolidated basis for such calendar
month, plus
2
interest expense, income tax expense, amortization expense,
depreciation expense and extraordinary losses and minus
extraordinary gains, in each case, of the Company and its
subsidiaries on a consolidated basis for such calendar month
determined in accordance with generally accepted accounting
principles, to the extent included in the determination of
such net income (loss).
(vi) For purposes of this Agreement, "TARGETED EBITDA" shall
mean, for any calendar month, the projected EBITDA for such
calendar month as set forth in the Budget.
(vii)For purposes of this Agreement, the "BT NET CASH
CONTRIBUTION" shall mean, as of any date of determination,
the amount by which (A) the aggregate amount of cash capital
contributions that Blonder Tongue has made to the Company as
of such date exceeds (B) the aggregate amount of cash
distributions that have been made to Blonder Tongue pursuant
to Sections 4.1 and 4.2 of the Operating Agreement as of
such date.
2. Valuation of Blonder Tongue Stock. For the purposes of this
Agreement and the Operating Agreement, the parties agree that the value of a
share of the Stock shall be the greater of the average of the high and low sale
price thereof as reported by the American Stock Exchange on the date hereof, or
$2.00 per share. The Company shall have the right to register the Stock at its
sole expense. In addition, the Company may, at no cost to the Company,
co-register with Blonder Tongue in the event that Blonder Tongue is also
registering shares of its common stock pursuant to a registration statement on
Form S-2 or S-3; provided, however, that the Company's co-registration shall be
on such terms and conditions as are acceptable to Blonder Tongue and the
underwriter of Blonder Tongue's registration, if any. The Company shall, at its
sole expense, promptly comply with all applicable federal and state securities
laws applicable to it's receipt and ownership of the Stock, including, without
limitation, making an initial filing of a Schedule 13(d) or 13(g) as applicable.
3. Membership Interests. Upon the execution of this Agreement and
Blonder Tongue's payment of the Initial Payment and issuance of the Stock to the
Company, the Company shall issue to Blonder Tongue and Blonder Tongue shall hold
a 35% Percentage Interest and 17.5 Membership Shares.
4. Consent and Acknowledgement. Blonder Tongue hereby acknowledges and
agrees that from time to time the Company may make loans to RIG and NetLinc,
subject to the following terms and conditions:
(a) Loans to RIG. The aggregate amount of loans outstanding from
the Company to RIG at any time shall not exceed $2,000,000. Loans from the
Company to RIG may be funded by a combination of Cash Flow and cash capital
contributions; provided, however, that (i) such loans may not be funded with
Cash Flow unless and until the BT Cash
3
Priority Return has been paid in full and (ii) only up to 50% of cash capital
contributions received by the Company may be used to fund loans to RIG.
(b) Loans to NetLinc. The aggregate amount of loans outstanding
from the Company to NetLinc at any time shall not exceed $300,000. Loans from
the Company to NetLinc may be funded only from cash capital contributions
received by the Company.
(c) General Terms and Conditions of Loans. All such loans shall
bear interest at the lowest applicable federal rate of interest necessary to
avoid the imputation of interest under applicable federal tax law and shall have
such other terms and conditions, including repayment terms, as are acceptable to
Blonder Tongue in its sole discretion.
5. Contributions Independent from Distributions. The obligations of
Blonder Tongue to contribute to the capital of the Company as contemplated by
the Operating Agreement and as set forth herein, shall be and remain separate
and independent from the obligations of the Company to make distributions to the
Members and to allocate profits and losses, as contemplated by the Operating
Agreement.
6. Representations, Warranties and Covenants of Company and NetLinc.
Company and NetLinc, jointly and severally, hereby represent, warrant and
covenant to Blonder Tongue as of the date of this Agreement as follows:
(a) Organization, Good Standing and Qualification. Each of
Company and NetLinc is a limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of Company and NetLinc has all requisite power and authority
to own and operate its properties and assets, to execute and deliver this
Agreement, that certain Distributorship Agreement dated on or about the date
hereof by and between Company and Blonder Tongue ("DISTRIBUTORSHIP AGREEMENT"),
that certain Distributorship Agreement dated on or about the date hereof by and
between NetLinc and Company, that certain Affiliated Party Transactions
Agreement dated on or about the date hereof by and among NetLinc, Company,
Blonder Tongue and the other signatories thereto, that certain Intellectual
Property License Agreement dated on or about the date hereof by and between
Company and Blonder Tongue (the "IP LICENSE AGREEMENT") and any other
agreements, instruments or documents to be delivered by Company or NetLinc in
connection with the transactions contemplated hereby (collectively, the
"AGREEMENTS"), and, to the extent applicable, to carry out the provisions of the
Agreements and to carry on its business as presently conducted and as presently
proposed to be conducted. Each of Company and NetLinc is duly qualified and is
authorized to do business and is in good standing as a foreign limited liability
company in all jurisdictions in which it is required to be so qualified.
(b) Capitalization; Equity Interests. Upon consummation of the
transactions contemplated by the Agreements, the capitalization of each of
NetLinc and Company will be as set forth on Exhibit B attached hereto and all
membership interests in each of Company and NetLinc have been or will be issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. Except as may be granted pursuant to the Agreements, there are no
outstanding options, rights or agreements of any kind for the purchase or
acquisition from either NetLinc or Company of any of their securities. When
issued in compliance with the provisions of this Agreements all membership
interests in Company and NetLinc will be free of any liens or encumbrances other
than restrictions on transfer under the Agreements or state and/or federal
securities laws.
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(c) Authorization. All action on the part of each of Company and
NetLinc, and their respective officers, managers and members, as applicable,
necessary for the authorization of the Agreements and the performance of all
obligations of Company and NetLinc under the Agreements has been taken.
(d) Budget. The financial projections contained in the Budget
attached hereto as Exhibit A are based on and reflect assumptions for which
Company has a reasonable basis, and reflect conditions generally expected to
exist and the course of action that Company expects to take, as of the date of
this Agreement.
(e) Liabilities. Except as set forth in the Agreements, neither
Company nor NetLinc has any liabilities and, to the best of its knowledge, does
not know of any contingent liabilities not previously disclosed to Blonder
Tongue. Neither NetLinc nor Company is a guarantor of any indebtedness or
indemnitor of any liability or loss of any other person or entity.
(f) Agreements; Action.
(i) Except as set forth in the Agreements, there are no
agreements, understandings or proposed transactions between either of NetLinc or
Company, on the one hand, and any of such company's officers, managers, members,
affiliates or, to the best knowledge of NetLinc and Company, any affiliate
thereof, on the other hand.
(ii) Except as set forth in the Agreements, there are no
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which either of NetLinc or Company is a
party or by which it is bound that may involve (A) obligations (contingent or
otherwise) of, or payments to, such company in excess of $10,000, (B) the
license of any patent, copyright, trade secret or other proprietary right to or
from NetLinc or Company, (C) provisions materially affecting or restricting the
development, presentation or delivery of NetLinc's or Company's products or
services, or (D) indemnification by either of NetLinc or Company with respect to
infringements of proprietary rights.
(iii) Except as set forth in the Agreements, neither of
NetLinc or Company has (A) made any distribution upon or with respect to any
class of equity interest, (B) incurred any indebtedness for money borrowed or
any other liabilities, (C) made any loans or advances to any person, or (D)
sold, exchanged or otherwise disposed of any of its assets or rights, other than
in the ordinary course of business.
(g) Obligations to Related Parties. Except as set forth in the
Agreements, there are no obligations of NetLinc or Company to any of their
respective officers, managers, members, or employees.
(h) Title to Assets; Liens, etc. Each of NetLinc and Company has
good and marketable title to its assets, subject to no liens except for liens
for current taxes not yet due and payable. Each of NetLinc and Company is in
material compliance with all terms of each lease to which it is a party or is
otherwise bound.
(i) Intellectual Property.
(i) Each of Company and NetLinc owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses,
5
information and other proprietary rights and processes (collectively "IP")
necessary for its business as presently conducted and contemplated to be
conducted, free and clear of all liens and without any known infringement of the
rights of others. There are no outstanding options, licenses or agreements of
any kind relating to the foregoing, nor is NetLinc or Company bound by or a
party to any options, licenses or agreements of any kind with respect to the IP
of any other person or entity (except as set forth in the IP License Agreement).
Neither NetLinc nor Company has received any written or oral communications
alleging that it has violated or, by conducting its business as presently
conducted or contemplated to be conducted would violate, any of the IP of any
other person or entity.
(ii) NetLinc is the sole owner of all IP relating to the
design, development, manufacture, sale, use, support or service of the Products
(as defined in the Distributorship Agreement) (collectively, "PRODUCT IP") free
and clear of all liens and without any known infringement of the rights of
others. There are no outstanding options, licenses or agreements of any kind
relating to the Product IP. NetLinc has not received any written or oral
communications alleging that the Product IP violates any of the IP of any other
person or entity. For so long as any of the Agreements remains in effect,
NetLinc will take all steps necessary to maintain and preserve the Product IP
and protect the confidentiality of the Product IP.
(iii) None of the key employees of NetLinc or Company is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would materially interfere with his
duties to such company or that would materially conflict with such company's
business as presently conducted or as contemplated to be conducted. Neither the
execution nor delivery of the Agreements, nor the carrying on of business by the
key employees of NetLinc and Company, nor the conduct of NetLinc's or Company's
business as presently conducted or as contemplated to be conducted, will
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any key employee of NetLinc or Company is now obligated. NetLinc and Company do
not believe it is or will be necessary to utilize any IP of any of its present
or past employees or consultants made prior to their employment or engagement,
as the case may be, by NetLinc or Company, except for IP that has been validly
assigned outright to and is currently owned in full by NetLinc or Company, as
applicable.
(j) Compliance with Other Instruments. Neither NetLinc nor
Company is in violation of or default under any term of its certificate of
formation or operating agreement, any provision of any agreement or contract to
which it is party or by which it is bound or any judgment, decree, order or writ
by which it is bound. The execution, delivery, and performance of and compliance
with the Agreements will not, with or without the passage of time or giving of
notice, result in any such violation or default, or result in the creation of
any lien upon any of the assets of such company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval material to the business or assets of NetLinc or Company.
(k) Litigation. There is no action, suit, proceeding or known
investigation currently pending or, to the best of its knowledge, threatened
against either NetLinc or Company, nor, to the best of their knowledge, are
NetLinc and Company aware that there is any basis for the foregoing. Neither
NetLinc nor Company is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
NetLinc or Company currently pending or which NetLinc or Company intends to
initiate.
(l) Tax Returns and Payments. Each of NetLinc and Company has
timely filed all tax returns (federal, state and local) required to be filed by
it. All taxes, and any assessments, due
6
and payable by NetLinc or Company on or prior to the date hereof have been paid
or will be paid prior to the time they become delinquent.
(m) Employees. No employee of NetLinc or Company has any
agreement or contract, written or verbal, regarding his employment. No employee
of NetLinc or Company, nor any consultant with whom NetLinc or Company has
contracted, is in violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, NetLinc or Company and the
continued employment by NetLinc or Company of its present employees, and the
performance of NetLinc's or Company's contracts with its independent
contractors, will not result in any such violation. Neither NetLinc nor Company
has received any notice alleging that any such violation has occurred. No
employee of NetLinc or Company has been granted the right to continued
employment by NetLinc or Company or to any compensation following termination of
employment with NetLinc or Company.
(n) Permits. Each of NetLinc and Company has all franchises,
permits, licenses, consents, authorizations and any similar authority necessary
for the conduct of its business as now being conducted by it and believes it can
obtain, without undue burden or expense, all franchises, permits, licenses,
consents, authorizations and any similar authority for the conduct of its
business as planned to be conducted.
(o) Insurance. Each of NetLinc and Company has property, fire,
liability, workmen's compensation and casualty insurance policies with coverage
customary for companies similarly situated to NetLinc and Company, each of which
is in full force and effect and all premiums due thereon have been paid.
(p) Full Disclosure. The Agreements and all other documents
delivered by NetLinc and Company, or their affiliates, to Blonder Tongue or its
attorneys or agents in connection with the transactions contemplated by the
Agreements, do not contain any untrue statement of a material fact nor, to the
best of NetLinc's and Company's knowledge, omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. To the best of NetLinc's and Company's knowledge, there are no facts
which (individually or in the aggregate) materially adversely affect the
business, assets, liabilities, financial condition, prospects and operations of
each of NetLinc and Company, taken as a whole, that have not been set forth in
the Agreements or in other documents delivered to Blonder Tongue or its
attorneys or agents in connection with the transactions contemplated by the
Agreements.
7. Representations and Warranties of Blonder Tongue. Blonder Tongue
hereby represents and warrants to the Company and NetLinc as of the date of this
Agreement as follows:
(a) Organization, Good Standing and Qualification. Blonder Tongue
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Blonder Tongue has all requisite corporate power
and authority to execute and deliver the Agreements to which it is a party.
(b) Authorization. All corporate action on the part of Blonder
Tongue necessary for the authorization of the Agreements to which it is a party
and the performance of all obligations of Blonder Tongue under such Agreements
has been taken.
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8. Survival. The representations, warranties, covenants and agreements
made herein shall survive until the expiration of all applicable statutes of
limitation (including all periods of extension, whether automatic or
permissive).
9. Remedies.
(a) Company and NetLinc shall, jointly and severally, indemnify,
defend and hold Blonder Tongue harmless from and against any and all loss,
liability, damage, deficiency or expense to Blonder Tongue relating to or
arising out of any misrepresentation, breach of any representation or warranty,
or nonfulfillment of any covenant on the part of Company or NetLinc contained in
this Agreement.
(b) In addition to the other remedies available to Blonder Tongue
under this Agreement or at law, all of which are cumulative and may be pursued
singly or concurrently, upon the breach of any of the representations,
warranties or covenants set forth herein, except the representation and warranty
set forth in Section 6(d) hereof, which breach is not cured (or with respect to
the representations and warranties set forth in Sections 6(n) and 6(o) only, a
cure is not being diligently pursued) to Blonder Tongue's reasonable
satisfaction within thirty (30) days after the occurrence of such breach, (i)
Blonder Tongue's obligations under this Agreement shall terminate in their
entirety, including, without limitation, Blonder Tongue's obligations to make
capital contributions of any nature to Company, and (ii) notwithstanding any
provisions of the Agreements to the contrary, all of the restrictive covenants
applicable to Blonder Tongue contained in the Agreements, including without
limitation, the non-competition covenants set forth in Section 29.1 of the
Distributorship Agreement, Section 5.9.1 of the Operating Agreement of Blonder
Tongue Telephone, LLC and Section 5.7.1 of the Operating Agreement of NetLinc
Communications, LLC, shall terminate in their entirety and be of no further
force and effect.
10. Miscellaneous. Captions and paragraph headings used herein are
used for convenience only and are not a part of this Agreement and shall not be
used in construing it. In the event of litigation necessary to enforce this
Agreement or the terms and conditions thereof each party shall be responsible
for its own attorney's fees associated with that litigation. This Agreement sets
forth the entire understanding between the parties hereto and supersedes all
prior understanding in connection thereof. No waiver of any provision of this
Agreement shall be deemed or constitute a waiver of any other provision herein
nor shall a waiver be construed as a continuing waiver. This Agreement shall be
governed and construed in accordance with the laws of the State of New Jersey.
Any suit involving any dispute or matter arising under this Agreement may only
be brought in the United States District Court for the District of New Jersey or
any New Jersey State Court having jurisdiction over the subject matter of the
dispute or matter. All parties hereby consent to the exercise of personal
jurisdiction by any such court with respect to any such proceeding. No
supplement, modification, or amendment of this Agreement will be binding unless
executed by all parties. This Agreement shall be binding upon the successors and
assigns of each party hereto. If any provision in this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, the other
provisions of this Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have duly executed this Agreement as of the day and year first
above written.
BLONDER TONGUE LABORATORIES, INC.
By: /s/ James A. Luksch
-------------------------------------
James A. Luksch, President
BLONDER TONGUE TELEPHONE, LLC
By: /s/ H. Tyler Bell
-------------------------------------
H. Tyler Bell, General Manager
RESOURCE INVESTMENT GROUP, LLC
By: /s/ Douglas Bell
-------------------------------------
Douglas Bell, Manager
NETLINC COMMUNICATIONS, LLC
By: /s/ Dr. Yo-Sung Cho
-------------------------------------
Dr. Yo-Sung Cho, President
/s/ H. TYLER BELL
--------------------------------
H. TYLER BELL
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Exhibit A- The Budget
- --------------------------------------------------------------------------------
Blonder Tongue Telephone Income Projections -- 2003 (based on 92,000 new ports)
- --------------------------------------------------------------------------------
Feb Mar Apr May Jun Jul
--- --- --- --- --- ---
Sales Projections:
- ----------------------------------------------------------------------------
Customer Additions: 0 2,000 3,000 4,000
- ----------------------------------------------------------------------------
Broadstar Comm. 1,000 1,000 2,000 1,000
- ----------------------------------------------------------------------------
Digital Comm 1,000 1,000 2,000
- ----------------------------------------------------------------------------
Total Residual Customers: 0 1,000 4,000 9,000 14,000
- ----------------------------------------------------------------------------
Income:
- ----------------------------------------------------------------------------
Equipment Margin: $0 $20,000 $80,000 $120,000 $140,000
- ----------------------------------------------------------------------------
Residual Revenue: $0 $0 $11,534 $46,138 $103,810
- ----------------------------------------------------------------------------
Total Revenue: $0 $20,000 $91,534 $166,138 $243,810
- ----------------------------------------------------------------------------
Expense:
- ----------------------------------------------------------------------------
Corp Overhead: $55,763 $75,867 $79,717 $95,525
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Targeted Monthly EBITDA: 0 (35,763) 15,668 86,421 148,285
- ----------------------------------------------------------------------------
Aug Sep Oct Nov Dec Total
--- --- --- --- --- -----
Sales Projections:
- -----------------------------------------------------------------------------------------
Customer Additions: 4,000 8,000 10,000 12,500 17,500 61,000
- -----------------------------------------------------------------------------------------
Broadstar Comm. 1,000 2,000 2,000 2,000 2,000 14,000
- -----------------------------------------------------------------------------------------
Digital Comm 2,000 2,000 3,000 3,000 3,000 17,000
- -----------------------------------------------------------------------------------------
Total Residual Customers: 19,000 29,000 41,000 55,500 75,000 75,000
- -----------------------------------------------------------------------------------------
Income:
- -------------------------------------------------------------------------------------------
Equipment Margin: $140,000 $240,000 $300,000 $350,000 $450,000 1,840,000
- -------------------------------------------------------------------------------------------
Residual Revenue: $161,482 $219,154 $334,498 $472,910 $640,159 1,989,684
- -------------------------------------------------------------------------------------------
Total Revenue: $301,482 $459,154 $634,498 $822,910 $1,090,159 3,829,684
- -------------------------------------------------------------------------------------------
Expense:
- -------------------------------------------------------------------------------------------
Corp Overhead: $102,325 $114,875 $132,221 $149,196 $175,067 980,554
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Targeted Monthly EBITDA: 199,157 344,279 502,277 673,715 915,093 2,849,130
- -------------------------------------------------------------------------------------------
- ----------------------------
Assumptions: Equipment Margin per port will be: $20.00
- ----------------------------
Residual Revenue per port will be: $11.53
Note: Residual Revenue includes:
$3 per customer per month for billing and
collections services
$2 per customer per month for customer service
support
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- --------------------------------------------------------------------------------
Blonder Tongue Telephone Income Projections -- 2004 (based on 260,000 new ports)
- --------------------------------------------------------------------------------
Jan Feb Mar Apr May Jun
--- --- --- --- --- ---
Sales Projections:
- -------------------------------------------------------------------------------------------------
Customer Additions: 20,000 20,000 20,000 20,000 20,000 20,000
- -------------------------------------------------------------------------------------------------
Total Customers: 95,000 115,000 135,000 155,000 175,000 195,000
- -------------------------------------------------------------------------------------------------
Income:
- -------------------------------------------------------------------------------------------------
Equipment Margin: $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
- -------------------------------------------------------------------------------------------------
Residual Revenue: $865,080 $1,095,768 $1,326,456 $1,557,144 $1,787,832 $2,018,520
- -------------------------------------------------------------------------------------------------
Total Revenue: $1,265,080 $1,495,768 $1,726,456 $1,957,144 $2,187,832 $2,418,520
- -------------------------------------------------------------------------------------------------
Expense:
- -------------------------------------------------------------------------------------------------
Corp Overhead: $203,313 $230,933 $257,554 $281,779 $316,066 $342,229
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Targeted Monthly EBITDA: 1,061,768 1,264,835 1,468,902 1,675,365 1,871,766 2,076,291
- -------------------------------------------------------------------------------------------------
Jul Aug Sep Oct Nov Dec Total
--- --- --- --- --- --- -----
Sales Projections:
- -----------------------------------------------------------------------------------------------------------
Customer Additions: 20,000 20,000 25,000 25,000 25,000 25,000 260,000
- -----------------------------------------------------------------------------------------------------------
Total Customers: 215,000 235,000 260,000 285,000 310,000 335,000 335,000
- -----------------------------------------------------------------------------------------------------------
Income:
- -----------------------------------------------------------------------------------------------------------
Equipment Margin: $400,000 $400,000 $500,000 $500,000 $500,000 $500,000 5,200,000
- -----------------------------------------------------------------------------------------------------------
Residual Revenue: $2,249,208 $2,479,896 $2,710,584 $2,998,944 $3,287,304 $3,575,664 25,952,400
- -----------------------------------------------------------------------------------------------------------
Total Revenue: $2,649,208 $2,879,896 $3,210,584 $3,498,944 $3,787,304 $4,075,664 31,152,400
- -----------------------------------------------------------------------------------------------------------
Expense:
- -----------------------------------------------------------------------------------------------------------
Corp Overhead: $365,554 $393,587 $427,112 $459,529 $492,022 $528,303 4,297,980
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Targeted Monthly EBITDA: 2,283,654 2,486,309 2,783,472 3,039,415 3,295,282 3,547,361 26,854,420
- -----------------------------------------------------------------------------------------------------------
Blonder Tongue Laboratories, Inc.
Cash Flow Projections For Telephony
For the year ending December 31, 2003
Feb Mar Apr May Jun Jul
EBITDA from BTT - - (35,763) 15,668 86,421 148,285
Cash Downpayment 500,000
Cash payments 83,333 83,333 83,333 83,333
Note payments 105,000 105,000 105,000 105,000 105,000
CASH OUTLAY (INFLOW) 605,000 188,333 172,666 101,912 40,049
CUMULATIVE 605,000 793,333 965,999 1,067,911 1,107,960
Aug Sep Oct Nov Dec Total
EBITDA from BTT 199,157 344,279 502,277 673,715 915,093 2,849,130
Cash Downpayment 500,000
Cash payments 83,333 83,333 500,000
Note payments 105,000 105,000 105,000 105,000 105,000 1,050,000
CASH OUTLAY (INFLOW) (10,823) (155,946) (397,277) (543,914) -
CUMULATIVE 1,097,137 941,191 543,914 -
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